Jan 27, 2015
Executives
Deborah Pawlowski - Investor Relations Lee Rudow - President and Chief Executive Officer John Zimmer - Senior Vice President of Finance and Chief Financial Officer
Analysts
Andrew Fleming - Heartland Advisors, Inc. Donald Porter - Dalton, Greiner, Hartman, Maher & Co.
LLC Steven Stern - Stern Investment Advisory
Operator
Greetings and welcome to the Transcat Inc. Third Quarter Fiscal Year 2015 Financial Results conference call.
A brief question-and-answer session will follow the formal presentation. At this time, all participants are in a listen-only mode.
[Operator Instructions] As a reminder, this conference is being recorded. It is now my pleasure to introduce your host Deborah Pawlowski with Investor Relations for Transcat.
Thank you, Deborah. You may begin.
Deborah Pawlowski
Thank you, Adam, and good morning, everyone. I hope you all aren’t buried out in the snow there.
We’re doing fine up here in Western New York with a very clear and cloudy day. With weather report I want to thank you for your time and your interest in Transcat.
On the call with me are President and Chief Executive Officer, Lee Rudow; and our Chief Financial Officer, John Zimmer. After formal remarks, we will open the call for questions.
If you don’t have the news release that crossed the wires after market yesterday, it can be found on our website at www.transcat.com. There are also slides that accompany today’s discussion which you can find at the same location on the website.
If you would, please refer to Slide 2. This is the Safe Harbor statements, because as you are aware, we may make forward-looking statements during the formal presentation and the Q&A portion of this teleconference.
Those statements apply to future events which are subject to risks and uncertainties, as well as other factors that could cause actual results to differ materially from where we are today. These factors are outlined in the news release, as well as documents filed by the company with Securities & Exchange Commission.
You can find those on our website where we regularly post information about the company as well as on the SEC’s website at sec.gov. So please review our forward-looking statements in conjunction with these precautionary factors.
With that, I'd like to turn the call over to Lee to begin the discussion. Lee?
Lee Rudow
Okay, thanks, Deb. Good morning, everyone.
Thanks for joining the call. Let me start by saying that generally speaking Q3 was a solid quarter, particularly as it relates to our Service business.
We continue to grow our top-line, in Service, the top-line trend. We tripled our year-over-year Service operating income which is consistent with the message that we try to convey and that we talk about.
And our Distribution segment continues to generate significant cash which many of you know we use to foster the growth of our overall business and our strategic plan. Before John walks through some of the financial data, let me take a couple of minutes and highlight some of the activities within the third quarter, I think you’d be interested in.
We are about three months removed from the Ulrich acquisition, up in Montreal, Canada. And the early read has been really positive.
As we anticipated, Ulrich is delivering expanded capabilities up in the region and strong leadership. Right out of the gate after the acquisition was completed in Q3, we signed a very significantly large deal with a major manufacturer up in Montreal.
And it’s not unusual when we acquire companies we often combine our resources right out of the gate and often times you should have the one-plus-one-equals-three scenario, so that’s kind of what took place in the early days of the integration of Ulrich. We continue - in addition to that we continued to work the acquisition pipeline.
We expect to continue to make deals that fit our strategic plan. The drivers are the same.
The expansion of our geographic footprint is important. We look to expand capabilities and always expertise within the industry.
We’re still the only company that we’re aware of that are making acquisitions in the life science, the healthcare space. We remain very well capitalized and maybe the biggest differentiator of all in the acquisition front is that we have the leadership in place today that recognizes good opportunities that can negotiate deals and ultimately effectively integrate the opportunities that we do acquire.
So net-net on the acquisition front we think we’re very well positioned and will be well-positioned moving forward. Shifting over for a minutes to the organic service front, our new C3 Metrology asset management software has got off to a good start, continues to be very well received with great early adoption rates.
The idea behind the software, as a reminder, to become more embedded, to become more intimate with our current large customers, that’s exactly what it’s doing, that’s exactly what we’re doing. The idea is also to foster enterprise level growth opportunities as we look to sell our services to larger companies.
The C3 Metrology software we developed is a key differentiator for us. For those of you who may be interested actually in looking at the software, there is a link on our website that will take you to the C3 software and you might find it interesting.
In addition to that, in the quarter we located our LA lab about 30 minutes from its former location. This new facility is state-of-the-art.
It allows us to have expanded capacity which we need, and expanded capabilities. It’s located right in the heart of the southern, what we consider the Southern California life science cluster.
