Q1 2024 SHF Holdings Inc Earnings Call

Okay.

Operator: Thank you for standing by. My name is Benjamin, and I will be your conference operator today. At this time, I would like to welcome everyone to Safe Harbor Financial's First Quarter 2024 Earnings Call. All lines have been placed on mute to prevent any background noise during the speaker's remarks.

Benjamin: Thank you for standing by my name is Benjamin and that will be your conference operator today.

Benjamin: At this time I would like to welcome everyone to Safe Harbor financial first quarter 'twenty 'twenty four earnings call.

Benjamin: All lines have been placed on mute to prevent any background noise.

Benjamin: The Speakers' remarks, there'll be a question and answer session.

Benjamin: We'd like to ask a question. During this time simply press star one on your telephone keypad. If you would like to withdraw your question Press Star one again.

Operator: There will be a question and answer session. If you'd like to ask a question during this time, simply press star 1 on your telephone keypad. If you would like to withdraw your question, press star 1 again. Thank you. I would like to turn the call over to Erika Kay. Please go ahead.

Benjamin: I'd like to turn the call over to Eric Okay. Please go ahead.

Eric: Thank you good afternoon, everyone and welcome to the first quarter 2024 earnings conference call for Safe Harbor financial before we start. Please note that remarks made today include forward looking statements, including statements with respect to the company's outlook and the company's expectations regarding its market opportunities.

Erika Kay: Thank you. Good afternoon, everyone, and welcome to the first quarter 2024 earnings conference call for safe harbor port financial. Before we start, please note that remarks made today include forward-looking statements, including statements with respect to the company's outlook and the company's expectations regarding its market opportunities and other financial operational matters. However, each forward-looking statement discussed on today's call is subject to risks and uncertainties that could cause actual results to differ materially from those projected in such statements.

Erika Kay: Actual results and the timing of certain events may differ materially from the results or timing predicted or implied by such forward-looking statements, and reported results should not be considered as an indication of future performance. Additional information regarding these factors appears under the heading Risk Factors in the Company's Filings with the Securities and Exchange Commission, or the SEC, including the company's annual report on Form 10-K for the year ended December 31, 2023, as well as limitation factors included in the forward-looking statements in the company's annual report on Form 10-K for the year ended December 31, 2023, which are available at www.sec.gov or on our website at

Speaker Change: Other financial operational matters. Each forward looking statements discussed on today's call is subject to risks and uncertainties that could cause actual results to differ materially from those projected in such statements.

Speaker Change: Actual results and the timing of certain events may differ materially from the results or timing predicted or implied by such forward looking statements and reported results should not be considered as an indication for future performance.

Speaker Change: Additional information regarding these factors appears under the heading risk factors in the company's filings with the Securities Exchange Commission or the SEC, including the company's annual report on Form 10-K for the year ended December 31, 2023, as well as limitation factors included in the forward looking statements in the company's annual report on Form 10-K.

For the year ended December 31, 2020, which are available at www SEC Gov or on our website at IR <unk>.

Erika Kay: The forward-looking statements in this call speak only as of today's date, and the company undertakes no obligation to update or revise any of these statements. Also, during the call, Safe Harbor will present both gap and non-gap financial measures. The reconciliation of non-gap-to-gap measures was included in SAFE's earnings press release, which you can find on the company's investor relations website or on the FDC website. Finally, the content of this call may contain time-sensitive information accurate only as of today, May 13, 2024. SAFE undertakes no obligation to revise or otherwise update any statements to reflect events or circumstances other than the date of this call. All dollar amounts expressed today are in U.S. dollars.

Speaker Change: H financial dashboard. The forward looking statements in this call speak only as of today's date and the company undertakes no obligation to update or revise any of these statements.

Speaker Change: Also during the call Safe Harbor, we will present, both GAAP and non-GAAP financial measures a reconciliation of non-GAAP to GAAP measures is included in today's earnings press release, which you can find on the company's Investor Relations website, Brian SEC Web site.

Speaker Change: Finally, the content of this call may contain time sensitive information accurate only as of today May 13 2024.

Speaker Change: I think Jeff Holdings, Inc. Undertakes no obligation to revise or otherwise update any statements to reflect events or circumstances other than the date of this call. All dollar amounts expressed today are in U S currency presenting today will be Sandy <unk>, <unk>, Chief Executive Officer, and Jim <unk>, Chief Financial Officer, Steve Harker.

