Cliff Eby

INVESTOR DAY 2015
CLIFF EBY, PRESIDENT, TRANSPORTATION AND
INFRASTRUCTURE, U.S.
JUNE 10, 2015
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INVESTOR DAY 2015
JUNE 10, 2015
CLIFF EBY, PRESIDENT, INFRASTRUCTURE AND
TRANSPORTATION, U.S.
Male:
Greg and Isabelle, thank you. Good morning.
So as transportation centers grow, there's a huge
need -- I'm sorry, as urban centers grow, there's a
huge need for transportation and it's not surprising
that most of that growth you will see is in the sun
belt. And in terms of what we're looking for,
significant growth is in Florida, in Georgia, the
Texas area, and primarily California in the West.
But the markets remain flat over the past couple
years and there -- is looking to remain flat due to a
broken federal funding model. So what I'd like to do
is spend a little bit of time talking about how
transportation projects are funded in the U.S. and
what that implies for our business. For the most part
there's two sources of funding for transportation, the
federal gas tax and the state gas tax. That's
supplemented by tolls on one side and also by local
bonding -- bonding initiatives that occur and tax
referendums. And I'll talk about those in a little bit.
On the federal side the funding for transportation is
an 18.4 percent gas tax. That gas tax hasn't
increased since 1993. In effect it hasn't had a raise
since 1993. If many in you in the room hadn't had a
raise since 1993, you'd be looking pretty shabby
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right now too. On the state side it varies. It varies
anywhere to 15 cents to about 25 cents, but centers
on that 18.3 percent. If I look at the history of how
these projects were funded, a hundred years ago the
federal government decided first to get -- to provide
a funding for transportation projects.
And 50 years ago for the Highway Trust Fund it
created the federal gas tax. Twenty-five -- for the
past 25 years we've been on six-year
reauthorizations of -- of the Highway Trust Fund.
And in the past 12 years we've had problems with
those, those reauthorizations. And we've had 33
extensions, short-term extensions, typically two to
three months at most, to the authorization.
And that's created a real problem in transportation.
A problem from a predictability standpoint. That
owners, state (EOTs), transit agencies in particular,
can't predict the funding that'll be coming in. And
you've heard that the Highway Trust Fund is
bankrupt. And in fact for the past five years we've
been outspending the revenues that are coming in to
that Highway Trust Fund. A number of reasons.
One is the fact that it hasn't had an increase and, two,
cars are becoming more efficient. Mileage is down
so less and less funding is coming in, as those needs
continue to increase.
But so many states have taken kind of matters into
their own hands. And they're, you know, creating
new revenue sources for that. So this is a map of the
states that have considered state legislation for
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transportation revenue or have enacted it. And this
is both state and local tax initiatives. So you'll have
a tax referendum in a city that'll add a penny or two
to their local sales tax in order to fund specific
transportation projects.
What's important here from a -- from an
infrastructure standpoint and WSP Parsons
Brinkerhoff is that in those locations where they
have these local tax referendums our success rate is
much better. We participate very early on in those
initiatives, work with the owners and the clients in
order to promote those, identify the appropriate
projects. And so when those tax referendums are
approved, we're on those in the top list to be selected
for those projects. And so we really focus on where
across the country we have these local and state
referendums.
Whoops. OK and, despite the flat market, our
pipeline has increased year over year. Now this is
the pipeline of projects that we have, that we're
pursuing. Approximately $4 billion right now.
Some of that is due to the delays that, you know, we
will talk about later and you've heard before today of
these projects in the pipeline. And so to some extent
the pipeline is getting bigger because projects are
getting delayed and these are continuing to increase
without a funding source.
You see in this map before Greg explained that the
larger circles are offices of over 200. The smaller
circles are those 25 to 100 for the most part.
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Infrastructure has about 4,500 employees in 70, 70
offices. We, from an efficiency standpoint, we're
trying to reduce the number of offices that we have.
You've heard of the consolidation as we bring
offices together to reduce that footprint. Next the
labor real estate is our next biggest expense, and -and trying to reduce this to the footprint is very
important.
Fighting that is the demand by most of our clients to
be local. Even in many states they're expecting a
local office in each of the transportation districts that
the state has. And for example in the Washington,
D.C., area we have offices very close to each other.
One in Virginia, one in Washington, D.C., and one
in Maryland. And that's a result of the client
requiring the people to be located in those states.
