Good day everyone, and welcome to the Gray Television's First Quarter 2016 Earnings Call. Today's conference is being recorded. For opening remarks and introductions, I will turn the conference over to Mr. Hilton Howell, President and Chief Executive Officer. Please go ahead, sir.

Thank you, operator, and good morning everyone. I want to welcome you to our first quarter 2016 Gray Television earnings call. I want to apologize, I've got a little bit of a spring cold and so I hope that my voice holds out through my opening comments. I believe Jim is going to say a few things after that and Jim Ryan and then Kevin Latek is here. He doesn't have prepared remarks, he'll be here to answer any questions that you may have. This morning, we announced record operator results of which we are very exceptionally proud. On a GAAP basis, we reported revenue of $173.7 million, a 30% increase over Q1 last year. Our broadcast cash flow was 65.9 million, represented a 41% increase over last year's results. And net income of 9 million represented a 61% increase over Q1 2015. Free cash flow of 24.2 million was a 10% increase over last year. And diluted net income per share on a GAAP basis was $0.12 for the first quarter. However, significantly, if you exclude the nonrecurring deal transaction costs that we incurred, the 6.7 million, our adjusted net income per share for the first quarter would have been $0.18 per share. Political revenue for the quarter was very strong, coming in at 9.7 million. But if you look at all of our sources of revenue for the quarter, every category increased by double digits. Local advertising revenue increased by 14.5 million or 19%, to 89.4 million. National advertising revenue increased by 4.3 million, or 24%, to 22.1 million. And as mentioned, political advertising increased about 8.5 million, or 733%, to 9.7 million. And finally, retransmission consent revenue increased 11 million or 30% to 47.3 million. Other revenue increased by 2.1 million or 65% to 5.4 million. We…

Thank you, Hilton. Good morning, everyone. I am going to keep my comments mostly focused, as far as Q1 results, on our, what we call the combined historical. That is basically the apples-to-apples comparisons, including the Schurz stations which we acquired, and the related transactions associated with the Schurz acquisition in the first quarter. Our total combined historical revenue was up 12%. That was driven by political and re-trans. Our local, we were very pleased. Our core local was up 3% in the quarter. As we had said in our guidance in our last earnings call for Q1, we did expect a slightly soft national in Q1, and it was down about 3%. Again, given the sheer number of dollars involved in national, that is not a lot of dollars on a percentage basis. Our broadcast operating expenses on a combined historical basis was 120.7 million, increased about 8% quarter-over-quarter. That was driven primarily by increased reverse comp to the networks of 5.2 million. And our payroll and benefits were up about 6% in the quarter. And I think as we move through the year on payroll and benefits, we will be able to start seeing some savings in the acquisitions from late last year, as well as some modest savings as we--the more recent acquisitions. On a year-over-year basis, our national rep commission was $1 million less than Q1 '15. If you recall in Q4, we took a $6 million plus charge to cover the termination fees on the rep agreements almost all of our rep agreements. We've got one or two that are longer-dated that we will deal with farther down the road. And as we said in Q4, that charge last year, we will more than pay for this year in the overall savings we have, not…

All right. Thank you, Jim. My phone was on mute, I apologize. That's great. Operator, would you open up for questions?

Thank you, sir. [Operator Instructions] We will take our first question today from Aaron Watts with Deutsche Bank.

Just two quick ones for me, within the core growth that you were talking about, kind of moving from 1Q to 2Q, I know you said you couldn't pin down too much on why April was a little slower, but can you maybe talk about how auto trended, or is trending, in the second quarter? I think it was, what, approximately flat in the first quarter?

Jim, you might be on mute.

I apologize. I was. Aaron, for the quarter, again, April was kind of broad-based slow. Obviously, with auto being a large part of our business, it was down a little bit, reflecting the overall slowness in April. I think for the whole quarter it should be not dissimilar to where it was in first-quarter, probably flat to up slightly right now. And that may be a little bit conservative on my part. But we are not seeing -- we're not overly concerned with the trends we are seeing in auto.

