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Operator: Ladies and Gentlemen, thank you for standing by and welcome to the Appliance Recycling Centers of America Third Quarter Investor Conference Call. (Operator Instructions) As a reminder, this conference is being recorded, Tuesday, November 4, 2014. I would now like to turn the conference over to Mark Eisenschenk, CEO at Appliance Recycling Centers of America. Please go ahead, sir.
Mark Eisenschenk: Thank you, operator. Good morning, everyone, and thank you very much for joining in this morning's call. Welcome to Appliance Recycling Centers of America's third quarter 2014 conference call. I am Mark Eisenschenk, President and CEO and with me today are members of our -- couple of our executive team, Jeff Cammerrer, Chief Financial Officer and Brad Bremer, President of ApplianceSmart. I also invited Jack Cameron, ARCI Founder and Board Chairman to join us on this morning's call. Jack retired as ARCA’s President and CEO in August after serving in that role for 38 years. Along with his responsibilities as our Board Chairman Jack is serving as ARCA’s ambassador to our industry. He is also helping me with our top leadership transition as I continue to learn to fill his shoes. This morning we will be discussing our third quarter results. Our press release can be found on our website arcainc.com, in the Investor Relations section. To start us off today, Jeff will read our forward-looking statement and review our third quarter financial results and then Brad will give an update on our retail appliance business and I will provide an overview of developments impacting our company. Finally, we'll open the call for your questions. I would now turn the call over to Jeff.
Jeff Cammerrer: Thank you, Mark. Our comments may contain certain forward-looking statements regarding possible events, including expectations that are not considered guarantees of future performance. Future results may differ materially and you should not attribute undue certainty to any forward-looking statements. Please refer to the cautionary statements in our SEC filings to understand risks that may impact our business. We reported quarter-over-quarter revenue growth again and positive earnings in the third quarter. Total third quarter revenues of $33.6 million were up $100,000 and our quarterly EBITDA was $1.4 million. We generated net earnings of $556,000 or $0.09 per diluted share, which was a decline compared with $1.1 million or $0.20 per diluted share in the third quarter last year. The decline in net earnings is a result of an increase in our effective tax rate and generating lower profit margins at AAP at ApplianceSmart. As I mentioned, our effective tax rate increased. Last year we reduced our effective tax rate and income tax expense by utilizing net operating losses with a corresponding valuation allowance and that was not the case this year. The impact of the lower effective tax rate in the third quarter last year was $0.10 per diluted share. Normalizing for this benefit, the diluted earnings per share was consistent with last year. Our overall results continue to be driven by our recycling division. Recycling revenues of $12.2 million were up $400,000 compared with the third quarter last year. The growth continues to be attributed to our appliance replacement programs. Byproduct revenues of $4.7 million are consistent with the third quarter last year. Revenues at AAP, which are reported as byproduct revenues, declined $100,000 on a reduction in non-ferrous scrap metal revenues. The declined in AAP revenues was entirely offset by improved byproduct revenues at ARCA. Our recycling division, including AAP, generated an operating profit of $1.9 million in the third quarter, down $300,000 compared with the same period last year. The decline is related to lower profit margins at AAP. AAP reported higher income and freight cost for recyclable Appliances and carried additional labor for sales promotions under a supply contract. The recycling division did not recognize any carbon offset revenue in the third quarter and we don’t anticipate recognizing any carbon offset revenue during the remainder of 2014. We mentioned in our second quarter conference call the California offset market was on hold. On September 18, the California Air Resource Board issued a preliminary determination that is leading to free enough many, but not all of the credits that were on hold. We anticipate recognizing carbon offset revenues in the range of $500,000 to $600,000 in 2015. On another topic and our second quarter earnings release, we disclosed that the California Board of Equalization is conducting a sales and news tax examination, covering our appliance replacement