Moelis & Company - Earnings Call - Q4 2024

Executive Summary

• Q4 2024 revenue surged to $438.7M, up 104% year over year, with diluted EPS of $1.15 GAAP and $1.18 adjusted; Q4 adjusted pre-tax margin reached 31.4% as average fees per completed transaction increased with particular strength in M&A.
• Management raised the regular quarterly dividend 8% to $0.65, citing strong cash and no debt, and emphasized record pipeline and improved deal conversion into 2025.
• Non-comp expenses held at 11.4% of revenue in Q4 (adjusted), while CFO guided 2025 underlying non-comp run-rate up roughly 15% on tech, occupancy and T&E as headcount grows.
• S&P Global Wall Street consensus estimates for Q4 2024 revenue/EPS were unavailable during retrieval; comparison vs estimates is therefore not included (S&P Global data unavailable).

What Went Well and What Went Wrong

What Went Well

• Q4 revenue and EPS inflected sharply: revenues $438.7M (+104% YoY) and adjusted diluted EPS $1.18; management attributed strength to higher average fees per completed transaction and strong M&A activity.
• Operating leverage improved: Q4 adjusted compensation ratio at 58.4%, non-comp at 11.4%, delivering 31.4% adjusted pre-tax margin; CFO expects continued leverage while investing in growth.
• Strategic investments paid off: Technology was the largest 2024 sector contributor; Industrials and Energy were active; Capital Markets had a strong year and serves as a “strategic weapon” as dealmaking accelerates.
• Pipeline and conversion improved: CEO cited record pipeline levels and faster conversion post-election, with minimal “pull-forward” effects in Q4.

What Went Wrong

• Expenses rose with growth: Q4 adjusted compensation expenses increased vs prior year due to higher bonus accruals; full-year adjusted non-comp expenses increased broad-based with business expansion.
• 2025 cost outlook: CFO guided a ~15% increase in underlying non-comp run-rate driven by tech, occupancy, and client events, creating a near-term headwind to operating leverage.
• Regulatory delays: Some Q4 deals were pushed from Q4 to Q2 2025 due to regulatory timing, tempering near-term quarterly annualization assumptions despite strong momentum.

Transcript

Operator (participant)

Good afternoon, everyone, and welcome to the Moelis & Company earnings conference call for the fourth quarter of 2024. To begin, I'll turn the call over to Mr. Matt Tsukroff. Please go ahead, sir.

Matt Tsukroff (Managing Director and Head of Investor Relations)

Good afternoon, and thank you for joining us for Moelis & Company's fourth quarter and full year 2024 financial results conference call. On the phone today are Ken Moelis, Chairman and CEO, and Joe Simon, Chief Financial Officer. Before we begin, I would like to note that the remarks made on this call may contain certain forward-looking statements, which are subject to various risks and uncertainties, including those identified from time to time in the risk factors section of Moelis & Company's filings with the SEC.

Actual results could differ materially from those currently anticipated. The firm undertakes no obligation to update any forward-looking statements. Our comments today include references to certain adjusted financial measures. We believe these measures, when presented together with comparable GAAP measures, are useful to investors to compare our results across several periods and to better understand our operating results. The reconciliation of these adjusted financial measures with the relevant GAAP financial information and other information required by Regulation G is provided in the firm's earnings release, which can be found on our investor relations website at investors.moelis.com. I'll now turn the call over to Joe to discuss our results.

Joe Simon (CFO)

Thanks, Matt. Good afternoon, everyone. On today's call, I'll go through our financial results, and then Ken will comment further on the business. We reported $439 million of revenues in the fourth quarter, an increase of 104% versus the prior year period. For the full-year, our adjusted revenues increased 40% to $1.2 billion. Our revenue growth was powered by year-over-year increases across all products. Regarding expenses, our adjusted compensation expense ratio was 58.4% for the fourth quarter and 69% for the full-year. Our non-comp expense ratio was 11.4% for the fourth quarter and 15.9% for the full-year. Non-compensation expenses of $50 million in the fourth quarter include approximately $2 million of transaction-related expenses. In 2025, we anticipate non-compensation expenses to trend higher as a result of an expected increase in technology, occupancy, and T&E spend.

