Ares Management Corporation (ARES) Earnings Call Transcript & Summary

All right. We will get started everyone. So good morning. This is Craig Siegenthaler from Bank of America, and I'm pleased to introduce Mike Arougheti. Mike is the CEO, Co-Founder and a Director of Ares Management. We also have Ares' IR team, Carl and Greg joining us. And I don't see them, but they're -- there they are. Right there. So first, Mike and team, thank you very much for joining us. Mike, how are you doing today?

Great. Great. Good to be here. Thanks for having us.

So Ares is one of the largest diversified global alternative asset managers and has been generating the fastest growth rate in the industry among the large caps over the last 10 years. Five years ago, the firm managed a little over $100 billion of AUM. Now it's roughly $400 billion -- it's $420 billion?

$420 billion.

$420 billion. Okay, $420 billion. The firm is now -- well, not now, the firm is the #1 private credit manager globally, arguably the hottest asset class and Michael, Kipp, Tony, Bennett and his senior partners manage the firm under a framework, which stimulates meritocracy and a share of the wealth culture. It's not a star system. Ares is also one of the more defensive alt managers given both its credit-heavy business mix and its management fee-rich profit stream. Mike, did I miss anything in the intro?

I think we covered, so we can give everybody 38 minutes back.

Okay, great.

Thank you.

All right. So let's actually start with the personal one. So Mike, I know you're big into sports, including fantasy baseball. Now you're truly playing in fantasy with Baltimore, so big congrats on that.

Thank you.

But I believe your first business, you actually started when you were a teenager, selling and -- buying and selling baseball cards. So how did that business gets started? I'm curious, what was your most valuable card? And do you still own it? And then fast-forward to present day, give us your thoughts on being part of the group that just bought the Baltimore Orioles.

Wow, we're going all the way back. It's funny how the media works because I'm a pretty shy person when it comes to that. But I guess there was an article that came out a couple of years ago, where we were making private credit the s****** business on the planet, and there was a picture of me kind of like this, and I caught so much flak from all of the people that I grew up with that I'm still -- and one of the things that they talked about, which is true, so you just brought it up, so we can talk about it, was my first business, which you probably haven't heard of it. It was called Four Corner Sports Cards, and it was a high-growth sports card trading business that I started when I was like 13. And it was funny because my parents were always pretty encouraging of me to try new things and be entrepreneurial and whatever. And so I ran it like a real business. I went out and got my tax ID and financials and made investments in cards and my parents would trudge me to card shows at the Pearl River, Hilton or wherever else I was going on any particular weekend. And it was a real -- it was a great experience for me because I -- a, I made a little money, which was a big step up. I guess my first business was actually selling Blow Pops on the bus where I would buy bags of Blow Pops for a $0.05 and sell them for $0.25, which was probably one of the best IRRs, I think, in my career, but I don't really...

High product margin.

Yes, I don't get a lot of credit for that. And it was great. I did that largely through middle school and high school and it was great. You said kind of what did I learn? I love baseball. It's been one of my biggest passions my whole life. And I think the biggest learning is do what you love. And generally, that's kind of a good predictor of success. I learned a lot about just interacting with people, right? You're sitting at a table like one of these and people are coming up to you and you're just meeting and greeting and talking, but you also -- you learn a lot about markets. And I was always fascinated by markets and the trading card space, and it's evolved now, but that is a pretty interesting market. Back then it was kind of a bubble, and we now know it, but it was interesting because if you go back and look at those 20 years in the sports memorabilia business, it was actually really, really frothy, and a lot of the card companies oversupplied the market. And so you had a lot of people that were speculating that wound up not making a lot of money. So I actually learned some important things about the structure of markets and speculation and the like. And then it's a tough thing because -- and maybe this is a segue into my love of sports and investing in sports is you want to do things that you're passionate about, but you can't get too emotionally connected to anything. And as a young teenager in the -- as a trading card mogul in the making, you fall in love with certain things and that's not often the best path to profitability. So I think there were some lessons there about having the right detachment. You asked me of my most valuable card?

Yes.

