Extendicare Inc
TSX:EXE
If you don’t study any companies, you have the same success buying stocks as you do in a poker game if you bet without looking at your cards.
Utilize notes to systematically review your investment decisions. By reflecting on past outcomes, you can discern effective strategies and identify those that underperformed. This continuous feedback loop enables you to adapt and refine your approach, optimizing for future success.
Each note serves as a learning point, offering insights into your decision-making processes. Over time, you'll accumulate a personalized database of knowledge, enhancing your ability to make informed decisions quickly and effectively.
With a comprehensive record of your investment history at your fingertips, you can compare current opportunities against past experiences. This not only bolsters your confidence but also ensures that each decision is grounded in a well-documented rationale.
Do you really want to delete this note?
This action cannot be undone.
| 52 Week Range |
6.65
10.38
|
| Price Target |
|
We'll email you a reminder when the closing price reaches CAD.
Choose the stock you wish to monitor with a price alert.
This alert will be permanently deleted.
Extendicare Inc
Earnings Call Analysis
Q4-2023 Analysis
Extendicare Inc
The company marked a significant anniversary by celebrating 50 years of trading on the Toronto Stock Exchange, reflecting on a storied past and looking optimistically into the future. Meanwhile, there's a narrative of robust growth, particularly in home healthcare volumes, which saw double-digit increases over the previous year, demonstrating resilience and expansion across core business segments.
The long-term care segment showed signs of full recovery from the pandemic's impact, with occupancy levels returning to historical norms at 97.8%, indicating stable funding and the potential for margin enhancement. This improvement is a result of both a recovery in occupancy and more efficient staffing strategies, and there's an opportunity for further margin improvements through ongoing discussions with government and sector partners.
New funding will facilitate salary increases, investments in training and technology, underpinning further expansion of the workforce. With 10 million hours of home care delivered in 2023, the company expects growth to outpace demographic trends thanks to a focus on addressing the backlog of care needs from the pandemic.
The Managed Services segment saw a marked increase in revenue and net operating income nearly doubling in comparison to the prior year, underpinned by strategic transactions that extended operations. The impact of the Revera and Axium transactions was fully reflected in the quarterly financials, showcasing the success of recent strategic moves.
Recent strategic transactions have laid the foundation for driving growth and value creation with a shift to a less capital-intensive, higher-margin business model. The Revera and Axium transactions in particular contributed to a substantial increase in net operating income, significantly impacting the quarterly financials.
Joint ventures such as the ones with Axium are pivotal to the company's redevelopment program, with acquisitions in the Ottawa region illustrating the company's commitment to growing its footprint. The ability to sell legacy properties has added liquidity and flexibility in capital allocation and is expected to bring in significant proceeds in the near future.
The company managed to return substantial capital to shareholders under its Normal Course Issuer Bid while maintaining a robust liquidity position and improving payout ratios. The flexibility provided by a strong balance sheet also allows for exploration of further growth and shareholder value optimization.
With new homes commencing construction and several redevelopment projects well underway, the company is poised to participate in future capital funding enhancements, reflecting a solid commitment to growth. The performance across all operating segments is showing tangible results from the company's strategy, promising continued strength going into 2024 and beyond.
The fourth quarter saw a 12.8% increase in revenue to $350.2 million, with net operating income nearly doubling. This performance is credited to growth in home healthcare, long-term care cost alignment, and increased managed services. The adjusted EBITDA for the quarter also increased substantially, contributing to a dramatic improvement in the adjusted funds from operations per share for the full year.
The company is enthusiastic about its Q4 results and the strategy that has led to improved performance, investing in a scalable platform that positions it for future growth. A focus on serving a growing and aging population, both in long-term care facilities and at home, underlines its mission and forms the foundation for potential future acquisitions that align with its strategic direction.
You don't have any saved screeners yet
Thank you for standing by. This is the conference operator. Welcome to Extendicare Inc.'s Fourth Quarter 2023 Analyst Conference Call. As a reminder, all participants are in listen-only mode, and the conference is being recorded.
[Operator Instructions]
I would now like to turn the conference over to Jillian Fountain, Vice President, Investor Relations. Please go ahead.
Thank you, operator, and good morning, everyone. Welcome to Extendicare's 2023 Fourth Quarter and Year-End Results Conference Call. With me today are Extendicare's President and CEO, Michael Guerriere; and our Senior Vice President and CFO, David Bacon.
