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Charm Communications Inc. (NASDAQ:CHRM)

1Q 2010 Earnings Call

May 27, 2010 8:00 AM EST

Executives

Henry Fraser – IR

He Dang – Founder, Chairman, and CEO

Wei Zhou – CFO

Analysts

Wallace Cheung – Credit Suisse

Paul Keung – Oppenheimer

James Marsh – Piper Jaffray

Operator

Hello and thank you for standing by for the Charm Communications Earnings Conference Call. At this time, all participants are in listen-only mode. After management’s prepared remarks, there will be a question-and-answer session. Today’s conference is being recorded. If you have any objections, you may disconnect at this time.

I would now like to turn the meeting over to your host for today’s conference, Henry Fraser from Brunswick Group.

Henry Fraser

Hello, everyone, and welcome to the Charm Communications earnings conference call for the first fiscal quarter which ended March 31st, 2010. The company’s earnings results were released yesterday and are available on the company’s IR website at ir.charmgroup.cn as well as on Newswire services.

Today, you will hear opening remarks from Charm’s Founder, Chairman, and CEO, Mr. Dang, followed by the company’s Chief Financial Officer, Wei Zhou, who will give you overview of the company’s strategy and progress and provide a financial overview and guidance for the second quarter. After their prepared remarks, they will be available to answer your questions.

Before we continue, please note that the discussions today will contain certain forward-looking statements made under the Safe Harbor Provisions of the US Private Securities Litigation Reform Act of 1995. These forward-looking statements are subject to risks and uncertainties that may cause actual results to differ materially from our current expectations. Charm does not assume any obligation to update any forward-looking statements, except as required under applicable rules.

Also please note that some of the information we discuss includes non-GAAP financial measures as defined in Regulation G. Most directly comparable US GAAP financial measures and information reconciling these non-GAAP financial measures to Charm’s financial results prepared in accordance with US GAAP are included in Charm’s earnings release which has been posted on the company’s IR website.

As a reminder, this conference is being recorded. In addition, a webcast of this conference call will be available on Charm’s Investor Relations website.

I will now turn the call over to Charm Communications’ Founder, Chairman, and CEO, Mr. Dang.

He Dang

Hello, everyone, and thank you for joining us on our first earnings call since our public listing on NASDAQ earlier this month, a great lead towards realizing our vision of becoming China’s first world-class integrated advertising and media group, well positioned in China, one of the world’s largest advertising market. We have confident in the future post-IPO developments of Charm. The first quarter was very exciting for us. We added to our base of blue-chip clients with a number of significant wins including Guangdong Development Bank, Subaru and Harbin Pharmaceutical.

To give you some industry context, according to CTR statistics, China’s advertising market increased by 22% in the first quarter of 2010 against the backdrop of China’s sustained economic growth, initiatives to boost consumer spending and continued heavy government investments in infrastructure. Consumption in China is on the raise and Chinese companies are spending more marketing dollars. The ability to provide fully integrated advertising services is increasingly valued by class and the need for them to build trusted national brands has never been higher.

Today, Charm, is a leading advertising and media group in China and we are actively extending our leadership in China’s increasingly market driven advertising industry. The cornerstone of our strategy is our diversified business model that allows us to provide clients with integrated solutions which (inaudible) in the range of Charm’s co-advertising service capability to provide a one-stop shop.

I would like to take you through how we’re able to do this for our clients. Through Charm Advertising, our core advertising agency business, we have long been a leader among domestic TV ad agencies. We are also the number one agent in terms of total ad placement on CCTV, the most prestigious TV platform in China, and the one most attractive to blue-chip companies. This advantage sets us apart from our competitors and helps us to continue to attract China’s leading companies to our platform.

We’ve been able to successfully build a large and loyal customer base that has a 100 blue-chip cool clients by combining international standards, local expertise, and total dedication to client service that’s unique in this market in which domestic advertisement represents about 70% of the market share. Behind our success is top industry talent and we’ve always emphasized the training and retention, a key to building a true service culture.

Since 2008, we have been developing Shangxing Media, MIM or principal media which invests in high-quality TV advertising resources including top satellite TV channels and programs on CCTV. Through these resources, we are able to provide clients tailor made commercials and branded content targeting specific programs on these channels. This has the dual advantage of maximizing the commercial value for the media owners in providing our clients with differentiated market solutions.

