Hello, and welcome to Broadstone Net Lease's Second Quarter 2022 Earnings Conference Call. My name is Sarah, and I will be your operator today. Please note that today's call is being recorded. I will now turn the call over to Mike Caruso, Senior Vice President of Corporate Finance and Investor Relations at Broadstone. Please go ahead.

Thank you, operator, and thank you, everyone, for joining us today for Broadstone Net Lease's second quarter 2022 earnings call. On today's call, you will hear from our Chief Executive Officer, Chris Czarnecki; our Chief Financial Officer, Ryan Albano; and our Chief Operating Officer, John Moragne, who will be available for Q&A. Before we begin, I would like to remind everyone that the following presentation contains forward-looking statements, which are subject to risks and uncertainties that can cause actual results to differ materially due to a variety of factors. We caution you not to place undue reliance on these forward-looking statements and refer you to our SEC filings, including our Form 10-K for the year ended December 31, 2021, for a more detailed discussion of the risk factors that may cause such differences. Any forward-looking statements provided during this conference call are only made as of the date of this call. I will now turn the call over to our Chief Executive Officer, Chris Czarnecki.

Thank you, Mike, and good morning, everyone. As we make our way into the second half of 2022, we continue to rely on our diversified net lease strategy to generate consistent and predictable results for our shareholders. Despite a heightened level of macroeconomic uncertainty and persistent volatility in both the equity and debt markets, I'm pleased to report another strong quarter of results across all facets of our business. Before I dive into Q2 operating results, I'd like to take a moment to reiterate how our diversified net lease strategy defensively positions us in today's dynamic market environment. As I've stated on previous calls, our diversified strategy uniquely positions BNL relative to many of our net lease peers to perform across all market cycles and economic backdrops. Relative to other REIT sectors, net lease has proven to be both defensive and resilient during periods of economic stress, and we feel that our differentiated strategy, well-constructed and highly diversified portfolio, along with a fortified balance sheet, provides us the flexibility to navigate periods of dislocation or changes in cap rates by changes in cost of capital. Diversification provides both defensive and offensive advantages during challenging economic times. Our strategy continues to offer unique benefits during the current rising rate and inflationary environment. We are confident that our strategy positions us to achieve both defensive internal growth as well as consistent and accretive external growth in the face of current economic pressures. From a defensive perspective, our portfolio of 764 properties is comprised of 213 tenants to diversify it across 57 industries, with no single tenant accounting for more than 2% of annualized base rent. Granular diversification, coupled with strong weighted average annual rent escalations of 2% translates into consistent and reliable same-store growth. Our portfolio has been deliberately constructed to withstand any single tenant credit event. Many of the industries in which we are invested are nondiscretionary in nature and are better positioned to withstand economic downturns. In addition, while our portfolio is comprised of many non-investment-grade tenants, hyper diversification has proven to synthetically create a lower risk profile than a simple investment-grade metric would otherwise indicate. I am pleased to report 100% of base rents were collected during the second quarter, and the portfolio was 99.8% leased as of quarter end. From an offensive point of view, having a wider buy box that includes multiple property types allows us to pivot quickly in response to sudden or dramatic changes in cost of capital. Clearly, the long-term cost of debt for all net lease REITs is considerably higher today when compared to year-end. In addition, the cost of equity has changed year-to-date for all net lease REITs, but more specifically those focused on non-investment-grade tenants. Ryan will provide details in a few moments on our capital markets execution and balance sheet strategy and how we have proactively managed this part of the business to position ourselves well for the remainder of the year. While cap rates in certain asset classes have experienced increases year-to-date, we have yet to see meaningful expansion in cap rates commensurate with the changes in cost of capital experienced year-to-date. During this period of dislocation, our diversified approach to investing has given us the ability to pivot quickly to maintain accretive spreads on new acquisitions. While we've been forced to be more selective given the environment, we're pleased with the opportunities that we have chosen to pursue year-to-date. During the second quarter, we invested $182 million in 15 properties at a weighted average initial cash cap rate of 6.4%. The leases include a strong weighted average lease term of approximately 20 years, and solid 2.1% annual rent escalations, translated into a robust weighted average GAAP cap rate of 8%. Our diversified approach to investing has allowed us to adjust our capital allocation decision-making in response to sudden changes in our cost of capital. While we closed many transactions during the second quarter that were committed to in Q1, we are pleased with the meaningful expansion in our weighted average initial cash cap rate quarter-over-quarter. Although investment spreads are not as wide relative to where they were last year, we're pleased with both the near and long-term accretion produced by Q2 transactions. Acquisitions completed during the quarter were more heavily concentrated to industrial opportunities at 82% with a smaller percentage of retail and health care transactions at 11% and 7%, respectively. The heavier concentration to industrial during the second quarter helps to balance out a first quarter that included more restaurant and retail transactions. We were able to source several attractive opportunities this past quarter, but I'm pleased to provide additional detail on. During Q2, we acquired eight industrial properties in five separate transactions for a total of $149 million. The leases include weighted average annual rent escalations of 2.2% and a weighted average 22-year lease term. These transactions include several unique opportunities, including the expansion of an existing tenant's facility. Last year, we completed and announced a two-property sale and leaseback transaction of refrigerated food processing facilities located in Wisconsin. At the time of the initial transaction, the tenant was well underway with a significant expansion of one of the purchased facilities, which we agreed to fund a portion of the costs upon completion, which occurred in the second quarter. This unique opportunity to support an existing tenant as they invest in our assets and grow their business showcases our partnership-based approach to investing. In addition, we completed a sale and leaseback transaction on a portfolio of hardwood floor manufacturing and distribution assets during Q2. Properties are master leased and located across several attractive markets in the Southeast. We were able to acquire these assets after several other buyers dropped out of the process as financing conditions changed rapidly. We continue to see this theme occur in the industrial transaction market and are ready to execute as attractive opportunities such as this present themselves in the future. During the quarter, we continued to acquire several investment-grade assets leased to discount retailers, which are relatively insulated from recessionary and/or inflationary pressures. We continue to view small one-off investment-free transactions as an attractive complement to our larger sourcing efforts. Finally, we acquired a single-site medical education and lab facility for approximately $13 million. The state-of-the-art facility was designed and constructed by a leading national developer and is dedicated to the tenant’s nursing and medical education programs. The lease includes a new 10-year term that commenced at the time of completion as well as attractive 3% annual rent escalations. This opportunity was sourced through an existing developer relationship, and we're hopeful that the relationship will continue to yield additional opportunities in the future. Since quarter end, we've closed an additional $80 million of transactions and currently have approximately $71 million of opportunities under control, which we define as having an executed contract or a letter of intent. With approximately $544 million of acquisitions either closed or under control year-to-date or 73% of the midpoint of our current acquisition guidance, I'm pleased to reiterate our confidence in our current full year 2022 acquisitions guidance range of $700 million to $800 million. The current market environment requires us to remain highly selective, but we are confident that our diversified capital allocation strategy will translate into an opportunity set that meets our risk and return expectations in the second half of the year. With a smaller asset base relative to many of our net lease peers, we're able to produce meaningful growth in earnings with relatively modest levels of acquisitions.

