Onity Group Inc (ONIT) 2005 Q1 法說會逐字稿

Welcome to the Ocwen first-quarter earnings announcement call. All lines are going to be in a listen-only mode until the question and answer portion of today's program. (OPERATOR INSTRUCTIONS) At the request of our call leader, this conference is being recorded for instant replay purposes. Any objections, one must disconnect at this time. I am now turning the call over to Mr. Bob Leist. Sir, you may begin when ready.

Thank you. Good afternoon, everyone, and thank you for joining us today. Before we begin I want to remind you that a slide presentation is available to accompany our remarks. To access the slides, log on to our website at www.Ocwen.com, select shareholder relations, then conference calls, first-quarter 2005 results, and then view slides. Each viewer will be able to control the progression of the slides during the presentation. To move the slides ahead, please click on the gray button pointing to the right.

As indicated on slide 2 our presentation may contain certain forward-looking statements that are made pursuant to the Safe Harbor provisions of the federal securities laws. These forward-looking statements may be identified by reference to a future period or by use of forward-looking terminology. They may involve risks and uncertainties that could cause the Company's actual results to differ materially from the results discussed in the forward-looking statements. For an elaboration of the factors that may cause such a difference, please refer to the risk disclosure statement in today's earnings release as well as the Company's filings with the Securities and Exchange Commission, including OCN's 2004 10-K.

We are happy to make Ocwen news releases, 10-Qs, 10-Ks, and other materials available to you via e-mail. If you are not already receiving our materials by e-mail and would like to be added to our distribution list, please email Linda Ludwig at LLudwig@Ocwen.com.

As indicated on slide 3, joining me for today's presentation are Bill Erbey, Chairman and CEO of Ocwen, and Ron Faris, President. This presentation will be followed by a question and answer period, during which we will be taking questions from those of you attending the conference by telephone. Without further delay I will now turn the call over to Bill Erbey. Bill?

Thank you, Bob, and thanks to all of you for attending Ocwen's first-quarter conference call. I would like to cover four topics in my remarks today. First, our enhanced segment reporting; second, an overview of our first-quarter earnings; third, our asset efficiency goals for 2005; and fourth, our de-banking initiatives. Following my remarks, Ron and Bob will provide more detailed information.

Over the past year we have been focusing our growth efforts on providing expanded loan processing services to the mortgage industry. Over time we are expanding our capabilities to serve the entire loan process from origination through securitization and servicing. We believe that these services will enable our customers to grow their businesses more effectively. In order to best reflect this approach to marketing and managing our business, we have redefined our segment reporting as we noted in our annual report and last conference call.

As shown on slide 4, we have defined five core businesses that are reflected in this afternoon's earnings release. Residential Servicing, Residential Origination Services, Commercial Servicing, Business Process Outsourcing, and Ocwen Recovery Group. Three of these segments have been redefined for 2005, and all prior-year information has been restated to provide comparable information.

As shown on slide 5, Residential Servicing includes our Residential Loan Servicing, VA servicing, and REALServicing groups. Residential origination services as illustrated on slide 6 includes our loans for resale on title activities as well as Ocwen Realty Advisors, REALTrans, subprime finance, and our new Mortgage Due Diligence Services, the operation that we purchased from a major Wall Street mortgage conduit last December. As Ron will discuss later, this operation is already making a positive contribution to revenue and earnings in its first month of operation and positions us to make significant progress in our ability to provide mortgage fulfillment and due diligence services.

Commercial Servicing, as shown on slide 7, now includes REALSynergy in addition to our domestic servicing operations and our international GSS joint venture. We have also officially closed our noncore Affordable Housing and Commercial Asset businesses and are now including the results of managing the remaining noncore assets in the corporate sector, consistent with our actions when the residential discount loan business was closed. Bob will cover the corporate segment later in this call.

As shown on slide 8, pretax income for the first quarter of 2005 was 3 million, as compared to quarterly averages of 6.4 million and 1.4 million in 2004 and 2003, respectively. In the aggregate, the pretax earnings of our core businesses were 6.4 million in the first quarter this year, which includes approximately 1.2 million of additional overhead allocations, because we no longer allocate any such cost of the closed noncore businesses.

