Earnings Call Transcript - FSV Q3 2022

Operator, Operator

Welcome to the Third Quarter Investors Conference Call. Today's call is being recorded. Legal counsel requires us to advise that the discussion scheduled to take place today may contain forward-looking statements that involve known and unknown risks and uncertainties. Actual results may be materially different from any future results, performance, or achievements contemplated in the forward-looking statements. Additional information concerning factors that could cause actual results to materially differ from those in the forward-looking statements is contained in the company's annual information form as filed with the Canadian Securities Administrators and in the company's Annual Report on Form 40-F as filed with the U.S. Securities and Exchange Commission. As a reminder, today's call is being recorded. Today is October 26, 2022. And I would like to turn the call over to Chief Executive Officer, Mr. Scott Patterson. Please go ahead, sir.

Scott Patterson, CEO

Thank you, Chris. Good morning everyone. Thank you for joining our third quarter conference call. I'm on the line today with our CFO, Jeremy Rakusin. Let me open by saying that we're pleased with the results for the quarter. We show continued strong organic growth, attributed to our teams and the quality of our service delivery. Our service excellence culture drives customer retention, repeat business and word-of-mouth referral, and our high-single digit organic growth for the quarter and year-to-date is a reflection of that. Total revenues for the quarter were up 13% over the prior year, with organic revenue growth at 8%, just about evenly split between our two divisions. EBITDA for the quarter was $95.5 million, a modest leap from 2021, reflecting a margin of 9.9% compared to an 11.1% in the prior year. Jeremy will walk you through the year-over-year margin variance. At FirstService Residential, revenues were up 13% with organic growth over 8%. Organic growth was driven by solid year-over-year increases in amenity management, and again this quarter by strong net new contract wins leading to higher management fee and labor-related revenue. We achieved particularly robust growth in Florida and the Southeast where we have a very strong presence. Again this quarter, we estimate that price accounted for between 2% and 3% of the quarterly gain. Looking to the fourth quarter at FirstService Residential, we expect to show mid to high-single digit revenue growth all organic. Moving on to FirstService Brands, revenues for the quarter were also up by 13%, approximately half of which was organic. Our home improvement brands led by California Closets were again very strong this quarter with year-over-year growth of near 30%. The growth seen here reflects higher capacity and production relative to the third quarter of 2021, which was weakened by supply chain and COVID-related disruption. Sequentially, revenues were up modestly relative to Q2, and we'll continue to have some success in adding production capacity despite a tough labor market. We're very pleased with the results from our home improvement brands that exceeded expectations for the quarter. The teams have done a great job of capitalizing on our strong demand in a tough operating environment. Looking forward to the fourth quarter, we expect to again show some sequential growth in Q3 and year-over-year increases of about 15% against a strong fourth quarter in 2021. Let me now turn to Century Fire before we talk restoration. Century had another strong quarter growing by over 20%, half organic. Growth was again buoyed by a solid commercial construction market and strong momentum with our national account service and repair program. Backlogs in bid activity remain very strong, and we expect similar year-over-year growth in Q4. Our restoration brands Paul Davis and FirstOnSite generated revenues that were approximately flat with the prior year and down mid-single digits organically. We did not book any revenues during the quarter from named storms or area-wide events and are pleased that we were able to match prior year revenues that