Colliers International Group Inc (CIGI) 2022 Q2 法說會逐字稿

Welcome to Colliers International Second Quarter Investors 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 known and unknown risks and uncertainties. Actual results may be materially different from any future results, performance or achievements contemplated in the forward-looking statements.

Additional information concerning factors that could cause actual results to differ materially from those in the forward-looking statements is contained in the company's annual information form as filed with the Canadian Securities Administrators and in the company's annual report on Form 40-F as filed with the U.S. Securities and Exchange Commission.

As a reminder, today's call is being recorded today, August 03, 2022. And at this time, for opening remarks and introductions, I would like to turn the call over to the Global Chairman and Chief Executive Officer, Mr. Jay Hennick. Please go ahead, sir.

Thank you, operator. Good morning, and thanks for joining us for the second quarter conference call. I'm Jay Hennick, the Chairman and Chief Executive Officer of the company. And with me today is Christian Mayer, our Chief Financial Officer. As always, this conference call is being webcast live and is available on the Investor Relations section of our website, and the presentation deck is also available there to accompany today's call.

Colliers reported strong second quarter results with solid revenue growth across all service lines. Despite a war and economic and other geopolitical turmoil in Europe, and the seemingly endless lockdowns in Asia, Colliers continues to perform to expectation through all market cycles. The fact is we are more balanced, more resilient and more diversified than ever.

During the quarter, we continued to grow our Investment Management segment in both size and scale, furthering our goal of becoming a major player in the rapidly growing, alternative private capital industry. We completed 2 acquisitions and the third after quarter end. Then in late June, we announced the addition of Versus Capital, a highly successful alternative real asset manager in the U.S. with strong private wealth distribution capabilities.

Once completed, our IM business will have a total of more than $85 billion in assets under management and make up about 30% of our pro forma annualized EBITDA. This segment, on a stand-alone basis, already compares favorably to other public companies in the investment management industry. Our revenues are primarily recurring management fees. About 90% of our funds are perpetual or long-dated strategies, 10 years or more. And 70% of them are in rapidly growing sectors like alternatives and infrastructure. But perhaps most importantly, each of our platforms are led by strong investment professionals who hold significant equity stakes in their own operations and have a long history of delivering top-tier performance for investors.

These characteristics, among others, truly differentiate our business from the rest in the marketplace. Over the past 6 years, Colliers has built a very valuable investment management business, one in which we see huge potential growth in the future. Separately, during the quarter, we added a significant building consultancy and project management leader in the U.K., enhancing our service capabilities in Europe.

And just yesterday, we added one of the fastest-growing engineering companies in Australia, providing us with another growth engine to our already strong operations down under. Based on acquisitions completed or announced so far this year, we expect 2022 to be a record year for capital deployment, with more than $1 billion invested in the -- for the first time in our history.

With our strong global brand and a growth platform, proven track record of more than 27 years, balanced and diversified business model, unique enterprising culture and significant inside ownership, Colliers expects to continue delivering exceptional returns for shareholders for many years to come.

Now let me turn things over to Christian.

Thank you, Jay. My comments follow the flow of the slides posted on the Investor Relations section of colliers.com to accompany this call. Please note that the non-GAAP measures referenced on this call are defined in this morning's press release. All references to revenue growth are expressed in local currency.

Our Q2 revenues were $1.1 billion, up 23% relative to the prior year period with revenues up strongly across all service lines, led by Investment Management and outsourcing and advisory. Internal growth was 15%, with the balance from acquisitions completed during the past 12 months. Second quarter adjusted EBITDA was $161 million, up 21% from 1 year ago, with margins of 14.3%, roughly flat versus the prior year quarter.

Americas revenues for the second quarter were $741 million, up 28% over the prior period. Growth was led by Outsourcing & Advisory, up 34% driven by Engineering & Design, including recent acquisitions. Capital markets activity was up 28%, led by industrial and land asset classes, partially offset by a reduction in debt origination activity due to the current interest rate environment.

Leasing activity was up 20%, with growth in both industrial and office asset classes. Adjusted EBITDA was $102 million, up 30% from last year, fueled by revenue growth as well as a gain on the termination of a lease, partly offset by higher variable costs and a mix change with the reduction in higher-margin debt origination. The Americas margin was up 20 basis points to 13.7%.

