Victory Capital Holdings, Inc. (NASDAQ:VCTR) Q4 2022 Earnings Call Transcript

Victory Capital Holdings, Inc. (NASDAQ:VCTR) Q4 2022 Earnings Call Transcript February 10, 2023

Operator: Good morning, and welcome to the Victory Capital Fourth Quarter and Full Year 2022 Earnings Conference Call. All callers are in a listen-only mode. Following the company’s prepared remarks, there will be a question-and-answer session. I would now like to turn the call over to Mr. Matthew Dennis, Chief of Staff and Director of Investor Relations. Please go ahead, Mr. Dennis.

Matthew Dennis: Thank you. Before I turn the call over to David Brown, I would like to remind you that during today’s conference call, we may make a number of forward-looking statements. Please note that Victory Capital’s actual results may differ materially from these statements. Please refer to our SEC filings for a list of some of the risk factors that could cause actual results to differ materially from those expressed on today’s call. Victory Capital assumes no duty and does not undertake any obligation to update any forward-looking statements. Our press release that was issued after the market closed yesterday disclosed both GAAP and non-GAAP financial results. We believe the non-GAAP measures enhance the understanding of our business and our performance.

Reconciliations between these non-GAAP measures and the most comparable GAAP measures are included in tables that can be found in our earnings press release and in the slide presentation accompanying this call, both of which are available on the Investor Relations portion of our website at ir.vcm.com. It’s now my pleasure to turn the call over to David Brown, Chairman and CEO. David?

David Brown: Thanks, Matt. Good morning, and welcome to Victory Capital’s third quarter 2022 earnings conference call. I’m joined today by Michael Policarpo, our President, Chief Financial and Administrative Officer; as well as Matt Dennis, our Chief of Staff and Director of Investor Relations. I’ll start today by providing an overview of the quarter and the full year period. Then I will cover our investment performance, which continues to be very strong. Then I will turn the call over to Mike to review the financial results in greater detail. Following our prepared remarks, Mike, Matt and I, will be available to take your questions. The quarterly business overview begins on Slide 5. 2022 was a history year for the asset management industry.

The disruptions in both the equity and fixed income markets drove assets levels significantly lower across most asset classes with industry wide declines in year-over-year revenue and operating margins. While we are not immune to the market backdrop, I am very pleased with the results we reported last night. At the end of each year, I like to step back and take a long range view of our company and review our progress against our long-term strategy and goals. At the start of the year, we laid out several key strategic objectives and we have achieved tangible and measurable progress in each area. As part of that, we continue to make strategic investments in hiring, technology, data, and marketing and distribution during the year and we are seeing that these investments are beginning to pay us back.

A good example of this gross long-term flows in 2022 were $33.3 billion which is 20% higher than the gross long-term flows of $27.9 billion generated in 2021 and 44% higher than gross long-term flows in 2020. The $6.5 billion in gross long-term flows achieved in the fourth quarter of 2022 is a record high for any fourth quarter period in our history. These results reinforce our strategy of investing in areas where we can make a meaningful impact on our business. Our long-term net flows were negative $2.5 billion during the year which equates to only 1.4% of the beginning of the year assets under management and pales in comparison to the more than $26 billion of negative market action we experienced since the beginning of the year. Specific to the fourth quarter, net long-term outflows were elevated.

We experienced clients selling assets at an accelerated pace for a number of reasons including tax loss, harvesting, capital gain, distribution avoidance, and pivoting to risk off positions to name a few. To-date in 2023 our net long-term flows have improved materially across our business from the fourth quarter. Operating income rose 7% from $374 million in 2021 to $399 million in 2022. Full year adjusted EBITDA margin was 49.6% in 2022 which exceeded our long-term guidance of 49% and is a good representation of our margin defensibility during a very volatile year. Adjusted net income or tax benefit was $1.05 per dilute share in the quarter and $4.58 per diluted share for all of 2022. We continue to return capital to our shareholders in 2022.

We were opportunistic in our share repurchases which accelerated in the second half of the year. In total we returned more than $200 million of capital to shareholders, which was more than three times the $62 million in capital returned in 2021. At the same time, we continued to reduce debt to increase our balance sheet flexibility. Based on our positive outlook of excess cash flow generation, the Board declared an increase of 28% in our quarterly cash dividend this quarter. Additionally, we have continued to make investments in our business in areas that can have the greatest impacts. These included expanding the use of data in all aspects of our business, enhancing our technology capabilities, investing in distribution, marketing, continuing to hire new talent, as well as expanding the products and service offerings available for our direct investors.