Gosh, I don't know. It was probably -- I mean, for that vintage, there's probably -- 1969 Reggie Jackson rookie card, maybe a Mike Schmidt rookie card. I didn't have any -- I couldn't afford anything beyond something that was proximate to my own experience. But at the time, those were a couple of hundred bucks a card, maybe at the time had reached close to $1,000, which was huge money. I still own them, and I'm happy to say that they are now in my son's closet and have not seen the light of day in 17 years. So I'm still waiting to unearth those and see how well I did. And then maybe just we haven't obviously closed the Orioles transaction, but again, lifelong dream of mine to be involved in the game. This is a special opportunity just given the group that we've put in to get -- we put together to do it. And I'm a big believer just in the value of sport. And I think you know this, one of the growth areas that we've launched at Ares in the last 5 years has been a very significant sports media and entertainment investment practice. So I think there's a lot of social benefit and community benefit to being invested in the space. But as an asset class, it's actually really interesting because it's non-correlated to most everything else that we can invest in. So I love baseball, love the team and the position that it's in from a competitive standpoint, love the city of Baltimore. And I just -- I like the growth prospects for the franchise. So super excited about it.

Great. Well, let's pivot that into private credit. So again, private credit is very much in vogue today, especially after the March regional bank crisis, which really brought to attention that banks need help in terms of capital relief and partnering with alt managers. And around the quarter, we also have Basel III implementation. So what inning are we in, in terms of this period of strong growth? A lot of bank executives kind of point out that this may be the top, but that's not likely the case?

Yes, I don't know if they're pointing out that it's the top. I think they're pointing out that there's been growth there because I think there's a lot of potential volatility around Basel III endgame, which we can come back to maybe a little bit later. But I still believe that we are in the early innings, as I guess we're going to keep the baseball metaphor is -- going all day. But I think we're in the early innings of the development of this market, and you can think about it in terms of the broadening out of what private credit means. I think when people first get introduced to private credit, they're thinking about leverage loans to private equity firms. And that's obviously a big part of the market, but it ignores commercial real estate lending, it ignores infrastructure lending, it ignores asset-backed and asset-based finance and all things in between, it also ignores the growing opportunity to move up and down the balance sheet into high-grade fixed income alternatives and it ignores the globalization that's happening in private credit. As the U.S. markets mature, we're seeing meaningful growth in Europe, we're seeing growth now across the Asia-Pacific region. So when we say early innings, there's what I would say, horizontal and vertical growth going on all over that market. I still struggle to understand why there's a narrative of late stage or that there's too much money raised. The simple math is if you look at the buyout market and if we just narrowly focus on the narrow definition of private credit as acquisition finance, there's about $3.5 trillion of private equity capital that's invested today in the ground. And there's about $1.5 trillion that is to be invested. There is roughly $500 billion of uninvested private credit that's been raised. So just -- if you just stop there and you say, "Okay, $500 billion uninvested against $1 billion of uninvested equity." Buyouts today are getting done roughly 50% debt, 50% equity, which means that if we were largely looking to the private markets, you're -- you don't have enough money in the private markets just to satisfy the appetite for the existing uninvested private equity. Putting aside of the private credit capital that needs to go into the existing installed base of equity, that $3.5 trillion requires a fair amount of liquidity solutions right now to delever and continue to extend duration there. So I actually think the private credit market is meaningfully undercapitalized. And then interestingly, if you look at the size of the private credit market and you said just in that narrow definition of direct lending, it's $1 trillion to $1.5 trillion, it still pales in comparison to the size of the loan market, high-yield market and the C&I portfolios on banks, which are all now roughly $3 trillion. So I -- it's getting a lot of attention. I think it's getting a lot of attention because it's a really attractive asset class from a risk-return standpoint in this market. I think it's getting a lot of attention because the banks went through a period of time where the syndicated loan and high-yield market were closed, and therefore, there was a share gain or a perceived share gain. And then again, I think with Basel III and the potential negative impacts on bank balance sheets, there's a conversation being had about kind of where is this business going and why? And those are all important conversations to have, but I don't think they're just indicative of an overcapitalization in the private credit markets. And I think when you move away U.S. Direct Lending, we are in the very early stages of development of all of these markets, alternative credit, commercial real estate, infra and the globalization. So I think we're still at the very front end of this.

So occasionally, the media likes to run with quotes in terms of how there could be risk in the shadow banking market. Sometimes, as I said earlier, might be a quote from a bank executive, but the system looks a lot safer than it did pre-GFC on many different levels. I was wondering if you could articulate this to us?

