Raymond James Financial, Inc. (RJF) Earnings Call Transcript & Summary

All right. We're delighted to have with us today Paul Shoukry of Raymond James, CFO of Raymond James. Paul, thanks so much for joining us.

Thanks for having us, and it's great to be back in person again after 2 long years.

Right, exactly. So Paul, you had your Annual Investor Day late last month for some of the investors here and online that might not have attended. Can you give us the high-level overview of your top 3 strategic priorities for the next 2, 3 years?

Yes. In terms of our top 3 strategic priorities, it's really more of the same. We're a pretty consistent firm. First and foremost, our top priority is focusing on investing in growth across all of our businesses. And we start that with our foundation of high retention of our existing producers, our existing financial advisers. And we've consistently had regrettable attrition of less than 1%, which, as far as we can tell, is the best in the industry and really a testament to us, keeping the advisers, treating them as clients, allowing them to own their book of business and really making sure that they're happy at Raymond James. And on that foundation of very strong retention, we grow by bringing in new producers, new financial advisers from other firms. And we've had record recruiting results last year and consistently had fantastic recruiting results across all of our affiliation options. And that really starts with our value proposition, and that's having a culture and a firm that's really focused on treating advisers like clients and respecting their relationships with their clients and coupling that with the scale and scope of services, products, technologies that can be competitive with the biggest firms in the industry. And then we complement that organic growth with acquisitions. We've announced 3 acquisitions in the past 12 months, closed on 2 of them. One is still pending, which for Raymond James is a lot because we do tend to prioritize organic growth first and foremost, but the acquisitions just happened to occur within the same 12-month period. Charles Stanley is a wealth management firm in the U.K. Paul Reilly first met with them in 2014. So it was a long courtship. TriState Capital, a bank and asset manager in Pittsburgh. We first met with them in 2019. And then SumRidge fixed income shop, which we could talk about later, which -- that acquisition has not closed yet but brings us great capabilities in terms of fixed income technology and product capabilities. So investing in growth is going to continue to be our priority going forward and has always been our priority since our inception. To support that, our second priority is going to be continuing to invest in technology. 10 years ago, 12 years ago now when Paul Reilly first started as our CEO, our technology investment was roughly $100 million. This year, we're annualizing about $500 million. And really, the focus over the last decade has been making sure that the adviser desktop, the financial adviser tools, that they use are providing them as much scope and scale as possible to broaden and deepen their client relationships. We are now increasingly focused on the client-facing technologies to the end clients, and we could talk about that more in terms of what that entails. So making significant investments in technology across all of our businesses. And then our final strategic priority, which we're really highlighting the value of here in the last several months is making sure that we maintain a really strong balance sheet. So our capital ratios are 2.5x the regulatory requirements. We have about $2 billion on cash on hand today. So we like to have ample capital and liquidity to stay flexible and nimble in any market environment. And sometimes we're criticized for being too conservative when times are very good, but certainly in market environments such as these having flexibility to be able to not only be defensive but opportunistic is being more fully appreciated.

Great. I do want to dig in on the technology side. But maybe just to start off with -- on the private client group, on the wealth management side, you've been steadily growing net new money at a double-digit rate for quite some time now. I know it's sort of hard to predict, but do you think it gets more difficult in the current environment? Or do you still feel good about where you're at?

Yes. We feel good about our net new asset trajectory. Our recruiting pipelines are still very strong across all our affiliation options. The retention continues to be very strong. Again, regrettable attrition of less than 1% across our affiliation options. So we feel good about the trajectory. If you look back at different cycles, we've consistently had strong recruiting -- net recruiting growth through both up and down markets. One of our best recruiting years was during the financial crisis where we were seen as sort of a source of stability in an otherwise turbulent industry. And so we had a fantastic recruiting year during the financial crisis. So we still feel optimistic whether or not we can kind of continue the double-digit net new asset growth going forward. Time will tell. I think a lot of it also was boosted by the high savings and investment rates over the last couple of years. So new account growth was at record levels for the existing advisers as well. But -- so I can't guarantee that we're going to repeat the records that we've had over the last couple of years. But in terms of continuing to drive strong growth relative to the rest of the industry, we're feeling really good about the pipelines across our affiliation options.

And what are clients doing right now, just given the volatility we're seeing in the environment, are they moving to the sidelines or they're looking for more opportunities in the market given the dip?

