Sprott Inc (SII) 2008 Q2 法說會逐字稿

Good morning, ladies and gentlemen, and thank you for standing by. Welcome to the Sprott, Inc. Second Quarter 2008 Results Conference Call. (OPERATOR INSTRUCTIONS.) On behalf of the speakers that follow (inaudible) caution that today's presentation and the responses to questions may contain forward-looking statements within the meaning of the Safe Harbor provision of the Canadian Provincial Securities Laws. Forward-looking statements involve risks and uncertainties and undue reliance should not be placed on such statements. Certain material factors or assumptions are implied in making forward-looking statements and actual results may differ materially from those expressed or implied in such statements.

For additional information about factors that may cause actual results to differ materially from expectations and about material factors or assumptions applied in making forward-looking statements, please consult the MD&A for this quarter, the Risk Factors section of the May 8, 2008 prospectus, and Sprott's other filings with the Canadian Securities regulators.

I will now turn the conference over to Mr. Eric Sprott, President and Chief Executive Officer. Please go ahead, Mr. Sprott. Thank you, Joanne, and good morning, everyone. Welcome to our first quarterly conference call as a public company. Today we have with us Steve Rostowsky, our CFO, and Peter Hodson, a Director of Sprott and the Senior Portfolio Manager of Sprott Asset Management.

Our second quarter results were released this morning and are available on the Investors section of our new website at sprottinc.com, where you can find also the second quarter consolidated financial statements and the MD&A.

I'll begin with a review of our results in the second quarter. Steve will follow with a more detailed discussion of our financial results before I give some comments on the markets and our investment strategy and outline aspects of our growth strategy. We'll then open it up for Q&A.

At the end of June, our assets under management were 7.7 billion, up 14% since last quarter and up 50% year-over-year. The assets continue to grow despite turbulent equity markets. The growth in our AUM in the second quarter was based on strong investment performance and solid net sales of our funds. You could argue a large part of net sales is driven by strong investment performance. Typically, sales follow performance.

The next slide outlines the funds' performance for the first half of the year. Our largest funds, the Canadian Equity Fund, the Offshore Fund, the Hedge Fund LP, and the Hedge Fund LP II, returned between 13 and 28% during the quarter. This is in comparison of the TX total return that increased six, and we tend to compare our hedge funds against the S&P, particularly the offshore hedge fund, which declined 13%, and the MSCI World Index, which was down eight. Our largest fund, the Sprott Canadian Equity Fund, continues to rank number one in Canada for its 10-year annualized net return of 30.11% as of June 30, 2008, according to GlobeFund.

Another highlight, the Sprott Energy Fund was ranked number two in Canadian mutual funds that are over 100 million in the second quarter of 2008, with a year-to-date return of 37%. Our two hedge funds made it into Barron's Top 75 hedge funds in the world in their April 2008 issue.

Going to sales, we had sales of 259 million for the quarter and 561 million for the first half of the year. Sales were particularly strong in our hedge funds, both domestic and offshore, which performed very well in the bear market environment that we find ourselves in. We would point out that since March 2000, we've been managing assets based on our view of the secular bear market, and now that we are technically in a bear market, we believe we're well positioned to outperform the markets and generate solid returns.

We have a great client base that's well diversified. At the end of June we had over 93,000 client accounts, up from over 80,000 at the end of December '07. As I've mentioned before, our clients are primarily retail and high net worth individuals whose assets tend to be a lot stickier than institutional investors. But before I talk more about the markets and our investment strategy, I'll turn it over to Steve to discuss Sprott's financial results in more detail.

Thank you, Eric. Good morning, everyone. As Eric mentioned, assets under management at the end of June were 7.7 billion, up 925 million or 14% from the 6.8 billion at the end of March. The increase reflects net sales in the quarter of 259 million combined with market value appreciation in our portfolios of 666 million. The company's domestic and offshore hedge funds showed the strongest growth in the second quarter and represented 44% of AUM at the end of the quarter, compared to 34% of AUM at June 30, 2007.

On a year-over-year basis, AUM increased by 50% from 5.2 billion, due to net sales of 1.3 billion, and market appreciation of 1.3 billion, so an equal split between the two components. The growth in AUM led to strong growth in management fees, which was 36.6 million in the second quarter, an increase of 38%, compared to the same period a year ago.

