Beazer Homes USA Inc (BZH) 2017 Q4 法說會逐字稿

Good afternoon, and welcome to the Beazer Homes earnings conference call for the quarter ended September 30, 2017. Today's call is being recorded, and a replay will be available on the company's website later today. In addition, PowerPoint slides intended to accompany this call are available on the Investor Relations section of the company's website at www.beazer.com.

At this point, I will turn the call over to David Goldberg, Vice President and Treasurer.

Thank you, Sheila. Good afternoon, and welcome to the Beazer Homes conference call discussing our results for the fourth quarter of fiscal year 2017. Before we begin, you should be aware that during this call, we will be making forward-looking statements. Such statements involve known and unknown risks, uncertainties and other factors, which are described in our SEC filings, included in our Form 10-K, which may cause actual results to differ materially from our projections. Any forward-looking statement speaks only as of the date on which such statement is made, and except as required by law, we do not undertake any obligation to update or revise any forward-looking statement, whether as a result of new information, future events or otherwise. New factors emerge from time to time, and it is not possible for management to predict all such factors.

Joining me today are Allan Merrill, our President and Chief Executive Officer; and Bob Salomon, our Executive Vice President and Chief Financial Officer. On our call today, Allan will briefly review our results for fiscal 2017, then discuss our ambitions for 2018 as well as our longer-term strategic objectives. Bob will cover our fourth quarter results in greater depth, where we stand relative to our 2B-10 goals and our expectations for the first fiscal quarter of 2018. I will then come back to provide more details about our land spending this quarter and provide an update on our balance sheet, followed by a wrap-up by Allan. After our prepared remarks, we will take questions in the time remaining.

I will now turn the call over to Allan.

Thanks, David, and thank you for joining us on our call this afternoon. Our fourth quarter and fiscal year results reflected great progress toward the profitability and balance sheet objectives embedded in our balanced growth initiative. As a quick reminder, this initiative is defined as the expansion of earnings at a faster rate than our revenue growth supported by less leveraged and return-driven capital structure.

That led us to 3 objectives for fiscal '17: growing our revenue, principally through higher sales basis; expanding our EBITDA at an even faster rate with improvements in our operating margin; and improving the health and efficiency of our balance sheet. We achieved all of these goals in fiscal '17 with gains in nearly every operational metric. Our ASP, sales pace, gross margin and SG&A all improved, which allowed us to generate $179 million in adjusted EBITDA, up more than 14% over the prior year. Bob will discuss the metrics behind these results, so I'll focus my comments on what comes next.

In 2018, we will rely on improvements from the same levers, which will position us to attain our 2B-10 target of $200 million in EBITDA. In fact, that's our internal goal and a key bonus metric for the entire company. At the same time, our interest expense will be flat on a dollar basis, so our earnings are going to grow up at an even faster rate than our EBITDA.

2018 will also be a year of increased investment as we position the company for accelerated but capital-efficient growth. There are 3 main themes that will dominate our investing. First, we're going to accelerate our acquisition of Gatherings sites, our age-restricted condominium communities. Our intense due diligence efforts over the past year in more than 10 markets will result in meaningful acquisition activity this year.

Second, our traditional community acquisition activities will remain focused on delivering extraordinary value at an affordable price. Key word here is affordable. Our strategy isn't changing. It's about the right location, the right product and the right price.

And finally, we're going to spend a lot more on land development, including about $60 million on formerly land-held assets. This development spend is what will unlock our ability to dramatically improve the efficiency of our balance sheet. These activities will drive our community count growth in fiscal '19 and '20.

To understand where we are taking the company beyond 2018, it's helpful to understand where we've been and what we've accomplished. By now, it should be clear that we are incredibly focused on improving our returns and more specifically, our return on assets. It's true that we didn't get to cherry-pick every asset we started with, and some of them have required a lot of our time, skill and development dollars to be monetized. We're proud of the improvements we've generated thus far, but to us, the really exciting part is what lies ahead.

Just 2 years ago, the combination of our land held for future development and our deferred tax asset represented nearly $600 million or 1/4 of our balance sheet. We're beginning to redeploy this capital into profitable communities, creating a path to substantial additional earnings growth.

As we look beyond 2B-10, we're on a mission to generate a double-digit return on assets. This won't be dependent on more capital, changes to our business model or a better economy. Instead, it will be driven by doing what we're already doing, growing our EBITDA and improving the efficiency of our balance sheet.

