Gladstone Investment Corp (GAIN) 2007 Q3 法說會逐字稿

Welcome to the Gladstone Investment third quarter 2007 financial results conference. (OPERATOR INSTRUCTIONS). As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Mr. David Gladstone, Chairman of Gladstone Investment.

Thank you, Diego, and hello and good morning to all of you folks that have called in. This is David Gladstone, and this is the quarterly conference call for shareholders and analysts for Gladstone Investment, trading symbol GAIN. We thank you all for calling in and we're so happy to talk to shareholders this time of year. And you're all welcome to come by and see us in McLean, Virginia. Please stop by and say hello. You'll see a great team working for you. I think they're the best in the business.

This conference call may include statements that may constitute forward-looking statements within the meaning of the Securities Act of 1933, the Securities Exchange Act of 1934, including statements with regard to the future performance of the Company. These forward-looking statements inherently involve certain risks and uncertainties, even though they are based on our current plans; we believe those plans to be reasonable. There are many factors that may cause our actual results to be materially different from any future results that are expressed or implied by these forward-looking statements, including those factors listed under the caption risk factors in our periodic filings as filed with the Securities and Exchange Commission that can be found on our Web site, GladstoneInvestment.com, and also on the SEC's Web site. The Company undertakes no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.

The quarter ending December 31, 2007 was okay for our company in terms of increasing our assets. We invest in two areas. We buy small businesses with their management teams, and we invest in senior syndicated loans of large middle market buyouts. Just as a reminder, we do not invest in home mortgages, nor do we invest in the housing industry. We don't invest in CDOs or CLOs, or other pooled loan assets.

On the buyouts for the quarter, we invested in two new buyouts for a total of approximately 37 million. We did not exit from any buyouts during the quarter.

On the syndicated loan side, during the quarter we didn't invest in any new syndicated loans. However, during the quarter we did receive repayments in sales -- from sales also of syndicated loans of about $24 million, including normal amortization. And we had a few of our other loans pay down by 7 million, for a total of 31 million in repayments for the quarter.

Since the quarter's end, we did not close any new buyouts of syndicated loans, but we do have some things working. I'd just say stay tuned and we'll keep you informed. At this point we have about 182 million in buyouts.

At the end of the quarter our investment portfolio was valued at $352 million, and our cost was $356 million, for about a $4 million difference. As reported as part of our dividend press release, our quarterly valuation of the portfolio during these changing times increased by 0.5%. This appreciation in the portfolio came due to the good appreciation of the companies we own with management; we had about 4.5 million there, even though we had some depreciation of our syndicated loans of about $3 million. And that's been due to the panic in the home mortgage area, which has caused a great turmoil in the senior syndicated loan marketplace as well.

I think our portfolio held up well. And while some of the home mortgage portfolios were off by very wide margins, and you saw a lot of finance companies taking a tremendous amount of hits to their portfolio, our portfolio of loans and investments was up by 0.5%, or about $1.5 million, which is about $0.09 a share.

I want to call your attention also to a peculiarity in the valuation methodology that we're using for investments where we have a large ownership position. The valuation methodology we adopted for those investments is based on a multiple of earnings, or as we call it, EBITDA -- that's earnings before interest, taxes and depreciation and amortization -- or sometimes calling cash flow for our portfolio companies. This tells us what the business could be sold for. When a company has good cash flows, the value of the portfolio company will go up. And if that portfolio company has poor cash flows, the value will go down. This is the way the stock market values businesses. However, if a company has very low cash flows under this valuation technique, or losses, then the method would result in a very low value, or even zero. So the valuation methodology is very conservative when companies have poor or no earnings. This method will produce a lot of volatility in the value of the portfolio. One of our portfolio companies, for example, had a bad period due to some changes in the industry. And even though we're paying our note as agreed, the valuation methodology dictated that we use zero value for the note and the preferred stock that we hold. I personally do not believe the investment is worthless, but once you adopt one of these valuation techniques, you have to use it consistently. So look for some volatility in the coming quarters as we use this technique as part of our valuations.

Since our inception in July 2005, we've completed nine buyouts and have not exited any buyouts. And since July 2005, we've made 72 loans in the senior syndicated loan area for a total of approximately $300 million. The average return on the exits that we've had in syndicated loans has been about 8%.

