Helen of Troy Ltd (HELE) 2004 Q1 法說會逐字稿

Good morning and welcome, Ladies and Gentlemen, to the Helen of Troy’s first quarter earnings conference call. At this time I would like to inform you that this conference is being recorded for rebroadcast and that all participants are in a listen-only mode. At the request of the Company, we will open the conference up for questions and answers after the presentation.

Our speakers for this morning’s conference call are Gerald Rubin, Chairman, Chief Executive Officer and President; Christopher Carameros, Executive Vice President; and Robert Spears, Senior Vice President and Chief Information Officer.

I’ll now turn the conference over to Robert Spears. Please go ahead, sir.

Good morning everyone, and again, welcome to Helen of Troy’s fiscal year 2004 first quarter earnings conference call. The agenda for this morning’s conference call is as follows:

We’ll have a brief forward-looking statement review followed by Mr. Rubin who will discuss our first quarter earnings release and the related results of operations for Helen of Troy, followed by a financial review of our income statement and balance sheet for the quarter by Chris Carameros, Executive Vice President of Helen of Troy. And finally, an open question-and-answer session for those of you with any further questions.

First, we’ll start with the Safe Harbor Statement. This conference call may contain certain forward-looking statements that are based on management’s current expectations with respect to future events or financial performance. A number of risks or uncertainties could cause actual results to differ materially from historical or anticipated results. Generally the words ‘anticipate’, ‘believe’, ‘expect’, and other similar words identify forward-looking statements. The Company cautions listeners not to place undue reliance on forward-looking statements. Forward-looking statements are subject to risks that could cause such statements to differ materially from actual results. Factors that could cause actual results to differ from those anticipated are described in the Company’s Form 10-K filed with the Securities and Exchange Commission for the fiscal year ended February 28, 2003.

Before I turn the conference call over to our Chairman, Mr. Rubin, I’d like to inform all the interested parties that a copy of today’s earnings release has been posted to our Web site at www.hotus.com. The release can be accessed by selecting the Investor Relations tab on the Home Page and then the News tab. And I’d also like to mention that this press release does contain non-financial — non-GAAP financial information.

Finally, due to the feedback from some of our previous conference call participants, and as we have requested in the past, we would ask that you limit your questions on the front end to one or two questions at the beginning of the question-and-answer period so that we can accommodate all those with questions and an opportunity to present them.

I will now turn the conference over to Mr. Gerald Rubin, Chairman, CEO and President of Helen of Troy.

Thank you Bob, and good morning everyone. Today, Helen of Troy reported record sales and earnings for the quarter ending May 31, 2003. Sales increased four percent to a first-quarter record of $106,500,000 versus sales of $102,483,000 in the same period of the prior year. First quarter net income increased 125 percent to a record $14,844,000, or 50 cents per diluted share, compared with $6,591,000, or 22 cents per diluted share for the same period a year earlier.

On June 17, 2003, Helen of Troy settled pending litigation and included the proceeds from the settlement in ‘Other Income’. The effect of the settlement was to increase earnings by approximately eight cents per share. Earnings for the quarter were 42 cents per share, excluding this transaction.

This marks our tenth consecutive year of first-quarter sales increases and we are extremely pleased with the results achieved in this difficult retail sales environment. Sales increased in every segment of our business, excluding Tactica. Our sales leaders include the International Division, the Professional Division, Retail Personal Care Products, and Idelle Labs Skin and Hair Care Products.

First quarter sales, excluding Tactica, increased by 20 percent to $91.2 million. Excluding Tactica and our new Idelle Labs Division, Helen of Troy sales increased by 7.9 percent to $82.1 million versus $76.1 million for last year’s first quarter. Tactica contributed one cent of earnings out of our reported 50 cents for this quarter.

Gross margins increased to 49.6 percent from 48.3 percent last year. First quarter operating income increased 5.4 percentage points to 15.2 percent of net sales from 9.8 percent a year ago. First quarter net income increased 7.5 percentage points to 13.9 percent from 6.4 percent a year ago.

Helen of Troy has a strong balance street, which includes cash of $33 million and stockholders’ equity of $304 million, an increase of $47 million in stockholder equity from the comparable period last year. Accounts receivable at quarter end were $72 million and inventory was $137 million. The inventory increased $25 million, or 22 percent, from $112 million last quarter, which was the end of our fiscal year. And of this $25 million increase, $5 million came from inventory from our new Idelle Labs Division.

