Eagle Materials Inc

Good day, everyone, and welcome to EGLE Materials Fiscal 2022 Earnings Conference Call. This call is being recorded. At this time, I would like to turn the call over to EGLE's President and Chief Executive Officer, Mr. Michael Hack. Mr. Hack, please go ahead, sir.

Thank you, Josh. Good morning. Welcome to EGLE Materials Conference Call for our fourth quarter and annual results for Fiscal 2022. This is Michael Hack. Joining me today are Craig Kessler, our Chief Financial Officer, and Bob Stewart, Executive Vice President of Strategy, Corporate Development, and Communications. We are glad you could be with us today. There will be a slide presentation made in connection with this call. To access it, please go to eaglematerials.com and click on the link to the webcast. While you're accessing the slides, please note the first slide covers our cautionary disclosure regarding forward-looking statements made during this call. These statements are subject to risks and uncertainties that could cause results to differ from those discussed during the call. For further information, please refer to this disclosure, which is also included at the end of our press release. I want to start off by saying I'm happy to be here today to talk to you about another great year for Eagle Materials. If I take a step back and look at Eagle's results this year, against the world backdrop, it is extraordinary what the Eagle team accomplished. News around the world and in the U.S. was dominated by words like global pandemic, supply chain disruption, invasion, war, and inflation. These were terms the world might have hoped had been largely relegated to history. Instead, each came to represent formidable challenges this last year. Against this challenging backdrop, contrasting terms come to my mind about EGLE materials. These include such terms as performance, resilience, sustainability, and continuity. This year, EGLE has built on its track record of achievement amidst adversity. EGLE has proven once again the power of long-standing, sound strategy, and the value of execution capability as a core competence. Let me offer a few perspectives about EGLE with respect to each of these terms, starting with performance. This was a year of highlights for EGLE materials. These highlights are both financial and operational. Let me start off with a few financial highlights that are worthy of mentioning. Revenue was up 15% this year to a record $1.9 billion, and most notably, gross profit margin increased 270 basis points to 27.9% during this inflationary period. Eagle's EPS from continuing operations was up 14% to a record $9.14. I normally do not highlight these statistics in my comments, But I believe this may be why analysts have observed that among the top 50 publicly traded building materials companies doing business in the US, Eagle's EBITDA margin performance remains among the very best. We view this as one of the key indicators to measure how we are performing. Our measures of performance are not only financial. One measurement that I hold very dear is our safety performance. I'm pleased to say that all of our businesses performed better than industry average this past year. Let's turn to resilience. The definition of resilience is the capacity to recover quickly from difficulties. This year definitely proved a difficult operating environment. Eagle believes that if you have the correct strategy, then you will be resilient. This was never shown more than in this past year where the reasons for these performance and cash flow characteristics relate to the compound effect of many decades of sound strategic decision disciplines. These are especially relevant as we navigated an unpredictable external environment this year. One aspect of this strategy is our commitment to owning manufacturing facilities where we also own or control our raw materials. with decades of reserves that are proximate to these facilities. One way to be resilient in the face of the interrupted supply chain is to own the supply chain, so to speak. The use of this strategy resulted in the acquisition of an aggregates-based business in Colorado. This $120 million investment checks all of our strategic boxes. It has long-lived reserves, is complementary with our cement operations, and it provides sustainable growth in an attractive market. Now to sustainability. There are many ways to look at sustainability. I think of sustainability in three buckets, financial, operational, and environmental. From a financial aspect, I want to highlight that we issued $750 million 10-year bonds with an interest rate of 2.5%. This long-term capital structure will serve EGLE well for the coming decade. From an operational perspective, you have heard many times in past calls how we invest in our facilities, keeping them in like-new conditions. In times of inflationary pressure, this deeply held philosophy has served us especially well. Not only does this minimize costs by having our equipment in like-new conditions, but it reduces labor-intensive operations through investment in technology and process controls. This is very helpful in the current type labor market. On the environmental front, we have started introducing a new product called limestone cement. This product will become our main product offering for us in the near future. In addition to making our clinker manufacturing capacity go further, which is especially important as we are facing sold-out conditions, it reduces the carbon intensity of the cementitious product. Cement, like wallboard, is a necessity, not a luxury, in the growth and renewal of America and is an essential in any path to a net zero carbon future. And finally, continuity. When I think of continuity, I think of consistency. Consistency is important on many fronts. As we have discussed, consistency to a strategy, either operationally or financially, is extremely important. I want to spend a little time on both the operational aspect as well as the financial. First, let me talk briefly about our financial continuity. This past year, we returned $620 million of cash to shareholders through share repurchases and dividends. I want to highlight that our use of cash has been consistent and will continue to be consistent. A proof point of this is that over the last three years, we have dedicated over $1.9 billion of our free cash flow to heavy side growth, light side improvement, and the return of cash to shareholders through share repurchases and dividends. $956 million, or roughly half of the $1.9 billion, was allocated to share repurchases and dividends We have again demonstrated that we can grow the business consistent with our strategy while returning cash to shareholders at meaningful levels. Now let's talk a little bit about operational continuity and how we have been successful in maintaining this over decades. It really comes down to people. At Eagle, we have invested and will continue to invest in succession planning, talent management, organization health, diversity, equity, and inclusion. People make the decisions that drive value in companies, and these decisions determine our results. I'm very proud of the people we have at Eagle, and we have a great talent pipeline to foster continued success. I'll wrap up my discussion today with a few comments about the current environment. First, from a demand perspective, we continue to see steady order trends across each of our major business lines. Despite the well-chronicled uptick in interest rates, demand for housing continues to outpace supply within our core markets. Public infrastructure spending is well supported with state and local government revenue continuing to improve, and federal infrastructure spending should further support cement demand later this year and for the years to come. Finally, private non-residential construction is improving with many data points starting to reflect growing strength. From a cost perspective, we continue to see inflationary pressure on energy and transportation. Against this backdrop, we have announced midyear price increases in wallboard, cement, and concrete and aggregates. We expect our midyear price increases to keep pace with the current cost of inflation. Against this backdrop for FY 2023 is shaping up to be another record year for Eagle Materials. Now let me turn it over to Craig for the specifics on the financial results.