At the end of the quarter, we had one syndicated loan past due with a balance of right around $2.9 million. And that company is what we call in workout mode now. And all the lenders -- we're just a small lender in that group -- are involved. And I think we'll have that one solved -- maybe this quarter we'll have that resolved.

This all leads us to say that the program we set up when we founded the Company is working as planned when it comes to the quality of our loans, and certainly to our buyouts, but it is still difficult to find good buyouts and even good syndicated loans today. So we have been very slow, very cautious in our selection of companies to buy. And in particular, we've been unwilling to pay too much for companies.

Also, we did not expect that there would be such a panic in the syndicated loan marketplace. But here we are with a panic, and the turmoil has caused the loans to depreciate by some amount, even though they're paying. With the turmoil caused and panic [in] the debt marketplace, there may be a lot more opportunities for us in the next 12 months. We'll continue to review the market and update you every quarter.

Our balance sheet is very strong. At quarter-end we had $150 million borrowed on the line of credit, and we have about $220 million in equity. So we are less than one-to-one in leverage. This is a very conservative balance sheet for a finance company like ours. We believe the risk profile is very low, and our line of credit is $200 million, and it was just extended for another year this past October. So we're in good stead with our lenders.

For the December quarter, net investment income -- which is before appreciation, depreciation, gains and losses -- was about 3.7 million versus 2.9 million for the quarter last year. That's an increase of about 29%. And for the nine months ending December, we had net investment income of $9.6 million, versus 8.4 million last year, about a 15% increase. And in this presentation we're talking about weighted average fully diluted common shares when we use the per-share number. That's the most conservative way of stating earnings per share.

For the quarter ending December 31, 2007, net investment income was about $0.23 a share for the quarter, as compared with $0.18 for the same quarter a year ago. This was an increase of about 29% on a per-share basis. This mirrors our slow and deliberate increase in our assets. For the nine months ending December, net investment income per share was $0.58, versus last year of $0.51 for the nine months, which is a 15% increase.

Okay. Let's turn to unrealized and realized gains. This is a mixture of appreciation, depreciation, gains and losses. We like to talk about this in two categories in this section.

First, net realized gains and losses, meaning gains versus -- or less losses, as this is the cash. And the second then is the unrealized depreciation or appreciation, meaning appreciation less depreciation, as this is non-cash accounting and comes from the value put on the portfolio.

So first, for the quarter ending December, we had net realized losses of about $146,000. And that resulted mostly from the sale of two of our loans in the senior syndicated area as we freed up some debt to get cash. We sold two loans to get some cash so that we could close on some of our buyouts. And for that same quarter we had a net unrealized appreciation of $1.5 million. This is non-cash and comes from the value put on the portfolio that I talked about earlier when we were talking about how the values were derived.

The unrealized appreciation or depreciation reported during the quarter ending would have been much higher, but the senior syndicated loans continued to have a bit of downward movement, so the appreciation wasn't nearly as much as I had hoped for. These loans are still paying as agreed, but the market for them just is not very solid.

Now turn to net increase in net assets from operations. This is a term that combines net investment income appreciation, depreciation, gains and losses. It's quite a mixture of accounting terms, but that's the way the accountants do it for companies like ours. For the December quarter this number was $5.1 million versus $2.7 million last year this time, much of it due to the depreciation mentioned at the beginning of the presentation. This December quarter we're at a positive of about $0.31 a share, versus last year's December quarter at a positive of $0.16 a share. Investors should expect this kind of movement in the portfolio, both up and down, which will impact this number that we've been talking about.

We didn't have any phantom income, as we call it, for the quarter as of December 31, 2007. We don't have any loans with paid-in-kind income or original issue discount. We call this kind of income phantom income, because the Company doesn't really receive the cash, but has to recognize it as income and pay it out, even though it doesn't have the cash to do it. We tend to avoid the phantom income, and our portfolio companies are paying on time as agreed, except the one syndicated loan I mentioned in the presentation.

Our average loan rating for the quarter remains relatively unchanged, although it was down somewhat. The risk rating system we use is set out of loans at an average of 5.4 for the quarter, versus an average of 6 at December 31st last year. And the risk rating used for unrated syndicated loans was averaging about 7 now for the quarter, versus an average of 7.8 for the December 31st quarter last year. Our risk rating system gives you a probability of default rating for which the portfolios will scale from zero to 10, with zero representing the highest probability of default. And the risk we see here is staying relatively the same as last year.

