Pinnacle Financial Partners Inc (PNFP) 2013 Q4 法說會逐字稿

Good morning, everyone, and welcome to Pinnacle Financial Partners's fourth-quarter 2013 earnings conference call. Hosting the call today from Pinnacle Financial Partners is Mr. Terry Turner, Chief Executive Officer. He is joined by Harold Carpenter, Chief Financial Officer.

Please note: Pinnacle's earnings release presentation is available at the Investor Relations page on their website at www.pnfp.com. Today's call is being recorded and will be available for replay on Pinnacle's website for the next 90 days.

At this time all participants have been placed in a listen-only mode. The floor will be open for questions after the presentation. (Operator Instructions)

Before we begin, Pinnacle does not provide earnings guidance or forecasts. During this presentation we may make comments which constitute forward-looking statements. All forward-looking statements are subject to risks and uncertainties and other facts that may cause actual results and performance or achievements of Pinnacle to differ materially from any results expressed or implied by such forward-looking statements.

Many of such factors are beyond Pinnacle's ability to control or predict, and listeners are cautioned not to put undue reliance in such forward-looking statements. A more detailed description of these and other risks contained in Pinnacle Financial's most recent annual report on the Form 10-K.

Pinnacle Financial disclaims any obligations to update or revise any forward-looking statements contained in this presentation, whether as a result of new information, future events, or otherwise. In addition, these remarks may include certain non-GAAP financial measures as defined in the SEC Regulation G.

A presentation of the most directly comparable GAAP financial measures and reconciliation of non-GAAP measures to comparable GAAP measures will be available on Pinnacle Financial's website at www.pnfp.com.

With that, I would now like to turn the presentation over to Mr. Terry Turner, Pinnacle's President and CEO. Sir, the floor is yours.

Good morning. For quite some time we have been discussing our strategic approach to growth and profitability -- essentially, that we would grow our balance sheet in the form of loans at a double-digit pace for a period of three years while containing noninterest expenses, which should result in dramatically improved profitability as a result of the operating leverage that that would provide.

So this morning I thought I would start with a dashboard that provides a simple snapshot of how that strategy has worked throughout 2013, and specifically again in the fourth quarter. As you can see on the first row of graphs, we are getting outsized balance sheet growth in the form of loans, up 11.6% for 2013, with the fourth quarter being the second-highest quarterly volume and net loan growth since we published our multiyear targets two years ago.

Frankly, the thing I am even more proud of in the loan growth is to growth in low-cost core funding, with DDA volumes up roughly 20% year over year; and transaction accounts, meaning DDA plus NOW accounts, up 16.7% year over year. And all that balance sheet growth is organic growth.

On the second row of graphs, you can see we have been able to translate the balance sheet growth into earnings growth, with fully diluted EPS up 29.4% year over year; net income up 30.6% year over year; and, importantly, organic revenue growth of 7.7% in the face of pretty stiff volume and margin headwinds.

As you can see on the third row of graphs, the dramatic improvement in asset quality over the last several years, which continued throughout 2013 and again in the fourth quarter, has provided meaningful credit leverage for our Firm in 2013 and I believe will continue to provide meaningful credit leverage throughout 2014.

As I alluded to on the last slide, we began publicly discussing our long-term profitability targets on our fourth-quarter 2011 current earnings call. As you can see in the graph on the left, we have made substantial progress since that time, now operating inside the target range of a 1.10% to 1.30% for ROAA -- albeit the lower half of the range, which leaves room for continued improvement.

Also, as you can see on the smaller graphs to the right, for each of the critical components required to sustain that 1.10% to 1.30% ROAA, we are now operating better than or within the published targeted range except for the expense-to-asset ratio, where we have made 22 basis points of improvement over the last two years. That said, the key for us to continue the trajectory toward the targeted range for the expense-to-asset ratio is to contain expenses while continuing to grow loans and revenues, which we have consistently done each of the quarters over the last two years.

In terms of our published long-term growth target, we've been highlighting this chart since January 2012. It was our belief at that time that our existing relationship managers, plus several new managers that we intended to and indeed have hired, had the capacity to produce approximately $1.3 billion in net loan growth over the three-year period, beginning in 2012.

