Sprott's (SPOXF) CEO Peter Grosskopf on Q4 2015 Results - Earnings Call Transcript

| About: Sprott Inc. (SPOXF)

Sprott Inc. (OTCPK:SPOXF) Q4 2015 Earnings Conference Call March 11, 2016 10:00 AM ET

Executives

Peter Grosskopf - Chief Executive Officer

Kevin Hibbert - Chief Financial Officer & Corporate Secretary

Analysts

Gary Ho - Desjardins Capital Markets

Graham Ryding - TD Securities Inc.

Aram Fuchs - Fertilemind Capital

Scott Chan - Canaccord Genuity

Operator

Good morning ladies and gentlemen and thank you for standing by. Welcome to Sprott Inc.’s 2015 Annual Results Conference Call. At this time, all participants are in a listen-only mode. Following the presentation, we will conduct a question-and-answer session. Instructions will be provided at that time for you to queue up for questions [Operator Instructions]. As a reminder, this conference is being recorded today, March 11, 2016.

On behalf of the speakers that follow, listeners are cautioned that today's presentation and the responses to questions may contain forward-looking statements within the meaning of the Safe Harbor Provision of the Canadian Provincial Securities Law.

Forward-looking statements involve risks and uncertainties and undue reliance should not be placed on such statements. Certain material factors or assumptions are implied in making forward-looking statements, and actual results may differ materially from those expressed or implied in such statements.

For additional information about factors that may cause actual results to differ materially from expectations and about material factors or assumption applied in making forward-looking statements, please consult the MD&A for this quarter of Sprott's other filings with the Canadian Securities Regulators.

I would now like to turn the conference over to Mr. Peter Grosskopf. Please go ahead, sir.

Peter Grosskopf

Thank you, operator. Good morning everyone and thanks for joining us today. On the call with me today is our Chief Financial Officer, Kevin Hibbert. For those of you who have not met Kevin he took as CFO late last year and we’re pleased to have him joined for his first earnings call.

Our 2015 annual results were released this morning and are available on our website where you also find our financial statements and MD&A.

I will start on Slide 3, with a quick overview of our 2015 financial results. Despite the extreme weakness in natural resources markets our AUM increased by $400 million on the year to $7.4 billion. This figure does not include approximately $1.1 billion in AUM gained through the successful completion of the Central GoldTrust exchange offer in January 2016, which subsequently increased our AUM to $8.5 billion.

Our adjusted EBITDA was $0.07 per share and we recorded a net loss of $0.16 per share due mostly to a $28.5 million goodwill write-down related to our acquisition of the global companies four years ago. In 2015 we recorded $9 million and mostly energy related loan loss provisions relating to our resource lending book, which I will cover in more detail later in the call.

Our balance sheet remains strong with more than $300 million in invested capital down from approximately $330 million at the end of 2014, which I’ll also cover in more detail later in the call. Over the past four years we've invested in nearly every aspect of our business to position the firm for future growth, while we are not satisfied with our financial results our recent financial results, we believe that the fourth quarter of 2015 mark the turning point and we expect particularly given the recent market events that Sprott is on a positive trajectory going forward.

On the next slide as you all know over the past four years we hired new portfolio managers and business leaders, we built a more diversified fund lineup and we expanded our exchange listed offerings. We also put in place a more experienced sales and service team for both our retail and institutional clients.

Our active resource strategies have been completely retooled and are now delivering better investment performance. The early results of our efforts have been positive and helped us to generate AUM growth and positive net sales in 2015. This trend has strengthened and continued into early 2016 and we’re particularly enthused by our recent year-to-date sales and investment performance.

Turning now to Slide 5, for a look at Sprott asset management. Under John Wilson’s leadership SAM has emerged as one of the fastest growing alternative asset managers in Canada. Sprott Asset Management has refocused its product line up on highly differentiated hard to replicate strategies and now offers its clients investment solutions they can't get anywhere else in core areas.

We’ve invested more in sales and particularly marketing in order to rebrand the business and deepen SAMs invest advisor channel penetration. We continue to expand our enhanced products franchise which now has total AUM of more than $1.3 billion. In 2015 we hired Dennis Mitchell and launched four new funds in large addressable core markets for Dennis, he is one of Canada’s best known portfolio managers with the large retail following and early sales of the strategies have been promising. SAM has established itself as a Canadian market leader in specialty credit products and we will continue to build out this product line in 2016.

