SEI Investments Co

NASDAQ:SEIC

Earnings Call Transcript 2022-Q4

[Operator]

Ladies and gentlemen, thank you for standing by. Welcome to the SEI Fourth Quarter 2022 Earnings Call. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session. Instructions will be given at that time. [Operator Instructions] As a reminder, this conference is being recorded.

I would now like to turn the conference over to our host, Ms. Lindsey Opsahl. Please go ahead.

[Lindsey Opsahl, Head-IR]

Welcome, everyone. Thank you for joining us on today's fourth quarter 2022 earnings call. Joining me on today's call are Ryan Hicke, SEI's Chief Executive Officer; Dennis McGonigle, Chief Financial Officer; and the leaders of our business segments, Paul Klauder, Phil McCabe, Sanjay Sharma and Wayne Withrow. Kathy Heilig, SEI's Controller is also with us.

Before we begin, I'd like to point out that our earnings press release can be found under the Investor Relations section of our website at seic.com. This call is being webcast live and a replay will be available on the Events and Webcast page of our website.

We would like to remind you that during today's presentation and in our responses to your questions, we have and will make certain forward-looking statements that are subject to risks and uncertainties that may cause actual results to differ materially. Please refer to our notices regarding forward-looking statements that appear in today's earnings press release and in our filings with the Securities and Exchange Commission. We do not undertake to update any of our forward-looking statements.

With that I'll turn the call over to CEO, Ryan Hicke. Ryan?

[Ryan Hicke, CEO]

Thanks, Lindsey. Good afternoon, everyone. I hope you all enjoyed the holidays and are off to a great start in 2023.

Before the holiday season, we had the pleasure of hosting many of you in Oaks for our investor conference in November. I really hope everyone enjoyed that experience. Personally I was engaged and energized by the entire engagement of the investment community. I was really excited to share our vision and strategic focus for the future.

We're going to continue to apply our proven business model by turning challenges into opportunities, helping clients and prospects more effectively deploy their capital for growth and leveraging our financial strength.

During the quarter, markets continue to feel the impact of economic factors, including inflationary pressures, geopolitical tensions, fiscal policy and more. Fourth quarter revenues declined 9% from a year ago. Our fourth quarter earnings were down 23% from a year ago. Fourth quarter EPS of $0.83 decreased 19% from the $1.03 reported in the fourth quarter 2021.

In the quarter, we repurchased 1.3 million shares of SEI stock at an average price of $59.36 per share. That translates into $79.6 million of stock purchases. We also declared an annual dividend of $0.43 per share. We continued to build off the third quarter's positive sales momentum, but we're still absorbing some losses that offset our wins. I feel very confident that we are turning the tide in a positive direction here, and we've spent a lot of time at key prospects and clients this year already. Net sales events totaled approximately $20.8 million, $10.9 million of which were net recurrent.

During the quarter, we also had a successful execution of a recontracting strategy, resulting in more than $108 million of annual recurring revenue extended across our processing businesses. We expect to also remain surgical and vigilant in our expense management. I'm sure you all saw that one of the major themes coming out of [taboos] as companies say they are giving priority to profitability and efficiency amid concerns about macroeconomic conditions, whether that's to reach their strategic goals, slim down their workforces or streamline operations.

The market, especially the tech and financial services industries are clearly making adjustments to spending and we are going to manage SEI well through this time, but lean into those investments where we have high conviction as to our ability to drive growth. We also see this time of catalysts and opportunities for SEI to more actively partner with existing and new clients to help them become more successful. Dennis will go into further details later on our financial results.

Turning to our lines of business. In the Investment Managers segment, our alternative business continues to see our largest clients opportunistically launching new products. One of our large multi-strategy clients expanded in the private credit business, and a flagship investor platform client at a private equity business as well.

In the traditional business, we continue to add new business in all product lines with both new and existing clients. In particular, our CIT business continues to thrive and expand. At a global level, we continue to grow our ETF, private equity and private debt business, primarily through cross sales with existing clients and successful new client wins.

Turning to our Investment Advisors business. We began immediately leveraging the synergies between our U.S. asset -- of U.S. advisory business and our asset management distribution businesses globally. We are only a few months into this effort, but we are starting to make progress.

