Earnings Call Transcript - LAND Q1 2021

Operator, Operator

Greetings and welcome to the Gladstone Land's First Quarter Earnings Conference Call. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. Please note, this conference is being recorded. I would now like to turn the conference over to your host Mr. David Gladstone, Chief Executive Officer and President. Thank you. You may begin.

David Gladstone, CEO

Well, thank you, Devin. That was a nice introduction and this is David Gladstone and we welcome you to the quarterly conference call for Gladstone Land and thank you again for all of you coming into this conference call and listening. And we'll start off, of course, with Michael LiCalsi, he's our General Counsel and Secretary and he's President of Gladstone Administration, which is the administrator for all the Gladstone funds.

Michael LiCalsi, General Counsel and Secretary

Thanks, David, and good morning. Today's report may include forward-looking statements under the Securities Act of 1933 and the Securities Exchange Act of 1934 including those regarding our future performance. These forward-looking statements involve certain risks and uncertainties that are based on our current plans, which we believe to be reasonable. Now, many factors may cause our actual results to be materially different from any future results, expressed or implied by these forward-looking statements, including all risk factors in our forms 10-K, 10-Q and other documents we filed with the SEC. And you can find these on our website at www.gladstoneland.com. Specifically, go to the Investors page. You can always find them on the SEC's website that's www.sec.gov. And we undertake no obligation to publicly update or revise any of these forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law. And now today we will discuss FFO and that's funds from operations. FFO is a non-GAAP accounting term, defined as net income excluding the gains and losses from the sale of real estate and any impairment losses from property, plus depreciation and amortization of real estate assets. Now we may also discuss core FFO, which we generally define as FFO adjusted for certain non-recurring revenues and expenses. And then adjusted FFO, which further adjusts core FFO for certain non-cash items, such as converting GAAP rents to normalized cash rents and we believe these are all better indications of our operating results and allow better comparability of our period-over-period performance. Now please take the opportunity, once again, to visit our website gladstoneland.com, sign up for our e-mail notification service, so you can stay up-to-date on the company. You can also find us on Facebook. Keyword there is the Gladstone companies and our Twitter handle is @gladstonecomps. Today's call is an overview of our results, so we ask that you review our press release and Form 10-Q, both issued yesterday for more detailed information. Again, you can find them on the Investors page of our website. With that, I'll turn the presentation back to David Gladstone. David?

David Gladstone, CEO

Okay. Thanks, Michael. As all of you know who are listening and from our press release yesterday, we currently own about 104,000 acres of farmland, 141 different farms and over $1.2 billion in valuation. Our farms are located in 13 different states and more importantly in 27 different growing regions. I noticed you all saw in the Wall Street Journal that Mr. Gates owns 120,000 acres and is supposedly the largest farm owner. Well, move over Mr. Gates, we're coming through.

Lewis Parrish, CFO

All right. Thank you, David and good morning, everyone. I'll begin with our balance sheet here. During the first quarter our total assets increased by about $67 million. This is primarily due to net proceeds received from stock issuances, which have yet to be fully invested. From a financing perspective during the first quarter, we secured about $10 million of new long-term bonds at a weighted average rate of 2.96%, which is fixed for the next eight plus years. In addition in January, we raised about $58 million of net proceeds through the issuance of a new 5% Series D term preferred stock, which is traded on NASDAQ under the ticker LANDM. And in February, we used about $29 million of those proceeds to redeem our Series A term preferred stock, which carried a coupon of 6.375% and had a mandatory redemption date of September 2021. On the equity side since the beginning of the year, we've also raised about $16 million of net proceeds from the sales of our Series C preferred stock. And over the same time period, we've also raised about $59 million of net proceeds through sales of our common stock under the ATM Program. Our current ATM Program originally allowed for $100 million of sales which we have since sold out of. So we will likely be looking to increase the size of the ATM Program soon. Moving on to our operating results. First I'll note that for the first quarter we had net income of about $554,000 and a net loss to common shareholders of $2.2 million or $0.082 cents per common share. On a quarter-over-quarter basis, adjusted FFO for the first quarter was approximately $4.7 million, compared to $3.6 million in the fourth quarter of 2020, an increase of about 31%. And AFFO per share was $0.174 in the first quarter versus $0.147 in the previous quarter, an increase of about 18%.