Thank you, Chris, and good morning, everyone. During the second quarter, we generated AFFO of $62.8 million or $0.35 per share, which represents approximately 6.1% growth over per share results from the same period last year. AFFO per share was flat quarter-over-quarter when compared to Q1 2022, which is largely driven by the revenue generated from late Q1 acquisitions, offset by accelerated equity raise that has derisked our capital markets execution in the back half of the year. Acquisitions completed during Q2 were predominantly closed in June and are expected to serve as a tailwind to our Q3 earnings. During the quarter, we incurred $9.3 million of total general and administrative expenses, which includes $7.9 million of cash expenses consistent quarter-over-quarter. Turning now to our balance sheet activity during the second quarter. We are currently experiencing an environment where investors are concerned about inflation, rising rates, and the potential for a recession, and we remain focused on navigating this dynamic market backdrop through proactive capital markets activity to maintain balance sheet strength and flexibility. During Q2, we sold 3.2 million shares of common stock under our ATM program at a weighted average sale price of $21.42 per share for net proceeds of $68.3 million. As of quarter end, there was approximately $166 million of capacity remaining on our ATM program. We ended the quarter with leverage of 5.3 times on a net debt to annualized adjusted EBITDAre basis and remain committed to our conservative leverage profile of less than six times. Equity issuance in the first half of the year has provided the leverage capacity and liquidity to fuel additional selective accretive growth opportunities in the second half of the year. We intend to continue to opportunistically utilize our ATM to effectively manage our leverage profile via the match funding of acquisitions. In addition, we continue to evaluate alternative equity raise methods available to us and are prepared to execute as pricing dynamics make sense relative to our pipeline of acquisition opportunities. On August 1, we entered into two new unsecured bank term loans, including a $200 million five-year term loan that matures in 2027 and a $300 million seven-year term loan that matures in 2028. The borrowings on the new term loans bear interest at variable rates based on SOFR plus a margin based on our corresponding credit rating. The applicable margin commensurate with our BBB and Baa2 investment-grade ratings was 0.95% and 1.25% for the five-year and seven-year term loans, respectively. Proceeds from the term loans were used to repay in total our $190 million 2024 unsecured term loan and a portion of the outstanding balance on our revolver. Given the current state of the investment-grade bond market, we turned to the unsecured bank market to both lengthen our maturity profile at attractive relative pricing and provide additional runway until conditions in the debt capital markets stabilize. We currently have no significant debt maturities until 2026. While we remain committed to being a repeat issuer in the investment-grade bond market in the future, we believe accessing the bank term loan market at this time was a prudent long-term decision that provides a high degree of flexibility and aligns with our current growth objectives. For fiscal year 2022, we are nearing our AFFO guidance range to $1.38 to $1.40 per diluted share, which represents an implied growth rate of 6.1% at the midpoint over our 2021 results of $1.31 per share. This revision to our full year AFFO guidance is driven primarily by the acceleration of our capital markets activity during the first half of the year. Although these proactive and strategic capital structure decisions create a modest short-term drag on earnings, we believe derisking the balance sheet today will allow us to continue to execute on our growth objectives in the pursuit of long-term shareholder value creation. This guidance range is based on the following key assumptions: acquisition volume between $700 million and $800 million, which remains unchanged; disposition volume between $75 million and $100 million, which remains unchanged; and total cash G&A between $31 million and $33 million, which remains unchanged. As a reminder, our per share results for the year are sensitive to both the timing and amount of acquisition, disposition and capital markets activity that occurs throughout the year. Finally, at our Board meeting held on July 28, our directors declared a $0.27 dividend per common share and OP unit to holders of record as of September 30, payable on or before October 14. We continue to evaluate additional future increases to our dividend with our Board on a quarterly basis. With that, I will turn it back over to Chris for closing remarks.

