Investcorp Credit Management BDC, Inc. (ICMB) CEO Michael Mauer on Q4 2019 Results – Earnings Call Transcript

Investcorp Credit Management BDC, Inc (NASDAQ:ICMB) Q4 2019 Earnings Conference Call September 11, 2019 1:00 PM ET

Company Participants

Michael Mauer – Chairman & CEO

Rocco DelGuercio – Chief Compliance Officer & CFO

Christopher Jansen – President, Treasurer & Secretary

Conference Call Participants

Christopher Nolan – Ladenburg Thalmann

Paul Johnson – KBW

Robert Dodd – Raymond James & Associate

Operator

Welcome to Investcorp Credit Management BDC, Inc Fourth Quarter Earnings Conference Call. Your speakers for today’s call are Mike Mauer, Chris Jansen and Rocco DelGuercio. [Operator Instructions] A question-and-answer session will follow the presentation.

I’ll now turn the call over to your speakers. Gentlemen, you may begin.

Michael Mauer

Thank you, operator. Thank you all for dialing in this afternoon. I’m joined by Chris Jansen, my Co-Chief Investment Officer; and Rocco DelGuercio, our CFO. Before we begin, Rocco will give you our customary disclaimer regarding information and forward-looking statements. Rocco?

Rocco DelGuercio

Thanks Mike. I would like to remind everyone that today’s call is being recorded, and that this call is the property of Investcorp Credit Management BDC. Any unauthorized broadcast of this call in any form is strictly prohibited. Audio replay of the call will be available by visiting our Investor Relations page on our website at www.icmbdc.com.

I would also like to call your attention to the Safe Harbor disclosure in our press release regarding forward-looking information and remind everyone that today’s call may include forward-looking statements and projections, actual results may differ materially from these projections. We will not update forward-looking statements unless required by law. To obtain copies of our latest SEC filings, please visit our Investor Relations page on our website.

At this time, I would like to turn the call back to our Chairman and CEO, Michael Mauer.

Michael Mauer

Thanks, Rocco. The past few months have been an exciting time for us. As we announced on June 26, Investcorp entered into a definitive agreement to purchase the majority ownership interest in the advisor. On August 30, the last of the steps associated with that purchase was completed. More comprehensive detail is provided in our press release which can be found on our website, and will be further elaborated in our 10-K which will be released at the end of the week.

To summarize, Investcorp acquired Stifel and Cyrus’s interest in the advisor. The composition of our board will change somewhat on September 15, and we have changed the name and ticker of our fund from CM Finance, Inc. (CMFN) to Investcorp Credit Management BDC (ICMV). Chris, Rocco and I along with the entire investment team will continue in our roles and are truly excited to join the Investcorp platform. We see enormous opportunities ahead for the BDC. The format of this call will follow what we have customarily done; a comment on the quarter and our outlook. Chris will detail portfolio activity during and after the quarter. Rocco will review our financial results and then I’ll conclude with additional commentary on handful of specific portfolio positions before we take Q&A.

We continue to reposition and diversify our portfolio with investments in new industries and to new portfolio of companies. We have been conservative focusing on first in loans, and our portfolio is approximately 80% first lien today. We have experienced some challenges in the portfolio but I’m proud of the work the team has done managing existing investments, originating new opportunities and continuing to reposition us through a focus on direct and club relationships. New deal economics are in our view, more borrower and sponsor friendly than we think is ideal but we have seen name-specific opportunities to find tighter, non-economic terms, especially when considering leverage levels, maintenance confidence, restricted payments and other elements which add risk from a lenders perspective. As always, the direct lending in club loan space tends to be slower moving, less certain, but ultimately a source of better structured loans for us to evaluate and invest in.

This quarter we made investments in DIP loans, secondary market purchases of loans and bonds, a syndicated loan, and in a number of club deals. We leveraged our relationships to find and make some of the most attractive loans this quarter and club deals for Limbach and Potpourri. Chris will walk through all of our investment activity during and after the quarter in detail, and then Rocco will discuss our financial results. I’ll conclude with some commentary about our largest marks, a few particularly topical investments, and then I’ll talk about our outlook over the balance for the calendar year. As always, we’ll end with Q&A.

With that, I’ll turn it over to Chris.

Christopher Jansen

Thanks Mike. We had another active quarter investing in six portfolio companies, including three new portfolio companies. We invested $32.2 million this quarter, all of which was in first lien and debt loans. We also had two full realizations during the quarter.

