Apollo Commercial Real Estate Finance's (ARI) CEO Stuart Rothstein on Q2 2014 Results - Earnings Call Transcript

Jul.30.14 | About: Apollo Commercial (ARI)

Apollo Commercial Real Estate Finance (NYSE:ARI)

Q2 2014 Earnings Call

July 30, 2014 10:00 am ET

Executives

Stuart A. Rothstein - Chief Executive Officer, President and Director

Megan B. Gaul - Chief Financial Officer, Principal Accounting Officer, Secretary and Treasurer

Scott Weiner - Chief Investment Officer

Analysts

Daniel K. Altscher - FBR Capital Markets & Co., Research Division

Steven C. Delaney - JMP Securities LLC, Research Division

Ryan Tomasello - Keefe, Bruyette, & Woods, Inc., Research Division

Charles Nabhan - Wells Fargo Securities, LLC, Research Division

Operator

Good day, ladies and gentlemen, and welcome to the Apollo Commercial Real Estate Finance Inc. Second Quarter 2014 Earnings Conference Call. [Operator Instructions] I'd like to remind everyone that today's call and webcast are being recorded. Please note that they are the property of Apollo Commercial Real Estate Finance Inc., and that any unauthorized broadcast in any form is strictly prohibited. Information about the audio replay of this call is available in our earnings press release.

I'd also like to call your attention to the customary Safe Harbor disclosure in our press release regarding forward-looking statements. Today's conference call and webcast may include forward-looking statements and projections, and we ask that you refer to our most recent filings with the SEC for important factors that could cause actual results to differ materially from these statements and projections. We do not undertake any obligation to update our forward-looking statements or projections, unless required by law. To obtain copies of our latest SEC filings, please visit our website at www.apolloreit.com or call us at (212) 515-3200.

At this time, I'd like to turn the call over to the company's Chief Executive Officer, Stuart Rothstein. Sir, please go ahead.

Stuart A. Rothstein

Good morning, and thank you for joining us on the ARI second quarter earnings call. Joining me this morning in New York are Scott Weiner, our Chief Investment Officer; and Megan Gaul, our Chief Financial Officer, who will review ARI's financial results after my remarks.

Given that we are fast approaching the 5-year anniversary of ARI's IPO and reporting on ARI's most active and successful quarter-to-date, I would like to take a few minutes -- a few moments to comment on ARI's strategy and the real estate finance platform we have built here at Apollo.

ARI was created in the fall of 2009 to be an opportunistic investor in performing real estate credit. Over the last 5 years, the real estate finance markets have certainly recovered, as evidenced by the fully functioning CMBS market, the appetite of insurance companies and banks for real estate assets and the market stability to refinance and restructure much of the highly anticipated 2010 to 2012 maturity wall.

During the recovery that has taken place, we have not wavered from our core strategy, and as the recovery has created various pockets of opportunity, we have consistently demonstrated ability to find investments throughout the capital stack with attractive risk-adjusted returns. Since going public, we have completed over $2.5 billion of transactions.

Also during the last 5 years, Apollo has continued to invest in building out a robust commercial real estate credit platform. And today, that platform is responsible for managing over $6 billion of capital, which has financed approximately $10 billion of real estate transactions across multiple property types and geographies. We feel very strongly that the depth and breadth of Apollo's real estate platform has been and will continue to be critically important to ARI's success.

Significantly, that platform has created best-in-class relationships with brokers, senior lenders and borrowers and has cemented a reputation for being a reliable counterparty that is highly thoughtful and creative around underwriting, pricing and structuring.

As a result, ARI is able to effectively differentiate itself when competing with other commercial real estate capital providers.

With respect to the state of the overall commercial real estate market, consistent with prior quarters, there continues to be robust transaction activity and improving operating fundamentals throughout most property types and markets. Sales prices for core properties in major markets have eclipsed their 2006, 2007 averages. The June statistics for the Moody's Real Capital Analytics Commercial Property Price Indices showed continued steady growth in prices across markets and property types, bringing the overall index to within 5% of its November 2007 peak.

Notably, noncore or nongateway city markets, which have lagged the major markets, have begun a steady recovery with a noncore index of 15% over the past 12 months. The real estate finance markets remain extremely active as well with capital flows, number of participants and competition steadily increasing. While CMBS volume declined 8% in the first half of 2014 when compared to last year, the lack of issuance was mostly due to increased competition for conduit eligible loans from insurance companies and community and regional banks intent on retaining commercial real estate loans on their balance sheets. As a result, owners and acquirers of assets are benefiting from the more robust lending market.

