Synchrony Financial (SYF) Earnings Call Transcript & Summary

Good morning, everybody. My name is Jeff Adelson, the consumer finance analyst here at Morgan Stanley. On behalf of the entire Morgan Stanley Financials team, I'd like to welcome you all to the 15th Annual Morgan Stanley Financials Conference. We have a great lineup over the next 3 days, 161 companies in attendance. And to start here today, kicking off our conference, I'm delighted to have with us today Synchrony's Chief Financial Officer, Brian Wenzel. Brian, welcome back.

Jeff, thank you. Good morning, and thanks for the invitation.

Yes. And before we get started, I'm going to quickly read some disclosures. For important disclosures, please see the Morgan Stanley research disclosure website at www.morganstanley.com/researchdisclosures. The taking of photographs and use of recording devices is not allowed. If you have any questions, please reach out to your Morgan Stanley sales representative.

So Brian, maybe we could just start. It looks like you put out your May credit 8-K this morning. You did talk about how the credit was going to peak this month -- or last month rather and you saw that sequential improvement. It looks like delinquencies did slow this month as well. Anything else you want to talk about or just dive into anything else you want to give us on the quarter as well?

Yes. First of all, thanks for having this conference a little earlier than 15, so we got our 8-K out. But it did show a reduction in the net charge-off rate at 30 basis points, delinquencies are declining, which is in line with the narrative that we shared with folks where losses in the back half of the year will be lower than the front half of the year. And you've kind of seen that peak really in April. And if you look at delinquency trend for the last 3 months, I think people should get more comfort, the trajectory of net charge-offs as we move forward.

And what are you seeing from the consumer? You spoke about consumer resilience before, how they're managing spend, trading down a bit. You also last week did note that retail traffic is trending lower, spend is more flattish. What do you think is driving this at this point?

Yes. So let me back up and lay out the frame and I'll go into that question. So for the quarter, we've talked about already during the quarter, you're going to see purchase volume that's generally flat to last year. Now I hate to sound like a retailer where I look at last year, and it's a record quarter for the second quarter we're comping against, but it is flattish. Payment rate is slowing with the consumer. So receivables are coming in line with expectations, which generally is a good thing. When you think about net interest margin, I kind of said it's going to be down probably 10 to 15 basis points, more a factor of having more liquidity than we anticipated, which is really a good thing when you think about funding for the second half and seasonality is really the driver there. We talked a little bit about charge-offs and expenses. Generally, you'll see a little bit of bump more related to the CIT efforts in the second quarter and kind of flat sequentially. So that's generally the framework. As you dive into the consumer Jeff, I moved away from this term resilient to managing, right? When you look at the trends that you see in the consumer, they are not struggling. So the traditional factors you'd see either on the spending side or a payment side, we do not see those today in the data that we look at. But what we do see is a consumer who is shifting from discretionary goods to more nondiscretionary items, even pulling back at services, travels, one for us because we actually deal with more main street travel. I think a lot of people talk about high-end travel, but main street travel is down a little bit, it's down probably 10% on the ticket size. And then when you see the spending behavioral patterns really diverge. I look at the top end, so 800 plus in the higher end of the prime segment is doing well and pulling. We continue to see month-on-month the nonprime one struggles a little bit more on average transaction value. So I sit there and say it's a little bit mixed relative to where you are on the income/credit rating.

And what metrics as you think about this normalization that's happening here, the slowing. What metrics do you think are most relevant when you're trying to assess the health of the consumer? And at what point would you become more concerned that these patterns we're seeing of sort of consolidation are shifting more towards deterioration if that happens?

Yes. So the metrics we generally look at are metrics where you're going to think about is the consumer struggling? So when you look at purchase behavior pattern, are you seeing things where they're trying to make dollars go further, keep dollars in their pocket. I always talk about gasoline or groceries are two predominant ways you see that. Trading down at MCC codes into more discount-related retailers. You do see a more dramatic shift in payment rates as well. So you see those particular things and then you begin to see entry rate go, and entry rate continues to be [ favorable ] back to 2019 and very consistent. So those are a lot of the trends. Where you would get concerned, Jeff, to be honest with you, is whether or not you see the more -- a little bit above the midpoint of prime, do you see that consumer really pulling back. Right now, they are pulling the economy forward. If they begin to wobble or struggle, then I think you're going to see some pressure. We have seen no signs, either even on the lower end, we don't really see signs of it. We just see the [ phone ] delinquency a little lower. [ 2Ds ] is a little tougher. And we see general stability in their delinquency stages.

