Good morning. My name is Julianne, and I will be your conference operator today. At this time, I would like to welcome everyone to the Newmark Fourth Quarter 2019 Earnings Conference Call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question and answer session. If you would like to ask a question during the session, you'll need to press star one on your telephone. Please note that today's conference is being recorded. Thank you. I will now turn the call over to Jason McGruder, VP of Investor Relations. Sir, you may begin when you're ready.
Thank you, and good morning. We issued our fourth quarter 2019 financial results press release and a presentation summarizing these results this morning. You can find these documents at ir.nmrk.com. Unless otherwise stated, the results provided on today's call compare only the fourth quarter or full year of 2019 with the year earlier period. We will be referring to our results on this call only on an adjusted earnings basis unless otherwise stated. We may also refer to adjusted EBITDA. Please see today's press release for results under generally accepted accounting principles or GAAP. Please see the sections in the back of today's press release for the complete definitions of any such non-GAAP terms, reconciliations of these items, the corresponding GAAP results, and how, when and why management uses them.
Additional information with respect to our GAAP and non-GAAP results mentioned on today's call is available on our website and in our investor presentation. Any outlook discussed on today's call assumes no material acquisitions, share repurchases or meaningful changes in the company's stock price. I also remind you that information on this call regarding our business that are not historical facts are forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 as amended, and Section 21E of the Securities Exchange Act of 1934 as amended. Such statements involve risks and uncertainties. Except as required by law, Newmark undertakes no obligation to update any forward-looking statements.
For discussion of additional risks and uncertainties which could cause actual results to differ from those contained in the forward-looking statements, see Newmark Securities and Exchange Commission filings including but not limited to the risk factors set forth in our most recent Form 10-K, Form 10-Q or Form 8-K filings. I'm now happy to turn the call over to our host, Barry Gosin, CEO of Newmark Group Inc.
Thank you, Jason. Good morning, and thank you for joining us for Newmark's Fourth Quarter 2019 Conference Call. With me today are Newmark's Chief Financial Officer, Mike Rispoli, and our Chief Strategy Officer, Jeff Day. Newmark generated record revenues of over $2.2 billion in 2019. All of our major business lines improved, with particular strength in investment sales and debt with a record volume of $81 billion, an increase of $16 billion or 25%, from 2018. Based on the strong productivity of the teams we have added over the past 18 months, we are confident in achieving our near-term target of $100 billion of debt and investment sales. I'm happy to report that the company's board of directors declared a qualified dividend of $0.10 per common share. Over the past two years, we have hired over 100 top producers with average annual production in excess of $2 million.
In our experience, brokers typically take 12 to 18 months to ramp up to their full potential. We continue to grow the businesses with more recurring revenues such as GCS valuation and advisory and property management, and expect to grow our growth to accelerate in 2020. We have never been more excited about the strength of our brand and ability to add talent to our platform. Comparing our results to the industry for the fourth quarter, Newmark's investment sales volumes were up 10%, while RCA U.S. investment sales volumes were down 7%, year-over-year. Our debt volume increased 20%, while the MBA commercial mortgage originations index was up 7%. The combination of our top-tier talent, leading-edge technology, and our demonstrated ability to cross-sell and collaborate effectively will continue to drive growth across all business lines. With that, I'm happy to turn the call over to Mike.
Thank you, Barry. Good morning, everyone. In the fourth quarter, our revenues were $632.4 million. For the full year, our revenues were up 8.3%, to $2.218 billion. Our leasing revenues decreased by 9%, in the fourth quarter but were up 5%, for the year. Our fourth quarter leasing results came in lower than what we had originally expected due to the timing of certain leasing transactions, many of which have now closed in the first quarter of 2020. In comparison, our leasing revenues grew by 48%, year-over-year in the fourth quarter of 2018. Our compensation expenses increased 2.1%, in the fourth quarter and were up 9.4%, for the year. As a percentage of revenue, our compensation rate increased by 56 basis points in 2019 due to the continued hiring of leading industry professionals. Excluding these new hires, our compensation ratio would have been virtually unchanged.
