This transcript is designed to be used alongside the freely available audio recording on this page. Timestamps within the transcript are designed to help you navigate the audio should the corresponding text be unclear. The machine-assisted output provided is partly edited and is designed as a guide.:.

00:05 Greetings. Welcome to Century Communities First Quarter 2022 Earnings Conference Call. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. As a reminder this conference is being recorded. 00:33 I would now like to turn the conference over to your host, Scott Dixon.

Thank you, and over to you, sir..

0:42 Good afternoon. Thank you for joining us today for Century Communities earnings conference call for the first quarter 2022. Before the call begins, I would like to remind everyone that certain statements made during this call are not based on historical information, it may constitute forward-looking statements.

These statements are based on management's current expectations and beliefs and are subject to a number of risks and uncertainties that could cause actual results to differ materially from those described or implied in the forward-looking statements.

Certain of these risks and uncertainties can be found under the heading Risk Factors in the company's most recently filed 2021 Annual Report on Form 10-K as supplemented by our other SEC filings. Our SEC filings are available at www.sec.gov and on our website at www.centurycommunities.com.

01:44 The company undertakes no duty to update any forward-looking statements that are made during this call. Additionally, certain non-GAAP financial measures will be discussed on this conference call.

The company's presentation of this information is not intended to be considered in isolation or as a substitute for the financial information presented in accordance with GAAP. Management will be available after the call, should you have any questions that did not get answered.

02:12 Hosting the call today are Dale Francescon, Chairman and Co-Chief Executive Officer; Rob Francescon, Co-Chief Executive Officer and President; and David Messenger, Chief Financial Officer. Following today's prepared remarks, we will open the line up for questions. 02:28 With that, I will turn the call over to Dale..

02:32 Thank you, Scott, and good afternoon, everyone. We're extremely pleased with our results this quarter, which included the achievement of numerous company records and successes as we continue to experience strong consumer demand throughout the quarter for our affordable new homes across our entire 17-state 45-plus market footprint.

Despite the continued headwinds from municipal and utility delays, supply chain disruptions and labor shortages, we delivered 2,348 homes for $1 billion in revenues with a gross margin of 28.3% and an adjusted gross margin of 29.5%, both all-time company records.

03:21 These home deliveries produced record first quarter pretax income of $189 million and a pretax income margin of 18.6%, a 560 basis point increase from the prior year quarter and our eighth sequential quarter of improvement.

Net income in the first quarter increased 40% to $142.5 million or $4.20 in earnings per diluted share, both first quarter records. 03:59 During the quarter, we executed 2,944 net new contracts with a number of sales increasing each month as the quarter progressed, even as the pace of interest rate increases accelerated.

Our backlog at quarter end consisted of 5,247 sold homes valued at $2.2 billion, increases of 28% and 37%, respectively, both company records. Our spec-based operating strategy enabled us to produce another quarter of strong results with increased gross and pretax income margins even as we dealt with higher material and labor costs.

04:46 Despite these challenges, we increased EBITDA by 34% to our first quarter record $204 million.

We also increased our investment in homes under construction, land under development and our quarterly dividend, while repurchasing more than 1 million shares of our common stock, reducing our outstanding share count to the lowest levels since the third quarter of 2019.

We are continuing to see delays in land development and home starts, due to the various factors facing the industry. All homes that we offer for sale are generally being sold before the home gets completed as the potential buyer pool still exceeds the supply of available homes.

5:36 As a spec builder, we are accustomed to having completed homes for immediate sale and move-in. At quarter end, we only had 17 completed homes across our 17 states that could be sold for an immediate movement.

The elevated interest rate environment has not eliminated the demand drivers propelling the housing market over the last several years, including the ongoing shortage of both new and resale homes available for purchase, millions of millennials, the largest generational group in the country, reaching the prime age for new household formation and the increased desire for homeownership brought about by the pandemic.

06:21 We believe the most significant impact of higher interest rates will not be on our ability to sell homes, but on our ability to raise prices as much or as frequently as we have done in the recent past.

As the housing market continues to normalize from the unsustainable pricing power that has existed for the last year or so, we expect to be back to the typical homebuilding scenario of raising prices in some subdivisions and offering certain incentives and others.

We have a seasoned management team and strong operational fundamentals and are confident in our abilities to make this transition. 07:03 Our record-setting first quarter results would not have been possible without the perseverance, ingenuity and dedication of our talented teams across the country.

