Dye & Durham Ltd

TSX:DND

Earnings Call Transcript 2023-Q2

[Operator]

Good morning. My name is Michelle, and I'll be your operator this morning. At this time, I would like to welcome everyone to the Dye & Durham Second Quarter Fiscal 2023 Earnings Call.

I will now turn the conference over to Ross Marshall, Investor Relations, on behalf of Dye & Durham. Mr. Marshall, you may begin your conference.

[Ross Marshall, Investor Relations]

Thank you, Michelle, and good afternoon, everyone. Welcome to the Dye & Durham conference call. Before we start, we would like to remind you that all amounts discussed on this call are denominated in Canadian dollars unless otherwise indicated.

Please note that statements made during this call may include forward-looking statements and information and future-oriented financial information regarding Dye & Durham and its business and disclosure regarding possible events, conditions or results that are based on information currently available to management, which indicate management's expectation of future growth, results of operations, business performance and business prospects and opportunities.

Such statements are made as of the date hereof, and Dye & Durham assumes no obligation to update or revise them to reflect the events, disclosures or circumstances, except as required by applicable securities law. Such statements involve significant risks and uncertainties and are not a guarantee of future performance or results. A number of these risks or uncertainties could cause results to differ materially from the results discussed today.

Given these risks and uncertainties, one should not place undue reliance on these statements and information. Please refer to the forward-looking statements and information and future-oriented financial information section of our public filings without limitation, our MD&A, our earnings press release issued today for additional information.

Joining us on the call today are Matt Proud, Dye & Durham's Chief Executive Officer; and Frank Di Liso, Dye & Durham's Chief Financial Officer. A question-and-answer session will follow with the formal remarks for research analysts.

I now turn the call over to Matt for his opening remarks. Matt?

[Matt Proud, Chief Executive Officer]

Thanks, Ross, and good morning, everyone. Our business continued to perform well during the second quarter. We recorded $107 million in revenue and $58 million in adjusted EBITDA, which brings our last 12 months total to $479 million of revenue and $264 million of adjusted EBITDA.

This morning's results demonstrate the strength of our underlying business. We continue to outperform the broader real estate markets with transaction volumes in Canada for example down 38% compared to the same period last year.

Despite these challenges in the market, our business is close to flat year-over-year. This is because we actively managed the business and have taking concrete actions to deliver this performance, including executing on purchasing -- on pricing power in the business resulting in additional revenue per unit we sell our customers in many cases growing our base of subscription revenue within our practice management product vertical.

Delivering on our cost reduction plan with $80 million in ongoing headcount eliminated from the business, we announced this event the last quarter. And as you can see from the results released this morning, we've already achieved what we said we would do. And purchasing and retiring approximately 20% of our outstanding shares due to NCIB and SIB. These steps have set the stage for future growth, which I'll address in a moment.

We built a very profitable businesses scale, delivering mission critical non-discretionary software to more than 60,000 customers globally. We deliver significant EBITDA and cash flow again at scale. Sometimes I'm asked about net income.

For Dye & Durham, it's not a primary performance metric because in an acquisition business model, particularly when doing larger M&A, you're going to have significant noncash items like amortization of purchase intangibles, which this quarter were approximately $39 million. However, we didn't generate $39 million less cash.

So we believe using adjusted EBITDA provides investors a more effective analyst -- analysis of underlying operations and financial performance, including, importantly, our ability to generate cash. So looking at Dye & Durham today, the business is diversified across geographies and product lines. We serve customers in Canada, the U.K., Ireland and Australia.

Our products include practice management software, data insights & due diligence software, as well as payment infrastructure and banking technology. All very sticky. We believe delivering on your commitments is important. You can see the scale we've added to the business since we went public, which is more than 40,000 customers added, approximately 115 million in organic EBITDA and approximately $1.8 billion in capital deployed across 18 acquisitions.

The headwinds in the market during the past 12 months have been considerable and real. Higher interest rates and inflation have negatively impacted the real estate transaction volumes. These headwinds are more prevalent in Canada than in the U.K and Australia, which have held up better. In the face of this pressure, we've consistently outperformed real estate transaction volumes across both our revenue and adjusted EBITDA for the past six quarters.

We've delivered this performance by actively managing the business through increasing our subscription revenue base, improving our price per unit, and realigning our product positioning to address a wider range of applications for our customers.

