Sculptor Capital Management Inc (SCU) 2015 Q3 法說會逐字稿

Good morning, everyone, and welcome to the Och-Ziff Capital Management Group's 2015 third quarter earnings conference call. My name is Cathy and I will be your operator for today. At this time, all participants are in a listen-only mode. (Operator Instructions) I would now like to turn the call over to Tina Madon, Head of Investor Relations at Och-Ziff. Please proceed.

Thanks, Cathy. Good morning, everyone, and welcome to our call. As usual joining me today are Dan Och, our Chairman and CEO; and Joel Frank, our CFO. As a reminder, today's call may include forward-looking statements, many of which are inherently uncertain and outside of our control. Och's actual results may differ possibly materially from those indicated in these forward-looking statements. Please see our 2014 annual report and the press release we issued earlier today for a description of the risk factors that could affect our financial results and our business and other matters related to the forward-looking statements.

The Company does not undertake any obligation to update publicly any forward-looking statements. During today's call, we'll be referring to economic income, distributable earnings, and other financial measures that are not prepared in accordance with US GAAP. 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 our website. 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 or any other entity.

With that, I'll now turn the call over to Dan.

Thanks Tina, Good morning, everyone, and thanks for joining our call today. The third quarter was challenging for financial markets globally. Volatility increased to levels not seen since 2011 and most major equity indices posted sharp declines in reaction to increased concerns on a number of fronts. The mark-to-market effects of these factors clearly hurt the recent performance of the OZ Master Fund. This was largely due to our equities portfolio, which we believe is currently undervalued given the fundamentals. Despite challenging markets, we are confident in our investment process and optimistic about the prospects of our portfolio. We believe that the current environment plays to our strengths as fundamental bottoms up investors enable us to generate positive absolute terms for our LPs.

With few exceptions, we haven't changed our assessment of the embedded value for most of our strategies. We like what we own and have taken advantage of the recent market dislocation to increase many of the ideas we feel most strongly about. On the credit side, the increase in volatility and widening of credit spreads has driven asset prices down, which creates investment opportunities for us. This plays to the investor mandate of OZCO, our global opportunistic credit fund. OZCO invests across the credit cycle taking advantage of dislocations and then the resultant deterioration in asset values. Turning to our new business initiatives. We recently launched a Long-Short Equity UCITS Fund. UCITS represents a very interesting opportunity for us and we are excited about its growth potential.

The size of the alternative UCITS market is currently over $200 billion with the typical incentive and management fee structure. The product structure and investor demand match up well with our ability to invest in liquid strategies across multiple asset classes and geographies, which gives us a competitive edge. This new fund will target European institutional and retail investors and will be distributed in partnership with Lyxor Asset Management, a leader in the distribution of alternative investment products. We plan to launch complementary UCITS funds in the future. In credit in addition to growing OZCO and our other opportunistic funds, we continue to expand institutional credit strategies, our performing credit platform.

ICS represents an important source of long-term AUM. When this platform reaches scale, we believe it can generate attractive pretax margins. This investment area is also accretive to our credit strategy overall because it enables us to participate in the credit markets across cycles and to follow an expanded universe of investment opportunities. We continue to make progress in our partnership with Northstar Asset Management, a leading global provider of real estate related alternative investments. We are in the registration process for a non-listed BDC and a closed-in credit fund that we will subadvise. We believe that combined these products can eventually grow to a substantial amount of AUM.

Building on the success of our US ICS business, we're expanding into performing credit in Europe with an initial focus on European CLOs. With the typical duration of about seven years, this type of AUM is an attractive source of long-term capital and is highly profitable as we reach scale. Over time we believe that our US performing credit platform, which currently manages $7 billion of assets, could grow to $20 billion plus and our European platform could be another several billion in AUM. The North American private energy sector is also an important focus. Over time we believe that this can be a very large growth opportunity for us given the scale and capital intensity of this sector. We have built a successful energy private equity business over the past 10 years investing capital primarily through our multi-strategy funds.

Our energy team is focused on investing in North American middle market energy situations across the energy and power, midstream, and energy services sub sectors. We have added senior investment professionals to the team over the past year to expand its capabilities, relationships, and leadership and we opened a Houston office this summer to increase our presence in the energy patch. These are just a few areas of potential growth for the firm and they represent very attractive incremental sources of earnings growth. We are always evaluating ways in which we can take advantage of our investment expertise and global scale to create value for our LPs.