I hope these comments help you understand our ambitions for this year and our confidence for even better results in the years ahead. Bob and Dave will pick it up from here.

Thanks, Allan, and good afternoon, everyone. I will begin with a review of our fourth quarter results, then move on to our 2B-10 performance, before concluding with a discussion of our expectations for the first quarter of fiscal 2018.

In the fourth quarter, our sales absorption rate was 2.8, up about 3% versus the prior year despite the impacts from Hurricanes Harvey and Irma at the end of the quarter. We generated sizable year-over-year growth in a number of our markets, especially in Las Vegas and Southern California, where our new communities in San Diego continue to be a source of strength.

Homebuilding revenue rose more than 7% versus the prior year to $665 million. Our average selling price of $350,000 was 5% higher than the same period last year as each of our regions experienced year-over-year price improvements. In addition, we generated a backlog conversion ratio of 78%, 140 basis points higher than the prior year driven by better cycle times.

In line with our expectations, average community count for the quarter was 154, and we ended the quarter with 155 communities.

Our fourth quarter gross margin, excluding impairments, abandonments and amortized interest was 22%, up 120 basis points versus the prior year. Although some of this improvement was driven by nonrecurring pickups, even without these benefits, our margin this quarter would have been up approximately 50 basis points. This marks the fourth consecutive quarter, where we posted year-over-year increases in gross margin.

SG&A as a percentage of total revenue, including both homebuilding revenue and land sales, was 10.5%, down 10 basis points year-over-year. This led to our fourth quarter adjusted EBITDA of $76.9 million, up nearly $11 million or 17% versus the same period last year.

Total GAAP interest expense, which includes both interest amortized from cost of goods sold and interests included in other expense, was $34.8 million in the quarter, approximately flat versus the prior year. In 2018, our total GAAP interest expense should be similar to our interest incurred, which is now about $103 million.

Our tax expense in the quarter was $4 million after noncash benefits of $9.5 million, which included $6 million related to federal tax credits from energy-efficient homebuilding. We continue to expect our effective annual tax rate, including both federal and state taxes, to be approximately 38% going forward unless there is a legislative change to corporate tax rates. Taken together, this led to net income from continuing operations of $33.7 million and earnings per share of $1.03. We'd note that our results in both the fourth quarter of this fiscal year and last year's fourth quarter included onetime items that limit the comparability of our net income.

Moving on to 2B-10. We continue to make progress towards our multiyear goal to get to $2 billion in revenue and a 10% EBITDA margin. Our 2B-10 progress is measured on a trailing 12-month basis, so our discussion reflects our full year results compared to the prior fiscal year.

We generated adjusted EBITDA of $179 million in fiscal 2017, up $23 million from the previous year. Here's the progress we made on the individual metrics.

Total revenue was $1.9 billion, up nearly $100 million or 5% compared to last year. We closed 5,525 homes in fiscal 2017, 2% higher than the prior year. Our sales pace was 2.9 sales per community per month, in the middle of our 2B-10 range and up 11% versus the prior year.

Our average selling price was $343,000, up more than 4% versus last year. The average price of our homes in backlog is almost $360,000, offering visibility into a rising ASP in 2018.

Our average community count for the last 12 months was 155, and we also ended the year with 155 communities.

Our gross margin for the past year came in at 21.2%, which is up 60 basis points versus last year. SG&A as a percentage of total revenue, excluding a $2.7 million charge related to the write-off of a legacy investment in the first quarter, declined to 12.2%, down 10 basis points versus the prior year.

Since we introduced our 2B-10 plan 4 years ago, our EBITDA has more than doubled, growing at a 20% compound annual growth rate.

Moving on to our expectations for the first quarter of fiscal 2018. We expect orders to be up low single digits versus the same period last year with a community count that is relatively flat. Our backlog conversion ratio should be in the mid-50% range, leading to modest year-over-year growth in closings. Our ASP will be in the high $340,000s, up from the first quarter of last year. We expect first quarter gross margin to be up versus the previous year, marking the fifth consecutive quarter of year-over-year improvement.

Our SG&A as a percentage of total revenue should be flat to down year-over-year. Our land sale revenue should be relatively flat year-over-year with limited impact on profitability.

And finally, the cash component of our land spend will be up quite substantially relative to the $103 million we spent in the first quarter of last year.

