Good morning, and welcome to the PennantPark Floating Rate Capital's first fiscal quarter 2020 earnings conference call. Today's conference is being recorded. At this time, all participants have been placed in a listen-only mode. The call will be open for a question-and-answer session following the speakers' remarks. If you would like to ask a question at that time, simply press star one on your telephone keypad. If you would like to withdraw your question, please press star two on your telephone keypad. It is now my pleasure to turn the call over to Mr. Art Penn, Chairman and Chief Executive Officer of PennantPark Floating Rate Capital. Mr. Penn, you may begin your conference.
Thank you. Good morning, everyone. I'd like to welcome you to PennantPark Floating Rate Capital's first fiscal quarter 2020 earnings conference call. I'm joined today by Aviv Efrat, our Chief Financial Officer. Aviv, please start off by disclosing some general conference call information and include a discussion about forward-looking statements.
Thank you, Art. I'd like to remind everyone that today's call is being recorded. Please note that this call is a property of PennantPark Floating Rate Capital, and that any unauthorized broadcast of this call in any form is strictly prohibited. Audio replay of the call will be available by using the telephone numbers and PIN provided in our earnings press release, as well as on our website. I'd also like to call your attention to the customary safe harbor disclosure in our press release regarding forward-looking information. Today's conference call may also include forward-looking statements and projections, and we ask that you refer to our most recent filings with the SEC for important factors that could cause actual results to differ materially from these projections. We do not undertake to update our forward-looking statements unless required by law.
To obtain copies of our latest SEC filings, please visit our website at pennantpark.com or call us at 212-905-1000. At this time, I'd like to turn the call back to our Chairman and Chief Executive Officer, Art Penn.
Thanks, Aviv. I'm going to spend a few minutes discussing financial highlights, followed by a discussion of the portfolio, investment activity, the financials, and then open up for Q&A. We were active in the quarter ended December 31st. We invested $239 million in primarily first-lien senior secured assets with an average yield of 8.2%. PennantPark Senior Secured Loan Fund, or PSSL, continued to perform well. As of December 31st, PSSL owned a $493 million diversified pool of 49 names with an average yield of 7.4%. We have only one non-accrual, which represents only 0.4% of the cost and 0% of the market value of the portfolio. Over the past 12 months, about 75% of our investments were in existing borrowers. These were generally cases where we had an option to continue to finance an existing borrower or could opt-out. To us, this incumbency is the best of both worlds.
Staying with solid credits with reduced competition or choosing to exit. In a market where investors are asking about differentiation among middle-market direct lenders, the value of incumbency can't be overstated. With 135 borrowers in our overall platform, we are deriving substantial benefits of incumbency. Our growing team, capital resources, and incumbency put us in a position to be both active and selective. Today, we are only investing in approximately 4% of the opportunities that we are shown. Net investment income was $0.29 per share. Due to our activity level and the maturation of PSSL, we are pleased that our current run rate net investment income covers our dividend. Our earnings stream should have a nice tailwind based on a gradual increase in our debt-to-equity ratio while still maintaining a prudent debt profile. As of last fiscal year, our spillover was $0.31 per share.
As of December 31st, our debt-to-equity ratio was 1.4 times. We are targeting a debt-to-equity ratio of 1.4 to 1.7 times. We will carefully continue to invest and optimize our leverage over time. A careful and prudent increase in leverage against a primarily first lien portfolio should lead to higher earnings. Our primary business of financing middle-market financial sponsors has remained robust. We have relationships with about 400 private equity sponsors across the country and elsewhere that we manage from our offices in New York, Los Angeles, Chicago, and Houston. We've done business with about 190 sponsors to date. Due to the wide funnel of deal flow that we receive relative to the size of our vehicles, we can be extremely selective in our investments. We remain primarily focused on long-term value and making investments that will perform well over several years and can withstand changing business cycles.
Our focus continues to be on companies and structures that are more defensive, have reasonable leverage, covenant protections, and attractive returns. We continue to be a first call for middle-market financial sponsors, management teams, and intermediaries who want consistent, credible capital. As an independent provider, free of conflicts or affiliations, we are a trusted financing partner for our clients. As a result of our focus on high-quality companies, seniority in the capital structure, floating rate assets, and continuing diversification, our portfolio is constructed to withstand market and economic volatility. The cash interest coverage ratio, the amount by which EBITDA or cash flow exceeds cash interest expense, continued to be a healthy 2.4 times. This provides significant cushion to support stable investment income. Additionally, at cost, the ratio of debt-to-EBITDA on the overall portfolio was 4.2 times, another indication of prudent risk.
