Q3 2022 Newmark Group Inc Earnings Call
[music].
Greetings and welcome to the Newmark Group, Inc. Reports third quarter 2022 financial results Conference call. At this time all participants are in a listen only mode. A brief question and answer session will follow the formal presentation. If anyone should require operator assistance. During the conference. Please press star zero on your telephone keypad.
As a reminder, this conference is being recorded it is now my pleasure to introduce your host Jason Mcgruder head of Investor Relations. Thank you Jason you may begin.
Thank you operator, and good morning, Nu Mark issued its third quarter 2022 financial results press release and presentation summarizing. These results. This morning. The results provided on today's call compare only the three months ending September 32022, with a year earlier period, unless otherwise stated we.
We will be referring to results on this call only on a non-GAAP basis, unless otherwise stated.
non-GAAP terms include adjusted earnings and adjusted EBITDA.
Please see the section in today's press release for the complete <unk> updated definitions of any non-GAAP terms reconciliation of these items the corresponding GAAP results, how when and why management uses.
More information with respect to our GAAP and non-GAAP results.
It is available on our website and today's press release.
Okay.
Quarterly results presentation.
Any figures with respect to cash flow from operations discussed on today's call refer to net cash provided by operating activities, excluding loan origination and sales as well as the impact of the 2021 equity back.
Cash from the business with the same cash flow metrics, excluding employee loans for producers.
The outlook discussed on today's call assumes no material acquisitions share repurchases or meaningful changes in the company's stock price.
As expectations are subject to change based on various macroeconomic.
Political and other factors.
125 financial and operational targets do assume acquisitions. They are also subject to change for the same reason none of our targets or goals through 2025 should consider formal guidance I also remind you that the information on this call about our business that are not historical facts are forward looking statements within the meaning of section 27, a securities Act of 1933 as amended and section two.
<unk> Securities Exchange Act 93 enforcement such statements involve risks and uncertainties.
As required by law Newmark undertakes no obligation to update any forward looking statement for complete discussion of additional risks and uncertainties, which could cause actual results to differ from those contained in the forward looking statements.
Newmark Securities and Exchange commission, including but not limited to the risk factors set forth in our most recent Form 10-K.
Our 8-K filings, which are incorporated by reference and now happy to turn the call over to our host Barry <unk>, Chief Executive Officer of Newmark Group, Inc.
Good morning, and thank you for joining US with me today are <unk>, Chief Financial Officer, Mike <unk>, Our Chief Strategy Officer, Jeff Day, and our Chief revenue Officer Lou Alvarado.
The rapid rise of global interest rates has materially impacted transaction volumes as a result, our total revenues declined by 16%.
This environment has created confusion with respect to seller and buyer expectations regarding market pricing.
We expect a decline in volumes to continue until interest rates and cap rates stabilize.
We anticipate lower volumes well into next year, while we continue to generate solid adjusted EBITDA and cash flow.
Due to our diversified revenue streams and variable cost structure.
Fee revenues from management services servicing fees and other increased by 11%.
Led by strong improvements in our servicing business as well as continued growth in flexible workspace and global corporate services. We expect these recurring revenue businesses to grow throughout the cycle.
While we produced stronger leasing activity in industrial and retail during the quarter. This was offset by lower office volumes office leasing remains more active in the sunbelt regions compared to the traditional core metro areas.
Nearly all markets class a office space commands a growing premium to class B and C. Our professionals are actively collaborating with clients identifying opportunities to different differentiation for repurpose underutilized properties and maximizing returns for our clients.
Revenues for commercial mortgage originations improved year over year for Fannie Fanny Mae and mortgage brokerage and office industrial and lodging. However, they were offset by reduced activity.
Other areas.
<unk> sales volumes for all property types were down for the entire industry.
That driven transactions were particularly impacted with the office sector most affected.
Multifamily and retail where new market strong performed comparatively better.
With over $410 billion of global institutional real estate capital waiting to be deployed and $2 five trillion of commercial and multifamily debt maturing over the next five years, we expect industry volumes to bounce back relatively quickly once U S interest rates are no longer rising and have stabilized.
We have experienced generating cash flow under challenging market conditions and have a strong long term track record of growth and improving our fundamental.
Since our IPO in 2017, Newmark has doubled its revenues and more than doubled its adjusted EBITDA, while generating $1 $4 billion of cash flow from operations and $1 $5 billion from Nasdaq.
