GP Strategies Corporation
Q2 2015 Earnings Call Transcript

Published: 2 Aug 2015

[Operator:]

Good morning. My name is Julian and I will be your conference operator today for the GP Strategies Second Quarter 2015 Earnings Conference Call. All lines will be placed on mute to prevent 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 Second Quarter 2015 Earnings Call. On the call today are Scott Greenberg, Chief Executive Officer; Doug 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. At this time, I would like to turn the call over to Scott.

[Scott N. Greenberg:]

Thank you, Ann. Good morning and welcome to our second quarter 2015 conference call. Today, we will follow our usual quarterly format. To initiate the call, I will provide a brief overview of the results of the second quarter of 2015, then Sharon will present an in-depth financial analysis, and Doug will give us key updates on our global initiatives. After Doug’s presentation, I will provide a final summary and then we will conclude with a Q&A session. This morning before the market opened, GP Strategies announced its earnings for the second quarter of 2015 and a plan to reduce cost and additionally propel growth. In the second quarter, the company achieved operating results with revenue of approximately 125.7 million and earnings of $0.27 per share compared to $0.42 per share in the second quarter of 2015. The second quarter revenue was sequentially better than the first quarter of 2015, where we achieved revenue of approximately 150 million or a 10.4 million increase. Our second quarter was adversely impacted by the expected decline in our non-core alternative fuels business and by foreign currency fluctuations. These factors actually mask the organic revenue growth we continue to experience in our core business during the quarter. To improve our operating margins we are implementing significant cost cutting initiatives targeted to result in a net $10 million cost savings on a yearly basis. This will better align cost with revenue and achieve desired operating margins. Net of that 10 million or inclusive of that 10 million net, we intend to also invest in attracting additional business leaders in some of our high potential international markets and launching new sales initiatives to enhance organic growth. In addition, we plan to return to our acquisition strategy which has contributed positively to GP Strategies growth over the years. It should be noted that in the second quarter of 2015, foreign currency fluctuations negatively impacted pretax income by a million dollars and there was a 700,000 increases in medical benefits expense which also reduce pretax income. In the second quarter the company achieved revenue of 125.7 million despite the elimination of approximately 13.2 million from the alternative fuel group and a reduction of approximately 3.3 million due to the unfavorable changes in foreign currency. Excluding these items we would have had organic revenue growth of approximately 5%. The company did announce its all time record backlog at June 30th, of approximately 252 million in addition to Sandy Group received major renewals in excess of a $100 million. Based upon these wins, the Sandy Group is poised for organic growth for years to come. We also repurchased shares of GP Strategies in our buyback program in the open market for approximately 700,000 during the quarter and have approximately 13.9 million remaining in our buyback program announced in the fourth quarter of 2014. In 2013 and 2014 we invested heavily in building our global reach and we anticipated seeing the returns of these investments in years to come. In 2013 and 2014 we added approximately 13 global offices to the company. This will not be impacted by a cost cutting measure and is actually a planned area of future investment. We believe this continued investment will enable the company to execute on a global basis. The strategy will continue to be a differentiator for the company. We are currently doing business with approximately 25% of the global 500 customers worldwide. Our goal is to continue to establish GP Strategies brand in this highly fragmented industry. EBITDA for the quarter was $9.7 million and approximately 46 million for the trailing 12 months ended June 30, 2015. This was approximately $2.72 per share based upon the current share count. We would clearly get asked on the market of domestic training business which is now estimated to be over $60 billion domestically. Our largest competitors are actually the in-house company’s trading upon us. We understand that we are playing in a highly fragmented industry and we look forward to continued execution. On previous calls we discussed initiatives to expand in the financial and insurance service sector. We started our initiatives performing in this sector approximately five years ago and in the six months of 2015, our revenue approached 22% of our total revenue. With that being said, Sharon will now give a detailed financial presentation for the quarter.

