Insight Enterprises, Inc. Q1 2010 Earnings Call Transcript

May. 6.10 | About: Insight Enterprises, (NSIT)

Insight Enterprises, Inc. (NASDAQ:NSIT)

Q1 2010 Earnings Call

May 5, 2010 5:00 pm ET

Executives

Glynis A. Bryan – Chief Financial Officer

Kenneth T. Lamneck – President, Chief Executive Officer & Director

Analysts

Brian Alexander – Raymond James & Associates

John Lawrence – Morgan Keegan & Co.

Matt Sheerin – Thomas Weisel Partners

Operator

Welcome to the Q1 2010 Insight Enterprises earnings call. At this time all participants are in listen only mode. Later, we will conduct a question and answer session. (Operator Instructions) As a reminder, this conference is being recorded for replay purposes. I would now like to turn the conference over to your host today Ms. Glynis Bryan, CFO.

Glynis A. Bryan

Thank you for joining the Insight Enterprises conference call. Today we will be discussing the company’s operating results for the quarter ended March 31, 2010. I’m Glynis Bryan, Chief Financial Officer of Insight Enterprises and joining me is Ken Lamneck, President and Chief Executive Officer. If you do not have a copy of the earnings release that was posted this afternoon and filed with the Securities & Exchange Commission on Form 8K, you will find it on our website at www.Insight.com under the investor relations section.

Today’s call including the question and answer period is being webcast live and can be accessed by the investor relations page of our website at www.Insight.com. An archive copy of the conference call will be available approximately two hours after completion of the call and will remain on our website for a limited time. This conference call and the associated webcast contain time sensitive information that is accurate only as of today, May 5, 2010.

This call is the property of Insight Enterprises. Any redistribution, retransmission or rebroadcast of this call in any form without the express written consent of Insight Enterprises is strictly prohibited. Finally, let me remind you about forward-looking statements that will be made on today’s call. All forward-looking statements that are made on this conference call are subject to risks and uncertainties that could cause our actual results to differ materially. These risks are discussed in today’s press release and in greater detail in our annual report on Form 10K for the year ended December 31, 2009.

With that, I will now turn the call over to Ken to walk you through an overview of our first quarter 2010 operating results and our priorities for the business for the balance of 2010.

Kenneth T. Lamneck

Thank you for joining us today to discuss our first quarter operating results. We’re pleased to report that market demand continued to improve in the first quarter across all of our operating segments. As we reported earlier today, consolidated net sales for the first quarter were $1.05 billion reflecting an increase of 10% from last year’s first quarter net sales and the first quarter since Q3 of 2008 that we saw year-to-year sales growth in all of our operating segments.

Gross profit was $145 million, up 10% from last year and gross margin was 13.8% down 10 basis points from 13.9% in the first quarter of 2009. Earnings from operations increased to $17.3 million from a loss of $7.9 million reported last year. Please recall that we recorded certain items in the first quarter of last year that did not reoccur this year including expense related to the termination of an equity incentive plan of $5.5 million and severance and restructuring expenses of $6.3 million compared to only $71,000 of severance expense this year.

Additionally, we recorded professional fees associated with the trade credits remediation of $4.1 million in the first quarter of 2009 but only $497,000 of similar expense this year. Net earnings and diluted earnings per share were $9.2 million and $0.20 in the first quarter of 2010 compared to the non-GAAP net earnings and diluted earnings per share from continuing operations reported in the first quarter of 2009 of $3.8 million and $0.08.

We are pleased with our first quarter financial results which resulted from better than expected sales and gross margin performance in North America, across our learner cost structure and in line performance in our EMEA and Asia Pacific segments. In North America, we experienced stronger than expected demand in our hardware category which resulted in 23% growth year-to-year in this category. We were also able to achieve increased gross margin on those sales when compared to the fourth quarter of 2009.

