Bgc Group Inc

NASDAQ:BGC

Earnings Call Transcript 2018-Q2

[Operator]

Welcome to the BGC Partners, Inc. Second Quarter 2018 Earnings Conference Call. My name is Crystal, and I'll be your operator for today's call. [Operator Instructions] Please note that this conference is being recorded.

I will now turn the call over to Jason McGruder, Head of Investor Relations. Mr. McGruder, you may begin.

[Jason McGruder, executive]

Good morning. I'm giving Ujjal a break today. We issued BGC second quarter 2018 financial results press release and the presentation summarizing these results this morning. You can find these at ir.bgc.partners.com. BGC's results consolidate those of the company's publicly traded majority owned subsidiary Newmark Group, Inc. You can find details about Newmark Group's separate conference call scheduled for today right after BGC's as well as Newmark's financial results press release and presentation at ir.ngkf.com. Both Newmark and BGC's financial results have been recapped and include the results of Berkeley Point for all periods discussed in today's call because the transaction of all reorganization of entity is under common control. Unless otherwise stated, the results provided on today's call compare only the second quarter of 2018 with the year-earlier period. We will be referring to results on this call only on an adjusted earning basis unless otherwise stated.

We may also refer to adjusted EBITDA. Please see today's press release for full-year financial result -- sorry, not full year results -- for results generally accepted principles -- accounting principles or GAAP. Please also see the sections in the backstage press release for the complete definitions of any such non-GAAP items, reconciliations of these items with corresponding GAAP results of how, when and why management uses them.

All of the company's fully electronic businesses are referred to as Fenics. These offerings include the Financial Services segments, fully electronic brokerage products as well as the sales market data, software solutions and post-trade services. With respect to your plan for the proposed tax spin-off to Newmark, we cannot provide any assurance regarding if, when, how and where the spin-off will take place. Had the spin-off occur immediately following the close of the second quarter of 2018, the ratio of Newmark common shares to be distributed with respect of each BGC common share would have been approximately 0.4647.

On today's call as well as in today's BGC's press release and investor presentation, we may refer to the financial results of "post-spin BGC." Post-spin BGC represents the results of the company, excluding the results of Newmark Group and the NASDAQ earn-out. BGC would like had the spin-off of Newmark already occurred. Put another way, post-spin BGC includes the results for BGC's Financial Services segment, excluding the NASDAQ payment for prior periods plus the appropriate pro-rata portion of corporate items. When do we refer to the stock price or high dividend of post-spin BGC? We are basing these figures on yesterday's closing prices of $10.94 for BGC and $13.83 for Newmark Group. The distribution ratio of 0.4647 Newmark common shares for each common share of BGC Partners and the annualized dividend of BGC as a result of spin-off of Newmark had already occurred. If the spin-off had occurred immediately after the end of the second quarter of 2018, each BGC common shareholder would have received 0.4647 Newmark shares for each share of BGC Partners.

Newmark closed yesterday at $13.83. Based on the 0.4647 distribution ratio, each common share of BGC would, therefore, receive $6.43 worth of Newmark common stock. This means that the market value of BGC post-spin is only $4.51 as of yesterday's close, which results in post-spin BGC having a dividend yield at least 11% for 2018. Please see the press release and investor presentation of our -- for more information about post-spin BGC. I also remind you that the information regarding our business on today's call that is not historical or forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 as amended on Section 21E of the Securities Exchange Act of 1934 as amended. Such statements involve risks and uncertainties. As -- except as required by law, BGC undertakes no obligation to update any forward-looking statements. For discussion of additional risks and uncertainties, which could cause actual results to differ from those contained in the forward-looking statements, see BGC's SEC filings including, but not limited to, the risk factors set forth in the most recent Form 10-K and any updates to such risk factors contained in the subsequent Form 10-Q or Form 8-K filings.

I'm now happy to turn the call over to Howard Lutnick, Chairman and CEO of BGC Partners.

[Howard W. Lutnick, executive]

Thank you, Jason. Good morning, and thank you for joining us for our second quarter 2018 conference call. With me today are BGC's President, Shaun Lynn; our Chief Operating Officer, Sean Windeatt; and Steve McMurray, our Chief Financial Officer.

