NewtekOne, Inc. 8.50% Fixed Rate Senior Notes due 2029 (NEWTG) Q3 2020 Earnings Report, Transcript and Summary

Good morning, ladies and gentlemen, and welcome to the Newtek Business Services Corp. Q3 2020 Earnings Conference Call. [Operator Instructions] I would now like to turn the conference over to your host today, Mr. Barry Sloane, CEO and President of Newtek Business Services Corp.

Thank you very much, operator, and good morning. I'm Barry Sloane, President and CEO of Newtek Business Service Corp., stock symbol NEWT on the NASDAQ. With me today is Chris Towers, Executive Vice President and Chief Accounting Officer. For those of you that would like to follow along on our presentation, I'd like to suggest that you go to our website, newtekone.com, N-E-W-T-E-K-O-N-E.com. Go to the Investor Relations section, where we have a PowerPoint presentation for all of you to follow along. And once again, welcome to our third quarter 2020 financial results conference call. I would like to point all of you to the note on our forward-looking statements on Slide #1 and move everybody over to Slide #2, where we could talk about our third quarter 2020 financial highlights. Net investment income for the quarter of $1.7 million or $0.08 a share. That was an overperformance versus a $0.03 a share loss for the 3 months ended September 30, 2019. Adjusted net investment income came in at $0.04 a share for the 3 months ended September 30, 2020. That was compared to $12.2 million or $0.63 for the same period last year. This was an underperformance based upon us ceasing lending activities in the end of the first quarter, which we've now started up, but it was a beat on the street relative to consensus of negative $0.015. So the $0.04 that came in beat the consensus analyst of negative $0.015. Net asset value came in at $324 million or $15.13 a share versus NAV of $15.70. A lot of that was due to the redistribution of cash that was earned in the second quarter performance, that distribution of the cash versus the earnings drove NAV down. We do expect NAV to normalize. And historically, we've been able to grow our net asset value over time. We believe that a reduction, we did this in the first quarter of this year in NAV, particularly in the loan portfolio, was appropriate given the uncertainty relating to the pandemic activities. But we feel very good about our valuation of our loan portfolio and our other assets and believe going forward that not only will we hope to be able to stabilize this but hope to be able to grow NAV and dividends, which we've been able to do over our history of being a BDC dating back to November 11, 2014. Debt-to-equity ratio, 1.21x, fairly low for our organization. Once again, we have restarted lending activities as of June 30, so that should pick up both debt-to-equity as well as the generation from 7(a) lending beginning in the fourth quarter of this year. Let's move to Slide #3. Slide #3 is a little bit of a repeat of what I discussed in Slide #2 relative to the shifting metrics in the business. In the first quarter, when you look at the 3 months ended September 30, 2020, net investment income increased significantly. A lot of that was due to the PPP financing, both in the third quarter. You could see that change as well in the second quarter. PPP lending is an above-the-line form of income. And we reduced our gain on sale, which affected adjusted NII in the same quarter. So we're going to have different and difficult quarterly comparisons. We always point to what we do over the course of the year, that we pay our dividends out of earnings, which we've always been able to do and it's part of our dividend policy. And we're very, very pleased with the guidance that we have for the remainder of 2020 as well as going forward into 2021. Looking at Slide #4, you've also got a repeat of those shifting metrics that I talked about. Net investment income of $31 million or $1.49 a share. Obviously, an outperformance versus an investment loss of $2.6 million, once again, based upon PPP versus curtailment of the 7(a) lending activity. But once again, we're repositioning ourselves for the growth of 7(a) again. We look forward to always paying our investors a reliable dividend, growing the dividend and a stable to growing NAV. Let's move forward to Slide #5. For those investors that follow the company, I think you're fairly well familiar about the Paycheck Protection Program. Obviously, we performed very well in 2020 off of that. We had some significant but, I'll call it, residual income in the third quarter that came in from PPP. And we're hopeful that there'll be a third round of PPP funding, which we believe could provide the company with an opportunity to generate additional income from additional PPP loans. There's no guarantee Congress will approve a new stimulus package. However, clearly, the rhetoric coming from the Senate, the House and the Administration has been positive about further stimulus. I think we've got to get the politics of the election out of the way, but even Mitch McConnell made a comment yesterday about providing additional stimulus to the economy. Should a third round of PPP funding get approved, we've laid some guidance that -- which we'll talk about shortly. That guidance does not include additional PPP funding. If it did come in, we probably would classify that as a special dividend, which could come in, in the fourth quarter of 2020 or in 2021. Moving to Slide #6. We have funded in the third quarter, $82 million of PPP loans in the quarter ended September 30, 2020, rounded up to close to about $1.2 billion of PPP loans for the 9 months ended September 30, 2020. We got a little over $3 million in fees that came in through the third quarter, picked up 10,500 new borrowers in aggregate. And we believe that with these borrowers, 130,000 employees were retained during that period of time. We funded 2 years' worth of loan production, we say, in slightly over 6 months, although 90% of that work was done, frankly, within a 2-month period of time. We were able to sell our PPP loans to third parties, so almost 99%, 98% of it was removed off their books where we partnered with banks to sell 100% participation certificates, which enabled us to record the full income from the PPP activity. On Slide #7, we talked about restarting our 7(a) loan business. Once again, this is pretty much from a dead start of June 29, 2020, to build a portfolio. We funded $13 million of 7(a) loans during the 3 months and we anticipate funding approximately $135 million of 7(a) loans in the fourth quarter of 2020 to get our normalized business back up and running again now that we've got more visibility going forward as well as underwriting criteria that's required to make, I would call it, appropriate loans and performing loans. We did curtail our lending activity right at the beginning of March, which pretty much hurt the first quarter's results and for the rest of the year, but we are back in business. And as you'll see, our referral pipeline is growing in a robust manner, our business model working on all cylinders, and we're very excited about our future going forward. We would like to reiterate that in the second quarter of 2020, we renewed our existing $150 million line of credit facility for 7(a) lending with Capital One Bank for a period of 3 years. Moving to Slide #8. Newtek Business Lending, our wholly owned portfolio company which originates 504 loans, closed approximately $50 million worth of loans through October 31. Clearly, an outperformance versus where this business activity has been in the past. We're anticipating fundings or closings of about $100 million for the year. That would enable us to have a fairly nice contribution from NBL that could be between $1 million and $3 million in dividend income into the company in 2020 primarily based upon SBA 504 lending in the third and fourth quarters of this calendar year. We did close -- or I should say we are closing on the renewal, subject to documentation that probably should get completed within the next week, on our existing $75 million facility line of credit with Capital One Bank for 504 lending, and that will be for a 3-year period of time. We're proud of the fact that we've been able to renew all our bank lines of credit during a difficult period. And we're also negotiating a new term sheet with a funder for an additional $75 million of SBA 504 financing. The 504 financing market, extremely attractive between the funding that the government provides with a 40% second debenture and now 50% conventional first, high LTV loans that we don't absorb that type of high LTV risk as the government provides the 40% second. And the debentures on that program have like a 2.5% handle, which has made this a very attractive investment vehicle for borrowers looking to acquire or refinance or rehabilitate real estate where the business is in that real estate and owns the real estate. Moving to Slide #9. Our company paid a third quarter 2020 cash dividend of $0.58 a share. The company has paid a total of $1.58 in cash dividends for the first 3 quarters of 2020. That compares to $1.44 in dividends for the first 3 quarters and 9 months of 2019, almost a 9.7% increase. We're going to give guidance for the rest of the year. So we have actually been an outperformer in paying dividends to our shareholders. We realized that our investment community, as well as management I might add, enjoys the benefit of receiving dividends on a regular basis as our interests