Good morning. My name is Dan. I will be your conference operator today. At this time, I would like to welcome everyone to the Primerica, Inc. Q2 2018 Earnings Result Conference Call. All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question and answer session. If you would like to ask a question during this time, simply press star, followed by the number one on your telephone keypad. If you would like to withdraw your question, press the pound key. Thank you. I will now turn the call over to Kathryn Kezer, Executive Vice President of Investor Relations. You may begin your conference.
Thank you, Dan. Good morning, everyone. Welcome to Primerica's second quarter earnings call. A copy of our earnings release, financial supplement, presentation, and webcast of today's call are available on our website at investors.primerica.com. Glenn J. Williams, our Chief Executive Officer, and Alison S. Rand, our Chief Financial Officer, will deliver prepared remarks. We'll open it up for questions. We reference certain non-GAAP financial measures in our press release and on this call. These non-GAAP measures have limitations. Reconciliations between GAAP and non-GAAP financial measures are attached to our press release. We will also make forward-looking statements in accordance with the safe harbor provisions of the Securities Litigation Reform Act. The company will not revise or update these statements to reflect new information, subsequent events, or changes in strategy.
Risks and uncertainties that could cause actual results to differ material from those expressed or implied are discussed in the company's 2017 annual report on Form 10-K, as updated by our quarterly reports on Form 10-Q. Now I'll turn it over to Glenn.
Thanks, Kathryn. Good morning, everyone. Today, I'll share performance highlights and accomplishments that position us for continued growth. Alison will cover our financial results. We're constantly striving to drive long-term value for all of our stakeholders by executing our strategy and evaluating uses of free cash flow. We've had great success driving organic growth over the past few years. We continue to assess opportunities to provide more solutions for our clients and support for our sales force. Our strategy continues to be maximizing sales force growth and productivity, broadening protection product offerings, expanding client Investment and Savings Products, and developing digital capabilities to deepen client relationships. We're pleased to report strong returns and continued distribution growth in the second quarter.
We achieved 42% growth in adjusted operating earnings per diluted share year-over-year and 24.5% ROAE in the second quarter, reflecting solid performance, ongoing share repurchases, and the benefits of tax reform. Our sales force leadership continued to perform well, with the size of our life insurance licensed sales force exceeding 130,000 representatives at the end of the second quarter. As you'll note on slide three, we continue delivering solid earnings growth across the business and returning significant capital to stockholders. Our adjusted operating revenues increased 13% to $466.9 million, and adjusted operating income before income taxes increased 17% to $112.8 million year-over-year, driven by increases of 23% for Term Life and 9% for the Investment and Savings Products segments. Net adjusted operating income increased 36% to $86 million from the prior year period, reflecting the benefit of tax reform.
We have experienced strong adjusted operating EPS and ROAE expansion year-to-date and expect annualized ROAE to increase to approximately 22% for the full year of 2018. Our strong and diverse cash flows have allowed us to return a significant amount of operating earnings to our stockholders. In the second quarter, we continued to optimize capital by repurchasing approximately $87 million, or 891,000 shares of Primerica's common stock for a total of $134 million, or about 1.4 million shares during the first six months of 2018. We plan to repurchase a total of about $200 million in shares during 2018, in addition to paying stockholder dividends, and we plan to deploy capital at or above this level in the future.
Moving to distribution results, on page four, you can see our life license sales force grew 7%, primarily driven by a 5% increase in new life insurance licenses compared with the prior year period. Recruiting of new representatives declined slightly from the second quarter a year ago, which had benefited from strong recruiting in connection with our 2017 biennial convention. In the third quarter, we anticipate that recruitment of new representatives will decline year-over-year due to the 17,000 recruits in the third quarter of 2017 who had their independent business application fees waived in hurricane-affected areas. The size of the life license sales force is expected to continue growing on both a year-over-year and a sequential quarter basis in the third quarter of 2018. Turning to page five, you can see Term Life issued policies were consistent with the strong results in the year ago period.
Productivity remained at the high end of historical levels at 0.22 policies per life insurance licensed representatives per month in the quarter versus 0.23 in the second quarter a year ago. As the growth in Term Life issued policies in prior years has compounded, the aggregate level of policies issued makes it challenging to sustain issued policy growth for the rest of the year. We currently expect issued policies for the full year of 2018 to be consistent with the 2017 level. Continued issued policy growth at these record levels requires ongoing focus and effective use of incentives as we continue to work to maximize productivity. In the second quarter, we achieved strong Investment and Savings Products sales of $1.8 billion, up 12% year-over-year, led by the significant growth in Managed Accounts sales.
