艾利丹尼森 (AVY) 2002 Q3 法說會逐字稿

Good day, ladies and gentlemen, and welcome to Paxar Corporation third quarter earnings conference call. At this time all participants are in a listen only mode. Later we ill conduct a question and answer session and instructions will follow at that time. If anyone should require assistance during the program, please press ‘*’ then ‘0’ on your touchtone telephone. As a reminder, ladies and gentlemen, this conference call is being recorded. I would now like to introduce your host for today’s conference call, Mr. Bob Powers. Sir, you may begin.

Thank you. Good morning and welcome to Paxar’s third quarter 2002 conference call. On the line from management will be Paul Griswold, President and Chief Executive Officer, and Jack Plaxe, Senior Vice President and Chief Financial Officer.

This morning before the market opened, Paxar reported third quarter 2002 results. Management will now provide additional commentary on those results as well as look to the future. At the conclusion of that commentary, any questions you have may be addressed to management.

Please be advised that certain statements about the future outlook related to Paxar Corporation involve a number of factors affecting the company’s businesses and operations that could cause actual future results to differ materially from those contemplated by forward-looking statements. Those factors include general economic conditions and the performance of the company’s operations within its prevailing business markets around the world, as well as other factors set forth in Paxar’s Form 10-K Annual Report. For a further explanation participants are asked to refer to the final paragraph of Paxar’s earnings release.

Paul Griswold will now begin our management presentation. Paul.

Thank you, Robert. Good morning and welcome everyone to Paxar’s third quarter earnings call. We’ll talk about the continuing progress we’re making throughout the year on specific initiatives; we’ll talk about the business at large, the climate around the world as we see it, and I will provide a description on the specific business segment performance. Before we get into that I’d like to turn the call over to Mr. Plaxe to take us through the financial summary and overview.

Thanks, Bob, good morning everyone. For those of you that have a press release at hand I’d ask you to please turn to page five, as I make my comments concerning the third quarter of this year compared to the same quarter a year ago. My remarks will address the 2002 column, versus the as adjusted columns in 2001.

Sales were $170 million this year, up 23 percent from $139 million last year. Exchange rates contributed approximately $4 million, or 3 percent to the increase in sales. Another $9 to 10 million or 7 percent can be attributed to acquisitions. The remaining 13 percent gain is reflective of two things. First, the fact that we had a very weak third quarter last year, and secondly, gains resulting from very specific sales and marketing initiatives that have allowed us to increase wallet share in key accounts.

The gross margin was 37.8 percent this year, up very slightly from 37.7 percent in 2001. SG&A was 28.7 percent of sales, as compared to 30 percent a year ago. Operating income was $15.4 million, or 9.1 percent of sales. A year ago, operating income was $10.7 million or 7.7 percent of sales. As noted, operating income increased 44 percent year-over-year.

Interest expense of $3.1 million up from $2.5 million a year ago. This reflects lower average cash balances, lower interest rates on interest income against a mostly fixed rate of interest expense, and somewhat higher average outstanding debt levels. In this quarter we’ve reduced the projected effective tax rate for the year to 22 percent. This is based upon very strong growth in earnings being generated by our businesses in Asia-Pacific, which have significantly lower tax rates than North America or Europe. The tax rate for the quarter was 17 percent, which somewhat coincidentally was the same as the third quarter a year ago.

Net income increased 50 percent to $10.2 million, and earnings per share increased 56 percent, to 25 cents.

I’ll make some comments on the balance sheet, which is on page four of the press release. Cash increased to $49 million at September 30, 2002, that’s up from $35 million at the beginning of the year and $45 million at June 30, 2002. Accounts receivable was $108 million at September 30, 2002, that’s up from $101 million at the beginning of the year, but down from $117 million at June 30, 2002. In fact, days of sales outstanding, which had increased from 57 at the beginning of the year to 59 at June 30, 2002, stands at 55 days at September 30, 2002.

Inventory dollars stood at $87 million at quarters-end, and represented 74 days supply on hand, the same as the beginning of the year and at June 30, 2002. We’re committed to improving inventory turns as we move forward. Long-term debt is up $14 million from the beginning of the year, but debt net of cash is unchanged, and our debt to total capital ration has actually declined from 37 percent to 36 percent. At $323 million, shareholders’ equity is up $37 million this year, or 13 percent.

