Q1 2022 Canaccord Genuity Group Inc Earnings Call
And.
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Good morning, ladies and gentlemen, thank you for standing by I'd like to welcome everyone to the Canaccord Genuity Group, Inc. Fiscal 2020 to first quarter results conference call. All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question and answer session if you'd like to ask.
Question. During this time simply press Star then the number 1 on your telephone keypad, if you'd like to withdraw your question. Please press star followed by 2 if you're having any difficulties hearing the conference. Please press star zero for operator assistance at any time as a reminder, this conference call is being broadcast live on line and recorded.
And I'd like to turn the conference over to Mr. Dan <unk>, President and CEO. Please go ahead Mr. <unk>.
Thank you operator, and thanks to everyone for joining us for today's call as always Im joined by Dominic <unk>, Our Chief Financial Officer.
Following the overview of our first quarter fiscal 2022 results, both Don and I will be pleased to answer questions from analysts and institutional investors. During today's discussion will refer to our earnings release and MD&A copies of which have been made available for download on SEDAR and on the Investor Relations section of our <unk>.
At <unk> Dot com.
Our quarterly Investor presentation, and supplemental financials are also available on our website I won't cover the entire presentation. During this call on them.
We'll refer to certain slides to guide our discussion.
Within our update certainly reported and information has been adjusted to exclude significant items in order to provide a transparent and comparative view of our operating performance.
These adjusted items are non <unk> financial measures. Please refer to our notice regarding forward looking statements and the description of non <unk> financial measures that appear on page 1 of our investor presentation and also in our MD&A.
I expect you've all had an opportunity to review our quarterly disclosure that were made available last night.
Our first fiscal quarter performance underscores the strength of our client franchise and the constructive get more normalized market environment relative to the same period a year ago.
Our results also reflect ongoing progress on the firm's strategic priorities across all our businesses as articulated by our leadership team and our 2021 Investor day.
And with higher contributions from our global wealth management operations, a continuance of strong capital raising activity and our capital markets business and substantial growth and advisory activity. The company has continued to post strong revenue and net income performances.
While we don't expect a continuance of record GCM activity levels that we experienced over the past year looking at slide 6 of our Investor presentation. You can see that our first fiscal quarter results have put us comfortably on track for a strong fiscal year.
Adjusted firm wide revenues for the 3 month period amounted to $524 million and increase of 39% when compared to the same period last year.
This was the third highest quarterly revenue earned by our company.
Excluding significant items firm wide pre tax net income for the first fiscal quarter amounted to $114 million up 173% year over year.
This translated to an adjusted earnings per common share of <unk> 73.
Substantial and transform the 25 reported in the first quarter of our last fiscal year.
Well this was another strong quarter for capital markets contributions on page 9 you can also see the continued growth of net income and diluted EPS contribution from our wealth management businesses.
Excluding significant items, our total expenses as a percentage of revenue for the first fiscal quarter decreased by 10, 7 percentage points when compared to on the same period, a year ago with non compensation costs coming in at 16, 7% a year over year reduction of 5.3 percentage points.
Yes.
As evidenced on slide 10, and we continue to benefit from the enhanced cost savings driven by the extended remote work environment and the restrictions and is placed on travel and entertainment.
That said, we've also maintained a strong focus on the efficiencies and cost discipline measures that we implemented prior to the pandemic.
Our non compensation expenses as a percentage of revenue decreased by 4.6 percentage points year over year.
While we continue to tightly manage our non compensation costs, we would expect <unk> and business development expenses to rise modestly from current levels as more in person meetings are scheduled.
Firm wide compensation ratio for the 3 month period was 62% a decrease of 4.8 percentage points, reflecting higher revenue and lower PSU charges relative to the same quarter last year.
Our continued progress against our strategic priorities and our market, leading execution capability and each of our business and geographies reaffirms my confidence and the strength of our franchise and our earnings power.
Reflecting this confidence the board of directors has approved a quarterly common share dividend of 7.9 and half cents for the first fiscal quarter <unk>.
Perhaps most importantly, we begin the fiscal year with fewer common shares outstanding on a fully diluted basis, and we expect continued buyback activity over the coming year, which will support enhanced earnings per share and any market backdrop.
We continued to deploy our balance sheet to support increased client activities. During the 3 month period. We have remained active on our NCI program and we expect to continue to do so throughout the fiscal year.
