Moelis & Co (MC) 2019 Q1 法說會逐字稿

Good day, and welcome to the Moelis & Company First Quarter 2019 Earnings Conference Call. (Operator Instructions) Please note that this event is being recorded.

At this time, I would like to turn the conference over to Michele Miyakawa, Head of Investor Relations. Please go ahead, ma'am.

Great. Thank you, and thank you for joining us for Moelis & Company's first quarter 2019 financial results conference call. On the phone today are Ken Moelis, Chairman and CEO; and Joe Simon, Chief Financial Officer.

Before we begin, I'd like to note that the remarks made on this call may contain certain forward-looking statements, including regarding future performance which are subject to various risks and uncertainties, including those identified from time-to-time in the risk factors section of Moelis & Company's filings with the SEC. Actual results could differ materially from those anticipated. The firm undertakes no obligation to update any forward-looking statements.

Our comments today include references to certain adjusted or non-GAAP financial measures. We believe these measures, when presented together with comparable GAAP measures, are useful to investors to compare our results across several periods and to better understand our operating results. The reconciliation of these adjusted financial measures with relevant GAAP financial information and other information required by Reg G is provided in the firm's earnings release, which can be found on our Investor Relations website at investors.moelis.com.

And I'll turn the call over to Joe.

Thanks, Michelle. Good afternoon, everyone.

On today's call, I'll go through our results, and then Ken will provide additional commentary on our business and outlook.

We reported $138 million of revenues in the first quarter which is down 37% from the prior year. This compares to the overall M&A market in which the number of global M&A completions greater than $100 million declined 18% during the same period. The decline in revenues was primarily driven by fewer transaction completions.

Our M&A closed transactions were down during the period. Restructuring activity declined slightly but continues to be a steady part of our overall business and was ranked #1 both in the U.S. and worldwide for completed transactions during the quarter. On a regional basis, Europe was disproportionately down as we continue to see softness in that part of the world.

Moving to expenses. Adjusted compensation expense was accrued at 64.8% due to our lower revenue base. We expect our compensation ratio to fall back to our target level for the full year. Our quarter 1 noncompensation expenses increased 2% versus the prior year period. The non-compensation ratio was 27.6% in the current period versus 17% in the prior year period due to our lower revenue base. We expect our noncompensation base rate to remain near the $38 million next quarter.

Moving to taxes. Our corporate tax rate is 25.3% for the quarter before the discrete tax benefit related to our equity award settlements. The tax benefit was approximately $8.7 million and it produced an overall net tax benefit in the quarter.

As a reminder, our adjusted net income presentation reflects all the firm's income tax that are calculated at effective corporate tax rate.

We expect another benefit in the second quarter related to anticipated equity award settlements. Assuming a stock price near current levels, the EPS benefit should be about $0.09 or $0.10 in quarter 2.

Finally, our Board declared a quarterly dividend of $0.50 per share, consistent with last quarter to be paid on June 25 to stockholders of record at May 10. We ended the quarter with a strong financial position with no debt and $78 million of cash and liquid investments.

And I'll now turn the call over to Ken.

Thanks, Joe, and good afternoon, everyone.

The financial results for the first quarter were clearly disappointing. However, from a qualitative basis, we remained active with our clients, we expanded our client reach and saw an increase in the number of new business activity. As a result, our deal activity is strong and our bankers are busy.

As Joe pointed out, the overall M&A market was down to start the year. And quarter 1 was an unusual quarter for us where an abnormal number of significant situations just did not come to completion. We expect some of this softness to continue into the first half of the year, but based on early indications we expect our second half revenues to be much stronger in comparison.

We continue to invest in talent. We started the quarter with 5 recently promoted MDs and hired a new MD focused on data analytics which is fundamentally and rapidly changing almost every industry that we cover.

We continue to have an active talent pipeline of both internal promotes and external hires. The development of our internal talent is embedded in our culture and has always been a key part of our growth strategy. Internal promotes create a self-sustaining pool of talent and creates the highest ROIC by far for shareholders. We expect that internal promotes will compromise the majority of our managing director additions in the near future.

Finally, we remain focused on our key objective which is to deliver confidential, unconflicted advice and outstanding results to our clients. Our model is powerful for our clients, employees and our shareholders. The outlook for the company is strong, the fundamentals for M&A remain in place, we have a leading global franchise, and we continue to execute on our organic growth plan.