[Sharon Esposito-Mayer:]

Thanks Scott and good morning everyone. We reported second quarter revenue of 125.7 million which represented a 9.3 million or 7% decline over the second quarter 2014 revenue of 134.9 million. During the quarter we experienced a 13.2 million reduction in revenue from our alternative fuel business due to completion of several projects during 2014. And 3.3 million reduction in revenue due to a decline in exchange rates compared to the average exchange rates during the second quarter in 2014. These decreases contributed to a 12% decline in revenue over the second quarter of 2014. As Scott mentioned, excluding these decreases revenue increased 5% primarily due to strong revenue growth in our Sandy segment. Sandy’s second quarter revenue of 25.2 million represented a 5 million or 25% increase over the second quarter of 2014 primarily due to an increase in publication revenue for an automotive customer. Second quarter 2015 publication revenue was 8.8 million compared to 3.6 million in the second quarter of 2014. The 8.8 million of publication revenue included 5.9 million of revenue for a new lower margin publication contracts which started in the second quarter of 2015. We are projecting a total of 6.8 million of publication revenue in the third quarter primarily related to the new award which will have lower margins in the single-digits. Revenue in the learning solutions segment also increased by 600,000 over the second quarter of 2014. It was a 2.4 million net increase in e-learning and training outsourcing services primarily for the financial sector and a $700,000 increase in UK government funded skills training. These increases were partially offset by a 2.5 million decrease in revenue due to a decline in exchange rates compared to the second quarter of 2014. Professional and technical services revenue decreased 11.9 million or 28% largely due to the 13.2 million declines in alternative fuels revenue due to the project completions in 2014. There was also an $800,000 decline in revenue from U.S. government clients due to contract completions and a $600,000 decrease in revenue due to unfavorable changes in exchange rates. These decreases were partially offset by a 1.6 million increase in revenue from our energy business due to a non-recurring revenue adjustment that occurred in the second quarter of 2014 and a 1.1 million net increase in training and technical services primarily for oil and gas clients. The performance readiness solution segment provided 19.6 million of revenue in the quarter which was an $800,000 sequential increase over Q1 revenue to down 2.9 million from the second quarter of 2014 primarily due to a net decrease in consolidating and training services. This segment also experienced a $200,000 revenue decline due to unfavorable changes in exchange rates compared to 2014. As Scott mentioned, the financial and insurance sector is now our largest market sector comprising 22% of year-to-date revenue up from 15% in 2014. The automotive sector remains our second largest sector and comprised 18% of revenue in the quarter, up 14% from 2014. Revenue earnings from operations outside the United States represented 29% of our revenue, up from 22% in the six months ended June of 2014. We have a revenue concentration from a single financial services customer which accounted for 14% of our year-to-date 2015 revenue and a revenue concentration with an automotive customer which comprised 11% of our year-to-date revenue. Gross profit decrease in the quarter by 4.7 million as a result of the decline in revenue. The decrease in gross profit was largely due to a margin decline in alternative fuels revenue and margins in the professional and technical services segment, and lower margins earned on the 5.9 million of new publication revenue in the Sandy segment. We also experienced a $500,000 margin reduction due to decline in exchange rates compared to the second quarter exchange rates in 2014. These items and the other revenue declines discussed contributed to a declining gross margin from 18.4% in the second quarter of 2014, to 16% this quarter. SG&A increased by 500,000, SG&A cost included a $500,000 increase in labor and benefits expense, and a $500,000 increase in IT infrastructure and other expenses over the second quarter of 2014, primarily related to international expansion efforts. These increases were partially offset by a $400,000 decline in the amortization expense. During the quarter we recognized a $100,000 loss related to a change in the estimated earn out payments and associated share value of contingent consideration accrued for certain acquisitions which resulted in a $500,000 expense increase over the gain recorded in the second quarter of 2014. Interest expense increased by approximately 200,000 in the quarter due to an increase in short-term borrowings and long-term debt primarily related to the best tender offer completed in October of last year. Other income decreased 400,000 over the second quarter of 2014, due to an increase in foreign currency losses over the second quarter of 2014. Tax expense was 2.7 million in the quarter or a rate of 36.3% compared to 5.7 million or 41.1% in the second quarter of 2014. Expected and projected decline in the rate is due to the fact that we are anticipating a larger percent of our income to be coming from lower tax foreign jurisdictions in 2015. We are currently projecting a tax rate of 37.5% for the remainder of 2015. Second quarter net income was 4.7 million compared to 8.1 million in the second quarter of 2014. And second quarter earnings per share were $0.27 compared to $0.42 in the second quarter of last year. Moving on to the balance sheet, some quick highlights, our cash balances were 12.3 million at June 30, 2015 compared to the 14.5 million at the end of December of 2014. In 2015 we spent 1.1 million on share repurchases in the open market and 2.6 million on contingent consideration payment for a previously completed acquisition. We generated 3.1 million in cash flows from operations for the six months ended June 30th, compared to 1.9 million of cash used in operations year-to-date June 2014. Cash flows from operations year-to-date include year-to-date income of 8.8 million plus non-cash add back to net income including depreciation and amortization of 4.1 million, non-cash compensation expense of 2.9 million which was offset by a 12.7 million decrease in cash from changes in other operating items primarily due to an increase in unbilled revenue. Fixed assets additions were 1.4 million year-to-date consistent with 2014. We had total borrowings outstanding of 59.9 million at June 30th, and have 35.2 million available under our revolving credit facility. At the end of June, backlog was 252 million in comparison to 234 million at the end of December 2014 and 226 million at the end of the second quarter of 2014. Approximately 95% of the backlog will be recognized as revenue within the next 12 months. At this time I will turn the call over to Doug who will discuss some operational updates.