And we've seen this through cycles as well. One of the primary advantages of having a financial adviser and having a long-term financial plan is that clients tend to stay more disciplined through both down markets and up markets. And financial advisers do a really good job keeping them aligned with their long-term financial priorities and not getting too emotional or making irrational decisions just based on what they're seeing short term. So -- and that tends to be the case for us. I mean, if you look at our asset mix, again, every client is totally unique. But on average, if you look at our asset mix, the exposure to the equity market is right around 60% in aggregate. It has been pretty consistent in both up and down markets. Actually, a lot of rebalancing obviously occurred during the market appreciation we saw over the last several years to keep that financial plan in place. And cash balances, we said at the Analyst Investor Day, is around $76.5 billion or so a couple of weeks ago. It's actually a little bit below that now. Now again, given what we saw Friday and yesterday, you might see an uptick in client cash balances. But again, advisers do a really great job keeping their clients on their financial plans and trying to keep them aligned with their long-term financial objectives.

So cash has been in a steady range over the last month or so...

Yes. I would say it's right around $75 million, $76 billion.

Got it. So maybe moving back to technology, and you highlighted your focus more on the client app. I think Scott spoke a lot about the firms focused on digitally empowering the advisers, making sure the firm resources were being used. So can you talk about more on what you're doing on the technology side?

Yes, I would say the objective is really twofold. One is to provide technologies to help advisers increase the efficiency and scale their businesses. They're having to do a lot more work to continue to justify the fees that they earn. They're managing not just investments but both sides of the balance sheet, and they really need technology to help them do that in a scalable and efficient way. And then the second objective is investing in technologies to improve the client experience, and there's a lot of overlap between those 2 objectives. So for example, having smart forms where you can -- clients can fill information now electronically versus through paper, there's controls and checks in place to make sure all the information they submit is adequate and robust and then having electronic signatures versus a wet signature, not only does that improve the client experience but it also improves the efficiency and the accuracy of the documents that are submitted versus paper forms. So that's an example. But advisers -- now we're investing in -- and have invested in technologies where with a click of a button, you can create a PowerPoint presentation with a quarterly review for your clients; with a click of a button, you can print out an investment proposal for your clients. And so it's really all about the 2 areas of focuses, making sure you have technologies that improve efficiency for advisers and increase and improve the client experience for clients and doing it in a way that's fully integrated and not having it be a patchwork of solutions from external vendors where you have multiple sign-ons, et cetera, where we really do have a fully integrated platform.

So that would mean not just lower cost, but also more assets per adviser, more clients per adviser that should help you in the longer run, not only in bringing in more assets but also in recruiting as well?

Absolutely. And that's the trend that we've been seeing at Raymond James and really across the industry is advisers managing larger books of businesses, higher asset per adviser, higher production per adviser. And that's really enabled by the technology investments that we've made over the last decade.

And does that also make it more efficient for advisers to say, have clients with a lower level of assets, but they're able to service those clients at a lower cost as well.

We focus that both -- focus on that both through technology and also the product offering. So there's product offerings that we've launched where you can put smaller clients in a diversified portfolio that automatically rebalances that there's firm-level due diligence on the underlying managers, et cetera. So there's product innovation that supports that as well.

Okay. Great. And then I think that brings us to market share. You have -- you've spoken about growing your market share on the costs. And admittedly, it's a more competitive market there than off the coast. And just given the tech investments you've outlined, what more do you think you need to do to gain that market share?

Yes. We have a significant opportunity to grow across the entire country, but particularly on the west coast and the northeast, the higher income markets. And I wish there was sort of a magic bullet, but as Paul Reilly says, it really is about hiring good leaders in those markets and having those leaders hire good producers, and it takes time to do. We could accelerate some of that through acquisitions, for example, but we're really selective on the acquisitions. They have to be really good cultural fits and really good strategic fits, and we add a price that we think makes sense for shareholders. But we continue to look for opportunities to accelerate our growth in those markets via acquisition. But in the meantime, it really is just the blocking and tackling. You hire good leaders in those markets, good complex branch managers and have them in good recruiters and have them focus on recruiting productive financial advisers that sort of are aligned with the culture at Raymond James. And over time, that's been our formula for success in all of our other markets. We've just had a head start, obviously, in Florida, the Southeast Michigan, et cetera.