They continue to solve problems daily with the goal of providing our customers a home for every dream, and we want to thank them for their contributions. 07:25 I'll now turn the call over to Rob to discuss our business in more detail..

07:29 Thank you, Dale, and good afternoon, everyone. Our spec-based land-light operating model focused on delivering affordably priced homes continued to produce strong results, allowing us to strategically invest in land and homes under construction, grow our business and increase stockholder value.

Throughout the first quarter, we continued to raise prices across all of Century's markets. Even with this price appreciation 80% of our home deliveries were priced below FHA limits, demonstrating our strong positioning within the affordable new home category.

08:09 Our home buyer continues to have a healthy financial profile with average FICO scores of approximately 740 and 710 with a DTI of 39% based on loans originated in the first quarter, respectively, for our Century Communities and Century Complete Homebuyers.

These scores and ratios are consistent with our buyer profiles for the past two years and continues to reinforce the financial stability of our buyer pool. 08:44 Our cancellation rate has remained low at approximately 12%, and we have not experienced a rise in contract terminations as a result of increased interest rates.

As we began doing last year, our mortgage company is qualifying buyers at a rate that is 50 basis points higher than the current interest rate. On an ongoing basis, we also evaluate and stress test all homes in our backlog without a rate lock at interest rates up to 6%.

09:17 During the quarter, we strategically invested in our land pipeline to expand our local market share. These investments have grown our total land supply to over 85,000 lots with approximately 60% controlled, consistent with prior quarters. One market we significantly increased our holdings was Florida.

In 2021, we announced our entrance into Florida with the Communities brand starting with Jacksonville at the beginning of the year in Tampa and Orlando near year-end. Our Century Complete brand has operated throughout Florida for numerous years. However, this state represented a major market where the Communities brand wasn't previously present.

The past couple of quarters with activity ramping up in Q1 have seen our leadership team hiring personnel, contracting land and beginning home construction. We will be offering our first homes for sale under the Communities brand in the second quarter with deliveries expected in the fourth quarter.

10:24 The homebuilding industry continues to be challenged by municipal and utility delays, supply chain issues and trade shortages.

We did not see a catalyst or comprehensive solution in 2022 to these issues, but our affordably priced spec-based model with no or limited options, national footprint and purchasing capabilities have helped us mitigate some of the impact.

Our local and national teams have also become more adept in identifying potential roadblocks and implementing solutions earlier with the experience gained over the last two years.

11:05 The upward pressure in material, labor and fuel cost hasn't abated with the exception of lumber, which lower costs are beginning to positively impact our new home starts. 97% of our first quarter home deliveries were spec-builds, enabling us to better forecast construction costs before establishing a home's price.

We continue to benefit from the strategic operational initiatives that have been implemented over the last several years and believe our business model is well suited to address the headwinds related to home construction and rising interest rates.

11:43 For example, in the first quarter, we achieved adjusted gross margins of 29.5%, our seventh sequential quarter of improvement, a pretax income margin of 18.6%, our eighth sequential quarter of improvement and a return on equity of 33.7%, our 12th sequential quarter of improvement, all company records.

We believe we are well positioned to continue generating strong financial and operational results, and we are excited for what the future holds for our company and our stockholders. 12:23 I'll now turn the call over to Dave to discuss our financial results in more detail..

12:30 Thank you, Rob. During the first quarter of 2022, net income increased 40% to a first quarter record $142.5 million or $4.20 per diluted share, compared to $101.7 million or $3 per diluted share in the prior year quarter. Pretax income was $188.8 million, an increase of 44% and a first quarter record.

12:58 Home sales revenues for the first quarter grew to $988.4 million, compared to $959.3 million in the prior year quarter. This improvement in revenues was propelled by 2,348 homes being delivered with a 23% increase in average sales price to $421,000. 13:22 In the first quarter, net new contracts across our regions were 2,944.

We improved our quarter end backlog 28% to 5,247 homes valued at $2.2 billion, a 37% increase. In the first quarter, adjusted homebuilding gross margin percentage was 29.5%, compared to 23.1% in the prior year quarter. Homebuilding gross margin percentage improved to 28.3%, compared to 21.1% for the same period last year.

