Nomura Holdings, Inc. (NYSE:NMR) Q3 2024 Earnings Call Transcript

Nomura Holdings, Inc. (NYSE:NMR) Q3 2024 Earnings Call Transcript February 1, 2024

Nomura Holdings, Inc. isn’t one of the 30 most popular stocks among hedge funds at the end of the third quarter (see the details here).

Takumi Kitamura: Good evening, this is Takumi Kitamura, CFO of Nomura Holdings. First, I would like to extend my heartfelt condolences to those affected by the Noto Peninsula earthquake and pray for a swift recovery from this disaster. I will now give you an overview of our Financial Results for the Third Quarter of the Fiscal Year ending March 2024 using the document titled Consolidated Results of Operations. Please turn to Page 2. Group net revenue increased 9% quarter-on-quarter to ¥400.2 billion, while income before income taxes grew 39% to ¥78.7 billion. Net income was up 43% at ¥50.5 billion and as you can see on the top right, performance bottomed out in the fourth quarter last year and has continued to improve since then.

The third quarter proved to be somewhat of an emotional rollercoaster for market participants over the possibility of the FRB moving away from its tightening stance. This, combined with tensions in the Middle East, resulted in elevated volatility in equity markets and heightened uncertainty. Inflation in the US slowed towards the end of the quarter, raising hopes of an exit from the sharp rate hikes over the past two years and driving robust performance in equity markets. In fixed income markets, we also started to see a recovery in the issuance of securitized product as interest rates fell and credit spreads tightened. Interest in Japan remained high. Activity picked up among not only institutional investors, but also corporates and individuals over expectations of a monetary policy shift, various actions by corporates to improve capital efficiency, and reduce strategic shareholdings, and investment momentum in the lead up to the introduction of the new NISA scheme.

Amid this environment, we played to our strengths by fully leveraging our extensive client franchise in Japan and our global network to deliver products, services, and solutions tailored to the needs of our clients. This resulted in strong momentum across our three core businesses. Before I go into the details of performance of each business, please take a look at the bottom right which shows three segment income before income taxes of ¥70.5 billion, up 16% over last quarter. Our international wholesale business reported an uptick in client activity towards the end of the quarter and all international regions had a profitable quarter. Diluted earnings per share for the quarter was ¥16.1 and return on equity was 6.2%. While this represents a positive trend towards improved performance, we are still not where we want to be.

With this momentum in performance and given our sufficient capital base, today, we resolved to set up a share buyback program in order to raise capital efficiency and secure a flexible capital management policy, and to deliver shares on exercise of stock-based compensation. The program will run from February 16th to September 30th and have an upper limit of 125 million shares with the upper limit of the aggregate amount of the repurchase price being ¥100 billion. Please turn to Page 3, update of results for the nine months to December. Net revenue for the period was ¥1,116.9 billion, up 11% compared to the same period last year. Income before income taxes increased 43% to ¥181.8 billion, while net income grew 28% to ¥109.1 billion. EPS was ¥34.69 and ROE was 4.5%.

As shown on the right, three segment income before income taxes rose 69% to ¥159.7 billion. Income before income taxes in retail jumped 3.5 times and in investment management, it increased 56%. Now, I will turn to business performance in the third quarter, starting with retail on Page 6. All the percentages I mention from now refer to changes compared to the second quarter. Retail net revenue increased 4% to ¥102.6 billion yen and income before income taxes was ¥31.9 billion, marking the highest level in eight years since the July to September quarter in 2015. The reallocation of our partners last spring has delivered steady results and we are starting to see good signs in terms of the quality and quantity of our dialogue with clients. As you can see on the bottom left, flow revenue increased 7% to ¥64 billion, spurred on by strong equity related revenues due to favorable market conditions and primary transactions such as the offering by Denso.

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Q&A Session

Recurring revenue, an area of strategic focus was in line with last quarter’s record high. Although revenues were up 4%, expenses increased by only 1% and our recurring revenue cost coverage ratio remains high at 55%. Please turn to Page 7 for a breakdown of sales by product. Total sales were down 9% at ¥4.7 trillion, but remained high and strong. Sales of stocks were ¥3.1 trillion, substantially higher than the level seen before the first quarter, with this quarter being a notably strong one for primary subscriptions. Insurance sales were at a record high. As we continue to provide consulting for our clients’ overall portfolio, we are seeing more clients use insurance products for estate planning and retirement funds, which is another benefit from reallocating our partners.

