REX American Resources Corp (REX) 2007 Q3 法說會逐字稿

Ladies and gentlemen, thank you for standing by, and welcome to the REX Stores fiscal third quarter earnings conference call.

During the presentation all participants will be in a listen-only mode.

Afterwards we will conduct a question-and-answer session.

(OPERATOR INSTRUCTIONS) As a reminder, this conference is being recorded Thursday, November 29th, 2007.

I would now like to turn the conference over to Stuart Rose, Chairman and Chief Executive Officer at REX Stores.

Please go ahead, sir.

Good morning, and thank you for joining REX Stores fiscal third quarter conference call.

We'll get to our presentation and comments momentarily, as well as your Q&A, but first I'll review the Safe Harbor disclosure.

In addition to historical facts or statements of current conditions today's call contains forward-looking statements that involves risks and uncertainties within the meaning of the Private Securities Litigation Reform Act of 1995.

Such forward-looking statements reflect the company's current expectations and beliefs and are not guarantees of future performance, as such actual results may vary materially from expectations.

The risks and uncertainties associated with the forward-looking statements are described in today's news announcements and in the company's filings with the Security & Exchange commission including the company's reports on Form 10K and 10Q.

REX assumes no obligation to publicly update or revise any forward-looking statements.

In terms of our net income this quarter, we made $14.7 million, $1.25 per share, versus $4.8 million, $0.42 a share last year during the same period.

$11.7 million versus -- on continuing operations versus $3.8 million last year.

Sales were -- on continuing operations, $58.8 million versus $61.1 million.

Last year comp store sales were down 8%.

Ethanol, we recorded a gain of about $17 million from the sale of our Millennium interest.

The bulk of that related to the sale of our Millennium interest to US Bio.

Synthetic fuel, we had a loss of $1.8 million, reflecting the phase-out that's going on in that business and the higher price of oil lowering the amount of payments that will be made to us, or that we expect to be made to us.

In terms of retail, the margins were up a little bit.

That was primarily related to service policies and the way we accounted for service policies.

We had great gains in comps and the key product category, which is LCD television.

We had had large losses in comps in products that many of which are phasing out like tubes, projection TV, light engines were down, plasma was down because of drastic price drops.

Again, there wasn't enough made up in LCD to make up for the losses there, but a lot of these products are starting to -- we're starting to go up against lower comps.

In terms of current sales, our November comps and October's comps actually were not as bad as the previous couple of months, and seems like we're starting to do at least see some light at the end of the tunnel in terms of comps, although they still are narrow -- they still are running negative in about the mid-single digits now.

LCD again is a big gainer for us.

In terms of stores, we closed 18 during the quarter, and we had some gain -- we had a gain related to the closing of those stores mostly tied to the real estate.

One encouraging sign on the retail side is our profit on the retail segment this year during the quarter was about $2.2 million.

Last year it was about $400,000.

For the year it's about $5.7 million versus $2 million last year, so our retail earnings are growing, and we're doing that at the same time, reducing our investment in retail.

This year now we've reduced our assets from about -- that are excluding cash that are in retail from about $254 million last year to $140 million this year.

The total net investment, excluding cash, is about $40 million.

So we're finally starting to see some sort of return on our retail investment, which is -- which to me is the key number, return on investment.

It's finally starting to get to a level that makes retail look a lot better to me.

In terms of ethanol, as I mentioned earlier we sold our Millennium interest.

We received a large amount of US Bio stock.

The stock today -- the number in our earnings prices the stock is at $7.56.

Today the stock is a little bit over -- is over $8, at least last time I looked.

We invested during the quarter $51 million to complete our obligation to the One Earth facility.

We -- we'll own over approximately 74% of that facility.

And in my opinion and looking at a lot of ethanol proposals this is the best project that I have seen.

It should be as good as -- if ethanol is good this project is great.

If ethanol is bad this project will be better than most, maybe better than all.

In terms of -- other projects we're in, we own 56% of a 40-million gallon plants in Levelland, Texas.

23% of [patriot], and a 10% investment in Big River.

Our Big River investment yielded -- was the primary reason we were able to show income in the quarter of about $535,000 in ethanol.

Again, we're making money in that plant where others in the industry are not making money.

And that plant will be expanded.

Also Big River will be opening a new plant in Galva, which we expect to see open -- which we hope to see open in 2009.

In conclusion, we're making -- not just making money now in retail.

We're making a decent return on our retail investment.

It's been done by first of all emphasizing LCD.