So then what is the recruiting environment look like right now? Packages, they tend to decline as markets decline. I think you've been pretty steady in hiring through cycles. Can you talk about what the recruiting environment is like right now?

Yes. And we've been steady recruiting through cycles not being the highest payer on the street. We're recruiting with our value proposition and that we tell -- our pitch is that you may not make the most -- you may not get the biggest check upfront at Raymond James, but over a long period of time, you'll do better at Raymond James. And so we're self-selecting the advisers who want to join us not for the biggest check that has a 7-year color on it, but really, the advisers that want to join us for a long period of time. And we benefited also through cycles by having multiple affiliation options because some channels are more attractive in different market environments than other channels. And so we're one of the few firms in the country that has multiple affiliation options at scale. None of them are upstarts there. They've been -- we've had them for a long time. We have thousand of advisers in both the employee and independent channel. And so we have a lot of experience running them side-by-side, and that's helped -- that diversification has helped us through cycles as well. So what happens to TA packages going forward? I think a lot of it will depend on the type of player in the marketplace. So while markets have gone down, interest rates are going up, that's going to be a huge tailwind for firms like us that custody, the cash balances. Obviously, you're well aware of that interest rate upside. But a lot of -- for example, the private equity-backed RIA aggregators, they're not benefiting from the higher rates because they don't custody the cash balances. And so those high deals were being fueled by low level -- low cost of debt, high levels of leverage and astronomically high multiples. Well, some of that has changed, right? Debt costs are higher, multiples are coming in. So I think it will be interesting to see what happens to deals in that space over the next couple of years, but I think it will still be competitive amongst our more traditional players because they're going to -- just like Raymond James, they are going to have some tailwinds in profitability from higher interest rates.

All right. Perfect. I want to move to the investment banking side. But maybe a quick clarification. I mean I've got a question from some of the new investors. And I'm pretty sure this isn't an issue for you guys, but around the payment of order flow headlines, it's not something that affects you, right?

No, it's not. We do not accept payment for order flow. It's something that we're glad there's a focus on in the industry because I think there's some misunderstanding and maybe lack of transparency with investors in terms of what the true cost of a trade is, but that is not something that we accept today.

All right. Great. And then -- so let's move on to investment banking and capital markets. I think you said recently that investment banking pipeline is sort of holding up well, but activity has slowed across M&A., and clearly, we're seeing in the public deal flow that underwriting is also weak. So anything to comment on beyond what we're seeing in the public markets? What are you hearing from the clients? Where do you see this going?

I think stepping back, we generated record investment banking revenues in 2021 of $1.2 billion, which is double what our record was prepandemic. And while the market forces have certainly been a tailwind over that period and in 2021 -- we also tracked the market share, and we believe we've gained significant market share over the last 5 to 7 years in investment banking as we have been focused on, under Jim Bunn's leadership, hiring high-quality MDs; niche acquisitions; Financo, which is a consumer M&A boutique; Cebile being a private equity sponsor/adviser. And so we've significantly upgraded the number and the quality of managing directors and investment banking over the last 5 to 7 years. So as we look forward, we're really optimistic and bullish on the investment banking franchise over the next 3 to 5 years. But what I can tell you is that we're optimistic over the next 3 to 5 months. Obviously, with what we're seeing in the markets, the volatility is not conducive. Obviously, equity underwriting is on the sidelines -- totally on the sidelines. And then M&A -- and that's across the entire industry, as you all know. And then M&A, on the positive side, we are still engaged in a lot of pitches. We're still winning a lot of pitches and winning a lot of engagements -- but the deals are taking a lot longer to execute, just given the market volatility and the sellers' expectations for price that they can achieve or generate doesn't reset instantaneously with the public equity markets. And so there tends to be gaps when there's extreme market volatility like this. So there tends to be gaps between buyers and sellers. So that will, I think, at a minimum delay transactions from occurring. But we feel confident about the space we're in, in M&A. Over 60% of our transactions are associated with financial sponsors. They still have a lot of dry powder to deploy, and they need to deploy that dry powder in a certain period of time. And so -- we like the space that we're playing in. We like the franchise, the strength of our franchise, the strength of our managing directors. But obviously, the markets are out of our control. And so we don't know what it's going to look like over the next 3 to 5 months.