First, I’d like to cover our fundings on revolving and delayed draw positions. We funded approximately $200,000 on 1888 industrial services revolver. We have no delayed draw commitments outstanding currently. As we disclosed on our last call, we made a new investment in the first lien loan of Limbach Holdings. A contractor focused on HVAC, plumbing, electrical and mechanical services for commercial construction. Our yield at cost on Limbach was 10.8%. We participated in the new first lien loans for flow control, a manufacturer of pumps and valves for the power, industrial and energy markets, first reserved as a sponsor. Our yield at cost is approximately 9%.

We’re also part of the first lien club transaction for Potpourri Group, most lien capital is the sponsor. Potpourri is a large multi-channel direct-to-consumer marketer targeting middle income women aged 45 and over, and is focused on clothing, accessories, home goods and specialty products. Our yield at cost was approximately 11.6%. We joined with other existing Fusion lenders to first provide a super senior first lien facility which is enrolled into a DIP loan as the company filed for bankruptcy in June. These loans provided need of [ph] liquidity as Fusion began it’s reorganization process. The yield is not a particularly meaningful number as the bankruptcy is set to last about four months but we calculated approximately 30% to 60% depending on the specific funding date. We also provided a small incremental loan for 1888 industrial services on a first lien basis as the company made a small strategic acquisition. This loan supports our broader investment in the turnaround of the company which has been making good progress since the oil crisis. Our yield on this new loan at cost is 7.3%.

We’re active in managing our positions and excel during the quarter. Earlier in the quarter when sentiment was very positive and yields tightened, we sold out our position in the first lien 10% notes at a price above par and purchased a small additional position in the first lien loan. In May, we added back a small position in the bonds. Our yield on the incremental loan position was approximately 9% at cost, and the new bond position yield’s approximately 13.1% at cost. We reduced our net exposure to a seller by net $4 million, as well as lowering our average cost.

We had two small realizations during the June quarter. First, we sold our position in Nexeo Plastics secured bond. Revaluated our ability to build a more meaningful size and attractive price and decided the market was more conducive to selling. I fully realized IRR under small position was 17% which is elevated due to the short holding period. Secondly, we saw those co-invest position in the Zinc Acquisition Holdings. Our loan had already been repaid and we were very pleased with our 80.5% IRR on our two-year long equity investment. When considered together, we realized a 23.1% IRR on our debt and equity investment in Zinc. Since quarter-end, we have made three new investments and had two full realizations. First, we invested in an incremental first lien loan to United Road Services, the leading auto transportation service company in the U.S. United Road is sponsored by [indiscernible]. Our yield at cost is approximately 8.6%.

We also participated in the first lien club loan for hyperion materials and technology. Hyperion is an industrial manufactured products made from hard and very hard materials; carbide and synthetic diamonds. It was carved out of Sandvik by KKR. Our yield at cost is approximately 8.3%. Finally, we’re also participants in a first lien club loan to NorthStar Group Services, environmental and facility management company focused on the remediation and deconstruction services markets. NorthStar is owned by J.F. Lehman. Our yielded cost is approximately 7.8%.

We had three-fold realizations after quarter-end as well. First, we sold our final debt exposure to PR Wireless, also known as Open Mobile. We previously sold [indiscernible] holding only a delayed drug commitment which fully funded last quarter. Today we have no exposure to Open Mobile from an NAV perspective, although we do continue to carry one at zero value. Our fully realized IRR on Open Mobile’s loans was approximately 10.8%. We also sold our first lien position in fleet pride [ph]; this is our third iteration of the investment and candidly, we view it as a high quality but ultimately non-core position. Our fully realized IRR in this position was approximately 6.5% and our IRR across all investments in fleet pride [ph] was approximately 14%. We sold our first lien position in Sears, this is a small position; we never had the ability to build it to a more meaningful size. Our fully realized IRR on the small position was approximately 11.3%.

Using the GICS standard as of June 30, our largest industry concentration was professional services at 13.5% followed by energy equipment and services at 10.2%, media at 9.9%, construction and engineering at 9.8%, and commercial services and supplies at 8.6%. Our portfolio companies are in 21 GICS industries versus 14 industries last year. As of June 30, our portfolio company count was 33 versus 32 at March 31 and 25 companies a year ago, this count stands at 34 today.

I’d now like to turn the call over to Rocco to discuss our financial results.