Q2 EMEA revenues were $169 million, up 20% from 1 year ago, led by Outsourcing & Advisory, including the benefit of our recent acquisition. Adjusted EBITDA was $14 million relative to $21 million last year and was impacted by a reduction in higher-margin capital markets revenues due to geopolitical uncertainty in the region as well as higher variable costs.

Asia Pacific revenues were $143 million, down 1% and were impacted by COVID-19 lockdowns in several Asian markets, which extended until late in the quarter. Adjusted EBITDA was $20 million relative to $21 million in the prior year quarter.

Investment Management revenues for the second quarter were $75 million, up 48% versus the prior year period. After eliminating the impact of pass-through period interest, revenues were up 45% driven by management fee growth and acquisitions that closed during the quarter. Adjusted EBITDA for the quarter was $29 million, up 36% versus the comparative quarter. New capital commitments from investors for the first half of the year have been solid.

We have several products presently in the market, including each of our newly acquired operations and including attractive long-term opportunities and alternatives and infrastructure asset classes. Given current market conditions, we are seeing investors take more time to make capital allocation decisions. However, our investor base is broader and more diversified than ever before. We are confident we will meet our fundraising objectives for the balance of the year.

We ended the second quarter with $68.7 billion of AUM, including Rockwood, which closed on -- I'm sorry, including Rockwood, which closed on July 6 and Versus which is expected to close in Q4. Our AUM is now $87 million. Our trailing 12-month investment management pro forma adjusted EBITDA is currently $220 million, which represents 30% of our consolidated total, as Jay mentioned earlier.

Our reported adjusted EBITDA is equivalent to fee-related earnings or FRE that many pure-play IM firms report since our IM earnings come predominantly from recurring management fees. In the coming quarters, we will enhance our IM segment reporting to give shareholders a better sense of these operations and their strong growth prospects. As of June 30, our financial leverage ratio, defined as net debt to pro forma adjusted EBITDA was 1.4x, including acquisitions that have been announced but were not completed as of June 30, and our financial leverage is 2x inside our comfort zone, and we expect to delever over time using operating cash flow to pay down acquisition debt.

In May, we renewed our revolving credit facility, increasing capacity to $1.5 billion from $1 billion and extending the term to 2027. The new revolver is sustainability linked and includes 3 ESG metrics aligned with our Elevate The Built Environment strategy. We are updating our outlook for the full year 2022 to reflect recently announced acquisitions and our first half operating results. The outlook is subject to risks and uncertainties as outlined in the accompanying slides.

We expect low double-digit revenue growth, consisting of high single-digit internal growth and the balance from acquisitions, including Rockwood, Versus and PEAKURBAN. We expect our adjusted EBITDA margin to improve 60 to 100 basis points relative to 2021 from a combination of higher-margin acquisitions and internal operating leverage. Finally, our adjusted earnings per share are expected to grow at a low 20 percentage rate. That concludes my prepared remarks. I would now like to open the call for questions. Operator, can you please open the line?

(Operator Instructions) Our first question comes from George Doumet with Scotiabank.

Congrats on a strong quarter. It seems like the lift in guidance mainly reflects this strong quarter as opposed to maybe any back half improvements in organic numbers. So just wondering, is there an element of conservatism in there. Can you maybe share with us what you're seeing in the funnel for that important Q4 quarter in terms of transactional volumes? .

George, we can hardly hear you as you're muffling in and out. Can you give us a quick question again?

Sure. I was just wondering maybe if you can talk to a little bit about the outlook for transaction volumes in Q4. It seems that the guidance that we raised doesn't really lift our back half organic numbers. So I was just wondering if you could talk about.

Well, George, we've had a strong first half. And you're correct, we haven't really adjusted our guidance for our base business other than to reflect acquisitions that are announced and being completed at various points in the back half of the year. We've had very strong organic growth year-to-date in the order of 20%. We expect that to -- the organic growth rate to slow in the back half as we have all year long. There are tough comps in Q3 and Q4. We do expect to have strong activity, but it won't be up 20% like it was in the first half of '22.

Obviously, there's interest rate changes and other things that when you compare that to last year, makes it a little harder for us. But we're still confident we'll deliver our expectations for the year.

Okay. And moving over to the Investment Management business. Jay, you said that 70% of AUM is in the rapidly growing sectors like alternatives and infrastructure. Just wondering is the aim to keep the mix the same? Or can we maybe see more traditional assets in there that lend themselves to maybe more immediate synergies.