Our Q4 results were released yesterday and are available on our website. The live audio webcast of today's call is available on our website, along with an accompanying slide presentation, and an archived recording will also be available on the site following today's call.
As while replay numbers and passcodes for this call have been provided in our press release to access the archived recording until March 22. Before we get started, please be reminded that today's call may include forward-looking statements and non-GAAP and other financial measures. Such forward-looking statements involve known and unknown risks and uncertainties that may cause actual results to differ materially from those expressed or implied today. We have identified such factors as well as details of non-GAAP and other financial measures in our public filings with the securities regulators and suggest that you refer to those filings.
With that, I'll turn the call over to Michael.
Thank you, Jillian, and good morning. I'll begin my remarks today with a few words about a significant milestone in the history of Extendicare. Last month, we celebrated 50 years of trading on the Toronto Stock Exchange by ringing the opening bell. It was a moment of great pride and an opportunity to reflect on our legacy and to look forward with optimism to the future. It was also a wonderful opportunity to recognize the achievements of our team and their commitment to our shared mission of helping people live better. Their commitment is exemplified in our fourth quarter results. They reflect the various strategic initiatives we've taken in recent years to transform Extendicare into a growth platform that addresses the care needs of the aging demographic.
2023 was truly a transformational year. In our results, you can see a number of significant trends. Robust growth in our home healthcare volumes, with a double-digit increase over Q4 last year; continued growth in our SGP client base, another step in the recovery of the long-term care segment with occupancy returning to pre-pandemic levels and significant progress in our redevelopment program.
These developments, along with the full quarter impact of the Revera acquisition resulted in strong financial results across all of our operating segments. Long-term care occupancy returned to historical levels, coming in at 97.8%, 330 basis points higher than Q4 last year, and above the threshold for full funding at the home level. We continue to show margin improvement in long-term care segment from a combination of occupancy recovery, lower use of agency staff and moderating inflation. We believe there's further opportunity for margin improvement as the funding gap that opened up in recent years due to funding increases lagging inflation has been the subject of discussions with government and sector partners.
We are hopeful that this will be addressed to some degree in the Ontario government budget to come later this month. On the home health care front, we see continuing strength. This segment continues to benefit from strong demand, delivering its fifth consecutive quarter of volume growth. Average daily volumes in Q4 increased by 2.8% from the prior quarter and were up 10.2% from the prior year.
As service volumes continue to expand, we benefit from a scalable back office and improvements in our recruiting, training and retention programs to increase capacity. This operating leverage, combined with strong demand for our services and government rate increases drove another year-over-year increase in our operating margin. In the quarter, the government of Ontario announced a further 6.7% rate increase for the home health care sector retroactive to April 1, 2023, on top of the 3% announced earlier in the year. This new funding will enable compensation increases and investments in training and technology to expand the available workforce and support the delivery of home health care services.
We are very grateful for this boost to the home care sector and we'll leverage this funding to drive further growth. We delivered nearly 10 million hours of home care in 2023 and we expect this figure to grow as home care is critical to ensure the sustainability of the health care system. We are positioned to outpace the 4% demographic growth in the short and medium term as we continue to expand to address the care backlog that opened up during the pandemic.
Looking at our Managed Services segment, we reported Q4 revenue and net operating income almost double that of the prior year period. This was the first complete quarter where we see the impact of the Revera and Axium transactions, which added 7,000 beds to our Assist and SGP operations. SGP also broadened its market reach organically, increasing third-party and joint venture beds served by another 5.6% from Q3 up 24.1% from the prior year.
Turning to Slide 4. 2023 marked a significant milestone in Extendicare's repositioning with the completion of our strategic transactions that started with the sale of our retirement operations in 2022 and culminated in the closing of the Revera and Axium transactions in Q3 of '23. These transactions established a foundation that we will use to drive growth and value creation using a less capital-intensive higher-margin business model.
We are focused on expanding managed services, building new long-term care homes in partnership with Axium and growing home health care services. Several elements of this strategy came into focus in the quarter.
Q4 is the first time we see the full financial impact of the Revera and Axium transactions, adding approximately $3 million in incremental NOI to our Managed Services segment. Our joint ventures with Axium underpin our redevelopment program evidenced by the acquisition of a 320 bed long-term care redevelopment project in the Ottawa region through our Axium JV, where we have a 15% managed interest. This was the first project we acquired under our right to purchase either alone or with Axium, any Revera redevelopment project that advances to construction.
