Century Communities Inc

NYSE:CCS

Earnings Call Analysis

Century Communities Sets Quarterly Records

In the final quarter, Century Communities set delivery and revenue records with 3,157 homes delivered, a quarterly revenue of $1.2 billion, and a net income of $91.3 million or $2.83 per diluted share. Full-year deliveries totaled 9,568 homes with revenues surpassing the $3.6 billion mark, topping guidance. The company reached its highest book value per share at $75.12, and net new contracts grew 86% to 2,340 homes. Century focuses on affordable housing, with prices well below the FHA limits, and has expanded its geographic footprint with a strategic acquisition. Fourth-quarter adjusted homebuilding gross margins rose to 23%, and SG&A expenses were 11.1% of home sales revenue. For 2024, they guide for deliveries between 10,000 to 11,000 homes and revenues from $3.8 to $4.2 billion with adjusted gross margins anticipated between 20% and 22% and a decline in SG&A as a percentage of sales.

Century Communities Reports Robust Quarter Amid Housing Market Recovery

The housing market has experienced a significant upswing, and Century Communities is among the beneficiaries of this positive trend. The company reported substantial growth in their fourth quarter, marking a 9% increase in deliveries over the previous year, and a remarkable 39% growth over the last quarter. They also set a quarterly record with 3,157 homes delivered. The housing market improvement bodes well for Century's future prospects, especially given the 21 years of consecutive profitability the company celebrates. With fourth-quarter revenues surging to $1.2 billion, showing a considerable 36% increase from the previous quarter, and earnings per share climbing to $2.83—a 15% enhancement year-on-year—investors could be attracted to what appears to be a robust performance.

Optimism Fueled by Sales Activity and Affordability Focus

A significant metric for investors to consider is net new contracts, which impressively increased by 86% to 2,340 homes in the fourth quarter compared to the same period in 2022. Notably, January's sales activity remained strong, outpacing the previous year by over 30%. Century's strategic emphasis on affordability—with over 90% of their deliveries priced below FHA limits—and their focus on spec-based construction play a pivotal role in their success. This positions Century effectively in the market by targeting a wide pool of potential homebuyers and maintaining direct cost control. Moreover, the company is active in acquiring assets that solidify their market presence, such as the recent purchase of Tennessee-based Landmark homes.

Financial Health and Cost Efficiency

The company closed the quarter on strong financial footing, with net income reaching $91.3 million, a 15% increase year-over-year. While certain costs like incentives for closed homes rose—reaching 800 basis points in the fourth quarter, 200 basis points up from the previous quarter—Century anticipates a reduction in these costs in the forthcoming year. Their operational success can be traced to improved cycle times, now at a steady 4 to 5 months, and a 1% reduction in direct construction costs within the quarter. Investors should also note the controlled lot inventory expansion, which grew by 8% sequentially and 39% year-over-year, indicating robustness in Century's land acquisition strategy.

Sound Financial Strategies and Growth Outlook

Century Communities looks ahead with financial prudence, maintaining an SG&A of 11.1% of home sales revenue for Q4, and aiming for a year-over-year decline in SG&A in 2024. The company boasts a reduced net homebuilding debt to net capital ratio of 22.4%—the lowest year-end level since becoming public—reflecting solid leverage management. With an effective tax rate expected to be on par with 2023, Century is showing the ability to manage profitability moving forward. With a backlog of 1,070 homes valued at $401 million and an anticipation of strong demand, Century Communities projects full-year 2024 deliveries to be between 10,000 to 11,000 homes with projected home sales revenues of $3.8 billion to $4.2 billion, signaling confidence in their continued performance and growth.

Earnings Call Transcript 2023-Q4

[Operator]

Greetings. Welcome to Century Communities Fourth Quarter and Full Year 2023 Earnings Conference Call. [Operator Instructions] I will now turn the conference over to Tyler Langton, Senior Vice President of Investor Relations for Century Communities. Thank you. You may begin.