David Gladstone, CEO

Thank you, Lewis, for the nice report. I know many of you are curious if we have plans to make further acquisitions. We are observing numerous buying opportunities and hope to announce additional acquisitions in the coming months. Our due diligence process has been prolonged due to travel restrictions and office closures caused by COVID-19, as some government offices only allow one person inside at a time. However, we anticipate that these restrictions will ease soon, enabling us to accelerate our activities compared to last year. Furthermore, we firmly believe in investing in farmland and cultivating crops that promote a healthy lifestyle, including fruits, vegetables, and nuts, which align with a positive trend in the markets we serve in the United States. Currently, approximately 85% of our total crop revenue comes from farms producing food found in the produce and nut sections of grocery stores, and we consider these to be among the healthiest food options. The trend toward organic produce is strong, with about 40% of our fresh produce acreage being organic or in the transition to organic status, a trend we support. Over 10% of our permanent crops are organic, and we plan to expand this over the next year since we believe the organic market continues to offer significant growth potential. Additionally, 95% of the crops cultivated on our farmland are classified as non-GMO, an important designation for us. Our focus on farmland dedicated to fresh produce is also driven by the impact of inflation on this sector. The Bureau of Labor Statistics indicates that the annual food CPI typically keeps pace with inflation, but fresh fruits and vegetables have outperformed the total CPI by 1.5 times over the last 40 years. This is why many financial advisors recommend investing in farmland as a hedge against inflation. Unlike commodity grain crops, such as corn and wheat, which are volatile and influenced by global supply and demand, fresh produce is mostly insulated against global fluctuations, as these crops are consumed locally shortly after harvest. I mention this because we are often confused with other farms that grow corn, soy, or wheat. We avoid these crops due to their competition with countries like Brazil and Ukraine, where production costs are considerably lower. Grain prices have surged this year compared to the last six years of low prices, largely due to drought conditions in Brazil and Argentina, where farms rely heavily on rainfall. However, nearly all of our farms have their own water sources. Demand for prime farmland dedicated to berries and vegetables remains steady to strong in our locations, particularly along the West Coast, including California, Oregon, Washington, and Florida, where we are fortunate to have adequate water resources. Farmland continues to outperform other asset classes, despite some recent downturns in certain areas. The NCREIF Farmland Index, comprising around $13 billion worth of agricultural properties, has averaged an annual return of about 12.3% over the past 20 years, in contrast to 11% for the overall REIT Index and an even lower figure for the S&P Index. During those two decades, the Farmland Index has not encountered any negative years, while both the REIT and S&P indexes have seen approximately four negative years. Farmland tends to offer investors a refuge during turbulent times, which seems relevant now as both land and food prices, especially for produce, continue to rise. Investing in our company should be viewed as a long-term commitment to farmland. The investment aspect parallels that of gold — a hard asset. Farmland is a tangible resource that has intrinsic value due to the limited availability of quality farmland in the United States and worldwide. In California alone, about 50,000 acres are lost to urban development every few years. Florida faces similar challenges with expanding urban areas. In contrast to gold and other alternative assets, farmland offers active investment opportunities, providing cash flows rather than sitting idle like gold. We are observing rising inflation, particularly in the food sector, which we anticipate will continue to drive up the value of underlying farmland. We expect this trend to be especially pronounced in the fresh produce market, as more consumers in the U.S. gravitate toward healthy eating. The success of Gladstone Land relies heavily on our dedicated team, many of whom are present here today. Acquiring and leasing farmland is a complex operation that goes beyond simply purchasing stock. It requires substantial engagement with farmers on the ground. We have strong teams on both the West Coast and East Coast. I encourage everyone to invest in our stock and continue enjoying fresh fruits, as we expect to be in a good position over the next decade. Now, I’d like to take some questions, so if the operator could come on, we will address them to the best of our abilities. Who is first?

Operator, Operator

At this time, we'll be conducting a question-and-answer session. Our first question comes from the line of Nate Crossett with Berenberg. Please proceed with your question.

Nate Crossett, Analyst

Hey, good morning guys. Maybe you could just speak to the current pipeline a little bit more. I know you guys don't give formal guidance, but what are kind of the main puts and takes in the pipeline right now? Is there anything under PSA? And I think historically you've tried to do about $200 million a year or so. Do you think that that's achievable this year?