And I think you recently mentioned that you're seeing the middle income consumer or household and even businesses starting to maybe struggle a little bit. Are you seeing that spread from low income more recently? Or is that more of a consistent trend with what you've seen this past year?

Yes. I like to watch [indiscernible]. I wouldn't say struggle, they're managing, right? So I don't think we've seen it move. I think it's been very contained in the non-prime. Deep subprime is obviously clearly the worst but that's not new news for the last couple of years. So we haven't seen a spread. We haven't seen it move. But they're managing. I looked yesterday in preparation for this. You look at gas and grocery, the average transaction value for us year-over-year is flat. So that tells you that the consumer has been managing throughout this. So when inflation went up, they kept the same ticket size, they took things out of the basket. Now as you get inflation a little bit of ease coming, not fully. But let's be clear, the weight of inflation, and generally, it's the cost of goods. People don't think about inflation. It's the cost of living is just generally higher and some of the things that are a little bit more secure, when you think about the housing and rent and auto insurance and things like that, those are sticking, take longer to reset than you'd see in grocery and gasoline, things like that.

And sort of related to today's result was better, obviously, for your credit story. You saw the peak last month. But I think the delinquencies more recently had not been slowing as much as maybe your peers have been seeing. You were starting to underperform seasonality. Obviously, this morning's results different, but what do you think was driving some of that? What are you may be seeing from your borrowers? Or can you just kind of high level, give us some insight there?

Yes. So I think the first thing, Jeff, is we probably don't agree with the characterization a little bit, no offense to you or your firm. But really, when you think about it, we lag the industry kind of coming up. And when you look at where people peak, they be significantly higher than their historical norms, right? We don't accordion the credit box. We didn't change our underwriting standards to try to create growth. So as we came out of the pandemic, right, let me go -- when we start in the beginning of the pandemic, we didn't go down as much as others. Then we didn't come out as fast, and people say, well, you're not as fast as others. Well, we didn't go down as much. I think now as you look at credit normalization, I think we were the second to last of the pure credit card issuers to actually reach peak normalization. So I think our path has been slower. So I don't think it's one where I look at it and say, hey, listen, we're underperforming versus that. We're on a different type of curve. But I don't think you can compare everyone else in this curve. Absolutely, the outlier is one particular issuer. You put them aside. I think we performed better than them through that entire window. And that's where I think people need to look at. I know a lot of folks were concerned about credit, hopefully, they looked the last couple of months. I think we've given you a number of different reasons why we're -- we have faith in where the net charge-offs are going and people get more comfortable looking at this morning's results.

Got it. And I think you also noted more recently that you're thinking the reserve ratio should be more flat this quarter. Maybe not decline as much in the back half of the year either, but you're still looking towards day 1 as an ultimate goal here. What is baked into that flattish reserve over the next 6 to 12 months? And then what would have to happen in either the delinquency formation or the loss formation for you to actually grow more confident in a sharper decline from here?

Yes. So I know I made some comments recently about flattish. Flattish for the quarter and then really flattish towards the end of the year. It's really more the interplay of when do you see your quantitative models produce results and trends. And then how does that interplay with your QA or your qualitative reserves. And I think as we look a little bit more, having that visibility, I mean, clearly, the Fed I presume, this week is not going to move. We don't think they were going to move anyway. We think it's generally a fourth quarter item for them to move. But inflation has been a little bit more stubborn. So I think it's really more the timing of how those two interplay more than anything else. To the latter part of your question, as you think about your reserve coverage rate, right, the question becomes, okay, over the next 12 months, do you see that rate going up or down, generally speaking. If the rate is generally going to be going down, you should be seeing a declining rate environment for the reserves. So I think as we get towards the end of the year, the question will be what does the '25 trajectory look like? Now there's a lot at play. I'm sure at some point in last week, our late fees there is an intersection with what happens there. But it's really how does that loss rate perform, and that's what we'll look to as we get to the fourth quarter. As credit improves, you should see that come down. We don't see anything that exists in the portfolio today that says, I cannot get back to that day 1 CECL, which really we never had a normal day 1 CECL. It lasted maybe 12 minutes before the pandemic happened. But other than mix, there's nothing really that's -- not a change in our assumptions.