[Douglas E. Sharp:]

Thank you, Sharon. Hello everybody and welcome to our second quarterly conference call for investors. Our substantial success last year with designing and building liquid natural gas facilities was not replicated this year. This was expected. With oil prices down we are seeing reduced opportunities since there is less incentive for using LNG and CNG as in over the road fuel. We are however seeing opportunities in the industrial and off-road use of LNG and are optimistic on a number of those opportunities. To reiterate a few highlights from Sharon’s remarks, revenue was up in Q2 excluding alternative fuels and the exchange rate fluctuations. Backlog is up which reflects positively on the future and global revenue or revenue outside the U.S. is up to 29%. The last point in times to our planned investments mentioned in our press release, it is normal for a business to reduce cost in some areas and make investments in other areas where growth can be expected. Our planned investments are aligned in the growing presence as a global solutions provider. So differently we are investing in areas that are aligned with the needs of our customers. Specifically we are looking to add resources in Asia, Europe, and Middle East. We are building out robust global processes and systems including instructor management, vendor management, learning consultants, and leadership development. And we are strengthening our back office support across the globe. Turning back to the second quarter, the big news is the success we had in the automotive sector. We have been awarded contracts in each of our top three automotive clients thereby securing our base work and set for another three years. GM we have expanded our sales and products training include comp and development and expanded our publication work across a number of GM brands. We are currently exploring other ways to add value to our automotive customers including revenue on global learning solutions and providing quality and efficiency across our enterprises. In conclusion, the fundamentals for our business remained strong. Knowledge capture, knowledge transfer, and putting knowledge quickly are paramount for performance in regulatory compliance. Our customers know this and we have the platform to provide their learning needs. We are globally efficient and exception people and processes we have a base of large and interesting industry leading customers. Phenomenally support the drop on for experience. We will continue to pursue our growth strategies and enhance our capabilities organically and through acquisitions of staying focused on our customer service. With that I’ll turn it back to Scott.

[Scott N. Greenberg:]

Thank you Doug, I like to comment on a few of the items that Sharon and Doug discussed today. The first is the backlog, June 30, 2015 to June 30, 2014. It is up over 10% which is a very strong sign. Second, looking at our automobile business sales training at Sandy, the majority of our current revenue is locked in for a three to five year period that’s unprecedented in the history of GP Strategies to get those type of awards. So we are looking on anything additional to be further organic growth in the future. So we really think the Sandy business is kind of locked in for three to five years with the organic growth and that was a major development in the quarter. As far as the acquisitions go the areas we’ll be looking on is the areas that don’t talk about as areas of growth for the company. So our global reach, our e-learning capabilities, sales training, and our delivery on a global basis is very important to the company in our acquisition strategy. And before I turn it to Q&A I’ll just talk a little bit about the cost cutting. As I mentioned earlier, not much of it will be in the administrative area because we want to use that leverage to expand globally and Sandy because of its extreme growth we’ll have very little cost cutting going into that net of $10 million after the additional investment. So the areas that we will focus on the cost cutting will be the other three groups. We believe it’s like pruning a tree. We are pruning part of the tree so it could grow much further and we think the company will have accelerated growth by this cost cutting initiative. When you look at the total cost of the business, while 10 million sounds like a lot of money and it is as far as affecting our profitability it represents less than 3% of the total cost of the company. So we could be very selective in this initiative as far as the prudent goes. So again I like to thank everybody for participating on the call in advance and now I’ll turn it over to Q&A.

