Full Transcript of Monster’s 3Q05 Conference Call - Prepared Remarks (MNST)

Nov.10.05 | About: Monster Worldwide, (MWW)

The latest in our selection of full conference call transcripts: the entire text of the prepared remarks from Monster’s (ticker: MNST) Q3 2005 conference call. The Q&A is here. We recognize that this transcript may contain inaccuracies - if you find any, please post a comment below and we’ll incorporate your corrections. And please note: this conference call transcript is a Seeking Alpha product, so feel free to link to it but reproduction is not permitted without the explicit permission of Seeking Alpha.

Key Executives

Andrew McKelvey, Chairman and Chief Executive

Steve Pogorzelski, Group President International

Lanny Baker, Chief Financial Officer

William Pastore, Chief Operating Officer

Bob John Vice President Investor Relation


Christa Quarles, Thomas Weisel Partners

Douglas Arthur, Morgan Stanley

Imran Khan, J.P.Morgan

Jeremy Davis, Credit Suisse First Boston

Matthew Litfin, William Blair & Co.

Jim Juneski, Ryan Bank


Ladies and gentleman thank you for sending by welcome to the 3rd Quarter 2005 operating results conference call. During the presentation all participants will be only in listen mode. Afterwards we will back to the question and answer session. At that time if you have question please press the “1” followed by the “4” on your telephone. As a remainder this conference is being recorded, October 26 2005. I would now like to turn the conference over to Bob John Vice President Investor Relation. Please go ahead sir.

[Bob John Vice President Investor Relations]

Good morning and thank you for joining us on Monster Worldwide Third Quarter 2005 conference call. You will have formal remarks from Andrew McKelvey, Chairman and Chief Executive, Steve Pogorzelski Group President International and Lanny Baker Chief Financial Officer. They along with William Pastore, our Chief Operating Officer will then answer your questions following the formal remarks. Before we begin I would like to remind you that except for historical information the statements made during this conference call constitute forward-looking statements under applicable securities laws. Such forward-looking statements involve certain risks and uncertainties including statements regarding the company’s strategic direction, prospects and future results. Certain factors including factors outside of our control may cause actual results to differ materially from those contained in the forward looking statements included economic and other conditions in the markets in which we operate, risks associated with acquisitions competitions, seasonality and other risks discussed in our Form10-K and other fillings made with the Securities and Exchange Commission. With that I would like turn the call over to Andrew.

[Andrew McKelvey, Chairman and Chief Executive]

Welcome to our third quarter 2005 conference call. We are pleased to report that Monster posted another outstanding quarter due to strong organic revenue growth, steady operating margin expansions and significant earnings growth. Really a strong showing all around. Results were driven by the terrific performance of our aggressive global sales force and dedicated operating team. We successfully executed our strategic plan to grow our customer base especially in the small and medium sized market while attracting quality job seekers and creating innovative online solutions and great service for our customers. The full impact of the hurricanes Katrina and Rita on the labor market may not be known for several months. However it is clear that the natural disaster had an immediate, but likely short-term effect on the employment market during the quarter. In fact the hurricane related job losses in September were somewhat less than expected, a positive indication of the underlying strength of the US labor market. These disasters are about much more than their effect on the job market, they are about our fellow citizens’ lives and livelihoods. With this in mind shortly after the hurricanes hit, Monster launched a customized hurricane relief site to bring together survivors, employers and volunteers to facilitate the rebuilding of lives. We are operating both public and private sector employers free job postings on the site. I have also asked some of our top technology and marketing experts to hold ongoing working sessions with the Department of Labor and Red Cross to determine how we can best help those affected, find employment, re-establish their lives and rebuild the communities. A tight labor market exists in the Gulf Course region particularly in rebuilding related sectors. We are not doing this alone. I am pleased to tell you that our efforts have been combined with the support and assistance of HotJobs, CareerBuilder and other career related sites.

The collective goal of this coalition is to provide a one-stop online resource for hurricane survivors seeking re-employment and for businesses seeking workers to rebuild the affected region. Also we are one of the major contributors to Mississippi’s first job fair since the hurricane. It’s very encouraging that the underlying economic data in the US remains strong and the overall economy remains somewhat resilient to these occurrences. Judging by what our customers tell us, we anticipate a healthy hired environment going forward.

