Hudson Technologies Q1 2026 Earnings Call - Revenue Beats on Warm Weather, But Margins Squeeze Under ERP Costs

John, Conference Operator: Greetings. Welcome to the Hudson Technologies 1st quarter 2026 earnings call. I would now turn the conference over to your host, Jennifer Belodeau of IMS Investor Relations. You may begin.

Jennifer Belodeau, Investor Relations, IMS Investor Relations: Thank you, John. Good evening, welcome to our conference call to discuss Hudson Technologies financial results for the first quarter of 2026. On the call today are Ken Gaglione, Hudson’s President and Chief Executive Officer, and Brian Bertot, Hudson’s CFO. I’ll now take a moment to read the safe harbor statement. During the course of this conference call, we will make certain forward-looking statements. All statements that address expectations, opinions, or predictions about the future are forward-looking statements. Although they reflect our current expectations and are based on our view of the industry and of our business as we see them today, they are not guarantees of future performance. Please understand that these statements involve a number of risks and assumptions, and since those elements can change and in certain cases are not within our control, we would ask that you consider and interpret them in that light.

We urge you to review Hudson’s most recent Form 10-K and other subsequent SEC filings for a discussion of the principal risks and uncertainties that affect our business and our performance and of the factors that could cause our actual results to differ materially. With that out of the way, I’ll turn the call over to Ken Gaglione. Please go ahead, Ken.

Ken Gaglione, President and Chief Executive Officer, Hudson Technologies: Good evening, and thank you for joining us to discuss Hudson’s first quarter results. The first quarter is typically slow for our industry, but for Hudson, our first quarter was about executing the operational and organizational progress we need to create the foundation for a healthy, diversified growth in the years ahead. We’ve been busy. We made solid progress, highlighted by strengthening our management team, making critical additions to our board of directors, launching our ERP system, and signing of a licensing agreement for the reclamation resale of some next-generation HFO refrigerants. Overall, we posted strong top-line results to start the year, driven by the commitment to excellence demonstrated by our employees at all levels of the company.

I’m gonna pause here and say that the leadership team is deeply grateful and thank all our employees for their efforts during the first quarter, and it was particularly difficult as we embarked on the implementation of our new ERP system. We kick off the 2026 selling season with revenue growth of 9% to $60.2 million, driven by strong sales volume and firming HFC prices, partially driven by unseasonably warm temperatures in the Southwestern region, some uncertainty in global supply lines driving demand, and over-delivery by our sales teams. I’ll point out that first quarter revenue growth was stronger than we had expected and guided in our fourth quarter communications earlier this year. Our concern then was that the new ERP system launch and the implementation challenges we were facing, not an uncommon occurrence with a transition of this magnitude, would negatively impact results.

With our visibility at the time, we expected first quarter revenue growth to be constrained to the low to mid-single digits. Again, thanks to our people, the initial headwinds had less of an impact than we anticipated, and that, combined with strong execution and those warmer temperatures creating new demand, contributed to revenue outperforming our expectations. The ERP system is now integrated and functional, and while we do expect to continue optimizing it for most of this year, we do not expect any major disruptions. The effort is already beginning to deliver the benefits of improved and faster management decision-making on a single source of readily available data. We experienced gross margin pressure in the first quarter, 2026, related to year-over-year sales mix.

While traditional HFC pricing was higher in the 2026 first quarter at slightly above $6 per pound, the first quarter of 2025 included a larger concentration of higher price and higher margin HFO refrigerants. As you might remember from last year, during that period, we started the season with an industry-wide shortage of R-454B, an HFO refrigerant and popular replacement for R-410A in new equipment. That shortage resulted in Hudson seeing heightened demand for R-454B as contractors needed to top off new systems as they came online and from inventory building to alleviate concerns over availability later in the season. The refrigerant producers effectively addressed the shortfall as the year progressed, and we view last year’s increased aftermarket demand for HFOs as an outlier.

We also restructured the management team in the first quarter, 2026 to better serve our long-term business objectives. This included the promotion of Robert Stoody to Senior Vice President of Operations. Robert is an industry veteran who not only leads our initiatives to integrate both our supply chain and plant operations but also maintains his legacy role managing our relationship with the DLA. Robert is supported by a dedicated team of professionals focused on enabling our ERP system and preparing for the new growth aligned with our strategic plan. We are well-positioned today to meet demands for all types of refrigerants, and under Robert’s guidance, we will further streamline and expand our capabilities and capacity to separate and reclaim more complex next-generation multi-component blends. We also made changes to our sales and marketing organization in the first quarter.