And what percent of revenue is that now for ad revenue?

Auto runs for us in the low 20%'s of -- low to mid 20%'s of total ad sales for us, pretty consistently year in and year out.

And how does that compare, if you think back to kind of pre-recession peak levels of auto? Is that about what it was back then?

Yes.

Okay. All right. And then just the other question I had on bringing your national rep business in-house, recognizing it is early days and political is probably moving that around a little bit, but any initial thoughts on how it has performed relative to your expectations?

We have been actually delighted in how we are performing. We have been getting good feedback from the national agencies we have been dealing with. And so we are very pleased with what we are seeing. Several agencies have provided feedback that the service level and the response times are better than what they had been. So we are delighted at where we are in that process at this point in time.

Okay, and one more if I can, just probably tied to that a little bit on the rep side. As you think about the cadence of political, can you talk about the ebbs and flows of your expectations 2Q to 3Q to 4Q?

Yes, I think, because, first of all, we were very pleased with what we ended up with in Q1. It was a little bit better than we had expected. As you know, when we get political guidance for the quarter, we generally are a little conservative just because it is difficult to predict it. It is always very last-minute business. In general, what we are seeing in Q2, I think is just reflective of the timing of the primaries and the primaries dragging out a little bit. We would have -- if you had asked us in December, we would have been expecting to be in more or less general election mode at this point in time. And that is just beginning to shake itself out. So, I think there is a possibility for a little upside late this quarter if -- maybe Trump starts gearing up more in general election mode. Third-quarter spending for political would be up significantly over the first-half of the year. And as we have said consistently for many years, historically half of our political revenue has come in, in the fourth quarter. And we're still very comfortable that we will do better than the 143 million that we had pro forma for all the acquisitions in 2012.

We will go next to Marci Ryvicker with Wells Fargo Securities.

Jim, you talked about May and June. How much visibility do you have? How much inventory is booked at this point for both months?

May is probably, at this point, around 85% to 90% of where we expect to end up. June is -- and this is -- those levels are very typical, Marci. And June, also very typical levels, and probably in the 60%, 70% range right now.

Okay. And then in terms of M&A, I know you're in the auction, and but a lot of people in your markets are not. So I am assuming that it is slow all over, or do you see a little bit of activity in some of the smaller markets?

Kevin, do you want to do you want to take that, Kevin?

I'm sorry. Can you repeat the question, Marci?

Just I've been asked if, in the smaller markets where there may not be as many participants in the auction, maybe there is a little bit of activity that is going on that we are not hearing about in the larger markets, where there are a lot more participants in the auction.

Marci, I would say that there is not really any more or, in my discussion at all, there's really some conversations taking place at all levels, but extremely muted compared to last year. The SEC has been very clear they are not going to process applications for station transactions if someone filed an auction application. And a lot of folks made it very clear they were filing auction applications whether they intended to participate or not. So, even if folks planned, were thinking they might sell, they are now kind of locked out of that process until later this year. And we have, as usual, people who would stations that we would like to buy, being the number one or strong number two station, looking at political revenue being extremely strong this year. So, for those two reasons, I still think people are mostly sitting on the sidelines in terms of thinking about transactions, whether they're in small markets or large markets, whether they are in a spectrum necessary market or a spectrum free market, there are folks that are just kind of sitting around. So I would say we are always, as we say, we're always talking to people on any given day; we are always looking for opportunities to grow the Company in a prudent manner, which is not taking as much time certainly now as it did before. And we don't really see that situation changing much until we get to the end of the year.

Got it. And then my last question, now that you don't have the CAPS agreement, Jim, it sounds like, just in general, your national dollars are higher margin. Is that the correct interpretation?

Yes, by definition they are, because we are not paying a mid-single digit commission rate on those national dollars.

Okay. And so it's just the typical commission to your own sales force, correct?

