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Ensemble Capital Webinar Transcript: Netflix Update

29 July 2020 | by Ensemble Capital

We recently hosted our quarterly client webinar. You can watch the reply HERE and read a full transcript HERE.

Below is an excerpt from the webinar discussing our investment in Netflix, Inc (NFLX).

Excerpt (Arif Karim speaking):

Today, we want to highlight the competitive and financial strengths that Netflix has demonstrated since we last discussed the business a couple of years ago, especially in light of the expected competition that’s finally arrived from traditional media companies launching their own streaming services led by Disney. In addition, the emergence of the COVID-19 pandemic around the world has led to accelerating benefits for digital entertainment and global production.

Two years ago, we shared that Netflix was reaping the benefits of its unique business model, where a generational shift in video services over the Internet enabled Netflix to dream big and bet big – to become the first global scale direct to consumer subscription media company.

Unlike traditional media companies, its growth opportunity was not limited by regional relationships with cable and satellite companies, who had built and owned physical connections to the customers. It was one that was open in reaching anyone with the more pervasive virtual connection, the Internet, wired or wireless, anywhere in the world at the click of a button. The traditional link between reaching a customer as a media provider and the physical infrastructure build was no longer a limit to growth and economics.

Netflix’s success in realizing this opportunity has everything to do with the company’s culture born of its history as an internet-based, innovation-driven business, which drove it to build capabilities that have underpinned its execution.

We list these capabilities that comprise the moat Netflix built, including the scale of its content catalog, its phenomenal subscriber acquisition engine which drives a rapidly growing budget for fresh content, and a global intelligent delivery network. It is now one of the largest entertainment content buyers amongst media companies anywhere and one the largest distribution “networks”.

As HBO’s top rival at the Emmys, the historical king of quality content, we know Netflix has that quality curation skill down. But it also caters to the Rom com, pop drama, mystery, sci fi and Adam Sandler fans too. And versions of such genres created by local producers for their local cultures around the world. Award winning documentaries, kids’ animation, stand-up comedy, and a plethora of cooking, travel, romantic, and even cleaning reality shows are part of its bag too.

With Netflix you get a whole mix of content from creatives around the world for all viewer interests, unbound by the limits of time slots, channel capacity, and advertising loads. The range has proven to increase Netflix’s audience, engagement, and addressable market. Netflix has not just achieved its goal of “becoming HBO before HBO becomes Netflix”, as its chief content officer Ted Sarandos used to quip, but it’s now substituting for the traditional cable bundle. Only better, significantly cheaper, and at your convenience anywhere.

Management’s focus on building and scaling this service out has been a huge creator of value for customers, content creators, and shareholders. It adroitly utilized cheap and plentiful debt capital, to accelerate the build out beyond its contemporaneous funding capacity, a clearly smart strategy in retrospect given its wide lead today.

The results of Netflix’s urgency coupled with the decade long inertia of media incumbents are evident — Netflix has driven adoption of the streaming video market globally and become the de facto leader with a global subscriber count that is quickly approaching 200 million.

Total paid subscribers (the red line) have grown by nearly 100 million since 2016, the year we took our initial position in the company, from 89 million to 183 million subs in 1Q2020. While the international segment of the business (the green line) now accounts for the majority of subscribers and revenue, the growth opportunity there is still nascent and provides years of runway.

Streaming revenue is estimated to triple from $8 billion in 2016 to almost $25 dollars in 2020. Operating margins are expected to increase from 4% to 16%. And we believe that margin can continue to grow for several years as the international markets mature, just as we’ve seen them do in the US market.

Content spending more than doubled from $7 billion in 2016 to an estimated $16 billion in 2020. The widening gap between the black revenue line on the graph from the blue content spending line demonstrates the leverage in the business while the green dashed line is indicative of the operating margin growth. Given the fixed cost nature of content and production infrastructure spending at scale, we expect free cash flow generation should follow, as incremental revenues continue to disproportionately favor profit growth.

Though adoption of video over the internet had already been strong, we believe the COVID-19 era is accelerating the shift from traditional Pay TV to streaming, while also favoring Netflix’s unique, globally distributed production model. Netflix has stated its 2020 and most of its 2021 new content schedule will generally be unaffected, while legacy media companies are reported to be stuck in action even for the fall 2020 lineup. We expect that should drive incremental subscribers seeking alternative sources of fresh content.

