Century Communities Inc (CCS) 2017 Q2 法說會逐字稿

This is the conference operator. Welcome to the Century Communities Second Quarter 2017 Earnings Conference Call. (Operator Instructions) And the conference is being recorded. After the presentation, there will be an opportunity to ask questions. (Operator Instructions)

I would now like to turn the call over to Scott Dixon. Please go ahead.

Good afternoon. We would like to thank you for joining us today for Century Communities’ Second Quarter 2017 Earnings Conference Call. After the market closed today, we distributed a press release detailing our second quarter financial results. We also posted supplemental pro forma materials for UCP and Century on the Investor Relations section of our website at www.centurycommunities.com.

Before the call begins, I would like to remind everyone that certain statements made in the course of this call are not based on historical information and may constitute forward-looking statements. These statements are based on Management's current expectations and beliefs, and are subject to a number of risks and uncertainties that could cause actual results to differ materially from those described or implied in the forward-looking statements. The company undertakes no duty to update any forward-looking statements that were made during this call.

Additionally, certain non-GAAP financial measures will be discussed on this conference call. The company's presentation of this information is not intended to be considered in isolation or as a substitute for the financial information presented in accordance with GAAP. Management will be available after the call should you have any questions that did not get answered. Hosting the call today are Dale Francescon, Chairman and Co-Chief Executive Officer; Rob Francescon, Co-Chief Executive Officer; and David Messenger, Chief Financial Officer.

With that, I will turn the call over to Dale.

Thank you, Scott. Today on the call, I will review our operating highlights, as well as the status of our merger with UCP, Inc. Rob will then discuss our new and existing homebuilding markets. Afterwards, Dave will follow up with further details on our financial results, balance sheet, and 2017 outlook. Following our prepared remarks, we will open the lines for questions.

During the second quarter of 2017, we had significant growth in net new contracts and home sale revenues, as well as the number and value of sold homes in backlog, while making further progress on many previously announced initiatives. We experienced considerable operating momentum and price gains as we capitalized on favorable demand trends in our key markets. These conditions allowed us to produce another quarter of strong earnings totaling $14.8 million or $0.66 per diluted share, compared to $0.62 per diluted share in the prior year quarter.

We increased our home sale revenue to $288 million, an increase of 12% from the prior year quarter. We recorded higher prices in most markets to produce an average selling price up 14%, reflecting favorable product mix and core price momentum.

Adjusted gross margin of $60.7 million represented another quarter of stable adjusted gross margin percentage of 21.1% compared to 21.1% in the prior year quarter. This consistency in gross margin performance relative to prior year and prior quarter was largely due to higher prices and favorable product and geographical mix, which offset any higher costs across our markets.

We ended the quarter with 1,366 homes in backlog valued at $522.6 million, year-over-year increases of 28% and 29% respectively. This significant increase in backlog homes bodes well for a continuation of our positive earnings trends into the second half of this year.

SG&A as a percent of home sales revenues improved by 30 basis points to 11.9%, and was significantly better than the first quarter of 2017 as we moved past much of the heavy lifting to ramp up our new homebuilding divisions in Utah and North Carolina, which are progressing according to plan.

Our financial services business has also turned the corner with respect to profitability. During the quarter, we began closing home loans, and we will continue expanding its reach through our growing portfolio of markets.

Now an update on our previously announced business combination with UCP, Inc. On Tuesday, we are pleased that UCP shareholders overwhelmingly voted to approve the pending merger. We are excited to complete this transaction tomorrow and welcome the UCP team to Century. The completion of this merger will mark a significant milestone for both companies and solidifies Century's position as the 16th largest public homebuilder in the U.S. We intend to build on our track record as one of the fastest growing U.S. homebuilders, both organically and through acquisitions, and accelerate our goal of expanding Century into one of the largest and most profitable U.S. homebuilders.

I want to take a moment to highlight a few of the significant opportunities and immediate benefits that this transaction creates. First, we immediately increase our scale with nearly 30,000 owned and controlled lots, along with a backlog of 1,778 homes valued at over $710 million on a pro forma basis as of June 30, 2017. We will now operate in 10 states, 17 markets, and 111 communities.

Second, in the process of expanding our scale, we have created a more geographically diverse portfolio with essentially no overlap. We will have a national portfolio with an established presence in many high growth markets. This provides increased land investment opportunities, as well as a mitigated risk profile against volatility in any one market.

