Good morning, and welcome to State Street Corporation's First Quarter 2024 Earnings Conference Call and Webcast. Today's discussion is being broadcast live on State Street's website at investors.statestreet.com. This conference call is also being recorded for replay. State Street's conference call is copyrighted and all rights are reserved. This call may not be recorded for rebroadcast or distribution in whole or in part without the expressed written authorization from State Street Corporation. The only authorized broadcast of this call will be housed on the State Street website. Now, I would like to introduce, Ilene Fiszel Bieler, Global Head of Investor Relations at State Street. Please go ahead.

Thank you. Good morning, and thank you all for joining us. On our call today, our CEO, Ron O'Hanley will speak first; then, Eric Aboaf, our CFO, will take you through our first quarter 2024 earnings slide presentation, which is available for download in the Investor Relations section of our website, investors.statestreet.com. Afterwards, we will be happy to take questions. During the Q&A, please limit yourself to two questions and then requeue. Before we get started, I would like to remind you that today's presentation will include results presented on a basis that excludes or adjusts one or more items from GAAP. Reconciliations of these non-GAAP measures to the most directly comparable GAAP or regulatory measure are available in the appendix to our slide presentation, also available on the IR section of our Web site. In addition, today's presentation will contain forward-looking statements. Actual results may differ materially from those statements due to a variety of important factors, such as those factors referenced in our discussion today and in our SEC filings, including the Risk Factors in our Form 10-K. Our forward-looking statements speak only as of today, and we disclaim any obligation to update them, even if our views change. Now, let me turn it over to Ron.

Thank you, Ilene, and good morning, everyone. Earlier today we released our first quarter financial results. We had a strong start to the year with our results demonstrating the breadth of our client franchise, the efficacy of our strategy, and our focus on execution. We reported both fee and total revenue growth, all while continuing to invest meaningfully in our business and controlling underlying expenses. Excluding notable items, we delivered both positive fee and total operating leverage, as well as solid EPS growth in Q1 relative to the year ago period. The first quarter was an important milestone. We have detailed our strategic priorities for 2024, including the growth initiatives we are undertaking across each of our business areas, as we continue to both invest in our capabilities and also target further productivity gains. Guided by our purpose to help create better outcomes for the world's investors and the people they serve, our four strategic priorities are aimed at continuing to extend our competitive advantage, while delivering positive fee operating leverage excluding notable items in 2024. These 2024 priorities are: growing fee revenue; extending our leadership in our markets and financing and global advisors franchises; enhancing and optimizing our operating model; and continuing to differentiate our business through innovative client solutions and technology-led capabilities to support business growth. We remain intensely focused on executing against these strategic priorities, particularly in a dynamic operating environment in which financial market expectations continue to change significantly. For example, as inflation remains elevated and economic data continued to be robust, investors pushed back their expectation for the timing of Central Bank rate cuts and treasury yields increased during the first quarter. Despite this, global equity markets performed strongly and volatility remained muted, with many indices setting records as fears of a hard economic landing…

Thank you, Ron, and good morning, everyone. Turning to slide four, I'll begin my review of our first quarter financial results, which included a $0.32 EPS impact from an additional FDIC special assessment, as described within the notable items table on the right of the slide. As Ron noted, we produced a strong start to the year. On the left panel, you can see that total fee revenue was up both sequentially and year-on-year. Relative to the year-ago period, we delivered robust management fee growth, higher front office software and data revenue, and servicing fee growth, while underlying expenses were well controlled. As I mentioned during the first quarter, we recorded a provision for credit losses of $27 million, largely due to two CRE names. All told, we generated both positive total and fee operating leverage relative to the year ago, excluding notable items. We also delivered solid year-on-year EPS growth of 11%, excluding notable items, which was supported by the continuation of our share buybacks in the first quarter. Turning now to slide five. We saw period end AUC/A increase by 17% on a year-on-year basis and 5% sequentially to a record level. Year-on-year, the increase in AUC/A was largely driven by higher period end market levels, net new business and client flows. I would note that we have seen a mixed shift into cash and cash equivalents with an estimated 1 to 2 percentage points of total AUC/A versus a year ago. Quarter-on-quarter, AUC/A increased primarily due to higher period end market levels and client flows. As global advisors, period and AUM also increased to a record level, up 20% year-on-year, largely reflecting higher period end market levels and net inflows, and up 5% sequentially, primarily due to higher period end market levels. At the right center of…

Operator, we can now open the call for questions.

