TESSCO Technologies Incorporated
Q2 2017 Earnings Call Transcript

Published: 28 Oct 2016

[Operator:]

Good day, ladies and gentlemen, and welcome to the TESSCO Technologies Second Quarter 2017 Earnings Conference Call. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session and instructions will follow at that time. [Operator Instructions] As a reminder, this conference call is being recorded. I would now like to turn the conference call over to David Calusdian from Sharon Merrill Associates. Please ago ahead.

[David Calusdian:]

Good morning, everyone, and thank you for joining TESSCO’s Q2 conference call. Joining me today are Robert Barnhill, TESSCO’s Executive Chairman; Murray Wright, Chief Executive Officer; and Aric Spitulnik, Chief Financial Officer. Please note that management’s discussions today will contain forward-looking statements about anticipated results and future prospects. Forward-looking statements involve a number of risks and uncertainties, and TESSCO’s results may differ materially from those discussed today. Information containing factors that may cause such a difference can be found in TESSCO’s public disclosures, including the most recent Form 10-K and other periodic reports filed with the Securities and Exchange Commission. With that introduction, I’d like to turn the call over to Bob Barnhill, TESSCO’s Executive Chairman. Bob?

[Robert Barnhill:]

Thank you. Good morning. Today I want to give you the highlights of our second quarter and our fundamental vision for regaining growth. Aric Spitulnik, our CFO, will give you the details of our performance. Murray Wright, our new CEO will review with you his initial observations and his high-level strategic plan. Then after Murray’s remarks we will take your questions. Our second quarter was encouraging on several fronts. We continue our evolution from a carrier- and transaction-centric product supplier to a relationship provider of end-to-end wireless solutions to deploy network and connectivity systems. We’re beginning to see increased purchases and commitments from carrier contractors. The private system operator market is growing year-over-year and quarter-over-quarter sequential growth. And on the September 1, Murray Wright joined TESSCO as President and Chief Executive Officer. Overall, we achieved sequential growth in earnings, achieving $0.12 earnings per share and $0.38 EBITDA per share. We continue to maintain a strong balance sheet and declared a quarterly dividend of $0.20 per share. As I did in past quarters, I’d like to highlight the five key initiatives to transform the way we do business to profit from the opportunities emerging from the convergence of wireless in the Internet. First, we’re expanding and enhancing our offer in the markets we serve. Our goal is to be your total source for the end-to-end wireless solution to deploy network and connectivity systems. To us, the end-to-end solutions include everything that is necessary to design, build and maintain a system to meet the customers’ requirements. We’ve expanded beyond cellular, into data, video, connectivity and controlled network systems including

[Aric Spitulnik:]

