AllianceBernstein Holding CEO Discusses Q1 2012 Results - Earnings Call Transcript

May. 2.12 | About: AllianceBernstein Holding (AB)

AllianceBernstein Holding (NYSE:AB)

Q1 2012 Earnings Call

May 2, 2012 8:00 am ET


Andrea Prochniak - Director, IR

Peter Kraus - Chairman and CEO

Ed Farrell - Controller and Interim CFO

Jim Gingrich - Chief Operating Officer


Michael Kim - Sandler O'Neill

Steve Fullerton - Citigroup

Chris Spahr - CLSA

Cynthia Mayer - Bank of America Merrill Lynch

Marc Irizarry - Goldman Sachs

Michael Kim - Sandler O'Neill


Welcome to the AllianceBernstein first quarter 2012 earnings review. (Operator Instructions)

I would now like to turn the conference over to the host for this call, the Director of Investor Relations for AllianceBernstein, Ms. Andrea Prochniak. Please go ahead.

Andrea Prochniak

Thank you. Good morning, everyone, and welcome to our first quarter 2012 earnings review. As a reminder, this conference call is being webcast and accompanied by a slide presentation that can be found in the Investor Relations section of our website.

Our Chairman and CEO, Peter Kraus; and our Controller and Interim CFO, Ed Farrell, will present our financial results today. Our new Chief Operating Officer, Jim Gingrich, is with us as well and will participate in the question-and-answer portion of this call.

Now I' like to point out the cautions regarding forward-looking statements on Slide 2 of our presentation. Some of the information we present today is forward-looking and subject to certain SEC rules and regulations regarding disclosure. You can also find our cautions regarding forward-looking statements in the MD&A of our 2011 Form 10-K in an our first quarter 2012 Form 10-Q which we filed this morning.

I'd also like to remind you that under Regulation FD, management may only address questions of a material nature from the investment community in a public forum. So please ask all such questions during this call.

Now, I'll turn the call over to Peter.

Peter Kraus

Thanks, Andrea, and thanks everybody for joining for our first quarter earnings call. As Andrea noted, I will go business highlights, Ed will then go with the financials and our COO, Jim Gingrich who is here as well will join Ed and I for questions at the end.

Let's start the morning with Slide 3. In a more constructive operating environment, we were able to deliver better investment preference for our clients and much stronger financial results this quarter than last.

Gross sales were $18.1 billion and were up 21% from the fourth quarter of 2011 and 15% from the same period last year. That is our highest since the second quarter of 2010 when sales were $18.8 billion, very close to this quarter's number.

Net outflows were down versus prior periods and that includes the impact of last years AXA asset sales which I will discuss in a moment. AUM increased 3% from yearend 2011 due to both, market appreciation and net new flows to retail, a business that performed extremely well in the first quarter.

Our retail strength is clear from the distribution channel view on Slide 4, should we take a look. Retail gross sales of $12.9 billion were 81% higher than the fourth quarter and 66% higher than 2011s quarterly average.

This is our best retail sales quarter since the second quarter of '07 when sales were $13.6 billion, again pretty close to this years' level. While Asia remains our strongest market, we had growth across regions, asset classes and both new and long standing products. As a result, retail had net inflows of $2.3 billion, our first positive flow quarter since early 2010 when inflows were $2.5 billion.

Inflows would have been stronger were not for about $600 million in redemptions related to prior year AXA assets sales in Canada and Australia that hit during the quarter.

Private client gross sales of $1.4 billion were down from the prior quarter. The retention is moderated and net cap net outflows flat. In institutional, gross sales of $3.8 billion were down sequentially and year-over-year. CRS sales were much later this quarter compared with the large funding we saw in a two comparable prior quarters.

As expected we had about $5.2 billion institutional redemptions related to AXA assets sales last year. This pushed outflows higher for the second consecutive quarter.

Slide 5 breaks out the impact of this dynamics when institutional flows more clearly. As you can see from the chart, top right, absent the AXA impact, outflows have been stable since the third quarter of 2011 and were substantially better than the first and the second quarter of last year.

As you have surely noted, we also added to our pipeline during the quarter, 40% of our $6.6 billion pipeline at the quarter end represented new additions including in diverse services like emerging market debt, global credit and small cap growth.

In fact, we're seeing increased our fee activity in both Fixed Income and Equities. In Fixed Income, we had first quarter wins in U.S. High Yield and Global Plus put a fine contribution and pitch for new business in global credit, global investment grade, high income and muni's.

