Kate Lowrey - Director, IR Vic Richey - Chairman & CEO Gary Muenster - VP & CFO.

Jon Tanwanteng - CJS Securities Ben Hearnsberger - Stephens John Quealy - Canaccord.

Welcome to ESCO Second Quarter 2016 Conference Call. Today's call is being recorded. With us today are Vic Richey, Chairman and CEO; Gary Muenster, Vice President and CFO. And now, to present the forward-looking statements, I would like to turn the call over to Kate Lowrey, Director of Investor Relations. Please go ahead..

Thank you.

Statements made during this call regarding 2016 and beyond EPS, EPS - As Adjusted, EBIT, tax rate, future growth, profitability and revenue, operating margin, cash flow, orders, successive new products, sales, acquisitions, implementation of the Company's capital allocation strategy, the costs, benefits and timing of restructuring and cost reduction activities, the results of recent acquisitions, corporate costs and other statements which are not strictly historical are forward-looking statements within the meaning of the Safe Harbor provisions of the federal securities laws.

These statements are based on current expectations and assumptions and actual results may differ materially from those projected in the forward-looking statements due to risks and uncertainties that exist in the Company's operations and business environment, including but not limited to the risk factors referenced in the Company's press release issued today which will be included as an exhibit to the Company's Form 8-K to be filed.

We undertake no duty to update or revise any forward-looking statements whether as a result of new information, future events, or otherwise. In addition, during this call, the Company may discuss some non-GAAP financial measures in describing the Company's operating results.

A reconciliation of these measures to the most comparable GAAP measures can be found in a press release issued today and found on the Company's website at www.escotechnologies.com, under the link Investor Relations. Now I'll turn the call over to Vic..

Thanks, Kate, and good afternoon. Before I give my perspective on the quarter, I will turn it over to Gary for few financial highlights..

Thanks, Vic. As a reminder, at the start of the year we announced that certain restructuring actions were undertaken related to our lower margins, international operations primarily in the test business. We described and quantified the specific actions as well as the annual cost savings anticipated once the process was completed.

The detailed restructuring costs were excluded from the FY'16 guidance provided in November and we noted that we will be presenting our quarterly and annual financial results for '16 on an EPS as adjusted basis. Our restructuring actions have been running ahead of schedule and are expected to come in below the original budgeted amount.

Once these actions are completed we will have eliminated a significant management distraction at the operating unit level which will allow us to begin realizing the identified cost savings and operating benefits we anticipated.

As described in the Q2 release and commensurate with the recent acquisitions of Fremont and Plastique we have expanded the presentation of our reporting segments to reflect the operating results of our technical packaging group.

We feel this additional disclosure will further shareholders understanding of our underlying operations as well as provide additional insight into our outlook.

Turning to our Q2 and year-to-date results, I'm pleased with our operating performance which exceeded expectations from several perspectives including EPS, cash flow and entered orders which each significantly exceeded expectations.

The early performance of Plastique is consistent with our acquisition forecast and their potential growth opportunities continued to materialize. During Q2 we reported EPS as adjusted of $0.40 a share which was 33% higher than Q2 of last year and 11% higher or $0.04 above the top end of our February guidance range of $0.31 to $0.36 a share.

Our six month year-to-date EPS as adjusted was $0.87 and is above our original six month expectations we set in November. Compared to our February guidance, our increased earnings came from every operating unit with the exception of VACCo whose sales were impacted by the timing on long lead items between the first and second half of the year.

Doble, TEQ and Test Q2 earnings each exceeded our previous expectations by a fair amount. Our Q2 and year-to-date cash flow is running several million dollars ahead of projections and our cumulative entered orders at the six month point put us in a comfortable backlog position at March 31.

The $273 million of orders year-to-date are supported by the continued strength of our commercial aerospace business and in particular the a A350 program coupled with the order strength generated in our technical packaging businesses.

Our multi-segment strategy and our strong operational focus are key themes that we've communicated over the past few years and these results demonstrate that our goals remain well defined and are clearly in focus throughout the organization. Here are a few highlights from the release to allow you to better understand the underlying results.

Q2 consolidated sales increased 8% or $10 million compared to Q2 of the prior year. The increase was driven by technical packaging were sales doubled from prior year reflecting the strong performance of TEQ and the contributions from Fremont and Plastique.

