ROAD - NASDAQ

Greetings, and welcome to the Construction Partners First Quarter 2024 Results Conference Call. At this time, all participants are in a listen-only mode. A brief question and answer session will follow the formal presentation. [Operator Instructions] As a reminder this conference is being recorded. It is now my pleasure to introduce your host, Rick Black, Investor Relations. Thank you, sir. You may begin.

Thank you, operator, and good morning, everyone. We appreciate you joining us for the Construction Partners call to review first quarter results for fiscal 2024. This call is also being webcast and can be accessed through the audio link on the Events and Presentations page of the Investor Relations section of constructionpartners.net. Information recorded on this call speaks only as of today, February 9, 2024. Please be advised that any time-sensitive information may no longer be accurate as of the date of any replay listening or transcript reading. I would also like to remind you that the statements made in today's discussion that are not historical facts, including statements of expectations or future events or future financial performance are considered forward-looking statements made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. We will be making forward-looking statements as part of today's call, that by their nature are uncertain and outside of the company's control. Actual results may differ materially. Please refer to our earnings press release for our disclosure on forward-looking statements. These factors and other risks and uncertainties are described in detail in the company's filings with the Securities and Exchange Commission. Management will also refer to non-GAAP measures, including adjusted EBITDA. Reconciliations to the nearest GAAP measures can be found at the end of our earnings press release. Construction Partners assumes no obligation to publicly update or revise any forward-looking statements. And now I would like to turn the call over to Construction Partners' CEO, Jule Smith. Jule?

Thank you, Rick, and good morning, everyone. Joining me on the call today are Greg Hoffman, our Chief Financial Officer; and Ned Fleming, our Executive Chairman. We are off to a good start to our fiscal year, and I'd first like to thank our 4,400 employees throughout the Southeast for their hard work and professionalism, that contributed to a successful first quarter. Revenue, net income, earnings per share and adjusted EBITDA were all up significantly compared to Q1 last year. We are pleased to report a record backlog of $1.62 billion as of quarter end, reflecting a demand environment that remains strong for both public and private work. This first quarter, we experienced typical seasonal weather with October and November a bit drier than usual while December was a bit wetter than usual. Our crews and teams were productive and delivered excellent results this quarter. Focusing more on the demand environment for construction services, there continues to be elevated demand for road repair, maintenance and expansion projects across our markets as a result of our country's continued migration soil. Each of our 6 states are well funded for this work. With the federal government's IIJA funding further supporting infrastructure investments from road projects to airports to ports and rail lines. Because of the migration to the Sunbelt of both new residents and businesses, the commercial economic activity in our markets has remained steady with an active bidding environment. We anticipate that our work mix for FY '24 will remain very similar to last year and typical for CPI, with approximately 63% public projects and 37% private projects. Turning now to CPI's strategic growth model. In this fiscal year, we've so far completed 4 strategic acquisitions, entering new markets, expanding market share in existing markets and adding capacity, services and talented new team members to the CPI family. Most recently, we announced on January 3 the acquisitions of SJ&L General contractor, a hot mix asphalt and site work company headquartered in Huntsville, Alabama and Littlefield Construction Company, a soil base, surface treatment and site work company headquartered in Waycross, Georgia. As we discussed in detail during our Analyst Day, a key component of our growth strategy is to actively expand our relative market share and service capabilities within existing markets. Both the SJ&L and Littlefield acquisitions expand our service offerings in existing markets while also adding valuable crews and equipment. In the case of SJ&L in Huntsville, Alabama, we are integrating this team with our existing platform company in the state, Wiregrass construction company. The greater Huntsville metro area and interstate 65 corridor continue to experience tremendous growth and as a combined organization, we can now offer turnkey services, spanning the construction value chain on both private and public project opportunities within this market. Likewise, our Georgia platform company, the Scrubs Company entered the Waycross market just a few months ago through the establishment of a greenfield hot mix asphalt plant. Now having acquired Littlefield, we are even better positioned to capitalize on the market that reaches from the Port of Brunswick into South Central Georgia. We are pleased to expand our presence in these crucial growth markets and proud to welcome the employees of SG&A and Littlefield into our continually growing CPI family. We continue to have numerous and active conversations with potential sellers, both inside and outside of our current states. The universe of potential opportunities in our highly fragmented industry is substantial. However, we remain patient and focused on finding the best strategic acquisitions that expand our footprint, increase capacity, grow relative market share and fit well within our CPI culture. We believe CPI is seen as the buyer of choice for many owners in the Southeast due to our reputation for treating sellers fairly, providing attractive career opportunities for their employees and our track record for successfully integrating and growing companies. As we continually discuss with the market, CPI's founding strategy has 3 main components: first, to operate a high relative market share business in local markets, building low-risk, high-margin projects from repeat customers and generating strong free cash flow; second, to capitalize on the need for the nation and our states to invest in catching up on deferred infrastructure maintenance and capacity. And third, as our industry goes through a generational consolidation to be the leader in building a scalable business by acquiring businesses in our industry. Our 5-year strategic plan that we call ROAD-Map 2027 simply outlines our plan to continue implementing CPI strategy. With growth targets that represent annual revenue growth of 15% to 20% and EBITDA margins in the range of 13% to 14% by 2027. The foundation of our strategic plan remains our people. We plan to continue building a competitive advantage through our workforce, maintaining our organizational culture as a family of companies and providing superior benefits and career opportunities, which attract and retain the best construction professionals. At CPI, we are dedicated to building better lives and to building the infrastructure that keeps our communities connected. In summary, we are pleased after Q1 to be right on track with our plan. As we enter the second quarter of our seasonal business, where we are hard at work, maintaining our fleet and asphalt plants and preparing for the busy work season ahead in the spring and the summer. I'd now like to turn the call over to Greg.

