Safeguard Scientifics Inc (SFE) 2004 Q3 法說會逐字稿

Good morning. My name is Lynn, and I will be your conference facilitator. At this time, I would like to welcome everyone to the Safeguard Scientifics Third Quarter Earnings Conference Call. All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question and answer period. If you would like to ask a question during this time, simply press "star" then the number "one" on the telephone keypad. If you would like to withdraw your question, press "star" then the number "two" on your telephone keypad. Thank you. Mrs. Dusossoit, you may begin your conference.

Thank you, and good morning and welcome. Safeguard announced our third quarter and nine-month results in a press release this morning. It is available on the homepage of our website www.safeguard.com. This call is being webcast with slides and is accessible at the investor's page of our website. It will be archived and available at the investor's page under our webcast and presentations menu about two hours after the conclusion of the call. The telephonic replay also will be available for five business days by dialing 1-800-642-1687, and entering the conference number, which is 1800688.

Before we begin our remarks I would like to remind everyone that the statements contained in this call and the presentation accompanying it, that are not historical facts, may constitute forward-looking statements. These statements involve certain risks and uncertainties, including but not limited to, risks associated with the uncertainty of managing rapidly changing technologies, limited access to capital, competition, the ability to attract and retain qualified employees, our ability to execute our strategy, the uncertainty of future performance of our companies, acquisitions and dispositions of additional companies, the inability to manage growth, government regulation and legal liability, additional financing requirements, labor disputes, the effect of economic conditions in the business sectors in which our companies operate and other uncertainties as described in the filings with the Securities and Exchange Commission. Safeguard does not assume any obligation to update any forward-looking statement or other information contained in this conference call and presentation.

If you read our release before you had your coffee this morning, you may not have noticed that we have made some changes in our segment reporting. That is just one of the topics that we want to cover with you today, and so, I would now like to introduce Tony Craig, Safeguard's President and Chief Executive Officer; and Chris Davis, Executive Vice President and Chief Administrative and Financial Officer. We'll start off with Tony.

Good morning. Thank you for joining us today. On slide 3, I will share with you some highlights of our activity since June 30th, and an update on our activities in our consolidated companies. Chris will then provide some detail on the financial results for the third quarter and the nine months, and we'll go a little further into the segment reporting changes we have made as we have continued our program in providing additional transparency for investors. After that, I will come back and say a few words about our agreement to acquire Laureate Pharma and then we'll take your questions.

On slide 4, you can see the highlights since June 30th, the most significant of which was the sale of or interest in CompuCom Systems. The transaction closed October 1st and represented the last major piece in the transformation of Safeguard Scientifics. The $128 million in gross proceeds from that transaction has allowed us to significantly strengthen our balance sheet, increase the parent company cash position to $254 million as of October 27th. As such, Safeguard can now shift from defense over the last three years to offense going forward, and concentrate on growth.

We have focused intensively during this period on sourcing acquisitions, and these efforts have resulted in the agreement to acquire Laureate Pharma, a privately held bioprocessing services firm, and in Alliance Consulting's acquisition of Mensamind, a privately owned software development and services firm based in India. In addition, we spent significant time in the quarter working with the Safeguard companies to help them achieve important milestones as they expand their market presence.

On slide 5, as you know, we completed the sale of our majority ownership interest in CompuCom Systems on October 1st in 2004. We discussed this transaction in previous calls, and Chris will talk in a moment about how our financial statements are affected. But I want to repeat why this is such an important milestone in Safeguard's long-term growth strategy.

By exiting our position in CompuCom we have substantially increased our financial flexibility to invest in and develop companies in the time-to-volume stage of development. Our whole strategy is based on finding, acquiring and developing companies in that stage of their growth. We needed to complete the sale of CompuCom in order to move aggressively ahead with this strategy. Now we can do that.

We are shifting from defense to offense. Part of the $128 million in gross cash proceeds will be applied to further reduce our long-term debt. Another part has been escrowed for the interest payments due through March 2009 on our 2.625% convertible subordinated debentures, as required by the debt conditions. The rest of the proceeds increased the cash we have available for general corporate purposes, which will include transaction costs, funding the growth of Safeguard companies and making new acquisitions. We are intensely focused on those activities in order to build successful companies and that is how we will build shareholder value for the long-term.