In this chart we are plotting the actual production to date against that three-year target that we outlined two years ago. We grew net loans outstanding $420 million in 2012 and $432 million in 2013. In total during the first two years since we announced our three-year target, we have added a total of $853 million, which equates to a CAGR of 12.2%, slightly better than the pace required to hit the three-year target at year-end 2014.

So 2013 was a great year of execution, and the fourth quarter was another great quarter execution in terms of taking market share and growing the balance sheet, specifically net loans; growing revenues while containing expenses; and continuing asset quality improvements, which should continue to provide credit leverage as we move through 2014.

I want to turn it over to Harold now to review in a little greater detail the results of the fourth quarter.

Thanks, Terry. We have been providing this information related to loan growth and payoffs for several quarters, and it gets at several items that we have been talking about for at least the last two years. First off, loan growth will be lumpy between quarters, and that we will not achieve our loan growth targets on a straight line.

That said, we remained very pleased with the energy of our sales force, as new loan originations equated to more than $1.3 billion in 2013, with approximately $375 million of that in new loans in the fourth quarter. So we are fortunate that we are in two great markets and have the sales force that can continue to grow loans, organically.

As for the green bars, and as we have mentioned in earlier calls, we and many other banks are experiencing significant levels of payoffs. This has and will continue to be a headwind to net loan growth. It's the one thing that we underestimated when we charted out our anticipated growth prospects in the latter part of 2011. Otherwise, we believe we would have produced outsized growth above our original estimates.

We anticipate that the first quarter of 2014 will be another quarter of greater-than-anticipated loan payoffs; but that, based on the strength of our markets and the efforts of our sales force, we should experience modest growth in the first quarter of 2014. But we remain committed to achieving our loan growth targets over the remainder of the year.

On last quarter's conference call, we stated there would likely be some margin contraction in the fourth quarter. We are somewhat more optimistic about the margin for 2014 than perhaps we were last quarter. We continue to believe our margin will remain within a 3.70% to 3.80% range in 2014, including the first quarter, and that will again be based on loan growth as well as decreases in cost of funds.

We did see some improvement in our net interest income run rates in the fourth quarter over the third quarter, as we reported a record $45 million in the fourth quarter and believe we we'll see continued increases in net interest income in 2014.

Concerning loans, as the chart indicates, average loans were $3.98 billion, while EOP loans were approximately $163 million greater than the average balance -- thus signaling increased late-quarter business activity as borrowers were hustling to get fundings accomplished by year end.

Our thesis for the first quarter is that we will continue to see heavy payoffs during the quarter, as in all likelihood we have several borrowers seeking funding to their year-end balance sheets to bolster cash. Our belief is that we'll see our sales force overcome those obstacles and will continue to experience growth in average loan balances in the first quarter of 2014 -- probably not too dissimilar to last year's first quarter.

As to loan yields, we are still in a war on loan pricing, and we expect we will likely continue to see some reductions in loan yield, but not at the pace we experienced in 2013. This is likely due to all bankers becoming weary of a continuing drop in loan yields, and all of us looking to find some solid footing. We don't think we are at the bottom, but it does appear to us we have reason to be more optimistic about loan yields this year.

As to deposits, thankfully again here in the fourth quarter we were able to offset loan yield contractions by continuing to lower our cost of funds. We got that done while growing our average deposit about 5% during the quarter.

We continue to believe we have an opportunity to reduce cost of funds in 2014. It will require another significant effort on the part of our relationship managers to accomplish further reductions, but we believe we have reason to believe they can make it happen.

As Terry mentioned, we continue to grow our non-interest-bearing deposit business, which we believe may be the most valuable product in our bank. Year-over-year non-interest-bearing demand deposits are up 31.3%, with all of it being organic, which is a huge positive for a CFO. Our EOP average balance for an individual DDA was approximately $22,000 to $23,000, up 6% from 2012's amounts, while the number of accounts are up 12% from last year's EOP, which means we continue to attract customers and grow low-cost deposits to fund loan growth.

Undoubtedly, we have depositors who are waiting on a better interest rate cycle or some investment opportunity to reduce their operating accounts. We do understand that; however, if you will recall, this time last year we were concerned that we had excess demand deposits due to the TAG program, which expired at the end of 2012. But our sales force pushed through that, as well.

