Note Important Disclosures on Pages Note Analysts' Certification on Page 13

Transcription

1 April 2018 EQUITY HIGHLIGHTS from Investment Perspectives To obtain important disclosure information regarding Hilliard Lyons' rating system, valuation methods, risk factors and potential conflicts of interest with respect to the companies covered in this report, please call (800) ext. 8820, or send a request via to RsLib@hilliard.com. Requests should include the name and date of this report and a list of companies for which the disclosure information is requested. Note Important Disclosures on Pages Note Analysts' Certification on Page 13

2 GameStop Corp. (GME) Update Consumer Sector (Discretionary) Ntrl-4 GameStop Corp. FY(1) GME $13.34 $25 $12 $3.77 $3.34 $ % 4/3/18 GameStop Corp. recently reported better than expected Q4 results. We note an extra week in the period compared to a year ago due to the timing of the fiscal year. Net sales rose 15.0% from the year ago period to $3.502 billion, better than the street consensus expectation of $3.300 billion. Holiday business was generally strong, including a boost to hardware sales due to Nintendo's (NTDOY-$53.63) popular Switch console. New software and the Collectibles segment also did well. Pre-owned software historically a high margin business remained on a negative trend, while the Technology Brands segment continued to struggle. Earnings beat expectations. Gross margin declined due mainly to a shift in the sales mix (more hardware). SG&A expenses rose in large part due to the extra week in the quarter; otherwise, expenses were well contained, in our view. Adjusted EPS, excluding nonrecurring items such as asset impairment charges, were $2.02 compared to $2.38 a year ago. On this basis, the street consensus estimate was $1.99 and our estimate was $1.93. Management issued FY'18 earnings guidance. This included a projected sales decline in the range of 2%-6% and adjusted EPS of $3.00-$3.35. We have fine-tuned our financial estimates, which represent the low end of the guided range for those metrics. This reflects our assumptions regarding the Technology Brands stores as well as pre-owned software. We maintain our Neutral rating. The unusually low valuation (roughly 4.5x our FY'18 earnings estimate) likely reflects concerns regarding the future of GME's largest segment physical disk videogame sales as well as challenges to the businesses intended to add diversification to the overall mix. At this point, we prefer more encouraging signs regarding those businesses before contemplating a potential rating upgrade. We believe the dividend, currently yielding approximately 11.4%, is adequately covered based on projected earnings. Please see our latest GameStop Corp. report dated April 3,

3 Flowers Foods, Inc. (FLO) Consumer Sector (Staples) Initiation of coverage; good long-term addition to portfolios LTB-3 Flowers Foods, Inc. FLO $22.22 $23 $17 $0.93 $0.89 $ % $25 4/3/18 We recently initiated coverage of Flowers Foods, Inc. with a Long-term Buy rating and a suitability rating of 3. FLO is the second-largest producer and marketer of packaged bakery foods in the US. Major owned brands include Nature's Own (the #1 bread brand in the US), Cobblestone, Dave's Killer Bread, Mrs. Freshley's, Tastykake, and Wonder. We consider FLO a well-run, high-quality operator in the Packaged Foods industry and Consumer Staples sector. We like the company's product portfolio, customer base, operating history, and growth plans. Earnings growth should return in 2018, in our view. Results in 2017 were impacted by a small divestiture early in the year, a heightened competitive environment, and some higher expenses. Project Centennial a wide-ranging operational review with a focus on cost reductions, improved competitive positions, and greater efficiencies began in 2H 2016 and is expected to lead to higher margins and greater profits beginning this year and continuing in The company is in sound financial condition. Debt is manageable at 40% of total capitalization, and the leverage ratio is 1.8x. We expect free cash flow (after capital expenditures) of over $250 million in 2018, which we believe could fund dividend payments as well as share repurchases or acquisitions, if desired. Dividends have been paid for 62 consecutive quarters with rate increases in each of the past 15 years. Our two-year price target is $25 per share. Potential total return is enhanced by a current dividend yield of 3.1%. We like the company's prospects, and believe signs point toward improved earnings beginning with the current quarter. We assume a future stock valuation slightly above the current level due to improving fundamentals. Please see our latest Flowers Foods, Inc. report dated April 3,

