PennyMac Mortgage Investment Trust

Good afternoon and welcome to PennyMac Mortgage Investment Trust's second quarter earnings call. Additional materials, including the presentation slides that will be referred to in the call, are available on PennyMac Mortgage Investment Trust's website at pmt.pennymac.com. Before we begin, let me remind you that this call may contain forward-looking statements that are subject to certain risks identified on slide two of the earnings presentation that could cause the company's actual results to differ materially, as well as non-GAAP measures that have been reconciled to their GAAP equivalent in the earning materials. Now, I'd like to introduce David Spector, PennyMac Mortgage Investment Trust Chairman and Chief Executive Officer, and Dan Perriotti, PennyMac Mortgage Trust Chief Financial Officer.

Thank you, Operator. P&T's second quarter financial results reflect increased levels of income, excluding market-driven value changes, and contributions from all three investment strategies partially offset by fair value changes in the interest rate-sensitive strategies due to elevated volatility. Net income to common shareholders was $15 million for diluted earnings per share of 17 cents. PMT's annualized return on common equity was 4 percent, and book value per share was $15.89 at June 30th, down slightly from the end of the prior quarter. Turning to the origination market, current third-party estimates for total origination average $1.7 trillion in 2024 and $2.1 trillion in 2025. reflecting projections for lower rates from current levels and increased refinance volumes. P&T's financial performance in recent periods highlights the strength of the fundamentals underlying its long-term mortgage assets and our expertise in managing mortgage-related investments in a challenging environment. I am pleased to note that in the second quarter, we successfully issued $217 million of exchangeable senior notes and $355 million of term notes secured by Fannie Mae MSRs, both at attractive terms and both with consideration of similar notes with upcoming maturities. Given its increased investable capital in the current market, P&T is expected to retain an increased percentage of total conventional corresponding low production in the third quarter. Dan will provide additional detail later on in the discussion. More than two-thirds of PMT shareholders' equity is currently invested in the season portfolio of MSRs and the unique GSC lender risk share transactions that we invested in from 2015 to 2020. As the majority of mortgages underlying these assets were originated during periods of very low interest rates, we continue to believe these investments will perform well over the foreseeable future. as low expected prepayments extend the expected asset lives. Additionally, delinquencies remain low due to the overall strength of the consumer, as well as a substantial accumulation of home equity in recent years due to continued home price appreciation. MSR investments account for more than half of PMT's deployed equity. The majority of the underlying mortgages remain far out of the money and we expect the MSR asset to continue to produce stable cash flows over an extended period of time. MSR values also benefit from the current interest rate environment as the placement fee income PMT receives on custodial deposits is closely tied to short-term interest rates. Similarly, mortgages underlying PMT's large investment in GSE lender risk share have low delinquencies and a low weighted average current loan to value ratio of 48.5%. These characteristics are expected to support the performance of these assets over the long term. And we continue to expect that realized losses will be limited. Slide seven outlines the runway potential expected from P&T's investment strategies over the next four quarters. PMT's current run rate reflects a quarterly average of 33 cents per share, down slightly from 35 cents per share last quarter, driven primarily by lower expected asset yields in the interest rate-sensitive strategies. Now I'll turn it over to Dan, who will review the drivers of PMT's second quarter financial performance.

