Pennantpark Investment Corp (PNNT) 2013 Q4 法說會逐字稿

Good morning and welcome to PennantPark Investment Corporation's fourth fiscal quarter 2013 earnings conference call. Today's call is being recorded.

(Operator Instructions)

It is now my pleasure to turn the call over to Mr. Art Penn, Chairman and Chief Executive Officer of PennantPark Investment Corporation. Mr. Penn, you may begin your conference.

Thank you and good morning, everyone. I'd like to welcome you to PennantPark Investment Corporation's fourth fiscal quarter 2013 earnings conference call. I'm joined today by Aviv Efrat, our Chief Financial Officer. Aviv, please start off by disclosing some general conference call information that includes a discussion about forward-looking statements.

Thank you, Art. I'd like to remind everyone that today's call is being recorded. Please note that this call is the property of PennantPark Investment Corporation and that any unauthorized broadcast of this call in any form is strictly prohibited. Audio replay of the call will be available by using the telephone numbers and PIN provided in our earnings press release.

I'd also like to call your attention to the customary Safe Harbor disclosure in our press release regarding forward-looking information. Today's conference call may also include forward-looking statements and projections and we ask that you refer to our most recent filings with the SEC for important factors that could cause actual results to differ materially from these projections. We do not undertake to update our forward-looking statements, unless required by law. To obtain copies of our latest SEC filings, please visit our website at www.PennantPark.com or call us at (212) 905-1000. At this time, I'd like to turn the call back to our Chairman and Chief Executive Officer, Art Penn.

Thank you, Aviv. I'm going to spend a few minutes discussing current market conditions followed by a discussion of investment activity, the portfolio, the financials, the overall strategy and then open it up for Q&A. As you all know the economic signals have continued to be mixed with many economists expecting a slowly growing economy going forward. With regard to the more liquid capital markets and in particular the leveraged loan and high-yield markets, those markets have generally been strong this year, due to substantial cash flows into high-yield funds, leveraged loan funds and CLO 's. Risk reward in the middle market has generally remained attractive, as the overall supply of middle-market companies who need financing, exceeds the relative demand of applicable lending capacity. As debt investors and lenders, a slow growth economy is fine, as long as we've underwritten capital structures prudently.

A healthy current coupon with deleveraging from free cash flow over time is a favorable outcome. We've continued to be selective about which investments we make in this environment. Given our strong origination network and the size of our Company, we believe we can continue to prudently grow. We remain focused on long-term value and making investments that will perform well over several years and can withstand different business cycles. We continue to set up high bar in terms of our investment parameters and remain cautious and selective about which investments we add to our portfolio. Our focus continues to be on companies restructures that are more defensive, have low leverage, strong covenants and high returns. With plenty of dry powder, we're well-positioned to take advantage of investment opportunities, as they arise.

As credit investors, one of our primary goals is preservation of capital. If we preserve capital, usually the upside takes care of itself. As a business one of our primary goals was building a long-term trust. Our focus is on building long-term trust with our portfolio companies, management teams, financial sponsors, intermediaries, our credit providers and of course our shareholders. We are a first call for middle-market financial sponsors, management teams and intermediaries who want consistent, credible capital. As an independent provider free of conflicts or affiliations, we have become a trusted financing partner for our clients. Since inception, PennantPark entities have financed companies backed by 125 different financial sponsors.

We have been active and are well-positioned. For the quarter ended September 30, 2013 we invested $186 million. The average yield on new debt instruments was 12.4%. Expected IRR's generally range from 13% to 18%. Net investment income was $0.26 per share. We have met our goal of steady, stable and consistent dividend stream since our IPO six and a half years ago, despite the overall economic and market turmoil throughout that time period.

We're one of the only BDC 's to not cut its dividend during this time period. We anticipate continuing this steady, stable dividend stream going forward. We're perfectly content under-earning our dividend temporarily, as we carefully and prudently invest in this environment. Given the current market backdrop, we remain conservatively levered and have plenty of excess liquidity that we can use for both defensive and offensive purposes. For the quarter ended September 30, our overall leverage ratio was approximately 45% and only about 30% excluding SBIC debt.