Thank you. [Operator Instructions] And your first question will be from Brennan Hawken at UBS. Please go ahead.

Good morning. Thanks for taking my questions. Eric, your updated guide sort of suggests that NII, you guys expect to pull back a little bit here from this strong result here in the first quarter. But one of the things that I noticed was repo was particularly robust in the quarter. Could you give a little color around what drove that strength and how sustainable it is? And is some of that normalization embedded in your outlook? Thanks.

Brennan, it's Eric. You know, there are a number of factors that drove the upswing in NII into the first quarter. The bulk of that was actually deposit balances coming in stronger than we had expected, both on the interest-bearing side across the stack and non-interest-bearing as well. That made up for the $30 million uptick in the -- in terms of our results relative to our expectation. The repo balances did tick up as well. They were a small part, but worth in NII terms, about a percentage point of more NII than we had expected. And I think what we're seeing is that as the conditions in the economy continue to evolve, clients are holding more cash on their balance sheets, or then putting that into a variety of different instruments. Sometimes it's on deposits, sometimes it's on sweeps, and sometimes it's in repo. And that's also been, in particular on the repo side, been aided a bit by the reduction in the feds overnight repo operation. So it's really a mix of factors that we're seeing, which together though are driving a better NII performance, which we're pleased with.

Yes, great. Thank you. You also quantified the impact of the BlackRock transition. So thanks for that. It does seem as though maybe that impact is a little larger than your prior expectation. Do I have the right read on that? And maybe could you give us an update on where we stand as far as the ongoing impact goes?

Sure, Brennan, it's Eric again. The previously announced client transition that we had referenced is in line in terms of amounts that we had expected. If you recall, we had said it would be worth about 2 percentage points of servicing fees this year, which is about a percentage point of total fees. And remember, if you go back to our original disclosure over the last couple of years, we had described the total amount to be worth about 2 percentage points of total fees. And we're seeing about half of that come through on a year-on-year basis this quarter and for this year. And so, you know, fully in line with what we had previously described.

Okay, thanks for taking my questions.

Sure.

Thank you. Next question will be from Glenn Schorr at Evercore. Please go ahead.

Hello there. One quick follow-up on the NII stuff, and thank you for all the details. The balance is coming in, in March. I know these things are really hard to predict, but is something happening with the client discussions and the overall profitability management that might give you confidence that those balances stick? Or should we think of this as rates are higher, parking balances with a safe custodian?

Glenn, we've been heavily engaged with our clients over the last year, I'd say, year and a half, as we've seen, you know, quite a shift in the industry environment and, you know, the evolution of deposits in the banking system. I'd answer your question in a -- at a couple different levels. I think first, going into this year, we had expected total client deposit balances in the $200 billion to $210 billion. And we now see that in the $210 billion to $220 billion for this quarter, And to be honest, we expect that we continue at around that level. And a lot of that is both the engagement that we've had with clients. They all have cash and we certainly encourage them to bring it to us. And part of that is the way we think about client relationships, client profitability, the client services that we can offer. And so I think some of what you're seeing here in the higher aggregate levels of deposits is due to our management action. You know, I think in addition to that, there do tend to be somewhat higher deposits in the banking system. So the tide has been gently rising, I'd say very gently, and that's been helpful. And we expect that to be relatively neutral going forward, but we'll obviously need to see based on the actions, the various actions at the Fed and how they evolve.

Very cool. Appreciate that. One quickie, you can't comment on the specifics, but I'm more talking the big picture. You were named in some stories potential interest in some private credit manager. I'm more talking big picture of where theoretically that might fit in and just I like the better flows on CNS, SSGA, but strategically what are you focused on in terms of continuing growth across that franchise?

Yes, Glenn, It's Ron. So we've tried to be quite clear above what we're doing over at SSGA. I mean, first is around continuing to grow the ETF franchise. As you know, our legacy strength is in the institutional business, where we continue to be quite strong, and we've focused a lot over the last several years on growing the low-cost ETF franchise, which tends to find its way into retail portfolios through intermediaries. That led to the repricing initiative that we did last year, which in retrospect is proven to be quite a smart move because the market share has gone up and those portfolios tend not to move, these are buy and hold investors. So ETFs would be one and then we continue to grow the active space, typically with working with very close partners of ours, and we see a lot of runway inactive. And then finally, fixed income, particularly out, we have a strong fixed income offering here in the U.S., and we've built it out quite a bit in the last couple of years in Europe, and you're seeing lots of strength in the ETF ecosystem in Europe. Second area of growth is really trying to leverage the institutional client base, because its legacy is the passive index business. If we have an institutional relationship, we tend to be the number one or number two manager on their platform. That leads you, that gives you a seat at the table and we believe it gives us an ability to potentially distribute other, kinds of, products and services. So that's where a lot of our focus is now on the institutional business. And then finally, continuing to deepen. We have a global franchise, but there's areas that we can deepen it more. You've heard us talk about Europe, and we're focused just as much on Asia Pacific as those markets continue to grow, and we're able to leverage the positions we have, but really focusing on deepening as opposed to broadening geographic reach. So that in a nutshell is how we're thinking about it, and we're pleased with how it's playing out.

