Interactive Brokers Group Inc (IBKR) 2013 Q2 法說會逐字稿

Good day everyone, and welcome to the Interactive Brokers second quarter 2013 earnings results conference call. This call is being recorded. At this time, for opening remarks and introductions, I would like to turn the call over to Ms. Deborah Liston, Director of Investor Relations. Please go ahead.

Thank you operator, and welcome everyone. Hopefully by now you've seen our second quarter earnings release, which was released today after market close and is also available on our website. Our speakers today are Thomas Peterffy, our chairman and CEO; and Paul Brody, our group CFO. We'll start the call with some prepared remarks about the quarter, and then we'll take Q&A.

Today's call might include forward-looking statements which represent the Company's belief regarding future events and by their nature are uncertain and outside the Company's control. Our actual results and financial condition may differ, possibly materially from what's indicated in these forward-looking statements. We just ask that you refer to the disclaimers in our press release. You should also review a description of the risk factors contained in our financial reports filed with the SEC.

Now I'd like to turn the call over to Thomas Peterffy.

Good afternoon and thank you for joining us to review our second quarter results. Before I get into the complexities, I want to simply state operating results without any currency and tax impacts. For the quarter, our pretax income excluding currency effects was $176 million. This is composed of $123 million in brokerage, $51 million in Market Making and $2 million in corporate. Our currency [losses] were $75 million, which corresponds to a 1.5% decrease in the value of the GLOBAL relative to the US dollar [our] capital of $4.8 billion.

Now to the details. I'm pleased to report that this was another record-breaking quarter for our Brokerage segment, which achieved pretax profits of $123 million, a 37% increase from a year ago, and our pretax profit margin climbed to a new high of 58%. This performance is obscured in our consolidated results due to the lackluster performance of the Market Making unit, which earned only $7.6 million. However, after removing currency effects, which I'll explain shortly, Market Making still earned a respectable $51 million in pretax earnings. Our results in this segment have suffered for the past several quarters due to competitive pressures to such extent that the future of this segment has become quite the hot topic of discussion among our investors, and we continue to evaluate what is in the best interest of our business as a whole and shareholder value. I will discuss more on this later.

But first, I would like to highlight our achievements in the Brokerage segment of 506,000 this quarter, a 9% increase over the first quarter and a 19% increase over the prior year quarter. Total customer equity grew 31% to $37.4 billion, year-on-year. While this is partly attributable to the increase in market values as illustrated by the 18% year-over-year rise in the S&P, it is also the result of our ability to continue attracting larger institutional accounts. This should demonstrate that by the average equity per customer account, which grew by 17% to $167,000.

Customers are taking advantage of our extremely low margin rates. In the first half of this year, we lent over $11 billion to our customers at an average rate of 1.14%. In total, margin loans have grown 32% year-over-year, boosting net interest income by 27%. We are seeing similar momentum in the rate of new account openings. Our average monthly account growth for the first six months of this year -- this year over 2400, outpacing last year's monthly average of 1700 -- what was surrounding, sorry. Our growing number of satisfied customers are spreading the word about their positive experience and referring us to friends and colleagues. Word of mouth is still our largest source of new accounts, and this effect is magnified by our customer base that continues to expand and which now totals over 224,000 accounts.

To give you some perspective on the size of our business today, on the average day in the first half of 2013, our customers traded over 300 million shares, 1 million options, 460,000 futures, and $11 billion of Forex. Our commissions are among the lowest in the industry across all products. During the second quarter, our average stock rate contained nearly 1,400 shares at the commission of $2.25. The average option trade contained [ten counter] of $6.80 commission, and there were 3.5 contracts to the average futures trade, at the commission of $6.29. Please keep in mind that these numbers include exchange fees and are averaged over 100 exchanges, some of which have very different fee structures. Our average account holder who trades over 500 times a year understands the value exceptional price execution, industry low commissions and financing rates, superior technology and sophisticated trading tools. These differentiators have not only earned IB numerous awards, but have also contributed to an ever-increasing awareness among financial professionals that IB's rapidly becoming a strong contender and arms broker to serve financial advisors and provide prime brokerage services.

