Good day everyone and welcome to the Vonage Holdings Corporation's Fourth Quarter 2015 Earnings Conference Call. Just as a reminder today's call is being recorded. At this time for opening remarks and introductions I would like to turn the call over to Hunter Blankenbaker, Vice President of Investor Relations. Please go ahead.

Great, thank you and good morning and welcome to our fourth quarter and year-end 2015 earnings conference call. Speaking on our call this morning will be Alan Masarek, Chief Executive Officer; and Dave Pearson, CFO. Also joining us are Joe Redling, Chief Operating Officer and Clark Peterson, President of Enterprise. Alan will discuss the company’s strategy, full year, and fourth quarter results, and Dave will provide a more detailed view on our full year and fourth quarter financial results as well as our outlook for 2016. Slides that accompany today’s discussion are available on the IR website. At the conclusion of our prepared remarks we will be happy to take your questions. As referenced on slide two, I would like to remind everyone that statements made during this call may be forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements are based on management’s expectations, depending on assumptions that maybe incorrect or imprecise, and are subject to risks and uncertainties that could cause actual results to differ materially. More information about those risks and uncertainties is highlighted on the second page of the slides and contained in our SEC filings. We caution listeners not to rely unduly on these statements and disclaim any intent or obligation to update them. During this call we will be referring to non-GAAP financial measures. The reconciliation to GAAP is available on the IR website. With that, I would like to turn the call over to Alan.

Thanks Hunter and good morning everyone. Thanks for joining us. I couldn’t be more excited and more energized to be with you this morning to discuss our results for the fourth quarter and full-year 2015 as well our outlook for 2016. 2015 was a transformative year for Vonage. We made enormous progress optimizing the profitability of consumer services while successfully pivoting to the unified communications for business market. I’d like to take a few minutes to reflect on some of the key highlights and how we advance our mission to become the markets clear leader. I’ll start with Vonage business. First, in 2015 we successfully integrated the five companies we acquired over the last two years. We made great progress moving towards common systems, network platforms, and product catalogues while operating two focused technology stacks. We improved operational efficiencies, exploited synergies, and drove rapid organic growth. And now we have a scaled platform to successfully integrate future acquisitions. Second, we simplified our go to market strategy by creating two product families. Vonage Essentials based on our proprietary call processing platform that has purpose built SMB through mid market customers. And Vonage Premier based on BroadSoft enterprise grade call processing platform which serves larger customers from the mid market to truly large enterprises. This product clarity is critical to deliver the right solution to the right customer with a value proposition that is simply better. And I am purposely emphasizing the word better. In fact we made it our new tag line; Vonage, the business of better. And we created this tag line because we believe our value proposition is simply better than others. And third, we implemented the industry's broadest multi channel sales distribution platform targeting business customers of any size or complexity, from small SMBs to very large enterprises.…

Thanks Alan and good morning everyone. I'm pleased to review our financial results for the fourth quarter and full year 2015 and our outlook for 2016. Before I begin, I’d like to note that these results include a full quarter of iCore financials as we acquired the company in late 3Q. Additionally quarterly growth rates disclosed in our presentation slides during our prepared remarks are on a year-over-year basis unless otherwise noted as sequential. With that let’s begin on slide 4. Revenue for the fourth quarter was $230 million up $15 million or 7%. Business revenue grew to $71 million, a 149% increase from the prior year. For the full year, consolidated revenue was $895 million, up 3% and at the high end of the increased guidance we provided in November on the 3Q earnings call. The increase was due to substantially higher Vonage business revenue, partially offset by expected line reductions in consumer. Vonage business grew 2015 revenue to $219 million, a 132% increase on a GAAP basis. Fourth quarter average revenue per line in consumer was $26.93, down from $28.06 due to the $10 a month for the first year pricing structure implemented in 2015 and lower ILD pay-per-use revenue. Q4 of Vonage business average revenue per seat was $44.79, up from $34.28 a year ago and up from $41.56 in the prior quarter. This substantial improvement reflects our successful efforts to strengthen our presence in the mid-market and enterprise phase organically and through acquisitions. Moving to slide 6, consumer customer churn for the fourth quarter was 2.2%, down from 2.4%. Churn improvement is the result of our focus on adding high quality customers that are less likely to churn and the continued stability of our tenured base. We ended the year with 1.9 million consumer subscriber lines,…

Great, thanks Dave. Lets open it up for questions please.

