Cohen & Steers, Inc. Q1 2010 Earnings Call Transcript

| About: Cohen & (CNS)

Cohen & Steers, Inc. (NYSE:CNS)

Q1 2010 Earnings Call Transcript

April 22, 2010 11:00 am ET

Executives

Salvatore Rappa – SVP and Associate General Counsel

Matt Stadler – EVP and CFO

Bob Steers – Co-Chairman and Co-CEO

Marty Cohen – Co-Chairman and Co-CEO

Joe Harvey – President, Chief Investment Officer and Senior Portfolio Manager

Analysts

Mike Carrier – Deutsche Bank

Dov Hellman – Sidoti & Company

Alex Blostein – Goldman Sachs

Cynthia Mayer – Bank of America

Operator

Welcome to the Cohen & Steers' first quarter 2010 financial results conference call. During the presentation, all participants will be on a listen-only mode. Afterwards, we will conduct a question-and-answer session. (Operator Instructions) As a reminder, this conference is being recorded.

I would now like to turn the conference over to Mr. Salvatore Rappa, Senior Vice President and Associate General Counsel. Please go ahead, sir.

Salvatore Rappa

Thank you and welcome to the Cohen & Steers' first quarter 2010 earnings conference call. Joining me are Co-Chairman and Co-Chief Executive Officers, Marty Cohen and Bob Steers; our President, Joe Harvey; and our Chief Financial Officer, Matt Stadler.

Before I turn the call over to Matt, I want to point out that during the course of this conference call we may make a number of forward-looking statements. These forward-looking statements are subject to various risks and uncertainties and there are important factors that could cause actual outcomes to differ materially from these – from those indicated in these statements. We believe that some of these factors are described in the Risk Factors section of our 2009 Form 10-K, which is available on our website at cohenandsteers.com.

I want to remind you that the company makes – assumes no duty to update any forward-looking statements. Also the presentation we make today contains pro forma or non-GAAP financial measures, which we believe are meaningful in evaluating the company’s performance. For detailed disclosures on these pro forma metrics and their GAAP reconciliations, you should refer to the financial data contained within the press release we issued yesterday and then our previous earnings releases, each available on our website.

Finally, this presentation may contain information with respect to the investment performance of certain of our funds. I want to remind you that past performance is not a guarantee of future performance. For more complete information about these funds, including charges, expenses, and risks, please call 1-800-330-7348 for a prospectus.

With that, I’ll turn the call over to Matt.

Matt Stadler

Thank you, Sal. Good morning, everyone. Thanks for joining. Yesterday, we reported net income of $0.21 per share compared with a loss of $0.34 per share in the prior year and net income of $0.27 per share sequentially. The first quarter of 2009 included a $0.39 per share impairment charge on available-for-sale securities. After adjusting for this item, earnings per share were $0.05.

We reported revenue for the quarter of $41.3 million compared with $23.5 million in the prior year and $39.9 million sequentially. The increase in revenue from the prior year is attributable to higher average assets, resulting primarily from market appreciation and institutional net inflows. Average assets for the quarter were $24.9 billion compared with $12.7 billion in the prior year and $23 billion sequentially.

Our effective fee rates for the quarter were 61.5 basis points, down from 63 basis points last quarter. The decline was primarily due to a higher proportion of institutional inflows from existing sub-advisory accounts which are lower fee-paying.

Pretax income for the quarter was $13.5 million compared with a pretax loss of $16.2 million in the prior year and pretax income of $15.3 million sequentially. The prior year's quarter included an impairment charge of $18.2 million on available-for-sale securities. After adjusting for this item, pretax income for the first quarter of 2009 was $2 million. Our pretax profit margin for the first quarter was 33% and our operating margin increased to 30% this quarter from 28% last quarter.

Turning to assets under management, our assets under management increased to $27.2 billion from $24.8 billion at December 31st. Market appreciation of $1.3 billion and net inflows of $1.1 billion accounted for the increase in assets. At March 31st, U.S. REIT common stocks comprised 43% of the total assets we manage, followed by international REIT common stocks of 27%, large cap value at 11%, preferreds at 8%, and listed infrastructure and utilities at 8%.

Our open-funds had assets under management of $7 billion at March 31st, an increase of $673 million or 11% from the fourth quarter. The increase was due to market appreciation of $416 million and net inflows of $257 million. Domestic REIT portfolios had $162 million of net inflows while international and global portfolios had $95 million of net inflows. Our organic growth rate for open-end funds was 16% if you annualize first quarter flows.

