Gary Love – Finance & CFO Steve Orr – President & CEO

Jeremy Mersereau – National Bank Financial Dana Benner – AltaCorp Capital Inc. Sarah Hughes – Cormark Securities Inc.

Scott Treadwell – TD Securities Inc.

Well, thank you, and good morning. Before we begin this morning's conference call, I would like to take a moment to remind all listeners that today's conference call includes forward-looking statements that involve estimates, judgments, risks, and uncertainties that may cause actual results to differ materially from those projected.

The complete text of ShawCor's statement on forward-looking information is included in Section 4 of the Third Quarter 2014 Earnings Press Release. It is available on SEDAR and also on the Company's website at shawcor.com.

I will now turn the call over to ShawCor's CEO, Steve Orr.

Thank you, Gary, and thank you ladies and gentlemen, for participating in this morning's conference call. ShawCor released our third quarter financial results yesterday evening.

As expected a revenue at $470 million did decline from a year ago level as a completion of large projects in Asia Pacific, offset benefits of incremental contribution of $30 million in revenue from the acquisition of Desert NDT. Solid year-over-year growth in a number of product lines in North America and strong growth complied by coding volume in EMAR and Latin America regions.

A particular importance in the third quarter was a growth in revenue in our EMAR region with a successful start off of production at the Socotherm Pozzallo facility and the launch of the South Stream Line 2 South Caucasus Pipeline projects at our coding facilities in the U.A.E. These two facilities will be increasingly important for ShawCor in the upcoming quarters as we execute several large booked five coding projects.

As mentioned, the revenue, although down from prior year was still quite strong and did in fact increase by around six% for this second quarter. Margins however were relatively weak with our consolidating growth margin at 36% down eight percentage points from the prior year.

The low growth margin can mainly be attributed to the shift in revenue away from higher margin project work in Asia Pacific which declined by a $156 million on a year over year basis. Simply stated, a recent revenue growth does not have the level margins that we experienced from the late 2012 to the first half of this year.

In addition, under option is relatively impacting Asia Pacific with a completion of a large projects, and then in our EMAR facilities as volumes are ramped up. For us, this indicates that the third quarter should represent the trial period from margins and income.

Continued growth in our backlog and strengthening in bidding activities suggests that a decline in financial performance that we are experience in the second half of 2014 will be temporary, and that we see the emergence of growth and revenue and earnings in 2015. Of course, we are not immune of the potential effect of the pull back in all the investment due to some $80 for Vera Oil.

However, much of our backlog is derived from natural gas infrastructure projects that are not linked to global oil crisis. I will comment further on our outlook in a moment.

But first, I will ask Gary Love, our CFO to provide you with some of the key details on the third quarter financial results.

OK, thanks, Steve. We are reporting revenue of $470 million in the third quarter.

That's a decrease of 11% from the third quarter of 2013 but is denoted that it's an increase of 6% from the second quarter of this year. Compared to the prior year, revenue increased in every region in both segments with the exception of Asia Pacific pipeline.

The larger source of growth in the pipeline segment was EMAR. Revenue was up $53 million were almost doubled.

This was the result of the ramp up of Socotherm Pozzallo plan and the launch of the South Stream and South Caucasus project at Ras Al Khaimah. Also, increasing $27 million or approximately 15% was North American pipeline.

We added $30 million from the Desert NDT acquisition and we had solid revenue growth from Flexpipe and at the Socotherm Channelview facility. But, within North America, we did see a year over year reduction in large diameter pipe coding and that was largely due to project timing.

These increases were not sufficient. However, to offset the $156 million or 76% declining revenue in Asia Pacific in comparison with a year ago when the Inpex Ichthys, Wheatstone and [Jugomar] projects had been in full production.

Now, compared to the second quarter of this year, the $28 million or 6% revenue increase was largely attributable to a 27% strengthening in North America and this of course was from the Desert NDT contribution and continued gains of Flexpipe. We also saw increases in Latin America and EMAR.

But again, these increases were partially offset by a $64 million or 56% decline in Asia Pacific and that followed the completion in the second quarter of the final base of the large project activity not with the Ichthys Flowlines project. On a consolidated basis, gross margins in the third quarter are 36% they are down four points from the 40.6% we recorded in the second quarter and as Steve mentioned, they are down almost eight percentage points from a year ago.