In addition, demand for hardware improved across virtually all product categories and all product groups which is encouraging and an indication that it’s not just large enterprise clients which are starting the new year with a new cap ex budgets and refreshed needs. In EMEA we saw sales grow in constant currency across all product categories. In particular, our UK business performed very well showing overall strengthening of demand for hardware and our continued focus on winning public sector business in the region. We believe the market in the UK is stabilized.

However, we continue to see weakness across the rest of EMEA where our business is primarily in the software category and within the large enterprise client group. In Asia Pacific sales increased over 100% in US dollars and 71% in constant currency primarily due to large transactions in the public sector client group. A significant percentage of our business in this region is generated in Australia, a more mature market where we have a focus on the public sector space. Typically, public sector clients are not fee based and therefore have resulted in more top line sales but decreased gross margins over the past several quarters. As a consequence, we expect gross margins to be in the range of 12% to 14% over the balance of the year.

Before I hand the call back over to Glynis, I wanted to quickly update you on our initiative to create a single sales and delivery organization in the United States. Success in this initiative is expected to increase sales to our existing clients across the full suite of our products and services and ensure we are more directly aligned with our partners. We have concluded the planning and design phase of this initiative and expect implementation to occur in the third quarter.

I believe that successful execution of this initiative will position our business to grow organically and with continued expense control will provide the foundation we need to improve our long term operating margin performance. I will now hand the call back over to Glynis who will discuss the first quarter operating results of our business segments.

Glynis A. Bryan

Starting with North America, net sales were $688 million up 4% from the first quarter of 2009. Sales in our hardware category increased 23% year-to-year reflecting higher demand by our current group but particularly corporate clients. Software sales decreased 22% compared to last year due primarily to a significant public sector software transaction in the first quarter of last year that was not replaced with volume this year and also the effects of publisher program changes related to software enterprise agreements that were effective beginning in May of last year.

Gross profit increased 6% year-over-year to $99 million while gross margin increased to 14.4% from 14.1% in the prior year. Increases in product margin driven primarily by sales in our hardware category were partially offset by declines in margins contributed by the software category on lower volumes and lower fees from enterprise agreements resulting from publisher program changes. Gross profit and margin also benefited approximately $1.9 million from the elimination of certain restatement related trade credits during the quarter through negotiated settlement or other legal release.

Selling and administrative expenses for North America in the first quarter were down $10 million or 11% compared to the first quarter of 2009. During the quarter we incurred approximately $497,000 of professional fees associated with the trade credits remediation and related litigation. Comparatively, selling and administrative expenses in the first quarter 2009 included $8.2 million of charges related to the North America portion of the termination of an equity based incentive compensation plan and professional fees associated with the trade credit investigation and restatement quantification.

The North America segment did not have any severance and restructuring charges during the first quarter of 2010 compared to $5.9 million in severance and restructuring charges recorded during the first quarter of 2009. As a result, earnings from operations in North America were $14.1 million in the first quarter of 2010, up from non-GAAP earnings from operations of $6.1 million reported in the first quarter of 2009.

Moving on to EMEA, our EMEA operating segment reported net sales of $317 million up 17% in US dollars. In constant currency, net sales increased 10%. Sales of hardware grew 20% in constant currency terms during the quarter due to high demand across all client groups but specifically in the public sector group where we continue to increase our presence and benefitted from the effects of seasonal client budget releases. Software sales increased 4% in constant currency compared to last year due primarily to higher volume, new client engagements and new publisher offerings offset in part by the effects of public program changes that were effective beginning in May of last year.

Service sales increased 17% in constant currency compared to last year due primarily to higher volume. Gross profit in EMEA was up 15% in US dollars and up 8% in constant currency terms while gross margin decreased to 13% from 13.3% in the prior year. The decline in gross margin includes increased product margin of 28 basis points which was more than offset by the effects of publisher program changes in the software category.

Selling and administrative expenses in EMEA in the first quarter were up 10% in US dollars and in constant currency were up 3% or $1.3 million year-over-year. The prior year quarter selling and administrative expenses included $1.4 million of charges related to the EMEA portion of the termination of an equity based incentive compensation plan. This increase year-to-year was largely driven by increased salaries resulting from our investment in sales headcount focused on the middle market and public sector client group and higher variable compensation on increased sales.

