Unifi Inc (UFI) 2011 Q1 法說會逐字稿

Good morning everyone and welcome to the first quarter 2011 Unifi earnings conference call. My name is Colby and I will your operator for today. At this time all participants are in listen-only mode. We will conduct a question-and-answer session towards the end of this conference. (Operator Instructions.) As a reminder, this call is being recorded for replay purposes.

I would now like to turn the call over to Mr. Ronald Smith, Chief Financial Officer of Unifi. Please proceed, sir.

Thanks, Colby, and good morning, everyone. Joining me for the conference call today is Bill Jasper, our President and CEO. During this call we will be referencing a webcast presentation that can be found at unifi.com. The presentation can be accessed by clicking the First Quarter Conference Call link found on our homepage.

Also before we begin I need to advise you that certain statements included herein may be forward-looking statements within the meeting of federal securities laws. Management cautions that these statements are based on current expectations, estimates and our projections about the markets in which the company operates. Therefore these statements are not guarantees of future performance and involve certain risks that are difficult to predict. Actual outcomes and results may differ, materially, from what is expressed, forecasted or implied by these statements. I direct you to the disclosures filed with the SEC and our Form 10-Qs and 10-Ks regarding various factors that may impact these results.

Before we begin the financial details I'd like to turn the call over to Bill who will provide you with an overview of the quarter. Bill.

Thanks, Ron. Good morning, everyone. As we continue to see recovery from the global economic downturn, the underlying improvements to our company that we have made are becoming increasingly apparent. A few examples are -- net sales for the current quarter are $5 million greater than the pre-recession September 2008 quarter, while adjusted EBITDA is $4.5 million better. We have achieved five consecutive quarters of positive net income as the fundamental improvements we have made have taken effect and we continue to improve our balance sheet reducing our long-term debt by a $15 million call and retirement of 2,014 senior secured notes.

These improvements are a result of our focus on driving continuous process improvement throughout the Company, maintaining high share in all of our key markets and investing in the growth of our PVA products, especially Repreve. Going forward we see fiscal 2011 as an important transition year. We are using the strength of our balance sheet to make strategic capital expenditures this fiscal year in order to support future growth initiatives which we expect will further enhance our results in fiscal 2012 and beyond.

Turning to the market, net sales from our domestic operations increased 16% compared to the prior year September quarter, which is a rate considerably higher than year-over-year improvement in retail sales. In retail apparel year-over-year sales increased 3.5% compared to the prior year September quarter. This marks the fourth consecutive quarter of year-over-year gains, bringing retail sales of apparel to within 1 to 2% of their pre-recession levels, which is encouraging. And although the improvements in retail sales over the past three quarters have been small, inventory levels at retail have improved to 69 to 70 days, a level much lower than the 77 to 78 days pre-recession.

Year-over-year retail sales in home furnishing increased 3.1% which is comparable to the increase seen in apparel. However, retail sales of home furnishings began declining a year ahead of the recession and have been experiencing a much slower recovery than apparel. Home furnishings sales remain approximately 15% below pre-decline levels and inventory has averaged approximately 111 days over the last eight quarters, an increase of approximately ten days from pre-decline levels. That said, we still expect continued but slow improvement in this market over the next several quarters as construction spending begins to recover.

We are also encouraged by the results of back-to-school season and it appears that the supply chain is well positioned to successfully manage through the upcoming holiday season. Many of the larger apparel companies are forecasting a continuation of year-over-year growth in retail apparel and we continue to be optimistic about the trends we are seeing in our key segments.

Our foreign businesses also performed well in the September quarter. In Brazil the continued strengthening of the real has created import pricing pressure but nevertheless our operations are reporting strong revenue and a significant contribution to adjusted EBITDA. On a positive note, the global supply chain dynamics that we are seeing around both the availability and pricing of cotton may present some near-term opportunities as Brazilian consumers have historically been highly cotton-centric and now many of our customers there are considering shifts into more synthetics.

In China, overall strong demand, especially for Repreve, has created volume growth and we remain optimistic about its continued growth.

And progress continues with Unifi Central America and we expect to be fully operational in December. ON a year-to-date basis, imports of synthetic apparel from Central America have increased 24% which is slightly higher than the increase from China and double the increase from the rest of the world, resulting in improvement in the regional share of US apparel consumption.

