Mr. Cooper Group Inc.
Q1 2021 Earnings Call Transcript

Published: 29 Apr 2021

[Operator:]

Ladies and gentlemen, thank you for standing by. At this time, all participants are in a listen-only mode. After the speaker presentation, there will be a question-and-answer session. Please be advised that today's conference is being recorded. I would now like to turn the call over to your host, SVP of Strategic Planning and Investor Relations Ken Posner

[Ken Posner:]

Good morning and welcome to Mr. Cooper Group's First Quarter Earnings Call. My name is Ken Posner and I'm SVP of Strategic Planning and Investor Relations. With me today are Jay Bray, Chairman and CEO and Chris Marshall Vice Chairman and CFO. As a quick reminder, this call is being recorded and you can find the slides on our Investor Relations Webpage at investors.mrcoopergroup.com.

[Jay Bray:]

Thanks, Ken and good morning everyone and welcome to our first quarter call. We'll start with the highlights on Slide 3. This was an exceptionally strong quarter for Mr. Cooper with $561 million and fully tax affected net income or $5.90 per share. Let me comment on 2 separate themes driving these results. The first is operating performance. This quarter, we generated a record $363 million and pretax operating income. That's equivalent to an ROTC of 43%, which by the way is the 8th consecutive quarter in which we've outperformed of our minimum 12% target. This is a story of our innovative technology, world-class operational and financial discipline, and a culture of people working together to help our customers. The second theme is the natural offsets in our balanced business model, which you saw in the $373 million mark-to-market on our MSR. This is a reminder that when interest rates go up in originations start to cool, we enjoy offsetting benefits from servicing. Tangible book value rose 22% to $31.97 per share. Let me give you some perspective on this metric. If you look back to the WMIH merger, which closed in the third quarter of 2018, TBV per share has increased by nearly 50% since then. This despite well over $1 billion in negative in MSR marks as interest rates were falling in 2019 and early 2020. While there was some volatility along the way, we've demonstrated solid profitability and resilience which speaks once again to the balance in our business model and those offsets between servicing and originations. Let's drill down further into the operating results. Originations generated pretax income of $362 million on record fundings of $25 billion. In fact, we had record fundings in both DTC and corresponded. Servicing turned in a really good quarter with $109 million in EBO revenues, pushing the margin back up to 3.7 basis points. Also, we had 3% growth in the portfolio or 12% annualized and I was pleased to see the growth engine firing on all cylinders with good performance out of DTC and Correspondent plus strong co-issue acquisitions and wins and subservicing and we remain optimistic about bulk opportunities in the coming quarters.

[Chris Marshall:]

Thanks, Jay. Good morning, everyone. I'm going to take you through the details of the quarter and as always, I'll start on Page-4 with a high-level summary of our results. I have to admit, it was a great feeling to book $561 million in net income or $5.92 a share, which reflected record operating results, plus a sizable mark-to-market gain on the MSR. On an operating basis, pretax income was $363 million and as Jay mentioned, fully taxed operating ROTCE was 43% and I will repeat his comment that this was the 8th consecutive quarter during which we've exceeded our 12% target. Now, with interest rates on the rise, our results are not going to stay quite this level but with solid originations volumes and strong EBO gains in the pipeline, we're still expecting a very strong ROTCE for the full year and a minimum of 12% in 22% and beyond. Adjustments in the quarter totaled $4 million, which included $3 million in transaction costs related to the Title-365 sale and million dollars in severance in the corporate segment. In terms of other notable items, I'd point out that servicing benefited from $109 million in early buyout revenues as well as a $12 million reserve release and I'll touch more on these items in just a minute. TBV grew at a very solid rate, ending the quarter at $31.97 per share. I'd point out that our DTA decreased by $112 million in the quarter as our net operating loss carry-forwards continue to limit our federal cash tax liabilities. Thanks to the decline as well as strong growth in equity, the DTA dropped to 45% of tangible book value this quarter from a peak of 75% in the first quarter of last year. By the end of the year, we expect the ratio of DTA to tangible equity to be at the point where rating agencies and our high yield investors will recognize the quality and strength of our capital base and hopefully, this will also set the stage for a re-rating of the TBV that the equity market applies to our shares. While on the subject of the DTA, I'd like to remind everyone that the Biden Administration has proposed raising the corporate tax rate to as high as 28%. Now, if this goes through, it will result in a mark up to our DTA by nearly $350 million or about $4 per share in tangible book value. While many of our competitors would see higher tax bills and reduced cash flow, our cash flow would not be affected until the deferred tax asset runs out completely which we still expect would take several years.