Thank you, Bob. Today, I’m going to give some comments regarding the results from the individual markets. Overall, our second quarter performance met the expectations we laid out on our last earnings call. Revenues and EPS were up sequentially from the first quarter, but down from the second quarter a year ago. However, this performance is well short of where we ultimately want to be. Sluggish demand from the public carriers, continue to weigh on our results. Gross margin held steady from a year ago at 21.4% of revenue and actually improved 40 basis points from the first quarter. The sequential increase in gross margin was primarily due to the improved product mix, particularly within the retail, commercial reseller and government markets. SG&A declined from the first quarter by approximately $300,000. As a percentage of sales, SG&A was 19.8%, an improvement of 110 basis points from the sequential first quarter. As a result, operating margin improved 140 basis points from the first quarter. But this is still down significantly from last year’s second quarter. Net income was $1 million or $0.12 per share, down from net income of $2.7 million or $0.33 per share in the same quarter a year ago, but up from $0.1 million or $0.01 per share in the first quarter. Now, turning to the markets, we continue to navigate uncertainty in our major markets. The carrier market in particular remains our biggest challenge as the major wireless carriers have pushed out their plans for renewed spending to build out their wireless networks. Revenues were down 28% over last year’s Q2. However, the carriers are increasing their activity. And we’ve been successful in winning some new business from tower owners, contractors and carriers, because of the consultative relationships we have developed. Some of this new business has been for traditional build-outs. But we have also been successful in developing new opportunities such as Internet of Things programs. We were able to grow this market 12% over Q1 and we are well-positioned to capitalize on renewed spending as it materializes. It just hasn’t happened as quickly as anyone would like. In the government market, we added four new state and local contracts to allow us to offer our product solutions. We also renewed eight contracts. This being a presidential election year, several large projects and opportunities has been shifted into 2017 calendar year as we await approval of the federal budget. For Q2 sales were up modestly from a year ago. Sales were off from the first quarter, which was very strong as many state and local agencies completed their fiscal years. We continue to drive more opportunities in this market based on the investments we’ve made in talent during the past few years. The private system operators market experienced significant activity within the utilities sector during the quarter. Among these were opportunities for test equipment, broadband radios, and signal enhancement projects. Overall, revenues increased slightly from the second quarter of the prior year and were up significantly from the sequential first quarter. As expected, we saw pickup in sales to a particularly large retail center customer that purchases primarily Ventev products. Within the VAR market, public safety continues to drive new demand for DAS equipment. We were also awarded our first NFL stadium DAS deal. And we have additional demand for similar installations in the pipeline. However, we need to grow faster in this space as revenues were down a year ago and sequentially. Looking at the retail market, sales were up slightly year-over-year. On a sequential basis, revenues were up mid-single-digits, largely driven by the iPhone 7 that was introduced towards the end of the quarter. Ventev continues to have success with mobile device and accessories. In the second quarter we launched a new category of Ventev car-mounts, which has received great reviews from both existing and new customers. We also launched our first Ventev branded USB Type-C integrated backup battery and 2-in-1 cable that includes both USB Type-C and micro USB. On the infrastructure side, Ventev continues to have success with Wi-Fi applications, including closing a large national mall project and several stadium projects. Total Ventev sales, which include both mobile device accessories and infrastructure products, totaled 15% of overall revenues. Sales were essentially flat year-over-year, but up 19% sequentially. The increase was also largely driven by the acceleration of sales to the repair center customer I discussed earlier. Looking at the balance sheet, we increased inventory by almost $14 million from the sequential first quarter. While this is a substantial increase, inventory is down from last year’s Q2, and the increase is a temporary event that occurred at the very end of the quarter. This was primarily related to the new iPhone as well as Ventev inventory as we gear up for the Q3 holiday season. Cash flow from operations was $400,000 during the second quarter and $500,000 for the first six months. Overall cash on the balance sheet was $10.8 million. We had no balance on our $35 million line of credit. We remain committed to our dividend program and we’ve set our dividend of $0.20 per share with a record date of November 9 and a payment date of November 23. Now turning to the outlook, we are now providing earnings guidance at this time for fiscal 2017 due to the uncertainty that persists, which primarily in the carrier market. While we currently anticipate modest sequential revenue growth in the third quarter, results are expected to be lower than in last year’s third quarter, primarily because of near-term uncertain economic and market conditions, pricing pressure in the retail market and the ongoing investments and our transformations. Overall, this quarter was a significant step forward for us, as we saw sequential revenue and earnings growth. We are excited by the momentum that is building. And I believe we are in a strong position to grow as we execute our plan. Now, I’ll hand it back to Bob.

[Robert Barnhill:]

Thank you, Aric. This is a very exciting time in TESSCO’s journey. For the first time, since I started the company in 1982, we have a new CEO. Murray Wright has the drive, experience and commitment to accelerate the transformations already underway to achieve breakthrough success. He has a strong background in sales and operations, have been working for leading technology companies including Tech Data, where he was the President of the Americas. Murray is ready to respond to the exponential pace of change in technologies, networks and applications, customer expectations, and doing business digitally. As Executive Chairman now, I look forward to supporting Murray as we transition leadership and achieve our transformation initiatives. Murray will share with you his observations and his high-level execution strategy plan. Murray, take it away.

[Murray Wright:]

