AGF Management's (AGFMF) CEO Blake C. Goldring on Q4 2015 Results - Earnings Call Transcript

| About: AGF Management (AGFMF)

AGF Management Limited (OTC:AGFMF) Q4 2015 Results Earnings Conference Call January 27, 2016 11:00 AM ET

Executives

Blake C. Goldring - Chairman and CEO

Kevin McCreadie - President and Chief Investment Officer

Robert J. Bogart - Executive Vice President and CFO

Analysts

Gary Ho - Desjardins Capital

Graham Ryding - TD Securities

Tom Mackinnon - BMO Capital

Scott Chan - Canaccord Genuity

Operator

Ladies and gentlemen, thank you for standing by. Welcome to the AGF Management Ltd. Fourth Quarter and Fiscal 2015 Earnings Conference Call. During the presentation, all participants will be in a listen-only mode. Afterwards, we will conduct a question-and-answer session. As a reminder, this conference is being recorded Wednesday, January 27, 2016.

Your speakers for today are Mr. Blake C. Goldring, Chairman and Chief Executive Officer of AGF Management Ltd.; Mr. Kevin McCreadie, President and Chief Investment Officer of AGF Management Ltd.; and Mr. Robert J. Bogart, Executive Vice President and Chief Financial Officer of AGF Management Ltd.

Today’s call and accompanying presentation may include forward-looking statements. Such forward-looking statements are given as of the date of this call and involve risks and uncertainties. A number of factors and assumptions were applied in the formulation of such statements and actual results could differ materially. For additional information regarding such forward-looking statements, factors and assumptions, AGF directs you to the caution regarding forward-looking statements which is contained on page two of the presentation, AGF’s MD&A for the year ending November 30, 2015, and AGF’s most recent annual information form.

I will now turn the call over to Mr. Bogart. Please go ahead, Mr. Bogart.

Robert J. Bogart

Thank you, operator. Good morning, everyone. I’m Bob Bogart, CFO of AGF Management Ltd. Thank you for joining us today for a discussion of our fourth quarter and 2015 financial results. Please note that the slides supporting today’s call and webcast can be found in the Investor Relations section of agf.com. Also speaking on the call today will be Blake Goldring, Chairman and CEO; and Kevin McCreadie, President and Chief Investment Officer.

Turning to slide four, I’ll provide the agenda for today’s call. We’ll discuss the highlights of the fourth quarter and fiscal 2015, provide an update on the key segments of our business, will review the financial results, discuss our capital and liquidity position and finally close out by outlining our focus for 2016. After the prepared remarks, we’ll be happy to take questions.

And with that I’ll turn the call over to Blake.

Blake C. Goldring

Thanks Bob and thank you everyone for joining us on today’s earnings call. Reflecting on 2015, we executed on many of our stated goals, specifically we made progress in building out a diversified asset management platform. Over the last two years, we have focused on our investment processes and talent. This has resulted in improved investment performance on a one and three-year basis. That performance along with new product launches has resulted in continued improvement in mutual fund net outflows. 2015 net outflows were lower by 20% and our positive trend continued into December. Our institutional business is on solid footing. Despite choppy markets, we continue to see interest in our global strategies.

Our pipeline at the end of 2015 includes $370 million in new global mandates. We acquired a majority interest in FFCM, a Boston based SEC registered investment advisor. FFCM has obtained exemptive relief which has also allowed it to manage a series of long-only, short-only and market-neutral ETF products. Along with our existing quant manager Highstreet, we now have unique capabilities to launch risk managed mutual funds and participate in ETF strategist and factor-based ETF markets. The first fund in our alternatives platform Stream Asset Financial LP, has weathered the impact of lower energy prices and is delivering expected returns to its investors. 80% of the capital has been invested and we hope to deploy the remaining capital in 2016. Our second fund, the Instar Essential Infrastructure fund is on the cusp of its first external close.