We've integrated these business segments to better leverage competencies, aligning our talent and go-to-market strategies across segments. Although it is early in the organizational alignment, when we look at the market landscape from institutional clients to BD affiliated advisers to the growth of pure RIAs, we are excited about the future here and feel strong about our positioning.

A key component of our strategy is the continued unbundling of our investment options paired with the conviction and oversight of our investment management unit, providing clients both flexibility and choice. Our ETF product line, the SEI systematic core strategies, strategic partnerships with Capital Group and Dimensional were not only top net cash flow contributors, but they're increasingly resonating with existing and new advisers and solving their client needs. Across this suite of solutions, we saw over $400 million in net cash flow for the quarter.

The Institutional Investors segment experienced new client wins, which included SEI Novus. Revenue and profit during the quarter were directly impacted by capital markets and client losses. Capital market activity was related to a decline in equities, long-duration fixed income balances and alternative investments. But despite the volatile marketplace last year, OCIO sales in 2022 produced strong results. Asset values will be a headwind as we move into 2023, but we will remain focused on where we believe there are growth opportunities including selling and installing OCIO new business in growth markets, retaining current OCIO clients, further integrating SEI Novus and advancing the ECIO platform, integrating and leveraging SEI Private Wealth Management in our institutional business.

In the Private Banks business, we had a very active quarter. We recontracted eight clients, including three in the U.S., four clients in the U.K. and one TRUST 3000 clients. Four of these eight clients were in competitive situations. Our contracts with Wells Fargo was resized as previously announced and our relationship has been extended until December of 2028.

We signed three new names in the quarter, including Hilltop Bank and First Financial in the U.S. and we also implemented two clients that were in our backlog. We will continue to rightsize expenses in this segment and look to accelerate sales activity, including cross-sell opportunities across our markets.

I'm acutely aware of the attention that has been paid to this segment in the past. The leadership changes we made last year, the aggressive increase in client engagement and expense management combined with a renewed focus on sales and what we believe are attractive segments for SEI make me optimistic that we have solidified the foundation for this business now for future growth.

Highlighting some more positive traction in growth areas in our investments in new business segment, SEI Sphere continues to be a focus area with an aggressive growth plan for 2023. This includes increasing the size of the sales force, investments and marketing, accelerated activity with existing SEI clients and new prospects and increased traction in the cyber and cloud services offering.

During the quarter, we also began building a corporate development team. They will be focused on the development and execution of our strategic transactions plan to drive growth. Finally, our partnership with LSV remains very strong. Dennis will report on their financial results for the quarter.

As I've mentioned in these calls, we're also focused on initiatives and programs that support the development of our talent and enrich our culture particularly in diversity, equity and inclusion. We continue to invest in these areas as competitive advantages for SEI in the future.

To echo my comments at the investor conference in November, SEI is going on offense in 2023. We'll focus on seizing opportunities that we believe will meaningfully drive growth and we'll continue to make the changes necessary to keep us on the path that we've laid out.

2022 was a year of organizational transition for SEI coinciding with the volatile market environment. We remain steadfast in our belief that we are well-positioned to not only help our client succeed, but continued driving our own success in the year ahead and beyond. This concludes my prepared remarks.

I will now turn it over to Dennis to discuss our financial results for the quarter. Dennis?

[Dennis McGonigle, CFO]

Thanks, Ryan.

I'll cover information related to the quarter for the company and units. As Ryan mentioned, EPS for the quarter was $0.83. This compares to a $1.03 during fourth quarter of 2021 and $0.45 for the third quarter of 2022. Revenue for the quarter was $457 million compared to $502 million in 2021 and $471 million in the third quarter.

Total expenses for the quarter were $363 million, which compares to $358 million last year and $420 million in the third quarter. Excluding items related to the voluntary separation program and other severance, expenses for the third quarter were approximately $358 million. Expenses in the fourth quarter included $2.7 million of severance and $3.5 million in incentive compensation true-ups for the year.

Revenues from asset management and administration were impacted by lower average assets during the quarter due to how we entered the quarter, capital market performance during the quarter and cash flows. Processing revenues were impacted by a one-time $6 million reduction in revenue, related to Wells Fargo, which was discussed on last quarter's call.

On the sales front in our processing businesses of private banking and IMS net sales events totaled $25 million and are expected to generate $15.1 million in recurring revenue. In our asset management-related businesses, net sales were approximately a negative $4.7 million. Private banking processing sales were $10.2 million, of which $3.3 million is recurring. This reflects three new SWP sales, two in the U.S. and one in the U.K.