Satellite TV is an effective, but cost efficient alternative as compared to CCTV, making it another powerful TV advertising platform to give smaller brands national access and larger brands the ability to target specific regions. Today, we have two satellite channels and the nationwide sales network to help bring our customer base to these channels. Additionally, we also have exclusive advertising rights to four television programs from CCTV 1, CCTV 2, and CCTV 3.

Our newest business Charm Interactive focuses on developing effective advertising solutions from digital media platform. This business is launched in response of the increasing demand from clients with comprehensive Internet and digital advertising solutions.

Charm Interactive services include creative execution, media planning and buying, and data capture and analysis. Our large client base and integrated across media communication capabilities which we have accumulated over the first 15 years are crucial in helping us grow this new business.

We can also leverage on the same client base and our position as an industry leader to access the top Internet portals and negotiate preferential rates. To drive growth in this new business, we have assembled the team of 30 experienced advertising professionals from a wide range of Internet related background.

Through Charm Interactive, we plan to focus on five industries in 2010, pharmaceuticals, financial services, home appliances, travel and tourism, and automobiles. We have selected these five industries after careful analysis with the advertising patterns and future trends as well as Charm’s natural strength in these five industries.

Charm has also started forming strategic relationships with major Internet portals in China. Additionally, we plan to establish a leading position with online video website which we share similar advertising and audience characteristics with TV and will appeal to a strong base of TV advertising plan.

In January 2010, the world’s largest independent media and communication group Aegis Media became a strategic investor in Charm and together we established a joint venture Vizeum to operate in China. As part of agency’s global network, Charm has accessed the agency’s market insight, technology platform, and professional expertise.

We also share best practices in client service and media negotiations, which enhances our operational capabilities. Our clients benefit from the added services that Aegis Media brings and the access to international advertising solutions, we can offer through our Vizeum platform. We’re also able to service Aegis Media’s international clients looking to break into the Chinese market.

As a 15-year industry veteran focusing on building China’s leading brand, I feel very excited by our position within this fast growing market. We have formed strong relationships within the industry, recruited top professionals, created an experienced management team and built a fantastic client base.

And we are the only domestic firm able to offer our clients fully integrated advertising campaign which brings together local knowledge and international floor expanded. And now with our strategic cooperation with Aegis, our increasing strength in digital media and the proceeds of our recent IPO, we are uniquely positioned to leverage our core capabilities, increased market share, and attain our goal of being China’s first world leading advertising and media group.

I will now hand you over to Wei Zhou, our CFO, to discuss the details of our operational progress.

Wei Zhou

Thank you, Chairman Dang, and thanks to everyone for taking our call today. As this is our first earnings calls, I want to spend a little bit of time upfront walking you through how we think about our business from an operational perspective. Please note that for the first section, I will be referencing some of our first quarter results using non-GAAP numbers in order to better convey our performance.

We define non-GAAP turnover as the total customer advertising spending placed with or through us. We believe turnover best reflects the scale of our business. In the first quarter of 2010, turnover grew 56% year-over-year and 19.9% quarter-over-quarter to approximately $141.7 million. The increase in turnover was mainly due to the increase in the number of advertising clients and increase in advertising spending from existing clients.

Breaking down by business, turnover in Charm Advertising agency business, which is the total advertising spending placed through Charm grew at 49.7% year-over-year and 12.8% quarter-over-quarter in the first quarter to $105.9 million. The increase in our agency business turnover was mainly due to the increased number of new agency clients and increase in advertising spending from existing agency clients.

In the first quarter of 2010, Charm provided advertising agency services to a total of 110 client accounts, 38 of which were acquired in 2010. The extraction rate for the agency business which is defined as revenue divided by turnover was 5.5%. This is compared to 5.5% – it was 5% in the first quarter compared to 5% for the first quarter of 2009 and 5.4% for the fourth quarter of 2009. We expect the revenue extraction rate to increase as we expand our full-service offering across all media platforms under Charm Advertising and as we ramp up digital media offerings under Charm Interactive.

Turnover for Charm’s media investment management or principal media business, which is the total advertising spending placed with Charm’s exclusive advertising channels and programs, we operate the principal media business under the Shangxing Media brand, and the turnover which is equivalent to US GAAP revenue grew at 78.2% year-over-year and 47.4% quarter-over-quarter to $35.8 million.

