The Walt Disney Company
Q1 2020 Earnings Call Transcript

Published: 5 Feb 2020

[Operator:]

Ladies and gentlemen, thank you for standing by and welcome to the Walt Disney Company's Fiscal First Quarter 2020 Financial Results Conference Call. [Operator Instructions]I would now like to hand the conference over to your speaker today, Mr. Lowell Singer, Senior Vice President of Investor Relations. Thank you. Please go ahead, sir.

[Lowell Singer:]

Good afternoon and welcome to The Walt Disney Company's first quarter 2020 earnings call. Our press release was issued about 25 minutes ago and is available on our website at www.disney.com/investors.Today's call is also being webcast and the webcast and a transcript will also be available on our website. Joining me for today's call are, Bob Iger, Disney's Chairman and Chief Executive Officer and Christine McCarthy, Senior Executive Vice President and Chief Financial Officer. Following comments from Bob and Christine, we will of course be happy to take your questions.So with that let me turn the call over to Bob to get started.

[Robert Iger:]

Thanks Low, and good afternoon everyone.We've had a great quarter and a very productive start to the year. But, before I talk about the quarter, let me begin with the events in Asia related to the Coronavirus. Certainly our hearts go out to all those affected by this devastating outbreak including the thousands of people who work for us in the region. In line with numerous prevention efforts taking place across China, we've temporarily closed our parks in Shanghai and Hong Kong and we will continue to closely monitor this public health crisis. Christine will have details about the developing financial impact in her comments.Turning to the quarter, since our last call, our studio released two more films that exceeded $1 billion each at the global Box Office. Star Wars

[Christine McCarthy:]

Thanks Bob, and good afternoon everyone.Excluding certain items affecting comparability, earnings per share from continuing operations for the first quarter were $1.53. Fiscal 2020 is off to a good start, as evidenced by our first quarter results, and as Bob discussed, we are incredibly pleased with the launch of Disney Plus and the positive consumer response we have received to-date. In terms of our fiscal first quarter results, our Studios creative momentum continues to deliver outstanding financial performance.Operating income was up significantly compared to Q1 last year, driven by growth and worldwide theatrical and higher TVs SVOD distribution results at our legacy film studio. The actual results reflect the performance of Frozen 2 and Star Wars

[Lowell Singer:]

Okay. Thanks, Christine. And operator, we are ready for the first question.

[Operator:]

[Operator Instructions] Our first question comes from Michael Nathanson with MoffettNathanson. Your line is now open.

[Michael Nathanson:]

Thanks, Bob. I have two few in Disney Plus. First one is stepping back a bit, what were the biggest surprises or learnings that you had post-launch, we looked at - we accomplished, and then after those learnings, how did you or what have you adjusted in terms of your launch plans or content spending plans after reviewing the first two months of this product?

[Robert Iger:]

Well, I don't know if you call this a surprise, but certainly it's a learning because we didn't know until we launched. But we've been heartened by the fact that there has been basically consumption of a broad array of product across all of our brands. That is not just about original programming or not just about the Disney library, it's really about everything including original shorts and older shorts, and legacy Disney Channel shows and of course, the library led by musicals and recent theatrical releases and Mandalorian, but it has been very broad-based, and I mentioned earlier that about, it was, 65% of the people who watch Mandalorian, watch at least 10 other things on the service, so this was not about any one thing.50% of people who use the service have watched movies as a, for instance. So with that in mind, we feel that validates the collection of those brands and a blend of product that includes obviously, the library or legacy TV and films of short-form and long-form, and then original programming.The trajectory in terms of our investment in original programming on the service is roughly the same as it would have been or as was before we launched. We haven't really changed that that much.Clearly, the original shows that we decided to invest in led by the Mandalorian have worked and we knew when we launched that we were launching with a modest amount of original programming and that it would build over time. So as we look ahead, we're really comfortable with volume that -- of the product that we are creating and don't really feel that there is much that we have to adjust to right now.We have just as a - for instance, we have a few Star Wars series in varying stages of production and development, we have the three Marvel series that were announced and I think there are seven other Marvel series that are in varying stages of development or pre-production, and there are a number of Disney originals, we have Disney original movies coming.Very pleased with them, by the way. I know we have a new one coming, Timmy Failure is a 100% on Rotten Tomatoes as a, for instance. So we've got a - I think a great blend and don't feel a real need to adjust, and I think the best thing about it all is that the decision that we made to go with quality and not just volume is working. So the second part of the question?

