COWN (2019 - Q1)

Good morning, ladies and gentlemen, and thank you for joining Cowen's conference call to discuss the financial results for first quarter 2019. By now, you should have received a copy of the company's earnings release, which can be accessed at Cowen's website at www.cowen.com. Before we begin, the company has asked me to remind you that some of the comments made on today's call and some of the responses to your questions may contain forward-looking statements. These statements are subject to the risks and uncertainties described in the company's earnings release and other filings with the SEC. Cowen has no obligation to update the information presented on the call. A more complete description of these and other risks and uncertainties and assumptions is scheduled -- is included in the Company's filings with the SEC, which are available on the company's website and on the SEC website at www.sec.gov. Also, on today's call, our speakers will reference certain non-GAAP financial measures, which the company believes will provide useful information for investors. Reconciliation of those measures to GAAP is consistent with the company's reconciliation as presented in today's earnings release. Now I would like to turn the call over to Mr. Jeffrey M. Solomon, Chief Executive Officer. Mr. Solomon, you may begin. Jeffrey

Thank you, Operator. Good morning, everyone, and welcome to Cowen's First Quarter 2019 Earnings Call. This is Jeff Solomon and joining me today on our call is our CFO, Steve Lasota. As a reminder, we now make available a financial supplement that provides additional operating and financial information as well as a reconciliation of GAAP to economic income. You can find this supplement in the Investor Relations section of our website and we encourage you to review it in conjunction with our earnings release to get a better sense of the progress we're making in achieving our long-term objective to achieve mid-teens average return on common equity, or ROCE, on a sustainable basis. First quarter of 2019 was another strong period for Cowen, building on the solid momentum we generated in 2018. It was our third highest quarter on record for overall revenue since the formation of Cowen Inc. in 2009 and our second best quarter for investment banking despite the impact of a 35-day government shutdown, which led to the SEC being closed for most of January. Our business is demonstrating the resilience and sustainability as well as the profitability that we've been working to achieve over the past few years. Equity and debt issuances remain strong with pipelines that are growing. Our markets business remains also strong and clearly outperformed many of our largest competitors despite lower levels of market-wide trading activity. I also want to note that Q1 2019 results are being compared with one of the best, if not the best, quarters in Cowen's history, which occurred in the first quarter of 2018. Taking a look at the performance of our operating businesses during the first quarter 2019. In banking and capital markets, despite the temporary government shutdown, the demand for equity and debt issuance continued to be robust. We are actively taking advantage of this market backdrop. Investment banking revenue in the first quarter of 2019 totaled $83 million and we booked 30 capital markets transactions during the quarter where we served as a book runner on 21 of them. While we're taking steps to diversify our business, healthcare remains at the core of our capital markets franchise and this was validated last month when we held our 39th Annual Healthcare Conference which drew a record 2,300 people, which is up over 20% from last year. To give you a sense of how important a sector healthcare is in the capital markets, today there are more than 4,000 listed companies in the United States. Of that 4,000, approximately 10% are healthcare companies that have gone public since 2012. Of those 400 or so listed healthcare companies, about 3/4 of those are biotech specifically. So, we think that healthcare revenue opportunities remain robust and given our history, reputation, and deep domain expertise that we -- we've developed a solid competitive position there. And as I said before, just as we've been building on our healthcare capital market strength, we've also made significant inroads in our other sectors. The net effect has been a premier healthcare franchise that continues to grow significantly but makes up a smaller percentage of the total pie as we scale revenues and capture market share in other verticals. If you look at non-healthcare investment banking revenue, it represented 52% of total investment banking revenue in the first quarter, up from 24% in the first quarter of 2018 and from a -- and from the full-year 2018 average of 38%, which is a significant improvement in sector diversification. That has been one of our stated objectives over the past 5 quarters. With the strong capital markets activity, we are working to make Cowen less reliant on the equity financing calendar nonetheless. Our higher margin advisory business has been gaining significant traction, making the investment banking business more profitable and consistent in its results. The advisory business nearly doubled to $28.4 million in revenue in the first quarter of 2019 from $14.4 million a year ago. As a percentage of total investment banking revenue, our advisory business grew from 15% in Q1 2018 to 34% in Q1 2019 driven by transactions across a variety of industries from healthcare and industrial to technology, consumer and information services. The acquisition of middle market advisory firm Quarton at the start of the year has given us a nice beachhead from which to grow our revenue, expand our international presence and further increase our diversification. The integration of Quarton into the broader Cowen banking franchise has been progressing on both sides of the Atlantic and the teams have already worked together to win a few joint mandates. As