SLR Investment Corp

NASDAQ:SLRC

Earnings Call Transcript 2024-Q3

[Operator]

Good day, everyone, and welcome to today's Third Quarter 2024 SLR Investment Corp. Earnings Call. [Operator Instructions] Please note, this call is being recorded. [Operator Instructions]

It is now my pleasure to turn the conference over to Michael Gross, Chairman and Co-CEO.

[Michael Gross, executive]

Thank you very much, and good morning. Welcome to SLR Investment Corp.'s Earnings Call for the quarter ended September 30, 2024. I'm joined here today by my long-term partner of 18 years, Bruce Spohler, Co-Chief Executive Officer; our Chief Financial Officer, Shiraz Kajee; and SLR Investor Relations team.

Shiraz, before we begin, would you please start by covering the webcast and forward-looking statements?

[Shiraz Kajee, executive]

Thank you, Michael. Good morning, everyone. I would like to remind everyone that today's call and webcast are being recorded. Please note that they are the property of SLR Investment Corp., and that any unauthorized broadcast in any form is strictly prohibited. This conference call is also being webcast through the Events calendar in the Investors section on our website at www.slrinvestmentcorp.com. Audio replays of this call will be made available later today as disclosed in our November 6 earnings press release.

I would also like to call your attention to the customary disclosures in our press release regarding forward-looking statements. Today's conference call and webcast may include forward-looking statements and projections. These statements are not guarantees of our future performance or financial results and involve a number of risks and uncertainties. Past performance is not indicative of future results. Actual results may differ materially as a result of a number of factors, including those described from time to time in our filings with the SEC. We do not undertake to update any forward-looking statements unless required to do so by law. To obtain copies of our latest SEC filings, please visit our website or call us at [phone].

At this time, I'd like to turn the call back over to our Chairman and Co-CEO, Michael Gross.

[Michael Gross, executive]

Thank you, Shiraz. And again, thank you for everyone for joining our earnings call this morning. After the market closed yesterday, SLRC reported net investment income of $0.45 per share for the third quarter of 2024, consistent with the prior quarter and representing distribution coverage of approximately 110%. Given that base rates declined for the first time in 4 years and conditions in the sponsor finance market remained fiercely competitive in the third quarter, we are pleased with the stability of our quarterly net investment income.

Additionally, as a testament to the overall credit quality of our portfolio, our net asset value remained at $18.20 per share. We believe our stability is a direct result of our conservative underwriting philosophy and multi-strategy approach to private credit investing with approximately 78% of our loan portfolio derived from specialty finance investments supported by collateral and the remainder in cash flow loans to borrowers in recession-resilient industries as of September 30.

Due to the more favorable conditions in our specialty finance markets, our investments in the third quarter were once again more heavily weighted in those asset classes, which we believe currently provide a more attractive risk-adjusted return relative to sponsor finance loans. 96% of our third quarter originations were in specialty finance, much higher than our historical mix. We believe our ability to pivot to the best risk-adjusted return across our private credit strategies is a hallmark of SLR's multi-strategy allocation approach.

Increasingly, private credit investors are looking for proprietary investment strategies and less correlated portfolios across their BDC investments, which we believe is clearly visible in our results, our portfolio composition and the momentum we have achieved year-to-date. Within our specialty finance businesses, we are seeing a combination of an increase in organic and strategic opportunities to expand our portfolio and product offering.

Across our ABL strategies, ongoing bank consolidation and risk reduction are driving commercial banks to exit noncore business lines and consider strategic partnerships, resulting in increase in investment pipelines for our ABL teams.

At the end of the third quarter, SLRC's portfolio company, SLR Business Credit, capitalizes on this dynamic by acquiring an asset-based factoring portfolio and operations from Webster Bank's Commercial Services division and an asset purchase that included a seasoned portfolio and a small team of professionals.

The $124 million factoring portfolio is diversified with loans to long-standing customers. The team of 14 professionals, which is based in New York, specializes in providing financing solutions to middle market companies with a focus on apparel, textile, jewelry and transportation businesses. The low to mid-teens returns and cumulative low loss rate experience for this factoring business makes the asset class an attractive addition to our ABL portfolio.