[Operator:]

Our next question comes from Jessica Reif Ehrlich with Bank of America Securities. Your line is now open.

[Jessica Reif Ehrlich:]

One more question on Direct-to-Consumer, then NFL. On Hulu, could you - Bob, you said you're going to take it internationally, you've alluded to that before, how long will it take you to get some of these lights back around the globe, and can you give us any thoughts on timing because the bundle strategy is obviously working here. And then on NFL, can you give us an update on your thoughts on that in terms of - well if anything you can – timing, but also placement of NFL on ABC versus ESPN, and ESPN Plus?

[Robert Iger:]

We are working up a plan to take Hulu internationally. We actually have a lot of specifics around it. But we've decided that the priority needs to be Disney Plus. We are launching, as I mentioned on the call across multiple territories in Western Europe later in March, and then in India, on March 29 and it's going to continue to roll out across the world going into 2021 including Latin America, and we feel that we need to concentrate on those launches, in the marketing and the creation of product for those and then come in with Hulu right after or soon after that.So we don't have specifics, except we do plan to begin rolling Hulu out, I'd say probably in 2021, internationally that is after the Disney Plus launch. On - then NFL side, look, it's very early to speculate. I think the ratings for the NFL suggest that, while there's a lot of disruption and there is a fair amount of erosion, and you see people basically watching programs from these multiple new sources and creating more competition for the traditional linear networks. The live sports has held up really well, led of course by the NFL. So our interest in the NFL remains very strong and there have been only preliminary discussions and nothing more and it would be premature for me to give you any more detail.

[Operator:]

Our next question comes from Ben Swinburne with Morgan Stanley. Your line is now open.

[Ben Swinburne:]

Bob, there's a lot of discussion in the market about the relative popularity of Disney's brands and IP outside the U.S. versus inside the U.S. and obviously, we're all going to now digest the results you just reported. But how do you think we should be thinking about the subscriber opportunity as you launch these new markets in the March quarter in Europe relative to what we've seen so far in the U.S. And what can you tell us about the India launch, and how you plan to price that and bundle it with Hotstar VIP? How big is Hotstar VIP? Can you just talk about the go-to-market in India since that's a market where you're going in with a really unique strategic position given the Star business?

[Robert Iger:]

Well, first of all those Brands are global Brands, each one of them, including Star Wars, which maybe what you're alluding to Ben. They have varying strengths in different markets, Disney is probably the strongest on a consistent basis across the world, but they all have raised brand affinity and brand interest in all of them, which I think is one of the things that is a strong selling point for us into markets.So, I don't really think that, well, we necessarily need to do much adjusting as it relates to the product that has been designed for the U.S. except to make sure, obviously, that the programs are dubbed in the local language properly and are high quality. And secondly, that we have enough local programming, either to meet local quotas or simply to address local cases.One of the interesting things by the way about Star Wars and The Mandalorian, because there has been some things written after The Rise of Skywalker, that the popularity of Star Wars in certain international markets where there's Star Wars and certainly in - and international markets has never caught on. One of the reasons for that is that there isn't a Star Wars legacy in many of these markets, China being a main one, where people didn't grow up on that franchise or that brand.So when they tuned into, or heard about the Skywalker legacy, there was too much that had already gone in the past that was not familiar to them and they didn't really want to get on board late. That's not true with Mandalorian, because Mandalorian is even though it's based on, obviously, certain Star Wars elements, characters in places, you don't have to know anything about the history of Star Wars in terms of an access point or in terms of your interest.So anyway, we feel great about the popularity of our brands. Interesting the Disney brand globally has never been more popular. The other thing I want to say is that the brand studies that we've seen or brand research that we've seen in the United States suggests that interest and affinity in the Disney Brand has actually risen nicely, thanks to Disney Plus particularly among young people.I think a lot of that has to do with the relevance of the platform, the technology, the manner of presentation. I think it's a loud statement about what's going on in the world today in terms of consumer tastes, particularly young people, which is why the demographics of Hulu were substantially younger than the demographics on some of our peers in the linear networks, et cetera, et cetera.In India, we're going to launch bundled with Hotstar directly bundled meaning it's Disney Plus Hotstar as a product. We're not giving specifics about price at this point, but expect that there'll be two primary products brought into India. One will be more premium in nature that will include the entire library, so with the original programming and the other one will be more basic that will have the library and not the original programming. Priced for the market and launched at a very peak period of time, so the IPL, the Cricket League. And so, we think it's an opportune moment, we take advantage of the presence of Star in the market and the millions of subscribers that they also have, we take advantage of the sports tie-in, and we use the interface and the technology that includes the billing that already exists to launch a service, we believe, under very, very optimal circumstances.