In addition, our variable annuity sales were up 22% compared with the second quarter a year ago, reflecting a more favorable market environment. Our annuity providers have also enhanced product features over the past year, which has made these products more attractive to our clients and representatives. Net flows were positive $261 million, and average client asset values increased 10% year-over-year to $61.3 billion. Our new state-of-the-art advisory platform has expanded our opportunity to serve clients with significant assets. Managed Accounts were our fastest-growing client asset value product class, increasing 41% from the second quarter of 2017. While Managed Accounts do not generate sales-based revenue, they produce higher levels of recurring asset-based revenues than other U.S. products, and this will benefit the business longer term. Our business model is balanced by two major complementary business segments with proven track records of delivering positive results.
The flexibility in our model enables us to deliver solid returns and long-term value during product mix shifts and rebalancing of momentum. As we head into the second half of the year, we will remain focused on building on our solid foundation and executing initiatives to drive organic growth. We continuously strive to enhance the business for our clients, representatives, and stockholders, and we are well-positioned to deliver meaningful long-term value to all of our stakeholders. Alison will now walk you through our financial results.
Thank you, Glenn, and good morning, everyone. My comments today will cover the earnings results for our core business segments, then we will conclude with a company-wide review of insurance and other operating expenses and income taxes. Starting on slide six with Term Life. In the second quarter, revenues increased 14%, with 15% growth in adjusted direct premiums. Revenue growth outpaced the growth in benefits and expenses, yielding a 23% year-over-year increase in pre-tax income and a 20.5% pre-tax margin for the quarter. Growth in adjusted direct premiums was driven by strong sales levels in the past few years and the runoff of business subject to the IPO coinsurance. We are seeing about a 6% annual decline in premiums ceded to IPO reinsurers now that policies that continue beyond the end of the initial level premium period are no longer ceded to them.
When combining these factors with our sales projections for the remainder of 2018 and the weakening of the Canadian dollar since the beginning of the year, we expect adjusted direct premiums to grow around 13.5% in the second half of the year and between 14%-14.5% on a full year basis. In the second quarter, the DAC amortization ratio was 14.6%, consistent with the prior year period. Persistency in the quarter was generally in line with 2017 levels, and we expect persistency to remain at this level, adjusted for typical seasonality, for the remainder of 2018. The DAC amortization ratio also reflects a small increase related to insurance commissions from a change made to our 2018 sales force equity program that modestly shifted expense from deferred to non-deferred expense. While this shift changes the timing of expense recognition, it does not impact the overall economics of the program.
We expect the DAC amortization ratio to be around 16% on a 2018 full year basis, consistent with 2017. Moving to Benefits and Claims. Normal claims volatility positively impacted Benefits and Claims by approximately $4 million in the second quarter, which resulted in a Benefits and Claims ratio of 57.5% versus 59.4% in the second quarter of last year. Year-over-year claims were $6 million favorable as the prior year period had $2 million of negative experience. On a full year basis, we expect the 2018 Benefits and Claims ratio to be around 58.5%. The net insurance expense ratio increased 50 basis points year-over-year to 8.2%, primarily due to $3.6 million of investments in key constituent initiatives using savings from tax reform, as well as digital development initiatives in the quarter.
For the full year, we expect the Term Life net insurance expense ratio to be slightly higher than 2017, reflecting these incremental investments in the business. Even with these increased investments, we expect the full year 2018 Term Life margin to remain between 18.5 and 19%. Let's move to our Investment & Savings Products segment, where we again saw solid growth. On slide seven, you'll see ISP revenues and income before income taxes grew 13% and 9% respectively over the prior year period. Revenues grew faster than income, primarily due to revisions made to our record-keeping platform contracts in December. These changes resulted in account-based revenues and operating expenses both increasing year-over-year, with a positive impact on pre-tax income of about $1 million in the second quarter. Sales-based revenues, net of commissions, increased 6% year-over-year, outpacing growth in revenue-generating sales, largely due to the 22% increase in variable annuity sales.
