Cowen Inc.
Q4 2017 Earnings Call Transcript

Published: 15 Feb 2018

[Operator:]

Good morning, ladies and gentlemen and thank you for joining Cowen’s Conference Call to discuss the Financial Results for the 2017 Fourth Quarter. By now, you should have received a copy of the company’s earnings release, which can be accessed at Cowen’s website at www.cowen.com. Before we begin, the company has asked me to remind you that some of the comments made on today’s call and some of the responses to your questions may contain forward-looking statements. These statements are subject to the risks and uncertainties described in the company’s earnings release, and other filings with the SEC. Cowen has no obligation to update the information presented on the call. A more complete description of these and other risks and uncertainties and assumptions is included in the company’s filings with the SEC, which are available on the company’s website and on the SEC website at www.sec.gov. Also, on today’s call, our speakers will reference certain non-GAAP financial measures, which the company believes will provide useful information for investors. Reconciliation of those measures to GAAP is consistent with the company’s reconciliation as presented in today’s earnings release. Now, I would like to turn the call over to Mr. Jeffrey M. Solomon, Chief Executive Officer.

[Jeffrey M. Solomon:]

Thank you, operator. Good morning and welcome to Cowen’s fourth quarter 2017 earnings call. This is Jeff Solomon and joining me today on the call is Steve Lasota, our CFO. While you’ve heard me on prior earnings calls, today is the first time that I am speaking to you as the CEO of Cowen. I want to start by telling you what an honor it is to lead an organization full of such talented professionals who come to work every day at Cowen to help our clients outperform. As CEO, it is my responsibility to deliver for those clients by providing resources that enable our colleagues to be the best that they can be in a collaborative empathetic culture. It is also my responsibility to ensure long-term sustainability of Cowen for our shareholders for whom we have not performed of late. I will out line on this call some of the steps we will be taking towards changing that outcome for the better. I will also lay out the framework on which we can judge our progress on elements that are well within our control as we navigate the markets in which we operate. Before doing that, I will spend a few minutes providing an overview of our performance in 2017. Then I will share with you the things that I have been most focused on since taking the new role on December 27. Steve will then review the financials in more detail and we will open up the call for questions. In 2017, we reported economic income of $15.8 million, which is a positive swing of $44.5 million from the economic income loss we reported in 2016. If we were to exclude additional one-time expenses related to the Convergex acquisition, and the transition of leadership, our economic income would have been $23 million, a positive swing of $51.7 million on an increase of revenues of nearly 200. We showed meaningful improvement in our financial results over 2016, due in part to favorable revenue environment in some of our businesses, as well as some of the strategic actions we undertook to improve our operating performance. Our improvement was in spite of continued industry headwinds and equity trading volumes, and a difficult asset raising environment for our investment management division. I will discuss each of these a bit further. In banking and capital markets, a favorable capital raising environment provided for record banking revenue of $223.6 million in 2017. Performance was led by equity financings and in particular an area - healthcare, which is an area, which has been a long-standing strength of our business. We also showed good improvement in other areas of banking such as M&A advisory, particularly in the tech sector. These results come from an organic multi-year effort from investments made in individuals and teams. As a reminder, we utilize the 2016 industry downturn to expand and invest in key areas of banking. And these areas began to contribute more meaningfully to revenue in 2017 as bankers became seasoned on our platform. As a result, we saw merger advisory revenue rise by 56% year-over-year to $41.7 million, our highest level in years. We remain committed to investing in our advisory activities in order to drive long-term margin growth. Diversifying our business mix towards higher margin activities will be a multi-year process as we continue to press on our traditional ECM strength. Heading into 2018, our investment banking backlog in both M&A and capital market transactions is larger and more diverse across industries than in any prior year. Turning to brokerage. Our research and equity franchises achieved positive share gains despite continued lower industry-wide trading volumes. In fact, even with NASDAQ composite volume is down 13% in 2017, we had positive organic growth. As you all know, we completed a transformational acquisition and our brokerage business in 2017 when we bought Convergex. That business has grown from a $207 million revenue business in 2016 to a $312 million business in 2017 with just seven months of Convergex contribution. A key rationale for the acquisition was that the increased scale would provide our organization with greater resilience in financial performance through market cycles, particularly in a post method to environment. We also believe that we would be able to achieve improved profitability through cost synergies that will be executed in phases. In 2017, we achieved $8 million of synergies and in 2018 we expect to realize significant additional cost savings as we realize further synergies in technology operations and corporate overhead, as we scale newer business lines such as securities finance and clearing. With the introduction of MiFID II last month, we are seeing what we expected to see. Buy side firms are continuing to make choices to stop doing business with the firms that cannot help them achieve their return objectives and are aggregating their order flow with partners like Cowen who provide real value in research and trade execution. Over the past few years, we have positioned ourselves to take advantage of that trend by being a top broker of choice among clients who seek both sophisticated research, as well as market liquidity through a non-conflicted agency model. Organizations that emphasize collaborative in-depth cutting-edge research are rare among our peers. Even rarer are organizations that emphasize that kind of research product, as well as provide innovative market liquidity solution for clients on a non-conflicted basis. Our clients are