GTT Communications, Inc.
Q3 2015 Earnings Call Transcript

Published: 8 Nov 2015

[Operator:]

Good day, and welcome to the GTT Communications Third Quarter 2015 Earnings Call. Today's conference is being recorded. And at this time I would like to turn the conference over to Chris McKee, General Counsel and Executive Vice President of Corporate Development. Please go ahead.

[Chris McKee:]

[Technical Difficulty] www.gtt.net. A replay of this call will be available for one month. Dial-in information for the replay, as well as access to a replay of the webcast is available on our website. Before we begin, I would like to remind you that during today's call we will be making forward-looking statements regarding future events and financial performance made under the Safe Harbor Provisions of the US Security Laws including revenue and margin expectations, projections in various references to trends and industry and GTT’s business. We caution you that such statements reflect our best judgment as of today, November 5th based on factors that are currently known to us and that actual future events or results could differ materially due to a number of factors, many of which are beyond our control. For a more detailed discussion of the risks and uncertainties affecting our future results, we refer you to our filings with the SEC including the 8K we filed earlier today, which contains our third quarter 2015 earnings release. GTT disclaims any obligation to update or revise these forward-looking statements to reflect future events or circumstances. During the call, we will also discuss non-GAAP financial measures; unless we specifically state otherwise the non-GAAP financial measures we will discuss today were not prepared in accordance with Generally Accepted Accounting Principles. A reconciliation of our GAAP and non-GAAP results is provided in today's press release and is posted on the Investor Relations section of our website. I will now turn the call over to Rick Calder. Rick?

[Rick Calder:]