Total revenue in the second quarter was 39.5 million, consisted of management fees, crystallized performance fees, and other income, primarily early redemption fees and commissions earned by Sprott Asset Management as part of the selling group for Sprott, Inc., and interest income. Those amounts were partially offset by losses on proprietary investments.

Total revenue in the second quarter last year was 3.7 million, which reflects the impact of loss on proprietary investments, most of which was sold in anticipation of the Sprott, Inc. IPO earlier this year, a dilution loss on the IPO of Sprott Molybdenum Participation Corporation, and an impairment of long-term assets, which together total 23.6 million. The dilution loss reversed the gain recorded in the first quarter of 2007, so there is no net impact on Sprott Asset Management for fiscal 2007.

Expenses in the second quarter increased by 8.6 million year-over-year to 22.6 million as a result of rising costs associated with higher AUM and management fees that would be primarily trailer fees. Also, the addition of several employees, including investment professionals, as well as the change in the way the company accounts for quarterly employee bonuses.

Base EBITDA for the quarter was 17.2 million, an increase of 38% compared to base EBITDA of 12.5 million in Q2 2007, assuming the current bonus pool program had been in effect in 2007.

As a private company, the pre-tax net earnings, including performance fees could be paid to employees and shareholders. Starting in 2008, our employee bonus pool is comprised of two components, 25% of net operating income, being management fees less operating expenses, and 25% of performance fees for the year.

Our net income in Q2 2008 was 11.4 million, or $0.08 a share, versus a net loss in Q2 2007 of 7.7 million, as a result of the investment and dilution losses that I referred to a few minutes ago--a few--just before. For the first half of the year, total revenue was 82.6 million, up from 42.7 million in the same period last year. Base EBITDA was 33.8 million, compared to 22.9 million in the prior year, assuming the current employee bonus pool was in place for 2007.

Net income was 28.1 million or $0.20 a share, compared to 11.1 million for the first six months of 2007. I'd also like to highlight that the company announced on Tuesday that it has declared a dividend of $0.25 per share for the quarter ended June 30, 2008. Management and the Board decided to introduce a dividend a quarter earlier than originally planned due to our positive earnings in the quarter.

I will now turn the call back to Eric to discuss our growth strategy and spot view of the market.

Thanks, Steve. We believe we're really well positioned to continue our strong investment performance. And we always believe that the three most important things in our business are performance, performance, and performance. We've taken a certain view of the market, both from the long side and the short side. We think we're in a secular bear market as we have discussed before that began in March of 2000.

I characterize what we try--what we are trying to do as being survivalists in a very, very difficult financial environment. We think there--we are likely in the midst of a systemic financial meltdown. I'm not trying to be shocking to anyone, but let's face it, when Bear Stearns goes down and Fannie and Freddie go down and [Emmy Mac] goes broke and Northern [Watt] goes broke, we have major issues out there. So we're trying to position our funds to survive the difficulties that we might face. So we've gone into on the long side gold because it's a--it will survive as a replacement to [a sea] of currency, the gold shares. We're in the energy stocks because of our belief in the peak oil thesis. And on the short side, we've tended to focus in on financial organizations, the financial industry, the brokers, the banks, consumer products, and of course, the homebuilding side.

Typically, some of these sectors have survived bear markets quite well and I would say that we were the most surprised people to find that even in our long only funds when we had the bear market in 2000 and 2001 and 2002, that those funds did exceedingly well. So much as we're trying to survive, we do hold out the prospect that on the long side we will earn some return in a very difficult environment.

So besides performance, we have other things that we can do to focus on growth strategies. And I'd like to explain some of these that are lined on this slide, which I'll likely have you see now. We're trying to capitalize on our brand name. We're at early stage of penetration with Canadian and global asset management industries. We aim to achieve the same success in the international arena. Our offshore accounts now represent 18% of our assets under management versus 13% at the end of June 2007. Our offshore funds have been in fact the best performing funds in our group, partly because they're measured in U.S. funds and the U.S. dollar has typically been weak and we tend to be long Canadian and short U.S.

And certainly, the offshore funds have shown the highest rate of growth over the last two years and we expect that growth will continue. I would--I feel that we're sort of at a tipping point where we can appeal to larger and larger clients all the time and in fact appeal to larger contributions to our funds. We've also expanded our investment team. We've been able to hire an incredible array of portfolio management talent here, including Peter Hodson, who's with me. But we hired Allen Jacobs and [Peter Imhoff] last year. Early this year, Charles Oliver and [Jamie Horbatt] joined the team and they now run our precious metals fund and they will be involved in other funds.