While many in the industry are cutting their capital allocated to invest in their platform and people, we are not. We are continuing to invest and hire at the same steady pace we have maintained over the last few years, and we’ll do the same thing in 2023 while also maintaining our long-term adjusted EBITDA margin guidance of 49%. Turning to Slide 7, you can see the strong investment performance we deliver on behalf of our clients has continued throughout the year and its final quarter. We had 44 mutual funds and ETFs with four or five star overall ratings from Morningstar. These products with four or five stars account for 62% of our AUM in mutual funds and ETFs. Additionally, approximately 80% of our total AUM outperformed benchmarks for the three, five, and 10-year measurement periods as of yearend.

During the year, our WestEnd Advisors franchise secured new platform placements with seven firms. In addition, we experienced more than a 25% increase of new advisors opening their first account with WestEnd during New Year. This sets the foundation for solid organic growth as these new advisors expand the number of underlying clients utilizing WestEnd’s models. 2023 is also off to a strong start with three of WestEnd’s products being added to LPL’s Model Wealth Portfolios platform, which is the flagship platform for many LPL advisors. We are also very well positioned from an investment performance and distribution standpoint to benefit from rotation back into fixed income. The increased shelf space we have secured for our USAA investments franchise outperforming fixed income products over the last few years, has us very well positioned to capture more market share as investors reallocate back to fixed income.

Keep in mind, from a product offering perspective, we have mutual funds, separate accounts, and the ETFs available for this franchise. Turning to Slide 8. Cash flow generation remained strong during the fourth quarter and full year. Share repurchases totaled 4.6 million shares during the year, which was significantly higher than in prior years. We pivoted to allocating more of our excess free cash flow to share repurchases given equity market conditions, and specifically due to the price of VCTR. Additionally, we did continue to reduce debt and we maintained our growing ancillary cash dividend. The chart on the right of this slide illustrates respective full year 2022 capital allocations. Our strategy included deploying capital support, earnings growth, capital appreciation, and balance sheet flexibility, while at the same time rewarding shareholders with capital returns.

We intend to maintain flexibility and strategically allocate excess capital to maximize long-term shareholder value creation. As we continue to conduct diligence on acquisition opportunities, we remain patient and selective. This approach has served us well over time. We are continuing to evaluate a number of opportunities and believe our patience and hard work will yield a positive outcome for our business and for our shareholders. Lastly, subsequent to year end, we announce a new addition to our corporate board. We welcomed Vice Admiral Mary Jackson as a new independent director of the company. Vice Admiral Jackson retired after serving the United States Navy for more than three decades. We look forward to her leadership and contributions to the Board.

With that, I will turn it over to Mike for more details on the quarter’s financials. Mike?

Michael Policarpo: Thanks Dave and good morning everyone. The financial results review begins on Slide 10. Total AUM increased $5.7 billion or 4% in the quarter to $153 billion at the end of December. This was driven by more than $10 billion of positive market actions as the markets rebounded during the quarter. Revenue of $201 million in the fourth quarter was up 3% in the third quarter, which was consistent with the 3% decline in average AUM in the year’s final quarter despite the higher point-to-point AUM. Full year 2022 revenue was $855 million. On a GAAP basis our operating income was $79.6 million in the fourth quarter and $399 million for the full year period. This compares with $89.8 million in the same quarter last year, and $374 million for all of 2021.

The increase in year-over-year operating income is attributable to non-cash items, namely the change in value of contingent consideration for recent acquisitions. Adjusted EBITDA was $100 million in the fourth quarter and $424 million for the year. Our margins have held up better than most all companies in our sector. Adjusted EBITDA margin was 49.7% in the quarter and 49.6% in the full year. Adjusted net income with tax benefit was $74.5 million or $1.05 per diluted share in the fourth quarter and $331.2 million or $4.58 per diluted share for the full year. Looking at capital allocation, we returned a record amount of capital to shareholders during the year. In the fourth quarter, we returned $59 million to shareholders with $42 million of that through share repurchases and $17 million in dividends.