We represent about 80 percent of the U.S. market in
transportation and infrastructure.
So every year Road and Bridges magazine does a
survey of owners from a DOT standpoint and transit
agency standpoint. And they ask "Who is the go-to
firm in a number of sectors?" And for the past five
years since they've done this survey Parsons
Brinkerhoff has remained number one in these four
categories. Everybody wants to be number one, but
-- but this is a great example, a good reminder, of
our commitment to the client and -- and what it takes
to establish that relationship with our clients. So that
to be recognized as the number one firm by all of our
clients in these four categories really is a
discriminator for Parsons Brinkerhoff.
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These are our major competitors, a good mix of
public, private and ESOP firms. These are the large
firms that we'll see on any project $5 million and
above and a design build project $250 million in
construction value and above. We will always see
these firms. We do compete locally on smaller
projects with a number of mid-tier firms and then
also you'll have a lot of regional firms that we
participate or compete against.
Let me talk a little bit about our business model.
And for the most part we're in a highly-regulated
business from a pricing standpoint. The Federal
Acquisition Regulation at the federal level drives the
pricing that we see in an awful lot of our business.
Our clients' (inaudible) delivery model is the full life
cycle, as Greg mentioned. I often refer to it as dust
to dust. From the early conceptual institutional
development-type projects, you know, all the way
through construction services and asset management.
Our sales model is based on qualification-based
selections. It's typically referred to as QBS. In the
U.S. we come under the Brooks Act which is
enacted by Congress that said engineers have to be
selected on a qualifications basis. After the selection
then you go to negotiations for the price -- the price
side of it. On our alternative delivery projects we
typically see best value, where it's a combination
score of a technical score and a price. And then we
typically are a prime and we like to lead joint
ventures. We rarely -- we're rarely a sub-consultant
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to other competitors and where we are a subconsultant it's on the design build job we're a subcontractor to the contractor for just design services.
On the revenue model most of our work is cost
reimbursable. Cost plus fixed fee or cost plus
multiplier model. Again it's the FAR or derivative
of the Federal Acquisition Regulation, those audits
that drive the rates that we can charge. Even when
you get to billing rates, those billing rates are often,
very often based on the FAR.
And some of our alternative delivery projects we use
a target price model where as long as we're within
the target we get a certain fee. When we get outside
of that band there's some risk sharing on the upside
and the downside. And then we do have about -and I'll get to the percentage of a lump sum or fixed
price work. We do very little what I refer to as G
max or guaranteed max work where we take scope
risk. In most cases, if the scope increases we
negotiate a supplemental for that work.
In terms of the services we provide, about 50 is
design, about 33 percent in construction
management and program management, and the
remainder in some of the upfront work. We have
some (OMN) work that we do for E4-70 and the
Florida Turnpike Enterprise where we're doing the
backroom servicing for their toll operations.
And from the type of work that we do we're about 60
percent highways in our business. We're known in
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the marketplace in most places as a rail and transit
firm, even thought that represents 22 percent of our
work. Due to our history in New York, our history
in San Francisco, our history in Atlanta, our history
on high-speed rail, we're clearly the market leader in
those areas and often recognized as a rail and transit
business. But closet to 60 percent of our work
comes in highways.
Then Greg talked a little bit about the aviation and
the airports business, a market that has grown for us
since which established this initiative about three
years ago, and expected to continue to grow. And
then water and the other categories is ports and
marine. Some of our strategic consulting work gets
assigned to the other category.
You've seen this slide before. Twenty-two percent
right now of our expected work is in alternative
delivery, combination of design build and P3.
Expectation is that will grow to about 30 percent.
That's where over the next five to 10 years I expect it
to kind of max out. And our business remains a
significant growth opportunity in the market place.
A list of our top 20 clients. You can probably get a
look -- you look at those logos and it's every growth
market in the United States. And it represents about
45 percent of our revenue, for those 20 clients. Net
revenues again in Canadian dollars increasing year
over year in what I describe as a flat market for
infrastructure. And our mix by client type, 82
percent of our business is public and 18 percent is
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private. Most of those on the private side is the
contractors' side of our organization. And 83
percent cost reimbursable with 17 percent fixed fee
lump sum.