Rocco DelGuercio

Thanks, Chris. For the quarter ended June 30, 2019, our net investment income was $3 million or $0.22 per share. The fair value of our portfolio was $306.4 million compared to $299.1 million at March 31. Our investment activity accounted for $7.3 million increase in our portfolio, including $8.2 million of net realized and unrealized losses. Our new investments during the quarter had an average yield of 11.5%. The weighted average yield of our debt portfolio was 10.5%, an increase of 6 basis points from March 31. The major drivers of this decrease were our new investments which had a slightly higher yield than our portfolio on an average, and the decline in LIBOR which accounted for a negative 25 basis point impact.

As of June 30, our portfolio consisted of 33 portfolio companies. 77.6% were first lien investments, a slight increase from last quarter, driven by our continuing — continued focus on first lien investments in this quarter. As of June 30, 18.7% of our portfolio is in second lien investments, 3.7% is in unitranche investments, and 0% of our investments are in equity warrants or other positions. 96.8% of our debt portfolio was invested in floating rate loans and 3.2% in fixed rate positions. Our average portfolio company investment was approximately $9.3 million, and our largest portfolio company investment was PGI at $17.3 million. We were 1.16 times levered as of June 30 versus 0.91 times levered as of March 31.

Finally, with respect to our liquidity, as of June 30, we had $19.7 million in cash, $6.6 million in restricted cash, and $19 million of capacity under our revolving credit facility with UBS. Additional information regarding the composition of our portfolio will be included in our Form 10-K which will be filed on Friday, September 13.

With that, I’d like to turn the call back over to Mike.

Michael Mauer

Thank you, Rocco. As we all know, there is a trade-off between risk and returns. We and our peers in the BDC space target returns materially higher than that of investment grade bonds, probably syndicated loans, or even high yield markets. We try to mitigate the risk with diversification in the portfolio across sectors, geographies and borrowers. We focused on the quality of loan documentation, maturities, cash flows and returning principle. We have managed down the portion of the portfolio in second lien investments from 48% in 2016 to less than 20% today and we do not see reasons to reach down the capital structure now to generate e-yield in the current environment.

We also have an investment team with deep investment background in distress market which is a valuable resource when any of our borrowers has performance issues. Fusion Connect out for bankruptcy on June 3 due to a combination of factors, especially failure to manage cost and integrate the acquisitions. Fusion ran out of liquidity in April and defaulted on it’s interest and principal payments due to lenders, since that time we have been in active discussions with other lenders, council, and advisors to ensure the greatest extent possible we can our ability to participate [indiscernible] and strategically and economically advantageous transactions with the company. Fusion currently expects to exit bankruptcy in October.

During May, 4L unexpectedly announced that both of it’s major segments have lost major customers. Management’s previously announced guidance was lowered meaningfully and the company hired advisors. Lenders have now formed an adhoc committee, we’re working with counsel and advisors to work towards a reorganization of the business. There is a great deal of uncertainty in the situation as the loan is still transitioning from the largely CLO-based ownership group. Business plans are being developed and capital structure discussions are ongoing.

As Chris explained, we actively manage our position to XL Technologies through the quarter. Since our trades, the market consensus appears to be that XL’s operational restructuring charges are actually permanent in nature which if true it would reduce EBITDA and at current run rate level these charges put the company under liquidity pressure. The markets negative sentiment is most apparent in the trading levels of the high yield bonds with the loans trading down in sympathy. Our view is that the market is overly pessimistic. The company has multiple levers to manage liquidity and we expect the current sentiment to shift over the coming quarters. We markdown our position in the first and second lien loans in premier global services by an aggregate of $1.2 million this quarter. Trends in PGI’s fundamental results continue to be challenging.

That said, the sponsors, Sears Capital, continues to be supportive and behave in a manner that gives us confidence in the business over the longer term, and we maintain an open dialogue with the sponsor, our fellow lenders and industry professionals. We’re optimistic in the company’s ability to continue to execute a turnaround and we see real upside potential with PGI’s transition to it’s new business model is reasonably in line with management’s plans.

AR or 1888 has been a constant focus for us since 2014. We supported the company through an out-of-court restructuring and currently provide a revolver for working capital purposes as well as multiple trenches of term debt. 1888 made an acquisition this quarter and is poised to grow outside it’s historic exclusive focus on the DJ Basin diversifying into the Permian and Wyoming. We provided an incremental term loan to help support this acquisition. We’ve remained cautious as revenues are still highly concentrated. We have hired a new CEO in conjunction with the acquisition, and we are in the process of hiring a new CFO.

