Forestar Group Inc (FOR) 2015 Q3 法說會逐字稿

Good day, ladies and gentlemen, and welcome to the third-quarter 2015 Forestar Group earnings conference call. (Operator Instructions) And as a reminder, today's conference is being recorded.

I would like to introduce your host for today's conference, Ms. Anna Torma. You may begin.

Thanks and good morning. I would like to welcome each of you who have joined us by conference call or webcast this morning to discuss Forestar's third-quarter 2015 results. I'm Anna Torma, Senior Vice President Corporate Affairs. Joining me on the call today is Phil Weber, Chief Executive Officer, and Chuck Jehl, Chief Financial Officer.

This call is being webcast and copies of the earnings release and presentation slides are now available on the investor relations section of our website at forestargroup.com.

Before we get started, let me remind you to please review the warning statements in our press release and on our slides, as we will make forward-looking statements during the presentation. In addition, this presentation includes non-GAAP financial measures. The required reconciliation to GAAP financial measures can be found at the back of our earnings release and slides and on our website.

Now let me turn the call over to Phil for some opening remarks.

Thank you, Anna. Good morning and thank you all for joining us. Before talking about the tremendous changes that have taken place at Forestar over the past five or so weeks and outlining our priority initiatives, I want to start by thanking Bruce Dickson for his outstanding contribution to Forestar, serving as our Chief Real Estate officer for the past five years.

Bruce is a man of unimpeachable integrity and character and we are all fortunate to have had the opportunity to work with and learn from him. Bruce plans to retire at the end of the first quarter next year and we wish him great joy and happiness on his journey, with his family, whatever it is he chooses to do next. Bruce, thank you very much.

In addition to Bruce, Chuck, and Anna, also joining me on the call are Michael Quinley, our President of Community Development, and Tom Etheredge, our President of Multifamily. Michael and Tom each have over 25 years of residential real estate development and finance experience. Both are experts in their field. We are very pleased to have them leading our residential housing development business. Thank you, Michael and Tom.

Today I'm going to speak mostly to our four key initiatives and then Chuck Jehl will report on the third-quarter results and our outlook going forward. As reflected in our deck and press release this morning as well as our announcements over the past few weeks, it is very much a new day, a new leadership team, and a new culture at Forestar.

I have met with or spoken directly with a significant percentage of the ownership of the Company since accepting this position a few weeks ago. I appreciate how generous investors have been with both their time and suggestions for the best way for Forestar to move forward. We have already begun to incorporate these suggestions into our analysis as a management team and in our discussions with our Board. For those of you that I have not yet met, I look forward to meeting you in the near future, either in your city or if you come through Austin.

While we are still very much in the early innings, we are focused on four key initiatives. I am pleased to report that we are making solid progress on all four. Now let me highlight and make a few points on each.

First, we are focused on reducing our corporate costs and our segment operating expenses in order to appropriately match our size and real estate focus. To date, we have taken actions to eliminate over $13 million in costs. These cost eliminations include approximately $8 million related to our non-core oil and gas business through a previously announced effort which Chuck Jehl has led and done a terrific job on.

Beyond the oil and gas savings, we have identified approximately $3 million in corporate savings and an additional $3 million in real estate and other natural resources savings. In total, the identified eliminations represent a full-year 2016 run rate savings of about 22% compared to the projected full-year 2015 run rate.

And I would remind everyone: while we may be only a few weeks into this, we will continue to evaluate other areas for savings. I can assure you that we intend to leave no stone unturned and there are no sacred cows.

Second, we are reviewing our entire portfolio of assets. I don't believe it is in the best interest of shareholders for me to telegraph any actions we may or may not take with respect to any specific asset, other than to say everything is on the table. In some cases, another investor may have a different time horizon or a different capital structure from Forestar, which allows them to place a higher value on an asset than us. That is certainly part of our review.

Third, we are currently evaluating our capital structure as we seek to manage our leverage and liquidity targets to our core residential housing development business. Similar to our view on assets, I don't believe it is in the best interest of shareholders for me to telegraph specific actions we might take or might not take, but let me be clear on two points.

First, this analysis will be conducted with a rigorous capital allocation policy discussion at the Board level. And second, everything is on the table. In fact, I've been charged by the Board to review Forestar's strategy and portfolio of assets at next week's quarterly Board meeting.

