Q1 2020 Earnings Call

Greetings welcome to the often financial's first quarter 2020 earnings call.

This time, all participants will be in listen only mode a.

A brief question answer session will follow the formal presentation.

If anyone should they shouldn't <unk> operator assistance during the conference. Please press star zero from your telephone keypad.

Please note this conference is being recorded.

At this time I'll turn the conference over to Decouple Exar Elliot Senior Vice President Corporate Communications you May now begin.

Good morning, and thank you for joining us Rockwood first quarter 2020 earnings call.

Please note that our first quarter 2020 earnings release in slide presentation have been provided it are available on our website.

Speaking on the call what the Auckland, Chief Executive Officer, Glen Messina, <unk>, Chief Financial Officer, John Campbell.

As a reminder, the presentation.

Comments today may contain forward looking statements made pursuant to the safe Harbor provisions of the federal Securities laws.

These forward looking statements may be identified by reference to in future periods, whereby you for forward looking terminology.

Forward looking statements by their nature address matters that are two different degrees on certain.

Our business husband undergoing substantial changes yeah. That's a result of the covered my P. pandemic. We are the best of a period of significant capital markets volatility.

And rapidly evolving mortgage lending in subversive environment, which has magnified such uncertainties.

You should bear these factors involved when considering such statements and should not place undue reliance on such statements.

Forward looking statements about several assumptions risks and uncertainties that could cause actual results could differ materially, including those risks and uncertainties described in our reports and filings with the FCC, including or you know report on form 10-K for the year ended December 31st 20 My team.

Kurt and quarterly reports on such date.

In the past actual results of deferred from that suggested by forward looking statements and this may happen again.

Forward looking statements speak only as of the day Bill made me, we disclaim any obligation to update or revise any forward looking statements whether I can result of new information feature that's where otherwise.

In addition.

The presentation and our comments contain references to non-GAAP financial measures such as expenses, excluding MSR valuation adjustments.

Our next that's notable and pre tax loss, excluding <unk> income statement notable.

Activation of energy lump sum cash payments adjusted annualized run rate cost savings among others we.

We believe these non-GAAP financial measures provide useful supplementary discussions going about shows about financial condition.

We also believe these non-GAAP financial measures provide an alternate way to do you sort of aspect about business had a constructive.

Non-GAAP financial measures should be viewed in addition to and not as an alternative for the company reported results on the accounting principles generally accepted in the United States.

Reconciliation of the non-GAAP measures used in this presentation for their most directly comparable GAAP measures maybe found in the appendix to our first quarter investor presentation available on our website.

For no operation of the factors I just discussed please refer to our presentation in today's earnings release as wasn't the company's filings with the Securities and Exchange Commission.

No I was trying to correlate with the Glen Messina.

Thanks, Steve Good morning, everyone and thanks for joining us.

Environment, we're facing today, if nothing like we expected that the started the first quarter.

Well if anything we're doing today, it's business as usual.

We had strong momentum going into the first quarter and that the momentum continued in January and February.

Then covert 19 happened.

I'm extremely proud of our team has reacted well maintaining our high standards for operational excellence in compliance.

Especially thank our employees that continue to report work facility, where it's critical for them to perform their functions.

Additionally, we would like to thanks to health care professionals and first responders sacrifices made throughout the world to battle the covert 19 pandemic.

Ralph This crisis, our team is maintained business operations to assist our 1.4 million borrowers.

It's field that more than 740000 calls from March 1st 330.

As of April Thirtyth, we've provided approximately 115000 active for parents plant.

All borrowers in need even if they were not protected under the cares Act.

Despite the strain the covered 19 environment well placed on our business.

We expect to have adequate liquidity operator business.

And we expect to Opportunistically originated approximately $25 billion, a new servicing for 2020, but the targeted 50 50 mix of on servicing and sub servicing.

Well, we're operating in an apartment with increased risk.

We believe this environment has created increased opportunities to invest in high quality.

The originated under Sars and delinquent servicing at very attractive returns.