We were effectively managing through the current ongoing market cycle. And when the market normalizes, which they always do, we're extremely well-positioned. For [technical difficulty] purposes, we provided a perspective on how the business in Canada -- again, this is just Canada could perform across a range of scenarios versus the last 6 months.

Starting -- again on Slide 8, starting from left to right, we modeled a modest 10% improvement, a forecasted range from third parties of 17% improvement, and then normalization of the 10 or 5-year average performance. Again, this is the Canadian real estate market. The incremental revenue captured under these scenarios range from $20 million to $65 million with a very limited incremental cost. So you should expect that to fall right to EBITDA.

Once the real estate market improves, we're in a great position to see material benefits across the top line and bottom line of our business. The resiliency of our business is one of the primary reasons we had such a high conviction, the substantial issue of bid was the right strategy. Since October 1, we purchased and retired 13.8 million shares or approximately 20% of the shares outstanding between the SIB and the NCIB for a total consideration of 208.6 million. This has resulted in a very consolidated ownership structure.

Given the consistency of our business in the face of real estate headwinds, the strength of our balance sheet, our ability to generate free cash flow, and the significant discount at which we are trading -- where we're trading when we announced the SIB, we believe there was no better use of capital. And based on the capital market dynamics since we announced the SIB, that strategy so far is proven right.

Underpinning our entire business strategy is disciplined and effective capital allocation. The SIB was just one example of our ability to be flexible in search of the best returns for our shareholder. So it's paramount for us. We continue to execute our strategy of disciplined capital allocation to build a business of scale through acquisitions and investments in our existing platform. These acquisition investments drive enhancements, new capabilities and improve the productivity of our customers.

We completed two smaller acquisitions recently, one that expanded our practice and our capabilities with a stronger focus on offering our customers litigation capabilities. And the other are expanding our practice and our capabilities in the United Kingdom. Given the current capital markets, we intend to be judicious in our acquisition strategy with a greater focus on smaller tuck-ins in the near-term versus much larger transformative acquisitions.

Effective capital allocation is a key aspect of building a durable business of scale. Disciplined cost management is also key. That's why during the quarter, we announced a strategy to identify and eliminate at least 10% of our operating costs. Since July 1, 2023, we reduced our annualized headcount expense by almost $18 million, and you can see the impact that it's having on our operating costs in Q2.

Since January 1, we've taken action to reduce headcount further. This is by a further $5 million on an annualized basis, or $1.3 million on a quarterly basis. We are well-positioned for a rebound in the real estate market with material top line and bottom line growth as markets normalize. We will continue to grow our subscription revenue, offering more value to our customers and increasing the stickiness of our platform.

Finally, as I just mentioned, we'll continue to execute on our M&A strategy with approximately $270 million in available liquidity at the close of the quarter, plus proceeds coming from the sale of TM Group as well as ongoing cash flow we generate from our healthy cash conversion business. This business generates a lot of cash.

We're building a global leader in the B2B software and services space that supports legal and business professionals. The business is dramatically larger today than it was at the time of IPO. We've demonstrated through multiple market cycles, we're able to manage the business for consistent and substantial performance, and we continue to execute on our strategy of scaling through acquisitions. We rapidly built a business to generate strong top line growth within an industry that provides stable cash flow and a very healthy margin profile. We look forward to updating you on our progress as we move forward.

I'll now turn it over to Frank to review the financials. Frank, over to you.

[Frank Di Liso, Chief Financial Officer]

Thank you, Matt, and good morning, everyone. Thank you for joining us today. We reported revenue of $106.7 million during the second quarter, a decrease of $3 million or 3% from the same period last year. The change is primarily related to lower real estate transactions as a result of unfavorable market conditions.

The pricing changes implemented combined with the launch of our minimum subscription program, and the impact of acquisition since October 1, 2022, nearly offset the entire pressure from the challenging market conditions. As background, fiscal Q2 is typically a seasonally low period for real estate transactions.

We generated adjusted EBITDA of $57.6 million, a decrease of $5 million or 8% for the same period last year. We continue to maintain our strong EBITDA margins coming in at 54% this quarter, which is in line with our target range of 50% to 60%. Overall, the business held extremely well as can be seen from the consistency of our revenue, adjusted EBITDA and margin performance.

As we said before, we've built a resilient business. On Slide 13, you could see the quarterly performance we have delivered on our adjusted EBITDA. We've managed through the challenging market conditions during the past 12 months with continued strong performance.

