Good day everyone, welcome to the Brown & Brown analyst call for the morning of December 16th. This presentation contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, and Section 21E of the Securities Exchange Act of 1934, which are intended to be covered by the safe harbors created by those laws. These forward-looking statements include information about possible or assumed future results of operations. All statements other than the statements of historical facts included in this presentation that address activities, events, or developments that we expect or anticipate may occur in the future, including such things as future revenues, including the expected 2011 revenues of Brown & Brown and Arrowhead on a combined basis and on a standalone basis.
EBITDA, including Arrowhead and a standalone basis, capital expenditures, business strategies, competitive strengths, goals, growth of our business and operations, plans and references to future success may be considered forward-looking statements. Also, when we use the words such as anticipate, believe, estimate, expect, intend, plan, probably, or similar expressions, we are making forward-looking statements. Many risks and uncertainties may impact the matters addressed in these forward-looking statements. These include those listed in the December 15th, 2011 press release related to the Arrowhead transaction and those listed in our most recent quarterly report on Form 10-Q, filed with the Securities and Exchange Commission. Many possible events or factors could affect our future financial results and performance. These could cause our results or performance to differ materially, and those we express in our forward-looking statements.
Although we believe that the assumptions underlying our forward-looking statements are reasonable, any of these assumptions, and therefore also the forward-looking statements based on these assumptions, could themselves prove to be inaccurate. In light of the significant uncertainties inherent in the forward-looking statements included in this presentation, our inclusions of this information is not representation by us or any other person that our objectives and plans will be achieved. Our forward-looking statements speak only as of the date made and will not update these forward-looking statements unless the securities laws require us to do so. In light of these risks, uncertainties and assumptions, the forward-looking events discussed in this presentation may not occur. As a reminder, today's call is being recorded. I'd like to now turn the conference to Powell Brown. Please go ahead, sir.
Thank you, Augusta. Good morning, everybody. I'm here in Daytona Beach with Cory and Scott Penny, and Chris Walker, Mac Armstrong and Steve Bouker are in San Diego this morning. They have a holiday party with all of their teammates this afternoon. Arrowhead is a specialty underwriting organization with numerous programs and a third-party administrator. They have excellent relationships with their insurance carrier partners and a history of creating very successful programs. As usual, we and they have no underwriting risk in the process. I've known their CEO, Chris Walker, for a number of years and have a high regard for his insurance acumen. He's built a very talented team with Mac Armstrong, Steve Bouker, Lou De Furia, Scott Marshall, and Steve Boyd. They'll continue to operate from their existing offices in Southern California and other locations. We're all very excited about our two firms coming together.
As you know, we have approximately $180 million of revenue in the program space today. With the combination of Arrowhead, we'll be close to $260 million in total program revenues, and our services division will be roughly $93 million. Arrowhead is expected to end the year with revenues of approximately $105 million. With that, if you could turn to page two in the investor deck, I'd like to review. The purchase price on this transaction is $395 million in cash, with adjustments for net working capital and sharing of net operating tax losses, which I'll ask Cory to discuss a little later, plus a $5 million earn-out. We're funding this with $195 million of our cash and $200 million in term notes. The estimated 2012 GAAP EPS accretion is somewhere between $0.06 and $0.09, of which Cory will elaborate on a little more later.
We're acquiring the C Corp stock via a reverse merger. The estimated 2011 net revenue, as I said before, is $105 million, and the adjusted EBITDA for 2011 is approximately $40 million. With that, I'd like to now turn it over to Chris Walker to talk a little bit about Arrowhead. Chris?
Thank you, Powell. Good morning, everyone. As Powell mentioned, I'm here in San Diego with Mac Armstrong and Steve Bouker. We are delighted to be joining Brown & Brown. As Powell mentioned, we've known each other for a number of years. I've admired his passion for the business, his work ethic, and the quality of his team at Brown & Brown. Through this process, we've gotten to know many members of that team. To a person, they have been extremely thorough, bright, responsive, and professional. That's the type of firm we wanted to associate with. Not to mention the significant footprint, knowledge, history, and reach they have in our industry. We truly believe it's a wonderful fit. Page three of the presentation goes through some highlights of Arrowhead, I'd like to point those out to you right now.