Secondly, lowering our investment in retail, closing unprofitable stores, taking advantage of some of our real estate profits and now retail for the first time I can say it appears -- for the first time in a long time appears like it will this year make a return on investment that at least is something that we can again feel good about.

Our investments in ethanol, we, again, we're in these sites at very -- compared to today's prices and today's market value of plants, at low -- we own the plants at relative to today's cost to build the plant at low cost, and we have very, very high hopes of that business.

It's a business that last quarter has seen ethanol prices not go up the way gasoline prices have gone up, and our feeling is, over the long haul, those prices have to come closer together, and as they do, ethanol should become, again, a profitable business.

In terms of synthetic -- or should I -- I should say more profitable business for us.

It's already a profitable business.

In synthetic fuel, that business is now, for all intents and purposes, done.

We've generated over the life of our synthetic fuel plants about $130 million in cash profits and $48 million in tax credits.

And it's a business that got us in the energy business, and it's something that we did very, very well, and, again, those profits and that business will be missed, but it is, for all intents and purposes, over, although we may, if oil continues to go down, show minor profits this quarter, and if oil goes up, minor losses.

We continue to show our faith in the company.

We bought back 487,000 shares the third quarter.

We still have 231,000 shares authorized to buy on our current buyback -- on our current million-share buyback.

That completes my part of the conference call.

I'll now leave it open to questions and answers.

Thank you.

(OPERATOR INSTRUCTIONS) And our first question comes from the line of Rick Weinhart at BMO Capital Markets.

Please proceed.

Good morning, Stuart.

Good morning, Doug, if you're on the line.

If we could start with retail, you mentioned a couple of the different categories of TVs.

Can you give us an overall sense of whether TV grew in the quarter on a total?

I'll give you -- I don't have it footed out.

Doug might have it that way.

But I can give you an idea how bad we did.

I mentioned we did 60% increase in LCD.

We were off about half in the tube business, in the light engine business, it's about 20% in the plasma business, 25% in the rest of the projection TV business.

Rick, overall we were down in the television category.

Down.

Okay.

And, Stuart, you mentioned comps were declining about in the mid single-digit level.

Now --

It's getting -- it's better than it's been.

Yes, that's clearly an improvement in the trend.

I'm wondering, though, specifically for Thanksgiving day weekend, how did that work out for you versus planned?

That was the reason for November, why comps are looking better now, why they are not declining as much as previous.

They were significantly better than -- we've improved significantly since Thanksgiving on the comp line.

And that continued into December?

I'm curious --

-- part of December, but it continued after the last couple of days, yes.

Okay.

Just curious if it was just a promotional environment that drove that or if you think there's something that is fundamentally changed.

I hope it's fundamental.

I know it's promotional all the time and our margins were not -- they were bad last year, bad this year, but not as bad this year as last year.

Okay.

And then just overall the promotional environment?

Would you consider it kind of on par with last year, or what is your sense?

I think it the's not as promotional as last year.

I don't think this year, I feel very -- that one day was horrible, but I don't see much coming after.

Okay.

Great.

Yet.

Okay.

And your gross margins, Stuart, you mentioned they're up 160 basis points now.

That's about in line with what you did in the first quarter, but it's not as strong as you did in the second quarter, so I'm wondering, should we think of this as third quarter kind of where the trend is and then maybe second quarter was an anomaly?

I wouldn't read too much into the gross margins going up, because a lot of it as you know is the way we account for service policies.

Yes.

I do.

I'm just trying to understand, the second quarter gain was so much stronger.

Was that just an anomaly, the second quarter gain?

And are we back to the normal trend?

Well, I think, again, yes, I'd say this is more realistic.

Second quarter, you get air conditioners, which are a high margin product.

Okay.

Thanks.

And the last question on the retail, the -- your SG&A expenses were down, which is -- pretty sharply here, as a percent to -- definitely a trend change from what you had last couple quarters.

What was driving that?

I think it's mostly getting out of the stores.

We've made a real effort to keep our good stores and close unprofitable stores, or marginally profitable stores, or -- and so I think that related to the general downsizing of the company has allowed us to drastically lower that number.

Okay.

And looking at your --

To just go back, our people have done a fantastic job.

It's hard, hard work to close stores, but it had to be done, and they've done it, and now for the first time that I can recall in long time I can tell you -- I can tell you that it appears, at least during this quarter, we made return on investment that we have nothing to be ashamed about.

Okay.

Great.

Or before I was -- we weren't making the type of money on our assets we should have been making.

