Builders FirstSource Inc (BLDR) 2015 Q1 法說會逐字稿

Good morning and welcome to the Builders FirstSource first-quarter 2015 earnings conference call. Your host for today's call is Mr. Floyd Sherman, Chief Executive Officer. (Operator Instructions)

Any reproduction of this call, in whole or in part, is not permitted without prior written authorization of Builders FirstSource. As a reminder, this conference call is being recorded today, April 24, 2015.

The Company issued a press release after the market closed yesterday. If you don't have a copy, you can find it on our website at bldr.com.

Before we begin, I would like to remind you that during the course of this conference call, management may make statements concerning the Company's future prospects, financial results, business strategies, and industry trends. Such statements are considered forward-looking statements under the Privacy Security Litigation Reform Act of 1995 (sic) and are subject to certain risks and uncertainties, which could cause actual results to differ materially from expectations.

Please refer to our most recent Form 10-K filed with the Securities and Exchange Commission and other reports filed with the SEC for more information on those risks. The Company undertakes no obligation to publicly update or revise any forward-looking statements.

We have provided reconciliations of non-GAAP financial measures to their GAAP equivalents in our earnings press release and detailed explanations of non-GAAP financial measures in our Form 8-K filed yesterday, both of which are available on our website.

At this time, I will turn the call over to Floyd Sherman.

Thank you and good morning. Welcome to our first-quarter 2015 earnings call. Joining me from our management team is Chad Crow, President, Chief Operating Officer, and Chief Financial Officer, as well as Marcie Hyder, our Vice President and Controller.

After I give a brief recap of the current quarter, I will turn the call over to Chad, who will discuss our financial results in more detail. After my closing comments regarding our outlook, we will take your questions.

I'm extremely pleased with our start to fiscal 2015, as our first-quarter sales of $371 million, our gross margin percentage, and our adjusted EBITDA of over $11 million all exceeded our first-quarter 2014 results. We were able to achieve these positive results despite the relatively flat single-family housing starts in the South region and the negative impact of commodity deflation on our current quarter sales as average market prices for framing lumber have fallen 11.8% since the beginning of the year and are down 13.6% when compared to the first quarter of 2014.

As a result, our lumber and lumber sheet good sales were down 1% versus first-quarter 2014 sales in the same product category. However, our value-added sales of prefabricated components, windows and doors, and millwork increased 12.8% versus first-quarter 2014 sales in the same product categories, largely due to our recent acquisitions.

I will now turn the call over to Chad, who will review our financial results in more detail.

Thank you, Floyd. Good morning, everyone. For the current quarter, we reported sales of $371 million compared to $345.9 million for the first quarter of 2014, an increase of $25.1 million or 7.2%. Excluding the impact of recent acquisitions, we estimate sales volume increased approximately 2.2% for the quarter, which was offset 1% by the negative impact of commodity price deflation on our sales.

Breaking down our sales by product category, prefabricated components were $78.8 million, up 11.8% from $70.5 million in the first quarter of 2014. Windows and doors were $85 million, up 11.4%; lumber and lumber sheet goods were $114.3 million, down $1.2 million from approximately $115.5 million in 2014. Our millwork category was $39.5 million, up 18.1%; and other building products and services were $53.4 million, up 6.4% from last year.

From a product mix standpoint, our value-add product categories continued to make up a higher percentage of our overall sales, as our prefabricated components, windows and doors, and millwork categories accounted for 54.8% of overall sales in the current quarter compared to 52.1% last year. Our lumber and lumber sheet goods declined as a percentage of sales, while other building products and services category was relatively flat compared to last year.

Our gross margin percentage was 22.6% in the current quarter, up 90 basis points from 21.7% last year. Our gross margin percentage increased largely due to improved customer pricing and a higher mix of value-added sales.

For the current quarter, our SG&A expense increased $13.5 million. Of the $13.5 million increase, $5.5 million related to expenses associated with the recently announced ProBuild acquisition, $800,000 related to an increase in stock comp expense, and $1 million related to an increase in depreciation and amortization.

As a percentage of sales, SG&A expense increased to 22.3% compared to 20% in the first quarter of 2014. Of this 230 basis point increase, 150 basis points related to acquisition expenses and approximately 50 basis points related to increases in stock comp expense and depreciation and amortization. Excluding these expenses, our SG&A expressed as a percentage of sales was 20.4% in the current quarter compared to 20% last year.