Switching now to non-interest income, our fourth-quarter core fee income was up 12.3% over the same quarter last year. We have seen outstanding growth in service charges, investment services, and trusts, which should offset whatever declines we might experience in our mortgage origination business. If you think about the long-term profitability target that we have set for each major element of the P&L statement, for the algebra to work, it is critical that we grow our fee income as fast as we are growing our loans and deposits.

We think we can continue to do that in our fee businesses. We will be working to increase our revenues meaningfully in wealth management in 2014 while at the same time maintaining our mortgage market share. We also have several tactical items aimed at interchange and credit card that we hope will bolster our fee businesses in 2014.

Other noninterest income will be choppy, as that is where loan sales, swap fees, etc. are recorded. While those items will reoccur, we have budget targets to produce those revenues. We just can't predict the timing.

Now as to operating leverage, our core efficiency ratio is at 56.3%, excluding ORE and Federal Home Loan Bank restructuring charges. You will note during the second quarter we had a $2 million credit to other expenses for an off-balance-sheet reserve reversal related to a previously unfunded letter of credit which was funded in the second quarter, and thus $2 million reserve reversal was offset by a $2 million increase to provision for loan losses.

That item prevented our fourth-quarter core efficiency ratio from being the best number on the chart. I believe our Firm had a great year in 2013 in terms of expense management. As we mentioned in the press release, year-over-year expenses -- again, excluding ORE and Federal Home Loan Bank charges -- were up only 0.6%, while revenues, excluding the impact of securities gains and losses in each period, were up 7.7%.

As you know, one of our long-term profitability measures that we are focused upon is the ratio of expenses to average assets. That number -- again, including those items -- was down to 2.38% for the fourth quarter, which is moving towards our long-term profitability range of 2.1% to 2.3%.

As far as 2014 is concerned, we are likely to see increases in our 2014 expense base, given we will continue to hire people and we have some CapEx matters that need to be considered this year. That said, I have great confidence in the senior leadership of this Firm, in that they will continue to find appropriate ways to increase the operating leverage of our Firm.

However, as we have said for the last two years, the primary strategy to decrease and to ultimately achieve our long-term expense-to-asset ratio will be growing the loan portfolio of the Firm with a corresponding increase in operating revenues and earnings.

With that, I will turn it back over to Terry to wrap up.

Thanks, Harold. I thought I would close today with some comments about valuation. 2013 was a good year for our Firm. We did see some multiple expansion, and so I thought I would just comment on my views about the PNFP valuation.

First of all, in 2013 -- as in every year, frankly -- our aspirations were high. Very few firms set multiyear double-digit organic balance sheet growth targets; but we set them, we published them, and we hit them.

We executed with precision, now operating inside or better than the targeted ranges for ROAA for the NIM, for the noninterest income, and for net charge-offs. We grew the balance sheet and the earnings at a double-digit pace again in 2013. And in terms of our track record for shareholders, our shares appreciated 72% during 2013. We initiated a quarterly cash dividend, and we were the second-highest performing bank stock among our peers over the last decade.

I think that may rationalize or perhaps justify the multiple expansion that we have seen. Of course, the real question is: how should shares of PNFP be valued going forward? I want to say quickly, I recognize and appreciate that there are other banks that have still higher multiples; and I genuinely applaud their accomplishments. But here is how I think about PNFP.

We continue to set aggressive targets for soundness, profitability, and growth. Our earnings are based on a proven ability to grow revenues -- in my judgment, a more valuable income stream than one built on expense cutting. That revenue growth is organic. It is not necessary for us to take on risks associated with M&A in order to produce outsized revenue growth.

We are able to produce outsized growth, really, for two reasons. One is because our markets are relatively more vibrant the most. And two, because we have created a competitive distinction in those markets.

Quickly, roughly 90% of our assets are in Nashville, Tennessee, which continues its two-decade-long track record for attracting jobs and has been the second-fastest-growing MSA in the nation since the recovery began. Not only that, but third-party research substantiates that we have now established the number-one lead Bank market share among businesses with sales from $1 million to$500 million in Nashville. That's a number-one share position. That is a valuable franchise.

And despite not being the leader, it is not inconceivable to me that we could maybe still double our current lead bank share in Nashville. And we continue to be the growing fastest growing Bank in Knoxville since we launched there in 2007.