As we look forward we are mindful of the state of the financial markets. Today, we’ll describe how we are positioning our business to take advantage of market volatility. We’ve taken steps to reduce our cost base and to ensure that we have a capital, required to weather the volatility. The restructuring we’ve undertaken this past year will reduce our expense base by approximately $13 million. However, we’ve been investing a portion of these savings into our growth platforms to ensure that we maintain our commitment to help investors succeed and to return capital to our shareholders.

Turning to slide six, we’ll provide updates on our business performance. I’ll start with retail. The volatile markets have had some influence on mutual funds net sales in Canada. December industry net sales are $1.1 billion, about half of a $2 billion reported in December of 2014. We saw a very similar phenomenon in August. Market volatility spiked and the industry softened. However, throughout this period AGF sales improvement continued. Similarly, the volatility in December and January did not impact the improving trend in our sales figures. We believe that as long as this volatility subsides in the near-term, we won’t see a significant impact on our business. This is due to a few factors. One, our investment performance improvement has been pronounced and advisors are noticing. Two, our products are distributed primarily in advice] channels. Investors who are receiving advice are more likely to have a suitable asset allocation and therefore are not trying to time the market. Three, risk management is an integral part of our investment process. So, we expect to perform well during these times. We have a few products that look specifically to protect against market downdrafts, namely AGF U.S. Sector Class and AGF Flex Asset Allocation Fund.

To-date, we have experienced a continuation of consistent improvement in our retail outflows. In Q4 2015, net redemptions of mutual funds as reported, improved by 38%. We expect future improvement in gross sales will be driven by focusing on the priorities that we have previously mentioned. One, continue to enhance our investment performance. As our investment performance has now reached nearly 60% over one year with longer term metrics also on the rise, our focus will be on targeting specific funds in categories that are selling. Two, we’ll provide innovative products and solutions around specific needs. As mentioned previously, we positioned our products for volatile markets. Three, we’ll continue to work closely with strategic business partners to facilitate distribution. During 2015, we experienced outflows in the strategic accounts business, primarily from a single client that was reacting to a large redemption in their own business.

As our performance continues to improve, we’re successfully developing new strategic distribution relationships and reinvigorating our existing relationships. We’re doing more business with our largest partners, including banks, credit unions, and insurance companies. Our managed fund products, AGF Elements has benefited substantially from these relationships.

Before we leave retail, we’ve talked extensively on prior calls about the regulatory environment. We expect the regulator to present proposal in 2016, but it’s important to note we have positioned our business for any particular outcome. We continue to believe that the emphasis will be on implementing a best interest standard, which has potential benefits for an independent manager.

And now, I’ll pass the presentation over to Kevin.

Kevin McCreadie

Thank you, Blake. Before I give an update on progress of our investment platform, let me touch briefly on market volatility. I agree with Blake that if market volatility continues, it will be challenging, particularly if the downturn is sustained. We believe that market should stabilize in the coming months, setting up some interesting opportunities to generate returns. We like the way how our funds are positioned. The refinement to the investment processes and the implementation of risk management processes and systems have served us well.

During this period of volatility, we managed to outperform and our above median performance compares quite fairly relative to many of our competitors. As we develop our asset management platform, we have positioned our capabilities across four verticals to align with areas of client demand.

So, if we turn to slide seven, I’ll touch on these four platforms. First within the AGF fundamental actively managed platform, we have a number of centers of excellence, most notably our global team led by Steve Way. We have a strong capability in global and we intend to leverage this in our growth strategy. To that end, we’ve freed resources to support the global team by eliminating positions and product scenarios where we have redundancies, primarily the Canadian equities. In addition to global, this platform also includes our North American fixed income and asset allocation teams. The asset allocation team is at a real value and contributed to the superior performance of our balanced products including AGF Elements which will be a key driver of our expected future flows.