We achieved a pre-tax margin of 31.4% for the fourth quarter and 16.4% for the full-year. Regarding taxes, our normalized corporate tax rate for the year was 30.1%, and our effective tax rate was 23.5%. The difference in rates is primarily driven by the excess tax benefit related to the delivery of equity-based compensation in the first quarter of 2024. Consistent with prior years, the annual vesting of RSUs will occur later this month. For purposes of quantifying the excess tax benefit in quarter one, we expect the impact to EPS to be approximately $0.1 for each $1.25 difference between the vesting price and adjusted grant price of $41 a share.

So, as an example, if market price at time of vest were $76, the estimated impact on EPS would be $0.28. Regarding capital allocation, the board declared a regular quarterly dividend of $0.65 per share, an 8% increase from the prior quarter. Lastly, we continue to maintain a strong balance sheet with $560 million of cash and no debt. I'll now turn the call over to Ken.

Ken Moelis (Chairman and CEO)

Thanks, Joe, and good afternoon, everyone. We're pleased with our strong year-over-year performance in 2024 across all products and sectors, all driven by the collaboration, commitment, and dedication of our global team and their relentless focus on executing for our clients. During the M&A slowdown, we made significant investments in key sectors and products while remaining deeply committed to developing internal talent, highlighted by the promotion of 12 new Managing Directors earlier this year. The performance resulting from the large investments we made in technology, industrials, and energy in 2023 have exceeded our expectations in 2024.

In fact, technology was the largest sector contributor to our 2024 revenues. The industrials and energy sectors have also been quite active, and the capital markets group had a strong year and continues to be a strategic weapon as dealmaking accelerates and private capital providers play an increasing role in the transaction financing markets.

Looking ahead, I'm optimistic for 2025. The M&A market is poised to benefit from the new administration's pro-growth strategy, and at the same time, we're seeing early evidence of a pickup in sponsor activity. In capital structure advisory, elevated rates and our enhanced creditor coverage capabilities provide a constructive environment for our restructuring business. And earlier this week, we announced the hire of a market-leading banker who will join the firm as Global Head of Private Funds Advisory. This appointment underscores our commitment to expanding our capabilities in providing private capital solutions to sponsors and limited partners globally. We've never been better positioned to deliver innovative solutions for our clients and results for our shareholders, and I've never been more energized about the future of the firm. With that, I'll open it up for questions.

Operator (participant)

Ladies and gentlemen, if you would like to ask a question, please press star one on your telephone keypad. It's also star one if you would like to withdraw your question. And we'll take our first question today from Devin Ryan, Citizens JMP.

Devin Ryan (Director of Financial Technology Research)

Hey, Ken. Hey, Joe. How are you?

Ken Moelis (Chairman and CEO)

Good. Hi, Devin.

Devin Ryan (Director of Financial Technology Research)

Really nice end of the year here for you guys, and I just wanted to dig in a little bit on what you're seeing in the environment. Obviously, you've been saying kind of backlogs have been at records, and then we see kind of this really strong quarter here. I know turnover has been a bit slow, but I'm just curious if we should think about this quarter as maybe there being a catalyst where there's been a change in kind of that conversion ratio or timing, or is it just more seasonality from this quarter, and then just more broadly, how we should think about kind of that conversion ratio or timing of deals kind of moving through the backlog as we look into 2025. Thanks.

Ken Moelis (Chairman and CEO)

It felt to me like just the pace of deals closing. There's always some seasonality in the fourth as opposed to some of the other quarters, but this one felt like something happened, and it might have been the election, but something happened, and conversion did pick up. What's interesting is, like we always talked about, you kind of have this book to bill with your pipeline. So you could look at the fourth quarter and say you emptied the pipeline of a significant amount of revenue, but our pipeline is at the highest levels ever. It's increasing. So we're building backlog faster than even than it is converting. But I think the problem was, Devin, it was really in that period of the Fed uncertainty and maybe even some of the regulatory uncertainty. It was just everything just took a long time.

There was some accordion effect that started in 2022, I guess, when rates started to move, where everything just took longer to get through your pipe from start to finish. It feels different now. It's not quite as quick to completion as 2021, but it's much clearer and more rapid to go from deal start to deal end, it feels.

