Silvercrest Asset Management Group Inc. (SAMG) CEO Rick Hough on Q1 2020 Results - Earnings Call Transcript

Silvercrest Asset Management Group Inc. (NASDAQ:SAMG) Q1 2020 Earnings Conference Call May 1, 2020 8:30 AM ET

Company Participants

Rick Hough - Chairman and Chief Executive Officer

Scott Gerard - Chief Financial Officer

Conference Call Participants

Sumeet Mody - Piper Sandler

Sandy Mehta - Evaluate Research

Operator

Good morning and welcome to the Silvercrest Asset Management Group Inc. First Quarter 2020 Earnings Conference Call. [Operator Instructions] Please note this event is being recorded.

Before we begin, let me remind you that during today’s call, Silvercrest will make forward-looking statements. Pursuant to the Safe Harbor provisions of the Private Securities Litigation Reform Act of 1995, all statements other than statements of historical facts, including statements regarding future events and developments and Silvercrest’s future performance as well as management’s current expectations, beliefs, plans, estimates or projections relating to the future are forward-looking statements. These forward-looking statements are only predictions based on current expectations and projections about future events. These forward-looking statements are subject to a number of risks and uncertainties, and there are important factors that could cause actual results level of activity, performance or achievements to differ materially to statements made.

Among these factors are fluctuations in quarterly and annual results, incurrence of net losses, adverse effects of management focusing on implementation of a growth strategy, failure to develop and maintain the Silvercrest brand and other factors disclosed in the company’s filings with the SEC, including these factors listed under the caption entitled Risk Factors in the company’s annual report on Form 10-K for the year ended December 31, 2019, and quarterly report on Form 10-Q for the 3 months ended March 31, 2020, filed with the SEC.

In some cases, these statements can be identified by forward-looking words such as believe, expect, anticipate, plan, estimate, likely, may, will, could, continue, project, predict, goal, the negative or plural of these words and other similar expressions. These forward-looking statements are predictions based on Silvercrest’s current expectations and its projections about future events. All forward-looking statements made on this call are made as of the date hereof, and Silvercrest assumes no obligation to update these forward-looking statements.

I would now like to turn the conference over to Rick Hough, Chairman and CEO of Silvercrest. Please go ahead.

Rick Hough

Thank you and thank you for joining us this morning for the first quarter of 2020 results for Silvercrest Asset Management Group. Silvercrest entered the first quarter of 2020 prior to the ongoing coronavirus pandemic and market dislocations with successful execution of its business strategy; complete integration of its new growth equity strategies; organic growth in its Outsourced Chief Investment Officer, otherwise known as OCIO business; and the new high-end assets under management, representing a full recovery from the market lows of late 2018.

In the midst of the unprecedented economic disruption of the viral pandemic, Silvercrest concluded the first quarter of 2020, with $20.6 billion in assets under management, a year-over-year decrease of $0.2 billion from the first quarter of 2019. Much greater market depreciation of $2.2 billion over that time was mostly offset by client inflows of $2 billion over the same period. Our revenue, net income, adjusted net income and adjusted EBITDA margins and GAAP and adjusted earnings per share, each increased substantially year-over-year.

Silvercrest has always maintained a high-quality balance sheet and substantial cash reserves, both to preserve flexibility for new growth opportunities and to weather market volatility inherent in the business due to severe market corrections, or exogenous events such as the current pandemic. Silvercrest reported $32.8 million in cash and cash equivalents as of March 31 and carries a manageable level of debt of $15.3 million as of March 31, 2020. Silvercrest currently pays a generous quarterly dividend of $0.16 or an annual dividend of $0.64 per Class A share of common stock. The firm anticipates that it can support the current dividend for a sustained period of time, even while continuing to invest in the business.

I am pleased to report that during the first quarter of 2020, the firm seamlessly transitioned its entire business to operate remotely. The firm long prepared for disaster recovery and business continuity. Silvercrest’s critical technology infrastructure was already cloud-based and operating remotely prior to this crisis. Silvercrest was unusually well prepared. Our firm was founded in the wake of the Tech Bubble crash and post 9/11. Our partners have a long-term vision, and we experienced the global financial crisis as a relatively young firm flourishing afterward. Our firm’s partners have the fortitude to guide our clients with mature steady hands. While the current pandemic has caused great suffering, it also represents an opportunity to solidify our relationships, improve the value of our organization and its capabilities.