Our proven expertise and special servicing and the actions we have taken over the past 18 months to strengthen our company.

Position us that's one of the few players in the industry. It could take advantage of these opportunities.

We felt the great platform and a great team.

Our primary broke limitation well be are available growth capital.

In this regard we're highly focused on exploring all strategic options to leverage our proven operating capability in this environment to fully realize the valuable platform.

He currently serves more than 460000 consumers a pre crisis subprime loans.

Completed approximately 1.5 million non for closure outcomes on behalf of struggling families since the financial crisis.

We believe that often has a critical role to play in the current environment to help our hours and the mortgage industry.

We continued to be what are the best Servicers for nonperforming loans with decades of experience that will help us assessed homeowners in the current situation.

We've done it in the past and we'll do it again.

I'd like to cover some of our business highlights from the first quarter.

Please turn to slide four.

Right the headwinds we face from the covert 19 pandemic, we made solid progress in the quarter.

We reported a net loss of $25 million into first quarter, which include 78 million dollar pre tax loss due to the impact of changes in interest rates on the MSR portfolio net of hedges.

And 62 million dollar income tax benefit primarily from the utilization of anywhere else relating to the change in carry back rules under the cares Act.

Pre tax income before notable items of 2 million include 7 million unfavorable impact of covert 19 during the quarter.

3 million dollar unfavorable impact due to seasonal changes employee costs, an escrow balances versus the fourth quarter.

We ended the quarter with unrestricted cash of $264 million, despite $59 million in MSR financing margin calls.

At $134 million and debt retirement and book value per share increased 9% from the fourth quarter to $3.32 per share.

First quarter funded volume was approximately $4 billion.

We achieved March and always funded volume in our flow in retail channels of approximately $11 billion.

We realized annualized run rate cost savings of $395 million as compared to the adjusted annualized run rate cost of awkward and P.H. combined for the second quarter 2018.

Despite the strengthen our liquidity position.

The dramatic improvements we've made for platform and the solid momentum our key business initiatives remain disappointed that our share price trade at an extreme discount to book value.

We believe we were taken all the appropriate actions to fully realize the valuable platform.

Lastly received a favorable ruling in the legacy, Florida matter, where the court granted our motion and dismissed with prejudice accepted an unfair trade practices that claim.

One of our top priority is to resolve the Florida and see if he'd be matters prior to trial in a matter that result in an acceptable financial outcome for stakeholders.

In this regard we've increased our reserves related to these matters in the first quarter two approximately $18 million.

However, we cannot provide any assurances that we'll be able to resolve this matter for the amounts currently reserve.

In the timeframe we desire.

Now please turn to slide five.

We believe the Swift actions, we've taken in response to the challenges created by the Cobot 19 pandemic have positioned dock when well to navigate through the uncertain future ahead.

We took decisive and proactive action to safeguard our employees. So that we could can do to serve our borrowers clients and investors.

We are fully functional with nearly all our global team working from home and approximately 2% of our team must work on site to drop requirements.

Our team is performing exceptionally well in this environment.

I'm proud of our call center team, whose skilled at hundreds of thousands of calls between March 1st in April Thirtyth.

Call Center is performing well and our performance compares favorably to the call Center statistics, most recently provided by the M. BA.

As mentioned earlier as of April Thirtyth, we granted approximately 115000 active forbearance plans are roughly 8% of our total number of loans serviced.

We have sole responsibility to adapt and roughly 27% of these plans were approximately 7% of our own portfolio.

On average, we're seeing approximately 26% of bars on for Barents plants continue to make their payments.

As you can see in the slide this varies by Investor type and is 41% for GSK loans.

Based on the it'd be a report data as of April 27, the percentage of loans in our portfolio want for parents for Fannie Freddie and Judy Investor types is below other non bank servicers.

For Pls, it's about.

We believe this is based on the quality and seasoning of our portfolio.

We have developed our forecast for advances based on our experience in natural disasters. However, in this case right using unemployment as one of the drivers to forecast future forebears plant demand.

Reinstatement and default levels.