It's so interesting. So it's funny you mentioned Kipp earlier. Kipp has a framed magazine cover in his office. I think it was Inc. magazine and it's a picture of a goose and it says, "BDCs, this goose is cooked." And I think it was circa 2008 or 2007. So 20 years ago, it was the same thing, and we can go back and rating agencies, analysts, bank executives, same thing, inappropriate risk in private credit. People were saying the next crisis is going to be precipitated by private credit in 2019. Obviously, that didn't happen. So I think some of that is just the competitive dynamic and different agendas. But I've been doing this a really long time. And the numbers do not tell you that there is increased risk in the private credit market. It's quite the opposite. When you look at default rates, loss given default. And part of that is who we lend to, and I'll come back to that. Part of that is the structure of the loans that we make. And a large part of it is the structure of the funds that we make the loans out of. And that's why I always try to ground people. So the first thing is if you think about just, again, the U.S. economy, there are, gosh, 30 million small businesses in the U.S. economy, 18,000 of them -- 18,000 have revenue in excess of $100 million. Our average EBITDA margin in our portfolio is somewhere between 20% and 25%. So if you just said they're all really good, high margin, high free cash flow businesses, that would tell you that you have 18,000 companies in the U.S. economy with EBITDA in excess of $25 million. The weighted average EBITDA or I guess a simple average EBITDA in our U.S. Direct Lending book is about $150 million. The median EBITDA is about $50 million or $60 million. So if I just look at the available universe of companies in the U.S. economy, that tells me that at least the way we're doing the business, we're investing in the top 1%, if not the top 0.5% of companies from a size and sophistication standpoint in the market. And we're doing it with sophisticated institutional partners, who own half of the capital structure below our loan, that are bringing a whole set of tools to the table to improve these businesses and make them better. So again, I find it hard when you look at where credit is being extended in other parts of the financial system to say that businesses that are sophisticated and investors making loans to the top 1% of middle market companies in the economy are somehow taking profligate risk. Two, and this is the thing that we saw exposed in spades at the beginning of last year, is that the banking system is levered 10x to 15x with not a lot of transparency. And when you have an asset liability mismatch in the form of deposits that can take flight in the matter of hours against long-term fixed-rate liabilities, bad things happen. And so we know -- we all know, leverage amplifies risk and it amplifies return and banks are highly leveraged. Private credit funds are not leveraged. They are long duration, unlevered, match-funded pools of capital that by definition allow them to take a different set of risks than banks do. Putting aside that there's no implicit or explicit government guarantees, right? There's no risk of loss for retail money or deposits. So it's a fundamentally different paradigm. And I think it's important that we talk about the structural differences in how credit is extended as much as we're talking about, the actual credit instrument. And then the structure of these loans, back to the private equity business, is fundamentally different than it was at the very early days of this asset class. So when we first started making loans into the buyout community, it was probably 70% debt, 30% equity or 80% debt, 20% equity. And so if there was a problem, we weren't really aligned with the private equity firm in terms of the preservation of the equity value below us. If you look at the positioning of our U.S. Direct Lending portfolios today, we sit at about 43% loan to value. So that means that there is a sophisticated institutional equity owner that has 57% of the enterprise value of that company subordinated to our loan. And so obviously, on an index basis in order to start seeing losses roll through that 43%, you have to have significant erosion in equity value. And back to my earlier comment about sizing of private credit, there's $3.5 trillion of capital sitting at the bottom of these balance sheets against $1 trillion of -- or $1.5 trillion to invest. A lot of that has to find its way into protecting the existing exposures. So the setup is different. So I think the structure of the market is different, the structure of the assets is different and the business is fundamentally different. So we're just constantly trying to educate about what these funds are and what these assets are and the role that we play and try to ignore the -- that this goose is cooked type because that's been around for 25 years.

Mike, earlier you said that you're still early innings of the private credit cycle or secular trend in the United States. If we're early innings, second or third inning, where is Europe today?

This is going to sound grossly oversimplified, and I apologize because I don't want to sound insensitive, but Europe is probably 10 to 15 years behind the U.S. And then I would say APAC is probably 10 to 15 years behind Europe. And that's a gross oversimplification because Europe is not one place nor is APAC. But when we say it's 10 years behind, it's a combination of bank participation in these markets, regulatory framework, development of the liquid capital markets, which is actually an important part of the ecosystem that you need to see to have the private credit markets develop, evolution of private equity, right? So we were very early in Europe. We launched our private credit business in Europe in 2006, when it really wasn't a market there. Post the GFC, we saw an acceleration in the creation of that market because the banks were capital-constrained and there was a real need for private credit to flow into that market. So they're maturing rapidly. But just based on size and all of those components, I would say that's probably a decade behind, and APAC is probably further behind than that.