Our inventory increase is due to increased sales during the quarter, early buildup of inventory for anticipated sales increases during the remainder of the year, expected ocean freight increases beginning at mid-year, and our business inventory of skin and hair products for the new Idelle Labs Division.

We also felt that it would be prudent to increase orders for product inventory during the quarter to accommodate for any possible impact that may have resulted from the SARS epidemic in Asia.

Our fiscal year ending inventory should be approximately $117 million, which would be made up of the same as last year’s inventory of $112 million, plus a projected $5 million of inventory for Idelle Labs.

For the fiscal year ending February 28, 2004, we expect overall sales to increase nine to 12 percent to a range of $500–$515 million. We are raising our fiscal year earnings-per-share guidance to $1.75–$1.80 from $1.45–$1.50, or 34–37 percent increase from the prior fiscal year’s earnings per share of $1.31. We are also projecting our second quarter earnings ending August 31, 2003 to be from 35–38 cents per share versus 30 cents for last year’s second quarter.

Year-over-year sales have increased from 34 of the past 37 quarters with net income increasing in 33 of these 37 quarters, which we believe demonstrates a consistent financial performance during the past nine years. And because of our continuing confidence in the future performance of the Company, our Board of Directors has authorized a stock repurchase program consisting of three million shares, effective immediately.

I would now like to turn this conference over to Chris Carameros, Executive Vice President of Helen of Troy.

Thank you Gerry, and good morning everyone. Needless to say, we are very pleased with our operating performance for the first quarter. First quarter sales grew by four percent. Specifically, net sales for Q1 2003 were $102.83 million versus Q1 2004 of $106.5 million. However, more importantly, our net earnings increased by 125 percent. Net earnings, Q1 2003 were $6.591 million versus Q1 2004 $14.844 million, or an increase of $8.253 million.

Most notable in the improvement of the operating income, operating income for Q1 2003 was $10.011 million, or 9.8 percent, versus Q1 2004 of $16.196 million, or 15.2 percent, for an overall increase of $6.185 million. Key to the improved performance is simply better margins on slightly higher sales while controlling, in some cases, and reducing SG&A expenses.

The first portion I’d like to discuss is net sales. The Company’s net sales, exclusive of Tactica, were in Q1 2003 $76.133 million versus Q1 2004 $91.236 million, or an increase of $15.103 million. This portion of the business represents 86 percent of consolidated sales for this year, while it was 74 percent of last year.

Specifically by segment, the North America segment for Q1 2003 was $71.930 million versus Q1 2004 of $81.387 million, or an increase of approximately $9 million. The International segment for Q1 2003 was $4.204 million versus $9.849 million, or an increase of $5.645 million. Tactica, however, had Q1 2003 sales of $26.350 million versus $15.264 million for Q1 2004, or a decrease of $11.086 million.

Growth in the Company’s sales, exclusive of Tactica, is due primarily to Idelle sales, International and the core business. Idelle includes the following: Sea Breeze®, Vitalis®, Ammens®, Final Net®, Condition 3-in-1®, and Vitapointe®. The remainder of the growth is attributable to increased sales in Vidal Sassoon® and Dr. Scholl’s® line of products sold at retail, along with increased sales in our Hot Tools® and Wigo® brand distributed through the Professional distribution channel.

Increased sales, International segment, primarily in the increases in the UK, Germany, France, and other international and Latin and South America regions. Also contributing to International growth has been the strengthening of the British pound versus the Euro. If you take a look at the pound we can see it was in 2002 generally at 1.45 versus currently at 1.63, along with an increase in the Euro of last year of .93 versus the Euro .11.

Partially offsetting our sales growth was a decline in Tactica sales as we discussed before. The decline was largely due to the reduction of sales of Apple stock products. There were of such a large part of sales last year and general softness of demand for products sold through television infomercials.

The next portion I’d like to cover is gross profit. Gross margins for the first quarter were in Q1 2003 $49.515 million, or 48.3 percent, versus Q1 2004 of $52.795 million, or 49.6 percent. The increase is due to lower sourcing costs, mix of sales to more profitable, newly introduced products, along with contributions by the Idelle brands and the benefit of the strengthening of foreign currencies against the dollar, as mentioned earlier.