Our client satisfaction scores are meaningfully higher than all our major competitors in Nashville, which bodes well for our continuing ability to take share. And since the competitive distinction that we have achieved is primarily based on people, and since we were recently recognized by the American Banker as the best Bank in America to work for, our competitive advantage in my judgment is a sustainable one. So in terms of valuation, that seems to me to be an extremely valuable earnings stream.

Operator, with that we will stop and take questions.

Thank you, Mr. Turner. (Operator Instructions) Michael Rose, Raymond James.

Just wanted to start on loan growth. It looks like quarter to quarter you hired about 13 people. How many of those are loan producers?

And then, as we think about 2014 and beyond as it relates to your pipeline and what you expect for loan growth, how should we think about the pace of paydowns? Will paydowns slow as rates rise, and less is taken away from conduits in the fixed-income market?

And then, just to wrap it up, how should we think about your ability to attract lenders with some of the more distressed, larger banks or out-of-state banks getting back on their feet and getting a little bit more aggressive here? Thanks.

Yes, let me see if I can get all of those, Michael. I think I will talk about hiring, first of all. I would say and characterize our hiring this way. I think when we -- in January of 2012, when we were handling the fourth-quarter earnings call, we put the targets out. We said we were going to hire 12 revenue producers, which we did.

I believe the number that we hired last year was 11. I think the number -- and again, I am not completely sure about this, but three or four of those would have been fourth-quarter hires. So again, maybe that will give you some characterization of the pace of hiring -- essentially, that we hired roughly the same number of revenue producers in 2013 that we hired in 2012, and that we had continuing momentum as we hired in the fourth quarter.

You know, my outlook is for 2014 that we will hire a similar number to what we did in 2012 and 2013. So hopefully that is helpful on hiring.

I think as it relates to our ability to continue to hire, I think there is nothing different in the hiring thesis. And the point that I am really making is that my belief is that the job for a relationship manager who is at an outpost location for a major regional company is a difficult existence. And a great number of those would have a preference to work for a local bank, where they are active in the decision-making of the company, know the decision-makers, and all those kinds of things -- generally suffer from less bureaucracy, which, of course, is the number-one irritant for relationship managers and so forth.

So my belief is that that ought to continue to let us keep hiring people at the pace we have. Harold, did I get all the questions?

I think so.

Michael, I think I got them. If I didn't, feel free to ask.

Yes, sorry I asked such a myriad of questions there. That does answer it.

If I can just ask one as a follow-up: as we think about your expense guidance for 2014 being slightly up from the fourth-quarter run rate, is that really contingent upon a much lower level of ORE cost? How should we think about the expense base from continued hires?

Michael, I think you should exclude ORE from that assertion. We believe ORE costs to be down this year. But we think salaries and other costs, equipment -- all that sort of stuff will also be up.

Okay. Thanks for taking my questions.

Jefferson Harralson, KBW.

Can you talk about the nature of the industries where your loan growth is coming from? I remember last year about this time, we had a big loan growth at the end of the fourth quarter because there were some business transitions trying to get ahead of the tax code. But this year sounds like it is different. Can you comment on -- any more color on the nature of this late-quarter loan growth?

I think I would say, Jefferson, that first of all the growth is concentrated in two asset classes: commercial mortgages and C&I lending. That gets -- as is typically the case for our Company, those are the two high-growth categories.

I think in terms of what is going on within C&I, it is a broadly diversified funding base. I couldn't look at one industry segment or another and say, boy, that is really where all our growth is coming from.

I would say that there is a lot of activity in healthcare. So some volume of that would be healthcare-related. I would generally say that is the most active sector within C&I. But again, it is not dominating by any means; it would just be the largest contributor.

You are right. Last year we did have a lot of people trying to get in front of tax changes and so forth. Obviously, that is not a catalyst for this year. But because of the commercial nature of our business, it is not uncommon that we have people that do hustle at year end to take care of whatever balance sheet dressing they may want to do. So that does stimulate some transactions.

And I think -- Jefferson, I don't remember if you asked the question last time, but somebody did ask the question about why we expected a bigger quarter in the fourth quarter in terms of loan fundings. I think the answer was because these commercial enterprises really do scramble around, and try to dress balance sheets, and do different things -- get transactions closed that match their fiscal year cycles, and so forth. So I would say that that is a catalyst, even though it wasn't quite as dramatic as a function of the tax laws that you saw the previous year.

And the CapEx matters? Can you qualify that as technology oriented? Would you say they are regulator driven?