willing to pay us for both. And with our larger footprint, we have seen significant market moves in our ranking with accounts both cash and electronics. Outside of the bulge bracket firms we are a top trader in terms of volume traded among full-service investment banks and not research driven trading firms. And in Europe, we actually gained new clients as accounts look to client consolidate their broker list around those providers that matter most during their MiFID II implementation process. We realized we have made significant long-term investments to get us to a leadership position in a tough space. But we're seeing very early signs in 2018 that our strategy is working. More on that later this year. Moving to the investment management business, we ended the year with $11 billion of assets under management, which is an increase of $459 million from January 2017. The industry in general continues to face a difficult capital raising environment as real money asset allocators take a hard look at the many alpha generating capabilities available to them. As we have stated in previous calls, our primary goal of 2017 was to eliminate products that have not shown an ability to scale so that we can focus on the profit and profitably building out the business. Earlier this week, we completed the process of eliminating three strategies from the platform. Our consumer equity long short, our global macro, and an event driven credit manager. We will be selective in how we grow from here by focusing on investment capabilities that are both saleable and scalable as we draw more closely upon the expertise in D&A of Cowen more broadly. The best example of this “Cowen DNA Strategy” is our new private healthcare strategy that we launched in the fourth quarter. This strategy managed by our former head of investment banking makes mid-to-late stage investments and innovative private biopharmaceutical and healthcare companies, and capitalizes on Cowan's well-regarded healthcare franchise. This strategy has been bought well received and was oversubscribed. This is a true testament to the Cowen brand, as well as to our track record in that strategy. Today, we have raised over $200 million in commitment with an investor base that includes several notable institutions that we hope to convert to long-term partners of the firm. Now, I will discuss what I have been most focused on since becoming CEO at the end of last year. To give you a bit of perspective, in recent years, we became a broader and larger platform with the goal of driving sustained profitability through scale and cost efficiencies over the long term. While our activities in 2017 moved us closer to that goal, we clearly have more work to do as our results and our stock price are not at all emblematic of who we are or who we aspire to be. As CEO, I will be taking clear steps on this front. Our number one goal is to create shareholder value through driving return on equity. We have to improve our standing as good stewards of capital by optimizing our balance sheet activities in pursuit of more accretive returns that are tied more closely to our operating businesses. In pursuing strategic decisions, that will create positive change, we are using a framework philosophy called simpler, fewer, deeper. While what we do on a daily basis can sometimes be complex. It is imperative that our strategy is a defined in such a way that we can clearly articulate and execute on it too relevant stakeholders, including clients and shareholders. This strategy enables us to select focused areas to press for growth, particularly when it comes to managing our capital. We will look to eliminate certain businesses and resize others as we focus our efforts on what is working and look to scale in businesses that will drive margins. We will go deep in our areas of strength and use that to our advantage. Simpler, fewer, deeper. We have already begun to put elements of this philosophy into action. We’re beginning the process of simplifying our balance sheet by improving our capital allocation process, which is essential to driving long-term returns on equity. That process includes opportunistically buying our stock back when it trades at levels where it can be quite accretive to do so. To that end, our Board of Directors has reauthorized us to repurchase up to $25 billion of common stock at our discretion. Our philosophy is that balance sheets are meant to be seen not heard. That means taking steps to reduce quarterly investment volatility, as well as harmonizing our balance sheet activities with our operating businesses so that our financial assets are rowing in the same direction as our business strategy. We will be looking to deploy capital and strategies where we can see a multiplier effect from our balance sheet investments in our operating businesses even as we look to create more predictability in our earnings from investments then we have historically experienced. An example of fewer is the elimination of the three capabilities from the investment management platform that I mentioned earlier, and we will continue to assess our product array for our clients as we focus more accurately on the Cowen DNA product I mentioned earlier. Those products have to be both saleable and scalable. The investment management divisions new private healthcare strategy is an example of how we can go deeper in an area, healthcare in this case where we can adequately leverage Cowen’s strength in research in banking. In investment banking we intend to deepen our foot print in adjacent areas, namely by scaling in merger advisory and leverage finance, where we can enhance our margin opportunity around our core industry strengths. Finally, the right cost structure will enable us to drive performance. To that end, we are working hard to continue to reduce non-compensation cost both variable and fixed in order to drive margins from the scale we have created, particularly from our improved equities platform. This framework will take some time for us to implement, but I want to begin the process of laying out for the you what we're thinking even though it is early in my tenure. I'm utilizing my first 90 days as CEO this being day 51, as a time to assess all of the businesses at Cowen. As such, we are engaged in our strategic review that will enable us to recalibrate our strategic priorities. Our expectation is that our ultimate decisions will bring greater consistency and transparency in our businesses and ultimately sustained profitability for our shareholders and employees alike. I will be in a position to share more specifics with you on some of the actions we were taking over the next few quarters and I look forward to doing that. Now, let me turn the call over to Steve Lasota for a brief review of our financials. Steve?

