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MCG Capital Corporation (NASDAQ:MCGC)

Q2 2010 Earnings Call Transcript

August 5, 2010 9:00 am ET

Executives

Steve Tunney – President and CEO

Tod Reichert – SVP and Corporate Secretary

Steve Bacica – CFO

Analysts

Jonathan [ph] – Stifel Nicolaus

Vernon Plack – BB&T Capital Markets

Sanjay Sakhrani – KBW

Mike Turner – Compass Point

Rick Fearon – Accretive Capital Partners

Operator

Good day, ladies and gentlemen, and welcome to your MCG Capital second quarter 2010 earnings investor call. At this time, all participants are in a listen-only mode. Later we will conduct a question-and-answer session, and instructions will follow at that time. (Operator instructions) As a reminder, today’s conference call is being recorded. I would now like to introduce your host for today's conference call, MCG Capital's Co-Founder and Chief Executive Officer, Steve Tunney; and Steve Bacica, Chief Financial Officer. You may begin your conference.

Steve Tunney

Good morning, everyone. Before we get started, I would like to have Tod Reichert, our Chief Compliance Officer, provide the necessary Safe Harbor disclosures. Tod?

Tod Reichert

Thanks, Steve. Good morning, everyone. Before we begin, we would like to remind you that various statements that we may make during this morning's call will include forward-looking statements as defined under applicable securities laws.

Management's assumptions, expectations, and opinions reflected in those statements are subject to risks and uncertainties that may cause actual results and/or performance to differ materially from any future results, performance or achievements discussed in or implied by such forward-looking statements. And the company can give no assurance that they will prove to be correct. Those risks and uncertainties are described in the company's earnings release and in its filings with the Securities and Exchange Commission.

Also during this call, management will be referring to a non-GAAP financial measure, DNOI. This measure is not prepared in accordance with US Generally Accepted Accounting Principles. You can find a reconciliation of this non-GAAP financial measure to the most directly comparable GAAP measures and other related information in MCG's second quarter 2010 earnings release and in the Investor Relations section of our website at www.mcgcapital.com under the heading Financial Information, Non-GAAP Financial Measures.

With that, I'll turn the call over to our President and CEO, Steve Tunney.

Steve Tunney

Thank you, Tod. And again, welcome, everyone. Hopefully by now, you’ve had a chance to review our earnings release, which was issued today. We are pleased that our net operating income and distributable net operating income results were in line with expectation s, and as a result, we will be paying a dividend of $0.12 per share based on second quarter’s results.

During the quarter, we have remained disciplined and focused on our strategy of monetizing low yielding investments, originating new investments, and reducing our leverage. In that regard, we originated new investments totaling $50.4 million during the quarter, successfully monetized our equity and debt investment in JetBroadband Holdings, LLC subsequent to quarter-end, resulting in an expected cash proceeds to MCG in connection with the exit of this investment of approximately $50 million after transaction expenses.

We also successfully monetized our equity investment in B&H Education, resulting in cash proceeds to MCG of $5.4 million. We’ve repurchased $8 million of our outstanding CLO debt securities at 55% of par, resulting in a $3.5 million gain. We also paid down $14.6 million of outstanding borrowings and increased our asset coverage ratio to 224% as of quarter-end and 226% as of July 30, 2010.

As I mentioned on our last call, we have increased the pace of our origination activity and we expect this level of origination volume to continue in the near term. We plan to deploy principally uni-tranched and junior capital investments in our SBIC and senior debt assets in our CLO facility. So far, during 2010, originations (inaudible) totaled and aggregated about $110.4 million, with $72.5 million in senior loans, $34.9 million in sub-debt loans, and $3 million in equity investments. The portfolio grew slightly from $991 million to $998 million as compared to last quarter, as our originations were offset by investment pay-downs and valuation adjustments.

Our primary focus is on the enhancement of long-term stockholder value, which we believe can be best accomplished by closing the gap between our stock price and our net asset value. And so increasing our operating income to support the growth of dividends, we firmly believe that we can accomplish this without existing new sources of incremental equity of debt capital.

As of July 30, 2010, we had approximately $240 million of origination capacity to fund new investment into opportunities, including unrestricted cash in excess of estimated operating requirements, debt servicing requirements, and upcoming dividend distributions. We also expect to generate additional capacity through the continued monetization of equity investments and expand the debt capital available to our core SBIC subsidiary.