are very much aligned. And we're proud of the fact that we've been able to grow the dividend through the first 9 months of the year. And as we restart our business, we have revised our 2020 annual dividend forecast between -- we've revised it and narrowed it. It was previously $1.80 to $2.30. As we get more visibility, we're $1.90 to $2.20. And we tightened that up a little bit. The company paid a 2019 annual cash dividend of $2.15 a share. Given how difficult a year this has been, particularly for most financial institutions and businesses in general, we're proud of the fact that we hope to get close to, beat or be equivalent to the prior dividend that we paid in the 2019 year period of time. The company does anticipate that its Board will declare its fourth quarter dividend somewhere around Thanksgiving. That would be payable before December 30 -- 31, excuse me, 2020. We are also forecasting an annual cash dividend between $2 and $2.50 per share in 2021 to resume our activity and being able to hopefully grow our dividend on a regular basis. By the way, these dividend forecasts, both for 2020 and 2021, do not include the potential benefit of an additional PPP program, which was very significant, obviously, in 2020 for the company. If we did get an additional PPP program, we'd probably pay that out in the form of a special dividend, which could occur in the fourth quarter of 2020 or in 2021. Moving to Slide #10. As we look at our business holistically, we, as an organization and the management team, have historically been able to emphasize that we are adaptable and flexible in our business model. And we've been able to clearly provide a seamless transaction to working remotely. The company is still approximately 90% working remotely at this point in time. 10% going into the offices is voluntary. It clearly is not an easy transition back into an office environment, particularly with infection rates running high and federal suggestions and state laws have handled the pandemic. We're very sensitive to the health and well-being of our employees and our staff, and we'll continue to maintain a model that keeps our employees health-conscious, first and foremost, in our minds. We believe our business model is ideal for the post-pandemic economy without the use of branches, brokers, business development officers, limited sales force, contact with end users. Our referral based system is really sterling in this particular environment. Obviously, business owners don't prefer to go into a financial institution's branch or to see a salesperson. Remote business is the future of these business solution markets going forward. We will see and anticipate a tremendous shift from the DAPs, the Paychexs, the financial institutions using feet on the street salespeople to go and acquire business. We also like the what we refer to as the 5 silos. We have lending solutions that are just great for customers. We'll talk about that shortly why our lending solutions are unique in terms of how they're structured and superior to a bank's lending solutions. Our IT portfolio of companies are very valuable, particularly with shifting to remote work. And we have a tremendous relevant products there to offer independent business owners. Obviously, payroll, health and benefits shifting around, where businesses need help calculating information to get loan forgiveness on PPP. Obviously, the health care and benefits market is shifting with COVID, picking the right health care provider, making sure that you have the right program in place. We also have Obamacare being looked at by the Supreme Court. So being able to provide solutions to businesses that are changing in a rapidly changing environment is what Newtek Business Service Corp. We are your business solutions company. Clearly, the same issues transcend into the, I'll call it, health and benefits area and property and casualty area. A lot of changes going on there for premiums and insurance coverage. Our insurance agency stands by to help independent business owners. Our Payment Processing business is very well positioned going forward. We'll talk about our POS on Cloud investment and how well that's going. And we plan on rolling out and launching our website within the next week or 2, which we'll make an announcement on. Obviously, the utilization of paper currency and coin, less prevalent. Technological solutions like tap-and-go, contactless payments, e-commerce, very much in vogue, and we have those solutions that are very well positioned for our customer bases going forward. I would like to emphasize our Slide 26, which we'll get to, and we look forward to launching our new website with respect to POS on Cloud. Moving to Slide #11. Obviously, many of our historic traditional investors are familiar with our SBA lending business. We are still, at the end of the SBA's fiscal year at the end of September, the largest nonbank government-guaranteed lender. We're sixth largest, including banks. We've been in the business a long period of time. We have a 17- to 18-year track record of loan default frequency and severity statistics. We've survived '08, '09. We certainly understand the stresses on our clients and the stresses of a portfolio. We've issued 10 securitizations of our uninsured pieces since 2010. They're all performing really well. That portfolio, I can't stress this -- the importance of this. It is a diversified portfolio of approximately 2,200, 2,300 loans with the average loan size of risk with respect to us of $180,000, that's our portion of the uninsured piece. Obviously, you're looking at probably $750,000 to $800,000 of the total loan. And these are -- a lot of these loans are seasonal, which we'll get into. We're looking at a 6% coupon floating rate at Prime plus 2.75% with no cap. And when we look at what Newtek does in the lending bucket, where we get that big, wide-open funnel for referrals, why is a Newtek loan a superior loan to our competition? Well, if you look at a bank, we -- our loans are 10- to 25-year amortizations. They are single-digit rates of interests. They have no covenants other than monetary primarily. And we are willing to over-advance on the primary collateral and certainly take a secondary and tertiary collateral, which we get liens on, to really improve our overall credit performance. So whether we ultimately put the borrower's referral request into a 7(a) loan in the funnel, a 504 loan, a secured line of credit, which revolves up and down against inventory receivables or our nonconforming loans, we've got real good solutions, particularly given that the 10- to 25-year no balloon but minimum fully amortizing loans, lower payments to borrowers with that single-digit interest rate. We're willing to give them an over-advance on collateral, which is valuable in a tough market where they might need additional equity and without the bothersome periodic issue of loan covenants that banks typically perform on our client base. So we're excited about our business future. We've been in this business 17, 18 years, not a new rodeo for us. We're very well prepared for the future in terms of growing our loan book as well as managing the existing credits that are in the portfolio. When you go to Slide #12, you can see why we are successful in this business. We've received an excess of 150,000 loan referrals for the 9 months ended September 30, 2020. That does not include PPP, about 110,000 for the 3 months. There's clearly borrower demand in the marketplace. There's not even a question. However, now that we're able to pick and choose by using technology, by using our secure file vault and our trained business service specialists up on the front end, we're able to sort through and pick out credits that would be able to stand the test of time, whether it's pandemic-related restrictions on business activity or not. Our referral per unit and day, in lending alone, about 1,200 units. Our database of customer opportunities are very deep. We've got over -- or I'd say close to $2 million worth of contacts in that database. Cross-selling efforts are being realized as we integrated our sales and marketing efforts. We've grown our outbound capability. We've also grown our internal training capability with establishing a library of videos and marketing slips for customers. We've got 17 years of loan assembly, underwriting and technological expertise, making us a leader in the area of lending. And we look forward to returning to a more normalized lending process, which we are experiencing going forward. Comparing our organization in lending to other fintechs, we're significantly different than the OnDecks, the Kabbages, the Lendios. Look, they are typically 6- to 24-month repayment periods, that drives your payment price up. The actual rate of interest on these loans, all double-digit, some as high as 20% to 80%. They also do limited underwriting. We do full underwriting. We take all forms of collateral, both personal and commercial. We put liens on them. It's a totally different form of lending, and it's worked well for us over this long period of time during many credit cycles and many interest rate cycles. When looking at our existing portfolio to calculate NAV, as of September 30, 2020, our 7(a) portfolio of uninsured loans that are in securitizations are sitting on the line, averaging about 35.1 months. That seasoning is extremely relevant. Now obviously, with the pandemic, that's kind of changed things around, but clearly, from a default perspective, you'd rather