Sundie L. Seefried: Presenting today will be Sundie Seefried, Chief Executive Officer, and Jim Dennedy, Chief Financial Officer, of Safe Harbor. I'll now hand the call over to Sundie. Sundie, please go ahead.

Speaker Change: Now hand, the call over to Sandy Sandy. Please go ahead.

Sundie L. Seefried: Thank you, Erika, and welcome to our first quarter 2024 earnings. We entered 2024 with our most expansive suite of financial compliance products and services in place. In the first quarter, we specifically focused on advancing newer lines of business as we continue to drive more diversified income streams and enhance our position as a premier financial services provider for cannabis-related businesses, or CRBs, across the country. It is important to understand the significance of our lending program in the context of the obstacles CRBs continue to face, even with regulatory changes in motion, when trying to gain access to capital to grow their business. Traditional banks and credit unions remain hesitant to engage in Canada's financing due to the industry's complex structure.

Sandy: Thank you Erica and welcome to our first quarter 2024 earnings call.

Sandy: We entered 2024 with our most extensive suite of.

Sandy: Financial compliance products and services in place in the first quarter, we specifically focused on advancing newer lines of business as we continue to drive more diversified income streams and enhance our position as a premier financial services provider for cannabis related businesses or CRB.

Sandy: Across the country.

Sandy: It is important to understand the significance of our lending program in the context of the obstacles CRB has continued to face even with regulatory changes and motion Im trying to gain access to capital to grow their businesses.

Sandy: Traditional banks and credit unions remain hesitant to engage in Canada. This financing due to the industry's complex structure.

Sundie L. Seefried: And if they do participate, loans often carry high interest rates with less favorable terms compared to loans provided to businesses in other sectors. Given our success in serving over 750 clients through our proven compliant cannabis finance infrastructure and facilitating over $22 billion in deposits across 41 states since our inception in 2015, incorporating lending into our platform was a natural extension for the business. Safe Harbor is one of just a handful of financial service providers capable of providing CRBs with access to compliant deposit tools and traditional lending.

Sandy: They do participate loans, often carry high interest rate with less favorable terms compared to loans provided to businesses in other sectors.

Given our success in serving over 750 clients to our proven compliant handed this finance infrastructure and facilitating over 22 billion in deposits across 41 states since our inception in 2015, incorporating lending into our platform was a natural extension for the business.

Sandy: Safe Harbor is one of just a handful of financial service providers capable of providing service access to compliant deposit tools and traditional lending our results in the first quarter demonstrate the success. We have achieved in developing this high margin business channel to further enhance our compare.

Sundie L. Seefried: Our results in the first quarter demonstrate the success we have achieved in developing this high-margin business channel to further enhance our competitive position. To provide some perspective on the growth of our lending program since it was first introduced in 2022, it is important to understand how our revenue composition has evolved over the past year. Given our success working with financial institutions to onboard, monitor, and ensure compliance with CRB funds, we have accrued a strong deposit base from which to lend.

Sandy: This position.

Sandy: Rice with perspective on growth of our lending program. Since it was first introduced in 2022. It is important to understand how our revenue composition has evolved over the past year, given our success working with financial institutions to onboard monitor and ensure compliance with CRB sponge, we accrue a strong deposit base.

Sandy: From which to land.

Sundie L. Seefried: To address our clients' increased requirements for growth capital, we have worked closely with increased deposits result in higher lending capacity. Given Safe Harbor's unique lending capabilities, we believe new lending opportunities will help drive strong organic deposit growth. When we began ramping up our lending program in Q1 2023, loan interest income was a nominal percentage of our business at approximately 11 percent. At the end of Q1 2024, the value of our loan book nearly tripled year over year, and loan income represented just over 40 percent of revenue in the quarter.

Sandy: Our clients increased requirements for growth capital, we have worked closely with our financial partners to lend against deposits increased deposits result in higher lending capacity given safe harbors unique lending capabilities, we believe new lending opportunities will help drive strong organic deposit growth.

Sandy: When we began ramping up our lending program in Q1 2023 loan interest income with a nominal percentage of our business at approximately 11% at the end of Q1 2024, the value of our loan book nearly tripled year over year and loan income represented just over four.

Sandy: 40% of revenue in the quarter.

Sundie L. Seefried: The results clearly demonstrate marked acceptance of this truly unique capability and support our goal of creating a more diversified income stream. Our business model centers on leveraging our experience in Canada's finance and our proprietary and compliant FinTech platform to create a one-stop-shop financial service center for Canadian businesses across the country. By expanding our product and service offerings, we have proven our ability to scale and differentiate Safe Harbor from the competition, which faces high barriers to entry in providing the same array of services due to the high level of compliance, oversight, and monitoring required.