Our current forbearance planned levels are consistent with our forecast and we're seeing a reduction in number of borrowers who are requesting forbearance, which is also consistent with our forecast.

Moving on to slide six.

We expect current cash levels, plus operating cash flow and our working capital improvement actions will support our operating needs.

Origination objectives debt service requirements and the equity portion of our servicing advance requirements, while maintaining our target $200 million, an operating cash plus liquidity earmarked.

We estimate the total amount of advances will peak around the end of this year.

For incremental about approximately $150 million above her first quarter 2020 advance balances.

You have a decade of experience and matching and collecting servicer advances, which peaked at well over $2 billion following the financial crisis.

We're confident in our ability to match the projected increase and advances.

We do not have to advance piano on 16% of the loans in our own servicing portfolio because contractually, we're only required dream it payments Wyndham our makes them.

On the remainder of the portfolio, where we must advance for Fannie and Freddie loans Dystopic dancing at four months PNR.

We recover a pea and I'd answer that resolution of the forbearance plan loss mitigation workout or liquidation.

Virginia alone, we advance PNR, while the for parents plan is active.

Evaluate the power for partial claim prior to the end of the forbearance period and recover the advances if they qualify for the partial claim.

It's a bar does not qualify.

Extend their for parents plan up to 12 month.

And would eventually be evaluated for a loss mitigation solution or default.

We can use excess funds and custodial account to limit our p. and I dances.

For Pls loans, we would continue to advance piano right through a series of one month for Barents plants, which advanced the due date upon completion and moved to resulting this payment to or near the loan maturity as a non interest bearing balance.

As such often does not expect to be out of pocket cash.

Any more than one month for each loan.

Generally we may stop advancing for piano I once deemed non recoverable from the net proceeds of the property.

We are required to advance T.N. eye on all loans until resolution of the forbearance plan loss mitigation solution for property disposition.

Based on natural disaster experience, we are assuming very forbearance duration and repayment terms and that's some borrowers well. Unfortunately ultimately go to default.

Moving on to slide seven.

Industry origination volumes and margins are strong frankly margins are higher than we've seen a long time.

We have built flown recapture originations capability to capitalize on this.

We have good momentum in these channels and work continue to expand our capabilities.

We are acting opportunistically to originate MSR in our retail flow channel.

Discount historical levels before covert 19, resulting in highly attractive returns.

Included in our liquidity estimates its funding $25 billion and originations for 2020 added target 50, 50 mix of owned servicing and Subservicing.

We believe this ratio as Britain inappropriate to conserve capital and considering potential variability and market conditions.

Our recapture fun defined for the quarter was $196 million.

And gross lock volume was 879.

Our March funded volume was adversely impacted by our and the markets transition to remote environment.

Soft volume trends and margins continued to be strong and loan pipeline cycle times are beginning to normalize.

In April we recorded gross lock volume of more than $500 million and we continue to expand capacity to maximize recapture volume potential.

And our correspondent forward lending channel. We're currently purchasing buying for more than 68, Counterparties and have an additional 182 in the pipeline.

First quarter bit volume was 13.4 billion up 126% from the fourth quarter.

We originated over $2 billion of annualized volumes during the quarter.

Overall, our flow channels across agency purchase co issue indirect flow MSR arrangements originated over $5 billion with annualized volumes during the quarter.

We're also granted approval to participate as a certified fire as part of the Fannie Mae S&P program.

Oh reverse originations business funded $226 million of loans in the quarter, 60% increase compared to the same quarter last year.

You are ranked as the number to reverse mortgage lender in the quarter based on FHLB endorsement.

Currently we have a pipeline of $90 billion and subservicing opportunities.

Although the subsurface excel cycle has a long tail there appears to be a growing interest from prospects in our offering as potential customers love to diversified subservicing providers.

Please turn to slide eight.

We believe this environment will create opportunities to invest in or sub service delinquent servicing at very attractive returns.

The pace the magnitude of our group is largely limited by our available capital.