This remaining increase was largely due to the result of investments made in employees and equipment to support current and future sales growth. And to a lesser degree, the negative impact of commodity price deflation on our sales.

Interest expense was $7.6 million for the first quarter of 2015, a decrease of $1.2 million from last year. The decrease was primarily related to $1.4 million reduction in the non-cash fair value adjustment related to outstanding stock warrants issued in connection with our 2011 term loan.

We recorded $200,000 of income tax expense compared to $100,000 income tax benefit in the first quarter of 2014. We recorded an increase in the after-tax non-cash valuation allowance of our net deferred tax assets of $3.1 million and $1 million in the first quarters of 2015 and 2014, respectively. As of March 31, 2015, our gross federal income tax, net operating loss available for carry forward, was approximately $264 million.

Loss from continuing operations for the first quarter of 2015 was $7.2 million or a $0.07 per diluted share compared to $3.3 million or a $0.03 per diluted share last year. Adjusted loss from continuing operations for the first quarter of 2015 was $2 million or a $0.02 per diluted share compared to $2.1 million or a $0.02 loss per diluted share last year.

Adjusted EBITDA was $11.3 million or 3% of sales compared to $8.6 million or 2.5% of sales in the first quarter of 2014. Adjusted EBITDA flowthrough on our incremental sales for the current quarter was approximately 11%. Operating cash flow was $9.9 million for the first quarter of 2015 compared to $13.8 million in the first quarter of 2014.

During the first quarter of 2015, we used approximately $5.8 million of cash on hand to acquire Timber Tech Texas, a manufacturer of roof and floor trusses located in the San Antonio metro area.

Capital expenditures were $9.1 million for the first quarter, an increase of $3.8 million over the same quarter of 2014. Total liquidity at March 31 was $141.2 million, including $36.8 million of cash and $104.4 million in borrowing availability under our revolver. We had $55 million in outstanding borrowings as of March 31.

I will now turn the call back over to Floyd for his closing comments.

Thank you, Chad. Demand for new housing continues to slowly yet consistently improve and we look to use this momentum to grow our revenues and market share while continuing to improve our operating margins.

Our recently announced transaction with ProBuild, which we expect to close in the second half of 2015, will be a high priority for us in the coming months and we look forward to being able to bring the best talent in the industry together as one team. We believe this transaction significantly enhances our opportunity for growth and we have never been more excited about the future prospects for our Company.

I will now turn the call over to the operator for Q&A.

(Operator Instructions) Rob Hansen, Deutsche Bank.

The first question I had was I just wanted to ask about the revenue growth and get what the acquisition impact would have been on revenue during the quarter. So just trying to get an organic growth figure outside of lumber for prefab and millwork and whatnot.

Well, for the quarter, the acquisitions contributed 6% of our 7.2% core BFS, or legacy BFS, if you will. Volume was up 2.2%, but that was offset by about 1% due to the commodity deflation.

Got it, okay. And then in terms of -- were there any weather impacts during the quarter? And have you seen any kind of rebound in volumes since then? And how has April been so far?

Okay, during the first quarter, we obviously had some impact from the winter weather that we experienced that primarily ran all through our operations. We estimate we probably lost five to six shipping days, but again, that volume is not necessarily lost. We pick it up then in following days when weather allows us to get back on the road again.

The problem that we had was that it delayed construction. A lot of concrete work did not get done in the first quarter that normally would have been done. That issue has been somewhat complicated now as we move into April, and April I think is definitely affected by the large amount of rain that we are experiencing, at least through our building areas. That's slowing things down.

But overall, we are seeing an improved flow in April. I think the builders are continuing to report the continuing improvement in their backlogs. I can tell you we are seeing in our truss backlogs, in our millwork backlogs, in the other panel backlogs, we are seeing almost record levels for us in work that is out ahead of us. And that is a good indication that we have some strong building ahead of us.

I think it's just all now predicated on getting the improvement in weather, where we can get on the job sites and where the builders can get progressing with the homes that they have got to deliver. So I am looking forward to April being a better transition.

I think right now, slightly better than what we experienced in March -- or I shouldn't say slightly better than what we have seen in March. And I think the momentum is going to carry on through the rest of the quarter. So I am looking for a pretty solid second quarter.

