Q4 2024 Moelis & Company Earnings Call
Good afternoon, everyone and welcome to the Moelis <unk> Company Moelis <unk> Company earnings Conference call for the fourth quarter of 'twenty 'twenty four to begin I'll turn the call over to Mr match to graph. Please go ahead Sir.
Speaker Change: Good afternoon, and thank you for joining us for Moelis <unk> company's fourth quarter and full year 2024 financial results conference call on the phone today are Ken Moelis, Chairman and CEO and Joe Simon Chief Financial Officer before we begin I would like to note that the remarks made on this call may contain certain forward looking statements, which are subject to various risks and uncertainties, including those identified from time to time in there.
Speaker Change: Risk factors section of Moelis <unk> company's filings with the SEC actual results could differ materially from those currently anticipated the firm undertakes no obligation to update any forward looking statements. Our comments today include references to certain adjusted financial measures. We believe these measures are presented together with comparable GAAP measures are useful to investors to compare our results across several periods and to better.
Speaker Change: To understand our operating results.
Speaker Change: Conciliation of these adjusted financial measures with the relevant GAAP financial information and other information required by Reg G is provided in the firm's earnings release, which can be found on our investor relations website at investors that most dot com I will now turn the call over to Joe to discuss our results. Thanks, Matt. Good afternoon, everyone on today's call I'll go through our financial results and then.
Ken Moelis: Ken will comment further on the business.
Joe Simon: We reported $439 million of revenues in the fourth quarter, an increase of 104% versus the prior year period.
Joe Simon: For the full year, our adjusted revenues increased 40% to $1 2 billion.
Joe Simon: Our revenue growth was powered by year over year increases across all products.
Joe Simon: Regarding expenses, our adjusted compensation expense ratio was 58, 4% for the fourth quarter and 69% for the full year, our non comp expense ratio was 11, 4% for the fourth quarter and 15, 9% for the full year non compensation expenses of $50 million in the fourth quarter include approximately $2 million.
Joe Simon: Transaction related expenses in 2025, we anticipate non compensation expenses to trend higher as a result of an expected increase in technology occupancy and G&A spend.
Joe Simon: The pre tax margin of 31, 4% for the fourth quarter and 16, 4% for the full year.
Joe Simon: Regarding taxes, our normalized corporate tax rate for the year was 31% and our.
Joe Simon: Our effective tax rate was 23, 5% the difference in rates was primarily driven by the excess tax benefit related to the delivery of equity based compensation in the first quarter of 2024.
Consistent with prior years, the annual vesting of <unk> will occur later this month for purposes of quantifying the excess tax benefit in quarter. One we expect the impact to EPS to be approximately <unk> <unk> for each $1 25 difference between the vesting price and adjusted grant price of $41 a share. So it is as an example, if mark.
Joe Simon: Price at time of vast were $76 the estimated impact on EPS would be 2008.
Joe Simon: Regarding capital allocation the board declared a regular quarterly dividend of <unk> 65 per share an 8% increase from the prior quarter and lastly, we continue to maintain a strong balance sheet with $560 million of cash and no debt.
Ken Moelis: I'll now turn the call over to Ken.
Ken Moelis: Thanks, Joe and good afternoon, everyone. We're pleased with our strong year over year performance in 2024 across all products and sectors, all driven by the collaboration commitment and dedication of our global team and their relentless focus on executing for our clients during.
Ken Moelis: During the M&A slowdown, we made significant investments in key sectors and products, while remaining deeply committed to developing internal talent highlighted by the promotion of 12, new managing directors earlier this year.
Ken Moelis: Performance, resulting from the large investments we made in technology industrials and energy in 2023 have exceeded our expectations in 2024 in fact technology was the largest sector contributor to our 2024 revenues the industrials and energy sectors have also been quite active in the capital markets group had a strong.
Ken Moelis: Ear and continues to be a strategic weapon as dealmaking accelerates and private capital providers play an increasing role in the transaction financing markets.
Ken Moelis: Looking ahead I'm optimistic for 2025, the M&A market is poised to benefit from the new administration's pro growth strategy and at the same time, we're seeing early evidence of a pickup in sponsor activity.
Ken Moelis: <unk> capital structure advisory elevated rates, and our enhanced credit or coverage capabilities provide a constructive environment for our restructuring business.
Ken Moelis: And earlier this week, we announced the hire of a market leading banker who joined the firm as global head of private funds advisory disappointment.