In fact, volume coming from the CAFTA region is now comparable to 2007 and 2008 levels. And based on this trend, we expect share of US apparel consumption from the combined US, CAFTA and NAFTA region to stabilize at its current level as brands and retailers seek to better manage inventory. This improvement in CAFTA has been driven by its ability to produce high-quality competitively priced garments on a quick-turn basis.

In addition to this, supply chain investments are being made in the region with over 27 apparel-related companies announcing capacity expansion in the US and CAFTA over the last several months. We believe these investments in both infrastructure and capacity make the region an increasingly attractive place for brands and retailers to source product, particularly at a time when the supply chains across Asia are continuing to experience labor, material, and transportation cost increases.

Looking back over the past three years we have accomplished the three primary objectives established by our executive team back in October 2007, which were returning the Company to profitability, developing a successful business platform in China, and creating a long-term growth strategy. As we look forward we are focusing on maintaining the gains we have realized and making substantial improvement from here.

We will focus on, one, continuously improving all business processes and corporate profitability; secondly, increasing sales and earnings in global growth markets; and finally, executing on our strategic growth plans to ensure the long-term health of the company.

With that as a backdrop I'll turn the call back over to Ron who will take you through our preliminary results for the September quarter. Ron

Thanks for that update, Bill. I'll now begin our review of the preliminary financial results for the September quarter which began on page three of the presentation. Net sales for the current quarter were $174 million, an increase of $31 million or 22% over the prior year September quarter. The increase was a company-wide effort as our operations in the US, Brazil, Columbia, China and Central America all recorded year-over-year net sales increases.

The company is also reporting net income of $10.2 million or $0.17 per share for the quarter, compared to net income of $2.5 million, or $0.04 per share for the prior year September quarter. Attributing to the improved quarter-over-quarter performance was a 170 basis point increase in domestic gross margins driven by process improvement programs and conversion margin improvement, and a $6.3 million improvement in the Company's share of earnings in Parkdale America which I will discuss in greater detail a little bit later.

These gains were partially offset by a one-time charge of $1.1 million associated with an early extinguishment of $15 million in the Company's 11.5% senior secured notes due 2014. The Company expects this partial redemption will result in a savings of approximately $1.7 million in annualized net interest expense going forward.

Total SG&A expense for the quarter was flat on a dollar basis compared to the prior year quarter but as a percentage of sales considerably lower.

Looking at our volume and pricing highlights on page four, quarter-over-prior-year-quarter volume increased 13% on a consolidated basis driven by gains in our domestic business and China, as well as the start-up of our Central American operation. Pricing increased 8.5% on a consolidated basis primarily as a result of passing along changes in raw material costs. Versus the June 2010 quarter volume decreased by 6.6% on a consolidated basis due primarily to the July 4th shut-down week in the September quarter and normal seasonality.

Quarter-over-trailing-quarter pricing increased 5% on a consolidated basis as we raised prices in the domestic polyester segment to regain conversion margins lost during the second half of fiscal 2010 and as we passed along raw material price increases in our nylon business.

Turning to our balance sheet highlights on slide five, the Company is reporting $26.3 million in cash on hand, a decrease of $16.4 million from June. Some of the key uses of cash during the current quarter were the $15 million partial redemption of the 2014 notes plus an additional $863,000 in early call premium, $5.5 million in capital expenditures to support our strategic growth initiatives and a $12 million investment in working capital driven primarily by an investment in inventory related to the start-up of the Central American operations and a pre-buy build-up of inventory in anticipation of rising polyester raw material cost which we saw in the October quarter - sorry, the October month - and we plan to see in the November month.

In addition, accounts receivable increased $4 million due mostly to year end timing. As of the end of the September quarter, total debt was $164.4 million, $163.7 million of which is the remaining balance of our 2014 notes. During the quarter the Company and our bank group agreed to amend our revolving credit facility and extend its maturity to September 2015. Under this newly amended revolver, at the end of the September quarter, we had no outstanding borrowings and our current availability is $81 million.