In addition, we incurred higher facility expenses due to an office relocation in France. EMEA also recorded $71,000 in severance expense in the quarter compared to $417,000 in severance expense recorded in the first quarter of 2009. As a result, earnings from operations in EMEA were $2.8 million in the first quarter of 2010 up from non-GAAP earnings from operations of $2.4 million reported last year.

In APAC, our APAC operating segment reported net sales of $44 million up over 100% from the prior year in US dollars and up 71% in constant currency terms. This increase is due primarily to increased sales to public sector clients including one large contract that was earned in the first quarter of this year that was historically executed in the second quarter. Gross profit was $4.8 million, an increase of 71% year-to-year in US dollars and 36% in constant currency while gross margin was 11% down from 13.9% in the prior year quarter driven by the increase mix of public sector business partially offset by the effects of the settlement and release of local sales tax reserves of approximately $480,000.

Selling and administrative expenses in APAC increased 34% year-over-year in US dollars and 5% in constant currency terms as a result of higher variable compensation on increased sales expense. As a result, our Asia Pacific segment reported earnings from operations of about $388,000 which was up from the non-GAAP loss from operations of $459,000 reported last year.

On our tax rate, our effective tax rate for the first quarter resulted in an expense of 36.7% in line with our expected normalized tax rate. This compares to a benefit of 33% in the prior year quarter due to the net loss recorded in that period. Moving on to cash flows, during the first quarter our operations generated $110 million of cash compared to $101 million for the same period in 2009. These results reflect payments of approximately $12 million to various state agencies as part of our previously announced program of compliance with our on claim property programs during the first quarter and the effects of timing to a larger supplier payment that was deferred until April 1st.

In the first quarter we also invested $3 million in capital expenditures primarily for improvements to existing infrastructure and our IT systems development project in EMEA. As a result, we were able to pay down debt by approximately $67 million and ended the quarter with $85 million of cash and $80 million of debt outstanding on our revolving credit facility.

I will now turn the call back to Ken for his closing comments.

Kenneth T. Lamneck

Given our stronger than expected financial performance in the first quarter, we now anticipate that diluted earnings per share for the full year of 2010 will be between $1.05 and $1.15. This outlook reflects the following assumptions: continued strong demand for hardware technology in North America partially offset by the full year effect of partner program changes that were effective beginning in May of 2009; a decline in sales of services in 2010 due to the completion of a significant service engagement in 2009 that is not currently expected to replace fully in 2010; and an effective tax rate of approximately 36% to 39% for 2010 up from 26% in 2009.

This outlook does not include the impact of any severance and restructuring expenses or expenses associated with the restatement of our financial statements or related litigation. I’m pleased with the company’s financial performance in the first quarter and believe with the changes we are making in our sales engagement models and through increased focus on operational efficiency, we’ll be well positioned to grow organically on both the top and bottom line in 2010 and beyond.

That concludes my comments. I will now open the line for your questions.

Question-and-Answer Session

Operator

(Operator Instructions) Your first question comes from Brian Alexander – Raymond James & Associates.

Brian Alexander – Raymond James & Associates

I think last quarter when we talked about the full year earnings outlook we were thinking revenue growth in the mid single digits. You exceeded, at least my expectations, on the top line growing 10% year-on-year. You’ve got easy comparisons for at least the next two quarters. You sound more confident about the demand environment particularly hardware so I guess the first question would be what would be your full year revenue growth outlook that’s associated with the new earnings guidance of $1.05 to $1.15?

Glynis A. Bryan

Based on the strength that we’ve seen in hardware, we anticipate specifically on the hardware side that our revenue growth is going to be more in the range of the mid to high single digits like the 8% to 10% range on hardware. We still have the challenges that we spoke about before with regard to the services segment of our business and the large contract that we had last year that’s not going to be repeated and we still have some lower revenue expectations around software related to lower true ups as well as the impact of the program changes.