All of these people have had tremendous track records. They are proven specialists in their area. And they will have lots of capacity for our company, because I think collectively these individuals probably ran upwards of 10 billion at other organizations. And right now, they're probably in the--about the 1.5 billion area with SAM and I think that's an area that we will see grow rapidly.

We've also increased our marketing efforts, not so much in terms of advertising and things like that, but we've established a wholesaler network. We currently have 12 sales reps - eight of them retail and four wholesale. And we're going to add to this team. We've just added a rep in Quebec this week. And I would say the advisors and dealers represent close to 50% of our assets under management at the end of the second quarter. So this is an area that we're just moving into and I think by pushing our presence in the market, we should garner new sources of funds. We also have new products. We've created eight funds since 2006, including the new global fund, the small cap fund that Allen's running, a growth fund. And we have other funds in the making. We are involved with the new Star Hedge Fund [Manager's Corp.] that I believe will be issued shortly where we teamed up with two other hedge fund managers and hopefully the [Bemo Nesbitt] who's leading the issue will have a very successful issue, and that's another fund that we'll be participating in.

We also have in our minds a couple of other funds - one that we mentioned before is an all-cap fund, which Charles and Jamie would run. And we may do something and probably will do something on that before the end of this year. We also have one other product that we're actively selling, but it hasn't sort of formalized itself, so I won't discuss that at this point in time.

We're a little unique and we have a couple of other public companies, one being Sprott Moly. And Sprott Moly is a company that has (inaudible). It's a little over 200 million and we of course earn a management fee and an incentive. The moly market hasn't been too exciting recently, but the stocks kind of held--not that the stocks held in there, but the net asset value has held in there.

Excuse me. I'm almost losing my voice here. Peter? I've got a cold and if you could talk to Sprott Consulting.

Yes, this is Peter Hodson speaking. Sprott Consulting is a corporation and a public company--or not a public company, but a corporation we set up to consult to the resource sector primarily. Primarily through Sprott Resources Corp. we've participated in a couple of corporation transactions. We have a phosphate property in Peru. We acquired a position in a private coal company, PBS Coal, which is undergoing some corporate activity right now. I can't talk about that right now, but we're quite excited by the potential here. We get a management fee and we get a performance incentive fee, 20% of performance above and beyond generic index. So these--this entity has quite a lot of potential for us and we're quite excited by the first year of Sprott Consulting.

Okay, Peter. Thanks for filling in there. I've had a cold this week and it got to me and I apologize, but I didn't want to cough in front of everybody. So we also have the likely benefits of being a public company. I think now that our stock is valued in the marketplace, it, one, creates the opportunity of people coming to us and showing us opportunities, and of course, it also creates a currency, which we could use should an opportunity present itself. So we're pretty happy with all the things that we can do. We're certainly happy with the growth that we've had in the last 12 months. We think we can lever the reputation that we have. And we look forward to accomplishing things as well in the second half as we did in the first half and I think if we could ever do in the second half what we did in the first half we would have to call it an astounding year.

So that concludes our formal comments. We're going to open it up to Q&A now.

Thank you. (OPERATOR INSTRUCTIONS.) And your first question comes from Gabriel Dechaine of Genuity Capital Markets. Please go ahead.

Good morning. Just a question on the net sales. It was 265 million for the quarter. Can you tell me how much of that is represented by funds from the IPO being reinvested into your own funds?

Were you asking a question about the commissions in the quarter?

No, no. Net sales.

(Inaudible.) Oh, how much money we put in. Oh, okay.

Out of that 265 million how much of that is--.

--Okay. I don't know the number. I'm going to say it was 50 to 75 million. Would that be a fair--over 75 million? Over 75 million.

Okay. The markets since the end of the quarter have been taking a bit of a dive, especially in the resources space. Has that--how is that being translated into your sales results? I know it's summertime. That's probably slowing down a bit. But is there anything beyond that that's playing out?

