CI Financial Corp (CIXX) 2011 Q2 法說會逐字稿

Welcome to the CI Financial fiscal 2011 Q2 webcast. My name is Monica, and I'll be your operator for today's call. At this time, all participants are in a listen-only mode. Later, we will conduct a question and answer session.

This presentation contains forward-looking statements, concerning anticipated future events, results, circumstances, performance, or expectations with respect to CI and its products and services, including its business operations, strategy, and financial performance and condition. Although Management believes that the expectations reflected in such forward-looking statements are based on reasonable assumptions, such statements involve risks and uncertainties.

For further information regarding factors that could cause actual results to differ from expectations, please refer to the Management's discussion and analysis available at www.ci.com/.cix. This presentation includes several non-IFRS financial measures that do not have any standardized meaning prescribed by IFRS and not comparable to similar measures presented by other companies. However, Management believes that most shareholders, creditors, other stakeholders, and investment analysts prefer to include the use of these financial measures in analyzing CI's results. These non-IFRS measures and reconciliations to IFRS where necessary are included in management's discussion and analysis available at www.ci.com/cix.

Please note that this conference is being recorded. I will now turn the call over to Stephen MacPhail, President and CEO of CI Financial. You may begin.

Thank you. Good afternoon.

Thank you for listening in on CI's earnings conference call for our second-quarter results. I only wish the market conditions were considerably better to be reporting on. Joining me today is Derek Green, President of CI Investments, and Doug Jamieson, Chief Financial Officer of CI Financial, both of whom you're familiar with.

I thought I would start with the performance of CI shares. For whatever period is shown, CI continues to outperform the TSX. Even going back to 1994, you can see CI continues its outperformance of the TSX and financial services index.

Moving to quarterly highlights, CI's average AUM was up 15% on a year-over-year basis as a result of positive net sales and fund performance. Consistent with asset growth is 15% earnings growth. We posted positive net sales in every month of the quarter and this continued in July.

Castle Rock, formerly known as Hartford, is exceeding expectations. Our institutional business has won 10 mandates year-to-date. And finally, we made strategic investments in expanding our Signature and Cambridge Money Management businesses and similarly, invested in expanding sales and marketing.

Turning to financial highlights -- as mentioned, average AUM for period was CAD74.5 billion, up 15% from the prior year. Earnings per share of CAD0.34 are up 17% from the prior year. Pretax operating earnings per share were CAD0.60, up 15% from the CAD0.52 per share in the prior year. Similarly, we earned CAD0.65 per share in EBITDA for the quarter, up 14% year-over-year.

SG&A, as a percentage of assets, was flat at 40 basis points. I want to point out that this 40 basis points includes all corporate expenses, all sales and marketing costs, the cost of all money management, both internal and external, the cost of administering Assante, and the cost of administering our mutual funds. We did this all for 40 basis points. Lastly, we paid dividends of CAD0.225 per share in the quarter, up 22% from the prior year.

I'll now pass it over to Derek Green, President of CI Investments, to talk about our sales and marketing activities. Derek.

Thanks, Steve. As Steve said, markets have been very challenging for the 2 months. Gross sales came in at CAD2.5 billion. We had net sales of CAD300 million -- which is -- we continue to have positive momentum. Our sales support has been strong across almost all channels, Sun Life and Assante at 17% and 13% and Edward Jones up almost 150%. IROC at positive 28% rounds out that group, and just BMFA slightly down at minus 6%.

The next slide is an update on our Castlerock business. As Steve said, this has turned out to really be a terrific acquisition. As of June 30, the assets were just shy of CAD2 billion. We had net sales of CAD100 million. Today we have a current run rate of CAD23 million annually. This is really an excellent achievement, given the effective purchase price of CAD95 million.

Our institutional business continues to do extremely well, In fact, would say that sales momentum is building. We're in line to exceed our forecast of CAD600 million in sales this year. And of the 14 short lists that we've been in, we've won 10 of them. So currently, we've funded just over CAD300 million and we have a little more money in the pipeline that will be going into the funds in the next month or so.

We'll be expanding our product offering in 2012 to include a Cambridge mandate. I think many of you are aware that we've built out the Cambridge team. 3 new people -- 4 new people, actually, have joined Cambridge and we're very excited about having that product in 2012.

As I mentioned earlier, clearly the markets have been very challenging for the last couple of months. In our business, there's nothing more important than performance. I know this chart is a little out of date. The numbers are as of June 30, but as you can see, the numbers are very strong across all of our mandates, different managers, and we've covered it in the balance product, the income product, equity product, but also in our global equity space as well.

