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Boyd Group Services Inc
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Good morning, everyone. Welcome to the Boyd Group Services Inc. Second Quarter 2021 Results Conference Call. Listeners are reminded that certain matters discussed in today's conference call or answers that may be given to questions asked could constitute forward-looking statements that are subject to risks and uncertainties related to Boyd's future financial or business performance. Actual results could differ materially from those anticipated in these forward-looking statements. The risk factors that may affect results are detailed in Boyd's annual information form and other periodic filings and registration statements, and you can access these documents at SEDAR's database found at sedar.com. I'd like to remind everyone that this conference call is being recorded today, Wednesday, August 11, 2021.I would now like to introduce Mr. Tim O'Day, President and Chief Executive Officer of Boyd Group Services Inc. Please go ahead, Mr. O'Day.
Thank you, operator. Good morning, everyone, and thank you for joining us for today's call. On the call with me today are Pat Pathipati, our Executive Vice President and Chief Financial Officer; and Brock Bulbuck, our Executive Chair. We released our 2021 second quarter results before markets opened today. You can access our news release as well as our complete financial statements and management discussion and analysis on our website at boydgroup.com. Our news release, financial statements, and MD&A have also been filed on SEDAR this morning. On today's call, we will discuss the financial results for the 3- and 6-month periods ended June 30, 2021, and provide a general business update. We will then open the call for questions.Comparing the second quarter of 2021 to the same period of 2020 demonstrates how significantly the business was impacted by the pandemic one year ago and how far we've come since that time. During the second quarter, we saw infection numbers and restrictions decrease while vaccination levels increased. We achieved strong same-store sales growth in the quarter, which resulted in increased adjusted EBITDA margins and net earnings, both in the quarter and on a year-to-date basis.Although we continue to experience reduced demand in certain markets at the beginning in the second quarter, demand accelerated in most U.S. markets as the quarter progressed. By the end of the second quarter, demand in the U.S. was at meaningfully higher levels than we experienced in Q1 of 2021. By contrast, demand in Canada remains significantly lower than the pre-pandemic levels and below the levels experienced in the first quarter of 2021.As was previously communicated, beginning January 1, 2021, Boyd is reporting results in U.S. dollars. This change has been made in order to better reflect the company's business activities, given the significance of U.S.-denominated revenues.During the second quarter, we recorded sales of $444.6 million, adjusted EBITDA of $58 million, and net earnings of $10.5 million. Sales at $444.6 million showed a 44.4% increase when compared to the same period of 2020. This reflects a $28.3 million contribution from 72 new locations. Our same-store sales, excluding foreign exchange, increased by 34.5% in the second quarter, recognizing the same number of selling and production days in the U.S. and Canada in the second quarter of 2021 when compared to the same period of 2020. The same-store sales growth in Canada was much lower than same-store sales growth in the U.S. and unfavorable when compared to the first quarter of 2021. While claim volumes increased meaningfully in the U.S., staffing capacity constraints for location level administrative staff and technicians limited same-store sales growth in the second quarter of 2021.Gross margin was 46.1% in the second quarter compared to 46.8% achieved in the same period of 2020. The gross margin percentage was negatively impacted by reduced parts and labor margins as well as variability and Direct Repair Program pricing.Operating expenses for the second quarter of 2021 were $147.1 million or 33.1% of sales compared to $108.5 million or 35.2% of sales in the same period of 2020. The increase in operating expenses was primarily the result of growth in the number of locations as well as the COVID-19 related cost reductions that impacted the second quarter of 2020. The decrease as a percentage of sales was primarily due to increased sales in the second quarter of 2021 as compared to the same period of the prior year, which was significantly impacted by the COVID-19 pandemic. Increased sales levels provided improved leveraging of certain costs such as property taxes and utilities.Adjusted EBITDA or EBITDA adjusted for fair value adjustments to financial instruments and costs related to acquisitions and transactions was $58 million, an increase of 62.7% over the same period of 2020. Adjusted EBITDA was positively impacted by improved sales levels, which also provided improved leveraging of certain operating costs. In total, adjusted EBITDA in the second quarter benefited from the Canadian emergency wage subsidy in the amount of $3.6 million as compared to $3.4 million in the same period of the prior year. As is the objective of the program, Boyd continued to employ and incur costs for employees that would have been laid off or furloughed absent the wage subsidy. As a result of the steady progress towards more normal business conditions in the U.S., EBITDA margin percent improved 50 basis points compared to Q1.Net earnings for the second quarter of 2021 was $10.5 million compared to a net loss of $5 million in the same period of 2020. Excluding fair value adjustments and acquisition and transaction costs, adjusted net earnings for the second quarter of 2021 was $11.4 million or $0.53 per share to an adjusted -- compared to an adjusted net loss of $4.8 million or $0.23 per share in the same period of the prior year. The increase in adjusted net earnings per share is primarily attributable to improved sales levels, which also provided improved leveraging of certain operating costs and other relatively fixed costs, such as depreciation and amortization that could not be reduced in relation to a decline in sales due to the COVID-19 pandemic during the second quarter of 2020.For the 6-month period ended June 30, 2021, we reported sales of $866.3 million, an increase of 11.7% over