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Executives

Jessica Greenberger – IR, Financial Dynamics

Dan Hendrix – President and CEO

Patrick Lynch – Senior Vice President and CFO

Analysts

Sam Darkatsh – Raymond James

Matt McCall – BB&T Capital Markets

Keith Hughes – SunTrust

David Macgregor – Longbow Research

John Baugh – Stifel Nicolaus

Carl Reichardt – Wells Fargo Securities

Glenn Wortman – Sidoti & Company

Interface Inc. (IFSIA) Q1 2010 Earnings Call April 29, 2010 9:00 AM ET

Operator

Good day, ladies and gentlemen and welcome to the Q1 2010 Interface Earnings Conference Call. My name is Derrick and I will be your Operator for today. At this time, all participants are in listen-only mode. Later, we will be conducting 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 Ms. Jessica Greenberger of Financial Dynamics. Please proceed.

Jessica Greenberger

Thank you, operator. Good morning and welcome to Interface’s conference call regarding first quarter 2010 results. Joining us from the company are Dan Hendrix, President and Chief Executive Officer and Patrick Lynch, Senior Vice President and Chief Financial Officer. Dan will review highlights from the quarter as well as Interface’s business outlook. Patrick will then review the company’s key performance metrics and financial results. We will then open the call for Q&A.

If you have not yet received a copy of the results release, which was issued after the close of market yesterday, please call Financial Dynamics at 212-850-5600 or if you can get a copy off of the Investor Relations section of Interface’s website. An archived version of this conference call will also be available through that website.

Before we begin the formal remarks, please note that during today’s conference call, management’s comments regarding Interface’s business, which are not historical information, are forward-looking statements. Forward-looking statements involve a number of risks and uncertainties that could cause actual results to differ materially from any such statements, including risks and uncertainties associated with the economic conditions and the commercial interiors industry as well as risks and uncertainties discussed under the heading Risk Factors in item 1-A of the company’s annual report on Form 10-K for the fiscal year ended January 3, 2010, which has been filed with the Securities and Exchange Commission. We direct all listeners to that document.

Any such forward-looking statements are made pursuant to the Private Securities Litigation Reform Act of 1995. The company assumes no responsibility to update or revise forward-looking statements made during this call and cautions listeners not to place undue reliance on any such forward-looking statements.

Management’s remarks during this call refer to certain non-GAAP measures. A reconciliation of these non-GAAP measures to the most comparable GAAP measures are contained in the company’s results release on Form 8-K filed with the SEC yesterday, each of which can be found on the Investor Relations portion of the company’s website, www.interfaceglobal.com.

Lastly, please note that this call is being recorded and broadcasted for Interface. It contains copyrighted material. It may not be re-recorded or re-broadcast without Interface’s expressed permission. Your participation on the call confirms your consent to the company’s taping and broadcasting of it.

With these formalities out of the way, I’d like to turn the call over to Dan Hendrix. Please go ahead, sir.

Dan Hendrix

Thank you and good morning to everyone. I’m really pleased with the beginning of the year, as performance improved across nearly all aspects of our business. We saw our first year-over-year improvement in sales since the second quarter of 2008.

In another welcome side, our sales within the corporate office segment turned positive on a year-over-year basis as well. As in prior quarters, we’ve benefited from end market diversification strategy with non-office segments such as education, retail and hospitality accounting for most of our sales improvement.

This is a very encouraging sign as we enter the second quarter, education buying season. Emerging markets actually had the largest percentage sales growth year-over-year, mostly coming in China, India, Brazil and the Middle East.

First quarter orders also improved year-over-year and would compare with the fourth quarter, which is unusual, but positive signs given that the first quarter historically is usually the slowest period. We continued to realize manufacturing efficiencies from our restructuring initiatives and as a result, our first quarter gross margin expanded year-over-year and held even with the prior quarter despite a lower sales level.

The combination of increased sales and enhanced manufacturing efficiencies led to our improved operating income and earnings per share compared with the year-ago period. Looking regionally, our U.S. modular business had another solid quarter with a second straight quarter of year-over-year sales improvement.

The corporate office segment led the gain with non-office segments also improving, particularly education and retail. Our Asia-Pacific division had a breakout performance with most of the success coming in Australia, which is now our third largest market and with China growing rapidly. To capitalize on the opportunities that we see in China, we are making progress on our plan to open a carpet tile manufacturing plant there and are on track to begin production in the third quarter of 2010.

