Colliers International Group Inc (CIGI) 2009 Q3 法說會逐字稿

Welcome to FirstService Corporation's Third Quarter 2009 Results Conference Call. Today's call is being recorded.

Legal counsel requires us to advise that the discussion scheduled to take place today may contain forward-looking statements that involve risks and uncertainties. Actual results may materially be different from those contained in these forward-looking statements. Additional information concerning factors that could cause actual results to materially differ from those in the Form 10-K and in the Company's other filings with Canada and US Securities Commissions.

As a reminder, today's call is being recorded. Today is Tuesday, November 3, 2009. At this time for opening remarks and introductions, I would like to turn the call over to the Founder and Chief Executive Officer, Mr. Jay Hennick. Please go ahead, sir.

Thank you and good morning, everyone. I'm Jay Hennick, Chief Executive Officer of the Company, and with me today is Scott Patterson, the President and Chief Operating Officer, and John Friedrichsen, Senior Vice President and Chief Financial Officer.

This morning, FirstService reported solid third quarter financial results. Overall revenues were up slightly to $450 million, EBITDA was down $4 million to $44 million, and adjusted earnings per share came in at $0.60 per share versus $0.68 last year.

Operationally, as you might expect, revenues in Commercial Real Estate were down 16% and EBITDA down 58% versus the prior year after adjusting for acquisitions and foreign currency changes. Business remains difficult, particularly in the US, although our offices in Canada, Latin America, and Asia Pacific are doing better than they were earlier in the year.

In residential property management, revenues increased 4% and EBITDA was essentially flat versus the prior year, primarily because of client cut-backs -- cut-backs on nonessential services and reductions in operating expenses -- as clients continue to look for ways to better manage their costs in the current economy.

Notwithstanding this, our results in property management continue to demonstrate the resilience of this business. We are the market leaders in the US because we remain focused on adding value to our clients and using our size and resources to create additional competitive advantages that are difficult for our competitors to replicate.

And finally, in Property Services, we had another great quarter, with revenues up 23% and EBITDA up 19%, all of which attributable to Field Assets, one of America's largest foreclosure service companies. Based on industry and market data, Field Assets is expected to continue to deliver strong operating results through 2010 and much of 2011 before the number of foreclosures start to adjust to more normal levels. In the meantime, we are pursuing strategies to expand and diversify our revenue streams to offset the expected revenue declines in 2012 and beyond.

Our consumer-oriented franchise systems continue to operate under the pressure of lower consumer confidence levels in the US, which is negatively impacting the demand for our services. I'm confident we're doing all the right things -- right-sizing these businesses, taking steps to leverage the synergies created by first Field Assets and some of our other service lines, and remaining very close to our operating costs. When market conditions change, we should be in an excellent position to capture market share, as many of our smaller competitors have found it difficult to remain in business during these difficult times. John and Scott will have more to say about our financial and operating results in just a few minutes.

FirstService was also busy on several other key initiatives during the quarter. In Commercial Real Estate, we continued to expand our high-end corporate and institutional services practice under the FirstService Real Estate Advisors brand. We opened offices in Atlanta, Washington, DC, and Richmond, Virginia, by taking over the operations of the former GVA real estate network partner in those markets.

Many of you will recall that GVA was affiliated with FirstService Williams in New York prior to our acquisition of Williams. Adding this group to our global platform not only gives us a solid foundation in new markets, it also brings with it longstanding business relationships with key executives and brokers at FirstService Williams who have worked together with the former GVA teams for many years.

Adding three new Company-owned operations in three new markets at little or no cost is one of the benefits we have at FirstService, and this is another example of how we are strategically capitalizing on market conditions to expand our business.

During the quarter, we also added industry leader Scott Nelson as President and Mark Rosenthal as National Director, and their teams, to our growing global workplace solutions business, a group designed to deliver recurring revenue streams and referred transaction activities to our global platform partners, not only in the US but worldwide.

And we strengthened our US Commercial Property and Asset Management Business with the appointment of Mike Kent as President. Our US property and asset management business manages more than 60 million square feet of office, industrial, and retail properties in a total of 120 million square feet across North America. We expect Mike to make a real difference, especially in the area of REO asset management, which is an area in which we have particular expertise.

