Cavco Industries Inc (CVCO) 2007 Q3 法說會逐字稿

Welcome to the Cavco Industries, Inc. third-quarter fiscal year 2007 conference call. During the presentation all participants will be in a lesson-only mode. Afterwards we will conduct a question-and-answer session. (OPERATOR INSTRUCTIONS). As a reminder, this conference is being recorded Friday, January 26, 2007. I'd now like to turn the conference over to Joseph Stegmayer. Please go ahead, Sir.

Thank you, Shawn, and good morning, everyone. With me today is Dan Urness, Cavco's Vice President and Chief Financial Officer. First I'm obligated to mention that we speak today under the umbrella of the Safe Harbor rules.

Certain comments we will make are forward-looking statements within the meaning of a number of Securities Acts and Cavco disclaims any obligation to update any forward-looking statement and investors should not place any reliance on any such forward-looking statements. A more complete statement on this subject is included as part of Cavco's third-quarter news release filed on Form 8-K yesterday and available on our website as well as through many other sources.

Let me began with the hard and perhaps obvious facts. The overall housing market is weak; demand for factory built housing is soft as well. And unfortunately there are no apparent catalysts that would serve to markedly improve demand in the short-term. Within this tough environment Cavco did reasonably well -- sales were $38.2 million and net income was $2.1 million or $0.32 per share.

Those of you who have followed Cavco for a couple of years know that we have been concerned about the state of the manufactured housing industry for all of that time and notably conservative in our comments about the outlook for the industry. We've maintained this position not because of concern about the long-term viability of this industry; indeed the need for affordable housing will continue to grow and factory built homes can serve this need exceedingly well. Moreover, certain markets that have been good for manufactured homes, the age 55 plus consumer market as one example, are very large and growing.

Our concern for the industry is centered around several challenges, some specifically manufactured housing industry related and others that were not caused by and cannot be resolved by our industry. The four would include the overexpansion of manufacturing and distribution capacity; the buildup of new unsold home inventory; and overly aggressive lending all of which occurred in the mid to late '90s.

The biggest challenge from outside our industry has been the aggressive financing and appealing mortgage terms that have been available to the site built industry. The adjustable rate mortgage products, the no down payment mortgages, the interest only loans have helped many home buyers step up in price point and buy a more expensive home than they could have bought before these loan products became so prevalent. This has taken many potential buyers from the factory built housing industry.

In the last couple of years as home prices rose rapidly in a number of markets including ours we've had the opportunity to offer high-quality attractive homes at great values. This was good for Cavco because it enabled us to capture more new home buyers in spite of the more attractive financing on the part of the site builders. Our price points were considerably below that of the site builders and offered an attractive alternative to many buyers.

More recently, however, the housing market has changed from a seller's market to a buyer's market and now we're facing a different challenge. Prospective buyers of factory built homes who are selling their site built homes to make a change are not able to sell their home in the timeframe they expected or at the price they anticipated, or both. Developers we work with indicate that they have interest and make deposits from buyers, but closings are contingent upon the sale of the customer's existing home. And so this has delayed ordering homes and the closure of those homes.

In the market overall there certainly seems to be a hesitancy on the part of consumers to make a buying decision. This could be attributed to, again, the general slowdown in housing, the negative news about housing and the uncertainty about the economy as a whole. We have no way of knowing when more favorable conditions will prevail. However, we are optimistic about the future because we believe that we're in attractive geographic markets, we have an excellent and diverse line of products, and we maintain a conservative cost structure which enables us to build a great value into our homes.

Additionally, we are a strong company financially and we have attractive operating leverage that should prove rewarding as the market for our products improves. Now Dan will cover some financial highlights and then we'll look to take your questions.

Thank you, Joe. Net sales for the third quarter of fiscal year 2007 declined 16% to $38.2 million compared to last year's third-quarter sales of $45.3 million as our wholesale shipments were lower this quarter by 14% with 898 homes shipped compared to 1049 home shipment during last year's third quarter. Gross profit for the third quarter of fiscal 2007 was $6.3 million, down from $9 million last year. The gross profit percentage was 16.5% compared to 19.8% last year.

The gross profit percentage was affected by lower production efficiency, a less favorable product mix and low margin results from the new Texas plant during the third quarter. Excluding Texas the gross profit percentage this quarter would have been 18.5%.