That is partially correct. I mean, there are, there is a person at each station that was already in the station staff that is handling the day to day responsibilities for that national business. So actually the incremental cost of them and how we compensate them is not significant; certainly, massively less than the commissions we were paying historically to the national rep. And as we said, in our Q1 call, we have hired only two additional people specifically to work companywide on the national business. One is a political specialist who has been doing very good work for us and on the political side. And the other is a -- I would describe as a sales generalist, not a political specialist. And so, that is the entire incremental effect to our payroll. And trust me there and I think as Kevin quipped in the Q1 call, we are not paying those people millions of dollars, either.

We will take our next question from Kyle Evans with Stephens.

Jim, I know we're looking at a new definition for local core going forward, but maybe you could ease us into this new reporting convention a little bit. People appear to be spooked by it today. Your same station comps last year were running at about 6% on core, and that is going to 3% in 1Q. And it looks like the guide is for zero to 1. Those both include Internet. Could you talk about the Internet assumptions in the guidance and how Internet performed in the first quarter?

Yes, Internet, what we used to call Internet, performed to our expectations. But as we've been looking at that, and as we have talked about on many calls, our digital revenues are all locally sourced in our individual 50 markets. They represent local advertising availabilities in those markets, whether they are an ad placement, a pre-roll or whatever, a mobile sponsorship. But all of that revenue has always come directly from the local markets and being sold our local sales staff. So we finally came to the conclusion it just made sense to put it all together and call it local, just because it is, at the end of the day, all local ad sale is coming out of our local markets, individual markets.

But you said it performed to your expectations. I mean, it was flat 2015 off of 2014. Did you expect it to be flat?

It was -- pardon me I've just got to look to the right line here. No, it was up a little bit. But keep in mind it was, even if you look back to the historical numbers, you're talking about less than $10 million. So, it was up low to mid single digits. We were pleased with it. But it is not a big component to our revenue mix. And quite frankly, it never has been. But then again, as we have talked many times, it is actually high-margin revenue for us. We do make very good positive cash flow on that particular product offering we have.

And I know national is a big piece of your business, but down national core seems to be a pretty consistent trend for the peer group. Could you talk about what is driving that for Gray and maybe how that is different or same versus your peers?

I would not describe it as any one big driver. A lot depends on what market we are talking about and the vagaries of the markets. The other big thing I think probably bigger picture would be that certainly, there may be some shifting, at least right now, in the last few months, the next few months there may be some shifting of dollars from mid to smaller markets, up higher in the market scheme. It's hard for us to tell. We see peers talk about soft national, too. But I also haven't heard of anybody like us specifically say it's such and such a category. It feels like it's for us, it tends to be semi broad based. But again, it's not large dollars. Quarter-over-quarter, on a combined historical basis, down 3% is really saying down $800,000 and we save more than that in the rep commission year-over-year.

It seems like we heard telco weakness from a couple of your peers and you were down 12% reported in on a combined historical. What's going on in communications?

I think that is the mix of budgets by the big guys in their marketing efforts.

Meaning mix by market size or mix by media channel or both?

I can't necessarily speak by media channel, but I think definitely our markets, some of the people, some of the big players that were active last year less active. And we have seen in communications from time to time a fair amount of volatility, as I've said, as a Verizon or an AT&T or name your big company, either moves in with a product offering or moves here, or ratchets it back.

Okay, two more quick ones and then I will get out of the way here. Any update to your units volume in retrans? That has historically been flat to slightly up. How has that held up?

We see it still along the same trend lines as basically stable.

And then last, how should we think about the variable expense associated with political? I know there has been some discussion about cats and national agencies, and I am just kind of looking for an incremental margin on that revenue as it hits in the back-half. Thank you.