[Ken Posner:]

Thanks, Chris. With that, I'm going to the operator to start the Q&A session.

[Operator:]

Our first question comes from the line of Doug Harter, Credit Suisse. Your line is open.

[Doug Harter:]

Thanks. Just hoping you could touch a little bit more on the capital deployment or the cash deployment, kind of once you get the $400 million? How are you seeing the MSR opportunities and kind of the thoughts on the impact to the leverage ratio, as you talked about at the end, if you were to do a sizable buyback and your willingness to temporarily move those metrics lower?

[Chris Marshall:]

Good morning, Doug. I guess, I'll give you 2-part answer to that question. First of all, yes, we do see it more MSR come in the market, we see just as we've been predicting that some of the larger aggregators with guys that don't traditionally hold MSR are beginning to bring tools to market. It's the still relatively low, but they are increasing at a noticeable pace. So what we thought would occur, looks like it's occurring and we are having some positive but still preliminary conversations with some large holders of the MSR. So that may in fact come to play out exactly as we said, but of course the returns have got to be appropriate. With regard to the other part of your question, I don't see any scenario where we don't hit our target. I'll just leave it at that. I mean we are going to be building book value through the year. If you just look at your own estimate or earnings or consensus estimate, company is going to be building quite a bit of equity over the balance of the year. Even while we're buying tools of MSR. So we said we'd grow 5% to 10% this year, we just grew 3% in the quarter and that's on an ending balance. If you look from an average balance, it's more like 4.5 and we're doing that while we're building book value. I think it's hard to imagine us not ending the year with TBV at or above $40 a share. So, I don't think there's any worry here about us continuing to buy MSR, growing the portfolio at a reasonable rate and at the same time strengthening the balance sheet and amassing cash that would put us in a position to buyback more shares as the year goes on.

[Doug Harter:]

All right, thank you.

[Operator:]

Thank you. Our next question comes from Bose George of KBW. Your question please.

[Bose George:]

Hey, good morning. Actually, can you talk about your expectations for EBO revenues once you get into 2022 and then just for the back half of the year, just sort of a cadence for the - what's left; is that trip fairly spread out over the next two quarters?

[Chris Marshall:]

Yes. Thank you, Bose, and good morning. The initial estimate we had of $352 to $450, that number is still a pretty good number overall. The $450 may increase a little bit, but what we said this morning, I'd stick to that. At least $400 of that is going to be produced in 2021. The balance of it will be in the begin into 22. I can't give you an exact amount quarter-over-quarter, but I think what we saw in the first quarter, we're going to see about that level every quarter through the year and again whatever doesn't get completed in the fourth quarter, will probably slip into in the first quarter of '22.

[Bose George:]

Okay, great, thanks. Then can you just repeat what you said about the earnings expectations for 2Q? I think it was for the originations segment that I just don't fully catch that.

[Chris Marshall:]

I think it's the origination segment and our overall expectation for earnings. We think, servicing, we're going to stay out of about this level through the year. It could be some upside if amortization really slows down materially and short rates move, but right now, we think, we're probably going to stay at this level. Originations earnings, while there still be well above historical levels, they are going to cool a bit. So, we were saying that originations would come down somewhere in the 2 in a quarter range, 200 during the quarter, maybe a little bit higher than that, but overall earnings. We're also expecting to be in that range. Operating income is what I'm referring to and that number of $200 million to $225 million is where we would expect the quarter to be. Of course, that's operating earnings. It's not reflecting the gain from Title-365.

[Bose George:]

Okay. So, the $200 to $225 is operating earnings for the company as a whole as well as for the originations segment?

[Chris Marshall:]

Both of those range are actually about the same number.

[Bose George:]

Okay, great. That's all I had. Thanks very much.

[Operator:]

Next question comes from Kevin Barker of Piper Sandler. Your line is open.

[Kevin Barker:]

Good morning, Chris. Could you just quickly address the payments issue that came out? I know you guys issued a press release and CFPB mentioned something, and it appears, it was a result of one of your vendors. Can you explain if that's fully resolved and other remediation efforts you're doing to make whole for customers?