Total product sales grew 12% over the prior year period, primarily driven by strong growth in Managed Account sales from the rollout of our Lifetime Investment Platform at the end of the second quarter last year. The momentum in this program, combined with positive net inflows and year-over-year market performance, led to a 10% increase in asset-based revenues net of commissions in the second quarter. Given the successful Lifetime Investment Platform rollout and enthusiastic adoption by our clients and representatives, I'd like to spend a few moments highlighting the contributions that Lifetime can make to our future earnings. Since the launch of this program in mid-2017, we have seen tremendous growth in our Managed Account business, with quarterly sales increasing from about $60 million in 2016 to over $200 million in the second quarter of 2018.
While Managed Account sales do not generate sales-based revenues, they do provide recurring asset-based earnings above what we receive for other U.S. products. The chart on slide eight depicts how earnings can emerge due to the accumulation of assets from new Lifetime sales over time. In the illustration, we take 2017 Lifetime sales at the current projection of 2018 sales of about $700 million and layer on three more years at the 2018 sales level. While we believe Managed Account sales will continue to grow, to simplify this illustration, we are not assuming that future sales increase from 2018 levels. We then apply hypothetical assumptions of a 5% market return and a 7% redemption rate to the assets.
Using these assumptions, the accumulation of Lifetime sales would generate net asset-based revenues, defined as revenues less commissions and platform administration and advisory fees, before internal operating expenses, of over $17 million in 2021, up from $4 million in 2018. This is a meaningful contribution to our ISP segment results. We'll move to a discussion of the company's insurance and other operating expenses. On slide nine, you can see our second quarter expenses of $98.5 million, or $16.3 million higher than the second quarter of last year. The changes to our ISP record-keeping contracts increased expenses by $6.3 million, as I mentioned earlier, this was more than offset by incremental revenues. We also had about $4 million of additional expenses to support growth in the business.
As Glenn described in previous earnings calls, we are committed to investing a portion of the financial benefits from tax reform in our key constituents, including our communities, our people, and our clients. Year to date, we have recognized around $5 million of expense in support of these initiatives, most of which was incurred in the second quarter. We anticipate spending around $10 million on a full-year basis and expect these expenditures to remain part of our expense base going forward. On recent calls, Glenn also described our commitment to digital development to enhance the effectiveness of our representatives and deepen client relationships. In 2018, we are laying the groundwork for a multi-year initiative to modernize end-to-end systems, data gathering, and processes to enable continuous delivery of innovation.
These efforts began to ramp up in the second quarter of 2018, with planning efforts well underway and exceptional talent to drive many of the initiatives onboarded. During the second quarter, we incurred around $2 million towards these efforts and believe we are on track to spend around $8 million more in the second half of the year. As we get closer to year-end, we will assess our progress and provide guidance on plans for 2019. Looking ahead to the third quarter of 2018, we expect expenses to be around $100 million, including about $6 million split equally for digital development and key constituent initiatives from tax reform savings. Moving to income taxes. In the second quarter of 2018, the effective income tax rate was 23.8%, about 70 basis points below our guidance for the quarter.
This benefit was primarily a result of a higher proportion of pre-tax earnings coming from the U.S. with a lower statutory tax rate and a lower proportion from Canada with a higher statutory tax rate than was originally estimated. We still expect our full-year effective tax rate to be about 23.5%. Let me reiterate our commitment to maintain a strong balance sheet and capital position with holding company cash and investments of $86 million as of June 30th, 2018. As you are likely aware, the NAIC has proposed changes to the statutory risk-based capital ratio, which we believe will reduce Primerica Life's RBC by about 45 percentage points to around 430%. The impact is lower than the 70-80 percentage points previously indicated, given that other calculation refinements have been proposed in addition to adjusting for the new federal tax rate.
We consider this level of RBC to be more than sufficient to support our business needs going forward. In closing, we are very excited to report that Moody's recently upgraded Primerica, Inc.'s senior debt rating to Baa1 and Primerica Life Insurance Company's insurance financial strength rating to A1, citing our strong profitability and financial flexibility as drivers of the upgrade. Let's open it up to questions.
At this time, we will conduct a question and answer session. If you would like to ask a question at this time, please press star followed by the number 1 on your telephone keypad. Your first question comes from the line of Ryan Krueger. Please go ahead.