the same period of the prior year, driven by same-store sales growth of 4.9% or 5.7% on a days adjusted basis as well as contributions from new locations that had not been in operation for the full comparative period.Gross margin increased to 46.1% of sales compared to 45.6% in the comparative period. The gross margin percentage was positively impacted by improved retail glass margins and a higher mix of glass sales in relation to collision sales, partially offset by variability in Direct Repair Pricing.Operating expenses increased $30.8 million when compared to the same period of the prior year, primarily due to the growth in the number of locations as well as the COVID-19 related cost reductions that impacted the prior year.Adjusted EBITDA for the 6-month period ended June 30, 2021, was $110.7 million compared to $96.1 million in the same period of the prior year. The $14.6 million increase was primarily due to improved sales levels, which also provided improved leveraging of certain operating costs compared to the prior year period that was much more significantly impacted the pandemic.We reported net earnings of $18.2 million compared to $12 million in the same period of the prior year. Adjusted net earnings per share increased from $0.51 to $0.92. These increases are primarily attributed to improved sales levels, which also provided improved leveraging of certain operating costs and other relatively fixed costs, such as depreciation and amortization that could not be reduced in relation to the decline in sales due to the COVID-19 pandemic during the second quarter of 2020. At the end of the period, we had total debt, net of cash of $671.1 million compared to $539.9 million at March 31, 2021.During 2021, the company expects to make cash capital expenditures within the previously guided range of 1.6% to 1.8% of sales. This excludes those capital expenditures related to acquisition and development of new locations; the investment in environmental initiatives, such as LED lighting; and the investment in the expansion of our Wow Operating Way practices through the corporate applications and process improvement efficiency project.During the first 6 months of the year, the company has invested approximately $2.4 million in environmental initiatives. These investments will not only provide environmental and social benefits, but also achieve accretive returns on invested capital. Additionally, the company is expanding its Wow Operating Way practices to its corporate business processes. The related technology and process efficiency project will result in a total of $2 million to $3 million of additional investment before the end of this year and will also be expected to streamline various processes as well as generate economic returns after the project is fully implemented. This initiative began in the third quarter of 2020.As has been our practice, I would now like to comment on some potential for insider selling. For personal or estate planning reasons, some insiders, although excluding myself, may choose to sell some of their Boyd holdings during the balance of the year. But in any event, we'll continue to hold ownership in Boyd shares at levels well above those required by the company's share ownership policies.While the COVID-19 pandemic significantly impacted Boyd's business over the past year, we experienced increased demand in most U.S. markets during the second quarter of 2021 as restrictions continued to ease during this period. Thus far, in the third quarter of '21, although still below pre-pandemic levels, demand is exceeding our capacity in all U.S. markets, which has resulted in high levels of work in process. The process of adding location level administrative staff and technician capacity to address this constraint remains a work in process and is resulting in increased wage pressure. By contrast, demand in Canada remains significantly lower than pre-pandemic levels. Demand in Canada in Q3 is building very slowly in comparison to Q1 and Q2 as restrictions are eased and removed.Looking to the balance of 2021 and beyond, we continue to be confident that we will maintain progress toward our long-term growth targets and operational plans. We have added 100 locations on a year-to-date basis in our pipeline to add new locations in existing markets and to expand into new markets is healthy. The recent acquisitions of John Harris Body Shops and Collision Works, which added a combined 51 locations with quality leadership, are strategically opportunistic and better position us to execute on our comprehensive plans for accretive market build out in and around these platforms. For these reasons, Boyd paid toward the upper end of our historic multiple range for similar strategic growth platforms. In addition to taking time to execute on our build out plans, as with many acquisitions, especially those of larger size, it will also take time to integrate and achieve our expected synergies and the result in earnings from these acquisitions and other new locations, especially given the continuing impact of the pandemic.We continue to have financial flexibility with our conservative balance sheet and more than $600 million in dry powder to take advantage of opportunities as they arise. Notwithstanding our strong growth and positioning for the future, the previously mentioned factors are contributing to adjusted EBITDA margin pressure with very modest sequential quarterly same-store sales gains in the third quarter to date.We are excited and optimistic about our positioning for the future. Our pipeline, including acquisitions, as well as greenfield and brownfield locations, is healthy, and we are confident in our ability to achieve our 5-year plan. As market demand returns to normal levels in all areas of our business and we build our staffing capacity, we are well-positioned for the future with our leadership position, our growth pipeline, and many business initiatives, including our Wow Operating Way, scalable technician development program, scanning and calibration, OE certifications and intake center strategy to name a few.As always, operational excellence remains central to our business model. And with ongoing investment in our Wow Operating Wave, we continue to work to drive excellence in repair quality, customer satisfaction, and repair cycle times to ensure the continued support of our insurance partners and vehicle owners.With that, I would now like to open the call to questions. Operator?
