Ladies and gentlemen, thank you standing by and welcome to the Sally Beauty Holdings' Fiscal 2012 Second Quarter Earnings Conference Call. At this time, all participants are in a listen-only mode. Later, we’ll have a question-and-answer session instructions will be given to you at that time. (Operator Instructions) And as a reminder today’s conference call is being recorded. I’d now like to turn the conference over to Karen Fugate, please go ahead.

Thank you. Before we begin I would like to remind you that certain comments including matters such as forecasted financial information, contractor business and trend information made during this call may contain forward-looking statements within the meaning of Section 21-E of the Securities Exchange Act of 1934. Many of these forward-looking statements can be identified by the use of words such as may, will, should, expect, anticipate, estimate, assume, continue, project, plan, believe and similar words or phrases. These matters are subject to a number of factors that could cause actual results to differ materially from expectations. Those factors are described in the Sally Beauty Holdings’ SEC filings, including its most recent Annual Report on Form 10-K for the fiscal year ended September 30, 2011. The company does not undertake any obligation to publicly update or revise its forward-looking statements. The company has provided a detailed explanation and reconciliations of its adjusting item and non-GAAP financial measures in its earnings press release and on its website. With me on the call today are Gary Winterhalter, President and Chief Executive Officer, and Mark Flaherty, Senior Vice President and Chief Financial Officer. Now, I would like to turn the call over to Gary.

Thank you, Karen, and good morning, everyone. Thank you for joining us for our fiscal 2012 second quarter earnings call. I’ll begin today’s discussion with a high-level review of our financial results, followed by a review of our business initiatives. Mark will then take you through the fiscal 2012 second quarter in more detail. As you may have seen from our press release this morning, we had an exceptional second quarter across both business segments. Consolidated same store sales growth reached 9.1% over positive comps of 6% in the second quarter last year. This record growth was primarily driven by higher traffic and average ticket as well as the benefit of an extra day in February and milder weather relative to last year. Consolidated sales were $889.3 million for a strong year-over-year growth of 10.9%. This strong growth led to significant SG&A leverage of 130 basis points, and operating margin expansion of 160 basis points or 14.8%. Net earnings in the second quarter increased by 37.6% to $67.8 million or $0.35 per share. We ended the quarter with a total store count of 4392, an increase of 185 stores or growth of 4.4% over last year, of which 4% was organic. Turning to our segment performance, starting with Sally Beauty Supply. Same store sales growth for Sally Beauty hit a record high of 9.3% versus 6.2% in the prior year. Net sales reached $554 million or strong growth of 12.9%, an increase in total transactions and higher average ticket continue to be the primary drivers behind our strong sales performance. Gross profit margin at Sally Beauty ended the quarter at 54.2% versus 54.4% in the year ago quarter, a decline of 20 basis points. On a sequential basis, gross margin was up 30 basis points over our 2012 first quarter…

Thanks Gary. Net sales for the second quarter were $889.3 million, an increase of 10.9%. Same store sales for the same period grew 9.1%. During the first six month of fiscal 2012 consolidated same store sales grew 8.1% exceeding our expectations. Due to the strong performance, we believe that our full year same store sales growth for 2012 will be in the range of 5% to 7% versus our previous expectations of 4% to 5%. We continue to believe that over the long-term same store sales will grow inline with our historical trends of 4% to 5%. Consolidated gross profit was $436.8 million or 49.1% of sales, a 20 basis point improvement from the fiscal 2011 second quarter. Second quarter SG&A expenses were $289.2 million and represented 32.5% of sales, a 130 basis point improvement from the 2011 second quarter. This leverage improvement is primarily driven by strong sales performance in both of our segments. Unallocated corporate expenses, including share-based compensation, were $25.3 million or 2.8% of sales versus the 2011 second quarter expenses of $21.8 million and 2.7% of sales. Consolidated operating earnings in the second quarter increased 24.6% to reach $131.7 million. Operating margin was up 160 basis points to 14.8%. Interest expense during the quarter totaled $22.4 million, a year-over-year decrease of $5.4 million. This decrease was due to lower outstanding borrowings and lower interest rates on the long-term debt. For the fiscal 2012 second quarter, our effective tax rate was 38% versus 36.7% for the fiscal 2011 second quarter. The tax rate was higher in the fiscal 2012 second quarter due to non-recurring tax benefits recorded in the fiscal 2011 second quarter. We continue to estimate that our annual effective tax rate for the fiscal 2012 year to be in the range of 37% to 38%.…

