Urban One, Inc. Q4 FY2021 Earnings Call

Ladies and gentlemen, thank you for joining Urban One's Year-End Earnings Call. All participants are currently in listen-only mode. We will have a question-and-answer session later, and instructions will be provided at that time. During this call, Urban One will share certain projections and forward-looking statements about future events and performance. We want to remind you that various factors, including risks and uncertainties mentioned in the 10-K, 10-Q, and other reports filed with the Securities and Exchange Commission, could result in actual outcomes differing significantly from our projections. This call reflects information as of March 3rd, 2022, and Urban One will not update any forward-looking statements made during this presentation. We may also discuss non-GAAP financial measures in relation to our performance, which will be reconciled to GAAP either during the call or in the press release available on our website at www.urbanone.com. A replay of this conference will be accessible from 12:00 p.m. Eastern on March 3rd, 2022, until 11:59 p.m. on March 7th, 2022. Live audio and replays will be available on Urban One's corporate website. The replay will stay on the site for seven days post-call, and no other recordings or copies are authorized. I will now hand the call over to Alfred C. Liggins, Chief Executive Officer of Urban One, joined by Peter E. Thompson, Chief Financial Officer. Please proceed.

Thank you very much, Operator. And welcome to our fourth quarter results and year-end conference call. Also joining Peter and I are Karen Wishart, who is our Chief Administrative Officer, Jody Drewer as Chief Financial Officer at TV One. And we have Kristopher Simpson, our General Counsel, also on the call. And as the press release states, I'm very happy with our Q4 and most of all, our full-year performance. We have guided EBITDA to be 140 to 145. That guidance was up from 135 at the beginning of last year. And we were able to exceed that and come in at 150 and some change. So very proud of our team across all of our platforms. They performed exceptionally well during COVID. And as we come out of COVID, they are continuing to accelerate that performance. The demand for our platform and our audience continues to be very strong, as I've stated. I expect this demand to continue for the foreseeable future. I do believe there has been a paradigm shift in how advertisers look at minority-targeted and focused audiences. Diversity and inclusion as it relates to ownership in media. The fact of the matter is it's always been a very logical business proposition that the audiences of Hispanic and African Americans are increasingly valuable as the country continues to grow in its minority presence, and now, I think more and more advertisers are really putting their investments in those areas. And so, we're very pleased that we've been a big beneficiary of that, having been in this space for over 40 years. So, Peter is going to take you through the details of the numbers in the operations; there is a lot for him to say and a lot to unpack here. And then after that, we will go to Q&A. Peter.

