Sculptor Capital Management Inc (SCU) 2009 Q3 法說會逐字稿

Good morning, everyone, and welcome to the Och-Ziff Capital Management Group's 2009 third-quarter earnings conference call. My name is Katina and I will coordinator for today.

At this time, all participants are in a listen-only mode. All lines have been placed on mute to prevent any background noise. (Operator Instructions)

I would now like to turn the call over to Ms. Tina Madon, Head of Investor Relations. Please proceed.

Great. Thanks, Katrina. Good morning, everyone and welcome to our third-quarter call. With me are Dan Och, our Chairman and CEO, and Joel Frank, our Chief Financial Officer. Dan will give you an overview of our business results, and Joel will take you through the details of our quarterly financials. After that, we will take your questions.

I'd like to remind you that today's call may include forward-looking statements. These statements reflect the current views of management about, among other things, assumptions with respect to levels of assets under management, future events and financial performance, many of which by their nature are inherently uncertain and outside of our control. Och-Ziff's actual results and financial condition may differ, possibly materially, from the anticipated results in financial condition indicated in these forward-looking statements. The Company does not undertake any obligation to publicly update or revise any forward-looking statement, whether as a result of new information, future developments or otherwise.

During today's call, we will be referring to economic income, distributable earnings and other financial measures which are not prepared in accordance with US Generally Accepted Accounting Principles. Information about and reconciliations of these non-GAAP measures to the most directly comparable GAAP measures are available in our earnings release which is posted on the "For Shareholders" page of our website.

Furthermore, no statements made during this call should be construed as an offer to purchase shares of the Company or an interest in any Och-Ziff fund.

Today's call is being recorded and is copyrighted material of Och-Ziff Capital Management Group LLC. Telephonic and webcast replays will be available later today. You can find the details for both on our website at www.OZcap.com.

Now, let me turn the call over to Dan.

Thanks, Tina. Good morning, everyone. We appreciate you joining us for our call today.

This morning, I will review our year-to-date investment performance as of October 31 and assets under management as of November 1. I will also discuss the current environment as we see it for capital flows, and briefly update you on our current priorities in our core business.

During the third quarter, our investment performance remained very strong across all our funds and that trend continued in the month of October. We have now exceeded the high-water marks for the majority of our capital.

We are intensely focused, as always, on our fund investors. Our goal, as always, is to generate consistent, positive absolute returns for them. The strength of our performance this year reflects our disciplined investment and risk management processes, a low use of leverage, and the uniqueness of our diversified multi-strategy approach. The combination of these factors has driven the consistency and low volatility of our investment returns over the last 15 years, and this year has been no different. As you have heard me say before, these elements are particularly important to fund investors as they evaluate the selection of investment managers in the post-crisis environment.

Our performance also reflects our singular focus on making the best investment decisions for the investors in our funds, regardless of market conditions or other factors. We allocate capital to the asset classes and geographies where we see the highest risk/reward based on the rigorous research we do, rather than being dependent on large directional moves in the markets broadly or in any one particular asset class or sector.

As we have for several quarters, we view the investment environment as an excellent one in which to generate strong performance. The strength of our year-to-date returns reflect the alpha we've been able to generate for our investors while at the same time hedging and actively managing our exposures.

We continue to believe that institutional investors have substantial capital to invest, that they will allocate a portion of it to alternative asset managers, and that this allocation will grow over time. As I said on our call in August, we believe that the most important factor about future inflows is not the exact point at which they begin but rather the aggregate size of those flows over time and the corresponding market share we are able to attract.

However, we believe the decision process on capital allocations is relatively advanced compared to what it was during the summer. Our dialogue with both current and prospective fund investors remains very active, and the level of interest in Och-Ziff is high. We remain confident that, as investors redeploy capital to alternative asset managers, we will be a leading beneficiary of those flows because of our track record, infrastructure, transparency, and the consistency of our model. We also firmly believe that the way in which we manage many elements of our business for the benefit of our fund investors during the financial crisis differentiates us and increases our competitive positioning.

Now let me turn to our business results beginning with Assets Under Management. As we announced this morning, our Assets Under Management as of November 1 were $22.6 billion, a $1.9 billion net increase from July 1, which includes $1.6 billion of performance-driven asset appreciation and $300 million in capital net inflows.

