Evercore Inc (EVR) 2010 Q3 法說會逐字稿

Good morning, ladies and gentlemen, thank you for standing by. Welcome to the Evercore Partners Third Quarter 2010 Financial Results Conference Call. During today's presentation, all parties will be in a listen only mode. Following the presentation, the conference call will be opened up for questions.

(Operator Instructions)

This conference call is being recorded today, Thursday October 28, 2010.

I would now like to turn the conference over to your host, Evercore Partner's Chief Financial Officer, Robert Walsh. Please go ahead.

Good morning, and thank you for joining us today for Evercore's Third Quarter 2010 financial results conference call. I'm Bob Walsh, Evercore's Chief Financial Officer, and joining me on the call today are Ralph Schlosstein, President and Chief Executive Officer and Roger Altman, our Chairman. After our prepared remarks we will open the call for questions.

Earlier this morning we issued a press release announcing Evercore's third quarter 2010 financial results. The Company's presentation today is complementary to that press release which is availed on our website at www.evercore.com. This conference call is being webcast live on the investor relations section of the website and an archive of it will be available approximately one hour after the conclusion of this call for 30 days.

I want to point out that during the course of this conference call, we may make a number of forward looking statements. These forward looking statements are subject to various risks and uncertainties, and there are important factors that could cause actual outcomes to differ materially from those indicated in these statements.

These factors include but are not limited to those discussed in Evercore's filings with the Securities and Exchange Commission, including our annual report on Form 10-K, quarterly reports on Form 10-Q and current reports on Form 8-K. I want to remind you that the Company assumes no duty to update any forward looking statements.

In our presentation today, unless otherwise indicated, we will be discussing adjusted pro forma for non GAAP financial measures which we believe are meaningful when evaluating the Company's performance. For detailed disclosures on these measures and their GAAP reconciliations, you should refer to the financial data contained within our press release, which as previously mentioned is on our website.

We will refrain from repeating the information included in the press release and then focus instead on the key opportunities challenge -- challenges and changes in our business. We continue to believe that it is important to evaluate Evercore's performance on an annual basis. As we've noted previously, our results for any particular quarter are influenced by the timing of transaction closings, both on the advisory and investment management sides of our business.

I'll now turn the call over to Ralph.

Thanks very much, Bob, and good morning, everyone. Notwithstanding the comments that Bob made about looking at our results over longer periods of time. I do believe that this quarter begins to demonstrate the potential of the Evercore franchise.

The highlights are we had record revenues as a firm as a whole and both in investment banking and investment management and produced improved margins despite the important investments that we are making in the future value of our firm. Third quarter net revenues of $123 million were a record, as I mentioned, at 48% increase versus third quarter of last year and 91% increase versus the second quarter of this year. Our year-to-date revenues of $273 million increased 33% from 2009.

Investment banking revenues, which Roger will talk at length about, were $99.6 million, obviously impacted positively by the closings of a number of large M&A and restructuring transactions. Our Investment Management business with revenues of $23.4 million increased significantly for the quarter, reflecting the closing of our investment in Atalanta Sosnoff at the end of May and continued progress in our early stage businesses. I might point out that both on a third quarter basis and year-to-date basis this business now represents close to 20% of our revenues as compared to 7% or 8% last year.

Our third quarter compensation ratio 62%, largely consistent with prior quarters. On a trailing 12 month basis the comp ratio is now 60%, which is comparable to last quarter and down from 72% a year ago.

As discussed during last quarter's call, the compensation ratio in the third quarter reflects the ramp up of staff in our institutional equities and private funds group without a concomitant ramp up in revenues as these are both early stage businesses. And like all investments in our business, the revenues will lag. Together, these two businesses were dragged on earnings of about $0.07 to $0.08 for the quarter because of their very early stage activity.

Non-comp costs increased 8% from second quarter, driven primarily by amortization costs of acquisitions, which Bob will go into. Our third quarter net income is $14.6 million, up 33% from the same quarter last year and dramatically from the second quarter of this year.

Operating margins for the quarter were 20%, compared to 7% in the second quarter this year and 23% in the same period last year. And margins would have even probably seven points higher had we not made -- if we were not giving effect for the investments that we were making in the instructional equities and private funds business.