In our core market of companies with $15 million-$50 million of EBITDA, our capital is generally important to the borrowers and sponsors. We are still seeing attractive risk rewards. We are receiving covenants which help protect our capital. Our credit quality since inception nearly nine years ago has been excellent. Out of 373 companies in which we have invested since inception, we have experienced only nine non-accruals. Since inception, PSSL has invested over $3.5 billion at an average yield of 8.1%. This compares to an annualized loss ratio, including both realized and unrealized losses of approximately nine basis points annually. With regard to the economy and the credit cycle, at this point, our underlying portfolio indicates a strong U.S. economy and no sign of a recession.
From an experience standpoint, we're one of the few middle market direct lenders who was in business prior to the global financial crisis and have a strong underwriting track record during that time. Although PennantPark Floating Rate was not in existence back then, PennantPark as an organization was, and at that time, we focused primarily on investing in subordinated and mezzanine debt. Prior to the onset of the global financial crisis in September 2008, we initiated investments which ultimately aggregated $480 million, again, primarily in subordinated debt. During the recession, the weighted average EBITDA of those underlying portfolio companies declined by 7.2% at the trough of the recession. This compares to the average EBITDA decline of the Bloomberg U.S. Corporate High Yield Index of down 42%. As a result of the IRR on those underlying investments, it was 8%, even though they were made prior to the global financial crisis.
We are proud of this downside case track record on primarily subordinated debt. In terms of new investments, we had another active quarter investing in attractive risk-adjusted returns. Our activity was driven by a mixture of M&A deals, growth financings, and refinancings. In virtually all these investments, we've known these particular companies for a while, have studied the industries or have a strong relationship with the sponsor. Let's walk through some of the highlights. We purchased $5 million DRS Holdings, Dr. Scholl's first lien term loan and committed about $1 million of revolver. Dr. Scholl's is a leading brand in the foot care category in North America, including insoles, skin treatments, and orthotics. Yellow Wood is the sponsor. ECM is a provider of a broad range of tools and consumables for electrical and harsh environmental applications under highly regarded brands.
We purchased $5.1 million of ECM Industries first lien term loan, as well as about $1 million of revolver and common equity. Sentinel Partners is the sponsor. We purchased $21.7 million of the first lien term loan of Smartronix, Trident Technologies. The company is a government contractor providing IT modernization, cloud services, defense systems, engineering, and intelligence, surveillance, and reconnaissance solutions. OceanSound Partners is the sponsor. Sales Benchmark Index is a management consulting firm that exclusively focuses on helping its clients drive sales. We purchased $14 million of the first lien term loan, the collateral term loan revolver, and equity of the company. CIP Capital is the sponsor. STV Group Incorporated provides specialized consulting services in engineering and architectural design, as well as project management primarily for transportation infrastructure. We purchased $19.8 million of the first lien term loan. The Pritzker Organization is the sponsor.
Turning to the outlook, we believe that the rest of 2020 will be active due to both growth and M&A-driven financings. Due to our strong sourcing network and client relationships, we are seeing active deal flow. Let me now turn the call over to Aviv Efrat, our CFO, to take us through the financial results.
Thank you, Art. For the quarter ended December 31st, 2019, net investment income was $0.29 per share. Looking at some of the expense categories, management fees totaled about $5.1 million. General and administrative expenses totaled about $1 million, and interest expense totaled about $7.3 million. During the quarter ended December 31st, net unrealized depreciation on investment was about $3.5 million, or $0.09 per share. Net realized gains were about $1 million, or $0.03 per share. Net unrealized appreciation on our credit facility and notes was $0.04 per share. Net investment income equaled the dividends. Consequently, NAV went from $12.97 to $12.95 per share. Our entire portfolio, our credit facility and notes are marked to market by our board of directors each quarter using the exit price provided by independent valuation firms, exchanges, or independent broker-dealer quotes when active markets are available under ASC 820 and 825.