We re-contracted eight clients during the quarter, representing $53 million in annual recurring revenue and an average extension of four-plus years. One of these re-contracts was Wells Fargo resulting in the recorded revenue reduction. One other re-contract was with a large U.K. client that extended our relationship for five plus years, while successful in retaining this client it will result in a current reduction and run rate revenue of approximately $7 million in 2023.

We view this as an investment in the key relationships in the U.K., due to their long-term growth prospects and opportunities for us to grow this relationship overtime. This re-contracting item is separate from and not included in our sales results. At year end, we successfully installed two clients on SWP. The current backlog of sold, but expected to be installed revenue in the next 18 months is $40.1 million.

Asset management revenues and private banking were up slightly during the quarter as a result of positive flows of approximately $500 million. Expenses in the quarter were down from the third quarter of 2022. This reflects our focus on expense management as Sanjay and his team reset the business for growth.

On the IMS front, net sales for the quarter were $14.8 million, $11.7 million is recurring. The quarter sales activity remains active, reinforcing our belief that the trend of outsourcing is continuing to grow. During the quarter, we re-contracted 15 clients totaling $55.2 million in annual recurring revenue, with an average length of over three plus years.

Revenue for the quarter was flat to third quarter, reflecting the impact of capital markets offset by client installs. We continue to see growth within many of our top clients. Expenses were up slightly from the third quarter, reflecting continued inflation pressures, growth in our talent and a true-up on incentive compensation for 2022. Our backlog of sold, but expected to install in the next 18 months recurring revenue is $32.9 million.

For Investment Advisors, net cash flow was approximately negative $675 million. This number reflects increased momentum in strategic initiatives, we have launched over the past two years. Offset by negative flows in mutual fund products. Activity included custody assets on the platform increased $473 million. Our dedicated RIA team produced $66 million in net positive cash flow and cash flows in the portfolio is built on our ETF strategies and our dimensional offering was approximately $350 million.

Our newer offerings are helping us move the business forward and to offset the negative flows we see out of mutual funds. Revenues for the quarter were down from third quarter as a result of asset levels entering the quarter, capital market performance during the quarter and net flow activity. Expenses were up slightly due to inflation and year-end activity.

We recruited 34 new advisors during the quarter, 15 of which were in the newer RIA channel and reengaged 13 existing advisory firms. Advisor activity remains strong, but we continue to see a slowdown in market activity on the part of both advisors and their clients. In the Institutional Investors segment, OCIO net sales events for the fourth quarter were essentially flat.

The unfunded client backlog of gross sales at quarter end was $2.5 billion. Revenues for the quarter were down from third quarter due to capital market activity, offset partially by net positive client fundings. We continue to see pricing pressure across all institutional markets and continued headwinds in the corporate PB segment globally. Expenses were also down reflecting reduced direct costs as well as general expense management.

In the Investments in New Business segment, revenues and expenses were flat to third quarter. We had net recurring sales of $500,000 in the quarter. We expect expenses in this segment while shifting to and supporting new initiatives to remain in this range.

LSV produced $31.7 million of profit during the quarter. This compares to $26.7 million during the third quarter. Revenues for LSV were $107 million compared to $91.6 million in the third quarter. LSV recorded performance fees of $13.4 million during the quarter, reflecting strong positive relative performance. The growth in revenues is a result of investment performance and capital growth in assets offset by net negative client flows.

Net sales were down slightly, while net flows from existing clients due to de-risking and reallocation were negative $2.3 billion. Market appreciation was approximately $12.8 billion. LSV continues to have active sales activity and continued positive performance will help that. Our tax rate for the quarter was 18.1%. That concludes my remarks. As a reminder, all of our unit heads are on the call.

And we'll now be happy to entertain any questions. Thank you.

[Operator]

[Operator Instructions] And our first question comes from the line of Ryan Kenny with Morgan Stanley. Please go ahead.

[Ryan Kenny, Morgan Stanley]

Hi, good afternoon.

[Ryan Hicke, CEO]

Hi Ryan.

[Ryan Kenny, Morgan Stanley]

Just a couple of efficiency-related questions, so first on the quarter, it looked like it came in a little bit lighter than usual on margins. So just wondering if you could give us some color on how we should interpret the trajectory for pretax margin? And if there's not a rebound in markets this year, are there any expense items that you could flex lower?