[Operator:]

[Operator Instructions]. Our first question today comes from the line of Jeff Martin from Roth Capital Partners. Your line is open. Please proceed with your question.

[Jeff Martin:]

Thank you. Good morning Scott and Sharon.

[Scott N. Greenberg:]

Good morning Jeff.

[Sharon Esposito-Mayer:]

Jeff.

[Jeff Martin:]

Good morning. Can you give us a little more detail in terms of the $10 million savings plan, how much of that is in SG&A, how much of it is in cost of goods?

[Scott N. Greenberg:]

Well right now Jeff obviously it could change but we are estimating roughly 10% of the net change in G&A and 90% of that will be affecting the operating margins or gross profit.

[Jeff Martin:]

Okay and over what time line should we expect this to be implemented, how quickly were you set to realize these savings?

[Sharon Esposito-Mayer:]

Jeff, we’re looking to make the majority of the changes in Q3 and some of the cost cutting will circle into Q4.

[Jeff Martin:]

Okay and then –

[Scott N. Greenberg:]

But Jeff we’ll obviously disclose when we release our numbers how much of the cost cutting occurred and what the severance obligations and things of that nature.

[Jeff Martin:]

Right, okay. In terms of the acquisition strategy, how is the M&A pipeline looking and how far are your along in the process. I know you talked about it, be more aggressive of your strategy last quarter, we’re just curious and how close you are in some things and when we might expect some announcements?

[Scott N. Greenberg:]

Right now we have deals in the pipeline. We have one deal where we commenced due diligence on. Until we complete due diligence I don’t want to predict on that one whether we’re going to -- how it’s going to proceed because that’s a little premature. However we do have deals that are farther along than we did last quarter.

[Jeff Martin:]

Okay and then you’d mentioned some investments in other areas, is there an offset to the 10 million savings that we should be thinking of in terms of debt investment and if so to what degree?

[Scott N. Greenberg:]

Now that’s a point that I want to make clear that the 10 million is after those investments. So the gross reduction will be greater than $10 million and net after the investments will be 10 million. So it won’t be 10 million minus it will be a 10 million net number.

[Jeff Martin:]

Okay and then in terms of alternative fuels, what was the alternative fuels in the third quarter of last year just so we know what comparison we are up against?

[Sharon Esposito-Mayer:]

It was approximately last year Jeff, the alternative fuels revenue was approximately 6 million, in the third quarter.

[Scott N. Greenberg:]

And it’s been running in the second quarter, it’s been running north of $1 million. However, that being said we do have some deals in the pipeline. Now the question is I don’t know whether it will get closed in the third quarter to generate significant revenue but we do have in excess of $10 million of deals in the pipeline. So I would expect maybe not the third but by Q4 that our revenues should start exceeding the current run rates. So the good news is that by the time we get to Q4 the comparison versus comparison won’t start showing the type of declines that we’d had in Q2 and Q1.

[Jeff Martin:]

Okay and then Sharon have you learned the estimate at current exchange rates with before and currency impacts on revenue would be today versus the third quarter of last year?

[Sharon Esposito-Mayer:]

No Jeff, we haven’t done that yet because it’s somewhat a factor of whatever the exchange rates are doing in both July, August, and September. So we can’t -- there is no way to easily project that.

[Scott N. Greenberg:]

Jeff, the reason I was so far up is compared to prior years particularly in a lot of the Asia Pac countries and also there was a dramatic change in the strength of the dollar against those currencies in Q2. And that’s pretty hard to predict going forward.

[Jeff Martin:]

Right, okay, thanks for taking my questions guys.

[Scott N. Greenberg:]

Alright, thanks Jeff.

[Operator:]

Our next question comes from the line of Kevin Liu from B. Riley, your line is open. Please proceed with your question.

[Kevin Liu:]

Hi, good morning. First question here just with respect to the segment performance was a little bit surprised to see learning solutions down sequentially. Can -- since like HSBC did actually hold up relative to the prior quarters, just wanted to get some more color in terms of why this sequential down tick when normally Q2 is kind of an up period for you guys?

