Federated Investors Management Discusses Q4 2013 Results - Earnings Call Transcript

| About: Federated Investors (FII)

Federated Investors (NYSE:FII)

Q4 2013 Earnings Call

January 24, 2014 9:00 am ET

Executives

Ray Hanley - Analyst

John Christopher Donahue - Chief Executive Officer, President and Director

Thomas Robert Donahue - Chief Financial Officer, Vice President, Treasurer and President of Fii Holdings Inc

Analysts

Michael S. Kim - Sandler O'Neill + Partners, L.P., Research Division

Matthew Kelley - Morgan Stanley, Research Division

Craig Siegenthaler - Crédit Suisse AG, Research Division

Cynthia Mayer - BofA Merrill Lynch, Research Division

William R. Katz - Citigroup Inc, Research Division

Eric N. Berg - RBC Capital Markets, LLC, Research Division

Kenneth B. Worthington - JP Morgan Chase & Co, Research Division

Operator

Greetings, and welcome to the Federated Investors Fourth Quarter 2013 Investors Call. [Operator Instructions] As a reminder, this conference is being recorded. I would now like to turn the conference over to your host, Ray Hanley. President of Federated Investors Management Company. Thank you. Mr. Hanley, you may begin.

Ray Hanley

Good morning, and welcome. We'll have some brief remarks and then open up for your questions. Leading today's call will be Chris Donahue, Federated's CEO and President; and Tom Donahue, Chief Financial Officer. And joining us for the Q&A is Debbie Cunningham, CIO for our money markets.

Let me say that during today's call, we may make forward-looking statements, and we want to note that Federated's actual results may be materially different than the results implied by such statements. We invite you to review the risk disclosure in our SEC filings. No assurance can be given as to future results, and Federated assumes no duty to update any of these forward-looking statements.

And with that, I will turn it over to Chris.

John Christopher Donahue

Thank you, Ray. Good morning. I'll begin with a brief review of Federated's business performance, and Tom will then comment on our financial results. I'll start with equities, where we derived 40% of our fourth quarter revenues, the highest percentage among the various asset classes. We nearly reached our all-time high for equity managed assets this week, with assets hitting $44.4 billion.

Sales results were strong in the fourth quarter, with net positive sales of over $800 million for combined mutual funds and separate accounts. Separate accounts were particularly strong at over $600 million. For the full year, gross sales of equity products reached an all-time high at just under $12 billion, up over 13% from 2012.

Our broad and diversified mix of solid equity strategies positions us well for the renewed investor interest. More than half of our equity strategies were in the top quartile for the trailing 3 years at year end, and nearly 3/4 were top half in 2013.

The mix of strategies with top-quartile 3-year records includes international, balanced allocation, income, growth, core, value, alternative and index. Our sales have become more diversified without the strategies, like International Leaders and Kaufmann's Large Cap, joining solutions products, like Capital Income and the Strategic Value Dividend Strategies, where income is the primary objective.

Nearly half of our equity funds had positive net sales in the fourth quarter, led by strong results in the Capital Income, Kaufmann Large Cap, International Leaders, International Strategic Value and Clover Small Value Funds.

Equity separate account growth was led by Clover Small Value, Clover Value and Strategic Value Dividend. MDT Mid Cap Growth was positive as well.

Early in the first quarter, equity fund net sales are solidly positive, almost $100 million, led by International Leaders, Capital Income, Kaufmann Large Cap, Clover Small Value and International Strategic Value Dividend.

Now let's turn to fixed income. Fourth quarter net flows for combined funds and separate accounts were slightly negative, yet improved from the prior quarter. Fixed income separate accounts showed positive flows, driven by a new mandate from munis and other fixed-income assets and additions to high-yield accounts. We are seeing an uptick in RFP activity for trade financed mandates and expect to have new account activity in this area soon.

We continue to see solidly positive flows into High Yield, Floating Rate and Sterling Cash Plus Fund strategies. Outflows were concentrated in government and mortgage-backed products, munis and the total return strategy. Fixed-income fund flows turned solidly positive early in the first quarter, led by the Total Return Bond Fund, which improved its record with top-quartile performance for the third and fourth quarter of 2013, moving the fund from below median to the 27th percentile for its one-year performance at year end.