We are evaluating a number of different opportunities to partner with investors to acquire or subsurface delinquent servicing or using our planned MSR funding vehicle as one of the mechanism to for that acquisition of delinquent servicing.

Ocwen continues to be what are the best Servicers for nonperforming loans with decades of experience that will help us assist homeowners in the current situation.

We have created a flexible how the automated operating platform that allows us to mark easily scale up loss mitigation capability, allowing for operations to maintain quality are undergoing increases in volume and rapid change.

Today, we're managing over $3 billion and advances in our proven capabilities allows us to aggressively market or sub servicing for servicers that do not have the experienced or capacity and handling delinquent loans.

We have been a leader in previous government homeowner assistance programs and completed over 350000 modifications under the prior HAMP program, which was 60% higher than the next highest servicer.

We have completed more than 1.5 million not for future outcomes on behalf of struggling families since the financial crisis.

Under the Treasury M.A.J. program following the prior recession off when completed almost 120000 principal reduction modifications to non TSC borrowers, which was almost 50% of all such modifications offered by the entire industry under the program.

Turning to slide nine.

We expect our financial performance for the balance of 2020, well see both positive and adverse impacts resulting from the cobot environment.

In servicing we expect to see lower servicing revenues and higher operating and interest expense.

In addition, given current interest rates are likely to see higher MSR amortization.

And some additional revenue pressure due to higher prepayments.

In contrast, we expect a more robust originations market with strong near term volume and margin opportunities.

We believe our actions over the past 12 month to build diversified origination sources and reduce our cost structure.

As well as our loss mitigation capabilities and strong operating skills.

Position us to capitalize on this market disruption and could provide the opportunity to prudently acquire servicing assets at very strong returns.

Going forward, we're executing our cobot 19 action plan and keep its its initiatives with commitment and focus.

Well, we continue to progress toward our objective to deliver attractive long term returns for our shareholders. We're not providing near term earnings guidance because of the uncertainty in the number of bars needing forbearance duration of forbearance and foreclosure moratoria.

Burst in loss mitigation.

Industry origination volumes and margins.

In any future state or federal government actions that may further impact the mortgage industry.

Now I'll turn it over to Jim will discuss the results for the quarter.

Thank you Glenn please turn to slide 11.

Commons today will focus in our first quarter results as compared to the prior quarter.

As previously noted our first quarter Investor presentation includes more details on our results and is available on our website.

The first quarter reported net loss of $25 million included $62 million income tax benefit primarily due to favorable changes in the carriers that among other items.

Pre tax results for the quarter were impacted by the cool did 19 pathogenic in market disruptions in several ways, primarily on favorable interest rate and assumption driven fair value declines in our net MSR portfolio.

The next financial impact from Koby 19 on revenues of $7 million on favorable and on expenses was minimal for the first quarter. Although we expect these impacts to increase.

Revenue of $254 million decreased by $8 million from the prior quarter.

Let's see so fair value election made in the quarter allowed us to recognize $47 million a future fair value upside into equity, although ongoing quarterly revenue is estimated to be lower the $4 million impacting the quarter.

Results were also negatively impacted by portfolio Renault covert 19 and market conditions.

Operating expenses continue to improve as result of our continuous cost improvement efforts.

Young favorable MSR valuation adjustment of $174 million first quarter is primarily due to.

$157 million of unfavorable fair value change, primarily going to agency portfolio due to 118 basis point decrease in the 10 year swap rate.

53 million dollar reduction in MSR value into the portfolio run off.

Offset by $35 million favorable impact on medical hedges.

And this valuation adjustment net of macro hedge and NRG totaled $78 million.

Our food MSR hedge strategy performed as expected with total cupboards against our food MSR equaled to 43% other decline and I sports MSR value.

The positive pretax earnings impact from the amortization of the lump sum cash payments, we seem to NRC in 2017 in 2018 was $25 million in the first quarter and $26 million in the prior quarter.

The remaining unamortized $10 million lump sum cash payments.

Contribute positively to our pretax income in April.

I would I like to reside Kaunas servicing and origination segment results.