[Steve Lasota:]

Thanks Jeff. Our GAAP results for the year ended December 31, 2017 was a loss of $67.7 million or $2.29 per diluted share on revenue of $659 million. This compared to a net loss of $26.1 million or $0.97 a share, diluted share in 2016 on revenue of $472 million. During the fourth quarter, we reported a net loss of $77.7 million or $2.51 per diluted share on revenue of $204.5 million. This compares to a net loss of $3.6 million or $0.13 per diluted share during Q4 of 2016 on revenue of $122.3 million. It should be noted that during the fourth quarter of 2017, we incurred several one-time charges. First, as a result of the new tax law, we are required to remeasure our deferred tax assets based on this lower and active tax rate resulting in the recognition of a tax charge of $46.6 million in the fourth quarter of 2017. This is a non-cash charge. Second, we recorded debt extinguishment cost of $14.7 million, including the expensing of the unamortized discount and unamortized capital debt issuance cost, which were a non-cash charge as well. This cost relates to our December refinancing’s when we redeemed our 8.25% senior notes due 2021, and partially retained our 3% convertible notes due 2019. Well the quarter also included one-time charges of $16 million related to transaction and other costs. The remainder of my comments today will refer to our non-GAAP financial results, which we refer to as economic income. Management uses economic income to measure our performance and to make certain operating decisions. In general, economic income is a pre-tax measure that eliminates the impact of consolidation - for consolidated funds and excludes goodwill and intangible impairment so in other transaction-related adjustments and/or reorganization expenses, the bargain purchase gain, which resulted from the Convergex acquisition, certain amounts associated with debt and preferred stock dividend. For the year, we reported economic income of $15.8 million or $0.54 per diluted share, compared to a loss of $28.7 million or $1.07 per diluted share in 2016. Full-year revenue of $666 million was up 42% year-over-year. Jeff discussed the strength we saw in investment banking revenue, which was up 68% year-over-year to $224 million, as well as brokerage which grew 51% or $106 million to $313 million and included seven months of Convergex. Investment income also contributed to the increase in revenue. Our expense margins shifted in 2017 due to the Convergex acquisition. Convergex included businesses with a lower compensation expense, as well as businesses with higher variable expense such as ADRs international equities and clearing. As a result, you can see that our compensation to revenue ratio declined from 64% in 2016 to 58% in 2017. Can also see the effect of the Convergex acquisition on our fixed and variable expenses. In 2017, these expenses increased 41% or $66 million to $228 million. That translated to an increase in our variable non-comp expense as a percent of revenue, which increase some 13% in 2016 to 16% in 2017. Our fixed non-comp expense declined as a percent of revenue from 22% in 2016 to 18% in 2017. As we have mentioned, cost synergies are a key rationale for the Convergex acquisition. We achieved approximately $8 million in 2017 and we expect to achieve a meaningful amount of additional savings in 2018 as we continue through the integration process. As I mentioned earlier, in December, we restructured our debt by issuing new 7.35% senior notes due 2027, and 3% convertible notes due 2022, and we substantially repaid our debt issued in 2014. I will now turn the call back over to Jeff.