The next page really just shows the strength and the longevity of our sales success since going public. This is one of our proudest achievements. And if you look that number, we have a stunning 91% positive sales over the quarter since going public in 1994.

The next slide just talks about some of the current initiatives that we're working on. As you recall, the last time we spoke we were just in the process of getting ready to host a leadership forum in Las Vegas. It was a huge, huge success. We had close to 600 advisers in Las Vegas where we were able to showcase our products and portfolio managers. And we've made a commitment to the advisors that we'll be doing another conference next May in Las Vegas again.

As Steve touched on earlier, we've made significant reinvestments into our sales and marketing group. We'll be implementing a new contact management system this Fall. We've add 20 new marketing people. I think we have a great story to tell. I'd just like the markets to perform a little bit better so we can tell that story more effectively.

The second quarter, we ended two relationships with sub advisers, and we moved approximately CAD3 billion in assets to the Signature Global Advisers Group and Cambridge. And our expectation is we'll have better performance at a lower cost as well.

So at this time, I'd like to hand the presentation over to Doug. Doug, go ahead.

Thank you, Derek.

I'll start by taking a look at how CI performed on a quarter-over-quarter basis. And we show that average AUM grew by 1% from last quarter. CI's earnings per share were flat when we adjust for the CAD3.5 million after-tax insurance settlement recorded last quarter.

Pretax operating earnings per share were up CAD0.01 from CAD0.59 to CAD0.60 this quarter. And here we take out nonrecurring items as well as the effects of deferred sales commission financing and redemption fee revenue. Similarly, EBITDA was up from CAD0.64 last quarter to CAD0.65 this quarter, an increase of 2%. SG&A spend was up slightly, but in line with the growth in CI's average AUM. So as a percentage of average assets, it stayed at 40 basis points. And CI paid out dividends of CAD0.225 per share for the quarter at a rate of CAD0.075 per month, up from CAD0.07 per month last quarter.

This next slight highlights CI's daily assets under management, which is the dark line, and the quarterly average is the shaded area. You can see the significant climb in CI's AUM from below CAD65 billion, in the middle of last year to over CAD75 billion, as recently as early July. And since then markets have tumbled and CI's assets under management are now below CAD70 billion, meaning that the average for Q3 will be below the average for Q2.

CI's EBITDA margin has expanded over the past couple of quarters. This quarter, EBITDA was at CAD187 million over revenue of CAD385.5 million, giving a margin of 48.5%, up 1% from last quarter. Taking a look at the last 5 quarters of free cash flow, you can see the significant growth in this number over the past year as CI's AUM grew.

CI's free cash is it's operating cash flow less the amount spent on deferred sales commissions. And this quarter, CI was also able to utilize the tax losses acquired with the Hartford Investments purchase, and that resulted in a CAD20 million cash flow item. Free cash flow was CAD127 million this quarter, and even after adjusting for the CAD20 million, was up from CAD98 million last quarter and CAD85 million last year.

On the next slide, we look at the uses of cash on a year-over-year basis. And CI generated operating cash flow of CAD162 million this quarter, compared to CAD122 million in the same quarter last year. From that, CI paid sales commissions of CAD35 million and CAD37 million, leaving free cash flow of CAD127 million and CAD85 million, respectively.

Last year, CI returned more than its reported free cash to shareholders with CAD63 million in share buybacks and CAD54 million in dividends. This year, CI paid out CAD65 million in dividends, but did not buy back any stock. This leaves a surplus of CAD62 million available to buy back stock in the future as CI's long term goal is to return its cash flow to its shareholders.

CI's ratio of net debt to EBITDA is currently just below 1.1. And we have over CAD100 million in excess cash, so we have significant flexibility, here. Over the last 2 years, the monthly dividend has increased from CAD0.04 per share to CAD0.075 per share. And annualized -- that's CAD0.90 per share for about a 4.5% yield, based on where CI stock is today.

And I'll now turn it back to Steve.

Thank you, Doug.

I'll summarize by reiterating that CI currently has an exceptional lineup of investment managers, excellent performance, as Derek pointed out. Arguably, probably the best in the history of CI. Our relative performance has been very good during the recent downturn, as a result of conservative positioning by large fund managers.

