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spk07: Greetings. Welcome to Century Community's second quarter 2023 earnings conference call. All participants will be in listen-only mode. Should you need assistance, please signal a conference specialist by pressing the star key, then zero on your telephone keypad. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star, then 1 on your telephone keypad. To withdraw your question, please press star, then 2. Please note this event is being recorded. I will now turn the conference over to Tyler Langton, Senior Vice President of Investor Relations for Century Communities. Thank you. You may begin.
spk03: Good afternoon. Thank you for joining us today for Century Communities Earnings Conference Call for the second quarter 2023. Before the call begins, I'd like to remind everyone that certain statements made during this call may constitute forward-looking statements. These statements are based on management's current expectations 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 statement. Certain of these risks and uncertainties can be found under the heading Risk Factors in the company's latest 10-K as supplemented by our latest 10-Q and other SEC filings. We undertake no duty to update our forward-looking statements. 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. Hosting the call today are Dale Francescan, Chairman and Co-Chief Executive Officer, Rob Francescan, Co-Chief Executive Officer and President, and David Messinger, Chief Financial Officer. Following today's prepared remarks, we'll open up the line for questions. With that, I'll turn the call over to Dale.
spk04: Thank you, Tyler, and good afternoon, everyone. In the second quarter, we experienced strong sequential gains across our business, including substantial increases in net orders, deliveries, starts, and gross margins. We generated $69 million in pre-tax income, $51 million in net income, diluted earnings per share of $1.60, and $80 million of EBITDA. Strong underlying demand for affordably priced homes, a scarcity of existing homes on the market, and consumers adjusting to higher interest rates are all contributing to and increasing new home sales. Our net new contracts in the second quarter totaled 2,317 homes, a 15% improvement over first quarter 2023, and a 4% increase over year-ago levels. Net new contracts were especially strong in our Century Complete business, increasing 40% sequentially and 16% on a year-over-year basis in the second quarter. Century Complete had an average sales price of $257,000 in the quarter, and we are seeing strong demand for affordable, entry-level homes across both our brands. This lower price segment of the market is benefiting from favorable demographics and has the widest range of potential buyers. As a reminder, The century-complete portion of our business only purchases finished lots on a just-in-time basis, which helps to drive above-average returns for this segment. Consistent with the past several quarters, we are continuing to concentrate our sales efforts on homes with near-term completions as it allows our buyers certainty in their interest rates. Our quarter-end backlog consisted of 2002 sold homes valued at $750 million, and we are not focused at this point on building up a significant sold backlog of later term deliveries. Our cancellation rate was 14% in the second quarter, an improvement versus our 18% rate in the first quarter of 2023, and a significant reduction from the 37% rate we saw in the fourth quarter of 2022 as buyers are adjusting to the higher interest rate environment. Our strategy of selling homes later in the construction cycle is another factor in driving this lower cancellation rate. For comparison purposes, our cancellation rate was typically in the low to mid 20% range in the years prior to COVID. Our cadence of orders was relatively consistent throughout the quarter. As we commented on our earnings call last quarter in terms of sales patterns, we expect more typical seasonality to return this year, resulting in sales slowing during the summer months and then picking up in the fall. In the second quarter, we delivered 2,235 homes. Our second quarter deliveries increased 17% sequentially and exceeded the guidance we provided last quarter. These better than expected deliveries were the result of moving up homes due to improving cycle times that were originally expected to complete in the third quarter. Since the beginning of the year, we have been increasing our starts given the improvement in our sales activity and margins on these newly started homes. In the first quarter, 2023, we started 2,354 homes which further increased to 3,041 homes in the second quarter. To put these starts into perspective, the number of homes we started in the first half of 2023 were twice the number we started in the second half of 2022, and as a result, we continue to expect to see higher deliveries in the second half of this year as compared to the first half. Revenues from home sales were $818 million in the second quarter. Our average sales price on deliveries decreased by 12% on a year-over-year basis to $366,000, reflecting our strategy of properly incentivizing homes with near-term deliveries, building more affordably priced homes, and more closings coming from some of our lower-priced regions. In the second quarter, The average sales price on our backlog equaled $375,000, and we expect our average selling price to increase in the second half of this year over second quarter levels as we continue to reduce incentives and selectively increase base prices. I also want to highlight that we released our 2023 ESG report last week. In this report, we published our greenhouse gas emissions inventory for the years 2019 through 2022 and provided details on our significant accomplishments over the past two years since our inaugural ESG report in 2021. As we detailed in the report, we are committed to providing our team members with the ongoing training and development so that we can continuously raise the bar for the home buying experience and want to thank all of our employees for their hard work and dedication to our valued customers. With the first half of the year behind us, we are on track to grow our business and increase our margins and returns in the second half of this year. Buyers are currently looking for affordably priced homes with near-term completions, and we are well positioned to meet this demand. We have continued to increase our starts given our confidence that the homes we're starting now will carry higher margins and returns. As a result, not only do we expect our deliveries in the second half to exceed first half levels, but our gross margins should continue to improve sequentially due to lower direct costs, improved cycle times, and reduced level of incentives. I'll now turn the call over to Rob to discuss our business and plans going forward in more detail.
