Stoneridge Inc (SRI) 2006 Q1 法說會逐字稿

Good day, ladies and gentlemen, and welcome to the First Quarter 2006 Stoneridge Earnings Conference Call. My name is [Janelle] and I will be your coordinator for today. [OPERATOR INSTRUCTIONS.]

I would now like to turn the presentation over to your host for today's call, Mr. Greg Fritz. Please proceed, sir.

Thank you, Janelle. Good morning, everyone. By now you should have received our first quarter earnings release. The release has been posted to our website at www.stoneridge.com. Joining me on today's call are John Corey, our President and Chief Executive Officer, and George Strickler, our Chief Financial Officer.

Before we begin, I need to inform you that certain statements today may be forward-looking statements. Forward-looking statements include statements that are not historical in nature and include information concerning our future results or plans. Although we believe that such statements are based upon reasonable assumptions, you should understand that these statements are subject to risks and uncertainties and actual results may differ materially. Additional information about such factors and uncertainties that could cause actual results to differ may be found in our 10-K filed with the Securities and Exchange Commission under the heading "Forward-Looking Statements."

During today's call, we will also be referring to certain non-GAAP financial measures. Please see the "Investor Relations" section of our website for a reconciliation of these non-GAAP financial measures to the most directly comparable GAAP measures.

For the remainder of the call, John will provide you his initial thoughts on the business, and George will provide an overview and discuss the financial details of the quarter, along with our guidance for the rest of the year. After John and George have finished their formal comments, we will then open up the call up to questions. With that, I would like to turn the call over to John.

Good morning and thank you for joining. I would like to comment on our first quarter results and update you on the status of our Operational Excellence efforts.

For the first quarter, we have reported EPS of $0.16, which included a $0.04 per share gain for the sale of excess land near our Sarasota facility. Revenue increased 1.5% in the quarter, excluding the unfavorable impact of foreign exchange translation. The increase was predominantly attributable to the continued strength of the commercial vehicle market. We expect that the North American commercial vehicle market demand will remain strong throughout the year. Offsetting this impact is the ongoing softness expected in the Light Vehicle production schedules of the traditional domestic automotive manufacturers.

On our last call in February, we discussed the need to bring the performance of our five focused facilities under a contained, control and improve process so we can contain and improve the performance of these facilities. Of the five problem operations four have shown improvements in performance in the first quarter, and one continues work on overcoming selective equipment issues, which have overshadowed other areas of positive performance in this plant. Here is a brief summary of our progress.

During the first quarter, George and I have visited our Mexican wiring facilities twice and have established a Kaizen team to address specific issues. We have drafted detailed operational improvement plans and have conducted several Kaizen events at each of these locations. Our Kaizen teams are comprised of leaders from the areas of operations, logistics, purchasing, IT and finance. We have prioritized the work effort and have established metrics to track the critical operating parameters.

From the initial Kaizen visit, the team has conducted daily calls with our Mexican operations to monitor progress, and senior management also receives daily updates. Examples of tangible improvements have been in the areas of reduction of premium freight and a reduction in open work orders. While these efficiency gains have been notable, we are still not up to the level of operating performance necessary to support our objectives of financial excellence. We will continue to address these two operations to reduce operational variability and to bring our performance to the levels necessary to support our customers.

We have also made selective management changes to strengthen and align our commercial vehicle group, increasing the focus on the under-performing Mexican operations.

One of our most problematic operations in 2005 was our United Kingdom operation. In our first quarter, this operation has shown positive turnaround and is now positioned to continue with operational improvements. The UK operation has reported its first year-over-year improvement in operating earnings in two years. This progress has been made through the hard work and dedication of the UK personnel, supported by selected outside resources from other operations in the company.

We have experienced substantial improvements in our operating efficiency metrics. One example of this is in the area of salaries and overhead costs. The costs savings impacts from plant consolidations help drive the improvements relative to our previous year. As a result of these efforts, I believe that our UK operation is now operating in a controlled phase of our three-step improvement plan, and moving towards the continuous improvement phase.

At our fourth facility, we have implemented programs necessary which will allow us to see improvements in the second quarter and beyond. The early metrics in a few critical areas are encouraging and, based on my visits to the floor, the improvements are visible.

Overall, we are making progress in improving our operating issues. However, we still need to remain focused in this area as we drive to a steady level of operational performance. The senior management team will continue to remain involved in the turnaround of our operations as our first priority.