Thank you, Michael. Fiscal year 2022 revenue was a record $1.9 billion, up 15% from the prior year. The increase was driven primarily by increased cement and wallboard sales volume and pricing. Revenue for the fourth quarter was up 20% to $413 million, reflecting improved pricing in both the heavy and light materials sector. Annual diluted earnings per share for the full fiscal year increased 14% to a record $9.14, reflecting strong pricing across each business line, good margin expansion, and our reduced share count. Fourth quarter EPS was up 22%. Turning now to segment performance, let's look at heavy materials results for the year highlighted on the next slide. This slide shows the results in our heavy materials sector, which includes our cement and concrete and aggregate segments. Annual revenue in the sector increased 6%, driven by higher cement sales volume and pricing. Operating earnings increased 10%, again reflecting increased sales volume and pricing, and operating margins improved by 100 basis points. As Michael mentioned previously, in January, we implemented cement price increases of $10 per ton across all markets except Texas, where we did not implement a price increase until April 1st of this year. Within the last few weeks, we announced another round of cement price increases across nearly all of our markets to take effect in early July. It's atypical to have multiple price increases in one calendar year, which demonstrates the very strong demand environment and the sold-out position of the U.S. cement industry. Moving to the light and materials sector on the next slide. Annual revenue in our light and materials sector increased 27%, reflecting improved wallboard sales volume and prices. and annual operating earnings increased 42% to $274 million, reflecting higher net sales prices and wallboard operating margins improving by 680 basis points. We've continued to see inflation pressures for natural gas and freight post our year end. However, we implemented a wallboard price increase in early May to help offset these cost items. Looking now at our cash flow, which remains strong, During fiscal 2022, operating cash flow was $517 million, down 20% from the prior year. The decline reflects the timing of working capital, namely the receipt of our IRS refund. Capital spending increased to $74 million as we continue to invest in and improve our low-cost operations. During the fiscal year, we repurchased approximately 4 million shares of our common stock, or 9% of the outstanding, for $590 million and paid $31 million in dividends, returning nearly $621 million to shareholders. On May 17th, the Board authorized the repurchase of an additional 7.5 million shares of our common stock, bringing our current authorization up to 10.3 million shares. or nearly 25% of our outstanding. In fiscal 2023, we expect capital spending to increase to a range of $115 to $125 million as we ramp up several projects to expand the production of Portland limestone cement and to continue to improve our low-cost assets. And as Michael mentioned, in April, we completed the acquisition of an aggregates-led business in northern Colorado. We financed the acquisition underneath our existing bank credit facility, which we also recently expanded to replenish our availability. And finally, a look at our capital structure. At March 31st, 2022, our net debt to cap ratio was 45%, and our net debt to EBITDA leverage ratio was 1.4 times. Total liquidity at the end of the quarter was approximately $560 million, and we have no near-term debt maturities, giving us substantial financial flexibility. Thank you for attending today's call. We'll now move to the question and answer session. Josh?

Thank you. As a reminder, to ask a question, you will need to press star 1 on your telephone. To withdraw your question, press the pound key. Our first question comes from Trey Grooms with Stevens. You may proceed.

Good morning. This is Noah Murkowski on for TradeGrooms. And first, congrats on a nice quarter.

Thank you.