Thank you, Alfred. As Alfred said, we were very pleased with our full-year 2021 numbers, and the first quarter of 2022 has started very strongly as well with advertising pacing up across the board. First quarter core radio advertising revenue, excluding political, is pacing up low double-digits. The auto category is still trailing prior year, but services, healthcare, retail, and entertainment are all showing very healthy increases. Reach advertising revenues are also pacing up strong double-digits as are ad sales for TV One. And the Digital segment revenues are pacing up strong double-digits in the first quarter. So, as we move into this year, we've had a good start. There was some noise in the fourth quarter expenses, which I'll talk about in more detail later. But I think the key points are firstly, that we were missing around $13.9 million of political advertising spend in the quarter. And we made that up with some lower margin business, such as events, which obviously came with higher expenses. We also had higher sales commissions driven by increased revenues. And we had higher annual bonus and incentive plans that skewed into fourth quarter expenses. We ran almost 50% more hours of original TV programming in the fourth quarter, and this led to an increased content amortization expense for TV One and our digital segment, which invested more in content and traffic acquisition and had higher accruals for full-year incentive-based compensation. So, the quarterly expense run rate was inflated by these various issues and isn't really fully representative of what we expect to have going forward. Consolidated adjusted EBITDA was $32.5 million for the quarter, down from $41.7 million for 2020 and up from $27.5 million in 2019. Full-year adjusted EBITDA was $150.2 million compared to $138 million in 2020 and $133.5 million in 2019. This exceeded our full-year adjusted EBITDA guidance for 2021 and as I mentioned, we're seeing favorable signs for continued success in 2022. Net revenue was up by 15.3% year-over-year for the quarter ended December 31st, 2021, at approximately $131 million. Net revenue for the Radio segment decreased 11.6% year-over-year in the fourth quarter due to non-returning political advertising revenue. Political revenue was down $10 million in just the Radio segment and down $13.9 million overall. Excluding political, net revenue for the radio segment was up 15.5%. Local ad sales excluding political were up 11% and national ad sales were up 12%, excluding political. Most of the major advertising categories were up from last year except for political. Food and beverage and automotive were also down. And automotive was down 21.8% due to supply chain challenges in the auto industry. Government and public were still our biggest category driven by government-funded pandemic outreach, amongst other initiatives. The entertainment category saw the biggest increase in the quarter from last year, up 166%, with increases from all of the entertainment product categories. Services, healthcare, financial, telecoms, travel, and transportation all saw double-digit increases compared to last year and retail was also high. Net revenue for Reach Media was $19.3 million in the first quarter compared to $10.3 million in the prior year. Event revenue from the Tom Joyner Fantastic Voyage was approximately $7 million. The remaining revenue increase was due to strong demand for network audio. Adjusted EBITDA in the reach segment was up by $100 thousand in the fourth quarter and by $4.3 million for the full year. Net revenues for our digital segment increased by $4.7 million in the fourth quarter. Continued demand for black-owned and targeted brands drove growth in direct advertising sales at iOne Digital. Adjusted EBITDA decreased for the quarter by $1.9 million but increased by $11.2 million for the full year compared to 2020 and by $16.6 million compared to 2019. We recognized approximately $54.6 million of revenue from our Cable Television segment during the quarter, an increase of 19.9%. Cable TV advertising was up 43.6% excluding political with favorable rate volume impact of $1.72 million, $2.1 million of free video on demand revenue, a million through increase in CLEO TV, and $2.1 million favorable audience deficiency unit burn-off. Cable TV affiliate revenue was up by 5.7% driven by rate increases and by converting free subs to paying subs, which was partially offset by churn. Cable subscribers for TV One as measured by Nielsen finished the fourth quarter of '21 at $49.3 million, up from $42.3 million at the end of Q3 and CLEO had $43.8 million Nielsen subscribers. We recorded approximately $2 million of cost method income less admin expenses for our investment in the MGM National Harbor property for the quarter, compared to $1.6 million last year and $1.7 million in 2019. Based on internal estimates of publicly available information, our put option is currently valued at around $100 million. To remind investors, we have the option to put a 6.67% stake in MGM National Harbor at seven times trailing EBITDA. Operating expenses, excluding depreciation, amortization, impairments, and stock-based compensation increased approximately $106.1 million in the fourth quarter compared to $74.1 million in Q4 of 2020. Of this increase, $3.5 million is a non-cash charge on the CEO's employment agreement award, and $1.9 million is for the onetime Casino chase cost. Both of these amounts are added back to adjusted EBITDA. As a result of the continuing reopening of the economy and increases in revenue, operating expenses increased from the prior year. Employee compensation increased by approximately $5.9 million. Program and content amortization at our Cable TV segment increased by $5.8 million. Revenue variable expenses increased by $4.2 million. Outside services, including contract talent and consulting fees increased by $1.7 million. Marketing and promotional expenditure increased by $1.4 million. Event expenses increased by $7.1 million, of which $6.6 million was for the Reach cruise. Radio operating expenses were up $3.6 million. Music license fees, employee compensation, and promotional spending were the main expense increases in radio. Reach operating expenses were up $8.5 million against a revenue increase of $9 million. And as mentioned, that cruise revenue was $7 million, and the cruise expense was $6.6 million. Profit sharing expense and affiliate fees were also up at Reach. Operating expenses in the digital segment were up $6.4 million, driven predominantly by incentive compensation and variable expenses related to traffic acquisition and sales. Cable TV expenses were up $7.6 million year-over-year. Programming content expense increased by approximately $5.8 million and employee compensation increased by approximately $1 million. Operating expenses in the corporate and eliminations segment were up by $5.8 million, which included the Richmond chase casino costs at $1.9 million and the employment agreement award of $3.5 million. For the fourth quarter, consolidated broadcast and digital operating income was approximately $44.1 million, decreased to 14.9%. Interest expense was approximately $15.9 million for the fourth quarter compared to approximately $18.7 million for the same period in 2020. The company made cash interest payments of approximately $187,000 in the quarter since the semi-annual debt service payments are due February 1st and August 1st. Provision for income taxes was approximately $1.2 million in the quarter, and the company paid cash taxes in the amount of $359,632. Net Income was approximately $6.6 million or $0.13 per share compared to $26.4 million or $0.58 per share for the fourth quarter of 2020. Capital expenditures were approximately $2.1 million, and the company executed a stock repurchase of 2,530 shares of Class D common stock in the amount of $9,000. As of December 31, 2021, total gross debt was $825 million, ending cash was $151.7 million, and net debt was approximately $673.3 million compared to $150.2 million of LTM reported adjusted EBITDA for a total net leverage ratio of 4.48 times. We believe our stock is currently trading below market comparables given our valuable co-option in the MGM property, a high cash balance, reduced net leverage ratio, strong adjusted EBITDA performance, particularly from our digital cable TV and network radio segments, and our ongoing free cash flow generation. We will continue to be opportunistic and prudent in terms of share repurchases. And we expect the board to authorize a stock buyback program as part of our capital allocation strategy. We currently expect full-year 2022 adjusted EBITDA to be between $145 to $150 million absent any significant economic slowdown with potential upside if political and digital revenues exceed expectations. And with that, I will hand back to Alfred.