As a result of our focus on high-quality new investments, solid performance of existing investments and continuing diversification, our portfolio is constructed to withstand market and economic volatility. The cash interest coverage ratio, the amount by which EBITDA or cash flow exceeds cash interest expense, continue to be a healthy 2.7 times. This provides significant cushion to support stable investment income. Additionally, at cost, the ratio of debt to EBITDA on the overall portfolio was 4.5 times. Another indication of prudent risk.

We have plenty of liquidity. As of September 30 we had in total over $400 million of available liquidity, consisting of almost $300 million of available credit facility, $75 million of new SBIC debt financing and our second SBIC, and over $55 million of cash on hand. As a reminder we have exempted relief from the SEC to exclude SBIC debt from our asset coverage ratios and SBIC counting is cost accounting, not mark-to-market accounting. These facts highlight how the SBIC debt reduces overall risk of the Company. We had some attractive realizations last quarter. For example Gauls repaid our $22 million subordinated debt investment which generated a 17% IRR. Our $46 million subordinated deposition and last mile funding was taken out at an IRR of 18%, when that Company was sold to a strategic buyer.

Despite the recession across PennantPark entities we've had only 7 nonaccruals out of 293 investments since inception 6.5 years ago. We currently have no nonaccruals on our books. To refresh your memory about our business model, we try as hard as we can to avoid mistakes, but defaults and realized losses are inevitable as a lender. We are proud of our track record of underwriting credit through the cycle. One of the way we mitigate those losses is through our equity co-investment portfolio. We are optimistic that our co-investment portfolio will generate gains over time.

In terms of new investments, we had another quarter investing at attractive risk-adjusted returns. Our activity was primarily driven by refinancings. In virtually all these investments, we've known these particular companies for a while, have studied the industries, or have a strong relationship with the sponsor. Let's walk through some of the highlights.

We invested about $18 million in second lien debt of Arsalon Acquisition. Arsalon provides outsourced mail, print and document management solutions. Apollo is the sponsor. Carolina Beverage is a manufacturer of specialty beverages in North America, providing services to some of the world leading beverage brands. We purchased $13 million of senior secured notes. Suntax is the sponsor. We purchased $19 million of the second lien term loan of InVision Acquisition. InVision is a pharmacy benefit manager. TPG is the sponsor.

We added $11 million of the first lien term loan of InstantWeb, which is the largest independent direct mail Company in the US. Court Square is the sponsor. LanguageLine is a provider of on-demand spoken interpretation services. We purchased $18 million of the second lien term loan. Avery is the sponsor. We purchased $56 million of the second lien term loan of Prepaid Legal Services, which provides legal services and identity theft monitoring and protection to its members. MidOcean Partners is the sponsor.

Turning to the outlook, we continue to believe that the remainder of 2013 will remain active. Due to our strong sourcing network and client relationships, we are seeing active deal flow. Let me now turn the call over to Aviv, our CFO, to take us through the financial results.

Thank you, Art. For the quarter ended September 30, 2013 recurring net investment income totaled $0.23 per share. In addition, we had $0.03 per share of other income. As a result, net investment income for the quarter was $0.26 per share. Looking at some of the expense categories. Management fees totaled $9.7 million, general and administrative expenses totaled $0.5 million and interest expense totaled $4.1 million. During the quarter ended September 30, net unrealized and realized gain from investments and debt were approximately $5.5 million or $0.08 per share.

Excess dividend over net investment income were about $1.5 million or $0.02 per share. Consequently, NAV per share went from $10.43 to $10.49 per share. As a reminder, our entire portfolio, credit facility and Senior Notes are mark-to-market by our Board of Directors each quarter, using the exit price provided by independent evaluation firms, securities exchanges or independent broker dealer quotations when active markets are available under ASC 820 and 825. In cases where a broker-dealer quotes are inactive, we use independent evaluation firms to value the investments.

Our overall debt portfolio has a weighted average yield of 13%. On September 30, our portfolio consisted of 61 companies across 26 different industries and was invested 28% in senior secured debt, 33% in second lien secured debt, 28% in subordinated debt, and 11% in preferred and common equity. 48% of the portfolio has a floating rate and the average LIBOR floor is 1.7%.

Now, let me turn the call back to Art.

Thanks, Aviv. To conclude, we want to reiterate our mission. Our goal is a steady, stable, consistent dividend stream, coupled with the preservation of capital. Everything we do is aligned to that goal. We try to find less risky middle market companies that have high free cash flow conversion. We capture that free cash flow, primarily in debt instruments, and payout those contractual cash flows in the form of dividends to our shareholders.