In Equities, we had wins in market neutral, U.S. small cap growth and we're getting into more searches for emerging market value against strategic value and select U.S. equity. Maintaining our recent improvement in investment performance will be a key factor in wining more business going forward.

As you can see on Slide 6, many of our services beat their benchmarks in the first quarter. Most of our Fixed Income strategies continue to outperform. Global high income, global fixed income and diversified yield have all beaten their benchmarks for the quarter, one, three and five year periods.

In Equities, consistent out performance like U.S. Small Cap Value, U.S. Small Cap growth, U.S. SMID Cap Growth leads in all time periods as well. And the first quarter is account of green for Large Cap.

In fact, U.S. strategic value, emerging market value, U.S. large cap growth all ranked in a top cortile, ranked by investment for the quarter. We've said for a while now, that in more rational markets we will once again be rewarded for stock level research and style pure investment discipline in growth and value.

We began to see signs of that in the first quarter of 2012. At the same time, we worked hard to offer a ray of equity services along the risk and returns backed in the deep client needs of today and their needs into the future.

Turning to our retail business, highlighted on Slide 7, our result this quarter clearly demonstrate our strategy of innovating with new products and resonating with clients around the world. Gross sales were the highest in the nearly five years with regional sales increases debt range from double to triple digits.

New product sales were $1.9 billion during the first quarter of 2012 up 32% from the fourth quarter of 2011. We accounted for 15% of total retail gross sales in the quarter, higher and absolute terms but lower as a percentage of the total given how strong sales were overall. The charts at bottom right singles out some top sellers including American income and Asia-expenses-Japan equity which sold particularly well on Asia.

At the bottom left, you can see some of our fastest growing new products. Our inflation suite of the product Muni Bond Inflation, Real Asset and Bond Inflation have together attracted nearly a $1 billion in retail and private client assets since we launched them in 2010. And in less than a year, our RMB Income Plus and Select U.S. equity, have already passed the $300 billion market.

We've been successful in gathering assets, because we're launching the right products in the right places and at the right time. The private clients which is on Slide 8, our assets and fees were up in the quarter and a new training quest started as well. We're focused on enhancing the elements of this business that set it part.

There are distinct advantages to our model, which our clients appreciate today more than ever. First and foremost we manage our clients' money. That gives us unique in size into underlying portfolio and the ability to tail a risk management to a client's specific asset allocation with dynamic asset allocation. We monitor individual accounts as systematically we balance them and make trade to take into account an individuals specific income tax rates.

Using these tools and a proprietary core capital model we fully customize allocation by client, while being the greater probability of success in meeting their financial goals. And we are disciplined investors with a process for constructing client portfolios in consistent way. We are accountable for a clients' year end and year out and deliver strong results over investment cycles while avoiding the pitfalls of performance.

Delivery for our clients is our primary goal. And we've made a series of enhancements to client portfolios over the past two years that aim to mitigate risk and produce more consistent returns overtime.

First, we introduce DAA, strategy that's been successful in reducing volatility and client portfolios since we began implementing it in 2010. Then we added new Alpha and Beta sources, that offerings like real assets, bond inflation and alternatives.

Now, we are enhancing our U.S. equity and price model with strategic equities and integrated portfolio designed to harness our highest conviction ideas in growth, added value in small and mid-cap and shorter time horizon equity strategies.

With this new approach, we maintain our growth and value orientation while at the same time tapping into a broader universe of investment opportunities and research ideas.

A ramp up to business highlights with Bernstein Research Services on Slide 9. Self side revenues were up 16% sequentially, whereas trading volumes rose in the quarter despite a 6% decline in U.S. aggregate trading volumes.

Year-over-year, our revenues were down 11% versus 13% drop at volumes. Story with this business means growth of our global platform and research reorganization. We focused on building on our capabilities and particularly pleased with our success so far in Asia.

As you can see from the chart at the top right the growth in both revenues and clients for our Hong Kong based Asian self side business has been explosive and we hired new consumer and insurance analyst there in the first quarter of 2012 as well. In the U.S. we again scored high when an annual survey of portfolio managers.

SCB earned the highest composites score across all with research and analyst quality metrics including service, research, knowledge, creativity and of course trust.

I'm more confident than ever that continuing to invest in this leading global research franchise is our best strategy for growing and gaining share of long-term.