As graphed on slide 9, after adjusting 2005 results to eliminate this cost, the core businesses would have reported pretax income of 7.6 million for the first quarter, as compared to quarterly averages of 9 million and 8.2 million in 2004 and 2003, respectively. The primary factors in the decline for 2005 were a decrease of 1.3 million in Residential Loan Servicing contribution as compared to the first quarter of last year and a reduced contribution of 1.4 million in our subprime unit.

We are encouraged, however, that the contribution for Residential Loan Servicing is up significantly as compared to the fourth quarter of last year, reflecting the growing impact of more recently priced portfolios. It's also worth noting that our core business performance also includes a significant investment in our sales and marketing functions. We increased our overall spending in these areas by $0.5 million in the first quarter of 2005 as compared to 2004.

Despite cost increases in the first quarter this year, we are making progress in growing our fee-based revenues. Slide 10 illustrates that our combined servicing and vendor management fee revenues amounted to 56 million in the first quarter of 2005, representing increases of 8% and 33% respectively over the average quarterly rates in 2004 and 2003. This growth in net revenue was achieved despite the continuing high level of MSR amortization expense. Ron and Bob will provide further information on our first-quarter earnings later in this call.

As I mentioned last quarter, a major initiative in 2005 is the more efficient utilization of our assets, with the goal of increasing return on equity. As shown on slide 11, Residential Servicing accounts for 55% of our total assets or $674 million, of which 74% are effectively AAA rated. In contrast, the combined assets of our other core businesses, which now include our $37 million residual trading portfolio, represent only 61 million or 5% of our balance sheet but accounted for 45% of revenues and 54% of core pretax income in the 2005 first quarter. Thus growing these businesses represented a major opportunity to enhance both profits and return on equity.

Apart from the assets associated with our other core businesses, we have 499 million of other assets. Included in this amount is 296 million of cash and investment-grade securities, which will decrease when we complete our de-banking initiative. We also have $23 million of noncore commercial and Affordable Housing assets, most if not all of which we anticipate selling during the course of 2005.

Receivables for income taxes and installment sales of Affordable Housing properties comprised 79 million; and we currently anticipate that 63 million of our tax receivables, which are pending final approval by the joint committee on taxation, will be collected during 2005, as will the next installment of approximately 5 million of the Affordable Housing receivables.

We are moving toward lease financing for a substantial portion of our $39 million of premises and equipment; and we have increased our focus on the remaining 62 million of assets with a view towards liquefying them wherever possible. The bottom line is that we intend to have a smaller and more efficient balance sheet that will provide us with increased flexibility to generate shareholder value.

As we have previously announced, we have submitted a formal application to the OTS to turn in the thrift charter of Ocwen Federal Bank, which is currently our principal operating subsidiary. We believe that this change will eliminate certain limitations on future growth of our servicing business. Bob will cover our financing efforts in this regard later in the call.

On the operations front we have already established a new subsidiary, Ocwen Loan Servicing LLC, which is licensed in all 50 states as well as the District of Columbia and Puerto Rico, to engage in all of the core businesses that we currently conduct in the bank. We are also actively revising our operating processes in anticipation of the completion of this transition.

I'm also pleased to note that we have completed an agreement to sell our deposits to Marathon Bank, a transaction which also subject to regulatory approval. While we cannot predict the exact date when the de-banking initiative will be completed and receive the requisite approvals, we are actively working to accomplish that goal. I would now like to turn the call over to our President, Ron Faris.

Thank you, Bill. My remarks today will cover our five core business segments, Residential Servicing, Residential Origination Services, Commercial Servicing, Ocwen Recovery Group, and Business Process Outsourcing. For the quarter ending March 31, 2005, these core business segments generated $6.4 million in pretax income, as compared to $10.3 million in the same period last year, a different of 3.9 million.

Three primary factors contributed to this reduction. First, our Residential Loan Servicing pre-overhead contribution decreased by $1.3 million. Second, our Subprime Finance Group's contribution declined by 1.4 million. Third, the closing of our Affordable Housing and Commercial Assets units resulted in the core business segments absorbing approximately $1.2 million more of overhead cost than in 2004.

As reflected on slide 12, the Residential Servicing business line recorded $2.9 million in pretax income in Q1 2005, as compared to an average of 4.2 million per quarter in 2004, a 31% decline. However, when looking at 2004 as a whole, slide 13 illustrates the improving trend in the residential loan servicing portion of our Residential Servicing segment. Loan servicing achieved 5.6 million in contribution margin in quarter one 2005, versus an average of 3.9 million in 2004. This improvement is the net result of a 13% improvement in Q1 2005 revenue over the 2004 quarterly average, partially offset by a 6% increase in direct cost and charges.