We view redemptions as now having normalized to historical levels for the industry as a whole, as market conditions have further improved and investor confidence has increased. We believe that investors continue to see the value of allocating capital to hedge funds, both in terms of portfolio diversification as well as the opportunity for yield enhancement. They are beginning to return to the industry.

Now let's turn to our Funds Investment performance. Year-to-date through October 31, our Master Fund was up 21.3%, net. Our Europe Master Fund was up 15.6%, net. Our Asian Master Fund was up 28% net. Our global Special Investments Master Fund was up 7.2%, net. We are very pleased with these returns, both on an absolute and relative basis.

These results were driven primarily by longshore equities where we continued to be profitable in every geographic region, convertible arbitrage across all geographies, credit in US and European distressed, and structured credit, principally in the US.

I want to take a moment to talk about our focus on structured credit. Our portfolio consists mainly of residential mortgage-backed securities, which we feel could generate equity-like returns without the use of leverage. The process we undertook to begin investing in this asset class is reflective not only of our disciplined approach to investing but also of our ability to define and source the talent, both within and outside our organization, to identify and evaluate investment opportunities. Prior to the market dislocation that began in early 2007, we did not participate in this asset class because of the levels of leverage and embedded leverage and the fact that risk management was generally governed by ratings.

Opportunities arose after the dislocation, but patience and significant due diligence were required to find those which could generate our desired risk-adjusted rate of return on an unlevered basis. We invested substantial time and effort to build out our structured credit team and to develop a deep understanding of the market. This approach gave us the ability to identify what we consider to be the most attractive investment ideas.

Patient, disciplined investing, combined with creating structural advantages in asset classes where we see opportunity, are hallmarks of Och-Ziff.

Similarly, we have built a strong capability in commercial real estate, which, as a mentioned last quarter, is an asset class in which we also see significant potential.

During the third quarter, we invested additional capital in the Master Fund, bringing our cash balance down from approximately 16% as of June 30 to 9% as of September 30. We remain very active in pursuing investment ideas in all of our core strategies to continue to generate strong performance.

We are also concentrating on building our private investment platforms. We continue to believe that these platforms represent some of the most important asset classes of the future and that market conditions will create additional attractive investment opportunities over time.

With that, let me now turn the call over to Joel.

Thanks, Dan. Today, I will review our 2009 third-quarter results and also give you some perspective on how we are thinking about expenses for the remainder of this year.

For the 2009 third quarter, we reported a GAAP net loss of $80 million, or $1.02 per basic and $1.06 per diluted Class A share. For your reference, a discussion of our GAAP results is contained in our press release.

Now let's turn to the details behind economic income, starting with revenues. Management fees totaled $88 million, of which $87 million was attributable to the Fund segment and $1 million to other operations, a small increase from the second quarter of this year due to the performance-related increase in Assets Under Management. Our average management fee remains at approximately 1.7%. This is a blended rate that includes the effect of our non-fee-paying assets.

Our Assets Under Management increased from July 1 to October 1 by approximately $1.4 billion to approximately $22.1 billion. This increase was due to performance-related appreciation of approximately $1.5 billion, partially offset by net outflows of approximately $100 million.

Now let me turn to expenses. Operating expenses are comprised of compensation and benefits and non-compensation costs. Our third-quarter 2009 comp and benefits totaled $28 million with $24 million attributable to the Fund segment and $4 million to other operations. Of the total, salaries and benefits were $18 million with $14 million attributable to the Fund segment and $4 million to other operations. These amounts were essentially unchanged from the 2009 second quarter.

Total salaries and benefits were 21% of management fees in the third quarter. Assuming assets remain flat, relative to the current level, we expect salaries and benefits to be approximately 20% to 22% of management fees in the fourth quarter of this year.

Third-quarter comp and benefits also included approximately $10 million of bonus expense, which is essentially all attributable to the Fund segment. Of this amount, $6 million is related to our discretionary bonus accrual and $4 million is related to accruals for guaranteed bonuses which will be paid at year end. We cannot determine the amount of incentive income we will earn for 2009 until the end of the year.

For the third quarter, we revised our bonus accrual, taking into account the strong positive investment performance of our fund, which as Dan noted has surpassed the prior year's loss levels for the majority of Assets Under Management.