Our total capital deployment initiatives for the first fiscal quarter, and putting common share dividends and buyback activity amounted to $19 million or 26% of our net income.
With that let's turn to the performance of our operating businesses.
Performance by our global capital markets business remained very strong over the 3 months period, reflecting the strength of our mid market franchise with activity levels have begun to moderate from the extraordinary highs and the previous fiscal quarter, our Canadian and U S and UK businesses delivered year over year revenue.
Increases of 111%, 34% and 20% respectively.
In addition, our Australia business continued to perform above historic levels.
Firm wide capital markets revenue for the first fiscal quarter amounted to $324 million up 38% when compared to the same period last year.
Our investment banking segment contributed 46% of the total capital markets revenue for the 3 months period and $151 million a year over year increase of 55%.
Over the 3 month period, we participated and 199 transactions to raise gross proceeds of $20 billion for growth companies.
Excluding significant items first quarter pre tax net income improved by 145% year over year to $84 million and the pre tax profit margin increased by 11.4 percentage points to 26%.
These improvements reflect higher revenue on a relatively fixed cost base and the impact of increased contribution from higher margin advisory activities.
M&A completions in the quarter increased substantially and.
And first quarter revenue from this segment increased 269% year over year to $76 million.
Roughly half of this amount was contributed by our U S business with to earned its second highest quarterly advisory revenue on record.
Our Canadian business also achieved impressive growth from advisory activity with revenue, increasing 95% year over year.
I will also note that our Paris advisory team achieved several completions during the 3 months period and is performing at record levels heading into the second quarter.
We continue to see robust M&A activity levels, and our core segments and geographies.
And when compared to the same period, a year ago trading volumes declined modestly, reflecting reduced market activity, which led to a 19% year over year reduction and trading revenues.
This segment earned revenue of $52 million for the 3 months period of which 45 million came from our U S operations, principally from our international equity script.
Across our capital markets business, we continue to pursue opportunities for expanding our product capabilities and the development and ancillary products intended to complement our mid market offering and enhanced our long term earnings potential and looking at the current quarter. Although ECM volumes remained very strong on July <unk>.
Activity levels appear to be curbing as we head into August reflecting naturally reduced levels as we close out the summer and most geographies.
The ECM pipeline for September and looks strong although not at prior year levels and as mentioned, we're also delivering on our strong pipeline of higher margin advisory activities.
And next week, we are hosting our 40 <unk> annual global growth conference and it will be the second year hosting this event and and entirely virtual environment.
Despite the change of format Theres been no change and our commitment to providing unparalleled experience for our clients.
We have set another new record participation with over 600 companies innovators and entrepreneurs presenting from across North America, the UK and Europe and Australia.
Our global wealth management business delivered another strong quarter of impressive growth with firm wide client assets hitting a new record of 95 billion up 38% year over year.
Total revenue of our combined wealth management businesses amounted to $195 million and increase of 41% when compared to the same period a year ago.
Excluding significant items pretax net income from this segment doubled when compared to the same period, a year ago to $48 million.
Our North American business was the largest contributor to this growth with an 83% year over year increase and quarterly revenue to $104 million.
Advisers in this region continued to enjoy strong participation and the robust market for new issue activity and quarterly investment banking revenue in this segment amounted to a record $40 million a year over year increase of 211%.
With our strong focus on recruitment retention and recognition of our IAA teams, we've continued to commit resources and investment in the area, which in and see adviser experience and support them and growing their businesses.
The average book per IEA team in this business grew an impressive 54% year over year to $239 million.
And the U K and Crown dependencies client assets at the end of the first quarter amounted to a record $56 billion and increase of 28% year over year, excluding significant items. The first quarter pretax net income contribution from this business reached a record 19 million.
Up 21% compared to the same period in the prior year.
Last week, we were pleased to announce the closing of the previously announced investment in this business by HPE Fs.
We look forward to building upon this excellent partnership as we work together to enhance near and longer term value for this business and for our shareholders.
We also remain on track to close our acquisition of the investment management business of Adam and company at the end of our second quarter.
This development will increase our assets by roughly $3 billion.
And we expect it to be accretive to our adjusted earnings.
Finally, our Australian wealth management business contributed revenue of $17.5 million and excluding significant items pretax net income of $2.6 million for the 3 months period increases up 34% and 279% respectively. Looking ahead, we will.
