Greenhill & Co., Inc.
Q2 2011 Earnings Call Transcript

Published: 19 Jul 2011

[Operator:]

Good day, and welcome to the Greenhill & Co. LLC Second Quarter Earnings Conference Call and Webcast. [Operator Instructions] Please note this event is being recorded. I would now like to turn the conference over to Richard Lieb, Chief Financial Officer. Mr. Lieb, the floor is yours, sir.

[Richard Lieb:]

Thank you. Good morning, and thank you all for joining us today for Greenhill's Second Quarter 2011 Financial Results Conference Call. I'm Richard Lieb, Greenhill's Chief Financial Officer. Joining on the call today is Scott Bok, our Chief Executive Officer. Today's call may include forward-looking statements. These statements are based on our current expectations regarding future events that by their nature are outside of the firm's control and are subject to known and unknown risks, uncertainties and assumptions. The firm's actual results and financial condition may differ, possibly materially, from what is indicated in those forward-looking statements. For a discussion of some of the risks and factors that could affect the firm's future results, please see our filings with the SEC, including our annual report on Form 10-K, quarterly reports on Form 10-Q, and current reports on Form 8-K. Neither we nor any other person assumes responsibility for the accuracy or completeness of any of these forward-looking statements. You should not rely upon forward-looking statements as predictions of future events. We are under no duty to update any of these forward-looking statements after the date of which they are made. We now like to turn the call over to Scott Bok.

[Scott Bok:]

Thank you, Richard. Let me start with a comment and the fact that we're having this call, which is our first quarterly conference call after 7 years as a public company. Previously, we relied on detailed quarterly press releases and about 8 to 10 investor conferences a year as our primary means of communicating with investors. Going forward, following the suggestions of some of our investors and analysts, we'll also be doing a quarterly call. Our goal is to try to give investors a better sense of the state of our business, but without giving any kind of forward guidance or projections. Also, given the confidential nature of our business, we'll talk about the business generally rather than say much about specific clients or transactions. Turning to the second quarter results that we just announced, we're pleased with what we achieved in a number of respects. We always caution not to read too much into any one quarter but for the second quarter, our Advisory revenue was up 38% versus the prior year. Our total revenue was up 9%, and our earnings per share was up 21% versus last year. The total revenue and EPS figures were up less than the Advisory revenue figure because last year we were still, to some extent, in the Merchant Banking business and therefore had more revenue in that area than we did this year. Looking at the year-to-date information, which is more meaningful given quarterly volatility, our Advisory revenue was up 36%, total revenue up 5% and EPS was up 8% versus last year. I think it's worth commenting on the fact that we again achieved considerably more revenue than was expected based on transaction headlines or league tables. This level of revenue was not from one big undisclosed fund placement assignment, nor was it from one big hidden M&A and restructuring revenue event the databases or analysts missed. Our revenue this quarter essentially all came from our historic core business, which is advising major corporations around the world on important transactions or related matters. We simply do more of that than is apparent in newspaper headlines. Our quarterly revenue results reflect well the current state of our business, which is that it has improved quite considerably from the depths of the M&A downturn that it has developed quite impressive breadth. For example, our number of million dollar revenue clients for the first half increased 80% compared to last year. You may recall that for the full year last year, it was up 33% from the year before. We're clearly covering a lot more clients than we used to in more sectors and regions around the world, and doing so successfully. In achieving what has been a strong first half in the Advisory business, we have seen good contributions from each of North America, Europe and Australia. We list in our press release 11 transactions that were completed during the quarter, including 2 quite large ones. But it's also increasingly clear that we're earning a significant portion of our revenue in ways that aren't apparent from M&A announcements or completions or from the league table data, which we've warned many times can be quite misleading for a firm of our size. On the transactions that you do see us associated with publicly, I'm pleased to say that we've had quite a major advisory role in pretty much every situation we've been involved in. In terms of the current level of activity, we are pleased with the breadth of our business. With respect to the quality of our current assignment list, you would have to go back multiple years to find as good a breadth of large important high-probability assignments. On the Corporate Advisory side, business remains strong in Australia. We're seeing more activity in Canada and Germany that has been the case for a while. The U.K. and Europe generally are finally seeing the beginning of a rebound in activity and given our historic strength in that market, that bodes very well for us. Lastly, where we are probably seeing the most significant increase in activities in the U.S., where almost half of our managing directors are based. Also noteworthy is how much of our business is cross border, including the 2 largest transactions listed in our press release and many of the others. We have built a seamless organization, all wholly owned and operating under the Greenhill brand that covers nearly all the geographic markets, where transaction activity typically runs at a fairly high level. As we go forward, we will look to continue to expand that global network of Greenhill managing directors. I'll talk to the Corporate Advisory business. It's worth mentioning our Private Capital Advisory business. This business, which operates globally and consists of a real estate side and a private equity side, does fund placement for private fund, handle secondary transactions in private funds and provides other related Advisory services. This business was a very modest contributor the last couple of years, in part because the real estate side only arrived at the firm mid-year last year, but it looks that could make a meaningful contribution this year. Over time, we think this could be a major business for us, with productivity levels comparable to our Corporate Advisory business. However, given the security flaw issues related to private capital raising, our involvement in transactions in this area will be less visible to the public than our role in M&A transactions. Speaking of productivity, it's important to note that while our Advisory revenue is up very substantially from last year, and last year as a whole was up 17% from the year before, we continue to be at much lower productivity levels than we enjoyed for most years of our history. Based on what we can see with respect to our relationships and client dialogues in our various businesses, regions and industry sectors, we see no reason that we can't get back to the productivity levels consistent with our history as and when M&A activity rebounds to -- continues to rebound from a level that continues to be well below historic norms and as our Private Capital Advisory business continues to mature. And when we talk about productivity, it's important to note that while revenue per managing director is a useful statistic, we have also always looked closely at revenue per person. That figure was typically $1.5 million to $2 million per employee before falling to about $1 million, as M&A activity plummeted in the financial crisis. Before I turn it back over to Richard, let me say that over our 7 years as a public company, we've sought to achieve 4 things, and I think we've succeeded in each