Well, thanks very much for that introduction, Barney. I am honored and excited to be here at TESSCO. It’s now been nearly eight weeks since I joined the company and then practically every meeting, I’m asked why chose this company at this time. So let me provide you with my rationale for making this move and then give you an idea of what we’ll be working on in the near future. First, I spent my entire carrier in the information technology industry at each of the vendor, distributor and VAR levels. This combination of experiences in the IT channel provides a great background for understanding the detail and the mechanics of TESSCO and how our business operates. I also heard very positive things about the strength of the TESSCO culture from colleagues, who have worked here in the past. That culture is built on a rich 33-year history of achievement, financial success and an ability to adapt. Then I can tell you today and confirm that culture is very healthy. My own interaction with TESSCO has been extremely positive. There is a great atmosphere within the organization. And every conversation I have had with the Board and with team members prior to accepting this position was positive and productive. You can be confident in the CEO selection process the Board uses, because it was long and it was thorough. Looking outside the company, wireless is a growth industry. Market forecast that I’ve seen show healthy growth for the next several years. Many of our focus areas like Wi-Fi, wireless infrastructure, machine-to-machine communications, and the Internet-of-Things are expected to have double-digit growth rates for at least the next several years. This is a great industry to be part of, and I believe TESSCO is in an excellent position to take advantage of that growth. Now a few words about our approach as we move ahead. First, strategy that’s in place is a solid one. And we plan to keep that largely intact. Many key investments and intellectual capital and technology have already been made in the recent past. These investments will enable us to pursue the existing transformation strategy without significant outlays of new capital. Instead, we are looking to make changes that will improve the company operationally. We are doing many of the right things, but we need to do them faster. We are increasing our intensity and focus on execution, particularly in achieving the top line growth. As just one example, we are actively engaged in a search for new Senior Vice President of Sales. We’ve narrowed the search to a small group of candidates and we are looking forward to making a hire in the near term. Much of our work right now is focused on process. We are assessing each department function and end-market as we develop new ways to accelerate our performance. We are identifying priorities and putting functional action teams in place. TESSCO has several opportunities to improve productivity, execution, agility, customer focus and speed. We will be discussing these in greater detail in future quarters. We are also exploring new solutions that will forge collaboration with existing customers and thereby enhance and strengthen those relationships. In summary, it’s quite clear to me, TESSCO is in a terrific position to capitalize on the growth of the wireless industry during the next several years. We have made significant investments in tools and talent, it’s now time to accelerate our progress and capitalize on those investments. The building blocks are in place and we look forward to discussing our achievements in the quarters to come. Back to you, Barney.

[Robert Barnhill:]

Thank you, Murray. We are all very excited to welcome you to TESSCO. Let me quickly summarize, before we move to questions. First, I think the key take away is that we are positioned well in cellular and the new world of wireless networks and connectivity. Secondly, we have the roadmap for making the transformations required and we believe these transformations will accelerate long-term growth. And finally, we are committed to making a difference in our customer success and creating value for you, our shareholders. So now let’s open it up to questions.

[Operator:]

[Operator Instructions] Our first question comes from Anil Doradla with William Blair. Your line is open.

[Anil Doradla:]

Hey, good morning, guys.

[Robert Barnhill:]

Hey, good morning.

[Anil Doradla:]

Bob, Aric, and congrats, Murray, on the appointment. And welcome to TESSCO.

[Murray Wright:]

Thank you.

[Anil Doradla:]

Looking forward to meeting you in person and working with you. So let’s kick off with a couple of questions, Murray. I’m going to put you a little bit in the hotspot here. So you come at a very crucial time in the history of the company clearly. It appears that this fiscal year also revenues in all likelihood will decline at least that’s one-time modeling, which means TESSCO’s revenues would decline for four consecutive years. However you slice it and dice it, you just can’t put a pause just into that. So I think - let’s start with the big picture question. What would you do to reverse these big issues? And why I ask that question, you talked about head of sales addition, but to me this is an important and crucial thing. But don’t you feel that you have to retake a look at what TESSCO is doing, whether the fundamental strategy is right or wrong, and whether this company is aligned for the future?

[Murray Wright:]

Anil, thank you for that question. I’d just like to say, keep in mind that I’ve only been here for two months. And part of what I am in the midst of doing at the moment is making sure that I understand the business and our customers. I think I will be in a much better position to answer that question on our next call. But I take stab at it right now, and say, you could be right. And anything that’s happened from a past-perspective on performance, I certainly can’t deny it. But the transformation of becoming more solutions oriented I think is the right move for TESSCO. And I think the history of the company has also demonstrated that their ability to able to go and secure very large transactions and develop large customer relationships. And so, I think that could be part of our future as well, making sure that we focus on driving more solutions. But then we are also going - we’ve demonstrated big-deal opportunities in the past. And I think we’ve got some very interesting things that are - it’s a little early to share with you in our pipeline. So I feel –coming into it, without having the four years of previous history, I feel very good about where TESSCO is positioned.

[Anil Doradla:]

And, Murray and Barney, you can also pitch in here. But - so if you guys are going to take a relook at your big picture strategy, how would M&A factor into that? Is that going to be an important component? In other words, from a capabilities acquisition point of view, given that, what I believe is time is running out a little bit, and you guys have to show growth, are you guys open towards a more M&A kind of deals where you acquire some of these adjacent capabilities?