Hi. Thanks. Good morning. Glenn, I was hoping you could talk a little bit more about the productivity trends in Term Life. Certainly, you're still at the higher end of your historical range, but as you mentioned, has come down some from last year. Could you just provide a little bit more color on what you're seeing there?
Sure, Ryan. You're exactly right. We continue to be at the upper end of what we've seen historically, but slightly down from the kind of breakout levels we were at a year and maybe two years ago. For us, that's just part of the cyclical nature of the business. We're always striving to improve productivity over whatever it was previously. We have people working on that 24/7. We recognize there's a little bit of a cyclical nature, there's a lot of a cyclical nature to all areas of our business. Even within the Term Life, you see periods of strength, periods where a breath is taken, and then you run at it again. We just feel like that's what we're seeing right now.
We're very pleased that we're still at the upper end, but we're working hard to focus our incentives and refresh them and make sure that our leadership is focused on continuing to grow and push that up as high as we can get it. Our commitment has not lessened.
Thanks. On expenses, it sounds like the constituent initiatives will kind of continue going forward beyond this year. On the digital side, I know you're going to give more color as we get towards the end of the year, but is there probably some aspect of accelerated expense there that could decline going forward?
There's definitely, I think just to reiterate what you said, we do feel like the expenses that we've added associated with the benefits of tax reform will be part of our ongoing expense base. With regard to the digital initiatives, as we've described in the past, a lot of what we're doing this year is really focused on, we keep referring to as repaving the road, if you will. Really moving our systems and our capabilities into more of a modern technology age. There's a lot of work to be done there, and we are progressing pretty well along those lines. As we move into the future and we look at what we want to spend, it'll be more correlated towards what we think the financial or the business-type benefits are associated with those expenditures.
At this point, I can't say exactly what we think the expenses will be, but I can say that as we move through 2019 and beyond, we do expect there to be obviously real economic benefits to the business for the things that we plan to do. We will continue to update you on how we move forward with that, as well as the things that we are focusing on to drive the business results.
Thanks. Just last question from me. Thanks for the illustration on the Managed Account platform. One follow-up would be how should we think about corporate overhead and expenses that, in the example that you gave, would there be positive operating leverage when we think about expenses that would be allocated there?
The short answer is yes. You have to just look at overhead and general operating expenses and recognize that a lot of that is in fact fixed in nature. We do expect as the volumes continue to grow, obviously our staffing needs will go up just in order to make sure the business is processed properly, that we are keeping compliant and the like. With that being said, certainly it's not one for one, so there's sort of a step variable nature to that. We do expect the operating expenses associated with this business to grow, but would agree with what your original point was, is that the leverage associated with those expenses should improve.
Okay, great. Thanks a lot.
You're welcome.
Your next question comes from the line of Jeff Schmitt. Please go ahead.
Morning, Jeff.
Sales, which have been good in the double digits. Are you seeing growth in the number of agents that are licensed to sell securities, or how does that pipeline look?
Hey, Jeff, you broke up on the very first part of that question. Do you mind asking that again just to make sure we have it right?
Yeah, sure. I was just wondering about the growth of agents that can sell securities.
Right.
How's that number looking? What's the pipeline looking like?
Yeah. As we've discussed in the past, that number, the new licenses and the total size of that sales force is continuing to grow. Generally, it's lagged the growth rate of the life insurance sales force by a few percentage points. At the same time, over the longer period, those two grow closer together. We generally try to focus on one thing at a time as our primary focus and then have a secondary focus. Yeah, we're continuing to grow in new licenses and in the total size of the sales force. The rate of growth that we normally talk about at year-end is slightly less than the life sales force.
Okay. Thank you. On new recruits, it sounds like you think that number's going to be pretty flat or even down this year. Do you view this sort of 300,000 level as kind of the high water mark or total saturation level, or are there things that you can do next year to take it above that?
Well, I definitely wouldn't use the word saturation. The need for what we're doing in the middle market is growing much faster than we are. It's more a function of our growth rates sustainable as they compound. The difficulty level gets harder as the numbers get higher. The dynamic that we talked about in the prepared remarks was simply a function of what we did last year. We had the series of hurricanes that impacted Puerto Rico, Texas, and Florida. As we often do in counties, it's a county-by-county focus generally that are declared disaster areas by FEMA, then often what we do to encourage people in that area and keep them focused is we waive the IBA fee, the independent business application fee, for joining the company. That's what we did last year.
