WD-40 Company (WDFC) Q4 2015 Earnings Report, Transcript and Summary

Ladies and gentlemen thank you for standing by. Good day and welcome to the WD-40 Company Fourth Quarter and Full Fiscal Year 2015 Earnings Conference Call. Today's call is being recorded. At this time all participants are in a listen only mode. At the end of the prepared remarks we will conduct a question and answer session. [Operator Instructions] I'd now like to turn the presentation over to the host for today's call Ms. Wendy Kelley, Director Investor Relations and Corporate Communications, please proceed.

Thank you. Good afternoon and thanks to everyone for joining us today. On the call today are WD-40 Company’s President and Chief Executive Officer, Garry Ridge; and Vice President and Chief Financial Officer, Jay Rembolt. Following their prepared remarks, the operator will come back on the line for the Q&A portion of the call. Before we get started, let me remind you that supporting materials for this call are available on our Investor Relations website at investor.wd40company.com. In addition to our traditional disclosures, the Company has published the supplemental slides, which can be downloaded from this Web site. We encourage investors to review these slides in conjunction with today’s prepared remarks. A replay and transcript of today’s webcast will also be made available at that location shortly after this call. As a reminder, today’s call includes forward-looking statements about our expectations for the Company’s future performance. Of course, actual results could differ materially. The Company’s expectations, beliefs and projections are expressed in good faith but there can be no assurance that they will be achieved or accomplished. Please refer to the Risk Factors detailed in our SEC filings for further discussion. Finally, for anyone listening to a taped or webcast replay or reviewing a written transcript of this call, please note that all information presented is current only as of today’s date, October 15, 2015. The Company disclaims any duty or obligation to update any forward-looking information whether as a result of new information, future events or otherwise. With that, I’d now like to turn the call over to Garry.

