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USANA Health Sciences, Inc.

Q2 2010 Earnings Call

July 28, 2010 11:00 am ET

Executives

Riley Timer – VP of Finance

Jeff Yates – CFO

Fred Cooper – President and COO

Mark Wilson – Executive Vice President of Sales

Analysts

Per Osland (ph) – Jefferies & Company

John San Marco – Janie

Tim Rainy with D.A. Davidson

Ramone Deunecio – Woodbush Morgan

Scott VanWinkle – Kenakor

Operator

Ladies and gentlemen, thank you for standing by. Welcome to the USANA Health Science Second Quarter Earnings Conference Call. (Operator Instructions)

I would now like to turn the conference over to Riley Timer. Please go ahead, sir.

Riley Timer

Thank you. Good morning, everyone. We appreciate you joining us this morning to review our second quarter results Today’s conference call is being broadcast live via webcast and be accessed directly from our website at www.usanahealthsciences.com.

Shortly following the call, a replay will be available on our website.

As a reminder, during the course of this conference call, management will make forward-looking statements regarding future events for the future financial performance of our company. Those statements involve risks and uncertainties that could cause actual results to differ, perhaps materially from the results projected in such forward-looking statement.

We caution you that these statements should be considered in conjunction with the disclosures, including specific risk factors and financial data contained in our most recent filings with the SEC.

Now, I am joined this morning by Dr. Fred Cooper, our President and Chief Operating Officer; Jeff Yates, our Chief Financial Officer; and Mark Wilson, Executive Vice President of Sales.

We’ll first hear from Jeff, who will discuss the details of our financial results this quarter. We will then hear from Fred, who will discuss our business activities during the quarter, as well as our plans for the remainder of 2010.

I’ll now turn the call over to Jeff.

Jeff Yates

Thank you, Riley. Good morning everyone, and welcome to the conference call. We appreciate your joining us this morning.

It’s a pleasure to be here with Fred and Mark, to talk about yet another record quarter for the USANA Health Sciences. I’m pleased to report that for the third consecutive quarter, net sales set a new high, high point, breaking through $126 million, which represents a 12.4% increase when compared with the $112.1 million we reported for the Second Quarter of 2009.

Our growth in sales this quarter was primarily due to an overall increase in the number of active associates, which for the second consecutive quarter, also resulted in a new high at $210,000. The number of active associates increased by 5% when compared to the Second Quarter of 2009, which is largely the result of continued growth of our Asia-Pacific markets.

Additionally, favorable changes in FX rates this quarter, added $5.2 million to our top line, when comparing our results to the same period last year.

Regionally, sales in North America decreased slightly by 1%, to $62.1 million compared to the prior year. While we were disappointed with our year-over-year results, we are encouraged to see that on a consecutive quarter basis, net sales increased 2.6% while active associates increased 1.1%.

It was also encouraging to see sales in the U.S. increase for a second consecutive quarter. We believe that we now have the right mix of executive and associate leadership in this market, and are optimistic that sales and active associates will continue to increase.

Looking now at results in our Asia-Pacific region, net sales increased by $14.5 million, or 29.5% when compared to the Second Quarter of 2009. Net sales for the region, totaled $63.9 million for the quarter, which represents more than 50% of our total sales.

Sales growth in this region was primarily due to a 22.3% increase in the number of active associates. In Hong Kong, our largest market in the region, net sales increased by 100%, and active associates increased by nearly 86% over the prior year.

In late May, we held our Asia-Pacific Convention in Hong Kong. We were pleased with the success of this event which added $2.8 million in sales. Because of the significant growth in this region and the excitement generated by this event, it will now be held annually.

During the event, we made several exciting announcements, including our intention to open business in China. We believe these announcements have added to the already significant momentum we are experiencing in this region.

Fred, will discuss more about these announcements in his remarks.

Now, to discuss the other major components of the income statement.

First, gross margin for the – excuse me, gross profit margin for the Second Quarter increased as a percentage of net sales, to 82% compared with 78.8% for the Second Quarter of 2009. This increase was primarily due to lower direct cost and the leverage gained on higher sales.

Associating incentives for the quarter were 45.3% of sales compared with 44.9% for the Second Quarter of the prior year. This increase was due to higher utilization of our matching bonus program and the negative effect of changes in currency exchange rates. Although this expense increased on a year-over-year basis, it is important to note that it has trended modestly downward over the last three quarters and is 10 basis points lower than Q1.