Additionally, the acquisition of the team enhances our suite of ABL financing capabilities, expands our expertise in lending to new industry verticals and deepens our extensive geographic coverage. This transaction represents SLR Business Credit's fourth tuck-in acquisition under our ownership. Importantly, it is indicative of the opportunities that we are seeing from regional banks retreat in certain direct lending asset classes. We have a strong pipeline of potential additional acquisitions that our team is currently evaluating.

Given that our ABL businesses have not experienced a degree of increased competition in sponsor finance, we are able to remain highly selective in cash flow lending. We achieved this by focusing on recession-resilient industries and not feeling beholden to recommitting to loans and refinancing that no longer meet our underwriting thresholds.

All that said, with the election uncertainty behind us, we believe that the supply-demand dynamic in the sponsor finance market has the potential to improve from accelerating merger and acquisition activity and new capital formation. Our flexible approach enables us to allocate capital to new sponsor finance investments when market conditions improve.

As an example, in 2023, our origination mix was heavily weighted towards cash flow loans. SLRC's comprehensive portfolio had originations of $397 million and repayments of $328 million in the third quarter, resulting in net portfolio growth of $68 million. 96% of originations were from SLRC's specialty finance verticals. Said another way, only 4% of our third quarter originations were in sponsor finance, a continued reversal from last year when originations were concentrated in sponsor finance.

We remain pleased with the composition, quality and performance of our portfolio. At quarter end, approximately 97% of our comprehensive investment portfolio was comprised of first lien senior secured loans. Our long-standing focus on first lien loans has resulted in a portfolio which we believe is more conservatively positioned and better equipped to withstand persistent inflationary pressures and high interest rates and portfolios with second lien and broader cyclical exposure.

As of September 30, we only had one investment on nonaccrual, representing 0.6% and 0.4% of the investment portfolio on a cost and fair value basis, respectively. We believe our low rate of nonaccruals is a result of our multi-strategy approach and is well below the peer BDC average.

At September 30, including available credit facility capacity at SSLP and our specialty finance portfolio companies, SLRC had over $750 million of available capital to deploy. From our seats, we believe SLRC is in a favorable position to take advantage of either durable economic conditions or a softening of the economy.

I'll now turn the call back over to Shiraz, our CFO, to take you through the Q3 financial highlights.

[Shiraz Kajee, executive]

Thank you, Mike. SLR Investment Corp.'s net asset value at September 30, 2024, was $993 million or $18.20 per share, consistent with the quarter ended June 30, 2024. At quarter end, SLRC's on-balance sheet investment portfolio had a fair market value of approximately $2.1 billion and 131 portfolio companies across 34 industries compared to a fair market value of $2.1 million and 138 portfolio companies across 37 industries at June 30.

At September 30, the company had approximately $1.1 billion of debt outstanding with a net debt-to-equity ratio of 1.1x. We expect our net debt-to-equity ratio to remain in the middle of our target range of 0.9 to 1.25x.

SLRC's funded debt consisted of 58% in revolving credit facilities and 42% of fixed rate unsecured notes at quarter end. During the quarter, the company amended both its senior secured credit facility and SUNS SPV credit facility agreements, extending out maturities and increasing commitments.

Company's $470 million of senior unsecured fixed rate notes have a weighted average annual interest rate of 3.8%. We remain in dialogue with the fixed income community and expect to opportunistically access the investment-grade market to address near-term maturities.

Moving to the P&L. For the 3 months ended September 30, gross investment income totaled $59.8 million versus $59 million for the 3 months ended June 30. Net expenses totaled $35.4 million for the 3 months ended September 30. This compares to $34.7 million for the prior quarter.

Accordingly, the company's net investment income for the 3 months ended September 30, 2024, totaled $24.3 million or $0.45 per average share, consistent with the prior quarter and more than covered our $0.41 per share distribution during the period.

Below the line, the company had a net realized and unrealized loss for the third quarter of $2.3 million versus a net realized and unrealized loss of $1.1 million for the second quarter of 2024.

As a result, the company had net increase in net assets resulting from operations of $22 million for the 3 months ended September 30 compared to a net increase of $23.2 million for the 3 months ended June 30.

On November 6, the Board of SLRC declared a Q4 2024 quarterly distribution of $0.41 per share payable on December 27, 2024, to holders of record as of December 13, 2024.

With that, I'll turn the call over to our Co-CEO, Bruce Spohler.

