Sunopta Inc (STKL) 2008 Q4 法說會逐字稿

Good day and welcome to the SunOpta Inc. fourth-quarter 2008 earnings conference call. Please note that today's conference is being recorded. I now would like to turn the meeting over to Steve Bromley, President and CEO. Please go ahead, sir.

Thank you. Thank you very much and good morning, everyone. Welcome to our year-end shareholder conference call. I am joined on the call today by Tony Tavares, SunOpta's Vice President and Chief Operating Officer; John Dietrich, Vice President and Chief Financial Officer -- pardon me, I think I called Tony Chief Financial Officer -- Chief Operating Officer sorry for Tony; and Ben Chhiba, the Company's Vice President, General Counsel, and Secretary.

Before I begin, I would like to remind listeners that except for historical information, the matters discussed during this conference call may include forward-looking statements including statements relating to our operating results and expected cost savings. All forward-looking statements reflect our current views with respect to future events and are subject to risks and uncertainties and assumptions we have made in drawing the conclusions included in such forward-looking information.

Many factors could cause our actual results, performance, or achievements to be materially different from those expressed or implied by our forward-looking statements, including those factors and assumptions set forth in the Company's annual report on Form 10-K for the fiscal year ended December 31, 2008 and the sections in that report titled forward-looking information and risk factors which will be filed with the SEC and Canadian securities regulators. We plan to file our 10-K for the year ended December 31, 2008 by no later than the close of business on March 11, 2009.

Please note that our financial results are reported in US dollars and in accordance with US GAAP. I want to mention at this time that we are targeting to keep this call to approximately one hour.

In spite of the issues that faced us in 2008, our results while less than originally expected, were positive in a number of ways. We achieved revenues of over $1 billion for the first time in our Company's history. We achieved strong internal growth. We achieved record results in several segments. We achieved strong cash flow from operations. We achieved significant debt reduction. All our banking ratios are in compliance.

We maintained tight control on expenditures, including CapEx. We restructured our management team and added new members to our Board of Directors. We expanded our global footprint, positioning the Company as a strong global player in natural organic and specialty foods and natural health products. We executed on initiatives to improve the long-term profitability and return from our operations. And we greatly improved our processes to address internal control, material weaknesses identified in 2007, and we started the implementation of lean management.

Over the course of our call today, we will provide further details related to these achievements. We began 2008 with great confidence and optimism having realized revenue growth of approximately 35% versus 2006 and having continued to execute on strategic initiatives which had significantly expanded our Company's global footprint and vertically integrated natural, organic, and specialty foods model.

Unfortunately, this excitement and optimism was impacted early in the year by our discovery that inventories within the SunOpta Fruit Group were overstated, leading to the need to restate earnings for the first three quarters of 2007 and delaying the filing of our annual financial statements pending an exhaustive internal review of the root causes which led to this write down. The resulting recommendations from this review have now been implemented across the organization and the SunOpta Fruit Group is now well positioned for the future.

And if the issues in the Fruit Group were not enough, the deterioration of the global economy towards the end of the year was most difficult for all of us and this has presented ongoing challenges to our business, our employees, customers, suppliers, and our valued shareholders.

Having said all of that, we embark on 2009 with cautious optimism, aware of the difficulties in the current global economic environment but confident that our core positioning as a key player in health-conscious food categories combined with the numerous cost control efficiency and product development initiatives that have been and continue to be implemented, will lead us to improved results in 2009 and beyond.

For fiscal 2008, we realized revenues of $1.055 billion, an increase of 31.5% versus fiscal 2007 revenues of $802.5 million. This increase includes a consolidated internal growth rate of approximately 16%. Revenues in the SunOpta Food Group increased to $960.3 million, an increase of 32.4% versus 2007; and revenues in Opta Minerals, Inc. increased to $93.4 million, an increase of 23.9%.

Revenue growth slowed in the fourth quarter as a result of the current global economic crisis which was especially evident in Opta Minerals where the steel and foundry industries were severely impacted. Our core Food and Natural Health product operations were also impacted, but still recorded positive internal growth in the quarter of approximately 10% after accounting for the effects of the dramatic swings in foreign exchange.

While it is reasonable to assume that we should not expect the growth rates which we had been experiencing, we all need to eat and we believe that our healthy products portfolio is well positioned for continued success as consumers continue to seek healthy cost-effective eating options.

For fiscal 2008, we realized the loss of $10.9 million or $0.17 per diluted common share after expensing $13.7 million or $0.21 per diluted common share for the impact of non-cash charges for goodwill impairment and non-cash tax valuation allowances. These write-downs were in part -- were due in part to the impact of the recent decline in our stock price combined with the current economic conditions. We want to be clear that these are non-cash items and do not directly impact any of our banking covenants or the strength of our balance sheet.

Adjusted earnings for fiscal 2008 were approximately $13.3 million or $0.21 per diluted common share after adjusting for the following. The non-cash charges for goodwill impairment and tax valuation allowances of $0.21 per share; professional fees, severance, and related costs incurred during the year related to the investigation of internal controls in the SunOpta Fruit Group and the restatement of financial results for the first three quarters of $0.10 per share; nonrecurring startup and operational costs including the impact of the flooding on our ingredients operations; startup costs related to plant expansions including the buildout of our new Modesto, California soy processing and packaging operations, which totaled $0.04 per share; and the unfavorable fourth-quarter arbitration decision within the SunOpta BioProcess Group of $0.03 per share.

For comparison purposes, excluding nonrecurring startup and operational costs, which I just mentioned, earnings were -- adjusted earnings were $10.8 million or $0.17 per diluted common share. This compares to our previous adjusted net earnings guidance of $0.19 to $0.23 per diluted common share.

Included in the results for the fourth quarter were approximately $3.6 million pretax or $0.04 per diluted common share of specific inventory write-downs to mark these costs to market as a result of significant decreases in these inventory values during the fourth quarter. Approximately $2.8 million of this adjustment was within Opta Minerals, Inc.

Please note that the adjusted earnings and adjusted earnings per share numbers that we have provided do not have any standardized meaning prescribed by generally accepted accounting principles and therefore are unlikely to be comparable to similar measures presented by other companies. This non-GAAP financial measure should be considered in the context of SunOpta's GAAP results and a full reconciliation of these amounts were provided with our press release.