Monster is surely getting better. Our goal, both domestic and overseas has been part driven by the strong and continuing shift to the online market from print. The hard work of targeting small and medium sized businesses in local markets and helping them move their recruitment online is paying off and the local re-growth will remain a priority for Monster. Monster Employment Index, the MEI results for the past quarter as well as the results for both Monster European index and the local index reflected the broad based increase in online recruiting demand. US online recruitment activity increased during the quarter for the US index reaching an all time high of 142 in August and registering a 4 point increase overall since the end of the second quarter.

For the first nine months of the year, the index has shown a 27 point increase, this well-distributed growth is a very encouraging sign, but we anticipate will also be reflected in the Department of Labor statistics over the next few months. Since the index measures jobs posted online that are likely to be filled over the next 30 to 60 days, it’s fast becoming recognized as the leading and economic indicator to correlates strongly with official labor figures, combined with other positive economic data we anticipate a healthy employment market heading into the winter season.

European index also edged higher in the third quarter continuing a mostly upward growth trend and suggesting a slow steady improvement in Europe online recruitment activities. The financial highlights for the quarter included a 26% revenue increase at Monster Worldwide and 31% revenue gain at the Monster Vision. Our ability to increase revenue and efficiently manage our expenses during the quarter allowed us to expand our operating margin by over 5 points. Certainly a meaningful achievement. As a result earnings per share from continuing operations grew at a significantly higher pace in revenue reaching $0.25 that is a 67% increase over last year’s third quarter on a comparable basis. In addition we ended the quarter with a very liquid balance sheet and over $300 million in cash.

For the first nine months of the year, Monster’s earnings per share from continuing operations have already exceeded the levels we achieved in all of 2004. So financially Monster is strong and getting stronger and the fundamental are certainly sound. One of the key priorities that I’ve spoken with you about is the further development of our multiple sales channel. The quarter’s strong organic revenue increase was partly driven by higher activity by our North American and international sales team.

Our Post–a-Job product had an excellent quarter growing more than 40% over last year’s third quarter. We’ve aggressively advertised and promoted its value proposition to recruiters from small and medium sized companies nationwide and most recently in Europe with terrific results. Post-a-Job is also a leading source of new business leads and combined with our productive telesales force that has enabled us deepen our coverage of the small and medium sized companies on a local level. This represents a huge market opportunity for Monster. Our tight focus on growing the Monster Division to reach it’s full potential is another priority this year.

We take great pride in our leadership role in the industry and we are driven to be innovative and creative. Our objective is to grow our brand in a measured and balanced way with targeted marketing that strikes the appropriate seeker audience to serve our customers needs. We’ve become more efficient in marketing and have significantly lowered the cost of attracting visitors to Monster, while generating a strong flow of resumes, application for job posting and page views.

During the quarter we introduced several enhancements to help jobseekers find and apply for more jobs is less time while providing our customers with a larger pool of quality candidates. We continue to make great strides in extending the Monster brand and online expertise to the international markets, another of our strategic priorities. In the quarter, revenue from outside of North America grew more than 1.5 times faster than domestic revenue growth. It is now on an annualized revenue run rate of approximately $180 million. We achieved strong top line growth in all four of our regions in Europe despite the continuing weak economic conditions in Germany and France, which are two of our largest markets in continental Europe. We’ve made strategic investments to raise Monster’s brand awareness in key countries in Europe and are seeing promising results and higher volumes from these initiatives.

We’ve recently promoted Steve Pogorzelski to the newly created position of International Group President. Steve’s success in leading Monster’s North American growth and development make him uniquely qualified to work closely with Peter Dolphin and his team in Europe and the leaders in our Asian markets to drive Monster’s strategic overseas expansion. His North American experience is invaluable.

In the month of September, Monster Worldwide attracted 75 million unique visitors to its’ global sites, a number far way larger than any of our online competitors and greater than the vast majority of designation websites. This demonstrates our leadership position, global presence and the power of the Monster brand worldwide. On our last conference call, I told you that Asia is the most dynamic human capital market in the world today. After returning from a trip to India, China and South Korea just a few weeks ago, I can make that same statement with an even higher level of confidence. These are nuance emerging markets that represent the fastest growing geographic regions of the internet economy.