As shown on slide 14, our servicing portfolio's unpaid principal balance at quarter end was 37.4 billion, and 8% increase from the December 31, 2004, balance of 34.5 billion. As of March 31, 2005, we were the servicer for 331,000 loans as compared to 320,000 loans at year-end 2004. These increases reflect our belief that market conditions are beginning to improve. Our balance of mortgage servicing rights at March 31, 2005, was 135 million, an increase of 3% from the end of 2004, reflecting our Q1 2005 MSR acquisitions.

Net revenues in the Residential Servicing segment were $30.6 million in quarter one 2005, a 17percent increase compared to quarter four 2004 results. The increase in revenues from Q4 2004 was primarily a result of an increase in servicing fees and a reduction in compensating interest.

Slide 15 shows the trend in prepayment speeds over the past nine quarters. As you can see, prepayment speeds continued to decline from their quarter three 2004 high of 44%, decreasing to 36% in Q1 2005. While we are encouraged by this trend, we remain cautiously optimistic about prepayment speeds, as the first quarter of the year typically reflects reduced prepayments. We experienced only a modest favorable impact in the first quarter from the reduction in prepayments, as MSR amortization and compensating interest expense absorbed 49% of the related gross fee revenue during Q1 2005 compared to 54% in Q4 2004. This reflects the slight reduction in amortization of mortgage servicing rights and the decrease in compensating interest expense caused by the slowdown in prepayment activity.

Slide 16 highlights the impact of interest rates on our float earnings. Despite the fact that float balances are approximately four times greater than their 2001 balance, the interest earned on float balances has only increased approximately three times. This is due to the significant decrease in short-term interest rates over the period.

Put another way, had rates remained constant since 2001, we would have earned 31 million of annualized float income in 2005, as compared to $26 million. Fortunately the recent increase by the Federal Reserve Board in short-term interest rates have begun to have a positive impact on our net float income, and we continue to hope for a positive effect on prepayment speeds over time.

Slide 17 shows the Residential Origination Services segment's quarter-one 2005 pretax income of $2.8 million, versus the 2004 average of $3.4 million. This decline is primarily due to the reduced contribution from our Subprime Finance group and the decline in earnings of Ocwen Realty Advisors. A significant portion of the reduction in Ocwen Realty Advisors' earnings relates to the initial boarding (ph) of the VA portfolio of properties in 2004.

Turning to slide 18, on a more positive note, despite the fall-off by Ocwen Realty Advisors, the Residential Origination Services segment's Servicing and Vendor Management fees increased to $12.2 million in Q1, 2005, an 18% increase over the 2004 average. One of the primary drivers behind this positive trend is our new Mortgage Due Diligence Services group.

We are very pleased with the progress that this group has made in its first quarter of operations. Recorded $1.8 million in revenue and $0.3 million of contribution before overhead. We are optimistic that this operation, combined with our existing origination services capabilities, will provide meaningful growth opportunities in the future.

Moving on to slide 19, our Commercial Servicing business broke even in quarter-one 2005, a slight improvement over the small loss in 2004 but a significant improvement over the 2003 results. In the first quarter of 2005, Commercial Servicing reported $4.7 million in revenue, a 10% improvement over the 2004 quarterly average revenue. In 2005 we will continue to grow top-line revenue while remaining focused on maintaining control over expenses.

As reflected on slide 20, our Business Process Outsourcing segment reported pretax income of $0.1 million for quarter-one 2005, versus a 2004 average of 0.6 million. This decrease is a direct result of increased expenses in this segment. We continue to invest in this business, including expanding our sales and marketing activities, to acquire new clients and to expand our relationships with our existing clients. We believe that we are beginning to see the results of these investments. Business Process Outsourcing's Q1 revenue of 2.6 million represents an 8% increase over our 2004 average quarterly revenue.

As shown on slide 21, Ocwen Recovery Group, our unsecured collections segment, posted pretax income of $0.5 million in Q1 2005, as compared to an average of $1 million during 2004. Despite an increase of 12% in revenue in the first quarter of 2005 as compared to the first quarter of last year, pretax income declined, reflecting both a reduction in revenues from our aging proprietary asset portfolio, which yielded high margins, and increased staffing costs as we build capacity in this business. Although we are disappointed in these results we are starting to see improvement in our offshore collection capabilities, which should over time substantially reduce our costs as a percentage of collections.