[Murray Wright:]

Thanks, Anil. I think I am sure Barney would like to weigh in on this as well, because we have talked about this. I think we have to focus on the fundamentals and get some growth with the foundation of the business. And I’m confident we are going to see that. But you are absolutely right, and in fact, we got our antenna up right now. And as you know, we got a very strong balance sheet and we got some flexibility that enables us to start to look at what smart potential acquisitions should look like. I would just add that, I think it is part of a strategy that we need to craft into the company. And we identify the spots where complementary acquisitions make sense for TESSCO. And now with Bob being the Executive Chairman, frankly, I think we have more time to evaluate those opportunities in the marketplace.

[Anil Doradla:]

Very good.

[Robert Barnhill:]

Yes, I think - just a great point is that, first of all, as we look at the solutions or the systems that we are supporting, we got to make sure that we really have the end-to-end products and services. You take the Internet-of-Things, so we keep talking about is that we need to fill-in some areas, when it looks for sensors and other components that we need. And to Murray’s point, that’s one of the areas that I am really going to be focusing on in terms of looking at where we need product if we don’t have it, do we get it with an existing vendor or do we get it with an acquisition. So it’s certainly a move we’ve always had - are looking for things, but now our antenna is really up.

[Anil Doradla:]

Very good. And so when I switch gears, clearly, Barney, there seems to be a fundamental paradigm shift away from the carrier market. In other words, carriers just don’t want to take on the responsibilities and the dollars associated with CapEx. So you talked about the NFL stadium build-out, sounds like the local facilities, local owners are taking on more of that relationship. Now, is this something you believe is the new way of doing this business or do you think this is - I’m kind of over extrapolating that comment?

[Robert Barnhill:]

Well, yes, I mean, first of all, we are certainly still very-focused on the carriers and the contractors. I mean, and we have the best team that we’ve ever had and we are building those relationships and really working on relationships selling rather than how many feet of cables you need. We’ve got some very exciting things in the pipe. As we said that the commitments are being made, our back order has never been as high in terms of what we are looking at. So the carriers, but remember that carrier is going to be buying some direct, but a majority of it is going to come through the contractors. Also I think as you know is that when you look at the NFL stadiums and you look at public safety, and where the carriers historically is they were building and they were owning. But now, they are pushing that out, so that the actual owner of the facility is putting in that the DAS carrier system. So the way that we are selling and who we’re selling to, is a lot different than what it’s been historically. But just as - and I’m sure we’ll be talking about the AT&T and the Time Warner is this is - all of this content needs the network. And the challenges going to be is, are the existing carrier today going to be a content to service provider or are they going to be the infrastructure provider. But one way the other, the infrastructure has to be built.

[Anil Doradla:]

Right, and looking at the…

[Murray Wright:]

Anil, I would look at it - with just one - I just add one comment to that is, if you think about our business, strengthen the foundation, grow the foundation of our business and the base with solutions, selling more stuff to more customers and more stuff to current customers. And the carriers are going to be a key part of our future absolutely. It’s just going to be the potential of being different than it was before. And in fact, we’ve got pilot projects in place today that it’s too early to go primetime with them, but with one of the major carriers we’ve got a very interesting project underway. So I think that while CapEx maybe a concern for them, they are also trying to offload expenses and services and other capabilities to their partners. And I think we are very well positioned to capitalize on that.

[Anil Doradla:]

So go from kind of a CapEx-centric company to more of an OpEx-centric operational…

[Murray Wright:]

Solutions oriented, right.

[Anil Doradla:]

Right, right.

[Murray Wright:]

So providing solutions that could provide that leverage and benefit to whatever the carrier is trying to accomplishing.

[Robert Barnhill:]

The other side of the carrier that we are really developing is that they don’t want to maintain inventory that they have done in the past that we all know and that’s where some of the sales have been slowed, because they’re working off their inventory. They want a kitted solution forward deployed, so they can take it and they can deploy it immediately. So it’s a totally kitted for a certain site or certain location. And that’s what we are developing; let me say, we’re developing our supply chain. So that we can totally kit it and then we can forward deploy it. So they have it close to where they can put it into operation quickly.