Deluxe Canada continues to perform well and it’s independent results are well within our expectations. That said, the U.S. parent company, Deluxe Entertainment Services has entered into an RSA with it’s lenders and is targeting to reorganize their capital structure in the coming weeks due to difficulties in it’s other business segments. We are in active dialogue with lenders to the U.S. parent, to advisors and counsel, and most especially, with our fellow club lenders to Deluxe Canada. We expect that there may be some business disruption associated with this but our loan was well underwritten and the RSA contemplates no impairment for our class.

Despite the negative creditor events for several of our borrowers this quarter, we continue to make progress with our portfolio repositioning. We’ve increased our portfolio company count from the mid-20’s to the mid-30’s today and are gradually increasing the number of club deals in the portfolio. We’ve used opportunistic sales to help reposition the portfolio and fund the purchase of new loans. In addition, we have several investments that are either committed or in the pipeline that we expect to fund in the near-term. Last quarter I guided that our new leverage target would be in the 1X in a quarter to 1.5X context. We were at 1.16X as of June 30 moving towards our target range. As I previously stated, the advisor will wave base management fees in excess of the excess over 1% for next quarter on leverage of 1X — above 1X. We did not cover our June quarterly dividend with NII and did not earn our incentive fee. We waived the portion of our management fees associated with base management fees over 1X leverage.

We do expect to cover the dividend and earn our incentive fee in the September quarter. Our Board of Directors declared a distribution for the quarter ended September 30, 2019 of $0.25 per share payable on October 16, 2019 to shareholders of record as of September 26. We have maintained our dividend at $0.25 since March of 2017 and are confident that this level is supported by our ability to generate NII without reducing the quality of our investments or changing our focus from secured lending opportunities. Due to the negotiation of the transaction between CM Investment Partners and Investcorp, we have been in an extended blackout period and as such we’re unable to purchase any additional shares. As a reminder, the board approved the extension of this $5 million program through May 1, 2020.

I would also like to update you on Investcorp’s commitment to purchase shares of ICMB. There are two components of their commitment. First, there is the commitment to make open market purchases under a 10B5 program. And secondly, to purchase shares at NAV. Investcorp has told us that they expect to execute purchases under both components commencing within the next 90 days.

Lastly, I want to finish by emphasizing that while two quarters ago we started to reposition the portfolio and further diversify it, we’ve only begun to make progress. As part of a larger platform with Investcorp, a firm which has over $32 billion of run rate AUM, the credit being over $12 billion of that amount, we have enhanced sourcing opportunities and additional resources to leverage as we execute this repositioning.

Operator, please open the line for Q&A.

Question-and-Answer Session

Operator

[Operator Instructions] Our first question comes from Christopher Nolan. Please state your question.

Christopher Nolan

Hi, the dividend. Given your high leverage ratios due to migration of the first lien loans, how do you anticipate recovering the dividend going forward?

Michael Mauer

As we look at the portfolio as it’s currently constructed and our target between 1X in a quarter and 1.5X, we will cover the dividends.

Christopher Nolan

And then, was the higher yield on new investments this quarter basically skewed by the DIP loan?

Michael Mauer

No, it was not. If you look at the additions or probably about 10 additions, and they were principally between 8% to 12% yield; so it was well dispersed at no high concentration. The DIP loan is a very, very small investment; so does not disproportionately affect things.

Christopher Nolan

Great. And final question would be; Mike, your comments on waiving the management fees above one-to-one debt-to-equity, is that waiving all base management fees above one-to-one? It wasn’t clear to me.

Michael Mauer

I just want to make sure that I’m answering the question was asked. Any base management fee above 1%, not a 100% of base management fee is the above 1% will be waived above one turn of leverage.

Christopher Nolan

Got you. Okay, so that’s it for me. Thank you.

Michael Mauer

Thank you.

Operator

Our next question comes from Paul Johnson. Please state your question.

Paul Johnson

Good afternoon, thanks for taking my questions. So I’m going to start, we’re not aware of Investcorp’s presence in the U.S. middle market. And I know — I think you mentioned that they managed $12 billion or so in credit assets. Are any of those middle market assets? And if so, or if not, I’d take a little bit to what Investcorp brings to enable in terms of value?