Well, it's interesting. We're finding immediate synergies in several of the infrastructure-type opportunities. So for example, our engineering business is doing a lot of business with our infrastructure operations, traditional assets, which is Colliers Global Investors and now and of course, Rockwood Capital, which is an absolute superstar in its space, creates additional synergies on our base business.

So those are just starting. In Europe, it's been -- we've leveraged that for a while now. But we're very comfortable with the activity that we're getting in both traditional and with infrastructure in particular. We're seeing lots of joint opportunities between our core business, which has now expanded to engineering as well.

Okay. That's helpful. And maybe one last one for me for Christian. Can you maybe talk a little bit, maybe share what your fundraising objectives are for the year? Maybe like just give us a ballpark number?

Yes. No, that's a number that will keep internal, not totally disclosed. But certainly, we have a number of engines now for fundraising with the various platforms and infrastructure with Basalt, Rockwood and traditional assets. So as well as Harrison Street, which continues to be very strong and alternatives and also in infrastructure. So we're looking across the board and hoping to generate significant capital inflows in the back half of the year.

Our next question comes from Scott Fromson with CIBC.

Just a quick question on the Q2 performance and the outlook for the nonrecurring revenue businesses, in particular, the transaction business. And maybe you can talk a little bit about it by asset class, please.

Yes. Scott. We had another strong quarter in Q2 with strong organic growth in capital markets as well as leasing. And it's been in a variety of asset classes, as I mentioned, industrial, land, multifamily, on the capital market side, and then office leasing and industrial on the leasing side. There continues to be good momentum in all those asset classes. But we're coming into some tougher comparatives in Q3 and Q4.

And as you can see in our full year outlook, I mean, our organic growth rate for the full year is in the high single digits, and we've been running, as I mentioned -- on the previous question, we've been running 20% organic growth here in the first half of the year. So certainly, it's going to be more difficult in the back half of the year and interest rates and market conditions will be part of that, but we feel pretty good about our prospects despite all that.

I might add something just some additional color. Both leasing and capital markets are up nicely 18%, 16% with lots of internal growth, say 15%, I think, across the board, internal growth. But in the leasing office, primarily CBD, those -- we're posting increases in leasing of 18% when office leasing, CBD is not yet totally clear. So if there becomes more clarity in what people do around office in the next couple of months, I think that, that number could really spike. But we are posting great numbers, notwithstanding the uncertainty in sort of traditional office leasing.

So we're watching it very carefully. It's happening in most markets around the world. And decisions are taking longer. People are rethinking the amount of space they need, work from home is something that is not consistent across companies, different companies operate differently. So their need for additional space is different. The only area that we're seeing, there's no clarity yet is leasing office, traditional office, CBD in particular.

And do you have a sense from talking with your client base, what they're thinking for the New Year? Or is that just too far out in the current environment?

Well, you're talking in terms of leasing for office?

Yes, leasing and capital markets, not just office but in general across asset classes.

Well, it can't really go general. So I would also say if you want to talk about capital markets, that capital markets for office product is not as clear also. So that's another segment of an asset class that has room to grow in the coming quarters. But I don't think underwriting is clear in buying office buildings today. And unless you can feel them whatever that means, and it's different in different markets or different quality of buildings and the same thing with leasing office.

Our next question comes from Stephen MacLeod with BMO Capital Markets.

I just had a couple of questions here regarding what you're seeing in the marketplace. Jay, you made an interesting comment in your prepared remarks around investors taking more time to make capital allocation decisions when it comes to investment management. And I'm just curious, is that something that you're seeing develop as well on the capital markets and leasing side of things?

Well, again, it's category. It's asset class based. Any multifamily, industrial, even retail is perking up now. Those assets, when they come to market, those assets are still actively pursued. It's not as active with office product and things like that. Any alternative assets like the types of assets that Harrison Street would buy, the types of assets that Basalt might look at, even Rockwood.

Rockwood has a very big multifamily business. Those are all highly sought after in many ways because they adjust themselves naturally each year when it comes to rent renewals and stuff like that. So they can adjust upwardly and downwardly based on economic factors. So it's really all over the map. And when we distill it back down to the actual results we've delivered and even going back to prepandemic and through the pandemic, being diversified and both globally and by service line and by asset class and provides so much diversification in this business model that we have. And frankly, we're not the only one. I would say that our largest peer, CBRE has many of the same qualities that we do as well.