This is the seventh quarter of sequential gross margin improvements. 14:06 SG&A as a percent of home sales revenue was 10.3% in the first quarter, compared to 9.6% in the prior year. The result of planning new community openings, entrance into new markets and overall wage increases that are occurring across the industry.

Our pretax income margin was 18.6%, the highest in our history and the eighth sequential quarter of improvement. 14:34 During the first quarter, Financial Services generated $26.3 million in revenues, compared to $33.6 million in the prior year quarter.

The business captured 77% of the closings and contributed $11.2 million in pretax income, compared to $15.3 million in the prior year quarter.

The decrease in pretax income compared to the prior year period was due to fewer loan originations, compared to the prior year and selling loans into the secondary markets at normalized margins this year compared to 2021.

15:12 We ended the quarter with a strong financial position, including $1.8 billion in stockholders' equity, a 33% year-over-year increase, $1.1 billion in total liquidity, $254 million in cash and no borrowings outstanding on our $800 million unsecured revolving credit facility that does not mature until April 2026.

15:39 During the quarter, we invested $62.4 million and repurchasing 1,13,387 shares of our common stock, leaving approximately 2.8 million shares available for repurchase under our current authorization. We also increased our quarterly cash dividend by 33% to $0.20 per share.

Our homebuilding debt to capital ratio was 35.6% at quarter end, compared to 39.5% in the prior year. Our net homebuilding debt to net capital ratio increased slightly from year-end to 29.3%, primarily due to increased investments in inventory.

16:23 In the fourth quarter, our tax rate was 24.5%, compared to 22.4% last year, due to the federal energy tax credits not having been renewed for 2022.

We're extremely pleased with our strong performance in the first quarter of 2022, which has resulted in us achieving an ROE of 33.7%, a new record for the company and our 12th sequential quarter of improvement.

16:52 Considering our first quarter results, backlog homes under construction and our current development pipeline schedules, we are reaffirming our 2022 guidance of deliveries in the range of 11,500 to 12,500 homes, home sales revenues to be in the range of $4.3 billion to $4.9 billion and ending selling community count to be in the range of 240 to 250 selling communities with the clear majority of our new community openings occurring in the third and fourth quarters.

17:26 With that, I'll open the line for questions.

Operator?.

17:33 Thank you. At this time, we will be conducting a question-and-answer session. The first question comes from the line of Deepa Raghavan with Wells Fargo. Please go ahead..

18:18 Thanks very much for taking my call.

Good evening, just, Dave, can you talk through some of the pricing strength in your orders? You didn't provide, I mean, I know you don't provide formal numbers there, but any color on the momentum? Are you witnessing any pushback maybe in your tertiary market or even in the Century Complete brand? And then also curious if you're taking any defensive measures already, I mean, you mentioned qualifying buyers at 50 bps higher in preparation for the higher rate environment, et cetera.

Some of your peers mentioned doing longer-term rate locks as well.

So just curious, how is pricing trending? Any pushback? Are you taking any defensive measures at this time?.

19:14 Sure. Hi, Deepa, this is Dale. No, we've really seen no pushback on pricing as we said in our prepared remarks, each month during the quarter, the sales actually increased. And throughout the quarter, we continue to raise pricing and we have not seen any pushback from that. Now at some point, that's going to stop.

Also, as we said in the prepared remarks, what we really believe is that as the interest rates continue to increase that, that's going to impact our ability to raise prices. 19:51 And at some point, as the year progresses, we expect to see incentives come back into the market.

But at this point, everything remains very positive with regard to your question on rate locks, we're doing the same thing as well. So it's really a combination in terms of when the house is going to complete.

Most of the homes when we look at what we have under construction other than homes that we have in backlog are really longer-term completions, the number of specs that we have completing in the second quarter are somewhat limited, because they've already been sold..

20:35 Thanks for the color there.

Just switching gears to closing volumes in the quarter, you know, versus consent, so it’s a miss, but wanted to see how you track versus your expectations internally? Also trying to get a perspective on that second half weighted closings and community count guide in light of supply chain constraints doesn't look like you're assuming supply chain gets better? But how do you catch up if there's been a miss in Q1 and the supply chain is not getting any easier?.

21:14 Hey Deepa, this is Dave. I would say that in terms of our deliveries for the first quarter, they are on track with what we were expecting internally. We look at this and based on what we were seeing from a construction scheduling standpoint and what we're seeing in the field, we're pleased with what we were able to deliver in the first quarter.