Now let's turn to the consolidated companies. Market conditions have remained difficult. However they are making headway. And while their progress is not obvious in their third quarter numerical results, we can definitely point to some important milestones that these time-to-volume stage companies have achieved the last several months.

On slide 6, Alliance Consulting, a wholly owned subsidiary of Safeguard provides custom software and IT consulting services to clients in the Fortune 2,000 market. It has extensive expertise in pharmaceutical, healthcare and financial services sector, and draws on the skills of more than 500 consultants and independent contractors with deep industry knowledge. Alliance engagement teams are tailored to meet client specific needs. The teams can hit the ground running and contribute quickly to providing the right solutions.

In the third quarter, Alliance reported revenues of $21.7 million, about the same as the previous quarter. And although they've seen a modest uptick in market since last year, and Alliance is aggressively pursuing more business, it's still a tough market in IT services. Clients are delaying project starts or issuing RFP's for work in multiple stages instead of one large project. This has had the effect of reducing visibility for revenue somewhat, although Alliance has been successful in winning new business in its key offering areas and is seeing increased interest in outsourcing.

Their most recent milestone, announced earlier this week, was the acquisition of Mensamind, a software development and services firm based in Hyderabad, India. Alliance wanted to acquire an offshore capability to enhance its flexibility in customizing solutions for its clients. Safeguard helped find and assess the various opportunities in India and then evaluated, structured, and closed the Mensamind deal. It's a perfect example of Safeguard's commitment to our companies as they scale their business to become market leaders. We can provide the negotiating, deal structuring, accounting, and legal expertise to get the deal done and allow the company to continue to focus on operating its business and serving its client.

The acquisition of Mensamind and the capacity in India that another Safeguard company Mantas has, will now allow Safeguard to provide access and advice regarding offshore software development and consulting services to all our companies and enhance Alliance's competitiveness in responding to its customer demand for some of the lower cost services.

Now let's take a look at Slide 7 at ChromaVision Medical Systems. ChromaVision is a leader in advanced cancer diagnostics. Its automated cellular imaging system, a digital microscope, and proprietary software that provide highly accurate images that assist pathologists making critical medical decisions. The company has significant patents and broad FDA clearance, which are two key barriers in this sector. ChromaVision is a public company in which Safeguard owns a 57% interest.

They released their third quarter results on October 21st and reported revenues of $2.6 million compared to $3.1 million in the same quarter year ago. In its release, as it has before ChromaVision cited the change in reimbursement rates for certain breast cancer tests as a factor in the decline of the per-click revenues. However, they have also reported a significant increase in system sales and a significant jump in revenues from the newly launched laboratory services. The establishment and rapid growth in the new lab services is a big milestone for ChromaVision.

Mike Cola, Safeguard's Group President for Life Sciences served as the Interim CEO at ChromaVision for five months in 2004. And during that time, ChromaVision completed a $21 million financing, changed its business model, and conducted a successful search for a CEO. The company has expanded into lab services to provide a more comprehensive suite of services for its customers. And has gained new customers as well as converting a majority of its existing ones who formerly used US Labs.

For every dollar of testing there are many more dollars of services associated with it, and lab services are expected to contribute meaningfully to top line growth. In fact, revenues from the lab services increased from 200,000 in the second quarter to 800,000 in third quarter. We're encouraged by that good start.

With the recent opening of a dedicated facility for the new lab services, ChromaVision will be able to rapidly expand its suite of diagnostic services. If you would like more information please visit their website where you can listen to a replay of their third quarter 2004 conference call with management and obtain other information about the company.

Let's look at Mantas on Slide 8. Mantas, in which Safeguard has an 87% interest, is a leading provider of sophisticated next-generation analytic applications that address risk management, fraud detection, operational analysis in financial services and telecom. Mantas behavior detection platform can analyze billions of accounts and transactions, all in the context of one another, in order to identify suspicious activity that needs further review. Its technology is used by some of best known names in financial service and telecom industries.

In the third quarter, Mantas reported revenues of 6 million compared with 7 million for the same period the previous year. Sales in the telecom sector were down from last year and that market continues to be soft. In contrast, sales to financial service customers increased and that market continues to be strong, in part, because of the continued regulatory spotlight on the banking and brokerage industries. During the quarter, Mantas signed a significant global deal with a major financial services firm to implement anti-money laundering capabilities for the surveillance activities in more than 60 countries. That work will begin in 2005.