Selling, general and administrative expenses for the quarter were $3.8 million or 9.9% of net sales versus $3.9 million or 8.7% for the same quarter last year. The lower SG&A costs are largely due to reduced compensation time to earnings, partially offset by stock option compensation expense which has only been a component of SG&A since the beginning of the fiscal year in accordance with the implementation of FAS 123(R).

The income tax provision for the quarter was recorded at 33%. Third-quarter income from continuing operations was $2.1 million or $0.32 per diluted share compared to $3.5 million or $0.52 per diluted share last year. In addition, our balance sheet remains robust with a combined cash and short-term investment balance of $59.6 million on December 31, 2006 compared to $51.9 million on December 31st last year. We continue to be debt free and we have responded timely in the current downturn to strictly control our costs and reduce overheads consistent with our current operating levels.

Thank you, Dan. And, Shawn, we are ready to take questions.

(OPERATOR INSTRUCTIONS). Michael Corelli, Barry Vogel & Assoc.

Good morning. Just a couple of questions. One, on the acquisition front obviously you've got a very healthy cash balance, industry conditions have deteriorated. Are you finding that the values are improving and maybe there are better opportunities now to make acquisitions?

Well, we certainly hope so. I'm not sure that we've had any measure to test that at this point. But I would think that there'd be a more attractive atmosphere, yes.

Okay. And as far as the seasonality of your business, I believe you usually have an uptick in the fourth quarter. Do you believe that we're going to be seeing an uptick seasonally or do believe that the conditions are so difficult right now that that might not happen?

Well, I think you hit -- the operative word is might there. Because we -- it's very hard to predict, Michael. You're right. Typically in our fiscal fourth quarter we do see a seasonal pickup in our business. And we would expect certainly that we'll see that this year. But it's certainly hard to predict and we're not obviously making any prediction here today. But we'd certainly expect that history will repeat itself.

Okay. And then just a couple of numbers related questions. What kind of tax rate should we be using both on a book basis and a cash tax rate going forward? And what do you think CapEx will look like for this year and for next year in whole?

Well, like I said, we booked our tax provision this quarter at 33%. The rate going forward is going to be at that level or slightly higher, up around the 34 neighborhood, again, depending on how earnings go. But we're down in that range definitely at these levels and we track down as our profit has gone down. As far as CapEx, our maintenance -- what we call maintenance CapEx is remaining right around 150,000 a quarter.

So what about other CapEx? I mean, do you have an idea what it might look like?

We have other potential projects of a fairly modest nature, but I think you could add possibly another $400,000 to $500,000 to that maintenance CapEx that would be probably spent over the next one to two quarters, base it for some additional equipment at the plants.

And what about the new plant, is that delayed right now?

The new plant -- yes, thank you for bringing that up. The new plant, we are basically slow walking that plant. We've got almost all the approvals; there have been several some glitches with the government authorities on supply of water and that sort of thing. But notwithstanding those issues, we basically have slowed that process down because of market conditions. We still intend to build that new facility. And as you might recall, we already own the land for it. But it's just a question of timing now.

We want to wait and see how the housing market goes, but also we think there could be more attractive construction cost possibilities down the road. When we did some preliminary bids on that project here several months back we were unpleasantly surprised by the cost of materials and to build that building. So we're looking at possibly the fact that if March construction slows down a little bit we would see a little bit more attractive opportunities to build at lower cost.

Okay. And the one question that wasn't answered is what about the cash tax rate going forward?

Sure. Right now our cash tax rate is tracking right around 17%. Last quarter we were at 24%. So that's how we've been recently. Going forward we're going to be at these lower levels.

So you think we should use that 24% number?

I'd say in the high teens.

Okay. Thanks a lot.

Paul Nouri, Sidoti & Co.

Good morning. Assuming the taxes facility, did you get all of the HUD code approvals yet?

We are certified to build HUD product in that facility, yes.

And what would be the motivating factor to start -- I mean I know I guess demand is pretty depressed there, but how much would you need to see it pickup to put some HUD code product there? Is it a matter of putting the sales infrastructure in place and getting orders or what?

It's a combination certainly. It's a question of the sales efforts and approaching the buyers of HUD product, mainly retailers and perhaps some developers. And we have been talking with a number of people on those lines. We're still focused presently on our park models and cabins, but we would look at adding HUD product if we feel there's sufficient demand for it. As you mentioned, Texas is still quite soft, although I think there are certainly opportunities for a high-quality product that's backed with good service at a good value. And that's what we intend to build there.