David Gladstone, CEO

Well, I wish I could answer that in a better way for you so you could put it into your model and project where we're going to be at the end of the year. We try to do that every year. But unfortunately, buying farms is not an easy process. And so as a result, I can't give you much more than that. How much do you have in your backlog?

Lewis Parrish, CFO

We've got about $150 million of deals that we're looking at various stages. Not all of those are under signed PSAs. Maybe half or two-thirds of those are under PSAs right now. But we're still going through the diligence process on all of them. Hopefully, we'll be able to close on most if not all of these over the next couple of quarters Q2 and Q3, but of course no guarantees.

David Gladstone, CEO

We really don't know what's going on with the government. They're talking about increasing capital gains which would hit these people that's talking about reducing how much you can transfer to your relatives or giveaway and it's really unsettling time for us with regard to taxes on people. We are hoping that some people who lose the ability to do a 1031 exchange will take our UPREIT shares and that's a non-taxable transaction in most cases and be enjoying like you are dividends coming in every month. Next question?

Nate Crossett, Analyst

Yes. So, I was going to say is the OP Units a bigger part of the conversation when you're working on deals because of all the potential tax changes?

David Gladstone, CEO

It certainly helped us close last December with people wanting to finalize their deals in 2020 instead of risking it with the new administration. This administration might make decisions similar to some past presidents, who often delayed enacting changes until mid-year but would apply them retroactively to January 1st. This uncertainty makes it challenging to plan ahead. People are hesitant, unsure whether to act now or wait and see how things unfold in the coming months. I wish I could provide a clearer projection, but unfortunately, I can't offer more than that.

Nate Crossett, Analyst

Okay, that's fine. Maybe you could just touch on pricing trends. I mean, I think cap rates of what you've done so far this year is a little bit lower than what you did in 2020. Is there anything that we would note there, or is it just deal-specific? And are you seeing any kind of increased competition?

David Gladstone, CEO

We haven't encountered much competition recently. Some buyers are trying to acquire farms, but they lack local presence. Farmers in California and Florida tend to be very cautious about sharing their information and are not inclined to disclose it to just anyone. We are a familiar entity in those regions, so farmers feel at ease working with us, and I expect that to persist. Regarding the potential impact of tax regulations, I am uncertain at this time. This uncertainty will significantly influence whether individuals choose to work with us or hold off for the next decade. Farmers can be unpredictable. However, with the average age of farmers around 58, they often have limited options aside from working with someone like us or a neighboring farmer. Typically, a farmer might decide to sell their land and mention this to a nearby farmer, who may express interest, leading to a private transaction without any formal listing or broker involvement. It's essential to stay informed about what’s happening within those communities and growing areas to seize opportunities. I believe we have gained recognition among those contemplating a sale, as we receive many inquiries now. Therefore, I think we are well-positioned for growth, but I’m unsure about what actions people will take at this moment. If there is clarity from the government regarding tax policies, it could facilitate movement in the market as people make their decisions. The situation is quite sensitive right now. Approximately half of the farms—around 80%—are still owned individually, with almost half of those not actively farmed by their owners but leased out instead. We would be interested in acquiring such farms and becoming the new landlords. This strategy has proven effective for growth, though it's challenging to make projections right now. We are continuing to engage with people and, as time progresses, I believe we will encounter many opportunities this year.

Nate Crossett, Analyst

Okay. Thank you.

David Gladstone, CEO

Next question?

Operator, Operator

Our next question comes from the line of Rob Stevenson with Janney Montgomery Scott. Proceed with your question.

Rob Stevenson, Analyst

Good morning, guys. I forget how much of your portfolio is appraised in any given year. But within the portfolio where are you guys seeing the biggest jumps in value on appraisals in terms of geography and crop types?

Lewis Parrish, CFO

We appraise each property at least once a year, conducting a full appraisal every three years. In the interim years, we perform desk appraisals, all done by the same team. Recently, we've observed significant increases in areas like Salinas and Watsonville in California. Florida continues to appreciate at a strong pace. However, the Midwest has remained relatively flat as we continue appraisals over the next year. If current trends persist, that might change. Southern California has seen a slight decline, decreasing by a couple of percentage points over the past year. Those are the primary areas where we are noticing increases.

Rob Stevenson, Analyst

Okay. That's helpful. And then has Gladstone Acquisition made any investments yet, or is there anything in the pipeline that's teed up for them if it closes?

