Willis Towers Watson Public Limited Company (WTW) Q3 2013 Earnings Report, Transcript and Summary

Good day, ladies and gentlemen, and welcome to the Quarter 3 2013 Towers Watson Earnings Conference Call. My name is Sheena, and I will be your operator today. [Operator Instructions] As a reminder, this call is being recorded for replay purposes. I'd now like to turn the call over to Aida Sukys, Director of Investor Relations at Towers Watson. Please proceed, ma'am.

Thank you, Sheena. Good morning. Welcome to the Towers Watson earnings call. I'm here today with John Haley, Towers Watson's Chief Executive Officer; and Roger Millay, our Chief Financial Officer. Please refer to our website for this morning's press release. Today's call is being recorded and will be available for replay via telephone for the next 2 weeks by dialing (617) 801-6888, confirmation number 65966102. The replay will also be available for the next 3 months on our website. Our website also contains a few slides that are complementary to today's call. Those slides include certain reconciliation information required by SEC Regulation G. This call may include forward-looking statements, within the meaning of Section 21 of the Securities and Exchange Act of 1934, that involve risks and uncertainties. For a discussion of forward-looking statements and the risks and other factors that may cause actual results or events to differ materially from those contemplated by forward-looking results, investors should review the Forward-looking Statements section of the earnings press release issued this morning, a copy of which is available on our website at www.towerswatson.com, as well as other disclosures under the heading of Risk Factors and Forward-looking Statements in our most recent Form 10-K and our other filings with the SEC. Investors are cautioned not to place undue reliance on any forward-looking statements, which speak only as of the date of this earnings call. During the call, we may discuss certain non-GAAP financial measures, such as adjusted EBITDA, adjusted net income and adjusted earnings per share. For a discussion of these non-GAAP financial measures, as well as a reconciliation of these non-GAAP financial measures to the most closely comparable GAAP measures, investors should review the press release and the accompanying financial tables we posted this morning. After our prepared remarks, we will open the conference call for your questions. Now I'll turn the call over to John Haley.

Thanks, Aida. Good morning, everyone, and thank you for joining us. Today, we'll review our results for the third quarter of fiscal 2013 and our guidance for the remainder of the fiscal year. Reported revenues for the quarter were $941 million, an increase of 4% over prior year reported revenues and up 2% on an organic basis. On a constant currency basis, revenues increased 5.5%. Our organic growth rate adjusts for changes in foreign currency exchange rates, acquisitions and divestitures. Our adjusted EBITDA for the quarter was $191 million or 20.3% of revenues. The prior year adjusted EBITDA was $180 million or 19.9% of revenues. For the quarter, diluted earnings per share were $1.34, up 41%, and adjusted diluted earnings per share were $1.60, up 15%. We're very pleased with the overall results this quarter. All segments either met or exceeded revenue guidance, and all regions posted revenue growth. Regulatory changes and economic uncertainty are continuing to fuel growth in our businesses, while at the same time that economic uncertainty continues to affect some of our other businesses dependent on discretionary spend. It's a challenging time to manage the business as economic uncertainty and regulatory changes are causing the same lines of business to trend very differently in different parts of the world. I'd like to commend our global and local leadership for working together in this dynamic environment, and our associates, who are in the marketplace helping us understand how to better deliver value to our clients. Today's global environment tests our management disciplines daily, but it also challenges us to be more innovative by continually focusing on our clients' evolving needs. It's been almost a year since we acquired Extend Health, and we could not be more pleased with the results. Not only did it bring us the…

Thanks, John, and good morning to everyone. We had a strong quarter, and as John mentioned earlier, we've reached a couple of key milestones. The third quarter officially marked the end of our formal integration process, and May marks the 1-year anniversary of our acquisition of Extend Health. I've been very impressed with the strong collaboration among our colleagues during our 3-year integration period. This was difficult work, and it's a real accomplishment to be finished on time and to have met our financial objectives. I'm also very pleased with how well Extend Health has aligned with the Towers Watson organization. The Extend Health team brought strong capabilities to Towers Watson, both personally and in the legacy Extend Health business model, which we've quickly been able to leverage in the collaborative effort with the Health and Group Benefits team, the Technology and Administration Solutions team and the Client Development Group to drive the build-out of OneExchange and continued strong growth. As John noted, our overall constant currency revenue growth came in about as expected this quarter, but our reported revenues grew at a lower rate. In the March quarter, the decline in foreign currency, particularly the pound sterling, had a negative impact of approximately $10 million in our revenue guidance, as well as year-over-year reported revenue comparisons. As a reminder, our segment margins are before consideration of discretionary compensation and other unallocated corporate costs such as amortization of intangibles resulting from merger and acquisition accounting and transaction and integration costs. For the quarter, the Benefits segment had a 35% NOI margin, and Risk and Financial Services had a 29% NOI margin. As a reminder, this is a seasonally strong quarter for both Benefits and Risk and Financial Services. Talent and Rewards had an 11% NOI margin in what is a…