We also returned nearly $1 $3 billion of capital to shareholders reduce.
Our net leverage by nearly 90% and continue to invest in our business. The company company has steadily gained market share. We are now number three in the U S investment sales compared with number for last year and number five in 2017, we.
We have continuously added the most talented professionals in the industry have grown their product productivity, which has driven our market share gains are meaningful scale low leverage strong cash flow together with our $600 million revolving credit facility.
It leaves us well positioned to invest in growth as we execute our 2025 plan.
We see great opportunities as the industry continues to consolidate around well capitalized full service providers like Newmark additional growth opportunities include expanding our interdigital foot footprint.
Using capital for our clients, expanding our servicing and asset management platform and growing our management services with that I'm happy to turn the call over to Mike.
Thank you Barry and good morning.
Against the backdrop of lower industry wide investment sales volumes and declining origination activity.
Our revenues were down 15, 7% to $664 $6 million compared with $788 $1 million.
Expenses decreased by $62 3 million or 10, 6% as over 70% of our expenses are variable.
We are targeting $50 million of fixed cost savings by the end of next year of which we expect to realize $25 million in 2023.
Turning to earnings.
Adjusted EBITDA was $122 $5 million versus $174 $5 million.
The decline was largely due to lower capital markets revenue.
Our EPS was <unk> 35.
Paired with <unk> 50 last year.
To put this in context.
Last year's third quarter earnings were the best ever for the company.
This quarter's 35.
It was our second best third quarter ever and <unk> <unk> ahead of 2019.
During the quarter, we repurchased $10 1 million shares for $10 35 per share.
This reduced our quarterly weighted average share count by five 6% year on year.
Moving to the balance sheet.
We ended the third quarter with $229 $7 million of cash and cash equivalents.
The change in cash and liquidity from year end 2021 reflects cash flows from operations of $209 4 million offset by $281 $2 million for share repurchases to.
The change in NASDAQ value from December 2021 of $87 6 million cash used for acquisitions of $64 2 million.
And normal changes in working capital.
We remain in a very strong financial position with net leverage at five times.
Turning to full year 2022 guidance compared with 2021.
We are lowering guidance, primarily due to the anticipated year on year decline in industry wide capital markets transactions in the second half of 2022.
We expect total revenues of between two seven and $2 8 billion.
Compared with 2 billion $906 4 million.
We anticipate adjusted EBITDA of between 500 and $550 million.
597 5 million.
We expect our adjusted earnings tax rate to be approximately 19% compared with 18, 9%.
And we anticipate weighted average share count declined by 6% to 7% compared with $264 million.
Consistent with our net issuance since the IPO our target net share count issuance is expected to be an average of 2% a year or less.
We have included an illustrative model on page 16 of our Investor presentation that demonstrates the components of our diversified business that drive our earnings.
We are providing this hypothetical model to.
To help you understand that even in challenging market conditions Nu Mark's business generate strong adjusted EBITDA.
This model is not guidance and as shown for illustrative purposes only.
With that I'd like to open the call for questions operator.
Thank you we will now be conducting a question and answer session I would like to ask a question. Please press star one on your telephone keypad, a confirmation tone will indicate your line is in the question queue. You May Press Star two if you would like to remove your question from the queue participants using speaker equipment and may be necessary to pick up your handset before pressing the star keys.
One moment, please while we poll for questions.
Thank you. Our first question is from tending looser with Goldman Sachs. Please proceed with your question.
Hi, Good morning team. Thank you for taking my question. So thank you for the slides, they're obviously very helpful and I see that you.
<unk>.
Highlighted that you're on track to meet our 2025 target.
Help us understand how do we kind of get there.
Obviously initially you guys had laid out plans around organic growth and M&A within our 13% revenue growth and EBITDA growth respectively.
What segments do you play a bigger role now and do you see a bigger roll off inorganic growth versus organic growth and how should we think about margins as you get there.
Sure.
Thanks for the question.
I think that.
Certainly we still believe that our targets for 2025.
Are achievable and that those are our goals. We always believe that we can grow across every one of our businesses and that growth included both organic and inorganic growth.
Growth through acquisitions.
We see opportunities in.
Both in the U S and internationally and.
So that all of that continues.
We see with $400 billion of capital to invest in commercial real estate, two five trillion of debt maturities coming up over the next few years.
While there may be a temporary pause or decline in activity.
As Barry said, there is some stabilization in interest rates and some.