Please turn to Page 8 for an update on KPIs. Net inflows of recurring revenue assets shown on the top left was ¥51.4 billion. This was lower than last quarter as the market rally and rising rally of priced products prompted large sales and exits. However, excluding corporate section, net inflows remained high at ¥151.5 billion. The top right shows recurring revenue assets at a record high of ¥21 trillion and recurring revenue, which represents stable revenues, remained strong. Flow business client numbers shown on the bottom left were particularly strong this quarter as we saw the benefits of reassigning sales partners and enhanced dialog with clients on the back of primary transactions. Flow business client numbers at the end of December were trending 15% above the same period last year at 1 trillion and 456,000 [ph], which is approaching our March 2025 KPI targets.

Our business for salaried employees, or workplace business, continued to grow steadily. The number of services delivered was approximately 3.6 million, driven by growth in ESOP participants. Please turn to Page 9 for an update on Investment Management. Net revenue decreased 14% to ¥38.9 billion and income before income taxes declined 33% to ¥15.6 billion. As you can see on the bottom left, stable business revenue was ¥33.3 billion, in line with last quarter, which was a record high since the division was established in April 2021. Investment gain/loss declined to ¥5.6 billion as American Century Investments related valuation gain/loss slowed. Please turn to Page 10 for an update on the asset management business, which is the source of business revenue.

As shown on the top left, assets under management totaled ¥78.5 trillion at the end of December, representing a record high for the third straight quarter. This is above our March 2025 KPI target of ¥75.8 trillion. On the bottom left, net inflows were ¥330 billion, with the investment trust business reporting ¥60 billion of outflows. This was due to an increase in sales to lock in profits on the back of the market rally. MRFs and other money market funds reported ¥70 billion of inflows as individuals parked more idle funds. The investment advisory and international businesses booked inflows of ¥385 billion. Japan reported inflows into yen bond funds, while internationally we saw inflows into US high yield bond funds and India equity funds.

Alternative assets under management shown on the bottom right stood at ¥1.6 trillion, down slightly due to yen appreciation at the end of the quarter. That said, inflows continued and we are making progress with our private market initiatives. Please turn to Page 11 for wholesale. Net revenue increased 6% to ¥217 billion. Income before income taxes was ¥23 billion, up 178%. Performance is improving after having bottomed out in the fourth quarter of last fiscal year. Although bonus provisions increased in line with performance, wholesale non-interest expenses decreased 1% as severance related expenses declined and we saw the benefits of cost reductions carried out through to last quarter. As a result, our cost to income ratio dropped to 89%.

Please turn to Page 12 for an overview of results by business line. Global markets net revenue was roughly flat at ¥171.6 billion. Fixed income revenues increased 7% to ¥103.5 billion. As I mentioned earlier, during the first half of the quarter, market participants remained on the sidelines over uncertainty surrounding monetary policy and geopolitics, but we executed client orders while stringently managing risk. Heading into the second half of the quarter as we gained clarity on the outlook for interest rates, market participant activity improved and we saw an increase in revenue opportunities. While market conditions weren’t easy, we booked stronger revenues across all core products such as rates, FX/EM, securitized products, and credit.

Equities net revenue slowed 8% to ¥68.2 billion. Equity products had a strong quarter in the Americas, but revenues were lower in Japan and AEJ on muted volatility and client activity. Execution services continued to deliver solid performance in Japan, while contributions from primary transactions and higher trading volumes on the back of heightened interest in Japanese equities from domestic and foreign institutional investors. Please turn to page 13 for investment management — investment banking results. Net revenue was ¥45.4 billion, up 36% driven by strong performance in Japan and EMEA. This represents the best quarter since the fiscal year ended March 2017 when comparisons are possible. As shown on the left, advisory and financing and solutions both reported revenue growth.

In advisory, we topped the 2023 M&A league table, supporting numerous transactions including management buyouts of Benesse Holdings and Outsourcing and Bain Capital’s sale of its stake in Nichii Holdings to Nippon Life Insurance. In financing transactions, we supported the efforts of corporates to strengthen their corporate governance through deals such as a large offering by Denso and an international offering by Asahi Group. We provided a diverse range of solutions for issuers, taking up the challenging of structuring new fundraising methods such as bond type class shares issued by SoftBank and a digitally-tracked green bond issued by Hitachi. Please turn to Page 14 for an overview of non-interest expenses. Groupwide expenses increased 3% to ¥321.5 billion.