Thank you. [Operator Instructions]. And the first question is from Catharine Trebnick of Dougherty & Company. Your line is open.

Thanks for taking my question. A nice one, quick -– maybe this is more for Clark or Joe Redling, how are you guys seeing Microsoft in the field and is that -– even though you gave very good guidance for your VBS, up 50% year-over-year, is there anything lagging from Microsoft in the recent announcements that you think might be impacting or might be sales going forward or etc. can you give us some more detail around that new competitor that has emerged? Thanks.

Catharine, hi this is Alan. I’ll just start and then I’ll turn it over to Clark. The noise on the initial announcements has actually subsided meaningfully. We do not see them in any way shape or form of presence today but Clark why don’t you expand.

Got to view with Alan, I think we have not seen them out there as a competitor really across the board. I think as we’ve talked about before it’s a very deep featured product offering right now and we have not seen it as a competitive issue in our environment right now.

Alright, thanks. The other one is around contact centers, BroadSoft just announced an acquisition with the contact center, you currently do a lot of third party integration for midmarket, could you give us some more details on how you think that acquisition in the contact center might help or hinder Vonage going forward, thanks?

Clark, why don’t you take that as well.

Yes, we are very excited about the acquisition Transera. I think it now gives us the full product portfolio for contact center or even any advanced contact center features that in the past we might have partnered with different advanced contact center companies like in contact and others. We now have those abilities to do all of that in our own Vonage cloud using the BroadSoft platform. So it's very advanced and has also some great features on the analytic side to do advanced call routing, has deep integration with salesforce.com, and we think it's going to be a great asset for us in the contact center style which is a very growing market.

You know Catharine its actually margin accretive to us simply because it will be part of our existing license cost with BroadSoft and so because it’s a much more capable solution we will less frequently have to go outside which depresses margins when you have to bring in a third party.

Alright, thanks guys. I’ll proceed to the queue I think.

Thank you.

Thank you. The next question is from George Sutton of Craig-Hallum. Your line is open.

Thank you. Alan, I appreciate your discussion as you talked about your capabilities as others are talking about up market opportunities. Wondered if you can kind of breakdown the competitive environment a little bit in that up market versus the SMB which obviously it seems a lot of folks are abandoning?

Let me take that into two parts. The reason we believe folks are abandoning the low end is because their acquisition cost don’t support selling to small customers. And because we’ve got the brand authority, the domain authority that we have. We have a very effective acquisition model, so the digital leads in then closed with its very, very efficient inside sales model, works really well for that segment. While others might be able to copy an efficient telesales operation what they cannot copy is the brand. That’s the -- it is the non-replicable asset. Up market its very different. Up market it is sold via bid on the street and the product set is critical for the up market customers. So as I spoke about in the prepared remarks, the fact that we’ve got the full -- whether we use the BroadSoft call processing stack as an element of our solution and then bundle it most frequently with our full NPOS network and all the automated provisioning tools we believe that certainly has the better product market fit than others who are trying to serve the up market and we’re seeing just increased demand from a very large enterprises in that segment. The competitors out there it’s still the same cast to characters not characters, the cost to company that we seen in the past we just now believe that we’re seeing more deals and we are winning more deals. So we are very, very bullish about the enterprise segment. Clark do you have anything to add to that.

Yes, I would agree. We’re seeing it across the board whether it is from our field sales group, whether it is from our channel teams there, it is clearly moving our market and we are uniquely suited as Alan said between our ability to offer QoS from three different mediums to Zeus which is really unprecedented as far as being able to provision these larger customers. And a product portfolio that we feel is bar none.

Thank you. Perfect, one another question if I could, relative to the enterprise growth guidance of 50%, can you give us a sense of what you are assuming from an organic growth number in that conclusion and then also give us a sense of what you expect for ARPU over this year?

I think we've discussed the ARPU, but what the key things to think about is we've become a serial acquirer. Now we've done four deals in the last nine months, five deals over two years. So we look at the growth on a GAAP basis. We've also now fully scrambled the eggs. So there is no longer a Vocalocity, a Telesphere, Simple Signal or iCore, a gUnify, it’s all part of a functionalized organization structure. That said, as we try to pick it apart, we have to look at these things that we've owned for more than a year and our growth rate is still extremely high but the key thing you got to remember is we just bought iCore four months ago. We paid 1.2 times -– 1.3 times revenue for that which we thought was an excellent deal. We've only owned it for four months. We need an opportunity to step it up to get it to the growth rate that we've had across the board. If you look at what our grow rate for the assets that we owned as of the beginning of 2015, we actually delivered 40% organic growth rate. So we're incredibly bullish with where we're going with these growth rates but it’s very, very difficult to unscramble the egg.