Moving forward with this new lab we expect to be more competitive in that region than we’ve been in the past. So that’s a positive.
And finally, relative to services in the quarter, we made significant progress selling our expanded addressable services, into our expanded addressable services, is the best way to put it. We closed two nice size organic deals in the analytical space servicing gas chromatograph, dissolution, and HPLCs.
These are services that we acquired when we made the Anacor deal a couple of years ago. So it’s good to see big wins in that relatively new space for us.
Overall, our Service, our organic Service pipeline is strong as we head into fiscal 2016. Let me take a minute and before John gets started, let’s move to Distribution.
We’re engaged now, we’ll get to it in a minute or two, but we are engaged in some new interesting activities but this is our backdrop. As many of you know the instrument market itself for the last several years has been kind of soft.
There’s been downward pressure on margins, but when we look back on our performance throughout all-in-all we think Transcat has performed pretty well in that kind of a market. Back in Q3, in November we launched our brand new website that we worked on for at least six months prior to the launch.
This new website puts us, and this new platform puts us in a position to do some unique things that we have not been able to do in the past, so we are - first off, we are piloting a new program. We call it a new instrument rental program.
And it’s gained - we have been pretty impressed with the early results and it’s gained some early traction right out of the gate. Now this isn’t a business that we think it’s going to move the top-line needle all that much, but it does have with it outstanding intrinsic margins.
And we’ll keep you posted as we move forward and continue to develop the business. But it’s interesting.
In addition to that, with the new service, the new web platform, we’re also going to launch a new SKU expansion project so we’re looking to add thousands of new items to our website and we’ve been unable to add in the past at least in an efficient way based upon the old platform versus the new. So that initiative combined with the rentals should create some momentum.
We expect both of these programs to have - provides some offset, if you will, for us on the margin pressure that we’ve been experiencing. The real story behind Distribution in fiscal 2015 however is about rebates.
We are down $1.4 million year-over-year when it comes to rebates and will continue to fight this significant headwind through our fourth quarter. The good news is that that challenge will end with fiscal 2015.
We will not have a rebate issue in fiscal 2016. It will be behind us, so kind of looking forward to that.
So we have new programs on the distribution front. We’ll fight through the rebate.
All-in-all relative to Distribution we feel like we’re doing the right things that are going to maximize the impact from Distribution and we expect the cash generation, the significant cash generation of the past will continue into the future. So with that, John, I’ll turn it over to you.
We can walk through some of our performance data.
John Zimmer
Thanks, Lee, and good morning, everyone. Slide 4 is an overview of the quarter and the important advances we have made so far this year that will help drive our growth.
Our Service segment continues to deliver excellent results while our Distribution segment provides solid cash generation for investments that support our organic and acquisition growth strategies. Looking at Slide 5, we continued our trend of top-line growth, posting record third quarter results on a consolidated basis and record third quarter service segment revenue.
We achieved $12.6 million in service revenue, 9.4% increase driven by a combination of organic and acquired growth. This marks our 23rd consecutive quarter of year-over-year service segment revenue growth.
The Distribution segment saw $500,000 or a 2.9% decrease in sales. While the market in this segment remains highly competitive we’re executive multiple strategies as Lee alluded to, to maintain and grow our market position.
Moving on to Slide 6, as we have seen in previous quarters, our Service segment delivered strong gross profit and operating margins. Gross margin for this segment improved to 110 basis points to 24.5%, while operating income tripled to $600,000 with the operating margin expanding 320 basis points to 4.5%.
Distribution gross profit was down $500,000 to $3.9 million with gross margin declining to 21.2% from 23.4%. As we mentioned the gross margin was primarily impacted by lower vendor rebates compared with the prior year period which accounted for 190 basis points of the 220 basis point decline.
We expect the negative impact to gross - the Distribution segment gross margin from vendor rebates in the range of 200 basis points to 300 basis points in the fourth quarter. On a consolidated basis, our operating income in the third quarter was $1.4 million, up 2.6% from the prior year’s third quarter.
We will now move on to Slide 7 and Slide 8, where we look at both contribution margin and adjusted EBITDA to gauge our performance. Contribution margin by segment excludes corporate expenses and focuses on the operating performance of the segment.
We use adjusted EBITDA, because we believe it is a good measure of operating cash flow for each segment. These are non-GAAP measures, so please review our reconciliations and related disclosures in our release and at the end of these slides.