That's really helpful commentary. One just follow-up on that is just in terms of the backlogs that you are seeing, and I think you mentioned it was probably a little bit more on the prefab side and millwork and whatnot, the value-added products.

Now this is in relation to the builders are looking more towards using these kind of value-added products and that's -- so you are essentially gaining share within your customer base? Or are you adding -- or is it more like you are adding some smaller, regional builders and they are recognizing the benefits of the value-added package?

I think we are definitely adding a good mixture of the large national builders as well as regional builders and local market builders, semicustom and custom builders.

There is a trend, a growing trend, towards the value-added products in the construction cycle. Certainly with the shortage that exists in labor today on construction sites are helping to increase the sales in those products, but we are continuing to add new customers as well as continuing to take expanded positions with existing customers.

And the backlog for us is really a good, I think, forward picture of what we can expect in the way of housing construction from our customers throughout our building area. And as I said, the backlog in whether it be trusses and panels, whether it be installed millwork, whether it be on windows and doors, all of those items we are seeing an expanding backlog. And it's all predicated on being able to get on to the job sites.

Great. I really appreciate the color. Thanks, guys.

Trey Grooms, Stephens.

This is actually Drew Lipke on for Trey. First question -- you continue to do a really good job in terms of margins. And I know this is also a tough comp here in the first quarter. This level of margin expansion that we are seeing, do you think that's pretty sustainable as we look out through the rest of the year?

No, we certainly look to continue to increase our margin as we go throughout the year. Pretty difficult to quantify that. A lot of that depends on volumes, commodity lumber prices.

But yes, the short answer is yes. We definitely will look to continue to expand our margin as the year progresses.

Yes, and typically our first-quarter margins are the lower -- is the lower quarter for us in terms of margin performance. So we are very pleased with what we saw in the first quarter. Our people are responding extremely well to improving not only the sales of value-add products, but we are continuing to try to improve the pricing on all of our products to the construction markets that we serve.

We still have a ways to go. We're still not back anywhere close to what we have been on a historical past, but at least we are closing that gap. And I think we will continue to close that gap.

Okay. And then on the Texas market, are you seeing any -- you talked about Houston. You saw slow down on the high end last quarter. Have you seen any noticeable changes there as you look at the different regions within Texas, and have you seen that slowdown maybe trickle down to some lower priced or to lower end homes at this point yet?

We have seen in Houston, in particular, we have seen the improvement has been, I would say slowly but consistently getting better. We are now looking at our Houston market. It looks like it's down 8% to 10%. I think initially, that number was running considerably higher than that in the beginning of the year.

We are starting to see some building in the lower side -- lower end of the market, so that's encouraging to us. The other markets -- San Antonio, Austin, Dallas -- are all looking good right now. We really have not seen anything in the way of a fall off. In fact, we have really seen some nice improvements in our business quarter over quarter in those markets.

Yes, other than some of the weather delays that Floyd already addressed.

Yes.

Right, okay. And then last one for me, just on SG&A. I know previously, we have -- excluding the one-time costs associated with ProBuild, I think you guys have pointed to mid to upper 18% of sales range.

Any update on what we should be expecting there? How much more do you see in terms of the investments with employees and equipment needed? And then maybe how should we think about this with ProBuild as well?

Well, we haven't changed our long-term outlook on our ability to leverage our OpEx. The headwinds we faced recently here is the commodity deflation, which has a negative impact on your top line. So you can be delivering more volume, but you're not getting the dollars running through. So that's a tough headwind at times.

And then in just the overall -- the slower growth on the housing start side. So our long-term thesis has not changed. I still think we are going to be able to drive that number down into those ranges that you just suggested. And long term, I still think even as a combined company going forward with ProBuild, we should be able to be at least that efficient from an OpEx side once we get through the integration process.

And once -- and of course, with ProBuild, it is going to also largely determine getting on -- getting down to one operating system. Where they now have multiple operating systems.

Got it. All right. Thanks, Chad; thanks, Floyd.

John Baugh, Stifel.

I was curious about the -- between now and when ProBuild closes, will you be able to have any and all meetings and work towards your synergies and how you plan to hit the ground running? Or are you prevented in any way from doing that?

Well, we do have to keep running as separate companies, but we are able to have integration meetings, planning meetings. You can do all the planning you want, you just can't start actually implementing anything.

