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Operator
Welcome to ONNX's first quarter 2022 conference call and webcast. During the presentation, all participants will be in a listen-only mode. Afterwards, we will conduct a question and answer session with pre-qualified analysts. At that time, if you have a question, please press star 1 on your telephone keypad. If at any time during the conference you need to reach the operator, please press star, then zero. As a reminder, this conference is being recorded. I will now turn the conference over to Jill Hominick, Managing Director, Shareholder Relations and Communications at Onyx. Please go ahead.
Jill Hominick
Thank you. Good morning, everyone, and thanks for joining us. We're broadcasting this call on our website. Hosting the call today are Jerry Schwartz, our founder and CEO, Bobby LeBlanc, Onyx's President and Head of Onyx Partners, and Chris Govan, our Chief Financial Officer. Earlier this morning, we issued our first quarter 2022 press release, MD&A, and consolidated financial statements, which are available on the shareholder section of our website and have also been filed on CDAR. Our supplemental information package is also available on our website. As a reminder, all references to dollar amounts on this call are in U.S. unless otherwise stated. I must also point everyone to our webcast presentation for our usual disclaimer and cautionary factors relating to any forward-looking statements contained in today's presentation and remarks. With that, I'll turn the call over to Jerry.
Jerry Schwartz
Thanks, Jill. Good morning, everybody, and thanks for being with us today. I'm pleased to report, I'm very happy to report, that Onyx had a solid start to the year with continued progress in our plan to grow the business and increase shareholder value. Our investing capital per share, or as we used to call it, NAV per share, grew for the eighth straight quarter, ending at US $92.94, up 3% in the quarter and 19% over the last 12 months. Bobby and Chris are going to provide more detail about those results. Recently, we held our limited partner annual meetings in Toronto. They were really robust, well-attended, and informative. And that was the first time in three years since our last in-person event. It was really nice to see so many of our long-standing LPs as welcoming new ones. It was also a time to reflect on how much has happened since the pandemic and how much challenge and uncertainty we've all managed through. And I might add, continue to endure to some extent lesser, but to some extent. Through it all, the Onyx team has remained resolute in our commitment to driving value for our clients and of course for our shareholders. I'm very proud of our team and their accomplishments during this difficult period. Our team's success, I think, is directly linked to our values and consistent principles. One of Onyx's earliest principles has been to be a responsible investor, and I can remember that being right on the top of our agenda as early as 1984. More recently, we've expanded on that foundation as we continue to evolve our ESG program. That was really evident in our LP meetings, where our investors heard how we're creating more discipline how we track and report our ESG efforts. As well, we're using ESG more effectively. For example, with NRP platforms, we see it as an opportunity to identify and to execute on value creation for our operating companies, and we've seen it in several instances already. Another area where ONIX has been making real progress is diversity and inclusion. It's important that we continue to build on our commitment to increase diversity and to prioritize inclusion. Our objective is to create a program that's inclusive of all ONIX locations and all forms and aspects of diversity. We have a D&I Leadership Council, and it's co-chaired by Bobby and Jill, and it's setting an active agenda, which includes advancing our engagement with external stakeholders. Shareholders, of course, are an important part of that engagement, and we look forward to updating you and keep you abreast of our progress. Let me stop there, and I'll turn it over to Bobby for more on the quarter. Bobby? Bobby?