Texas and Florida are two of our biggest states, and it covered a large area of both of those states, and so we had a significant number of those come in without IBA fee, 17,000. We're not expecting to do that again this year. You've got a different dynamic in the comparison. The comparison of the numbers from 2017 or 2018 is driven around that dynamic. As we look forward, we believe there's room to continue to grow our business, to continue to grow recruiting. The response to our message as a business opportunity is very strong, and so we believe there's upside there, and that we can continue to grow the sales force as well. We believe there is more upside out there.
Got it. Okay. Thank you.
Certainly.
Your next question comes from the line of Mark Hughes. Please go ahead.
Morning, Mark.
Good morning. Question on the Mutual Funds sales and Managed Accounts sales. How should we think about that dynamic? Your Mutual Funds sales were up 1% this quarter. Managed Accounts continues to be quite strong. Presumably, there's some mix shift that's going on that it's influencing your near-term sales-based revenue, but as you show in the example, that will be replaced over time with more asset-based revenue. How much are we going to see those Mutual Funds sales decline in Managed Accounts take their place? How should we think about the relative growth in those categories?
I would probably describe it more as focus shift than mix shift. We have had a very successful launch of the Managed Accounts platform, and it's going well. I think the platform itself is something to be proud of, I think the way that our team has rolled it out and the way that our sales force has responded to it's all been excellent. We're getting a lot of focus on that and a lot of upside. I do think that over time, that becomes a more normal part of our business, and it's not the shiny object that attracts so much attention, you'll see a normalizing of our business shift.
The other thing that we mentioned in the call is the rebound in Variable Annuities sales, and I think our rebound is very much in line with the industry as there's more certainty in the marketplace, and as a result of that, product providers are taking advantage of that natural momentum to improve their products and attract even more attention to them. All of that, I think, is something that has detracted focus from Mutual Funds. I would expect over time you would see things rebalance. It's all on a pendulum that swings one way and then the other, then really over time normalizes. I wouldn't look at this as something that over time you would see Mutual Funds sales suffer long-term as a result of what we're doing. It'll just rebalance itself.
Understood. The expenses associated with the Managed Accounts. Are the commissions similar to what you've had in the sales-based category, more like 70%-75%?
Yeah, that's correct. Our grid, everything we do is product agnostic to make sure that we're not creating a conflict where it's possible. Our grids are the same for all products. We push the amount of compensation created by the product out through the same grids. They're in that 80% top-end range, 75%-80% kind of average range.
Alison, on the decline in premiums ceded to the IPO co-insurer, any thoughts about how that will progress over time? I think there was maybe some discussion about depending on how blocks were issued in the past, it might influence the way that a number progresses. The ratio has been declining, looks like pretty steadily 60-70 basis points per quarter for the last several quarters. Is there any reason why that wouldn't continue to be the case?
No, not in the near term. We do expect it to run off by around 6% a year, I'd say that will continue for, I don't know exactly how many years, but at least for the next several years. I think the pace will slow down a little bit at that point. Again, it has a lot to do with the size of these blocks. Also just the nature of the book of business and what the duration is of the policies that are subject to that reinsurance treaty. That being said, I expect it to run off less than 6% sort of after a few years. I think the important thing to remember is that business is going to remain on the books for a long time.
I think it gets sort of, you start to hear 6% and you in your head do math and say, "Oh, it's going to be gone after a few years." It's going to be around for a very, very long time. I just think that's what's really important to remember when you think about this. For the next couple of years, I think the 6% run rate is a good one.
Glenn, you talked about the cyclical nature of the business, that sometimes you stop to take a breath. Your outlook here for, I think, policies issued to be relatively stable year-over-year. A simple question is kind of why this time around, as you look at the business, what's the influence on that kind of a newer outlook for stable rather than up?
We are always monitoring the momentum that we have in each of our lines of business, and I think of our business really in three big chunks, the building of distribution, and then obviously our life insurance business and our investment savings business. At all times, we're looking for the natural momentum in those three areas that we can kind of throw fuel on the fire on, and then we're looking at the obstacles to those three. In a certain sense, they are incredibly complementary. One of the things I'm proudest of about our business model is that we can shift between those lines and manage the natural fluctuations in the business and still have strong results, even as momentum and product mix shifts. The three do compete with each other to a certain extent.