On our fourth initiative, I've had several very helpful conversations with shareholders regarding efforts that would help investors better understand the Company's assets, and we are reviewing additional disclosures.

Now, let me address our core residential housing development business. In our community development business, what Forestar does best is we buy land, we entitle it, we manufacture lots, and we sell them to homebuilders. On the multifamily side, similarly we buy land, we entitle it, we build a multifamily community, and in almost all cases, we sell that stabilized property to an investor who is likely a better long-term owner of a new Class A multifamily community than Forestar. That is who we are, it's what we do best, and it's what our focus is going forward.

To close, let me again say thank you for the warm welcome. We're in the early innings, we know we have a lot of work to do, we have outstanding people throughout Forestar, and I am confident we will be successful in creating value for Forestar shareholders.

Now I will turn the call over to Chuck for a review of third-quarter 2015 results.

Thank you, Phil. I would also like to welcome everyone joining us this morning. Third-quarter 2015 financial results were negatively impacted by approximately $153.9 million in special items, including a deferred tax asset valuation allowance and asset impairment charges related to our non-core oil and gas assets, both primarily driven by the continued decline in oil prices. As a result, the Company reported a net loss of approximately $164.2 million or $4.79 per share in third quarter 2015 compared with net income of $5.2 million or $0.12 per share in third quarter 2014.

On an after-tax basis, third-quarter 2015 special items of $153.9 million or $4.48 per share include the deferred tax asset valuation allowance I'd previously discussed of $98.9 million; $42.5 million improved property asset impairments primarily related to our assets in the Bakken Three Forks in North Dakota and the central Kansas uplift in Kansas and Nebraska; and $10.3 million of unproved leasehold interest impairments, primarily associated with undeveloped leasehold in the Bakken Three Forks; and $2.2 million in severance-related charges.

Excluding special items, third-quarter 2015 net loss was approximately $10.3 million or $0.31 per share compared with net income of $5.2 million or $0.12 per share in third quarter 2014.

Before I turn to our segment financial results, I want to provide some additional insight into the deferred tax asset valuation allowance we recorded in the quarter. This allowance was principally a result of impairment charges recorded in our oil and gas segment, primarily due to oil prices declining. With the additional impairments recorded in third quarter 2015, the Company is now in a cumulative three-year pre-tax loss position, which is a technical matter under GAAP, limits our ability to consider projected future taxable income in determining whether a valuation allowance is required.

To the extent we generate sufficient future pre-tax income, we will be permitted to reverse a portion or all of the deferred tax valuation allowance. It is important to note that the valuation allowance does not prohibit our ability to utilize these tax deductions against future taxable income.

Now turning to our segments. To illustrate the impact of these special items, we have provided quarter-over-quarter segment results, excluding special items. Real estate earnings were $5.2 million in third quarter 2015 compared with $16 million in third quarter 2014. The decline year over year is principally due to a $7.6 million gain in third quarter 2014 associated with the acquisition of our partner's interest in the 11 multifamily venture and decreased residential lot sales activity.

We sold 301 lots in third quarter 2015, nearly 7% lower than prior year, principally due to construction and permitting delays, driven by abnormally wet weather conditions during the second quarter 2015. Despite these delays, we continue to see relatively stable market demand for our communities in low housing inventories.

Now turning to oil and gas. Segment results in third quarter 2015 were approximately $86.2 million loss compared with $6 million in third quarter 2014. This decline was primarily driven by lower oil prices, which resulted in approximately $81 million in pre-tax impairment charges. Excluding these charges, third-quarter 2015 oil and gas segment results were a loss of approximately $5 million.

The continued decline in oil and gas commodity prices negatively impacted results, but was partially offset by an 18% increase in total oil and liquids production volume and a 36% reduction in segment operating expenses quarter over quarter.

As a result of our initiatives in oil and gas to lower operating expenses and significantly reduced capital expenditures, the oil and gas segment generated approximately $18 million in positive net cash flow in third quarter 2015, including $11 million from non-core asset sales as compared with negative $4 million in net cash flow in third quarter 2014. Going forward, we are well positioned to generate positive cash flow at third quarter-end commodity pricing levels.

Other natural resources was essentially breakeven in third quarter 2015 compared to $0.7 million in third quarter 2014. In recapping the segment results for the quarter, we lost approximately $81.2 million, primarily due to oil and gas impairment charges in the third quarter, and the Company reported a segment loss of $81.1 million. Excluding these charges, third-quarter 2015 total segment earnings were about $0.1 million compared to $22.7 million in third quarter 2014.