Kirk Reimer, who was formerly Hudson Vice President of Sales, now assumes expanded responsibilities for core marketing activity and the execution of certain strategic growth initiatives as Vice President of Sales and Marketing. Kirk has played a key role building our national sales team and go-to-market strategies and now has a renewed emphasis on building our core marketing organization and supporting focused growth in the services component of our business. We added significant marketing talent this quarter to support Kirk and his organization in the first quarter.

John, Conference Operator: Please continue to hold, ladies and gentlemen. We’ll get our speaker reconnected shortly. Please continue to hold. Please continue to hold, ladies and gentlemen, while we get our speakers reconnected. Please continue to hold. Thank you for your patience. Once again, apologies for the inconvenience. Please continue to hold while we get our speakers reconnected. Thank you.

Please continue to hold, ladies and gentlemen. Please continue to hold. Thank you for your patience. Please continue to hold, ladies and gentlemen. We’ll have an update shortly on our speaker’s reconnection. Please continue to hold. Thank you for your patience. Ladies and gentlemen, thank you for standing by. Once again, thank you for standing by. We are going to place everyone on music hold, and we plan to resume today’s conference soon. Once again, please stand by and remain connected at this time. We will place everyone on music hold. Thank you. Okay. Do we have our speakers reconnected? Can you hear me? This is the operator. Your line is live.

Ken Gaglione, President and Chief Executive Officer, Hudson Technologies: Hello, this is Ken Gaglione again. Apparently, we’ve had some technical difficulties with the line, so we’re going to restart. We’re not sure exactly where we were cut off by the technology here. We’re just going to restart again. Apologies for the confusion. Good evening, and thank you for joining us to discuss Hudson’s first quarter results. The first quarter is typically slow for our industry, but for Hudson, it was about executing on the operational organizational progress we need to create the foundation for healthy, diversified growth in the years ahead. We made solid progress, heightened by strengthening our management team, making critical additions to our board of directors, launching our ERP system, and the signing of a license agreement for the reclamation and resale of our next-generation refrigerants.

Overall, we posted strong top-line results to start the year, driven by a commitment to excellence demonstrated by our employees at all levels of the company. The leadership team is deeply grateful and thank them for their efforts during the first quarter, especially with the introduction of our new ERP system. We kick off the 2026 selling season with revenue growth of 9% to $60.2 million, driven by strong sales volume and firming HFC prices, partially driven by unseasonably warm temperatures in the Southwest region, some uncertainty in global supply lines driving demand, and over-delivery by our sales team. I’d like to point out that the first quarter revenue growth was stronger than we had expected and guided in our fourth quarter communications earlier this year.

Our concern then was the new ERP system launch and implementation challenge that we were facing, which are not uncommon occurrence with a transition of this magnitude, would negatively impact results. With our visibility at the time, we expected first quarter revenue growth to be constrained to the low to mid-single digits. Thanks to our people, the initial headwinds had less of an impact than we anticipated, and that combined with strong execution and those warmer temperatures contributed to revenue outperforming our expectations. The ERP system is now integrated and functional, and while we do expect to continue optimizing it for most of this year, we do not expect any major disruptions. The effort is already beginning to deliver the benefits of improved and faster management decision-making based on a single source of readily available data.

We experienced gross margin pressure in the first quarter 26 related to year-over-year sales mix. While traditional HFC pricing was higher in the first quarter slightly above $6 a pound, the first quarter of 2025 included a larger concentration of higher price and higher margin HFO refrigerants. As you might remember, during that period last year, we started the season with an industry-wide shortage of R-454B, which is an HFO refrigerant and popular replacement for R-410A in new equipment. The shortage resulted in Hudson seeing heightened demand for R-454B as contractors needed to top off new systems as they came online and from inventory building to alleviate concerns over availability later in the season. Refrigerant producers effectively addressed this shortfall as the year progressed. We view last year’s increased aftermarket demand for HFOs as an outlier.