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

Thanks, Dan. Let me start with a quick recap of our third quarter economic income results and our share repurchase. We reported $66 million of distributable earnings for the third quarter or $0.13 per Adjusted Class A share and a dividend of $0.04. Our non-comp expenses came in slightly better than we had anticipated so our pre-tax economic income of $112 million was essentially flat to the second quarter. However, our quarterly adjusted tax rate was 41%, a significant increase from the 17% rate in the second quarter. Our annual effective tax rate is affected by the amount of incentive income we earn for the year relative to the amount of management fees.

Although we can't predict performance, our current expectation is that the annual incentive income will be lower for 2015 than it was in the prior year. This will result in a higher effective tax rate for the fourth quarter and we estimate that it will be in the range of 24% to 28% on a full-year basis. We repurchased approximately 4.6 million Class A units from two former partners of the firm at $5 per share, which represents a 32% discount to our closing price yesterday. We are convinced our stock price doesn't reflect the current value of our business or the value of its future growth and forward earnings potential.

We took advantage of an opportunity to repurchase shares at a discount to the current price and we will consider additional opportunities to repurchase shares in the future. Now a few comments on fourth quarter expenses. Our operating expenses, which is comprised of salaries and benefits and non-compensation expenses, were 51% of our management fees in the third quarter. Next quarter we are estimating they'll be in the range of approximately 52% to 56%. Our non-comp expenses will stay elevated in the 35% to 37% range because of the legal fees we're incurring in connection with our FCPA investigation.

At this point, we anticipate this increase normalizing in mid-2016. Our other major fourth quarter expense is bonuses. Over the past several years, cash bonuses have ranged from 19% to 22% of total revenues. We will assess what we feel is required to properly compensate our employees, but expect cash bonuses be on the higher end of this range. We're pursuing a number of new business initiatives that represent significant opportunities for us to grow over the long term, high margin and expand our distribution. We are focused on substantial markets where we can leverage the competitive edge that comes from our ability to invest across multiple asset classes and geographies. Our new usage fund is a good example of this.

Our focus on North American private energy sector is another. Equally important is the contribution from our multi-strat credit and real estate funds, which will continue to be important contributors to our future assets and earnings growth. We have a leading presence in the market for each of these products building out our 21-year track record of delivering significant value to our LPs. We're excited about our future growth and earnings prospects. We believe that our new products and other ideas we are working on will be accretive to our existing business, drive strong net inflows over time, and be highly profitable as we reach scale in these areas. This in turn will create significant value for our shareholders.

With that, we will take your questions.

(Operator Instructions) Dan Fannon, Jefferies.

I guess if we could just talk about the buyback first and give us a little bit of context behind the purchase in the quarter and I think you mentioned that you'd consider other buybacks going forward and just curious how you're thinking about buying from employees versus the open market and how we can think about balancing the dividend, your float, and the other kind of factors you've talked about previously?

Well, obviously all the factors that you talk about are something that we take into account, but when we see there is an opportunity to buy back stock at a very good value, we're going to do it. And in this case there were some former partners that were looking for liquidity and we had the opportunity to do that. Whether we're going to if that opportunity comes up again, of course we will do it. If there are other opportunities, we'll assess it. But like anything along our dividend policy, we expect it to stay the same. The difference is if we find opportunities that we think of a real value to our investors as opposed to distributing the cash we're going to do and this is one of those cases.

But I think you even said in your prepared remarks that you thought the stock was of good value even at these levels. So, open market purchases is not something you would be considering at this point?

No, I wouldn't say that we wouldn't. It's going to depend on opportunity and availability and it's something that we constantly discuss. So, I can't say no and I can't say yes. If it's something that we think has real value, it's something we'd consider.

And then further on, Joel, your comments about mid-2016 with the non-comp expenses being elevated, that's a push out a little bit it seems from your previous comments. So timing around potential closure of the investigation, is that now pushed towards mid-part next year?

We are hopeful the investigation will be over by the end of the year and the non-comp expenses would be normalized by then. Although we are focused on resolving this, the government moves at its own pace and therefore specific timing is always predictable. At this point, yes, I'd say our best guess is mid-2016.