David Gladstone, CEO

No. We haven't closed yet. And you may know that if you're raising a SPAC, you can't do any negotiations before you get the first tranche of money in. So we're sort of sitting on the sidelines waiting for all of these things to clear. The SEC has been involved in the SPAC business pretty heavily during the last I don't know six months. So as a result, things have slowed down, Rob, and I don't know when we'll get out on the road and be able to do something. We know some people that want to do a transaction, but we're not talking with them or negotiating as provided by the SEC's regulation.

Rob Stevenson, Analyst

Okay. Are you expecting that there will be a significant size for that vehicle? Is that the reason you chose not to create a taxable REIT subsidiary because you were concerned about reaching a limit?

David Gladstone, CEO

Yes, that's one reason. The second reason is that I avoid doing taxable REIT subsidiaries because they can lead to complications. If you fail the test, you can't operate as a REIT for five years. Therefore, we steer clear of any risk that could arise from that situation. Our company is strong and stable now, so there's no need to take unnecessary risks, and taxable REIT subsidiaries present that kind of challenge. I hope we can acquire the land and the business through the SPAC, as that would be the ideal approach, preventing any conflicts with our tenants.

Rob Stevenson, Analyst

Okay. And then lastly for me Lewis a couple of numbers questions. I don't know if I missed it in your comments but where did the $2.2 million of other income in the first quarter come from? And is that a onetime thing, or is a portion of that recurring?

Lewis Parrish, CFO

It's an annual occurrence. This refers to the interest patronage or refunded interest from our Farm Credit loans. Typically, it is recorded in the first quarter of each year. This amount has grown over the past few years as we have taken out more loans from Farm Credit. In the first quarter of 2020, we received approximately $1.3 million, followed by another $300,000 in the third quarter of that year, totaling about $1.6 million for 2020. This year, it is $2.2 million. While it's not a quarterly recurring figure, we expect a similar amount, possibly slightly higher or lower, based on the loans we have in the first quarter of each year.

Rob Stevenson, Analyst

Okay. So is there a Q3 corresponding like last year, or is this basically the bulk of it for 2021?

Lewis Parrish, CFO

We do not anticipate anything additional in 2021. Last year was impacted by various factors, and typically, we collect all the interest that we accumulated during 2020. We will receive a portion of that refunded in the first quarter of 2021. Due to COVID and other circumstances last year, some Farm Credit associations chose to distribute a part of that patronage early. In a typical year, the $300,000 would have been received in this first quarter as well, but they opted to pay out some of it ahead of schedule.

Rob Stevenson, Analyst

Okay. And then last one for me. The shares and units outstanding today given the second-quarter issuance is that roughly $29.5 million somewhere in that ballpark?

Lewis Parrish, CFO

Yes. That's correct.

Rob Stevenson, Analyst

Okay. Perfect. Thanks guys. Appreciate the time.

Lewis Parrish, CFO

Okay. Next question please.

Operator, Operator

Our next question comes from the line of John Massocca with Ladenburg Thalmann. Please proceed with your question.

John Massocca, Analyst

Good morning, everyone.

Lewis Parrish, CFO

Good morning, John.

John Massocca, Analyst

So, maybe going back to kind of the valuation on the in-place portfolio. You've seen some pretty good upward momentum in commodity-based farms in the Midwest, particularly. Are you seeing that same kind of upswing in farm valuations for the more fresh produce type farms that make up the bulk of your portfolio?

David Gladstone, CEO

Yes. We primarily see this driven by the need to secure farmland. Growers understand that if they don’t act quickly, they will lose their opportunity. As a result, they come in strongly, allowing us to increase rental prices somewhat. However, we can't raise the rents too high as it would impact their profitability, since rent is a significant expense for them. Consequently, working collaboratively with these farmers has proven to be a wise approach. We don't push the numbers as much as we could, but over time, we will recover any potential lost revenue because we own the land, which they need to cultivate fruits and vegetables. The agricultural landscape in the Midwest has shifted noticeably, partly due to drought conditions in Argentina and Brazil, where production has decreased compared to previous years. Ukraine is performing well, and our operations are steady. Currently, many Midwest farmers have sold or are in the process of selling their expected harvest for the year, indicating a potentially very profitable year for corn and wheat growers, although this might only last for a single year. Next year could see increased competition, especially if Brazil receives favorable rainfall, leading to greater corn production and a possible oversupply that drives prices down. Despite the recent dramatic increases in grain prices, most farmers have already sold their corn on the exchange. It's becoming uncertain whether U.S. farmers will be able to meet their production targets due to droughts affecting many dryland farmers, who depend on rain for their crops, a situation we are not in. Only about 3% of our land relies on rainfall, which is not crucial to our overall operations. We utilize irrigation systems and advanced farming techniques to manage our water needs, which we treat as a critical resource. Currently, we are in a strong position, but this may change over the next five years. We are also exploring opportunities to purchase water rights from the aquifer, which can be traded, even though financing such purchases is difficult. Overall, we are considering this as a precaution. Other questions?