Devin Ryan (Director of Financial Technology Research)

Got it. Okay. That's great color, Ken. Thank you. And then a follow-up for Joe. I heard you mention, I think, some kind of inflationary non-comp expense items as we look ahead. So I'm just curious if we can maybe flesh those out a little bit. Is there any degree of kind of how significant those will be, or how to think about non-comp growth into 2025? Because obviously, you have that on one end, but then my sense is there's also probably less SVB contracted expenses, if I'm correct. So I just wanted to kind of think about some of the puts and takes as we are modeling out non-comp expenses for 2025. Thanks.

Joe Simon (CFO)

Yeah, sure. So to be perfectly clear, there are no more SVB-related transaction expenses. But I'd say the underlying run rate in 2025 is going to increase over 2024, and it's primarily driven by continued adds to headcount. I think if I took out transaction expenses projecting into 2025, I'm thinking probably around 15%. We're adding and building out space in the U.K. We're having tremendous success with client events, and so we expect to expand on that. And then always technology and information services, particularly as headcount grows, that expense by definition will grow as well.

Devin Ryan (Director of Financial Technology Research)

Understood. Okay. That's very helpful. Thanks, Joe, and thanks, Ken, as well.

Ken Moelis (Chairman and CEO)

Thanks.

Operator (participant)

Your next question is from James Yaro, Goldman Sachs.

James Yaro (VP of Equity Research)

Good afternoon, and thanks for taking my questions. Just want to turn to restructuring quickly. Obviously, it's very strong for you and for the industry in 2024. As you think about the outlook for 2025, what's the ability to hold this level of activity? Is there any potential that we could see a further acceleration from here? And then any ability for you to just give a rough split of how much revenue in the quarter was from M&A versus restructuring versus capital markets? Thanks.

Ken Moelis (Chairman and CEO)

Look, it's always hard to project because restructuring is based on the economy, interest rates. Look, we did have a very good year. The economy feels strong enough that as of now, I don't see an event that would cause a major disruption. Of course, I have to also say that things are pretty volatile in and around things like the government and things like that. So anything could happen. I would expect 2025 to be a year that looked a lot like 2024 as of now, as of now, and that's without any external events in the restructuring world. I think on to your answer, about 60% of our revenue was M&A. That doesn't mean it was all restructuring. The rest is capital markets, really capital markets and restructuring. And those numbers, by the way, are for the full-year.

James Yaro (VP of Equity Research)

Okay. Thank you. That's very clear. Maybe just quickly on the compa ratio, I think you were well within the range of the sensitivity that you gave for the compa ratio for 2024. Maybe if you could just provide any context on the compa ratio progression to 2025 and whether that sensitivity is still something we should be thinking about?

Ken Moelis (Chairman and CEO)

I think it's more complicated. Look, we gave a pretty good algorithm and stuck to it for the year. As you get closer to market-based low 60s compa, it's going to start flattening out. It's not a linear progression. I think we do have leverage. If everything stayed the same, I think we'd probably get 75% of those savings. And that's if we didn't do anything exciting for the year, but I will say 75% of the savings per $100 million is kind of what we gave you.

And again, I just want to reiterate, as you get down near the low 60s, it just becomes competitive with the market and what everybody else is doing. That's kind of where we're not planning on linearly going through that in any capacity. But then you have other things like this Private Funds Advisory hire we made. We do intend to build a market-leading business around that. How big and how fast we do that will affect that. But we think we have a market-leading banker to put us in position. We think it's an important project for us, and we'll be aggressive.

James Yaro (VP of Equity Research)

That's very clear. Thanks a lot, Ken.

Operator (participant)

Next up is Brennan Hawken, UBS.

Brennan Hawken (Senior Analyst Equity Research)

Good afternoon, Ken and Joe. Thanks for taking my question. Curious on capital, Ken. So saw the dividend increase, clear sign of confidence from you. And I know that you have an expressed fondness for dividends and being in the dividend-growing club and whatnot. But with fully diluted shares on an average basis from 4Q 2023 to 4Q 2024, increasing by 12%, what are your thoughts on allocating some of your excess capital or capital generation to buybacks to neutralize the employee compa?

Joe Simon (CFO)

Can I just correct one thing that you said, Brennan? You're looking at an accounting result with respect to share count. And as you may remember, when you run losses, which is what we did in 2023, you only have basic count. And the fully diluted count is what you're looking at at the end of 2024. So you basically are looking at apples and oranges. It did not grow by 12%. But I'll let Ken answer the question now.