With that, I'll open it up to questions.

(Operator Instructions) And your first question will be from Ken Worthington of JPMorgan.

Maybe first, as we think about Europe, to what extent has the uncertainty around Brexit truly eliminated some M&A opportunities versus just delaying those opportunities? So I guess my question is as we get more certainty around Brexit and when decisions are eventually made, does the pipeline there just sort of explode? Or does it sort of come back with a whimper because activity just truly wasn't delayed, it was just eliminated? Hopefully, that makes sense.

Yes. Look, it makes sense, but it's really a tough question to know the answer to. So Europe has been -- I mean, our first quarter in Europe was just bad. It was not -- there was not a lot of activity. I don't know. It's obvious that the uncertainty is causing issues. And look, people -- allocation of capital, not knowing what's going to happen, is probably causing some of it. How much, Ken, is almost impossible to say? Look, the only thing I'll say is it's a big economy. Europe taken as a whole is a sizable economy, and it's hard to believe that this is the natural state of deal mechanics in that -- in an economy that size. So I don't know that it would explode, but I assume that if there were some [calmness], and by the way, it's not just Brexit. You have elections going on in several of the major economies there this year that will fundamentally change some of those governances, and so I think there's a lot of uncertainty. And my gut feel is it's a large economy, second-largest place we want to be in the world. And it will be relevant. I don't know if that means an explosion or a slow come back after all is said and done.

Okay. Great. And then also kind of broadly, in conversations with CEOs in the C-suite broadly, what is sort of the sentiment that you are hearing from this group? Is the macro environment changing the narrative on M&A at all for them given rates are down and spreads have tightened again? Is there any urgency to kind of maybe push more quickly with deals? Or is the outlook for maybe a falling rate environment actually leading to greater uncertainty and maybe slowing things down? So just as you take their temperature, what are you sort of getting the sense of from them?

Again, it's hard for me to generalize, but I'll tell you what we see which is I think that, that broad middle market, that deal activity was kind of shook, I think, by the October, November, December decline in markets. So it was shook -- on the buyers side, I think, was worried that they'd be early -- January, February, March, that they were buying into a false rebound. Obviously, December was a signal of a recession. I think people were, "Hey, I'm going to wait a while. See if this is real." In the middle market, in that area where it's kind of cash buyers both ways, I think there's a sensitivity to price. A very big sensitivity to price. And by the way, the sellers don't want to wade into an uncertain market either.

So the volatility of October, November, December, I think you had a bunch of sellers go, "Look, I don't want to put my company out there and talk about it into a very uncertain market." In the larger companies, I think people are trying to execute on strategic imperatives and price is less of an issue. And it's still very active, Ken. I would say to you almost all companies are in active dialogues at the larger scale on strategic imperatives. Maybe slowed down a little by market volatility on the margin but not as a whole. So -- and I do think, by the way, when the Fed reversed its statements, I guess that was in December, and the stock market has now rallied and held its position, I do think you're seeing people slowly come back to say, "Well, this is the market. This is where it is. This is where we're going to transact." And I do think that's what's leading to some comeback in the general activity.

The next question will be from Devin Ryan of JMP Securities.

So I guess first question here, just in terms of the reacceleration and activity that you guys are seeing. I'm just curious if it's anywhere specific or if it's just kind of broad-based, things are kind of coming back online? And just based on the cadence of revenues expected on the year or at least the comments about maybe a slower first half relative to the second half. I'm just curious how you think about -- kind of the 2018 revenue level, obviously, was a great year. Does that set a high bar? Or could the back half, just based on what you're seeing now, get you back to something [and that seams up] good?

Look, I don't want to -- it's not that clear. As you could tell from the last 3 months, it's hard to know. So I would say that we've reaccelerated. One of the things, and I said it in the script at the beginning, the market was down, and I don't want to underplay that, and especially that broad range in middle market. But I think we actually had a period there, and it was -- when we put our resources in the field, you're not -- you're covering a bunch of significant clients. And statistically, a certain amount of transactions close and move. And by the way, we've been in public now for 5 years and they've come in fairly regularly quarter-by-quarter. And I said I felt like I was in a 4, 5, 6-month period here where we were in a coin-flipping game and 10 tails came up in a row. That's what I mentioned, an abnormal amount of situations. Look, sometimes deals don't get to completion. And for whatever reason, I think we went into a period where we didn't complete, too. I don't -- some of this was the market but some of this is us. So when you say the reacceleration, I think market seems to have been down about 18%, so you can reaccelerate off of that pretty good. And then on our own situation, I think we'd probably go back to a normal distribution of things we're working on reach completion. And that combination should be pretty powerful as it happens. But it doesn't go away in 1 4-week period because you have the sort of deals you think you were going to execute on that might have completed sometime over the first half.