[Richard Lieb:]

Thank you, Scott. I want to touch on 4 broad topics

[Scott Bok:]

Thanks, Richard. Given that we're in a people business, it's probably appropriate to always make a comment on people issues. In a couple of cases recently, the loss of a Greenhill partner received news coverage, so let me comment on that. First of all, it's probably inevitable, but when you have people whose been in the firm for 15 years, you're going to have some of them leave. And when you've added 40-plus managing directors in just 3 years, you can probably also expect some departures over time. But it's wrong to assume that every departure is unplanned or unwelcome, or that even the ones that are unplanned will have a material impact on a firm of our size. No well-managed business is or should be static. When you see people leave Greenhill, it can mean one of several things. In some cases, senior people leave as part of a normal, well-planned and healthy transfer of responsibility and opportunity for the next generation. In other cases, we ask senior people to leave because they weren't successful with us. And still others, they leave without being asked because they realize themselves that they weren't that successful with us. And lastly, in some cases, given the size we've achieved, it's inevitable that we will occasionally lose someone we wanted to keep simply because a competitor offered him or her materially more than his or her productivity for us merits. It is simply not appropriate for a variety of obvious reasons for us to explain publicly what category each departure that occurs falls into it and we won't be commenting on future departures other than those of executive officers of the firm, none of which are certainly currently anticipated. What I can tell you is this

[Operator:]

[Operator Instructions] And our first question comes from Daniel Harris of Goldman Sachs.

[Daniel Harris:]

I wanted to touch on what you had said, Scott, with regards to the divergence from the publicly available deal statistics. I completely understand how your business is much more diverse and broad than it has been. But there's been a real divergence over the last 2 quarters, and I think what I'm just trying to get my arms around is we can all look at what that's been historically, and rush to our own conclusions about why it was that way in the past. But what do you think is driving that change more recently and that most notably, over the last 2 quarters where there's been a real divergence from what we've seen historically?

[Scott Bok:]