Sandy: The results clearly demonstrate market acceptance of this truly unique capability and support our goal of creating a more diversified income stream.

Sandy: Our business model centered on leveraging our experience in Canada finance and our proprietary <unk> compliant syntech platform to create a one stop shop financial service center for Kansas businesses across the country.

Sandy: By expanding our product and service offerings, we have proven our ability to scale and differentiate safe harbor from competition, which experienced high barriers entry and providing the same array of services due to the high level of compliance oversight and monitoring required today.

Sundie L. Seefried: Today we are less reliant on our depository fees to drive our growth. We are now operating multiple synergistic business channels with increasing income being derived from loan interest, lending fees, and investment income. As a result, I am pleased to report that in the first quarter of 2024, our loan income increased 250% year over year to $1.6 million in the first quarter of 2024, compared to $466,000 in the comparable period of 2023.

Sandy: We are less reliant on our deposit towards the east to drive our growth.

Sandy: We are now operating multiple synergistic business channels with increasing income being derived from London interest lending fees and investment income as a result, I am pleased to report that in the first quarter of 2024, our loan income increased 250% year over year.

Sandy: One 6 million in the first quarter of 2024 compared to 466000 in the comparable period of 2023 as I mentioned during our Q4 2023 call. Our deposit base has decreased due to the July 2023 termination of our master services and revenue share.

Sundie L. Seefried: As I mentioned during our Q4 2023 call, our deposit base decreased due to the July 2023 termination of our Master Services and Revenue Sharing Agreement with Central Bank in Arkansas. As a result, our total number of client accounts dropped from 1,040 as of March 31, 2023, to 757 as of March 31, 2024, which negatively impacted our quarterly depository fees. For the first quarter of 2024, these fees decreased 28% to $1.62 million, compared to $2.25 million in the first quarter of 2023.

Sandy: Agreement with Central Bank in Arkansas.

Sandy: As a result, our total number of clients accounts dropped from 1040 as of March 31, 2023 to 757 as of March 31, 2024, which negatively impacted our quarterly depository fees for the first quarter of 2024 Dcs decreased 28%.

Sandy: 162 million compared to Q3 to $5 million in first quarter of 2023.

Sundie L. Seefried: A decrease in depository fees does not surprise us due to the present market and the need to increase deposits at all financial institutions. We anticipated this change in the market and will remain competitive with our pricing to continue to retain and attract new clients. Our primary focus is to continue to attract lending opportunities, which in turn creates relationships with businesses for the long term. We believe the key takeaway from our first quarter results is our ability to provide our customer base with additional value-added products and services, such as our high-margin lending program, where we believe we will remain at the forefront of the cannabis finance industry.

Sandy: A decrease in depository fees does not surprise us due to the present market and need to increase deposits all financial institutions. We anticipate this change in the market and remain competitive with our pricing to continue to retain and attract new clients. Our primary focus is to continue to attract.

Sandy: Lending opportunities, which in turn create relationships with businesses and.

Sandy: Long term.

Sandy: We believe the key takeaway from our first quarter results is our ability to provide our customer base with additional value added products and services such as our high margin lending program, where we believe we will remain at the forefront of the cannabis finance industry. In addition.

Sundie L. Seefried: In addition, with a greater array of financial tools now available for our platform, we are positioned to capture new customers and, in turn, add new deposit accounts. We will lead with lending as more and more financial institutions with signable bank balances look to safe harbor to support the additional banking needs of these cannabis businesses. Many of these financial institutions do not want to attempt to replicate our model, as it has proven extremely difficult to do.

Sandy: With a greater array of financial tools now available for our platform, we are positioned to capture new customers and in turn add new deposit accounts.

Sandy: We will lead with lending as more and more financial institutions with Seinfeld Bank balances look to safe Harbor to support the additional banking needs of these candidates businesses. Many of these financial institutions do not want to attempt to replicate our model as it has proven extremely difficult to execute.

Sundie L. Seefried: Our near-term growth strategy is to acquire portfolios from banks looking to exit the business, increase our deposit base, and further leverage our platform to meet the demands of CRBs across the country. With the rollout of more and more deposit and credit tools, along with our ability to serve large multi-state operators, or MSOs, in every legal market across the country, we are strategically positioned for growth. For example, with the launch of our interest-bearing commercial deposit accounts in 2023, more and more CRBs are recognizing the breadth of our service offering.