[Jeffrey M. Solomon:]

Thanks Steve. 2017 was a year in which Cowen underwent a few significant transitions in addition to my new role. In addition to doing a transformative acquisition, we announced new leadership changes at Cowen and Company when Larry Wieseneck and Dan Charney assumed the roles of co-president. In addition, Fred Fraenkel assumed the role of the head of Cowen Investment Management. We also created a new management committee that is designed to drive business decisions more holistically even as we continue to be a flat organization or our most important partners, particularly the ones that drive revenue can exert significant influence in our strategy going forward. In my new role as CEO, I cannot be more excited for our future. I speak for all of our partners at Cowen when I say that we are completely dedicated to doing whatever it takes to create value for our shareholders. We have amazing talent, a strong will and a deep sense of commitment to those of you who allow us to come in every day to help our clients to outperform. And now it’s up to us to make sure that you reap the benefits of those efforts as well. To everybody on the call from Cowen who is listening, it’s all happening. Let’s continue to make that our top priority. Operator, we’ll open up the call now for questions.

[Operator:]

[Operator Instructions] Our first question comes from the line of Devin Ryan with JMP Securities. Your line is now open.

[Brian McKenna:]

Hi guys this is Brian McKenna for Devin.

[Jeffrey M. Solomon:]

Hi, Brian.

[Brian McKenna:]

Hi. So just first question from me, so you’ve hired a number of M&A advisory bankers over the past several years, revenues in that part of the business were up over 50% in 2017 and there seems to be some nice momentum to start the year, so how do you feel about where the business is today and how aggressive are you going to be further building out the footprint from here?

[Jeffrey M. Solomon:]

So, that’s a key area of growth for us. It’s clearly M&A, it is a higher margin business across the board, and I think we have done a great job, I think at the harder part of the business frankly, which is how do you embed yourself in the minds of clients as a go to bank. I think once you accomplish that, you have that brand there, there is an opportunity for us, particularly in healthcare to penetrate much more in the M&A dialogue than we have. And so, there is a real opportunity for us to even press deeper in that area. So, we look to continue to do that. I also think that in other areas as we made investments in, particularly in technology and consumer and industrials, we’re showing some real traction there. I like to think, when we bring bankers onto the platform it’s usually a good 18 months before we start to see some results. Though, as I mentioned I think on the last call, we brought some folks on last year, and they were really instrumental on holding us to drive one of the largest M&A fees that we’ve ever had at Cowen, which was Rimini Street in the third quarter of last year. And so, when you start to create scale as we have in our investment bank, suddenly the flywheel effect starts to take over and you get this network effect of being able to use your qualifications in rooms across industry strategy. So, I would say top priority for us. I think we will do so organically. We are going to continue to look at ways to maybe make some smart acquisitions with folks who we think that really well with us culturally, and can help us to scale even faster. So, no question, it will be a top priority for all of us here at Cowen.

[Brian McKenna:]

Okay, helpful. Thanks. Next one, just with the firm parting ways with CEFC, it didn't seem that the capital was necessary, but how are you thinking about your capital position today relative to some of the initiatives underway? And then just on the capital management strategy more broadly, you repurchased about 20 million shares in the quarter and increased authorization by $24 million, but what is your appetite for share repurchases kind of in the near-term here? Thanks.

[Jeffrey M. Solomon:]

So, I think first of all, capital strategy is something we’re working really hard on. We said when we announced that we were withdrawing from the CEFC transaction, we didn’t need the capital. We thought that was going to be an opportunity for us to partner with somebody to do an area of growth beyond the United States, and frankly this gives us a chance to re-address exactly how we want to do capital optimizations. So, having done the financings in December in the fourth quarter, I think we're pretty well squared away in terms of capital needs, feel very good about where we stand with our capital today in the mix of equity index that we have, super conservative, and long-term sustainable, and we were able to reduce some of our cost to borrowing even as we increased our capitalization. We will absolutely look to buy back stock as part of our capital optimization plan. I think it’s, the math that we need to look at and more carefully is how we deploy long-term growth initiatives and over what time we could achieve those returns versus returning capital to shareholders who have been more than patient with us as we’ve made investments in businesses where we have the scale and create synergies. So, I think, I don't anticipate us doing incremental capital raising in the near-term, feel like we are really well capitalized. Certainly, the more cash flow we generate we will be looking to share those returns with investors as we take a more total shareholder return approach to managing our balance sheet.

