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Operator
Good day, ladies and gentlemen, and thank you for standing by.
Welcome to the Investors Financial Services Corporation's third-quarter 2006 earnings conference call.
Today's call is being recorded.
At this time for opening remarks and introductions, I would like to turn the call over to Ms. [Ann Borst], Senior Director of Investor Relations.
Please go ahead.
Ann Borst - Senior Director of Investor Relations
Thank you very much.
We will be making a number of forward-looking statements which are based on management's assumptions and predictions as of today.
These statements - including but not limited to statements regarding the Company's expected diluted earnings per share, drivers of revenue growth, effective tax rates, client fund flows, interest rates, projected net operating revenue, [poor] service fees, value-added service fees, foreign exchange service fees, net interest income, new customers, RSP activities, customer product launches, client renewals, balance sheet growth, reinvestment focus, reinvestment spread, increased personnel expenses including compensation, technology and office space, our plans to create long-term shareholder value, and operating margin - are subject to risk and uncertainty.
The Company's actual results may differ materially from our current predictions due to any one of a number of factors.
Information regarding the factors that may affect our actual results is set forth in our most recent 10-K and 10-Q filings with the SEC and in the form 8-K we filed today, which includes our press release.
I recommend that anyone listening to this call review these reports carefully.
Because this call will be archived on our website, www.ivtco.com, I want to emphasize again for anyone listening at a later date that the statements made today are based on our assumptions as of today, October 18, 2006.
These assumptions may change, but the recording of this call will not be updated.
Joining us on today's call are Kevin Sheehan, Chairman and Chief Executive Officer;
Mike Rogers, President; and John Spinney, Chief Financial Officer.
I will now turn the call over to Kevin Sheehan.
Kevin Sheehan - Chairman and CEO
Thanks, Ann.
Good evening.
We have reached a significant corporate milestone this quarter by processing over $2 trillion of assets for our clients, which is up 18% from September 30, 2005.
By the end of the year, our assets process will have grown over 1.5 times since 2002, and our revenue will have grown 80% during that same period of time.
To achieve these same levels of growth in the future, we have accelerated some disciplined yet aggressive investments during the quarter.
While these investments temporarily dampen our short-term operating leverage and 2006 earnings guidance, I know they are necessary to build the foundation for future growth.
The largest investment in 2006 is for approximately 750 new employees we will have hired by the end of the year.
Approximately $30 million of the compensation and benefits expense in 2006 will be for new employees servicing new business.
Approximately $40 million of the compensation and benefits expense will be for new employees added to build capacities in areas such as Europe, technology, alternative investments, middle office outsourcing and fund services.
In 2006, we will incrementally spend $19 million in technology investments, which represents approximately 2 to 3% above our planned long-term spending of 18 to 20% of annual revenue.
We are completely committed to remain at the forefront of asset processing systems.
We continue to build technology in communication protocols to drive automation, especially for complex alternative investment products.
Over time, we will be able to eliminate many of the industry's exception-based processes, which are inherently part of the processing for many hedge funds and other emerging, complex capital structures.
In addition, we will invest approximately $7 million in 2006 for space to accommodate new employees we hired this year and to build out capacity in North America and Europe.
As I have discussed before, inventorying for growth requires step variable investment.
Also included in this investment is a new state-of-the-art trading facility, consistent with our corporate commitment to professional education.
So, despite the unanticipated inverted yield curve environment, I believe the 2006 investments in new hires, technology and space are necessary to support the future growth of the Company.
This year, we have sold our services to new clients that represent opportunities to generate very good top- and bottom-line growth for us.
In the third quarter, we converted fund accounting and administration of a prominent European hedge fund, and fund accounting outsourcing of funds offered by Global Investment Bank, which we believe has the potential to develop into substantial business in the future.
In summary, our plan to create long-term shareholder value is to leverage our core capability as a leader in asset processing to profitably grow our businesses globally, invest in our employees and technology to position for the future, and then focus on returning to positive operating leverage as the required investments are completed; manage capital prudently, especially in the current environment.
I will now turn the call over to John Spinney, who will review the quarter's financial results in detail, as well as our expectations for the rest of this year.
John Spinney - CFO
Thank you, Kevin.
I will begin with the year-over-year results.
Third-quarter diluted earnings per share came in at $0.54, $0.01 higher than the third quarter of 2005.