Firmwide, we remained focused on our long-term strategic initiatives and our progress was even clear in the quarter's improved operating environment.

At Slide 10, we would cap our most recent accomplishments. On a performance front, our European and Asian fixed income franchise recognized again and again in the Lipper's 2012 Global Retail Surveys. Diversification and innovation are driving sale and net flows particularly in fixed income and retail.

In alternatives, we recently completed the successful close of our first U.S. real-estate fund nearly $700 million in capital commitments, plus another $200 million in co-investment capital from key strategic investors. And we just won a new U.K. DC client with a $200 million initial mandate.

Finally, we've reduced our non-comp expenses like T&E, communication cost and professional fees and we are managing our comp ratio to stay within our stated 50% cap. This contributed to the quarter's margin expansion. We also had successfully sub-leased more than 90,000 square feet in New York, as we consolidates space on a recent by recent basis. We'll begin to see the positive impacts on our P&L in 2013. This is long term work and is no means a win year.

We know from prior years that anything can happen from here. So while it's early at the first quarter was a strong one for AB and further improved in our strategy to build the firm in the future is working.

Now I'm going to hand it over to Ed for detail review of the financials.

Ed Farrell

Thank you, Peter. Before getting into the first quarter financials, earlier this morning we reported GAAP earnings and distributions of $0.26 per unit. I'm going to begin by reviewing our adjusted financials in a high level on Slide 12. Then I'll go into more around the major variances in the coming slide.

Adjusted revenues increases sequentially in the first quarter as a results of improved operating conditions but decline versus the prior year period. Adjusted expenses declined both sequentially and year-on-year. For the first quarter, our adjusted operating margins were 18%, an improvement from 7% in Q4 2011 but down four percentage points from Q1 2011. Adjusted earnings per unit were $0.29 in Q1, up $0.22 sequentially and down $0.12 from the prior year period.

Now I will review our GAAP income statement on Slide 13. Quarterly net revenues of $682 million improved 9% sequentially versus the prior year period revenues decline 10% from $755 million. Operating expenses of $581 declined 50% for Q4 and 6% from Q1 2011. It is important to remember that the sequentially variances in our GAAP metrics are largely driven by fourth quarter $587 non-cash charge related to the acceleration of our deferred compensation orders and the true-ups of the 2011 full year compensation ratio. Net income for the first quarter was $87 million.

Now I'll review our quarterly revenue to more detail on Slide 14. Base fees increased by $7 million or 2% sequentially, this is inline with the increase in average AUM shown on the earlier slide.

Bernstein research revenues improved $14 million or 16% from prior quarter as of trading activity improved in all regions where we operate. We had investments gains of $31 million in the first quarter versus $3 million in losses in Q4 2011.

The gains were in our fee capital and deferred compensation related investments as well as the AB venture fund in which we have a minority interest. We continue to develop new products and ended Q1 2012 with $536 million in fee capital investments, an increase of $80 million in the quarter of which $30 was market depreciation.

Approximately two-thirds of our seed capital investments are hedged against market risk and any gains and losses can be directly attributed to the portfolio managers generating positive or negative results. On an adjusted basis, net revenues were up 7% sequentially, attributed to improved Bernstein research revenues, investment gains and a 2% improvement in basic fees.

Compared to the prior year period, investment gains increased due to strong first quarter performance, yet base fees were lower by $87 million or 17% year-over-year. This is due impart to the 13% decline in average AUM over this period and a continued shift over the last year from equity to fixed income in non-actively managed assets. Together these assets nearly account for 70% of our AUM versus 56% one year ago.

As Peter, mentioned earlier Bernstein research revenues decline 11% year-over-year versus the 13% drop in U.S. trading volumes. On an adjusted basis, net revenues were down 15% from prior year quarter due to lower base fees and Bernstein research revenues partially offset by higher gains in fee capital investments.

Now let's review our expenses on Slide 15. As I previously mentioned, first quarter GAAP operating expenses declined by 50% sequentially due to the deferred compensations charge in the prior quarter. The impact of our non-compensation related cost savings were much less. Including the charge, total comp and benefits decreased 66% sequentially excluding the charge totaled compensation in benefit expense of $303 million in Q1 2012 increased 1% due to an increased in adjusted revenues offset by decrease in the compensation ratio in the fourth quarter of 2011l.