That's a little bit of a hard one for us to figure out. But certainly there is, you're right, an incredible divergence. I mean, never seen a Dealogic report. I didn't even know what they look like, but I did read in one of the analyst's reports that we beat their number by 3 -- about 300 percentage the last 2 quarters. And I know -- I mean, just to prove kind of how crazy the reliance on that source is, I mean the Wall Street Journal article this week, which on the whole I thought was a positive article for us. It actually has a graph, a chart that says Greenhill's M&A from -- revenue from M&A Advising in 2007 they showed what looks like about $250 million. The real number was $370 million that year. Year-to-date, it shows like $40-something million; the real number is more like 3, 3.5x that. So people just kind of slavelessly rely on that Dealogic data, which obviously just doesn't fit what we do at all. Now I get -- how would I say this? We do certainly have a growing list of retainer clients who pay us apart from transactions. Restructuring, historically, has been a business that you sort of earn a fair amount of revenue without it showing up on league tables and announcements. But I think, as we all know, that's a fairly quiet business right now. But we are doing more things that are kind of financing-related advice. I think everybody knows we're advising the U.S. Treasury in relation to AIG. We have actually 3 different assignments right now all relating to infrastructure with New York City. We have other projects that involve financing advice around the world, advising governments in New Zealand, in Norway, in Australia and a lot of that doesn't show up. I mean, frankly, I'll admit, I mean, it feels to me like 90% of what we do is what I would call M&A. It's what I would have called M&A, now even when I was at Morgan Stanley as well. It's obviously a broad definition of corporate advice. But clearly, it's adding up to a lot more than what a simple sort of league table check can show people on the outside.

[Daniel Harris:]

Okay. And then just following up on that, one of the other metrics that we look at which does -- is based on your historical revenues is the efficiency per banker, which you did touch on as well, Scott. But how should we think about getting back to a historical level where you guys have been prior to the expansion of the last few years where north of $10 million per advisor was something that seemed pretty in line for a few years. We're less than half of that now. I mean, is that they way you guys think about where we are in this cycle, that we're less than halfway to sort of peak levels? Or is the expansion into new areas, geographies and people likely to depress that number versus what it had been, I think, historically something close to the $13 million?

[Scott Bok:]

I mean, $13 million is certainly more like the peak. And there were a number of years that's sort of $10 million or higher. And I think over time, if you'll look, and I think we've put some data and some presentations, it's kind of $7.5 million or $8 million is more of an average figure for us, which is still, as you said, is well below where we are today. I do think with your -- you're probably accurate to say that our view is that we're probably halfway back to what's a good M&A market. Clearly, it's picked up some. We've benefited from that, but it's got a long way to go. I mean, I think another way to look at it is if you kind of broke our business down into various segments, I mean, I would say we're at a very good level of productivity in Australia. I think we're probably pretty close to a very good level of M&A and the productivity in North America. We're certainly not there in Europe. It's been a much tougher market for reasons we're all familiar with. And likewise, the Private Capital Advisory business, which is fairly new to us, has been an area that's been less productive. So you can kind of get there 2 ways back to the historic level. One is just rising tide, flips all boats, there's lots more M&A activity, and we've continued to grow our market share some. The other way is just to take frankly where we are now and say, "Well, what if North America and Australia stayed about as they are today? What if Europe got back to something like a norm, not even a peak and what if fund placement, Private Capital business got to where it's capable?" Well, I mean, that would get us there as well. It's not like we need to get dramatically better in the U.S. The lagger is really our -- in terms of M&A activity really are Europe, and then of course the Private Capital business.

[Daniel Harris:]

Okay. And then just last for me. So on the sort of the environment out there, I think you point to a couple of reasons why M&A should continue to grow from here. I think we all see some of those and yet in the past few quarters, it seems like there's some pretty big overhangs with regards to what's going on in the U.S., but most notably in Europe. How would you characterize CEO conversations that you're having now versus, say, a quarter or 2 quarters ago? Are they incrementally more nervous with regards to growth opportunities, or even what the near-term future looks? Or are they looking past the near-term thinking that there will be solutions and that they'll be able to make deals that are going to be very accretive for shareholders 6 to 12 months out?

[Scott Bok:]

I mean, I can only speak for us. I can't speak for the whole market. So I don't know necessarily what others are seeing out there. But I would say that -- and clearly, I said that we have the best kind of assignment list in terms of size and profitability, and some of it we've had in multiple years. Last year, I would say in sort of the spring, early summer, we definitely kind of got off to a great start last year. And then there was the real sag and all kinds of worry about European sovereign debt. And that obviously is what led to QE2, et cetera, and then things finally picked up much later in the year. I haven't seen anything like that so far this year. And in fact, we're -- I don't know if these people are kind of tired of waiting around, or they feel like they've cut their own cost as much as they can, or if they're sitting with a big cash balance and an unlevered balance sheet and simply want to -- and of course, most companies are performing quite well right now, and they simply want to do something to grow their business. But for whatever reason, we really are seeing quite a lot of interest among CEOs and boards in doing significant strategic transactions. And at least as of yet, we've not seen any pullback in the same way that we saw kind of at the beginning of last summer when the sovereign debt crisis in Europe first hit.