The first quarter of 2020 experienced net positive organic flows, which includes $163 million in new client accounts. Silvercrest has maintained a proven ability over time to continue attracting net positive asset flows despite industry-wide trends in active management. And we remain proud of our ability to continue growing the business even during difficult environments. Last quarter, we announced that our first OCIO clients had provided half of Silvercrest’s new client account growth. That business continues to develop new opportunities. We are proud of growing that business from scratch, and we expect continued success.

The current economic environment is stressful and the market represents a step backward for our business as with many others potentially slowing new business activity. Nonetheless, Silvercrest has successfully made investments and will continue to make investments in new high-net worth portfolio management professionals, marketing its institutional quality equity strategies and pursuing its new OCIO initiative. Regardless of the environment, Silvercrest will continue to opportunistically seek to effectively deploy capital to enhance and complement its organic growth.

On April 28, 2020, the company’s Board of Directors declared a quarterly dividend of $0.16 per share of Class A common stock and the dividend will be paid on or about June 19, 2020 to shareholders of record as of the close of business on June 12.

With that, I will hand it over to Scott Gerard to go over our financials before we take questions. Thank you. Scott?

Scott Gerard

Great. Thanks, Rick. As disclosed in our earnings release for the first quarter, discretionary AUM as of March 31, 2020, was $14.9 billion and total AUM as of March 31, 2020, was $20.6 billion. Revenue for the quarter was $28.4 million, and reported consolidated net income for the quarter was $9.7 million. Delving further into the quarter, again, revenue was approximately $28.4 million, which represented approximately a 26% increase over revenue of $22.6 million for the same period last year. This increase was driven primarily by increased net client flows in discretionary assets under management, including $1.7 billion in assets under management acquired on July 1, 2019, in connection with the Cortina acquisition, partially offset by market depreciation.

Revenue for the quarter ended March 31, 2020, related to the Cortina acquisition was approximately $2.9 million. Total AUM decreased from December 31, 2019, to March 31, 2020, primarily because of market declines resulting from the COVID-19 pandemic. Most of our revenue is billed in advance based on closing market values from the last day of the previous calendar quarter. First quarter 2020 revenue was primarily based on December 31, 2019, market values. Expenses for the quarter were $15.8 million, representing approximately a 15% decrease from expenses of $18.6 million for the same period last year. This decrease was primarily attributable to a decrease in general and administrative expenses of $5.2 million and an increase in compensation and benefits expense of $2.4 million.

Compensation increased primarily as a result of merit-based increases and newly hired staff, including the addition of Cortina staff and an increase in the accrual for bonuses, partially offset by a decrease in equity-based compensation expense due to a decrease in the number of unvested restricted stock units. The decrease in general and administrative expenses for the quarter of this year was primarily attributable to a $6 million decrease in the fair value of contingent consideration related to the Cortina acquisition, partially offset by increases in professional fees due to increases in acquisition-related fees resulting from the Cortina deal, depreciation and amortization expense related mainly to amortization of intangible assets related to Cortina and to the renovation of our office space in New York City, occupancy and related expenses and an increase in the fair value of contingent consideration related to the Cappiccille acquisition.

Reported consolidated net income was $9.7 million for the quarter as compared to $3 million in the same period last year. Reported net income attributable to Silvercrest or to Class A shareholders for the first quarter of 2020 was approximately $5.5 million or $0.59 per basic and diluted Class A share. Adjusted EBITDA, which we define as EBITDA without giving effect to equity-based compensation expense and non-core and non-recurring items, was approximately $8.2 million or 29% of revenue for the quarter compared to $5.8 million or 25.5% of revenue for the same period in the prior year.

Adjusted net income, which we define as net income without giving effect to non-core and non-recurring items and income tax expense assuming a corporate rate of 26%, was approximately $5.1 million for the quarter or $0.36 per adjusted basic and diluted earnings per share. Adjusted earnings per share is equal to adjusted net income divided by the actual Class A and Class B shares outstanding as at the end of the reporting period for basic adjusted EPS, and to the extent dilutive, we add unvested restricted stock units and nonqualified stock options to the total shares outstanding to compute diluted adjusted EPS.