Segment operating income for the year was $15.9 million as compared to $5.7 million in 2007, an increase of 181%. Segment operating income within the Sonata Food Group increased 84.9%. The improved segment operating income in the Food Group was driven by record results in the SunOpta Grains and Foods Group and SunOpta Distribution Group; improved results in the SunOpta Fruit Group as the business was repositioned for the future; and the impact of a sharpened and continued focus on margin improvement and cost containment, which continues into 2009. We will discuss a number of these actions in a moment.

Segment operating income within Opta Minerals declined approximately 17% to $5.5 million in 2008, reflecting the precipitous drop in the fourth quarter in the foundry and steel industries as a result of the decline in the global economy and a $2.8 million write-down of magnesium inventories to net realizable value, as I mentioned previously. Without this write-down, operating income in the group would have improved approximately 25% versus 2007. Operations have been restructured to deal with industry declines and the group is expected to benefit from increased infrastructure spending later in 2009 as government infrastructure spending initiatives begin.

Segment operating results in the SunOpta BioProcess Group improved in 2008 but remained in a loss position with an operating loss of $3.3 million versus an operating loss of $6 million in 2007. The group continues to focus on leveraging its technology and expertise in the production of cellulosic ethanol, a category that is expected to offer excellent long-term growth potential as the world looks to reduce its dependence on fossil fuels and reduce greenhouse gas emissions.

For the fourth quarter, we realized sales of $245 million, which represents a 16.8% increase from the previous year. The quarter had internal growth of 9.7% after adjusting for foreign exchange movements. We did see some revenue weakness in certain sectors due to the economic downturn and a desire of customers to manage their inventory levels. We'll talk more about this in a minute.

On a GAAP basis in the fourth quarter, the Company realized a loss of $0.17 or $0.27 per diluted common share including the impact of the non-cash charges that we previously spoke of totaling $0.21. In addition, the Company incurred the costs of the unfavorable arbitration decision in the BioProcess Group plus some professional fees and related costs all in all totaling $0.04 per diluted common share resulting in an adjusted loss for the quarter of $1.1 million or $0.02 per share. And of course, these results include the pretax commodity cost write-downs of $3.6 million.

I would now like to turn the call over to John Dietrich, our Chief Financial Officer, and he will provide some specifics related to the Company's financial position and certain balance sheet items. John?

Thanks, Steve, and good morning, everyone. During fiscal 2008, we realized cash from operating activities of $33.7 million versus utilization in 2007 of $35.1 million, an improvement of almost $69 million indicating extensive efforts to reduce working capital and control spending across the organization.

Excluding the addition of credit facilities related to acquisitions completed in 2008, we reduced our bank indebtedness by $24.6 million versus an increase of $18 million in 2007. This was very positive and we are focused on continuing to do so in 2009.

At December 31, 2008, the Company's balance sheet is strong, reflecting a current working capital ratio of 1.74 to 1 with accounts receivable and inventory values totaling approximately $296 million. Our long-term debt to equity ratio at year-end was 0.49 to 1 and total debt to equity ratio was 0.79 to 1. Our Company has total assets of $581 million and a net book value of $3.52] per outstanding share.

Compared to 2007 after excluding acquisitions, we have seen a reduction of accounts receivable in proven and days sales outstanding of approximately five days. During the year, we have made a focused effort to reduce credit limits and improve the aging of our receivables. This has been very successful and we will continue to focus on aging and days outstanding in these difficult economic times.

Excluding inventories obtained with the 270 acquisitions, inventories in our base business has declined approximately $10 million despite internal growth. The largest decrease was in the Fruit Group where the bulk of the long 2007 inventory position has now been sold. Inventory turns have improved by one half turn and are expected to improve further in 2009. We see inventories as our biggest improvement opportunity over the course of this year.

At the end of the year, we remain in compliance with all bank covenants and expect to remain compliant going forward through 2009. I would like to detail our banking arrangements. In essence, we have four facilities and total debt excluding cash balances at the end of the year of $178.7 million. The first facility is held by our banking syndicate and services our core Food operations excluding operations in Europe. Total debt on this facility at the end of the year was $95.4 million including operating lines of $28.5 million. The annual renewal of the operating line component of this facility occurs at the end of June each year and we are working with our bankers currently to complete this renewal.

Our European sourcing and trading operations are financed via an asset-backed operating line with total amounts outstanding of $30.9 million at the end of the year. Opta Minerals are financed via standalone operating long-term debt facilities of $28.6 million. Both of these facilities are standalone and do not have any resource to SunOpta.

In addition to these facilities, the Company has promissory notes due to various parties primarily related to companies that were acquired and these amounts are subordinated through the Company's banks.

Capital expenditures were $9.7 million during 2008, our lowest level in five years and down from 2007 levels where we spent approximately $30 million. During 2009, we will continue to tightly control capital spending with a focus on completing our current projects such as the Modesto facility and projects intended to improve operating performance and reduce our environmental footprint.

I will now turn this call back to Steve.

Thanks, John. We are most fortunate to be operating in food business segments which are less volatile than many others. We continue to streamline our Company's operations aimed at improving earnings and return on assets employed. We have recently commenced implementation of lean enterprise systems across our organization under the direction of Tony and have set a target of a further $10 million in savings and efficiency improvements by the end of 2009.

We also continue to leverage our global supply chain aimed at achieving further cost reductions in areas such as energy, chemicals, packaging, raw materials, etc. Tony will speak about much of this in a few moments, but needless to say, attention to cost is key in this economic environment.

For 2009, we expect to expand sales from new products such as organic packaged soups and alternate beverages, expanded healthy fiber offerings and new healthy convenience foods products prepared at our healthy fruit snack and healthy grains processing and packaging operations.

We also expect a benefit from our new soy processing and packaging operation in Modesto, California, which is expected to be operational late in the second quarter of 2009. This operation when combined with our existing aseptic packaging operation located in Alexandria, Minnesota is expected to bring total annual production capacity to between 250 million and 300 million quarts of soy milk and alternate beverages, the largest such operations in our belief in North America that is dedicated to these products.

When combined with cost-reduction and rationalization initiatives and the avoidance of certain nonrecurring and for the most part non-cash costs incurred in 2008, we feel we should realize much improved results in 2009.

As we move forward, our Company's primary focus remains the improvement of operating margins and return on assets employed. In our non-core operations, Opta Minerals, Inc. and SunOpta BioProcess, which are now less than 10% of annual revenues, are both strategically important businesses within the sectors where they compete. Opta Minerals has grown to a wonderfully profitable company with revenues approaching $100 million and operations throughout North America and Europe.