On Slide 7 for the quarter, consolidated contribution margin was $3.4 million compared with $3.5 million in the prior year period, where the Service and Distribution segments’ contribution margin was $1.5 million and $1.9 million respectively, or 12% and 11% of revenue for each segment respectively. On Slide 8, consolidated adjusted EBITDA was $2.4 million compared with $2.2 million or 5.8% increase over the third quarter of fiscal 2014.
The service segment achieved adjusted EBITDA growth of $500,000 or 69% over the prior year period. On a trailing 12-month basis, Service segment adjusted EBITDA increased 22% over the comparable period in fiscal 2014.
And since fiscal 2011 that segment has achieved 34% compound annual growth rate. On to Slide 9, our third quarter net income was consistent with the prior year period at $800,000 or $0.11 per diluted share.
Our net income compound annual growth rate since fiscal 2011 is nearly 9%. Slide 10 provides detail regarding the strength of our balance sheet.
As of the end of the third quarter of fiscal 2015 we have $14.8 million in long-term debt. The Ulrich Metrology acquisition which Lee mentioned used $6.7 million of borrowings available for acquisitions, leaving $8.3 million available for acquisitions for the reminder of the fiscal year.
Our year-to-date CapEx was $2.7 million and focus primarily on additional service capabilities in information technology including C3 and our new website which Lee discussed earlier. We expect full fiscal year 2015 CapEx to be approximately $3.5 million.
Slide 11 is an illustration of key investments and the impact to debt on a trailing 12-month basis, which demonstrates that we are generating cash to fund day-to-day operations and continue to make investments necessary to fund future growth. We believe that our balance sheet structure offers the financial flexibility to facilitate our acquisition strategy and satisfy working capital requirements in capital expenditure needs.
And lastly Slide 12 summarizes the key points we have discussed today. That concludes my remarks.
Operator, we can now open the line for questions.
Operator
Thank you. We will now be conducting a question-and-answer session.
[Operator Instructions] Our first question comes from the line of Andrew Fleming with Heartland Advisors. Please go ahead with your question.
Andrew Fleming
Hey, good morning, Lee and John. Congrats on a solid quarter, especially in the Service side of the business.
John Zimmer
Thanks, Andy.
Lee Rudow
Hey, thanks, Andy.
Andrew Fleming
Lee, I’ve been trying to get a better understanding of the gross profit margin profile in the Distribution side as we move into fiscal 2016. So should we expect the gross profit margin to revert back to 2014 type of margins or that the kind of 21% to 22% that we’ve seen in this fiscal year?
Lee Rudow
Right.
Andrew Fleming
Is that a good run-rate to think of going forward?
Lee Rudow
Yes, I think it’s more accurate to say that will be the run-rate to think of going forward. We anticipate, Andy, continued pressure on the margins to what exact degree, it’s hard to completely determine, but we’re going into the year thinking there will be a run-rate will - the run-rate will continue that there will some marginal pressure.
That’s why we’re doing some different activities to try to offset that and anticipate that that’s going to happen. Now if that doesn’t happen, that’s fantastic.
If there is some stabilization in the margins, that will be great for the business. But we’ll go in with the assumption that margin pressure will continue.
Most of it is Internet based, if you will, increased competition. But there - obviously at some point there is a bottom, people have to make money.
Have we reached it? We don’t know, but it’s best to prepare for it to decline a bit and the pressure to continue and offset it with some good programs and that’s what we’re doing.
John Zimmer
And, yes, and from a rebate perspective, we don’t expect it to decline. There may be some small upside next year.
I don’t think we should expect to see it rebounding to a level that it was last year.
Andrew Fleming
Okay. So more of this…
John Zimmer
Over to this year.
Andrew Fleming
Okay. That sounds good, and then just trying to dig a little deeper on the Service gross profit margins, so obviously great improvement year-over-year.
And I’m just trying to understand from Q-to-Q, from the second quarter to the third quarter. Did this third quarter have a larger percentage of outsourced Service revenue?
John Zimmer
Not particularly. I think this every quarter is a little bit different and the mix of work that we do is different from the second quarter to the third quarter and I think that’s why it’s more relevant.
The work that we did year in the third quarter other than new business would be similar to what we did last year in the third quarter so it’s really more of a mix. Sometimes the type of work that we do for a particular company, whether it’s a big on-site or another might be at a lower margin in the third quarter than the work that we did for a different customer in the second quarter.