In summary, I am pleased with the growth in the residential loan servicing portfolio, and the recent slowdown in prepayment speeds. I am also pleased with the growth we saw in top-line revenue in our core segments and the results of our Mortgage Due Diligence Services business. I remain positive that we can grow the Ocwen Recovery Group and Business Process Outsourcing segments as we continue to invest in these business lines. Thank you, everyone. I'd now like to turn the call over to Bob Leist.

Thank you, Ron. I would like to focus on two areas. First, the operating results of our corporate segment, including recent progress in disposing of our remaining noncore assets; and second, the status of our efforts to obtain new sources of financing to replace the deposits that will be sold when we de-bank.

Let me begin the discussion of the operating results of the corporate segment with a definition. The corporate segment consists of any unallocated net interest income or expense, the results of business activities that are not individually significant, and certain general corporate expense and income items.

As shown on slide 22 for the first quarter of 2005 the corporate segment incurred a pretax loss of $3.5 million. This loss consists primarily of three components -- $1.4 million of interest expense, $1 million of costs related to our remaining noncore assets, and $600,000 related to start-up business initiatives that are too immaterial to report as a segment.

The interest expense in corporate represents both the interest cost of carrying our corporate assets, such as our income tax and Affordable Housing receivable balances, and also includes a portion of the interest on the 3.25% contingent convertible senior unsecured notes due 2024 that we issued in July of 2004. As we did last quarter, we decided to retain this cost in the corporate segment rather than allocate it to the business units at this time. We feel that this is appropriate because the notes were issued to accumulate cash in preparation for de-banking rather than to fund current business activities.

As I mentioned, corporate also includes $1 million of costs related to the management of our remaining noncore assets. These costs included 0.7 million of additional provisions related to our Affordable Housing assets, as well as operating costs and salaries for the staff who are responsible for managing and selling the remaining assets.

During the first quarter, as illustrated on slide 23, we reduced our remaining noncore assets by a net $5 million, from $28 million as of December 31 of last year to $23 million as of March 31. This reduction reflects the sale of the subsidiary that owned Bayers Road, our shopping mall in Canada, which had a net book value of $8.8 million as of last year end, net of a short-term facilitating loan to the purchaser of approximately $5 million, which we expect to be repaid before the end of the year.

As of March 31, in addition to this loan, our remaining noncore assets consisted of one Affordable Housing property and a related loan, and three commercial real estate assets. Several of these assets are under sales contracts that we expect to close prior to the end of 2005.

I also want to provide an update on our efforts to obtain new sources of financing in anticipation of de-banking. In April 2005 we executed a second series of notes in the advanced securitization structure that we first completed in November of last year. We issued incremental term notes for $75 million and an additional one-year variable funding note for $25 million, thus providing an additional $100 million of financing in total.

This securitization provide several benefits to the Company. First it provides up to $275 million of financing. Second, the term component of the note provides us with $175 million of longer-term financing, which is an advantage over 364-day credit facilities. Third, it provides cost-effective financing at one month LIBOR plus 53 basis points.

In addition, we concluded a syndication of our existing line of credit for advances in PMSRs, which will increase our borrowing capacity under that line by $65 million, for a total $135 million. The syndication will formally close at the same time the de-banking becomes effective. With these transactions in place, we believe we have raised sufficient financing to pay off our deposits and escrows when de-banking occurs. I would now like to open the call to questions.

(OPERATOR INSTRUCTIONS) John Hecht, JMP Securities.

Real quick, a couple housekeeping. Is the 1 million you referred to in the expenses for the Affordable Housing, is that -- would you call that a onetime expense? Or would that be reduced going forward as those assets go away? Or how should we look at that?

That $700,000 of that is a provision, John, that I think you ought to look at as a onetime event. There will be few 100,000 that are ongoing while the remaining commercial and affordable assets are there.

Real quickly in looking at the slides, what composed the difference between pretax income and then the contribution margin in the Servicing segment?