[Operator:]

And the next question we have comes from Devin Ryan of Sandler O'Neill.

[Devin Ryan:]

Can you give us the number where head count ended for the quarter? I didn't see that. And then, if you can, also just talk a little bit about your outlook for adding senior bankers from here, types of conversations you're having? Are there any sector or geographies that are priorities? And then would you look at the additional acquisitions some more to maybe what you did with Caliburn to achieve that?

[Scott Bok:]

Sure. As far as head count for the year, I think as I said, or at least maybe it was in the Wall Street Journal article or something, but we're down kind of like single-digit percent. We're down very modestly from year end. I mean, you know some of the departures, there have been others at various levels. But it's really very, very modest in the scheme of things. It truly is. So I would bet we will end up finishing this year at roughly the headcount we've started this year, which is probably not a bad place to be, given that for the 3 prior years, we went up by about 2.5x in terms of number of MDs, and quite substantially in terms of overall personnel as well. And I think that, that was very clear at the beginning of the year and said, "Look, we've had 3 extraordinary years. We had 28 managing directors the day Bear Stearns failed, and we obviously grew dramatically 3 years in a row. The third year being through Australia and then sort of getting more into fund placement, and then we said at the beginning of the year this is going to be a year of digestion, it's going to be a year of integrating all those people and getting the most we can out of them. And we don't think it's going to be as great a recruiting environment for a whole bunch of reasons as it was during the crisis when people were -- the very best people were very anxious to find new homes. Now that's not to say we're not still talking to plenty of people. I think we've said for a long time that Brazil, in particular, is quite a high priority for us. And I do still expect we will do something in the relatively near term there. I don't think it will be something of the size we did in Australia simply because I don't think that thing really exists in the sense of a 10-year old firm that's highly profitable, and would be a perfect fit with us. But I think we'll do something down there. We are having selected other conversations with senior bankers. And my guess is, just frankly because of continued tribulation at some of the bigger firms, that next year will again be quite a significant recruiting year for us, because I think after maybe a year of it seeming like things might get better, I think people will continue to be disenchanted with the bigger firms, and so I think after kind of a 1 year integration and consolidation period, I think we'll be back to a pretty meaningful level of MD growth next year.

[Devin Ryan:]

Okay, great. And then just maybe kind of just digging into Europe a little bit more. In the U.K., specifically, it just represented such a big percentage of where your resources are allocated. And obviously, it was a big tailwind for you in the prior cycle. You noted that things are starting to pickup there a bit, but we all know the issues that are over there. What do you see as the potential for activity maybe just in Europe broadly, but also in the U.K. just in this cycle, how big you think Europe could be? Will it be bigger less than in the prior cycle?

[Scott Bok:]

I think the potential there is going to be in fitting with history. I mean, as I've talked to you and many others over time, I mean, I've lived through 3 down cycles and I can tell you that over the course of my career, and I can tell you that at the bottom of each one, it felt like you would never get back to the prior cycle peaks, and yet you always do, and the peak always ends up being even higher. I think that's true in Europe. I mean, I don't think the major companies based in Europe can stand by while the companies, their competitors in the U.S. and increasingly in the developing markets are consolidating their industries around the world. I think they will have to step up and participate in this consolidation. And I think there is, as I alluded to in my comments, I think there is evidence that, that is starting to happen. We do have quite a number of attractive assignments in Europe and particularly the U.K. right now. I mentioned Germany is quite strong for us this year, probably considerably stronger than last year. But the U.K. is where we really had an extraordinary market position. I still think we have every bit as good, if not better, of brand name instead of relationships here. And I think over the course of this cycle, really even starting in the latter half of this year, we're going to see an increasing contribution from the U.K.

[Devin Ryan:]

Okay, great. And then just lastly for me, in terms of the remaining Merchant Banking portfolio, did you guys have a timeline, I guess excluding the Iridium position, do you have a timeline for when you would like to liquidate that? And could you potentially do another sale like you did with the other portfolios?