Cash from operations was $18 million in the quarter, depreciation was $7 million and capital expenditures were $6 million. For the first nine months we had cash from operations of $36 million, depreciation was $22 million and capital expenditures were $16 million. For the full year 2002, we’re projecting capital expenditures of between $22 million and $24 million; depreciation will be approximately $29 million.

During the third quarter we repurchased 600,000 shares of our common stock, at an average price of $15.16, and a total cost of $9.1 million. Since 1998 we’ve repurchased 12.3 million shares, at a total cost of $128 million, the average price was $10.34. Paul, that completes my remarks.

Thank you, Jack. Let me go in and talk about some of the specific activities and accomplishments during the past quarter. Overall we’re pleased with the continued strength in all of our businesses. Strong sales growth versus the prior year period clearly weaker than we would have wanted a year ago, but albeit another $170 million compared to a $173 million in the preceding quarter. We met our earnings projections despite a challenging worldwide economic situation, which we don’t see a great deal of change going forward. So those two are very, very key points we’re very pleased to report.

Sales up 23 percent, clearly a strong performance. Operating income up 44 percent versus prior year, with $15.4 million versus an adjusted $10.7 million. Our operating margin at 9.1 up from 7.7, not where we wanted to be, but we will talk more about the performance initiatives we’ve got in place there. Overall a solid quarter.

Each of the business segments for the quarter; North America up 13 percent year-to-year; Europe up 30 percent, and if I take the foreign exchange impact out, up 17 percent, still stolid. And Asia up 38 percent, which is reflected in our adjusted tax rates, as Jack described. Each of the businesses, moving directionally exactly where we expected, and that’s why the confidence in the forward view of where the business is going to be.

Some very specific initiatives that we kicked off late last year, and the early parts of the first and second quarter this year, out client relationship selling effort, our CRM initiative, continues to show positive impact, in fact we’ve expanded the US based initiatives over to Europe, and now we have over 50 accounts around the world that we’re using as particular methodology to go to market with. And this is all about a one-stop-shop, but it’s about executing a one-stop-shop. It’s about having senior executive contacts with these key accouints and moving all of our products to the forefront as a value proposition.

Year-over-year as we compare growth we’re well north of 10 percent, around the world with these accounts, we’re holding our own and very important to appreciate that we’re not taking our eye off the other accounts. And someone on the last quarter’s call asked me about those non-CRM accounts. CRM is methodology of going to market, it’s not a category of customers, so we’re working this around the world with all of our customers.

We’ve also introduced in the most recent quarter, a new focus on our contractors and manufacturers, which is adding additional fuel to our revenue line as we grow the business. Going forward, that category of customer, if I can describe it as such, is going to become a key focal point as we continue to see strong migration of business offshore, and more independence on the part of these contractors in making decisions for their sourcing supply choices. And I think it’s more and more important that it plays into our global footprint and the fact that we operate in over 75 countries, and we’ve got over 400 people calling on customers around the world every day. So we see that as a very, very strong opportunity for us to grow the business going forward.

The full product offering continues to be a key leverage item as we move into our customers, with a number of new product initiatives that we’ve taken to market this past quarter. Our [Lockprint] Two, which is a sublimation technology focused on the very important denim market around the world. This enables us to provide a wash resistant performance label for many of the major brand names. Our Ultra hand-held launch came out in July and met with very, very positive responses, more and more of the retail space has moved to mobile computing and portability, away from the tabletop markets. This very proprietary product has enabled us to gain quick impact in key customer locations.

Last quarter we talked about an acquisition of a technology called thermal transfer; this is certainly becoming more and more topical as recent advertising has talked about the tagless T-shirt. It’s exactly where we saw things moving a year ago, which is why we moved into this technology space. The MTP business that we acquired is delivering a little bit better than expected actually in Europe, and we’re moving up out plans to introduce that product in North America early next year.

Our woven label technology has taken on a new look as we’ve begun to really transfer the innovativeness and the creativity of our European businesses here to the states, and we’re providing yet another point of difference for our customers, as they continue to try to differentiate themselves on the shelf. And the woven label business continues as one of the real art forms in our industry, it’s not like any of the other businesses, and we think that a tremendous opportunity going forward.