Thank you, David. PMT earned $15 million in net income to common shareholders in the second quarter. or 17 cents per diluted common share. PMT's credit-sensitive strategies contributed $16 million in pretax income, including $11 million from PMT's organically-created CRT investments. Credit spreads were relatively unchanged during the quarter, with only minor impacts on the fair value of our investments. As David mentioned, the outlook for our current investments in organically-created CRT remains favorable. with a low underlying current weighted average loan-to-value ratio of below 50% and a 60-day delinquency rate of 1.11%, both as of June 30th. Income from opportunistic investments in CAS and Stacker bonds issued by the GSEs totaled $6 million in the quarter. As mortgage credit spreads tightened over the last several quarters, the go-forward returns on some of the investments that we had previously made fell below our threshold. In this quarter, we sold $8 million in subordinate tranches of investor loan securitizations we participated in during 2021. The interest rate-sensitive strategies contributed $17 million of pre-tax income. The fair value of PMT's MSR investment increased by $46 million due to slightly higher mortgage rates at quarter end. These fair value gains were more than offset by changes in the fair value of MBS interest rate hedges, and related income tax effects during the quarter. MBS fair value decreased by $39 million, and interest rate hedges decreased by $18 million. Income on assets held in PMT's taxable REIT subsidiary drove a tax expense of $3 million. The fair value of PMT's MSR asset at the end of the quarter was $3.9 billion, essentially unchanged from March 31st. Delinquency rates for borrowers underlying PMT's MSR portfolio remain low, while servicing advances outstanding decreased to $83 million from $110 million at March 31st. No principal and interest advances are currently outstanding. Turning to the correspondent production segment, pre-tax income was down slightly from last quarter as lower margins offset the impact of higher volumes. Profitability in the segment in recent periods has benefited from the release of reserves related to representations and warranties provided at the time of securitization, as the high volumes of loans produced from 2020 to 2022 passed the three-year window for violations with minimal repurchase-related losses. We expect the contribution from the release of these reserves to decline to more normalized levels over the next several quarters. Total correspondent loan acquisition volume was $23 billion in the second quarter, of 24% from the prior quarter, driven by an increase in the size of the mortgage origination market. Conventional loans acquired for PMT's account total $2.2 billion of 26% from the prior quarter. As David noted, in the third quarter, we expect PMT to retain a higher percentage of total conventional correspondent production from 30 to 50% versus 18% in the second quarter. The weighted average fulfillment fee rate was 20 basis points, down from 23 basis points in the prior quarter. PMT reported $35 million of net income across its strategies, excluding market-driven value changes and the related tax impacts from $28 million last quarter, primarily due to higher average yields on interest-sensitive assets during the quarter. Turning to capital, we are fully reserved in our liquidity management for repayment in full of the $210 million in exchangeable senior notes due in October 2024. In May, We issued $217 million of new five-year exchangeable senior notes with a coupon of 8.5%. In June, we issued $355 million in five and a half year Fannie Mae MSR term notes at SOFR plus 275 basis points. And after quarter end, we redeemed $305 million of similar term notes due in 2027 with a coupon of SOFR plus 419 basis points. These successful financing activities further solidify PMT's capital position, illustrating our deep access to capital and liquidity across various types of transactions and investors. We'll now open it up for questions. Operator?

I would like to remind everyone we will only take questions related to PennyMac Mortgage Investment Trust, or PMT. We also ask that you please keep your questions limited to one preliminary question and one follow-up question. As we'd like to ensure, we can answer as many questions as possible. If you would like to ask a question, please press star 1 on your telephone keypad. And if you'd like to withdraw that question, again, press star 1. Your first question comes from Jason Weaver with Jones Trading. Please go ahead.

Hi. Good afternoon, everyone. Thanks for taking my question. You know, I fully agree with you on where credit spreads are and your decision to retain more correspondent production. It makes a ton of sense. But ultimately, can you talk about what form that will take? Is this as simple as, you know, just keeping more whole loans on the balance sheet, or will you be looking to term fund that via securitization eventually?

So for those loans that we're keeping through the core or that PMT will be, the additional loans that PMT will be retaining through the correspondent channel, You know, primarily those will consist of the, you know, Fannie Mae and Freddie eligible loans that P&P has historically retained. And those, generally speaking, we sell or securitize to the agencies. A few we sell as whole loans to third parties. But generally the investment that's generated from that is in mortgage servicing rights in addition to the gain that we earn through the correspondent securitization. So don't have any plans currently to retain loans specifically on balance sheets other than potentially through securitization of some, you know, certain sets of loans, you know, that we may look to retain and then, or that we may look to securitize and retain subordinate tranches on, which we've done, you know, certain periods in the past. And that looks to be, you know, a potential opportunity that could be arising again in the current environment.

Okay, got it. That's clear. And just my follow-up is really on the macro level. Sort of at what level or range of benchmark 30-year mortgage rates do you see as really the inflection point for, you know, refinancing activity and prepayment? And I really ask as it pertains to correspondent production levels.