Net operating revenue for the third quarter increased 15% year-over-year, due to new business wins, strong value-added service fees, higher market values, and strong client fund flows.
Core service fees for the third quarter increased 17% year-over-year due to wins from new and existing clients, as well as higher client fund flows and higher asset values.
Value-added service revenue increased 23% year-over-year as a result of higher revenue from foreign exchange in cash management.
FX fees increased 10% year-over-year, due to increased market volatility, higher client volumes, and new business.
Cash management sweep fees increased 75% year-over-year, due to higher client balances and new business.
Net interest income was out up 3% on a year-over-year basis, due to strong client funding.
Total operating expenses were up 20% year-over-year due to investments to position the Company for future growth, such as the additional personnel, technology and office space.
As we said last quarter, these step variable costs are warranted investments as we continue to expand and enhance our products and services in several high-growth securities processing areas.
Now, I will detail our significant expenses separately.
Compensation and benefits expense increased 14% year-over-year due to adding approximately 700 employees and management to our North American and European offices.
Annual salary increases and option expense also contributed to the growth in the compensation and benefits expense.
Technology and telecommunications expense increased 40% year-over-year, reflecting both our commitment to our Global Integrated Technology platform, which we view as a significant competitive advantage, and growth in new business and existing customer volumes.
Transaction processing fees increased 28% year-over-year, due to increases in transaction volumes, higher market values, and new business.
Occupancy expense increased 30% year-over-year, due to new office space in Boston, California, Dublin, London and Luxembourg.
Now turning to the linked quarter results, net operating revenue for the third quarter declined 7% linked quarter due to lower value-added service fees.
Core service fees decreased 1% linked quarter due to lower transaction volumes.
Value-added service fees decreased 24% linked quarter due to lower foreign exchange and securities lending fees.
FX fees decreased 38% from the record levels in the second quarter, primarily due to lower client volumes.
Securities lending fees decreased 51% linked quarter due to a second quarter favorable international dividend season, and lower-than-expected volumes in the third quarter.
Cash management sweep fees increased 25% linked quarter, due to higher client balances.
Net interest income was up 1% linked quarter, due to the strong client funding.
The net interest margin increased by 4 basis points linked quarter to 1.4%, and interest rate spread of 1.02% remained the same as last quarter.
We continue to invest in the same asset classes we have in the past.
We are focusing on investments in variable-rate, short-term, short-duration securities.
We are not attempting to generate incremental yield by taking on increased risks such as duration in credit risk.
We also continue to run a closely matched balance sheet, with an asset duration of approximately 1.5 years and a liability duration of approximately a year.
The high amount of our variable-rate securities in our portfolio has allowed us to continue to maintain low asset duration.
Total operating expenses decreased 7% linked quarter, primarily due to the 14% reduction in Comp and Benefits expense from lower bonus accruals.
Technology and Telecommunications expense increased 10% linked quarter to drive automation for the industry's complex portfolio structures, such as hedge funds.
Occupancy expense increased 8% linked quarter due to new space in Boston.
Other operating expense increased 38% due to higher recruitment costs and temporary help.
Now turning to our 2006 guidance, we expect our 2006 net operating revenue to grow approximately 14% compared to 2005 net operating revenue.
While this growth is in line with the guidance we gave in the second quarter call, we did experience lower-than-expected core and securities lending revenues.
We now expect our 2006 total operating expenses to increase approximately 24%, compared to 2005, as a result of the accelerated investments Kevin discussed earlier to position the Company for future growth.
As we have said before, we believe the long-term success of the Company is based on quality customer service and our integrated technology platform.
We are willing to forego some operating leverage in the short term to invest for future growth in the long term.
We expect our effective tax rate to be approximately 33.5%.
We are now projecting 2006 diluted earnings per share to be approximately $2.25 to $2.30 per share, including a benefit of $0.08 per diluted share from the reversal of previously accrued taxes in the second quarter of 2006.
While we are in the middle of our budgeting process for 2007, our preliminary numbers suggest revenue of approximately 15% in EPS about flat with this year.
We will provide more information on our fourth quarter call in January.
In summary, while we have near-term challenges, we believe our long-term outlook remains strong.
We are well-positioned to deliver superior customer service and quality.
We are aggressively investing in the near-term for future growth and continued customer satisfaction.
Our expertise in Single Integrated Technology platform remain the strong foundation of our business model.
Operating leverage is expected to improve in the second half of 2007, when the full-year impact of the major investments is realized.