As I look at the second quarter, and we're trying to figure out what are -- what's our cadence going to be in the third and fourth quarter.

Second quarter, probably going to experience a backlog conversion that's similar to what we had in the first quarter and last year, so somewhere between that 50% and 60% backlog conversion is where I'm going to be coming in, in the second quarter. 21:51 And then Q3 and Q4, I've got 5,000-plus homes in backlog today.

A lot of those are going to be closing here in Q3 and Q4. We've got new communities opening up later in the year, we have a variety of sales going on and so while it may seem like its back-end loaded, it's fairly consistent with what our Q4 call was saying that the first half of the year our new communities was going to be a little bit static.

And given that we had strong sales in the first quarter, we closed out of a bunch of communities that we hadn't planned on closing out of that early -- and so we'll deliver those homes later. And then the homes at the new communities that we're looking to open will continue to be open later on during the year..

22:37 Got it. If I can squeeze one more in, can you talk to your SG&A outlook, as well for the full-year? I mean Q1 SG&A, again slightly higher than we would have expected.

Just can you comment where we should expect it to land for the full-year 2022? And if it's higher, what are some of the moving parts that's driving that SG&A higher? Thanks very much..

23:03 No problem. Yes regarding SG&A, I think if you're looking at it on a percentage basis, yes, it's higher compared to other quarters that we've had. But on a dollar basis, our fixed costs in Q1 were flat with Q4 and so from a volume perspective, we feel good about where SG&A is.

And then given what our revenue and volume outlook is for the back half of this year for the next three quarters, we would still expect that our full-year SG&A as a percent of revenues comes in at or better than what our 2021 was, which was 9.7%, so I think you'll see some steady improvement as the year goes and the volumes return..

23:45 Thanks very much. Great quarter, I'll pass it on..

23:48 Thanks, Deepa.

23:51 Thank you. The next question comes from the line of Alex Rygiel with B. Riley. Please go ahead..

24:02 Thanks. First question has two parts. Gross margins were fantastic and gross margins over the past few years have increased sequentially from the first quarter print. Dale, you mentioned in your remarks that you expect to be back to more normalcy where some communities or pricing power and others require some use of incentives.

So how should we think about that comment as it relates to margin implications over the next year or so?.

24:37 Well, we look at our backlog, our backlog is consistent with what we've experienced. As we go forward, it's -- it really is market conditions. And -- just like we -- when we had the opportunity to raise prices, we raised them frequently and aggressively, and we're able to exceed what our input cost increases were.

To the extent we can continue to do that, we're planning on doing it. When -- and if the market gets to a point where we can't do it and we have to add incentives then we'll do that.

So looking forward, it's a little hard to have a crystal ball, it’s really going to be what the market will provide is what we're going to make sure that our business lives with..

25:28 That's helpful.

And then the next question, can you just address sort of the view that some might have that higher rates possibly impact the first-time buyer category the most? And how that could reflect on your business?.

25:48 We don't really see it that way, and we haven't seen a difference both between our brands and even within the Century Communities brand itself. I mean there is -- there are some quite a spread in terms of ASP between the various subdivisions.

And we really haven't seen a difference in how the lower-priced communities have performed versus the higher-priced communities in our portfolio. We always look at it, if there's a certain amount of elasticity involved and as rates go up and someone can't afford as much house.

Well, they also have the opportunity to buy a less expensive house, and that's really where we offer most of our products. So that's not something that when we look at it, we think that's a big risk to our business..

26:41 That’s helpful. Thank you very much..

26:46 Thank you. The next question comes from the line of Alan Ratner with Zelman & Associates. Please go ahead..

26:56 Hey, guys. Good afternoon, congrats on the strong results. And thanks for the color. First question, apologies if I missed it, but curious that, you know, just thinking about April here and recognizing you just kind of commented that you haven't seen any discernible differences across your price points.

What are you seeing in terms of traffic, weight lists, things like that? Any kind of forward-looking indicators that you could point to that would suggest things on the margin might be softening just a bit.

I think we've heard a little bit of chatter about that from others, but I'm curious if you're seeing that in your footprint? And if so, any particular markets or price points stand out?.

