Fidelity National Financial Inc (FNF) 2017 Q4 法說會逐字稿

Thank you for standing by, and welcome to Fidelity National Financial 2017 Fourth Quarter Earnings Call. (Operator Instructions) As a reminder, today's call is being recorded.

Your hosting speaker, Dan Murphy. Please go ahead, sir.

Thanks. Good morning, everyone, and thank you for joining us for our fourth quarter 2017 earnings conference call. Joining me today are, our Chairman, Bill Foley; CEO, Randy Quirk; President, Mike Nolan; CFO, Tony Park; and EVP, Brent Bickett. We'll begin with a brief strategic overview from Bill. Randy will review the title business, and Tony will finish with a review of the financial highlights. We'll then open it up for your questions and finish with some concluding remarks from Bill Foley.

This conference call may contain forward-looking statements that involve a number of risks and uncertainties. Statements that are not historical facts, including statements about our expectations, hopes, intentions or strategies regarding the future are forward-looking statements.

Forward-looking statements are based on management's beliefs as well as assumptions made by and information currently available to management. Because such statements are based on expectations as to future financial and operating results and are not statements of fact, actual results may differ materially from those projected.

We undertake no obligation to update any forward-looking statements, whether as a result of new information, future events or otherwise. The risks and uncertainties which forward-looking statements are subject to include, but are not limited to, the risks and other factors detailed in our press release dated yesterday and in the statement regarding forward-looking information, risk factors and other sections of the company's Form 10-K and other filings with the SEC.

This conference call will be available for replay at our website at fnf.com. It will also be available through phone replay beginning at 1:30 p.m. Eastern Time today through February 7. The replay number is (800) 475-6701 and the access code is 442706.

Let me now turn the call over to our Chairman, Bill Foley.

Thank you, Dan. 2017 was a very successful, strategic year for our company on a number of fronts, as we continue to deploy capital in our ongoing quest to create value for our shareholders. We simplified our corporate structure through the completion of 2 transactions during the year. On September 29, we completed the tax redistribution of Black Knight, as FNF shareholders received approximately 0.3 shares of Black Knight common stock for each share of FNF common stock. On November 17, the exchange of FNFV tracking stock for a new Cannae Holdings common stock and then the subsequent split-off of Cannae Holdings was completed. We believe these transactions have created a streamlined FNF corporate structure that has already provided meaningful value for our shareholders.

We also continue to make acquisitions to strengthen our title insurance business. In 2017, we acquired 10 title and escrow companies for a total of approximately $130 million, the most significant being Title Guaranty of Hawaii in August. We believe there will be a number of strategic title and escrow companies -- company targets to allow us to continue to grow this agency acquisition strategy in 2018.

We also continued building our real estate technology platform aimed at the real estate broker and agent markets through the Real Geeks and SkySlope acquisitions. We are now focusing on integrating our lead management, CRM and digital transaction management technologies to offer a suite of best-of-breed technology solutions for our real estate agent customers and further solidify our relationships with this vital group of clients.

We also devoted a significant amount of cash for the repurchase of our outstanding convertible bonds during the year. In total, we repurchased $230 million in face value of the convertible notes for a total purchase price of $549 million, leaving $65 million of the notes currently outstanding at the end of our 2017. This eliminated the need to issue nearly 12 million shares of FNF stock if the notes had been converted based upon the year-end conversion price.

Finally, for the sixth straight year, our Board elected to increase our quarterly cash dividend with our fourth quarter 2017 dividend, increasing to $0.27 per share, an 8% increase from the previously -- quarterly cash dividend of $0.25.

Additionally, yesterday our Board also decided to raise our first quarter 2018 quarterly cash dividend to $0.30 a share, an 11% increase from the fourth quarter 2017 dividend of $0.27. The outlook for our title business and the recent Federal Tax Reform Act leave us confident in our ability to continue to generate the strong cash flow necessary to support the higher dividend, which now gives our shareholders a 3% yield.

As we enter 2018, we expect to continue to seek ways to deploy capital that will maximize return for our shareholders.

I'll now turn the call over to Randy to discuss the title insurance business.

Thank you, Bill.

The fourth quarter was another strong performance from our title business as we generated adjusted -- generated adjusted pretax title earnings of $273 million and an adjusted pretax title margin of 14.7%.