We remain true to our growth strategy of focusing on savvy, active traders and investors as opposed to the masses, and still, our customer base has become quite diversified with respect to geographic end segments. Only 44% of our customers live in the US, and less than 60% are individual customers. We are making great headway in attracting institutional accounts with introducing brokers, financial advisors, proprietary traders and hedge funds being our fastest growing segments, in that order, looking at it from a point of view of account growth. All these account types require specialized tools, which we have been developing and refining over time. For instance, financial advisors value the ease of having automated trade location, reposition rebalancing over many client accounts, as well as our model portfolio technology and our money manager marketplace. Hedge funds take advantage of advanced tools like our book trader, market scanner, basket trader and option trader, to name a few, in addition to our [50] prototypes and [argos].

While we have not introduced any critical new products this quarter, we have been working on enhancements to our current technology which we believe can be a significant draw for the right customer segments. For example, EmployeeTrack is our turnkey solution for compliance officers or financial organizations that are required to monitor their employees' brokerage activity. We have recently added more features that makes this even a more robust tool. Compliance officers can now screen for certain outliers, such as number of trades greater than a certain amount or profit or loss outside of a given range, and they can also restrict or flag trading in certain symbols. In addition, our EmployeeTrack technology allows us to consolidate account data for clients that have accounts at other brokers. We also have a number of other important technology developments in the pipeline which will be announced in the quarters to come.

Now turning to the Market Making segment. Market Making conditions improved from the first quarter, although the improvement in our trading gains was hampered by currency fluctuations that moved against us. As a result of our currency hedging strategy, in which we diversify our equity of nearly $5 billion across a basket of 16 currencies that we call the GLOBAL, we record a transaction loss when we report our results in US dollars, as the dollar has strengthened against the GLOBAL. This was again the case at the end of the quarter, as the US dollar continues to rally, held up by rising rates in wake of the Fed Chairman's comments last month that the central bank would begin to pare back monetary dealings.

In the second quarter, we saw modest improvement in certain transposed benefit to our trading gains. [Opportunity] rose in June, topping 20 for the first time this year, most recently by investor concerns over the aforementioned press comments regarding the [transitive] easing program. The average rate for the quarter totaled [15], which was 9% higher than the first quarter. The ratio of actual to implied volatility, which is directly correlated to trading gains also rose from 76 in the first quarter to 95 in the second. This environment also drove an increase in trading volumes across the globe.

Exchange trade option volumes increased 13% in the US and increased 11% globally for the second quarter. By comparison, our firm's total option volume increased by 10%. As a result, our firm's market share decreased from 12% to 11.8% in the US, and was unchanged at 9.4% GLOBAL. In the Market Making segment, our option volumes increased only 9% during the second quarter, which drove our market share in that segment from 6.4% to 6.2% in the US and from 6% to 5.9% GLOBAL.

As I mentioned earlier, the positive trends in volatility and volumes were partially offset by unfavorable currency movement, which resulted in a $75 million translation loss. $33 million of this loss is netted with trading gains, and the remaining $32 million is reported below the line in comprehensive income. Even without the currency effects, trading gains totaled $102 million, 19% lower than the year-ago quarter. Overall, we did not achieve our target 10% pretax return on equity this quarter, even though we continued to pay, that is the Market Maker equity this quarter, even though we continued to pay the recurring 10% dividend from Market Making capital. As a result, we have slowly been reducing capital in this segment.

Due to the competitive pressures I have been discussing on the last several calls, we are continuing to diminish our footprint in Market Making. We have been scaling back our participation in certain products and certain exchanges, and in the second quarter, have been reallocating headcount to a growing Brokerage business. But this is a slow, gradual process, and we are not rushing to exit this business. We do not know where the increase in regulatory capital requirements for banks and brokers will end up and if that will generate any opportunities for us. In addition, our Brokerage segment benefits from the cost savings and operational efficiencies shared between these highly complementary businesses. And it is important to note that this synergy allows our customers to enjoy lower commissions, superior price execution, grow GLOBAL excess and greater depth of securities lending inventory, to name just a few.

And now Paul Brody will give you a more thorough review of the financials.

Thank you, Thomas. Thanks everyone for joining the call today. And as usual, I'll first review our summary of results and then talk about segment highlights before we take questions. The second quarter, we saw the continuing trend of robust growth in our Brokerage business and tepid results in the Market Making segment. Net revenues this quarter were driven by rising Brokerage commissions and net interest income, partially offset by declines in trading gains, which were exacerbated by translation losses on the strength of the US dollar relative to other currencies. As a reminder, our financial statements include the GAAP accounting presentation, known as comprehensive income. Comprehensive income reports all currency translation gains and losses, including those that reflect changes in the US dollar value of the Company's non-US subsidiaries, known as other comprehensive income or OCI, and that these are reported in the statement of comprehensive income.

