Nadeem Moiz - EVP and CFO Donald Stebbins - President and CEO Troy Ford - VP and Treasurer.

Christopher Van Horn - FBR Capital Markets Brian Sponheimer - Gabelli Michael Ward - Seaport Global Vahid Khorshand - BWS Financial.

Good day, everyone and welcome to the Superior Industries Second Quarter 2017 Teleconference Call. Today’s conference is being recorded. I'd now like to turn the conference over to Nadeem Moiz. Please go ahead, sir..

Thank you and good morning, and welcome to our second quarter 2017 earnings call. During our discussion today, I'll be referring to our earnings presentation which is available on the Investors Section of our web site at www.supind.com. Joining me on the call today is Don Stebbins, our President and Chief Executive Officer.

I'll start on slide 2, where I’d like to remind everyone that any forward-looking statements contained in this presentation or commented on today are subject to the Safe Harbor provisions of the Private Securities Litigation Reform Act of 1995.

Actual results could differ materially because of issues and uncertainties that need to be considered in evaluating our financial outlook. We assume no obligation to update publicly any forward-looking statements. Specific conditions, issues and uncertainties that may represent forward-looking statements are noted in detail on the slide.

I'd like to point you to the Company's SEC filings also, including our annual reports on Form 10-K for a more complete discussion on forward-looking statements and risk factors that may cause actual events to differ from these forward-looking statements.

We also will be discussing or providing certain non-GAAP financial measures today, including EBITDA margin, adjusted EBITDA, adjusted EBITDA margin and free cash flow. These non-GAAP financial measures excludes the impact of certain items and therefore have not been calculated in accordance with GAAP.

Reconciliations of these measures to the most directly comparable data presented in accordance with GAAP may be found in the financial tables including with our second quarter 2017 earnings press release and in the appendix of this presentation. I'd now like to turn the call over to Don Stebbins, our President and CEO.

Don?.

Thanks, Nadeem. Good morning everyone and thanks for joining us today. Before I begin, I want to officially welcome Nadeem to the Superior team. Nadeem is an accomplished leader and joined us about four weeks ago from Direct Chassis Link.

Throughout his career he has demonstrated strategic and operational expertise for the execution of numerous transaction and the development of sophisticated financial organizations, all of which were proven valuable as we execute our long-term strategy. On slide 3, let me provide a brief update on our recent acquisition.

As you know on May 30, we closed the acquisition of UNIWHEELS, creating what we estimate to be the second largest global supplier of aluminum wheels. This was a transformational transaction for us that significantly diversifies our business including customers, geographies and end-markets.

In addition, it bolstered our team by bringing together two highly skilled organizations that will generate opportunities to share manufacturing best practices and enhance R&D and engineering capabilities, which we believe will push us ahead in delivering industry leading design, innovation and quality.

Together we have an annual manufacturing capacity of more than 22 million wheels. The two manufacturing facilities completed in the last two years. This strategic combination enables our team to develop a common culture of innovation and operational excellence to better serve our customers.

We have commenced the delisting process of Uniwheels from the Warsaw Stock Exchange, upon settlement on August 8, Superior will own approximately 93.2% of Uniwheels' common shares. We anticipate the delisting of the shares of Uniwheels by the fourth quarter of 2017.

The squeeze out process for the remaining shares will continue into the coming quarters as we follow the required regulatory processes. Please turn to slide 4, during the past couple of months, we greatly strengthened our senior leadership team. As I mentioned, we welcomed Nadeem in July as our Chief Financial Officer.

Additionally, we have added three strong and experienced senior leaders. From the UNIWHEELS' acquisition, Wolfgang Hiller will head up our European operations, and Karsten Obenaus will serve as our Chief Financial Officer for Europe, we also brought on Rob Tykal to run our North American operations.

I feel confident that together, this team is poised to seize the significant opportunities ahead of Superior, while also navigating the complexities of bringing together two market leading businesses. As a reminder, our results for the quarter and year-to-date will include one month of UNIWHEELS' operations.

The second quarter of 2017 was a mixed quarter in terms of performance with our North American operations coming in below our expectations and the first month of our European operations outperforming. In the quarter, we shipped record 3.8 million units in reported net sales and value-added sales of $240.6 million and $130.4 million respectively.

In North America, we launched the Equinox program and so added volumes from the present kicks [ph] that launches last year. That said these gains did not offset the lower overall North American passenger car sales and the roll off of a couple of North American programs.