Despite lower real estate market transactions our adjusted EBITDA performance remains consistent. This indicates how we can manage the business cycles while we still deliver shareholder value. As an example, during Q2 fiscal '23, we took proactive action to reduce our cost structure by $5 million relative to Q1 fiscal year '23.

Total operating costs which includes direct costs, technology and operations cost and G&A, and sales and marketing costs were $41.1 million for the quarter, or 46% of revenue compared to $47 million for the same period last year. The 4% increase in operating costs in the year-over-year period is mainly due to cost acquired from acquisitions completed during the period.

In November 22, we disclosed that given the macroeconomic challenging environment, we will be in implementing a cost reduction initiative to reduce our current operating costs by at least 10% commencing in Q2 fiscal year '23. By the end of December '22, we had reduced approximately -- we had reduced approximately $17.8 million in annual salaries since the start of the fiscal year. This is reflected in the $5 million of total operating cost savings realized in fiscal year '23 Q2 relative to Q1.

Given the timing of the headcount reductions in the quarter, we expect an additional $5 million annual or $1.3 million per quarter of additional salary savings. Based on the cost savings action to date, we expect to exceed on the overall cost target of 10%, and we continue to expect our ongoing operating costs to be within the 40% to 80% range of revenue.

Net finance costs for the quarter was $38.4 million compared to $22.3 million in the second quarter prior. The change is due to higher interest and accretion expense of $14.6 million related primary to the Ares credit facility, as well as a $4.2 million noncash impact from changes in the fair value of our convertible debenture.

As a reminder, IFRS accounting requires us to mark-to-market or fair value these instruments each quarter. So we do expect this variability in our finance costs to continue.

Acquisition, restructuring and other costs for the quarter were $15.6 million compared to $9.8 million in the second quarter of last year. The change is due to higher acquisition costs related to prior acquisitions, due diligence activity and additional restructuring costs incurred. A large portion of these costs relate to the proposed acquisition of Link.

During Q1 fiscal year '23, we announced a normal course issuer bid, and in Q2 of fiscal year '23, we completed a substantial issuer bid. As Matt mentioned previously, between the two programs, we have purchased and retired 13.8 million outstanding shares for -- consideration of $208.6 million. This consists of 2.8 million shares under the NCIB program from October 1, 2022 through December 31, 2022, 10.3 million shares completed under the SIB as well as 0.7 million shares subsequent to the quarter, which completes the NCIB.

Turning to our balance sheet. As of December 31, 2022, we had approximately $217 million of liquidity. This liquidity consists of cash, the revolving credit facility and the delayed draw term loan. Our leverage ratio and based on fiscal year '23 consensus net of proceeds of assets available for sale and cash is currently 2.9x as of December 31, which we believe provides sufficient headroom along with our free cash flow conversion.

We intend to continue to deploy that capital towards new acquisitions. Also worth to mention that our TM Group business is classified as assets available for sale during the 3 months ended December 31, 2022.

With that, I will turn it over to the operator for Q&A. Operator?

[Operator]

[Operator Instructions] Your first question will come from Robert Young of Canaccord Genuity. Please go ahead.

[Robert Young, Canaccord Genuity]

Hi. Good morning. Maybe the first question, just a quick one on the TM Group. You said it was classified as held for sale. Is that still contributing through the income statement? I don't see anything on the line there. So is that still?

[Frank Di Liso, Chief Financial Officer]

Yes.

[Robert Young, Canaccord Genuity]

Okay.

[Frank Di Liso, Chief Financial Officer]

Hi, Rob. It's Frank here. That's correct, Rob. We -- that's still part of the P&L, Rob, as it was not classified as a discontinued operation.

[Robert Young, Canaccord Genuity]

Okay. And maybe any update on the timing or any update on TM Group divestiture you can provide would be helpful.

[Matt Proud, Chief Executive Officer]

No disclosure there, just by within the public already.

[Robert Young, Canaccord Genuity]

Okay. Then I guess the next question I would ask is around the housing transactions. You gave a bit of an indication on the Canadian market, 38% decline in the quarter. Maybe if you could just give us a sense of what the U.K. and Australia were -- I mean, you mentioned a little bit about the potential upside, but is there any signs of troughing or what would you be looking for as a sign that you've hit a bottom?