Turning to page six, the Company recorded net earnings of $9 million from our equity affiliate partners compared to net earnings of $2.1 million for the prior year September quarter. The earnings from Parkdale America during the September quarter were $8.6 million compared $2.4 million earnings in the year-ago quarter. This improvement in results is primarily attributable to the higher volumes related to the economic recovery and to the Hanes brand acquisition which was completed in October of 2009. The results were also positively impacted by the timing of revenue recognition related to the EAP cotton rebate program. During the quarter Parkdale America recognized rebates of $19.3 million under the EAP cotton rebate program which is substantially greater than the normal quarterly benefit level of approximately $7 million. As a result the Company's 34% share of benefit for the quarter was just over $4 million greater than what we would usually expect based on Parkdale's normalized rate of income recognition from the cotton rebates. This higher level of EAP rebate recognition was due to the conditions of the EAP program requiring participants to invest the rebates in qualifying capital expenditures and due to the timing of Parkdale's related capital expenditures.

As of the end of the September quarter Parkdale has an additional $1.2 million in unrecognized EAP rebates which are expected to be recognized during the December quarter along with the normalized rate as Parkdale completes the modernization of one of its spinning facilities.

Turning to page seven the Company is reporting adjusted EBITDA of $18.4 million for the September quarter which is in excess of the original $15 million to $17 million guidance provided on our July earnings call, but in line with our updated guidance provided in the Company's Form 8-K filed with the SEC on September 20th. Excluded from the adjusted EBITDA for the quarter are approximately $1.8 million in restructuring and start-up costs related to our operations in Central America and replacing the production capacity in our domestic operations.

Now before I turn the call back over to Bill, I'd like to provide a brief update on some key dates for the December quarter. At our annual shareholders' meeting, the one-for-three reverse stock split was approved by our shareholders and the Board of Directors. The one-for-three reverse split is expected to take effect on November 3rd and all future filings will be adjusted to reflect the change.

and speaking of future filings, our 10-Q for the September quarter will be filed no later than November 5th. Our quiet period for the December quarter will begin on Thursday December 23rd, and extend through our earnings release conference call which is currently scheduled for Thursday, February 3rd. With that I'd like to turn the call back over to Bill for a couple of closing comments.

Thanks, Ron. As you all may know, cotton prices recently hit the highest level since records began back in 1879, as weather-related and other supply disruptions combined with robust global demand, particularly in Asia, have created concerns about availability. Cotton prices began moving higher in July as demand increased and reached their high point in October. As a result we are seeing some customers looking to substitute polyester for cotton based on their concerns over cotton availability and pricing.

In polyester we are seeing rising raw material prices driven by higher oil prices, increased global demand for polyester and unplanned PX and MEG plant maintenance shut-downs in Asia. We have announced a polyester price increase and expect to recoup the raw material increases we received over the next few months.

As you are aware the December quarter is historically our slowest with holiday shut-downs typically trimming 1-1/2 to 2 shipping weeks from the quarter. Accordingly we are estimating adjusted EBITDA for the December quarter to be in the range of $13 million to $15 million. Looking at the remainder of our fiscal year we believe retail sales in most of our markets will continue a slow but steady improvement and our region will hold share and benefit from that growth.

Based on these projections and continued improvement in our operational efficiencies we are reaffirming our previous adjusted EBITDA guidance for the 2011 fiscal year to be approximately $65 million which is an improvement of 18% versus our previous fiscal year. And with that I'll open the floor to questions. Operator.

(Operator Instructions.) Your first question comes from the line of Joe Phillips with Kellner DiLeo.

Good morning. A good quarter. Can you tell me again where the slides are on your website?

IT should be just on the homepage there. There's a first quarter conference call link that you can get to.

Okay, great. That's all I needed for the moment. Thank you.

Our website, just for reference, is Unifi, U N I F I. So it's just www.unifi.com.

Your next question comes from the line of Allen Zwickler with First Manhattan. Please proceed.

Good morning. Two unrelated questions.. One, as we look forward to the balance of this year and next year, is there any restructuring, more restructuring comtemplated, , i.e., in the US or in any of the other places? Or are we pretty much done with trying to de-bottleneck or close or shuffle the deck in the

Yes, just in very general terms, we've completed, at least in my mind right now, any restructuring we're going to do. And in fact we're actually growing capacity this year as we start up our operation in Central America. So I don't foresee any restructuring and certainly if there's continued growth in retail sales as the economy slowly recovers I would anticipate our sales increasing.

Now much of that increase, I believe, we're going to get through efficiency improvements in our plants as we're growing the effective capacity of our plants with many improvement programs that we have ongoing right now. So the short answer is no, I don't expect any restructuring anytime in the near future. The longer answer is I would expect our sales are going to continue to grow.

Okay and next question, the new plants that you're putting in, the CapEx, any early read on how they're going or is it just a little too premature?

