At World Properties, LLC (COMP) Earnings Call Transcript & Summary

Good evening, ladies and gentlemen, and welcome to the call today to discuss Compass' definitive agreement to acquire Christie's International Real Estate and @properties. I will now turn the call over to Soham Bhonsle, Head of Investor Relations. Please go ahead.

Good evening, everyone. It's my pleasure to welcome you to today's call. Joining me on the call today will be our Founder and CEO, Robert Reffkin; and our CFO, Kalani Reelitz. A press release and 8-K with the SEC information on today's announcement can be found on the Compass website. As part of our 8-K, we have also included an Investor Presentation that has additional information on the announcement and can be found under Events and Presentations tab on the Investor Relations website. We will also make a replay available of the conference call to listeners in the Investor Relations section of our website. The matters we will be discussing today include forward-looking statements and, as such, are subject to risks and uncertainties. These risks and uncertainties include those risk factors discussed in the most recent reports on Form 10-Q and 10-K as well as those discussed in the press release announcing this acquisition. These and other risks and uncertainties could cause actual results to differ materially from those contained in our forward-looking statements. With that, let me hand it over to Compass CEO, Robert Reffkin. Robert?

Good evening, and thank you for joining us on such short notice to discuss our announcement to acquire Christie's International Real Estate and @properties. For simplicity purposes, for the remainder of this call, we will refer to these businesses as either the Christie's International Real Estate Affiliate business, which is the franchise business or the owned brokerage business. So let me begin. Today marks a significant milestone in Compass' journey as we bring an iconic luxury brand with global reach together with Compass. We are taking the next step with the management team that is widely considered in the industry as best-in-class, and a team that I've admired for a very long time. I believe this partnership will be transformational for Compass as it adds new high-margin businesses to the P&L, expand our total addressable market, and significantly accelerates our current strategy. Let me briefly elaborate on these points. First, we are kickstarting a new dimension to our business through an entry into the high-margin independent affiliate business under the Christie's International Real Estate brand. This expands Compass' business from one that not only serves agents, but independent broker owners as well. Second, we are entering the international market in a capital-light manner as we look to expand through an affiliate network that does not have nearly the same capital intensity as opening up a brokerage office. Third, we are adding the eighth largest brokerage in the United States by closed sales volume to our platform, which should bolster our local scale and inventory advantage in several key markets across the United States. And fourth, we are accelerating our integrated services strategy by adding Title & Mortgage businesses with above-industry average attach rates and adjusted EBITDA margins that are accretive to our current title margins. With the company's overall business expected to generate adjusted EBITDA margins of approximately 9% to 10% in year 1, and what we still expect to be a very slow market. It's clear that we are acquiring one of the best businesses in our industry. 9% to 10% adjusted EBITDA margins not only reflects the quality of the company we're acquiring, but also the potential for Compass' future financial profile as our mix continues to shift towards higher-margin businesses. Now let me provide a quick overview of these various businesses, starting with the Christie's International Real Estate affiliate network. The Christie's International Real Estate brand is one that attracts the best independent broker owners in the industry, and appeals to the higher end of the market, similar to the Compass brand. Their network currently consists of more than 100 independent broker owners globally, and the pipeline continues to grow. Upon the closing of this transaction, we believe the ability to receive referrals from the roughly 34,000 Compass agents nationally will make it easy to expand the Christie's International Real Estate affiliate business to new markets. Importantly for investors, this is a business that tends to be sticky in nature as affiliates typically commit to a 10-year term. With the current weighted average remaining term standing at 6.7 years. It's also a business that generates attractive EBITDA margins of approximately 30% to 35%, which will be highly accretive to our P&L as we expand to the network over time. An added benefit of entering the affiliate business is that we get to immediately expand our reach into luxury international markets such as Paris, London, Singapore and Dubai, just to name a few. We believe a key differentiator for Christie's International Real Estate versus other franchises in the marketplace is that it offers an affiliate-focused proprietary tech platform to its independent broker owners. The Christie's International Real Estate tech platform includes features such as a Deal Management System for agents to manage their entire transaction, the ability for agents and clients to manage and track all tasks from contract to close, and digital buyer and seller presentation capabilities, to name a few. We see plenty of growth opportunities globally for this business and look forward to partnering with Christie's International Real Estate Co-CEOs, Thad Wong and Mike Golden to grow the affiliate network. Moving on to the owned-brokerage business. We believe this acquisition is highly complementary to Compass' current footprint, consistent with our previous stated inventory strategy. The owned-brokerage business operates predominantly at high-end price points and has a significant presence in Chicago and Atlanta, both key top 30 markets for Compass. Lastly, this transaction adds meaningfully to our integrated services growth. As we've discussed on prior calls, our core pillar of our strategy going forward is to grow our integrated services business across all of our largest markets. With this transaction, we are taking a meaningful step in that direction. As we're adding sizable Title & Mortgage businesses that have been operational for over 10 years, and have leading title attach and margins that are accretive to Compass. With the upcoming national launch of the client dashboard in early Q1 2025, we are excited to continue to find ways to place Title and Mortgage in the client experience to drive above-average industry-leading attach. Beyond just the immediate financial benefits, the Title business has strategic value to us as their proper title brand operates in attorney direct end markets as opposed to agent directed markets. Those that are familiar with the title industry will know that gaining traction in an attorney direction market is much more difficult and takes much longer than an agent directed market. With the help of the proper title team, we believe we can leverage their learnings to help us expand further in approximately 1/3 of the states we currently operate in that are also attorney directed. With that, let me hand it over to Kalani, our CFO.