be into the belly of the default curve. Defaults do tend to accelerate between 18 and 24 months. We would point you to a report that S&P did, which does talk about all these issues and will give all of you a very good feel for what credit defaults one might expect as we're wading through this particular economy. I will add that our 7(a) portfolio, which -- whether it's in a securitization or not, is considered on our books. Securitizations are considered financing. We have that portfolio marked at a 30% cumulative gross default even with the 35 months weighted average seasoning and a 40% severity, which we consider really the right price. We've seen some of our brethren in the BDC business actually start to raise their NAVs back up as the pandemic effects have appeared to be less consequential in the second and third quarters. I think we've still got another quarter or 2 to gather that type of information to be comfortable making an adjustment back up and changing some of those metrics around. We tend to be, clearly, less volatile. And obviously, that portfolio has performed well for us. Moving to Slide #14. You can see that we have a 98.5% currency ratio on the 7(a) portfolio. Obviously, the Section 1112 payments that we've received by the SBA for our borrowers has been very helpful. We are aware that there is a major portion of those 1112 payments that still exist that haven't been utilized. And the current proposals that have been made in the Senate and the House to continue PPP funding going forward for another round would potentially include those payments, which should keep this currency rate low. Without that, we do expect obviously our currency rate to suffer a little bit, but something that we've clearly dealt with experience in the past and we believe is quite manageable. Slide #15 is -- we try to put these examples to the marketplace to sort of demonstrate what our loans look like, and in those outlined situations where they do go bad, how we work through them. This particular credit was a non-accruing loan and wound up paying off. Once again, the differentiator between our types of loans, the borrower, 20% greater equity or larger, personally guaranteeing a loan. They also had their residential property guaranteeing a loan. And although the business had failed and they closed the stores, we wound up getting full repayment first -- primarily based upon the value of their personal assets. They were able to refi on residential real estate at the beginning of November. They paid out principal, interest, late fees, miscellaneous fees and expenses. Different underwriting than you're used to with other types of lending. Moving to Slide #16. It's a slide that we produce fairly regularly. It shows the net cash created on a typical sample 7(a) transaction. Prices in the 7(a) market are firm to better. I would suggest that you can assume, on a projected basis, 110, 111, 112 net type prices to Newtek in the fourth quarter. Slide #17 is the income effects of an SBA 7(a) loan transaction. Once again, a slide that we've had for many, many, many years in our presentations that most of you are familiar with. Moving forward to Slide #19 and talking about portfolio companies and effects of dividends. In 2019, approximately 30%, 35% of our dividend and earned income came from portfolio companies. Slide #19 is a sample of a 504 loan. We want to make sure that everyone understands how these 504 loans are made. We fund the 50% first, the 40% second. That will be taken out by government debentures from a CDC, community development corp. Slide #20 shows the return on equity from 504 lending, really high. 504 lending is different than 7(a) lending. Once we sell the 50% first, it leaves us with no balance sheet. We make the loan. We warehouse it with our Capital One Bank line. The 40% second gets taken out by government debentures. And then we typically sell the first loan into a premium bid into the secondary market. Slide #21 talks about our conventional loan portfolio. We reported to the market at the end of Q1 on our conference call that we suspended all lending of our nonconforming conventional loans. So since that time, we have turned 7(a) back on. We've turned 504 back on obviously, as we've talked about our success there. And we do anticipate turning the nonconforming portfolio back on. It's a $91 million portfolio. All 19 loans are current with the exception of one. We expect that one loan to get turned back on as the state of California, which is particular borrowers in has opened up their market, particularly for the movie production business, which is what they're ingrained in. They're back open, they're cash-flowing and we expect that loan to come back. Obviously, from a credit standpoint, this is an unusual market. Most credit cycles are driven by weaknesses in the economy. This one is primarily driven by government shutdown due to the pandemic. So we're obviously optimistic about states opening up and getting back to business as therapeutics and vaccines are beginning to enter the market. And we believe that state and local governments will start to ease up on some of their restrictions. On Slide #22, we talk about prospective new JVs for a nonconforming business. We're currently negotiating term sheets with prospective joint venture partners to create up to $150 million of additional third-party capital that would, we believe, originate up to $1 billion of nonconforming conventional loans. So the equity base of this particular business is about 30% with 70% exit upon securitization financing. So we're excited about these new ventures. One term sheet has been signed. The second is in investment committee. So we're hopeful we can move forward with that shortly and then begin to open up our nonconforming loan business, which gives us loans up to $15 million in size. So on Slide #23, talking about the success of our 504 program. We funded or closed $21.7 million of 504 loans ending September 30. In the month of October, that number got up to $50.6 million. And we hope to close or fund a total of $100 million of 504 loans during the calendar year. That could create contribution from NBL between $1 million and $3 million in dividend income to the company depending upon fundings as well as selling. A little bit more difficult to make loans in the current environment. Obviously, when dealing with a borrower, you've got to make sure that, number one, you want to have a real good handle on what they did during the pandemic from an income perspective; you want to make sure that they use the right PPP equipment during that period of time; and then on a going-forward basis, how they could potentially withstand another government shutdown if it happens. So there's additional burdens on underwriting and compliance that make lending a little bit more difficult and give us a little bit less visibility than normal, so please excuse the wider ranges. Historically, we've tended to be conservative in making these types of projections and forecasts. Slide #21 -- 24 talks about our other real important portfolio company, Newtek Merchant Solutions, having an equity fair value of $115 million. Enterprise value, I think, is about $115 million with about $35 million of debt. We clearly improved our EBITDA and cash flow run rate in the third quarter of 2020 and anticipate that going forward. We're forecasting ranges of $1.1 million to $1.2 million per month in EBITDA. And when you look at -- from a valuation perspective, the public comps of other entities that are -- what I'll refer to as Super ISOs, i3 Verticals, EVO, Global Payments Systems, we think their multiple valuations on this business are quite reasonable, still in single digits. Looking at Slide #25. We've definitely had a recovery month-over-month. I will say that October has slowed down a little bit. I think that's a function of stimulus running out and businesses suffering a little bit. Once again, we're hopeful that the government will provide one more round of bridge financing in stimulus to our clients. On the calendar year, we're forecasting that adjusted EBITDA in the Newtek Merchant Solutions space will decline by 10% to 15%. That's a general decline from, say, $14.5 million of EBITDA to, say, $12.5 million to $13 million. We've had a significant impact on one of our portfolio companies, Mobil Money, which primarily services cab drivers at Newark Airport. That's probably cost us somewhere around $1 million of cash flow. So a major decline in our numbers had come from one particular demographic segment, but we do expect that to rebound. Slide #26, we talk about POS on Cloud. We are aggressively moving forward in this particular area. I draw your attention to this particular product. We'll be launching our website shortly, Newtek Payment Systems. We'll put a press release out on it, which will really be able to give the marketplace an understanding of why our POS on Cloud software is the all-encompassing system that, working in partnership with our financial institutions, A, can give them great branding, great deposit-taking capability and provide a tremendous service to their business clientele. So POS on Cloud processes payments. It integrates with e-commerce, creating websites for restaurants, retail and other companies that mirror what's in the POS system. It integrates with all food delivery services like Uber Eats, Grubhub, DoorDash. It integrates with accounting ledger, accounting software, really important to reduce company expenses and make