Now let me provide some additional color on our community development and multifamily businesses. We continue to closely monitor the Texas economy and housing markets for signs of slowdown, given the decline in oil prices.

As the charts on the left-hand side of the slide illustrate, we believe new home inventories in Forestar's Texas markets remain below equilibrium at less than two months of supply. And more importantly, demand, as measured by job growth, continues to outpace the national average in all Texas markets with the exception of Houston, which is still generating positive but slower job growth. The combination of low housing inventories and solid job growth should continue to drive steady demand in our communities.

We have yet to see a significant impact on new home starts and sales in our Houston communities. Despite third-quarter housing starts for the entire Houston market being down 10% compared to year-ago levels, housing starts within Forestar's Houston projects were still up over 25% in third quarter 2015 compared with the prior year. We believe pent-up demand in low housing inventories in Houston, as evidenced by 3.2 months of resale home inventory as of the end of the third quarter, which is well below the equilibrium of six months, continue to support a return to normalcy rather than being the beginning of a protracted decline in the housing market.

During the first 9 months of this year, Houston developers had delivered approximately 3,000 more finished lots than housing starts, thereby leaving vacant developed lot inventory at 16.6 months supply, with 24 months supply of lots being considered a normal market. Notwithstanding the slowing job growth in Houston, the single-family residential market remain in solid shape from an inventory standpoint.

At third-quarter-end 2015, Forestar had approximately 250 finished developed lots in inventory in Houston, with over 65% currently under option contracts to various builders. In addition, we had over 350 additional lots under development in Houston, with almost 85% of those lots under option contracts with builders. That generally includes a 10% to 15% cash earnest money deposit, which reduces the risk that the builders walk away from the delivery requirement under these option agreements.

At the end of the third quarter, we had over 1,440 lots under option contracts with builders across our portfolio of communities. Based on these option agreements and current market demand, we expect lot sales in 2015 to be in the range of 1,400 to 1,600 lots.

Now let me turn to our multifamily business. Multifamily conditions across our target markets remain steady, with strong occupancy rates and moderate levels of new supply relative to projected demand and solid but slower rent growth across most of our markets.

We continue to closely monitor each local multifamily submarket for signs of a slowdown, given potential supply issues and affordability issues, driven by strong rent growth. In addition, we utilize guaranteed maximum price contracts with third-party general contractors to mitigate construction and labor cost increases.

At the end of the third quarter, including ventures, we had 8 multifamily projects in 6 markets, totaling almost 2,600 units, including 2 completed and stabilized projects and 6 projects currently under construction. Now let me provide an update on a few of our projects.

Eleven, a wholly owned multifamily project adjacent to downtown Austin, is almost 95% leased and generating approximately $3 million in annual net operating income. Midtown Cedar Hill, also a wholly owned multifamily project located near Dallas, is now stabilized and nearly 95% leased. Midtown is currently under contract to be sold and should close by year end 2015.

Our 360 project in Denver, which is being developed in a joint venture with Guggenheim Real Estate, is now substantially complete and nearly 70% leased. In addition, Acklen, which is being developed in a venture with MassMutual in Nashville, is also nearing completion and is just under 50% leased.

Both 360 and Acklen are located in strong multifamily markets and experiencing leasing and rent growth above our respective initial underwritings. Hiline, [Elon 99], Music Row, and [Dylan] are all currently under construction and are making good progress.

To close, Michael Quinley and Tom Etheredge are both here and can answer any specific questions you have from them on our residential housing development business.

Thank you for joining us this morning and for your interest in Forestar. Now we would like to open the call up for a few questions.

(Operator Instructions)

Steve Chercover, D.A. Davidson.

Good morning. A couple questions, please. First of all, within the last year, some of your shareholders agitated -- or I guess suggested -- that selling your stabilized multifamily properties might not be the best course of action because effectively they were giving you cash flow and collateral. So it looks like you are not going to heed that advice and you are going to continue to sell them?

This is Phil, Steve. Good morning. No, I don't want to go into specific assets or strategies today. I think if you are look at what we've done in the past with most of the multifamily that we have built -- developed and built, we have sold those assets.

And as I said in my remarks, I think in many cases, there is a better owner of multifamily than Forestar. That does not mean that we won't ever own multifamily, but I think as a general rule what we have done is what we will likely continue to do.