4 Chemical Financial Corp. (CHFC) Q1 earnings preview Financial Sector Buy-2 Chemical Financial Corp. CHFC $54.55 $60 $44 $2.87 $3.06 $ % $65 1/26/18 Chemical Financial Corp.'s net interest margin should decline modestly in Q1'18, with expected linked-quarter (LQ) erosion of two bps to 3.45%. Net interest income is anticipated to decrease 0.8% due to the modest margin compression and two fewer days in the quarter. We are modeling a provision for loan losses of $5.2 million versus $7.5 million in Q4'17 and $4.1 million in the year-ago quarter. In modeling the provision, we assumed a net charge-off ratio of 10 bps, up from 0.04% in Q4'17, but down one basis point from Q1'17. Noninterest income is expected to decline to $36.4 million from $39.9 million in Q4'17 as the elevated level of "other" noninterest income realized in Q4 is not expected to recur. Operating noninterest expense should increase approximately 3.0% linked-quarter to $100.4 million due largely to higher salaries & benefits stemming from seasonality and hires of lenders and other revenue producers. Our Q1 EPS estimate is $0.90 versus $0.87 in Q4'17 and $0.70 in the year-ago quarter. The primary driver of the EPS gain is a lower tax rate resulting from tax reform. Our 2018 and 2019 EPS estimates are $3.94 and $4.41, respectively. The 2018 estimate represents a 28.8% year/year increase driven primarily by organic growth, expense reductions resulting from an efficiency initiative launched in Q3'17, and lower income tax expense. We have a Buy rating on shares of CHFC. The stock was trading at 13.8x our 2018 EPS estimate at the time of this writing versus a mean of 14.1x for other mid-cap banks. We believe this discount is unwarranted given that few banks will likely be able to replicate the 9%-10% loan growth Chemical should generate this year. Moreover, CHFC's earnings multiple remains below its historical multiple of 15.1x despite the steep increase in bank valuations since the presidential election. Please see our latest Chemical Financial Corp. report dated January 26,

5 Zoetis Inc. (ZTS) The benefits of diversification Health Care Sector Buy-2 Zoetis Inc. ZTS $82.85 $86 $52 $1.96 $2.40 $ % $91 2/16/18 As if on cue, the American Pet Products Association (APPA) released 2017 sales data in the midst of the Trump administration's trade feud with China. Americans increased spending on their pets by 4.1% to a record $69.51 billion last year, with the veterinary care category ($17.07 billion) leading the growth at 7%. At a time when the livestock side of the Animal Health industry could be facing headwinds due to trade disputes, investors can rest assured Americans and other countries, to a lesser extent, are continuing to pamper and "humanize" their pets. Recently Animalhealth Europe reported that in 2017, for the first time, spending on pet medicines ( 3.17 billion) passed that spent on livestock ( 2.82 billion). With the exposure to commodity cycles creating greater volatility in livestock sales, we believe investors should place premium valuations on companies diversified into the attractive pet industry. Zoetis Inc.'s diversification expands beyond the basic breakdown of livestock and companion animals. Within livestock (57% of 2017 revenues), the company's largest exposure is to cattle at 33% of total revenues. This is important for investors to remember as they assess the Chinese tariffs of 25% on a wide range of pork products. Zoetis only derived 12% of revenues from swine medications, and we estimate 25% of those sales were US-based. Furthermore, according to the USDA, only about 7% of US pork exports are China-bound. Making the simplistic assumptions that ZTS's customer base exactly matches the export patterns of the broader market and that headcount and medical purchases will be cut to precisely match the export reduction, Zoetis is looking at a miniscule 0.20% drop in sales. We believe this math is too bearish as the Chinese will likely ramp pork production or source imports from a different region like Europe. Zoetis's geographic diversification will come in handy and negate the impact of Chinese tariffs to immaterial amounts, in our view. ZTS generated 3% of 2017 revenues from China and over 11% from Europe. The question for investors in Zoetis is whether the trade dispute escalates into a trade war and to what extent the specter of a trade war is impacting customer investment. While we are touting Zoetis's species and geographic diversification, we wish to remind investors of the company's excellent diversification by product line and category. No single product line exceeds 7% of sales and the top ten products are less than 40% of revenues, a rare level of diversification for a company involved in the highly regulated, high barrier-to-entry biopharmaceutical development and manufacturing business. Yet diversification cannot assure a profit or protect against losses. By product category, vaccines are the largest source of revenues at 26%, overtaking the fading anti-infective category for the first time in Relative to competitors, ZTS more easily swallowed the decline of antibiotic usage due to regulatory and consumer headwinds thanks to its product category diversification. A company with the diversification and growth prospects of Zoetis makes an attractive investment, in our view. ZTS is rated Buy. Please see our latest Zoetis Inc. report dated February 16,

