Q1 2020 Earnings Call
I.
Gentlemen, please standby your conference call will begin momentarily. Thank you for your patience and please standby.
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Good morning, My name is Crystal and I'll be your conference operator today.
I would like to welcome everyone to the Virtus investment partners quarterly conference call.
I couldn't station for this call is available in the Investor Relations section on the Virtus website Www Dot Virtus dotcom.
This call is also being recorded will be available for replay will novartis website.
This time, all participants on the listen only mode. After the speaker's remarks, there will be a question and answer period and instructions will follow at that time.
I'll now turn the conference over to your House Sean work.
Thank you and good morning, everyone on behalf of Virtus investment partners I'd like to walk you need to the discussion over operating and financial results for the first quarter of 2020.
Our speakers today are Georgia older President and CEO, Vertis, and Mike Ingersoll Chief Financial Officer.
Following their prepared remarks, we love acuity period.
Before we begin I direct your attention to the important disclosure on page two of the slide presentation that accompanies this webcast certain matters discussed on this call may contain forward looking statements within the meaning of the private Securities Litigation Reform Act.
90, 95, NAV structure subject to known and unknown risks and uncertainties, including but not limited to those factors set forth in today's news release and discussed in or as you see filings.
These risks and uncertainties may cause actual results to differ materially.
And those discussed and these statements.
In addition to results presented on a GAAP basis, we use certain non-GAAP measures to evaluate our financial results are non-GAAP financial measures are not substitutes for GAAP financial results and should be read in conjunction with a GAAP.
Reconciliations of these non-GAAP financial measures to the applicable GAAP measures are included in today's news release and financial supplement which are available on our website.
Now I'd like to turn the call over to George George.
Thanks, Sean Good morning, everyone. Thanks for joining us on our first or in first quarter earnings conference call as always I. Appreciate your interest in Vertis and it is uncertain time I hope that you know you care about anything [noise].
Despite the challenging market commercially first quarter.
Impact on any asset levels in net flows were pleased with financial and operating performance of the business, which included.
Hi, its level of quarterly sales with increases across nearly all product categories.
Positive net flows in retail separate accounts is structured products as well as equity strategies in the aggregate.
A higher operating margin earnings per share there was a prior year period and continue to return of capital and meaningfully higher debt reduction.
Our managers also continued to generate outstanding investment performance, which I'll discuss in more detail in a moment.
The market environment like the one we are experiencing provides a great opportunity for quality active managers to demonstrate their value to clients.
Turning over to the result.
After reaching their highest level last quarter ones for me you have declined by 18 billion or 17% in the first quarter almost entirely due to the market decline in March.
Quarter, we had 1.3 billion to net outflows primarily in mutual funds, particularly fixed income.
Looking at the flows it useful to understand the trend during the quarter.
The first two months total long term net flows continued the positive trends in the fourth quarter as we generated 1 billion of positive net flows with strong momentum across products and asset classes.
However, the market shop in March alleged elevated mutual fund redemptions as a retail investors led to cash proceeds safety.
The elevated level of fund redemptions, a beat it by the end of March.
One thing that remain calm consistent throughout the quarter with sales momentum, which continue despite the challenging environment.
For the full quarter sales were 7 billion, 47% sequentially and 20% over the prior year with increases in old products, except the Ts.
So for the quarter by product, we had net outflows in mutual funds GTS, an institutional or retail separate accounts and structured products generated positive net flows.
On net outflows were 1.6 billion primarily related to the more credit sensitive fixed income in emerging market equity strategies.
Yes, again equity fund flows will breakeven with areas of strength in domestic ins makeup.
As well as international developed markets, all of which generated positive flows.
We also maintained ourselves them in flow momentum with retail separate accounts and generating continued positive flows both the intermediary sold in private client channels.
In terms, what we saw in April that was continuation of the sales momentum as well as consistent positive flows.
If you will fund sales in April with the highest level six years and net flows through the month will meaningfully positive.
We also continue to see strong positive net flows in retail separate accounts.
In terms of institutional we saw positive flows or wall, including new mandates well, we do not know what the marks will bring over the next few months. This is certainly a strong start for the quarter in terms of flows.
Our financial results reflected a partial impact in the challenging markets I began leaving the quarter as well as our normal seasonally higher employment expenses.
Well that will decline in operating income that margin was primarily result those items.