So on that point, on the sponsors, I know they have a lot of dry powder, but at the same time, with rates moving higher, funding becomes more expensive, hurdle rates are higher, maybe you are baking a recession in your investment horizon, what are you hearing from them?

Yes. I mean there's certainly downside risk in the investment banking business in this type of market environment. And to me, the higher cost of debt and what you're seeing in the public equity markets ultimately affects valuations. And the question is going to be, will sellers reset their expectations to a lower valuation if that's what the market dictates. And only time will tell if that will occur not.

Okay. And then on -- maybe just moving on to the trading side, you saw a big increase in your FIC business from your bank lines when the Fed was doing QT that drove up deposits in the system and loan growth was also weak at that time, so banks were investing more in securities. What do you think happens now when things are reversing? You have QT, you also have stronger loan growth, there's arguably fewer cash balances to deploy?

Yes. And I described our year last year where we had record investment banking revenues of $1.2 billion. What's really unusual for both our investment banking business or our fixed income business that generate record results at the same time, which is what we saw last year and what helped the firm achieve record results despite a near 0 interest rate environment. And so the fixed income business, we are the leading player in the depository space. That's one of the main reasons we acquired Morgan Keegan in 2012. It was because they had a leading position serving small and midsized banks. To the extent, as Manan said, they have more deposits that they can use to fund loan growth, then they have to invest in the securities portfolio, and that's where our fixed income team helps them invest in their securities portfolio. We have a lot of tools and resources to help them with asset liability management and then optimizing their securities portfolio. And that business really thrives when banks are flushed with cash and loan growth is relatively weak, which is the environment we saw over the last couple of years. Looking forward, if cash becomes more precious, if loan growth accelerates, then all else being equal, you would expect there to be a decline in the securities portfolios, which would be a headwind for the fixed income business going forward. And that's one of the reasons we announced the acquisition of SumRidge because that diversifies our fixed income franchise, one with a leading technology solution, which we think is going to be increasingly important in the fixed income business as more of that business becomes electronic like the equity side of the business has become. And two, it gives us a corporate capability, which we really didn't have before in terms of investment solutions on the corporate side, and they trade -- they turn over that inventory very rapidly. They have a -- they don't take long positions of significant portion. They really stay almost client-oriented and high turnover oriented. So it's a unique franchise, and we're excited about what that can do to complement and diversify our existing fixed income franchise.

And I know you do a lot of rates, but does this help you branch out into credit and other areas of different market as well. That's right.

Yes. All right. Yes. I don't think you would -- we joke that when it comes to the FIC business, we're not in the IC part. We're not in interest rates, commodities or currencies. We'll leave that to the big players on the street. We're really just in the traditional fixed income space.

Got it. Okay. Moving on to the commercial bank. You've seen some really strong growth in the SBL front. Markets are a little bit more volatile right now, rates are rising, that could slow things down there. But where are you at with penetration levels with your existing customers? Is there more room you think to grow there?

Yes. Certainly, in the last couple of years in the SBL business for both Raymond James and TriState Capital have been phenomenal. We're talking about 40% to 50% year-over-year growth, and obviously, that has been boosted by the near 0 rate environment. These are floating rate assets primarily as well as a rising equity levels as the securities in the portfolio are the collateral for the SBL loan. So we were very clear that we did not think that 40% to 50% type growth is sustainable. But with that being said, we also have conviction that we're in the early innings of the SBL life cycle. There's still a relatively low level of awareness and appreciation of the SBL products. It's still in its early days. And so we think for Raymond James and really the entire industry, there's an opportunity to increase penetration. It's a great product for the investors and borrowers who need that type of product and want that liquidity flexibility. And so we think that there's a lot of upside, but certainly not at the glide path that we've seen in the last couple of years. We think that, that will flatten out and be a nice source of sustainable growth over time.

So you mentioned TriState, you completed that acquisition earlier this month. When you announced the acquisition back in the fourth quarter of last year, I think you said about 8% accretion to earnings. I mean rates are significantly higher now. Presumably, that gives you more accretion in that business. And you probably have more details now that you've closed the acquisition. Any thoughts there?