Brian Alexander – Raymond James & Associates

So would you say that software and services are unchanged from your prior outlook while hardware growth expectations have increased?

Glynis A. Bryan

Correct. That would be a fair summary.

Brian Alexander – Raymond James & Associates

Give how much growth you saw in hardware this quarter, why expect such a material deceleration to get to only mid to high single digits given you just grew I think over 20% in both of your major geographies?

Glynis A. Bryan

In Q1 for us, I can’t speak to the rest of the market but we think that Q1 was probably the worst quarter for us with regard to hardware in North America. Specifically, this is a comment about North America, so our expectation of being able to grow 23% in subsequent quarters in North America is not really there. Likewise in our EMEA operation part of what contributed to the 20% growth in our EMEA operation was related to budget releases around the timing of how the municipalities, the local government and the UK actually, when their budgets refresh so we had some benefit from that in the first quarter in EMEA that we also don’t expect to be duplicated going forward so hence why we’re moderating the 23% growth that we saw in the first quarter.

Also, we actually so strengthening in our hardware product line in the first quarter of 2009, in the second quarter of 2009 I think we reported that was the first quarter that we saw sequential growth in our hardware product lines in some time towards two years prior. We actually saw sequential growth each quarter, second, third and fourth quarter in 2009 going in to 2010 and this is also why we’re moderating the 23% to be kind of 8% to 10%.

Brian Alexander – Raymond James & Associates

Then just on the earnings guidance, I don’t know it looks maybe potentially conservative. You increased the full year by $0.10 but you beat the Q1 consensus at least by $0.07. I know you didn’t guide the first quarter but it would appear that you’re only increasing the balance of the year by $0.03 given the upside in the first quarter. Is that the way that you’re looking at it relative to the forecast that you had that you just had strong upside in Q1 but you don’t expect much upside for the rest of the year? If that is the case, is that because you’re reinvesting more? I’m just trying to connect the dots here on why we’re not seeing more of a flow through on the strong results in Q1 for the rest of the year?

Glynis A. Bryan

I don’t know what the thought process was behind the three analyst that actually came up with that consensus but our expectations for the first quarter performance would have been higher than what consensus implied. You actually I think had an $0.18 first quarter number for Insight and that may have been more reasonable with regard to our own internal expectations about what was going to be happening. From our perspective it’s not a $0.07 beat in the first quarter but still better than our initial expectation.

Brian Alexander – Raymond James & Associates

You might have said this in the prepared remarks but why did the software decline accelerate in the first quarter in North America and when do you expect software to grow?

Kenneth T. Lamneck

On the software side as you know there were program changes that occurred last year so that compare of course impacted us as well as we did have in Q1 2009 a very substantial deal in the public sector space that we weren’t fully able to recapture in this Q1 this year so that certainly had some impact. Going forward for the rest of the year Brian we would expect that we’ll see modest growth in the compares for software.

Brian Alexander – Raymond James & Associates

Is that just North America or is that a global comment?

Kenneth T. Lamneck

That’s consolidated, that’s a worldwide statement.

Brian Alexander – Raymond James & Associates

So beginning in Q2 you’ll see growth in software?

Kenneth T. Lamneck

Correct.

Brian Alexander – Raymond James & Associates

Then final question for me and I’ll get back in the queue, the gross margin strength in North America, gross margins up sequentially quite a bit despite the lower mix of software and services so that implies that hardware margins, and you alluded to this in the script were very strong sequentially. I also think Glynis you mentioned the $1.9 million reversal of trade credit in this quarter so that would imply maybe 30 basis points of benefit as far as North American gross margins were concerned. Is that math right? And, then just overall what drove that hardware margin up so much sequentially and is that sustainable going forward?