Next is SG&A expense. For the first quarter SG&A expense decreased both in absolute dollars and as a percent of sales. Q1 2003 SG&A was $39.504 million, or 38.5 percent, versus Q1 2004 of $36.599 million, or 34.4 percent. The reduction in SG&A is due to reduced advertising and Tactica, offset by increases in the following: Other SG&A increases relate to Idelle and the new distribution center located in Mississippi, along with staff increases related to Idelle in Mississippi.

Next, I’d like to cover operating income exclusive of Tactica. Operating income improved overall of 17.3 percent of sales against 8.7 percent last year. Company operating income, exclusive of Tactica, increased $9.1 million.

The last portion I’d like to cover is our financial position. As you can see, our financial position continues to remain strong. Our cash balance of $32.6 million compared to $47.8 million as of yearend and $88.4 million of last year. The reduction in cash is due primarily to an increase in inventory, as mentioned above, purchase of the six brands from Proctor & Gamble, advance payments of royalties for one of our major license agreements, and the purchase of our Mississippi distribution center.

Receivables increased $5.8 million, or 8.9 percent compared to last year. And our days outstanding stayed approximately the same at about 59 days. Inventories increased $25.3 million, or 22.6 percent from yearend and increased $52 million, or 61 percent compared to last year. As Gerry mentioned, Idelle accounts for about $5 million of this increase and a buildup of inventory in general, as he mentioned before.

Debt to equity improved to .18 this year versus .21 last year. And, as mentioned before, our financial position remains strong.

This concludes the review of the financial statements.

I’d now like to open up the floor to any questions. Operator, please.

(CALL INSTRUCTIONS). Our first question today comes from Joe Chumbler. Please state your question.

Thanks. I’m wondering if you could give segment operating income for North America, International, and Tactica.

Well, it actually would be released with the ‘Q’ and we’d like to defer that until then.

OK. And the other question on that line is, I’m wondering if you could explain if there’s a relationship between the Tactica sales and North American operating margin as it’s disclosed. I’m just looking at last year’s results and it appeared to be that they were inversely related. As Tactica sales and margins decline, North American operating margin increased. Is there a relationship or are they mutually exclusive?

Well, this is Chris Carameros speaking. Tactica had a decrease in sales, as we mentioned before, and they operate off a higher margin with higher SG&A. What you’re seeing is it’s an exclusive event because actually Helen of Troy had an increase in sales and an increase in margin. So, although it appears you have a smaller increase relatively speaking, Helen of Troy had a very large improvement in its gross margins.

OK. So, I guess if you just go back over the last four or five quarters and just take out the entire Tactica segment, would the operating margins in North America look identical?

You will see that the operating margins have improved in the North American segment.

OK. And then also, finally, just on the North American segment sales, if I back out Idelle, it looked like maybe they were flat in the quarter, excluding Idelle. Is that right? Is that about how they’re tracking this quarter?

We had a small increase of about two percent, so we did have a positive growth within the core business. But along with that, of course, our core business is International and we had a nice increase. But within the North American segment we had about a two percent increase for the quarter.

OK, thanks.

Thank you. Our next question comes from Mike [Mananotchie]. Please state your question.

Yes, hi, Chris. Can you just run me through how the tax rate came out, what it was and what we should expect for the rest of the year?

Yes, sir. Generally our tax rate is running about, if you look for the year, actually for the quarter, it looks right around the 18 percent. We normally accrue the 20 or 21 percent. Specifically, we have a bit of anomaly relating to the settlement of our litigation, which was primarily, as we disclosed in our ‘K’ previously, relates to a [Schwabell] litigation within there. But unfortunately that went offshore and was taxed at a little bit lower rate. But I would say for the rest of the year you should expect 20 percent.

OK. Thanks.

Thank you. Our next question comes from Mimi Sokolowski. Please state your question.

OK, thank you. Two things. Can you break out the revenue for me again? There was some stuff I couldn’t really hear.

OK. When you say the revenue, specifically?

North American, Tactica, International, for this first quarter.

I’ll repeat that again. I’ll give it to you for Q1 2004. North America was $8.387 million; International was $9.849 million; and Tactica was $15.264 million. It should be in the press release, right?

And also, that guidance of $1.75–$1.80, does that include a 50-cent EPS or 42?

Right now that would include 50 cents.

OK. Thank you.

Thank you. Our next question comes from [Amil Suwami]. Please state your question.

Yes, hi. Could you repeat the gross margin drivers again? Was it foreign exchange and the mix primarily that drove the gross margin?

The three things we said was the foreign exchange along with Idelle and newer products drove the gross margin.

