Question-and-Answer Session
Operator
(Operator Instructions) Our first question comes from Jeff Evanson - Dougherty & Company LLC.
Jeff Evanson - Dougherty & Company LLC
Obviously flow controls just an outstanding performance there. I guess I’d like to get a sense for how much you felt promotions positively impacted the quarter. Some might suggest those may have put inventory into the channel. If you could discuss your thoughts about channel inventory, that’d be great.
Daniel A. Rykhus
We did address some capacity concerns in the second quarter by encouraging our resellers to bring in some inventory and we were satisfied with the level of participation that our resellers gave us in those programs. But you’ve got to remember that over the last few years the amount of actual inventory consumption in the summer has been going up dramatically. And one of the reasons for that is anhydrous ammonia system usage in the summer months. So if we had to say you’ve got to look at the amount of sales that came in to the second quarter versus what you think was going to be consumed anyway, I’d say there’s the potential for around a couple million dollars of additional sales in the second quarter that we may not have seen in the second quarter without a promotional program.
Jeff Evanson - Dougherty & Company LLC
But you are seeing general demand going up anyhow?
Daniel A. Rykhus
Oh yes. And Jeff what was really more critical than moving sales into the second quarter wasn’t really the point. It was how do we optimize our factory because we’ve got demand that’s more or less at the ragged edge of our capacity right now and boy it’s hard to turn down orders. So what we’re trying to do is figure out how we can optimize the factory capacity, and that was one way of doing it to do as much as we could in the second quarter and just keep everybody working hard and keep producing as much as we could.
Jeff Evanson - Dougherty & Company LLC
Sure. I understand. It’s a load balancing issue. I guess one thing that maybe puzzled me then, and maybe I’m comparing apples to oranges, is I did see that your intercompany sales elimination was actually down 75% sequentially while your flow control sales were down only 35% sequentially. Does that tie into this equation or am I mixing metrics here?
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