In cases where broker-dealer quotes are inactive, we use independent valuation firms to value the investments. Our portfolio remains highly diversified with 102 companies across 43 different industries. 89% is invested in first lien senior secured debt, including 10% in PSSL, 3% in second lien debt, and 8% in equity, including 4% in PSSL. Our overall debt portfolio has a weighted average yield of 8.4%. 99% of the portfolio is floating rate. Now, let me turn the call back to Art.
Thanks, Aviv. To conclude, we want to reiterate our mission. Our goal is a steady, stable, and protected dividend stream coupled with the preservation of capital. Everything we do is aligned to that goal. We try to find less risky middle market companies that have high free cash flow conversion. We capture that free cash flow primarily in first lien senior secured instruments, and we pay out those contractual cash flows in the form of dividends to our shareholders. In closing, I'd like to thank our extremely talented team of professionals for their commitment and dedication. Thank you all for your time today and for your investment and confidence in us. That concludes our remarks. At this time, I would like to open up the call to questions.
Thank you. If you would like to ask a question, please signal by pressing star one on your telephone keypad. If you are using a speakerphone, please make sure your mute function is turned off to allow your signal to reach our equipment. Again, please press star one to ask a question, and we'll take our first question from Mickey Schleien with Ladenburg.
Well, yes. Good morning, everyone. Art, your platform has extensive experience in oil and gas investments. I'm interested to understand how you may be leveraging that into alternative energy. Are there borrowers in that space which meet your investment criteria? How do you see the opportunity in that segment developing?
Yeah, it's a good question, Mickey. The alternative side is something we haven't done much in, if anything. We are focused particularly today on kind of sponsor-driven businesses where there's a lot of equity underneath us, our loan-to-value is strong, we have very good coverage and where there's cash flow to pay us down. We haven't really seen much in the alternative energy space coming out of the middle-market sponsor arena.
Okay. Thank you for that. That's all my questions for today.
Thank you.
We'll take our next question from Michael Ramirez with SunTrust.
Hey, good morning, guys. Thanks for taking our questions. I guess regarding your investment activity, just looking at the exits and repayments, it seems like they've averaged about roughly, say, 13% of total portfolio on a quarterly basis over the last year. While we understand repayments are difficult to predict, do you think this trend should continue through the calendar year 2020? Or are you seeing other indications that the portfolio could possibly see a faster or slower turnover over the next year?
It's a great question. Obviously, it's hard to predict, Michael. We think there's going to be a lot of deal activity between now and the election. We think people are going to want to do deals pre-election. We think we are going to be active. That could also mean there's repayments coming out of that. This is why we kind of talk about incumbency is, in certain cases, there's going to be companies sold out of our portfolio where we'll have an option to stay in or an option to exit. That's the best position to be in because these will obviously be credits where we have almost perfect due diligence on. Hard to predict the amount of repayments. We do think we will be active both on the buy side and perhaps on the sell side as deals get done between now and November.
Okay, great. Appreciate that. Just another one on the investment portfolio. We just heard Aviv talk about how you have investments in 43 industries. If I recall correctly, last quarter was 37. Is this just new classifications or are you guys entering new industries?
Yeah, these classifications are from one of the rating agencies. I think it's either Moody's or S&P. When a deal comes in, we try as best we can to map to whatever bucket there is within those categories. We had a very active December quarter, as you saw, $239 million deployed, which was high. We think a lot of people wanted to get deals done before year-end. We think people want to get deals done before the election. We were pleased with the flow. We were pleased, importantly, that we can maintain very high credit standards. We talked about how the deals we're doing is kind of debt EBITDA in the mid-fours to low fours, still getting over an 8% yield on average. That's very attractive, risky, just the return for us.
These deals are primarily, if not all, first lien top of the capital structure no more than 50% loan-to-value. Sponsors are putting a lot of equity in these deals, and we're in a position where we can be very selective about what comes into the portfolio and still be active. That's where the team we've built over the last number of years around the country, the incumbency from 135 different names we have in the portfolio gives us a really good opportunity to review what's in the market and only pick those credits where we feel very safe, where we're getting covenants, and where we feel protected in this environment.
Okay, great. Thank you for that answer. If I may, on the balance sheet, it looks like the payable for investments purchase line increased over about $70 million from the prior quarter. I guess, does this mean some of the new investments were back-end loaded in the quarter? If yes, say for example, if we took this new investment and it was more towards the beginning of the quarter, how much would that have contributed to investment income?
