Hector Maya: Got it. Thank you. Very, very clear. And could you also please talk a bit more about the increase in general and administrative expenses with compensation on travel costs? And if you could give us also a sense of what happened in the non-recurring expenses there too.
Michael McCleary: Hi, Hector. Yeah, just basically overall, we’re continuing to review our compensation levels – at all levels of management. And so there’s some year-on-year increases there. And the non-recurring expenses were just some professional fees we incurred from some special projects that won’t have an impact going forward. So I mean, G&A in general, remember we’re investing in IT and we’re investing in the management team. So it’s going to fluctuate quarter-on-quarter based on sales increases and where we’re going, and I can fluctuate up and down a little bit as a percentage of sales. Obviously, our goal in the long run is to leverage G&A, as a percentage of sales because that helps us deliver better value to our member.
Robert Price: One thing I’d add to that though, which certainly I agree with everything Michael has said, I think, the real fundamental nature of the club business is to continue to find ways to be more efficient in the delivery of merchandise to the ultimate consumer. And Michael had mentioned, I believe, that we had recently opened a Panama distribution center. We are soon to open a Guatemala distribution center, and we’re building a distribution center for Trinidad. Those are very strategic decisions that we believe can leverage and improve expense ratios and inventory turn because of the fact that we can flow merchandise in a much more efficient way, we believe. And we’ve kind of proven it in Costa Rica, where we already have a distribution center.
And those distribution centers have many other possibilities beyond just the flow of merchandise to our clubs, as we get more into online shopping and dealing more with business-to-business members, we think these distribution centers will become quite strategic. The way I think of the distribution center is going back to the early days of Price Club in 1976. In a sense, we were a distribution center. And so, in a way, it’s going back to our roots, and especially as we focus more and more on the business-to-business segment in our business — and our operation.
Hector Maya : Excellent. Thank you very much. That was a very, very good color. And the last one to — if you could also share some further details on the performance seen in the other income and expenses, particularly with more color on the spike in other expenses during the quarter?
Michael McCleary: Yeah, I think Hector, I mentioned in the call that — that’s pretty much from FX. And I called out two things in particular. We have this unique situation where we’re sitting on a lot. I think we’ve talked about this in prior calls, we’re sitting on a good amount of cash in — that we convert into U.S. dollars from local currency, we hold that in our bank accounts in Costa Rica. And the strengthening of the Colon has had the unusual effect of hitting us from a P&L perspective. So that’s essentially unrealized losses on our U.S. dollar balances. We’re a U.S. dollar based company in the whole. And we think from a long-term perspective, it’s the right thing to do to transfer our — convert our local currency balances into U.S. dollars, and that’s what we generally do in all of our markets, as long as we’re able to.
And we generally hold that because then we can redeploy it easier within the company. So we have some unusual fluctuations from foreign currency sometimes in some of the countries. In the past, you may recall we’ve had similar issues with Jamaica. So hopefully that’s a transitional issue. And then I also mentioned that we continue to pay extra costs to convert the ill-liquid currencies that we have, such as Honduras and Trinidad, into U.S. dollars. And that’s also impacting that line.
Hector Maya : Got it. I understand. Thank you very much Robert and Michael for taking my questions. Thank you.
Robert Price: Thank you, Hector.
Operator: Your next question comes from the line of Jon Braatz from Oppenheimer. Please go ahead.
Jon Braatz: Michael, just a follow-up. Given the currency issues in Honduras, have you implemented any pricing actions in that country similar to what you did in Trinidad?
Michael McCleary: We’ve taken some pricing actions in Honduras, and that’s something that we’re continuing to review. So yeah, obviously, our goal is to hopefully be able to pay for those — any extra costs we’re incurring in countries where the currencies are ill-liquid. You may not, kind of like the — I mentioned for Costa Rica, may not always match on an accounting basis, but from an economic perspective, I’d [rather line those up] (ph).
Robert Price: I just add one thing to — this is very top of the agenda for Michael and myself. We’ve spent a lot of time talking about Honduras and trying to identify a variety of ways to balance the challenge we have with ill-liquidity, but also making sure that we don’t harm the business long term. Balancing Act. And I think we’re on top of it. But this is part of the nature of where we do business. These are countries that have a lot of challenges. We’ve gotten pretty good at it, but the reality is we go through these [series] (ph) where it costs us money, reserve a business, pretty good business, and so we’re looking at a lot of alternatives for how to deal with the Honduras situation, but it is a significant challenge. And we’re on it.
