Good day and welcome to the Superior Industries Fourth Quarter and Full Year 2015 Earnings call. For opening remarks, I would like to turn the conference over to Kerry Shiba, Executive Vice President and Chief Financial Officer. Please go ahead, sir..

Thank you, and good morning everyone and thanks for joining our call. During our discussion today, I will be referring to our earnings presentation, which is available on the Investors section of our website at www.supind.com. We got this posted a little bit late this morning, so hopefully you’re able to go check if you don’t have it in your hands.

Joining me on the call today is Don Stebbins, our President and Chief Executive Officer.

As usual, I’m going to start with the second slide of the presentation, where I would like to remind everyone that any forward-looking statements contained in the presentation or commented on today are subject to the Safe Harbor provisions of the Private Securities Litigation Reform Act of 1995.

Actual results could differ materially because of issues and uncertainties that need to be considered in evaluating our financial outlook. We assume no obligation to update publicly any forward-looking statements. Specific conditions, issues and uncertainties that may represent forward-looking statements are noted in the detail on the slide.

I would like to point you to the company’s SEC filings, including our annual reports on Form 10-K for a more complete discussion on forward-looking statements and risk factors that may cause actual events to differ from these forward-looking statements.

We’ll also be discussing or providing certain non-GAAP financial measures today, including value-added sales, EBITDA and adjusted EBITDA.

Reconciliations of these measures to the most directly comparable data presented in accordance with GAAP may be found in the financial tables included with our fourth quarter and full-year 2015 earnings press release. I now would like to turn the call over to Don Stebbins, our President and CEO..

by the end of the first quarter, we expect to have increased the capacity in our newest facility by an additional 25% or 500,000 units, to a total capacity of 2.5 million wheels per year to help us efficiently meet customer demand.

We also expect to make further progress toward a 24/7 manufacturing schedule, driving higher efficiency and incremental low-cost capacity. Along with our partner, we also expect to complete the ramp-up of our Mexican polishing facility by the end of the second quarter.

We are also initiating a project to increase the capabilities of our wheel finishing capacity in Mexico. By year end, we expect to complete the rollout of our new ERP system, which will provide us improved analytical tools to better manage the business.

Finally, we expect to benefit from our new tax strategy that will reduce our effective tax rate in 2016 to the low 20% range, from 32% in 2015 and 49% in 2014.

In summary, we remain focused on further strengthening our manufacturing platform, driving increased operating efficiencies through best-in-class processes, and further diversifying into more value-added segments while growing value-added sales. We believe these initiatives will continue to drive profitability in 2016 and beyond.

With that, I’ll turn the call back to Kerry..

Thank you, Don, and apologies up front for any coughing or hacking you hear from me. I’d like to now provide you a more detailed review of our financial results for the fourth quarter and the full year 2015. Let’s start with Slide No. 4, please.

On the right side of the table, you can see that Superior shipments increased 19% to 3.2 million units in the fourth quarter of 2015 compared to 2.7 million units in the same period last year, significantly ahead of the 2.2% growth in North American vehicle production which is shown on the left side of the table.

We are very pleased with the level of unit shipments in the fourth quarter, which was the highest for a single quarter since 2007. Similar to the trends we observed last quarter, our highest increase in shipments occurred for our largest program, the Ford F-series, which grew by 202,000 units or 58% year-over-year.

The largest increase for F-series largely reflects timing of the new platform ramp-up for Ford. We also experienced nice growth on the Focus and the Fusion for the quarter. We had significantly higher volume at GM with an overall 25% increase year-over-year.

The largest increases at GM were for the Chevy Malibu, which is a program that we are new on, and for the K2XX platform, with the Chevy Traverse also up significantly.

Additionally, we were at plus-19% at Toyota with strength in both the light truck and passenger car categories, and finally we also experienced nice increases for the Yaris Scion I8 program and the Mazda 2.

Similar to what we saw in the third quarter, the overall shipment growth year-over-year was partially offset by declines in our volumes on the Ford Edge and the Nissan Maxima, which are programs on which we are winding down. I would also like to comment briefly on the sequential pace of shipments.

Total shipments were up 16% in the fourth quarter compared to the third quarter, while North American vehicle production was down 1% sequentially. The strong sequential growth was driven by a 16% increase in shipments for the K2XX, which was bolstered by a win of an in-process 20-inch polished wheel program.

This was further supported by strong increases on the Toyota Avalon, the Nissan Altima, the Dodge Ram truck, and the Ford Fusion.