Our decision to ramp up end-use market diversification strategy in Asia has had some success as well. And we gained traction compared with the first quarter of last year in education, government and hospitality sectors.

In Europe, we began to see some stabilization, mature office markets but still no significant improvement. Emerging markets in India, Africa and the Middle East are beginning to come around and help with performance.

At Bentley Prince Street, sales are essentially even with the first quarter last year but we were able to cut the operating loss by almost half. We’ve adjusted its product mix, reduced inventories and increased efficiencies.

While the demand environment for high-end broadloom carpet remains very challenging, its even top line performance is better than the overall U.S. commercial market, which continues to decline. Our FLOR residential consumer businesses had another profitable quarter with our web and catalog sales driving performance and our FLOR store still exceeds our expectations.

We’ve ramped up our sales and marketing investments at FLOR and expect to see an uptick in sales to return later this year. So we’re off to a strong start in 2010 with performance generally improving across all our businesses.

In the first few weeks of the second quarter, the sales and order numbers have continued to be encouraging. While there’s still uncertainty around the conditions in Europe, overall we’re optimistic about the opportunities ahead, particularly at Asia-Pacific. We’re also high on the possibility of the emerging market, such as China, India, South America and the Middle East.

The Americas is still tough, but it’s coming around and making gradual improvement. The second shift toward carpet tile is continuing and we feel that we’re well positioned out perform the industry and continue leading the category.

With that, I will turn it over to Patrick to provide you with more details on our results and financial position.

Patrick Lynch

Thank you and good morning, everyone. I will now take a few minutes to talk through the financial highlights from the first quarter. Sales for the first quarter of 2010 were $217.2 million, compared with sales of $199.3 million in the first quarter of 2009, an increase of 9%.

Currency fluctuations represented about 6% of this increase. As Dan mentioned, our sales performance was driven by the increased demand in education, retail, hospitality sectors globally.

Gross profit margin was 33.8% compared with 31.7% in the first quarter of 2009, reflecting the benefits of our restructuring initiatives and the increase in sales levels. While we began to implement restructuring initiatives in late 2008, the full benefits of these efforts did not begin to flow through until the second quarter of 2009.

Further reflecting the benefits of our cost saving efforts, while SG&A expense in the first quarter of 2010 increased slightly to $56.5 million from $54.4 million last year, it declined as a percentage to 26% compared with 27.3% a year ago. The improvement reflects our continued cost management and was offset somewhat by investments in our end market diversification strategy.

The resulting leverage can be seen in our operating income. Excluding restructuring charges totaling $3.1 million, operating income in the first quarter of 2010 improved by 92% to $16.9 million compared with adjusted operating income of $8.8 million in the first quarter of 2009.

As a percentage of sales, 2010 first quarter adjusted operating income was 7.8%, compared with an adjusted 4.4% in the first quarter of 2009. Including all the charges in both periods, 2010 first quarter operating income was $13.8 million or 6.4% of sales, compared with $3.1 million or 1.5% of sales in the comparable 2009 period.

Interest expense in the first quarter of 2010 was $8.8 million compared with $7.7 million in the first quarter of 2009. In February of 2010, we repaid the remaining balance of $14.6 million of our former 10.375% senior notes. Also as previously announced, we completed the early redemption of $25 million of our 9.5% senior subordinated notes in March of 2010.

We expect to start realizing annual interest expense savings of $4 million as a result of these transactions beginning in the second quarter of 2010. Adjusted net income attributable to Interface for the 2010 first quarter was $4.9 million or $0.08 per diluted share, which excludes the $3.1 million restructuring charge and $1.1 million of expenses related to the early bond redemptions.

This compares with an adjusted net loss attributable to Interface of $0.2 million or $0.00 per share in the first quarter of 2009, which was adjusted to exclude the aforementioned restructuring charges. Inclusive of all items, net income attributable to Interface in 2010 first quarter was $1.9 million or $0.03 per diluted share compared with a net loss attributable to Interface of $4.2 million or $0.07 per share in the year-ago period.

Depreciation and amortization was $6.1 million in the first quarter of 2010 compared with $6.2 million in the first quarter of 2009. Net capital expenditures in the first quarter of 2010 were $2.8 million compared with $5.6 million in the first quarter of 2009. For the full-year 2010, we continue to expect capital expenditures to range from $25 million to $30 million.

