Question-and-Answer Session
Operator
(Operator Instructions) Your first question comes from Richard Wesolowski – Sidoti & Company.
Richard Wesolowski – Sidoti & Company
Phil, you mentioned your headcount fell by about 200 this quarter which would take you only a bit below where you started the year yet your 4Q sales will likely be down 15% to 20%, do you still have excess technicians in the field?
Philip J. Hawk
I think the number I have that we are down, the field headcount now is down about 84 from the beginning June 1st count. A couple of things again, what I really look to is labor utilization levels and as I indicated, I’ve been pleased with the stability of those numbers in the face of declining volumes through the third quarter. But, candidly I would expect our count to probably drift lower at the current levels.
Richard Wesolowski – Sidoti & Company
Can you relay or give any detail on the type of pricing discussions that you’re having with your major customers and maybe comment on whether a low 50% direct margin is still a reasonable expectation?
Philip J. Hawk
Here are the facts, the facts are that a number of customers are raising questions, really they’re raising the issue to their necessity to reduce their costs. They’re challenging suppliers to assist and support them in those activities including rate reductions as part of those discussions. They’re taking them very seriously and so are we so we are actively engaged in those conversations and are working with our customers.
At this time the adjustments that impact our business have not been material and we’re working very, very closely with our customers. A point that I would make and again, I’m not forecasting, it’s just hard to see completely how all this will play out but I will just note that some of the generic kind of stress of kind of deflation in the market and things like that or kind of high profit levels in the past or in the peak periods that need to be adjusted really don’t apply as much to us. Our margins have been pretty consistent throughout time and we don’t have kind of major material components in our business. As I say, we’re working closely with all our customers. We’re taking their circumstances seriously and are fully engaged on the topic.
Richard Wesolowski – Sidoti & Company
Broadly speaking is the 50% plus job margin still realistic?
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