A backlog, this I guess is not to scale. But maybe if
we put the baseline at around $500 million. But the
important point here is the backlog is growing and in
2015 we continue that growth in backlog year to
date. And it represents about 11 months of revenue
for us.
So Greg mentioned some of the revenue synergies
and you see some of the project that he talked about.
We're particularly focused on terminals and hubs as
a unique opportunity that we think going forward
has a great growth for repurposing those facilities as
transportation needs have changed. And we -- what
we're looking at just the natural synergies of sharing
clients on a regular basis. But where I see the real
opportunity is creating the future.
And we're establishing a leadership role in
automated vehicles and connected vehicles. John
Porcari, my colleague in the back who runs the
strategic consulting group is heading that initiative, a
real passion (inaudible). And it doesn't take a whole
lot of imagination to see as we move to these
automated and connected vehicles the need for
parking in major metropolitan cities is going to
change drastically. And repurposing those -- the
buildings, the parking lots, the side streets, to use
that real estate more effectively is a tremendous
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opportunity for WSP Parsons Brinkerhoff to come
together and be a leader in that marketplace.
We're looking at a number of underserved markets.
We are a mature business, a leader in most of the
transportation areas that we focus on. But we do
have some underserved markets. Texas is one of
those that we're focused on. Southern California,
particularly from a construction services piece.
We're looking at that very hard. The aviation
strategic initiation that we created three years ago
has been a tremendous success. You know, Greg
mentioned our most recent win at Atlanta Hartsfield,
LAX, San Francisco, New Orleans, and La Guardia,
and we see that continuing as an opportunity to both
organic and acquisitive growth.
So let me talk about a couple of projects. You heard
about -- you heard about this one earlier. You know,
tremendous, tremendous news that we were selected
on this and recommended by the authority to the
board and the board has approved signing this
contract. Seven hundred million dollars over seven
years. But this is one of several.
We have a role in every high-speed rail program in
the United States. We're the program manager for
Illinois High Speed Rail. We're the program
manager for parts of Texas High Speed Rail. And
we're the program manager for the NET Futures
Project, which is the improvement of the northeast
corridor, the work in developing an environmental
impact statement to allow future improvements on
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the northeast corridor. We've dominated that space
since President Obama introduced high speed rail six
and a half years ago, and expect to continue to do
that, not only in the U.S., but across the globe.
This is our mid-town tunnel project. What you're
looking at are immerse tubes. These were built in a
shipbuilding facility. They've been completed at this
point. The ends have been capped and they've been
floated to the top of the shipbuilding facility. You
see six segments there. This is the second litter of
segments. They're 300 feet long, about 60 feet wide,
and about 40 feet high.
You know, the concrete thickness from the base is
about four feet thick. And they're floated down the
Chesapeake Bay from Baltimore. This is Sparrows
Point in Baltimore that you're looking at. Floated
down the Chesapeake Bay, and then Norfolk,
Virginia, where they're immersed and tied back
together, opened up, and that'll be the tunnel. A very
interesting video on our website, if you want to see
the construction process on how these are put
together.
The busiest port in the United States, L.A. Long
Beach. We're the program manager and construction
manager for the Gerald Desmond Bridge. This is the
first cable stayed bridge to be constructed in
California.
Now I mentioned before we're the program manager
on Atlanta Hartfield. This project is just getting
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started with fees of $20 million. We unseated the
incumbent that had been there for a number of years
and quite proud of the business development success
we've had in this in the aviation space.
And I won't steal Greg's -- Greg's thunder for this
afternoon. You'll be looking at parts of this project
this afternoon, but the number seven extension from
a transportation standpoint has been a project that
Parsons Brinkerhoff was fundamental in developing
the concept very early on, meeting with the MTA,
New York City Transit, and others in developing
this project, and then became the engineers for the
project as it moved through.
So with that I have a few minutes here for questions.
Female:
Hi. Mona (Nisiair), (Levention) Bank. So it seems,
just from you and Greg before, that that Parsons has
been a very well-established company with a lot of
history behind it. And earlier, you know, it was
pointed towards a relation-based nature of the
business. You knew of the La Guardia terminal
project early on and you put together a team for that.
You also spoke about a change in funding and more
shift towards P3. I'm just wondering, has there been
a change in contracts are being awarded and has
there been any disruption in the industry? So
because funding's tight, for example, you know, is it
-- are you seeing governments awarding contracts to
a company in China 'cause it's cheaper?