we look ahead, we will continue to scale the higher margin advisory business by allocating more capital towards building out teams and we'll also evaluate the potential for additional bolt-on acquisition opportunities should they present themselves. Now turning to our markets businesses. For the first quarter, markets revenue, which includes brokerage, securities finance and other revenues, totaled $112.7 million, which is down 4% from the first quarter of 2018. The dip in revenues was due in part to lower levels of market-wide trading as U.S. volumes declined over 1% and pan-European trading dropped 18% versus the first quarter of 2018. In the wake of the spike of volatility in late 2018, we observed negative performance from a number of our smaller hedge fund clients, which in some cases led to the closures of funds. This impacted our trading in prime brokerage business with this client segment. With respect to institutional brokerage, which compares our cash equities, electronic trading, options, special situations and credit trading, revenue decreased 7% in the first quarter of 2019. However. our U.S. cash trading was down only 2% and U.S. electronic trading was flat year-over-year. This stands in sharp contrast to most of our competitors including the bulge-bracket firms, which reported double-digit percentage declines in the first quarter in equity trading revenues. Revenue for our institutional services business, which includes prime, clearing, soft dollar and commission recapture, decreased 10% in the first quarter of 2019 due in part to the weakness in the hedge fund segment. But there was -- there were areas of outperformance, in particular, securities finance was up strongly year-over-year. We continue to make progress in the global expansion of our prime capabilities, our outsourced trading platform and our securities finance operations including the launch of a swap trading capability. In short, we're very pleased with how our markets business is outperforming the competition in a tougher tape and we're optimistic about our ability to continue gaining share as we grow the business. Moving to the investment management business. As part of our simpler, fewer, deeper philosophy, we are focusing our investments on our areas of core expertise at the firm or what we call Cowen DNA. Going forward, we will continue to look for ways to leverage the strength of the organization to create long-term value. And as we've said before, we evaluate our potential strategies to determine if they truly meet the salable and scalable tests that we've been talking about for the past few quarters. So, the bar remains quite high for new initiatives. Looking at our existing strategies, our private Cowen healthcare investments continue to perform well and we're nearly 2/3 invested in the second healthcare fund and expect to be able to launch another fund in the coming months. HealthCare Royalty Partners is now 97% committed in its third commingled fund and had a productive first quarter committing $220 million to 4 investments across 4 of its various -- sorry, $220 million to 4 investments across various of its funds. Merger arbitrage outperformed the benchmark HFRX merger index for the first quarter. And our real estate fund RCG Longview remain closed to investors as they are either in or finished with their investment periods. At the end of February, we fully liquidated the Margate long-short equity portfolio although the fund did make a contribution with positive returns for the first 2 months of the quarter. So overall it was a strong quarter for investment management with management fees of $9.6 million and incentive fees of $16.7 million, which is an improvement over the first quarter of 2018. Turning to our balance sheet. We've been talking about the ways in which we're ensuring that it will be seen and not heard, and our efforts are certainly beginning to bear fruit although there's still work to be done. In addition to winding down our long-short equity fund during the first quarter, we disposed of one of our private investments in the wind farm operator Eolia recognizing and realizing approximately $4.3 million in proceeds. While we still have approximately $122 million in non-core illiquid investments on the balance sheet, including the stakes in Linkem and Formation 8, we're committed to realizing value in those investments in a manner that maximizes returns for our investors. As we're able to monetize these investments, we intend to redeploy the capital in a combination of accretive investments in our core businesses as well as with share repurchases. I look forward to sharing more details in the coming quarters as we make further progress on simplifying our balance sheet. Turning now to capital returns. We continued to buy back shares during the quarter repurchasing 315,000 shares of our common stock for $4.7 million. And we also received a new Board authorization to repurchase additional stock bringing our total authorization back up to $25 million. We remain balanced in our capital allocation approach buying back our shares opportunistically out of cash flow while still maintaining capital on hand to support the growth of our businesses; whether that's growing the advisory business, investing more in spread generating investments such as securities financing, or funding incremental Cowen DNA strategies in investment management. So in conclusion, first quarter was another positive step forward for Cowen and we put up solid performance in banking and brokerage despite less than optimal market conditions, gained traction integrating Quarton and ramped up the advisory business as well as made significant progress in simplifying our investment management operations. We believe all these steps move us closer to our target of sustainable mid-teens return on common equity. And before I offer some closing remarks and thoughts about our outlook, I'll turn the call over to Steve Lasota for a brief review of our financials. Steve?