Third, we believe the increased market liquidity from a larger and broader share base will allow a wider group of equity investors to participate in our exciting story.

Fourth, we expect the merger to be accretive to our 2018 earnings per share due to economies of scale and cost synergies that we expect to begin realizing in 2018, ranging from $5 million to $8 million per year.

We have studied UCP's markets for several years and are pleased with the product offerings, commitment to quality, and opportunities for expansion. We believe the new markets are poised for growth, and we look forward to investing in these divisions. We've also been impressed by the talented UCP employees that will be joining the Century team. With UCP's well-located lots in the high growth markets of California, Washington, and the Southeast, partnered with Century's strong capital base and tenured homebuilding experience, we believe we can improve the historical velocity and margin profile generated from these land positions.

We have been planning and working on the transition since the transaction was announced in April, and our team is already hard at work, executing our integration plan. This transition and integration plan is founded on achieving Century's strategic growth objectives, while furthering our commitment to grow earnings per share and return metrics.

As an important first step, during the upcoming week, we will begin the process of transitioning UCP and its wholly-owned homebuilding subsidiary, Benchmark, to the Century Communities trade name. We are confident that this rebranding will enhance our combined operations by providing a uniform brand to employees, customers, trade partners, and the investment community, allowing us to take full advantage of national purchasing synergies and bringing UCP into Century as one unified team.

In summary, we are positive on the homebuilding environment in general, and ours in particular, and we're encouraged by the trajectory of our multi-market strategy. We will move forward with our plans to rapidly integrate UCP with Century. We intend to put our balance sheet to work on sound investments in our homebuilding operations and other avenues that provide attractive returns. We expect to achieve better economies of scale across our expanded footprint, while remaining disciplined with our costs to deliver strong earnings growth. With these objectives in place, we are focused on investing time, energy and capital to advance our long-term growth strategy and enhance our returns on equity.

I'd now like to turn the call over to Rob to discuss our markets in greater detail.

Thank you, Dale, and good afternoon, everyone. As Dale mentioned, our sentiment on the homebuilding environment remains positive with solid Q2 performance in our markets. Second quarter net new contracts grew 18% to a record 1,021 homes, led by Atlanta and Las Vegas. We ended the quarter with homes in backlog up 28% to a record 1,366 homes, representing a backlog dollar value up 29% to $522.6 million from the prior year quarter. This was made possible by our absorption pace improving by 20%. We increased or held firm on price in key markets with an average selling price at backlog of $383,000, helped by the success of new communities and product offerings.

During the past several years, we have effectively demonstrated our ability to deploy capital at attractive returns and believe we are poised for even greater success in the future. The combination of our existing portfolio with UCP's West and Southeast assets, many of which were purchased at favorable values, provides us with exceptional land positions in some of the most robust U.S. homebuilding markets.

On a pro forma basis as of June 30, we ended the quarter with land inventory of 29,602 owned and controlled lots, which are split 50/50 between owned and controlled, and are more than double compared to the prior year reported quarter. Looking forward, we see many opportunities where we can invest capital at attractive returns, especially in our new West Coast markets.

Beginning with the third quarter 2017 results, we plan to report homebuilding operating metrics in 4 U.S. regions: West, Mountain, Texas, and Southeast. As we consider the significant increase of active markets, and the integration of UCP's operations into our business, we believe this will be a more efficient and effective way to present our business moving forward.

We have posted a supplemental on our website which more clearly breaks down the composition of our business by region on a pro forma basis, including UCP. The West will include UCP's California and Washington businesses. The Mountain region will be Colorado, Nevada and Utah. Texas will include all of our operations in that state. And the Southeast segment will capture the remaining markets of Georgia, Tennessee, and the Carolinas.

Looking at our market portfolio, overall, new residential activity continues to perform well. Our deeply rooted positions in attractive regions of the country are and will continue to drive meaningful growth in new contracts, home deliveries and earnings in both our new and legacy markets.

Consistent with how we will look at our footprint moving forward, I will walk through our market comments today in accordance with the pro forma regional layout I just discussed. Starting with our Mountain region, we were encouraged by the very positive momentum in deliveries and new contracts, which were both up more than 20%, along with a 15% increase in unit backlog. This improvement reflected a very solid pace of activity in Nevada and the continued ramp up of our Utah operation. Each of our markets in the Mountain region benefit from job growth, low new home inventory, low resale supply, rising rental rates, and noticeable strength at entry level and first move-up price points.