And then I guess just lastly if you could give us some comments or specifics around gross sales trends. In the quarter we've seen the net number, I think we get the gross numbers in your Q, but is it still a gross sales issue or are you seeing redemption activity also picking up, just some color there would be helpful?

Look, I think on an overall basis, it ebbs and flows. It's hard to say exactly why people either have outflows or inflows, but each investor makes his own decision based on a number of factors. But across the board we have a 20-year history of performance, periodic ebbs and flows, and we have a bunch of new products that people are interested in and have good conversations with investors. So, we're very comfortable that going forward things will continue to evolve and with our new products we are very comfortable with the conversations and where we're going in terms of running those products in new distribution channels.

Great. Thank you.

Robert Lee, KBW.

Joel, the big jump up in the tax rate in the fourth quarter, just kind of curious what kind of drove that? In a sense it was so much higher than it's generally run?

So basically, Rob, you know how the model works. The incentive flows through differently than management fees on a lower tax base and so higher the incentive basically the lower the tax rate is going to be. We have to make a projection for the year in order to come back to our quarterly financials and so our projection is even though we can't predict performance and never can that incentive for the year might be a little bit lower because of the volatility of the market. That's going to affect the tax rate so it will affect the third quarter tax rate, which will affect the annual tax rate. Does that makes sense?

Yes. So, I guess in effect it was somewhat of a true-up exercise in the quarter?

What you're going to do based on how things change, how performance is, how the markets are; so we're constantly doing that and we have to.

I look at real estate and credit, could you highlight what kind of dry powder or maybe you want to call it shadow AUM you kind of have to deploy, but maybe isn't earning fees yet? Do you have anything like that?

I mean look, we don't break out that kind of information, but what we're doing in each of these sleeves is taking advantage of the opportunities that we see within credit, within real estate in order to expand those businesses and expand what we do. And the CLO market is a good example of that, even the UCITS market which is not part of real estate or anything like that, and in any of those particular sectors where we see opportunity and we can take advantage of it, that's what we're going to do. So, you could see from our press release there's like $280 million of unrecognized incentive, whether there's more embedded incentive down the road, of course there'll be because hopefully there will be earnings even though we can't predict that. So right now I think you kind of see what we have and if there's more information we can give you down the road, we'd be happy to.

Okay. Thank you.

Bill Katz, Citi.

Just coming back to the guidance on the non-comp being extended out to second half of next year, I would think that your end of things would try to be relatively static, but you say the government's moving at a glacial pace. Is there been a worsening in the discussions that leads to the extension of the timeline?

There's no change in what's going on. It's really more about how these things move along, the government taking its time to finish what it needs to do, but no material change in anything. So again we want to get it done, we're focused on getting it done, they have to complete what they need to do. So, we think the best guess right now is mid-2016.

And just coming back to flows for a moment. Can you just give us a sense of where you're seeing strength versus weakness? I don't know if you could do it on a gross sales level or net sales level or if you could do it by distribution channel, just trying to frame out if there is any visibility for an upturn in flows particularly in the Master Fund side?

I think in terms of Master Fund, it's hard to know exactly what affects flows. Like I said before, each investor makes his own decision based on many factors so it's kind of hard to say. But if we continue to perform, we think that product along with our current products are going to do very well. And as Dan said and as I said earlier, we have a high level of interest in our new products and we're expanding our distribution channels, which I think will be important in relation to flows going forward. So, that takes some time and again when that's actually going to hit, we can't predict. But we feel very positive especially based on our conversations with investors and how we see these new things progressing.

I'm sorry to press the point, but is there any reason to think that the attrition trends in the Master Fund are going to abate? Obviously you disclosed October, November volumes or at least imply in some cases and not really point to any kind of stability. So I am just trying to understand your footings are strong, but your flows are not as robust. Where do we get the comps if this thing turns anytime soon?

Bill, I mean over our 20-year history on the multi-strategy Master Fund, we've consistently performed and the fund has consistently grown and if you look at our 20-year history, you see that. As we discussed, there are ebbs and flows within that asset growth. We are very confident. First of all, we feel very good about our portfolio. We would have liked better performance during the recent market cycle, but we believe that what happened is that our equity portfolio underperformed its fundamentals. We think we've added to positions that we like, we feel very good about going forward performance and the structure of the portfolio, and every time the past 20 years that the Master Fund AUM has ebbed and flowed, it has always returned to consistent steady growth. We are confident based on discussions with LPs and other factors that that will resume.