[Matt Proud, Chief Executive Officer]

Well, I mean, look, we -- you can look at the public data available and what you're seeing is clearly not the same decrease year-over-year in the U.K. and Australia compared to Canada. So look -- I mean we remain optimistic that going forward, should there be any kind of normalization in Canada, that's why we kind of focus and provide Canadian numbers only, just given the dramatic decrease you've seen in Canada compared to other markets, which I'll say are more stable, that you'll have a big pickup in revenue, which in turn will drop to EBITDA. But if you go to Slide 6 in the deck we provided, it's Slide 6, there's -- we provided public numbers for you.

[Robert Young, Canaccord Genuity]

Okay. And then on the best use of capital going forward, would you consider to be -- continue to be very aggressive on the buyback given where the valuation -- you already highlighted the valuation is low in your view?

[Matt Proud, Chief Executive Officer]

Look, we always step back and think, hey, what's the best use of your capital today? Historically, there's been a large focus on scale and growing the business. And overall, push comes to shove, I'd say our preference is to use our capital to scale the business, not to buy back stock. But the reality is there's nothing cheaper we can buy than our stock today. Assets in our space don't trade where we trade, and so we've had to be flexible in our approach, which I think is so far proven to be the correct approach to it. So I don't want to rule it out, but it's not a primary focus for us.

[Robert Young, Canaccord Genuity]

Okay. And then in the presentation, you said that you're focused on increasing growing subscription revenue. Can you just talk about your success there and then whether you're going to take what you've done in Canada to expand that to other regions in U.K. and Australia, et cetera? And then I'll pass the line.

[Matt Proud, Chief Executive Officer]

Yes. So the second part of the question, yes, we are going to be expanding that to the other regions we operate. And in regards to the first part of the question, look, it's a focus of ours. We continue to put a lot of effort and activity into that, and we'll continue to do so going forward.

[Robert Young, Canaccord Genuity]

I think last time you gave a number around that, it was 31%, I think, of revenue in Canada was tied to minimum value contracts. So is that the full scope of subscription? And there are other parts of the business that are within subscription? Maybe just if you could just expand on that and give us a sense of what the full scope of the subscription is.

[Matt Proud, Chief Executive Officer]

Yes, the full scope of subscription revenue in our business is greater than that. When you look at kind of annualized numbers, it's about $50 million of subscription revenue across the business, and this makes up a healthy part of that.

[Robert Young, Canaccord Genuity]

Okay. Thanks for answering the questions.

[Operator]

Your next question comes from Thanos Moschopoulos of BMO Capital Markets. Please go ahead.

[Thanos Moschopoulos, BMO Capital Markets]

Hi, good morning. Matt, now that you're more focused on smaller tuck-in M&A, can you speak to the ongoing opportunity to use more of your bandwidth and time to drive internal efficiency in the business? I mean, obviously, this is a restructuring program that you've called out. But as we think kind of longer term over the next year or two, are there other things you can be doing as far as -- that are integrating your existing operations, leveraging technology and so forth to drive better improvement?

[Matt Proud, Chief Executive Officer]

Yes. No, it's a good question. Over the last 12 months, we were fairly preoccupied on the M&A side with the bigger, unsuccessful Link transaction. What -- how what that gave us the time to do internally was focused on integration and making sure the business is the correct size, synergies are realized and that the organization is structured in the appropriate way. So we spent a lot of time last year doing that. I think you're seeing in our results today, I mean we -- the results of that.

So for example, we have -- aside from our results, though, we also have move from a geographical management structure to a function-based structure, which has resulted in better managerial performance over the business, less layers of management, is overall a more effective and integrated business. There's been a high degree of focus on integrating systems as well, aside from standard stuff like accounting systems, like HR systems.

We've also had a big focus on putting and building out a single unified billing system for the entire company. So a lot of that work has happened and has continued to happen. I wouldn't position it as either or mutually exclusive. We continue to believe that we haven't effectively run business. It is well integrated, and we can continue to do acquisitions while maintaining that.

[Thanos Moschopoulos, BMO Capital Markets]

Great. Next, kind of focusing on the near-term, there's obviously a lot of moving parts, and no one has the crystal ball. But just thinking about the restructuring program, the recent tuck-in M&A, and I guess, the current state of the market and seasonality, would you think that the March quarter should show maybe a sequential uptick from revenue and EBITDA we saw in December quarter? Or would that be hard to conclude inclusively?