And yet, I don't think the market really truly gives them the benefit of the doubt when it comes to valuation. So I think these diversified services companies, something that I know a little bit about over the last 27 years are phenomenal ways to create shareholder value. And surely, we've done it over so many years. And I would say that we're more excited today about what Colliers can do in the coming years than ever before. sorry to go on, but I can only lead horses to water, I can't make them drink.

Yes. No, that's great. You mentioned rates creating uncertainty out there as well. Have you seen any -- have you begun to see the prospect of rising rates or actual rising rates impacting velocity of transactions.

For sure. For sure. Previously, somebody could leverage an asset and generate still yield on the cash portion, we're seeing -- based on interest rates today, we're seeing that there's a lot more cash required to make a sale happen, which means that there's downward pressure on pricing. But that's the other beautiful thing about our business. We don't own real estate, our clients do in our investment management arm, but we're a transactor. So as long as there's transactions, Colliers does nicely. And there's been the velocity of transactions virtually across the board, as you can see with 15% internal growth, those are pretty impressive numbers, numbers I haven't seen in a lot of years.

Our next question comes from Chandni Luthra with Goldman Sachs.

In terms of the 60 to 100 bps margin expansion versus 40 to 80 bps prior, how much of that is attributed to acquisitions versus efficiency in the legacy business and operating leverage. Is there a way to parse that out?

Yes. Jenny, I think the majority of it will come from the acquisitions. And as you can see, the acquisitions are predominantly investment management businesses, which carry much higher margins than the services business.

Makes sense. And if I could just follow up with that, the recent acquisition, the Versus business, the alternatives, right? Obviously, the margin structure is very, very lucrative there versus even the legacy investment management business margin, which is closer to 40%. So is that something that you're actively considering? And do you plan to even within your sort of mandate to increase the Investment Management business, should we think about future acquisitions more on lines of alternatives or infrastructure versus traditional?

Well, Sandy, we're being very strategic and opportunistic and the types of acquisitions that we've completed over the past 6 years have all been hand selected and nuanced because the -- for us, the key thing is the leadership teams and their commitment to the business long term. And that's a real differentiator for Colliers. And it has been for Colliers for the past 28 years.

So we know how to select great leadership teams. We know how to partner with them to help them grow double, triple the size of their business over the course of time. And so we will continue to look for the right types of companies. Now infrastructure, renewables, even traditional asset classes like Rockwood. Rockwood has a lot of alternate assets. Debt -- as a very interesting debt platform has a rapidly growing multifamily platform. And so you'll get both traditional and some acquisitions like Rockwood, you'll have both traditional asset classes and you'll also have alternates.

And in the traditional asset classes in a case like Rockwood, they hold those assets for, in some cases, in perpetuity until they decide that, that asset does not make sense for them. But generally speaking, they tend to find the highest quality buildings and own them for the long term. And so that's -- those are the types of characteristics and quality we look for when we look for an acquisition. So it's not run-of-the-mill separate accounts business or fund-to-fund businesses, for example.

And Sandy, just to add to that, you started the question on the margin point. And certainly, we're looking for businesses that are generating high EBITDA margins with recurring long-term management fee revenue streams. So that's part of the math here and is included as part of the criteria that Jay outlined with the right management teams, the right types of assets, the right type of growth profile, the margin profile has to be there, too And obviously, these businesses are also very capital light, which we love generating a lot of free cash flow. So all this criteria have to be met

Congrats on a strong quarter.

Our next question comes from Stephen Sheldon with William Blair.

This is Patrick on for Stephen this morning. So now that you've roughly hit your goal of 30% of adjusted EBITDA from the IM business and given your commentary on the continued strength you're seeing in those businesses. I just wanted to ask if there's potential for that target to move higher. And in general, what your pipeline looks like there?

For sure, there's potential for us to have that grow higher. As I sort of alluded to in a couple of the earlier answers, we sort of see ourselves as a highly diversified services business. We have growth engines in our core business. In Outsourcing & Advisory, you're seeing lots of growth there. But we continue to see growth in our investment management arm.