included $30 million primarily from Hurricane Ida. Organic growth for the quarter excluding storm revenues was above 10%. On September 24, Hurricane Fiona swept through Atlantic Canada causing damage primarily in Nova Scotia, New Brunswick and Prince Edward Island. Both Paul Davis and FirstOnSite responded to the event and are working in the area, but we did not book any revenue in September. Revenue generated from Fiona will fall into our fourth quarter and perhaps into next year. A few days later, on the 28th of September, Hurricane Ian made landfall in Southwest Florida and caused significant damage in the Fort Myers area and continued up through Orlando and the Northeast Coast of Florida. Went offshore and made landfall again in South Carolina. This was a big Category 4 event due to catastrophic damage primarily from flooding related to an unprecedented storm surge. We have thousands of associates that live and work in the area of the storm, and thankfully, they are all safe, although a number of them unfortunately lost their homes or suffered significant damage. We are helping these employees who have been impacted through the FirstService Relief Fund that we set up five years ago to provide aid in situations just like this. For the FirstService Corporate lead, our associates contribute to the fund. And I'm proud to report that in the last four weeks, we have provided over $250,000 to team members that experienced financial hardship related to the storm. The storm not only impacted our associates but also many of the communities that we manage in the area through FirstService Residential. Our teams are working closely with our boards and residents to document damage for insurance purposes and to facilitate the cleanup, mitigation, and restoration process. Both Paul Davis and FirstOnSite have been on standby and are working closely with FirstService Residential throughout Florida and South Carolina to help our managed communities during this difficult time. The collaboration has been very strong. Taking part in FirstService-managed communities, both Paul Davis and FirstOnSite are engaged and working on hundreds of projects in the affected area. It is still too early to quantify what this will mean for our restoration businesses in terms of revenue in the coming quarters. Many of the jobs we are engaged with may become tear down and rebuilds rather than mitigation and restoration jobs. In addition, we're working with many clients to confirm insurance coverage before restoration commences, and the outcome could affect the amount and type of work performed. The situation continues to evolve. At this point, our best estimate is that restoration will show about 20% revenue growth in Q4 relative to the prior year. This is assuming we generate $70 million from Hurricanes Ian and Fiona, with the bulk from South Florida work relating to Hurricane Ian. In the fourth quarter of last year, we generated $40 million of Hurricane Ida. Work related to Ian and Fiona will definitely roll into 2023, but we're not in a position to quantify the level of backlog that will carry forward at this point. We'll obviously provide an update on our year-end call. Staying on restoration, earlier this week, we were excited to announce the addition of three companies to our restoration platforms. The acquisitions enhanced our geographic footprint and service capability. FirstOnSite acquired Watermark Restoration, boosting our presence in the U.S. Southeast, particularly in Alabama and North Carolina, and adding several significant customer relationships. In Canada, FirstOnSite acquired the assets of Confra Global Solutions, a reconstruction company that enhances our full-service restoration offering to commercial clients in the Toronto metro market. And finally, we acquired a majority stake in our Paul Davis franchise serving Nebraska and Southern Missouri. It was the largest and most successful Paul Davis franchise in the network, and we're excited to partner with Roger Fredstrum and Jeff Theobald to drive further growth in the Midwest U.S. On that, let me now hand off to Jeremy to walk through the results in more detail.