Ken Moelis: This appointment underscores our commitment to expanding our capabilities and providing private capital solutions to sponsors and limited partners globally.
Ken Moelis: We've never been better positioned to deliver innovative solutions for our clients and results for our shareholders and I've never been more energized about the future of the firm with that I'll open it up for questions.
Ladies and gentlemen, if you would like to ask a question. Please press star one on your telephone keypad.
Speaker Change: Also star one if you would like to withdraw your question, we will take our first question today from Devin Ryan citizens.
P.
Hey, Ken Hey, Joe how are you.
Speaker Change: Hi, Devin.
Speaker Change: Really nice end of the year here for you guys and I just wanted to dig in a little bit on what youre seeing in the environment obviously.
Speaker Change: <unk> been saying kind of backlog has been of records and then you will see kind of a really strong quarter.
Speaker Change: Quarter here I know turnover has been a bit slow, but I'm. Just curious if we should think about this quarter is maybe there being a catalyst where theres been a change in kind of that conversion ratio or timing or.
Speaker Change: Is this just more seasonality from this quarter and then just more broadly how we should think about kind of that conversion ratio or timing of deals kind of moving through the backlog as we look into 2025.
Speaker Change: Well it felt to me like.
Speaker Change: But just the pace of deals closing.
Speaker Change: There's always some seasonality in the fourth as opposed to some of the other quarters, but this one felt like.
Speaker Change: Something happened and it might've been the election, but something happened and conversion did pick up what's interesting is like we always talked about you kind of have this book to Bill was your pipeline. So you can look at the fourth quarter and say.
Speaker Change: Emptied the pipeline of a significant amount of revenue, but our pipeline is at the highest levels ever it's increasing.
Speaker Change: So we're building backlog faster than even.
Speaker Change: Then it is converting but I think the problem was Devin. It was just it was really in that period of the fed uncertainty and maybe even some of the regulatory uncertainty. It was just everything just took a long time there was some accordion effect.
Speaker Change: <unk> started 2022, I guess when rates started to move.
Speaker Change: Everything just took longer to get through your pipe from start to finish.
Speaker Change: It feels different now it's not quite as quick to completion as 2021, but it's much clearer and more rapid to go from deals start to deal and it feels.
Speaker Change: Got it okay. That's great color Kevin. Thank you and then a follow up for Joe.
Speaker Change: You mentioned.
Speaker Change: I think some kind of inflationary non comp expense items as we look ahead. So I'm just curious if we can maybe flesh those out a little bit.
Speaker Change: Is there any degree of kind of how significant those will be or how to think about non comp growth into 2025, because obviously you have that on one hand, but that my.
Speaker Change: Census, and Theres also probably less SBB.
Speaker Change: Contract contracted expenses, if I'm correct I just wanted to kind of think about some of the puts and takes as we are modeling out non comp expenses for 25.
Speaker Change: Yes, sure. So there has to be perfectly clear there are no more SBB related transaction expenses.
Speaker Change: But I'd say the underlying run rate in 'twenty five is going to increase over 24, and it's primarily driven by continued adds to head count I think.
Speaker Change: If I took out transaction expenses projecting into 25, I'm thinking probably around 15%, we're adding and building out space in the UK, we're having tremendous.
Speaker Change: Success with client events and so we expect to expand on that and then always technology and information services, particularly as head count grows that expense by definition will grow as well.
Speaker Change: Understood. Okay. That's very helpful. Thanks, Joe Thanks, Ken as well.
Speaker Change: Your next question is from James <unk> Goldman Sachs.
James: Good afternoon, and thanks for taking my questions.
James: Just wanted to turn to restructuring quickly obviously is very strong for you and for the industry. In 2024 as you think about the outlook for 2025, what's the ability to hold this level of activity is there any potential that we could see a further acceleration from here and then any ability for you to just give a rough split of how much.
James: Revenue in the quarter was from M&A versus restructuring versus capital markets. Thanks.
James: Look it's always hard to project is it restructuring.
James: Based on the economy interest rates.
James: Look we did have a very good year the economy feels strong enough said.
James: As of now I don't see.
James: <unk> that would cause a major disruption of course I have to also say that things are pretty volatile in and around that.
James: Uh huh.
James: Things like the government and things like that so anything could happen.
James: I would expect 2025 to be a year that looks a lot like 2024.
James: As of now as of now and Thats thats without any external events in the restructuring world.