In closing, I'd like to thank our extremely talented team of professionals for their commitment and dedication. Thank you all for your time today and for your continued investment and confidence in us. That concludes our remarks and at this time I would like to open the call to questions.

(Operator Instructions)

We'll take our first question from Mickey Schleien, Ladenburg

Good morning, Art and Aviv.

Morning.

Morning.

Wanted to ask you about the fourth-quarter deal flow. We're hearing that it might be quite busy and I'm curious about the quality of the deal flow, specifically are you seeing more M&A business as opposed to refinancings and repricings?

Thank you, Mickey, it's a great question. We are seeing some nice deal flow for the December quarter. And it is more in line with traditional mezzanine that is used for new buyouts or growth financings. So, it's back to what we would prefer which is a down the middle of the fairway middle-market financings for growth or buyouts. And the activity level is pretty good.

You increased the weighting in the portfolio into second lien pretty significantly. Could you describe your current view of that segment and why that occurred?

We look at deal by deal. Clearly all things equal we like floating rate, we like that potential upside. If we do fixed-rate usually it's at a high fixed coupon such that if the credit quality is good that coupon looks very attractive to us over time. This was just what the market gave us, the opportunities in the market. Where we can negotiate a floating rate, we will. Where we can negotiate a second lien versus sub debt we will. It really just is a deal by deal situation, Mickey.

Okay. You have a couple of concentrated positions in the energy sector, Brand Energy and Eureka. Is that also opportunistic or is there some overriding theme there?

We like energy as a space. Energy is a big sector of the economy. We think there's a lot of opportunity in energy. So, we will continue to focus on energy as a key industry vertical for us. It's one place where the American economy is growing and where there are lots of capital needs going forward. So, energy will continue to be an element of what we do. Just as an FYI, Brand Energy did announce that they were getting bought and that deal that we have will be getting refinanced and taken out at a premium. But, we do like energy. We think it's underserved by banks today, in general, and we think the opportunity for capital deployment is interesting.

Thanks, Art. Just a couple of housekeeping questions and then I'll let someone else jump in. In the K it shows $15 million of undistributed taxable income at the end of the year. I just want to confirm that I am reading that correctly, because that is $0.23 a share and in the previous quarter, when we talked about it, it was only $0.01 to $0.03. So, I'm curious what caused that large increase from the third quarter to the year end?

Just a timing difference, Mickey, which is the dividend gets paid out right after quarter end. So, you can look at it as $0.23 positive, you can look at it as about flat. It's just timing.

Okay. And lastly, if I'm doing the math correctly, there was actually a credit to administrative expenses in the fourth quarter. I guess you were probably truing things up for the year, but I wanted to understand the nature of that? And more importantly, what is the outlook for administrative expense in the next fiscal year and is there some sort of operating leverage to consider there?

That is quite right. At year-end we are truing up or down as the case may be, so that's what you see as of September 30 our fiscal year end and for the next year. Again, if you look at the year ending, 12 month ending September 30 of about $6 million, that will give you a good clue as to the next year's running level of G&A.

Okay, thanks for your time this morning.

Thank you, Mickey.

Greg Nelson, Wells Fargo Securities.

This is Greg filling in for John. Just a couple quick questions for you, Art. First, when we look at the environment and excess liquidity that's flowing around. We see some equity gains this quarter in Magnum Energy, just trying to get a sense of the future gains in the portfolio and what that can mean for NAV going forward?

Thanks, Greg. In terms of kind of the benefit of some of the strength in the market is you're absolutely right we're seeing some general NAV improvement post quarter and there were two investments that have traded up very nicely. One is a finny on, where that instrument was $0.50, $0.57 on the dollar at September 30, today is trading in the mid-80s or quoted in the mid-80s. The other one is InstantWeb first lien. That was quoted around $0.80 on the dollar at September 30, today is quoted in the mid-90s.

So, we have seen some appreciation in the portfolio. And that is the positive of this kind of gradual economic recovery that we're seeing. Some investments are starting to be valued higher, equity co-investment portfolio should be valued higher, you mentioned Magnum Hunter. So, in this environment where on one hand we can say, gee, there's not enough fear in the market. We'd like more fear on one hand, on the other hand we are saying it's helping the NAV of the portfolio. So, that is certainly part of the positive we're seeing.