Ken Moelis (Chairman and CEO)

To the gist of the question, which is, look, we're 12 months away from, I think, on this earnings call, being asked if our dividend was safe, and today, we're being asked what we're going to do with our excess capital, so we increased the dividend because it's very timely and quickly gives away what we think will be excess cash generation, and we're confident in that, so we raised the dividend, and from there, we will return the capital. It may be a series of things. It might be stock repurchases. We're not against that. We repurchased a large amount of stock a few years ago, so we're not against that.

It's going to be determined by us, the board, the market, how we want to get the capital back to you, a series of things, but again, it's a good conversation. I'll be discussing what we're going to do with our substantial excess capital versus can we make our dividend. So we'll address that. And believe me, we will not keep any of the capital. It will be returned in the best way we can think of and as quickly as possible.

Brennan Hawken (Senior Analyst Equity Research)

Okay. Totally fair. And I get the irony, Ken. There's no doubt. And Joe, thanks for pointing that out. If we just convert to 1Q, then it's 8%, and that's over a year and a half, nearly two years. So it's a more modest amount of dilution, for sure. So appreciate all that. When you're thinking about the productivity levels, right? So you guys did really. There's no other way to describe it. I mean, you really did quite a great job here in 2024, very strong finish to the year. You got to nearly $8 million of advisory revenue per trailing MD. So really turned what we were all thinking was going to be a pretty bad year into quite a solid one.

Given the quantum of banking talent and the caliber that you've added, you flagged the tech team's contribution here this year, Ken, how should we be thinking about that metric? And given the new team and the new capabilities, is 2021 really such a stretch from a productivity perspective? You guys did 12.5 in that year.

Ken Moelis (Chairman and CEO)

Look, I don't know the full answer to that, but I will say the tech team, remember, it's only 18 months into it. I don't think we're at full run rate with the revenue per head on that team. This is, again, it takes time to build up, and we're seeing the benefits. Our industrials team, we added in from Credit Suisse, so that's about a year in, maybe a little more. We then made a big investment in energy, and we're extremely happy with energy. Energy, I think you're going to see ramp up, and it's a big vehicle. Lastly, I'm very excited, but we do have some garden leave on the private funds advisory. It's a large business for many of our peers, and it's been a very small business for us.

So the headcount, and that's the same. A lot of the same calling effort to the sponsors. We will add MDs there, but I think the revenue per MD there. Brennan, I don't really know the answer, but my gut feel and my hope is that, yeah, that 2021, you probably had an S&P 500. I'm doing this out of memory. That was probably at the beginning or is up significantly. I'll just leave it. It's up significantly.

The amount of private capital is up significantly. The opportunity to do business in a larger global economy with larger deals. By the way, we had no tech team in 2021, which was kind of a glaring hole in our go-to-market, especially because 2021 was a pretty good tech year. So look, I'm excited to find out. Let's leave it that way. I'm excited to find out, and I'm not limiting it to that. I've never limited it to that, but we'll find out.

Brennan Hawken (Senior Analyst Equity Research)

Fair enough. Thank you for the color.

Operator (participant)

Next question today is from Brendan O'Brien, Wolfe Research.

Brendan O'Brien (Senior VP)

Hey, good afternoon, and thanks for taking my questions. I guess to start just on the sponsor business, you say that you're starting to see signs of a pickup there. It would be great to get a sense as to how meaningful of an acceleration we could start to see. And on top of that, a lot of the restructuring activity has been focused among sponsor clients through LME activity. I was just wondering whether there's any connection between the elevated restructuring activity among sponsor-backed companies and the subdued sponsor M&A backdrop.

Ken Moelis (Chairman and CEO)

I think sponsors are definitely coming forward. I mean, again, is it, I don't know, on a scale of one to 10, I guess a year ago, I'd give it a two or a three. I think we're probably at a six. Again, very rough estimate of mine. I don't think we're at full speed. Again, I'd go to 2021, when on a scale of one to 10, that was kind of a 10. Everybody was buying and selling at the same time, and it was active. But I think we're kind of at a six. But my feeling is people want it to get, as opposed to a year ago where I think people were like, "Hey, we're not doing anything, and we really don't expect to do anything." I think we're doing things, and we expect to do more and want to do more.

So I think the desire and the bias is to be more aggressive. On the creditor side, it's interesting. Probably our biggest opening is a lot of our restructurings were company side or debtor side. It's where we do a lot I mean, it's probably 70/30. And we are being much more active now on the private credit side and trying to get in on that side of the restructurings. Is your point like these companies couldn't sell, so they're getting into trouble? I don't think that's the answer because it's hard to sell a company that can't cover its debt.