spk05: Thank you, Dale, and good afternoon, everyone. We have a strong presence and concentrated focus within the affordable new home category with approximately 93% of second quarter deliveries coming from homes priced below FHA limits, allowing us to target the widest range of potential buyers in any given market. Additionally, roughly 99% of our home deliveries this quarter were from spec builds, which allows our buyers to purchase quick move-in homes and lock in their mortgage rates for certainty of financing. We are continuing to see improvements in our cycle times due to easing of supply chain issues and trade shortages and expect the cycle times of homes that started in the second quarter of 2023 to begin to approximate a more normalized four to six month timeframe. In the second quarter of 2023, the direct construction costs on our starts remained static with the prior quarter, which had declined by roughly 11%, an average of approximately $20,000 per home versus the high watermark in the second quarter of 2022. These savings will flow through to our earnings and benefit margins in the second half as we begin to deliver more of these lower-cost homes. Recently, we have experienced increases in lumber costs and could potentially see increases in certain other categories as the new home market continues to rebound. In the second quarter, we generated adjusted gross margins of 21%, 840 basis point improvement over first quarter 2023 margins of 19.6%. Our gross margins in the second quarter were ahead of our expectations for them to be roughly flat on a sequential basis. The primary drivers behind the better than expected results were lower incentives as well as solid performance on costs and cycle times. The homes that we have been starting over the past several months are carrying a higher margin profile due to improvements in direct construction costs, reduced incentives, and shorter cycle times. As a result, as Dale mentioned, we continue to expect our home building gross margins to trend positively on a sequential basis in both the third and fourth quarters and our second half deliveries to exceed first half levels. Given solid demand in the market, we have been able to reduce the amount of incentives that we have been offering while still maintaining a healthy sales pace. Incentives averaged 900 basis points on closed homes in the second quarter of 2023, which was down roughly 100 basis points on a quarter-over-quarter basis. Our incentives on closed homes will continue to decline as incentives on new orders in the second quarter decrease sequentially throughout the quarter, reaching approximately 600 basis points for June sales. The remaining incentives offered are largely related to interest rate buy downs. Now turning to land. We ended the second quarter with approximately 58,000 owned and controlled lots a 12% increase over first quarter 2023 levels as we began to expand our land acquisition efforts. This higher lot count was driven by an increase in our controlled lots to 27,000, with controlled lots as a percentage of total lots increasing to 46% in the second quarter versus 39% in the first quarter 2023. Our 31,000 owned lots in the second quarter was roughly similar with the last six quarters and provide approximately three years of deliveries based on the prior year volumes. We would expect our controlled lot count to increase further over the balance of the year as we continue to invest in land to support our future growth. In the second quarter, our community count of 233 increased by 10% from year-ago levels of 213 and was basically flat with first quarter 2023 levels. Our community count saw the greatest year-over-year increases in Texas and the Southeast, two markets that have been performing well given their relative affordability, strong employment, and population growth. We continue to expect our year-end 2023 community count to be in the range of 250 to 260 communities representing strong year-over-year growth of 20% to 25%. We will achieve these levels by opening over 90 communities and closing out approximately 70 communities in the second half of the year. We view this new number of communities as a new base that we will look to further grow in the years ahead as we focus on increasing our share across our national footprint. We are pleased with our performance this quarter. Our sales activity remained at healthy levels given the strong demand for affordably priced homes and limited supply of existing homes for sale. And we expect to see the positive momentum experienced in the second quarter to continue into the second half of this year. I'll now turn the call over to Dave to discuss our financial results and increase guidance in more