We’ve also made significant investments in our quantitative platform to take advantage of trends in the areas of factor-based ETF and related managed strategies to FFCM and our Highstreet affiliate. We believe that there will be opportunities to launch some various interesting risk oriented solutions in Canada and in the U.S. The acquisition of FFCM provides a complete trading infrastructure to support ETF and mutual fund products. Beyond trading capabilities, FFCM has developed and launched five ETFs into the market with performance success. DIVA a hedged dividend product has been nominated by ETF.com for the best new alternative ETF introduced in 2015. This ETF has a long and short fund that generates a 4% yield with significantly reduced volatility. We have also bolstered our quantitative platform by investing in FFCM and hiring additional resources into Highstreet. We’ve also consolidated AUM under this platform from prior teams and external sub-advisory relationships that have been terminated.

The real assets platform initially focused on infrastructure investing will be broadened over time include other asset classes. This capability will be leverage within our institutional relationships to drive both capital and bill book. Real asset investment is secular trend globally that will continue to develop as clients look for uncorrelated returns to the equity markets.

Lastly, our private client business is managed independently from our other businesses but it is an area of stability where continued growth will be supported by demographics.

Turning to slide eight, November 2015 marked the end of our investment process and talent view. Throughout the year we made difficult decisions as we built out our centers of excellence; now we’re product focused and reduced the number of our teams. Our approach has been to provide more resources to the remaining teams to create depth and succession. We’ll continue to look at any area of underperformance with the name to improve but the heavy lifting has been completed.

We are very pleased with the improvement in our investment results. Our one-year AUM above median is close to 60% and the three-year figure now stands at 50%. Our goal is to achieve 60% of the AUM above median over three years, which we are well on track to achieve. As I’ve noted before, we aim to sustain the performance improvement of the one year number above median. As we do that the three-year number should rise above median as older performance rolls off. And constant within all of our platforms, we have the right talent with a focus on risk, process and execution. We will sustain the strong and repeatable performance.

Turning to slide nine, I’ll talk more about our institutional business. During Q4, we experienced higher net redemptions than we reported in our Q3 pipeline. This was due to an unforeseen redemption from an EM sub-advisory client during the quarter. As we mentioned on last quarter’s call, redemptions in EM could mirror market volatility. That said, we did have an existing client add 71 million to an existing EM mandate during the quarter. We also carried forward a $105 million commitment from the Q3 pipeline into the Q4 pipeline. The client decided to increase their allocations and used additional time to make this happen. This account funded in December. In addition, we were awarded another global core mandate in Q4 in the amount of 210 million. As a result, our Q4 pipeline represents new gross flows of 263 million. Offsetting these wins, our redemption notifications saw only 359 million. This was primarily attributable to an option overlay strategy we managed that the sponsor decided to internalize.

Looking forward to 2016, I continue to be encouraged by the activity we’re seeing especially in our global core strategy and expect to see strong new flows over the year. In the back half of 2015, our sales team spent a considerable amount of time marking the essential infrastructure fund. We will refocus on distributing our global strategies in 2016. Currently, we’re in the final stages of fund raising for the Instar AGF Essential Infrastructure Fund, which is a North American mid-market strategy.

Our seed investment in the Billy Bishop Toronto City Airport passenger terminal is going well and in line with expectations. We have made significant fund raising progress in late 2015 with a group of Canadian and international institutional investors with whom we are now working to complete the necessary legal and other documentations to finalize their commitments to fund. We’re very pleased with the market response to this line and the quality of our cornerstone investors and expect to make an announcement shortly on the fund’s first close.

With our global team and infrastructure fund, our capabilities line up very well with consultant searches and the demand we are seeing in the marketplace. We have confidence in our growth in the institutional business.

With that I’ll turn the call back over to Bob.