Thanks, Jeff. As Jeff mentioned, we had a tough comparison against the very strong Q1 of 2018, but we are still pleased with our results especially given the government shutdown and the after effects of the volatility in late 2018. For the first quarter of 2019, we reported GAAP net income attributable to common stockholders of $8.1 million compared to net income of $15.2 million in the prior year period. GAAP revenue was down 11% year over year to $224.1 million from $251.4 million in the prior year period. In the first quarter of 2019, comp and benefit expenses were $130.2 million. Non-comp expenses for the first quarter of 2019 were $85.6 million and D&A was $5 million. In addition, other income from gains on investments was $40.9 million, income tax expense was $3.2 million and non-controlling interest expense was $2.2 million. Now turning to our non-GAAP financial measures, which we refer to as economic income. As a reminder, we use economic income to measure our performance and to make certain operating decisions. In general, economic income is a pre-tax measure that eliminates the impact of consolidation for consolidated funds and excludes goodwill and intangible impairment, certain other transaction related adjustments or reorganization expenses, certain costs associated with debt, and preferred stock dividend. Economic income revenues also include incentive income during the period when incentive fees are not yet crystallized with GAAP reporting as well as investment banking retainer fees collectible during the period that would otherwise be deferred for GAAP reporting. The remainder of my remarks will be based on these non-GAAP financial measures. We reported economic income of $17 million for the first quarter of 2019 compared to $24.1 million in the prior year period and economic income attributable to common stockholders of $15.3 million compared to $22.4 million in the first quarter of 2018. Economic income revenue decreased 3% year-over-year to $233.5 million. Although down from Q1 of 2018, revenue was driven by continued strong performance in equity financings and brokerage along with growing contributions from our advisory business and from non-healthcare sectors. For the quarter, investment banking revenue was down 12% to $83 million from $93.9 million in the first quarter of 2018. Brokerage revenue was down 8% year-over-year to $105.2 million. Management fees for the quarter were $10.4 million compared to $13.1 million from the prior year period. Incentive income was $16.7 million in the first quarter, up from $5.2 million in Q1 2018 due largely to strong performance by some of our affiliate funds. Investment income for the quarter was $17 million, up from $14.3 million in the prior year period due in part to the realized gain from the sale of our Tilray shares. And finally, other revenue was $1.2 million in the first quarter compared to $888,000 in the prior year period. Turning now to our expenses. Comp and benefit expense for the quarter was $129.7 million or 55.5% of economic income revenue compared to $134.1 million or 55.5% in the prior year period. Fixed non-comp expenses totaled $35.2 million in the first quarter compared to $34.7 million in the prior year period. Variable non-comp expenses in the first quarter of 2019 were $37.7 million compared to $38 million in the first quarter of 2018. Depreciation and amortization expenses were $5 million compared to $3 million in the first quarter of 2018 and as mentioned before, the increase is due to the Quarton acquisition. Turning to the balance sheet. Common equity, which is stockholders equity less preferred equity, was $713.5 million compared to $693.1 million at the end of 2018. Return on common equity was an annualized 11.5% in the first quarter of 2019 compared to an average ROCE of 12.1% for the full year of 2018. Book value per share, which is common equity divided by total shares outstanding, decreased slightly to $24.12 as of March 31, 2019, compared to $24.37 as of December 31, 2018, due to the issuance of shares related to the Quarton acquisition. And invested capital was $634.7 million as of March 31, 2019, compared to $786.7 million as of December 31, 2018. And finally, as I noted on our last call, we are reviewing our segment reporting structure to determine whether any changes have occurred that would impact our reportable segments. Because of the shift we're making to refocus our investment management businesses on Cowen DNA products, we are currently evaluating the impact of these changes on the presentation of economic information that we use to assess the performance of our operating results and make decisions about resource allocations. This evaluation will impact our determination of operating segments as early as the second quarter of 2019. We'll provide you with any necessary updates on this matter going forward. With that, I’ll now turn the call back over to Jeff.