Yes. Got it, okay. That's good context. I was just looking for a little more, so I appreciate that. And then with respect to the restructuring business, just based on the revenues in aggregate for the quarter, it doesn't look like, from the outside, probably a big contribution. And I know last quarter on the call you talked about you had a record 2018, but still felt like the restructuring outlook into '19 could be maybe as good or even potentially better. So I'm just curious if the read is still -- if it's maybe starting on a little bit slower note that you could see a big reacceleration there as well in terms of contribution. Or just how we should think about restructuring more broadly just given that it looked like probably a little slower there as well?

Yes, probably statistically and significantly slower. It's been pretty rock solid. The team's ranked #1. We love our restructuring business. And I'll say this, when the Fed was at 2.5% and had a plan to keep raising, I thought that we'd be -- could have been in a big restructuring cycle. I think of it as the same sort of -- continuous to last year because I don't expect the economy to have an issue. I don't expect the Fed to raise rates in the short term. So I think it will be similar. I think you can depend on it being pretty similar and pretty stable to the last couple of years.

Yes. Okay, got it. And then just last one here, make sure I understand the comment correctly. So obviously I understand the comp ratio dynamic to start the year. But is the expectation, based on your comments Ken, just that the full year, you still feel pretty comfortable that you'll be able to get back to -- on a full year basis kind of where you've been, call it, the 57.5% level. That's the current expectation?

Yes. I mean we made -- it's a commitment we've made. We want to stay at that level. We do think this was an unusual quarter, and we expect to be at 57.5%.

And the next question will be from Michael Needham with Bank of America Merrill Lynch.

So the first question I have is on completed transaction trend. So if I just look at that number that you guys give every year, that trend it just hasn't grown very much over the last few years despite really strong headcount growth. Can you help me better understand that difference? I'm sure there's some delay in production from the people you're developing, and you touched on the ROI potential for them. It just -- it is a decently large gap.

I don't have the exact number, but -- of completions in front of me. But remember, our average fee level has picked up pretty dramatically in that time. So far, I think something in the order of 30% or 50% on our average fee. So to the extent we're doing bigger and larger fee transactions, that might account for some of it. But I'd like to get back to you. The number of transactions -- hold on, I'm looking at it right now.

Yes. I was kind of looking over a long period. But over the last 5 years, the headcount's up 80% and the number of transactions is up 17%.

Look, let me get back to you on it. I -- we have pushed hard to increase our average fee over that time period. So we may be on larger transactions and just doing -- it just might be larger transactions and less of the smaller deal size. But let me come back to you. We'll give you an exact answer to that.

Yes, sure.

It will also be important to just differentiate between total fee-paying clients versus clients paying over $1 million. I'm not sure which one you're referring to, but we can certainly help you with that off-line.

Yes, yes. Yes, just total. And that kind of move upmarket, is that a fairly conscious decision you're making where you're telling your bankers it isn't really worth going after or covering a client where the fee potential is below a certain minimum? Or is it more of just a general evolution of the firm and the brand?

Yes. Okay. And by the way, I'm just trying to find your numbers. I don't think that there's a published number of our closed transactions, so I'd like to go over that with you. I just don't want anybody in the call to think -- I don't know that we have published -- or anywhere our closed transactions are published. You might be looking at some other announced number or something other than that. So I just want to -- we'll work with you to clarify what your number you're looking at because we don't see it. I don't have the number you're looking at. So...

Yes, sorry. It's from the K., but I'll -- yes. Just on -- we'll follow up.

Okay. I'll look over that. And then on the fees, yes, we made a very, very definitive decision as a group, by the way, at one of our offsites to definitely move the average fee up over the last few years which usually means moving up size, getting rid of marginal transactions. Yes, we did that purposely.

