Beazer Homes USA Inc Q4 FY2021 Earnings Call

Good afternoon. And welcome to the Beazer Homes Earnings Conference Call for the Fourth Quarter fiscal year ended September 30, 2021. Today's call is being recorded, and a replay will be available on the company's website later today. In addition, PowerPoint slides intended to accompany this call are available in the Investor Relations section of the company's website at www.beazer.com. At this point, I'll turn the call over to David Goldberg, Senior Vice President and Chief Financial Officer.

Thank you. Good afternoon and welcome to the Beazer Homes conference call discussing our results for the fourth quarter and full year of fiscal 21. Before we begin, you should be aware that during this call, we will be making forward-looking statements. Such statements involve known and unknown risks, uncertainties and other factors described in our SEC filings, which may cause actual results to differ materially from our projections. Any forward-looking statement speaks only as of the date the statement is made. We do not undertake any obligation to update or revise any forward-looking statement, whether as a result of new information, future events or otherwise. New factors emerge from time to time; it is simply not possible to predict all such factors. Joining me today is Allan Merrill, our Chairman and Chief Executive Officer. On our call today, we will review highlights from fiscal 21, outline our objectives for fiscal ’22 and provide an update on our ESG initiatives. I will then cover our full year results in greater depth, our expectations for the first quarter and the full fiscal year and update our outlook for continued growth in our land position and community count. My comments will be followed by a wrap up by Allan. After our prepared remarks, we'll take questions in the time remaining. I will now turn the call over to Allan.

Thank you, Dave. And thank you for joining us on our call this afternoon. In the beginning of last year, we established three strategic objectives for fiscal ’21 related to our profitability, lot position and balance sheet. As we progressed through the year our performance continued to improve. Now the year is over, I'm happy to report that we far exceeded our expectations for all three objectives. First, we expected to slightly increase EBITDA and generate double-digit earnings per share growth. In fact, our EBITDA increased by nearly 30% and EPS more than doubled. We were able to capitalize on a strong demand environment, while managing through the impacts of cost increases and supply chain disruptions. Earnings further benefited from lower interest expense and energy-efficient tax credits. Second, we expected to grow our lot position. At year end, our active lot position was up more than 25% versus the prior year. Importantly, we also grew our share of lots controlled by option from about 35% to nearly 50%. And third, we expected to reduce debt. Over the course of the year, we retired more than $80 million of debt, substantially improving our credit profile. These outcomes are a result of our long-standing balanced growth strategy, which is our multi-year plan to grow profitability faster than revenue from a less leveraged and more efficient balance sheet. Over the past five years, we have grown EBITDA at a double-digit compound annual growth rate substantially faster than our revenue growth, reduced net debt to EBITDA from over seven times to about three times and increased return on equity by more than 15 points. As we look forward to fiscal ’22, there are industry and company specific factors that provide the basis for our confidence and highlight the risks which are influencing our operational priorities and expectations. At an industry level, we believe the favorable conditions for housing are likely to endure beyond this year. Strengthened demand is supported by demographics, a growing economy and rising household incomes. But the supply of new homes is seriously constrained by entitlement restrictions, supply chain challenges, and labor shortages. While this backdrop is generally positive, it also creates several risks. First, supply constraints make us quite cautious about the likelihood of improvements to cycle times in fiscal ’22. In fact, we've pulled forward our cutoff dates for home starts scheduled to be closed this year. Second, there are clearly affordability risks posed by rising home prices and the potential for higher mortgage rates. To address this, we are obsessively committed to delivering extraordinary value to homebuyers through innovation, simplification and choice, among other strategies. At a company level, we are encouraged by the dollar value and embedded profitability of our backlog, the continuing strength in our online and in-person traffic and our ability to leverage overheads and further reduce interest expense. With that background, I'd like to highlight some of our expectations for fiscal ’22. First, we expect to grow EBITDA by more than 10% leading to earnings per share above $5. We are beginning fiscal ’22 with approximately half of our expected closings for the year already in backlog, giving us visibility into profitability growth driven by higher ASPs and better margins. Our deleveraging results will also contribute to lower interest expense. Second, we expect double-digit growth in our lot position, with lots controlled by options remaining around 50%. Land spending is expected to increase again this year although we remain highly disciplined in our underwriting. Third, we expect to deliver a return on total equity of about 20% or nearly 25%, excluding our deferred tax assets. And finally, we fully expect to achieve our long-standing goal of reducing debt below $1 billion. Looking beyond this year, we believe that we are positioning the company for more growth and more profitability, leading to higher returns on shareholders' equity. As we improve our financial and operational performance, we are also focused on creating additional value for stakeholders by extending our leadership position in ESG. On the environmental side, we were pleased to be named an ENERGY STAR Partner of the Year for the sixth consecutive year. And importantly, we continue to make improvements in our designs, materials and construction practices, in support of our industry-first pledge to have every home we build designated as net zero energy ready by the end of 2025. As part of this effort in fiscal ’21, we committed to meeting the EPA's rigorous standards for their Indoor airPLUS program. On the social side, we've made significant progress on the rollout of Charity Title, our title business committed to contributing 100% of its profits to charity. In fiscal ’22, we expect this expansion will allow us to donate more than $1 million allocated between our national philanthropic partner Fisher House, and other charities in the communities we serve. Our process of partnering with charities aligns our financial contributions with opportunities for both employee engagement and wellness. These philanthropic efforts have added to employee satisfaction, and have been very well received by our trade partners and homebuyers. Finally, on the governance side, our diverse and highly engaged board has earned high ratings from third party rating services. But we aren't resting there. Later this calendar year, we will publish our first ever Tear Sheet where we will provide substantial new ESG disclosures pursuant to the SASB framework for homebuilders. If you're familiar with SASB, and the types of metrics and disclosure topics they favor, you'll know this has taken a significant effort to prepare, and it won't just be a glossy marketing report. The bottom line is that we believe extending our ESG leadership position will provide real value for each of our stakeholders. And we are excited about adopting new processes and products to enhance the sustainability and resiliency of our business. With that, I'll turn the call over to Dave to walk through our results and expectations in more detail.