Thanks, Mark. In summary we had a great second quarter, and when someone with our strong first quarter results, our year-to-date performance is outstanding. For the first six months of fiscal 2012, net sales are up 10% driven by same store sales growth of 8.1%. Our consolidated gross margin is up 70 basis points with operating margin expansion of 160 basis points over the prior year. I anticipate this performance will continue and lead us to another six months of stronger results. As always, thank you for your interest in Sally Beauty Holdings, and now we will turn it back to the operator to take your questions.

Thank you. (Operator Instructions) Our first question will come from the line of Simeon Gutman at Credit Suisse. Please go ahead. Simeon Gutman – Credit Suisse: Thanks, good morning and congratulations on the results.

Thanks, Simeon.

Good morning. Simeon Gutman – Credit Suisse: Good morning. On gross margin, a few questions, if you ex out Europe or the UK impact, were the core drivers in place, would we have seen the typical gross margin expansion there?

Yeah, let me address gross margin right off the back here, because to me it’s a non-issue, and I don’t want people to be concerned about it longer term. There were actually three things that impacted Sally’s gross margin in the quarter. One was, as we put in our press release, and I just mentioned in the call, we are in the process of transitioning some of our distribution in the UK from a third-party provider that we went to about a year ago, back into our own distribution. So there has been some distribution cost related to that, which hits our margin line. The other thing that impacted Sally’s margin for the quarter is, when Easter falls as early as it did, Easter is a significant promotional event for us, particularly in our African-American categories, which typically are lower margin categories to begin with. So we have very successful Easter promotion, and it all hit in the second quarter as compared to last year being in the third quarter. And also if you look at last year, the increase from Q1 to Q2 in our margins last year were enormous, it was over 100 basis points. So we had a very tough comparison to make. The third thing that I will say is, we came out of Q1 with Sally margins significantly higher than we had planned for, and significantly higher than the 50 basis points that I’ve always kind of given all of you guidance on. And we decided to reinvest in the business and take advantage of Easter being in the second quarter, and we really drove the business hard in the second quarter, which I think is evidenced by the increase in our Beauty Club Card member sales, which is as all of you know one…

Yes, yes. The reason we are moving away from it is, we believe and our history tells us that, we can do the distribution of the part that we move to third-party provider at a lesser cost. And I fully expect going into next fiscal year for our margins to not only achieve what they’ve been in the past in the UK, but exceed those for a couple of reasons. Our margins in general in the UK and Europe are increasing as they are here at Sally, primarily due to the increased sales of our own brand goods over there. So yeah, the answer to your question is definitely, yes. The good news is that, we’ve been able to work through these issues and not impact our sales in the UK. Our sales actually in the UK and Europe for the quarter are – our comps were quite good. Simeon Gutman – Credit Suisse: And a preempt to my next question, which was to talk about that, but I mean were they good or how did they compare to how you plan the business?

They were above it. Simeon Gutman – Credit Suisse: Okay, and then you mentioned some of this just a second ago, about mild weather, is there any way that it’s probably difficult to quantify, but have you tried to quantify what some of the drivers of the quarter, either mild weather, and I don’t know if you had any discernible impact from some of the Hunger Games traffic, and maybe some – how you retain some of those customers if you’ve been able to post that, and what it’s done for the business?

