Earnings Call Transcript - PRAA Q2 2021

Operator, Operator

Good afternoon, and welcome to the PRA Group Conference Call. Please note, this event is being recorded. I would now like to turn the conference over to Ms. Darby Schoenfeld, Vice President of Investor Relations for PRA Group. Please go ahead.

Darby Schoenfeld, Vice President of Investor Relations

Thank you. Good afternoon, everyone, and thank you for joining us. With me today are Kevin Stevenson, President and Chief Executive Officer; and Pete Graham, Executive Vice President and Chief Financial Officer. We will make forward-looking statements during the call, which are based on management’s current beliefs, projections, assumptions, and expectations. We assume no obligation to revise or update these statements. We caution listeners that these forward-looking statements are subject to risks, uncertainties, assumptions, and other factors that could cause our actual results to differ materially from our expectations. Please refer to the earnings press release and our SEC filings for a detailed discussion of these factors. The earnings release, the slide presentation that we will use during today’s call, and our SEC filings can be found on the Investor section of our website at www.pragroup.com. Additionally, a replay of this call will be available shortly after its conclusion and the information needed to listen is in the earnings press release. All comparisons mentioned today will be between Q2 2020 and Q2 2021, unless otherwise noted. And our Americas results include Australia. During our call, we will discuss adjusted EBITDA and debt to adjusted EBITDA for the 12 months ended June 30, 2021, and December 31, 2020. Please refer to the appendix of the slide presentation on our website during this call for a reconciliation of these non-GAAP financial measures to the most directly comparable U.S. GAAP financial measures. And now, I’d like to turn the call over to Kevin Stevenson, our President and Chief Executive Officer.