Looking quickly at the balance sheet, total assets were approximately $189.2 million as of March 31, 2020, compared to $214.2 million as of December 31, 2019. Cash and cash equivalents were approximately $32.8 million at March 31 this year compared to $52.8 million at the end of last year. Total borrowings as of March 31 this year were $15.3 million. Total Class A stockholders’ equity was approximately $69.8 million as of March 31 this year. That concludes my remarks.

I will now turn it over to Rick for Q&A.

Rick Hough

Thanks very much. I appreciate that, Scott. We can now open the line for discussion of questions. Thank you.

Question-and-Answer Session

Operator

[Operator Instructions] And our first question comes from Sumeet Mody of Piper Sandler. Please go ahead.

Sumeet Mody

Thanks. Good morning, Rick. Good morning, Scott. I hope you guys are doing well staying healthy.

Rick Hough

Good morning.

Sumeet Mody

Just wanted to touch on this last – we touched on this last quarter, few days into March, I wanted to get an update on the M&A environment, if conversations or your strategy has changed at all over the course of the last couple of months. Things have certainly ramped up to say at least from a volatility perspective after that conversation?

Rick Hough

So M&A is something that we periodically engage in, selectively and carefully. I can’t say we’ve changed the strategy because we are continually reaching out to peers and businesses that may be of interest to Silvercrest or interested in Silvercrest on an ongoing basis. Our outreach has probably ramped up a bit only in the sense that I think it’s really important to be in close touch with peer firms and institutions, understand what they’re going through, how they see the environment, how it’s affecting their businesses. We’re very open with sharing ideas about the business and have great relationships with the leaders of a lot of other firms. And we have just made sure that we stay close and have continued to foster those relationships. I think the environment obviously will be changed for the amount of M&A. Often in these environments, when you are talking about boutique businesses, those who may have been in market decide to leave and wait for a recovery in asset values and revenues, but there are others who are looking at longer term strategic options and this may help realign the market with the reality of volatility that occurs on a more frequent basis than I think people are willing to acknowledge.

We had the Tech Bubble 20 years ago. We had the global financial crisis 10 years ago, and now we have this crisis. If you go back in time, it’s not unusual to have pretty major sell-offs at least every 10 years. And certainly, there are intermediate periods of sell-offs. And as you know from these calls, it’s long been my view that many businesses were overvalued on the basis of their annuities, and there was a tremendous amount of leverage flying into the market to prop up valuations. And now that we have a lot of dry powder, a very healthy balance sheet and that there may be a realignment or a modification in valuations I feel optimistic about the environment at some point going forward. Usually, it takes time for things to settle and open up. But at least on the M&A front, I kind of welcome the potential shakeout.

Sumeet Mody

Makes sense. Just turning to the fee rate on the discretionary side, it looks like it came down to 58.7 basis points in the quarter, kind of the lowest it’s been since 4Q ‘18, but kind of still within that range, 58 to 60. Just wondering if it was kind of affected by institutional mandates in the quarter versus high net worth? And how you feel that rate is going to be in the year, is 58 to 60 still an okay bogey?

Rick Hough

Yes, it’s an okay bogey. I don’t think we’ve been as high as 60 for years. I think this came up in our last conference call. It depends what you’re looking at. Are you looking at beginning-period AUM, end-of-period or average AUM? And if you’re looking at average, it’s kind of a fictional number because we don’t bill on average AUM over the quarter. And the new business flows that occurred at least during the first quarter were more high net worth than institutional. We had new institutional business. But of course, large family relationships can get institutional like pricing. Our basis points have not really moved around at all over the past 15 years. They may come down 1 basis point or so, but it’s been in that ballpark for a very long time.

Sumeet Mody

Got it. Thanks. And then I guess one, on – I appreciate the commentary from you guys still planning to invest in high-net worth professionals, marketing the equity strategies, pursuing the OCIO initiative, all good things in this environment. But are there any verticals that you are not involved in at the moment that you kind of wish you were in this environment and maybe that you can lean into this year with all the presence and take advantage of any opportunities? Is there anything you guys are thinking about?

