LGI Homes Inc (LGIH) 2015 Q1 法說會逐字稿

Good morning and welcome to the LGI Homes first-quarter 2015 conference call. Today's call is being recorded, and a replay will be available on the Company's website later today, at www.LGIHomes.com. We have allocated an hour for prepared remarks and Q&A. (Operator Instructions).

At this time, I will turn the call over to Rachel Eaton, Chief Marketing Officer at LGI Homes. Mrs. Eaton, you may begin.

Thank you. Good morning and welcome to the LGI Homes conference call discussing our results for the first quarter of 2015. Today's conference call will contain forward-looking statements that include, among other things, statements regarding LGI's business strategy, outlook, plans and objectives.

All such statements reflect current expectations. However, they do involve assumptions, estimates and other risks and uncertainties that could cause our expectations to prove to be incorrect. You should review our filings with the SEC, including our risk factors, for a discussion of the risks, uncertainties and other factors that could cause our actual results to differ materially from those anticipated in these forward-looking statements.

These forward-looking statements are not guarantees of future performance. You should consider these forward-looking statements in light of the related risks, and you should not place undue reliance on these forward-looking statements, which speak only as of the date of this conference call.

Additionally, certain non-GAAP financial measures will be discussed on this conference call. The 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. Reconciliations of these non-GAAP financial measures to the most comparable measures prepared in accordance with GAAP are included in the earnings press release that we issued this morning, and in our Quarterly Report on Form 10-Q for the first quarter of 2015 that we expect to file with the SEC later today. This filing will be accessible on the SEC's website and in the Investor section of our website, at www.LGIHomes.com.

Joining me today are Eric Lipar, LGI's Chief Executive Officer and Chairman of the Board; Charles Merdian, the Company's Chief Financial Officer, Secretary and Treasurer; and Meg Britton, the Company's Chief Administrative Officer.

With that, I will now turn the call over to Eric.

Thank you, Rachel and good morning everyone. We appreciate you joining us on the call today. First of all, we have some breaking news hot off the presses. The Builder 100 rankings were released this morning, and LGI Homes was named the 21st largest builder in the United States, according to Builder Magazine. I want to thank the entire team at LGI Homes for all their hard work contributing to our success.

On the call this morning, I will summarize the highlights from the quarter, then Charles will follow up to discuss our financial results in more detail. After he is done, I will conclude with comments on how the second quarter is unfolding, and our expectations for the remainder of 2015, before we open the call for questions.

The first quarter of 2015 was another record-setting quarter for closings and revenues at LGI. We closed 671 homes during the quarter, with just over $120 million of home sales revenues, which represents a 38% increase in the number of homes closed and a 59% increase in home sales revenues over the first quarter of 2014.

March 2015 set a new record for home closings in a single month. We had 298 home closings, which represents a 21% increase over our previous record of 246 homes closed in December 2014. Our average sales price for the first quarter increased more than $23,000 over the first quarter of last year. One factor contributing to this increase was our first six closings in our new Terrata community, the Potranco Ranch at San Antonio, Texas.

These six closings had an average sales price of just north of $400,000, with an average size of 3,400 square feet. During the first quarter, we demonstrated that, with our disciplined commitment to our systems and processes, we can successfully expand our footprint in addition to our price points.

We ended the quarter with 44 active communities, which is an increase of 16 communities, or 57% over the first quarter of the previous year. Our focus on production building, based upon including standardized features in all of our homes, and building in affordable locations, continues to support our industry-leading absorption rates, as well as adjusted gross margins at the high end of the range reported by our homebuilding peers.

Looking now at some of our market highlights from the quarter. Our presence in Texas remains strong and it continues to be our leading division, representing approximately 57% of our closings. During the first quarter, we had 382 closings across our Texas markets. This is a 10% increase over the 345 homes closed for the first quarter of 2014. Approximately 51% or 194 closings in Texas during the first quarter of 2015 were in the Houston region.

With eight active selling communities, our absorption for the first quarter was 8.1 closings per community per month. This compares to 7.5 closings per Houston community for the first quarter of 2014. In addition, our average sales price in Houston increased 17% to $177,600 in the first quarter of 2015. Not only did we increase our average sales price year-over-year, but we realized an increase in absorption as well.