Kevin Stevenson, President and Chief Executive Officer

Well, thank you, Darby. I’d like to begin the call this evening like those of the last year and a half and send our thoughts out to those who’ve been impacted by COVID. It seems as though every day there are additional challenges associated with this pandemic, and it’s our hope that we can continue to address those challenges and move forward. I hope to see more acceptance of the vaccine, and I’ll share that we plan to further our efforts to educate and promote, and I hope everyone listening is doing the same. It’s become clear and clearer these days as each day goes by, we find ourselves talking about two separate groups: those who are vaccinated and those who are not. We need vaccination rates to rise in order to move forward toward a more normalized life, and I hope we can all work together to achieve that. Moving on to the second quarter overview. In Q2, we collected $544 million globally; this production was the second highest quarter in PRA’s history, just behind our record-setting first quarter of 2021. This is driven by record European cash collections, which increased more than $50 million compared to the second quarter of 2020 and more than $8 million compared to last quarter. Net income attributable to PRA Group for the quarter was $56 million. Portfolio purchases for the quarter were $220 million, with Americas generating its largest quarter since the second quarter of 2020, and Europe recording its second largest Q2 since being acquired by PRA back in 2014. Our strong quarterly performance is yet another in the line of record-setting results that we’ve delivered in the past year and a half. I believe that our past decisions and investments have contributed to our sustained positive performance. As it relates to 2021, two come to mind. First, we held to our pricing discipline in Europe from 2016 to 2018, when we saw intense and, in many cases, irrational competition. We then invested heavily in NPLs in 2019 and 2020, when the market became more attractive. Due to the longer duration of the collections period in Europe, we are seeing the impact of those purchases today. These results are a testament to our dedication to our disciplined long-term approach to portfolio purchasing. Second, over the past few years, we’ve made significant investments in digital and data. We’ve built new global digital payment portals, strengthened our global data and analytics capabilities and talent, and we’ve seen benefits from these actions, with year-to-date growth in our global digital collections of 50% and an outstanding first-half cash efficiency ratio of 67.4%. In both of these cases, you saw the power of a global enterprise. We were able to effectively execute each because of our diversified footprint. We moved investment in volumes around the planet in order to mitigate areas of competition, and we also shared technologies and lessons learned around the globe in the digital and data space. Looking even further back, while we’re focusing on past investments, it’s fair to say that one of our most important investments was our move in 2014 to strongly enter the European market broadly and diversify our products in those markets. Moving on, productivity continues to be strong in the U.S. call centers, increasing from the high bar we set in the second quarter of last year. We continue to collect a significant amount through our digital platforms, and same as last quarter. Digital collections exceeded those of our largest two call centers combined, but by an even higher percentage in Q2 than in Q1. We have a lower inventory of accounts in our legal collections channel, and as a result, lower collections. This is largely due to strong performance in digital and call center collections, decreasing the need to move accounts into the legal channel. This is a positive trend since we prefer to work with our customers via non-legal channels. Another component of lower legal collections, however, was our decision not to seek new wage and bank garnishments during COVID. We halted those efforts in March 2020 and did not start them until around July 1st of this year. Based on our research, many collectors and banks either never stopped or they restarted last year. In Europe, our productivity levels remained strong, and we delivered record cash collections despite the majority of the workforce being in a work-from-home status. While some countries remain in varying degrees of lockdown, we saw little impact to cash or normal business operations, including the legal collections channel. Digital cash collections, while on a smaller scale, are growing at an even faster pace than in the U.S. Portfolio purchases were $220 million during the quarter, an increase of $61 million from the first quarter of 2021. In the Americas, we invested $114 million, and this is the first quarter since Q2 of 2020 that we purchased more than $100 million. We’ve been monitoring some of the credit trends, and based on what we are seeing, it appears as though Q1 2021 may be a turning point in the environment; there are a few items we’ve been tracking. First, we started to see increased lending trends by creditors, according to the Senior Loan Officers Opinion Survey on banking lending practices for July 2021 by the Federal Reserve. Banks have continued the trend from Q1 of easing standards for credit cards, reducing minimum required scores, and increasing credit limits. Second, according to the Federal Reserve Bank of New York, credit card balances increased by $17 billion sequentially, a little over 2% during the second quarter, which is reversing the trend during the pandemic. Third, consumer spending has been increasing in 2021. Finally, credit card charge-off rates in the U.S. were in the 3.5% to 4% range during 2017 to late 2020, but during the fourth quarter of 2020, we saw this number dip to its lowest level in quite some time. However, in Q1 2021, it ticked up almost 40 basis points, or a 40% increase, to almost 3% again. It’s still early, but these are positive trends for our portfolio purchasing outlook. In Europe, we see a somewhat different environment. We mentioned on the last call that we saw a healthy pipeline, and that has translated through to our numbers for the quarter. Portfolio purchases in the quarter were $106 million, and this is the second highest European Q2 investment level since we became a global enterprise in 2014. We’re starting to see more normalized volumes coming to market, and we’re excited to see more portfolios offered for sale during the second quarter than we had originally expected. The European pipeline for the second half of the year continues to look strong, and it’s our belief that the market opportunity will be larger in 2021 than it was in 2020. With that, I’d like to turn things over to Pete to go through the financial results.