OK. And as far as the SG&A is concerned, is that the going rate that we could use going forward, percent of sales for SG&A?

Yes, I would think so.

OK. And could you just, for my benefit, repeat once again what the settlement was regarding — I missed that? Is that in a previous release somewhere?

It’s disclosed in the litigation piece of our ‘K’.

OK, thanks.

Thank you. Our next question comes from Doug Lane. Please state your question.

Yes, good morning. A question on the SG&A. It was down $3 million. Is that attributable 80–90 percent of that to just less spending at Tactica?

Yes.

And then, what is your full-year outlook for sales at Tactica now that the last two quarters have been more in the teens than the 20-percent kind of run rate you might have looked for previously?

I would look in the $60–$70 million range.

So, we should see improvement in the back half of the year?

We hope so.

Any drivers there that you could share?

Dollars are driven by new products and we kind of defer to that at this point in time.

OK.

We released earlier they have the Singer license and that portion, so that should be a helpful piece.

And lastly, what did the P&G brands contribute in the quarter in sales?

Say that again.

What did the P&G brands, the Idelle brands, contribute in the quarter in sales?

About $9 million.

OK, thank you.

Thank you. Our next question comes from Mike [Mananotchie]. Please state your question.

Yes, hi, Chris. Did you give out the operating income for the Tactica Division for the quarter?

No, it would be on the ‘Q’.

OK. So you don’t have that yet?

We disclose in the ‘Q’.

OK. Thanks.

Thank you. Our next question comes from Joe Chumbler. Please state your question.

I just wanted to go back to the North American segment, excluding Idelle. Is the current quarter tracking ahead of the first quarter as far as Personal products sales go?

Yes.

OK. And then, finally, in your 10-K there was a new disclosure regarding just the IRS audit of ’97 through ’99 and the $10 million recommended adjustment. Can you give any more detail on that?

Primarily what we disclosed in there, but, you know, the IRS always takes positions and we’ve always been successful with what we’ve been accruing in the past. We’re optimistic that we’ll prevail on that.

OK. Thanks.

Thank you. (CALL INSTRUCTIONS). Our next question comes from Ben Andrews. Please state your question.

Hey guys. You gave me a very pleasant morning. Thank you. Gerry, can you give me some color on International, just for the rest of the year, as far as just growth for the quarter? It seems to be moving the core pretty nicely.

Well, you know, as you saw, we did very well internationally. I guess that’s kind of the culmination of about the last five years of hard work. We have more distribution now; we have a lot of new products. Our business in Germany and France, and of course, in the UK increased nicely, South America, so just overall we — our brands are just doing well internationally.

As far as that continuing, definitely we believe that — the first quarter historically has always been an indication of how well you do for the year, and if this is an indication, we should have a great year.

Where did the Idelle name come from, Gerry?

That was my mother’s name.

OK. It looks like that unit is tracking kind of — I didn’t expect to see $9 million in revenues this quarter. I think you were shooting for low $30s when you first announced the acquisition for this year. Do you expect now it’s going to be a fair amount higher than that in revenues?

It definitely should be. I mean, it’s tracking at $9 million, so that’s $36, so $36–$40 million, or plus as the fall season increases. We’ve just had a good reception from the retailers. We were happy that we bought these brands from P&G and it’s going very well. Hopefully, it will be $36–$40-plus.

Ben, this is Chris Carameros. Domestically in Canada we should track at the $30–$32 million. Internationally we should track — we have a pretty good presence in Mexico and about $3 million over in Europe and another $3 million, so it should be in the $36 million range. Other countries where we’re very — don’t have much of a presence, we’re going to extract some of those sales out in the form of royalty, so the sales may not be there but the income will be there. If we look at the overall sales, we should be tracking overall in the $36 million range.

As far as the share buyback, you still had a million shares available, correct, so now you have four million?

No, actually the last one expired and that’s why they authorized a new fresh three million shares. But you’re right, we did buy, I think, a couple million shares the last time — the last authorization.

Thank you guys.

Thank you. Our next question comes from Jeff [Wineberg]. Please state your question.

Congratulations on the wonderful results guys. A couple of quick questions. Can you talk a little bit about, first of all, just based on the guidance you’ve already given this year, what does that imply in terms of the operating margin for the corporation for the year overall?

Well, if you take a look at what our operating — as I mentioned to you before, I believe in the consolidated piece, we’re looking at a 15.2 versus 9.8. Hopefully, we can continue along that range. Does that answer your question?