Okay, yes. Thanks, Roger. Now we'll take your questions.

[Operator Instructions] Our first question is from Jeff Volshteyn, JPMorgan.

Looking at the expense line items, they came in a little bit lighter than we expected. Can you just talk about some of the perhaps efficiencies that are in there? And did they come in within your expectations on the expense lines?

Well, I'd say broadly, one, you should remember that FX is in there, and that's probably a little bit of a contributor. I mean, broadly, as we've been talking about, I think, since last summer, we did take a disciplined outlook for fiscal year '13 in expenses, and I think the results show that we have had good discipline and good expense control. In terms of probably the biggest thing that comes to mind that probably has happened as you look at line items in the P&L is some of the changes with respect to the IT projects completing and some rationalization based on some of the outsourcing that was done previously in one of the legacy companies going away. But I think, in general, it's a broad impact and again, underlying integration and IT consolidation related.

Okay. And how should we think about the tax rate, let's say, for 2014?

I think we haven't really changed our view. I think we talked about it last quarter that this 35% to 36% range seemed like a reasonable ongoing level. There are, as you know, quarter-to-quarter one-off items that happen in taxes that change that. But I think for the moment, that's our longer-term outlook or medium-term outlook, let's call it. But also with the anticipation that gradually, we hope to realize some efficiencies that you see come in and push the rate down a little bit over a kind of a multi-year horizon.

Okay. If I could squeeze in one more. There's, I think, a negative stock compensation item in the quarter. Was that a reversal of something?

Yes, it was an adjustment that was related to the finalization of some of the legacy programs that actually relates to the assumption you make on people who end up leaving before the stock program concludes. So it was really a finalization of some accounting that we had done on stock compensation.

Our next question is from Tim McHugh, William Blair & Company.

Just a follow-up on that last one, I guess, just to be clear. Was that related to the Towers parent acquisition or just normal ongoing?

Yes, it was related to, again, some of those legacy merger programs, yes.

So you excluded that anyway?

Yes, it is excluded, yes.

Okay. All right. And then just on the Talent and Rewards and, I guess, specifically the data side, obviously, the macro environment is a little tough in Europe, and you talked about some of the timing issues throughout the year. So it's understandable why it's down, I guess. But just if we look at the competitive environment and maybe kind of the client preferences, is there anything happening in the marketplace that is more structural or changes your view of how that business can grow going forward?

No, I don't think so. Talent and Rewards is a business that is, as we've talked about before, is the most economically sensitive. And so we do expect some volatility -- more volatility there than in any of the other ones. There is an element of sort of discretionary spend that accompanies a lot of the services we have there. But our overall view of Talent and Rewards that over the course of a whole business cycle, that's probably going to generate a higher revenue growth than, say, the other 2 large segments, we still continue to subscribe to that.

Okay. And in the exchange business, I know it's small, but it looks like you're looking for sequential growth, which I think -- you haven't owned it for a long time, but I think that's a little abnormal. I usually thought Q4 was the -- calendar Q4 was the big sequential uptick. Are you seeing good -- is that a sign of good off-season kind of enrollment trends? And I guess, a follow-up is, are you at a point yet where you have any visibility towards what enrollment growth might look like in the fall in terms of client additions?

Well, Roger, you may want to comment a little more on how things fall in the quarters. But, frankly, it's actually the third quarter that's usually seasonally the most strongest. Roger, you want to...

Yes, I mean, there is some off-cycle activity. So I think you're noting there, Tim, that maybe the range is a little bit higher than where we came in for the third quarter. But as John said, it's primarily, again, the enrollment season is in the fall. But again, there is some off-cycle activity, which contributes as you go through the year.

Do you have any visibility yet towards this upcoming fall in terms of the client additions? And, I guess, when would you start to have better visibility?