Jill
Thank you, Jerry, and good morning, everyone. ONIX had an active start to 2002 with progress across all of our businesses. Our invested capital per share was up 3 percent in a quarter, reflecting the resiliency and diversification of our portfolio. We're making headway in expanding fee-generating assets under management, which I'll provide an update on shortly. We updated our financial reporting this quarter to present fee-related and distributable earnings, part of our commitment to increase transparency and comparability with our alternative asset management peers. Chris will focus more on the results in his remarks. Most importantly, we remain committed to the strategy we presented at Investor Day. I feel confident that we're on the right path to create value for our shareholders. With that said, there is no question that we are operating in a challenging geopolitical economic, and market environment. But that doesn't diminish the solid fundamentals of our business. We believe we're in a stronger position today than we have been for years, which is reinforced by the following. One, we have a great team, and we're attracting the right people to expand our expertise and diversify our skills. It might seem cliche to say that our success is driven by our people, but it's true. We have the people, the culture, and the commitment to deliver. Two, our private equity portfolio is well positioned with good diversification. Today, we have active investments in 41 companies, one of the highest numbers in our history. Our companies managed effectively through COVID and are now executing on plans to drive future value. Since before the pandemic, our private equity returns are more than double that of the most relevant mid-cap index. Like all of you, we're closely watching the situation in Ukraine, and our thoughts are with those directly impacted, including the family and friends of our ONIX team members. The human impact is immense, and the economic considerations are real. From a portfolio perspective, we have limited direct exposure. We continue to monitor the broader secondary impacts, but currently expect any exposure to be immaterial in the context of our overall portfolio. Three, Onyx has weathered many market cycles before, making us a preferred partner in tough market conditions. Not many firms can say they've been in business for four decades. We bring that experience to bear every day in the decisions we make on behalf of our clients and shareholders. This experience is important as we navigate the current inflationary environment. Until now, we've been able to manage price press-throughs and have felt limited direct impact across the PE portfolio. This is a result of investing in businesses with resilient value propositions. With pressures ongoing and the expectation that price increases may eventually impact demand, we remain cautious and continue to seek out additional ways to mitigate impacts. Four, recent industry consolidation reinforces our understanding of the value of our asset manager. Our CLO business is just one example. As we saw with Carlisle's acquisition announcement of the CBAM portfolio of assets, acquirers are willing to pay a premium to acquire CLO businesses with strong earnings. Ours is a leading CLO business, which we will continue to grow. We priced our 24th US CLO last month and ranked 16th for CLO managers for global issuance in 2022. But these types of transactions are important reminders of the value ONIX shareholders already own. Finally, we have operational momentum. Over the past year, we significantly enhanced our ESG program, accelerated progress in D&I, and put an increased emphasis on employee engagement. Although these are often viewed as behind-the-scenes initiatives, they are critical to our ability to drive business and financial performance and attract and retain the best talent. We are making progress in all areas of our plan. The team is united in wanting to continue to grow our business and increase shareholder value. Here are examples of how we're doing that. As you heard from Jerry, we recently hosted our Limited Partner Annual Investor Meetings in Toronto. It was an important opportunity to get people back together and engage directly with LPs as we move forward with fundraising. In PE, we continue to anticipate a first close for ONIX Partner 6 in late Q2 or early Q3. ONCAP will formally launch fundraising in the fall. As I commented last quarter, it's a crowded fundraising environment. Recently, we heard more industry participants acknowledge how this is impacting fundraising timelines. We remain confident in our own plans and our ability to grow fee-generating AUM through our PE platforms. Over time, Onix has succeeded by staying true to our investing DNA. We invest in complexity and dig deeper to search out businesses with long-term resilient value, all in a disciplined way within our chosen verticals. These messages continue to resonate with our LPs. For the first time, the PE and credit investor meetings were fully integrated, a clear indication of the One ONIX approach becoming embedded in our culture. Following the meeting, we closed on a long-term credit investing partnership with Mercer. It's a customized cross-platform solution allowing investments to be dynamically allocated by our team. Mercer considered 50 firms in their process, choosing ONIX as one of its five partners. The arrangement is for $165 million in fee-generating AUM in 2022, with the opportunity to meaningfully grow the partnership in years to come. This is a first of what we expect to be many bespoke arrangements for clients made possible by the breadth of the full credit business we are building. As we told you at Investor Day, we're also exploring other new opportunities to add fee generating AUM. I'm pleased to share that we are forming a new platform focused on investing in transportation related assets used for land, air, marine, and industrial applications. The strategy will focus on investments involving hard assets with long lives, contractual cash flows, and an element of inflation protection. We think it will appeal to infrastructure and cash yield-oriented investors looking to rebalance into the physical economy. To launch the fund, we brought on board Wes Dick, a former senior executive at B-BAM, a world leader in aircraft investing and asset management. We know Wes well and we're pleased to have him join the Onyx team. This initiative is very much aligned with our strategy of building out new businesses that leverage our sector knowledge and add value to our growing asset management business. We expect to officially launch the fund later this fall and we'll share more details with you as they are confirmed. If I have a message for our shareholders today, It's a consistent one. We have the right people, plan, and foundation to execute on our strategy. Over time, we will grow our asset management business and our NAV with the goal of increasing shareholder value. We'll keep working to ensure that the price of ONIX shares reflect not only the full value of our investing capital, but also the inherent value of our future growth expectations. With that, I'll hand it over to Chris for more on our Q1 performance.
