Goldman Sachs BDC Inc (GSBD) 2018 Q2 法說會逐字稿

Good morning. This is Ian, and I'll be your conference facilitator today. I would like to welcome everyone to the Goldman Sachs BDC, Inc. Second Quarter 2018 Earnings Conference Call. (Operator Instructions)

I will now turn the call over to Ms. Katherine Schneider, Head of Investor Relations at Goldman Sachs BDC. Katherine, you may begin your conference.

Thanks, Ian. Good morning, everyone. Before we begin today's call, I would like to remind our listeners that today's remarks may include forward-looking statements. These statements represent the company's belief regarding future events that, by their nature, are uncertain and outside of the company's control. The company's actual results and financial condition may differ, possibly materially, from what is indicated in these forward-looking statements as a result of a number of factors, including those described from time to time in the company's SEC filings. This audio cast is copyright material of Goldman Sachs BDC, Inc. and may not be duplicated, reproduced or rebroadcast without our consent.

Yesterday, after the market closed, the company issued an earnings press release and posted a supplemental earnings presentation, both of which can be found on the home page of our website at www.goldmansachsbdc.com under the Investor Resources section. These documents should be reviewed in conjunction with the company's Form 10-Q filed yesterday with the SEC. This conference call is being recorded today, August 3, 2018, for replay purposes.

With that, I'll turn the call over to Brendan McGovern, Chief Executive Officer of Goldman Sachs BDC.

Thank you, Katherine. Good morning, everyone, and thank you for joining us for our second quarter earnings conference call. We are pleased to report another strong quarter for our shareholders. Net investment income per share was $0.50 in Q2, which equates to an 11.1% annualized return on book value. In addition, our board declared a $0.45 per share dividend payable to shareholders of record on September 28.

I'd like to highlight that, including this most recent quarter, net investment income has now exceeded our dividend for each of the last 12 quarters, reflecting the consistency of performance we strive for on behalf of our shareholders. In addition to delivering strong operating performance, we've been working hard behind the scenes on matters that will lay the groundwork for future performance.

Specifically, during the quarter, we received shareholder approval to reduce the minimum asset coverage requirement to 150%, which is often referred to in the industry as raising the maximum permitted debt-to-equity ratio to 2:1. Importantly, we received an overwhelmingly positive response from our shareholders on this important proposal. Over 75% of our shareholders attended the meeting in person or by proxy, and of those who voted, 95% voted in favor of the proposal. We are gratified by the strong endorsement, and we look forward to working on your behalf to deliver strong results on the changing regulatory framework.

As a reminder, the management fee payable to GSAM was reduced from 1.5% to 1% on gross assets, beginning on the date we received shareholder approval. As we discussed in detail last quarter, we believe that the added balance sheet flexibility provided by the reduced asset coverage requirement, combined with the lower management fee, will allow us to pursue a broader range of assets while potentially increasing returns on shareholder equity. Any use of additional leverage will continue to be governed by prudent risk management practices, which we believe are a core competency of Goldman Sachs. These practices will help to ensure that our balance sheet leverage appropriately considers the underlying risk profile of our assets in a dynamic environment.

We were also pleased that during the quarter, we received an investment-grade rating with a stable outlook from Fitch. Subsequent to quarter end, we issued $40 million in principal amount of our 4.5% convertible notes due 2022 and an add-on to our existing convertible notes. The add-on demonstrates our access to the institutional unsecured debt capital markets on attractive terms and further augments our mix of funding sources. Moreover, we are engaged in constructive dialogue with our bank lenders on amending the terms of our existing credit facility, and we have been approached by a number of other providers of financing offering capital. We look forward to keeping you posted as we carefully consider terms and structures for financing going forward.

With that, let me turn it over to Jon Yoder.

Great. Thanks, Brendan. During the second quarter, we continued to see strong demand for credit in the middle market, driven primarily by continued activity from private equity sponsors. While the market to provide capital remains competitive, we are focused on maintaining appropriate underwriting discipline and focusing on what we believe are higher-quality companies. There continue to be many attractive elements of lending to middle-market-sized companies in the U.S., namely, the accelerating growth in gross to net domestic product and very low unemployment rates are providing a very good operating backdrop to our portfolio companies.