First of all, we were founded in 1983. We've grown from a monoline program manager, one line, one state, into one of the largest program managers in the property and casualty industry. We expect our 2011 written premium to be approximately $650 million. We act as a virtual insurer, providing outsourced product development, marketing, underwriting, actuarial expertise, compliance, claims, and other administrative services to our insurance carrier partners. As Powell mentioned, we do not assume any underwriting risk. We offer 19 different property and casualty products, each of which has its own marketing niche, underwriting staff, distribution network, and insurance carrier partners. We're very well-diversified in the specialty niche area. We maintain relationships with 25 property and casualty insurance carrier partners, all of which currently have AM Best Financial Strength ratings of A-minus or better. We distribute our products through roughly 3,100 agencies in more than 5,900 locations nationwide.
We have great reach. We have over 250,000 policies in force, with the majority of those issued through Arrowhead Exchange, which is our proprietary, secure online portal that allows Arrowhead to transact our business electronically. It is very efficient. We also have, as a very important of our organization, a third-party claims administrator, which is called American Claims Management, or ACM for short, yet a very important part of our organization. Powell mentioned some of our management team. We are very proud of the management team we have at Arrowhead. We have significant expertise and a very deep bench. We have roughly 510 teammates at Arrowhead. The average experience with Arrowhead of the senior management team is roughly 11 years. Just as important, the experience in our industry is roughly 22 years.
We really have a very experienced team of underwriters that use their expertise and analytics to generate superior underwriting results. Turning to page five of the presentation, our operating divisions are divided into three very distinct segments. The first is our specialty commercial division, which is comprised, as you can see in the presentation, of things like our special risk, which is our commercial earthquakes, and the workers' compensation line. Our personal lines division is comprised of wheels, personal property, as well as a residential quake program, to name a few. Finally, our American Claims Management, or ACM, which provides a number of different services in the claims TPA space. The revenue breakdown, roughly, is about 47% of our net revenue is attributed to specialty commercial, 27% of net revenue is in the personal line side, and roughly 26% of net revenue comes from the TPA side.
We really believe we distinguish ourselves in each of these areas through a number of means. First of all, we have superior carrier partners with our book of business. Secondly, we have very responsive products for our agents, brokers, and carriers. Thirdly, we provide fast and efficient service. Finally, we have tremendous expertise in the underwriting and claims management areas. We are very proud of what we built at Arrowhead, and we are proud to be joining Brown & Brown. Powell, I will turn it back over to you.
Thank you, Chris. If you go to page six in the deck, as you can see, Arrowhead, for reporting purposes, 74% of it will be in our national programs area, as Chris said, with specialty commercial being 45% and personal being 29%. Then 26% of their revenue being in our services area. Arrowhead will be a new region in Brown & Brown. Chris Walker will be a new senior leader of our company, and Chris and his team will report directly to me. If you look under that pie chart, our total estimated revenues at year-end this year will be just over $1 billion, with roughly 60% retail, 17.5% national programs, 15.5% wholesale, and 6.5% services. The combined pro forma organization for 2011 would be about 55% retail, 23% national programs, 14% wholesale, and 8% services.
You've heard us discuss before our next goal will be $2 billion of revenue. We believe the majority of that revenue will be in the retail space. We, as you know, continue to actively look and invest in all divisions of our business, i.e., in quality organizations, just like Arrowhead. With that said, I'd now like to turn it over to Cory for some information on the expected EPS working capital NOLs.
Thanks, Powell. As Powell said, the expected purchase price is $400 million. For that purchase price, we expect to receive a closing balance sheet with $9 million of tangible net working capital, and that effectively reduces the overall purchase price. Now, additionally, the actual transaction of the acquisition of the stock of this company will create approximately $25 million of actual tax refunds and potential future tax credits. Of that $25 million of benefits, Brown & Brown should receive approximately $5 million to $6 million of those. Now, as it relates to the components of the potential net income effect of Arrowhead, we begin with the $40 million of expected adjusted EBITDA as of 2011. The largest expense off of EBITDA is expected to be the amortization expense.