And finally, the last thing I want to talk about in the product introduction, relates to the whole brand security and brand protection category. Historically we’ve always been a player, be we really haven’t advanced and promoted our capabilities, and we’re making inroads now in many of the footwear, sport companies, and we see a lot of opportunity going forward, as counterfeiting and brand protection becomes all the more important feature of the retail space.

So these all come together to add to what Jack earlier described as that organic growth element in the year-over-year performance, and we see that clearly a part going forward. Each quarter we will talk about specific product initiatives that continue to add to the repertoire, or what we talk about is a product suite that we offer through our CRM initiative to the key accounts.

As we look at the business going forward, continually the retail market is challenging, no question about it. We’ve watched closely with regards to the West Coast dock issue, and situation, in fact I spent a week during the time of its resolution our on the West Coast visiting customers. And I think the impact was a bit mixed; some customers had anticipated this back during the summer months and began to line up shipments into the East Coast, which was about when you would have had to have done that. Some others were tied up in the port, but we feel that that’s a number of weeks for that to be resolved, and do not anticipate a significant impact to our business going forward, but again that’s to be seen. And that’s certainly factored into some of our forward guidance.

In addition to that, the forward guidance is also affected by the increasing activity to offshore manufacturing, it’s something that plays into our capabilities, but it’s something that’s very difficult to anticipate. I think most recently our expansion into market like Dubai, Morocco, Rumania and the European sector; and then in Asia, into Bangladesh, Vietnam, indicate out capability of moving and going into operation in a matter of months, which has enabled us to capture and support many of our global customer initiatives. So again that’s a very key capability. We’ve got a recipe to operate around the world, and we execute against it. We’ve almost formalized that business development process so that we can move in green field investment areas as quickly as an acquisition.

The other point I want to make, and it’s something that probably will come up in the question is, over the past nine months we have brought into the business five acquisitions. And part of our ability to call the top line number is certainly impacted by familiarity with the business and the revenue lines. And the guidance coming into this quarter, we surprised ourselves, we came in well above it, and a lot of it clearly was - I think Jack mentioned - $9 million of the $31 million piece was acquisition related, and we expected it but we didn’t expect to see some of the integrated sales activity quite as quickly as we’ve seen it. And it also reflected itself in the margin line as we move through the year, as we’re becoming more familiar with these businesses.

I will preempt a question that I am sure is on everyone’s mind, what’s happening with margins? Our margins year-over-year was 37.7 to 37.8, I could say flat as a solid performance given our revenue growth. But I will say that we have been very, very specifically protective of business in the Asian market where our gross margin declined almost two points during the quarter, but we did that knowingly and we were able to balance the bottom line of the operating margin by adjusting our SG&A. And we’re going to continue to manage gross margin and SG&A performance in a connected fashion. In the past we’ve talked about getting 200 to 300 basis points out of the margin space, we’re not letting go. Our practical process improvement initiative in the United States in the quarter saw another four basis point improvement in our US operations. We’ve got specific initiatives to manage this, and I don’t see this as a risk moving forward, in fact we see some significant opportunity as we continue to integrate the acquisitions and grow out business.

I think the most important message in the call this morning is the fact that we’ve delivered a top line, it’s all about growth. We’ll get the operating costs in line; we’ve got specific initiatives. Our SG&A throughout this year has been impacted by what I would call one-time and non-recurring rebranding initiatives that I’ve spoken about in the first two calls this year, related to advertising, training, and all the change that we’re moving through the organization. And I will say that as we wind down the year there is nearly $2 to $3 million in non-recurring that moves off that plate as we move into next year.

So a lot of things are in place. We’ve just completed our strategic planning cycle for the next three-year period, and I’m impressed with the way the organization has taken on many of our changes. I’m impressed with the focus on wallet share that Jack referred to as far as how we look at our customers. And probably most importantly, the operating performance that we’re seeing in the United States as we expand and provide that on a best practice basis around the world, is all upside.

So I want everyone to get a sense of going forward. We make a practice of putting numbers out that we can meet or achieve, that’s the business that we’re in. I think that where we stand right now, as a management team we’re very comfortable as we look forward, and we realize the uncertainties, but uncertainties become more normal, let me say it that way, and to say uncertainties is to say it’s going to be more of the same. I mean we’re looking at next year as a 2 to 3 percent kind of growth year, in the economy. We think we certainly can go after twice that in our organic growth, and we’ve said that pretty consistently throughout, we’re going to continue to look at acquisitions. Jack talked about a balance sheet and a cash flow that continues to generate the kind of strength that enables us to use our options carefully, whether its share repurchase, whether it’s productivity initiatives, or acquisitions as such.