Rick Hough

No. I think one thing that we have done pretty well as an organization have picked our strategic priorities and then successfully executed those before going on to too many other things. And the strategies that we have chosen are all highly compatible with our high-net worth business. They all work together to reinforce each other. So our equity business, which we started, of course, in value equity and have now expanded with the growth equity capabilities, is of a very important use to the high-net worth audience. And the fact we have institutional clients is proof of thesis that what we are delivering to our client base are institutional-quality equity capabilities. The same goes now for the OCIO initiative. It was born out of the intellectual capital we created in our investment policy and strategy group, which serves to select managers, build asset allocations, do risk management and otherwise support the high-net worth business, which is led by our portfolio managers. I’ll remind you, our portfolio managers are not just relationship managers, they are investors in their own right and have a dual role of handling relationships and the investments as well as bringing in new business, which they have done effectively over the years. Again, the OCIO business is proof of thesis from institutions that what we are delivering from an investment policy perspective is of institutional quality. And we have family office services, as you well know. We also have a family business advisory capability as part of that. And we’re going to be really careful about the kind of businesses we would go into to further diversify what we’re doing. It has to be compatible, it has to be part of a single story and it has to be something that we feel we have the bandwidth and ability to execute successfully. Now that we have growth equity, international value, additional value strategies in the marketplace and an OCIO business to support as well as hiring new portfolio managers, that’s a lot of wood to chop and a potential success. So I don’t see us necessarily going into new verticals until we’ve achieved some further success in those initiatives that already exist.

Sumeet Mody

Okay, got it. Yes, that makes sense. And then just trying...

Rick Hough

I would add by the way just adding new portfolio managers or doing M&A, you can add talent in two different ways. It’s significant in its own right as each person brings in new business and contributes to the whole and requires management and other work.

Sumeet Mody

Okay, got it. Thank you. I guess, just turning to the flow picture, a couple of questions there, but it looked like you had that some really solid organic growth in the quarter, relatively speaking, and definitely nice to see, especially compared to the backdrop of 4Q ‘18. Just wanted to get some color around the makeup of those new clients, I saw last quarter, the OCIO business made up about half contribution. But just wanted to get an update on the quarter and then on the OCIO initiative as well, how’s it progressing.

Rick Hough

Yes. So the first part was institutional or OCIO, sorry?

Sumeet Mody

First part was the – just in general, the new business, the net new business in the quarter. Kind of what was the makeup of those clients?

Rick Hough

Yes, okay. So with new business in the quarter, it was a pretty decent new business quarter. We had even positive net flows when you looked at the existing clients, although I should point out that because of the corona pandemic taxes, as you well know, were moved into July. So there may be cash that was not raised in the first and second quarters, which we normally see in order to pay taxes earlier in the year will – could potentially happen in the third quarter. As you well know, there’s always a headwind for taxes in this business or other expenses. And so we just don’t know how that’s going to shake out inflows. But that’s normal for the course. I just think it’s worth pointing out that it’s – it may be a bit delayed this year. And it’s not always a hit to our flows each year. It just depends. But there have been meaningful capital gains in recent years that have meant outflows. But with new business, I guess it was about $163 million. It was really tilted towards a high-net worth business in that first quarter. One of the nice things about how we’ve diversified the business over the past few years is we’re not reliant on one single engine of growth, which we had been for a very long time. We did have new institutional business come in the door, but we also had some rebalancing as well. Our performance has held up quite well over time, as you noted in your note. And I would say there was only, maybe, $25 million in absolute new accounts. There were greater flows than that into institutional, but absolute new clients was about $25 million. The balance was high net worth. The OCIO business, I don’t think, had much in the first quarter, but as I noted at the end of our last call, its pipeline remains very strong. And I’m optimistic that it will continue to be a meaningful contributor in the second, third, fourth quarters.

Sumeet Mody

Okay, great. And then I guess, just touching off of the pipeline, I mean can you give us an update there on the 6-month actionable? How that looks today? I know you spoke last quarter about that, around $3.6 billion, but how do you view that today?

Rick Hough

Yes, yes. So as you know, the last time I updated everyone on the 6-month actionable pipeline, which we’re quite conservative about assessing, it’s either where we’re invited or we’re in the finals for a mandate. And the pipeline was just about historic highs the last time we spoke. On the institutional side, I think I’m going to hold off talking about pipeline. So much is kind of on hold right now in business. We’re continuing to be very active. We’re close to the consultants. We have had as many conversations as ever. And we expect our share of new business. But I think it’d be a bit imprudent to get a hard pipeline. And there have been times on these calls when I’ve been very frank that the pipeline’s dried up or really slowed down, or as I did last quarter, talked about how large it was. I’d rather not characterize it because it’s just uncertain. It just feels like a lot of things are waiting for more clarity in the macroeconomic environment. There also has been nearly unprecedented consolidation among the consultants, which are responsible for a lot of our institutional equity flows. And we are very busy cultivating those relationships and getting to know either new organizations are navigating the organizations as they’ve changed. The conversations are very positive. Our performance has done very well over reasonable time periods. And so I feel very good about it. But – and I certainly don’t want to be misunderstood as saying that the pipeline is dried up or there’s an issue. There’s not. I just don’t want to characterize it because I do think the new business development is being stretched out a bit more over time.