As I mentioned, the second quarter was a record quarter for ARI as the company completed over $576 million of transactions and year-to-date, we have committed to invest over $730 million.

The breadth of ARI's origination capabilities is evidenced by the diversity of the transactions completed thus far in 2014. The company deployed capital into each of ARI's target asset classes, including first mortgages, mezzanine loans and investments in legacy CMBS and closed transactions involving a broad range of deal structures and underlying asset type.

Notably, as ARI has grown its capital base, the company now has the ability to both hold larger positions and notably, to principal larger loans and then syndicate portions of those loans to third parties. ARI completed 2 such loans in the second quarter. The first was a large loan on a resort hotel in Aruba, where ARI syndicated a senior piece and retained a high-yielding junior piece. And the second was a first mortgage on a portfolio of Destination Homes, where ARI retained a controlling interest in the first mortgage and syndicated pari passu interest to other investors.

ARI also continues to identify synergies within and benefit from the broader Apollo platform, which provides ARI with valuable underwriting information and deal flow.

During the quarter, ARI participated in refinancing an existing loan on a health care portfolio, which had been presented to ARI through an affiliated healthcare lender, acquired by an affiliate of Apollo in 2013. And another investment sourced through the Apollo platform is our pending investment in KBC Bank, which is on track to close in the third quarter of this year.

In addition, given Apollo's dedicated team of CMBS professionals who are in the market on a daily basis, ARI has the ability to selectively invest in attractively priced CMBS strategies. Since ARI went public in 2009, the company has deployed approximately $200 million of equity into $1.1 billion of CMBS, which have generated a mid-teens IRR.

Most recently, in the second quarter of this year, we deployed approximately $35 million of equity into roughly $175 million of legacy CMBS and financed the balance using the company's recently upsized $200 million term repurchase facility.

While CMBS represents only 8% of our net equity at June 30, 2014, given ARI -- given our ability to identify these assets and the company's ability to source and structure max term financing, the result is an attractive risk-adjusted return, which supplements our earnings and dividend-paying ability. The newly purchased CMBS have been underwritten to generate an IRR of approximately 17%.

Another area of success for ARI has been the financing of a broad mix of for-sale condo projects, including both conversions and new development. Since 2012, ARI has committed to invest over $348 million into 5 transactions, representing 310 condo units across varying price points. Many of the traditional providers of this type of financing exited the business during the financial crisis, thereby enabling ARI to capitalize on the void left in the market and generate attractive returns. ARI has taken a very selective approach to transactions in markets, as evidenced by the investments completed to date, which have been either in New York City or Metropolitan Washington, D.C., arguably 2 of the strongest housing markets in the nation. At all times, we carefully monitor our exposure to this strategy.

Some important metrics to note include the fact that the 2 most recently completed investments in D.C. have future funding components, which are not expected to fund until after we receive the repayment on our largest New York City condo exposure, which is nearing completion.

Furthermore, in our 2 largest New York City condo transactions, contracts with aggregate net sales proceeds have been executed in excess of our bases in the respective deals. As such, the market risk condo exposure of our investments in this strategy is approximately 21% of our book value and about 11% of our assets.

Lastly, on this topic, it is important to note that across our condo portfolio, the weighted average loan to net sell-out was 52% at June 30. We are extremely comfortable with the approach we have taken to underwrite -- to underwriting these deals and price-to-risk in these transactions and across our for-sale condo investments, we expect to generate a weighted average underwritten IRR in excess of 13.5%.

With respect to the company's overall investment portfolio, at June 30, 2014, the portfolio had an amortized cost of $1.3 billion, a leverage weighted average underwritten IRR of 13.9% and a weighted average duration of a little bit more than 3 years.

Across our first mortgage and mezzanine loan portfolio, the weighted average loan-to-value was 58% at quarter end. Importantly, the credit quality of our loan portfolio remains stable. In the 5 years the company has been public, ARI has never realized a loss, which is something we are very proud to report. Our focus remains on investing in performing loans and making sure that throughout our deal underwriting and restructuring, we are focused on protecting principal.