Thanks, Steve. So, another profitable quarter in the books and another step towards achieving our long-term objectives as we work to drive higher and more sustainable returns for our shareholders. We've worked hard to get to this point where we are today, but I can assure you we're not looking back. We'll continue to simplify our balance sheet, diversify our revenues, scale our higher margin and recurring revenue & spread businesses, and improve our capital allocation process. We will also strive to provide our investors with transparency needed to understand the growth opportunities here at Cowen. Before we take questions, I want to stress again that our success is the result of the dedication and effort of so many of our teammates who strive to create value for our clients and who embody our core values of vision, empathy, sustainability and tenacious teamwork. I'm very grateful for all the efforts made by everyone at Cowen and remain quite fortunate to be leading such a talented team. With that, I will open it up for questions. Operator?

[Operator Instructions]. Our first question comes from Devin Ryan with JMP Securities.

First question on just kind of the equity underwriting business. Another great quarter there and obviously against the backdrop with the government shutdown and I think a number of your peers had a quite a bit of a softer result or will as we get through earnings season here. And so, clearly, you're kind of outpunching I think a number of firms and it looks like the second quarter is off to another good start. So, I'm just curious how you guys think about your market share and how that's been evolving and really also kind of where -- where it can go. So, you know, any anecdotes around where you are on covers and kind of how you've been moving up through the ranks kinda co-manager to lead manager and just any other context you can give us because it does seem like you guys are having some pretty nice progress there.

Well, so thanks by the way for recognizing that. I think we said on the last call that when we are looking at our pipeline, the government shutdown was simply delaying things. I actually think it probably has a more profound impact on companies that are -- as they try to figure out how to get capital raised in the second quarter, just things that they would have otherwise raised money maybe at the end of the first quarter that's going to get pushed into the second quarter. And so, I think you're seeing the start that we have and we've made in the second quarter as a function of the fact that we had this 35-day shutdown. I think what we said was on the last call, which I believe to be the case and it's certainly bearing out, that once we get through the rest of the year, everything that would have gotten done -- everything that gets done would have gotten done anyway. The 35 days you won't miss it and that's actually bearing out to be the case pretty -- I'm pretty comfortable in saying that. From our standpoint, listen, we're really good at this. I know that it's -- a lot of people just don't understand that there is an art and a -- both an art and a science to doing underwriting and I would just say the Street doesn't do a lot of them anymore, a lot -- except in the sector where we are the best and that is biotech and we're really good at it and we understand not just how to get them done, but how to get them done in a way that you get winning at both the companies and the investors. And this is something we focus on significantly and people know it; both investors know it, companies know it. Venture capitalists and the folks who are giving us the mandates recognize that there is a capability -- a core capability here that is significant. And so we don't win them all, but we win our fair share because this is something we're really good at and we continue to make investments to ensure that we will be at the top of our game there. It's also -- I've said over and over again the 1 sector that pretty consistently raises money and the fact that there are 1 out of every 10 companies in the United States is a healthcare company that's come public in the last six years suggests that this is the right sector to be in if you are a bank that's really excellent at doing equity raises, which we are. So, we focus on it and we recognize that it's a special skill. We'll continue to do things to defend our position. So, we definitely turn away business if we are not getting the right economics and if we don't like the companies. I mean, I think we can afford to be selective in many instances. So, we are very cautious around making sure that the deals that we do will be additive to everybody. And so again, I just think that's a -- that's where we are and we'll continue to hopefully not just maintain our share but take share from others. One of the things that I'm most proud of and I think we talk about this all the time is the amount of repeat business we do. And so when you think about these companies, a key element is recognizing that if you can be a book runner consistently and outperform for those folks consistently, then you get rewarded consistently. They want you in the book because you're adding value, particularly when there's not a C event. I think a lot of the value gets added frankly when -- not during a financing and I think we've set up on some pretty good processes here to ensure that clients are getting the best from us even when they're not paying fees and maybe especially when they are not paying fees. And that's just a different philosophy that I think reflects -- frankly reflects our experience being a client of the street, right, and I think you and I have talked about that. And so, that's really what we are doing. So I feel -- I continue to feel like we'll make progress there. The other area that's grown obviously is our cannabis business and that is obviously an emerging area. There's a significant amount of capital raising that's going on. I think you probably when you reference some of the progress we've made in the second quarter, certainly you can see that we're not just raising money for biotech companies, but also that -- that's gone over to the private and public market in cannabis and cannabis related activities. We think that's still in the early days and we certainly are aware that there are a number of companies that wish to tap the capital markets and we're going through processes where we're aligning our brand and our franchise to excel in that space and so far, so good. Tilray was obviously a milestone event last year being the first company to list here in the United States directly although there's a number of companies that are cross listed. We were at the forefront of that and we’ve said again publicly and privately that this is a team effort and it requires really collaboration and cooperation across the entirety of the firm and that includes banking and capital markets. And obviously, we have a thought leader in research in that space, but even business operations. When you think about legal and regulatory and accounting and finance and operations in order to really be the forefront and a leader in an emerging industry where there's not a lot of knowledge in the market, that's a team effort and it reflects I think the best of what we do at Cowen which is collaborate, get around the table and try to solve problems for our clients and help each other out in that process. And I don't want to make it seem like it's -- we're all sitting around the campfire here. But the reality is business is hard and it requires everybody to get around the table and work collaboratively to get outcomes for clients and that's something we're really good at. So, again that's sort of -- I feel great about what we've done and what we continue to do.