[Tyler Langton, executive]

Good afternoon. Thank you for joining us today for Century Communities Earnings Conference Call for the Fourth quarter and full year 2023. Before the call begins, I would like to remind everyone that certain statements made during this call may constitute forward-looking statements. These statements are based on management's current expectations and are subject to a number of risks and uncertainties that could cause actual results to differ materially from those described or implied in the forward-looking statements. Some of these risks and uncertainties can be found under the heading Risk Factors in the company's latest 10-K, as supplemented by our latest 10-Q and other SEC filings. We undertake no duty to update our forward-looking statements. Additionally, certain non-GAAP financial measures will be discussed on this conference call. The company's presentation of this information is not intended to be considered in isolation or as a substitute for the financial information presented in accordance with GAAP. Hosting the call today are Dale Francescon, Chairman and Co-Chief Executive Officer; Rob Francescon, Co-Chief Executive Officer and President; and David Messenger, Chief Financial Officer. Following today's prepared remarks, we will open the lineup for questions. With that, I'll turn the call over to Dale.

[Dale Francescon, executive]

Thank you, Tyler, and good afternoon, everyone. I'd like to begin by saying that we are pleased not only with our results but also with the meaningful improvement that we have seen in the housing market in general and our business in particular. Our orders and deliveries exceeded our expectations in the fourth quarter, and 2023 was our 21st consecutive year of profitability. We are optimistic about our outlook for 2024, given both the progress Century made over the course of 2023 and the underlying strength of the housing market. In the fourth quarter, our deliveries of 3,157 homes were a quarterly record and increased by 9% versus the prior year period. On a quarter-over-quarter basis, our deliveries increased by 39% and grew sequentially for the third quarter in a row as we continued to benefit from improved cycle times in our increased level of home starts, which began in the first quarter of 2023. On the back of these higher deliveries, our fourth quarter revenues were $1.2 billion, a 36% sequential increase and our highest level since the fourth quarter of 2021. Diluted earnings per share of $2.83 increased for the fourth sequential quarter and represented an improvement of 15% over year ago levels. For the full year 2023, we delivered 9,568 homes and generated home sales revenues of $3.6 billion, exceeding the upper end of our guidance for both deliveries and home sales revenues. Our book value per share increased by 11% on a year-over-year basis to $75.12, a company record, and we ended the year with 22.4% net leverage, the lowest year-end level in our history as a public company. Our fourth quarter net new contracts increased 86% to 2,340 homes compared to the fourth quarter, 2022. On a sequential basis, our net orders in the fourth quarter increased by 9%. This level of sales activity was much stronger than we were anticipating as our fourth quarter net orders have experienced an average 10% sequential decline in each of the last 4 years. January has continued to see strength with our sales more than 30% ahead of the prior year's January. Regardless of the market served, the Century Communities and Century Complete brands target building and selling affordable homes with more than 90% of our fourth quarter deliveries priced below FHA limits. In addition to that affordability, both brands built nearly a 100% of their homes on a spec basis, which allows for direct cost control, availability of quick move-ins and buyers' certainty of financing. Our focus on affordability positions us well for future growth and continued success as we can target the widest range of potential homebuyers. Our average sales price of $376,000 is among the lowest of the publicly traded homebuilders while Century Complete's average sales price came in at $258,000 this quarter. Additionally, through our Century Complete business, we have developed an expertise in entering and operating in secondary markets where there is less competition from the public homebuilders and where we believe we can take share from smaller private builders that are more capital constrained and have higher development and construction costs. As a reminder, our Century Complete business only acquires finished lots and typically on a just-in-time basis. Last week, we announced the strategic acquisition of the assets of Landmark homes of Tennessee, which will grow Century's already sizable presence in the greater national market through the addition of 6 active landmark homes communities. Importantly, this transaction provides us with a pipeline of controlled lots that will be delivered to us in the future as land development is completed and furthers our goal of increasing market share throughout and beyond our 18-state geographic footprint through the opportunistic acquisition of other homebuilders to augment the organic expansion of our land portfolio. In closing, I want to thank all of our team members for their hard work and dedication that drove significant improvements in our business in 2023 and have positioned Century for continued success in 2024 and beyond. I'll now turn the call over to Rob to discuss our operations and land position in more detail.