It's a good question. I think the vast majority is trades that were done just prior to year-end that we were going to close in the first week or two of the year. That's a big chunk of it. Look, you can do the model. We're 1.4 times leverage as of quarter end. We say we have a target up to 1.7. We're going to work to optimize within that, and we're also going to work to optimize our joint venture with Kemper PSSL, which is not fully optimized yet. I think if we optimize both the PFLT balance sheet as well as the PSSL balance sheet over the coming quarters, we're going to pick up $0.02, $0.03 per share per quarter.
Okay, great. One last one, if I may. More macro, I guess. On the regulatory front, could you please give us your thoughts on the Coalition for Business Development withdrawing its AFFE rules application to the SEC? Actually additionally, do you believe there's another path to relief from AFFE?
It's a good question. We're not on the forefront of that. We are involved in the SBIA. From what we hear from the experts who are involved, they're still optimistic that something can happen, kind of either through discussions with the SEC or through legislative areas. We're not that close to those discussions. We're involved in, and obviously supportive and allocating time and resources to it. There's others who are better positioned to answer that question.
Okay. Thank you, Art. That's all for me today. Thanks.
Thanks.
We'll take our next question from Paul Johnson with KBW.
Good morning, guys. Thanks for taking my question. The first question was around just sort of your optimal leverage range. Earnings today cover the dividend pretty well. Obviously, the yield outlook has decreased quite a bit with LIBOR moving lower. I'm just wondering, is there a point or any point, where you probably start to hold back on growth, perhaps tap the brakes a little bit on originations, just given the lower yield outlook and probably the limited increase in earnings that you would get from higher leverage?
It's a good question. Something we think about a lot, Paul. It's always a debate. I think in general, the kind of risk-adjusted returns we're getting today, where we're getting low to mid 4s debt EBITDA. We're averaging 8% on that. In general, we think that's going to weather any kind of storm and still generate a safe return for our shareholders. We did a CLO within PFLT last quarter. As you know, CLOs take the same exact collateral and can leverage it 3 or 4 to one and still be safe and feel safe that they're leveraging the same collateral 3 or 4 to one. We're not suggesting that here. We are suggesting that as long as we can underwrite really solid deals, we can operate within our target. The target is still less than the regulatory constraint of two to one.
Our target is 1.4 to 1.7. Even if we go to the high end of our target, we still have cushion relative to the regulatory constraint. We have this PSSL joint venture with Kemper, which has had very nice returns and is now $500 million and is not really quite optimized. We could and we are thinking about how we get higher returns from that entity and get a little higher ROE, which obviously since PFLT owns 87.5% of it enhances the earnings of the PFLT. We're optimistic that number 1, the deals that we're doing today will stand the test of time and will play well in any environment, given the leverage, the covenants, where we are in the capital stack. It can be leveraged reasonably within certainly our target and the regulatory constraints.
We think we can over time get to north of $0.30, maybe as high as $0.31 or $0.32 as we optimize these tools.
Okay, great. Thanks for that. My second question has to do with LIBOR and loan spreads in the market today. Obviously, there's been a pretty meaningful move lower in LIBOR. Last year, while LIBOR was moving higher, we saw spreads kind of tighten along the way. I'm wondering, are you seeing any of the decline in LIBOR today being offset by perhaps higher spreads in the middle market?
What we can say, I can say for sure that spreads have not been coming down. We have seen select cases in new financing where spreads are widening a touch. I would not call it a major trend at this point. I would not pound the table and say it's happening. I would say there's perhaps some green shoots in that regard recently, where the spreads have widened a little bit. Hard to say. We'll see what happens. For sure, we're not seeing tightening at this point.
Okay. My last question just has to do with deal flow. You talked about having a pretty active fourth quarter and closing a decent number of deals. I'm sorry, I'm talking about the calendar fourth quarter, obviously. Do you believe that because of that active quarter that pull forward of deals essentially, will that potentially affect any of the first quarter of 2020 originations?
It's a good question. Usually you can say there's a seasonality to our business where people want to get deals closed by December 31st, calendar fourth quarter, and then usually there's a lull in the first calendar quarter of the year. Here we are a month and five, six days into it. Hard for me to pound the table either way on that. As I said, I think the overall umbrella is that people want to get deals done before November, which is the election. We believe we'll have an active nine, 10 months going into the election. I can't with precision tell you what's going to close on either side of March 31st at this point, Paul. We're busy. We're looking at a lot of stuff. There's a lot of deals in the market.