To invest with discipline and the growth of all of our global wealth management businesses, which are fundamental to our long term stability.
We have been driving digital transformation throughout the organization for several years with a particular emphasis on our wealth management businesses and the infrastructure that supports them.
These investments have played a critical role and our resilience throughout the pandemic and it will continue to be critical to our long term growth and stability.
In conclusion, we are pleased to have had such a productive start to our fiscal year we.
We expect that certain market tailwind will moderate and coming quarters, but the global macroeconomic environment continues to provide a supportive backdrop for activities and our core mid market sectors.
Our substantially stronger wealth management franchise continues to provide stable earnings Foundation.
We are seeing both higher highs and higher lows across our businesses and we believe our competitive position has never been stronger.
Well, we know a full reopening will take some time people are gradually returning to the offices and <unk>.
Basically meeting in person with colleagues and clients, which is boosting spirits across the FERC.
We will always be firmly rooted in our core CG values, but we are acutely aware that generating sustainable value for our shareholders requires us to advance our strategic priorities and ways that provide benefits to both our business and our communities with that and mine. We are committed to operating with a greater consciousness.
Of our impact on our people our communities and the planet.
We've also continued to advance our capital markets and wealth management offerings, which focus on helping companies investors advance their sustainability objectives and contribute to a better world.
And everything we do we remain focused on delivering outstanding experiences for our clients, while managing the firm for profitable growth and shareholder value over the long term.
With that Don and I will be pleased to take your questions. Operator could you. Please open the lines.
Thank you, ladies and gentlemen, we will now conduct a question and answer session. If you'd like to ask a question. Please press star followed by 1 on your telephone keypad, if you'd like to withdraw. Your question. Please press star followed by 2 there will be a brief pause while we compile the Q&A roster.
Your first question comes from Rob Goff with Echelon. Please go ahead.
Good morning, and congrats on a very strong quarter, another strong quarter should day, thanks, Rob free and ROE.
Yes.
Perhaps turning to the U K to start you had posted.
And your priorities were building out distribution.
And then pursuing accretive financing opportunities to further expand the business without dilution could you perhaps.
Elaborate on those.
Sorry, Rob I didn't could you just.
And.
Rephrase that a little bit I didn't quite follow the question sure ill try 1 more time and.
The U K.
On your slides you talked about building out your distribution capabilities.
And 2 and the.
And the pursuit of accretive financing opportunities to expand the business. If you could perhaps talk a bit more towards clients that would be great. Yes.
So you mean UK well.
Yes, sorry, yes, yes, sorry, yeah, I mean, I wouldn't really characterize it as perhaps expanding our distribution capabilities I think it's more just increasing our.
And our client asset base through a program of.
And of organic growth and.
And.
Recruiting advisors and.
Being opportunistic and looking at <unk>.
Acquisitions.
And that's always been our path and our plan. So it's really it's really the growth of client assets through.
Through those methodologies that I just described so it's not and distribution is as such.
And then.
You mentioned not like non dilutive Rob that's a good question and maybe we need to be a little bit more transparent on that but the idea is we've got a partner and U K wealth.
We don't want to dilute ourselves at the capital at the holding company level for sure. We don't want to raise money when we've earned about $3 a share LTM.
And fund UK acquisitions, we brought and the partner for a reason to help.
Grow that business.
And a non dilutive fashion to our public company shareholders. It doesn't mean that our ownership and UK wealth wouldn't reduce over time, if we use their funds as opposed to our funds. We also have a pretty significant balance sheet. There we've got.
Post Adams and co.
And Adam and co we'd have about a 100 million pounds of debt Theyre done.
Yes and that at all.
With that we'd have about 100 million pounds of debt and then we've got ample capacity to put more debt on that business should we choose to use that to grow that business. So there's a lot of non dilutive ways to our public company shareholders to finance the growth. The continued growth of our U K wealth business. We continue to look at acquisitions in that market and in fact are very active.
Right now looking at a whole bunch of opportunities, we're going to continue to grow that business to scale.
Our margins now are up over 25% and that business clearly very strong, but we want to continue to grow that business and continue to achieve very good margins and enhanced profitability.
Does that answer your question Rob.
And that's great and if I may turn to Australia could.