Okay.

And then just on the real estate, if we look out to next year, how many -- can you tell me approximately how many leases you've got coming due in '09, or calendar '08?

Rick, I do not have that in front of me.

It -- I just don't have that number in front of me.

Great.

And I'll get back in the queue for my other questions.

Okay.

Thanks, Rick.

Our next question comes from the line of Arnold Brief at Goldsmith & Harris.

Please proceed.

Couple quickies.

Hi, Arnold.

Good morning.

The -- you said you closed 18 stores.

Have you disposed of those 18 stores?

Are you still carrying them?

What's the situation with those?

Doug.

You want to know what we've disposed of during the quarter and where we stand on those 18?

Yes, I mean, during the quarter, we closed on the sale of nine properties and had a pretax gain on those of $5.4 million.

By and large with 18 stores, yes, we've disposed of them and moved on.

We do have a couple of real estate assets that we're still carrying that are vacant, and again, I don't have a number in front of me, but it's approximately maybe five stores or something like that.

Okay.

How many stores left -- how many stores do you have left, and of those stores that are left how many are owned?

We're currently operating -- we ended the quarter with 124 stores.

We own approximately 50 pieces of real estate besides the three warehouses that we also own, and again, of those 50 stores, I believe a couple of those are vacant and not considered in the retail operations.

Okay.

In total, Arnold, we feel very good about real estate that we've kept, especially the warehouses.

Okay.

Secondly, could you run us -- run me through, I know if I go back on my own notes I could dig most of this up, but it would be, I think, good to update it.

You said you owned 50% of 40-million gallon facility.

Yes.

And you said 23% of how many gallons?

That will be 100-million gallon facility.

And 10% of --

End up 190-million gallon two facilities.

190?

Then you have the fourth facility that's operating, I forget how much, what percent --

74% of another 100-million facility.

Okay.

And of the $100 million in cash on your balance sheet is any of that already committed for any investments in --

$59 million is committed, is -- and that completes our commitment to the alternative energies.

And the $59 million commitment gets you what?

Basically a commitment.

We might have $1 million or $2 million more that we're committed to, but that's, Arnold, that gets us up to $102 million that's on the balance sheet.

We've actually already funded it, but of that $100 million, we're consolidating two of the plants.

The One Earth plant and the Levelland plant get consolidated, so of that $100 million cash, $43 million of that was ours, and the rest was per the consolidations from the ethanol facilities.

And of the --

$43 million cash also is -- that's should seasonal -- that's at a seasonal high point -- or a seasonal low point.

It should go up through the Christmas season.

And receivables get paid off, etc., inventories go down.

And the $59 million is committed, is that in your numbers already, are is it -- is there more gallonage that you pick up?

It's in the numbers.

As we've said we've already put the money into those plants.

It's just we pick up the cash because we're consolidating them, so it comes back onto our balance sheet.

But it's not yours?

It is ours since we own 75%, but it will be spent to build the plants.

74%.

In light of what's going on in ethanol, corn prices -- not so much corn prices up and ethanol prices down.

I tend to agree with you that somewhere along the line the economics are going to result in more refiners using more ethanol just from the economic standpoint.

But there is a -- some major efforts going on from food companies and lobbyists and a number of areas in Washington against -- making a case against ethanol.

In light of that, how do you view future investments in the industry?

Would you rather just buy back your stock, or would you intend to make more ethanol investments or what?

I'm sorry, I didn't mean to cut you off.

What was the last part of your question?

Well, in light of the -- not just the current prices of ethanol and corn, but in light of the lobbying efforts that are going on against the ethanol industry and to some extent they are getting a receptive ear, would you consider future investments in ethanol, or would you rather bay back your stock, or would you rather look at other investments all together?

Well, at this point in time, where our stock is today, and this is just my personal opinion, we're already a player in the ethanol business and we're better off either looking at ethanol company -- if we're going to buy in the ethanol field, maybe look at -- if we're going to -- companies that can lower our cost per gallon, and there aren't any there right now, so the cheapest ethanol company is our own, so it gets back to what you said, buying back the shares.

Thank you very much.

Our next question comes from the line of Mike [Meary] at [Meary] Asset Management.

Please proceed.

Hello, I would like to say that's great news on the real estate side.

That's been a very long time.

And I know that's been very hard work closing those stores.

Thank you.

Thanks for saying.

And our people deserve credit.

It's really hard work, and they've done it.

They've really -- it's no fun for any of us, and they've hung in there, and now this thing is starting to look a lot better.