In the third quarter revenue from our Asian operations grew at a healthy rate and our India operations are on a pace to deliver revenue that is almost double that of last year. Last week we are very excited to announce that we expanded our footprint in Asia to the acquisition of JobKorea, the premier online recruitment website in South Korea. This acquisition marks a significant step in Monster’s global expansion strategy and establishes Monster as the number one online recruiter in one of Asia’s fastest growing markets. I’ve asked both Steve and Lanny to give you some additional information on international markets and the JobKorea acquisition and the terrific opportunity it represents to driver Monster’s global growth. Before turning the call over to Steve I would like to say that we are very pleased with the results of the third quarter and believe we are well positioned to continue to deliver continued growth as we enter the fourth quarter. The fourth quarter has historically been a strong sales quarter as companies tend to renew or reinitiates commitments in support of their hiring needs for the following year. We’ve built a solid platform for sustainable growth and strengthened our leadership position as we look into 2006. Our strategic priorities which we focus almost across the entire company to be drive the global Monster by enhancing and developing products and technology to build our international operations. Further expand our sales channels and balance our investments to reach our long-term objective of delivering strong results in the near term, as we have certainly done this quarter. With that Steve will share with you more information on JobKorea and International.

[Steve Pogorzelski, Group President International]

I am truly excited about my new role because there is a tremendous opportunity to leverage Monster North America best practices in the international markets. Moreover there are also opportunities to transfer the innovation in these individual markets across borders. The JobKorea e-com model is an excellent example of this and I will describe the model later in my remarks. I would like to share some of the other observation that I have after six weeks in my new role. In that time I traveled to Europe, India and South Korea and China. I found substantial potential at every stop whether it’s the $4 billion European help line and advertising market or the surging labor markets and economies in Asia Online recruitment. Internet adoption trials the US at about half the rate but the adoption curves do look similar. I am impressed by the expertise, the passion and commitment to results exhibited by our international senior leadership teams.

It is important to note that we are the only company playing regionally and globally and we will leverage our network but ultimately the battle would be won by leadership at the local level. We are the market leader in nearly three quarters of the markets we serve and our objective is to posses the number one position in all of our markets. Our global footprint allows us to define the online recruitment space around the world and to do this we will leverage our competitive advantages. Specifically our global brand awareness, our unmatched market insight, our deep operating experience in distinct economic cycles, various stages of adoption and in creating scalable business models. Our expertise in increasing sales, productivity and efficiency, our proven product and technology expertise especially e-com, and finally leveraging our multinational customer base. Looking ahead at 2006 and beyond I am confident about monster’s international potential in terms of both revenue growth and profitability. Longer term I believe that international can be as big if not bigger than the US.

As promised I would like to share some insights about JobKorea. One thing we are learning is as we become more global is that there is great opportunity in value and building a global footprint and sharing ideas and strategies across the globe. Our recent acquisition of JobKorea is a good example. South Korea is an attractive market with a strong economy, global brands and an advanced, technologically literate, internet-connected workforce. Internet penetration in Korea is 70%, and 85% of those users are on broadband.

Korea has also has a highly advanced mobile phone Internet market, all of which provide an environmental ripe for new ideas and a proving ground for a new applications of interactive technology. In this market JobKorea has emerged as the clear leader with a well-recognized brand of 50% plus online market share and healthy profitability. Driving this is a lucrative e-com model that generates 80% or more of the revenue over the internet on an in-bound basis. This is the inverse of the US. This model is highly scalable for JobKorea and its applications for other existing Monster properties and future country startups. There is an opportunity to combine the JobKorea e-com model with Monster’s sales expertise and penetrate small and medium sized business and enterprise markets.

In summary the combination of Monster’s global vision set by Andrew, our commitment to locally managed market leadership, our well recognized industry experience and strong financial resources put us in this position to acquire JobKorea and thereby strengthening the company’s worldwide reach and increase our long-term growth potential. I can hardly wait for 2006, now I would like to turn the call over to Lanny Baker.

[Lanny Baker, Chief Financial Officer]

Monster Worldwide’s third quarter financial performance again demonstrated the attractiveness of the company’s business model and the benefit of deliberate operating and financial executions. Among the highlights of the third quarter, the Monster division achieved organic revenue growth of 30% year-to-year. Incremental profitability at Monster North America exceeded 60%, overall operating margins expanded by 580 basis points year-to-year. Earnings from continuing operations rose 67% year-to-year to $0.25 a share, and free cash flow totaled $58 million in the quarter equating to 23% of the company’s third quarter revenue and an impressive $0.46 per share in the quarter alone. Our results particularly on the bottomline and inter cash flows were slightly stronger than we anticipated. Accumulating strides in sales force productivity and the growing significance of our e-commerce channel contributed to the top line growth as well as to our profitability upside during the quarter. The good news is that we should be able to extend these recent trends into the end of the year and beyond.