We don't have any visibility right now. I mean, we're out in the marketplace talking to companies that are looking to maybe go for 2014. But those decisions won't be made for a few more months.

Our next question is from Paul Ginocchio, Deutsche Bank.

John, 2 questions for you. First, are you worried as we get into the back half of the year that maybe the implementation of health care reform could distract HR departments and maybe cause some discretionary projects to be delayed? And then second, how comfortable are you with your current portfolio of businesses? And are you looking to rationalize that portfolio at all?

Yes. So I think when we look at the impact of health care reform, I think there's always -- it's unlikely that a lot of change around health care reform is going to spill over into, say, Talent and Rewards or even into Retirement or something like that. If people are doing some things around health care reform, it could affect other consulting projects that we might have done in the health care arena specifically. Overall, we're pretty pleased with the diversification we have really across all potential possibilities in the health care reform area. So for -- to the extent companies continue in the similar fashion to providing health care, we'll continue to provide them with our health care consulting services. To the extent they decide to move into an exchange area, we're all set to take care of that, too. So we like the service offerings we have there. We think it meets all of our potential client needs. And we think it provides us as a business good diversification. With regard to our overall portfolio of services, when we set out our growth strategy, we said that one of the things we would look at is -- increasing market penetration was one of our growth pillars, innovation was another one of our growth pillars, and M&A activity was another one of our growth pillars. And we're always looking at potential acquisitions out there, and we always are in the market for potentially considering them. I don't think that we're going to turn out to be doing an extraordinary number of acquisitions. I think we did Extend Health last year and we'll probably be doing ones of that size maybe every few years.

I guess, John, I was more interested if you're thinking about any divestitures?

Well, I mean, when you look at mergers and acquisitions, you consider the whole portfolio. But we're focused right now on some -- on thinking about how we can really build the business.

Our next question is from Sara Gubins, Bank of America.

Within Exchange Solutions, could you talk about how you would expect costs to ramp over the next year or so? There are a lot of initiatives which sound very exciting but are kind of long term in nature. And I'm wondering if that might have a negative impact on as we think about fiscal '14 pro forma margins?

I think, Sara, that one, given the growth -- potential growth profile of that business, as we've been emphasizing, I think, over the past year, there is some unpredictability as to how the margins will behave kind of quarter-to-quarter and even year-over-year. And as we've noted, not only the seasonality effect between the first half of the year given the seasonal ramp-ups, but also the impact that, again, that has from one fiscal year to the next. So I think in the retiree part of the business, it greatly depends on what we get in the new business pipeline and what the enrollment demand is for the fall, similar to fiscal year '13. I think for the other -- the build in OneExchange, as we've said, the work that's going on right now is incorporated into our guidance. As we look into next year, we just don't expect any significant impact on the margins of the company. Although depending on the amount of activity that we get, again, you could see some costs increase similar to what we see in the TAS business as we get new clients today or historically, where there is some cost investment and some deferral of those costs as we build out the systems for new clients. So as the year goes on and we understand the actual pipeline of activity, we'll be giving more specifics and more detail on what we expect there.

Okay. Second, within Risk and Financial Services, in the fourth quarter, you're looking for 1% to 3% constant currency revenue growth, could you give a little bit more color on that given that it's the easiest comparison of the year?

Yes, I'll just comment first, I suppose, from how we put the view together, and John may want to add to that. But I think probably, in general, in terms of the trends of the underlying lines of business, we don't see anything right now much different than the trends that we saw in the third quarter, which is good performance out of investment and Brokerage with continued growth. And a more challenging environment in Risk Consulting, where, as we've noted, there is discretionary spend pressure, which we've particularly seen in EMEA and Asia Pacific. So I think again, similar dynamics with similar kind of upsides and risks.

Okay. And then just last question, you had pretty clearly outlined in the last quarter that the lump sum work in the Retirement business wouldn't recur at the same levels. But I'm wondering if there's any reason to think that as you look out over the course of calendar 2013, if that might pick up perhaps in the second half of the calendar year?

So I think -- there was a special reason why we had the -- we had a lot of the work done on lump sums in the last quarter. There was, in fact, as we've mentioned before, a bit of an arbitrage opportunity that occurred then. And we expected that this year, the amount of the bulk lump sum work would be substantially down. I think we still see that. We're not saying that it will go away at all completely, but we don't see it at quite the level we had last year.