And just after quarter end, we acquired a 29.9 stake in publicly traded Colliers CRE, the Colliers partner in the UK, Ireland, and Spain. This investment makes us the single largest shareholder in this company, with significant influence over future operations. Over the next 12 months, we will take things one step at a time; but in the near term, we will re-brand as Colliers International to be consistent with our other global Colliers operations. We will implement some of our existing operating systems to more integrate CRE into our global platform and to refocus their sales efforts on driving more pan-European business out of London to our other operations in Eastern Europe and Asia.

Finally, as previously announced, FirstService is in the process of completing a $70 million public offering of unsecured subordinated convertible debentures. Closing is scheduled for November 10, once the final prospectus has cleared. The proceeds will be used to repay existing bank indebtedness, effectively freeing up the entire bank facility and giving us about $200 million to fund our future growth. The debentures are convertible into shares of FirstService at $28 over the next five years.

As many of you know, issuing equity at any price is not something we take lightly at FirstService. In fact, the last time we issued equity was in 1997. However, after much deliberation we decided that issuing a total of 2.5 million shares in the future at a large premium to today's price was the smart thing to do for our shareholders. Over the past three years, FirstService has repurchased a total of 1.9 million shares at an average price of $20, so the overall dilution to FirstService shareholders has been kept to a minimum.

Having the extra growth capital at this time in the market cycle will come in very handy. Over the past few months, we have begun to see an increased flow of investment opportunities, and some older targets have returned with a renewed interest in partnering with us. This does not mean we're on the verge of completing a large number of acquisitions. Rest assured, we will continue to operate in the same way as we have in the past, with the care and discipline of a management team with a significant equity stake in the business and a proven track record to preserve.

The FirstService business model and way of doing business has stood the test of time. Since we listed our shares on NASDAQ in 1995, our compound annual return has been about 20%, and that's despite the decline in our shares from previous levels. A 20% annualized return is an exceptional return by any standard; and for this management team, with a significant amount of our own money on the table, an investment in FirstService is the exact right place to be.

Now let me turn things over to John to take you through the financial details. Scott will then provide his operational review and then we'll open things up to questions. John?

Thank you, Jay. As announced this morning in our press release and outlined by Jay in his opening remarks, FirstService reported solid overall results in our third quarter ended September 30. This was accomplished in the face of economic conditions which remain challenging, to say the least, and is a testament to not only our service line diversification but also our entrepreneurial culture that aligns our management team with our shareholders, making decisions that balance short-term results with creating long-term value.

Augmenting our solid overall operating results, we also generated strong cash flow again in Q3, and strengthened our balance sheet by reducing debt and carefully managing our uses of capital, positioning us well going forward to navigate economic conditions that we expect to remain challenging for the foreseeable future while also being able to seize opportunities to generate long-term value for our shareholders.

Here are the highlights of our consolidated results for the quarter, all of which are from continuing operations. Revenues were $451.1 million, up marginally from the same quarter last year, and up 4% on a local currency basis.

EBITDA totaled $43.5 million, down from $47.5 million last year, with our margin coming in at 9.6% versus 10.5% last year, and adjusted diluted earnings per share of $0.60 versus $0.68 last year.

GAAP EPS for the quarter was $0.16, compared to $0.36 for the same quarter last year, with both a noncash charge to GAAP EPS of $0.24 due to the change in value of our noncontrolling interests, and $0.11 due to a further tax valuation allowance relating to tax loss carry-forwards impacting the current quarter GAAP EPS, and which did not impact GAAP EPS last year. More details reconciling adjusted earnings per share to GAAP earnings per share are outlined in our press release issued this morning.

Turning now to our cash flow statement, we saw strong results in our Q3 following similarly strong Q2 cash flow. Before working capital and the impact of discontinued operations, we generated about $28 million in cash flow from operations compared to about $23.5 million in Q2 and $26.5 million in Q3 of last year.

Adding in the positive impact of both working capital changes totaling $4.9 million and cash flow from discontinued operations totaling $6.5 million, the latter of which benefited from monetization of commercial mortgages held for sale, net cash in total provided by operating activities totaled $39.4 million in our third quarter.

During the quarter, we invested $7.2 million in CapEx, up from $4 million in the same quarter last year, and similar to the $7.1 million in Q2. Year to date, we've invested about $8.5 million in CapEx and expect to finish the year at about $22 million, which will be well within our self-imposed limit of 20% of EBITDA.

Turning to our balance sheet, we were able to utilize our free cash flow to reduce debt levels during the quarter, with our net debt position at the end of the quarter totaling $221 million, down from $252 million at our last quarter ended June 30.