So, let me try and address those one at a time. First of all, trying to quantify weather is difficult. One thing that’s fairly easy to quantify is, in the second quarter last year, we had 90; whatever days that were in the quarter, and this year we had that plus one. So that’s – if you just do simple math there, it’s a little less than 1% that you’re going to get out of the leap year addition. The weather, as I said, I don’t like to put a lot of emphasis on weather, but it was so significant, last year in the U.S., particularly in that quarter, and in Europe that, you have to mention it, because the year before, we had a significant amount of stores that were literally closed for several days. So to quantify that is really difficult, but it’s a factor. Your third comment regarding Hunger Games, Hunger Games was a huge success, but it was anniversarying things like Crackle from last year. So it – we knew we had to anniversary that business, and we did. As a matter of factor, our nail categories are still growing extremely strongly, because it wasn’t just Hunger Games, this new gel polish. It’s just huge, and it’s a much higher price point polish, so not only are we seeing units coming out of it, but you’re seeing the dollars much more significantly than you would in a normal nail polish just because of the price point. We also on the BSG side of our business, we have a brand that we have a close relationship that we’ve launched called, [Vanit] in the nail category, that’s done extremely well in the quarter. And I’d also – let me make one more comment on margin, when you look at our margin strictly at the POS level, which would not include the distribution costs, and anything else that’s going on that affects margin other than the raw POS margin. Our POS margins were excellent for the quarter. Simeon Gutman – Credit Suisse: All right, thanks again for all the color.

You’re welcome.

Thank you. We’ll go next to line of Meredith Adler at Barclays. Please go ahead. Meredith Adler – Barclays Capital: I just want to follow a little bit more, you talked about sales in the UK being strong. And last quarter you talked about sales and Europe being very strong. And I think you talked about getting products that you didn’t have before, can you talk a little bit more about what’s going on in Europe, I know whether kind of confused things, but more generally what’s going on?

Sure, our business in the UK is actually quite strong, and our comps are good there. Fortunately, the distribution efforts are not destroying our service levels and impacting our sales there. And as I just said, our POS margin primarily driven by a lot of our new products that are in brands that we own or control the distribution up are growing much better than average, so it's giving us a nice pump in margin. In Europe, the acquisition that we made last fall in the Netherlands is performing right in line with our investment case. We’re very pleased with that, we look forward to more growth in the Netherlands. Germany had a nice quarter, and Belgium and France, particularly France are just growing very, very rapidly. Most of our new store growth in Europe had been in France for the quarter, and will continue to be on a percentage basis. So we’re very pleased with Europe. As I think all of you know, we’re in the process of putting in an international ERP system over there, which we would hope a year from now will be in place, that's going to allow us to just bring a lot of things together. Today we operate on four or five different IT systems over there because of acquisitions. And as we’ve done in many of the acquisitions, particularly BSG here over the years, when you get everybody on the same system, there is not only a lot of cost take out – opportunities, but there is – you just have much better insight into your margins, and your costs and everything else. And I really look forward to that being a significant turning point in the profitability there. Meredith Adler – Barclays Capital: And then we haven’t talked really very much about BSG, and you had an eye-popping improvement in the operating margin, could you talk a little bit about what’s doing that, some of it I think you said was maturing of acquisitions, that was in the press release?

As you know, BSG made two significant acquisitions over the last two years, Aerial being just a year ago this past fall, we are now seeing a lot of the synergies that we put in place in the cost take outs through that consolidation which was happening last year. We’re up against that this year, so it looks very good, particularly in the first two or three quarters of this year, BSG should have great, just should have comps from an operating standpoint. Also, and this is something I’ve mentioned, but maybe not mentioned it enough in the past. We are doing really well in renewing leases at a very favorable rate, which helps our operating costs. And these renewals, the majority of them are five-year renewals. So when you drop from an average of 8% or 9% renewals rates, which is what we were running prior to the financial crisis, down into the very low single digit increases, and that follows you for the next five years, that is major. Because for us, the only expense we have, direct store expense, that’s more than rented payroll. So that’s significant, and also with the increased sales and the great comps we’ve been having, you get a lot of leverage on payroll in the stores. So it’s all just working for us right now. Meredith, we’re very pleased, our people are just executing extremely well, and life is good. Meredith Adler – Barclays Capital: Okay. And I guess the fact that BSG, is there any reason to believe that, that anything is going to derail the current margin, obviously, it won’t be up as much every quarter, but probably you said it would still be up in the third quarter, but should we think of the level as being something that continues?