Our increased volume on the redesigned Chrysler Town & Country, now known as the Chrysler Pacifica, somewhat reflects ramp-up timing for the new vehicle, although we do expect our shipments for this program will begin to decline in the near future. Moving to Slide No. 5, let’s take a closer look at the change in value-added net sales.

We’ve introduced a new format this quarter to also address value-added sales, which we haven’t done specifically in the past. Both analyses are now in a waterfall format, which I also hope you find more straightforward than the formats we’ve used previously.

Let’s start by looking at the fourth quarter comparison for value-added sales, which is shown on the top half of Page 5.

The first and last bars of the chart basically reconcile value-added sales to reported net sales, where you can see the values of metal and up-charges we exclude from value-added sales because they fundamentally are passed through to our market.

For the fourth quarter of 2015, value-added sales were $103 million, a $14.3 million or 16% increase compared to the fourth quarter of 2014. As previously discussed, the increase was mainly driven by higher unit volume, which had a positive impact of $16.3 million on value-added sales. Favorable product mix contributed $1.4 million to the improvement.

The benefits of higher unit volume and favorable product mix were partially offset by a $900,000 negative impact for changes in the relationship of the U.S. dollar to the Mexican peso, the higher sales adjustments credited to our customers, and lower project development revenues.

Net sales were $194.6 million for the fourth quarter of 2015, a $7.9 million or 4% improvement when compared to the fourth quarter of 2014.

The volume growth benefit of $33 million was offset significantly by the pass-through of $26.4 million in lower aluminum value and the combined impact of smaller differences that I just mentioned in the value-added sales comparison.

In case you have a question, the $26 million impact of lower aluminum value is measured as the change in unit price for metal times the number of units sold in the current period, so this number is not going to match the difference on the top chart when just comparing aluminum value at the beginning and end of the periods of contrast because of the volume adjustment.

Turning to Slide No. 6, which addresses the full year 2015, value-added sales were $360.8 million, an $8.5 million or 2% decrease compared to value-added sales of $369.4 million in 2014. The decrease was mainly driven by $4.1 million due to the strengthening of the U.S.

dollar versus the Mexican peso, higher sales adjustments, and lower project development revenues which more than offset the $3.2 million in benefits from higher unit volume. Net sales declined $17.5 million or 2% to $727.9 million, while unit shipments increased 1% year-over-year.

The volume growth benefit of $6.4 million was more than offset by the $11.9 million pass-through of lower aluminum prices as well as the other items just discussed, again which impact value-added sales. Turning to Slide No.

7, our fourth quarter adjusted EBITDA increased 61% year-over-year to $25.3 million and reached 24.5% of value-added sales, an increase of 680 basis points when compared to the same period last year.

This excludes $3.1 million of plant closure-related cost, most of which was for asset impairments recorded during the quarter, as noted on the bottom of the table so you have it as reference.

As you can see from the chart, the increases in fourth quarter EBITDA were largely driven by higher unit shipments and a stronger product mix, which we have already discussed. Similar to previous quarters, cost improvement was another key contributor to our increase in profitability.

Something I believe I have commented on previously, cost comparisons were less favorable in the fourth quarter than in the first three quarters of the year as expected as high production rates to build inventory prior to the shutdown of the Rogers facility in the fourth quarter of 2014 contributed to temporarily improved deficiency at that plant during the shutdown period.

That being said, improved cost performance resulted from a combination of factors in the fourth quarter.

These include the benefit of changes in our strategic manufacturing footprint, namely the previous plant closure and the completed ramp-up of our newest facility in Mexico, as well as lower energy prices, particularly in Mexico and strong cost control across all of our manufacturing facilities.

Going forward, while we expect to benefit still from continued cost performance improvement, the year-over-year benefit of the strategic footprint change will begin to decline as inefficiencies during the 2015 ramp-up of the new plant in Mexico move further out of the rear view mirror.

Slightly offsetting the volume and cost improvement in the fourth quarter was $3.7 million in higher SG&A expenses, including $1.7 million of transition costs for the relocation of the company’s headquarters from California to Michigan, a $1.6 million higher compensation cost reflecting improved company performance, and about $600,000 for consulting and legal expenses primarily related to the corporate income tax project which Don referred to earlier.

Moving on to Slide No. 8, our full-year adjusted EBITDA increased 36% year-over-year to $76.1 million or 21% of value-added sales. This represents 600 basis points of margin expansion year-over-year.