Earlier this week, Mantas signed an alliance with Fiserv CBS Worldwide, a unit of Fiserv Incorporated to provide its anti-money laundering technology to several hundred Tier 2 and Tier 3 banks around the world. This follows an agreement Mantas sealed earlier this year with ADP to provide its patented behavior detection platform technology to that firm's US brokerage customers.

During the third quarter, Mantas achieved an important milestone with the delivery of Mantas 4.0, the only enterprise-wide solution that enables financial services customers to deploy multiple compliance applications on a common platform. This next generation sophisticated analytical software application product with additional flexibility and scalability enhances the ability to meet demanding regulatory requirements. Mantas began the fourth quarter of 2004 with a backlog of $33 million compared to 31.8 million in June.

On Slide 9, revenues of Pacific Title & Arts Studio in third quarter were 4.6 million. An acceleration of production to the first half of this year strengthened the first and second quarter was an anticipation of possible strikes in Hollywood. That left a bit of a dry spell as we come into third quarter and made it little difficult for Pacific Title. They are investing for future growth and they continue to develop a film restoration and film archiving solution. We are pleased with the market reception it has received. They are also investing in digital workflow software to drive efficiencies in their operations. As you know Pac Title's business has undergone a dramatic shift from primarily analog work, to now, almost completely digital work in the last few years.

I will be back in the moment to discuss the agreement to acquire Laureate Pharma. Let me now turn this over to Chris who will provide more detail on the financials and an exposition of the new segment reporting.

Thank you Charley and good morning. As you can see on slide 10, I am going to update you on Safeguard's three and nine-month 2004 consolidated results, transactions since June 30th, carrying values, market values of our public company ownership interests, and our parent company cash and cash outlook.

Before I begin the financial review, I want to bring to your attention two changes in the presentation of Safeguard's financial statements both of which relate to the sale of CompuCom. Beginning with the third quarter of 2004, results for CompuCom Systems are shown as discontinued operations in all periods presented. Since the transaction closed October 1st, the gain on the sale of CompuCom of approximately $1.5 million will be recorded in the fourth quarter, as part of discontinued operations.

As you probably know, over the last three years, CompuCom represented approximately 90% of our consolidated revenues. As a result, the sale of our interest in CompuCom has prompted us to reexamine our operating segments in accordance with FAS-131 Disclosures About Segments of an Enterprise. Previously, we reported our ownership in our companies in three segments, Strategic, Non-Strategic and CompuCom. We believe that it is now appropriate under FAS-131 to report each of our four consolidated companies as a separate segment, that is Alliance Consulting, ChromaVision, Mantas and Pacific Title and Arts.

The results of operations of our other companies in which Safeguard has less than a majority interest, as well as our ownership in private equity funds will be reported in other companies. All prior periods have been restated to reflect this adjustment to our segment reporting. This change in our segment reporting is also consistent with our efforts to provide additional transparency on Safeguard and our consolidated companies.

As shown on Slide 12, Safeguard reported consolidated revenues from continuing operations of $35 million for the third quarter of 2004. This compares to $43.1 million for the same period in 2003. The decrease was primarily a result of revenue declines at Pac Title and at Mantas. In addition, the prior year quarter includes $2.7 million of revenues at Tangram Solutions, which was sold earlier this year.

For the third quarter of 2004, we reported a consolidated net loss from continuing operations of $19.1 million. This compares to net income from continuing operations of $17 million in the third quarter of 2003, when Safeguard recorded net gains of $30 million in connection with the sales of Kanbay and Internet Capital Group.

Net loss in the third quarter of 2004 was $19.1 million or $0.16 per share, compared with net income of $18.2 million or $0.15 per share in the third quarter of 2003. These results also reflect increased losses at our consolidated companies in 2004, when compared to prior years.

For the nine months ended September 30, 2004, Safeguard consolidated revenues from continuing operations were $113.8 million, compared to $125 million in the prior year period. Net loss from continuing operations for the nine months ended September 30th was $14.6 million, compared to a loss of $5.8 million in the first nine months of last year.

Net loss was $36.2 million or $0.30 per share, compared to a net loss of $0.4 million or $0.02 per share. The change is due to a decline in sales, gains on sales of companies and increased losses at certain consolidated companies in 2004.