At this point, I'll turn it over to David.

Thanks, Bob. In the quarter, we spent $136 million on land and development in addition to activating $41 million of land previously held for future development in Las Vegas and Northern California. For the full year, we spent about $445 million in addition to activating more than $100 million in previously land held assets. In total, our land spend, including activations, was up nearly 40% from fiscal 2016.

Since peaking in 2009, our total land held for future development has declined from $420 million to $112 million, a reduction of more than 70%. In turn, our active assets now represent 92% of our total inventory.

While we've made significant progress in activating assets over the past 3 years, many of these communities are still under development and aren't generating revenue yet. As we've shown on Slide 12, this represents a sizable portion of our inventory, which will make a major contribution to our growing profitability and improving returns in the years to come. Realizing the benefit of our deferred tax assets will have a similar though longer-term impact.

Predicting future community count is difficult. You can see on Slide 13 that we have 37 communities expected to close out in the next several quarters. This should be more than offset by a pipeline of 28 new communities and 16 communities that were previously classified as land-held which have yet to open.

Additionally, we have 33 communities that have been approved and are currently under contract.

In late September, we announced a $400 million issuance of senior notes due 2027. The transaction closed in early October, and the proceeds were used to retire $225 million of our 2019 senior notes and $175 million of our 2023 notes in a leverage neutral transaction. The weighted average maturity of our debt is now 7.2 years, up from 5 years at the end of fiscal 2015. Even better, we have no debt due until 2022 other than the $100 million of our 2019 senior notes, which we will pay off closer to maturity.

Our efforts to improve our balance sheet haven't just been about extending our maturities as we've also reduced debt and brought our annual cash interest expense down by more than $15 million over the last 2 years. When we pay off the remaining 2019 notes, we will generate an additional $5.5 million of annual cash interest savings. We also increased the size of our credit facility to $200 million and extended the maturity to February 2020.

With the improvement in profitability and a reduction of debt, our net debt to adjusted EBITDA has declined to 5.8x, down from nearly 12x just 4 years ago. We expect further improvements moving forward as we continue to grow our profitability and reduce net debt.

With that, let me turn the call back over to Allan for his conclusion.

Thanks, David. Our fiscal '17 results clearly demonstrated the operating leverage inherent in our business, with incremental improvements across multiple levers, driving substantial growth in profitability. 2018 will be another important year for the company as we continue to execute our balanced growth initiative, push to achieve 2B-10 and drive toward a double-digit return on assets.

I want to again thank our team for their continued efforts. With their talent, I'm confident we have the people, the strategy and the resources to reach our objectives.

And with that, I'll turn the call over to the operator to take us to Q&A.

(Operator Instructions) Our first question comes from Michael Rehaut with JPMorgan.

I wanted to start off with how you're thinking about gross margins, and understand that returns is as much or more of a focus than one metric on the income statement. But as you see, in particular, some of the cost inflation that's out there in the marketplace, you've been able to achieve kind of a low 21 percentage type of a number in the back half. Is that something sustainable more for the whole fiscal '18? Just trying to get your sense of the puts and takes there with the emphasis on the cost inflation side.

Okay. So I'll take a stab at this. The answer simply is yes. There are a lot of moving parts, as you would guess, in terms of the cost pressures. But the pricing environment is pretty constructive, and our efforts, particularly with respect to our spec homes, have given us much better margins in the last year. And I think as we've used that supply constraint more and more effectively as well as really refine the included features in our homes, we've just found things that have allowed us to offset those costs. So I think we're in a pretty stable environment, and I honestly think we've got just a little upward trajectory. We're going to push for margin improvement for the full year.

That's great. It's good to hear, and obviously, to have the pricing power necessary to at least offset some of the inflation out there is obviously encouraging. I also appreciate the comments during the prepared remarks on some help with the interest expense for the year, which you expect on a GAAP basis to be roughly equal to the $103 million that you did in '17. The way we've been modeling it is that the -- what comes through below the EBIT line should go down materially, maybe from $15 million this year to plus or minus $5 million in '18. So what you're saying is that would be offset by a similar increase in the cost of goods sold. Just curious, I mean, eventually as you grow the business enough that you'll be fully -- it will fully go through COGS, I was just trying to get a sense of when some of the savings from some of the debt paydown may flow through or you might see that $103 million start to decline in fiscal '19 or beyond. And I'm just trying to get a sense of what that amount might be.