Okay, great. And the only other one I have is on the restructuring business. I think your team's done a really good job of gaining market share in a pretty benign environment. Can you talk about how that team's positioned for a potential downturn in terms of like mix of business at the firm and how that team should perform?

Yes, look, the team, we have retained the whole team, promoted from within so we have a larger capable team because we do think there will be a downturn. It's hard to believe sometimes because nothing seems to turn down anymore, but we think there is a cycle that happens. And secondly, they've all stayed together. That's number two. So it's a team that's been together for a while. And lastly, because we don't have a commission structure, the -- each individual banker does not have their own either sector or specialties. So there are some, I think, restructuring groups that are paid on their own restructuring, exclusive from the other, call it, bankers -- coverage bankers. We don't do that. So in the last crisis, we literally were able to move -- we could account in the last downturn, '09, '10 every single banker, except 1, was actively working on a restructuring during that time. So we -- because we have 1 bonus pool, we're able to move a significant amount of talent and move them over to help. And I think that will give us a big advantage again in a rapidly -- in a rapid downturn. It's hard to hire into your restructuring group, so you have to use the resources that you have.

The next question will be from Michael Brown of KBW.

So Ken, I just wanted to kind of ask one question on China. So I mean obviously it's kind of a smaller piece of your business. But if we should see resolution on trade with China, just kind of interested to hear your thoughts maybe for yourself and for the industry on kind of what your expectations would be for kind of a pickup in cross-border activity. I mean I know it's not again that meaningful for you guys, but do you kind of see a pent up of demand for activity with China?

First of all, it was meaningful for us. When you're allowed to actually do cross-border with the U.S. -- I'd say allowed in a "fashion." But we had a large -- we did a lot of deals in 2016. That was a pretty good line item for us. Look, I don't think this is just the trade deal. I think the trade deal will probably -- if it's done well, will probably be good for markets. But look, there's a continuing underlying weariness of allowing some cross-border M&A and significant Chinese ownership of American companies. And I don't know that the trade deal will stop that. So no, I don't expect that M&A will go back to where it was before we started to really ramp up CFIUS and the technology cold war with China at this point. So no, I don't know that, that will snap back at all.

Okay, that's helpful. Very interesting. And then just a follow-up on the comp expense. So the comp dollars came down to about $89 million this quarter, and obviously, there's some seasonality to kind of the quarterly run rate. But is that kind of a fair way to think about essentially how low you can take down the comp dollars in a tough revenue environment? Or is that kind of not the right way to think about it?

I'll let Joe -- Joe, do you have a thought on that?

I think that's the -- you're right. That's probably the lowest it can go. That is our fixed comp. It's slightly exaggerated because of the amortization of some new awards that are retirement eligible, so that ultimately accelerates. But on a fixed basis, it's probably going forward about $80 million a quarter, and so I think that's certainly the baseline.

The next question will be from Betsy Graseck of Morgan Stanley.

One question on the expenses. If the revenue environment does not pull back, pull up like you're expecting, is there any other expense lines that you could pull back on or manage? Or not really?

Yes, there probably are some things we could -- well, usually -- again, some of what happened in the first quarter was not like activity was down. We just didn't complete some things. But when activity goes down, travel -- a lot of the expenses that are noncomp associated with business activity go down slightly. Obviously, if we looked forward and saw the revenues were not looking like they'd come up, you probably could do reductions in headcount, and that would lower. But as of right now, that's not -- none of that is on the table. We don't think this was a -- this is or was a permanent change. In fact, we feel pretty good about the future. As I said, we think the world had a down 18% year, and we had an unusual number of deals that just didn't go. So the answer is yes, but that's not where we're looking right now. We're not moving into that [moat].

Yes. So then the other question I have for you Ken is regarding your comment around the AI professional that you hired. Just wanted to understand how you plan on leveraging the data specialists that you brought in? Is that something that's cross-industry? Is that more of a consultant role? Or is that somebody who you're anticipating is going to be bringing in business at a specific vertical, in the data vertical?

We expect to get 2 things from them. One, we do want and talk to -- about being client facing and going to talk to our clients about things they're doing in the space for their own business and businesses they're thinking of acquiring to help them with their own data analytics, and we think that's important. And secondly, we feel like every industry in the world has been affected by data analytics and AI in their own business. And we think there's data in the world of M&A in the things we're thinking and we wanted to be early. We didn't want to wake up one day and have what happened to many industries happen to us. So we are starting to organize around our own data analytics and things that will be helpful to us in the M&A environment. And interestingly, there are -- there's plenty of information out there if you could get it and figure out how to use it for the benefit of our clients. So really, we look at it as 50-50, 50 external and 50% of the time internal.