Regarding financial improvement, we have launched an initiative on working capital under George’s leadership, focusing first on receivables and then on inventory. While early in the process, we are beginning to see a cleanup in our past-dues resulting from increased collections efforts. We will continue these efforts and launch the inventory initiative in the second quarter. These initiatives will also be monitored by senior management to ensure we are making progress.

In the first quarter, we also met our commitment of successfully renegotiating our bank amendment. George will touch upon this in more detail, but the amendment provides us for full access to our $100 million revolving credit facility, and enhances our already strong liquidity position.

Another change made is to ensure that we are aligned around management best practices was the alignment of our compensation systems to emphasize accountability and performance, to drive the results of the units and, overall, Stoneridge. Our incentives are now based on a better balance of results of the total company as well as individual performance.

Finally, we have strengthened the team by appointing a Chief Information Officer to lead the efforts to improve our systems and to obtain the benefits from common platforms, hardware and software. We may selectively add other positions if we see them as cost effective and value-added.

Whole the automotive is a difficult environment, we have a clear plan for operational and financial improvement in 2006. Our first quarter results demonstrate progress towards our goal of operational excellence. Our earnings showed sequential improvement from our second half of last year. While these results are encouraging, we are not satisfied with our operating performance or financial returns. We strongly feel that we need to bring our return on invested capital back in the 10% to 15% range. Our focus for 2006 is to move Stoneridge to operational and financial excellence. With that, I’d like to turn the call over to George.

Thank you, John. Before we review the first quarter results, I would like to highlight a few accomplishments in the quarter. During the quarter we successfully completed our credit agreement amendment. This amendment brings our total revolving credit availability to $96 million and provides us with a more flexible asset-based facility going forward.

Our cash balance of $41.8 million increased approximately $1 million from the year-end level. We believe we can build upon this level as our efforts in the area of working capital management gain traction. Specifically, we are working to reduce our past due accounts, evaluate our terms with certain customers, and work to reduce our inventory balances. And we are specifically targeting bringing our working capital down to $0.10 to $0.12 per dollar of sale.

I would now like to cover the first quarter results in more detail and then we will open up the call for questions.

First quarter revenue totaled $179.6 million, which was $1.2 million below the prior year’s first quarter. Our first quarter results were impacted by an unfavorable $4 million foreign current exchange translation effect. Excluding this effect, our revenues increased $2.8 million, or 1.5%.

Light vehicle revenue declined $2.9 million to $71.5 million. The decline was attributable to unfavorable product mix from our primary customers, foreign currency exchange, and ongoing product price reductions.

Medium and heavy duty truck sales totaled $84.4 million in the quarter, $1.1 million above the prior year. The increase was mitigated by unfavorable foreign currency exchange translation effects. Excluding the foreign exchange impact, our medium and heavy-duty truck sales were approximately 5% above the prior year.

Sales to agricultural and other markets totaled $23.6 million compared to $23.1 million in the prior year. Stronger demand from our agricultural customers drove the increase.

North America revenue accounted for 78.5% of the first quarter revenue, compared to 77.6% for the same period in 2005.

Power Distribution revenues increased 1% to $100.4 million. Excluding the unfavorable currency translation impact, revenues increased 5% on the strength of North American commercial vehicle demand in the quarter.

Revenues for the Control Devices declined $2.5 million on unfavorable mix from our traditional domestic customers, negative currency exchange and production and price reductions.

Our first quarter gross profit totaled $40.7 million, and our corresponding gross margin was 22.7%. Our first quarter margin increased 290 basis points from the fourth quarter level. This increase was due to higher sales volumes relative to fourth quarter, and operational efficiency improvements at our UK operations.

On a year-over-year basis, the decline in our gross profit is primarily attributable to unfavorable material price variances resulting from raw material price increases, continued operational inefficiencies at some of our facilities in Mexico, and product price reductions. We will focus in direct material procurement and operational excellence to improve our gross margin going forward.

Sales from low cost manufacturing locations accounted for 38% of the total sales in the first quarter, and this compares to 22% from four years ago.

SG&A expenses totaled $30.9 million in the first quarter compared to $30.4 million in the previous year. Lower design and development spending was offset by a non-recurring gain from the legal settlement gain in the previous year.

