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Global Sources Ltd. (NASDAQ:GSOL)

Q4 2008 Earnings Call Transcript

March 12, 2009, 2009 8:00 am ET

Executives

Kirsten Chapman – IR, Lippert/Heilshorn & Associates, Inc.

Merle Hinrichs – Chairman and CEO

David Gillan – Deputy CFO

Analysts

Jason Brueschke – Citigroup

Eddie Leung – Bank of America-Merrill Lynch

Operator

Welcome to the Global Sources fourth quarter and year-end 2008 earnings conference call. At this time, all participants are in a listen-only mode. (Operator instructions) As a reminder, this conference is being recorded today Thursday, March 12, 2009.

I would now like to turn the conference over to Kirsten Chapman. Please go ahead ma'am.

Kirsten Chapman

Thank you, Regina. I would like to thank everyone again for joining us today for Global Sources fourth quarter and year-end 2008 earning conference call. With us on the call today are Merle Hinrichs, Chairman and Chief Executive Officer; David Gillan, Deputy Chief Financial Officer; and Eddie Heng, Chief Financial Officer.

If anyone has not yet received the earnings press release, it is now available at the company’s website at globalsources.com. If you would like to be added to our distribution list or if you would like additional information about Global Sources, you may call Lippert/Heilshorn & Associates at 415-433-3777.

There will be a telephone replay of this call available until March 16, and the dialing instructions are included in the press release. The replay will also be available on the investor relations page at the company’s website for at least 30 days.

Before I turn the call over to management let me remind you that this call will contain forward-looking statements. Investors should be aware that any forward-looking statements are based on assumptions and are subject to risks and uncertainties that could cause actual results to differ materially from those discussed here today.

These risk factors are explained in detail in the company’s filings with the Securities and Exchange Commission. Global Sources do not undertake any obligation to publicly update or revise any forward-looking statements whether as a result of new information, future events or otherwise. I would also like to remind you about Regulation FD restrictions.

The company’s official spokespeople to the investment community are Merle Hinrichs;

Eddie Heng; David Gillan; James Strachan, Executive Vice President of Corporate Development; and Suzanne Wang, General Manager of Corporate Investments.

Now I would like to turn the call over to Mr. Hinrichs. Please go ahead sir.

Merle Hinrichs

Thank you, Kristen, and I thank everyone for joining us this evening. While the global economic environment in the last half of 2008 proved to be difficult, we had a solid year with many noteworthy accomplishments.

Global Sources grew revenue 14% for the full year and 7% for the fourth quarter. More importantly, we are well positioned for the challenging times ahead. Notably, we have a very strong balance sheet with $131 million in cash and cash equivalents and no debt. Our products are clearly differentiated and we have a long track record of delivering profitability.

The financial highlights for the fourth quarter are as follows. Revenue increased to $65 million, growing 7% as compared to the fourth quarter of 2007. Our growth continues to be driven by the strong performance of our online services, which grew to $25 million up 22% compared to fourth quarter of 2007. And our revenue from China increased by 18% to $45.4 million.

Looking at 2009, the global economic downturn is severe and global trade has been particularly hard hit. The situation is very uncertain and our visibility is limited. Accordingly, we expected a decline in revenue and profitability. Overall, our long-term goal remains same, to sustain profitability and shareholder value. We are focused on managing the company through the global recession. We are concentrating on our core businesses, maximizing the productivity of our team members and managing our costs.

We're fine tuning our products and services to the changing needs of our customers. We are focused on becoming stronger, leaner, and even closer to our customers. And our objectives are to improve our competitive position and growth disproportionately to competitors when the economy improves.

Before we begin our detailed financial review, there are three corporate events I'm pleased to discuss today. In December, we completed our tender offer for 6.25 million common shares at $8.00 per share. This exercise enabled us to offer capital in cash to all shareholders, while also protecting the size of our public flow [ph].

In February, we announced a one for ten bonus share issuance, which rewards all shareholders of record on February 27, 2009, through a non-cash stock split. The bonus shares are scheduled to be distributed on or about March 31, 2009. And today, joining me on the call for the first time is David Gillan, our new Deputy Chief Financial Officer. As announced on our November conference call, Eddie Heng is scheduled to retire as CFO on June 30, 2009. However, we are pleased he has agreed to remain on our board as a Non-Executive Director after his retirement. David joined Global Sources last quarter, and has been working closely with Eddie since then to ensure a smooth transition.