For our rated syndicated loans, they have averaged and continue to average B+ or B1, depending on which rating agency you talk to, and this quarter ending December 31st and for last year, so it was unchanged. This is quite satisfactory for our current portfolio mix. We're happy with where we are.

Since I last talked to you last quarter, syndicated and sub-debt and all of the syndicated loan markets are just -- have come to a halt. And there seems to be a slow move back, but it's still -- given the disruption in the marketplace, I just think it's going to stay somewhat in turmoil for the next six months or so. That's for the larger companies that we help finance where the marketplace is in disarray.

For the buyouts of small companies, the world is still different. The small-business marketplace companies with strong growth rates are still going for strong top dollars. We've seen competition come in and pay 8 times cash flow for these companies. So this is still high, and some buyers are not finding financing. And there may be some repricing of buyouts in the future. This market is having some heartburn as it's difficult to find debt to leverage these companies up as much as the buyout funds would like to do it. So there may be some opportunities in this period that we're in now.

On the other hand, businesses with lower growth rates are being purchased for lower multiples of cash flow. And we have been buying some of them. As we continue to buy them, our balance sheet will show that we've provided the debt and the equity for the purchase. We do that so we can generate income from the investment to pay our dividends. I think -- I really think the rest of the year will be okay for us and we'll continue to grow our assets in this area. And the dividend should follow that trend.

Given the change in the market, I think, our time really has arrived. There are a lot of opportunities out there, and I think 2008 will be a terrific year.

We are concentrating our debt with variable-rate loans so that we can't get hurt when rates increase. And while our rates are variable, we often have minimum. Most of the time we have a minimum that a loan will charge -- we call these floors -- so that we don't have declining interest rates hurt our ability to pay the dividend.

We do have $52 million of fixed rate loans, and all the fixed rate loans are made through our buyout deals. They're at relatively high rates, so we should be okay there. But in order to have some protection, we purchased an interest rate cap on about $20 million. We did that to keep our loss to a minimum if rates somehow start rising again. It's always good to have some protection for that.

We continue to worry about the cost of oil and the rippling effect in the economy. It just takes a lot of money out of the pockets of the middle class, and they have less money to spend because gas costs and heating oil costs are taking their income away. I think restaurants and other things dependent on the consumer are going to have increasingly difficult times in the period that we're going through now. We are no longer worried about inflation the way the government measures inflation; we'll likely not see much there for at least six months, maybe even a year.

The amount of money being spent on the war in Iraq is still hurting. I think our troops are the most wonderful people in the world; they are certainly the heroes of this century. We support our troops in Iraq, but we all have to recognize that the war is draining our economy.

Even worse is the pork barrel spending by federal, state and local governments. They just seem to be out of control now. Congress is acting, in my own estimation, irresponsibly, and so our most of the state governments. This excess spending causes excess taxation, and that dislocates all economies. It's really killed the dollar in terms of other currencies like the euro, and the trade deficit with China and some other nations is just terrible. China continues to subsidize its industries to the disadvantage of our businesses.

And now we're seeing full impact of the downturn in the housing industry and the mortgage industry. Investors and lenders have lost a lot of money. But I think the worst is over. I think we've now bottomed out as far as this is concerned, and we should start to build some strength and sell off some of these houses that are sort of stuck in limbo at this point in time.

In other ways, our US economy has continued to hum along. We and the small-business world have kept -- have seen them -- these businesses keep their costs low. For many of them profits are improving. But there is a slowdown. We have to recognize that. And while we don't see a big slowdown in the companies in our portfolio, we know that there must be some slowdown coming. But it's not reached a state of showing us that a recession is coming. We still don't believe that there's any recession in the cards for us. We think this will just be a slow 2008, and then we'll turn back up.

Manufacturing is not operating at full capacity, and I don't think they're going to make it this business cycle. And there has been some slowdown in hiring, and backlogs have come down a little bit. So it just looks like a slowdown and not a recession. The recessions we saw in 2001 and 1990 were huge recessions compared to what we're going through now.

I hope you all saw that we filed our shelf registration statements and are in a position to raise money sometime in the future, should we need to do so. In order to finance our future investments and buyouts, we really have two choices.

First of all is to sell some of the senior syndicated loans at a slight loss to raise cash. This was the original plan. We're still on that plan, except the senior syndicated loans have dropped in price, so we'd have to take a small loss.