Well, this year, we will not be paying national rep commissions on the political revenue that would have in, like in ’12 or ’14 or ’08 or ’10, would have come through the national rep firms. And while it isn't 100%, and while that historic business was not 100% of our political, it was by well over half of it, much more than half of it. So, one way to think about it, and it doesn't necessarily show up in the year-to-year comparison, but we are saying $143 million-plus of political this year, a lot of that would have gone in prior years, had we maintained the rep firm, the vast majority of that $143 million would have gone through the national rep. You figure there would have been even if we had renewed our agreement, I am not saying the rate would have been the same as the historic rate, it probably would have come down but you are still talking about a commission rate somewhere in the low-middle-single digits, the middle-single digits I would presume. So, and I know it's a kind of an imprecise answer because you'd have to think through several variables. I mean the bottom line is, by switching off the national rep and going direct, we will not be paying national rep commissions on millions upon millions upon millions of dollars this year. So that is a huge benefit to us. And it's exactly why we took advantage of our termination clause at the end of the last year when we had the opportunity.

We will go next to Jim Goss with Barrington Research.

I presume the core local up a little type guidance does include Internet and digital? And is there a sense, as you are making this transition, of how much that actual broadcast revenue or ad revenues are in that mix? Are they actually flat or down a little bit?

The way we used to describe as digital is probably up a little bit. But again, Jim, the amount of dollars we are talking about in relation to the total amount of local, what we are now calling local that we are guiding to, which was 104 million, 105 million I mean, it's not the big driver in the overall equation. And as I said earlier we had a slow April across the board. May is very healthy. And June is in local, is in positive territory. So, it's the overall impact on the quarter really reflects a slow April.

Okay. And as you approach the political peak, in terms of crowding out, which categories tend to be most affected? Have you noticed any pattern over the years?

First would be, as far as a category auto, because auto advertising loves a strong newscast and that is exactly where political advertisers want to be as well. But we had seen that pattern every political cycle we've ever had and especially our local advertisers, auto advertisers, they know that cycle as well as we do. So, it's not a surprise to anybody in September and October, especially October when politicians are trying their best to buy 100% of our news inventory.

Okay. When the tax rate was down in the quarter, but is there any pattern we should expect for the balance of the year in terms of tax rate?

Nothing pronounced. I don't think it's -- I don't have in front of me but it was about, just shy of 40.

I think it was up a little.

Yes, I don't think there's going to be a huge change in that quarter-to-quarter.

Okay. And lastly auction strategy, is there any sort of motivation you have or anything you would like to present as to your approach to this?

We are in a quiet period mandated by the FCC, and we cannot make any comment whatsoever on the auction.

We will go next to Leo Kulp with RBC Capital Markets.

Thanks for taking the questions. I just had a couple of quick ones around modeling in the back-half of the year. So, when we look back to 2012 when there weren't any acquisitions, there was a slight decline in broadcast OpEx between 2Q and 3Q, and some growth in 4Q. As we look to the second half of this year, there sounds like there's going to be some savings on acquired stations last year and some, but of course some political commissions. So putting it all together, is it fair to expect a modest decline in operating expenses in 3Q and 4Q on the core side, with some increase around commissions for political?

I think core might moderate a little bit as we get far--back into the year. There would be, as you said, probably a little uptick especially in Q4 on incentive compensation that would be reflective of the final political numbers. But in comparison to prior cycles, the uptick because of the political and expense line, isn't going to be quite as noticeable in like '12 or '10 or '14 for that matter, because we aren't going to be paying the rep commission on the national political. And that rep commission historically went through the TV operating expense line.

Got it, thank you. And then secondly, can you talk a little bit about how reverse comp is trending? I think you have spoken about a 50% payout ratio. But it looks you might be a bit below that now. But can you just kind of give us some updated thoughts around that?

In the big picture for us this year and next year, we still think that it is around 50% at the end of the day, it might be a touch lower one year. But basically, we are saying it's a 50/50 zip code area. I think clearly our affiliation agreements are all out and we have talked about many times, we have a big repricing ability at the end of '17 going into '18 of over 6 million of our subscribers, over 6 million subs to reprice. So it is way too early to predict that pricing, but certainly we are expecting a real good year in 2018 on our gross retrans number. And so, I still think we are probably in that 50-50 zip code, even out through at least 2018. Kevin, you may want to add to those comments.