Our next question is from Tobey Sommer, SunTrust.

I was wondering if you could give us some color of what this current quarter's enrollment looked like in the Exchange Solutions business on the municipal and state side with their fiscal year starting in July.

So you're asking, Tobey, sorry, that the off-cycle enrollments for the March quarter itself?

No, for the June quarter, the quarter we're in. I assume that anybody you've sold, you're in the process of enrolling now.

Yes, I mean, again, the low -- I mean, I don't have any numbers for you. There is a relatively low level of activity in the interim quarters at this point, and we would hope longer-term to move away from the extreme seasonality that we have right now. But it's nowhere near the magnitude that we experience in the fall.

Roger, the cash flow has improved this year, partially attributable, I guess, to the integration winding down and good margins. What do you think about cash deployment now in the balance sheet? Because it looks like the net cash balance is set to rise unless you spend it. Any updated thoughts on that will be helpful.

Yes, I think, no updated specifics, and what we've generally said about emphasizing flexibility to do acquisitions and then historically when we view capacity to deploy more free cash, leaning to share repurchase, and I know we still have about $120 million available in the share repurchase authority that we have from the board from last year. I think you know well, Tobey, that coming out of integration, the free cash generation is back to levels that we would expect. And it was very heartening to see in the balance sheet this quarter DSO back to more historic levels. And those are processes, as I noted in my remarks, that we'll continue to work on, although certainly there isn't going to be upside to move them to the same degree that we moved them over the past 6 to 9 months.

Our next question is from Shlomo Rosenbaum, Stifel.

I just want to go back to an earlier question. Just on the Data, Surveys and Technology. John, was the kind of likeness this quarter, was it all due to the pull-forward earlier in the year? Or was there anything else going on that makes that a little bit more discretionary and therefore, it was more vulnerable this year -- this quarter?

Yes, so there's a couple of things really, Shlomo. One is that distribution among the quarters, as we mentioned. But you also have to remember that the distribution was somewhat skewed last year. So last year, at this time, we had -- I think it was a 20% increase in DST. And so the comparable is very high.

Okay. And then in Europe, can you just walk through the different areas of the business and quickly just give us a feel for where you might be feeling -- seeing weakness or strength? And are you getting a sense that we're getting some stabilization over there for your business? Or is it continuing to kind of gradually step down a little?

Okay, I'm sorry, Shlomo, just to be clear, I actually gave you the 20% I think was for RTC. It was 13% last year for DST. But I think the point still stays that it was a very tough comparable as to what we're comparing to. So DST is something that I think for the moment, it's easier to compare it on an annual basis than it is on a quarter-to-quarter basis.

Okay. So you're basically saying it’s strong comp -- a tough comp?

Yes. I'm sorry, what was your second question?

Just going through EMEA, where are you seeing pockets of strength or weakness? And are you feeling like we're getting a little bit more stability or is it continuing to deteriorate just at a slower pace?

Yes, I think EMEA, the one area that we -- if we look at RCS, Roger talked about RCS, the Risk Consulting and Software, as discretionary funds being tight really across all of the different regions of the world. But I think we noticed that maybe a little bit more in EMEA than anywhere else. And there are fewer discretionary projects. I think the continual delay in Solvency II has had a tough impact on EMEA. So I think that RCS is something that we see as being relatively weaker in EMEA at the moment than it is in some other areas. We see investment and Retirement and TAS are really all up in EMEA. Exec comp is up a little bit, not as much as it had been. But it really varies a good bit across the specific practices. Talent and Rewards, in general -- I mentioned exec comp as being a little bit up, but Talent and Rewards is really affected by discretionary spending. So it's one that we're a little concerned about the outlook there.

Okay. Then just going back to a comment you made earlier, you could do acquisitions the size of Extend Health every few years, are you referring to revenue or are you referring to $430 million price tag?

Well, I think if you think about what we said in our growth strategy, which was that we would like to maybe grow by about an extra 2% or so per year as a result of inorganic growth, then if we did something that was about a 10% of revenues every 4 years or so, that would feel about right. That would get us to about 2.5% average every year. If we're spending one time -- so that's -- our revenues are $3.6 billion, so $360 million. If we were spending around 1x revenue or 1.25x revenue, we'd be somewhere in the neighborhood of what we spent for Extend. So I think that's the kind of thing I was thinking about when I said that.