James: On the to your answer about 60% of our revenue was M&A that doesn't mean it was all restructuring the rest is capital markets really capital markets and restructuring and those numbers by the way or for the full year.
James: Okay. Thank you that's very clear maybe just quickly on the comp ratio I think you are well within the range of the sensitivity that you.
James: Dave for the comp ratio for 2024.
James: Maybe if you could just provide any.
Context on that.
James: The comp ratio progression to 225 million and whether that sensitivity is still something we should be thinking about.
James: So I think it's more complicated look we gave a pretty good algorithm and stuck to it for the year as you get closer to market based low sixty's comp, it's going to start flattening out it's not a linear progression I think we do have leverage if everything stayed the same I think we probably get 75% of those savings and that's it.
James: If we.
James: It didn't do anything exciting for the year, but I will say, 75% of the savings for $100 million is kind of what we gave you.
James: And again I just want to reiterate as you get down near the low sixties.
James: Becomes competitive with the market and what what everybody else is doing that's kind of what.
James: We're not planning on linear lately going through that in any capacity.
James: But.
James: Then you have other things like this private funds advisory hire we made we do intend to build a market leading business around that.
James: How big and how fast we do that well will affect that but we do intend to we think we have a market leading.
James: Banker to put us in position, we think it's an important.
James: Project for Us and we will be aggressive.
Ken Moelis: That's very clear thanks, a lot Ken.
Moderator: Next step is Brendan Hawken UBS.
Brendan Hawken: Afternoon, Ken and Joe Thanks for taking my question.
Brendan Hawken: Curious on capital.
Speaker Change: Ken So saw the dividend increase.
Speaker Change: Clear sign of confidence from you and I know that you have a and expressed fondness for dividends and being in the dividend growing club and whatnot.
Speaker Change: But.
Speaker Change: With fully diluted shares on an average basis from <unk> 23 to <unk> 24, increasing by 12%.
Speaker Change: What's your what are your thoughts on allocating some of your excess capital or capital generation to buy back to neutralize the employee comp.
Speaker Change: Just.
Speaker Change: Correct correct, one thing that you said Brennan.
Speaker Change: You're looking at an accounting result, with respect to share count and as you may remember when you run losses, which is what we did in 'twenty three you'll only have basic count and the fully diluted count is what youre looking at at the end of 'twenty. Four. So you basically are looking at apples and oranges it did not grow by 12%.
Ken Moelis: I'll, let I'll, let Ken answer the question now.
Speaker Change: So the just to the question which is.
Speaker Change: Look we're 12 months away from I think on this earnings call being asked if our dividend was safe.
Speaker Change: And today, we're making is what we're going to do with our excess capital. So.
Speaker Change: We increased the dividend because it very timely and quickly gives away what we think will be excess cash generation and we're confident that so we raised the dividend.
Speaker Change: And from there we will return the capital it may be a series of things right. It might be stock repurchases, we're not against that we repurchased a large amount of stock a few years ago.
Speaker Change: We're not against outage.
Speaker Change: To be determined by us the board the market, how we want to get the capital back to you a series of things, but again this is.
Speaker Change: It's a good it's a good conversation and I will be discussing what we're going to do with our substantial excess capital versus can we make our dividend. So.
Speaker Change: We will address that and believe me, we will not keep any of the capital. It will be returned and the best way, we can think of and as quickly as possible.
Speaker Change: Okay.
Ken Moelis: Totally fair and I get the irony Ken.
Speaker Change: No doubt.
Speaker Change: And Joe Thanks for pointing that out if we just convert to <unk> than it is 8% and that's over a year.
Speaker Change: Year, and a half nearly two years, so it's a more modest amount of dilution for sure.
Speaker Change: So appreciate all of that.
Speaker Change: Well when you're thinking about.
Speaker Change: The productivity levels right. So you guys did really.
Speaker Change: There is no other way to describe it I mean, you really did quite a great job here in 2020 for very strong finish to the year.
Speaker Change: You got to like nearly $8 million of advisory revenue per trailing M. D. So.
Speaker Change: No really turned what we are all thinking it was going to be a pretty bad year into into into quite at a solid one how given the quantum of banking talent and the caliber that you've added you've flagged the tech teams contribution here this year Ken how.
Speaker Change: How should we be thinking about that metric and given.
Speaker Change: The new team and the new capabilities.
Speaker Change: Is 2021 really such a stretch from a productivity perspective, and then you guys did 12 and a half now.