With respect to our portfolio, we were disappointed to have an unrealized loss of $13 million or 1.3% of our fair value. The decrease of $11.6 million in the fair value of our investment of Broadview was attributable principally to an adjustment to our estimate of the fair value of this investment, which is based on, among other things, M&A comparables, private market transactions, public company comparables, discounted cash flow analysis, and an independent third-party valuation.

The $8.6 million mark we incurred on Jet Plastica this quarter was related to operating performance and a reduction in valuation multiples. Although recent economic data has largely shown that the recovery is slowing and that growth will remain weak for some time, we hope to see improved operating performance and valuation multiples that will allow our portfolio values to increase. However, as I have stated before, we will not be immune to additional marks, as we expect the recovery to affect some of our portfolio companies at a different rate than the economy as a whole.

Further, with respect to our portfolio, as we also discussed in our last call, we have seen an improvement in our revenue of portfolio companies, although they are still down 4.6% on a TTM basis versus a 5.6% decline of TTM revenue last quarter. Additionally, our portfolio companies have continued to reduce expenses and produce EBITDA growth of 9.1% on a TTM basis compared to an 8.8% TTM growth last quarter.

While we are pleased that the market has recognized our accomplishments over the last 18 months, we will not be satisfied until we close the gap between our stock price and our net asset value. We think the critical driver in closing this gap is growing our net operating income, which will in turn enable us to increase our dividends. We believe that we can achieve net operating income growth by repositioning our low yielding equity assets to pulling our restricted cash and utilizing the debt capacity we have in our CLO and our SBIC to increase our earning assets.

As we continue forward, our decisions regarding stockholder distributions will be based on quarterly assessments of the statutorily required level of distributions, gains and losses recognized for tax purposes, portfolio transaction events, our liquidity, cash earnings and our asset coverage ratio.

For the second quarter, our distributable net operating income was $0.13 per share, our net operating income was $0.12 per share, and our taxable income was $0.17 per share. Our unrestricted cash balance at quarter-end was $44.2 million, and our asset coverage ratio was 224%. We also had PIK collections of $4.4 million during the second quarter and $8.7 million subsequent to quarter-end.

After considering all of these factors, our Board decided to set our distribution for the second quarter at $0.12 per share. Going forward, we remain focused on those initiatives that will enable us to continue to build value for our stockholders by closing the valuation gap between our net asset value and our share price and generate earnings that will allow us to make and grow distributions to our stockholders, as we continue to execute our strategic plans.

With that, I will turn the call over to Steve Bacica, our Chief Financial Officer, for our financial overview of the quarter. Following Steve’s presentation, the two of us will be available to address any questions you may have about our performance. Steve?

Steve Bacica

Thanks, Steve. Good morning, everyone. For those who would like to follow along with the webcast, we have posted slides that you can refer to as I give the financial update.

Moving to slide three, quarterly update. Our net operating income during the three months ended June 30, 2010 was $8.9 million or $0.12 per diluted share compared to $8.2 million or $0.11 per diluted share during the three months ended in the prior year. DNOI for Q2 was $10 million or $0.13 per share, which was the same as the prior year period.

The increase in net operating income during the three months ended June 30, 2010 compared to the three months ended June 30, 2009 was attributable primary to the benefit of decreases in interest expense and general and administrative expense, offset by a decrease in interest income resulting from lower average LIBOR, changes in the composition and the average balances of loans that are on non-accrual status, and a decline in average loan balances.

During the three months ended June 30, 2010, we reported a net loss of $750,000 or $0.01 per diluted share compared to a net loss of $5.9 million or $0.08 per diluted share during the three months ended June 30, 2009. The net loss reported for the three months ended June 30, 2010 resulted primarily from net operating income of $8.9 million, offset by net investment losses of $13 million and a net gain on extinguishment of debt of $3.5 million during the quarter.

On slide four, Selected Balance Sheet Data, we have a well-capitalized balance sheet with just under $1.2 billion in total assets and $615 million in total stockholders’ equity. Our debt-to-equity ratio was 0.87 to 1 at June 30th, and we had $91 million in unrestricted cash as of July 30. Also, please note that our debt-to-equity ratio after adjusting for cash, restricted cash and securitization cash was 0.69 to 1 as of June 30, 2010. Our NAV per share for Q2 was $8.03. Our BDC asset coverage ratio improved from 216% at the end of 2009 to 224% as of June 30. As of July 30, 2010, our BDC asset coverage ratio further increased to 226%.