Pete Graham, Executive Vice President and Chief Financial Officer

Thanks, Kevin. During the second quarter, we saw strong global cash collections of $544 million in total revenues of $286 million. Total portfolio revenue was $283 million, an increase of $15 million or 5%. We’ve again assumed that the majority of the $75 million in cash overperformance in the quarter was a timing acceleration of collections rather than an increase to total expected collections. Additionally, this quarter we also made adjustments in some geographies to increase our near-term expected collections, bringing them in line with recent performance and collection trends. The increase in the near-term expectations resulted in a positive adjustment, which partially offset the impact of acceleration adjustments this quarter. We expect these adjustments to reduce the amount of overperformance we will have in the second half of the year. Keep in mind that this is not an increase to total expected collections; rather, it is an increase in the near-term forecast with corresponding reductions later in the forecast period. Operating expenses were $181 million, or $21 million increase from the second quarter of 2020. This was driven primarily by higher levels of activity in 2021 compared to the pandemic-suppressed prior year. Additionally, currency translation was a headwind of $4 million. The effective tax rate for the six months ended June 30 was 19.3%, reflecting some discrete items in the second quarter. However, we still expect to be in the low 20% range for the full year. Net income was $56 million, which generated a $1.22 in diluted earnings per share. For the quarter, cash collections were $544 million. This is second only to the record set in the first quarter of this year. In order to normalize for outsized cash collections in the Americas during the second quarter of 2020 and record cash collections in the first quarter of this year, we’ve also presented year-to-date cash collections to better illustrate the overall trend. For the first six months of the year, Americas collections increased by $15 million, driven primarily by significant growth in U.S. call centers, digital and other Americas cash collections. This was partially offset by decreases in U.S. legal collections reflecting the lower inventory of accounts placed into the legal channel over the last year. Europe cash collections were another quarterly record, growing $53 million or 42%. For the first six months of the year, Europe cash collections grew $81 million or 29%. As Kevin mentioned, we are realizing the full impact of record portfolio purchasing in 2019, strong investment levels in 2020, and our European business is driving significant growth. Over the past few years, we’ve been steadily improving the efficiency of our operation, and in 2020 set a record with the cash efficiency ratio of 64.5%. We’ve continued this trend in 2021; our cash efficiency ratio was 66.8% for the second quarter and 67.4% for the first six months of the year. Based on our strong results in the first half, we’ve increased our expectation for the full year cash efficiency ratio to 64%. We are operating at some of the highest efficiency levels we’ve had in the history of the company. ERC at the end of the quarter was $6.1 billion with 44% in the U.S. and 51% in Europe. One of the primary drivers holding our ERC steady from last quarter, despite solid investment levels, is our assumption that the majority of our overperformance in the last 15 months is an acceleration in the timing of collections. Over the past five quarters, we’ve overperformed our expectations for collections by over $450 million. It’s important to recognize that because of our assumptions, we’ve reduced ERC by a similar amount during that same period. If with additional time and analysis we determine a portion of our overperformance was an increase to total estimated collections, positive forecast adjustments could eventually flow into revenue. We expect to collect $1.6 billion of our ERC balance during the next 12 months. Based on average purchase price multiples we recorded in the first half of the year, we would need to invest approximately $870 million globally over the same timeframe to replace this run-off and maintain current ERC levels. We anticipate that even in the current market conditions, we could meet or exceed that level of investment. Due to our strong cash and financial performance, we’ve continued to deleverage. For the 12 months ended June 30, we generated $1.4 billion of adjusted EBITDA, an increase of about $90 million when compared to the full year of 2020. As a result, we ended the quarter with a debt to trailing 12-month adjusted EBITDA ratio of just under 1.7 times, compared to about two times at year-end. Our capital position remains strong, with over $1 billion available for portfolio investment at the end of the quarter in addition to the adjusted EBITDA generated by the business. We announced previously that our Board of Directors had authorized a $150 million share repurchase program. We evaluated various capital allocation options and determined that a share repurchase program was the most effective way for us to return capital to investors at this time. We intend to manage this program in tandem with our pipeline of portfolio investment opportunities while maintaining our leverage and growth targets. Our strong and conservative capital structure also gives us the flexibility to continue to explore other capital allocation possibilities in the future. Finally, last week we amended and extended our North American credit facility. This gives us additional flexibility, further diversifies our maturity profile, and decreases overall borrowing costs. We appreciate the continued partnership from our lenders and their ongoing support. Now, I’d like to turn things back to Kevin.