During the first quarter of 2015, we have continued to diversify our operations outside of Texas. A total of 43% of our first-quarter closings were generated by our Southwest, Southeast, and Florida divisions, an increase over the 29% of closings generated by those divisions during the same quarter in the prior year. This increase is due to substantial organic growth, including the addition of 12 active selling communities in those divisions, as well as growth attributable to the Oakmont acquisition completed in October 2014, which established our immediate presence in the Charlotte market.

The integration of the Oakmont assets into LGI Homes is complete. We have converted all systems to the LGI way, and are very pleased with the results.

During this past quarter, we had our first home closings in our newest market, Denver, Colorado, which expanded the geographic footprint of our Southwest division. We have two communities in Denver, our Legacy Park community and our Bella Vista community. Between the two locations, we closed 15 homes during the quarter. The average sales price for our homes closed in this market was approximately 276,000, and the average size was just over 1,800 square feet.

We are excited about our momentum in these new communities. We have found Denver to be a very good market for us.

We ended the quarter with a portfolio of 21,286 lots that we own or control, of which we own 16,299 lots. Of the owned lots, approximately 10,700 are either raw or under development. In order to sustain our presence in our submarkets, we are performing development activities so that we can control the pace of future sections. We believe our lot inventory generally represents three to five years of supply in our markets.

We remain disciplined in our evaluation of our land acquisitions and expansion opportunities. As a result, we only move forward on deals that meet our underwriting criteria and our strategy. Overall, we believe the market conditions we have experienced this quarter have been favorable. Each of our markets continues to experience strong momentum in housing demand drivers, including nationally-leading population and employment growth trends, general housing affordability, and desirable lifestyle characteristics.

For more detailed financial results, I will now turn it over to our Chief Financial Officer, Charles Merdian.

Thanks, Eric. Home sales revenues for the quarter were $120.7 million, based on 671 homes closed, which represents a 59% increase over the first quarter of 2014. Our average sales price was $179,866 for the first quarter, an increase of 14.9%. Increased average home sale prices have contributed to our strong revenue performance.

Average sales prices increased across all our divisions. And companywide, we realized an 8.2% increase compared to the previous quarter. This increase reflects price increases, changes in product mix, and new communities we added during 2014 and the first quarter of 2015, which have higher price points, all of which offset by an average sales price of approximately $147,000 for home sales in our Charlotte market, which is still showing some lower overall pricing from the homes acquired in the Oakmont acquisition.

Sales prices realized from homes closed during the first quarter of 2015 range from the $110,000's to the $430,000's. This includes, as Eric mentioned previously, the closings of our first six Terrata brand homes during the first quarter, which had an average net sales price of approximately $400,000. Excluding Terrata homes, we experienced a first-quarter year-over-year price appreciation of 13.6%.

Adjusted gross margin was 27.8% for the quarter, 30 basis points higher than the first quarter of 2014. Adjusted gross margin excludes purchase accounting included in cost of sales for the quarter of $1.1 million, of which approximately $700,000 was related to the Oakmont acquisition, and approximately $400,000 was from the GTIS acquisitions.

On the balance sheet, we have approximately $2 million of step-up remaining, which we expect the majority to come through the income statement throughout this year. In addition, adjusted gross margin excludes approximately $1.1 million of capitalized interest charged to cost of sales during the quarter, representing 88 basis points. And we expect this to increase to 100 to 125 basis points over the remainder of the year.

Selling expenses were $11.6 million or 9.6% of home sales revenues compared to $7.4 million or 9.7% of home sales revenues for the first quarter of 2014. Selling expenses as a percentage of home sales revenues are consistent with previous quarters.

General and administrative expenses were $8.2 million in the first quarter or 6.8% of home sales revenue as compared to $5.1 million or 6.7% of home sales revenue for the first quarter of 2014. The absolute increase in G&A expenses is primarily due to the increased number of active communities, higher number of home closings, and the employees needed to support this increased activity.

General and administrative expenses were $7.2 million in the fourth quarter of 2014 or 6.6% of revenues. Our first-quarter 2015 G&A expense includes approximately $1 million in additional costs related to our annual performance recognition and training events that are traditionally held during the first quarter of each year. As previously mentioned on earlier calls, we believe that SG&A expense as a percentage of revenue will be in the range of 14.5% and 15.5% for the full year.

Pretax income for the quarter was $11.7 million or 9.7% of home sales revenue, an increase of 40 basis points over the same quarter in 2014. We had net income of $7.7 million or 6.4% of home sales revenue for the first quarter of 2015, which represents $0.39 per basic share.

