Anthracite Capital Inc. Q3 2008 Earnings Call Transcript

Anthracite Capital, Inc. (AHR)

Q3 2008 Earnings Call

November 10, 2008 8:30 am ET

Executives

Harris Oliner - Corporate Secretary

Christopher Milner - CEO

Richard Shea - President and COO

James Lillis - CFO

Analysts

David Fick - Stifel Nicolaus

Rich Shane - Jefferies & Co

Presentation

Operator

Good morning. My name is Katrina and I will be your conference facilitator today. At this time, I would like to welcome everyone to the Anthracite Capital Incorporated third quarter 2008 Earnings Call. Our hosts for today's call will be Chief Executive Officer, Christopher A. Milner; President and Chief Operating Officer, Richard M. Shea; Chief Financial Officer, James J. Lillis; and Harris Oliner, Corporate Secretary. (Operator Instructions)

Mr. Oliner, you may begin your conference.

Harris Oliner

Thank you, operator. Good morning. This is Harris Oliner. I am the Corporate Secretary of Anthracite.

Before Chris, Richard and Jim make their remarks, I want to point out that during the course of this conference call, we may make a number of forward-looking statements. We call to your attention the fact that Anthracite's actual results may differ from these statements.

As you know, Anthracite has filed with the SEC reports, which list some of the factors which may cause Anthracite's results to differ materially from these statements. Finally, Anthracite assumes no duty to update any forward-looking statements. Chris?

Christopher Milner

Thank you, Harris, and good morning, everyone. As I am sure you are aware, the third quarter was a very difficult period of time. Unfortunately, October really did not get any better, in fact got significantly worse. Over the course of that period of time, we saw a number of major financial institutions, that experienced failure or near-failure circumstances and the system, financial system that is overall also experienced a great deal of strain.

During this period of time, from our standpoint, the equity markets also woke up a little bit to what was going on and saw very significant declines, not just in the US but around the world.

The irony of the equity market declines, as contrasted with the credit market strains that we have been talking about on this call for the last coupe of quarter, if not more, is that once equity markets start to decline and individuals around the country and around the world start to see their 401(k) balances or whatever it maybe substantially down, I think the broad population and, more importantly, in some respect politicians start to identify what the problem to a much greater degree than they may have when it was simply a package of letters, CDS, CMBS, whatever the academes might be that were causing problems in the market.

As a result, we have seen some very significant and coordinated global policy responses from a number of the central banks and the governments around the world. I think from our point of view that has begun to take hold and started to lessen some of the very dramatic negative implications to the financial system, particularly focused on the shorter-term money markets where some of the stress was the most extreme and we are starting to see relatively important indicators, like LIBOR, beginning to decline, showing a bit less systemic risk in the market.

Having said that, we think this is just the beginning of what will probably be a fairly long-healing process from a system standpoint. There will probably be significant amount of time before we can say, we have returned to what we characterize as a normal environment, although we recognize the normal will be different than it has been in the past.

What does this mean in terms of the economy? As I mentioned, the equity markets have realized the significance of what is been going in the fixed income markets and responded, and I think unfortunately the circumstance has been going on long enough and has had enough of an impact on the system that it is unlikely that the economy will avoid a recession at this point, if we are not in one already.

I think the systematic strain that has gone on over the last 15 to 18 months in the fixed income market, and certainly the last quarter or two in the equity markets, is very much pulling down confidence in the US. I also think that as you look at the US economy's contribution to the world economy overall and the number of conversations that were once had about decoupling or the ability of the world economy to extend a US slowdown, I think in many ways those theories have come apart a bit.

I think it is less a function of the US having a smaller proportion of the world economy which I think is in fact the case, but in circumstances that are extreme like the ones we are in now. I think it is very difficult for such a large proportion of the world economy to go through such a significant strain and not have it affect the whole.

Putting that into relief a bit, I think with this past month’s non-farm payrolls going down as significant as they did. You begin to see the effects across the economy of these various trends.

I think it is also important to note that each and every month during the course of 2008 has registered a decline in non-farm payrolls here in the US, and I think that starts to have an affect as I mentioned on consumer confidence and undoubtedly retail sales as we go into the holiday season here in the US.

As I mentioned, this is also being translated around the world into slower economic activity. Property values in the UK are down probably even more than they are here in the US, and the number of Japanese developers that have filed for bankruptcy relief is significant. So it does seem to be a phenomenon that is moving around the globe.