Okay, great. And then, Roger, last question, just what do you feel is a normalized annual free cash flow number for the business today as it stands?

Well, we don't have specific numbers, I suppose. But in terms of an aspiration and a range in which we think it should fall, adjusted -- having free cash flow in the neighborhood of adjusted net income is something that over time that we think we should see.

And our next question is from Tobey Sommer, SunTrust.

I wanted to ask you a question about the hiring environment from competitors. Are you, do you think, a net gainer of talent in the marketplace? Any color you can give about the pace of hiring and where you're focusing your additions will be helpful.

Yes. Okay, so I think overall it's a competitive market for talent that we're in. I think if you were to ask me, I'd say I think we probably are a slight net gainer as a result of all of the different movement that occurs. I think we, a few years ago, we might have been seeing more gains, more relative gains than we see today because I think some of our competitors were having some issues a few years ago that maybe they have a little bit behind them. But I think overall, we feel pretty good about our positioning. We feel pretty good about the value proposition we have, and it's something that seems to be resonating in the marketplace. I mean, I think probably the proof of that is that this is not something that's at the top of our list that we're worried about losing folks to competitors or not being able to attract them.

And then my last question has to do with the deferred revenue adjustment on the Exchange Solutions business. Will the effect of that dissipate over time? How does -- how should we think about the mechanics of modeling that into the future?

Yes, it really has dissipated. So I think we noted in our remarks that it was only $500,000 this past quarter, and that's down from -- well, it's $12 million for the year, so it's down from millions in the first and second quarter. And so it's really -- it's down to virtually nothing, and it does go away totally after the first year. So as you look forward, it's really not much of a factor at all.

Our next question is from Mark Marcon, R. W. Baird.

I have 3 on 3 different areas. First of all, with regards to Exchange Solutions, I recognized the pipeline in terms of what the enrollments are going to be in the coming fall are still unclear at this point, but is there anything that has diminished your enthusiasm around that area? Or would you expect the growth to continue to be quite strong?

Yes, I don't think there's anything at all that has diminished our enthusiasm around Exchange Solutions. Now this was a very good year we had. We grew at an even faster rate than we projected and I'm not saying we'll grow at that rate every year or anything. But I think I can say about the whole management team and the board, we're more enthusiastic about Exchange Solutions today than we were the day we did the deal.

That's what I thought, but I wasn't sure it was coming across on the call in terms of some of the earlier responses to some of the questions. Because it sounds like from some of your practice managers that within retirees, we could potentially, in terms of that penetration level, that could potentially go up into the 70% to 80% range over the next few years. Is that still a correct assumption?

That's what we would like to see. I mean, I think the -- I'm glad you asked that question because sometimes, you're doing these earnings calls and you respond to the specific detailed question and you don't always communicate some of the sense of enthusiasm that you feel about things as much as you'd like. But I think, look, we're the market leader in the retiree exchange business, and we've been growing that lead this year, and we expect to continue to grow that for a number of years.

Okay. That's what I thought. And then with regards to health care consulting, how are you expecting that to ramp up as we get closer and closer to certain deadlines for the ACA, some of which are right on our doorstep?

Yes, I don't know. I think we've seen the health care consulting itself sort of vary between the mid-single digits up to the low-double digits over the last, in any particular quarter, over the last few years. I think we'll probably continue to see it in that range as to which quarters it's going to be up in the high-single digits or low-double digits as opposed to which one it's in the down, maybe more in the middle. I think it's hard for us to predict the exact incidence of that. But we feel good about saying that the overall result is, we think that the health care consulting is going to be somewhere in the mid-single digits, and that's assuming that there's not really some big change to active exchanges. If there's that, that will general a lot of business because the active exchanges are really something that is a collaboration between our health care consulting, our TAS, our Exchange Solutions and also Talent and Rewards in regard to consulting on communication in change management and the value proposition to retirees. So that's a business the exchange -- to the extent employers move to active exchanges, it generates a lot of work, not just for the health care consulting, but for really a lot of parts of the business.

Great. And then finally, on the pension side, there's, obviously, been a lot more press recently in terms of some of the P&I 1000 and the challenges that they're facing with regards to where their assets stand relative to the current present value of the obligations. Can you talk a little bit about how you're thinking that, that's going to evolve? I know we had the big arbitrage situation last quarter, but what sort of opportunities does that present?