I appreciate that, Ron. Thanks.

Thank you. Next question will be from Ken Usdin at Jefferies. Please go ahead. Please go ahead, Ken, your line is open. Could you please unmute? No response. Moving on to Alex Blostein at Goldman Sachs. Please go ahead.

Hey, good morning, everybody. Thanks. Another one for NII, I guess good quarter, good guide for the second quarter as well and that's sort of elevating your full-year NII guidance also. But similarly, I guess to kind of what we saw in your guidance last quarter, the back half of the year seems to have a pretty meaningful drop off for the tune of maybe $100 million bucks or so versus the quarterly run rate. Eric, I guess given your comments on deposits being stable and higher rates are kind of are where they are, you still get in the benefit of repricing on the securities portfolio? What sort of informs this sort of decline in NII towards the back of the year?

Alex, it's Eric. You know, we're going to continue to see some of the trends that we have been seeing, and it's just a matter of how the various pieces, you know, partially or fully offset each other over time. You know, we're going to continue to see a tailwind from the level of rates, at least given the current forward curve, because that plays through the investment portfolio and gives us a tailwind, as does some continued growth in lending. The headwind that we've been navigating through, which I would describe comes in steps, and sometimes it's a step down, sometimes half a step back up, is around the deposit levels across the interest-bearing stack, where we're just seeing deposits, I think, at nice levels, to be honest, while we continue to see the grind down of non-interest bearing deposits. And we do expect another quarter of that non-interest bearing deposits to trend down and then to flatten out in the second-half of the year. I think, so you'll see those trends continue. I think you'll -- we'll see where we come out. But you know, if you take our guide together, we expect a modest step down into the second quarter, and then we see a leveling off in the third and fourth quarter of our NII. I think in the past we've talked about being in a range of $500 million to $600 million a quarter. We're now seeing and expect to be comfortably above the $600 million per quarter range. But it's those factors as headwinds and tailwinds that'll play through, that'll kind of dictate exactly where we come out. But I think as I said earlier, the level of client engagement that we've had in terms of putting deposits with us, putting deposits at different price points with us. Some of those are the core transactional deposits that need to support custody accounts, and some of those are the discretionary amount of deposits. It's been a real priority for the franchise and I think one that we've shown some good success in. And that's really creating, I think, this better expectation than we had earlier signaled at the beginning of the year, and one that we think will endure and then, you know, provide the stability and over time upside in NII in the coming years.

Great. All right. I think, that's helpful. My second question is around expenses. You talked about how consolidation of the GV, I guess, that took place recently in April here, will create a new wave of optimization for next year, if I got that right? Can you just outline what that could mean in terms of incremental, either rejuvenating benefits or cost benefits, however you want to frame that, and what that means for maybe the overall kind of expense growth for the franchise? I know you're holding the line this year really well, but is there an opportunity to kind of continue that into 2025 as well? Thanks.

Yes, Alex, it's Ron here. I think it's good to focus on what we said here because we've talked to you and your colleagues just about ongoing productivity improvement. We've been at it for years. And we do believe this unlocks a potential, not a potential, but a new wave of productivity growth. And why is that? Well, firstly, almost by definition, if you're taking these ventures on, you're eliminating the margin that was in it, that was in our expenses, that now comes out, right? So you've got that as a near immediate tailwind. But more importantly, and more important for the long-term, is that we can really complete and take advantage of true end-to-end process improvement and simplification. We had created through the JVs, which go back to the early days of our off-shoring journey. We created a lot of complication. Unintentionally, we created a lot of complication. This enables us to get at that. The work has already started. Our operations folks are spending a lot of time in India there. They've done some recent hiring and brought on some great leadership there. So if you think about the importance of India to our operations and, you know, the amount of work that passes through there, between this end-to-end simplification, this ability to eliminate checkers of checkers of checkers and all those kinds of things, we see an enormous amount of opportunity to improve. And then finally, as we continue our technology investment, a lot of that will be directed there. It'll be directed at some of the things that, you know, in the past you would have said, well, let's take advantage of labor arbitrage. And now the technology is at a cost level where we can simply eliminate the labor and not have, particularly for some of these repetitive kinds of tasks between machine learning and other kinds of AI that you can use to replace labor. And you end up then with a one -- a lower labor cost, but more importantly, you've got job content that's very attractive to people, and people want to make careers here as opposed to feeling like they're stuck in this dead-end repetitive task. So we are very optimistic about this.