Thanks, Robert. I'd like to echo Robert's excitement on this transaction. Living here in Chicago, I know the iconic Christie's International Real Estate and @properties brands firsthand and have like Robert long admired the business and their teams. As we think about the merits of this transaction, first, it adds significantly to our inventory strategy. And second, brings to us an incredible portfolio of integrated services, including title, mortgage and a franchise or affiliate business. As you can clearly see on Slide 8 of the investor presentation, this is a business that we expect to not only generate a solid core brokerage margin but also title margins in the 30% range. And then affiliate margins in the 30% to 35% range. Combined, we expect the business to generate a 9% to 10% adjusted EBITDA margin in year 1, where volumes are expected to be only slightly up. Highlighting the quality of this business we're buying at a great multiple in the 5 to 6x range long term, and is a good reflection of where we think we can take our business overall going forward. Let's now go through some of the financial and operational details of the transactions on Slide 9 to hopefully answer key questions you may have. Operationally, we intend to keep Compass and the @properties entities as separate brands for the foreseeable future as we want to limit any distractions for agents in the markets that they operate in. Co-CEO, Thad Wong and Mike Golden, will continue to run the day-to-day operations, and we have full faith in their capabilities given their tremendous track record. Next, as Robert mentioned, with this acquisition, we will enter the franchise business through the Christie's International Real Estate brand, a name that we think will resonate well with independent broker owners in the market. This business is well established and includes over 100 affiliates globally and has the infrastructure built to grow affiliate count immediately. Importantly, the affiliate program will remain under the same operational leadership with no planned changes either. Furthermore, the Compass brand will continue to remain an owned-brokerage operation, and we will plan on leading with Christie's International Real Estate brand on the affiliate front going forward. As it relates to key financial metrics, we expect year 1 revenue for the combined business to be in the $500 million range, and a year 1 adjusted EBITDA contribution for the business to be approximately $49 million. We also anticipate up to $30 million in cost synergies over the 3 years as we leverage the experience of two great operators to drive meaningful efficiencies. The acquisition will not impact our previously announced 2024 full year adjusted EBITDA guidance range of $109 million to $119 million, given that we don't expect the deal to close until Q1 2025. Importantly, this does not change our long-term OpEx framework of 3% to 4% growth per year in our core brokerage in any way. We remain relentlessly focused on our cost discipline. Moving on to accretion and purchase price. We expect the transaction to be accretive on an adjusted EBITDA per share basis within the first year of closing the transaction. We also expect a fully synergized adjusted EBITDA multiple to be in the range of 5 to 6x. The 5 to 6x post-synergy multiple is in line with our previously stated M&A framework for core brokerage but also takes into consideration the quality of the businesses we're buying, and the fact that we're entering the franchise business with what we consider to be the premier brand in the industry. The total consideration for acquisition is $444 million with a $50 million 2-way purchase price adjustment or collar, depending on the stock price 1 year from close. We expect to fund the acquisition through a mix of cash and equity with $150 million of the consideration being in cash. We expect to fund the majority of the cash portion to cash on hand and secondly, from our revolver. Importantly, we expect our net cash position to be greater than our overall revolver draw once the transaction closes. Our immediate goal will be to pay down our revolver by using the strong free cash flow we expect both businesses to generate. And then secondly, as the company generates increasing levels of free cash flow in the future, we will begin to consider ways to return capital back to shareholders. The equity portion has a few nuances that are worth pointing out. First, we expect to issue $294 million in equity, 1 year from the close date of the acquisition at a VWAP of $6.6612 per share or what translates to roughly 44 million shares issued 1 year after closing. Second, the transaction includes a $50 million 2-way collar -- purchase price collar, which protects our shareholders in a scenario where our share price exceeds $7.79. Details on how the collar mechanism works is outlined in the 8-K filed with the SEC in conjunction with our announcement this evening. As I finish my prepared remarks, we believe this transaction is transformational for Compass and will create significant shareholder value as we add a mature, sticky and high-margin revenue stream in the form of franchise to our mix, as we expand our addressable market through the addition of international affiliates and serving independent broker owners, as we deepen and expand our high-margin integrated service offerings. And lastly, as we meaningfully accelerate our existing inventory strategy in several of our top 30 markets. With that, let me stop there, and let's turn back to the operator for questions.