The increase in LIBOR that we have experienced in recent quarters is offsetting pressures on credit spreads. Strong equity markets are supporting higher enterprise values for the companies that we lend to and which serve as the primary source of our collateral, resulting in loan-to-value ratios trending lower.

But notwithstanding the positive environment that we're currently experiencing, we do not lose sight of the fact that economies will cycle, rates will move and markets will fluctuate. Furthermore, the duration of our loans is likely to be longer than the current positive environment. As a result, we continue to maintain a cautious approach to asset selection and continue to focus on companies that we believe are in more durable sectors that are less prone to cyclicality.

One new investment to highlight this quarter is a loan in equity investment that we made to a company called Acuity Delivery Systems. This is a company that we sourced through our PWM network and which we tracked for several years before making the investment. Acuity is a revenue cycle management business that serves hospital systems and focuses on improving clinical documentation processes. The company has a strong value proposition in its ability to capture foregone revenue for hospitals at meaningful and measurable ROIs. We structured a first lien loan at L plus 700 basis points that we believe has attractive characteristics, including the comparatively modest leverage ratio in the low loan-to-value. Furthermore, our loan is supported by the company's contracted revenue business model and a blue-chip customer base.

Alongside this loan, we also made a small equity investment, which was structured with downside protection, including a liquidation preference and a minimum return. We believe that this investment is a good example of the importance of a strong origination network to find attractive deals, even during the competitive environment that middle-market lenders are currently experiencing.

During the quarter, we were also able to harvest some older investments at attractive levels. As an example, we exited our second lien position in Global Tel Link. Some of our long-standing investors may recall that we marked this position as low as 60% of PAR in December 2015, after a regulatory change was announced that many investors feared could have a meaningful impact to the company. While we marked the position lower to reflect this risk, we believe that the company was positioned to navigate through the change in regulations. Our view was ultimately proven correct as the company made the necessary adjustments to its business strategy, and we were able to sell our remaining position at PAR.

Turning to some specifics for the quarter. New investment commitments and fundings were $92.6 million and $58.9 million, respectively. Regarding placement in the capital structure, our new originations this quarter were comprised of 94% senior secured loans, including 85% in first lien loans, 9% in second lien loans and 6% in preferred and common equity. These new investment commitments were across 7 new portfolio companies and 4 existing portfolio companies.

Sales and repayment activity totaled $79.6 million, driven primarily by the full repayment of investments in 3 portfolio companies and the sale of investments in 1 portfolio company. During the quarter, the yield on our investment portfolio was relatively steady. The weighted average yield of our investment portfolio at cost at the end of the second quarter was 10.9% as compared to 11.1% at the end of the first quarter.

Regarding portfolio composition. At the end of the second quarter, the total investments in our portfolio were $1,237,000,000 at fair value. And they were comprised of almost 89% senior secured loans, including 36.2% in first lien; 16.6% in first lien last-out unitranche; and 36.1% in second lien debt; as well as 0.5% in unsecured debt; 3.1% in preferred and common stock; and 7.5% in the Senior Credit Fund.

We also had $58.6 million of unfunded commitments as of June 30, bringing total investments and commitments to $1,295.9 million. We were pleased to increase the company's single name portfolio company diversity by 5% quarter-over-quarter and 31% year-over-year. As of quarter end, the company has 99 investments across 59 portfolio companies operating across 31 different sectors.

Turning to credit quality. The weighted average net debt-to-EBITDA of the companies in our investment portfolio at quarter end was 5.2x, reflecting stable performance in our portfolio companies quarter-over-quarter. The weighted average interest coverage of the companies in our portfolio was 2.2x versus 2.3x as of the end of the first quarter.

The Senior Credit Fund continues to be the company's largest investment at 7.5% of the company's total investment portfolio, and we have been very pleased with the performance of the investment since its inception. Over the trailing 12 months, the Senior Credit Fund has produced an 11% return on our invested capital at fair value. During the quarter, the Senior Credit Fund had new originations of $60.8 million across 5 new companies. Sales and repayments were relatively muted at only $11.9 million, resulting in net funded portfolio growth of $43 million during the quarter. The total size of the portfolio as of quarter end was $490.5 million.

As of the end of the second quarter, the weighted average yield at cost on investments in the Senior Credit Fund was 7.6%, which was unchanged from the prior quarter. First lien loans comprise 97% of the total investment portfolio within the Senior Credit Fund, and all of our investments are floating rate. The Senior Credit Fund also remains well diversified with investments in 36 portfolio companies operating across 20 different industries.