Our leverage, expressed in terms of net debt to trailing 12-month EBITDA, was just over 2 times, down from 2.3 times at June 30 and at the lower end of our historical operating range over the past 10 years of 2 to 3 times -- and of course, far below our debt covenant of 3.5 times.

But the bigger story concerning our balance sheet was announced after quarter end, that being the $70 million convertible debenture offering that Jay already outlined. We view this issue of unsecured subordinated debt as long-term capital, the five-year fixed rate of 6.5%, and a 41% conversion premium at date of announcement that will ultimately become equity and part of FirstService's permanent capital base.

Aside from the conversion feature, the debentures, which also have no financial covenants, allow FirstService to pay interest or principal in common shares, providing flexibility should we ever decide that such form of payment instead of cash is prudent. And if there's one thing we've learned from the events of the past 12 months, it's to ensure that at all times we have ample liquidity and flexibility to fund our operations and growth opportunities. As the economy slowly emerges from the challenges currently being faced, it's the latter which will become increasingly important.

And while FirstService has always been averse to raising capital by any type of security that includes equity, we also realize that on the right terms and at the right time, doing so positions us well for the long term.

Unlike some of our peers, we have not made acquisitions that included purchase prices reflecting double-digit multiples of EBITDA and then been forced to raise equity at or near all-time low share prices, or issue subordinated debt with double-digit coupons at the insistence of lenders. To the contrary, our disciplined approach to acquisitions, well-timed sale of our integrated security business in 2008, and patience in accessing a convertible debenture financing on very favorable terms allows us now -- this is still baseball season, at least in New York and Philly -- to step to the plate with the bases loaded. But in keeping with our tried and true approach, hit for singles and maybe the occasional double rather than swinging for the fences.

And finally, before Scott provides operational overview, I'd like to thank the underwriters, led by TD Securities, Scotia Capital, and BMO Capital Markets, for their advice and execution in our convertible debenture offering, as well as several of our banks in our bank syndicate that showed considerable support and leadership in working with us to help plan for the future. And of course, for the tireless efforts of our finance and corporate development professionals here at FirstService that did double duty with our usual quarterly reporting in addition to our financing.

Now I'd like to turn things over to Scott for his comments. Scott?

Thank you, John, and good morning. My comments will be focused on the divisional results and I will start with Residential Property Management, which generated revenues of $174.8 million for the quarter, up 4.4% from the prior-year quarter, driven by increases in management fee revenue but partially offset by declines in ancillary service revenue.

Regionally, our management revenue growth was again driven by contract wins in the Northeast and Southwest, primarily Arizona and Nevada. Management revenues in California and Florida were approximately flat with a year ago.

In terms of ancillary service revenue, we continued to experience modest declines in Florida, particularly in our landscape and HVAC services business during the quarter. Defaults and foreclosures continue to plague many of our community in Florida, which is putting tremendous pressure on operating budgets and cash flows, which in turn results in service cutbacks and price sensitivity. As property manager, we are working closely with our clients to help match operating expenditures with reduced cash flows.

Our EBITDA margin in this division was 10.1% for the quarter, down 50 basis points from 10.6% in the prior year. During the quarter, we experienced almost $1 million in incremental worker's comp expense relating to one large claim in Florida and several other claims that were settled during Q3. Adjusting for this amount would increase the margin to a level comparable to the prior year. We have many years of experience history relating to worker's comp, and we see our Q3 expense as unusual and not reflective of a new level.

Let me now turn my attention to our Property Services division, which comprises Field Asset Services, Paul Davis Restoration, and several consumer-oriented franchise systems. Revenues in this division grew 23%, driven again by a continued strong growth at Field Asset Services, which was up 65% year over year for the quarter, offset by 25% year-over-year declines for the franchise systems as a group.

The FAS results for the quarter were comparable to the June quarter, representing the first time we have not seen sequential growth since we acquired FAS in October of 2007. Through increasing foreclosure volumes and the addition of new customers, FAS has grown month over month for almost two years. In the third quarter, we started to see the number of foreclosures slow, and this continued right through September to quarter end.

The combination of state moratoria and the Obama Administration's Making Home Affordable modification plan created a lull in newly initiated foreclosures as our clients worked to implement the programs. The programs have effectively lengthened the foreclosure process, and while mortgage delinquencies continued to build during the third quarter, fewer delinquent mortgages ended up in foreclosure, which directly impacted the number of bank-owned properties that FAS was given to manage.