I would say the inputs that we use for the model in terms of the interest rates are rising much faster than we thought, it's a positive. The loan growth that they've had since we announced the deal is higher than we thought it was going to be, which is a positive. And so there's a lot of positives to the original model that we've created. Now accretion is calculated off the base level of earnings that we generate on a stand-alone basis. Obviously, higher rates increases our earnings by the first 100 basis points, $600 million or 30% to 35% accretion for us on a stand-alone basis. So you have a higher base to grow off of as well. But frankly, we don't get too focused on what the accretion is going to be 1, 2, 3 years out. For us, the success of an acquisition like Morgan Keegan, as an example, in 2012, we really can only determine that by plus years out. When you say -- you look back and you say, "Okay, do we have a stronger combined franchise now in fixed income in that example than we did otherwise." And so that's really how we're going to measure success is kind of what does the franchise on a combined basis look like? Do we have strong retention of the key leaders and producers? Those are the key drivers of success in our minds versus kind of the 2-, 3-year accretion versus our original estimates, which is frankly just a guess at the time based on a lot of variables that are out of our control.

And I think one of the things you also mentioned that, you can replace a part of TriState's higher cost of deposits with your lower cost deposits. How are you feeling about that now?

Well, we still have a lot of deposits that we're accommodating on the balance sheet, which we could use to replace and/or fund the growth over at TriState Capital. But with that being said, TriState Capital, they're going to remain separately chartered, separately branded, and they're going to continue to serve their clients, both on the lending and the depository side of things. And so we're going to really respect that independence that they have as a stand-alone bank. And frankly, one of the reasons that I first met with them in 2019 was because they have -- they bring to us a diversified funding source outside of our wealth management business. That's back when a lot of folks in our industry, including ourselves, we're raising broker deposits to diversify our funding source. So we also want to keep that in mind while short-term replacing deposits generates the most -- the highest level of near-term accretion. We don't want them to replace deposits, which a year or 2 from now, we're going to wish we had. And so we're going to balance kind of the short term, but always prioritize the long term as we do with all decisions.

So then how do you think about deploying your deposits now? On the security side, your fairly short duration. You have -- I think you said you've seen increasing conversations with third-party banks for utilization of deposits there. So how are you thinking about managing that side of the balance sheet?

Yes. Over time, we have roughly $13 billion to $15 billion of cash in the broker-dealer and the client interest program. A lot of that is what we call overflow balances that -- where we run out of capacity with our own banks or with third-party banks. And we would expect those balances at the broker-dealer to be redeployed into the bank suite program to maximize clients' FDIC insurance when the capacity comes back to the market. That hasn't really happened yet with third-party banks. They're starting to talk about potentially needing capacity a year or 2 from now, but they either want you to lock into term, which we don't do on the sweep program, we do that -- we take duration -- to the extent we take duration, we take it on the bank's balance sheet. As Manan said, we're buying 2-year treasuries. We're staying very short, just given the uncertainty in the interest rate environment. And so -- but we think with the changing dynamic in cash across the industry, that demand will come back. And certainly, we would shift more cash balances to third-party banks as soon as they start paying us reasonable rates for those deposits. But in the meantime, we'll continue to fund the bank's growth, but they're growing as fast as they can within the parameters that they have, and they have very disciplined parameters and risk-adjusted return targets, and so we'll continue to support that to the extent that they can find it.

And how are you thinking about your own deposit costs? Do you think -- do you still have room to grow your deposits or have a lower rate on your deposits even if you see a little bit of outflow in the money market funds right now?

Yes. I mean we're -- our suite program is not really intended to compete with the rate that you can earn and money market funds. Just like money market funds can't compete with the returns you can earn on higher risk assets as you go out to the risk curve. And so we're going to -- we tend to be more generous than the average competitor in terms of what we pay on our sweep deposits that we want to always put clients first. And we exhibit that as many ways as possible, including what we try to pay on suite deposits versus the competitive environment, but I don't envision that rate ever coming close to what you can earn in a normal rate environment to purchase money market funds. So -- but we do have one of the most competitive purchase money market fund platforms in the industry. We let all of our clients avail themselves to the institutional share class. They're on the highest yield, something that not all firms do because it's omnibus relationship. So any firm could avail themselves to that, but not all firms do it because they -- some firms want to earn more even on the money market funds. And we have no proprietary funds on our money market fund platform. It's all open architecture with 3 or 4 different fund families. So to the extent that clients and advisers are helping their clients maximize yield on their short-term investments, we have a fantastic purchase money market fund platform for our clients to avail themselves, too.

