James McCulloch: Well, I think – the Street would also appreciate the additional growth opportunities reflected in the share price. So – the other issue was on the gross margins going into next year. I think you’ve mentioned that in the first quarter, there’s about a $12,000 per unit cost savings through engineering improvements, material improvements, as well as that 8.5% price increase, which would take effect fully take a face in the first quarter. Back of the notebook numbers, do you have any clarity on gross margins going into next year. It looks like they should improve just on those two factors alone to over 20%. So do you have any clarity for the group on that/
Desmond Wheatley : Yes. In fact, in my comments, my prepared comments, I was more aggressive than that. I think we get better than 20% improvement in gross profitability. And then I went one step rather than that and did the back in napkin arithmetic for you, you can see that with those — with that rate of gross profitability, we would basically — had we had the same way of growth possibility that we’re anticipating in the first quarter and moving forward. And again, we’re not going to stop improving that either. But just on the numbers that we’re talking about today had we had that same level of gross profitability throughout all of this year, we would have been pretty close to breakeven right now.
James McCulloch: Question just on the European operations. Are there any potential delays just on the qualification process either for all of Europe or individual municipalities or countries? Are you looking at a European standard that once that’s or do you have…
Desmond Wheatley : No, no, we will. We will be putting CE onto our products over here. Here’s a good news about that. Again, this is an area where Beam Europe is much better equipped than we are in the United States just because they’ve been doing this a lot longer. They have all sorts of ISO certifications and all sorts of other is, which, by the way, have already been helpful for us. Just a slight departure from the question. We’ve recently responded to an RFQ that required a certain level of certification that we would not have complied with had we not made this acquisition. It’s fantastic – when we realized that my God, on closing, we have all these certifications now that we can qualify for this RFQ that we previously would not have been able to go after.
So I mean, just — it’s — as you can note very enthusiastic about what we’ve just done in Europe. I’m really, really glad to have them on team. They’re just wonderful hard-working well-educated English speaking. Again, I encourage everybody to watch the video that we did last week because I want you to see what this place is all about and its capabilities. But yes, there will certainly be some European requirement. There are lots of different things we’re going to have to do for Europe. It’s metric. The voltage is different here, frequencies are different here. And we will see certification on our products rather than UL listing, – and those things are processes. But we’re talking a small number of months. We’re not talking about years or anything, and we’re also not talking about huge sums of money, particularly in light of the fact that, again, the team over here is very, very well versed in doing those things.
And on voltages and frequencies in less anybody’s worried about that, don’t be that really to an electrical engineer. It’s like saying, well, do we do the anything or do we do the B thing. It’s really not a big deal, but it’s a process, but we have very, very well-qualified people working on that right now. And another thing I just want to tell you about on the European team that I’m also very encouraged about is they actually started working on this stuff before we closed. We were all very confident that we were going to close and just to show you how enthusiastic and what a great attitude they all have. There’s none of that head shaking and people are not feeling negative about this and they’re very excited about the new products and started working on developing them before we can close the deal, which I just think is a great indication of the quality of people we’re dealing with.
James McCulloch: It that’s been in the last 2 or 3 years of conference calls, I don’t think I’ve ever heard you where you were not enthusiastic about demand…
Desmond Wheatley : I love the business. I love the business, Jim. That’s – it’s important to love what you do, and I do love it, and I’m very, very confident about where we’re going.
James McCulloch: Two final questions on the European operations. You mentioned there that you got the assets significantly below market value. However, there’s a payout over the next couple of years or incentive payouts based on performance. Can you give us a little clarity on that? Is it based on profitability, on volume? And what kind of impact would that have on gross profits of Beam Europe?
Desmond Wheatley : Yes. And by the way, just to go back to your previous comment about my enthusiasm. It’s — that enthusiasm would be rather boring if it wasn’t born out by facts. But again, 295% increase in production this year. I’m proud of my enthusiasm, and I’m proud of the team who’s making it — who’s validating it, frankly. We keep doing what we say we’re going to do. We keep expanding in the way that we say we’re going to keep expanding. We keep improving every aspect of the business. And that’s how — that’s part of the reason I remain so enthusiastic, I suppose. But — I’m sorry, Jim, I lost my train of thought there because it was so important to me to say that…
James McCulloch: Yes, as…