Our institutional business is poised for growth and expected to increasingly contribute to our bottom line. All our financial metrics are best in class. As a result of that, CI's well positioned to handle the current market challenges, but equally important, take advantage of opportunities the current market downturn might make available for us.

That concludes our formal remarks, and I'd now like to open it up for questions.

Thank you. We will now begin the question-and-answer session. (Operator Instructions) Scott Chan, Canaccord Genuity.

All right, guys. First question is for Derek. Just trying to trying to sort out the institutional numbers -- I guess you'd said that you had won 10 of 14 mandates year-to-date. As of Q2, what was the total amount of net sales for those 10 mandates? I'm just trying to get a sense of the expectation of a target exceeding CAD600 million for the year?

We probably have another CAD100 million to fund -- so around CAD300 million, a little better than CAD300 million. We've got approximately CAD100 million left to fund in the pipeline. The actual sales were fairly -- they were very similar first quarter to second quarter.

Okay. Perfect. Derek, and just from the SEG fund front, any update there? I guess on a quarter-over-quarter basis, we're still going through on a total basis of net redemptions, based on the Transamerica gift stuff maturing?

It would also be anything that's 10 years old that had a 10-year cap guarantee is maturing. The redemptions on our product have actually slowed. I mentioned that in -- I think -- the fourth quarter of last year. We anticipated the redemptions on our product. Our sales and our redemptions were, basically, dead even. For our own product, we were even, sales and redemptions. Other SEG products that we're involved with where we're a partner, we were in net redemptions.

Okay. My last question is just for Steve. Steve, I was just wondering if you could provide us an update regarding your BNS relationship post vote. Are you guys still in contact with them or how is that playing out, right now, in the summer?

Scott, first, I would just say that the challenges we encountered this spring were business issues only. And I feel reasonably confident saying that both parties have put this issue behind themselves. I'd also say that I'm cautiously optimistic that we can move forward in the relationship with the Bank of Nova Scotia. In the past month, Bill Holland, Peter Anderson, and most recently, myself, have met with Chris Hodgson, who you know heads up all the wealth management at the Bank of Nova Scotia. And without going into details, I can just say the conversation was, primarily, about building the relationship going forward. I don't think Chris would have a problem with me saying that he was supportive of Tom Muir joining our Board and was pleased with the financial performance of CI. And lastly, we agreed to meet regularly over the foreseeable future, and I would think everyone would agree this was a positive step forward in the relationship between the two Firms.

Okay. Perfect. Thanks for the update, Steve.

You're welcome.

Stephen Boland, GMP Security Group.

Thanks very much. Sorry, Steve. That statement you mentioned about who joining the board?

Tom Muir.

All right. Okay.

It's in our press release.

Okay. I thought it was in reference to Scotia appointing someone to your Board?

No, it wasn't Scotia appointed. (laughter) He was a candidate that we'd identified before. He's on both the Board and the Audit Committee of CI. It's very well qualified in that regard.

Perhaps -- just on the bringing the AUM in house, that number was CAD3 billion. Do you want to provide a cost saving -- quantify that at all?

No, I don't think so. One of the things I would like to add, though, is -- Steve touched on it -- we've had a pretty significant buildout of both Signature Group and the Cambridge Group this year. We believe that we'll be able to get better risk-adjusted returns for the clients, and we think there'll be some cost savings as well.

Steve. It's Steve MacPhail -- it's never an immediate thing because in order to put the type of team we put together -- took significant investment in our part, and you start paying for that on day one. The strategic view here is that we can grow those assets much more than they would have been with the old managers. And that's where we get the economies to scale. As those assets grow, then when we look forward, that's how we're going to make this more profitable for us by growing the assets with that team that we have. And the view is, for the most part, that team could manage CAD10 billion to CAD15 billion in assets, and now we're sitting at not particularly high numbers with them.

Yes. That's great. And just last -- can you put context around your gross sales number, your management fee to AUM has remained pretty steady now for a couple of quarters. Is it same type of products balanced? More safe-type investments? Is that a fair statement?

Most of the money we're seeing, it's been pretty consistent where we're seeing big sales is into balanced and balanced income. So the mix hasn't really changed. I would say in the last two months, we actually started to see some people start moving into some of our global product. But I think people are a little nervous right now. So they're -- I think they'll be sticking around the balanced income for a while longer.

Okay.

Steve. It's Steve MacPhail. So when you looked at the July 30 AUM numbers for CI -- because we've seen a lot of concentration in the more conservative products -- that was a big contributor to our assets dropping significantly less than what the indexes were dropping over the period and that has continued for us. I think it's a pretty good indicator to you where a lot of these sales are going for CI -- really, not into any of the high test products.