[Dennis McGonigle, CFO]

Sure, I mean margins given the nature of our - the predominant nature of our revenue streams being asset-based, when we have these down markets, and we're - most of our revenues are average asset base. So the market might be up kind of point-to-point. But in between, there's a lot of activity, which results in kind of lower average assets. That's revenue that really comes right off the bottom line. So margin compression is somewhat a function of that.

I'd say in the quarter, though yes, we did have good expense management overall and did that in the context of maintaining the investments and the things we know are important and feel really and critical to our future growth prospects. If we have downward pressure, continued downward pressure on markets, we do have some variable costs that we'll adjust based on assets that's, kind of the first expense item on our P&L.

Beyond that, a big chunk of our compensation is variable. So we certainly have the ability we felt necessary to adjust that based on company - overall company financial performance as the year goes on, we've done that say, under other periods under extreme market pressure we've made those adjustments. We do have some variable spending, if you will on things that we could hold off on if we chose to.

I'd say that our general rule of thumb, though is difficult markets - do end. And when we come out of them, we want to be in this position of strength to take advantage of markets reopening and clients and prospects moving back to making business decisions on our side. So we wouldn't give up - certainly would never give up the future and the opportunities the future presents in tougher market cycles. Well, not as so we've been through it before and everybody around this table has been through it before. So we'll work - our way through it.

[Ryan Kenny, Morgan Stanley]

Thanks that's clear. And then just one follow-up, the press release called out greater investments in compliance infrastructure. Can you just help us understand what that is? And is that a one-time build or is that a multiyear build that would be helpful? Thanks.

[Dennis McGonigle, CFO]

I'd say it's really just a continuation of what businesses like ours have been facing over the past say five, 10 years, but certainly accelerated over the past five years. And that's really our ability to meet the compliance requirements of the regulatory frameworks within which we have to operate in all the jurisdictions we have to operate and also making sure that our knowledge of those compliance requirements makes their way into the products and services we are delivering to clients because they are also dealing with those same regulatory compliance pressure.

So it's almost - first we have to digest the meal and then we can share the meal with the clients after we digest it. And if you look around the globe, whether it's the U.K., Ireland, Europe, the U.S., Canada, the regulatory pressure every client just continue to build. So that's really what that referencing. And also, I'd say that there's been continued shift of in many jurisdictions where they want the regulatory work to be local, locally done rather than centralized outside of their domain. So that's adding a little bit to the - or has added over time, a little bit of the cost pressure.

[Ryan Kenny, Morgan Stanley]

Thank you.

[Dennis McGonigle, CFO]

Well.

[Operator]

Next, we'll go to the line of Owen Lau with Oppenheimer. Please go ahead.

[Owen Lau, Oppenheimer]

Thank you for taking my question. Ryan, during the Investor Day, you have identified some area for growth such as outsourcing and partnership opportunities, cybersecurity and RIA. Could you please talk about if there's any particular growth area that you would focus on in 2023? Thank you.

[Ryan Hicke, CEO]

Sure Owen. Good to hear from you Happy New Year. I kind of take those in stages. So if you look at our focus on - I'll come back to the outsourcing one in a second. You looking at something like cyber, that's the SEI Sphere business that I mentioned in the call. We've actually increased our sales force there, added a little bit more in terms of our capabilities in the cyber and cloud offering and actually really started to get more aggressive taking that service out to existing clients.

In the RIA space, Dennis talked about in Wayne on the call, yes we have a dedicated team there we put in place last year. We're really starting to see some positive traction and momentum in flows from that segment. When you look at the total addressable market and the size and breadth of that segment, it is definitely an area where we really feel that we compete well that our value proposition aligns and that we actually are a little differentiated.

Because of our ability to kind of unbundle the technology, the administration and the manufacturing with our open source solutions and our own manufactured solutions. We feel very good there. And it's interesting on your kind of outsourcing point in the first box from November, I was thinking about this the other day that right in the outset from April through, I'd say, July, without seeing a lot of our clients, and I would call that a little bit more of a listening tour.