[Operator Instructions] And your first question comes from David Newman from Desjardins.
Just on the same-store sales growth, how much -- do you have an estimate of what you think was left off the table because of capacity or labor constraints in the second quarter? Or was it just deferred into work in progress? And I'm just trying to reconcile the ramp or acceleration that you're talking about in demand versus the tempered sequential outlook. So just trying to get an understanding of what was left off table, how much was in work in progress, and the kind of mix outlook.
Yes. We haven't quantified that, David. We -- I will say that volumes have not returned to pre-pandemic levels, but the labor shortage is making it difficult for us to process the available work. So our work in process has increased. I think there's some risk that as work in process continues at high levels, that our capture rates could diminish a bit. So it could impact some of that available revenue. But as I communicated, we're working hard to build our staff and to take advantage of the work that is available.
And Tim, just in terms of the -- just trying to reconcile this acceleration that you're above capacity in all your U.S. markets versus sort of the tempered sequential outlook. How do we reconcile that?
I think it's really the labor constraint is really what's tempering our same-store sales growth right now. The -- not so much the market volumes, although market volumes have not yet returned to normal.
Okay. And then if you look at sort of supply chain, labor challenges, the benefits from Biden are poised to end September, maybe labor will become less of an issue. But what sort of margin pressure or maybe just a quantum of the upside in labor inflation as you head into the second half here?
I would say it's clearly a very tight labor market in the United States right now. And we will remain competitive to attract our fair share of the labor. Historically, as we've had to do that, over a period of time, we've been able to recover any labor rate increases that we've had to provide through pricing with clients, although I wouldn't expect that in lockstep. But we've had pretty stable margins over a very long period of time.
Okay. And last one for me, guys. It's just -- if you look at -- coming out of the pandemic here, any change that you're seeing at all in insurer behavior to concentrate the DRPs of larger players, especially those that have OE certifications, technology, people, et cetera?In other words, you guys enjoy a natural advantage by being a larger player and your greater ability to process work because if you're having difficulties, I have to think a lot of the mom-and-pops out there are having even more difficulty in terms of securing labor. So any change that you're seeing in insurer behavior at all?
Well, I think insurers still have a desire to concentrate their volume with fewer players. It creates benefits for them. And I believe that the investments we're making both in training and in OE certifications will make us more attractive to our partners over time. I think the OE certifications -- we've grown our network of certified locations extensively over the past few years. I don't think that's an immediate payback. I think it's a longer-term benefit that we can provide.And as we do with other things like our aluminum repair capabilities, we can hub-and-spoke or OE certifications so that where there's a need or a desire for an OE certification, we can move vehicles to an adjacent repair center that has the appropriate certifications.
Your next question comes from Jonathan Lamers from BMO Capital Markets.
Pat, and Tim, could you update us on the labor rate situation and whether insurers are prepared to absorb the wage pressures the industry is seeing?
I guess I don't have anything specific to comment on that other than, Jonathan, over several years, we've experienced labor rate pressure before, and we've been able to recover that over time through market pricing. So I'm -- we intend to be competitive to attract the labor that we need. And I would expect that over time, we'll recover that incremental cost.