Non-compensation expenses were down 7.1%, in the fourth quarter, up 7.6%, for the year. As a percentage of revenues, our non-compensation expenses were down 16 basis points in 2019. On the last earnings call, we announced a restructuring plan to eliminate $15 million of annualized costs by the end of 2020. We're pleased to report that we have achieved our target and are now raising it by an additional $5 million of expected savings by the end of 2020. Turning to our earnings. Our pre-tax adjusted earnings were up 8.6%, in the fourth quarter and 11.5%, for the year. Adjusted EBITDA improved 6%, for the quarter and 7.9%, for the year. Our full-year tax rate for adjusted earnings was 14.8%, in 2019 and 2018. Our fully diluted post-tax adjusted earnings per share increased by 15.6%, to $0.52 in the quarter, and by 8%, for the year to $1.62.
Our fourth quarter weighted average fully diluted share count was 264.5 million, down 1.2%, year-over-year. We repurchased 4.5 million shares for $42.1 million at an average price of $9.32 in 2019. We believe that Newmark's stock is very attractive at its current price. However, in order to preserve the tax-free nature of the spinoff from BGC, our ability to repurchase shares through the end of November 2020 remains constrained. Moving on to the balance sheet. Our total liquidity was $163.6 million at December 31, 2019. Our unsecured long-term debt was $589.3 million. Our net debt to trailing 12-month adjusted EBITDA was 0.8 times. The strength of our balance sheet and cash flow generation provide the solid foundation for future growth. Turning to our guidance for 2020. We expect industry leasing and investment sales activity to be flat to down in the U.S. for the year.
The MBA expects origination volumes to be up 9%, in 2020. For Newmark, we currently expect our leasing to be consistent with industry volumes, but our capital markets to increase by high single digits. We expect the remainder of our businesses to grow mid to high teens. Our 2020 guidance is as follows. Revenues in the range of $2.4 billion-$2.5 billion, up from $2.218 billion in 2019. Adjusted EBITDA in the range of $590 million-$615 million as compared to $565.5 million in 2019. Adjusted earnings tax rate between 14% and 16%, compared with 14.8%, in 2019. Adjusted earnings per share between $1.70 and $1.76 versus $1.62 in 2019. Fully diluted weighted average share count is expected to be relatively unchanged.
As Barry discussed, in the past two years, Newmark has hired more than 100 producers who, on average, are expected to generate more than $2 million annually. Our earnings outlook incorporates the initial costs prior to the full delivery of their expected revenues. Once these new producers are fully up to speed, we expect them to contribute an incremental $100 million in revenues and $0.10 to $0.15 in adjusted EPS on top of our 2020 guidance. As we detail in today's press release, certain items such as the impact of the NASDAQ forwards, mark-to-market movement on real estate services investments, and non-cash MSR amortization impacted our GAAP results for the quarter and the year in 2019. While we do not provide guidance for GAAP, we expect the difference between our GAAP and adjusted earnings results to narrow in 2020, assuming those certain items do not recur.
Operator, we would now like to open the call for questions.
As a reminder, if you would like to ask a question, please press star followed by the number 1 on your telephone keypad. We'll pause for just a moment to compile a Q&A roster. Your first question comes from Jason Weaver from Compass Point. Your line is open.
Hi, good morning. Thanks for taking my questions. I just wanted to dig into the timing of the large lease transactions that you mentioned during the call. Can you give us any idea of the scale of that and/or any particular other details?
Sure. I think if you look at the midpoint of our guidance for the fourth quarter and the year relative to where we finished, the movement was in that range. What I think we'll see is some leasing improvement, leasing up year-over-year in the first quarter compared to the first quarter of 2019. Although the year, as we said, will be in line with the rest of the market.
Got it. Thank you. Can you dig into the forward revenue guidance a little bit more? Does this imply any mix shift in your mind among the different line items between leasing, sales, mortgage banking, and management services?
Sure. I think as we said, the leasing will be in line with the market, so that's flat to down a bit. Our capital markets is growing faster than the market. We said high single digits. The rest of our businesses are growing mid to high teens. You will see those businesses with recurring revenues continue to grow over time within Newmark.
Thank you. We also heard from Jones Lang LaSalle that most of the attrition activity from the HFF merger has subsided as of now. Can you talk about recruiting momentum going forward?