On Slide 6, you can see how dramatically the composition of SAM’s AUM has shifted since 2011 when more than 90% of our AUM was invested in precious metals. Since that time, we successfully transitioned most of SAM’s active AUM from legacy funds to new diversified strategies and new precious metal strategies which are just now beginning to achieve the scale needed to deliver meaningful profitability. In addition to our active strategies, our exchange-listed products franchises return to growth.

And so now on Slide 7, the Central GoldTrust transaction increased the scale of our physical trusts, and importantly increased investor interest as moved both of our gold and silver trust premiums to their net asset values. Our two gold miners ETF's are performing well as precious metal sentiment improves. And we expect to launch additional ETF products before the end of 2016. One of our main priority for this year is to attract AUM to our next-generation resource strategies most of these funds outperform their benchmarks in 2015 and our active resource strategies are up by an average of 30% year to date.

I’ll now pass it over to Kevin for a review of our 2015 financial results.

Kevin Hibbert

Thanks Peter, and good morning everyone. I will start on Slide 9 with a look at our AUM roll forward. AUM as of December 31, 2015 with $7.4 billion which was up $400 million or 6% compared to December 31, 2014 and was largely flat to September 30, 2015. The increase in AUM on a year-over-year basis was due to a combination of good sales momentum in our mutual funds and exchange-listed products. We also benefited from foreign-exchange gains in our bullion fund products, which were partially offset by market value depreciation across the most product lines as well as redemptions of our bullion fund.

Average AUM for the 3 and 12 months ended December 31, 2015 was $7.6 billion, up slightly from the prior year. As Peter mentioned, the successful closing of the Central GoldTrust transaction added another $1.1 billion to our AUM in January.

Moving on to Slide 10, you will see a breakdown of our full-year revenues for 2015. Management fees were $75.3 million reflecting a decrease of $3.1 million or 4% from last year as a result of lower AUM from our private resources businesses in both the U.S. and Canada. Commission revenues were $7 million for 2015 down from $7.8 million last year. That decrease was largely due to reduced private placement activity in our U.S. brokerage business in the global segment.

Interest income which is driven primarily by the performance of our loan book was $18.7 million reflecting a decrease of $1.5 million or 7% from last year. The decrease was primarily due to lower average loan balances on the year. We recorded a loss on proprietary investments of $9.8 million for the year with the majority of the losses stemming from an impairment charge on a seeded energy asset, market value depreciation in certain seeded fund investments and certain equity holding.

Other income for the year was $25.8 million reflecting an increase of $14.4 million from the prior year. The increase was mainly due to strong foreign-exchange gains on translation of U.S. dollar-denominated cash receivables and loan balances and the generation of royalty income on energy assets held in our proprietary investments.

Turning now to Slide 11 for a look at our expenses for the year. Total expenses for the year were $157 million compared to $96.5 million last year. The increase was primarily due to impairment charges on goodwill and intangible assets as well as loan loss provisions recorded during the year. As you can see, we recorded impairment charges of $43.8 million primarily from the write-off of goodwill in our global segment, which houses our U.S. businesses, and the write-off of an energy-related management contract in our consulting segment.

Loan loss provisions were $9.2 million for the year reflecting an increase of $8.7 million from the prior period. The increase was primarily the result of higher specific loan loss provisions on resource loans and a new general loan loss provision of $1.2 million that was taken across the loan portfolio to reflect the credit risk associated with the ongoing global resources sector decline.

Other expenses were $8.6 million for the year reflecting an increase of $8 million from 2014. Other expenses consist of two things. First, operating expenses, depletion, and impairment charges incurred in certain seeded energy assets held this part of proprietary investments. And second, costs associated with the silver bullion trust exchange offer that were expensed on expiry of that offer.

SG&A expenses were $27 million reflecting an increase of $4.3 million or 19% in 2015 due primarily to higher marketing technology and fund related operating costs in our SAM segment. Total reported compensation and benefits was $38.1 million in 2015 reflecting a decrease of $1.5 million or 4% from the prior year. The decrease was due to lower discretionary bonus resulting from year-end bonus adjustments and lower year-over-year cash-based earn-out obligations in Sprott Toscana as that entity reached the end of its vesting period.