We also restructured the management team in the first quarter 2026 to better serve our long-term business objectives. This included the promotion of Robert Stoody to Senior Vice President of Operations. Rob is an industry veteran who not only leads our initiatives to integrate both our supply chain and plant operation but also maintains his legacy role managing our relationship with the DLA. He is supported by a dedicated team of professionals focused on enabling our ERP system and preparing for new growth aligned with our strategic plan. We are well-positioned today to meet demand for all types of refrigerants. Under Rob’s guidance, we will further streamline and expand our capabilities and capacity to separate and reclaim more complex next-generation blends in the future. We also made changes to our sales and marketing organization in the first quarter.

Kirk Reimer, who was formerly Hudson’s Vice President of Sales, now assumes expanded responsibilities for core marketing and the execution of certain strategic growth initiatives as Vice President of Sales and Marketing. Kirk has played a key role building our national sales team and go-to-market strategies and now has a renewed emphasis on building our core marketing organization and supporting focused growth in the services component of our business. We added significant marketing talent to Kirk’s organization in the first quarter, and we will continue developing our marketing and service personnel in the months ahead. HVAC industry, as you might know, requires a wide variety of products and services to keep cooling systems operating, and we want to ensure that the market recognizes our unique capabilities in meeting customers’ needs whenever, wherever, and however they need us.

Additionally, we enhanced our board composition with the replacement of 2 outgoing directors with 2 new independent directors, Alan Sheriff and Jeffrey Feeler. Coming into this year, it was a priority of mine to build on the strong competencies of our board by adding new directors with diverse professional experiences and distinct perspectives in areas where we will need as the company continues to grow. Alan and Jeff bring the additional operations, M&A, and capital markets expertise needed to advise and bring new perspective to the company’s identification and assessment of new opportunities. Long-standing board member Mr. Rich Perlow was appointed Lead Independent Director, assuming responsibility from outgoing director Mr. Vincent Abbatacola, who retired from the board this period. The company would like to thank Vinny for his more than 30 years of dedicated service to the board and to Hudson Technologies’ success.

Together with our current members of the board, these new members and other changes fortify the Hudson board by expanding our financial and operational depth of expertise and variety of perspective. As we’ve discussed on previous calls, our capabilities place us in 2 important points in the refrigerant supply chain, as a provider to wholesalers who supply contractors working in the residential and light commercial space, and as a direct supplier to customers with 24/7 cooling needs such as supermarkets and industrial facilities. This provides some resilience to our earnings. With our new team in place, I believe we are very well-positioned to expand our leadership position in refrigerant recovery and reclamation while we explore new opportunities as our industry and customers adapt to an always-changing refrigeration market. A couple of other notes here of importance.

Regarding the status of our rescinded DLA contract, Hudson continues to support DLA while it updates its award procedure in response to a competitor’s challenge earlier this year. We cannot predict the outcome, but we remain confident in our successful track record servicing the DLA and expect a favorable outcome when the analysis is complete. In this time of uncertain political change, I’d like to take a moment to speak to certain regulatory forces and their potential impact on the company. The strong regulatory tailwind provided to reclaimed refrigerant providers like Hudson by enactment of the AIM Act in 2020 remains a cornerstone of EPA’s plans to step down HFC use another 30% in 2029. Recovered and reclaimed refrigerants are expected to fill the void between reduced supply of virgin refrigerants and actual market demand from legacy HVAC systems for HFCs.

We do not expect this AIM Act-driven supply-demand imbalance to change materially. We have seen our efforts in some states like California and New York and some other Climate Alliance states to legislate accelerated reduction in the use of high GWP refrigerants in favor of reclaimed refrigerant for some segments, while other efforts by other parties have sought to slow or alter the phase-down schedule over primarily economic or logistic concerns. The outcome of these competing efforts is unclear. Hudson is well-positioned through our supply of legacy HFC refrigerants and new capabilities to support their replacement products to continue our growth regardless of the outcome. Given the current macroeconomic environment with rapidly changing and unclear domestic policies, higher consumer prices, and damaged global trading alliances, the potential impact on refrigerant supply is difficult to estimate and always a concern to the business.