Thank you, Wendy. Good day and thanks for joining us for today's conference call. To sum up fiscal year 2015 it was the best of times and it was the worst of times. Fiscal year 2015 was a year of solid operating performance that was obscured by the impacts of political events, economic instability, a strong U.S. dollar and a particularly weak Euro against the pound sterling. We are proud that we've been able to build a global company and we currently generate approximately 40% of our sales in currencies other than the U.S. dollar. With this comes foreign currency risk. We currently have four subsidiaries located in the United States, I'm sorry outside of the United States that generate sales and do business in currencies other than the U.S. dollar. They are located in the United Kingdom, Canada, Australia and China. The main currency in which each of these subsidiaries conduct business is called its functional currency. We have foreign currency translation exposure when we translate the results of our foreign subsidiaries from their functional currency into U.S. dollars. The continued strengthening of the U.S. dollar deflates the net sales denominated in currencies other than the U.S. dollar and thus has a negative effect on our consolidated results. In addition to this currency translation exposure our UK subsidiary also experiences foreign currency transaction exposure, because it conducts business in currencies other than its functional currency the pound sterling. A significant portion of EMEA's net sales are generated outside of the UK and transacted in Euros and U.S. dollars. When these sales are converted into pound sterling EMEA's reported results are impacted by changes in the currency exchange rates for those two currencies. In 2015, the euro has continually weakened against the pound. This transaction exposure has been most significant to our business. Today, we reported consolidated net sales of $378.2 million for full fiscal year, which is a 1% decline from last fiscal year. In the fourth quarter, consolidated net sales were $92 million, which is 6% decrease from the fourth quarter of last year. The impacts of changing foreign currency exchange rates significantly reduced that net sales in fiscal year 2015. When you take, both translation and transaction exposure into consideration, changes in foreign currency exchange rates reduced our total net sales by around $16 million for the full year. Consolidated net sales were reduced by about $11 million due to the impact of the strengthening of the U.S. dollar against the functional currencies of our subsidiary. This is the translation related exposure. In addition, consolidated net sales were reduced by about $5 million, primarily due to the impact of the weakening of the euro. This is the transaction related exposure. However, despite these challenges, we reported full year net income of $44.8 million and a diluted earnings per share of $3.04. In the fourth quarter, net income was $11.7 million and diluted earnings per share were $0.80. So, what happened? Let’s start with the EMEA segment, i.e. -- and this is where we experienced the most significant challenges, particularly related to currency headwinds. Net sales in EMEA, which include Europe, Middle East, Africa and India, decreased to $136.9 million for the full fiscal year, down 10% versus last year and $33.2 million in the fourth quarter, down 17% versus last year. EMEA’s results in the quarter and full year periods were negatively impacted by foreign currency exchange headwinds as well as the continued political and economic instability in Eastern Europe. We sell into EMEA through a combination of direct operations as well as through marketing distributors. Direct market sales accounted for 63% of the EMEA’s total sales in fiscal year 2015 and 70% in the fourth quarter. Our direct market sales declined 7% in the full year and 12% during the fourth quarter. The declines in both periods were almost entirely due to foreign currency exchange rates. I want to share with you our EMEA direct market sales results in the local currencies in which they are transacted. In the United Kingdom where we sell in pounds sterling, sales increased 9% for the full year and 30% for the fourth quarter. In Europe direct markets where we sell in euros, sales increased by 6% for the full year and for the fourth quarter. These sales increases in local currencies were due to the continued expanded distribution and growth of our base business in these markets. So they have currency headwinds during the crew’s results and growth in our European direct markets. Now, let’s turn to the regions distributor markets, which accounted for 37% of EMEA’s total fiscal year sales and 30% of sales during the fourth quarter. Distributor market sales decreased 14% in the fiscal year and 26% in the fourth quarter. This is the first time in 10 years that we fail to achieve full fiscal year growth in the EMEA distributor markets. This was primarily due to three reasons; the continued political and economic instability in Russia, including a massive currency devaluation and accompanying recession. For