Subsequent to year-end, we entered into a purchase and sale agreement to sell our fifth redevelopment project into the Axium JV, a 256-bed long-term care home currently under construction in the Ottawa area. The transaction is subject to customary closing conditions, including regulatory approval, and we expect it to close in the second quarter.
We also entered into separate agreements to sell the land and buildings associated with the soon-to-be shuttered Sudbury and Kingston C bed homes for estimated aggregate net proceeds after tax and closing costs of 5.8 -- pardon me, $8.5 million. These legacy homes are scheduled to cease operations when the corresponding redevelopment projects in the Axium JV opened later this year.
The ability to sell the legacy C home properties once they are replaced by joint venture redevelopment projects, provides us with added liquidity and increased flexibility in considering our capital allocation priorities. Such transactions along with the proceeds from the 2022 sale of our retirement operations enabled us to return $46.1 million to shareholders under our NCIB since 2022, while still maintaining a strong liquidity position and improving our payout ratio.
Our strong balance sheet, low debt ratios, increasing cash flows from operations and partnership with Axium give us lots of optionality as we seek to drive growth and shareholder returns.
Moving to the next slide. We continue to advance our redevelopment program with 2 new homes commencing construction in the quarter, both of which benefited from the supplemental capital funding subsidy that expired in August 2023.
As I mentioned earlier, our Axium JV acquired its first project from Revera during the quarter. Revera is responsible for development and construction and Extendicare will manage the 320-bed home when it opens in Q2 '26, replacing a nearby 303-bed home currently also managed by Extendicare.
Additionally, in the quarter, we commenced construction on another 256-bed home in Ottawa, which will replace a 240-bed home nearby. This project is expected to be sold into the Axium JV in the second quarter. Together with the 4 homes already under construction in Sudbury, Kingston, Stittsville and Peterborough, these 6 projects will replace 1,377 Class C beds with 1,536 new beds. We are on track to open 3 of these homes in 2024, with our 256-bed Sudbury project being the first to open later this month.
We continue to advance the balance of our redevelopment projects to be ready to participate in any future enhancements to the capital funding program in Ontario. We are hopeful funding will enable up to 4 new projects to begin construction in 2024. Construction costs, interest rates and applicable regulatory approvals will be pivotal in determining whether and when our other projects might meet the financial conditions necessary to proceed. At this point, I will turn it over to David Bacon to discuss our results in more detail.
Thanks, Michael. I'll start by reviewing our consolidated results for the quarter. On a year-over-year basis, all of our business segments are up strongly. On a consolidated basis, our Q4 revenue increased 12.8% to $350.2 million. This increase was driven primarily by growth in our Managed Services segment, largely attributable to the impact of the recurring management fees earned from our Revera and Axium transactions, Michael spoke about. 10.2% year-over-year increase in home health care average daily volumes and improve long-term care occupancy levels.
Revenue also benefited from long-term care flow-through funding enhancements and rate increases in home health care. Our Q4 NOI nearly doubled to $42.8 million, and we achieved an NOI margin of 12.2% compared to 7% in the prior year. Excluding the impact of unfunded COVID costs in Q4 of 2022 and prior period items impacting both quarters, our NOI improved year-over-year by $9.7 million, reflecting growth in home health care volumes and billing rate increases, improved alignment of our LTC costs with funding and growth in our managed services, offset by higher operating costs.
Adjusted EBITDA for Q4 increased by $19.5 million to $28.7 million, reflecting the improvement in NOI, partially offset by modestly higher administrative costs. Our AFFO per basic share in Q4 was $0.23, up dramatically from $0.02 in the prior year, reflecting the improvement in adjusted EBITDA and lower maintenance CapEx. For the full year, AFFO per basic share improved to $0.72, with a payout ratio of 66%. When adjusted for the impact of COVID recoveries and prior period funding adjustments, our AFFO for the full year was $0.56 per basic share, reflecting a payout ratio of 86%, a significant improvement over our 2022 levels.
Turning to our individual segments, starting with long-term care. Excluding the impact of $14.4 million in COVID funding received in Q4 2022, our revenue increased by $27.5 million year-over-year driven by funding increases, timing of flow-through spending and improvements in occupancy. NOI as reported, improved by $7.1 million to $17.6 million with an NOI margin of 8.5%. Excluding the net impact in '22 of COVID costs, prior period funding and worker comp rebates, the year-over-year increase in NOI was $1.9 million. This improvement reflects lower use of agency staff, timing of spending, funding enhancements and increased occupancy, offset by higher operating costs.