We are incredibly busy. We hired a big capital markets team in D.C., in Atlanta. We just hired the number one capital investment sales team in Texas. We hired a capital markets investment sales team in the Midwest, Chicago area. We continue to be the company of choice for the best people. All of the foundational building that we've created for the brand to be an acceptable brand for the best people in that business to come are choosing us. I couldn't be more excited about those prospects, and the pipeline has accelerated. In many of these markets, we have a choice of several people where we have some white space and some holes to fill. That part of our business is really on its way and working on its own volition, and we're really excited.
Okay, just one final one. Turning to the NASDAQ asset, is there any way to minimize the earnings distortions coming from that? I'm just thinking out loud, via moving it maybe into an SPV and use hedge accounting.
It's not something we've contemplated, but we can certainly think about that. I think the good news is, there is a lot of noise, as you mentioned in the GAAP numbers, related to the put transaction that we did. The good news is, while those transactions, because we maintained the upside and protected all of our downside from 2019 to 2022, the value to us has gone up, I think somewhere in the neighborhood of $175 million, as NASDAQ continues to appreciate. It's been a great cash generation tool for us. It's a great asset for the company, even though you don't see it on the balance sheet.
Okay. Thank you for taking my question.
Your next question comes from Jade Rahmani from KBW. Your line is open.
Thank you very much. Looking at your commission rate as a percentage of volumes, which I'm glad that you disclosed, it does show a decline in the commission rate. I was wondering if that was attributable to the size and mix of transactions or if there's any fee pressure in the market, which anecdotally I've actually heard about in certain office markets.
No, I think we've talked about our overall comp rate being up a little bit year-over-year. That really for us is just a fact of adding the teams that have come on, that their revenue comes 12 to 18 months later. Of course, those teams come with other people that have compensation. It has a near-term effect on increasing our comp rate. We think over time, that will normalize itself, and our comp rate should stay pretty good over time.
If I take the investment sales and debt placement commissions of $165 million divided by investment sales and brokerage volumes of $24 billion, it's 69 basis points, and historically it's been closer to 80 basis points. I'm wondering if there's any pressure on fees in the market.
I'll let Barry, answer about fees in the market. I would say for us, what we're seeing is a lot bigger transactions. Of course, as the transactions get bigger, the fees as a percentage of the total volume do go down. That's just market for us and for everybody else. Barry, are you seeing any?
We're doing much bigger deals. We have a bigger share of those large towers and large financings. The larger the deal, there is a little bit of fee pressure.
Okay. In terms of the leasing business and the overall fundamentals, leaving aside WeWork, could you comment on the health of the tech sector away from, say, the big five tech companies? Has there been any change in terms of VC-funded entities facing more pressure from their boards to be scrupulous in their capital spend plan that could affect office demand in gateway cities such as San Francisco or New York, where tech has been such a huge driver of growth?
Yeah, we're not seeing that. Yes, in the co-working space, maybe somewhat. In the tech space, it's the biggest growth area. The biggest issue for some of the big tech markets is availability of space. The demand is greater than some of the availabilities. What's happening is that'll be good for other markets like Austin and Nashville and Texas, where companies are looking for availability and labor. It'll all even out. At the end of the day, if they need labor, they need talent. They're growing. There seems to be no shortage of startups. They continue to proliferate and be a big part of the market.
On the GSE multifamily side, I was wondering if you anticipate any issues with respect to the GSEs being able to hit the 37.5%, affordability requirement, and if that could be at all a headwind in terms of Newmark's business. I believe that Newmark's been trying to focus on growing multifamily in some of the top major cities where ARA has a large presence.
Correct. What we found actually, Jade, is that the growth that we've experienced has actually been complementary to the 37.5%. While those aren't numbers that we disclose, the trend's been positive, and it's not a concern. It's obviously a concern in the sense that we want to make sure we meet or exceed, but it's not something that we think is going to be an issue for us or for the GSEs.
Thanks for that. lastly, I wanted to see if you could provide an update on both the Knotel and CCRE investments that Newmark has on its balance sheet. How are those companies individually performing? if you could also clarify how much capital Newmark has invested to Knotel, that'd be helpful.
CCRE is doing pretty well. It's being run by Paul Vanderslice, and that is going very well. The Knotel investment for us has been a good investment. They had a little bit of a down round as part of the noise in our GAAP, but a small amount. In that industry, in the previous question, raising money in that industry has slowed a bit. The good news for that, it's inseminating those businesses with much more discipline. The business structurally is sound. The industry is a good industry. I think that they're doing okay.
