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Seth Meyer

Thank you, Scott, and good afternoon, ladies and gentlemen. As Scott mentioned, the fourth quarter capped off our 20-year anniversary with a number of records for Hercules Capital. In addition to record funding activity in 2024, Hercules broke quarterly and annual records in many dimensions, including total investment income and net investment income, all while managing the balance sheet conservatively with low leverage and strong liquidity.
2024 was another year of validating the benefits of operating at scale by growing our platform AUM by approximately 14% to approximately $4.8 billion, while our noninterest operating expenses grew less than 5% year-over-year. Our return on average equity ended the year at 17%, and our Q4 net investment income provided 123% coverage of our base dividend despite the 100 basis points of prime rate reduction in the second half of 2024, putting us in a very strong position, heading into 2025.
During 2024, our weighted average cost of debt was approximately 5% and the leverage remained conservatively low, putting us in a position to be able to take advantage of what we expect to be a more favorable new business environment in 2025. During the year, we added a new SBIC license, providing us with $175 million of favorably priced debt.
In addition, we upsized and renewed our $300 million credit facility, led by SMBC. And subsequent to year-end, we extended our $175 million letter-of-credit facility with SMBC by 2 years, now available until February 2028, to cover a good portion of our available unfunded commitment in a more cost-effective manner.
In 2024, we continued to supplement liquidity by raising net of fees, approximately $218 million throughout the year via our ATM program. We ended the year with approximately $660 million in available liquidity in the BDC. Inclusive of the RIA managed private funds, available liquidity was over $1.1 billion for the entire platform.
With all this in mind, let's review income statement performance and highlights. NAV unrealized and realized activity, leverage and liquidity, and finally, the financial outlook.
Turning first to the income statement performance and highlights. Total investment income in Q4 was $121.8 million, driven primarily by our growth throughout the year in the debt portfolio. Core investment income, a non-GAAP measure, was a solid $114.5 million. Core investment income excludes the benefit of income recognized as a result of loan prepayments.
Net investment income decreased to $81.1 million or $0.49 per share in Q4. Our effective and core yields decreased modestly in the fourth quarter to 13.7% and 12.9%, respectively, compared to 14.4% and 13.3% in the prior quarter. The decline in the core yield during the quarter was largely driven by the Fed rate reduction of approximately 100 basis points in the last 4 months and our focus on first lien securities.
As of year-end, approximately 50% of our loans are at the contractual floor after the recent rate reductions. And thus, the impact of any future rate reductions will be muted.
Fourth quarter gross operating expenses were $43.5 million compared to $44.3 million in the prior quarter. Net of costs recharged to the RIA, interest expense and fees decreased to $22.1 million from $22.4 million in the prior quarter due to lower utilization of the credit facilities as a result of the ATM activity and due to use of the SBIC facility. We have drawn down $104 million out of the $175 million available from the new SBIC facility in the fourth quarter.
SG&A decreased to $21.4 million, just below my guidance. Net of cost recharged to the RIA, the SG&A expenses were $18.6 million. Our weighted average cost of debt decreased slightly to 5% quarter-over-quarter. Our ROAE or NII over average equity decreased to 17% for the fourth quarter. And our ROAA or NII over average total assets decreased to 8.9%.
Switching to NAV and unrealized and realized activity, during the quarter, our NAV per share increased by $0.26 to $11.66 per share. This represents an NAV per share increase of 2.3% quarter-over-quarter. The main driver was accretion due to the use of the ATM.
Our $13.8 million of net unrealized appreciation net of the impact of foreign currency movements was primarily attributable to $10.7 million of net unrealized depreciation on the debt investments and other investment-related payables, $2.6 million of net unrealized depreciation attributable to valuation movements on publicly traded equity and warrant investments, $2.2 million of net unrealized depreciation attributable to valuation movements in the privately held equity warrant and investment funds, $0.6 million of net unrealized [ depreciation ] attributable to net foreign exchange movements.
In addition, Hercules recorded $25.5 million appreciation, attributable to reversal of previous quarter's depreciation upon a realization event.
Moving to leverage and liquidity, our GAAP and regulatory leverage decreased to 89.6% and 75.6%, respectively, compared to the prior quarter due to the utilization of the ATM in the quarter. Netting out leverage with cash on the balance sheet, our net GAAP and regulatory leverage was 83.9% and 69.9%, respectively. We ended the quarter with nearly $660 million of available liquidity.
As a reminder, this excludes the capital raised by the funds managed by our wholly owned RIA subsidiary. Inclusive of these amounts, the Hercules platform had more than $1.1 billion of available liquidity. The strong liquidity positions us well to support our existing portfolio companies and source new opportunities.
Finally, on the outlook points. For the first quarter, we expect our core yield to be between 12.25% and 12.75%, excluding any future benchmark interest changes. And I would note that there are 2 fewer days in Q1 2025 compared to Q4 2024, which will reduce the interest revenue accordingly. As a reminder, more than 97% of our debt portfolio is floating with a floor. And presently, approximately 50% of our prime-based portfolio is at its contractual floor.
Although very difficult to predict, as communicated by Scott, we expect $100 million to $200 million in prepayment activity in the first quarter. We expect our first quarter interest expense to remain flat compared to the prior quarter.
For the first quarter, we expect gross SG&A expenses of approximately $23.5 million to $24.5 million and an RIA expense allocation of approximately $2.8 million. As a reminder, the first quarter always has higher payroll taxes and benefit expenses. Finally, we expect a quarterly dividend from the RIA of approximately $1.8 million to $2 million. This will reoccur quarterly throughout the year, which is another increase to my prior guidance.
In closing, our balance sheet remains strong to support our existing portfolio as well as to be used opportunistically to invest in the best opportunities.
I will now turn the call over to the operator to begin the Q&A portion of our call. Carmen, over to you.