[Matt Proud, Chief Executive Officer]

I think it's hard to conclude today exactly where the March quarter will be. Again, I think we gave some color on the -- and some guidance on -- some color to insight into the cost base. But as it comes to revenue, I think it's still a bit too early to tell.

[Thanos Moschopoulos, BMO Capital Markets]

Okay. Fair enough. And then just final one for me is you're disclosing customer churn, which is [indiscernible], I appreciate that. Just to clarify the calculation of that, would that just simply be customers who spent a dollar revenue in the current period versus a year ago? Or will it be the definition of the churn metric?

[Matt Proud, Chief Executive Officer]

Yes. So it's correct. It's the previous period. And we are taking, I believe, material customers, so customers over$5,000 as we look at them, it is measured over an annual basis. So just want to make that clear as I know some companies report churn on a monthly, but this is an annual basis.

[Thanos Moschopoulos, BMO Capital Markets]

[Indiscernible]. Thanks, guys.

[Operator]

Your next question is from Kevin Krishnaratne of Scotiabank. Please go ahead.

[Kevin Krishnaratne, Scotiabank]

Hey, there, gentlemen. Good morning. Just one for me. Looking at the geographical breakdown, the revenue in the U.K. was down a little bit more than we've seen growth over the past few quarters. Can you just explain what was happening there? I think FX might have been a tailwind for you in the quarter. Can we just flesh out what you're seeing in the U.K. business specifically?

[Matt Proud, Chief Executive Officer]

Yes, I think -- again, the U.K. market has been down more than the Australian market, but not as much as the Canadian market, and that's being reflected, I think, in the numbers. I'd add to that, we don't have the same pricing power in the U.K. as we -- today as we have in Canada. So our practice management business is smaller in the U.K. than it is in Canada. And so we -- in Canada, we've been able to kind of, over the last year, execute successfully, fairly material and significant price increases, which have resulted in a higher price per unit that we sell our products to our customers for. So we've been able to -- despite a much worse downturn in the market than you saw in the U.K., still have the revenue performance we saw in Canada, which was up and so that's the dynamic we're seeing.

[Kevin Krishnaratne, Scotiabank]

And is the -- like what drives your less of an ability to have pricing power in the U.K.? Is it -- as you bring potential unity there and other products and better products in the U.K. market, could that change?

[Matt Proud, Chief Executive Officer]

So it has to do with our product mix from a product line perspective. We’ve a bigger data insights business in the U.K. than we do a practice management business today. So a goal of ours is to keep growing that practice management business in the U.K., given the size of that market, where -- when you look at the Canadian market today, we’ve a very big practice management business. So it just has to be good product mix.

[Kevin Krishnaratne, Scotiabank]

Okay, got it. And maybe just -- you just mentioned the price increases that you've been doing in Canada. Can you remind us sort of relative to Q2, where we're in Q3 in terms of where you've done pricing? Are there opportunities to come? How much of the base? Any sort of view you can give us on trends on pricing going forward?

[Matt Proud, Chief Executive Officer]

Look, again, as I keep saying, this is a very healthy business that has pricing power. So we continue where appropriate to put forth inflationary plus price increases which will enable us to have continued -- driving the business forward.

[Kevin Krishnaratne, Scotiabank]

Okay. Thanks. Appreciate the color. I will pass the line.

[Operator]

Your next question comes from Stephen Boland of Raymond James. Please go ahead.

[Stephen Boland, Raymond James]

Good morning, guys. I guess two questions. First would be, when you talk about salary cost and reductions. And Matt, your comments on removing layers of management, I take that to mean if volumes increase across the board in all the jurisdictions, that stopping will not be required again. So these are almost like permanent expense reductions. Is that the right way to think about it?

[Matt Proud, Chief Executive Officer]

That's correct. When you think of our business, it's not like a lot of other businesses you see in the real estate space, where there's bodies attached to it. This is a computer processing, the vast majority of the transactions. So that's why we have such a low amount of COGS. So we are able to scale the business up without adding more bodies get -- we are a software business. So these are permanent layers of management and permanent efficiencies we realize that we will not be replacing. With that said, as we buy companies, you do get headcount naturally from that, but there's revenue that obviously offsets that, but just the clarity I want to mention that.

