Derek Schmidt: No. The inbound costs, so container cost and then drayage for sourced goods into our DC, those are all capitalized parts of the finished costs. So when I talked about logistics, that 15%, that is the cost of outbound shipments to our customers as well as our distribution centers and then any inter-plant, inter-DC kind of transfer costs as well.
Bud Bugatch: Got you. Okay. That’s very helpful. And other for me on the sales, you talked about Costco and the sales lift of 6.8%. How much of that was due to Costco for the quarter? And what’s the — how much is due to maybe gaining — you’re competing well, so would tell me your you’re gaining new accounts. So can you look at sales that way?
Derek Schmidt: Yes. If I decompose the 6.8% growth, Costco probably made up about 2.5% of that. So take that away, we still feel like we’re competing really well in our core business within our traditional retailers.
Bud Bugatch: So that 4.3%, how much is same location or same customer and how much would be new customer?
Derek Schmidt: There’s not a lot of new customers. For the most part, I mean, where we’re driving penetration is with our largest, most strategic retailers who we believe are going to be the winners in the future within the business. And that’s really where we’re gaining share.
Jerry Dittmer: The other place that we’re gaining this year is obviously with the Zecliner and the Flex and other things like that, and those enhanced product lines, those are the other things that are driving a lot of that.
Bud Bugatch: So that’s new floor space in existing retailers — but many of those retailers are dedicated to you, right?
Derek Schmidt: Correct. That’s a good way to look at it. Yes. I mean the other corollary is — I mean, we track the number of placements that we have for every single one of our products and the number of placements is growing. And we know retail space isn’t growing. So again, that would give us another encouraging indication that we’re gaining share in retail.
Bud Bugatch: That’s a great maths. Do you have a percentage that you’re willing to share on percentage of placement growth?
Derek Schmidt: Yes, it’s been — I mean, over the last couple of years, between 5% and 10%, kind of high-single-digit.
Bud Bugatch: That’s great. And last for me, the receivables look like you’re looking like, if my math is right, somewhere around 32 days versus something closer to 40 days at the end of the year, the health of your retail base, can you talk a little bit about that? Are those the right numbers?
Derek Schmidt: No. I mean we typically run around that 30 to kind of 33-day range. So that doesn’t typically change. The only thing is, dependent on if we have heavy sales in the last month of the quarter, that will be what SKUs, accounts receivable either up or down. So overall, we’re feeling good about the overall quality of credit and AR. Obviously in this uncertain economic time, we’re watching credit concerns closely, but feel good about the quality of AR. No concerns or issues there.
Bud Bugatch: Okay. And so the delinquencies are not particularly significant, over 30?
Derek Schmidt: No.
Bud Bugatch: Okay. Great. And 30 is the normal term — would that be your normal terms?
Derek Schmidt: 30 to 33, yes, in terms of days. But…
Bud Bugatch: Thank you very much. Congratulations and good luck on the balance of this calendar year and the fiscal year.
Derek Schmidt: Thanks, Bud.
Operator: [Operator Instructions] The next question is from John Deysher of Pinnacle. Please go ahead.
John Deysher: Good morning. Thanks for taking my questions. Looks like a solid quarter. I just have a couple of quick questions. First, what was the backlog at the end of the quarter?
Derek Schmidt: Around $48 million. Yes. So relatively unchanged from where it was at the beginning of the year.
John Deysher: Okay. Great. Another balance sheet question. I noticed other assets, other current assets are up to $9.2 million. It’s been growing. And I’m just curious, what’s in that other assets bucket? And why is that increasing?
Derek Schmidt: Yes. There are two things, John. Every year in the first quarter, we prepay our annual insurance, and we also prepay our annual SAP software license. So those two things combined are worth about $2.5 million. So that was the increase in Q1.
John Deysher: Okay. So that may come down going forward?
Derek Schmidt: Correct. And that’s our normal cadence. Typically, we pay those in full at the beginning of each fiscal year.
John Deysher: Okay. That makes sense. What’s the status of the Mexicali plant? I know you haven’t opened it. It’s a relatively new plant, I think, built within the last couple of years. What’s the status of that at this point?
Jerry Dittmer: Yes, John. The status right now is, with the current environment, we didn’t see a need that we’d be moving in there in the short-term. So we basically have it leased out at this point in time. And it’s something we’ll come back and visit every six to 12 months. But for the next year, it’s — we basically have it leased out about 95%.
John Deysher: Okay. And what, the lease is month-to-month or year-to-year?
Jerry Dittmer: They’re year-to-year with — obviously with options, and there’s two different parties in there. And we’ll just really continue to look at our demand and when we’ll need it and continue to work with these folks that are leasing it right now.
John Deysher: Okay. That’s good news. What — when does it roll over, at the end of the year?
Jerry Dittmer: Different times. One of them rolls out in the fourth quarter, the other one will roll out first quarter next year.
John Deysher: Great. And finally, on the availability, I think the press release said $27.6 million. That’s down pretty substantially from the $45.8 million at the end of the year. What was the reason for that decline in availability?
Derek Schmidt: It’s largely due to inventory reduction. So I mean, at its peak, our inventory was over $190 million. Today it’s $120 million. So that line of credit is an asset-backed facility.