[Operator:]

Our next question comes from Alexia Quadrani with JPMorgan. Your line is now open.

[Alexia Quadrani:]

Just following up on your color or your commentary on Disney Plus. Is there any more you can share with us in terms of what the - where the subscribers came from meaning and sort of like what type of subscriber they are, meaning like how many maybe a year-long or multi-year subscriber deal versus month-to-month, and sort of how many sort of came in for use versus on wholesale partnerships like Verizon and such. I don't know how much color you can share there?And then my second question is just on the studio, where you've had just incredible success there and another record year,'19, I guess your conduct - your conviction of that success can continue, especially when you're taking account kind of pipeline now from the Fox Studios?

[Robert Iger:]

First of all, regarding Disney Plus, and the fact that the ARPU by the end of the quarter was $5.56 on a $6.99 subscription suggests that while there were discounts in the market in the packaging that existed enabled consumers to buy in at lower prices. We did extremely well, basically with the Direct-to-Consumer Package, and ARPU that was higher and so the 26.5 million and subscribers came roughly 50% directly through Disneyplus.com, for instance, where not only weren't we revenue sharing with others, but a lot of those subscribers, or many of them may have bought a year-long service or even a three-year, many of them bought basically the month for the full - for the full price.About 20% of those subscribers came from Verizon, and the rest came from the variety of other services, that is stripping the app, and including the iTunes platform. So we were actually very pleased with the diversity of, basically, routes that people took to get to us and extremely pleased with the ARPU.Now also understand that the vast majority came from domestic because we only launched in a couple of territories, Australia, New Zealand, and the Netherlands and Canada with this, and so, these are mostly domestic subs. But, I think it's all very, very positive story in terms of the - the manner in which people bought this and as I said earlier, the ARPU. And the other thing that we noted that was that the bundle with ESPN and with Hulu was very helpful in terms of lowering churn rates.And as I said, in my remarks, both the conversion from free-to-pay, as well as the churn rates were much better than we expected they would be - much better than we had estimated they would be before we launched.And I think, again, that's the result of - that starts with the product and I think the end of - the user interface also got incredibly high marks in terms of the ease of use, the easy navigation, the quality of the product, the value of the brands and the price point which we can't ignore, a very accessible price point, priced purposely because of the brand and our desire to be as accessible as possible on a broad basis.Regarding the studio, look, a $11 billion plus Box Office year from the Disney studio alone is not something we're likely to repeat right away, but as we look ahead, we're extremely pleased with the long-term prospects for our studio and the slate. I could name a number of titles, but this year, for instance, we have to Pixar titles with Onward and Soul in the marketplace.We've got a couple of really strong Disney branded Jungle Cruise and Mulan. We have obviously Marvel with Black Widow, initial at first, and then Eternals at the rest of the - at the end of the year and you can imagine, a lot of development from all of those.On the Star Wars front, were it - as I had mentioned in previous calls, we're taking a bit of a hiatus in terms of theatrical release, we finished the nine-episode Skywalker Saga, and we're developing both television and features.The priority in the next few years is television with The Mandalorian Season 2 coming in October, and then more coming from The Mandalorian thereafter, including the possibility of infusing it with more characters and the possibility of taking those characters in their own direction in terms of series. And then, we have a prequel to Rogue One in an Obi Wan series, also in development.So the priority for Star Wars in the short-term is going to be, I'll call it television for Disney Plus, and then we will have more to say about development of theatrical soon after that. But 2020 is not going to be the same as 2019 for the studio. But as we still expect a very strong year, and given the franchises and the talent that we both work with, and have working for us, we are confident that the studio is going to continue to be a strong driver of operating income for the company, both on the movie front, but also as a great supplier of product both original and secondary market for Disney Plus and for Hulu, by the way.

[Operator:]

Our next question comes from John Hodulik with UBS. Your line is now open.