Before I turn the call over to Megan to discuss our financials in detail, I would like to highlight that our operating earnings per share this quarter exceeded our dividend per share. For the past few quarters, we said we believe the earnings potential of our portfolio on an invested basis could meet or surpass our dividend. Historically, we have experienced a cash drag in the quarters following a capital raise, which impacted our operating earnings. This past quarter, we were able to better manage the timing of our capital raising effort with our capital deployment effort, which resulted in solid operating and financial performance. Our pipeline for future investments remains robust, and we will continue to be thoughtful around the timing of capital raises and deployment.

And with that, I will turn the call over to Megan.

Megan B. Gaul

Thanks, Stuart. I want to remind everyone that we posted our supplemental financial information package on our website, which contains detailed information about the portfolio, as well as ARI's financial performance.

For the second quarter of 2014, we announced operating earnings of $18 million or $0.42 per share, representing a per share increase of 35% as compared to operating earnings of $11.7 million or $0.31 per share for the second quarter of 2013.

Net income available to common stockholders for the same period was $22.1 million in 2014 or $0.51 per share as compared to $9.9 million or $0.27 per share for 2013.

The company reported operating earnings of $32 million or $0.80 per share for the 6 months ended June 30, 2014, representing a 14% share increase -- per share increase as compared to operating earnings of $23.7 million or $0.70 per share for 2013.

Net income available to common stockholders for the 6 months ended June 30, 2014 was $37.8 million or $0.94 per share, as compared to net income available to common stockholders of $12 [indiscernible] $0.59 per share for 2013. For reconciliation of operating earnings to GAAP net income can be found in our earnings release contained in the Investor Relations section of our website, www.apolloreit.com.

GAAP book value per share at June 30 was $16.30, which is a slight increase from $16.21 at March 31. As a reminder, we do not mark our loans to market for financial statement purposes. We currently estimate there's another $0.21 per share of value when our loans are mark-to-market and estimate our market value per share to be $16.51 at June 30.

With respect to repayments, as Stuart mentioned earlier, in the second quarter, we received a $47 million principal repayment from the mezzanine loans secured by portfolio of healthcare properties. The company realized a 12% IRR in this investment and participated in the refinancing of this loan.

To fund our recent investment activity, the company completed a $9.7 million share offering during the second quarter, raising net proceeds of $158.4 million. In addition, we extended 2 of our credit facilities. The borrowing capacity under the company's JPMorgan facility was expanded to $175 million from $100 million, and the borrowing capacity for the Deutsche Bank facility was upsized to $200 million from $100 million.

We continue to believe that our business model remains favorable in this interest-rate environment and are confident ARI's well positioned if interest rates rise.

In addition to the minimal use of leverage, 52% of our loan portfolio had floating interest rates at June 30.

Finally, as indicated in our press release, the Board of Directors announced a common dividend for the third quarter of $0.40 per common share. This is the 17th consecutive quarter of a $0.40 common dividends. Based on Monday's closing price, ARI's stock offers an attractive 9.8% yield.

And with that, we'd like to open the lines to the operator.

Question-and-Answer Session

Operator

[Operator Instructions] Our first question comes from the line of Dan Altscher from FBR Capital Markets.

Daniel K. Altscher - FBR Capital Markets & Co., Research Division

It looked like a pretty good quarter. I was wondering on the JPMorgan facility, I know you said you upsized it, which was, looks like a pretty good move here, but seems like it might be brushing up against the limit once again. Are there thoughts to maybe try to pay that line down or up it again or maybe get a new facility for first mortgages?

Stuart A. Rothstein

I mean, generally speaking, Dan, we've been in discussions with both JPMorgan, as well as a couple of other banks to sort of either redo the facility in total or split it into a couple of different facilities and those conversations are ongoing at this point in time. So I think what you're seeing right now is sort of just managing through the process in terms of the discussions we're having and sort of JPMorgan's been a great partner in terms of working with us in the interim as we have needs to finance deals that are happening real time. But I think as we move through the end of the year and the early part of next year, you'll either see a full redo of the JPMorgan facility or you'll see other facilities, which sort of break it into its desperate parts.