And I’d say, George, its Dave, just to answer your question on ARPU, ARPU in business will be fairly stable. So we are growing in enterprise but we also continue to grow with our Essentials product and so those two are balancing it very quickly. And that market tipped to the cloud earlier, so we have a very good running start there. So when you mix that all together, in the absence of acquisitions, ARPU will be relatively stable per seat.

Okay, perfect. Thanks guys.

Thank you.

Thank you. The next question is from Greg Burns of Sidoti & Company. Your line is open.

Thank you. I missed some of the prepared comments there, but I was hoping you could maybe go back over some of the levers that you still have, maintaining the profitability of that consumer segments, whether it’s still marketing expense optimization or what are the other areas where you could maintain the margins there?

Let me ask Joe to answer that.

Yes, I think we've gotten to the point where it’s really a variable expense model now. So I think there's opportunity on the margin side. We still think there's opportunity to continue to optimize the marketing spend as we head into 2016. And as our -– Alan, mentioned on his remarks, the tenured base continues to grow with lower churn rates. So I think it’s a combination of being focused -– continually focused on the optimization of the marketing spend, acquiring customers with much higher profitability and being very selective on that, it is continuing to right size the cost structure as that business shrinks in terms of the overall customer base and bringing that cost structure down with that revenue line, and continuing to support our existing customer base to drive that churn down. So those are really the three big levers.

I think, Greg let me add on top of that. What’s really interesting in consumer is typically if you have one declining segment and one increasing segment, the fixed cost structure of the one in decline at some point would overtake it and you would not be able to generate the operating leverage. That’s not the case here because so much of the fixed cost is shared because of the common network. So it’s simile but it’s an amazing advantage that we have. The other thing that we have to remember is back when we were spending marketing in -– as I reported, we cut at a $100 million, back when we were spending so much more in marketing, our IRRs on that marketing spend were very poor. So now the IRRs on the marketing spend are attractive. So we've gotten this business to a point of optimization where its performing quite well, and given the tenured base that Joe talked about, what you're going to have is you have the classic long tale of a consumer subscription business, which we're confident is going to generate cash flow for a very, very long period of time.

Okay, thanks. And in terms of the EBITDA guidance, I guess just maybe directionally not actual dollars but how dilutive is the business segment to that number or when do you foresee that getting to -- breakeven to accretive?

So this year in 2016 we’re looking at customer economics being attractive enough and our cash flow position as company being good enough to be able to grow as fast as we possibly can in business. What that will equate to is a modest EBITDA loss in business for 2016. For 2017 we would look at that to be breakeven or better as we start to take material operating leverage and then beyond a curve where we are building operating leverage every year in business.

Okay, thank you.

Thank you. And the next question is from Mike Latimore of Northland Capital Markets. Your line is open.

Good morning. I guess Alan you said the pro forma organic growth on Vonage business was 40% this year, that includes Simple Signal and Telesphere.

It includes Telesphere because we didn’t buy Simple Signal until in 2015. So you look at the assets that we owned as of the beginning of the year is 40%.

Okay guys, and then you mentioned that obviously having a great balance sheet and cash flow is important in this environment, I guess has the sort of broader macro concerns, does that influence any sort of business customer buying patterns here, anything like that. I mean your guidance is obviously very good but is that’s showing up in sort of the discussion at all?

Actually no, the macro-economic stuff has had zero impact. If you think about what we’re selling it is a ROI sale. It eliminates the customers upfront hardware cost, it has lower operating cost, it's an instantly scalable solution versus the finite scalability of the on trend solution, and it has got more functionality. So it is compelling in any sort of environment. What's interesting is when you go truly up market the benefits of these type of solutions are even better. Because if you look at a very, very large enterprise that’s distributed in hundreds of locations, take a retailer for instance their connectivity and their communications come from literally dozens of sources and there is PBX boxes of different ages with maintenance contracts and connectivity coming from literally dozens of sources. So the big issue that’s happened in the enterprise side is the comfort with the cloud. That’s where the pivot has happened if you will and now that segment is becoming increasingly comfortable. Working with some of my guess is the opportunity to harvest those savings that the previous structure didn’t permit. So we remain very bullish we’re seeing nothing negative relative to macro-economy.