Understanding of where pricing is we think the activity will start to pick back up.
Let me add to that.
Without question.
We are an intermediary.
We are in a business when there is trading.
That's good for us.
In a period of discovery and confusion when interest rates are rising spreads are not set cap rates are not fully determined.
The delta between aspirations of buyers and sellers is not.
Stable and that that always bears.
At some point during the market when there is adjustment once interest rates settle.
And once cap rates are determined which is driven by interest rate transactions.
People will start trading again.
Theres a lot of money out there the banks are in good position to land Theyre, just not lending because of the nature of the rising interest rates and the spreads and uncertainty in respect of certain categories of real estate, but but this is not the first rodeo. We've all attended and the question is exactly when.
When that will settle down having said that with respect to our growth.
Have a clean sheet in.
In the international market, which we've we've acquired two companies in the U K.
I spent.
<unk> weeks in Europe last last month, and I will tell you that the reception for a firm like ours in those markets is enormously gratifying. So the opportunities in respect of a market, where there's a little bit of adjustment is actually good for us I think it will unleash.
Ill put put many professionals in a position to want to change and to want to explore and we're seeing that as an opportunity in many respects.
That's super helpful. Barry would you think that leverage increasing your leverage would be on the table in this market if an opportunistic deal were to present itself.
We've concentrated on mostly bolt ons.
<unk>.
Large teams talented people the DNA of our company is about.
Bringing in the best talent.
<unk>.
If something presented ourselves obviously, we will look at anything that presents itself.
<unk> made doing a major acquisition provides for an enormous amount of friction.
<unk>.
Conflict. So it's much more complicated for us we've had really good success.
And with tuck ins bolt ons.
Large teams talented people I mean, our objective is to bring the best talent enable and empower them with infrastructure and information.
And help them join the what's the deepest bench certainly in capital markets.
In the U S and the rest of the world. So.
So.
So to answer your question, we have we have.
$800 million of dry powder liquidity, we need more its easier to easy to go back to the well, but we're very careful and thoughtful in our purchases because at the end of the day when you create and finish all the plumbing and the distribution around the globe you wanted to all work together and.
To be synergistic and the machine works itself out when great people are working altogether throughout throughout the globe.
Got it.
For my.
Second question.
As we think about leasing revenues down 5% you talked about office leasing being a driver there could you perhaps give us more color on the current state of office leasing you've mentioned in the past that there should be large office transactions potentially next year with a lot of debt maturity and renewal.
Coming due so how should we contextualize pool that especially in the reality of a recession next year.
The debt maturity to $2 five trillion.
<unk>.
Our debt maturity as is with respect to capital markets people have to refinance.
Regardless of the state are there.
They are building. So that's that is without question a market that just will feed itself with respect to office.
Companies have been gathering.
Evidence.
On on what the state of office should look like.
Without question, it's going to be different.
Then it was prior but there.
There is very little <unk> that people will be in the office if its not three days four days a week and people will still need office it will be.
Conversions of some of the older B and C product that isn't suitable for repurposing or to renovate.
And that would that will be good for the market and one thing I can tell you in an inflationary market, it's not going to get any less expensive to build.
And then as supplies.
<unk> diminishes and demand increases as populations grow in many markets. There is still going to be a tremendous demand.
And the Delta between B and C buildings.
B b large so it'll it'll actually bring up the BMC buildings because to build a new building and some of these markets could cost between two and $3000 a foot.
And it's going to be very expensive to rent so it's actually going to create.
Less supply as demand comes back.
Thank you for that.
Thank you. Our next question comes from Alexander Goldfarb with Piper Sandler. Please proceed with your question.
Hey, good morning, good morning down there.
So just a few questions.
First.
Barry maybe just continuing on on the leasing front with office.
What are you guys seeing as far as.
Leasing trends, meaning.
There is some chatter that certain functions like back office like accounting right.
Even the top tier professional services or or companies are having those people work from home. So what are you seeing as you are your clients.
Go for new space or are assessed there currently are they are.
Are they all shrinking footprints are they growing are they trying to move more.
To different offices more to the Sunbelt I'm just trying to get a sense for how people are assessing their needs and I hear you on the on the flight to class eight certainly we see people willing to pay a premium for new construction, but at the same time does that mean, all the older generic stock becomes Swiss cheese, so it's sort of a two parter there.
It depends on the older stock I mean, there are certain types of buildings.