Thank you, Chris and good morning everyone. Thank you for joining us. GTT is executed very successfully on our growth plan so far in 2015. Through our combination of three highly strategic acquisitions and investments in organic growth, we have significantly increased our scale and presence in the market place. In the third quarter revenue and adjusted EBIDTA grew 97% and 133% respectively compared to last year. With the acquisition of One Source Networks, which we completed on October 22nd on a pro forma basis, we now have annualized revenue of approximately $470 million and annualized adjusted EBIDTA of approximately $100 million excluding OSMs synergies. At these levels, I'm pleased to report that we have now achieved our previously announced financial objectives of $400 million in revenue and $100 million in adjusted EBIDTA. Having reached the significant milestone, we have spent considerable time discussing our next set of financial objectives and given organic growth potential and then number of actionable targets in our acquisition panel. Today, we are pleased to announce our next financial objective to reach 1 billion in revenue and 250 million in adjusted EBIDTA within the next five years. Let's talk a bit more about our Q3 results. In the third quarter, we delivered solid sequential revenue growth and adjusted EBIDTA margin expansion. Revenue grew 2% from Q2 driven by our continued organic growth initiatives. Gross margin dropped to 45% as we added two significant strategic customers to the quarter at lower initial margins. Both customers are cloud service providers. A great segment for GTT where we provide network connectivity to allow these cloud service providers to reach their clients at any location in the world. We are providing an initial base of services at lower margins as our first – in each account. That we see significant high margin growth potential in both of these fast growing cloud service clients. Adjusted EBIDTA grew 7% sequentially in the quarter and adjusted EBIDTA margin expanded by a percentage point to a new high of 21.5%. We expect to continue to drive margin expansion over time from a balanced mix of revenue growth and synergy realization. MegaPath integration is now substantially complete we will now turn our attention to the integration of OSN. We think OSN is a highly strategic acquisition for GTT and accelerates our growth strategy by broadening our portfolio cloud networking services including SIP trunking, posted PBX and other enterprise Ethernet services. Extending GTT's worldwide network reach through the addition of new points of presence in Australia and South America. Adding a high caliber sales team with deep relationships across at a worst state of Blue Chip multinational enterprise accounts. And adding a high growth recurring revenue base, with industry leading tier metrics and a capital efficient business model. Following our proven track record of successful acquisition, we expect to complete the OSM integration in two quarters post close. We expect to announce the go port organization decisions during the fourth quarter and we expect to complete system and network integration by the end of first quarter, 2016. We have already announced the appointment of two experienced and talented leaders from our OSN to the GTT senior leadership team. Gina Nomellini, is now GTT's Chief Marketing Officer, responsible for leading brand development and messaging, marketing communications, product development and product management. Brent McCutchin, is now GTT's Senior Vice President of Global Service Delivery, leading GTT's service delivery organization and processes worldwide. We think OSN is a tremendous fit for GTT and as we have said previously, we expect this deal to come in at a multiple of 7 times post synergy adjusted EBIDTA more better on a pro forma basis. This is slightly higher than the post synergy multiples on our previous deals but we feel clearly justified given OSN's track record of strong growth. If you factor in OSN's historical growth rate, this acquisition should come in at our historical range of five to six times post synergy EBIDTA or better. Looking at our organic growth initiatives, our sales force is now at approximately 100 quota bearing team members including OSM. We expect to grow from these levels over the next year adding 10 to 20 net new reps by the end of 2016. During the third quarter, we appointed Layne Levine as our Chief Revenue Officer. Layne has done an outstanding job positioning GTT as a leader and delivering cloud networking services and we are excited to leverage his proven sales leadership to drive GTT's worldwide growth initiatives and achieve our target of sustained 8% to 10% top line growth. In additions to the POPs [ph] we added through OSN, we also established a new point of presence in Hong Kong to provide multinational enterprises with extended global network service in Asia. This is our second POP in Hong Kong and our fourth in Asia along with Tokyo and Singapore, and allows us to enhance our network reach to support increasing demand from our clients in this region. On the M&A front, where we would not expect to close any new deals prior to including OSN integration, we continue to maintain an active funnel of a creative opportunities. As we look ahead to any future potential acquisitions, we will continue to maintain our discipline strategy of focusing on opportunities with a strong, strong strategic fit consisting with our growth strategy of extending our global network adding to our cloud networking service portfolio and adding multinational clients to our business, that could be successfully integrated quickly in two quarters and in a highly accretive purchase price as a multiple of post synergy adjusted EBIDTA. For the reminder of the year, we remain focused on delivering a very strong execution on each aspect of our strategy. Expanding our portfolio cloud networking services to multinational clients, extending our network reach to any location in the world and with any application in cloud and delivering an outstanding client experience by delivering our core values of simplicity, speed and agility. We are very proud of GTT's progress so far this this year, and we are excited to get to work on our next set of financial objectives. Now, I'll turn the call over to Mike Sicoli, for a review of the financials.

[Mike Sicoli:]