Jerry
Thanks, Bobby, and good morning, everyone. Segment earnings in the quarter were $0.76 per share, included our $0.69 from our investing capital and $0.07 from asset management. Starting this quarter, the pro forma adjustment for fees on ONIX capital is no longer reflected in our investing and asset management segment earnings. We've adjusted prior year comparatives to be like for like on this basis. This change is connected to our broader shift in focus to fee-related earnings, or FRE, and distributable earnings as the primary measures for the asset management segment. For the quarter, we had a fee-related loss of $15 million and distributable earnings of $25 million. I'll dig into those numbers when we get there, but let's start with our investing results for the quarter. Our PE portfolio was up 2%, very good considering the challenging and volatile market conditions in the quarter. A large component of the return came from ONCAP, driven by a mix of factors across the portfolio, including a number of companies with strong operating performance, real earnings and cash generated in the quarter. These businesses did a terrific job managing inflationary pressures through price increases supported by strong end-market demand. We're also seeing strong demand for our Canadian-based businesses, as the opening of the economy here catches up with the U.S. However, as most of you would suspect, margin management is likely to be more challenging going forward. ONIX experienced positive contributions across most of its core PE verticals. Industrials and healthcare both delivered strong returns in the quarter, 9% and 7% respectively. As was the case for the ONCAP portfolio, these returns at Onyx Partners were driven by operating performance, with market factors having an overall negative impact on Q1 valuations, as you'd expect. The negative return from the services vertical was attributable to the significant decrease in Clarivate's trading price, You'll recall that we've already returned two times our original investment in Clarivate, including a large secondary just last year that left us with about 30% of our original investment. Despite the recent sell-off, Clarivate continues to be a great investment, and we expect to see meaningful value generated from the recent lows. Overall, in the context of a difficult market backdrop, we're very pleased with our resilient and diversified PE portfolio. Turning to our credit investments, we experienced a modest loss in the quarter, substantially all from CLO equity, a reflection of the risk-off markets that developed in Q1. Of course, we focus on our CLOs' long-term cash returns, and in this respect, the CLOs continue to perform, with ONIX receiving $19 million in regular quarterly distributions. All told, our investing capital per share ended the quarter at $92.94, returning 3% since year end. That return includes the benefit of buying back some of our shares at a hefty discount. Q1 represents our eighth consecutive positive quarter, with investing capital per share returning 75% over those two years. We're pleased with the investing results this quarter, with the PE portfolio's strong operating performance managing to offset broad-based market weakness. Now, let's look at the asset management side of the business. Our fee-generating AUM was up 2% in the quarter. The increase was driven by over $700 million of incremental CLO AUM, which, importantly, required minimal incremental capital for Monica. In addition, we priced our 24th US CLO in April, which will add another $400 million to fee-generating AUM, and secured the first commitment from the Mercer Strategic Partnership that Bobby described earlier. We continue to expect consistent fee-generating AUM growth throughout the year in credit, with increases at private equity ramping up over the second half of the year. As you recall, our goal to grow fee-generating AUM 15% this year is part of the five-year plan from Investor Day. As we focus on raising capital to build ONIX's capacity to generate FRE and distributable earnings, let's turn to where we're at on those measures today. As a quick reminder, the difference between our asset management segment earnings and FRE is the exclusion of carried interest from FRE Carry is reflected in distributable earnings on a realized basis, as you can see towards the bottom of the table. In the quarter, we had an FRE loss of $15 million, which included a loss of $7 million from the asset management platforms directly and $8 million of costs related to the public company and investing ONIX's balance sheet. This compares to an FRE loss of $4 million in Q1 last year. The year-over-year change was driven by lower management fees at PE, the lack of performance fees at credit, which is not a surprise given the market, and our investment in an expanded credit team. The decrease in PE fees was tied to the expiration of fee periods for OP3 and ONCAP2 late in 2021, and the decreasing fee basis from realizations in fully invested funds. We expect PE fees to continue to decline as we move towards final closings of OP6 and ONCAP5 in 2023, but expect a step function increase at that point. Compensation expense in the credit business, which, as a reminder, includes wealth management operations, reflects the fully annualized level associated with the team we've built to ramp up AUM. As credits AUM and underlying invested capital grow, we expect an unusually high percentage of the incremental management fees to fall to the bottom line. By and large, our