detail. Thank you, Rob. During the second quarter of 2023, pre-tax income was $68.7 million, and net income was $51.4 million, or $1.60 per diluted share. Even up for the quarter was $80.1 million. We also posted strong sequential gains in net orders, starts, deliveries, and gross margins. Home sales revenues for the second quarter were $818.4 million compared to $1.1 billion in the prior year quarter and $735.6 million in the first quarter of 2023. Home deliveries of 2,235 homes increased 17% sequentially and declined by 18% on a year-over-year basis, a direct impact from our decision to start fewer homes in the second half of 2022. Our average sales price of $366,000 declined by 12% versus the prior year quarter, reflecting higher incentives in homes closed this year, building more affordably priced homes that buyers are seeking in MIX. Regarding MIX, in the second quarter this year, the West, and especially the high-priced Bay Area, accounted for a lower percentage of deliveries, while our lowest-priced Southeast and Texas regions, along with Century Complete, accounted for a higher percentage. We expect our average selling price to increase in the second half of this year over second quarter levels as we continue to reduce incentives and selectively increase base prices. Net new contracts in the second quarter across our footprint for 2,317, a sequential increase of 15%. As Dale mentioned, we believe our sales activity is benefiting from strong underlying demand for affordably priced homes, a scarcity of existing homes on the market, consumers adjusting to higher interest rates, and our ability to buy down rates. On a sequential basis, our new orders also benefited from having a higher level of inventory with near-term deliveries available for sale. At quarter end, our backlog of sold homes was 2002, valued at $750 million, with an average price of $375,000. In the second quarter, adjusted home building gross margin percentage was 21%, compared to 19.6% in the first quarter of 2023. Home building gross margin was 19.7%, compared to 18.2% in the first quarter of 2023. Even with these improved second quarter margins, we still expect our gross margins to increase sequentially in both the third and fourth quarters of this year due to improvements in direct construction costs, reduced incentives, and shorter cycle times. We did not book any impairments this quarter. SG&A as a percent of home sales revenue was 12.8% in the second quarter, compared to 9.6% in the prior year, but was down sequentially from first quarter 2023 levels of 13.4%. The largest driver of this year-over-year increase was the spreading of our fixed costs over a lower revenue base, as well as higher commission rates on home sales. During the COVID-driven sales boom that lasted through the first half of 2022, we were able to lower our commission rates given the exceptionally strong demand for housing. As demand returned to more normalized levels, we increased our commissions to more historical averages to ensure that we are driving buyers to our communities and expect to continue offering this level of commissions in the current environment. During the second quarter, financial services captured 73% of the closings, generating $24.3 million in revenues compared to $22.8 million in the prior year. The business contributed $12.5 million in pre-tax income compared to $8.6 million in the prior year quarter. Our net home building debt-to-net capital ratio decreased 120 basis points to 22.3% in the second quarter compared to 23.5% at the end of last year, even with a significant increase in the number of homes under construction. Our home building debt-to-capital ratio also decreased to 31.2% at quarter end compared to 32% at the end of last year. We maintained our quarterly cash dividend at 23 cents per share and ended the quarter with a strong financial position, including $2.2 billion in stockholders' equity, $1.2 billion in total liquidity, and $374 million in cash. During the second quarter, we had no borrowings outstanding on our $800 million unsecured revolving credit facility that does not mature until April 2026. Additionally, we have no senior debt maturities until June of 2027, providing us ample flexibility with our leverage management. At quarter end, our inventories total $2.9 billion. Now, turning to guidance, the second quarter had strong sequential gains across our business and bolster our confidence in the second half of 2023. As a result, for the full year 2023, we are increasing our guidance for home deliveries to be in the range of 8,300 to 9,000 homes, and our home sales revenues to be in the range of $3.1 billion to $3.4 billion. With that, I'll open the line for questions. Operator?