Sorry. Last question on the tax loss -- is that going to be an ongoing quarterly cash item?

No, no. This is a one time --

One time.

Yes.

Okay. Thanks very much, guys.

Doug Young, TD Newcrest

Hi. Maybe to follow up quickly, Doug -- that tax loss -- is there more to come in the next two quarters? Or are we done with it?

No. That's it -- one time -- CAD20 million using the losses.

Okay. Fair enough. Then maybe Steve or Derek, the asset management expenses were up a little bit -- ticked up a little bit -- I know it's 40 basis points overall. Just wondering, given the market -- first of all, obviously, you had a big conference -- wondering if you can quantify what the expense was there, and then obviously, with the markets coming down, do you foresee yourself pulling back a little bit on expenses to manage the expenses here?

I guess I can answer that question for you. We're not going to tell you what we spent on our Vegas conference. That's part of our secret sauce, how we do all this for so cheap. Just to remind you, that 40 basis points, that includes the Assante costs. Our asset management costs are only 32 basis points. Remember, that includes the operations, the funds, money management, the whole thing. I just want to clarify that's 32 basis points for that part because the Assante admin business cost us about 8 bips. With respect to pulling back on costs, it probably would be a little shortsighted right now. We just made a significant investment in certain areas to turn around, and all of a sudden try to wind that down because within a two-week period of time markets went down. It would be hurtful to our business. I would say that what we will do over the next three to four weeks is look at all areas of the business, and there are things that we can just slow expenditures in that we don't feel are as critical to some of the growth expenditures that we're making today. That's the way we've always operated our business. It would be wrong to say that we're going to try to wind down some of these strategic investments that we just made.

Fair enough. So this quarter is probably indicative of what we should be looking for, give or take, going forward with the addition of all the individuals with Hartford and so forth.

Well, I think, in absolute dollar terms, but when the market drops 10% to 12% almost overnight, there's not a chance that we can reduce absolute cost that fast. A number of these are variable expenses in there, but not 100%. We don't see absolute costs going up on a quarter-over-quarter basis. They might be down a little bit. So that would result in, on a short term basis, the basis point cost having to go up.

Okay. And then just obviously, we're getting a lot of questions of taking a look at July, and I know it's early days in August, but can your just talk about -- you're not going to quantify it -- what net flows have been? Have they been positive over the last month and a half?

It's Derek. In July, I would say it was consistent with the previous few months. We were in net sales and in August, when you get that type of downdraft, people have moved to the sidelines. So August -- it's hard to say -- we're the early part of the month, but I think there's a lot of people that are sitting on the sidelines, just waiting to see what's going to develop here.

Okay. And then on the free cash flow side -- Steve, you've given targets before. Sorry if I didn't see it, but I don't recall you saying it in the presentation. It think it used to be around CAD400 million. Is that still, roughly, what your hoping to generate? Am I remembering that correctly?

That's right. Actually, our target number was probably north of CAD400 million. And our forecasts are changing by the day now, as you can appreciate. But we certainly would expect, today, free cash flow in the vicinity, slightly, somewhere above CAD400 million.

And your priority -- I would imagine dividend increase first, then stock buyback. Is that correct? And then obviously, if strategically, if there's opportunities out there?

It's interesting. We had, actually, contemplated a dividend increase up to about two weeks ago. And then we sat down and had a bit of a change of heart the last five or six days on it, based on the strength of our free cash flow. But I would say, just looking at what's happened today that there may be some buying opportunities on buying back stock. So we'll be taking a pretty close look at that every day, especially -- we're in blackout right now, of course, we can't buy anything. Once the Company is out of blackout, we'll take a pretty hard look to see if there's an opportunity to build value for CI by buying back stock. I'm not going to say that, right now, our priority is to increase the dividend over buying stock.

How do you think about that considering buying back stock pushes up the ownership of Bank of Nova Scotia? Does that factor into your thought process?

On a very marginal basis, I don't think it particularly matters at all with us, right now. If you're talking about pushing it up materially, I guess we would have to think about that, and a lot of that will depend on where things go between CI and the Bank of Nova Scotia going forward. But I don't think, today, we're going to sit down and say we're not going to miss on an opportunity buy back stock, strategically, just to freeze Bank of Nova Scotia at their current level. That seems a little shortsighted.