Also generating inflows are our high-yield strategies that have maintained very strong performance records and, of course, various short-duration strategies. At year end, we had 10 fixed-income strategies with top-quartile, 3-year records. Some of these products include our high-yield funds, several government funds, our Ultrashort Bond fund and our short-intermediate municipal fund.

Looking now at money markets. Period-end money market fund assets increased slightly from Q3, while average money market assets were about the same. Our market share was just under 9%.

On the regulatory front, the SEC continues to digest the voluminous comments filed in response to their money market fund proposals, with 98% of the commenters opposed to the fluctuating NAV for money funds, including leading organizations of government and private sector financial professionals, business representatives, state and municipal leaders and many others. It is clear that money market issuers and investors understand the negative impact and the lack of benefits from the floating NAV.

Additionally, approximately 90% of the commenters supported Alternative Two, which is the voluntary gating and fees concept, as proposed with some modifications, which would provide fund boards with the tools to deal with regulators' stated goal: stopping runs.

Congress is also monitoring money market fund regulations. In fact, consideration of the concerns of money market fund stakeholders and the negative consequences of impairing, restricting the use of money funds, was specifically listed as an expectation of Congress in the conference report to the large spending bill just recently signed into law.

The SEC also is reviewing the comments generated by their request for comments on the OFR report that provided insight into the views of those advising FSOC on the need for structural changes to money funds. We think that the OFR, FSOC, fed views on money funds, and asset management broadly, illustrate a flawed bank-centric approach that could have dangerous consequences to the efficiency and effectiveness of our capital markets.

As stated in Federated's OFR comment letter, the OFR report should be a wake-up call for those segments of the mutual fund and broader investment management industry, as well as for the SEC, the CFTC and state insurance commissioners, who thought that FSOC had its eyes on money funds alone and would not reimagine all segments of the investment management industry as de facto banks that should be regulated like banks.

Indeed, coupled with the designation of nonbank financial institutions as systemically important, should be a wake-up call for participants in all aspects of the financial markets.

Taking a look at our most recent asset totals as of January 22. Managed assets were approximately $379 billion, including $278 billion in money markets, $44 billion in equities and $57 billion in fixed income, which includes our liquidation portfolios. Money market mutual fund assets stand at about $239 billion. The January average for money market fund assets are running at about the same, $239 billion.

Looking at distribution. Equity fund gross sales were up 20% in 2013 when compared to 2012. We saw 31% growth in the broker/dealer channel, helped by the addition of wholesalers and related resources. We're planning further modest growth of sales personnel in this channel, adding 4 field and 2 internal reps.

We are also planning to add sales capacity in our SMA business, which has produced strong growth and has recently been ranked in the industry top 10 managers for SMAs plus model portfolios.

In the institutional channel, we had several account additions, that I mentioned earlier, that funded in the fourth quarter, resulting in strong quarter 4 growth for gross and net sales. One of these, a mandate for munis and other fixed-income securities for over $300 million, was both won and funded during the fourth quarter.

The level of funding exceeded our expectations in the fourth quarter, and we have another nearly $100 million in additions yet to be funded. We anticipate that number to increase as we progress through the quarter.

RFP and related activity increased 20% in 2013 and remains high. We expect to continue to win new institutional business in 2014 based on our performance profile, product mix and sales effort. The institutional team is also having success adding our products to new distribution opportunities within major platforms. Examples during the fourth quarter included Kaufmann Large Cap, Floating Rate Trust, High Yield Trust, International Leaders, Capital Income and the domestic and international strategic value dividend strategies. These, and other placement successes, offer solid growth potential.

Now turning to offshore business and acquisitions. In our Asia Pac operation based in Australia, we continue to look for an acquisition to move this effort forward. Our expanded U.K. resources are responding to the increased interest in our trade finance strategy that I mentioned previously. We are seeing success from a modest wholesaling effort in Canada and in Latin America, and are in the process of adding 3 new sales positions to increase coverage and sales.

We continue to actively seek alliances and acquisitions to advance our business in Asia and in Europe, as well as in the United States. Tom?

Thomas Robert Donahue

Thank you, Chris. Taking a look first at money fund fee waivers. The impact to pretax income in Q4 was $29.3 million, down from $30.3 million in the prior quarter. The decrease was due mainly to higher rates for treasury and mortgage-related securities.

