CatchMark Timber Trust, Inc.
Q4 2016 Earnings Call Transcript

Published: 17 Feb 2017

[Operator:]

Good morning, and welcome to the CatchMark Timber Trust Fourth Quarter 2016 Earnings Conference Call and Webcast. All participants will be in listen-only mode. [Operator Instructions] Please note today's event is being recorded. I would now like to turn the conference over to Brian Davis. Please go ahead, sir.

[Brian Davis:]

Thanks, Rocco. Good morning and thank you for joining us for a review of CatchMark Timber Trust results for full year 2016 and fourth quarter 2016 as well as the outlook for 2017. I am Brian Davis, the Chief Financial Officer of CatchMark. Joining me are President and CEO, Jerry Barag; and Chief Operating Officer, John Rasor. During the course of this call, CatchMark management will make forward-looking statements. These forward-looking statements are based on management's current beliefs and the information currently available. CatchMark's actual results will be affected by certain risks and uncertainties that are beyond its control or ability to predict and could cause our actual results to differ materially from our expectations. For more information about the factors that could cause such differences, we refer you to our 2015 annual report on Form 10-K and other reports that we file with the SEC. Today's presentation may also include certain non-GAAP measurements. Reconciliations of these measurements are included in our earnings release which is posted to our Web site. John Rasor and I will join Jerry to answer any of your questions after his presentation. Now, I turn over the call to Jerry Barag.

[Jerry Barag:]