Moving on to slide five, Selected Operating Data, NOI and DNOI have improved compared to Q1. Looking at the sequential comparison of Q2 of 2010 versus Q1 of 2010, improvements in revenue were offset by non-accrual impacts, and we expect that salaries and benefits will continue to fluctuate partially driven by our long-term incentive plan, which was tied to our share price performance.

Also, the proxy contest in connection with our 2010 annual meeting accounted for an additional $866,000 in expenses or about $0.01 per share of NOI. SG&A is at 3.4% of average investment assets on a current run rate basis. And we expect that level to continue in the near-term and to decrease over the longer term.

Moving on to Gross Originations and Paydowns on slide six, you will see that we had gross originations of $50 million during the second quarter and $30 million in paydowns. The $50 million included about $36 million of investments in three new portfolio companies, about $10 million of advances to existing customers, and the remainder of the originations were from PIK and dividend accruals.

Of the $30 million in paydowns, about $5 million was related to the monetization of B&H Education and $12 million was due to the partial monetization of NBSSI [ph]. Other reductions in paydowns were spread across the portfolio.

Moving on to slide seven, we are positioned to grow income and dividends. We have worked hard to place MCG into a strategic position to continue to grow operating income, which we expect will support current and future dividends. As we remain focused on investing in current yielding debt securities, we plan to make use of the approximately $240 million of origination capacity that we have at July 30, 2010.

Moving on to gains and losses on slide eight, our net investment loss for Q2 was $13 million before the $3.5 million gain on an $8 million debt buy-in. The most significant valuation changes for the second quarter included a negative $11.6 million mark for Broadview and a negative $8.6 million mark for Jet Plastica. Conversely, we had positive changes to valuation with a positive write-off of $4.8 million for Avenue Broadband, a $3.2 million markup of MCI, and a $2.4 million markup of Garden State Dental.

From an operational perspective, we will continue to be very proactive with our portfolio companies regarding all operational and business objectives and performance in the current economic environment.

Going to slide nine, which is Debt Obligation Summary, we have outlined our current debt structure as of July 30. Our access to leverage opportunities and the cash included in our 2006-1 facility and its undrawn $15 million revolver create attractively priced debt capital, as we move forward with our origination activities. We intend, in the coming quarters, to put the potential debt capacity we have available to us to work. We have no scheduled debt due until October 2011, which is reduced on an ongoing basis by payments we make to our private placement note-holders as we monetize assets.

Additionally, during the second quarter, we repurchased for $4.4 million in a privately negotiated transaction a total of $8 million of outstanding debt securities under the 2006-1 securitization. In connection with this repurchase, we reported a $3.5 million gain on the extinguishment of debt during Q2. To date, we have repurchased an aggregate of $30.6 million of our outstanding debt securities under the 2006-1 Commercial Loan Trust for $10.5 million.

Slide 10 shows our portfolio distribution by asset class. Looking at our investment portfolio, as we move forward with origination activities, we expect you will continue to see us focus principally on new debt investments rather than significant new equity positions.

On slide 11, we expect to focus on improving diversification with new originations, and we do not intend to materially increase our weighting in telecom, cable, or health care. With the JetBroadband sale closing, our cable portfolio has decreased in the third quarter from the sale. Overall, our portfolio remains well diversified from industry concentration although our highest concentration is still our CLEC component of telecom at 15.8%, driven by our investment in Broadview.

Moving on to the next slide, slide 12, which outlines our portfolio investment ratings, changes to IR ratings in Q2 included an increase in IR 2s due to new originations and a decrease in IR 3s, and an increase in IR 5s due to expected performance in certain loans. One other point to note on this slide related to our non-accrual loan percentages.

On a fair value basis, we have seen an increase in non-accrual loans from 4.1% to 4.7% this quarter compared to Q1 2010. Also, on a cost basis, our non-accrual percentage has increased to 15.1% in Q2 from 12.9% in Q1 of 2010. The key driver of the change was Active Brands senior debt going on non-accrual status in Q2.

Moving to slide 13, in summary for the quarter, we are pleased to announce increases in originations, the improvement in net operating income, and the closing of the JetBroadband sale. Also, we are very pleased to announce the $0.12 dividends this quarter.