As I said on the last call, we will continue to follow the same methodology that we have always employed in determining bonuses, which is to pay them based on the full-year economic results of the Firm, including the amount of incentive income we earn. In 2010, assuming the environment continues to normalize, we expect to return to the model we have used historically, which is to determine discretionary bonuses without establishing an accrual during the year.

Now turning to non-compensation expenses, third-quarter 2009 non-comp expenses totaled $23 million with $22 million attributable to the Fund segment and $1 million to other operations. These amounts were essentially unchanged from the 2009 second quarter.

For the 2009 third quarter, non-comp expenses totaled 26% of management fees. Assuming assets under management remain flat relative to the current level, we expect this ratio to be approximately 27% to 29% during the fourth quarter of this year.

Our third-quarter 2009 effective tax rate was 14%. The lower quarterly tax rate was principally related to the reduction in taxable income due to the projected economics of the Firm, inclusive of the expense related to vesting of RSUs, which increased during the quarter due to the increase in our stock price and the resultant flow of these economics through our legal entity structure.

At this point, we anticipate our annual tax rate will be 13% to 20%.

As a reminder, we do not earn incentive income nor determine discretionary bonuses until year-end. Additionally, we don't know the amounts of expense related to the vesting of RSUs since it is related to our stock price on the date of vesting. Therefore, based on these factors and the way in which the effects of the related economics flow through our model, our tax rate can change materially.

Third-quarter 2009 distributable earnings were $34 million, or $0.08 per adjusted Class A share. As you saw in our press releases morning, our dividend for the quarter will be $0.07 per Class A share. As in prior quarters, we used cash to fund items related to the operation of our business. The most significant of these was the quarterly principal repayment of our loan.

With that, we will be happy to take your questions.

Thank you. (Operator Instructions). Cynthia Mayer, Banc of America-Merrill Lynch.

Good morning. I'm wondering if you could talk a little about the revelatory environment as you see it now. Do you see any proposals which could affect your tax rate or profitability? To the extent hedge funds register, does that have any impact, do you think, in terms of the competitive dynamics in the industry?

We've always been supportive of well thought-out institutional regulation. Och-Ziff has been registered with the SEC since 1999, as well as registered with other authorities around the globe.

As I think you know, I am a member of the President's working group on hedge funds. We believe that well thought-out institutional regulation is a good thing for the industry, a good thing for the investor, and a good thing for Och-Ziff. We have been supportive and we remain supportive.

Okay. I'm also curious if you think the better performance within the industry this year is going to have any impact in terms of your thinking about comp. Are you feeling any more competitive pressures? To what extent do you respond to those versus just take a look at internal profitability?

We've always had a focus on hiring, training and retaining the best people in the business. I think we made clear that we believe that, at Och-Ziff, we've got the strongest team in the world, and that team has gotten stronger throughout the financial crisis.

We intend to make the right decisions for our personnel. We think there are reasons people are here other than compensation, but we also understand how important compensation is. We will make the right decisions and do the right thing for the personnel who've contributed to a very strong year and who, as we said, we think represent the best team in the industry and we intend to keep that team together going forward.

Could you maybe just update us on headcount and outlook for hiring?

Yes, right now, we are at about 362 people. I think, you know, I will talk in terms of operations in relation to hires. Obviously, as the business grows, you would expect the operational part of the business to grow as well. Of course, related to opportunities and what we see on the investment side, we will make a decision at the time as we move forward.

On the investment professional side, we've been consistently and steadily hiring throughout the year, and we intend to continue that going forward.

Okay. Just the last question I guess is you mentioned low leverage. I'm just wondering if you could put that in some context, what the current overall leverage is and where you see that going. I mean (multiple speakers) compared to historic, is it any different from historic leverage levels?

Well, don't forget we don't necessarily look at historic. We don't -- we look at the market conditions now and that's how we determine our exposures and of course our risk adjusted return. Although we don't disclose leverage, in general it has been extremely low and it continues to be low.

To give an indication, Cynthia, we mentioned at the beginning of the year our cash position was about 30%. It is currently -- it's gone to about 16% at the end of the second quarter. It is currently about 9%, so slightly more invested but nothing -- no dramatic change.

Right, thanks. You're right; you mentioned that.

Roger Freeman, Barclays Capital.

It's Steven here for Roger. I was wondering, Dan, if you can talk about the $400 million of inflows. What's the nature of it? Is it concentrated, diversified, and talk a little bit more about the underlying investors as you look at the pension foundations, corporates and family office.