Thank you, Brian, good morning everybody and thanks for joining us this morning. We have a lot to cover today, full year 2016 results, fourth quarter results, a dividend declaration and 2017 guidance. Overall CatchMark continues to present a compelling investment opportunity underpinned by a consistent strategy an approach to deliver superior risk-adjusted returns through operational excellence, sound acquisition of prime timberlands and well-timed sales. Yesterday's earnings announcement covered the high points. Operational highlights for the full year 2016 include increased total revenues by 18% year-over-year compared to full year 2015, increased adjusted EBITDA by 13%. Increased total harvest volumes by 21%, increased gross timber sales by 23% and increased our quarterly dividend by 6% compared to 2015. From a transaction standpoint during 2016, we acquired more than 81,900 acres of prime timberlands for $143 million and sold 7,300 acres of higher and better use timberlands for $12.5 million which meet our annual dispositions goal. Taken together, these activities increased total holdings to nearly 500,000 acres, an 18% increase over year end 2015 and then 80% increase since our 2013 IPO. We have now expanded operations into eight states throughout the U.S. South, well beyond our original Georgia Alabama centric holdings. For the fourth quarter, we enjoyed a similarly good year-over-year result. We increased revenues by 19% compared to fourth quarter 2015. Increased adjusted EBITDA by 4%, increased total harvest volumes by 17%, increased timber sales revenue by 20% or 21,500 acres of timberland for $29 million inclusive of closing costs. Completed timberland sales for the 1,000 acres for $1.8 million and paid a dividend of $0.135 per share to stockholders of record on December 16, 2016. Fourth quarter transactions including expanded our South Carolina and Alabama timberland holdings through the acquisition of 13,200 fee acres. These timberlands have an average merchantable stocking of 57 tons per acre which is well in excess of average timberland property. We also bought the leasehold interest in 10,668 acres that were well stocked in Georgia, simplifying the ownership of previously owned CatchMark property. This purchase gives us the right to harvest the property significant merchantable inventory for future income. The balance sheet with modest leverage provides ample liquidity and borrowing capacity of $174.3 million and $9.1 million of cash on-hand at year-end. Under the $30 million share repurchase program announced in August 2015, more than 309,000 shares were opportunistically repurchased during 2016 at an average price of $10.36. As of year-end, we had $20.8 million left to deploy in the program. From an operational standpoint, we were particularly pleased that we capably realized pricing about south-wide averages in all prime product categories and took advantage of higher pulpwood prices in managing our harvest mix. The strategic decision early in the year to accelerate planned timber sales volumes also paid off as we temporarily took advantage of supply constraints for pulpwood influenced by wet weather conditions in some of our markets. We continue to compare favorably to our peers and the industry in terms of harvest tons per acre and we continue to steadily improving our per acre inventory stocking through sustainable forest management practices and acquisitions of prime timberlands. Importantly, we're also able to integrate successfully our new acquisitions highlighted by the Carolina Midlands properties into our merchandising programs and realized significant gains in harvest volumes and delivery year-over-year. Looking at the fourth quarter and annual results with greater detail; for the quarter ended December 31, 2106, revenues increased to $20.4 million from $17.1 million in the fourth quarter of 2015 resulting mostly from a 20% increase in timber sales revenue driven primarily from the incremental harvest volumes realized on property required during the year. GAAP net loss increased to $4.9 million from $3.3 million for the fourth quarter of 2015 resulting primarily from a $1.1 million increase in interest expense due to higher average debt outstanding. For the full year 2016, revenues increased to $81.9 million from $69.1 million for the full year 2015 primarily resulting from a 23% increase in timber sales revenue. That $12.2 million increase resulted mostly from harvest volumes realized from properties acquired during the year. Timberland sales revenues increased due to selling more acres in 2016 from the larger land base and were still well within target levels of 1% to 2% of fee acreage. These sales registered lower year-over-year average sales per price -- price per acre as a result of CatchMark retaining harvest rates to approximately 113,000 tons of merchantable timber on the acreage sold which had an average book value of $2.6 million. GAAP net loss increased to $11.1 million for the year-ended December 31, 2016 from $8.4 million for the year ended December 2015 resulting primarily from a $3.1 million increase in interest expense due to higher debt average outstanding. In looking at adjusted EBITDA for the quarter ended December 31, 2016; adjusted EBITDA was $7.2 million, a 4% increase over fourth quarter of 2015, primarily due to an increase in net timber sales and an increase in revenue from the net timberland sales. For the full year end December 31, 2106; adjusted EBITDA came in at the higher end of company guidance totaling $36.5 million, a $4.3 million increase over full year 2015 primarily due to $6.2 million increase in net timber sales. Yesterday we also declared a $0.135 per share dividend for shareholders of record as of February 28, 2017 which will be payable on March 16, 2017. Of course consistent dividend payouts and the ability to grow our dividend overtime remain paramount objectives of management in our board and we plan to continue to deliver on this promise. And I think it's important to highlight that CatchMark's dividend is completely covered by cash available for distribution and at today's share price, CatchMark delivers a significantly higher dividend yield than our peers. For 2017, two major drivers should favorably impact CatchMark's year-over-year earnings. Realizing incremental harvest gains from the Carolina Midlands acquisition, as well as other recent timberland acquisitions; and increase in saw log demand from expected ongoing improvement in the nation's housing market. We continue to be optimistic about future market conditions underpinned by growing housing activity, both in new housing starts, commercial construction and repair and remodel activity. The housing market has demonstrated steady gains in housing starts while low unemployment and the prospects for rising wages should encourage continued home buying activity. Even if interest rates increase modestly as has been signaled by the Federal Reserve, it does not appear that mortgage rates will move up dramatically enough from near historic lows to chill activity. Having said that, the pricing outlook for saw logs and pulpwood remain somewhat restrained. But once again, we anticipate achieving pricing above south-wide averages because of our favorable locations in robust no markets. As market demand grows during the year, we plan to continue our progress towards improving our product mix closer to our goal of a 50-50 saw logs to pulpwood mix. For 2017, we are seeking to achieve a 40% to 45% harvest mix from higher profit margin saw logs. While our operations will stay focused on maximizing harvest yields in the short-term, we continue best-in-class forest management practices to meet the highest industry standards for sustainability and environmental responsibility; ultimately the foundation for CatchMark's long-term success. Our disciplined and highly selective approach to underwriting acquisitions will not change. We remain focused on buying premium well-stocked properties that are accretive to current cash flows and that can drive increased earnings per share but which also have characteristics to sustainably produce high volume harvests of merchantable inventory over the long-term. In summary, our key metrics are up; revenues, EBITDA, harvest volumes, and gross timber sales. Log prices remain a short-term industry challenge but we believe the mill markets in which we operate will be in the vanguard of price recovery as eventual increases occur. The overall economy and housing market appear generally favorable and supportive giving us confidence in the future. Our biggest acquisition ever, Carolina Midlands, has been an unqualified success. It's been integrated into our operations and it's moved us into excellent mill markets and new desirable customer relationships. Our operation remains focused on taking advantage of market opportunities and serving our strong customer base as we look to improve our harvest mix with a greater percentage of saw timber. As always, we remain totally committed to sustainable forest management practices that will help ensure long-term productivity from our timberlands. We will continue to be extremely disciplined in seeking new acquisitions and keeping with our long-held goal of assembling the highest quality timberland portfolio in the industry. This discipline and prudence should translate into the acquisition of additional wells properties with sustainable growth characteristics and long-term income generating potential. All of these factors position us to continue to generate significant cash flow which will be available to cover our dividend and grow the dividend overtime, all resulting in an increase in shareholder value. And the CatchMark team is very much looking forward to delivering an extremely solid 2017 for our shareholders. Thank you so much. Brian and John and I will now be happy to answer any of your questions.