So within private credit, Ares made some pretty big hires. I guess maybe 4 or 5 years ago now with Joel Holsinger and Keith Ashton, they both co-manage the Pathfinder Fund, which is really focused on ABF or asset-backed finance, hot area now. How do the growth prospects in ABF compare to the growth prospects in your corporate direct origination business?

I would say it's probably the fastest-growing part of our credit business, may be seconded by infrastructure lending. And again, if you look at our corporate Direct Lending business, that's been growing at a very healthy clip. So -- and we're talking about 15% to 20% growth rate in that business, we're seeing faster growth in those areas. And that's a commentary on the TAM and a commentary on the competitive set. We were actually pretty early in the development of the alternative credit business, at least the way that we do it down balance sheet. But to put it in perspective, that business has gone from probably less than $5 billion of capital to now $35 billion or $40 billion in the last 5 years with significant momentum around the globe raising and deploying capital. So there is a secular shift in place that's driving growth in that market that started post-GFC with effectively the disaggregation of the securitization apparatus and the whole spinning up of the finance company universe in these markets that has been part of the driver, but we're getting this now second-order cyclical growth opportunity that's getting created with some of the challenges that we're seeing in the banking space. And so a lot of what we're doing there now is really partnering with the regionals and the super regionals to help them resolve some of the balance sheet issues that they have. So that is a very large addressable market. And what's interesting about it is you have the ability to attach to it either as an investment-grade lender or a sub-investment-grade lender or both. And so it is an opportunity for the markets to begin to appreciate private high-grade solutions in a way that we haven't really seen in the corporate market.

So I wanted your perspective on -- since ABF is growing so quickly, what does the competitive landscape look like today? Because a lot of your large-cap peers, names I cover, they have very big ABF businesses, but a lot of what they do is focused on investment grade or the liquid side of this, where you're focused on noninvestment-grade, you're by far #1, and I don't think anyone is really kind of close to in terms of #2 at this moment.

Yes, I think that's right. We have chosen by design to aggregate our capabilities in the noninvestment-grade part of that business. It's not to say that we don't have insurance company clients, funds and our own captive insurance assets that allow us to participate in the high grade. But our view has been while the numbers may not be as large in terms of TAM, the ability to deliver real alpha to our clients and get paid for it is just better down the balance sheet. And it is very difficult, even as these markets scale, in our opinion, to be in multiple parts of the capital structure with different clients. So in a lot of these situations, you kind of have to decide are you going to be a lender or an owner. And I think we have said, generally speaking, we're going to try to go for higher risk-adjusted return down the balance sheet and leverage our relationships if we need to bring a broader solution to a counterparty like a bank that we can bring capital, but we don't have to necessarily control it. And that served us well, right? So we've been able to scale up, to your point, that part of the business in a way that I think very few people have.

So let's the conversation [ in ] private wealth. So you've recently built out a suite of products to really complement your original product, ARCC, your public BDC. But how do you see private wealth industry fundraising or retail alt flow trends over the next 5 years? And across different third-party data providers, they kind of rank you maybe around 3 or 4 depending on who -- which one you're looking at. But do you expect to closing the gap to #1?