Thank you, Jule, and good morning, everyone. I'll begin with a review of our key performance metrics for the first fiscal quarter compared to the fiscal first quarter in 2023. Revenue was $396.5 million, up 16%. The increase included $29.6 million of revenue attributable to acquisitions completed during and subsequent to the 3 months ended December 31, 2022, and an increase of approximately $25.1 million of revenue in the company's existing markets, contract work and sales of HMA and aggregates to third parties. The mix of total revenue growth for the quarter was approximately 7.3% organic revenue and approximately 8.7% from recent acquisitions. Gross profit was $51.9 million or 13.1% of revenue compared to $30.5 million or 8.9% of revenue in Q1 2023. General and administrative expenses were $36 million and as a percentage of revenue, were 9.1% compared to 8.7% in the same period last year. Net income was $9.8 million and diluted earnings per share were $0.19 up from $1.9 million and diluted earnings per share of $0.04 in the same quarter last year. Adjusted EBITDA was $40.9 million, an increase of 50.4%. Adjusted EBITDA margin for the quarter was 10.3% compared to 8% in the first quarter last year. You can find GAAP to non-GAAP reconciliations of net income and adjusted EBITDA financial measures in today's earnings release. In addition, as Jule mentioned, we are reporting a record project backlog at of $1.62 billion at December 31, 2023, up from $1.6 billion at the end of our Q4 fiscal year 2023. Turning now to the balance sheet. We had $68.7 million of cash and cash equivalents and $154 million available under the credit facility, net of a reduction for outstanding letters of credit. In addition, we have the ability to establish an incremental revolving credit facility up to the greater of $200 million or total trailing 12 months adjusted EBITDA. We have $280 million of principal outstanding under the term loan and $163 million outstanding under the revolving credit facility. The availability on our credit facility and cash generation will continue to provide flexibility and capacity to allow for potential near-term acquisitions and high-value growth opportunities. As of the end of the quarter, our debt to trailing 12 months EBITDA ratio was 1.78 times. Our expectation is the leverage ratio will maintain a range of 1.5 times to 2.5 times while continuing to add sustained profitable growth. Cash provided by operating activities was $60.4 million compared to the $28.9 million in the same quarter last year. Net capital expenditures in the first quarter were $24.3 million. We expect net capital expenditures for fiscal 2024 to be in the range of $90 million to $95 million. This includes maintenance CapEx of approximately 3.25% of revenue, with the remaining amount invested in high-return growth initiatives. Today, we are maintaining our previously disclosed fiscal year 2024 outlook. We expect revenue in the range of $1.75 billion to $1.825 billion, net income in the range of $63 million to $70 million; and adjusted EBITDA in the range of $197 million to $219 million, which reflects adjusted EBITDA margin in the range of 11.3% to 12%. And with that, we are now ready to take your questions. Operator?