Based on the expected purchase price of the $400 million, we estimate that approximately 25% of that will be allocated to amortizable, identifiable, and tangible assets. Thus, if you use our normal 15-year amortization period, the annual amortization will be between $6 million to $7 million per year. However, since we are purchasing the stock of Arrowhead, we believe that we will only have the actual tax deduction of amortization expense of about $800,000 per year. Thus, we're going to have between $5 million and $6 million of annual non-deductible amortization expense, and that will cause our GAAP effective tax rate for our consolidated financial statements to move from our current levels of about 39.8% to around a 41% effective tax rate level. Additionally, we believe that the depreciation expense on an annual basis will be between $700,000 a year and $1 million per year.
We also plan to grant stock incentive plan shares to the Arrowhead management team that will be earned over four to seven years, if they are able to hit certain growth targets. We expect that the annual non-cash stock grant compensation expense relating to these grants will be approximately $2.5 million to $3 million per year. The last component to really discuss is the incremental interest expense. As Powell mentioned, we anticipate borrowing about $200 million from our existing banking partners. We believe that the interest rate will be a floating LIBOR rate, plus in the 1% range on top of that. Thus, the initial interest expense should be between the $3 million and $5 million mark. With those various components, I think you can work it into your own model.
That was the basis for us estimating that the 2012 accretion on this acquisition could be between $0.06 and $0.09 per share. Okay. Was that it?
Yeah. Thanks, Powell.
Yeah, thanks, Cory. In conclusion, we're very excited to have the 510 Arrowhead teammates join Brown & Brown. We believe the combination catapults us forward in the programs area with expanded capabilities, additional products, broadened carrier relationships, and most importantly, a great group of people driving a great business forward. With that, Augusta, I'd like to turn it over to you to open it up for questions.
Thank you, Mr. Brown. The question and answer session will be conducted electronically. To ask a question, please press star one on your phone at this time. Keep in mind, if you're on a speaker phone, to depress your mute function to allow your signal to reach our equipment. Again, that's star one if you would like to ask a question. We'll pause for a moment to assemble the queue. Our first question will come from Sarah DeWitt of Barclays Capital.
Hi, good morning.
Good morning.
I was wondering first if you could talk about the acquisition price. I believe it's about 10 times EBITDA, which is above where your stock is trading, above the valuation that you typically do for deals, which is, I think, about six to seven times.
Mm-hmm. Yeah.
Could you just discuss the thought process there?
Sure, Sarah. I would tell you that, as you know, in larger acquisitions, the cost of organizations typically has gone up. We have seen that before, number one. Number two, we think that Arrowhead is a very good operation led by a great group of individuals, and think that they have the opportunity to continue to grow and help us achieve what we're trying to achieve. We felt like it was an appropriate investment, understanding that it is more than what we have typically paid, but we thought that it was the appropriate thing to do in light of this, because we think they're a great fit for Brown & Brown.
Okay, great. Thanks. Separately, could you talk about the future sources and uses of cash and what this acquisition means for future share buybacks after you just announced a $100 million authorization earlier this year?
Sure. Let me make sure that that was an authorization, and that we may or may not look into that if it is at the appropriate time and set at an appropriate level. As we've talked about before, I think that our debt to EBITDA on now, post-transaction, will be, Cory, is it 1.18? We believe that we still have plenty of room to continue to invest in our business, whether it be in a buyback, if that were an opportunistic level, or continue to invest in future acquisitions, which we plan on doing. We feel good about where we are, Sarah.
Okay, great. Thanks.
Our next question comes from Keith Walsh of Citi.
Hey, good morning, everyone, and congrats on the deal. First, if you could just give me a little more color about the geographic footprint of Arrowhead. I know that for Brown, you guys had some concentration issues, maybe in parts of the country that were going through a little bit of a more difficult period. If you could just talk a little bit about that.
Yeah. Good morning, Keith. What I would say is this, Arrowhead obviously was founded in Southern California, and they have a significant penetration in western states, specifically California, but they do business all over the country. Their products can be far-reaching, and they do business in a number of states all over the place. I would say to your point, if you want to be specific, you have always said, you meaning Keith and others in the investment community have said, you're kind of overweighted in Florida. We said, "Well, we feel all right about that because we know it, and this is where we're based, and we've continued to grow outside of Florida." This is a big concentration in the West. If you looked at the Western five or six states, that's a big concentration for them.
Secondly, if you could just a little more color around the Arrowhead Exchange. It sounds interesting. How does it work exactly? The margins are exceptionally high on this business, so maybe you could just give a little more detail around that, and then I have one follow-up.