For the full year of 2017, we generated more than $1 billion in adjusted pretax title earnings and adjusted pretax title margin of 14.5%.

The residential purchase [and] commercial markets continue to drive our performance in the fourth quarter, as residential open and closed purchase orders per day increased 5% and 1%, respectively, in the quarter; and total commercial revenue grew by 1% versus the fourth quarter of 2016.

On the refinance side, open refinanced orders declined by 21%, the smallest quarterly year-over-year decline in 2017 and closed refinance orders fell by 34%.

For the fourth quarter, total open orders averaged just over 7,200 per day with October at 7,600, November at more than 7,500 and December seasonally lower at more than 6,300.

As I mentioned, purchase orders opened per day increased by 5% for the fourth quarter.

For January, total open orders were just under 7,500 per day through January 26 and purchased orders opened per day grew by 2.4% over the first 4 weeks of January of 2017. Additionally, refinanced orders opened per day increased 3.3% versus the prior year for the first 4 weeks of 2018.

During the fourth quarter, we eliminated 407 positions in our field operations, almost all of them in November and December, as we prepared for the traditional seasonally slow first quarter of 2018. We also eliminated another 62 positions in the first 4 weeks of January.

Both our direct and agency channels had stable revenue performance as direct premiums declined by 1% versus the prior year, while agency premiums increased by just under 1% versus the fourth quarter of 2016.

Direct revenue benefited from the 16% increase in the fee per file, primarily driven by the higher percentage of purchase closed orders and a strong commercial fee per file, offset by a 15% decrease in closed orders driven by a decline in refinanced closings versus the fourth quarter of 2016.

Total commercial revenue of $288 million was a 1% increase over the fourth quarter of 2017 driven by a 6% increase in the commercial fee per file, offset somewhat by the 4% decrease in closed commercial orders.

National commercial revenue of $165 million declined by 1% as the 5% increase in the fee per file was offset by a 6% decrease in closed orders. The full year 2017 total commercial revenue of more than $1 billion grew by 5% over 2016 while national commercial revenue of approximately $600 million increased by 3% over 2016.

The total fee per file of $2,425 increased by 16% over the fourth quarter of 2016 as 61% of closed orders were purchase related versus 51% in the fourth quarter of 2016.

Let me now turn the call over to Tony Park to review the financial highlights.

Thank you, Randy. We generated more than $1.9 billion in total revenue in the fourth quarter, with title generating nearly $1.8 billion in total revenue, and our corporate and other segment generating $121 million, which is predominantly real estate brokerage and technology revenue. Adjusted pretax title earnings were $273 million, a $19 million or 7% decrease from the fourth quarter of 2016. Adjusted net earnings from continuing operations were $170 million or $0.60 per diluted share.

The title segment generated $1.8 billion in total revenue for the fourth quarter, less than a 1% increase over the fourth quarter of 2016. Total title and escrow revenue was essentially flat with the prior year.

Personnel costs increased by 5%. Salaries increased with a 3% increase in staffing levels needed to process the increased number of purchase orders as well as title acquisitions during 2017.

As Randy mentioned, we did eliminate 407 positions late in the fourth quarter, but that cost benefit won't be recognized until 2018. Other operating expenses declined by 3% as the major variable expenses in title plant usage and ServiceLink pass-through businesses declined with the decrease in opened and closed orders versus the fourth quarter of 2016.

FNF debt outstanding was $579 million for a debt-to-total capital of just under 14%. Our claims paid of $63 million were $6 million higher than our provision of $57 million for the fourth quarter. We made the decision to lower the provision for claim loss expense to 4.5% for the fourth quarter. This change was supported by continued significant payment declines for policy years 2009 through 2016, and we expect to maintain the 4.5% provision level into 2018.

The carried reserve for claim losses is currently $30 million above our actuary central estimate.

With the passage of the federal tax regulation, we expect to see a significant benefit from the new 21% federal corporate tax rate. As we begin the year, we estimate that we will incur a 24% total tax rate in 2018, which includes the impact of state taxes and other miscellaneous items that may not be deductible under the new federal tax laws. This 24% is our best current estimate, and it is possible that figure could fluctuate as we move through 2018.

Also, in our GAAP results, we did record a $93 million credit adjustment to revalue the net deferred tax liability position given the recent passage of federal tax regulation. This credit adjustment was excluded from both our adjusted net earnings and adjusted diluted EPS figures.

