GP Strategies Corporation
Q1 2017 Earnings Call Transcript

Published: 2 May 2017

[Operator:]

Good morning. My name is Tia, and I will be your conference operator today for the GP Strategies’ First Quarter 2017 Earnings Conference Call. All lines will be placed on mute, preventing any background noise. After the speakers’ remarks, there will be a question-and-answer session. [Operator Instructions] As a reminder, this call is being recorded. Thank you. I will now turn the call over to Ann Blank, Director of Investor Relations. Please go ahead.

[Ann Blank:]

Thank you. Good morning and welcome to GP Strategies’ first quarter 2017 earnings call. On the call today are Scott Greenberg, Chief Executive Officer; Douglas Sharp, President; and Sharon Esposito-Mayer, Chief Financial Officer. Before we begin, I would like to remind you that today’s comments will include forward-looking statements, which are subject to certain risks and uncertainties that could cause our actual results to be materially different from expectations. For a complete discussion of these risks, we encourage you to read our documents on file with the SEC, which are posted on the Investors section of our website at gpstrategies.com. A replay of this call will also be available on our website later today. And at this time, I’d like to turn the call over to Scott.

[Scott Greenberg:]

Thank you, Ann. Good morning and welcome to our first quarter 2017 conference call. Today, we will follow our usual quarterly format. To initiate the call, I’ll provide a brief overview of the results of the first quarter of 2017, then Sharon will present an in-depth financial analysis and Doug will give key updates on our global initiative. After Doug’s presentation, I’ll provide a final summary, including an acquisition update and then we'll conclude with a Q&A session. This morning before the market opened, GP Strategies announced earnings for the first quarter of 2017. GP Strategies reported first quarter 2017 revenue of $122.4 million, which was an all-time record of revenue for the company’s fiscal first quarter. Organic revenue growth and revenue from recently completed acquisitions more than offset the $3.7 million decline from foreign currency fluctuations. The Performance Readiness Solutions group and Sandy Training & Marketing segments, both paved the way for the revenue growth. Overall the revenue increased 6% despite the above mentioned $3.7 million negative impact due to foreign currency rate declines. Our reported pre-tax income of $6.1 million included $400,000 of financial system implementation costs, $300,000 of legal expenses relating to acquisitions, and over $300,000 of costs to upgrade technology products. As previously announced on our last conference call, during the third quarter GP Strategies signed a significant contract to provide global learning services for a large pharmaceutical customer. GP Strategies will provide a global managed learning service program. The agreement has a term of three years with two one-year options. Under this agreement, GP Strategies expects to help the client drive global consistencies and efficiencies while enabling the learning function to become more responsive to the needs of employees and managers. We are pleased to have been selected for this critical initiative to take primary responsibility for managing their learning suppliers. This initiative will allow GP Strategies to provide the client with a global view of learning and development the government slots -- supply chain with complete visibility of consolidated spend across all supplier types. Having a single source of learning and development vendor will help the client facilitate effective account management and spend consolidation. This win demonstrates that our previous investment in our global platform differentiates our company in the training industry. The contract will now start in the second quarter with a ramp up of revenue occurring in the second half of 2017, so therefore we did not incur any revenue in the first quarter. In the first quarter of 2017 the company achieved EBITDA of $8 million which was consistent with the first quarter of 2016. Some companies and analysts add back non-cash compensation expense to EBITDA on a pro forma basis. These expenses for the quarter were approximately $1.5 million. As far as share buyback, the company repurchased approximately 70,000 shares for approximately $1.7 million of GP Strategies stock in the open market for the quarter ended March 31, 2017 and had approximately $4.4 million remaining under our buyback program at March 31, 2017. A little bit of a summary of the last few years. In the last few years, we invested heavily in building our global reach and adding high level personnel and we anticipate seeing huge returns of these investments in years to come. We added over 13 global offices for the company and our annual revenue in the Asia Pacific region [indiscernible] in excess of $25 million which is a multiple of where it was just five years ago. We still currently do business with approximately 25% of the global 500 customers worldwide and our goal is to continue to establish GP Strategies brand in the highly fragmented industries. On previous calls, we discussed initiatives to expand into the finance and insurance sector. We started this initiative performing in the sector approximately six years ago and for the first quarter our revenue from the sector was approximately 20% of our overall revenue. We are making a major push in the pharmaceutical sector on the heels of the award mentioned earlier as it has the same strong positive attributes to GP Strategies improved spend [ph]. With that being said, I’ll now turn it over to Sharon who will give a detailed financial presentation for the quarter.