As you can see on slide 13, we have provided results of operations by segment for the three months ended September 30, 2004 versus the same period in 2003. The nine-month comparative results are shown separately on slide 14.

In our new segment-reporting format, we present 100% of each consolidated company's revenues and operating income or loss. In the third column, we present Safeguard's share of income or loss after minority interest adjustments. Alliance Consulting revenues in the third quarter of 2004 were flat year-over-year, due to continued softness in the IT market. The larger operating loss in 2004 is due to higher employee related costs and professional fees, while they kept their cost of sales constant in 2004 versus 2003.

ChromaVision revenues were down year-over-year because of the lower reimbursement rate issue that we've discussed previously. The larger operating loss was due primarily to start-up expenses associated with the new lab services operations. Mantas's revenues in the third quarter were down year-over-year mainly because of the weakness in the telecom market compared to last year. Their operating loss, however, was $1.1 million less than it was in last year's third quarter due to cost reduction initiatives undertaken this year.

At Pacific Title, revenues were down in the third quarter, as Tony explained because of concerns about possible strikes in Hollywood. There was also a noticeable decline in post-summer film releases this year. Their lower operating results this year tracked the lower revenues, as well as some expenses associated with their new investments in digital intermediary equipment.

On Slide 15, we list several transactions completed in the third quarter and year-to-date. In July, we provided a $10 million commitment to Mantas for product development. In July, we funded $5 million of that commitment and in September an additional $3 million. We expect to fund the balance in Q4.

We gave notice that on November 12th, we will redeem the remaining $54.8 million of outstanding 5% convertible subordinated notes due in 2006. This redemption will be completed using a portion of the proceeds received by Safeguard from the sale of CompuCom.

With regard to our 2-5/8% convertible subordinated debentures, we used $16.7 million of the proceeds from the sale of CompuCom to purchase a portfolio of government securities to meet our interest obligations of $17.4 million between now and March 15th for 2009.

An escrow agent holds these securities and will disburse the interest payments accordingly. These government securities will appear on Safeguard's balance sheet in Q4, as restricted cash. The escrowing of this interest, in effect, means that Safeguard has provided for the cash requirements related to the interest payments through March of 2009. Also, I would like to mention that these convertible debentures have now been registered and are trading without restriction.

There are a number of data points, that are key to valuing Safeguard and we tried to simply the way that we provided them to you in these quarterly calls. On Slide 16, we are presenting Safeguard's carrying values. At September 30th, 2004 the total carrying value of our investments was $153 million excluding CompuCom, which is now reported as discontinued operations. This compares to $286 million at June 30th when CompuCom was still included.

As you can see on the slide, the components of our carrying value include the carrying value of our interest in public companies, in private companies, and in private equity funds. The carrying value of our public company investments has changed rather dramatically of course, since the beginning of the year, as a result of the sale of our interest in Tangram, Sanchez Computer and most recently CompuCom systems.

At September 30, 2004, the carrying value of our private company investments was $99 million, compared to $98 million at the end of the second quarter. We think these carrying values are conservatively stated since the carrying value is our original acquisition price plus any follow-on investments, plus our share of any earnings or losses of each company reduced by any impairment charges that we may have recorded, since we invested.

At September 30, 2004, the carrying value of our private equity fund interest was $28 million, compared to $26.5 million at June 30th. As you know, we are not making any new commitments to the private equity funds.

Now let's look at the market value of Safeguard's ownership in public companies on slide 17. Following the sales of Tangram, Sanchez and CompuCom this figure also has declined significantly. We currently have ownership interest in public companies with an aggregate market value of $38 million, as of October 27.

Turning to Slide 18, Safeguard's parent company cash balances were $143 million, as of September 30th. The decrease from $152 million reported during our last earnings call on August 5th, represents a $2.3 million interest payment on our new bonds, $3 million funded to Mantas, $800,000 in private equity fund commitments, and $2.7 million of corporate expenses including the fees associated with the CompuCom transaction.

Let me also note that these parent company cash balances at September 30th exclude $22.8 million of cash balances associated with our less than wholly owned consolidated subsidiaries. With the closing of the CompuCom deal on October 1st, we received $128 million in gross cash proceeds. We have since purchased $16.7 million of treasury securities in connection with the funds that we were required to escrow. That resulted in parent company cash at October 27th of $254 million.