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Male:
A good question. A number of changes that we're
seeing. First is the (lumpiness) that we talked about
before. The projects are awarded and they're large
projects that come quickly. From our traditional
work that we do, they're typically with large general
engineering consultant-type contracts or program
management, construction management-type
contracts that were being let.
What we're seeing now is more and more task order
type contracts. So we don't have the certainty that
that project will last seven years, eight years, nine
years. California is unique in that area these days.
Typically the task order contracts have large (upset)
limits, but no authorization to proceed beyond the
specific task.
With respect to a changing client, we -- we always
want to stay close to the owners, irrespective of
whether they are our direct client or not. We think
that provides a tremendous benefit to the team,
understanding what the owner wants, and being able
to relate that to the contractor. Knowing that we can
get permitting approvals through the state DOTs of
the owners on a certain basis is a big value to our
contractors, reduces risk there. But we do have a
new set of clients, and those are the contractors and
in some cases the (STVs) on a P3 basis. And we
make a concerted effort to establish the same of
relationship with those large contractors.
And our feeling is work with a small number of
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contractors where we have strong relationships
where they understand us, we understand them, we
understand how we work together and become more
efficient. Rather than a scattered approach of trying
to work with every contractor in the United States.
Yes?
(Off-Mike)
Male:
OK, the wait is over. Michael (Dudas) from
(Sternagia). Two questions. First, what is it going
to take for the P3 model to get more prevalent in the
United States? What are some of the cultural,
political, legal things that need to get done for
something that the rest of the world has caught on
much earlier, and how it's going to flow in the U.S.?
Male:
I think time is helpful, success on these projects.
You know there's a political risk to these as the
owner in moving forward. And we see that across
the world. E407 is -- is a good example where the
government was criticized for giving so much -giving so much away to the developer. As that
model becomes more established in the U.S.,
understanding those risks from a political standpoint
I think greatly helps.
The other piece of it is understanding and the
certainty of where are we headed with the Highway
Trust Fund from a federal standpoint. Is the General
Fund going to continue to subsidize the Highway
Trust Fund in supporting transportation, for
transportation projects? And then what is the role of
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tolls and local bond initiatives and referendums in
terms of that funding?
So I think -- I think it's a matter of time more than
anything else that says this is a successful model.
We've been, we've been at it for 25 plus years from a
P3 standpoint, going, you know, all the way back to
the Dulles Greenway, which is outside of
Washington, D.C., from a transportation project, and
awful lot of projects have been looked at this way,
and we're seeing projects that they start out as either
unsolicited, start out as P3s, and then political
decision to now move them back to either design
build or traditional.
But, as Greg pointed out, when the need's there, the
project will get built. What we're seeing in the
pipeline is just the delaying of those projects and due
to the lack of uncertainty.
Male:
And my (co-worker) kind of touched on one of your
answers. Is there any sense from Parsons and their
government lobbyists or yourself in particular about
the prospect of a highway reauthorization in this
current Congress or what may happen in 2016?
Because from the other companies that I talked to,
it's sorely needed in this extreme frustration level
from the companies that need to get that certainty.
So any sense of…?
Male:
Well we all sit around and speculate and we're all
optimistic because we're in this market, hoping that
the next short-term reauthorization for two months
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or three months will be the signal to say let's get
something done. But I -- I certainly don't have a
crystal ball in that area and, if history is any
indication, we're continuing down this path of shortterm reauthorizations until something crucial
happens in the U.S., and I can't even fathom what
that might be. John might have some perspective on
that. John was the former Deputy Secretary of the
Department of Transportation, dealt with it on a
daily basis, and tried to deal with Congress.
John Porcari:
I'd like to be more optimistic than you are, but I tend
to (inaudible) with you. We just had our thirty-third
extension, which is for 60 days. The rules that
Congress operates under now, which require an
offset, really work against anything other than a very
short term extension. Everyone understands the
need and the opportunity cost if pretty apparent, but
the will is not yet there.
Male:
John just wrote a very interesting editorial blog
about how we're spending our parents' money and
not keeping our assets up, you know, up to standard
in this country. And we're just living of their
investments in infrastructure and not investing
ourselves. Yes.