Sandy: Our near term growth strategy is to acquire portfolios from banks looking to exit the business increase our deposit base and further leverage our platform to meet the demands of CRB across the country.

Sandy: With the rollout of more and more deposit and credit tools, along with our ability to serve large multi state operators or msos in every single market across the country, we are strategically positioned for growth.

Sandy: For example, with the launch of our interest bearing commercial deposits accounts in 2023, more and more CRB are recognizing the breadth of our service offering.

Sandy: It is also important to note that our business fundamentals remained strong resulting in continued improvement to our bottom line. We impactful we reduced our total operating expense by over 36% to $3 $73 million in the first quarter of 2024 compared to.

Sundie L. Seefried: It is also important to note that our business fundamentals remain strong, resulting in continued improvement to our bottom line. We impactfully reduced our total operating expense by over 36% to $3.73 million in the first quarter of 2024, compared to $5.8 million in the first quarter of 2023.

Sandy: $5 8 million in first quarter 2023, these improvements improved operating efficiency to deliver positive net operating margins.

Speaker Change: Before I turn the call over to Jim to discuss our first quarter results I would like to discuss the incredible step forward made recently in legitimizing the Kansas industry with the proposed rescheduling our candidates from schedule, one substance to a schedule III substance and what this means for our industry.

Sundie L. Seefried: These improvements improved operating efficiency to deliver positive net operating margin. Before I turn the call over to Jim to discuss our first quarter results, I would like to discuss the incredible step forward made recently in legitimizing the cannabis industry with the proposed rescheduling of cannabis from a Schedule I substance to a Schedule III substance and what this means for our industry's growth as well as safe harbors. We believe the rescheduling of cannabis will be a significant catalyst for the industry, leading to greater access to traditional financing channels that have far too long been inaccessible.

Jim: <unk> growth as well as safe harbors, we believe the rescheduling of candidates will be a significant catalyst for the industry, leading to greater access to traditional financing channels that have slower Q long been and this festival the prospect of rescheduling cannabis would go a long way and evening the playing field.

Sundie L. Seefried: The prospect of rescheduling cannabis would go a long way in leveling the playing field for our cannabis business. Without the constraints of Section 280E, the Internal Revenue Code, which prohibits businesses dealing with Schedule 1 substances from writing off business expenses on their federal tax returns, these businesses can deliver much stronger financial returns.

Jim: For our Canada businesses without the constraints of section two Adv, the internal revenue code, which prohibits businesses dealing with schedule one Scott just from writing off business expenses on their federal tax returns. These businesses can deliver much stronger financial returns in the near term.

Sundie L. Seefried: In the near term, we believe the potential for rescheduling will attract more capital to the industry, allowing for greater growth and financial stability. In effect, these businesses will have more money to deposit into their bank accounts, which could potentially lead to greater lending opportunities for state power. The rescheduling of cannabis would be a huge win for the cannabis industry, including Safe Harbor. As more financial institutions open their doors to cannabis businesses, we expect that demand for our services to support these businesses will dramatically increase.

Jim: We believe the potential of rescheduling will attract more capital to the industry, allowing for greater growth and financial stability.

Jim: These businesses will have more money to deposit into their bank accounts, which potentially lead to greater lending opportunities for safe Harbor.

Jim: The rescheduling of candidates would be a huge win for the cannabis industry, including safe Harbor as more financial institutions open their doors to Canada businesses, we expect the demand for our services to support these businesses will dramatically increase issues.

Sundie L. Seefried: Issues with payment networks will unfortunately continue to exist, leaving the industry predominantly cash-intensive, in addition to the fact that cannabis will remain under the Controlled Substance Act. Another catalyst for the industry's growth is the SAFER Banking Act, which will allow state legal cannabis businesses to transition from being primarily cash-based operations and allow industry participants to gain greater access to traditional financial institutions. While this act is moving closer to becoming law, it does not eliminate the need to meet the compliance and oversight requirements of the Bank Secrecy Act, or BSA.

Jim: Issues with payment networks will unfortunately continue to exist leading the industry predominantly cash intensive in addition to the checks that candidates will remain under the controlled substance Act.

Jim: Another catalyst for the industry growth is safe banking act, which will allow state legal cannabis businesses to transition from being primarily cash based operations and allowed the industry participants to gain greater access to traditional financial institutions.