After David discusses our fourth quarter and year-end 2008 financials, I will return to summarize and open the call for questions. David?

David Gillan

Thank you, Mr. Hinrichs. I will now review our financial results for the fourth quarter of 2008 compared to the fourth quarter of 2007.

Revenue was $65.0 million, up 7% from $60.8 million. Online revenue grew 22% to $25 million. Exhibitions revenue was $26.4 million, up 4% from $25.5 million, reflecting higher yield per booth. Print services revenue was $11.4 million, down 15% compared to 2007. Sales from mainland China, which comprised approximately 70% of total revenue were up by 18%.

Total operating expenses for the quarter were $57.1 million compared to $53.7 million in Q4 07. Sales costs increased to $24.7 million compared to 20.6 million due to increased sales presentations. As anticipated, the operating expense increase was due to supporting greater revenues, expanding sales representations, and investing in information technology infrastructure, content development, and marketing to buyers and suppliers.

Total operating expenses in the fourth quarter included a credit of $420,000 of non-cash stock-based compensation. I would like to remind you that these non-cash stock-based compensation charge is a charge to our income statement and the corresponding credit to our additional paid-in capital account in our balance sheet. Hence, there is no impact on shareholders equity. However, in this quarter since it is a credit in our income statement there will be a corresponding debit to our additional paid-in capital account in our balance sheet.

Interest income was $268,000 compared to $1.7 million in Q4 07. The decrease was due to the combination of the lower cash balance, resulting from our property purchases in the third quarter, and the lower yield on US Treasury bills.

At December 31, 2008, we had $100 million of US Treasury bills. The GAAP net income for Q4 08 was $7.5 million, or $0.14 per diluted share, which included a $939,000 write-down on the fair value of securities, and a credit of $420,000 in non-cash stock based compensation expense based on the December 31, 2008 stock price of $5.45. This compares to the fourth quarter of 2007, when GAAP net income was $8.1 million or $0.16 per diluted share, which included a $2.4 million gain from the sale of equity interests in HC International; a $3.1 million write-down on the investment in Blue Bamboo; and a $3.6 million non-cash stock-based compensation expense based on the December, 31, 2007 stock price of $28.22.

Non-GAAP net income was $8.0 million, or $0.15 per diluted share, compared to $12.5 million, or $0.24 per diluted share, for the fourth quarter of 2007.

Now I will review our year ending December 31, 2008. Revenue was $206.9 million as compared to $182 million at December 31, 2007. GAAP net income for the year was $26.4 million, or $0.51 per diluted share, which includes $939,000 write-down on the fair value of securities and a credit of $902,000 non-cash stock-based compensation expense based on the December, 31, 2008 stock price of $5.45. This compares to $24.0 million, or $0.46 per diluted share in 2007, which included $1.8 million impairment, net charge on the HC International investment; a $2.4 million gain from the sale of equity interests in HC International; a $3.1 million write-down on the investment in Blue Bamboo; and a $7.8 million stock based compensation expense based upon stock prices at the end of the year.

Non-GAAP net income was $26.5 million, or $0.51 per diluted share, compared to $34.4 million, or $0.66 per diluted share in 2007.

Now I will move to a review of our balance sheet at December 31, 2008. Given the current economic situation we are facing, we continue to benefit from and are very pleased to continue to have such a strong balance sheet. Cash and securities as at December 31, 2008, totaled $131 million, which reflects the tender of 6.25 million common shares or $50 million paid in December 2008, as well as real estate purchases totaling $47.9 million made throughout the year as compared to $197.8 million as at December 31, 2007.

It is our policy to keep our cash as liquid securities and cash equivalents. Accordingly, $100 million of the $131 million is in short-term US Treasury bills.

Short and long-term deferred income and customer prepayments were $76.7 million as at December 31, 2008, compared to $83.1 million as at December 31, 2007.

Our total assets were $245.1 million as compared to $271.8 million a year ago. Also, we continue to not carry any long-term debt or bank debt. Our days sales outstanding or DSOs at December 31, 2008, were 12 days compared to 15 days a year ago.

At December 31, 2008 shareholders equity reached $141.9 million. With regards to the first half of 2009, the business climate is very uncertain. Accordingly, we have decided to suspend providing financial guidance until we have better visibility.

And now I will turn the call back to Mr. Hinrichs.

