Q4 2019 Earnings Call
Continue to standby. Thank you for your patience.
Earnings Conference call at this time, all participants are in listen only mode. Later, we will conduct a question answer session and instructions will follow at that time.
As a reminder, this call may be recorded.
I'd now turn the conference over to Michael Kim Investor Relations. Please go ahead Michael.
Thank you and good afternoon, everyone.
During our prepared remarks, we will be referring to slides, which are available for viewing or download from our website, that's investors dot easy Corp. dotcom.
Before we begin I'd like to remind everyone that this conference call as well as the presentation slides contain certain forward looking statements regarding the companys expected operating and financial performance for future periods.
These statements are based on the Companys current expectations.
Actual results for future periods may differ materially from those expressed or implied by these forward looking statements due to a number of risks and other factors that are discussed at our annual quarterly and other reports filed with the Securities and Exchange Commission.
And as noted in the presentation materials and unless otherwise identified.
Adults are presented on an adjusted basis to remove the effects of foreign currency fluctuations and other discrete items now I'd like to turn the call over to Mr. Stuart Grimshaw Stuart.
Thanks, Michael.
Good afternoon, and welcome to the fourth quarter results.
If we turn to page four of the presentation I'd like to highlight a few of the key themes for the quota.
The board has approved in up to 60 million dollar share repurchase program about cost say non voting common shares over three year period.
This decision reflects our commitment to driving shareholder value through the efficient and effective use of capital.
Supporting the decision or the board has been the strengthening of our balance sheet with a cash balance of $162 million in September yearend.
You will also remember that we repaid the 195 million June 2019 convertible note at maturity.
Our next bond maturity isn't 2024.
But the twin he not trained financial year, we opened 22 to nearby stores in Latin America, and the targeting if the 40 throughout the 2020 financial year.
We also acquired seven stores in Nevada in June 2019.
As we mentioned on the last call we remain disciplined on the acquisition front.
While we continue to see attractive opportunities that they door asking process did not reflect that is odd returns and how I see targets that we have for myself.
[noise] then you point to South system was successfully rolled out across all stores in the U.S. and Mexico, you know Tribrid this year.
From a management perspective, we've achieved the loved the past four years with EBITDA more than doubling.
My name present, expanding resulting in a let them EBITDA CAGR of 36% since 2017.
Strong cash generation on fiscal 2019 with $112 million free cash flow in collection on much receivable.
I continued sound performance from the U.S. business, and importantly, simplifying the business what asylum Grupo Finmart as well so the closure of at U.S. financial services business.
Turning now to slide five.
Simplistically. This chart shows that we followed a disciplined blossom growth that has seen an EBITDA CAGR of 20%, Brian I'm from 2015 to 29 team.
As we've highlighted this growth has been driven by focusing the business back onto that core customer Vod Apone business supported by strong operational performance acquisitions denied by store openings and expense control.
Page six this shows the strong free cash flow generated by the business as well as of the collections in the notes receivable from the south of Grupo Finmart business today, we've received $96 million from the purchases of that business.
You can see the material change in free cash flow generated from fiscal 2018 of $59 million to $77.9 billion in fiscal 29 team.
[noise] on slide seven we look toward the more strategic objectives.
We continue to focus on serving and satisfying our customers need for cash and we've seen this fight because play up through a history of long term halo growth.
As mentioned, we opened 22 stores in fiscal 2019 10 on the fourth quarter. This year and plan to accelerate this to 40 in fiscal 2020.
We remain disciplined on the acquisition front and coupled with an effective capital management strategy have authorized a three year up to $60 million share repurchase program.
At digital platforms into beta stage with anticipated public release by the end of this calendar year. Additionally, in Texas and Florida.
We believe this platform now hold liana will enhance the retention an acquisition of phone customers as well as attract completely new customers to this platform.
With that I'll hand over to Danny.
Thanks, Stuart and good afternoon, I want to start by Flushing out the share repurchase authorization, we announced in conjunction with the earnings that Stuart mentioned a moment ago.
At a high level, we remain focused on allocating capital to opportunities that can deliver the highest long term returns to our shareholders.
In light of the disconnect we see between the value of our core business and the stocks current valuation we see easy Corp. stock is one of the highest investment return opportunities with a favorable risk reward relationship.
It also allows us to return capital to shareholders in a tax efficient manner.
