Q3 2020 Blucora Inc Earnings Call
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Session you wanted to press Star one on your telephone please be advised that todays conference is being recorded if you require any further assistance. Please press star zero I would not like to have a conference over to your speaker today build Mitch Mitchell as Vice President of Investor Relations. Thank you. Please go ahead Sir.
Thank you and welcome everyone to <unk> third quarter 2020 earnings conference call.
By now you should have an opportunity to review a copy of our earnings release and supplemental information.
If you have not yet reviewed these documents are available on the Investor Relations section of our website at <unk> Dot com.
Joined today by Chris Walters, Chief Executive Officer, and Mark Newman, Chief Financial Officer before.
Before we begin let me remind everyone that todays discussion these forward looking statements.
Based on the environment as we currently see it and speak only as of the currency as such they include risks and uncertainties and actual results and events could differ materially from our current expectations.
Please refer to our press releases and other SEC filings, including our form 10-K. Thank you and other reports for more information on the specific risk factors.
We assume no obligation to update our forward looking statements, except as required by law.
We will discuss both GAAP and non-GAAP financial measures today.
Earnings release supplemental information earnings condensate presentation are available on record Dot Com and include full reconciliations of each non-GAAP financial measure discussed to the nearest applicable GAAP measure with that let me hand, it over to Chris.
Thanks, Bill and good morning, everyone.
I'm pleased to report that our third quarter results showed incremental improvement and came in higher than expected on a number of metrics the mark will cover shortly.
In addition, we closed the acquisition of its tip us, adding a story, we fast growing high margin business to our company and we made progress in setting ourselves up for future growth.
I continue to be impressed by our employees and their commitment to executing on the strategy we have put in place.
I'm also proud of our financial professionals, who have worked tirelessly to position their clients for success, both from a tax and wealth management perspective through an uncertain time.
Having met with financial professionals regularly since joining I could see the passion they have for their work and it makes us want to work even harder to position them for success.
Warn that in a moment.
I'll start this morning, with an overview of our Taxact business.
We're very focused on executing all that is required to best position us for tax year, 2020, and a shortened lawsuit.
As discussed we made significant progress last year on our product. However, we were challenged by being out of position on marketing at the start of the season and not having assisted offering available for all interested customers.
To prepare for a strong upcoming tax season, we are focused on several things.
Ensuring that we have our entire marketing approach optimized, including our team structure and capabilities media partners messaging and technology.
Continuing to enhance our core product offerings with an emphasis on areas that proved to be most challenging for users last year.
As well as our landing pages, which.
Which are the intersection point between products and marketing and are critical to start rate.
Launching our hybrid assisted offering to all users who may have interest.
Our testing over the last couple of years gives us confidence that we will be able to execute this effectively.
Improving our tax pro software and targeted ways, including coverage for more tax situations and an improved onboarding experience.
We have a solid plan to accomplish a great deal in a shortened off season with a number of talented new additions to our team.
All aspects of what we are trying to accomplish are tracking well to enable us to start next season.
With both marketing and product further optimized and.
And working in concert.
This combination is focused on enabling us to make progress in the early stages of executing our sustainable growth strategy for the business.
I'll now move to wealth management.
It's been a great deal of change in the business over the last two years, we transition to a new clearing platform and completed the acquisition of first global I began to integrate the businesses.
The change continued this quarter with the completion of the HCAT best acquisition and rolling out of New advisory pricing.
I'm pleased with the progress we are making however, the amount of change has been significant for our financial professionals and their teams.
We need to improve on multiple fronts in the coming year.
Including improved service levels.
A better technology experience for both financial professionals and their customers completing the integration of all core systems and processes and increasing stability. So that future changes are focused primarily on better experiences for our financial professionals and their customers.
It has been a busy quarter with us making progress on many fronts, including.
Adding a new product management team that will be the architect for improved financial professional and end customer technology experiences.
Rolling out a regional service model that is focused on improving the service experience for a valued financial professionals.
Consolidating and refining.
Our advisory programs and pricing consistent with regulation, <unk>, which we believe will drive an incremental shift to advisory services.
We also expect to see a decrease in the distribution of paper statements.
Upgrading or operational approach, which has improved processing times.
Adding three new large h. kfs affiliated accounting practices and recruiting 60, new financial professionals to be affiliated with a band tax during the quarter.