6 Hillenbrand, Inc. (HI) Strong start to fiscal 2018 in Q1 Industrials Sector Ntrl-2 Hillenbrand, Inc. FY(9) HI $45.35 $48 $35 $2.00 $2.10 $ % 2/1/18 Hillenbrand, Inc. is a global diversified industrial company that makes precision and bulk material handling systems, extrusion equipment, screening systems, and flow control products. Through its Batesville Casket Unit, Hillenbrand is the largest US producer of burial caskets, both metal and wood. We reiterated our Neutral rating on HI in early February following fiscal Q1'18 results (October-December). We continue to like execution at Hillenbrand amid its transition to a diversified industrial company, as it leverages its legacy-casket business cash flow to diversify its business mix. We also like the refocus of M&A toward building existing platforms rather than looking for larger scale deals. That said, we continue to assign a Neutral rating on HI shares, as we lack a compelling near-term catalyst. HI reported Q1 adjusted EPS of $0.54, beating consensus estimates and up materially from $0.42 in the same period last year. Total revenues were up 11.5% year/year, driven substantially by organic growth of nearly 14% in the Process Equipment Group (PEG). Global economic conditions continue to aid results; PEG backlog exiting the year was up 37% compared to the prior year. The company's current balance sheet combined with anticipated impacts from the US Tax Cuts and Jobs Act give HI capital flexibility moving forward. We calculate gross debt to EBITDA at its lowest in years, and borrowing capacity has doubled in the last year to ~$570 million. The stock is currently indicated to yield 1.8%. This is low by recent standards, but is still about in line with the XLI sector ETF. Please see our latest Hillenbrand, Inc. report dated February 1,

7 Facebook Inc. (FB) Data privacy concerns weigh on valuation Information Technology Sector LTB-3 Facebook Inc. FB $ $195 $139 $3.33 $6.16 $ % $239 2/1/18 Facebook Inc. is the world's largest social network with billion monthly active users. We continue to believe FB has an industry leading mobile advertising position despite recent data privacy concerns due to the network effect of the company's social networking site's 2 billion users and other company owned brands such as Instagram, Messenger, WhatsApp, and the Oculus virtual reality platform. We particularly like Facebook user demographics on a relative basis. FB average daily usage recently declined 2.14 minutes per day or 5% as it cracked down on viral video streams. This selfinflicted damage led to the first ever decline in daily active users in the US. We expect usage time to rebound and monetization to further improve from premium content and enhanced video advertising longer term. Long-term growth potential may also be derived from Messenger and WhatsApp monetization. The average Q4 revenue per user (ARPU) was $6.18, up 28% year/year. The average price per ad increased a strong 43% with ad impression growth slowing as expected to 4% from 49% yr/yr last year. Despite negative headlines about advertisers pulling dollars from Facebook we have not found this within our research. Average revenue per advertiser increased 7% yr/yr while the advertiser count increased 39% yr/yr. Facebook's net cash totaled $41.7 billion, which provides a level of safety if fundamentals were to deteriorate. We await additional data on advertisers in conjunction with the company's Q1 earnings release. The company's recent data privacy controversy, regarding Cambridge Analytica and the sharing of user data with third party applications, could continue to weigh on shares. We have yet to publish an updated Facebook report as we wait to fully realize the implications to long-term advertising trends and top line growth. We have been ahead of the market in lowering the multiple we apply to Facebook's future earnings to derive our price target, as we expect increased regulations and higher costs. We believe management is focused on these concerns and are taking the first steps to regain user trust. We take a long-term view as we believe shares could remain pressured near term as CEO Mark Zuckerberg is expect to testify to Congress, the FTC investigation intensifies, and sentiment remains pressured ahead of Q1'18 results to be released on April 25th. Please see our latest Facebook Inc. report dated February 1,