the first full fiscal year of sales in Russia declined about 30% compared to last year. The ongoing political and economic instability to Ukraine, including combat in the Donbass region, which is the industrial heart lane of the country, for the full year, sales in Ukraine declined 77%. Sales declined in the Middle East, primarily due to lower sales of WD-40 Multi-Use Product in Afghanistan. Our marketing distributors in Russia and the Ukraine are actively pursuing strategies to reestablish products in these countries. But despite our optimism for economic and political stability, we’re unable to predict the immediate reach for these markets. We find confidence in the fact that virtually all of the remaining distributor markets continue to see year-over-year growth. Although sales throughout EMEA were challenged throughout the year, in this fiscal year WD-40 Specialist product line sales was strong. Reported sales of the WD-40 Specialist product line in EMEA increased 16% in the full year and 19% during the fourth quarter. So let’s now jump back across the palm and discuss our results in the Americas. Net sales in the Americas, which include the United States, Latin America and Canada, increased to $187.3 million for the full fiscal year and 48.1 million in the fourth quarter. Both periods were up 4%, the percentage sales growth in the Americas segment was even higher if we look only at our maintenance products. Maintenance products in the Americas increased 5% in the full year and 6% in the fourth quarter. For both periods this growth was due to higher maintenance product sales in the US and Latin America, driven by new distribution and successful promotional programs. These increases were partially offset by sales declines in Canada, which were significantly impacted by unfavorable changes in foreign currency exchange rates. Looking a little closer at the U.S. sales were up 4% in the full year and 6% during the fourth quarter driven by higher maintenance sales. In the US sales of WD-40 Multi-Use product were up 3% in both periods and sales of WD-40 Specialist were up 25% for the full year and 49% in the fourth quarter. The sales increases for WD-40 Specialist for both periods, was due to new distribution and increased promotional activity. Total sales in Canada were down 8% for the full year and 20% during the quarter. In its functional currency the Canadian dollar sales were up 3% for the full fiscal year but down 7% for the fourth quarter. The declines in the fourth quarter were driven by the timing of our promotional activities. Total loads in Latin American sales were up 7% for the full year and 8% in the fourth quarter. The sales increases in Latin America for both periods were due to higher sales of WD-40 Multi-Use product primarily due to high level of promotional programs and increased distribution particularly in Brazil and Mexico. As a reminder our maintenance products exclude our home care and cleaning products. We can consider our home care and cleaning products particularly those in the US as harvest brands that continue to generate meaningful contributions and cash flow but are generally expected to become a smaller part of our business over time. Now let's take a look at Asia-Pacific. Net sales in Asia-Pacific which includes Australia, China and other countries in the Asian region increased 6% to 54 million in the full fiscal year and decreased 5% to 10.6 million in the fourth quarter. Changes in foreign currency exchange rates had an unfavorable impact on sales. On a constant currency basis sales in Asia-Pacific would have increased 10% for the full year and 4% for the fourth quarter. In Australia reported net sales were down 3% for the full year and 8% in the fourth quarter. Changes in foreign currency exchange rates had a negative impact on these results. In its functional currency the Australian dollar sales were up 10% in the full year and up 13% in the fourth quarter. This growth was due to increased distribution and promotional activities in both periods. Sales in China increased 10% for the full year and 7% in the fourth quarter due to new distribution much of which came from Southern China and in ongoing promotional activities throughout the country. We continue to be optimistic about the long term opportunities in this region although we expect a lot of volatility along the way due to the timing of promotional programs, the billing of distribution, shifting economic patterns and the varying industrial activities. Sales to our Asian distributor markets increased 11% for the full fiscal and decreased 12% during the fourth quarter. Increased sales in the full fiscal year were driven by higher sales volume of WD-40 Multi-Use products in markets particularly of South Korea, the Philippines and Indonesia. The decline in sales in the fourth quarter was driven primarily by the high level of purchases made by our customers in the fourth quarter of fiscal 2004 in advance of price increases implemented in the region in the first quarter of fiscal 2005. I'm going to take a break and hand over to Jay who'll continue on with a review of the financials.