Finally, our investment portfolio totaled $4.5 billion at December 31. From a regulated standpoint, we have $1.5 billion in statutory reserves, $1.5 billion in regulated cash and investments and $830 million in secured trust deposit, for a total of approximately $3.8 billion in regulated cash and investments.

From an unregulated perspective, we have $360 million of unregulated cash as of December 31. There is $180 million in cash and investments at ServiceLink and other subsidiaries and $150 million in equity investments, all of which are restricted primarily by minimum working capital or other regulatory requirements.

Let me now turn the call back to our operator to allow for any questions.

(Operator Instructions) First question is from the line of Mark DeVries, Barclays.

Just one question for me. I was hoping to get a better sense of what we should expect for share buybacks in 2018 and also for the remaining $65 million outstanding in the convertibles.

Well, the $65 million on the convertibles will be -- our present intention is just to purchase that, use cash, cash on hand to take care of that. And as we've started moving into the year and get to the first quarter, the Board yesterday discussed a pretty significant buyback program. I believe we have 13 million or 14 million shares currently authorized, Tony?

Yes, right.

And so you'll start seeing some buyback starting to occur. Once we're sure about the convertible repurchase in August and the cash has been allocated for that, and then -- and also with regard to the dividend increase to ensure that we have adequate cash flow to fund that, and then we'll be buying stock back. That seems like -- it seemed like a good use of our -- good use of the cash on hand. And with the dividend, with the Tax Reform Act, it gives us a little more flexibility.

Your next question is from the line of Bose George, KBW.

Just to follow up on capital use. In terms of capital for acquisitions, is the number you had in 2017 something we should think about for '18 as well?

That -- I guess that's a good target. We're -- we've sort of built out the real estate technology platform that we've been talking about. Now it's a matter of integrating it. And there are a few small acquisitions that will help supplement that platform, and then we continue to look for agency acquisitions, but we want them to be sizable. We don't -- the $2 million or $3 million or $8 million revenue acquisitions don't really move the needle, so we're looking for larger acquisitions. And generally, those acquisitions reside in the West. So that's really kind of our -- that's really our focus. Stay focused, stay central to the title insurance business, agency acquisitions and continue to build out our real estate technology platform.

Okay. That make sense. And just -- a related question on the acquisitions this year. How much did that contribute to the order count in the fourth quarter?

Well, I don't have an order count. I can tell you that our Title Guaranty company over in Hawaii was a very, very significant acquisition. The other 8 or 9 are -- 4 of them were escrow companies in Southern California and some was infilling over in Florida, some small agents over in Florida to build out our LandCastle Title initiative. I don't have TG's order count. We can get that for you, but they've been very significant. It added -- it did add about 600 employees with all of these acquisitions through the year. We made room for those employees during the year as we overall reduced our staffing levels by about 800. But we do have a good operation in TG Hawaii, with a run rate, revenue-wise, of about $60 million.

Okay, great. That's helpful. And then, just last one for me. Just last week, the California Insurance Commissioner made some comments about P&C pricing in light of lower tax rates. Just wanted to get your thoughts on any potential changes in the regulatory landscape in title.

Yes, Bose, this is Tony. Looking at just our after-tax margins for the company as a whole, we're sub-10%. So even with the tax reform and the maybe 100 plus basis point benefit to that, we still feel like our pricing across the board is fair and reasonable, which is the standard that our regulators would require. If you look at California more specifically, our after-tax margins are in the mid-single digits. So even adding 100 basis points to that, again, I feel like we're very competitive and we're very fair and reasonable to the consumer. So we don't really anticipate any regulatory pressure based at least on those guidelines.

Your next question is from the line of Mackenzie Aron, Zelman & Associates.

First, on the investment income, it looks like it moved higher this quarter. Is there anything that you can call out that drove that; and is this new run rate, is that something that's sustainable that we should expect going forward?

Yes, this is Tony. I would say both. We had our investment property exchange business continues to generate higher returns based on rates moving higher. And so I think we had $2 million or $3 million there. We also had some onetime benefit from the FGL transaction, some fees that we earned as a backstop to close that transaction of about $4 million. So that was a nonrecurring item in Q4.

Okay, perfect. And then, on the balance sheet, I think last quarter, you had suggested that once you achieve a ratings upgrade, you would consider getting the debt to capital to a more normalized level. Can you just remind us what that would be? And then, any update on the timing from the rating agencies?