Thanks, Ryan. I want to close today by reiterating how this quarter shows some of the key principles in North Stars of how BNL has operated and how John and Ryan and I think about running this business for the long term. First and foremost, we will always maintain a very diversified defensive portfolio that supports our base of operations and allows us to grow. Second, committed to maintaining a strong balance sheet and thinking long term as evidenced by the seven-year term loan that we completed just a few days ago and the pull forward of equity. The short-term trade-off that comes from this is something that we will make over and over again as we think on a long-term basis of what's best for the company and our shareholders. And finally, you see very clearly our ability to pivot and the value that comes from our flexible acquisition strategy. But Q1 versus Q2 difference and are going into initial cash cap rates of 70 basis points is the strongest in the space. And that is reflective of our ability to move as market conditions change and ultimately drive the best possible risk-adjusted returns for our shareholders. These three factors to me are cornerstones of how we run the business, and then support an exciting and interesting back half of the year, along with a very robust pipeline. And so I want to reiterate those factors as to why we think Broadstone is the right net lease company for today's environment. With that, operator, you can open the line for questions.

Your first question comes from Ki Kim with Truist. Please go ahead.

Thanks and good morning. Can you describe the acquisition environment and the changes in pricing, as well as how you plan to progress for the remainder of the year?

Ki, would you mind repeating that? It got a little choppy on our end. I think you were asking about the acquisition environment, but if you just repeat it, so I make sure we hear your question, that would be great.

Sure. Can you discuss the acquisition environment or pool and pricing? And how do you see this developing for the rest of the year?