The boards approval of a share repurchase program of up to $60 million over the next three years reflects the strength of our balance sheet combined with a strong free cash flow generation of the business.
To that point, we ended fiscal 2019 with $162 million in total cash on hand, Internet cash from operating activities continues to build.
Including collections on notes receivable, we generated $112 million a free cash flow in fiscal 2019 up 23% from the prior year.
Looking back over the past three years free cash flow plus alpha credit payments on those notes receivable.
Compounded added 33% annual growth rate.
We maintain ample capacity for continued growth investment in the form of new store development funding pawn loan growth investments related to building out our digital capabilities repurchasing shares and capitalizing on M&A opportunities all evaluated against our strategic and financial criteria.
We are adopting an opportunistic methodology to repurchasing shares based on a number of factors consistent with our overall approach to capital management maximizing returns and understanding that from time to time, we may be precluded from repurchase activity. When we have access to nonpublic information such as regarding potential M&A Act.
Given these are during other blackout periods.
On the investment side, we plan to accelerate new store openings in Latin America, Stuart mentioned with around 40, new stores or nearly doubled the 22 stores, we opened in fiscal 2019.
From a return perspective, new stores typically carry.
Returns on invested capital in the range of 30% to 35% by year five.
The related upfront cost typically pressure near term earnings for the first six to nine months and reduce overall operating margins until the stores mature.
Turning to our financial results on a GAAP basis, we reported a loss of one cent per share for the fifth fiscal fourth quarter, representing a penny per share improvement from the prior year quarter.
Included in the GAAP results were $2.7 million of cost related to the buildout of our digital platform.
$2 million for our portion of discrete charges recognized by cash converters.
$1.9 million related to the expiration of a call option on an unconsolidated affiliate following their third party capital raise.
$1.7 million of due diligence costs on an acquisition that we ultimately walked away from.
In other smaller discreet items.
GAAP results also include noncash interest expense related to our convertible debt, which is added back in our adjusted figures.
On an adjusted basis, we reported diluted diluted earnings per share of 19 cents for the fiscal fourth quarter of 2019, and 90 cents for the full year up from 86 cents in a prior year on an apples to apples basis.
Subsequent to fiscal year end on October 20, Onest cash converters announced an agreement to settle its remaining class action lawsuit.
As part of the settlement cash converters is expected to pay 42, and a half million Australian dollars with cash on hand, and cash flow from their operations.
Based on our minority interest.
In cash converters and translation to U.S. dollars.
We will recognize an estimated $10 million noncash charge in our fiscal 2020 results once the settlement as approved by the court.
We're pleased to see cash converters put this matter behind them as our their shareholders.
Indicated by the 70% share price appreciation since September thirtyth.
As shown on slide nine we grew EBITDA by 2% in fiscal 2019 and longer term trends remain favorable.
Consolidated EBITDA compounded at an annual growth rate of 17% over the last three years fueled by strong growth across Latin America complemented by steady contributions from our U.S. pawn operations.
While margin expansion took a pause in fiscal 2019 much of the downtick related to the rightsizing of aged inventory levels and the seasoning of new stores.
I expect some continued pressure on short term EBITDA margins in Latin America, as we accelerate new store openings in fiscal 2020.
Turning to the adjusted highlights on slide 10.
Total revenues were up $9.4 million or 5% year over year, reflecting a 37% increase in scrap sales, 3% growth and merchandise sales and a 2% uptick in pawn service charges or PSC, all of which contributed to the increase in free cash flow.
And then consolidated pawn loans outstanding or pillow was up 1% year over year, primarily reflecting acquisitions and new stores with average pillow during the quarter, increasing 2% driving a similar growth rate in PSC as related yields remained consistent with the prior period.
As noted on our last earnings call PSC in the U.S. and Mexico was negatively impacted during the quarter by a 24 hour system outage on July nine.
As well as the knock on effects related to system performance issues in the May to June timeframe, both of which were resolved by mid July .
We estimate the July system outage cost us about three to four cents EPS in the fourth quarter and the May to June system issues decreased EPS. Another three cents spread between Q3 in Q4 as these issues effect not only sales, but the loan portfolio in which pawn service charges earn.
Other than the outage there were no further system performance issues in Q4.
And Pos improvements implemented mid July significantly enhance processing speeds and stability.
Merchandise sales grew 3% in total while same store sales growth came in at 2%.