I think with that, what I’d like to do is open up the call to questions, and similarly we can continue to fill in the blanks of the story.

Thank you. Ladies and gentlemen, if you have a question at this time, please press the ‘1’ key on your touchtone telephone. If your question has been answered and you wish to remove yourself from the queue, please press the ‘£’ key. If you are on a speakerphone, please lift the handset before asking your question. One moment for our first question. Our first questions comes from Matthew Kempler from Sidoti & Company LLC

I wanted to follow up on your progress over in Asia, do you think that your competitors are successfully matching your move to acquire business there, or is this competitive advantage to Paxar right now?

Matt, I think it’s - and I want to say this in a non-arrogant way - I think we’re able to take advantage of the migration of business, and I would say that we’re taking share there, and we’re protecting our base business. I think protecting the base business is more important than the share taking. There’s a lot of new business and new programs. We’ve just completed the construction of a pretty significant facility in China, about two hours north of Hong Kong; we employ over a thousand people. We see that as the next growth of our business, and we’ve made both a human and a financial commitment to that market. And we’ve been very, very well received by the customers and the local manufacturers.

And in terms of how you mentioned that you had to protect some business in the Asian markets from gross margin declines there, is that against more regional competitors or is that against your traditional competitors?

That’s more against traditional competitors. The regional competitors are always going to be there, I think that’s the thing that keeps Paul Shu and his team awake at night. But I think that something that is a very specific competitive set, they’re not going to compete on programs that are global requirements. Where we do bump into traditional competitors - I like that term - is on those programs that require multiple geography capability.

And I apologize if you already mentioned this, but the regarding the CRM accounts, I know on the last conference call you have given this metrically, 10 of your 13 your CRM accounts, so are the sales up about 10 percent year-to-date? Do you have an updated metric for that?

At the nine-month call we just went through this, in fact it was part of our strategic report out. The CRMs in North America two remarks to make. The 13 have been expanded to 17 now, which makes apples to apples comparisons a little bit clumsy. The original 13 are up over 10 percent on a year-to-year basis, and as we look at - and I’m not even going to offer the additional - we’ve included some other accounts that were via this kind of account management. All I can tell you is that we’re seeing and we’re going to deliver improvement in the same line of the double-digit kind of number.

In these accounts, and a question that a number of you have asked in the past in one-on-one discussion, we’ve penetrated in these CRM accounts 15 to 20 percent. So there’s a huge opportunity to get deeper into accounts like Adidas and Marks & Spencer and others. The other point about CRMs is we’ve embarked on a Pan-European CRM initiative where we’re opening up as 20 CRM accounts in Europe, again with the specific purpose of information coordination, which is becoming more and more important for these accounts. So nine month, Paul, we’re tracking double-digit growth. It’s probably at or even slightly below our overall sales growth, and the answer to that question before is, we’re opening up a lot of positions in the second tier or very important customers that don’t qualify for a CRM title.

And I know in the last couple of months you just had your second round of meetings with a number of your CRM accounts, can you just give us an idea of how that went, what you’re hearing from those clients?

I would say guarded optimism. In the case of one West Coast account we’ve committed to putting a person on the ground with them as a dedicated resource to manage some of the security and brand protections programs. But all in all I think it’s dangerous to take too literally these major account points of view. They have guarded optimism going forward, and I think the back-to-school season as it relates to the US markets was ho-hum. I think the bet everyone’s making bit self- fulfilling, that Christmas is going to be better than we’ve heard, but we’re not banking on that, we’re calling for, as I say, pretty much in uncertainly out there.

Same-store sales again is not a metric that we live and die by, we really measure units and we look at a lot of the brand CRM accounts in particular coming out with new private brands, new programs. And honestly, the CRM initiative is giving us a bit of an inside crack on sitting down and getting some of the design and creative work. And that’s all incremental business, if you can think about it like that. So I’d say guarded optimism, primarily because many of our customers are looking to be different, they’re launching new product lines, all that requires new packaging collections, and that’s where we play best.

Our next question comes from Arnold Ursaner from CJS Securities.

I don’t want to beat the competition idea to death, but have seen any impact from newer entrants into the market, and your response to that? And if you look at where margins are now, can we expect further erosion or have we seen the worst of that at this point?