Sure. I'll begin and then hand it over to John for further insights. At a high level, we are very pleased that transaction volume and opportunities fitting our criteria have remained strong. We have mentioned in previous calls over the past year that the transaction opportunities have been solid. To provide some context, we've assessed over $4 billion in transactions through the second quarter, which is a notable increase for our company size. This is a net positive that lets us be selective in this uncertain environment while still maintaining an exciting pipeline. Regarding our cap rates at 6.4% this quarter, there are three main factors influencing this. First, market conditions and competition have shifted compared to a few months ago. We've seen many levered, PE-backed, and secured financing buyers step back from the market, which has provided some cap rate relief and made certain asset classes more appealing, particularly in the non-investment-grade industrial sector and food processing. Second, the cost of capital for active buyers has changed, affecting return expectations and bidding behavior. These two dynamics have shaped the market landscape, resulting in bid ranges from various sophisticated parties varying by 100 to 150 basis points, meaning some may bid at a six cap while others may bid at a 7.5 cap. Lastly, several transactions continue to come onto the market with specific structures and return parameters, which may not be fulfilled by some buyers, therefore presenting new opportunities for stable companies like ours. Additionally, our ability to adapt across asset classes was evident this quarter as we shifted back into industrial properties more significantly, while earlier in Q1 we concentrated heavily on retail and restaurants. Combining all these factors explains the cap rate differences between Q1 and Q2. While I can’t break down each factor into specific basis point contributions, these elements are influencing the acquisition market as it stands. Our pipeline remains strong and promising for the second half of the year, and we feel confident in executing within our guidance range and potentially beyond. Now, I’ll turn it over to John to discuss individual property sets in more detail, but overall, we are optimistic about executing our plans as we move forward.

Yes. So to carry forward from where Chris was, we are currently on pace to evaluate about $30 billion in opportunities this year, which is a significant increase over us from even a historical high from last year. The market remains very competitive, but we think that that places our strengths with a diversified and differentiated investment strategy. Our ability to pivot between these asset types, industrial, retail, restaurant, health care, we think is unique in the space. And as Chris said in his remarks, you can see that play out in that 70 basis point increase in cap rate from Q1 to Q2. We continue to see great opportunities for us with our investment strategy as well as the disciplined execution and underwriting standards that we employ in that mid-six range up to the high 7s. So we expect to continue to play in that space. Industrial, in particular, is an area where there's a lot of activity, some great opportunities in the pipeline. And we hope to see some additional in the health care. That's always been something we've talked about this year has been a little bit light. Retail and restaurant continue to have some good opportunities as well. But with our strategy, we think the second half of the year is going to be really interesting, and we hope to be able to opportunistically execute on some additional growth on the back half of this year from where we stand today.

How do you view the balance between raising equity to fund your acquisitions versus obtaining additional assets? The sector's spot prices have fluctuated, but raising equity to buy assets results in a smaller spread. I'm interested in your thoughts on managing these different options.

Sure. We'll get Ryan into that.

Sure. Look, as we think about the portfolio, we have certainly thought about dispositions before and maybe a little bit of a different light today, but not too different. Frankly, we're always pruning assets that are lower performers. That's our main disposition strategy. As we think about assets that exist in the portfolio that we could sell and positively recycle capital, you take that, you think about the frictional costs associated with it and the fact that we really like these assets and want to hold them for the long term. We don't see a very meaningful way to recycle capital through dispositions versus our ability to raise equity today at various pricing levels and put it to work in an accretive manner. So when we weigh those two things out, we certainly look at it, evaluate it like anybody should from a capital allocation perspective. But feel very comfortable with funding acquisitions through equity rather than shrinking the portfolio and incurring a bunch of frictional costs related to assets that we want to own for the long term.

Your next question comes from the line of Michael Gorman with BTIG. Please go ahead.

Yes, thanks, good morning. I was wondering if you could just talk for a minute about how you're approaching your underwriting. And as you look at this portfolio of deals that you have out there in this pipeline, a lot of discussions in the REIT sector, obviously, about the change in cost of capital for buyers in the market. But I'm wondering how that change in cost of capital is having an impact on the tenants and maybe how you're thinking about underwriting different financial strengths and different financial structures of your tenants given the volatility in the capital markets.