things more seamless. It also integrates with our own payroll solutions products, so the time and attendance functions. And the POS push the data right into our payroll to provide payroll, workman's comp, health insurance and a window into 401(k), all on one piece of software. So POS on Cloud actually a real human capital management systems for businesses, helps reduce their expenses, put all their data up in the cloud in a secure manner. And we are looking forward to working with our depository alliance partners, which is going to enable them to manage and operate the depository accounts both for payroll as well as the e-commerce and payment processing functions. And also, for our investment banking clientele, wrap around and help them distribute and well as protect their 401(k) against the predatory ADP and Paychex-type solutions in the marketplace. Slide #27, we talk about our technology segment, what we refer to as our third silo of 5 in the Newtek Business Service Corp. ecosystem. We continue to see a dramatic turnaround in Newtek Technology Solutions, our Phoenix-based cloud computing portfolio company that primarily focuses on providing managed services. Historically, we've had 3 portfolio companies in the space, including IPM and Sidco. We are announcing today in the fourth quarter of 2020 that we're going to merge all the portfolio technology companies together, IPM, which is acquired in 2017, and our managed tech solutions; and Sidco will be a subsidiary of Newtek Technology Solutions. We're forecasting that the combined companies will generate revenue between $45 million and $50 million in 2021 and adjusted EBITDA between $5.5 million and $6 million. This should give us a bump of a valuation as well as cash flow. We're really excited about the business prospects. And when we lay out our technology solution offering, we're going to be able to really wrap our arms around independent business owners, helping them with purchases of software and hardware, helping them with purchases that are required for professional services. How do I architect my technology? How do I implement the technology once I've made the purchase? And many businesses, they really can't afford to manage it day-to-day. They can't afford a CIO. They can't afford a CTO. They even can't afford the local break fix providers that have historically put PCs in their shop and loaded software into it. We're in a new market and a new environment. And I need to point out, we're not competing against AWS and Azure. As a matter of fact, we partner with them. We manage workloads in AWS and Azure. But for the small and medium-sized and independent businesses and family offices, they need the personal attention that the Googles, the Amazons and the Azures can't provide. We can provide that to them. We can provide them 24/7, high quality, great architects, great technology engineers to help them navigate. So we're really excited about our foray into growing this particular segment and silo in our business. So Slide #28 talks about cloud services. So if you go to the bottom bullet, ITaaS, infrastructure as a service; DRaaS, disaster recovery as a service; DaaS, desktop as a service; software as a service; we give clients secure e-mail; hybrid cloud; private cloud; public cloud, we are the cloud service provider for independent business owners. Slide #29. We mentioned this in our press release. We're proud to have added to our staff. Sam Razon joined us this year, along with Shannon Vestal, to really grow and further develop our Payroll Solution offering. It really is a human capital management system. We'd love you to go to our website and see that everything that we could do for your company in the payroll, health and benefits space. We also added 2 great executives to our Property and Casualty Insurance Agency: Rick Carpenter as Director of Property and Casualty; and Kathryn Ingram, SVP, Property and Casualty. We're very excited about some additional hires we made in that particular space. And I will point out that on October 28, we hosted a webinar to address the future of payroll benefits and really discussed hot topics relating to changes in the market, particularly relating to the pandemic and changing in the economic landscape. I'd love to suggest that you go to our webinar. You could see where you can find it on that slide. It's available on replay. And really, it's a tremendous display of the expertise that we have in this particular space. Moving to Slide #30 and as we're getting close to concluding our presentation and wrap up the rationale for an investment thesis. Making an investment, it's all about risk or reward and risk or reward in a Newtek investment. We firmly believe our loan portfolio and balance sheet has less leverage than our BDC peers. It's important to note that our loans are no growth to low growth-type businesses. They don't really require 4%, 5%, 6% growth in revenue and earnings and in cash flow. Obviously, our competitors in the BD space very heavily invested in leveraged loans that are lent at 4 to 5 and 6x EBITDA. So we believe that our businesses, which are more bread and butter and core, well collateralized and well supported by the personal guarantee of the owners with both personal and corporate assets, will stand up well in this particular economic time. Important to note, not our first rodeo. We've been through this for over 17 years, did a good job in managing 2008-2009 credit crisis. Particularly with respect to servicing, we're very active working with our clients and making sure that they've got the right solutions and then they could be able to handle and navigate things through. We speak to all those 2,200, 2,300 clients in the portfolio. Also mind you that as we've discussed, the loans are personally guaranteed and collateralized with liens on them. It's a diversified business model. So apart from lending and credit, we obviously got revenue streams growing in tech solutions, payment processing, NII and payroll. We utilize technology to acquire clients, clearly in vogue today, where being able to acquire business through brokers, bankers, branches or BDOs quite difficult in the current environment. And we think this is going to be a permanent shift in business. Once again, it's more efficient. It's better received by the customers that want you when they want you on demand. And we believe that our shareholders can realize long-term rewards due to our unique infrastructure and business methodology. It's very much of a hidden value prep in terms of how Newtek does its business. We move to Slide #31 and we look at our catalyst going forward. What's the investment thesis to investing? We're renewing up our 7(a) efforts, which clearly should get us back into an originate and gain-on-sale mode. We had a real good third and fourth quarter in 504 income. We look for that to continue in calendar year 2021. We hope to anticipate -- resume our joint venture lending activity in the nonconforming conventional loan market in 2021. What we've done with respect to the combined Newtek Technology Solutions with our other 2 technology portfolio companies, we look forward to the creation of a business in 2021 that does between $45 million and $50 million with adjusted EBITDA of $6 million. Those are nice increases. That's not just adding up the 4 different components. It probably picks up another, easily, $1 million or $2 million of cash flow. So we're also looking for a recapture of NMS as the business bounces back nicely, Newtek Merchant Solutions getting back to an EBITDA of $14.5 million to $15 million. We believe that we will get another stimulus package, which will certainly help us manage our credit. And additionally, as we've spoken about recently in the regulatory environment with respect to BDC investment, particularly with more investment from institutional investors, on August 5, the SEC endorsed their proposal to modify AFFE. The proposal is still in the proposal stage. There have not been any adopted changes for the AFFE requirement as it applies to BDC, but we're hopeful that, that will get finalized, hopefully, in the near future and that it will -- it really enable institutional investors that don't invest more than 10% of their total funds to basically be able to own and record BDC without having a double count to fee expense. So rolling forward to my final slide on Slide 32. We are a differentiated and diversified BDC model. A lot of people are looking to invest in BDCs for the dividend and the asset category. They want to make an investment in BDCs from the structure, but they'd like to get away from investing in portfolios of leveraged loans with hidden leverage in the assets. That's us. We're an internally managed BDC. That's -- our interests are aligned. We're not growing for growth's sake to pay ourselves a bigger management fee. We're not a new company. We've been around, established in 1998. We have a long-term lending track record and history with senior management. Peter Downs, our Chief Lending Officer, has been with the company since 2003. Tremendous alignment of interest. We love shareholder appreciation and dividends. And we don't get any management fees, owning about 6.3% of outstanding shares. And clearly, we've stayed away from oil and gas industry. We're not a second lien lender, no SBIC hidden leverage. We think that we have a nice promising future going forward. So with that said, I'd like to turn the presentation over to Chris Towers, our Chief Accounting Officer. Chris?