And then the last question, I think you are able -- with some of your business offering able to do kind of a high-end approach where some companies can keep on premise systems in some locations and cloud in other, is that a material part of the business or is that just a nice application?

Well I’ll start and then I’ll turn it over to Clark. Hybrid is a natural element. We see that absolutely everyday because, go back to that enterprise example, they may have a contract for connectivity that still goes for a couple of years with another provider. They want to have to pay twice so we’ll peer into that network and still provide QoS. They may have a contract with an premise PBX but we got a maintenance contract which still has a couple years to run or the box itself is not fully depreciated. And in that instance we can just sift into it through our network as well. So we are working this hybrid environment that is the rule, not the exception. Clark do you want to add to that?

I’d absolutely agree. I think that is normal for us and it’s a really a strategic advantage and the further companies are and the more locations they have more of this comes into play and you will see across the board. And in multiple locations they are not all going to be similarly situated and so they are going to have different sizes of office, we have the full product portfolio for all those different sizes and needs. They are going to have different connectivity needs like Alan said. We have all three of the connectivity needs that really address that full market. And when you look at the products that there is it fits that whole market segment. So we really have a great product set to address that. And as Alan had mentioned earlier it’s also very cost effective for them to now be able to pull all those offices together, get volume, price and as you look at LD and other things that we can really pull them together under one cloud. And at a CFO level they appreciate that ability to unite all their offices both by feature set and geographically as far as the way they communicate.

And can I just have the one win competition question. I guess, the telecom operator and cable companies, where would you rank that kind of group in terms of the competitive landscape and has there been any change from that group in the last say 6 to 12 months?

Clark, why don’t you take that?

Sure. I have not seen much change as they continue to I think be a competitive front out there more on just the very smaller SMB customers. We have not seen them move market in any meaningful way.

Okay. Thank you.

Thank you. The next question is from Dmitry Netis of William Blair. Your line is open.

Thank you for taking my questions gentlemen, nice results.

Thank you.

Okay. Couple of questions, I guess, just in terms of guidance maybe asked a little bit differently and as I kind of look through the numbers that $25 million sort of lower top line guide and given that 50% growth in VB would assume probably 6%, 7% upside in that business from where the Street had been for 2015. So I would say that probably translates around $30 million headwind around that number of the consumer -– in the consumer revenue, and then that probably results in about 12%, let’s call a 13% decline year-over-year. So my question is really is that a voluntary number to project some sort of natural attrition or will there be continued involuntary churn in that business created by you and as you sort of continue to optimize that business? So I'm just trying to understand the ebbs and flows of the consumer and what’s the more of a secular organic decline looks like?

Sure. I think this addresses it, in 2015 consumer revenue was down roughly 13%. That is the trajectory that, that business is on and embedded in our guidance for 2016 is that business will be down around 13% in that range again. We're not engineering to that number. That is the trajectory it’s on when you look at optimizing it in terms of having every subscriber added, be materially MPB or IRR positive. And we expect, given that this will be the second year on that trajectory that, that’s the course that we’ll stay on. I would note that for the long-term if you simply play out a 13% decline over a five-year period, you still have a $300 million revenue business in 2020 and at that stage you may be in a different posture as it relates to marketing and have significant margin upside at that point. I don’t think that’s something that’s necessarily clear in our guidance or factored in to investor expectations right now.

Dmitry, this is Alan. One, I think as we've chatted about this in the past, if you go back two or three years, where the decline in revenue in consumer was 5% or 6% a year, back in 2012, 2013 and 2014, those were the times when we were spending these marketing dollars north of $200 million. But they were generating completely unsatisfactory IRRs. So this 13% decline slope is now a place where we've now optimized the marketing so that the IRRs are attractive. We think that’s just a far better way to run this business and its generating more profitability, not less.

Dave, Alan, thank you for that color, very helpful. I will switch it over to VB real quick. The -– well just a quick one on the large sort of as you move mid-market enterprise, were there any large kind of think of maybe thousand plus deals in the quarter? Do you have any of those in the pipeline, kind of how are you thinking about those kind of big enterprise deals as you and Alan mentioned the markets inflection and bigger enterprise is starting to jump into the cloud?