Robert J. Bogart

Thanks Kevin. Slide 10 reflects a summary of our financial results for the fourth quarter and for fiscal 2015. EBITDA for the quarter was $25.5 million, adjusted for a $2.8 million restructuring charge EBITDA was $28.3 million. Adjusted EBITDA in Q3 of 2015 was $30.5 million. Adjusted EPS for the current quarter was $0.12. Included in the Q4 EPS results is a catch up provision of a penny, reflecting the carry payment liability to the Stream Asset Financial GP that the LP investors in the find will bear. AGF in its capacity as GP will benefit from the carry payments in the future, however under IFRS accounting, there is no recognition of a carry income until it’s been crystallized which will occur towards the end of the fund’s life.

Going forward, increases in fair value of Stream LP will be reported net of any liability from the associated carry due to the GP. This penny impact should be considered along with our $0.12 adjusted EPS number when evaluating Q4 core operating earnings.

For the fiscal year, adjusted EBITDA was a $128.7 million which compares to a $154.9 million in 2014. Reported consolidated EPS for the fiscal year came in at $0.58 per share compared to $0.70 per share in 2014.

Turning to slide 11, I’ll walk through the yield on our business in terms of basis points. This slide shows our investment management revenue, operating expense, and EBITDA as a percentage of average AUM on the current quarter as well as trailing 12-month view. Note that the results reflect our core investment management business excluding onetime items and the other income mentioned previously. With respect to revenue, the revenue yield increased slightly versus the previous 12-month period. This is due to an increased weighting of equity assets across the book in which those funds carry higher relative fees. This will also affect the mix shift on trailer fees which have trended slightly higher.

SG&A for the quarter came in at $47.3 million; this includes the aforementioned $2.8 million restructuring charge. Excluding this charge, SG&A came in at $44.5 million for the quarter, in line with our guidance. The majority of our restructuring is now complete. As Blake mentioned, we have been reinvesting a portion of the savings into our growth platforms namely to add depth and capability to our global investment management team and institutional distribution footprint. We are guiding SG&A for 2016 to be a $175 million, reflecting lower overall compensation in the organization.

This expense guidance does not factor in the effect of in-sourcing and integrating our previously outsourced fund operations which is on track to occur at the end of Q1 2016. Going forward, the revenue for the fund operation segment will be reported as separate line in the P&L whereas the cost associated with that business segment will be reported in SG&A. The net impact of the fund operations segment will be positive but will be not be material to the overall P&L. Starting in Q2 2016, there’ll be no new disclosure in the financial statement which will separately disclose fund operations as a business segment. This disclosure will provide discrete financial information that is separate from our core investment management business.

Turning to slide 12, I’ll discuss free cash flow and capital uses. This slide represents the last five quarters of free cash flow shown by the blue bars on the chart. The cash flow represented is consolidated free cash flow. Free cash flow was consistent with Q3 2015 and the Q4 dividend payout ratio was within our anticipated range at 34%. A volatile market will influence the level of free cash flow generated by the business even with markets at these levels, however our annualized free cash flow will be sufficient to cover our dividend here with any remaining tax contingencies and fund commitments to the alternatives platform. As Kevin mentioned, we anticipate closing the Essential Infrastructure Fund in the coming weeks and that time we’ll receive our proportionate share of cash back to bring our investment in the fund down to our proportionate share of total commitments. Of our $50 million commitments to the Stream Asset Financial LP, only 10 million remains.

As we’ve explained on prior calls, we’ve generated returns from our alternative platform in two ways. First, our LP investments will have a total return profile of approximately 12% and generate a cash yield in the 6% to 7% range. Management fees will emerge as the platform generates scale but for the next few years, we expect most of the management fee revenue will be reinvested to grow the platform.

During the quarter, we recognized $2.3 million from the LP investments. For fiscal 2015, we earned approximately $13.9 million from the platform including the $5.7 million gain from Q3 monetization event.