We're managing a full year compensation ratio to stay within the 50% of adjusted revenues versus the prior year quarters. Total comp and benefits declined by 11%. This is due primarily to the decline in adjusted revenues. We ended the first quarter with 3,000 employees down 7% from yearend.

Now looking at our non-compensation expenses. Promotion and servicing were up 3% sequentially primarily due to higher volume related costs which were partially offset by lower T&E overseas. The 1% year-over-year decline is the result of lower T&E, trade executions and transfers to fees offset by volume related expenses.

In the current quarter, we received a $6.5 billion class action fund distribution. Let me stress that this should not be considered from run rate adjustments G&A. Excluding this credit, G&A cost down 6% sequentially due primarily to lower professional fees and office related costs, versus the prior period G&A expenses again excluding the class action fund distribution was down 1%. This decline is due to lower technology related cost and professional fees.

As Peter mentioned, in the first quarter, we sub-leased over 90,000 square feet in the New York area, representing and which we recorded of $9.3 million charge offs in the period. On an adjusted basis, operating expense has declined 6% sequentially and 10% versus the prior year period.

Now let's move on to Slide 16. This summarizes the adjustments we've made to get from GAAP to adjusted earnings. After the changes we made to our plan last year, the deferred compensation adjustment will be minimal on a go-forward basis. I just mentioned the real-estate charge we had in the current quarter and finally we adjust for non-controlling interest.

Q1 2012 adjusted operating income was $101 million or 174% sequential increase from $37 million. Our adjusted margin was 18% in the quarter. The factors that drove the margin expansion were higher Bernstein research revenues and investment gains lowered non-comp expenses and the compensation true-up in this first quarter to reach up full year compensation ratio target versus the prior period, adjusted operating income of $101 million decreased 30% from $144 million.

With that said, by nearly every financial measure, Q1 2012 was a better quarter than Q4 2011. Our flows improved, revenues were higher and expenses were lower as we continue to execute our cost reduction efforts. Together these factors and yielding the unit holders better financial results.

Now, Peter, Jim and I will answer any questions you might have.

Question-and-Answer Session


(Operator Instructions) Your first question comes from the line of Michael Kim.

Michael Kim - Sandler O'Neill

First, one of your competitors is rumored to be in the market to divest its private client business as maybe they view it as somewhat of non-core segment in terms of how they're trying to position their franchise. I know you view your private client business differently. So can you just talk about how you see that business evolving and where you're gaining traction or market share?

Peter Kraus

Look, our private client business is absolutely essential and critical to our firmwide efforts. It has been a long-term part of the firm. It is essential to our philosophy of service in clients. We think we actually provided service to individual clients' stage unique in the industry. And we've talked about that many times during the earnings call. We see that business as a growth opportunity for us in United States overtime.

And I cannot imagine, AllianceBernstein not having the private client business and not continuing to grow it. It's just so essential to integrate into our advice and into sort of the way in which we intend to manage our clients well overtime. So I think any opportunities for us to grow that business including, adding by acquisition although it's hard to do and unusual. This is something that we would continue to pursue and continue to think about.

So you know from our perspective, we see the private client business as a core business of the firm, a unique set of activities and products and services that we provide in the marketplace, unique competition and one that we think will grow handsomely overtime.

Michael Kim - Sandler O'Neill

And then, just in terms of cost, you continue to streamline the expense base, I'm just curious as how you're thinking about incremental savings from here maybe as it relates to occupancy or G&A and then just your expectations for headcount going forward?

Jim Gingrich

I think as we indicated last time, we still while we're making progress, we still have a lot of work to do in occupancy and other parts of our non-compensation cost structure. So it's unfortunate that that work takes time. So as Peter and Ed indicated, while we're making progress in the current quarter in terms of sub-leased in existing space that will only show up in 2013.

But I would anticipate that we will continue to make slow but steady progress across our entire non-compensation cost structure.

With respect to headcount, I think that we feel good about where we're at. We've made progress in the first quarter. A lot of tough decisions were made but it's something that we always will continue to take a look at, again, as we've indicated in the past to make sure that our headcounts are lined with revenue.


Your next question comes from the line of Bill Katz.

Steve Fullerton - Citigroup

This is Steve Fullerton filling in for Bill. I was wondering if you guys can give some color around volumes in private client, thus far into the second quarter and what's going to take to get the positive flows in private client.