We are confident in our differentiated tax focused wealth management strategy and their market position is compelling for the right financial professionals and their customers.
That said, we have work to do in the coming year to solidify the foundation for long term organic growth.
We plan to focus on improving our service and operational performance aligning systems processes and technology to improve efficiency and scalability.
Maximizing financial professional performance by providing improved tools.
And completing the integrations of first global NHK affects.
These efforts will take some time to show impact over the course of the coming year, we anticipate that our efforts will lead to decreasing risk of financial professional departures and an increasing share of advisory assets.
The combination of actions will put us in a stronger position from which we expect to deliver organic asset growth in future years.
Let's now turn to Blucora as a whole.
It's been a challenging year with the start of the global pandemic following closely after my start and the CEO role.
External forces had large impacts on both sides of our business.
Including the extension of the tax season and the equivalent.
Of 625 basis point interest rate cuts.
I'm proud that we've been able to keep our to you safe, while delivering for our customers and financial professionals.
In this challenging environment, and making significant progress on repositioning the company to enable sustained growth in coming years.
Near term financial results have been adversely impacted by events of this year. However, we are fortunate to have two strong profitable businesses with positive cash flow and ongoing demand during these challenging times.
A number of challenges became clear after I stepped into the CEO role nine months ago, including.
The need for more sustainable growth strategies for the company and our businesses.
Our leadership structure that didn't provide the necessary clarity and ownership needed to drive performance.
Skill gaps across a number of important areas.
A lack of cultural alignment across the organization.
And under investment in technology, resulting and challenges for our financial professionals customers and employees.
And potentially high value synergies between the businesses had not been meaningfully tested.
Weve address these challenges by taking the following actions.
Shifting to sustainable growth strategies for each business and across Blucora.
Including establishing priorities for realizing value across the businesses.
Weve aligned the organization towards common goals and priorities down to every individual team member.
Adjusted leadership structure, most notably consolidating operations within the business units and combining our software efforts under one leader and Curtis Campbell and our wealth management efforts under Todd Mckay.
We also separated our CIO CTO teams to bolster our technology.
Expanded the roles of a number of our talented team members and added many new.
Members to our team with the required skill sets.
We believe we now have the right team in place to deliver going forward.
[noise] rolled out a culture initiative to ensure one common sense of purpose.
Well, we were early on in the process. Our employee engagement has shown significant improvement in terms of alignment on priority.
Clarity of objectives and overall satisfaction.
We increased our investment in technology teams.
And efforts at Blucora under the business unit level to more effectively meet the needs of financial professionals customers employees.
Weve committed to testing the highest value potential synergies in the coming year, which are a few things.
Improving the tools needed to make our financial professionals more productive by leveraging the product and technology leadership and approaches from Taxact.
It will be about 12 months before we expect to see material benefit from these efforts.
The second is converting tax at pro users into a VAT tax financial professionals or in HCAT Fest referral partners.
We're in the early stages of engaging tax pros now to test and refine our approach before a planned roll out in the middle of next year.
The final area is helping financial professionals acquire more customers.
Most tax and financial professionals have limited time.
And marketing sophistication or scale.
Our financial professionals can leverage the marketing capabilities within our tax Act organization to help them drive new customer acquisition, resulting in higher asset flows.
We expect to begin to define our service offerings and early 2021.
And test the service offering in the second half of the year.
I'm more enthusiastic now than ever about the opportunity in front of Blucora.
We believe our textbook is software and wealth management company.
He has a compelling position.
In the large and growing markets.
We have made significant progress in the midst of a very challenging environment to best position the company to deliver sustained organic growth in the coming years.
We haven't execution focus team in place to deliver on the promise.
With that I'll turn it over to Mark.
To review, our Q3 performance and full year 2020 and tax season Alex.
Thank you, Chris and good morning, everyone.
I'd like to provide some additional detail on our third quarter results and updated outlook for the full year 2020.
As well as a preliminary outlook for the upcoming year in tax preparation.
Starting with third quarter results, our acquisition of Ace Kfs closed on July 1st and therefore has been included in our results for the full quarter.
On this basis consolidated third quarter results were as follows.
Total revenue of $175.4 million, which is towards the upper end of our guidance range.
GAAP net loss of $26.2 million or 55 cents per share, which includes acquisition and integration costs of $10.3 million primarily related to the closing of the Capex acquisition.