Our previous year's design and development spending include heavy spending to achieve the EU certification of our next-generation Digital Tachograph, which has been successfully launched in the first quarter. Since we achieved the certification last spring, we did not incur these costs in the first quarter.

Stoneridge incurred first quarter charges of approximately $200,000 related to our previously announced restructuring plan, which was a decrease of $1.6 million from the prior year. We expect restructuring expenses related to previously announced restructuring program will decline as the year progresses.

During the quarter we also recorded a pre-tax gain of $1.5 million related to the adjacent land sale at a North American manufacturing facility. We continue to evaluate these types of transactions to improve our asset utilization and strengthen our balance sheet.

The Company recognized a first quarter income tax expenses of $2.1 million, bringing our effective tax rate to 35.6%. This rate compares favorably to the 43% effective tax rate reported in the previous year. The improvement is primarily attributable to the improved performance of the UK operations and the corresponding decrease in the amount of valuation allowance that was provided against our deferred tax assets. We expect our 2006 tax rate to return to a more normal rate between 33% and 37% for the year.

For the first quarter, Stoneridge recognized a net income of $3.8 million, or $0.16 per share, which included a $0.04 per share gain for the sale of excess land near our Sarasota facility.

Depreciation expense for the first quarter was $6.2 million, and amortization expense totaled $400,000. Earnings before interest, other income, taxes, depreciation and amortization were $16.7 million for the first quarter compared to $19.4 million in the previous year.

Working capital, excluding cash and the current portion of long-term debt, finished the [year] at $79 million, up $3.1 million from the fourth quarter balance of $75.9 million. The higher levels of working capital were primarily attributable to higher accounts receivable balances in the quarter

We are intent on reducing the level of working capital employed at all our businesses. Our initiatives include reducing our past due accounts receivable, enforcing our current payment terms with certain customers, and reducing our inventory levels throughout our operational improvement initiatives.

Operating cash flow, net of fixed asset additions, was a use of $300,00 in the first quarter, compared to a use of $9.4 million in the previous year. The increase in cash provided by operating activities of $11.6 million was primarily due to improvements in working capital management in the areas of accounts receivable and accrued expenses. The cash provided from accounts payable result from better managing of the Company’s accounts receivable and accounts payable in the quarter compared with the prior year.

Capital investment totaled $6.6 million in the first quarter, reflecting investment in new products. Some significant components of our investment were in the areas of customer actuated switches, power distribution systems, and sensor products.

In March, we successfully amended our current credit agreement. This agreement helped us improve our availability in the current revolving credit facility. The revolver availability is tied to our asset levels for inventory, receivables and cash.

AT the end of the first quarter, we have full availability under the $100 million credit facility. Our capital structure is currently comprised of 200 million of senior notes due in 2012, an un-drawn resolving credit facility of $100 million. In addition, our quarter-end cash balance totaled $41.8 million. We are comfortable with our strong liquidity metrics, and we'll work to reduce our cost of capital going forward.

Now, I would like to take a moment to discuss our outlook for 2006. For the full year, based on our current industry outlook, our guidance remains unchanged at $0.30 to $0.40 per share.

And in closing, we remain steadfast in our pursuit of operational improvement in 2006. Our two areas of near-term focus are cost control and working capital management. We believe that improving our return on invested capital is a key metric to drive value for all of our stakeholders.

Operator, I would like to open up the call for questions.

[OPERATOR INSTRUCTIONS.] Brett Hoselton of Keybanc Capital Markets.

This is [Brandon Farrell] on for Brett. It’s good to see you guys starting to make some headway as far as some of the inefficiencies go. Based on what you guys have seen down in Mexico so far, do you guys have a sense of maybe what -- would you be able to quantify potentially the benefits and the timing of those benefits as you see them down in Mexico?

Well, I think the plan is still now -- I would say our Mexican operations are still not in a contained phase. We are moving to a contained phase. And I think that’s going to take us probably over the next three to six months. So, I don’t see any -- I see improvement. I’m not sure that the type of improvement we want out of those operations will happen as fast as we would like because there are several inherent issues relating to that. But, quantifying that result, George, I think that we would say that -- we’ve quantified that in our forecast, and so that’s where we are.

So are you guys recognizing a potential impact in the $0.30 to $0.40 guidance? An improvement?

Yes, we’ve sort of baked that in, Brandon. And we do see over the course of the year [another] $0.30 or $0.40 in improvement in gross margin during the course of the year.