The contribution line we refer to is just pre-overhead allocations. When we are looking at components of the segments we're talking about pre-overhead, because we don't drive that down into every nook and cranny, if you well. So pretax is a fully allocated number; leaves nothing left behind in corporate. If we look at some of the components within it, we will look at them without trying to figure out where the overhead is down there.

Now in thinking about your investments in Ocwen Recovery and the business outsourcing units, in your guys' minds are these investments that have immediate results in terms of revenue growth? Or is this part of a longer campaign to grow these businesses over time?

I think, as I pointed out with Ocwen Recovery Group, we are a little bit disappointed that we have not seen better results. But the investments that we're making in sales and marketing, there is a lead time before those will generate sufficient new revenue to help grow those businesses. So I would say that the investment is more for a longer-term growth than short-term.

Lastly, I guess we saw the largest bump up in MSRs this quarter relative to more recent quarters. Is that saying something about return on investments of these assets that you guys are seeing now, given where prepayments may be going? Or was there specific opportunities that you came across during the quarter?

I think as I tried to state in my discussion, we believe that the market is more rational now; that pricing is a little more in line with where we think they should be, considering where prepayment speeds are for subprime loans. So I think we felt more comfortable participating more actively in the purchase market in the late fourth quarter and in the first quarter.

Thanks very much.

Richard Shane of Jefferies & Company.

A couple things. First of all, you showed that prepayment rates slowed in the first quarter versus where we were for the last three quarters of '04. I'm curious, though. It seems like from talking to the mortgage originators that volumes started to peak back up for them towards the end of the first quarter. Is that something we should be concerned about when we look at the prepayment rates and make our prepayment assumptions headed into Q2 and the remainder of the year?

That is accurate. The average that we showed for the quarter, definitely the January and February numbers were in the low 30% range; and I think it was up around 40% in March. We're still trying to figure out, as well as you are, where the future is. But I think you should take that into consideration when projecting out.

Keep in mind that first quarter, if you charted back for the last three years, the first quarter tends to be the slowest quarter. There is seasonality in origination.

Okay. The second question is, Ron, you made the comments that you're starting to see some signs that the BPO is improving. Obviously there's been a huge investment there over the last couple of years. Can you talk about -- can you sort of elaborate on what those signs are and what perhaps we could be looking for? When you think that you sort of leave that investment phase and really start to realize some good profitability from that business?

As you know, we don't really project out. What I can say and what I did say is we are seeing revenue up a few million dollars in the first quarter run rate compared to all of last year. We are looking at a number of promising opportunities within our pipeline. But I am not sure I can really say a whole lot more than that.

Ron, should we look at it as -- because those tend to be at least 12-month contracts -- that there is not sort of a onetime element to that revenue; that it sort of grows from there?

Generally the contracts are even longer than one year. So I mean generally speaking, once you would see the revenue grow, it should continue unless there was some sort of hiccup and we lost a client or something like that. But generally when you see it grow, then we would expect it to stay at that level and then increase from there.

So we should see this sort of layering on?

Yes.

Terrific, thank you.

Derrick Winger (ph) of Jefferies & Company.

Just a couple cash flow figures. Can you give me the depreciation and amortization, and the capital expenditures for the quarter, and the capital expenditure outlook for the year?

I have to check that one, hold on a minute. Can you mute that in the background if that is possible? It should be about 3.3 million, I'm sorry, of amortization and depreciation in the quarter. That should be fairly consistent going forward. We run about 39, $40 million worth of PP&E. A major portion of that PP&E happens to be hardware and related maintenance contracts on third-party software. It gets amortized generally over three years.

And the CapEx for the quarter and the year outlook?

About the same.

It should remain flat, looking at anything -- any significant changes there basically.

What was it for the quarter?

I'm sorry, I've got to look through -- it's not that significant a number. Hang on. About 3.5 million.

Thank you.

That has remained fairly flat over the past two to three years. No anticipation that it will change.

So they are roughly in line, the D&A and the CapEx?

Yes.

Thank you.

Bob Napoli of Piper Jaffray.

The mortgage due diligence group, you acquired that in the fourth quarter of last year, is that right?

It closed last day of the year, first day of the --right at year end was when the transaction closed.

Is this a -- can you tell me a little bit about that business? How long has it been around? Or is this something that can be -- I guess I am trying to get at, is this going to something that can be very significant? Or is it something that is going to -- the revenue we saw this quarter, we're going to see like modest growth off of that? Just trying to understand if this is a big opportunity, or a long-term kind of slow growth opportunity?