Well, Michael, it's certainly a fact that other expense interest will continue to decline like it has the last couple of years, and that'll be offset, we believe, in '18 by commensurate increase in interest expense through COGS. I would have to ask you, I'm not sure of the $130 million number you referenced...

$103 million.

Oh, $103 million, sorry. Yes, I mean, we believe that based on where the assets were going, that we're going to relieve basically what we expense. And I think over time, you'll see that to be fully absorbed through cost of sales as we continue to leverage the interest costs.

Michael, the other thing just to keep in mind, and I you know this, it's the part that makes everybody's head explode, when you think about the movement of interest through the income statement, you've got to have a stake in the ground about what the change in the balance sheet will be in the relevant period. And we tried to give pretty good visibility 90 days out. Trying to predict the balance sheet 2 years out, that's probably beyond our pay grade.

Yes, Michael, it's Dave. I think the one thing I would add is, and I think this is the important thing, and I think Allan and Bob have touched on it, there's leverage inherent, and Allan mentioned it in his opening remarks, on the interest line. If your interest expense is staying relatively flat and your top line is growing, your interest as a percent of your top line is going down, and frankly, that's the earnings lever that Allan was referencing in his comment.

No, I definitely appreciate that. And I guess I was just obviously thinking about more in terms of like fiscal '19 on an absolute level if that overall number would start to come down and reflect some of the debt paydown that you've done over the last couple of years.

Yes, Mike, I think it's best to take the conversation probably off-line. We're not giving out fiscal '19 guidance, but I'm happy to kind of review with you off-line the levers that determine the amount of interest that we relieve through the income statement off-line. I think that will be easier.

The next question comes from Ryan McKeveny with Zelman & Associates.

On the gross margin, I think Slide 29 is very helpful, where you showed the gross margin across the regions and looks like a pretty tight band of kind of 90 to 100 basis points improvement year-over-year across those regions. So I'm curious on just the dynamics of the pricing power against cost dynamics across the different markets, maybe any positive standouts or, on the other hand, any markets that the cost side of things is a bit more cautionary than what we're seeing in total.

It's a good question. It's just hard to answer it on an earnings call because there are 16 markets and all the factors are varied. I think -- let's talk about one outlier. There definitely are some other-than-normal cost pressures in Houston that have arisen since the storm, and I expect that somebody would want to ask about that. It's really manifesting itself principally on the labor side and, in particular, on the installation of drywall. And we definitely have seen over the last 60 days an uplift there other than kind of the normal cost pressures that we'll be hard-pressed to fully offset during the year. That's baked into our thinking about the year in the aggregate, but I would just say that's one place where we clearly acknowledge that there are some difficult-to-predict dynamics with the amount of renovation and repair work that has to take place. If I go back a little bit then, I would tell you and we've sort of touched on this, a big driver for us has been narrowing the gap between our spec margins and our to-be built margins. Another component has been in, as I said, managing the feature level within each of our homes, a huge focus on affordability. And just because the pricing power is there, one way to think about pricing power is changing feature levels as opposed to just pushing base price. And I think that has been a dynamic that's played out. And I think a final factor for us has been I think we've gotten better and better and better at our construction practices and being clean and complete at closing, and that's had a positive effect on our warranty spending, which has contributed really across the whole of the footprint. So I would say, and it's probably not quite the answer you wanted, those 3 factors relate to almost all of our markets with the one outlier really being the dynamic that I mentioned in Houston.

Yes, that's very helpful. And I guess one more similar -- along similar lines, do you disclose the percent of communities that you actually were able to raise price in, in the quarter versus maybe trends in 3Q?

We don't. I'm always a bit puzzled by people who do that because the fact is pricing is a factor of so many variables, whether you changed your incentive, changed the base price, had a different incentive structure, lot premiums, and there are so many things going on. I wouldn't really know how to give you a good answer to that question.

(Operator Instructions) The last question currently in the queue will come from Jay McCanless with Wedbush.

The first question I had, the gain on debt restructuring, can you talk about where that came from? And then also, should -- what type of onetime expense for the debt transaction during the current portion (inaudible)

Yes, James, this is Bob. The gain on debt restructure was a restructure that we did on a real estate secured loan. That was a onetime type thing. And as it relates to the transactions we finished in October, the loss will be in the mid-20s, related to all the things that go into that, and that will be in our first quarter.