[Sharon Esposito-Mayer:]

Thanks, Scott. Good morning everyone. The first quarter revenue we reported of $122.4 million represented a $6.7 million or 6% increase over the first quarter 2016 revenue of $115.8 million. As Scott mentioned, the growth was led by strong revenue growth in our Sandy and Performance Readiness Solutions segments but was partly offset by revenue decline in other segments, and the overall $3.7 million decrease in revenue due to foreign currency exchange rate declines which had a negative 3% impact on revenue growth in the quarter. Sandy’s first quarter revenue of $24.6 million represented a $2.8 million or 13% increase over first quarter of 2016, primarily due to an increase in training services related to our luxury vehicle launch. Sandy’s first quarter revenue included $5.5 million of publication revenue, consistent with Q1 of 2016. We are projecting a total of $7.6 million of publication revenue in the second quarter which is a $2.1 million increase over Q1 publication revenue. Performance Readiness Solutions revenue increased $4.6 million or 25% to $22.8 million compared to $18.2 million in the first quarter of 2016. The Maverick acquisition completed on October 1 of 2016 contributed $1.6 million of revenue in the quarter, and the McKinney Rogers acquisition completed on February 1 of this year provided $1.7 million of revenue. The remaining $1.3 million or 7% organic revenue growth was primarily due to a $1.2 million increase in technical training for an aerospace client, a $600,000 increase in platform adoption training services and a $300,000 increase in leadership and performance consulting services. These increases were partially offset by a $300,000 decrease in revenue due to unfavorable changes in exchange rates in this segment. The Performance Readiness Solutions and Sandy revenue increases were offset by revenue declines in the other segments. The Learning Solutions segment experienced $200,000 revenue decrease compared to the first quarter of 2016. The job skills acquisition completed on March 1 of 2016 resulted in an $800,000 revenue increase in the quarter and there was a $1.7 million net increase in e-learning content development and training outsourcing services. These increases were offset by a $2.7 million revenue decrease due to unfavorable changes in exchange rates. And excluding this decrease, revenues would have increased in this segment by 5% in the quarter. Professional and technical services revenue of $25.3 million was a $400,000 improvement over fourth quarter revenue of $24.9 million but a $500,000 or 2% decrease compared to the first quarter of 2016. The decreases were due to a $400,000 decline in revenue from oil and gas clients and a $700,000 decline in revenue due to a decline in exchange rate. These decreases were partially offset by a $600,000 increase in alternative fuel projects. Excluding this $700,000 decrease from exchange rates, revenue in this segment would have increased slightly by $200,000 or 1% over the first quarter of 2016. The automotive sector was our largest sector in the first quarter and comprised 22% of revenue, up from 20% in the first quarter of 2016. We continue to have a revenue concentration from a single automotive customer which accounted for 13% of our first quarter revenue in both 2017 and 2016. The financial and insurance sector comprised 20% of first quarter 2017 revenue compared to 22% in the first quarter of 2016. We continue to have a revenue concentration from a single financial services customer which accounted for 14% of our first quarter 2017 revenue and 15% of our first quarter 2016 revenue. Revenue earned from operations outside the United States represented 29% compared to 31% in 2016. Gross profit increased in the first quarter by $1.5 million or 8% on the overall 6% revenue growth. Gross profit as a percentage of revenue increased to 15.8% from 15.5% in the first quarter of 2016. The acquisitions contributed $700,000 of gross profit in the quarter. The remaining $800,000 increase in gross profit was largely due to $1.1 million of combined organic gross profit increases in the Sandy and Performance Readiness Solutions