So those margins are going to fluctuate from quarter-to-quarter, but that’s why we look at it, year-over-year for the same quarter.
Andrew Fleming
Great, and then with the Ulrich transition now being fully integrated what percentage of revenue for the company as a whole from Canada at this point on an annualized basis?
Lee Rudow
Just Distribution, or Distribution and Service as well?
Andrew Fleming
Just total, total revenue.
Lee Rudow
You want to get on it or you want me to get on it?
John Zimmer
I think, yes, on the service side of the business, our Canadian revenue is in Canadian dollars somewhere between $9 million and $10 million roughly. And on the Distribution side it fluctuates on an annual basis but it’s in the $4 million to $5 million range.
Andrew Fleming
Okay. And then on the Service side, I assume we’re naturally hedged, and that the cost and revenues…
Lee Rudow
Yes, that’s correct.
Andrew Fleming
…cancels each other out.
Lee Rudow
Right.
Andrew Fleming
Okay.
Lee Rudow
It’s in a 15% range, Andy, relative to Services, percentage of our overall Service revenue.
Andrew Fleming
Okay. Great.
Lee Rudow
In 20 [ph].
Andrew Fleming
Okay. Great.
And then as we move into fiscal 2016 on the service side, we still think that 10% growth with the 50% incrementals, should be the way to think about things going forward?
Lee Rudow
Yes, and I think our revenue as always will be - we haven’t changed our plan, so it’s going to be blend of organic activity and acquired activity. And we would absolutely look to see revenues grow in the double-digits and so we’re on target with that.
Andrew Fleming
That’s great to see. Well, keep up the good work.
If that comes to fruition we should be close to mid-teens ROIC, which is nice to see.
Lee Rudow
Exactly, yes.
Operator
Thank you. Our next question comes from the line of Dave Rhode [ph] with Stifel Nicolaus.
Please go ahead with your question.
Unidentified Analyst
Hi, good morning, fellows.
Lee Rudow
Good morning, David.
Unidentified Analyst
Yes, congrats on another record quarter, and I also noticed, I think someone had sent me, you guys were listed in the Forbes 100 Best Small Companies last fall. I think that was third quarter as well.
John Zimmer
You are correct. And that’s, Dave, that’s something we’re particularly proud off.
We didn’t see that coming, or didn’t know that we were being considered by - yes, that’s always good news.
Unidentified Analyst
Yes. I - some of my questions have already been answered.
I would like to ask one question. I know, you guys used to post the amount of your product sales that were Internet oriented, or you’re not doing that anymore, can you disclose that number or not?
John Zimmer
We haven’t been disclosing that number, David, it hasn’t really changed much, and so it wasn’t really particularly interesting. It’s still in a low double-digits and continues to be pretty consistent on a net basis.
I think, one of the things that maybe more interesting as we go forward now that we’ve launched our new website is that, there is a settling-in period. When you do, we have a new website, where the spiders have to re-index from an SEO standpoint, so your traffic drops a little bit initially and then it starts to pick-up again.
So I think once it settles in at a - at the rate that it’s going to be more consistently from a traffic standpoint, it might be interesting for us to provide an update, maybe in the first or second quarter of next year. But we’re already seeing the traffic rebounding to the same levels it was at and actually beyond, where it was when we launched the new website.
So our expectation is the new website will generate more traffic and more importantly, the conversion rate on somebody gets to our website will be increased.
Unidentified Analyst
Has there been any more thinking along the lines of analytics as far as marketing via the Internet yet?
Lee Rudow
Dave, we think about that all the time. We have a new VP of Marketing here that took the position in the - in Q3.
In fact, we have been really impressed with his attitude, his ability, his energy level, all-in-all his smarts. And I think that, when we have marketing meetings now and my quest steps to the front and sort of lays out his thoughts and a strategy, it’s a different atmosphere.
And we’re encouraged, I’m looking forward to what you’re thinking, well, I think you can implement. So data becomes - the analytics become more and more important.
We can now with our new platform we know who is looking and what, when they visit our website, we know how long they spend in each area of our website, what their interests are, and we have the ability to chat with them online. We have the ability to follow-up really quickly in a more effective way than we have in the past.
From a data perspective specifically addressing your question, we’re getting better analytics, and so to agree that, we can capitalize on that, our success will be accelerated. One thing I wanted to add to what John had said, we did some industry research and when you launch a new website, you have to go to that re-indexing process, it takes ex-amount of time to do that in.