It's hard to tell you with certainty what this first calendar quarter is going to look like, unfortunately.
Okay. Thanks for that. Those are all my questions.
Thank you.
Our next question comes from Chris York with JMP Securities.
Good morning, guys, thanks for taking the questions. First is on PSSL. The net investment income declined sequentially and is now below the distribution, the dividend distribution to PennantPark for the first time in, I think, about two years. Is this quarterly level of roughly $1.6 million sustainable for PennantPark?
It's a great question. What happened was, intra-quarter, PSSL shrunk, and by quarter end, PSSL is now above where it was the prior quarter. Sitting down with Kemper and talking about the game plan for PSSL, we intend to grow PSSL. That's all you saw was a temporary shrinkage of PSSL. We believe PSSL is going to grow. That's our game plan, thereby not only covering the dividends at PFLT, hopefully generating some upside above and beyond that.
Got it. Second question is, the weighted average leverage that you provided here on the call this morning for your portfolio company declined from 4.6-4.2. Is that a function of amortization, either growth or maybe even investment activity in the quarter?
Yeah, it's a great question. It's a little of all the above. We've had good performance. Our portfolio is clean. It's been clean for a while. It's been clean for, as far as I can say, and I'll pound the table a little bit, nine years. We had a spasm about a year ago where we had a few non-accruals, but prior to that, we had no non-accruals for two years. It's been about a year since we've had some non-accruals. The portfolio is solid, de-leveraging nicely. The new deals are coming in. We're keeping our standards high and kind of staying in the mid-fours in terms of new deals. We're pleased with what's going on.
I mean, in an environment where people are wondering where the best risk-adjusted return is and what should they be doing, and are we at the beginning or end of a cycle, and what's going on, and this, that, and the other. I mean, senior secured loans with 50% loan-to-value, mid-four debt EBITDA at 8%, it's a really good place to be, we think. It's a really good place, we think. Kind of defensive, solid yield, well-protected with equity cushion. We're beating the drum on the asset class, and certainly on the kinds of deals we're doing.
I beat that drum on the asset class as well. I share that sentiment. Secondly, on maybe just talking about the portfolio. I noticed you wrote down the recently restructured equity in both Country Fresh and Quick Weight Loss. Could you update us on the performance of both of those portfolio companies and then your confidence in the debt for them being paid back?
Good question. Clearly both of those companies, by definition of the write-down, have been underperforming. We're working on both of them. I think Country Fresh has some nice ups. They're just getting their act together post when they were restructuring. Quick Weight Loss, we'll see. Quick Weight Loss jury's out. It's a relatively small piece of the portfolio. I will also comment that we have a number, quite a few equity co-invests in the portfolio. By design, we have those equity co-invests, and you can see a bunch of them are marked up, Chris, to help offset declines that we have from time to time and problems we have. You've pointed out two areas of historical weakness of both Country Fresh and Quick Weight Loss.
You can look at our equity co-invest portfolio, and there's a lot of different names that are performing very well and have been valued at higher levels. That's what we're supposed to be doing from a portfolio management standpoint, is having some of that to help offset those losses.
Got it. Just to reiterate it seems you feel more confident about Country Fresh than Quick Weight Loss. Is that fair?
Well, we're right in the middle of weight loss season here in February. Post-Christmas, it's weight loss season. I'll have a lot more color for you next quarter on that one.
Fair enough. In light of changes in the direct lending market over the last couple of years, what do you think you guys have the greatest competitive advantage today that results in the sponsor making PennantPark as a platform being a first call today to be a partner?
Well, it's a great question. We've been doing this a long time. As we continually reiterate, we are well known. We are well-liked. Our financial sponsor clients give us a first call, and we like to think we get a last look because of that. That allows us to participate, and win deals or get chunks of deals if we want to, but also allows us to pull back when we don't really want to play. That what we call it incumbency where we have 135 existing borrowers, but it's also been 13 years at PennantPark and decades before that. One thing I will point out, which I think plays to our strength today, is with the rise of very, very large direct lending peers, you see more and more of those direct lending peers too.