And we are proactively maintaining a flat balance sheet until reinvestment spreads widen and the yield curve steepens.
I would now like to open the call up to your questions.
Operator
(OPERATOR INSTRUCTIONS) Jon Arfstrom.
RBC Capital Markets.
Jon Arfstrom - Analyst
Just wanted to make sure I heard the '07 guidance correctly.
Can you say that again?
John Spinney - CFO
Sure, John -- revenue growth of about 15%;
EPS growth flat with 2006.
Jon Arfstrom - Analyst
So you are suggesting higher expenses still through the beginning of '07?
John Spinney - CFO
That's correct.
As we talked about step variable costs are going to go into '07 until we have got the lap on headcount in the full integration of the office space.
Jon Arfstrom - Analyst
Okay.
What kind of revenues are we likely to see from this spending?
Where do they show up, when do they show up, are they already in the numbers?
John Spinney - CFO
I think you will start seeing those in '07.
We have got a pipeline that consists of a lot of these types of investment products we talked about -- alternatives and potential clients in Europe.
We converted a couple that Kevin mentioned earlier in the call, that one is an existing hedge fund complex in Europe.
The other is a kind of a de novo, but started by a major investment bank.
And those are the reasons why we are making investments today - to position the Company for future growth in those type of areas, and we will start seeing that benefit in '07.
Jon Arfstrom - Analyst
On the margin, I was a little bit surprised that it was up sequentially.
Is there anything unique that happened in the quarter?
And without being too specific, can you hold this level of margin in this type of environment?
John Spinney - CFO
Well, we did have a bigger inversion than we expected.
I think one of the things that we benefited from during the quarter was higher client funding, lower borrowed funding, which helped us in terms of mix, and it helps in [them].
Jon Arfstrom - Analyst
So essentially, if we are talking about flat '07, you understand what the implications are and what the criticism will be in terms of when are we going to see the revenues from spending, because obviously, that is much lower than I think the numbers that I have and that most of the people have for consensus.
So I think there are going to be a lot of questions in terms of what are we getting for all this expense spending.
I just want to make sure you guys understand that.
Kevin Sheehan - Chairman and CEO
Yes, I think we understand it.
I think our view is historically, we probably made similar investments when we were facing this kind of growth, and I think the reality for us is we need to make those investments ahead of time, and we need to warehouse the people.
We need to warehouse the space, and we need to continue to improve technology so that we don't get behind the eightball.
I think, historically, that stuff was probably masked by the performance of net interest income.
Unfortunately, we are faced with the growth on the fee side in an environment where we have got an inverted yield curve, and we don't have the other revenue coming from the balance sheet to support that ramp-up and expense.
Jon Arfstrom - Analyst
Okay -- two headwinds, really.
I guess the other question I would have then is do you think -- are the competitors keeping up with you?
Do you feel you are a step ahead in making some of these investments?
John Spinney - CFO
You know, I will tell you; it is hard to decipher exactly what they are doing.
I think they have alternative revenue streams that they can put to work, like asset management.
So I think that it is probably, the reality is that it masks some of their continuing investment as well.
Operator
(OPERATOR INSTRUCTIONS) Andrea Jao.
Lehman Brothers.
Andrea Jao - Analyst
Just hoping to drill down on the things that need to happen for you to return to positive operating leverage for the back half of '07.
Kevin Sheehan - Chairman and CEO
I think it is basically the stopping of adding headcount, which we are pretty much done with, as we head into the fourth quarter here and finishing bringing on the space in the first half of '07.
At that point, I think the expense growth slows down very, very quickly.
That said, if we are putting on the business, expense is always going to ramp with new business.
But obviously, there would be margins associated with that, Andrea.
Andrea Jao - Analyst
Thank you.
Operator
(OPERATOR INSTRUCTIONS) Brian Bedell.
Merrill Lynch.
Brian Bedell - Analyst
So you guys are at $2.25 to $2.30 for 2007?
Basically the EPS numbers?
John Spinney - CFO
That is what we said, yes.
Brian Bedell - Analyst
Okay, basically that -- okay.
And your $2.25 to $2.30 for this year includes the $2.5 million of securities gains in 2Q '06?
Is that correct?
Kevin Sheehan - Chairman and CEO
That's correct.
Brian Bedell - Analyst
Okay.
So just going back to some of the questions that were asked before, in terms of, I guess you expect to make these investments over the next few quarters and get to a run rate by the second half of 2007?