It also created a backlog, or an inventory, of delinquent mortgages that our lender and servicer clients are steadily working through. This backlog is starting to make its way into the system and we have seen our volumes increase in October as a result.

Looking now at our franchise systems -- as I mentioned, as a group they were down approximately 25% from year-ago quarter. Consumer confidence is at a 26-year low and home remodeling expenditures, similarly, are at a very low level. Our franchise system revenues track these industries very closely; and while we have seen revenues stabilize across all our systems, we have not seen any indication that a sustainable uptick will occur in the near term.

EBITDA margin in this division was 20.1%, down from 20.6%, due primarily to lower margins in our franchise systems as a result of the lower revenues and associated negative leverage.

Looking forward, we expect FAS to continue to show strong year-over-year growth for the fourth quarter and continue to post strong results well in to 2010. Sequentially, based on the guidance we have from our customers, we expect the fourth quarter FAS revenues to generally be in line with those realized in the second and third quarters. Offsetting this strong performance will be continued but moderating year-over-year declines in the results of our franchise group.

In commercial real estate, revenues for the quarter were $156 million, down 16% from a year ago after adjusting for foreign currency and for the acquisition of Williams in October of 2008 and Colliers Netherlands in November of 2008. Global market conditions and transaction activity remained weak during the quarter, but did show some improvement over the first six months of 2009.

We experienced modest year-over-year gains in Asia-Pac, but these were more than offset by declines in North America and steep declines in Central and Eastern Europe, including Russia.

In the aggregate, our global investment sales were down 19% versus year ago. Leasing was off 10% and appraisal down 23%, while property management and project management were, together, up 20% over prior-year levels.

Although the major regions we operate in tend to be at different stages of the recessionary cycle, we believe that, on average, we are through the bottom and beginning the recovery stage, although we expect it to be a long and slow recovery. One metric that supports this belief is our sequential revenue trend. Our September quarter was up 9% compared to our June quarter, but one year ago our September quarter revenues were trending down, off 12% relative to the June quarter.

Let me now spend a minute focusing on each of our major regions. In the Americas, revenues were down 20% after adjusting for acquisitions and foreign currency fluctuations. Similar to last quarter, the decline was balanced in percentage terms between the US, Canada, and Latin America. In the US, the primary driver of the year-over-year decline is reduced investment sales activity in the US Southwest.

In Canada, brokerage activity, both sales and leasing, was off in our three major markets of Vancouver, Calgary, and Toronto. And in Latin America, the 20% decrease was driven primarily by significant declines in Mexico, as our other major markets in this region were off only slightly from year ago.

Our Americas region posted a mid-single-digit EBITDA margin for the third quarter, up from a break-even result in the second quarter but down from the 10% margin in the prior year.

Looking forward in the Americas region, we expect to see continued year-over-year declines in Canada and Latin America, as these markets have both weakened through 2009. In the US we will see a moderating of the year-over-year declines and move to a comparable year-over-year level, not necessarily a reflection of a turnaround or a pick-up, but more a reflection of the extremely low activity levels we experienced in late 2008-2009.

In our Asia-Pac region, total revenues were approximately flat with a year ago in US dollar terms, but up about 8% in local currency, driven by particularly strong year-over-year results in China and Hong Kong. Australia, which is a big business for us, accounting for almost 20% of global revenues during the quarter, posted solid 5% year-over-year growth and 10% sequential growth compared to the June quarter. Across Asia and Australia, we saw a pick-up in investment sales, which drove the year-over-year improvement.

We generated a low double-digit EBITDA margin in this region for the quarter, up from a low single-digit margin in the prior year.

Looking forward in our Asia-Pac region, we expect improved year-over-year results in the fourth quarter and through 2010. China and Australia, in particular, are showing increased activity levels.

In our Europe region, including Russia, the market continues to be very difficult, with transaction activity at a standstill. We operate in 14 countries in Central and Eastern Europe and throughout the Baltic region, plus Russia. Sales, leasing, and appraisal revenues were off in every market for the quarter compared to prior year. In total, revenues were down 60% versus prior year, and approximately flat with the June quarter. The operating environments are particularly difficult in Russia, Romania, and Hungary, which historically have been three of our largest businesses in this region.

The EBITDA loss in our Europe region was approximately $2.5 million, excluding a final $1.2 million lease exit settlement in Moscow. This loss is similar to that experienced in the June quarter.