Last, on the M&A side, you mentioned domestic and some in the US. I just wanted to confirm domestically M&A-wise -- you're looking, I think, institutional and distribution, and I just want to confirm the US when you're talking it. You are talking more smaller in size. Can you talk about the pipeline and opportunity up there over the last few months.

Yes. I'll just start with Canada. Whenever there's a correction like we're facing today, it definitely creates opportunities. CI is very well positioned to weather these types of things because as you asked on the free cash flow, we've got a lot of free cash flow still going here. I think it's a lot tougher on some of the smaller firms. I think we'll see more coming available to us. There's been a lot of things bandied about over the last two months. I think over the next two months, I'll just see a lot more presented to CI. On the US side, the pipeline is very good. We're seeing a lot of things being presented to us, but we're cautious there as to what we may or may not want to do for CI. I don't think we'd ever take the position that we're experts in running US businesses. So in many cases, we're looking for businesses that have decent US management where we can work together with them. There's a lot of metrics that go into play on it.

How big would you be willing to go in the US?

That's a tough question. I couldn't answer that. I think it, really, would depend on the opportunity. If it was a brilliant opportunity, a north of CAD1 billion, we wouldn't say no to something like that.

Okay. Thank you.

(Operator Instructions) Geoff Kwan, RBC Capital Markets.

Hi. Just wanted to follow up on Doug's question for Derek. The sales activity over, call it the past couple of weeks, has it been more of a gross sales issue or has it been a redemption issue or both?

I would say it's a combination of both. The redemptions are fairly constant. After we had a couple of big down days, that's when people are sitting on -- if there's a purchase that they're thinking of making, they may not agree with market timing. But when you see a 3% or 4% down day, people move to the side and say hey, maybe, I can get this a little cheaper. Why don't I just wait and see what's going to happen here. I would say it's more that people are just sitting, waiting to see what's going to happen.

Okay. And then on the institutional business -- if I understood that right -- you had CAD300 million that funded so far this year -- have another CAD100 million in the pipeline.

Approximately.

Sorry, approximately. I guess for the first half year-to-date you were saying roughly even. So the flows would have been roughly called CAD150 million in each of the first two quarters. Is that the right way to be thinking about it?

Yes. And the business is the fairly seasonal. The January, February, March, the beginning of the year -- they tend to get together their committees, and in the summer -- it's not too dissimilar from the retail business where, again, when people come back after Labor day and people get to work. We try to maintain very good activity throughout the year. But there is some seasonality. I would expect to see a decent finish to the year.

Okay. And the last question I had was on the M&A front -- with, potentially, some more volatility in the markets, how is that impacting its ability to come to a bid ask spread that would narrow to something you might be okay with? Is that an issue that might arise again as we would have seen a few years ago?

I think I know what you just asked me. I'm a lot happier looking at things today, when prices have adjusted downwards than I might have been that had I bought a month and a half ago. So just start with that. But I, certainly, would say that like anything, when markets move down, the seller's expectations, clearly, have to reflect the market. And that's why I think we're in a better position to do something, a more relatively attractive price.

And so far from what you've seen -- oh, I don't know if it's a little bit premature, but people's asking prices -- it's not as much an issue today as it might have been a few years ago?

Well, I would say it's premature. The market changed so dramatically in the last week and a half. What I'm really reflecting on is my expectations -- now over the next two months. And especially, once we get into September. People really start to focus on what their strategic options are.

Okay. Thank you.

John Reucassel, BMO Capital Markets.

Thank you. A couple of questions of clarification to start. Doug, on slide 12 -- the last date on that slide, is that as of yesterday's close?

That is as of Friday's close.

Friday's close. Okay. Thank you. And Derek, on slide five, the IIROC sales up 28%. I'm sorry if you mentioned it, but is this mainly related to the Edward Jones Group? Or what's going on there? Is there a particular product?

That doesn't include Edward Jones. That would be the traditional Edward Jones we broke out on its own. It's gross sales?

Yes.

The gross sales are up that amount, but the redemptions are also up too.

Got you.

There's been a tremendous amount of interest in the Cambridge Group with Alan Radlo and the new colleagues that he's joined. That have joined him. There's been a tremendous amount of interest.

Okay. And Edward Jones' sales. Is that because you're selling more -- it's not the traditional Hartford or Castlerock product? It's more a CI product?

It's a combination of the two. They were significant supporters of Hartford. And the sales remain strong. They've improved pretty dramatically.