Then the second question I had, your average closing price this quarter was a little bit lower than what we're looking for. The average backlog price is well above what we expected. Is that more of these new California close coming in? And if so, could you maybe give us some insight as to how we should expect the ASP to trend here? As a lot of these California homes are going to close in the back half, should we expect ASPs to step up meaningfully?

I don't think you'll see dramatic variability. I think you're going to see growth in ASP quarter-over-quarter-over-quarter, really reflecting a gradual mix shift. I don't have the visibility, Jay, to say, hey, this is a particular quarter where you're going to get a big pop. I have to say that, again, internal, external, we thought that the conversion of the backlog from June 30 into the fourth quarter ASP was kind of the normal relationship, and we kind of expect that to continue in 2018.

And then, Bob, just -- and I apologize if you guys [can probably develop it] better. But what exactly would gross margin have been without, I think you called it out in the release, 70 basis points of one-time benefit? So would have been 16.3% or what? Or is that 70 off of the 7 -- 22?

The 70 is off the 22, ex interest, impairments and abandonments number. That's the number that we've been referencing. We have it referenced in the prepared remarks, the fully loaded, because the 16.3% also includes impairments as well.

And then the last question I have, what should we model for other expense for first quarter? And I'm assuming with you guys adding -- activating assets, et cetera, it's probably going to trend down through the year, correct?

Yes. I think, Jay, it will continue to trend down like it had in 2017 versus '16. I think we'll see a similar trend.

Okay. And what should we model for the Q?

Yes. Frankly, Jay, it's Dave. We talked about interest expense, both that which is flowing through other expense and amortized interest. I would look at it from that perspective. Frankly, the geography on the income statement is a little bit less relevant than the total interest expense in our minds. And again, as Bob said, it's going to be down but I would focus on total interest expense in your modeling, both amortized and through direct.

The next question comes from James Finnerty with Citigroup.

I just wanted to touch base on the debt side of the balance sheet. With the substantial increase in land spend that you're predicting in '18, how do you see yourself funding that? Is it through traditional eventually through debt increase or through equity issuance? And when you say substantial, can you give us an idea just so we could think about what substantial means?

Yes. Let's be clear, James. We have, through our capital base now, more-than-sufficient capital and liquidity to fund the land spend that we're talking about for '18 without doing anything in the capital markets. Very clearly, we've outlined a plan to repurchase another $100 million, retire another $100 million of debt in the 2019s. We have every plan to do that and to go out and execute that plan. So if anything, you're going to see debt reductions in 2018 as opposed to debt issuances, and again, we have more than sufficient capital, be it on balance sheet capital or capital as we've talked about through -- or driving our capital efficiency plan essentially to purchase the land and commit the land spend that we've talked about.

Okay. And then the land spend, can you give us an idea of how to think about it, either in whole dollars or in terms of percentage increase relative to '17?

Yes. I would -- we don't generally, and we haven't given full year '18 land spend. We're going to kind of keep going quarter-to-quarter here. And the comment we made in the beginning of the call was substantially more than the $103 million that we spent in the first quarter of last year.

Okay. And then moving into '19. I know that you're not giving guidance, but just so we could think about it, do you foresee eventually needing to raise capital again if you're going to increase land spend in '19? Or will you continue at this sort of debt level for the next couple of years?

Yes. Frankly, James, I don't -- we don't foresee or plan on raising additional debt. Again, it's been more of a deleveraging story, and that's what we're really focusing on. So I would tell you, given our current land spend plans, no, there's no plan to access to that market for additional leverage.

The next question comes from Lee Brading with Wells Fargo.

Just kind of following up a little bit on those, and also, just to expand -- if you guys could expand a little bit on the investing that you've talked about in '18, one was the Gatherings sites. If I heard right, you said were 10 this past year. And I was kind of -- what are you seeing there, and kind of what do you see for '18 for that opportunity?

Well, I'm not going to give you a specific number, but I would just tell you that I think when we get out to '19 and '20, Gatherings is going to be an important part of the mix of closings that we have in the company. And that's going to require a lot of community count. We've been doing the work in these various markets. And we've got the opportunities lined up. So I would say it will fill a big part of our land spend, but we're going to continue to invest in the traditional communities. And as I also said, we've got a lot of land development spending this year. An unusually high proportion of our total spend will be on LD because we're able to take those former land held assets and start generating revenue from them. So that's the other part of the investing.