As outlined on slide 12, or servicing segment reported 56 million dollar pre tax loss compared to 59 million dollar pretax income in the prior quarter.

Consistent with our efforts to build our originations platform.

Or servicing business remains focused on providing sustainable loan modification solution.

Qualify borrowers in need.

Completed more than 8300 modifications in the quarter, 41% higher than the prior quarter.

Please turn to slide 13.

You're origination segment reporting pretax income of $10 million $7 million favorable to the prior quarter.

Are we capture business recorded 11 million dollar gain unsettling a quarter $2 million higher than prior quarter, driven by 189 million dollar higher hole through adjusted lock volumes.

Corresponded business recorded 2 million dollar gain unsettling a quarter 2 million dollar higher than the price or did you do improvement margins.

Reverse mortgage business with adversely impacted $3 million by market disruption attributed to cope with 19, which started to stabilize an equal.

As you can see onside 14, we ended the quarter with $264 million unrestricted cash.

At quarter and whoever fully funded on our servicing advanced answering the warehouse facilities based on available collateral.

We also had available borrowing capacity of $446 million provided we have the eligible collateral too fond and the facilities.

Or liquidity was $165 million lower than prior quarter, primarily driven by $134 million of debt paid out including $126 million of S.S.G.L. balance during January.

We were also impacted by $59 million of margin calls on our financing instruments declining interest rates and changes in modeling assumptions in other working capital needs.

This was offset by $78 million with cash sources from various balance sheet optimization initiatives during the quarter.

In April we completed balance sheet optimization actions, which generated in additional $42 million ubiquity and are currently targeting additional high probability actions of $130 million for the balance of the year.

We repurchased 5.7 million shares in the quarter for total cost, including conditions a $4.6 million.

We expect to finalize shortly increases and extensions of our OMART an old fat facilities that should cover our forecasted increased requirements for advanced financing an R.P.L.S.N.G.S.V. portfolios.

The cost of financing under these facilities will increase due to increased funding spreads commitments.

We also expect to extend our G.S.C.N.S.R. financing facility and warehouse line.

We are not acting at this time to establish a pride <unk> advanced funding facility or according to access the Junaid <unk>.

We will continue to such and he may requirements options going forward and they establish financing later this year.

We ended the quarter with corporate debt outstanding a $513 million in a corporate debt to equity ratio of 1.2 times.

Shareholders equity ended at $430 million in a books value per share which $3.32.

Well, we just 515.

Increasing forbearance plans will drive slower servicing rather than you and higher operating expenses.

Temporary and unavoidable.

As stated earlier, we're expecting advances to increase $150 million above first quarter level.

We also expect average financing spreads to increase offset in part by low market interest rate. This will drive higher interest expense.

For those that are in forbearance, we will not be receiving servicing fees during the forbearance period.

Deferred servicing fees will be recognized upon resolution of welfare plan, a ton of loss mitigation or it liquidation.

The services feature for old does not impact our total cumulative revenue over the life of alone, but we'll reduce near term revenue in cash flow.

In addition, due to the moratorium on foreclosures and resolutions, we will not be recognized the recovery of deferred servicing fees on P.L.S. loans to would've gone to resolution.

In April we saw a 13% reduction in resolution of delinquent loans and a 9% increase in foreclosure rules.

This is also a matter timing impact near term cash flow revenue in pretax income.

Awkward has a strong history of reducing too licensees and collecting differed surfacing geez.

We believe the recovery of differed servicing fees will be somewhat higher than recovery rates. We have storch, we experienced with natural disasters as no infrastructure rebuild it was required in homes are not damaged.

We're not expecting in the media increasing operating expenses. While these loans are in forbearance. However, once before there's period is over we will see an increasing costs relating to completing the necessary modification.

Oh now turn it back over to the one.

[noise] next year.

Restarting the slide 16.

We've made solid progress on our growth strategy finished performance and business improvement plans.

Well, we expect a covert pandemic well in fact or performance in the near term. We believe we have strong momentum.

As well to liquidity improving operating capability to navigate this environment.