[Bruce Spohler, executive]

Thank you, Shiraz. Given the current competitive sponsor finance cash flow market, the flexibility offered by our commercial finance strategies enables us to source attractive investment opportunities away from this competitive cash flow market. We take a fundamental bottom-up approach to our portfolio construction based on the relative risk-adjusted return profile across our investment verticals.

At quarter end, on a fair value basis, the comprehensive investment portfolio consisted of approximately $3.2 billion of senior secured loans to over 850 borrowers. The average exposure per borrower is $3.7 million. Measured at fair value, over 98% of our portfolio consisted of senior secured loans with just under 97% invested in first lien loans, including investments in the SSLP attributable to the company and only 0.2% was invested in second lien cash flow loans with the remaining 1.2% of the portfolio invested in second lien asset-based loans.

Our specialty finance investments account for approximately 78% of the comprehensive portfolio, with just over 22% invested in first lien cash flow loans to upper mid-market sponsor-backed companies. We believe this defensive portfolio construction positions us well and provides a differentiated risk return profile relative to sponsor finance-only portfolios.

At quarter end, our weighted average yield on the comprehensive portfolio was 11.8%. Our portfolio credit quality remains strong.

At quarter end, the weighted average investment risk rating was just under 2 based on our 1 to 4 risk rating scale with 1 representing the least amount of risk. Over 98% of the portfolio is rated 2 or higher at quarter end.

Additionally, 99.4% of the portfolio on a cost basis and 99.6% on a fair value basis was performing with only one investment on nonaccrual.

Now let me touch on each of our 4 investment verticals. Sponsor finance or cash flow lending. In this business, we originate first lien senior secured loans to upper mid-market companies in noncyclical industries such as health care, business services and financial services. This has helped to mitigate the impact on the portfolio from cyclical economic factors. At quarter end, our sponsor finance cash flow portfolio was $714 million, including senior loans in our SSLP, representing 22.4% of the comprehensive portfolio. It was invested across 45 borrowers with approximately 99% of the portfolio invested in first lien loans.

Our borrowers have a weighted average EBITDA of approximately $132 million, median EBITDA of $65 million and carry low LTVs of just over 42%. Sponsor finance, the average EBITDA and revenue growth continues to be positive across our portfolio companies.

Overall, our borrowers have successfully managed the transition to an environment with higher cost of capital as well as inflationary premiums. The weighted average interest coverage for our sponsor cash flow loans has been stable at approximately 1.8x. Additionally, only 1.7% of our third quarter gross income is in the form of capitalized PIK interest from cash flow borrowers resulting from amendments. We believe these healthy credit metrics are the result of the diversity of our investment portfolio across private credit strategies and our focus in sponsor finance on recession-resilient industries with high recurring free cash flow.

While M&A has picked up in the second half of this year, activity levels are still well below the historic norm. This has caused much of the private debt activity to remain centered on repricings and dividend recaps. With the resulting spread compression and weaker structural protections, we are remaining highly selective in our cash flow investments. However, we are optimistic that sponsor finance conditions will improve next year as sponsors seek to return capital to their LPs through exits.

During the quarter, we made investments of $14.5 million in sponsor first lien loans and experienced repayments of just under $39 million. Michael mentioned, sponsor finance deal flow continues to be muted due to the lower M&A volume. However, there are pockets of opportunities in our defensive sectors to invest at attractive risk-adjusted returns. At quarter end, the weighted average yield on our cash flow portfolio was 11.1%.

Now let me turn to our Specialty Finance segments. Across the board, the credit quality of these loans continues to be solid with attractive LTVs supported by meaningful collateral. I'll first discuss our ABL portfolio.

At quarter end, this portfolio totaled $1.1 billion, representing 35% of our total portfolio. It was invested in 262 different borrowers. Weighted average asset level yield was 14.4%. We continue to see an increase in the opportunity set for ABL, resulting in a strong pipeline heading into year-end. Money center and regional domestic banks have been pulling back from the ABL market, creating an attractive opportunity for our team.

Additionally, bank's ability to pledge asset-based loans or factoring loans as collateral for borrowing with the Fed, I'm sorry, has been reduced. SLR is positioned to collaborate with banks who are shifting their ABL strategies in reaction to these challenges.

Our recent acquisition of the loan portfolio and servicing platform from Webster Commercial Services is an example of this type of opportunity. We're currently involved in other strategic discussions regarding either purchasing portfolios, joint ventures or referral programs.