[Operator Instructions] Our first question comes from the line of Kathryn Thompson with Thompson Research Group. Please proceed with your question.

I just wanted to focus into end markets. And first with the DOT work this quarter was 37% versus 33% in Q1 for the last 2 years. But the public contribution overall in Q1 was slightly lower than the previous quarters at 59% versus 61%. So it just seems that public non-DOT work was a lower contributor to this quarter. Is there anything to call out on the municipal level that could be driving this? Or any other color just to account for the delta?

No, Kathryn. I don't think so. We did a lot of public work that's city, counties and DOTs and -- so the mix of what we're doing on public work in any one quarter can vary. But there's nothing particular that's changed about that. We do anticipate this year, as we said in the prepared remarks that our mix of work will be about 63% public and 37% private. In the public work, cities, counties, DOT and airports, different -- they'll all play a part in that public mix.

And then on the private side, all our channel checks still point to manufacturing, heavy industrial still strong and some edges of weakness continuing it for traditional office and shopping centers. Can you touch more on current trends you're seeing on the private side and how the type of work for heavy versus light is differing from any trends you're seeing in highway work.

Yes, I think you're exactly right with what you said, Kathryn. What we're seeing is that as businesses continue to migrate to the Southeast as they reshore, we're seeing a lot of manufacturing facilities get built, headquarters buildings, pharmaceutical manufacturing sites. That's a lot more of what we're bidding on. We do continue to see residential stay very steady. But there's not as many office buildings and retail buildings in the mix, but there's a lot more of the, as you would say, the heavy commercial sites.

And then final question just is more on we've seen some abatement of raw materials, but there are other costs that are going up. What are you seeing from DOTs and other contractors in terms of bidding expectations around input cost, and are there any other type of costs like insurance that are preventing projects from moving forward.

I would say, Kathryn, clearly, inflation our DOTs have had to adjust their estimates to match the reality of the input costs that are out there in the marketplace. And I think they're doing that. We're seeing their estimates go up to where projects aren't getting held up. It has affected their purchasing power to some extent. But there's still a lot of things being bid, and I don't see projects getting held up by that. I think they're adjusting to the new world of input costs. I think that inflation is -- continues to be steady. It's not out of hand like it was a couple of years ago. But I think the DOTs, by and large, are keeping up with that in their outlooks and their estimates.

Our next question comes from the line of Tyler Brown with Raymond James. Please proceed with your question.

So it sounds like in Q1, weather was fairly normal. Just any thoughts here on Q2 for weather? I know it's been off to maybe a rough start here in Q2. Just anything to think about there.

Well, January has been cold, at least the first couple of weeks with the polar vortex. But the reality is, Tyler, we have expectations in our seasonal business. Q1, we expect October to be great, and it was. We expect December to be wet and it was. And so it was typical. We expect January to not be great weather. That's when we're fixing our equipment, as I said. And so we're just getting ready for the work season. So we were able to work where we could in January and -- but it definitely was pretty cold in a lot of places.

And then, Greg, just so I have it for modeling, but at the midpoint of the revenue guide, I think it's calling for something like a mid-teens revenue growth. But just can you remind us how much of that is from expected M&A?

Yes, you're right. It's 15% with the projected midpoint from last year. It's going to be typical to what it was in the first quarter, about half and half equal percentage organic and inorganic -- and that's probably in the range of $125 million, $130 million of acquisitive revenue.

And then, Joel, so I know that M&A has been a driver since we're talking about it. But you seem to have had a lot of success with greenfields. And I'm just curious if that will become bigger part of, call it, the external growth story in coming years. And if we just take Waycross as an example, how does establishing a greenfield hot mix plant in a new market drive discussions around additional M&A?

Tyler, good question. Greenfields have always been one of our growth strategies where we see an opportunity to go to an adjacent market. And Waycross was just a perfect example of seeing an opportunity in an adjacent market for the Scrubs company to go put a hot mix asphalt plant. And that really led to the discussion with the Littlefield company about acquiring their business and bringing their workers and their equipment into that area, that Waycross the area. So once we establish a greenfield and we're in an area that does provide opportunities for us to try to build market share in that market. And you're right, Waycross was a perfect example of that. So greenfields are sometimes the answer, sometimes an acquisition to move into an area of the answer, but we're studying all of them.