Michael Mauer

So, couple of things. One is, in credit, none of those are middle market, that was the strategic rationale for us becoming part of Investcorp’s platform. Investcorp, it was been around since 1982 and it is by definition, approximately 37 years in the middle market private equity. So they are very, very prevalent in the middle market and prevalent in the U.S. middle market equity side. It brings to the table a platform that it has $32 billion overall, it’s got of the $12 billion a little less than half of that is in broadly syndicated credit in the U.S. which has dialogued across the street with regional and large banks. It also brings to the table a lot of middle market lenders who were trying to underwrite to the parent private equity side and bring dialogue. So over the last month, there has been several times that I’ve gotten calls from people who are looking for dialogue with Investcorp, who are very active in middle market lending, some of which we know very well but it has really ramped up the dialogue and others that we did not as well who have reached out and want to have a dialogue where before they did not.

Paul Johnson

Thanks. And then, so as far as — so I believe the transaction closed on October 30. So are you guys starting to see yield flow right away? I mean has that already changed or do you think it will take more time to improve the ingredients [ph]?

Michael Mauer

Well, I think EMLA [ph] is just having the word starting, the answer is yes. There is two deals in the last two weeks that have come in, one of which was not interesting to us that we’ve already passed on, the other which is interesting and we’re digging into. So, it had started but I think it is nowhere near what I would say is a ramped up stage as a result of the relationship. I think that will take several months, and more importantly, we are looking at ways to broaden the platform from AUM whether or not those are private funds alongside or other ways to do that. And having more capital will also facilitate ramping up those discussions.

Paul Johnson

Thank you for that. And then, as far as their equity Fusion at NAV, basically 5% of the equity based plan to inject into the BDC. Just to be clear, did you say that they expect to execute that within the next 90 days or is that something that will take place over the next two years?

Michael Mauer

We are in discussions with them about how it will happen but it will begin within the next 90 days is what they have told us they expect. Both the [indiscernible] Paul, in the open market.

Paul Johnson

Got it. And then, just one or two more, if I may; I was hoping you could provide any short color update on your investment in PGI from your global systems since that was going to larger investments, the stressed mark [ph] last quarter?

Michael Mauer

Listen, as you know, we operate under NDA so it’s hard to say much there. What I would say is that Cereus [ph], the sponsor, continues to be very active, very focused on it, it’s one of their largest equity investments and we continue to feel positive about the way they are managing that investment.

Paul Johnson

Thanks for that. And then my last question; as far as your outlook for the dividend — I know you said you expect to earn that along with your full incentive fee, you will be earning an incentive fee next quarter. Does your outlook announced include any sort of credit losses baked into those assumptions?

Michael Mauer

So, what it — what we’ve done is we continue to look at our portfolio, we run models against it without going into any details. We think that that will cover the dividend, we’ll earn out base management fee but if or how much of the incentive fee is probably the question there. But we’re very happy over the near to medium term to be covering the dividend, and then we’ll figure out how we earned in the incentive fee. But the objective here is that, the portfolio that earns the dividend and we have and we moved towards the repositioning of the portfolio more diverse as we continue over the next 6 months.

Paul Johnson

Okay, thanks for taking all of my questions this morning.

Michael Mauer

Thank you very much, Paul.

Operator

Our next question comes from Robert Dodd. Please state your question.

Robert Dodd

Hi guys, I’m out of the office, I’m at airport, so excuse me, if there is background noise. On the — going back to closest unforced question, on the dividend — I mean, obviously if we look at accruing portfolio at principle was up sequentially. Dividend here was stable, yet total investment income and NII obviously were down materially, sequentially and didn’t cover the different this quarter. So could you give us some — kind of more exclusive color than your confidence level about why there was a decline that quarter with the portfolio growing and stable, and why you expect that trend to levers through the dramatic next quarter?

Michael Mauer

I’d say there are two pieces to that Robert and thank you for the question because it requires a little bit of explanation. Number one is, we have increased a little bit under our leverage from prior quarter; so we’re at — I believe it was 1.16, I don’t have it right in front of me. As of the end of the quarter we’re targeting to get into that 1X in a quarter to 1.5X range which I think we will be barring some unexpected repayments or something like that which is not necessarily be a bad thing but that would affect the leverage ratio. The second piece is that we had unsettled trades going into quarter-end where we had made investments, we were poised to start earning the interest, they delayed on the settling of those. And thirdly, it was the cash balances that we deployed during the quarter, so when we look at going into September we should cover it and then going into the December quarter we should be in better shape as far as the fully deployed.