I will now turn the call over to Jonathan to walk through our financial results.

Thanks, Jon. We ended the second quarter of 2018 with total portfolio investments at fair value of $1,237,000,000, outstanding debt of $508 million and net assets of $726 million. Our net investment income per share was $0.50 as compared to $0.47 in the prior quarter. Earnings per share were $0.43 as compared to $0.46 in the prior quarter.

During the quarter, our average debt-to-equity ratio was 0.72x, which was unchanged from the previous quarter. We ended the second quarter with a debt-to-equity ratio of 0.7x versus 0.73x at the end of Q1.

Turning to the income statement. Our total investment income for the second quarter was $37.2 million, which was up from $35.5 million last quarter. The increase quarter-over-quarter was primarily driven by higher interest income as a result of higher effective LIBOR resets on our investment portfolio in Q2 as well as higher prepayment-related income. Total expenses before taxes were $16.8 million for the second quarter as compared to $16.5 million in the prior quarter. Expenses were up quarter-over-quarter, primarily driven by an increase in interest expenses, also as a result of higher effective LIBOR resets on our borrowings and from other operating expenses, which is partially offset by a decrease in investment advisory fees.

NAV was stable quarter-over-quarter as we ended Q2 with net asset value per share at $18.08 versus $18.10 from the prior quarter. Our supplemental earnings presentation provides a NAV bridge to walk you through these changes. The company had $34.8 million in accumulated, undistributed net investment income at quarter end, resulting from net investment income that has exceeded our dividend in prior quarters. This equates to $0.87 per share on current shares outstanding.

As Brendan mentioned earlier, subsequent to quarter end, we closed on an issuance of $40 million in principal amount of 4.5% convertible notes due April 2022. These notes have identical terms and are part of the company's outstanding $115 million notional convertible notes. Net proceeds of the offering were used to pay down a portion of the debt under our revolving credit facility. We were very pleased with this reopening as it allowed us to opportunistically increase our unsecured funding.

With that, I will turn it back to Brendan.

Thanks, Jonathan. Overall, as I mentioned, we are pleased to have produced a strong quarter in first half of 2018 for our shareholders. We believe our execution this quarter in the face of dynamic regulatory and market conditions will position the company with increased flexibility, thereby enhancing opportunities to continue to deliver attractive returns for our shareholders. As always, we thank you for the privilege of managing your capital, and we look forward to continue to work hard on your behalf over the remainder of the year.

With that, Ian, let's open it up for questions.

(Operator Instructions) And our first question comes from the line of Leslie Vandegrift from Raymond James.

Just a first one on the senior credit loans. Pretty good growth this quarter there. Some of the peers have already announced that they're shrinking their senior loan funds. What kind of outlook do you have there? And what does the competitive environment look like for those loans right now since others seem to be moving away?

Yes, Leslie. So Jon Yoder here. So I guess, what I would say is on the Senior Credit Fund, as we talked about in prior quarters, we had slowed down sort of the growth. In fact, we had some portfolio decline, if you go back over the last 2, 3 quarters prior to this quarter. And a large part of that was we're looking at what the best opportunities are across the market. And our view was, and for much of the past few quarters, that sort of the upper-middle market, which is really where the Senior Credit Fund is focused, was a little bit less attractive. There was a little bit more competition from CLOs and other types of vehicles that are focused more on the upper-middle market. And so we didn't want to force capital out, didn't want to reduce the yields that we were getting on the assets that were already in the vehicle. And so we kind of took a step back a little bit. This quarter, I would say, there -- I would say this quarter, we saw a little bit of improvement in terms of the environment for deploying capital into that part of the market, especially in June when we saw spreads widen a little bit for those types of loans. So we were able to grow the portfolio a little bit. But I would say, overall, we -- we're not -- there's no big strategic shift that we're making. We still are pleased with the Senior Credit Fund. It's been a great performer for us. It is our largest investment, as we've talked about. And if we can find good opportunities, we'll continue to deploy capital there. If we can't, we're fine letting the vehicle kind of produce returns that it's producing based on the existing portfolio. So -- and I mean, I wouldn't expect any major strategic shift in that portfolio.