The second option is to raise money from shareholders in a rights offering. A rights offering is the only fair way to raise money at these depressed stock prices. So every shareholder would have a right to participate in the program.

At this point in time, we're leaning toward selling some of our syndicated loans and taking a slight loss. It may be the best thing for us at this time. But again, we'll discuss that with our board members in the April meeting that's coming up in the first week in April of this year.

Our dividends declared by our board of directors in January is $0.08 a month, run rate of $0.96 a year. That's for January, February and March. As I mentioned, the board will meet in the first week in April and decide where the dividend should be. At this rate, the dividend rate and the stock price was about $10.15 yesterday. The yield on the stock is now at 9.5%. So a great yield, great income while you wait. The stock market has only put in a return for shareholders on average of about 9 to 10% over the last 10, 15 years. So being able to get a cash income at 9.5% while you wait for us to put these LBOs on our balance sheet sounds like a good way to go.

Please go through the Web site and sign up for e-mail notification service. We don't send out any junk mail, so go to Gladstone investment.com and do that.

In summary now, as far as we can see, the beginning of the calendar year 2008, I think all of 2008 is going to be pretty good. We can only see a couple of quarters out and we want to be careful; we are, after all, stewards of your money. We'll stay the course and continue to be conservative in all our investment approaches, and we'll see what that brings for us in 2008. But I think this will be our best year yet.

I'll now open up the call for questions. So if you'll come back on, Diego, we'll get some questions.

(OPERATOR INSTRUCTIONS). Vernon Plack, BB&T Capital Markets.

I wanted to see if perhaps you could provide a little more color on your pipeline. In particular, at least the way that we're looking at it, it appears that -- I don't believe you have made an investment since perhaps October. Can you provide some color just in terms of what your pipeline looks like?

Sure. I'd be glad to. The pipeline is steady. It's filling up. Here's what's going on. Just like in the home mortgage place, the homebuyers are sitting on the sidelines and not willing to sell at these lower prices because they want to get a good price for their house. And the same thing has happened to some of the sellers of businesses. They're sitting on the sidelines saying, my buddy down the street got X dollars for his house or X dollars for his business. He got 10 times EBITDA; I want the same amount or I'm not going to sell. As time goes on, people get a little weary of that, and eventually they sell their house. And in our case, they sell their business. We've got a number of deals perking and working now, and I am hopeful that we can have some announcements this quarter. But two deals last quarter was a good quarter for us. If we do two again this quarter, even if we do them at the end of the quarter, it will be a good quarter as well. The number of businesses for sale is out there, but the prices are still relatively high. We just don't want to leverage these companies up, especially in a slowdown.

Have you seen prices come down to any extent, or what is your thought on pricing some of these businesses?

There's two kinds of businesses that we look at; one with very strong growth rates. Those are all chased by most of the LBO funds. And they're chasing them because they can buy them, even at high prices, at eight or 10 times EBITDA, and then turn around in three years, hopefully, and double the sales and double the earnings, and then sell out. They need a lot of equity in those, and they don't get any income to speak of while they're waiting. We would have a hard time doing that, because if we did it, our return, our current return would be so low it would endanger our dividend.

So we've concentrated on what I'll call the small cash flow companies in smaller markets, in which the Company is making a good amount of money, has a great deal of protection in terms of competition coming in. They might have a 70 or 80% market share. And after looking at those, we can buy them for four or five times their cash flow, and load them up with debt. We can get paid a good amount of income while we wait for them to pay down the debt over four or five years, maybe six years. And then, at the end of that period of time, we would leverage them back up and take a large dividend out with management, and then have them pay off the debt again over a four or five-year period.

So, yes; there are plenty of deals out there. Yes; a lot of the growth stories are going still for large dollars. And it's only the -- I'll say the more mundane companies, the small cash flow companies, that are going for reasonable prices. And we've got a number of those in our sights, and hopefully we'll close a couple more in this quarter and a couple more next quarter.

One last question. Do you feel as though you're seeing enough deals now, or are you getting in front of enough of these deals where you feel as though you're seeing your fair share of opportunities?

Vernon, we see them all. We're in the pipeline. We see just about everything that comes along. There are larger transactions that we see and don't do anything with. For example, if there's a buyout that is going to cost $50 million because it's a 10 million in EBITDA, very hard for us to do that transaction. So, we're still not doing the larger transactions that we'd like to do. And hopefully somewhere along the way, we will grow to be big enough so that we can do a little bit larger transactions. We're in the pipeline. All of the brokers in this business that -- they know each time they find a smaller deal that we're going to be interested in it. So we're seeing them all; it's just a question of price now.