[Chris Marshall:]

I think, Kevin, what we put in the press releases is pretty consistent with where we're at. On Saturday, we discover that electronics payment vendor, ACI Worldwide, they inadvertently issued current mortgage payment drafts and per conversations with them, it looks like they were testing their system from a capacity standpoint and putting test files into the production environment. So, obviously once we identify that through a normal process Saturday morning, we immediately reported to our customers' banks. We worked with them to prevent any financial impact to our customer accounts by providing credits and reversing the incorrect drafts and fees. This was not a security breach obviously and we did not receive any funds from customer accounts and as a result of the team's action, really Mr. Cooper out of the 480,000 customers who could have been impacted, we're only aware of a few hundred that have incurred NSF fees. We're going through those as we speak and providing refunds. All result obviously of ACI's error and then look at it from a customer standpoint, nothing is more important to us than the trust of our customers. In addition to all of the work we did to fix ACI's error, we also immediately start communicating with our customers. We alerted our customers through emails Saturday evening, website, social media posts and blogs and brought in extra staff at the call centers. I think, overall, right now, we feel like we have mitigated the impact of this and we're tracking it on a daily basis. Our call volumes are back to normal and we're just not seeing a lot of activity around the year by MSR.

[Kevin Barker:]

Thank you for the additional color there. And then, given your comments in the correspondent channel where competition is much more intense but you've created more efficiencies in order to make it worthwhile, can you help us get an idea of what your estimated pro forma return on equity would be on new production within the correspondent channel?

[Chris Marshall:]

Yes, I think you have to think of the correspondent channel as the returns there are consistent with the MSR we buy in the purchase market minus whatever the profit margin is, we're in the correspondent channel largely to acquire new customers and to either replenish the amortization in the portfolio or to contribute to some nominal growth. So, when we're buying MSR, we're looking for returns in the low to mid to high teens, depending on the nature of the MSR, and what our expectations are for recapture opportunities. And so, I think of correspondent, even though what we're saying is earnings - the margin - our overall margin is going to compress as we get in the second quarter, merely saw a little bit of it, is really being driven by extreme compression in the correspondent channel. But even at these very thin margins right now, we think that will normalize at some point, but we're still ending up acquiring MSR that we would otherwise be buying in the bulk market. So we're still getting at a discount. So that's how I think of the returns, they are still good returns. Now, we're not going to - we'll stay in the market, we'll compete. And I think everyone is going to see everyone as a player, and that market is going to see the same very intense pressure for some period of time. It will sort itself out, but we're doing it to, again, acquire new customers and replenish our run-off. So to us, it's still a discount to what we pay in the bulk market and still make sense, but we wouldn't stay there just to say we're in the correspondent channel. So pricing gets really irrational and if we see some segments of the market where we can't make money, then you should expect us to drop out and our funding to fall off, but we've built a very, very efficient machine here. We're a big player in correspondent now and we have the advantage of being able to buy, again, it's fueling our overall strategy. But if margins turn negative, then you'll see us back away.

[Jay Bray:]

And you've seen us do that, we've been through these cycles as you know, and we'll maintain strict discipline around our return to goals, but to Chris' point, today correspondent co-issue they're is still very attractive from an overall return profile, and we'll just continue to see how the market plays out.

[Kevin Barker:]

So, are you seeing that competition emerge from banks or non-banks in particular? And do you see your competitive advantage there is your recapture rates on loans that are running off from the portfolios you're purchasing through that channel?

[Chris Marshall:]

Yes. The recapture rate we see really differs almost client by client and we price accordingly for that. So, I wouldn't give you a blanket answer on that. This quarter we did see more competition from a couple of banks that have large correspondent activity, but there has been - we have a number of newly public companies who've stated very aggressive growth targets. And that's playing out as fierce price competition. I don't think, for the obvious reasons, people will allow it to continue at that level. I think we'll see people make decisions on growth over price or price over growth and retain profitability. But again, for us, since it is a means to an end, as long as we're acquiring the MSR, we want to acquire at a discount to the bulk market then it's a positive for us.

[Jay Bray:]

Kevin, I bifurcated a little bit in junior FHA product. I'd say, it's still predominantly non-banks, you're not seeing really any bank competition there, to Chris' point, on the GSE side a little bit more from the banks. And undoubtedly, recapture is a huge advantage for us as we've talked about in the past, but that will vary by pool but still, even most pools we're certainly going to be able to recapture more loans than anybody else.