Great, thanks. And then just another quick one. Going over to leverage, what do you guys view as the right point for leverage with the SBIC debt and without?

That's a great question, Greg. As you all know we mentioned we have two SBIC licenses. Those have exemptive relief from the SEC. So, on those particular boxes under PNNT we can leverage $1.00 of equity to $2.00 of debt. So, that's always a possibility. To us we view that as cushion. We still view it as on an overall basis, including SBIC debt, we want to be levered 0.6 to 0.8 times debt to equity. We always have that extra cushion there for both defensive purposes, as well as offensive purposes. But we're still focused on a 0.6 to 0.8 times debt to equity ratio on an overall basis including the SBIC.

Great, that's all for me thanks, guys.

Thank you.

Greg Mason, KBW Brokers.

Great, good morning. Wanted to talk about you had a significant number of refinancings this quarter. However, the fee income really didn't show an uptick. In fact, it was down from last quarter. Is there some reason the high activity this quarter didn't generate more fee income?

Sure. That's a great question. It really just depends on if there is still a prepayment penalty left to be paid during the quarter. So, for instance, on Last Mile Funding that we did get a 2% prepayment fee and on Gauls we got a 3% prepayment fee. But on some prepayments that we had, for instance, Jacuzzi, Performance Inc., et cetera, we did not get a prepayment fee. So, it just depends.

Like Jacuzzi and Performance have been investments we've had for a long period of time and that prepayment penalty had already burned off by the time we got repaid. So, that is just kind of idiosyncratic with a particular deal. The two deals that are publicly announced in terms of refi's this quarter, Brand Energy we'll have a prepayment penalty and we have this investment in Affinity called Good Sam. It's an Affinity club for RVs. I think we're going to get tendered at about 1.09. So, those are the two that are publicly known that will be refi'd for this quarter.

Great and on those lines, I think there's been some information about Pennant Media and Jacobs Entertainment have been involved in new financing transactions in the fourth quarter. Do those new transactions impact the securities you hold at all?

That's a good question. Pennant was a refi. We did take a look at the new deal and you'll know in February whether we participated in it. And Jacobs, there was nothing that significantly impacted our piece of paper, which continues to perform well.

Okay.

You might be thinking about another Jacob. You might be thinking about Jacobson, not Jacobs Entertainment.

Apologies. And with the Affinian I think there are a couple of options for that investment. I know it's an exchange into a higher-yielding PIK piece or I think there's some other notes higher in the capital structure that you could move into. Could you just talk about the options you have with Affinian and if you are leaning one way or the other on that investment?

Sure, thanks, Greg, it's a great question. So, just to put everybody on the same page, we as of September 30 and still today own Affinian 11 5/8 bonds. There's an exchange offer in the market to exchange those securities into a 14.5% piece of paper with 15% warrants. That 14.5%, as Greg said, is PIK. Those are liquid instruments, so, step number one is exchanging our existing paper into the new paper. As a result Affinian has, of this exchange, Affinian 11 5/8 have traded from $0.57 on the dollar to the mid- 80s. We're evaluating the exchange.

Certainly, I think we're going to participate in the exchange. And since it is a liquid instrument we always have options. Do you buy more, do you sell, there's a piece of paper higher in the capital structure, that's a 13.5% cash pay interest that we're evaluating as another opportunity. We know the credit well, we think the future can be really interesting for this Company, as they expand their loyalty and international segments. We think this warrants that we're getting could be really interesting. So, we're evaluating all of our options and you'll know in February what we've actually done, if anything.

Great and then one last question. I see on the balance sheet you've got a $52 million payable for investment purchase. I assume those are deals that closed right at the very end of the quarter? Is that correct? So, essentially you don't have any income this quarter from those investments?

That's right. Those are deals where we've committed by quarter end and they usually close within a week or two of the end of the quarter. So, that is, they are booked as investments even though they haven't closed.

Okay, great. Thank you, guys.

Doug Mewhirter, SunTrust Robinson Humphrey.

Most of my questions have been answered. I wanted to talk a little bit about your yields. It seems like over this past say four quarters the yields have been coming down across most of the middle-market, but it seems like there's been a bit of a stabilization. You're only down about 10 basis points sequentially on your stated yields. And also I noticed on your new investments, despite going a bit higher in the capital structure, year-over-year your new investment yields are about 20 basis points higher. Is that an anomaly? Do you think that there -- is some stabilization in yields in where you're playing right now?