And that's a great question, because we just got back from Denver for a couple days this week and had those initial kickoff meetings with ProBuild's management team. And it went really well and we're just now starting to lay the groundwork for figuring out where we want to get to and then building that roadmap to get there and putting the teams together to do it. But we have started that process.

But John, as you probably know, any data involving your -- any overlap areas or even non-overlap areas, anything related to customers, product sales, market sales, anything in that area, we cannot exchange data whatsoever. That all has to be done through cleanroom and an independent third-party to do any analysis work.

But other than that, we can do as Chad said: all the planning and so forth, getting ready for execution the day the transaction closes.

Great. And Chad, do you have any -- could you give us your best guess quarterly, maybe, for the next three quarters, how Southeast housing starts might play out?

(laughter). I wish I had that crystal ball. Southeast is essentially our markets and we're budgeting internally for slow and steady growth. So I think I would expect to see somewhere in 8% to 10% starts growth over the next couple quarters in our markets.

Okay, super. Good luck. Thank you.

Trey Morrish, Barclays.

Thanks for taking my questions. Could you describe what you think the on-time and full delivery rates are between Builder and ProBuild?

We haven't gathered that information yet. That's probably something I'd have to get back to you on.

Okay. And then could you describe what role you feel your technology and systems provide a competitive advantage in the industry?

Well, I think as Floyd alluded to a moment ago, the fact that we are on one system is certainly an advantage to several of our larger competitors. But I also think the fact that we own the source code over the years that's been highly customized to fit our business.

I think our results have proven it allows us to be one of the more efficient operators in the industry. And so I certainly see that as an advantage and being on one system, not only can you be more efficient from the headcount standpoint, but just the real-time access we have to our business on a day-to-day basis to be able to make decisions quickly I think is also very important.

All right, awesome. And following up on that, how long do you think it could take you to implement one system between Builder and ProBuild?

That's something we're still trying to get our arms around. It's going to be a multiyear process. I would probably say you are looking at two years to four years, something like that.

Okay, got it. Thanks, guys. Appreciate the insight.

(Operator Instructions) Justin Bergner, Gabelli & Co.

My first question relates to an interesting factoid in your Form 10-K, where you talked about the largest customers growing in 2014 to 25% of your revenue versus I think it was 22.5% the year before. I was wondering if you might just be able to flesh that out for us, and also speak to whether or not that's a favorable mix development for the business?

You know, Floyd may have something to add to this as well. We have always hovered around that 22% to 25%. I do think part of that is, as Floyd mentioned earlier, our ability to provide the components as a higher mix of our products.

Our ability to scale in general with the larger builders I think has been important as we have come out of the housing recovery. We have the infrastructure; we have liquidity to grow as fast as we need to to keep up with the pace of the large builders. So that -- off the top of my head, that would be the first two items I would say would attribute to that growth.

Okay, great. My second question relates to just trying to better understand the incremental margins and some of the puts and takes. Are you able to -- my first question is are you able to quantify how much EBITDA came from acquired properties in the quarter?

And my second question is how much of a headwind should we think about from the lumber deflation at the EBITDA level this quarter?

Well, on the acquisitions we made, obviously, they were heavily weighted towards value add. And so, their EBITDA contribution was higher than the Company as a whole, so they are still performing very well. And it is obviously part of our strategy to improve our mix in those categories.

From a commodity deflation standpoint, it is a headwind for us. The simple math I do says -- let's just say we had a 10% price deflation over an entire year. And so we feel the full impact of it. I think a 10% price decrease would probably result in about a $10 million decrease in gross profit dollars.

And so it would have a fairly significant impact on EBITDA. That's why we have always said higher prices and stable prices are the best environment for us. So this is -- it's a challenge right now.

Okay, that's helpful. I mean, as a rule of thumb, could someone just take the lumber deflation and apply a 10% incremental margin to it? Or something thereabouts to get a rough sense as to what the headwind would be?

Yes, you could. I usually go about it by just looking at our product mix and calculating it from the top down, if you figure out what it might do to our cost and then in the fact that we typically markup those commodity lumber products. To get somewhere in the neighborhood of a 20% margin, you can pretty quickly do the math to see how that might flow through.

Okay. My third and final question relates to the environment -- the competitive environment in your industry, given what looks like a less optimistic view of housing starts now versus three months ago.

I know that you were planning around 10%. Maybe some of your competitors were planning for a little bit higher and it seems like 10% is in the high end of what we might expect now for 2015.