Yes. The rating agencies, we would expect something, I think, in the first quarter. We've met with both of them. One of them, we're half a notch below the other, we would expect an upgrade from that one. In terms of debt to cap, 13.6%, is pretty low relative to history. To give you an idea of maybe a normalized number, 25% debt to cap would allow us to borrow about $850 million if we were to do that at some point; 30% debt to cap, if we went that high, we could borrow about $1.3 billion. But at this point, given our cash flow generation, we don't plan to borrow, unless there's a need to do that.

And next, we have John Campbell, Stephens Inc.

Just back to the corporate revenue line. Tony, I think you mentioned the majority of that's brokerage and then the CRM or technology rev. But could you maybe parse out how much of that or maybe piece out what is brokerage versus tech? And then, I'm just curious if the entire bucket or that kind of all-in platform rev is actually making money.

Yes. So the majority of the $120 million comes from the brokerage side. The technology piece is about $30 million, I think. So roughly $90 million on the brokerage side. Brokerage business is basically breakeven. The technology businesses make a little money. The $23 million in adjusted pretax loss reflects some corporate expenses as well as the $9 million in interest expense. There's a bit of seasonality especially to the brokerage business. So the fourth quarter and the first quarters are softer. The second quarters and third quarters, we have the strength of real estate activity, and that's when we see more profit coming through that segment.

Okay, perfect. And then, Bill, maybe a question for you. I mean, it sounds like you guys are integrating that. Obviously, you've probably got bigger plans later down the road. Just curious about what the thought is there, what's kind of a strategic plan or what are some blueprints you guys have in place? Is that something you might IPO? Or is that something that you use internally? Just any thoughts there.

No, we're actually like focusing, putting all of the real estate technology businesses under one umbrella, one single company. And we're in the process now of creating [steady] plans for some of the management so that they can benefit from cross-selling each other's products, and that's starting to work very well. And I know that in the last year, Commissions Inc. ran the -- had growth in client base of, what did you say?

37%.

37%. How many new customers?

About 1,400.

About 1,400 new customers, but about 1/3 of those new customers were actually generated by cross-selling from the title insurance reps, and we really haven't even kicked that off. So the idea or the strategy of having these real estate technology businesses, and then cross-selling them with our title insurance reps is definitely working. On the buildout of the platform, we've still got a long ways to go. So we're really focusing this year, in '18, on completing the complete integration from front to back. And the goal being that when a, when someone wants to sell a house, when that -- when the farming system happens, and we -- and they want to list the house, they list it with one of our -- one of -- through one of our technology companies, and then it's fully-integrated all the way through the escrow close and on the intermediate steps, we start selling other products and services such as home warranty, homeowner's insurance, pest control, inspection. So it's a -- we're very confident it's going to be a very vibrant platform and it's going to be significant to our company. It's just, as you know, we've been working on this now for 1.5 years or 2 years, and it's just a process of getting these things integrated. But we're really excited about the progress we've made, particularly in the cross-sell area.

Okay, that's helpful. And just curious, I mean, it's a similar situation to Black Knight, where it's a good technology-driven platform where it's kind of being bogged down by the title multiple, right, within the entity. So I mean, is that anything you could possibly spin out or IPO or maybe retain some type of interest or ownership there?

I think that's part of the long-term plan, assuming that we're successful in our process and developing a, I mean, really integrating the platform. Probably a few years off to get there. We'd like to get ourselves to the point where we're doing $0.25 billion of revenue in this group of businesses. And right now, you can see it was about $30 million in the quarter, but we're not that far off and the growth next year in these businesses, we estimate to be roughly 35%. So on all the business put together, so it's got a lot of potential. It's working the way we hoped it would work. And then our goal has always been, as we develop these lines of businesses, to create value for our shareholders, whether it's through an IPO or through a spin-off.

Okay. That's helpful. I'm going to squeeze in one more here. On the share buybacks, I just want to make sure I understand the commentary you guys just provided. It sounds like you're maybe holding off share repurchase activity until August, is that a fair way to sum up your thoughts?