During 2009, the Company will focus on new product introductions and cost rationalization initiatives, plus two new operations in Florida and Texas which will improve the Company's sourcing and supply capabilities for silica-free abrasives in the southern regions of the United States.

While Opta has been impacted by the current global economic downturn in the foundry and steel industries, operations have been restructured and we feel the business is well positioned to capitalize on anticipated increases in infrastructure spending in the coming years.

SunOpta BioProcess remains focused on the utilization of its technologies in the production of cellulosic ethanol. The opportunities in this sector are attractive as the world looks to reduce its dependence on fossil fuels and reduce greenhouse gas emissions. While production of cellulosic ethanol in North America is very small, the renewable fuel standards in the US call for 16 billion gallons of cellulosic ethanol by 2022, a large task and a great opportunity for SBI's expertise.

The group continues in its efforts to refine its technologies and applications around the world and is making progress. They are completing expansion of a new pilot facility and they continue to work on a joint venture initiative with Central Minnesota ethanol partners, cellulosic ethanol partners on the development of a commercial scale production facility.

I would now like to turn the call over to Tony Tavares, who will discuss activities in the SunOpta Food Group.

Think you, Steve, and good morning, everyone. As Steve mentioned, we are fortunate to be in the food business and we believe this leaves us well positioned relative to most industries to weather the weakness in global economic markets. There appears to be a concerted effort on the part of most of our customers to reduce inventories, possibly driven by the same efforts on the part of their customers and consumers in general. In fact, this is one of our objectives as well.

Our focus in sales will be to reach out to new customers and to expand the uses for our products to counter what we believe will be sluggish industry demand. In addition to significant new supply contracts with major food service operators for our septic soy milk products from our Modesto and Alexandria facilities and fruit smoothie products from our Pacific food facility, which we have previously communicated, there are active projects underway in all divisions to expand sales with new customers, new products, and innovative applications.

We are using the Blue Ocean framework for strategic planning across all divisions and market expansion is a key part of the strategy sessions. As we move forward, we believe that our focus on operating margins and return on assets employed is the best way to work through troubled markets and position ourselves for the many acquisition and other opportunities we expect over the coming months.

The use of lean enterprise and lean green systems across all departments and all SunOpta companies will be key to achieving these results. Through standardizing best practices, leader standard work, visual performance boards, daily accountability, and lean management systems, our objective is to continue the transformation of the culture of our Company and to make continuous improvement and environmental cost-reduction a part of everyone's job description. The gains will be steady and incremental and over time, we believe quite substantial. We have set an internal objective of $10 million in annualized savings as a direct result of these initiatives by the end of 2009.

We also expect the lean initiatives to significantly reduce the amount of working capital employed especially inventories and improve fill rates and other customer-related performance measures. We are currently process mapping the order to cash value stream in each of the divisions to identify opportunity areas and subdivide complex processes into more manageable parts. We have set an internal objective of $20 million in further inventory reductions by the end of 2009.

Although this process will target all inventories, we will focus especially on reducing inventories of higher priced specialty items, where we believe the risk of reduced demand may be higher. In addition to lean enterprise and lean green initiatives, there are also a number of specific costs and working capital reduction initiatives in each of the divisions. We have reduced our fixed payrolls by over $3 million per year. This number is in addition to a companywide salary freeze and reductions in hourly wages resulting from lower production levels at some facilities.

Reduced prices of natural gas and other processing materials will represent savings for the Company and reduced spending on travel and other admin expenses will also generate savings. In total, we expect savings from these initiatives in the range of $6 million annually. And we continue to aggressively pursue further opportunities to reduce costs and improve efficiencies.

The new aseptic facility in Modesto will present opportunities to expand our sales but will also reduce the cost of delivered product to important markets in the Western United States. The Grains and Foods Group also have successfully widened the sourcing area for sunflower, which will allow for better capacity utilization at these facilities and increase sales without a corresponding increase in inventories.

In the Food Group, we have restructured our operations to concentrate our processing activities in the Irapuato, Mexico, Buena Park, and Pacific food facilities and will buy the balance of our frozen fruit requirements from co-packers. In addition to lowering our fixed expenses and providing annualized savings of approximately $1.5 million, this will also lower our inventory and working capital and result in greater flexibility to respond to market conditions.

The Ingredients Group has made a number of process changes to reduce the use of expensive materials and improve yields resulting in a total annualized savings of approximately $800,000. They have also launched a number of innovative new fibers offering increased functionality and recently entered into an agreement for the addition of an insoluble fiber with specific functional qualities to its portfolio.

Taken collectively, the scope of the many initiatives underway should help us to offset the effects of the economic downturn and I can assure all our shareholders that the management team is committed to generating solid bottom-line performance in 2009.

Great. Thanks, Tony. While 2008 was perhaps one of the toughest years in our Company's recent history, we embark on 2009 with a cautious sense of optimism aware of the difficulties in the current global economic environment but really confident that our core positioning as a key player in health-conscious food categories combined with the numerous cost control efficiency and product development initiatives that we have implanted will lead us to improved results at 2009 and beyond.

As I stated earlier, our focus is on improving operating margins and our return on assets employed. We are committed to this at every level of our organization.

Our stock price has fallen recently to new lows and I can assure you that we are not aware of any undisclosed information that is causing the share price to decline. We continue to focus on managing our business to increase shareholder value via new sales, new products, cost rationalization, and management of working capital. We believe the stock price will increase as we remain focused on improving the fundamentals of our business.

With that, we would like to open the call to questions but want to remind you that we will not be commenting on the events leading to the restatement or the audit committee's investigation. The events surrounding the restatement are the subject matter of litigation before the courts in Canada and the US, and therefore it is not appropriate to comment further at this time.

Thank you and we will open the call to questions.

(Operator Instructions) Ed Aaron, RBC Capital Markets.

Good morning, guys. So it's a jungle out there, but you did a nice job managing the cash this quarter, so that was good to see. I was hoping maybe for you to elaborate a little bit on the sales trends that you are seeing both in terms of where you are seeing relative strengths and weakness in your business? And then also any color you can give us just since there's so much volatility out there right now on what you have seen even kind of into the first quarter, because you do have two months under your belt here.