When looking at the waterfall analysis, improved cost performance was by far the largest factor driving the year-over-year EBITDA increase in 2015 with roughly one-half of the improvement resulting from the strategic manufacturing footprint change.

This was partly offset by the timing of the pass-through of aluminum as the impact of significant declines in aluminum prices during the year flowed through the P&L more quickly in our sales line than in our cost line.

Similarly to the quarterly comparison, higher SG&A of $5.6 million in 2015 reflected transition costs related to the relocation of our headquarters, about $4 million. The majority of these expenses were incurred in the third and fourth quarters, and we of course do not expect to see significant additional costs related to the relocation in 2016.

The increase in SG&A for the full year also reflected $1.6 million in higher compensation costs, again reflecting improved company performance. Adjustments to EBITDA were $6.3 million for the full year, all of which relate to the closure of the Rogers manufacturing facility.

I would also like to comment briefly on the sequential quarterly changes in EBITDA, which is illustrated in greater detail in the appendix of the earnings presentation - that should be Slide No. 15. Fourth quarter adjusted EBITDA increased by about $8 million or 48% when compared to the third quarter.

A little over two-thirds of the sequential improvement in adjusted EBITDA was driven by higher unit volume and favorable product mix. The remaining sequential improvement was driven by cost control in all of our plants as well as favorable timing of aluminum pass-through.

This was partially offset by increased costs related to the relocation of the corporate office and higher compensation costs, as I talked about earlier. Turning to Slide No. 9, I have a few final remarks on cash flow and capital allocation. We saw a significant increase in cash generation for both the fourth quarter and the full year.

Our operating cash flow during the fourth quarter was about $20 million, which compares to $5.9 million for the same period last year. Operating cash flow for the full year of 2015 was just under $60 million as compared to a little under $12 million for the prior year.

The change primarily reflects improved net earnings and lower working capital, which was aided by reduced costs for aluminum. Capital expenditures were approximately just under $7 million in the fourth quarter of this year, about two-thirds lower than when compared to the $20.6 million spent last year.

Almost three-quarters of last year’s total capital spending was for the new manufacturing facility in Mexico. Lastly, as Don mentioned at the beginning of the call, we remain focused on a balanced approach to capital allocation.

During the full year in 2015, we repurchased 1.1 million shares for a total of $19.6 million, again part of the $30 million share buyback program approved in October 2014. We also paid $19 million in dividends during the year.

As Don also mentioned, we completed our $30 million repurchase program in January, and we announced a new $50 million share repurchase program at about the same time. With that, I would now like to turn the call back over to Don to walk you through our ’16 expectations..

Thanks Kerry. Turning to Slide 10, let me take a moment to walk you through our 2016 guidance that we first provided in mid-January. We expect value-added sales to be in the range of $370 million to $390 million, driven by unit shipment growth of approximately 1 to 4% along with favorable product mix in 2016.

We expect value-added sales growth to be higher in the first half of 2016 compared to the second half, reflecting the broader overall North American production schedules along with new program launches. Adjusted EBITDA margins measured as a percentage of the value-added sales are expected to increase 125 to 200 basis points.

Net sales are expected to be in the range of $720 million to $740 million, and adjusted EBITDA margin as a percentage of net sales are expected to increase 100 to 175 basis points. We expect capital expenditures to approximate $40 million and working capital to be a slight net source of funds.

We also anticipate an effective tax rate in the low 20% range for fiscal 2016 as a result of our more favorable corporate tax strategy. Lastly, we expect to return approximately $20 million in cash to shareholders in the form of dividends.

In conclusion, we are very encouraged by the early progress we have made in the evolution of our business, and we remain confident that we have the right strategy in place for continued success in 2016. With that, I’ll turn the call over to the operator to open it up for questions..

[Operator instructions] We’ll go first to Jimmy Baker at B. Riley & Company..

Hi, good morning. Great quarter. Just first looking at the Q4 value-added sales rate, I guess even adjusting for seasonality, it seems like that rate is above on a run rate basis what you’re guiding to for 2016.

You mentioned that the first half growth rate would be greater, just given North American production schedules, but are you actually expecting second half, or at least Q4 of ’16 value-added sales to be down year-over-year, or could you just do a little bit more breaking out of the delta between the Q4 run rate and what you’re expecting for 2016?.

Yes, I’ll go first, Jimmy. I think it breaks down somewhere in terms of production, 52 to 53% of what we think we’ll make in terms of the number of wheels will be in the first half, versus 47, 48% in the second half. That would explain most of that, I would guess..