Kenneth T. Lamneck

Your math is correct Brian in that regard so we’re very pleased with the ability to grow hardware as substantial as we did as well as to improve the margins. So, that was a key focus for us to really make sure we weren’t just growing revenue at the expense of margins. So we had a concerted effort to make sure that we delivered on that. That’s a heady proposition to try to continue that. Certainly, our intent is to stay focused on that area.

Brian Alexander – Raymond James & Associates

And the trade credit reversal was that about 30 basis points in the quarter?

Glynis A. Bryan

Yes.

Kenneth T. Lamneck

Yes, you were correct with your math.

Glynis A. Bryan

You’re correct with the math. The $1.9 million is not indicative to what we would anticipate every quarter.

Kenneth T. Lamneck

But, as you know as well, which made it tougher overall and of course was last year we had a lot more of the software fees in the margin structure so we had to make up for that as well so there was a good solid performance as you indicated on the hardware front.

Brian Alexander – Raymond James & Associates

So are you suggesting going forward in North America gross margins probably won’t hang out at these levels?

Kenneth T. Lamneck

That’s probably a fair assessment.

Operator

Your next question comes from John Lawrence – Morgan Keegan & Co.

John Lawrence – Morgan Keegan & Co.

Ken, you talked a little bit in your prepared remarks but can you talk about obviously the sales channel is improved and demand environment, what changes have you sort of instilled in the organization from a sales standpoint in the first quarter and as we get in to the second quarter?

Kenneth T. Lamneck

John, what we’ve done is we’ve put a little bit more rigor around the process that we have as far as inspection and accountability at the sales level to really drum that up and I think that’s certainly having certainly some positive impact and that will continue going forward. As you know, we are touching on of course the sales engagement model that we’re going to go effective in July. Those pieces have been coming in to play here over the quarter as well and continuing this quarter so it’s not going to be just one big bang. Some of those things are having certainly some positive impact on us as an organization.

John Lawrence – Morgan Keegan & Co.

To go back to Brian’s question just a second, as you’ve gone through that process and engaged the sales force a little bit more, some of those other categories software and services are you more confident in those areas than we were say three months ago?

Glynis A. Bryan

I would say that I think we are as confident as we were originally, I mean that’s what has reflected the change that is primarily driving the revision to the guidance that we gave, is primarily around the strength that we’re seeing in hardware so the assumptions around software and services are essentially unchanged.

John Lawrence – Morgan Keegan & Co.

But, to follow that logic I would assume those process that you’re talking about would affect all areas of the business?

Kenneth T. Lamneck

That is correct.

John Lawrence – Morgan Keegan & Co.

Last question, from the cost structure is there anything that you’ve done besides just from the sales organization practices that have been steps cut out or whatever to improve the flow of the product?

Kenneth T. Lamneck

Yes, it’s really been really focused on the whole process of the business and we’re certainly looking at every aspect of that.

Operator

Your next question comes from Matt Sheerin – Thomas Weisel Partners.

Matt Sheerin – Thomas Weisel Partners

On the hardware sales strength in the quarter, you’ve talked about in the past on enterprise hardware sales being a little bit of a drag on gross margin and it sounds like you talked about strength in hardware coming from the enterprise side yet margins seemed to be better so why is that?

Kenneth T. Lamneck

It’s the right mix of business, the mess that we had in the quarter but it did play from all components so it wasn’t again just driven by S&B or just enterprise, it was pretty much across the board. We had a lot of diligence around ensuring that we could maximize profit and I think it delivered the right results. That really was the story.

Matt Sheerin – Thomas Weisel Partners

If you look at the Calence business which I know is a small percentage but a higher margin business, how did that perform relative to the core commodity types of products that you sell?

Kenneth T. Lamneck

To you mean Calence Matt?

Matt Sheerin – Thomas Weisel Partners

Calence, I’m sorry.

Kenneth T. Lamneck

So the Calence business of course we don’t break that out separately but it is focused on the networking aspect of the business as you well know. It certainly performed in line with where we were overall.