Merle Hinrichs

Thank you, David. The markets we serve has fundamentally changed. Consumer spending has declined globally and is not expected to return soon to previous levels. This impacts the profitability of retailers and other buyers. Accordingly, they are changing their sourcing strategies, which in turn impacts the strategies of all exporters and manufacturers. That said, buyers are focused on the future. They need to replenish their inventories, and they need to source merchandise that will sell in today's market.

The world is a very big market and China will be a dominant supplier of products to the world’s consumers for many years to come. In addition, China's domestic market remains a highly attractive long-term growth market for us. Global Sources is well positioned to serve the new and changing needs of our buyer and supplier customers. And particularly, we have a strong leadership position serving the medium to large sized buyers and suppliers. As an aside, the 80/20 rule that generally apply to importing, where for example in the US and according to US Customs the top 3000 buyers account for more than 67% of total imports.

We have a well differentiated end-to-end product offering that not only delivers a large online audience, but with shows and private sourcing events it also enables customers to get face-to-face and conclude orders. In addition, we have a very large and well established IT content and sales representation infrastructure, a great balance sheet and a solid business model, and a highly experienced management team that has successfully weathered many competitive and economic challenges in this space over many decades.

In short, we believe we have all the assets and experience we need to manage the company through this period. Moreover, we view this as an opportunity to get leaner and stronger and closer certainly to our customers, and as an opportunity to refine and retune our services to the new needs of our customers.

I would like to turn the call over to the operator for questions and answers. Operator?

Question-and-Answer Session

Operator

(Operator instructions) Our first question comes from the line of Jason Brueschke with Citigroup. Please go ahead with your question.

Jason Brueschke – Citigroup

Thank you. Good evening Merle, David, Eddie, Kirsten and everyone. Merle, I'm going to spend most of my time just asking you a couple of questions about the demand environment. Can you maybe touch on a couple of things? First of all, kind of how has maybe business tracked year-to-date. It seems from the latest macro figures coming out of China that February was a particularly challenging month.

There – just if you could maybe comment on that. The second – I'll give you a couple of points. I would like just your views on Merle. Secondly, with respect to restocking, when your buyers are restocking, are they restocking in a similar quantity kind of what is their views on how their views changed as to what they anticipate, either the type of products that people may be buying in the fall or as they restock and also the quantity. The third question I would add is it seems like to me, when we look at some of your statistics, for example, your number of customers went up 20%. The number of RFIs almost doubled. So there seems to be a tremendous amount of interest. Is this – the difference between the increase in the RFIs versus the number of customers, does this suggest that there is disruption, I'll call it disruption within the supply chain meaning that these customers that are coming back to resupply are looking for different suppliers, and maybe they have had in the past.

And then my final question if you could touch on is, can you maybe talk a little bit about the impact of credit insurance limits being lowered and maybe just the bad (inaudible) the credit side of the equation, is there just more, I guess, a lack of trust is one to say between both the buyers and the sellers that A, that the buyers may go out of business and therefore people don't want to manufacture for them and then on the other side may be the manufacturers go out of business, the people are worried about buying for them.

So I know that's a lot but I think that will help us have a better sense of what's really going on. Thanks.

Merle Hinrichs

Right. And thank you, Jason, for joining the call this evening. First of all, regarding your – the macro question, your first question on how the trade is tracking, et cetera. Well, I think those figures are, you know, they are available in many terms and in many ways from the number of employees that have been previously employed in the export industries in China that did not have jobs to return to. The 25% decline in exports in February, the decline in exports from Taiwan, and from typically every country including Japan in a substantial number.

A lot of the exports from Taiwan and Korea, in particular, were component parts that would be exported to China for assembly and then re-export. So the whole international trade and the trading activity in China has contracted greatly, and far faster than anyone could have anticipated largely because of the implosion at the retail end. Now this takes me to your second question and the restocking that buyers are faced with. They have a lot of – they have had a lot of unsold stock prior to Christmas. Christmas was very slow. There were any number of sales after Christmas to push that overstocking through. You have seen that with Macy's, giving very large discounts to, of course, the store closures which many stores did reduce the number of outlets, and, of course, you know, you had a number of stores that have permanently closed.

Circuit City and a whole bunch of other companies have reduced their total floor space. So what is the situation with merchandisers restocking now is that they have got basically a changed consumer habit. Consumers that are buying today are looking at a more utilitarian product. An example, microwave ovens, household utensils, and things to do more with what it takes to reduce your life – the activity of one's life to a more home related focus.

