Question-and-Answer Session
Operator
(Operator Instructions). Our first question comes from the line of John Nelson with the State of Wisconsin Investments.
John Nelson – State of Wisconsin Investments
Could you provide some comments on what’s going on with your competition and why you feel at least in the packaging space why the Quattro is so much superior?
John Dulchinos
Quattro really has a couple of compelling advantages to the market. One is speed. We have been benchmarked against every other packaging mechanism on the marketing, and it proves to have the fastest cycle time in the industry, and then secondly, it comes with our very well and tightly integrated vision technology which allows us to be able to see objects on a moving belt and track them and pick them at a very consistent and high rate of speed, which gives us performance advantages and applications. We are very excited about this. It also is a patented technology base, so it’s not a set of IP that would be able to come out from other manufactures. That’s all very positive. The market opportunity, we believe, is on the cusp of a very exciting period of time. The food industry and the pharmaceutical industries have been around for a long time, but what’s really driving opportunity now is the convergence of the need for more hygienic packaging. Over the last year, there have been several E. coli and salmonella scares that have occurred that really are negatively enhanced by having people in the packaging rooms, so the drive for safety, the drive for speed and flexibility, and the drive for the cost which is going up in the geographic markets are all making the opportunity for robotic packaging a much more salient opportunity now, and we think we’ve got the best product line and the most differentiated product line in the industry, and we are really going to work hard over the next year to exploit that opportunity.
John Nelson – State of Wisconsin Investments
Can you give us any idea as to how to better assess the potential opportunity that is as far as either construction of new plans or refurbishing and replacing old packaging equipment with new packaging equipment, any kind of cycle that part of the business tends to go through?
John Dulchinos
It’s hard to give you a measure of that, but let me just characterize it for you. First off, one of the reasons besides a well differentiated product line that we are pursing this market so aggressively this year is it tends to be less affected by economic conditions in other markets. People have to eat and as such it requires full running of the factories independent of where the economy is. The opportunity is really built around replacing historic non-automated lines, so the other thing that’s exciting about is it is it’s not build a new factory and then put a lot of equipment into an opportunity, it’s to take exiting lines that have been running that have not been automated and apply automation to it, so it’s really a cost reduction opportunity, so what’s good about that in an environment like this is that the capital cost to get into it are much lower than if you had to build a whole factory and then provide equipment, and secondly, all manufactures are looking for ways to get their cost down, and this is purely a cost play for manufacturers. It allows them to lower their packaging cost for hopes of reasons including labor and including environmental issues, and therefore we think it’s a good opportunity.
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