Thank you. Another important topic that many want to hear about is our efforts regarding the second casino referendum in Richmond. The City Council of Richmond, Virginia voted 8 to 1 to petition the court to put a second referendum on the ballot this November. That was just the first step. There is also an effort in the Virginia General Assembly led by a state senator from Petersburg to block that referendum and redirect the casino license opportunity to Petersburg. There were two bills introduced, one in the House and one in the Senate, aimed at this. The House bill did not progress, and the Senate bill also failed. We have been actively engaging in Richmond to support the opportunity for residents to vote again. The City Council is also working on legislation to reduce property taxes and specifically target casino revenues for schools and other capital projects. Despite the failure of those two bills, current budget language would block Richmond from having a second referendum this year and would prevent another vote until November of '23. We are closely examining the potential of Petersburg as an alternative location. As of this year, it appears likely that the opportunity will remain in Richmond. Right now, this language would indeed prevent Richmond from holding a referendum this year. However, if they choose to pursue it in '23, many factors in the General Assembly could influence the situation. The session runs until mid-March, and there are a lot of political dynamics at play that are unrelated to the viability of the casino in Richmond and are more about certain legislators promoting other locations and trading votes on issues to achieve their goals. It remains very fluid. We are highly involved. Our operational partner for the Richmond casino, Peninsula P2E, has recently announced they are being sold to Churchill Downs Incorporated, a much larger gaming company better known for the Kentucky Derby but also a significant operator with various gaming facilities and casinos. They are active in the Florida and Maryland markets and have recently acquired a license in Terre Haute, Indiana. Although we value our collaboration with Peninsula, we also had the chance to communicate with Churchill Downs recently, and they are enthusiastic about the Richmond opportunity and eager to assist in ensuring we can pursue a second vote. I don't have concrete news to share; I’m not here to declare it dead or confirm it's going to happen. The situation is currently uncertain but we remain hopeful and committed. This connects to another point we discussed in the last conference call about our net debt repayment. We have substantial cash reserves, as Peter noted. Until we determine the outcome of the RVA Casino opportunity, we are holding onto that cash, but as the year progresses and our operations continue to perform well, we may consider purchasing some of our debt in the open market, which we are permitted to do. I don’t want anyone to think we are merely hoarding cash without purpose. The main factor influencing our decision will be whether a significant $100 million investment in the casino opportunity is necessary. However, if everything goes well, I feel optimistic about our company's position. I have concerns about the geopolitical landscape and its implications for our domestic economy, as we all do. We are doing our best in a rapidly evolving media environment and an unpredictable geopolitical scenario. With that, I'd like to open the lines for questions.

And we're going to take a question from Patrick Wang with Voya Investments. Please go ahead.

Good morning. Thanks for the question. I noticed that the debt balance is down to $811,000. Does that mean that you have repurchased some of the notes in the open market at this point?

No.

And also, what's the cash on hand this morning?

No, we reported net average issuance cost. The gross debt is $825,000 as I mentioned earlier, and I believe our cash balance is in the mid-30s. The gross debt hasn't changed, and there have been no purchases. As of this morning, the cash balance was about $137 million.

Okay. So, what is the timeline now and what will happen next? Please provide us with a playbook for the development of the casino project.