Well, generally on sales trends first, Ed, some general comments. I think like everybody in this industry, the last number of months have been a little bit more -- I will use the word volatile probably not the right word, but you know we are seeing a lot of our customers adjusting inventories. As Tony mentioned, we are adjusting inventories, so I know our suppliers are talking about inventory adjustment. So I think we are all dealing with retail customers of ours and manufacturing customers adjusting their inventory carrying levels.

That's also being driven by I guess a common theme that everybody is talking about now is pantry deloading where you are just not carrying as much inventory at the house and that sort of thing. So we have been working through that. We saw inventory of adjusting starting later in the fourth quarter and certainly has carried on in the first quarter because we've had customers who you saw significant declines and then they pop back to pretty much the levels that you would have expected in the past. So that has certainly been a factor out there.

As a general rule, we have seen what I would call more expensive, exotic products, very high cost, high antioxidant specialty type products slow down significantly. They are not an exceptionally large part of our business but they are part of our business and we've seen that slow down. That, and a lot of those products are sold through independent and sort of super -- the super natural channels where there's also been some slow down.

Center of the plate type products, organic soy milks, frozen fruits, and those sort of things have held up quite well. Private label products seem to hold up pretty well in this environment. So we are not going to see growth of 20% like we did in prior years. I can assure you of that, but there's still really good demand and people continue to eat. But as a general rule, the higher the price, the greater potential that there may be some impact.

At the same time, we are about 50% organic and 50% natural and a lot of the natural products are a little less cost, so they are not as impacted. We have some customer statements. You know, we do sell products into products that go into McDonald's for their fruit parfaits and apple dipper products, fiber in the fajitas and those sort of things. That is doing very well because their business is strong. So still lots of learning to do, but sales are certainly not where they were last year but holding up.

So down year-over-year in the first quarter, is that the implication there?

Yes.

They are down sort of marginally to a year ago. It is Tony Tavares. The real issue for us is determining how much of the small drop we have seen is caused by inventory reduction taken on the part of customers and how much is really sort of a change in demand. We are what quite confident that the demand peace is a real small part of it, so as long as demand remains pretty well [part] last year or even a small marginal drop, we think we will be all right.

What about in terms of any pricing pressure in the supply chain? I mean there's a lot of price taken on the way up with commodities and now our commodities have kind of gone the other way and we have a much more difficult environment, it seems like you have heard all the markets talk about this. There's kind of more pricing pressure working its way down through the supply chain and I'm just wondering how much of that you've seen thus far? Thanks.

A lot of the selling prices, a lot of our products are sold with -- not a formula exactly, but certainly proportional to the cost of our commodities. So as the commodity prices come down, selling prices will come down, but margins will stay pretty much intact. That's one comment.

The other comment on the increased costs, certainly we saw a run up all the way through last year and on some cases they are coming down, like energy for example, and we certainly intend to share some of those savings as we come down with our key customers. And again, still believe we can do that and keep margins at a good level.

Okay, that's all I had. Just one quick point of clarification, when you mentioned sales down modestly, is that on an internal basis or a total Company basis? Is there still a little [left] with the acquisition in there.

I think what we were referring to is a slow down in our internal growth rate.

Internal growth.

Okay. Thank you. Great.

Scott Van Winkle, Canaccord Adams.

Thanks. First on the soymilk facility you are just opening -- if you said this I apologize, I didn't catch it. But how much of the volume do you currently already have kind of presold or have demand for when that facility opens at the end of the second quarter?

What percentage of their capacity or --? We have a significant amount of volume that has been presold if you go through that facility, if that's the question that you are asking.

Yes.

Yes. So we've brought on some new customers and we have other new customers that will come on in that facility, so we certainly don't have that facility sold out, which leaves us opportunity to move into some new product categories but there is good demand to open that facility.

The facility can house multiple lines. We are putting in one line to begin with and I believe we've got -- we've got two lines, excuse me, and we've got roughly three quarters. So it's a great start and lots of room to go from there.

Excellent, and as you look across your product categories and you have things like oat fiber that aren't necessarily sold only into the natural and/or organic food segment? So if -- and this is probably a tough question -- but if we're talking about economic sensitivity based on price, if you were to kind of look at your business and say what percentage of it goes into more of the conventional food industry, could you do that?

It is a little bit hard to do, Scott, other than say that 50% of what we do goes into organics and 50% goes into natural so it's that natural category that ends up in more of the conventional foods, food business. And I don't know if I can comment -- (multiple speakers) We don't track it.

It's not a way we track the business, but maybe 25% or 30% and to your point, one of our largest -- one of the things that fiber is used for is not so much for its health benefit but for its functional benefit, because fiber can go into food products and as I know you are aware, fiber is a texturizing agent and essentially it acts like a binding agent or a sponge when it gets into food and it can absorb water and oil, so it provides some interesting functional capabilities.

So fiber is used in just everyday food products to reduce breakage, you know, in crackers to add a little bit of moisture by putting the fiber in and adding some moisture so that the cracker isn't dried out as quick and breaking and it's used in all kinds of applications like that. Any time we can go to a food manufacturer with an application that says you put in some fiber, you could also put in some water and so then that may offer some interesting cost savings and that sort of thing. So it is a way that we can sell the product and that's certainly attractive in this economy.

And you talked a lot about kind of channel de-loading, everyone taking inventory out at each level of supply chain, which is certainly the topic of the day and from the industry. I am wondering if you look at your segments where that's a more significant issue and where it's not as much a significant issue?

The area where we have seen it being the biggest issue, the category -- the group within our businesses where we've seen some significant impact is in our international sourcing and trading group who are essentially 100% organic products and of all of our groups had the highest level of what I'd call specialty products. So they have certainly been impacted because they are into the high antioxidant berries and a number of those things. And so that has been a business that we have seen some real impact in.

There's some good visibility going forward that we are going to see some positive turnaround in a couple of the categories within that business. But they've been impacted especially on the North American side, not so much on the European side. And the on our distribution business, we've seen the impacts because they are distributing across all of the categories, be it dry, fresh, frozen and certainly they have seen the de-loading impact.

Steve, this is more of kind of I guess a question of your opinion. There's a rumor that the leading soymilk brand is going to drop organic. And I am wondering if that were the case, would there be any opportunity for you in that regard?

Well, we hope so. You know, about 90 -- I don't know the exact number, but over 95% of soymilk today is organic and our belief is that consumers want organic and they have been used to getting organic. Certainly if that were to change, that would open up some real opportunities to replace that organic consumer and provide private label products into that category. But we've heard that. But --

It's in the market, isn't it?

