Doman Building Materials Group Ltd

TSX:DBM

Earnings Call Transcript 2018-Q2

[Operator]

Good day, and welcome to the CanWel Building Materials Group Ltd. Second Quarter 2018 Financial Results Conference Call. Today's conference is being recorded.At this time, I would like to turn the conference over to Ali Mahdavi, Investor Relations for CanWel Building Materials. Please go ahead.

[Ali Mahdavi, Head of Investor Relations]

Thank you, operator. Good afternoon, everyone. And thanks for joining us for CanWel Building Materials' Second Quarter 2018 Financial Results Conference Call. Joining me this afternoon are CanWel Chairman and Chief Executive Officer Amar Doman and Chief Financial Officer James Code.If you have not seen the news release which was issued earlier today, is available on the company's website at canwel.com as well as on SEDAR, along with our MD&A and audited financial statements. I would also like to remind you that a replay of this call will be accessible until midnight on August 15.Following the management team's remarks, we will conduct a Q&A session. Instructions will be provided at that time for you to join the queue for questions.Before we begin, we are required to provide the following statements regarding forward-looking information, which is made on behalf of CanWel Building Materials Group Ltd. and all of its representatives on this call. Remarks and answers to your questions today may contain forward-looking information about future events or the company's future performance. This information is subject to risks and uncertainties that may cause actual events or results to differ materially. Any information regarding forward-looking statements is made as of the date of this call, and the company does not undertake to update any forward-looking statements.Please read the forward-looking statements and risk factors in the management's discussion and analysis as these outline the material factors which could cause or would cause actual results to differ. The company will not provide guidance regarding future earnings during today's call, and management does not anticipate providing guidance in future quarterly or interim communications with investors.I'd like to now turn the call over to Amar.

[Amardeip Singh Doman, Chairman & CEO]

Thanks, Ali, and good afternoon, everybody. Thank you for joining us on today's call. Let me begin by highlighting some of our key financial metrics, followed by some color on our operations during the second quarter and what we are seeing so far, which gives us continued confidence across our business segments. Then I will hand the call over to Jay Code, who can drill further into the numbers.Starting with sales, we continued to show growth at the topline, reaching new record sales well surpassing the CAD 1 billion mark on a trailing 12-month basis. We accomplished this while remaining relentlessly focused on margins, overall profitability, further diversification of the business, cost management, which has resulted in a company that is stronger than ever and one with continued tremendous prospects and promise for growth ahead of them.As a result of these efforts, I'm pleased to report, during the second quarter, we again achieved new record results across our key financial metrics, with revenues increasing 19.4% to CAD 382 million, gross margin dollars amounting to CAD 57.9 million or 15.1% of revenues, EBITDA increasing 45.5% to CAD 27.5 million, net earnings increasing 50% to CAD 14.7 million.During the quarter, aside from our growth and integration efforts, we maintained focus on operational efficiencies and cost controls, as we always do, while our core Distribution business and Forestry divisions continued to perform with strength and in line with our expectations. We remain pleased with the overall performance of our business and maintain a very positive view, as we continue to build the company on solid footing for today and for the future.Overall, we continue to be very pleased with the net impact of our acquisitions to date, which have provided us with these improved returns, a vaster footprint and deeper brand awareness in many parts of Canada; and growing visibility in the U.S., where our operations are showing strong performance. We will continue to monitor the North American landscape for opportunistic and strategic growth opportunities to complement our organic growth profile. As we have done so in the past, we will remain extremely disciplined on pricing and evaluating any and all growth opportunities that may become available to us, with sustainable value creation being at the center of our objectives.2018 has proven to be a strong year so far, and we are excited about the prospects for the rest of the year. Our Building Materials, Distribution and Forestry business segments continue showing strength and promise.Before I hand the call over to Jay, I would like to take a minute to provide clarity on the subject of tariffs vis-a-vis the current U.S. administration. To be abundantly clear, CanWel does not sell softwood lumber to the U.S., which implies that we are not subject to tariffs related to this category. And as it stands, no other tariffs are impacting our business. As a reminder, CanWel sells logs, posts, polls, which are not subject to tariffs. Having said that, we will continue to carefully management the business to minimize any potential impacts any newly implemented duties might have on our business.With that, I would like to ask Jay Code, our CFO, to take over and provide a view of the company's second quarter financial results in greater detail. And then we'll be happy to open the call for questions.