Additionally, as we discussed last quarter, we made certain strategic international policy changes to manage this expense. Many of these changes were made to better align payments under our associate compensation plan, with actual sales growth.

We will also implement additional changes this quarter to further manage this expense and place greater emphasis on associate productivity. While these changes may negatively impact sales in certain markets, in the short term, we believe they are necessary to drive the long-term success of our business.

Because the major compensation plan changes were implemented at the very end of our Second Quarter, we expect the impact of our changes to begin in the Third Quarter. According to our expectation, is that associate incentive expense will continue to decline relative to sales in both the third and fourth quarters.

We also have an enhancement plan for our international convention that we believe will further benefit our shareholders.

SG&A this quarter increased to 23.1% of sales compared to 22.1% last year. Of note, during this Second Quarter we incurred $1.6 million in expenses associated with our Asia-Pacific convention which is not comparable to the prior year. Excluding these convention expenses, SG&A decreased as a percentage of sales to 21.8%.

As a result of higher sales and improved operating margins, net earnings for the quarter were $10.8 million for a record $0.69 per share, compared with $8.8 million or $0.57 per share in the Second Quarter of the prior year.

We continue to make progress in strengthening our balance sheet to better position ourselves for growth opportunities. Specifically, our planned entry into China.

Our cash balance of the end of the Second Quarter was $28.4 million compared to $13.7 million at the end of 2009 while we continued to carry no debt.

We are pleased with the quarter and are optimistic that we will have a strong finish for the year. Accordingly, we are raising our guidance and are now – excuse me – and now project net sales to be between $488 and $495 million, and estimate that earnings per share will be between $2.73 and $2.80. With that I’ll now turn the call over to Fred.

Fred Cooper

Thanks, Jeff. Good morning, everyone. I’ve been looking forward to discussing our Second Quarter results with you and once again, we’ve exceeded expectations.

I’m particularly encouraged by our third consecutive record setting quarter.

What is great about our business model is that when sales grow, coupled with managed spending, comes leverage. That leverage was evident in our financial statement this quarter where we experienced over 28% improvement to our operating margin by significantly reducing our relative spend on cost of goods sold.

This quarter we benefited from improved production efficiencies due to higher sales, lower standard cost on raw materials, lower freight cost, foreign currency changes and price increases implemented during 2009.

We’ll continue to closely manage COGs but we expect this line item as a percent of sales to be just slightly higher than Quarter 2 in the second half of 2010.

Last quarter we talked to you about certain international policy changes and adjustments to our compensation plan. We did these because they were designed to enhance rewards for greater associate productivity, and also to reduce our exposure to currency fluctuations.

While these changes were implemented in the last three weeks of the Second Quarter, so the Third Quarter will be the first quarter we see the full impact.

During this quarter we also introduced new enhancements. We will be introducing new enhancements to our compensation plan at our international convention. Though similarly, the full impact of these enhancements on the incentive line, will not be reflected fully until the fourth quarter.

I now want to spend a few minutes talking about our regional results. First in North America. Looking at our sales results this quarter compared with the second quarter of last year, we’re obviously not happy that it had the slight decline of 1%.

What does make us optimistic about North America is the sequential quarter improvement, although slight at 1% that we experienced.

In local currency, each of the U.S., Canada, and Mexican market, increased from the First Quarter. And for the U.S. this is now the second quarter in a row that sales have improved from the previous quarter.

I point out the statistics not because I’m overly pleased, but because we believe that North America is progressing. We’re optimistic that as we continue to deploy our strategies over the next few quarters, we’ll continue to see growth in our North America market.

Now in August, we’ll hold our 18th International Convention here in Salt Lake City. And as always, we plan to make several new and exciting enhancements at the event, which is – at this event, our primary goal is to recognize, train, and develop our core business leaders.

Also, at this convention we plan to announce new products, training material, and exciting enhancements to our compensation plan that we hope will incent our leaders to grow sales.

As we discussed last quarter, we finished the evaluation of associate rewards and our recognition program. Hence, our convention will be improving some our recognition and promotional programs to further drive growth.

Now, Jeff, already mentioned our Asia-Pacific regions to drive our overall growth. The number of people advancing in both rank and title in this region continues to grow as well as the number of associates who are earning a weekly commission check. Not surprisingly, this region is now our largest region in both sales and associate counts.