[Operator Instructions] Your first question comes from Bernard McTernan with Needham & Company.

Great. Maybe just to start, would love to just get your thoughts in terms of what this transaction means for the 30-30 vision. And Robert and Kalani, you both called out accelerating the inventory strategy. Just wanted to get some more clarity in terms of what that means exactly. And then lastly, the cost savings 3 years to realize and would love to -- if any guidance in terms of how quickly those buckets or what the major buckets are and how the pace of that synergy realization.

Well, thank you. Look, we're excited by the opportunity to drive the inventory strategy. As mentioned last year, this company generated $22 billion in gross transaction volume. Our goal is to continue to grow across our top 30 markets, as we've mentioned in the past. And this company has very significant in Chicago land, including Chicago, Michigan, Indiana as well as in Atlanta. In Atlanta, they're the #1 luxury brokerage. And it brings significant gross transaction volume to Compass. In terms of the inventory strategy overall, as we've discussed in the past, we want to build a company that better serves homeowners and builds a platform for homeowners that gives them the same advantages as the big real estate developers, real estate professional, real estate developers as well as the real estate homebuilders are able to freely market their homes in any way they want. They are not restricted by National Associates of REALTORS nor mandatory submission rules like Clear Cooperation. And the reasons why they want to list to -- what they were able to do, they're able to protect their listing from days on market from price drop history, from valuation estimates that are lower than the price of the home that they're actually listening at. They want to be able to watermark their photos. Of course, as you know, in this industry, agents are not able to watermark their photos, but then to MLS, most of them will watermark it. And they want to make sure that the buyer inquiries go to the agent that they hired, right? And the way that the system works is when you are forced to put it into Clear Cooperation. You are no longer -- the buyer inquiries get diverted to third-party, leads sold off by the portals. And so again, there's nothing in our inventory strategy that we're advocating for homeowners that the professional builders and real estate developers don't do every single day. Because they have a carve-out along with celebrities to be able to market in a way that they want. And so the bringing two great companies together, I think, gives us a clear path to being able to give these kinds of benefits to individual homeowners that the big money real estate developers and homebuilders have been taking advantage of forever.

Yes. That's great. Bernie, I would add two things. One, to your question, I think this is part of the strategy that we talked about when we talk about 30 for 30. Obviously, we've mentioned we have a robust pipeline, and we're happy to announce this partnership. On your second question related to synergies. Look, here's the exciting thing. I think Christie's International Real Estate is clearly best-in-class operating margin operators. And I think over the last few years, Compass has proven to be best-in-class operators at scale. And so I'm excited to really get everyone thinking about how we drive more efficiency for the company. We've done some preliminary work. I would say we're going to move as fast as prudently possible. There's going to be some things we can move really quickly on. There's going to be some things that we take our time and do it the right way. But again, the two -- the fact that Christie's International Real Estate is kind of best-in-class operating margins, and we have driven kind of best operations at scale. We've done some preliminary work. We'll share more details as we get through kind of close and as we get into the business, but I'm excited for the opportunity for value creation there.

Your next question comes from the line of Ryan McKeveny with Zelman & Associates.