Or will those -- will that expense base dissipate somewhat in the second half of '07?
John Spinney - CFO
I think we will get to a lower run rate in terms of percentage up.
We are going to ramp the percentage for the next few quarters, although it is starting to decelerate on a year-over-year basis and a link quarter basis.
But the growth will stop in terms of how fast it has been growing over the last quarter or so and into next year; and like I said, I think Andrea or Jon asked the question -- that when you get into the back half of 2007, we are expecting some positive operating leverage.
If we are selling business, you are going to see expense growth commensurate with the sale of new business in terms of people, technology and other expenses.
Brian Bedell - Analyst
Right, right.
So basically, you get to an expense run rate around 2Q or 3Q, and that is your base run rate.
And as you add new business, you grow at that pace but you no longer are growing at the "investment" phase?
John Spinney - CFO
That's correct.
Brian Bedell - Analyst
Okay.
What are some of the most -- the largest initiatives?
Is it mostly mid office and alternative, or -- ?
Kevin Sheehan - Chairman and CEO
It is mostly middle office.
It is alternatives.
It is our Fund Services business in general.
Sales environment, client management, folks -- and Europe, excuse me;
I forgot about Europe.
Brian Bedell - Analyst
And how many employees are you adding altogether over the next -- through 2Q '07?
Kevin Sheehan - Chairman and CEO
Well, for this year, we are planning about 750 -- I don't have an exact number, going into '07 right now.
Brian Bedell - Analyst
And that's through full-year '06, right?
Kevin Sheehan - Chairman and CEO
Yes.
Brian Bedell - Analyst
Right.
Okay.
On the -- I guess, is it more of a sales and marketing infrastructure build-out and it's sort of a somewhat of a retooling of the systems?
Or are their major structural changes in your [system] being made?
Kevin Sheehan - Chairman and CEO
On the headcount it is to position ourselves to be able to accept growth with trained resources and to accommodate that growth, to bring in the intellectual capacity to help drive the technology.
But the technology is not a wholesale change; it's to augment some of the increasing demand we have for technology, particularly around things like the alternative space in a lot of the -- what I guess I will essentially call exception-based processing that we do today.
Not that it is an inherent limitation, necessarily, in our operation, but it is a broader-based industry limitation where we have got to increase the amount of throughput we get on an automated basis.
And that takes performance from our customers, ourselves, and the industry per se.
Brian Bedell - Analyst
Right --
Kevin Sheehan - Chairman and CEO
I don't think it's unique to us.
Brian Bedell - Analyst
Right.
And just a couple detail questions for this quarter.
The $2.4 million of other operating income -- what was that due to?
John Spinney - CFO
The other operating income -- that was mainly the federal home loan bank dividend, I believe.
Brian Bedell - Analyst
Okay.
And that's a onetime event?
John Spinney - CFO
No, they changed their dividend schedule a little bit, so we got a higher dividend in the third quarter than we did in the prior quarter.
Brian Bedell - Analyst
Okay; so when we go to the fourth quarter, is that reversing?
Or is that basically staying there?
John Spinney - CFO
It will probably be a little bit lower.
Brian Bedell - Analyst
Okay.
And then just in terms of your '07 guidance, you said it is very preliminary at this stage, and of course you know markets move around a lot.
But what type of assumptions are you assuming for equity market growth and yield curve?
John Spinney - CFO
Right now, where we typically bake it is 15% client fund flows into our analysis.
And for a yield curve perspective, we are looking at sort of a forward curve, and maybe some easing into the first quarter of 2007. (multiple speakers) yield curve, nonetheless.
Brian Bedell - Analyst
And using a forward curve as a base?
John Spinney - CFO
As one of our proxies, yes.
Operator
Rob Rutschow.
Prudential Equity Group.
Rob Rutschow - Analyst
Can we talk about the client assets that you got on this quarter?
Why did so many come on this quarter?
I am looking at $800 million in new deposits -- linked quarter?
Kevin Sheehan - Chairman and CEO
Well, deposits are up because of what balances our clients leave here and what their investment needs are throughout the quarter.
And that is going to ebb and flow, and that has been growing over time for us -- kind of in line with asset growth, as you see the assets to process number go up, there's typically some correlation to your deposit liabilities going up as well.
Rob Rutschow - Analyst
I understand that, but it is a pretty big difference -- you are talking about 15% versus a couple percent for assets.