We've repurchased 1.3 million shares and LP units in the nine months ended September 30 at an average price of 27 21. That includes 446,000 shares in the third quarter at an average price of 24.58. These repurchases more than offset -- and in fact, more than twice offset the dilutive effect of equity bonus shares in 2010. And as you see in our press release, our board authorized a new buyback program of 2 million shares.

Our objective there for this program remains the same, first to offset the dilutive effect of equity bonus awards and also in addition to retain the flexibility to opportunistically purchase shares when the market gives us that opportunity, which we did in the third quarter.

We also increased our dividend in the quarter to $0.18, a 20% increase. As we said a year ago, we will reevaluate our dividend once a year in connection with the release of our third quarter earnings. And I think if you look at the combination of our dividend and share repurchase activities, we've stated that as a general matter we believe our business can operate in a manner where we return to share holders either in the form of dividends for share repurchases roughly the amount of earnings that we generate each year, and we have been doing that certainly over the last year or so.

In summary, the fundamentals of our business continue to improve as the markets gradually recover and as our strategic initiatives progress.

Let me now turn it over to Roger who will talk about both the performance of our Advisory business and an update on the M&A environment.

Good morning, everybody. We did slightly exceed our all time quarterly record in investment banking revenue. The quarter, on investment banking, was up 37% from the third quarter a year ago. It was up 120 -- 112% from last quarter and just a touch higher than the fourth quarter of '09.

We were fortunate enough to see 15 transactions which closed during the quarter and each of which encompassed revenue greater than $1 million. So, very broad based transaction activity. Two of those transactions involved revenue greater than $10 million, and two of those also took place in the UK.

Our fee paying clients increased to 85 during the quarter, materially up from 72 last quarter. Our headcount in all of investment banking increased by 43 during the quarter. Most of that took place in Evercore equities, our equities business and our private funds group, which as Ralph said are quite new initiatives which are just ramping up.

The number of senior managing directors or partners was flat as one new partner joined the firm during the quarter, [Phil Capin] who has an energy and chemicals background and one of our partners, Robert Gillespie, credit to him, was selected to head the FSA in London and we will be announcing over the next very short term an additional -- a further addition to the partnership.

The compensation ration for all of investment banking was 60.8% for the quarter, up from 56.8% in third quarter a year ago, down from 62.4% last quarter. Advisory only comp ratio, meaning excluding the equities business and excluding private funds group was 51.4%, that's generally where we want it to be.

And so you can see that in a very natural and logical way, it's the brand new initiatives which are, just like any initiative, driving up the comp ratio during their ramp up period for all of investment banking and that's the natural process involving new initiatives. But the advisory comp ratio itself has improved because, of course, revenue are up and we're using a bit more stock in overall compensation.

Our average revenue per partner on a rolling 12 month basis through third quarter was up just under 8 million globally up from 7.3 last quarter and 6.9 at the end of the third quarter of '09. Those are all rolling 12 month figures. For the nine month, investment banking revenue was $216.3 million, that's up 15% over the first nine months of 2009.

In terms of the league table, Evercore ranked second among boutiques for the first nine months of 2009 on announced transactions in the United States and first among them for the rolling 12 month period on that same metric. I might also point out that our special niche among large cap situations and large cap transactions continues because two of the five or six biggest transactions of the year are the Qwest CenturyLink transaction which was announced about three months ago and the Sanofi-Genzyme transaction which is in the market now trying to resolve itself.

Finally, the merger and acquisition market itself is steadily recovering. That's true globally and that's true intra U.S., but not -- it's not sky rocketing. Global announced volume last quarter was the highest since the third quarter of '08, so the highest in two years and that's also true, the highest quarter in two years for US volume. At the same time though, this cycle has quite a ways to go because the volumes recorded globally in the last quadrate and in the US last quarter are well below the peak volumes that we've seen earlier this decade.

So our view continues to be that the merger and acquisitions cycle is in the -- lets use a football metaphor, it's in the early part of the second quarter in terms of its classic five to seven year upcycle character. And the counter cyclicality of restructuring an M&A is asserting itself as it always seems to do, in the sense that this M&A recovery is offsetting the softening and restructuring activity.

So on that, I'm going to turn it back to Ralph.

Okay, thank you, Roger. Let me talk a little bit about the Institutional Equities business, which we report as part of investment banking, and then talk about investment management.

First of all, we are very pleased with the progress the institutional equities team is making. The team of professionals -- senior professionals in the business is now substantially complete. It's currently comprised of 41 people. We have launched research on 84 companies in TMT and FIG and plan to cover about 100 companies by the end of the year.