Forgive me, I apologize, no, what I’m just trying to understand is, based on the just say $1.75, to be conservative, what [technical difficulty] in terms of operating profit for the year — I’m sorry.

Are you talking about net after tax?

I was actually doing before tax, but — if possible.

Well, if you take the amount of shares times $1.75 and use the 20 percent tax rate you could come up with pretty close to what the number is projected. I’m sure it’s in the $65–$70 million.

OK. Well, if you could just [indiscernible] in the middle of that range and the sales for the year, about $510 million we get, you know, around 13 percent in terms of operating profit margin for the year. I just wanted to sort of use that as a base and understand if we’re looking forward over the next two or three years what the opportunity might be there in terms of improving that operating margin.

There’s always — our intent to increase the operating profit, you know, the 15.2 percent operating is actually corporately, Helen of Troy without Tactica was around 17 percent.

I guess the opportunity would be that we would be able to increase our sales and put it through the same SG&A structure that we have, which should improve our overall margins.

That’s sort of what I was getting at because a lot of the other consumer goods companies, for example, you bought some products from P&G and a lot of other companies and our peer group tend to average operating margins in that high teen area, 17, et cetera. I just wanted to understand structurally that the opportunity for Helen of Troy to get to 16, 17, 18 percent type operating margins, you know, over an extended period of time.

I think absolutely it’s going to be. Historically we were somewhere around 11.5 to 12 percent and now we’re trending in the 16–17 percent and we think that’s going to continue, based on the products that we have, the costs of goods, and overhead.

Forgive me, but just — I’m a relatively newcomer. Is the easiest way to understand it that new products have higher margins and simultaneously you’re getting benefit for the economy of the scale by being a larger corporation while simultaneously lowering your sourcing costs for this sort of the three elements?

Yes, I think you kind of hit it there on the head. It’s product mix; it’s sourcing better, and of course, new products always give us a bigger profit.

OK. But importantly, all of these factors seem to be the same things you would expect would continue in the future.

Definitely.

OK. Finally, just to understand, the guidance you’ve given for the year, the $1.75–$1.80, does that include stock buyback in terms of a lower denominator in those numbers?

No, it does not.

But to the extent you do that though it would be additional earnings per share then?

Definitely, yes.

OK. And forgive me, just in terms of that buyback — I’m sorry for so many questions, it’s just a very exciting story — what would be the timeframe, just ballpark, that you would expect to consummate the three million shares in?

As we’ve done in the past over the last 10 years, we don’t disclose when, what day we’re going to buy and at what price, but if you go back you can see that we have, over the years, if you go back 10 years, we’ve probably purchased five million shares, so, we do have a history of buying. The time, I cannot tell you. It’s just — sometimes we buy an opportunity and sometimes we buy with excess cash, but we do buy.

OK. And finally, just the last question for you, in terms of — just in terms of sort of an external Wall Street perspective, doesn’t seem to be any sort of clear perspective in terms of just sort of long run sustainable targeted earnings-per-share growth. Is it fair to think — I know you’ve talked about this year, you know, 30–40 percent growth, but sort of over the intermediate term is it usual for us to think about targeting sort of mid-double-digit type earnings growth over sustained periods of time?

I think so and I don’t know why you can’t think that way. If you look back, the last five years we’ve increased anywhere from 25–33, 31 percent for the last four years and this year we expect certainly, as we projected, somewhere in the 34–37 percent. So we’ve done this for four years and there’s no reason why it can’t continue.

Terrific! Thank you very much.

Thank you. Our next question comes from Steve Friedman. Please state your question.

Good morning Gerry, Chris and Bob. Congratulations on a remarkable quarter! As I look over your press releases and I see that, excluding Tactica, you indicate that you would have had a 20-percent sales increase. Is that correct?

That’s true.

So, Tactica is becoming — would it also be fair to say Tactica is becoming less and less of a factor in your overall position? As I think you mentioned in your last quarter that there was a lot of time spent on Tactica, which is not a significant overall source of your revenue and net.

That’s true. As I mentioned in my comments, of the 50 cents, one cent was contributed by Tactica.

OK. One follow-up to that too, Gerry, you mentioned, and I’m not sure if it’s in the last call or the call before, that you felt our stock was grossly undervalued. As a matter of fact, indicated that you thought the stock was worth over the next couple of years $35–$40. On a $1.75–$1.80, using a very modest multiple, should be talking a range in the $36–$40 area. Wouldn’t you consider that a reasonable — I know the Company doesn’t put value on the market price of the stock, but at the same time you were fairly prophetic in your call on what you felt the stock was worth.