First-quarter net orders were 968. Ending backlog for March was 601 units, and the cancellation rate for the first quarter was 21.4%. As of March 31, we had $39 million in cash, $387 million of real estate inventory, and total assets of $466 million. In November of 2014, we issued $85 million of our 4.25% convertible notes due in 2019, which, under their terms, are convertible under certain circumstances into approximately 3.95 million shares of our common stock.

At March 31, notes payable on our financial statements include $77.1 million, which represents the fair value of the convertible notes at the date of issuance, plus accretion of a 6.63% discount through March 31. $5.5 million of the original proceeds were recorded to additional paid in capital to reflect the equity component of the convertible notes, and $3 million is included in deferred tax liabilities.

At our annual stockholders meeting last week, our stockholders approved the flexible settlement provisions of the convertible notes, which enables us to choose whether we will settle the conversion of the notes with cash, shares of our common stock, or any combination of cash and stock. Diluted earnings-per-share for the first quarter reflect the impact of the convertible notes using the if-converted method from the date of issuance. The underlying shares of approximately 3.95 million were treated as dilutive.

Since we have obtained stockholder approval for the flexible settlement feature of the convertible notes, we will now be eligible to use the treasury stock method for determining the impact of the conversion feature of the notes on EPS. Under the treasury stock method, the convertible notes will not be dilutive unless the market price exceeds the conversion price of our common stock.

A portion of the net proceeds from the issuance of the convertible notes was used to reduce other debt outstanding. The outstanding borrowings under our secured bank credit facility at March 31 were approximately $152.9 million, and total debt was approximately $230 million. At the end of March, we had approximately $46.5 million of additional availability under our secured bank facility, and we are currently in discussions with various lenders to enter into an unsecured revolving bank credit facility that would replace our existing secured facility. At March 31, our gross debt to capitalization was 54.7% and net debt to capitalization was 50%.

At this point, I would like to turn it back over to Eric.

Thanks, Charles. In summary, we had another outstanding quarter. Let me provide some guidance and thoughts about what we are seeing for this quarter and looking ahead into the remainder of 2015.

The second quarter is starting strong with 267 closings in April, up from 191 closings in April 2014, representing 39.8% year-over-year growth, which represents over six closings per month per active community. Sales have been strong during the second quarter, and we continue to see the demand for homeownership remain high.

As previously discussed, home closings were strong in Texas during the first quarter of 2015, and have been -- continue to be very solid going into the second quarter. As of now, our performance has not been impacted negatively by the weak oil and gas sector in the Texas and Houston economies. In fact, April absorption in Houston was nine closings per community.

One of our highlights in April was the close-out of our longest-running project to date, Sunrise Meadow in the Houston market. We closed 973 homes between March of 2006 and April 2015. Over the life of the project, we averaged 8.9 home closings per month, and increased average sales prices from the $120,000's to the $170,000's. Our placement for this community is Trails at Seabourne with 370 lots, and we are on track for a seamless transition.

At the end of April, we had 44 active selling communities. We have many new projects in the works this quarter, and we are still expecting to have 50 to 55 active selling communities by the end of 2015. In preparation for closings in 2016 and 2017, we have begun evaluating expansion opportunities in new markets, such as Seattle and Nashville, as well as opportunities to leverage our existing management teams and expand to adjacent markets, such as Jacksonville and Raleigh-Durham.

We are furthest along in our expansions of the Seattle market. We have promoted an experienced manager with proven success in opening new markets to lead the region, secured top talent with local expertise, and identified great land positions. We are encouraged by our test marketing results, and expect to begin construction on new homes in the greater Seattle area later this year.

We believe strong interest in homeownership will continue. This, coupled with our first-quarter results, indicates that we are on track to meet our market guidance. Last quarter, we committed to deliver 2,800 to 3,200 home closings, and as of April 30, 2015, we are on pace to meet this expectation.

In addition, we saw significant increase in average sales price over this past quarter. We expect that to moderate over the remainder of the year, with our average sales price increasing at a rate of 1% to 2% each quarter. Based on this early momentum, we expect to see our average sales price in 2015 increase by at least 11% over 2014.

We expect our 2015 adjusted gross margins to be consistent with what we experienced in 2014. Our adjusted gross margin is expected to continue to be in our target range of 27% to 29% after taking into account purchase accounting, interest costs, and other nonrecurring type items.