Just one other thing I forgot to mention. Lexicon. It looks like that was written down another 400,000 or so. Your comments earlier would suggest that you feel as though that loan will go back on a full status some time here soon.

I know it will be worked out this quarter because -- and we're a tiny piece of that. And there have been several proposals posted, negotiated, and I think they'll come to some kind of conclusion within this quarter. Not really able to tell you what that conclusion will be, but I think we'll be fine.

Thank you.

Dan Furtado, Jefferies & Company.

I just had one quick question on the management fee policy, or actually the reimbursement of it. I've noticed it's, obviously, gone up over the last couple of quarters. How do you see that trending in the future, and kind of what's your philosophy around where you expect that to go over the next few quarters?

We typically have two parts of that. One part, of course, is the fact that we reduced the fee pretty dramatically for senior syndicated loans; that is, we don't charge quite as much. So the giveback here is related to the way that we price that, but it's more importantly related to the fact that you have to hit your goals in order to get your money. So the giveback will continue as long as we need to give it back in order to meet the dividend. And I think you'll see this quarter, or maybe next quarter, a dramatic increase in the ability to pay out this fee, the incentive fee to the people who are working here.

One quick follow-up. What are your thoughts on FAS 157 and the impact this could potentially have on valuations in the space?

We really don't think it will impact us at all, because we've been under FAS 57 indirectly. It's been proposed now for, I don't know, five, 10 years it seems to me it's been working. For the last couple years, since it looked like it was going to come through, even though it was in draft format, we've been working FAS 157. I think there's no impact for us.

Excellent. Thank you.

Christopher Singley, Singley Capital Management.

The first question I have -- can you refresh my memory about what the BDC regulations specify about the maximum percentage of control investments?

It's not the BDC legislation; it's actually the tax legislation.

Thank you, sir. What is that limitation?

Let me explain it to you. The tax regulation says that you can only own -- only have 50% of your assets in companies where you are the voting shareholder of greater than 10% of the stock. Now, the way that that works is that preferred stock is convertible and warrants don't count. So in many instances, you may have a control situation for SEC purposes, but not have a control deal for IRS purposes. And in fact, most of the transactions we have meet the test of control for the SEC, but don't meet the test for the IRS.

I see. Thank you. So you're not, on your current capital base, bumping up anywhere close to that?

No. Not that control one, no. We are bumping up against the size limitations. We've got -- we can only have so much of our assets in companies where we have more than 5% of our assets.

I see. So for the other part of the portfolio that's not invested in these buyouts, it seems for the long-term plan you're moving from shifting away from these syndicated loans into more straight sub-debt. What is the target investment mix if you had all your druthers?

All of our druthers, we'd have all of our dollars in buyouts, and we would have no syndicated loans.

Working within the IRS framework, regarding the definition of control, excluding certain preferred (inaudible), you believe you can accomplish that?

Yes. I think that's easy to accomplish.

Thanks very much.

Ross Haberman, The Haberman Fund.

A quick question. Could you elaborate on how much below, I guess, cost is the syndicated loan portion of the portfolio which you were discussing you might want to sell some of?

We're not too far off the index. The index is running about 93%. So you're talking about somewhere between 5 and 7% would be a range.

Of the total amount of how much -- how much were the syndicated loans?

Total portfolio is how much, Mike, now? About 174 million.

One other numbers question. The equity portion of the companies which you own; my recollection -- that was 30 or 35 million last quarter. How much was that as of the end of this quarter?

Just the equity ownership?

Yes. I thought -- 30 to 35 sticks in my mind from last quarter.

It's about 35 now. It's about 35 now. It hasn't changed.

So there wasn't much adjustment there?

Not much adjustment. That's right.

The volatility or the variability which you were discussing, is it going to become mostly in that portion of the asset space?

Once we get -- certainly once we get rid of the senior syndicated loans it would be there. That would be the point that you'd see the most movement.

Is that percentage -- the equity percentage, is that capped at any dollar or total percentage of the total?

No. No cap.

Thanks. Best of luck.

[Lee Carter], Oppenheimer & Co.