We see that in the type of products that are being sourced. So, this sort of segues to your third question to reference the number of customers that are using the services and the number of RFIs. Yes, we're getting a lot more activity on both the sell side and the buy side. The sell side, of course, are trying to gear their product offerings to a buy side that is in change and influx, and the buy side, of course, is very concerned that the suppliers – number one, that the suppliers that they have been buying for or buying from are stable that will be able to supply because there is nothing worse for a buyer than having bought a certain product and then finding out that the supplier cannot deliver it, and he then ends up with an empty shop.

What is critical for merchandisers is to have product on the shelf or on their shelves that meets the consumers current needs, and given the amount of change that has taken place in the last six months, this is really a major challenge, especially when they have as I mentioned before so much overstock, which had been ordered in the early part of 2008. So as I said in my prepared notes, Jason, we are in a different place and a different space in the retail industry, and what is happening due to that is that merchandisers are buying less, there are buying smaller quantities, they are looking at, of course, more frequent purchases if products are being, you know, if products are being sold.

They are certainly trying to push their credit terms or push more severe credit terms, if I may put it that way, to the supplier and entrepreneur [ph]. On the other side, the supplier is saying, wait a minute, I don't want to get into a credit problem, and of course is pushing back on these extended credit terms. Now as you will appreciate, the banks have not really been facilitating borrowers in a way of making credit available to either the buyer or the supplier because of the concern of the creditworthiness of a supplier that is in a challenged situation or a buyer that is in a challenged situation.

So it is true that not only do you have a change in the retail market at the consumer level but that passes right on through to what the buyers reaction is, what the supplier's reaction is to that buyer, and then, of course, how the buyers are interacting, or I should say, how the banks are interacting with this changed environment. So, it's quite an upheaval, and it is – and I'm of the opinion that we will not see a return to previous buying amounts in the near future. We certainly won't see it in 2009. I think that addresses most of the questions Jason that you have asked. If there is any –

Jason Brueschke – Citigroup

That's great. If I may – with that as the backdrop, could I maybe ask you to compare and contrast how the domestic demand is faring? It seems that, you know, domestic retail in China seems to be holding up. It is certainly down from where it had been but certainly holding up at least in percentage terms but also maybe if I could just get some comments. That does not have to be point by point, just general. Maybe some more color on the domestic demand, and then maybe I'll just have one last question after that, Merle if you could just maybe address of your businesses what's – is trade show more exposed or less exposed and say your online business. That would be my final question, the domestic first and the tradeshow question second. Thanks.

Merle Hinrichs

Okay. Regarding the domestic demand, and I think the China domestic demand. This is holding up quite well. It is not having the implosion of the west that we have seen, and let me speak specifically to our own offering, which is called the China GSOL, and it is the domestic site that we run. We have had a lot of prior participation from companies like Acer and Alcoa, (inaudible), and currently we have about 115,000 verified and unverified suppliers (inaudible), and are requesting about a 1.4 million product offerings, and the RFI activity has increased by some 300%, and we completed the survey actually of our Chief Executive leadership, which there is a certain group of buyers in that or a certain group of retailers, and there is every expectation amongst the majority of them that there is going to be an increase in sales for 2009. So that certainly bodes well for our site and for the development – the future development of it.

I think there was only – there was a minority that actually felt that something like 30% that felt like that there was going to be some kind of correction. So, I think the China’s top 1000 retailers saw their sales rise by something like 24% for 2008. It'll be – I'm not sure it is going to be that much in 2009 but I don't see that we’ll see nearly any diminution similar to what we have in the West. So we are very, you know, very comfortable and excited about the China GSOL.

With that, moving on to your question about trade shows and which one is exposed, well I think, you know, in our situation and as the China exporters mature, they certainly deserve a much larger offering in their efforts to promote their products to foreign buyers. I mean, just using our online services or anyone's online services, hardly is sufficient in today's increasingly sophisticated world. As an exposure though, I think that all media are exposed. The budgets that are available for marketing from the manufacturer look at all of these spending opportunities or these promotional opportunities, and increasingly I think that there is a concern and an interest in getting out to the buyer. We certainly see an increased focus on this from Chinese Government support, where they will support Chinese manufacturers who wish to show their merchandise overseas and any much of this stimulant [ph] is quite new, in fact it's only within the last year. There is also some support for advertising as well. So I can’t say that one is more exposed than the other, Jason. I think that they all are. It really depends upon the budgets of the manufacturer.