Okay. So favorable -- everything is kind of going as you expected and sounds like even better than you expected, initially?

Yes, yes. I mean, I think with the Gatherings opportunity, this is a massive demographic opportunity. We have a competitive advantage in our execution capability with this particular product, being appropriately aggressive with it. I think when we're first in a market, our first deal in Orlando, well under construction, our first deal in Dallas, our first deal in Atlanta, we're being really careful to make sure that these first communities, that we're able to share all of the tribal knowledge that we've collected in other markets. But we're locked and loaded for a growth trajectory in each of the markets that we've identified for Gatherings. And I've telegraphed that, that number is at least 10 of our markets should expect that spending.

Nice. And then managing the balance sheet. You guys have done a good job doing that in so many different ways, but just when I'm looking at -- you talked about net debt-to-EBITDA, and I look at debt to cap and -- is another way I look at it. And each year, you've been bringing it down like 300 basis points as I look the last 2, 3 fiscal years. And I'm not looking for guidance on that, but I would imagine, maybe is there a target or an ultimate level that you'd like to achieve from maybe managing the balance sheet, debt to cap or something in that respect?

We haven't really talked about a number there. I think we've talked about debt-to-EBITDA more because there are imponderables on the balance sheet that make that a little bit more challenging. So our focus has been, let's go drive EBITDA, and that will make the debt-to-EBITDA better and better and better. So I would tell you, we're aware of kind of what those metrics are, but I'm more focused on -- I want to get the interest coverage up and the debt-to-EBITDA down.

Got you. And now, in this year, I guess, you're going to have to -- in '18, you have to come up with a new catchphrase is what I'm guessing now. So Bob, I guess that's on you.

Yes. We've got to get a whole graphics department involved in creating a logo, but we'll put that off a little bit. But I think we've told folks where we're headed so that you can kind of see when we get through 2B-10 kind of what the rest of the story looks like, and there's a lot there.

The last question currently in the queue comes from Michael Rehaut with JPMorgan.

I just wanted to circle back to, again, kind of roughly speaking, how to think about fiscal '18. And I'm specifically thinking about top line. You indicated in your first quarter guidance that you expect orders to be up modestly, closings also look to be up modestly if you take the mid-50s conversion. And from an ASP side, you're finishing the year strong, around almost $360,000, which is nicely above the fiscal '17 average. So how should we think about revenue growth in terms of both closings and ASP in '18?

I think, Michael, it's pretty hard to see too much farther beyond the first quarter or so. But the backlog at $360,000 is a pretty good indicator of how we feel about continual ASP growth. Given the 6 levers that we've talked about, just continual improvement year-over-year on each of those levers, I think that's really what we're focused on.

Well, maybe from another perspective, looking at the average community count, you still have the 2B-10 range of 170 to 175. You indicated with the activity that you have more communities about to open or opening versus near-term closeouts, which is kind of obviously implying a little bit of sequential community count growth. So from that perspective, should we be expecting a little bit of community count growth in '18 and mix in a little bit of absorption growth to get some type of at least mid-single-digit volume growth number for the upcoming years? Is that reasonable or...

Well, Michael, let me respond in a couple of ways. We're not going to give fiscal year '18 guidance, but let me come back to some things that we've said. We expect improvement in the same levers in '18 that we were able to improve in '17. And I think that's important. We saw ASP growth. We saw pace growth. We saw margin growth. We saw a little SG&A leverage. We saw leveraging of the interest expense. The one thing to be a little careful about, and we're very cautious about it on the community count side, is just because you've taken an order doesn't mean you have a closing. So depending on when communities open during the year, you may get no revenue benefit from community count, and that's why we've really been careful to talk about incremental improvements in a number of different metrics culminating in our expectation and plan to attain the $200 million in EBITDA is really the focus. And I really -- I spent time talking about community count growth in our investing in '19 and '20 because I think that's when the benefit of those sales starts to be realized from a revenue perspective.

I will now hand the call over to Allan Merrill for final comments.

Okay. Well, thank you all for joining us on our fourth quarter and full year earnings call. We look forward to talking to you at the completion of our first quarter. Thank you all.

That does conclude today's conference. Thank you for participating. You may disconnect at this time.