Sure. As we said on the last two calls and we hope to be able to say for a long period of time, the key to any inflows are not what occurs one month, one quarter, the exact composition of any specific sample.

We are confident that institutional investors and other investors have seen that hedge funds who run their businesses properly, who protect risk, who provide liquidity, transparency and disclosure, are very, very valuable asset class. We believe that those managers who are perceived to do that will grow assets going forward.

Clearly, we are pleased to have seen Assets Under Management increase with the announcement that we made this morning. We are very pleased with the composition of that. We are working very hard in all areas.

Now, I will remind you, the main way that we work hard in terms of asset growth is to deliver performance, to deliver risk management, to continue to improve our transparency and disclosure.

Our major marketing push has been and will always be to give investors reasons to want to be with Och-Ziff because of the performance that we are going to generate. So we are pleased with the monthly number we announced this morning, we are optimistic about institutional flows into the industry, and we are confident that we have given investors more and more reasons and further differentiated our firm during the crisis in a way that should benefit us.

Would you have any updates in terms of the stats, the percentages? You've sometimes given that in the past.

In terms of portfolio breakdown or --?

That -- yes, that was going to be the second part of the question. I mean first, like from the funds, pensions, foundations corporate and institutional.

Yes, funds to f funds is about 24%; pensions, about 20%; foundations, about 19%; corporate institutional, 12; the affiliated capital, which is mainly the partners capital, is 11%; family and individuals, 8%; and then Private Bank, 6%.

In terms of the portfolio breakdown -- long/short equity about 30%; convertible arbitrage about 20%. Structured credit is 14%. Private investment is about 13%. Other credit is 11%. As Dan mentioned, cash is 9%, and then merger/arbitrage is 4%.

Okay, thanks. Then lastly, when talking about the pipeline for flows, any pressure in terms of the 220-type structure and what about longer-term lock-up periods? Can you update us on that? Thank you.

We have not seen any pressure. We have had discussions with investors about longer lock-ups with adjustments to the alignment of interest, but in general (inaudible). We think that the investors understand, more than ever, manager selection is the key. Being with the right manager and the right firm is crucial, and being with others can have significant consequences.

Okay, great. That's it for now. Thank you.

Marc Irizarry, Goldman Sachs.

Dan, a question for you on I guess the geographic breakdown of your fund investors. Are you seeing a difference in the behavior in terms of capital formation from overseas versus US institutions?

Well, first of all, as you saw based on the number we announced this morning, I [don't know] the number we announced this morning is statistically significant. Joel gave you the breakdown to cause any change.

We are seeing interest from all geographies. We think that is a combination of the fact that there is capital in many places around the world, we think that the work that we've done and the investment presences that we've established internationally have created an advantage for us in that area. But I would not say we are seeing any difference in behavior. I think it's the same general concept, Marc -- understanding which funds really perform, which funds do I think will perform, which funds did what I consider to be the right things. That's the manager selection process, that's where I want to be, and that seems to be consistent throughout the globe.

Okay. Then from that comment, it sounds like the manager replacement cycle is probably driving more of your flows right now versus maybe bigger allocations. You know, you do say there's a lot of capital that these institutions have to invest in alternatives. How far off do you think we are from an even bigger acceleration in terms of asset allocation towards the industry broadly?

Well, in terms of the first part, I did not mean to imply it's manager replacement at all. So I do want to be clear on that. I mean, let's remember what happened over the past 12 months. There were, in general, outflows from the industry. I think Och-Ziff suffered disproportionately because we didn't change our liquidity terms in any way, shape or form.

We do believe that the new cycle into the industry is in front of us. As I said, I don't know exactly which month or quarter it's going to start. We are pleased with what we announced this morning, but we remain focused on giving the best investors in the world reasons to be with us. If we continue to do that, then we will benefit as things evolve.

Okay, great. Then Joel, if you could give us some help maybe on the fourth quarter. You sort of laid out some metrics. Maybe I missed it but can you repeat what you said about the cash bonus awards and the way you're thinking about comp in the fourth quarter?

Yes. Basically, it's the same model we always use. We determine bonuses based on the total economics of the Firm. As you know, we don't earn incentive until the end of the year, so at that point, we will make our decision on how we going to what are going to do in terms of bonuses. And of course, as Dan said, obviously we have a great team and we want to keep them together and remain competitive.