The increase was mainly due to the increase in satellite turnover as a result of price increases and the addition of four new exclusive CCTV programs which began operating during the first quarter of 2010. The numbers I have just gone through explain the way we look at turnover, revenue extraction rate in our business and includes non-GAAP measures.

In terms of pure GAAP figures, the results are as follows: total US GAAP revenue were $42 million in the first quarter of 2010. This represents an increase of 73% compared to $24.3 million in the first quarter of 2009, an increase of 36.9% compared to $30.6 million in the fourth quarter of 2009.

Revenues for the agency business were $5.3 million in the first quarter, representing an increase of 50.7% compared to $3.5 million in the first quarter of 2009, an increase of 4.9% compared to $5.1 million in the fourth quarter of 2009. The increase in revenue is consistent with the increase in turnover for the agency business.

The revenues for the principal media business was $35.8 million in the first quarter of 2010, representing an increase of 78.2% compared to $20.1 million in the first quarter of 2009 and an increase of 47.4% compared to $24.3 million in the fourth quarter of 2009. For the first quarter of 2010, Charm had 206 advertisers for its principal media business compared to 183 advertisers for the first quarter of 2009.

For brand and identity services, revenues were $0.9 million in the first quarter of 2010. This is an increase of 33.4% compared to $0.7 million in the first quarter of 2009 and a decrease of 33.3% compared to $1.3 million in the fourth quarter of 2009. The increase compared with the first quarter of 2009 was mainly due to an increase in full-service advertising clients. The decrease in the fourth quarter are compared to fourth quarter was mainly due to seasonality.

Cost of revenue in the first quarter of 2010 was $29.5 million, compared to $20.1 million in the first quarter of 2009 and $17.7million in the fourth quarter of 2009. We attribute this increase mainly due to the addition of four new exclusive CCTV programs, which began operating in the first quarter of 2010 and an increase in higher satellite TV and media costs.

Gross profit in the first quarter of 2010 was $12.4 million, an increase of 200% from $4.1 million in the first quarter of 2009 and a decrease of 3.9% from $12.9 million in the fourth quarter of 2009.

Selling and marketing expenses were $4.2 million in the first quarter of 2010, an increase of 66.6% compared to $2.5 million in the first quarter of 2009, and increase of 26.3% compared to $3.4 million in the fourth quarter of 2009.

We attribute the increase in selling and marketing expenses to the increase in headcount to support the additional inventory in our principal media business and to investments in human capital to ramp up the Vizeum joint venture with Aegis Media.

Selling and marketing expenses represents 10.1% of the company’s total revenues in the first quarter of 2010 compared to 10.5% for the first quarter of ’09 and 11% for the fourth quarter of ’09. We attribute to the decrease in selling and marketing expenses as a percentage of total revenue primarily to increased efficiency of scale.

General and administrative expenses were $1 million in the first quarter of 2010 compared to $1 million in the first quarter of ’09 and $1.7 million in the fourth quarter of ’09. We attribute the decrease compared to the fourth quarter primarily due to higher professional service expenses and accounts receivable allowances incurred in the fourth quarter of 2009.

As a result of the foregoing (ph), operating profit was $7.2 million in the first quarter of 2010, a 12-fold increase from $0.6 million in the first quarter of ’09 and a decrease of 8.7% from the $7.9 million in the fourth quarter of ’09. In the first quarter of 2010, the company had tax expenses of $0.4 million.

Net income was $6.8 million for the first quarter of 2010, representing an increase of 800% from $0.8 million in the first quarter of ’09, and a decrease of 10.7% from $7.7 million for the fourth quarter of 2009. Pro forma of fully diluted net income per ADS in the first quarter of 2010 was $0.21 compared to $0.02 and $0.24 for the first and fourth quarter of 2009 respectively. Each ADS represents two common shares.

The company’s first quarter non-GAAP net income which excludes share-based compensation expenses was $7.4 million compared with $1.4 million for the first quarter of 2009 and $8.3 million for the fourth quarter of 2009. Cash flow from operations in the first quarter of 2010 was positive. And as of March 31st, 2010 the company had cash and cash equivalent of $74.2 million compared to $54.7 million at the end of fourth quarter 2009. Also, as of March 31st, 2010 the company had 347 employees compared to 310 employees as of December 1st, 2009.