[James S. Code, Chief Financial Officer]

Thank you, Amar. Just a reminder that CanWel's second quarter results were released earlier today. Our results are presented in accordance with international financial reporting standards and presented in Canadian dollars unless otherwise noted. And please note, our operations are at times impacted by the seasonal nature of our industry, and, accordingly, our operating results for interim periods are not necessarily indicative of the results that may be expected for a full fiscal year.Sales for the 3-month period ended June 30, 2018 were CAD 382.1 million versus CAD 320 million in the comparative period in 2017, representing an increase of CAD 62.1 million or 19.4%. Sales for the Distribution segment increased by CAD 61.2 million or 19.8%, largely due to the inclusion of the results from the Honsador Acquisition, an upward trend in construction material pricing, and the company's continuing focus on its product mix strategies and target customer base.Sales for the Forestry segment increased by CAD 1 million or 8.7%. The increase in sales relative to the comparative quarter of 2017 is linked to an increase in the volume of logs sold due to favorable weather conditions in the period and the deployment of harvesting crews to areas not as affected by wet ground conditions experienced in the comparative period.Gross margin dollars increased to CAD 57.9 million in the 3-month period versus CAD 39.7 million in the comparative quarter of 2017, an increase of CAD 18.2 million or 45.8%. Gross margin percentage was 15.1% in the quarter, an increase from the 12.4% achieved in the same quarter of 2017. This increase in margin dollars and margin percentage is mainly due to positive contributions from the Honsador Acquisition as well as the aforementioned upward trend in construction material pricing.Expenses for the 3-month period ended June 30, 2018 were CAD 34.9 million as compared to CAD 23 million in the comparative quarter in 2017, an increase of CAD 11.9 million or 51.7% due to the factors discussed below. As a percentage of sales, expenses were 9.1% in the quarter compared to 7.2% during the comparative quarter in 2017.Distribution, selling and administrative expenses increased by CAD 11.1 million or 57.5% to CAD 30.4 million in the second quarter of 2018, from CAD 19.3 million in the same period of 2017. The increase is primarily due to additional expenses relating to the Honsador Acquisition's operations. And as a percentage of sales, these expenses were 8% in the quarter compared to 6% in the comparative period in 2017. Amortization of intangible assets were CAD 1.7 million versus CAD 0.8 million in the comparative period, with the increase reflecting amortization related to the acquisition of Honsador.In the comparative 3-month period, restructuring charges were related to the closure of noncore Forestry segment operations. There were no similar charges in the 3-month period ended June 30, 2018.Finance costs in the second quarter of 2018 were CAD 3 million compared to CAD 2.1 million in the same period in 2017, an increase of CAD 0.9 million or 44.7%. Finance costs were higher than the same quarter in 2017, mainly due to higher average borrowings on the company's revolving loan facility, resulting from working capital requirements of Honsador, with the balance driven by the aforementioned higher construction material prices versus the prior year.Acquisition costs in the comparative period related to due diligence and identification of potential acquisitions which did not come to fruition. There were no comparable costs in the current 3-month period.As a result of the aforementioned, EBITDA for the 3-month period ended June 30, 2018 was CAD 27.5 million versus CAD 18.9 million in the comparative quarter of 2017, an increase of CAD 8.6 million or 45.5%. EBITDA for the second quarter of 2017 was impacted by acquisition costs of CAD 0.7 million and restructuring costs of CAD 0.8 million. Adjusted EBITDA before these one-time items was CAD 27.5 million compared to CAD 20.5 million in the same quarter of 2017, an increase of CAD 7 million or 34.1% compared to the same quarter in 2017. The increase in adjusted EBITDA relates largely to the aforementioned improvements in the quarter, most notably from the results of the Honsador Acquisition and from construction material pricing increases.Net earnings for the quarter ended June 30, 2018 increased 50% to a record CAD 14.7 million compared to CAD 9.8 million in the same quarter of 2017 as a result of the previously discussed operating improvements.Dividends paid to shareholders amounted to CAD 21.7 million versus CAD 17.1 million in the comparative period of 2017. The increase in dividends paid reflects the greater number of shares outstanding in the current period resulting from the 2017 private placement and 2017 public offerings. Dividends declared and paid on a per-share basis was consistent, as at August 1, 2018, there were 77,697,461 common shares issued and outstanding.With regards to our year-to-date cash flow, operating activities generated CAD 29.7 million in cash before noncash working capital changes, versus CAD 16.4 million in the comparative period of 2017. This increase in cash is primarily a result of stronger earnings, driven by the inclusion of the Honsador operations and the positive impact of rising construction material pricing in the period.Our capital expenditures continued to be planned and managed prudently and deliberately to ensure capital is effectively deployed to provide long-term sustainable value to the business.This concludes our formal commentary, and we would now be happy to respond to any questions that you may have. Thank you. Operator?