Peter Kraus

In terms of private client flows, for April we'll probably have some information flayed in next few weeks as you know we do put out our monthly asset flow information. I think private client flows in general have not been in positive over the last few years reflecting the challenged performance that we've had.

I think we've continually though show strong inflows in the business, in other words, it's not as if we're not actually adding new clients. And I think that as the performance of base or the poor performance of base and as some of these new strategies that we put in place, in particular in strategic equity, strategy becomes known to our clients and prospects.

But we expect that that will do two things, one alleviate some of the outflow that has occurred because of the challenged performance in '08, '10 '11, but also add new clients because as we said in the discussion, we really believe what we're providing clients is unique. And one of the most difficult things in the private clients business is differentiating yourself.

Many of the services look very similar and what I think is special about the Bernstein prodivate client business is what we offer clients is truly unique and I think that that will have dividends over time.

Steve Fullerton - Citigroup

And just one follow-up, what should be using for normalize G&A moving forward?

Peter Kraus

I would use the number about $130 million going forward and as Jim mentioned earlier, as we continue to make some decisions with real-estate that that number will go down but it will trail in future periods.


Your next question comes from the line of Chris Spahr.

Chris Spahr - CLSA

I'm just wondering about this strong relative performance, if that's continued into April versus the first quarter?

Peter Kraus

Well, you know we don't obviously disclose all of the institutional accounts, the Lipper information you can and that is public, but most of our products continue to perform well into April. The large cap equity products have done less well but still have maintained most of there relative positions, relative peers, that is. The fixed comp products continue to do well and specialty equity products continue to do well. April, obviously was challenging month in the market and so obviously challenged investors all over the world.

Chris Spahr - CLSA

And just making sure, you've been expecting a good rebound into your three numbers as the weak '08, '09 performance rolls off, but it's not really clear that's going to be the case at least in large cap with the one year numbers. I mean what is your current take on your relative performance for the three years?

Peter Kraus

I think we've mentioned to you that we were going to have a six month period where our numbers would look actually pretty attractive, because as you recall in '09, we had significant out performance from the market bottom. I think it was March 9, '09 to sometime in early 2010. And if that was going to create positive, very positive performance for us on a relative basis, but that wasn't going to last, because of course the latter part of 2010 and 2011 were challenged for us.

So I don't have the numbers in front of me, Chris but I would expect that what's going to be relevant for us is our performance in 2012 going forward and not bank upon the fact that our three year numbers didn't look particularly strong, because we know we had a challenged 2011.

By the way that comment is specific to the large cap equity services. That's not the case for many of the small cap services and specialty services and equity. It is not the case for fixed income.


Your next question comes from the line of Cynthia Mayer.

Cynthia Mayer - Bank of America Merrill Lynch

Maybe just a follow-up on that, since the Small and SMID are doing so well, could you break out about how many assets those are?

Peter Kraus

I don't have them it front of my fingertips. But we'll try to get that information to you, Cynthia.

Cynthia Mayer - Bank of America Merrill Lynch

And then, looking at Slide 4, it looked like the retail gross sales were up and private client was down a little bit but not much, but institutional challenged gross sales really fell off, where did you see the drop off there, which product?

Peter Kraus

I think as we noticed that CRS sales were light in the quarter compared to previous quarters when they were much stronger. CRS sales and defined contribution sales tend to be lumpy. There are large corporate plans that assigned mandates episodically effectively throughout the year. And when they do they're actually quite large when they happen. And that was the major reason why the first quarter was lower.

Cynthia Mayer - Bank of America Merrill Lynch

And then maybe one more product question if I may, which is it looks like the overseas sales for the Global High Yield and American Income funds were doing really well. Are those hedged or they viewed at all as products for overseas investors to get dollar disposure.

Peter Krauss

Some of those products are hedged. Our currency risk in this products are substantially lesser or smaller than some of the competitive products. That is one of the competitive advantages we think we have in that space.

Cynthia Mayer - Bank of America Merrill Lynch

Is that the main reason you think you're doing well versus competitors or just anything else we should take a look at?

Peter Kraus

We think there returns are more consistent overtime to more volatile markets. And we think people want consistency in returns and they want yield. And those products provide both. And they also are unconstrained buying products.

So they allow the portfolio managers to allocate to what the portfolio managers sees as relative value in the fixed income markets and that allow us to return want to be more stable and as we have performed the last few years, those returns be attractive. So I think that the products consistency in both levels of volatility and return have actually attracted lots of investors to that space.