Yeah. I'm going to let the Arrowhead team respond on that, if that's okay.
Great. Thank you, Powell. Yeah, I think, Mac, why don't you talk about Arrowhead Exchange a little bit to Keith as well?
Sure. Arrowhead Exchange is our secure online portal that Chris was referring to earlier in the call, this essentially is a platform that allows a retail or wholesale insurance agent to transact its business electronically. That means submit business, submit an application, receive a quote, bind a policy, and issue a policy in an entirely paperless fashion. What that allows us to do, especially for premium products that have low premium levels, to do it in a non-manual, automated fashion, and therefore, at a high margin, and process a high volume. As Chris referred to earlier, we process about 250,000 policies in totality. About 85% of those go through Arrowhead Exchange. That provides efficiency and high margin, and something that we're hoping we can be helpful in exporting across the organization.
Okay. Then last question, just for Cory. I guess your accretion numbers include a lot of the adjustments you mentioned on the call, I didn't hear anything about potential cost save opportunities here. Maybe you could talk about what you guys are thinking about on the cost save side.
Yeah. If I can get that, Keith. Remember, they're a very efficient organization already, this is a standalone operation. They're not folding into something, we're not folding something into them. Quite honestly, the synergies have already been, if you want to use that term, I think captured. We're not anticipating a significant synergy save. It is their ability to continue to grow their business going forward, we feel good about that.
Great. Thanks, guys.
Our next question comes from Matthew Heimerman of JPMorgan.
Hi, good morning, everybody. I got a couple questions. The first is just, Cory, can you give us a sense of what the contingent commission level is at Arrowhead?
The contingent levels are about $4 million-$5 million.
Okay. Would you expect any drop-off in contingents in 2012 given some of the experience of the industry this year?
No, we don't believe so.
Okay. As we think about the company, obviously there's some markets that are in transition, some better than others. But how would you discuss kind of the short and long-term growth potential of Arrowhead's business versus what we would think of historical Brown business? I'm thinking holistically, not necessarily the program or service segment specifically at Brown.
Yeah. Well, remember, let's talk about the transition in the market first. There are some insurance companies that are driving rate more than others. In certain parts of the country, you're seeing exposures increase, some places you're not. There are a number of insurance carriers as you know, that are trying to outsource some part or most of the services that look like an insurance company, of which Arrowhead has done a great job in replicating those. We believe that there are new business or growth opportunities in several areas with Arrowhead. One, it would be expansion of existing programs. Two, creation of existing programs. Three, the potential of expansion of an existing program. When I say expansion, that might be taking something that they currently have.
I don't have something in mind right off the top of my head, but adding on an additional product or service to it, which would be a growth opportunity. We believe that there are good opportunities for us to expand this business. As I said, we look forward to it.
Okay. Just a sense of maybe how their organic growth number has looked this year.
If I could ask Mac Armstrong to answer that.
Sure. Year to date, our organic growth is around 7.4%.
Is it fair to say that that's a number that's gotten better as the year's gone on?
Yes, it has. It's been consistent, it's getting better.
Okay. Much appreciated. Thanks.
All right. As a reminder, that's star one if you'd like to ask a question. We'll go next to Mark Hughes of SunTrust.
Thank you. Anything you can say about the process for the acquisition? Was this a competitive deal?
Yes.
Thank you.
Mark, I'm not trying to be flippant, but yes, it was a competitive process. As I said, I've known Chris for a number of years, but Scott and I went and met with Mac and Chris early on in this process, and one thing led to another, which led to another, which led to another, and yes, it was a competitive process, which culminated last night.
Yes. You might have touched on this earlier, but your appetite for additional acquisitions, will there be some process of integration or settling, or should we think that your appetite for pursuing new deals is just as it was before?
The latter. It's game normal, as usual. They are a very well-run, we believe, business, and are excited for them to be on the team, so there's not an integration process. They just keep doing what they're doing. Scott and his team and all the other Brown & Brown teammates around the country will continue to look for new investment opportunities across all four of our divisions. We don't anticipate this changing. It is not going to change our appetite or desire to do additional transactions in 2012.
Thank you.
We'll go next to Dan Farrell of Sterne Agee.
Thanks. Good morning. Can you just talk a little bit about retention of the Arrowhead people? I know you have the earn-out, but any other components to speak of, any sort of lockups and non-competes?