Okay. Thanks for taking the question.
Thank you.
As a reminder, to ask a question, please press star one. Your next question comes from Patrick O'Shaughnessy from Raymond James. Your line is open.
Hey, good morning, guys. Can you speak to your U.K. and European aspirations in light of your acquisition of Harper Dennis Hobbs?
Well, HDH is really the gold standard on tenant rep for retail. Many of the brands that come into the U.S. come in via London and Europe. The designers come here with the purchase of RKF being the number one tenant rep in New York, being very active in L.A., and having a London beachhead for that business will give us a dominance in those luxury high street clients that need representation in their rollouts and growth throughout the United States. For us, it was a very strategic move, recognizing that a lot of people have written off retail. There will always be retail. It'll be more focused, and HDH is a great acquisition for us.
Do you look at HDH as a beachhead from which to do more acquisitions in Europe, or was it more about complementing what you already do in the U.S.?
I think it's a little of both.
Okay. Question on the margin guide for next year. Is the expected business mix faster growth in the non-transaction areas, slower growth in the transaction areas? Is that expected to have negative margin implications for Newmark in 2020?
I think what's driving the slight decline in the margins year-over-year is more due to the timing of the ramp-up of the producers. The recurring businesses have a mix of margins, so the servicing businesses in there, that continues to grow pretty rapidly, which is a high-margin business. You have things like property management, which are a little bit lower margin. For us, it's really the comp rate relative to the hiring and the ramp-up of those new hires.
Got it. Just last one, was there any deal slippage on the capital market side, or was that pretty much confined to the leasing side of things?
I don't believe there was on the capital markets. There was sort of slippage on the leasing side as far as we can see.
Okay, great. Thank you.
Your next question comes from Alexander Goldfarb from Piper Sandler. Your line is open.
Hey. Good morning. Just a few questions here. First, just clarifying on the NASDAQ. Obviously, you guys have made a lot of money with the contracts that you bought. The share count or the NASDAQ now is 114. A year ago, it was somewhere in the, I think, 90s type range. Does the increase in the stock price factor into the 2020 guidance, or everything is backed out, and the guidance is based on the original contract price when it was, I think, around 90 or so?
Sure. Good morning, Alex. Our guidance is just based on the current Nasdaq price. At the current Nasdaq price, we received a certain amount of cash when we did the RBC transaction in 2018. We maintained the appreciation above $94. Our guidance is really the cash we received, plus whatever cash we expect to receive above $94.21. Our guidance is just the cash we'll get from the transaction.
Okay, to be clear, Mike, it's the $94.21 plus whatever that is, call it an extra $20 a share or something a little less than $18 a share. That's in your.
Yeah.
2020 adjusted EPS guidance.
That's roughly correct. Yes.
Okay. The second question. I have three questions. Second question is, there was an S-8 filing last fall, $183 million. You guys were very clear, "Hey, it's just registering RSUs for sale." Just thinking about how that stock is sold in the market, is that something that you guys control, or that's stock that goes to brokers and, pick a day on X date, there's suddenly $183 million worth of Newmark stock that's for sale. Can you just help us understand the mechanics of that and how that will impact the trading volume?
Yeah, I don't see that as having any material impact on the trading volume. That's a routine filing so that our partners and our acquisition partners and anybody we issue shares to over time, those shares are registered. All those shares are in our fully diluted share count. I don't think you should read anything more into it than that.
Okay. Just finally, you guys have done a good job. You've been hiring people. The share count is now flat with last year versus previous year was up 4%. You're cutting costs $15 million. What's still I'm looking at is in 2018 to 2019, you guys grew adjusted EPS 8%, and that included 4%, increase in the share count. This year, the guidance implies 7%, growth despite flat share count, despite the cost savings, and despite the nice mark that you've made off of the NASDAQ. You're growing revenue sort of around 10%, or so, but there's an offset somewhere else. Can you just help? Barry, everything you said sounds good, sounds great. Where is this offset? It seems like you're getting a lot of benefits, but it's not showing up in a faster earning EPS growth.
I'm just looking for a little bit of perspective on that.