Our GAAP net loss and GAAP EPS were both below our target range is due to a higher than forecasted tax expense that like to offer more perspective on this.
Reported net income figure is greatly impacted by the variability in our tax rate, which can be volatile, especially on an intra period basis as profitability estimates our adjusted two out the year.
Small movements in pre tax income caused larger swings and the tax rate due in part to changes in a while utilization, which is one of the reasons. While we also proved that non-GAAP financial measures, which we believe provides investors with a more complete understanding of our underlying operations when viewed as a supplement to GAAP results.
Now moving on to that if you adjusted EBITDA was $27 million above the high end of our target range.
Non-GAAP net income was $15.1 million or 31 cents per share.
Both also above the high end of our target range.
Turning now to tax preparation.
Teseq revenue for the third quarter was $39.4 million just above the high end of our target range.
This was driven by better overall performance and third peak, leading up to the October 15th deadline.
Polluting ancillary product sales that came in a bit better than our forecast.
Segment operating income was $16.2 million also above our target range due to the flow through from revenue.
Moving onto wealth management there.
Third quarter wealth management revenue was $135.9 million, which is right about at the midpoint of our target range and included about $9.2 million of revenue related to each campus.
Relative to last quarter. The total revenue number represents an improvement of 17% driven by 25% increase in advisory revenue.
This growth was also driven by a number of additional factors, including market improvement. The addition of Ace campus, including net inflows within that business and a 12% increase in trailing revenue and 14% increase in transaction revenue.
Excluding the addition of HK Fs, which again contributed $9.2 million of revenue this quarter revenue grew 9% relative to last quarter.
On a year over year basis total wealth management revenue was down 7%.
It is primarily driven by a 90% decreasing sweep revenue and a 27% decline in transaction based commission revenue the latter driven by the factors, we mentioned last quarter.
These factors include the extended tax season, and limited ability to meet in person, making it difficult to drive business development activities, both with it but existing customers as well as attracting new ones.
Excluding HK has revenue of $9.2 million revenue declined 13% year over year.
Wealth management segment operating income came in at $17.5 million above the high end of our target range, primarily due to prudent expense management.
Total client assets increased 13% year over year to $76.2 billion, which includes approximately $5 billion from the addition of HCAT.
He based advisory assets were up 23% year over year to $32.4 billion. This is a new record for advisory assets, even excluding H. campus and advisory assets as a percentage of total client assets ended the quarter at 42.6% up about 370 basis points from the same quarter last year.
Also hitting a high watermark.
Net inflows into advisory assets were about $125 million, consisting of about $70 million in outflows at advanced tax.
Boosted by net inflows at each campus of about $200 million.
We saw net outflows in total client assets of about $300 million, which represents an improvement from last quarter's result, and consist of about $500 million of outflow of and tax partially offset by the $200 million inflow Ace campus.
Finally in wealth management HK has contributed as I mentioned earlier revenue of about $9.2 million and contributed $3.1 million to wealth management segment operating income, which represents a 34% margin on a standalone basis.
Total client assets HCAT Fs ended the quarter at about $5 billion up from about $4.5 billion in Q2 with net inflows of about $200 million during the quarter.
More than 90% of HK assess client assets aren't in advisory billing structure.
As of the ended the quarter HK offense or about 75, SCPA cards 4400 are a client and over 13000 retirement plan participants.
Finishing up on third quarter performance unallocated corporate expenses came in at $6.7 million slightly better than the midpoint of our range.
During the quarter, we had about $5.4 million in transaction and integration costs related to H CAPHS S $1.8 million in integration costs related to the acquisition the first global and a $4.1 million impairment charge related to exiting the former first global headquarters building.
Finally, the H. campus transaction included two potential earn out payments to be paid based on ending asset balances in June 2021 in June 2022, what could potentially total up to $60 million and which are contingent upon certain performance metrics.
The earn out potential stem from a renegotiation of the upfront purchase price of $160 million down to $100 million. This.
This contingent consideration is recorded on our balance sheet and then other current liabilities and other long term liabilities.
The estimated fair value of this liability will be reevaluated each quarter until the second earn out measured in days and the change in the fair value will be reflected in operating income.
This will be highlighted and the change in fair value of acquisition related contingent consideration line of the piano and excluded for purposes of calculating our non-GAAP net income it.