Speaker Change: At year.
Speaker Change: Well look I.
Speaker Change: I don't know the full answer to that but I will say the tech team remember.
Speaker Change: It is only 18 months into it so I don't think we're at full run rate with the revenue per head on that team.
Speaker Change: This is again it takes time to build up and we're seeing the benefits our industrials team. We added in from credit Suisse. So that's about that's also about a year and maybe a little a little more.
And we then made a big investment in energy and we're extremely happy with energy and energy I think youre going to see a ramp up and it's a big fee pool.
Speaker Change: And then lastly, I'll make very excited but we do have some garden leave on the private funds advisory.
Speaker Change: It's a large business for many of our peers and it's been a very small business for us.
Speaker Change: So the head count and Thats the same a lot of the same calling effort to the sponsors we will we will add mds, there, but I think the revenue per MD there Brian.
Brian: Brendan I don't really know the answer but my gut feel and my my hope is that yes. The <unk>.
Speaker Change: 21.
Speaker Change: You probably had an S&P 500, I'm doing this at a memory that was probably at the beginning right.
Speaker Change: Is up significantly I'll just leave it it's up significantly the.
Speaker Change: The amount of private capital is up significantly the opportunity to do business in a larger global economy with larger.
Speaker Change: Uh huh.
Speaker Change: With larger.
Speaker Change: Deals by the way, we had no tech team in 2021, which was.
Speaker Change: Kind of a glaring hole in our go to market, especially because 2021 was a pretty good tech year outlook.
Speaker Change: Outlook I am excited to find out let's leave it that way I'm excited to find out and not limiting it to that I've never limited it to that but.
Speaker Change: But we'll find out.
Speaker Change: Fair enough. Thank you for the color.
Speaker Change: Next question today is from Brandon O'brien of Wolfe Research.
Brandon O'Brien: Hey, good afternoon, and thanks for taking my question is.
Brandon O'Brien: I guess to start just on the sponsor business. You cited that you are starting to see signs of a pickup there would be great to get a census to how meaningful of an acceleration we could start to see and on top of that a lot of the restructuring activity has been focused amongst sponsor clients through <unk>.
Brandon O'Brien: <unk> I was just wondering whether there is any connection.
Brandon O'Brien: Between the elevated.
Brandon O'Brien: Restructuring activity amongst sponsor backed companies and subdued sponsor M&A backdrop.
Brandon O'Brien: I think sponsors are definitely coming forward I mean again as it I.
Brandon O'Brien: I don't know on a scale of one to 10, I guess a year ago I'd give it a two or three.
Brandon O'Brien: I think we're probably at a six.
Brandon O'Brien: Again, very rough estimate in mind I don't think we're at full speed. We're again I would go to 2021 one.
Brandon O'Brien: On a scale of one to 10 that was kind of a 10, everybody everybody was buying and selling at the same time and it was active but I think we're kind of at a six.
Brandon O'Brien: But my feeling is people wanted to get as opposed to a year ago, where I think people are like hey, we're not doing anything and we really don't expect to do anything.
Brandon O'Brien: I think it's we're doing things and we expect to do more and want to do more so I think the desire and the bias is to be more aggressive.
Brandon O'Brien: On the creditor side, it's interesting.
Brandon O'Brien: Probably our biggest.
Brandon O'Brien: Opening is a lot of our restructurings were company side, where debtor side.
Brandon O'Brien: It's where we do a lot.
Brandon O'Brien: It's probably 70 30.
Brandon O'Brien: And we.
Brandon O'Brien: We are being much more active now on the private credit side and trying to get in on that side of the restructurings.
Speaker Change: Is your point like these companies couldn't Estelle so they are getting into trouble I don't think thats the answer.
Speaker Change: It is hard to sell a company that can't cover its debt. So I don't think M&A truly covers.
Speaker Change: Restructuring I think restructuring.
Speaker Change: It might be driven more by interest rates, which just make the onerous debt obligations kind of come in quicker than they would have three or four years ago.
Speaker Change: But I don't I don't think its the M&A, that's driving and in fact, if anything I think some of the private capital solutions that we're doing very pick.
Speaker Change: Pik preferreds structured rescue credit.
Speaker Change: That's probably staving off some of the <unk>.
Speaker Change: Restructuring more than M&A would.
Speaker Change: That's helpful context, I guess for my follow up I, just wanted to touch on the comp ratio. It was great to see the comp leverage come through this year.