Look, I think it's a gradual decline down. I think, you know, if you look at originations post-COVID, you know, we kind of jumped and kind of ran through loans with 5% handles. And I think it's really in the 6% to 7% range where you see a lot, and even north of 7% where you see a lot of opportunity. The way I think about it is it's going to be this slow grind down. I think when rates get to 6.5%, that's where it really picks up steam. And I think at six, you're in what I would deem a really robust refi market because it's not just the existing firsts that are in the money. You could have loans that are 4% and 5% taking out debt consolidation, cash out refinances to either pay off existing HELOCs or closed-end seconds or other forms of debt. And so it's really a function of what's behind the first lien. that helps drive the refinanceability. But I, you know, I continue to believe that, you know, it's, you know, 10-year around three and three quarters, mortgages down 50 basis points, that it really is, you know, to me, that's the signal of a true new market or new phase of, you know, the refinanceability.

Great. I really appreciate that, Culler. Thank you.

Your next question comes from the line of Doug Harper with UBS. Please go ahead.

Thanks. I know you guys take a long-term approach to the dividend, but, you know, I guess how are you thinking about the dividend, you know, and given kind of the run rate earnings that you laid out and that that took a slight tick down this quarter?

Yes, so to your point, we do take a long-term approach to the dividend and, you know, look to Obviously, over time, we want the dividends to reflect the earnings capacity of the company, but at the same time, you know, as the market gyrates, don't necessarily look to adjust it with every sort of gyration. We did see a little bit of a tick down in, you know, in our run rate, as you mentioned, from 35 cents to 33 cents versus the dividend at 40 cents. You know, that was primarily driven by, some additional reinversion of the yield curve over the past month or two. As we look out, you know, really what some of what that's reflective of is an expected decline in short-term rates and that would drive down our financing rates. And really, as we look out a little bit past the horizon of, you know, of our forecast here into later next year, we do see the, you know, in our forecast, the potential for our EPS to move up back above the 40 cent level. And so, given that, we see that potential. We're not looking to adjust the dividend. We don't expect to adjust the dividend in the short term. I would really look to keep it stable as the market sort of readjusts as expected, and we see short rates come down over the next few periods.

It's just a follow-up to that. In addition to kind of the direction of short rates of the yield curve, what other factors could be a positive towards getting run rate earnings back to the dividend?

The deployment of capital is important, and so that's part of why we are looking to adjust You know, we're looking to adjust and deploy more capital in PMT through the correspondent channel, which we view as, at the current point in time, or at this point in time, the best option for PMT to deploy the capital that it raised in the second quarter through its convertible debt issuance. As I had talked about a little bit earlier, in addition to investments in MSRs, You know, we are looking also at potential securitizations of certain subsets of the loans, you know, notably investor and second home loans, where we do think that those securitizations have become viable again, and we do have sufficient amounts of those types of loans coming through the Correspondent Channel to be able to, you know, form a securitization, you know, further investment into those areas I think could help drive the, you know, drive the earnings back toward the dividend level. But in addition to that, you know, the other driver with the de-inversion of the yield curve, you know, having our long-term assets, the yields on our long-term assets, which are, you know, marked to market according to, you know, where the current market is and given the longer, that longer rates are currently lower than shorter rates, having short rates come down some and normalize that. And of course, for our interest rate sensitive assets, we are hedged for those interest rate changes, but that will drive the sort of earnings potential, the run rate earnings potential, you know, up given the balance of the longer term yields and the shorter term yields. And we think that's probably the biggest driver.

You know, Doug, PMT is a really uniquely, from the point of view that it has, this really unique synergistic relationship with PFSI. And when you look at what's going on in the marketplace with more and more loans being delivered outside of the GSEs and being securitized, we're really encouraged by what we're seeing in terms of the ability to aggregate in a short period of time and be able to create credit-related investments for PMT in a sustainable way One of the beauties of CRT was in addition to having credit risk investments, we were able to create this sustainable asset creation mechanism where PMT could invest in credit-related assets. And, you know, I'm seeing what's going on with subsectors of the market to the point Dan raised on investors and second homes in particular. We're seeing opportunities to create investments that are either at our return target or maybe a little above or a little below. But I think what's perhaps underappreciated is the fact that if we can do this on a consistent basis and we continue to show investors that we have the ability to raise and deploy capital, that's really powerful for PMT. In addition, we're seeing in PFSI, we're seeing a really, really strong growth in our jumbo business in PFSI that it could use, you know, we could take that jumbo business and sell to PMT, and PMT could buy additional jumbos through the corresponding channel to do jumbo investments. And then finally, while closed in seconds, don't at this point return the, you know, anywhere near the targeted return that we'd like in PMT. That's another asset class that we have access to. So if you go back to the creation of PMT, this was the investment thesis of PMT. And we believe that depending on what happens in the election and the regulatory environment, we're really positioned very, very well to seize on an opportunity that we haven't seen in quite some time in the capital markets.