It's a little premature. I mean certainly our Central American plant is near completion and we'll have that completely operational and commercialized in December and that's going well. Other capital investments we're making we anticipate them being completed in the second half of our fiscal year. But right now everything's on schedule. Certainly the recycle project which is the biggest one we have is still on schedule for a February to March start-up and we anticipate that's going to go smoothly.

Okay, and lastly, if you could just spend a minute on Parkdale again, because it seems to be a bouncing ball. This quarter, obviously, you earned more than you thought you would, but part of your explanation was it was deferred, meaning that it was sort of on their books and didn't hit your books. Could you just paint a picture right now of, and again this is my assumption, that if we were at steady state, meaning demand for their products kind of stayed the way it is now, what would the effect be to Unifi, just in general terms? Because the number was so much higher this quarter, and it's just kind of hard to figure how important that is going forward.

Yes, I think once the -- I guess on slide six there, for the quarter Parkdale did $8.6 million. Our share, sorry, our 34% share of Parkdale's interest was $8.6 million. That number is just over $4 million heavy specifically related to the recognition of those deferred revenues based on the timing of CapEx. So if you take out that $4 million you're a little over $4.5 million, our share of what their income was, for the quarter. And it's been a while since we've reported the rest of the financial information.

We'll file their -- we'll file an amendment to our 10-K this year to put their 2010 financial statements in there so you can get a full blast of it there. But just from the net income standpoint for this quarter it would have been $4.5 million would have been our 34% share of that business. And really this quarter is the quarter where the demand has returned but the HBI acquisition is fully integrated. When that transition happened back in October of 2009 they didn't buy the finished goods inventory that HBI had on hand. They just bought the assets and the inventory that was within the system which meant it took them a good three, four months before they were able to reach full capacity and full volume. So this quarter is really the first good quarter when you got a solid look at exactly what the impact of that business is with the HBI acquisition fully integrated in there.

So, asked a different way, to the best of your knowledge, what's their run rate these days? I mean, is their third quarter typically strong as well? I mean, I just want to understand the character of the earnings going forward because it seems like the HBI clearly was very beneficial to them and to you. And so what, in your numbers for the year that you've reiterated, which in a sense means that you've included these numbers that you just came out with, what is your assumption for their contribution versus your contribution, if you understood my long question?

I think so. Let me back up to make sure we're clear though When we talk about adjusted EBITDA, our adjusted EBITDA excludes any benefit from Parkdale America or any other equity affiliate. That (inaudible) a number we give for the annual year is based off our core operations. In addition to that, then you add in equity affiliates. You know we've got two small equity affiliates that are really sourcing operations, so Parkdale is completely independent of our guidance and that's' why we cut them out. We don't provide guidance for Parkdale because we're not in operating control of that business.

Now like you said, the HBI acquisition has been very good for the business. At $4.5 million, if you annualize the $4.5 million, our share is $18 million -- divided by 0.34, a $50 million net income business is what you would get coming off of this annualized quarter.

Well that would be robust to say the least, right?

No, no, no, I'm not annualizing --

No, I'm just saying -- that's what I'm trying to get at is that you could really have fun with the numbers if you wanted to.

And that's using the normalized EAP rebate income to come up with that. But as far as the seasonality of Parkdale's business versus the -- is this September quarter typically it's best quarter or not? I would say their seasonality is generally the same as ours where the March and the June quarter are the better quarters. September would be their third highest quarter and, like us, December quarter is where everybody takes their shut-downs. From a normal standpoint, the thing that I dont know is, because the HBI acquisition was such a large volume acquisition and you can see that in our Q's when we provide the revenue numbers, just that HBI was such a large volume, how that affects that seasonality I just don't have that history as a frame of reference.

Okay, and last one I'm going to sneak in, the tax rate versus the reality of your carry-forwards from previous years, how does one model that? I mean what your tax rate would or wouldn't be given -- is it more a function of where you're earning the money, I guess, at this point?

At this point, it's almost completely, other than the little AMT, it's completely a function of in the US we're not paying domestic taxes. We had $54 million of net operating loss carry-forwards as of the end of June. But outside the country, in China and in Brazil, we are paying taxes on earnings down there. Our NOL number, we're eating into that NOL number over the next couple of years, so by the time you get out of 2012 you'll be -- as far as modeling in, we'll have exhausted that NOL and we'll going back to being a taxpayer here in the US as well.