Doble sales increased as a result of higher software and service revenues, Test sales decrease due to project timing and filtration sales were up modestly as a result of VACCO's sales timing issues partially offsetting the increase in commercial aerospace.

Corporate costs were higher than last year primarily due to the timing and volume of spending on professional fees primarily incurred supporting our M&A activities. In the balance sheet, we continue to maintain a very favorable debt level with $60 million of net debt outstanding at March 31.

We remain firmly committed to our capital allocation strategy which includes share repurchases and dividends and as such we repurchased 87,000 shares and spent $3 million during Q2. We expect to continue to opportunistically repurchase shares in the open market over the balance of 2016.

After reviewing our sales growth and profit improvement opportunities over the balance of the year, we determined it was appropriate to raise our FY ‘16 EPS as adjusted guidance to $1.95 to a $1.202 per share from the previous range of a $1.90 to $2 a share.

Getting off to a solid start over the first half of the year and considering the strength of our current backlog coupled with the contributions from Plastique this provides additional comfort and our ability to achieve our increased EPS goals. Regarding our Q3 outlook we’re expecting EPS as adjusted to be in the range of $0.40 to $0.45 a share.

Finally commenting on our longer term view we continue to see meaningful sales, EBIT, and EPS growth across the business segments consistent with the previous expectations and earlier communications. And I'll be happy to address any specific financial questions when we get to the Q&A and now I'll turn it back over Vic..

Thanks, Gary. As noted in the release and as Gary discussed we had a solid quarter and we’re well positioned to hit our increased EPS outlook for the balance of the year. I'm pleased to see that we had good performance across the company both in Q2 and year-to-date.

While I won't say we’re immune from the economic headwinds, many industrial markets currently facing. I do believe the breadth and diversity of our end markets in the specific niches we operate in provide us a protection to mitigate their impact. Gary and I visit all of our major operating locations in April and we came away encouraged by what we saw.

Again we're not without challenges, but the issues we’re facing appear manageable and to offset these issues, we have identified some solid upside opportunities that we can capitalize on as we head into next year. Also in April we visited two of Plastique'soperations in Europe.

Their engineering and design center in the UK and their manufacturing facility in Poland. During this trip we had the opportunity to meet more of the management team and were able to do a deeper dive into their market opportunities. I guess I'm even more excited about this business and its future.

Gary and I came away impressed with the strength of the management team as everyone we met appeared very dedicated to the company and excited about their opportunities as a part of TEQ and ESCO. Their core business is very solid with some real upside as a result of their fiber pack capabilities.

More and more customers want the option of using a sustainable fiber based product or a combination of fiber and plastic packaging and the desire for more environmentally friendly packaging is driving the demand for these alternatives.

Our combined technical packaging group now has scale and market leadership positions across several growth markets where we are providing highly engineered products to customers in the medical, pharmaceutical and the consumer markets. I'm confident these opportunities we’re seeing set us up nicely for the future.

Moving on the filtration, our aerospace business continues to perform above expectations and our year-to-date earnings, cash flow, orders and outlook for the balance of the year remained strong.

A key driver of the continued success and confidence in our commercial aerospace business is we’re well ahead of our near term order and production plan on several platforms led by the A350 which continues to run better than expected. Doble reported another solid quarter with operating performance in Q2 delivering adjusted EBIT margins of 25%.

The utilities continue to rationalize our capital budgets and we better understand the potential impact on our legacy hardware sales. We continue to see additional opportunities in our service and software applications.

Additionally to mitigate the impact of CapEx constraints we see tangible opportunities with our new products such as DM Series, Doble Prime and our [indiscernible] offerings. Overall the combination of our offerings in a breath of our solutions bodes well for outlook.

I recently attended the 83rd Annual Doble Conference and was thrilled to see another year of record attendance as we hosted over 1500 customers for the weeklong event. The restructuring activities in Test and Doble are progressing ahead of schedule and below our projected cost.

These activities have taken place without any negative impact on the rest of the business and most importantly we're seeing a cost savings materialize as anticipate. I feel good about the growth opportunities we see ahead of us across the business which gives me confidence over the balance of this year and for additional growth in '17 and beyond.

I'm pleased we were able to supplement our outlook with some non-organic growth during the past six months. This is as we've discussed previously acquisitions are a key component of our ability to meet our longer term growth targets.

We are currently reviewing some additional opportunities which we find interesting and we will continue to work diligently to make some of these happen. We certainly have a balance sheet capacity and management bandwidth to handle this additional growth within our current operating infrastructure.