Just real quickly, Jule, kind of conceptually backlogs are strong. It feels like work is picking up on the public side. You look at a lot of private companies. I'm assuming they are effectively full as well. So I'm just curious if your internal metrics, however you measure them. Are you seeing fewer bidders or more rational bidding for public work given that, let's say, the market is just generally full?

Well, I would say, Tyler, yes, to a certain degree, people have good backlogs and the construction industry has a lot of work. Still a competitive bidding environment, but I would say, yes, there's probably due to everyone having a lot of work. There's probably fewer bidders, and I think that's the sign of a healthy market.

My last one here, Greg, just kind of coming back to the model. I know that there was a gain on the Bluewater Facility Exchange last Q1. But just any broad thoughts just from a modeling perspective, how we should think about gains on sale per quarter? Is it maybe $1 million or something like that? Just any help would be there?

Yes. I think that's right from a modeling standpoint, yes. That was certainly a one-off I think every year, gain on sale of equipment is part of our strategy related to owning operating and then acquiring replacement. So yes, that's -- I would say that's a pretty good number.

Our next question comes from the line of Andy Wittman with Baird. Please go ahead.

I guess I was going to start out just by digging into the margins in the quarter a little bit. Maybe I'll start with the G&A margins here. The raw number was up a decent amount, about $3 million or so above kind of where the run rate has been in the last few quarters. And so Greg, I was wondering if you could just comment on that. Is there anything in that number that makes it unusually high or low. You kind of did some more acquisitions, so I thought maybe there's some deal costs in there or something else. But you tell us, is this the new run rate? Or is there something different from that we should expect?

I think this is about what we would expect. We -- if you compare to last year, we talked a little bit about there was still some $50 million worth of low gross margin work that we had to complete. And so now that we're into fiscal '24, we're not seeing those. But in terms of overhead and acquisitions, we were slightly up this year -- this quarter compared to last year. But I think what you're seeing there is individual expenses that maybe were out of period, but we're still expecting the year to turn out to be what we expected.

Can you just remind us what it was that you expected for the year in G&A?

Yes, 8%.

And then just on gross margins. Obviously, you're starting to get some of the recovery with your backlog now being better priced and inflation coming down, Jule. Can you maybe talk about how this quarter reflects. Are we now at the run rate where you kind of feel like the price/cost dynamics are kind of fully behind you and you're operating at the gross margins that you expect? And maybe if you could just expand on that also by talking about how the expectations of the gross margins in the backlog that you've recently won compared to what you've been putting up here this quarter and the last few quarters?

Yes, Andy, I think that's exactly right. I mean I think just as we said in the summer, it's just really back to normal for CPI. And I think that's what you saw this quarter. If you remember, last year in the first quarter, we said we're finishing up a lot of this pre-inflationary backlog because a lot of the projects we do finish in the October, November, December time frame, they get final paving. And so last year's first quarter, we were just finishing a lot of that work. So what you're seeing this quarter is really just us back to normal, doing work that has the costs baked in. And so it's very much just a normal business. And I would say we're adding backlog to -- we're adding work to backlog at healthy margins. We're seeing that our crews and our teams in all the areas are going out there and finding ways to win on projects, which is very much back to the norm. Of CPI, where more projects finish at better than bid margin. And so to us, it's really just getting back to the normal operating model of CPI.

Just one last final question, probably for Greg, I'm guessing. I was just kind of curious, when you think about revenues of HMA or aggregates to third parties this first quarter in '24 versus the first quarter in '23. Greg, can you talk about how that changed and the impact that had on margins, maybe like total dollars sold to third parties. Just so we can understand how much of a component of your revenue mix, that part of your business was?

Yes, absolutely. So I guess, first of all, let me say that particular area of sales revenue for us is focused more in the commercial private market. So like internally, we noticed that, that was still a very strong component of our business. So it's really good to see. I think just another internal indicator for us that activity is still strong. We are typically in the 10% to 12%. I think we've talked about before of third-party sales of both aggregate and hot mix asphalt each year in our revenue.

And there wasn't a change this year versus last year still kind of consistently in that range.

Still pretty consistent, yes.

Our next question comes from the line of Michael Feniger with Bank of America. Please proceed with your question.