Specifically, the pipeline segment gross margin was 36.9% and this is versus 41.6% and 44% in the second quarter and year ago quarter respectively. The petrochemical segment gross margin decreased to 26.2% that compares with 31% and 33% in the third quarter and year ago quarters respectively, with a decrease due to primarily shift in our wiring cable product mix.

With both revenue and gross margins lower, gross profit decrease by $60 million or 26% from the prior year. SG&A expenses we basically unchanged from the prior year, this was due to reductions in incentive compensation accruals that offset both salary cross inflation, and the addition of $4.8 million in SG&A from the acquisition of Desert NDT.

We are reporting adjusted EBITDA for the third quarter of $71.3 million. A decrease of $57 million or 44% from year ago and it's also down from $83 million in the second quarter.

The consolidated adjusted EBITDA margin in the third quarter is 15.2% with the pipeline segment at 17% and the petrochemical industrial segment at 16.8%. Depreciation and amortization in the third quarter is $19.1 million.

This is up from $15.1 million in the second quarter, but down from $20.7 million a year ago. The increase over the second quarter is substantially due to approximately $2.6 million of amortization from the Desert NDT acquisition.

Now, the final impact to operating income in the third quarter was the Brazil impairment charge of $41.4 million. Should note there is a $12 million offset to this charge in the tax provision.

This yields a net impairment loss of approximately $30 million. Below operating income, we have reported a gain from the sale of the Socotherm Brazil and APSCO joint ventures of $4.5 million.

The gains are primarily due to currency adjustments that we booked this quarter ones those joint venture sales were finally closed. We financed the closing of the Desert NDT purchase with debt at the start of the quarter.

And as a result, net finance caused increase to $6.2 million from $4.5 million in both the second quarter and a year ago quarters. We are reporting EPS in the quarter of $0.9 per share.

This however includes a net impact from both the impairment loss and the gain on asset sale of approximately $0.42 per share. This would imply then that our operating EPS for the third quarter is about $0.51 per share on a diluted basis.

Now, turning to cash flows, before changes in non-cash working capital, the cash flow provided by continuing operations with $56.3 million, this compares with $61.6 million and [$100 million] in the second quarter and year ago quarters, respectively. The decrease was significantly lower on a proportionate basis than the decrease in net income, and this of course, is due to the significant non-cash item recorded in the third quarter.

The change in non-cash working capital was a net cash inflow of $10 million and that's versus the cash outflow of $48 million in the second quarter and a very significant cash outflow of $95 million a year ago. The positive change in working capital primarily reflects the change in the movement of deferred revenue and a build in accounts payable this quarter.

Cash flow used in investing activities in the third quarter excluding reductions in short term investments was $272 million, and this included the Desert NDT transaction at $280 million. An investment in a company PFT of $2.8 million and capital expenditures on property plan equipment of $22 million.

These investments were partially offset by $32 million in proceeds from the sale of the Socotherm Brazil joint venture interest. Cash flow provided by financing activities in the third quarter was $259 million and that consists of the net share issuance proceeds of a $193 million net debt issued of $75 million and these were partially offset by cash used for our regular quarterly dividend of $9 million.

Based on the net cash flows in the quarter, our cash plus short term investments increased to $104 million from $50 million at the start of the quarter, including available credit facilities the company now has over $380 million of available liquidity as the quarter end. I'll now turn it back to Steve for his commentary on our outlook.

Thank you, Gary. As I noted at the outset of this call, we continue to expect that earnings in the second half will lag the performance that we reported for the first six months of this year.

But that this will represent the trap in our performance as the projects that we have built up in our back yield lag are executed. The one factor that we are watching closely and could in fact, this outlook could be a sustained pull back in oil and fields investment as a result of oil price is that remain below $80 per barrel.

For ShawCor, this impact would be largely filled by our North American businesses that are leverage to oil well drilling and completion, including small diameter pipe coding, composite pipe, OCTG tubular management and repair and gathering line weld inspection. These businesses represent less than 30% of ShawCor's 2014 revenue and that any decrease in the market activity was likely not be felt until the second half of 2015 if [fit all].

Beyond the North American Upstream [ridge] businesses, the company's outlook continues to be positive. We continue to scare large pipecoating projects and report an overall increase in the company's order backlog which ended the quarter at $739 million up from $684 million at the start of the year.

The most important contracts awards in the third quarter were the $200 million contracts for BP for installation coding and events works for the BP led shot in these gas development in the Caspian Sea. ShawCor's current bidding and additional work for some of this gas export pipeline and a decision on this award and the final score was expected before the end of the year.