So wrapping up, we had strong first half of the year and our outlook for the balance of the year remain strong. Our actions to reduce our cost structure are paying off and we're on track for bring in a strong '16 as we are well positioned for profitable growth in all three segments.

Our focus remains constant to improve our operational performance and execute on growth opportunities both organically and through acquisitions. So now I'll be glad to answer any questions you have..

[Operator Instructions]. Our first question will come from the line of Jon Tanwanteng from CJS Securities. Your line is open..

I'm just wondering if the margins in the USG segment is substantial is that more a result of the higher -- less hardware in the quarter and do expect that to normalize?.

There's always going to be some ups and downs from quarter to quarter depending on the mix, but you know certainly we see that businesses is being over 20% going forward..

Okay. We’ve seen a number of commercial aerospace suppliers talk about weakness or slowdowns in deliveries.

I'm just wondering why you haven't seen any of that? Is that a purely the mix of programs you’re exposed to?.

Yes. I think it's really very much platform driven and you know we get that question quite often recently because there has been a good bit of that news but quite honestly we have not seen any of that.

And I think it's just a mix of the programs that we’re on and that we were just out with those guys a couple weeks ago and kind posed same question to them because [indiscernible] and so we did a little deeper dive look at the program that they're on and the production schedules for the platforms they are on seem very solid.

So we've not seen any indications that that's going to soften our specific airframes in the near term..

And can you comment on the technical packing business, now that you’ve broken it out.

You know what should we expect from the new segment in terms of growth and then margins over time?.

I think we’re looking at it kind of 12% or 13% range now. We think that we're looking at some things to improve that and to get some additional growth and obviously would have to add a lot of infrastructure as we grow that business. The core packaging business if you will and talk about that was the original business that we had.

You know we expected some attrition in that business this year, it's pretty typical to do that and we have never really seen it.

So I think that guy has done a good job of going out and work and existing customers pretty hard to ensure that we maintain the business that we have, in fact in a number of cases have been able to be get longer term LTAs if you will longer term contracts and gives us a little more stability.

So as we add to that business we do think we’re going to get some leverage. Obviously it's not the same level of profitability as we’re seeing our filtration of USG business but we do think there's opportunity continued to drive margin there. I think the big question is how much leverage we're going to be able to get with having a European operation.

We think it will be good but you know we're not really ready to commit to anything until we have a little more time with those two businesses but certainly we see the longer term opportunity there to do more medical in Europe, I mean a lot of our customers were really pushing and saying you need to have a European operation because shipping costs, and that's where they're located.

So we think that they will give us more opportunity there, conversely some of the areas where they were already very strong. We think we can bring some of that to the U.S. So, there are certainly are opportunities there but it's very early in a process. You know it will take a little time to see how much of that we can harvest..

And that 12% to 13% was an EBIT margin is that what you’re talking about?.

Yes..

Okay.

I think you did a little more than that in the quarter, little over '14 -- do you think that’s going to come down?.

That’s the right number but I guess the one thing we have to keep in mind is as KAZ program and what I would call the core TEQ business it's running at an extraordinary rate right now, we’re restocking some of their inventory orders.

So that's a high margin product for us and so when you're looking at what's going to happen when that business, it's not going to run at the rate it has been for the last quarter or two because as they convert from Gen 1 to Gen 2 and a backwards compatible things, you’re going to see a little bit of stabilization in the revenue line and that will bring the margins back down to a little bit closer to historical.

So it is 14% for this quarter but I think as you look forward keeping it at upper 12s to mid 13s is the right way to think of that as a longer term run rate, once KAZ kind of goes back to its normal run rate versus this current extraordinary run rate..

And then again I mean I think the question is going to be as we get more business if we're able to grow that which we think will be able to we should be able to leverage that and get a higher margin..

And then just one more question, the SG&A line was actually quite a bit below what we thought it was going to be.

How should we think of that run rate going forward?.

I think you know what you're seeing this is the first real quarter where we have, where we’re completely out of the facility in Germany and essentially out in the UK and we’re also out of the facility in Brazil and so that's why you see the big down tick that you’ve there.

So I think if you just carry that forward at least for the balance of this year we would be comfortable you know again because you're going to have -- we’re not going to be adding people back into the facilities that are the relationships that we just shut down so this feels like you know give or take a couple hundred thousand that this is the run rate that you should see going forward.