And has the weakness in the HUD code market spilled over into the park model markets? I know the park model market is a lot smaller; maybe it's been more stable.

Our specialty business, which park models and cabins, has been performing better than HUD and modular business has. And that's reflected in these -- in our shipment numbers. We actually have had a good season full of park models and our company has done quite well in that area. As you mentioned, it's a much smaller industry but we continue to be a leader in that field and we've been very pleased with the performance of that business recently.

Is there anything on the commercial front to speak of? I mean, I know it's still a very small part of your business, but anything changing there?

No, the commercial is a commercial product; it takes some time to develop. We are, as you mentioned, a small factor in it. We have greater capabilities. We've been adding some to our line of units offered; that is we've been engineering more product and getting approvals on more product that we can build. So we have a broader line and we are marketing to a number of the users of commercial product. I think we'll see some more business. But again, I would say that that is going to move up at a fairly measured pace and we don't anticipate it to be a large portion of our business in the near-term.

Okay. And I guess there's funding going to builders of these modular type schools in California. Is that too low of a margin business for you guys to go after or have you guys looked at it at all?

I don't think that's something we would participate in. That's more specialized and there are some producers in California who do specialize in classrooms for the state of California. So I don't think we would try to compete within that market.

All right, thanks a lot.

John Diffendal, BB&T Capital Markets.

Good morning. A couple things, Joe. As the downturn has intensified, how has that changed the relative demand on the pricing scale of what you offer? In other words, in the HUD code and in the modular market are the buyers moving toward the lower end, I assume? Versus the high end of what you sell -- pricing?

Well, John, what we're seeing is pretty much a barbell kind of thing. We're seeing demand at the lower end and at the higher end and not a lot in between. Or we're seeing a reduced demand, put it that way, of the price points in between. So we have introduced -- continue to introduce new product at various price points and different designs to try to capture anything that's out there. But I would say pricing -- we have not seen pricing necessarily drop overall, but we have seen demand for lower-priced product increase.

Okay. And from the [Palmer] call earlier this week Larry [Keenan] was particularly emphasizing how there had been a slowdown in the 55 plus communities markets in some of the states that you're involved in. Can you give us your thoughts on that situation?

Well, I think he's -- I don't know exactly what he said, but I think he's accurate on that; we would agree. As I mentioned in my prepared remarks, we sell a lot of developers of planned communities and subdivisions. As I go around and as our people go around and talk to these folks we hear the same comment independently of one another. That yes, they have a fair amount of activity, maybe not quite as much activity as they had six to nine months ago, but they're still seeing pretty good activity. But a lot of the buyers are selling their site built home to make a lifestyle change and obviously with the slowdown in housing they're not able to sell their home in the timeframe they expected.

And that's true in a lot of communities, even here in Arizona and California where the buyers aren't necessarily moving a long distance but they are making a lifestyle change. In these markets it certainly moved from a seller's market to a buyer's market here these last six to nine months and people are having to put their homes on the market for a lot longer timeframe. It was for a while there certainly in these markets where people could put their home up and they'd have it sold in a matter of weeks or less and now it's taking months.

And in some cases there's what I would call some sticker shock in reverse -- the seller expected to get a certain amount of money and now they're not able to, the real estate agent is the guy from the -- looked at a different price and they have to come around to a mindset that will enable them to accept that lower-price. It still might be far above what they have in the home, but it's not as high as their neighbor may have gotten for their home six to nine months ago. I think there's a certain amount of that that has to be overcome. But once that happens and once I think the pipeline starts to fill some of these sales of existing homes we'll start to see some increase in closures at these communities. But it definitely has been a factor.

Anything -- obviously California and Arizona are key states for you obviously. But anything that's different or anything changing in what you're seeing in those two states -- I mean separately -- your impressions of what you're kind of seeing kind of like right now? There's just been no change or anything that's changing either one state versus the other?

John, I would say that we have not seen any significant changes that would come to the surface versus the last quarter. California is, as you know, it's slower than the slowdown and faster and deeper than Arizona, but Arizona has slowed down as well. Nevada, one of our other markets, has slowed down considerably. We're seeing some signs of pickup in New Mexico. But I wouldn't say there's any change in the last few months, it's more of the same.