To give you some perspective on what it is, I wouldn't call it a business so much as we acquired the processing capabilities that a Wall Street firm had that was doing it internal for themselves. They were looking to shed that internal operation have somebody outsource that for them. So we basically took over their operation, and they are our client. Our first client. We do anticipate adding other clients onto that platform.

We think the business fits in nicely with a lot of things that we're doing, including the fact that many of the Wall Street firms are looking to grow their own mortgage conduit operations, yet in most cases will not want to do processing on their own. So Ocwen, who already is a big processing provider to them in the form of servicing and Ocwen Realty Advisors, would be a natural fit to do their mortgage origination processing and due diligence work.

Would it make sense to define exactly what work we do for them?

Yes. The kind of work that we do right now is on loans that they acquired through their conduit operations; generally they're closed loans that they acquire from small conduits and small brokers. We do due diligence, including reunderwriting compliance work, and then we give them the go-ahead either to actually acquire that loan or to turn it back to the seller.

We will also be adding capabilities to do what we refer to as wholesale processing, which means you're actually doing the origination function prior to the loan closing. So a broker that would present a loan to the conduit, and we would actually handle it from that point forward, all the way up through the closing of the loan.

Again, we don't really make projections as to where we think the business is going. But we think it fits in well with our core capabilities. We think it fits in well with our existing client base; and we are definitely excited about the opportunities that it presents us.

So the key there is to be able to expand it to other clients. Then do you feel like you get big scale advantages as you sign, as you grow revenue in that business?

Definitely there are scale advantages. We also would do what we've done with our other business lines, of being able to move some portion of the labor offshore to a lower-cost base. Also hopefully improving turnaround times and quality by doing that as well. There's a number of different ways that we think we can grow the bottom line in the coming quarters. But scale should be helpful in that business yes.

In the shorter term we should kind of see maybe revenue improve with seasonality of the mortgage business; and then longer-term hopefully you get some of these new clients and improve the cost base.

I think that is fair, yes.

Then OTX, are most of the parts of OTX in Commercial Servicing, or where did that get split about in the various segments?

OTX is really split up now between three segments; the residential -- the REALServicing system, which is the residential servicing system, is now part of the residential servicing segment. REALTrans is part of the origination services segments; and REALSynergy, which is the Commercial Servicing system, is part of commercial.

Are you going to give us historical quarterly financials under this same kind of structure for '03 and '04 or something like that?

We will be as those reporting periods come up, Bob. In other words, we've given first-quarter '04 now restated in the earnings release.

So we'll just get quarter by quarter --.

So as each of those periods roll out, we will be doing that.

He's asking, are you going to give the same for -- you're asking for 2003 as well, Bob?

Yes, are we not -- so we're just going to get '04 by quarter then? We're not to get '03? Or we're going to get '03 full year? I mean, we would like to see, I guess, '03 and '04 any way in full year, and then the quarters I guess we will get as the quarters go by.

Right. Typically, the '03 stuff would show in normal reporting would show up in the K at the end of this year where you have three to five-year view depending on the data.

Then last question, what were prepayment speeds in the month of April?

They were a little over 38%.

I'm sorry, I lied. The growth we saw in the servicing portfolio this quarter, now that your seeing better opportunities even though you have not yet de-banked, are you able to continue to grow that portfolio? There certainly must be a lot of product on the market.

Well, we still have to -- there are the capital constraints that we have, regulatory capital limits that we have to stay within. And we do have to kind of manage our cash appropriately up to the point that we de-thrift and pay off the deposits. So I don't think -- we still have to be somewhat cautious up until the point that we de-bank.

Would you be disappointed if you're not de-banked by like say the end of the third quarter?

I don't think we should probably give you that statement, Bob, in terms of that. We are certainly very -- it is very high lot on our list of what we work on every single day, is to accomplish that.

Thank you.

One thing that might also help you, Bob, too, if you notice that even though we grew the portfolio very significantly, you will notice the PMSRs only grew by about 3%. So there has been a lot of subservicing that has been put on the books as well, as opposed to just straight servicing.

That makes sense.

(OPERATOR INSTRUCTIONS) Currently we are showing no questions registered.

Thank you, everyone. Have a great afternoon. Goodbye.

This does conclude today's conference. You may disconnect at this time and have a great day.