Based on our third quarter results and our current view of the fourth quarter we now expect to deliver slightly stronger results than we had anticipated earlier. Importantly while raising our earnings guidance, while also investing more in marketing end product And our operating discipline drives monster fixed and variable cost down and pushes margins upward, we are in better position to internally fund important strategic investments in long-term growth of our business. Notably we intend to support these internal investments, which will focus on additions such as stepped up marketing aimed at smaller employers in our e-commerce business, as well as introducing new jobseeker functionality while still delivering significant earnings and cash flow growth in the near term as our newly revised guidance implies.

During the third quarter Monster Worldwide’s financial performance demonstrated two important and intentional accomplishment.

First our revenue trends and operating reach shall continue grow in the breadth and depth of the business.

Second the results also visibly showcase the growing power and efficiency of Monster’s financial engine. Looking outside North Americas it is easy to see Monster’s expanding breadth and reach in the company’s international operations. With the addition of Korea Monster now operates online in 24 countries. Our global footprint in online recruitment is unmatched and international now represents 22% of Monster’s revenue. We are optimistic about the long-term opportunity overseas and we are equally encouraged by the growth we are achieving there today.

In the third quarter head of Monster’s operations outside the United States achieved greater than 50% organic revenue growth over the prior year’s quarter. With our biggest overseas operation Germany, growing by more than 80% year–to-year despite a soft labor market and political distractions in that country in the quarter. Meanwhile in the big long-term opportunity that is China our partner China HR again posted revenue growth in the vicinity of 100% year-to-year.

Now before getting into the third quarter results in full detail, I would like to focus on one of the business model’s most fundamental strengths, that is Monster’s ability to generate strong and growing cash flows that supports strategic flexibility and our ability to drive shareholder value. On this front, our financial engine is really revved during the quarter in the year. Year-to-date Monster Worldwide’s revenue has grown 33% from the year ago’s nine-month revenue. And with careful cost management and our inherent operating leverage, we’ve been able to convert that top line growth into a 66% increase in operating income before the depreciation and amortization. Because Monster’s business model requires neither heavy capital expenditure nor significant balance sheet investments to support growth, we’ve converted 89% of the company’s EBITDA into free cash flow over the last nine months. That cash flow conversion means we produced over a $1.40 per share in free cash flow across the last 12 months. We believe that the company’s free cash flow which has averaged about 170% of the income from continuing operations this year, is a quintessential hallmark of our internet powered business model and leadership position.

Now let us turn to the P&L. Overall revenue grew to $249 million, a 26% increase from the third quarter of last year. The Monster unit grew 31% year-to-year to $207 million in revenue. While the advertising and communications division saw a 4% year-to-year growth to $42 million in revenue in the third quarter. Overall operating expenses grew 17% year-to-year in the third quarter nearly 10% points slower than revenue growth and our margins expanded accordingly. A 580 basis point increase to an operating margin of 19.1% in the third quarter of 2005 compared with a 13.3% margin a year ago. Operating income grew 80% of $48 million and operating income before depreciation and amortization increased 55% to $58 million, plus the EBITDA margins at 23% for the quarter, the best level since the final quarter 2001.

Zeroing in on the Monster Division, the highlights includes stronger organic revenue growth of 30% which excludes $1.6 million from acquisitions in currencies and very favorable profitability trends with margins ending up bit higher than we anticipated for the quarter. The Monster Division achieved a 26% operating margin and a 30% EBITDA margin in the third quarter of ‘05. These levels represents a 300 to 400 basis point of improvement over the earlier period and reflect the increasing efficiency of the model. Within North America Monster’s revenue grew 28% year-to-year highlighting our secular momentum.

Monsters domestic revenue growth outpaced the combined help wanted advertising revenue performance of the leading US newspapers that are online by a healthy margin again in this third quarter.