[Scott Bok:]

Let me about comment on both pieces of that. The non-Iridium is actually fairly small now, I think. And it consists of a whole lot of different investment, some of which are quite old, some of which are much more new. I think that will just kind of naturally liquidate as those funds liquidate. I don't expect another transaction like the last 2 that we did. But I do think we'll get cash out of that portfolio even as soon as this quarter is very -- and it will be in lots of smaller transactions as things get liquidated and sold and levered up and recapped, and whatever the fund managers decide to do. But I think that will naturally over the next kind of probably roughly evenly over the next couple of years, I think, will just be pretty much completely liquidated to a very, very large extent. Iridium, we continue to believe is a company that's performing extremely well, and that we think is worth a lot more than what's trailing at the markets, but we're not in a hurry there. I think over time, obviously it's not a core holding for us, so I don't expect us to be holding at 5 or 10 years from now, but we think there's really a lot more upside potential there. And so we chose to liquidate some of these other illiquid investments, so that we would be able to really hang on to the significant stake in Iridium until more of that value is realized.

[Devin Ryan:]

Okay, great. And then just lastly in terms of your pipeline and you think about your pipeline currently, the stuff that has not been announced, is there still a runway, you think, of deals getting announced that could close this year? Are we -- you're starting to get to the point where we're starting to talk about in 2012 deal -- the recognition of the revenues from deals you announced?

[Scott Bok:]

I mean, certainly, there are sectors and situations where it's a highly regulated situation, maybe there's going to be a long anti-trust review or something where if you announce the deal tomorrow, it's not going to close this year. But in a large majority of case -- let's put it this way, I think we already have, and we kind of keep a rolling fourth quarter forward pipeline of every assignment we're working out, what the fee is, what the probability of success is. I mean, our first quarter already is a long, long list. So there are many things where the way it's going to play out, we think it's going to be next year, and that's great. We're building a great pipeline, I think, for 2012 and beyond. But there's still plenty of things. I mean, most of the things probably that we think have a good chance to close in the latter quarter of 2011 are things you haven't even heard about yet. And we don't need to have a huge percentage of those close. We have a lot of them there. And in many cases, you can announce the deal, if it's a private deal even as late as October, November, and have it closed this year. If it's a public deal, buying a public company, taking it private, that probably has to get done by, announced by something like the end of September, to have a shot at getting it done this year. So there's still plenty of time to play for making 2011 a good year.

[Operator:]

The next question we have comes from Doug Sipkin of Ticonderoga.

[Douglas Sipkin:]

Just had a couple of questions and then a clarification, maybe just first for Rich, I just wanted to make sure I got the numbers right. You did indicate that you did well over the credit line, I guess, and now you guys have a $50 million of credit line through April 2012?

[Richard Lieb:]

Actually, just to be clear, the facility goes through at April 30, 2012. The availability is now $60 million effective September 30 of this year. It will be reduced to $50 million for the duration of the facility.

[Douglas Sipkin:]

Okay. So it goes to $50 million in September?

[Richard Lieb:]

Correct.

[Douglas Sipkin:]

Okay, perfect. And then just to comment about the fixed compensation, and I definitely appreciate the disclosure. I think, Scott, you said, it will be about $120 million this year versus $160 million last year?

[Scott Bok:]

Yes. I did say $120 million for this year. I don't think -- I think $160 million sounds considerably high for last year. I don't remember exactly what it was, but it's going to be material...

[Douglas Sipkin:]

You're right, actually. I apologize, you're right, because I'm assuming it's right. Okay. You're right. It probably wasn't $160 million. Look, I'm sorry, go ahead.

[Scott Bok:]

So it's going to be down meaningfully from last year, but it was not $160 million last year. So it's not that meaningful.

[Douglas Sipkin:]

Right. I got you. Now it's a fair point. So how, I mean, how -- I guess from -- with the employee headcount flat, how is that happening?

[Scott Bok:]

Well, there's as a result of -- I mean, it's kind of the comment I made. When people leave us, I mean, the kind of the point I'm trying to get across really in terms of some of the departures, not only does -- not every departure had a revenue impact, but they do have, actually, quite a significant cost impact in terms of restricted stock that gets forwarded -- forfeited. And obviously, people stop collecting the salary once they're gone as well. So if you look at the impact of those 2 things, it's quite substantial. That is what is -- that's kind of the main thing that's really reducing considerably our fixed cost for this year.

[Douglas Sipkin:]

I get you. So you're actually allowed to sort of, from an accounting standpoint, reverse some of their restricted stock expense, I guess, you've taken against them, is that right? Because I was under the understanding that you'd just have to sort of like change your forfeiture assumption.

[Scott Bok:]

No. I mean, if you've given somebody some restricted stock, and let's say he's owned it for a while and it's 80% amortized from our share count, and then he leaves and gives all back to you, I mean, I don't know how it would make sense to account for that other than the fact that you get that money back. And it effectively floats back into your compensation pool to get paid to the people who remain at the firm.