And with that, I think we will open it up for questions.

Question-and-Answer Session

Operator

(Operator instructions) Our first question comes from Troy Ward with Stifel Nicolaus.

Jonathan – Stifel Nicolaus

Thanks, this is Jonathan [ph] filling in for Troy. Steve, one quick question. Can you talk a little bit about the prepayment velocity in your loan book today and what you would expect for the remainder of the year?

Steve Tunney

It’s tough to predict because it’s lumpy. So we did obviously after quarter-end have some significant paydowns with JetBroadband, but it can vary anywhere from typically $15 million to $40 million in a quarter. It could be very lumpy.

Jonathan – Stifel Nicolaus

Okay, okay, great. And then also taking note of the Broadview write-down, could you give us some color on the industry trends in the CLEC space?

Steve Tunney

I think that the industry trends are actually positive for the CLEC space. In fact, as you may be aware, there was now a third transaction in the space, a company called FiberNet, which was a CLEC subsidiary of One Communications, transacted in the quarter. It’s a publicly announced deal that basically a fiber company called NTELOS has purchased them. So we are very encouraged by that development in a sense that now we have three transactions over the last seven to nine months and three new market entries. We had a cable company by CLEC, we had an RLEC by CLEC, now a fiber company by a CLEC. So we think that that’s all positive developments.

Jonathan – Stifel Nicolaus

And that purchase on a multiple to EBITDA, would you happen to have that handy?

Steve Tunney

I think it was announced at 6.8 times.

Jonathan – Stifel Nicolaus

Okay. And then also, could you tell us what the weighted average yield on some of those new investments, I believe, like $34 million in senior debt you made this quarter, just kind of on average ballpark?

Steve Tunney

Yes. The spreads run anywhere from 500 to 1,200 over LIBOR. So there are three new names in the portfolio. A company called Service Champ, which was fixed rated 14 in a quarter; a company called Snowflex Cinema, which is an entertainment deal, which is 700 spread over a 200 LIBOR floor; and a company called Telex Group, which is business services, which was a 500 spread over a 325 floor.

Jonathan – Stifel Nicolaus

Okay, great. And then just one last modeling question. Would you happen to have the balance of the SBIC or the debt out in the SBIC at 6/30?

Steve Bacica

Jonathan, in the debt, we actually have July 30th balances.

Steve Tunney

July 30th, it’s $55 million .

Steve Bacica

And so we’ll pull June 30th.

Steve Tunney

And circle back with you.

Jonathan – Stifel Nicolaus

Yes, we can get that offline, guys. That's not a problem. Thanks a lot.

Steve Tunney

Just for everybody’s benefit, the SBIC balance at June 30th was $41.6 million.

Operator

Our next question comes from Vernon Plack with BB&T Capital Markets.

Vernon Plack – BB&T Capital Markets

Thanks very much. Steve, I was hoping for a little bit more color on your biggest write-down as well as your biggest write-up, that being Broadview as well as Avenue.

Steve Tunney

With Broadview, I think I’ve said about all I can say. I mean, I think it would be – we look at, as I’ve said, M&A, public, private, DCS, and third-party valuations. To my mind, it’s a tweaking of the investment valuation in the sense that since we own so much of it, any small moves in enterprise value flow right through to us in a big way because of how much we owe as a company. So we can’t really take it to the next level because of the issues. They are publicly reporting company. On Avenue Broadband, we’ve had a write-up, which is an additional write-up, I believe, because we had a write-up in the first quarter as well. And it’s really just they are executing extremely well on their operating plan and it’s all tied to improvements in operating performance of this company.

Vernon Plack – BB&T Capital Markets

Okay. And did you say that you had one loan that went on non-accrual? Is that Active Brands?

Steve Tunney

Yes. Active Brands, we put the senior debt on non-accrual, which increased our non-accrual fair value from 4.1 to 4.7. Basically, as we looked at the relative cost of fair value in that loan, even though it’s been paying – it's something that we have a higher standard I think for controlling company investments. And given the growth between our estimate of fair value and cost, we put it on non-accrual.

Vernon Plack – BB&T Capital Markets

And were there any investments that went off of non-accrual?

Steve Bacica

Yes. Vernon, there was another piece of GMC that went back on to accrual status in the quarter.