Based on these assumptions, including 2,800 to 3,200 expected home closings, a likely increase in average sales price, consistent adjusted gross margins, and expected improvement in our G&A leverage, we believe our basic earnings-per-share will be in the range of $1.85 to $2.25. The midpoint of our EPS guidance of $2.05 per share represents basic EPS growth of approximately 50% over 2014.

Now I will be happy to take your questions.

(Operator Instructions). Nishu Sood, Deutsche Bank.

Thanks and very, very good results for the quarter. I wanted to ask about the monthly closings. March was obviously a super-strong month. April was quite strong as well but somewhat of a letdown. Did you experience some of the -- with March being so strong, was there -- were you running a little light on completed homes? Did that hold back April? Any color there would be helpful.

Yes, I would say yes, Nishu. I mean, we consider April a strong month too, almost 40% year-over-year increase. So March and April, certainly strong months. January and February are traditionally our slowest closing months of the year, because that's based on December and January sales. So, March and April coming up, January and February sales, rather than getting past the Christmas holidays, has been very strong.

But yes, we can only close as many houses as we have finished. And we would have certainly closed more homes in April if we would've had more homes closed. You're exactly right.

Got it. Got it. Okay, great. And you had mentioned on the SG&A, 14.5% to 15.5% for this year. Clearly, with the pace of expansion that you've had, it has -- and I think Charles mentioned this in some of his commentary -- has boosted some expenses in the earlier-stage communities. Underlying, though -- and obviously, we've had the chance to observe you as a public company for some time -- what's your updated thoughts about leverage on that number in the out years?

Without -- obviously, you're not going to give us a specific number, but how much greater potential is there for leverage once you begin to mature a little bit more? Maybe, obviously, law of large numbers, the growth profile begins to slow down a little bit.

Yes, this is Charles. Good question, Nishu. So, really what we have seen, like you said, over the past year, being newly public and building the internal team primarily is what's been driving the G&A portion.

Selling expenses has historically been in that 9% to 10% range. And as we mentioned in the comments at 9.6%, that's right in the range. So that portion of SG&A, we would expect to be right there consistently, with possibly a little bit of leverage, as we continue to grow the average sales price.

On the G&A side, like you said, it really will depend in future years on which markets we expand to and how we end up structuring the overhead. So I really don't have anything else maybe to add for 2016 or 2017 yet. But there is definitely a possibility to see more operating leverage. But time will tell, and we will get there as we get a little bit closer.

Got it. And one final one, if I could, on Houston. Very good color. The 8.1 absorptions in the first quarter, and Eric you mentioned up in 9 -- the 9 level for April. So very strong, and there doesn't seem to have been any signs of slowdown.

I kind of wanted to ask why -- first of all, in the earlier stage part of your selling process, the responses to your flyers, has that continued to be strong? Or have you seen some drop-off in that? I kind of consider that to be the earliest stage equivalent reading for your sales process.

And just on a bigger picture basis, it really has surprised a lot of people that Houston hasn't slowed down. So, you are there and you are in the thick of things, so maybe if you could give your thoughts on the dynamic that's at play, and when we might expect to see some slowdown? Because certainly you would think there would be some effect at some stage.

Yes, Nishu, we, being LGI, do not expect a slowdown at all. Over the last four months, obviously, we gave some stats that indicate very strong performance in Houston. I can tell you that sales have continued to be strong over the last 30 and 60 days. So, for closings for the next 30, 60, 90 days, those houses are already sold, and we expect closings to remain very strong.

Historically, we've been building houses since 2003 in Houston. And through our process, it doesn't matter if it was the low point of the housing downturn in 2007 or 2008, the phone has never stop ringing. The demand in the Houston market for renters looking for homeownership has always remained strong. So we do not see that changing for LGI.

Got it. So you have seen no drop-off in response rates?

We have not.

Okay. Great, thanks a lot.

(Operator Instructions). Michael Rehaut, JPMorgan.

Good morning, everyone, and nice quarter. The first question I had was just to make sure I got it correct, that basically, talking about your guidance for the year, just want to make sure -- it appears that you essentially reiterated all components of the guidance. Is that fair to say -- from last quarter?

Yes, that is correct.