The primarily driver of our growth in this region is Hong Kong. The market continues to deliver record quarters for sales and associates for us.

In May, we held our annual Asia-Pacific Convention in Hong Kong, and the event was met with record attendance. In fact, it was our largest ever gathering of USANA associates on any one event. At that convention, we launched three new products designed specifically for the region. Two skin-brightening products to enhance our skin care line and a calming tea product.

The launch of these added to the record sales achieved at the convention.

The highlight of this convention was the announcement of our intention to enter China. This is a market that we have been monitoring and considering for several years. Essentially, since the rules were changed to allow direct selling to take place in the market, we have had our eye to enter there. I believe this is by far the number one opportunity market right now for USANA.

Indeed, our expectations are really high for China. We believe that now is the opportune time to aggressively invest and prepare for this market.

If you look across geographies, it is the Chinese communities and markets like Canada, Australia, and even the U.S. that are aggressively growing for USANA. Remember, for us, international expansion is largely driven by were our associates believe opportunity lies.

We see China as the next big opportunity.

As you’re probably aware, the compensation structure for China will be different from all other markets. Historically, there’s been uncertainty in regards to how best compensate a sales force in China. Many companies have made significant investments to find out what works best. We wanted to wait for the environment to stabilize in China in terms of what type of compensation plan is acceptable and is proving to be the most successful.

For us, this is the critical sticking point for not entering the market sooner, as we wanted to be able to be educated as possible in order to minimize risk, and be able to enter with minimal investment.

It was critical that we learn the best tragedies and practices from what the 25 companies operating with the direct selling license in China have done that is enticing to their associates, acceptable to the government, and profitable to the organization.

Now, however, most companies are migrating to a model that works well for this market and one that we believe will work well for USANA.

At this point in time, with only 25 companies operating under a direct selling license, we believe China to be the largest opportunity for USANA. Considering the significant momentum in this region and the success of AP convention, with by the way, we’ve already sold to capacity for 2011, we are expecting our Asia-Pacific regions to continue this pace of growth.

With that I’ll now ask the operator to facilitate the question and answer session.

Question-and-Answer Session

Operator

Thank you, sir. (Operator Instructions)

Our first question is from the line of Per Osland, with Jefferies & Co. Please go ahead.

Per Osland – Jefferies & Co.

Thanks. Good morning, everybody. Congratulations. Quick question on China, just kind of, I guess, housekeeping. But do you have – what sort of a timeline do you have? I mean, it sounds like it’s certainly the next frontier for you, but do you have kind of a date in mind in terms of when that launch would occur?

Fred Cooper

Unfortunately, no. It’s a matter of getting acquainted with the regulatory agencies there in China. It’s difficult to go through all the rigorous processes of obtaining the license.

So no, we can’t be more specific on the time other than we are aggressively pursuing it.

Per Osland – Jefferies & Co.

Fair enough. I feel like I asked this probably last quarter too, and I think it merits maybe asking again, given the strong results here.

The raise in the outlook was pretty strong on both the top line and the bottom line. And certainly, well above and beyond the beat versus all of us on the call. So I'm wondering, kind of A, I guess, how much did the results beat your own internal expectations since you don’t, you know, look at it quarter to quarter with us on your releases? And sort of, where did you see the biggest, the biggest upside surprises in your view?

Jeff Yates

Good question, Per. I appreciate you being on the call with us today. There are a number of factors that we consider when we’re evaluating our forecast and so forth. And you know our M.O. We’re careful and we’re anxious about the dynamics in the marketplace; obviously not that far out of a really chilled market in so many of our markets that we operated in. We’ve been concerned about that.

We wanted to get a better feel for how the progress was going to continue in our Asia-Pacific region; anxious about what might continue to be the case for FX. Considering all those factors have been cautious, but optimistic, obviously. We did anticipate the growth that we projected with our last release on guidance.

We were pleased to see that Hong Kong grew at an even greater pace. We were pleased to see the progressive growth in the U.S. We’ve been anxious about the impact of our comp plan changes that we’ve been describing to you, the strategic impact of those.

Having modeled all of those now and now having some experience with them in the last several weeks, we’re pleased to see what the impact of those is having on our field, and we wanted to be cautious as well with all of that.

All in the mix of, you know, where do we think we’re going to go. We want to make sure that we’re meeting or beating expectations overall. But we felt like we met what we had anticipated. And we were pleased to see that we did a little bit better than we thought.