Great, so let me clarify something Dmitry here and I’ll turn it over to Clark in a moment in your question. We are not moving into the enterprise. We are not moving into the enterprise, we are in the enterprise. When we have been in the enterprise. So at times it is frustrating, the markets you guys have narrated about were in the SMB side, that’s untrue. We are in both ends of the segment, both ends of the market, so the focus where Telesphere was selling well and where iCore was selling well traditionally for many years is in mid market up to our enterprise. And as the market itself, not our legacy companies has now become more and more robust in enterprise, we are just naturally picking up more and more customers. There are many customers that we already have with more than a thousand seats. Many, many customers like that and there are many, many customers that ends up in the pipeline but we are running a business that is serving the full spectrum of the business market. Any size and across any sort of level of complexity that’s the strategy that we are going after and we are doing that with these two purpose built stacks to target SMB and then separately to target up market, midmarket up to truly large enterprise. Clark, anything to add there?

Just real quick I think to your earlier point, we are there and we feel like we are really a better offering there for these mid to large enterprises and that’s already been appreciated by the number of customers they already have in that group. And like we mentioned earlier 20% of our MR already comes from those 250 seats and higher. But to your question on the thousand seats or higher, yes we have a very robust pipeline of customers that are multi thousand size customers. And we continue to see not only from our different field and channel partner leads and pipeline committing but also RFPs coming and continue to grow larger and larger more at market and ask specifically in RFPs for only hosted providers to respond to those RFPs. So it is clearly a change and clearly something we’re seeing move up market in a significant way.

Yes, thank you and fair enough Alan, I should have given you a chance to address your presence with iCore and Telesphere in the large enterprise sort of segment. But that commentary on the thousand seat plus and five point there was helpful too. And then I guess, thanks -– and then last question I guess on the just the channel programs around VB, I think you guys mentioned in the call four targeted sales channels, I was just trying to revisit that, if you could give some more color what are those four channels specifically and I do know you have now field sales organization, I think part of it or big part of it came from iCore acquisition and maybe I was thinking 90 to 100 people roughly, correct me if I am wrong, but what is the plan to grow that organization to above that 90 to 100 people that you brought in as you sort of moved according to those accounts, larger accounts?

This is Alan again, our strategy is an omni-channel strategy. We have four channels. So inside sales which is telesales, then we have our own W2 employees, our own W2 sales people that’s are direct field sales force, then we have the channel managers who work with the master agents and the sub agents throughout North America, and then we have Clark's enterprise channel. As I said in my prepared remarks we want to sell the right product to the right customer through the appropriate channel and you’re going to sell your SMB down to your micro businesses through your telesales channel because that’s the most effective way to reach those at appropriate acquisition cost. And the enterprise obviously serves as enterprise and then the direct field group and the channel is really focused mostly in midmarket and up to a small enterprise. From a growth point of view the size of the direct field group is already well figured then at 90 to 100 that you mentioned. We are presently in nine cities with separate sales offices. We think about the expansion strategy, we use the term at NFL cities strategy. There are 32 cities, 32 NFL cities. Again, it doesn’t necessarily have to be having an NFL team there but you get the idea that we're going after the large city. So today we have sales offices in Chicago, New York, Philly, Washington, Atlanta, Dallas, Houston, Denver, Phoenix, and we're expanding in every direction to have a direct field presence in all the major markets throughout the country. And we're going to do that organically and inorganically. Again, because we just can’t get there fast enough organically and there were opportunities to buy others of these BroadSoft service providers in these other markets and we're going to be very active with that this year.

Alan, thanks. Maybe last question for Dave, real quick, on the data center consolidation. What's the impact to gross margin on FX is there any positive tailwinds in there?

Yes, that will be reflected in COTS, it’s going to take throughout the year to do that and we were cutting our data center footprint and this is separate and apart from our pops, our termination pops. We're cutting our data center footprint in more than half. So you're not going to see a significant impact to margins in 2016 but in 2017 you should see a material difference which we’ll clarify as we execute that change.

Awesome. Thanks, guys. Keep up the good work.

Thank you.

Thank you. And the next question is from Robert Routh of FBN Securities. Your line is open.

Yes, good morning and thank you. Good quarter. First question is obviously acquisition and such you talked a lot about and you said you can do a bunch of them or try to this year with the BroadSoft players. What right now should we look at in terms of how many deals do you see being out there, is there a plethora of them or are there only a few that you’d be interested? And what are the current metrics we should look at in terms of what you think you’d be able to make acquisitions at in terms of a multiple of revenue or multiple of EBITDA, just so we can get a sense as to kind of how the market looks from your perspective?