Moving to other capital considerations during the quarter, we repurchased 500,000 shares for total consideration of approximately 2.7 million. For the full fiscal year, we’ve repurchased 5.6 million shares for total consideration of 39 million. Since December 1, the beginning of our current fiscal year, we’ve repurchased an additional 1 million shares for total consideration of approximately 5.1 million. Our cash flow and capital situation will allow us to participate with opportunistic repurchases through the NCIB looking ahead.

Turning to slide 13, I’ll turn it back over to Blake to wrap up today’s call.

Blake C. Goldring

Thanks, Bob. AGF continues to make progress against our stated objectives. Along those lines, I’d like to share our primary goals for 2016. One, sustain improvement in our investment performance and processes; two, drive gross sales through retail product development and strategic partnerships; three, create an action plan to take advantage of the capabilities that have Highstreet and FFCM, so launch product into the ETF and liquid alternatives markets ;four, continue the development of our infrastructure platform.

The acquisition of FFCM provides us with what could be a strategically significant capability given the growth opportunity of ETFs and the other institutional capabilities that it can bring to our organization. Along with our alternatives platform, these are important areas of business, as we build out a diversified asset management platform. In order to better leverage these investments and the future opportunity it presents to the firm, I’ve ask Bob Bogart to transition from Chief Financial Officer to the role of EVP, Head of Corporate Development. In this capacity working with the executive team, Bob will look to build out these platforms as well as identify and assess other opportunities for growth at AGF. In connection with this change, I’m very pleased to announce that Adrian Basaraba will be promoted to CFO of AGF Management Limited effective July 1, 2016. Over the decade that Adrian has been with the firm, he has proven to be a very capable and trusted partner that has in-depth familiarity with all aspects of our business and has been an integral part of our senior leadership team. He is also well known to the analyst community. I want to thank everyone on the AGF team for their hard work and kind of results we’ve achieved in 2015, and I’m excited to accomplish more in 2016.

We’ll now take your questions. Thank you.

Question-and-Answer Session

Operator

Thank you. We will now begin the question-and-answer session. [Operator Instructions] And our first question comes from Gary Ho from Desjardins Capital. Gary, please go ahead.

Gary Ho

Thanks. First question, I guess perhaps Kevin or Blake, you started progress on the retail redemptions this quarter; you mentioned performance as well. Given the market volatility post the quarter, can you -- I know you elaborated a little bit on this, but can you give us more color on how flows are holding up and perhaps a look for the RSP [ph] season? Thanks.

Blake C. Goldring

So from say December to frankly yesterday, we’ve actually seen increase in overall gross sales 5%. So, that’s in volatile period is pretty great. We’ve also seen a drop in overall redemptions by 21% which given the overall market, just in December alone, net sales were I believe a year ago 2 billion and this last year, they were 1.1 billion, so in fact they are about half. So, I’d say that we’re tracking really well in the first two months of this year.

Kevin McCreadie

Yes, Gary, it’s Kevin. On just how we held up -- we had the month of December which was pretty volatile. For December, we were probably -- 63% of our assets were above the median with probably 42 of those in the first quartile. So, too early to in January but we’re pretty comfortably and above the median there as well year to date. So, I think just based on the performance that we’re having there I think it is good as we could have expected.

Gary Ho

And sorry, just going back to those numbers, the plus 5% and the drop in redemption 21%, those are I guess after the quarter; was that referenced…

Blake C. Goldring

That’s correct.

Gary Ho

And then I guess the other question I guess for Kevin, on the restructuring charges. I think you mentioned you guys are mostly behind the firm right now. I just wanted to get your thinking, I think you mentioned around roughly 80% was where you guys were at last quarter. Give us some color how you feel about the current team whether it’s on the sales side or on the PM side.

Kevin McCreadie

I think you’re referencing, Gary, the 80% done last quarter. So, I think as I said, there was a -- that we talked that the heavy lifting behind restructurings on the investment side is behind us. So, I think we’ve consolidated teams which I have a lot of confidence in. Our global team, we’ve reinvested in our North American teams, we’ve reinvested and we just got a new APM in behind Peter Imhof. So, I think that we really got the right global talent and the right team in process now. So, I feel pretty good about that but as I’ve noted in the past, we’re in the talent business so we constantly have to keep looking at how we can improve.