And just one last one for me on credit. So losses lower in the back half of the year, peak this past month. What about the vintage data? Is there anything way to thinking about the stack rank of the various vintages and what that tells you about how we're heading into 2025? Is this support more of a stabilization or maybe more outright improvement, you think, at this point?

Yes. So obviously, we don't have a vintage look for that part of this year. And it's a little bit tougher at this point to get second half of '23. Generally speaking, the industry, let me start with the industry and to be clear, this is the industry. We look at TransUnion, the vintages are underperforming, so -- which is part of the reason why you see, for some measure, was significantly higher net charge-offs in those periods. Ours, generally speaking, are a little bit worse, but not as worse as the industry. So again, it's a shared consumer. So we're impacted by that. That delta doesn't necessarily trouble us as much because we have a 5.5% to 6% range. So it's one that we look at and say, it's not going to generally speaking, over a period of time put us outside that range. But clearly, there's a little bit different mix because of the credit that was put out in the post-pandemic period. So again, we like the vintage we're putting on. A little bit worse than pre-pandemic, but nothing dramatic.

In the underperforming vintage comment, that's relative to what period?

So it's going back to pre-pandemic.

Okay. Got it. Maybe switching gears here a bit. And if anyone has any questions, feel free to raise your hand at any point in time, happy to ask your questions. And if you want to also e-mail me as well, I'll try to get to your question, if I can see it on my phone. But maybe switching to everybody's favorite topic, late fees. Lots of drama in the courts recently. We don't need to relitigate that, no pun intended. But maybe just a quick overview of your latest one, where you see things at this point, how they're shaking out. And maybe just a quick update on the $650 million to $700 million of offsets you put out there, how much of that is actually in the numbers yet? I know you said the bulk of that is going to hit in the fourth quarter, but just maybe give us an update on how you see that cadence sort of playing out over the rest of the year?

Well, that's a big question. So let me unpack it into pieces. So for those that are not familiar, we continue -- or the chamber continues to argue with the CFPB about what the right venue is and whether or not an injunction is in place. Where it stands today, the CFPB provided a response to the mandamus petition, to the Fifth Circuit in Texas. And now it's up to the Fifth Circuit to rule on the mandamus petition, which really was -- does the key stay in Texas or does it transfer to the District of Columbia, right? Obviously, we probably are supportive of the chamber's view be there's more customers in Texas than there are in D.C., but we'll let them figure that out. So the next step in that process is for them to rule whether it stays in Texas or not. Put aside venue for a second, the next step in the process will be, will the CFPB, the defense in the case, actually ask for the injunction to be lifted. At that point, most certainly, the chamber will counter and say, they oppose the lifting, a; and b, they would like the court to rule on the other elements of the late fee, which the District Court in Texas rule is compelling, right? And that's the heart of whether or not the rule change was, in fact, legal and compliant with the [indiscernible]. So those are the steps that will happen. Most certainly, those are the things that are going to have to happen to determine, first of all, whether or not the impact of the late fee rule change will happen in a period of time here. And there's a number of different outcomes. Unfortunately, I can't even -- in our 19 minutes left here, you can go through the number of options. So that's kind of where the case is a little bit. So I think you'll see some actions here over the next couple of weeks as that moves through the process. With regard to the changes in our pricing product and policies, we're pleased with the efforts to get those out. We indicated a large number of that, north of 60% have already been completed. Now you won't see really the effects of that. You'll see really in the third quarter and into the fourth quarter as they build because it takes effectively 90 days from the time which you mail it to the time which it gets realized in your financial statement. So -- but we do have a very rigorous tracking mechanism. So we look at on a daily basis, closure rates, complaint rates, call rates, purchase active, sales app -- sales per active. So we have a number of different things. And there's just under 80 metrics that we look at daily, and we can look at it by platform, by portfolio. So we're actively monitoring whether or not what the consumer's reaction to them are because it's not just Synchrony, the whole industry has begun to change pricing or a lot of people have changed pricing throughout this. So we're pleased with the progress. We've executed the way we thought we'd execute. Unfortunately, we're just early in the game here to understand the exact implications. So there's no reason for us to sit back and say what we've indicated before is going to be anything different. I know you asked the question, we really haven't broken out the pieces, it's fair to say. And again, you'll start to see those materialize in the back half of this year.