Revenues from our Financial Services business were up by more than 11% and Newmark's revenues grew by more than 15%. BGC's consolidated revenues grew by 13% to quarterly record of $960 million, while post-tax earnings per share were up by 15% to $0.30. We continue to make progress towards our planned spin-off of Newmark, which we intend to complete by the end of 2018. I'm also pleased to announce that our Board declared a $0.18 dividend for the second quarter, which is consistent sequentially and year-on-year. At yesterday's closing stock price, this translates into a 6.6% annualized yield.

As we explained at the beginning of the call and in today's press release, post-spin BGC represents the company, excluding Newmark or what BGC would look like had the spin-off already occurred. Since many of you have asked about the earnings post-spin BGC, let me break down the consolidated company into its 2 businesses as they would look post-spin. Post-spin BGC would have increased its revenues by 13% in 2017 and its pretax earnings by 32%, and that compares it with 2016. We expect post-spin BGC revenues to increase by between 7% and 10% year-on-year in 2018 and book pretax earnings to improve by between 20% and 28%. Given BGC's dividend policy of paying out at least 75% of post-tax adjusted earnings per share, post-spin BGC would have paid full year dividends of at least $0.50 per share in 2018, with the expectation of increasing the post-spin BGC dividend in 2019.

If the spin-off had occurred immediately after the end of the second quarter of 2018, each BGC common shareholder would have received 0.4647 Newmark shares for each share of BGC Partners. Newmark closed yesterday at $13.83. So based on the 0.4647 distribution ratio, each common share of BGC would receive $6.43 worth of common Newmark stock at yesterday's closing price. This means the market value at yesterday's closing price of post-spin BGC was only $4.51 at yesterday's close, which results in a post-spin BGC having a dividend based on our policy of at least 11% and possibly the 75% ratio of our dividend at least, so that means that our dividend would be at least 11% for 2018 or possibly higher. Given the strong full year growth that we outlined above for post-spin BGC in 2018 as well as the strong improvement we expect in 2019, we believe post-spin BGC's earnings and dividends will continue to increase.

Now turning to Newmark. Newmark's revenues increased by 18% in 2017 compared to 2016, and Newmark's pretax earnings increased by 74% over that same time frame. For the full year 2018, Newmark expects its revenues to increase by between 19% and 28% and earnings to grow between 22% and 39%. Newmark has grown between 2 and 3x faster than its full service publicly traded peers, and we expect this outperformance to continue. Due to the upcoming spin-off, Newmark is very attractively valued. Newmark currently trades at around 9.2x 2018 price to earnings -- to adjusted earnings versus 16 to 22x for its peers and at approximately 8x 2018 enterprise value to adjusted EBITDA and that compares to 10 to 12x for its publicly traded peers, and we will go into more detail about Newmark on its earnings call following this one.

We expect BGC and Newmark to each produce strong earnings growth going forward. Given this anticipated growth, post-spin BGC's dividend policy paying out at least 75% of adjusted earnings per share and Newmark's dividend policy of paying up to 25% of adjusted earnings per share. We expect the combined company's dividends paid by both companies to be at least equivalent to the $0.18 per quarter currently paid by BGC consolidated. We expect these dividends to increase going forward as the companies grow. In addition to returning cash in the form of dividends, BGC's Board of Directors has increased the company's repurchase authorization to $300 million. Newmark's Board also doubled its buyback authorization to $200 million.

So with that, I'll turn the call over to Shaun.

[Shaun Lynn, executive]

Thank you, Howard, and good morning, everyone. We believe that our Financial Services business has continued to gain market share thus far in 2018. We benefit from our ongoing investment in technology, improved front-office productivity and the continued benefits from our successful integration of GFI, Sunrise and other recent acquisitions. Our year-on-year revenue growth is virtually entirely organic across all of our Financial Services asset classes in both our voice hybrid and fully electronic businesses. This was led by a 24% improvement from our overall foreign exchange business and a 16% growth from our energy and commodities. Fenics generated double-digit percentage revenue growth across rates, credit and foreign exchange. Fully electronic products with notable performance during the quarter included European, U.K. and Canadian sovereign bonds, stock foreign exchange and foreign exchange options, interest rate options, credit and foreign exchange products in emerging markets and credit derivatives. Revenues from our higher-margin data, software and post-trade business increased by 15% year-over-year.