[Operator:]

[Operator Instructions] Today's first question comes from Collin Mings of Raymond James. Please go ahead.

[Collin Mings:]

Good morning, guys. Just to start here, maybe you just talk about -- if you've seen your response from your customers due to the recent increase in lumber prices and just what are you hearing as it relates to your operations as it relates to the softwood lumber dispute?

[Jerry Barag:]

We're hearing a lot of anticipation from our customers for the market to be full of a lot of air so to speak as this things sorts out. And I know as you know, it really shut up over the last couple weeks. Our customers are looking forward to a settlement that appears to -- whether it's in terms of duties or quotas, that it's going to restrain Canadian lumber coming in and they are gearing up to be ready for that. So I think it's all favorable to us at terms of how it's going to pass.

[Collin Mings:]

I guess along those lines John have you seen actually an increase in demand yet maybe where some of the mills are looking to ratchet up for production just given how favorable pricing is?

[Jerry Barag:]

Not significantly but several of our customers are either finishing up or still in the process of some fairly major capital expenditure projects which is going to measurably pick up some production for us.

[Collin Mings:]

Okay, that's helpful. Then turning to just the acquisition pipeline and deal flow Jerry, just maybe touch on how the deal pipeline is here to start 2017 as a compared to a year ago. And then just remind us of kind of the capacity that you guys think you have for acquisitions without taking on some sort of JV partner?

[Jerry Barag:]

So it's a seasonal flow of acquisitions and this year has started probably a little bit slower in terms of deal presentation into the marketplace than last year did but based on what we have heard and what we have seen, that's going to belie the fact that it's going to be a pretty robust year for transactions again. And that's for both large, medium and smaller sized transactions as that appear to all be coming to the marketplace. So I don't think our ambitions will be inhibited at all by deal flow and the ability to find pipeline. With respect to capital availability, we have maximum capital availability to us today of about $175 million; and of that -- you know, realistically about $75 million to $100 million is what we would probably comfortably be looking to deploy absent any JV partners or additional non-diluted equity capital.

[Collin Mings:]

Understood. So I guess maybe along those line Jerry, to update us as far as the JV front; should we expect to see some terms or partnering out in advance of a deal or would it likely just be announced in conjunction with some sort of acquisition that you guys were partnering with someone on maybe a larger transaction that called that $75 million or $100 million range that you threw out?

[Jerry Barag:]

Yes. I would probably expect all of the above, okay. There is multiple avenues that we're going down and pursuing. And we're putting together this platform from a blank slate and it's a multi-dimensional kind of activity. And so I think you will see announcements around deals and more forward looking strategic alliances that give us the ability on a blind basis to look at transactions going forward.

[Collin Mings:]

Okay. Switching branch to a couple of modeling type questions and then I'll turn it over and jump back in the queue. But just as far as Brian, just as you think about your mix of floating rate debt, there has obviously been some upward pressure on interest rates. What are your latest thoughts about maybe fixing a little bit more of your debt?

[Brian Davis:]

Right. So calling to remember back in August we had this conversation, we executed another $45 million of fixed rate debt and that gave us $80 million at year end. We're in active conversations with our board right now looking to swap another $60 million to $80 million sometime during this quarter, that bring us to about 50-50 mix regarding floating to fixed rate. And on a net patronage basis our weighted average cost would be still under 3%.

[Collin Mings:]

Okay. So even giving effect to some sort of swap, you're still looking at sub 3% overall?

[Brian Davis:]

Correct.

[Collin Mings:]

Okay. And then I did want to follow-up just on the expenses during the quarter as well Brian, it does look like that -- I mean there was a jump in G&A, forestry as well as other operating expenses and recognizing obviously the larger asset basis, a component of that. Was there anything else unusual in the quarter or some other expenses that are flowing through; think about going forward?