Thank Rick and good morning everyone. Starting with the income statement, revenue of $97 million, grew 97% year-over-year compared to $49.2 million in third quarter 2014 and increased 2% from $95.1 million in second quarter 2015. The year-over-year increase was due primarily to the acquisitions of UNSi on October 1st, 2014 and MegaPath's managed services business on April 1st, 2015. The sequential increase was driven by organic growth. Foreign currency translation had an impact of $2.9 million on the year-over-year comparison. So in constant dollars, third quarter 2015 revenue grew by a 103% compared to last year. The currency impact on sequential results was minimal. Gross margin of 45% increased 580 basis points from third quarter 2014 and decreased by 90 basis points from second quarter 2015. The year-over-year increase was driven primarily by the acquisition of MegaPath which brought higher gross margins due to the managed services product mix. The sequential decrease was due primarily to the addition of two large strategic customers who as Rick discussed were signed at lower initial margins which we expect to increase over time as we sell additional on net services and renew current services that GTT's lower unit cost levels. SG&A as a percent of revenue excluding non-cash stock comp and transaction related expenses was 23.5% higher than the year ago figure of 21.0% but well below the 25.3% we've reported last quarter. The year-over-year increase as a percent of revenue results primarily from the UNSi and MegaPath acquisition s as these companies carried higher SG&A levels than GTT, due to lack of scale and the incremental cost of operating the managed services product set. On a pro forma basis, however, we have been able to reduce SG&A cost significantly as a percent of revenue over the past year due to synergy realization primarily from headcount reductions. The sequential decrease was due to additional MegaPath synergy realization with a full quarter of lower headcount a well as a 450,000 reduction in employee compensation related to capitalized labor incurred during the first half of 2015 associated with internally development software driven by the MegaPath integration. Adjusted EBIDTA of $20.8 million grew 133% compared $8.9 million in third quarter 2014 and increased 7% from $19.5 million in second quarter 2015. Foreign currency translation had an impact of $600,000 on a year-over-year comparison. So in constant dollars third quarter 2015 adjusted EBIDTA actually grew by a 140% compared to last year. The currency impact on sequential results is minimal. Adjusted EBIDTA margin expanded by approximately 330 basis points to 21.5% compared to 18.2% in third quarter 2014 and by approximately 100 basis points compared to 20.5% in second quarter 2015. The year-over-year increase was due primarily to the acquisitions of UNSi and MegaPath, specifically synergy realization. The sequential margin increase was due to the reduction in SG&A as a percent of revenue partially offset by the decrease in gross margin. As we've discussed previously we expect to drive continued margin expansion over time as we fully achieve synergies complete network grooming projects and realized the benefits of scale and operating leverage. In addition, during the third quarter we recognized $1 million of additional non-recurring transition and integration expenses associated with the MegaPath acquisition, recorded in SG&A but excluded from adjusted EBIDTA. When combined with the non-recurring cost recognized in the second quarter including $7.7 million of severance, restructuring and other exit cost as well as $2.6 million of transition and integration expenses recorded in SG&A, total MegaPath related non-recurring costs add up to approximately $11.3 million. Capital expenditures in the quarter were $3.5 million including the adjustments for capitalized labor I mentioned earlier compared to $400,000 last year and $2.9 million last quarter. Third quarter CapEx was 3.6% of revenue slightly below our target of 4% to 5% of revenue. Our CapEx light strategy continues to enable us to remain nimble and providing solutions to complex client needs and deliver compelling cash flow margins relative to CapEx heavy players. Unlevered free cash flow defined as adjusted EBITDA less CapEx was $17.3 million in Q3, or 17.9% of revenue, compared to $8.5 million last year and $16.6 million last quarter. Net cash provided by operating activities was $19.9 million on a year-to-date basis which includes $7.4 million paid for cash interest $5.5 million paid for restructuring and exit costs relating primarily to the UNSi, MegaPath acquisitions, $3.6 million paid for transition and integration costs primarily relating to the MegaPath acquisition, $3.9 million of the use [ph] related to the working capital deficit acquired from MegaPath, $2.4 million of use from changes in foreign currency rates and a general working capital use of approximately $6.6 million some of which is related to working capital deficits from acquisitions completed prior to 2015. There are often working capital fluctuations in periods following acquisition as it can take several quarters for customer business vendor payments to settle-down to a more normal state. Moving to the balance sheet, as of September 30, our cash balance was $19.7 million and our outstanding debt balance was $227.7 million including capital leases. Our leverage ratio using third quarter 2015 annualized EBIDTA was 2.7 times on a gross basis and 2.5 times on a net basis. On October 22nd, we completed the acquisition of One Source Networks. We paid a $175 million for the acquisition including approximately $164 million in cash and $11 million in GTT stock plus approximately $5 million in cash for an estimated working capital surplus as of the closing date. We funded the acquisition and refinanced our existing debt with a new credit facility. The new credit facility consist of a seven year $400 million term loan B placed at LIBOR plus 525 basis points with a 1% LIBOR floor as well as a five year $50 million revolving line of credit. The term loan was issued at a price of 98 [ph] requires mandatory principal amortization of 1% per year until maturity plus in access cash flow sweep and includes a 101 soft call premium for six months. On a pro forma basis our ratio of total debt to adjusted EBIDTA is now approximately four times, at the high end of our target range of three to four times but well within our comfort level. We expect to de-lever organically over time through a combination of adjusted EBIDTA growth and free cash flow generation. Even with higher leverage our balance sheet credit profile and liquidity remains strong. With that, I'll turn the call back over to the operator, to take your questions. Operator?