They're doing very, very large direct loans that would have gone to the broadly syndicated market. I saw one a couple of weeks ago, $1 billion for a quote-unquote "direct loan," from one of our peers, or it was a group of our peers, some of the mega funds. God bless. The last thing we would want to be doing is competing with the broadly syndicated loan market, where leverage is high, there are no covenants, and you're pricing for the last basis point. We're very pleased that some of those folks are vacating what I'll call the traditional middle market, which is where we play in the $15 million-$50 million, $15 million-$40 million. If you want to hone in on it's $15 million-$30 million EBITDA companies that are just too small for these guys to focus on anymore.
Where we can be important to the borrower, drive up covenant protections, drive yields, drive upfront fees, and deliver a very nice package, which you're seeing in our results, where we can deliver debt to EBITDA in the mid-4s with covenants and 8% yields. To me, that's very positive for where we are positioned. The last thing I would want to be doing is competing with the broadly syndicated loan market.
That's great, Art. In light of some of those comments, especially on size, what do you think is the largest deal size you would want to hold at PennantPark Floating today, and then maybe originate at the platform? One of the reasons why I ask is I've noticed some maybe follow-on investment activity at PFLT, where it seems like your largest size is maybe $35 million. Any update there could be helpful.
It's a great question. It's something we obviously think about because diversification is a key attribute we're searching for. PFLT has many names. It's probably too diversified, but we want to be very diversified. We have a bunch of vehicles that are growing outside of the BDCs, and we have a bunch of limited partner relationships who want to see flow from the platform. I think today we have a name that's $120 million between our vehicles and our close limited partners. That's kind of where we are today. That ebbs and flows depending on the capital we have at the various vehicles and the LP relationships. It's significant. For companies in that $15 million-$30 million zone, that can solve a lot of problems.
Tim McKenn, last one is any changes at the platform or additions at the platform that are relevant? You mentioned some other funds that could be beneficial to PennantPark Floating.
Yeah. I think we made a press release maybe six months ago about closing on additional capital, and we've got other funds in the market. I want to be careful. I don't want to use a conference call to market private funds. Just to be clear, I'm not marketing private funds here. We have other vehicles in the market, and other relationships that we're developing into managed accounts, and there's a variety of different things going on. Then this whole theme that we've been talking about where you can derive very good risk-adjusted returns in senior debt that plays in the market. We also have a very strong track record in opportunistic, which is slightly higher-yielding stuff. You see that playing out in PNNT, in higher yielding first lien, occasional second lien, occasional mezz, equity co-invest and occasionally some secondary opportunities.
That can be very attractive for people as well.
Great. You've been generous with your time. Thank you very much, Art.
We'll take our next question from Ray Cheesman with Anfield Capital.
Art, this is really more of a high-level macro question. Over the last year, you've done what you said you were going to do. You deliver us low leverage, solid credit, good dividend, well-covered, and yet the market trades you at slightly under 94% of your NAV. While in the background, we see FS and KKR get together and their stock rise. ARCC and American Capital get together, their stock rise. Golub swallow its sister fund, and their stock rise. Where is the place that you'd like to put PFLT so that it would get credit from investors for its strengths without, and I totally understand, competing with that crazy place where the people don't get any coverage of their money and savage each other for increasingly less spread? How do you see that in the future?
Look, we can control what we can do. Good question, Ray. We think about it a lot. We can control what we can control. We can choose our investments, which we'd hope to choose wisely. We can manage our capital structure and the different facilities and leverages and joint ventures. We cannot control the stock price. That's clear. We've been buying the stock personally as management, but we cannot control the stock price. We are not pleased with where the stock is trading, clearly, relative to the performance when you think about the nine years we've been in business and the rock-solid performance we've had over that period of time. Look, we're all ears. Ray and others, if people have suggestions about how we can better articulate the story to the marketplace, meet investors, position things, we are all ears.
Ultimately, we want to deliver a safe and steady cash flow stream to our shareholders. We think we're doing that. There's no change in that strategy. We're hoping that at some point the market recognizes the value proposition.
Well, hey, thanks for delivering value to us who have faith.
Thanks, Ray.
There are currently no other questions in the queue at this time.
Great. I want to thank everybody for participating today. We really appreciate your interest in the company. We will talk to you next quarter. That'll be in early May. That'll be our next quarterly conference call. Thank you very much. Bye-bye.
That does conclude today's conference. Thank you for your participation. You may now disconnect.