[Douglas Sipkin:]

Okay, great. And then just -- can you talk a little about maybe the competitive landscape? I know you guys have always talked about the big, bold bracket firms being competitors. I don't know that that's changed, but it does feel like there's more and more small, sort of private boutique shops popping up. What are your guys' view about them being sort of competitors? I mean, is it increasing the competitive landscape? Obviously, it's always a very competitive business to begin with. So I'm just curious, is that adding more competition, or is it really sort of just -- it's always been this way, and that's the way it's going to be going forward?

[Scott Bok:]

I mean, I think, as you said, it's always been a ferociously competitive business. I think there's no question that the key people from whom we affirm, from whom we seek to gain more market share continue to be the big -- what I call, the big 9 in global banks. I mean, they probably still collect well north of 80% of all the advisory fees paid in the world. And I think the evidence is just undeniable that, that share for them has been shrinking over time. So that's the main source of how we're going to gain market share over time. Certainly, it would be great to be the only alternative to those 9 firms, then we'd get all of that. Clearly some other boutiques or independent firms, whatever you want to call them, have grown up over the years. I think very few we would really see as competitors of ours. I mean, some are competitors in a particular industry, whether it's tech, whether it's consumer, whether it's certain other sectors where financial services, for example, where there are some boutiques that focus just on those areas. But as far as firms that can do really what we do, probably 40% of the deals we announced are cross-border deals. I think we're one of the very few firms that has a really strong position not only in the U.S., but in the U.K., across Europe, Canada, Australia, Japan, and that's going to be tough for other firms, I think, to build out in the same way that we have. So I feel fine about competing with the other independent firms. And frankly, I think probably a number of those firms, including ourselves, will probably continue to gain share at the expense of the big 9.

[Operator:]

The next question we have comes from Lauren Smith of KBW.

[Lauren Smith:]

So Scott, you noted that you expect that next year could be another significant year for headcount growth. So where do you see that growth coming from? Is it certain industries you feel you need to be in? Is it adding to your Private Capital business, or is it adding other geographies like Brazil that you have identified as being a high priority, or it will be both?

[Scott Bok:]

I think that, to be honest, it probably is a little bit all of the above. I mean, I think we now have a pretty strong base across a lot of different geographies, many of which we've been in for a very long time, and across certainly a large majority of the relevant industries out there. When you think about growth of Managing Director headcount going forward, and by the way, we're growing a lot of our own talent as well, so we certainly expect to continue to see, as we have over the last several years, some internal promotion into key regional and industry sector positions. But sitting with 12 office now, I mean, if each one added one Managing Director next year, that would be actually, would actually be quite a lot if they added sort of one on average. So I don't think it's that hard to figure out where the growth might come from. I suspect it will be a whole variety of things. It will be some new market, perhaps like Brazil. It will be some factors that we really don't cover that much today, and it will be other sectors where we're trying to build out from having sort of 1 or 2 people who do it, maybe in 1 or 2 markets to having more of a global team that covers an industry sector. So I don't see -- certainly, open minded to the big addition like we did with Australia, or we did with the Private Capital Advisory. But my guess is that next year will be more like a number of individual people filling individual niches for us.

[Lauren Smith:]

Great. And then, I guess, just lastly for me, you would purchase some stock in the quarter and you have fairly sizable remaining authorization, $68 million plus, and given stock price and there's been a lot of volume, I mean, is it fair to say you guys are out there actively buying back your stock?

[Scott Bok:]

Well, we're not today, because we're always frozen for a couple of days after a -- for a little while, a few weeks before and a couple of days after returnings announcement. But certainly, we think that is a good use of some capital. And you can see from our balance sheet that it's really very strong. You can see from our earnings, and what Ie said about the pipeline that we feel good about our cash flow. So certainly, we do hope to buy back more stock in the coming period, because it's as you pointed out, it's at a value at least that we think it's quite attractive for us to be buying it in. So I think that we probably should wrap it up now maybe with that one, Richard, is that -- do you think- do you agree with that?

[Richard Lieb:]

Well, I do.

[Scott Bok:]

Okay. So I want to thank everybody for joining our first call, and we will look forward to speaking with people again in about 3 months. Thank you.

[Richard Lieb:]

Okay. Thanks, everyone. Bye.

[Operator:]

And we thank you, gentlemen, for your time. The conference is now concluded. We thank you all for attending today's presentation. At this time, you may disconnect your lines. Thank you.