Okay. And then, as far as commodities go, what -- could you guys -- were you able to lock in any contracts for the year on copper or aluminum or anything like that, resins? And what was the impact versus last year maybe sequentially?

Well, Brandon, we’re probably like a lot of the others is we did -- we were successful in locking into some new contracts that took us out through most of the year 2006. We took at a look at copper. We felt that copper had peaked a couple of time. And maybe to all of our surprises that copper continued to go up. In fact, when we look at some ranges we were seeing in the $2.50 per pound range. And as you know, it went over $3.00. We believe that it’s at a high and we did not take any forward coverage at those levels where we thought we’d lock ourselves into high prices.

Okay. So you guys aren’t potentially covered on copper, correct?

We are not covered on copper.

Okay. Do you know what the impact was sequentially on raw materials for you guys for year-over-year?

Well, basically, as it was a little over $1 million, and primarily most of that was copper in the first quarter, year-over-year.

Oh, it was year-over-year? Okay. And just one follow-up. You guys had talked before about potential SG&A opportunities and taking a closer look at that since you guys arrived. What do you guys see there so far, based on what you’ve seen as far as taking absolute dollars out or as a percentage of sales?

Well, we look at it with our organization and set some targets out there that we think we should work towards to achieve some SG&A reductions. Some of the SG&A reductions will come as we improve our systems. We’ll get more capabilities to be able to do things and then we’ll be able to reduce our systems costs. Some of it will become -- as we look at operations and businesses and determine whether those warrant further investment. We have a team that’s right now working on a segment of our business to look at the positioning of that business going forward. So, I think there will be some savings coming out of that over some extended period of time as we move to set these target objectives.

Do you think that’ll come in the back half of ’06, or is that more of an ’07 issue maybe?

It’ll probably be -- it will be started probably in ’06, but it will continue into ’07. Again, before we can -- we have to see the execution plan and what plan is going forward and how we would implement that to make sure that we’re putting resources on the right types of projects. And this goes back to our objective to establish marketing presence in selected areas. And so in a combination of reviewing where we want to place our investment, that will also dictate the types and talent that we need of people to support that. And then that will -- the fall off of that would be the savings that come out of these programs.

And Brandon, I think there’s two answers to the SG&A. It’s really broken into two separate parts. One is design and development, as we talked about in the last call, and that is more of a strategic issue of where we spend money and the focus for new products and customers. And the other is what we call the discretionary SG&A, which is the remaining piece of -- that is an element that we’ll look at at competitive situations or where we need to be in the marketplace to compete. So, that’s an area that we will begin to focus on.

Jeff Skoglund from UBS.

I was wondering -- I think you made the comment on the gross margins that it was driven -- at least sequentially the improvement was driven by both volumes and then also improved operating efficiencies primarily at the UK facility. I was wondering if you could kind of break those two drivers out. You know, was the $10 million improvement in gross margin roughly -- was it primarily attributable to margins, or what percentage of that was UK operating efficiencies?

Well, I would say that most of the margin really came from the volume. We still have a lot of work to do in the UK. But, if you saw our volume in the fourth quarter of last year, it was in the $152 million range. We’re at $177 million in the first quarter this year. So, a lot of that improvement came there. But, we did see a nice turnaround in the UK operation and we’ll continue to see it over the course of this year.

Yes. I think it’s important that -- remember what we said the last time. The operation should not detract from the performance. So, when we get to the contain phase, they should not be reducing our performance. So, I think that when you look at the UK operation, their year-over-year performance has improved. They’re still not where they need to be, but they’re not draining the business like they were in the past year.

Okay. And second question would be on the part of your business that goes into the commercial truck market. As we look forward to ’07, a lot of analysts expect a pretty significant downturn. I think 35-ish percent type on class 8s and maybe 20-ish percent on medium trucks. And I was just wondering if you could maybe go into some of the preparations that you’re making to deal with that. And then also give us an idea of what kind of contribution margins you’re expecting in terms of the volume data. It looked like sequentially it’s about a 30%, 35% number Q4 to Q1. Is that the kind of number we should be thinking about when we look forward into [Q7] when you might have some revenue pressures?

Well, we are expecting to see the same type of decline in the commercial vehicle segment that the others have already talked about and experienced. We believe that perhaps the decline will be less steep for us as we look at some of our programs and those programs in the marketplace. We are working in the operations right now to adapt -- I mean, quite frankly, we have needs in our operations for floor space to bring on some programs. So, I think as we look at this we’ll let the -- we’ll start to factor in those declines of programs that are phasing out and those drops.