I do. And we already saw that. There was a pretty meaningful share shift in the wealth space last year. And I would expect that to continue. But maybe just to zoom out, Craig. So we've made meaningful investments in our Wealth Management Solutions business. We have a pretty broad product set now that includes 2 non-traded REITs, a diversified credit interval fund, a private equity vehicle, a non-traded BDC, a European BDC equivalent, and we're continually pushing new product into that market. We have about 150 people that service that channel, concentrated in the U.S. but growing pretty rapidly in Europe and APAC. And I think in order to be successful there, you need a combination of product, performance, obviously, an investment in people and then brand. And I think you mentioned whether we're 3 or 4, I'm not sure that we're that concerned about it, I think, it's do we have what it takes to be long-term successful there? And what will that channel look like 3, 4, 5 years from now? And I think you will see continued consolidation of shelf space in the hands of the people who have been able to make the investment in product, people, brand and distribution. And we're really, really happy with the progress we're making. Just to put it in perspective, we raised $600 million in the channel in January. I'm not saying to annualize that, but if you annualize that, that would have us squarely in the top 3 or 4, putting aside the fact that we have a new product that is ramping, adding new partners in the channel and new selling agreements. So we're demonstrating the ability to bring new product into the market and ramp it quickly. Our non-traded BDC, hopefully, not surprisingly, given our traded BDC track record, launched in the wealth channel in July or August of last year and is now approaching $4 billion. So there's a lot of upside there. But I think it's important that when people are understanding the retail opportunity that we don't get so enthusiastic that we miss the value of the institutional piece of the business. At the end of the day, whether we raise the capital, retail or institutional, we're deploying it into similar assets. So it's not really transforming our capability, but it is a great diversifier in terms where we raise capital. We do have some incremental degrees of freedom in how we invest in some of these funds versus some of the institutions. So it's a really attractive growth area and from a strategic standpoint has a lot of value, but it's not so large or so transformational, in my opinion, at least at Ares that will overwhelm that core institutional franchise that we've worked so hard to develop.

I wanted to touch on your insurance business for a moment. How is your business different than the larger alts that have acquired or built big captive insurance companies? And also, what do you see as the key risk in building a large insurance business maybe too quickly and also with some of the tail risk that you could see, especially on the liability side?

Yes. I'm going to answer this just from the Ares perspective so it's not to sound like I'm disparaging of other people's choices because I think the folks that have chosen to build their insurance businesses are demonstrating great success and great results. We have taken a slightly different approach to building our business, which is a couple of things. Number one, ours was a de novo build. So we effectively started our affiliated insurance entity from scratch, fully tech-enabled without any legacy back book. And we did that because we wanted something that would be kind of best-in-class without any historical systems issues, integration issues or liabilities. And I actually think that served us well in terms of the efficiency of the platform that we have and not having to navigate somebody else's liabilities or credit back book. We also set out to grow it but grow it in a way that wouldn't again overwhelm the other parts of our capital complex. So when we first put out guidance for what we wanted that to be in the summer of '21, we said that success there would be $25 billion of AUM against a $500 billion asset pool at the end of '25. So 5% of the assets. And we've said in prior conversations, if that turned out to be 10%, great, but it's not going to be 50%. And what we also articulated is that while we made a meaningful investment that has been quite profitable for us to get it up and running, that we wanted to use third-party capital to drive the growth in that business and maintain our position as an asset-light asset manager with a view that there are any number of places that you all could go to get access to our investment capability through our non-traded and traded product, et cetera, but that we wanted to make sure that we were a pure-play on the asset management side. And so where that has led us is in terms of how we're set up relative to the peers. We continue to grow that business nicely. It is pacing with the expectation. The returns have been great. We ended last year with about $12.5 billion of AUM. It grew $6 billion last year. So you can see the confidence that we have in getting to that initial guidance. It is asset-light in the sense that we are raising third-party capital to grow it. The reinsurance business is doing what we wanted it to, the annuities business is doing what we want it to. And to your point, it's all kind of new vintage liabilities and assets. So it's clean and it's captured a lot of the opportunity that exists on both sides of the balance sheet. And we are continuing to focus. Back to your question about asset-based finance, we have 150 insurance clients. We manage probably $50 billion-plus of their money side-by-side with our insurance affiliate. And they're important partners of ours, and they have been for a very long time. And so a lot of the benefit that one derives from the captive platform, we derive from those relationships. And candidly, it may be a little less profitable, but it is no less effective in our ability to attack those markets. And you hit on it and it's funny because we talked a little bit about regulation and the noise around it and the median stuff, but insurance is a heavily regulated business. By the way, retail is a heavily regulated business, and so when you are aggressively moving into those channels, it comes with a different set of risks than come managing a diversified institutional asset management platform that I think we need to be mindful of. So there's a lot of opportunity there to grow, there's a lot of opportunity to drive profit. It's obviously coming at a lower fee rate on more assets, but it doesn't -- it's not without risk from a regulatory standpoint, and there's a lot of complexity there. And so part of what we're trying to do is make sure that we are tuned into the opportunity, but that we're not over-indexed to the risk, which is why we're making the decisions that we're making.