Thank you, Barry. Good morning, everyone. You can find a summary of our third quarter 2020 results on Slide 34 as well as a reconciliation of our adjusted net investment income or adjusted NII on Slides 36 and 37. For the third quarter 2020, we had net investment income of $1.7 million or $0.08 per share as compared to a net investment loss of $500,000 or $0.03 per share in the third quarter of 2019. Note that income related to the PPP is included in investment income. Adjusted NII, which is defined on Slide 35, was $950,000 or $0.04 per share in the third quarter of 2020 as compared to $12.2 million or $0.63 per share for the third quarter of 2019. Focusing on third quarter 2020 highlights. We recognized $14.9 million of total investment income, a 6.9% decrease from the third quarter of 2020. Decrease was driven primarily by a decrease in interest income attributed to the decrease in the Prime rate and a decrease in dividend income from portfolio companies, mainly NMS. These decreases were offset by the recognition of $3.1 million of income related to the origination of $82.5 million of PPP loans during the quarter. Servicing income increased 11.8% or 2 point -- to $2.9 million in the third quarter 2020 versus $2.5 million in the same quarter last year, which is attributable to the average servicing portfolio growing from $1.04 billion at September 30, 2019, to $1.1 billion at September 30, 2020. Distributions from portfolio companies for the quarter included $1.7 million from NMS, $125,000 from IPM, $175,000 from Sidco and $240,000 from Newtek Conventional Lending, our joint venture with BlackRock TCP. Total expenses decreased by $3.3 million quarter-over-quarter or 19.9%, mainly driven by a decrease in interest expense, referral fees and other G&A costs such as advertising. Realized gains recognized from the sale of the guaranteed portions of SBA loans sold during the quarter totaled $1.6 million compared to $11.7 million during the same quarter in 2019. In the third quarter of 2020, we sold 16 loans for $11.8 million at an average premium of 11.79% as compared to 147 loans sold during the third quarter of 2019 for $89 million at an average premium of 11.49%. The decrease was attributed to our continued focus on PPP originations during the third quarter of 2020. As I mentioned earlier, income related to the PPP is included in investment income. Realized losses on SBA non-affiliate investments for the third quarter of 2020 were $2.4 million and $838,000 during the third quarter of 2019. Overall, our operating results for the third quarter resulted in a net decrease in net assets of $500,000 or $0.02 per share, and we ended the quarter with NAV per share of $15.13. I would now like to call -- turn the call over back to Barry.