Thank you.

Your next question comes from the line of John Szabo with Flintridge Capital. Please proceed.

Good morning and thanks again for a good quarter. Just to follow up on the Parkdale discussion, Ron, is there any remaining balance on that deferred revenue line at Parkdale that may flow into earnings over the next year or so?

Yes, two things - the remaining balance is $1.2 million. And all that means is they've received $1.2 million over the life of the program more than they have expended out in capital expenditures. They will eat into that over the next quarter.

The other piece, the other point to that is, that CapEex is based on a modernizing a spinning facility. Not only are they going to eat into that but they're still spending cash here over the next quarter, which means as they get new cotton rebates coming in they'll recognize those directly to the balance sheet because they're spending ahead, basically, on CapEx.

So there's $1.2 million left. That $1.2 million will go on top of the normalized amount for next quarter and for the few quarters after that they'll have already spent what they needed to spend in order to recognize the revenue in those quarters as well. So it's going to have -- the next three quarters are going to be -- very much have a smoothing effect of what a normalized rate would look like for that EAP rebate.

Okay. So, maybe you could just help me out with, sort of, the strategic rationale for Parkdale, and I apologize if this has been covered in previous presentations or SEC documents, but what's the sort of big picture strategic rationale for the investment in Parkdale?

Yes, back in -- I've been around for 15, 16 years -- we went in the cotton spinning business in the early 90's as a diversification. We rolled up two -- we did a merger of two cotton companies and it was us and Parkdale, were the two large players in the business. The market, like the rest of -- a lot of other US manufacturers during that time period, we were seeing some contraction in manufacturing. The market had too much capacity and it needed to be rationalized. The way the market was rationalized was we put the two businesses together through a merger where we wound up owning 34% and Parkdale America wound up owning 66%.

So it was strategic diversification back in the early 90's. It was market rationalization back in the late 90's. We put the businesses together to stay. There is -- from a minority rights standpoint, we don't have a call or a put or anything like that in there, so strategically that's where they went together, and they're staying together. We're very happy with the results of the investment. They're earning a significant return on that business and those guys are really good operators, and we're happy to be a part of it.

And, Ron, the only thing I'd add to that is if you look at our company strategically one of the big strengths we have is that we've got a very broad product mix and we participate in a lot of markets. Even though Parkdale is not -- it's just a minority joint venture for us, it does greatly broaden our footprint in the textile industry in this hemisphere. So it just provides more diversity to our product mix and I think that's a very, very important strategic strength that we have.

Okay, and then, so just going back to the opening remarks and that sort of a substitution effect and given what's happening with cotton, I mean, is that - - do you sort of at this point consider it a hedge? In other words, people prefer synthetics, your base business is going to do well, but if it goes back to cotton, Parkdale will do well. Or is it really not that specific in terms of how you're thinking about it strategically?

Certainly for our core business there is some momentum to move from cotton to synthetics and it's difficult to say how big of a move that's going to be, or if it's going to happen in a big way. Certainly in Brazil there's probably more opportunity than there is here because Brazil is so cotton-centric.

From a Parkdale standpoint it's very difficult for us to predict how this is all going to play out over the next couple years. I think one thing is fairly certain, that there is enough momentum with this cotton price increases that we probably are going to start seeing some clothing increases, or clothing price increases, at retail, going forward. I guess that's about --

Yes. The other good -- the other positive strategic for Parkdale, if there is a switch on a global basis, and polyester does take share from cotton every year, on a global basis, it's such a cost effective alternative to cotton and has all the functionality -- has a lot more functionality than cotton.

But one of the other big positives, or one of the other big mitigating factors is, if that does happen the US is still the largest producer of cotton in the world and it's one of the large exporters of cotton so Parkdale has a cost advantage on raw materials and the cotton raw materials are very advantageous. And the production scale that's been set up here and the infrastructure that's been set up here in the region for very basic products like T-shirt and underwear and T-shirts for printing is very cost effective on a global basis. Even if there is a shift there will still be some significant demand and we're still optimistic about the future of Parkdale related to --

Just to clarify, Ron, when you say Parkdale has a cost advantage, you're really saying the US has a cost advantage.

Exacty, because of local US cotton.