Meredith, I’ve been saying for years, and it was happening for years prior to us spinning out, and you all came to know us better that our margins increase typically 50 basis points a year, and that’s driven by all the profit enhancers that we discussed every quarter. I don’t expect that to change, we’re running ahead of that on a year to-date basis right now, and I expect us to end the year in line with that. And no, I don’t see anything changing because I don’t see any of the drivers changing, our control label and own brand sales are increasing still faster than our overall sales increase rate. Our shift in the Sally business towards more of a retail percentage continues with the Beauty Club Card and the CRM program. I fully expect for that to continue, there is no reason on the horizon at least that, I’d actually that one, BSG there was just a report put out by PTR group which does a lot of research in our industry on booth running. And it confirms everything that I’ve been saying to all of you for years now that, booth running is growing at a record rate, which on the BSG side, and on the Sally side, but more so, on the BSG side. That is a store customer. So BSG’s store piece of the business continues to accelerate at a faster rate than our sales consultants, which is also good for our margin. So all of our margin drivers are in place, and fortunately I tested, it isn’t into a large degree, we don’t control it, they are natural margin enhancers that are happening just because of the trends in our business and our industry. Meredith Adler – Barclays Capital: Okay, great. Thank you.

Thank you, Meredith.

Thank you. Our next question will come from the line of [William Raider] of Bank of America. Please go ahead.

Good morning.

Good morning, Bill.

You mentioned on the Sally side that comps were up both based upon traffic as well as ticket. Can you talk about whether there was any inflation in the increase in ticket or if it was just more items.

There is a little bit of inflation. We are seeing some cost increases come out of Asia particularly, mostly in human hair. I’ve mentioned this is the last couple of calls that there, you believe it or not, there is a shortage of human hair globally. And it’s the supply and demand, and it’s getting difficult to get. It’s a fast growing category for us, although it’s a relatively small percentage of our business. But cost in that category in the last six months had literally doubled. So there is some inflation in there, again, it’s – that’s not a huge category for us. So I can’t tell you that there is a lot of inflation in the overall number, but there is some.

Okay. And then, in terms of the market broadly for U.S. professional beauty supplies, do you have a sense for how that the industry grew in 2011, and what your expectation is for 2012 industry growth?

Yeah, actually – was it six?

Six.

Yeah, we just got some numbers on the industry growth for 2011, and it says it was 6%.

And then for 2012, do you have kind of expectations for how that might grow?

The expectations that came out of that same report basically are same 4% or 5% growth for the next five years, I don’t know that I want to go out that far predicting industry growth. But we’ve always exceeded the industry growth, and I expect that we will – going forward I certainly hope so. And the industry is, as I’ve said and shown all you in many charts for years is a very consistent and stable industry. Historically, it has grown 3% to 5% over the last 27 years; though the 4% or 5% expectation for the next five years is certainly in line with history, and personally I would say that, I’m pretty comfortable that, that will be inline with what happens.

Okay. And then lastly, you paid down $100 million of debt in the quarter, I’m wondering if you can talk just briefly about how you are thinking about future debt reduction versus other uses of free cash flow, whether those are acquisitions or the returns of money of the shareholders?

I think, as we said in our – kind of our earlier remarks, we are certainly considering other uses of cash. We publically talked about that, our sweet spot in terms of our leverage is between 2 to 2.5 times, and we’re right now at the midpoint of that. So we are actively having dialogue in terms of – what are some of the other uses of cash in terms of any kind of shareholder friendly activities, whether it be in the form of the share repurchase or dividend program. But I want to make it clear, just that our priority first and foremost is to grow the business. And we still believe there’s plenty of organic runway to grow as well as acquisition footprint, both in Europe as well as in the North America footprint on BSG. Now with that said, and just that we are generating cash as you can plainly see, much quicker than our needs for investing in the current operating cycle. So certainly those dialogues are actively being discussed. As far as we do have a refinancing advantage, we’ll be coming up here shortly, and we’re having talks with the board as well very actively in that regard. And I expect in fairly, timely, in a fairly timely manner that we should have some more clarity around that to share with you.

Okay, that's all from me. Thank you.

Thank you. We’ll go next to the line of Kevin Coyne at Goldman Sachs. Please go ahead.

Hi, this is [Liz] standing on for Kevin. How are you?

Good.

How are you?

Good, thanks. Turning to SG&A this quarter, you had really strong operating leverage. Could you please comment on how we should think about this for the second half of the year and into fiscal ‘13?