segments due to the revenue growth discussed and a $700,000 increase in gross profit in the professional and technical services segment largely due to a reduction in overhead expenses compared to the first quarter of 2016. These increases were partially offset by a $1 million decline in gross profit in the Learning Solutions segment due to a $700,000 decrease from unfavorable changes in exchange rates, and a $600,000 non-recurring cost reductions related to the job skills program in the first quarter of 2016. SG&A expense increased $1 million to $13 million for the first quarter. SG&A costs included a $400,000 expense increase related to our new financial system implementation which we anticipate would go live in 2018, a $300,000 increase in bad debt expense and a net $200,000 increase in labors benefits and other expenses over the first quarter of 2016. First quarter 2016 SG&A expense included approximately $300,000 of legal expenses related to the completion of the McKinney Rogers and the Maverick acquisition. As I mentioned first quarter SG&A expense included approximately $400,000 of expenses related to our new ERP system. We anticipate this expense to increase to $1.1 million in the second quarter of this year. During the quarter we recognized $200,000 of income related to a change in the fair value of contingent consideration compared to $200,000 of expense recorded in the first quarter of 2016. Interest expense increased approximately 4200,000 due to a combined increase of $2.8 million in borrowings and an increase in interest rate. Other income decreased $500,000 compared to the first quarter of 2016 primarily due to a $300,000 decrease in foreign currency gains and a $100,000 decrease in joint venture income. First quarter 2017 income before taxes was $6.1 million compared to $6 million in the first quarter of 2016 and tax expense in the quarter was $2 million or a rate of 32.8% compared to $2.2 million or 36.7% in the first quarter of 2016. The decrease in the rate is primarily due to a mix of capital income from higher taxing to lower taxing jurisdictions. Effective January 1, 2017, there was also a change in the trading for stock compensation that required excess tax benefits for the efficiency to be recorded as a discrete tax benefit or expense. This will result in quarterly fluctuations in our tax rate and we recorded [ph] a $100,000 benefit or reduction of 1.1% to our tax rate in the first quarter of 2017. Excluding this fluctuation, we are projecting a 2017 rate of approximately 34.3%. First quarter net income of $4.1 million or a $300,000 increase over the first quarter of 2016 and our first quarter earnings per share were $0.24 compared to $0.23 in the first quarter of 2016, Moving on to some quick balance sheet highlights. Our cash balances were $15.5 million at March 31 compared to $16.3 million on hand at the end of 2016. In the first quarter of 2017 we spent $1.7 million on share repurchases and $3.2 million to fund the McKinney Rogers acquisition which was completed on February 1. We generated $4.1 million of cash flows from operations compared to $6 million in the first quarter of 2016. The $4.1 million is comprised of year-to-date income of $4.1 million, plus non-cash add back to net income including depreciation and amortization of $1.4 million, non-cash compensation expense of $1.5 million, offset by a $200,000 non-cash gain on contingent consideration, and a $2.7 million decrease in cash from changes in other operating items. Fixed asset additions were $500,000 in the first quarter and we generated free cash flow of $3.6 million in the quarter. At the end of March, backlog was $294 million compared to $254 million at March 31 of 2016 and $285 million at the end of December of 2016. Approximately $33 million of the backlog increase compared to March of 2016 is for a contract with an international oil and gas customer which will be performed over the next four years. With the exception of the contract, approximately 95% of backlog will be recognized as revenue within the next twelve months. At this time I will turn the call over to Doug who will discuss some operational highlight.