Compensation and benefits increased 2% to ¥170.6 billion. Although severance related expenses declined, the increase is due to yen depreciation and higher bonus provisions in line with improved performance. Please turn to Page 15 for an overview of our financial position. Tier 1 capital shown in the table on the bottom left was ¥3.4 trillion. Risk weighted assets were ¥18.4 trillion. Our Tier 1 capital ratio was 18.3% and we had a common equity Tier 1 capital ratio of 16.2%, underscoring that we continue to maintain a robust financial position. That concludes the overview of our third quarter results. To sum up, spurred on by structural changes in the Japanese market, in the third quarter we were able to deliver steady results by leveraging our strengths, centered on our home market and the strategic initiatives we have been implementing.

Retail had its best set of results in eight years and investment banking revenues were at record levels as we provided a wide range of support for various corporate actions by Japanese companies. The Nikkei has continued to rally into 2024 and we get a real sense that the new NISA scheme has been a catalyst to kick start a full-fledged shift from savings to asset formation. In just the three weeks to last week, we saw NISA sales at over one third of annual sales for 2023. We expect Japanese corporates to step up efforts to enhance their corporate governance and raise capital efficiency and many corporates are coming to use for advice. Factoring in expectations of policy action by the Bank of Japan, we expect to see the good momentum of our Japan business continue.

Our international business, in particular macro products, has had a tough time due to monetary tightening over the past two years. However, as interest rates finally peak out, we started to see signs of improvement towards the end of the quarter. In 2024, as market participants’ idle funds and pent-up demand takes off, we expect this positive trend to continue, albeit with different intensity in each region. In January, retail revenues have remained around similar levels to the third quarter, while wholesale revenues are outpacing the third quarter, driven by solid performance in rates in the Americas and equity derivatives in each region. When tailwinds are behind us in both Japan and overseas, it is a good time to tackle long-term issues.

In order to build a business platform capable of achieving sustainable growth, we will expand our risk-light businesses and create a structure for consistent revenues while taking steps to further improve our ROE. Thank you.

Q – Masao Muraki: Hi, Muraki, SMBC Nikko. I have two questions. Page 13, investment banking for Japan. In the presentation, you mentioned the Denso Asahi deals. These are deals that are related to strategic holdings and Benesse was deal to delist and make it non-public. Can you describe the mid-term potential fee pool of these deals? And the revenues that you are expecting in the mid to long run? And of course, in the case of Denso, there are various stakeholders and interested parties. So, it took time for you to structure the deal. But if you have these — more of these deals in the fourth quarter or first quarter, do you think that you will be able to sustain such high level of revenues through reference? And what is the structural demand?

And for the time being, what’s the pipeline? Do you think the pipeline is enough to sustain this level of revenue? That’s my first question. Second, Page 15, capital policy. All three finalization impact which you had disclosed most recently, ¥700 billion of capital buffer exists. But why at this timing of quarter three gross, — this is gross prior to stock option offsetting. And why did you decide on that if you think about the stock option, is this within the profit level? It could have been set at a higher level, so why at this timing? And what kind of discussion has taken place in order to decide on this ceiling amount?

Takumi Kitamura: Thank you very much. First of all, on the IB pipeline, in Japan and some other regions, we think that there will be deals as the backdrop, there’s a requirement for governance reform. In other words, top management of corporates are beginning to think more seriously about governance. So, the funds that used to be affiliated with strategic holdings can be freed up for more strategic investment for growth. On the other hand, there could be MBOs in order to step down from the market. That kind of action is being taken by corporates and we think that this will be a continued trend. You specifically mentioned the Denso deal. Reduction of such policy holdings further the delisting of parent and subsidiary, we think that this kind of trend will continue quarter-after-quarter.