[Brian McKenna:]

Got it. Thanks. And then last one from me. You recently made a few senior international hires within the brokerage business, could you talk more about the international strategy and some of the opportunities to expand globally?

[Jeffrey M. Solomon:]

So, we got the international business as part of the Convergex acquisition. I would say it has been a real pleasant surprise not that I didn’t have high expectations, but certainly giving us that window into deeper conversations with clients globally who are grappling I think with the MiFID II implementation being able to have real strategy discussions around whether or not we should become systematic internaliser , you know that’s a real benefit for us and so we’re not looking to expand much more in terms of geography than we currently are, and I would say that the growth and this has come from both our international prime business, which is something we started before the Convergex transaction, as well is being able to expand our existing U.S. equity offering with clients on the continent. And so, I would say it’s a combination of all those. We’ll continue to add people to the extent that we think they could be accretive to an already successful platform, but no meaningful acquisitions or deeper investments to scale beyond adding people who we think can be additive.

[Brian McKenna:]

Okay, appreciate it. Thanks Jeff.

[Operator:]

Our next question comes from the line of Steven Chubak with Nomura Instinet. Your line is now open.

[Steven Chubak:]

Hi, good morning.

[Jeffrey M. Solomon:]

Hi Steven.

[Steven Chubak:]

Jeff, wanted to just dig in our little bit deeper into some of your marks on the alternative investment strategy, you highlighted some of your efforts to unwind some of the smaller non-core areas, which you couldn't scale focusing on your core competencies. So, certainly sounds like it’s moving - stepping the right direction. I guess bigger picture from our seat, it looks like the returns in this business have been underwhelming for some time. You have a lot of unlocked value in your proprietary capital investments, and hearing you emphasize this notion of simpler fewer deeper and that being the renewed focus, I’m just wondering what’s the justification for maintaining a subscale alternative investment operation at all. It just feels like there’s a lot potential value creation that’s maybe being left off the table.

[Jeffrey M. Solomon:]

Yes, I am not going to get too much into the details of what we're thinking on a broader strategic picture as it relates to that. I think we have some work to do to re-establish profitability in that business. What ultimately ends up happening and how we end up unlocking value from that division, I think it all emanates from making the right decisions to drive profitability, and there’s some obvious things we can do like the things we’ve been doing. So, again, we are looking at that business as a seeding strategy affiliates business. I think we’ve - it’s safe to say we made a decision that that’s not an area we are going to continue to pursue in the same way. I think there is definitely some opportunities for us to bring teams in that are a little bit more organic and tied closer to the Cowen DNA, but does the world really need another head fund strategy that sort of not core to what we do at Cowen. I have some real questions about that. I think the success that we had in raising the Cowen healthcare fund gives a good glimpse into what we can do on this platform. We announced, we were going to do this literally in August, and we have had a four-year track record of investing on our own balance sheet, and we did a fun one with a single family office and between the time we made the announcement and honestly made the - we didn’t make the transition for Kevin Raidy who is the Head of Banking until October 1, and so between really October 1 and the timing close our fund in January, we raised almost $0.25 billion in that strategy. And it shows you that the Cowen Brand, particularly around healthcare is exceedingly strong and when you marry that up with a capability that you can demonstrate we have the ability in that division to drive profitability. Now that is currently a 2%, seem to be maybe 3 or 4-person team, but that is it. And so, one of the things that when we look at the business going forward, ultimately our ability to drive value is going to be tied up in our ability to drive profitability and so we're making decisions around that first and foremost. And then we’ll see what makes sense down the road strategically.

[Steven Chubak:]

Got it. So, I mean from our seat, as you push forward with the simplification efforts, and you alluded to some of those, Jeff, in your last remarks - you talked about potential metrics that we could actually follow a monitor on an ongoing basis. I'm just wondering if there are any measurable targets that you could cite on this call at this point where we can hold management accountable, whether it's ROE, pretax margin, to evaluate whether you are making sufficient progress in driving returns and generating value.