Looking at the more comparable year over year period operating income as adjusted increased 20% in the margin increased by 170 basis points, reflecting revenue growth and the leverage ability of the business.
Earnings per share as adjusted increased 22% over the first quarter of 2019 to 3032 cents.
The sequential decline in NPS is largely driven by the seasonal employment expenses.
Turning now to capital.
Continued our balance completed approach to capital management.
Our ability to maintain appropriate levels of working capital reasonable levels of leveraging axis sources of liquidity in this environment demonstrates the benefit of our consistent disciplined in managing the balance sheet.
This quarter, we continued our consistent pay down of the term loan by reaching 17 half million and taking advantage of market dislocations to retire an additional 10 million at a discount.
The quarter.
Also repurchased 1.6%.
Shares outstanding highest level in the past four quarters.
As a reminder that conversion over heard stock during the quarter resulted in an increase in the market floater for a common stock and the elimination of the preferred dividends.
Lastly for turned over to Mike, Let me comment on investment performance.
The challenging markets, we've been experiencing over the past few months or the type of environment when asset managers, particularly those with distinctive investment strategy. It demonstrate their value I am pleased at our managers have done that.
Equity strategies several of our managers employed high quality or high conviction orientation. The seeks to deliver strong relative performance provide a level of downside protection in difficult markets.
In aggregate, our equity prep products and meaningfully outperformed the market in the first quarter, because they've done over longer periods of time.
On the fixed income side, our managers employ multiple strategies across the spectrum of credit quality performance in our fixed income products was consistent with expectations with higher credit quality strategies outperforming during the most stress period and others are performing to the upturn since the recent low in the market.
We're pleased with the investment results and believe the performance in this difficult market demonstrates the value quality aftermath.
Let me turn the call over to Mike provide more detail on the results Mike.
Thank you George good morning, everyone.
Starting with our results on slide seven assets under management.
At March 31st long term assets were 89.5 billion.
Down from 107.7 billion at December 31st the sequential decrease reflected 16.6 billion up market depreciation.
And 1.3 billion of net outflows.
Assets continued to be diversified by product type with open end funds institutional and retail separate accounts representing approximately 37%.
32%.
At 20% respectively.
In terms of asset classes equity assets represented 64% of long term a win.
With 75% of domestic equity in 25% International.
I'd point out that fixed income assets represented about 32% of long term a web.
Which is up 250 basis points sequentially.
Largely due to the impact of the equity market decline.
We continue to generate strong relative investment performance across our strategies.
As of March 30, Onest, approximately 82% of rated fund assets had four or five stars.
And 97% where in three four or five star funds.
We currently have seven funds they win of 1 billion or more and all are rated four or five stars.
Representing a diverse set of strategies from five different managers.
In addition to this very strong fund performance, 92% of institutional assets were beating their benchmarks and a five year basis as of March 31st.
As 79% of assets were exceeding the median performance of their peer group.
On the same five year basis.
Turning to slide eight asset flows.
Net outflows of 1.3 billion in the first quarter were largely related to the exceptionally challenging markets in March.
As George indicated that flows were broadly positive through the end of February.
Continuing the trend of positive flows for the fourth quarter.
Up until the market decline in March.
Which then led elevated redemptions.
Primarily in the more credit sensitive fixed income strategies.
By product, we had net outflows and open end funds institutional any ts.
And generated positive net flows in retail separate accounts and structured products for the quarter.
By asset class fixed income drove the net outflows consistent with industry trends.
As our equity strategies in aggregate had positive net flows for the fifth consecutive quarter.
Net outflows for open end funds were 1.6 billion for the quarter.
Compared with point 4 billion in the prior quarter.
Looking at open end fund flows by asset class fixed income net outflows were 1.4 billion, primarily due to more credit sensitive strategies, including leveraged finance a multi sector.
Domestic equity net flows were essentially breakeven strong positive net flows from mid and smid cap strategies were offset by net outflows in both large and small cap.
Midcap generated point 3 billion a positive net flows in the quarter up 33% sequentially.
International equity funds had net outflows of point 2 billion as positive net flows in developed markets strategies were more than offset by emerging markets.
Total sales for the quarter were strong.
Up 47% sequentially and 28% year over year to 7 billion their highest level since becoming public.
With sequentially higher sales of open end funds retail separate accounts.
Institutional and structured products.
Fun sales of 3.9 billion increased 1.5 billion or 65% sequentially with increases across asset classes.