And would did you say that segment profit was year to date, and then what are the total assets in that business?

Year to date, $5.7 million.

Quarter, $2.2 million.

Now, this is at the end of the quarter, it's not our average total assets, but we ended the quarter with approximately net assets of about $40 million.

Okay.

And Q4 is usually a pretty good quarter for that, and I would guess the assets you've kept are more profitable than the ones you disposed of, so your return on investment --

And our net assets is -- again, that's net assets excluding cash.

Cash should go up and inventory down so the actual amount invested in retail should be less at the end of the year, we hope -- we would expect, anyway.

Yes, great.

And how many dollars did you spend on your stock buyback in the quarter?

Doug, do you have that number?

Yes, Tom, actually, I don't have about -- well, about [$18.67] for the shares on average, and we bought back 480,000 shares, so --

And I agree with you, your stock is by far the cheapest ethanol company at all on -- out there by a long shot.

And we have very top-quality plants as shown by the demand for our plants.

Any plants that are -- are virtually all the plants that are sold, the type we have get sold to premiums -- good premiums to what we paid for.

Well, I appreciate the stock buyback and I hope you keep doing it.

Your US BioEnergy stock, did you sell any shares, and is that stock restricted in any way?

The stock is only restricted by Rule 144 and 145.

During the quarter we did not sell any.

I don't know if people saw it, but there is a liquidity event going on today where [Verison] has agreed to purchase US Bio for stock.

So, and again, we'll see what happens there.

We -- as of the end of the quarter we hadn't sold any stock.

Okay.

But you would be able to under that rule with liquidity event?

Under that rule we can sell, not all of it, but we have the right to sell some of it, anyway.

Okay.

Good.

I mean, I've never really been a huge fan of public companies owning the stocks of other public companies, and then having the shareholders taxed twice on those profits.

And you're -- I hear you loud and clear, also.

Again, we're an ethanol company, also, and lacking at what we can do, should we ever -- where our stock sells for, we have to always look at what's the best thing to do.

Great.

And can you give an update on the construction progress on the plants you're building and just in terms of the time line and cost changes, if any?

There haven't been any major cost changes.

Everything seams to be coming in as far as I know pretty close to budget without anything -- any major surprises.

Levelland is scheduled to open in late February of this year, Levelland, Texas.

Patriot, summer -- our expectation is summer of next year, and that -- Levelland was February of next year, and Gibson City, sometime in 2009, first half of 2009 would be my best guess.

Gibson City is the One Earth plant?

One Earth, yes.

Okay.

And are there any other benefits from any of these plants?

I remember you had mentioned some tax benefit for Levelland because it's a small --

Yes, in that we apparently are going to lose that tax benefit to Texas.

That was a benefit.

We went into the plant hoping to get that benefit.

The Texas legislature this year will -- did not fund that benefit, so we no longer have that in our projections.

Okay.

Does the plant still make --

In terms of the others, there's always local benefits, but there's no state benefits.

Okay.

And the Big River plant, currently are they producing and what's the time line on with they get up to the 190 million?

Big River is currently -- should be up to 90 million very shortly.

Then the second plant, the 100 million plant in Galva, about the same time as our Gibson City plant, first half of 2009, would be my best guess.

Okay.

And in terms of Levelland and One Earth, since you're consolidating those, how much debt from those will come on to your balance sheet in addition to the some $15 million in cash you're spending?

Doug, do you know?

Excuse me, I don't have that number right in front of me, but I'll get that, then I'll report it as the call continues.

Okay.

Again, each of these plants stands independently even though it will be consolidated on our balance sheet.

We are not -- we have no liability past our investment on the debt on these plants.

Good, all the debt is nonrecourse then.

Right.

Great.

Thank you very much.

Alright.

Thank you.

Our next question comes from the line of Richard Dearnly at Longport Partners.

Please proceed.

Hi.

Good morning.

What did you pay for the 86,000 shares you bought so far this quarter?

Doug?

Yes.

So far this quarter, we have spent about $1.5 million on those shares.

Okay.

And the -- yesterday, the chief economist for [Tasoro] was quoted in the Journal talking about, I'm getting a windfall because ethanol is priced so much less than its value to me.

And I'd pay a hell of a lot more than ethanol than I am for now.

I found those interesting.

Of course, economists are economists -- and most of the public ethanol companies have been talking about the blenders are beginning to notice the $0.50 differential, which I guess has narrowed slightly here, before the tax credit and trying to blend more, and there's been investment in infrastructure, blending infrastructure in the business, and then all of them talk about Florida and the southeastern markets.