Thank you, Garry. In addition to the information presented on this call I suggest that you review our press release which is issued earlier today as well as our 10-K report for the fiscal year 2015 which we'll expect to file on October 22nd. Let's start with a discussion about how we performed against our most recent fiscal year guidance. We projected our fiscal year net sales results to be in the range of 383 million to 390 million which meant flat to growth of 2%. Today we reported fiscal year revenue of 378.2 million reflecting a decline in sales of about 1%. As Garry discussed in detail the stronger than anticipated impact of foreign currency exchange rates as well as the economic and political challenges in some of our European markets made it difficult for us to forecast topline sales results. We project gross margin to be better than 52%. And today, we reported gross margin of 52.9%. We expected our global advertising and promotion investment to be in the range of 6% to 7% of net sales. And today, we reported our A&P investment of 6% of sales. We expected net income to be between $44.5 million and $45.4 million, which would have achieved diluted earnings per share of between $3.03 and $3.09, assuming $14.7 million weighted average shares outstanding. Today, we reported net income of $44.8 million and diluted earnings per share of $3.04, based on $14.6 million weighted average shares outstanding. Now, on to our 50/30/20 Rule. For many years, we’ve run our business by what we call our 50/30/20 Rule. We used this rule to guide and measure the performance of our business. Under the 50/30/20 Rule, 50 represents gross margin, which we target to be above 50% of net sales. 30 represents our cost of doing business, which is our operating expenses, excluding depreciation and amortization. Our target is to be at 30% of net sales. And finally 20 represents EBITDA. If our gross margin is above 50%, then our cost of doing business is 30%, we’ll generate EBITDA above 20%. The descriptions and reconciliations of these non-GAAP measures are available on our SEC filings and in our investor presentation which is available on our investor relations Web site. Beginning this year, in fiscal 2016, we are changing to a new 55/30/25 Rule. This means we’ll be targeting gross margin of 55%, cost of doing business at 30% and EBITDA of 25%. By aligning the organizations behind these stretch targets, we will continue to improve the financial performance of our business. Now let’s take a look at our fiscal 2015 results. So the last time under our 50/30/20 Rule; first, gross margin. In the fourth quarter, our gross margin was 54.3% compared to the 52.7% last year, driven primarily by the net favorable impact of 230 basis points from major input cost. This is primarily due to decreases in the cost of crude oil, one of the primary feedstocks of our petroleum based specialty chemicals. These improvements in gross margin were partially offset by changing foreign currency exchange rates. In the fourth quarter, foreign currency exchange rates adversely affected our gross margin by 70 basis points. This is because the [EMEA] (ph), our cost of goods are sourced almost entirely in pound sterling, or approximately 45% of our revenues are generated in euros, 30% in pound sterling and the remaining 25% in U.S. dollars. The euro deterioration against the pound more than offset any benefit from the strengthening U.S. dollar. As a result, revenues in total were less than pound sterling thus decreasing our gross margin. Although there were several other items that impacted gross margin, they were individually insignificant. The themes that we just discussed for the fourth quarter for gross margin, also apply to the full fiscal year. Gross margin was 52.9% compared to the 51.9% in the prior year. Major input costs had a less favorable impact of 160 basis points. Foreign currency exchange rates adversely impacted gross margin by 50 basis points in the fourth quarter. All other items combined had an unfavorable impact on gross margin of 10 basis points. If the cost of crude oil goes up significantly in the future, we will surely see some impact to our gross margin. But the new gross margin goal of 55% that we are targeting is not continuous on oil staying at any particular price point. We cannot control the global market dynamics, such as the price of crude, but we will continue to be focused and deliberate in managing the rest of our business for continued growth in our gross margin towards that target of 55%. Now, I’ll address our cost of doing business. In the fourth quarter, our cost of doing business was 35% compared to the 34% last year. For the full fiscal year, our cost of doing business was 34%, flat to last year. The revenue decline for the fiscal year negatively impacted our cost of doing business percentage. We expect to move closer to our target of 30%, over time as revenues grow. While our target is to have our cost of doing business at 30% of net sales, and we plan to continue the investments we make in research and development, brand protection as well as regulatory and quality assurance. For the full fiscal year, 76% of the cost of doing business came from three areas; our people costs or the investments we make in our tribe; our marketing investments; and the cost to get our product to our customers for the fourth quarter SG&A expense decreased to 27.4 million down from 28.3 million last year. The decrease was primarily due to lower earned incentive compensation, lower professional service costs and changes in foreign currency exchange rates. These decreases were partially offset by higher costs associated with new product development. For the full fiscal year our SG&A expense increased slightly to a $108.9 million up from a $108.6 million last year. We continued our investment in innovation and renovation and invested $3.5 million during the fourth quarter and a record $9 million for the full fiscal year. This investment is associated with our maintenance products and directly supports our strategic initiatives. Our innovation team engages in consumer research, product development, product improvement, and a variety of testing activities. Today our organization has more resources in places to manage product innovation, product renovation, product quality, regulatory and consumer safety than ever before in the company's history. Advertising and sales promotion expense increased by 2% to $6 million in the fourth quarter. The increase in advertising and sales promotion expense was primarily due to higher level of activities and programs in the Americas. For the full fiscal year, our A&P expense decreased by 4% to $22.9 million. As a percentage our A&P investment decreased from 6.2% to 6% for the full year. The decrease for the full year was primarily due to lower level of promotional programs and marketing support in EMEA. And that bring us to EBITDA, the last of 50/30/20 measures. EBITDA was 19% of net sales for both the fourth quarter and the full fiscal year. Looking at amortization, the amortization in tangibles remained constant at approximately $700,000 in the fourth quarter as compared to the prior year quarter. For the full year such expense increased by $400,000 from $2.6 million to $3 million primarily due to the intangibles acquired in the GT-85 acquisition completed at the beginning of the fiscal year. Total operating income in the fourth quarter was $15.8 million versus $16.6 million in the same period last year. Operating income in the fiscal year was 65.4 million compared to 63.7 million in the prior year. And net income for the fourth quarter was 11.7 million versus 11.5 million in the prior year quarter. Changes in foreign currency exchange rates had an unfavorable impact of $800,000 on the translation of our consolidated results for the quarter. Our diluted earnings per common share were $0.80 in the quarter compared to $0.77 in the prior year period. Diluted weighted average shares outstanding decreased to 14.5 million shares from 14.9 million shares in last year's quarter. And now net income for the full year at 44.8 million versus 43.7 million in the prior year. Changes in foreign currency exchange rates impacted our results $1.7 million for the full fiscal year. Now diluted earnings per common share were $3.04 for the fiscal year compared to $2.87 in the prior year. And our diluted weighted average shares outstanding decreased to 14.6 million shares from 15.1 million shares last year. A word about our capital allocation. We continue to return capital to shareholders through regular dividends and share repurchases. On October 2nd, the board of directors declared a regular quarterly cash dividend of $0.38 a share payable October 30th, 2015 to shareholders of record at the close of business tomorrow. Based on today's closing share price of $93.39 the annualized dividend yield is 1.6%. During the fourth quarter we repurchased 50,000 shares of our stock at a total cost of $4.4 million under our share repurchase plan and during the full fiscal year we repurchased 386,000 shares at a total cost of $30 million. Our latest share repurchase plan became effective March 1st, 2015. And it provides the authorization to acquire up to $75 million of the company's outstanding shares through the plan's expiration date in August of 2016. In addition to growing our earnings our solid balance sheet and strong cash flow we also focus on another metric - return on invested capital. For the fiscal year 2015 our return on invested capital was an exceptional 27.2%, and that provides our financial overview. Now, I’ll turn it back to Garry.