Lastly, we increased our quarterly cash dividend by 28% to $0.32 per share, and that will be payable on March 27th to shareholders of record on March 10th. On Slide 11, you can see total AUM of $153 billion at the end of the year remains well diversified from a distribution channel and client perspective. This diversification has served us well in the current volatile market environment. Turning to Slide 12, long-term gross flows were $6.5 billion in the fourth quarter, which was the highest we’ve ever reported for a fourth quarter period. Full year gross long-term flows of $33.3 billion, also marked a new record. WestEnd Advisors, Sycamore, Sophus, and RS Global, each had positive net flows for 2022 and the fourth quarter represented the ninth consecutive quarter of positive net flows for our Victory Shares ETF business.

We also earned a number of product recommendations and model allocations during 2022 that will support future sales activity. For example, Fidelity Strategic Advisors and Edward Jones made model allocations to trivalent and RS growth respectively and Schwab added the Victory shares USAA core intermediate term bond ETF to one of its models. In addition, our market neutral income fund was added to the recommended lists at Morgan Stanley, Merrill Lynch, Saterra , Fifth Third Bank and LPL. And this was added to models at both Fidelity and LPL. Slide 13 illustrates our revenue by quarter. One note to make on this slide is our fee rate held up nicely and was 51.7 basis points in the quarter. On Slide 14, we break out our expenses which increased $10.5 million due primarily to an increase in non-cash expense related to the change in value of contingent consideration from recent acquisitions recorded in acquisition, restructuring and integration expenses.

On a cash basis, compensation as a percentage of revenue held steady as designed at 24.5% and our variable operating expenses calibrated with our AUM and revenue. Moving on to our non-GAAP results on Slide 15, adjusted net income was $65 million in the fourth quarter. The tax benefit in the quarter increased to $9.5 million, reflecting the incremental tax benefit associated with the payment of the third USAA earnout payment of $37.5 million made in Q4. ANI with tax benefit was $74.5 million or $1.05 per diluted share. Our adjusted EBITDA margin came in very strong at 49.7% in the quarter. We’re making no changes in maintaining our long-term guidance of 49% for 2023, which is inclusive of our continued investments in numerous areas to support our growth initiatives that Dave highlighted in his opening remarks.

Lastly, turning to Slide 16, our net leverage ratio at year end was 2.4 times. We reduced debt by $150 million during the year through repayments and purchases in the open market. As a reminder, we are reducing the floating portion of our debt and not the $450 million of debt that we have hedged at 3.15% interest rate. In addition, our $100 million revolver remains undrawn. GAAP operating cash flow from operations was $67.1 million in the fourth quarter. That concludes our prepared remarks. I will now turn it back over to the operator for questions.

See also Most Valuable Real Estate Companies and Most Valuable Hotel Companies.

Q&A Session

Operator: Our first question comes from Craig Siegenthaler with Bank of America.

Craig Siegenthaler: Good morning, Dave. Michael, hope you’re both well.

David Brown: Hi, Craig.

Craig Siegenthaler:

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David Brown: Good morning. So I would think of it this way. We’re opportunistic in our share buyback and really it depends on the market conditions. We talked about in our script the last six months we leaned into buying shares because of the market. When we look at the market going forward we’re going to take it week by week. That’s part of an overall capital allocation strategy, which really the primary purpose of our capital allocation strategy is to really have a flexible balance sheet so we can go ahead and pursue acquisitions and the buyback and the dividend is ancillary to that. So we’ll take it really week by week from the way the market behaves and the way our stock behaves. I’d reiterate what I said in our script that we think that the levels we’re at today, there’s really good value in our stock. But we’ll see how the market does over this quarter and next quarter.

Craig Siegenthaler: And Dave, my followup is also on capital return. You know, with the dividend hike, I think your yield is now around 4%. You know, is the purpose there really to attract more of a long-term income focused shareholder based? Because I’m just thinking about where your stock valuation is today given your desire for M&A, and I know it’s not a ton of capital, but why not focus more on buyback M&A versus the dividend hike going forward?

David Brown: Yes, it’s a good question. I think we’re taking a balanced approach. The dividend increase was not done to attract a certain type of shareholder. I think it was done for the purpose of rewarding shareholders that we have grown. We’re secure enough in our financial position. We have a really positive outlook to the future and we think that the balance we have between debt pay down, buyback and dividend is the right balance. For 2022, if you go ahead and look at how we allocated capital, the majority of our capital allocation did go down to debt pay down. We also have a lot of different tools on M&A. We have an undrawn revolver. We have our structuring. We generate a lot of cash and we have a portion of our debt that as you know, that is hedged out at about 3% plus. So I think all-in-all, we look at the dividend as a component. The increase is a reward. It’s not really being done to attract any certain type of investor.