Jeremy Rakusin, CFO

Thank you, Scott. Good morning, everyone. Our third quarter financial results came in largely matching our internal expectations and more than the quarterly performances delivered during the first half of this year. The overriding themes also remain similar to prior quarters, with strong across-the-board topline organic growth driving our performance partially offset by the same factors contributing to margin dilution. I will elaborate on these drivers momentarily, but let me first summarize our consolidated results. For the current third quarter, FirstService recorded total revenues of $960 million, up 13%, and adjusted EBITDA came in at $95.5 million, up 1% relative to the prior year period. Our adjusted EPS was $1.17, down from the reported $1.50 from Q3 last year, which included a $0.21 per share gain on sale from a non-core business. So, earnings per share are down modestly year-over-year against a normalized $1.29 after adjusting for this prior year gain. Highlighting our consolidated performance for the nine months year-to-date, we delivered revenues of $2.73 billion, up from $2.39 billion in the prior year period, an increase of 14%, which includes 8% organic growth. Adjusted EBITDA sits at $249.2 million with our overall EBITDA margin at 9.1% compared to $243.8 million and a 10.2% margin for the prior year period. And lastly, our adjusted EPS year-to-date is $3.02, down from $3.36 recorded for the same period last year. Our adjustments to operating earnings and GAAP EPS in providing adjusted EBITDA and adjusted EPS, respectively, are disclosed in this morning's earnings release and are consistent with our approach in prior periods. I'll now dive further into our third quarter segmented results for our two divisions. At FirstService Residential, we generated revenues of $478.6 million, a 13% increase over Q3 2021. This strong topline performance growth drove EBITDA of $49.6 million, a 10% increase year-over-year. We incrementally continue to close our year-over-year margin comparison with the current quarter EBITDA margin yielding 10.4%, 30 basis points lower than the 10.7% in last year's Q3. The margin was influenced by a higher mix of the labor-based services that Scott referenced earlier as driving our growth compared to higher margin ancillary services. Higher margin transfers and disclosures revenue, in particular, saw a greater than expected year-over-year decline due to reduced home resale activity compared to the robust levels we have called out in previous quarters. We are pleased with our progress in clawing back from a 100 basis point margin gap with improving comparisons sequentially over the past four quarters. Now to FirstService Brands. The division generated revenues of $481.9 million during the current third quarter, up 13% versus the prior year period. Our Brands' EBITDA was $48.8 million with a 10.1% margin, down versus $53 million and a 12.4% margin in last year's third quarter. Our Brands margin decline during Q3 was due to a combination of continued growth-related investments in our restoration operations, together with the absence of revenue from any notable weather-driven activity versus last year, which benefitted from the Hurricane Ida and Texas Freeze events during the comparable period. We explained the same margin dilution dynamic in our most recent second quarter call as well and on a sequential basis compared to Q2, our Brands margin improved by 80 basis points, up from 9.3%. Now, onto our consolidated cash flow where before working capital we generated $72 million of operating cash flow in line with the prior year. Working capital requirements during the quarter absorbed all of this cash flow for a couple of reasons. We had timing-related tax and payroll payments that were both adverse to our cash flow in the current quarter and compared unfavorably with the prior year period. In addition, with Hurricanes Fiona and Ian landing in the latter half of September, our restoration operations incurred meaningful upfront mobilization and preparation costs in advance of those events without realizing any corresponding revenue during the quarter. Now as Scott mentioned earlier, our teams are still in the early stages of the damage assessment and remediation planning with our clients, and preliminary indications are that we will have a lengthy backlog tail into 2023. Although timing is unclear at this juncture, we will ultimately see cash conversion of the working capital investments with weather events over future quarters. Beyond working capital, the other leg of investments supporting organic growth is our capital expenditures. CapEx during the quarter came in at $19 million resulting in $55 million of spending year-to-date. We are pacing within our previously set annual target of $85 million and may come in a little lower than that level for the full year. In terms of our tuck-under acquisition program, we have remained steadfastly disciplined with what we are willing to pay for potential targets in the face of aggressive competitive bidders, and this has tempered our activity during 2022. We strive to be prudent and opportunistic with all of our investment dollars, whether deployed for organic growth purposes or towards acquisitions to meet our return on investment expectations. We did see some modest acquisition activity during the quarter and, as Scott touched on, we also closed a couple of additional restoration transactions post-third quarter. These tuck-ins will augment our growth heading into 2023. Our deal pipeline remains active, and we expect to convert on additional opportunities in the coming months. Our balance sheet at quarter-end included net debt of $556 million, resulting in our leverage coming in at 1.6 times net debt to trailing 12 months EBITDA, up slightly from 1.5 times in the previous second quarter. This leverage threshold is very much in line with where our capital structure settled over the past several years and remains conservative and well within our comfort level. Our liquidity and debt capacity also remain strong with approximately $550 million of total cash on hand and undrawn availability under our credit facility. At the end of the third quarter, we also announced new three-year senior note facility arrangements with our two longstanding lenders, Prudential and New York Life, simultaneously with the issuance of an additional $60 million of 10-year notes with a 4.53% coupon from New York Life. The financing improved the cut-downs of our debt mix to a healthy level of one-third fixed and two-thirds floating. The facilities also enhance our financial flexibility to incrementally tap into multiple tranches of long-term notes in varying amounts over the next three years. With the uncertain and volatile interest rate environment, flexibility in managing our financing cost and diversifying our debt maturities is a key element in maintaining a strong balance sheet. In terms of our outlook for closing out 2022, our consolidated revenues for the fourth quarter will see low double-digit to mid-teens percentage growth over Q4 2021, including the assumption of realizing roughly $70 million of hurricane work, as Scott mentioned. We expect that Q4 consolidated EBITDA growth should roughly match the topline performance with consolidated margins in line or possibly a little better than the prior year quarter and somewhat dependent on the type of restoration work performed during the period. After going through our budget and strategic planning review processes with each of our operations in the coming weeks, we will provide a 2023 outlook during our 2022 year-end earnings call scheduled for early February. That concludes our prepared comments. Operator, can you now open up the call to questions? Thank you.

Operator, Operator

Thank you. Our first question will come from Michael Doumet of Scotiabank. Your line is open.

Michael Doumet, Analyst

Hey, good morning guys.

Scott Patterson, CEO

Hi, Michael.