You know kind of a net upper 32s, 32 million kind of think, 33 maybe but you're not going to see it going back up to 34, 35 any time soon..

Our next question will come from the line of [indiscernible]. Your line is open..

I think this maybe is more of a question for Gary, so we know that your years are typically backend loaded but this one is looking incredibly Q4 loaded and I guess I'm a little bit surprised that we didn't see a little more lift in Q3 but you know we're looking now at something in the low 40s in Q3 and then pushing $0.70 in Q4 and this might be very broad but can you just talk about some of the major moving parts how this progresses sequentially Q2 by segment or Q3 and then Q4? Thank you..

I think Kevin, if we start with the back of commentary that I made you know relative to some of these long lead items you know as you're transitioning the SLS type business from you know development into some production hardware and you're kind of moving the Virginia class from one lot to the next as those things transition.

Just kind of put numbers around it in, Q2 VACCO was a little less than $20 million in revenue and obviously there's a nice infrastructure there.

So the EBIT margins that came out of VACCO this quarter were about 13% - 14% because that's not their run rate for revenue and so taking VACCO up Q3 up to 26 or 27 is more rational as you're catching up on these long lead items that are converting through the calendar is probably the best way to think about it and then their sales move up closer to 30 million in Q4 which might seem extraordinary going from 19 to 32 quarters later but again I will remind you that the revenue associated with SLS in the Virginia class, these are significant programs that come through at high dollar and in high margin content.

So I would say that's probably the only thing that's really unique relative to the thing relative to our past, you know VACCO has generally been pretty stable on a quarterly profile basis and that's a on the other side of the business.

If you look at our historical test business profile, you know the fourth quarter has always been their biggest revenue generator and that's going to be the case this year as well and so as we, as Vic said we spent a lot of time down with those folks.

We have program by program specific details there that support our thinking and then you know we put a little assessment on top of that because it's not our goal to overcommit and underperform.

So I think we've dialed it to a fair amount of time but your math is right, I mean if we're going to do the middle of our range in Q3 you got to get to a 70 something thing in Q4 but when we go through the components you know by revenue profile and profit profile. It's not that extraordinary on a piece by piece basis..

What kind of assumptions are you making on Doble? Because I think at one point you thought the year might be more than 10% growth topline and it was more like four or five in the first half, I know there's an easy comp coming there in Q4 but what's driving that? Are you still holding that target and what drives it? What accelerates?.

Actually some of the things that we have in front of us that where we have contracts in hand but we obviously haven't started delivering the product yet, so we have some things related to Doble arms that are unique revenue recognition items.

Again these aren't $5 million and $7 million things but they are things that when they pop through in the second half of the year, you know they're 0.5 million and 1 million kind of things and some of these products that Vic alluded to whether it's [indiscernible] or the prime some of these new things that are coming through.

So you’re going to see a sequential ramp up from Q1, Q2, Q3, Q4 through the year and again that's really just the manifestation of the order profile converting through as we do our diligence in the utility space.

We see, at least we anticipate from conversations that we've had that the budgets are going to be loosening up here a little bit in Q3 and Q4 as the utilities rationalize our CapEx. So that's a long answer to say, we have some optimism and that we have dialed it back a little bit so we're not -- we probably added a 10% number right now.

I mean could we do that? Yes, but we would probably need some extraordinary budget releases and that's what we've dial back into our current assessment..

But in terms of your optimism there Gary, we just did 30 million, we were closer to 35 in Q1 or maybe back more along the lines in Q1 run rate in the second half?.

Yes..

And then usually again the margins come through with pretty strong incrementals here mix aside and that’s a fair assumption as well that we'll see the strong flow through that we normally see?.

Right, especially as Vic alluded to the benefit of the mix working favorably as you get more software and services through those tend to pull through higher incremental margins.

So as that mix moves forward we get a nice sequential dollar for dollar pop to the EBITDA line that’s higher than if the legacy hardware stuff would come through at the same revenue volumes..

And again you have to remember we would take some cost out of that business as well both in Brazil and some domestically as well..

Right.

Well to your earlier comment, Vic, I mean it sounds like holding 20% isn't a real high hurdle when we did 28 and 25 basically in the first two quarters but you're not suggesting that there's something in the mix coming that would knock us down but it sounds like maybe we've seen the low water mark in Doble for the year on sales and EBIT margin..

Right..

Our next question will come from the line of Ben Hearnsberger from Stephens. Your line is open. .