[Jeffrey M. Solomon:]

So, I think it’s a little early for me, I mean at this for six weeks and I know I have been the President for a while, but I will just tell you my experience of being CEO it’s a little bit of a different view. And so, we will absolutely lay out in more detail later on in the year, specifics around how you can judge us. But some of the changes that we have talked about here are just at the beginning, and I would like to implement those a little bit further and move it a little bit further along. We have some internal metrics we’ve already discussed in terms of how we're going to be driving ROE, so I think the management team is well aware of what those are and the strategic decisions that we’re making are through the lens not only of simpler, fewer, deeper, but through the lens of how we are driving ROE for shareholders. Now, what that will ultimately be is a function of the market choice, the markets and how those are, but as I said earlier in my remarks, we should be able to provide very clear metrics for you and for shareholders to judge us little later in the year.

[Steven Chubak:]

Got it. And speaking of the markets, one of the things, Jeff, that we have been getting a lot of questions on from folks is, as you've done the Convergex deal and completed that, we are certainly seeing some signs, and we even saw in the fourth quarter numbers, that's helping drive some diversification in your revenue base. And given the recent spate of volatility, I was hoping you could give us some context since during periods where there's been a severe market correction, elevated volatility, your business hasn't fared as well. But with this increased diversification and the benefits from Convergex in a more volatile backdrop, how do you think your business fares in that type of environment going forward?

[Jeffrey M. Solomon:]

Well, so it’s early I would say, January was a pretty amazing month for us, just operationally and as we got - we were prepared for the volatility in February across the board. And we benefited from that in some areas and we took some pretty meaningful steps to manage that volatility in anticipation not that we’re always going to be that smart, but as we look to reduce some of the historical volatility that you’ve seen on the balance sheet, you know there are some things that we can do more aggressively out of the gate, while we’re actually taking a longer time to strategically reposition and that is to say that our balance sheet is currently deployed, and it takes a little bit of time to pivot that balance sheet to where it ultimately will be. Again, going back to, this is why I can't give you specific ROE metrics today because a lot of the ROE drive is going to be from how we reposition the balance sheet into operating businesses, and that is a multi-quarter effort for us, particularly with some of the private investment that we have on the balance sheet. So - but in terms of looking at how we did in the 10% drawdown of what I can say to you is, we’ve experience probably four 10% drawdowns since 2011, and this is the best that our balance sheet has performed in that period by a factor, by a significant factor.

[Steven Chubak:]

That's really helpful color, Jeff. And then just one more follow-up for me on the buyback. You announced a repurchase authorization of $25 million. You talked about your focus on being optimally deploying that excess capital potential and deploying it more towards buyback as well. I’m just wondering; given where your shares are currently trading, why not get a little bit more aggressive here if you have that excess capital capacity? I mean $25 million actually sounds - while it's a pickup year on year - relatively light in the context of where your stock is trading right now.

[Jeffrey M. Solomon:]

I will repeat to you, what my board repeated to me, which is doe the first 25 and then we will see where we are. I mean there is no reason to put a big headline number out there and then not fill it. We will, if the markets are appropriate for us, we will replenish it once we use it, and so, I would read anything in it other than we anticipate being able to use capital to both grow long-term initiatives and return capital to shareholders when we see it. There are going to be some opportunities for us to make strategic investments. I think I highlighted what those could be and so we want to be judicious with how we think about that because we do think that if we make the right kind of acquisitions in some of those areas it could be much more meaningful long term accretive than the immediacy of buying back capital. But if those don't materialize, it's clear that in some of our businesses we are over capitalized and we can certainly be in a position where we return capital to shareholders. And so that balance is something that we are literally analyzing in real time, and why I’m not being more specific is because I’ll let you know when we reach some conclusions, and you will be able to see it, but it is absolutely on the table. I think, we traded a meaningful discount to book value and so our ability to find something that meaningfully moves ROE and drives the return for shareholders, the bar is high to do that. And so, if we do something strategically, it will not be casual and it will be due to the lens of how we can drive long-term strategic growth, when it’s really going to be easy for us to buy back stock if we want to.

[Steven Chubak:]

Great. Thanks for taking my questions Jeff, and look forward to getting more color on some of those targets.

[Jeffrey M. Solomon:]

Well thank you Steven, appreciate the questions, they are good ones.

[Operator:]

And I'm not showing any further questions in queue at this time. I’d like to turn the call back to Mr. Solomon for any closing remarks.

[Jeffrey M. Solomon:]

Well thank everybody for dialing in. We appreciate all of the support, and we look forward to sharing much more with you in the quarters to come. Thanks everybody.

[Operator:]

Ladies and gentlemen, thank you for your participation in today's conference. This concludes the program and you may now disconnect. Everyone, have a great day.