[Robert Francescon, executive]

Thank you, Dale, and good afternoon, everyone. As expected, incentives on closed homes increased to roughly 800 basis points in the fourth quarter 2023, up from over 600 basis points in the third quarter. These higher costs were primarily due to the increased cost of mortgage rate buydowns in the quarter. Interest rate buydowns continue to be the most important incentive for our customers given their ability to significantly lower monthly payments, a key focus for our entry-level buyers. With the recent decline in interest rates, we've been able to pull back on our level of incentives on new orders in December and in January. 2023 saw our team shorten cycle times, control direct construction costs and grow our land pipeline and community count. During the fourth quarter, our cycle times further improved, putting us in a position that we can now typically start and complete homes in a normal 4 to 5-month time frame. We also had continued success in controlling our costs in the fourth quarter. On a sequential basis, we saw a further 1% reduction in our direct construction costs on the homes we started even with the continued strength in the housing market. On the land front, we ended the fourth quarter with approximately 74,000 owned and controlled lots, an 8% sequential improvement and 39% year-over-year increase. The higher lot count this year was driven entirely by an increase in our controlled lots, which accounted for 59% of our total lots in the fourth quarter with our number of owned lots remaining relatively static for the eighth consecutive quarter. Additionally, at year-end, Texas and the Southeast accounted for roughly 50% of our total lot count, up from 43% at year-end 2022 and reflective of our strategy to grow our presence in these attractive markets that are benefiting from relative affordability and strong employment and population growth. Combined with Century Complete, these more affordable markets comprise nearly 75% of our owned and controlled land supply. We ended 2023 with a community count of 251, the second highest level in our company's history and an increase of 21% versus year ago levels with every region we operate in, experiencing growth. Century Complete accounted for over 40% of our total community count and 37% of total deliveries in 2023, while the Southeast and Texas combined accounted for close to 30% of our total community count and over 30% of total deliveries for the year. In summary, our year-end 2023 community count of 251 and total owned and controlled lots of nearly 74,000 gives us confidence that 2024 will be a growth year for us. I'll now turn the call over to Dave to discuss our financial results in more detail.

[Dave Messenger, executive]

Thank you, Rob. During the fourth quarter of 2023, pretax income was $126.1 million and net income was $91.3 million or $2.83 per diluted share, a 15% year-over-year increase. EBITDA for the quarter was $145.2 million, a 20% increase over year ago levels. Revenues for the fourth quarter were $1.2 billion, up 36% sequentially and 2% versus the prior year's quarter. Our record fourth quarter deliveries of 3,157 homes increased 39% on a sequential basis and by 9% versus prior year levels. For the first quarter of 2024, we expect our deliveries to see their typical seasonal decline. As a reminder, the first quarter typically represents the low point for our deliveries during the year with first quarter deliveries having accounted for a little over 20% of our full year deliveries on average over the past 5 years. Our average sale price of $376,000 in the fourth quarter decreased by 2% on a sequential basis, mainly due to higher levels of incentive and mix as Century Complete accounted for 39% of fourth quarter deliveries versus 36% in the third quarter of 2023. At quarter end, our backlog of sold homes was 1,070 valued at $401 million with an average price of $375,000. This is the direct result of intentionally selling homes later in the construction process. In the fourth quarter, adjusted homebuilding gross margin percentage was 23% compared to 19.8% in the fourth quarter 2022. Homebuilding gross margin was 21.6% compared to 17.6% in the prior year quarter. As expected, our gross margins decreased sequentially in the fourth quarter, primarily due to higher levels of incentives. Looking out to 2024, we expect to be able to reduce our levels of incentives versus fourth quarter 2023 levels. SG&A as a percent of home sales revenue was 11.1% in the fourth quarter compared to 9.5% in the prior year. The largest driver of this year-over-year increase was more normalized commission rates on home sales. For the full year 2023, our SG&A was 12.4% versus 9.8% in the prior year being impacted by higher commission rates, lower home sales revenues due to decreased homes closed at a lower ASP and a significant number of new communities that we opened in 2023. For 2024, we expect our SG&A as a percent of home sales revenues to decline on a year-over-year basis as we look to grow our deliveries and keep our fixed levels of G&A relatively constant.In the fourth quarter, our tax rate was 27.6% compared to 22.4% in the prior year quarter and 26.1% for the full year 2023. The increase in our annual effective rate in 2023 as compared to 2022 was primarily driven by a reduced number of homes qualifying for 45L credits. We expect our full year tax rate for '24 to be similar to the full year 2023 levels. Our net home building debt to net capital ratio decreased to 22.4% compared to 23.5% in the prior year quarter and represent the lowest year-end level in our history as a public company. Our homebuilding debt to capital ratio decreased to 29.9% at quarter end compared to 32% at the end of the same period last year. During the quarter, we maintained our quarterly cash dividend at $0.23 per share and ended the quarter with $2.4 billion in stockholders' equity, $1.1 billion in total liquidity and $328 million in cash. At 12/31, we had no borrowings outstanding on our $800 million unsecured revolving credit facility that does not mature until April, 2026. Additionally, we have no senior debt maturities until June of 2027, providing us ample flexibility with our leverage management. Homebuyers are exhibiting strong demand for affordable new homes; our cycle times have returned to historical levels and further growth in our community count is anticipated. Accordingly, we expect our full year 2024 deliveries to be in the range of 10,000 to 11,000 homes and home sales revenues to be in the range of $3.8 billion to $4.2 billion. With that, I'll open the line for questions. Operator?