Finally, turning now to Slide 12, you will see a full reconciliation of net loss to adjusted base EBITDA. Our net loss for the year ended was $39.6 million or $0.16 per share compared to net income of $19.4 million or $0.08 per share in 2014. Adjusted base EBITDA was $16.6 million on a full-year basis reflecting a decline of $16.9 million or 51% from 2014. The decline in adjusted base EBITDA was largely due to lower management fees, interest, and commission income coupled with the specific loan loss provisions taken during the year.

That said, I will now pass it back to Peter for some closing remarks.

Peter Grosskopf

Thanks Kevin. So on Slide 13, we've given a snapshot of our current capital position. We continue to enjoy a strong balance sheet. Invested capital stood at $309 million reflecting approximately a $34 million or 10% decrease from last year. And I just wanted to walk you through the main drivers in 2015 of that capital book decrease, so the first one was the small shortfall and our operating cash flow compared to our dividend.

The second was our investment in the Central GoldTrust transaction. Third would be prop book losses, which I should mention that subsequently rebounded. Fourth would be loan loss provisions and then offsetting that a partial offset was FX gains and interest income and the FX gains related to our U.S. dollar position, which for us is relatively permanent.

Turning now to Slide 14, we thought it would be valuable on today’s call to spend a bit of time on our loan book. The current balance sheet value of our loan book is just over a $100 million. As we’ve noted, during 2015, we believe we were proactive and got in front of extremely difficult resource market conditions by taking a $9 million loan loss and provisions in order to stay ahead of potential credit risk. $4 million of these provisions were related to an energy loan, which we have the low expectation of recovery and the remaining $5 million is related to loans where we have better recovery prospects. Fortunately, the provisions that we have recorded in 2015 were largely offset by FX gains on those loan positions.

On Slide 14, we have categorized the loan book in a number of different ways including by geographic location of the security and by maturity. I would note that despite the breakdown by industry group 75% of our loan book is extended to mining industry borrowers. After taking these proactive measures, we are confident in the credit quality of our remaining loan book and that credit quality is solid.

So going to 2016 outlook on Slide 15, SAM has now been repositioned and is now one of Canada's fastest growing alternative asset managers. We believe that the bottom has finally entered precious metals and both are actively managed precious metal strategies and our exchange listed products are well positioned to benefit from a recovery and performance and investor interest.

With the GPU deal and strong investment performance year-to-date our AUM has increased from $7.4 billion at the end of 2015 to close to $9 billion as of today’s call. We are focused on adding new institutional AUM in 2015 and these efforts are supported by senior sales professionals we’ve added in New York and London. We see excellent opportunities to seed new alternative funds along with new clients, which can be run from our existing platform.

After a tough 2015 we would note that the proprietary investments portion of our capital has generated year-to-date returns of approximately 30%. We will focus and will contain our costs during 2016 and streamline some of our subscale strategies and business units.

That concludes our prepared remarks. We will now open the call up for questions. Back to you operator.

Question-And-Answer Session

Operator

Thank you. [Operator Instructions] Our first question comes from the line of Gary Ho with Desjardins Capital Markets. Your line is open. Please go ahead.

Gary Ho

Thanks. Good morning. Thanks for the additional color on the loan books. I have one more question. Can you give us color how you came up with the general provision of the $1.2 million? Was that under a stress scenario or a specific price deck how should we think about that?

Kevin Hibbert

Right. Thanks for that question its Kevin here on the line. So the just a sort of step back the - there is two provisions you make the specific and the general. When you are dealing with the general provision, you are generally doing that when there is no specific indicators of credit risk in that particular area of the portfolio.

The numbers that we came up which were fairly low because the overall loan book is about 15 loans as you know. And so you should have the ability to identify where the specific credit risks are. So when you step back and identify all the specific credit risks in the portfolio you're really left with not that much risk left over to identify in a loan portfolio of our size. So the million that we have is really indicative of just the general provision to cover any risk that we may have missed on a specific level and we think $1 million is about the right number.

Gary Ho

Okay, perfect. Thanks for the color there. And then maybe Peter given the run in precious metals over the past few months are you seeing corresponding uptick in terms of sales into your strategies. Can you elaborate on that as well?

Peter Grosskopf

Well, yes, so a few different points. First of all Bullion Trust as I mentioned they’ve gone to premium. So that opens up growth for them again and it's pretty significant the volumes there pretty significant. Second the ETF’s have certainly generated some interest and some creations in the last month.