Kevin Stevenson, President and Chief Executive Officer

Thank you, Pete. Over the past year and a half, our employees have shown great resilience, dedication, and a willingness to help others despite their own challenges. I believe this has been a huge contributor to the results we produced. Without their hard work and support, this would not have been possible. I ended last quarter’s call by saying that the advancements we’ve made over the past 25 years are nothing short of amazing to me. I talked about the transformation I’ve seen over that time, and now today, we are so much more than just a purchaser or servicer of nonperforming loans; we are also a data analytics company, a technology company, a digital outreach and marketing company, and I do believe that we are just getting started. With that in mind, I’d like to share the five strategic objectives that we have and which will continue to guide our future. First, we are working to expand both products and market share. While we have a strong share of the market in the U.S., we are not as large of a player in some of our European countries. We made great strides over the past few years, and we believe we can continue this progress, particularly with our competitive position and conservative balance sheet. In a similar way, expanding products is very important to us. There are a number of nonperforming loan segments that we either do not currently purchase or have not traditionally been part of our portfolio or the market. Expanding our addressable market to include additional products would help us grow our portfolio and further diversify our revenue streams. Our second strategic objective is modernizing collections. We made significant progress since 2018 through investments in digital and data, and this effort will continue as we adapt to and leverage the changing way our society communicates. Our third objective is increasing efficiency. There is certainly some overlap between modernizing collections and improving efficiency, but this third objective is not only about collection operations; this objective permeates every aspect of our company, from finance to IT to human resources and, of course, operations. In order to give external stakeholders a measure of how we’re performing on this front, we report cash efficiency ratio as an adjusted EBITDA in addition to our other results. We believe these metrics help take some of the noise that would be accounting, and should be considered in addition to, and certainly not in place of, our other results. Our fourth strategic objective is developing, or being developed, as a recognized trusted brand. To the investment community, we’ve always been outspoken and engaged; however, for years PRA was content to fly under the radar with legislators and regulators. As a result, we let others develop public opinion narratives for our industry. When I became CEO, I made a significant push for PRA to become the biggest spokesperson in the industry, particularly with legislators and regulators, and to educate them on who PRA is and how we do business. I bolstered our government relations department a few years back, and I believe we’ve become one of the loudest voices in the nonperforming loan industry in the United States. Additionally, one of the challenges in today’s world is ensuring that customers know who we are and if they can trust us to help with their debt. Last quarter, I detailed some of the marketing initiatives that we are engaged in and we’ll continue to advance those in the coming months and years. Finally, our fifth objective is fostering a high-performing workforce. While I believe there are many companies who probably have this on their list, we’ve proven that this is a successful strategy for PRA and we are dedicated to it. Last year, we provided our employees with a number of benefits aimed at helping them through the pandemic, and simply thanking them for continuing to embody PRA’s culture. I provided a list during our fourth-quarter call if you’d like to revisit it. Additionally, we formalized our diversity, equity, and inclusion efforts. PRA is now a diverse company, and in April of 2021, we released our first ESG tear sheet, which disclosed metrics around the diversity of our workforce. We were also recognized by 50-50 Women on Boards for being a three-plus corporation with three or more women on our Board of Directors. If you follow us on social media, you have likely seen our posts about how we want everyone at PRA to "be yourself and be your best." We’ve hired a diversity inclusion leader in our human resources department and created a diversity and inclusion steering committee. We’ll be leveraging off a fantastic starting point and continue to build out this program as we move forward. While I’ve given much of this information before, I wanted to frame it in the context of our company’s strategy. The last year and a half of strong results, despite a challenging environment, shows what this strategy can produce. Multiple quarters of global cash collections record, significant net income growth, increased cash efficiency, and productivity at some of our best levels ever, along with improved leverage ratios that are already among the best in the industry. We’ve driven these results at a time when the leading indicators of supply for our industry are moving in the right direction, putting us in a good position to be prepared, and I believe it will only get better from here. Operator, we’re now ready for questions.

Operator, Operator

We will now begin the question-and-answer session. The first question comes from Bob Napoli with William Blair. Please go ahead.