All right. Great. I do want to move to the audience for questions. But before that, let me get to everyone's favorite topic, which is pretax margins, and I'm sure you've been getting a lot of questions on that, too. You guided to 19% to 20% plus at the Investor Day a few weeks ago. I think The Street estimates are closer to 22%. And obviously, there's a lot of puts and takes. So can you clarify what the time frame is for those margins and what the assumptions are behind that?

Yes. We try to make -- we don't put out sort of these 5-plus year aspirational margins that we hope to one day achieve subject to XYZ. Our margin targets are typically, "Hey, here's what we think we can do over the next year coming out based on what we know now. We would be pleased if we're generating these margins a year from now." And then we have our Analyst Investor Day a year later, and we refresh those targets based on what we see at that point in time. In our business, it's harder to go out. It's hard to go out -- hard enough to go out 1 year, let alone 3 or 5 years. And so that's kind of the target is kind of where we hope to be a year from now. 19% to 20%, we think would be a great result. But the x factor really is going to be going back to what we were talking to about earlier was the Capital Markets results. We had record results last year in both our equities and fixed income side of the business, and that drove margins up despite the low interest rate environments, and we had record results in extremely high margins and ROEs in the 20% range without interest rate help, which if you asked me 2 years ago if that would have been possible, I probably would have said no. I certainly wouldn't have guided to that in a near-0 rate environment. So that's the x factor if capital markets results are much better than we anticipate, which we hope is the case, then, all else being equal, we can potentially exceed those targets. If they're much worse than we anticipate, which we hope obviously is not the case, then they can be lower than those targets. But that's just our best guess based on what we know. And we always try to be conservative when we provide guidance. And in an uncertain and volatile market environment, we're going to lean in on being even more conservative than we typically are. But that's not to say that those are the floors, things could obviously get a lot worse from there or hopefully better.

All right. And then on the expense side, I know you mentioned that business development costs can likely normalize, go up as we move further and further away from the post-COVID environment? Are there any other areas that you see more expense upside just given the cost pressures we're seeing across the industry?

Yes. And frankly, I think the business development expenses are probably normalizing faster than we would have thought. This conference being an example, not that my ticket cost all that much. But in terms of -- we're having a lot of conferences, too. We had our independent contractor conference in Nashville, where I think we had 4,000 to 5,000 people this quarter. We had our Chairman's Council recognition trip. So we're -- and it's great. I mean I've never seen morale hire. The advisers are really happy to get together, share notes, share best practices, catch up personally. So it's really great that we're doing these things. And I think it's accelerating my time line for when we kind of get back to normal in the business development line item, which is, again, I think we all were hoping for that a year from now, a year ago, that we would be kind of back to normal with conferences and travel and sitting across from you here in person today.

Great. Any -- I want to just check if the audience has any questions. There's one question there.

Just a quick clarification on the margin guidance. When you say over the next year, is that Q2 to Q1 or is that Q3 to Q2, what's the -- is there a specific timing on that?

It's really not that precise. Our margins can bounce around quarter-to-quarter based on capital markets results, et cetera. So I mean it's not intended to be an average of any point in time. It's sort of just where we hope to be a year from now in terms of a margin range. So it's -- I wouldn't say it's that precise where we're trying to average a period of time or anything like that because it can bounce around a lot from quarter-to-quarter.

Any other questions from the audience? So I'll wrap up with a couple of quick questions on capital return. You didn't change your guidance for 20% to 30% dividend payout ratios. And clearly, higher rates means higher earnings. Does that mean there's more upside to dividends?

Yes, we have a long history of consistently increasing our dividend. So it's a Board decision at the end of the day, but hopefully, we'll be -- and we typically do it in the December Board meeting for the upcoming calendar year. So hopefully, if we earn it and we continue to generate good results, then hopefully, we can increase our dividend going forward.

And then on buybacks, I know you said you want to be opportunistic there as I think in the past, you've said 1.8x book is a good threshold. Is that still a good threshold or...

Yes. And we have a lot of shares to buy back before we kind of think about that opportunistic threshold. So we said that we want to offset the share issuance associated with the TriState acquisition, that's about 7.8 million shares, and that's not subject to the opportunistic historical threshold. That's something we want to do more deliberately now that we've closed the transaction.

All right. Perfect. With that, we're out of time. Paul, thanks so much for joining us.

Thanks for all of your time. Appreciate it. Thank you, Manan.

Thanks.