Also, in the quarter which assured addition awards for over $50 million in value for joint protection products for South Stream offshore pipeline project. The company now had secured over a $150 million in contract awards from lines one and two of the South Stream project and is now processing bids for line three and four.

Our future outlook is supported not only by the growth in backlog but also by the continued growth in outstanding bid lift with the value of currently outstanding firm bid exceeding one billion. In addition to the work for Sean and South Stream, we have bids currently outstanding in Asia Pacific, Latin America and both East and West Africa or some of these activity maybe deferred in an environment of low oil prices, much of our large project activity related to – is related to national gas infrastructure projects that aren't dependent on short term oil prices for economic viability.

The continued strength of our bidding activity provides us with optimism that we will see further backlog growth in the fourth quarter of this year. While bidding securing and executing large pipecoating projects remains a key objective for the company, we are also focused on executing our strategic growth plan.

During the third quarter we completed the acquisition of Desert NDT. The acquisition was immediately accrued to our margins and earnings in this quarter and more importantly we had begun the process of developing synergies by deploying advanced NDT technology through the Desert network of branches throughout the U.S.A.

Desert NDT plus our existing Shaw pipeline services business provides us with a solid platform on which to grow our pipeline and related infrastructure and integrity management business. In addition, our strategy to grow in the oil field connectivity space was events with an investment in [color] fits through systems and connectors.

PFT is a recognized connector brand in the oil field and our investment provides a channel to market for the products and services of DSG Canusa and Shaw Flex. Another critical strategic development for ShawCor and the quarter was a successful completion of the $200 million offering a common shares with the completion of the overall allotment option in early October, the equity offering had generated net proceeds to ShawCor in excess of $220 while the immediate use of proceeds was to pay down debt we fully intended to deploy the proceeds from the equity offering in growth investments.

We have an extensive list of potential acquisition targets in each of ShawCor's five growth teams and we expect to continue to target and close strategic acquisitions over the next 12 months. And in that note, I'll now turn the call over to the Operator, Karen for questions.

Good morning everyone.

Good morning.

Just based on the last comments you had, Steve, have you seen more interest or better multiples from companies trying to sell their businesses given today's environment?

So Jeremy, what were actually seeing is a larger gap between what sellers are prepared to release their assets or to sell versus what we are prepared to pay. And I think this is pretty normal because sellers were optimistic on the outlook and buyers potentially are a little bit more conservative so, we're seeing the – unrealistic gap right now.

And – but I can say this is really affecting future deals not ones that we currently have you know, at the top of the list. But I – there is you know, I think we all watch multiples and through cycles, we see there is a period of time that there are – the gap becomes and then there's a potential area where there was no trades for a while as the seller realized the new values.

And then you see an accelerated volume of trades. I think what's really important for us is that, we will continue to resource and pursue acquisitions throughout the cycle.

And then often it provides opportunity but we will continue to put the efforts in.

Thank you. Do you still expect to hear a possible work from the first stage of the Chevron IDD project for the end of 2014 because they made their IDD a few weeks back?

Sure. I think it's highly unlikely.

So, with the dynamics that are happening currently in Indonesia, what we forecast is that the current bid and activities are out so the pricing – these will all come to determination kinds so they won't be extended and it will start off again in early 2015 and a lot of it is about the arrangement between – or the geopolitics in the area and it associates with the production sharing agreement. But we have high confidence and that the Chevron IDD will be – will happen but not with the award in 2014, certainly.

It will be – it will start in 15.

And we would – I would add that we would expect that to be you know, the best case scenario was the 2016 project for execution.

Okay. And speaking of geopolitics any differences from the last time for the South Stream project today compared to relative to Q2.

Steve Orr: So what we are seeing is the line one and two continues on plan as there was a slight delay and I would say a delay within a couple of weeks of execution of PQTs and going but it’s on plan. Surprisingly, what we're seeing is increase acceleration of bidding and contractual discussions on line three and four.

So, we you know, the geopolitics are I think accelerating these discussions and then I think the big question is, if anything was to move on line three and four, it would be towards this funding on the projects. But today, they are – we are moving quite rapidly as we mentioned our EMAR facility is coaching the [erosion] component of line two and our Canusa division CBS is in Bulgaria is executing the field coding.

So, it's full steam right now.

Thank you very much.

Good morning, gentleman.

Good morning.

I wonder if you could weigh in on the Asia Pac – the Asia Pac wind down has been well telegraph. Were there any charges in the quarter due to you know, lower word force provisioning, et cetera that may have also rippled through the numbers?