Jason Brueschke – Citigroup

Perfect. Listen, I've taken up a lot of time. I'll get back in the queue. My other questions are answered, thanks.

Merle Hinrichs

Thank you again, Jason, for joining us.

Operator

(Operator instructions) Your next question comes from Eddie Leung of Bank of America-Merrill Lynch.

Merle Hinrichs

Eddie, good to have you with us.

Eddie Leung – Bank of America-Merrill Lynch

A couple of questions, the first one is –

Merle Hinrichs

Sorry, Eddie. You’ll have to speak up please.

Eddie Leung – Bank of America-Merrill Lynch

Sure. How has the current environment strained your expansion plans in some of their emerging markets outside of China?

Merle Hinrichs

Eddie, I'd say that we have been and we are very aggressive in the developing world of the BRIC community. I think I shared this once with you before, but we have a much larger participation from Brazil and Russia and from the Middle East at the recent trade show in October, which was very encouraging and if you look at the China export statistics you’ll see that the percentage increase of those exports is far greater than it is for the developing area. As you know, this last year we also have launched our first CSF show in Mumbai. This was a major success, and we will be looking to do that again next year with a – this year with increased number of participants – increased number of exhibitors and, of course, attendees.

So we are very focused on making sure that our advertisers and our exhibitors reach this developing market, and again it's a different product mix, but this is high on our list of activities.

Eddie Leung – Bank of America-Merrill Lynch

That is very interesting to hear. Second question is on the new products or services. Is there any new products or services in the pipeline that you think may be interesting in this current environment? Can you share some of your thoughts on that front?

Merle Hinrichs

Well, what we are doing now, of course, is making sure that our products are rolled out to the emerging markets. This is our focus. We feel that the product offerings that we have are very robust. We don't have competitors that even come close to the product offerings that we have for the China manufacturers. And I think that China manufacturers, as I mentioned before, really do deserve the opportunity to use all the tools that we have in helping them reach both the developed and the developing markets.

When I say all the tools what I mean is our online services [ph], which reach the large and medium-sized buyers and the publications, which are excellent tools in promoting brand. Our trade shows, which give them a chance to meet face-to-face and equally important is our private sourcing events, which are one on ones and that is where suppliers really can write the orders. So, Eddie, I think what we have is a very robust product offering. What we need to do is to make very sure that that complete range of products is being seen and being used by all the buyers and we think we have quite a comprehensive coverage at this juncture.

Eddie Leung – Bank of America-Merrill Lynch

Understood. Thanks.

Merle Hinrichs

Thank you, Eddie, for joining us.

Operator

(Operator instructions) Your next question is a follow-up question from Jason Brueschke with Citigroup. Please go ahead with you question.

Jason Brueschke – Citigroup

Great. Merle you had indicated that not surprisingly given the macro environment that you will probably see year-over-year in ‘09 decline in both revenues and profits. Maybe, the question I have is more I think micro level, which is within that kind of general context. Are you seeing your customers simply ceasing advertising for whatever reason or and I guess that what I know is kind of how to quantify this or are we seeing customers maybe being more frugal with their export B-to-B advertising meaning that they are trading down from some of the higher product offerings, higher star offerings you have to some of the lower ones. So they continue to work with Global Sources. It is just that they are trying to deploy, maybe a smaller budget in a more economical way.

Merle Hinrichs

Jason, it's actually all of the above. Every, you know, every manufacturer has a different concern, a different budget, a different plan, and we have to map to those requirements. There is a lot of slicing and dicing of the services as well. The point, I think that we have is that what we do have available is that we can provide alternatives. We can provide very functional alternatives to just an online offering, and I think that the area that probably is hit worse is in the small and medium-sized manufacturers that don't have the wherewithal to continue or are in trouble or challenged.

Fortunately, we are in the medium to the upper suppliers as well as the medium in upper type of buyers. So, I think, we are in a stronger position than a lot of our competition. But having said that, even this particular group, of course, are finding this situation very challenging for a number of the reasons I mentioned earlier on the first questions.

Jason Brueschke – Citigroup

Thanks. And then maybe two other questions. Could you may be comment on the various vertical industries that you operated in; maybe give us some examples of some of the verticals that may be more impacted. I know we talked a lot about retail, and maybe some examples of some of the verticals that might be better positioned from not only their demand environment, these manufacturers but also the company's, Global Sources, demand environment would be the second – the first follow up.