[Operator:]

Thank you. [Operator Instructions] And we will take our first question today from James Breen. Please go ahead.

[James Breen:]

Thanks for taking the question. Just one if you can talk about your organic growth obviously it's something people focus on the first half of this year as a little bit below expectations, maybe talk about how organic growth came in this quarter and then how you see that being impacted by the One Source acquisition, and in additionally from the sales force perspective I think you were at around 75 at the end of the second quarter. Can you talk about where you are now? What you will gain from One Source and sort of how you think about for year-end into next year? Thanks.

[Rick Calder:]

Great, thank you very much Jim for the questions. We feel good about organic growth. We grew 2% sequentially. So within the 8% to 10% range we discussed getting back to in the second half of the year. We see good opportunity across all three of our segments. We had a great enterprise wins across a number of different financials both in the retail, the financial services, the healthcare industries. We had some very nice wins as we talked about in the carrier segment, cloud services companies who are using us now to extend reach worldwide, to reach all of their clients using our cloud networking capability to reach any location in the world. And then we also see continued progress. We actually had a nice growth in our government segment as well and we've remained hopeful about our ability to be a player in the global network services contract moving forward that has not then awarded at this stage. So we feel good about organic growth across all the elements of our business and being able to sustain 8% to 10% growth that we've targeted for us over our next set of growth phase as we look to achieve $1 billion in revenue over the next five years. Specifically, on headcount we were slightly under 80 as we announced on our last earning call and we're right it about a 100 right now as we just mentioned and we think that is a good number for us to be at. I think we also said that we would like to grow our sales force in to 2016 by adding 10 to 20 additional reps over time as we continue to show which we are showing now good productivity growth. We'll continue to add that and that 100 is with the One Source Networks addition as well. So we clearly expect to be growing our sales force through the year 2016. We think as we noted in our prepared remarks we've added a set of talented individuals, a set of founders of that business who we believe will continue to sustain and assist our growth as we move forward.

[James Breen:]

Great and as One Source is growing pretty rapidly as your potential there you can see organic growth get above that 8% to 10% range just given the One Source business?

[Rick Calder:]

There's potential, I think our goal has been very consistently 8% to 10% in that region, we achieved higher than that and we continue to sustain. If we sustain higher growth in that, we could potentially set a higher target for ourselves. I think we'd like to continue to achieve the target that we have set before ourselves in terms of organic growth and continue to work on initiatives to drive back growth even higher.

[James Breen:]

Great. Thank you.

[Rick Calder:]

Thank you Jim.

[Operator:]

And we'll now go to Scott Goldman with Jefferies.

[Scott Goldman:]

Hey great, good morning guys. I guess a couple of questions. Just on the new target Rick you laid out the five year target? Couple of questions on that. Just want to -- maybe you could help us to understand sort of the mix in terms of we can do the math on the organic, assuming organic growth target you have laid out would imply that probably only about $250 million or so might come from M&A over that next five years which my guess would probably be fairly conservative given the pacing of deals in recent times and using say OSN as sort of a proxy for what type of revenue could be acquired? Just wondered maybe if you comment on that mix M&A versus organic inside of those assumptions. And on the same topic also comment on the implied margins of those targets. I mean probably on a few hundred basis points above where we are now, probably something you could achieve organically on your own. But love to hear your thoughts there? And then secondly just on OSN maybe you can do the compare and contrast the integration process there with prior ones is this one easier given the product mix and culture of the company or does it bring any challenges perhaps like MegaPath had some and cross sell opportunity that come out of that as well with existing base. Thank you.