Just lastly, I don't think I saw it in your release -- dollar backlog number?

Our backlog is just under $3 million.

Great, thank you.

Kathryn Thompson, Avondale Partners.

Thanks. First just a couple housekeeping questions. What was your capacity utilization in the quarter in terms of a percentage and on the floors per day?

Kathryn, we're running -- in our HUD and modular business we're running about 62% of our utilization.

And what does that translate on a floors basis?

Let's see, for the quarter we showed about 23 floors per day.

Okay. And with your backlog, it's helpful with the dollars and that, what is that in terms of days?

A say again the backlog in terms of days?

Yes.

Well, it would be -- you're looking at about a week's worth of business.

Okay. As far as your gross margin pressure, you outlined three different things that affected your margins. And really just looking forward and modeling forward. And you specifically mentioned Texas as an issue. Should we see similar pressure from Texas in the upcoming quarter?

I think we'll continue to see some -- yes, some of that pressure from Texas. We made a decision on Texas that we knew at the time was a longer range decision. But I think we feel that we need to get positioned in these slower times to be ready to have the operating leverage when things turn up. And Texas has historically been a very good market for manufactured housing, it has not been obviously in recent years, but we believe it will come back again. And on top of that you have potentially some replacement housing business for the Gulf states including Texas, Louisiana and Mississippi that could come into play.

So and finally, we felt with our park model and cabin business we could take that business further east than we could from Arizona. So it was a deliberate decision that we knew would be a fairly slow start up, it has been, it's been actually a little bit slower than we had anticipated. And yes, I think that one can assume that in the fourth quarter of our fiscal year we'll continue to have some adverse effects on our overall business from Texas. It's something we're not overly concerned about. We will get it turned, but it's certainly taking a little bit longer than we anticipated.

And essentially just kind of biding your time in Texas until there's some uptick in that market?

Hopefully a little bit more than that. You're right, I think we don't plan on pitting a highly productive plant until we see an uptick, but we certainly can expect -- even in this market we certainly expect to get it profitable. We don't expect the losses to continue long-term, but I do think we'll continue to have some losses into the fourth quarter.

Okay. And just you had about a 16% decline in sales, but the top two states you're in -- California and Arizona -- they were fairly significant declines at least for the days that we have for shipments in November. California down close to 45% and Arizona down roughly 34%. That would imply that you're gaining some meaningful market share in those states. Is that too much of a stretch?

Well, I hope that's part of it and the market share data lagged somewhat so we'll see. We're certainly trying to. I think it's also the fact that we haven't seen our December was obviously fairly weak and so if you look at November numbers I think we started to see some effects both latter part of November and into December. I think we are doing better than the shipment numbers would indicate, but certainly we've been affected.

So you're saying in the latter part of November you started to see and it got incrementally weaker?

Yes, I would say progressively through the quarter we saw business soften somewhat.

And has that situation changed going into the current quarter?

No, I think it's fairly stable, but as you see by our backlog it's very low. We've come down to that level through the quarter and it hasn't gotten any better in recent weeks. So I think we're kind of at a plateau at this point.

Okay, great. Thank you very much.

Dax Vlassis, Gates Capital Management.

I was just curious, I see your sales have come down, but I would expect the receivables to kind of come down in concert with that. Has there been any delinquencies or changes in your collections, can you comment on that at all?

No, there really has been no change in our collections and what we did do was receive a large amount of that right at the beginning of January. Money that we would have anticipated received late December. Our collection efforts remained constant really through the holiday period. But it was really a function of timing this time around.

Right. And just in the current environment I've heard I guess some additional people in the channel lending, sort of exiting. Is there any movement on that either positive or negative?

Yes. Greentree announced their exit from the channel lending business. I don't think that will have any particular affect on us at this point. A lot of our business is not channel business is traditional mortgage business and has been for some time. Given the price points, the design of homes that we build, the price points we build at -- we have moved more towards the traditional land home or planned subdivision business over the last five or six years and that account for the bulk of our business.

We don't do in effect very much channel financing business. And the channel financing we do do is generally in these 50 and older communities where the buyers have attractive credit records and in fact generally put down large down payments. So getting the channel financing for those buyers is not difficult. Where the channel financing has affected the industry is among that first-time affordable home buyer, the family, the working-class family buyer and it's certainly hurt our industry. And to some extent it's hurt the markets out here, but we've seen that hurt a number of years ago is not being accelerated or accentuated at this point and will not be by the exit of Greentree.