It can be converted to first class.
Product.
There are there are rental numbers in places like Soho and in markets, where the cast iron buildings rent for.
890, <unk> over $100 a square foot.
And they are in demand and they're rented so it really depends on the product and in certain businesses I think.
If there were a recession I think the equilibrium between Ceos and employees with.
<unk> changed somewhat Ceos want their people to come into the office.
So many advantages and the evidence is still information as to what the effect on productivity.
And not being in the office, but there are lots of young people, who are going to come back to the office, who want to see their fellow employees, who want to be part of a company not to.
Total virtual environment.
There are people that are going to work for some companies that have never been in an office never met anybody else in the office.
I don't know how it works, but I am not a big believer that in the long term that is going to be something that's sustainable.
You're going to still going to need.
The socialization the growth there.
Relationships that are built in the nuances of how to learn a trade and everybody is in some form of trade to be in the office, but what about the functions I mean, we've spoken to a number of companies.
Whether it's.
<unk> or.
Clients, where they are saying part of there.
Accounting function is now working from home or.
I mean, it does seem like there is some consolidation where front of office people, yes, youre right Barry or in the office, but it seems like companies are assessing do.
Do they need everyone back or they can have a certain segment of their employees work more from home or I'm. Just curious what you guys are seeing as you and Lou and others in the organization to speak with with your with your customers.
So Alex this is low.
We've seen some transactions some recent renewals with it.
And we've seen some where they have shrunk.
As Barry said that definitely means that chase for quality and when we say qualities fully monetize space right. So in order to get there.
<unk> the other thing we've seen is.
Since the end of summer, there's been an increasing occupancy in the buildings, we tend to track how many people are in the building, we're now getting into the high <unk> low <unk> percentage when before we were in the teens.
So definitely there is a trend it is going to be different as Barry said, it's going to be if you look at today when we track a lot of activity on Tuesday, Wednesday, Thursday kind of quiet in Monday and Friday.
But that doesn't mean, they don't need the space that just means they needed on Tuesday, Wednesday Thursday. So I think what we're seeing is a change in the space to much more collaboratively areas meeting space touchdown space a change in the density which is sometimes creating.
The ability to shrink.
But I think it's still a work in progress I still think we're at in the final decision mode, where people have said, but people that are renewed have renewals are having to make decisions.
The ones that we're working through right now.
Okay. Next question is on the mortgage business.
Clearly positive that it's primarily or maybe almost entirely multifamily, but at the same time.
Mortgage rates going up I would assume leads to less refinancing and certainly if capital markets activity is slowing that's got to impact mortgage originations and the LTV proceeds. So can you just give an update on how you see the mortgage business sort of over the next six to 12 months.
Given obviously the pause that's gone on in the general capital markets business.
Sure.
First I would say that I wouldn't characterize our recent volume is almost exclusively multifamily. We do have a significant component of multifamily business, particularly Fannie Mae, which is the higher margin GSC business.
But we've attracted and Barry talks about this a lot and this is where the talent that we bring in really shines.
In a normal environment when there are $30 $40 50 lenders that could potentially finance the deal.
We're running more of a process and while creativity and strategy is important.
Less so than in a cycle like this with people that we've attracted are really almost more like investment bankers and brokers and they are creating transactions out of distress situations for screen size and other types of structures that perhaps the average mortgage banker or broker wouldn't be able to.
Two.
<unk>.
Performance. So what I would say is that I would call that with interest rates, where they are until they settle out we're going to see a decrease in activity, but I also believe that we're going to get a disproportionate share of the activity that's out there because of the people that we have and because we have such a robust GSE business.
The final question is.
Barry right now we have negative cap rate is still below our financing costs I think we're all aware of the cap rates are a lot stickier.
Then that most people think of.
How long do you think buyers are willing to tolerate negative leverage meaning is it as long as they underwrite maybe.
Two years of negative leverage before their pro forma to go positive there fine or how do you how do you view the.
The sustainability of negative leverage.
It's going to require more cash.
And the prize.
There's a lot of loans out there that that banks don't want to renew.
That with some more equity into the transactions these lenders will extend loans.
There'll be some of that.
There will be more.
Larger cash buyers.
There will be.
There'll be some opportunity to advise clients on how to restructure their loans buy down their loans extend their loans that will be an opportunity for.
For rescue.
Rescue capital perhaps equity.
Other forms of replacement of equity.
And that's that's an opportunity for the creative people.