Daniel K. Altscher - FBR Capital Markets & Co., Research Division

Okay, well we'll be on the lookout for that. On the $210 million loan that was, I guess, syndicated out to bigger parent, Apollo, it seems like Apollo's done or the bigger parent's done a pretty good job of sourcing deals or maybe acting as a partner there. Do you see that going forward, that trying to use some of those funds that are managed by the parent as a way to lay off risk or use of a partner for capital sources? Is this kind of like a one-off sort of thing or is this going to be maybe more of a continual trend?

Scott Weiner

This is Scott. To be clear, the other participant is not Apollo Global itself, but other vehicles and funds managed by Apollo, just to clarify.

Daniel K. Altscher - FBR Capital Markets & Co., Research Division

Right, right, right.

Scott Weiner

It's certainly an ongoing strategy, as Stuart mentioned in his opening remarks, we have a much larger real estate debt platform. ARI is a vehicle whether through leverage or without leverage kind of looking for the higher yields. We have other vehicles kind of where they're looking for what I'll call more senior mez or lower yielding or lower yielding CMBS. So this was a situation where the yield works on an unlevered basis for certain vehicles, was a large deal that allowed us to have a competitive advantage. And then from ARI's perspective, it was an asset that we were able to put leverage on to get to our yield. So I would say we continue to look for opportunities like that. We also see opportunities where we can speak for a large part of a capital structure, let's say example, a mezzanine loan, that is a very thick piece, and where we can put a senior piece into a vehicle looking for that type of risk and return and ARI can take a more junior piece looking for that type of risk and return. So that we do, do that a bit. Obviously, it goes through Apollo's kind of conflict and allocations processes to make sure everything is done on arm's length and things like that. But that is a big competitive advantage that I think we have where we do have multiple cost of capital looking for different yield and risk deals.

Daniel K. Altscher - FBR Capital Markets & Co., Research Division

Okay. And then maybe just a quick numbers question. On the Aruba loan, the $90 million that was syndicated out and you guys kept the $65 million, can you give the representative yields that were -- accompanying the senior and junior portion, the asset yields?

Scott Weiner

Sure. I mean, the senior was participated out to a bank who most likely included in a CMBS deal. Their yield was L with a forehandle. And then our mez was [indiscernible] note was double digit L but over 1,000. And there are obviously, fees and floating rate and stuff like that, but [indiscernible].

Operator

Our next question comes from the line of Steve Delaney from JMP Securities.

Steven C. Delaney - JMP Securities LLC, Research Division

I was wondering, Stuart, if you could comment on, if you now see yourself as pretty much fully invested from the early May raise? And could estimate for us how much additional loan origination capacity do you see yourself having now with the June cash and remaining funding under the bank facilities for senior loans?

Stuart A. Rothstein

Yes. Look, I would describe this as effectively, fully invested, particularly given the 2 deals we announced after the quarter closed. So we did go in -- ended the quarter with a little bit of capital, announced 2 deals earlier in the quarter. As I mentioned in my comments, we do expect to get, start getting paid off the latter part of this year on one of our large New York City condo deals. So that's due to the inflow of capital from our perspective. We also have another deal that will get refinanced, though given the way of the deal's structure, we'll have a look at putting our capital back into the refinancing. So I think we've got...

Scott Weiner

And that was the shorter deal that we had bought that we announced that matures the end of this year. So that's the deal where we figured it was a very safe piece of the capital structure, better than cash, earning anywhere from 8% to 9% type return that we either -- we'll look at the refinancing, but it's the source of proceeds for new deals.

Stuart A. Rothstein

So all things considered, I would say we have less than $50 million of, call it free capital right now. But I do think we have some options to add a little bit more leverage to the company if we wanted to in order to proceed trends -- to pursue transactions and complete transactions before doing anything significantly in the capital market.

Steven C. Delaney - JMP Securities LLC, Research Division

Got it. And that's your last comment there, Stuart touched on what I was kind of trying to, that incremental to the $50 million of which you would call free capital, when I look at how your senior loans were levered at June 30, your advance rate of about $147 million on $344 million you're only about 42%. So with the peer just on that collateral before you even add one -- I think you had what -- the third quarter loans, one of those was a senior loan, right? I believe. So I mean, it would seem that there is some additional borrowing capacity and I assume that's what you were referring to when you talk about incremental leverage.

Stuart A. Rothstein

Yes. For example, the home loan that we've just discussed where we participate with other parts of Apollo, that as we've said, is unlevered. We're in the process of levering that again to get more capacity to make new deal.