Craig Siegenthaler: Great. Guys, thank you for taking my questions.

Operator: Our next question comes from Kenneth Lee with RBC Capital Markets.

Kenneth Lee: Hi, good morning, and thanks for taking my question. Wondering if you could just further expand upon your prepared remarks about being well positioned to potentially capture fixed income net flows. If the industry trends inflect, wonder if you just talk about product offerings any gaps and also your current distribution reach as well? Thanks.

David Brown: Yes, good morning. A great question and very timely. You know, so just to expand on what we said in the prepared remarks, we have 16 products under the USAA franchise. 15 of them I think are four or five star, which is about, it’s really remarkable that we have this franchise with this excellent investment performance. We offer these products in ETF, a mutual fund, and also separate accounts. And we have intermediate, an intermediate term bond fund, a short-term bond fund, government securities fund and income fund, and then intermediate tax exempt. So we really do cover a lot of real estate from the fixed income and investors’ perspective. Since the acquisition, we’ve spent a lot of time building out the distribution on the retail and intermediary side and also on the institutional side.

We’re starting to make some progress and we think as investors come back into fixed income, we hope that as we progress through the year and the Fed, what the Fed is going to do becomes much more clear, we think we’re really well positioned with the investment performance. And then also this is a franchise that manages about $25 billion in assets, so it’s a sizeable franchise that is deep in resources and has been doing this quite a long period of time.

Kenneth Lee: Great, very helpful there. And then perhaps on a more broader level, as you look out further this year, which strategies or areas do you see as key growth opportunities in terms of net flows, potentially? Thanks.

David Brown: So yeah, I’d start off not in any priority order, but I’d start off with WestEnd. You know, WestEnd Advisors was net flow positive in 2022 when a lot of their competitors weren’t. They’ve got really solid investment performance. We like the model space. We have excellent distribution there, and it’s expanding, so we’re really excited about that opportunity. Mike mentioned our ETF platform Victory Shares, the consistency of flows there has been really impressive, and we’re seeing that moving into 2023 and we don’t see that changing, so we’re excited about that part of our business.

Trivalent, those: And then lastly, we also with our New Energy Capital acquisition we expect that to make progress as well and that’s around private funds, and we’re excited about that opportunity.

Kenneth Lee: Great. Very helpful there. Thanks again.

Operator: Our next question comes from Mike Brown with KBW.

Michael Brown: Great. Good morning guys. How are you?

David Brown: Good.

Michael Policarpo: Good.

Michael Brown: So, you know, I guess I wanted to just maybe start on the fee rate here. It’s remained relatively stable here and you’ve had a lot of kind of mix shift in your AUM here with the kind of some of the recent acquisitions. As we think about the fee rate here as you think about your growth profile for 2023?

David Brown: Good morning, Mike. Yes, I think as you mentioned, our fee rate has remained very stable. And I think as we look out in some of the areas that Dave just highlighted, we would expect that the fee rate will continue to be driven by both beta impact as well as asset mix, channel mix, product mix. As we think about opportunities for expansion of fee rate, we’ve talked a little bit about the fulcrum fees we have on some of our products that gives some upside. Those fulcrum fees were positive in the fourth quarter, about 0.1 basis points, and there is opportunity for upside on that. But as we think about the guidance going forward, I would say we’ll be in the 52 basis point range. That will vary as we see changes in different products that have organic growth going forward.

But that’s kind of the level that we’re looking at going forward. And the last thing I would obviously say this quite often, we’re very focused on margins. So fee rates will continue to move slightly in different directions, but I think the power of our operating platform really allows us to focus on margins.

Michael Brown: Okay, great. And Michael, you talked a lot about the platform additions for a number of your various different affiliates. When you look back historically, how did those additions start to contribute to flows? Could you give some thought on maybe the magnitude of pickups that you’ve seen in the past and then maybe speak to how quickly some of those flow benefits start to come through?