Okay, great. Thanks.

Dan Fannon, Jefferies.

Good morning. I wanted to follow up a little bit more on the flows and get a sense of -- are you seeing a reallocation from existing customers or is this new business from people you haven't actually partnered with before or done business with before?

Both.

Is this -- as you look at kind of the pipeline, you mentioned kind of a broader allocation or pent-up demand in terms of the number of dollars within the kind of institutional community. Are you talking broadly when you talk about new fees and these dollars coming in? Is that happening across your investor base, or are these one-off conversations in terms of discussing new fees and different lockups, or is this something you're talking to existing customers as well as new customers with?

The new fees, as you mentioned, the longer lock-up concept is not a significant part of conversations we have. There are certain investors that are potentially interested in lock-ups longer than our two-year structure, and that is something we are of course willing to discuss.

You know, in terms of the first part of your question, I think, from an industry perspective, I think, in general, there is more liquidity in the world, there is more capital that is focused on investing in hedge funds going forward. That is something we obviously don't control. That is something that we feel is going to occur and that we hope does occur.

The part we can control is generating the performance. I think we had another very strong quarter generating steady, consistent hedge performance, generating true alpha. We continue to improve our transparency and disclosure and other issues that increase investor comfort with Och-Ziff. We feel if we continue to do that, then we can benefit over a long period of time.

I will add to that. Infrastructure is also a big focus, and I think that's a big positive for fund investors. We have a very strong infrastructure and as a public entity probably stronger than some others, so I think that is a real focus and a real key.

Great. Then lastly if you could just highlight where you see the most kind of attractive investment opportunities today in the market.

Absolutely. Well, Joel gave you the portfolio allocation, so that gives you some sense as to where we are today.

Going forward, we do see -- and I'm glad someone asked this because our focus is on the opportunities we see for the investors -- some of the areas where we see attractive opportunities, long/short equity where, as we mentioned, we've been profitable in every geographic region. We continue to see opportunity. We've got a very large number of investment professionals around the globe. Our local presence is very important. The fact that we have industry expertise as well as generalists is very important, and we expect to continue to see opportunity there.

On the credit side, we are beginning to invest in a distressed cycle for the first time. We think our capability and our teams are very strong.

We've been patient; we will continue to be patient. We are seeing things to do there and we think that will be a significant cycle going forward.

We mentioned commercial real estate as an area that we believe will present opportunity over the next 12 to 24 months. We have been preparing for that for the past two years. We are optimistic about the opportunities there.

I'm not going to run through the rest. The fact I left some areas open doesn't mean that we are not excited about the opportunities. Those are some of the areas where we see things evolving and creating new opportunities.

Great, thank you.

Robert Lee, KBW.

Real quickly, I am just curious, Dan, how far along you may be in some of the new platforms you have been developing in terms of being able to kind of either roll those out maybe into separate, stand-alone strategies and accept third-party assets into those strategies. Is that something you can start to see with this coming cycle?

Sure. First of all, I do want to be a little careful because obviously, to the extent any of these are going to become funds, I don't want to talk about fundraising on a call like this for legal or compliance reasons. However, with that disclaimer, I am happy to give you an update.

We have remained focused and dedicated for the past two years on building these businesses and dedicating the resources, hiring the people, spending the time, committing the capital necessary to build these businesses. So in areas such as commercial real estate in the US and in Asia, emerging markets, energy and alternative energy, as well as our resource business in Africa, we feel better than we have about the potential investment opportunities. We are more excited at this point than we ever were about the ability to invest our capital, because I think most of you remember we kept our IPO capital in the funds largely to invest in these areas, and we think our teams are stronger than they've ever been. So from the investment side, we feel we have -- staying close has been the right thing, dedicating the resources has been the right thing, and we are very optimistic from that vantage point.

I don't want to comment on any the specific of the timings on third-party capital because, for legal and compliance reasons, that's not something appropriate for this call.

Okay, just maybe one quick follow-up, Joel, on comp. If I remember correctly, historically, I think you've paid somewhere around 13%, 15% of revenues in bonuses. I mean, understanding Q4 is going to -- good move, but is that kind of on an annualized basis what we should be thinking about still?