Yeah. But there's a couple of factors.

We are reducing some of the cross structure and that's an on-going process. It – you know, it certainly started earlier this year but it obviously accelerated in the third quarter and there are cost associated with that.

Probably the bigger factor though would be the you know, it would be the underutilization in the third quarter certainly on a comparative basis to the past. But both were even on an absolute basis.

So, we would expect to see you know, better utilization in Asia Pac in 2015 and beyond than we experienced in the third quarter. It was low.

I think both – obviously from a comparative basis to the – two recent quarters but even in terms of relative to outlook for the future. The other factor though is that, where we are wrapping up revenue which is in EMAR, we're also not yet getting full potential margins.

And that's you know, not unusual in environment where you're conducting PQTs and so there were – there was a very extensive program of PQTs. We're adding personnel as to say, we're ramping out volume.

So, we are not yet seeing anywhere close to the – let's say, full potential margins that we will see in EMAR going forward. So again, that's – that was a certain negative factor in the third quarter.

All right. OK, it's helpful and then again, secondly, the bid lag remaining over a billion notwithstanding the fact that you've done very well in EMAR.

Would that speak partially to maybe the acceleration of South Stream three and four discussions et cetera or is it considerably broader than that?

Well, it's considerably broader than that and quite honestly, we would not, I'm not sure we formally bid line three and four yet. They are not in the one billion that I quoted.

They are still on the non-firm bid process yet. So, the – these commissions are not until into December, we expect for them to go in so, they would not be in that number.

So, I would say, our geographical fit in this one billion that we quoted there has been a changing part and quarter where the shift is now moving away from EMAR as a large projects are now being secured.

Did you update us on the Gulf of Mexico notwithstanding the fact that it’s been a little volatile commodity price wise seemed to be some pretty good things coming along in that market? Any additional color would be helpful.

There's a lot of projects that we're currently bidding on or have visibility on. And so, we expect generally that Gulf of Mexico is going to be an active region.

You know, I would have to say though that it is, you know, we're talking about deep water oil development and so, you know, in the context of lower oil prices, it would probably be more risk in some of the other areas where we have either you know, strong bidding or a project visibility. You know, I think Steve mentioned the – you know, the fact that for us our exposure is generally tilted very heavily towards natural gas infrastructure that's you know, the nature of pipeline and so, but that's not the case in the Gulf of Mexico.

Gulf of Mexico is you know, is a deep water old pipe. So, it would be at more risk to the you know, the current commodity environment.

All right. Just one last question for me if I may.

You mentioned on-going success with Flexpipe in the U.S. and in Latin America now but it’s not going well in Canada.

But I would imagine these are perhaps notable successes. So, any additional comment?

That would be helpful as well. Steve Orr: So, maybe the positive in the quarter and the – we probably don't have enough time to go through all the positive in the quarter in Flexpipe because it’s been quite exciting quarter.

So, if I look at geographical expansion, we continue to move our flex court into Venezuela. And our limitation is really the security of payment from the national company there.

So, the way it works is we receive payment and then we shift. So, but this continues to be a highlight and we expect that at year-end, it will demonstrate the strongest growth.

So that's probably the big story in Latin America. If you look at other positive stories on the international market, we are not getting a repetitive revenue stream for the application of Flexpipe as the core product, the composite in Saudi Arabia.

And they are probably – it's a unique opportunity where they are using the school associated with early production. So there is pulling it out, they are running it for pod testing and early characterization and then a re-doing.

So, we're starting to associate Flexpipe now with full testing sets of equipment. So we are working through all the large [driver's] companies.

In addition, we actually have now revenues streamed that are coming from continental year off which was the first time we were able to secure that and that happened this quarter. In terms of product expansion we were able to be successful in the deployment of FlexFlow in another early adapter.

So, now, we have several lines installed for our FlexFlow product. And to remind those on the call, this is our sixth and eight in stick product platform that we hope to expand larger.

In addition, Flexpipe made a foreign movement on the commercialization line for FlexFlow and we're now boxing up the commercial tape winder. And if you recall today, rewind one tape at a time to make our flexible product and we'll now move it to that.

We would do six tapes at the same time so we'd be able to do a joint in less than 10 minutes where today, a joint takes about a part of the day. The other thing I'll add is, we have finalizing this happened only in the last couple of days, a long term supply change which was a concern on the expansion of FlexFlow.