Overall, Fenics revenues grew by more than 19% as we continue to invest in technology and convert our voice and hybrid desks to more profitable fully electronic trading. We expect our $1.6 billion of voice hybrid brokerage revenues to provide substantial opportunity for additional conversion into more profitable, fully electronic trading. Our overall revenues for Financial Services as a segment increased by 11%, $480 million for the quarter, while pretax earnings were up by 24% to $113 million. Our continued margin expansion was led by the 15% year-on-year increase in revenue per producer in the second quarter of 2018 in Financial Services. Our front-office productivity have improved year-on-year for 6 quarters in a row.

As we roll out new products and services across Fenics, our brokers and salespeople increased their productivity. We continue to see the market volumes improve. We expect to have strong performance and organically increase our revenues, market share and profits. With respect to results for Real Estate Services, revenues for Newmark as a stand-alone company increased by 15% year-on-year in the quarter to $467 million. Our pretax adjusted earnings increased by 28% to $76 million. Please see Newmark's press release from earlier today for more details.

With that, I'm happy to turn the call over to Steve.

[Steve McMurray, executive]

Thank you, Shaun, and hello, everyone. BGC generated consolidated quality revenues of $960.1 million or 13.1%. Our revenues from the Americas grew by 11%. Revenues from Europe, Middle East and Africa were up by 16%. While Asia Pacific revenues increased by 21%.

With respect to expenses, compensation increased by 8.9%. Our compensation ratio improved by approximately 210 basis points to 54.5% due to the mix of revenues by geography and product. Our quality compensation ratio of post-spin BGC was more than 2 percentage points lower than for consolidated company and improved year-on-year. BGC's consolidated non-compensation expenses increased by 21.7% to $240.7 million. Non-compensation expenses would have increased approximately by 9%, excluding the $24.5 million of Newmark capital expenses related to ASC 606.

As a percentage of revenues, our non-compensation expenses were 25.1% versus 23.3% in the year-ago period. Our non-compensation ratio would have improved to 23.1% with the [indiscernible] ASC 606. Our overall expenses were $763.8 million compared to $678.1 million consistent with Newmark's methodology of recognizing income related to receive the NASDAQ shares in the third quarter on the GAAP, the consolidated company will report any incremental tax obligation related to the NASDAQ earn-out in the third quarter each year through 2027 for GAAP adjusted earnings and adjusted EBITDA. Based on yesterday's closing stock price, we expect the NASDAQ payment for the third quarter of 2018 to be approximately $91 million.

We recently announced that Newmark ended its transactions monetization with the expected in 2019 and 2020 NASDAQ payments. As a result of these transactions, Newmark received $152.9 million of cash as well as downside protection below $94.21 on the 2019 and 2020 earn-outs. Newmark retains all potential appreciation related to the anticipated receipt of 9.9 million NASDAQ shares from 2018 through the 2027, and have the flexibility to monetize some or all of the payments from 2021 through the 2027. In addition to the monetized NASDAQ shares, the consolidated common expects to receive more than $775 million worth of additional stock over time. The consolidated balance sheet does not yet reflect these shares because the payments are contingent upon NASDAQ generating at least $25 million in gross revenues annually. NASDAQ generated gross revenues of approximately $4 billion in 2017 and net revenues of $2.4 billion.

Moving on to our earnings. Our pretax earnings before noncontrolling interest and subsidiaries and taxes were up by 30.3% to $175.8 million. Our tax rate, which is just 12%, expects our estimated full year 2018 rate. In the second quarter of last year, our non-GAAP tax rate was 12.7%. You see post-tax earnings were up by 24.6% to $144.1 million. Our post-tax earnings per share were up by 15.4% to $0.30.

BGC's fully diluted weighted-average share count was 481.5 million for both adjusted earnings and GAAP. Our share count increased year-on-year largely due to the sale of 19.4 million BGC Class A common shares from December 19, 2017, through March 6, 2018, for net proceeds of $270.9 million. $242 million of the gross proceeds were used to purchase 16.6 million newly issued exchangeable limited partnership units with Newmark during the first quarter of 2018, which Newmark used to repay $242 million of its long-term debt. This substantially improved the consolidated company's balance sheet.