Due to execute are key business initiatives to achieve progress towards our objective to deliver attractive long-term returns for shareholders.

Specific bars, indeed is one of our corpus capabilities and it keep differentiator for us in the industry.

We have created a flexible highly automated operating pot form that allows us to more easily scale up loss mitigation capability lying for operations to maintain quality.

We're going increases and volume and rapid change.

We believe this environment has created increase opportunities to invest in high quality newly originated M.S.R. and delinquent surfacing at very attractive return.

Are proven expertise and special services.

And the actions we took over the last 18 months district for our company and expand our rich Nations capabilities Division does is one of the few players in the industry, who could take advantage of these opportunities.

We have a great pot farm.

<unk>.

Our primary girls limitation will be are available growth capital.

In this regard.

They focus on exploring all strategic options elaborate drop proven operating capability in this environment to fully realize the value of our platform.

We believe that <unk> has a critical role to play it in the current environment help both borrowers and the mortgage industry.

Did it to be one of the best services for nonperforming loans with decades of experience that will help us assist homeowners in the current situation.

We have done it in the back and we'll do it again.

I want to thank our management team board of directors and employees for their commitment and resilience during a crisis, we have all been facing.

This team at driven to a challenge like nothing we've ever face before.

I'm proud of hope, we adopt to get us to where we are today as we take the next step towards further probing our long term competitiveness and financial performance.

And with that for ready to take questions operator.

[noise]. Thank you at this time will now be conducting a question and answer session.

If you like to ask a question today. Please press star one on your telephone keypad and a confirmation tone indicate your line isn't the question Q.

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One moment, please so we pull for questions.

[noise]. Thank you are first question is from the line of we coupons will make a family office. Please just use your question.

<unk>.

Glen destroyed good very optimistic tone [noise].

But the facts or the following we have a book value at 330 to be able to stock the closure 40 cents or 12% of book value, we have a market cap of poetry $54 million.

We have a term loan there's trading at 80 cents, an adult with a short term maturity. We have publicly traded that that sells a yield to mature did they give 22%.

So the public is making a pretty grim assessment.

Situation, Yeah as best as I can tell because of the term loan you're unable to capitalize on Mr markets Mispricing. So I have three questions for your number one.

Right of the answers are evident in what you were presented I guess the question, whether it's believable do you believe the book value of the company is real and we will remain the solvent entity. That's question one.

Too it seems to me I'm very surprised that nobody showed up and knock on your door given how.

The.

Skill set the the company you know you said on three occasions today, great platform great team.

He had available to big discount Nobody's shown up so I'm, assuming that the Florida age G.

The consumer protection, whatever the hell that cold board or to poison pills, you address that a little bit and your comments maybe could readdressed in third told me about the profitability of new servicing you say, great. We turn investment when I look at the who we're we're showing it in the marketplace. It would seem to me either.

Greater return on investment those to pay for you to show you entity, if there's a buyer.

Or find other ways of capitalizing on the big discount that up papers, so yet, but thank you for any responses you could provide.

Oh, Good morning League and thanks for your questions maybe frame specific you'd get into your questions. There was one update I have for every one for the markets just giving the environment. This call was pre recorded that you might have been able to tell by some of the captain's basing between speakers, but we do have an agreement.

In place.

Two applies to extend through June 2021 are Omar and OFAF advance financing facilities. The <unk>. The offending capacity will increase from 200 million to 500 million to accommodate forecasts advancing requirements and the amortization of 185 million and turn notes in August.

The about facility will increase to a total of $70 million. In addition, we've reached an agreement to extend our M.S.R. repo and where hospital east with with Barclays. So.

That's a an up they'd want to get out to the market for answered your question.

So in terms of your question, we <unk>, Yeah look from from what value perspective, We've you know, we we I I believe in the credibility of are going after prophecies in the value of our assets and I believe our book value was barely state it for the company.

In terms of the C.F.P.D. matter.

As I said on the call look this is one of our top priorities to resolve it's one of the few remaining legacy regulatory matters that are you know like that I think Ah Ah Ah serving as a drag on evaluation of the company or we've set as our strategic.