I think you pretty much covered it. I don't think I have anything additional to add. That one page in our deck, I think that is a pretty good top providing visibility on our retrans, expiration date subs, and our network affiliation agreements on the following page. But it's a fair amount of transparency, certainly the most we can provide on our expected retrans revenue and costs. And again, we all have high expectations for retrans growth. I think all of our peers have said that as well. We don't see anything that will alter our expectations at this point. But we have given as much guidance as we can right now, based on the contracts that are currently in existence and our own expectation about where the markets are going.

We will take our next question from Robert Maltbie with Singular Research.

Firstly, wanted to ask, we have seen a bit of softness Q1 in the overall domestic economy of half a point of GDP growth, pretty lackluster. In trying to calibrate organic, I guess, growth or sales growth, ex your acquisition, Schurz acquisition, do you have any metrics there that would provide some guidance?

What we've said many times is we think of basically core growth whether it's -- and here I am talking about all in all transactions, basically the Company as it exists today, given the strength of our stations we would expect on -- I want to make this clear. This is a long-term trendline expectation of ours. There certainly would be some up-and-down quarter-to-quarter. But we would -- our view is that at the very least we would be growing in core at GDP and quite frankly, slightly above GDP on a long-term trend line. And that the growth above GDP is because of the strength of our stations and the strong position we have in the local markets.

I see. Regarding the SyncBack acquisition addressing over the top, what can we expect moving ahead, more strategic investments? And what do you foresee as being an impact?

Kevin may have some comments on that. First of all, the SyncBack investment we made is small. It was $3 million. We viewed that as essentially a technology play for us in that we -- they have technology we were very interested in. And our view is by making the investment that technology will be -- we will be getting access to that sooner than otherwise and we can benefit from that in the long run. And as I said, Kevin may want to add some more comments.

I would add that Gray has not created an in-house venture capital fund and has no plans to do so. We are not looking to make investments in the digital space or other areas outside of broadcast television. This small investment in SyncBack is a one-off opportunity for the reasons Jim mentioned. I would only add that the technology that SyncBack is pushing out is not only something that we think it's important for us to get behind and to use and get access to. We felt that being a part of that launch would also help the rest of the industry rally behind the new technology, which in a very high level, allows us to put our signals into the cloud, and from the cloud, allow anyone from CBS all access to Sony or YouTube or Apple or whomever wants to access our signals for an over-the-top product to get the broadcast signal directly from the cloud instead of having to run separate feeds into each of our TV stations or pulling the feeds out of somewhere else. So we thought getting behind it would expedite or put a little fuel behind what we think is really winning technology, but you should not expect that Gray is going to be investing in digital or other businesses down the road. This is absolutely a one-off that made fantastic sense for us and we don't expect to see anything like this in the future. Not to say -- I don't mean to say never say never but don't read too much into this, this small investment, as a change in strategy in any way.

Thank you. And finally, what would be the gross amount of the savings on the rep commission saved over the last 12 months or for fiscal year 2016?

Bear with me one second. On a combined historical basis, 15 national rep commissions would have been a little over $13 million. We will have again we have a couple of national rep agreements still out there that are more longer dated that didn't make sense to terminate yet. But again, on a 2016 combined historical basis, on those particular agreements, will probably be paying approximately $1 million in commissions. But the key takeaway is that we won't be paying national rep commission in 2016 on well over a $100 million of national political revenue. So there is a huge savings there for us on a go-forward basis that doesn't translate into necessarily a year-over-year savings for us, if you understand the distinction I am making.

We will take our next question from Barry Lucas with Gabelli & Company.

Jim, could you just remind us what the step-down is in the premium on the bonds in October?

Yes, just a minute. I have to admit, Barry, I didn't have that on my cheat sheet, so just a minute. Let me quick look it up for you. Is there another question in the meantime?