So, we are now in a great position to expand our catalog from the two – and so, the four inch and below core products on our flex cord anti-volume product were now set up very nicely. That in 2015, we will have a revenue from FlexFlow which is quite exciting because it will also help our core product.

There are operators today that want to buy from one supplier. So having it six and eight inch, it is pretty typical for us.

OK, very thorough. Thank you.

Good morning. I guess, just starting on the bid book, would you be able at all to provide us an approximate percentage of the bid book that would be labor to natural gas versus oil on the project site?

At the time I had at least two thirds.

It’s on that gas? OK.

Yeah, absolutely. It’s not even significantly higher than that.

Okay. Helpful.

OK, and then in terms of EMAR and you talked about kind of the ramp up impact to margin this quarter. Just trying to get a sense, is every – when you look back and see that the thing that kind of constructed margins, would that all expected, was there anything in there that you had to go in and fix or was it just a normal ramp up?

I think as the EMAR is executing, you know, we talked in previous calls within the EMAR numbers of course, our – the Socotherm Pozzallo ramp up, right? So, we talked in previous calls that w we were concerned and was an area of focus on starting the Pozzallo plant as it was a dormant plan to bringing up.

And there is a – within the quarter, there was about to a week of delay and the start off production. So, this is a surprise on expected but it's only about a week and in all fairness, it's a hit and miss often as we start up exactly on time as PQTs are assigned and we clear them right.

So, this was the only surprise that I can say that the Ras Al Khaimah are the facility that we have in the Middle East has executed outstanding. To date, and I think we reviewed it this quarter.

They have been successful in 20 PQTs or product qualification, 20 times the first time. So that I have 20 PQTs they have done on first projects.

They have been successful on every time. And we're now seeing from your customers that this is critical and is recognizing and we are able to exploit it.

So turning to your question on the production, there's about a week in terms of mobilization and executing Pozzallo about a week.

And so, I say, if we look into Q4 in 2015 like are the ramp up cause will they be all completed in Q4, you start to see the margin based on the more normalize margin in 2015. Is that how you're thinking about it?

By the time we're at Q4, we should have the absorption concern finalizing in EMAR, yeah.

Okay. And then moving on to Asia Pacific.

I think Gary mentioned, you know, you – you're expecting things to improve in 2015 to help margins there. The – that improvement that you're looking for, is that in the backlog today or is it stuff you're bidding on?

So I think what you're going to see in Asia Pacific is they are going to go back down to a historical numbers. And in the historical numbers was a much larger percentage of what I would call, reoccurring revenue associated with the domestic.

So, if you look what's in the backlog, I'm trying to think of the loudest – Gary, will look at the numbers here to confirm.

Yeah, the work – it's certainly in the near term so let's say, the fourth quarter and then maybe the first one or two quarters in 2015, the work is very much local work. So in our – facility we're going to be executing domestic Indonesian projects and then in our Kuantan facility in Malaysia, we have you know, we've got work primarily.

We've got work with Shell but primarily it's Petron [Keira Galley] is the work. So again, local work.

So I would ask a couple of quarters but that's what we expect.

Okay. And based on that revenue that you see dated in the next couple of quarters will let help you see it, you know, a bit of a sequential improvements in margins in Asia Pac?

Is there enough revenue there or is – will it stay low until you get some bigger project?

It will stay low probably through the next let's say three or four quarters. You know, really, when we look at our overall picture and you know, we – you know, we obviously noted the consolidated growth margin of 36%, that's quite low for us.

That is – you know, that we haven't seen a consolidated gross margin at that level since 2011. So, when we look at that level and we see that transitioning to 40 to 42% gross margin, the primary driver for that will be EMAR.

Unfortunately, Asia Pac is not going to help us in that regard over the next three or four quarters. Beyond the next three or four quarters, we would then expect to hopefully see some contribution to award increasing margins then coming from Asia Pac.

But in the near term, it will be EMAR but the point is, we are confident that we will see margins slowly moving back to the 40% range not in the fourth quarter but certainly in the first half of 2015 and it will be primarily EMAR.

Okay. And then, just lastly, can you talk a little bit about Socotherm and how things are going there in terms of this turnaround on the margin side of things?

Right. So the margin improvement for Socotherm is communicated there, I think several times and we see this kind of a 36 months journey.

Right.

And two components which is the pricing and the second of course is the operation – operational effectiveness. So I – probably, we under estimated the time taking to get poorly priced projects through the fund.