John Massocca, Analyst

But, I mean just in terms of the price kind of rises, we've seen with wheat and some of the other commodities. Are you seeing those in kind of the berries or even some of the nuts or any of those kind of produce, that's more typical of what's in your portfolio today? And then, in that kind of same line of questioning, does that impact how you see participation rents going forward?

David Gladstone, CEO

Yes, it will affect participation rents, but we do not expect significant changes. For instance, the prices of large strawberries being delivered in New York are between $20 to $22 per package, a price we haven't seen in a long time. However, if you are delivering the same berries as before, the prices remain at $12, $14, or $15. There hasn't been any major change like we've seen with corn, which rose from $3.50 to about $6 a bushel, a substantial increase. Our market has remained stable, particularly with berries and blueberries. In the nut sector, almonds have been the most active commodity. China is a major buyer of almonds, and there are large growers who dominate this industry. We haven't observed significant price fluctuations in almonds, unlike the dramatic changes in corn and wheat caused by supply and demand. High supply results in lower prices, while circumstances like crop failures can cause prices to surge. This volatility is not ideal for businesses focused on consistent monthly dividends for investors. We believe we are well positioned in this regard. Although the corn market may see a boom this year, leading growers to benefit, this also means manufacturers will face increased prices; for example, the cost of GMO chemicals has skyrocketed by 100%. We do not experience these same cost pressures, so we haven’t needed to raise our prices dramatically. Although prices have increased recently, I attribute this mainly to consumers purchasing more at grocery stores following restaurant closures, and prices have since stabilized. Therefore, I don’t expect significant price hikes for strawberries, blueberries, or nuts; they should remain steady, allowing us to accurately plan our harvest. I must mention that the influx of migrants is beneficial for crops that require hand harvesting, like strawberries and many blueberries, as it eases labor shortages for farmers. Apple growers should also see advantages this year, and while I can share current prices, I can only speculate on what they might be in six months to a year.

John Massocca, Analyst

Okay. That's understood. One quick question about the balance sheet: leverage decreased slightly quarter-over-quarter, and it's likely that this trend will continue for the second quarter since the acquisition was fully funded through equity raising on the ATM. Is this new lower level of leverage possibly the run rate moving forward, or is some of the activity on the ATM mainly aimed at building cash reserves for future opportunities as the pipeline develops throughout the year?

David Gladstone, CEO

What we observe is aligned with our judgment of what benefits the company. Currently, borrowing costs from Farm Credit and other lenders are very low, and we are taking advantage of this opportunity. We finance 60% to 70% of our properties through this method. On the equity front, we've successfully sold many shares, which has pleased our CFO, who is feeling quite secure with the funds available. Typically, we operate on a tighter budget, but he now has the flexibility to close deals without immediate financial pressure. We have also benefited from selling common stock through the ATM and borrowing from our banking partners, which include about eight to ten banks. Overall, we are in a strong position financially. We have not experienced a significant influx in our non-traded sector, so our fundraising there hasn't been at elevated prices. We are well-prepared for any upcoming closings. If we finalize the current projects in the pipeline, we will exhaust our cash reserves and will need to borrow funds. We have not drawn on some debt options yet, mainly because it hasn’t been necessary for closing, but we will re-enter the debt market. The banks are showing eagerness to support our endeavors.

John Massocca, Analyst

Okay. That answers all my questions. Thank you very much.

David Gladstone, CEO

All right. Operator, we have another question?

Operator, Operator

Yes. Our final question comes from the line of Craig Kucera with B. Riley. Please proceed with your question.