So I don't think M&A truly covers restructuring. I think restructuring might be driven more by interest rates which just make the onerous debt obligations kind of come in quicker than they would have three or four years ago. But I don't think it's the M&A that's driving it. In fact, if anything, I think some of the private capital solutions that we're doing, very picky preferred, structured rescue credit, that's probably staving off some of the restructuring more than M&A would.

Brendan O'Brien (Senior VP)

That's helpful context. I guess for my follow-up, I just wanted to touch on the compa ratio. It was great to see the compa leverage come through this year. And I think you kind of alluded to this in your answer to a prior question, but when you provided the incremental guidance, you indicated that you thought you could get back to a low 60s compa ratio with about $1.3 billion-$1.4 billion of revenues. I just wanted to get a sense as to whether you think that's still the case today or has the continued investment in the business maybe pushed that number a bit higher.

Ken Moelis (Chairman and CEO)

Yeah. I don't remember saying it exactly because even the algorithm we hit didn't really go to that number if you did it straight-line. So I don't think that. I think I might have said something like, "By the fourth quarter, we might be having a run rate of revenue." I might have said at one point that would justify getting back to low 60s, 60s in that range. And I think that's kind of where I, that's what you get. So that would be a couple of hundred points. I think it's higher than the revenue number you're talking about. There is leverage, by the way, all the way up, but it just gets more and more difficult as you get there.

Joe Simon (CFO)

And we've been making. We continue to make substantial investments. Last year, this year, we expect to. So yes, that will also have a. That's a headwind to the operating leverage that you're.

Ken Moelis (Chairman and CEO)

Yeah. I want to be clear on that. It's not like we didn't do anything this year in terms of investing. Even bringing down the compa ratio, we did invest, and so inherent in 2025 is some investment. The private funds advisory thing could be a little larger and more aggressive than just regular way sector banker. It'll depend how fast and how quick we can get moving on that. We have garden leave and lots of things like that, but we're going to move as quickly as we possibly can to build that out.

Brendan O'Brien (Senior VP)

Great. Thank you for taking my questions.

Ken Moelis (Chairman and CEO)

Thanks.

Operator (participant)

We'll go next to Ryan Kenny, Morgan Stanley.

Ryan Kenny (Research Analyst)

Hi. Thanks for taking my question. So you've been really strong at hiring and protecting your workforce in downturns and then taking share and market upturns. So as the market starts to recover, is the recruiting environment getting more competitive, and does that slow the pace of leaning into hiring, or do you expect to continue hiring at pace?

Ken Moelis (Chairman and CEO)

I think the environment's not gotten any more competitive. It's about the same as it's been. I actually think the continuing what I call regulatory crunch on the major banks makes people available. I actually think the onerous capital restrictions. I think there was I said it at the Goldman Conference when I was there. I do believe that the entire transaction financing economy is switching from being bank-centric to being I won't call it private credit-centric, but to being institutional-centric, whether that be sovereign wealth funds, insurance, private credit. I do think the regulators intend on taking the risk out of the taxpayer-guaranteed financing sector, which is commercial banks. And I agree with them. That should have been done long ago. But you can see it. I think there was a major bank that two weeks ago announced they were shutting down their entire investment bank.

And I think bankers are starting to see what they have to do is look at the market and realize that being independent and not having the conflicts and the problems of being a regulated financial institution lead the best. I think the best people in the world tend to want to come to an independent firm in which creativity and intellectual talent is highly recognized. So that continues to happen, and that's where a lot of the talent comes from.

Ryan Kenny (Research Analyst)

And then just to follow up on the quarter, revenues were clearly really strong. Should we think about the build through 2025 as building off of 4Q annualized revenue numbers, or should we look more at full-year 2024? Was there anything idiosyncratic in the quarter, any big fee events or pull forwards that we should be thinking about as we model into 2025?

Ken Moelis (Chairman and CEO)

Interestingly, there was nothing really unusual about Q4. I think our pull forward, Joe, was what, 8?

Joe Simon (CFO)

Yeah. It was modest, which was the same as third quarter, so.