In Texas, home sales revenues increased 13% and backlog was up over 40% year over year. In both Central Texas and Houston, we are experiencing an increase in demand as we continue our pivot to lower price points. During 2017, we have increased our investment in Texas by 18% and lot positions by 22%. We are encouraged by this strengthening demand and the overall outlook for our Texas region.

Looking at the Southeast, limited supply and robust demand is supporting favorable home price appreciation. Our net new contracts in Atlanta increased 19% year over year, resulting from continued strong absorptions. During the quarter, our Atlanta division closed out and opened 10 communities. The 10 new communities experienced strong absorptions, however, had no spec inventory to close during the quarter, which led to a lower than expected backlog conversion rate. Pro forma backlog growth for the region was 33% year over year.

In UCP Southeast markets, which include Tennessee and the Carolinas, revenues were up 30% on stronger selling prices and home deliveries. New contracts in UCP Southeast markets were lower, but we expect to ramp up community openings in coming quarters to capture the robust pace of home buying activity in this exceptionally strong region.

Looking to the West, this planned regional segment will be entirely comprised of UCP's existing operations in California and Seattle, which represented approximately 24% of our second quarter pro forma revenues. In Northern, Central, and Southern California, along with Seattle, demand remains strong with new contracts rising 32% during the second quarter and home deliveries up nearly 40%.

Through a combination of well-located communities and attractive product offerings across a diverse buyer segment, we are firmly situated to take advantage of strong economic, employment and population growth. We are encouraged by the homebuilding momentum in both our legacy and new markets, and we look forward to generating enhanced returns from our expanded geographic footprint. We intend to continue strengthening our presence in the new and existing vibrant markets to grow revenue, profitability, and returns on equity.

I will now turn the call over to Dave who will provide greater detail on our financial results for the second quarter.

Thank you, Rob. During the second quarter of 2017, we had significant growth in orders and homebuilding revenue, while making further progress on many previously announced initiatives. I'll first discuss our legacy business, then provide some additional color on UCP's second quarter performance which are not included in our reported results today.

Pretax income for the quarter was $23.1 million, while net income increased by 13% to $14.8 million or $0.66 per share, compared to $13.1 million or $0.62 per share in the prior year quarter. During the quarter, we incurred $916,000 of acquisition expenses or $0.02 per share. Adjusted EBITDA grew 24% to $31.6 million compared to $25.5 million in the prior year quarter, attributable to revenue growth.

Home sales revenues for the second quarter were $287.6 million, an increase of 12%, compared to $257.2 million in the prior year quarter. This improvement in revenues was mainly driven by a 14% increase in average selling prices, which increased to $381,900 in the second quarter of 2017 compared to $334,900 in the prior year quarter. This was due to a shift in regional and product mix, as well as core price gains. Home deliveries were 753 compared to 768 homes in the prior year's quarter.

Gross margin percentage on homes closed in the second quarter was 18.7% compared to 19.2% in the prior year quarter, driven by an increase in our financing cost. Excluding capitalized interest and purchase accounting impacts from cost of sales, our adjusted gross margin percentage in the quarter was consistent with last year at 21.1%. As we look at our margin profile going forward, we recognize that over the next couple of quarters, we will see an impact from the addition of the UCP portfolio and the purchase price accounting impact.

Based on our prior experiences, we anticipate that in-place UCP WIP will generate gross margins in the 6% to 10% range. We expect that inventory to roll through the system in 2 to 3 quarters. Excluding this one-time impact, we project an improved margin profile for the UCP portfolio both from land write-downs resulting from the below book value purchase price, as well as a positive impact from our national purchasing and other initiatives.

SG&A as a percent of homebuilding revenues declined to 11.9% for this quarter compared to 12.2% for the second quarter of 2016, which was a result of home sales revenue increasing 12% over the prior year, which more than offset our investments in personnel to support our growth and investments in new divisions. We expect to continue to leverage our platform as our 3 startup operations -- Utah, Charlotte, and Financial Services -- continue to grow and the integration of the UCP operations is completed.