Now we're on kind of round two of those. Bill and I were just on the road last week and it's a little bit more of a growth tour. And that - those conversations with two of our larger clients last week are more about how can we be doing more together with them? Where could SEI add value? Where do they want to deploy their capital? And those conversations, I think, are actually starting to happen in a more widespread way across all SEI client bases.

So that's something that I get excited about because our engagement with our top clients has been really strong. We have a lot of clients coming on campus in the next 30 to 60 days. But I think that transition is, key there. And then the fourth area, Owen, that we talked about in November was alternatives, and we will continue to lean in that space, not just through bills, business and IMS.

But in terms of how SEI creates more opportunity from a manufacturing perspective around alternatives and where we believe we can facilitate more capabilities with our position with technology between the manufacturing space and the distribution space, especially in the U.S. So long-winded answer to your simple question, we are really focused in those four areas to varying degrees of traction, but it feels good. The client engagement is very high right now.

[Owen Lau, Oppenheimer]

Got it, that's super helpful. And then maybe - Dennis just a housekeeping question about the interest and dividend income, I saw there was a $6.6 million interest and dividend income. How should we think about this line item going forward? Thank you.

[Dennis McGonigle, CFO]

Well, it's really - I mean, Owen I mean it's pretty simple the interest rates go up. We're earning more on our cash. Now we're not - certainly don't view interest income is how we're going to drive growth. But as long as if interest rates stay where they are or continue to creep up and our balance sheet kind of stays under its current construct and interest income will improve. So...

[Owen Lau, Oppenheimer]

Let's say any -- like the base of the, I guess, the interest income asset that you can disclose?

[Dennis McGonigle, CFO]

I'm sorry. The interest income we earn on our balance sheet is really comes from the cash we have on deposit were invested in money market funds or other cash instruments. That's where -- that's all that is.

[Owen Lau, Oppenheimer]

Got it. Okay. Thank you. Thanks Dennis.

[Dennis McGonigle, CFO]

You're welcome. Yes, we don't -- I would just -- we don't generate spread income, that's what you're getting at.

[Owen Lau, Oppenheimer]

Yes, okay. Got it. Thanks.

[Operator]

Next, we'll go to the line of Mike Brown with KBW. Please go ahead.

[Mike Brown, KBW]

Hi, good afternoon. I guess, first, I wanted to just follow up on the margin question. How are you guys thinking about the longer-term operating margin for the business? And then maybe more near term for 2023. I guess came in closer to 20% this quarter, but it was closer to high 20s, more so historically. Is that where it should trend back to eventually?

[Dennis McGonigle, CFO]

Mike, I'll answer first and then Ryan will tell me whether I got this right or not. My expectation is the margins will trend more to where they have been historically. We have different businesses operating. We certainly have an expectation that the private banking margins will improve over time. That's really what Sanjay has been working and his team are working on kind of resetting the business, bedding down the kind of revenue picture on the client side and making some progress on the spending side.

So there's certainly expectations for us that, that business will -- has been reset in the late stages of being reset. And as we grow it, we'll capture more margin. The IMS business, I think you'll see everybody is on the call, they can comment as well after I'm done. That business is kind of a mid-30s, 34% to 36% margin business. Typically, when it's creeped up to the high 30s, that's more of an anomaly than kind of how we see the business operating. And we expect the margins to kind of be in that 34%, 35% range over time. And these are all market neutral comments.

So Investment Advisors, I think, is one area where we're going to be consolidating the AMD, the asset manager distribution components of revenue and profits with the adviser channel, that will have a dampening effect on the margins just because of margins in the asset management distribution business and the types of clients we serve there in the global nature and how we report revenue and expense in that business because the sub-adviser cost for the non-U.S. assets are an expense item on the P&L. That runs at a lower margin business than adviser business has run historically.

So that will have a little bit of a dampening impact just on the math corporate margins, it should have an impact. But there, given the mix of business over time, as Wayne talk about some new types of products and capabilities of strategic asset offer versus mutual funds as a straight-up product, the margins on those products, as well as selling custody-only assets onto the platform with a lower price point. We always expected the margins in that business to contract slightly, but with an expectation that it will be a much bigger business.

So kind of higher dollar profit, slightly lower margins. And then couple that with the institutional business, which has always been a high-margin business. But with the compression of revenue, and as I mentioned and Paul has mentioned many times, the pricing competitiveness in the market, while that's been kind of a 50%, high 40s percent margin business, their margins will probably track a little bit over time, but with market success, again, dollar profits should improve. So overall margins, I would expect them to be kind of in historical ranges, but for different reasons than maybe they have been in the past.