Got it. Okay, cool. And then separately on repurchases, I think the Board approved $100 million in February. And it doesn't seem like you did any -- you used that at all. Maybe I'm wrong, but I just wanted to understand how you're thinking about using it, how we should think about share count over the next quarter-or-so, that kind of thing. What kind of average price we should be looking for, that type of thing.

We did buy a little under 100,000 -- 95,000 shares of stock in the market. So that's in the press release in the quarter. And the way we think about it is again, we like distributing -- look, we will distribute our excess capital as soon as we have enough to make a meaningful distribution. We think about all the time whether we should do that versus stock repurchase or dividend. Dividend is a very efficient way to get it into everybody's hands. Stock repurchase, we -- as our stock has changed very dramatically where it was trading, we were trying to be pretty aggressive in December. We were -- we did some stock in -- as you could tell earlier, you could tell by the price where it was. Our belief is it's really a value proposition. I don't want to be in the market with a continuing stock repurchase. I don't think that's the most efficient way to do it. But as I've said, I look at it as kind of like the football field. If the stock is within the 80% of the field that is somewhat fair, valued well, I don't think you'll see us in the market. If it gets in what I call the red zone of the 20%, what I think is clearly demonstrably underpriced, we'll be aggressive. And the reason -- we kept the company unlevered, and we think that's very important in a personal services company. So we'll use excess cash to do that. And if it got well within that red zone, we might become more aggressive. But we're not big believers in leverage in a personal services business.

The next question will be from Jim Mitchell of Buckingham Research.

Maybe just talk a little bit about sort of the non-M&A, nonrestructuring capital markets advisory, fund advisory, things like that where I know you've been expanding. It's been a growth driver in the past. Just any kind of thoughts there. It seemed like that might have also been a slow quarter. How do we think about that -- the trajectory of that in those areas?

Yes. In the funds business, I think on a quarter basis, financially it was probably off a little bit. But everything about the funds business is on a very good growth path. You're just talking about a 12-week period in which a fund has to close, and those are really lumpy. So if it doesn't close, it doesn't close. There's just so many we do a year. But they are -- I feel great about that. We hired into Europe to help a while back, 1.5 years back, and that's been very successful. So that's going well. I think our IPO advisory work is going extremely well. It's primarily European and really not -- we do some in the Americas, but it's primarily -- IPO advisory is more of a non-American business. And so the slowdown hasn't helped them, but they're on substantial deals. And what was the other -- just capital markets? Look, it was all -- in first quarter, all products were down, some slightly down. And some of that is just the lumpiness of things like fund advisory. It's hard to really look at as a quarterly business.

Right, okay. And maybe for Joe. I noticed that overall cash flows were down. Is that just a function of the buyback in the fourth quarter and the lower earnings? Or is there anything else to call out on the cash usage side?

No. There's nothing unusual to call out. It was a combination of earnings and the share buybacks.

The next question will be from Richard Ramsden of Goldman Sachs.

So I guess at the start of the year or even late last year, there was some optimism that financial sponsor activity was going to pick up and offset the plateauing on the strategic M&A side. Has that panned out the way that people were expecting? Or have prices kind of got to a level where financial sponsors are sitting on the sidelines?

No. It's kind of -- it has not panned out, and I think it's the volatility. So I always swear I hate the word dry powder, but obviously, there is a lot of money raised in this section. The allocation of capital to private equity is just spectacular. I mean it's -- a lot of the money is left to hedge fund allocation in the alternative world and gone to private equity. So there is a lot of money to be spent. Now what happened -- again, I think what happened is between October and December last year, you had a move. And that move was based on people declaring the end of the cycle. It had to do with the Fed. It had to do with lots of indications that somebody saw the end of the cycle. When I say somebody, the markets thought the cycle was ending. But then you had a comeback gradually over the first quarter.