In light of the strengthening of the US dollar against a number of other currencies, adding OCI to net income decreased our reported earnings per share by $0.07 for the quarter. Overall operating metrics for the latest quarter were somewhat mixed. Volumes were up in futures and stocks and down in options versus the year-ago quarter. Average overall daily trade volume was just shy of 1.1 million trades per day, up 16% from the second quarter of 2012.

Electronic Brokerage metrics showed a healthy increase in the number of customer accounts and a strong increase in customer equity. Total and cleared customer DARTs were both up from the year-ago quarter and sequentially. Orders from cleared customers who clear and carry their positions in cash with us and contribute more revenue accounted for 92% of total DARTs, holding fairly steady with the recent quarters. Market Making trade volume was up, though contract and share volumes were mixed across the product types. Other positive metrics, such as the increase in actual to implied volatility ratio that Thomas mentioned, were largely offset by losses on our currency strategy.

Net revenues were $284 million for the second quarter, up 9% from the year-ago quarter. Trading gains were $59 million for the quarter, negatively impacted by currency translation effects, while trading gains compared to the year-ago quarter decreased by 30%. Excluding the currency translation, trading gains would have dropped 19% from the year-ago results. Commissions and execution fees were $138 million, up 28%. Net interest income was $63 million, up 19% from the second quarter of 2012. And within that, Brokerage produced $58 million, and Market Making, $5 million. Other income was $24 million, up 59%.

Non-interest expenses were $150 million, down 2% from the year-ago quarter. Within the non-interest expense category, execution and clearing expenses totaled $65 million, down 2% from the year-ago quarter as significantly lower Market Making fees largely offset increases in Brokerage fees. Compensation expenses were $58 million, a 3% decrease from the year-ago quarter. At June 30, our total headcount was 892, a level consistent with both the year-ago quarter and the prior year-end count. However, within the operating segments, we added staff in Brokerage and cut back in Market Making. As a percentage of net revenues, total non-interest expenses were 53%, and out of this number, execution and clearing expense accounted for 23%, and compensation expense accounted for 20%. Our fixed expenses were 30% of net revenues.

Pretax income was $134 million, up 23% from the same quarter last year. For the quarter, Brokerage accounted for 94%, and Market Making accounted for 6% of the combined pretax income. Ex currency effects, the contributions were 71% for Brokerage and 29% for Market Making. For the second quarter, our overall pretax profit margin was 47%, as compared to 42% in the second quarter of 2012. Brokerage pretax profit margin was 58%, up from 53% in the year-ago quarter.

Market Making pretax profit margin was 11%, down from 26% in the year-ago quarter. However, excluding translation effects, Market Making pretax profit margin was 46% in the latest quarter. Comprehensive diluted earnings per share were $0.14 for the quarter, as compared to $0.09 for the second quarter of 2012. On a non-comprehensive basis, which excludes OCI, diluted earnings per share on net income were $0.21 for the quarter as compared to $0.17 for the same period last year.

In terms of the balance sheet, as a result of the growth in our Brokerage business and the withdrawal of capital from our Market Making operations, regular and special dividends, Brokerage continues to account for over two-thirds of our balance sheet assets. From the year-ago quarter, cash and securities segregated for customers rose 11%, and secured margin lending to customers rose 33%, while positions in securities held by our Market Maker units were paired back by 28%. According to our announced policy, regular quarterly dividends will continue to reduce the capital employed in the Market Making segment unless higher profitability returns. Nevertheless, our balance sheet remains highly liquid with low leverage. We actively manage our excess liquidity, and we maintain significant borrowing facilities through the securities lending market and with banks.

As a general practice, we hold an amount of cash on hand that provides us with a buffer should we need immediately available funds for any reason. We also continue to maintain well over $2 billion in excess regulatory capital in our broker dealer companies around the world. Our long-term debt at June 30 remained at zero. And at June 30, our consolidated equity capital was $4.90 billion.