Thanks Jay. Take a moment now to review how we’re making progress on our strategic drivers. The strategic drivers for this year for the Company, number one, is to grow WD-40 Multi-Use product. Our goal under this initiative is to take WD-40 Multi-Use product that little blue and yellow can with the red top to more places for more people with more users. In the fourth quarter, we launched our newest product, WD-40 EZ-REACH, which is a 14.4 ounce can of WD-40 Multi-Use product featuring an innovative flexible straw. Though it’s still early, we’ve seen encouraging point of sales results. And so far, the end user results have been -- reviews have been positive. We are currently distributing the product at three U.S. retailers and we expect to add several more by the end of fiscal year 2016. Strategic initiative number two, is to grow the WD-40 Specialist product line, which celebrated its fourth birthday this year. Our goal under this initiative is to leverage the power of the shield to develop new products and categories within identified geographies and platforms. Despite all the macroeconomic events that we accounted this year, WD-40 Specialist still achieved a global growth rate of 24% for the full fiscal year and 36% during the fourth quarter. For the full fiscal year, WD-40 Specialist global sales generated about 6% of the revenue that we saw from the WD-40 Multi-Use product. Over the next 10 years, we believe we can grow that number to 25%. When we report first quarter fiscal year 2016 earnings, we will begin to provide additional information for investors about the performance of the WD-40 Specialist product line. Strategically initiative number three, is to broaden our product and revenue base. Our goal under this initiative is to leverage the strengths within our Company to generate revenue from new sources outside of our flagship WD-40 brand. We continue to broaden our revenues with products like WD-40 BIKE and new products within our three-in-one brand. At the end of fiscal year 2015, we started a plan for the transition of WD-40 BIKE’s business in the U.S. from one to distribution limited to independent BIKE dealers to one which will now also include the same multiple trade channel distribution network and customers, which currently are in place for our other maintenance products in the Americas segment. We will continue to develop or acquire maintenance products that fit well within our unique multiple trade channel distribution network. Strategic driver number four is to attract, develop, and retain outstanding tribe members. Our goal under this initiative is to attract, develop, and retain talented tribe members. This quarter we welcome nine members and this year, we welcome 57 new tribe members in the full year than those ever in a single year. This included a mix of both new and backfill positions, which grew our global tribe to 433 people around the world. While we do not expect to add headcount of this rate, this investment in our most valuable resource positions us well for future growth. Strategic driver number five is operational excellence. This initiative includes the continuous improvement of resources, systems, and processes in order to help us offset rising cost and protect our operating margin. We made great progress on several initiatives in fiscal year 2015. We made enhancements to our supply chain in both the Americas and EMEA. We continue our preparations for the 50 U.S. states transition to the lower VOC formula we launched in California during 2014. We continued our focus on category leadership, which has totally transformed the way we talk to our customers about our product. And we made additional progress on the implementation of the upgraded ERP system in EMEA. So, let’s look at what 2016 has to hold. In 2016, our guidance is that net sales will grow between 6% and 8% with net sales expected to be between $400 million and $408 million. Gross margin for the full year is expected to be near 53%. Advertising and promotional expenses are projected to be between 6% and 7%. Net income is projected to be between $47 million and $48 million and diluted earnings per share is expected to be between $3.26 and $3.33 based on an estimated $14.4 million weighted average shares outstanding. As a reminder, this guidance does not include any future acquisitions or divestitures, and assumes that foreign currency exchange rates will remain close to the current levels. Now, let me repeat that last part because it’s important. This guidance assumes that foreign currency exchange rates will remain close to current levels. In closing, despite the decline in our topline consolidated results, I’ll say our business continues to perform well. Foreign currency exchange rate headwinds may continue to impact our reported results but our strategy for growth is one for the long term. I believe vision crushing roots ritual of the pressure of quarterly earnings is not the measure of success. A company must have a clear and compelling vision, a set of core values that drive the culture, values must be clearly acted upon. A clear set of strategic drivers must determine how our time, talent, treasure and technology are invested to achieve our stated outcomes. Looking ahead we say the opportunity is double the sales of their multiuse product and grow WD-40 Specialist to about 25% of that amount, essentially doubling the size of our business over the next ten years. How? By doing exactly the same things we've been doing for the last decade and bringing it to a bigger and broader global audience. Ultimately, we believe our topline growth combined with disciplines of our business model will continue to increase stockholder value. So in summary what did you hear from us on the call today. You heard that currency exchange rates continue to challenge our reported results, particularly in the EMEA segment and thus we suffered a decline in full year reported sales for the first time in five years. You heard that if you remove the impacts of those currency exchange rates we are growing in almost all of our markets. You heard that the Americas segment is performing well and in line with our expectations with a 4% growth rate for the full fiscal year. You heard that our Asia-Pacific area continues to grow despite some currency headwinds with a 6% growth in the full fiscal year. You heard that WD-40 Specialist product line is performing above expectations with global growth rate of 24% in the fiscal year and you heard that we launched the WD-40 EZ REACH and we've seen encouraging point of sale results so far. You heard that beginning this fiscal year we are committing to a new rule the 55/30/25 Rule. You heard that crude oil cost going down continue to be a tailwind and we're seeing positive impact from lower input costs and you heard that we continue to return capital to our stockholders and that for fiscal year 2015 our return on invested capital was 27.2%. In closing I'd like to share a quote with you from Charles Dickens. “For our path in life is stony and rugged now and it rests with us to smooth it out. We must fight our way onward, we must be brave, there are obstacles to be met and we must meet and crush them.” Thank you for joining us for the call today. We'd be pleased now to open the conference call for your questions. Back to the operator.