[Scott N. Greenberg:]

Sure Kevin, two things really affected Q2 in the Learning Solutions Group; the first is a significant amount of the currency adjustment for the revenue occurred in the Learning Solutions Group because they are the ones with a lot of international revenue. So I would estimate probably close to $2.5 million of the currency change was against the Learning Solutions Group. The second item was in the area of financial services, we had a very large program in Q1 and sequentially that was not a big contributor in Q2. We do expect that to free-up, I don’t know what it will be in late Q3 or Q4 but I do expect that 3 million to stop coming back by Q4. And if you take the 3 million and the currency of 2.3 million into consideration that would be the majority of the difference as opposed to the expectations.

[Kevin Liu:]

Got it. The program certainly makes sense just to be clear the 2.5 million currency impact that was on a sequential basis or was that a year-over-year comparison.

[Scott N. Greenberg:]

That compares to Q2 of last year.

[Kevin Liu:]

Understood and then I think Sharon had mentioned unusually high medical expenses that impacted within the quarter, should we expect that to just reverse course and tick back down to a more normalized number or does it stay elevated for a few quarters here?

[Scott N. Greenberg:]

Yes, we are a self funded company, so it’s not a fixed amount. Usually obviously we don’t dive and sell funding for a company our size, it is much more cost efficient then going into fixed price. So even though the Q2 quarter was high, it would still be a fixed price thing. While we have the same number of employees roughly in total than we have in last year domestically, it’s a little bit of a surprise to see that increase which represented probably about a 30% increase in medical cost. So I would expect it to go down but again that’s what the odd side but it could vary quarter by quarter but over a course of time that was an aberration.

[Kevin Liu:]

Got it and just lastly with respect to acquisitions, curious if those are now going to be more focused internationally as well to kind of leverage the infrastructure you have put in place? And then secondarily what are some of the valuation expectation you are seeing out there, are they pretty consistent with where were you last and acted most of your acquisitions or have they gone up or down of late?

[Scott N. Greenberg:]

I would say they are consistent with the past acquisitions so I would say it’s more consistent with the deals we’ve done like Effective People which we did April a year ago, which continues to have record quarters. The bad news with the acquisition of Effective People that’s why you have seen us post losses on contingent consideration because they’ve been so successful we have had to raise the earn out targets. So included in the quarter, Sharon mentioned was about $100,000 of loss on contingent consideration and predominantly related to effective people. But I would say the multiple is consistent with prior years. Training is still considered very good industry to get into and invest. And but I don’t think its risen at all in the last 12 months.

[Kevin Liu:]

Okay, thanks for taking the questions.

[Scott N. Greenberg:]

Thank you Kevin.

[Operator:]

Our next question comes from the line of Gary Bragar from NelsonHall. Your line is open. Please proceed with your question.

[Gary Bragar:]

Yes, thanks very much. Hi everyone. Quick question for Doug and it may have excuse me have been partially covered already but I was wondering if you could speak a little bit in terms of HSBC, how that is doing and I did see in early June that they are reducing up to 10% of their work force so didn’t know that has any impact on your business or not, if you could comment on that?

[Scott N. Greenberg:]

Yes, we typically don’t talk about a customer in particular. Obviously from the press releases we all understand that HSBC is a significant customer of GP. Sharon gave you the details in percentage on overall revenue of our largest customer. So you could see that overall revenue continues to be strong with our two largest customer’s, one being in the automotive industry and one being in the financial service sector. And with that I’ll let Doug give a little more insight.

[Douglas E. Sharp:]

Yes, just real unfortunate Gary, real shallow response to that other than what you already know in the news. I mean HSBC is a great client to work for and they are going through a change. They are reassessing their businesses globally as they mentioned. They are in program to see cost to invest in areas that they can grow in. They have regulators and monitors as everybody knows, they are in the business and all of that I can say probably obviously everybody at all of that comes change in processes, comes enhancement in technology, and comes a need to educate people on those processes and technologies, and therefore usually we have change just generically when you can think about it this way. When you had a change going on, a lot of complexity and a lot of people involved in need for learning and development solutions are great. So we are proud to be a partner of HSBC and hope they get through that change.

[Gary Bragar:]

Thanks Doug, could you also talk about what the pipeline looks for future growth of outsourcing by -- maybe by industry segment as financial services still pretty hot?