Now, I’ll take a few minutes to review some of the details of our individual business segments.

Our modular carpet segment continued its strong performance in the 2010 first quarter. Sales in the segment were $194 million, up 10% from $176.4 million in the first quarter of 2009. Operating income for the modular carpet segment in the 2010 first quarter was $17.2 million or 8.9% of sales compared with $6.7 million or 3.8% of sales in the first quarter of 2009.

The 2010 and 2009 first quarter’s figures included restructuring charges of $2.9 million or 1.5% of sales and $5.3 million or 3% of sales respectively. Turning to Bentley Prince Street, progress was made in streamlining the segment’s underlying manufacturing operations since the year-ago period has been significant but low demand for high-end broadloom continues to impact sales for the segment.

Sales were $23.2 million for the first quarter of 2010, up 1.3% from $22.9 million in the first quarter of 2009. Bentley Prince Street recorded an operating loss of $1.4 million in the first quarter of this year, compared with an operating loss of $3 million in the year-ago period. Its operating loss for the 2010 first quarter included restructuring charges of $0.2 million. Its operating loss for the 2009 first quarter included restructuring charges of $0.4 million.

Now, turning to the balance sheet, we exited the quarter with $71.4 million in cash compared with $54.9 million at the end of the first quarter of 2009. Inventories were $115.8 million at the end of the first quarter of 2010 compared with $124.8 million at the end of the first quarter of 2009 and $112.2 million at the end of 2009.

Average DSOs during the first quarter of 2010 were 53.8 days compared with 58.2 days in the year-ago period and inventory turns in the first quarter of 2010 were five times compared with 4.3 times in the first quarter of 2009. Our restructuring actions have yielded a stronger, more profitable operating platform from which we can serve our existing customers and capitalize on new market opportunities.

We remain focused on managing our margins and driving cash flow to fuel the business investments that will support our continued market leadership.

Now, I’ll turn the call back over to the Operator for your questions.

Question-and-Answer Session

Operator

(Operator Instructions) I’m showing the first question come from the line of Sam Darkatsh with Raymond James. Please proceed.

Sam Darkatsh – Raymond James

Good morning, Dan, Patrick. How are you?

Dan Hendrix

Hi, Sam.

Patrick Lynch

Hi, Sam.

Sam Darkatsh – Raymond James

I think you had a price increase in March, Dan. Do you happen to have what the average ASP was in Q1 versus yards?

Dan Hendrix

We didn’t see any improvement from the price increase in Q1. Now, that happened in the middle of March. And it wouldn’t have an impact yet.

Sam Darkatsh – Raymond James

Did you have it where it was ASPs -- were ASPs up in the quarter or were units and hours pretty…?

Dan Hendrix

Those were actually pretty flat.

Sam Darkatsh – Raymond James

Pretty flat. Okay. So it was all -- the growth was all units and currency?

Dan Hendrix

Right.

Sam Darkatsh – Raymond James

Okay. Talk about some of the different non-office end markets. I know you mentioned retail, education, hospitality real strong. Juxtapose those against maybe what you’re seeing elsewhere or are there -- is it just kind of one-off jobs that are coming through or not coming through and its timing or are there trends that you’re seeing?

Dan Hendrix

I would say that there’s a penetration going on in those segments that’s probably greater than the office segment because the penetration of carpet solids is a lot less. And it’s not one job here or one job there. It is grass roots business. A lot of our business in that segment aren’t big jobs. They’re more refurbishment jobs of a smaller nature but I would say the education continues to be our biggest segment globally, followed by the government and then the retail space.

Sam Darkatsh – Raymond James

And last question, the office mix looks like it was growing. The corporate mix looks like it was growing in the quarter. That’s I think pretty encouraging. What are you seeing there? Is it a specific end market on the corporate side that’s showing the most…?

Dan Hendrix

I would say the financial services segment is starting to invest again in their office space, which is very encouraging for us because that was a pretty big part of the corporate office for us. So I would say the biggest leader, particularly in the U.S. and in Europe is the financial services group.

Patrick Lynch

I’ll also tell you too, Sam, that the technology sector too is continuing to spend and invest.

Dan Hendrix

Yeah. The West Coast business is very, very strong. That’s true.

Sam Darkatsh – Raymond James

Okay. Thank you.

Operator

Your next question comes from the line of Matt McCall with BB&T Capital Markets. Please proceed.

Matt McCall – BB&T Capital Markets

Thanks. Good morning, everybody.