David Brown: Yes, it’s Dave. I’d start with WestEnd. You look at WestEnd Advisors, we own that business for all of 2022, and that was net flow positive. So that’s a very fast addition. They had a really great existing distribution platform and we’re expanding that. You could go back to one that we did pre-IPO, which was our ETF platform. That was done in 2015, and that has been a consistent grower that took a little bit of time, but that has been a consistent grower. We also look at the opportunity that we have with the USAA fixed income investments and that as we see fixed income accelerate, we think that will be a grower. Today it’s not, but we think that one will be a grower. The point is each one really has its own unique situation.

The concept is to take really excellent investment franchises and really plug that into our distribution network and expand out their opportunity set to gain more clients. And that has lots of different perspectives on that, and that’s what ranges in the different time and the different examples.

Michael Brown: Okay, great. Thanks David. I appreciate the color on the franchises there. Thank you.

Operator: Our next question comes from Brennan Hawken with UBS.

Brennan Hawken: Good morning. Thanks for taking my questions. I’d like to start on the capital return side of things, buybacks robust again and you guys spoke to that a bit in a prior question. But one of the things that’s interesting when we speak to investors about Victory and the discount, as many point to the large private equity ownership and concern either, concern about when that ownership might end up winding down versus, or maybe that is a reason for the discount. So I’m curious about whether or not you have had any discussions with your owners. I appreciate that they probably don’t consider the current valuation levels as attractive to sell. And so it’s almost like a chicken and egg situation. What I’m trying to get at is, have you considered maybe a program with them that would allow you to allocate your buyback to chip away at their ownership, so that there could be a clear indication to the market that that ownership will grind down over time, which could allow for the private equity owners to see a path to exiting the position at an improving valuation and you could end up with a win-win situation?

David Brown: Yes, great question. I think first our private equity owners have liquidated and actually reduced their position quite significantly over the last few years and the ownership has come down quite significantly through a couple programs and so we’re happy with that. We also on the other hand, have done very well with the ownership of private equity. So having them as owners has not been a hindrance on the performance of the business. The board evaluates every time, every quarter, all different kinds of programs around what we do with our buyback, how we interact with our private equity shareholders. And so all of the things that you’ve mentioned we continue to evaluate. As we look forward, what we’re focused on is really performing from a business perspective.

And we think the ownership structure will take care of itself over a period of time. And we think, as you have pointed out the discount, we think that’s a tremendous opportunity, entrance point for investors. Because those challenges are not business related, they’re really more ownership related. But I would really just sum it up saying that we’re focused on the business. We’re focused on growing the business, doing smart acquisitions, taking care of our clients and we’ll evaluate every quarter what we do with our buybacks and how we interact with the private equity sponsors.

Brennan Hawken: Yes. That’s all really fair. And that’s absolutely the right focus. So I really appreciate that. You spoke to getting added to some of your products added to models at LPL and many of us see the momentum behind those centralized models at that firm. Can you speak to — do you know if there’s any typical lag or timing around when you start to see the benefits from getting added to those models and how we should think about the outlook for maybe even that lineup in those models getting expanded in the future?

David Brown: Sure. There’s definitely a lag. Every platform is different. Unless you’re getting a direct allocation from a CIO office or a home office, there will be a lag in time to educate the advisors to go out and do marketing material and to have meetings, so there is a lag. I couldn’t give you a timeframe, but we do know from history that getting onto platforms, getting into models is the first step in a process of getting more clients and getting positive flows. So we know it’s the beginning. And I think it’s a really, really important first step to an end point of really seeing nice, a nice impact on flows.

Brennan Hawken: Okay. Thanks for the color.

Operator: Our next question comes from Ken Worthington with JPMorgan.

Kenneth Worthington: Hi, good morning. Thanks for taking the questions. Maybe to follow-up on the model portfolio questions that we’ve heard throughout the call, were there an unusual number of additions this quarter or is this sort of, is there always sort of this level of additions, maybe there’s other subtractions and it’s just a normal course of business, and if there were an unusual number of additions this quarter why now? What has changed to sort of drive the interest in your products?

David Brown: Hi Ken. I would say that there’s probably a little bit more than usual this quarter. I don’t know if I have a reason. I could guess that some of it has to do with, maybe the market calming down a little bit and people focusing on thinking about the future as opposed to digesting what’s happening, given the market volatility. That would be my guess, but I would say just a little bit more than normal. But I don’t have a specific trend or two other than I think it’s just market conditions.