Michael Doumet, Analyst

The first question I had was really on the residential pace here. Just trying to figure out the margin story. And so, it feels to me like there are three major drivers here, and I'd like to pull those apart just for the sake of better understanding in where margins can land in Q4 and obviously in 2023 for that segment. So, on the one hand, it sounds like you're raising price and you're having success there driving better labor recoveries. On the other hand, you're calling out unfavorable mix, and I'm not sure what the comps look like for the next coming quarters. So, just given those puts and takes, do you think that net trend is still positive to that segment through Q4 and to 2023?

Scott Patterson, CEO

Hi, Michael. Yes, I'll take that. Continued improvement, and we've done it for four quarters, and we continue to expect to close the margin gap. Best guess is that we will in Q4 match year-over-year margin performance. And perhaps a little bit of the shortfall in Q3 will be accounted for in Q4 in my mind. What I just said would be a significant fallout in transfers and disclosures revenue on resale activity at the lowest level for this quarter in the last 10 years. So, it's actually reversed from above-average levels over the couple of years during COVID to well below average levels in this quarter. And that sets the mix dynamic. As for the other component, in terms of covering wage inflation, that's a combination of pricing and efficiencies, and we believe that dynamic, at least for now, is largely covered off. It was a little more of a mix phenomenon.

Michael Doumet, Analyst

Got it. Helpful, thank you. And then on Restoration, how should we think about the margin improvement there and how it plays out in the medium term, again putting aside the variability from the storm activity? I guess the way I'm thinking about it, there's some margin normalization that will happen as we complete the investments, or is it really just a function of higher revenues by throughput and scale that will absorb higher OpEx in that sense?

Scott Patterson, CEO

In the absence of any meaningful weather events, it's going to play out over a longer period in the next couple of quarters. Through 2023, at a minimum, we're going to be operating at the low, kind of more like mid-single-digit margins like we have in Q2 and Q3, without any weather. The weather events give us operating leverage to perform at a higher level, bringing in incremental EBITDA at a higher margin level. When we're through the investments, we expect to reap rewards, but that's a multi-year exercise. I had spoken in Q2 about it being a multi-year exercise that we went through with FirstService Residential about eight years ago.

Michael Doumet, Analyst

Okay. So, those are my two. Thanks.

Scott Patterson, CEO

Thanks, Michael.

Operator, Operator

Thank you. One moment, please, for our next question. Our next question will come from Stephen MacLeod with BMO Capital. Your line is open.

Stephen MacLeod, Analyst

Well, thank you. And good morning, guys. I just wanted to get some color on home improvement. It was strong Q2, again strong Q3. I'm just curious if you can give a little bit of color around what you're seeing in terms of job leads heading into Q4. And then maybe, more importantly, heading into next year considering the weaker macro backdrop that we're seeing?

Scott Patterson, CEO

Sure, Stephen. I mean, I think I've mentioned a lot of color that leads and bookings have come off in the last several months, but they do still remain at a healthy level. And we have clear visibility through year-end. As I mentioned in my prepared comments, we expect to show 15% revenue growth over Q4, that was last year, which was quite strong. At this point, we believe we will enter 2023 in a similarly healthy position with a solid backlog and will certainly provide more color and visibility on our year-end call. It's our intention that we will certainly grow in 2023. It's not likely to be at the same pace as we're seeing this year; we are knocking out some big numbers in home services. But certainly, we will grow next year, and even with the backdrop of this uncertain environment. Our perspective in these markets is that they're huge, and our share is modest to small. Even in a downturn, the work will be there; we need to grow up and get it.

Stephen MacLeod, Analyst

Right, okay. That's great. And then just turning to acquisitions. Jeremy, you mentioned this season will be disciplined, but you did complete a couple of deals recently, a few deals. I'm wondering if you can just give some color as to what you're seeing in the pipeline being most robust and where you'd like to execute if the price is right.

Scott Patterson, CEO

Well, really, nothing's changed. As Jeremy said, the pipeline is pretty good and solid. We've certainly in terms of the number of deals we closed slowed in the first six months, but you saw our announcement earlier. As Jeremy said, we expect to close a few more this year. We think on balance this year we'll end up being a decent year on the acquisition front. It's balanced; we're looking across all our platforms and engaged across all the platforms. Restoration continues to be healthy, as it has been for the last couple of years. I would expect the next year to resemble what we've done the last few years. I hope I answered your question completely.