Well, I can tell you that as we stand so far this month we have positive net sales. Obviously, as I said earlier, funds tend to follow performance. We've had, obviously, some adversity in terms of the sectors that are going against us in this quarter. And so, you will not likely have the same pace of sales unless things turn around. As we all know, the markets are incredibly material. And there's been--there was study I think was put out in the Globe and mail this morning that showed that the greatest volatility in stock markets is always when you're in a bear market. That 19 of the 20 biggest times since '29 was after the bear market in 1929. In Japan, 18 of the 20 biggest moves were after the meltdown in 1990. And when NASDAQ faltered in 2000, 19 of the 20 biggest days were after it had already gone into a bear market.

So we are faced with this volatility and it's just one of those things that we have to just accept. There's nothing we can do about it. I mean, I can give you the bizarre example of last week, that on a Wednesday I was sitting there and my trader was reminding me that the housing stocks, which we're short, were up 5% that day. And the next day, they were down 10.

Yes.

And there's just no way that any sane portfolio manager can work with that. I mean, it just happened. You've got to kind of ride it out. And we're--we've had a long history of doing well and staying with our bets and normally the bets have come around for us for the most part. So that's what we intend to do and I think our clients--thank God our clients understand that, because we haven't had any net redemptions this month, even though it's obvious from the performance of our equity fund this month that it hasn't gone as well as we might have planned.

But like most times that we suffer adversity, we've always come from a very high out performance period and can afford to take the hit. And now, we've taken the hit and things look like they're turning around and going our way again.

So I take it you're not--you're sticking to your convictions and not making any adjustments to how you're positioned, i.e., long resources, short those sectors we were talking about earlier.

Yes. No, we've not changed anything. We take a very long-term view of the macros. We try to stay the course. Obviously, every day and every week we're looking for new opportunities and we do things on some basis all the time. But typically, the themes don't fall away because they're pretty well proven and they seem to manifest themselves the way we expect them to do. So we see no reason to change.

Gabriel, thanks for your questions.

Yes, no problem. The other one I just wanted to ask was on the institutional side, the IPO. Have you gotten any traction out of that, getting some branding, I guess? Has it created any new business opportunities for you that maybe weren't there before?

Well, I'm sure that it will. And I can--I think we get a sense that we see potential customers who are prepared to commit larger amounts of money. I mean, they don't all come in quickly, but I think being public and being a little more transparent lets people see what our company's all about. They realize that we're financially stable and we've been successful for a long time, so I'm sure it's going to help out in the medium term, if not the short term.

Okay. Well, just a last one, if I may. On the salary expense, in the prospectus you guys are breaking that down, but not in the quarterly here. The breakdown between fixed salaries and bonuses, is that something you can provide?

The breakdown between fixed salaries and bonuses?

Yes.

Is that what you're asking for?

Yes.

Well, we only accrue the bonuses--well, you can work it backwards probably, because we--the bonus is 25% of the net operating fees. So if you get the net operating fees and work it back, you can figure out the bonus. But we don't break it down.

Okay. All right, thanks.

You're welcome.

And your next question comes from Doug Young of TD Newcrest. Please go ahead.

Hi, good morning. Just in terms of maybe a question for Steven--the base EBITDA you said I think was 17.2 million. When I think a base that's excluding the performance fees. Is that the right way to think of that 17.2?

Yes, it's excluding performance fees net of any bonus that would attach to those performance fees.

Yes, okay.

And securities gains and losses.

Excellent

Yes, that's excluding proprietary investment gains and losses. Those are the two adjustments to EBITDA to get us to base EBITDA.

So that's--I mean, I was surprised there was performance fees in the quarter.

Those are crystallized performance fees, as we're calling them, which are--which is when somebody redeems our funds, particularly our hedge funds. And there is an accrued performance fee in the fund. As you know, we accrue the fees--performance fees in the funds every day. So it impacts the NAV. So if somebody redeems those funds, there's sort of an embedded performance fee that attaches to every unit, so we multiply that per unit performance fee by the number redeemed and we actually receive that--those performance fees, so we call them sort of crystallized or earned.

And in the compensation line, 25% of that would be going to the bonus pool, essentially?

That's correct. It's included in the compensation number, the accrual.

So the crystallized performance fees being up and the--I think you mentioned other income being up as a result of higher redemption related fees, I guess it's fair to assume redemptions have increased in this past quarter versus last year, quite significantly it would appear.

Well, there's a--the crystallized performance fees are a combination of two aspects. One is obviously the dollar amount of the redemption. But also, the amount of accrued performance fees that are in that fund at that point in time. And as Eric mentioned, the performance in some of the hedge funds were very strong till the end of June, right, they were high 20s. So we had quite high relative accrued performance fees in those funds. So it's a combination of both, Doug.