Robert, and Kalani, congrats on the announcement, and also congrats to Thad and Mike and their team. So with @properties, as they've been expanding themselves, I think, in recent years in the Midwest. And it sounds as though Thad and Mike will continue to run that. I guess, how should we be thinking about the general expansion incremental to the @properties side of things and also incremental to the Compass side of things? Does that become kind of strategically planning out, "Hey, we could bring, let's say, the @properties brand to this new market and the Compass brand to that new market." So any thoughts on that would be useful as part one. And then part two, my understanding from a tech platform perspective is certainly that you guys and @properties stand very highly regarded in the industry in terms of the tech platforms. I guess, is the thought that those run separate? Or is there a potential integration, best practices of their platform that integrates with your platform and vice versa would be great to understand.

And so let's start with your first question. I think what this does is it moves Compass. Compass has always focus on entrepreneurs. We have the Compass entrepreneurs principles. Everything Compass stands for is empowering entrepreneurs. To date, our focus has been on the agent entrepreneur and expanding to market by market, and trying our best to build the company that helps best agents as entrepreneurs realize their entrepreneur goals for their business, helping them better serve their clients, helping them to grow their business and have more income to support the family more, time to do their family. That's been the mission of Compass. What this expands for the company is now being able to serve independent broker owner entrepreneurs. There are a lot of incredible broker owner entrepreneurs, who don't want to sell their companies. They want to continue to run it independently. And now through the Christie's International Real Estate brand, they can do that. We can support those goals, and give them the access to the combined benefits of what our company can do for them. Whether it's technology, whether it's inventory, whether it's referrals, but that's -- it adds an additional lever for growth. And in addition to that, it's not just being domestic but domestic plus international. In terms of your second question, as I've gone around the country over the last 12 years now talking to agents from different companies. And different companies have come to Compass. I am certain that @properties is the company that has built the best technology for agents when I look at companies -- when I look at other companies outside of Compass. And I am very, very excited to see us be able to leverage the best of both to build a better platform for agents. I'm certain we can learn from them, and I'm sure there are things they can learn from us. And I'm sure we'll be able to create scale and efficiencies in doing so.

That's very helpful. And I guess one additional follow-up on the Title & Mortgage. Maybe you could just elaborate a bit on how the new addition kind of fits in with the existing business? Is there overlap in some of the T&E markets? It sounds like mortgages may be separate, but like does the origin point JV structure stay in place and keep doing what it's doing. And then separately, Proper Rate does what it's doing? Just any clarification or thoughts on that would be useful as well.

Yes. Yes. Look, we have learned a lot from @properties over time. One of the validating points for us to create a JV for a mortgage business with guaranteed rate is we saw that @properties had a JV with Guaranteed Rate. So Proper Rate is a JV with the same company that our mortgage JV is with. And we -- knowing that Thad and Mike are truly best-in-class operators. That was -- as we thought about the decision, we said, hey, it's good enough for them. It's a pretty good signal that's probably good enough for us. And so that coming to the point we're in right now, I think that there should be synergies there. But they've been doing this for much longer than we have. So they have a very significant presence and team in the Chicago land area. In terms of Title, we don't have title in the greater Chicago land area because it's an attorney directed market. It takes a long time to build, and they have the best one by far, of all the brokerage firms. So it's just -- it's an additional lever for us, where our agents will now be able to recommend to their clients. I mean, Compass agents will now be able to recommend to their clients' Proper Title which is a growth synergy that we have not baked into our synergy number, but it is a revenue synergy.

Ryan, it's Kalani. Just the only thing that is one of the things that gets exciting here is on the title side, as Robert mentioned, the attorney directed states. We now have a mature partner who knows how to operate them. It expands us very quickly, whereby our strategy to date, as we've talked to you folks about has always been organic growth, through JV or M&A. This puts us right in there with best operators 10 years, and we can expand quickly we can kind of save ourselves to learning -- the growing pains, I guess, if you will. Same with franchise, we just had the ability to just leapfrog kind of the build-out is going to be really important for us and let us grow faster.

Your next question comes from the line of Jason Helfstein with Oppenheimer.

Congratulations on getting the deal done. So a few questions. First, maybe can you talk a bit about the retention dynamics within the deal? Second, is there any kind of lockup on. the seller's equity? And how do we think about that? And then it sounds like you do plan to keep the acquired tech platform is largely intact. So just Kalani, maybe just kind of reiterate or I guess, in a little more detail, it sounds like the majority of the that $30 million will probably be from a non-tax standpoint on the cost synergies side.