While we are seeing improvements in our LTC NOI, we continue to face pressures on our operating margins, stemming from the elevated cost inflation experienced in recent years. As Michael mentioned, we are hopeful, rate increases on the Ontario government budget this spring will include some catch-up for inflation to help alleviate some of this margin pressure, which is also critical to support the advancement of redevelopment.
Turning now to our home health care segment. Revenue in the fourth quarter increased by $18.8 million or 17.3%, driven by growth in our volumes and rate increases. This also includes the benefit of $5.4 million in retroactive funding recognized during the quarter in connection with a 6.7% billing rate increase announced in Q4 that was retroactive to April 1, 2023. The $5.4 million relates to the recovery of prior wage and benefit increases for staff and eligible investments in recruiting, retention, training and technology to support our home health care operations.
NOI increased by $9.7 million to $16.1 million with an NOI margin of 12.6% compared with 5.9% last year. Adjusting for last year's COVID impact and the retroactive funding recognized in Q4, NOI increased by $3.5 million and NOI margin was up 220 basis points over last year. In addition to the billing rate increases, the improvement in NOI is driven by the growth in volumes as our recruiting and retention programs continue to help stabilize our staffing capacity and expand our workforce.
Turning to our Managed Services segment. Revenue and NOI nearly doubled, thanks to the addition of new managed homes and SGP clients related to the Revera and Axium transactions. Our Q4 revenue increased by $8 million or 92.5% to $16.5 million, leading to an increase of $4.3 million over last year's NOI. The Revera transactions contributed approximately $7 million in revenue and $3 million in NOI this quarter. At the end of Q4, Extendicare Assist had management contracts supporting 9,800 beds, up 64.2% from a year ago. SGP supported over 136,000 third-party beds at year-end, up 24.1% from prior year.
Finally, turning to our financial position. Closing the Axium and Revera transaction has enhanced our financial stability and provided added flexibility. We ended 2023 with a solid liquidity position with cash and cash equivalents of $75 million and access to a further $71 million in undrawn credit facilities. Our maturity profile is favorable with no debt maturities before the second quarter of 2025. We do expect to generate additional proceeds in 2024 from the sale of our Sudbury and Kingston legacy C bed properties and the sale of our new 256-bed project in Ottawa into the Axium joint venture in Q2. The improvement in our operating results added flexibility from our strategic transactions and the proceeds from the sale of our retirement operations in 2022 have allowed us to return capital to shareholders under our NCIB.
During '23, we repurchased for cancellation approximately 1.7 million shares out of a cost of $11.1 million representing a weighted average price per share of $6.34, bringing the total shares repurchased under our NCIB since June of 2022 to 6.8 million shares. We will continue to consider strategic repurchases of common shares depending on market conditions, share price and our outlook for capital needs for redevelopment and other growth initiatives.
With that, I'll pass the call back to Michael for his closing remarks.
Thanks, David. We are truly delighted with our Q4 results and the momentum we have entering 2024. We are seeing the evidence of our strategy in action with improved performance across all operating segments. The transactions are delivering immediate benefits in the form of improved financial performance and a more sustainable operating model. This validates our decision to focus our efforts on those areas in which we lead the market.
With compelling demand for services, a scalable platform and a talented team of dedicated professionals, we are well positioned for strong growth and value creation. We have effectively positioned ourselves to pursue our mission of helping people live better every day whether in long-term care or in their own homes. Residents and patients and their families rely on us to provide high-quality care made possible by the professionalism and hard work of our team.
We have over 22,000 dedicated care professionals working in our homes and home care districts. On behalf of the entire management team, I thank them for their outstanding efforts and steadfast dedication to our shared mission. I'm proud of our achievements over the past 50 years as a public company, and we look forward to continuing to build on this legacy for many years to come.
With that, we're happy to take any questions that you might have.
[Operator Instructions]
The first question comes from Jonathan Kelcher with TD Cowen.
First question, just on the home health care, good sequential growth in volume there. How should we think about that growth going forward into 2024?