The only things I would add, Leslie, if you look back historically over how we've deployed capital here, it's been thoughtful, it's been opportunistic. We've taken the balance sheet up and down as we've seen opportunities. That said, that's a -- really a result of what we're seeing on a micro basis. We talk about it often, but this is not simply a beta expression of the syndicated leverage loan market. It's a relatively small pool of capital where we've been able to find predominant first lien assets at pretty attractive yields within sort of the upper part of the middle market. So it's a relatively small and disciplined sandbox, if you will, where we've been looking for opportunities. And you can rest assured, we'll continue to be thoughtful and disciplined as we do continue to deploy capital here. And I think, furthermore, when you look at the growth this quarter, it was really a reduction of the repayments that primarily drove the increased balance, which I think is a reflection of a little bit of the market opportunity that the markets offer that Jon described. So just like Jon said, no dramatic philosophical changes, and we'll continue to be thoughtful and opportunistic with new opportunities there.

Perfect. And on balance sheet now, you have access to shareholders -- like you said, overwhelmingly approved you guys to begin using the increased turn of leverage. What does that pipeline look like then? So between co-investing with the other funds and your own investments. Over the next 12 months, are you looking at the same size about average EBITDA of companies? Are you looking at the same sized hold sizes for you guys? Now what's the...

Yes. No, thanks for the question, Leslie. Again, we talked about it a lot last quarter. That's a big change from a regulatory perspective. I think the first order analysis that we, as a team, do is strategically, in light of the change in regulation, what's the right thing to do? And we certainly think that the added flexibility by the reduced asset coverage ratio is a tremendous asset that we think, as a management team, we should avail ourselves of. And so we took the step to get shareholder approval rather than board approval and just waiting a year to be able to implement the strategy. If it's something good, we'd rather get there sooner rather than later. But recognize that sitting here today, there's still some work to do to be able to implement the leverage. We just got shareholder approval a couple of weeks ago. We continue to work with our financing providers to amend our credit facility to be able to incur the incremental debt, and we're hopeful the discussions are constructive. We think there's certainly financing available for us given the strategy that we're pursuing. And so we'll continue to leverage our capital base across the 3 different vehicles and co-invest in a similar fashion across those different vehicles based on those market opportunities. So no dramatic change that happens philosophically, this vehicle versus the others. And I think, again, when you look at this quarter, most of what we did, as Jon mentioned, was in more senior assets. I think 70% of what we did was first lien loans. We did a little bit of last unitranche as well. That's a reflection of what we saw from a bottoms-up perspective in the market. And that's how we'll always look at capital deployment opportunities. We may be sitting here a year from now, and yes, there's a lot of capital chasing those senior deals and there's better opportunities away. So the most important thing to remember is the flexibility that we get by virtue of having the ability to shift our balance sheet. We've taken steps to do that, and now we're positioned, really, to be able to deploy in the right part of the market given market conditions.

And just the last modeling question. Spillover income at the end of the quarter, do you have that number?

We quoted that number as $0.87. It's the $34.8 million, I believe, was the number I had in my prepared remarks.

And your next question is from the line of Fin O'Shea from William -- I'm sorry, from Wells Fargo Securities.

I'll start out a question for Mr. Lamm. Forgive me if this is in the public domain already, but can you provide an update on discussions with the credit facility providers? And to the extent that -- assuming we haven't heard anything thus far, to the extent that more owners terms would be -- or more tighter terms generally would be applied beyond 1:1, are we seeing you move more into the unsecured market for financing?

No. We're having very constructive dialogue with the -- with our lenders. And certainly, with respect to terms, we're certainly going back and forth. This is a change to go from 1:1 to 2:1, and there will be certain amendments to those terms. But as we look at a variety of at least early discussion items, we think that there is a very, very workable solution here to be achieved between us and our lenders. And frankly, the way that we think about risk management in levering our portfolio conforms very nicely with the way that the lenders do. So we don't anticipate having an issue there. But with respect to accessing the unsecured markets, we're certainly going to continue to avail ourselves of opportunities to do that when available. We're very pleased with the Fitch rating that we received, and we'd be looking for both financing on the revolver as well as through the unsecured markets on a go-forward basis.