In Europe, despite a year-over-year decline in industry volumes during the quarter, our European operations increased unit shipments on a year-over-year basis by 17%, bolstered by the opening of the new plant in Poland.

Second quarter adjusted EBITDA was $29.5 million or 23% of value added sales compared to 28% of value added sales in the prior year period. The decline was driven primarily by lower unit volume and higher manufacturing costs for the quarter in the North American operations.

As a result of our strategy to provide our customers with a more balanced product portfolio, we have continued to see our average value added per wheel increase. For the second quarter, we had a net loss of $7.3 million or $0.41 per share driven by acquisition related cost.

Excluding these costs, net income and diluted earnings per share would have been $19.6 million or $0.78 higher respectively. With that in mind, our integration efforts are well underway and we are focused on value creation opportunities. Please turn to slide 5.

One of the most critical milestones of the integration was the establishment of an integration management office which is being led by Jim Sistek, Senior Vice President of Business Operations at Superior and Carson [indiscernible] from Uniwheels.

This team is comprised of leaders from both organizations representing the collective functions of the business supported by outside advisors. In terms of synergy opportunities, we continue to expect to generate $15 million in annual run rate savings by 2020, driven by operational improvements achieved across their combined businesses.

Since the closing of the transaction, we have actioned and identified a significant number of actions through economies of scale, operating improvements and best-in-class process alignment. Additionally, we have identified several potential revenue opportunities by showing our North American and European technologies to our global customers.

These conversations have been extremely encouraging and we are optimistic about our chances of locking down these new revenue opportunities. As we move through the integration, we are focused on advancing the key areas which we believe will unlock the full potential of this combination.

This includes an unwavering commitment to our customer and employees and realizing expanded opportunities in North America and Europe. In addition, we are identifying and implementing the best practices at both organizations across the combined footprint including our technological capabilities and our operational excellence practices.

On that note, I would like to take a moment to recognize the efforts of our employees. We’ve see a tremendous effort and teamwork in these early stages and we know that this will ultimately be a key component of our success. This is a very exciting time for our company.

On slide 6, North America and Europe are experiencing similar trends towards larger wheel diameters and more complex finishes as well as lighter weight designs which positions Superior well for the future particularly with our expanded global footprint and broaden portfolio of technologies.

In fact, in North America alone a number of 19 inch and greater diameter wheels are expected to increase 188% by 2021. Further, Europe is also benefitted from the increasing penetration of aluminum wheels over steel wheels. From 35% to 46% in Central Europe and from 60% to 69% in Western Europe.

For reference, the massive penetration rates are approximately 82%. Both Superior and Uniwheels maintain strong customer relationships and our conversations with the customers over the last few months underscore our confidence that we have the right strategy to capitalize on the global trends that will push our company forward.

These strengths will support our ability to win higher value-added wheels and evaluate cross border opportunities. Further, we continue to invest in projects involving new manufacturing technologies and sophisticated finishes which typically have higher value add.

In line with the demand for premium finishes, construction of our state-of-the-art PVD facility in Mexico is on track. We successfully completed our prototype trials out of this facility last month. The launch of this technology in 2018 will establish us as a first wheel supplier in NAFTA and Europe to bring this capability inhouse.

In closing, while the macroenvironment in North America is tempered relative to last year, we believe we are a stronger company today with a more diversified business and some of the most innovative technologies in the market.

I'm encouraged by the opportunities ahead of Superior as we are in excellent position to drive long-term sustainable growth and profitability and in turn, value creation for our shareholders, employees and our customers. And with that, I'd now like to hand the call over to Nadeem. .

Thank you, Don. I'll now provide a more detailed overview of our financial performance for the second quarter of 2017. Starting with slide number 8, Superiors' North American volumes were down approximately 100,000 units or 4% compared to the same period last year, modestly above industry production which is down 2.9%.

As Don mentioned, our results were bolstered by new crossover and SUV program launches in North America, but more than offset by movement away from passenger cars across the sector, roll offs of certain previously discussed programs and slightly softer industry volumes on a number of other programs.

Year-over-year shipments in Europe are favorable compared to the markets given the ramp up of the new plant in Poland that Don mentioned. On slide 9, you can see the contributions that Uniwheels made to the consolidated financial position of Superior for the second quarter.

Uniwheels contributed approximately 845,000 units $53.7 million of net sales, $32 million of value added sales and $8.7 million of adjusted EBITDA.

For the second quarter, we had a net loss of $7.3 million or $0.41 per share driven by acquisition related costs, which includes purchase accounting adjustments, non-recurring interest, acquisition support cost and foreign exchange transactions.