Great. Mike, at this moment, I just want to look at the audience and see if there's a question. If you have a question, please raise your hand, we can get you a mic. Front row, right here.

If you talk to the banks recently, they seem a bit more sanguine about their risk asset inflation prospects with maybe some Basel III softening as well as accreting capital and kind of the crisis receding a little bit from last year. So how is the tone of the ABF and the SRT conversations or the pipeline changed, if in any way as a result of that?

We haven't seen a change yet because I think you've got -- you have just basic AOCI, asset-liability mismatch issues that need to get resolved in certain balance sheets that are stressed, right? So that's happening irrespective of the Basel III conversation and future for RWA calculations. Two, I think for the larger banks, some of this is also just about what is going to be the future balance sheet positioning. What business do I have that I'm in that's core, where I want to reinvest, what's noncore, where I want to shed assets, do I need third-party capital providers to help monetize my customer franchise. So I want to be clear that while the SRT opportunity is real, and we've been very active and some of these portfolio acquisitions have been real, I think the real sustainable opportunity is less about that and just more about how do we continue to bring creative capital into the market to coexist with the banks as good partners. And those are the big, big sustainable opportunities. So we haven't seen any change in the pipeline now because, again, the bulk of the pipeline is more in reaction to people that need to do something, but there's a lot of conversation about what is the future like and how can we work together. I'll say this too, just because we're obviously at the BofA conference and I've been very public and vocal about this. And it goes back to some of the median -- how people want to see things that don't exist. Banks are some of our most important partners, both thought partners and capital partners, and our growth has been their growth and vice versa, and we support each other in a lot of different ways, wealth advisory, capital markets, balance sheet. So this idea that we're fighting over market share is not actually the way that we're experiencing it. And if you actually look at bank balance sheets aggregated, one of the largest growth areas has been lending to other financial institutions. So there's a big ecosystem of bank and non-bank relationship where everyone is actually partnering, leveraging their strengths within whatever capital constraint they have, right? So that from a reg cap standpoint, it's more effective to lend money to a portfolio of middle-market loans than to own it, that's what's going to happen and everyone kind of wins in that scenario. So I do think we're spending a little too much time in this conversation talking about the areas of competition as opposed to talking about all the areas of cooperation, which is actually the much bigger -- much bigger story.

I have one more up here. So Mike, over the years, we've watched you attract a lot of great talent, investors that were kind of maybe stars in their own shop, had a lot of momentum, they decided to come to Ares. On top of that, I don't think you've ever lost a senior executive, investor, member of the leadership team really since inception. I mean...

I would say we've never lost, nor do I expect we will ever lose a member of our senior leadership team that we don't want to lose.

Okay. So what is special at Ares that creates the sort of atmosphere?

I think about this a lot. I do think that we have a special culture. You mentioned stars, and you and I have talked about this, and you know a lot of my partners. Ares -- investing in Ares is a team sport. We believe that we can build real, durable, repeatable processes where everybody can win, but we do not have star PMs, right? That's just not the way that the firm has been built because that's not scalable, right? So we learned a long time ago that if you could get a bunch of like-minded folks together with a view of shared success over long periods of time, it would compound and you would all do better than trying to compete. And so I do think that we are less competitive internally than some of our peers, we're more collaborative, a little bit gentler maybe as a result, but a lot of it comes down to, I think, also my business partners are my best friends. I mean we grew up together. We've been working together for 30 years. We've kind of seen our kids get born and get married and it's -- so I think the culture, even though we have 3,000 people in 40 offices in 20 countries, the culture of the place still feels real small company partnership-oriented, which is something that we spend a lot of time cultivating and investing in. Because, again, you say, why would somebody come? It's a great place to do business. And if you're a star that doesn't want to be a star, but wants to be part of a team, this is a good place for you to be. You could be entrepreneurial in building a business, you get a lot of autonomy, but you also get the resource of a $420 billion global asset manager. And so we've attracted a certain type of person that I think wants to be part of a team, buys into that culture of collaboration and our values. And it's also why we don't lose a lot of people just because you kind of self-select to be here. But it comes down to relationships, I think, at the end of the day and how much value we place on them.

Great. Well, Mike, with that, the clock is at 0. We're out of time. But on behalf of all of us at Bank of America and Merrill Lynch, we just wanted to thank you for joining us.

Thank you, Craig. Appreciate it.

Thank you.

Thanks.