[Operator]

[Operator Instructions] Our first question comes from Yuri Lynk with Canaccord Genuity.

[Yuri Lynk]

I think you've mentioned a few times higher construction material prices, and their impact on the results certainly doesn't hurt. But they're down, lumber prices, at least, are down, about 70% from the mid-May peak. So can you just walk me through the potential margin impact and if your confinement inventory system kind of fully insulates you against any kind of write-downs, given how volatile the lumber price has been?

[Amardeip Singh Doman, Chairman & CEO]

Yes, lumber and panel prices have certainly come off. We deal in more than just 2-by-4 benchmarks. Of course, we deal with all species, all grades, that don't all follow 2-by-4 up or down. So that certainly mitigates ups and downs as far as extremes in the marketplace. But having said that, there's no write-downs in the company whatsoever. We manage our commodity risk on the wood products side very prudently, as we always have. We've been through ups and downs. Obviously, we saw some pretty serious peaks here. Material has come off on 2-by-4 board on plywood and OSB, but they're still much higher than they were last year at this time. So we're enjoying still inflationary times in lumber and managing the downside well. So we're not hitting any panic buttons here on margin drops or write-downs or anything of the sort.

[Yuri Lynk]

Maybe one for James -- can we talk about your full year expectation for where noncash working capital should land? Should it be a source or a use of cash for this year?

[James S. Code, Chief Financial Officer]

Right. Well, it should -- it kind of follows on your first quarter, Yuri, because it's going to depend on where the prices for commodities land. Volume-wise, we expect inventory to be in the same neighborhood as where we started the year. But pricewise is another question. So depends where we land versus the pricing at the beginning of the year.

[Amardeip Singh Doman, Chairman & CEO]

Yes, last year, we saw the market come off around summertime, and then it ran from fall and then stopped. So kind of anyone's guess, so it probably depends on [indiscernible] of the market, Yuri, as far as inflation coming back in or staying away, utilize more or less cash on the revolver.

[Yuri Lynk]

I mean, if we just assume the prices are going to stay where they're at...

[James S. Code, Chief Financial Officer]

Yes. If they stay where they were at, at the beginning of the year, you would expect similar working capital levels at the end of '18.

[Yuri Lynk]

And then, last one for me, just continuing on the cash flow theme. Think CapEx was as high as I've ever seen it. So any color on the CAD 8 million and what that full year CapEx number might look like?

[Amardeip Singh Doman, Chairman & CEO]

Yes, certainly. So we don't want to break out exactly what's in there due to confidentiality reasons. But part of that is the Oregon Cascade acquisition, so there's some monies in there that have gone towards that unfinished treating plant we acquired. But I can let you know that our operating CapEx or routine CapEx is strictly at budget or under currently.

[Yuri Lynk]

Is that a one-quarter thing, Amar? I'm just trying to -- I don't know what to put in my model for CapEx for this year.

[Amardeip Singh Doman, Chairman & CEO]

Yes, I can't tell you what to back out. But if you look back at our traditional CapEx of, call it, CAD 5 million to CAD 6 million a year, that's what we'll land at the end of the year. That's probably what I can tell you. It's pretty consistent.

[Yuri Lynk]

You're at CAD 10 million now, year-to-date?

[Amardeip Singh Doman, Chairman & CEO]

Right, including some acquisition costs. Again, we just can't disclose exactly what that is, but we think about that in 2 pieces.

[Operator]

We'll take our next question from Anoop Prihar with GMP Securities.

[Anoop Prihar, MD & Special Situations Analyst]

Just talking about the outlook section in your MD&A, where you reference the housing starts in both Canada and the U.S., it looks as though, based on those numbers, we could be rolling over here. And I'm just wondering, are you seeing any signs of that in your business? And where do you think we are relative to that cycle?