Thanks, Jeff. I really appreciate the detailed response. I guess a follow-up on the brokerage business. Understand some of the dynamics that impacted the first quarter and I don't think Cowen was alone there. And, we've heard from some of the larger banks that we cover that prime brokerage balances have been recovering a bit into the second quarter. I'm curious whether you guys are seeing that as well. I know sometimes it's a little bit of a different client mix. I'm just curious if you can give us any sense of whether the tone is changing or improving at all in the early days of the second quarter for that business?

It is. It has actually been improving throughout the first quarter. I mean we had a pretty -- that business is actually on or exceeding our budget for this year. So, we budgeted a down year based on what we saw happening in the fourth quarter. So, I'm actually very pleased with that performance. And so yes, we're continuing to see balances recover and certainly a new fund formation is occurring. I mean, there's a natural time of year when people begin to look at new fund formation and they -- this is that time and we're seeing that repair itself a little bit. We also made some decisions with certain of our clients. We pulled in some financing and got a little bit more conservative towards the back half of this -- of last year in part just because we were a little more concerned about the environment in the fourth quarter. And so part of what you're seeing here is we just came into the year with lower balances, but that was a very conscious choice and I think sometimes lost in the push for revenue growth. If everyone looked at the topline numbers and says hey, what does that say? It's hard for you and for investors to understand that we're actually making micro-decisions on -- sometimes that are short-term micro decisions that impact our current performance because we think long term it's the right thing to do for the business. And so when we make decisions to maybe pull in lending a little bit, we do that because it's the right thing to do for our business long term. The environment has gotten better and we will -- as we're going to get into launching our swap dealer, there's an opportunity for us to actually take on additional clients that currently we don't have who want to trade with us on swap, it enables us to do what I would call virtual prime business, which is a much -- much more seamless engagement. And it'll be 1 of the first times we can actually cross-sell our prime product and our securities finance product with some of our larger long-only and hedge fund clients. So, we're still in the early days there. I think Convergex was obviously a transformational deal and we spent a good portion of the year last year integrating that and we deliberately did not go through a significant cross-selling effort because we just wanted to make sure we got it right with our clients. But now I think it's an opportunity for us to look at some of those products and services on a selected basis and our team and our sales force is actually able to bring in partners from other parts of the firm with a high degree of confidence and we can begin to look at how we take bigger share of the wallet from important relationships. So, it's still in the early days here, Dev.

Got it, yeah great. And just last one here, you touched on this. But just remind us in terms of the kind of reduction in call it balance sheet assets here or investments whether it be investments in funds that are -- that are above kind of the amount that's necessarily strategic to the firm or monetizing some of the private investments. If you can, just any sense of kind of over the course of the next say 2 or 3 quarters what we should expect? I know some of that it is outside of your control, but just if there's any expectations that we can think about from the outside of where call it the balance sheet or some of those investments will trend?

I am not going to give you specifics on that. I wish I could. For example, I wouldn't have been able to tell you that Eolia was going to trade. I knew it would trade at some point this year, but I couldn't tell you if it was going to happen last quarter or next quarter or the third quarter because that was an Oaktree decision. And I think part of -- as we've expressed, part of our frustration with a private portfolio is that we don't have unilateral ability to make decisions on disposition in a way that would enable us to realize the value we think we have. And so, all I can tell you is that we are further along in that process than we were a year ago particularly for some of the big assets. The names that are in the Formation 8 portfolio are closer to being able to have monetization events because the businesses have continue to improve and get better. And certainly Linkem, we've begun the process of looking at how we're going to be able to create a monetization there. Again when that happens and how that happens is still to be determined and we have a partner there that we are working very closely with to make sure that we do the right thing by the business. So, all I'll tell you is it's in motion and we're further along this year than we were last year and hopefully we can continue to maintain that momentum.