Could you talk to your assessment of the opportunities and Australia both true.
Groupement tuck in acquisitions, and particularly on the conversion of the transactional accounts.
Yeah, great questions, all of which are great opportunities for us So I wish I could get to Australia to be honest, we haven't been there on a year and a half and those borders on opening up anytime soon.
Our business there.
Start by not answering your question our capital markets and business. There has materially benefited from the fact that we've stapled on a very successful wealth platform on to that business and you've seen those results.
And through for for for the last 5 quarters, including this quarter, although down on off its peak still substantially higher than it was prior to when we bought Patterson merge and Patterson.
So that's that's plenty of exactly according to plan, what's playing out better than plan is how we've grown that wealth business. So we've taken assets full fee paying assets as opposed to just.
Custody assets.
And growing them materially and that's been done in part from converting the book of custody assets into fee paying assets and in part attracting new advisors to the platform that we brought on.
12 teams Dawn and I'm looking at you and I say, it but about debt certainly over 10 teams into our UK platform, which is a surprise because that wasn't our initial objective. Our initial objective was.
Get the house in order before starting putting on additions on to the house, but theres been huge appetite from others. Other firms there to join our very successful platform. So we're on.
And we're monetizing that or.
Yes.
Doing that so that remains an opportunity and then we are there is consolidation in that marketplace and change in that marketplace and we are looking at acquisitions as well and that marketplace. If they were incremental and additive and accretive to our shareholders or no big rush there because I think we have a good critical mass there, but you never know what may come up and what we may do.
So I wouldn't rule it out completely but I also wouldn't expect and the announcement and the next 3 months are up.
Great.
And laugh.
If I may.
And that your capital position.
And as you prepared for evolving regulatory environment.
Are you looking for more restrictive regulations and prepared for that are on.
Interest and the thinking behind that Youre talking about in Australia are broadly speaking.
More broadly.
No yeah, we don't anticipate material changes in regulatory capital.
Broadly speaking to any particular market could have changes in Australia. In particular is a very it's a relatively capital light jurisdiction that could change, but the Canadian rules, if anything would be I'd hate to say this.
I'm not going to say it robust and let's say if anything capital capital rules would free up as opposed to become more onerous, but im not going to say that because all.
I'll get it wrong, but yes, we don't see a material change and their capital rules elsewhere, and we do have ample capital I think I think what we were alluding to and you never know words out of context here, Rob, but great question, but I think what we're alluding to is the business is very very very active.
And as that as the business is active that requires capital.
And especially when it's active on underwriting and active on margin and active everywhere. So we would have and using their capital significantly.
2.
To manage our business and make the money, we're making but that being said, we still have ample capital and beyond above and beyond that.
Okay. Thank you good luck and noticed that you'll be reading the slides, which is great.
And to make sure they are fully out of it okay. Thank you.
Cheers.
Your next question comes from Jeff Fenwick with Cormack Securities. Please go ahead.
Hi, Good morning, everyone Hi, Jeff.
Why don't we continue with the wealth management discussion here.
And focus on Canada first I mean, the margin there was a per.
Pretty sizable step up and it looks like that was really a factor of lower cost as a percentage of revenue on and.
And when I look at the percentage there I think that's about as low as it's been over the last couple of years. So.
And maybe can you just give us some color on what was happening there is it a change and the revenue mix, that's driving the lower relative compensation or how should we think about that.
There is nothing fundamental Jeff Great question, and there is nothing fundamental other than scale right certain comp is variable and certain comp is relatively fixed so as you increase the scale of the business the revenue the revenue on that business.
Comp comes down and I appreciate you'll find other quarters, where it did and sometimes it will depend on mix between new issue business and commission business, but for the.
To the large degree I mean, I think you will expect to continue to see comp coming down as a percentage of revenue as the overall revenue goes up and those the mix and revenue in Q1 was roughly 60% and kind of commission and fees, 40% new issue, sometimes that new issue revenues and slightly lower comp ratio then.
And the commission and fee ratio would be but I.
I don't think there's anything material to takeaway there.
And that's the way the numbers played out.
Okay, and with respect to the focus on growth going forward from here.
How do you think about your priorities and then about maybe taking off some some advisory teams with larger books do you still think there is.
And some smaller independents you can go after to take out a whole firm.