Robert Dodd

Got it, thank you. And as you mentioned in your prepared remarks, you started rotating the portfolio — reposition the portfolio about three quarters ago. Obviously, since then there has been a fairly steady downward trend in NAV with the mark coming through. So is there anything to read into the portfolio repositioning, the attrition of NAV and as you continue to finalize that portfolio repositioning. Are we going to continue to see this slow kind of attrition of NAV until some of those legacy assets get washed out?

Michael Mauer

Well, I mean, if we felt it the fair value was down, we would have marked it down as of the quarter-end. So I don’t know that we will or won’t, we do have some positions and we talked about 4L and we talked about Fusion; I think over the next 69 days both of those should have a lot more clarity on the restructuring and where they are coming out. I think also XL had indicated publicly that they expected to work through their restructuring charges through the end of the year, that obviously has a delay in the timetable on which we see it but if they do what they said they are going to do, they are present upside from where it is right now. So there is offset and uncertainty is still there, so unfortunately I don’t have a very succinct answer for you, Robert. Hopefully, I…

Robert Dodd

That is helpful, and that’s kind of — where the question comes from. You commented on like 4L while it’s still rotating from the CLO-type ownership group to maybe something that might be more distress oriented or not CLO-eligible? I mean, doesn’t that kind of activity tends to put pressure on the fair values in the near-term, maybe not permanently, right, just trading values now. I mean, so is that a risk there?

Michael Mauer

Absolutely. I would say that your observation is correct, that actually taken one step further. When you have any large group that’s transitioning, you have pressure on values because that’s technical, not fundamental; those are the people who wanted to sell and not hold. On the other side, the people who were buying tend to be people who see value and they are not seeing value whether buying, if they are seeing value significantly above where they are buying because they tend to be hedged funds or distress, and if they are seeing it at the purchase price they never buy.

Robert Dodd

Got it, yes, understood. And if I share one more, obviously, we don’t have the portfolio, this is what other than [indiscernible] know that I’ve discussed with you guys in the past because it used to be a big position. I don’t know how big is this today but monitoring any update on those guys? I think at one point it was your number one position but obviously it hasn’t been for a while now but anything going on there?

Michael Mauer

Yes, we revised the public dataset that — it is from a volatility and went down a bit over the last 6 to 9 months. Over the last months to two months we’ve seen some positive news, and it’s playing out the way we would have expected it too long-term, it would be what I’d say. The other thing is, you can go on publicly and look at the New York State Gaming Commission numbers of revenue by week; they were very, very weak when they opened 18 months ago. As of this spring, they had opened or it was open nearby the waterpark and some other things, they still do not have opened all of the — I think it’s the village but definitely the golf course and some other things. So you can see that they are top — I want to say their Top 10 weeks of revenue have been in the last 15 weeks, that could be off a little there but you can go and look at that and it continues to ramp up. I don’t think it will be significant as a standalone but hopefully, it will help the overall business. The sport book became legal as of September 1, there is only two weeks in as of today as far as revenue on that separately identified piece [ph], and neither one of those has four weeks of college football and NFL in it. And it tends to be [indiscernible] our view is NFL and college football, NCAA basketball there probably the biggest drivers around that but it will help drive some incremental traffic too.

Robert Dodd

And on top of that…

Christopher Jansen

It’s Chris. The parent has continued to be supportive in their public documents as — it’s a public filer and there is a commitment to continue to fund from the parent owner; but continue to fund just in case the funds are needed.

Robert Dodd

Got it. I appreciate the color guys, thank you.

Michael Mauer

Okay, are there others?

Operator

Yes. We have another question from Christopher Nolan. Please go ahead.

Christopher Nolan

Hi, the look back. I see with the new management that there is a 11 quarter look back and that’s a change from just a calendar quarter look back. Is that correct way of looking at it?

Christopher Jansen

No, it’s the same thing Chris, it’s 11 quarters including the current quarter. It’s just — it was just reset.

Michael Mauer

So it’s a rolling 12, it doesn’t — it’s not a calendar, it’s always 12 back.

Christopher Nolan

Right. Okay, that’s it for me. Thank you.

Operator

[Operator Instructions] At this time, we have no questions.

Michael Mauer

Thank you very much, operator. Thank you, everyone. We look forward to speaking in several weeks.

Operator

This concludes today’s conference call. Thank you for attending.