No. I don't think regulator driven would be the catalyst. I think it's -- just with the growth, we have got some -- well, we want to also beef up on our cyber security tools and all of that. So we've got some expenses there, but we've also got a new branch in the budget this year. So we hope to get that accomplished in Knoxville towards the end of the year. Those sort of things. But I don't think there's any regulatory kind of matters out there that is requiring this increased CapEx.

Hey, Jeff, and I might just comment -- I don't know if this is helpful or not, but I would just go back and look at it over the last several years. We have been hustling, really trying to rebuild the core earnings capacity of the Firm. Most of that activity was credit related, as you know.

But we have continued to push on software enhancements. I would put them in really two broad categories. One, we are making meaningful investment in security-related software -- cybercrime and the like. We are also making meaningful enhancements on things that advance our -- I am going to say consumer-based technologies, primarily; software that supports mobile banking and mobile deposit making, e-statements, and those kinds of things. So those are the two principal categories outside the investment in the new branch office.

All right. That make sense. Thanks, guys.

Peyton Green, Sterne Agee.

I was just wondering, maybe, Harold, if you could talk about the securities book. I noticed, just kind of looking at it, that most of it seems to be in pretty good shape. But there -- you have a little bit of agency exposure that I would guess is kind of your longest-duration stuff that has the lowest yield. In your margin guidance, do you anticipate doing any restructuring on that end? Or is this just simply what you expect the deposit cost improvement versus the loan yield change to be?

Peyton, today I think those bonds are in okay shape. You are right; they are out there. They are out there at about 10 years average life. But right now I am thinking we will probably just keep on keeping on.

But we will constantly be looking at the bond book in total to try to figure out how we might better position this Firm for a rising rate cycle that has started, for all intents and purposes. We don't think we'll see as significant rise in the long rates over the next, say, year or so.

Okay. And then maybe Terry can speak to this, but the deposit growth has been quite strong, and the mix has certainly been very, very good. Do you expect this year to be that kind of year, also? And I guess -- I think you all mentioned that 45% of the loan growth in the quarter was new clients. Any idea as to how much of the deposit growth? Or was that a mix of both?

Peyton, as it relates to deposit growth, we do anticipate continued outsized growth in low-cost categories, specifically DDA and NOW. When you think about the increase that we saw in DDA, you've got a 6% increase in average balances and a 12% increase in the number of accounts. So it is pretty fundamental growth that is occurring there.

So my belief is that that momentum could continue forward. I am not aware of anything that ought to interrupt that momentum. I don't know if that answers your question or not.

Okay. No, that helps a lot. Thank you.

Matt Olney, Stephens.

Hi, guys. This is actually Tyler Stafford in for Matt. I want to start on asset sensitivity. Last quarter you said that another $200 million of floating assets would put you into the positive asset sensitivity camp. Can you update us on how you feel about your asset sensitivity today and maybe your expectation for 2014?

Tyler, that number is roughly the same today as it was at the end of September. We saw some decrease in loans -- on floored loans this quarter. Not a significant amount, but our goal, obviously, this year -- this will be the year for us to try to figure out ways to reduce the liability sensitivity of this Firm and try to achieve some neutrality, probably over the next 12 months. Maybe a little bit longer than that.

It does appear the economy is strengthening, probably more rapidly than any of us had anticipated. So that will be one of the jobs that we will take on this year is to try to get this liability -- where we are today, which I think is just slightly liability sensitive, into a more neutral position.

And then on expenses -- I apologize if I missed this in the opening remarks, but that other expenses line item dropped pretty significantly. Is there anything non-core in that? Or is that a good run rate?

No. I think in the third quarter we had a big legal accrual that paid in the fourth quarter or got reduced in the fourth quarter. So the fourth quarter is more of a run rate than the third quarter, I'd say.

Okay, great. Thanks, guys.

Kevin Fitzsimmons, Sandler O'Neill.

I just wanted to follow up on your comments on loan growth. It seemed like we had a high-paced -- almost 18% end-of-period annualized growth in the fourth quarter. And you implied some of that was helped by just a surge in trying to get late-year activity done.

We are coming off the third quarter, which was a pretty low quarter in terms of the loan growth for you all. I think it was about 4% and change loan growth, and now 18%. I think what you said is maybe it moderates a little bit going into the next quarter, just with the surge in year-end activity.