Cynthia Mayer - Bank of America Merrill Lynch

And lastly, are AXA shifts and outflows over by now?

Peter Kraus

There is I think some money that will go out in the balance of the year. And I don't remember the exact number, but maybe it does

Ed Farrell

In June we anticipated about $2 billion out and then we jumped fast forward and we got to 2015 and there is another approximately $2 billion then.


Your next question comes from the line of Marc Irizarry.

Marc Irizarry - Goldman Sachs

Peter, thank for the disclosure around the gross sales by region on a gross basis. Can you give a little bit of perspective in terms of those markets, what's happening maybe with retail, redemptions in the U.S. versus the rest of the world?

Peter Kraus

Let's just separate the growth of the marketplace from what's happening to AllianceBernstein. I'm not going to comment on marketplace. You know those numbers better than I. What's happening for us in retail around the world is we continue to have significant penetration and success in Asia, as you can see, all over Asia. We've done I think a very effective job at building the brand and having, as said earlier, consistent products. And we don't see absent market changes. The markets remain as they are. I think that we are comfortable in our position in Asia and think that what we've produced there in terms of gross sales will be consistent.

The opportunity for us is Europe and United States where our penetration has been less. And I think that some of the momentum that we're looking to build in the future will come from those two markets as we do a better job with a broader set of services in the U.S. marketplace and in the European marketplace. I'm sure you noticed in our fixed income activities, we actually launched an ad campaign, somewhat unusual for us, launched that fixed income called codebreakers. And I think that there is a hell lot of excitement around it for us and a lot of excitement around it for the wholesaling force and the FAs who utilize our products.

So I guess I'd just leave you with the impression, Mark, that we think that there is positive momentum in that retail space in the U.S. and Europe and that it's pretty much business as usual which has been quite good for us in Asia.

Marc Irizarry - Goldman Sachs

Just in the first quarter institutional business like AXA-related down-flows. Were there some maybe seasonal or annual sort of rebalancing that happened this quarter with institutions that you can maybe dimension some, or is that something that maybe we won't see going forward? Was there any sort of annual rebalancing that might have happened within the institutional world?

Peter Kraus

Well, as I mentioned to Cynthia in response to her question that the levels are lower in institutional in the first quarter versus other quarters due to the CRS fundings in prior quarters which we didn't have as many of in the first quarter. So that relates to level.

As it relates to the tenure of the market, if that's your question, what's going on institutional space, for us we have seen the RFP activity. As you can see in the pipeline, that pipeline number has largely it has been, at least since I came to the firm. So I think that those are interest signs that probably reflect some increased momentum and attractiveness of the AllianceBernstein investment platform.

On a general note what's going on in institutions in terms of how they allocate their assets, I don't think we've seen a point of inflection where institutions decided now they're going to take more risk. I still think that in the defined benefit world there is a consistent glide towards de-risking either in the form of less active management, more fixed income, more LDI, but a sort of persistent de-risking in the defined benefit market principally in the private side in the corporate world.

In the public side, I think it's less pronounced and a willingness there to continue to have a risk element in the portfolio. In the defined contribution side, I think it looks pretty much like the retail market, meaning that there is probably less risk taking than there has been in history. And in the retail markets, you've seen the equity outflows as much as I have. That continues to be a market that is shunning risk.


Your next question comes from the line of Michael Kim.

Michael Kim - Sandler O'Neill

Can you maybe quantify the G&A cost savings you expect to realize next year just relative to the current $130 million run rate you mentioned earlier?

Peter Kraus

That's a fair question, but we're not going to project out what we think we're going to do next year with any sort of quantifiable numbers that you would find useful. But you should know that, as we've said, we're going to continue to work on this and to reduce those expenses and that we would expect that that will produce a better margin over time.

Michael Kim - Sandler O'Neill

I think last quarter you mentioned something like 5% to 10%. Is that sort of reasonable?

Ed Farrell

Again, Michael, we don't normally provide that type of guidance. I think as Peter said, we don't think our current margin levels are acceptable and we're going to continue to work hard to improve them.


We have no further questions at this time. We'll turn the call back over to our presenters.

Andrea Prochniak

Thanks everyone for participating in the call today. If you have any further questions, please feel free to contact me and the Investor Relations. Thanks and have a great day.


This concludes today's conference call. You may now disconnect.

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