Vernon Plack – BB&T Capital Markets

Okay. All right. Great. And just one final question, as it relates to leverage, your net debt-to-equity net of cash has been, for the last several quarters, at about 0.69 to 1. Where is that number headed or is that the range that you're comfortable operating in or would like to operate in at least for the foreseeable –?

Steve Tunney

I think it will go up from here. Our objective is to run at a little higher than that to get better leverage for the shareholders. I think that the cash that we’ve been building, it’s been due to portfolio pay-offs, has caused the origination activity not to show up in net growth of that number and the total loan portfolio. But I would say that the composition of the portfolios improving from a mix of earning assets to non-earning assets because we are monetizing equity and then redeploying it as debt. So even though the overall portfolio only grew $7 million during the quarter, we did have an improvement in the mix of earning assets in that portfolio because we’ve monetized equity, redeployed the debt, and the markdowns that we took in both Broadview and Jet Plastica, which caused an offset to the total assets, were markdowns on assets that were non-yielding.

Vernon Plack – BB&T Capital Markets

Okay. Thank you very much.

Operator

Our next question comes from Sanjay Sakhrani with KBW.

Sanjay Sakhrani – KBW

Hi, thanks. Good morning. I apologize if I missed this, if you mentioned this earlier. But I was wondering just on the loan growth that you guys expect, where are you guys sourcing that stuff from? What kind of industries are you looking to invest in and how does that pipeline look at this point? Thank you.

Steve Tunney

As far as where we source from, we do work with private equity firms and for the most part, we are working with private equity firms that had between $250 million and $750 million in assets so that the composition of their portfolio matches up with what we want to deploy, although we do deal with some larger firms that run more money than that. From an industry perspective, during the quarter, we did deals in business services, entertainment distribution.

I would expect to see more of that. I would also expect to see us to continue to deploy in the education space, business services. The red light sectors, as Steve mentioned, are principally telecommunications, cable and health care, although as we get further into the year, you may see us do healthcare and cable depending upon the velocity of repayments that we get in those sectors. And then I would say we don’t participate really in the energy sector because of the skilled business and it’s really not what we do.

Further, we don’t participate in real estate sector. But other than that, I think everything else is open. And as far as the pipeline, we think the pipeline is building. We have an expectation that M&A volume will continue to build throughout the second half of this year. We believe that through our conversations with various firms that are in the business that are marketing these companies, there is quite a pipeline of transactions that’s building out in the marketplace. And I think it’s tied principally to people’s concerns about what’s going on with tax rates, further concerns about what’s going on with taxation of carried interests. I think it’s motivating a lot of people to try to monetize transactions in 2010 versus 2011, and we are hopeful that we’ll be participating in that evolution as it occurs.

Sanjay Sakhrani – KBW

Okay. Just one follow-up. I think you mentioned that you guys are going to do more sub-debt oriented investments. Are you guys getting equity warrants with that or options to buy equity warrants and would you consider that?

Steve Tunney

Well, we have historically had a portfolio mix that consisted of senior loans and second lien. So this really isn’t new business for us. It’s something that we’ve been doing quite a while. I would say that over the last several years we have not seen a lot in the way of opportunities to get warrants as part of the sub-debt position. We see it more of a fixed return concept, both current pay and PIK. And with our focus on driving DNOI and NOI, we’re focused on more on those types of returns than an equity return that may pay off down the road. So presently our focus is on high-yielding debt securities, but over time, as we close that valuation gap between our current stock price and our NAV, you will see us do more, I think, tag equity-oriented investing like we’ve done in the past.

Sanjay Sakhrani – KBW

Okay. Just – I'm sorry, one final question. You guys still had a fair amount of paydowns, and I'm sure some of it is kind of proactive, but how should we consider it going forward? I mean, should we expect a fair amount of paydowns to persist?

Steve Tunney

You might have missed it.

Sanjay Sakhrani – KBW

I’m sorry.

Steve Tunney

The first caller asked about a paydown velocity question. It’s very lumpy. I think that if you look at our typical portfolio, if you just look portfolio normal course, the expectation would be $10 million to $15 million worth of amortization on a quarterly basis just based on the run-off of the portfolio. But it can spike the $30 million, $40 million, even $50 million because of very lumpy payoffs that are very difficult to predict. Case in point of JetBroadband that we had announced did close subsequent to quarter-end. Well, that’s going to be a rather large lumpy monetization. Now, a component of that was non-yielding equity, which we are very happy to get those proceeds and redeploy it. But there was a debt investment as well that comes with that payoff and we had to get that money back out the door and working for us as well.