Well, as I mentioned on the BSG side, we are still realizing nice synergies particularly out of the Aerial acquisition from last year. On the BSG side, those synergies will probably as far as anniversarying them and feeling them, they will be behind us going into 2015, but BSG continues to make small acquisitions that are not as large in the way of synergies, but in some cases they’re even more synergistic because you keep almost none of the overhead, which was very much the case in the [mutual] acquisition that we made last November. On the Sally side, in Europe we obviously as we gain scale in Europe that is helping our operating margins, which we will continue to do. Operating margins in the UK as I also mentioned will look much better next year once we get these distribution issues behind us. And also in Sally, with our comps running anywhere near the range they are which this quarter was really off the chart, but even if they stay in the neighborhood of our year-to-date, which is closer to 8%, we get a tremendous amount of leverage as I mentioned on rent and payroll. So we expect that our EBITDA will continue to grow significantly faster, and our operating earnings than our top line does, which has been our history.

Okay. Thanks, that was really helpful. And then could you remind us what your capacity is on restricted payments. I think it was around $440 million last quarter?

Yeah, we’re up to about $465 million.

Got it, and do you have any timeframe as far as when you could potentially announce, I guess either a potential buyback or a dividend is that something we could expect in the next six months or…

I don’t want to necessarily put a timeline on the – any kind of distribution of cash for any kind of shareholder friendly activities, certainly, we have a historical track record of doing things timely. And I think that also follow suite is that when you look at our refinancing activity also, we certainly want to be on this side of B, Term B going current. So certainly within the six month timeframe would be a fairly reasonable expectation for us.

Okay, great. Thank you.

You’re welcome.

Thank you. Our next question comes from the line of Jason Gere at RBC Capital Markets. Please go ahead. Jason M. Gere – RBC Capital Markets Equity Research: Okay, thanks. Most of the questions have been talked about. So I guess two things, one, I mean strong comps, so I guess this question is kind of like finding a needle on the haystack. But were there any categories that stood at a little bit on the weaker side like appliances or anything in the Sally side that, with the macro environment was a little bit softer than planned?

Not really. I’m glad you brought appliances though because they bounced back nicely. The last couple of years, we have seen appliances relatively flat or low digit growth; this quarter, they were high single digit growth. So we are very pleased with that. As far as soft categories, our African-American categories have been soft for gosh quite a while now, several – two, three years, but that has more to do with hairstyles in that community than anything and it’s not significantly impacting the business and it just goes as curly hairs comes back in that community, in particular it drives a lot of maintenance products and it’s cyclical, but its one of the few categories with us that actually did it. Jason M. Gere – RBC Capital Markets Equity Research: Okay. And then just kind of, I guess a broader question about the new stores that you’re looking may be a real estate plan. Given the size of the Sally store being 1,700 square feet, it seems easy to carve out a store in some of these malls that are out there. So maybe if you could talk about the locations, are you finding more and more A locations out there and then at more attractive rents than before, and is that part of the story that’s really helping the comp accelerate. So just – I guess I’m trying to look at how are A store locations comparing to maybe C store? And how do we think about real estate going forward, where you can find good locations? And then I just have one other housekeeping kind of a question afterwards.

From a real estate standpoint, it’s a lot like the old ad that you hear about any real estate, it’s all location, location, location. And there are not a lot of new centers going up yet still because of the financial situation. The space that you see come available if it’s in an A center, you typically are not going to steel that space. There is a lot of space available in centers who have had major tenants go dark, which is not necessarily where you want to be and I keep emphasizing that a lot of our favorable rent expense is coming from renewals where you are in a center – where we are in a center with an established track record even if the center is not an A center, its an A center for us and we’re able to negotiate renewals in a very favorable way. So I would tell you that it’s not having an impact on the business, anything – it’s challenging the business to find new A locations right now. I think that a lot of our expansion, as I’ve said many times is really coming outside the United States, we're opening stores as quickly as we can find them in Canada, but Canada is just not as overbuilt as the U.S. and it's a lot more difficult to find retail space. We are also opening rapidly, as I mentioned a few minutes ago in France and we’re going to continue there. We believe we can have literally in the 100 of stores in France and we're somewhere in the 30s right now. So a lot of the expansion will be outside the U.S. and we continue to work very hard and getting a foothold in more of the South American countries which once we get that foothold I think we could open a lot of stores very quickly. We continue to open a lot of stores in Chile, we started with a small base of 16 stores, but we basically doubled that and they’re all, they do extremely well. As Mexico we continue to open about 20% new stores on our base in Mexico. Jason M. Gere – RBC Capital Markets Equity Research: So how do you think about I guess maybe over the next year or so with the square footage in that four to five range, I know international is growing faster but that's because of the low numbers I guess. But are you having any difficulty in the U.S. side or you just, you are happy with the locations that you guys have said, I know typically don't like to cannibalize within next three to five months of an existing store. But are you generally – even though there is not a lot of new centers out there, you are generally pleased with the locations that you are finding.