While we’ve long expected one or more of the technology leaders such as Amazon, Google, or Apple to emerge as one of the three to five long term global streaming platforms alongside Netflix, the only traditional media company we believed would be able to make a credible run for a position among them is Disney.

Disney arguably has the strongest content catalog and IP of any traditional media company, including Disney Animation, Pixar, the Star Wars and Marvel franchises, The Simpsons, and all the television content from ABC, Disney, and twenty first Century Fox Studios, while its globally recognized brand and cross-platform marketing capabilities make it formidable. Bob Iger, its chairman and highly regarded former CEO, made it clear at launch that streaming is the future of Disney and all of the company’s strategic focus was on making that transition successfully.

Disney took a smart and humble step in copying almost exactly the playbook Netflix developed in building its service. This included bringing in house the technical capabilities by acquiring a majority stake in BAM Tech for $2.6 billion, scaling its content catalog via its acquisition of twenty first Century Fox for $71 billion, committing to invest about $5 billion from foregone licensing revenue and expenses to build out the platform, and pricing its “premier” content service aggressively to drive accelerated subscriber growth globally. That’s $79 billion by our count.

In comparison, Netflix’s accumulated cash burn, or investment, of $11 billion since 2012 to build the market and become its leader looks like a phenomenally productive allocation of capital, which has resulted in the incremental two hundred billion dollars in market cap investors have awarded it since.

The Disney Plus streaming service was launched in November 2019 first in the U.S. with an incredible 10 million subscribers signed up on day one. The surge actually crashed its network! By the end of the quarter Disney had added 26 million subscribers, while Netflix as the U.S.’ biggest incumbent streaming service managed to add, not lose, nearly half a million new U.S. subscribers. Netflix exited the fourth quarter with 61 million U.S. subs while its global base grew by 8 million to end the quarter at 167 million subs.

With COVID-19 accelerating sign ups, the March 2020 quarter saw Netflix adding nearly 16 million new global subs to end the quarter at 183 million. Disney Plus, benefitting from its launch in the E.U., added about 16 million users, excluding the 8 million subs in India where the service was added as a free supplement to its existing HotStar service. Disney reported a total of 50 million subs including HotStar.

The market’s worries were put to rest about any sort of competitive threat Disney posed for Netflix in those first two quarters since launch. What’s clear is that the great majority of existing Netflix users added Disney Plus instead of substituting it, while Netflix’s cadence of fresh content sets a high bar for any competitor to keep up with the subscriber expectations it has set longer term. Even Disney needs time to build this level of production capability (also aided by the acquisition of 21st Century Fox Studios).

And if Disney can’t slow Netflix’s subscriber growth, we don’t think any other traditional media company can either.

The bigger picture take away is that the huge global numbers of new streaming subscribers added in the U.S. and globally are demonstrating that instead of a war among streaming services, the more important dynamic is the accelerating decline of the high priced traditional cable bundle, at least here in the U.S., as consumer engagement and dollars are being redirected towards more modern paid and free online services. In other words, the traditional bundle’s relevance is quickly declining.

It probably won’t be long before economics will dictate that Disney offer its ESPN sports content via streaming, and that indeed will be the final nail in cable’s demise while the handful of global leaders in streaming content flourish.

You can watch the reply HERE and read a full transcript HERE.

For more information about positions owned by Ensemble Capital on behalf of clients as well as additional disclosure information related to this post, please CLICK HERE

While we do not accept public comments on this blog for compliance reasons, we encourage readers to contact us with their thoughts.

Past performance is no guarantee of future results. All investments in securities carry risks, including the risk of losing one’s entire investment. The opinions expressed within this blog post are as of the date of publication and are provided for informational purposes only. Content will not be updated after publication and should not be considered current after the publication date. All opinions are subject to change without notice and due to changes in the market or economic conditions may not necessarily come to pass. Nothing contained herein should be construed as a comprehensive statement of the matters discussed, considered investment, financial, legal, or tax advice, or a recommendation to buy or sell any securities, and no investment decision should be made based solely on any information provided herein. Links to third party content are included for convenience only, we do not endorse, sponsor, or recommend any of the third parties or their websites and do not guarantee the adequacy of information contained within their websites. Please follow the link above for additional disclosure information.