Yes, and then specific to your question on Q4, again Q4 this year was one of our strongest on record and we do not expect that to be replicated in the fourth quarter of 2016, so that will be down..

Okay, understood.

Then just beyond the volume, anything to note on the quarterly cadence as it relates to breaking down the margin improvement or pace of margin improvement throughout the year?.

I would expect that you will see a slight improvement in the first half of the year. That rate of improvement, I would expect to tail off slightly in the second half.

It goes back a lot, Jimmy, to the point that as we progress through 2016, the inefficiencies in the comparison when looking at the 2015 ramp-up of the new facility in Mexico will start to disappear from the year-over-year comparison.

By the time we hit the fourth quarter of 2015, the new plant in Mexico was basically running at its full rate of capacity, so a lot of the start-up friction was behind it by then..

Okay, so just to be clear, is your, let’s say, your capacity exiting 2016 essentially the same as what you exited 2015 with, and then just one more footnote, what are your underlying assumptions for F-series and K2XX production in the 2016 guidance?.

Let’s talk capacity. So I would expect in terms of capacity that the end of 2016 will be higher than 2015.

Now again, 2015 was an extraordinary--the fourth quarter was an extraordinary quarter in that we were able to make $3.2 million units without the additional 500,000 units on the new plant in Mexico, but I would tell you that it was not a sustainable rate to be able to run at that level for a year, a year and a half.

So we’re going to continue to improve from an efficiency standpoint in each one of the plants. We’re adding that additional 500,000 units - that will be ready kind of mid second quarter, late second quarter, so those types of things will certainly allow us to operate at a higher level as we go into 2017..

Okay, and then your underlying assumptions for F-series and K2XX, just rate of change?.

I think we’ll have to get back to you on the actual numbers that we’re using in terms of those two platforms..

Okay, fair enough. I’ll get back in the queue. Thank you..

Thank you..

We’ll go next to Anthony Deem at Keybanc..

Hi, good morning gentlemen. Thanks for taking my questions..

No problem..

First, can you share your actual aluminum content forecast embedded within your net revenue guidance range, and if you believe there’s any potential risk to the downside given the weak fourth quarter pricing and maybe what you’re seeing year-to-date in aluminum pricing?.

Hold on just a second on that one, Anthony. So we are forecasting about a buck a pound, a dollar a pound of aluminum content. The number of pounds that we have in the sales forecast is, I’m going to say roughly about 330-ish million.

We will take a re-look at that and come back to you in more detail when we talk later, but that’s I think rough order of magnitude at this stage. That dollar a pound also has two basic components to it. It’s a midwest price for commodity aluminum, and then we also pay an alloy premium. I really can’t--here’s the problem for you.

I understand but really don’t want to disclose those two different components, because the alloy premium is a competitively negotiated price..

Okay, understood. Secondly from me, at the midpoint it seems you expect EBITDA dollars to grow about $7 million to $13 million year-over-year in 2016. Can you dimension the most significant factors behind that EBITDA improvement and provide any commentary on 2017 and beyond? That would also be helpful..

Yes, so I think if you were to break that down, certainly the addition of the 500,000 units on our new facility, that expansion certainly will help us in 2016 and continue in 2017. Certainly the transition costs, that friction will go down as well.

I think that throughout, as we’ve mentioned essentially for the last year and probably year and a few months, we’ve mentioned that the operating efficiency in each one of our facilities is improving.

We’ve added temporary labor--you know, we’ve taken that from 3% to 17% in our facilities, which is helpful as well, and then as you go through 2016 and beyond, a large portion of this - and you’ll see this in the value-added per wheel - is going to be the mix of product.

We are moving towards larger, more complex wheels which will yield more margin for us, and you saw a little bit of that in the fourth quarter of 2015. You’ll see more of that in ’16, and you’ll really start to see the impact of that in ’17 and ’18.

Remember, we’re bidding for a program two to three years out, so as we started to drive that strategy in late ’14 and 2015, we’re going to see that in late ’16 and ’17..

That’s a good segue to my next question. In the press release in the guidance section, it states Superior will be expanding its product portfolio.

Was that just a comment geared towards the larger, more complex wheels, or can you elaborate on that comment to maybe clarify if it’s maybe of an M&A comment potentially where Superior might be interested in expanding beyond its singular product, the aluminum wheel? Any color there would be helpful..

It was intended to speak to moving in terms of different aluminum-type wheels, different finishes, different sizes, more innovative product in terms of reducing weight per wheel, working with other companies in terms of the materials that go into wheels, that type of thing..