We have some interesting opportunities. We continue to look at. These are generally long duration. So I would say ongoing conversations with targets, particularly because we like to meet the targets well in advance of the transaction, get to know them, understand what their motivation is. And so we have a lot of active conversations.

Our model is very attractive to many who believe they need a strong equity, permanent equity partner to help build their business long term and potentially to allocate shares to some of their up-and-coming professionals. So we are a perfect option for them. And so we've got lots of interesting irons in the fire, but they'll only come when they're ready. But we're setting ourselves up for continued growth for sure.

Great. Thanks for the additional detail there, Jay. And then I wanted to ask, I'm not sure if you guys have discussed this publicly, but if you can provide any color on your overall exposure to office space and then possible what your mix or weighting looks like in Class A versus Class B and C office space and just the trends you're seeing across those asset types.

Well, I mean, I'll answer that. We're a global business, highly diversified. We have asset classes everywhere. The answer is different in Los Angeles and in Chengdu, China. So I'll answer that. We're a global business, highly diversified. We have asset classes everywhere. The answer is different in Los Angeles and in Chengdu, China. So I can't give you general numbers, other than what we disclosed.

And the color that I gave earlier, I would just repeat which is we're seeing strong internal growth across most asset classes. Office is challenged and some other assets, some retail, mostly shopping malls continue to be challenged. But generally speaking, we continue to see great velocity across all of the asset classes with those exceptions.

Our next question comes from the line of Daryl Young with TD Securities.

First question is around the O&A business. I mean, exceptionally strong growth rates, and you alluded to a few things already. But in engineering, I think, really bolstering the results in there. But is there anything in terms of cross-sell or just anything in particular you can point to that's really caused this acceleration? Does it seem like some of the strongest rates we've seen out of O&A.

Yes. We are continuously focusing on cross-sell in the O&A business. Project management and engineering is a new business for us, 2 years old, [cross-sell] with our project management business, which we've been in for many years. Getting inroads into our Harrison Street platform has been very fruitful for us with the engineering and project management services.

We had MSAs with a number of the Harrison Street funds. And we are, as we speak, providing services at the asset level to those Harrison Street funds. We also provide debt services, debt placement and loan placement services for Harrison Street funds, and we hope that will expand to other parts of the Investment Management business.

Rockwood. For sure, with the U.S. presence that it has can benefit from that. So we're looking always ways to cross-sell and enhance the revenues across our platform and across our service lines.

Another great example just to add to Christian's -- another great example is PEAKURBAN and each of our engineering firms have a significant business in preparing land for development. So a municipality, county might hire an engineering firm to help prepare a release of land, developer might hire an engineering firm to help design and prepare land for development and it's the same types of clients that Colliers has.

So the same developer client would be using an engineering firm to help them set up the master planned community for subsequent development. And so engineering has allowed us to really expand. Christian already mentioned project management, which is becoming a very significant business for us. I think engineering project management together is probably approaching $900 million on an annualized basis.

And each one of these projects requires oversight and management and that creates a great cross-selling opportunity for developers for Harrison Street, as Christian already mentioned, and other of our investment management arms that are developing, expanding or doing additional work on existing properties. So it really is a natural addition to what we do, and we see huge potential in continuing to grow it globally, as you saw with PEAKURBAN.

You saw a nice project management addition in the U.K. this quarter. And those types of acquisitions will just continue. And as I've mentioned in past calls, the beauty of being one of the leading players in global real estate is that not only do you have a brand that's highly recognized as an institutional brand but you also have a great leadership team that's highly motivated around the world to help integrate those acquisitions, maximize them, including cross-selling of services.

Terrific. And then just one other question around the investment management platform. Are there milestones or objectives that we should be thinking about in terms of tying together all of these kind of, I'll call them, highly specialized segments that you've now acquired? Or would you see them as continuing to grow fairly decentralized and independently? And then getting a little long. But on the Versus side, just maybe a little more color on the retail angle of asset accumulation there.

Yes. So we have clear goals in investment management. The first was we wanted to be $100 billion in AUM within 5 years. That was 1.5 years ago. So we're getting pretty close to that goal. Our plan for Investment Management. And as Christian said, we will continue to outline more of this over the coming quarters is to leverage the Colliers' unique partnership philosophy and maintain autonomy and ownership minority ownership of each of the platforms, but have a hybrid approach. So fundraising, governance, capital allocation, certain things like that, where they can all benefit from sharing best ideas and practices.