We recently hosted our quarterly client conference call. You can read a full transcript HERE.

Below is an excerpt from the call discussing our investments in Netflix, NVR, and First Republic and why we expect them to survive and thrive on the other side of COVID-related economic and business impacts.

Excerpt

Arif Karim speaking:

As the leading streaming video provider around the world with over 160 million paying subscribers, Netflix has seen a huge increase in engagement as a result of global lockdowns. A recent estimate we saw indicated 4 billion people have been ordered to restrict their movement. And what do people do when they stay home? Well, one thing they have been doing is watching a lot more Netflix. In fact, so much so that it’s put a strain on regional internet networks that have also seen a surge in capacity utilization from work at home and school at home activities such as video conferencing.

As a result, in parts of the world including Europe, Netflix has voluntarily reduced video streaming quality to free up bandwidth for other productive uses. This indicates strong user engagement, which is always the first level proxy in value creation in a service that is about consumer attention at its core. And the more valuable a service, the less likely the consumer is to drop the service for any reason and the higher the pricing power the service builds up.

Source: Netflix

So, from our reading, the value of Netflix has gone up tremendously for its users as they stay in and socialize less. In the meantime, with economic pressures on consumers globally, we think it’s reasonable to expect that Pay TV subscriptions like cable and satellite, could see accelerating declines, especially here in the US where that trend has already been in place. This would free up five to 10 times more budget than cancelling a Netflix subscription of $13/month. Netflix is more likely to be near the bottom of costs to cut and near the top of services to add in our view.

Finally, Netflix announced it would spend $100 million to support out of work members of the creative community as a result of the impact of Coronavirus. This is a strong show of support for creative partners and potential partners on the production side of its business but also demonstrates the company’s financial strength and culture. It undoubtedly wins Netflix even stronger sway as the preferred partner for creators to help Netflix fill its growing global audience’s appetite for new content across categories.

Todd Wenning speaking:

We’ve previously discussed our interest in finding idiosyncratic businesses, or companies that aren’t easily compared to others. NVR is one such company. While it is a homebuilder and is impacted by macroeconomic trends in housing, it has a unique culture and business model that is primed to not only survive near-term shocks but thrive on the other side.

Most homebuilders started as land developers and later got into homebuilding. As such, land development is in most homebuilders’ DNA. Owning and developing land has its benefits, especially in boom times when land values are appreciating and property is scarce. This works both ways, however, and as we saw during the housing crisis in 2008/2009, land-heavy homebuilders are often forced to write-down land values and some go out of business. In fact, the largest homebuilders were more land-heavy going into the COVID downturn than they were in the years leading up to the housing crisis.

Source: Ryan Homes

Rather than owning land, NVR’s long-time strategy has been to option its land, providing it with more financial flexibility when times get tough. Further, NVR had over $500 million of net cash at year-end 2019. During the housing crisis, NVR expanded into new territories and in the coming quarters we expect management to once again capitalize on opportunities to both expand and consolidate share of key markets.

When the market gets concerned about homebuilding, NVR often gets thrown out with the bathwater and we believe this has been occurring again. Going into the economic pause, there were several strong tailwinds supporting new home builds including the largest cohorts of millennials moving into household formation and prime earning years, a lack of existing home inventory, low mortgage rates, and low unemployment. Indeed, in February, monthly new home sales hit their second-highest level in 12 years. Though unemployment is a big question mark over the next few quarters, the demographic, existing home inventory, and low interest rate tailwinds remain in place. In fact, the rise of remote work during COVID quarantine may be another tailwind for new home sales (which are typically in suburban and exurban areas) as more workers may find they do not have to live close to companies’ urban headquarters to do their job.

Sean Stannard-Stockton speaking:

First Republic is a bank that caters to high net worth families. They are widely seen as the most conservative bank in terms of underwriting loans and over the long term, including during the housing bust and financial crisis, they have seen a rate of losses on their loans at about 1/5th the level of losses reported by the big banks.

There is no doubt that First Republic will earn less this year than we would have expected them to earn prior to Coronavirus. The main reason for this is the rapid decline in interest rates and thus the rate of return they can earn on the home loans they offer their clients. Yet it is important to note that it is the spread between the amount they earn lending money vs the rate they pay on checking and savings account deposits that drive earnings. While this spread will narrow, part of the decline in mortgage rates will be offset by a decline in the interest the bank pays on deposit accounts. In addition, the drop in rates has triggered a boom in refinancing and as we saw during the refinancing surges in recent years, First Republic is typically a net winner as more people with loans at other banks refinance the loan over to First Republic rather than refinance their First Republic loan to another lender.