Right. And then you've been pretty good about talking about where industry shipments are and kind of whether it was ahead the curve, when they were declining, saying that you think there's going to be further declines. And it seemed like we were bouncing along the bottom and then now it's kind of turned down more than what we thought the bottom was I guess at about 130 or at least that's -- 130,000 which I think is kind of where we -- 130,000, 125,000 and it's looking like it's going to be lower this year.

What in your opinion are the long-term prospects for an upturn to getting meaningfully higher units? Or are we at a permanent sort of lower level for this industry and that you'd have to take market share within that number of units shipped to really grow the business, just kind of curious of your kind of overarching thoughts?

Dax, that certainly is the biggest question facing our industry and I don't know if we have enough time to try to cover it all. I do believe that the market for the size of our industry will increase again. We certainly have been faced with an enormous number of challenges these past really 10 years -- well, I should say more like six years -- since '98 when things started slowing. And as I mentioned, a lot of those things were caused by our industry. But then we've been affected by a lot of things that have happened and caused by our industry namely the strong financing opportunities for site built.

I think as that slows down, and I think it will -- I'm no economist, but I do think that we'll see some retreat in the aggressive financing that's been going on on the part of site builts. I think we're already seeing it seeing it subtly. And that should certainly help us. There's no question that we've lost a lot of our buyers of our product that have been able to step up to higher price point product, not unlike many other consumer durables, cars and other things. People have been able to buy product at much higher price points than they were traditionally able to afford. I'm not sure that's good or healthy for the economy, but that's my personal feeling.

But back to manufactured housing -- I think we'll get some of those buyers back -- I think. We have a very, very good product as an industry, the quality has improved dramatically over the last five to 10 years, the aesthetic appeal is improving, we're -- I think we have a very favorable cost relationship vis-à-vis building on-site. So consumers have a very attractive product, has great value and we have not been able to compete with the zero down payment and the interest only kind of loans that we haven't had available to our industry. I think as those things slow down we'll see a lot of those buyers back.

So I'm very optimistic about our future as an industry. And I think then some of it's a question of going to in some cases modular products which we build as well, in certain markets modular makes sense where there are zoning issues or maybe where you want some higher price point product in a rural area, they want a bigger more elaborate home and modular homes sometimes fit that bill. So I think there are niches that this industry can pursue that are attractive. And many times very large industries.

I think again, that demographics work in our favor from the standpoint of the aging baby boomer population and our product is ideal for those buyers, it's ideal not just because of its affordability, but it's ideal as a second home, as a retirement or a vacation place. It's ideal from the standpoint of low maintenance, energy efficiency. It's ideal from a developer standpoint to be in planned communities and they have very elaborate amenities in those communities because they can get a lower price point on the home and then factor into the purchase price of that home the amenities of the community. If they try to build on site their whole price point structure will be considerably higher and they might miss a lot of those 50 and older buyers.

So I believe that this industry will recover. The question is really when. And that's been the toughest one to answer. As I guess conservative or circumspect as I've been about the industry, I certainly didn't expect this to commend this past year, what looks like it will be 119,000 units. I would have thought, as you mentioned, we'd be bumping along at a little bit higher trough. This year obviously doesn't look very good either. From a capital standpoint what we're trying to do is not get too worried about the absolute number again we want to build whatever the market calls for and we want to pursue a lot of these niches.

Fortunately in our market I think we're in a very attractive position, because the populations are growing, Arizona is now the fastest-growing state in the nation, Nevada is right behind it, California is not as fast growing, but certainly is a huge population state. And New Mexico is also growing. So we have markets that are I think pretty strong population growth wise, there's strong economies and the demographics because their destination most of these states are destination states for vacation and (indiscernible) retirement living. I think we're in strong markets that should outperform.

And just kind of one follow on, if you look at -- if you consider what has been this downdraft and I think probably some of your competitors who you I guess routinely would have conversations with that you're interested in and potentially acquiring -- has this sort of protracted downturn changed your idea of what these companies are worth? And also has the buyer -- has the seller -- the potential sellers of these businesses, are they getting fed up with what's been going on and kind of assumed lower multiples for their business? I'm just trying to get a sense of more so if your thoughts have changed on valuation given where we are?