Okay. Now, I've got it. Thank you. And then, just on the offshore side, I know you've brought a sales representative in more recently, and I understand it's still early days. But any traction at this point?

Doug, we don't have any net sales yet, but I'm sure if I brought that individual in here and asked him is there any traction, he'd probably give you chapter and verse about how great things are going. So he speaks very highly of the things we're going to do. But we haven't had any contracts yet and I think he's only been here about two months or so.

I guess the lead time, Eric, on that, is it a little--I guess it's going to be a little longer?

Well, he's only made one road trip so far, so I don't want to stand in judgment of how long it's going to be. And quite frankly, I--as I said to this gentleman when he joined us, look, you don't have to rush out there and accomplish everything in the first six months. That's not the important thing in our business. The important thing is to get established with accounts. I mean, these types of sovereign wealth funds that's he talked to have large vast amounts of money. So if you close somebody, it's going to make a big difference.

Okay. And I guess I'll ask the question. I'm not sure I'll get the answer. But do you care to share with us where your asset level is as of let's say yesterday's close or more recently?

Doug, that's something that we don't want to get into this routine of it's this at this month and that at that month. I mean, it's so volatile, even within a month you have a good week. And I mean, our assets could change by 300 and 400 million in a week depending on our performance. So we just don't even want to get in there. That's why we kind of focus on just building the base and we'll all see where the performance fees end up in the year. And the only comment I'd make on performance fees is I'd be very happy if we could do in the second half--well, I'd be more than happy if we could do in the second half what we did in the first half, and you would be more than happy if we could do that.

And I guess maybe lastly, and I don't know how to specifically attack this. But in terms of one of your big calls has been short on the financials, specifically in the U.S. Any way to quantify how big of a short position that represents of your total assets under management?

Yes, there probably would be. And I would say it's about--it's probably around $1.5 billion of short positions. I'm just giving you a rough number. It's probably around that level.

Okay, great. Thank you.

(OPERATOR INSTRUCTIONS.) And your next question comes from Geoff Kwan of RBC Capital Markets. Please go ahead.

Thanks. Most of my questions have been answered. The only question was just kind of adding to what Doug was asking on the interest and other income line. I understand that there's stuff like foreign exchange, there'll be redemption fees, and other items like that. But when you look on a year-over-year basis, it's gone up quite a bit and seemed sustainable on a quarter over quarter basis. Is that kind of where the level is and is it getting driven by certain items more than others?

Geoff, it's--I mean, it's quite unpredictable what--early redemption fees is one number. There were foreign exchange gains in the first quarter, which were related to fees receivable from our offshore funds. And I should clarify to Doug's question as well, where we have a switch from one fund to another, we will crystallize the performance fees on those changes as well, or if there's in fact an early redemption. But it's really going from one fund to another, which happens a fair amount. So even though it looks like a redemption, a lot of it ends up going back into a different fund. So certainly, the numbers are up. But it's totally unpredictable, Geoff, whether it's sustainable or a trend so to speak.

And sorry, just to clarify your point on switching between funds. If they do it within the--I think it's 180 days or whatever, but they stay within the Sprott family, are they charged an early redemption fee on that fund that they were selling?

No.

Okay.

But some people have, for example, changed from let's say hedge one to hedge two from some reason, or some offshore--the offshore fund to our offshore 2C fund. And it causes a gain to be kicked up, even though there's been no net redemption. But that does happen from time to time.

Sorry. And that would hit into the interest and other income line?

No, that wouldn't. No, no. That would go into crystallized performance fees.

Right, right. Okay.

But an early redemption, yes, if a guy has an early redemption. But there weren't too many people that had early redemptions. There might have been some unusual ones this quarter, but there are always early redemptions. We're always a little bit shocked that people would buy our funds with--and have a viewpoint of less than six months. I mean, it's a little surprising when we're taking a long term view of things and people are in and out within the six month time period.

Okay, great. Thank you.

Thanks, Geoff.

Your next question comes from [Steven Bolin] of JMP Securities. Please go ahead.

Good morning. Just a quick question and I apologize if this is in your disclosure. Did you give out gross sales in the quarter?

No, I think we just gave out net sales.

Can we get the gross sales figure?