Assets under management in our closed-end funds totaled $5.7 billion at March 31st, an increase of $190 million or 3% from the fourth quarter. The increase was attributable to market appreciation. Assets under management and our institutional separate accounts totaled $14.5 billion at March 31st, an increase of $1.5 billion or 12% from the fourth quarter. The increase was comprised of net inflows of $874 million, the majority of which was some sub-advised accounts into global and large-cap value portfolios and market appreciation of $675 million.

Our organic growth rate for institutional accounts was 27%, annualizing first quarter flows. As noted in the earnings release, institutional separate accounts include $220 million of assets under management invested in our alternative global real estate long-short strategy.

Moving to expenses, sequential expenses were up about 1%. The increase was primarily due to higher comp, partially offset by lower G&A and distribution and service fees. Compensation to revenue ratio for the quarter was 39%, which is in line with the estimate we provided on our last call. G&A decreased 9% from last quarter, the decrease being primarily due to lower consulting fees and lower fund reimbursement costs.

For – generally for distribution and service fee expense, they will vary based on average asset levels in open and mutual funds. The sequential variance is in line with the decrease in average assets of our open-end load mutual funds, primarily from our International Realty Fund.

Now, turning to the balance sheet, our cash, cash equivalents and investments totaled $237 million compared with $236 million last quarter, which is adjusted to include our investment in the global real estate long-short onshore fund. Due to the addition of third-party investors during the first quarter, we have deconsolidated the global real estate long-short onshore fund. And you will recall that the offshore fund was deconsolidated during the fourth quarter of 2009. Stockholders' equity was $288 million compared with $285 million at December 31st.

Now, let me briefly discuss a few items to consider for the second quarter and the remainder of 2010. The effective tax rate this quarter was 34%, a bit lower than the range we gave on our last call. The lower tax rate is due to a larger percentage of assets being managed outside the U.S. in jurisdictions with lower effective tax rate and the projected utilization of capital loss carryforwards. We expect that our effective tax rate will remain at approximately 34%.

With respect to compensation, we expect to maintain a 39% compensation-to-revenue ratio. We expect G&A to increase slightly from the first quarter. The increase, which should be about 5%, is due to increased level of business activity.

And finally, as a remainder, we may receive a performance-based incentive fee on our global real estate long-short strategy. Performance fees will be recorded when earned, which will not be until the fourth quarter.

Now, I'd like to turn it over to Bob.

Bob Steers

Great. Thanks, Matt and good morning, everyone. We are pleased to have had a – as you heard from Matt, a quiet, but strong first quarter so far. As always, our focus in management here remains on investment performance, expanding distribution, and developing new product extensions. And with that in mind, I am pleased to report continuing strong results in all three areas.

Starting with investment performance, both our U.S. and global real estate strategies continued to exceed their benchmarks for the quarter and for the latest 12 months. Our global listed infrastructure strategy was about in line with its benchmarks for the first quarter, but well ahead for the 12 months. Our preferred stock strategies was well ahead of its benchmarks in the first quarter and substantially ahead of benchmarks for the latest 12 months.

Our global long-short strategy had positive returns in the first quarter and over 43% growth for the latest 12 months. The one strategy that did not exceed its benchmark in the quarter or for the latest 12 months is our large-cap value strategy and that of course is something that we are very focused on turning around at the moment.

Turning to distribution, we continued to experience strong industry-leading organic growth in the quarter. As Matt mentioned, in the quarter we had 18% organic growth and 45% for the latest 12 months, which translates into $1.1 billion of new assets for the quarter and over $5 billion for the latest 12 months.

Drilling down and looking on the institutional side, the strong positive trends of the past 12 months have continued into this year, generating over $870 million of net flows in the quarter. As we've spoken about in the past, we've expanded our global distribution breadth and reach by entering into 17 sub-advisory relationships around the world. These sub-advisory accounts generated $677 million of net flows in the quarter with more than $400 million of those flows or 60% representing non-U.S. investors.

We anticipate that the flows from this relatively new source of distribution will continue to grow, especially as we develop additional distribution partnerships. In addition, we added three new separate account clients, totaling $228 million including $176 million invested into our global long-short strategy. It's noteworthy that our pipeline became more robust as the quarter went on and the interest in our long-short and real estate multimanager alternative strategies is growing.