[Douglas Sharp:]

Thank you, Sharon and good morning everyone. We're certainly pleased to report our growth of 6% on revenue and 8% on gross profit for the first quarter, particularly considering this includes the 3% negative impact on revenue from the strengthening of the U.S. dollar. Said differently, eliminating currency exchange, our revenue in local currency was substantially over Q1 of last year. These results demonstrate our ability to win and perform more in a global economy. It demonstrates that we can execute on our strategy. So a few quick highlights behind the numbers. Scott mentioned our new outsourcing win with a global pharmaceutical company and Sharon mentioned our success in the automotive sector, including some great work with a luxury brand. We also received verbal notice that we were successful in our re-competition of work with one of our international aeronautical clients. Further, our professional and technical services group continues to expand operations in Kuwait as they pursue a global strategy for our energy, oil and gas services. We are also working on a number of cross-selling and cross-support opportunities with our recent acquisitions of Maverick, McKinney Rogers and Emantras. And finally I believe our position of our brand in the market is strong as we are seeing a number of requests for proposals, including a number in the global financial sector, and as you might imagine we are very busy developing technical and pricing proposals as we speak. With that, I will turn it back to Scott.

[Scott Greenberg:]

Thank you, Doug. And I guess the consistent message today is we're pleased with the fact that even though some of it is acquisition but with organic and acquisition, if it wasn't for currency, as Doug mentioned, our revenue growth in the quarter would have been 9% and it’s something to be particularly proud of for the company. Going on, you could also see -- and I'll give a little bit of a history -- is that GP Strategies was hugely successful in the past with its acquisition strategy, and we believe that we have the people and staff and the ability to purchase companies, integrate them and get the benefit of selling their products and working with them over the GP Strategies or customer base, which I mentioned earlier is approximately 120 of the global 500 companies of the world. So we restarted our acquisition strategy in the last six months. The first thing we did in case we needed some extra dry powder is we raised our credit facility and we now have a larger credit facility than we had previously. And then we started looking at acquisitions and a pipeline of acquisitions. I am pleased to report that since we started that we have closed three acquisitions in that period. We closed -- just recently closed Emantras which gives us the ability to develop high end content out of India, so we can leverage the costs, that have cost arbitrage with our customers and we won McKinney Rogers which now takes us into the C-suite of customers with our hope of selling them on the services and introducing them to GP. So we now have an entry point in the highest level of a company’s organization which we wanted to step on and the third acquisition and the first one is when we bought Maverick which gives us an entree into the cloud learning environment and cloud training through Oracle. So those three acquisitions are important because all of our groups can leverage the services that they provide. So this could go through automotive, this could go through financial, this could go through pharmaceutical. So we hope to use all three acquisitions to expand our major markets and give them cost arbitrage situations and the additional ability to sell products. But like 2009 through 2013 or 2014, we will continue on with the strategy and look for additional niche acquisitions that we believe is a good fit and we can leverage our customers and personnel going forward. As far as the investor `front, this is our season for meetings. So in the last month hopefully we see a lot of you. We start off with the Barrington conference which is coming up next week and then we have B. Riley conference in California followed by the RW Baird conference in New York. So this will be a period where we'll get to meet a lot of the investors and answer all your questions and talk about the company in further detail in the next month. I'd like to thank you for participating on the call and now moderator I’ll turn it over to the Q&A session.

[Operator:]

[Operator Instructions] Our first question comes from the line of Jeff Martin with ROTH Capital Partners.

[Jeff Martin:]

Could you give us a sense -- you mentioned in the Q, it gives you an entry point into the highest level of an organization; can you talk about that client base? How many of the large clients do they have and what types of industries and does this bring in new vertical opportunities for you?

[Scott Greenberg:]

Well, right now they have about 20 clients, some of their largest industries is on food and beverage, there is one large in the industry and that's more on the alcoholic side, and then the second largest industry is financial services. So those are two of the industries that they’ve been involved with, but the type of services that they have are not industry specific but they have had good success in the past in food and beverage and financial services. Now the one thing to add is that in Europe GP Strategies has a division called Lorient [ph] which has been active in food and beverage as well. So again it's financial services and food and beverage are two of the industries.

[Sharon Esposito-Mayer:]

Yes, and Jeff, they also have some clients in the retail product space as well as they have historically worked with some even sports organizations, large sports organizations in the past as well.

[Jeff Martin:]

And then can you give us an update on the rollout in Kuwait on the March contract as well as talk about the start-up of the pharmaceutical client?

[Scott Greenberg:]

Yes, on as far as the large Kuwait rollout it's still running at a million plus in revenue for the quarter. So it hasn't hit the full maximum value yet, where we anticipate as a high would be 2 million a quarter, we're probably a little bit away from that. And that's where we are. So in the quarter it was probably a little over $1 million, reflected as revenue in the financial statements and it should ramp up slightly as we go forward. As we mentioned in the past calls, we do see other opportunities in that region and with that client. So we are looking to expand that initial contract but as of now with Kuwait we're going to be just working on that initial contract. Yes, the pharmaceutical rollout -- we signed the contract when we announced the last quarter, so we do have a definitive agreement in place. We’re having meetings next week to start the rollout procedures in the Gulf which countries will occur first and the big element of these as we mentioned in the past is, in addition to the vendor management, on how much of the training we can actually do directly and that would find the work on as well, so I think it’s still early to tell what, how much or how much that revenue stream would really be but that's where it becomes significant.

[Sharon Esposito-Mayer:]

So Jeff, just to tack onto that a little bit, we have begun the rollout in a couple of the geographic locations and Europe as well. The communications have gone out through the various purchasing organizations within the client. We already had kick-off meetings with the client and we would anticipate within -- as early as the next couple weeks that within the month of May we will start to be fielding request from that client in the geographies we've already rolled out for requests for services. So it has already started. It is a very large organization, so the information has been disseminated and the requests are beginning to trickle in.

[Operator:]

The next question is from the line of Kevin Liu with B. Riley & Company.

[Kevin Liu:]

First question, just wanted to ask little bit more about your push into the pharma sector. Are you guys seeing other RFPs already or do you feel like you need to get this first customer fully ramped, and at that point you'll start to see even more traction?