27:33 Yes, Alan, this is Dale. We have seen that. There's been a little less traffic, but the amount of traffic that we are getting in the amount of demand that we're seeing so far exceeds the supply of homes that we have available.

I wouldn't say there is any particular markets or price points that's different in terms of what we're seeing in terms of interest level. But I think it's something that historically we always see when you have interest rates go up.

You get -- you really get two actions from buyers, it pulls some buyers off the fence, because they want to go ahead and buy. And then the other thing it does is it keeps some people on the fence as they have to digest it. And be -- get to a point where they say, okay, they're comfortable with it.

28:32 Really, in a lot of cases are -- a buyer is really making a choice for -- to purchase much of our product on or they going to continue to rent or are they going to purchase a home? And rental rates certainly aren't softening, so when you look at that trade-off of continuing rent or being able to lock in on a longer-term basis, which our housing costs are, it's still very attractive even with these increased rates to buy a home.

And the -- I just had the question in terms of are we concerned about the higher rates impacting our lower-priced product. And really, in certain ways, it goes the other direction, as well because if you have a lot of move-up homes that takes someone that is choosing to sell their home.

Many times, they have a low interest rate and having to step up and buy another one. So we really look at it that we are positioned in the right buyer price point for what's going on right now..

29:41 Great and I appreciate the thoughts there. And you brought up rentals, and I'm curious, I forget kind of where you've been in the last few quarters.

But in terms of interest from single-family rental and sales there, what's that running at right now? And given the move in rates, has there been any contemplation as far as either increasing that exposure? Anything going on there that's been an incremental change?.

30:06 No, that's a -- we haven't seen any reduction of demand from the four rent operators. It's really a small part of our business, we don't quote that. We do a certain amount of it, but it's really a very small part of our business..

30:25 Okay. I appreciate it guys. Thanks a lot..

30:28 Thank you..

30:32 Thank you. The next question comes from the line of Jay McCanless with Wedbush. Please go ahead..

30:42 Hey, good afternoon, guys. Thanks for taking my questions. First question, I had and it's actually kind of a two-parter.

If I think about the complete brand versus the legacy communities brand, are you having more issues, supply chain and freight lane wise getting those Century Complete Homes built, just because these homes are out typically further outside the normal metro than, say, your legacy brand? 31:13 And then also, the second part of this question is, are you seeing the same amount of home price appreciation in these smaller metros like you're seeing in the more normal markets where the public builders operate?.

31:27 Jay, the first part of your question is, yes, there are more supply chain challenges on the Century Complete side, just given the fact that, in most cases, they're smaller subdivisions, as well as they may be in a little further outside the metro area. The trade-off is that the houses are simpler to build. They're smaller.

So as a result, when you look at it, even though there are more supply chain challenges, they're faster homes to build just because of the size and complexity of the home. In terms of our ability to push price, no, we've not seen any difference at all..

32:19 And then I wanted to ask, understanding that you're maintaining the revenue and the unit closing guidance, it seems with $421,000 ASP this quarter that has some newer product comes on in the back half of the year, it looks like ASP is going to have to tick down pretty meaningfully from this $421,000 now.

Maybe you could talk about whether it's that new Florida product you talked about on the Complete side or increased openings of the community -- the Century Complete brand. Just maybe walk us through how the ASP you think is going to progress this year..

32:58 Yes. Hey Jay, it's Dave. It's definitely a mix issue. And as we look at the ASP, if you look at our backlog, you've got 45%, 46% of our backlog is sitting in Century Complete with an ASP at $252,000. So as that comes through our closings more of an outsized pace, that will be dropping our delivered ASP.

And then yes, as we're bringing on new communities, there will be at a variety of price points, whether it's in the Florida markets, the Louisville markets, the Central Complete markets or other centric communities openings. We are always trying to bring them in at kind of that affordable entry-level price component.

But the biggest shift is really a mix component that you can see in our backlog alone with 45% plus sitting at $252,000..

33:47 Okay. And then I guess, what are the implications maybe for the second quarter and third quarter gross margin? Because I think Dale or Rob said earlier that what you have in backlog now is probably pretty similar gross margin wise.

But as you open a lot of that new product in the back half of the year, what impact might that have on gross margin?.

34:08 Yes. I think it's a little bit difficult, as Dale was saying, to have visibility into what's going to occur in the back half of the year. But as I look at backlog, backlog has been experiencing margins that have been similar to what we've been posting the past several quarters.