We will continue to monitor it. In closing, we used the first quarter to execute important organizational and operational imperatives outlined previously and in accordance with our strategic plan. Our performance in the first quarter reinforces my belief that we are uniquely positioned with the right people, products, and services needed to continue our core growth, improve our leadership position in value-added refrigerant lifecycle management solutions. We are focusing on driving organic growth through our ability to provide refrigerants through our extensive national footprint and building our recovery and reclamation capabilities today while exploring real opportunities to further innovate with the goal of diversifying our revenue stream and reducing seasonality in the future. Our first quarter results reflect trends that should provide a solid platform for the 2026 selling season.

Now I’ll turn the call over to Brian J. Bertaux again to review our first quarter 2026 financial results. Go ahead, Brian.

Brian Bertot, Chief Financial Officer, Hudson Technologies: Thank you, Ken. I’ll review our Q1 2026 finance results with a comparison to Q1 2025. We recorded revenue of $60.2 million, a 9% increase compared to the $55.3 million posted last year. As Ken mentioned, revenue came in higher than we anticipated, driven by strong sales volume and organizational execution as well as warm weather in the Western U.S. Gross profit was $11.8 million in the quarter, and gross margin was 20% compared to gross profit of $12.1 million and gross margin of 22% last year. The Q1 2026 gross margin declined slightly, primarily due to the mix of refrigerants sold as compared to last year. The Q1 2025 sales mix included a broader range of higher-priced and higher-margin HFO refrigerants as contractors topped off newly installed equipment as the systems first entered the marketplace.

We expect gross margin to improve as we continue through the selling season. Hudson recorded SG&A expenses of $9.5 million compared to $8.2 million in Q1 2025. The increased SG&A spend was primarily related to the post-implementation enhancement of our ERP system and continued focus on strategic initiatives. Operating income was $1.5 million compared to $3.1 million in Q1 2025. This variance was mostly attributed to the higher SG&A expense. Income before income taxes was $1.6 million compared to $3.7 million in Q1 2025. Income tax expense was $1.3 million compared to $900,000 in Q1 2025.

The increased income tax expense for the quarter relates to approximately $900,000 or $0.02 per share, and income tax expenses related to a non-operating item as well as executive stock compensation. We recorded net income of $300,000 or $0.01 per diluted share compared to net income of $2.8 million or $0.06 per diluted share in Q1 2025. The company’s unlevered balance sheet remained strong at March 31, 2026, with $19 million of cash, and we are positioned well from a working capital perspective as we enter the selling season. During the first quarter, we purchased two and a half million dollars of common stock as part of our opportunistic buyback program. Now I’ll turn the call back to Ken for his closing remarks.

Ken Gaglione, President and Chief Executive Officer, Hudson Technologies: Okay. Thank you, Brian. As we continue through the 2026 selling season, we’re focused not only on driving success this year but on positioning Hudson to capitalize on opportunities to deliver strong long-term growth and profitability. Our additions to the management team and the board demonstrate our commitment to intensifying our strategic initiatives while driving operational excellence. Again, Hudson is uniquely advantaged with the combined strength of our extensive customer base, industry partnerships, national footprint, proprietary technology, and decades of expertise in this industry. Our focus now is to leverage these advantages to enhance our capabilities and open up new opportunities.

John, Conference Operator: Please continue to hold. We’ll have our speakers reconnected once again shortly. Thank you for your patience.

Ken Gaglione, President and Chief Executive Officer, Hudson Technologies: Hello. I’m sorry we’ve had technical difficulties tonight. We’re gonna open the line up now, operator, for Q&A.

John, Conference Operator: Certainly. Thank you. At this time, we will be conducting a question and answer session. If you would like to ask a question, please press star one on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star two if you would like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. One moment please while we poll for questions. Once again, please press star one if you have a question or a comment. The first question comes from Ryan Sigdahl with Craig-Hallum. Please proceed.

Ryan Sigdahl, Analyst, Craig-Hallum: Hey, good afternoon, guys.

Brian Bertot, Chief Financial Officer, Hudson Technologies: Hey.

Ryan Sigdahl, Analyst, Craig-Hallum: Want to start with gross margin. I get the year-over-year compare, but when I look back, it’s the lowest Q1 since before COVID. I guess surprise given HFC pricing was up year-over-year and quarter-over-quarter. Just curious what’s going on on the gross margin side?

Brian Bertot, Chief Financial Officer, Hudson Technologies: I would just tell you it is, it is a tough comp against last year’s first quarter. Remember that our Q1 and Q4 are our lowest margin quarters, and we are still sticking with our overall guidance of, say, mid-25s% for margin overall. It’s just a low point for the year or just called out a season, and we expect to pick up margin into Q2 and Q3.