Same store sales growth in both the U.S. and Latin America slowed partially due to our system issues as well as some social welfare programs recently instituted in Mexico.
Overall merchandise margins declined to 33% for the quarter as a result of our focus on reducing aged inventory year over year from 8% to 6%.
Optimizing loan to value ratios and improving the cash the cash cycle.
Turning to scrap sales and gross profits during the fiscal fourth quarter were both up strongly year over year on a step up and related volumes.
That said, our scrap gross margin tick down due to liquidating older merchandise with a higher cost basis, as well as lower diamond prices and higher processing fees in Mexico, partially offset by higher gold prices.
Adjusted corporate expenses of 12.1 million.
Were 12% lower than the prior year quarter on a reduction in incentive compensation and an unrelated 800000 dollar benefit I would not expect to repeat.
For the quarter EBITDA was down year over year, primarily reflecting lower sales gross profits higher operating expenses higher loan loss provision at cash Max and an 800000 dollar reduction in income from cash converters.
Adjusted EBITDA was up 2% for the full year compared to fiscal 2018.
The adjusted effective tax rate for the quarter was 20% leading to an overall tax rate for the year of 27%.
Looking ahead I expect the tax rate to be in the low to mid 30% range for fiscal 2020.
Turning to the us.
Upon highlights for the quarter on slide 11.
Same store loan growth came in at 1% for the quarter with ending pawn balances up 2%.
In turn PSC increased by 1% as growth in the average pillow balance for the quarter was partially offset by 170 basis point downtick in yields.
Merchandise sales in the U.S. were flat year over year, while related margin soften 320 basis points to 35% given incremental discounting to move aged merchandise.
Age General merchandise stands now at 6% down meaningfully from 9% at the end of fiscal 2018, reflecting the effectiveness of our inventory management.
At a high level operating expenses remained well managed in U.S., PON, which should drive margin expansion over time, assuming re accelerating revenue growth.
More tactically fiscal fourth quarter expenses were skewed by a half million dollar workers compensation charge from a single large claim compared to an $800000 credit in the prior year quarter.
While segment EBITDA was down year over year, mostly reflecting lower merchandise sales gross profits and higher labor costs full year EBITDA in the U.S. was up 1% versus fiscal 2018.
Now focusing on Latin America on slide 12.
PSC was up 3% compared to the prior year period.
On a higher average loan balances for the quarter and more favorable yields.
In addition, merchandise sales were up 11% and same store sales were up 8%. The merchandise margins declined as we remained focus on opera and optimizing loan to value ratios, reducing aged inventories and maximizing sales gross profits.
To support the company's efforts to reduce inventory and improve the cash or cash cycle. Latin America segment conducted a deeper jewelry pulled in in the past while this created some margin headwind in the quarter increase the cash generated from jewelry scrapping sales by $1.9 million or 56%.
The ending pillow, which will affect the pawn service charges in the beginning in fiscal 2020 was down 1% year over year in the same store balance was down 3%.
The ending pillow reflects recent social welfare programs in Mexico meeting the cash needs of some of our customers and the made a July system issues previously discussed with same store Latin America loan balances up 2% outside Mexico.
Turning to expenses Latin America operating costs were up 15%, reflecting store licensing requirements enacted in Mexico, higher labor related and rent expenses cost related to new relocated and expanded stores and an increase in robbery losses and related security costs.
Looking ahead, we recently hired a new Latin America divisional CFO , partly to enhance oversight and refined focus on improving operating efficiencies.
For the fiscal fourth quarter segment, EBITDA was down year over year, primarily driven by lower merchandise sales gross profits and higher operating expenses.
Full year EBITDA in Latin America was up 5% versus fiscal 2018.
Finally, I wanted to provide some perspective as we enter fiscal 2020.
At a high level it will take a few additional quarters to begin to realize the full benefits of our investments in technology distribution and customer service.
That said, we remain confident our strategic initiatives will drive long term growth of free cash flows and higher returns on earning assets over time.
More specifically the flatter trajectory of PEO growth more recently, partially driven by recent system issues combined with a social benefit programs in Mexico will likely continue to pressure PSC and related earnings in the near term.
Our ongoing focus on reduced reducing aged inventory on our balance sheet likely remains a headwind for merchandise sales and margins in the coming quarters.