Thanks, Allan. Good afternoon, everyone. Turning to slide nine, we outline the detailed results for fiscal ’21. In the appendix, we include a comparable slide highlighting results for the fourth quarter. For the full fiscal year, we generated net income of $122 million, or just over $4 of earnings per share, which benefited from $12 million of energy-efficient tax credits. Excluding these tax credits, our earnings per share would have been $3.61, more than double the prior year. Adjusted EBITDA was about $263 million, up nearly 30% versus the prior year. Homebuilding revenue remained relatively flat versus the prior year, as the benefit from higher ASPs offset a modest decline in closings. Gross margin, excluding amortized interest, impairments and abandonments was up about 200 basis points to 23%. SG&A, as a percentage of total revenue decreased 50 basis points to 11.4%. Interest amortized as a percentage of homebuilding revenue was 4.1%, down 40 basis points as we benefited from lower interest incurred, and our tax expense was about $22 million for an average annual tax rate of 15%. This rate was lowered by energy-efficient tax credits primarily related to homes closed between fiscal ’18 and fiscal ’20. Turning to our expectations for the first quarter of this fiscal year: average monthly sales pace should be in the high 200s, which represents an increase relative to our historical first quarter average over the past five years. Community count is expected to be around 115, essentially flat sequentially. Closings should be between 1,000 and 1,050 reflecting extended cycle times and our emphasis on delivering a spectacular customer experience. ASP should be in the high $430,000 range. Gross margin should be up between 125 and 150 basis points versus the same period last year. SG&A on an absolute dollar basis should be up about $4 million. Land sale and other revenue should be about $7 million, with a margin of about 50%. Within the ranges we provided for closes and margins, EBITDA should be above $50 million, or up around 15%. Interest amortized as a percentage of homebuilding revenue should be in the mid threes and our tax rate should be approximately 25%. While precision in EPS forecasting is difficult, we expect earnings per share to be up at least 50% versus the same period last year. Looking forward to the full fiscal year, we expect to grow EBITDA by more than 10% in fiscal ’22 and earn more than $5 per share. Our improved profitability will be driven by the following factors: a significant increase in our average sales price to about $450,000, up over 10% versus fiscal ’21; more than 100 basis points of operating margin improvement arising from a combination of increased gross margin and lower SG&A as a percentage of total revenue; and interest amortized as a percentage of homebuilding revenue in the low 3% range as the benefit from our efforts to lower our cash interest expense continue to materialize. We ended the fourth quarter with nearly $500 million of liquidity comprised of unrestricted cash of approximately $250 million and nothing outstanding on our revolver. We have no significant maturities until 2025, and a clear path to bring debt below $1 billion in fiscal ’22. Our substantial deleveraging combined with higher earnings has led to significantly better credit metrics for our business. This trend should continue as we move through fiscal ’22. By year end, we anticipate our net debt to EBITDA will be in the low twos, and our net debt to net cap in the 40s. In the appendix of this presentation, we provided a longer term view of our improvement in the statistics, which we've accomplished while growing the profitability of our business. We spent over $245 million on land and development in the quarter, bringing our full year total spend to almost $600 million, up from less than $450 million in fiscal 2020. This increased land spending combined with our efforts to increase the percentage of our lots controlled through options has allowed us to grow our active lot position to over 21,000 lots. Looking forward, we expect to again increase our spend on land acquisition and development in fiscal ’22, which should generate at least 10% growth in our total lot position. As you can see on slide 12, we've already driven our total active lot positions back to a level that supported a much higher community count. To further demonstrate the relationship between growth in our lot position and our community count, on slide 13, we've shown this data on an index basis. In addition, we've also lagged our community count by one year to roughly reflect the normal timing difference between controlling lots and opening communities. As you plan for community count is headed, there are a couple important things to consider. In fiscal ’21, the growth in our lot position was driven by the approval of more than 100 communities for acquisition. This was about double the run rate of new community approvals in fiscal ’19 and ’20, and did not reflect any material change in community size. But, as you would expect, the supply chain disruptions that we're experiencing are also impacting the timing of land development activity. As such, the lag we typically experience from the time of controlling new lots to activating new communities has extended and become less predictable. Accordingly, we have very good visibility into a substantial lift in our community count, which will start later this year and accelerate during fiscal ’23. On a final note, our profitability expectations for fiscal ’22 are not meaningfully dependent on new community openings. With that, let me turn the call back over to Allan for his conclusion.