Okay. Thank you, guys.

Patrick Davitt, Autonomous.

Even if you include the diversion of cash to the payout, the payout ratio keeps kind of coming down now to kind of in the 65% range. Could you talk a little bit about what is driving I guess the need to kind of keep a little bit more of that cash internally? I mean you go back to say 2011, which was another year where the performance was tracking low, it looks like you kept it at 90%. So, what's different this year?

Actually not much different and let me walk you down what we're doing and the slight differences. So $0.02 which is basically what we've always done relates to either CapEx or RC withholding and related taxes, that hasn't been changed. About $0.03 we keep back for general corporate purposes, which is funding new products so that's something that we started to do for the last couple of quarters, that's something we talked about on our last call. And then $0.04 is related to the buyback. So that's kind of the walk down and I think it's pretty much consistent because we don't plan on changing our dividend policy, we plan to distribute the majority of the distributable earnings; but where we see opportunity whether that's investing in new products, whether that's buying back shares and we think that's more of value than distributing the cash; we're going to do it. So it's not a change in distribution policy at all, it's a matter of where do we think there is opportunity for our investors and if that's investing in new funds or for other corporate purposes or we think that buyback in this case was of real value, that's what we're going do.

Okay. That's all I got. Thank you.

Mike Carrier, Bank of America Merrill Lynch.

Just on the buyback when you think about like the opportunity that came up in the quarter, are there other shares that are out there that will vest over the next one to two years where you could potentially have that opportunity? I guess I'm just wondering is there any way to gauge that potential opportunity?

Not really. I mean it's very hard to gauge and it depends on each investor, each partner rather and where the opportunities are whether that's through partners or otherwise. It's a hard thing to gauge, but if the opportunity presents itself, we're going to take advantage of it because we think that's real value to our investors.

And then just on the quarterly net outflows over the past couple quarters, just wanted to get a sense. When we look at the overall performance across strategies, it's still relatively good versus the benchmark to those strategies. Just wanted to get a sense when you look at this string of outflows, is there any concentration that you've had in certain clients that are reallocating, certain geographies, anything that would make it different versus some of the industry trends that we're seeing from a flow perspective?

I wouldn't say there's anything specific in terms of investors, obviously we have bigger concentration with certain investors and like I said earlier, it's hard to know exactly why there are outflows. There are many variables that affect this, each investor makes a decision. And I think again our focus is having good conversations with them, advance that performing, continue to perform. There will be ebbs and flows, there will be reasons why this stuff happens. We had a great year last year and there's a lot of market volatility, there is a lot of stuff going on. So I think that it's going to vary, but continued performance and our expectation is our products will continue to grow and as we said before, there's a lot of new offerings and new distribution channels. So, we're fairly comfortable.

And then lastly just on the performance of the Master Fund. Dan, you mentioned you're still confident in the portfolio and you got the long-term track record. But just more curious when you look at kind of how the portfolio acted in August, September, anything that you've seen kind of the similar scenarios in past market environments where you had a big spike in volatility or things that are a little bit out of whack. Just wanted to get your perspective because generally the fund tends to do well when you've got either weak markets and it holds up relatively well. Just wanted to get your perspective on why it might have acted the way it did and then relative to the past that you've seen certain environments where it's done this and then obviously the long-term track record speaks for itself.

What happened was as a fact of the matter, the longs in our equity portfolio as it overall underperformed, that is what happened. We've seen that happen before occasionally. In all of those cases since if we're right about the fundamentals, we have in almost all those cases not only recouped the mark-to-market, but we generated alpha going forward. We're confident this is another one of those periods. We've seen this happen in periods the market goes up and periods the market goes down. This was wider than some of the others, but it's happened in the past and we feel very good about where we are.

It creates opportunity for us and I think that's Dan's point in terms of it creates opportunity, you can add on to positions that you think are fundamentally sound and to his point of mark-to-market, that will turn around and there will be recovery so we're really comfortable with our portfolio.

Okay. Thanks a lot.

Craig Siegenthaler, Credit Suisse.

I have a longer-term question here for Dan. Can you comment on what you're seeing in terms of pressure to fee structure and what you expect from the industry? And do you think the 2 and 20 structure is at risk for a large part of the industry just given performance of the last few years?