results are in line with where we expected to be at this stage of the investor day roadmap. As we continue along that path, we also expect to exploit additional levers for growth that were not part of the five-year model. A good early example is the transportation-focused platform Bobby introduced. Given our fundraising expectations, the platform will make a positive contribution to FRE with its very first fund. And, like any of our platforms, we expect to benefit from a growing series of successor funds. I plan to come back to our five-year plan as part of the Q2 call in August to provide updates on our progress and mid-term targets, especially for fee-generating AUM. Turning quickly to distributable earnings, a relatively quiet quarter for Realizations resulted in 25 million of distributable earnings. We expect ONIX to consistently generate DE in the coming years, which is an important foundation to our growth plan. While realized carried interest is included in DE, on a mark-to-market basis, we generated $20 million of carry in Q1 compared to $96 million a year ago, Given the broader market's weakness, the year-over-year decline isn't a surprise. However, with $25 billion of Cary paying AUM, we expect Cary to contribute meaningfully to shareholder value in the coming years. While we're happy with our Q1 results in this challenging environment, we are reminded of the discipline and tenacity that has seen us through choppy periods before. As Bobby mentioned, we're known as a partner for tougher markets And that's a reputation we plan to maintain. That concludes our prepared remarks, so we'll be happy to take any questions.
Bobby
Certainly. Ladies and gentlemen, if you have a question at this time, please press star then 1 on your touchstone telephone. If your question has been answered and you'd like to remove yourself from the queue, please press the pound key. Our first question comes from the line of Jeff Quant from RBC Capital Markets. Your question, please.
Jeff Quant
Hi, good morning. Just had a question in terms of both on the deal pipeline and monetization, given what we've seen in the markets, kind of within your portfolio, if there's anything that you think you might be able to monetize in the next, I don't know, next year, and then also, like I said, on the deal pipeline, how that might have changed in the past couple of months.
Jill
Hey, Jeff, it's Bobby. I'm going to hear from you. The new deal pipeline, I'd say compared to 2021 is slower. I wouldn't say it's meaningfully slower, but it's slower. On the monetization side, I can't get into details, but I would expect us to have some announcements over the coming couple of quarters of a couple of realizations.
Jeff Quant
And sorry, just on the deal pipeline, is that because of what's going on in the markets. And then also too, is for, for stuff that you're looking at, you know, have there been kind of changes in expectation on price or are prices still elevated?
Jill
Yeah, I think, I think those two things are actually correlated a bit when you have a near term volatility, like we've seen since the beginning of the year, you know, people who were sellers, um, had price expectations in their minds in December when the cost of capital changes, interest rates rise, you have geopolitical risks. bidders may not be willing to pay today what they're willing to pay in December. It depends on the company, too. Like, it depends on the cash profile. It depends on how much of these things are inflation, whether things are impacting a given business. But, you know, for certain businesses, there tends to be a pause in periods of volatility, and we've seen a bit of that in the New Deal pipeline. Again, even with that, on the realization side, I expect us to see a couple in the coming quarter, quarter or two, because of the type of businesses that we're looking at for realizations are less impacted by these types of things.
Jeff Quant
Okay, perfect. Thanks.
Bobby
Thank you. Our next question comes from the line of Graham writing from TD securities. Your question, please.
Graham
Hi, good morning. I guess just you mentioned that you had a meeting with all your LP investors, you know, regarding fundraising for onyx partners six, just Maybe some commentary on how you're feeling your confidence towards the size and the timing of that potential fundraise. Any changes to where your head was at before you went into those meetings?
Jill
No. Again, we're expecting a first close in early Q3. We're hopeful that that close will include several long-term partners of OP that are brand name LPs, including ourselves, by the way, within that first close. But look, I said it last quarter, and I think you've seen a lot of our competitors say it this quarter, it's a very crowded fundraising market. I expect the duration of the fundraise to be longer than it's been typical for prior funds. As an example, OP5 was a seven-month fundraise. I expect us to be fundraising well into the first half of 2023. particularly because a couple of our long-term LPs have said they don't have the capacity this year to fund this year, and they want to be with us, but they prefer to be in sort of Q1 or early Q2 of next year. So I do expect it to be a longer process. I do expect it to be more difficult than prior fundraisers, but I do expect that we will be able to maintain many of our current partners and other new partners, including you know, distributing our OP through Gluskin and potentially other retail channels, which we're actively exploring.