Sumeet Mody

Okay. Yes, I understand.

Rick Hough

I’m a little more, I should say, I didn’t – that was on the institutional equity side. On the OCIO business, I’m a little more confident in saying that the pipeline is, as I characterized it last time, robust, and it marches to a little different beat than the pure institutional equity business, and I remain short-term optimistic on that.

Sumeet Mody

Got it. Okay, alright. And then just wanted to pivot over to the capital returns, I know your preferred method has historically been the dividend. It’s great to see you guys can easily maintain and even grow that, while still investing in an environment like this, but just wanted to find out a little bit more about repurchases. I saw you guys put out that 10b5-1 last month. Just wanted to see what your kind of philosophy was around that and if you guys actually repurchased anything in this quarter?

Rick Hough

The 10b5-1, I believe, was for my own personal purchases of stock. I’m – it’s the largest – yes, it’s the largest piece of my own savings and wealth. And from time to time, I like to personally invest in the business. I wish I had more, quite honestly. And I don’t have a plan that’s regularly being executed. I could very well purchase more at some point. I have done so periodically, as you’ve seen in the filings. We favor supporting the high dividend as a means of returning capital to investors. I think we’ve had discussions before about the issues of buying back our stock and what that could do to our flow. And when I was asked about this 1.5 years or even 2 years ago, let me just say, I’m really, really glad I have the cash I do on our balance sheet, that we have a low level of leverage, at least short term, that would not have been a good use of capital. And we are now in a premier position with regards to how we look compared to many others in the industry, I would argue. Yes, our dividend can be supported for a very sustained period of time, even at the current market levels, even at the March levels. So we also feel good about that. I’ve also talked about, as we invest in the business, you’ve seen our EBITDA margins creep up over the years. They were in the kind of high mid-20s, 25%, 26%, 27%. It may have been somewhere around 26% or 27% when we went public and it’s come up as high as 30% or 31%. And the most recent quarter, it’s come down just a bit. But I’ve also said that as we invest in the business, I could be pushing it down to the mid-20s or even 24%. I just think it’s prudent to do that. We’re not just running a static business here. Otherwise, it would be a declining annuity. I usually don’t get into forward-looking comments, but it’s – it should be notable that, of course, we build close to the market lows at the end of March. As you know, we’re reporting AUM as of March 31, which often drives our second quarter results. So we look good year-over-year, especially considering that we had to climb out of the hole from the fourth quarter of 2018. I’m very pleased with the results. I’m pleased with new business development. But we’re going to see some challenges. We tend to lag in terms of our results compared to other companies as a result. But this is going to be a very healthy cash flow-generating business that continues to grow. I hope that helps.

Sumeet Mody

Yes, that was definitely helpful. I just wanted to have one last cleanup question, if I could here, for maybe, Scott. But obviously, with the market impact in the quarter being what it was, it should maybe pressure revenues in the second quarter, at least second quarter, but just wanted to get an idea of how maybe that impacts compensation and the ratio you guys are accruing to and if you are still kind of comfortable, like it kind of ties into what you were talking about on the margins there, but I just wanted to get an update if I could?

Scott Gerard

Yes. We are – you noticed for the first quarter that we accrued to a 55% recurring cash compensation ratio. And our plan is to do our best to try and continue to manage toward that. As in prior years, there have been years where – many years where we’ve come in under that. For ‘19, we came in just a tiny bit over that. So we’re going to continue to look to manage that. Certainly, there is a variable portion implied in that ratio with our incentive comp pool. So that’s – that will move along with revenue. So that’s our current position on that.

Sumeet Mody

Right. Thanks for taking my question guys.

Rick Hough

Thanks.

Scott Gerard

You are welcome.