Dan Hendrix

Good morning.

Matt McCall – BB&T Capital Markets

Dan, let me clarify following up on that last question, the first thing I wrote was that education, retail, hospitality, that’s where most of the improvement came and then the third thing I wrote, I guess three lines down, was that corporate provided most of the improvement in North America. What did I misunderstand there?

Dan Hendrix

That’s right. Corporate did lead.

Patrick Lynch

In North America.

Dan Hendrix

In North America, that’s true.

Matt McCall – BB&T Capital Markets

The other comment was more globally?

Dan Hendrix

Yeah.

Matt McCall – BB&T Capital Markets

Got it. Okay. Sorry about that. All right. So if we look at the -- and just got a question about the price increase. It sounds like it’s preemptive in nature because you didn’t see much gross margin pressure in the quarter. What’s the outlook for gross margin relative to both the price cost and what would be normal seasonality? Are we just going to see the normal flow through that we would be expecting? I mean is the price going to be enough to offset…?

Dan Hendrix

Yeah. That’s the intent of the price increase. And you’ll get the leverage from increased sales, as sales increase you’ll get the flow through.

Matt McCall – BB&T Capital Markets

And continuing that thought, is the flow through, you’ve made some investments. You talked, Patrick, you talked about the focus on cost management but you’ve also made some investments on the SG&A line. Is -- are the investments going to trump any incremental margin or are you going to see the normal flow through there?

Dan Hendrix

We could see a little bit of impact from increased SG&A. Hopefully, the increases sales will offset that to drive the percentage down but we are making investments. We’re adding sales people. And we’re investing in marketing. I think we have an opportunity to grow. So we’re going to make those investments, particularly in the U.S. and in Asia.

Matt McCall – BB&T Capital Markets

Okay. And then the final question is on Asia. I think the last call you talked about China, when you started up, you’ve got enough volume earmarked for that facility that’s going to come out profitable. Would that profitability impact the profitability of other facilities or is it going to be…?

Dan Hendrix

It will impact Thailand to some extent, yeah. We’re moving production from Thailand into China.

Matt McCall – BB&T Capital Markets

So maybe a net neutral out of the gate?

Dan Hendrix

I think you’ll see a net negative the first two quarters and then it will be positive after that. And the idea of putting the plant in China is to have a more accelerated growth curve in China as you take more business. So I clearly believe we’ll offset the negative impact of having another plant.

Matt McCall – BB&T Capital Markets

Okay. And so what would be the anticipated…?

Dan Hendrix

Incremental cost of that plant is $2 million a year.

Matt McCall – BB&T Capital Markets

So when you talk about a net negative impact, is that the ballpark that we should be looking at?

Dan Hendrix

That’s right.

Matt McCall – BB&T Capital Markets

Okay. All right. Thank you all.

Dan Hendrix

Thank you.

Operator

Your next question comes from the line of Keith Hughes with SunTrust. Please proceed.

Keith Hughes – SunTrust

Thank you. If you look at the order paced in the quarter, was there any noticeable acceleration particularly as you go into April or was it steady?

Dan Hendrix

No. January was horrible and then February was better and March was the better of the three months.

Keith Hughes – SunTrust

Are we still on a March pace here in April?

Dan Hendrix

April looks pretty good.

Keith Hughes – SunTrust

Okay. Patrick, on the interest savings you mentioned the $4 million number. Is that for a full year, on a full year basis or just the remaining?

Patrick Lynch

That’s a full -- that’s an annualized number.

Keith Hughes – SunTrust

Annualized number. And I guess finally, on uses of cash flow, is the goal still here to bring debt down as you can find these bonds to buy?

Patrick Lynch

That’s right.

Keith Hughes – SunTrust

Okay. Thank you very much.

Patrick Lynch

Thank you.

Dan Hendrix

Thank you.

Operator

Your next question comes from the line of David Macgregor with Longbow Research. Please proceed.

David Macgregor – Longbow Research

Good morning, everyone.

Dan Hendrix

Good morning.

David Macgregor – Longbow Research

You were talking about the April numbers feeling pretty good. I’m just wondering if the end market mix is the same or whether you’re seeing any change, what you talked about with …?

Dan Hendrix

In April, well, starting in the second quarter you’ll see the education bubble come through from a buying season standpoint. So I would suspect that the education will lead the second quarter.