Or maybe is it just about extending your service offering tips and maybe start to manage more of these assets as well as advising them.
Yes.
Above.
Yeah, I mean, we.
We definitely want to continue to grow our Canadian wealth offering the same and the UK and Australia to be honest, but and we definitely have a lot of resources to do that.
We think this business could be substantially larger notwithstanding we're the largest independent.
Make that point, very purposely and most profitable and highest revenue and independent.
We think there we think this business can and should be bigger and we are actively trying to grow it through all of the above scenarios that you pointed to.
Okay and.
I think it was within the context of capital markets. You made some comments of expanding your product capabilities, but I can see how there might be leveraged into the wealthy and it as well so I guess theres been a little bit on media speculation around looking at and I can alternative debt platform, but.
And what type of things might be a nice add on to what you have the day I do think of your operating as being relatively fulsome, so their holes and.
And the menu there that you want to go and yes, I do think that as well.
Primarily capital markets, but you are right it could relate to wealth and.
And then when you talk about holes.
And.
Mid tier debt platform would be good I'm, just kidding and whatnot.
To comment on speculation, but but.
Like there are we do have.
Think about our client base, our mid cap line, but it's not materially different.
Your firm's client base or think about our.
Our retail offering and there's things that we don't offer that we should offer if we are going to become more full service. So we continue to assess that.
I use an example, it sounds silly, but something as simple as FX, Jeff like having a material foreign exchange offer and we do a lot of U S. We do a lot of Canadian deal. It would be good to be able to do FX and and intelligent fashion. For example, there's lots of little examples that theyre not going to be materially.
Move the needle but.
But we've got a big enough balance sheet became a franchise that we can certainly handle some additional capabilities.
Okay, and then maybe 1 last 1 here on on UK growth and then you did give us a bit and color on this earlier, but.
What's the status of the market there from a competitive position and if you're if you're looking to roll and other other businesses like Adam and company.
Granted you've got <unk> now that that's closed and they're with you as a partner. So is there still a pretty good pipeline here to continue to expand that and the yard yard and quite large and the domestic market huge huge pipeline and the market continues to consolidate little guys continue to get out there continues to be deals every day.
Youll notice that Raymond James just announced an acquisition there and the other day.
On.
And there is lots of there continues to be lots of activity and.
I don't want to say on 2 promotional Jeff. So I wanted to be a little careful book, but we've never been better positioned.
To get deals done.
And you look at our currency you look at our capital capability and look at our partner and you look at the fact that we've successfully very successfully integrated and several firms.
Real tangible benchmarks.
Out there and.
And we're really well known and the community now as a consolidator. So we're very well positioned that being said as you know.
No M&A is M&A and often you don't get to the finish line more often than not you don't get to the finish line, so who knows but we are the team. There is working very hard to continue to consolidate that marketplace.
Okay. Thanks for that color our Q. Thank you great questions.
Your next question comes from Graham Ryding with TD Securities. Please go ahead.
Hi, Good morning, good morning, just to follow on on that last theme.
When you look back and all the acquisitions, you've done and the UK wealth market and have your attention level spend.
A bit higher have they been as high as you would have targeted or wanted in terms of keeping assets and teams.
Hi, Graham on yes, they've been very high and certainly met and exceeded expectations and it hasnt really been a problem at all and there's always a little bit <unk>.
Ones and twos here and there, but both client retention and advisor retention has been very strong and I think that speaks a lot to our capabilities in terms of integration and.
Being on top of the socialization aspect of acquisitions.
It's been always been well received and we've been successful at doing it and known for doing it.
I guess, the telltale sign both on our UK wealth acquisitions or on a U S. M&A acquisitions I mean, if you notice in our financials, we keep on paying the earn outs that means people are over achieving what the targets that we set and those acquisitions are you'd love to pay earn outs. If you can.
So we've been paying our notes on all of our acquisitions and most of them have had some form of earn out payments. So that's a good thing and thats, a pretty obvious sign that they're performing better than it.
And at least the base estimate.
Okay great.
And then any any commentary in terms of.
Sticking with well just the organic flows and the quarter and he's.
Scott divisions, and Canada, UK, and Australia, and just any any context on where your flows positive.
And the quarter and then just on the recruitment side as well any activity there and the quarter to pull out or just any commentary on the on the pipeline.
Yeah. The flows for the quarter have been positive.