[Anil Doradla:]

Very good. Now, Aric, switching to the finance part, over the last couple of years you guys have done a reasonably good job reining in your OpEx, SG&A to ensure it just doesn’t go out of hand. So sounds like 2017 will be another year where you will have to just grind it out on the top line as you kind of pivot your strategy. So can you share some comments on how you are looking at the OpEx for the year? Would the decline be in line with the revenues or the decline will be more severe or you will be in the spending mode in 2017?

[Aric Spitulnik:]

I think you will see something somewhat similar to where we have been in the first two quarters. We are certainly looking at expenses. What we are trying to do is identifying areas where we may not have the right skill-set. And it is a lot of making sure that, as Murray says, putting the right people in the right chairs. So I don’t think we are going to be investing in a whole lot of new people and I think from a technology and from a space and capacity situation we’re in great shape there. So I wouldn’t expect any significant investments in the business from an operating expense standpoint. So I think we are kind of - just kind of be - where we are today is a good trend-line for where we are probably going to be for the next two quarters with a little bit of ups and downs here and there and trying to get a little bit more productive with our sales force. But I don’t expect any major changes in the second-half of the year from where we are today.

[Anil Doradla:]

Great. And one final question for Murray and Barney. Look, I mean, clearly as part of the big picture strategy, new talents, new talent acquisition, adjacencies are obviously are always of focus. But can you share with us, how much focus are you guys emphasizing on divesting properties or shutting down divisions or getting out of some of these businesses, because part of that pivot into this new paradigm is not only getting to new stuff, but also just continuing the old stuff too, right?

[Murray Wright:]

Anil, I’m in assessment mode and analysis mode with Aric on that. And will be able to give you a better answer in January. But I’d say it’s on my list.

[Anil Doradla:]

Very good. And once again congrats, Murray, looking forward to having a great time with you in TESSCO.

[Murray Wright:]

Thank you very much.

[Robert Barnhill:]

Thanks, Anil.

[Operator:]

Thank you. [Operator Instructions] And we do have a question from the line of Bill Dezellem with Tieton Capital. Your line is open.

[William Dezellem:]

Thank you. A group of questions, first of all, the reseller and the government market were both down versus the first quarter. Would you please discuss the dynamics behind that, please?

[Murray Wright:]

Yes. On the government side, the state and local yearends were in Q1. And we had a great amount of business there as one of our best government quarters we’ve had. So it’s a difficult comparison. And as I said, some of the election year stuff is causing some uncertainty in the government market. And we actually expect - normally, we see a better Q3 and a worse Q4, actually expect that to be either close to the same or either bit better in Q4 than we will in Q3 for government. So it’s a little bit of a - some uncertainties in the political arena are affecting some of the federal government spending. So, well, we certainly are confident that the government market is going to continue to grow on a long-term basis. The commercial resellers have been a market that we’ve been struggling with a little bit. We’re still working on putting together a little bit more of an outreach plan in that market, getting some more people out in the street. So that’s been a longer-term focus that we’re still working towards, nothing in particular. It’s now like it is one customer. It’s not a trend that we see from a group of customers, just happened to be another slightly down quarter from where we were last quarter.

[William Dezellem:]

And finally, is it that you think over time you have been struggling with that reseller market and it’s not gaining attraction to that you think it should?

[Robert Barnhill:]

Part of it’s the carriers, that they deal some work with carriers, so the carriers being down. That certainly impacts it. I think some of it’s the transitions here that we’re seeing and who is doing what, as far as the carriers versus the VARs. So there has been some work there. I think we were doing more work with the two-way dealers in the past and that’s slowed down a little bit. So we need to make sure we have an edge there and we are being more aggressive and trying to go after some of those guys. So it’s a sales strategy that we’re still in process of executing. And so we haven’t been as successful as we like. But - and where we’re giving up in that market that’s a critical market for us. And we’ve got a lot of resources in that market that we think can drive a lot of success in the future.

[Murray Wright:]

Hey, Bill, I just add, a lot of my past experience is, if I take a look at Tech Data for instance, has been dealing with the VARs. I understand the marketplace pretty well and we are going through that assessment process and looking at our go-to-market strategy today, our coverage model, our target customers, our pricing strategies. But I mean you and I’ve talked about this before. I’ve been here two months. I think we’re making some very good progress and we’re making changes. I anticipate those changes will deliver results, but it will be an evolution, not a revolution, for us to start to build momentum in that marketplace.