Looking at UCP's second quarter performance. UCP had a good pace of activity, led by the West, with net new contracts growing 16% year over year to 265 homes. Homebuilding deliveries were also strong with a 32% increase to 259 homes. UCP backlog of 412 homes was up 22%, which provides for a solid base of activity for Century to hit the ground running in our newly added West and Southeast communities. UCP ended the second quarter with a little over 7,000 owned and controlled lots.

Stronger revenue has resulted in UCP's homebuilding gross margin expanding to 19.4% compared to 18.2% in the prior year quarter. Adjusted gross margin improved to 21.8% compared to 20.7% in the prior year quarter. And SG&A improved to 14.2% as a percent of homebuilding sales compared to 14.4% in the prior year quarter. This all culminated in pretax income increasing 192% to $5.7 million from $2 million in the prior year quarter.

Looking at the combined performance of both UCP and Century on a pro forma basis, second quarter net new contracts would have grown 17% to 1,286 homes. Pro forma backlog increased by 26% to 1,778 homes. Homebuilding revenue on a pro forma basis increased 18% year over year to $400.8 million. This improvement was primarily attributable to a 5% increase in pro forma home deliveries and a 13% increase in pro forma average selling prices to $396,100 because of favorable mix attributable to a 38% increase in deliveries from UCP markets in the west. Overall, these UCP and pro forma results are very positive and support our conviction that the planned addition of these assets under the Century brand should continue to flourish as we further improve operations in these well-positioned communities.

Now turning to our balance sheet and liquidity. In May 2017, we raised $395 million of net proceeds from a successful offering of senior notes due in 2025 that carry an interest rate of 5.875%. We used a portion of the net proceeds from this offering to pay down in full our revolving credit facility, with the balance of the proceeds intended to fund the UCP acquisition.

As of June 30, 2017, we had total long-term debt of $787.4 million and total liquidity of $763 million, including $363 million of cash and a full availability of our $400 million revolver. Our net debt to capital ratio improved to 44.9% at June 30, and adjusted for the UCP transaction, it would have approximated 50%.

During the quarter, we issued approximately 383,000 shares under our ATM for $9.6 million or $25.16 per share. Tomorrow, we expect to complete our previously announced merger with UCP through a combination of stock and cash consideration. The cash portion of the deal is expected to total approximately $98 million, plus the payoff of $153 million of debt. We plan to fund this through cash on hand. We will also issue 4.2 million shares of Century stock to UCP shareholders. This will result in Century shareholders owning roughly 84% of the combined company upon close.

I'll now discuss our updated outlook for 2017. We're excited with the expanded scale of our business across a national footprint. Our updated expectations are for our combined business, which reflect not only an increase to Century's previously issued guidance, but the addition of UCP's activity for the period from August 4 through the end of the year. We expect our full year deliveries to be in the range of 3,500 to 3,800 homes, and home sales revenues to be in the range of $1.3 billion to $1.5 billion. And we expect to have 110 to 120 selling communities at year end.

While we typically do not provide guidance on a quarterly basis, there are a couple of moving pieces related to this transaction that will impact our third quarter and fourth quarter results. First, approximately 4.24 million shares will be issued to fund the UCP merger. And second, we anticipate onetime and acquisition-related expenses of $8 million to $10 million, which will mostly be recognized during the third quarter of 2017.

Through the balance of 2017, we have a very strong pipeline for additional growth, and look forward to integrating UCP into Century and leveraging best practices across the platform to expand our top and bottom lines. Furthermore, we anticipate that we will generate meaningful synergies from national purchasing advantages and shared corporate expenses, which we expect will cause the transaction to be accretive in 2018. We are pleased with our operating and financial progress to date, as well as those of UCP, which will provide us with a strong platform to benefit from the exciting prospects of our combined businesses in years to come.

Operator, please open the lines for questions.

(Operator Instructions) The first question comes from James McCanless of Wedbush Research.

The first question I had, I didn't hear what you guys said the reason for the gross margin decline year over year in the legacy CCS business.

Jay, this is Dave. The primary decline in the gross margin was due to financing costs. Because if you look at on an adjusted basis, 21.1% versus last year 21.1%, we're still relatively consistent and had been running between a 21 and 22 on an adjusted basis, but the gross has been impacted by an increase in the financing costs.

Okay. And then what about -- what should we build in for potential integration or M&A expenses for the back half of 2017?

This is Dave again. We had said that we expect about $8 million to $10 million of one-time and acquisition-related expenses of which probably the majority you're going to see in the third quarter.