What is the competitive dynamic like? Has the price pressure started to subside? Are you seeing yourself having to walk away from less business?

We are still continuing to walk from business to where we just don't feel that -- this is especially true in the commodity side of the business. That's where we have done most of our walking from the business to where it just doesn't pay us to chase that -- the business at those price points.

I think a lot of that has to do with the fact that when commodities are continuing to go into decline, people are stuck with inventories. And they start trying to move inventories at whatever prices they can get out of it, rather than sit and hold on it, because they need to turn those dollars to continue to support the business. And for a number of other reasons.

But -- there has always been pricing and we certainly have strong competition for even the value-add products, and there is some we lose. Some of those business, because we don't get what we think are appropriate margins. But most of the business loss is coming out of the lumber, lumber sheet goods category.

My feelings about building and the activity in building, I am not maybe as pessimistic as you are. I think the first quarter was definitely influenced by weather. I think it's -- we have seen, I think, above normal rain conditions through much of our building area that's affected and even slowed April somewhat. But I am encouraged -- very encouraged by what I see in backlogs of business that is building up.

The feeling among our builder customers are still very positive. They certainly don't seem to be backing off of their building plans. And for what they are giving us in -- for forward planning is still in the range and will meet the targets that Chad said, that 8% to 10%. And I feel that's going to be the level of activity that we're going to see.

So as building conditions continue to improve, then take some of the capacity oversupply conditions out. And gradually, we are going to see a steady improvement in the pricing that we have in this business. So I am very optimistic as I look forward. And in fact, I feel certainly better this year than what I did last year at this point in time.

Great. That's very helpful. Would it be fair to say that the competitive environment has not worsened from a quarter ago, even though the start numbers in the first quarter were pretty modest?

No. I don't think Texas has worsened. Certainly not from the business that we are seeing in all the markets that we serve. And Houston seems to be recovering from -- initially, I think there was maybe an overreaction and a thought, certainly, there was job loss and it certainly impacted Houston more so than our other markets in the state. But I think that's -- seems to be subsiding and Houston is coming back.

Great. Well, best of luck with ProBuild and the rest of the year.

Matt McCall, BB&T Capital Markets.

So Floyd, you mentioned the growing trend toward value add. And then Chad, I think you are talking about the acquisitions being aimed at value add. So tying this back into your margin commentary, if I look at the last few years, it looks like Q2 through Q4 averaged about 50 basis points better than Q1.

Given this trend toward more value add and the acquisitions are obviously going to help that, could the improvement be a little bit better than that? Not quantifiable, but directionally, could it be better than what you have been seeing in previous years?

I think it certainly could be, especially with the backlog we are looking at. I am as optimistic as Floyd, both top line and from a margin standpoint, so absolutely there could be some upside there.

And so the backlog, what you are seeing in backlog in terms of mix, how does that compare -- I am specifically looking at the value add. But how does that compare to what you are seeing in Q1 of last year?

Our backlog is a lot better than what we saw in Q1 of last year. In fact, like I said, we're almost at the best levels we have seen in a long time in the backlogs of our value-add products. And the pricing is also equal or -- better than what we saw in the first quarter last year.

Okay. And then finally, Chad, on the SG&A line, you talked about the impact of investments and stock comp. Same type of question: relative to the deleveraging you saw in Q1, what's the expectation for the remainder of the year, specifically with those two items?

On the stock comp, that charge you saw in the first quarter will be representative of what we would see the rest of the year. Was that your question?

Yes. And then the investments in people. I think you talked about some machinery, different things like that.

Yes.

Are those --?

I think we're still a little heavy there, as we have talked about on some prior calls. We carried a little bit of extra people cost and facility costs through the winter in anticipation of the spring selling season.

So we have got a little cushion there to take on more volume, but once we get to a certain point, the variable side of our business will kick in again as volume increases. And that's typically the delivery side of the business, where you are needing more drivers to deliver product, so more equipment. And then the salesman commission piece of our business is variable as well. But we have some room to grow there.

Yes. And the -- some of the reason that we have -- in addition to what Chad as said is definitely very accurate. But another reason why we have taken on additional drivers and additional help in our operations is due to the fact of -- the drivers are very, very scarce, very hard to find, and any opportunities we can where we can hire additional drivers, we have done it so that we could make sure that we were fully covered when it came to the busy months.