Already to to get this close.

In a matter that produces an acceptable I'll come to all of our stakeholders and arguably would like to get it done prior to the trial date, which is at the tail end of this year. So yeah look we can't provide any assurances that we'll be able to resolve it for the amount that we increase the reserve two or in a time frame you specified but it is.

Absolutely one of our top priorities to get clear.

In terms of the profitability of new service, saying <unk>, Yeah low margins in your reputation environment. We're we're in today are at levels. A few of us have seen in our lifetime, it's a very robust originations market both from a volume at the margin perspective.

Yeah, what our portfolio retention chattel.

The economics are such that you know fundamentally I'm the Sars to catch cost of the M.S.R. zero. So we are you know that m. as far as come back coming back to us without necessarily a cash investment.

And you know margins in correspondence blending again or is wide is an r. flow channels wide as we've seen in in quite a long time. So yeah. The cash costs, so to speak of M.S.R. creation as well below the fair value.

There's a number just locations in the market as you might be able to a suspect that's kinda driving that but yeah. The returns on on M.S.R. is today or or some of the best we've seen.

Yeah look at the I I I believe we built a terrific platform here, we've got skill sets and capabilities that are right for this part of the market cycle, we thought that origination platform. They can take advantage of the rich nation opportunities are we talked about we've got the special servicing capabilities to.

Deal with the yeah wave of modifications that are coming at us and the matching through the elevated level of advances that the industry, saying and I think that's going to be a valuable resource and a valuable service as we move forward and it's something we're looking to market aggressively and yeah. They had on a call look I I I.

I believe in the team are operating capability and evaluate play in the marketplace and we are highly focused on exploring all strategic options 11 laboratory capabilities that we've built so fully realize that I have our platform. What what can you say better for you know, we're Florida Corporation I'm shocked I know they don't want to put you out of business, but.

<unk> what is the status of the negotiations with the Florida ready G.

[noise], Yeah. When you look I I I really can't provide anymore and that that I've said already <unk>. The law. When you said Barry I should please oh, so I said it's.

We are our goal is to resolve these matters before they come to trial.

I'd be the same thing for for energy.

[noise] I believe so they can tightening as consistent between the two.

Show the Florida, the 40 G. a trial data set for late this year.

Both the C.F.P.B. and the thought about are searching for late this year, that's correct <unk>. Okay. Thank you.

I guess, what's behind my questions role honesty is whether the shareholders.

Are better off being the risk by merging with a larger.

Entity, if that opportunity exists that may not exist I don't know will remain independent and the frustrating thing about remaining independent original mortgage <unk>, a little over $50 million.

12% of book value term loan trading the big discount.

All the which does not fit with your optimism of what you've created here you're platform and your team and it'll it's either you got to kind of disregard.

Markets efficiency, except what you're saying versus what the market is saying.

I get it.

[noise] just an observation.

Answer my questions. Thank you.

Exactly.

Mm.

Thank you as a reminder, you May press star one to ask a question.

[noise]. Thank you.

At this time altering the slur bicycling mussina for closing Norma.

[noise] great. Thanks, Thanks for.

Again, I I want to extend my thanks to the entire team who has just worked tirelessly over the last 60 days to enable a remote operating framework and continue to conduct our business in a high quality fashion and serve all of our bars with with empathy and focus and even those people who are <unk>.

<unk>, we're making sure that we can accommodate their their financial need in this time of of of struggle for <unk> for the nation into the world like I I firmly believe are proven expertise in special service thing any actions are taken over the last 12 months.

To strengthen accompany really position as as what are the key players in the industry, who can take advantage of the opportunities. That's in the marketplace. Today, we built a gray platform integrating I'm proud of everyone.

Get I think our primary growth limitation won't be are available growth capital and again, we're going to leverage all options, we can to fully harvest the value of our team or platform in this environment. Thanks, everyone and look forward to talking to you next quarter.

Thank you. This will conclude today's conference me disconnect. Your life's. This time, thank you for your participation.

[noise].