As of June 30, 2018, our spot fully diluted share count was 485.9 million. With respect to the balance sheet as of quarter end, our liquidity, which we define as cash and cash equivalents plus marketable securities that have not been financed, reverse repurchase agreements and securities owned, less securities loaned and repurchase agreements was $453.4 million. Notes payable and other borrowings were $1,289.3 million compared to $1,650.5 million at the year-end 2017. Book value per common share was $2.92 as compared to $2.17. And the total capital, which we define as redeemable partnership interest, total stockholder's equity, noncontrolling interest in subsidiaries was $1,714.5 million as compared to $1,186.2 million. The change in cash equivalents since year-end 2017 was due in part to the consolidated companies use and the proceeds received from the first quarter of 2018 share issuance and from the monetization of approximately 2 million NASDAQ shares as well as cash on hand to pay a total -- net total of approximately $361 million of notes payable on other borrowings.

Total capital increased largely due to NASDAQ monetization, the positive effect of GAAP net income on retained earnings and the previously reported impact ASC 606. After the end of the quarter, we closed an offering of $450 million or 5.375% senior notes. We intend to use some of the net proceeds of this offering to redeem $112.5 million or 8.125% of senior notes due 2042, which Newmark assumed from the IPO. These notes were callable at par beginning June 26, 2017. BGC intends to lend Newmark the funds to redeem the callable notes, which we expect to reduce both Newmark's and BGC's consolidated annual interest expense, all else equal.

We believe that the combination of lower longer-term debt, increased total equity and improving adjusted EBITDA will strengthen our balance sheet and improved our credit ratios, including debt to equity, interest coverage and debt-to-adjusted-EBITDA. Our balance sheet metrics have improved for the consolidated company as well as for both post-spin BGC and Newmark standalone.

With that, I'm happy to turn the call back over to Howard.

[Howard W. Lutnick, executive]

Thank you, Steve. Our consolidated outlook for the third quarter is as follows: We expect to generate revenues of between $920 million and $970 million, which is between 11% and 17% higher as compared to $827 million for the third quarter of last year. We anticipate pretax adjusted earnings to be in the range of $250 million to $270 million, which is between 12% to 21% higher compared with $223.9 million in the prior-year period. We anticipate our consolidated adjusted earnings or consolidated adjusted earnings tax rate to be in the range of approximately 11% to 12% for the third quarter of 2018. This compares with 16.2% for the third quarter of last year. For the full year 2018, we expect post-spin BGC revenues to increase by between 7% and 10% year-on-year and pretax adjusted earnings to grow between 20% and 28%.

For the full year 2018, Newmark expects its revenues to increase by 19% to 28%, and its adjusted earnings per share to grow by 22% to 39%. We expect to update our guidance towards the end of September, and Barry Gosin and I will be hosting Newmark's earnings call at 11:00 a.m., so please hold your detailed Real Estate Services questions until then.

With that, operator, we'd now like to open the call up for questions. Thanks.

[Operator]

[Operator Instructions] And our first question comes from Richard Repetto from Sandler O'Neill.

[Richard Repetto, analyst]

Thanks for all the breakout on the conversion ratio and the post-spin BGCP. I called it BGCP stuff before we call it post-spin BGCP.

[Howard W. Lutnick, executive]

It's certain.

[Richard Repetto, analyst]

It is. So a voice broker peer had some problems, call it ICAP, the CEO was fired, the difficulty with synergies, et cetera. And I'm just -- given your guidance, I'm trying to see any of the problems of tailored ICAP don't appear to be transferable over to your voice broker. I'm just trying to get any comments what that means to you, what's been happening to your competitor there?

[Howard W. Lutnick, executive]

So we read with interest what happened to them because we had none of that. I mean, we -- as you've seen, we've bought numerous numbers of companies, and we've told the market what we expected in our integration cost and performance. And we were able to deliver those numbers and then exceed them as we got better and better in understanding the various companies we acquired and how we could integrate them. I think we've become very good at that over time, and I'm very proud of my management team's capacity to integrate companies into our back office, into our technology and to utilize the scale of our technology to improve the performance of the companies we acquire. And that may be the differentiating factor is that we are and we have a technology company as part of us. Fenics is part of us. And so our ability to take the scale of our technology investment and then give that technology to the new companies we acquire, allow them to leverage and grow out off of that technology has been a key driver to why we're able to integrate the companies. So no, we have: a, a long-standing management that's been together a long time. b, we understand how to integrate companies and have successfully integrated GFI, Sunrise, others. C, we've delivered the cost savings that we said we would. And d, we are growing and gaining market share. So I don't really want to comment on things that happened to others. But obviously, our growth across the board, across each of our areas of Financial Services have really been outstanding and we're very proud of where we are, how we're growing, how we're succeeding, and how we're moving things electronic. And we feel really good about our -- the company, the prospects. The volumes in the market are growing. I mean, how nice when you read in the newspaper today that the U.S. Treasury is going to have to issue more and more treasuries, it might be tough to reading the newspaper, but if you're in volume of trading business, these are really good things. And we're seeing lots of volume out there, growing interest rates is excellent for our company. And we feel really good about our prospects.