In the midst of all this, Anthracite is continuing to focus our attentions almost exclusively on the credit side of our activities and the liquidity of our company. It is clearly been a challenging environment, and frankly, we expect that will continue for some period of time.

From a standpoint of our lenders, they certainly have been very supportive and as will be discussed here in a bit, we did extend two of our lines during the quarter. Having said that, our lenders have their own pressures as well, and I think many of the margin calls that we have delineated in the press release are not just a function of mark-to-market changes in spreads as we have seen over the last twelve months, but are also starting to be impacted by some of the credit conditions that we see in the market place.

In this regard, CMBS delinquencies are up somewhat, although frankly, when you look at the amounts and think about the conversations that we have had on this call in the past, that they are probably not even as high as we would have expected or frankly as high as we have reserved for in our GAAP yield calculations. So, on the CMBS side, we do see some relative stability you would say.

I think where we are seeing more significant challenges around some of the floating rates, more transitional business plans where access to capital in terms of refinancing proceeds or sales or frankly the confidence associated with executing new leases are really driving what is going on. In the some cases, causing the depletion of certain reserves and we do take a couple of provisions during the period which Richard will talk about in more detail reflecting some of these transitional business plans.

Overall, from an operating performance standpoint, we did post operating earnings of $0.32 for the quarter which we do feel is a good reflection of the earnings capability of the company. Although, we certainly acknowledge in environments like this that operating earnings take on less significance as we focus our attentions very much on the liquidity side of things and the expectations for credit going forward.

With that as a brief overview, I am going to turn it over to Jim and he will go through the quarter's results in a bit more detail. Then Richard will talk some more about the liquidity side of things, the credit and where we are going from here. Jim?

James Lillis

Thanks, Chris. As Chris just mentioned, operating earnings for the quarter is $0.32 per share as contrasted with same quarter of last year, which was also $0.32 per share.

Our net income for this quarter was $0.14 per share as compared to last year's $0.19 per share. I think the best way to talk about this quarter and its operating earnings is to look at it on a linked quarter basis and comparing with the prior quarter. If you do that you will see that overall our income line and expense lines on the operating side are running fairly steady.

That is to be expected given we are not making any additional investments at this point in time. However, there is one line that did show an up tick of almost $3 million, that is the commercial real estate securities line, and I would like explain that in this call.

Each quarter, based on updated estimates of future cash flows, we increase or decrease the yields on our commercial real estate securities. If yields decline, there is an additional step where we reduce the cost basis of the security to fair market value.

Interest income is then computed based on this lower basis. This process does not change overall in reported net income as commercial real estate securities are mark-to-market through P&L.

As you may recall in the beginning of the year, we adopted FASB 159 for certain parts of our balance sheet, including our formerly available-for-sale securities. So in other words, the increase in interest income is offset by our corresponding increase in unrealized loss in the P&L. So, that gives you an idea of what contributed mostly to the uptick in the operating earnings quarter-over-quarter.

Moving down to the other income loss line, Chris has mentioned briefly and Rich will further into the provision for loan losses which actually is two loans aggregating $18.7 million. Another contributor to the other income loss line was what we call our FASB 159 adjustment, which is where we mark certain assets and liabilities to market each quarter.

Given the widened of spreads which impacts both the assets and liability side of balance sheet, liability spread widened further than assets spreads during the quarter, resulting in a $14 million gain from this calculation.

With that as some backgrounds, you have another quarter around. I would like to turn over to Rich for further color on certain items.

Richard Shea

Okay, thanks Jim. Good morning, everybody. I just want to play out as Chris said, lot has happened in the markets since our last call, and it seems like every time, we have call a lot has happened during that quarter and things continue to be challenging on several fronts. Our focus has been very much, special in the last quarter on the liquidity of the company, in a very challenging environment for liquidity for the broader economy in general and that includes the United States as well as Europe so, its very unusual, as we all know., international issue that everyone is trying to cope with.

One of the things that is falling out of this is that, as liquidity continue to be extremely tight, there seem to be knock-out effect, if you will, where the lack of liquidity can speed up additional credit weakness, which we have seen a stable performance, but if the liquidity crisis continues on for long period of time., we are going to see higher assumptions with regard to credit performance, loss assumptions.