[Amardeip Singh Doman, Chairman & CEO]

Yes, I tend to not listen to too much of the noise of the month. We tend to look at yearly trends on housing starts. And what we've seen is sort of a tale of 2 stories. Canada is a provincial styled story. I think there are certain provinces that are feeling a bit unloved and slowing down, just due to being perhaps overbuilt. But certainly, when you extrapolate out the single-families where we look at, and really where we participate, Anoop, we think Canada is balanced out pretty well for us, and we're well situated across the country. And of course, we're very heavy in pressure-treated lumber, which doesn't really move around as much with new home starts. And in the United States, we believe that housing start numbers have come down a bit, just because there are shortages of permitting, there are shortages of people. You're at full employment. It's getting more and more difficult to complete a house, and we're seeing starts back off. But the demand, even at the box store level, we're about -- 45% of our business on U.S. mainland is extremely strong. And that tells us a lot, it's a good barometer. And then, down on the Hawaiian Islands, it's extremely busy on all the islands and continuing to get busier. So we're seeing that things are pretty decent. I don't particularly myself see a rollover happening. But month to month, they seem to fluctuate. But again, we like the trend we see.

[Anoop Prihar, MD & Special Situations Analyst]

And just secondly, you do talk about the Hawaiian operations not being impacted by the volcanoes. I'm just wondering, are you seeing any material impact in business levels there on the upside as a consequence of the rebuilding initiatives that must be getting underway?

[Amardeip Singh Doman, Chairman & CEO]

Yes, they're trying to fast-track in Hawaii some of the permitting for temporary housing, which we'll certainly play in. It's not moving as fast as one would want. But a lot of the displaced Hawaiians are living with family or renting motels and just doing what they can and try to work things out with their insurance policies. So it's a bit of a mess down there. But certainly our building, which -- we're in Hilo and [ Kona ], so quite far away from the volcanoes -- those projects are all going forward. It slowed down a bit earlier in the year, when the first kind of shockwaves and news came out of this disaster. But it's really backed off, and it's kind of a way of life down there. And our builders are going at the same speeds. And we're above budget on the big island. So we're not feeling it as much you might see watching the news.

[Operator]

Our next question comes from Steve Hansen with Raymond James.

[Steven P. Hansen, Senior Vice President]

Amar, it's been very dry here in Western Canada, and right down into Northern California as well. Do you just want to talk about the impact of the dryness on your forestry operations, if there's been any at all? Are you getting days where you can't get into the bush at all because of the fire hazard, and/or any direct fire impacts?

[Amardeip Singh Doman, Chairman & CEO]

So we started to creep into some heat level 4s, which are close to shut down last week or the week before. We never got there. And we got some rain, and it's dropped to a 2 in our area. So we're back to normal shifts. So we -- not that we were cutting back shifts, we were just working hours that were, obviously, not in the direct heat, and we had to be on fire watch. We've got one small little fire in some seedlings, it's been put out. Otherwise, no impact, and we're level 2. So we're working away pretty heavy out there in the forest right now, and the outlook looks for cooler weather in the next 10 days, where we are in the Kootenays. So polar opposite of last year, which we're very thankful for.

[Steven P. Hansen, Senior Vice President]

And Amar, are you able to provide any additional commentary around the acquisition you touched on, just in terms of the strategic nature of it? I know that you can't say much, but can you give us any sort of sense as to how that fits into the broader strategy in that region, or if there's other things to do going forward in that same area?

[Amardeip Singh Doman, Chairman & CEO]

Yes, certainly, we're completing a plant that is about, call it, 80% built. And we financially took on that role to complete it, as there were some difficulties with the owner's financing, so we took that over. We expect to be in production, we hope, in November. So by the time we report our next quarter 3, our earnings, we should be able to hopefully announce that we're producing pressure-treated lumber for the Oregon market and Southern Washington state. And that's been a geographic target of ours for a while, and this helps [ complete ] us go down the I-5 corridor and also allow us to do some railing into California. So it'll be a 2019 story. And once we're up and running, we'll be able to share with you our targets a little bit more as we start to see what we can produce and obviously what type of owner file we can build heading into next year.

[Operator]

We'll take our next question from Leon Aghazarian with National Bank Financial.