Excluding these costs, net income and diluted earnings per share would have been $19.6 million and $0.78 higher respectively. Let's take a look at the second quarter year-over-year change in both net sales and value-added sales on slide 10. As before, we segregate value added sales and the amount of metal and up charges in the comparison.

Net sales were $240.6 million in the second quarter of 2016 compared to net sales of $182.7 million in the prior year period. The increase was driven by the addition of Uniwheels which contributed $53.7 million during the quarter as well as higher aluminum prices.

Value added sales were $130.4 million in the current year an increase of $29.2 million compared to the second quarter of 2016. Uniwheels contributed $32 million to value added sales in the quarter. Now turning to slide 11. Our second quarter adjusted EBITDA was $29.5 million compared to $27.9 million in the prior year period.

As shown in the chart, the decline in Legacy Superior was driven in large part by lower volumes and higher costs of approximately $13.7 million. Roughly 20% of this impact was due to higher energy prices, we also incurred additional cost for labor, maintenance and operating supplies at a higher rate relative to sales volume.

The continued transformation of our product portfolio to larger more sophisticated wheel designs have impacted our overall operating efficiencies.

However, we’re actively addressing this as we move forward partially, offsetting these increased costs was a favorable currency impact due to lower value of the Mexican Peso against the US dollar and lower admin expenses.

The leadership changes in the North American operations have been structured desired results and to benchmark and implement best practices across the combined organizations. Moving onto slide 12, I would like to touch on our cash flow and investing in financing activities.

For the second quarter 2017, cash used by operating activities was $8.5 million which compares to 8.5 million of operating cash flow generated in the second quarter of 2016.

The change primarily reflects lower net income in cash cost related to the acquisition of Uniwheels, capital expenditures were 13.2 million during the second quarter of 2017 which compares to 11.6 million in the prior year period. The increase was driven by an addition of one month of Uniwheels operations.

During the second quarter of this year, we returned 4.5 million to shareholders through cash dividends. We did not repurchase any shares during the quarter. Moving on to slide 13, I would like to discuss our capital structure and capital allocation.

We currently have an elevated cash position due to the expected repayment of our European term loan and to fund the acquisition of the remaining outstanding shares of Uniwheels. In terms of liquidity management, we currently have ample available borrowing capacity under our US and European revolvers.

As we have said, our long-term target leverage ratio is approximately two times net debt to EBITDA. There are of course a number of variables impacting our business including future investment opportunities which will affect where our leverage just stands [ph] at any point in time.

Going forward, balancing repayment of debt and continued investment in our business will be our top priority for the use of our cash flows. As previously discussed, we reduced our quarterly dividend to $0.09 per share in line with the objective of deleveraging and do not anticipate any near-term share repurchases.

We believe the changes in capital structure and capital allocation are appropriate in support of the transformational nature of the Uniwheels acquisition.

We’re confident these steps when taken together provide the right balances to achieve growth in the value of the company while achieving a stronger, more balanced and diversified platform for the future.

Moving on to slide 14, you can see our debt amortization and maturity schedule, the yearly amortization payments relate to our US term loan and equipment financing loan in Europe.

And lastly, let me take a moment to walk you through our 2017 financial outlook on slide 15 which now incorporates Uniwheels on a consolidated basis for June through December. We expect net sales to be in the range of $1,095 million to $1,115 driven by unit shipments of 16.9 million to 17.2 million.

This assumption implies continued overall production growth in Europe and lower North American production relative to last year. Given the roll-off of a number of programs in the US, we anticipate a slight market share decline in North America and a market share gain in Europe.

The current pipeline of business for North America is related towards the fourth quarter due to the launch of a number of new programs. In terms of value added sales, we now anticipate a range of $595 million to $615 million.

The higher growth rate of net sales in comparison to value added sales reflects the current market price of aluminum which as you know is passed to our customers. We expect 2017 adjusted EBITDA to be in the range of $135 million to $145 million.

We also expect capital expenditures to be approximately $85 million a portion of this is due to the new finishing investments we've discussed. Working capital is expected to be a net source of funds for 2017. We also anticipate our effective tax rate will be in the range of 10% to 13%.

Interest expense is expected to be approximately $35 million for 2017 including non-cash amortization is expect of $2 million. And finally, in the second half of 2017 cost related to amortization of [indiscernible] and accretion related to preferred equity is expected to be approximately $11.5 million and having earnings per share impact of $0.79.