Turning to expenses, we believe the system issues are now behind us.
After mid July , but we're still working and are making additional investments to ensure these do not recur.
That said as Stuart mentioned, we recently completed the rollout of our new point of sale system, providing a solid foundation to improve lending decisions, thereby driving higher yields PSC and net revenues over time.
In enhancing our team members ability provide excellent customer service.
While it's still early in the stores that have had the system a bit longer we've already seen some improvement in yields versus stores that got it later.
We remain focused on controlling expenses enhancing productivity and optimizing leadership structures in the field.
Which we believe will drive higher margins and EBITDA growth longer term for these will take a bit of time to work through the system.
From a cash flow perspective receipts from the Alpha credit notes receivable will reduce substantially in fiscal 2020 from the $30 million to $34 million Weve received annually over the last three years.
The total remaining balance due was down to $8 million at the end of fiscal 2019.
With that ill turn the call back over to Stewart.
Thanks. Thanks.
And we'll now open it up for questions.
At this time I'd like to inform everyone.
In order to ask a question you will need to press star one on your telephone to withdraw your question press the pound or hash key please standby will be compiled acuity roster.
Your first question comes from John Hecht from Jefferies.
Afternoon, guys. Thanks, very much just just trying to get a sense for some of these onetime questions.
Any use you talked about our DC.
Call options that maybe.
Im not aware what that is can you tell us some background on that.
Yeah, I do you see the chemical rich data coal pricing.
A 13% interest in that that's.
Facilitated a lending platform that goes with that Canadian operations, They did a capital raise.
During the year.
And we had a call option meadows attached to it which expired and that was just the theoretical value that call option being written off.
Okay, and then I understand the upcoming.
Cash good versus that of the velocity, but there was some discrete items charge this quarter, what's the background to that.
Yeah, those were some that actually cash converters took on their books. So they recently got a new CEO in there.
Wrote off a better software.
They had.
Increased.
Reserve on some loans receivable number of other things that I think it was about 12 million total Australian dollars that they took a charge.
So five or six unique items that.
Saves specifically called out in their earnings pre announcement.
And then the final wanted to dig.
Digital platform.
Theres a discretionary investments how are those aside from this.
I guess how are they discrete are different from some of the investments in the point of sale stuff.
Yes, so primarily around line I think is what.
What your.
The second you're asking about some of the discrete investments in the in technologies, where we're investing what we've traditionally called evergreen.
That now is is.
Branded as Lana.
So I see so you're just simply because discretionary youre doing it as one offs expense not a recurring expenses at the way to think about it.
Yeah, we've adjusted want to throughout the year for the.
In adjusted financials.
Okay, and then where well before get worse.
Sorry, but.
Yeah by the way John on that I, just want to let you know we will going into this next year, we would not plan on adjusting for Lorna So.
That's that's one that.
It will.
It should start producing revenue here fairly shortly so we'll either put that into the.
Other segment that we've got now reported as a separate segment probably.
But I would not expect that to be an adjustment going forward.
Okay and then.
You might have mentioned, it's in the call the locations and store openings that you're expecting next year.
Yes, there will be in Latin America, with the majority being in Mexico.
Okay, and then last question and appreciate you guys addressing all these it.
We've heard about the impact of seven social welfare programs in Latin America from from your peers. So thats not terribly surprising, but I'm wondering if you could give us a sense or.
How long do you think this would be sustained based on your knowledge of the political environment down in Mexico.
Hi hits.
We're a little surprise to the social welfare programs come into place as as was the management team down there I am sure App. He is were also we're still seeing cash in the economy. So those programs is still working working their way through and it's coming up to bonus time from us the work and so we'll see a sustained cash probably three Joel.
In February of next year.
We.
I'm not an expert on Mexican politics, and the how amlin. Thanks.
We think it's it should run its course by then but.
As we have a surprise bodies programs I couldn't gives you comfort that they went reappear again jump.
Okay. Thank you guys very much.
Thank you thanks, Jeff.
Our next question comes from the line of Vincent Caintic from Stephens.
Hey, Thanks, Good afternoon, Ashley continuing on that line of thought of the social where Phil welfare programs.
If you could.
Is there a way to size, perhaps the impact.
Thats had two.
To this quarter's results and maybe an idea if you can help us of how to think about that into the next quarter, what you're seeing so far and then maybe just taking a step backs I know.