[Leon Aghazarian, Special Situation Analyst]

Just on the lumber pricing side, obviously we're seeing a significant increase on the lumber prices, about 60% to over a year. Just looking towards -- on the forestry side of things, can you give us an indication as to, is it a pricing increase, is it more of a volume increase? What are you kind of seeing on the forestry side, is kind of my angle here.

[Amardeip Singh Doman, Chairman & CEO]

Certainly. So we've seen log prices increase -- depends on the species, et cetera, but call it 15%, maybe even a little bit higher, depending on the exact log mix. And what we've elected to do is sell ahead all of our productions here. So we're off the market as far as new orders go. And that bodes pretty well. We think we sold it [ at ] fair pricing. There's a shortage still that we've discussed with you and others in that region that we're in, in the Kootenays. So certainly, we're happy where the pricing is. And we're happy at our harvest levels, and we're really starting to see it turn on kind of the end of June-July. And again, if the heat stays out, we should have a big August and fall. So pricing for us looks very favorable. And again, we've sold it right into probably breakup of next year, which would be early spring.

[Leon Aghazarian, Special Situation Analyst]

And if I could just take a look at some of the kind of macro numbers in terms of Canadian housing starts and U.S. housing starts, obviously, that's a pretty good indicator of the business that's to come. What are you seeing there? I mean, we've seen some of the Q2 numbers in terms of housing in Canada and the U.S. Are you still seeing some positive indicators from your end, or are you starting to see some other signs as well?

[Amardeip Singh Doman, Chairman & CEO]

I think we're focusing on the West in the U.S., so we're not as concerned about what's happening in, say, Florida. But we'll look at the West and watch that close. We're seeing shortages of labor, we're still feeling it. It's gotten a little bit better. But certainly, there's a strain going on for skilled trades, et cetera. And I think that's slowing things down a little bit. But again, our home center business is strong, our lumberyard dealer business is strong, us directly in Hawaii is strong. So we're not really seeing -- I don't know if the media's trying to talk us into a housing slowdown, the numbers have come off a little bit. But again, we're not looking too [ hard ] month to month, we're really looking at -- if we had 6 months of down, Leon, I might have a different answer for you. But I think it's very lumpy, just due to some of the economic factors out there. Rates are still very healthy, mortgages are still very healthy. If you want a job, you're working. And I think those are the things that we focus on that would bode well for a stable LG market.

[Leon Aghazarian, Special Situation Analyst]

And the last one for me would be -- I know there was a lot of questions on cash flow and what you're going to see. Obviously, Q3 is also a very strong quarter for you guys. Just wondering what capital allocation strategy is going to be from now till the end of the year. Is it going to be more towards [ vet ] repayment, building up inventory, potential maybe tuck-in M&A? What's kind of the profile that we're looking at, now till the end of the year, please?

[Amardeip Singh Doman, Chairman & CEO]

Sure. Yes, we're still trying to maximize efficiencies at our acquisitions that we've been completing. So we're going to continue to work on that. Any excess capital will go down to repay our credit facilities, certainly. And we are still at our base of, we hope, 1 to 2 tuck-in acquisitions a year that we're working on. So those particular acquisitions are smaller in size but steadier in earnings, we like those. So we'll continue to work on that. But really, it's run the business, get that payout ratio down lower and lower. We're starting to get into those target zones in the 70s that we talked about. So we want to continue to deliver what we promised run the business well, and then take advantage of strategic opportunities at discount pricing. And that's what we're working on now as far as the M&A side.

[Operator]

We'll take our next question from Charan Sanghera with RBC Capital Markets.

[Charan Sanghera, Senior Associate]

Just maybe turning over to the U.S. operations -- California operations seem to have leveled off year-over-year in growth after, albeit, a couple of really good quarters. Is there anything we should read into there, or is it just maybe one-off, sort of leveling off of growth there?

[Amardeip Singh Doman, Chairman & CEO]

No. In fact, volumes there are a bit higher. Doug fir, which is our main product line, did come off. We've had a couple of great years of Doug fir being quite inflated, and there being a log shortage; that seems to have corrected itself. So overall, the craziness of Doug fir shortages has settled down in California. And then in redwood and cedar, we've seen production start to catch up as well. So sort of the panic and shortages have gone away, we're back into kind of normal growth. But certainly, we're extremely busy in all the 5 states we service on the mainland. And it's just back into more of a normal cycle, more a bit of a hyper-cycle that we saw in, say, the last 18 months or so.