spk07: Thank you. We will now begin the question and answer session. To ask a question, you may press star then one on your telephone keypad. If you're using a speakerphone, please pick up your handset before pressing the keys. To draw your question, please press star then two. At this time, we will pause momentarily to assemble our roster. Our first question comes from Alex Rigel with B. Riley FBR. Please go ahead.
spk01: Thank you. Good morning, gentlemen. Very nice quarter. Thanks, Alex. A couple of quick questions here. Can you talk a bit about the mortgages your buyers are getting, average interest rates, FICO scores, that sort of thing?
spk05: Yeah, from a FICO score perspective, it's been relatively constant. We've been staying in the On the CMP side, on our Central Complete side, we're at about the 7, the high teen, 715, 719. On the Central Community side, we're hanging out right around 730. That buyer profile for both buyers really hasn't changed over the past couple of years. It's been pretty flat. And then in terms of mortgages, right now, you know, we've been offering five and three quarters on mortgages for the buyers, and we've seen that be a pretty attractive rate to move people through.
spk01: Excellent. And then can you talk a little bit about thoughts about geographic expansion into new markets over the next six to 12 months and your thoughts on M&A opportunities?
spk04: You know, in terms of expansion into additional markets, we're very happy with the markets that we currently have. And not that we would rule out expansion into other markets if we found the right opportunity. Same thing with M&A more generally. We continue to look at things as they become available. There still seems to be quite a difference between bid and ask. And so as we would find an opportunity that we thought the pricing worked and the market worked, we would move forward on that without a doubt. But right now, I don't see any of that on the horizon.
spk01: Thank you. You're welcome.
spk07: Our next question comes from Carl Reichardt with BTIG. Please go ahead.
spk08: Thanks, Stephanie and everybody. Do you have, Dave, offhand the number of unsold units you had under construction at the end of the quarter? And then corollary to that is of the 3,000 or so starts you did in the quarter, what percentage of those did you sell during 2Q? Sorry, that's what I would ask. Sorry, what percent did you have an order on in Q2?
spk05: Understood. So I don't have anything related to homes under construction other than the fact that we have started more than 5,000 homes this year. Since we're selling homes later in the cycle, you would imagine that the majority of the second quarter home starts have yet to be sold. So we would see those be sales later in the year as they get closer to completion.
spk08: If I look at your guide and I say, you know, you've got $2,000 in backlog, you've delivered $4,100 plus, you need $2,500 or so to get to the midpoint of the backlog, effectively all that $2,500 is in the ground already, yeah? At least it's trenched.
spk05: Correct.
spk08: Okay. Thank you. And then you guys talked a little bit about the Century Complete business and talked about the breadth of demand in terms of buyer segments, which is interesting. Can you talk a little bit about the mix of first-time buyers coming out of apartments versus moved down, older customers versus maybe, say, investors who are buying that product, what that mix looks like and how it might have changed?
spk04: Yeah, in terms of investors, we're seeing pretty minimal investor activity right now, where historically that was on the century complete business may have been 10% to 15% of our deliveries. It's hardly worth mentioning at this point. With regard to the demographics of our buyers, it's really the entire spectrum. We're getting first-time home buyers. We're getting move-down buyers. We're getting some buyers that are selling their existing house and buying a century-complete house. So it's really across the board.
spk08: Okay, thanks. And if I can squeeze one more in, just on buybacks, can you talk maybe, I don't know exactly where your current authorization sits, and you've obviously got the dividend going now. Can you talk about, given the run in the stock, you're thinking on potential buybacks, or are we thinking about the cash you're generating, since you have no debt to pay down, going really plugging back into the land market to grow the business more or less over the next year or two? Thanks.
spk05: Yeah, no problem, Carl. Yeah, we've got roughly a million and a half shares available under our current authorization. And as we look at it right now, obviously the stock has been on a run for a little bit here. But we have always viewed the opportunity to plow some of these earnings and that cash flow back into the business and continue to grow it. We think that we have an opportunity across our footprint in our markets to really keep expanding this business and get deeper, larger, more scale in our existing markets. and we'll do that through reinvestment.
spk08: Thank you, David. Thanks, all.
spk07: Next question comes from Jerry McCandless with Wedbush Securities. Please go ahead.