Additionally, we're continuing to see opportunities to provide ABL structured facilities to traditional cash flow borrowers who are facing liquidity pressures. Borrowers who have traditionally accessed the cash flow market are now more receptive to SLR's ABL solutions to provide working capital financing. These ABL facilities carve out working capital assets from our borrower into a borrowing base that supports an incremental ABL facility ahead of their cash flow facility and provides additional liquidity for our borrowers. For the third quarter, we had $244 million of new ABL investments, including the Webster acquisition and repayments of $107 million.

Turning to Equipment Finance. At quarter end, this portfolio totaled $1.1 billion, representing 1/3 of our comprehensive portfolio with facilities across 540 borrowers. Credit profile of this portfolio continues to be stable. Weighted average asset level yield was 9.4%. During the third quarter, we originated $138 million of new assets with the majority of this coming from our business that provides leases to investment-grade borrowers for their mission-critical equipment. We had repayments of approximately $104 million. Our investment pipeline has expanded in conjunction with the disruption caused by last year's regional bank failures as well as the expansion of our vendor finance program.

Now let me turn to Life Sciences. At quarter end, this portfolio totaled $267 million. Approximately 90% of the portfolio is comprised of investments in borrowers that have over 12 months of cash runway. Additionally, all of our portfolio companies have revenues with at least one product in commercialization stage, which significantly derisks our life science investment. These investments represented 8.4% of the total portfolio for the third quarter and contributed over 25% of our gross investment income. The life science industry continues to be somewhat challenged with 28% of the deals to date being invested in down or flat rounds, which is the highest level in recent history. Many small cap and private biotech values have remained significantly lower than their pre-Silicon Valley Bank collapse highs and over $300 billion of VC dry powder has remained mostly on the sidelines awaiting for valuations to reach a better equilibrium, particularly in later-stage development companies where we invest.

While SLR's portfolio has held up well, in part due to our focus on late-stage post-commercialization life science companies, there has been an increase in defaults in life science portfolios due to weaker lender protections that prevailed in the market prior to the collapse of Silicon Valley Bank.

A forward-looking rate environment should result in a more normalized life science lending activity, but it will also slow the process, and we anticipate current conditions to persist for at least another couple of quarters.

Venture debt financing in health care-related IT service companies has been active. But due to the lack of IP protection and other collateral that we require, SLR has remained on the sidelines. In addition to sourcing new opportunities in late-stage drug development and device companies, we remain focused on supporting and in some cases, expanding our existing portfolio of borrower relationships.

By keeping healthy life science credits longer and increasing our credit facilities to finance their growth, we have been able to maintain meaningful exposure to this asset class during a challenging time for the life science industry broadly, while maintaining a comfortable level of diversity.

During the third quarter, the team funded $1 million of new facilities and had $78 million of repayments. At quarter end, the weighted average yield on our life science portfolio was 12.6%, including potential success fees, however, excluding any potential warrant gains. With early signs of improvement in the life science market, we've seen a modest uptick in private and public equity valuations as well as in our investment pipeline.

Given our ability to allocate capital to the best risk-reward opportunities across our various private credit asset classes, we have the luxury of being highly selective as we look to deploy capital in life sciences, while still generating positive originations across the entire platform.

Lastly, let me touch on our SSLP. During the quarter, SLRC earned $1.9 million from SSLP, representing a 15.7% annualized yield, consistent with the prior quarter. At quarter end, it had a fair value of $204 million, including unfunded commitments, investment at SSLP totaled approximately $219 million.

Now let me turn the call back to Michael.

[Michael Gross, executive]

Thank you, Bruce. In conclusion, we remain pleased with the stability achieved in our third quarter results and encouraged by the overall credit quality of our investment portfolio, which is evidenced by another quarter of NAV stability, no changes to a low level of nonaccrual investments, a low level of watch list investments and minimal payment in-kind income with broad diversification.

While concerns about credit quality and private credit portfolios continue to creep into the market psyche, we view the consistency of results achieved in 2024 as a testament to our multi-strategy approach to private credit investing. As we sit here today and observe the growth in our platform over the last few years that has expanded our diversified commercial finance investment capabilities and momentum across our business, we believe the company is positioned very favorably.