Thanks again, Dave. Fiscal 21 was a very successful year, but it's in the rearview mirror. And in fact, I'm even more excited about fiscal ’22. Here's why. The housing market remains quite strong, with demographically driven demand confronting structural supply constraints. We have a terrific backlog to jumpstart our year giving us visibility into improvements in pricing and margins to be realized in the near term. We're also investing for the future with a growing but risk-balanced land position, creating longer term growth opportunities. We have the best balance sheet we've had in more than a decade with far less debt and plenty of liquidity. And we're expanding our capabilities across the entire spectrum of ESG resulting in clear, easily observed achievements. Taken together these factors have us better positioned than ever to create growing and durable value for shareholders, customers, partners and employees and positively impact every community where we operate. Ultimately, credit for our results and our optimism about our future prospects is attributable to our team. I am sincerely grateful for their dedication, their efforts, their resiliency, and their success. That's why I remain confident we have the people, the strategy and the resources to accomplish our goals in the coming years. With that, I'll turn the call over to the operator to take us into Q&A.

Thank you, sir. It is now time for the question-and-answer session of today's call. Operator instructions are available to participants. Thank you. Our first question comes from Julio Romero from Sidoti & Company. Your line is open, sir.

Hey, good afternoon, Allan, David, thanks for taking the questions. So just to start off on the land spend, can you just talk about that fourth quarter sizable deployment? It was really impressive. I mean, talk about maybe how much was in options versus traditional land spend, how much was in land that's maybe further along in the development process versus earlier on? And then secondly, I'm not sure if I missed a land spend target for ’22?

I'll take the second one first. We did not give a dollar amount; we said we expect land spending to go up in 2022, but we don't have a hard and fast dollar amount associated with that. Turning to the first question, it's sort of interesting that what we struggled a little bit with in 2021 was in the first, second and third quarters deals seemed to slip a little bit. And it's amazing how deadlines create activity, and we were able to realize a lot of what had slipped for a week or a month or a quarter during the course of the year. So that the bulking up of that spend was really just timing or idiosyncratic results of individual transaction details. So there wasn't some conscious fourth-quarter decision to go spend a quarter of a billion dollars; it was really related to individual deals, and it really was a good mix across both acquisitions and option take downs. So there really is nothing unusual in the mix. It just clearly the dollar amount was quite significant.