Based on current assets and assuming overnight repo rates for treasury and mortgage-backed securities run at roughly 2 to 4 basis points over the quarter, the impact of minimum yield waivers to pretax income in Q1 would be about $30 million.

Looking forward and holding all other variables constant, we estimate that gaining 10 basis points in gross yields would likely reduce the impact of minimum yield waivers by about 45%, and a 25 basis point increase would reduce the impact by about 70%. Multiple factors impact waiver levels, and we expect these factors and their impact to vary through the quarter.

Revenues in Q4 increased 1% from the prior quarter, due largely to higher average equity assets. Operating expenses increased slightly from Q3, due largely to higher comp and related, due to adjustments to bonus accrual and from seasonally high T&E, partially offset by lower distribution expense. Amortization of intangibles decreased primarily due to the reduction in the contingent liability associated with an acquisition.

Nonoperating income increased from Q3, due to $2.9 million of capital gain distributions from mutual fund investments and a $2.5 million reduction in the level of impairment charges on a minority interest investment, which has no remaining book value.

The Q4 effective tax rate was 34.3% and the full year was 35.8%. Each was lower than expected due to lower state taxes, which are estimated during the year based on projected apportionment of income for state tax purposes. We estimate the effective going rate forward to be about 38%.

Looking at our balance sheet. Cash and investments totaled $292 million at year end, of which about $276 million is available to us.

That completes our remarks. And we'd like to open up the call for questions now.

Question-and-Answer Session

Operator

[Operator Instructions] Our first question today is coming from Michael Kim from Sandler O'Neill and Partners.

Michael S. Kim - Sandler O'Neill + Partners, L.P., Research Division

First, just assuming risk appetites continue to improve, it seems like we would continue to see money may be moving away from more dividend or income-focused equity funds in favor of more traditional strategies. So just broadly speaking, if that's the case, how do you see that shift playing out from a flow perspective as you look across your business?

John Christopher Donahue

We think we are in as good a shape as we have ever been in, Michael, in terms of that. When you see the broad-based nature of the positive flows that we have in various funds, from managed volatility to global allocation funds, tail risk, the tail risk fund, the whole array of MDT funds, obviously, the large cap Kaufmann Fund and the movements in the Clover area, we are very well set up for expansion in sales on those products.

Thomas Robert Donahue

And Michael, if I could just add to that. While there is shifting and more interest in the alpha strategies, and as Chris points out, we're very well positioned there, the interest in the dividend-oriented strategies remains high, income-oriented strategies. Looking at our -- the early part of Q1, the Capital Income Fund in particular, which is a balanced allocation product, is among the leading flow getters for us. So we see it as an evolution with the interest in equity income strategies remaining high.

Michael S. Kim - Sandler O'Neill + Partners, L.P., Research Division

Okay. And then just curious to get your take on the opportunity seemingly developing across institutional fixed income, just assuming pension plans increasingly shift into maybe more defensive asset allocations now that they're closer to being fully funded. So more specifically, how your business might be positioning itself to take advantage of that trend?

Ray Hanley

In that area, Michael, we would have a variety of products that would work well. And one in particular that I would mention is a floating rate strategy. We're seeing a lot of interest there, both institutional and retail. And the other one I'd mention is trade finance. We mentioned in our remarks, we have a very high level of RFP activity going on in -- for that strategy and a lot of institutional interest there.

Michael S. Kim - Sandler O'Neill + Partners, L.P., Research Division

Okay. And then just one for Tom. Can you quantify the adjustments in the bonus accruals in the fourth quarter? And then, any color in terms of how you're thinking about the comp line as you look out to the first quarter, just recognizing the seasonal step-up in payroll taxes?

Thomas Robert Donahue

Sure, sure, Mike. So in the third quarter, we had reduced bonuses based on what we were seeing. And then, in the fourth quarter, primarily related to the continuing improving performance in the equity area and the increased sales efforts, we had to increase bonuses. So when you do that in the fourth quarter, you're looking at the full year. So in terms of looking forward, I wouldn't expect the comp total line to match what the fourth quarter was, but it should be at a higher rate than, certainly, than the third quarter.

Operator

Our next question today is coming from Matt Kelley from Morgan Stanley.

Matthew Kelley - Morgan Stanley, Research Division

My first one's kind of a follow-up to the last one there. Just as there have been a number of puts and takes on your expenses in 2013, so I'm just curious, given what your business objectives are going into the new year, how are you thinking about various puts and takes on different line items going forward? What might we see you spend more on? And what might we see you spend less on?