So first question, how are you thinking about raw material and especially energy-related costs on both sides of the businesses as we look into the balance of the calendar year? And I know you don't guide, but from a high level with pricing in place, directionally, how should we be thinking about the margin trajectory given the cost outlook?

Yeah, it's a good question, Noah. So on the wallboard side, think about the major inputs. On the good news, OCC prices, which we saw escalate last year, those have really plateaued and have actually started to come down a little bit here in the spring and early summer. So that's been a nice tailwind. and look to see that continue this year. Natural gas is a large input into the production of wallboard. We've certainly seen a move up during this past year. We do have about 30% of our natural gas needs hedged at under $4. But for perspective, for every dollar move in gas, it equates to about a $2 per thousand square foot change in cost. So Depending upon where gas flows through the year, you can kind of use that as a gauge. On the cement side, it's predominantly solid fuels. And in those cases, we've basically forward purchased most of our fuel needs for this coming year, albeit at elevated prices. But those are pretty well locked in for not just the calendar year, but for the fiscal year. But we are seeing some increases there. And so to summarize, right, I would say we've seen inflation pressures more so for this coming year than we've seen in many years. But as you mentioned, we do have multiple price increases slated for this calendar year, which should more than help offset some of these cost pressures.

Thanks. That's helpful. And for my follow-up, you know, in the press release and prepared remarks, noted that housing demand remains strong across your geographies but you know we have started to see some of the forward indicators there pull back so how are you thinking about the strength of housing demand as we move through this next fiscal year and given the immense backlog of homes yet to be completed should we expect less of a negative effect on wallboard volumes even if we do see a pause and starts yeah you know it's unique noah that um two two comments albeit the

The well-chronicled rise in interest rates will have some impact, but you think about where we operate in our markets where affordability remains very reasonable. The U.S. consumer has a job. Wages are growing. And in many cases, there almost is no inventory on the ground. And multifamily rents continue to go up pretty significantly. So, you know, against that backdrop, our order books have remained strong. You know, I would just also, you know, point out that, you know, we continue to see improvement there, and it's something we are certainly watching very, very closely.

All right, got it. Thanks for taking my questions, and good luck with the rest of the year.

Thanks, Noah. Thank you. Our next question comes from Anthony Pettinari with Citi. You may proceed.

Hey, good morning. Just following up on Wallboard, you know, your volumes in the previous quarter were negative year over year, and you obviously saw good volume growth this current quarter. Just wondering, is that just purely a function of year over year comps, or is that, you know, completions catching up with starts? I'm just wondering if if there's any kind of perspective you can give us on kind of the flow of wallboard volumes over the last six months. And if you saw any kind of, you know, trend into the current quarter, either positive or negative.

Yeah, Anthony, as we talked about last quarter, the December volumes being down had more to do with the supply chain issues that the homebuilders were facing, certainly in the fall, and those continued into the winter. And it was unique in January and February as we saw the spike in COVID cases. We were seeing some improvements, but it was being masked by some of the COVID issues. And as those have largely cleared out, I think some of those supply chain issues are starting to improve. But as you pointed out, what's unique, and as we think about this calendar year, and we think about the building cycle of a home, call it from a start to all board consumption, has historically been about three months. that building cycle has elongated, which in effect has built somewhat of a backlog for home building that we don't normally think about. So we do have good visibility into that right now.

Okay, that's very helpful. And then just a quick follow-up on costs. On the natural gas hedges, do those roll over or reset at some point? Is there any kind of timeline we should think about that for the coming fiscal year?

Yeah, that 30% was for fiscal 23. We continue to layer in as we go and as we find the opportunity for reasonable cash prices. Got it.

Got it. That's very helpful. I'll turn it over.

Thank you. Our next question comes from Jerry Rebich with Goldman Sachs. You may proceed.

Yes, hi. Good morning, everyone.

Morning, Jerry. Good morning.

I'm wondering, can you talk about how you think about in the next residential downturn how you would expect your wallboard margins to perform considering all the factors you spoke about at the beginning of the call in terms of rising gypsum costs, rising cycle-over-cycle transportation costs, et cetera, when you look at all of those factors and the impact on folks that don't have co-located reserves and How do you think about the way your business will perform cycle over cycle whenever the residential downturn will be?

Yeah, Jerry, as you know very well, we're very well positioned both geography and from a raw material perspective. You know, we own or control our raw materials. with multiple decades of natural gypsum already in the ground, effectively prepaid for, if you will, located near our facilities. And the one plant we do have in the eastern half of the U.S. has a pretty unique supply contract. So we can certainly speak to our own situation. And frankly, that plant in South Carolina didn't operate. We didn't own it. It got built in the prior cycle. So We think we've actually improved our overall position relative to where we were in prior cycles. There's other macro-related things within the industry in terms of limited new supply, things like that, that were very impactful in prior cycles, not just the 2006 to 2010 timeframe, but you go back even further to the late 90s, early 2000s. early 2000s when synthetic gypsum first really became available, there was a significant amount of new supply being added. And with that being generated from coal-fired power plants and that supply declining, that resource is diminishing in availability.