Thirdly precious metal active funds and despite the great performance investors are a little slow to return to the sector, so there's been some inflows. But they’ve not been massive. I just think it takes time to gain momentum and people are worried that perhaps they’re going to get in at the wrong point and will be facing a pullback. So actually think a pullback would be good for sales.

And then lastly institutionally there's absolutely no question that with negative interest rates globally institutions are looking at gold in a very, very different way than they did in the last five years. So we are seeing the pace of institutional presentations picking up, significantly and I would be really surprised if we weren’t able to capitalize on that in the near future.

Gary Ho

Great. And then just maybe touch on the other stuff so on the profits that’s managed by Dennis Mitchell's team how is the traction been since launch and kind of versus your expectations. And can you size up how much those funds are currently.

Kevin Hibbert

I think the total of the funds you know I am just aggregating here is probably less than a $100 million currently. But the fund launches in my experience are always slower than you expect them to be. A manager of Dennis's stature you know you would think you would be in the multiple hundreds of millions right away. But money is difficult to move and these days investors are careful enough that even if they know the portfolio manager.

They don’t always subscribe at the first meeting that takes a while to move money. So based on monthly sales from what I've seen I'm quite impressed in terms of the investor response it looks like it’s coming in daily now and it would be about where I would expected to be. So Dennis is in very large categories he's got a very large following this is about exactly what I would have expected.

Gary Ho

Great. And then maybe just last question for Kevin. On the SG&A is the current quarter's run rate $7.9 million or so. Is that a good number for 2016 to use?

Kevin Hibbert

No. I would say that this past year was very much about reinvesting in key areas of our business. There was a rebranding and repositioning of SAM in particularly and also some investments we engaged in as far as creating some next-generation products, we feel will do pretty well for us, when there's an eventual recovery in the resources space. So I probably would not rely on that number as indicative of what you'll see going forward this year. But I am not prepared to give any specifics at this time unfortunately.

I mean we did spend - we spent significant dollars on the rebranding and we spent significantly on those precious metal strategies and launches and the ETF products those expenses just won’t be repeated and will be borne by higher AUM on the funds themselves.

Gary Ho

So the marketing in the IT piece that was mentioned I think in the MD&A those won’t be repeated?

Kevin Hibbert

So marketing spend there we were still in the process of the rebrands that you could still see a bit more spend there on the technology side that's really captured as part of a broader cost-containment plan that I am leading that Peter alluded to earlier. So there is just going to be a little bit of ins and outs and offsets a little bit of noise if you will in that SG&A line such that I can't really confirm right now how that number would look but certainly what you've seen in 2015 is not what we’d expect as a longer-term run rate that's for sure.

Gary Ho

Okay, perfect. That’s it for me.

Operator

Thank you. And our next question comes from the line of Graham Ryding with TD Securities. Your line is open. Please go ahead.

Graham Ryding

Good morning. Maybe I could focus on there was some talk in your presentation in the MD&A about new ETF launches later this year and also focusing on U.S. expansion. So on the first just maybe some detail around what you're looking at on the second part? Your U.S. expansion should we think that as focused around your existing products or you referring to launching new institutional products to grow in the U.S.?

Kevin Hibbert

Thanks for question Graham. So on the ETF's we do want to stay focused on our niche and we are not going to have a very broad lineup but one or two additional launches is what we’d expect and see good prospects there. And then on the U.S. expansion, it's very much around existing products. We have and more probably take our U.S. sales channels and focus on AUM generation and I mean by that I mean both on the institutional side, retail broker dealer channels and we have our own assets under administration through the global resource franchise that we will probably take more into AUM over the next year or year and a half.

Graham Ryding

Okay. Great. And do you have an institutional product to sell in the U.S. right now?

Kevin Hibbert

Yes, we have our new precious metal strategy and a fewer products are what I call institutionally qualified. So those will be packaged in usual LP formats for interest in face we had one subscription in January for one of the enhanced funds and enhanced long-short that was - we haven’t drawn down a lot of the commitment so it’s not really in that AUM number I quoted, but it's a $50 million, leadoff order for that strategy, so it's both in diversified and resource strategies.

Graham Ryding

Okay, great. And then maybe jump into the loan books. I appreciate the color you provided. The impairment that you took this quarter on the specific side just maybe a little bit of color was that one loan or was it a group of loans. And I believe you’ve got two loans that are in second positions just wondering what your comfort is around those loans going forward?