8 Gladstone Commercial Corp. (GOOD) Current valuation attractive, in our view Real Estate Sector P/FFO Rating - Price Year Year FY FFO Ratio Ind. Div. Target Latest LTB-3 Gladstone Commercial Corp. * (H) (I) (W) GOOD $17.52 $23 $17 $1.55 $1.52 $ % $21 2/16/18 Gladstone Commercial Corp., headquartered in McLean, VA, is a real estate investment trust (REIT) focused on investments in industrial and commercial properties and mortgage loans, primarily to small to medium size businesses. On February 16th, we raised our rating from Neutral to Long-term Buy. We believed valuation looked attractive, given the current share price decline. At current levels, we continue to find the shares attractive. Our 2-3 year target price is $21. GOOD has one of the highest yields in the REIT sector at 8.6%, and the company consistently paid the dividend through the recessionary environment. We note the yield has increased recently on an absolute basis, as the share price has weakened significantly. We have no reason to believe the company will not continue to pay the dividend now that the economy is improving. Gladstone Commercial closed on a little over $130 million of acquisitions in 2017, above our initial estimate for the year. We are assuming approximately $115 million will be closed in 2018, a little less than closed in 2017 and based on the lack of early year acquisition activity, the share price decline, and higher interest rates which could constrain activity. We anticipate acquisitions will be closed throughout the year, with the larger amount occurring in the second half of the year year-end occupancy was 98% and should be higher now, since as of the start of 2018 two of the company's partially occupied properties became fully occupied. Since 2003 occupancy has never dropped below 96%. The company has no lease expirations in 2018 and only 4% expire in 2019, which should result in occupancy remaining strong over the next few years. * - Annual yield is calculated by dividing the distribution amount by the current market price of the security. For US income tax purposes, the Company may classify all or a portion of its distributions as dividends or other non-dividend distributions. Note that for some investors, for US income tax purposes all or a portion of the Company's 2017 dividend or distribution was treated as return of capital and not as "dividend income" as reflected on the IRS Form 1099-Div for the 2017 tax year. The Company generally makes a final determination regarding the proper tax treatment of distributions after calendar year end. We urge each shareholder to consult with his or her own tax advisor to determine the tax consequences of the distributions received, including any state, local or foreign tax considerations. Please see our latest Gladstone Commercial Corp. report dated February 16,

9 Verizon Communications (VZ) Maintaining Neutral rating Telecommunications Sector Ntrl-2 Verizon Communications VZ $47.93 $55 $43 $3.87 $3.74 $ % 1/24/18 We maintain our Neutral rating on Verizon Communications. We have largely been on the sidelines with VZ for the past couple of years due to the company's lack of consistent earnings growth. Adjusted earnings per share for the past three years 2015, 2016, and 2017 have been $3.99, $3.87, and $3.74, respectively. This has largely been a function of challenging industry conditions which have limited revenue growth. Wireless remains an intensely competitive industry. Moreover, the industry is a more mature one than in recent years, with slower organic growth. However, it appears Verizon's fortunes may be improving due to a combination of tax reform and lower costs. Few industries will benefit as much as telecom from tax reform. While this year's core organic revenue and earnings are expected to grow at a low single-digit rate, we raised our 2018 EPS estimate upward to $4.50 per share, largely due to the expected $0.55 to $0.65 tax benefit. We also give Verizon credit for its ambitious plan to reduce costs by $10 billion over the next four years. The cost cuts could come from either capex or operating cost reductions. Management continues to maintain premium pricing and expects service revenue to grow by the end of 2018 on a year/year basis. This could prove meaningful as it could perhaps allow the company to grow its revenues more consistently going forward. Additionally, the company's growth could benefit from the eventual adoption of 5G technology. We would maintain positions in Verizon and note the stock offers an attractive dividend yield of nearly 5%. Please see our latest Verizon Communications report dated February 1,

10 Dominion Energy (D) Negative FERC tax ruling impacts outlook; Buy rating retained Utilities Sector Buy-2 Dominion Resources D $66.95 $85 $66 $3.80 $3.60 $ % $76 3/29/18 We upgraded our rating on Dominion Energy to Buy from Neutral on January 30th. As a reminder, Dominion is one of the nation's largest producers and transporters of energy, with a portfolio of approximately 25,900 megawatts of generation, 14,800 miles of natural gas transmission, gathering, and storage pipeline, and 6,600 miles of electric transmission lines. Unfortunately, however, the company's outlook was dampened by an unexpected negative ruling by the Federal Energy Regulatory Commission (FERC) on March 15th. The FERC ruled master limited partnership interstate natural gas and oil pipelines can't recover an income tax allowance in cost-of-service rates. This impacts Dominion through its ownership stake in Dominion Energy Midstream Partners (DM-$14.90), which was expected to be a source of equity financing. In response, Dominion announced on March 27th it intends to issue 20 million shares, which is expected to address its equity needs for both 2018 and In addition, the company intends to issue debt at its Cove Point liquefied natural gas facility as well as sell non-core assets. While we were surprised and disappointed by the FERC ruling, we are encouraged by Dominion's response with these steps. In addition, management reaffirmed both its near-term and long-term earnings guidance of 6% to 8% compounded annual growth from 2017 thru The dividend is expected to grow by 10% annually for three straight years. Also, the stock offers an attractive 5% dividend yield. We still think D has merit for utility investors and retain our Buy rating. Please see our latest Dominion Energy report dated March 29,