Question and Answer Session

Operator

(Operator instructions)
Brian McKenna, Citizens JMP.

Brian Mckenna

Thanks. Good evening, everyone. It was great to see another record year of origination activity, two years in a row now you've set records on this front. I know it's a little early here, but, based on the pipeline today and everything you could see across the business, could 2025 end up being another record year, and I guess what I'm getting at is it reasonable to expect another year double digit growth, in within the investment portfolio.

Scott Bluestein

Sure, thanks, Brian. I think the short answer is if credit quality is there, We're certainly hopeful that this will be another record year for us. I think we've proven over the years that we're not going to chase the market and just book deals for the sake of showing growth.
Right now we're off to a great start. I provided some color in terms of our closed commitments quarter to date, which are $250 million. An additional $578 million of signed pending commitments that puts us arguably off to the best start we've had in the last five years in terms of early Q1 activity. So we're very optimistic about the new business environment for 2025 and if the credit quality is there to support it, our balance sheet is incredibly well positioned to allow us to take advantage of it, and the result of that could be yet another record year for us on the new business front.

Brian Mckenna

Okay, great, that's helpful, and then on the RIA, I believe you're going to be in the market fundraising for your next fund this year. Can you just talk about the potential size of this, how quickly you think you can raise this capital, and ultimately.how long it takes to get that capital invested. And then just as this AUN, begins to, earn fees, etc. How should we think about the earnings contribution, the HCGC, from the RIA in 2025 and really longer term as well.

Scott Bluestein

Yeah, thanks, Brian. The private credit fund business continues to be a really exciting and growing part of the overall Hercules platform. We have publicly disclosed that we currently are managing three distinct institutional private credit funds. We don't have any disclosure to make on this call in terms of the next fund, but as we've sort of consistently said, we would expect to be in the market at some point over the next year or so.
I'm trying to raise an additional fund given how well those 1st three funds have performed and how aggressively we've been able to deploy capital, we'll obviously make some public disclosure when when it's appropriate to do so in terms of how that's going, but I think pretty consistent in terms of how we've approached the market historically.
Our goal is never to raise as much money as we can and invest it as quickly as possible. Our goal has always been, whether it's in the BDC or in the private fund business, to raise enough capital that allows us to appropriately go after quality credits in the market without being forced into a position where we have to deploy capital just for the sake of overall capital deployment.
So we're going to continue to manage both the BDC and the private fund business with more of a controlled managed growth mentality. But I would expect for our investors, shareholders, stakeholders to see growth in both the BDC and continued growth in the private fund business in 2025. With respect to the earnings power generated from the private funds business. I'll have Seth address that.