Thanks, Phil. And it was Midtown that will be sold by midyear -- or sorry, by the end of the year?

Tom, do you want to give an update on -- Tom Etheredge, on Midtown?

Other than it's under contract right now, the scheduled date for closing is December 10. And they've completed their due diligence period and inspection period.

Okay. And that sounds good. And then amongst your four initiatives, the last one being additional disclosures, are you going to change the way some of the management compensation is embedded within the sectors or the segments? Because I have to say that it has been a challenge to model Forestar and I'm just wondering if we will see kind of a different approach going forward?

What I would say there is we are looking at every disclosure that we make. And so what -- we will add that to the list and discuss that. So thank you for bringing that up.

Yes, I think it would be terrific. It would help us help you, I think, if we could have a bit more accuracy in our estimates. So I appreciate that. Look forward to working with you.

Thank you.

Steve O'Hara, Sidoti.

Thanks for taking the question. I was just wondering: in terms of the lot margin and what happened there, could you just talk about -- obviously, the price per lot increased a decent amount, but the lot margins seemed to decline. I'm just wondering is that a mix issue? Or should we kind of expect lot margins to compress going forward? Is it the inventory that you have now is more expensive going forward?

And then just on the number of lots maybe for -- I don't know if you want to give an early outlook for 2016, but I think in the past, it was something like 1,900 lots. And I think that included ventures or -- maybe you can just give us maybe a ballpark what the expectations might be for 2016 for lot sales -- maybe wholly owned and with ventures? Thank you.

Steve, good morning. Thank you. I'm going to let Michael Quinley take your question on the lot margins.

Steve, as it relates to the margins, you hit it correctly. It's really about the mix. As Chuck noted that some of our mix was impacted by weather conditions, and it's really all across not just Texas. It's Texas, Atlanta, Tennessee, North and South Carolina. So I think that margin differential is purely driven by mix.

As it relates to the forward-looking number, we are not prepared at this time to put anything out there. But as soon as we got those put together, we'll be happy to get that out. Thank you very much for your question.

Okay. And then maybe just a follow-up. I mean, it seems like 2015 lot sales -- it looks like they are going to be down pretty significantly over 2014. But I know you had some bulk sales kind of in the wholly owned line.

Can you just tell us what the wholly owned lot sales were for 2013? Just kind of remind me for 2013, excluding what you consider bulk sales for 2013 and 2014. And that way, I can kind of maybe get a better apples-to-apples comparison.

Steve, you will have to forgive me. I've been sitting here for about five weeks and so I may not have that number on the top of my head. But I think that the bulk sales in 2015 were somewhere between 400 and 500 lots. I don't remember the 2013 number -- 2014 number. But 2013, the total residential I think was about 1,883 lots total. And then on 2014, it was about 2,300. And again, I think there was like 400 to 500 in bulk sales.

Okay. All right; thank you very much.

Closer to 400.

Closer to 400. Okay. Thank you.

Jeff Bronchick, Cove Street.

So what is the -- as you see it now, what is the current quarterly or annual SG&A plus incentive comp run rate for 2016 with what you've announced today or to date?

Good morning, Jeff. This is Phil. I think if you look at -- so the total is $13 million less. And the breakdown on that would be -- a couple of ways to look at it. So between the non-core segments and G&A, that's about 93% of the total. And I'm not sure -- I know the G&A number is 3 is what we said. I don't know when you add in --

Not for the -- so when you look at 2016 -- so you successfully complete this cost-cutting program within the context of continuous improvement. And you are looking at your income statement and you say G&A -- and I ask because 2015, you had obviously a variety of one-ish-time things. But what does that number looks like when you are all done with the SG&A sense? So what's the annual SG&A spend for the Company with this built in?

Well, for 2016, I don't want to give you a number because we're not done yet. So these are the initial eliminations and savings that we've made. We've got a whole lot more that we're working on. So as I said in my remarks, this is just the beginning and we are not leaving any stone unturned. There's no sacred cows. And so I would expect for us to have additional savings as we move forward on some of the initiatives that I've outlined today.

Got it. So just for example, just on your income statement through the first three quarters, you see a G&A expense of $19,000 -- $19 million -- $19.5 million. So obviously you minus $13 million and you minus some whatever executive severance issues. And that's where you are starting from and going at it after next year -- for next year?