Understood, and I guess, thinking a little bit longer term, you're obviously set up for very, very strong growth in fiscal ’22. As the backlog you have now and as maybe the margin levels kind of level off beyond ’22, is the benefit you'll see from improved community count in ’23 and SG&A leverage and lower interest expense large enough to offset any normalization in current backlog levels?

That is a great question. It's a really complicated question, because you articulated about six different variables a year-plus from now, but the truth is, I think so. I think there's enough volume. I think there's enough normalization on the cost side that even if, as new communities open, they have a higher land cost basis, which they will and that creates a different comparison from a gross margin perspective, I think there are enough other things going on — and you listed them fairly effectively — that I'm not concerned about running out of opportunity for profit in 2022.

That's exciting. Nice quarter and best of luck in fiscal ’22.

Thanks, Julio. Thank you very much.

Thank you. Our next question comes from Susan McCleary with Goldman Sachs. Your line is open.

Thank you. Congratulations on a great quarter and a great year. My first question, Allan, is going back to the land market. Obviously, all the builders are out there expanding their lot counts, really trying to position for the growth that they see coming through the market in the next several years or so. But do you have any concerns or any signs that the industry is at all repeating some of the things that we saw that contributed to the last housing downturn? How do you think about walking the line between having a certain level of risk management and conservatism relative to wanting to capture the growth that's out there?

Another really great question. The truth is that I don't see any scenario or any evidence that there is a community count opportunity, even with all of our growth ambitions, that would put us back in the context of producing or attempting to produce 1.7 to 2 million homes a year. So when we talk about the last big downturn, we were at production levels that were double where we are right now. I don't think despite community count growth, anyone is going to run through so much inventory that we're having to run fast just to replenish and grow. A slightly more nuanced question is whether this repeats at the sub-market level, and that's where the walking-the-line approach we're taking comes in: be really, really focused in existing submarkets, existing lots with existing product types. I can have very good visibility on 40-foot lots for front-loaded product, single-story ranch plans in a submarket, and I can know, at a high degree of confidence, what the competitive scenario looks like in ’23 and ’24. If I drive for exits out of town where land is cheaper, I have almost no visibility into how many communities I'll be competing with in ’23 and ’24. So for us, the balance of risk and opportunity is to do what we know how to do where we know how to do it.

Okay, that's very helpful. And then my next question is going back to your commentary around your ESG efforts and your net zero ready program. A lot of the materials that go into these homes in order to make them more energy efficient inherently end up costing more relative to some of the alternatives. How do you think about weighing that relative to affordability, given the focus on affordability as well?

It's another excellent question. So the first thing I would tell you — and this may be controversial — is that the fact is it resonates with our homebuyers. Some of our homebuyers, probably a minority of them, are focused on emissions and carbon and they like the fact that the home has a different energy or greenhouse gas contribution. A larger share look at it and say, 'I'm going to have $50, $60, $70 electric bills instead of $150 electric bills,' and they see value in that. Another group of our buyers worries about buying a home that could be functionally obsolete the day they bought it. Buying a Beazer home, you're not at risk of that because you're buying next year's home. We're two to three years ahead this year because we are doing things that other people aren't doing and that does resonate with homebuyers. The other part of it is, and again people may roll their eyes, it has energized our team. Our team knows that tackling this is difficult. But it is something that is different. It is better and it excites them. There's nobody in our industry — or any industry for that matter — who doesn't want an engaged, enthused employee population who's really committed culturally to achieving things that are awesome. Those reasons stand on their own and are wholly supportive of what we're doing. There's a third piece to it, and it's more prosaic: I like getting there first. The things we are doing are ultimately going to roll through building and energy codes over the next five to ten years. Rather than waiting until the 11th hour and then being in a panic to figure out how to qualify, I much prefer to be early, to be able to experiment, practice, substitute different products and figure out what works at scale in different climate zones, rather than having standards dictated to us. Finding ourselves early also puts us in a better position to accommodate those adoptions. Those are practical reasons, but enough for me is that our customers like it and our employees love it.

Thank you. Our next question comes from Tyler Batory from Janney. Your line is open.

Hey, good afternoon. Thanks for taking my questions. Just first one on the guidance — thoughts of being above $5 of EPS in fiscal ’22 — a multi-part question here. I think this is quite a bit above some of the guidance or commentary you had provided earlier. So wanting to understand the delta in terms of what you're expecting now versus what you were expecting a couple of months ago. And then I'm also curious: supply chain is such a key topic — to hit that $5 target, are you expecting things to remain relatively consistent in terms of the supply chain cycle times, or are you perhaps expecting them to get a little bit better as we move through the year?