Both in the UK and in Canada.
In terms of organic net inflows so thats continued.
Meet expectations and continued to build.
On the recruitment and on the recruiting side.
The recruiting pace is the same as it's been we mentioned Australia already and it's been very active there, but even in Canada. The recruiting pace is fantastic, but we're operating from a much bigger base the person and we recruited and we started with a $10 billion asset base, we're up to 35 billion.
Okay keep moving the needle.
We got to keep the effort and intensified efforts so to speak so we're still talking to lots of people, hoping and lots of people are going to come over.
And it's easier than ever to sell this platform just given the success on the 47 teams or <unk> 46 teams that have come across so it's been good we've tracked we tracked and another very very well to large advisors from 1 of our independent competitors over the last.
A couple of months and both of them were sized and there were important additions. So things continue to continue to go there is some ebb and flows were in the middle of someone else and not much happens, but it will pick up again.
Okay.
And then I noticed that there is there was some commentary around.
The management and the UK wealth management.
And the platform purchased a 4% equity stake is that a new development and is that incremental to the 22% stake that HCS.
Is acquired and just wanted to try to think like how much.
I want to just Canaccord genuity O&M that UK wealth platform.
Well I think we've always contemplated having some direct equity program for the employee base and the management base within the UK wealth group. So this was just sort of the formalization of our AV and equity incentive plan for the for that particular group.
It's not completed and closed yet.
And do that over the next couple of weeks, but its estimated to be about 4%. So our.
Our interest of 78% after hps would be diluted down to say and that 75% plus or minus range dependent upon what the finalization of the.
Management participation plan is and most private equity partners that you bring into a situation like that want and management co investing with them. So this is not.
They are co investing at the same values that <unk> came in that this is not some kind of.
And free equity.
From that perspective so.
There is a part of that and obviously like the direct alignment there.
Sure. Okay and this is this is the management team running and your UK wealth platform correct and it's not not me not done.
And in case specific to UK.
Okay understood and then just my last question Mike.
Capital or working capital sort of theirs and Theres, a few things going on and the current quarter with.
The proceeds from <unk>.
But you're also investing and Adam co.
And any any context on sort of you're expecting your capital levels here too.
And to lift or to be relatively flat quarter over quarter.
And that's.
What are the key moving pieces and we should be aware of.
Yes, I think as Dan mentioned earlier on I mean, we have.
We're using debt in the UK to fund past acquisitions, we've got room and that debt capacity to fund future acquisitions, So how Adam and Koga, specifically funded is still to be.
Finalized, but it's quite conceivable that moving.
It could be fully funded with debt are substantially funded with debt.
And then as we go forward it will depend on the circumstances, but the combination of debt and equity is sort of the plan going forward.
And so our current capital obviously, we've taken and a fair amount of capital from the HCS transaction, even repaying the interim financing that we use to take out the convert so its.
It's fair to say that we are relatively capital flush right now we've got a number of strategic priorities going on as we've indicated but we've also said.
Pretty publicly that we're going to continue to be aggressive on buying back our stock. So we used $19 million last quarter between dividends and buying back stock I think.
We're going to continue to be relatively aggressive and and normal way and I don't think you'll see anything substantial at this stage, but and the normal way buying back our stock and continuing to lower our share count I mean, we brought our share count down from a high.
And I have 130 million shares down to sub 110 million shares and.
And that pace of activity is going to continue we are.
Making a lot of money and we're making a lot of cash and that gives us an opportunity to use that balance sheet to create value for our shareholders.
Okay. That's it for me thank you.
<unk>. Thank you.
There are no further questions at this time. Please proceed.
Okay, well listen thank you everyone I appreciate you've taken the time and the summer and.
I appreciate all your interest in our company I mean, this really <unk>.
Concludes our call for the first quarter and Don and I are of course available for any follow up questions. We've got our annual special meeting Tomorrow at 10, a M tomorrow feel free to dial in and we've got a new board member joining us as well on that.
And so youll see 40% of our board now will be.
Gender diverse for sure.
And obviously access details.
And our meeting were provided through our information circular and they have also been made available on our website.
And with that operator, thank you very much and we can close the lines and we'll talk to you again soon.
Ladies and gentlemen, this concludes your conference call for today, we thank you for participating and ask that you. Please disconnect your lines have a great day.
Okay.