[Operator]

We will now begin the question-and-answer session. [Operator instructions]. At this time, we will pause momentarily to assemble our roster. Our first question is from Carl Reichardt with BTIG.

[Carl Reichardt, analyst]

Thanks. David, just got to my question at the very end on community count. Obviously, the growth of '23 was super strong. So can you talk a little bit how you plan to lay it out in '24? I'm assuming it's slower, is there a cadence to the community count that you expect to be front-end or back-end loaded in terms of new stores? And if you can give us a sense of the growth, it would be helpful.

[Dave Messenger, executive]

Yes. I think as we've been talking to, we wanted to see 2023 as a significant amount of growth. We invested a lot of capital in the land to get to that [ $250 million that we have new plans ], so kind of the new jumping off point for the company going forward. We do expect to be growing community count. It would be probably -- you see more of that growth come online in third quarter as we're getting finished and getting communities out of the ground in the first half of this year and start looking for sales in that third quarter time frame. Right now, we don't have a guidance range out there, but we do expect to see community count at a slower pace than 25% per year, but we do have land and assets that we want to get into production and increase that growth going forward.

[Carl Reichardt, analyst]

Okay. And then also just on the rapidity with which you turned your backlog this quarter, recognizing business improved and you had inventory ready to go, so as you look -- and your cycle times have normalized too. So when you talked about we're trying to sell homes later in construction process, like on average between taking the order and closing the house, what's your time frame? And can you tell me what percentage of homes in the fourth quarter you both saw orders and delivery within that quarter?

[Dave Messenger, executive]

I'm sorry, can you repeat the last part of that question? I've got the first part in terms of how fast we're turning.

[Carl Reichardt, analyst]

Correct. Yes. The last one was, if you look at your delivery volume in fourth quarter, what percentage of those deliveries did you have ordered and closed in that same quarter, in the fourth quarter?

[Dave Messenger, executive]

Well, you can see that from the -- our backlog conversion rate we had a significant amount that got sold and closed during the quarter. I believe we turned our backlog, not quite 170%, it's a 157% in the fourth quarter. So obviously, there was a significant amount of homes that were sold and closed during that period. And given the amount of time that we have between selling and closing, it's typically about a quarter, giving a few months that we're able to sell and close a home and just depending on where it is in the process. Obviously, quick move-in homes these days have been in fashion and so people have been able to find those on our website and been able to sell and close homes in the fourth quarter.

[Carl Reichardt, analyst]

Okay. So a quarter turn is kind of what you're back to that normal rate after having flush through inventory this quarter. Okay. And then last question, sorry to add one more. Just on the acquisition, I think we've asked before and maybe all of you guys can talk about what the environment looks like for private company acquisitions. We started to see a few crop up in a number of builders now. Have things loosened up? Are there particular places that you're especially interested in beyond Tennessee?

[Dave Messenger, executive]

Yes, Carl, we definitely have seen more M&A offerings and we expect that that's going to continue. Part of it is when you look at the private builders, the capital constraints are starting to become impactful to them as well as you just look at it, in many cases, the people who founded the business are starting to age a bit and they'd like to be able to liquidate their holdings. For example, in the situation that we found ourselves in in Nashville, where we found out a great company that's been in business for 30 years, and they've now become our land development source as we go forward. We have an ongoing relationship with them. It's one of their expertise, and they wanted to exit the whole building business but stay and keep their hand in land and land development. And so we have an ongoing relationship with them there. And so from our standpoint, we find that to be a very valuable thing that we can create those ongoing relationships.In terms of markets, we really look at M&A at this point as really opportunistic abilities to enhance our organic portfolio of land. In terms of voids in our market, the only ones that we really have is like a higher presence within Florida. We're there throughout Florida in our Century Complete brand but on our Communities brand, we're only in Jacksonville. Florida, our experience has been very positive and we'd like to expand our presence there and M&A would be one way to do that.