Matt Sheerin – Thomas Weisel Partners

In the software business particularly in EMEA, I know that part of the changes from the vendor margin changes has to do with the focus, your focus on enterprise in the sense you get penalized on the rebate side of the margin side. I know you’ve talked in the past Ken about reorganizing for refocusing your software sales efforts on the S&B side. How is that going?

Kenneth T. Lamneck

You’re talking Matt specifically about Europe?

Matt Sheerin – Thomas Weisel Partners

Well, in general. I know that part of some of the margin cuts from software has to do with your focus, your end market focus.

Kenneth T. Lamneck

No question certain key publishers have created more of an incentive for us to focus our efforts and attention in the S&B space. So we’re certainly doing that and that’s where you saw us actually both in Europe as well as Asia Pac [inaudible] investments in more people to get to that client that we need too. A lot of what we’re doing in the new sales engagement model takes us there as well in the North America market place. So yes, very much so we’re making progress in that space. Not as fast as I’d like but we’re certainly very focused on that and expect to deliver those kind of results there.

Matt Sheerin – Thomas Weisel Partners

The gross margin range that you gave for the year 12% to 14%, your already at the higher end of that in the March quarter and that would expect because of seasonal strength in software in June and December despite some of the margin cuts you’ve talked about that sequentially it still would go up in June and December relative to other quarters. Is that thinking right or is it going to change now because of the mix and because of the margin structure on the software?

Glynis A. Bryan

Just to clarify, the 12% to 14% that we referenced in the script was actually related to our Asia Pac operation. So Asia Pacific reported 11% gross margins in Q1 and what we were highlight is we thought that in Asia Pac specifically that the margins would normalize over the year to more of the kind of 12% to 14% range, that 11% was not going to be the new run rate for Asia Pac going forward.

Matt Sheerin – Thomas Weisel Partners

What about a range then for your overall business?

Glynis A. Bryan

We haven’t actually ever given you guidance around our gross margins but what we did say I think in our conference call the last time around was given the mix of business that we had specifically, the impact of services, etc. that we would anticipate for the total company that there’d be a small reduction in our gross margin percent on a year-over-year basis 2010 versus 2009.

Matt Sheerin – Thomas Weisel Partners

So your updated EPS guidance still includes the 10 to 20, whatever basis point decline in gross margin year-over-year?

Glynis A. Bryan

Our updated guidance includes some assumption regarding a small decline in GP in this year.

Matt Sheerin – Thomas Weisel Partners

But would you expect a seasonal uptick in gross margin in the June and December quarters because of the software business or no?

Glynis A. Bryan

I think based on our normal seasonality we do anticipate that there would be an uptick in Q2 more specifically. I don’t think we saw as big of an uptick in Q4 as we normally have seen but definitely in Q2 with the higher software percentage in there we would anticipate a slightly higher margin in general. It’s somewhat more muted this year because everything is [inaudible] with regard to we have one more month of the publishers program changes and then it kind of calendarizes for the 12 month period in Q2.

Matt Sheerin – Thomas Weisel Partners

On the expense side it looks like you’re doing a good job of controlling costs. Could you talk about investments that you’re making? You talked Ken about adding some people in Europe and I’m sure you’re doing some cuts here and there so how do you see the expenses shaking out throughout the year?

Kenneth T. Lamneck

It won’t be that substantial. We’ll also be doing a similar add of sales reps here in Q3 and Q4 in the US market to the tune of 30 people per quarter so not a substantial impact to the SG&A line.

Matt Sheerin – Thomas Weisel Partners

Isn’t there a base salary associated with those reps?

Kenneth T. Lamneck

Correct. Typically they will be inside reps and that typically is from a base salary point of view in the $40,000 range.

Matt Sheerin – Thomas Weisel Partners

Just lastly, on the sales reorganization or realignment in North America which you said is going to take place in Q3, I know you’re planning well in advance to avoid any potential hiccups particularly as you enter the stronger fourth quarter period but are you internally at least budgeting for some disruptions and perhaps lower than seasonal sales at all or are you expecting to get right through that and not see any hiccups?