Will there be constant flow of these deals? Of course, there could be uncertainties, but such kind of strategic holdings, it’s estimated at ¥50 trillion, ¥60 trillion. So, in order to free-up those holdings, we think that we will likely see continuation of these transactions. Secondly, Basel III impact. At the CEO Forum, we said that we think that we have a sufficient buffer. And why at this timing? We wanted to secure flexibility as we have been saying, but strategic policy to-date and in third quarter, we were encouraged by the performance. So, those are the biggest factors that we decided to do this resolution at this particular timing. We are a financial institution and we have various corporate-related information. So, we cannot just arbitrarily set up such buyback scheme.

There was a window of opportunity at this timing and that’s one of the reasons why we made a decision ¥100 billion, is that high or low? I think that it’s an appropriate level. The business side hasn’t used up its capital and as mentioned by Muraki-san, there could be more. We will, however, look at business opportunities and opportunities for growth and ¥100 billion was the level that we decided upon to strike a balance between those requirements. Thank you.

Masao Muraki: Thank you very much. Related to the first question, you mentioned governance, but what’s Nomura’s policy? This hasn’t really impacted the bottom-line, but the sales proceeds of the strategic holdings is there, you offset that with the unrealized losses, but you’ve sold many of your policy holdings. But what’s the strategy? Which stocks did you sell? And what about listed group companies, are you continuing your discussions on what to do with those holdings?

Takumi Kitamura: Thank you very much. In our case, as you have mentioned, realized gains and losses and unrealized gains and losses are offset. So, it’s a fact that we have sold some holdings, but we refrain from disclosing the names. In June, the securities report will be published. So, you will know that we have sold some of our holdings. Our strategic holdings. Regarding sales, since a few years ago, we have been engaged very seriously. On regular basis, we are monitoring the purpose of those holdings and we have been engaged in measures to reduce the amount. This major policy hasn’t changed and because of the rally in the stock price, the amount outstanding may have not gone down, but the number of names has decreased. Against Tier 1 capital, the ratio is currently 2.7%.

It’s as low as 2.7% already. And this isn’t the end point. We are going to reduce the number of names and we’ve made that commitment publicly. And I don’t intend to talk about our peers, but as a financial institution in terms of sales of strategic holdings, we are one of the financial institutions that are doing this very actively.

Masao Muraki: Thank you very much. So, you will continue to discuss your holdings in listed companies.

Takumi Kitamura: Yes, of course.

Masao Muraki: Thank you very much.

Wataru Otsuka: Thank you. I’m Otsuka from SBI Securities. I have two questions, but could you answer each of my question one-by-one. First, Retail divisions numbers, could you teach me how to understand the numbers, Page 6 and 7? In the third quarter, in Page 7, total sales number seems to have come down. But Page 6, revenue has increased. So, there may be — I want to know the mix of various elements there? And also in Page 6, net inflow of cash and securities, plus ¥1.2 trillion, but net increase of investment trust or Page 8, recurring asset net increase. But looking at the net inflow of cash and securities, I would have expected a bigger increase. But in the fourth quarter, is there going to be more net inflow for net inflows of cash and securities? That’s my first question.

Takumi Kitamura: Thank you. The total sales come down, however, the numbers are looking robust [Indiscernible]. In the third quarter, many products were handled, secondary buying activities were small. But in the primary area, primary products more than offset the weakness in the secondary area.

Wataru Otsuka: And the second question about the pace of increase in net inflows of cash and securities, ¥1.2 trillion of increase.

Takumi Kitamura: Of course, this is not just as a result of buying activities, but the deposit of equity or stock certificates. So, that’s involved. So, it’s difficult to do the matching perfectly. So, for example, our sales partners who visit our clients and to build trust, they are working on such activities. But sometimes that results in immediate buying activities, but sometimes clients assets in the form of equity or stock certificate, we receive the deposit of certificate sometimes. So, in that sense, there isn’t a perfect linkage to buying activities by customers. And regarding the stock certificates, that’s not included in the recurring revenue asset net inflows. So, as you say, it’s difficult to see consistency among different numbers.

Wataru Otsuka: Okay. Then a qualitative question. Including net inflows of cash and securities, the number is positive, then moving forward, this is a tailwind for the business is the right way to understand it?

Takumi Kitamura: Increase in net cash and securities, it is a positive thing for us. If we just receive deposit, it doesn’t automatically create revenue, but this is likely to result in the next action. So, is it negative or positive? It’s definitely positive for us.