We have been trying to stay in front of that as much we can as you saw last quarter, we increased our CMBS loss assumptions by about $97 million. In this quarter we do have some provisions to report, which I will talk about in a little bit more detail as when I talk about the credit.

I do want to point out that we have been very proactive with regard our liability part of the balance sheet. That is been the strongest focus and our immediate objective is to continue providing as much stability on the liability side as possible, and by doing that we are looking to reduce our short-term liabilities and extending our short-term liabilities, so that we no longer have any mark-to-market issues in that.

A lot of stress with regard to pricing of our assets for securing those liabilities and we want to make sure that the company can continue with a strong balance sheet by being able to removing that or reduce those footings as well to remove that as much as possible.

To that end, the first objective here is to make sure that our existing short-term liability providers feel comfortable with the way we have underwritten our assets and the we are managing our portfolio and we feel very comfort that both Banc Of America and Deutsche Bank having extended their facilities to us very recently in the third quarter, as we reported. We feel comfortable that there is some strength there. Again we want to able to continue working to replace those payable times or replace those with longer-date of liabilities.

As we mentioned also, we are working very hard with Morgan Stanley for our February maturity. We have a facility with them that matures in February of ’09, so we are already working diligently with them. That is spins with thus far a very positive negotiation we have been discussing our ways, so that we can continue extending that line as well as brought some pay down opportunities for that line as well.

So you know there are two. Let me stress here that in evaluating opportunities to continue shoring up our balance sheet, really nothing is off the table and we are looking at obviously the first order of business units to look at the cash experience generated by the company, by its existing portfolio and looking to utilize that to reduce our short-term liabilities.

We are also looking at ways to issue different types of capital, primarily some of elongated debt instruments, secured by these assets or non-secured by these assets, which include some type of a conversion featured in to common stock or some warrants that go along with that.

We also have issued common stock throughout the third quarter, not because of the latest downturn of our stock price. We did see that the issuing common stock on our short facility, which has been a very flexible and very helpful tool for us to continue generating cash for the company to strengthen the balance sheet.

As you can imagine in these markets with liquidity being scarce that it has been, it is very difficult to price and/or structure anything in such a challenging market. We do have a few transactions that we are looking at and it is seems that when we get close, the market turns upside down once again and we continue to having to work further on various types of transactions.

I do think, we do have good access to the capital markets even in a situation that we are in currently and we will continue working towards on main objective, which is balancing at the liquidity of our firm to pay down and manage our short-term liabilities as quickly as possible. I do stress here and the press release that one of the option to that one of the consequences of what we offer the solution to our short-term issues will be higher cost of capital of course that you will have to be paying to capital attention to realize that everything when the capital markets cost more than it did a year and a half ago.

What we were attempting to do is to make sure that people understand that any new types of capital transaction products that we put on will be at a higher cost of capital and therefore pressure on our existing operating earnings which has been extremely stable, especially in the context of the current market. There will be some downward pressure on our operating earnings as we anticipate putting higher cost of capital on.

I think it will be well worth of, as I said several times in these calls, paying the current price for capital to stabilize our liability section will be something that will certainly help the company over the long-term and that continues to be a significant focus of our as well and there are lot of short-term issues here. We are thinking about the long-term health of the company and we want to make sure that we continue to provide value to our shareholders and I think we have the ability to show a lot of success along with those lines.

So with that, I will just turn over to the credit side and I point out something that Chris already mentioned is that on the CMBS side, we do have delinquencies, have listened to that 97 basis points, but again that is well within the realm of what we have for a long time been assuming is going to be our lost experience over time.

So we do feel about while we have been trying to proactively increase on the loss assumptions where necessary, we do think that on the whole that the credit performance of our portfolio, especially on the CMBS side has been within the realm of our expectations over the last several years. We are of course looking very carefully at how the continuing liquidity prices will affect credit performance and we will made adjustments as necessary as you have seen we have done.

So from that performance perspective, I think we do have a very strong handle and have been very proactive with regard to the way we are managing these issues. I think something that we do want to point out is that our strategy for any workouts with CMBS pools or otherwise has been focused on working with good borrowers that have a strong business plan that are victims of the current economic situation.