We're seeing that now.
And we're involved in transactions that require a lot more thought and a lot more reach in respect of where the capital is.
And then everything is a function of like a development deal.
Owners or owners are going to have an appetite based on their view of the long term value of the market. So to develop a building you don't get any cash flow you have Barry for years and your point about how long will they take negative leverage if they believe the asset is priced right and it's a long term market where demand is going to increase.
And there is an opportunity to get an asset because theres less competition, but they want to own that asset. It will adjust we've lived in environments, where 6% 7% interest rates.
We're around.
I mean for the last 10 years interest rates were abnormally low.
I mean, I remember functioning in a market when interest rates are 18% once the market settles in and people know what they are buying it will reset there'll be some price capitulation.
Some buyers who are loaded to bear who believe in the long term nature of real estate over the over over time, and we will invest we're seeing people right now in this disconnect.
They are willing to pay more they are willing to accept more interest and the questions will have sellers be willing to reduce their price and theres a little bit of a delta, but it's closer than we think and it.
It could turn the same way everything.
Everything turns and surprises us I mean look how we came out of the pandemic people would have predicted it would have been way longer than it was.
And.
The feeling was much worse than it ended up being I mean, we came out of the pandemic like a bat out of Hell, we're going to come out of this like a bad out of the held the same way we did in the pandemic because we've attracted talent.
Our people are creative.
We understand real estate from the inside out.
We know what it means to be in a troubled environment.
Into workout periods before.
In some respects.
That's it.
The spreads really widen and interest rates remain really high.
Some.
Some people might say that over the long term for a 10 year run that could be a really good thing because a lot of the wealth is created through cap rate compression and the higher the cap rate the higher the interest rate the bigger the reset.
Once it starts trading Youll get another 10 year run of activity on people buying stuff.
Capitalizing at cap rates going down because of the availability of capital and the desire to invest.
No.
We're here.
We're an intermediary we have very little risk I think if you look at the model and focus on that model. The hypothetical model that we said you.
At our business and what the risks are.
Our solid cash flow company.
With a really very transparent look at the downside with an incredible amount of talent in the business. We've grown on the upside. We are beta is higher is when when it's when it's when it will settle we will come back with.
Like I said.
And you know and are even in our hypothetical scenario the cap rates.
And our hypothetical scenario or five seven so.
Downside scenarios that we put in the release.
Thank you Barry.
As a reminder, if you'd like to ask a question. Please press star one on your telephone keypad.
Our next question comes from Jade Rahmani with <unk>. Please proceed with your question.
Thank you very much just wanted to confirm the liquidity table and we should be taking the $230 million of cash and adding it to.
The Undrawn revolver right. So liquidity is 830 mill.
Yes, that's absolutely right Jade and we even have a slide in the slide deck, where we show.
If you take our cash on hand, plus the cash we'll generate from the business.
Plus the Undrawn revolver.
We still believe we have a $1 billion of capital too.
Continue to invest in the business and return capital to shareholders.
Okay great.
<unk>.
Interesting to note that in your comments you chose to say you expect an extended period of decline what informs that expectation and thats with respect to capital markets volumes.
We couldnt, we couldnt predict the pandemic.
We couldnt predict Ukraine.
It's Adam.
It's hard to determine exactly when something.
I mean, we view.
People have said we've were overzealous at times that we under.
Guided.
We want we want to stay the right thing based on the knowledge we have at hand.
My personal belief.
Is it shorter it'll turn quicker.
But <unk>.
You tell me the banks.
Banks will decide when they want when they start lending.
And the Fad.
We will decide when they stop raising interest rates.
And I don't think anybody has the answer completely I think it's subject to getting arms around inflation, we have an election coming up which is driving that aggressive attack on inflation.
Just how aggressive they get it.
No one could to determine interest interest rates drive.
Transactional volume.
That's just the nature of our business.
Right.
That makes sense and I appreciate the conservative approach CBRE noted that.
Americans business.
Timber was really when volumes begin to decline down 43% year on year did you see it.
Same kind of a trend.
Things began to worsen before that.
Yeah, I'd say for Us Jade.
We started to see a little bit before September so as we got into August it started to slow.
The mid to late part of August and certainly accelerated into September .
And could you give any color as to how leasing is trending so far in the fourth quarter.
What magnitude of decline is reasonable to expect I know that the 2023.
In a hypothetical scenario of illustration shows.