So you're pleased with the progress you're monitoring the complaints. What has the initial customer response been so far? Could you maybe give us examples of how you're thinking about that so far?

First, let me talk about APR for a second. Before the changes relative to the potential late fee rule change, we had a significant increase in APR due to the rate environment, right? So you saw prime rate go up 500 basis points. The consumer continue to move on. The important part with our card different than others is when you look at the average balance of our cards being $1,400. It's really not a lot to the consumer each month. So the consumer doesn't feel it as more as much as other cards where there's a higher balance. And even some of the people who thought they had an APR in the teens, they're in the 20s now. So there's no reaction there. That's a base. So the APR moves that we had, which, again, are meaningful, but not terribly meaningful, a couple of dollars a month, I think, to the average consumer for us will go through. I think one of the reactions we are seeing, which we're pleasantly surprised with is the adoption of e-bill, right? We put a fee in for paper statements. Most certainly, we've gotten consumers to call and say, "I like that." And we say, "I know, but we need to do this." And hear the term changes. And we've gotten pretty good adoption in helping people move to the e-channel, which for us is great. Not only from a cost standpoint, but just engaging with the consumer in a different channel. You can also get them in auto pay and things like that. So we're pleasantly surprised there. Those are, I think, the two biggest things. I think when we look at all the metrics I talked about and really that entire dashboard, I think taken as a whole, it's in line with expectations to probably a little bit better.

And if the late fee rule does go through, obviously, there's underwriting changes in play here. How meaningful of a cut would you take to your standards there? Or how dramatically would you increase those standards, raise those? Is this something like cutting off the bottom 20%? Do you think about shifting the long-term target NCO from something like below the 5.5 to 6 you have today? Walk us through how you think about that.

Yes. So first of all, our stated objective was twofold. Number one, we wanted to be ROA neutral. I think underpinning that with a sense of urgency given the RSA model that we have, which is uniquely different than probably every other issuer given the magnitude of it. And number two, we want to do that at the same level of sales, right? So the way in which we constructed our [ PP&C ] changes, we did that in a way so that we didn't have to make drastic underwriting cuts. So now it's going to come back into performance and whether or not the changes that we have, the industry changes, does that change our expectations and will we have to go back and do more broader-based actions. In your scenario, where you just dedicated 20, I don't see any scenario where you probably get to 20, maybe a real edge case, but I wouldn't put that in the possibility. But again, as of now, we have not restricted the lower income bands because we think we've dealt with in pricing, but we're going to have to look at what it is. One of the big debates between the CFPB and the industry has been, where is the returns? And how will the returns play through? And will you get more delinquency as you have an $8 late fee that's fairly low relative to decision to make a payment or not make a payment. So that's going to be interesting to watch. But right now, we don't have significant credit modifications in just about late fees.

And just maybe thinking about the other side of that, late fee rule doesn't go through, maybe a little bit more of a bull case for you. How much of these offsets you've run through do you think actually stay in the run rate? Or do you pull anything back or?

Yes. So the way I -- the framework I think about it, Jeff, is there's two buckets, right? Bucket A is where you have partners who have an RSA component to it. And then Bucket B is cards and programs where we control the pricing and we control the economics. So think about CareCredit there, Synchrony MasterCard, HOME Network, et cetera. Bucket A, you're going to go have a conversation with the partner and talk about, if a rule -- if we're certain the rule is not going to come back and play or it's not going to come back and play in a different way, which always could be the case, how comfortable are they to leave those in place? Some of the things, most certainly like the one we talk quite a bit about, the way in which we assess interest and we move to an industry standard from where we were, that probably stays, right? Other things may roll back. That's going to be a partner-led decision. In bucket B, we control that. Now obviously, I can't sit back and say to our partners, hey, you can do what you want, but I'm rolling everything back. And so it probably wouldn't be the case. But really, it's going to be a discussion among those two big groups. That being said, Jeff, we have not spent any real time on this concept. Right now, we believe that the rule is wrong. We believe that the injunction will be held. We believe the litigation will go on, and that will take a while, but our actions are out there in advance. And we'll deal with it when the results of the litigation or the injunction comes through. So if we cross that bridge, which would be interesting, we'll deal within those two buckets.