I guess just to that last point, do you foresee that opportunity being more durable than it's been since PMT was created since that opportunity has kind of been fleeting in its life?

I don't like predicting the future, but I can tell you it's the most traction I've seen in private label securitization since we started PMT. And I think the capital runs deep, but I think we have a real advantage in the fact that we have the flywheel of sorts where we can buy the loans and create the security, sponsor the securitization, sell the senior bonds and retain the sub bonds. And that's, I don't know who else has that, you know, who has that ability. All right.

Appreciate the answers. Thank you.

Your next question comes from the line of Crispin Love with Piper Sandler. Please go ahead.

Thanks. In the interest rate-sensitive strategy segment, can you just speak to the investment opportunities you're seeing and which you view as the best risk-adjusted returns, whether it's on the MSR or the agency and non-agency sides as you look forward, and how those opportunities compare to the credit side?

Sure. In the current environment, and this goes along with some of the commentary and some of the actions or activities that we've had in the portfolio recently, You know, on the credit side, we've seen credit spreads tighten over the last several quarters. You know, we have been opportunistically purchasing credit investments, primarily Stacker and CAS securities. We've generally been divesting of those and certain other credit investments in the recent quarters as spreads have tightened significantly and brought some of those investments below our return hurdles. Where we see the most attractive places to invest currently, as you mentioned, is in the interest rate-sensitive strategies, primarily in mortgage servicing rights. And so we have access through the correspondent channel to those mortgage servicing rights. That's why we're shifting a portion or P&Cs retaining in Q3 a greater portion of those conventional correspondent loans. given the capital that it raised through its convertible issuance. That's what we see as the most attractive and most sort of present opportunity. We also are looking at MSR portfolios that come to market on the secondary market or bulk MSR portfolios. We've participated in a few of those purchases. or bought a few of those portfolios over the past few quarters. In recent periods, we've seen those portfolios really be, you know, pretty bid up to a significant degree to where the acquisition of MSRs through the correspondent channel appears more attractive at this point in time. But we still, from a collateral point of view and from a PMC positioning point of view, generally see the low-coupon MSR portfolios as attractive. the pricing in the bulk market has not been what we're looking for most recently. As David mentioned, the other opportunities that we're looking at are really around the securitization of some of the production that comes through in the correspondent channel, potentially also in terms of loans that are originated from the direct channels at PFSI. and potential generation of securitizations and retention of the subordinate bonds there. So that's another avenue that we view as attractive currently, and especially to the extent that we can create a program that allows us to consistently invest in those types of assets.

Great. Thank you. That's helpful. And then just on the third-party estimates that you mentioned early on in the prepared remarks on mortgage originations, I think it was $1.7 trillion and $24 trillion and $2.1 trillion and $25 trillion. In the current environment, do you believe those estimates are about right with the forward curve and your rate expectations, or do you think those could be a little bit too aggressive with what you're seeing right now?

Look, I think they are, personally, I will tell you that they're backloaded to, you know, Q3 and Q4. And in that backloading, there is a perception that rates are going to decline. And so, I think you have to ask yourself, if you just look at the current run rate and you annualize it, or you look at the first two quarters and you annualize it, you don't get to 1.7. And so the question is, what is going to be the general direction of rates as you go through those quarters?

Thank you. I appreciate you taking my questions. Thank you.

Our next question comes from the line of Bose George with KBW. Please go ahead.

Yeah, good afternoon. I wanted to try and quantify just the benefit from, you know, retaining more more of the conventional production at PMT. So this is looking at the difference between the gain on sale and the fulfillment fee. It's 35 versus 20. So can we just look at sort of 15 basis points on the incremental loans that are being retained at PMT?

I think that the primary benefit is really around the capital deployment. So if we look at... you know, if we look at the gain on sale or the gain in PMT, a portion of that is driven by the, a portion of that is driven by the gain of the loans that flow through to PFSI. A portion of it is also driven by what I've mentioned earlier in the call, some of the rep and warrant relief, which is really related to loans that we sold historically and not necessarily loans that are being sold and securitized in the current period. So really the, you know, the additional correspondent benefit on those loans is, you know, is a smaller spread is a few, you know, a few basis points. The really the benefit overall, a few basis points net over the fulfillment fee. Really the primary benefit overall is in terms of the retention of additional investment and additional MSR. that, you know, will grow that MSR asset a bit and drive additional earnings from, you know, from a growing MSR portfolio or a larger MSR portfolio as opposed to the MSR portfolio, which really has been pretty static over the past few quarters.