The only thing I'd add there, Fin, is recognize and you'll appreciate when the change in regulation happened, I think it's -- it took the sell-side community by surprise. It took certainly the BDC managers by surprise in terms of the speed with which it happened, and I think the lending community is in the same position. And as you know, historically, they've really underwritten the space based on a very conservative regulatory cap, 1:1 debt against 50% loan-to-value against a pool of these assets. The battle-tested portfolios through the crisis, lenders have really not lost a lot of money, and now that the regulation has loosened, they need to sort of stop, take pause and make sure that as they do focus on where and to whom they want to lend, they're doing so in a manner that's been consistent with their own risk management policies. And yes, I think that's just a process that needs to be worked through. As Jon said, we're having very constructive dialogue, and we suspect we'll get to a good position that's going to allow us to execute on our business model. For us, we're focused on getting the right structure in place, not the most expeditious structure in place. Obviously, we're in this for the long term. Anything we could do in the unsecured markets helps facilitate discussions with our senior lenders that improves their collateral coverage if there's more junior debt in the stack. And so as Jon mentioned, we were very pleased, despite some of the noise in the rating agency community more broadly, to get Fitch to give us investment-grade rating. On the back of that, we were able to access the unsecured market, and so that's a positive for us. And over the long term, we suspect that'll be an area where we will be interested in accessing more debt capital as the business model continues to evolve.

Very well. And then one for you, Brendan. I was going through the transcript with you outlining the pitch for leverage last quarter, and one item you mentioned was the benefit of being flexible in distributions. Can you expand on this? Does it mean that you'll sort of lever a bit by a flush of outstanding ICTI? Or will there be some change to dividend policy going forward?

I suspect -- and you'll forgive me for not recalling exactly the script last quarter. We were probably referring to the [RIC] test and the flexibility and the cushion we have relative to the RIC test, which if you were to violate those, it crimps your distribution capabilities. So simply having the increased flexibility, if you're a shareholder, that means there's just a lot more cushion that keeps your dividend all the more secure. So certainly was not intending to signal any change in dividend policy. A question we get a lot in light of the consistent over-earnings of our dividend is a conversation we have with our board, of course, every quarter. And as we make that analysis, our goal is to maximize outcomes for our shareholders. And sitting here today, we think better to retain that income into NAV, where the market is giving a premium evaluation to that NAV. Their outcome for shareholders has been pretty good in that pocket. And so something we will dynamically focus on over time, but no change in that word we're talking about now regarding distribution policies.

Okay. Just one more small question on investment. Businessolver, can you -- we saw that come into one of the venture lending BDCs this quarter. Can you outline the nature of that deal? What's the, say, debt-to-EBITDA or EBITDA levels in general? Just some kind of metrics to help us get comfortable with that deal.

Yes. Well, recognizing that we're typically bound with confidentiality provisions, and so getting into very specific financial attributes of the loan is challenging for us on a single-name basis. But rest assured, this is a traditional loan consistent with our investment strategy all along. Businessolver is a Warburg portfolio company. It's a cloud-based health benefits provider to smaller enterprises. So pretty interesting and unique market opportunity for Warburg. It's a company that is, I would say, a typical-sized company from a revenue and EBITDA perspective with respect to our portfolio and how we describe the business. And so notwithstanding the fact that Hercules is a co-investor here and are traditionally involved in venture lending, period, full stop, this is not a venture loan, this is a traditional loan historically, consistent with what we've done. And so we can leave it at that. But if you have any other questions, happy to answer that.

And our next question is from the line of Derek Hewett from Bank of America Merrill Lynch.

The yield on income-producing investments appeared like it was flat quarter-over-quarter, about 11.5% versus some peers, which saw modest gains given the rise in LIBOR over the last couple quarters. I mean, it appears some of the -- at least some of the variance was due to the Senior Credit Fund. So my first question is, were there -- is that correct? And were there other material factors that impacted the yield this quarter? And then kind of add as a related question, could you give us a status update on professional physical therapy, which I believe is the only nonaccrual in the Senior Credit Fund at this time?