In terms of what to expect for cash activity for the balance of 2004, please see slide 18. $56.4 million will be spent on November 12th to redeem the balance of the 5% subordinated notes, including the accrued interest. We anticipate funding $6.2 million to Safeguard companies and private equity funds between now and the end of the year. Based on today's commitments, that would bring Safeguard's funding for all of 2004 to approximately $31.3 million. We also announced that Safeguard has agreed to acquire Laureate Pharma for $29.5 million, which Tony is going to talk about in a moment.

I also want to take a moment to address the Safeguard's corporate, general and administrative expenses as there have been many questions about our G&A, and we promised to provide some additional insight on the last call. Our total G&A expenses for 2004 are expected to be about $19 million. One-third of that is directly related to the cost we incur as a public company, including D&O insurance, SEC reporting and costs associated with our compliance with the Sarbanes-Oxley Act, and various other professional fees.

As you know, these costs have risen dramatically over the last few years. Another third of the total G&A cost are people costs, and the remaining third includes all other Safeguard operating expenses. The public company costs are unavoidable, but as Safeguard grows, they should stay relatively constant. In general, we will provide an idea of what we expect our G&A expenses to be on an annual basis. And we'll update you on any unusual expenses that may alter those estimates. Now, let me turn the, you call back to Tony.

Before, we open the call to questions; I'd like to say a few words about Laureate Pharma, which you can see on slide 19. We announced on October 21st an agreement to acquire the business, and substantially all of the assets of Laureate Pharma of Princeton, New Jersey for $29.5 in cash. Laureate Pharma is/was, a privately held bioprocessing and drug delivery services company that operates two facilities in New Jersey and employees about 70 people. They have modern facilities and equipment, and have significant capacity to increase volume.

Laureate is a perfect example of a time-to-volume stage company. Revenues in 2003 were approximately $7.4 million. Through the first nine months of 2004, revenues were $8.1 million. It's a strong competitor in a rapidly growing sector of the biopharmaceutical industry. According to data from HighTech Business Decisions, an industry research organization, the biopharmaceutical services market in the US is projected to grow at 20% per year, reaching $2.6 billion in 2006.

Laureate is ideally positioned to capitalize on the trend towards outsourcing by biotech firms, needing fast high quality FDA certified production of their pharmaceutical products, as they go through clinical trials and into the commercial market. It has the capacity to grow, but it needs help with sales and marketing. Laureate has low market and technology risks, but they now face the operational risks of scaling the business to meet demand.

This is where Safeguard can help. The management and staff of Laureate Pharma are first rate. They have on average 20 years of both technical and management experience in the biopharmaceutical industry. We expect this transaction, which is subject to standard closing conditions to be completed in the fourth quarter, and it should not have a significant impact on our 2004 results. Additional information will be available once the deal is closed.

On Slide 20, over the next few years, it's our intention to find more companies in the time-to-volume stage growth, with proven technology and established customers, but which face those critical operational issues as they grow their business. This is when companies face the highest operational risk, and this is when Safeguard adds significant value by providing capital, expertise, resources and the commitment overtime that mitigates that risk and enables them to grow and succeed.

It should not be surprising, that companies will show losses at this stage and Safeguard will report our share of those losses. This will continue, until they individually and collectively achieve scale. Once they reach scale and profitability, the value that we are creating should become more apparent to the marketplace. This value will ultimately be realized in our financial statements upon an exit event. The opportunity pipeline continues to build at Safeguard and we are optimistic we will find additional life sciences and information technology businesses that meet our criteria.

Meantime, we will continue to develop companies in which we have investments, we had a strong balance sheet, we have deep industry knowledge. We have the experienced management and resources to apply. We are ready to move ahead in the shift towards the offense from defense and focus on executing the strategy for growth. Chris and I will now take any questions you might have.

At this time, I would like to remind everyone, if you would like to ask a question please press "star" then the number "one" on your telephone keypad. We will pause for just a moment to compile the Q&A roster.

Your first question is from Bill Sutherland, with Boenning & Scattergood

Good morning.

Good morning Bill.

I wanted just to look at Alliance for a second and see if there is any seasonality we should understand about either the last quarter or Q4 and maybe a sense of what the telecom sector has been doing and what the outlook is for that?