As we've seen a burst of momentum in our investment and savings business, that attracts a little attention, much in the same vein as I just described about the managed account business within the ISP segment. The good news is we're seeing gaining momentum in that business as we're seeing momentum stabilize in the life business and overall, both for our company and for our sales force, it continues to provide an opportunity that's moving forward. A certain amount of it is just that we've had four incredible years of extraordinary growth on the life side of our business. We're taking a little bit of a breath and refocusing on that, but at the same time, we're seeing a huge burst of momentum on our ISP business as we reported today.
I think it's just part of the natural shift of the business, and one of our jobs is to manage that, so that we don't let anything get too extreme. We're very focused on getting stronger momentum on the life side. We wanted to share today as we saw things as of today, but that doesn't lessen our commitment to continue to work on it for the future.
Just final point or question, is it fair to say that in the back half, you've got some tough comps in terms of the sales force and recruiting growth relative to last year, that'll make it harder to make as much forward progress on the overall headcount, productivity is relatively stable, policies issued are also relatively stable. Is that a fair way to look at it?
As we said for the next quarter, in the current quarter that's underway right now, we do expect to see continued growth in the size of the sales force. As you've noted, it slowed down slightly in the last couple of quarters, it's still growing at a slightly slower pace. I think that we expect that not to be impacted as directly as the life momentum has been.
Thank you.
Certainly.
If you'd like to ask a question today, that's star followed by the number one on your telephone keypad. Your next question comes from the line of Dan Bergman. Please go ahead.
Morning, Dan.
Morning. To start, I guess within Investment and Savings Products, with another strong quarter of Variable Annuity sales, I was just hoping you could elaborate a little bit more on the year-to-date growth in VA sales and generally just what you're seeing there. Is the DOL rule and the regulatory uncertainty receding a big driver of that, or more due to product changes that are making the guarantees more attractive? I guess just any thoughts on that would be appreciated.
Sure, Dan. We believe it's a combination of the two. Our growth rate is similar to the industry as a whole. I think that reflects both dynamics that you mentioned. A little more certainty in the future for the product has clearly made the entire industry feel like it's safe to go back in the water. So I think people are taking advantage of that. Then I would commend the annuity providers as they recognize that natural momentum that's created from that dynamic. At the same time, they're introducing product improvements that make the product more attractive to clients.
As is often the case, I believe in our industry and probably all others, is when a product is threatened, for any reason, and then you realize that there is a future, you use that opportunity to go back and improve the product at the client level, make it more attractive to the client. I think that's exactly what the industry is doing. I think the large numbers, the growth percentages that you're seeing both at Primerica and at other distributors is a result of both of those dynamics.
Got it. Thanks. I just wanted to see if there's any update or updated thoughts you could provide just on the regulatory front in general, in terms of where things stand, with the SEC best interest proposal or any potential new suitability or best interest rules coming out of the NAIC or New York State, et cetera.
Sure. Both of those we're very familiar with and very involved in that. As we've stated before, we appreciate the fact that the SEC is acting under their authority. They're taking a very thoughtful approach and a thoughtful process. They've requested a lot of input from the industry. Of course, we continue to provide that as we have with previous processes. Not only do we participate actively, but we also are monitoring the entire rulemaking process. We believe that is on the track it should be on. Where it comes out, too early to tell. We continue to be involved in that, give our view, and provide our input as it's asked for. We'll continue to be involved and keep you posted as more certainty arrives on that front. On New York, it's a very similar process.
They have finalized a regulation that applies the best interest standard to the sale of annuities and insurance products. The NAIC and even other states might do similar things in the future. Once again, we're at the table involved, providing comment and starting to triangulate what type of adjustments might be needed in our business. On the New York front, we're particularly pleased that the New York DFS recognized that term insurance should be treated differently from more complicated products. It is a simpler product, therefore, figuring out what the best interest is should be a little easier and less disruptive, and that appears to be the direction things are going right now.
Again, we're continuing to work on the fine details and plan our adjustments, but we are involved in it and feel like we have a handle on it, and we can make the adjustments that would be required, assuming things progress as they appear to be directed now.
Got it. It's a very helpful call. Thank you for taking the questions.
Certainly.
We have no further questions in the telephone queue at this time. I would like to thank everyone for attending today's conference call. This will conclude our call, and you may now disconnect.