I think it's more than a rumor now. It's done I think. Or we've heard the same thing if it isn't done.

(multiple speakers) It seems like an opportunity for you.

It will be interesting to monitor and we are on it.

Okay, and last question, you talked a lot about cost savings, kind of a new culture of saving dollars and you threw out some numbers. Maybe I didn't catch this, but is there any acceleration of integration efforts? You've got some fairly distinct operating segments. Is there some opportunity to kind of double-up the responsibilities across those segments or in those segments?

The answer is a definite yes. I think the focus the last nine months since I've been here is really to provide a common way of looking at the businesses, a common way of reporting the numbers, just a common philosophy of continuous improvement, the common way to get at things and still leave all the entrepreneurial spirit there.

And what results is sort of a matrix structure that you have the economy, but you bring groups together in new product development and marketing and sales to try to play the strengths up or to leverage the strengths of the various divisions. So I'd say yes, and there are very specific projects that we've started, for example, to leverage our competencies in international sourcing of things like coffee and cocoa, juices, and try to leverage that with other divisions and leverage sales.

So it's a work in progress. I don't think we're ever going to be totally done with it, but without a doubt, there's more momentum in that area than there was before.

Great, thank you. Look forward to seeing you guys this afternoon.

Peter Prattas, Fraser Mackenzie.

Good morning, guys. Just first off wanted to touch upon your profitability specific to the food group, looking at Q4 and sort of getting a gauge of what we can expect throughout 2009. By my calculations, it looks like at the gross margin line you might have been at around 13% gross margin in foods at Q4, suggesting maybe that the macro effects are delaying your ability to improve your margins.

So I just want to get a sense from you guys if you think that's where it might stay just because you have the macro forces working against you, or will we stay at around the 14%, 15% range gross margin in 2009, or can you get to sort of the levels that you are hoping to get to?

Well, we'd expect that it improves. In fourth quarter, we obviously had a number of the inventory write-downs that impacted that business. And in the fourth quarter as well, we slowed some facilities in order to dramatically reduce our inventories in those businesses. So, you know, there was a negative impact around that.

Also on the Canadian distribution business, you know, the Canadian dollar fell dramatically versus the US dollar, and so we were in a position where we weren't able to get that pricing passed through to our customers. So we have no intention of seeing gross margins on an ongoing basis.

Economies aside here just for a minute, in that business at those levels, and Tony went through a number of initiatives across our business from new products to cost rationalization to rationalization of facilities, leveraging what we have, we would be extremely disappointed if the numbers stayed at those levels going forward.

I qualified that just for a moment by saying as the economy is shifting around and we are shifting the cost base and our infrastructure to align with that, there may be sort of shorter-term buffeting there, but longer term we are focused on much higher margins.

Understood, and just related to the inventory then, can you give us an update on where the berry inventory is, now the old stuff and whether there is potential for I guess further write-downs in terms of some of your other products just keeping in mind where pricing maybe has gone in the recent months?

Sure, so first thing at the end of 2000 -- I don't have the exact numbers in front of me but I can tell you at the end of 2007, we had almost $50 million in frozen fruit inventory and that had been sold through and we were down around $6 million, $7 million by the end of the year. And that continues to be taken down now. So that issue is really all behind us now.

We've seen, and as Tony mentioned, we will never see the run up in those inventory levels within our fruit business ever again. The business has been restructured. As Tony has mentioned, we have changed our purchasing patterns. We have changed the way we process. We have idled, we have rationalized some facilities so that we are not going to process all the berries ourself anymore and we are going to partner with other co-packers to do some packing so we can buy as needed rather than process all at one point in the processing season during the year.

So there has been a number of initiatives undertaken there. Generally speaking, we have seen commodity costs come down versus early into the fourth quarter, surplus grain inventories have come down. Most fruit inventories costs have come down, so those are coming down. And as Tony mentioned, depending on our relationship with our customers, we pass most of that through as soon as we can. Obviously we won't get all the benefit right away. On the grain side of the business for example, we would have contracted at higher prices and we would have sold at higher prices for next year. But over time, those prices will all come down. They appear to be coming down. So we will see that as well.

That will impact the top line a little bit that the commodity prices are just coming off and it will be a little less built into our sales.

I think as a general statement, what I would say is that from a cost perspective, processing perspective, significant improvements far from close to where it is going to go and where it can go, but significant improvements over where we've been. The number one challenge this year is to try to get those costs to outstrip what is going to be sluggish demand. And we are constant. We've got a lot of areas that are going right. That's kind of the number one war cry. And if we are going to spend -- find the capital and reduced inventories. It's really trying to turn unproductive assets into something that will generate more. So it's a year where we have to make do and do well with less.

Okay. And just one last question relating to CapEx. You brushed upon it in the opening remarks there, but just trying to get a sense because you have committed to a couple of things in 2009. Can we get a sense of how much capital spending you are going to have or have committed to early on in 2009 until you get those two facilities running and how much that will work out to be for the full year? I'm guessing maybe $20 million for the full year with that front-end loaded?

That would probably be on the high side, Peter. It would probably be $15 million to $20 million, in that range.

Okay, great. Thank you.

Hopefully $10 million, but Tony wants to spend all the time. I'm just kidding.

It's not a bad number and I got really what we're trying to do honestly is to try to get all of that out of our inventories.

Great, thank you.

Bob Gibson, Octagon Capital.

Good morning, everybody. When you talk about commodity write-downs, $3.6 million. So is the $2.8 million Opta in there?

Yes.

Okay and can you give us some color where the other $0.8 million might come from?

Yes, it was high ends antioxidant, a number of products but generally speaking fruit business, high antioxidant berry type products where the markets just fell right off and the pricing fell right off. You can't have them -- there's no hedge mechanism there, so you are kind of stuck in the middle.

Okay, great. So my math is not so good, so I am looking at your goodwill year-over-year and you had you wrote down $10 million.

That's right, 10 point --

Can you walk me through how come it's --?

Well, it would change, Bob, because we added goodwill for the Tradin acquisition and MCP and Opta Minerals, plus you get an exchange effect on the Canadian goodwill as well.

Exchange effect. Okay. But the biggest difference would be the Tradin acquisition (multiple speakers)?

Yes, there were two acquisitions. While there was only one food acquisition, and as you know, we are not focusing on acquisitions at this stage of the game and there was one in the minerals business as well.

Okay, so just acquisitions. And now you just mentioned FX, corporate -- are you guys being paid in US bucks or Canadian?