Market expectations for the shape of the forward interest rate curve remain dynamic on the heels of this week's elections, but do continue to include declines in base rates throughout 2025. This situation may present a challenge for some private credit portfolio yields and earnings that are constructive with predominantly floating rate cash flow loans vintage concentrations. With approximately 35% of our portfolio indexed to fixed rates, investors should come to appreciate that SLRC specialty finance assets have a lower correlation to base rates and offer a more substantial, more absolute return like profile and the company, therefore, has portfolio yields that are expected to have a lower beta to future changes in SOFR.

In closing, SLRC trades at a 10.7% dividend yield as of yesterday's market close, which we believe presents an attractive investment for both income-seeking and value investors and offers shareholders portfolio diversification benefits compared to cash flow-only strategies. Our investment advisers' alignment of interest with SLRC shareholders continues to be one of our significant hallmark principles. The entire investment team and the entire firm own over 8% of the company's stock and includes having a significant percentage of their annual incentive compensation invested -- reinvested in SLRC stock.

The team's investment alongside fellow institutional and private wealth investors demonstrates our confidence in the company's portfolio, stable funding and earnings outlook.

We thank you all again for your time today as we know it's a busy time for those that follow the listed BDC marketplace closely. Operator, will you please open up the line for questions.

[Operator]

[Operator Instructions] And we will take our first question from Bryce Rowe with B. Riley.

[Bryce Rowe, analyst]

I wanted to -- I guess, just kind of a quick one here on Business Credit and the Webster acquisition. You put some equity into that subsidiary, the SLR Business Credit subsidiary. And kind of curious what your thoughts are around maybe the increased dividend or increased earnings from that particular investment. I mean again, it's really early days in terms of the investment, but certainly expecting some level of increased return there.

[Bruce Spohler, executive]

Yes. We definitely are expecting some increased return. I think in the first quarter or so, it will start a little bit slower as we integrate the business into the platform. We did buy a business, came with about 14 people as well as the $125 million or so portfolio. So we are targeting sort of a low to mid-teens ROE on that investment. So I think if you put that across the $30 million or so of equity that we dropped in, that's a good starting point, and we hope there's upside from there.

[Bryce Rowe, analyst]

Okay. That's helpful, Bruce. And maybe a couple more here. As we think about the SLR senior credit, are you at kind of a level where leverage within that particular portfolio is where you want to be? Or would you like to operate it with potentially more leverage?

[Bruce Spohler, executive]

No, I think the leverage is where we want it to be. We are thematically, as Michael mentioned, rotating out of cash flow loans and the entire strategy at SSLP is cash flow investing. So you'll see it bump around a little bit as we get some repayments and opportunistically add to it. So I don't think there's much more leverage there. I think there's a little bit more upside as we optimize the size of SSLP, but we'll let a few loans go in this repricing environment.

[Bryce Rowe, analyst]

Yes. Okay. And then maybe one more around the repricing environment. We've heard a lot about the potential for M&A to pick up to help maybe, I guess, remix the supply and demand within private credit as it relates to cash flow lending. Do you all sense that there could be an opportunity to maybe to reemerge within that market now that you're pivoting? I'm just kind of trying to get a feel for how long the pivot lasts and how opportunistic you all can be with the current market environment.

[Bruce Spohler, executive]

Yes. I think the first thing that happens is, to your point, it takes the pressure off the existing portfolio because everybody starts to underwrite new opportunities and that supply dynamic shifts such that, it's difficult for borrowers to come in and reprice the existing portfolio. So from our perspective, we took our portfolio down from 26% sponsor finance to 22% -- I'm sorry, 24% down to 22%.

Last year, we peaked at over 26%. So it will move around for us. We never see it much more than high 20s, and we don't see it getting down to much lower than high to mid-teens. So we are looking for new opportunities, but the first benefit is definitely taking the pressure off the existing portfolio from a repricing perspective.

[Michael Gross, executive]

I do think, though, that there's been so much money raised for just sponsor finance that it's not going to change the yield that we're seeing dramatically at all. What it does do for us, though, given how picky we are in cash flow lending, it gives us more opportunity to choose amongst and find things that fit our type box. But I would not sit here today and assume that spreads are going to widen dramatically just because there's more M&A supply coming.

[Operator]

And we will take our next question from Melissa Wedel with JPMorgan.