We are signing up clients at a rapid pace. As of the end of the quarter we had about 40 clients that had traded with us and another 20 that had opened accounts and as of today, those numbers are 49 and 29. And we have a goal of opening 100 accounts by the end of the year. And as you know, this is a business where differentiated high quality research and very strong senior sales and sales trading coverage is the key to our success. And with the growth of our research product and the unique client access and intellectual capital opportunities that we are offering to institutional investors, we are definitely seeing an increase in trading volume in this quarter relative to last.

This quarter our capital markets advisory team participated in one offering. As all of you know, the equity market underwriting activity was quite light in the third quarter. We continue to be involved and advise clients relating to offerings in Evercore's key sectors, financial institutions, energy, industrials, metals and mining, real estate and transporting. And as the equity underwriting market picks up and the IPO market picks up, we expect to have some participation in that.

As I said earlier, this business was about a $0.05 drain on earnings in the third quarter. We expect it to be no higher than that in the third quarter and as I've said before, we expect to make steady progress throughout next year to the point where the businesses breakeven on a run rate basis by the end of next year.

Our Investment Management business -- operating income for the business in the third quarter remained near breakeven, driven in large part by the addition of full quarter results from Atalanta Sosnoff, as well as continued progress in our early stage businesses. Investment performance was generally strong in those products -- and in those products where we were a little under the benchmark, we're actually seeing a good reversal this quarter.

Assets under management during the quarter are now at $16.6 billion, which includes 11.2 for Atalanta Sosnoff. The growth in assets under management was driven by $450 million of net inflows and $930 million of market appreciation.

Our early stage businesses continue to make progress towards our goal of run rate breakeven on an operating basis by the end of the fourth quarter and we expect to meet that goal. And we continue to see opportunities to invest in high quality investment managers, and are pursuing those opportunities when both the quality of the business and the price make sense.

I'll let Bob now review a couple financial matters, and then we'll open it up to questions.

Thanks, Ralph. Just a few points to wrap up. Our non-comp costs stood at $21.4 million for the quarter, which is an increase of $1.7 million. That's largely driven by amortization costs, amortization of intangibles associated with acquisitions. The increase in the quarter is $1.4 million, and that cost for the full quarter stood at 2.2.

The remainder of the increase in non-comp costs is fundamentally driven by the consolidation of a full quarter of results for Atalanta, which was then offset by some cost reductions across the other businesses. The balance sheet remains strong with $242 million of cash, cash equivalents and marketable securities. And as a final note, we did close on our investment in G5 advisors in Brazil on October 1, so the results from that investment will begin to be reflected in the fourth quarter, using the equity method of reporting, so we'll have one line for that.

So with that, we'd like to open the call for questions.

Thank you.

(Operator Instructions)

Your first question comes from the line of Eric Bertrand with Barclays Capital. Please proceed.

Hi, guys.

Hi, how are you?

On the Institutional Equities business -- firstly appreciate the disclosure around the size, coverage universe, revenues and expenses. But looking through the details it seems like the revenues declined by about half sequentially. Is that mostly from the lower underwriting revenue allocated to that business during the third quarter?

It's 100% from that, because we didn't even have a securities trading license in the second quarter, and we just really -- I think anything that we did on the trading side in the third quarter would -- you would have to refer to as episodic, given how long it takes to get the research out and to open accounts. So it's -- in the second and third quarter revenues in that segment or that sector are essentially underwritings.

Are you generating any trading revenue?

Now we are, yes.

Okay. Are there notable equity underwriting deals in the backlog that you'd expect over the next quarter or two do you think?

Yes, we don't like to talk about the backlog specifically, partly because you never know about timing.

Okay, fair enough. I guess my --

Obviously, over the medium and long term we're going to be participating in underwriting. But as you know, we don't just close our backlog and we don't talk about what's specifically in it, and as Ralph said.

Yes, as I said though in my comments, we have active engagements underway in FIG, energy, industrials, metals and mining, real estate and transportation. That should tell you something.

Yes, that was the direction I was going with it.

Okay.

Dovetailing over to the other kind of start us business -- your investment. The segment is very close to breakeven again. On the Atalanta management fee revenue, our understanding is that most of it's keyed off of quarter end NAB. So the third quarter was keyed off of the fairly low June 30 market values. Is it fair to assume that the rally in the third quarter will key off Atalanta revenues for the fourth quarter and be a meaningful contributor to maybe pull the segment up to a profit?