Stephen MacLeod, Analyst

Yes. No, that's great, Scott. I mean, it sounds like things are largely focused towards restoration in terms of the end markets almost as other areas that you're interested in.

Scott Patterson, CEO

It is, which it has been for the last few years, but we are engaged across all the platforms.

Stephen MacLeod, Analyst

Okay, great. Okay. That's all and thank you very much.

Scott Patterson, CEO

Thanks.

Operator, Operator

Thank you. One moment for our next question. And our next question will come from Faiza Alwy of Deutsche Bank. Your line is open.

Faiza Alwy, Analyst

Yes, hi. Good morning.

Scott Patterson, CEO

Good morning.

Faiza Alwy, Analyst

I wanted to get your perspective on the labor market, and it sounds like things have eased a little bit from everywhere just a few months ago. We wanted to get your perspective on what you're seeing in the marketplace now and sort of if you have any prognosis of where we might go as we look ahead to 2023?

Scott Patterson, CEO

We said it's eased a little bit; I think that's right on. It has eased first and very incremental for us, and labor availability remains a big issue. It's, if not the top priority, very close at every one of our brands and remains most pronounced at the entry level where we still have too many open positions. So, everybody's on it; there has been some improvement through 2022, but it has been slowing out. I think it will remain tough for the foreseeable future.

Faiza Alwy, Analyst

Okay, that's helpful. And I guess I'm curious, you've talked about a little bit of pricing. Are you at this point like have you recovered sort of all of the cost increases that you've been seeing for all of the inflation that you've been seeing? Like, are you sort of on a one-to-one basis at this point, or is there still more of a recovery to go in terms of pricing and recovery of cost as we look ahead to 2023?

Scott Patterson, CEO

Yes. I'll start with that, and then Jeremy, maybe you can fill in because there is a difference between our two divisions. FirstService Residential is an ongoing exercise as the inflation increase baked into our organic growth is sort of between 2% and 3%. Certainly our costs were up by more than that, so we have not fully recovered at FirstService Residential. We're planning our way back through price increases but also through efficiency, and Jeremy can fill that out in more detail. Then we're having much more success on the Brand side in terms of cost improvements and pricing. Jeremy, anything you want to add?

Jeremy Rakusin, CFO

Yes. You characterized it correctly. On the Brand side, it's a lot easier to pass forward, not just in terms of having more pricing power, but they are job-based. So, you don’t have to wait for annual contract renewals. For the year, it's typically a quarterly line. But as on the investments in FirstOnSite, our other businesses, home services and FirstOn and Century Fire have performed very well on the margin side, meaning that pricing is covering off all inflationary pressures, labor and other material inputs. And on the raising side again, the outlook is to close the gap and have flattish year-over-year margins by Q4. We're using multiple levers. As Scott said, the continuing efforts on pricing, we need the efficiency angle as well to cover off the fact that costs are a little higher than pricing in that side of the business.

Faiza Alwy, Analyst

Got it. Thank you so much.

Operator, Operator

Thank you. Again one moment for our next question. Our next question will come from Daryl Young of TD Securities. Your line is open.

Daryl Young, Analyst

Hey, good morning everyone.

Scott Patterson, CEO

Good morning, Daryl.

Daryl Young, Analyst

First question is around Century Fire. And 50% of the business on the monetary side would be highly resilient. The other 50%, could you just give us a little bit of color on the installs, what end markets would be the key drivers there? Is it multifamily or is it more commercial?

Scott Patterson, CEO

It's commercial, and we include multifamily in that definition. It's all types of rental buildings: 3-storey walk-ups, high-rise towers, and also includes distribution warehouses, which remain strong, data centers, and it really cuts across office and retail as well. It's very robust right now for us, in terms of sprinkler installation and alarms installation.

Daryl Young, Analyst

Okay, good. And then, second question is also on Century Fire. Just looking out a few years, I mean your growth rates have been exceptional at Century Fire. Is there an investment cycle similar to what's happening in Restoration that will need to happen at Century Fire as you would integrate that platform, or are you still a few years away from sort of going through that similar exercise?

Scott Patterson, CEO

No, here, it's not as significant an exercise because the growth has been as strong as it's been. It's been paced over, I guess, seven years now. And so we've been at it, and we do have a platform that we are integrating our tuck-under acquisitions into, and we've been investing the last several years but just more moderately relative to the significant expenditure we're seeing at FirstOnSite.