And Tim, I'm curious about opportunities for automation and collision repair, such as automated inspection systems with cameras or software. Are there any opportunities that you see there longer-term, maybe for identifying minor dents or anything else?
There is some equipment out there that is not common, although it has grown in its presence. It's primarily used for things like PDR or hail damage to assess quantity of dents on panels. I think there is -- there will be more automation coming into our industry. I think the early part of it may come on improving the efficiency of the repair plan and in estimating process, AI around estimating and looking at maybe some of the technical requirements to properly complete a repair.That could also evolve in scanning and diagnostics to help with the interpretation and the repair procedures necessary to repair or correct diagnostic or calibration issues with vehicles. I haven't seen anything yet that's really going to greatly improve the efficiency of labor, other than things like the investments we make in our Wow Operating Way, which are really more process-focused in nature.
And one follow-up on the recent acquisitions. It's great that things are tracking on target. Would you frame the multiple paid for Collision Works as setting a new benchmark versus assured and the other history?
No. It is within the range, but it's towards the higher end of that range.
Your next question comes from Bret Jordan from Jefferies.
Could you give us just a little bit more clarity, I guess, when you talked about variability in DRP pricing a couple of times and maybe the cadence of that variability, is it just your costs are going up at a faster rate than they're passing through pricing and it will catch up? Or is there anything else going on?
No. When we refer to the variability, it has to do more with performance-based agreements and pricing adjustments that can happen favorably or unfavorably on a quarter-to-quarter basis as it relates to our agreements. And it's not -- these are not large, large adjustments typically, but they do have an impact.
Okay. And then I think you mentioned a couple of times that we're still below pre-COVID volumes but picking up. Could you give us a feeling for where we are on a comparable basis to the second quarter of '19 from a comp standpoint?
What I've heard through CCC, and I've actually read it more in the analyst reports directly from CCC was somewhere the volumes are down about 12% to 15% from '19 levels.
Okay. So I guess, theoretically, you would have gained share in that period. So could you talk -- or would you be in the same ballpark? Or would you be doing somewhat better than the market?
We don't disclose specifics on that. And it's pretty difficult to measure because we've grown an awful lot since 2019 as well.
Bret, if you look at our same-store sales decline. And again, this is approx, this is not perfect. In Q2, they were down by 33%, and we are reporting, they're up by 34.5%. So if you compound, it essentially tells we are down around 10%. Obviously, you have Canada, you have other things, but that's approx, and then you can compare that to the CCC benchmark. So it might give you some hints.
Your next question comes from Maggie MacDougall from Stifel.
You made some comments around some initiatives you have to essentially increase operational efficiency or find some cost savings in the business. And I'm wondering if you could provide us with a bit more detail in terms of the opportunities that you see and whether there's costs associated with that?
Whether there's investment costs associated with that, Maggie?
Yes, exactly.
Yes. I think we're always working on refining our Wow Operating Way processes. We've talked a lot over the past year about what we do -- what we're doing at a corporate level. But we continue to look at our operating practices in the field as well that would be designed to help us move cars through the process faster and more efficiently.So we continue to make investments there. Those are really largely built into our cost structure. So they're not necessarily incremental. I would say if we had an opportunity that we thought would require a significant expense or a significant investment, we would probably speak to that separately.
Your next question comes from Daryl Young from TD Securities.
First question is just around the contribution from recent acquisitions. I noticed that it looked significantly lower than maybe I would have expected. Is that a reflection of just more greenfield and brownfield locations opening during the period?
I think that's part of it, although that's not the lion's share. It's really -- we're buying businesses that are still impacted by the pandemic, and it takes time to get our synergies, our relationships in place in the current environment. So it's really more related to that than it is to greenfield, brownfield.
Okay. And then just a longer-term question around some of the U.S. electric vehicle targets that were -- that have been proposed. Can you just remind us what some of the considerations are in repairing electric vehicles? And I know there's obviously less engine work in your business, but just any consideration there we should keep in mind for any future investments?