I wanted to ask a question on the packaging, the technical packaging segment. I think it may have been asked earlier and if I missed it I'm sorry but how should we think about growth in that business now that you have broken it out, you have critical mass there..

I think there is good opportunity for growth of the business, I think underlying businesses -- honestly this year has grown a little bit better than we thought it was going to as I mentioned earlier because we did have some of the attrition that we typically would encounter in that business.

And then so the question is with the addition of Fremont and with the addition of Plastique it's really -- we still get our arms around how much they're grow organically but having just been over there it feels really good because they have great opportunities particularly in the fiber pack piece of it.

And so the real quick question how quickly we can take advantage of the be in two different continents and the number of different end markets now.

So you know I'm not ready to commit to long term growth number but I do think there's a lot of really good upside opportunity as we again take some medical product to Europe and bring some consumer product back here and when a process if you can expand in a fiber pack capacity now because we have won some opportunities there that requires to continue to do that.

So it's going to take us a quarter or two to really understand how quickly we’re going to grow that business but there's a lot of opportunity there..

And Ben I will put some numbers around that just one of the nice parts of the timing of when we purchased Plastique, they do have seasonality and their strongest period of revenue historically when we are diligence seeing the company let's go back four to five years. The period where they get the majority of the revenue is our fourth quarter.

So a lot of their products get delivered to their customers, in time for the fourth calendar quarter. Okay so what that means is our quarters when we're producing and selling to those customers who then distribute it to the medical field or the consumer feel or the Gillette's of the world and things like that.

So as we move to the third quarter and again this kind of goes back to Kevin's question, keep in mind we had him [ph] for two months in Q2 and now we get three months in Q3 so that inherently adds $2.5 million or $3 million of revenue in Q3 sequentially.

Then you take the commentary on our fourth quarter which is their highest revenue quarter, it would not be unusual to see an extraordinarily high quarter at Plastique with north of $11 million or $12 million and again that's the restocking and pushing through things that are going to be in the ultimate end customers hands for the October to December 31 period.

So that rationalizes this year and why we have a steep ramp and again I mention the back flipping in detail and put the Plastique thing in there and let's call it 12 million in that quarter and you're pulling through you know 13% - 14% EBIT that’s an incremental add, that's net of purchase accounting.

So the short answer on the growth is for '17 we’re going to have an unusual looking growth there because you're going to have 12 months versus 8 months, so it's going to look extraordinary in '17 just the calendar works in your favor, but if you just neutralize everything and if you had the advantage of seeing the last three years this would be kind of a 5% to 6% grower on a normalized basis and that's setting aside what fiber pack can add to the upside.

So relative to how we value the company when we purchased it, we were looking at kind of a 5% or 6% normalized year-over-year growth rate with the ability to accelerate that both on the top line and bottom line but the contributions that can come from this fiber packed product that's really just hitting the market here.

So it looks good for the rest of this year, we're going to this extraordinary pop in Q4 and then obviously you'll see a drop down a little bit in our Q1 of '17 but then ramp back up, so '17 will look great compared to that. So hopefully that long answer helped answer your question..

That’s helpful, Gary thank you. And then Vic, I wanted to get your comments on the test order pipeline.

It's slowed down over the last year and I'm sure that had to do with the general industrial slowdown, can you talk about what you’re seeing there and the different pieces of that business?.

The domestic business I would say is kind of playing like we anticipate, you know the medical businesses is solid. You know it's not up, it's not down, I mean it's kind of hit the numbers where we have seen historically. The Acoustics business is a little soft right now and that's not surprising.

If you look at the rest of the domestic business as they were seeing that opportunity the wireless business remains good and strong. Moving outside of the U.S. Europe's tough, I mean it's tough for everybody right now.

We've got some opportunities but you know it's been very competitive because a lot of our competitors there are headquartered there so that makes it more difficult but the place we're really seeing great opportunities is in Asia still, and particular in China you know we want a nice job with the electric vehicle manufacturers in China.

There's a number of additional opportunities in that specific space out there right now because you know China came out with one of their five year plans and that's a specific area they identified, you know development electrical vehicles that they want to put a lot of investment in and so that's resulting in a lot of opportunities for us which we're taking advantage of.