[Kevin Barker:]

Yes, thank you. I'll get back in the queue.

[Operator:]

Thank you. The next question comes from Mark DeVries of Barclays. Your line is open.

[Mark DeVries:]

Yes, thanks. I just had a follow-up question for Chris on the capital return potential, if you just think about where consensus estimates are for your earnings and then the title gain and then you layer on the potential for 5% to 10% MSR growth. If that's where you ended up 5% to 10%, how much capital would that leave you at the end of the day for potential repurchases?

[Jay Bray:]

If you look at our plan, our cash flow for the year, Chris, you can comment on this, is growing materially throughout the rest of the year. And within that plan is the growth of 5% in the portfolio. So I think we'll have plenty of excess cash, and it's going to continue to grow throughout the year.

[Chris Marshall:]

We ended the quarter at $654 million. But we expect $400 million from Title 365, we expect to be cash flow positive through the year. So you can do the math and say it's easy to see us having in excess of $1 billion by the end of the year or even towards the middle of the year and, of course, we've got to hold some of that cash just for normal operating, but it's certainly a number if it's not $1 billion, it's in that $750 million, $800 million range that's available for investment, whether it's investment in growing the company, which again is our priority. But if we can't put it all to work and we're sitting here with a stock that's $34 and, almost under any scenario, tangible book is going to grow to 40 or more just on the basis of consensus earnings absence from massive mark-to-market impact, negative mark-to-market impact, which I don't think anyone expects, it doesn't consider further positive mark-to-market. So I think based on the Fed's comments yesterday on inflationary pressures, I think everyone's expecting over the long term for rates to go up, which means more positive marks on our book. And it doesn't include any change in the tax rate. Those things all say the stock could be well into the '40s. So if we're sitting here with a lot of cash towards the end of the year and the stock that's trading where it is now, it seems to be a no-brainer that we want to buy back our shares in a much higher level just given where tangible book is. Now, given the consistent profitability we've been earning, you would think we'd be trading at a premium to those levels. And hopefully, the stock is there, but if not, then we'll have considerable amount of capital to fund buybacks.

[Mark DeVries:]

Got it. Makes sense. And then, I think in past calls, you commented about considering starting to hedge the MSR but it didn't really make sense at the time, just given where rates were, and then, rate risk was kind of asymmetric where you'd only benefit on your MSR value. But now that the rates have backed up some and your MSR value is up a little bit, are you starting to reconsider that kind of a go-forward basis?

[Chris Marshall:]

I'll give you a more general answer, I think we will have a more comprehensive hedge program at some point in the future. Today, the only MSR that we hedge is that which is financed. And we do that out of an abundance of caution, just to mitigate any kind of capital calls if rates ever became volatile. That's a very small percent of the portfolio or less. So if the answer is, are we going to hedge more comprehensively, I think the answer would be yes, but I don't think rates have backed up to a point now where we would begin doing that. At some point in the future that's likely.

[Mark DeVries:]

Got it. Thank you.

[Operator:]

Our next question comes from Lee Cooperman of Omega Family Office. Your line is open.

[Lee Cooperman:]

First, let me congratulate you guys on excellent performance. You give all the different numbers, but that one could look at and reached a role in the conclusions, but I have a few questions that I would like to draw you add on where I'm asking for your bottom line rather than giving us a lot of the inputs. You mentioned you have a minimum expectation of 12% ROE. What do you think normalized ROE is if you look at your book value at year-end at 40? What do you think normally are in that book value?

[Jay Bray:]

We said a minimum 12%. And we say that because we think that's sort of the price of entry, we've got to earn that but we offer the range of 12% to 20% and we'll see what ours . I want to give you an exact number, but I think the range of expectation for us will be somewhere in the 12% to 20% on a consistent basis.

[Lee Cooperman:]

Got you. Okay, good. Okay. Second, the question is what is the minimum cash you need to run your business the way you want to run it? If you mentioned you probably have over $1 billion in cash tomorrow end the year at $2 billion or something like that. What is the minimum cash you would be comfortable to run your business?

[Jay Bray:]

So on a stable environment. We actually focus on immediate liquidity of which cash could be a third or half of that and that's somewhere in the $400 million range of cash really only has to be a couple of $100 million or $200 million.