Bob Napoli, Analyst

Thank you and good afternoon. Nice job on the quarter, nice presentation there, I appreciate that. Number of questions, but just ask a couple. I guess, the first of all, just on the capital return, I guess maybe start there. I know you did a deep dive on strategy there beyond the $150 million. What is the long-term strategy on maintaining leverage, ROE, capital return? So what is – I mean, $150 million that’s nice, but what is the strategy, the overall strategy for capital returning back? If you said, Kevin, maybe charge-offs are coming back. I don’t think they’re coming back any time too soon in a big way. So, I think you’re going to generate a lot of cash and continue to delever, but anyway just some thoughts on what the overall capital return strategy is?

Pete Graham, Executive Vice President and Chief Financial Officer

Yes, hey Bob, it’s Pete. Thanks for the question. As we said previously, we’re going to evaluate all options. We did consider various alternatives, and we felt like at this time that the buyback was the appropriate avenue. I think the sizing of it makes sense in the context of market cap, and we feel like we can operate this buyback in the context of our target leverage range, which you’ve been following us for a while. We tend to be kind of between two and three times and tend to gravitate toward the middle of that range. And so given where we are now, we feel like both with the opportunity for investment that we see coming, we can operate within that range.

Bob Napoli, Analyst

All right. Okay. So, I would guess, I mean, it makes sense the $150 versus your market cap, and I guess, the rate you’re generating capital another year from today, maybe you do another $150 I would guess. Is it just the intent to buy this back on a steady consistent basis?

Pete Graham, Executive Vice President and Chief Financial Officer

Yes, I’m not going to prejudge exactly how we’ll operate the program, but yes, steady is a word that’s used to describe our company.

Bob Napoli, Analyst

Okay, very good. Thank you. And then, Kevin on the digital data investment. Can you maybe highlight some of the advances that you feel like you’ve made over the years and what do you think is unique to PRA and maybe gives you a moat versus competition?

Kevin Stevenson, President and Chief Executive Officer

Yes, thanks. I think that if you’re looking, you can break it down into pieces; think about digital portals. For example, I think I might have talked about this in prior calls, but I can’t remember. Simplicity and ease of use is one of the big things that we’re focused on, and I’m sure everyone listening has been on terrible websites where you can’t figure out what to click; most recently, I was on the Virginia DMV site, and that’s probably not one of the best-designed sites I have ever seen. So, we really had this idea of making it easy, low friction, and very simple and intuitive, and I know it sounds simplistic, but it’s been very successful in that area. I talked in my script about sharing observations across Europe and the United States; some of the obviously smaller scales over there, and we were able to test different formats to see which ones seem to have better take rates and so on. So, I think it’s not very granular for you, but that’s the strategy behind it and the testing we did just around the design of these portals. Of course, we’ve got a whole marketing campaign around driving traffic to the site as you might imagine. On the data side, we did some really fundamental stuff in cloud computing, nothing earth-shattering there, but I think the big thing about data was bolstering our staff. We really hired some very talented people in Europe as well as in the United States to make sense of the data we have at our disposal. We’ve been in business for 25 years, and we’ve got every scrap of data we’ve ever collected; that’s a very valuable asset for us. So, the short answer is on the data side; it’s really about the talent we hired.

Bob Napoli, Analyst

Okay. And then last question from me, I’ll turn it over. Just, I mean, you mentioned nonperforming loan segments that you’re not in and getting smaller in other countries. Just some thoughts around expanding products and market share in other countries. What products are you not in that you would like to be, that you think you should be in, that we should see you in over the next year or two, and what markets do you think you have market share opportunities without obviously being too aggressive on pricing to get that share?