[Richard Repetto, analyst]

Got it. And then, Howard, I guess, the next question or follow-up question is on the revenue outlook for 3Q. If you take somewhere around the midpoint, it's flat to slightly up compared to this quarter, I believe. And I know the seasonality, and we know what volumes are and that it started off. So I guess, can you help -- you won't give any outlook on just the post-spin BGCP revenue outlook for 3Q. And I know you've given some guidance for the full year, so just bridging that, I guess.

[Howard W. Lutnick, executive]

Actually, we did -- we have the full year guidance for Newmark. We now gave full year guidance for post-spin BGC, so you have a good sense of -- and the key that – of why we chose to do that is people were very concerned, they didn't really understand the scale by which post-spin BGC produces enormous amounts of cash and at our minimum of 75% distribution dividend policy, you're talking about a dividend policy that would be well above at current the stock prices 11%, could even close into the 12% and then with our growth rate in 2019, could grow from there. And that just seems, to us, to be incredibly attractively priced for people who want to buy the company. Just it seems illogical to us given the scale and scope of how well we're doing, how good the market -- our side of the markets are performing. And so I can't really sort of break it out any further. I tried to show and the management tried to show the details of how confident we are in the business, how successful we said we think the business is going to be for the full year for both of the -- both divisions of the company. And I think if you put them together, you're going to see enormous cash flow, a great dividend-paying company and great upside.

[Richard Repetto, analyst]

Got it. Got it. Understood. And the very last question, Howard, is you say in the earnings release, you intend to use additional net proceeds from the debt raise to redeem $112 million -- $112.5 million of, I believe, Newmark debt. And I guess, the question is why -- is that just to lower the interest payments at Newmark? Does that delay at all the spin-off or the distribution of Newmark shares? Why is this being done, I guess, is the question?

[Howard W. Lutnick, executive]

Well, it's basically attractive economics mathematically, right. BGC was able to borrow and raise the size of its debt offering, which eventually it will want to use when it's acquiring other companies. So for this interim period, it increased the size of its offering an extra $100 million, $112 million. Newmark is going to use the money to pay off its debt, which will lower its coupons dramatically from age to age to much lower numbers, that's great for Newmark, which we own 90% of it. So that makes us feel really good. And then when Newmark spins, they'll just pay BGC back the money. And so it has no delay whatsoever in the spinning. It's just basically going to be short-term positive economics for Newmark and then when Newmark separates, which it expects to do before the end of the year now, they'll pay back BGC. And so this is just smart economics.

[Operator]

And our next question comes from Patrick O'Shaughnessy from Raymond James.

[Patrick O'Shaughnessy, analyst]

So I wanted to follow-up on Richard's first question about TPI cap and some of that commentary, and specifically, their commentary about more market forces are driving broker compensation up. Can you speak to what the compensation ratio trends have looked like in your post-spin business, as we're calling it?

[Howard W. Lutnick, executive]

We've seen steady to declining, and you've seen that in our quarter-over-quarter numbers for a long time. We see them as steady and declining. We -- the key to having a steady-to-declining compensation ratio is the capacity to assist your brokerage as being more productive electronically. And having the tools to make your brokers more productive allows your overall compensation ratio to decline and the key to that, of course, is that our brokers have significant amount of equity ownership in this company, and they want to be part of the company. And they have, of course, substantial economics if they were to part. And so we have the lowest turnover. We are -- our brokers are being very productive because of electronics. And I think the combinations of those math means that we expect our compensation ratio to remain steady or decline going forward. That is our expectation.

[Patrick O'Shaughnessy, analyst]

Got it. And then another follow-up question. Just on mechanics of loaning that $112.5 million to Newmark and then them paying down that 8% debt. When would you expect that to take place process-wise?