First cash as discussed as well, but.
Just in your words, if you could describe exactly what's going on and it's one of the debates is whether or not this is a onetime.
Payment or an ongoing payment im not sure if you could maybe elaborate on that.
Yes.
It continues to be a little bit more ongoing payment right. Now. So the question is Stuart was alluding to is how long do they continue to do it if.
If president look was over door wants to continue it could continue for a good while but.
Yes, Thanks, a lot of that's probably a an initial impact that they're looking for.
As far as sizing it that's a little bit more difficult to isolated but.
But.
That was one of the things that I tried to call out as well.
It's a little tough to parse it out but.
We saw a 3% DC decrease in same store loan balance in Latin America overall, but when I look at Latin American territories, excluding Mexico. It was actually a positive 2% same store loan growth.
So that doesn't tell you directly the.
The income statement impact, but gives you an idea of kind of the impact on the portfolio that flows through the.
The pawn service charges.
Okay, and then on the flip side. So you you have upon businesses and yet.
Joe business.
So more of your customers of cash in their pockets have you seen.
Maybe an offset somewhere on the retail side and do you see that your customers, having the propensity to spend more.
Yeah, we've seen a little bit of that.
The nice balance in the business that you generally see is exactly that so.
It's been nice to see that they.
When they do have cash they are actually spending a bit on merchandise I would not say Ed I see it as a complete offset but we've seen a bit of.
Yeah, and offsetting improvement there.
Got you.
Okay shifting.
Gears a bit to the Atlanta platform so maybe.
Two questions. So the discretionary strategic investment I guess.
That's an ongoing investment and maybe the size of that kind of stays should we expect that sort of 1 million per month to continue along that that rate and then going forward now you're going have to have revenues associated with that.
Yeah, I would expect the spend probably to slow a bit on that Vincent were.
Last year, the total spend was about 13.6 million.
About 6 million that that was capex and the rest of it flowed through opex.
I would expect next year, the capex to slow fairly substantially probably closer in a million dollars range or so for the year.
Depending on.
Responses from the customer or whatever we or introduction development of new products.
We may accelerate that some.
But thats kind of current trajectory current plan.
And I would expect the AAPEX or.
Yes, I appears to be somewhere around probably a seven to 8 million total spend.
So in total probably six to 7 million spend versus the 13.6 million last year.
Okay Gotcha and.
Has the product product offering changed much from when it was called evergreen So it's going to be like online.
Sort of virtual.
On capability is that still some letters or any differences from.
That is now.
It's a it's still is writing it's it's got a bank account with the debit card attached to it.
And is not minimum balance on the bank accounts. So in the beta trials has had some very strong feedback and we can also.
Extend loans extend the palm lines without having to be in the store that's developed in beta trials as well it will continue to roll that.
Functionality as we see how our customers react to the offerings.
So we as I said in my comments, we believe it's actually a really huge move cabot to renewed the pull in line to that being in the store and we think it also attract new customers to the business just through the bank account offerings.
Okay got you last one quickly from me so on cash converters, it's nice to see.
That stock has improved a bit.
Your stock is.
Declined just kind of wondering how you're thinking so my question to maybe what I had last quarter, but how you're thinking about.
Your ownership of cash converters that sort of core long term.
Owning for you or is it something that.
Stock has appreciated maybe this stuff has now been settled and.
You've got to buy back on your own.
Maybe you can.
Switch over to buying your stock just any thoughts.
Well the board of looking at pretty much every quarter and assess it we have a.
Reasonably significant holding in that stop we think the business model. They have is actually a reason we sound business model.
The risks that we had seen in the business sitting round the class action.
Have all be mitigated. So we would actually is looking to see how that stopped performs before rushing in and I'm thinking about doesn't why but the one thing I will tell you is.
Our board is having quarterly updates on us in assessing the usage of that capital in line with everything else that we do as well.
Okay understood. Thank you.
Vince at the one other I would mention to you on the numbers on launch also as I was just point out I would expect as we put that asset into use will start depreciating that so I'd expect about 1.2 1.3 million of depreciation and come through on that this next year as well.
Great. Thanks for the detail.
Yes.
Your next question comes from the line of Greg Pendy from Sidoti.
Hi, Thanks for taking my questions can you just remind us what the cadence throughout the year.
On the digital line item was was it front loaded or was it roughly two and a half to 3 million per year per quarter.