It is important to understand that this quarterly evaluation will add uncertainty in estimating our GAAP net income.
For the third quarter, the fair value of the liability declined to $26.6 million, which resulted in a gain of $1 million.
It's important to note the valuation methodology aligns with best practice and includes assumptions for a number of market based discount factors. This results in a much lower earn out valuation than what is estimated on an on discounted basis.
We hope that each kfs business continues to perform favorably within two years, which would result in the payout of the earn out at the achievement of the earn out metrics would bring very positive growth in this business.
As we provide guidance over the next two years, we will do our best to incorporate our latest thinking into non-GAAP expectations, resulting from what we expect to ultimately payout.
Turning now to liquidity.
At the start of the quarter and in connection with the H. campus acquisition, we entered into a $175 million add on term loan to our existing credit facility.
We used approximately $100 million of the proceeds of the term loan increased to fund the purchase price of each campus acquisition with the remainder with proceeds net of fees currently remaining on the balance sheet.
We ended the quarter with cash and cash equivalents of $151.2 million and our net debt was $412 million.
Our reported net leverage ratio at the end of the quarter was 4.5 times compared to 4.4 times in the prior quarter.
As we look forward from a capital allocation perspective, we will continue to be prudent.
We have not engaged in any share repurchase activity and have no near term plans to do so.
With the H. campus acquisition completed or ongoing priorities for cash deployment aside from unique opportunities will be to support organic growth and pay down debt or long term net leverage goal remains to be below three times.
With that let's turn to our updated full year outlook for 2020.
For the full year, we expect tax act revenue of between $207 million and $208 million and segment operating income of $47.5 million to $48.5 million.
For our wealth management business, we expect full year revenue, which includes H. kfs for the period of July one through year end of $535.5 million to $540.5 million and segment operating income of $68.5 million to $70.5 million.
This translates to consolidated full year outlook again, including HK offense for the partial year of revenue between 742.5 $748.5 million adjusted EBITDA of $88.5 million to $92.5 million.
Non-GAAP net income of $46 million to $51 million or 95 to one dollar a five cents per diluted share.
GAAP net loss attributable to blucora of between $339 million to $333 million or $7.05 to $6.94 per diluted share in corporate unallocated expenses to be between 26.5 and $27.5 million.
So as you can see third quarter results were ahead of our targets.
Full year estimate at the midpoint and have also increased.
We plan to reinvest some of the improved results in accelerating opportunities for tax season readiness.
The change in corporate level expenses relates in part to managing discretionary spend based on performance of the overall business.
In Houston forecast now takes into consideration our upwardly revised revenue target as we held off on certain investments until we have more confidence in business performance.
On a net basis that results in our adjusted EBITDA target for the year, improving by $1 million at the midpoint relative to our prior 2020 outlook non-GAAP EPS, improving by 10 cents per share.
And these 2020 results you have covered it really didnt tax which are discrete including the cost of the extended season at tax Act and some of those will be longer lasting such as the decline in sweep revenue that we experienced in the second quarter on.
It will likely persist beyond 2021.
Finally at this time of year and has become customary to provide a preliminary outlook for the first half of the upcoming tax season.
Given that this year's tax season with extended into the third quarter, we feel that it may be more helpful to provide a preliminary outlook for the entire year for tax at a few things I will note as it relates to this guidance.
Our product enhancements that showed significant improvements in conversion retention and customer satisfaction. This past season it.
The decline in consumer unit seen in prior seasons with significantly improved.
The marketing improvements implemented during this past season showed a significant improvement in second peak unique site visits and Weve continued to enhance our marketing team and plan for next season.
And as discussed earlier, we plan to launch a commercial version of a hybrid assisted product offering in January.
These factors among others give us confidence as we head into the upcoming season. However, we were also entering into a transition year as we move from price based growth to unit and ARPU based growth.
This transition as well as the fact that we are guiding over a longer timeframe gills less certainty incur.
Incorporating these factors and assuming normal start and end dates for a typical tax season, we are preliminarily targeting tactic revenue to grow in low single digits relative to full year 2020.
In terms of segment operating income consistent with our prior commentary, we expect a healthy rebound next year and expect a minimum of $20 million of additional segment operating income for it is 2020.
This preliminary guidance does include maintaining higher than historical level of marketing spend although lower than last tax season. However.