[Operator Instructions] Your first question comes from the line of Linda Bolton Weiser from B. Riley and Company, please proceed with your question.

Hi, this is Zach Cummins. I'm in for Linda right now. My first question is, we did a little research and we found about a 34% retail price premium at Home Depot for your EZ REACH product in comparison to just your regular multiuse product. Does that sound about right to you and then how much of an effect will EZ REACH have on the U.S. sales mix?

That sounds right, I think it's $7.88 in Home Depot, and I'm not quite sure how I'd answer your second question on sales mix.

Okay, thank you, and then if I remember correctly I think you said the EZ REACH is with three distributors at this point. And I was wondering how long do you think it'll take to reach full distribution and then do you think are there still supply constraints for the product.

We are currently shipping product to Home Depot, Lowes and Auto Zone. We expect by March next year to be shipping to a number of other customers. Depending on demand we would, we feel that by the middle of next fiscal year we should have reasonably good wide distribution in the United States then after that it would be what we need to consider for that global market.

All right, great, that's all from me.

Okay, thank you.

Our next question comes from the line of Liam Burke from Wunderlich. Please proceed with your question

Thank you, good afternoon Garry.

Hi Liam.

Garry could you give us, could you give any sense as to specialist sales how they trend in emerging markets versus more developed markets. Looks like the U.S. is hitting its stride, but I mean how does that compare to the ramp up in a market like China.

Specialist is very limited in China, Liam the first thing we need to do is to make the shield famous and then take Specialist in after as you may have heard on the call, Specialist is now at about 6% of our MUP sales, and we’re pretty happy with that. But most of those are coming originally, a big portion from the U.S. and then from EMEA the more mature markets and Australia. We have some business in some of our distributors, but that’s the longer term build. Our goal at the moment is to get to our 25% of MUP number in the more developed markets like U.S., the UK, Australia, France, Germany those sort of areas and then later we’ll continue on building it in more of the emerging markets, as we build the awareness of the core brand of the blue and yellow can.

Okay, so just sticking with -- just second. Your growth rates in China reflect that you have probably primarily Multi-Use product sales?

Yes.

Jay, do you have any -- in your -- the efforts to step up or what you’ve done and moved up gross margins. Do you have any capital projects, or is there any capital investment that needs to be made for you to achieve your objectives on the gross margin fronts?

We have few initiatives around some machinery for line speeds and line efficiencies…

And EZ REACH…

And certainly EZ REACH has an opportunity to improve margin as well.

Great…

When we get volumes up…

Well, thank you very much.

Ladies and gentlemen, that does conclude our allotted time for questions. We thank you for your participation on today’s conference call and ask that you please disconnect your line.