Are we being paid?

Canadian dollars.

Okay, so part of that corporate cost increase this quarter was probably FX related, right? Not FX -- just additional bodies?

No. I can assure you that there weren't additional bodies and so --

I think we had some foreign exchange expense in the quarter offsetting some gains that we had in previous quarters.

In Q3, there would have been FX gains. In Q4, there was an FX -- there was not a loss there. I can assure you there were no incremental heads at a time when we are cutting back.

Cutting back, okay. And then lastly, can you walk me through the Fruit Group this quarter? Why is it losing money? Just walk me through the mechanisms of (multiple speakers).

Yes, in the second and third quarters of the year, they are in their processing season and that's where they have the bulk of their -- that's where they have the bulk of their earnings. First and fourth quarters they are packaging but they are not processing fresh fruits. They don't absorb as much overhead, so first and fourth is our -- are their earnings periods. During the fourth quarter, a concerted effort was put forward to reprocess as much of the old product as possible and continue to move that through. So those were the key drivers.

Okay, so now that I've got a full year under my belt, that's kind of how I should be modeling this going forward, right?

First and fourth are low and second and third are the better quarters, yes.

Okay, great. Thanks.

But a large impact is selling through all that old stuff, which you had written it down but when you sell it, you don't make any (multiple speakers) So that's a good part of it. Margins should improve there.

I'm happy to report that we will not be talking about that for much longer.

Chris Krueger, Northland Securities.

Good morning, guys. I had a lot of questions answered already, but just two quick ones. In the current quarter we are and just a few weeks to go in the first quarter, on the debt issue, can you give us an indication if are you paying down more debt during the first quarter? And if so, can you give us a range of maybe how much we would expect by the end of the quarter?

We really -- let's just deal with some general concepts. We are continuing to conserve cash. You know, a major cash draw starts kind of into the fourth quarter when we get into the fruit season again, but we are working hard to conserve our cash balances. We are limiting the amount of capital spending that we are doing other than with the projects that we have under way and it's not real, real big money that we are spending. We expect to continue to sort of year-over-year sequentially based on how the business trends and when we are spending and not spending on various inventories, we expect that to continue to improve.

And our goal, as Tony mentioned is we believe there's lots more to come under inventory. We have done a great job of controlling our receivables and of course, that's a very critical area in this day and age given the customers that you do have. And we are fortunate to be dealing with wonderful customers who for the most part are quite stable. We will continue to leverage our payables as much as we can and we believe that that's all part and parcel of improving our return on the assets that we have employed and continuing to pay down our debt.

Okay, then a follow-up --

I apologize, I just can't give you the number for the end of the quarter.

That's fine. I don't if you can answer this but as far as your first-quarter debt covenant at this stage in the quarter, how comfortable are you with your ability to get by there?

We feel good about it.

Okay, thank you. That's all I've got.

Sarah Lester, Sidoti & Co.

Good morning. You talked a little bit about acquisitions and I know you've had sort of a pause over the past year or so. But can you talk about acquisitions? Is that going to start changing?

No, not in the immediate future. This is a time in our life where we are very much focused. I am sure if you compared what we are saying a year, year and a half ago compared to what we are saying today, we are very focused on our platform that we have built and put into place and on improving the efficiencies from that and improving the return on that. It's also a time where we are managing our resources, our cash resources, and our financing resources very carefully.

Quite frankly, we are just going to be -- there will be deals out there at a point in the future, but they are not -- it is not an area that we are spending a lot of time on. We do get some opportunities that come across. It's not our first focus by any stretch, but unless it's just too good to be true, we are really happy with the platform that we have. We see some great internal growth opportunities where we can just build off the platform that we have. So it's not something that we are focused on.

The day will come again, for sure, and we will be ready to go when that happens. But for now we are very much focused on leveraging what we have across the business.

I think the focus this year is really strengthening the platform and when we do go into acquisition mode, which Steve mentions a lot of opportunities, we all believe that, we will be much better positioned to digest a lot more. So -- but it's a year to consolidate and get by with less.

All right, that's all, thank you.

Keith Howlett, Desjardins Securities.

Just a few questions. On the fruit inventories, am I correct that the $5 million to $6 million will be gone by the end of the first quarter '09?

The goal is to move them as quickly as humanly possible and some of these are -- the best way for me to describe it is they are specific types of materials that will go when the specific customer needs that type of material again. So the sooner the better, but I wouldn't necessarily -- we are not going to just throw it out.

And Keith, that is the gross amount of inventory. We have half the reserves against that as well, well over half.

But we are working through quickly. I don't think it's really -- it's really not possible to put an exact date, but by the end of 2009, we won't have anything in inventory that we wouldn't have made in 2009. That's the target.

Then just on the Cleugh's businesses, I was just trying to understand from the restructuring you've done in the food group, have you more or less closed down the Cleugh's processing facility or --?

No, what has happened is there is a large processing facility in the Los Angeles area and there was a second facility in the Salinas California area that was in the leased operation and we have rationalized the Salinas operation and won't be operating that this year. And as we indicated, we have entered into supply arrangements with other packers to do that. And that really allows us to be variable, not have as much of a fixed platform in place.

The Mexican operation is still running. And the second smaller Mexican operation, we have done really the same thing as we have done in Salinas, where we are not going to run it this year and we will go to more of a variable cost base. But no, that -- berry operations are still what they were just with rationalized operations.

On the -- maybe just on the fruit bar operation, can you speak as to how you are doing on the new line and capacity utilization?

This is one of Tony's greatest achievements, so I will let him brag.

No, I don't need to brag. The team did good work and they were one of the operations that jumped on the lean enterprise systems first and had started and when I got here in June, we really (inaudible) acceleration and that operation was profitable in the fourth quarter and continues to be profitable at the start of the year. And they are on budget topline and bottom line. So a lot of -- again, far from a completed work. IT is never really quite done, but substantially improved from where it was.

And on the opening up of Modesto, I presume it is going to take volume from Alexandria so I am just wondering how the sort of -- I don't know, that might or might not be wrong -- but how will the two operate in terms of capacity utilization?

There will be some move of inventory, Keith, and part of that is you know our customers just can't afford to ship product all the way across the country. So we will shift some inventories around and rationalize and streamline operations accordingly.

So Alexandria has sort of been running on full tilt. Is it sort of like the two of them will be 80% or 85% or how is it sort of --?