Just I think you might have touched on it a little bit maybe with weather in January. Just curious with such a strong start to the year, any reason to not raise the full year outlook? Was there anything that kind of stuck out to you? Is there anything we should be aware of that you're implying maybe just with margins maybe in the last the next 9 months that changed your expectations from coming into the year? .

No, Michael. Not at all. I'm glad you asked that question. We typically look at our business as 2 halves of the year. And so that's why we talk about our revenue is 40-60 of our EBITDA is typically 30-70. We just try to just get through the first 2 quarters and then assess our business at midyear. And so we feel good about our guidance. There's nothing we're doing other than just saying we're reaffirming that. We'll take a good hard look at it after the second quarter in our mid-year.

And just with the quarter, anything you touch on with the margin on -- we obviously saw there's lower diesel, maybe liquid asphalt. Just was that a benefit to the margin in Q1? And how are you thinking about where that -- those prices are today what it means kind of for the next 3 quarters if it stays at this level?

Yes, Michael. I think -- but we always say is that when there is some downward pricing and energy costs. We do get a little tailwind. And when it goes up, we see a little headwind. And I don't think that has changed. I think if you look back over the last 12 to 18 months, primarily diesel and natural gas have fluctuated within a pretty tight range. It seems like it was more back in early 2022 when it kind of spiked up. So I think we're operating within a pretty decently stable range and certainly taking those slight tailwinds when we can get them.

And just my last one. Obviously, we're going into an election year. I'm curious if you can hear on the ground of does that create any uncertainty you think of your business? Or is this less of a concern maybe compared to prior election years because you do have that legislation IIJA that was passed -- just curious kind of how we think about that in election year with some of the funding and if it's a little different this go around than maybe what you have seen in other prior election years.

Michael, good question. The good thing for us is in Washington, D.C. certainly has a lot of things they argue about, but infrastructure funding is probably the most bipartisan thing in Washington. And so both parties see the need to invest in the nation's infrastructure, they always have. And so we really don't see the election, however it turns out, really affecting the funding for the IIJA or the surface transportation funding overall. So clearly, we want the economy to remain strong and stable, and -- but we really don't think the election is going to have a big impact on our business.

Our next question comes from the line of Stanley Elliott with Stifel. Please proceed with your question.

Talk about like when you all would expect your backlog logs to normalize? I mean, it looks like you've got covered for the rest of the year. Curious if we should see some improvement on the organic side. How can you flex the labor component to maybe to add above the 7-plus percent sort of numbers you guys are looking at on the organic side?

Stanley, I'll address the backlog first and then organic growth. The -- our backlog was set another record this quarter. And so I think that's 13 quarters in a row, which is very atypical for CPI. In that our backlog sequentially has always tended in the busy season to go down when we're burning off a lot of backlog. And so that indicates 2 things. Number one, we're growing and number two, it's an active bid environment. But at some point -- we can only sell but so much ahead of our resources. And so at some point, it's not going to surprise us at all for it to -- our backlog to go down sequentially. So -- but it does give us good visibility. It does allow us to stay patient at the bid table, which are great things. On the organic growth side, we continue to focus heavily on organic growth. And you're right to do that, we have to add labor. And so we continue to add labor and equipment and to invest in organic growth. As Greg said, beyond maintenance CapEx, we add equipment, we hire people and try to invest in high-value growth initiatives on the organic side.

And then in terms of kind of the backlog or the pipeline of work, any kind of drill down color you guys could share on maybe some of the states that you guys are seeing the most activity? I'm just curious to try to get a little sense within the portfolio there.

Well, I would say all 6 states, we have active bid environments. So there's no state that I would say is any concern. Clearly, when you look at our states of Florida and Tennessee and South Carolina are just -- have great funding programs and are very, very active. Florida is clearly experiencing just an incredible amount of migration. But so as Tennessee and South Carolina. North Carolina has a very healthy funding mechanism. So it's -- Georgia, is great. I mean it's -- there's -- all of our platform companies are adding work to backlog and bidding a lot of work. So we're blessed in that regard.

Our next question comes from the line of Adam Thalhimer with Thompson Davis. Please proceed with your question.

I got to be honest, Stanley stole all my questions. Maybe I'll just double up. I was curious on kind of your expectations for DOT bidding in the next few months.

Well, we've got quite a bit to bid on. The DOT, as you know, doesn't bid evenly throughout the year. A lot of their work does bid in the next few months. in some of our states. And so we've got a pretty big letting in North Carolina this month and South Carolina here next week. So there the winter time they let a lot of work that they want to do in the spring and summer. And so it's pretty active.