Looking forward in this region, we expect the market to continue to be difficult through the fourth quarter and well into 2010. We have taken significant steps to cut costs and restructure, and we look to operate at close to break-even basis and improve from there through 2010.

That concludes my comments and I would now like to ask the operator to open the call to questions.

(OPERATOR INSTRUCTIONS) Frederic Bastien, Raymond James.

Good morning, gentlemen. In the last conference call, you mentioned that the CRE division had good chances of breaking even for the full year. Now, this would imply EBITDA of about $13 million for the current quarter, which we haven't seen you do since, I guess, the spring of '08. How do you feel about your chances to break even in that quarter-- or, for the full year?

Well, I want to be careful here, Frederic. We're not giving guidance -- certainly not over all, or for a segment. We're going to do everything within our reach to arrive at break-even or better for this year. Some of this is going to be beyond our control in the revenue side; and believe me, the team is doing everything they can to uncover revenue opportunities and generate sufficient revenue to get us to break-even or better for the year. So that would be a strong finish to the year. In order to accomplish that, that's what we're focused on, but there are no guarantees.

But typically, Q4 is seasonally strong. Can we expect that to occur in the current year, given the situation in the market?

Right. Historically, Q4 is strong. I guess it remains to be seen whether the current environment is going to be conducive to a strong calendar-year finish, which the entire industry has experienced in the past. It's just a bit unknown right now. There will be certainly lots of activity, but whether it's at a level that would be consistent with prior patterns, we just don't know.

Okay, fair enough. You recorded a gain from available for-sale securities in the quarter. Is this still related to your residual interest in Resolve?

Yes. That was the residual interest in Resolve, which was subject of a takeover by Davis and Henderson. That transaction was completed during the quarter and we monetized our units, which we received from Davis and Henderson prior to quarter end, and recorded a gain over the carrying value, which we had previously had with respect to that investment.

Okay, so there should be no impact related to that in Q4 -- that's behind you now?

Right.

Okay. Given I guess the outlook you've provided for FAS, and also the franchise businesses, where do you guys stand in terms of your ability to grow EBITDA in 2010 versus 2009?

I think in large part that is going to depend on a recovery in consumer confidence and the recovery in our franchise systems in general. We are getting some guidance from our clients and our lenders and servicers that provide us with some comfort and an indication that 2010 will be strong for FAS. It's not clear whether it will be stronger than 2009; it's not clear it'll be worse than 2009. I think our expectation is that it will be-- at this point, that it will be similar. So then it really falls to our franchise group. We think we'll see some improvement in 2010, but it's won't be dramatic.

Okay, great. My last question is -- wondering if you could speak to the opportunities you're seeing on the commercial real estate space in continental Europe. Obviously, with your latest move you've gone into the UK and Ireland and you've got exposure in Spain. But how are you planning to approach sort of the Old Europe market, if you will?

Well, our current plan, Frederic, is to digest CRE for the next 12 months. Remember, we do lead Colliers International global network; we have affiliate partners in Old Europe, as you call it; they are good friends of ours. They are fighting the same battle that I think everyone in Western Europe is fighting in terms of business activity. So we are supporting them as much as we can. And so I think for the next 12 or 18 months, you'll see strength in our CRE business, principally, and work with our affiliate partners in the rest of Western Europe.

Thanks; that's all I have.

David Gold, Sidoti.

Hi, good morning.

Good morning.

A couple of questions. One, could we go over what the current FAS run rate is and sort of-- I guess Scott's comments were that, as we head into the fourth quarter, to be stable. But do we still think there's more room for growth there, or do we think it's sort of peaking out?

We think that there is a significant backlog of foreclosure activity and that the volumes will continue to be steady and strong. But we're not anticipating significant growth from current levels.

Okay. And then, remind me -- I think over say the past year a big focus, as it's grown, has been towards independent contractors so that you can manage the costs there. Is that right?

The whole model is independent contractor-related.

So presumably, at some point in the future, when we sort of see the other side of that, you should be able to adjust costs pretty quickly.

Yes. I mean, the contractors are bought on a per-episode basis for specific services. We run a massive call center that's people-related and is measured very closely in terms of the various functions that they undertake, and so we can staff up and staff down relatively quickly based on market conditions.

Okay. And then, on the commercial real estate side, Jay -- you're continuing through this to opportunistically add brokers and professionals as you see them?

Yes.