Thanks so much.

Thank you. Next question will be from Brian Bedell at Deutsche Bank. Please go ahead.

Great. Thanks. Good morning. Thanks for taking my questions. First, just a confirmation on the guidance you gave, Eric, on the 2Q fee revenue up 1% to 2%, NII down 2% to 5%, expenses up 2% to 2.5%. Is that sequential for revenue and year-over-year for expenses?

No, it was sequential for every one of those as you look forward. So it was all on a 1Q to 2Q basis.

2Q basis, okay. So then going back to the NII guide, I think you also said down 2% to 5% versus the 7% to 16% in 2Q and then did you say down again in 3Q and then flattening out or flattening out in 3Q?

What I described is a flatter second-half of the year. And so, you know, there are different paths here, to be honest. And it really will just depend on the level of deposits, the level of interest rates, just how the pale of some of the climate deposit or pricings that we've described come through, or the back end of those. So I gave some, you know, a high level view, but Brian, I think there's a range of scenarios. But we do have some confidence in the expectation that in aggregate, NII will be down 5% from a full-year basis, and that's quite a bit better than the down 10% that we had previously guided towards.

Right, yes. Then if I just get -- if I use the flattish assumption, I'm more like flat for the year on that cadence, but would that be sort of a, as you said, a range, but a flat NII outcome year-over-year would be at the better end of your range, or is that sort of really difficult to achieve?

No, let me try to clarify. We expect total NII to be down 5% on a year-on-year basis for the full-year. What I did say is that we expect NII to be in 3Q and 4Q to be roughly the same, to be flattish between those two quarters. And so, you know, now the question is exactly how much does it come down in second quarter, and then from second quarter into the combination of third and fourth quarter, how much does that come down? And there is a range of different scenarios I think you could foresee. But the reason we're trying not to over-spec the exact quarter by quarter by quarter by quarter expectation is there's just underlying volatility out there in the kind of macroeconomic conditions in the risk on risk off sentiment in the central bank's actions right. And then in our client deposit levels. And so hopefully that gives you enough context to go on.

That's super helpful. And then maybe just on the private markets wins, it sounds like momentum is improving there. Maybe if you could just talk about what your pipeline is looking like in private markets, Alpha and kind of your expectations over the next one to two years?

Brian, it's Ron. I mean, we've talked about the private businesses being a double-digit growth business. We stand by that. We see lots of potential growth. Private markets, Alpha is developing nicely for us, largely for some of the -- for many of the same reasons that Alpha itself has. It's an opportunity as these firms become more complex, have complex operating and technology stacks. It's a way to not just lower some costs, but improve operations and future-proof operations. So it's developing well. So we remain optimistic about it.

Okay, great. Thank you.

Thank you. Next question will be from David Smith at Autonomous Research. Please go ahead.

Good morning. Could you talk a little bit more about your capital priorities today? Your payout ratio in the first quarter was somewhat below your 100% full-year target?

David, it's Eric. We gave guidance at the beginning of the year on a full-year basis purposely, right, because each quarter there's going to be a different set of variables as we navigate through. So we described capital return in aggregate to be around total earnings for the year and we reaffirmed that in our prepared remarks. If you then go into the specifics of the first quarter, remember we had expected a normalization of the lower than usual RWA that came through in the fourth quarter. Some of that is just market factors playing through on the FX book. Some of that is equity markets upticking in the agency and securities financing space. And some of it, to be honest, is just putting capital to work with our clients, where we're engaging with them, and that's driving some of the fee revenue growth that you saw. At the same time, our priority is to get capital back to shareholders. We continued our dividend at pace, as you'd expect. We had some buybacks this quarter. If you do the math, that buyback activity will increase going forward for the next few quarters. We also had the new information about the FDIC assessment. And so we had to accrue for that expense instead of returning capital to shareholders for this particular quarter. So anyway, just a way to describe, we're on track with our priority and to be honest, our commitment to get capital back to shareholders in line with earnings this year. And it will just -- every quarter is a little bit different, but I think you'll see that accelerate into the second quarter.