The company estimates its total revenues for the second quarter of 2010 will range from $41 million to $42.5 million, of which revenues from the agency business are expected to be between $4.5 million and $5.0 million. And revenue from company’s principal media business are expected to be between $36.5 million and $37.5 million.

The second quarter 2010 non-GAAP net income which excludes share-based compensation expenses is expected to be between $8 million and $8.5 million. The company expects the total revenue for full-year 2010 to range from a $185 million to $192 million. Non-GAAP net income for the full-year 2010 which excludes share-based compensation is expected to be between $39 million and $41 million.

The company bases these estimates on a foreign exchange rate of 4.8256 RMB to 1 US dollar. This forecast reflects the company’s current and preliminary view which is subject to change.

Thank you for you attention. I will now hand over to the operator who will open the line for questions.

Question-and-Answer Session

Operator

(Operator Instructions). Your first question comes from the line of Wallace Cheung of Credit Suisse. Please proceed.

Wallace Cheung – Credit Suisse

Hi, good evening, Dang, Zhou and congratulations on the quarter. I have two questions. First one is can you just explain a little more on the turnover breakdown of the media investment business as far as the agency business among various type of media, say for example like the CCTV and CCTV 1? And secondly is which are the – which are the key fast growing sectors that you have seen in first quarter and any particular strong growth sectors in the second quarter as well? Thank you.

Wei Zhou

Thank you, Wallace. I’ll answer – I think I’ll answer the first question first and then I’ll let Mr. Dang answer the second question regarding sectors of growth. In terms of the – in terms of turnover breakdown, if you look at the – if you look at the overall turnover for the agency business, which was about a $106 million, if you break that down in the first quarter, is around 87% which is placed on CCTV with another around 15% placed on other television with the remaining placed on other media form.

And then, if you look at sort of the media investment for the media investment business, it’s around 65% for the satellite and then around 30% plus for the – and in terms for the sectors, I’ll let Mr. Dang go answer that question.

He Dang

If you look at sort of in terms of overall industry, the fastest growing sort of five sectors – our fastest growing sectors predominantly came from consumer products as well as other – these consumer products would include food, beverages as well as daily use products, as well as pharmaceuticals and other business services.

But if you sort of look at our – if you look at Charm’s customer ads in the first quarter, we added 38 I think – 38 agency clients. And then if you break that 38 down, we have around eight customers that came from the consumer products and another eight coming from home appliances and seven coming from pharmaceuticals. So you can see that sort of our growth is pretty in terms of customer growth. The sectors are in line with the industry growth.

Wallace Cheung – Credit Suisse

Thank you. Just quickly like, will we be seeing like a – moving on to the second quarter and maybe the rest of this year, are we going to see like the CCTV part of the revenue or turnover contribution will be increasing or decreasing? And the second follow-up is in terms of the industry breakdown, we recognize that I think automobiles is also one the top five right now. Given a fact after recent decline of sales were of automobile, would there be any kind of impact on the turnover revenue growth in the rest of the year? Thank you.

Wei Zhou

Sure. If you look at the overall – if you look at the overall business for Charm, we actually expect the CCTV portion of our turnover to decrease through the course of the year as we ramp up both in terms of the – our Charm Interactive initiative, so we actually expect our new media and digital media as well as Internet advertising turnover to increase as a percentage of total and also we are – and in terms of satellite turnover, I am talking about the agency business to increase as well. So we expect CCTV portion of the turnover to decrease through the course of the year.

In terms of answering your second question, in terms of industry breakdown, I think for automobile, it has not been – it has been a part of our client base. But if you look at sort of our overall Charm’s client base, it is very diversified across different industry in terms of consumer products, financials, pharmaceutical, home appliances, et cetera.

So I think for the automobile side, I think what we’ve talked – for example, I think we’ve actually had new wins in the first quarter on the agency side of the business with Subaru which is a Japanese automobile brand. And then, also we expect for our online business for the digital marketing, we actually have made very good progress with Japanese automobile brands as well. So we actually expect sort of automobile to continue to contribute into our business.

Wallace Cheung – Credit Suisse

Thank you so much. (inaudible). I will go back to the line. Thank you.

Wei Zhou

Thank you.

Operator

Your next question comes from the line of Paul Keung of Oppenheimer. Please proceed.