Okay. In the third quarter. And then the third question I had, Atlanta closings took a pretty big dip year over year. Was that a weather issue or what's going on there?

It was really transitioning from closeout communities to new communities. During the quarter, we closed out and opened 10 communities in Atlanta. As a result, even though we had the strong absorptions with sales, we didn't have the spec inventory on the ground to get the homes closed. So we look at that as it was kind of a one-time event in Q2 as we transitioned from closing out communities to opening new ones, and we don't see that repeating itself going forward.

The next question is from Michael Rehaut of JPMorgan.

This is Neal BasuMullick on for Mike. I guess to start out with, in your updated guidance, I guess you didn't have an updated gross margin outlook. I know there's some moving pieces with UCP. But I guess looking at the historical spread between your margins and UCP's, there's some potential uplift there. So maybe could you add a bit on the puts and takes?

Sorry, repeat the last part of that.

Could you add a little bit on the puts and takes for gross margin for the year with UCP in there?

It's a little bit difficult to forecast what a combined portfolio gross margin is going to be. But as you're thinking about your model and you're looking at it, for the Century legacy business, the Century portfolio, I just made a comment to Jay; we're looking at adjusted gross margins that continue to be around a 21% number. When we're looking at UCP, now there's going to be some noise in the third and fourth quarter that based on our prior experiences, as we look at purchase price accounting, what's going to get reported on a gross margin basis is going to be -- in place with is going to have a margin of, say, 6% to 10% that'll roll through in the third and fourth quarter. But on an adjusted basis, when you factor that out, I think that UCP's been running 19%, 20%, and we think that there's some opportunity to move that up. But in terms of combined company guidance, I don't think we're in a position today to provide a lot of clarity on that.

Okay. No, that's helpful. I guess in the context of that overall outlook, you touched a bit on overall pricing. But I guess drilling down to more specifically where are you seeing the most pricing power, and I guess how are you thinking about current pricing trends?

Neal, in general, and this has been consistent really throughout the year, the pricing power we have is really on a subdivision by subdivision level as opposed to really across a market. We continually review our subdivisions. We're adjusting prices where we think we have the ability to do so. And as Dave said, year over year, our adjusted margin has been very consistent, which is reflective of the fact that as we have seen cost to inputs increase, we've been able to raise prices to offset it. And we see nothing that's changed on a go-forward basis, and we anticipate we'll continue to be able to do that.

The next question is from Alex Rygiel of FBR Capital Markets.

Growth has been fantastic over the last handful of quarters and years. Now you're integrating a pretty big transaction with UCP. Are we going into a period here where maybe for 2 or 3 quarters maybe you pull back a little bit, focus internally, focus on integration, branding and so on, or how should we think about that?

Alex, we've already started the integration process, and we've integrated a number of companies already that we've acquired. And we look at UCP, it's really, in certain ways, not a lot different than what we've done before. They have a variety of markets. We have a plan that's already in place, some of which has already begun, and in terms of rolling out the branding, in terms of converting everyone to the same operating reporting platforms. So when we look at this, we've had quite a bit of experience over the last couple years with regard to the other acquisitions that we've done. And frankly, in this case, we had a running start because we've had close to 6 months to get the plans in place, where typically in a private company transactions, they're going to close much quicker and we don't have quite as much runway on the planning. So we're very comfortable with the integration and think that we have a lot of opportunity to grow organically, and that's really where we're focused. Particularly in the UCP markets, in many cases, they haven't had the capital to invest in their business, and so we're very excited about the opportunity to do that.

Secondly, as it relates to raw material costs, any thoughts, comments on that, whether or not it's lumber or other building materials?

We've clearly seen over the last year a rise in lumber cost, and we're still seeing it in certain other commodities. But as we look at that, we've been able to offset those costs with increased topline pricing growth, and as I said earlier, we anticipate we can continue doing that going forward.

And then lastly, you mentioned Atlanta and Las Vegas were very strong. You brought up some more macro items that are helping those markets out. Anything in particular as it relates to company-specific items that you think are driving some of the strength in Atlanta and Las Vegas?