Domestic equity sales increased 76% international increased 69% in fixed income increased 48%.
Institutional sales increased 5.3 billion or 21% from the fourth quarter due to flows into both new and existing mandates across multiple affiliates.
Retail separate account sales of 1.1 billion were up 5% sequentially due to growth and intermediaries sold channel.
Turning to slide nine.
Investment management fees as adjusted at 112.3 million.
Decreased point 7 million or 1% sequentially.
And were up 15% over the prior year period.
The sequential decrease was due to lower performance related fees.
As average age when increased modestly in the first quarter.
Performance related fees were <unk> point, Sixmillion down from 1.1 million in the prior quarter.
It's important to remember from modeling second quarter revenue that certain product.
Fees, including retail separate accounts are based on beginning of quarter asset balances.
The average fee rate on long term assets for the quarter was 46.8 basis points, a 0.2 basis point declined from 47 in the prior quarter.
Due to lower performance related fees.
And up <unk> 0.9 basis points from the prior year period.
Excluding performance related fees from both periods. The average fee rate was flat on a sequential basis.
With respect to open end funds the fee rate increased to 57.8 basis points from 57.4 in the fourth quarter, reflecting the ongoing positive fee rate differential between sales and redemptions.
This quarter the blended fee rate on fund sales was 62 basis points, but the rate on redemptions at 54 basis points.
Slide 10 shows a five quarter trend that employment expenses total employment expenses as adjusted 66.9 million increased 14% sequentially from the fourth quarter.
The increase primarily reflected 7.7 million a seasonal items, which included 4.2 million of incremental payroll taxes 2.2 million of increased benefit costs, primarily due to the four on K match.
And 1.3 million of accelerated compensation expense as a result of annual equity grants made to retirement eligible employees.
Excluding the seasonal items employment expenses of 59.2 million increased 5.4 million sequentially as higher sales based compensation.
Was mostly offset by lower profit based compensation.
As a percentage of revenues employment expenses were 52.6%.
Or 46.5%, excluding the seasonal items.
Turning to slide 11.
Other operating expenses as adjusted were 18.9 billion.
Or 14.9% of revenues up from 18.2 million or 14.2% of revenues in the prior quarter.
And included higher product related costs.
Looking forward, we believe other operating expenses in the short term may trend to the lower end of the 18 to 20 million dollar quarterly range.
As we anticipate that certain categories in particular travel and entertainment costs will be meaningfully lower.
While we continue to invest in the future growth in the business.
As a reminder, second quarter results are impacted by our annual equity grants to the board of directors.
Slide 12.
Illustrates that trend in earnings.
Operating income as adjusted of 40.1 billion decreased 10 million or 20% sequentially due to the seasonally higher employment expenses and increased 6.6 million or 20% from the prior year.
The operating margin as adjusted of 31.5 per cent compared to 39% in the prior quarter.
Compared with the prior year period, the operating margin increased 170 basis points from 29.8%.
Excluding the 7.7 million of seasonal items, the operating margin as adjusted for the first quarter was 37.6%.
Interest and dividend income of 3.4 million declined from 4.1 billion in the prior quarter.
As a consequence of the market environment, we expect interest and dividend income to be lower in the second quarter in a range of one to 1.5 million.
The effective tax rate as adjusted for the quarter was 29% up from 27% in the prior quarter.
We believe 29% is reasonable for modeling purposes.
Net income as adjusted of three Dollarsthirty two cents per diluted share decreased one dollar.
Or 23% sequentially due largely to the seasonal employment expenses, which were 69 cents per share.
Compared with the prior year net income per diluted share as adjusted increased 59 cents for 22%.
Regarding GAAP results the first quarter net loss per share of 58 cents compared with $2.83 of net income in the fourth quarter of 2019 and included the following items.
$2.10 of net realized and unrealized losses on investments.
One dollar our COO launch expenses.
86 cents due to the increase in the liability for the fair value adjustments.
The affiliate minority interests in excess of carrying value.
And a seven cents gain on extinguishment of debt.
[noise] slide 13 shows the trend of our capital position and related liquidity metrics.
Working capital at March 30, Onest of 155 million decreased 5 million or 3% sequentially, primarily reflecting debt repayments and return of capital to shareholders, mostly offset by operating earnings.
Gross debt outstanding at March 30, Onest was 258 million as we repaid 27.5 million during the quarter.