Okay. And then I guess really the follow-on to that would be the ASP for the first quarter, and then you kind of said that you expect it to moderate over the next two or three quarters to 1% to 2% up sequentially.

Did the ASP come in a little bit higher than you expected for 1Q? And just kind of curious if you thought maybe that -- if that's the case, that maybe that provides the potential for you guys to maybe hit towards the upper half of the EPS guidance range, is that kind of a fair statement? Or how does the 1Q ASP play into the bigger picture for ASP expectations for the full year and EPS?

Sure, Mike. This is Eric. I'll start off and Charles can add to it he wants to.

The first quarter was a surprise to the upside, primarily driven by Denver getting off to a really good start. And us getting off to a good start in Terrata homes in San Antonio certainly influenced that. Now that that absorption is built into the model, if you will, we won't have new communities like that coming in the second and third and fourth quarters.

So, that's why our model is showing more moderate price appreciation in the second, third or fourth quarters of about 1% or 2%. On the last call, I believe we talked about price increases year-over-year of north of 8%. So now, based on the first-quarter results and similar appreciation second, third and fourth quarter, we feel that north of 11% is more accurate.

And so with that then guidance maybe being raised, but you kept the range at least for the EPS, is it fair to say that all else equal, maybe could -- kind of points to maybe at least somewhere above the midpoint of that range? I mean, obviously, you are still baking in, I would presume, some cushion for what may or may not happen, let's say, from a cost side in the back half. But it, certainly, I think, at minimum would strengthen your conviction in the $1.85 to $2.25 range?

Yes. I would agree with that statement. I mean, we are very positive about the year, very comfortable with all our guidance. The first four months have got a great start to the year. The pipeline looks great for next quarter, so we are very optimistic on the year. Being only four months into it or this being the first-quarter call, probably too early to raise guidance on some of those metrics, but certainly everything is heading in the right direction.

Okay. And then just one last one on guidance. The share count, Charles, maybe you could just review how we should think about that, given the updates around the decisions around the treatment of the debt and so forth?

Sure. So based on the stockholder vote -- so the 3.95 million shares will be treated as dilutive for the month of April, and then would be treated as nondilutive, assuming that the market price is below the conversion price of the $21.52. So, the 3.95 million would be dilutive for one month and then nondilutive for two months.

And then going forward, it would be nondilutive, so we would be using the [20.9%] that we had previously, is that right? As long as the share price doesn't stay -- stays below the strike?

Yes, you would use the [19.9%], which was the [20.9%] minus the 1 million shares that we repurchased when we did the convertible notes.

Okay. One last one if I could. On the gross margin side, you reiterated your guidance for that for the year. And at the same time, you continue to be expanding into new markets, evaluating new markets, et cetera. As you're looking at those new markets and finding different opportunities, you had mentioned Denver doing well and Seattle, which, in particular, those are two -- let's say everything else equal, a little bit higher ASP markets.

Same time Raleigh-Durham is a little lower ASP. But as you're looking out and expanding, I mean, are your expectations for the adjusted gross margins in the 27% to 29% range, I mean, is that something that you are going to continue to kind of build into your model that you would want to keep the underwriting at those levels, and that you expect to continue to see opportunities for land at those gross margins? Or would there be any type of change to that outlook over time, where the 27% to 29% might be -- let's say the range might be taken down by 100 or 200 bps?

No, we are comfortable saying that that range of 27% to 29%, that's what we would expect in the future. For the last five quarters of being a public company, including a lot of expansion into other markets, we have been between 27.5% and 28.9%. So we are right on track. There will be fluctuation within that range, but we think that's where we're going to be there in the future.

We underwrite to a 25% gross margin, so in the new markets, they tend to be a little bit lower. But as the markets get seasoned, we tend to increase the gross margin. That makes up for it. And that average of 27% to 29% for the year, we think that's very accurate.

Great. Thanks, guys.

Sam Doctor, Fundstrat.

Thanks for taking my call. Actually most of my questions have been answered already. I had one regarding the ASP. Obviously, we saw an upside to the ASP. How much of that was a price increase? And how much of that would you attribute to a mix shift? And seeing that upside, I would've expected to see a little more operating leverage, particularly on the sales expense. So, can you give us a sense of what's going on there?

Yes, it's a mix, Sam, of both. We've been able to raise prices in all of our existing communities. Most of that price increase, because there's a pretty big number in the first quarter, is the result of new communities and the higher price point communities opening up.