We want to be able to work with them and we are more prone to extend in the renegotiate terms more so than doing a foreclosure and selling properties in such that a distressed market. I think it concludes everyone to try and navigate through this difficult environment and be able to work together to be able to push maturities out in the situations where that needs to be done and maintain a very proactive strategy from that perspective and I think that is been working reasonably well thus far.

With that, I will turn over to our loan portfolio. We did put up provisions in two different loans. One is a multi-family project in New York City where there was a business plan, a transitional business plan, like both of the loans that we are provisions on do involve a certain degree of transitional business plans in a market where accounting out, specify a business plans has become extremely challenging, any loans that we have made reliant upon that are the ones that are feeling the most challenge.

So, specifically the one in New York is multi-family project that was undergoing renovations and being converted from more rents stabilized to a more market brand situation that of course would increase the net operating income which of course was the main plan. The other thing that occurred there is that the cost of utilities had gone up more significantly. We are all I am sure aware of what is been happening with the price of oil. So therefore, the operating expenses of this particular building increased significantly and the pace of the transitions in the current market has slowed from its original estimated pace.

We do not think that there is a major problem here, but we do think that a $5 million loan loss reserve is appropriate in this particular scenario. I do want to point out that while this loan is not delinquent as of the moment, we do expect that there will be some changes being made to reflect lower than operating income.

Also the effect of these higher expenses has had on the interest reserves that were built into this structure which we were able to a very important part of the credit underwriting. It made a much more compelling credit story because it did have a significant amount of interest reserves as of day one and which is unlike some of the other properties that we may have heard about in New York that have similar types of transitional business plans.

We did feel that was a high degree of credit consciousness going into this with regards some high interest reserves. Those of course have been depleted somewhat more than expected and therefore the debt service coverage ratio has dropped somewhat greater than its original anticipated, but we do feel that there is value in this particular project and is worthwhile continuing to negotiating and making sure that we stay on top of that particular loan's performance.

The other one as I mentioned is also a transitional business plan. It is, however, a portfolio of office building in the Netherlands so obviously that is part of our European portfolio. The European portfolio has been performing in general relatively well, but we are seeing again pockets of weakness, especially in the context to whether our transitional business plans because the European markets are feeling just as much if not more stress on the liquidity and pricing side as the US markets.

So, we are watching both sides of the Atlantic very carefully, and I do want to point that while this line also is not delinquent as of the moment, and we do think that $13.7 million equivalent, it is a euro denominated loan, but a $13.7 million equivalent provision is appropriate for this as the original leasing has been a little bit slower than what we anticipated, and the higher cap rates that are being applied to portfolio evaluations on the European office buildings that secures this loan has been rising as they have been in numerous markets if not all markets.

Therefore, the original business plan of leasing up and selling office buildings out of this portfolio has slowed somewhat, and while we do believe there is a very strong operator in place here, and we are working with that particular operator to make sure that while things are going through a very difficult time but we can all navigate through this and that the loan stays as current as possible, and maintenance and tenant improvements are continuing to be applied to the buildings.

So that is something that we feel very strongly about, and that needs to be front of, and I think that once again underscores our desire and our strategy to stay very much on top of what is going on with regards to the credit regardless of whether it is in the US or on European side, and this is the way this has been manifest.

I also want to point out that Carbon Capital continues to have our five loans, and in fact we spoke about it last time. So I will not go into details there. We do not feel that any additional provisions were required there. There are some transitional type assets within that portfolio, and therefore there are getting a lot of attention from the credit perspective, within the context of working with borrowers where the borrower is acting responsibly and for the most part, not in every case, but for the most part the borrowers are acting responsibly and we are able to work very well with them.

We do have a very recent delinquency that occurred on a property in downtown New York that we do feel that since is a first mortgage that there is a significant amount of value on that property, so therefore, there is a significant degree of protection of the principal amount of the loan, particularly on the Carbon, so we do feel, as I mentioned that additional provisions within that investment entity was not required in the third quarter.

The other thing that I want to point out in Carbon is something that we have been mentioning on news calls for some time now is that Carbon has been able to take advantage to some extent of opportunities in the market because we were able to purchase back some of the liabilities that that entity has issued at a significant discount to par, and therefore, it creates a one time gain within that entity.