Over the past year, we have reduced gross debt by 70 million or 21%.
The first quarter debt repayment included 17.5 million as part of our consistent quarterly pay down of the term loan.
As well as an opportunistic retirement of an additional 10 million at a discount to par.
The net debt to bank EBITDA ratio of 1.5 times at March 31st was up from 0.3 times at December 30, Onest due to the payment of annual incentives and related seasonal expenses, but declined from 0.9 times a year ago.
Due to EBITDA growth.
At a higher cash balance.
Gross debt to EBITDA was 1.2 times at quarter end down from 1.6 times in the prior year.
EBITDA in the first quarter was 49 million.
Regarding return of capital to shareholders, we repurchased approximately 111000 shares of common stock for 10 million, representing 1.6% up beginning of quarter total outstanding shares.
And net settlement, an additional 41000 shares for 3.5 million.
And as discussed in our last call our Mandatorily convertible preferred shares converted during the quarter.
Simplifying the capital structure, increasing the marketing most of our common stock.
And eliminating the preferred dividend.
One additional item of economic value to note as our intangible assets that will contribute and continue to provide a cash tax benefit of approximately 10 million per year at current tax rates over the next 14 years.
With that let me turn the call back over to George George.
Thank you Mike.
Thoughts before taking questions. Clearly these are unprecedented market with an elevated level of uncertainty and volatility that makes it difficult for an asset manager to have clear visibility to the next few quarters, who are reconciled and we're confident in our positioning for both competitive and balance sheet perspective.
Our managers have clearly demonstrated their ability to generate attractive investment performance. Our distribution is highly effective as evidenced by the sales growth during this environment.
Cost structure is highly variable and as we've demonstrated we've always managed our expenses locally and we'll continue to do so as we focus on those areas that enhance our value proposition.
I want you to strong we maintain an ability in flexibility to operate ultimately we will continue to be balancing our management of capital, which is in core to our philosophy and allows us to navigate this environment without having to make fundamental changes to capital allocation.
In addition, as I said earlier this market is an opportunity for active managers to demonstrate their value proposition.
As we anticipate all investors will be thoughtful about how to invest for the next 10 years as opposed to the left that we.
We see this is an opportunity, which we are particularly well positioned.
Well now take your questions Crystal Jochen blind please.
Thank you ladies and gentlemen, if you have a question at this time. Please press the star followed by the number one key on your Touchtone telephone. If your question has been answered or you wish to remove yourself from MCU. Please press the pound key once again to ask a question. Please press Star then one now.
And our first question comes from Jeremy Campbell from Barclays. Your line is open.
Hey, Thanks, guys.
Thanks, Good color around April flows for George I was wondering if you can go into a little more detail around what strategies are driving such accelerated sales growth across the spectrum, but maybe particularly especially in the retail separate account channel.
Sure.
And I think throughout the period, what we're trying to sort of highlight was really unusual about this period is not only to continued sales momentum, but actually if I were to have gone into like on a month by month basis, who's actually sort of step increases over that period remember when we did the call late January for the fourth quarter.
Sort of indicated that daily sales in January were very strong robust pretty broad base, particularly on the equity side is what I would say then as we went into February they actually uptick even more in terms of the sales again.
Broad base other than maybe a few fixed income strategies. So that was sort of interesting to watch and then even during that that incredibly severe dislocation in March we sort of had a capitulation on the redemption side.
The actually didn't see any decline in sale, which is really unusual I've been looking on a daily sales since 1996 and is really odd to not have some kind of correlation between sales levels and capitulation on the redemption side with these sorta held up and I think a lot of that was while there were clearly many people Fortunately we will.
Going to receive safety of either cash or we're very.
Credit high credit quality strategies, other people, where we rebalancing their portfolios and seeing that as an entry point into maybe some equity strategies that they had previously thought might have been overbought. So I think the diversity. So I think as we sort of walk through the different strategies and domestic in aggregate maintained its positive momentum.
On the international side that was positive so were what I would really due to the reverse is where it was there a little bit weakness was absolutely during the downturn in the very credit sensitive and of the but the lower credit quality fixed income and emerging market equities, which all makes sense other than that it was pretty consistent and it was in.
Funds and there was in retail separate accounts they been alluded to for E Mail.
In the institutional side, so really it's almost sort of you plucked out those three weeks in March.
The numbers across the board would have been incredibly strong positive gold product categories.