And we're well down the road on this. We frankly started 2 or 3 years ago with Harrison Street and Colliers global investors. So this is not new to us. But with this new group of additions, we will be accelerating that and hopefully provide a little bit of strategy around that in the coming quarters. And in terms of -- is that good enough for you on that one?

Yes. No, that's great color.

Okay. And in terms of Versus. Versus, again, an exceptional company run by an exceptional group of leaders. In addition to their base business, which has been very, very successful over many years, including great returns, they have, over many years, developed a distribution channel through the RIA, the registered investment adviser channel that is second to none.

And it has served them well, but we believe that given the strong leadership team in that segment of their business, we can expand that business to include originating capital for our other investment management arm. So all of our platforms are excited about that. Obviously, we haven't closed on Versus yet, it will probably be in the third or fourth quarter. I don't know the exact date. But we are hard at work trying to put the pieces in place to accelerate that aspect of our growth engine going forward.

So it really augments our distribution to the retail side of the world. Obviously, we've been very successful with the institutional side, LPs, sovereign wealth funds and the like but this gives us a whole new area of growth and one that we can leverage across many different platforms. So we're very excited about it.

Our next question comes from Frederic Bastien with Raymond James.

Jay, I know you've been attracted to Investment Management for some time now, and you noted earlier the many ongoing discussions you're having. But just wondering, what has triggered all this yield flow in the past 6 to 12 months? Have there been more owners looking to monetize? Are there valuation expectations more reasonable, the combination of both or something else?

It's a great question. We started this 6 years ago. We had countless meetings all around the world with the types of targets that we thought would make sense for us. We planted seeds, and you've seen us do this in other parts of our world too over the years, Fred.

And I think there has been a realization that -- 2 things, I think, a realization about 2 things. Number one, that firms need -- for the long term need to be owned by a wider group of shareholders, not just the original founders. So the original founders are looking for ways to reallocate equity in their business to a wider group of shareholders, which, as you know, is perfectly aligned with us in so many ways.

And I think the other thing that's happened is, over the past 3, 4 years, there has been other monetizing events at some of these firms that we've acquired, where they brought in a partner, minority partners or others that have just not worked out or the partner didn't add value as we can add value.

And there was -- there's just a natural opportunity to reallocate the share register to those people that are going to help pull the wagon day-to-day. So we're trying to capitalize on it. Thankfully, we have a strong balance sheet and the ability to continue to pursue these. But we're very careful about the types of people we want to partner with. And again, just to say the same thing again, we've done this for 28 years.

So in many ways, it's something that we're very comfortable with. And we believe we have a good sense for the type of partners that are our kind of people.

Great. I guess, switching to the Colliers E&D strategy. Can we expect you -- I mean you've been focusing predominantly in the U.S. Now we've seen you go into Australia now. There's obviously lots of areas where you can grow. But are you interested in maintaining your efforts on OECD countries? Or could we see you expand to other areas where Colliers has a presence, thinking maybe India or China? Or Would you focus on predominately the OECD countries?

Yes, it's an interesting question, Frederic. I mean, so far, we're in 2 countries, and there's so much more to do with the engineering and design business and the project management business. Look, like I think we're going to focus on some of the more mature markets first. But I never say never to an opportunity in India if that comes to fruition at some point in the future.

We have a significant project management business already in India. So it would be a very complementary move there if the right opportunity presented itself.

We do have a question from the line of Scott Fromson with CIBC.

(inaudible) buyback.

Can't hear you, Scott. Try it.

Okay. Just a question on the NCIB program, the (inaudible). Based on the current valuation, do you expect to be active in the remainder of 2022?

Scott, you're asking about the issuer bid? Yes. So I think we -- we have been active this year on the issuer bid. We did recently renew our issuer bid for the next 12 months, and you saw the press release on that. We are allocating capital, first and foremost, to acquisitions this year with over $1 billion of investment there. We may return to the issuer bid at some point later this year. We'll consider that at the time based on our acquisition pipeline based on our trading price at the time and our leverage. So we're keeping that option open.

I'm showing no further questions in queue at this time. I'd like to turn the call back to Mr. Hennick for closing remarks.

Thank you, operator, and thanks, everyone, for participating, and we look forward to meeting again at our next quarterly conference call. Thank you.

This concludes the conference call. Thank you for your participation, and have a nice day.