Is it a function at all of lower transaction volume?
Kevin Sheehan - Chairman and CEO
You know, I really cannot get behind the number in that much detail.
I just know that if clients are leaving money in the sidelines, it's staying on our balance sheet.
And it is their preference on whether they are fully invested or not invested.
And as a result, our balance sheet became more client funded during the period.
Rob Rutschow - Analyst
And what is the geographic dispersion of those deposit assets?
I'm sorry, deposit liabilities?
Kevin Sheehan - Chairman and CEO
Those are domestic deposits.
Rob Rutschow - Analyst
Okay.
And then it looks like you have lagged the cost of the repos a little bit.
Again, this quarter, they were only up about 20 basis points.
Why is that, and should we expect the same going forward?
Kevin Sheehan - Chairman and CEO
I think when you look at the repos, there is -- the potential to look like it has lagged is probably masked because of the benefits associated with the swap portfolio.
So I would not necessarily point directly to the deposit liability pricing versus the underlying economics of what is hedged against that line.
Rob Rutschow - Analyst
Okay.
How much are your swaps at this point, and how much is hedged of the repo portfolio?
Kevin Sheehan - Chairman and CEO
About $1.6 billion, $1.7 billion.
Rob Rutschow - Analyst
Okay.
And then in terms of your assets process, can you give us the numbers over what the cross border assets were this quarter versus last quarter?
John Spinney - CFO
Yes, let me get the exact numbers -- it was around $380 billion.
The exact numbers;
I have them here. $377 billion.
Rob Rutschow - Analyst
This quarter -- and what was that last quarter?
John Spinney - CFO
It was $363 billion.
Rob Rutschow - Analyst
Okay.
And in your guidance for next year, are you assuming lower interest income and still strong fee growth?
Or sort of a more -- a closer mix -- 50/50?
John Spinney - CFO
Well, we have not really given -- we are not giving detailed guidance on that.
It is too early for that.
But when we get some idea -- it will be somewhere around 15% NOR for the year.
Rob Rutschow - Analyst
Okay.
I mean, can you give us any idea at all how you get to that 15%?
Kevin Sheehan - Chairman and CEO
It's based off of -- I think it was either you or Brian then asked about -- what are your assumptions for markets?
And all we have in there is client fund flows and, basically, the full-year impact of new sales trends this year, coupled with what our assumptions are for net interest income based on our scenarios.
Rob Rutschow - Analyst
Okay.
And can you tell us, finally, what the margins are on the European business versus what you have in the U.S.?
And what you -- what business that you get here?
John Spinney - CFO
Very similar.
Operator
[Marty Mossier].
Mason Street Advisors.
Marty Mossier - Analyst
So I think what I heard in the '07 assumptions is 15% flows on approximately a flat yield curve and no new business in the numbers.
No new business in '07 in the numbers, whatever you are assuming and '06 is in the numbers.
Is that right?
Kevin Sheehan - Chairman and CEO
There is a little bit of new business in that number, Marty.
Marty Mossier - Analyst
Okay.
And then I just want to ask the question -- if you are spending ahead of the business, why would expenses ramp again when the business comes on?
Kevin Sheehan - Chairman and CEO
I am not saying they are going to ramp again.
There may be additional business above and beyond what we have for the investment piece that is going to cause further expense; but expense associated with the new revenue that is coming in on the new business.
I think what we have gotten too, Marty, and you have probably been in this stock for a long time and remember, we used to say, "We don't put on expense, we have new business sold." (indiscernible) emphasize, we are at, we are getting to the point where we need to do some hiring ahead to build capacity so when a big client comes and it takes us 50 people to service that account, you are not taking them from somebody else's account and hurrying the service.
You are basically have people here they can take that client right in, not affect our existing customer base, and make it a very positive experience for the conversion.
And that gets our relationships off to a good start by doing that.
Marty Mossier - Analyst
And is that a change in from the customer expectations where they just don't want to wait for you to have that capability?
Kevin Sheehan - Chairman and CEO
I think it is a change in how we want to operate to service our customers.
And what we have seen as we have grown, we cannot wait to hire people.
We need to hire them ahead to accommodate the new business as it comes in.
Marty Mossier - Analyst
Okay.
And then how much of the tech spending is sort of catching up on core to meet current clients, and how much is really the incremental client on the Technology side investment?
Is there any catch-up in this, or --?