Thank you, Chris. Operator, I'd like to open up a question-and-answer section -- session.

[Operator Instructions] Your first question comes from Mickey Schleien from Ladenburg.

Barry, I just wanted to touch on trends in SBA 7(a) prices, which were quite strong in the third quarter, and ask you who would you say are the main players bidding up those prices. And what do you think the outlook is finishing this year and going into next year?

I think that in looking at the government-guaranteed bid for 7(a) loans, a couple of things have occurred. Prepayment rates have slowed significantly in this calendar year, and we do expect them to continue to be slow as the lending environment for particularly most bank lenders is one of a more cautious note. So you're not getting banks refinancing small and medium-sized business borrowers with low interest rate loans at this point because they're just -- the banks right now still have their risk off-trade on. So prepayment speeds clearly drive the market. Supply and demand drives the market. There has not been a plethora of originations. I don't see that at this point yet in the fourth quarter. It may start to pick up. We don't see that. The demand for government-guaranteed assets with a zero risk-based capital is insatiable. Banks are flushed with deposits. The stimulus has put a lot of money into the banking system so that they need to put that money to work. A LIBOR floater plus 65 basis points at zero risk-based capital is attractive. So my view of this is beware of the change of prepayment speeds. So until we get into a more robust economy, which I don't think that's on the cards until -- now growth is one thing, but what I mean a more robust economy, I mean a lot of lending activity, as a matter of fact, greater GDP than you had in Q1 of 2019 going into the pandemic. I don't think we need to be overly concerned about significant price weakness until maybe the third and fourth quarter of next year at best.

And just a couple more questions, one on the balance sheet. Any guidance you can give us on when you might do your next securitization?

Yes. Look, securitizations are a financing for us, and they wind up taking out the Capital One Bank line. So a general forecast and obviously a little -- we got to be a little careful about SEC issues and front-running, which is weird, but generically speaking, I'm thinking this is going to be -- it's clearly a 2021 calendar event and maybe second or third quarter.

I understand. And that's just due to the cadence of the 7(a) business, right?

Yes, in other words, just building up enough critical mass. We probably have around $60 million that we've mostly funded with equity at this point in time. We're not using our line. And our lines are very low levels across the board and -- which is good. It shows that we've got good liquidity in the system and don't have excessive needs to hit the capital markets. We always want to stay ahead of that game. You never know when the markets won't be kind. So we've been very good in managing that for us. And I think that, that portfolio could begin to build up after 2 quarters. We also have a prior transaction that we might be able to call, but that's -- I think out in the future would probably be third, fourth quarter of next year is probably a good enough guess.

I understand. And you kind of hit the nail on the head. We don't know when the markets will be open or not. But I'd be interested in understanding, just broadly speaking, what's your thesis on the economy for next year that ultimately is supporting your dividend forecast.

I think that our thesis is that the economy has a lot of momentum behind it. And irrespective of whether you've got Trump in the White House or Biden, which is on everyone's mind, I think the concept of additional stimulus is out there. I'm not overly concerned about a tax hike with either executive in. I have to make this one comment. I'm not -- people think the Republicans have the Senate. That's not clear at this point, particularly if you get 2 Georgia runoffs, which is possible. But I think that there's a ton of liquidity in the system. There's a lot of momentum. New business formation, believe it or not, is growing rapidly. So a lot of parts of the economy are growing on all cylinders, lots of liquidity in the system. From an aggregate standpoint, I'm bullish. Now the flip side of that is you've got certain businesses at the extreme that require no social distancing, indoor activity. Those are businesses that are going to have a hard time. We're happy that we have a diversified portfolio, both geographically and Sidco, to be able to combat that. So there's no -- there's nothing in our portfolio that keeps me up at night, that says, oh my god, I'm overbalanced in gymnasiums in New Jersey, for example.

Those are all my questions, Barry. I appreciate your time this morning.

Thanks, Mickey. Thank you very much. Just to put one more final point on it, I'm generally optimistic about economic growth in 2021.

Your next question comes from Scott Sullivan of Raymond James.

First of all, a comment. I really do appreciate sort of the management's flexibility and acuity in terms of being able to live the Warren Gretsky school of thought, skating to where the puck is going rather than where it is, so congrats on that.

Thank you.

And I do appreciate the color on the cross-selling initiatives and certainly the more elegant solution with IPM and NTS. So from a high level, where do you -- where are you modeling the most growth, obviously, in a more normal economic scenario? Where is the best CAGR in all of the different silos other than lending?

I think that it's a good question because part of it relates to where we are in our product cycle, and then there's near term, medium term and long term. I think I'm optimistic about the turn in Tech Solutions. Now from a marketing perspective, we're probably less built out there than we are in Tech Solutions -- than in, I'm sorry, Payment Processing, which is a bigger business. But I think that the menu of solutions that we have to be able to offer to independent business owners relative to product, professional services, managed solutions is broad. This is a growth area for many, many years, and there's so much work to be done. And frankly, not a lot of competition in the space, in my opinion. In the merchant space, which there's a lot of competition and a lot of people in there, I think that we've got superior solutions. I was on with a financial institution last night. And for example, we talked about our POS on Cloud and branding it for the particular institution. So you can call it -- we can give a financial institution their own payment solution, where their name comes across the brand. For example, I'll use your company's name, Raymond James. We could create Raymond James Payment Solutions. Well, what does that do? We're going to put POS software in the business that's got your name across the top. That's branding to the business owner and branding to the 8 to 10 to 100 employees that are interfacing with that POS system, whether that's doctors, dentists, lawyers, motels, restaurants, and at a finger snap, you can boot up a website for pay at the table or all the retail SKUs right away because it comes right out of the POS, both the card present or the in-store activity and the online activity integrate directly into accounting GLs, which we have set up, the time and attendance function on the point of sale, pushes the time and attendance data directly into our payroll software so we could perform payroll, taxes. We also then, from that cloud-based solution, can manage their workman's comp, their health insurance and wrap around their 401(k). So that for an entity like yours, you're now branding your brand name to the restaurant, to the retail store, pay at the table, QR code, your name is across the top, and you get deposits. You get the deposits from the payroll account. You get deposits from the merchant account. These are solutions that we've created through owning our own software, developing it further. And now we're going to begin to roll this out with our financial institutions partner. So I think there could be tremendous growth there as well. If you switch over to, generally speaking, payroll, health and benefits, the landscape of all the changes in payroll, whether it was the fact that the IRS pushed back a quarter for filing tax returns, changes in certain tax issues relating to whether it's state or federal items, payroll is more and more prominent. And the reality is, independent business owners, they're just not going to go online and punch data in. They need to talk to somebody. They need to get that expertise. The changes in health care relative to the pandemic, vast, significant. So this is where I think we're well positioned with our solutions. But I would say that in 2021 versus 2020, bigger delta in tech, a rebound in payments from 2019 -- 2020 to 2021. Those are the 2 things to keep an eye on. I also think in lending will be more prominent in 504 and hope to get the nonconforming business. So we have a lot of engines in 2021 that were 0s in 2020. I mean the 504 business probably helpful in the fourth quarter. The nonconforming, we hope to get back ongoing. That was practically a 0 in 2020. And the growth lift in payments and tech give us a good base for being able to get a good dividend out to shareholders in 2021. And by the way, you didn't hear me mention PPP, right? No PPP. PPP comes in, which we saw what a nice job PPP did for us, so we'll see what happens.