Source: First Republic

In making the decision to invest in First Republic years ago, we certainly did not forecast a viral outbreak occurring. But we did assume that there would be deep recessions and ever financial crises that may occur while we owned the stock. Their strong credit profile is important not just from a financial modeling perspective, but in attracting customers. For as long as we’ve been invested in First Republic, the bankers’ desks at the local branch near our office have displayed a one-page summary of the company’s credit ratings, illustrating how they are better capitalized than all the well-known big banks. It is the companies that recognize the importance of being safe and secure all of the time that are best positioned to retain their customers’ trust during a crisis. So when Americans started thinking about sheltering in place and wondering if their cash in the bank would still be there after the crisis, knowing that First Republic has always stood for risk avoidance and high levels of service provides their customers with the confidence they need to keep their assets with the company or even consolidate other loans or deposit accounts they might have elsewhere.

You can read the full transcript here.

For more information about positions owned by Ensemble Capital on behalf of clients as well as additional disclosure information related to this post, please CLICK HERE.

While we do not accept public comments on this blog for compliance reasons, we encourage readers to contact us with their thoughts.

Past performance is no guarantee of future results. All investments in securities carry risks, including the risk of losing one’s entire investment. The opinions expressed within this blog post are as of the date of publication and are provided for informational purposes only. Content will not be updated after publication and should not be considered current after the publication date. All opinions are subject to change without notice and due to changes in the market or economic conditions may not necessarily come to pass. Nothing contained herein should be construed as a comprehensive statement of the matters discussed, considered investment, financial, legal, or tax advice, or a recommendation to buy or sell any securities, and no investment decision should be made based solely on any information provided herein. Links to third party content are included for convenience only, we do not endorse, sponsor, or recommend any of the third parties or their websites and do not guarantee the adequacy of information contained within their websites. Please follow the link above for additional disclosure information.

On Monday, Ensemble Capital’s CIO Sean Stannard-Stockton appeared on CNBC to discuss Netflix and the threat of Disney Plus. In this clip, Sean explains why we see Disney Plus as more of a complement than a substitute for a Netflix subscription, and offer an explanation for why Netflix has rallied 17% since Disney Plus launched.


If you are reading this in an email, click here for the video.

For more information about positions owned by Ensemble Capital on behalf of clients as well as additional disclosure information related to this post, please CLICK HERE.

While we do not accept public comments on this blog for compliance reasons, we encourage readers to contact us with their thoughts.

Past performance is no guarantee of future results. All investments in securities carry risks, including the risk of losing one’s entire investment. The opinions expressed within this blog post are as of the date of publication and are provided for informational purposes only. Content will not be updated after publication and should not be considered current after the publication date. All opinions are subject to change without notice and due to changes in the market or economic conditions may not necessarily come to pass. Nothing contained herein should be construed as a comprehensive statement of the matters discussed, considered investment, financial, legal, or tax advice, or a recommendation to buy or sell any securities, and no investment decision should be made based solely on any information provided herein. Links to third party content are included for convenience only, we do not endorse, sponsor, or recommend any of the third parties or their websites and do not guarantee the adequacy of information contained within their websites. Please follow the link above for additional disclosure information.

“The son of [Reed Hastings] must not become a Jedi.”

Much to the chagrin of the traditional media Empire industry, Netflix has become the leader of the global direct to consumer (DTC) streaming media (OTT) business it founded with a staggering 150MM subscribers globally. We believe the global scale it’s built up in the business makes it too big for all but a handful of traditional media and global tech companies to compete with. For a more in depth look at its business and strategy, please refer to our deep dive Netflix report.

The market will become much more exciting with the launch of new competitors over the next year, especially offerings from the largest traditional media companies. The new Disney Plus service will launch in November 2019 in the US, Canada, Australia, New Zealand and the Netherlands, with plans to expand globally over the next couple of years. Disney’s DTC service will be followed by Apple’s TV+ and Time Warner’s HBO Max (reboot of HBO NOW plus more TW content) services in soon thereafter.