Peter Grosskopf

Yes, I don’t know that we have any loans left on the books in second positions, okay, I’d have to come back to you on that, I don’t think that’s the case so our loan book is - are senior secured. As Kevin mentioned, the general is kind of super stress for credit market conditions, you haven’t seen anything, you're just kind of cleaning up to make sure that in case something happens in the future you are covered. And general aren’t encouraged by auditors, we tried to press them hard to go as high as we could and that’s the subject of audit.

For specifics what we try to do is really, really stress test each loan for worst-case scenarios and range of outcomes and all the rest of it given how poor credit market conditions got. So that's what we came up with and that’s the best - and we hope to do better than that. We hope to get full recoveries on those loans, but we wanted to be realistic.

Kevin Hibbert

And Graham, Kevin here. I see where you're - way you’re asking about the second secured under the - I assume you are looking at the priority of security charges section of Note 6.

Graham Ryding

Yes, Kevin I remember where I got it from, but I just saw some footnote around the breakdown of your outlook.

Kevin Hibbert

Yes. Okay, so we’ll - I’ll circle back with you after the call to give you a little bit more color around that.

Graham Ryding

Okay, great. And then just with your outlook for the loan book overall you are comfortable with the recovery year to date in the resource space, so you are comfortable sort of continuing to add new loan to the book or what’s your outlook for the overall portfolio?

Peter Grosskopf

Yes. So there has never been a better time to be in the resource lending business, the deals that we are seeing now are I think - it's just a very good time to be a resource lender, you're getting very senior secured packages on very good projects with very good upside. So we are committed to the strategy. We think the book is adequately provisions and we are in the progress and I’ve said this for a number of quarters, but we are actually in a closing progress for a side per fund, so we think that business will actually grow, but that our balance sheet commitment does not need to grow.

Graham Ryding

Great, thanks.

Operator

Thank you. And our next question comes from the line of Aram Fuchs with Fertilemind Capital. Your line is open. Please go ahead.

Aram Fuchs

Yes, like you said it looks like we’ve turned the corner here in the precious metal market that you have taken out on of your biggest competitors and this Bullion Trust business is really - one of the few businesses that can be seen as perpetual. And I was wondering if you can look at your loan book and look at great opportunities that you have an independent third parties, but isn’t that is a good time to be buying back your own shares, it seems like if the corner is turned and the cash distributions are increasing [indiscernible] balance sheet to a stock buyback?

Peter Grosskopf

Hi, Aram it’s a good question and thanks for putting me on the spot about it. I mean we have a lot of capital and we have options with that capital and we have a very strong dividend rate. And the questions gets debated all the time between the excellent opportunities to seed new funds and do things like the Central GoldTrust transaction, which there are more of them available now than at any time that I've seen in the last five years. So on the ground money that you can get very attractive rates of return on versus buying back our stock, which again we think we would be buying back at below intrinsic value versus paying a dividend which is important to some of our shareholders.

It’s a debate and when do we step on a buyback versus our organic growth opportunities. I can tell you we are looking at a couple of things right now were we just wanted to keep dry powder at the Company level and we will always have that option and we appreciate that it would be a sign of support for the shareholders and be very good for us, but we decided not to go ahead with it at this quarter, it's constantly reviewed. That’s all I could say about it and I’m sorry.

Aram Fuchs

Okay, thanks. That’s fair enough. And the Asian business, you had previously described that sort of a toe in the water in Korea and China, you didn’t bring it up this call, is it fair to say that it’s sort of in that incubation stage or maybe you can give us an update there?

Peter Grosskopf

Yes, it’s been slower than expected so we did get those leadoff orders, we do have a decent chunk of AUM there, we do make some positive EBITDA contribution as we do in almost all of our resource businesses now, but it's certainly not taken off the way we thought it would. We are sticking with it. Those client relationships are long-term. New clients take a long time to develop.

There is no question in our mind that Chinese buyers are going to be the big swing factor in the gold market and we wanted to be first and we were first. And there's a price for being first and that’s that we were a bit early to get large AUM increases there, but that doesn’t mean we are stopping and those efforts are fully costed. It’s kind of like an upside option and I think it's a very important part of what we could develop on the institutional side for AUM.

Aram Fuchs

Okay, great. Thanks a lot. Those are my two questions.