Speaker Change: And I think you kind of alluded to this in your prior.
Speaker Change: Answer to a prior question, but when you provided the incremental guidance you indicated that you thought you could get back to a low sixty's comp ratio was about <unk>.
Speaker Change: One three to one 4 billion of revenues I, just wanted to get a sense as to whether you think thats still the case today or has that continued investment in the business.
Speaker Change: Maybe pushed that number a bit higher.
Speaker Change: Yes, I don't remember, saying that exactly because even the algorithm we hit.
Speaker Change: Didn't really go to that number.
Speaker Change: If you did it straight line so.
Speaker Change: I don't think that I think I might have said something like by the fourth quarter, we might be having a run rate of revenue I Might've said at one point that would justify getting back to low $60 60 in that range.
Speaker Change: And I think thats kind of where I.
Speaker Change: You get so that would be a couple of hundred point I think it's higher than the revenue number youre talking about there.
Speaker Change: There is leveraged by the way all the way up but it just gets more and more difficult as you get as you as you get there and we've been making we continue to make substantial investments last year. This year, we expect to so yes that will also have a.
Speaker Change: That's a headwind to the operating leverage that Youre, yes.
Speaker Change: To be clear on that it's not like we didn't do anything this year in terms of investing even even bringing down the comp ratio, we did invest and so inherent in 2025 is some investment.
Speaker Change: The private funds advisory think could be a little larger and more aggressive than just regular way sector banker.
Speaker Change: It will depend how fast and how quick we can get moving on that we have garden periods and lots of things like that but we're going to we're going to move as quickly as we possibly can to build that out.
Speaker Change: Great.
Speaker Change: Thank you for taking my questions.
Speaker Change: Thanks.
Speaker Change: We'll go next to Ryan Tony Morgan Stanley.
Speaker Change: Hi, Thanks for taking my question so.
Speaker Change: So you've been really strong at hiring and protecting your workforce in downturns and then taking share in market upturn so as the market starts to recover.
Speaker Change: The recruiting environment getting more competitive and does that slow the pace of leaning into hiring or do you expect to continue hiring at pace.
Speaker Change: I think the environment's not gotten.
It's competitive it's about the same as it's been I actually think the continuing what I call the continuing regulatory crunch.
Speaker Change: On the major banks makes makes people available I actually think the onerous capital restrictions.
Speaker Change: I think there was a <unk>.
Speaker Change: And at the Goldman Conference when I was there I do believe that the <unk>.
Speaker Change: Tire transaction financing economy.
Speaker Change: Switching from being bank centric to being.
Speaker Change: I won't call it private credit centric, but to be institutional centric, whether that'd be sovereign wealth funds insurance private credit.
Speaker Change: I do think the regulators are intent on taking the risk out of the.
Speaker Change: Taxpayer guaranteed financing sector, which is commercial banks and I agree with them that should have been done long ago, but you can see it I think there was a major bank that two weeks ago announced they were shutting down their entire investment bank.
Speaker Change: And I think bankers are starting to see or have to do is look at the market and realize that being independent and not having the conflicts and the problems of being regulated.
Speaker Change: Financial institution.
Speaker Change: Lead the best I think the best people in the world tend to want to come to an independent firm in which creativity and intellectual talent is high and we recognized so that continues to happen and that's where a lot of talent comes from.
Speaker Change: And then just a follow up on the quarter revenues were clearly really strong. So do we think about to build through 2025 is building off of for Q annualized revenue numbers or should we look more at full year 'twenty four but is there anything idiosyncratic in the quarter or any big fee events or pull forwards.
Speaker Change: We said, we'd be thinking about as we model into 2025.
Speaker Change: Interestingly there was nothing really unusual about Q4, I think our pull forward Joe is what eight yes.
Speaker Change: Monitor which was the same as third quarter, so very light the pull forward wasn't there there was no.
Speaker Change: Unusual fee.
Speaker Change: If anything we always have puts and takes deals move in deals move in deals move out. The most interesting part is the deals that moved out in the fourth quarter were mostly regulatory and so they almost there. So the move outs are going to skip a quarter that we had some things move from not from quarter four to quarter, one but from quarter four to quarter two because they were regular.
Speaker Change: Tori.
Speaker Change: And.
Speaker Change: I thought it was about normal of what when in versus what got delayed other than what got delayed didnt get delayed by weeks. It got delayed by a couple of months.