However, if we are not getting the desired returns on this marketing spend we can certainly dial it back in line with performance.
We believe this to be a high confidence outlook as we drive our strategy of positive monetize unit growth.
The launch of our hybrid assisted model and anticipate a strong improvement in our marketing capability, all while driving improvements in product quality.
Group together these initiatives are exciting and we believe will set the stage for long term sustainable growth.
Before I turn it over to the operator I wanted to make known to you that they'll Michel like wisdom Blucora. Since early 2017 has accepted a new role outside of the company.
As such this will be his last earnings call with us.
I'd like to sincerely. Thank bill for his find work in many many contributions to Blucora, we will miss him and wish him well and every success in his new endeavor.
Another member of our team dealer trial, who has been working and advanced tax and has many years of IR experience with a former cash America will be stepping in on an interim basis, while we search for a new full time Investor Relations leader as.
His contact information is on our website.
Concludes our prepared remarks, we will now turn the call over to the operator for <unk> operator.
As a reminder attack the question we want to press Star one on your telephone to withdraw your question press the pound pool. Please stand by while we compile the Q and A's officer.
Our first question comes from the line of Chris Shutler from William Blair. Your line is now open.
<unk>.
Hi, everyone. Good morning.
First I wanted to ask on tax Act.
Just your confidence in.
Monetize unit growth in 2021.
And I.
I guess, what's what's assumed in your expectation for low single digit revenue growth.
Sorry, we havent done any breakout or provide any granular more granular break down into the into that so I'm not sure. We can provide more detail in terms of our confidence level, but we're doing all the right things and the off season.
Each was focusing our investments in areas in the product whether for 10 points in the last year. We also have done a great deal ensuring that we've got our marketing messaging, our media partners or approach our teams all could fall right.
We think the combination of those things as well as launching the hybrid assisted offering more broadly and making it available to all consumers who may want it how the combination of those things give us gives us confidence that well paid unit growth.
Sure.
Got it okay.
And then Chris Capex SEC pricing gap versus the the market leader has narrowed considerably in recent years as you've noted.
Well at this point, what would you point to as kind of the main.
The value proposition of tax act relative to your key competitors.
Well, so we think it's a combination of things one as was just noted we continue to make some compelling enhancements in the product really around ease of use.
And Mark referenced what we shared last quarter, which was meaningfully increasing satisfaction with our products from customers and so with that real focus on ease of use and demonstrated results in terms of the improvement year over year in terms of customer satisfaction, we think thats something that we can really.
Really kind of watch onto.
We also think that with the right positioning there or how many consumers in the market, who ultimately want to align with which brands challenger brands and we think with the right positioning their consumer segments out there that will respond very for favorably to catch up.
And then we will also work on differentiated features some of which we launched last year.
That through testing with consumers, we found that they actually have great value or the place great value. So an example of that.
Would be tax plan. So at the end of the experience, we give consumers the opportunity to understand the kinds of actions that should take in the off season to be best prepared for the coming year. So we think the combination of a simple intuitive user experience that consumers are rating and a more favorable year over year, coupled with the right.
Positioning that connects with the consumer segments that are interested in tax act and finally, some differentiated features we think all three actually give us a really compelling position to build from.
Great.
And then just a couple on the.
On the wealth business, the operating expense number and wells came in lower than expected I think it was only up correct me if I'm wrong, but I think it was up 2 million sequentially.
Bye.
Hi, Jeff asked coming into the fold, which I think added around 6 million.
So first am I reading that correctly and if so how sustainable is the current level of expense.
And Mark you want take that.
Sure.
A number of things that we've done.
The fact that the macroeconomic picture, it's placed on certain position, where we just need to be prudent expense management perspective, and so we continue to look forward.
How we plan to maintain an expense profile that aligns with the revenue growth and they start going forwards.
So the way I would look at it going forward is we'll continue to be prudent we'll continue to manage expenses in line with expected revenue growth.
But yes, you are viewing the numbers correctly.
<unk>.
Are there any areas Mark you can point to where expenses were well known.
Probably down sequentially.
Well as you can imagine this year CN is down quite dramatic.
Our folks are staying at home as it relates to conferences with our financial professionals.
The thing this year that is different from years past.
Time will tell how next year plays out to the extent that simple start traveling more and if it's possible for people to come together I think those are the sorts of expenses that you would see US go up relative to this year, because we do value that face to face interaction.