200 -- a couple, three months ago you mentioned you thought estimated loss would be about 200 billion on the sub-primes. Is that still your figure? And you thought it might be bottoming around in April?

I think it could be in the 2 to 400 billion. I don't remember. I thought 2 was my low and 4 was my high. I don't think this is a big deal for the economy to absorb.

I noticed we did 187 billion on the savings and loan. So, in today's market, you're right; it seems like you'd be right. Any indication of an IPO coming out in '08 out of you, or a sale? Any indication at this time?

You could have one of our companies probably not go public, but you could have it sold.

Okay. Because that's when the earnings pop a little bit. Secondly, any indication -- no; I'll pass on that question. Somebody else asked it. Right now it looks like Gladstone, or GAIN, is looking like it's the pick of the litter, head of the class, sitting in a nice silk purse. That's what I see. Anyway. A good comment I heard, David -- and this is not my idea, but -- they don't restate dividends. And that kind of fits you.

That fits you. Once you've paid it out you can't restate it. What you've got, you've got. And we've never missed a dividend, never decreased a dividend, and we even increased the dividend on this one. And hopefully this year we'll do it again.

Is there any -- as you're in the marketplace, is size of your companies or anything else negatives why they're selling (inaudible) think would be selling at a 7 or 8% in today's market.

That's what we believe. But when the tide goes out, it takes all boats down. And we're in the finance business, and people don't like finance companies right now. They all believe we're going to hell in a handbasket.

Thanks, David.

Jon Arfstrom, RBC Capital Markets.

A question for you on your capital raise comments. Would there be a method -- if you needed to raise some capital for a buyout, is there a methodology that you would use in terms of choosing which syndicated loans you sell?

Sure. We'd choose the ones that would have the lowest loss on them. If you had something that had some special reason to be sold, we would. But these are pretty vanilla-type loans. So you'd choose the one that was trading the highest so you could trigger the less loss.

Good. And then in terms of your increase in valuation on the control investments, were there one or two that caused that, or was it EBITDA strength across the board?

I think it was more or less strength across the board, but I can't remember exactly. You'll have to take the list of loans and kind of go down the list and check them off yourself. I'm sorry; I don't have that in front of me.

That's fine. Thank you.

(OPERATOR INSTRUCTIONS). Henry Coffey, Ferris Baker Watts.

David, before I get into it, I wanted to commend you on what you're doing with this management [team]. We've got a couple of other companies that could learn a few lessons from your book. If you look at your portfolio, would you ever -- particularly the syndicated loan book, kind of just the opposite of what you said -- would you ever give some consideration to, in essence, boosting the quality by selling whatever you perceive to be a dog? Or do you think the quality on the assets is pretty universal across the board?

That's what I meant when I said these are pretty much vanilla loans. We did a good job of selecting them. And sure; if there was one we felt like was sort of out of the box, we'd sell it.

I missed this comment earlier. Delinquent fees and past dues and non-accruals in the portfolio; anything that -- do you have any loans that fit into that box right now?

We only have the one, Lexicon. Everybody else is paying as agreed. And when we say paid as agreed, a lot of people will say we receive the payment within 90 days or 60 days. These are all current. One day late is late.

Exactly. And finally, I don't know if this is heresy or inspiration; I know in the past you've done this sort of thing. Would there be any financial benefits to putting the two companies back together again since one has a lot of capital, and the other one is raising equity from time to time? Or do you think that would just not really create any value?

It probably would create some short-term value in the sense that you'd have a larger entity. The bad news would be you'd be co-mingling two types of loans and investments, and two types of people. Lending people are relatively different from buyout people, and we're trying to build teams around both of those concepts. I think when capital gets to be around 500 million in market cap, people will stop asking me that question. And certainly when we get this one up around 500 million, it won't matter either. So we just have to work our way there. It's unfortunate that we're as small as we are, because we'd like to do some larger deals in this company.

Whatever way you cut it, your quality is winning out. So just stay the course.

Tell the marketplace, would you? Mr. market is not listening to us.

I'm on my cell phone, so I'll dial all 1 trillion investors out there.

Thank you.

Mr. Gladstone, we have no further questions at this time.

That ends the conference call. We thank you all, and we'll be on the line next week with capital. Thank you again.

Thank you, sir. Ladies and gentlemen, this does conclude today's teleconference. You may disconnect your lines at this time. Thank you all for your participation.