You did.
Yes.
No I think you covered it.
Yes.
Okay great.
Just a quick follow up and Mike I was hoping you know obviously, there's a lot of moving pieces the fee rate because you have inflows in the higher fee products and was largely products, but you also have the strange averaging thing that happened probably during the first quarter were no because the sell off was in March.
Got it was a linked quarter waiting if you will so I was just hoping you can give some color around one maybe maybe where the fee rate was ending the quarter versus the quarter average and then too.
We are where we might be sitting right now given the pretty big rally back here we've had in April.
Yeah. Obviously this is difficult question to answer given the significant volatility in the markets.
We did point out I think it's important to recall that certain of the asset categories in the product types do a.
Lock in their fee rates at the beginning of the period and most notably retail separate accounts and I think just looking at at that product category I think from a modeling purpose you'd probably want to look towards the fourth quarter rate in that 46 to 47 level as as a more appropriate.
At level for modeling purposes.
And then as we look at the open end funds.
We did have the positive fee rate differential which was offset by some of the equity market declines. So again I think looking back at the fourth quarter level is probably as good as any from a modeling perspective, but clearly these fee rates are going to be impacted by continued.
Volatility in the markets so.
I think.
Okay.
Sure.
Great. Thanks, guys.
Thanks.
Thank you.
Our next question comes from to meet Modi from Piper Sandler Your line is open.
Thanks, Good morning, guys.
Just wanted to get an update on the on the capital priorities in this environment, Sean increased debt pay down in the quarter 27 and half million.
For purchases in line with last quarter on a dollar basis, just wanted to get an idea of how you guys thought about that balance for the quarter and then what the stock kind of rebounding off these loans just your leverage ratio still being in a pretty comfortable position. How are you thinking about that second quarter and potentially going forward from there.
Sure.
And a lot of it is sort of fundamental sort of how we always thinking about right. We always sort of strive to make sure that we have.
The flexibility and the optionality to sort of maximize our use of capital in an environment. So having gone through this environment.
The thought soulfulness behind getting into this environment, making sure we weren't too over levered and that we could sufficiently have capital to fund the ongoing investments in our business as well as Steve.
Repurchases and returns of stop sort of a was helpful to have that kind of the situation as we entered this so as we always do we sort of evaluate at any point in time, what the different opportunities are so we highlighted a couple. So we we do believe in consistently paying down debt, we've demonstrated that consistently since the issuance of that debt, but theres no.
Also an opportunity to retire some of the discount so that we viewed as a compelling use of capital and it is that time and in terms of stock repurchases. We consistently do stock repurchases generally other than those periods, where we have other some some other large capital type of the commitment.
And we're also in an environment like just want to be thoughtful that we maintain sufficient liquidity had things continue to go south right.
At March 20, Threerd the feel in the market was much different than it was what two days ago.
So we do think armina obligation is to make sure we have a strong balance sheet to manage the company if things work to get as dire in the financial markets as they were previously but they're not to have that include us from from having opportunities to take advantage of that might want to talk about the debt repurchase.
Yeah, and some meat.
The debt repurchase I think is it is good to just elaborate on how we thought about it of the 28 million or the 27.5 million paydown of the first quarter.
We've generally been consistently paying down the term loan on a quarterly basis, and 17 and a half million of that was clearly part of the consistent approach of paying down the the loan and then as the markets dislocated in that mid March timeframe, we saw.
Just a an opportunity to provide liquidity to certain of the holders of the low that a meaningful discount when it just.
Traded down it into the 80, so we were able to deliver again, while continuing to de lever and since that time, we've seen what the loan.
The backup.
Closer to 97.
And it's historically traded at par so.
It's something we monitor and or able to opportunistically execute in that dislocation.
Great. Thanks, guys.
Thank you.
Thank you.
Our next question comes from Diet, three Ram Krishnan from Bank of America. Your line is open.
Hello, This is actually on behalf of Michael in Kenya.
Following up on the West Hello can you Jenny.
Yes, yes, yes.
Just following up on the audio question on capital Management I was wondering what's your appetite Mondays and sort of what would be the nature of new affiliates you are likely to know gotten.
Okay.
Yes, so going back to the philosophy is we want to make sure. We do have flexibility for the various things in terms of we spoke about return capital we spoke about.
Thoughtfully, managing our leverage as appropriate and having flexibility in our balance sheet, we always say on M&A that our fundamental long term growth strategy is not predicated upon M&A. However, we see it as a very effective tool in the right in the rate environments.