It was I was pretty much of fixed charge of about $1 million a month that was pretty fixed all the way through we had a little bit at the start of the year. Yeah. We about 2.1 million in the first quarter. It was a whole lot bags and then that ran through it about a million a month and.
65% of that was pretty much expensed, yeah, all right.
Okay. That's helpful. And then can you just kind of give us a little bit of color I guess with its on track the launch evergreen.
By year end is that going to be throughout just the last or is that going to be.
Both of you asked Latin American is it going to expected to be integrated with all your stores or is it just a grad secondly, some gradual.
Let me it'll be a gradual all at the gradual rollout Greg the we're looking at Texas, and Florida start within that 60% about USA stores, we havent.
Put it into Mexico has yet when looking at that but yes, you want to make sure that we have a fully functioning platform for any said the migration that.
We've got a little bit of a trial going on at the moment in the betas made a stages.
And I will continue to roll that during the course of the next calendar year.
Okay, well go product by product or is it going to.
Before I guess off all products or.
Yes at the platforms to continues to develop its functionality will roll out as the functionality keeps improving so.
It will as it stands will be rolled out across.
The states that apply and as we add new states they won't be a different offering unless there is some not legislative requirements of the state that needs changes.
Okay. That's helpful.
Thanks.
And as a reminder to ask a question press Star. One. Your next question comes from Scott Buck from B. Riley.
Hey, good afternoon, guys just a few for me.
Second the social.
Fair programs in Mexico.
At what point do those exten.
Far enough that you start to kind of reassess Mexico as a.
You know area of increased investment interest versus maybe the rest of Latin America or even appear in the states.
Yeah, I mean, we've got a long term commitment to Mexico. So.
There is always when you operate in Latin America. There are always a degree of volatility is electricals hospitals change, but it does still revert to the basics.
These customers do have a need for cash over the long term and they will come and go as I have cash they will use it. So one of the potential unintended consequences of social welfare programs as we might get turned off at customers will have a high need for cash as I'll have to adjust the living standards.
We think there is potential unintended consequence that could benefit us.
But we still see Mexico's a very attractive.
On the mental environment Theres still up right within as we do in other Latin American countries to and I'd say or or changes that we saw as more and the the rate of growth or the rate of earnings but.
It's still represents a pretty significant earnings for us.
Earnings and cash flow.
Great I appreciate that color moving north now to Canada can you give us an update on kind of where you are with with cash matched and what you're you're thinking is there. It looks like you know weve gone up quarter now without any kind of store consolidation are you happy with the footprint and what's maybe the longer term.
You know opportunity there.
Yes got back I mean, it's 22 stores.
So we have a rounding error in the statements we have down from 27 earlier. So we have consolidated some of the stores.
It off rights reasonably well, it's not something coal we just keep it running we tried to do is.
Looking at a while ago as to whether there's any opportunity to rationalize the.
At this stage, it's in a bit of a holding patent is and will probably end up reviewing.
Its relevance over over the next 12 months.
Okay perfect last one.
Any they're kind of capex investments for 2020 or area as an increased investment.
Besides with.
Already been noted between now and.
The new stores store openings.
And some of the Capex, we've we're doing a fair bit of work on the infrastructure.
The company we've got a.
Quite a legacy environment.
Each with using a micro services strategy to migrate ourselves off from a very old environment. We're trying to keep all that capex for than the similar trying to what we've had for the last year or so so it's more a.
Reallocation into it to fix and the infrastructure than but we don't.
It is actually the right thing to do we don't believe it'll it'll impact.
Business.
Okay perfect guys. Thanks, a lot.
Your next question comes from the line of Air in English from 22 northwest.
Hey, guys. Thanks for that time here I guess can you just walk through what the board thought process wise on on the buyback and whether you have.
In the near term.
Ah we just.
As we've outlined before we've been looking at.
Acquisitions.
Over the past two years also in what we found is that.
The multiples and if we applied capital as multiples Didnt provide a very efficient return.
What we believe was the appropriate risk that would be taken us as the.
As the board looked at the alternatives they did seven that.
Probably the best the best efficient effective use of the capital at this stage would be to wouldn't want to share purchase credit.
So if the thought process is that easy socket now extremely undervalued, but it seems to be objectives, we true because it trades on their evaluation local that it traded in 2009.