[Brian Davis:]

Really there is two components; inside a G&A we had an increase of non-cash equity expense associated with our long-term incentive plan but that is an ongoing element to a year-over-year change but there is also that deal cost associated in the fourth quarter this year that wasn't as large last year, as well as expenses associated with their work towards a joint venture. As realized to other operating expenses, same thing with four or three management expense, that's really having more assets under management on a year-over-year basis. But inside of other operating assets and John can talk a little bit more about this; we had $361,000 charge associated with seedling mortality.

[John Rasor:]

You know, what we experienced in towards the Southwest Georgia and also in some areas in South Carolina was pretty severe drought which really laid in done entire almost -- most of the fourth quarter. And we were hoping that that might get some rain before it started raining. And the short story as we've got 1,182 acres that we're going to have to do some replanting on, the survival rate was just not good enough. We were certainly not alone in this but and it's been years since that there have been anything this severe. Properties in Alabama and other properties around us in Georgia, as well as South Carolina, everybody struggled with the same thing. We felt we came out fairly well and we'll have that taken care of here during the first quarter.

[Collin Mings:]

Okay. So basically this is the jump there and the other operating was -- a lot of that was kind of onetime associated with the seedlings. Is that the right way to interpret it?

[Brian Davis:]

That's correct.

[Collin Mings:]

Okay. And then as you think about 2017 guidance and I apologize if I missed this but how should we think about that G&A line item recognizing that I guess for all years; '16 came in about $9.3 million recognizing you're still kind pursuing some of those JV opportunities. What's a good range of thinking about that?

[Brian Davis:]

Right. As you know Collin, since our IPO we've been very focused on cost management. We've doubled our assets under management, tripled our EBITDA. So this is an area where we spend a lot of time on. We are budgeting an increase for next year about $1 million to $1.2 million but a majority of that is really driven by equity plan as it reaches its final year of a four year program, that's around about $2.2 million in G&A next year.

[Collin Mings:]

Okay. Alright, I'll jump back in the queue. Thanks guys.

[Operator:]

[Operator Instructions] Our next question comes from Dave Rodgers of Baird. Please go ahead.

[David Rodgers:]

Yes, good morning guys. I just wanted to follow-up one of your comments in your prepared remarks regarding kind of weather allowing you to kind of take advantage of some of the pulpwood pricing. I think sequentially pulpwood pricing overall was flat and I think year-over-year may be down just slightly. So I mean is the market remain that challenging for you guys where I guess taking advantage of weather is kind of just keeping you at that flattish mark; is that the way we should think about it right now?

[Brian Davis:]

Well, I'm going to let John weigh in on it but with 2020 hindsight, at the beginning of last year from a weather pattern standpoint, we had a very wet beginning of the year. And then through the summer and then into the fall, we had drought conditions. We had a pretty dry year. And so at the very beginning of the year we just looking out over things decided that as we were harvesting and getting requests in from mills with great pricing that we would just sell into that. And then place for bet that it wouldn't persist for the entire year and that turned out to be a good thing. And so you know, it's hard to talk about average prices because you know everything happens at a spot level and we have to look back over the year to see what the average prices were. And you know, at today's level it hasn't gotten wet again but we've got -- we've returned to more seasonal rainfall and prices have kind of stabilized in a range where we think they should be and we don't know that the same opportunity is there right at the second but we're going to continue to look for that over the course of the year and enhance our revenue capabilities as best as we can according to those weather patterns.

[John Rasor:]

And I would add to that. Of all pulp and paper mills in our operating regions are at variable inventories plus you've had two incidents; one was the IP [indiscernible] mill that had an explosion and just week or so ago PCA out of Louisiana had a tank explosion that they were working on during a scheduled mail outing. So both mills are running one line now rather than two, that would back some pulpwood up for a while but we'll work around that.

[Brian Davis:]

I mean the good news Dave is that because a lot of the pulpwood that we've delivered and distribute is done through supply agreements and long-term agreements. We're not having capacity issues; I mean we're able to distribute the pulpwood harvest that we want to distribute.

[John Rasor:]

And in some cases we actually deliberately shifted the pulpwood not like because of the favorable pricing but we're able to back off some saw timber volumes that we didn't really want to have to push into a market, it was already pretty full. So it worked out fairly well for us.

[David Rodgers:]

Okay, that's helpful. And then maybe on the acquisitions, I think Jerry talked about buying leasehold interest in the fourth quarter, maybe just a little bit more details on that and the breakout between that and the owned acreage that you acquired?