Yes. Well, I'm not going to predict that it makes a profit, but the mathematical analysis that you just did is absolutely correct. I mean if you look at the equity markets, the virtual absolute low was June 30, so -- at Atalanta, which is obviously a big part of our investment management business today is -- its revenues for the third quarter were geared off those June 30 numbers and revenues for the fourth quarter will be geared off the September 30.

Great, thanks. I'll hop back into the queue.

Your next question comes from the line of Daniel Harris with Goldman Sachs.

Hey, good morning, guys. How are you?

Hi, Dan.

Was wondering if you could help us think about the opportunities that you're seeing in asset management. Where do you think that you are looking most specifically in terms of the wealth management, investment management or other things like Trilantic that you had done. Where you've seen the most opportunities?

I'd say as a general matter, we're seeing the most opportunity in - and are most interested in institutional asset management businesses. I mean, Evercore is after all predominantly an organization that serves either the highest quality institutions or very high net worth individuals. So from a client based point of view, that's certainly where we're oriented.

And in terms of the types of businesses, we're looking for businesses that today are predominantly proprietor owned because our business model is to have very significant equity ownership going forward on the part of the principals in the firm because we believe that that alignment of interest is -- dramatically enhances the stability of these businesses. And as a general matter, we're interested in businesses that are in the higher value added, higher fee parts of the investment management business.

So equities, maybe we would have some interest in a high yield or emerging markets, the debt, but that's probably as uninteresting as we would be interested in. Because I think the strength of this firm is our intellectual capital and our relationships, so we want to be just as we are in our Advisory business in the high value added parts of the investment management business.

Okay, thanks a lot. You also noted during the prepared remarks that you had two deals close in the UK. I was wondering if you could give us some more color on how the progression of that business is doing. I know you guys have been focused on bringing the revenues and the activity rate up there as you think about going -- what some of our core strategies are going forward.

Well, we have been revamping our operations in the UK and both -- and maybe I should have used the word upgrading, but they have the same effect [to those] words. And are in the midst of a medium term effort to strength and expand our presence there, and for that matter towards all of Europe because Evercore ultimately will have a larger presence on the continent.

At the same time, the original team there has always been a great banking team and that's what happened this time. Bernard Taylor who form the outset has headed Evercore London oversaw these two -- or led the teams that did these two transactions, and once again demonstrated what a great banker he is and always has been.

So there's a couple of things going on, it's really good bankers doing what they do, and it's the process of upgrading and strengthening the office and the overall team that's going on there.

Okay, thank you.

Last year, as we discussed, our European operations were a drag on earnings. This year we don't expect that to be the case and next year we expect them to be a contributor.

Okay, helpful. And then just lastly, Roger, how would you characterize any change in the conversations that you've having with senior level CEOs over the past quarter as it relates to maybe the first half of the year. Are they feeling more or less confident in terms of the direction that things are going, and how do you think they're feeling about looking at acquisitions versus other opportunities they have with their balance sheet?

That's a particularly good question at this moment because the answer has to be a measured one. There's no doubt that attitudes are better from the point of view of doing transactions than they were six months ago or a year ago or 18 months ago. No question.

At the same time, it's not unbridled enthusiasm. Its cautious enthusiasm if I can choose that set of words and the caution comes from the sober economic outlook in the developed world, US, Eurozone and Japan, and the impacts of that sober outlook on their own business outlook. But of course, the financial market environment is very good. Access to credit for larger corporations is very good. Corporate profits themselves are very good. Corporate liquidity very high. And so, on a scale of one to ten with one being I'll cut my throat before I do a deal and ten I've got to do three before tonight's over, I'd say it's about a six and a half.

Okay, thanks.

Your next question comes from the line of Mark Lane with William Blair and Company. Please proceed.

Good morning, and I enjoyed the one to ten scale analogy, Roger. Question -- first, is on hiring. You mentioned that you were -- you had plans to improve the -- I guess it was maybe the UK business in particular, but just what about the hiring environment more broadly for senior people? As you go into year end and look out to early next year can you hit your -- the targets that you've looked at historically and try to add five or six bodies?