(Paul Legend):
Hi, (Paul Legend) from (CIPC). You talk about
your number one position in transportation so I just
wondered a few things about that. What is that
measured on? Is that market share? Can you talk a
little bit how you got, why you think you're still
number one, and what's your opportunity to actually
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grow market share? How do you actually improve
upon that position?
Male:
From the slide that I had up there in the number one
position was a Road and Bridges survey that they do
asking clients and owners who is the go-to firm in
these areas. We are not necessarily number one
from a net revenue standpoint on all four of those,
but we're recognized as client as the go-to firm. I
think it's very important, you know, value in the
marketplace to do that and it reinforces the fact of
our strategy to maintain those strong, strong client
relationships. In terms of increasing, increasing
market share, we have a strategy in place to identify
opportunities in the market due to consolidations
that are in the market, disruptions that are in the
market.
To improve that market share and, so far today, this
year has been quite successful in identifying where
those opportunities are and winning more than our
share of work on increasing that. But, you know, as
a leader in the marketplace, in our traditional
markets, we are constrained very often where the
state DOT has a tendency to share the work.
Male:
(inaudible)
Male:
I don't have a number. The industry does not kind of
publish that and has never been able to really capture
that data. And it's because the market is so broad
with large firms, mid-size firms, regional firms, and
even your one and two person firms that are out
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there.
The other part that's very hard to determine is as
Greg showed on the one slide, a lot of our
competitors are on the EPC, have a joint venture role
on the construction side of things, and how do you
disaggregate that to say here's the pure play
professional services market share?
Christopher (inaudible):
Thanks. Christopher (inaudible), (Core)
Capital. You made the -- you made the comment
that you thought alternative delivery would move
from roughly 22 percent today to about 30 percent,
but then plateau. Why is you think it will plateau?
Is it a function of type of projects? Is it the
financing limitations? Just any thoughts around that.
Male:
Primarily the financing limitations. You now, the
transportation in this country is subsidized and you
can only go so far with the P3 models before there
has to be some type of assistance and additional
funding by the owners and by the clients. So, on
their own, these projects need support from the state
and local governments and the federal government,
and just kind of where we are in the process, the
political will to move some of these forward.
I just look at the next five to 10 years as 30 percent
about the limit of what to expect there. If something
critical happens, something changes that, it could
change, it could increase from there. But I don't
have data on other countries and I'm not really sure
how it compares to what -- what many (inaudible)
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are seeing in Canada and across the globe.
Female:
Hi. Wondering if you can talk about your average
contract size in the transportation infrastructure
group? And is there a goal to grow the project's size
through P3s or otherwise? And also wondering how
much room do you have to grow in project size
before you run into EPC contractors as pure
competitors and your cutoff from (inaudible)?
Male:
Let me answer the last one first. In the
transportation market we aren't seeing the EPC
contractors coming together as an integrated
program delivery project delivery fashion. We have
the contractors and the engineers, and there's very
few that have looked at the market and said, you
know, we going to -- we're going to have both under
one roof, and we're going to serve everybody with
best in class across our entire spectrum.
Most of your heavy civil contractors, have a small
engineering component, but they don't want to be the
engineer of record. They don't want to do the design
work that we typically provide. So in the
transportation space, I don't think we run into that in
the near term in any way. From a project size, we're
really not -- our major clients produce 45 percent of
our work and our big projects are probably, you
now, 50 percent of our revenue. We're not
necessarily focused on project size.
One of the things we bring to the market place is the
full spectrum of services. And that's unique
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compared to our competitors. We want to have a
leadership role in every one of those segments. Yes.
I'm not smart enough to predict, you know, which
segment is going to get hot and when. And don't
want to have to pick and choose.
And from our standpoint the ability to have a -establish a leadership position, whether its connected
vehicles that I spoke about, transit-oriented
development, sustainability, all these niche market
areas -- it's important to us to have a leadership role
and very often, as those projects are starting, they're
very small contracts.
They're $100,000 contracts that are starting up. And
we find them from a margin standpoint to be, you
know, reasonable -- almost as profitable as the
larger, the larger projects. We certainly don't view
them as a lost leader in any way. They are making
margin contribution across the board.
Michael (inaudible): Michael (inaudible) (inaudible) Securities. Greg
talked about aviation as an area that you're interested
in expanding from an acquisition perspective. I
notice you're already number one in airport design
according to the survey. What is it that you're
missing then? And then a second part is can you
talk about the organic growth outlook for the
aviation sector?