Yes. Sure. Jason, thank you all for joining last minute. On the retention, I think our ability -- and where we've said we're operating the two companies as is. That's a really important message. Two great companies. We want to make sure we get the best from each other, but not necessarily change quickly. So you'll continue to see us really focus on agent support and driving the operations in the two businesses. On the lockup, we do have kind of standard lockup for owners and key leaders. We think that's important. Again, this is a world-class organization, and it starts with their leadership, and it's important that they are here long term, and they've made -- and they've been a great partner so far, and we're excited for that. On the tech platform, look, I think we've done some preliminary work on the $30 million of synergies we think, is there. Where we will drive anything on the tech will be because we think we've taken the two platforms and found a better way to do it collectively for our agents. So there can be some, I don't want to say none, but we're looking at all of it. We've done some work. We'll talk more detail after. But I think where you'll see us really find opportunities for efficiencies in our technologies because we've kind of been able to figure out where the best of both can come together and actually be one plus one equals three kind of synergy.

Your next question comes from the line of Mike Ng with Goldman Sachs.

Just two for me. First, on the affiliate model, would it ever make sense to roll out the affiliate model under the Compass banner? And could you just talk about some of the things that you saw most attractive in an affiliate model that helps you expand faster and what are some of the key reasons why an owner broker, right, wouldn't want to be acquired but would prefer the affiliate model. And do you see that as an opportunity to rollout affiliate models more aggressively and Compass' markets that they may be more dominant?

Thank you, Mike. The Compass has no plans to license the Compass name. And so this is now a perfect way for us to be able to expand to markets in an affiliate with an affiliate business. Christie's International Real Estate has incredible brands, incredibly respected. There are a lot of independent brokers, there's a 40,000 brokerages in the country of different sizes, obviously, they can be very small, but many of them are -- they want to own the brokerage and they don't want to sell. And so this gives them a path to -- this gives Compass a path to supporting their success in their growth while still giving them the independence where they control their company. They decide who they hire. They decide how they grow. And we have an agreement of how we can support them. And as these companies come together, the Compass and Christie's International Real Estate, an independent brokerage either that already is a franchise where that franchise is up in 10 years and their 10 years comes due, and they want to explore a different franchise or independent brokerage that doesn't have a franchise relationship yet. Compass and Christie's together can go to them and say, hey, we can give incredible world-class brand, A. We can give you the benefits of our combined technology, B. We can give you the benefit of our unique inventory, C. We can give you the benefits of our training platform as well, but you have your -- but you keep your independents and you keep our unique culture, which is very important. And it's your brokerage firm. And we're here to support you with -- in the ways that you want to be supported. And we believe that as the franchise relationships come out with other companies, maybe they come up every 10 years, they're coming up every year across the country. We believe that those independent broker owners, when they see, okay, I could basically have a brand where I am right now, or this -- or I can look to the right at Christie's International Real Estate with the backing of Compass and access to unique inventory, have access to a world-class technology platform, have access to an incredible brand that has being Christie's International Real Estate that's international with 100 offices -- in 100 different markets across 50 countries and territories. And with leaders like Mike and Thad who have truly built, cannot overstate how incredible @properties is. They have built one of, if not, the best brokerage firm in any local market anywhere. And then on top of that, you have -- they can go to these independent brokerages and say, I can help you build your company in the way that I built mine. It's a very unique value proposition where there aren't people like Mike and Thad that are coaching growing, developing independent broker owners through their affiliate business at other franchises.

Great. Robert, Mike, can I just add, Mike, I think one thing that's really important to us too is the -- our ability to take something that's really working well. There's a unique multi-tenant platform. It's affiliate-focused tech. We've always said and understood that there's some build-out we have to do if we were ever going to go into a franchise model. With this acquisition with the Christie's International Real Estate, we have proven, right, capabilities, back-end technology. And so I think it's really important that to your question on growth, it speeds us up and we can go quickly just as Robert is mentioning, versus having to build out anything on an own brand type of name.

Great. And just as the follow-up. Clearly, best-in-class margins on the @properties side, relative to the Compass margins, I guess, where are some of the places where they've gotten some good leverage? Is it on the commissions and transaction side? Or is it elsewhere in the P&L?