Kenneth Worthington: Okay. And then for symmetry, any unusual eliminations of your products on platforms? Were there any offsets to the additions or were there largely gains this quarter?

David Brown: We had one large relationship that was ended, that was a relationship with a large amount of assets which impacted our total net flows for the fourth quarter. But I would make note that that was a very low fee and extremely low margin relationship. So it was a lot of assets, but not a lot of earnings. That’s with one kind of institutional type client, but other than that, nothing of note.

Kenneth Worthington: Okay. And then I guess also flushing out some of the comments on New Energy and alternatives. How did things evolve throughout 2022? And you mentioned I think with regard to New Energy, a focus on privates, what is your outlook for the coming year? Again, just sort of flushing out some of your prior comments.

David Brown: So for 2022 and for New Energy, I think it was a platform setting, so it was that business working in within our environment and getting themselves ready for a growth phase. We’re positive from a private market perspective and especially what they do, and especially with a team that does it, given their long track record and the space that they operate in. And when I look out, in the future in 2023 and beyond, I think for Victory New Energy was the first alternatives acquisition we’ve done. That’s a potential area of interest for us. And I think that that’s a really positive part of our business that is really just beginning and something that we’re very interested in and we’re spending a lot of time on.

Kenneth Worthington: Okay, great. Thank you very much.

Operator: Our final question comes from Michael Cyprys with Morgan Stanley.

Michael Cyprys: Hey, good morning. Thanks for taking the question. Maybe just on M&A, you guys have been quite active over the years. Markets have been quite volatile, though financing costs have gotten a bit higher and bit that spreads have widen out. So just hoping you could maybe help update us on how you see the M&A backdrop today for Victory, how your conversations are evolving? Any color on what that pipeline looks like, size, magnitude, types of deals, and how those conversations have evolved in the past 12 months?

David Brown: Hi, Mike. So as I said in the script, we are very patient and selective as we’ve always been. As a public company, we’ve done four acquisitions in five years, so we’ve been really active. I think in those four acquisitions, I think we’ve done about $1.5 billion in capital. So we have, we’ve done very sizable deals in comparison to our size. And the way we see the market today is there’s a lot of discussions. There’s a lot of things happening and — but doesn’t mean that there are a lot of good companies that are for sale. It doesn’t mean there are a lot of companies that fit with us. So we’re just continuing to move forward. It is part of our strategy. It’s not the only part of our strategy. And as I look at the environment with pricing, with cost of, with financing costs, we’re well positioned if we find something that works to execute on it with our balance sheet, with our history of the debt that we’ve used and then also with our structure, we feel really good, but if we find something we’ll do it.

Michael Cyprys: Great. And just on some of the more recent acquisitions that you’ve done with WestEnd, THB, NEC, can you maybe just help quantify how much of flows each of those three individually contributed in 2022? And could you elaborate on some of the distribution synergies you’ve been able to realize so far? So with WestEnd, I know part of the ambition was about selling to more advisors. How many more advisors are you guys selling to today? How many new platforms have you added that they’re selling onto? Thank you.

David Brown: Yes, so we don’t give specific flows for each franchise as you know, but I will tell you the three that you mentioned, if you accumulated their flow profile accumulated, all three of them are net flow positive. So if you look at, combined all of their flows that group will be net flow positive, so they’ve been additive to our net flow profile. As far as WestEnd specifically, I think we had some numbers in the script. We have added advisors, we’ve added multiple platforms and we’ve had that. We’ve also launched an ETF MODL as well. So we’re really, really pleased there. THB has been added to a couple large platforms, the SMA product. And then NEC as I said this year in 2022 and 2023, we are preparing for growth there as we go out and think about how you grow and raise private funds. So we’re really pleased with them. And if I think about the numbers, as I said, you put all three of them together, it’s net flow positive for 2022.

Michael Cyprys: Great. Thank you.

Operator: There are no further questions at this time. I’ll now turn the call back over to Mr. David Brown for closing remarks.

David Brown: Thank you for your interest in Victory Capital. Next week we will be in New York attending the BofA Securities Financial Services Conference. And in March we’ll be back in New York at the RBC Capital Markets Financial Institution’s Conference. We hope to see you there and look forward to keeping you updated on our progress as the year unfolds. Thank you for your interest in Victory.

Operator: That concludes today’s presentation. You may now disconnect.