Seth Meyer

Yeah, just in my guidance, we continue to update the dividend expectations coming out of the RIA, and that's reflective of that. Earnings growth that's occurring off the funds I wouldn't expect it to be beyond what I guided as a quarterly distribution for the current year and and and the timing of when we launch the next fund and the and close it would certainly change that but I I wouldn't foresee that it be impacting 2025.

Brian Mckenna

Okay great that's helpful I'll leave it there.

Operator

Crispin Love, Piper Sandler.

Crispin Love

Thank you. Good afternoon. On credit quality, just one non accrual now, but you had $54 million and realized losses from a couple of debt investments and a pickup in the grade 4 bucket. So can you detail what drove both of those, which companies and your views on credit going forward and also how much of the $54 million was unrealized previously?

Seth Meyer

So as Scott guided the amount that was in.
The $54 million was approximately $43 million of that, and that was related to the convoy realization event. Scott, do you want to cover the other dimensions of that? Yeah, sure.

Scott Bluestein

Chrisman. There were of the $53.9 million, about $42 million of that was already in unrealized. So very little impact in terms of net asset value. The single largest driver of the realized loss was just a crystallization and the completion of our convoy workouts. That was an investment that went on non-accrual in 2023. We began our workout efforts in the second half of 203. The workout efforts culminated in Q4 this year, so we just crystallized that unrealized into a realized position.
The only other realized loss of substance was one debt investment to a public biotech company that ended up filing bankruptcy. We worked together with the investors. That company was liquidated. We had a pretty substantial recovery on the debt position, but there was a small realized loss on that investment as well. So those were the two biggest drivers in terms of the realized loss activity, and again, $41.9 million out of the $53.9 million. Had already been recognized as an unrealized loss in 2023.
In terms of overall credit as it relates to grade 4, you are correct, there was a small movement in the rated 4 bucket. In Q3, 2.3% of the portfolio was in grade 4 credits. In Q4, $159.4 million, so about 4.6%. Still below our norm, we generally want to see grade 4s at 5% or below, so we're at 4.6%. We're certainly closer to the high end of that, but still below the average that we've typically seen. And the biggest change in that was 3 credits that we're having trouble fundraising. We proactively moved those credits down from grade 3 to grade 4 in the quarter. Our teams are actively working with each of those 3 credits, and we would expect to have a more substantive update over the next 90 days that we can speak to on our Q1 call. Outside of that, when you look at the portfolio as a whole, pretty pleased by what we're seeing, weighted average credit rating of 2.26, so no real change from the 2.24 that we saw in Q3, continuing to see companies being able to raise a healthy amount of equity. The one caveat that I would make is the comment that I made in my prepared remarks is that we have seen certain syndicates.
Essentially struggling with raising new capital with high valuations and so companies that raise money in 22 and 23 at relatively high valuations, if they're approaching the market right now for new investors to come in, they're getting substantial pushback and we've seen that from not just our portfolio but really across the ecosystem. So that's something that we're watching pretty closely. We want to see how that plays out, but nothing material that we see right now in our portfolio outside of what I just said.

Crispin Love

Great Scott, thank you for that. All very helpful. In in recent quarters you've talked about healthier companies waiting for rates to come down to add debt capital, and you've definitely had a significant pickup in funding in the 4th quarter. Do you think that was driven by companies waiting post-election after a slowdown leading into the election, or other, or are there any other callouts of key drivers of the activities on the 4th quarter and was that activity back and loaded mostly?

Scott Bluestein

Yeah, I think I think the two biggest drivers were just the election and Fed rate uncertainty that we saw in the Q3, Q4 time period. When we did our Q3 call, we spoke about just overall caution across the ecosystem. We saw that in our Q3 funding numbers, but we did guide to an expected uplift post Fed action and post-election outcome, and that's exactly what we saw.
I think once the uncertainty of the election was lifted, once it became clear what the Fed was going to do in both September and again in December, we've just seen a lot of momentum on the new business side, and we really don't expect that to slow down. I think the other thing that's been a tailwind is the fact that, base rates are now down roughly 100 basis points over the last two quarters, and so I think a lot of companies are looking to take advantage of that.
You're also seeing, I think companies now sort of come to the recognition that we're likely to stay in the current rate environment for the foreseeable future, and the notion that there will be numerous additional cuts in 2025 is becoming increasingly less likely. So I think companies are just looking at it and saying if we're going to do something, let's do it now, let's not continue to wait for rates to come down because they frankly may not come down much further.