Well, Jonathan, the care gap that I mentioned earlier that opened up during the pandemic is still quite significant. So the way we look at this is that our -- the underlying kind of demographic growth of the seniors' population is about 4%. So you might think of that 4% as being kind of a natural growth rate of the sector in the long term. But there's quite a gap to close before we get to, let's say, a more steady state. So hard for us to quantify exactly what that gap is, but we see no letting up in our growth rate. The market seems to be able to absorb all the capacity that we can deliver. So we're expecting that to continue for the foreseeable future.
Okay. Well, I guess another way of asking that question is how much capacity do you think you can add over the course of -- because it's close to 3% in Q4. So how do -- how much capacity can you add in 2024?
Well, the pace that we've set out over the last 5 quarters is a pace that we're now configured for in terms of our recruiting teams, our training teams, onboarding and management. The back office is very scalable, so we don't have any limitations there. So we'll continue at this kind of a pace until the market is saturated.
Okay. Fair enough. And then, David, just on the margins, I guess, sort of a note in your presentation talking about an additional stat holiday -- what -- how does that impact? Is that just pay as 1.5x? And does it really hit the quarterly margins by 120 basis points? Or am I reading that incorrectly?
No, it is sizable. If you think of the business, Jonathan. It's all labor, right, from a cost perspective, highly variable. So that comment is on the sequential quarter. So I know we've been focused on sequential trends as we've been through this recovery. I think we can probably next year, start moving to year-over-year comparisons, and then we don't have to get into these quarter-by-quarter seasonal differences. But when comparing to Q3, there is an impact of about $1.5 million of additional hit to NOI for having an additional stat holiday for our staff.
So it is on a sequential quarter basis, it is a sizable impact. So if you excluded that, from our quarter, our margins would have been closer to 10%, which would have been a slight uptick, which you'd expect to see given the volume growth in Q4 over Q3. So it's more of a seasonal quarter-to-quarter thing, Jonathan, as opposed to kind of an annual impact.
Okay. And then the retro funding you got in the second 6, 6 and change increase from the government. Is that -- should we think about that as mostly flow through -- or will you guys get a little bit of margin on some of that?
Yes. It's largely going to be flow through. There's probably a little bit of a onetime pickup in that Q4 5.4% for some -- I'd say, some recovery of one time investments we made earlier in the year with the new funding. But largely going forward, we are going to be trying to direct most of that into staff wages, benefits and programs, which I think to Michael's earlier comments about our confidence in driving capacity and staffing, part of that comes through this much needed adjustment to our rates, which we can get flowed into compensation for our staff. So I think of it as largely flow through and the real growth in our margins is going to come through volume next year.
Okay. And then on Managed Services, first full quarter with everything closed, was there any consulting fees or onetime items in there? I think in the past, you've sort of guided to a 50% margin, you're a little bit higher this quarter.
Yes. There's still nothing unusual this quarter on that front. I think the biggest impact is the full quarter of the management fees coming through Revera. The things that do create variability for us, which is why we would still say in that we've talked between 50%, 55% range in the past, and that would still be what we would say today. The things that do drive a bit of variability occasionally are going to be consulting assignments in the Assist business, which tend to be nonrecurring. And we're doing those assignments to hopefully lead to a recurring type engagement of some time, whether it's full management or back office.
And we are helping people with their redevelopment as well, which, again, potentially leads to us becoming a permanent manager. The other thing where there'd be a bit of variability in there is level of ongoing construction redevelopment projects in the JV with our projects because we do earn some development fees. So -- but in this quarter, it's quite -- there wasn't much in the way of consulting and they're affecting it. But we still think of our margins in that segment in that 50-55 because there will be some occasional variability.
Okay. And then just lastly, as you guys have transitioned to more of an asset-light strategy, how should we think about your balance sheet and your leverage targets?
Yes, I think we have some flexibility as you can see from where we are on leverage targets. I think where we think of the capacity that, that gives us is more maybe potential future other growth opportunities outside of organic. So that just gives us flexibility there. And we do have the convert coming up in 2025, which is still 5, 6, 4, 5 quarters away. So we are turning our minds to that. But we don't really have a targeted leverage ratio at the moment. I think we're happy with the flexibility we have today, but it does position us to be both strategic and potentially opportunistic if certain acquisition opportunities come along in addition to having the capital we need to fund our share of the redevelopment, which is dramatically lower than what it historically has been given the partnership with Axium.
[Operator Instructions]
The next question comes from Pammi Bir with RBC Capital Markets.
David and Michael, just coming back to that last comment that David made in terms of maybe step that would be opportunistic or something of interest from a capital deployment standpoint. What would that be aside from obviously, the redevelopment program. I'm just curious where you'd like to sort of expand the footprint.