We feel good about our -- what I'll call our recruiting strength or our recruiting position, and we're very focused on having a good recruiting season. This is right now the recruiting season because what one typically does is try to identify and work with potential candidates in the fall and the early winter and then close on them after they're compensated in the early part of next year. So, this is the season right now.

We have a lot of initiatives underway on recruiting, both here and internationally. I'm not going to prejudge how we do. As you know, Evercore historically has recruited five -- roughly five new partners a year. There's been periodic variation around that mean, but that's probably what the average would be over the past few years. And we certainly expect to continue at that approximately rate. I'm not going to say anything as to whether we'll exceed it because I don't know. But we have a very specific in place on recruiting, probably the most organized approach we've ever had and it's a very high priority for us.

Does the international --

What are we trying to recruit for? We're trying to recruit for certain sectors which we want to add or alternatively get deeper in, and we're also focusing on globalizing our business.

Does the international at all include any emerging market focus? I know you talked about leaning on the partnerships and in certain geographies, but is there an opportunity to add to outside of Europe which you've talked about before?

Yes, I mean I think if you look at our -- first of all the acquisition of a half interest in G5, that's very much a part of that in both China and Japan we have alliances with the premiere organizations in those markets and China with CITIC Securities and in Japan with Mizuho, which finished number one in M&A last year ahead of Nomura for the first time ever.

So -- and both of those alliances are starting to bear some fruit. And if you look at the places that we aren't in today that we think about, the two most logical would be Australia -- other than the continent which Roger mentioned already of Europe, would be Australia and India, and we're very conscious of trying to expand our capabilities there.

Once again though with the -- with two caveats. Number one, Evercore has never been a place that simply said we want to be this place or that place or we want to be in this industry and that industry and just hire the best person we can, we've -- our productivity per partner is higher than anyone in the industry, and part of the reason for that is that we are extraordinarily selective in who we hire.

And then the second caveat is I agree with what Roger said, that our effort is probably as organized as it's ever been in terms of recruiting. But the thing -- the imponderable is what will the environment be like at the end of this year, which is obviously related to both the culture and the ambience of the firms from which we're recruiting and, of course, compensation at year end.

Okay, and then on t he asset management business, Bob or Ralph, the profitability of the business -- first of all is the Atalanta Sosnoff amortization in the pro forma results?

Yes, it is.

Okay. So even including that, revenue was down sequentially a little bit which makes sense, but expenses in that business taken out at Atalanta Sosnoff were up. Was there anything unusual sequentially? I mean, it's kind of tough to see two and a half -- $2.8 million loss excluding Atalanta Sosnoff turn into a profit by the end of the year.

The decline in revenues, absent Atalanta is really a function of the absence of some onetime gains that showed up in the second quarter which resulted from liquidating some marketable securities that we had been holding in anticipation or in the run up to actually closing on the Atalanta purchase. So absent that one time item, those businesses had largely flat revenue and that's a function as Ralph described of the equity markets at the end of June.

In terms of expenses there's really no notable story on a trailing quarter basis, absent Atalanta, as I said before, net/net expenses were down for the firm sequentially if you exclude amortization and the consolidation of Atalanta.

So when you say breakeven by the end of the year, does that mean breakeven in the last month of the year or on a run rate basis going into next year?

Well, I think what we've said is that the early stage businesses that were here in the middle of last year, which does not include Atalanta Sosnoff and does not include Trilantic -- the investments that we made this year, that those businesses would be breakeven on a run rate basis by the end of this year.

What that means is that they may not be breakeven for the fourth quarter, but their run rate off of quarter end assets under management and quarter end -- and anticipated expenses next year will be a positive contribution on an operating basis, not a detraction which they were hugely last year and to a lesser extent this year.

Okay, good enough. Appreciate the answers.

(Operator instructions)

Your next question comes from the line of Devin Ryan with Sandler O'Neill. Please proceed.

Hey, good morning guys.

Hey, Devin.

Morning.

Roger, when you think about this cycle, do you think there's going to be the same participation from financial sponsors? And then, is that going to be a positive for Evercore because that fuels more activity or does that crowd out some of your strategic clients that maybe get priced out of deals?

Well, the sort answers are yes, and yes. Financial sponsor activity is rising quite rapidly. In fact, one of the stories I think that's been a little bit underreported is the degree to which leveragability for sponsors has recovered. We're seeing some remarkable improvements in that, in the last few weeks. Not just on situations we're involved in but in situations in the market. And I expect sponsor activity to be quite robust over the next year.