Yes, all very important, but don’t over-read too much into that..

Got you, just wanted to clarify. Thank you. Last question from me - so when does the share repurchase authorization expire, and maybe what sort of dilution should we model against it? It kind of looks like a 2% decline in the share count annually in the fourth quarter. Is that a safe assumption for us to model? Thank you very much..

There is no stated sunset on the program itself, Anthony, so it’s open. We look at market conditions and price valuations and how that’s comparing to where we’ve been historically, so it’s kind of circumstantial at this point in time as to what our intentions are as far as volume that we will repurchase.

Certainly as shares get issued out of compensation plans, we want to ensure at minimum that there’s no dilution that occurs for our investors as a result of that, so that will set a floor for us on what we want to do. But timing, I think, will be circumstantial to how we see what’s happening in the market..

Very good, thank you..

Thanks Anthony..

We’ll go next to Tristan Thomas at Sidoti & Company..

Hey, how is everyone?.

Great, Tristan.

How are you today?.

Not bad. Two quick questions for me. First, I’m going to use a baseball analogy.

In your mind, where do you see the North American light vehicle market, and then where is Superior with its internal changes - second inning, third inning, what have you?.

Yes, I think for North America, it’s probably in the late innings of the cycle. I think the question is, do we reach--are we kind of at a plateau level and stay at 17.5 or some level slightly above that or slightly below that? That’s certainly our feeling here. For Superior, I think we’re in probably the third inning.

We’ve got a long way to go in terms of both our strategy to move towards higher value-added product, improving our relationships with our customers, and improving the efficiency of the operations of our facilities, so I think we have a long way to go before we run out of things to do..

Got it, and I just want to tack onto what the previous individual asked. In terms of M&A, is that something you’re continuing to look at, or we should maybe be--kind of maybe provide some more color into that..

No, it is something that we continue to look at and evaluate, both inside the wheel space here in North America and globally, and we have also had dialog with some guys that do aluminum products for our customers outside the wheel space.

So we’ll continue to evaluate that as we go forward, but job one for us is to, again, to make sure that we’re as competitive as we can be and successful as we can be in the aluminum wheel space here in North America..

Sounds good, thank you, guys..

Thanks..

We’ll go next to Glenn Chin at Buckingham Research..

Good morning, gentlemen. My questions have been answered, thank you, but congratulations on a strong quarter..

Great, thanks Glenn..

Thanks Glenn..

We’ll move next to Brian Sponheimer at Gabelli & Company..

Hi, good morning guys..

Good morning, Brian..

A couple questions. First, I just wanted to get my numbers right on the buyback.

So if you repurchased 1.1 million this year but your diluted share count only went down by roughly 300,000, is that to imply that there were option grants and other share grants that went to new employees for Southfield and that shouldn’t repeat, or is this more a run rate thing for the rest of the business?.

I think it was basically vesting. There were not a bunch of new stock grants that were given to people as we moved the headquarters. That was not a factor. You’re basically looking at vesting schedules on programs that have been in place, a little bit circumstantial to Don’s contract and some loading on that.

But I think that ultimately my hope would be clearly that the performance of the company continues to be very, very positive and that we’ll continue to see equity grants in the future that are tied to that improving performance..

And the criteria for the equity grants, is that a margin hurdle or a stock price hurdle? Give me some color on the criteria if you can..

The performance base of our--.

Yes, so two-thirds of the performance of the stock plan, the long-term incentive plan is performance-based. One is EBITDA margin, two is return on invested capital, and the third is total shareholder return versus the peer group. The weights of those are 20% PSR, 40%for the other two..

We’re going into a new freer plan for that right now in 2016, 2016 to 2018. We did switch one component based on feedback from our investors, Brian, and we took out the EBITDA margin because we’re still driving the short term on EBITDA performance.

Some of our investors felt that that was a little bit of a duplication of factors, so we replaced that component with cumulative EPS over a three-year period, so that will be in there for the new plan going forward..

Okay.

Just on the business, Don, how staffed are you now in Southfield relative to where you want to be for the business?.

We’re fully staffed. We have about 65 people here in Southfield..

All right. Obviously we’re seeing production move away from cars and into light trucks and cross-overs.

Can you just, one, give a sense as to your ability to be flexible regarding costs as these programs change; and two, if you can remind me what the car versus light truck mix is right now for Superior?.

Yes, I think in terms of the percentage car-truck, it’s probably 70-30. I think if you look at the next three years, 2018 that will be declining, the light truck will be declining to probably another three or four percentage point change, so we’ll move closer to the market split of light truck to pass car..