[Howard W. Lutnick, executive]

So I think the calling of a bond takes approximately 30 days. So let's assume that, that gets done in and around somewhere near like 3, 4 weeks from now. Then BGC would lend the money to Newmark, and Newmark would pay off the debt. And then Newmark will be issuing its own debt between now and the end of the year to separate BGC and would pay back. So it's really only a couple of months' process. But it was just economically logical for us to do it. BGC wanted to borrow and do the debt deal that it did. But it just didn't need that cash for the short period of time. So it's best use within the group was to lend it to Newmark and let Newmark save couple hundred basis points on debt, just seemed a smart thing to do short term. We all know that Newmark -- as we intend, Newmark intends to repay all the debt by the end of the year in the spin. So this is only just short term.

[Patrick O'Shaughnessy, analyst]

Got it. And then speaking of debt, you guys have a slide where you lay out what the pro forma net debt-to-EBITDA would be for the post-spin BGC Partners. And I think it was 0.6x net debt-to-EBITDA. What do you think is an appropriate leverage ratio for the post-spin Financial Services business? And assuming that's higher than 0.6x, what are your thoughts in terms of potential uses for any debt capacity that you have?

[Howard W. Lutnick, executive]

So I think we have a substantial debt capacity remaining in the post-spin BGC. We've -- as we mentioned before, we view being an investment-grade credit is something that we consider important to us, it's not really important to the business per se, but it's something that we consider important. And therefore, that would be sort of the bounds by which we try to stay in. Uses of that significant dry powder would be, as we grow our business, you've watched us grow our commodities. We have the capacity to grow in insurance. There are a variety of places that we see out there that we have the opportunity to grow. And there are lots of brokerage businesses for us to grow and build. You've watched us continue to extend accretively and successfully. And having that dry powder is attractive to the math of accretive acquisitions and plans to do that.

[Patrick O'Shaughnessy, analyst]

Got it. Wanted to turn to Fenics. Any update on your plan to provide us a little additional clarity to the financials of that business?

[Howard W. Lutnick, executive]

Our current plan is, we're focused on the spin of Newmark and the execution of that between now and the end of the year. After that we are going to look strongly at the best way to start to separate for you the details and financials of Fenics. We are hard to work at that, and we are trying to consider when is the best time to start to do that. So I would -- but I would think that would be a post-spin BGC coming out party, if you will. Something that we will talk about as people want to look at post-spin BGC, we will consider having to separate out Fenics in much more detail for you, so that we can get a good understanding of its value. Again, these are just incredibly valuable assets that are part of this company that we have built and grown. And these are great opportunities for us.

[Patrick O'Shaughnessy, analyst]

And then speaking of those Fenics assets, can you speak to the traction that you're seeing with your Fenics U.S. Treasury solution? Looks like you had a nice sequential uptick in your electronic grades volumes despite some seasonably slower volumes overall. So are you seeing some increased customer interest in that solution?

[Howard W. Lutnick, executive]

We are. So in June, we announced the opening of our U.S. Treasury business, and we've called it a rolling opening because we had a pipeline of clients, who are integrating to the platform. We -- our objective was to have the fastest system with the best data and the tightest spreads. And so far, our data has been exceptional. We've been trading at incredibly tight spreads and building on the volume. Each month has been a substantial growth. Plus, the market details are out there plus 40% growth month-over-month. We feel really good, and there are so many accounts that are coming online, so many who are testing with us, who have just begun trading on the platform. So we feel really good in treasuries. We have a similar system growing in foreign exchange as we speak also during -- really nice month-to-month growth. And these are look -- these are all small numbers, but when you grow 40%, 50% per month, you become material pretty quickly. And so we expect in U.S. treasuries to become a material player in the U.S. Treasury business, reasonably quick.

[Operator]

And that does conclude today's question-and-answer session. I would now like to turn the conference back over to Mr. Howard Lutnick for any closing remarks.

[Howard W. Lutnick, executive]

Thank you all for joining us today, and we look forward to speaking to you at both updating towards the end of September, and we'll look forward to speaking to you next quarter. Thanks, everyone. Have a great day, today.

[Operator]

Ladies and gentlemen, thank you for participating in today's conference. This does conclude the program. You may all disconnect. Everyone, have a wonderful day.