Daryl Young, Analyst

Okay, good. Actually, maybe just one last one. With respect to FirstService Residential, I think the answer is no because you didn’t call it out, but is there anything we should be aware of in Florida related to the hurricane activity that could be an issue for FirstService Residential?

Scott Patterson, CEO

We don’t think so. I mean, it's very stressful on our teams this whole event because we manage so many properties that were in the area of the storm. So, our managers, our teams are working extremely hard. But these communities still need to be managed and through this event, and so we really won't see any impact one way or the other.

Daryl Young, Analyst

Got it, alright. That's it from me, thanks.

Scott Patterson, CEO

Thanks.

Operator, Operator

Thank you. And one moment for our next question. Our next question will come from Stephen Sheldon of William Blair. Your line is open.

Stephen Sheldon, Analyst

Hi, thanks. Just one quick one from me. In Brands, how concerned are you about weakening consumer sentiment starting to impact demand in the home improvement businesses? It doesn't sound like it's having any notable impact yet, but do you see that as being much of a risk into 2023, or does the demographic of the customer base and typically support?

Scott Patterson, CEO

Well, I think we see it as a potential risk, Stephen, definitely. But as I said earlier, these are huge markets, and we have a small share, and we're the largest in all these markets. So, our belief is that we can grow in any environment. The work is out there, and we saw that particularly with CertaPro Painters and Floor Coverings International during the great financial crisis. We grew right through it. California Closets was hit a little harder, but we think we're in a better position now, and we believe that any likely recessionary environment won't be different. So, we feel good about 2023.

Stephen Sheldon, Analyst

Great. Thank you.

Operator, Operator

And our next question will come from Frederic Bastien of Raymond James. Your line is open.

Frederic Bastien, Analyst

Good morning, guys. During the previous earnings call, you expressed confidence in closing some tuck-in acquisitions in very short order, and obviously, we see it. We saw that earlier this week. How are you feeling about the pipeline as you exit this year and start looking at next year?

Scott Patterson, CEO

Well, I think we have opportunities in our pipeline that we won't close until 2023. So at this point, I feel optimistic. And I think our expectation is that we'll see more opportunities in the coming year. We have liquidity and are in a position to move quickly whereas relative to some of our competitors that we've been pacing in the last couple of years, they may be more reticent in a more interest rate environment that we're seeing today. I think we're optimistic.

Frederic Bastien, Analyst

Great. And is the focus still predominantly on building your Restoration franchise versus remaining opportunistic in other service lines?

Scott Patterson, CEO

I would say yes, but we do have opportunities across the board right now. The focus on Restoration will continue as we fill out our footprint. We're getting to a point, we're not there yet, but we'll get to that point where we'll have primarily an organic growth engine. And that's where a lot of this investment is focused, as Jeremy said when describing in the last couple of quarters.

Frederic Bastien, Analyst

Okay. Another question is on FirstService Residential, 8% organic growth, which if you exclude the 3% you got from gains is right smack in line with your long-term guidance. How do we think about that going forward? I mean, is it reasonable to assume that the price increases you experienced in the quarter could be repeated in the next two to three quarters, or I mean are you expecting just kind of settle back to this long-term average target that you have?

Jeremy Rakusin, CFO

No, I think having the pricing, we've always had some level of price increases even though they were modest. So, where our price increase level is up about 4.5%, and we expect to continue to see that in the next few quarters. We did get a boost this quarter from amenity management, primarily pool maintenance and repair and work that had been deferred through COVID. We wouldn’t expect to see the same kind of boost in the fourth quarter because it’s a non-seasonal quarter for that business. But we think we'll settle back into the mid-single digit level going forward.

Frederic Bastien, Analyst

Thanks. I appreciate the clarification. That's all I have. Thanks.

Jeremy Rakusin, CFO

Thanks.

Operator, Operator

Thank you. I'm seeing no further questions in the queue. I would now like to turn the conference back to Mr. Scott Patterson for closing remarks.

Scott Patterson, CEO

Thanks, Chris. And thank you for joining, everyone. We look forward to reporting on our year-end in early February. Have a great rest of your day.

Operator, Operator

This concludes today's conference call. Thank you all for participating. You may now disconnect and have a pleasant day.