And I think you gave the tax rate for the second quarter. Are you still expecting 21% to 22% for the full-year?

I think I need to quickly go back to the January remarks, but we did not update those and -- so I think that's a good place, a good estimate to use for the full-year, the one that you had back on the January call. Yes, that's correct.

Okay. And just one last cleanup. The preferred dividend, they'll still be elevated in the $50 million to $55 million range in the second quarter, but then it will be kind of more like $40 million in the second-half of the year?

Yes. Yes, that's correct. We're just kind of moving through this past quarter 1 and quarter 2 between the redemptions, the issuance and redemptions and then literally, the tactical timing of some of the dividends, you've got it right. There's one more quarter of elevation in the $50 million to $55 million range next quarter, meaning second quarter and then it will run at about $40 million a quarter from third quarter onwards.

Thank you.

Thank you. Next question will be from Mike Mayo at Wells Fargo. Please go ahead.

Can you hear me? Ron O’Hanley: We can.

Can you talk about the relationship between stock markets and revenues you used to have for every 10% change the S&P 500, it impacts your servicing fees by x amount. Can you remind us what that is these days and how much of a lag there is with that? And along with that, I guess your guidance for NII instead of being down 10% to down 5%. What exactly changed the last kind of month or so?

Yes, Mike, it's Eric. Let me answer those in reverse order. On NII, what happened in the first quarter was really higher deposit balances across the interest-bearing stock and even relative to our expectations on noninterest-bearing in March. So that changed in a positive way, created an uplift into the first quarter that we had not expected. The last time we gave full-year guidance on NII was back in January when we expected it to be down, on a full year basis, 10% for the full-year. And it's only today that we've reassessed that. We did not reassess that back at the beginning of March. We reassessed that today. And what we're factoring in is the higher step off, the higher level of deposits with us generally. And the fewer rate cuts that we're expecting from central banks around the world. And so that's what gets us to a better full-year guide on NII. If I then turn to the equity market question, how it factors through servicing fees. We need to be -- we need to go through it in pieces. And so let me start. First, what matters to us is not just the S&P equity index, because we're global, right? More than 40% of our revenues are broad, including in emerging markets. And while the S&P is up year-on-year 28%. The All-World Index is up only 18%, and that's what's more material to our financial statements given the international and global footprint that we have. With that 18%, we'd expect a substantial tailwind of servicing fees on a year-on-year basis and up 4% to 5% range, typically. But it tends to move around. As you said, sometimes there's a bit of timing there. Sometimes there's a bit of mix there and so forth. What we did see that was a headwind to that this year were two things: one was the previously announced client transition, and that was worth about 2 points of servicing fee headwinds; and then we've continued to see a lower -- or I'll describe different level of client activity that was worth almost 2 percentage points of headwind this year, some of which we think is cyclical. Some of that is transactional activity that we've talked about that we tend to get paid for on a unit basis through our fee schedules. And then this quarter, we also referenced the shift to client cash and cash equivalents within the AUC/A stack, which tends to come in at a much lower fee rate for custody and accounting services. And so those were the pieces that went against us.

And just one follow-up, just -- you said more-than-expected deposits. Why was that?

I think the more-than-expected deposits is really driven by two factors. One, is that there tends to be more cash in the system, in the banking system today. We think that's a mix of central bank actions, in particular, in the U.S., the reduction in the overnight repo operation that the Fed is running. That comes back in a way into our clients or into the banking system. And that's been a -- I think that's generally improved liquidity conditions or added to what is -- our very liquid conditions have made them even more liquid. And then the second factor, to be honest, is over the last 1.5 years, two years, we've been very engaged, and I'd say, increasingly engaged with clients on where they put their cash. They put their cash with us in deposits, in repo, in money market, in money market suites, because every one of those areas we offer services to our clients. And I think what we've done over time is sharpened our engagement with our clients, and that's resulted in more cash and deposits with us in a way that we find is healthy, obviously, for our balance sheet. We're always delighted to keep cash, but also helps with earnings and margin and economically.

Thank you.

Thank you. Next question will be from Rajiv Bhatia at Morningstar. Please go ahead.

Great. Good morning. Can you comment on how the pricing environment is for your servicing business? If inflation remains higher for longer, should we expect lower pricing headwinds? And then as I understand it, about 60% of your service fees is asset-based. How do pricing headwinds compare in the asset-based bucket versus the non-asset-based bucket? Thanks.