Gary Ho

And then maybe just lastly for Bob, congrats on your new role. Can you expand on what you plan to accomplish? It sounds like you’ve got a lot of hats to look after; so there is FFCM, the alternative platform, private client, any color you can share with us?

Robert J. Bogart

Sure, Gary, a little bit. It’s obviously early days, so I won’t be too specific on the plans but with respect to FFCM, I can tell you that we’re really excited about that capability that we’ve acquired in addition to what Highstreet has been diligently developing over the past several years on an internal basis and then jointly bringing that capability to market. I’m sure as you’re undoubtedly aware the ETF market is quite large and growing. Global ETF market is just under 3 trillion, of which 2 trillion resides in the U.S. space where FFCM has got a presence. And within that 260 billion is in the alternative ETF space. So, there’s just a terrific opportunity for us to grow that asset south of the border.

That said albeit the U.S. is our immediate attention, we’ll also be looking to focus on the development of new product in Canada with, again with the Highstreet and FFCM team to bring risk managed products or our ETF managed strategies to the Canadian marketplace. With respect to the alternatives side, the immediate focus is to get the fund launched which will happen as Kevin mentioned imminently and then start to understand what the second leg of that platform will look like. And so, we’ll put some effort against that in 2016. So, those are kind of high level priorities that I’m envisioning.

Operator

And our next question comes from Graham Ryding from TD Securities. Graham, please go ahead.

Graham Ryding

Thanks. Maybe I could just follow on from -- Bob, you are just talking about launching products around FFCM and Highstreet. Should we think about those as likely ETF products or would those be similar to your U.S. sector class where it would be a mutual fund product based on ETF?

Robert J. Bogart

It will be a combination of all of that, Graham. In the U.S. it’ll be -- as I mentioned we’ll be more focused on in the short-term managed strategies. Those managed strategies utilize third-party as well as internal managed ETFs and there’s a [indiscernible] in wealth management space to leverage those products within that market. But it’s -- a lot of it is too be determined up here in Canada but all that is on the table.

Graham Ryding

And then it sounds like you’re pretty far along with the -- or getting close to the first close of the Essentials Infrastructure Fund. Am I right that you are pretty confident that this is actually going to close in Q1, and is there any update on the size that you’re expecting the first close to be?

Blake C. Goldring

Yes, we’re very confident. The thing is that we’ve taken our time with this because it is a very obviously truly important; we want to get total pedigree clients well known, international partners in this first close. And when we do finally get this done, in the very near future, you’ll see that and appreciate why we’re taking a little bit more time. And of course that reset is up for a nice close on our second close. I can tell you that and the estimates that we’ve talked about before we would be clearly at the high end of those estimates.

Graham Ryding

And Bob, you talked about the second leg. Are you referring to a second close of this fund or are you talking about moving into other asset classes in the alternative space?

Robert J. Bogart

It would be a second fund underneath the platform that I was referencing.

Graham Ryding

And then just one last quick one if I could. The fund performance is clearly taking a nice step upwards in particular from December to November. I’m just wondering is that entirely related to fund performance and sort of the trailing dynamic or is there any sort of fund mergers that may play there?

Blake C. Goldring

Yes, we did do some fund mergers early on in the year but that really has not impacted the weightings of our assets above median. The performance has improved. I mean I think we’ve got some solid teams. Recent Morningstar, we get the changes every month, Of the 26 funds that got changed, 24 upgrades, 10 of those were in four and five star fund. So I think the team work has shown itself, we have got to keep doing that. But yes, it’s been more about driving performance, not for mergers.

Operator

And our next call comes from Tom Mackinnon from BMO Capital. Tom, please go ahead.