Ken Moelis (Chairman and CEO)

Right. Very light. The pull forward wasn't there. There was no unusual fee. If anything, we always have puts and takes. Deals move and deals move in, deals move out. The most interesting part is the deals that moved out in the fourth quarter were mostly regulatory, and so the move-outs are going to skip a quarter. We had some things move from quarter four to quarter one, but from quarter four to quarter two because they were regulatory. And I thought it was about normal of what went in versus what got delayed, other than what got delayed didn't get delayed by weeks. It got delayed by a couple of months. Again, it's always been a bit of a seasonal business.

The amount of transaction animal spirits we saw arise in the fourth quarter, I think were more important than the seasonality alone, but I don't want to discount. We always have a first quarter is always the lightest, and fourth quarter is always not always. Usually the best and the first quarter is usually the lightest. But I do think over the full course of the year, I feel like the trend is the trend is good. I just can't say that you should annualize one quarter.

Ryan Kenny (Research Analyst)

Right. All right. That's helpful. Thank you.

Operator (participant)

Next up is Ken Worthington, JPMorgan.

Ken Worthington (Brokers, Asset Managers, and Exchanges Equity Analyst)

Hi. Good afternoon. Big questions largely answered and asked and answered. Joe, a little one for you. The compa ratio is usually early in the year, the compa ratio is like a placeholder, and then you true up later in the year. How should we think about the placeholder as we start thinking about compensation for 2025?

Joe Simon (CFO)

Yeah. It's a good question. As you know, we always have a bump in the equity charge due to the incentive equity, which is granted later this month. And then the retirement-eligible participants are accelerated in the first quarter. And then what Ken was describing as typical seasonality in the first quarter, I would probably start with where we landed for the full year as a starting point placeholder, and we'll go from there.

Ken Worthington (Brokers, Asset Managers, and Exchanges Equity Analyst)

Okay. Great. Thank you very much.

Operator (participant)

Just a reminder to the audience, it is Star One if you have a question. We'll go next to James Yaro, Goldman Sachs.

James Yaro (VP of Equity Research)

Thanks, Ken, for taking the call. I just wanted to clarify on your comment around the 25% compa ratio here. Just to confirm, are you saying that for, let's say, $100 million increase in revenue, that 75% of that would drop to the bottom line? So that'd be like a 25% compa margin. Is that right? Is that what you?

Ken Moelis (Chairman and CEO)

No. Look, Joe's looking at me because he said, "Stay away from extending out the algorithm we want." And of course, I stepped in it. I was just saying that it's not a straight line. I was going to say it's asymptotic what happens as you go to 61, but Joe told me no one will know what that means. So I'll try it and see if anybody writes that and gets it. But it's just going to slow. We were doing 400 basis points, I think we gave you at the beginning of last year per 100. It can't go that fast. It's not a straight line. There is room to improve. So I was saying, would we get 300 basis points? If we did nothing else, maybe. Maybe that would be right.

But again, that's going to change because as you get that, you're getting down closer and closer to low 60s, and then you're going to look around and see what is the competitive environment. What do you have to do? As you get there, you're not going to go through that, so the question is how close, how quick, and when do you do it?

I don't think the right answer here is to have an algorithm from this point on, other than to say to you, "I think we can get a lot of savings," and then offset that by any outsized investment in a new business that is outsized. I think inside of that compa ratio, we always do think we're going to hire some people. So I don't want to say that we're but if we do something in which, let's say, PFA, which could be a sizable thing, that might affect it too. So it's complicated, and Joe told me not to do it, and I made the mistake of getting close.

Joe Simon (CFO)

Yeah. I mean, again, remember the purpose. We were at an 83% compa ratio in 2023. We wanted to demonstrate that there was a path to getting to something that was more reasonable. And that's why we put out that algorithm. I think it's going to be more difficult to be precise around that, given some of the opportunities that are before us with respect to investment and where we are today. But we will be striving for operating leverage. That is absolutely on the bingo card.

James Yaro (VP of Equity Research)

Okay. That's very clear. Thank you.

Operator (participant)

Everyone, at this time, there are no further questions. I'll hand things back to our speakers for any additional or closing remarks.

Ken Moelis (Chairman and CEO)

Thanks for joining us, and we hope to come back and continue to improve all the elements that you've been asking about. Thank you.

Operator (participant)

And once again, everyone, that does conclude today's conference. We would like to thank you all for your participation. You may now disconnect.