No, I agree with you. As I mentioned earlier, for the last four years we’ve had at least a 30-percent-plus growth in earnings per share and yet the market seems to want to give us a 10PE. I mean, even now I think today we’re probably selling at a…

You’re showing at 10 times your estimated earnings, which appear to be very attainable if not exceed?

Yes. As I mentioned before, they say that your PE ought to be what your growth rate is and if our growth rate exceeds 30 percent for the last four years and is continuing this year, we should have a 30 PE, but in any case I don’t see why we can’t have the 20 PE. And you’re right, if we made these numbers or hopefully can beat these numbers, I don’t know why the stock can’t be $40. It’s just a little bit up to the analysts to be a little bit more positive with us and I think we should have that 20 PE.

Well, I can’t help but — adding one other thing. I haven’t heard from Alice Longley at First Boston on this call and I guess maybe Alice will change it to a ‘buy’ at this rating since she’s had it at a ‘hold’ from seven to 15. On the last price it was 16 target price, so maybe she’ll take a good look and feel that maybe it’s time to change.

I hope so.

Thanks again, Gerry.

Thank you. Our next question comes from Doug Lane. Please state your question.

Hi, yes, a quick follow-up. Did you tell us what the dollar impact was from foreign exchange on the sales line? Have you calculated what you think an EPS impact might be from a favorable foreign exchange?

We were looking at that last night a little bit. We estimating about $1.5 million of that increase International related to the currency.

OK. Thanks.

Thank you. Our next question comes from Ben Andrews. Please state your question.

Hey Gerry, can you say a few words on Russell, and it’s unclear from the press release that I read if Chris is the CFO or if he’s just filling in until you get a new CFO?

Ben, this is Chris Carameros speaking. Your first question about Russell, as you may know, I’ve known Russell a long time. I’ve been on the Board here for almost 10 years now. I helped recruit Russell here and we worked together at not only KP&G, but also Cooper’s [indiscernible] together, so we’ve known each other a long time. He had a good opportunity he felt to get into a startup company here in El Paso and he got a piece of the equity and he wanted to give it a shot. I can’t blame him. If that’s what he likes to do and that’s what he wanted to do and we wish him well.

As you may know, I’ve got some financial experience in the past. I’m really filling in as CFO until we hire one permanently and we have talked to several people and have two or three people in mind we want to take a look at and do a more cursory review of those people and select that person hopefully in the next 30 or 60 days.

Thank you.

Thank you. Our next question comes from Jeff [Wineberg]. Please state your question.

Hi, two quick follow-ups, I’m sorry. I just wanted to make sure I understood your general thought process in terms of acquisitions going forward. There might be some other niche opportunities in terms of some of the consumer product brands in your focused areas that you might be able to acquire.

The answer is ‘yes’. We’ve been looking at several acquisitions and again, as I mention in every phone call, hopefully this year we’ll be able to announce another acquisition.

OK. Would that be accretive to earnings if you were to do so?

Definitely.

In the first year?

Yes. Some of the companies that we’re looking at are brands that large corporations have for sale just as we bought the six brands from P&G and that would be in our Idelle Labs Division, which we want to grow that business.

OK, great! That would be typically accretive to earnings in the first year.

Oh yes, definitely.

Great! And the final thing — I apologize — I think you mentioned on the call — there was a little bit of noise in the background and I did not hear the second quarter EPS guidance.

It wasn’t in the release, but for the second quarter that ends August 31, 2003 we’re projecting from 35–38 cents versus 30 cents for last year.

OK, terrific! Thank you.

Thank you. Our next question comes from Mimi Sokolowski. Please state your question.

OK, thank you. Just as a reminder, it’s been discussed before, but can you remind me what breakeven for Tactica is?

On sales, about $60 million.

OK. And what again did they do in revenue this quarter?

Let me look at those numbers — it was $1.264 million.

OK. That’s it. Thanks again.

Thank you. (CALL INSTRUCTIONS). If there are no further questions I will turn the conference back to Gerald Rubin to conclude.

We’d like to thank everybody for participating in our first quarter conference call and I look forward to talking to you on our second quarter conference call. Thank you again.

Ladies and Gentlemen, that concludes our conference for today. Thank you all for participating and have a nice day. All parties may now disconnect.