John Spinney - CFO
Well, I think when you talk about catch-up, is similar to what Kevin said.
There is a lot of [renewals] and protocols, or ways that things are processed with respect to alternative investments, for example.
But we are trying to do is get ahead of that, take out that manual process, which raises risk and cost more money to handle in deploying technology, you take some of that out.
And that is across the whole business.
The biggest aspect of that is typically in the alternative hedge fund, private equity type of areas, where they do not have swift protocols, and they do not -- they are still dealing in faxes and things like that versus automated trade delivery and automated recon protocols.
And as you get into more esoteric investment types like swaps, which are used across our client base, you had better automation to take paper documents, extract the data elements we need ad of those to record those to the accounting records, and also reconcile those on an automated basis.
As the volume of those types of transactions have increased, again, to manage our risks and our clients' risks, we are making those investments to get ahead of that.
And as Kevin said earlier, it is something that the industry is facing.
And I think we are just trying to get ahead of it.
Marty Mossier - Analyst
So the other players in this environment don't have that capability right now, either?
Would that be accurate, or are you --?
Kevin Sheehan - Chairman and CEO
(multiple speakers) it out, just like we are.
Operator
(OPERATOR INSTRUCTIONS) Ethan Meyers.
Westfield Capital.
Ethan Meyers - Analyst
Quick question on new business.
Sales to new clients have been pretty lackluster all year.
Do you want to give us at a quick update on the pipeline and what you are seeing there?
John Spinney - CFO
Yes, the pipeline has been building, in particular in Europe.
And that is one of the reasons we made the investments.
The two pieces of business Kevin referred to came out of our European operation.
And we continue to see strong opportunity there, as well as in the U.S.
I think what has taken a little bit longer for some of these things to close, and that is really the story there, that the dollar amount of our pipeline is probably higher than it was or similar to what it was in the second quarter.
It hasn't abated.
Ethan Meyers - Analyst
And based on the expense numbers that we are talking about, is it fair for me to assume then that you are basically -- for '07 to shape up the way you are telling us it is shaping up, and assuming that 15% revenue growth, that is another year of 20% expense growth for the full year.
I mean, it's just simple math, back of the envelope, right?
So are you telling -- and then, at the same time, you've told us that peak investments that you guys have decided to make in terms of new platforms and new business are basically settling out in the fourth quarter.
So the step function increases that we have been hearing about all year are settling in in the fourth quarter.
Are we to assume, then, that you guys have some big piece of business that is coming on here either in the fourth quarter or in the first quarter that is requiring a big upfront investment?
And if that is the case, then why aren't the revenue numbers higher than just 15%?
John Spinney - CFO
I think to answer your first question, the step variable costs will continue to run into '07 -- in particular the office space.
Some of that has been taken down now and is in the run rate.
And the majority of it will flow into '07.
And then associated with that will be incremental depreciation expense; and then again, the headcount you are seeing part of it in the third quarter, part of it in the fourth quarter, and maybe get the full -- you know, you don't really kind of laugh -- the incremental growth from that headcount until you get through at least probably mid second quarter on that, Ethan.
With respect to the big win you are talking about, the only time we announce new business is when we have it signed.
And to answer your question, we don't have something signed right now that we would be prepared to announce.
Ethan Meyers - Analyst
But you are baking in a big win into your expense guidance.
John Spinney - CFO
No, I didn't say that.
Ethan Meyers - Analyst
Okay.
Capital is still building, and you guys have shown kind of little interest in buying back your stock.
It looks like it is bid $38 and change right now.
What are your thoughts there updated?
Are you just waiting for the yield curve environment to get better?
Do you feel like that is a better use of cash?
Kevin Sheehan - Chairman and CEO
Well, we have $150 million authorization out there to buy the stock back.
And when it gets attractive, we will buy it back.
Operator
Ladies and gentlemen, this concludes our question-and-answer session.
A replay of this call will be available starting at 8 PM Eastern time today, and will run through October 25 at midnight Central time.
To access this replay, please dial 719-457-0820. (OPERATOR INSTRUCTIONS).
And enter in the passcode of 3315714. (OPERATOR INSTRUCTIONS).
At this time, I would like to turn the call back over to Mr. Kevin Sheehan for closing remarks.
Kevin Sheehan - Chairman and CEO
In closing, thank you for joining us on today's call.
We look forward to updating you on our progress in January during our fourth-quarter earnings conference call.