Our existing communities, apples-to-apples, year-over-year comparison, certainly increased. But most of the increase would come from the newer high-priced communities. And replacing older communities with newer communities because of lot costs and et cetera, that creates higher price points.

How does that affect the G&A line, though? I mean, the sales expense? Because I would've expected to see a little more leverage on that expense line.

And so from a selling expense standpoint, it's really made up of three components. So you have sales commissions made up of internal and outside commissions. We have seen, over the last 12 months, a slight increase in outside commissions as we move up the price band.

We have about one-third of the expenses really that we allocate or budget for, for our marketing expense or our direct-mail campaigns and our Internet campaigns. And really one-third of the selling expense bucket is allocated towards operating the sales centers in each individual community. So, kind of as we mentioned, there is some potential for maybe some leverage on the selling side, but we don't certainly expect it to be very significant. We still think we will be in that 9% to 10% range.

Okay, great. Thank you.

You bet.

Edward Okine, Basso Capital.

Just back to the Houston situation. I mean, is it your particular product, that's why you said that you are not seeing any slowdown at all? Or the whole -- I mean, so the Houston region as a whole, you think, would not see any down -- sorry, drawdown?

Yes, this is Eric speaking. You know, I think there is certainly -- the facts are we are in the entry-level housing business in Houston; we are focused on converting that renter to homeownership. So we are not in the higher price point in the Houston market. And I think oil and gas may affect the higher price point more than the entry-level.

But I -- all I can tell you is what we have seen, and we have not seen any slowdown. And arguably, we've seen an uptick as far as our closings go. We have been able to maintain absorption with our average sales price increasing. We said earlier, $177,000 first-quarter average sales price in Houston.

But I think it's more of our process. We've been strong in Houston for a long time. We had a lot of referral business. We got a great management and people team here in the Houston market. And I think our success in Houston is going to continue.

Thank you.

You're welcome.

Barry Haimes, Sage Asset Management.

Congrats, guys, on a great quarter. My questions had to do with Terrata. And now that you're out in the market, you've got a few closings, as you've mentioned. I wonder if you could talk about both the sales process and the sort of -- and kind of what's the same and what's different compared with traditional LGI? And then also the kind of construction standardization element.

I presume at this price point, there are probably some differences on each of those two sides. And so I wonder if you could just talk a little bit about what's the same, what's different? And are there any learnings or tweaks so far, as you've gone through the initial phases? Thanks.

Sure, Barry. This is Eric. I appreciate the question. First of all, on the sales process itself, which I would define as when the customer contacts us, the process that we take them through to talk about LGI, to talk about the Terrata brand, and all the information they need to do business with us, that process is exactly the same. Same process that we've been using since the mid-1990's in land business and same process we use in entry-level housing.

The marketing to get the customer to inquire at a Terrata Homes is slightly different. Obviously, we are not sending direct-mail to people living in apartment complexes and focused on that. Although there's a direct-mail component to Terrata, it's going after a little bit different buyer and a little bit different price point, in that community, at north of $400,000.

So the process is the same; marketing to get them to that point is a little bit different. The product itself, we are still building our Terrata Homes brand in San Antonio at a 100% spec. And by that, we mean we are going to build the houses in advance of sales. We believe there is demand for customers, even at that price point, that are looking to move in the next 30, 60, 90 days. And unless you have an existing house ready to satisfy that demand, you are not going to be able to sell to that customer.

And sales, sales have been very strong. We are happy with our results. So far, we've closed six in our -- essentially, our first quarter of business. We've got enough contracts pending right now that we believe we're going to close at least six next quarter.

So, everything is looking good in Terrata. And we're going to roll that out in a community in Charlotte that open in the third quarter of this year, and then roll it out in a few more communities end of this year, first of next year.

That's great. One just quick follow-up. So, if I was to go into the community, how many different types of models would you have within Terrata?

We have five different floor plans, with each floor plan having three different elevations.

Got it. Thank you very much. Appreciate it.

You're welcome.

Thank you. At this time, I would like to turn the call over to Chairman and Chief Executive Officer Lipar with any closing remarks.

Thanks. I want to thank everyone for joining us here today. We look forward to sharing our success as 2015 unfolds. Thanks.

Thank you, Sir. And thank you, ladies and gentlemen. That does conclude today's conference. You may disconnect your lines at this time. Have a wonderful day.