Jerry
Hey, Bobby, just to add on to that on the timing point, we're well positioned leading up to that first close in terms of having room to do probably one good size investment left in OP5. And, you know, in terms of our expectations around that first close, it'll be kind of seamless in terms of our ability to continue on investing at our normal deal size. The other thing I think I mentioned on a prior call, but just to make the point again, that ultimately, regardless of the timeline to the final close, from a management fee perspective, LPs pay fees back to, you know, the first date we start investing from OP6. So, you know, you'd like the fundraise to be shorter because it takes up less energy and less time, but kind of from an economic and operational perspective, it's sort of a bit of a non-event.
Graham
Okay, understood. And then, you know, FRE was negative this quarter. It sounds like it's going to continue to be that way until the, you know, these private equity fees ramp up and also, you know, fees on the credit side ramp up. Reasonable to expect positive FRE in 2023 once that sort of catch-up occurs that you're talking about?
Jerry
Yeah, I think that would be a reasonable way to think about it, Graham. And to your point, what we're going to see over the next 12 months or up to 18 months is, one, from a credit perspective, for the most part, and I think we've talked about this before on these calls, fees are earned on invested capital. And so there's a bit of a lag even between fundraising and fees on the credit side. And then on the private equity side, although we ultimately – get fees back to the effective date of OP6 from a gap perspective. You can't record those fees until you've actually got the commitments. So there will be, I think, if you think about our private equity business between now and mid-2023, there'll probably be a pretty consistent and at some point a pretty significant, you know, temporary decline in fees until we get to that final close. But, yeah, I think I agree with everything you said in terms of expectations.
Graham
Okay, great. And just to follow up on your comment there, on the credit side, you know, you've been having some pretty good momentum there in growing your fee-generating credit AUM, but your management fees have been going sideways over the sort of past four or five quarters. Is that because your invested capital has not really changed that much, even though your fee-generating AUM is going up?
Jerry
Yeah, I think that's a fair statement. And there's also a bit of, particularly in our MES business, much like private equity, there's also the impact of realizations and distributions. The MES business is a bit more like private equity in that regard in terms of closed-end funds and callable capital. So it's kind of those two things at play, I'll say, in the credit business at the moment. But, you know, with good momentum raising AUM, it's really kind of just a matter of time to get the revenue to catch up with the asset raising.
Jill
And that mass product is in market right now, looking for it to raise its next fund, which will be larger than its last one.
Graham
Great. That's it for me. Thank you.
Bobby
Scott, you might have your phone on mute.
Scott
Oh, can you hear me? Yes, we can hear you now. Oh, sorry, I didn't hear my name. Sorry about that. Good morning. So just on the new fund vertical, the transportation focus, I know it's very early, but do you anticipate like a target raise of like onyx partners or an on-cap size or somewhere in between?
Jill
No, we haven't, we haven't rounded out of what we're going to target internally yet, but it'll be nowhere near an onyx partners type size fund. I would, I would say we somewhere in the on-cap size range, you know, give or take.
Scott
Okay. And then just in terms of your, you know, private equity marks this quarter. And when I looked at your, like all manager peers, it was very similar. Can you remind us, you know, kind of your marketing process? Because some of the companies that came out, you know, kind of really delayed a couple quarters, especially with the public market impact on the multiples. So maybe an update just on kind of the private equity marks and kind of what went into it this quarter.
Jerry
Sure. Yeah, our process is a quarterly process, Scott. So we do the valuations that you see flowing through into our public reporting are March 31st valuations. On the private equity side, particularly on the large-cap private equity side that makes up the vast majority of the balance sheet exposure, we have an independent valuations team within finance that leads that process, obviously with lots of input from the portfolio companies and the investment teams that oversee them. And ultimately, those valuations come forward to a valuation committee and are reviewed and audited by our auditors. We have many different approaches to valuation, depending on the company, the industry, its peers, and quite frankly, depending on the model or thesis under which we bought the company. So it's kind of hard to kind of describe one methodology. But we do have a pretty even mix overall between the use of current market multiples that can include reference to the private market multiples that we see, and more long-term DCF models that ultimately, as you know, still depend upon an exit multiple. So, you know, it is fresh, and it does reflect, you know, the state of the markets at March 31st, 2022. Okay.