Wataru Otsuka: Thank you. Understand. My second question, Page 12, wholesales, GM, the revenue, as you explained, it hit the bottom, I understand. But the absolute level, how should I understand the absolute level? So, FY EQ combined ¥271 billion, it’s not bad. But could you comment on whether there is further room for growth in terms of outlook? Thank you.

Takumi Kitamura: Page 12, if you look at the numbers, equities are stable, though there are ups and downs, but relatively stable. But equities are expected to show solid performance. The challenge is with fixed income. The last one year, we struggled with fixed income. As you know, Otsuka-san, our core products are limited, especially our dependence on macro products is heavy. And the biggest revenue driver is rates effects. But with many countries conducting unprecedented rate hikes, customer flows have been weak. And all of our positions that we managed didn’t work well. As a result, we couldn’t generate revenue the last one year. But from here, of course, we cannot be overly optimistic, but the interest rate hikes seem to have peaked out already.

In that sense, business environment compared to last year, all-in-all, seems to be favorable. And our global market structure has been refreshments and strengthened. So, we’d like to capture customers’ needs and by making — through market-making activities, we’d like to monetize clients’ needs. And you evaluated third quarter is not bad, rather good, but there is more room for us to deliver more results.

Wataru Otsuka: Okay. Understand. Regarding fixed income, what is the outlook for Japan? It could depend on the actions by the BOJ, but what is your outlook for Japan?

Takumi Kitamura: Thank you. Our firm view is that in April, yield curve control and minus negative interest rate will be eliminated. That’s our view. But towards the normalization of interest rates, the market participants are paying attention to that. And — but compared to several years ago, the situation is a lot more favorable and people have their anticipations of various thoughts towards the market and that is not bad for us as business environment.

Wataru Otsuka: Okay, understood. Thank you very much.

Unidentified Analyst: [Indiscernible], Bank of America. I have two questions. First of all, wholesale cost to income, there has been a drastic improvement and especially in the quarter that ended, overseas was a driver and cost control was successful. Is that sustainable in Q4 and the next fiscal year? What is the prospect regarding the compensation, personnel expenses? And Page 18, value-add risk. This is a detailed question. Interest-related VAR is becoming smaller. Based upon the change in interest rate ecosystem, do you have a robust system in place for risk control? Thank you very much.

Takumi Kitamura: Wholesale cost income ratio has come down quite significantly. Yes, that is a fact, as you know. At the second quarter financial results presentation, I said that even if we do headcount reduction, that’s not reflected immediately in the personnel expenses. The reason why in Q2 cost was high, there was double count in terms of headcount reduction costs and salary paid to those who are still remaining. And I said that the benefit will begin to be reflected from Q3, according to my recollection. And that impact is coming into play and we are constantly reviewing the headcount. And in Q4 and in the quarters to follow, we will continue various structural reform. Measures are in place. It’s gone down to 89%, but it still is a high level, so we will continue our efforts in this area.

And VAR, generally speaking, trading position is somewhat controlled. End of December, VAR same level as the previous quarter. We were waiting for the market environment to become more stable. And we want to capture business opportunities. But your question was whether we have a robust risk control system. The answer is yes. A few years ago, there was a little — it wasn’t a minor event, it was a major event. But since that event, we have been conducting corporate-wide efforts to strengthen our risk management system. That’s been ongoing for a few years. First line of defense, a second line of defense. We have put in place such robust risk control system. We have started a project to reinforce our risk control, and it’s already in BAU. So, while risk control is in place, we will also gain revenues.

So, we will continue our measures in risk control as we continue to increase our revenues.

Wataru Otsuka: Thank you very much.

Kazuki Watanabe: I’m Watanabe from Daiwa Securities. I have two questions. First, Page 12. Fixed income monthly revenue trend. In the second quarter telephone conference, your understanding was you are expecting a tough time, but what was the situation in the December quarter? And spread product seems to be improving on a year-on-year basis, what was the reason behind it? Second question, Page 11, wholesale cost-related question. At the investment forum, the division cost run rate of ¥5.1 billion was announced, but what’s the run rate cost for the third quarter? And also macro products and outlook is improving, is it possible for you to unchange your outlook? So, those are my two questions. Thank you.