In conclusion, over the last several years, our team has made tremendous strides in positioning this business for continued growth and enhancing its global competitiveness through a strengthened manufacturing platform and industry leading real innovations.

I'm very excited to be joining Superior team as such an important time as we embark on this transformation journey through the acquisition of Uniwheels and we further establish the company as a global leader. And with that, I would now like to turn the call back to the operator to open up for questions. .

Thank you. [Operator Instructions]. We'll go first to Christopher Van Horn with FBR Capital Markets. .

Good morning. Thanks for taking my call.

Could you just highlight some of the puts and takes on the roll offs versus the new programs? Is there anything any customer you can highlight or type of vehicle you can highlight in terms of what's driving that?.

No, it's kind of I would say the normal flow during the second quarter. For us, it's some programs that end-of-life type things, and the launches are coming the new program launches are coming in the primarily in third quarter. So, it's not anyone specific customer or any specific passenger car or light truck. .

Okay, got it. And then obviously, there has been a lot of OEMs talking about production cuts in the back half.

I'm not sure if you’ve disclosed kind of your passenger car mix, but is there any clarity you could give us on what your passenger car SUV mix is?.

Yeah, so for the first half of the year light truck has been about 70%, passenger car about 30%. That's speaking in North America, that's a North American number. .

Got it. And then if you could just little bit more strategic, but how have your conversations been with some of the new customers post acquisition? I know you've mentioned in the past, the German OEMs might be some low hanging fruit.

And just curious how strategically customers are looking at you now that you have this expanded capability?.

Yeah, I think that the conversations with the customers have been outstanding. You’ve got the normal kind of who will be our point of contact, will that change, will the speed of decision making change, those type of conversations which are relatively easy in terms of those answers.

And then talk about product launches and our ability to continue to invest in facilities and new product developments.

So, there is no question that the conversations have taken a different, more advanced tone and certainly how for the German OEMs in particular, how we can continue to help them be successful and North America has been a focus for those conversations.

I would say the other piece that quite frankly we hadn’t put in to the synergy bucket in any significant way was new products with those customers and some of our technologies that we’ve shown some of the OEs in Europe and conversely some of the Uniwheels technologies that we’ve shown here have been tremendously received.

So, we’re excited about that..

We will go next to Brian Sponheimer from Gabelli..

Thank you.

A few things in here, just on a balance sheet would [ph] start there, the restricted cash, can you talk about what are the walls on that cash?.

Yeah, so that was during the tender process for the remaining outstanding shares you have to put that essentially in an account in Poland in [indiscernible] to ensure that if all of the shares, if a 100% of the outstanding shares were tendered to you that you had the funds available.

So, on August 8th when the additional shares settle with us that will become unrestricted. .

Got it, okay. On operations, just kind of broadly speaking with inventory way too high in North America, what signals are OEM sending to you that may be different than they were three months ago about cutting productions for the fourth quarter now. .

I would say there has been a general tone of cautiousness and softening. There haven’t been -- we haven’t seen significant cuts for the fourth quarter from our as we look at our modeling, you know what’s for us we’ve got a number of launches in the back half of the third quarter and early fourth quarter.

And those have continued -- I would say as we look at those launches they continue to have robust schedules. In fact, a couple of them have increased but overall, I would say yes there is certainly a tone of general softening. .

Okay. On the operations side, if we go back to third quarter last year and first quarter this year, you had the issue with the Mexican facility.

Then you had energy cost in the last quarter, what was the bulk of what took place this quarter, was it still that one facility that’s giving you problems or were there issues elsewhere?.

There are a couple of facilities I would say that are focused for us and really it revolves around high scrap rates and so what high scrap rates drive is increased labor cost, increased energy usage and increased supplies.

And so primarily in two facilities and really that's based upon as Nadeem mentioned, as we shift to a more difficult portfolio of products to make, some of these issues have been stubborn for us to solve. We've identified some I call it core [ph] processes for the new portfolio of product.

And certainly, as we look at the plan of attack, we've hired a consulting firm to help us bring lean and continuous improvement principles into the facilities. The Uniwheels team has been quite helpful.

We've reorganized, not only we added a new senior leader Rob Tykal but we've also reorganized the intense manufacturing group to help assist the facilities. And then program management is becoming stronger and stronger. So, I would say that these are solvable issues.

Although they've been stubborn for us, and I think we've got the right leadership in place and the right assistance around us now to get them fixed. .

I appreciate that color. So, I mean if you take broad strokes I don't want to pin you down any timeframe. But when you think you can get tasked what's troubling the operations right now. .