Speaker Change: Again.
Speaker Change: It's it's always been a bit of a seasonal business.
Speaker Change: The amount of <unk>.
Speaker Change: Transaction.
Speaker Change: Animal spirits, we saw a rise in the fourth quarter.
Speaker Change: We are more important than the.
Speaker Change: The seasonality alone, but I don't want to discount we always have a first quarter is always our lightest and fourth quarter's always not always.
Speaker Change: Usually the best in the first quarter is usually the lightest.
Speaker Change: But but I do think over the full course of the year I feel like the trend is the trend is good I just can't say that you should annualize one quarter right.
Speaker Change: Alright Thats helpful. Thank you.
Speaker Change: Next up is Ken Worthington Jpmorgan.
Ken Worthington: Hi, good afternoon, three questions largely answered and asked and answered Joe a little one for you the comp ratio usually early in the year the comp ratio is it like a placeholder.
And then you true up later in the year, how should we think about you know.
Ken Worthington: Yeah.
Ken Worthington: Placeholder as we start thinking about <unk>.
Ken Worthington: Compensation for two.
Ken Worthington: 2025.
Ken Worthington: Yes.
Ken Worthington: Good question.
Speaker Change: As you know, we always have a bump in the equity charge due to the incentive equity which is granted later. This month then and then the retirement eligible participants are accelerated in the first quarter and then what Ken was describing as typical seasonality in the first quarter.
Speaker Change: I would probably start with where we landed for the full year as a starting point placeholder.
Speaker Change: We'll go from there.
Speaker Change: Okay, great. Thank you very much.
Speaker Change: And just a reminder to the adding incident star one if you have a question. We will go next to James BRL Goldman Sachs.
James: Thanks, Ken for taking the follow up I just wanted to clarify on your comment around the 25%.
Speaker Change: Comp ratio here, just just to confirm are you saying that for.
Speaker Change: Let's say 100 million increase in revenue that 75% of that would drop to the bottom line so that'd be like.
Speaker Change: 25% comp margins at the right is that what you meant.
Speaker Change: Okay.
Speaker Change: Joe is looking at me because he said stay away from.
Speaker Change: Sending out the algorithm we wanted.
Speaker Change: Of course I stepped in it I was just saying.
Speaker Change: It is not straight line I was going to say, it's a Sim ptotic. What happens is you go to 61, but Joe told me no one will know what that means.
Speaker Change: I'll try it and see if anybody writes that and gets it but.
Speaker Change: It's just going to slow we were doing 400 basis points. I think we gave you at the beginning of last year per hundred. It can't go that fast is not straight line. There is there is room to improve so I was saying would we get.
Speaker Change: We'll get 300 basis points, if we did nothing else, maybe maybe that would be right, but again, that's going to change because as you get that youre getting down closer and closer to 60, low <unk> and then youre going to look around and see what is the competitive environment. What do you. What do you have to do as you get there that youre.
Speaker Change: Youre not going to go through that so the question is how close how quick and when do you do it I don't think.
Speaker Change: Look I don't think the right answer here is to have an algorithm from this point on other than to say to you I think we can get a lot of savings.
Speaker Change: And then offset that by any outsize investment in a new business that is outsized.
Speaker Change: Inside of that comp ratio.
Speaker Change: We always do think we're going to hire some people. So I don't want to say that but if we do something in which let's say PFA, which could be a sizable thing that might affect it too. So it's complicated and Joe told me not to do it.
Speaker Change: The mistake.
Speaker Change: Again remember the purpose that we were on it.
Speaker Change: 83% comp ratio in 2023, we wanted to demonstrate that there was a path to getting.
Speaker Change: Just something that was more reasonable and that's why that's why we put out that that algorithm I think it is going to be more difficult to be precise around that given some of.
Speaker Change: The opportunities that are before us with respect to investment and where we are today.
Speaker Change: But we will be striving for operating leverage that is absolutely on the <unk> card.
Speaker Change: Okay, that's very clear thank you.
Speaker Change: And everyone. At this time there are no further questions I'll hand things back to our speakers for any additional or closing remarks.
Speaker Change: Well, thanks for joining us and we hope to come back and continue to improve all the elements that you have been asking about so thank you.
Speaker Change: And once again, everyone that does conclude today's conference we would like to thank you all for your participation you may now disconnect.
Speaker Change: Okay.
Speaker Change: [music].
Speaker Change: Okay.