I don't have it in front of me and I'm not so sure that we're--we would be prepared to disclose it. I think the net sales number is probably the most appropriate number. I can tell you this--that--I mean, I'm always a little bit shocked at the--people redeem every day, particularly in the public mutual funds. I mean, we have redemptions every day.

Which is why gross sales is probably a good indication of what your sustainable--.

--No, but a lot of it is switches as well. So that's we think the net sales is actually a better number.

Yes. We can have some sales and redemptions, but the money stays the same.

Yes.

Needless to say, with 259 million of sales in the quarter, when you look at what's happening in the Canadian mutual fund and hedge fund environment, I mean that's an incredible difference between what other fund managers are experiencing, so we're very happy with that number.

That's--I agree with that. I guess just the amount of sales reps. If you could just clarify again, how--I guess you said 12--eight wholesalers and four institutional. Was that correct?

No, we have eight retail for private client and four wholesalers.

Four wholesalers. Okay, that's great. Thank you very much.

Okay, Steve.

Your next question comes from [Jack McGuire], a private investor. Please go ahead.

Hello. What factors would have to occur before you would remove the shorts on those housing stocks in the U.S.?

Well, Jack, thank you for the question. It would be a number of things. When we monitor a situation, you have to look at data points. There's almost data points every day, whether it's the rate of house price decline, which the Case-Shiller Index came out a couple of days ago. I think there'll be another one of those data points come out either today or tomorrow that's a more public one. We would have to see that lenders were willing to lend. We see the total opposite. For example, in the paper--I think it was in the Financial Post or National Post this morning, G.E. Capital says they're pulling out of mortgage market in Canada.

And think of the number of people that are out of the mortgage market in the United States, which is really where the housing crisis is. So the willingness to lend is certainly falling away. The house prices keep declining. I have--I mean, I'm saying this a little tongue in cheek, but I don't think we need one new home in the U.S. We don't need any new homes. So if you're a new homebuilder, I don't know who you're building for, because there's really no sort of net need for new homes in the United States, because we have so many homes being foreclosed on, we have so many homes being listed that can't sell, that we will wait--we're quite prepared. I guess we've probably made a pretty fine return on our housing shorts. I don't even know what the index is down, but I'm willing to imagine it might be 80%. But one of the views we take is if somebody's going to go broke, we'll be happy to ride them all the way down. So unless we see something changing, and the quarterly reports of the homebuilders were awful. So we're happy to maintain our position until something says we shouldn't.

I hope that answers your question, Jack.

Yes, thank you. Just one quick follow up. In baseball terminology re the housing crisis, what inning would you speculate that we're in?

Well, that's a good question. Well, you've got to think we're past the fourth or fifth, because house prices are down a hell of a lot already. California, they're down over 30% now. I mean, it can only go so low, okay? And one of--I think the thing that will be most mitigating of house prices going down is the cost of building a new one. Because we might be getting down to a level where you can't really build a new one at that level, but you still have so many for sale that prices keep going down until finally you have to clear the market. And clearing the market then I think would cause the bottom of the market, not so much the fact that it would cost a million to build a new one, but you can buy the old one for 800, because that's what the market is.

So I don't--I think we have a ways to go yet. We're quite prepared to play it out for a while here.

Thank you very much.

You're welcome, Jack.

We have time for one more question. And the last question comes from [Vincent Yen], PIP Wealth Management. Please go ahead.

Hi, guys. I just wanted to--if I'm looking at this correctly, the tax rate for Q2 is about 32.5%. I'm just wondering if that's going to be the same number going forward for the rest of the year, or if you anticipate that changing later. Thanks.

Vincent, we accrue at 33.5%, which is our statutory tax rate. Can't totally predict what it will be. That's the rate that we go with until we actually know what it is. Some of our fees comes through limited partnerships and the nature of that income, we don't know until later and some is taxed at a different rate. But we'll only know that when we receive the fees, particularly performance fees, which will be at the end of the year. So we budget and we accrue at 33.5%, which is the statutory tax rate.

Okay. That's great. Thanks.

Gentlemen, there are no further questions. Please continue.

Okay. Well, we want to thank everyone for participating in the call. We're very happy to be a public company. We look forward to--we'd love to duplicate our first half obviously going forward. We have pretty good momentum. We think our themes are holding together. And we hope it will be rewarding for all shareholders. So, thank you, again, and good afternoon.

Ladies and gentlemen, this concludes the conference call for today. Thank you for participation. Please disconnect your line.