David Macgregor – Longbow Research

Okay. And then would you…

Dan Hendrix

The corporate business continues to improve.

David Macgregor – Longbow Research

Okay. So you’re seeing that more predominant than the April orders numbers?

Dan Hendrix

Both, yeah.

David Macgregor – Longbow Research

Okay. The second question I have for you was just with respect to China. I know you’re ramping up there and you talked about the third quarter 2010 startup. Can you just talk a little more about, sort of, how you’re preparing the organization in China for that capacity ramp in terms of getting people -- feet on the street in advance and…?

Dan Hendrix

We have a significant sales and marketing group already on the street there.

David Macgregor – Longbow Research

Right. I’m just wondering…

Dan Hendrix

What we’re doing is we’re hiring people to obviously start up the plant.

David Macgregor – Longbow Research

Right. That’s what I’m trying to get you to talk about.

Dan Hendrix

And we have -- we’ve got the management in place. Most of that management is local Chinese management and we’re gearing up for it. And fortunately we’ll have enough business to create one shift when we start up, which is great. And we’re pretty much prepared to start it up as far as hiring goes, we’re in pretty good shape.

Patrick Lynch

We’ve effectively spent the last 10 years building out the sales, marketing and distribution relationships across China and then backfilling it essentially with the manufacturing platform.

Dan Hendrix

Yeah. And I would say the best thing that’s gone on in China for us is the local, domestic business is now 70% of that business. And the multinationals are now starting to come back, which is great.

David Macgregor – Longbow Research

What end markets are you getting there?

Dan Hendrix

Mostly corporate and government. We’re starting to see some improvement in the education piece and we think there’s a big opportunity in hospitality in China.

David Macgregor – Longbow Research

And with those competitors coming back to them or with the international companies coming back to the market, I guess the customers rather than competitors. How is the competitive situation over there changing?

Dan Hendrix

It’s the same. We’ve got -- there’s good competition in China.

David Macgregor – Longbow Research

What do you expect to be realizable margins on that business?

Dan Hendrix

Our goal is to have a 15% operating income in the China market.

David Macgregor – Longbow Research

Can you get to that number within -- you talked about a two quarter ramp, I’m just wondering if it’s …

Dan Hendrix

I think it will take a year.

David Macgregor – Longbow Research

A year to get to that. Right. Okay. Great. Good luck with it. Thanks.

Dan Hendrix

Thank you.

Operator

Your next question comes from the line of John Baugh with Stifel Nicolaus. Please proceed.

John Baugh – Stifel Nicolaus

Good morning. Could you comment on where Europe modular sits on an EBIT margin basis versus the U.S. and if not specifically, generally and …

Dan Hendrix

I would say in the peak of 2007, the European margins were equal to the U.S. margins. That business got hit the hardest in the downturn and now we’re around the 7%, 8% range.

John Baugh – Stifel Nicolaus

And is that just waiting for volume to come back? Essentially, Dan, is there something that’s changed there?

Dan Hendrix

No, I would say that the European has the biggest leverage in the top line from a margin, incremental margin standpoint. When we see sales come back, we’ll realize the operating margins out of those sales.

John Baugh – Stifel Nicolaus

And how would you describe -- I mean we’ve got all these headlines now with Greece and Spain, and Portugal. And I realize that I think the U.K. is your biggest market, but what’s the tone of that business and what’s your sort of budget or thought for the year?

Dan Hendrix

I would say that going into 2010, we felt like the U.K. was going to be hit the hardest of all the markets in Europe. I would say that that’s not playing out. The U.K. is now -- you’re seeing a lot of refurbishment business in the U.K., if you look at the refurbishment architectural index that’s come off the bottom.

New construction hasn’t come off the bottom yet. There is a shortage of office space, particularly in London, going on right now. So we’re very encouraged about the U.K., which is our biggest market. Where we’re seeing the softness is in Italy and Spain, which is not that big a market for us and in the Benelux area. Germany actually is starting to show a lot of signs of growth. So the southern regions of Europe is the areas that we’re most concerned about and we used to be more concerned about the U.K., but that’s not the case today.

John Baugh – Stifel Nicolaus

And is the Middle East, which I believe is lumped in that region for you, is that up and offsetting a negative overall true European?

Dan Hendrix

The Middle East is up modestly. It’s not booming but it’s up and India is helping offset a little bit of the European, yeah.