That is been an interesting way to play some amount of offense there. We are husbanding liquidity and being very careful with the liquidity in Carbon as well as in Anthracite, but we saw the opportunity to buyback some debt there, and that is been very positive experience. We bought back about three bonds, one in the third quarter and two very recently in the fourth quarter, once again to demonstrate the proactive way that we manage the portfolio. We are not only looking to mitigate losses but also looking to capitalize on opportunities where possible in a very distress market.

So from our perspective, the more detailed aspect of what the company is doing, I think Anthracite pretty much everything. So, now, I would like to just turn it back to Chris to wrap it up and then we will go to some Q&A.

Christopher Milner

Thank you, Richard. I think what we will do operator is just go to Q&A at this point in time.

Question-and-Answer Session

Operator

(Operator Instructions). Your first question comes from David Fick of Stifel Nicolaus. Please go ahead with your question.

David Fick - Stifel Nicolaus

The reserve you took on the New York apartment complex, I presume that is Peter Cooper Village?

Christopher Milner

No, actually it is not. Peter Cooper Village is something that Anthracite does not have any economic interest in.

David Fick - Stifel Nicolaus

Okay, that is great. It eliminates a conflict with Blackstone.

Christopher Milner

Yes, I know its BlackRock.

David Fick - Stifel Nicolaus

Yes.

Christopher Milner

No. The Anthracite vehicle provides financing to entities that are affiliated with the manager.

David Fick - Stifel Nicolaus

Sorry for the miss statement. The first quarter dividend, you make a comment in the release and you said you will evaluate it for the first quarter, why even pay a first quarter dividend, why not just reserve the capital at this point?

Christopher Milner

I think from the standpoint of what we are describing, it is a circumstance where we recognized the significance of the liquidity. We have an upcoming meeting with our Board where the dividend will be discussed in detail as you can imagine. There are a range of potential options as you mentioned, going from the extreme of not paying one to paying a portion of it in stock or leaving it as it is. I think those are all items that we will discuss in detail with the Board and release to the public when the final conclusions have been reached.

David Fick - Stifel Nicolaus

I just want to add something and wanted want to point out that while operating earnings due show support from a dividend. As Chris had pointing out liquidity is our primary concern at the moment. So like I said before nothing is off the table.

Christopher Milner

I think David to where your questions probably going to go next. We are also, as the year comes to a close, very closely evaluating our taxable income, which clearly factors in, in the context of a real estate investment trust in terms of the dividends, and how it is addressed from the company’s perspective. That work is not yet complete as the year has not ended. There are number of factors there as well that will also be taken into account.

David Fick - Stifel Nicolaus

Okay. Any consideration of the reading?

James Lillis

We have, like I said nothing is off the table. The reading just creates a different issue where they will be a tax liability in many cases due rather than paying it to our shareholders. We paid 35% of it roughly to the government. That is still liquidity issue but it is not off the table per se but it is not really something that we feel is front-centered at the moment.

David Fick - Stifel Nicolaus

The government will not shares. Okay, my last question is your – congratulations, first of all on your extension on the lines. Can you give us some information on the terms, pricing, advance rates, and so forth?

James Lillis

The terms of these facilities as you can imagine are more conservative than they were and as I mentioned that the capital in any form cost more. You can certainly assume that we do not provide the specific details of the pricing and advance rates of each particular line, especially because we are negotiating a third provision extension or rather a line extension.

So suffice to say that the cost of the capital is greater, the advance rates are somewhat lower. It is not onerously so. I do want to stress that one of things that we are working with our lenders on, is to make sure that there is amortization in there. So we could pay down the short-term loans as quickly as possible.

David Fick - Stifel Nicolaus

Hey great. Thanks.

James Lillis

Okay.

Operator

(Operator Instructions). Your next question comes from Rich Shane with Jefferies & Co. Please go ahead with your question.

Rich Shane - Jefferies & Co

Thanks for taking my questions. In a paragraph where you describing the dividend, prospects, you talk about your current projections for cash over the next twelve months. In the proceeding paragraph, you talk about the seven CDOs and potential violations or compliance tests and cash trappings triggers et cetera. You were very clear in that paragraph, but at this point you are not trapping cash and you feel like you have adequate coverage.

When you look at those current cash flow projections over the next twelve months that you were talking about, that leads to the conclusion that you have cash to make the first quarter dividend but potentially thereafter? Are those assuming that any of those CDOs start to trap cash?