Yes, absolutely. I think that where we sit today relative to history probably isn't dramatically different. I think we've been always very downside oriented in thinking about our tenants' financial health and picture. Probably the difference and the biggest change of where we sit today is obviously putting a closer lens on retail or restaurant sectors where you clearly could see some incremental pressure on the consumer and making sure that we're acquiring the highest quality, highest performing sites possible in the portfolio and perhaps doing a little bit more up-tiering in that regard. But in terms of just underwriting through regular way, industrial or health care, the philosophy is very much the same. Our credit risk team spends a lot of thoughtful and diligent time in conjunction with our acquisition team, stress testing each tenant or underwriting. So one of the most common bullet points in an acquisition memo is that they've gone out and stress tested rates, rising across that stack of a tenant by 400, 500 basis points, and what does that do to their fixed charge coverage and their ability to meet their obligations. And then also looking more carefully at downside margin compression that could occur and the same sort of math of margin compression being 10% or 20%. And what does that ultimately do to the tenant's overall set of obligations. And so I think a lot of that, which is embedded in who we are and how we've been able to collect and have such a strong portfolio in a non-investment-grade basis for the last 15 years, is just a heightened focus on those type of metrics today more than ever. And then obviously, thinking about tenants refinancing risk in the same way that we spent a bunch of time talking about our refinancings today, and trying to make sure that we push out our debt maturities as long as possible looking at the capital stack and understanding where a tenant might have future refinancing risk in the next two, three, four years. Most of our tenants have a pretty good handle on that and are pushed out a number of years, but that's always a discussion topic as well. So I think both factors are all what we're focused on today more than ever.

Great. That's helpful. And then maybe even specifically on the industrial side, as you started to see this wider bid range and as you've seen some of the transactions increasingly coming back to market, are you starting to see sellers accepting not the top bid for the certainty of close? So when you entered some of these, are you winning transactions where maybe you're not the top bid just because of your reputation as being able to close and close on time?

Yes. I love examples. I'll let John give examples because I'm sure he's got a view from that. And no, I'll just say absolutely. We absolutely are winning deals because of that with a 15-year track record of surety to close and not having financing contingencies, and also having a reputation in the market with brokers and sellers that we make sure that when we have signed up a deal that we have integrity around the terms that we've underwritten that we have done the work that we need to do to ensure that unless there's some real unknown that comes up during the diligence, we are going to close. And that matters in this market, particularly in comparing us with folks that are coming in with financing contingencies or with slightly shorter track record or no track record at all, where sellers are looking at it and saying that this is a key part of their business operational and financing strategy, and they want to make sure that they're going to have that cash in hand at the end of this deal. So that absolutely has played a part in our ability to execute on these transactions. I would also say, I mean, it's about walking the walk or talking the talk. We continue to honor what we've set out for. We closed an industrial transaction in early July that we picked up and shook hands on in March, and it took a while to close. And we honored the spirit of that deal and put it at a price differently today, probably. But for a repeat partner that we know really well and a long-standing brokerage relationship, it was far more important for us to be the steady hand during this time than to squabble over an incremental change there. And so I think that’s that will continue to serve us well. And as John said, it's happening every day with opportunities that we're going after to today's environment, so.

Okay. Great. And then maybe one for Ryan. Just sticking with the financing side of things. I completely understand, especially in this market, wanting to take care of pending maturities. And I just wonder how you think about it, right, 2024 is certainly probably further out, I think, than a lot of other folks would be thinking, but how you balance out potential interest rate drag in the short term versus how far out you're looking at extending maturities. And should we take this as some type of indication of your thoughts on where rates are going over the next two to three years or where you think access to capital is going over the next two to three years as you think about your capital stack?

Sure. Reflecting on our previous conversations, including last quarter's call, I mentioned we wouldn’t need to access the bond market or seek permanent financing until late this year or early next year, depending on the pace of acquisitions. Our acquisition pace has been strong, and we’re excited about that. We're also pleased with the term loan execution we recently completed. We're evaluating all our debt capital options. As you noted, the bond market has been somewhat unstable, and there hasn't been a new deal executed since April. Considering the current and potential future interest rates, our focus is on strengthening our balance sheet, ensuring liquidity, and securing permanent financing. While discussing unsecured term loans with our banks, we found an opportunity to secure a seven-year term loan. We executed a $200 million five-year term loan and a $300 million seven-year term loan. It's important to note that not all REITs can access a seven-year term loan. In terms of pricing, the all-in cost for the seven-year loan is in the high 3% range compared to the bond market, where it’s closer to the mid-5% for a similar seven- or ten-year period. For us, locking in our capital cost today and shifting towards permanent financing was an easy decision, even if it entails some near-term drag.

Your next question comes from the line of John Kim with BMO Capital Markets. Please go ahead.

Hi everyone, good morning. It's Eric filling in for John. Sticking with the topic of capital markets, regarding your new secured or unsecured facility, is the decision to keep it variable to provide you with more flexibility in the current market compared to swapping that facility?