So is the way to look at loan growth into next quarter somewhere in the middle? Or somewhere like a low double-digit pace, but not quite the 18% linked annualized we saw this quarter? Thanks.

Kevin, if I understand your question, I think you are asking: do we anticipate that we would have an 18% growth rate in 2014? If that is the question, no, we don't.

I believe if you look at loan growth -- again, just go back to the three-year target. I think the number we said was $1.270 billion. I think we said at the time that's a little better than $400 million a year; that we won't bring it out on a quarterly basis on a straight line; that we will have quarterly fluctuations. But about $400 million a year was what we had said when we started out. We did $420 million in 2012. We did $432 million in 2013, and that is about a 12% CAGR. That's a pretty good assumption going forward in my opinion.

Okay. Great. And then just one follow-up question, Terry. Obviously, the growth is really happening and coming to light in Knoxville as well as Nashville. How do you feel about new entries? I know you have mentioned Chattanooga in recent calls. How do you feel about opportunities for de novo entries in some of those markets?

Kevin, I think maybe the best answer to give you is that I continue to have interest in both those markets, but I do not have anything that I am working on that is material or likely to occur in the very short term.

Okay. Great. Thank you very much.

Brian Martin, FIG Partners.

Harold, maybe you can just touch on your thought on being a little bit more optimistic on the margin this quarter than you were last quarter. Is that just a function of the deposit-gathering efforts that you guys are anticipating primarily in 2014?

I think there are several factors to go into that. One is we think we will be able to reduce our cost of funds or more in 2014. We won't be able to reduce it as much this year as we did last year.

We think we are still in the hunt to increase our low-cost core funding mix within the deposit base, so that is part of it; but we think we will also be increasing the loan-to-deposit ratio this year with higher-yielding earning assets. I think when you plow all that through a P&L, that margin ought to respond accordingly.

Okay. And then just maybe one for Terry. Just on the M&A -- with the valuations you talked about, with the stock going up as much as it has, does M&A weigh any more important as you look to 2014 at all, with the increase in the currency?

Brian, I would say -- and I think I have always answered those sorts of questions this way: when I think about our Company, I think of us primarily as an organic grower. I think that is part of the value of the Firm.

I do think we have an advantaged stock. I do think there is an M&A wave that is going to come. I am certainly not predicting exactly when that is going to hit. I think everybody has been expecting it for some time, and it has not yet materialized. But I do believe an M&A wave is coming.

I try to always say, boy, it is hard for me to imagine over a 2- or 3-year period, we won't make an acquisition along the way. But I just want to reiterate: that is not what I spend my time trying to figure out. That's not what I spend my energy on.

My energy, and really the energy of this entire Firm is really focused on organic growth opportunities that we have, which are substantial. So I don't know if that is helpful or not, but that is about the best thing I know to say.

Okay. I appreciate it. Thanks very much.

Mikhail Goberman, Portales Partners.

In prior quarters you guys have sort of stated that you just hadn't been seeing the CapEx expansion from businesses in your markets that maybe you would like to see. Given the strong C&I and CRE loan growth you had in this Q4, would you say that you are maybe starting to see this potential CapEx expansion in sort of animal spirits beginning to take shape?

Boy, that is a good question. I think -- I guess, to be clear, I hope our characterization over the last few quarters has been that what we have seen is people that are taking on deferred capital expenditures which they deferred through the recession. Because we have been seeing that in plant and equipment, where people are refurbishing a fleet or those sorts of things.

So we have been seeing that sort of CapEx for a period of time. The kind of capital expenditure we have not seen I would call bona fide growth, where people are building plants, adding shifts, and doing those sorts of things. And I would say, no, we still see almost none of that kind of activity.

Okay. Thank you very much.

(Operator Instructions) Peyton Green, Sterne Agee.

Just a follow-up. Sorry if I missed this and you have already disclosed it, but what, Harold, what was the amount of loans at floors? And then how much cushion did you have versus the current loan renewal rate?

It was just under $1.3 billion, with an 84 basis point difference between the contract rate and the floor rate.

Okay. Great. Thank you very much.

(Operator Instructions) Presenters, at this time it looks like there are no additional questioners in the queue. This does conclude our time for questions.

Ladies and gentlemen, this does conclude today's call. Thank you for your participation and have a wonderful day.