[Operator]

The next question is from Jay McCanless with Wedbush Securities.

[James McCanless, analyst]

Great quarter. Good news on January being at 30%. I guess when in '23 did you guys start to see the turn? Just wondering when the comps are going to get harder from a year-over-year perspective?

[Dave Messenger, executive]

I think we probably started seeing a turn midway second quarter. If you're thinking of '23, we started out the year with relatively high interest rates. We saw some interest rate relief as we got into kind of March and April, we started seeing a pickup in sales and then it really kind of bounced around. So I think comps based on any given month may be hard or light just given where we were and where interest rates were at that given time of last year.

[James McCanless, analyst]

Okay. And then I guess the other question, if you're bringing incentives down, I guess, what's more impactful right now, the volume that you're generating or the incentives coming down? Just trying to think about what first quarter gross margin would look like relative to what you put up in the fourth quarter?

[Dave Messenger, executive]

I think -- while we don't have guidance out on our margins, we're obviously thinking that as incentives are getting pulled back, we think there is some stability to that gross margin line heading into the year. I don't think you're going to -- we're not anticipating it falling like it did from Q4 to Q3.

[Operator]

The next question is from Alex Rygiel with B. Riley FBR.

[Alexander Rygiel, analyst]

Great quarter gentlemen. How should we think about Century Complete growth in 2024 versus the base business?

[Dale Francescon, executive]

Our Century Complete business has -- for quite some time it was roughly a third of our overall volume. We moved it up to 35%, 36%. We're now just under 40%. It's a type of thing that because we only buy finished lots and we're typically buying them just in time, some of our constraints on growing that business is impacted by some of our land development partners and the timing in which they're able to complete and deliver lots to us. But as we look at it right now, we're just under 40% of our overall business in terms of units on Century Complete. As we've said, we ideally would like to see it get to 50% but as the Community side continues to grow, that becomes harder to make Century Complete 50%. But we're very happy with it at the point that it currently is.

[Alexander Rygiel, analyst]

And then is there a magical rate right now that's really getting your homebuyers active?

[Dave Messenger, executive]

I don't know -- I don't know if there's a magical rate. I know that -- I think we've talked about it in the past. I'd say right now, as buyers have seen the overall rates come down, they are exhibiting more confidence, and we're seeing that demand come out to a marketplace. And so while there may be individual buydowns that occur at a closing table like -- which always occurs, I think that today we're just seeing the fact that the macroeconomy and the macro-interest rate levels have been coming down, buyers are more encouraged about going out and buying that house. So I don't know that I would say there's definitely a magic rate out there at the moment.

[Operator]

The next question is from Jesse Lederman with Zelman & Associates.

[Jesse Lederman, analyst]

Congrats on the really strong end of the year. My first question is just a follow-up on the Century Complete brand. Can you remind us if there's any gross margin or return differential between that -- the Century Complete product and the communities brand?

[Dale Francescon, executive]

In terms of gross margin, because we're only buying finished lots, so we really have no land profit built into the margins. The margins tend to be structurally a bit lower. On the flip side, because we are not carrying land and developing land the returns are significantly higher.

[Jesse Lederman, analyst]

Got it. Yes, that makes sense. And then just a quick follow-up on that. Are you seeing any -- I mean you talked about the constraint there in terms of your developer, you're kind of at the mercy of your developers. Can you talk about maybe what you're seeing from them in terms of their ability to get financing and continuing the development process?

[Dale Francescon, executive]

Yes. Obviously, financing has tightened up in the last 12 months on that or more. But when we look at it, the stronger developers have been able to figure out workarounds whether they can get financing or figure out other ways to fund their projects as well as our structure sometimes on our optioned lots on how we'll do things. So we've been able to navigate that but clearly, as a general statement, it is tighter from a financing front for the land development communities. And so we're continuing to source good partners in that daily and we're getting through that fine but it has tightened up. One other thing on the positive side, we've seen a flattening of increases in LD costs and so with that, where we were seeing ramp at increases in the past, we've seen a flattening now. So that's a good thing going forward.