Our third quarter, I wouldn’t call it seasonality, but comparing our margins this quarter to other quarter, are impacted by a couple of specific things. Our European business represents a pretty significant part of our business. Europe in July and August goes quiet, and we’ve got a capacity balancing challenge over there that has an immediate drain on margins. So if you net that out, that certainly has an impact on this quarter’s performance. In addition to that I think what’s happened in Asia the most recent quarter is, I won’t say behind us, but we’ve stabilized the situation there, I don’t see any play forward in that case. And in the case of North America I only see upside to the current position based on our operating initiatives that we’ve put in place.

So net net, I don’t see continued erosion for those specific reasons, and I would say that we’re looking, and certainly part of our guidance going forward is a recovery - if I can say it that way - to a number well north of the 37.8 you say this quarter. But I want to be certain that you know the reasons for that. You’ve got Asia behind us, you’ve got Europe, the weak summer period and balancing of capacity, which historically has always impacted us, and the initiatives in the United States. So very, very purposeful reasoning for my remark, not hopeful, wishful. And I think we’re pretty confident that you’re going to see the performance going forward, which is why I say I want the attention as best we can placed on that top line performance. Because if we can come in and reestablish our baseline at a number near where we’ve been in the last couple of quarters, that’s a real accomplishment, that’s a harder thing to do than the margin piece at the end of the day.

Okay, so then if we start to look forward, in terms of the new product development and some of the acquisitions that are obviously factoring in now, what sort of growth potential can we really start to see from those, if it’s not say Q4 we’re looking into, ’03 if you start to get some economic improvement?

Well I think the easiest one to zone in on, and I’ll take advantage of some our customers’ advertising, is the tagless. The transfer technology that we required with MTP was something that we’ve been looking at for nearly 6 months. I mean in our business that could be a $10 to 15 billion idea in the United States alone. So it is on a percent, certainly substantial. In the case of the equipment, I mentioned the Ultra and we’re going to be coming out with the next generation of Sierra units, our portable printers replace marking, I mean that a few $3 to 4 million annual kind of idea. So I think substantially the new products - literally without an economic by the way, I’m not assuming we’re going to see a tremendous turnaround next year, having just completed this whole planning cycle - we’re looking at not an insignificant amount of revenue from new products, which enables us to open the door to other sales.

I mentioned something of some of these exchanging technologies with our European global label business, very, very important, because we’re going to be bringing ideas to our US customers that they’ve never seen before. Things like microweaves and other technologies that fashion-adjusted European retailed have been using for years. So again it’s a combination of new products presented to customers with this client relationship model, where they us as more than a ticket and tag company. I talked earlier about things like our core branding initiative where we do actually price manage the process mapping for retailers. All these things are coming together and they have kind of contributed to the top line.

And just one more thing, in terms of acquisitions, you mentioned the strength of your balance sheet. Would you say that you’re more acquisitive at this point, less acquisitive? You’ve got a couple that are factoring in your current results, so maybe talk about the direction of change?

Well I think strategically we’ve always, and I’ll kind of reprise what we talk to investors about every time we meet with individuals or goods. We talk about a 3 to 4 percent organic growth, we talk about a market share gain of a couple of points, and we talk about a very purposeful 3 to 4 percent acquisition related revenue play. At any given time we’re looking at 3 or 4 or 5 of these ideas. These ideas tend to be a few million to 30 or 40 million. I don’t think that we’re changing in any way our strategy; I think we have been pretty much consistent.

We went through a period in early ’01 where who knew where the economy was going, where we protected our powder, as they say, and built our balance sheet. Right now we’re well positioned I think. First and foremost we look for productivity and efficiency improvements in our plants, second, is acquisitions and we’re always going to paying attention for share repurchase opportunities. And the use of proceeds.

Our next question comes from Edward Rosenfeldt from Lazard Asset Management.

Could you explain the tax rate and how much of that is entirely based on Asian migration of your business, and what would you expect going forward, is 22 percent something you see for the next few years even?