Yes. I think the vehicles, all newer vehicles are going to come with more technology, and that's true of electric vehicles as probably as well as the general population, although electric may even have more than average. So I think you'll see more ADAS type systems on these vehicles as it becomes a greater share of the market. There are fewer mechanical parts. That's not necessarily bad from a collision repair perspective. The panels that are typically repaired by us would continue to be damaged and be an opportunity. There are safety-related matters around electric vehicles, there are high-voltage vehicles, and in some cases, may require some specialized equipment. And in many cases, do require specialized training.So we would intend to use our hub-and-spoke network to create those capabilities, whether it's equipment or training or certifications in certain locations and then route vehicles to those locations as needed. That will change as it becomes a greater share of the market. But as it begins to evolve, I think we'll be well prepared to service that segment of the business.
Your next question comes from Steve Hansen from Raymond James.
I just wanted to circle back on the John Harris, Collision Works deals and the effort in multiples that you've paid. Can you just give us some added context there? Do you think that's just reflective purely of the quality of those 2 franchises? Or is it more indicative of more competitive M&A environment out there?
Well, certainly, it's a competitive environment for M&A right now. But I think it's probably more related to the quality and what we believe we can do with those platforms once they were under our ownership. While they were both decent-sized businesses, we assessed it carefully and identified lots of fill in market opportunities in and around these platforms that we can use our single shop in greenfield brownfield strategy to grow those networks out. They both also came with high-quality leadership that was accustomed to and experienced in a growing business.So we think it added to our capabilities, and they were both really good, high-quality platforms in areas that we intended to grow in as well with lots of room for further growth. So that was really how we came to the conclusion that it was a good investment for us.
Steve, we would characterize these as strategic growth platforms and the multiple way clearly reflects that.
Okay. That's helpful. And maybe let me ask it in another way. Do you see any multiple inflation in the smaller, single, and maybe double type shop acquisitions out there at the moment?
The market -- right now, as we discussed before, there is ample supply. So we are able to acquire those things at very attractive valuations. And we consistently told we underwrite to 25% pretax ROIC basis and we're able to get those valuations.
Okay. That's helpful. And just one last one, if I may, is on the emerging technician and people shortage issue, I guess, reemerging, it feels like that was a big issue prior to the pandemic as well. But how do you feel like your position is relative to the industry? I'm just thinking back to your strategic decision last quarter or even into late December last year to restaff or repopulate many of your skeleton operations. It's striking that it might have given you an advantage relative to some of the other parties that might have been more flat-footed on restaffing. Do you have a sense for how you're positioned relative to others out there and whether that could benefit you in the back half?
There's no real industry data on it. My sense is that most in the industry right now are feeling the same pressure that we are. So it's a very tight labor market, and the business has picked up over the past few months. So I think it's probably -- we're not in an unusual position. I do think we've continued to make investments over the past few quarters to grow our technician development program. And will that -- and we've talked a lot about this in the past, that's not an immediate fix. We are -- we've been doing that for a while now, and we do see graduates coming out of that program with greater frequency now, and we've expanded the program as well. So I think we're -- this is not an easy thing to address, but it's our intent to invest in people to grow their skills and capabilities to solve the problem longer-term and be competitive in the marketplace in the near term.
Our next question comes from Nauman Satti from Laurentian Bank.
So my first question is, I remember in the last call, I think you mentioned that not all shops in Canada were open. So I'm just wondering if that has changed? Or are there still shops that are closed on the Canada front?
We still have some locations in Canada that are intake only at this time.
Okay. But in the near term, do you expect them opening up soon? Or is it going to stay that way?
No, I expect them to open up. I don't have a time frame, and we're going to base it on the recovery of the business. I'm hopeful that with the reduced restrictions in Canada that we'll start to see in pickup in volume there relatively soon. I think as most people know, Canada has done an outstanding job with vaccinations and pretty recently has begun to reopen the economy in a way that is very positive. So we'll just have to wait for that to unfold into improved business conditions.
Fair enough. And just on the cost side. I know you've mentioned about technician pressures and wage pressures. But I'm just wondering that last year, you guys had taken out some cost. Were there any permanent cost reductions that can sort of offset these cost pressures? Or those costs are also coming back?
We've really brought a lot of the cost back in Q4 and in Q1 so that we were prepared for the increase in business where we have fallen short of where I would like to be is what the specific level shop staffing. So we did identify some permanent savings, but our focus has been on preparing ourselves for the recovery and the growth of our business. And I think that's the right place for us to be. We're seeing positive signs that we need the people to take advantage of.
Okay. And maybe just a last one from my end. This is more like a big picture, long-term question, I would say. You've mentioned the hub-and-scope framework (sic) [ hub-and-spoke framework ] where you could take in a car and then move to another location. I'm just wondering, at what stage are you in that? Because you have close to 700 locations. Is that something which is widely available within your network? Or there are few states in which you're doing it, and eventually, you're going to roll it out to other states?