[Rick Calder:]

Great, Scott, thank you very much for the questions. First on the targets just for some history. This is our third set of financial objectives. We announced our first set in the first quarter of 2011 to grow the business to $200 million in revenue and $30 million in EBIDTA and we achieved the EBIDTA in the third quarter of '13 and the revenue in the fourth quarter of '14. In the third quarter of '13 we announced our second set of financial objectives to grow the business to $400 million in revenue and a $100 million in EBIDTA and just as we described two years later this quarter fourth quarter of '15 we'll achieve both of those objectives. So we are now announcing our third financial objectives to grow the business to a $1 billion in revenue and $250 million in EBIDTA in five years. To your point about organic growth well a crystal ball can't say exactly, beyond the pace in the nature of the acquisitions. We do see a very active funnel of opportunities that we see before us. And I think we laid out a time frame that we believe is achievable with the 8% to 10% organic growth and as our historic norm has been, to do one selective strategic acquisition each year. It does not have to be a significant sizable one doing five OSNs or five UNSi's as we've done before, could achieve that. Could we achieve it sooner, if we do larger deals, yes but we think it is a very prudent time frame for us to achieve that next financial objective of growing the business. We've achieved in the past the financial objectives we put before us and we're confident in our ability by executing our strategy both organically and through selective strategic acquisition that we can create great value in the organization moving forward. With respect to margin let me ask for the second question, let me ask Mike to address that one and then I will come back to the OSN integration process.

[Mike Sicoli:]

Sure. So to address your point of your questions specifically, I do think we could get to 25% organically. The goal that we set out there is probably a blend of being prudent and conservative as Rick articulated but also acknowledging that some of it will come from M&A and not necessarily knowing exactly what EBIDTA profiles of those targets might be. If it's all deals like OSN then we could probably do better than 25% margin in that time frame but we're sort of leaving open the possibility there could be a mix of different types of targets in there.

[Rick Calder:]

And then on the OSN integration process, so as you called we did our third acquisition in the year we did. We closed the UNSi acquisition on October 1st of '14, we close MegaPath on April 1st of '15 and we closed this on October 22nd of '15. So little faster than our historic phase. We do believe this one will be significantly easier than the prior two. We think that and we've been talking to the principals of OSN for many years. We think they share a very common culture with us. Many of the employees within the firm we welcome back, we've worked with previously in former lives and we think that it is a fantastic fit. We believe as we said in our prepared remarks that we would complete the organizational integration this quarter and that we would complete all the system and network integration in the next quarter. And so we clearly believe that we're on that pace to complete all integration in two quarters to realize the synergies that we described as we originally announced deals seven times or better and that to a degree that the growth continues that we've seen in OSN that on combination with us that we could be back into our historic range of five to six times or better as well.

[Scott Goldman:]

Great. And in terms of the cross sell opportunity what you see in terms of demand within your existing days on hosted voice side or unifying communication side in particular?

[Rick Calder:]

Yeah. Great question, Scott, I think one of the things that -- while we had already added the hosted voice, capability hosted PBX, we added deeper product set, different technology platform for the hosted capabilities. That's why it really broadens there and we're very excited about adding the SIP trunking product. So there is a global backbone of section board of controller, sonic section board controllers [ph] that we're now adding and points of presence around the globe. Some of them co-located with our existing points of presence, some new as we described; Sydney, Australia, Bogota and Latin America and Columbia and points of presence also in Europe, Hong Kong and four in the United States. So we think that is a tremendous cross sell opportunity for our base. Where our multinational clients have installed basis of IPTV [ph] axis or legacy basis of TDM voice PB axis and upgrading them to IP and we clearly have that opportunity now to cross sell that product and we'll become sort of the fourth core area of our business in addition to Internet services, Ether cloud transport services, a full suite of managed services and our full complementary suite of voice over IP services that we will add to the mix to sale to multinational clients.

[Scott Goldman:]

Great. Thanks a lot.

[Operator:]

We'll now go to George Sutton with Craig-Hallum. Please go ahead.

[George Sutton:]

Thank you. With respect to the perspective of the cross sell I want to look at it from the point of view of a quota carrier. So do I now have a -- I obviously have a much broader set of services I can sell. I'm curious how that affects my quota expectations and is there any need for me to specialize or am I selling the entire bag, myself?