Additionally you see a lot more particularly in China but throughout Asia where historically our primary customers have been the government or government agencies and we're seeing a lot more commercial companies and test companies, if you think that are increasing their activity. So we’re seeing really good opportunities there. So the U.S.

is solid, Europe is a little weak but Asia has been good and strong force and again if you think about that business particularly on the MC side, a lot of it goes to direct to customers but a lot of it does go to test facilities as well.

So they're both customers for us and the good thing about it is you know that maybe a customer will go to the test facility and get their price tested, that way but when they get enough business it makes more sense for them to have their own facility and so they have been used to using our equipment and a large test company and so they will come to us and we will build a facility for them.

So I would say the overall market for the test business has been pretty solid, you know we've got a good position with Apple and they continue to grow significantly and we're preferred vendor for them..

Okay. I think you're probably the only one out there saying good things about growth with Apple right now. So kudos to you guys. Thanks for taking my question..

They have got a new facility underway and so that's what's driving a lot of that..

Our next question will come from the line of John Quealy from Canaccord. Your line is open..

I'm sorry if I missed this, on the ETS and Doable restructuring you said you’re mostly [indiscernible] fit below budget.

Did you quantify how much is the delta and when will it come back to the P&L or how should we think about that Gary?.

Yes, what we said in the release is we've spent or at least expensed about 5.5 million and then we have about two yet to spend so let's call it 7.5ish and round it to eight and so that's kind of how the map is laid out in the press release. So it feels like it's running about a $1 million under budget at the pretext line..

Okay. So that might be--.

Remind it's a zero sum game, so whatever happens to the positive and negative goes in and out so we're reporting on as adjusted so as that -- I don't want to give you the impression that that means that's why we were raised earnings because it's whatever hits the P&L gets backed up dollar for dollar to net to zero, so by under running it's great from an economic perspective of cash but from a reporting as adjusted basis it's neutral..

Right. So it doesn't matter how it winds up to your point in Q4, Q1 it's as adjusted out. The second question I’ve is as we get I guess acquainted with technical packaging. Book to bill was very strong and I think Gary your point about it lines up with deliveries perhaps in your fiscal Q4.

Should we think that book to bill sort of moderates towards one in that Q4 period or how should we just think about the booking forward look side of technical?.

I think because the sales are going to be extraordinary relative to the monthly average if you just took their year divided by 12.

I don't think it be fair to anticipate high book to bill in Q4 because of the sales impact but I think if you look at it on a year over year basis you know carrying a one to one relationship probably is okay, but again then he'd keep the KAZ business in mind because you get a big order and then you run it off for two years and then you get another big order, so those are really the only two things I think you have to kind of keep us set aside in your model is quarterly seasonality and then the one off big things.

It's not unusual to get an $8 million or $9 million KAZ order and then burn through it over the next 12 months.

So obviously an awkward book to bill on that program as you go over three quarters but I think you'll be pleased with us on an annual basis what the book to bill looks like, it's not one of these things where you know because these production runs are so long you know you get the order on Monday and ship it on Tuesday, so backlog you know flips real quick.

It's not something like that.

So I think you'll be able to model out three and six months of comfort relative to how the order book lays in front of that which is what you see now when you look at what the what the order book for Q2 was in technical packaging and then that kind of supports the comment here I made on what's going to happen over the next two quarters here relative to the sales as that converts itself to [indiscernible]..

And lastly Vic, for you. So now four distinct sub-segments for ESCO. Can you comment on any potential one off dispositions or is there another little sleeve of business that you could bolt on here without much managerial oversight on the ESCO portfolio? Thanks guys..

I certainly don't see you know as strapping on another leg if you will if that was the second half of your question. And the other thing is, very happy with the four businesses we have now.

I think they're performing well, we've made some changes this year to their cost structure in place and as we talked about before you know selling a business it's making good money to pay off debt at 1% just doesn't make sense. And so we're happy with where we're at now.

You know we're always open minded about looking at the business, we're just with our Board last week and spend a day and half talking about strategic plan and those type of things and so obviously our job is to look at all the options and we always do that.

That is today -- we mentioned at the end of my prepared remarks what we're really focused on is you know performing on the business that we have been and looking for growth opportunities both organically and through acquisition. So we’re pretty happy with where we're at now.

We think we've done things we needed to get the cost structure in place and now ready to leverage that as a growth business..

Operator:.

Okay, I think we’re done. So appreciate everybody attention today and we will talk to you next quarter..

Ladies and gentlemen, thank you for participating in today's conference. You may now disconnect. Everyone have a great day..