And then we'll look and see if there's any additional incentives or costs that need to be kicked in to get homes closed in the appropriate quarter and as we want them scheduled to be closed.

34:34 And then we'll be looking at margins and what the market is dictating, as we get into that third and fourth quarter and seeing where rates are, where the buyers are, what is the market doing and how we compete accordingly in order to sell and close the homes.

And so as we look at it, it's a little bit difficult to give you any kind of color into that third quarter, but that's kind of where we see the market today..

34:59 Okay. And then last one, and I'll turn it over. I know you guys said you were underwriting to 50 basis points higher on new mortgage apps.

But have you looked at the backlog and if we get to 6% or 7% mortgage rate, what percentage of the current backlog might not be able to close?.

35:24 Yes, this is Dave. We have been stress testing. As Dale mentioned, we've got a fairly significant amount of our backlog for the second quarter here is already rate locked.

For all loans, all potential loans that are not rate locked, we are stress testing up to 6% and working with the buyers to see if they need to be doing anything additional in order to make sure they're going to close the home.

And then we're continually doing a variety of other stress tests just to make sure that if ratio's gone out of whack, whatever else may be going on with the buyer, we're making sure that those homes are closing, and we've got a plan for them..

36:01 Okay, great. Appreciate taking my questions..

36:05 Thanks, Jay..

36:10 Thank you. Next question comes from the line of Alex Barron with Housing Research (ph). Please go ahead..

36:29 Thanks, gentlemen, and great job on the quarter. I wanted to see if you could address the topic of share buybacks. It seems like you guys stepped up here this quarter, something that I think you hadn't done to the same degree before. So I'm just curious about your thoughts going forward given where the stock is trading? That's my first question..

36:56 Yes, hey Alex, this is Dave. I would say that in turn, we've been receiving a lot of questions about our capital deployment. And obviously, during the quarter, first, we increased our dividend 33% of the $0.20 a share. And then secondly, we did, we were active in the market and we bought back just over 1 million shares at north of $62 million.

And if the market continues to discount the stock, we view it as a very attractive option and we'll evaluate it going forward..

37:28 Yes, because right now, I mean, it seems like you're going to be trading below book value, which would be pretty accretive. My second question has to do with build times.

What have you guys experienced in terms of build times this quarter? And along with that, at what point in the process are you guys kind of selling the majority of your homes and at what point are the buyers able to lock in the rates? Are you assisting them with that? Or is that something that they're doing?.

38:04 So in terms of cycle times, -- Alex in terms of cycle times, from the fourth quarter to the first quarter, they've been up as much as 10 days on our houses. And so it has not gotten better. There are some green shoots right now where it appears that some things are getting a little better.

But again, we're not forecasting that for the balance of this year for right now. 38:29 As it relates to when we put a home up for sale, we're going to make sure we have our costs locked in. That's the luxury of our spec-based model and not put them on the market too soon, so that we know for sure what our margins are and where we're at.

And also what's really important is not just the margins, but that we can deliver a home on the time frame that our buyer is looking for it, so that we have that consistency as well. And so with that, we will assist them in rate locks. And it's on a case-by-case basis, of course, but that's something we will do..

39:10 Okay. And if I could ask one last one.

Just curious how much, I guess, confidence or visibility you guys have into how deep the buyer pool is? In other words, do you have a waitlist or what's the way that you assess the supply versus demand to be able to assess whether you should increase prices and so forth?.

39:33 It's really, Alex, a matter of what we have for sale and what our sales pace is. And we're continuing to be able to sell our homes before they're complete. And if we start seeing that changes in the market, then we'll adjust how we market, sell and price our homes. But we've not reached that point yet..

40:04 Okay, great. Well best of luck for the rest of the year. Thank you..

40:08 Thanks, Alex..

40:09 Thanks..

40:13 Thank you. Ladies and gentlemen, we have reached the end of question-and-answer session. And I would like to turn the call back to Dale Francescon for closing remarks..

40:26 Thank you, operator. I'd like to take this opportunity to once again thank all of our team members for their incredible work and continued dedication to our valued homebuyers. I'd also like to thank our investors for their time today. We appreciate your continued support and investment and look forward to speaking with you again next quarter..

40:51 Thank you. This concludes today's conference. You may disconnect your lines at this time. Thank you for your participation..