Kevin Stevenson, President and Chief Executive Officer

Well, that’s a thing, though, right? So let’s start with that. Let’s start with countries in Europe. I mean, we are a strong player in the U.K., I think that’s pretty clear. But if you look at some of the market shares in areas like Norway, Spain, Italy, and Poland—these are very big markets with substantial investment opportunities—we are not on the same scale as we are in the U.K. or certainly in the United States. Our goal has been to keep picking off portfolios to make sure we understand what we’re talking about and to ensure that when I tell you that, if I tell you, the pricing is rational at some point in time, you can trust me that I’ve got the data to discuss that. One of the things that we do with our strategic objectives is create a roadmap. If I were to unveil this product we’ve got, you would see each country and then investment targets for what we call roadmap deals, picking off things that don’t pose too much risk but are big enough to be material and give us data we need. So, that’s an ongoing effort. We’ve actually done a really nice job in Poland, I’ll say that. We went from almost nothing in Poland to—we’re not where we want to be yet, but we’re a significantly bigger player in Poland than we were 18 months ago. That’s the idea on markets, and I think we can— we’ve got internal goals of what market share we want to be in each country. On the product side, a lot of these products that we’re currently not buying, we had purchased before, say in the United States, but things like telecoms and utility accounts are ones we haven’t purchased in quite a long time, and I think it’s time to start revisiting some of those asset classes. Things like peer-to-peer lending—we're not a big player in, of course—the hot topic of Q1 was BNPLs, right? These are all targets of ours as well. One more area in Europe is the SME loans, or small and medium enterprise loans. We’ve dabbled in that from time to time in various countries but are not a big player in it; it's a very big asset class and something we’d be interested in if it makes sense. So, those are a few examples for you. Does that make sense or do you have other questions about that?

Bob Napoli, Analyst

No, that does make sense. The industry has been pretty tricky in some of those asset classes. But maybe with the data— the improvement in data analytics we have, you can make those work. Thank you.

Kevin Stevenson, President and Chief Executive Officer

Thanks.

Mark Hughes, Analyst

Yes, thank you. Good afternoon.

Kevin Stevenson, President and Chief Executive Officer

Hi, Mark.

Mark Hughes, Analyst

Hi, I’m sorry if I missed the first few minutes of the call. In Europe, you clearly had strong purchasing; there was some of your competitors in Europe talked about the increasing pricing. Could you address that?

Kevin Stevenson, President and Chief Executive Officer

Sure. Yes, we had our largest Q2—our second-largest Q2 since we’ve been in Europe. So, it was a pretty successful quarter for us. Pricing is certainly up from 2020, and that’s to be expected and I think it’s interesting if you think about Europe—you missed the first part of the call—volumes in Europe are very strong. So, they were much stronger than we had anticipated going into the year, so that’s the good news. I think the driver of some of the pricing is simply the competitors in Europe. If you think back to 2016, 2017, 2018, they pulled back a little bit in 2019 and 2020, and a lot of them had targets to deleverage and so on. They did that to varying degrees, and then I think now they’re back in the market. If I could paint a picture of Europe broadly, which I know well, it varies by country but generally speaking, it’s competition-driven and supply is strong over there. But I would couch the pricing as probably not too different than it was in 2019, and I think we all liked 2019. Of course, there are always deals where you scratch your head, wondering how someone paid down for that deal, but that’s kind of the nature of our industry.

Mark Hughes, Analyst

Yes. And then in the U.S., I don’t know if you touched on pricing there, the purchase multiple that looks like year-to-date at 2.12 in Americas Core versus, so that’s what it was through Q1; now it’s 1.98. Is that a decent reflection of the pricing dynamic?

Pete Graham, Executive Vice President and Chief Financial Officer

Yes. You know that the deal multiples can always be impacted by mix. But I think that in general the pricing is a little more competitive in the U.S. than it was last year, and as Kevin said, it’s pretty steady for the most part in Europe; maybe a little elevated over what we saw last year.

Mark Hughes, Analyst

How about any observations around progression and collections through the quarter? Everything is moving so fast these days with the changes in government supports. Perhaps when you think about that earlier in the year or even April, May, June— and even July if you want to comment on it. Anything you’ve noticed about collectability?