Yes, Mike, I think a few things. One, as we've mentioned in the prepared remarks, I think the mix of the integrated services and other non-brokerage and that portfolio that shows the power of our strategy and where we can go as we grow our integrated services we've talked about. So I think that's one is just their portfolio and build-out is a much better mix, and we'll obviously -- that's what we're aiming for. And then two, I think their ability, again, they're operating. They've got a great COO, Mike and Thad are just good business leaders and their ability to kind of drive cost directly in line. I think that's the best thing about this deal is we are culturally aligned on tech, we're culturally aligned on how we operate and our support of the agents. And so we'll learn and from both sides and make sure we get the best value creation.

Your next question comes from the line of Matthew Bouley with Barclays.

Congratulations on the announcement here. So I guess, back on the question around franchise and affiliate. I guess, is the intention here to methodically develop this sort of core competency in franchising and maybe this becomes an option for you going forward with independent broker owners? Or does it really signal that you have, I guess, a more forceful intention around growing an affiliate business. I guess, how would share of franchise be contemplated in hitting the 30-30 market share goals?

Thank you. Yes, I think it's definitely more the latter. This is intentional, this is strategic, and we intend to support the growth of the affiliate business with the full company. The background here is Mike and Thad had truly one of the best brokerages in the country. And in 2021, they acquired the brand of Christie's International Real Estate. And then they -- knowing the brokerage leaders and having the respect of them across the country, they went to them and said, here, we have this great brand, but we also have -- they built something called pl@tform, which is their technology for the agent in Chicago. But we have this pl@tform, which we can advance and augment to work for your -- as your franchise operations. So they said, a, we give the brand, two, we give you the pl@tform, and then three, that we will give you all the learnings that we use to build our brokerage. And it's -- you can see from the margins that they built truly one of the best brokerages to have 9% to 10% margins in a low $4 million existing home sale environment is truly remarkable. And so the opportunity that we see together is to meaningfully accelerate that with everything that they've been doing to date, but adding on top of that over time, a bit of benefits of the Compass technology, adding on top of that, the benefits of more unique inventory shared with our sister companies. And we see that as being very attractive.

Got it. Okay. And then secondly, back on the cost synergies. I know you mentioned that there's a lot you want to take some time to do to figure out the right way. But just in terms of the near term, I mean, what are some examples of the low-hanging fruit you have on the cost synergies that you can do upfront? And then if we think about $30 million I mean, any thought preliminary on ratably spread out over 3 years? Or should we think that, hey, you can front-load some of that $30 million to year 1.

Yes. Matt, thanks for the question. I think on synergies, we have done some preliminary work. I think we have tremendous opportunity in the way that we would do it with any acquisition, but particularly one of the size as we kind of look at the whole scope end-to-end from the agent-facing work all the way to the work to support the offices to the transactions to all of it. I think I think there is opportunity across the spectrum and just our ability to be more efficient. Again, I think we will learn from them on ways that they're driving the margin in a bit better, and there's ways that we have driven scale, so a good example, I guess, to give you is where we've been and learned how to drive scale whether it's offshoring, whether it's robotics, et cetera, to do some of the transaction work or some of the corporate support work. That's a good opportunity there. But I think, again, I think we'll see opportunities across the scale from the agent facing all the way through only to make the experience better as we learn from each other. As a timing perspective, I think there will be some things we can do quickly. There also will be some things we can take time. I don't think we've done enough work on the detailed time lines of opportunities for when it pans out, but I think it won't be a backloaded that we'll spread. We'll try to move as quickly as we can and make sure we're driving value quickly. So long as it balances against the support of our agent and our independently owned affiliates.

[Operator Instructions] Your next question comes from the line of [ David Cannon with Cannon Wealth Management. ]

Congratulations. My questions. First one is, can you give me a sense as to the growth rate of agents on the affiliate side over the past several years?

Yes. We're not sharing that at this time.

Okay. Could you give me a sense of what was peak EBITDA going back to 2021 for Christie's? Can you give us a sense as to where that was?

For the overall peak EBITDA was, I believe, was in the high 70s.

Yes. I think they've taken a very similar impact as we have with the market.

Okay. And then in particular, could you go through where we have overlap and where we don't have overlap in the U.S.

Yes. So we have overlap in Chicago. We have overlap in Atlanta through the owned businesses and in other major markets, the overlap is with the affiliate business. We have overlap in the affiliate business in the Bay Area, in L.A., in Austin, in Dallas in the D.C. area, in Florida, in New York and those are some of the major markets.

This is all the time we have for questions today. This will conclude the Q&A session as well as today's call. We thank you for joining. You may now disconnect your lines.