Well yes, the rate reduction is based upon the fact that we’ve got this mix shift to Asia, which is growing obviously more rapidly than the rest of our business. We pointed out this is on top line basis, but it’s a significant indicator. Asia was up 38 percent; Europe was up 30 percent and the United States 13 percent. So yes, that shift continues and you will see those sales figures when we release our 10-Q. And that is what’s driving the rate reduction. We would not have lowered it in this quarter if we didn’t think that that was the right rate for the year, and for next year it would be probably a 22, but I would 23 as the highest. And we’ll give guidance for that on the fourth quarter conference call.

Our next question comes from Rob Health from FMI.

Just a question, not to beat a dead horse, but I’m just curious, Paul, as to why you’re so confident I guess on the temporary nature of maybe some price competition in Asia? That seems to me like maybe it was something that was new to you in the quarter and why do you think that should be sort of short term thing in nature?

Well I wouldn’t say it was temporary, and I certainly didn’t want to give any sense of disregard to it. What I tried to say, Rob, was the activity in Asia was specific to a number of new programs that have been put on the table by some major brand and retail houses that we went in to bid against. And ultimately we had to get to a price that we felt protected our position with a major account. We tend to price our products on a customer rather than a program basis, without getting overly strategic about this. So in other words, we’re going to manage our customer profitability not only a product profitability or a program profitability.

Temporary, I think the basis of my comment with regard to, it’s behind us, is that many of the programs are for a multiple month, in some cases multiple year shipments, and it’s all about proving to these customers that we can deliver on time, ship when it’s needed, and perform overall. And as we go forward we are able to notch that whole value proposition up to compete with this whole deflationary environment. I mean the way we look at how do you operate against a disinflation or a deflation, you build value into the products just like our customers do, you stabilize the price and you wait for stronger economic conditions. Beyond that, you go after volume to amortize some of your scale of manufacturing costs.

So I thing everything we have done there we did planfully. I mentioned we’ve just completed a pretty significant facility in China. We’ve got very cost effective operating capability there and we want to scale that to be a strong contributor going forward. So I didn’t mean to sound arrogant, didn’t mean to sound like it was behind us, but where we went this quarter was at least with our eyes open, and we did it by purpose. So it’s an elective decision if I can say it that way.

Does this go hand in hand with the CRM initiative, or is it the timing of these things just happened to roll into when you guys are trying to be proactive on this larger customer CRM initiative?

Well two things. I mentioned the CRM initiative, then I also mentioned the focus on manufacturers who what here before have been contractors. And I’ll tell you when you’re a CRM or a client executive in an account, and you have being doing business with the account in geographies X, Y and Z and the accounts has logged that business in these other two geographies, some of that is happening. So the CRM initiative is opening the door to other geographic programs that we haven’t been playing in. But I think the other initiative is the fact that we’ve got 45 people focused on these contractors in the Asian markets, and they’re calling on them in a much more proactive way. And really, dealing with programs in addition to what we’re [indiscernible] nominated for. So that also feeds into the mix. So it’s a combination of CRMs and just how we go to market.

I guess would you say, from a landscape point of view that you guys are generally the low cost or lower cost type of provider of these products?

I’d certainly be comfortable saying that we’re in the first quartile. There’s always somebody out there that can beat your number, and there’s a lot of local people that you have not a lot of specific detail about their manufacturing operations. But I’d tell you that we operate in these countries with national managers, local managers, they know the business. We compete in China like a local company; we don’t compete like an American company, if I can say it that way. So I’m pretty comfortable that if we’re not, we’re very close to the low cost producer.

And again on the SG&A side, you talked about in that past, about goals of getting into that low teens type of operating margin; obviously this quarter is a tough one to use, but I just wanted to make sure you’re still feeling like we’re still on the track here?

Absolutely, in fact this quarter, and I appreciate you saying it was a touch one to use, but if we get back to a 10 plus line, which I think we can do next quarter, going forward we’ve laid out a three-year plan very recently to our Board and Management team, that takes us well into that low teen area. So, call it propaganda, call it promotives, it’s very specific. We’ve got actions against it, and we want to do in a way that it’s sustainable. So we do things so we don’t retrace steps.

Once again, ladies and gentlemen, if you have a question at this time, please press the ‘1’ key on your touchtone telephone. Gentlemen, there appear to be no further questions at this time, I’d like to turn the program back to you for any further remarks.

We thank you for your interest and participation into this conference call and look forward to speaking with you during next quarter’s conference call. Thank you.

Thank you, ladies and gentlemen, for your participation in today’s conference. This does conclude the program, you may now disconnect.