[Jesse Lederman, analyst]

That's great. Very encouraging. Generally, spec builders have a higher inventory turnover ratio and you're hovering around 1x, which is a bit below the peer group. Now that your cycle times are improving and you're on a more consistent [ stock ] cadence since the beginning of the year, do you have internal targets that you're striving for in terms of working capital as a percentage of revenue or inventory turnover that you discussed internally to drive the business?

[Dave Messenger, executive]

Not to try to avoid your question but yes, we obviously have a variety of internal metrics, internal hurdles that we're looking at, everything from the time that we are reviewing land deals to when we're doing starts for homes and opening new communities, but it's nothing that we've published or put out there right now.

[Operator]

The next question is from Michael Rehaut with JPMorgan.

[Andrew Azzi, analyst]

This is Andrew Azzi on for Mike. I just -- congrats on the quarter as well. I just wanted to maybe, obviously, with understanding that you're not guiding margins, help us think maybe through some of your assumptions or thoughts on construction costs, pricing or the land environment to help us think of gross margins next year or this year rather?

[Dave Messenger, executive]

I think it's obviously going to be a combination of all those things that given right now, our guidance is estimating an ASP of around $380,000 in the low and high end and then we are looking to pull back incentives. But we know that some of that some of that is -- some of those savings will get eaten up by some direct cost increases. So while we're still experiencing a positive trend in the fourth quarter, later this year we may see increases. So [Indiscernible] to be how well can we negotiate direct costs down across our national platform in order to provide some additional margin lift.

[Andrew Azzi, analyst]

And then maybe if you can just review your capital allocation priorities going forward?

[Dave Messenger, executive]

Yes, I would say that we continue to invest in the business. We've got roughly 75,000 lots owned and controlled with about 60% of those being off balance sheet and under some form of option and a controlled arrangement, and we're looking to continue growing the business. As I said earlier, with somebody else's -- with one of the other analyst's questions, we're looking to grow our community count. So we think that we'll have plenty of opportunities to be reinvesting this capital that we're generating back into the business and grow organically as well as Dale said, look, there are other parts of the market that we'd like to see M&A opportunities, Florida being one of them. We just executed on the transaction in Tennessee and so we think there will be other opportunities that come out for us to utilize this capital to continue to grow the business.

[Operator]

[Operator Instructions] The next question is a follow-up from Jay McCanless with Wedbush Securities.

[James McCanless, analyst]

Just wanted to get a sense of what percentage of communities during the fourth quarter you were able to raise price and what pricing power looks like as you start the new year?

[Robert Francescon, executive]

Jay, it's -- I can't give you a specific number, but it really comes down to we're adjusting prices and reviewing them on a weekly basis on a subdivision-by-subdivision level. I can give you just kind of a general feel that certainly, once we saw some interest rate relief, we started raising prices, reducing our incentives because most of -- we look at it, most of our homes have some type of incentive in it. Most of the increased price is really reflected in reduced incentives, although there are increased base prices from a case-to-case basis, but it's really more incentives. And it's so -- which is all based on what we see in terms of competition for that particular subdivision, the level of inventory we have, that type of thing. But in general, on a directional basis, we are seeing that our incentives are going down and that's really where our focus is.

[James McCanless, analyst]

That's great. And then the other follow-up I had, what are you seeing from competitors right now? Has some of the frenzied discounting and promotions that we're seeing in the fourth quarter -- is that lessened somewhat or is it still pretty aggressive what you're seeing from some of the larger competitors?

[Robert Francescon, executive]

Well, it's -- notwithstanding the fact that still generally inventories are very low, everybody is looking to move product. And from time to time, one competitor or another may be discounting homes more than the rest of the market. But in general, we're not seeing ramp in discounting going on out in the market and what was there in the fourth quarter seems to have settled down as we've gone into the new year.

[Operator]

This concludes our question-and-answer session. We will now turn the line back over to Dale for some brief closing remarks.

[Dale Francescon, executive]

Everyone on the call, thank you for your time today and your interest in Century Communities. To our team members, thank you for your incredible efforts, dedication to Century and commitment to our valued homebuyers. To our investors, we appreciate your continued support and look forward to speaking with you again next quarter and sharing with you our continued progress.

[Operator]

The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.