Secondly, it benefits Evercore because one of the big initiatives around here, over the past could of years has been our sponsor's group, I've been quite involved in that myself, and our efforts are really coming along well. I think one of the realities is that the credit market collapsed in all the tumult, and turmoil and damage created opportunities including for us vis-a-vis sponsors. A lot of sponsors were not happy with the way they were treated, if I can put it that way, during the crisis. And we have been doing a pretty good job capitalizing on that.

So, I expect our own sponsor related transaction activity to be good during the short to medium term.

Okay. Thanks. And then when you mentioned what's impacting your clients today, you didn't mention regulatory uncertainty in a number of industries. Just wanted to get a sense, has this become less of an issue today as clarity has improved from I guess earlier in the year? Or, is it still an issue that's holding some clients back from doing deals?

I, for one, think that factor's very overrated in terms of its impacts on transaction activity. I see very few instances where that is restraining transaction activity, and I think there are two reasons why its overrated. One, it's really only relevant in highly regulated industries because two, for all the talk there may be about uncertainty and regulatory uncertainty being an impediment to overall economic activity, I don't see it outside of heavily regulated industries having much impact on deal activity at all.

Okay, okay. And then just lastly, I apologize if I missed this, but investment management of the 450 million of positive flows, any detail on where that came from would be helpful.

Not really, I mean it's pretty much -- across all of the areas. Not concentrated in one area.

Okay. Okay thanks for taking my questions.

Yes.

Your next question comes from the line of Lauren Smith with KBW. Please proceed.

Hi, good morning. Apologies if -- I had to jump off for a brief moment, but I just wanted to get an update from you guys on the institutional side. I mean, you're adding coverage so you're up to about 84 now, and I know you guys said your yearend target was 100. When we look out say the next 12 months, where do you think you can be?

And as far as your industry coverage, your focus on tech media, telecom and FIG now, what would you identify as maybe the next one or two sectors? Or, is that -- do you feel like you've got enough on your plate now or is there sort of a natural next industry vertical that you want to add to your platform?

Well, I think the number one through 42 priority in the Institutional Equities business is execution. We've identified the two sectors that constitute 50% roughly of the equity trading volumes. That's clearly where you want to start. Those also happen to be sectors where we have strong investment banking efforts as well.

If you use the methodology, although we have no plans at this moment to be in any of these sectors focusing on the highest trading activity sectors of the market, the three that are each roughly constitute 8% to 10% of the market are healthcare, energy and consumer, but we have no plans at the moment to be in any of those.

Okay. And when you think out 100 companies by year end, you have I guess what -- 12 analysts, where do you think you can be over say the next say six, 12 months? Is there more breadth to add in these existing sectors?

Why don't we get back to you on this because I don't have a precise answer on this?

Okay, sure.

Your next question is a follow up question from the line of Eric Bertrand with Barclays Capital. Please proceed.

Hey, guys. You commented how you're expecting basically a 100% payout ratio between the dividend and the buyback. Are you targeting something in -- what seems to be 20%, 25% range for the dividend itself.

If I were to answer that I'd have to give you a view on what earnings would be next year, so I'm not going to answer that. I think as a general matter, if you look at these companies in our industry, they have payout ratios in the 30% to 50% range.

Okay, I was looking out on a trailing basis but that's fair. And then a detail question perhaps for Bob, the share count sequentially, diluteds came down by some 1.6 million sequentially but the comment in the release was that you bought back only 446,000 shares. Am I missing a piece there?

I don't think you're missing the piece its -- as you know earnings per share is a function of averages, so if you look at a couple of factors, it drives the significant decline in the quarter (inaudible). We bought back more than 0.5million shares in the second quarter, so we got a full quarter's effect of that. In Q3, we had obviously on an average basis meaningfully less than a full quarter when we reported second quarter results. We bought back 343,000 in the first quarter.

The other factor, as you know, under the treasury method is our share price and in the second quarter our average share price was something like 20% higher than it was in the third quarter. So when you factor in averaging, when you factor in the change in the average share price for the periods, you get the outcome we reported.

Okay, thank you.

There appear to be no more questions at this time. I would now like to turn the floor to Ralph Schlosstein for closing remarks.

Thank you very much for your attention, and we'll talk to you next quarter. Thank you.

We thank you for your participation in today's conference, this does conclude your presentation. You may now disconnect and have a great day.