It's a broad question. We've been in an environment, I think, the last four years or so where we've seen pricing headwinds in the servicing business to be roughly in the 2% headwind level. And that's kind of -- that will float around a bit by quarter. It will float around on the margin a little bit by year, but it's substantially below what we had seen way back in 2019. And which was, I'll describe, a bubble of repricing. I described it that way because during this time, we've seen, to your point, a very accentuated rise in inflation. We've now seen a partial reduction in inflation. And that's not really had a large or substantial effect to our general fee rates or our -- or servicing fees. And so it's been -- I think it's not particularly determinative of that. In terms of our fee schedules, you're right, the fee schedules have several components. They have asset-based. There's an asset under custody basis for some of the fees which is about half. There are some transactional fees. There are just some flat fees. There are some per account fees. And those usually end up being negotiated as a package. It's not that when there is a -- when we have negotiations that one particular part of that package is treated very differently. We have large, sophisticated clients. They think of it as a package. And to be honest, they're looking for a fair set of -- a fair amount of fees so that as a partnership, which lasts often 10, 15, 20, in some cases, 30, 40 years, right? That they feel they're getting value and that they feel that we, as a custodian can deliver on what their expectations are. And so it comes to be a reasonable accommodation, I think, in our minds, in their minds.

Got it, thanks.

Thank you. Next question will be from Ken Usdin at Jefferies. Please go ahead, Ken.

Thanks, Ron, Eric, sorry for that earlier. Sorry for that earlier. Just one follow-up on just the servicing fee algorithm. So with all the commentary you've made. And you show us the good detail about the business wins and the fees to come on, and we know about the headwinds, some cyclical, some due to deconversion. Do you have a line of sight when we can really start to see that back office line start to move up in a positive way. And I know we have to consider the middle office and the whole front office kit as a together thing. But that's still the biggest line, and that's still kind of flattish on a year-over-year basis with all the things we talked about. But is there any path forward where you can kind of see some of those headwinds abating and some of the growth starting to come on and transitions that we can see a better growth rate overall? Thanks. Ron O’Hanley: Yes. Ken, why don't I start here? The transition, I know it feels like it's been going on forever, but that will basically abate. And the effect of that will go away, more or less go away next year, assuming no other changes on the client side. So a headwind goes to zero. Secondly, and perhaps more importantly, you've seen -- you saw the sales performance last year. You're seeing the sales performance this year that's building up the to be installed business. That still remains very, very high for us. Part of it is some complicated kinds of Alpha clients that they will install, they are installing -- they typically tend to install in waves and tranches. So we'll make progress against that. But I would note from sales performance last year and it continued in the quarter, there's a fair amount of back office in some of these recent sales, which just installs faster. And so we're quite optimistic about the opportunities here in fee revenue growth, particularly servicing fee revenue growth as you overcome headwinds, but more importantly, start to reap the benefits of what we've sold in Alpha, what we sold in back office and get those installed.

And Ken, it's Eric. I would just add that we've had these client activity headwinds that we described, which is a mix of risk-off sentiment, which has led to lower transactions through the custodial accounts. And then we've described this shift towards a cash mix, right? We don't see those just continuing at the same pace. We see that as somewhat cyclical. You'd expect -- I don't think we generally expect much more cash to be on hand with clients. There are -- I think there's a case to be made that cash levels of client should actually start to get deployed over the next year and could even be neutral or a possible tailwind. So I think we've been going through a bit of a cyclical phase here on those environmental and activity type and mix headwinds. And I think without those, you could then see through to some of what Ron described around sales, installation and the underlying growth of the franchise.

Okay. And one follow-up then is also we can see the wins and what you put on and the yet to be installed to Ron's point. Can you just talk about just the pipeline, is the pipeline continuing to strengthen? Is it consistent? Have you now put more of that pipeline through? Where do we stand on that? Ron O’Hanley: Yes. Ken, I mean, I think what you should have heard from us today is that we have a sales target that we talked about in January, we're standing by that sales target. That's significantly up from last year, which was significantly up from the year before. So I mean you get there because of the pipeline. So we're encouraged by our pipeline.

Okay, great. Thank you.

Thank you. And at this time, I would like to turn the call back over to Ron for closing remarks. Ron O’Hanley: Well, thanks to all of you on the call for joining us.

Thank you. Ladies and gentlemen, this does indeed conclude your conference call for today. Once again, thank you for attending. And at this time, we do ask that you please disconnect your lines.