Largely through self inflicted issue is referring to the multiple convertible offering that were widely hated by your equity holders.
Turning to the board, which alone reduced the market cap by a nice figure announce.
The ongoing disaster cashing voters, why not just aggressively tender for $60 million stock right now.
Nine incentives potentially using the buyback over three years and arguably missing the windows as Andres.
You can reward your equity holders.
And just destroyed by.
Tenants and management this asset as company.
Hi, This is very long statement, there and I'm not sure I can get around to all of it.
I think many lastly, livestock right now that's a question well or the one of the reasons is we're in a blackout. So we can do that.
Come on guys. It's one excuse after another.
So just trying to sockets the slot asset value.
Where's the shareholder value orientation of the company.
Oh, that's why the companies the the border looking at the investment opportunities and items that I have said the share repurchase program as a priority volumes.
Well, they we were there to support the board and the board have a comedian place and I will determine the appropriate strategies around that.
Well, let if what if it looks like to everyone on the outside the board is not aligned with the rest of the equity holders because that that's really the problem you guys have here the credibility problem and announcing a buyback and then not using exmar using it happen, we will not improve the governance.
Proceeds governance problems at the company.
The strategy of that is determined as to how to embark upon the buyback program is actually one that we don't we wouldn't disclose I've only to the market I mean, we're doing a rationally.
We are using their resources and we do it appropriately.
Discussions with.
Shareholders of vein that I have been.
Bang the table that they believe the most efficient use of capital would have been a share buyback program of which.
The board have determined as an appropriate course so.
I wouldn't be surprised if the shareholders will just disappointed by the board's actions.
I would I would add to that Aaron that the ports discussion there was not hey, let's announced plan and then not doing trades right.
It's not lip service on that.
And then pension actually activism.
Well I understand that adding I am also aware that that this is not your decision.
Our stores alone.
Yes, it's a buyback by what I would say is.
Well, they're looking for action and add a shared cannot be purchase.
And then I don't know when you guys whenever you the buyback so hopefully we have some real action on that front. Thank you.
There were good points out.
And your next question comes from the line of curious Steiner from Huber capital management.
Hey, Steward and Danny I, just maybe one or follow up on a on a last question. So I've covered you guys a long time and.
I don't think you guys have ever announced a share repurchase authorization of the magnitude that you just announced so that that's obviously positive.
During the quarter, though you did have some costs related to an acquisition that you considered.
And it wasn't it was not an immaterial amount so I assume that the size of the acquisition wasn't the immaterial either.
So I guess, maybe you're saying you can do both acquisitions and buybacks at the same time, but I guess I'm, just getting a bit of a mixed picture as to what the priority of capital is and if it would be hard for me to imagine that whatever you looked at would be cheaper than the easy Corp. stock. So maybe you could just clarify that sorry.
Understand with what the intentions of the board is with regard to capital allocation.
Moving to the board.
Obviously would be looking at the best uses those.
Free cash resources.
Sometimes the time horizons can be a little bit different some of the acquisitions really he will have in five years to 70 horizon, rather than the one year horizon, So while a number of.
How does look at potentially at quarter to six months to 12 months. Some of these acquisitions can actually be quite attractive over longer period of time. So the board look at different time horizons as well.
We do look at acquisitions, all the time the one as you rightly pointed out Wasnt acquisition off some size given the state of the due diligence costs, we head, but the right thing was determined that it wasn't the appropriate.
Course of action to follow through on.
But we will continue to look at opportunities, but at this point of time.
The share repurchase PRASM has the prior.
That's great. So can you confirm that once you're out of a couple of day period. After the earnings reports that you will no longer be quite period.
After the.
I think we're in black hat natural Q1.
Outstanding typically current.
Program is that would go into blackout generally a month before quarter end.
And we are within a month of the next quarter end, so that would like us out for this period.
Stuart and I have talked about.
Potentially needing to reassess the.
Time frames that we self assess or self imposed the blackout periods, but that would typically be from that point until I believe 48 hours after we announced earnings.
Got it thank you.
And that was our last question at this time I will turn the call back over to the presenters for closing comments.
Thanks, everyone for being on the coal will be obviously liaising with many of the the Viatel size over the next step 40, I'd also and we look forward to those discussions thanks very much.
Ladies and gentlemen, this concludes todays conference call. Thank you for participating you may now disconnect.