And then my second question is, could you maybe give us an update on competition. We know that Alibaba introduced a dramatically lower price pointed starter pack in November, and I'm just curious to get your views on, if that has caused any change in the competitive dynamics, or any disruption or just – or any change in your strategy as to how do you go to market et cetera, thanks.

Merle Hinrichs

Thanks, Jason. Regarding products, as I mentioned earlier, products which provide utility, products which are going to be useful, products which have longer life are really the type of products with which merchandisers are focusing on. They are also focusing on the more generic product offerings. They are not looking for the brands with which they would have to pay premiums for or stock. So there is pressure on product design, the type of product utility – there is pressure on finding products of utility, there is pressure on the pricing points, there is pressure on the size of the order in literally all categories.

Obviously, there is going to be a continued need for basic consumer products. That it is a change, there is definitely a change in the market. With regard to your second question, as you'll recall, we did a complete restructuring and launched GSOL 2.0 in the early part of 2008. It was extremely successful. Along with that we offered a one price at 40,000 amendment [ph] a year. And very shortly thereafter, (inaudible) decided that they had to lower their prices, and their price is now at for whatever reason, about half of ours. And we have always been the higher priced product and appealing to the larger and more medium sized suppliers, which is the position we have always taken. They have taken the position of the small medium-sized suppliers, which I think will be not able to afford more than that but of course, many of them are much weaker in their ability to supply, and I understand also that now, that they have even cut the price in certain areas, below the 20,000 rate.

So, I'm sure have picked up quite a bit of volume on it, but we don't wish to compete on price. We compete on the services, the quality of our offering, the quality of our buyer community, and for certain I think have an appreciation amongst the suppliers for providing a more sophisticated and certainly a broader range of product. So that is really how we see it.

Jason Brueschke – Citigroup

Great. Thank you again.

Merle Hinrichs

Thank you.

Operator

The next question is a follow up from Eddie Leung with Bank of America-Merrill Lynch. Please go ahead with your question.

Eddie Leung – Bank of America-Merrill Lynch

Just a quick follow up on the custom mix that you have, can you talk about –

Merle Hinrichs

Eddie, I'm having trouble hearing you. Eddie, can you speak up a bit?

Eddie Leung – Bank of America-Merrill Lynch

Hi, Merle. Just I want to see is there any change in the customer mix of the new buyers as well as suppliers that you got recently in terms of their size, in terms of their needs et cetera?

Merle Hinrichs

Maybe repeat the question, custom size buyers -- I'm sorry, I don't understand.

Eddie Leung – Bank of America-Merrill Lynch

I just want to know, I just want to hear whether you have seen any change in the customer mix that you have recently?

Merle Hinrichs

Okay, thank you.

Eddie Leung – Bank of America-Merrill Lynch

Both from the supplier and buyer point of view.

Merle Hinrichs

Yes, no, we've always focused upon the medium and larger buyers. We have extended over the last 2 to 3 years a substantial effort to reach out to buyers in the developing countries. So there has been a bit of a change there, but not in the quality of the buyer, not in the type of buyers. We try to specialize our buying community, because what we want to do is deliver quality enquiries and quality opportunities to our suppliers. (inaudible) So, we certainly try to qualify our buyers whenever we can.

We have always had a very strong following of retail and wholesale importers in the developing markets and continue, of course, to build on that. So there is some modification, but it is based more on external demand for our products. And I think that that is very natural in this environment.

Eddie Leung – Bank of America-Merrill Lynch

Got that. Thanks.

Merle Hinrichs

Thank you, Eddie.

Operator

There are no further questions at this time. I will turn the call over to Mr. Hinrichs for any closing remarks.

Merle Hinrichs

Well, I want to thank everyone that have joined us this evening or morning whatever it may be. I just like to say that in our 38 year history, our management team has certainly successfully responded to numerous challenges, and over these years we have built a very solid foundation, well differentiated products, which I have shared with you this evening. And we have a very strong financial position, and I know the situation is very – it is certainly challenging, but the company will certainly weather it well. And I have every confidence that we will be stronger for it. So, again I want to thank you all for joining us this evening and look forward to seeing you on our next call.

Operator

Ladies and gentlemen, that concludes your conference call for today. We thank you for your participation and ask that you please disconnect your lines.

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