Yes, yes. Jason M. Gere – RBC Capital Markets Equity Research: Okay.

And as far as your guidance question, we have not changed our guidance. We typically will be opening organically, 4% new units for SBH in total plus the acquisitions. Jason M. Gere – RBC Capital Markets Equity Research: Okay. And then did you comment just with in Sally, the growth in the comp between the U.S. versus international, do you have that information?

We don’t break that out, but as I’ve said, all of our international comps for the quarter were very favorable when you compare them with Sally. Jason M. Gere – RBC Capital Markets Equity Research: Okay, great. And then the last question is a housekeeping. Just I think in the last quarter, the SG&A was a little bit limited because of stock comp accrual. So clearly you guys and well deservingly are hitting your targets this year. So how do you guys accrue for stock comp, my understanding which is typically, I didn’t think it was evenly spread over the year, but are we not seeing that impact in the second quarter and the rest of year, did a lot of that come in the first quarter? If you could just provide a little color on that that will be really helpful.

Yeah, Jason, when you look at our stock comp year-over-year because there is some rules and restrictions around the acceleration of our stock comp based on age and other requirements such as tenure in the business. The acceleration of the majority of the stock comp expense does occur in the first quarter, and then what you typically see is a fairly ratable amount of expense being amortized into the succeeding quarters throughout the year. Jason M. Gere – RBC Capital Markets Equity Research: Okay, that’s great. Thank you very much. Great quarter, guys.

Thank you.

Thank you. We’ll go next to the line of Olivia Tong at Bank of America/Merrill Lynch. Olivia Tong – Bank of America/Merrill Lynch: Thanks, guys. Just one quick one. On the – you’ve mentioned for cash use, is that clearly supporting the business whether it would be top line growth or continued improvement, efficiency would be clear, number one priority for cash. So are there anything that are – was there are other areas where you’re planning for transition similar to the UK, are there ones that are currently on going that we should think about as we move into the second half?

I don’t see any other, if you’re really referring to any kind of more capital investment within the business from a CapEx point of view, I don’t see anything that we haven’t already encumbered in our guidance at this point for 2012. Yeah, we do have our EPR project that we’re rolling out through out our international footprints, it’s not – it’s more of a mid-market package. So it’s not the formidable implementation that you would typically see with the larger type of software packages. So you’re not seeing a lot of spikes or volatility in our business as far as CapEx. Olivia Tong – Bank of America/Merrill Lynch: Got it. Thank you so much.

Thank you. Our next question will come from the line of Joe Altobello with Oppenheimer. Please go ahead. Joseph Altobello – Oppenheimer & Co.: Thanks. Good morning, guys. Just a – couple of quick ones on comp growth. I think Gary already mentioned that, obviously with the comps being so strong, I guess plus a year so year to-date, you do obviously envision moderating back to more of a long-term 4% to 5% comp growth. So if I go back to my model, it seems like and maybe I’m looking at the wrong numbers, but it seems like your comp growth on the Sally side anyway has more been in the 2% to 4% range over the past decade or so prior to 2010. So is that the right number we’re looking at or we had a plateau given all the initiatives you guys have done in the last few years including CRM, et cetera?