Okay. And then just one last one -- John, if you can update us as to where you are as to cost cuts and what the thinking is on a go-forward basis -- are we largely done or is there still a little bit more to be done there?

We're substantially complete on the cost cuts. There may be a bit of trimming that needs to get done in commercial real estate -- would probably largely be around certain premises where we may decide to do something with the leases. But we're substantially through that exercise. Annualized cost savings as a result of measures taken this year are north of $20 million. And then adding that to last year's $26 million, you get to, on the $45 million, $46 million annual range, which is significant. And that's substantially over with -- certainly given expected revenue levels and where we think they're likely to be.

Perfect; thank you both.

Brandan Dobell, William Blair.

Thanks, guys. First, in Commercial Real Estate -- within Asia-Pac and Europe over the past year or so, how much kind of product line or service line expansion have you undertaken, just given the market weakness, to pick off people with specific skill sets. So not investment sales or leasing, but perhaps evaluation or other areas -- debt placement, things like that. Or has that not been a big part of the strategy?

Well, I think recruiting in general is a strategic focus for us in really every region and every office. And not just in Europe and Asia, but that really goes through all our regions. And in the last six months, we have, in virtually every office, every region, made a significant hire. It's either an upgrade or it fills a gap in our service offering. So there has been a lot of that happening for us around the globe.

Specifically as it relates to service lines, we've added property management capability in some markets, facilities management capability in some markets. But generally it has been focused on upgrading our producer talent and filling in gaps here and there.

Okay. Within Field Asset Services, is the margin profile of that business going to be any different as the quarters of hyper growth slow down a little bit? Is it a more manageable business when it's a little more steady, or does it not change the margin profile that much?

There are certainly some moving parts. As our revenues continue to decline on the franchise side, we'll see margin decline in that part of the division. FAS -- there is some seasonality as our lawn cuts come to a close in the northern regions and our winterizations take effect. We're not necessarily getting paid different amounts for the services as they change from season to season, so there is some margin impact. And I think in general, we're providing more services for the same dollar, so there may be some slight decline in margin over time.

Okay. I may have missed this, but have you guys talked about how we should think-- or, how we should model the impact from the investment in Colliers UK? Is it going to show up as a minority interest, should we look at the revenue line and push it at a loss? Just trying to get a feel for how we should change our model, especially as we think about the next couple of quarters.

It's John here. It's will be recorded as an equity investment, so we will have it, the share of income, picked up on the P&L under Other Income. But it's not expected to be significant. You do have the historically seasonally strong quarter, but we would expect it to be better than break even, but not a whole lot. So it's not significant, is the bottom line, at least for the near term.

Okay. And then, final question for you. As you take a look back over let's call it the last three or four quarters, has what's happened in let's call it your consumer-facing business, has that changed your resolve, or your commitment, to being in those industries at all? In either way, I guess -- want to be more or less involved in those consumer-facing businesses based on what you've seen in the past nine months or so?

Well obviously, going through the past 12 months or so has been an eye-opener for everyone. But I have to tell you that looking and thinking about our management teams in our consumer groups, I think they've done a terrific job. They are very close to their businesses, cutting costs where appropriate, keeping focused on the client.

And interestingly, most of these businesses are essential services. So there's a lot of people delaying services that they'd otherwise be buying. So we think that we like the space. Being a franchisor and/or an operator of a contractor network gives us lots more flexibility than others that are directly in the business. So I think the long answer is we like the space. We would continue to expand in that area if we found the right opportunities but it would be along the same lines as we currently operate -- through franchise systems principally, or contractor networks, where we have lots of flexibility and leverage around costs and brand.

Okay. Great, guys; thanks a lot.

(OPERATOR INSTRUCTIONS) Bill MacKenzie, TD Newcrest.

Thanks. Just one thing I wanted to follow up on; I apologize if I missed it. But in terms of the margins at FAS [Gartigas], some color on what the margins were at FAS in the quarter last quarter. I think you said that they were roughly similar to property services as a whole; I'm just curious to know how they tracked, Q2 versus Q3.

Q2 to Q3, the FAS margins were unchanged.

Great. That's it for me; thanks.

(OPERATOR INSTRUCTIONS) Mr. Hennick, there are no further questions at this time; I'll turn the conference back over to you.

Thank you very much, everyone, for joining us today and we look forward to visiting again on the next conference call. Thank you, everyone.

Ladies and gentlemen, this does conclude your conference call for today. You may now disconnect your line, and have a great day.