spk00: Hey, good afternoon. Thanks for taking my questions. I guess the first question I had with the guidance at 8,300 to 9,000 closings seems like a pretty wide range for this late in the year. Maybe talk to me about what the difference is between the top and the bottom of that range?
spk05: Yeah, I think, you know, 8,300 to 9,000 closings, we still have, you know, we just put those homes in the ground. We still have to sell and close them, and there's still a lot of things that can happen between now and the end of the year. You know, we think that there's still going to be strong underlying demand. We've got a macro economy to think about. We have cycle times. We have municipalities. We have labor and a variety of issues. And so at this point in time, we feel pretty good with having that range, which is less than 10% from the bottom to the top of it. And we'll hopefully tighten it up as we get into the third quarter.
spk00: And then with SG&A dollars, could you maybe talk about, especially with what you said about co-broker and your prepared remarks, where you think that quarterly or annual run rate in dollars should be now and how fixed versus variable, if you could.
spk05: Yeah, I think on the commission side of the world, I think that we'll end up being kind of in that 3.5% to 4% range, which is where we've been historically. And it's roughly 30-ish percent of our overall SG&A dollars. We've been running pretty historically fixed SG&A at 65% to 70% of the bucket.
spk00: And then one other question I wanted to ask on complete, you know, we've heard people in the media talk about this lock-in effect where existing homeowners don't want to list because they don't want to give up a 3% mortgage for a 7% mortgage. Historically, you guys have talked about complete competition being more the local housing market than other new home builders. I guess, is that still the case? Is that something that contributed to some pretty nice order growth for complete this quarter?
spk04: Yeah, I think, first of all, it's still the same. When we look at it, well, in some subdivisions, we're competing against new home builders. It's largely against resale homes. And we are definitely seeing the number of resale homes available in virtually all of our markets as being very constrained. So as a result, that gives us a competitive advantage and one that we're continuing to push. And I do think that's a big reason why our complete business did so well in terms of new orders on the second quarter.
spk00: And then last one. I know you said in the guidance that you expect the gross margin to go up sequentially. Is there going to be, in terms of the actual closings, for the next two quarters, are you thinking it's gonna go up from 2Q to 3Q or should we expect a dip just because of what you talked about with starting less homes at the last half of 22? How should we expect the quarterly cadence on closings to go?
spk05: I would expect the latter based on your comments that you'd see a bit of a dip in Q3 and pick it up again in Q4.
spk00: Okay, great. That's all I had. Thanks for taking my questions. Thanks, Jay.
spk07: Our next question comes from Alan Ratner with Zalman and Associates. Please go ahead.
spk06: Hey, guys. Good afternoon. Thanks for taking my question. Hi, Alan. Hey. So, apologies for the somewhat technical modeling question, but I'm trying to figure out some math here and hoping you can clarify it for me. I think you mentioned that you guys expect to see a typical seasonal pullback in order activity in the back half of the year, which we're hearing from a lot of builders. But I'm struggling to reconcile that with your model right now, where you're effectively selling homes at or close to completion. And your closing guide for the back half of the year implies pretty steady closing activity, at least back half versus first half, averaging 2,100, 2,200 closings per quarter. why wouldn't your orders kind of be in a similar range? And if it were to be in a similar range, that would imply, you know, kind of flattish with the first half of the year.
spk05: Yeah, I think making sure I'm trying to follow your math and happy to discuss it after the call as well. But as I look at it with when we have homes completing and when we expect to be selling them, With a little bit of seasonality occurring here in the July and August months, and we'll see sales pick up again into the fall, we think that where our backlog is today, 2002 homes, and that sales cadence, we think that we still hit the closing guidance, whether to be in that range of 8,300 to 9,000 homes. Got it.
spk06: Okay. Yeah, we can talk through the math later, Dave, but appreciate that. Second, on the margin, obviously you're expecting sequential improvement over the next couple of quarters. If I think about your incentives right now, which are running about 600 bps on orders versus 900 bps on closings, is that the easiest way to think about how much improvement you expect, kind of 300 bps or so over the next couple of quarters, or are there other moving pieces in there that I need to consider?
spk05: Well, there's moving pieces on directs as well, as I pointed out. But, you know, I think that would be at the top level at that 300 bps.
spk06: Top, meaning that would be at the high end of what you would expect? Yep, exactly.