Segment operating results are summarized in the Earnings Release, and of course, will be more fully detailed in our quarterly 10-Q report. So I will just highlight the noteworthy items, beginning with Electronic Brokerage. Customer trade volumes were up across all product types. Clear customer options and futures contract volumes were up 26% and 23% respectively, and stock share volume was up 54% from the year-ago quarter. Customer accounts grew by 12% over the total at June 30, 2012 and by 3% in the latest quarter.

Total customer DARTs were 506,000, up 19% from the year-ago quarter, and 9% from the first quarter of 2013. And our cleared customer DARTs, which generate direct revenues for the Brokerage business, were 463,000, up 16% on the year-ago quarter and 10% sequentially. The average number of DARTs per account on an annualized basis was 526, up 4% from the 2012 period and 6% sequentially. Commission revenue rose on a product mix that featured larger average trade sizes in futures and stocks and slightly smaller in options. This resulted in an overall average cleared commission per DART of $4.50 for the quarter, 8% higher than the year-ago quarter, though down 2% sequentially. These numbers reflect our success in attracting institutional customers, who tend to trade in larger size.

Customer equity grew to $37.4 billion, up 31% from June 30, 2012 and up 5% sequentially. These changes took place during periods in which the S&P 500 index rose 18% over the past year and 2% over the last quarter. Sources of growth continues to be a steady in-flow of new accounts and customer deposits. In addition, our favorable financing rates have allowed us to attract customer margin borrowings. After falling to lows in the fourth quarter of 2011, margin debits have been building steadily to $11.2 billion, 32% over the quarter end level a year ago. Customer credit balances, which increased 23% over the year-ago quarter, also continue to grow progressively, though spread compression especially in certain foreign currencies persists in restraining interest income.

Higher options and futures trade volume resulted in top line revenue from commissions and execution fees of $138 million, an increase of 28% from the year-ago quarter and 15% sequentially. These revenues are spread mainly across options, futures, stocks and foreign exchange. Net interest income rose to $58 million, up 27% from the second quarter of 2012 and 8% sequentially. Low benchmark interest rates, which continue to compress the spreads earned by our Brokerage unit, have been offset by steadily higher customer credit balances in each successive period, and our aggressive lending rates have boosted customer margin borrowing. Our fully paid stock yield enhancement program continues to provide an additional source of interest revenue that's shared with our participating customers.

Keeping pace with the increase in commission revenue, net interest income as a percentage of net revenue held steady at 27%. With the growing customer asset base, we believe we are well positioned to benefit from a rising interest rate. Based on current balances, we estimate that a general rise in overnight interest rates of 25 basis points would produce an additional $50 million in net interest income annually. The next 25 basis points would yield about $40 million additional, and thereafter, the increases would be less due to the fact that our rates are pegged to market benchmarks. Execution and clearing fees expenses increased to $41 million for the quarter, up 13% from the year-ago quarter and 12% sequentially, in line with volume increases. Fixed expenses increased to $49 million, up 7% on the year-ago quarter, primarily due to higher software development related expenses. Pretax income from Electronic Brokerage was $123 million for the second quarter, up 37% on the year-ago quarter, and 11% sequentially.

Turning now to Market Making. Market Making trade volume was up 14% from the prior year quarter, though mixed across the product types. Options contract volume was down 7% while futures contract volume and stock share volume were up 47% and 57% respectively. Trading gains from Market Making for the second quarter of 2013 were $59 million, down 31% on the year-ago quarter. Currency translation effects negatively impacted second quarter's reported earnings by $43 million, a similar effect to the year-ago quarter when reported earnings were reduced by $41 million. Our overall equity is measured in US dollars, was reduced by the strengthening of the US dollar against certain currencies.

More specifically, we measure the overall loss from our strategy of carrying our equity in proportion to the basket of currencies we call the GLOBAL to be about $75 million for the quarter. Because of $32 million translation loss, this is reported as other comprehensive income, this leaves a loss of $43 million to be included in reported earnings. To summarize this, if we eliminated all currency effects, pretax income from Market Making for the second quarter of 2013 would be about $51 million.

Execution and clearing fees expenses decreased to $25 million for the quarter, down 20% on the year-ago quarter, driven by lower trading volumes and options. Fixed expenses were $35 million, down 4% from the year-ago quarter, primarily due to our devoting fewer software development resources to this segment. And pretax income for Market Making was $8 million for the quarter, down 68% from the year-ago quarter. Taking into account the currency effects from each period, the year-over-year decrease in pretax income from Market Making would be 22%.