Male:
I'm sorry. The organic --?
Michael (inaudible): The organic growth outlook for the aviation
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sector.
Male:
Yes. In terms of what we're missing is really scale.
We just don't have the size of some of our
competitors across the board. We're recognized as
the go-to firm. We're focusing on all three areas, the
strategic consulting area of aviation, the upfront
work, the planning work, the CM, the design work,
both from a roadside and a landside -- I'm sorry, a
landside and an air side piece of the business, and
then the CM PM, construction management project
management piece of it.
Many of our competitors are focused in one of those
areas and don't do it across the board. We're looking
at all three areas. In terms of the balance between
organic and acquisitive growth, I would say about an
even balance. And we tend to be opportunistic in
terms of what's coming on, what we're seeing from
an acquisition side. And an awful lot of the growth
that we see in the marketplace, you know, is going to
be dependent on our success in going after these
projects.
We're, you know, the big piece from the organic side
is the investment in people, bringing on leaders in
the regions where these airports are and that they
have the relationships and have done work in those
airports before. And so that's the strategy that we
use in terms of the organic growth.
Mark Neville:
Hi. Good morning. Mark Neville from Scotiabank.
This is going back to the funding issues. You know,
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when you're working on projects or bidding on
projects that require funding from the Highway Trust
Fund, just curious from the client's side sort of what
their expectations are or, you know, sort of in these
short-term extensions for years now so they sort of
feel like the funding will be there. Just sort of how
much that uncertainty actually poisons you, how
these proceed, or how they think about it.
Male:
Yes. Well I talked a little bit about the task order
contracts that we see. That's one mechanism that the
states particularly use in order to reduce their risk,
reduce the fact that they can't make the outlay at the
beginning. The other is multi-year funding where in
the past we would have a six-year program
management job in our backlog, they're breaking it
into annual reauthorization funding types. So it -once that money is designated and obligated, you
know, by the states, it's pretty certain that it will
remain there. There are unique cancellations,
typically they're politically driven where a new
governor comes in, takes a look at the project and
says, this isn't the direction I want to go. Those
projects tend to go on whole. So the need is
tremendous. You know, it's eventually going to
come. It's a question of timing.
Nolan (Heck):
Nolan (Heck), 1919 Investment Council. By
implication your California high speed rail, about ten
percent of the total value is going to be (WSP BD).
Would that be the same for La Guardia, village (with
forever) tunnel, other projects?
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Male:
I'm not sure I…
Nolan (Heck):
Well you said $700 million out of the $7 billion
project, that's about 10 percent.
Male:
No, the project in total, the official estimate right
now is $63 billion. Now that's the -- you now, a -you know, even that's a segment of the original
thinking of the project. That's basically from the
L.A. basin to San Francisco Bay area, is a $63
billion project. But that's -- that's to be built over a
number of years and our contract is over a sevenyear period. So I'm not sure… If I said $7 billion on
something, I misspoke. I apologize.
Nolan (Heck):
But the La Guardia project, roughly what percent of
the overall (inaudible) do you feel is likely to be
(WSP BD) revenues?
Male:
Because it's all four segments coming together, I
don't have that off the top of my head. Greg?
Greg:
(inaudible)
Male:
And then we, you know, we have subcontractors that
participate, so the net revenue piece is something
smaller than that. Most of the projects that we do
from a public standpoint have a large (MBE DB)
component in that, ranging anywhere from five
percent to 30 percent of the project is required.
Male:
Given the contracting model in this space, what's the
opportunity to improve the operating margins or the
EBITDA margins in the business.
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Male:
You know one is the efficiency side of things, you
know, eliminating -- eliminating rework, eliminating
any erosion that we have, and we're focused very,
very much on making sure that we're more, you
know, more efficient in this space. On the fixed
price work, you know, again anything you do that's
reduces your cost is important.
On the cost reimbursable work, there's a regulated
model that have to, you know, you accept the
margins on that cost base. But in the short term, not
all of those projects, even if they're cost
reimbursable or what we refer to as provisional
where that rate changes on a regular basis, we often
have a fixed rate that we go in to the projects on. So
it's limited in a regulated market, but there is always
the opportunity to do better on the efficiency side.
Male:
Thank you.
Male:
Hi. Just regarding acqui…