No, I'd say it'd be after the first quarter. We'll really reevaluate and see how cash flow is and see if we feel like it's a good use of the borrowings, to actually borrow some money and buy back shares. I'm a big fan of buying back shares on a continuing basis, and not doing one-off deals. So I'd rather by 25,000 or 50,000 shares a day and be steady, rather than buy 2 million shares when there's a particular seller, and then we don't do anything. So we're trying to just get a -- trying to make sure that our projections on cash flow are accurate. And then, by the end of the first quarter, we start moving into stronger -- a stronger cycle. And we definitely want to repurchase the converts in August for cash, not stock, which is, in effect, another buyback. So we're anxious. I'm just as anxious as you are to reduce the outstanding share count.

Next, we have Mark Hughes, SunTrust.

The underlying fee per file, when we look at residential purchase or refi, could you give us a sense of that, what the changes year-over-year say?

Yes, sure. The fee per file now is running about $2,400 all in; it's about $1,100 on the refinance side. It's -- obviously, it's increased. We're up, I believe it was 16% year-over-year, but we think there's more room. As this mix change -- now we're running right now about 63% of purchase. And as this mix continues to change, which it's likely to do through 2018 with some additional fall-off in [write] refinances, that fee per file will go up. So right now, we're playing at $2,500, but a very good chance that could go up.

What's the -- been the year-over-year change if you just looked at purchase, say, in isolation?

It's Mike. We don't break it out that way, so we don't have that number because our office has processed resale or refi all in the same office. And I don't believe we cost account at that level.

No. We have the order counts at that level. We don't have the revenue broken out between residential purchase and residential refinance.

Understood. And then, just overall cash flow in the business now, taking into account the title and the technology and the brokerage businesses, how do we think about that kind of on a run rate basis or maybe in relation to net income? How should we think about the free cash flow that's going to be available for these other uses?

No, it's usually a little greater than the net income number. It's probably adjusted pretax or maybe a little short of adjusted pretax would be a good way to estimate what our annual run rate is in free cash flow, not before CapEx, which frankly is not a big part of our business.

Our next question is from the line of Geoffrey Dunn, Dowling & Partners.

Bill, last quarter, it seemed like you were pretty confident you were going to get back into the market with 50K a day of buyback. So I guess I'm trying to figure out what changed. We knew tax reform was likely, and that helps your flexibility. So what changed quarter-over-quarter to push the buyback out 6 months?

We were taking a look at a fairly significant acquisition, and we were in a position, we needed to black ourselves out from a buyback, and it doesn't appear that particular acquisition is going to transpire. So that's really the primary cause for us not buying shares back. And when that -- when we have more clarity on that particular acquisition, which we think we believe we'll have in the next few weeks, then we can start getting back into the market.

Okay. And then, on the debt side, you had talked about terming out debt. Is that still something you might be looking out in the next, I guess, within the next 6 months type of time frame?

Hi, this is Brent. I'll take that question. Yes, it's something that we're looking at. We have $300 million on our line of credit. As Bill and the team mentioned, we're going to use cash on hand to take care of that convert, the balance of the convert by August. That's priced out right now at about $170 million type of range, based on current prices. But as Tony said, we talked to the agencies. We think it's important to get the necessary upgrade from Moody's, who's been lagging, we think, for many, many years, just given the strength and the clarity of our capital structure. So we will hope to get that upgrade and look to term it out. The rates still look attractive, but we'll be opportunistic as we do it. But it would be very logical for us to put a 10-year bond on at some point to term it out.

(Operator Instructions) And at this time, we have a question from the line of Jason from Piper Jaffray.

So just wondering on the expenses. It sounds like they've been reduced further, and just wondering if those expenses are rightsized for the current volume trends that you're seeing. I'm just trying to get a feel for the margins going forward, if it seems like the revenue's stabilizing, are the expenses also stabilized?

Yes. This is Randy. We -- in terms of our staffing, and that typically is the biggest issue, we're getting close, but it's always a work in progress. And again, as this shift mixes more towards the purchase, and we've gotten the, what was a pretty severe fall-off in refinance, behind us, we'll continue with our adjustments and continue to lower the labor expense or personnel expense. So we're never done. We operate in kind of a real-time environment and -- but we're optimistic that we'll have a seasonal first quarter. We're optimistic about how this will transpire with the growth and the purchase. We've come out of the year pretty quickly now, much like we did in 2017 with the order count. We're running orders today at about -- on the purchase side, about what we were in October. So watching all the indicators, we'll operate in a real time, and we're never done making these expense adjustments.