Tom Mackinnon

Just couple of questions here, just given the increase in market volatility over the last couple of months with respect to the institutional business. Is there any way we could get maybe a breakdown of what the emerging market proportion of the institutional business is and -- because that seems to give you some sort of volatility in terms of your pipeline?

Kevin McCreadie

Yes, we called that out on a Q3 call that I was concerned about the asset class. It wasn’t really going -- ever be about our performance. I think when people decided to take risk out of an asset class, everyone is going to feel the pain. And you saw the EM, as an asset class and the entire industry took about a $62 billion redemption last year. So, my concern is probably well founded. EM represents a probably about a 1 billion of our total AUM but that’s spread across retail, which we think has been pretty strategic accounts which have been pretty sticky. Two or three largest clients, I think we feel pretty comfortable with. I saw them in November and in fact one of them actually reallocated some more money toward EM. So, it’s going to be a source of volatility potentially this year. But it’s not about performance; it’s really about people’s appetite to the risk. I’d say the other issue about market volatility is and I think Blake mentioned this, a lot of our clients we sell through sub-advisors. And the fact that those folks are hopefully getting good advices, doing the right thing and staying in that may leave it in a little stickier place on a retail business.

Tom Mackinnon

Okay, thanks. But you can’t split -- you said 1.8 in total EM but you can’t split that into retail and institutional, but would the bulk probably be in institutional?

Kevin McCreadie

It’s about 600 million retail, 1.2 billion institutional.

Tom Mackinnon

And just a question really on Smith & Williamson if you will, like I thought this business a little bit seasonal in the fourth quarter, may have been slightly higher in the seasonality. It just seemed to be -- what are some of the thoughts in terms of how we should be looking at earnings coming out of this thing going forward?

Robert J. Bogart

Smith & Williamson, as you know, the wealth manager and like our business is going to suffer the volatility as the primary driver of its revenue is management fees. But in addition, the firm is making some strategic investments in building out its business, its brand awareness in the local market and trying to develop a pool fund business, in addition to its private client base. So, while we expect this to deliver long-term increases to the firm’s earnings performance, we should hopefully see a little bit of reduction in its contribution over the next four quarters. So, 2.5 is our estimate on a quarterly basis, that’s what we’re thinking at the current currency exchange.

Operator

[Operator Instructions] And our next question comes from Scott Chan from Canaccord Genuity. Scott, please go ahead.

Scott Chan

Just going back to FFCM, and obviously you have assets down there already. What is the -- if I think out like three years, what is the bigger opportunity that the U.S. or developing something in Canada with new products and perhaps overlaying this product into some of your managed solutions?

Blake C. Goldring

Well, just in terms of our attention, Scott, it will be on both. So, we’ll have a North American view. Obviously the size of the U.S. market is, order of magnitude, bigger than the Canadian. So in percentage terms, we think we can make a lot of progress in Canada as well as the U.S.

Scott Chan

And just on your NCIB, you’ve been pretty aggressive last two fiscal years. How should we think about that in the context of the current stock price and your capital position right now?

Blake C. Goldring

Scott, I guess the situation is that we’d like to return real benefit to our shareholders through obviously a healthy dividend as well as buybacks and reinvestments in our business. So, I think at this point, we will obviously be available opportunistically to invest, to buybacks shares and that thought hasn’t changed.

Operator

And it appears we have no further questions at this time. I would like to turn the call back over to the speakers for any final remarks.

Blake C. Goldring

Thank you, operator. Thanks everyone for joining us on today’s call. Our next earnings call takes place on March 23rd when we review our results for the first quarter of 2016. Details of the call will be posted on our website. Finally, an archive of the audio webcast of today’s call with supporting materials will be available in the Investor Relations section of our website. Good day, everyone and thank you.

Operator

Thank you, ladies and gentlemen. This concludes today’s conference. Thank you for participating. You may now disconnect.

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