In our view, the global market is large enough to accommodate 3-5 global media players and many consumers will subscribe to 2 or 3 services offering their favorite content. We believe direct streaming services are redirecting the Pay TV industry’s traditional value chains around the world while expanding the market by leveraging global scale economics and modern low cost distribution via “smart” devices and 4G/5G connectivity.

Having said that, it is important to separate Netflix’s US (maturing) and international (nascent) markets.

“Do. Or do not. There is no try.”

In the US, as the pioneer in streaming video whose odds looked very long only 7 years ago, Netflix has already won. More than half of all Americans subscribe to Netflix, which is more than all the Cable TV subscribers combined (which are in slow steady secular decline). We don’t think there is a ton of growth left in the number of subscribers in the US, especially since a significant fraction share passwords, but we do think Netflix can continue to raise the price they can charge (we also believe password sharing is intentionally leveraged as a viral customer acquisition strategy and, in fact, paid for by its service pricing strategy).

Netflix is already quite profitable in the US, with an estimated operating margin of 25%*. Last quarter they raised the price in the US by 13% and still kept 99.5% of their subscribers, resulting in an 11% q/q increase in net US revenue. You can imagine what that does to enhance profitability given that a substantial portion of the increase falls to the bottom line (profits grew 20% q/q). Compare that with the narrative that “Netflix lost 200K US customers in the quarter, they’re losing their pricing power!”

As we’ve discussed in our post on Netflix’s pricing power, immediately after past price hikes, there have been one or two quarters of increased subscriber churn followed by a bounce back in subscriber growth. The June 2019 quarter was just the latest quarter to see a similar, expected phenomenon though the exact magnitude of the impact is always hard to forecast. We believe the churn is due to initial “sticker shock” and Netflix’s customer friendly policy of clearly alerting people to price increases with a simple button to cancel. But about a quarter or two later, most of these churned-off subscribers hear about a show that all their friends are talking about or realize how wonderful the convenient advertising-free service had been and sign back up, realizing that it is still an amazing bargain at $13/month for essentially a mini-cable bundle offering thousands of hours of instantly on-demand shows and movies.

“I’ve got a bad feeling about this.” 

Investors are quite worried about Disney’s new steaming services, and for good reason, given its well-regarded global brand with strong marketing capabilities, popular IP based video franchises (Disney characters, Star Wars, Marvel, Pixar, etc.), and its multi-year commitment towards global expansion of its streaming services. But Disney is very late to the game and has a lot to learn about going direct to consumer with a subscription business, the execution of which is tougher than most realize. No doubt, Disney will figure this out through years of dedicated experience as Netflix has over the past 2 decades.

“Be careful not to choke on your aspirations, Director.”

After everyone thinking Netflix was bound to fail, the iconic Disney has smartly and humbly realized that their only choice is to try to copy Netflix’s strategic playbook (literally!) to scale quickly and stay relevant in the long run. We believe Disney’s new service is likely to be a big success. But the “product” it is delivering to its subscribers is primarily going to be Disney’s brand of movies and shows. So, it will be more like HBO (a great niche premium channel) while Netflix has a broader set of content akin to an entire cable bundle (a broad selection, cable TV replacement). Disney is hoping that by bundling Hulu with Disney Plus for the same price as Netflix that they can compete directly, but Hulu is not new and has attracted about 30 million compared to Netflix’s 150 million.

That said, it would not be unexpected to see a quarter or two of impact to Netflix’s gross subscriber additions in the US, as a certain proportion of new to streaming video customers give Disney Plus a try, and churn rates to increase, as those Netflix subscribers who value it the least get over their inertia (inertia is a beautiful thing in subscription businesses!) and try a big new competitively priced service instead. A couple of quarters later, we believe we’ll see the playing field become more balanced, with the vast majority of Netflix’s subscribers keeping their service while many of Disney Plus’ new subscribers will be adding it as their second streaming service.

The bigger impact to the entire market will be that the surge of streaming service options, each with its own package of unique content, will finally kill cable television service model. If for $25-40/month you can get Netflix, Hulu, Disney Plus, ESPN Plus and Amazon Prime video, who will keep cable TV? This will free up $100/month of video spending for most households and, while Disney and others will certainly win some of that, we believe Netflix will remain the default service and the de facto leader while the traditional cable companies’ ongoing businesses will be to supply the broadband pipes connecting them.