Steven C. Delaney - JMP Securities LLC, Research Division

Okay, that's helpful. And Scott, I'm looking at your legacy CMBS and obviously, very attractive funny markets there. And you give us an average maturity of like 2.8 years. I was wondering if you could comment sort of on how are the wings that average look? How the longest pieces, maybe how long are they in terms of duration?

Scott Weiner

I mean, we're buying '06, '07 paper that was 10 years. At the time, obviously, certain deals have loans, underlying CMBS defaulted and gone to resolution, others have been extended and we do our own underwriting. But I would say, it's within a tight band. It's not like there's a 1-year and a 10-year in there. They are kind of -- that is a true average, if you will. The financing we have in place is longer than that to give ourselves room as these things tend to go out longer. But the model would tell you the true input, [ph] yes it's around ...

Steven C. Delaney - JMP Securities LLC, Research Division

But the financing would be, while it's committed longer, it would be floating rate though, right?

Scott Weiner

The financing is floating rate, but if we swap effectively. So we're buying fixed rate bonds and using fixed rate financing.

Steven C. Delaney - JMP Securities LLC, Research Division

So you've swapped..

Scott Weiner

We've taken out that interest rate risk. And the IRRs we're showing are based on our modeling around any kind of -- not to say, we expect the bonds we're buying to take losses, but to the extent we did expect them to take a loss, that's modeled in the IRRs.

Steven C. Delaney - JMP Securities LLC, Research Division

Right. That was very helpful. I was specifically going to ask if you had put swaps on those. So I appreciate that.

Operator

Our next questions comes from the line of Jade Rahmani from KBW.

Ryan Tomasello - Keefe, Bruyette, & Woods, Inc., Research Division

This is actually Ryan Tomasello on for Jade. I was wondering if you can discuss the competitive environment a bit more, what are you seeing in terms of increased competition for yield? And have there been any changes in underwriting standards that particularly concern you whether it be on certain deal types or geographies or property types?

Scott Weiner

No, as we continue to say that the markets are robust. There is abundance of cash out in the world looking for yield. I think that specifically manifests itself across all asset classes, it's not commercial real estate credit. In some ways, I do think commercial real estate credit in some ways is what I call the tallest midget where I think when you look at high yields in some other asset classes, we do still offer some attractive relative value. I would say where we're seeing the most competition is in, what I'll call the most liquid parts of the market. So loans intended for securitization or mezzanine debt that is kind of in a large liquid form being syndicated widely by the street, where the remainder of the underlying asset looked like the company. So people without necessarily real estate knowledge can do that. And again those people who are more calm to yields who have seen that to be a limited service hotel portfolio or things like that, so you have seen compression. Also as we stated earlier, the availability of financing is very high for first mortgage loans. You have not seen it come back for mez or CLOs or things like that. But clearly, the borrowers, it's kind of a cycle, right? There's more leverage to do first mortgage loans, so thus for spreads on first mortgage loans are coming down, thus cost of funds are lower, so people are paying more for properties. As far as kind of concerns and bad habits, yes, look, I think the capital markets, they will compete on both a spread or a yield perspective, but they'll also compete on a credit perspective. And so you are seeing a little bit of originate distribute model where people are giving up on terms. I mean, we're still not back to the peak '07. But yes, largely competition. I mean I think we pick and choose our battles and really look to areas of the market where you do need more real estate expertise or for example, you're doing a loan with a bank who's holding on their balance sheet who very much cares who is behind them, or a borrower who's not necessarily focused on the last basis point spread looking for someone who is going to be there and hold it on their balance sheet and someone they come and talk to. And we've been able to do it really across all property types, whether it be hotel, multifamily, other types. It's just finding deals. So we certainly are passing a lot more deals today than we did last year at this time because I think it's 2 things: one, deal volume is up dramatically, but also there's just a lot of -- there's no shame in asking. People ask for anything these days, and if they get it, they get it, and if not, there's no detriment to them for asking.

Ryan Tomasello - Keefe, Bruyette, & Woods, Inc., Research Division

Got it. And then secondly, can you talk about the type of deal flow, what you're seeing recently as far as the mix between first mortgages and mez? And if there has been a change, what do you think is driving this? And are you increasingly looking to originate more first mortgages or do you think you will continue to focus more on the mez space?