With respect to retail, sentiment and sales continue to improve, especially in the broker-dealer channel, which as you all know, have – has been especially challenging for sometime. The RIA channel posted solid – a solid $38 million of net flows or roughly 12% organic growth rate, which is consistent with recent trends in that segment.

Our broker-dealer commissionable sales, which were fairly anemic last year, are showing encouraging signs of improvement. Gross sales of open-end funds grew 25% sequentially, which is consistent with industry-wide growth in equity flows in the quarter.

More broadly, our view is with the worst of the financial and economic crisis behind us, the outlook for the balance of the year seems very promising. Demand for our listed, unlisted, and hedged real estate strategies is strong and improving and we believe this will continue for a number of reasons.

First, commercial real estate prices bottomed about a year ago and appear to be in asset class with very attractive return prospects, particularly for institutional investors. Second, real estate fundamentals are approaching a bottom and will begin the recovery phase over the next six to 12 months. Third, we are observing that institutional capital, particularly from new sources such as sovereign and hedge funds, is flowing into the asset class. Lastly, broker-dealer flows, as I mentioned, appear to have turned the corner and should accelerate from here.

The bottom line is that both technical and fundamental signals suggest to us that we are in the initial stage of a new cycle for both real estate and other income oriented strategies such as listed infrastructure, dividend growth stocks, and preferred equities. And we are confident that we are well positioned with respect to investment performance and distribution to capitalize on all of these opportunities.

With that, I'll stop and open it up to questions.

Question-and-Answer Session

Operator

Thank you. (Operator Instructions) Our first question comes from the line of Mike Carrier with Deutsche Bank. Please proceed with your question.

Mike Carrier – Deutsche Bank

Thanks, guys. You guys gave some color on the institutional flows, just on some of the products in the quarter. I guess, when you are talking to institutions, given where they are currently allocated and given where the consultants are recommending them to be positioned, based on your products, like where are you seeing the most opportunity? Is it still in the real estate products or is it the infrastructure or some of the other funds that you have?

Bob Steers

Well, this is Bob. We are – I would point out that in the first quarter, the institutional pipeline actually started out somewhat light in January and even into early February and then – and maybe that was seasonal, I'm not sure. But the pipeline became much more active as the quarter went on and we are seeing that continue past the first quarter.

The interest has been in two or three areas. It's been in listed infrastructure, we continue to add institutional separate accounts there. Interest in listed, both U.S. and global, continues to be strong. And as I mentioned, the level of activity and interest in our long-short strategy is extremely strong.

Marty Cohen

This is Marty. And I think in order of size, global and the institutional global real estate has been the biggest area of interest, followed by the – our dividend – our large-cap value and then infrastructure. Interestingly, on the institutional side, global real estate is more popular on the retail, both RIA and BD U.S. is more popular.

Mike Carrier – Deutsche Bank

Okay. And then just on the retail flows, I think you guys gave the breakdown between the U.S. and the international. I just didn't get that, but I think on the international it was like $95 million. I just was curious to what it was on the U.S.

Bob Steers

On the institutional?

Mike Carrier – Deutsche Bank

No, no, this is on the retail.

Bob Steers

Oh, retail? Say that again. You want the breakdown on retail between what?

Mike Carrier – Deutsche Bank

The U.S. and – the U.S., yes, and international real estate. I think the international you gave was $95 million.

Bob Steers

Yes, international was $95 million, domestic was $161 million or $162 million, call it, on the open end.

Mike Carrier – Deutsche Bank

Okay, okay. And then, probably for either Marty or Bob, like – I think it was 12 months ago and you guys, when you looked at the overall real estate and the REIT market, you had the view on the three stages, first to recap buying properties and then the economic recovery. And it feels like we've gone down that path. And just want to get an update there.

And then just given the run in REITs and I think you mentioned the technicals in terms of more money flowing into the asset class, do you think there is enough follow-through? And over the next 12 months, would you expect some of these REITs to be able to reinstate dividends, just like we are seeing on the financial as well?

Joe Harvey

Well – this is Joe Harvey and I'll handle those questions. The outlook we had a year ago for how the cycle was going to develop has been pretty much dead-on. And over the past year, it's been the recapitalization phase where listed companies have used access to public capital to shore up their balance sheets. Now, we are solidly into the next two phases, the acquisition phase and the fundamental recovery phase of the cycle.