Well, Dax, I think on the first part of the question, yes, we certainly would want to be somewhat cautious given the unpredictability and the surprisingly soft numbers sitting in our industry now. Do we acquire somebody and have to struggle with the same struggle they may have and how long do we struggle with those things. I think you balance that on the one hand while on the other hand you want to have the leverage on the upside as things improve.

And that's the move obviously we're making in Texas. For the part of the sellers, I really can't -- I can't speak to what's in their mind. Hopefully they're getting more realistic as time goes on that -- as to valuations and I think some of the public transactions that have occurred in our industry would indicate that the valuations are fairly conservative in the anywhere from four to six times EBIT or EBITDA kind of price ranges. And I think if those kinds of valuations prevail it's probably reasonable.

Right. Okay, thanks, Joe.

Jay McCanless, FTN Midwest.

Quick question on the FEMA alternative housing pilot program. I know that it right now is out to bid with the states and I think the states have gone out and started requesting bids. Are you all -- since so much of this it looks like it's going to go to park model homes, are you all involved in that? Are you all going to place or put in a bid for this?

Yes, we are involved and, yes, we certainly expect to place a bid on any business. I don't think it's quite as far long as you suggested yet. I think it will take some time and sometimes things move so much slower in these kinds of matters. But we're very interested in it; we're going to talk with folks over in the Gulf Coast states. And I think as you point out, we have a decided experience advantage and capability in smaller units, the park models and park model size and larger size product from a design engineering standpoint and from the standpoint of having built these for many, many years.

And building a higher quality product too, that is with more elaborate design features than maybe some other people have had. So we certainly expect to be in the hunt. But I'd hasten to ads that everybody will be looking for that business too, so it will be certainly a competitive environment.

Sure. What do you expect the timeline will be? I mean, granted the government is involved, but what do you estimate the timeline will be?

Well, I think we're a couple months off from actually bidding. I hope it's sooner than that. But I think by the time some of these states get their designs finalized what exactly what they want to build, the type of product and what features they want in the product -- everything from the durability of the unit and its capacity to withstand wind and hurricane force winds to price points, to logistics on delivery and there's a lot of things that have to be resolved, (technical difficulty) an enormous task.

And I think it's -- for that reason I don't think it's going to happen quickly. I think there's a couple months. So if you were to ask me will it happen this month or next month into February I would tend to doubt it. But I think we could be seeing an opportunity to quote on that business over the next couple of months, several months.

Great. With the park models becoming a more important part of your business as the Texas plant ramps up, etc., what would you estimate Texas is as a percentage of annual sales now for you?

Well, it's de minimus and we don't disclose our individual plant activity. But as I say, our sales are very small there and obviously it's one of the reasons we're generating or we're not generating income there yet. I think we have the opportunity to start ticking up our sales activity into the fourth quarter, then into the first and I think we will do that. But it's going to be tough. If we can get up to the three units a day, even three to four floors a day I think that would be attractive for us -- at least in moving into the black.

Okay. All right, thanks, guys.

(OPERATOR INSTRUCTIONS). Paul Nouri, Sidoti.

Considering construction has slowed down so much, are you guys seeing any benefit from the supply-side? Have prices come down there or do you expect them to?

Paul, it's been a mixed bag. We have certainly seen lumber, dimensional lumber and what we call panel products, plywood and OSD, have come down. We've seen certain other products where the price increase as they've been planned are not being implemented. We have not seen wholesale declines in pricing of most of our components and raw materials. But we've certainly seen a reduction in the rate of increase or (indiscernible). And in some cases we have seen modest declines.

Prospectively I would think that, yes, we might have an opportunity to see some further declines there. Certainly a lot of our vendors also sell the DIY market and so as housing slowed down generally, particularly the site built housing, I think those vendors have been able to focus on filling pipelines in DIY the big box retailers. I think as they accomplish that objective then maybe things will slow down a bit further for them. And if housing doesn't pick up near-term certainly there could be some opportunity to see some softening in prices there.

All right, thank you.

There are no more questions on the phone lines.

Okay. Thank you, Shawn, and thank you, everyone, for joining us today. We'll look forward to speaking to you in three months and we appreciate your support and comments.

Ladies and gentlemen, that does conclude the conference call for today. We thank you for your participation and ask that you please disconnect your lines.