In Atlanta, as I mentioned, we opened 10 new communities in the last quarter, and we have quite a few more additional communities to open in Q3 and 4 in Atlanta. And we're just very bullish on the market. As the #2 builder in that market, we're continuing to grow within the market. And we're just, from a prospect standpoint, we just see a lot of opportunity there. Shifting to Las Vegas, we have continued to go into lower price points within the Las Vegas market. That, coupled with a demand increase, we've had very robust sales in Las Vegas year to date.

The next question is from Nishu Sood of Deutsche Bank.

This is actually Tim Daley on for Nishu. My first one is just a follow up on Jay's question around the gross margin. There was a 60-basis point sequential decline in the second quarter, but in May you had mentioned how you anticipated being able to maintain a relatively stable gross margin from quarter to quarter throughout the rest of the year. Was this due to the Atlanta spec closing issue? And if so, should we maybe recouple that trajectory on a legacy basis if we're thinking of it that way for Century through 3Q and 4Q?

This is Dave. I would say in the first quarter, we had some commentary about trying to be around a 22% as we're looking at backlog, and then we're coming out 21.1% today. So a little bit of a decline, but we really attribute that more to just based on where the product and the type of houses that closed ultimately in the Q2 versus what may have been projected earlier in May. With a 21% to 22%, we don't see that as a material degradation in margin, and so we think that staying within that range going forward for the next couple quarters for the legacy Century business through the balance of 2017 is a reasonable expectation.

All right. Very helpful there. My second question, I was just trying to reconcile the updated guidance with I guess UCP's historical guidance. Obviously, no one's holding you to what the prior company had said, but just from a capacity issue, I'm just trying to understand, break out what the difference between what the upgrade to the Century legacy is and versus what is closing from UCP. Because obviously there's a bit upside on the closings and revenue ends that's kind of unanswered there.

This is Dave. A couple things to consider when looking at our increased and updated guidance for 2017. Had we done the guidance at the beginning of the year, the pro forma guidance would have been in the range of 3,925 to 4,275 in terms of home closings and $1.4 billion to $1.6 billion. However, you got to keep in mind, I don't get to count the full year for UCP, so we've got to take out 7 months' worth of activity. If you break down the guidance a little further, we're including an increase in Century's legacy portfolio that our original guidance was 3,000 to 3,300 homes and $1 billion to $1.2 billion in revenues. Well, we had a strong first half of the year, and as we look at our backlog and what we're expecting in the second half from our divisions, we're increasing the Century level guidance to 3,100 to 3,400 homes being delivered this year at $1.1 billion to $1.3 billion in revenue. The balance then to get to our updated guidance is related to the UCP portfolio. Now what we did was -- they had come out with guidance at the beginning of the year of 925 to 975 on home closings. And essentially we just deducted homes closed up through today out of that number such that we -- and we deducted the original range, we end up with 545. That way we just took homes closed off both the low and the high end of the range to come up with an updated guidance. So we're not updating UCP's guidance today; we're just adjusting it for actual activity up through this week.

All right. That's very helpful. And then just to reconcile a bit further, you put out the statement with expecting the synergy, that cost saving synergy of around I think it was $5 million, the press release for full year 2018. Does that still hold? And what do you think could happen during the rest of the year that you could surpass that?

This is Dave. I'll go first and let Dale clean up anything he wants to. We've said that $5 million was a starting point for us in terms of synergy that when we look around the combined portfolio, we look at having now a national coast-to-coast footprint. That gives us a lot of purchasing power, a lot of synergies from an operational perspective that we think that hitting $5 million is good. Possibly we'd go higher than that. And I think that where we had talked about it before, Dale said in his prepared remarks $5 million to $8 million per year going forward. This year, you're not going to see very much of it in 2017 because obviously it takes a while to work those into the system. But once we get up and going in 2018, we think that $5 million to $8 million number, based on some of these synergies, is fairly attainable.

Tim, just to provide a little more color on that, we see some of these synergies coming from the public company costs, the audit, the legal, insurance, personnel, national purchasing. And so when we look at that, as Dave said, we originally put out the $5 million. As we have continued to refine this, we think we're going to be in the $5 million to $8 million range. Some of that we're going to start seeing this year, but very little of it. Most of it will start into 2018. And hopefully we can build on it from there in future years.

This concludes the question-and-answer session. I would like to turn the conference back over to Management for any closing remarks.

Thank you, operator, and thank you again to everyone for joining us today. We look forward to speaking with you again next quarter.

This concludes today's conference call. You may disconnect your lines. Thank you for participating and have a pleasant day.