[Scott Greenberg:]

Well, the good news with the pharmaceutical sector is that we have developed on a small scale a history of providing high end services already. So we've been involved in developing e-learning content in the States for a major pharmaceutical company for many years and generate a few million dollars of revenue. In addition, we've done work with other companies in leadership training in the past as well and other types of content development. So we probably have dealt with at least six of the major pharmaceutical companies at a smaller level in the past. Now with this major win, we’re hoping that we can leverage that into becoming a much broader supplier of services and vendor management on to that customer base. So we have meetings set up – I think we have a preliminary meeting on June 1 or June 2 in Europe. So we are seeing activity already on that front but again when we entered the financial service sector six years ago we really ended that whole with very little history and we initially started with Bank of America and we -- and still a good account for GP and expanded it from there and then we had the major win that we had a few years ago. On the pharmaceutical front, though, while we are really putting an effort on it, and we're really trying to develop it, GP Strategies does have a history and a track record with companies but at a much smaller level from where we want to be in the future.

[Kevin Liu:]

And switching over to finance services, Doug mentioned a number of RFPs on that side. Can you put any context around the potential size of the opportunity, are these considered kind of major deals like the big HSBC win or are they kind of more traditional outsourcing agreements?

[Douglas Sharp:]

I would say right now they are more of the traditional that we are looking other than the recent win in the major pharmaceutical window we have, we are now looking at eight figure deals right now in those. But again if they add up especially as we always mention that 90% of a lot of customer base tends to be recurring and we said on the call that between backlog and revenue, that we see typically 70% of our revenue we could see coming into the next year. So while not tens of millions of dollar bets, they could spot adding up.

[Kevin Liu:]

And just lastly from me, the Sandy segment continued to see pretty strong growth. I am just curious as to whether you think that you can stay in the growth throughout the year and then also you talked previously about being able to break into the technical services side. Perhaps, so just curious if you guys have started to make progress on that front?

[Scott Greenberg:]

Yes, as far as Sandy, any time you look at the growth that they have, it's predicted going forward would be very aggressive. So we're happy with their growth but I would say that you can see we’re using that type of growth in the model going forward. I believe that a lot of our growth is going to have to and growth start coming from the other units of the company as well, protect your way if you look at the things like Performance Readiness and the additions that we’ve done that and leveraging that, has been a big help there. So I really think that, that is partly equation out.

[Operator:]

[Operator Instructions] Gary Prakar [ph]

[Unidentified Analyst:]

Thank you, I am not sure what happened but first congratulations on a very good quarter and congratulations on global pharma client. I wasn't on last quarter's call, so this is really good. My question was, partly an answer but maybe just ask two related question. Can you state anything on the size of the global pharma company or how global they are? And I guess just anything on -- I guess has to be determined but anything else on services you mentioned there might be potential for training but are any other possible services like content development?

[Scott Greenberg:]

Well, right now, if you look at the global pharma customer we won, we announced on the last call that we would be very disappointed if there wasn’t 8-figures plus. Now looking at it there is two elements of what we could do for them. One, we pretty much know and one is the upside so to speak. So when you break out the work we’re doing for them, we’ll building vendor management – for their global vendor management which basically means we manage their vendors on a global basis. And that is a predictable revenue stream at this point. The second element is development content and doing the training. And that element is going to be how much of the spend we could capture with the GP Strategies staff and personnel and that's what's yet to be determined and that will be the factor that will determine the material impact of this account. But we know with their spend that they have and this will answer the second part of your question -- being one of the world's largest pharmaceutical companies, just remember GP Strategies’ customers are usually the best and biggest in the industry that they participate in, for the most part. So if you look at GP customers based in the pharmaceutical industry we're mainly dealing with the largest companies of the world and this one is surely one of them. But the key element will be how much of the training spend that we could capture. Now the one thing that we are obviously hoping for and we’re putting the push in the pharmaceutical industry just like we been in the financial services, is the pharmaceutical industry has a lot of the same attributes that is good for GP Strategies. Means, it’s in a regulated environment with the FDA and other regulatory organizations, which means that any changes to products or new product introductions require a lot of training, require a lot of labelling, require a lot of instruction, there's a lot of leadership training going on in these type of organizations and because of the profitability and how big they are there's typically a very large spend and those are the features that make us expanding in the pharmaceutical industry [important]. And hopefully this could be a lead account as we establish ourselves with the industry.

[Operator:]

The next question is from Alex Paris with Barrington Research.