Tyler, let me handle the first question. I wouldn't say that anything has materially changed in terms of our expectations. We've tried to lay out high-level guidance for how you get to the $5 in terms of ASP growth and some margin creation that we talked about between gross margin and SG&A. We have continuing better visibility as we go, and that's part of the reason for the guidance. What you'll see in your model is a little bit on the top line — ASP growth and some significant ASP gross margin expansion — plus lower interest expense, which has a significant impact on EPS. So really no change in terms of what we're seeing in the market. In terms of the supply chain, we basically baked in no improvement in the supply chain in our numbers. Allan talked about that, changing the cutoff dates for starts to be clear that we're baking in what we're currently seeing in terms of cycle times and not assuming improvement as we move through the year.

Okay, very helpful. Also interested on the gross margin side: if my math is right, in terms of the guidance you're looking at some sequential progression from the fourth quarter to the fiscal first quarter. So interested in expectations in terms of input cost and also your perspective on the lumber side?

We've talked about the price-cost mix in the fourth quarter and the sequential change that had occurred, and you can see from the guidance that we have some improvement as we move into Q1 as we benefit from the lower lumber costs that we experienced as we moved through last year. So you'll see lumber cost improvement rolling through and certainly some price appreciation driving some of the margin guidance that we have for Q1.

Q4 is really where we experienced the run-up last spring that affected us through the summer and into the fourth quarter. So we knew Q3 to Q4 was going to be the point where we were carrying the heaviest lumber costs. As we rolled into Q1 we were careful — we were pretty long in terms of days before prices spiked, then we got ultra short; we didn't panic and we didn't get long again. So as prices came down we were able to capture that improvement pretty quickly.

Okay, just last one on pricing: last quarter you talked about perhaps expecting some moderation in the market. Is that playing out, and what's your perspective on incentives out there from either you or competitors?

On incentives, it's tricky: incentives by themselves tell you a little bit, but you really have to put them in the context of base prices and included features. We've seen diminution in incentives; there isn't anything we're seeing as an early warning indicator of great concern. It's really the aggregation of base price, included features and incentives. It has played out as we thought last quarter: it is definitely not as euphoric from a price-action standpoint, and seasonally it wouldn't normally be either, but it's very stable. Demand is strong, both online and offline. I feel like the pricing environment is good. We're cautious about this; we understand there's a very important tether between incomes and house prices, and that relationship is more taut than it was 12 months ago. For that reason alone, we are not assuming or underwriting any price appreciation beyond what the fundamentals support.

Okay, that's all from me. Appreciate the detail. Thank you.

Thank you. Our next question comes from Alan Ratner with Zelman and Associates. Your line is open.

Hey, guys, good afternoon. Nice job in a tough operating environment out there. I appreciate all the guidance. I know it's not an easy environment to give a lot of visibility into, but Dave, my first question on the $5 per share guidance and all the inputs that go along with it: where do you feel like if things were to go sideways, there could be some risk to that? On the flip side, which inputs do you feel like you're being conservative on where if things ultimately do improve, there could be some upside? How do you think about conservative versus more aggressive inputs?

Alan, in terms of the forecast, with approximately half the closings already in backlog and the margin competency we have, it feels pretty good. In terms of risks, there are still sales to make and there's still a production environment. Assuming flat cycle times is a risk, but we've managed and incorporated that into the forecast. I'd say that's probably the biggest risk, but we think we've properly captured it. In terms of upside, we'll see as we play through the year; it's a tough question to answer right now. For now, think of prices as stable; as we move through the selling season we'll have a better sense of potential upside from operating results.

Got it, that's helpful. Second question, Allan: you've been pragmatic about recognizing potential affordability constraints if rates rise. Over the last month or two we've seen some volatility in mortgage rates. Can you ascertain any interesting consumer behavioral trends when rates were starting to creep higher? Did you see buyers jumping off the fence in anticipation rates would continue going higher, or was it a muted reaction? What are you hearing from the field?