Ryan Sigdahl, Analyst, Craig-Hallum: Yep. I was looking at Q1 to try and be seasonally comparable, when I went back. I think previously you had said, flat to up slightly for the year. Mid 20% may be saying the same thing, but gross margin was 25% last year. I guess, is it still, you know, 25% or better?

Brian Bertot, Chief Financial Officer, Hudson Technologies: Yeah. Correct.

Ryan Sigdahl, Analyst, Craig-Hallum: Okay. ERP transition, are you willing to quantify how much of an incremental cost that was? If any of that is lingering still in Q2 or the rest of the year?

Brian Bertot, Chief Financial Officer, Hudson Technologies: We don’t wanna go into great detail in it, but let’s just say it was a strong contributor, probably half of the increase year-over-year. Yeah, as Ken noted, we’ll continue to invest in optimizing the ERP system throughout the rest of the year. We’d expect the same level of SG&A activity.

John, Conference Operator: Okay. Ryan, do you have any follow-up?

Ryan Sigdahl, Analyst, Craig-Hallum: I do, but if they’re not there,

Brian Bertot, Chief Financial Officer, Hudson Technologies: Did you not hear us?

Ryan Sigdahl, Analyst, Craig-Hallum: All right, you’re back?

Brian Bertot, Chief Financial Officer, Hudson Technologies: Yeah. We don’t know what.

Ryan Sigdahl, Analyst, Craig-Hallum: Okay.

Brian Bertot, Chief Financial Officer, Hudson Technologies: We’re going-

Ryan Sigdahl, Analyst, Craig-Hallum: You cut out there at the end.

Ken Gaglione, President and Chief Executive Officer, Hudson Technologies: Did you hear the answer to the question, Ryan?

Ryan Sigdahl, Analyst, Craig-Hallum: I think I caught most of it. Maybe, just for my last question, just on the early season weather, which you called out, but we certainly had a nice stint of warm weather well earlier in the Northeast, et cetera. Just can you talk through kind of the activity that’s been happening from a preseason standpoint, and what kind of the narrative it is from the industry as we head into the summer selling? Thanks. Good luck, guys.

Ken Gaglione, President and Chief Executive Officer, Hudson Technologies: Yeah. Thanks, Ryan. Yeah, you’re correct, right? There was a heat dome that hit the Southwest early and much earlier than anticipated that drove folks to look to increase inventory. Maybe there was some lingering questions about what happened last year to make sure that they had product available. Right now it looks like that’s become it’s normalized or regressed back to where we would normally expect it, so no more large excursions on the outlook.

John, Conference Operator: Okay. Our next question comes from Jason Tilchen with Canaccord Genuity. Please proceed.

Jason Tilchen, Analyst, Canaccord Genuity: Good afternoon. Thanks for taking my questions. I guess to start, as it relates to the Q2 guide, can you sort of unpack some of the trends at the beginning of April and what’s contemplated in terms of volume compared to pricing? Also on the gross margin, you mentioned that improvement expected throughout the year. Anything else in terms of some of the key puts and takes and the cadence maybe Q2 versus the second half?

Ken Gaglione, President and Chief Executive Officer, Hudson Technologies: We gave our revenue guidance and it’s kind of the same story as Q1, where we’ll expect better volume year-over-year in Q2. With that R-454B shortage last year, all refrigerants, HFOs and HFCs had a lift in Q2 and Q3, and then pricing came back down as the situation just normalized. Therefore, we’re expecting higher volume, but less from a pricing. We’d expect pricing to be lower than last year because of that event with the HFO shortages.

Jason Tilchen, Analyst, Canaccord Genuity: Great. That’s very helpful. Last quarter, you talked about some of the opportunities that you’re exploring to diversify into some adjacent areas on the services side. Just wondering if you could maybe provide an update on those efforts. What are some of the gating factors to keep in mind as you, as you’re looking to make those moves? What’s excited you about those opportunities thus far?

Ken Gaglione, President and Chief Executive Officer, Hudson Technologies: Yeah, certainly. I did indicate that we’re looking to diversify revenue and improve quality perhaps, and reduce the seasonality of the business. We have identified several interesting opportunities. Not really in a position to go into any great detail right now, but there are significant activities in this industry that we are looking to take advantage of.

