Question-and-Answer Session
Operator
Thank you. (Operator instructions) And we will take our first question from Sam Darkatsh with Raymond James.
Sam Darkatsh – Raymond James
Good morning Chuck, good morning Nick. How are you?
Chuck Sorrentino
Good Sam. How you doing?
Sam Darkatsh – Raymond James
Couple of questions, first off the $30 to $40 it looks like you are looking for a Q4 sales down high single digits, if not low double digits if my math holds. Is that correct, and if so how much of that is due to copper deflation, how much of that is end market do you feel?
Chuck Sorrentino
It’s difficult to sort out what’s the end market. One of the problems we have Sam is the influence of storms into the fourth quarter. So, that get creates a lot of noise in the data sort to speak, but having said that your numbers of you know are minus 5% to minus 10% reserves are probably a good range to look at.
I don’t think we can comment on the copper thing that much other than to say that it’s been dropping dramatically. I mean if you look at the futures market for copper, which I did this morning, the lowest number is today’s number, which $1.82. The highest number is over $3.60, I don’t know that I remember seeing such a large swing in the value of copper and most of that is appear to me to be a biased upwards. In other words, the futures markets are stronger than the current spot markets, but we can’t predict copper, we are not going to try to predict copper; all we can do is deal with it.
Please keep in mind that, sizeable portion of our sales are copper neutral. We sell on service our appeal from customers is service. Most of what we have is readily available from other people. It’s not available from other people at the same service package, so we are able to mitigate the effects of commodity volatility as a result, but yes there is going to be some softening in the fourth quarter and there is going to copper headwinds also.
Sam Darkatsh – Raymond James
Where do your gross margins ultimately stabilize? I mean, if you had some headwinds now, again we are talking about copper, because of the severe deflation over the past few weeks which would be a detriment to gross margins and you noted in your prepared remarks that with mix you have lower rebates and such. Where do you think that, if copper stabilizes that the gross margins end up coming in around?
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