[Stephen Boland, Raymond James]

Okay. That's good. And maybe just if you can expand, you mentioned the function, but management now is more on a functionality basis as opposed to geographic. Can you just break that down? Like what are the layers? Is there one person in charge of not just due process, but Canada, maybe you could just explain what is the next layer of management?

[Matt Proud, Chief Executive Officer]

Yes, the way our business works is -- the key functions are we’ve operations. And so that has all the customer help desks and customer support functions that roll up into it for all products. So that's a function. One, it's not broken down by due process or by SAI Global or by any other business we've acquired. We've integrated in the organization structure the various support capabilities from an operational perspective. We then have finance, we have sales, we have product, we have IT, which consists of both IT infrastructure as well as software development with communications and legal.

[Stephen Boland, Raymond James]

Okay. And so you have a single person for each of those functions that are doing it globally. Is that the way to think about it or close to being global?

[Matt Proud, Chief Executive Officer]

It's close to global. The one [indiscernible] state, we still have a Managing Director with a lot of kind of cross supporting is Australia, just given the proximity with -- and the time difference. But it's a very integrated and global functional management structure.

[Stephen Boland, Raymond James]

Okay. And just on the pipeline of M&As. I appreciate you're saying that you're probably going to focus on tuck-ins. Have you seen compared to 12 months or 24 months ago, what the multiples are like? Is it rational? Or is it still -- nothing's really changed in that and sort of those what you saw in the past?

[Matt Proud, Chief Executive Officer]

Yes. I think we were hoping. We talked about this last quarter and kind of towards the end of last fiscal year, we reported in September. But we're hoping that we'd see more a decrease in valuations. That's not happening. The reality is when you have -- in our industry, these businesses are software businesses that generate a lot of cash and they go for high multiples, often high-teen multiples, that's [indiscernible] we paid. Now I think we've -- not -- we don't see that changing, to answer your question. So I think we have a demonstrated ability to pay that and bring it down to a more reasonable multiple, but the multiples are definitely more kind of high teens than they are single digits.

[Stephen Boland, Raymond James]

Okay. Thanks, guys.

[Operator]

Your next question comes from Scott Fletcher of CIBC. Please go ahead.

[Scott Fletcher, CIBC]

Thanks. Good morning. A follow-up on the M&A for me. You mentioned, obviously, taking a pause from looking at or taking action on the larger deals given the current backdrop. Is there a certain macro indicator or maybe level of housing market improvement where you would start to get more comfortable looking at larger deals? Or is it more of a function of seeing the cash flow start to drop through once the transaction activity comes back?

[Ross Marshall, Investor Relations]

Michelle, I think your line is live. Go ahead, ma'am.

[Scott Fletcher, CIBC]

So this is -- so is there a metric we are looking at? No, there's not. And look, as I continue to say, I mean, we continue to believe adjusted EBITDA is the best metric when looking at this from a cash flow perspective, for many reasons. We talked about the non-cash reasons. There's also -- if you look at things that impact, the cash interest is obviously one of them. But to answer your question, there's nothing that per se, a hard metric. We are just being cautious in an environment where capital is tighter. And I think we're very confident in our ability to execute on what we do. But just to be a little more cautious, that's kind of approach we're taking in a world where, again, capital is more expensive and it's harder to come by.

[Scott Fletcher, CIBC]

Okay, thanks. And then on the type of company you're looking at on the tuck-in side, would that -- would the idea there be to look at adding more subscription revenue? It seems like that's been the idea with some of the tuck-ins in the past.

[Matt Proud, Chief Executive Officer]

Yes. I mean, there's pros and cons of subscription revenue. Obviously, you have the pricing power, though it's there, it's hard to execute upon, and it's less instantaneous than you'll get in the transactional business, though you have the certainty attached to it for a period of time. Look, we obviously -- when we look at what we're buying, I would tuck-in this in the three verticals that we have, and yes we can diversify away from real estate transactions. We think that's a positive thing. And to do that also by subscriptions is helpful as well. So yes, we obviously consider that.

[Scott Fletcher, CIBC]

Okay. Thanks.

[Operator]

At this time, we’ve no further questions. So I'll turn the conference back to Ross Marshall for any closing remarks.

[Ross Marshall, Investor Relations]

Thanks very much, everyone, for joining us today. We look forward to updating you on our Q3 call in May. Have a great day.

[Operator]

Ladies and gentlemen, this does conclude your conference call for this morning. We would like to thank you all for participating and ask you to please disconnect your lines.