Per Osland – Jefferies & Co.

Yeah, you certainly did. On the comp plan changes, I know you said that you put them in the last three weeks of the quarter. And now we’ve had, you know, four to five weeks additional transpire since then.

When you talked about them on the first quarter call, there was sort of the tone of caution that, you know, you weren’t quite sure exactly how they may or may not impact the top line, you know, in the short term.

Are you incrementally more optimistic that it’s not going to be a drag at this point given the strong performance that you saw in te second quarter, and obviously, now that we’re a month into the third?

Fred Cooper

Yeah. Predicting human behavior is difficult, and I would say, yes, we’re feeling much more comfortable that the field understood why the changes were necessary. And most important is the relationship we have with the field. They understood the requirement of changing the compensation plans payout for international exchange to be fair.

When they feel that it was a fair change, and understandable why it was done, they seem to accept it a lot better.

Per Osland – Jefferies & Co.

That makes sense. Okay. One last one and then I’ll get out of the queue. Just in terms of kind of broad numbers, can you give us an idea of how many people were at the Asia-Pacific convention? How many people were at the – remind us how many people were at the global convention in Salt Lake last summer. And does the obvious strength of the Asia-Pacific market sort of affect the attendance, you know, for the Salt Lake Convention now given that that’s going to be an annual event there?

Fred Cooper

So to answer the question, first of all, it was probably up 500 from 7,000, up from 6,500 to 7,000, about 500. And the second is certainly, individuals who go to the AP Convention are probably a little less likely to now feel the need to come to the international convention in North America.

But additionally, the fact that it is in Asia means more individuals are able to attend one or the other. So we definitely get more people by holding two, than one. But the North American one would be down a little because people didn’t attend.

Per Osland – Jefferies & Co.

Makes perfect sense. Thank you. Congratulations, again.

Fred Cooper

Thank you.

Operator

The next questions is from the line of John San Marco with Janie. Please to ahead.

John San Marco - Janie

Thank you. Congratulations on a nice quarter.

Fred Cooper

Thank you.

Jeff Yates

Thanks John. And welcome.

John San Marco - Janie

Thank you. Can you break out what drove that huge year-over-year spike in gross margin? And then specifically, and in addition to that, whether there are any positive margin-mix implications from, you know, from the disparate growth rates we’re seeing between Asia and North America?

Jeff Yates

I’ll have you repeat the second half of the question, but let me answer the first half.

We’ve had a positive impact from lower direct costs; materials, direct labor and so forth. And obviously, when we’re producing higher volume, we get the benefit of leverage on the sales line, our costs don’t increase exactly in concert with the sales line up at our cost-of-goods level.

Now, repeat your other question.

John San Marco - Janie

Sure. The second part was whether Asia was any part of that. Obviously, it drove all of the leverage benefit you’re speaking to. But whether the price points are different there, or there’s something else, you know, for us to consider that you know, the rapid growth you’re having in Asia is margin beneficial in some way?

Jeff Yates

No. To the question about whether or not Asia-Pacific had a significant impact. But generally speaking because margins are about the same everywhere we operate, and we do have an impact of FX that rolls through some of our costs of goods. It’s not a significant factor, per se, but overall, it was just better operations, better packaging, better shipment, and improved direct costs; materials and so forth.

John San Marco - Janie

Got it. That’s helpful. And just to clarify a comment you made earlier, I think you said that the back-half gross margins will be up year over year, but not as strongly as what we just saw this second quarter. Is that right?

Jeff Yates

Yes.

John San Marco - Janie

Okay. And all the same drivers there?

Jeff Yates

Exactly.

John San Marco - Janie

Also if you can clarify one other comment. Pricing, I know you took some pricing increases in 2009. What was the timing of those, and when – how significant were they to your top line, and when should be expect those to anniversary?

Jeff Yates

Repeat that?

John San Marco - Janie

The pricing you referenced in 2009 that contributed a little bit to the top line this quarter, how significant was that, and when does that benefit go away?

Fred Cooper

Yeah, we didn’t do a global price increase worldwide at one specific time. So as I hear you asking the question, there won’t be, per se, an anniversary date. Some were done in some countries early in ’09, of which the anniversary has come and gone. And some are coming in the fourth quarter, that would be their anniversary date.

But kind of throughout the entire year, and then given that it was in different markets, the weighted average of that increase, it would be very difficult to say there’s an anniversary date.