We never paid based on any rate or ratio. We actually decide, Dan, based on the total economics of the Firm, the competitive environment, and etc. So we've never been focused on a ratio. It's always the economics of the Firm, which we don't know until year end because obviously we don't earn our incentive until that time.

One thing I will add -- look, 2009 is a very unusual year. It was unusual in a negative way at the beginning in that we had a high-water mark. It is unusual now in that it has been an extremely good year in terms of performance and the contribution by our teams.

So our focus this year is not, as Joel said, it is never specifically on any one ridge and one number, but in 2009, as the collective owners of the business, the partners and public shareholders, our focus is not on any specific ratio, exactly what the arithmetic is on any level of incentive compensation. It's on doing the right thing and keeping what we continue to believe -- I know I'm repeating it, but it's so important -- we continue to believe it is the best team in the world doing this, the best organization in the world doing this, the best systems and infrastructure in the world doing this, to keep it together and keep it getting stronger.

All right, well, thanks for taking my questions.

Cynthia Mayer, Banc of America-Merrill Lynch.

Thanks. Just in terms of the outlook for flows, I'm wondering -- and maybe I missed this. Could you update us on what demand is like from fund to funds at this point and how healthy that seems as part of the industry? I'm also just curious. As you talk to clients, to what extent are institutional clients asking for products like the Master Fund which blends strategies versus wanting more dedicated strategies?

Well, look, as you say, the demand, the discussions, they vary. In general at Och-Ziff, we think investors understand how much value there has been to our unique multi-strategy approach. They understand that, over 15 years now, we have had a history of avoiding losing during market declines, during credit market declines, during emerging-market declines, etc. They understand the fact that our people have been here together for so long, the fact that everyone is focused on the same P&L and not generating individual revenue; they understand the uniqueness of the model, that asset allocation is extremely valuable. So in general investors at Och-Ziff want that and continue to want that.

In terms of your first question about fund to fund, I hope we've been clear since the beginning. Just as all hedge funds aren't the same, all fund to funds aren't the same. We've always felt that the fund to funds that are invested in Och-Ziff are effectively high-quality institutional investors, they do strong due diligence, they maintain contact and relationships, understand what we do.

It appears to us that they focus very, very strongly on their clients' interests, and we think investors like that have value, so we've always remained confident that those fund to funds will do well, will flourish. They continue to remain important to us despite some difficulties they may have had during the financial crisis.

But to be clear, Joel gave you the numbers on the investor base. Fund to funds are 24%, and the interest we are seeing is very broad-based and from a number of different areas, largely institutional.

That concludes the question-and-answer session today. I will now turn the call back to Mr. Och for closing remarks.

Thanks, Katina.

During the past quarter, we generated strong investment performance and have exceeded the high-water marks in the majority of our capital. We continue to benefit from an attractive investment environment across all of our portfolios.

As we move through the final quarter of this year and beyond, I want to re-emphasize a few points that we think are important to understanding Och-Ziff's competitive positioning and growth potential.

First, the strength of our performance this year reflects our disciplined investment in risk-management processes, a low use of leverage, and the uniqueness of our diversified multi-strategy approach. These elements are particularly important to fund investors as they evaluate the selection of investment managers in the post-crisis environment.

Second, we believe that the most important factor about future capital inflows is not the exact point at which they begin but rather the aggregate size of those flows over time and the corresponding market share we are able to attract. ]

Third, we remain confident that, as investors begin to redeploy capital to alternative asset managers, we will be a leading beneficiary of those flows. We are intensely focused on managing our business for the benefit of our fund investors, as we did throughout the financial crisis and as we have done since our inception, which we believe differentiates us and increases our competitive positioning.

Investors are focused more than ever on the presence of a robust infrastructure, with an emphasis on strong financial, operational and compliance-related controls. These attributes have been core strengths of Och-Ziff since our inception.

Joel and I look forward to updating you on our progress for the remainder of this year. With that, let me now turn the call back to Tina.

Thanks, Dan. Thank you, everyone, for joining us today and for your interest in Och-Ziff. If you have any questions, please don't hesitate to contact me at 212-719-7381. Media inquiries should be directed to Steve Bruce at 212-371-5999.

This concludes our call. You may now disconnect.

Ladies and gentlemen, thank you for your participation in today's conference. This concludes your presentation. You may now disconnect. Good day.