And we planned and knew that, perhaps, we take one step back, so that we can take two steps forward in terms of traffic. But we’ve actually experienced a little bit of a different trend, and we’re recovering quicker than industry norms.
We’ve even checked with Fluke and some of our manufacturers who went to a similar process, it took six months to eight months to recover, and we look at where we’re recovering within almost a quarter, so that’s good news too as well.
Unidentified Analyst
That’s great. I guess, this would be for John.
So it looks like you’ve got about $800,000 left in CapEx for the fourth quarter here, is that about it?
John Zimmer
Yes.
Unidentified Analyst
Okay. And you quantify at all, I know we’ve talked about the rebates and the effect that they’ve had on things.
Can you quantify at all any EPS, or lack of that that occurred because of that in the third quarter?
John Zimmer
I don’t have that number in front of me, Dave, but it was 190 basis points of margin. So we would have to calculate the dollars associated with that and tax effective, because it really drops to the bottom line.
Unidentified Analyst
And just FYI gosh, I mean, I look back ten years with you guys and you’ve really done an outstanding job. I ran some numbers, your shareholders equity in the last ten years quarter-over-quarter is 773% increase.
John Zimmer
Wow.
Unidentified Analyst
Your Service revenues last 10 years have increased 201% quarter-over-quarter. And the Service revenues 10 years ago were 30%.
They are now 41% of the overall picture. My question for Lee is going forward, we don’t have to go out 10 years into the future, but as we look forward, how do you want to see that mix with service and product sales on a long-term basis?
Lee Rudow
Longer term, Dave, and there is no question that our strategy is driving us towards growing Service, obviously the faster rate than Distribution. We want to see Distribution grow.
We want to add thousands of SKUs. We want to expand our product line on the Distribution side.
But the - we’re going to look to grow the Service, it’s got the higher margins, it’s got the recurring revenue streams. The bottom line is the most important thing and [Audio Gap]
Unidentified Analyst
…going forward, during, say, the next 12 months?
John Zimmer
So we plan to continue to meet with investors on a quarterly basis, we’ll continue to do these conference calls, this is all part of investor outreach. We do have a plan to go to the West Coast in a couple of weeks.
We’re going to be there from 9 through the 11. And if anybody is on the call, or listening to the call who is interested in meeting with us, then they should contact Deborah Pawlowski and we can set up a one-on-one meeting will be in San Francisco, LA, and San Diego during that time, and we plan to do that kind of thing quarterly.
We will - we’ll look at some conferences as appropriate and we've done some of that. So, yes, you’ll probably see more of the same as what we've been doing over the last 12 months.
Unidentified Analyst
Thank you.
John Zimmer
Thanks, Dave.
Lee Rudow
Thank you, Dave.
Operator
Thank you. [Operator Instructions] Our next question comes from the line of Donald Porter with DGHM.
Please go ahead with your question.
Donald Porter
Hey, good morning, guys.
Lee Rudow
Good morning, Don.
John Zimmer
Hi, Don.
Donald Porter
Hey. So what was the organic growth rate in the quarter?
John Zimmer
We don’t - we haven’t been splitting out the organic growth. We integrate very quickly and we haven’t, and we don’t typically break that out.
We don’t plan to, because once we acquired these businesses, they become part of our network and some of the opportunities that we was talking about earlier are generated through that sort of one-plus-one-equals-three scenario where we’re - we have a trouble with putting it in our pocket, whether it’s organic or acquired, so…
Donald Porter
Okay.
John Zimmer
It’s not really meaningful to break it out.
Donald Porter
,
Lee Rudow
Yes, I mean, I’ll just give you, this is Lee, Donald, that’s in the - it’s a six-figure contract, let’s call it, mid-to-low six-figure contract range.
Donald Porter
Okay, guys. And the other two, you said you expanded Service and you won two deals, not actually there?
Lee Rudow
Yes. So those deals on the analytical space, one is a mid six-figures and one is around low six-figures, so they’re both significant.
Donald Porter
Okay, I agree. And just, not to beat dead horse in the rebates thing, but is this just an half year, where it reverts kind of every other year, or is it more competitive just kind of generally.
And so it’s more difficult to kind of get margin there.
John Zimmer
Sure. So last year, Donald, we had a really good year with Fluke in particular and it droves a very high gross rebate for us.
Donald Porter
Gotcha.
Lee Rudow
And the bar gets raised, it’s based on growth. And so when you’re coming off of a very, very good year, it’s difficult to hit that threshold makes you impossible, but somehow it’s difficult.