11 Northwest Natural Gas Co. (NWN) Recently upgraded to Neutral Utilities Sector Ntrl-2 Northwest Natural Gas Co. NWN $58.00 $70 $52 $2.19 $2.24 $ % 2/27/18 Northwest Natural Gas Co. is a natural gas distribution company headquartered in Portland, OR, and has been in business over 160 years. It serves 725,000+ residential and business customers in Oregon and southwest Washington. The company also provides natural gas storage and related transportation services. It is the largest independent natural gas utility in the Pacific Northwest. We recently upgraded shares to Neutral from Underperform. With some visibility toward rate relief in 2019 and a ~15% pullback since Thanksgiving, we ended our nearly two-year call to sell NWN. Risk/reward has improved substantially, in our view, based on forward valuation and nearing of impact from the North Mist storage expansion project. Just before the new year, NWN announced its first Oregon rate case in six years. New rates should take effect in November of this year and are said to increase annual net revenue by $25.7 million. Management had been hinting at progress here for a couple of quarters, but clarity nonetheless brightens the story, in our view. Current rate case assumptions reflect any/all necessary adjustments driven by tax law changes. Q4 adjusted EPS of $1.04 beat consensus estimates. We were a bit above consensus, calling for flat results year/year, but constructive weather aided utility performance despite 1.8% greater shares outstanding. In line with our 'put and take' narrative, results excluded a substantial write-down of one of Northwest's storage facilities that drove over a $100 million decline in shareholders' equity in the quarter. NWN entered the water utility industry in late December with acquisitions in Oregon and Idaho. The two water utilities serve a total of 6,475 customers; we do not anticipate these transactions to be material to financial results, and they factor only slightly into our qualitative view. Please see our latest Northwest Natural Gas Co. report dated February 27,

12 Connecticut Water Service, Inc. (CTWS) Merger of equals with SJW, strong Q4 results Utilities Sector Ntrl-3 Connecticut Water Service, Inc. CTWS $61.13 $65 $49 $2.08 $2.17 $ % 3/15/18 Connecticut Water Service, Inc. is the largest publicly traded water company based in New England. Through its wholly-owned public water utility subsidiaries, CTWS provides drinking water to roughly 136,000 customers across Connecticut and Maine. In March 2018, the company agreed to merge with a California-based peer utility. On March 15th CTWS announced a merger of equals with California-based SJW Group (SJW- $53.30). SJW's primary subsidiary provides water services to ~230k connections in the state of California, though SJW also serves ~14k additional customers across several other states. CTWS shareholders are set to receive shares of SJW at deal closing, and will retain about 40% ownership in the combined company. Post-closing, the combined entity will be the third largest publicly traded water utility. Current SJW CEO Eric Thornburg will lead the combined company. Mr. Thornburg previously held the same role at CTWS for ~12 years prior to leaving for SJW last fall. We particularly like this aspect of the deal as we believe Eric's leadership was instrumental in CTWS's growth in recent years. Dave Benoit, the former longtime CFO of CTWS and current CEO, will stay on as President of the New England Operations. Perhaps dwarfed by the merger announcement, Q4 results for CTWS were above our expectations. Revenue grew 15% and 8% in Q4'17 and full year 2017, respectively, bolstered by the purchases of Avon Water and Heritage Village. Largely through M&A, CTWS has seen a ~50% increase in customers since year-end We expect fundamental results at Connecticut Water to have little impact on CWTS's share price up through the deal closing. Merger or not, we like the long-term prospects of Connecticut Water and the combined entity, but refrain from making a call on the stock amidst the approval process. As we do not follow SJW, we assign CTWS shares a Neutral rating. Please see our latest Connecticut Water Service, Inc. report dated March 15,