Sure. I'll start, Alex. Barry could weigh in. It really is the timing of the hires. If you look at our hiring 100 producers over a two-year period with $2 million annual production, that really accelerated through the back half of 2019 and into the first quarter of 2020, frankly. Our hiring just continues to accelerate. Our guidance is assuming all the costs related to that hiring when it takes 12 to 18 months to see the revenue. I think the one thing I did say in my prepared remarks, if those producers were fully ramped up, our EPS would be $0.10-$0.15 higher. I think that's pretty telling in terms of how it affects our numbers and how the timing affects the business.
Alex, you've been in the industry a long time. There are lots of ways to grow. You could buy companies, and from a simple point of view, it's instantly accretive. You get the receivables, you get the cash flow, you have the goodwill. When you hire talent, it's really a laser focus on the bulk of the production and the most productive elements of the business. That required us to build a brand that was a good place for the best talent to want to come from where they might be comfortable and might be happy. We have now, we believe, that we've done a good job in building our brand so that we can now hope and aspire for the best people.
The difference in hiring brokers is whatever we hire or acquire the brokers, it takes them, depending on the particular business line they're in, a good amount of time to ramp up in leasing a little longer, sales a little less. During that period of time, we have significant expenses. We've taken the expenses, we're amortizing the upfront, and we're getting the revenue somewhere a year to a year and a half or the second year to ramp up. That is a harder, more arduous, more grinding way to build a company. We think at the end of the day, what we've created is an environment that's incredibly attractive to the best people. The ultimate proof in the pudding is three years ago, our average underwriting per broker might have been $1.1 million.
Our average underwriting is pushing up to two and a half million. To me, that says it all, sums it up, and encourages us to say we've arrived. We're at a place where this is the place for brokers and professionals to come because they know we're on the move. We have momentum. The support, the infrastructure, the resources are here. The clients are here, and it's working.
Barry, look, that's great. To have better producers is great. Just a question, presumably every year you're going to be hiring, or every two years you're going to be hiring that sort of 100 brokers, or was this just a growth spurt and then that is going to taper down so that we'll see the benefit of all these hires flowing through as we look at the out years?
It's going to be a combination of both. In the capital markets side of the business, more is not more. One being one and a half is maybe better for the house, but it's not always good for the broker. Many of the brokers are concerned about crowding where they are. Certain businesses, when you put all the players on the field, the idea is to get them to work together, collaborate, communicate, build bigger market share, hire bigger business, and higher revenue per capita. When you get to the place where not only are you bringing the highest producer, but you're giving the producers the ability to earn more in place with infrastructure, with technology, with resources, and then market acceptance, that is what's going to show up on the bottom line, and that's what's going to show up in our earnings margin.
That is going to be sticky for the broker. That's what's going to make this company the company we expect it to be, and it continues to grow to be.
Okay. Thank you, Barry.
The only thing I would add to that is, Alex, I would add to that, as we bring in these really talented professionals, what we've seen over the past few years is we're able to build around them in the businesses that may not exist or may not be as strong in those particular markets. Capital markets leads to leasing, leads to property management, and we're able to cross-sell our businesses in a way that will help our revenue growth continue to accelerate in the future.
That is exactly right. When you bring in capital markets, the ability to do the financing, to do the leasing, to do the management, even to create a level of depth in our relationships with investors, with private equity firms is all good for every aspect of our business and will be accretive in a way that is not going to be expensive for us. We're just going to increase our market share. We've already seen that in the markets where we have investment sales or financing dominance.
Okay. Thank you, Barry. Thank you, Mike.
Your next question comes from Henry Coffey from Wedbush. Your line is open.
Yes. Good morning, everyone. It's a challenging process. Our former CEO at TurnAG used to say, "I can capitalize it, or I can expense it, and I get better people when I expense it." The comment you made early when you gave your guidance was that you were expecting your brokerage income to be up, I think you said sort of high single digits, which I'm going to read to be 8%, and that the MBA was talking about the origination loan market growing by nine. Does that mean you're growing? I know you don't break out all the components of that, but it makes it sound like And that leasing would be flat. It makes it sound like you're growing a shade below the market rate right now, or am I misinterpreting that?
Yeah. Let me just try and clarify that, Henry. As you know, capital markets is both investment sales and mortgage brokerage. The market for mortgage brokerage is, the MBA said about up 9%, but the market overall for investment sales is expected to be flat to down. The combination of our two businesses, and our investment sales business is, on a revenue perspective, much larger today, even though we did $30 billion of debt transactions last year, and that's a really growing business for us. Our high single digits growth is a combination of those two. We believe we're outgrowing the market.