Thomas Robert Donahue

Well, we think we're going to spend more on comp. But again, not for the -- probably not higher than the fourth quarter. Distribution line is going to be driven by the waivers. And so we already forecasted that to be at about $30 million. The professional service fee line, I would expect that to be a similar number. Office and occupancy, I don't see a lot of changing there. Same thing in systems, we're continuing to invest in technology area that we need to do. The T&E was probably a little bit seasonally high, as mentioned in the call or in the comments. So I would expect that to tick down a little bit below the $4 million number. And advertising and promotional, we're continuing our advertising program. It's probably around the -- I don't know exactly what we expecting in Q1, but probably a similar number for the year. And on the intangibles, that changes around with our deals and valuations. So I'm not really forecasting that one. And other is other.

John Christopher Donahue

I would add one thing to that, Matt, tying in to the comments I made. If you add up the various places were I said we were adding salespeople, which was 4 plus 2 in broker/dealer, 1 in SMA, and 3 in Canada and Latin America, you get 10. Well, we don't have them now. And we are going to be adding them. You won't get the full year impact of that. But that will be one area that is specifically related to where we think our growth prospects and where we will spend more money.

Thomas Robert Donahue

And Matt, on the nonoperating, we had our capital gain distribution from our investments in the mutual fund at the end of the year, which was $2.9 million. So that comes once a year in mutual fund land at the end of the year. So I wouldn't expect that -- us to get that number in the first 3 quarters. And if we take gains in our portfolio, we'll see the gains come through. But the timing of that, it depends in our seeding, it depends on what's going on and how flows go in the new seeded products.

Matthew Kelley - Morgan Stanley, Research Division

Got it. That's helpful. And then I have one follow-up for Chris. Just you talked a lot about kind of gaining traction in some of the separate accounts and, specifically, some of the equity and fixed-income funds you mentioned. But I'd just be curious, is there any -- are there any strategies, whether it be in equities or fixed income, or maybe alternative-type funds, that you feel like you have an opportunity to play in that you're not currently in?

John Christopher Donahue

Well, we have recently made a new hire here of an individual, who is going to head up the movement on the alternative side. And we've got a lot of good products with the managed risk, managed tail risk and products like unto that. And I think we are going to see a bigger push coming from us this year on that subject. The other ones, I would just be repeating the funds, the mandates, where we have the equity products in very, very good shape this year for collecting up regular sales.

Now on the fixed-income side, Ray mentioned the trade finance. And we're thinking we're going to have some pretty good things coming online on that as well.

Operator

Our next question today is coming from Craig Siegenthaler from Crédit Suisse.

Craig Siegenthaler - Crédit Suisse AG, Research Division

First, given the strong growth in some of your equity products, I'm wondering are there any capacity constraints in any of your smid kind of equity products, given the growth?

John Christopher Donahue

Well, we aren't running against any of them. You talk to the PMs about how big some of those products might get, and they will have answers at some point. But we're not in danger of hitting any of them in the near future.

Craig Siegenthaler - Crédit Suisse AG, Research Division

Got it. And then, Chris, I'm wondering if you could give us kind of your in-house perspective on the Financial Stability Board's document they put out in January 8 on kind of their own advice in terms of how they want to look at nonbank, non-insurer global SIFIs. And one of their kind of -- one of the differentiated ways they look at, is kind of regulation more from the product level than from the company level. I wonder if you had any thoughts around that?

John Christopher Donahue

Well, overall, they seem to have an attitude that if it has money in it, it must me a bank, it must be regulated like a bank. And so, overall, that would be the comment that we just don't think is apropos. I think it is also consistent with the view that we have that there is an interest on the part of whether it's FSOC, OFR, the fed, in getting more and more into the regulation of the investment management operation more broadly. And I think that's a problem.

Operator

Our next question today is coming from Cynthia Mayer from Bank of America Merrill Lynch.

Cynthia Mayer - BofA Merrill Lynch, Research Division

I'm not sure if you covered this. I apologize if you did. But on the uptick in equity separate accounts flows, I think you mentioned Clover on that. Can you give some color just on what types of products those are? Those variable annuity or those institutional, what sorts of channels is that? Is that managed accounts?