[William Dezellem:]

That’s helpful. Thank you both. Let’s shift to the iPhone introduction for a moment. Talk a little bit about the impact that you see on the business as a whole and Ventev specifically if you would.

[Aric Spitulnik:]

So the iPhone launched in mid-September, so it was a very strong launch, the first few weeks of this iPhone are almost two-times higher from what we saw from last year’s iPhone. So I think the 7 is definitely generating a lot of momentum. And we’ve seen that continue into October. On the Ventev side, Ventev is more the power. They don’t do a whole lot of the cases. So it did see a little bit of a lift. But if you have an iPhone 6 and you upgrade into a 7, you don’t necessarily need another power right away. So Ventev is certainly saw a lift from that, but would not have seen - the case manufacturers, is what we primarily sell. And there’s a new iPhone launch. But power is an ancillary product that goes along with it sometimes, not as much as a case or a protective screen.

[William Dezellem:]

And the inventory you increase that you referenced, in part tied to the iPhone, but in part to Ventev. Can you dial into that a little bit more, because the magnitude of that increase appears to be bigger on a sequential basis than what you have experienced in the prior upgrade with launches, if I’ve done my homework correctly?

[Aric Spitulnik:]

Yes, so lot of it is timing. So there is a lot of inventory that came in right at the end of the quarter that were so much of it. We couldn’t get it all turned around and get out the door as quickly. Some of that is also starting to ramp up again for the holiday season. The Ventev piece of that is a lot of the connectors that we buy overseas and those are a little bit of a constrained resource right now. So we went a little heavy with purchasing those. So that was a significant increase over previous years. Those connectors are also more expensive than they’ve been in the past. So that contributed to that as well. We’re still down as I said from last year’s second quarter inventory and we would expect by the end of Q3 to be significantly down from where we are right now, both with iPhone inventory Ventev inventory and overall inventory.

[William Dezellem:]

Thank you. And then, let’s keep on inventory front for a moment. Channel inventory in the carrier market has been a problem. Just wondering what your current update in terms of what you are seeing with inventory levels and do you have some perspective as to when we might get to the level of the carriers would consider appropriate?

[Aric Spitulnik:]

Yeah, I mean, it’s still out there. It’s definitely come down quite a bit in the last - over this calendar year. They’re not to a point where they’re down to zero or by any means. But they’re certainly at a point where they’re starting to order some things that they didn’t need before. So it is a good sign overall. We can’t speak exactly to how much anybody has - any particular carrier. But we’re seeing that come down quite a bit. We’re seeing some of the stuff that we haven’t sold in a while starting to move a little bit, including the one customer that we have some inventory for. So I think overall it’s a good trend. We’re not to the bottom of that yet. So we’re heading in the right direction with it.

[William Dezellem:]

And then, finally the microcell market is an area that you all have not really played deeply in the past. Is that an area that as you go through the strategy evaluation creates - where you’re finding that there might be more of an opportunity there than you had historically thought?

[Robert Barnhill:]

Yes, we still can’t participate in the small cell itself, the active component. But we’re already supplying the carriers antennas, cabling. We’re looking at the enclosures. So there’s a lot there and there is going to be a lot of the densification as we go forward. And there’s - CommScope, for example, is just acquired, it’s public knowledge, a small-cell manufacturer, which is I believe that’s going to help us as we go forward in terms of actually getting that access point that we need to play. But it’s - somebody’s deployments are pretty interesting in terms, if you see the ones that they’re doing, if you’re in Baltimore it’s still on the power poles. And they’re actually putting - for every three poles they’re putting a small cell on top and it’s a good-looking thing. It’s painted brown, it kind of blends in. But we’re looking at these various disguised antennas that will be very important as we do more of the small cell deployment.

[William Dezellem:]

Great. Thank you all. And welcome aboard, Murray.

[Murray Wright:]

Thank you, Bill.

[Robert Barnhill:]

Thanks, Bill. Good talking to you.

[Operator:]

Thank you. I’m showing no further questions. I’d like to turn the call back to Murray Wright for closing remarks.

[Murray Wright:]

Well, great. Thank you everybody for being on the call today. Let me just say that we value your support and we’re confident we will regain our growth. There are just too many opportunities in the marketplace for us not to start to generate momentum. I look forward to talking to you again in January. Thank you very much for being on the call. Have a great day.

[Operator:]

Ladies and gentlemen, thank you for participating in today’s conference. This does conclude the program and you may all disconnect. Everyone, have a great day.