You will rationalize -- but you're right like we've been sort of putting as much volume as we could into Alexandria, so that will shift around. And then there's some new business opportunities that will come in and fill those holes. We talked about moving into organic soup, organic Tetra Pak soups and some alternate beverages and those sort of things. So there is new business to come in as well once we get that stabilized.

And just on -- sort of on the new product front, I don't know whether this is feasible or possible. Could you envision sort of a SWAT team that's trying to develop new private label products internally I guess using the resources across or --?

Yes, what we have and is coming together is what we have coined a virtual center of excellence, a virtual product development team. So using the folks that are in the various divisions, we have an individual in marketing who is going to lead that effort, have some common guidelines to apply within the divisions. And certainly have guidelines on the products that prevent [develop] using the talents of the divisions.

So very much so and not a lot that we can talk about right now and not a whole lot frankly that I would want to talk about right now. But I think you are going to see some nice innovation towards the end of this year. So very much taking certainly our ability to do supplements with our ability to do fiber, with our ability to make it portable in a handheld form, all of those things are being worked on.

Just briefly on the BioProcess division, can you just update us on where the Verenium and the China pilots are or any new news there?

Well, the Verenium facility has been up and running and Verenium have had a number of announcements recently at that facility now being their pilot facility being up and running. They have announced that they are moving on to start the development of a commercial facility, so we are hopeful on that front. Our guys are scheduled to be -- I'm going to stop talking about China.

Our guys are scheduled to be back in China at a point in time we are told that it's in the large oil companies' budget for this year. So that's positive. But quite frankly, I told you that they are scheduled to go back in the past and we are a bit at the whim of the calendar that they are following over there. But we are still in dialogue and hope that it will happen, but boy, it has been a lot slower to happen.

At the same time on the BioProcess side, the Obama administration are certainly putting alternative fuels and greenhouse gas emissions high on the agenda, which all looks good. They are putting money behind development of alternative energies which is good. The renewable fuel standards have been written and I talk about the fact that it's calling for 16 billion gallons of cellulosic ethanol by 2022 and for those of us who are getting a little older, that may sound like a long time away, but it's 2009 now, so it's not a long, long time.

Last year in North America I believe we produced food to ethanol of around -- I don't know the exact number but about 10 billion gallons. That was through 140 plus facilities. So you get your head around what has to happen over the next 10 years if we are going to be able to produce that type of cellulosic ethanol, that's a lot of opportunity.

So these economic times aren't helping move big projects ahead, that's for sure, but there is a real inertia, if you will, from political sources to make it happen and I think that that's going to be very positive for us.

The real excitement around BioProcess within SunOpta is there is I guess a belief among the team here that the next two or three years with oil prices where they are, you are going to see a limited number of big commercial sized projects. But we also firmly believe the result of everything that Steve just said, that you are going to have a large number, a huge number of pilot clients going up.

So we spent a lot of time developing what we think is a real innovative way of putting a pilot plant into operation at much less cost. So we like to dominate that part of the process now and we think over the next three or four years, that will put us in a really great place when the commercial projects come on board. So there's been a lot of innovation over the past few months in that area.

And is that what you will utilize in the Central Minnesota?

No, that is commercial scale. One of the issues, Keith, is that to Tony's point, that people need to move in the pilot scale operations. You know and prove out the technology and, you know, our system was expensive and it's because it's a larger scale. So we have spent a lot of time working on how our technology can be better placed to assist in getting to pilot scale on a more economical basis for people that need to move into this industry.

Modular, it sort of clicks in. It is scalable to a certain extent. It's all good stuff.

And is the -- I guess the Central Minnesota is in the phase 2 still.

Phase 2, yes, and proceeding. I think we announced we received a grant for almost $1 million to support that from the state of Minnesota, who are great partners.

Can you just -- one last question on the tax rate. I guess the BioProcess is separately taxable entity as Opta Minerals is, as Food is. Is that correct?

Yes, that's correct. We have various different tax jurisdictions, but SBI is a separate one. Minerals would have separate ones in Canada, US, and the European operations. The Food Group would have essentially one jurisdiction in Canada, one in the US, and then its European operations, and then various other ones, Mexico, China.

So what sort of tax rate, just on the food business do you think would be likely going forward?

(multiple speakers) You've got a different effective rate depending on the jurisdictions, so our total would be around 32% to 35%.

On just the food side?

No, total (multiple speakers).

Total for the whole blended.

Minerals would be in that area too.

Presumably the losses you have at BioProcess, you can't do anything with them. Is that --?

We end up taking a full valuation on those losses as they occur because we don't -- we've got a lot of losses coming out right now under that group -- and the consolidated tax rate that I gave you though.

It is all built into that 32% to 35% overall?

Yes.

Thanks very much.

Ron Reuven, Reuven Enterprises.

In regards to the alternative energy initiative being proposed by the Obama administration, are you guys applying or is there such grants that you are trying to get at this point for the BioProcess Group?

Yes, we are. We are working on getting grants for a number of areas, but one of them -- by the way, these are a combination of grants, loans guarantees, etc. Obviously right now looking at working on the Central Minnesota Project. But yes, we are.

Okay, and do you -- when you apply for these grants, do you apply for a certain dollar amount or it's just a grant and whatever they are going to give you?

You apply for -- you know what -- I don't --?

We have specialists that are helping us with each of the projects that will get the maximum amount. I don't know if that's (multiple speakers)

I don't know if I could properly answer that.

Okay, what about in Canada?

There are also opportunities in Canada as well.

Got you, all right. Now as far as the debt repayment that you are doing right now, do you -- once you pay this debt based on your -- I guess the deal you have with the financial institutions, is that -- once that money is paid is -- are you able to get -- borrow the money again without redoing the whole application or is that paid and it's done?

No, what we did is we just paid down our operating lines and these are revolving operating lines so you go in and alter them at any point. They go up and down all the time, and so the bottom line is when you are generating cash, in the periods where you are generating you apply it to your lines and then at times you'll need cash to fund some of the operations and those lines go back up, so they are revolving and they go up and down.

Got you, got you.

There is also a component where we are paying down long-term debt under fixed terms and that, once they are down, they are down.

Most of that is the subordinated debt.

Got you, okay and in regards to Eric Davis's hire, I know one of the things that you mentioned is that he has the ability to get up to 50% of his salary as a bonus based on certain metrics reached. Are you comfortable discussing those metrics?