One third or less of the shortfall in capital markets to translate lower leasing but are you seeing.
Declines in leasing thus far in the quarter.
Yes, I would say, we would expect our leasing to be down.
Somewhere in the neighborhood of where it was Q3 and may be down a little bit more than that.
And if you look at the hypothetical model we model down.
For the trailing 12 months, I think 10% to 15% so somewhere in that neighborhood. You should also note that we've had.
Two years of not a great office leasing market.
The confusion about what the office market looks like so we're working off of a different kind of bottom there's going to be a point where ceos.
And employees.
Bridge the gap of what what the office should look like and there's got complete understanding.
That could.
Back that could get better and we're seeing it get better we're seeing more people back in the office as Lou said.
We're seeing more Ceos get their arms around the impact on productivity.
There is a certain amount of skepticism as to whether people are really working at home.
I mean they.
They are willing to go to restaurants theater.
Madison Square garden, but they are going to come into the office eventually thats going to change.
When you see some job loss.
And some change in the economics that puts a little bit of fear.
In respect of Hey, I need to be in front of my boss.
Need to be better than what I do.
Being together with clients is a better way to conduct business.
I mean, some of that is going to be part of the evolution, but we're working off a base that has been taking a beating for three years.
Thanks, very much just finally, a technical question.
Tax rate adjusted tax rate at 19% now from 17th 19 previously any changes to what drove those changes in the share count or anything else there.
When we bought back more stock in the third quarter, we bought back a little over $100 million.
I think it was around 10 million shares so that obviously will drive down our expectations for the year.
And what's interesting I think Barry had mentioned.
Ed.
Our new 2022 guidance.
We're trading at below five times adjusted EBITDA.
And if you even look at the mid point of our hypothetical model.
It's still below six times I think it's about five seven times. So we think the stock is still a great investment.
And that's why you've seen us continue to buyback.
Thank you.
For taking the questions.
Yeah.
Thank you. Our next question is from Patrick O'shaughnessy with Raymond James. Please proceed with your question.
Good morning in the office sector to what extent are buyers waiting to see how far rents and vacancy might fall before we're willing to step in or is it really just that theyre waiting out the interest rate volatility that you've spoken to already in this call.
I think they're mostly waiting for the interest rate volatility.
I think I think sellers are aware that the values of what.
And want to sell.
Also.
Sort of.
A lot of funds around that we'll probably sell not as excited about the capture of there theyre promotes and move on to their next funds to take advantage of the disruption in the industry at better better returns.
So there's going to be some of that is cleaning out.
The market that will create activity.
Okay.
Got it and then we get a little bit more commentary on the industrial and warehouse sector, Obviously, Amazon reported yesterday and it wasn't all that great.
I'm just hearing a slowdown in terms of imports.
And online commerce. So what are you seeing out there in the industrial warehouse space.
There is interesting so high street retail.
Is doing as well as I can I can remember in terms of there.
The high end brands.
And then there is the formation of a lot of new brands around the globe for retail.
And.
As different from the past many of them are looking to create their own distribution.
Turing into three pls on their own and subsequently buying their own.
Our supply chain and logistics capabilities, so as to not be embedded in the system of another.
Another company like <unk> like Amazon.
So I think youre seeing more formation of that kind of activity.
You're still you still have more.
Near shoring.
And a desire to manufacture things closer to home the frictional cost of shipment is still there's still an aspect of making those kind of decisions. There is probably not in a lot of there's not a lot of product interest rates will affect the amount of things he can't build.
And there are fewer opportunities to develop industrial and some of the really loaded market but.
Amazon has slowed down on some warehouse and logistics, but I think youll see other people stepping in and picking up some of that demand.
And a lot of it has to do with inventories and how inventories.
Load up and sales and we're seeing sales reflate.
Got it I appreciate that color and then last one for me curious if we can get your reaction to class a shareholders voting against three of the four director nominees recently.
Yes, I think.
Certainly we had the annual shareholder meeting.
All the directors were.
Renewed and we think we have a strong board we will look to continue to make it stronger overtime.
Thank you.
Okay.
Thank you there are no further questions at this time I would now like to turn the floor over to Mr. Barry Carlson CEO for any closing comments.
I'd like to thank you all for joining us today, and we look forward to updating you on the business next quarter.
This concludes today's conference you may disconnect your lines at this time. Thank you for your participation.
Okay.
Okay.
Yeah.
Okay.