spk05: Okay, got it.
spk06: That's helpful. And I guess just on those direct comments, You know, I've been personally a little surprised. It seems like many builders that have seen nice cost reductions, you know, expect those reductions to remain in place even as starts are accelerating across the industry. Your tone to me sounds a little bit more realistic and aligned with how I'm thinking about it, that, you know, with some of these pretty significant increases in starts, It's possible certain items might see a bit of a reversal there. I'm just curious if you've seen any indication of that up to this point, any particular markets or trades. that you feel like are starting to get a little bit stretched or come back for some price increases, or is that just more kind of prospective thinking on your part at this point?
spk05: Nothing that's consistent right now, Alan, but it's really more from our perspective looking forward and just being in the business for a long time, knowing how things work. We're seeing it obviously right now on lumber, but we think we're going to see it in some other categories as well. But nothing that I could say, if it's on the ground happening today in numerous areas, that is not the case. But on the other hand, we're flat, you know, from basically net flat from where we were on a sequential quarter basis. So, you know, certainly it is not going down at this point. Got it.
spk06: And just a strategic, you know, question on this. So, you know, on one hand – Demand is strong today and surprisingly strong, and it feels like you guys definitely have some pricing power as evidenced by the incentives pulling back. Let's say costs were to claw back up a bit here. How aggressive would you be on trying to pass that along to the consumer, or are you perhaps a bit more cautious given where affordability is today than perhaps you would have been two years ago, let's say, when rates were half of where they are today?
spk04: Yeah, I think rates today clearly impact this. But I'm not sure it's any different than where we were going back a year and a half or so ago. As our costs were rising, we were moving along the additional costs wherever we could. We would try to do the same thing going forward. Now, there's obviously with the higher interest rates, that would be more difficult to do. But to the extent in a particular subdivision we can do it, we will. And if we can't in another subdivision, then we'll just have to absorb it. Got it.
spk06: Appreciate the thoughts. Thanks for all the time. Thank you.
spk07: Our next question comes from Michael Rehart with J.P. Morgan. Please go ahead.
spk02: Hi. Thank you for taking my question. This is Andrew Ozion for Mike. Nice quarter. I just wanted to ask, Yeah, of course. I just wanted to ask, in terms of the absorptions you saw this quarter, it looks like you were doing a little bit better than you would historically. And kind of just given your confidence going forward, do you kind of expect that to continue in terms of just beating your historical seasonality a little bit or any puts and takes there?
spk04: Part of that is all driven by what we have available for sale. It still comes down to as things are nearing completion, we have been selling them and we have very little in the way of completed inventory. With that in mind, some of the seasonality is impacted by what we have available for sale as well as the same thing with absorption rates. As we look at it, you know, as Dave commented earlier, some of our sales pace is going to be impacted on when homes are nearing completion and where they are in the construction cycle. So that kind of affects the actual absorptions as well.
spk02: That makes sense. I appreciate it. Thank you for that. I also wanted to ask maybe I don't think I heard earlier in the call about what you saw month to month in terms of demand trends and maybe what you're seeing in July so far.
spk05: I would say that month to month, we saw some of the seasonality moving through the quarter from April through June. Then as I look at July, on a sales basis, we're up 15% or so over last year at this point. you know, continue to see some of that seasonality play into our numbers going from June to end of July.
spk02: I appreciate that. And then, you know, as you continue to invest in land to support growth, where do you aim to be maybe long-term in terms of your option lot percentage?
spk05: Well, we still like the ratio of a 50-50 option versus owned. And we're getting back closer to that now. We went ticked up above that when we dropped so many lots at the end of the last two quarters of last year. But we're starting to rebuild that now. We're up sequentially quarter over quarter. We're at roughly the 58,000. As we said in our prepared remarks, we see our controlled lots continue to grow throughout the year, and so that will get us closer to that 50-50 ratio. So no commitments will be there, but that's kind of the goal right now.
spk02: Thanks so much. That's all I had. Good luck. Best of luck in the next quarter. Thank you. Thanks.
spk07: This concludes our question and answer session. We will now turn the line back over to Dale for some brief closing remarks.
spk04: 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 to you again next quarter.
spk07: The conference is now concluded. Thank you for attending today's presentation. You may now disconnect.
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