Paul Keung – Oppenheimer

Hi, good evening. Thanks for taking my question. First is a, I think you’ve just touched upon it. You mentioned the – the online interactive business, the mutual businesses that you are expanding into. What size business you’re expecting it to be (inaudible) share in both in terms of revenue and headcount and is that in your guidance for the year?

Wei Zhou

Yes, sure. I think if you look at sort of the online advertising business, we’ve actually made a very good – made very good progress in this business. In that, currently, we – like as Mr. Dang mentioned, we are targeting for two areas in terms of customers, we’re targeting five industries that consists of pharmaceuticals, financials, as well as automobile, travel, and home appliances.

And then in terms of how we’re going about it is that we are – we currently have contracts with most of the major portals in China and we are also focusing on online video website, because of their ability to sort of transfer a lot of our television advertising client on to that platform.

In terms of service capabilities for this, we’ve actually have – the current team we have in place has the capability to offer already you know the full scope of Internet advertising services. This includes our creative execution, media planning and buying, data capture as well as online PR management and sort of word of mouth marketing through the Internet with social media.

In terms of the headcount for the business, currently we have around 30 staff for this business. And then we expect the total headcount for the full year to reach around 60 people. And in terms of turnover for this business, we target online advertising spending turnover to be over a 100 million RMB for the first year of operation.

Paul Keung – Oppenheimer

Great, thanks. And my second question, what kind of price increases are you seeing on some of your – on your list of programs you’re getting right now and do you plan to raising prices again this year?

Wei Zhou

Sure. In terms for our exclusive channels and programs, if you break it down between satellite and CCTV, for satellite, we’ve actually seen a sort of a total in terms of selling prices of around 50% year-over-year.

And then, of that, we have a very good – I think in terms of answering your question, in terms of where we’re going to exclude additional increases, I don’t think we have any plan for both of the channels we have. But the pricing structure is flexible such that we can adjust the level of discount, the rate card rates. And so, you know, as the supply and demand for these when it changes, we can adjust a price accordingly going forward.

Paul Keung – Oppenheimer

Okay, great. Thank you very much.

Operator

Your next question comes from the line of James Marsh of Piper Jaffray. Please proceed.

James Marsh – Piper Jaffray

Yes, hi, Wei. Just a quick follow-up on that last comment there. I think what I heard you say that was satellite pricing was up about 50% year-over-year for Dragon and Tianjin within the media investment management business?

Wei Zhou

That is correct.

James Marsh – Piper Jaffray

Okay, that’s excellent. And then, how does that compare to the CCTV pricing within that same unit?

Wei Zhou

The CCTV pricing, the increase is actually in line with sort of the primetime auction pricing increase which is between around 20% to 30%. And then that price is actually more, I think is more stable versus the satellite.

James Marsh – Piper Jaffray

Okay. And earlier, you were talking about the cost effectiveness of satellite advertising relative to this thing, maybe you could just give us an update on this big gap between CPMs for CCTV and for some of the satellite channels just broadly?

Wei Zhou

Yes, sure. For CCTV, in terms of CPM, if you look at their CPM for – let’s say for CCTV primetime resources, it comes around to be around 4 RMB for CPM, which is actually lower to what it is say for Shanghai Dragon, which is between six to eight depending on the timeslots.

But I think – and – but I think – and the reason for that is CCTV has much broader coverage across the country and that – but then if you look at in terms of absolute prices for these two, CCTV is definitely more expensive in terms of you know the 50-minute hard time ad time rate.

But I think what, say for Shanghai Dragon TV, what is attractive for its channel to advertiser is that’s very targeted in terms of a high-end use – high-end viewers versus CCTV which was sort of more nationwide – more nationwide audience.

James Marsh – Piper Jaffray

Okay, thank you. And then, can you –

Wei Zhou

Sorry James. To go back to your question in terms of TV rating, we are actually seeing satellite TV especially for Tianjin TV increasing TV ratings this year. I think for the first quarter both Shanghai and Tianjin are in the top 10 in terms of ranking for satellite TV between around seven and eight which is very good for us.

James Marsh – Piper Jaffray

Very good. And then on the new media Internet business, you mentioned 100 RMB for the full year. I am just trying to get a sense for how fast that business will scale up on. Is it just – would you think of it’s kind of a linear growth as we move towards the end of the year? Does it kind of accelerate towards the end of the year? Just for modeling purposes, how do you think that plays out?