Thomas Robert Donahue

Yes, Cynthia, it was -- the biggest growth was in Clover, both in the value strategy and in the small value strategy. Traditional separate account and a significant sub-advisory addition were really the drivers there. And then we had a few more institutional accounts come online for the Strategic Value Dividend Fund, which -- our dividend strategy, which, to go back to an earlier question, the interest in income by institutions remains high. And so we see institutions looking to strategies like that to complement or even substitute for fixed income. From an income standpoint, there's still, of course, lots of institutional fixed-income interest for rebalancing and the like. So you really see that going both ways.

Cynthia Mayer - BofA Merrill Lynch, Research Division

Okay. And then just a small detail question on the money markets. The averages have been below the ending for a couple of quarters. Is that just typical year-end people putting assets in at the last minute and then withdrawing them?

Thomas Robert Donahue

That -- yes, it would be hard to characterize. I mean, we typically do see assets come in late in the year, go out early in the year. But you've got an awful lot of different clients moving different ways. So that one would be hard to flag specifically.

Operator

Our next question today is coming from Bill Katz from Citigroup.

William R. Katz - Citigroup Inc, Research Division

Can you -- I think you talked about this in the last quarter's conference call. I apologize. I just couldn't find my notes. Could you size or dimension the trade finance business a little bit in terms of the type of mandates, how big these are, and then the kind of fee rates that might be attached to them?

John Christopher Donahue

Well, the sizes can be all the way from tens of millions into hundreds of millions, depending on the size of the client and how they look at it in terms of fitting into their portfolio. And in terms of the...

Thomas Robert Donahue

From our standpoint though, I mean, it's a multibillion-dollar opportunity. The asset class is enormous. We're somewhere around $500 million to this point. But we have several RFPs that are working their way through the process. That would be typical for the size that we win in the -- anywhere from the tens of millions, up into the low hundreds of millions. So we're very optimistic about that. We're seeing a lot of interests. We have clients planning visits over to London to visit with our team there, and it's something we think will show up in 2014.

William R. Katz - Citigroup Inc, Research Division

Okay. And next question, coming back to money markets for a moment, sounds like things are moving along a bit. Do you have a sense on the timing, Chris, in terms of when the SEC may come out with their responses to all these inquiries, kind of...

John Christopher Donahue

Well, Bill, it's really hard for us to put an exact thing on that. I'll tell you the bandwidth or the pointer fingers that we can look at. The SEC, as part of their regulatory requirements, have to put out a date when they'll get their work done. And they out the date of October of '14 for this particular issue. A second pointer finger is that when we were doing the amendments in 2010, the time between the -- when the rule was proposed and it was actually adopted was 6 months. And so here, you have a lot more controversy. You have a lot more comments and a lot more depth. And so, will they get that done within 6 months of September 17, or whenever the comment period closed? We have been told through our various meetings with commissioners that they are very importantly studying these items. But they just don't tell us when they will come out with their final rule.

William R. Katz - Citigroup Inc, Research Division

Okay, that's helpful. And just a point of clarification, Tom. You mentioned that your comp would be flat in the first quarter versus the fourth quarter, you said. That's what I interpreted from your comments. A, is that correct? And then, is there any type of sort of seasonal pressures that might change that calculus a little bit as you work through the year?

Thomas Robert Donahue

Yes, I don't know what's going to be in the first quarter because we've got to look at the sales and the performance. And I expect it to be a little bit below, actually, the 68.7. And how will that change? It's -- every quarter, we have to look at the performance of the company, the performance of the funds and the performance of the sales group to recalibrate it. And we usually are optimistic starting in the beginning of the year with what's going to happen in order to not come to the end of the year and be short in terms of our accrual.

Operator

Our next question is coming from Eric Berg from RBC Capital Markets.

Eric N. Berg - RBC Capital Markets, LLC, Research Division

I actually have a fairly close-in question and then a higher-level broad question. My close-in question relatings to fixed income. So my first question relates to fixed income. I'm trying to understand, sharpen my understanding of the key drivers at this point. In other words, you cited improved performance as a major driver of inflows, but you've also cited ongoing interest in income. So my question to say it simply is, what are the key drivers of the fixed-income flows right now as you think about that corner of your business?