It really has to do with those controllable factors associated with being just a different year that's typical.
Okay.
And then lastly, just the I think the guidance it assumes markets as well and as of September 30.
That's correct.
Okay. Thanks very much.
So.
Thank you as a reminder, task of questions you only need to press star one on your telephone. So we'll try your question press the pound key.
Our next question comes from the line of Dan Kurnos from Benchmark. Your line is now open.
<unk>.
Dan Kurnos from benchmark. Your line is now open.
<unk>.
Our next question comes from the line of well cutting from JP Morgan. Your line is now open.
Good morning. Thanks.
Thanks for taking my questions.
Sure starting.
Starting on the tax EBITDA guide for next year on our last call. It was indicated that there was $20 million of coli related spending in 2020.
I'm so it seems like.
The guidance is essentially.
Like adding that back in for next year, which with revenue growth would imply that EBITDA margins would be declining next year and I'm trying to understand is that is that a function of conservativeness due to the unusual nature of this year and the planning for next year is a reflection of greater and greater marketing spend and trying to I'm trying to piece back why the nor.
I'm alive margins, excluding co bid would be declining.
Sure Mark you want to take it.
Sure. Thanks for the question well as we did indeed guide to covert related spend last year was about $20 million.
We are keeping our segment income outlook consistent what we shared last quarter, which is that it will be at least $20 million better than 20.
Which will that alone would be a significant rebound next year from the low 20% range this year to the low thirtys.
As I mentioned on the call we do have the ability to throttle on marketing spend based on performance.
We believe that growth in excess of our guidance range would drive incremental profit.
Well, we mentioned on the call that next year or tax year 20, as a transition year and there are many exciting opportunities ahead. So the question becomes what is the right timeframe of which is actually really take hold and that's really the driver of the.
Statements made during his prepared remarks around the confidence expectation for next year and the guidance that we provided at the margin.
I do look forward to sharing more results as the season unfolds.
Okay.
Thanks Mark.
Turning to event tax what do you think is driving the continued outflows that event tax and how long do you think it will take for the investments that you're making now to translate into flows getting closer to breakeven.
Sure. So as we mentioned during the prepared remarks, the amount of change over the last couple of years for financial professionals has been very significant.
So when you do improve on multiple fronts in the coming year, including improved service levels and better technology experience for natural professionals and our customers.
And so ultimately as we make those improvements I think we'll actually see a risk of departures are outflows.
Decrease I'll reiterate the actions that we're taking the action, we think watched position us for long term growth rate.
We've added a new product management team, it's consolidating and refining the advisory and pricing programs and one regulation <unk>. We're upgrading our operational approach to continue improvements in processing times and we're rolling out a regional based service model and so all these things are in flight and we believe though.
Have a positive impact in the coming year, and ultimately enable us to terms.
Okay. So it's fair to think about this I guess is it.
A year.
A year or so of having to have some of these investments.
Come to fruition and then actually seen the benefit is that a fair way to talk about it but that's that's terrific.
Great and then my last question on the on the debt. So historically blucora as paying down debt in the first half of the year to align with cash flow from.
Tax Act should.
Should we be thinking about it that really for this year that we can expect debt pay down consistent with how it has been paid down in the past.
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Mark you want some states that Chris sure. So what we're going to continue to find the right balance between paying down debt investing in the areas that will drive continued growth.
Further as we enter into next year, there is still a little bit of uncertainty as it relates to the timing of tax season, and we fully expect that the tax season is going to begin on January 1st and it's going to end on April 15th.
Did that play out that gives us far more confidence to be able to pay down debt as we have historically, but also to balance that priority with any sort of organic growth opportunities that are focused one of us as well. So it really just comes down to lets get to January is make sure that returns to something of normalcy.
I think we can there's a better chance.
Seeing historical norms in terms of our debt paydown.
<unk>.
Got it all right. Thank you. Thank you for taking my questions.
Sure.
Thank you as a reminder to ask a question you wanted to press star one on your telephone to withdraw your question press the pound team.
At this time I'm showing no further questions I would like to turn the call back over to management for closing remark.
Great. Thank you all for joining us today and for your interest and we of course will speak to you next quarter.
Ladies and gentlemen, this concludes today's conference call. Thank you for participating you may now disconnect.
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