I believe that in the next 30 days, we will have clarity on whether we can hold a referendum in 2022 or if it will need to be postponed to 2023. If it moves to 2023, several other factors need to be addressed to determine our position. Our agreement with the city does not extend that far, so the city must ultimately decide if they are willing to push it to 2023. Discussions are ongoing, and currently, everyone is collaborating to try to make it happen in 2022. If it turns out we cannot proceed this year, we will need to collectively evaluate whether we are prepared to commit to this project for an additional year and a half. I have been visiting Richmond almost every week, including yesterday. We are working closely with the city, which is eager to see this project succeed and does not want it to move to another location. In the next 30 days, we should know if we can go forward with a referendum this year, and we should also gain some insight into whether the coalition is willing to remain united in pursuing it in 2023.

Right. So, what's the likelihood that Petersburg will get it?

I have no idea. It's not going to happen this year. Everyone wants me to make predictions, but this is politics, and I cannot do that. Even if I gave you an estimate, I can't predict the board's decisions either. Last time, polls indicated that before the RFP, 62% of Richmond residents supported gaming. After the RFP process, there were various proposals in middle to upper middle-class neighborhoods, and local residents tended to oppose them. By the end of the process, support for gaming was at 47%, while opposition was 45%. Once we were selected, support increased to about 52% to 53%, with five undecided voters and the rest opposed. However, in the referendum, conservative voter turnout surged, and we lost by a margin of 5.85 to 49.15. I don't want to mislead anyone. We are actively working on this, but the political landscape is uncertain. Even if we achieve a chance to hold a referendum, it was still a 50-50 shot. Consequently, if you own our securities or stock, you should focus on the core business fundamentals. This includes our cable networks, the rebound of our radio business, the digital sector that is gaining momentum, and the value of our MGM stake. The put option is maturing, and they are performing exceptionally well. Consider the casino as a potential upside if it occurs.

Right. Could you also talk about your strategy on radio? Before you talked about potential station swaps to get more economy scale. Is there any recent update for the plan?

We are continuously exploring various opportunities with a primary focus on those that can enhance our market scale. Currently, we are evaluating several possibilities but do not have any finalized agreements at this moment. I firmly believe that scaling in the radio business is essential. The radio industry, particularly in the markets we've been involved in, has been experiencing a gradual decline of around 2% over recent years, although some markets perform better than others. It is a contracting business, but profitability remains possible. I am not suggesting that radio may not eventually be seen as undervalued in terms of ad costs, especially with ongoing industry consolidation. As larger players emerge and demonstrate value to advertisers, we may see an increase in cost-per-thousand rates. However, when considering any acquisition in the radio sector, it is crucial to approach it with the understanding that it could see low single-digit declines. This perspective ought to guide our pricing and management strategies. Thus, we must evaluate acquisitions through this lens. I believe expansion makes sense, and while I don't imply that everything we acquire will fit within our established Urban radio framework, engaging in broader radio consolidation may require us to step outside our traditional boundaries. Our previous experience with Intercom in Charlotte, North Carolina, exemplifies this approach, leading to significant financial growth and a diverse offering for advertisers, including Urban. I aspire to replicate such successful clusters in other markets as we move forward.

One last question on the margins. This quarter, you are about $10 million short of last year's EBITDA level. Is the decline solely due to the political advertising and the absence of some other one-time investments in digital that are impacting the margins? Can we expect the margin in 2020 to be higher than the first quarter due to these investments?

Yes.

Because your revenue is great.

Yeah. Revenues are great. The political obviously was high margin. That wasn't there this quarter. And if you think about the cruise, for example, that was $7 million of revenue, $400,000 of profit. We were very happy with it. We wanted to run a big scale event post-pandemic and see how it went, but obviously very dilutive on margins. And then as I also mentioned, Q4 was expense heavy and is not really representative of a regular quarter. We have the TV One amortization higher. We had incentive payments that were for the full year, but we didn't know what that was going to be until the fourth quarter, so they were heavy incentive payments booked into the fourth quarter. So, to your point, the margins were depressed in the fourth quarter unnaturally. So, we would expect to see margins generally return to historic kind of run rate.

Hi. Good morning. Thanks for taking my question. Just wondering if you could talk about your full-year guidance in EBITDA for '22, just some of the puts and takes, what could go better or worse, and with it being political, why you see it being down year-over-year?