Crispin Love

Great, thank you, makes sense to me and I appreciate you taking my questions.

Operator

Finian O'Shea, Wells Fargo Securities

Finian O'Shea

Hey everyone, good afternoon. I wanted to move over to the core yields, about 12.5 guidance. First, can you remind us that's a global portfolio number, and if so, what's the sort of new money, core yields you're deploying at today?
And then what does that imply that they will be at the end of the year with your deployment assumptions thank you.

Seth Meyer

Thanks, Fan. So yeah, the guidance was 12.25 to 12.75 for Q1. That is a global number. That would be our average core yield over the entire portfolio. And Scott, you want to take the second part?

Scott Bluestein

Yeah, sure. So Finn, if you look at Q3, 13.3% core yield across the totality of the portfolio in Q4, 12.9%. The Fed rate cut in Q3 was at the very end of the quarter, so virtually no impact in Q3. The entire impact hit in Q4, which drove that 13.3% to 12.9. We saw roughly the same thing happen in Q4, where the Fed rate action was towards the back end of the quarter, so very little impact on core yield in Q4. We expect that to flow through to Q1, which is why Seth gave the guidance that we that we currently gave.
Right now we're originating consistently in that 11.5% to 13% range, so right within our core yield target, our modeling for this year shows that we will be able to deploy up to our stated objectives by holding our core yield guidance in the range that Seth provided. So I think overall we feel very confident that our core yields are going to stabilize in that 12% range and based on everything that we're seeing right now in terms of capital deployment. We think that we can bolt hit our funding objectives and maintain that core yield target of being in the 12% range.

Finian O'Shea

Okay, that's helpful and sort of related but longer our question there's been.
A lower grind of the end of term fee embedded in the portfolio as it's grown obviously the market has been, all over the place in recent years as as you know better than I, but seeing if this is a secular change in the nature of what you do, is it going upmarket or is just is are are fees coming out of these structures, or should we anticipate a come back. In more meaningful end of term fees in your origination.

Scott Bluestein

Sure, I think it's really a combinationin of of three things, number one.
We've been fairly conservative in our minds in originations over the last two or so years. We've gone significantly up in terms of first lien exposure. Our first lien exposure, if you look at it two years ago, was in the mid 70s. Today it's at 91%. We've gone upstream in terms of scale and sophistication and overall maturity of the companies that we are lending to. Those two things generally come with slightly lower economics, and that's a trade that we've been willing to make because we think that's in the best interest of our shareholders and stakeholders long term. So that's number 1.
Number 2, there is a tremendous amount of liquidity in the ecosystem, and a lot of larger asset managers are looking to deploy capital in every vertical. And so we have over the last handful of years seen large asset managers TRY to do deals in the growth stage part of the market. That are just not typically structured or priced for how the market has historically worked. So those are lower economics, lower fees, so for or historically LIBOR based rates versus prime rates.
And so we've obviously reacted to that to make sure that we defend market share. We don't think that's sustainable. We don't think that's long lasting, and that will just take some time to work its way through the system. We are very confident that we're going to be able to maintain our core yield target for the year.
And I think at the end of the day when you look at how we manage the business where we manage it to core yield, but we're actually solving for that effective yield which includes the benefit of the accelerations and the pre-pays, we are consistently generating somewhere between a 13% and a 15% effective yield on this portfolio, including 13.7% in Q4, despite the fact that base rates have come down by 100 basis points.

Finian O'Shea

That's very helpful thanks and if I can do a bonus, for you or perhaps Seth, there's a lot of unsecured in your debt stack that's going to start to roll I think it already has. I think you paid one post quarter you mentioned in the in the release should we expect.
This level of unsecured in the debt mix or any color you'd provide us on how this might shape up well hard to predict if there's any sort of directions you are leaning thank you.

Seth Meyer

Yeah, that's a good question, thanks. Yeah, so we did pay off $50 million of a private placement unsecured on February 5th in June we have 120 that matures. That's all for 2025. You're correct that over the next 3 years, we do have some others maturing more significant in 206 and 27.
As far as the mix between secured and unsecured, it will stay more heavily weighted to the unsecured side, but we've always said that we would be opportunistic in the secured side should rates favor such a decision, we just will not go heavy in that market as we're no longer. Required to do that, meaning the industry itself as well as the size and the scale of the balance sheet of Hercules Capital itself doesn't warrant a necessitating dipping into that market too heavily, so the vast majority will be unsecured.
Okay, thanks so.