[Lee Cooperman:]

So you have probably $600 million, $700 million, $800 million of excess cash presently, or will have at the end of the year. I have no idea what KKR's intentions are but Wednesday sell some I assume there would be willing to sell at all. Do you have the mental orientation and the interest in buying them out, should that stock become available?

[Jay Bray:]

We certainly want to be able to do that. I think one thing about KKR they've been an incredible shareholder and are for obvious reasons they want to make sure the stock price is optimized. So I don't think they have made any they certainly haven't communicated to us any formal decision when they were to exit or how fast or what that would look like. However, as a private equity firm, I think we all know that they hold investments for a period of time and then look to recycle that capital and they held this investment for a long time. So if they were to do that. Yes, we would certainly look to put our cash to work for their shares or anybody else who is looking to exit their position.

[Lee Cooperman:]

And then the last question, if you will be willing to answer it, but what is your view of the value of the equity, I mean you've been very right for quite some time now about saying the equity very mispriced. And, but I'm curious. Basically, what's your view of the value of the equity?

[Jay Bray:]

Well, if you think of that. I'll answer this one. If you think of our tangible equity is largely the value of our MSR and we could sell that at market prices is that book value, value of our business is nothing. Well, I think that's ridiculous. We've already said the Title 365 is with was worth $500 million of book value is almost nothing. Same thing with our exchange business and it's hard to make a case for it with the moratorium, but that business earned $60 million a year, year-in year-out or more. So what's it worth is another $500 million, $600 million that has no book value. So I wouldn't put an exact price, I think our stock is materially undervalued when you think of the earnings power of this business but separate and distinct from the value of the MSR portfolio.

[Lee Cooperman:]

Are you basically out of being able to buy back stock until August now, given what you've already done so far this year?

[Jay Bray:]

We are.

[Lee Cooperman:]

Great. Okay. I would just say is an endorsement of what you're doing is I would buy every share you could buy back because you're talking about your $5, $6, $7 owner, 12% return on book you to be at least book value, if not more. And you're doing a great job and have great confidence in what you have to. Good luck.

[Jay Bray:]

Thank you. We appreciate that support.

[Operator:]

Our next question comes from Henry Coffey of Wedbush. Your line is open.

[Henry Coffey:]

Good morning. It's really great quarter by the way. Thank you. Three on somewhat unrelated questions, first with ACI, any future pejorative regulatory action around the issue, does that stick with them, or is there any way that could migrate towards you?

[Jay Bray:]

Well, Henry. One of the other things that we did do once we identified ACR there, we did reach out to all of our stakeholders, including the regulatory community to make them aware of it. And we've had discussions with a number of them. And yes, those discussions have gone well, I think clearly, they're going to want to see how this continues to unfold. Again, we see coal levels back to normal, we see less and less inquiries around this from customers. Just the level of activity overall has gone down. So, I think the fact that it ultimately is not going to be any material impact to our customers, I think that will influence the regulatory community. And from ACI standpoint, yes, I would expect that they certainly will get plenty of attention from regulators. We're not generally customer. So, I think there will be more scrutiny on them, for sure.

[Henry Coffey:]

On the origination front, I know when I go back really to the name change there was this development of a product and a platform where you really could help your customers manage how they dealt with their own debt and now we're into a cash out refinance market where that's an obvious opportunity. How well-developed are those products and what's the resistant point with customers? Are you able to get them? Do they get it? Are they using it? Or is there still a lot of friction around getting people to use the equity in the house to pay off higher causing debt?

[Chris Marshall:]

I wouldn't describe anything as friction and I'd say in terms of our products, they are outstanding. The tools we've built were really built with cash out debt consolidation and really managing customer - helping them manage their personal balance sheets. That's how they were built. And so, we're in an outstanding position to take advantage as the market pivot's that way. And you've already seen or you will see in its early days, but that product as an overall component of our originations is already growing. I expect you'll see that when we report second quarter that it's more and more of the volume that we're doing. So yes, I think that's going to be a big positive for us. Our customers have a lot of equity in their home and to the extent they have other debts that they can consolidate and save a lot of money. At the end of the day, it's all can we help them improve their bottom line? That's what we're here to do.