13 Additional information, including a report on each common stock mentioned, is available upon request. Check with your Wealth Advisor for the investment appropriate for you. Explanations & Disclaimers A - Actual Ann. - Annual/annualized Bps - Basis points E - Estimated EBITDA - Earnings before income, taxes, depreciation, amortization EBITDDA - Earnings before income, taxes, depreciation, depletion, amortization EPS - Earnings per share EV - Enterprise value FFO - Funds from operations FFOA - Funds from operations adjusted FFOM - Funds from operations modified FY - Fiscal year FY(1-11) - EPS are for fiscal years (1=January, 2=February, etc.) GAAP - Generally accepted accounting principles Ind. Div. Yield - Indicated dividend yield NA - Not available/acceptable NAV - Net asset value NM - Non-meaningful - Price/earnings ratio -- current price divided by EPS Q - Quarter (1-4)Q - 1=First quarter, 2=Second quarter, 3=Third quarter, 4=Fourth quarter REIT - Real estate investment trust TR - Total return TTM - Trailing twelve months YTD - Year to date All data is adjusted for stock splits or stock dividends. Unless otherwise noted, EPS are from continuing operations and exclude non-recurring items. We recognize each client's investment needs and goals are different. Opinions expressed are subject to change without notice and do not take into account the particular investment objectives, financial situation, or needs of individual investors. Analysts' Certification The contributors to this report hereby certify that the views expressed in this report accurately reflect their personal views about the subject. They also certify that they have not been, are not, and will not be receiving direct or indirect compensation in exchange for expressing the specific points of view in this report. Important Disclosures The contributors to this report or members of their households typically have positions in the companies they follow, which may include, but are not limited to, common stock, options, rights, warrants, or futures contracts. They may not engage in buying or selling securities contrary to their recommendation. Hilliard Lyons' analysts receive bonus compensation based on Hilliard Lyons' profitability. They do not receive direct payments from investment banking activity. H - Hilliard Lyons has received investment banking compensation from this company within the past 12 months. I - Hilliard Lyons has been a manager or co-manager of an offering of securities of this company within the past 12 months. 13

14 W - Gladstone Capital Corp. (GLAD-$8.70), Gladstone Commercial Corp., Gladstone Investment Corp. (GAIN-$10.21), and Gladstone Land Corp. (LAND-$12.29) share the same board and management. Investment Ratings Buy: We believe the stock has significant total return potential in the coming 12 months. Long-term Buy: We believe the stock is an above average holding in its sector, and expect solid total returns to be realized over a longer time frame than our Buy rated issues, typically 2-3 years. Neutral: We believe the stock is an average holding in its sector, is currently fully valued, and may be used as a source of funds if better opportunities arise. Underperform: We believe the stock is vulnerable to a price set back in the next 12 months. Suitability Ratings 1 - A large cap, core holding with a solid history. 2 - A historically secure company which could be cyclical, has a shorter history than a "1" or is subject to event driven setbacks. 3 - An above average risk/reward ratio could be due to small size, lack of product diversity, sporadic earnings or high leverage. 4 - Speculative, due to small size, inconsistent profitability, erratic revenue, volatility, low trading volume or a narrow customer or product base. Hilliard Lyons Investment Banking Recommended Issues Provided in Past 12 Mo. # of % of Rating Stocks Covered Stocks Covered Banking No Banking Buy 38 34% 11% 89% Hold/Neutral 71 63% 8% 92% Sell 3 3% 0% 100% As of 4 April 2018 Other Disclosures Opinions expressed are subject to change without notice and do not take into account the particular investment objectives, financial situation or needs of individual investors. Employees of J.J.B. Hilliard, W.L. Lyons, LLC or its affiliates may, at times, release written or oral commentary, technical analysis or trading strategies that differ from the opinions expressed here. J.J.B. Hilliard, W.L. Lyons, LLC is a multi-disciplined financial services firm that regularly seeks investment banking assignments and compensation from issuers for services including, but not limited to, acting as an underwriter in an offering or financial advisor in a merger or acquisition, or serving as placement agent in private transactions. The information herein has been obtained from sources we believe to be reliable but is not guaranteed and does not purport to be a complete statement of all material factors. This is for informational purposes and is not a solicitation of orders to purchase or sell securities. Reproduction is forbidden unless authorized. All rights reserved. 14