Yeah, our guidance for the back half of the year doesn't really have any substantial improvement built into it. So, we're looking for 2018 to be a better year in terms of the performance of the facilities in Mexico. .

And we'll go next to Mike Ward with Seaport Global. .

It looks like the value-added revenue per unit and the margin at Uniwheels is significantly above Superior. I don't know, is that a mix issue, is the aftermarket margin higher? I assume the aftermarket revenue per wheel is lower.

And is it something that you can bring across and maybe leverage on the Superior side?.

We're certainly hopeful that we can bring across the North American, the aftermarket into North America. .

Is that right?.

Yeah. So, we're going through the study there right now to determine how that would happen, if it can happen, but certainly we think that that is an opportunity for us.

And by the way that has not been built into what we think our synergies savings or benefits are?.

Okay.

Are the margins better in the aftermarket and would be a premium wheel, there are so many, the Japanese wheels have come over is that right?.

Yeah, the aftermarket in the US at the low end is primarily an Asian based product. For Uniwheels they are number one in Europe, they tend to be at the higher end, they have although they play across all of the levels, their ATS brand is their high brand has significant recognition throughout the world.

So, we think that that probably would be the first brand to bring over to the U.S. aftermarket. .

And so structurally can you get overall company margins at the level that Uniwheel is today?.

You know I think that’s a longer-term goal of ours Mike. You know certainly we believe that and one of the reasons in the benefits of acquiring Uniwheels was to understand their manufacturing technology and be able to bring that across.

Certainly, I would tell you that the guys that are running our facilities in North America are learning from the Uniwheels team, the Uniwheels team is down there right now helping us. Especially as we make this transition to larger higher end more complex finishes, there are some processes that they’ve developed over time that we don’t have.

And so, the question is and we’re working through this is how quickly can we bring those into our operations to improve our margins..

We are going to Vahid Khorshand with BWS Financial..

Hey good morning.

First question, how many product launches did you have in Q2 and how many do you expect in Q3?.

We had 10 product launches in Q2 and we have 11 in Q3..

And do you expect still five in Q4?.

I think Q4 is going to be three..

Okay. Thank you. And then just a follow-up on I guess the last question you were talking about what’s the difference in efficiencies between Uniwheels and North America.

Do you now have information on what’s difference in scrap rate is in North America and Uniwheels?.

Yes, we do..

Is that something you’d be willing to share?.

No, I think overtime we’ve said that its somewhere in the neighborhood of 50% difference and that’s you know been borne out by the actual numbers. .

Thanks. And then looking at the adjusted EBITDA margins, it looks like you guys came in at North America at 21% which is an improvement from you know Q3 and Q4 last year, it has been trending higher since it went down.

Do you anticipate any kind of drop-off in Q3 and North American on that?.

No, we don’t. I think that the back half for the year for us is dependent upon three or four factors.

One is we need the volumes in North America to hold; two, we need to launch the product well; three, we need to continue this process of leaning out our operations and we’re taking almost every week some number of heads on at the operations as we continue to move forward in the processes.

But how we launch these products in the third and fourth quarter will be certainly a driver and whether or not volumes hold at where we think they will be..

We'll go next to Oliver [indiscernible] with BNP Paribas. .

Can you help us reconcile the numbers from the SUP and Uniwheels especially as it relates to you the guidance, will you be willing to give the confirmation [ph] to Uniwheels to the full year guidance in terms of EBITDA?.

What I would say I mean I think this will give you enough information is that so for the back half of the year, the EBITDA contribution from the, call it the European operations and the North America operations will essentially be balanced at 50% 50%. .

Alright. So as does that mean on a table change in terms of the North American operation. Because at the time of the [indiscernible] road show you said that, you expected the first half of the year to be somewhat weak in North America, but to recoup some of that with better product launches and that's operation issues in the North America.

So, I was wondering if anything has changed as regards to that guidance you gave at the time?.

I think two things. One is, certainly again the product launches that we have in the third and fourth quarter are important to go well for us, based upon that statement. And secondly, we underperformed where we thought we would be in the second quarter. So, it will depend on how the back half comes or whether or not we can make that up or not. .

We'll go next to [indiscernible] Meizhou International [ph]. .

Yes, hi good morning. So, the first question for me is just want to get a sense, sorry I missed that on the previous question. So, your EBITDA outlook for U.S.

what is it now versus $97 million to $105 million previously? So, what are you guiding on a standalone basis?.