sales in California for the years 2011, 2012 and 2013. As we previously disclosed, it is possible this Taxing Board will assess taxes, penalties and interest and amount that is material to ARCA's financial statements. We have not paid or accrued sales taxes for the examination period or thereafter. This situation has changed little since August and ARCA will issue updates when appropriate. ApplianceSmart, our retail division, reported sales of $16.7 million, a 2% decline compared with the third quarter of last year. The decline in sales was primarily the result of lower revenues generated through our contract sales group. Last year in the third quarter, we recorded a large contract sale that was not repeated this year. Despite this quarter-over-quarter decline, on a year-to-date basis, our contract sales are up $650,000 compared with the same year-to-date period last year. ApplianceSmart reported an operating loss of $595,000 in the third quarter, compared with to an operating loss of $163,000 in the same period last year. The decline in operating performance is related to the previously mentioned sales decline and margin compression on certain products. Profit margins on our unboxed merchandize for example decreased 300 basis points compared to the same period last year. Moving off to the financial results, as you may have seen, an 8-K was filed with the SEC yesterday announcing my departure. I was given an incredible opportunity to become the CFO of the company in the healthcare sector that I could not turn down. My last day with ARCA will be November 21. I agreed to be available after that as needed to ensure smooth transition to my replacement. I am truly grateful for the opportunities ARCA gave me over the past six years. I know ARCA has a bright future guided by Mark’s leadership and supported by the talented employees throughout the company. I'll now turn the call over to Brad, to talk more about ApplianceSmart.
Brad Bremer: Thanks, Jeff. As Jeff said, our ApplianceSmart third quarter results were affected by business of contractors. One large contract that we had during the third quarter of last year did not continue at the same levels as the previous year causing the $600,000 decline in the contract component of ApplianceSmart sales. That decline however was favorably offset by a $300,000 sales gain at our physical stores. In particular, we saw strong in-store sales this quarter in the Georgia market. As you know, Georgia's housing market was hit severely by the recession. However, home values there are rapidly accelerating now and this is hopefully a sign of few things to come. As Jeff said, we also experienced some margin compression during the third quarter, mainly due to our sales mix. Part of the compression was due to an inventory adjustment that we made in the quarter, which may or may not ultimately be needed as we sell through the affected merchandize. Actually the Nation's economy in general, retailers generally had a lackluster year and consumer activity has been subdued, sliding crude oil prices however are given relief at the [thumb] (ph), which is bound to provide a boost for consumer spending in the coming months since gasoline prices have dropped to a four-year low. On the industry front, we continue to watch our competition. A major retailer in the South ApplianceSmart just closed stores on the second of its four locations in Atlanta and we expect to see them exit the market completely in 2015. Sears and Hh Gregg also continue to report large same-store sales declines. This is a sign of a turbulent times that the industry is currently facing. The collapse of Sears would clearly alter the industry landscape and that may have a positive impact on ApplianceSmart. As to our market position, ApplianceSmart is considered a power regional independent and we operate in a market niche. We differentiate ourselves in a mix of in and out-of-carton products a bunch of which has closed out of special by merchandize and is typically in stock in our stores. It is also available to take home today as it is purchased. Also unlike many other appliance retailers, we had a highly trained sales staff many of whom have been with us for years. In summary, we carry the same top rated brands, but we have the expertise to help consumes make the right buying decision for their needs and our appliances and incredible values. I wanted to close by comments I mentioned that Bosch recently awarded us the rights to sell two of their high end brands, their prestigious Bosch Benchmark and [lines] (ph). Having just launched these high-end brands at ApplianceSmart, I am happy to say we're already registering some sales of these appliances. I'll now the call over to Mark.