John Christopher Donahue

Well, if you look at the key drivers in terms of the mutual fund side, just looking at this year so far, the short-term funds are still doing quite well. So you have the short-term income fund and the ultrashort government bond fund bringing in positive flows. But you're also seeing a turnaround in terms of the Total Return Bond Fund, which is the big picture here in the first year, because of that turnaround in performance I talked about. And that's -- those are basically the elements that have generated the positive flows so far, a couple of weeks here into the year. Now if you turn to the institutional side, it's a little different picture because it's a question of the mandates. We've talked a lot about the trade finance, we talked about floating rates, we're having interest in high yield. And those mandates are won over a longer-term period, and you really don't have the kind of weekly flow data that we have on the mutual fund side. So those would be 2 gangs of products and mandates in 2 different marketing areas.

Eric N. Berg - RBC Capital Markets, LLC, Research Division

My second question relates to the study that was released by, I guess, the Swiss group 2 weeks ago now, that suggested that further work should be done to look at whether asset managers should be regulated more closely. And they were making the point that, while they understand that the money that you manage is your customers' money, it's not the company's money, it's the customers' money, that asset managers engage in activities that could, at least in the view of the authors of the study, pose systemic risk, mainly, use of derivatives, possibility of substantial requirements for liquidity and inability to meet those requirements. What's wrong with that thinking? In other words, understanding that your balance sheet doesn't include a lot of your own money relative to your customers' money, but acknowledging, too, that asset managers use derivatives and can face demands on their liquidity. What is wrong with the argument that asset managers need to be regulated more based on what I just referenced? What's wrong with that argument?

John Christopher Donahue

We have filed lengthy papers on this. I'll try to give you a summary of it. Let's begin with the non-definition of what is systemic risk? We have Nobel laureates quoted as saying that the way Dodd-Frank presents it, it isn't really a definition of an economic concept; it's a grab bag for regulators to determine where they want to go. So we're not working with precise definitions of systemic risk.

Getting more to the question of the difference between an investment management operation and a bank, debt and leverage do matter. They are very serious and important things. Because what a bank is doing is obviously ratioing itself: 10:1, 15:1, 30:1, back in the old days, and that really, really matters. Whereas in an investment firm, there are no leverages. There are the leverages you've talked about, which we'll get about in a minute in terms of derivatives and how you position your portfolio. But the underlying customer owns the paper, so that you have an automatic living will, especially in a money market fund, where if you run into a problem, all you have to do is gate the fund and roll it out, and in 45 days, everybody has half their money. In a variable price product, all you have to do is turn the underlying security over to the investor, which he or she owns already.

So these are some of the principal differences. But I think the main one that I would talk about is the fact that whether you're not you are on leverage. Now this gets into derivatives. And now it gets into a question of how you use them and to what extent. And if you're using them to balance your portfolio, to examine your risks and those ways, that's a lot different than what long-term capital was doing back in the old days. So I think within those context, you have to have serious discussions about the differences between an investment management complex and a bank.

Thomas Robert Donahue

Before we take the next question, this is Tom. I just want to ago back to Bill's question on next quarter's comp. And I was talking to my team here in between and I neglected to mention about the payroll taxes that shows up in the first quarter, where that's $1.5 million or so higher than the normal other quarters. And then we also have some stock-based compensation that comes in, in the first quarter. So the -- I'm not really excited about predicting what the numbers are going to be. But it probably will be at higher than the 68.7, and by maybe $1 million or $2 million.

John Christopher Donahue

I have one other point, Eric, I'd like to add to the short version. And that is that when you have banks and central banks control the investment management business through regulation, you have a completely different look at the capital markets. For example, the SEC is supposed to look at efficiency, capital formation, protection of investors. These are not concepts that the fed is all that interested in. And this is why we think it is very dangerous and potentially very damaging to the capital markets to change the nature of who and what entity and under what mandate regulators are looking at the investment management industry. I'll end with that because we could go on.

Operator

Our final question today is coming from Ken Worthington from JPMorgan.

Kenneth B. Worthington - JP Morgan Chase & Co, Research Division

Actually, all my questions have been asked and answered.

Operator

That does conclude our question-and-answer session. I'd like to turn the floor back over to management for any further or closing comments.

Ray Hanley

Well, that concludes the call and we thank you for joining us today.

Operator

Thank you. That does conclude today's teleconference. You may disconnect your lines at this time and have a wonderful day. We thank you for your participation today.

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