That's been the real problem with Florida not opening up, especially during the summer months, but we all expect that to open up by this summer.

Is -- if -- is -- could that have -- I haven't really looked at the demand from the southeast or Florida relative to what might be excess capacity within efficient transportation reach of Florida.

Is there plenty of supply, or would --

Well, there will be a lot of supply, but I believe there's certainly room, once Florida and Georgia, for the whole country to blend 10% ethanol.

And at 10% ethanol, there -- that -- there is a lot more demand than there is supply, and at the margins people can make on the ethanol versus wholesale gasoline, just logic tells me that people are going to blend 10% ethanol, as soon as every state lets them.

You can make a lot of extra -- the blenders -- some blender can make a lot of extra money.

And those margins -- and those spreads should close as that becomes more and more competitive.

Right.

And what would you say the cost to build the plant, now that steel and other things have come down in price and there's some slack in the construction part of the business?

What would --

We're still being told well over $200 million per plant, if we were to start today.

So that's for 100 million gallons?

100-million gallon plant, yes.

People are paying that.

There's projects out there where people are paying that.

And are you entertaining -- there's been a lot of talk about sort of marginal -- marginally funded proposals not getting off the ground or early starts being canceled.

Is that an area you're looking at for investment?

We see them all the time, and at the moment, we have looked at them, but at the moment where our stock is, and like I say, we're already a player in ethanol, we're better off -- we can buy our own plants on the cheap.

Right.

I see.

Okay.

Thank you.

I'll get back in line.

Okay, thank you.

Appreciate it.

Let me go ahead and say at this point the total debt for Levelland, Hockley and One Earth combined will be about $140 million.

Okay.

(OPERATOR INSTRUCTIONS) And we have a follow-up question from the line of Arnold Brief at Goldsmith Harris.

Please proceed.

You mentioned you got a $5.4 million gain on the sale of the real estate.

Yes.

What was the cash actually generated by the sale of the real estate?

Doug?

Again, I don't have that right in front of me, but --

Ballpark is fine.

Yes.

Probably about $10 million.

From 18 stores.

Okay.

Not from 18 stores, no, no.

That was from selling.

We sold nine stores during the quarter.

We closed 18, but we sold nine.

Okay.

Okay.

So -- okay.

So you still have more stores on the books to sell at this point.

Yes, we do.

Either -- yes, to sell or to --

Or whatever.

Whatever, right.

I just try to rough some numbers quickly.

You -- making assumptions on deferred income and tax benefits and the cash you have left, and the stock that you own in US Bio, and it seems to me the price of your stock is pretty much in your -- in the numbers that are shown on your balance sheet.

And you're really paying nothing for the value of the ethanol facilities.

They're -- your ethanol investment right now is being --

-- but I know exactly what you're saying, that the retail side and cash side almost -- and US Bio stock almost equals the market value.

Right.

So your ethanol of [136 million gallon] investment is really showing zero value on the price of your stock, let alone the fact that your retail and noel are generating earnings, which we're not capitalizing at all, either.

That's -- I've looked at that, and that goes back to what I say about our commitment to buying the stock back.

Yes.

You mentioned Verison had done something with US Bio.

I haven't seen that this morning yet.

It happened this morning.

So I can't tell you a lot about it.

I haven't had a chance to study it.

You have any idea just from the numbers that are surface?

You know Bio's numbers I'm sure by heart anyway.

What did they pay per gallon?

I don't know.

I don't know.

I haven't -- it just happened this morning, and I haven't -- I'll know that later today but not right now.

Okay.

Thank you.

Sure.

The $10 million that I said, that was for seven of the properties that we did in one transaction, and then we sold two other properties besides that.

So in total we probably got more like $13 million on those nine properties that we sold.

Thank you.

And we have a follow-up question from the line of Mike Meary at Meary Asset Management.

Please go ahead.

Hey, I just thought I'd point out, I know Verison has some other marketing businesses, but their tangible value is about $6.25 a share at the end of last quarter.

So just in case there's any desire to hold onto that a little while it's obviously valued much higher than our current stock.

There you go.

Yep.

I hear you.

And I know exactly what you're saying.

I know.

I just thought I'd point it out.

Thank you.

And we have a follow-up question from Rick Weinhart at BMO Capital Markets.

Please go ahead.

Hi, guys.

I want to talk about the CapEx.

First, Doug, do you know what it was in the quarter?