Sure, and throw this out for Hilton or Kevin, and that is, you identified a number of acquisitions made over the last two and half years, and just wondering what the real appetite is going forward once the auction is completed? How do you see the Company progressing? How big? And do you have any interest in the properties that will be divested out of Nexstar and Media General?

I'll let -- go ahead, Hilton.

We think the merger and acquisition world is going to become much more aggressive at the completion of the auction. We have [indiscernible] stations Nexstar/Media General merger. Whether or not we will be able to play there or not, I don't know. But they have some stations that Gray would clearly be interested in. In terms of our long-term strategy, we do remain very committed and focused on growing the [indiscernible] of our stations. In terms of ultimate size, we have no stated goal of reaching the cap or doing anything else like that. But we do have a stated goal of growing and building our Company, and with stations that are similar in profile to those we have in our portfolio today. We are always looking and we may end up having a few announcements down the road, and some maybe fairly soon. But in general, the closing of those will be postponed from what we understand until the end of the auction process. And so that will slow down that piece of it. But we do firmly intend to remain focused on growing our station portfolio and expanding our geographic reach. And we think that the course of this year is going to delever the Company fairly substantially after closing on the Schurz transaction mid-February. And that will give us dry powder by the end of the year to prudently make more investments. Kevin, do you want to follow up with that?

I would just second what Hilton said and just add that we think that the post-auction environment for station acquisitions will be different and better for us than what we've seen over the last few years. Because the other companies that we would typically compete with for high-quality properties are no longer in the market for the most part. Nexstar will be near the cap. Media General will no longer be a buyer. Lind will no longer be a buyer. Schurz is no longer a buyer. Sinclair is close to the cap. So we think as good properties come online, there is not too many other folks out there who are in a position to buy some of the better properties that may become available. So we are particularly excited we may have some good opportunities at good multiples down the road. Obviously no assurance that that will be the case, but we just don't see a lot of pure competition for some assets that we would have seen if things came in the market a couple years ago.

Barry, going back to your specific question, the bonds are currently callable at 105.625, in the second call date starting October 1st, so the call is 103.75. So there's obviously a significant step-down for us not many months down the road.

And we’ll go next to Dennis Leibowitz with Act II Partners.

The stock was off almost 10% based on the second quarter guidance. And I guess it is a mix of the core, the political and the expenses. I wonder if you could say, I guess first of all, is the second quarter outlook less than you would have expected before? And which of those elements is most important?

First of all, the expenses are right about where we expected them. The political is obviously a big driver in the quarter. But political obviously, as we said, that's more of a reflection of the length of the primary season and what primaries were up in Q2. We think certainly our guidance for Q2 in political is conservative, and I think there is room to the upside if the main candidates shift to more of a general election mode later in the quarter. And obviously that remains to be seen and is difficult to predict. But we are very, very comfortable overall about the political for the year. And so, quarter-over-quarter variances, we are not troubled by it. And the dollar amounts we are seeing right now are about in the range we would have been expecting. Core, our local being up slightly, I think we take that as a positive sign. I think it is a little bit reflective, the second-quarter, reflective of the overall economy a little bit. And as we said, we had a slow April, a good May, and a healthy June, looks like it's shaping up. So it's just a case of a slow out-of-the-box start in Q2 for us. So we are not overly concerned with the trends we are seeing so far.

[Operator Instructions] And we’ll go next to Mitch Fitter with Aegis Capital.

Has there been an increase in the amount of shares outstanding? And if there has, can you just give us a little color on why that is?

We did have a public offering in March of 2015, so I am not sure what historical numbers you may be looking at, but that was the last significant share issuance we've had.

So the acquisitions, you haven't given stock on some of these acquisitions? It has basically been cash?

Yes, that's correct. They have been cash purchases.