Your next question comes from Brian Stauffer from Compass Point.

Barry, congrats on the quarter. So I got one question answered about the 7(a) loan market and the strength you're seeing there, but you did mention earlier in the call the work-from-home dynamic. Do you see any opportunity there to kind of rationalize Newtek's real estate footprint moving forward, maybe save money on OpEx down the road as leases come up for renewal?

Brian, no question. I think that the pandemic changed my viewpoint on real estate footprint and staffing. And I think that a lot of that relates to given that I typically drive somewhere, wherever I am, whether it's an hour each way, which is fairly typical. I think that on a going-forward basis, that's going to be more pertinent. We will be not renewing our lease in Irvine, California. Our staff is working remotely and doing great. We will not be renewing our lease in Milwaukee. Staff's working remotely and doing great. We have taken a little bit more space in our Lake Success area, but we also have one parcel that we'll probably put up for sublet. Our Orlando business is doing well. So I think that you're going to see more cost savings in that particular area. And we've also put tools in place for staff to be able to monitor their own activity relative to talk time, inbound calls, outbound calls and time sheets. So from a monitoring perspective, it's really important to make sure that we're hitting all of our production metrics. So I think one of the -- there were many negative aspects, obviously, to the pandemic. One of the positive ones is to get people to work more efficiently from home and save on commutation, which saves them money as well as time.

Your next question comes from Matt Tjaden from Raymond James.

Barry, first one, if I can, on 7(a) originations. Any color you can give on what you're seeing a month into the quarter? I know $135 million is the expectation for 4Q. Any expect -- or any color you can give on what you're seeing a month in?

Look, I think we put that number out there, and it's difficult for us to peg that with precision. I'll explain why. We put commitments out there. We then go into an underwriting. And some of that is, wow, all of a sudden, the tax lien pops up at closing. Okay, all of a sudden, our real estate appraisal changes. It's really hard to forecast that pipeline, both positive and negative. We put out a number that we're comfortable with. We've expressed to the market there's volatility. But also I would say this, we've come out with guidance that we expect our dividend will be between $1 -- from $1.80 in the low to $1.90. We're down from $2.30 to $2.20. We've taken PPP out of that. So if a PPP comes in, that's extra. So I think that our investor base, which is sensitive to, obviously, share price as well as the dividend, should feel pretty good that we're going to come close to -- we certainly believe we're going to be within the range, and we'll forecast that dividend. But to forecast specific loan funding, it's tough. You lose a $5 million, $10 million loan, it becomes difficult. The good thing about our business model, though, is we're kind of firing on many cylinders. We've got the 504 business now. We gave a fairly wide range of dividend and income generation of $1 million to $3 million. Our tech business is picking up. No, but I can't give you the type of guidance that we're traditionally used to giving because it would be disingenuous because we're finding situations where we're trying to get loans closed and the world's changed, stuff pops up at the last minute. Conversely, we're getting an overwhelming amount of referrals that are blowing away previous numbers. So we've got plenty of stuff to look at. I think that's important because I realize we're sitting here at November 5, and the way the world is today, everybody wants to know what's going to happen between now and December 31. Well, I will tell you that's important to me, but what's more important is the direction and the movement in the model. So to me, I'd just be frank with you, yes, I don't want to be on a conference call with all my numbers or my guidance, but I'm really interested in the long-term forward momentum of the business, which looks pretty good for 2021, with a fairly wide range for 2020. I know I evaded your question, but I think the long-winded answer is appropriate for this investor group that we're trying to get them to really focus on the long-term aspects of our business, not quarter-to-quarter, which is what we've been pretty good at historically, trying to cultivate investors in Newtek not to be quite hung up on just straight quarterly, even dividend that you see in most BDCs. Thank you. Any other questions, Matt?

Yes, one follow-up, if I can. And this one might be difficult to answer as well.

Sure.

So the dividend guidance for 2021, $2 to $2.50. Based on your dividend payout ratio, we can kind of back into an earnings number there. Can you give maybe not the specific number, but what's the expectation for 7(a) origination activity during 2021?

I would say that we'll probably be between $580 million and $600 million for 2021 for 7(a).

Great. And then just a last one, quickly on NBL. Just to confirm, NBL did not pay a dividend in 1Q, 2Q or 3Q, so that $1 million to $3 million dividend will all come in the fourth quarter?

I'm going to say yes. Chris, is it accurate? There was no dividend from NBL in Q1, Q2, Q3? I believe that's the case.

Correct, yes.

So that would all be in the fourth quarter?

Yes.

Your next question comes from Adam Morton of RBC.

Congrats on a good quarter, man. Great job.

Thank you.

A couple of questions. Given this pandemic, given I guess it's -- I don't know if I want to say safe to say that it looks like a -- in all probability, a Biden and then a Republican Senate, are there any geographic pockets and/or sectors that you guys think are areas that you may want to attack as far as where you're going to be lending to? I mean, I know I talked to folks down in Texas and in Arizona, and these socially distanced, sort of like the restaurants and things like that, are there any areas that you think that you guys could attack that would make some sense or where you might want to overweight yourselves going forward over the next 3 to 5 years?

I think it's a very good question. And with the backdrop of diversification, which has always been a winner for us, both industry and Sidco, but you can't ignore the demographics of businesses and customers moving to Sunshine states, Rust Belt states -- I should say Sunshine states and Sun Belt states, the Arizonas, the Texases, the South Carolina, North Carolina, Florida. I mean the trends are that's where consumers are moving to. We're certainly going to look at all geographies and all businesses and all borrower types, but it's certainly tough for a lender to go I want to be real big presence in New York City today. It's really hard, really hard.