[Melissa Wedel, analyst]

I was hoping you could elaborate a little bit more on the assets that were acquired in that factoring portfolio. Can you just talk a little bit about how those maybe provide some -- do they diversify the rest of that existing portfolio? And then are they sort of fixed rate or floating rate assets? Appreciate it.

[Bruce Spohler, executive]

So good question, Melissa. They're all floating rate. And they're consistent with our existing platform that is already both either factoring or in an ABL structure lending against receivables. So the collateral is something that we're incredibly familiar with. What it does for us is, yes, it adds an element of diversity. We had approximately 94 different borrowers across the $124 million of funded assets. So it's a very diverse portfolio with an average investment of about $1.3 million per borrower.

Yields are in the low to mid-teens and losses are de minimis because effectively, in factoring, you're buying or lending against high-quality receivables. In this case, think Walmart, Costco, Amazon and yet our customers are clearly not of the same credit quality. And so therefore, we get to charge higher returns, but our underlying risk really is close to investment grade.

What we like about the portfolio is it is long-standing, long-tenured relationships. This is not an M&A sponsor finance portfolio that churns every couple of years as sponsors come in and out of investments. Here, this is working capital financing for our borrowers. So the average relationship in the Webster portfolio is 9 years. So it's very stable assets, but the underlying collateral turns every 30, 60, 90 days.

So we have the ability to unwind our investment rather quickly if we want out. Obviously, that's not what we're seeking to do with relationships that have lasted 9 years. But from a risk mitigation perspective, the ability to unwind quickly against very high-quality collateral and yet keep long duration and high returns on these assets is extremely attractive.

It's also, I would say, unique to our platform in that you need to be in this business to be able to make an acquisition like this. We acquired a business, came with a team, not all of the team that Webster had. We were able to find some synergies and bring it on platform. And it also adds diversity to the industries that we focus on. We already are very active in health care ABL.

We're very active in digital media ABL with our acquisition a couple of years back. And this is very -- as Michael mentioned, focused on traditional factoring industries such as apparel, textile, jewelry. So it expands a region and an industry focus for the team there. So we think it's extremely attractive and we'd love to do more.

[Melissa Wedel, analyst]

I appreciate all that context. Speaking of doing more, leading right into my next question. Are you constrained -- are you getting constrained by the 30% cap? I mean how much capacity do you have to do additional deals like this?

[Bruce Spohler, executive]

So just as a quick reminder, remember, the 30% catches some of our FinCos because of the structure of owning the FinCo. We can put their assets actually on the parent company's balance sheet, and it doesn't utilize the 30%. So we have a lot of flexibility. And as we see large portfolios, the BDC, as you know, benefits from the affiliation with the broader platform with over $14 billion of investable capital, we can take assets both into the BDC and alongside in our private funds as well. So we feel we bring a lot of flexibility and don't feel constrained by the 30% test.

[Operator]

And we will take our next question from Sean-Paul Adams with Raymond James.

[Sean-Paul Adams, analyst]

On Rug Doctor, I know it's been on nonaccrual for a couple of years now. It's also held by a number of other BDCs. But it looks like the portfolio markdowns really haven't shifted in the last couple of quarters. Has there been any change or any pathway for resolution on that nonaccrual?

[Bruce Spohler, executive]

Yes. So that's a great question. As you know, while we care about every investment, it's rather de minimis in size across the portfolio. The big thing that happened with Rug Doctor is a couple of years back, we entered into a JV with BISSELL, who is a major player in the vacuum business, but not so much so in the rental vacuum business. And so BISSELL actually runs this JV. And so what you're seeing is our ownership and our peers, BDCs ownership in the JV.

The only reason it's on nonaccrual is because we have not been collecting interest. We've been keeping it in the business. And really haven't restructured our investment. We do think there'll be some resolution there with our JV partner. Long term they obviously would probably prefer to own all of it than part of it. But that's really, I think, going to be the catalyst down the road is [ BISSELL] is a likely acquirer of the remaining interest from ourselves and our pure BDCs.

[Operator]

And it appears that we have no further questions at this time. I will now turn the program back to our presenters for any additional or closing remarks.

[Michael Gross, executive]

No additional remarks other than to thank you for your time and attention on this particular busy season of quarter earnings. And again, as always, if you have any other follow-up questions, please feel free to follow up with any of our team. Have a great day.

[Operator]

Thank you. This does conclude today's presentation. Thank you for your participation. You may disconnect at any time.