Now I'll turn the call back over to the moderator, and we will take some questions.

Thank you.

(Operator Instructions)

Rich Repetto, Sandler O'Neill.

My first question is on Brokerage. So the interest rate sensitivity that you talked about, Paul, with 25 basis points equaling $50 million, I calculate on that 25-basis-point increase, you'd take somewhere around 20 basis points of that to get to the $50 million. Is that -- can you give us sort of how the split would be on the first and second increases?

I can tell you in broad strokes. We take most of it on the first 25 because many -- a lot of holdings are in currencies with low interest rates, like the dollar right now. As a result, the credit rate to the customers is generally zero in those currencies. Hence, as the rates rise, the first 25 basis points would capture most or all of that.

As the rates continue to rise, if you look at our website, for example, it will show you that we base our credit interest to our customers on the benchmark rate minus some spreads, say, 50 basis points. So while we would capture most of it, at some point we cease to capture all of it, and then we're pegged in a spread -- 50-basis-point spread environment. The only other thing I would add to that is that in some currencies, like Australian dollar or Canadian dollar, the interest rates are already higher, so as rates go up, we may earn more, but we also pay more immediately to those customers.

Got it. That's helpful. Thank you.

And then on Brokerage, so you allocated -- looks like around [$300,000] more capital to the broker, and I'm just wondering why you would do -- like the margin loan balances stayed pretty flat, up slightly. I'm just trying to understand capital -- the Brokerage part of the capital allocation strategy here.

We do not allocate capital. The capital ends up in the segment where it's earned.

Got it. That makes sense.

And then the last question -- Thomas, this is a question everybody else is going to ask you, too, but on the Market Maker, so if you see -- I calculate somewhere -- capital declining because of the dividend and so forth about 8% quarter to quarter, down $230,000. So I guess the question is --

What are you saying, $230,000?

That the capital was -- if you just look on page 1 of your earnings release --

$2.3 billion?

It's $2.6 billion, if you had $4.9 billion in total equity, and $2.3 billion to the broker, that leaves $2.6 billion.

Right, right.

Last quarter, it was $2.83 billion.

Right.

So rough numbers, probably rounding issues, but down about $230,000 quarter to quarter.

$230 million.

Excuse me, $230 million. My mistake. You're absolutely right, $230 million.

Right.

I guess the question is -- if that's about an 8% decrease, or around there, quarter to quarter, at what level -- and we know you've been very -- it's been important to keep the Market Maker over-capitalized. I know you gave the number -- the $2 billion in excess capital for the broker -- in the BDs. But the question is -- at what level does it become you can't sustain -- I don't think you can go down to $200 million or $500 million. At what level do you have to say -- the Market Maker should no longer operate because the capital level is too low?

As I said in my prepared remarks, we are shrinking the number of products and the number of exchanges that we make in market. So as those products decrease, the required capital decreases. So basically we could be making -- we could maintain the Market Maker on a few hundred million dollars' worth of capital.

Okay.

On a very limited number of products.

And so that would be the strategy then, just to continue this slow decline in capital rather than at some point say -- enough, and return capital to shareholders and cease operating.

Unless something unusual happens, that is what we have been doing, and that is what we're going to continue to do. Now, if suddenly there are great opportunities, we can imagine even taking some capital from the broker and put it in the Market Maker, and if it really becomes a hopeless situation, then we could take the money out of -- all the money out of the Market Maker, right?

Understood. I got it. Thank you. Sorry about the mistake on the units there on the capital.

Sean Brown, Teton Capital.

Hey, guys, congratulations on the very good quarter. I just had a quick housekeeping question around the share count here at IBG, Inc. level. I saw that it's up some from Q1, maybe about 1.4 million shares. And I know that share grants are sort of lumpy there, and so I'm just wondering, is that from share grants or is that from people I guess transferring or converting their IBG holdings stock over to Inc. level?

Sean, it's the former. In our stock incentive plan, there's a vesting period over 6.5 years, and the vesting occurs every May, which is -- we would agree, in the second quarter. So every second quarter, you're going to see the effect of shares vesting and becoming part of the public flow.

Got it. So it was basically restricted stock before, and now it's just common stock?