So, we still – when we look at this quarter and we've not calculate the margins for projects that are being executed and the impact was not raising or reserving or having these contracts passed on to us. We have not yet got the full effect of the new pricing that we pushed out in 2014 related to Socotherm, so we are not there yet.

So, we still have moving on pricing. But we are moving it substantially especially in the Channelview and I would say projects that are being done internationally out of Pozzallo or Italy.

On the – on fixing the operational performance, Pozzallo, I mentioned is a highlight and they are executing at new pricing at margins that were bids. So this is a positive note.

But we are struggling to get channel deal. We had a real set back this quarter.

We had a major HSE incident on – in the Channelview facility and this is an indication and often, I mentioned that HSE is an indicator of running a – is a good indicator of how well the operation is running and the – all the leading indicators were quite positive. Channelview we took a little bit of setback.

So, Channelview was not there. So we're – I would say more than a year away from being able to put the flow processes that are in place in Shaw into the facilities of Channelview and the rest of Socotherm.

But Pozzallo which was a start-up proved to be easier because we were starting from scratch so we still have always figured them.

Okay. That's it for me.

And thank you very much.

Thanks. Good morning guys.

I wanted to start maybe build on Dana's question on the deep water this morning. One of the nig7 drillers announced some sort of bad news and sort of outlook on their view of the world understanding that, that's not directly what drives your business but is certainly part of some of the cycles.

Can you characterize sort of the global outlook for deep water? Would you characterize it as really being an oversupply of rigs or has this commodity change and maybe an attention to capital on the part of these project proponents slowed things down.

Is it more than just maybe a pause?

Scott, we are little bit downstream from one after the reg is drilled of course. We're in the planning cycle.

But what I can say about deep water in general is the promise price seldom meets the expectation. So if I look at Brazil, consistently Petrobras both in terms of their operations and the number of well head that they want and a number of regs and the number of field that they want, the FP one built several meet – has never met what the expectations are.

I think West Africa is the same way and with the exception of the Gulf of Mexico gaining traction I think what we’re seeing is a calibration of expected activity in deep water versus the true reality of what's going to happen. Deep water investments are large.

Require a lot of capital and I think in today's environment and even without the oil prices they are starting to have more and more scrutiny and overruns on the call from the deep water projects are driving them to be delayed. I think this is – so to correction that's how I see it.

For us, our pursuit to deep water projects and the ones that we speak about in most cases have already FI deed and they are going to happen. So, we're trying on a different stage, we're not in the – on the evaluation of deep water, would drive a lot of the other service company by the time we get to involve, the reserves are confirmed.

It’s now all the economics. And then by the time we line our contract, the pipe has been ordered and we're just executing a post FID approval line.

Okay. That's sort of what I thought.

I just wondered if the – any of that maybe negative sentiment that made its way far downstream to you guys or if it was, as you said more of a correction of the frontend. I wanted to move on to Flexpipe.

You mentioned that you had secured some supply chain enhancements for FlexFlow. Can you just characterize that?

Is that a distribution network? Is that just securing the inputs?

Is it storage? Is it a combination that's allowing you to go – kind of think about commercial revenues for that line next year?

You know, so one of the biggest challenges on FlexFlow is the volume in which we think we're going to have to further with. And today, one of the core composite – one of the core component of the flex offering is the tape.

And the tape is made locally here in the Toronto area. And so, because we're increasing the speed in which we are going to wind pipe and how much we expect we can move and introduce them into the industry.

The tape manufacture that we get it from and this is a critical component because it's the core confidence, so you have to have quality controls and were unable to find the Chinese suppliers that can make volumes but they can't consistency in the – for example, the – across the tape, you'll have to have the same wettings across the whole dimension of the tape and we're going to make right at the limits at the widest tape made. And it can be made nut not in the quality where you have equal wing.

So, what we have done is we worked with the Canadian supplier to take over the licensing and we're moving it in house with their full support. And so, this is – we have qualified the supplier, we worked with them to see if they can move the volume and is confident in getting the volume made the decision that we're going to take a license from them and the technology transfer agreement to move it in house.

And it was concluded as of yesterday which is very exciting for us because now we're in control of our destiny and we're vertically integrated.

Okay. Perfect, that clears it up for me.

I appreciate the call guys. I'll turn it back.

Thanks.

Right. So on behalf of the management team, I thank everybody for attending the call and look forward to catching up with you during the quarter for some of you at the end of the next quarter.

Thank you very much.