Dan, good morning. The answer is, as you know, we historically, on our transactions, when you have selling shareholders, ask them to assign customary non-compete, non-solicitation agreements, depending on their position in the company, if they were a selling shareholder or not. We feel very comfortable about the covenants that we have in place with our new teammates and the incentives to drive desired outcomes going forward. We feel good about it.
Was there ever any thought to putting any stock component into this deal as well? Do you just feel that will come through stock grants down the line?
The latter.
Okay. Thank you very much.
Thank you.
Please press star one if you would like to ask a question. We'll go next to Meyer Shields of Stifel Nicolaus.
Thanks. Good morning, everyone. Congratulations on the deal. I was wondering whether we could get, I think we have the revenue breakdown for Arrowhead in terms of the Brown & Brown segments. Can we get the EBITDA breakdown as well?
Not EBITDA. I'm sorry, what are you talking about, segments?
In other words, we have the services and the brokerage.
Yeah, Meyer, in our consolidated financial statements on a quarterly basis, you'll get what you normally get in terms of the normal segment pre-tax earnings and all the components to figure out what the EBITDA is on a go-forward basis. They're going to be combined with our normal operations. You basically have the baseline of a consolidated $40 million EBITDA on $105 million of revenues.
Okay. Is it reasonable to assume that the services margin is lower than the brokerage component?
The answer is that would be a reasonable assumption.
Okay. I will work with that. Second question. I guess the $5 million earn-out seems sort of small, just relative to the purchase price or, I guess, other metrics. I was wondering if you could explain what the thought process was coming up with that.
Yeah. Remember, this is a transaction which the majority ownership were in private equity hands, there was more of a guaranteed upfront component than in many transactions that we do. However, we believe with the earn-out and the stock incentive plans that we have in force with the appropriate teammates, that we have direct alignment of what we want to achieve at the end of the day. We feel good about it. It was more driven by the ownership, not the ownership that's coming with Brown & Brown, but the ownership that owned the majority of the entity, rather than desire necessarily on our part.
Because under normal circumstances, we might have a little bit more earn-out, but we feel good that with the combination of the earn-out and the stock incentive plan, that we have the right desired outcomes highlighted and potentially rewarded based on achieving those outcomes.
Okay. That's helpful. Thank you very much.
As a final reminder, that's star one if you would like to ask a question. We'll go next to Ken Billingsley of BGC Securities.
Good morning. I just wanted to follow up on just some of the comments at the beginning, just to maybe understand the numbers a little bit better. I was writing them down. I wasn't sure if I caught them all. You said that this is going to create about $25 million of NOLs or tax refunds, future tax credits. Is that correct?
That is correct.
And so these are-
In the corporation.
Excuse me?
In the corporation, yes.
These were brought over from Arrowhead. Is that correct?
Really, the majority of them are going to be created primarily from the related expenses of the transactions. For instance, when you exercise restricted stock agreements and incentive stock options, there's some ordinary income that's taxed to individuals, and the corporation gets tax expenses off of those. Those will create a net operating loss, essentially, the second before the transaction that resides in the corporation. We'll immediately be able to take those and do an amended return for the 2009 year and the 2010 year, and that will create real tax refunds. The remaining amount of those tax deductions will be able to be utilized as carryforwards, which we believe will be utilized over the next three to five years.
I see.
That's how they come about.
Okay. There aren't any NOLs on there that are going to be created due to the transactions?
That is correct.
Okay. Of that, after you file, Brown & Brown, you expect to generate, essentially to benefit your bottom line, $5 million-$6 million?
We're going to get $5 million-$6 million of those benefits. Ken, just make sure that is essentially a balance sheet purchase accounting transaction that will not benefit the actual tax rate on a go-forward basis because that's created at the date of acquisition. I just want to make that clear. On a go-forward basis, the way to think of it is that our effective tax rate will be more in the 41% range.
Okay, it's all balance sheet. There's no cash generated or created from this to the bottom line.
Well-
accounting.
No, there will be cash generated in the future, but that effectively gets set up as an asset on the purchase price on the purchase day. Whatever goes to the previous Arrowhead equity owners, their portion will be set up as a liability on the date of purchase.