The nice thing about it is, in our Mexican operations, that in a lot of cases you can let turnover take care of the work employee, the work levels. And then it’s just a question of capital investment. We believe currently -- with our operations structure now, we’ve made most of the capital investment we need to make, except for a new program launch in one of our U.S. facilities. So, I think we’ll be structured for that. I don’t think that the structural cost of -- I mean, the salary cost and the hourly cost will be the things that get adjusted as we see the volume developing.

Okay. And you wouldn’t care to put a contribution margin on the revenue?

No.

Okay. And last question. I think you mentioned it. Was depreciation 6.2 in the quarter and amortization $400,000?

Yes, it was.

Joe VonMeister from Jefferies.

Great quarter, guys. I’m curious how, in the face of rising raw material costs, you were able to post this nice margin improvement that you recorded in the quarter.

Well, I think it’s a combination of the volume and getting some handle on our operation and efficiencies. And so, we still have that material cost issue out in front of us. As George said, we were able to hedge zinc, so we got some benefit from that. And then -- but I think the key is the operational improvements that we’ve seen and the volume leverage.

Now, I never really quite understood the reason for the sharp decline in EBITDA from what had historically been reasonably high levels to the levels that you got to in the later part of last year, or in most of last year I should say. Was that a price-down on the part of your customers? I mean, did the customers come in and say we’re reducing prices on these products? Because, you know, your EBITDA in the third quarter last year was literally cut by half or more and the same was true for the fourth quarter. Was that all price-down or did you lose a big chunk of business? I never really understood what drove that.

Joe, I think it’s probably three things. I mean, first -- well, the easiest to spot on the horizon was customer bankruptcies, so we had that. We did have material price pressures over that period of time. And then our own operational efficiencies. Some of our restructuring efforts didn’t -- were in those numbers also. And while we spent the money on restructuring, we didn’t get as much of a benefit as we anticipated. That’s part of the reason for that significant decline.

So, it wasn’t a price-down?

Well, there were price-downs, but usually there are contractual price-downs. I don’t think overall that those were the biggest factors that hit the Company in the last half of last year. It was more our operating inefficiencies in the last half, Joe, that had more of the bearing on our performance in the second half.

It looks like you’re getting back in the game here. Do you care to give us guidance for the year?

Well, it’s the $0.30 to $0.40 that we’ve given. I mean, while we’re getting back in the game, we’re not at the level of performance that I think we should be at, and I don’t think anybody in our organization believes that we’re at that level of performance. So, we’ve got a lot of work in front of us to do to continue on this path that we’ve had for operational excellence. And as I said, inside our organization that is our primary focus for the year 2006

And the $0.30 to $0.40, that would drive -- I look at the bonds primarily. That would drive an EBITDA recovery into the, say, $40 to $45 million range, or would it be higher than that?

Well, I think it’s -- you know what the depreciation is. I think it’ll drive a level higher than that.

Paul Ross from ING.

George, a couple of balance sheet questions for you.

Sure.

I noticed the cash balance increased $1 million from the end of the year through the end of March. Did you draw down any of your domestic bank facility to make the coupon payment yesterday?

No, we did not. We did not draw down anything against the revolving credit agreement.

And in the area of your working capital goals, when I ran the 10% to 12% ratio against what I think your sales might be for this year it appears that your expectations for a reduction in working capital are rather modest, meaning less than $5 million on a net basis. Am I misunderstanding something?

Yes. I think if you look at receivables inventory less payables, I think you’ll find that we’re running at a rate of about $0.15 per $1.00 of sale through the end of the first quarter.

I included the deferrals and the pre-payments.

Just take inventories and receivables less accounts payable.

Okay, good. And what in particular do you have to do to get to a 12% ratio, per se, because that would be a big item as far as generation of cash and improvement in liquidity.

Well, inventories clearly -- and those are all under our control in terms of how we service our customers and through our purchasing raw materials in the supply chain. And then receivables was all about blocking and tackling, and getting down to the details of past dues, what are our turns with the customers and managing each one of those by line item.

Well, the inventory is an interesting one. If you wanted to hedge forward, you would obviously be building inventories. But on the accounts receivable side, is that more a low-hanging fruit type of situation? Something we should expect sequential improvement from quarter to quarter in the accounts receivable level? Which is more easy -- which is easier for you to accomplish for us?