Okay. So the changes go through and then sort of in the retailers' hands is what I'm hearing about.

No. It's -- Jeff, it's a joint decision, right? So we go back into -- we're going to present them with data about what's the consumer's reaction to it. Is there a reaction to it? So we don't -- in any scenario, I don't think of retailer controls in that case, unilaterally the rights. We don't control the unilaterally rights. It's a partnership decision. That is the way in which our company philosophically operates. So it will be discussion. I think some may want to stay exactly where they are once they have the economics. Some may say we want to change certain elements of it. Again, we all didn't want to do some of the things we did, but we had to react in order to maintain the ROA in the same level of sales.

I'm just going to pause to see if there's any questions from the audience. Looks like not. If not, I'll move on. So speaking of the partnerships, you've got the renewals out there every so often. Are you noticing any sort of increased or lower competitive intensity in RFPs out there? And then as I think about your book, I think the last big one we saw renewed was Lowe's in 2022, but the other big 4, maybe 4 to 5 years ago. Maybe just a quick update on how your conversations have been going broadly?

Yes. So your first part of your question on competition, we don't really see anything dramatically different, right? You don't see everyone consistently in every opportunity. People are focused on different types of programs and where they are. For the most part, there's been a couple of times where a particular institution may have been irrational. But that's been the same for the last -- I've been in this business over 25 years. You've always had someone at maybe at one point come in and be a little rational for different reasons. But generally speaking, it's been consistent. And listen, we're very disciplined on our pricing. We want and we'll achieve the right risk-adjusted return or we'll walk away. If it's not the right program and the partners not engage for the right reasons, we'll walk away. If it's not supported by the partner, we'll walk away. Now again, we believe we have the best capabilities. So we're not the cheapest, unfortunately, for them, but we think there's value that we bring to the table. So competition and balance is probably consistent and really depends upon the opportunity. The second part of your question on renewals. First of all, Lowe's has been a tremendous partner for us for over 40 years. Trusted brand. We love the value prop, relaunch of the card program, relaunch, I'm sure you probably saw some of the advertising that they put around the card. There's a great example where the card is integral to the customer strategy. And those programs can be successful, and we're very pleased with that partnership and look forward to working with them on not only our card but installments as well. So that's great. On the other four, we continue to try to renew these every day. This is a relationship business. You have to continue to serve them. The market is changing every day for the retailer. So the ability for us to continue to provide the best level of service, the best capabilities to them, that's what gets us to renewals, and we're going to continue to do that. You saw in our 10-K, we have well over 90%, '26 and out, or I should say, we have over 90% revenue secured through '26, we'll continue to work through those. But again, we're optimistic if we continue to do the things that we need to do every day that we have. We have a great track record, and we love our partners.

And then I think we have a couple of large retailers out there maybe with some portfolios influx, any sort of interest from Synchrony always in the mix or thoughts there?

Jeff, the way I think about those are what's the program's purpose for the retailers, right? So if a retailer or a partner wants to use it to engage either a certain part of their customer base and drive it as real value add, and it's critical to their operations and has support from the C-suite, then that's a great opportunity for us. And we'll look at that opportunity and price it to get the right risk-adjusted return. We price through the cycle because these are longer-term arrangements. So in that case, we would be -- we've been inclined to engage in a process. If that's not the case or it's a partner that says, listen, there is one -- we've been in the automotive business for argument's sake, and we acquired it with Nissan. That card, as we learned, is really difficult. You're trying to sell cars, you're trying to sell maintenance programs, you're trying to sell extended warranty cards way down the list. It's probably difficult to do. So it's one where we said, hey, listen, we're probably not in the automotive space. And that's where we understand the industries, but again, it goes back to the right risk-adjusted return. And we'll participate where we think it makes sense. If it doesn't, then we'll focus our attention in other areas. We love the current business that we have and the opportunities to grow our existing partners.

And speaking of newer business verticals, I don't know if we'd characterize it as a new vertical per se, but there's been a little bit more of a focus on BNPL out there from the media, the regulators on risks in that space. You've got an offering, more of a feature and a part of your multiproduct approach than a leading product, I would say. But are you noticing any sort of pockets of difficulty from those users, whether it be your own or what you're seeing from your own cardholders with BNPL loans elsewhere? Any high-level thoughts there?