It's a great question. We, as you know, Doug, we don't come into the office everyday and say we have to grow. We have a risk reward bucket that we want to fill with good risk reward. So, generally that means rational debt to EBITDA multiples, generally that means rational yields. If we can find investments that fit that bucket, we'll certainly look to do them. And, if not, we won't. The market continues to -- yields continue to go down a little bit.

That said, in this quarter ends at 12/31 we're finding some interesting stuff that's more traditional, middle-market M&A or growth financings that certainly is well within the zone of what we've been doing from a debt to EBITDA multiple, any yield multiple. So, hard for me to make any kind of overall market commentary, but for us and our slow growth mentality we're finding enough for now to do that is interesting.

And actually that just triggered a follow-up question on that. Do you think, though, that maybe some of the underlying in terms of conditions have deteriorated. So, even if a like for like yield there might be a little less underlying protection in terms of covenants or maybe the PIK versus cash share?

Yes, it's more. What you worry about is debt to EBITDA levels going up and yields coming down. More and more debt -- for us more so leverage levels that get unreasonable. So, we will not do deals that we're not comfortable with from the standpoint of the debt to EBITDA multiples. So, certainly multiples have pushed up a little bit and we let plenty of deals go with people we've got really good relationships with that we'd like to accomplish, but we just don't like the risk reward. So, that's okay. We're okay in the slow growth environment right now picking our spots.

Okay, thanks. Thanks for your answers, that's all my questions.

Chris York, JMP Securities.

Good morning, guys. Most of my questions have been answered, but wanted to get a little bit more color on the decline in the underlying leverage at your portfolio companies to 4.5 times. Is that due more to the new investments put on the balance sheet? Or is that more towards the exit of investments?

So, our new investments came in this quarter about 4.6 times. So, it's really mostly existing credits deleveraging. That's what you hope happens. You hope you lend to a company at whatever, 4.5, 5 times and over time it deleverages. So, that is kind of what is going on broadly in the portfolio.

Got it. All right, that's it for me, thanks.

Thanks, Chris.

John Hecht, Stephens.

Thanks very much for taking my questions. Just a couple and the first one is more kind of strategic. Over the past year you've taken your adjustable-rate composition up quite a bit from where it was before and it seemed to me that was in the context of waiting for rising rates. But this quarter it looks like, again, more second lien fixed rate stuff. Are you at a point where you feel good about the composition? How should we think about where your focused in the next three or four quarters?

That's a great question, John. We, all things equal, we prefer floating-rate with a floor that gives us maximum optionality. If this economic recovery continues, it gives us maximum optionality on the upside and when we can negotiated it or get it, we prefer it. If we do fixed-rate, we prefer a very high fixed coupon such that as the Company deleverages, they have the right incentives to pay us back.

But we think we're very well aligned. If you look at our debt and what's going on on the liability side of our balance sheet, we've got our bond, our 12 year bond. We've got SBIC license 1, which is $150 million locked at about 4%. We've got another $75 million hopefully that will be locking here over the coming quarters. So, we like, in general, having locked liabilities and having assets that can float up. So, we like where we're positioned, but it's always tough to bid on interest rates.

For us it's mostly about betting on credit. That's why we think people invest with us is we think we're pretty good at credit, but we do want to be as smart as we can around liability and asset matching, mismatching, et cetera. And in this case we'd like as much liability to be fixed as possible as well as assets to be floating. Our liabilities, we do have this credit facility that's [up] plus 2.75 that we did a couple of years ago. That's a little bit above market right now and that may be an opportunity for us to reduce the cost of our liabilities over time.

Okay, that's good color, thanks. The second question is ladder repayments in the quarter, was there any OID in the interest line?

Sure, in terms of when a company gets paid off and the OID has been amortizing up to par. Is that your question, John?

Yes. Was there any incremental OID in the interest income line this quarter?

No. You did see, for instance, we bought some InstantWeb at a discount in the secondary market at about $0.75 on the dollar. That Company is now levered under five times. It is doing well. That piece of paper is now quoted in the mid-90s, so it was a nice add-on secondary opportunity for us. But we -- if we buy it at 75, for instance, if we think we will get paid out at par, which we do in this case, we will accrete that discount to par at maturity.