And just the liquid trading strategies. I mean, are you optimized there at the moment or is there still potentially room there to bring some capital out of some of the existing funds that you're still in?

I like what we own. I like what we own today, I mean, I think we obviously -- the long-short book we liquidated in the past quarter. Again it was a positive contributor, but it was pretty clear that that business wasn't going to scale adequately to be a standalone business long term and so ultimately we were in a position where we could repurpose that capital for other things. If you look at what's happened in our event book, I think that we took obviously -- we took the allocation down there meaningfully in the first quarter of last year and it's continued to perform really well and that gives me great confidence that it will continue to do so and I love it and so I don't anticipate there making any meaningful changes. Part of what we did though, Devin, is we moved a lot of our allocation to the dealer businesses and in there we're a liquidity provider in a number of different spaces. We are one of the leading traders in SPACs and aftermarket and that requires some capital and we're happy to be in that business to facilitate trading capabilities for our clients when they need it and there's a decent return to be made in that business by simply owning SPAC shares that are sometimes trading at a discount to the trust value. And so the whole idea here again, as we've talked about with optimizing the balance sheet, is to utilize our balance sheet to drive our topline revenue in conjunction with serving our clients’ needs and we are doing that more and more. So about 56% of the balance sheet is allocated to dealer related businesses including securities finance, which is obviously a customer facilitation business. And I would assume that over time as we liquidate some of these private businesses, we will redeploy in some of those where we can scale. And of course, I do expect that we'll have at least 1 new strategy launch this year hopefully in our asset management business which we'll talk about when that happens. And so, very happy with where we are on the balance sheet and we continue to be cautious obviously. We're not looking for market directionality as a way to generate returns. We're all about alpha and figuring out how we can outperform without taking a lot of market directionality. And so, first quarter I think is a good example of what you can do when things go the right way. We'll also say Starboard had an exceptional quarter in the first quarter and obviously, we continue to benefit from that both in investment income as well as incentive income. And when Starboard does well, we do well in that area.

[Operator Instructions]. Speakers, I'm showing no further questions at this time. I'll turn the call back over to you for any closing remarks.

Well, I'll take that as a positive sign. Maybe Dev, you got the chance to ask all the questions that everybody wanted to ask. Obviously, we are extremely positive and we want to thank you all for joining us on the call today. We do appreciate your continued support of what we're trying to get accomplished here at Cowen, which is ultimately at the end of the day about creating value for all of our stakeholders. Now I use the term stakeholders deliberately because, at Cowen, we're committed to doing better so that we can do more good. And that's something that we've been focused on a lot here in 2019. Doing better means more than just expanding the bottom line although that's certainly our primary goal because we are a for-profit enterprise. But doing better is also about taking care of one another, being empathetic, working as part of a team. Certainly one of the things we talk about here is how we get psychic joy from helping clients succeed and how we get psychic joy from helping one another succeed as we make a positive contribution to our communities. Not the least of which is here today. Obviously, I think for most of America, it is Bring Your Child to Work Day. And so I think a little later on this afternoon I will be talking to a very important series of stakeholders who pretty much on an annual basis have some of the most difficult questions that I'll probably have to answer today. So, I'm looking-forward to doing that. And I would say that these kinds of efforts to do better -- to do good by doing better aren't exactly always captured in our results, but they are reflected in the type of people that we think are attracted to Cowen and our purpose as an organization. And at the end of the day, one of the measures we look at is whether or not people want to come here and we're not too far removed from the days in which people didn't even think about us. And so every day that goes by when we get inbound calls from folks who are super talented who want to figure out how to do better for themselves and their families by joining an organization that respects that is a sign that we're on the right track. And that is something that's well within our control, it takes a long time to build. And so the positive momentum that we're seeing and I think ultimately what you see in the numbers is a function of the fact that we're able to get really talented people who are the right cultural fit for us to drive results for all of us. It takes time. I know some of you've been extremely patient, but what you're seeing here and what I think you'll continue to see market conditions notwithstanding is that the benefits of bringing that kind of talent into the organization that helps us to make the firm long-term successful. So with that, I'll thank you again for joining and we look forward to speaking with you on our next call.

Ladies and gentlemen, thank you for participating in today's conference. This concludes the program. You may all disconnect and have a wonderful day.