Restricted stock units inside the stock incentive plan, which have vested and become common stock, that's exactly right.

Got it. Okay. Thanks a lot, guys, and congrats again.

Thank you. Mac Sykes, Gabelli & Company.

Good afternoon, gentlemen. I was wondering, Thomas, if you could comment on Brokerage markets outside the US? Where are you most optimistic about the Firm's positioning?

Geographical distribution, our Brokerage accounts have grown most in Asia, and secondarily in the United States.

And then, you've done a terrific job with the Brokerage balances, and you talked about the margin rates. I was just curious as to what the inputs really are for your customers in terms of maintaining the margin balances, ie, what's the risk to decrease balances? Are they more sensitive to the market declines, volatility, perhaps higher interest rates, competitive aspects? Just want to try to figure out sort of the stickiness --

We did find when the market fell that balances have come down, and then as the market rises, it tends to -- balances tend to rise again. I would think that the more people -- many people do not believe that we really only charge what we charge, so the more people come to believe that, I expect that these balances are going to rise.

Thank you very much.

Thank you. Niamh Alexander, KBW.

Thanks for taking my questions. If I could stick on the broker, please, Thomas or Paul, can you share with me what the strategy is with the institutional client group at the broker, because it seems like it's growing? And you gave us the order in which you're growing clients. Can you help me understand how you're selling to that group, how you're marketing to that group, and what, if anything, has changed in your marketing strategy there for that group?

Not a lot has changed. We are obviously -- you see, we are product driven. So we always start with product development, and then we train our sales force to understand what the new aspects of the product are, and then they go out and try to push the products. So instead of being marketing driven, we are product driven. And maybe that doesn't work as well in the institutional marketplace as in other things that we have done. But believe me, we're working on it very hard.

We'll find you hiring a few Wall Street salespeople in there?

Sorry?

You're not afraid to hire a few Wall Street salespeople?

I don't want to get into the issue of multi-million-dollar compensation salespeople. I do not like the taste of it, and I do not like the potential repercussions.

Okay. Okay. So it's kind of the same as you've been doing before -- it's kind of build the platform and let it sell itself, as it were, with recommendations and going forward from there.

Can I go back to one of your comments on the Market Maker? Because clearly you're making money in the Market Maker. You're kind of trying to [lay out] and articulate the strategy, but you did make a comment about potential opportunities with the capital changes for banks and whatnot. Because some of your biggest competitors in the Market Making space are the banks. Do you see an opportunity there, if some of them have to start reallocating capital, is that one of the reasons that you're kind of doing this at a slower pace?

Well, yes. In the Market Making space, some of our biggest competitors are banks, and I think that the returns, as we so well demonstrate, are not so very big in Market Making in exchange to product. I assume that if capital would become more dear to them, then they would consider maybe leaving that business.

Secondarily, some of the smaller Market Makers use these same banks as clearing organizations, and the banks take capital hits on the loans they make to these Market Makers. So if they had to raise those interest rates, then maybe those Market Makers will leave the business.

Okay. So that's -- I guess it's maybe something that plays out over the next couple years, as opposed to couple of quarters, but it's something kind of -- it seems like you see as potential opportunity?

That's correct.

Fair enough. Thank you.

And then the other thing is just on the FX -- I guess it does have quite a big impact on the volatility in the earnings that you're reporting, and kind of clouds the strength in the Brokerage a little bit. I'm just wondering if it's worth maybe reporting just a non-GAAP earnings number that excludes FX on an ongoing basis? We could chat about that after.

I think that (inaudible) could report our earnings in [GLOBALs].

(laughter) It would certainly be less volatile in GLOBALs. What we intend to do, Niamh, is show the various measures, and leave it up to investors and analysts like yourself to determine which ones they want to follow. But we do say that -- we've been saying, as a business philosophy, we maintain our equity in this basket of currencies. And so you can view that as part of the core activity, or not part of the core activity.

Okay. Fair enough. I'll get back in line. Thank you.

Thank you.

(Operator Instructions)

Thank you very much.

Thanks, everyone, for participating today. And just a reminder, this call will be available for replay on our website, and we'll also be posting a clean version of the transcript on our website tomorrow as well. Thanks again for your time, and have a great evening.

Ladies and gentlemen, thank you for participating in today's conference. This concludes our program. You may all disconnect, and have a wonderful day.