I don't think if we take the midpoint of the guidance between 135 and 145, at the back half of the year, 50% we think it's essentially split 50-50 Uniwheels and Superior. .

Okay. And in terms of the capital expenditure guidance of $85 million, just want to understand, so when we look at full year of Uniwheels and full years of Superior, is that what it's based on or is it based on full year for Superior but six months of Uniwheels. So just kind of give me like the 2018 number.

Because I just want to make sure that 85 captures full year for both sides..

Right, so the 85 is based upon full year Superior, seven months of Uniwheels. .

Okay.

So, any change on what sort of like a pro forma number would be if you were to include full year for both? Any estimates?.

Yeah. .

So again, probably the better way thinking about it is on a go forward basis, so for 2018, I think we will communicate its approximately 82 million. And so probably that’s a better way of thinking about it as opposed to 2017 outing [ph] and things like that. So, what I would suggest is 2018 numbers. .

Sorry could you could repeat that 2018 number? I didn’t get it..

Yeah, so the way we look at it is that the per facility there is $5 to $7 million of capital to essentially run the benign facilities in a normal mode. And so that all gets you to 55 or so million dollars and then there will be special projects on top of that.

And so, from that standpoint, at this point in time we’re going through all of the capital requests and doing that planning right now for 2018.

So, for instance as we’ve called out the PVD facility, you know there will be some spending for that in 2018 but the substantial majority of that will be done in 2017 but there are other projects in the queue so to speak that will be layered on top of 2018. So, if I had to guess it’s a 75 to $80 million in 2018..

Okay, thank you. That’s very helpful and just lastly on the shipments, so just on US shipments, so you did 5.8 million in the first half on US and last year you had 12.3.

So, what’s the number estimated for the full year in the US this year?.

Yeah, I think it will be somewhere in the neighborhood of 11.4 to 11.7..

We will go next to Daniel Gagliardo [ph] with HPS Investment Partners. .

Good morning. Looking at your balance sheet, specifically your debt balances in the second quarter it looks like they were up pretty substantially from the pro forma marketing from the debt financings, somewhere around 67 or 68 million.

I guess specifically in Europe, looks like the increase was about 45 million and then also wonder the US revolver and other 22 or so I’m just trying to understand what drove those increases. Were those normal working capital swings or seasonality or if you can give a little more detail..

Yes, so this is Troy Ford, VP and Treasurer. So, there is some additional debt on the balance sheet that will be paid down during Q3 which we funded as part of the transaction. So, if you look at the marketing materials, you would have seen a lower debt balance, obviously choosing a lower cash balance and associated lower debt.

So that is just a process of repaying that at term loan that you know that’s a substantial portion of it. Some of it is working capital and then there were some portion of the revolver balance in the US associated with incremental fees and just timing of working capital..

And we’ll go next to Antonio [indiscernible]. .

Good morning. Thank you very much for taking my question. Just going back to the outlook. If I take the midpoint 140, I take out just to make sure when you look at this in the same way, take out the Q2 EBITDA 29.5 minus the first one, the 19 in the first part of the year. I get to 91 to be done for the remaining part of the year.

Then I think 60 divided by 2 is 45 plus. The 20 that was in North America is kind of plus 19 gets to 85 for the full year, which compares to a 101 midpoint, so 15% reduction in the guidance for U.S.

Is kind of the right reasoning?.

Cannot argue with that math, cannot argue with that..

Okay, now fine thank you very much. Just to make sure. And the second point is regarding the cash flows in the second part of the year with reference to the additional cost for the transaction. And I make reference to any transaction cost to be paid in Q3 as well as how much cash would be spent for the squeeze out.

And if I assume a while for the debt that we paid out in Q3 is washed because it's probably now part of their liabilities, then so the cash will be down but will go down but also liabilities will go down. So, from a next debt perspective that will be a wash.

But I'm wondering if there are cash outflow mainly in terms of the squeeze out as well as the transaction fees that should actually reduce the cash and therefore increase the net debt in Q3..

Yeah, I think the squeeze out in just in terms of timing, the squeeze out probably occurs in 2018 and early 2018 I would guess. So that's not going to be a discussion point of Q3 for sure and most likely Q4. .

Yeah, one more point to your question regarding other cash outflows for the deal, we anticipate in just in terms of kind a timing of final payments for transaction fees is probably $3 million to $5 million in the third quarter just related to outstanding payments on the advisors [ph]. .

This concludes the question-and-answer Session today, this also concludes today's call. Thank you for your participation. And you may now disconnect. .

Thank you very much. Thank you..