[Douglas E. Sharp:]

Just generally we assess that Gary as you might as you do in your business on a fairly regular basis and we can talk offline on that, how we feel about that. But I would say our sense is based on the opportunities we are going to think on our western country or clients North America and Europe are looking to grow their -- centralizing grow their earnings solutions outsourcing globally enterprise wide and we are seeing that and we’re also seeing the opportunities as far as new clients, new people thinking coming in the market or coming from more of a global areas than we have seen in the past. Now part of that is probably our presence there has been uplifted in the last two three years. So we’re seeing -- we are starting to get known locally in these areas and see more opportunities. So I am not sure that I guess I am not sure from your perspective I see regular report on the dynamics of the business. I am not sure that our input is not just being there right and therefore we are getting more opportunities for the areas of putting on more opportunities independent, does that make sense.

[Gary Bragar:]

Sure it makes very sense to what we producing a global outsourcing report and learning in the next month so we can see that our view of the growth factors.

[Douglas E. Sharp:]

Yes, looking forward to reading that.

[Gary Bragar:]

Great, thanks so much.

[Operator:]

[Operator Instructions]. Our next question comes from the line of Ross Taylor from Somerset Capital. Your line is open. Please proceed with your question.

[Ross Taylor:]

Ladies and gentlemen, Scott you commented on M&A pricing but would you comment on the number of acquisitions you are looking at the size in the financing. I assume that they would just be like your traditional using your bank loans to finance the deals but how big are we looking at in the aggregate total and how many deals would you expect to be able to do between here and the end of the year?

[Scott N. Greenberg:]

Well as far as the payment terms, GP Strategies has always used cash and earn out for the deals. We’ve never issued any equity on any of our transactions and I expect to see that trend to continue. Sharon mentioned the availability under our line and our line is very reasonable based upon our EBITDA. So we don’t over leverage the company. So that’s pretty much where we stand, you will not see the company issue equity on any of the transactions we are currently looking at. As far as the size were up, the deals we are looking at to move the needle so to speak unless something is so strategic that it could impact one of our initiatives you would probably be looking at revenue north of $10 million on any of the transactions that we go forward with. So I would say you won’t see us looking at $2 million or $3 million or $5 million revenue targets unless it was so important it could affect another end of our business but we have none of them in the pipeline right now. As far as deals go, I am not guarantying the deals before the year end, the one thing that you know from the past that on the 25 deals that we’ve completed, we been very selective in our acquisition and we do a significant amount of due diligence. And that sometimes effects the timing, however, we do have some one in particular that we are in the due diligence phase with and we are proceeding in that regards. I talked about the multiples before typically, our deals once we consolidate and get synergies and expense of in expenses they are typically accretive on an EBITDA basis to our current run rate EBITDA. So that kind of handles the multiple question. But again that’s been a strategy, a successful strategy but as you can see from today’s call with what’s going on internationally with the cost reductions getting our margins back up significantly, we have had a lot on our plate in the last 30 days.

[Ross Taylor:]

Scott, since you’ve come on or have been promoted to CEO, the company has been exceptionally focused on enhancing shareholder value. A year ago or so less than a year ago you guys did a Dutch option that was undersubscribed, it was done at a price of 29 that’s roughly or actually right now absolutely right where the stock is trading at. You bought back stock in the last quarter with the stock down here particularly given what I pickup from the tone of the call you guys view as not any fundamental issues at all with the business. In fact you seem to be very upbeat and positive on the business. Should we expect a buyback to be more aggressive in the last half of the year than in the first half even with the acquisition strategy?

[Scott N. Greenberg:]

Well, I don’t want to give away my hand or the Board’s hand right now on our buyback program because that’s obviously subject to changes as the Board. But I will say we were a buyer in the Dutch tender and we bid up to $29 a share in the Dutch tender roughly 10 months ago. And today we don’t think -- we think the fundamentals are still long-term strong so that obviously will have an impact on our decision.

[Ross Taylor:]

That’s good. Thank you very much. I’ll chat with you next quarter.

[Scott N. Greenberg:]

Alright, thanks Ross.

[Operator:]

[Operator Instructions]. And there are no further questions at the moment.

[Scott N. Greenberg:]

Thank you, moderator, thank you Julian. Again I like to thank everybody who participated on the call. While this quarter obviously showed less organic growth than previous quarters we are still excited about the potential and opportunities ahead and we look forward to an update in about three months, so thank you very much.

[Operator:]

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