Kevin Stevenson, President and Chief Executive Officer

Yes, I think what we’re experiencing is, you know, the first quarter obviously had normal tax seasonality in the U.S., plus additional stimulus, and that kind of carried through into the second quarter. We’re anticipating more normal seasonality as we come into the second half of the year. As I said in my prepared remarks, I don’t know if you were on for that part; we did make some adjustments as we went through our closing process to make upward adjustments in the second half of the year to our forecasts in certain geographies while still holding our total expected collections constant, as we have been doing, but raised the near-term forecast and pushed it out further in the forecast period.

Mark Hughes, Analyst

Probably that can say you’re less likely to have the outperformance.

Kevin Stevenson, President and Chief Executive Officer

Yes, that was our— that was also in my prepared remarks. Our expectation is we’ll hopefully have a lower degree of overperformance in the second half of the year because of those adjustments we made.

Operator, Operator

Your next question is from Robert Dodd with Raymond James. Please go ahead.

Robert Dodd, Analyst

Hi guys, and congratulations on the collections quarter. One sort of follow-up to that question. When we look at the collections efficiency in the first half of the year—obviously very high, high 60s—which has had a tailwind because of the cash over and then— the cash over-collection. And then, when we look at the shift on curves that would ideally shrink the overperformance, like you just said. What would that do or where do you expect collections efficiency to go as your new curve estimates are closer to reality, if you will?

Kevin Stevenson, President and Chief Executive Officer

Yes. Again, we updated our full-year forecast at 64% for the full year, and that’s an indication of we’re expecting kind of normal seasonal slide as we go into the second half of the year with lower levels of overall collections, and expenses kind of trending as they are currently.

Robert Dodd, Analyst

I understood. I mean, I guess there is a point—and this is, if you are at 64 for the year, the outlook kind of implied base case would be in the low 60s, long leg going forward beyond this year maybe.

Kevin Stevenson, President and Chief Executive Officer

Again, we’re always working on increasing our efficiency of the operation; it certainly would be our goal to maintain our level of efficiency that we’ve obtained this year.

Robert Dodd, Analyst

Understood. Thank you. And then, on the other one, if it’s— obviously the intent is mentioned here to expand geographies, expand products. Should we expect that to be greenfield-type initiatives or would it be, given you are under-levered, you have excess capital, you're generating a lot of cash, what would the weighting of the probability or willingness to do M&A to fill in those geographies or product sets? What would the willingness be there?

Kevin Stevenson, President and Chief Executive Officer

Yes, sure. So, it’s a good question, because generally speaking, at least for the foreseeable maybe nearer term we want to expand our market share in areas that we are already in, and if we found a company that gave us, especially in data, and I’m thinking about especially Europe. I wouldn’t hesitate to do some sort of strategic M&A deal to do that. I wouldn’t hesitate at all. We chose to go into Australia; more of a greenfield deal that was just given the circumstances down there. But Poland is an example— it’s a good example. We did a good job expanding that; we did acquire a small company in Poland, and that gave us a nice leg up, so I wouldn’t be afraid to do that again.

Robert Dodd, Analyst

I appreciate. I just remember— obviously I think McKenzie Hall and you guys accumulating data, with a greenfield approach it can be slow. Thank you.

Kevin Stevenson, President and Chief Executive Officer

It can be slow, and the McKenzie Hall is a great example. It was a very small acquisition in Scotland, and it was really a test from my perspective of whether anything we do here in the States translates to the U.K., and plus we acquired some data and some processes and so on, and it was a good stepping stone, which ultimately led to the active capital acquisition.

Operator, Operator

This concludes our question-and-answer session. I would like to turn the conference back over to Mr. Kevin Stevenson for any closing remarks.

Kevin Stevenson, President and Chief Executive Officer

Well, thank you very much. Thank you, operator, and thank you everyone for attending. I just want to end the call like I started it. If you are in a position to influence people, please promote and educate people on this vaccine. It’s the way that we can get back our lives to a more normal position. So, with that, we look forward to talking to you next quarter. And that’s it, and good evening.

Operator, Operator

The conference has now concluded. Thank you for attending today’s presentation. You may now disconnect.