[Alex Paris:]

So just a couple of wrap-up sort of questions and wondering how you're thinking about capital allocation from a share repurchase acquisition pipeline perspective? You know in Q1 you repurchased 70,000 shares, that's not a huge number I assume and it has to do with a short window between Q4 and Q1 earnings. But what sort of pace do you anticipate being on there and how will that be gated by acquisition activity, say?

[Scott Greenberg:]

Well, we constantly monitor the two and we monitor the price of the stock as well, and we look for opportunities when we purchase the stock. I mean as you know over the course of years we've been very active on buying back our shares. I believe in the last ten years we bought back probably in the neighborhood of $130 million of stock, a significant amount and we typically allocate our cash into two areas for the company. One is share buyback, the two is acquisitions and making acquisitions. At this stage right now we're obviously becoming aggressive on acquisitions and you’ve seen the results of what that can mean in Q1 and Q4 of last year by building our revenue and building our gross margin up. So I think that overall that is the number one priority is the acquisitive nature of the company but we will consistently and constantly monitor the two. We do have a lot more flexibility into our credit facility, that's now in place. So our old credit facility was roughly a $65 million revolver and we started with a term loan on that as well, the new facility started with $100 million revolver and a $40 million term loan. So we do have significant availability and as you know at the same time the company has historically been a cash generator. So I think we have a lot of flexibility in cash flow and what we do. But we discuss it consistently with the board. On the positive note, other than the systems that were installed currently, there is typically not a lot of capital appropriations that go back into the business model, this year will be a little bit of a deviant from that because of the system but as you historically know our capital and as far as capital appropriations is typically very small which gives us the company a lot of cash flow in addition to the availability in our facility.

[Alex Paris:]

That reminds me, so you had $400,000 of expenditures on the ERP system in Q1. I think Sharon said a million, we should expect in Q2; is that it or will there be more spending in Q3 and Q4?

[Sharon Esposito-Mayer:]

Alex, there will definitely be more spending in Q3 and Q4. The amount that I said for Q2 that the $400,000 would be increased in Q2, would be roughly $1.1 million and it will stay at about that level in Q3 and then we'll start to taper off in Q4 and right now we're targeting go-live in Q1. The majority of the spending will be done by Q4 with some trickle in Q1 and I'll continue to give some guidance on that and we talked about the fact that it would be probably somewhere north of about $3 million spend in total for it and I'll continue to provide quarterly guidance on that as we go.

[Alex Paris:]

And then excluding that expense, it seems like you got a pretty good handle on other expenses that they are increasing at – they appear to be increasing at lesser rates that revenue; do you expect that sort of trend to continue?

[Sharon Esposito-Mayer:]

Yeah, I do think that trend will continue. We're looking at right now to make a potential maybe investment in some additional resources to support the acquisition initiatives because we don't want to be constrained because of resources on that front as opportunities present themselves, but aside from that I think we got a good handle on expenses, those in SG&A and operationally right now.

[Scott Greenberg:]

Right but to the extent we're investing in resources for the M&A, hopefully the fruits of that would be higher revenue from transactions we complete as well.

[Alex Paris:]

And then lastly, just the character of the pipeline, you’ve described this as aggressive strategy to make more tuck-in acquisitions. Is that what it looks like again going forward over the balance of the year? Are there larger opportunities?

[Scott Greenberg:]

Well, you never know where the next opportunity is but I do think we're trying to concentrate on a range that’s slightly larger or larger than the last three we've done. So I would call them mid-size acquisitions probably somewhere between the current ones we did and the successful acquisitions we've done with RWP and Sandy, but again what we evaluate the first thing is what the acquisition really means to GP. So something -- we believe could have a long term material impact on GP even it’s on the smaller side, we would take a serious look at that, it's the criteria but otherwise we're probably more in the $10 million to $30 million revenue targets but for whatever reason it appears the ones, at least the last three we bought the ones we thought that could benefit GP the most were more in the $5 million to $10 million range.

[Operator:]

We have no further questions at this time. I’ll turn the call back to you.

[Scott Greenberg:]

Okay, thanks everybody for participating on the call. I’d like to thank the support of the investors and also the GP Strategies’ employees, that worked really hard to get record revenue in the quarter. And we look forward to seeing you at the three conferences that we will be at and talk to you shortly. So thanks a lot.

[Operator:]

Ladies and gentlemen that does conclude the call for today. We thank you for your participation and ask that you please disconnect your lines.