And then, on the real estate brokerage and tech businesses. I'm just wondering if we're at a point where we could kind of think about a revenue capture, you could get around a transaction as you're doing more of the functions in the value chain versus if you're just doing title insurance or -- is there some way to think about it like a revenue multiplier or maybe even you could take that down to earnings? Any way to kind of think about the added value for the P&L from doing more across the value chain?

It's going to be significant. I'd say, I believe it's premature for us to speculate on that particular topic at this time because we're just starting to roll out the cross-selling of third-party products through our platform. And part of the -- part of the -- part of what we're working on is an online document execution platform that would go from front to back through all of our systems and all of our title offices, but would start with our TRM business, with our -- for our real estate brokers. So I would rather defer that for 6 to 9 months, because I think we'll know more, and we're really piloting at this point. We believe it's going to be significant, because we believe we have a -- we've come up with something that's, as we've been talking about for 1.5 years or so or 2 years, we believe we have a way to transform the way the industry operates, but we're still going to be patient and going to work hard at it.

Sounds great. And then, just on trying to help us think about modeling the corporate segment. It's gotten a little bit more difficult, and I know there's seasonality, but can -- and there's some acquisitions kind of in the second half of this year. Can you just kind of help us think about an annualized revenue run rate for the corporate segment, because of the brokerage and technology businesses and then, maybe also just -- also help us with like kind of a good corporate expense run rate.

I'll start with the after -- the adjusted pretax first, and it's a little misleading. If you look at the fourth quarter 2016, you have some eliminations that are actually stuck in the discontinued operations line item, because we were eliminating Black Knight revenue from the title company. And so you really have 2 components. So you're better off focusing on the current quarter, and that $23 million adjusted pretax loss is probably a fairly good number in the seasonally weaker quarters of the first quarter and the fourth quarter, and then that number probably comes down to $20 million or under $20 million run rate for the second and third quarter. So that's the number on the pretax side. In terms of the revenue, from our technology business, I think, roughly $100 million would be a good run rate on an annualized basis on the technology side. And then -- and in the brokerage business, it's probably more like $350 million, if I had to put a number on it. So that's the, kind of the all-in, including all the acquisitions that we've made to date.

And back over to Bose George of KBW.

Just have a quick follow-up on the diluted share count. What drove the increase quarter-over-quarter?

Yes, Bose, this is Tony. The basic share count was the same third quarter to fourth quarter at $272 million. As you know, the stock price impacts the share count the way that calculation works. And so we had a couple million share count increase on options and restricted stock, both from share price gains as well as vesting of restricted stock in the fourth quarter. And then, the other component, which was about a 3 million share count increase, was related to the convertible debt. And that, too, is driven not only by share price, but as you probably know, from an accounting and reporting standpoint, FNF has always had the obligation that was really reflected in FNFV's share count -- in their diluted share count, for the convertible debt. And so we highlighted that before, but it was actually in their share count. When FNFV spun out in Q4, that came over to FNF and became part of that conversion number. So it added about 3 million shares. So 281 million is the number, up from 276 million in the third quarter of this year.

Okay, that makes sense. And that's kind of the run rate, all things equal, going forward?

That's the run rate going forward until we retire the convertible debt, and it's somewhat dependent on where the stock price is.

And actually, once the 65 million of converts are retired, what's the impact on the share count at that point?

It comes down about 4 million.

Okay, great. And then, actually just one more, just on the buybacks. If the wait until the first quarter until your converts are being repurchased and then basically after that, we should expect that kind of 50,000 a day run rate?

Somewhere between 25,000 and 50,000 shares a day, somewhere in that range, based upon our cash flow and really our analysis at that time; and that number may fluctuate. Some months it might be 15,000, and some months it might be 50,000. So we're -- we don't -- we never announce that, but we are going to be steady and consistent once we get into the program.

Okay. No further questions in queue at this time. Back over to Mr. Foley for closing remarks.

Thank you. Fourth quarter was another strong performance in our title business, and overall 2017 was a very successful strategic year for our company. We believe our company is well positioned as we enter 2018, and we look forward to executing on our business plans and deploying capital to maximize returns for our shareholders. Thanks for being with us today.

Thank you. Ladies and gentlemen, that does conclude your conference. We do thank you for joining while using AT&T Executive TeleConference. You may now disconnect.