I think you’ll see receivables quarter to quarter. I think inventories are tied and linked to this operational efficiency that John has referred to. And that may come with some fluctuations quarter to quarter. But, think our bottom line result is we believe we can manage working capital by the end of this year to those target levels.

[James Brandal] from [Brandal Capital].

Question was asked and answered already. Thank you.

[Chris Visciato] from [ISI Capital].

Just a couple of questions. In terms of your earnings guidance, what are you assuming to make that guidance in terms of product prices for the rest of the year and raw materials -- I mean, obviously, raw material prices are locked in. But, [inaudible] copper prices, as well as your product prices. Changes in those.

Yes. I think what we have included is our normal contractual prices that we have with our customers, which have been fairly consistent. And we -- on the raw materials side, as I said, we’re locked in to zinc already and we’ll continue to watch copper through the course of this year. And there’s a number of things that we can do, but we do think that copper is at a peak.

Right. Are you projecting much lower copper prices in your projections, or pretty much sort of status quo and then--.

We’ve got it a little lower than where it’s at, but not significantly.

Right, right. Okay. And then just to get back to -- I’m not sure I totally understood when there was a question about the expected 2007 drop in Class A’s and medium truck sales. Just sort of in orders of magnitude, are you thinking that you’ll be able to improve cash flow from ’06 to ’07 in spite of that, or basically are the gains from the operational efficiencies that you’re driving going to out weight that, do you expect? Or how do you expect that to sort of play out?

Well, I would think that we are looking at gains -- we haven’t done our first cut at the 2007 forecast yet. But clearly, if we get our operations back into the levels we should see some improvements from that performance. The real question would become how much volume erosion is there? And nobody real knows that at this point in time. I mean, there’s ranges of estimates out in the industry going from 20% to 40%. So, we’re tracking that and we’re monitoring that. As we get closer in towards our development of our plan for next year we’ll get a better picture of that. Right now, the market remains robust. People are talking about they think they should remain robust throughout the year and that’s exactly what we’re forecasting. The drop-off, nobody -- it’s anybody’s guess at this point in time.

Right. Okay. And then my last question, I’m not sure if you’re going to be able to answer this, but I think you know there’s -- I guess out in the market for the bonds has been 10-year for some of the bonds, like a company named [Trace, LLC] and I just wanted to know if you knew who that was or -- I’m assuming it’s not the company, but I wanted to know if you knew who that was?

They have not approached us. We have not had any discussions with them. That’s an independent group. And we’ve assumed that they view it as a good investment.

Right. Okay. So they haven’t -- you haven’t had any talks with them--.

We’ve had no discussion with them at all.

Joe VonMeister from Jefferies.

In terms of raw material costs, what percentage of your cost of sales is raw materials in general?

We said it’s slightly less than 50%.

And the contracts that you have are basically fixed price, or do they give you pass-throughs on some of these?

Most of them are fixed price. We are working with some customers to develop a band approach where if the price escalates above a certain range we would be able to increase our pricing. If it decreases below a certain range we would have to give a reduction. But by and large, most of our contracts are already committed, just like everybody else in this industry.

Right. Yes. That’s common. And if you gave it out, I didn’t -- you normally give us segments, Control Devices and Vehicle Management and Power Distribution. Can you give us those segments before the Q comes out? Revenue and EBITDA, if you have them handy.

Joe, we gave you revenue and we don’t provide EBITDA on a breakdown.

You provide the numbers you need to calculate it in your Q’s.

Yes.

So I guess the answer is you don’t want to -- we’ll just have to wait for the Q.

Yes. The Q will be filed on Friday, so you’ll have it available then.

At this time there are no more questions. I would like to turn the call over to management for closing remarks.

Okay. Well, thank you all for attending this call. As we said last time, I mean, the performance of the business and the performance of the company and our record as management is only based on our ability to deliver the results. We’re encouraged by the performance of the first quarter. We have a lot of issues that we have to tackle and accomplish to continue to drive this business forward. Our management team is engaged in that process and our senior management team is directly involved in that process. And so, we’re excited about our ability to push the business back to performance levels that it was able to achieve in the past.

So with that, I’d like to thank you all for attending.

Thank you for your participation in today’s conference. This concludes the presentation. You may now all disconnect. Have a great day.