Richard Shea

No, we did not make the assumption mainly because CDOs 1, 2 and 3, which we did back in '02 and in '04 are all very much in compliance around a scenario that is so bad that those would in any way affected. The next series of CDOs, what we call our HY series or High Yield series, so CDO HY1, HY2 and HY3 do not have tests whatsoever. So we are not concerned about those.

One that we are looking at is High Yield PN-1, that as I mentioned we are in compliance. If there are dramatic downgrades on the European collateral, that could be a risk there, but I think its minimized, because we do have the ability to actively manage that and we can move assets in and out of there to make sure that continues to perform, but again to answer your question very directly, we do not assume any type of cash shutdown as part of those projections.

Christopher Milner

As you look at the older CDOs Rick, CDO1, 2 and 3, those are comprised primarily of 1998 through I believe maybe 2002, 2003 collateral, maybe a little bit of 2004, where you have seen frankly more upgrades than downgrades over the life of those transactions and so as Rich had mentioned we have got not only the cushion that we structured the transactions with but you have seen specifically on the 1998, 1999 transactions, significant upgrades given the very large amount of subordination relative to what went on in the later years, enhancing that protection.

As time went on and we began to acquire assets in the later vintages, we recognize the increase in gearing inside of an individual CMBS deal. We switched our focus from a CDO structuring point of view, to one where we will willing to give a bit in terms of the capital structure benefit of having IC and OC tests like CDO1, 2 and 3 and we switch to, as Richard, the high-yield series of the HY group of transactions where we traded off the lack of those triggers for what at the time was concession in terms of the capital structure.

I think given the way the world has worked out, we are quite pleased with having made that trade-off at the time because those deals are not encumbered by triggers, and therefore we do not have the same cash flow exposure on those deals, where we frankly think the risk of such downgrades is significantly higher.

Rich Shane - Jefferies & Co

Got it. That is very helpful. What I am trying to get out is, when potentially there are, we have a conclusion here which is that in the back half of 2009 you are concerned about the cash flows and the ability to support the dividend. One of three things could change. The expected cash flows of the assets could decline. The higher funding costs associated with extending the liabilities could cause the spreads to near to the point, the cash flows do not support the dividend. Or three, either meeting margin requirements by selling assets or just simply just juice of cash flows to support future margin calls could impact cash flow, so that you can not get there. I am just trying to understand, when you look at this, what is driving the thought process well?

Christopher Milner

Sure. Let me try and rephrase the question a little bit and then give you some sense. I think what I think you are asking and what I think we are trying to answer is, in this scenario where a company like Anthracite has to deleverage itself quite significantly over the last 18 months and potentially over the upcoming 12 months. All we are simply saying is there are scenarios where if the deleveraging process of the next 12 months looks like the last 12 months, and the access to new capital is even less than it was over the preceding 12 months, then something will have to change.

I think numerically that should be pretty straight forward to everyone, right? REITs by their structure are not allowed to retain very much cash flow over a period of time to meet the type of deleveraging exposure that this entity has experienced over the last 12 months, and I suppose under a range of scenarios could experience in the next 12 months.

I think, that is what we are suggesting investors and analyst alike need to give consideration to, the marketplace from a stock price point of view is substantially down from where it was. That implies that raising new capital is more challenging, and to the extent as I said that the company has to continue deleveraging at the rate that it has been. There would simply be issues regarding resources and uses that may cause the dividend have to be one of the things that are evaluated in the context of how we go forward.

Rich Shane - Jefferies & Co

Chris that is very helpful. Thank you very much.

Operator

At this time, there are no further questions, gentlemen. Are there any closing remarks?

Christopher Milner

This is Chris. We would like to thank everyone for joining the call today. Obviously, given the nature of the couple of questions and the comments that we have made throughout the call, we do recognize the severity of the market environment, we are very focused on the liquidity and credit considerations of the company.

Having said all of that, I do want to highlight and not completely lose sight of the fact that generating 32 sets of operating earnings during the course of the quarter does still provide an indication of the long run earnings capability of the company and we look forward to continuing our efforts and the liquidity and the credit side, getting through this very difficult and trying period of time, hopefully continuing to generate those types of earnings for the benefit of our shareholders and stakeholders.

So with that, we appreciate everyone's continued interest in the company and we look forward to speaking with you in the coming quarter. Thank you.

Operator

This concludes today's teleconference. You may now disconnect.

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