[Jerry Barag:]

Sure. So this goes back to the legacy property, the market property which actually appreciates a lot of things. I mean it goes back decades and decades but there was a portion of the land that is covered by a long-term lease that legally was rather complicated. There was fee ownership and leasehold and sub-leasehold interest and other things. And there were really three parties; three or four parties involved in what amounted to about 10,000; 11,000 acres of that property. And so the owner of the sub-leasehold who was the successor to the temple inland came to us and offered to sell out the sub-leasehold interest. So we were actually the primary leasehold owner for most of those acres which was in between the fee and the sub-leasehold owner and we didn't have the right to harvest the timber. And so we think we got a pretty attractive price to buy the rights to harvest that timber, and in some cases some of those acres were actually acres where subsequent to the IPO we had gone back in and bought the fee acres. So there is still a little bit of stuff that's out there but at the end of the day we have an income producing asset today as opposed to this other odd situation that has just developed and we've been managing through.

[David Rodgers:]

Okay, that's helpful. And that's in relation to the quote that I think you said 57 tons per acre?

[Jerry Barag:]

Yes.

[David Rodgers:]

Got it, okay. And then I guess on the broader acquisition; just following up on Collin's earlier question, I guess we've been waiting for some time for a large number of these properties to kind of hit the market. Is 2017 going to be the year? I mean is there anything that kind of delays that, pushes it back or are we finally getting to that point where we're going to see the large amount of volume kind of hit the market?

[Jerry Barag:]

Well, 2016 we saw a large amount of volume -- the volume is really being metered or constrained by the overall capital availability of the marketplace. So most of these funds and most of these timberland owners understand that they can't all come to the market at the same time and expect to maintain pricing and have available liquidity or have enough market participants to create an orderly market. And so we're seeing a pace deal by deal that's going into the marketplace; and you know as an interested observer, I have to say they are doing a good job of keeping the market orderly and prices have been generally pretty good. I mean they've been slightly upward; you know, flat to slightly upward prices. And the last [indiscernible] numbers that were just put out for 2016 over the course of the year show a slight appreciation in property values which is positive but -- and so that's an indication that the markets are behaving rationally and orderly.

[David Rodgers:]

Okay. Last question maybe for me, Brian, any visibility on the timing of land sales in 2017?

[Brian Davis:]

Yes. And I'll differ to John a little bit on this but typically this market is a first quarter and fourth quarter market. John you want to speak a little bit about how we think for 2017 and timing?

[John Rasor:]

Yes, following what Brian said, it's been historical that the first and fourth quarters where most of the activity is although we do get some through the middle of the year as well. But typical of that, we've started 2017 out very strongly. We've already closed three sales. Our book for the year is half full at this point. So we see this going like clockwork really.

[David Rodgers:]

Alright, great, thank you guys.

[Operator:]

And our next question is a follow-up from Collin Mings at Raymond James. Please go ahead.

[Collin Mings:]

Thanks. And I just thought on that last question; are there -- thinking about just the year-over-year increase as far as an expected real estate sales; is that just a reflection of the larger asset base or other -- is there like a couple of particular one-off opportunities that may be larger or more viable land of use beyond by the timberland that is embedded within that guidance range?

[Jerry Barag:]

It's a larger asset base call.

[Collin Mings:]

Okay.

[Jerry Barag:]

Yes. I mean it -- there works out a math. I mean their asset base is growing so the number of acres are growing; that we're selling is growing too.

[Collin Mings:]

Okay. And then I just wanted to revisit; I mean we've talked a lot on the last few calls just about share repurchases and you guys repurchased about $370,000 worth of stock during the fourth quarter. Just maybe remind us of your appetite for that versus acquisitions, particularly again given the steep discount at least by my math that the shares currently trade to NAV.

[Jerry Barag:]

Right. So we have by virtue of our lending agreements and other things, a limited amount of capital of available to us to repurchase shares and that's kind of reflective of what the share repurchase program is today. With respect to that, we have taken an approach which is to be somewhat opportunistic about how we effectuate that share repurchase program. So as the price gets -- as the prize of our shares has gotten lower, we've bought more shares and as the price is recovered and moved back, we've bought less shares. And that seems to be given -- given the availability of capital to us the right way to think about this. And to execute the program and it's been -- you know, effective if you put that in terms of the fact that we repurchase shares on an average of somewhere around $10.35 a share. Since we've been doing this work which seems to be pretty attractive price for the company to be doing that; and so that's how we're executing.

