Question-and-Answer Session
Operator
(Operator Instructions) Your first question comes from [Karu Martison] – Deutsche Bank.
Karu Martison – Deutsche Bank
When I look at your home and garden and EBITDA, so the right way to look at this is about $48 million for the year and then seasonally, will we still see a loss in the first quarter?
Kent J. Hussey
That’s correct.
Karu Martison – Deutsche Bank
So we will still see a loss in the first quarter?
Kent J. Hussey
Yes. I mean it’s almost the lowest quarter of the year I believe. Yes, the fixed overhead there results in a loss and that’s comparable to other competitors in the industry.
Karu Martison – Deutsche Bank
And in terms of the closing here, I mean, are you going to retain the rights to the brand? I mean, one of your competitors is out saying you know, they’re looking to provide the private label already.
Kent J. Hussey
We are currently retaining the rights but we are working to ultimately transfer these to the retail customers who have used these brands in the past.
Karu Martison – Deutsche Bank
That doesn’t sound like there’s any compensation for the brands coming.
Kent J. Hussey
We’re still working on that.
Karu Martison – Deutsche Bank
I didn’t hear what the average zinc hedge was right now.
Anthony L. Genito
We didn’t give it, Karu. What was – how much was hedged which is about 65% for 2009.
Karu Martison – Deutsche Bank
In terms of the working capital draw down here, I mean last year or last quarter you guys were talking about $40 to $50 million of free cash flow bringing up – well, for this year, but for 2009 you were saying $40 to $50 and you had rattled off we should get $20 to $25 from the FX urea hedges rolling off, we should see continued improvement on the lack of restructuring, obviously we’re not going to have that. I mean, if you backed out these kind of one time items, do you still feel that the core business even gets to those levels here in 2009?
Anthony L. Genito
To the $40, $50 million level?
Karu Martison – Deutsche Bank
Correct.
Anthony L. Genito
Well, keep in mind in 2008 we originally thought that we were going to be in a use of $50 to $60 million which we came in at about $16 million. Just do the math real easy. So we improved and then [were] able to save, came in at $20 so a use of $20 so you’re talking about $30 to $40 million improvement. A portion of that timing clearly is going to now impact 2009, because we did have some strong working capital management but was predominantly driven by as I said, inventory reduction, but mainly late cash receipts that came in at the end of the quarter.
- To read the full transcript on Seeking Alpha, click here »