Craig Kucera, Analyst

Hi. Good morning guys. Most of my questions have been answered already, but I do want to circle back to a couple. Just first I'd like to talk about pricing. I think last year you bought at about a 5.5% cap, and I think year-to-date you've done anything from sort of just inside of a 5% to 5.3%. As we think about 2021, and the pipeline of assets you're currently looking at, should we expect to see yields that are maybe compressed 25 to 50 basis points throughout the year, or any color there would be helpful.

David Gladstone, CEO

I don't think that will happen. Sometimes we encounter situations where we need to be flexible with our standard policy of achieving a 5.5% return. You have to make some concessions to finalize a deal. But Craig, you understand how this industry operates. If you're engaged in a 10-year lease with an annual increase of 1%, you might start at 5%. However, as time progresses, that rate will rise. The accounting method requires that you add up all ten years and divide by ten to find the average, which informs our current discussions. I believe we are positioned well to manage that. Additionally, some figures that seem low may actually include incentives where the contract allows for participation in harvests or a rent adjustment after three to five years. Frankly, I'm puzzled why more farmers don't take advantage of those rent adjustments, as we've not seen significant increases in farm rents during renegotiations. This relates to starting from a higher market position than most. There are some families who have stopped farming and are relying on rental income, and we face competition from them at 3% cap rates. However, there are not many of those opportunities available. Over time, we've noticed that many farm owners sell their properties because their children are not interested in continuing the farming legacy or maintaining ownership, even if the land is rented. Once they see the cash flow, it becomes difficult to keep them invested in farming. It's nice to have a place filled with memories, but generally, people are choosing to sell their farms rather than hold them as investments.

Lewis Parrish, CFO

And Craig, to add to that, I think the lower cap rates we've seen this year are somewhat circumstantial. We had one sought farm at around 5%, which is fairly typical for that. The facility we acquired, which had a lower cap rate in the first year, was primarily due to an adjustment on the OP Unit issuance price compared to the fair value at the closing. Additionally, all the farms we acquired at the end of the quarter in April had a first-year cap rate of 5.3%, but regarding what David mentioned about the annual escalations, it's a 15-year lease. The negotiation for the first year was a unique case as well. However, over the term of the lease, the straight-line rent cap rate is about 6.7%. This aligns with our expectations. Overall, this year's cap rates compared to last year do not indicate a decline; rather, they are specific to the region and the deals.

Craig Kucera, Analyst

Got it. No, I appreciate the color, and just one more for me. As we think about how to encapsulate the potential upside from all the participation rents that you have, as you've done more-and-more leases on that front over the past couple of years. If we are in an environment where, let's say, all of your crops increased 10% in value this year, how does that translate to land? I think last year you did $2.4 million in participation rents, but if we did see a nice sort of even increase across the board what would that mean?

David Gladstone, CEO

Well, it certainly means that the total participation rents are increasing because we have additional farms with participations in their leases. As long as we keep adding, you'll see growth. Most places have not decreased in terms of participation rents over the past years; most have gone up. If they contributed $2 million last year, it could be $3 million or $4 million this year. We won't know for sure until later in the season since people are still planting. It can be tough to predict outcomes without many years of experience, especially with unexpected weather events like a freeze. For instance, one of our cherry growers lost most of their blossoms this year and won't have income, though they might receive some insurance money. Because we have many farms in different regions, it’s difficult to generalize what will happen across the entire portfolio. However, I believe our participation rents will rise for two reasons: if rents, sales, and prices increase, our participation rents will follow suit; and there are simply more participation rents in our portfolio now. This helps offset years where we didn't earn as much income due to lower initial participation. This year, we’re starting with significantly more since we closed numerous deals last year. So, Craig, I can't really assist you with your model, but that’s where we stand.

Craig Kucera, Analyst

That's right. I appreciate the color anyway. Thanks.

David Gladstone, CEO

Okay. Anybody else have question in the telephone line there?

Operator, Operator

There are no further questions at this time. So I'll pass the floor back over to Mr. Gladstone for any closing comments.

David Gladstone, CEO

Okay. Thank you all for calling in. Maybe next time you'll have a lot more questions for us and we can have more fun answering them. Thanks for calling in. That's the end of this call.

Operator, Operator

This concludes today's teleconference. You may now disconnect your lines at this time. Thank you for your participation and have a wonderful day.