It felt pretty muted. We've certainly lived through environments where rising rates pull forward some demand; I don't think we saw that this time. I also didn't see any effect on our backlog that suggested buyers were pulling back because rates ticked a bit higher. One thing that gives me comfort is that lenders are competing for our buyers; that competition is a buffer for small moves in rates. I'm not suggesting we're not exposed to higher rates — we are — but having multiple lenders trying to win the business is helpful in a rising-rate environment.

All right, thanks a lot, guys.

Thank you. Our next question comes from Alex Barron with Housing Research Center. Your line is open.

Good afternoon, gentlemen, and great job. It's great to see where you guys ended up compared to where you started the guidance. I wanted to focus on your deferred tax asset (DTA) — probably something you don't refer to much. My understanding is that you won't be paying taxes for a while on some of the earnings. Can you give us a sense if you get other years like 2022, how many years out does your DTA cover you from paying taxes?

Alex, you can work on the pre-tax income and look at federal tax rates to do some math. What I would tell you is the deferred tax asset is very meaningful to us. As profitability grows, the present value becomes bigger because we're shielding more taxes more quickly. It is incredibly valuable and the value is becoming more clear given our increasing profitability and timing.

And in terms of your $5 number, what tax rate are you implying given the proposed tax changes? Are you assuming last year's tax rate or a higher tax rate?

We're using a similar tax rate; we haven't assumed a different tax rate in the numbers.

Given you're trading near book value, have you considered buybacks rather than just paying down debt?

We've had a long-term focus on getting our leverage into a much healthier place. When we talk about where we'll be at the end of this year, we estimate being down in the two-times debt-to-EBITDA range and in the 40s on debt-to-cap. That's a different environment than historically; it may be a conversation for next year. Right now, we have a tremendous growth opportunity in front of us and deal flow that underwrites to our satisfaction. So buying back stock doesn't seem to be the best allocation of capital at the moment. It's on the table — we've done it before — and if there were serious dislocations in the share price it could come back on the table. For now we've prioritized de-risking the company by getting debt down and creating a growth trajectory, which our shareholders have told us is valuable.

All right, thanks. Keep up the good work.

Thank you. Our next question comes from Jay McCandless with Wedbush. Your line is open.

Hey, good afternoon. Dave, at the end of your commentary, did you say that Beazer believes you can get to the $5 without seeing meaningful community growth this year? Did I hear you correctly?

You did. We said approximately half of the expected closings for the year are already in backlog, so you can do some math based on that.

Okay. What number of closings are you anticipating to get to this $5?

We didn't give an exact number on the call. We're not going to give exact guidance, but as I mentioned, approximately half the expected closings are already in backlog, and you can work from that.

And you removed an older chart that was helpful showing communities coming open versus ones closing out. What is the plan B if community development runs slower? Because competitors are telling us it's slower to get communities out of the ground. I'm trying to back into the math if backlog is half your production this year.

First, Jay, we don't need to get a lot of communities open this year to deliver our forecast. Closings will come from our existing communities. If we get a community open in the spring, the likelihood it will produce closings by September 30 is essentially zero, which is why Dave said our profitability forecast is not meaningfully dependent on new community openings. We do still have the chart; it's in the appendix, chart 27, showing communities expected to open in the next six months, those that will be closing out, and those that have been approved but not yet closed. That data is available if you'd like it. Normally, taking the September 30 backlog and multiplying by two to forecast closings would be conservative because we typically turn inventory faster. This year there's less risk in the number because a larger share is already contracted and we assumed cycle times do not improve.

Okay, thanks for taking my question.

Thank you. Our next question comes from Vince. Your line is open.

Thanks for taking my question. My question relates to liability management and how you're thinking about your capital structure. I know in the prepared remarks you talked about having a nice runway until 2025 in terms of your next maturity. But when I look at the 2025 debt that is fairly expensive from a coupon perspective, and when I look at where your bonds are currently trading, we're probably talking two to three hundred basis points inside of where the coupon is for your 2025 paper; these bonds are callable now and they step down a bit in March. So how are you thinking about addressing those in the future?

The math you're doing is the same math we're doing. We're making sure to be thoughtful and timely with the market. The economics you described are not lost on us; we understand it and want to make timely and good decisions.

Understood. That's all I had. Thank you.

I want to thank everybody for joining us on the call and we'll see you next quarter. Thank you very much for your time and this concludes today's call.

That does conclude today's conference. You may disconnect at this time. And thank you for joining.