On the acquisition front, it turns out that while we think there is going to be a lot of opportunity, it's not going to be fire-sale prices like we experienced in the early '90s. There has been a lot of capital on the sidelines, especially for properties that are stabilized or well-leased. The real opportunity for the companies we invest in will be where the situations are more difficult, where properties have vacancy, or where there is very difficult capital structures.

I think what's changed in the first quarter of this year is probably even more important and that's that the economy globally is now in a synchronized upturn and that is important because it drives the demand for space.

And when you look globally, we are at all different points in time in that cycle. So for example, you go to Asia, we are already in the upturn where occupancies have been going up and rents are going up. In the U.S., which is about a third of the market globally, we are now at that phase and our analysts are seeing on the field that things are beginning to turn. That's a very important inflection point.

As we sit here today, public companies have tremendous access to capital, both in terms of the cost of capital and the size of capital. That's a huge advantage versus the private market and we think they are going to use that to take advantage of some opportunities going forward.

Bob Steers

And I would just add with respect to capital flows, if you just look at what has been made public with regard to the investors lining up on either side of whether it's the general growth, transaction or the Extended Stay transaction, you have some of the world's largest sovereign funds lining up whether it's with Brookfield or Simon. And that transaction in Extended Stay, you are getting the Blackstones and Paulsons and so on.

So the capital that is interested and coming into the real estate asset class is a bigger – bigger than any other asset class anywhere. So there is no shortage of liquidity. The difference is it's coming from different sources, it's not coming from pension and endowment funds to the extent it has in prior cycles.

Joe Harvey

The other part of the question was with respect to dividend growth and this is a very interesting area we think, especially for the U.S. REITs, where to deal with the financial crisis many REITs had to cut their dividends to very low levels, essentially to the minimum required to be a REIT at taxable income.

As the economic recovery occurs, as fundamentals turn up, we believe – and we've already seen this happen so far this year where REITs are going to reinstate cash dividends compared with stock dividends and they will have to increase their dividends as their cash flows grow. And we've forecast for the U.S. sector that dividend growth over the next five years will average about 12%, which is, as a security, very interesting, especially if you think about the potential for rising inflation. You've got a group of securities that have very competitive current yields, but also a very attractive dividend growth rate.

Mike Carrier – Deutsche Bank

Okay. Thanks, guys.

Operator

Our next question comes from the line of Dov Hellman with Sidoti & Company. Please proceed with your question.

Dov Hellman – Sidoti & Company

Hi guys. Can you just talk about your international distribution? You mentioned on your institutional, I think in terms of sub-advisory, 60% non-U.S. investors. Can you just maybe talk about the regions and just give some more color on that?

Marty Cohen

Well, in Asia – this is Marty. In Asia, we have a very strong relationship with Daiwa Securities and Daiwa Asset Management in Japan. We manage a lot of money for Japanese investors there. In Australia, we have some funds that we manage money for and some money managers in sub-advisory roles such as Colonial First State and on our global infrastructure strategy. But we also have some funds that are offered –

Cohen & Steers funds that are offered in Australia.

In Europe, we are on a number of different platforms, HSBC, Skandia, and several others that have been very, very – very important to us. It is our opinion and our view that whereas in the U.S., distribution is very varied, both direct and indirect. It's less so in these other two regions of the world where we are better served by having distributors there distribute our investment strategies rather than having, say, a wholesaling sales force or lots of salespeople there. So, we are more focused on distributors and platforms and we continue to do that. I forget – what's our number? It's like 35 different platforms we are on.

Bob Steers

We have – it's about 17 or 18 sub-advisory relationships, about 30 – representing more than 30 portfolios.

Marty Cohen

Right.

Dov Hellman – Sidoti & Company

And in terms – sorry.

Marty Cohen

Well, I was simply going to say that – but we do – institutionally, we still have our own people outside the U.S. and we are actually expanding and adding resources to develop large institutional relationships in Asia. We will be announcing two additional hires in that area in the near future.

Dov Hellman – Sidoti & Company

Got it. And then I guess, in terms of your – looking at overall your investors, what percentage of your AUM is international investors right now, roughly, obviously?

Marty Cohen

20%, maybe a little – around 20% to 25%.

Dov Hellman – Sidoti & Company

Got it. And just in terms of the products that you are seeing there, is it mostly global infrastructure right now and large-cap value or is it – and you mentioned global real estate as well. Are those the main products?