Scott Weiner

I think we're actively looking at both, I mean, for the first mortgages, for us, again not looking to compete with the capital markets. There needs to be some sort of transition. And that has a construction so the deal that we announced post quarter was a brand new multifamily building that had retail leases signed, but the multifamily component wasn't occupied, so wasn't well-suited to capital markets. So that was a very nice deal, the kind of deal that we were able to do. As we've grown in size and also the available capital, we are able to do bigger deals now, where we could take something down and either use leverage or sell of a senior, i.e., what we did in Aruba. We've also added to the team quite honestly and so we have brought on some people who historically, have focused on that segment of the market. So we are actively working on a few other deals in that segment. We do find first mortgage with leverage attractive. But at the same time, the mezzanine loans we're doing effectively, we have term financing because the senior is the senior that matches the same term as us, is another way to think about it. And so sometimes it's more effective for us to partner with a large bank and co-originate a deal. They'll do the senior and we'll do the mez as opposed to us taking the risk on the financing or the syndication.

Ryan Tomasello - Keefe, Bruyette, & Woods, Inc., Research Division

And then just one last question, switching gears to the dividend. Great to see that you guys were able earn the dividend this quarter. Going forward, trying to get a sense of what your current thinking is, do you expect to continue to out-earn the dividends, like this quarter, implying that dividends could potentially increase from here?

Stuart A. Rothstein

Not to get too far ahead of ourselves. I mean, I think, look, we're virtually fully invested today based on my response to the earlier question. Certainly at that level of capital deployment, we're comfortable in earning the dividend. I think if someone's taking a view towards 2014, I think as long as we can earn it, the dividend will stay where it is and to the extent we could lower the payout ratio a little bit with the same dividend, that's certainly the desire. And as we've said many times before, as long as we're efficient in using our capital, given what the pipeline looks like today and given what we're seeing in terms of deal flow, we feel pretty confident about our ability to earn the dividend.

Operator

[Operator Instructions] Our next question comes from the line of Charles Nabhan from Wells Fargo.

Charles Nabhan - Wells Fargo Securities, LLC, Research Division

Most of my questions have already been asked. But I was hoping to get some color on deal flow in terms of fixed versus floating. If you look at the portfolio, it's about 52% floating versus 48% fixed. And given the renewed focus on interest rates, I was wondering how you'd think about -- how you think about that balance and what you're seeing in terms of deal flow?

Scott Weiner

I would say -- this is Scott. I would say, for the most part, it is really floating rate with the exceptions of if we can do a mezzanine loan with a teen interest rate. Clearly, yes, the 10-year might go up from 250 to 4 or 5. Obviously, if we're in the teens, we're very, very happy with that. And I think if you look at our weighted average fixed interest rate, it's very high. We're not looking to do 5% or 4% loans, and then put floating rate leverage on, that obviously doesn't work. Clearly, the large deal that we did in the quarter as a first mortgage was fixed. But again, that coupon was approximately 8%. So again much higher than you're seeing now first -- traditional first mortgages done today. But so I would say, certainly, the floaters that we're going to be -- the first mortgage that we're going to be doing generally will be floating rate. The mez, I think, will be a mix really just depending on whether, say, we can get 13% today versus LIBOR 1,000, maybe depending on the borrower's view of the curve and our view of the curve, we might take the fixed rate at 13% as opposed to hoping that LIBOR goes up.

Charles Nabhan - Wells Fargo Securities, LLC, Research Division

And as a follow-up, I was wondering if you could -- could you give us a sense for where you're running asset level leverage on the fixed and the mezzanine portfolio? And maybe how we should think about that in terms of the overall consolidated balance sheet?

Scott Weiner

We don't put any overall leverage on our mezzanine loans, right? So from a leverage perspective, we use term financing for the CMBS, which we've talked about. There's no leverage on the mezzanine loans. And then under the JPMorgan facility, we have various advance rates on our first mortgages. I would say it's approximately kind of as far as that goes, 65 type advanced ballpark, on average against the first mortgage loans.

Operator

Thank you. And that concludes our question-and-answer session for today. I would like to turn the conference back to Mr. Stuart Rothstein for any closing comments.

Stuart A. Rothstein

Thank you, operator, and thank you, everybody for participating on the call this morning.

Operator

Thank you. Ladies and gentlemen, thank you for participation in today's conference. This does conclude the program, and you may now disconnect. Everyone have a good day.

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