Kenneth T. Lamneck

Matt, we don’t expect that we’re going to see any hiccup there and the reason is, is we’ve been really clear and very careful is that we’re not changing the book of business for the reps and the accounts that they call on. We’ve been really careful about doing that because once we break that relationships with a rep to a client we know we’ll lose business so we’ve been extremely careful to stay out shoot, we will not do that. Now, they will in some cases report to a different manager and may be assigned to a different – you know, more clarity around what geography they’re calling on but we’re really clear on the fact that our reps will not actually have a different book of business starting July 1. We know mistakes have been made in the industry in that regard and we’re not going to repeat those and that’s why I’m pretty confident that we will not see disruption in the business.

Matt Sheerin – Thomas Weisel Partners

So if the sales people are keeping their accounts than exactly what changes are taking place?

Kenneth T. Lamneck

A couple of changes, one is we’ve done an extensive analysis on the accounts that we’re calling on and we’ve done an extensive analysis on where the top accounts in the industry are and where the business is that’s being driven. In many cases we’re finding that some of our reps are calling on accounts that are very, very well below that. As you know, reps in any company always try to horde accounts wherever they can.

As an example, in many cases we have reps who aren’t doing any business with these current clients that have them so we’ve done the analysis so we know where they stand. We’re actually going to take those accounts away and we’re actually going to re feed them with accounts that have a much higher potential for them to actually start to penetrate and start to put models in place for higher accountabilities and higher inspection to make sure that we’re getting the penetration that they need.

Additionally, we’re taking from the aspect of in some cases today we’ve got situations where a lot of the support resources are misaligned and we’re bringing those support resources much more in line to make them much more easily accessible to assist our reps in closing deals. There’s a lot more behind it but that’s some of the gist of what’s changing.

Matt Sheerin – Thomas Weisel Partners

So in other words your sales people will keep their best accounts and get underperforming accounts with potential?

Kenneth T. Lamneck

Correct and we’ll be doing lots of inspection accountability around that.

Operator

I’m showing no further questions at this time.

Glynis A. Bryan

Thank you very much and we’ll talk to you at the end of the second quarter.

Operator

Ladies and gentlemen that concludes today’s teleconference. Thank you for your participation you may now disconnect and have a wonderful day.

Copyright policy: All transcripts on this site are the copyright of Seeking Alpha. However, we view them as an important resource for bloggers and journalists, and are excited to contribute to the democratization of financial information on the Internet. (Until now investors have had to pay thousands of dollars in subscription fees for transcripts.) So our reproduction policy is as follows: You may quote up to 400 words of any transcript on the condition that you attribute the transcript to Seeking Alpha and either link to the original transcript or to www.SeekingAlpha.com. All other use is prohibited.

THE INFORMATION CONTAINED HERE IS A TEXTUAL REPRESENTATION OF THE APPLICABLE COMPANY'S CONFERENCE CALL, CONFERENCE PRESENTATION OR OTHER AUDIO PRESENTATION, AND WHILE EFFORTS ARE MADE TO PROVIDE AN ACCURATE TRANSCRIPTION, THERE MAY BE MATERIAL ERRORS, OMISSIONS, OR INACCURACIES IN THE REPORTING OF THE SUBSTANCE OF THE AUDIO PRESENTATIONS. IN NO WAY DOES SEEKING ALPHA ASSUME ANY RESPONSIBILITY FOR ANY INVESTMENT OR OTHER DECISIONS MADE BASED UPON THE INFORMATION PROVIDED ON THIS WEB SITE OR IN ANY TRANSCRIPT. USERS ARE ADVISED TO REVIEW THE APPLICABLE COMPANY'S AUDIO PRESENTATION ITSELF AND THE APPLICABLE COMPANY'S SEC FILINGS BEFORE MAKING ANY INVESTMENT OR OTHER DECISIONS.

If you have any additional questions about our online transcripts, please contact us at: transcripts@seekingalpha.com. Thank you!