Well, I think we said a couple of quarters ago that we were pretty comfortable in the 4% to 5% range going forward with Sally. I’m not going to – let’s say for 10 years, I don’t know, but I’m fairly confident that our teams are doing an excellent job with the CRM and the Beauty Club Card programs and there is significant runway there. So I don’t expect to see Sally’s comp drop back into the 2 to 4 range, at least in the foreseeable future. Joseph Altobello – Oppenheimer & Co.: Okay, fair enough. That was obviously before the spend to most of that period. So in terms of the operating leverage, what comp number do you need to put up to see operating leverage at Sally?

To see leverage? Joseph Altobello – Oppenheimer & Co.: Yeah, on the...

We’ve said historically that we actually can get a little bit of leverage at a slightly negative comp, and again it has to do with our margins drivers. But the flipside of that is, what I said a few minutes ago, when we see margin or comps in this 8% range, we get an enormous amount of not only leverage on our SG&A, but when those margin drivers kick-in it goes kind of comps, it’s a nice thing. Joseph Altobello – Oppenheimer & Co.: Okay. Great thanks, Gary.

Also, Joe, I would add to that, that these comps are driven as much by traffic increases as they are average sale increases; and that to me looking at the long-term especially comparing back to those days of 2% to 4% comps is the thing that encourages me more than just the 8% comps. If that was happening on 2% or 3% traffic increases, I would not make a statement to you that I was comfortable in the 4% to 5% range. Joseph Altobello – Oppenheimer & Co.: Okay, thank you.

Thank you.

Thank you. Our next question will come from the line of Linda Bolton-Weiser at Caris. Please go ahead. Linda Bolton-Weiser – Caris & Company: Hi, I didn’t see if your 10-Q was filed, but you have – like an operating cash flow number in the – I guess the six months of the quarter?

Yes, we haven’t filed the Q yet, but it will be filed later on. Our cash flow from operations was about $138 million, that's about 9.9% increase? Linda Bolton-Weiser – Caris & Company: That’s for the six month or the quarter?

Six months. Linda Bolton-Weiser – Caris & Company: Okay. And then just, correct me if I am wrong, but on the refinancing of the Term B loan, of course equities shareholders want to add too, or assuming it would eliminate interest rate risk because as you would be into a fixed rate situation, but it would be slightly dilutive to EPS; so if you would fix into a higher interest rate than what you’re currently realizing, right?

If you’re assuming in your model that we were to refinance in the high yield market in a fixed rate environment. Now, you certainly could refinance in the leverage loan market again with another Term B, which would be variable. But under your assumptions that you’re making, certainly there will be a little bit of a dilutive impact if you go to a fixed rate environment. Linda Bolton-Weiser – Caris & Company: Okay, and then just on the gross margin when you were discussing that, I just didn’t quite catch the reason for the large sequential increase in the gross margin in the comparison year. Was there something unusual that went on when you move from the first to the second quarter last year that made that unusual to gross margin last year?

Well, I think a lot of it last year was, we were very promotional last year in the first quarter which was our Christmas quarter. And coming out of that, the increase in the second quarter just looked huge. It was over 100 basis point. There’s a lot of reasons for that, but I would tell you that, I believe we were just as promotional this past first quarter, but more in a value way than just price off. We’ve been very successful with a lot of our bank promotions on the Sally side where the customer buys $45 worth of product and they get a very nice type of a bag with it, which is again it’s viewed as a value promotion and it isn’t just price off. So that actually helps our margin, but also allows us to look very promotional to the consumer. So that’s one of the things Linda and there are many. And margin is – it’s a little difficult to control them to the single basis point when you’re looking at a whole quarter. But like I said, when we see our margins accelerating that quickly, we will reinvest some of that margin back into business through our Beauty Club Card program and our CRM program because we’re not here to just blow out margins in any given quarter or year, we run this business for the long-term. Linda Bolton-Weiser – Caris & Company: Right. And then just – one of the key margin drivers is the shift in Sally Beauty to the regular customer that you alluded to from the professional. Did you give a number on that, like do you a number this quarter versus last year, what the percentage of regular consumers was?

Yeah, it’s still running about a point above last year, we typically don’t give that on a quarterly basis because it fluctuates a little bit and we do give it on an annual basis. But again, for model purposes, we’ve said for a long time, it’s about a point per year shift. Linda Bolton-Weiser – Caris & Company: And it’s over 80% now right?

No, no. It’s still in the mid-70s. Linda Bolton-Weiser – Caris & Company: Okay. Okay. Thanks a lot.