Operator

Thank you. And I am showing a follow-up question from the line of Graham Ryding with TD Securities. Your line is open. Please go ahead.

Graham Ryding

Just one more on the - you mentioned about streamlining subscale strategies, have you made any decisions in this area or is it just something that you are looking at going forward?

Peter Grosskopf

No decisions, it’s tough because in some of those strategies we see potential and one always thinks that you're just around the turning point where they can become more economic. Most of what we are talking about does not cost us any money, so it's not as though we are pressured to rationalize a big cost item, but we do want to focus and we’re well aware of the fact that our size and not the strategy can grow to $500 million, it’s not worth us running for the most part. So you do have to make tough decisions and we are going to continue to prune the lineup on some of our resource strategies in particular. We have some inefficiencies that we will be correcting in the next call it 3 to 6 months.

Graham Ryding

Okay, thanks. And just some color maybe that you are pretty constructed net sales this quarter, maybe what were the influence on the mutual fund side also the alternative investors platform?

Peter Grosskopf

On both the 3 and 12 months ended basis most of the net sales in the mutual funds space that are coming from John Wilson’s enhanced fund product. In Q4, we saw a little bit of momentum coming from Dennis Mitchell’s focused funds and on the alternative side it was our bridging funds and then there was a little bit on the ETF side as well, both the STDJ and STDM.

Graham Ryding

Great, thank you.

Operator

Thank you. And our next question comes from the line of Scott Chan with Canaccord Genuity. Your line is open. Please go ahead.

Scott Chan

Good morning guys. Kevin just on your comments just on the retail flows, is that you guys put in that legacy asset chart, I know the legacy assets are down a lot from past periods, but how do you think about those products in terms of CRM2 its high cost fees and its performance issues going forward. It just seems that those assets continue to decline I was wondering if there is any strategic review on what you are thinking on those.

Peter Grosskopf

Scott, its Peter, thanks. So it has to do with the streamlining comment that I just answered. It’s always tough. The couple of those products are still pretty strong competitors. They are all very differentiated. So none of those products are benchmark products that people can get elsewhere for lower fees. I've maintained from the start that based on how volatile our performance was on those products.

It’s kind of like talking about our brushfire after you just went through a forest fire to justify fees, but we all do have to do it. And the one answer that we have is in every case we've invested a lot, bringing new portfolio managers and with a discernible plan to add value.

So it’s early days for us to prove our work we are all the fund companies on the independent shelf in particular have to prove our work. But we’re not thinking it’s a big factor in our business. We’re not feeling a big push from lower fees, we know a couple of our competitors that are kind of have more prolific benchmark products that had to react and I do think in general the trend on fees is down but it’s not going to be a major thing for us.

Scott Chan

Okay. And on the resource credit side, did I miss this; did you give an update on the status of the credit fund on that platform?

Peter Grosskopf

Yes, we do plan on closing the first tranche of a credit fund in this quarter.

Scott Chan

This quarter, okay.

Peter Grosskopf

Meaning, sorry Q2.

Scott Chan

Q2, okay. And I was told that you cut your dividend. But you didn’t cut your divided. Did you?

Peter Grosskopf

No.

Scott Chan

No, okay. There [indiscernible] that you guys cut your divided $0.03, but I didn’t, [indiscernible] anywhere, but on that note, how committed are you to that dividend and over the last two quarters are tough year to date it seems like it’s a lot better for you. Are you comfortable with your dividend right now?

Peter Grosskopf

Yes, well that’s part of the question I answered before for Aram. We have a strong balance sheet we do have operating cash flow even that we weren’t happy with last year. But that we think will grow this year. And so for us the choice is buyback dividend or invest in our business through new funds and at current levels our dividend is fine. The difference is between that and our operating cash flow was fairly small and manageable for last year.

And just in general we think our boats going to float higher this year. So we’re comfortable just maintaining as we are. And there is no stress on the dividend for us at all.

Scott Chan

Okay, very good. Thanks a lot guys.

Operator

Thank you. And I am showing no further questions at this time. And I would like to turn the conference back over to Mr. Peter Grosskopf, for any further remarks.

Peter Grosskopf

That concludes our remarks for today operator we’re happy to takes questions offline and appreciate everybody's time and interest. Thank you.

Operator

Ladies and gentlemen thank you for participating in today's conference. This does conclude the program and you may all disconnect. Everyone have a great day.

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