Marty Cohen

It's mostly global real estate.

Dov Hellman – Sidoti & Company

Global real estate?

Marty Cohen

Yes.

Dov Hellman – Sidoti & Company

Got it. Okay, thank you.

Operator

The next question comes from the line of Alex Blostein with Goldman Sachs. Please proceed with your question.

Alex Blostein – Goldman Sachs

Hey, good morning, guys. Just wanted to drill down a little bit more on the, I guess, institutional appetite for real estate investments and specifically would like to get a little bit more color on – do a you have a tight force or harder assets and more, I guess, illiquid strategies where returns tend to lag, I guess, the public markets versus your strategy that tends to be a little more liquid. And do you think that's going to be a bit of a competition going forward for the assets flowing into the asset class?

Bob Steers

I would say that the demand for liquid real estate came back first, certainly. It hasn't been until the last three months or so where investors have shown significant interest in investment strategies that entail significant lock-ups. So – for example, we are – we have a real estate – private real estate fund, a funds team, which is in the market. I can’t – since they are in the market, I can't really talk about the details. But they are raising money to do a global multimanager portfolio. Demand or interest in that strategy was largely just academic up until about three or four months ago and now, it's significant.

That said, there is still a great reluctance from most investors to lock themselves up for seven or eight years. And so we are actually finding that there is interest in strategies that can combine strictly private with liquid or hedged real – listed strategies where you in essence are combining public and private and that delivers kind of the best of both worlds. So that hybrid approach is a potential opportunity for us.

Alex Blostein – Goldman Sachs

Got it. That makes sense. And then on the alternative strategies or the long-short fund, can you just give us a sense of what – in that product, how much is third-party money versus your own and then performance of the fund quarter-to-date?

Matt Stadler

Right. Well, we have about $220 million of third-party money in the balance. We have about $40 million – a little over $40 million of Cohen & Steers' investment and affiliates.

Alex Blostein – Goldman Sachs

Got it. And performance?

Bob Steers

The – what I can give you is the first quarter and latest 12 months on a gross and net basis. First quarter, 1.6% growth, 1.1% net. Latest 12 months, 43.5% gross, 34% net.

Alex Blostein – Goldman Sachs

Got it. Thanks a lot.

Operator

(Operator Instructions) Our next question comes from the line of Cynthia Mayer with Bank of America. Please proceed with your question.

Cynthia Mayer – Bank of America

Hi, good morning.

Marty Cohen

Good morning.

Cynthia Mayer – Bank of America

I apologize if you already discussed this, but just on the reinstatement of the cash dividends, how important is that in terms of the retail flows reigniting? Do you expect to see – do you think that's what has been holding back retail flows or do you think something else has been holding them back?

Bob Steers

I think it's not generally known, the dividend paying capabilities of these companies. And we've started to see some dividend – well, we've seen most, if not all of the stock dividends go away. But from an accounting standpoint or a record standpoint, going from stock to cash, it looks like an increase. But also, we are starting to see some of the larger companies raise their dividend substantially. PSA is an example. Well, what was that?

Matt Stadler

19%.

Bob Steers

19% increase in there, one of the largest – one of the five largest REITs. And as Joe said, just by virtue of increased earnings, they are going to be forced to increase their dividends to maintain their REIT status. You won't see that in full force probably until later this year as the fundamentals – fundamental improvements translate into earnings growth.

But assuming that we are past that bottom, which we are very confident that we are, when you look out at the next several years, the combination of increasing fundamentals, the leverage to the – both financial and operating leverage that these companies have, and their ability to make accretive acquisitions, I think you are going to see a very interesting pattern of dividend growth. And I think that the market may have a wait-and-see attitude towards that, but we are pretty comfortable that we will see in the next – starting in the next six to 12 months.

Cynthia Mayer – Bank of America

Okay. And in terms of fee rates, you mentioned some fee compression due to a mix shift toward institutional and sub-advise. I assume you expect that trend to continue. Or do you feel sort of like their fees have reached a floor here?

Bob Steers

I don't think we can predict that with any certainty, but I do – what we are saying and what we are trying to articulate here is that the institutional business and the RIA business, which has been rock solid throughout the downturn, remains rock solid, whereas the areas that are either brand-new or have previously been soft like broker-dealer, are off of low bases, showing dramatic increases, and those are our highest-fee businesses.