Okay. Okay, great. That's helpful. Thanks. And then on slide seven, where you have the run rate earnings, does that just incorporate the forward curve or? Like if the curve steepens, is there any benefit or how should we think about that?

Yeah, it does. Yeah, it incorporates the forward curve. So to the extent that the curve steepens and really the primary steepening would be either, yeah, either long rates going up or really short-term rates going up like a Fed cut because, you know, to the extent that you think of a steepening as twos, tens or something along those lines, the two-year declining, at this point doesn't give us a lot of benefit. We don't really get the benefit until actual short rates decline, and we get some benefit in terms of the financing. So either the yields on our longer-term assets go up, we mark those to market, and are generally hedged against that, and that would be a benefit in terms of the ongoing returns of the assets versus the financing, or if we see short rates go down, then the spread, you know, and long rates stay the same, then the spread between the short rates and the longer-term yields, you know, would grow, and that would drive additional earnings on the interest rate-sensitive strategies. Okay, great. Thanks.

Your next question comes from the line of Matthew Howlett with B. Reilly Financial. Please go ahead.

Oh, hey, David. Hey, Dan. Thanks for taking my question.

Hey, Matt, how are you?

Good, thanks. Hey, look, on the subject of the balance sheet and the capital constraints, I know you want to put more money to work out there. If rates start coming down in September, does that change your opinion on maybe trying to refinance the 24 maturity? I mean, what's the appetite? I'm assuming the preferred markets probably aren't open quite yet, but you probably don't want to issue equity below book. So just thoughts on if the environment starts going down, if the rates start heading downward.

So, yeah, to the extent that we saw on the financing side, to the extent that we see rates decline, we could look at doing some additional issuance. But with respect to the 2024 maturity, really the way that we have been looking at that and that we've sort of talked about in the past is that we've fully reserved for that in our liquidity forecasting. And so, as you know, as we were looking out, we had constrained investment because we wanted to make sure we had enough liquidity reserved to pay off the 2024 maturity that comes later in the year of our convertible. But as given that we raised additional convertible debt in the second quarter, that really freed up some investment capacity for us. And that's really what's leading us to drive toward additional investment through an increased participation in the conventional correspondent loans that come through the correspondent channel and drive investment in MSR as well as additional correspondent activity and income. But to your point, to the extent that we see some additional opportunities as interest rates decline to issue additional financing, then we would potentially look to You know, look to take advantage of those opportunities as well, which could drive additional additional potential for investment. Well, sorry, I think your perception of the preferred and our opportunities on the preferred and the common equity side are correct currently where we don't see those as available opportunities in the current market.

Well, I say it because, David, I mean, you've been in the business a long time, and to hear you talk about securitization market like you just did is just, I mean, it's just really eye-opening. My question is, I mean, non-agency securitization, where is PFSI selling all that production today? That's one. And then two, if PMT was to start acquiring investor seconds, I mean, what type of returns are we talking about here? I mean, I know it's going to depend on what you assume for losses and where the securitization spreads are and yields. But I mean, I remember when you guys were doing sort of 20% yields on the CRT. I mean, we're talking about that type of ROEs if you start doing a jumbo program or a second program. Oh, I wish. Those are great days.

Look, to that point, there's been this migration of loans that have either high loan level price adjustments or higher cost to deliver the GSEs away from the GSEs to cheaper cost of capital. In particular, we've seen this with insurance companies and other organizations that are aggregating those loans and securitizing them. Now, they have a lower cost of capital than PMT, but at the same time, I am seeing that specifically on investors in second homes, there's an opportunity to do a securitization and do it that gets, you know, our dividend yield is roughly 10%, and that's kind of how we view it, net of our expenses of the returns that we want to achieve. And I think that, I think it's achievable. Is this going to be 9.75 or 10 and a quarter? But suffice it to say, the way we look at the returns is in a very conservative fashion. We look at returns with burdening the investment with the margin call reserves that are required with the financing. We stress test it at, you know, two times losses or, you know, faster speeds. You know, we look at where does the investment completely break. So we're, you know, we have a long history of doing this with CRT in particular, but I do think it's, I think it's, what's exciting about it is it's a meaningful opportunity for us potentially meaningful opportunity to add credit-sensitive investments in the PMT by leveraging the synergistic relationship that we have with PFSI, and that's what I'm enthusiastic about.