I don't think seasonality is really what Alliance goes through. I think it is much more the market condition that they are in, where there is a change in the buying pattern of the users. They have been able to hold up well. I think, as you may know Bill, that entire industry over the last three years, has seen a precipitous decline in consulting services purchased by American companies.

Alliance has held it's own. It's actually been more or less flat through that. They will have less billable days in the next quarter than the current quarter, but as we said they've got a lot of customers that they have recently acquired. So we will see, how that turns out. As to the telecom industry, there's been a bit of a decline in the telecom piece when you look at Mantas but they have more recently seen a little bit of uptick in some sectors and we actually have some positive views on that going forward.

As I look at the quarters last year for Mantas, you are right. I did get my segment companies mixed up. You had a huge Q3 is what happened last year to Mantas, is that just timing of license sales and so forth?

That's exactly what it is, Bill. They had license sales that year and then this quarter, they did not have the same proportion. This is the timing and lumpiness effect that we see in a small Company.

Now, Alliance, on the same sort of revenue level, you did have an operating loss as opposed to a very small profit a year ago. What is involved there?

It is just people cost, Bill.

So, you have got a utilization decline. Is that kind of the simple answer?

No, there's not been a utilization decline. We are sort of very close to the line here. We are talking about small movements one way or the other. There is nothing that represents a trend that we have seen, nothing significant.

The other issue, Bill, is that there was a management restructuring that took place last quarter or two quarters ago now, at Alliance and what you are seeing are some of the costs associated with that coming through.

What kinds of costs, Chris, just briefly?

Just the cost associated with making a switch in CEOs.

Oh, JUST that kind of comp package. OK. Or a change out of people, you mean?

Yes. There were some changes there, as you know.

Pac Title, we haven't seen these numbers, before. And it looks like it can be a very profitable unit and it has got obviously some operating leverage. What is the general sort of growth expectation that you have? It is in a more mature market and so forth.

They have been transforming from the analog to the digital role and they have carved out a little bit of a leadership niche in that space certainly in terms of trailer production and special effects. I think, when you look through the numbers in the past versus the current quarter, you'll see that once they reach a certain critical mass level, there is a little bit of operating leverage on the top side of that. They didn't enjoy that in the current quarter because revenues dropped for the reasons that we indicated.

The industry as a whole tends to be fairly consistent from year-to-year. So, it really becomes a question of getting the digital work here to be able to penetrate the new techniques that the studios want to use.

And they're also pursuing growth opportunities by introducing some new offerings to the marketplace, and we mentioned the restoration and archival projects that they have initiated and we're seeing some good initial response to those offerings.

Lot more to come, as we talk quarter-by-quarter.

And we'll get, the, on this new presentation, Chris, it will be fully unveiled as far as prior periods at yearend? Is that the...

Yes, we have restated the quarters and the nine months in today's information. When we prepare the K at the end of the year, we'll restate the prior years to be in this new format as well.

Thank you, Bill.

OK. Thank you.

Operator, are there any other questions into the line?

Not at this time.

Should we give it just another moment? It's ok.

Again, if you would like to ask question at this time, please press "star" then the number "one' on your telephone keypad. We have a follow question from Bill Sutherland with Boenning & Scattergood.

I will just ask one more quick one. I definitely want to ask, you a little bit about Mensamind, since there is no information. Is there not going to be any, or is it too small?

I think as Mensamind becomes more visible in Alliance's operations, it will come through their marketing efforts and you will get your answers there. They will have a separate view. Obviously, this is very important to Alliance. As the marketplace has not just indicated they are willing, but demand low cost services and many of the RFPs and the contractual specifications we see now, really require you to qualify for delivery of that or you get ruled out of the entire bid. So, I think, if you track Alliance's activities through their own press releases, you will probably see the details you might be looking for.

I wasn't questioning the logic of the deal. Tony, I was just curious. 100 programmers, 50 programmers, that kind of stuff?

We just haven't released that as yet.

OK. That's it. Thanks.

Thank you very much. Well, thank you all for your attention today. As I said, we are really focusing on growing these companies. This shift from defense as we have gone through three years of restructuring Safeguard is completely over. We've got a strong balance sheet with good cash, and we are going to continue the process of the Safeguard model, which is finding, acquiring and hopefully building great companies that deliver shareholder value. Thank you.

This concludes today's conference call. You may now disconnect. Thank you.