I'd say it's fairly widely available, but it is evolving. If you take aluminum, which -- we've had aluminum capabilities for 6 or 7 years now. We would have the hub-and-spoke capability for structural aluminum repair broadly throughout our network. We would also -- we have plenty of OE certifications. Most repairs today don't require an OE certification. It's more premium-based vehicles that may be routed to a specific shop. But I think that could evolve, and we're building our network to be well prepared for that.One of the other benefits of the hub-and-spoke network is that when we have a location that has enough work or maybe even too much, we can pretty easily move work to adjacent locations to take advantage of available capacity. So it goes beyond just when it's required to properly repair a vehicle, and it allows us to better take advantage of our capacity, which really allows us to deliver better results for our insurance clients by reducing [indiscernible] and increasing customer satisfaction.
Your next question comes from Chris Murray from ATB Financial.
Turning back to look at some of the larger acquisitions. And Pat, I think you mentioned earlier that part of this is looking at it on a return on capital basis. When you're looking at doing these larger acquisitions -- and I appreciate you're talking about paying for higher multiples, and maybe that's just the brain damage of getting a larger transaction done as opposed to several small ones. But in order to meet your hurdle rate, are you looking at this from a perspective of just the baseline transaction? Are you looking at it more in the terms of everything that will go with it over the next couple of years in terms of, as you said, expanding the network core synergies or anything like that?
Yes, we do look at the future, Chris. Like when we talk about the single shops, that is, I think -- there the growth is not that critical. But when we talk about these MSOs, we look at what that brings to the table. So these are the strategic acquisitions. We look at the quality of the earnings, quality of the management, the growth opportunities it brings, broadening the relationships, stuff like that. So we do look at the future with these things.
So I mean, is it fair to think that the effective multiple if you will go back and look at the cut it on an EBITDA basis or whatever, out further, the multiple actually will probably end up being kind of more in the range than it would be just at first blush? Or when you're talking about the higher level...
Absolutely.
Okay. So the higher level most of you were talking about is just on the base transaction, it's not on the...
That's correct.
Okay. No, I just wanted to clarify. And then just thinking about average revenue per store and growth, I think somebody alluded to the fact that maybe the revenue growth wasn't as big as they thought, maybe around the store growth. I guess 2 pieces of this question. One, how do we think about now that you started to add additional intake centers? Should we be starting to make sure that we're not -- we're separating those out in terms of revenue generation? Or how should we think about intake centers impacting revenue generation? Or is it just more still a utilization play? And then the other piece of this question is, since you've started really adding intake centers, I guess, maybe in December, when we really started seeing it step up, how are you seeing the performance so far maybe over the past 6 to 8 months?
Chris, I would clarify that the intake center strategy is intended to help us boost same-store sales, and it ties into our OE certifications. The intake centers are typically in an OE dealer location. So it gives us another point of contact with customers and more of a revenue channel to that brand. In the short term, the labor capacity constraints make that a little bit more challenging. But as we begin to solve the labor problem, I think it can be one of the strategies that we have in place to help us generate incremental same-store sales.
Okay. And so -- but I guess the way to think about it is when we think about store or revenue growth on a store basis don't be including the intake centers is the way to think about it?
Yes, we don't count the revenue in the intake center. We count it in the production facility.
Our next question comes from Zachary Evershed from National Bank Financial.
Most of my questions have been answered. And maybe one last one, looking at the M&A pipeline, we've seen a nice little pickup in pace here over Q2 and now Q3. Do you think this pace is sustainable? And do you think there could even be a little uptick from the current pace?
No, we don't extrapolate the current pace. So we provide that guidance on a long-term basis, and we are sticking to that guidance of doubling our revenues using 2019 as the base and would like to double by 2025. And at any point in time, you may see ebbs and flows because the acquisition comes in lumps. We don't want people to get too excited when we do more as well as get dejected when there is a low in the activity.
There are no further questions at this time. I'll turn it back to Mr. O'Day for closing remarks.
Great. Thank you, operator, and thank you all for once again joining our call today, and we look forward to reporting our third quarter results in November. Thanks, and have a great day.
Ladies and gentlemen, this concludes your conference call for today. We thank you for participating and ask that you please disconnect your lines.