John San Marco - Janie

Got it. That’s helpful color. And then just lastly on your balance sheet, what do you guys think the optimum cash balance is for the business? That level moves around a lot, and you know, right now you’re sort of at peak cash levels without any debt. And I’m just wondering how much of that you feel like you can put to use without having to attack your credit line at all?

Jeff Yates

Well, we try to optimize around a billion dollars.

John San Marco - Janie

There’s better uses than just sitting it there, right?

Fred Cooper

Absolutely.

Jeff Yates

Totally. It should be noted that, as Fred has described, it’s hard to know how much and when the types of investments and the extent of which will be required of us as we enter this new market, coupled with other growth opportunities that we’re investing in in the U.S. and in other markets that we feel are coming out of a really difficult economic environment.

And so we see ourselves in a position that’s very opportune. We’ve got freedom, we’re liberated by the balances that we have, and anticipate getting return on that cash in ways that will strengthen us over the long term.

So needless to say, and while we have been building our cash and haven’t been able to say much about it with our announcement in the AP Convention, we’re excited to be able to funnel that cash into those growth opportunities going forward.

Fred Cooper

And we expect China’s going to cost us some money.

John San Marco - Janie

Will that show up in the form of, you know, a little bit higher CapEx rates in the years ahead of us?

Jeff Yates

Obviously, likely with respect with those investments in that new market.

John San Marco - Janie

Great. Well, I look forward to seeing a billion dollars on the balance sheet.

Jeff Yates

We do too.

John San Marco - Janie

Thank you for taking my questions.

Jeff Yates

By the way, thanks for joining us, John. All right.

Operator

The next question is from the line of Tim Rainy with D.A. Davidson. Please go ahead.

Tim Rainy – D.A. Davidson

Good morning. And let me add my congratulations on a pretty amazing quarter.

Jeff Yates.

Thanks.

Tim Rainy – D.A. Davidson

I guess, you know, without beating on the same question, my question was similar in that you talk about investments in China, but usually those are P&L investments rather than capital investments.

I understand there probably is some need to create some source of manufacturing in China. But you know, that’s likely to be quantifiable and relatively modest, I would think.

So can we revisit that one more time? The investments you’re likely to make would be margin rather than capital?

Fred Cooper

I’m struggling with that because it’s a new market for us. So the reason I struggle with the answer is, we just know what others have done before, and the amount that they have spent to get in there in terms of manufacturing. We have a [inaudible] facility that we’re going to be looking at what options to do with that one, which may or may not necessitate a build out on the CapEx side. And then all the expenditures going into enter into that market.

Jeff Yates

Furthermore, Tim, there are minimum investment requirements made by Chinese Regulatory Agencies, particularly in our industry. And it is significant. We know that some of the hurdles are no less than $20 million. And while we have created a footprint in there with our Tangen facility, that’s unrelated to our other core operations at this time.

We have a whole variety of other requirements that are made of us that are minimum investment amounts, obviously prepared for those coupled with Fred’s comment there are a number of unknowns for us at this point. And so we want to be prepared to deal with them, coupled with the fact that there are a variety of ways to enter into this market, some of which are more expensive, some are less.

And so for us and our strategy for that market, we’re considering every alternative and feel like we’re well prepared to take advantage of any of them.

Fred Cooper

And also adding to that, it’s also not uncommon to have branches done in China. And all of those necessitate that kid of capital expenditure.

Tim Rainy – D.A. Davidson

So, Fred, should we sort of as we model the company looking forward, should we assume that share repurchase is a pretty low priority right now, or an unlikely alternative?

Fred Cooper

Relative statement, I would state we believe there are better uses for our cash right now probably than share repurchase. But again, that’s a Board call, not for me to decide on how much they’re going to spend on it. But yes, I would say the other sources of cash is, I wouldn’t necessitate saying share repurchases.

Tim Rainy – D.A. Davidson

Got you. Okay. Thank you.

Operator

(Operator Instructions)

The next question is from the line of Ramone Deunecio [ph] with Woodbush Morgan. Please go ahead.

Ramone Deunecio – Woodbush Morgan

Yeah, good morning, everyone. My question is on China again, not dwell on it, but really, the whole Asian business. I mean, given how quickly you’ve grown the Asia business, does it make sense to ramp up Asian manufacturing anyway even regardless of your timing and extend of your entry into China?