[Ryan Hicke, CEO]

Mike, I don't have anything to add to that. I think Dennis captured it all. And I think kind of echoing an earlier point, we have a good understanding and a good track record of how to operate the business in kind of difficult times. We're going to continue to operate with courage and conviction in the areas that we believe we want to invest for the future. But I also think, as Dennis mentioned, with Sanjay and the team have done the last nine months to really stabilize private banking, and we can grow off that point will also help to offset some of the areas where we might see some compression. But that compression will be driven by growth of new solutions, which would be a good thing.

[Mike Brown, KBW]

Okay. Thank you, Dennis and thank you, Ryan. To switch gears to the recontracting actions. I'm good to hear that you've been able to extend those relationships and thanks for quantifying some of the impacts there. How do you -- how should we think about what's the opportunity with some of those specific clients to cross-sell and will deepen the relationship there? Is there opportunities to mitigate some of those recontracted headwinds here give some specific examples that would be helpful. Thank you.

[Ryan Hicke, CEO]

Yes. I think we'll let Phil and Sanjay answer that. Phil, do you want to go first?

[Phil McCabe, EVP, Head-Investment Manager Services]

Sure. Okay. Thank you. What I would say on a recontract side is actually we did really well. It was 15 different clients. It was about $55 million in revenue, for the most part, a little bit more than three years on average and fees stayed pretty much the same. In some cases, we sold some new products and services.

So for us, it was really good. I think if you look at IMS for the quarter, our sales were about $14.8 million, and that was pretty much 50-50 between cross-sell and new business. So the pipeline is strong. The clients are doing really well. I mean I think we're in a really good place right now. Sanjay?

[Sanjay Sharma, EVP and Global Head-Private Banking]

Yes. Thank you, Phil. I would echo Phil on the similar lines. When I took over private banking responsibility back in kind of Q2 of last year or so, one of the key up was to retain clients, engage our clients and grow with the client's growth. So based on that, we came with the startup of how we ensure that we fix the leaky bucket but because we've seen that happening in the earlier phases. So we came with the strategy, engaging with the clients and that was the result of those initiatives that in the fourth quarter, we could recontract eight clients. And if I quantify those recontracts except one client, we are pretty much neutral.

So except one client where we made -- again, it was a part of our strategy that how we can grow with that client that specific client was looking at consolidating their vendor partner footprint and looking at the growth opportunities. And I'm very pleased to say that, yes, we were selected as one of the strategic partner there. And now we are working actively with that client to come with a road map in terms of how we can grow together.

So as I would bring it back that the recontracting is a part of our growth strategy, so that we can cross-sell and port banking especially in that segment, it can open up the rest of SEI capabilities as well.

[Ryan Hicke, CEO]

And Mike, the other thing I would add to what Sanjay and Phil said is that this is kind of more of our -- there aren't kind of change internally is as I mentioned earlier, we have three or four organizations coming in the last week in February alone with their executive team for an Oaks visit. They're going to be meeting with a lot of people around this table as opposed to just the unit head, who has the client relationship.

So I think that whole posture and positioning has changed for us so that when clients are on site or we're out seeing clients, there's a little bit of a broader representation of SEI leadership and engagement there so that we're positioning the company and not just a unit. And I could tell you, I mean, activity doesn't necessarily always equate to results, but we have the right activities right now, and we're getting the right level of engagement. I think the clients have actually been super receptive a broader conversation around the capabilities that SEI can bring to bear to help them succeed.

[Mike Brown, KBW]

Great. Thank you. Thanks for taking my questions.

[Ryan Hicke, CEO]

You're welcome.

[Operator]

[Operator Instructions] And see no further questions. I will turn it back to CEO, Ryan Hicke. Please go ahead.

[Ryan Hicke, CEO]

Thank you. Appreciate your participation on the call today. I'm personally energized by the opportunities that lie ahead for SEI. We will continue to focus on leveraging our reach, driving sales and profit growth, capitalizing on market trends but also helping clients maximize their opportunity right now and delivering what the market values. I appreciate everyone attending our call today. Thanks.

[Operator]

That does conclude our conference for today. Thank you for your participation and for using AT&T conferencing service. You may now disconnect.