Steve. Just a question on the cost -- the 32 basis points. I understand the markets go up and down. That's going to drive the 32 basis points. But you've also talked about significant investments and what not. Is the 32 basis points too tight a number? Or how should we -- it seems like it's a pretty low number, and you mentioned significant investments. Are you signaling that's going higher? Or how should we think about that?

I guess what I'm saying, John, is in the second quarter, if we had wanted to earn CAD0.35, we could have earned CAD0.35 or CAD0.36. We could have met all the analysts' targets or exceeded them. But we, strategically, chose to spend more money in that quarter is what we did. We felt that we're more than happy to give up CAD0.01 of earnings per share in order to get long-term growth, that's what we did. I'm not suggesting it's building from there. I'm saying that we've made that investment. And the level that you saw us spending in the most recent quarter is the level that we see going forward. But we anticipate it generating more assets that we, otherwise, would have got, had we not made that investment. And when we get the more assets, then because we've taken variable costs on a number of those assets, which we had, which were at Trilogy, et cetera and created a more fixed cost environment with Cambridge. That's how we get the costs down over time. We get more assets and our money management expense doesn't go up with every asset. That's the bet you make when you're running a business. I just want to position it that way. We're not saying that we're going to keep spending more money.

What we're saying is we already did spend a lot of the money at a time when, typically in the second quarter, you would anticipate us spending less money -- would historically be the way it is. And when Derek pointed out, we're going to do the conference again next year. We're going to do it again next year because it was so successful. But the reality is when I look at what we spent in that conference and we went all out to create a great experience for the adviser by having so many people there, our effective cost per adviser was very, very cost efficient for that type of venue. Remember they pay their way to get there. And they pay their own hotel rooms because of the economies of scale. We can just create very cheap hotel rooms for them and get a lot of other costs way down.

Okay. That helps.

One thing I would add to that is we are tracking the sales support we're getting. And there were lots of new people or old friends that haven't been supporters. This is retail business, and they were retail advisers that went to Las Vegas. So the sales support was, for the people that have attended, is up 25% year-over-year. And if you look at our overall business in retail, it's up about 13%. As Steve said, that's pretty cost effective.

That's very helpful. The next question is on the US expansion. You guys have US -- historically in the past you've done -- you sometimes backed different portfolio managers that you like down there -- and support them as they grow their business. Is that what we're talking here, US expansion? Or is this like you're looking for existing companies to buy?

I think it's both, John. We don't rule out any opportunity in it. Is our number one mandate to go in and buy 100% of a company? Not necessarily. We could end up being a 20% owner of another company just like we had with Altrinsic and then over time build up our ownership as we develop a better relationship with that organization. I think the best way to describe it -- for us it's all about generating management fees cost effectively. And if there are cost effective ways of generating management fees for CI, that doesn't involve buying 100% of the company, maybe, we should look at that. Think outside the box a little bit.

Okay. And last question for either of you. Vanguard, had you guys anticipate any impact from Vanguard up here or are you guys -- you've both been around a long time?

I think we both can weigh into this. They've been around for a very long time. And I don't necessarily think they're going to price their product in Canada the way they've priced their product in the US. As you know, It's a Mutual Company that is owned by the unit holders. When you get markets that have misbehaved the way they have in the last, say, five weeks, that's when you want active management. And I'm not nearly as concerned today about indexers or passively managed strategies as you are when the markets are rocking and rolling. I just feel a little better today than I might have.

Okay. Thank you.

Thanks, John.

Paul Holden, CIBC.

Just one question for you. If I look at net sales and take off CAD300 million for the institutional to do a year-over-year comparison, is it fair to say that retail net sales are about half of what they were last year through the first six months of 2011?

I'm not sure I can answer that accurately. I don't have that number right in front of me.

Okay. But if I take the simple year-to-date net sales and exclude institutional to get a comparable figure of retail year-over-year, that's what I'm coming up with. With would that be a correct approach?

Yes. I think it's roughly there. Paul, we haven't disclosed the details, even last year of where we did all the business. It's fairly close. The institutional business, certainly, is up in the mix of business that we have, and the net retail business is slightly lower than where we would have had it before.

Okay. Thanks.

We have no further questions in queue. I will now turn the call back over to Stephen MacPhail for any closing remarks.

I'll just conclude by saying thank you very much for joining in on our second quarter conference call. And I look forward to speaking to you again in three months. Thank you.

Thank you, ladies and gentlemen. This concludes today's conference. Thank you for participating. You may now disconnect.