[Jay Bray:]

And Henry, you said it. We have the tools already. That machine as we speak. We've got over 30% already cash out refi and that number is going to continue to grow in size. I think it will be a massive opportunity for us.

[Henry Coffey:]

And then on the consolidation front, I think it's fair to say that all of those companies that came public, seeing that were not raising capital as much as trying to cash out key investors. There's probably still an appetite for that. When you look at the marketplace, what sort of opportunities do you see? Is it going to be, as you said on the call, buying MSR? Are there origination platforms that could fit into your acquisition strategy? Maybe now that the public companies are obvious targets because of their relative size, but are there other smaller companies that are likely to come up for sale? How does that play out?

[Chris Marshall:]

By looking at M&A and buying an origination platform is really not top of mind for us right now. We've got an outstanding platform. If we saw something, we look at every transaction that comes to market. Obviously, we get one of the first calls, but it's something that have to have such tremendously compelling accretion for us to want to do it. We're not looking to buy someone else's business at the top of the market and we don't think we need to, to continue to grow and generate shareholder value. I think it's the other part of it is some looking at us as an opportunity to help their franchise and we've gotten a lot of phone calls along in that regard. But for right now, we're almost entirely focused on exactly what we said, growing the business at the right return levels. And if we can't get the share price to the right level, then we'll have the flexibility to buy back more shares and generate shareholder value that way.

[Jay Bray:]

Yes, I think, Henry, if you look at us historically, we have traditionally just bought assets and bought MSRs. Obviously, we bought Pacific Union, which turned out to be a good acquisition for us. It would have to be something that to Chris' point, is very accretive and something that we really do not have in the franchise today. Whether that's different channel, whether that's technology, but we we're going to continue to stay focused as Chris just outlined.

[Henry Coffey:]

Great. And thanks for taking my questions.

[Chris Marshall:]

Thank you, Henry.

[Jay Bray:]

Thanks, Henry.

[Operator:]

Thank you. Our next question comes from the line of Kevin Barker of Piper Sandler. Your line is open.

[Kevin Barker:]

Just a follow-up on some of the M&A comments. You have vested interest to push to increase your earnings as much as possible. You'll do that organically as much as you can that create efficiencies. But is there any other ways that you can accelerate the utilization of the deferred tax asset in order to improve the balance sheet and bring - increase the cash balances for the company?

[Chris Marshall:]

Certainly we look for those opportunities every day, Kevin, and for obvious - and I know why you're asking the question. We wouldn't do an acquisition just to accelerate the use of the DTA. We think now that we have been actively converting the DTA from an NOL to temporary difference DTA, what we've done is - and we expect that to be completed even faster than we thought, probably by the end of this year. So, that will lock in a permanent asset for us and while we'd love to use it as quickly as possible and convert it to cash, outside of looking at opportunities to optimize profitability in the company, we don't have any special plan to just try to accelerate that.

[Kevin Barker:]

Okay. Thanks for taking my question.

[Operator:]

Thank you. And you have a question from the line of Lee Cooperman of Omega Family Office. Your line is open.

[Lee Cooperman:]

Thank you. But, okay, we'll take it. I've been called worse. All the talk recently has been about who you're acquiring. Let me ask you a different question, with the M&A environment improving and with the tremendous value that we offer, your huge escrow balances, the tremendous number of client relationships you have, would we be attractive acquisition to another finance institution? And would we consider it?

[Chris Marshall:]

Well, certainly we consider anything that generates incremental value to our shareholders. That's at the end of the day what would make all of our strategic decisions for us. Do I think so? Yes, I think you've seen a couple of transactions recently where bank specifically are looking at mortgage companies and seeing the very significant synergy, the arbitrage between how similar assets are valued in those two sectors. So yes, I think long-term - well, I should say lave long-term. I expect to see a lot more of that type of M&A - banks acquiring mortgage platforms whether or not we see somebody interested in Mr. Cooper, specifically that we think is a good marriage that hasn't materialized yet, but we certainly consider if it happens.

[Lee Cooperman:]

Okay, thank you. Thank you. Good luck.

[Jay Bray:]

Thanks, Lee

[Operator:]

Thank you. At this time, I'd like to turn the call back over for closing remarks.

[Jay Bray:]

Thank you, guys, for your participation and look forward to chatting with you throughout the day. Appreciate it.

[Operator:]

This concludes today's conference call. Thank you for participating. You may now disconnect.