Now, are you generally, is the management team generally disappointed with the price of the stock over the last couple of years? It doesn't seem to have -- it gyrates back and forth. And you are building a very significant Company, but the shareholders don't seem to be being rewarded. So, is it a function of trying to pay down that debt? Or is just something that it's a longer-term story where, once you reach a point where you have enough stations, you will be able to reduce G&A and make -- get the stock price higher? I was just wondering if you could comment on that. You don't pay a dividend to the common shareholders, so they are holding on for growth. And it doesn't seem like the stock has really performed all that well. I know you guys are very proud of what you have accomplished, but it doesn't seem like the shareholders are benefiting.

Mitch, this is Hilton. Let me start with that. Actually, we are very proud of what our stock has done over the last three years. We've been disappointed with what has happened through the course of this year. It is difficult for us to truly understand it, because our numbers continue to be at the top of the industry. Right now we do not pay a dividend, nor do we have a stock buyback program, but both of those are issues that will come to pass in time. We still believe that the best use of our free cash flow is to continue to grow the footprint and the profile of the Company. I do know that at the end of the first quarter, we found out that we had some relatively significant selling from funds that had very, very low basis in the stock. And I believe, and we believe, that that was purely justifiable profit taking on their part. But I can assure you that we are working each and every day to grow the shareholder value of this Company. And so it really is our top concern. We believe that the best route to ultimate lasting value is by creating a Company that has got a footprint and profile that is really second to none in our industry. And so we are going to remain focused on that for the short and perhaps medium-term. But we will be looking at shareholder returns when those opportunities dwindle a bit.

Great. I am just looking at a weekly chart. The stock has been back in December of '13, the stock was just at about the same level that it is now. So, we are talking about two and half years of no appreciation in the overall price of the stock, unless I am missing something. But I appreciate your comments. And I have full faith that you guys are going to build this into a very significant Company, even to the point where you are going to have to fend off some potential acquirers.

Well, Mitch, let's look at it this way. I think it's a doggone good buying opportunity, and why don't you and Aegis step out and just kind of pick up some? Because we are going to make it worth your investment. I promise.

We will go next to David Atterbury with Whetstone Capital.

Kind of picking up on that line of questioning, and also in light of the very attractive M&A backdrop that you are describing, how are you all thinking about using equity or hopefully not using your equity as a source of capital to complete M&A? And that might be one concern people have with overhang on the stock is that there could be issuances coming. Because I think the M&A activity is expected to pick up. So could you talk a little bit about how you view the stock value here, and how you view it as a potential use of capital for any future M&A? Thanks.

This is Hilton. I will start with that and I will let either Kevin or Jim follow up with their thoughts about it. As was mentioned by Jim, at the end of March, on March 31, we did do a secondary. And it was intentionally to create the dry powder for us to do all of the acquisitions that we completed in 2015. We have, I think by nature of the business and due to the auction a period of time where this Company will de-lever itself and will create its own dry powder. I don't see a need in the immediate future for any sort of equity issuances and they are not on our radar screen.As Jim mentioned if we did nothing and no acquisition occurred, by the end of this year we are going to be in the low 4's. And if we exceed what I think is relatively conservative projections, we will be below that. And that will give us ample capacity to make acquisitions as we've gotten larger. So, there is no current or projected discussions about using equity to fund what we are doing right here.

Okay, well, that's great, because we are firm believers that the stock is awfully mispriced and cheap down here. And I think we are glad to hear that it is not an intended use of capital for M&A. That's great. Thanks, guys.

And listen, we agree with your conclusion and--because we think we are grossly undervalued right now.

Gentlemen, there are no other questions in queue at this time. I will turn it back to you for closing remarks.

Alright. Thank you so much, operator. Once again, I am sorry about my voice. It happens every now and then. But we really do appreciate your time and your attention to our Company. We are actually quite pleased, very pleased, with our quarterly results, and we have no doubt that 2016 as a total year will hit all kinds of historical records. And we look forward to talking to you next quarter. And between now and then, if you have any questions reach out to us at any time. Thank you so much. And with that, we will sign off.

Ladies and gentlemen, thank you for your participation. This does conclude today's conference. You may now disconnect.