I'm sorry, what was that, Rick?

The capital expenditures for the quarter.

Yes.

I mean I've got that, but like I said, with us consolidating, it's $26 million, but that includes consolidation and what we've spent at Levelland.

And the majority of that was spent at Levelland.

Right, yes, but expect almost all of it, right.

So -- okay, so $26 million there.

How much more do you have left for -- on a consolidated basis for Levelland then?

I think you've spent about what it looks like about $35 million, I think, to date on it, so does that leave about $30 million or so to go?

Yes.

I've actually got -- we got about $45 million invested in alternative energy, and I can't remember how much of that also includes One Earth.

So, yes, probably about $35 million was for Levelland, so we'd have another -- yes, about another $25 million to complete that construction contract.

And then One Earth obviously you have about another $180 million or so to go on that, right?

I mean it would be a substantial amount to go.

I'm just trying to figure out what the cap values are going to look like and the timing of that as we get into how much is the fourth quarter, how much next year.

Yes, that sounds about right.

I mean, I think the construction contract on One Earth is about $170 million, just for construction contract.

Alright.

Last question on the CapEx.

So for One Earth, will it be a similar kind of layout in terms of the cash as to what we saw with Levelland, which was, it looks like it was very much back-end loaded towards the end of the construction.

Yes, I think it will be very similar.

I think the way those contracts work, I mean, they will be very similar.

Okay.

Great.

And then one last question on the real estate.

You had, I think, 19, is that correct, the number, you were on lease to -- month-to-month still to go from your last big sale-lease-back?

Any sense that -- and if that number is wrong, correct me, but is there any sense in terms of whether or not those stores are going to make the cut this year?

We're going to wait and evaluate that after we get through Christmas.

The beauty of this transaction that we did, Rick, was we can continue month-to-month.

It's not like if we don't cut as long as they're making money we can keep going with them, so we'll look at them after Christmas.

If they made money, we'll keep going.

If something happens where they stop making money or start losing money, then we'll cut them.

Okay.

Yes.

What I was getting at was that I would assume that you wouldn't close them for the holidays anyway, so you might have a sense as to how many --

We might have closed one before the holidays, but, yes, you're 100% rate.

Okay.

Great.

Thanks very much.

And we have a follow-up question from Richard Dearnly at Longport Partners.

Please go ahead.

Couple of details.

Is the $140 million of debt is that your 74%, or is that the whole debt of the project?

That's the whole debt.

And again, that $140 million was for One Earth as well as Levelland and Hockley.

So and since we'll be consolidating all that debt will go on the consolidated books.

That's nonrecourse debt, both tied totally to the project.

Right, and then your gain on sale, you sold nine stores with the proceeds of about $13 million with a $5.4 million profit.

Where did that appear on the P&L, and -- you showed gains on sale of real estate of $900,000, or $901,000 --

But then we also had gains on disposal of net operations which is net of tax and the rest of it is down there.

Oh, okay, the rest -- is that $3.4 million?

Yes.

Okay.

So the $5.4 million is pretax.

That's correct.

Oh, okay.

Alrighty.

Thank you.

Thank you.

We have another follow-up question from the line of Arnold Brief at Goldsmith & Harris.

Please proceed.

Just one question.

Your store base has contracted rather substantially over the last few years.

You still have three warehouses with, I would assume, a lot of empty space in them.

Are there any plans to increase the efficiency of the retail business by consolidating warehouses, or are there any plans to lease some of the warehouse space and generate income?

Any plans to sell the warehouses?

You're right, we probably have too much warehouse space, and we're working on how to handle that, and have nothing to report right now, but as I mentioned, a lot of times we consider our warehouses to be very valuable assets that are not on the books for real high prices.

How many square feet again?

-- what we think the current price is of warehouse space.

How many square feet of warehouse do you have at this point?

Doug, would you know that number?

Yes, I can get it, just to report the right number.

Let me look that up for you.

I think it's in your 10K, but I thought you might know it.

Yes, it's about 800,000 square feet.

Thank you.

Mr.

Rose, I show no further questions at this time.

So I'll turn the conference back to you.

Very good.

I'd like to thank everyone for listening, and hopefully if we can get same-store sales turned around then we might in the next couple of quarters start having positive things to say about a couple of areas.

So, anyway, thank you for listening, and appreciate very much everyone being on the call.

Thank you.

Ladies and gentlemen, that does conclude the conference call for today.

We thank you for your participation, and we ask that you please disconnect your lines.

Thank you, and have a great day, everyone.