And Richard, what I find is it's really hard to get a private equity person who just saw in December prices go down by 3 multiple points to come pay February's rebound price. Everybody was sort of like, "Well, hey, don't you remember, your companies were valued this much lower in December." And then it's also difficult to get sponsors who own a lot of the companies to come to market and sell an asset when they just saw the volatility and they're not sure they can execute at the price. So it was more of the speed and the -- and I think the certainty within the economic market that the fourth quarter was previewing a downturn in the economy. There were not a lot of -- that was the agreed-upon reason. So it's not the prices. I think the fact that the prices are now leveling off and are fairly not volatile, fairly stable, I think will lead to more transactions. People are much more able to pull the trigger when they see a price level that feels stable.

And how would you characterize the availability of credit for LBO transactions, say, relative to where we were 6 or 9 months ago? Have things fully recovered? Or is there still some resistance in that market?

I think it's -- again, I'd say close to fully recovered. It's 90% or 95%, I haven't tested. But I think most people are active in the credit markets and almost -- they're probably a tad below. Bank debts trading a tad lower than that. So give it 90%, 95% to where it was. I don't think it's going to prevent a deal. I think that credit is not an issue in executing a transaction.

And the next question will be from Jeff Harte of Sandler O'Neill.

A couple for me. As far as kind of MD recruitment efforts, can you talk to your thinking there a little bit? And I'm kind of coming from what appears to have been a lack of hiring announcements year-to-date. And your comments earlier about growth being kind of promotion-heavy in the near future, are you backing away from recruiting a bit?

No, we'll be out there. I think the first quarter is always -- is a tricky quarter because if you're hiring from people who have a job in the industry, they're usually going to wait for their bonus check to clear, and that's kind of a late February, March event. And then it's just hard to get everything done. The first quarter is tough if you're in-industry hiring. If you're hiring somebody that's kind of not in the cycle of a bonus pool, you might be able to get them. I think we have a healthy backlog. We're talking to lots of people. Most of them are in-cycle, meaning we have a strong backlog of candidates we're talking to and interested in. And really, you'd be amazed at how people do not -- well, you probably wouldn't be, you're all in the industry, so you know what I'm talking about.

But the desire for somebody to get a call show up on their desk from Ken Moelis a week before bonuses are decided is not high. So just in case they get caught. So people go dark for a period of time. It's very hard to conduct those conversations. And I think it's just that function of you only have a few weeks at the end of the first quarter where you're through bonuses and can get a transaction done. No, we -- the short answer is we anticipate it being active and -- but I think almost everybody we're talking to has a job at this point.

Okay. And just to clarify your comments earlier kind of completions not hitting in the first quarter. You're referring to kind of closing delays and timing issues as opposed to terminations or mistransactions or things like that?

No, no, I'm talking about everything. As I said, sometimes you feel like you flip 10 tails in a row. I'm talking about deals that we thought we were close to doing, where either us or the client both decided, "Let's not proceed." Deals that -- there were deals, by the way, that were going to complete that were timing moved. There were -- it was all sorts of things where you've put your bets on the table for a long time, you've devoted a lot of resources, and for whatever reason, and there's dozens of reasons, regulatory, economy, price, that those transactions do not go forward or complete. Now that's the business we're in.

Look, let me just say this because I think that's the last question. We ask you not to evaluate us on a 12-week basis, and this is the reason why. During those 12 weeks, we could have told a client not to proceed on a deal that would have made our numbers come out better. But the absolute right thing for us to do is -- over the long-term and the health of the company is to give the best possible advice. So there are a thousand reasons why in a 12-week period, you could end up with a transaction that didn't reach completion. When I say completion, announcement, completion, closure, any of the spots where a firm might get compensated. And by the way, for me, personally, it felt like we incurred all 1,000 ways over the last 5 months. It's not fun to live through, but it happens every once in a while. And it's just happened on a larger and an abnormal percentage of the deals than it normally does. So yes, some of those -- the good news though is most of those people are clients. They may not be deals that were put off, but they're clients that still use us and we're in good stead with. And something might happen down the road. But no, they were not all just based on timing to closure, if that makes sense.

And ladies and gentlemen, that will conclude our question-and-answer session. I would like to hand the conference back over to Ken Moelis for his closing thoughts.

Well, I appreciate everybody being on the call. And I know it was a difficult quarter to explain and understand, but we still feel great about the model and what we can deliver. And I appreciate all of you showing up and listening to our discussion. Thank you.

Thank you, sir.

Ladies and gentlemen, the conference has concluded. Thank you for attending today's presentation. At this time, you may disconnect your lines.