[Collin Mings:]

Okay, that's helpful. Going back to Dave's question just on the lease acres acquired during the quarter. Are there additional opportunities like that in the pipeline or is there an opportunity to maybe buy some leasehold interest and other well -- maybe well stock timberland or that -- would that just be kind of a one-off opportunity given the overlap of some the existing properties?

[Jerry Barag:]

There is still an opportunity on those acres that we just purchased the leasehold to acquire the underlying fee. And that -- you know, hopefully it's going to happen; it's been talked about often on that will hopefully happen at some point during the future. Within the acres that we own, there really isn't another situation that looks like that but as you rightfully point out; there are opportunities like that out in the marketplace that we continually look at, we evaluate to see if that would make sense for us.

[John Rasor:]

There is probably more infrequent though than frequent.

[Jerry Barag:]

Yes.

[John Rasor:]

And each of them generally has very unique dynamics associated with it because some of these leases tend to be very old and you have to be awfully careful when you do you due diligence.

[Collin Mings:]

Okay, alright, that's helpful. And then you touched on this already a little bit just in terms of the pipeline and what you've seen as far as the [indiscernible] numbers but just -- what's your sense; I mean it's something that's come up a lot obviously with the timber reach over the last now three four months just as we started to see this upward pressure on interest rates. How do you see that playing out for timberland value the discount rates and I know we've talked about this in the past Jerry but just maybe an updated thought here on that front.

[Jerry Barag:]

Yes, I don't think much has changed. I think we're seeing a bifurcated market where quality is still highly desirable and sought after and values on high quality properties have held up pretty well. And then lower quality properties and out of favor properties, you know, have kind of been all over the place. And I think you will see that play out during 2017 as well. There are some great properties that are going to come to the market that we have heard about and then there are other things that are going to hit the market that for good reason, justifiable reasons are going to sell at what's going to look at -- what's going to look like to the market as low attractive pricing. And you know, it's important that everybody be mindful of the fact that -- you know, fundamentally I would say that property valuations are kind of flat and we expect them to stay kind of flat for 2017 but some of these transactions that go off and some of them might be pretty big and notable is a little bit noise around the edges. And like I said there are specific issues around some of these properties that's going to justify the fact that they are going to sell for the prices that they do.

[Collin Mings:]

Okay. Two last ones for me. One, John in the past you've kind of be able to provide a little bit of color across the different wood baskets; I don't know if you can take the time and maybe do that now just what you're seeing across your different wood baskets, maybe which ones are seen a little bit more optimistic about as far as pricing intention? And then other one is that may be a little bit more cautious on?

[John Rasor:]

I think we're feeling good about our Southeast Georgia properties, that's probably one of the best markets in the U.S. We're feeling good about South Carolina and with Florida having a full year this year's comment which will add to our total tonnage. Our South Central, we call our South Central region which is the legacy properties plus what we've added to it, it's steady state. And the Southwest which is Western Louisiana and East Texas; it has some challenges associated with it and we found ourselves working around it holding our own but that could be one of the tougher ones to get a lift.

[Brian Davis:]

I mean in general, Collin it's pretty easy. You know, east or west, east starts better and take us a little tough for the further west you go.

[Collin Mings:]

Okay. And that's in terms of -- we're going to speak in terms of saw logs or really across all product types?

[Brian Davis:]

I think I would be speaking in terms of saw logs, both saw timber and chipping saw.

[Collin Mings:]

Okay, all right, that's helpful. I appreciate the color there. And then just going back Brian as far as -- from a modeling standpoint; is the swap or the potential swap that you mentioned as far as fixing some more debt, is that contemplated in the $10 million of interest expense guidance?

[Brian Davis:]

It's captured in there.

[Collin Mings:]

Okay, perfect. Alright, I'll turn it over. Thanks guys.

[Operator:]

[Operator Instructions] I'm showing no further questions. I'd like to turn the conference back over to Jerry Barag for any closing remarks.

[Jerry Barag:]

Okay, thank you for joining us this morning. We look forward to a great 2017 and we will speak to you in a couple of months.

[Operator:]

And thank you, sir. Today's conference has now concluded, and we thank you all for attending today's presentation. You now disconnect your lines and have a wonderful day.