[Rick Calder:]

Thank you George, great question. I think by and large and I'll answer it by thinking about the process we went through One Source Network. So while they have a very deep product set in the voice capability and deep facility for selling Internet and Ether cloud transport services, one of the real drivers is the ability to sell the network base worldwide reach of the GTT Network that really drove the deal to happen. We, as we said welcome a whole series of fantastic folks to the team. They are as excited about selling our capabilities, our historic capabilities of Internet services, Ether cloud transport services and managed services to the deep portfolio of clients they have and we've had some very initial exciting meetings with the top 20 accounts about the reach and depth of the GTT product portfolio. So I would say if we think about a quota bearing, that the opportunity to have a cloud networking platform that is tight and broad as ours is and its reach being be able to deliver it everywhere in the world gives the opportunity for as we like to think about it, performance improvement and rep productivity improvement. So I would say while we have some specialization in sales engineering and service delivery resources across some of these product set, the broad reach that we have of the product portfolio and cloud network and I think can be absorbed by the clients in general. We do see some specialization by vertical, we have folks that are focused a little bit more intensively in financial services sector and the healthcare sector, in oil and gas and the government sector et cetera but I think the tight suite of cloud networking services, again Internet Ether cloud transport, managed services and now voice-over-IP is something that we believe can be successfully trained to the entire sales organization, enterprise sales organization so that we can improve rep productivity and continue to add very effectively quota bearing reps over time.

[George Sutton:]

Okay. Perfect it, I just wanted to get behind the thought process relative to your new goals, obviously a $1 billion revenues in 2015 [ph] and EBIDTA's a pretty round number I'm curious the five years and then how much give and take there was on that time frame?

[Rick Calder:]

Great question, thank you. You know I will reiterate the fact that we've done this twice before. We think we have clearly the opportunity to grow our business successfully with our proving strategy both organically and through select acquisitions and I think we wanted to be conservative in the time frame at which we achieve and not putting undue pressure to do deals that may not be strategic. One of the things we take very, very seriously is the fact that we are going to do a selective strategic acquisition, it must fit with our strategy and must expand our cloud networking service portfolio, it must help expand our reach globally to every location in the world and up in the cloud and add a good roster of multinational clients. We did not want to feel any undue pressure based on an arbitrary time frame we put out there to look at deals and feel that we had to do an acquisition to achieve some arbitrary time limit. I'd be very clear that we have achieved the goals that we set out previously in under five years. So there is an opportunity there but we wanted to very clear that our objective is to do it within a five year time frame through good solid organic growth and very prudent accretive selective acquisitions that complement our strategy.

[George Sutton:]

Hey one last and if I could relative to these two deals that you started with lower margin at the beginning. If we look back a year from now will those have been unusual deals or will that have been the start of a new trend?

[Rick Calder:]

It's great question. We love these two accounts. We think there are tremendous growth opportunities for us. Clearly as they're relying on us not exclusively but I would say for a vast majority of their cloud networking extensions to their clients. We have seen since doing these deals very significant high margin growth premium. So we have a very nice flow of new orders and we believe as Mike said in his remarks that our ability to take the base of business that we have at re-term and continue to upgrade the margin. We have seen that continually in our business that as we approach re-term, we are able to upgrade the margins of our services over time. And it's been one of the drivers of margin expansion of our business that we have tremendous buying power in the industry with our buying from off-net extension, last mile extension providers, and we are able to add re-terms significantly improve the margin profile of the business. That continues to exist as well in our core network. The absolute magnitude of our core network spend continues to come down as our traffic grows very nicely on it given the extreme leverage we have with our suppliers in driving per unit cost down faster than per unit revenue price declines in our business. So we're very excited about these two clients. We've seen very nice order trends for them moving forward and we see them as being nice growing parts of our business.

[George Sutton:]

Perfect. Thanks guys.

[Operator:]

We'll now take a question from Jonathan Charbonneau with Cowen and Company.