Takumi Kitamura: First question, fixed income monthly revenue trend. October was a tough month, a bit more than 20%. And November, December, about 40%. So, end of second quarter, at the telephone conference, I said we anticipate a struggle, but yes, we faced a difficult situation as the number show. And for us for spread products, as you said, the spread product is improving, especially credit business. Continuously, the spread is tightening and in the situation, the business is performing solidly. One of the revenue drivers is securitized products. the market has come back and the number of issuance of bonds is increasing. So, finally, the market started to move, especially in December due to the increase in bond issuances, secondary trading was boosted.

So, the recovery there contributed. And wholesale cost, no matter aware, the revenue level lies, naturally, when revenue goes up, variable cost changes as well. But we are continuing with cost control without feeling complacent through structural reform and so on. We are separating fixed costs, while we cannot help increase in variable cost. But through cost control initiatives, we are looking to reduce cost base, and that effort will continue.

Kazuki Watanabe: Thank you very much. Second question, Q3 cost run rate, do you have a quantitative information you can share with me? And back to the first question, the interest rate level is high in the USA, but are you seeing the return of activities?

Takumi Kitamura: Yes, we are — our understanding is the activities are starting to return. Overall, the last one-year, market was frozen. So, whether it is a fledged recovery, we are not there yet. But in the sense of outlook, the outlook is getting brighter. Also, run rate in the third quarter at the CEO Forum, we mentioned the number, but in the sense of the run rate base, there is no change.

Kazuki Watanabe: Okay, I understand. Thank you very much.

Koichi Niwa: Citigroup Securities, this is Niwa speaking. Can you hear my voice?

Takumi Kitamura: Yes.

Koichi Niwa: Thank you very much. Domestic retail and tax rate for Japan retail activity, three segments; wealth management, corporate owners, high net worth and affiliate mass affluent, what was the situation in the third quarter, has there been any change? And what are some of the actions triggered by the new NISA scheme? That’s my first question. Secondly, this is a small point, the tax rate. All the international regions were profitable. I thought that it would go down according to my calculation. If this situation continues, how should we interpret the tax rate applied for Q4 and the quarters to follow?

Takumi Kitamura: Thank you very much. For Japan Retail, we were strong in all areas, wealth management, mass affluent, high net worth. We were strong, especially we did well in high net worth. And since the beginning of this month, this trend has followed on. We allocated — we assigned partners to high net worth, so we were quite strong. Not to say that we were not as strong in mass affluent, we did well in mass affluent as well. But — and then on NISA-related business, we are not only focusing on NISA, but the clients’ interest is heightening. We feel that from their reaction. Using NISA, in just three weeks, last year’s one-third is the progress rate in terms of sales. So, client sentiment is very warm, heating up. But while we will make use of NISA scheme, our objective is our clients’ increasing financial assets.

That’s the most important mission. So, portfolio allocation, equity, fixed income, distributed investment have long-term targets as they manage their investment. And if they experience successes that would lead to the next business opportunity, we’re not just trying to increase the number of accounts. That is not our goal. 3.6 million is quite an amount. We hope that they make use and detailed tailor-made consulting will be provided to our clients, which is our strength. And tax rate, it may appear to be high slightly, there are a few technical factors behind, which simultaneously occurred. So, if this trend continues, the tax rate may come down slightly. Thank you.

Koichi Niwa: I have a follow-up question. Recurring asset for Japan retail target in March 2025, ¥21.6 trillion, I believe, was your target. Haven’t you already reached that level? Or is it because of the increase in stock price? What is your forecast? Thank you very much.

Takumi Kitamura: The recurring revenue coverage — expense coverage is 55%. We want to further elevate this ratio. But in order to do that, recurring asset outstanding will have to be increased. That’s not the only factor behind the recurring revenue, but it is a very important component. So, we want to further increase recurring assets. At the CEO Forum, we said that it’s at 55%. We want to raise this to 80%, which means that it is indispensable for us to increase recurring assets. Thank you.

Koichi Niwa: Thank you very much. That gives me more nuance. Thank you.

Takumi Kitamura: Thank you, everyone, for attending the telephone conference, and we received various questions. But the last one year, we struggled and now wholesale is seeing a sign of recovery, so — towards the improvement. So, we feel a real sense of improvement, and we have capital buffer here. So this time, we’ve announced buyback. Without a doubt, in the background is our confidence on recovery of business. Still 6.2% is our ROE level. So, there is more work to be done. As a company-wide efforts, we would like to make efforts to improve our business. Thank you for your continued attention. Thank you.