[John Hodulik:]

Bob, couple of questions, follow-ups on the DTC business. First of all, on Disney Plus, the model definitely, it seems to be holding up, you talked about, ARPU churn, content spend, the target is for 60 million to 90 million subs, and 24 million in profitability, because of this, we're halfway to the goals, in the model, the metrics seem to be hitting. Can we expect the profitability to come in sooner than the 24 million number?And then, if we just focus on the U.S., I think you guys gave guidance for 20 million to 30 million subs in the U.S., and again, you're sort of at the high-end, or around the high-end of that guidance. What are you seeing in terms of the TAM, are you just - is the TAM bigger than you thought and could that potentially be the case in the rest of world or are you just - just penetrating the market - as we then thought?

[Robert Iger:]

I think, John, you touched - when you touched on it related to the U.S. I was actually going to bring up the 60 million to 90 million included obviously two-thirds of that subs that we were going to get from outside the United States, where except for just a few markets we've not even launched yet.So, it's far too early for us after, basically, a quarter and a little bit more under our belt to change our guidance, having not launched in any of the big international markets yet. What we know about those markets, not in any way pour cold water on them, because we know that those brands are strong in the markets, and this product is already working.The interest in streaming, in general, in those markets, isn't as high as it has been in the United States. I'm talking about across the world. So we have probably more of a marketing effort and I'd say, more of a challenge to launch in those markets, not that those markets haven't been already seeded with streaming, we know Netflix has done extremely well Internationally.But we're just beginning there, and I think it's just premature for us to take our guidance up. What we do know, of course, is that we have reached a number in the United States that since you did the math that would suggest that we're at the number that we predicted we would be in year five, just after a very short period of time, and I don't know whether that is a statement about the total available market or the quality of the product or both, or the price. It is just the way I think a number of factors that I've touched upon, and I just - I'll go over them one more time.Those brands are extreme - not only are they high quality, It is a very unique product. I was asked earlier on CNBC about whether I felt threatened by competition, there's obviously more competition coming into the space, But there isn't any competition that is like ours, like our product, because of the investments that we've made in those franchises and the quality of the product that we've made over the years and we're continuing to make.So we're very differentiated, we're extremely well priced. And we created a service tech - from a technical basis and the user interface basis, that is really working. There's an elegance to it and an ease, and we feel great about it.So our - as we look ahead at that guidance, and I can't say that we won't change in at some point, but it's - we don't believe that it would be prudent for us to adjust it at this point, and we have a long way to go.

[Operator:]

Our next question comes from Doug Mitchelson with Credit Suisse. Your line is now open.

[Doug Mitchelson:]

I am going to keep going on Disney Plus but, Bob, I think congratulations are - in order on the success of the service, so far. A couple of things, in terms of consumption patterns for the Disney Plus service, is this a service households are using every day or they're using every week, and any sort of issues or thoughts around consumption levels after the initial sign-up period is - where people can then leave the service, a bunch of them starts to fade after that or did you find that it stayed relatively level?And I am interested, Bob, you talked a lot about in India, but interested about the launch in Europe broadly and contrasting it with the first series of markets. So is the content that is available on the service in the U.S., also, sort of the same content available in Europe, and any sort of differences or nuances in go-to-market, marketing and distribution efforts in any of those countries that we should be aware of as we try to gauge how successful Europe might be? Thank you.

[Robert Iger:]

We measured - in terms of the - I'll call it engagement, we've measured recency, which is essentially how many people are - used it recently, are active users on a weekly basis, that's extremely high. We measure frequency, which is a number of times people stream per week since launch and we measure engagement, which is basically how many hours people have streamed on a weekly or basis per subscriber, and I don't think we should get into all those details right now, except to say that in all three cases, recency, the percentage of people that it - are weekly active users, very, very high.The same thing is true with frequency the number of average days that they actually use the service, and again this is something that we've seen over both - basically, the first quarter. I think these numbers probably relate to the first quarter and not necessarily since December 28, that's also very high and the engagement, or we were looking at multiple hours a week stream, per subscriber. I can give you that now, that's in the six hours to seven hours a week range, very, very high. Now Christmas was in there, time when a lot of families were off, that may have actually skewed that a little bit high, but again we're seeing consumption, I'll call it across the board, and in sum, it is quite interesting to us.Pixar has done extremely well, as a, for instance, including their shorts, musicals are doing very, very well. Obviously, great interest in some of the big titles that have recently come on the service. Toy Story 4 just came on. I think, Rise of Skywalker later in the year. Lion King came on, Avengers, I mentioned Endgame. It's kind of, I guess, and without, in anyway, sounding like we're bragging, it validates the concept of putting those brands together and collecting library.As we look to the rest of the world, there really isn't anything to cite in terms of encumbrances that would be an issue. We're in relatively good shape there. I'd say that we have some work to do in terms of local product, because there are quotas in certain markets that we have to meet. But the universal appeal of - of this product is - is pretty strong. You do have to factor in that, in some markets, there's lower broadband penetration. And so you don't have the total available - the total available market is not as high as it is in other markets.Netherlands was very high. That's why we decided the launch there. South Korea is very high. But there are other markets, obviously, India being one, that you have lower broadband. But huge opportunities - huge opportunities for us, Internationally, and that's where that Disney name and that family nature of the product, I think, will resonate extremely well.