Jim: This act is moving closer to becoming law. It does not eliminate the need to meet the compliance and oversight requirements of the bank secrecy Act or BSA.

Sundie L. Seefried: Most financial institutions are either unable or unwilling to undertake the compliance management needed to process these funds. Therefore, we view the SAFER Banking Act as a neutral event for Safe Harbor given the continued need to navigate the BSA.

Most financial institutions are either unable or unwilling to undertake the compliance management needed to process. These funds. Therefore, we view the safer banking act as a neutral event for safe Harbor, given the continued need to navigate the BSA it.

Sundie L. Seefried: It is becoming increasingly important to ensure new businesses entering the market are properly processed and managed. Over the past 10 years, we have tailored our Syntech platform to expand with the evolving Canvas regulatory landscape. Our ability to streamline operations and ensure proper compliance is unmatched. The cannabis industry remains complex and will continue to change. We pride ourselves on our unique capability to consistently deliver trusted financial services to cannabis entrepreneurs nationwide. I'd now like to turn the call over to Jim to discuss our financial results for the quarter ended March 31st, 2024. Jim?

Jim: It is becoming increasingly important to ensure new businesses entering the market are properly processed and managed.

Jim: Over the past 10 years, we have tailored our fintech platform to expand with the evolving canvas regulatory landscape.

Jim: Our ability to streamline operations and ensure proper compliance is unmatched the cannabis industry remains complex and we will continue to change we pride ourselves and our unique capability to consistently deliver trusted financial services to the cannabis entrepreneurs nationwide.

Jim: I would now like to turn the call over to Jim to discuss our financial results for the quarter ended March 31, 2020 for Jim.

Jim: Thank you Sandy and good afternoon, everyone.

James H. Dennedy: Thanks, Sundie, and good afternoon, everyone. Total revenue in the first quarter was $4.1 million compared to $4.2 million in the prior year period, primarily attributable to a decrease in investment income and Deposit, Activity, and Onboarding. This decrease was a result of fewer accounts being opened and lower deposit balances in the current period versus the prior year period. However, the decline in these two revenue streams was offset by a substantial increase in loan interest income by more than 250% in the current period to $1.6 million versus the prior year period of $466,000.

Jim: Total revenue in the first quarter of 2024 was $4 1 million compared to $4 2 million in the prior year period.

Jim: Primarily attributable to a decrease in investment income.

Jim: And deposit activity and Onboarding income.

Jim: This decrease was a result of fewer accounts being opened and lower deposit balances in the current period versus the prior year period.

Jim: The decline in these two revenue streams was offset by a substantial increase in loan interest income of more than 250% in the current period to $1 $6 million.

Jim: Versus the prior year period of $456000.

James H. Dennedy: Operating expense in the first quarter of 2024 decreased by more than 35 percent to $3.7 million compared to $5.8 million in the prior year period. The lower operating expenses in the first quarter were primarily driven by significantly lower compensation and employee benefit expense, including stock-based compensation expenses, lower Advertising and Marketing, and lower General Administrative.

Jim: Operating expense in the first quarter of 2024 decreased by more than 35% to $3 $7 million.

Jim: <unk> to $5 8 million in the prior year period.

Jim: The lower operating expenses in the first quarter were primarily driven by significantly lower compensation and employee benefit expense, including stock based compensation expense.

Our advertising and marketing expense.

Jim: Lower general and administrative expenses.

Jim: The company reported net income in the first quarter of 2024 of nearly $2 million versus a net loss of $1 4 million in the prior year period, primarily due to the company generating positive operating income during the first quarter of 2024 and favorable changes to the fair value of our warrant liability.

James H. Dennedy: The company reported net income in the first quarter of 2024 of nearly $2 million versus a net loss of $1.4 million in the prior year period, primarily due to the company generating positive operating income during the first quarter of 2024 and favorable changes to the fair value of our warrant liability and the fair value of deferred consideration owed to the APICA shareholder. When adjusting the debt income for interest, taxes, and depreciation and amortization expense, and further adjustments to exclude non-cash, unusual, and or infrequent costs, we compute an adjusted EBITDA, which management believes is an important measure to evaluate our operating performance.

Jim: And a fair value of deferred consideration owed to the abaca shareholders.

Jim: When adjusting the net income for interest taxes, and depreciation and amortization expense and further adjustments to exclude noncash unusual <unk> infrequent costs, we compute and adjusted EBITDA, which management believes is an important measure to evaluate our operating performance.