[Charan Sanghera, Senior Associate]

And just quickly turning to Hawaii -- year-over-year looks like comp-store revenues were down 9% to 10%. Is there any impact from the volcanoes, or is it just kind of a timing of bigger project, as you've alluded to in the past?

[Amardeip Singh Doman, Chairman & CEO]

Yes, it's exactly timing. So Hawaii is very lumpy. So we had finished off some projects with a large homebuilder. And we're now looking at the second phase of that for this part of the year. I can report the electrical division is exceeding expectations, as are the outer islands. And we're just waiting on some larger projects to come through in Oahu, which will again push us through. And we think the second half of the year, from what our visibility is now, is going to be stronger than the first half. We can see that already in July and trending into August. Stay tuned. And things are fine down there.

[Charan Sanghera, Senior Associate]

And just a question on M&A -- a competitor of yours did a [ size one ] position on the U.S. West Coast, kind of fit some of the subjective requirements that you guys were looking at. And was wondering if you can comment on that. It was something that you guys looked at as well?

[Amardeip Singh Doman, Chairman & CEO]

Yes, we won't comment on what competitors are up to. And we wish them well with their strategy. And we're on our own.

[Operator]

And our next question comes from Hamir Patel with CIBC Capital Markets.

[Hamir Patel]

Amar, I wanted to get your thoughts just on the weakness we're seeing in lumber and panel markets. What's your sense as to where inventories are, maybe both at the mill and dealer level?

[Amardeip Singh Doman, Chairman & CEO]

Yes, everybody's on a bit of a hand-to-mouth. As you know, we turn our inventory ever 3 weeks. So we've done a great job of managing the downside as well as we don't get crazy rich on the upside. But that's our model. So we're just seeing dealers, if they need 2 trucks, they'll buy one. Everyone's trying to call this market to 0 all of a sudden, which tells me there's probably a snapback coming now, because it's leveling. I would say on the lumber side, panels look like they're going to be a little weaker yet, just because there's a lot of production out there. And we're starting to turn the calendar August-September. So traditionally, dealers kind of Midwest and -East are depleting inventories, not building them. So there could be a little spike maybe in lumber shorter term, but then we flatten out -- although having said that last year, just started to move and didn't stop. But I think the difference this year, Hamir -- and you're closer to all the mill guys than I am -- is I'm not sure we're going to have that railcar shortage on SPF. Now we look at all the other species in North America, there wasn't this SPF skyrocket. And I think that was due to certain circumstances in a certain region called BC, right here at home. And that really drove those prices up due to not being able to get out of the mills. Now I think that has solved itself, and we're back into the normal market. Having said that, I think someone asked us a couple years ago if we'd like spruce to be at 450; we'd say darn right, we would. So I don't feel like we're bottoming, we're still at a great price.

[Hamir Patel]

And Amar, I know Canada recently imposed 10% duties on U.S. plywood imports. Does that affect your business at all?

[Amardeip Singh Doman, Chairman & CEO]

No. We pretty much distribute 100% Canadian plywood.

[Hamir Patel]

That's what I thought. And then, just following up again on the M&A side -- any color you can give about the pipeline and vendor expectations, if you're seeing any moderation as the year has unfolded?

[Amardeip Singh Doman, Chairman & CEO]

Yes. So over time, we've stuck to our strategy of acquiring businesses in a certain value range, and we don't move out of it. So whether or not valuations exceed that, we'll just say no thanks, and let someone else give it a go, as we might've seen in Oregon. So we'll look at certain valuations and be very disciplined. But having said that, the pipeline for us, we still believe, will be on pace to do 1 to 2 per year of these tuck-ins of treating plants in the strategic geographic areas that we've focused on and built relationships with. So I would say we'll be on pace to continue what you've seen for the past 6 years.

[Operator]

And there are no further questions at this time. I'd like to turn the conference back to Ali Mahdavi for any additional or closing remarks.

[Ali Mahdavi, Head of Investor Relations]

Thank you. On behalf of CanWel [indiscernible] would like to thank you again for joining us this afternoon. We look forward to providing you with our next update when we report our third quarter results.This concludes today's call. Have a great afternoon, everyone.

[Operator]

Once again, that does conclude today's conference. We thank you for your participation.