And then, Jule, any of the ankle weights still hanging around? I was curious if labor is getting a little bit better.

I would say it's pretty much normal now, Adam. I mean, clearly, the generational, as I've talked about, the generational just retiring of our workforce makes it harder to find skilled operators, but I think that's an advantage for us because we're going to do what it takes to attract and retain a workforce. And so we see that as an advantage that we're going to try to leverage. But as far as just finding labor to fill our crews, the annual raises the cost of labor. It just -- it's back to normal. It's a pass-through cost that is not out of control like it was right after COVID and the reopening of the economy. So I would definitely say, I don't feel like we're running with any ankle weights now.

[Operator Instructions] Our next question comes from the line of Brent Thielman with D.A. Davidson. Please proceed with your question.

Lot coverage or, I guess, just a couple here, Joel. Joel, the fact that your markets are so good impacting your ability to do deals as fast as you like. Your results are solid. I assume many of the potential targets are, too. Just wondering if that's have an impact on so or expectations or so or expectations reasonable?

Yes, Brent, that's a good question and 1 that we get asked a lot. And the reality is the markets and them being solid, really don't play into our sellers thoughts because our sellers are thinking more long term with what's best for their family. And they're doing family generational planning and what they've made a lot of money in this business for decades. And so they're really not looking at the short-term market. And so I really haven't seen any change in their expectations. I really haven't seen anything about the current funding making them less willing to sell. We're in a lot of conversations throughout the Southeast in the Sunbelt with potential sellers. That's -- our pipeline is active. So -- but the markets being healthy really isn't a big consideration for them. It's more what's best just for the overall business and their families long term.

And then, Greg, this 1 might be for you. I apologize if you mentioned this in the script, but the first quarter cash flow was unseasonably good, really good. And just curious, do we see that -- do we see the typical pattern through the rest of the year? Or is this going to be less than a typical year for cash flow?

No, I think that -- yes, it was a good first quarter. First of all, margins helped, right, year-over-year, certainly have more to end in revenue going up quarter-over-quarter. Both created great cash flow opportunities just to turn that revenue into cash. I think in terms of the rest of the year, we're going to see more traditional going back to what we have experienced from a cash flow perspective over the years. Obviously, the last couple of years were strange and different, but I expect you to go back to more normal cash flow for 2024.

Our next question comes from Brian Russo with Sidoti. Please proceed with your question.

Just to follow up on the DOT letting activity. I mean how would you compare it to last year -- is it accelerating or -- because the DOTs are anxious to get the IIJA matching funds? Or is it just more turnkey based on their state programs? Just curious.

Yes. Brian, I think both of those are right. I think that the IIJA funds come through the normal programs that the federal government gives the money to the states in the federal fiscal year. And so the states have to spend that money or commit it. And so I think it's very similar to last year in what the states are doing. But I also think the states are -- they have their own funds. As we talked about previously, Florida, Tennessee, South Carolina, North Carolina and now Georgia recently announced they're using state funds to augment infrastructure funding because they need to keep up with the migration to their states. And so we really see that the DOT's activity, if anything, it's more than last year, but certainly very similar. And so -- it's an active bidding environment. And I think that we -- the IIJA, we still are just really in the early innings, maybe the third or fourth inning of this money getting to the projects and being spent. And so we've still got a long way to go with that.

And then just on the backlog, obviously, another strong quarter despite the seasonality of the business. I mean, how would you characterize the projects on the public side and then maybe the private side. I mean is it still similar size and duration on the public side? And then is there is a heavier concentration in manufacturing or industrial on the commercial side?

Yes, Brian, I think an analysis of our backlog, obviously, dictates kind of what we say going to do in terms of the mix of revenue going forward. I think Jule said a minute ago, 63-37 is kind of what we expect public to private. And that's pretty normal, it is what it was last year. So I think the makeup is very similar. And then in terms of duration of project, size of project is also very similar. We track that and want to understand that because we've talked before, there -- that there's a sweet spot that we're trying to achieve, and it has not changed.

We have no further questions at this time. I would like to turn the floor back over to management for comments.

Yes, we'd just like to thank everyone for joining us this morning. We look forward to speaking with you again next quarter.