Yeah, and look, we'd love to see you grow in the next part of this cycle, get more capital in the company. Best of luck. Thanks a lot. Thanks, Seth.

Your next question comes from the line of Doug Harper with UPS. Please go ahead.

Thanks. Just wanted to follow up, you know, how you're thinking about the different risk profile of kind of the current coupon MSR from correspondent versus the lower coupon that's currently in the portfolio. And if you could just remind us, you know, kind of the recapture agreement that PMT has with PFSI.

Sure. So the, to your point there, the, and to what I raised earlier, PMT's sort of preferred investment in MSR in terms of collateral characteristics would be in the lower coupon that comprises, the lower coupon comprises the vast majority of its current investment in MSR. We expect that, you know, that investment in MSR to have Lower prepayment speeds, also more stable prepayment speeds as interest rates fluctuate because generally those loans are at 3 to 4 percent note rates, and we don't expect them to become refinanceable except in a very, very, very significant interest rate decline. However, those portfolios are priced in the current market when they come through bulk pretty fairly aggressively. as far as we've seen recently. Through the correspondent market, PMT is able to acquire more recently originated current note rate loans. So in, you know, loans with note rates generally in the sixes today, those loans are obviously more sensitive to refinances. And given that PMT itself does not, you know, does not originate loans is, you know, less beneficial to the extent that there, you know, there's an interest rate decline. However, PMT does have a recapture arrangement with PFSI to the extent that PFSI recaptures loans that are part of PMT's MSR. It can recapture around generally 35% of the MSR or the value of the new MSR and that varies a little bit depending on the recapture rate that PFSI achieves. So that's the protection that PMT has and benefit that PMT has as, you know, interest rates fluctuate and pertinent speeds might pick up.

Great. Appreciate it. Thank you.

Your next question comes from the line of Michael K. with Wells Fargo. Please go ahead.

Hi. I know you just said you don't like predicting the future, but do you think there's potentially a better chance of reviving the lender CRT that you did in the past, given what could happen potentially with the election?

Well, I think that, you know, we've been in discussion with With the GSEs about lender CRT, it's really doubtful for the foreseeable future. You know, the GSEs are creating CRT. They're not even selling all the CRT. I think that a few things need to happen. One is you need a much bigger origination market. But more importantly, you need a change in thought in terms of what do you do with the CRT. And the GSEs would have to be put in a position where they feel compelled to sell more of the bonds and they need the additional liquidity from a PMT. And so I think that there's a few things that need to take place, but I don't at this point believe that it's really in the cards. But to your point, Michael, you could have a change of administration, you could have a change in leadership at FHFA. And so, you know, we try to remain very close to the people in FHFA. I've been spending time in DC once a quarter in meeting people, you know, in and out of government. And so, we're just trying to, you know, really, you know, make ourselves available to leaders and to be able to make ourselves available to give our point of view. But I think that, you know, it's not something that we're really planning on, which is what makes the opportunity to do private label securitization so exciting for me.

Okay. And the second question is, I mean, does P&T have any interest in issuing equity below book value? I saw that $200 million distribution agreement recently filed.

Yes. No, consistent with our previous, you know, how we've operated through our entire history. We're not looking to issue equity below book value. We did renew our equity shelf, you know, which we had not used since the last renewal of note as we've been below book value. But we did renew that, and with that, you know, renewed our at the money agreements with our underwriters. We would really only look to utilize that to the extent that we saw, you know, PMT's price move above book value to potentially and had, you know, opportunities to be able to deploy the capital. You know, then we would, you know, potentially look to issue through that shelf. But we don't have any plans to issue equity below book value.

Okay, thank you.

We have no further questions in our queue at this time. I will now turn the call back over to Mr. Spector for closing remarks.

Well, I'd like to thank everyone for joining our call today, and thank you very much for your great questions. If you have any additional questions, please feel free to reach out to our Investor Relations Department, and they will be responsive as always. So thank you all very much, and have a good day.

This concludes today's conference call. Thank you for your participation and you may now disconnect.