Very good. The other question I have is, and I understand you're not going to get too much into the details, but what you can add in color would be great. When you talked about it being a competitive deal, obviously I'm assuming that influenced some of the decision to put more into the purchase price and less into the contingent. Was that a factor of getting that deal done? Because it was near the high end of what you typically pay, though it is a much larger transaction.
The answer is yes. To reiterate, that was more driven by the dynamics of the overall ownership of the firm as opposed to in our more traditional type earn-out arrangements, which has more upside and a little bit more downside. That came through in the process, so yes.
Can you talk about the margins? You said that you're going to keep them as a standalone operation for the most part, and so obviously not a lot of synergies created, and that makes sense if they're obviously very efficient. Can you talk about, just in general, what some of the margins are in general at the company, at Arrowhead?
Yeah. It's a 40% EBITDA on $105 million approximately of estimated 2011. It's a $40 million adjusted EBITDA number on $105 million estimated annual revenue.
Thank you.
Ken.
We'll go next to Ron Bobman of Capital Returns.
Hi, good morning. I just had a quick question. I'm sure there's some overlap on your respective carrier partners. I was wondering if there's any expectation for, in effect, the commission rate, the profit commission, any sort of pick up or enhancement to the Arrowhead levels by virtue of combining with Brown & Brown. Thanks.
Yeah, don't know the answer to that. They have enjoyed very good relationships with their carrier partners. We don't know if that will exist or not. We do have overlap, and we feel really good about their carrier partner relationships.
The EPS contribution that you referenced, obviously, I assume, does not assume any sort of enhancement to the commission levels. Should I assume you might pursue it?
I think that we look at all types of ways to grow our business, but your answer to your question is it does not contemplate that.
Okay. Thanks, guys, and best of luck.
Thank you very much.
We'll take a follow-up question from Meyer Shields of Stifel Nicolaus.
Thanks. Two really quick numbers questions. One, is there going to be any unusual level of expense in 4Q associated with this deal?
Meyer, you're kind of light. Can you say that question just to make sure?
Yeah. Should we anticipate any material bump up in your expenses for the fourth quarter of 2011 from this deal?
No
The 41% tax rate, is that gross or net of the loss, the NOL?
Yeah. As I said, the NOL will not have any impact on the go-forward effective tax rate. That is our effectively net on a go-forward basis, but they're not related to each other.
Okay. The monetization of the NOL is a first quarter 2012 event?
No, the monetization of that is a purchase price accounting adjustment that is done on the balance sheet at the date of acquisition. Therefore, it's basically setting up either a income tax refund asset account or a deferred tax asset account, and then a corresponding liability for any of those NOLs that we anticipate that will be to the benefit of the seller. Therefore, the net is just a balance sheet amount at the purchase date.
Okay. Got it. Thank you very much.
Okay.
We'll go next to Brett Huff of Stephens Inc..
Good morning, and congrats on a nice deal.
Thanks, Brett.
I'm sorry, I missed a few of the early questions, so I hope I'm not repeating one, so let me know if I am. Just two quick ones. Number one, can you explain how the leverage in the business will work going forward? It's already got great margins. It seems like it can go up given the mix of the technology as well as the MGA portion of that. If you haven't hit on that, can you just outline how you see leverage and margins going forward?
I think that Brett, that question hasn't been asked. The answer is we believe that their margins can continue on as they grow their business organically. We have not done a lot of digging into the incremental improvement in a margin as you go up for every incremental dollar of revenue. We do feel really good about the efficiency and the way they run their business right now. We do believe that there will be additional opportunities to grow it and potentially become more efficient. Brett, similar to our program operations. Obviously, programs in general have a higher fixed cost base, and therefore do naturally have a little bit better leverage performance.
That's great. The second question is just on the specific business. Did you call out specifically what the quake or whatever focus of theirs was? What portion of the business that is as a % of revenue?
Yeah, we haven't done that. It's all in there. Their larger programs in there would be comp, workers' compensation, and earthquake are larger programs in the mix. We did not talk about the specific size.
Okay. That's what I needed. Thanks and congrats again on a nice deal.
Thanks a lot, Brett.
Mr. Brown, we have no other questions at this time.
Okay. Augusta, thank you very much. We've enjoyed talking to everybody this morning. Hope you all have a wonderful holiday season. We'll talk to you the next earnings call. Have a great day. Goodbye.
That does conclude today's conference. Thank you all for your participation.