Good question. Our digital business has taken off. Last year's budget was around $30 million, and we nearly hit $60 million, in the high 50s. We started this business in 2008 and faced challenges for a long time. Digital publishing is tough due to the shifting focus from website domains to search, and then to social media. Every change in the big platforms' algorithms affects audience size. Content creation is costly, and a significant portion of revenue goes to Google and Facebook. For many years, this business either broke even, lost a million dollars, or made a million dollars. Before the pandemic, we cut many expenses and made about $900,000 in 2019 with a low expense base. As we entered the pandemic, we continued to trend down, though not as much as other areas. We saw a rise in African American audiences and demand started to increase significantly, resulting in around $6 million in earnings during the pandemic in 2020. Heading into 2021, we weren't sure where demand would go since traffic remained stable or declined. However, demand proved to be even stronger, leading us to make about $17 million last year. Given the uncertainty about where that demand could peak, we budgeted for a decrease in digital to $10 million from $17.5 million. While that’s a big reduction, it has actually performed well in Q1, indicating potential upside. We’re just anticipating some pullback from the extraordinary demand we’ve experienced. Political aspects could also perform very well, and there’s potential for upside there.

We expect revenues and adjusted EBITDA to increase year-over-year for our Radio properties in 2022, and the same goes for TV One with impressive ad sales growth. We anticipate EBITDA growth this year. However, as Alfred mentioned, we are least certain about digital since it's a newer business that has been growing rapidly, and we are unsure how long that will continue. There are various factors to consider, such as the number of impressions we can deliver, traffic trends, and potential algorithm changes. Therefore, we have adjusted our expectations for digital as Alfred pointed out, but for the other segments, we are forecasting growth.

And so, look, here's the thing. You'll know what we print in Q1, right? You can track how we're doing quarter-to-quarter. So, at some point in time, people will be able to figure out how they're going to do better than this 145 to 150. We contemplated not giving guidance at all. But people kind of like to know something. And so, we felt comfortable putting out 145 to 150. We also don't know what's going to happen in the world, right? In terms of now as there going to be a recession. And is there going to be fallout from what's happening in Europe? But anyway, that's how we came to guidance. And I'd get one could argue that we should do better, right, than our guidance.

That's helpful. On the topic of politics, many people are discussing the mid-term election cycle compared to the presidential cycle, which is usually slower. However, there are thoughts that certain markets could be equal to or possibly outperform previous expectations. Where do you stand on this?

When we look back at four-year cycles, 2020 was obviously exceptional. If this year is anything like that, then we will exceed our projections. If we review 2018, we achieved approximately $7.4 million net, and we anticipate similar figures this time, give or take a million. However, if it turns out to be more aligned with 2020, then we will surpass that. For reference, our previous high watermark was in 2012 when we made $9.1 million. In 2020, our net was around $18.9 million, while in 2012 we had $9.1 million, which gives us some context for potential outcomes.

Okay. Great. I have one more question. You mentioned some one-off expenses, but I didn't hear anything about inflation, supply chain issues, or changes in wages. Is there anything you can share about those?

Yes, we did do salary increases midway through last year from memory, and that's the first time in a long time that we've done across-the-board increases. So yes, that will drive expenses up. And obviously there are inflationary pressures on various things. I think for us, we're pretty fixed cost base.

Most of our escalators in our agreements are very low-single digits, which we have been negotiating over time. We moved away from the CPI escalator many years ago and focused on keeping increases to around 1% or 2%. I don't remember all our contracts off the top of my head, but if there is a 2.5% figure in any of them, that would be the exception. We long ago ruled out increases of 3%, 4%, or 5%.

Got it. Sorry, I mentioned my last question, but I have one more regarding what could happen in the world during a recession. Can you share any insights on how your business might be impacted in such a scenario compared to other similar businesses? Do you think you tend to be a bit more resilient?