Right, okay. So just so I understand this. You've seen this spike in cotton and yet it didn't negatively impact Parkdale's earnings from what I can tell, I guess. So I guess that means that they're not in a position where they get squeezed in a spike like that ? Is that a fair

No. I think that it's more - there's a timing issue in there. That's certainly a risk and a concern, that high price of cotton . If you think of the way cotton trades, the farmers want to lock in early, so the farmers didn't participate in this big spike because they locked in the selling of their crop early. The customers want to lock in as well. You think of the down-stream guys, they're wanting to lock in as well. So the Parkdale business model, a large, large percent of their customers lock in their cotton on long-term contracts in tradable markets. And so I think what you saw last quarter didn't necessarily show up in Parkdale's results just because so many people were already locked in here through 2010 calendar year.

I mean, as we move forward if prices stay up -- that's the point Bill was talking about -- if those prices stay up you can't lock in at lower prices anymore because the prices have already moved up. When they lock in to those higher prices, ultimately that's going to be passed on to the brand and retailers who are going to have to pass it on to the consumer. And that inflation of garment pricing is going to have to show up at retail because there's not room in the chain. I mean you're talking about prices that went from $0.50 to $0.75 up to $1.25, $1.35, so there's not room in the chain at all to eat that. So that's where it's going to have to be forced out through

Okay, so maybe just to summarize, then. With regard to Prakdale, as you move into the next year's crop and maybe they're a little bit more exposed, they're either going to have to raise rates, or they would be subject to kind of that margin squeeze we just talked about. On the other hand, in your core business, you've got, seemingly, some very good substitution effect possibilities, I think Bill mentioned, in Brazil, in particular. But I imagine it could go beyond that. So would you say the net effect of it, I guess is the question, the net effect of this is overall positive on Unifi's financial outlook over the next, say, 12 to 18 months?

I'd have to say, I mean it's got -- certainly has some positives from the standpoint of growth in polyester. The one potential issue we're going to have is it is also driving up raw material prices in synthetics, primarily polyester. Now we're selling at high capacity utilization so we've got the ability to pass some of these costs through certainly. But it will be interesting to see how it plays out over the next six to nine months, but overall, I think, if I had to judge the impact, it's going to be slightly positive for us.

Yeah, I think the other thing I'll say, too, if it stays up at record high, $1.30, I think it will cause some pressure. I think our expectations is there will be more capacity that comes on next year. There will be capacity that comes back on because the flooding won't be the issue again next year.

Right.

So I think based off where we see pricing in the long term, I think it's net a positive to us, but I don't expect it to stay up in that high range where it's at today.

Right.

It's been trading off pretty significantly. Twelve-month futures are even trading off pretty significantly from where there they're at today. So if it happens like the expectations are, I think it will be net positive for us.

Okay, if I could just sneak in one more question, I'll jump off. But, how do you feel about the, sort of the inventory levels in the chain, I guess, I mean down to the retail level. I mean do you feel like we're sort of through the end of the restocking, coming out of the recession? Or do you think that those sort of retail inventory levels are still a little skinny? I think you referenced some of that, but I mean, if you could just give me a little bit more color on where you think, how that is, it would be helpful.

Sure. Retail --, you know, let's talk apparel because that's really the biggest part of our business, certainly. It's still about 50% of our business. Inventories there have really averaged about nine to ten days below where they have been historically. Our belief is that's going to continue. There's two potential positives from that. If they elect to begin to raise those inventory levels then you're going to obviously see some increase in our business because of the restocking.

If, as we believe, they continue to keep them at lower levels because of what happened back during the large downturn we had back in 2008, that's also very beneficial to us because when they have lower inventory levels, they need more quick turns, and that really gives an advantage to the CAFTA and NAFTA regions. So in our view the fact that retail inventories are at very low levels compared to where they've been, historically, that's a positive to us really in two different ways.

Thanks again for a good quarter. I really appreciate how you guys have done a great job. Thanks.

(Operator instructions.) At this time there are no further questions appearing in queue.

Okay, thank you Operator.

Jjust a couple of closing comments. I'm very encouraged by what we're seeing at retail now and even though the economic recovery is going to be slow we feel very good about where we're positioned right now. We've made tremendous improvements to our operational efficiencies. We've greatly improved customer service and relationships so I'm very excited about where we are right now and I think we're positioned to really take advantage of improvements in the economy, so I'm feeling very good about where we are right now. Thank you.

Thank you for your participation in today's conference. This concludes the presentation. You may now disconnect. Good day.