We're not seeing pressure on our fee structure and I think you've seen that in our different products. The only change you're seeing at all is product mix, we think that's going to continue to be the case. So, I can't really comment on the industry because I'm not privy to others. We haven't seen anything in the industry, but we wouldn't have a better look into that than the industry, but you've seen different studies and different surveys that we believe show that there's been very little change in the industry, established managers with long-term track records who are building their businesses and creating more and better opportunities for LPs along with institutional infrastructure continue to be in greater and greater demand and we're not seeing anything on that front at all.

And then just a follow-up on flows and you can relate this either to Och-Ziff specifically or the industry, but there's likely going to be some large outflows in the industry just given what performance has done and I'm wondering do you think most of that will be recaptured into illiquid ops like credit and real estate where you have products that are growing?

Difficult to say. For us on the institutional side as a general matter, the people who make specific allocation decisions in credit and real estate are separate from those who make decisions in some of the hedge fund areas. Having said that, with a lot of our large relations, they also view an overall Och-Ziff relationship. But I think institutionally as a general matter the areas you mentioned; credit, real estate, and liquid hedge funds; the decisions are made in each of those sleeves by separate people. However, the CIO and the Board has an overall alternative structure. So I think we'll say our view is let's make sure that in each area we're offering the best product, the best team, and communicating that to clients and potential clients in the best fashion. So whatever does occur, we're in the best position to capture.

Thank you.

[Alex Blostein], Goldman Sachs.

Question for you guys in some of the illiquid strategies that you're pursuing both in credit and real estate. I was wondering if you can give an update on kind of the timing and potential or the magnitude of what the next generation kind of fund could look like? Are you in the market fundraising anything or planning to be in the market fundraising anything in either one of those products over the next 12 to 18 months?

We are in the market in a couple of places, which I can't comment. We have a real estate credit fund, I can't comment on details there, and we did talk about an energy fund, but I can't go into a lot of details on that either. Also we are doing some work with Northstar on a BDC closed-end fund, which we think will close sometime mid-2016. UCITS Fund which is not an illiquid type thing, but the UCITS market, as Dan mentioned, is quite large and we just closed on a new UCITS Fund. So, there's a lot going on. I can't give you lot of detail in terms of timing and size, but from what you've heard from Dan and from myself, you can see there is a lot of activity in what we're trying to do is as I said earlier is take advantage of all these different asset classes where we have expertise and build on them because they are higher margin products because you don't have to add a lot of investment professionals once it's built out, you don't have to add a lot of infrastructure costs, and what you get as you move up the scale that become higher margin products. And some of the stuff we're building obviously is not quite there yet, but when it gets there, it's a positive. And so I think that there's a lot going on and hopefully we'll be able to tell you more in the future.

Okay. Just to double check I guess on the payout overall and I get what you said earlier just in terms of the timing and different sources of capital uses that you guys see, but it looks like even included in the buyback overall payout this year-to-date is in the high 70%s and you guys are consistently well over 90%. So, I'm just not exactly clear why it's tracking meaningfully lower relative to last couple of years?

Again let me take you through it so you can understand. We've always had around $0.02 which we kept for CapEx, for our RC withholding and related taxes, the $0.04 buyback is something that's unusual that we did this quarter that we haven't done, and $0.03 for the last couple of quarters we've kept back to invest in new products and for general corporate purposes. And so where we feel that it's of more value for us to take it and invest it or use it for other purposes, we're going to do it. So, it's not a change in dividend policy and I've talked about this in the past many times. We sit here and we always think about what's the best value for our investors. Is it paying everything out, is it doing a buyback at $5 a share, and we'll make that decision where we think there is real value to investors and will continue to do it. If we think that paying everything out is the right thing to do, that's what we're going to do. So we really haven't changed anything other than the fact that we're taking advantage of opportunities that we think will be of real value for the business and our investors.

Okay. So I guess just taking the buyback and dividends as one item and kind of maybe keeping CapEx and things for business expansion as a separate item. Given the opportunity set that you guys see for yourself over the next 12 to 18 months, is there kind of call it 80% total payout more reasonable between both dividend and buybacks?

Look the thing I'm not going to do is project because like I said every quarter we are going to figure out what's the best thing for our investors and we'll figure it out. But the distribution policy is to distribute majority of distributable earnings unless we think there's more value elsewhere.