And so we've just had a challenge this year. Coming off of this year going to next that’s absolutely not going to be the case, so it’s not completely cyclical and there are half years and there are little bit, there are anomalies in there.
But generally you are coming off of a high year and that’s a result.
John Zimmer
I think going forward though, the market is very competitive, and I don’t think that the expectation is to see the level that we saw last year, I think, no further declines. But we won't see - we are not expecting to see the rebound.
Donald Porter
Gotcha.
John Zimmer
So the margin going forward maybe similar to what we are seeing this fiscal year. And we are also getting an increased contribution of our revenue from a more variety of manufacturers.
And that’s spreads the revenue out, and I think that diversification is positive for the business in the long run.
Donald Porter
Gotcha, great. And just on the M&A pipeline, how is that looking?
Lee Rudow
So we have a - we have a decent pipeline, it’s something that we work, pretty hard at, and we like the pipeline as it is today. We expect that to result in future deals, that’s our strategic plan.
Donald Porter
Gotcha. Okay, great.
Thanks, guys. I appreciate it.
John Zimmer
Thanks, Don.
Operator
Thank you. Our next question comes from the line of Steven Stern with Stern Investment Advisory.
Please go ahead with your question.
Steven Stern
Good morning.
John Zimmer
Good morning.
Lee Rudow
Good morning, Steve.
Steven Stern
Boy, directly [ph] got here in Washington, we have one-inch of snow in the ground and we can’t handle that nearly as well as you guys can handle it in Rochester.
Lee Rudow
That’s for sure.
Steven Stern
Three quick kind of what on related questions. In your release, you referred the cost discipline in Distribution and reduced expenses related to performing space compensation.
I’m just curious, is that a commission - sales commissions for the sales staff, or is that operating rewards for the distribution management?
John Zimmer
It’s more of the latter. We are very performance-based.
Our compensation throughout the company is very performance-based and heavily levered that way. So as we see something like a reduction in the gross profit or year-over-year that has an impact on everyone’s compensation.
Steven Stern
Very good. What are some of the parameters into sales growth, margin change?
What are the parameters of –what are the benchmarks by which the - they are measured?
John Zimmer
The most important is our - is EPS. When we talk about our management performance-based compensation plan, EPS is the highest rated.
And there are other factors and all of that, it’s relatively complicated, but all of that is outlined in our proxy statement. So if you go to the proxy you can see.
But for management, it’s based on the overall company performance in the most heavily weighted factor as EPS. And then we also have a plan that that all employees share on, which is based on our success relative to our plan every year.
And those are - yes, go ahead.
Steven Stern
And do you have an ESOP plan?
John Zimmer
No, we don’t.
Steven Stern
Very good. And then the third question completely change of pace, with the decline - the drastic decline in oil prices, petroleum prices, what is our exposure to the refining industry drilling retailing any?
Lee D. Rudow
So, Steve, this is Lee. There - such a drastic decline is likely to impact the lot of areas and a lot of companies.
I don’t think anything really significant on our end. We do have a certain portion of our Distribution business itself into the pipeline industry.
We just - we’re pulling our own data within the last month or so to try to gauge the potential impact. It’s not really all that material, I mean, where we have some decline in that market, of course, but it’s not something that, we’re not concentrated on the Distribution side relative to refinement of oil and so on and so forth.
On the Service side, it’s even going to be less an impact. We've always talked about targeting the life science industry and that’s where the bulk of our customers lie, not in the oil refining and so reduce some work at the utility level, but again, the oil should have a minimal impact.
Steven Stern
Very good. Okay, that’s it.
Now, keep up the good work.
John Zimmer
Thanks.
Lee Rudow
Okay, Steve, thanks.
Operator
Thank you. Ladies and gentlemen, there are no further questions at this time.
I would now like to turn the floor back over to management for closing remarks.
Lee Rudow
Okay. So I thank, everyone, for joining us on the call and certainly appreciate your interest and support.
As John mentioned, we’re going to be in California, February 9 through 11, I think we are stopping off in San Francisco, LA, San Diego, so if you are in that area, you ought to contact Deb, and we’ll do everything we can to accommodate a meeting if that’s possible, otherwise, I will keep you updated on our progress. We appreciate you all being on the call.
Operator
Ladies and gentlemen, this concludes today's teleconference. You may now disconnect your lines at this time.
Thank you for your participation, and have a wonderful day.