John Baugh – Stifel Nicolaus

Okay. And Patrick, do we just lop off $1 million of interest expense by quarter going forward from what you reported in the first quarter?

Patrick Lynch

Yeah.

John Baugh – Stifel Nicolaus

Okay. How do we model currency by quarter for the balance of the year? I think you said it was a 6% influence on the …

Dan Hendrix

I’d say that in the second quarter it will -- the Euro now is becoming more on par. So you don’t have the big benefit from the Euro. I would say the impact is going to be 2% to 3% in the second quarter.

John Baugh – Stifel Nicolaus

And then the latter half?

Dan Hendrix

I don’t know. In these constant levels, it’ll be pretty neutral.

John Baugh – Stifel Nicolaus

Okay. And then could you comment on -- you mentioned that your orders were higher in Q1 versus Q4. Would you be willing to give a number and then a comment on where the backlog sits as you enter Q2 year-over-year?

Patrick Lynch

I think we gave the orders in the press release, didn’t we?

John Baugh – Stifel Nicolaus

Is it? Okay, I didn’t see it.

Patrick Lynch

The bottom of the income statement.

John Baugh – Stifel Nicolaus

And there’s a backlog there too?

Patrick Lynch

Yeah.

John Baugh – Stifel Nicolaus

Okay. I’ll look at that. Thank you.

Dan Hendrix

Sure. Thanks.

Operator

Your next question comes from the line of Carl Reichardt with Wells Fargo Securities. Please proceed.

Carl Reichardt – Wells Fargo Securities

Hey, guys. How are you?

Dan Hendrix

Hi, Carl.

Carl Reichardt – Wells Fargo Securities

All right. I was curious about the previous restructuring charges, Patrick and they’ve been helping margins. Is there a sense you’re going to get any more incremental benefit from the charges you had previously taken in margins over the next couple of quarters or are you pretty much maxed out now?

Dan Hendrix

I think we’re maxed out.

Patrick Lynch

Yeah. That’s right.

Dan Hendrix

Sorry, I didn’t mean to take Patrick’s question.

Carl Reichardt – Wells Fargo Securities

Thanks, Dan. And then…

Dan Hendrix

I can’t get out of my CFO role.

Carl Reichardt – Wells Fargo Securities

And then just do you have any expectation for tax rate through the balance of the year and if will bounce around much?

Patrick Lynch

I think it will be around the 38% level.

Carl Reichardt – Wells Fargo Securities

38%. Now, that’s going to be each quarter for the rest of the year on average?

Patrick Lynch

Yeah.

Carl Reichardt – Wells Fargo Securities

Okay. All right. Thank you.

Operator

(Operator Instructions) Your next question comes from the line of Glenn Wortman with Sidoti. Please proceed.

Glenn Wortman – Sidoti & Company

Good morning, guys.

Dan Hendrix

Good morning.

Patrick Lynch

Good morning.

Glenn Wortman – Sidoti & Company

I joined the call late, so I’m sorry if you already covered this, but did you provide the percentage increases for the corporate office overall and in each of your geographies?

Dan Hendrix

We don’t do that. We just said that the corporate office market was up.

Glenn Wortman – Sidoti & Company

Okay. And assuming an ideal operating environment with corporate growing strongly and that’s -- not saying that’s going to happen necessarily this year strongly, but maybe next year or the year after. I mean how fast do you think you can grow your sales in an ideal operating environment?

Dan Hendrix

Well, if you go back to the last downturn, 2003 when we hit bottom and then we grew up from 2007, we averaged about 15% growth through that period.

Glenn Wortman – Sidoti & Company

Okay. And then finally, did you guys talked about your expectations earlier for maybe the Bentley Prince Street brand for the rest of the year?

Dan Hendrix

It’s the same old story. We need to get it to $25 million. I think we’ll break even. I’m very pleased with the fact that we’ve really dropped the operating cost of that business and we’ve taken out about half the SKUs. Then we’ve worked on getting the margins per product right. And we didn’t say it, but the tile part of that business was actually up.

We just got to get it to $25 million and I don’t know if people picked up on the conference call, but the fact that we were flat says we took share. The overall commercial market was down probably about 8%. So we’re -- I’m pleased that we’re holding serve. I’m not pleased with the fact we’re still losing money there, but we need to get the sales up. A couple million dollars and we’ll break even.

Glenn Wortman – Sidoti & Company

All right. Thank you very much.

Dan Hendrix

Thank you.

Ends Abruptly

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