Monster’s North America operating margin was 35% in the third quarter of 2005 up 740 basis points from a year ago. EBITDA margin was 38% up 650 basis points year-to-year. In both cases monster’s year-over-year incremental margins in North America were about 60% in the third quarter, improving upon the second quarter’s performance and demonstrating the scaling of our business model. The sources of the margin improvement continue to be higher revenue and balanced gains from employee related cost economies, marketing efficiency, and leveraged against fixed cost items such as technology and real estate. However increased efficiency on the employee side was the largest margin drive in the quarter. Sales force productivity was the key driver of both revenue growth and profitability in North America in the third quarter, with revenue per sale increasing 5% between the second and third quarter of ‘05.

More broadly revenue per employee at Monster North America was up 15% year-to-year in the third quarter as headcount rose under 10% significantly lower than revenue growth. The smaller and medium sized businesses continued to offer great potential for Monster in the US as these businesses have typically somewhat slower to adopt online recruitment. Encouragingly the steady growth of consumer e-commerce and improvements in internet payment systems, security and advertising models are bringing more and more small business onto the internet. And those trends are benefiting our results too.

Notably SMB customer growth exceeded 35% year-to-year in the quarter. The growth of SMB and local business is propelling our e-commerce channel in particular, which had a record quarter and accounted for a high teen percentage of Monster’s career related revenue in North America while also contributing to the margin performance described earlier. Thanks to effective marketing we attracted 16,000 new customers to e-commerce in the US in the third quarter. From a product standpoint, changes were made to our e-commerce side are allowing us now to set a wider variety of products in bundles and nearly half of our e-commerce orders in the quarter came from products other than single job postings.

Moving Monster’s operations outside North America, international revenue increase by 46%, organic growth revenue of 40% year-to-year overseas was consistent with the 38% organic rate of the second quarter. We are encouraged by our growth in Europe and Asia particularly given the slight sluggish economic conditions throughout much of the year. With our first half branding portion in Germany winding down, we continue to market Monster aggressively throughout Europe. Our marketing and spend in Europe, which more than doubled year to year in the third quarter and is aimed primarily at jobseekers. We are seeing positive results her with significant increase in registered users’ resumes and job applications across the key regions. Meanwhile prior investments in expansion of our sales force in Europe and Asia are generating growth in our customer account and lifting Monster’s overall recruitment advertising market share overseas.

For the third quarter of ‘05 Monster’s international operations were roughly breaking on EBITDA while losing about 2 million on the operating income line. These profitability levels are consistent with the first half and our strategy for the year as we prioritize investments overseas in ‘05. This is a good chance to talk about JobKorea, the market leading online recruitment company in South Korea we acquired recently. Far away JobKorea is the strongest and most attractive company in that market. With a business model that as Steve said is largely inbound and e-commerce driven. Monster Worldwide paid $94 million in net cash in short-term investment required for JobKorea. We funded the purchase with cash using a portion of the $314 million in cash equivalents you see in our September balance sheet.

JobKorea is expected generate about $15 million revenue as in ‘05 up roughly 50% from 2004 levels due to higher prices and growing percentage of it’s posting being placed in revenue generating premium locations. Thanks to the efficiency of it’s business model JobKorea’s EBIDTA margins are expected to be in the mid 20% range in 2005, with margins expanding in ‘06 and beyond. We previously stated that we would expect JobKorea’s operating income before depreciation and amortization to be approximately $6 to $7 million in 2006. And with the full allocation of the purchase prices finalized we will update to you on likely EPS transactions. However we do not expect a large earnings impact into 2006 but the deal will be immediately accredited to cash flow and should make a meaningful earnings contribution beyond 2006. From a valuation standpoint at the midpoint of the operating cash flow range outlined for 2006, our purchase equates to roughly 14.5 times forward EBIDTA, which we believe compares favorably with valuations observed to cause of range of recent and comparable internet transactions.

Circling back to our advertising and communications segment revenue rose about 4% year-to-year to $42.5 million in the third quarter. Within North America we grew revenue by 12% year-to-year but softer economic conditions in the UK and Australia panelized AdComs and their revenue by 3% year-to-year.

Given the steady decline of helpline which still accounts for more than half of AdComs’ global billing, we’ve been reengineering and resizing our AdComs operations, as a result segment operating expenses declined by 3% year-to-year and over $2 million sequentially allowing the unit to post double digit operating margin for the quarter. While the dollar value of AdComs profit remains small within the quarters expense sand profit performance speaks loudly about the management team and our company’s operating discipline.