Just to clarify, you’re 70-30 truck to car?.

Correct..

Okay. I guess last one from me, your cost basis out of Chihuahua, how much of your total costs down there are denominated in U.S.

dollars versus pesos? Is labor peso, while the rest of the costs are generally speaking dollar denominated?.

Somewhere between 75 and 80% of that cost is peso-denominated. That’s not taking into account aluminum..

Yes, so labor obviously we’re paying our employees in Mexico in pesos. Our electricity cost is denominated in pesos. Most of our supplies, outside contracting costs, all that type of stuff is primarily pesos. Natural gas is denominated in U.S. dollars - that’s the major non-metal cost that’s in USD, and of course metal..

All right, thank you guys very much..

Thanks Brian..

We’ll go next to Hamed Khorsand at BWS Financial..

Good morning. Thanks for taking my questions.

Regarding your earlier comment about expanding into different wheel base sizes and so forth, what’s prevented you from being more into the automobile space, and what is it I’m assuming that now gives you the ability to go into that space and benefit your profit margins?.

I think historically the company had been set up for, let’s say, larger production runs, so as you move towards the higher, more complex wheel, this is a different skill set. The facilities weren’t initially set up for that.

Certainly from our standpoint, we view this as a significant change for the company, and along with that we’ll be able to grow our margin and conquest new business..

I think somewhat it’s also reflective of just the competitive dynamics. Forty-ish percent of the North American market is served by the imports. Most of those are coming out of Asia, and most of those are coming out of China, so there is significant logistics costs to move those wheels over here.

On smaller diameter wheels, which tend to be for passenger cars, the logistics cost is more competitive. You can put more smaller diameter wheels in a shipping container than a large diameter wheel.

So it’s just kind of natural ebb and flow of where is the market more competitive versus where is it better from a value perspective, that’s also led us to gravitate towards the light truck category. It really has not been any issue of process constraints or factory constraints at all..

If you look at our forecast in terms of 19-inch wheels and above, in 2015 that represented about 14% of our production, and as we look at 2018, that should be somewhere in the neighborhood of 25 to 28%. So clearly a focus, clearly it’s working, clearly we can be competitive and drive that margin through those programs..

Okay, great. Thank you..

We’ll go next to Brian Rath at Walthausen & Company..

Hey guys, thanks for taking my questions.

Just first one on your comments about moving towards the 24/7 production in Mexico, just curious if you can elaborate in terms of what you’re seeing from just the workforce there and anything--any kind of pushback either culturally or just moving to that type of production model, but more so what does that do in terms of adding capacity if you were to get to 24/7 and what do you see that as savings from a cost perspective as you’re maybe more efficient and not having to idle things on the weekend?.

Yes, so the move to 24/7 is part of the program to take us from essentially 11.5 million units or so that we were at 22, 24 months ago, up to 14 million units. So 24/7 is a part of that, certainly internal scrap reduction is a part of that, certainly improving the OEE of our facilities is a part of that.

The additional 500,000 units in plant 15, our new facility is a part of that. So I think we’ll be there in probably another year and a half in terms of that ramp-up to 14 million units, which is perfect in terms of how we plan this out with the sales function.

So even if we had 14 million units of capacity today, we don’t have the orders to fill that, so this has been timed to move very methodically into this to dovetail with the sales function..

As far as implementation and, I guess you asked the question, Brian, cultural reaction to it all, it was a little bit of work at the beginning to try to get this running smoothly, so I wouldn’t say the day we flick the switch in the first departments to go to around-the-clock staffing that it went perfectly smooth.

But we’ve learned from that, and at this stage I would say things are running smoothly where we do have 24/7 today. I think we’ve figured out the right way to go about it..

Okay, great. Then just switching on--my only other question was on the tax strategy.

Can you elaborate more on what you’re doing to drive that rate down from the 32% that you said to the low 20s?.

Fundamentally, it relates to some changes in legal structure, Brian. I don’t want to go into too much detail about that, to tell you the truth, but we are moving some of the values of our legal entities around a bit, and that’s allowing us to adjust some of the overall tax rate based on the jurisdictions that we’re in..

All right, thanks guys..

That does conclude the question and answer session. At this time, I’ll turn it back to management for any closing remarks..

Great, thank you very much. Great questions today, and appreciate your support. Thank you..

Thanks everybody..

That does conclude today’s conference. Again, thank you for your participation..