Okay. Well, that being said, right, and I totally agree with you, there's going to be survivors and thrivers in New York City.

And we will -- and we're currently having conversations -- to be frank with you, we've got -- we're having conversations right now with a couple of restaurateurs that are going into revive like amazing brands, right, that are now looking to an SBA loan where the owners and operators, they're not billionaires, but they've got the capital and the guarantor capability to withstand bumps and grinds. And they've got a plan to go back in and revive the brand. But New York is not going to die. It's always going to be around and it's always going to be present. But you've really got to be more selective in picking the winners and losers.

Your next question comes from [ John Sefiati ] from Santander Bank.

My question really, one of the earlier slides, I believe it was Slide 8, and you're focusing in on the 504 loan program. And I think it was mentioned that there wasn't a lot of growth that was happening in the first half of the year obviously because of COVID and the company is focused more on making the PPP loans and being more neutral. But in looking at the slide, there's about $51 million of loans that were funded during the quarter or maybe getting up through 1031. How are those loans primarily funded? Was there a capital injection that took place from Newtek into the SPV so that there was additional dry powder to fund those loans? Could you just give a little bit of context as far as how -- what capital was contributed and maybe what dividend may be coming back in the fourth quarter?

Sure. I think that with our portfolio companies, I mean for the most part, the ones I mentioned earlier, Merchant Services and Tech, they don't require capital. Where we're lending out of NBL does require capital in addition to our lending partners like Capital One Bank that provide us leverage. So in order to make those loans, we position capital into Newtek Business Lending, which, in conjunction with our leverage partners, enables us to make that loan and then hold it on the balance sheet and lending facility of NBL.

Do you know approximately how much capital was contributed during the quarter?

I do not, not offhand.

Okay. And then going forward, as far as the profile of customers, do you see any change in strategy just related to the underlying customers that you'll target, given the pandemic and changes in the market? Would you focus on targeting certain types of customers from a profile perspective?

Yes. No, it's funny because -- and I say that we are very big on diversification. And I think that diversification makes us smarter without having to be smart. So what I mean by that is I could sit here today and say we are not going to make a hotel loan and we're not going to make a restaurant loan. Now here's the funny thing. Today, those are probably the best loans to be -- to make. And I'm not suggesting that you make a loan in a particular area or region that's totally closed down or based upon 19 -- 2018 underwriting criteria. But some of these situations, they have repositioned themselves. They've got good capital. They've got great location. They've got great operators. And they've just survived COVID and the pandemic. Now where you want to be careful is you don't want to basically provide the funding and there's no liquidity and they can't survive another shutdown, which is a real important analysis that we do when we make these loans. So I think it's fair to say that we're going to continue to be diversified. We're clearly going to be more careful in a motel or a restaurant, particularly over the next 6 or 9 months, but we're not definitely a no. And what happens when you have these economic shakedowns is you wind up losing weaker participants in an industry segment or demographic, and the stronger ones wind up being your best credits because their competition goes out of business, they're the lone survivor and they do well. So we always look at lending with a view towards what's going to not be just a good credit for the next 6 or 12 months, but what's going to be good for the long term. And most importantly, can these businesses survive slow growth, no growth or a downturn in the near term? Do they have enough liquidity to survive the bump? How good is their operating team? And we're very proud, for example, of our nonconforming portfolio really being able to do well during this period of time from the standpoint that we've obviously picked good operators and we pick people that have enough other wherewithal to be able to not want that enterprise value in their business to go away.

Great. That's very much appreciated. And just one other follow-up question. I know that financial results were included in the press release and in the lending presentation. Do you know -- do you have an anticipated date that we could expect to see the full Q for September 30, 2020?

Yes. I mean, usually, that gets filed within a week or so of this call, so that's pretty much a good anticipation.

Your next question comes from Harold Elish from UBS.

So one of the pandemic winners, it has seemed to be, is the world of fintech in general, and that there are a number of new players outside the streams that Newtek has generally employed to get referrals. I don't know whether it's too early, but I'm wondering whether you're thinking of pursuing some of these online relationships, particularly those that seem to be appealing to millennials and active traders as conduits for your business going forward.

So Harry, I appreciate your drawing attention to the value-add of technology in the pandemic sort of rising to the surface. I think that OnDeck Capital, which really had a disastrous portfolio but arguably good technology, I think was acquired for like $90 million for the technology. And I think Kabbage was acquired by American Express for like $800 million or $900 million. And I think that their portfolio results are arguable in that the credits that they made, but with the market, particularly financial institutions that don't -- they're not nimble, they have a hard time putting software changing processes, techniques into place is valuing is that the business methodology of acquiring clients remotely, not having bankers, branches, brokers or BDOs and utilize technology to make and manufacture a loan, and in our case, in addition to making and manufacturing loans, we make and manufacture payment solutions, we make and manufacture technology solutions, we make and manufacture health and benefit solutions and insurance solutions is being valued by the marketplace. Now in our case, I'm kind of being asked how many loans am I going to do in the next 30 days, which we plan on doing a lot. But in addition to that, there is this hidden value within our organization, which I try to emphasize, which is look at how we do our business, look at why there's a thesis about what we're doing. I mean there are people that pay millions of dollars to get the types of economic activity and referral that come through our doors for being in the business as long as we are, for servicing clients well and for having this technology in place that makes it really easy to work with Newtek on a loan opportunity or a tech solution or a payment solution or whatever it might be. So we're hopeful, over the course of time, that we certainly appreciate investors valuing our cash flows and our dividends, but we also are hopeful that the investment community will value the operational methodology, the software and the way in which we conduct our business. That will be the way business is conducted in the next 10 years. We think we're ahead of the game.

I'm showing no further questions at this time. I would like to turn the conference back to Mr. Sloane.

Operator, thank you. And I'd like to thank everybody who participated in the call, the analysts' Q&A and investors in our company. Over 20 years a publicly traded company, we have tremendous appreciation and respect for the faith and the investment that you've made in us. And we'll continue to work hard and continue to perform and hopefully meet or beat all of these expectations. So thank you very much. Have a great day. Stay safe.

Ladies and gentlemen, this concludes today's conference. Thank you for your participation, and have a wonderful day. You may all disconnect.