Question-and-Answer Session
Operator
(Operator Instructions) Your first question comes from TC Robillard of Bank of America Securities.
TC Robillard - Bank of America Securities
I just wanted to draw down a little bit on the operating margin structure as we look at skilled trade. Clearly it seems like there’s a lot to be gained. You are doing a good job on the acquisition side diversifying the business. Could you just give us a sense of how that compares, I know construction has always been your kind of high margin business. How does Plane Techs, how does TLC, compare to your other services.
Derrek Gafford
It probably best to just focus on Plane Techs for now. TLC, because if we’re looking at in on a year-over-year basis, that’s where the majority of the impact is. Roughly speaking Plane Techs’ decreases are gross margin by about 20 basis points, or about 100 basis points. But net-net it increases operating margin by about 20 basis points, so it’s actually additive to the margin.
TC Robillard - Bank of America Securities
And do you expect TLC to have a similar type of profile once that gets normalized into your business, or is that a situation where you need greater scale because of the small amount of geographic focus.
Derrek Gafford
Yes, right now it’s not really much of an impact but we would expect to approximate our current operating margin. And we’re going to need some more scale there. Right now we’ve only got 10 branches, so it’s a good start for us, but it’s just a start.
TC Robillard - Bank of America Securities
Now, is that in the area where there are other decent size acquisition candidates that can give you a geographic footprint quicker, or do you get the sense that this is much more of a multi-year organic story, the TLC, specifically.
Steven C. Cooper
Yes, it’s a combination on this, Bill. There are some other like-sized companies out there, but our first approach is going to see if we can work some order where we have a place that leads to some other brands and do some office sharing and really leverage this cost up a lot.
So that’s our first approach this year, but if we can look at these other regional companies along the way, we will. We’re quite excited that the way we do dispatch in this business, and on a centralized basis, to control the compliance out of one centralized location so we can expand the sales and the recruiting pieces quite quickly where we see the demand, by throwing these folks in one of our existing brands. That’s what where we’re most excited about this business.
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