That's right. That's what we are targeting next.

And the second thing. In some of the oil and gas acreage sales, is that -- the majority of that is Bakken?

No. Jeff, this is Chuck. Of the 10,700 acres we sold in the quarter, about 9,700 of that was in Oklahoma that we sold in the [Marchan Harskvar] play. And that was only 240 acres in the Bakken and that was more opportunistic as we managed lease explorations expirations.

And as you know, we've slowed down operating costs and CapEx there tremendously. And that was more as operators have slowed and drilling plans have slowed down, basically staying ahead of lease expirations and being opportunistic with other buyers. So it was very little of the 10,700.

Got it. So out of the 240 in the Bakken, is that fairly representative of sort of your fairway holdings in the Bakken? And just trying to get like a per acre on what you do think the Bakken sold for?

On the Bakken acreage, it was 240 net acres. And I'll tell you, it was blended between some HBP acreage held by production acreage as well as some undeveloped acreage, with no wells producing in those units.

So on a blended basis, the transaction was about $6.6 million, but it also included 4 producing wells. So it's really hard to extract the acreage value between the producing acreage or the held by production from the undeveloped. It was a total package.

Got it. And lastly, Phil, when you go through this strategic review or asset by asset and costs and generally everything, are you guys working with any strategic advisors presently on this process or is it an internal review?

I would rather not give you the specifics, but we are working with -- we are getting advice from very capable folks.

All right. Thank you very much.

David Spires, Nitro Capital. (sic)

Congratulations. Awesome new appointments and I appreciate all the color and commentary, especially around the planned cost reductions. Just looking at the oil and gas in 2016 -- I'm not sure if this was actually said yet, but at current WTI strip prices on $45 and not including any acre sales, is the expectation in 2016, the oil and gas division could be free cash flow positive?

Yes, David. This is Chuck again. Yes, we feel at the current pricing levels where we exited Q3, which was about $45, $46 WTI, we feel very good and well positioned for next year with our cost reductions and both operating expenses as well as CapEx and with distressed pricing less investments obviously in oil and gas. So yes, we feel good about where we are heading for next year on a cash flow positive basis.

So is it basically including all required CapEx you should be at the end of the year with free cash flow positive?

Say that -- I'm sorry, I didn't --.

So including any required capital expenditure, because I assume that you are not going to just invest for the sake of investing only if you are required by some type of a contract, that at the end of the day, you will be free cash flow positive in the oil and gas division next year?

Yes sir. That's our expectation.

Got it. And then in terms of -- I know you mentioned you do plan on releasing additional disclosures. But I think many were -- are at some point expecting to see some kind of illustration of what management believes or looks at in terms of NAV of the Company.

Not necessarily a detailed NAV, but something at least regarding operating properties -- the Radisson, multifamily properties, core assets, etc. So is there anything we should be expecting in the near future regarding those type of an NAV presentation?

David, thank you. This is Phil. As I said in my remarks, we are reviewing additional disclosures and I have had a lot of very, very helpful conversations with a number of shareholders who have opinions on that.

And I think where I think we would expect to go with this is that we would review some additional disclosures that would allow you using your own assumptions and others using their own assumptions to derive a NAV calculation. And I think that's the direction that we're headed.

Got it. Okay. And then just a comment here as well. Obviously, I understand that -- especially you guys have only been at the helm about maybe a month now. And also by looking at the release, you are clearly and rightly so putting a focus on cost cutting -- dealing with the non-core assets, the capital structure, and all those, which are the real issues facing the Company.

But you also mentioned that -- one of the first things mentioned is that the focus on creating shareholder value is going to be done through the residential housing development business. And that you also intend to pursue additional multifamily development opportunities.

So just the comment here is that -- I don't think I'm alone in saying. But I think it should be pretty clear that in order to be successful here so everyone involved can make a lot of money and to really create shareholder value, I think the full focus should be on first fixing the problems which you mentioned: the bloated costs, the high cost of capital debt, and the non-core assets. And fixing those issues first.

And that it would seem that it would be almost a waste to even consider any additional multicompany developments before any of those issues are fixed. So that's just a comment that I would make is that the only way to really create the value is by fixing those issues first. And that multifamily development or investments aren't really going to solve any of those problems.