Scott
And just lastly, just on the on-cap performance, this quarter up 16% quarter-by-quarter, was there any kind of themes or specific investments that drove it? It was...
Jerry
It was actually pretty widespread. The portfolio did well as a whole. I couldn't draw one name out of a hat at all to tell you that's where the value generation came from. And I think it just reflects, you know, perhaps a little bit of caution at year end, but being proven out in Q1 where those teams and those companies just did a really great job from an operating perspective. The other thing to keep in mind is we're never going to follow the market directly, right, because we do invest with a thesis. And I don't know, Bobby, if you want to give a little color in terms of, you know, how we think about value creation and Wes's role.
Jill
Yeah, no, but that's exactly right. So, look, we have to ground the valuations in numerics, DCFs, and comparables every quarter, but to the extent that we're tracking against our underwriting plan and the business is going well, other than the cost of capital and the higher discount rate, which you obviously have to take into account for valuations. If we're tracking better than we're expecting, that's often offsetting the higher cost of capital and the comparable analysis rate. And that is important. We're doing a much better job with Wes and that team, you know, creating those value creation plans and having KPIs, just a handful by a company to really know what drives the business, so there's total transparency. And if you do see a problem, we're able to attack it quickly. Again, we were always all over these things. I just think we're much more systematic in our approach to the data analytics and the KPIs with Wes and the team than we have in the past. It's just all part of continuous improvement.
Jerry Schwartz
Just to clarify, Bobby's talking about Wes Pringle and his operations group, not Wes Dick and his transportation group.
Scott
Okay. And I appreciate the enhanced disclosure specifically related to the credit performance this quarter. Thank you.
Bobby
Happy to help. Thank you. And our next question is a follow-up from the line of Graham trying from TD Securities. Your question, please.
Graham
Yeah. I just wanted to follow up on that theme a little bit. You know, in Q2, we've obviously seen a pretty material pullback here and public equity markets, we've seen a very, very material move higher and interest rates. So, you know, it's reasonable to assume that that will be a factor in your sort of valuation process for your private equity investments. Um, and then whatever's happening at the company level operationally, that will sort of, um, either that'll be another factor that could offset or, or, or, you know, uh, could also have a big influence on, your NAV and your private equity performance.
Jerry
Yeah, I think that's exactly right, Graham. And what we hope to see quarter over quarter, regardless of whether the market's going up or the market's going down, is as the teams execute on those value creation plans, what we typically see is our view of value narrowing relative to the comps. What we're often doing is marking our companies at a discount to public comps and larger comps. while we are executing on a plan to deliver value. And as we execute on that plan and improve margins or grow the business, create additional moats in the business from competition, we see narrowing of those discounts to multiple. So we do expect to see valuations for our businesses not to line up directly with the market. But yeah, what's happening in the market is definitely a headwind to value creation in Q2.
Graham
Okay, perfect. And then I apologize, I didn't get all of the info you mentioned, this partnership with Mercer. Could you maybe just revisit the details on that comment?
Jill
Yeah, so the credit team formed a partnership with Mercer whereby our whole suite of credit products will be put into a commingled fund. And within rules that we're creating with Mercer, our team will figure out how to allocate the credit products within that structure. It's a very exciting new platform within credit, and it's one that we're hoping to replicate with other Mercer types in the world. And in particular with Mercer, who's been a great partner so far to date, we expect the dollars that we're managing on their behalf to grow pretty meaningfully over the coming years. Okay, great.
Graham
That's it for me. Thank you.
Bobby
Thanks, Ben. Thank you. This does conclude the question and answer session of today's program. I'd like to hand the program back to Mr. Jerry Schwartz for any further remarks.
Jerry Schwartz
Thanks, Operator, and thanks to everybody for participating today. We, believe me, appreciate deeply your continued support, and we look forward to speaking with you again in August. In the meantime, I wish you all the best, As we head into the summer months, let's enjoy some of this good spring weather we're seeing today. Thanks, everybody.
Bobby
Thank you, ladies and gentlemen, for your participation in today's conference. This does conclude the program. You may now disconnect. Good day.
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