Sure. I'll provide a bit more detail. Out of the $500 million in total term debt, we allocated $190 million to pay down our 2024 term loan, which was already swapped. Our balance sheet now includes a mix of swaps and unsecured bank debt, which mitigates most of the variability. Since $190 million is already swapped, we are currently assessing the possibility of fixing the remaining $300 or $310 million of the new term loan exposure for five to seven years. That's the all-in rate I mentioned. We are evaluating this now and are likely to fix a portion of it soon.

Perfect. And then maybe one on the watch list. How does your view change at all kind of given the current environment today? Is there anything that has been added or removed?

Okay. I'll take that. In terms of the watch list, I'd say, there's been no real material change since Q1. Only a handful of tenants on it. Obviously, we continue to monitor them, and they have varying degree of changes in terms of strength or weakness associated with them. But overall, nothing new specifically from a tenant perspective has come on or gone off in any meaningful way from one quarter to the next. I'd say maybe to sort of piggyback off of one of Chris' points from a thematic perspective, where clearly, looking at the market backdrop, the uncertainty, the inflationary pressures, supply chain-related dislocations and trying to understand how that really impacts each of our tenants. So one area that we certainly have focused on is consumer discretionary spending, where does that impact our portfolio? And how do we see that play through. Chris had referenced the restaurant space. We're keeping an eye on that and a few other sort of consumer discretionary-focused spaces. But overall, that's more thematic, no actual tenant identified that would make its way to the watch list at this point.

Your next question comes from the line of Ronald Kamdem with Morgan Stanley. Please go ahead.

Just a couple of quick ones. Just going back to the question on sort of the bank loans. Asked in a different way, debt-to-EBITDA was 5.3 times at end of the quarter, just how high are you on to let that go as you sort of evaluate opportunities before you have to come back to the equity markets?

Sure. As we think about our leverage, I think I've said that we're comfortable sort of operating in that low to mid-5% zone. So we're certainly comfortable operating in the mid-5s. And I think from one quarter to the next, we were 5.1 to 5.3. We raised some equity off of the ATM subsequent to quarter end. We've also identified deals. So I'd say that mid-five zone still feels very comfortable to us in this environment.

Great. And I missed the opening comments, so apologies if you covered, but sort of the acquisitions in Canada last quarter, maybe can you talk about just what the opportunity set is that market, what it's looking like and so forth?

Sure. We continue to view Canada as a complement to our strategy, separate from the portfolio we acquired last quarter. This quarter, we evaluated two industrial portfolios and actively pursued them, but neither deal materialized. We jokingly refer to them as three plus one, meaning three U.S. assets and one Canadian asset. This approach allows us to stand out and add value in the bidding process since domestic buyers typically focus solely on U.S. assets. We can offer a comprehensive solution through sale-leaseback transactions. Additionally, we are having discussions with tenants considering space in Canada. Looking ahead, we are also exploring opportunities within the retail sector in Canada, although that's still in the early stages. Overall, our primary focus remains on sale-leasebacks where we might acquire an additional asset or two as part of a larger or diversified portfolio to distinguish ourselves in a competitive market.

Great. And my last one was just on cap rates, just where you're seeing the most order widening and sort of you guys have the opportunity to look at a lot of different buckets, where is sort of the best opportunities right now for the incremental dollar?

Sure. Yes, I think we talked a little bit about it in the early part of the call, but certainly have seen more widening in the non-investment-grade industrial space. So again, taking distribution out of it, but the light manufacturing, food processing has seen some of that widening and then secondarily on the non-investment-grade retail that has also widened up a little bit. Health care for us this year, which is sort of our third vertical, has been a little bit quieter. So we're not ready to call any dramatic pricing movements there and the investment-grade retail space maybe a little bit of widening, but has also hung in there because the 1031 buy has been pretty strong. So for the incremental dollar and where the pipeline is today, more heavily weighted towards that non-investment-grade industrial space, which is, I think, we were looking at yesterday, something like about half our pipeline right now with the other three verticals being fairly equally weighted after that for the remainder.

And this concludes the question-and-answer session. I will turn the call to Chris Czarnecki.

Sounds good. Thank you so much, everybody, for joining us for our second quarter earnings call. We continue to appreciate the support of all of our investors, and we wish you a great end of the summer. And we look forward to being back in front of you with strong Q3 results in early November. Bye.

This concludes today's conference call. You may now disconnect your line.