Yes. So first of all, about the BNPL, it is getting the attention of regulators and others. And first of all, we think that's a great thing because all we want is regardless of the product you have or the regulatory body you have, the same rule should apply to everyone. And clearly, they don't apply and it's different for those people offer those products, which I think in the long term is problematic for consumers. Check ability to pay and things like that because they are [ reverse out ] what label you have, they are lending institutions or credit cards, right? That's how I know, we saw it in the 1930s, everything for us is buy now, pay later, right? Because no one pays me at the time. That being said, your question about overlap and impact from buy now, pay later, what we've seen in data, we've used outside people to help us. We don't really have a tremendous overlap. So the people who are generally taking out buy now, pay later that were cash payers, debit transactions, things like that are out there. Our offering, we offer the same things now that they had. We had the same products before. They were just inside of a revolving accounts. And now if you want to put in a stand-alone account, we can do that. They are paying for which people think buying buy now, pay later is really not a big offering, I think, for even those players labeled buy now, pay later. So not a big offering for us. And they've moved up the spectrum into bigger or longer-term installment loans and then now they're moving to credit card. So they realize that the strategy that we have, which is being multiproduct. So you allow the consumer to say, what product do you want? What's the type of purchase you want? What's the best financing you have? That's why a multiproduct setting and our ability to potentially try to engage with the customer and say, okay, after you have one product, is there another product that meets your buying and consuming decision. So again, buy now, pay layer, probably was talked about a lot more a couple of years ago, not a big influence on our results or our volumes.

So part of multiproduct approach, but it doesn't sound like it's a leading part of the conversation. It doesn't come up much in the conversations? Or is it always a part of the conversation, you would say?

Yes. I don't think -- our partners don't talk to us about buy now, pay later. They do you have an installment product. And we said, yes, listen, we can give you an installment product, that's stays as loan, that's closed. And most of the partners want products that have continuing relationships with people. So I say, if you want to offer that product, we have that product. If you want a revolving product with an installment product in it, we can do that. If you want to procure product label or secured product, a dual card that has utility. So I think the conversation is more about the whole product suite and where you offer those products in the consumer buying journey and how would you offer it. So that's more of the conversations with us. I think when you only have one product or two products, and your product may be pricey to a merchant, becomes more difficult to sell.

Maybe just switching to capital here. You submitted your capital plan to the Fed earlier this year, and I think you're now at the lowest level of CET1 you've ever been, but you're still in an excess position at this point. You built up some pref in the stock as well. How are you thinking about the excess capital position here? Is that something maybe where you want to wait until we get more clarity on the capital rules from the regulators, more clarity on the credit picture or maybe until you officially hit that CCAR bucket in 2026?

Yes. So I think it's first important for investors or potential investors to understand, we've been on a capital journey, right? So our first goal was to have a higher capital position so we could secure exit from our former parent. I think at one point, we reached the high 17s, maybe 18% capital back in 2015 or '16. And then we began our journey to reduce that to a target level. I think in 2021, we provided that to our level being 11%. You got to remember, as you go towards 11%, you have a lot of stakeholders you're bringing along with us, rating agencies, the regulators, investors. You can't, in any given period, just say, okay, I'm going to target, because for whatever reason, they're going to get anxious. So we've had a planned journey to get there, and we're going to continue on that journey. A couple of items that you kind of brought up in theory or encapsulated inside our capital plan, we do scenarios in there that have late fees. We do scenarios in there that have obviously credit stresses. So we incorporate a lot of those. With regard to Basel III and whether or not the rule changes come out, whether they're going to be proposed or just enacted, we think are going to be dramatically different than what was proposed under wherever path they choose going forward. That is outside of our, I think, our capital plan. Most certainly, the transition period would allow us to deal with that implication. But I think when it goes to late fees or credit, it's already incorporated into our capital plan today, and we're going to continue to execute it. As we move forward here, we feel very comfortable. It's in a great position to have excess capital and have the ability to either reduce the share count or do things like we did in the first quarter, which is acquire a very attractive business from Ally Allied Lending that builds on the scale that we had that makes us the only issuer that has an installment product and a revolving product for home specialty business and brought a whole bunch of new verticals. And so that was a great -- we hope to be a great acquisition for the company in the long term.

All right. Well, I think we're just about out of time. Thank you, Brian, for coming today, and it was a pleasure to have you.

Jeff, thank you, and good luck with your conference.