James H. Dennedy: A reconciliation of net income to adjusted EBITDA is provided in the press release and current report of Form 8K filed earlier today. Adjusted EBITDA for the quarter ending March 31, 2024 was $1 million versus $409,000 in the prior year period. Moving to the balance sheet, at March 31, 2024, the company reported cash and cash equivalents of $5.6 million, compared to $4.9 million at December 31, 2023. Cash generated by operating activities in the first quarter of 2024 was $1.4 million versus $232,000 of cash used by operations during the same period in 2023.

Jim: A reconciliation of net income to adjusted EBITDA is provided in the press release.

Jim: And current report on form 8-K filed earlier today.

Jim: Adjusted EBITDA for the quarter ending March 31, 2024 was one.

Jim: $1 million versus $409000 in the prior year period.

Jim: Moving to the balance sheet at March 31, 2024, the company reported cash and cash equivalents of $5 6 million.

Jim: Compared to $4 9 million at December 31, 2023.

Jim: Cash generated by operating activities in the first quarter of 2024 was $1 4 million versus $232000 of cash used by operations. During the same period in 2023.

James H. Dennedy: The improvements in cash flow were mainly due to a decrease in operating expenses. Turn it to our liquidity. Our net working capital in the first quarter of 2024 improved to just short of $318,000 versus the working capital deficit of $135,000 reported at December 31, 2023. The improvement in our working capital is primarily attributable to lower operating expenses and a greater number of performing loans at better rates than at year end. Looking ahead to the full year of 2024, we expect to generate slightly better adjusted EBITDA on modestly higher revenue compared to our full year of 2023, which reported $3.6 million of adjusted EBITDA on $17.6 million of total revenue. The reconciliation of adjusted EBITDA to Gap Net Income for the full year of 2023 was provided in the Form 10-K for 2023, filed with the Securities and Exchange Commission on March 25, 2024.

Jim: Improvements in cash flow was mainly due to a decrease in operating expenses.

Jim: Turning to our liquidity, our net working capital in the first quarter of 2024 improved to just short of $318000 versus a working capital deficit of $135000 reported at December 31 2023.

Jim: The improvement in our working capital was primarily attributable to lower operating expense and a greater number of performing loans at better rates than at year end.

Jim: Looking ahead to the full year for 2024, we expect to generate slightly better adjusted EBITDA on modestly higher revenue compare to our full year of 2023, which reported $3 $6 million of adjusted EBITDA on $17 6 billion of total revenue.

Jim: A reconciliation of adjusted EBITDA to GAAP net income for the full year of 2023 was provided in our Form 10-K for 2023 filed with the Securities and Exchange Commission on March 25th 2024.

Operator: We will provide updates to this guidance and subsequent earnings calls throughout the year. With that, I will now turn the call back to the operator to open the call for questions. Thank you. We will now begin the question and answer session. If you have dialed in and would like,

Jim: We will provide updates to this guidance in subsequent earnings call throughout the year.

Speaker Change: With that I will now turn the call back to the operator to open the call for questions.

Operator: Thank you. We will now begin the question and answer session. If you have dialed in and would like to ask a question, please press star 1 on your telephone keypad and raise your hand to join the queue. If you would like to withdraw your question, simply press star 1 again. If you are called upon to ask your question and are listening through a loudspeaker on your device, please pick up your handset and ensure that your phone is not on mute when asking your question. Again, press star 1 to join the queue. And since there are no questions in the queue, this concludes today's conference call. Thank you for participating. You may now disconnect.

Speaker Change: Thank you we will now begin the question and answer session.

Speaker Change: If you have dialed in and we'd like to ask a question. Please press star one on your telephone keypad.

Speaker Change: And to raise your hand to join the queue.

Speaker Change: If you would like to withdraw your question simply press Star one again.

Speaker Change: If you are called upon to ask your question in a listening they're loud speaker in your device. Please pickup your handset and ensure that your phone is not on mute when asking a question.

Speaker Change: Press Star one to join the queue.

Speaker Change: Okay.

Speaker Change: And there being no questions in the queue. This concludes today's conference call. Thank you for participating you may now disconnect.

Speaker Change: [music].

Speaker Change: Okay.

Speaker Change: [music].

Speaker Change: Okay.

Speaker Change: [music].

Speaker Change: Yes.

Speaker Change: Okay.

Speaker Change: Yes.

Speaker Change: Yes.

Speaker Change: Yes.

Speaker Change: Okay.