Mark Eisenschenk: Thank you, very much Brad. First off, I would like to say, I am very happy to serving as ARCA's new President and CEO. Jack Cameron's shoes are large indeed and I am doing my very best to fill them. This morning we heard discussion about the outstanding California sales tax matter and on our third quarter financial results. I would now like to share some positive developments and initiatives in our business. First off, as you may recall, in our second quarter earnings release, we said there were some uncertainty about our particular plants replacement program, whose funds were expected to run out at the end of the past third quarter. While I am pleased to say that that utility just agreed to fund another $4 million under the contract and that will be through the end of the fourth quarter 2014. For the rest of this year, we'll continue to provide energy efficient washers to their low income customers. As you know California is experiencing a major water shortage due to a small prior year drought and our energy star high efficiency thermal washer should ultimately help California save millions of gallons of water. And in addition to consumers saving on their water bills, the new washers also conserve electricity. To provide a big picture perspective on appliance replacements through utility companies energy efficiency programs, we provide truck loads of energy efficient appliances to their customers, to those customers are located in California and Washington, Texas and Missouri, New Jersey and also in Canada. So far this year, under energy efficiency programs, we've delivered about 500 semi-trailer loads of new energy efficient refrigerators and washers and exchange them for old energy cost saving appliances and these exchanges are what we refer to as appliance replacement. In the last nine months alone, we replaced more than 42,000 semi-efficient appliances and then we properly disassembled and recycled every single one of them for this amazing appliance replacement effort helps low income households and have a powerful and beneficial impact on energy consumption over time. In other news, to meet the needs of our utility customers this summer we opened recycling centers in Missouri and Illinois. It was a lot of hard work, but I am happy to say things are operating even better financially than we expected. We're also in the process of opening a recycling center in Oregon in order to support a new three-year recycling contract for utilities in that space. The new center is scheduled to recycle appliances at an annual volume that is consistent with our other existing recycling centers and this Oregon facility will add jobs and also could create additional business opportunities for us, hopefully in the form of appliance replacement programs. In addition, we just won another small recycling contract in Kentucky. We'll add that contract's incremental volume to our existing Louisville Kentucky recycling facility, which should make that operation even more successful. Also you may have heard that Electrolux has announced they will purchase GE Appliances in a $3 billion plus transaction. This appears to be good news for us as we have strong relationships with both Electrolux and GE. Over time, we anticipate the combined appliance manufacturing company will add even more business to our company, especially in the area of responsible appliance recycling. Regarding our retail appliance operations, ApplianceSmart is now listed as one of the top 25 appliance retailers in the country. On the another yet very important topic, we've been working on strategic planning since I took my new role in August. The process is ongoing, but we've already identified several major business initiatives designed to accomplish several key objectives. Our first initiative is to improve our operational efficiencies. So we put in place at least one action to reduce cost both at the retail store level and in our recycling operations. Those initiatives should save us several hundred thousand to potentially seven figure dollars a year and there are more cost reductions in the works. We're reducing excess square footage where appropriate. This applies to excess floor space in our retail stores and at our corporate office. We're working to reduce major expenses such as call center costs and we're challenging vendors to reduce their pricing. We're also eliminating redundancies where necessary. Incidentally in addition to our initiatives, the recent downward trend of fuel costs should bode well for our operating costs, particularly transportation and reduced fuel costs should help for increasing consumer spending. Our second key initiative is to grow our business and this applies to each line of our business. We're working on doing a better job reaching sales prospects, winning their business and delighting new and existing customers. Our third key initiative is that we're going to capitalize on certain strategic opportunities that we've identified. For competitive reasons, however at least for now, I am not prepared to discuss these at this moment. And finally, our fourth initiative is towards bring out the best in everyone. We're training and setting clear expectations for all of our associates. The expectations are specifically designed to help achieve our high level company goals and then we'll reward desired outcomes and successes as appropriate. In closing, both Jack and I want to say thank you to Jeff Cammerrer. He is an outstanding Chief Financial Officer and a great person. I've really enjoyed working with Jeff. I sincerely wish him every success in his new position. Thank you, Jeff. This concludes our prepared presentation. We look forward to answering any questions you may have about these topics and anything else. Operator?
Operator: Thank you. (Operator Instructions) And I am not showing any questions any questions at this time. Mr. Eisenschenk, I'll turn it over to you.
Mark Eisenschenk: Well, thank you very much everyone who has attended this morning's conference call. And with that, we'll conclude our call and we appreciate the opportunity to keep you updated about ARCA and look forward to talking with you again in the future.