How rapidly they – assets continue to flow into those two channels, it’s anybody's guess. But the – connecting the dots, the current trends look very favorable. So could that translate into a reversal in the next few quarters of the fee trends? Sure. And we are hopeful it will. But it's all about relative flows and if institutional steps up yet again, then that will have an effect. On the other hand, as I mentioned, the pipeline for long-short is very robust. And we are also looking forward to a first closing in our multimanager fund.

Cynthia Mayer – Bank of America

Great. I guess just one more question on fees. Is there any difference between U.S. and non-U.S. fees or should we just be thinking of retail versus institutional? Would you rather be selling overseas if – ?

Bob Steers

Non-U.S. and global are slightly higher than U.S only.

Cynthia Mayer – Bank of America

I guess –

Bob Steers

A lot of the non-U.S. –

Cynthia Mayer – Bank of America

– by where you are selling.

Bob Steers

What's that?

Cynthia Mayer – Bank of America

For instance, if you are selling institutionally overseas to an institutional client overseas, is that any different from selling in the U.S.? Or conversely, if you are selling a retail fund to an Asian investor, is that any different from selling a retail fund to a U.S. investor?

Bob Steers

Our institutional fee rates are pretty consistent around the world. So it doesn't make a whole lot of difference whether it's a U.S. or non-U.S. client. It's the sub-advisory – we access non-U.S. retail mainly through sub-advisory relationships. Yes, we have SICAVs in Europe and our funds in Australia. But frankly, those are mainly for small institutions. So it's the sub-advisory flows from offshore which gains access to retail and that's lower-fee business.

Cynthia Mayer – Bank of America

Great, okay. Thank You.

Operator

We do have a follow-up question from the line of Alex Blostein from Goldman Sachs. Please proceed with your question.

Alex Blostein – Goldman Sachs

Hey guys, just a quick follow-up. On capital management, you are sitting on, I guess, a little bit over $5 a share in sort of cash and short-term investments. How do you think about redeploying that? I mean, should we think about a little bit of a buyback or an increase in dividend or a potential I guess seeding new strategies or what are the priorities?

Marty Cohen

Well, we did increase our dividend last quarter. Our policy right now is to examine the dividend once a year in our March quarter. So that decision will come next year. We find that there are lots of uses for our cash internally, whether it's seeding new funds or – the business is a little more capital-intensive than it used to be because particularly with alternative strategies, you need to co-invest with your client. So we don't feel that we have a lot of excess cash and have – it's not a burden to us.

Alex Blostein – Goldman Sachs

Is there a target of how much, I guess, you need to co-invest into the products some – with some of the alternative strategies you have, anywhere from 2% to 5% co-investment from the general partner? Is that kind of the range we should be thinking about?

Marty Cohen

It's probably 5%, in the 5% range. But often if you want to get something started, then you got to – you've got to invest more so that you get closer to critical mass in a particular strategy.

Alex Blostein – Goldman Sachs

Got it. Thank you.

Marty Cohen

If we start a new mutual fund, then that's something that we would see with some reasonable amount of capital. We are in registration, I think, on a – or at a registration on a preferred securities open-end fund for which we suspect we – we've been very successful in the – in some platforms in the unified managed account area for our preferred strategies and as Bob mentioned, that's one where our performance has been really superior to both benchmarks and competitors.

Based on that, we decided to launch an open-end fund. This is the first open-end fund we will have launched in a number of years. But we feel that the time is right both from a demand standpoint and also from a yield standpoint, because you can get a superior yield in preferred securities than in many other money-market instruments.

Alex Blostein – Goldman Sachs

Thanks.

Operator

We have another follow-up question from the line of Dov Hellman with Sidoti & Company. Please proceed with your question.

Dov Hellman – Sidoti & Company

Hi, just a quick question on closed-end funds. Could you speak just maybe about the leverage there? Is it still around 30% or so? And do you see any opportunity maybe for that increasing now a bit or no?

Bob Steers

Well, it's been in the 30%, low-30s range. All I can say is we are very comfortable with that level.

Dov Hellman – Sidoti & Company

Okay. Thank you.

Operator

Mr. Rappa, there are no further questions at this time. I will turn the call back to you.

Salvatore Rappa

Great. Well, thank you all for joining us this morning and we look forward to speaking with you next quarter. Thank you.

Operator

Ladies and gentlemen, that does conclude the conference call for today. We thank you for your participation and ask that you please disconnect your lines.

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