I think it'll be interesting to see this environment may create opportunities. We certainly will evaluate anything that comes to our attention. We think we're uniquely positioned particularly for some of the firms are looking to partner in a multi boutique model.
So we would we would certainly consider things like that again, our strategy isn't dependent upon that to be successful book, we do think that there could if there were opportunities. We certainly look at those and in terms of kinds of things we'd look at it would it really get down primarily to.
Firms that are very good at what they do in or somehow differentiated in one aspect or another.
So its who are hard to put a filter around that because you sort of never know what opportunities are going to rise, but we're conscious of anything that sort of out there and are continuing we continuously have dialogue with you for opportunities, but we're very thoughtful about how we use our capital and what is the highest and best use at any given time.
Thank you.
Thank you.
And ladies and gentlemen to ask your question. Please press Star and then one now.
And our next question comes from Michael Cypress from Morgan Stanley. Your line is open.
Hi, Good morning, this is Stephanie filling in for Mike.
Wanted to ask about expenses a bit more and how are you thinking about expense flexibility if the markets pull back further.
Maybe can we get an update on the comp outlook I apologize if I missed that earlier and then broadly speaking any color about library, you could potentially look to pull for there if we have a sustained market pullback.
Sure I'll I'll give a high level of American can elaborate.
So generally as we sort of look or expenses, we do have a.
Meaningful percentage of our expenses that are variable that will vary with.
The revenue line in the UN line and that includes significant portion of our employment expense. So a lot of our employment expense and as a reminder, a lot of our affiliate structures. Our profit based so that as profit goes down the compensation goes down and then there will be certain things and Mike alluded to one of them which is traveling.
You came in I'm pretty confident will be much lower this quarter than it was in second quarter last year. So I think we sort of see that happening. So we constantly monitor expenses. If we look at those things where in the short term, we can maximize opportunity without sacrificing strategic things Mike.
Yeah, I think as we've talked about.
On the employment side about 50% to 55% of the employment is variable.
It is challenging given these volatile markets to talk about expectations, certainly we pointed to record levels of sales in April.
Assuming that would continue then we would have sales commissions go up and given.
The market environment, we would probably exceed the range that we've talked about previously, but certainly the market and sales levels are the key variables that are going to drive the.
The employment ratio the profit based.
Tools, they certainly take care and fluctuate according to revenue and profits.
On the other operating expense side, we did point too.
Moving to the low end of the is that $18 million to $20 million range as we talked about so theres some flexibility.
Again, thank that thats appropriate.
Thinking about the second quarter.
And as you model again.
Just a reminder of the board grants the come through on the expense side in Q2.
Okay. Thanks, and then maybe a follow up if I can I wanted to get an update on your view on the Cnos.
Given the current market environment, how are you thinking about the potential to for us So Steve and see how those has that happened dad and any help on sizing any potential impact there. Thanks.
Yes.
Yes, I think there there are couple of and impacts that.
That I'll point to and we did.
Talk about the outlook for interest and dividend income in the second quarter in a range of one to 1.5 million.
Thats down from 3.4 million in the first quarter and that's.
A combination of.
The C portfolio the cash balances.
Expecting to contribute lower given the lower cash balances at a lower expected return on those cash balances in the current environment and then the outlook on C. lows.
I think as we look forward to the to the close our managers are actively.
Performing and managing each of our CLL as which represent about 4 billion or so they use them I think it's important to note of the 34 basis point fee on structured products about one third of that fee is the senior FY two third of it is subordinate.
And.
We will look to each of the structures on how they're performing will impact.
The subordinate fee that and as you mentioned there is some structures that had been.
Deferring the subordinate fee at this point, we sort of look back to.
Previous market cycles, where those deferrals can last a quarter or two and then.
Get fully recovered so we feel good about that asset category. It will be reflected on a structure by structure basis, and we'll update you as appropriate.
To the extent.
Anything changes.
Okay, great. Thank you.
Thank you and I am showing no further questions from our phone line I now, let's turn the conference back over to George April for any closing remarks.
Thank you and I want to thank everyone today for joining us and certainly as always encourage you to give us a coffee of any of the further questions take care and Stacy.
Ladies and gentlemen, thank you for participating in today's conference. This does conclude the program you may all disconnect everyone have a wonderful day.
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