Operator

[Operator Instructions] And our next question comes from Sandy Mehta of Evaluate Research. Please go ahead.

Sandy Mehta

Yes, good morning. Congratulations on the strong growth in EPS and revenues in the quarter despite all the market turmoil. My question is along the lines of free cash flow. So structurally, your company, you’ve had much higher free cash flow versus EPS. In the last four years, it’s been more than doubled. Free cash flow has been more than double reported EPS. Is that a trend that you see continuing – is that the trend that you saw continuing, strong free cash flow versus EPS, in Q1 and should we expect that for this year, regardless of whatever level the EPS turns out to be, but strong free cash flow vis-à-vis that?

Rick Hough

I’ll let Scott take that first, Sandy, and then I’ll follow up with some more general comments on our growth and expectations.

Scott Gerard

Yes, Sandy. How are you doing? Keep in mind that when you are looking at our business and when you are looking at EPS or our adjusted diluted EPS, which we focus on, there are several items that create disparity there. If you think about over the past year as a result of the Cortina acquisition, we had to layer on a meaningful amount of additional amortization expense. We’ve had a portion of our compensation structure has been equity-based compensation expense. We had a large grant that was made back in 2015, which fully amortized back in August of 2019. So you’ve got items such as that, that will continue to affect adjusted diluted EPS but aren’t necessarily factors when it comes to generation of cash flow.

Rick Hough

With regards to the cash flow generation and earnings, as proud as we are of the performance in these environments and after the fourth quarter of 2018, which in retrospect, doesn’t look like much, but it was really – created a difficult environment for asset managers and revenue and cash flow in the business going into 2019. That was a meaningful decline. And so the – when you see the year-over-year numbers, we’re comparing to a first quarter of 2019 that was fully depressed as a result of that disrupted market in 2018 and a full recovery through the end of last year, which set the stage for our Q1 2020 results, and plus one of the larger or largest acquisition in the firm’s history. And look, we’ll take it wherever we get it. And that’s part of the business mix. But I think it’s hard to expect on an ongoing short-term annual basis to kind of year-over-year increases that we saw at least from that quarter to this quarter. I think it has to be averaged out over other market events and activity. Look, I’m optimistic we can continue growing the company and growing free cash flow and earnings as a result. We try to do deals and build the business in a fashion that’s accretive pretty quickly and not hurt our earnings per share. I think I’ve talked about the growth drivers of the firm that all look like they’re in good shape to continue doing that. But I think going from a market low revenue and cash flow generation to a fully recovered market plus an acquisition may skew things a bit to the high side, at least on a year-over-year basis.

Sandy Mehta

Okay. And one last question. In April, the markets rebounded very strongly. So I presume that you’ve seen a sharp rebound in your AUM. The month is complete. Can we ask you if you are willing to give an April end AUM number or we – should we presume that your business is also growing in line with the markets?

Rick Hough

I think you should presume our business has recovered with the market. The market lows were, I believe, towards the latter part of March and then started increasing a bit by the time we bill based on asset under management as of March 31. To give an April number for a business that is not retail-oriented with sponsored mutual funds or other flows like that and that also only bills effectively four times a year, I think could be misleading. There’s a lot of potential activity between where we sit now at the very beginning in May and when we actually bill, which would be June 30, values. So with another two entire months of this quarter to go before we even bill, I think we could muddy the waters by getting into monthly AUM or at this time. But you can presume that at least the equity part of our portfolio has increased generally in line with the market.

Sandy Mehta

Great. Thank you very much.

Rick Hough

You are welcome. Thank you.

Scott Gerard

Thank you.

Operator

This concludes our question-and-answer session. I would like to turn the conference back over to Rick Hough for any closing remarks.

Rick Hough

Thank you. Thank you for joining us for our first quarter of 2020 results. We’re pleased with the different initiatives at the company, whether that’s in the high-net worth growth initiatives to hire new portfolio managers or to continue growing the business with our existing portfolio management team, who’ve done an excellent job, or our institutional equity business or the OCIO business. The firm did a very good job recovering from the fourth quarter of 2018 and has proved that it can organically grow the business in any number of different ways. And we’re optimistic about, even in this environment, our ability to continue doing so. Thank you for joining us, and I look forward to speaking with you next quarter.

Operator

The conference has now concluded. Thank you for attending today’s presentation and you may now disconnect.