Well, I think -- what we think is that there's going to continue to be some bulk lump sums. We don't expect to see some big sea change in, for example, a lot of plan terminations. Even if interest rates rise, we don't think that would be something that would trigger them. Lots of different reasons why plan sponsors have taken steps to stabilize the funded status through investment strategies that really match the asset returns but changes the liability. So even if interest rates went up, you wouldn't necessarily have the biggest change there. There would be questions about the capacity of the annuity market. You provide attractively priced annuities. That could diminish as interest rates go up. We would also see an issue about supply and demand, so we don't see any big change in that. That would be something that would have a more dramatic impact on the business than almost anything else, and we see very little chance of that occurring. So that suggests we're going to be seeing more of the same kinds of things that we've seen over the last few years. We're going to see employers a little bit concerned about how they have to fund their plan. We're going to be looking to see employers taking steps to try to improve the funding. People looking at things like bulk lump sums and some options like that. But I don't think we're going to see anything that's dramatically different than what we've seen.

[Operator Instructions] Ashwin Shirvaikar, Citi.

So my first question is on the Exchange Solutions business. Can you comment on the non-retiree portion of it? Some nice partnership-type announcements recently. On a multi-year basis that non-retiree portion should still be a pretty good source of incremental growth for certain types of industry at least, right? I'm thinking retail, fast food, that type of industry. Can you comment on that?

Roger may want to jump in here, but let me just say I think we've spent a lot of time on designing the OneExchange solution, and the reason we spent so much time on that and we believe we have really the industry-leading solution here, is because that's potentially a very big sea change in what happens in health care delivery in the United States. So we expect to see that. Now the OneExchange includes the ExtendRetirees, which we're projecting are going to grow at 20-plus percent for several years. Participation in the other parts of it, the ExtendAccess, which connects to the public exchanges, and ExtendActives, that's going to grow a little more slowly. We're going -- it's going to be limited to select employers for January 1, 2014. And we expect that most of our clients are going to study the impacts of moving to an exchange model carefully, and we don't expect to see a tremendous amount of activity in the first year. We expect to see movement to ExtendActive and ExtendAccess in the 2015 enrollment period and possibly even stronger enrollment for the 2016 enrollment season. So we're very excited about this prospect. We love the design and what we have. We think we have some things to offer that nobody else is offering at the moment. But it's not something that we expect to see a lot of enrollment just in the next 6 months or year. Roger, do you want to add anything to that?

I think you said it very well, John. I'd just emphasize the enthusiasm, which of course, is illustrated by the amount of activity that we have going on there.

On that, because you have sort of a multi-year path, what are doing with your sales force and building out the support side of it? Will that be more of a just-in-time kind of a fix to how you deliver the business? Or is that something you build because you kind of believe strongly that they will come?

Well, it's a -- one of the things to keep in mind is that the health care consultants that we have right now that are in there, every health care consultant is being asked by their clients about the pros and cons of moving to exchanges. So the best sales force we have for getting clients to understand the value proposition there is really the existing health care consultants we have, plus our Exchange Solutions folks, who have a particular knowledge base in the retiree area. But the health care consultants are working every day with their clients on the pros and cons of what goes on there.

Got it. My last question really is given what the equity markets are doing, John, does that affect sort of the nature of the strategic conversations that you have at high levels with buyers of your services?

I'm not sure exactly what you're driving at there, Ashwin. Could you maybe elaborate a little bit?

Well, equity markets have been quite strong, and I'm just kind of wondering how that affects pension plans. And does that in turn affect the conversations that you might be having with your client base because of that?

Yes, I mean -- I think, look, one of the things that -- 2 things about the equity markets. One, to the extent pension funds are in the equity markets, it's a great thing to see that go up and improve the funding status of the plans, and I think we all feel better when the plans are somewhat better funded. So it's desirable to see that. As I mentioned just a few minutes ago in response to a different question, a lot of plan sponsors have really taken steps to stabilize their funded status through investment strategies that are matching the asset returns with the changes in liabilities. So for sponsors that have done them, the equity markets don't provide quite the boost that they might have seen in the past.

We have no further questions at this time. I would like to turn the call over to John Haley for closing remarks.

Okay. Well, thanks very much, everyone, for joining us this morning, and we look forward to reviewing our fourth quarter results with you in August. So long.

Thank you for joining today's conference. This concludes the presentation. You may now disconnect. Good day.