[Operator:]

Our next question comes from Todd Juenger with Sanford Bernstein. Your line is now open.

[Todd Juenger:]

One quick one on Hulu, as far as I could and then, I'd love to talk about the Parks for little change of break here. So just on Hulu - on the Hulu SVOD ARPU, that $13-plus number, struck - stuck out to us, it's - it's even higher than the non-advertising Hulu - SVOD list price. So just wondering if you could share what's going on with advertising ARPU on the Hulu SVOD, it must be a big number. And anything you could share there would be helpful to understand.And then on the Parks, a couple of really minor ones, and then a bigger one. Christine, if you could remind us, for the U.S. domestic Parks, what percent of attendance comes from international visitation, and particularly from Asia, and if you're thinking about that at all, when you think about the near-term effects of the virus and the travel curtailments there?Longer term, Bob, I hope you'll accept this question, I'm not - just wondering how you think about the growth function for parks. It's a question we get from investors all the time it's super important. We'd love if you just share your thoughts, because I think what investors look at is so much of revenue and income growth has come from increased spend per guest in the form of either pricing or merchandise and food volumes. The question we wrestle with is gee how long can that keep going, right?Is there some point at which either your consumer gets priced out or - just competition sets in or that sort of thing and [indiscernible] sets in. So without asking for formal guidance, I just loved - is there still more opportunity on the yield side or how long can you push that, are there other ways the parks can grow over time? Thanks.

[Lowell Singer:]

Okay thanks, Todd.

[Robert Iger:]

I think we go first because we want to do is Hulu SVOD ARPU?

[Christine McCarthy:]

Hulu SVOD ARPU is very strong. The ad-supported, the product is priced at $5.99 and - but the ad-supported part of the equation, it makes the ARPU come out even higher than the ad free. Most of the subscribers subscribe to the ad-supported. So that's a good balance of the ARPUs when you stack them up next to each other. Let me take the domestic park question on international visitation.We have typically run in the 18% to 22% range for guests outside of the U.S. We're at the low-end of that range, maybe a tick below right now because some of the South American markets, because of the disruption in those economies have had lower visitation. The two I would cite, would be - that won't be a surprise to anyone, would be Brazil and Argentina. In general, the parks do not have a significant amount of visitation from Asia.When you look at Walt Disney World, no Asian market even factors into the top five, and the top one being the UK, which I think everyone knows that. And then we have Brazil, Canada, Mexico and Argentina, that is for the East Coast, Walt Disney World. And then when you look at Disneyland, Canada is a very strong market for us, no surprise, just given proximity to the West Coast markets of Vancouver.And then, we also have Mexico, Australia, and the only market that even breaks into the top five would be Japan and it's actually a very low single-digit number for Disneyland. And so far, there has been no evidence that there is any impact on the intent to visit, or people fulfilling reservations or commitments from Coronavirus.

[Robert Iger:]

And regarding other growth possibilities for the parks, it's really going to be a blend. We continue to invest capital to build out new attractions, new hotels, new restaurants. We've announced many different projects. Obviously, we just opened Rise of the Resistance and that's done extremely well, not just in terms of attendance but per capita spending has been quite high. We have a variety of different Marvel projects underway.The Avengers project in California, and a number of Marvel related things in Florida, including a Guardians of the Galaxy E-ticket attraction. So, we're going to continue to build out against the Company's most popular, or using the most popular franchises. And as I mentioned, build out hotels as well. We just opened one Riviera Resort we're opening one in Florida. We have a Star Wars themed hotel coming, a lot of activity there.We will look for international opportunities as well. They still exist, and obviously, the virus has slowed things down a bit, but we expect that when that passes that we will start looking expansively in other territories. And of course, lastly there is a yield story to tell and that's been exceptional that is a combination of things. But clearly, far more sophisticated, more thoughtful pricing strategy has helped a lot.Taking advantage of peak periods and pricing leverage but also making the parks more accessible in non-peak periods for others at substantially more accessible prices.