I can to you how bonuses work across our Company. I won't get into the specifics, but we have bonus programs across the Company for our executives and senior management that are based upon a combination of factors. And those factors are corporate net income and return on net assets. So we use RONA targets, which encourages all the operators and all of the executives to focus on our earnings and also focus on our balance sheet and the return on net asset.

And the various levels are across the organization, so each one of the operating groups, they will have specific targets but they also will have a large portion tied into overall corporate net income. So Eric will be bonused very much the same metrics that Tony, myself, John. (multiple speakers) We are all in the same boat.

Okay, all right, I guess I know you discussed a little bit more in regards to the China resource and alcohol deal that you've been working on, what seems to be a century, are they backing out of it? Are they not interested anymore or are they just very, very slow and like the rest of the world right now?

No, I think we need to be clear. China resources and alcohol already have a pilot operation in them.

Right, but I am talking about the second chapter, the commercial.

There's more than one party in China, okay? So they continue to work on their operation and refining their operation and we continue to try and support them wherever we cannot in that process. And so they are still doing what they are doing and the other party in China is also working on a similar operation. But they haven't commenced as of yet.

Okay, but as far as the commercial plan, is that something that is still in discussion with China resource and alcohol specifically?

We are still talking to them about where they are going with their project and yes.

Okay, that's it. That's all I have, guys. Appreciate it.

[William Ditto], [GoTo Company].

Just going over the Food Group, you guys are in a pretty unique situation here with global sourcing. You guys are exporting to over 30 companies and of course a key focus right now is margin-building strategies. Just going over some of these other countries where the demand is still even stronger than it is in the US, do you guys kind of feel that you can meet some of that turnover even though you are trying to reduce inventories? Do you guys think you can be efficient there in reaching out to those markets?

It's Tony Tavares. In answer to that, the inventory reduction objectives or initiatives, we fully expect to be able to do that and improve fill rates, so it's really not a question of a trade-off between servicing customers and reducing inventories. We think there is a lot of green space there where we can do both. So the inventory reduction initiatives will in no way affect our ability to service any viable customer.

Okay, and yes I think there was a pretty much confirmation of the big -- one of the big soymilk companies taking off three organic brands, which should be favorable to you guys. Just a question on percentage. What percentage of your Modesto facility is going to go service that new contract that you guys have with the retail operator for $20 million in revenues a year? Is there a certain amount of percentage that you guys are diverting from Modesto to that? Do you know what it is?

That facility, Modesto will service that account and it would be about 25% to 35% of the opening volume.

Okay, okay. And then there's a real paucity of the cellulosic ethanol plants coming off especially what we are looking at in terms of commercial plants and increasingly it's putting the focus on the plants that are actually either up and running, number one, and have been funded by the DOE. And there's a lot of projects that have kind of gone belly up. They've either turned away their DOE money, their federal funding, and they are not meeting prerequisites for commercialization.

You guys, that is where your milestones are kind of coming in here. My question for you guys is with some of these advances in the enzyme and the hydrolysis stages, it looks as though that's really favoring steam explosion pretreatment. And I am wondering what you guys have to say in that effect in terms of some of these advances like single step fermentation and things like that?

Well, we are biased and we agree. We think that all of this development, it looks -- it helps position the business going forward.

We also think we have a better -- certainly a much better story to tell everybody on the environmental side where our process is more environmentally friendly and it's going to be a major plank of our selling proposals.

Okay, that is one of the going interests of a lot of places right now especially with this administration. The cost of doing business is always including the cost of the environment. So all right. Well thanks very much, gentlemen.

[Ron Pollack], private investor.

Yes, on the CMEC feasibility study, can you give some additional information in terms of completion dates? Are the results positive, negative, where does that stand?

We made it through -- we went through the first phase and we were satisfied with where things were at. The second phase involves much more detailed planning, much more detailed engineering, much more detailed studies across the entire phase. We are proceeding through that phase and I think it would be fair to say that there hasn't been a show stopper come up that says that isn't a viable project and that we shouldn't keep moving forward with it. We are doing that. We would expect that that would be behind us kind of late third/early fourth quarter.

And at that point if you get the thumbs up, with the economic times what they are, do you have the ability to proceed with the commercial project or would that be delayed?

No, as we indicated, the BioProcess Group are well-funded and they have significant resources and they would be looking, as we mentioned earlier, be looking to receive -- take on other funding sources and that can be through primarily through various government programs that are in place or other partners as well.

Do you have a target date?

Target date for --?

Beginning, just deal on the ground.

No, we don't have a specific date. It really depends on how all the phases, all the phase 1 -- pardon me, phase 2 work gets completed and then once that's completed, there would be a date in the ground. At the same time, there's a bunch of streams that we are undertaking. We are obviously going down the study side. We are also talking, working on partnerships to help fund that facility.

Are you talking to any oil companies about partnerships?

Yes.

And you have mentioned the fact that the US government stimulus infusion can positively impact some Opta. Have you run any projections that you can share?

We haven't run specific projections because quite frankly at this stage of the game, the government is -- it's very hard to tell exactly where the government are putting their money and what they are putting it into and how we can benefit from that. The infrastructure side or the abrasives and industrial mineral side of the business obviously would be benefactors in bridge cleaning and road building and all of those sorts of projects.

As of this stage of the day, as of today, I can tell you that the government money isn't flowing out yet in significant portions that the business sees. So that's very much a -- we know it's coming and our customers claim it's coming, but nobody knows when it's coming.

We have done a lot of modeling our processes to what type of oil price we would need to make it viable and we feel pretty good about it.

One last question. On the aseptic soymilk contract that you've announced with a food service restaurant company, you said it's going to create revenue of $15 million to $20 million annually. Do you have a projection for what the net income on that money would be?

We don't disclose that.

And have you announced what the restaurant company is?

No, we haven't.

We would have loved to, but they prefer us not to do so.

Great, thank you.

Thank you. And that was our last question.

Great, thank you very much, operator, and to everyone on the call, thank you very much for joining the call today. I know we said we would keep it to an hour and we are a little bit over, but we wanted to get in as many questions as we possibly could.

As you can tell, there's a lot of interesting and hard work going on in our organization. We are very confident about the future. We thank you all for your support. As always, feel free to give us a call if you have any questions and we look forward to chatting to everyone again soon. Take care. Thank you.

Thank you. Ladies and gentlemen, this does conclude your conference call for today. Once again, thank you for participating. At this time, we ask that you please disconnect your lines. Have yourself a good weekend.