Finian O'Shea

Much.

Operator

John Hecht, Jefferies.

John Hecht

Afternoon guys thanks very much for taking my questions. First one is, I know for you guys run a conservative balance sheet and so forth, but you, your leverage ratio now, is kind of I think it's below the mid mid point of the target. I guess what's your desire to increase leverage, especially, that would be an offset to the decline in rates.
Recently.

Scott Bluestein

Yeah, I think, John, that's one of the distinct advantages that we have heading into 2025. You're seeing across the BDC space, across the private credit space, some yield compression, both with respect to base rates coming down and with respect to new onboarding yields on originations.
Being under levered with a lot of liquidity puts us in a distinct competitive advantage to be able to offset some of that by being a little bit more aggressive on leverage, and that's exactly what we intend to do. You are correct that right now when you look at our GAAP leverage at 89.6%, when you look at our regulatory leverage of 75.6%. That is well below our historical norms and frankly below our targets, but we've intentionally been conservative in terms of leverage because we think that by utilizing leverage more aggressively this year we're going to be able to deploy capital aggressively, continue to take market share, and offset a good portion of that overall yield compression that we're seeing across the ecosystem.

John Hecht

Okay, and then, non-related follow up it's that, obviously people are thinking about the changes in the administration and what that might mean the industry. Any thoughts on your side on what, yeah, the the kind of hot subsectors that you will maybe, modify your approach to this year, whether it's, increase or decrease allocation that just anything on, kind of that that front of where you're focused from a technological perspective.

Scott Bluestein

Yeah, John, great question. And our investment teams, both on the tech side and the life sciences side have spent a lot of time, thinking about that question. And, frankly, and to be H1st, we have started some rotation into some sectors more aggressively and out of some sectors more aggressively and certainly not going to telegraph to the market where we're being aggressive and where we're being more conservative, but we have absolutely started to react to.
What we expect the new administration to do in terms of both policy and rhetoric, I would say that overall we are pretty bullish in terms of the general backdrop for 2025, particularly with respect to new originations. Arguably we're looking at an environment that we think is going to be characterized by less regulation. More M&A activity, more capital markets activity, more investment in technology and technology enabled solutions.
So we think that there's a lot of positive overall momentum. The caveat is I think a lot of this is going to come with just a lot of volatility, a lot of uncertainty, a lot of people waking up every morning to check their Twitter accounts to see what was said and what actually got done. So we are watching that sort of volatility very closely because that could have a real impact on credit. But with respect to the new business market, we're actually pretty bullish in terms of of what this year should look like.

Operator

Christopher Nolan, Ladenburg Thalmann.

Christopher Nolan

Hey guys, Scott, on a follow up to the last question on leverage, are you targeting leverage so your EPS is sufficient to cover the dividend plus plus a supplemental?

Seth Meyer

So, thanks Chris for the the question we're targeting a leverage to make sure that we're giving a good return to our investors at the moment we've been keeping our powder dry in anticipation of being opportunistic.
We'll continue to, evaluate the market, but Scott's been very clear that we plan on driving the leverage up, as we see opportunities. Our leverage ceiling that we've communicated is, 1.25%, and we'll stay a fair distance away from that.
Historically, no further north than 1.15, so we're a fair distance off of that and we have a ways that we would go until then.

Scott Bluestein

Yeah, and Chris, I would just add on that point when we, when we're managing the business, our view is that the base dividend is sacrosanct. So when we're thinking about how we run the business and and where we need to see NII that $0.40 base distribution is something that that we hold very near and dear to our hearts.
The supplemental distribution is being paid out of that spillover, which, as we noted, is $163.6 million or $0.96 per share at the end of the quarter. So that just puts us in a really strong position to be able to make sure that we continue to cover comfortably that base distribution with NII irrespective of the rate environment and that we continue to do the right things to make sure we're returning as much of that spillover as we can to our shareholders, which ultimately we think is the right thing to do.

Christopher Nolan

Great, follow up question AFFE, given all the moving pieces going on and with the new administration, are you getting a twings out there of possible reconsideration by the SEC for the AFFE rule?