Jason Tilchen, Analyst, Canaccord Genuity: Okay, great. 1 last follow-up. In the prepared remarks, you mentioned some uncertainty in the global supply chain, being a tailwind to demand in the quarter. Wondering if you could just expand on that a little bit. Has that persisted into Q2? How much of that is sort of baked into the guidance you provided?

Ken Gaglione, President and Chief Executive Officer, Hudson Technologies: Sure. What happens is the refrigerant producers rely on certain materials coming through the Gulf and other places, certain feedstocks to produce refrigerants. The intel that we get from refrigerant producers is that those costs are increasing, and we’re starting to see a lift to prices as a result and increases being passed through the channel by the producers as a result of this uncertainty and some other factors, but mostly the uncertainty around supply through the Gulf of raw materials, certain raw materials. There’s just generally, I would say, in the market, overall uncertainty about where prices are going and consumer confidence and inflation are all not going in the right direction, is the things that we’re hearing. That tends to favor, in our industry, that tends to favor repair over replace.

Repairing equipment over replacing equipment tends to favor legacy HFC source and supply, that’s where we’re well-positioned, as I indicated in the comments, to take advantage of that one way or the other. It’s an uncertain time, and we’re just trying to reflect that uncertainty.

Jason Tilchen, Analyst, Canaccord Genuity: Great. Thank you very much.

John, Conference Operator: Once again, if you have a question or a comment, please press star one. The next question comes from Josh Nichols with B. Riley. Please proceed.

Matthew, Analyst, B. Riley: Hi, this is Matthew on for Josh. Thanks for taking my questions. In the release, you guys used the word firming, which is a step up from balanced regarding the pricing momentum. I was just wondering if you could put some more color around where R-410A sits today and whether you’re seeing the type of seasonal price appreciation that kicked in last May or not.

Ken Gaglione, President and Chief Executive Officer, Hudson Technologies: Right. We just indicated that we are starting to see firming in R-410A pricing. As we get closer to the season, we sort of expect that to continue. We’re guiding conservative here on where we think it’s going to land. Generally, I think it’s going to be a little bit consistent with last year’s performance.

Matthew, Analyst, B. Riley: Got it. Separately, do you see any early traction on the Solstice licensing deal for R-448A? Are you seeing any reclamation volume start to come through there?

Ken Gaglione, President and Chief Executive Officer, Hudson Technologies: We have a licensing agreement for R-448A and R-449A. The R-449A is actually a Chemours product. It’s been cross-licensed. The answer to your question is that those products are forward-looking, and they primarily are for the supermarket segments that have converted earlier to those materials. We’re just getting underway with that. We haven’t seen a lot of traction with it. We wouldn’t expect to see a lot of traction with it just now, but we do have materials in-house, we do have the capability, and we have gotten interest from parties in California and other areas where those products are dominant. It’s looking very positive, but nothing to report just yet.

Matthew, Analyst, B. Riley: Thanks. Last question from me. Just with cash coming down to about $19 million in 1Q, I’m just wondering how you’re thinking about the pace of more buybacks versus preserving cash for M&A or what that capital allocation strategy is there.

Ken Gaglione, President and Chief Executive Officer, Hudson Technologies: Well, being that we are unlevered and with a cash position, and we’d expect this to be the low point for the year, so we expect to be generating cash flow. Again, we’ll continue to apply our capital allocation strategy with opportunistic share repurchases and always looking at strategic opportunities.

Matthew, Analyst, B. Riley: All right. That was all from me. Thanks for taking my questions.

John, Conference Operator: We have reached the end of the question and answer session, and I will now turn the call to Ken for closing remarks.

Ken Gaglione, President and Chief Executive Officer, Hudson Technologies: All right. Thank you, operator. I’d like to apologize for the technical difficulties we’ve had tonight on the line. Do not understand that, but we will figure it out. I’d also like to thank our employees for their commitment to our success this quarter, and to thank all of you for your interest and support of Hudson Technologies’ mission and commitment to sustainable practices around refrigerant lifecycle management. Look forward to speaking with you again in August to discuss our second quarter results.

John, Conference Operator: This concludes today’s conference, and you may disconnect your lines at this time. Thank you for your participation.