[Jonathan Charbonneau:]

Great. Thanks for taking the questions. Can you maybe give an update on your partner channel and how we should be thinking about the contribution from it next year? And then longer term how much revenue do you believe given your business should be coming from the partner channel? Thanks.

[Rick Calder:]

Right. It's a great question John. We, I would say have not made significant progress from where we were last quarter which interestingly creates a nice upside opportunity for us in 2016. Today probably less than 15% of our business comes through traditional Asian channel partners or system integrators and I think as I commented on the question last quarter, we see an opportunity to take upwards of a third of our business there. So we are going to make, in the quota bearing portion of our business a much more significant investment as we grow our business into that partner channel to see whether we can actually grow the portion of our revenue that comes through traditional agents as well as system integrators. So we do see it as an opportunity and not one that we have changed the mix significantly between 2Q, and 3Q. So we see that as an opportunity to continue to drive good solid organic growth and as we grow the sales force that is a particular focused area of investment for us moving forward.

[Jonathan Charbonneau:]

Great. Thank you. Operator

[Rick Calder:]

Great. Thank you very much operator. I'd like to turn it over to our Executive Chairman Brian Thompson for some concluding remarks and then I will wrap up.

[Brian Thompson:]

Thank you Rick. I'd like to kind of start my remarks by sharing with you a couple of disappointments. The first disappointment was I try as I might especially after stimulated calls from even some of you and friends. I could not find anything within the company or even the exogenous factors going on in the market place that would have justified our share price going down some 30% over a two week period. It made no sense for me then, it makes no sense to me now and I hope those you on the call understand it made no sense when you look at the numbers that the company is doing and the progress we do on our path. The second disappointment was the despite protestations that I made to our General Counsel, he would not allow either our Board nor our executive team to go into the market and acquire stock as it went down 30% and you all understand that, I would guess. But those are two comments I wanted to make. And the reason I make those comments is that all along through the last 8.5 years that we've been trying to build this company, I have continued to say we're building a company for the long run. We're building a company that has long term values and growth and we don't manage the company on a quarter-to-quarter basis. My impression is that there are some investors that just don't have that understanding of the company and therefore that must have been what took place. But those who do understand the company including most of you on this phone call, I think would recognize that we're in this for the long run and we're doing what is right. The interesting part about it is this executive team has been able to put together, very close attention on the fundamentals of managing a business at the same time as they are paying very close attention to integrating acquisitions. Something that I can't point to any other company I know that does as well as this team does. Better than that with the acquisition of the team that we just go with OSN and we were able to at our Board meeting last week down in Austin get to meet a good numbers of these folks, we have strengthened deeply our bench, our head headquarter bench and the bench within the organization of people that number one understand what the company is about and number two are really aggressively anxious to get underway with the company's new structure, including the move forward that the team will make as we integrate. This is one company; this is one company with a set of fabulous products now, a great reach worldwide and irrespective of that I think that this is probably something that any investor would be wise to keep for a long time in their portfolio. My grandchildren believe that for sure but more importantly I think as we go forward the one thing that we haven't been able to do, which I apologize for but you also understand is, because this team was working very aggressively on the integration on the acquisition of OSN, they haven't spent the time in the market place nor could they because of the implications of that to keep you all informed about where we are in the market. And I can assure you over the next weeks coming you will see a lot more of the executive team as we do calls and we're available here so that we appreciate your interest, we appreciate what you are doing and I sure hope you appreciate what these guys are doing. Thank you very much.

[Rick Calder:]

Great. Thank you very much Brian and thank you for everyone for joining our call and as Brian said we'll be attending the Jefferies SMID Cap Telecom Conference on the 18th of this month and we have four non-deal roadshows planned before the end of the year to meet with many institutional investors for year end. So we very much look forward to speaking with you on the road to the degree we have a chance to meet in person and we look forward to reporting our full year 2015 results on our fourth quarter goal. Thank you very much.

[Operator:]

And thank you. That does conclude our conference for today. I would like to thank everyone for your participation.