Seth Meyer

So nothing directly from the SEC, but you know we participate in different groups and supporting them to the extent that legislation can be put forward to address that issue. At the moment, I, what are we here? I know it feels like we're 3 months into the administration already, but at the moment it has not been something that has been pushed forward yet, and we're waiting to see who would sponsor a bill this time. So there's no progress to report at this time other than yes we remain interested in that topic.

Christopher Nolan

Sounds good. Okay, good quarter, good year. Thanks, Chris.

Scott Bluestein

Thanks Chris.

Operator

Paul Johnson, KBW.

Paul Johnson

Yeah, good evening. Thank you for taking my questions, Scott, so when you reference a certain syndicate of, companies that you're referring to, with sensitivity to evaluations here, I'm just curious maybe what exactly you're you're referencing here is this are we talking about, certain DC investors in in the market that are. Becoming much more sensitive to companies that were raised at much higher valuations or is this more like a cohort of of companies that are essentially held by, maybe a certain syndicate of VCs that are are struggling to raise capital.

Scott Bluestein

Yeah, no, I think it's a pretty broad-based comment, Paul. You know what we have seen over the last handful of quarters. Is that new investors looking at new investments are much more focused on valuation than we have seen over the last handful of years. So to the extent that you have a company that raised a large round of financing at what arguably now is an inflated valuation in 21 or in 22, and that company is coming to market looking for a new investor.
The new investor, what we are seeing, not in every case, but certainly in some cases, is much more sensitive to that valuation discussion. And so that puts more pressure on that company's current existing syndicate to essentially fund the company on its own without new investor money coming in. And what we have started to see is that there is some stress in existing syndicates in terms of their ability and willingness to continue to fund some of those legacy legacy companies. So it's something that we're watching closely. We've seen it take place in a small handful of situations, but it is something that we're watching, and we want to see how it plays out over the next several quarters.

Paul Johnson

Got it thank you that that's helpful and then I was wondering maybe just a little bit more broadly on, in terms of maybe getting an update on on funded commitments, looks like they're pretty stable all year looks like they also went down just a little bit quarter over quarter, you know. Just trying to get an update maybe on what you're seeing in terms of revolver draws, liquidity within portfolio companies possibly where you're starting to see it get stretched at all.

Scott Bluestein

Yeah, so overall our unfunded commitments declined in the quarter, so unfunded commitments at the end of Q4, $448.5 million. That's down slightly from $489 million in Q3. That number, if you look at it over the last sort of several several quarters, has been relatively consistent, although it is starting to trend down. We're not seeing any noticeable trends in terms of companies choosing to draw or not draw.
The one caveat to that would be we are seeing some instances where existing portfolio companies that we had booked maybe 2 or 3 years ago that had unfunded commitments where the rates are much higher on those deals because where the base rates were at the time. Those companies are a lot less likely to draw, so we've seen a lot of companies let those unfunded commitments expire, and that's just a trend that has has partly contributed to that decline in unfunded commitments over the last couple of quarters.

Paul Johnson

Got it. Thanks again. That's helpful. Last one, just on volunteer this quarter, it's obviously been a very successful investment for you guys. Looks like you fully closed that position out in the 4th quarter. I was wondering, do you have, a way to quantify how much that drove, any of the unrealized, portion of the gas this quarter?

Scott Bluestein

That was the biggest driver of the realized gains on the equity front, roughly in the $15 million dollar range in terms of realized gains in the quarter on that investment.

Paul Johnson

Got it. And actually, I also meant to ask kind of if there was any additional appreciation during the quarter from that investment and if there is a way to quantify that from from the 9:30 mark.

Scott Bluestein

So the investment was exited in Q4, so there wouldn't be anything on the balance sheet as of the end of Q4. If you look at the realized gains on the equity positions for the entire quarter, roughly $22 million so $21.9 million during the quarter. The biggest driver of that was Palantirer. We also exited partially several other public equity positions where we had some meaningful appreciation during the quarter.
Okay, got it.

Paul Johnson

Thanks for that that's all the questions for me.

Operator

Thank you so much and as I see no further questions, thank you. I will turn the call back to Scott Lucin for final comments.

Scott Bluestein

Thank you, Carmen, and thanks to everyone for joining our call today. We look forward to reporting our progress on our Q1 2025 earnings call. Thanks, everybody.

Operator

Thank you, and with that we conclude today's conference. You may now disconnect.