I want to emphasize that we are in the advertising business. The impact of a recession can vary; for instance, I recall the recessions in 2009, 2010, and the severe economic downturn during the pandemic, which was more than just a slight decline in GDP. Our management team is dedicated to navigating through tough times. At one point, our debt ratio was nearly nine times, but we have successfully halved that without causing major issues with our debt holders. I believe our team is committed to maintaining solid financial stability. The diversity of our assets plays a crucial role in protecting us. For example, during the pandemic, our radio sector saw a decline of over 70% in April, which was shocking. Many radio companies experienced a decrease in EBITDA of more than half, yet we managed to come through it well, despite suffering some pain and salary cuts. A significant reason for this was that our cable television business thrived, alongside our digital operations. We generated over $500 million in revenue, with $100 million coming from subscription fees and affiliate fees from stable cable operators, which are less affected by economic fluctuations. Compared to other radio companies, we have a more secure position due to our diversification, and our resilience depends on the nature of the recession. I believe our varied business portfolio enhances our stability. The current desire for spending directed towards our audience and minority-owned businesses is an added advantage. Additionally, we have managed to reduce our debt and prefer to stay out of high-leverage situations. When necessary, we are open to selling equity, as demonstrated during the pandemic when we raised $50 million in the ATM market. This strategic capital allocation, coupled with stringent expense management and strong demographic factors, positions us well. I’m proud of our management team, who have responded positively to the need for tough decisions regarding debt reduction. Instead of resisting these changes, they have embraced them, helping us navigate through challenges successfully.

Thanks for taking all my questions.

Operator, we've got time for one more.

Our next question will come from the line of Sundar Varadarajan with Lord Abbett. Please go ahead.

Hi, thanks for squeezing me in. Just wanted to step back and maybe in have you discuss a little bit more about what your ultimate leverage targets are, and then put that in the context of, you mentioned, authorization to buy back stock, as well as you evaluate this referendum, what happens if in 30 days it doesn't look like it's going to happen in '22 but there's a chance that it may happen in '23. Are you still point a hold on to the cash until you figure out what happens in '23? So if you could give us some timeline or running that would be very helpful.

I haven't fully thought this through, but initially, if it's set to happen in 2023 and we maintain our coalition while pushing forward, the company is generating a significant amount of cash. This presents us with the chance to reduce debt, potentially buy back stock, engage in some strategic mergers and acquisitions, and still make the $100 million investment needed for the casino. We're not just going to sit on the cash. We're paying a 7 and 3/8 interest on our debt, and we aim to keep increasing our free cash flow. These assets produce substantial free cash flow, so I would feel confident reducing our balance sheet because I know we'll be able to pursue the casino opportunity.

Got it. And then in terms of your leverage targets for the core business, where do you want to get to before you say you've done enough and move more towards equity returns?

I want to avoid seeing a leverage ratio in the sixes again, and right now we are at 4.5. If we don't make any changes, it will likely drop below four by the end of the year, possibly reaching the high threes. That's a favorable position for us. While I am not ruling out the possibility of temporarily increasing leverage to five for a strategic move that would help us quickly return to lower levels, my long-term goal is to remain below four and maintain that position. We have a history of selling equity. We have done it before and will continue to do it when the timing is right. We've repurchased a significant amount of our shares over the last decade, often during market downturns when prices were low. For instance, during the pandemic, we bought nearly 4 million shares at $0.76 each. Selling those shares later at five dollars was a smart move. Ultimately, I want to keep our company below a leverage ratio of four, and I really want to avoid seeing anything in the sixes again. I would also like to steer clear of anything in the fives unless it's for a brief period to manage an acquisition integration, after which we would aim to get back into the fours.

Good. Just one clarification point on that when you mentioned a strategic transaction that could reach or be close to five times on a short-term basis. Are you including the gaming investment as part of that? Or when you refer to strategic, are you talking more about the quarter?

That's a really important question, and I haven't considered it fully. I don't want to give a definitive answer because if we allocate $100 million, it will impact our leverage ratio. We'll factor that into any M&A opportunities we have at that time. For instance, if we invest $100 million in the Richmond casino and later find an M&A opportunity, our leverage might rise to 5.8 or 5.9, or even 6 times, which would make it unlikely for us to complete that transaction solely with cash. Instead, we would likely pursue a strategy to keep our leverage low. Moreover, if we are investing $100 million in the Richmond casino, our stock value won't be $5; it will be significantly higher since the market has shown that they are willing to assign value even before it opens. Therefore, we will have other options to manage our leverage. Does that make sense?

Yeah, I know that. That makes a lot of sense. Thank you for that clarification.

Okay. Operator, thank you very, very much for your help with today's call. Everybody, thank you for attending. Thank you for your support. And as I always say, Peter and I try to be exceptionally accessible offline. So, feel free to send an email or call if you missed a question or think of something later that you need answered. Thank you very much and see you next quarter.

Ladies and gentlemen, that does conclude our conference for today. Thank you again for using the AT&T teleconference service. You may now disconnect. Thank you, everyone. We're sorry. Your conference is ending now, please hang up.