And last thing was I just wanted to point it out. It was mentioned by an analyst that investors were arguing to retain the multifamily properties. In the past calls, our firm argued that, but the only reason we ever argued that was we didn't really trust the reinvestment of the management team at that time. But we are looking forward and very nice job so far, especially regarding the cost cuts and the focus there. So I appreciate it, guys.

Thank you, David. We appreciate it.

Rob Longnecker, Jovetree.

I just wanted to follow up on the NAV question. Do you guys calculate NAV internally on a quarterly basis?

I don't think I want to get into the specifics on what we do internally on this call.

Is there any reason why not? That doesn't seem like a proprietary thing or anything that would change the restructuring?

As I said, we are reviewing our disclosures. And we've got a lot of feedback from -- very thoughtful feedback on the NAV question. And I would just at this point say we are working on that and working on what are the disclosures that we think could help investors using their own assumptions to derive a NAV calculation that is helpful for everybody in valuing the Company.

Okay. Well, I would just make two -- the first point I'd say is obviously, the more disclosure, the better. If you guys put out a NAV calculation with a series of assumptions and a range, I think that would be really useful for shareholders and for investors because it is a lot of work. A lot of us do it every quarter and it is a lot of work, so I understand that.

I think the second point would be it's a data point that you guys should have internally to help you make decisions about what you are doing with the business and the segment. So hopefully, that's something that both you share with investors and use internally to make your own decisions. So I guess I would just leave it at that. Thank you.

Albert Sebastian, Prospect Advisors.

My first question is with regards to the reserve against the deferred tax asset. It's my understanding that this could be used to offset future income from any parts of the business; for example, if you were to sell the Radisson hotel in Austin, which I'm sure you would do significantly above the cost basis there. So that reserve or that NOL associated with the reserve, that to be used to shelter that gain. Is that correct?

Al, this is Chuck. The DTA, as I talked about in my comments -- it is under the technical GAAP -- is basically just a bright-line test of the 36-month cumulative net loss we are in as of third-quarter end. That does not prohibit us from utilizing those tax deductions against future taxable gains in income.

So as long as the valuation allowance is up and -- as we continue -- to the extent we have income in the future to get to a income position for a 36-month test, we will reverse all or a portion of that, as I discussed. But yes, those deductions are available against future tax losses -- excuse me -- those deductions can help against future tax income.

Okay. And just one other question. I guess you sold some non-developed land in the quarter for $2,200 an acre. That's a little bit lower than what you've historically sold it at. That's almost equivalent to a timberland value. Is there a particular reason for that? And is that reflective of the value of your undeveloped land or is it just kind of a one-off?

You know, Al -- it's Chuck again. I think we sold 4,600 acres of undeveloped land in the quarter. About 3,900 of that was sold from a joint venture that we have a 50% interest in in Georgia. And I'd say that the $2,200 average price of acre sold was more just a mix in location of that timberland in those acres sold. I wouldn't say it's indication of any future value.

Okay. And I'll just make one comment with regards to the NAV. I think management should have an NAV calculation internally. I think in order to allocate capital appropriately, particularly when it comes to share repurchase programs, which at some point you might decide to do, I think you have to have an NAV calculation.

I would expect it not to be disclosed to investors, but I think you have to have one. And I think the approach of sort of giving a lot of disclosure and therefore enabling investors to come up with their own NAV calculation, given their assumptions, is a good approach.

Al, thanks. I think where we are -- and Phil did not say we didn't have one. He just said we are not prepared to talk about it today. And I think that as we look at those future disclosures and provide additional disclosures, that will aid investors and shareholders. So we will continue to work on that and try to get the tools necessary available through our disclosures.

Great. Thank you.

Thank you. And I'm showing no further questions at this time. And I would like to turn the call back to Mr. Phil Weber for any further remarks.

Thank you all, especially those of you on the West Coast. I know it's bright and early out there, so thank you for joining us on the call.

Just to summarize, there have been tremendous changes at Forestar. We are focused on the four key initiatives of reducing cost across the entire organization, reviewing our entire portfolio, reviewing our capital structure, and reviewing additional disclosures. I'm very pleased with the progress we've made in the five or so weeks that we've been into this. And we've got a great team here and I'm very confident that we will be successful and we will create value, which is what we come to work every day focused on.

So thank you for the feedback and the comments. Look forward to meeting some of you that I haven't met and we appreciate your support. Thank you.

Ladies and gentlemen, thank you for participating in today's conference. This does conclude the program and you may all disconnect. Everyone have a great day.