Okay. So, just at maturity. Okay. And then you had about $101 million of investments in existing companies. Was that all refi or was there any other catalyst that drove some of those investments in the quarter? Just trying to characterize what's going on in the investment environment right now?

Sure. So, Prepaid Legal or Legal Shield was a big one. That was a refi as an equity co-investor here and as a participant in a dividend, we're really not company-owned. We're happy for its cost to be lower. Really like the credits, levered under four times, is spewing cash flow. So, that was a refi. K2 was a refi, Company is doing well. InstantWeb, as I said, was more of an add-on secondary market purchase at a nice discount. So, those were the three kind of existing names. We did a small add-on for Service Champ, a small add-on subordinated debt instrument, $4 million. That Company continues to do add-on bolt-on acquisitions in this industry.

Okay. So, some refi and some just growth capital. Is that fair to characterize it that way?

Yes. We would say K2 is growth capital, Service Champ's growth, Prepaid Legal and InstantWeb are -- InstantWeb is a secondary and Prepaid Legal is a refi.

Okay. My last question, Affinian I know traded down last quarter. That was the concern around the government shutdown. It seems like it's traded back up nicely. Was there any real glitch in the performance of that or was it fairly stable the whole time?

The Company has been impacted historically by the CFPB, the Consumer Financial Protection Bureau, since a bunch of its clients are US financial institutions. They are finding other growth avenues in other segments, such as loyalty and international, which is really the growth plan going forward which we think makes it a really interesting opportunity as they grow out and away from the CFPB risk.

They've been experiencing EBITDAX pension now?

Yes.

Okay. Perfect, thanks very much.

Thank you.

Douglas Harter, Credit Suisse.

Thanks. Art, you had mentioned that you were hoping to lock the next $75 million of the SBIC soon. What is your plan for being able to deploy that and how does that market look for loans? Does that fit into there?

Yes, it's a great question. Certainly, some of the activity that we're doing this quarter or the quarter ended December 31 looks like it fits. It is SBA eligible. It's an idiosyncratic thing whether the deals we do fit the definition of a small business under the SBA guidelines. Looks like this quarter we will have some that do fit. We're optimistic, obviously. If something fits it's going to certainly be -- go into the SBIC's because we would like to fill up those buckets and lock those rates, but we're not forcing it. To us the most important thing is credit quality.

Great, thanks, Art.

Arren Cyganovich, Evercore.

Thanks. I'm just a little bit surprised that you're finding more attractive opportunities, more M&A like opportunities in the December quarter, given the overall environment. How are you coming across these? Are these sponsor driven deals or are they other kind of direct investments that you're finding?

Great question. It's a mixture of sponsor related and direct. The sponsor deals are with sponsors that we've had a long, long term relationship with where we've built trust over time. So, where we get a first call and we get a last look. And so there're going to be sponsors that we've done other deals for that we've -- where we've developed a trusted relationship and that's a big part of our business model on the origination side.

If we walk into a room and there's ten of our friendly competitors there we know that we're adding a lot less value than if we walk in the room and there's one or two of our friendly competitors. We don't begrudge sponsors for having other people in the room because, frankly, we may say no, because we say no most of the time. So, it's fair for them to have other folks in the room. It's a question of when we like something, do we get a fair shot at the business?

So, a few of these deals are middle-market sponsor second lien or mezz based on relationships with credits we like and where leverage levels are reasonable. Some of them are -- we have a nonsponsored deal or two where we have a particular view of an industry. We have a special relationship with the management team and we think we're getting a really interesting risk reward or we're getting a really nice yield and where our debt to EBITDA levels are reasonable.

So, the nonsponsored deals are management teams that you've generally just worked with in the past or how does this usually come about?

They're in industries that we've evaluated in the past where we've linked into a management team or we've diligenced it enough and the structure of the deal is, we think, safe and compensates for the fact that there's not a sponsor.

All right, sounds good, thanks, guys.

Thank you.

Casey Alexander, Gilford Securities.

Thank you. My question was answered, thanks.

Thanks, Casey.

And at this time I'm showing no further questions, I'd like to turn the call over to Art Penn for closing remarks.

We'd like to thank everybody for being on the call today. We're filing our next Q in early February. So, we'll be speaking to you them. Have a great holiday season and new year. Talk to you in February.

This does conclude today's conference. We thank you for your participation. You may now disconnect.