[Operator:]

Our next question comes from Steven Cahall with Wells Fargo. Your line is now open.

[Steven Cahall:]

Just two quick ones but maybe first on Disney Plus. It seems like you priced this exactly right, given the market response. I would think you could kind of make life harder on some of your more expensive streaming competition like Netflix or HBO by keeping the price low for as long as you can and keeping that engagement with customers. So just kind of curious how you're thinking about the price of Disney plus long-term does it go up over time or do you sort of keep it as it is?And then, Christine, just wondering if you could maybe give us a little more color on how to think about the studio for the year, there is just a lot of moving parts there. I know theatrical is impossible to predict, but then you've also got the synergy with the Fox Studios and the transfer pricing. So, how do we kind of think about the income production of the studio this year given all those different pieces? Thanks.

[Robert Iger:]

Yes Steve, we haven't had a conversation about price since we launched except that we felt that our pricing strategy has worked. We really are not focused right now on price at all. We believed all along that we would have an opportunity to address pricing as we added more content, really original content, and the price-value relationship went up to the consumer, but it's not a priority of ours right now. We're still as we’re very new with this.So, I think it would be premature for us to start talking about, and don't expect anything in the near term, very near term from a price increase perspective. Christine, you want to take the question about the studio?

[Christine McCarthy:]

Yes let me take that. As Bob already mentioned our studio, our legacy Disney studio had nothing short of a truly phenomenal year six movies, over $1 billion in the global box office. That is an incredibly hard - seven movies over sorry about that. seven movies over $1 billion, that's an incredibly hard comp on a year-over-year. So, we will still - we still believe that our studio will be very successful this year.And we have confidence in their content resonating with consumers on a global basis. Bob already mentioned some of the big movies that we have coming out, and we feel really good about those. As it relates to transfer pricing of content, the studio definitely will benefit from the content sales to DTCI. The Pay 1 windows and we had quite a few movies come out in fiscal 2019, that will make it into the Pay 1 window in fiscal 2020, and that will also have a positive impact on the studio.

[Operator:]

And our final question comes from David Miller with Imperial Capital. Your line is now open.

[David Miller:]

Bob, as you know, I've covered you guys for a long time, and I've covered the theaters for a long time. And I've probably heard you say maybe a dozen times over the last four years that you are 100% committed to the theatrical window, going forward, despite the launch of Disney Plus. The problem is that, and I would never accuse you of being disingenuous, you know that but the problem is that the market doesn't really believe that given 52-week lows on excuse me AMC and Cinemark and to some extent Marcus.So on this call, would you be willing to kind of recommit to the theatrical window or I should say, what would you have to say going forward about your overall commitment to the theatrical window given your market leadership in that regard? Thanks so much.

[Robert Iger:]

The theatrical window is working for this company and we have no plans to adjust it for our business. Your comment about how those companies are faring on the market, I think, maybe is a reflection of how the other movie companies are positioning their films and their business we're not the only movie company. We are the biggest Box Office, but we're not the only movie company and I suspect that it's not due to us or either a lack of conviction on our part or any suspicion that we might not be - that we might not be telling the truth.

[David Miller:]

Right.

[Robert Iger:]

But we're not - it's working for us, and we have no plans in the foreseeable future to change it that requires.

[Lowell Singer:]

Thank you, David, and thanks everyone for joining us today. Note that a reconciliation of non-GAAP measures that we referred to on this call to equivalent GAAP measures can be found on our Investor Relations website. In our remarks we provided estimates of the performance of certain 21CF assets in periods of the prior year.These estimates are based on an analysis of these records, but are nonetheless unaudited estimates and are not precise measures of historical results before the acquisition. Let me also remind you, certain statements on this call, including financial estimates may constitute forward-looking statements under the Securities Laws.We make these statements on the basis of our views and assumptions regarding future events and business performance at the time we make them, and we do not undertake any obligation to update these statements. Forward-looking statements are subject to a number of - risks and uncertainties, and actual results may differ materially from the results expressed or implied in light of a variety of factors, including factors contained in our Annual Report on Form 10-K, quarterly reports on Form 10-Q and in our other filings with the Securities and Exchange Commission.Thanks again for joining us. Have a good rest of the day.

[Operator:]

Ladies and gentlemen, this concludes today's conference call. Thank you for participating. You may now disconnect.