Jeff Yates

I think that makes a lot of sense. For years and years we were operating in the low-cost country, in the U.S. Obviously, with the strength of the U.S. dollar, that has caused us to evaluate what other options that we have. It’s something that we consider. We do have actions there, and it’s a item that is of importance to us strategically and it’s part of what we consider as our growth opportunities.

And so, your point is well taken, and has been considered for a very long time.

Fred Cooper

I would add to that also, aside from just the pure ROI decision on whether or not it makes financial sense to move over there, there is also value perceived in that region for an American-made product.

So it also tempers you a little bit. It’s not completely an ROI. The ROI has to kind of get to a point of overwhelming to switch it, and then do maybe work-in-process manufacturing, partial here, and the final there.

Certainly, China’s going to have some legal requirements that have to be manufactured there, so that will necessitate as well some manufacturing over there to some extent.

Ramone Deunecio – Woodbush Morgan

Okay. Thanks very much. And my congratulations on the quarter as well.

Jeff Yates

Thank you.

Operator

The next question is from the line of Scott VanWinkle with Kenakor. Please go ahead.

Scott VanWinkle – Kenakor

Hi. Good morning, everyone. A couple questions. You know, first the preferred customer numbers in North America were flat sequentially. I know you round those numbers, but with distributor growth in that region starting to return even though it’s still relatively modest, are you seeing the same kind of trend in the preferred customer accounts in North America?

Mark Wilson

Scott, this is Mark Wilson. We’re certainly seeing a new resurgence. As people are coming out of this recession, I think we’re seeing more activity of our leaders. They’re getting back to work, there’s things starting to happen. We have some good signs. It’s not where we want it to be. We have some other things in place that we’ll continue to roll out over the next several quarters. You’ll see some good, I believe, trends heading in the right direction.

And so, yes, I think you can plan on for customers growing as associates. Usually it follows a fairly tight trend of what we’ve built over the years.

Scott VanWinkle with Kenakor

You’ve made some changes in your compensation plan. Have there been any changes on the preferred customer, the discount you get for getting on a continuity plan? Have you thought about any enhancements there to drive that number as well because, you know, that’s obviously a nice predictable number.

Mark Wilson

We haven’t put anything in place based on what you’re talking about. Our preferred customer program is very generous and in fact, sometimes our associates are a little disconcerted in the fact that our preferred customers get the exact same price that they do with no qualification requirements, with no annual, you know, fees or anything like this.

But certainly, some things we could look at and we constantly look for ways to. And we market – our marketing team markets both to our associate base and our preferred customer base very separately.

So we have separate communications to them. We have specials that are geared directly to them so that we make sure we’re communicating to those audiences differently.

Jeff Yates

And the PCs tend to be also at a ground where associates sometimes try to evolve someone into becoming a business builder. So it’s kind of a prep area for many people that start out just trying our products, find that they love them and then want to share them.

Scott VanWinkle with Kenakor

Okay. And then moving over to margin, the commentary on the gross margin, I heard that – was there any detail given on why the back half gross margin might not be quite to that 82% level?

Jeff Yates

No, just wanting to be cautious and anticipation of the remainder of the year.

Scott VanWinkle with Kenakor

Okay. But no radical changes in things like your productivity or your standard costing and ingredients and things like that? You talked about being the driver, it’s just you don’t want to project that high of a number?

Fred Cooper

Yeah. One of it is, we got some significant improvements in cost of goods on raw in the first half. We don’t expect to see that good. So you’re not going to see a negative impact significantly. We just got some great gains on cost of goods first half.

Scott VanWinkle with Kenakor

Okay. And the new skincare products, launched at convention, do the margins, are they a little different there than the margins with the rest of the business?

Jeff Yates

Very consistent with what we have elsewhere.

Scott VanWinkle with Kenakor

Okay. And last question, when Jeff said that billion dollars in the balance sheet, I want to know if he had his pinky to his mouth, like in – all right. Thank you, guys. Congratulations.

Jeff Yates

Thanks, Scott.

Operator

Management, there are no further questions. Please continue.

Riley Timer

Thanks, everybody, for your time and your questions. If you have any other remaining issues or questions to ask, please feel free to contact Patrick Richards in Investor relations. His number is 801-954-7961. Thanks.

Operator

Ladies and Gentleman, this concludes our conference for today. If you would like listen to a replay of today’s conference, please dial 1-800-406-7325 or 303-590-3030 and enter in the access code of 43291.

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