You are welcome.

Thank you. Our next question will come from the line of Karru Martinson at Deutsche Bank. Please go ahead.

Hi, it’s [Pat Tremaglio] stepping in for Karru.

Hi, Pat.

Just on the acquisition front, do you have any more color for us, whether it’s size or whether you are looking at U.S. versus international, anything in the pipeline?

Well, as I’ve said in the past, the pipeline or the available acquisitions are going to be more plentiful outside the U.S. The ones in the U.S. will be primarily on the BSG side of the business, it will be going forward almost all tuck-ins. And we still find a significant amount of opportunity for BGS in the U.S. although they are smaller ones. So the top line impact of the smaller one is obviously not going to be as great, but the EBITDA impact is even more significant than the large ones because they are in effect true foldings.

Okay. Thank you. And then lastly on private label, can you just give us some color on penetration for the quarter?

That also has been increasing about point for the year. We are in the mid-40s, and it continues to run little over where it was last year, and it’s another number that we really give on an annual basis.

Okay. Thanks a lot. That’s all from me.

Thank you.

Thank you. We will go next to the line of Jill Caruthers at Johnson Rice. Jill Caruthers – Johnson Rice & Company: Good morning. Just a follow-up, I know you’ve touched upon it. But could you give us a little bit more details on the metrics that you comment where – given your margins so strong coming out of the first quarter really drove the second quarter business strong part. Did you – essentially was it more to marketing dollars or is it more focused on the B Club customer or what not?

We typically invest more in our customer acquisition and of the program, which is really the CRM program. And hopefully, when we bring more of those potential customers in and get them into the Beauty Club Card program that’s where we realize the loss and the benefit from that. Jill Caruthers – Johnson Rice & Company: Okay. And then just last question. It looks like your Sally segment, the EBIT margin of 20.1% looks like it’s a peak number from going back what I have in the model. Could you talk about where do you think that margin level could go in the future?

Again, I don’t see any of the margin enhancing drivers that are causing that to happen changing in the near future. So I would just tell you to add those variables to the model and the control label or own brand sales continue to increase about a point a year, the retail business continues to increase about a point a year. There is a little bit of LLC action in there and for the foreseeable future that’s not going away. So, however, that flows through the model is pretty much what it’s going to be. Jill Caruthers – Johnson Rice & Company: I appreciate it, thank you.

You are welcome Jill.

Thank you. We will go next to the line of Jacob Zitter at Robert W. Baird. Please go ahead. Jacob Ross Zitter – Robert W. Baird & Co. Equity Capital Markets: Thank you. Just quickly, is there any update with the CRM implementation in the UK, or is that a function of the broader ERP?

No, it isn't a function of the ERP and it is beginning over there as it was here in the U.S. it’s a long process you have to build a significant database before it has a whole lot of value, but our partner in the CRM program here in the U.S. is now operating in the UK and we will be moving forward just like we did in the early days here. I would not look for a significant impact anytime soon, because like I said this was started gosh 15, 16, 17 years ago in the U.S. and it takes a long time to build a database of knowledge about these customers to be able to use that knowledge to create a relationship and help the business. Jacob Ross Zitter – Robert W. Baird & Co. Equity Capital Markets: Understood. But the initiative is underway, you are starting to send up mailers and get that in a…

No. We are in the very earlier stages of that, but you really can’t send out a whole lot of mailers until you figure who to send them to. So that’s all part of the early stages of the process. Jacob Ross Zitter – Robert W. Baird & Co. Equity Capital Markets: Okay, great. Thank you.

You are welcome.

Thank you. I will turn it back to Mr. Winterhalter for closing remarks.

Thanks, operator. I’ll summarize, but then we delivered consolidated sales growth of 10.9% and same store sales growth of 9.1% in our 2012 second quarter. Margin expanded 20 basis points and we achieved SG&A leverage, which contributed to a 22% EBITDA growth. Once again thanks so much for your interest in Sally Beauty Holdings and we look forward to seeing many of you soon. Thank you.

Thank you. And ladies and gentlemen, that does conclude your conference for today. Thank you for your participation and for using AT&T Executive Teleconference. You may now disconnect.