Sure. Derek, it's Jon Yoder. So in terms of the yield on income-producing assets, you're right, it's 11.5%, which is flat quarter-over-quarter. Although if you look at the longer-term trend on that, that's been going up and I think, consistent with rise in LIBOR. So you're right that the contributors -- I mean, all else being equal, you probably would've expected that. If the portfolio was completely stagnant, you probably would've expected that to go up a little bit this quarter, given the increase in LIBOR that we experienced, although not a big move this quarter. I think that there was a couple -- 2 contributors to that. One is the one you mentioned a little bit less from the Senior Credit Fund; the other one is the yields on new investments this quarter, some of the new things that we put in were a little bit below what some of the exits were. And so that was -- that would be the other reason that was flattish rather than up. So those are 2 things. I wouldn't necessarily read a lot into -- as we say, every quarter it feels like the origination yields any one quarter relative to the repayment yields. Any one quarter, I would not suggest are necessarily a trend. If you look at the past quarters, in past quarters, we've had yields on new originations that exceeded yields on repayments. So it's -- including, I think most recently, 2 quarters ago. So it's tough to extract a trend from that. But if you had to say this quarter why was yield on income-producing assets flat, that would be the reason why.

And Derek, I'll take a crack at Pro PT. Maybe just kind of first frame for context. So Senior Credit Fund has a $10 million exposure to Pro PT. We marked it down to, I think, $0.78 on the dollar this quarter. So we, of course, own half of the Senior Credit Fund, so that's a $5 million cost basis relative to our $1.3 billion of assets. So relatively small exposure, but you're right, it is actually our first nonaccrual in our Senior Credit Fund since inception. So the business is a provider of physical therapy solutions, sponsor own business that ran into some issues around collections. So we are working constructively with the owner of the business as well as the bigger lenders in that position. We expect in short order there to be a successful resolution there, which would entail junior capital coming in from the sponsor to shore up liquidity of the business and probably a restructuring of the payment schedule for that piece of paper. And I'm actually being corrected, we were down to $0.83 on the dollar this quarter. So not a lot to see there in terms of overall positions, but of course, whenever we have an investment that isn't performing relative to our expectations, a lot of focused energy in making sure it gets remediated.

Okay, great. And then also, could you remind us what the -- what is the revised leverage target given the additional flexibility that you guys are going to have from the adoption of the 150% asset coverage ratio?

Yes. We haven't, Derek, put out a formal leverage target. What we discussed in great length last quarter on our call and a little bit with some other callers earlier today is the flexibility and dynamic leverage allocation based on the risk profile of the investments. And so recognize that within Goldman Sachs, we had a risk management function that is quite robust. And without getting into the sort of all the grainy details, effectively, the nature of the investments, whether it's a junior investment or senior investment, will dictate the degree to which -- the amount of, call it, risk capital it will attract. And so you can expect, Derek, that as our portfolio trends more senior, we can take on more leverage. To the extent we continue with a different mix of investments, there'll be less leverage. But I think in any

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you could probably think of it as 1.5 as the max leverage that we would likely take on. That would be consistent with the same percentage amount of cushion relative to the regulatory cap that we have in place today. So in other words, when you think about 0.75x being sort of the max comfort level for us, that's relative to the regulatory cushion on a percentage basis on 200% asset coverage. It's a similar dynamic. And so dynamic allocation of balance sheet leverage based on the composition of the assets that we're originating.

Okay. And then just in terms of expected ROEs, do you think you'll be able to kind of -- is it going to be status quo if you look at the core, say, the core ROE over the last 1 to 2 years? Or do you think there should be some upward bias given that the higher leverage aspect of it?

Yes. Again, we spent a lot of time talking about this last quarter. The main reason for asking our shareholders for the flexibility to pursue this is because we do think there are opportunities, one, to pursue a broader range of assets that give us the flexibility that we talked a lot about. But also to increase returns on equity for our shareholders. And I think further to that, we actually took very decisive action to reduce our management fee on 100% of the assets by 50 basis points. So when you think about the mere impact of that piece alone, that certainly should contribute positively to better returns under the new regime. So we're hopeful that all those factors, the flexibility, the lower expense structure on assets will contribute to better outcomes, which increase the breadth of investments that we can pursue and drive those returns.

(Operator Instructions) At this time, there are no further questions. Please continue with any closing remarks.

Great. Thank you, Ian, and thank you all for joining us on a summer Friday. We appreciate always your time and attention. If you do have any additional questions, please feel free to reach out directly to the team, and we'd be glad to speak to you. Thank you so much.

Ladies and gentlemen, this does conclude the Goldman Sachs BDC, Inc. Second Quarter 2018 Earnings Conference Call. Thank you for your participation. You may now disconnect.