Sanjay Sakhrani – KBW

Okay. Great. Thank you very much.

Operator

Our next question comes from Mike Turner with Compass Point.

Mike Turner – Compass Point

Hi, good morning. Most of my questions have been answered. Just as far as the debt outstanding on the unsecured notes, is that – that was as of July 30th, does that include the proceeds from JetBroadband? Did that close on the –?

Steve Bacica

Mike, basically the way that works is the paydown on the private placement notes will basically occur in about 10 days. And so the validity of the balance will go down from July 30th balance of about $44 million will go down to about $31 million with total paydowns. There will be a piece of that posted mostly to private placement notes, but there will be several million dollars also to pay down on the warehouse.

Mike Turner – Compass Point

Okay. And then correct me, when can you – is it when it gets below 25 that you can buy back your own stock, at like a 20% ratio?

Steve Tunney

No, actually it’s – the way it works is once we hit $35 million, for every subsequent $5 million of paydown, we can buy in $1 million worth of stock.

Mike Turner – Compass Point

Okay. Okay, great. And on the Jet Plastica write-down, is that – have you essentially written down all the B-notes and then now some of the A-notes. Is that how that's worked?

Steve Tunney

No, there is still a component of the B-notes that are outstanding, and you will see that in our scheduled investments that will be part of our filing very shortly.

Mike Turner – Compass Point

Okay, great. Thanks a lot.

Steve Tunney

Thanks, Mike.

Operator

Our next question comes from Rick Fearon with Accretive Capital Partners.

Rick Fearon – Accretive Capital Partners

Hi, good morning, guys. Quick question. Just wondering if you could quantify at all some of the new deal pipeline for us, if you have a sense of where that's looking to be this quarter and what you would expect in terms of total dollars for the year.

Steve Tunney

We expect that our origination volume will continue at least at the pace that we distributed – exhibited for the second quarter, and we are hopeful that we’ll absolutely be able to blow it a bit from there.

Rick Fearon – Accretive Capital Partners

Okay, great. And on the monetization side, Broadview, it does seem like at the company level, they've been receiving some really positive industry recognition. And it looks like the company is being pretty innovative. Is there anything to report, any movement with respect to monetization there? And maybe you could just share some color, Steve, as well, I know you're real familiar with the operations there, some of the things that are going on that differentiate Broadview.

Steve Tunney

Yes. I mean, Broadview is very differentiated in the sense of what we have from a VoIP offering. We have actually rolled that product out nationwide. And I think we’re closing on 50,000 installed seats of that product offering. And it’s being very well received in the market. I think that that does distinguish us further. What I think distinguishes us is the fact that we are very concentrated in the large Northeast corridor [ph], which is a very valuable footprint to our network and our customer base. That’s up in the Northeast. I think we are, if not the largest, among the largest independent CLECs in New York City and quite a substantial presence as well in Philadelphia and in 20 Northeast markets. So we think we have a very unique asset.

Globally, with respect to what’s going on, as I mentioned earlier, there has now been three transactions in the space, which we think is a very positive development. In particular, we see increases in the transaction multiples. We also see new market entrants. And I think that that speaks of the desirability of the assets in the space. So we are hopeful that for us, we can meet our objectives, which I’ve stated that we hope to be able to monetize that investment over the next 18 months. It’s something that we think we can achieve, and we obviously recognize it’s critical for us that we get that investment monetized at some point. So we can redeploy it and get a yield on that investment whereas now it is a non-yielding asset.

Rick Fearon – Accretive Capital Partners

And you think that strategic sale is more probable than the shelved IPO that you had filed at one point?

Steve Tunney

You know, it’s tough to tell and it’s really tough to get real specific on that at this time. I think that the transactions that have occurred in the market are strategic transactions across the board. So I would say that that versus no IPOs with sort of probably weight you through the strategic versus the IPO. But you know –

Rick Fearon – Accretive Capital Partners

Great. Well, thanks a lot. Thanks for the hard work, guys.

Steve Tunney

Thanks, Rick. With that, I think we’ve answered everyone’s questions. So once again, we appreciate your support and look forward to reporting our third quarter results in the near-term. Thank you very much.

Operator

Ladies and gentlemen, this does conclude today’s presentation. You may now disconnect.

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