Got it. All right, thanks.

Ken Worthington, JP Morgan.

If you stripped out the regulatory and legal costs, what would G&A have been this quarter? It seems like you're expanding, just wanted to kind of right size your expectation when the FCPA issues sort of come to an end?

Ken, what I will do is when it does start to come to an end and we can normalize the numbers, I'll give you guidance. I think that's the better way to look at it rather than breaking down the numbers. So going forward, as I always say I'll do, I'll give you guidance if I have expectations that the numbers will be coming down and come to a more normalized level, I'll give you those numbers then.

Okay. It does seem like you're still spending a good amount of money on legal costs and it would appear as we try to back into it that the spending has increased. So I respect that things are moving at a glacial pace, but it seems like something is happening because you're definitely spending what seems to be a fair amount of money. Are there meetings still taking place? Is it just background work that's being done? Can you share anything more than what you've done thus far with us on the topic?

There's really not much more to say. It's a process that just takes a good amount of time and don't forget that our business is growing too so that also affects non-comp expenses although not as materially as this. There is not more detail I can give you. When there is more detail I can give you, be happy to do it. But at this point, it's just a process that we have to go through when it continues and there are costs associated with it. But the increase in non-comp although a lot of it and the majority of it relates to that does not all relate to that. There is also some increases [causing growth in] business.

I believe you also mentioned that cash bonuses would be at the high end of the range this year. Why high end versus low end, what drives that?

So, it's my expectation although I can't pinpoint it because I don't know what performance is going to be and we have to see where the firm is at the end of the year. I think I kind of align it back if you look at 2011, kind of a similar year although I don't know where we're going to end up. And so I'm trying to give you the best guidance I can. No way for me to predict it, no way for me to know where we're going to end up at year-end, what performance is going to be. But I'm just trying to give you the best guidance I can in terms of what I expect based on where we are right now and obviously that can change based on the economics of the firm.

And I'll try to ask in terms of the expansion to energy. I think you alluded to actually dedicated products here as opposed to just contributions to existing, but is the focus on equity? Do you think it's equity and then maybe expanding into credit? Are they closed-in structures? Anything more in terms of what you think that business will look like as it develops?

All of the above, I mean energy is similar in size to real estate. We're talking about hundreds and hundreds of billions of dollars of potential. We have capabilities in what would be called the private equity side, we mentioned meant we will be doing that in multi-strategy funds. We've got very strong capabilities on the credit side, we've got very strong capabilities on the equity side. We just added senior personnel and opened an office in Houston. And so just as in real estate, our primary focus was on the equity side with a private equity focus, but now that the world is offering opportunities on the credit side, we're well positioned to pursue it. On energy, we think it will ultimately be all of the above and it's a very substantial opportunity.

The enhanced Master Fund seems to be trailing the other suite of Master Funds. So maybe just discuss what in that investment is either not working or different than the big traditional Och-Ziff Master Fund? Thanks.

The enhanced master is effectively a more aggressive version. So as a general matter when things are working, the more aggressive is going to outperform; when things are not working as well, the more aggressive is going to underperform. And so we just had a recent period where things didn't work as well as we'd liked them to work so the more aggressive underperformed.

Okay. Thank you very much.

Patrick Davitt, Autonomous.

It occurred to me when you talked about the margins in the closed-end business that clearly given where your stock price is because I think most people would agree that the liquid ops side is probably the primary drag on the stock price. If you thought about or if it's even impossible to report the closed-end business separately from the hedge fund business at this point because it seems to me that that's part of the business the market would be willing to put a much higher multiple on?

As you've seen in the past we change our disclosures all the time. It's a constant discussion. You know when we feel that's the right thing to do in separating the business or segmenting then obviously there's a lot of decision-making going to that both on the accounting side and the business side, we'll do it. So it's something that's constant discussion, it's something that has to be well thought out and we'll figure out the point in time that what you're asking for if that makes sense and when it makes sense.

Great. Thanks.

That concludes the question-and-answer session today. I will now turn the call over to Ms. Madon.

Thanks, Cathy. We appreciate you joining us today. If you have additional questions, please give me a call at 212-719-7381. Media inquiries should be directed to Jonathan Gasthalter at 212-687-8080.

Thank you for your participation in today's conference. This concludes the presentation. You may now disconnect. Good day.