“The Force is strong with this one.”

Despite its scale and leadership advantages in streaming video, Netflix isn’t sitting still. They are taking their large US profits and reinvesting in dominating international markets where they are far ahead of everyone else. This makes the company look less profitable overall since they grow via income statement spending (outsized content and marketing budgets), not capex as a physical assets company traditionally would have. And though its international business just turned the corner on profitability, we believe it has a long way to grow as the US market has done. Longer term we expect they will raise prices in their international business just as they have successfully done in the US .

At today’s $16/month for their top tier service with four 4K simultaneous streams, people can share the service and pay as little as $4/month each (or subscribe separately to a single mobile stream in some emerging markets like India), which is a bargain for all the billions of dollars of great content they get access to so affordably and conveniently. However, the fixed cost nature of content makes each of even the lowest priced marginal subscribers very profitable and their aggregated spending continues to feed the Netflix content engine that benefits all existing subscribers, even as they scale the add grows the Netflix’s overall margins.

“You can’t stop the change, any more than you can stop the suns from setting.”

So bottom line: we do think competition is ramping up and Disney will be successful, but we never expected that the other media players would fail to compete forever. The fact that they are now recognizing that Netflix has successfully pulled the rug from under their businesses and must be copied doesn’t change our positive view on the company, especially since we believe it is far ahead of the competition on its ability to recruit and retain subscribers, source a variety of locally and globally relevant content, and access deeper into the global market with local partnerships, and most importantly, its culture of customer focus and innovation.

Netflix has already grown to become a global scale media company, so the onus is on the competition to execute and invest billions (in the form of losses for years) in order to do the same to be viable long term competitors.

*Pro forma ECM estimate based on reported US contribution margin and geographically proportionate operating expenses.

For more information about positions owned by ECM on behalf of clients as well as additional disclosure information related to this post, please CLICK HERE

While we do not accept public comments on this blog for compliance reasons, we encourage readers to contact us with their thoughts.

Past performance is no guarantee of future results. All investments in securities carry risks, including the risk of losing one’s entire investment. The opinions expressed within this blog post are as of the date of publication and are provided for informational purposes only. Content will not be updated after publication and should not be considered current after the publication date. All opinions are subject to change without notice and due to changes in the market or economic conditions may not necessarily come to pass. Nothing contained herein should be construed as a comprehensive statement of the matters discussed, considered investment, financial, legal, or tax advice, or a recommendation to buy or sell any securities, and no investment decision should be made based solely on any information provided herein. Links to third party content are included for convenience only, we do not endorse, sponsor, or recommend any of the third parties or their websites and do not guarantee the adequacy of information contained within their websites. Please follow the link above for additional disclosure information.

Last week, Ensemble Capital’s CIO Sean Stannard-Stockton appeared on CNBC with his take on Netflix’s latest earnings report. During the interview, Sean also explained why we think Disney’s upcoming streaming service won’t be a significant competitor to Netflix despite likely being a big success for Disney.

 

Netflix had a ‘perfectly good’ quarter, investor says from CNBC.

As of the date of this blog post, clients invested in Ensemble Capital Management’s core equity strategy own shares Netflix (NFLX). This company represents only a percentage of the full strategy. As a result of client-specific circumstances, individual clients may hold positions that are not part of Ensemble Capital’s core equity strategy. Ensemble is a fully discretionary advisor and may exit a portfolio position at any time without notice, in its own discretion.

While we do not accept public comments on this blog for compliance reasons, we encourage readers to contact us with their thoughts.

Past performance is no guarantee of future results. All investments in securities carry risks, including the risk of losing one’s entire investment. The opinions expressed within this blog post are as of the date of publication and are provided for informational purposes only. Content will not be updated after publication and should not be considered current after the publication date. All opinions are subject to change without notice and due to changes in the market or economic conditions may not necessarily come to pass. Nothing contained herein should be construed as a comprehensive statement of the matters discussed, considered investment, financial, legal, or tax advice, or a recommendation to buy or sell any securities, and no investment decision should be made based solely on any information provided herein. Links to third party content are included for convenience only, we do not endorse, sponsor, or recommend any of the third parties or their websites and do not guarantee the adequacy of information contained within their websites. Please follow the link above for additional disclosure information.