Turning to balance sheet, we built our net cash balances by $74 million in the quarter to $269 million at the end of the third quarter. The net change in cash could be summarized as we had $58 million in free cash flow and another $23 million in net proceeds from stock option exercises. Of late we had a net $3 million in cash equivalents for acquisition payments and selling for balances related to the sale of discontinued operations. After the quarter closed we applied $94 million of our cash balances to the purchase of JobKorea which leaves the company with well in access of $150 million in net cash. At end of the third quarter the Monster Division had $247 million in differed revenue on the balance sheet, a slight increase from the second quarter reflecting some seasonality. On the year-by-year basis Monsters differed revenue was up 26% at the end of the third quarter. Providing encouragement as we enter the seasonally stronger fourth quarter.

Let us now move to the business outlook, which we are revising due to strong third quarter results and prove this ability into the final quarter. In addition the updated outlook now includes the anticipated contribution of JobKorea which we expect to be about $2 to $3 million in revenue and a small increment to operating income before depreciation and amortization for the period from mid-October through the end of the year. Taking this into account we now anticipate total company revenue of $260 to $267 million in the fourth quarter of 2005, up 23 % from year ago at the midpoint of the range. For the Monster Division we expect fourth quarter revenue of $218 to $223 an increase of 28% at the midpoint of the range. At AdComs we anticipated a flat year-to-year revenue comparison for the fourth quarter with progress in North America mitigated overseas.

At the anticipated revenue levels we expect to achieve substantial year-to-year increases in overall margins in the fourth quarter. At Monster healthy demand for candidates in the US the globally e-com opportunity and our long-term objectives overseas support continued investments in marketing and promotion and we expect to invest slightly more during the fourth quarter then we did in the third quarter. Measured as a percentage of Monster Division revenue our overall marketing and promotion expenses will be slightly greater in the fourth quarter of 2005 than they were in the final quarter of last year. We will capitalize on our growing scale and improving expenses sufficiency’s elsewhere to fund these investments while producing profitability at Monster on par with the high level seen in the fourth quarter ‘04. We expect these investments to return added revenue growth and profit heading into next year.

Last year we saw a 600 basis points sequentially increase in margins at Monster segment in the fourth quarter versus the third quarter, which in part reflected seasonal strength of revenue and our historical pattern of front loading our year long marketing activity. This year in keeping with recent discipline and our branding investments in Europe and our objective of balancing near term earnings results would be appropriate investments for future growth. We expect the monster divisions margins to be roughly flat from the third quarter to the fourth quarter of 2005. Below the operating income line we’ve interest income on our cash balances in the fourth quarter although at a slightly reduced level conducted compared to the third quarter given the cash outflow to fund the JobKorea acquisition. We expect a 35% cash rate in the fourth quarter and we will report a share of China HR net losses on our equity interest line. Expecting less than the $2 million equity loss for the year.

Pulling the pieces together, we now expect fourth quarter earnings per share from continued operations to be in the range of $0.27 to$0.28 per share. More than a 50% increase year-over-year at the midpoint. On a full year basis we now expect Monster Worldwide to generate $0.91 to $0.92 in earnings per share from continued operation, up from our pervious earnings expectation of $0.88 to $0.91 per share for the full year. The revised guidance represents a near 70% improvement from the $0.54 per share Monster earning in 2004 on a comparable basis. Our full year revenue expectations are now $980 to $987 million for the company overall and $812 to $818 million for the Monster Division on its own. At the midpoint of those ranges the Monster unit will achieve 37% revenue growth this year with organic growth better than 30% underlying that figure. For the company as a whole the full year outlook suggests 30% revenue growth in 2005.

In summary our third quarter financial performance was strong as we head into the seasonally strongest quarter of the year encouraged by Monster’s momentum. The breadth and depth of the business continues to grow both in the US and abroad and our financial model is increasingly efficient and strong. For continuing reducing cost and driving revenue up and prudently balancing near-term profitability and earnings objectives with essential strategic investments for the future growth. With our strong top line large global opportunity, improving margins and healthy free cash flow we believe Monster Worldwide business model shows convincing current performance and compelling long-term appeal. With that we will turn it back to the operator for your questions.

Question-and-Answer Session



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