Sure. So we’ve only talked about having really two buckets of BroadSoft providers out there which is at where we're focused on in the near term if the larger providers, who are typically north of $50 million of revenue and yes smaller ones which tend to be very geographically focused, which tend to have anywhere between $5 million and $20 million of revenue. As we think about that bigger bucket, there's probably $200 million plus of addressable acquisition market revenue out there for us. And on the smaller end there's a very long tail, but realistically there's probably a $100 million of revenue out there that is addressable or could be acquired. We're looking in both markets. I think the headline or the thumbnail valuation tool that we've used is a revenue multiple and making sure that, that is highly accretive. But our real analysis is based on discounted cash flow in both un-synergized and then synergized. And it’s just very important to note that each company is different. We're seeing many companies, most in fact, if not all, that are not growing as quickly as we are. So they’re typically, they have positive EBITDA in many cases but they’re growing a lot like iCore was by itself, without new capital in the teens, organically. So, when we think about valuation it is just -- it’s very hard to apply the market to that. So that’s why we use the DCM [ph]. I think that our past acquisitions over the past year have been done in the low one’s to two times forward revenue. I think that’s a good guide as we think about it, although if an acquisition has cash flow, we can certainly factor it. We would increasingly factor in an EBITDA multiple there just to make sure that we're capturing the essence of that company.

Okay, great, makes sense. And then one more follow up. Given the cash flow characteristics of your business and what you expect it to be in 2016 and given where your equity is now and the cost of that equity relative to your cost of debt, because obviously your cost of equity is far greater than your cost of debt and your leverage really 1.1 times and you are going to be free cash flow positive, but it looks like in 2016 as well. When you look at your repurchase activity wouldn’t it make sense to lever up a little more and really change your equity to create leveraged equity returns especially in this market because obviously you know with acquisitions that you did, etc. even with the repurchase activity your share count keeps going up as well as your EBITDA going up and so you are never getting that leverage equity returns. I am just curious as to how you are thinking about that especially given what we’re seeing in the market recently with equities being punished?

Sure, we think the buyback is a good use of capital and as I mentioned in my prepared remarks, it is going to continue to be a key part of our capital allocation strategy and plan. What we’re balancing that again is the potential for M&A which we just talked about. Now we have got, it has not been an either or and it is not going to be an either or, it is really about balancing those things. So our current debt, we leverage at 1.1 times net. Now our current facility which we put in place in July which by the way is at current LIBOR is that less than 3.5% coupons to your point that is being cheaper, enables us to go up to 2.75 times gross leverage. So we have got significant headroom there. Then there is the potential for more leverage, for more dollar leverage if any asset that we acquire actually has cash flow associated with it because our current facility is at $350 million total. So we got significant capacity between cash and the revolver, it is really just a question of making sure that we can address all of the M&A that’s attractive out there and also have some capital for the buyback as well. And so we are dynamically balancing those things based on the M&A opportunities that we’re seeing as well as the fact that the price we’ve always thought our stock was cheap but its particularly attractive at these prices which is why we got very aggressive in January.

Great and just one final question related to this is what do you feel given the growth prospects of the business is the proper leverage for the company, obviously it is probably a little low now, you don’t want to go too high where are you most comfortable in terms of your target leverage on the growth space?

Right now we’re not operating the company towards the target leverage. We’re letting the leverage up to a cap of what's available at reasonable coupon. Within that we’re letting our M&A and other capital allocation buyback in organic growth strategy drive that. I think the current bank loan as I said enables us to go up to 2.75 times. I think we are comfortable running the company at 2.75. I think we would be running it at 3. I think when you start to get above that it is less about target leverage and its more about cost of debt. I think when you cross into high yield land, there is a disproportionately higher cost of debt at that point. So three times I think we’re prepared to let the strategy try that and once we’re through this acquisition push that we are making now it will be more about fine tuning what the target is.

Okay, great. Thank you very much.

Thank you. And this time I’d like to turn the call back over to Hunter for closing remarks.

Great, thanks Latoya. And thank you everyone for joining us today. We appreciate your support of us, look forward to speaking with you throughout the quarter as well as again next quarter. Thank you.

Thank you. Ladies and gentlemen this concludes today’s conference, you may now disconnect. Good day.