You're expecting your mortgage brokerage business per se to be up, we'll call it more. Okay. I think I have that and how that works out. I guess the other perspective is you've solved a series of problems, and we had this share count growing where you fixed that. You can't buy back stock essentially for another year or little slightly less than a year because of the tax-free situation. Your third lever for creating value is your dividend. Why not, since you can't do return of capital on the share front, if you're confident that you're going to keep growing the EPS number and that you'll be able to buy back stock in a year from now, why not boost the dividend?
Well, obviously, that's a board decision. We've always said.
Okay. It's a board decision. Why didn't the board boost the dividend?
Well, we've always said we pay out around 25%, of our earnings on an annual basis, and in the first quarter of each year, we set the dividend, and we try to stick to it for that particular year. When we get into the first quarter of 2020, we'll obviously have that discussion. Our earnings are growing, and we'll talk about it.
Great. Thank you very much.
You're welcome.
Your next question comes from Jade Rahmani from KBW. Your line is open.
Thank you. Just to follow up on the revenue guidance. If I take a 10%, growth rate for capital markets commissions, assume flat to down 5%, for leasing, take mortgage banking and grow that by 15%, and grow management services and other revenues by 15%, I get to $2.35 billion. I'm wondering where our assumptions are too conservative.
Sure. I think we said mid to high percentage teen growth for the rest of the businesses. Mid is obviously around 15. High is higher than that.
Even if I do that, I still get to, let's say I take 20%, growth in mortgage banking and management services, I still don't get there. I don't know if I get to $2,395. To get to $2.5 billion, we would need to assume much stronger growth than this. I guess, I don't know if you could give any clarification. What is driving the management services and other revenues to be growing at close to a 20% clip?
Sure. We've talked about the impact that capital markets teams have on property management. We're starting to see that come to fruition. We focus on technology in our Global Corporate Services business, and that leads to transactions, that leads to project management. Those businesses continue to grow. As we continue to accelerate our debt, particularly on the GSE side, that leads to growth both in our merchant banking and our servicing, which is in the management fee line. All those businesses grew, and valuation and appraisal was up, I think, about 30%, in 2019. We still believe we can build a $150 million business. After 2 or 2.5 years, we're at $90 million. There's a big growth trajectory in that business as well. The good news is all of our businesses continue to grow.
We're really focused on the cross-selling to both corporate clients as well as institutional owners, and we're just gaining market share in each one of our businesses.
We've also hired more senior leadership on the management services side. That has been performing very well. We are focused on rounding out our business. We are paying attention to the leasing and GCS and management business and hiring great talent and professionals on the broker side, hiring great talent on the management side. Considering where our platform is today, considering where our capital markets business is today, is working.
Okay. Any M&A opportunities or areas of strong interest right now that you would rank as a top priority, aside from recruiting? For example, would you be interested in the asset management business?
We have not focused on the asset management business. That is not in our view at the moment. We like being where we are. We represent large owners and institutions up and down the capital stack. We like being one of the three that doesn't in any way, shape, or form compete with our clients. We provide them services on the debt side. If there were an asset advisory or separate account business, maybe we would think about it. Our strategy right now is to do everything we can to help owners and institutions run, lease, manage, buy, sell their property first and foremost.
Okay. Well, thanks very much for taking the questions.
Thank you.
Your next question comes from Jason Weaver from Compass Point. Your line is open.
Hey, thanks. Just one follow-up. In the past, you've included a slide. Can you give an update on the cross-selling opportunity between ARA and Berkeley Point? Just looking for what progress you've achieved thus far and what you're targeting going forward.
Sure. We've progressed as hoped this year. Our cross-sell last year was 23%, or in 2018. In 2019, it was 33%, we continue to strive for 40%. With the growth that we've had, we would hope that we would see that in the relatively near future.
All right. Thanks for that.
We have no further questions. I turn the call back over to Barry Gosin for closing remarks.
Thank you all for joining this call. I look forward to seeing you and speaking to you in the next quarter.
Ladies and gentlemen, this concludes today's conference call. Thank you for your participation. You may now disconnect.