Well, Pammi, that's a great question, something that we're discussing. I mean, the reality is that the health care system is struggling to keep up with the need for services. The pandemic really resulted in us getting behind the curve of keeping up with the demographics and so we're seeing really significant demand. We've got a waiting list for long-term care in the province of Ontario, 46,000 people the home care situation is such that almost 25% of all the referrals that come to the various service providers in home care are turned down. Because people don't have enough capacity to meet them.
So there's this huge unmet demand situation across the sector. So we're waiting to see now what the reaction to that might be in terms of the next step. I think the 6.7% rate increase to home care on top of the 3% that was already announced is the kind of government reaction that we're seeing to this situation. Governments are really trying to address this and are moving quite aggressively.
At the same time, we've seen so far in the province of Ontario, about 10 long-term care homes shut their doors for various reasons, perhaps because the land underneath could be redeveloped in different ways or some of the smaller homes in [indiscernible] having financial difficulty kind of operating in the current market. So the point of all of that is that we expect that there might be other operators that are looking for scale. I mean, we see the -- how people are seeking scale just by the growth in our purchasing partnership. It's just been explosive growth.
People are looking for ways to operate more efficiently. But I also think people are realizing that the smaller operators are just going to have more challenges given the complexity of the market. So we do think that there may be assets that come on the market that are looking for better leverage looking for a different approach. We've already seen that with Chartwell and Revera, exiting long-term care. But I think there might be there might be other developments in that regard.
So I think we'll be very careful and very selective. We're very happy with our organic growth, but there may be some opportunities to advance what we're doing through acquisitions. But our strategy of focusing on services, focusing on redevelopment, home care and managed services is our plan. So we won't be considering any acquisitions that go outside of that strategic direction. It would only be things that accelerated and are accretive to our earnings.
That's helpful. I guess maybe just on that, is there anything maybe in any sort of more advanced stages of discussions or all sort of just kind of sitting tight with a balance sheet that maybe has the opportunity to act if you wanted to?
Yes, I think it's the latter. We see the opportunity there. But frankly, our first instinct is to accelerate our own organic growth to be as fast as we can. From our mission perspective of caring for people access to care is one of the key quality measures. If you can't get access to care, it's a significant failure of our health system. So we're really focusing on doing everything we can to accelerate our organic growth first.
Okay. last one for me. On long-term care, a decent, I think, sequential pickup in the quarter in terms of the NOI. But as far as you think about 2024, I think we've talked about this in the past, but coming back to your comments around the budget for the Ontario budget and thoughts on funding. Just curious whether you see 2024 may be getting back? Or is it still too early to sort of get back to those pre-COVID levels...
Well, we think -- yes, it's a good question. So 2 or 3 things to point out on that. First of all, we are undertaking some significant cost and efficiency programs in our homes. And so we expect to be able to improve our margins somewhat from where they are now. And we could do that just on our own. But as we've pointed out before, and as others have pointed out, there's quite a lag in our funding compared to inflation. I mentioned that some smaller homes are closing.
Part of that is just the financial pressure that inflationary gap is creating for the sector. But that inflationary gap is also constraining redevelopment. And it's not moving as fast as the government had originally envisioned when they announced the program a couple of years ago. So there's a number of policy reasons that I think the government needs to act on this to be able to advance the capacity building that we need to achieve. So I'm -- that's why I'm cautiously optimistic. But of course, we don't know until we see what's in the budget a few weeks from now. So I think there's opportunity for us to make some improvement on our own, but I do expect that we'll get some help.
And then the last thing, Pammi, just to remember, is that the flow-through care funding envelope is increasing quite a lot. It increases again in April so that we can provide 4 hours of direct care per resident day. And as those flow-through amounts increase, that just the math reduces the margin. So the margin is -- looks a little lower than those historical numbers, but in absolute dollars, I do think that over the next year or 2, it's very likely that we will return to those more historic levels.
[Operator Instructions]
Since there are no more questions, this concludes the question-and-answer session. I would like to turn the conference back over to Jillian Fountain for any closing remarks. Please go ahead.
Thank you, operator. That concludes our call for today. This presentation is available on our website as are the call-in numbers for an archived recording. Thank you for joining us, and please don't hesitate to give us a call if you have any questions.
This concludes today's conference call. You may disconnect your lines. Thank you for participating, and have a pleasant day.