Because the last thing you need is to have a good improvement in business and not be able to get it out, either from pulling the load and pulling all the various products, loading the trucks. And so we have continually been beefing up our labor in order to make sure that we can take care of the volume when it comes our way in the better building season.

And I think the same logic applies to truss designers. It's really hard to -- truss designers are in tight supply these days as well. And so we held on to our design capacity and that is certainly going to pay off, as Floyd mentioned, because we do have a very large backlog that we see coming. So I think that was a good move as well.

Good point.

Okay, perfect. Very helpful. Thank you.

Jay McCanless, Sterne Agee CRT.

Two questions for you. First one -- what should we think about for legal costs for 2Q? And I know the rest of the year may be tough, but any guidance you could give us on how to frame 2Q?

Oh, gosh, that's a tough one. A lot of it depends on the timing of the transaction and how things progress. I guess the way I would answer that now is best guess, there is maybe another $15 million or so of expected transaction-type costs that will come over the next couple of quarters, but exactly how that will play out, I don't know yet.

Okay. No, that's helpful. Thank you. The second question I had -- and this also relates to ProBuild, but a different way. What are you seeing right now from suppliers and more importantly, what are you seeing from competitors?

How are they responding to the deal? How are they positioning themselves relative to what should become a very large company pretty soon?

Our interaction with the suppliers has been strictly it's business as usual for the two companies. We have not tried in any way to start getting into advanced talks with suppliers to talk about the future of the Company on a combined basis.

Got to stay away from that, and we will respect the legal requirements that we have in that area. And so any attempts that have been made to engage us in those type discussions we have said have to be put off until the transaction is closed.

It is really hard to do, because you want to be able to jump in and see what advantages we can produce, but we have to stay away from it. And I think the same thing is probably -- is true from a ProBuild side.

As far as the competition, this business has always been rife with people who know all of the answers before they see any of the data. And we are going through some of that now. We have a couple of competitors who just really feel that they can't attract people and they can't build their business doing it by -- in a traditional and the legitimate ways. They got to try to create issues and build their business off of creating problems for somebody else.

But I guess that's maybe sometimes the way competition is. But they are trying, but I think they will be very limited success. I think both of our companies have enough strong points going for us that our people are smart enough to read between the lines.

Got it, okay. And then I think you already answered this one, but lumber thus far in 2Q, looks like southern yellow pine is moving higher, but some of the other species continue to move lower. Do you guys expect a similar deflationary impact from lumber this quarter as to what you saw in 1Q?

I would like to say no, but where I sit right now -- the weather right now, and I just -- I follow on a weekly basis, so we are continually following the production, incoming orders on lumber at the mills' levels, the shipments.

The weather is really impacting it and especially the southern yellow pine guys. And they certainly have seen while their prices have held up better, it's still not really good. But they have recently, with all of this rain, they certainly are seeing some -- we are seeing the price has fallen in southern yellow pine.

I really think we are going to -- we are starting -- I think we are close to seeing a bottom. And I think we're going to start -- my feeling is we're going to start seeing a gradual but slow improvement on the commodity pricing side.

I just don't -- I just can't see how the mills can continue operating at the type price points that they have now, especially the OSB guys. And my feeling is second quarter and third quarter, we're going to see better pricing than what we see right now.

Okay, perfect. Thanks, guys.

(Operator Instructions) Rob Hansen, Deutsche Bank.

I just had one follow-up. In terms of your customers, you have probably been out and had a bunch of conversations with customers. I just wanted to see if you had any kind of early feedback.

And I realize you are not out there trying to run the companies as combined companies or anything like that, and there is strict separation, but just any early feedback from customers where you have talked to them, yes, here is the combination, obviously what it looks like. And have there been any fears or anything like that? So anything along those lines would be great. Thanks.

I think the feedback that we certainly have had has been positive. I think the customers feel that, hey, it's interesting. They are obviously going to be watching it closely to see how it might affect them long term.

I think they understand the value proposition. And what this combination can do in the marketplace for making us a more efficient provider. And I think overall, I think it has been a very positive reaction.

Great. Thanks, guys.

It appears there are no further questions. I will turn the conference back over to our presenters for any additional and closing remarks.

Okay. We appreciate everyone joining the call today. If you have any follow-up questions, don't hesitate to give Chad or Marcie a call here in Dallas. Thanks and have a great week.

This concludes today's presentation. Thank you for your participation.