Wei Zhou

Sure. Let me translate that for Mr. Dang, and then we’ll have him answer and I will translate the answer back, okay?

James Marsh – Piper Jaffray

Sure.

He Dang

If you look at sort of the breakdown of that 100 million turnover for this year, we think predominantly most of that will come in the second half of the year versus the first half of the year as we are still strengthening our team.

James Marsh – Piper Jaffray

Okay, thank you very much.

He Dang

Yes.

Operator

(Operator Instructions). You have a follow-up question from the line of Wallace Cheung of Credit Suisse. Please proceed.

Wallace Cheung – Credit Suisse

Hi, thank you for taking my questions again. Just quickly on the Vizeum joint venture, can you give us more color, what is the operating basis right now say in the first quarter in terms of like turnover, what’s the percentage of turnover for the agencies like coming from Vizeum? And also in particular when you talk about you acquiring around 40 something like customers, 38 customers in the first quarter, does it mean that the (inaudible) have been actually coming from the Vizeum joint venture or actually it’s growing organically? Thank you.

Wei Zhou

To answer your second question, I think on the customer side, that 38 addition are organic in growth for Charm Advertising, for our own business. We did not – we have – we did not include any of the Vizeum customers in that additional – in that 38 customer new accounts. In terms of – in terms of turnover revenue as well as sort of a net income contribution for Vizeum in the first quarter, they’re all very immaterial right now.

Wallace Cheung – Credit Suisse

Okay, thank you. So I assume that maybe in the second quarter guidance, you have not yet factored into a significant amount of turnover in the profits from Vizeum joint venture, am I correct?

Wei Zhou

That is correct. We’re still talking – we’re still in the process of ramping up operations for Vizeum in the first half of the year.

Wallace Cheung – Credit Suisse

Okay. And if it so, can you just give us a bit more color on the operating status like when the movement that we’re going to see a faster and stronger momentum of the business and even maybe a higher cross selling from the Vizeum global into the Vizeum joint venture? Thank you.

Wei Zhou

Yes, sure. For this operational, I will translate the question for Mr. Dang and then I’ll let him to answer.

He Dang

For the first half of the year, the joint venture of Vizeum, we’re still in the process of integrating its operations to part of the Charm’s network. And then we expect most of the work in the second half of the year is to make preparation for sort of in terms of getting clients and getting customers for the following year.

Especially in the second half of the year with leveraging, for Vizeum to leverage off Charms – Charm as well as Aegis’s capabilities, we expect to make very good headwind with Vizeum jointly in the CCTV primetime auction process.

The current Managing Director of Vizeum China, the joint venture operation is a very experienced person, experienced advertising professional, who is a former Vice President within Charm Advertising. She is a very – she is an experienced media planner within Charm, especially with regards to CCTV.

After the Managing Director for Vizeum is able to learn all the advantages within Aegis’s network, we strongly believe that she will be fully functional and excel at Vizeum. Thank you.

I am sorry, I just want to add that she started her Managing Director role at Vizeum China in April of this year.

Wallace Cheung – Credit Suisse

Okay, thank you. Just maybe the second question will be just a quick one. What is the media costs for the media investment business in the first quarter? Thank you.

Wei Zhou

The cost of media for the – in terms of cost of revenue for the media business in the first quarter was $28.5 million.

Wallace Cheung – Credit Suisse

Yes, understood, thank you. But just say within that cost of revenue, how much is this coming from directly from the media cost side?

Wei Zhou

Of that it’s all – a small portion of it is business fax, but it’s pretty much all media cost.

Wallace Cheung – Credit Suisse

Understood. So how do we see the media investment business gross margin in the second quarter then?

Wei Zhou

We expect the trend to be – to increase in the second quarter, the gross margin, especially as we ramp up the CCTV resources.

Wallace Cheung – Credit Suisse

Thank you.

Operator

This concludes the question-and-answer session. I would like to turn the meeting back over to Mr. Fraser for closing remarks.

Henry Fraser

Again, thank you for joining us today. If you have any further questions, please do not hesitate to contact our Investor Relations team by sending an email to charm@brunswickgroup.com.

Operator

Thank you for joining today’s conference. This concludes the presentation. You may now disconnect. Good day.

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