And, you know, Craig, putting the pieces together, when we last had a you know, housing slowdown, if you will, in the, we'll call it 15, 16 timeframe, you know, you folks had wallboard margins that were in the 33% range, and obviously you're doing much better than that now. If we think about a scenario where, let's say, housing starts drop to 1.2 million starts nationwide, you know, is the same level of margins that we saw If the last time starts were at similar levels, a good way to think about your business or any other moving pieces we should keep in mind given the factors that you just stepped through.

Yeah, hard to speculate with all of the factors that will go into there, but certainly we think our business is positioned differently than we've seen in prior cycles and much more sustainable to carry on the conversation that Michael had. I would add one other variable to that, and we've continued to invest in and improve our paper mill, which is, frankly, one of the largest input costs into manufacturing of wallboard. And as we've expanded that mill, if you think about the entire system within the light business, that was an important development as well, which has given us a lot more room to maneuver and lowered our cost structure for that business as well.

Okay, great. And lastly, on capital allocation, given all of the moving pieces on the macro risk, how are you folks thinking about capital deployment in the case we do enter a recession? Obviously, the balance sheet is really healthy as you laid out. Can you talk about the strategic priorities, if they could shift at all, if you might get a good entry point? because of economic conditions over the next couple of years. Just update us on how you're thinking about, in that scenario, what the opportunities might look like. Thanks.

Yeah. And, Jerry, this is one of the areas that we focus on, cash flow and the capital structure. And as you mentioned, we put the balance sheet in a position with call of leverage of around one and a half times to either A, manage cycles, and or B, continue to grow the company. And we've certainly put ourselves in a position to do both. And as we mentioned, we did find a small aggregates-led business in Colorado, which is very complementary to our cement business. So we've been able to continue to grow the company. There is a good pipeline of opportunities that we continue to go through. To the extent those opportunities... you know, either don't meet our strategic criteria or our financial criteria for investment, you know, we will continue to repurchase shares and return the cash to shareholders in a meaningful way. And we've positioned ourselves to be able to do that, and our shareholders have been rewarded with that in a very meaningful way this past year. And that's been a strategy and a capital allocation discipline for many, many years and decades, frankly.

Okay.

I appreciate the discussion. Thanks.

Thank you. Our next question comes from Stanley Elliott with Steeple. You may proceed.

Hey, good morning, everyone. Thank you all for taking the call, and congratulations on the strong finish to the year. Craig, along those lines, how are you all thinking about leverage? I mean, it's certainly a one, let's call it one and a half. You have a lot of flexibility. I mean, do you want to keep it low right now, kind of see what's happening in the marketplace now, And I say some of that in the context of the new repurchase authorization, which I'm assuming is going to come mainly out of cash from your free cash flow. But just curious how to think about balancing the absolute leverage numbers.

Yeah, look, the managing of the capital structure is a hallmark of Eagle that has allowed us to manage the business through cycles. And we know that when We go through fits and starts in the economy. Those are when opportunities to grow the business materialize and we can buy at the right price. So we like our leverage where it is. We kind of operate below this two times, well below that two times. It gives us the opportunity to grow and execute very quickly when the opportunities materialize and It's also not lost on us that we can efficiently capitalize those opportunities when we're borrowing at 2.5% over a 10-year period of time. So we like where we sit. I'll tell you, we also like the value in the shares, where the shares are trading and the valuation right now, given that. given where the business is operating and the cash flow that we are generating. So we like where we sit, but should the opportunity present itself for a growth opportunity, we will increase leverage. It's got to be the right opportunity that meets our strategic criteria, meets our financial criteria, very good visibility into how we would delever post that transaction. And we did that with Cosmos. Cosmos is the perfect example of that. where we had very good visibility post-acquisition to reduce leverage, and that's been a hallmark of Eagle for a long time and will continue to be so.

Perfect. And then switching gears on to the cement, I guess actually more capacity in general, tight on the cement right now, when will the PCL start to flow through? Kind of think about like a 5% to 10% sort of an increase, and then Any update on the capacity that you might have at some of the wallboard and paperboard operations here as we're kind of thinking about 23 and then into 24?

Yeah, I'll take that one with it. So when we look at the PLC cement with it, we talked about in some of the previous calls with it, some of our plants have a little bit of capital that we have to put in place to feed those facilities. So that's why you see in Craig's comments a little uptick on the capital side this year with it. That is in part to make sure we're balanced grinding capacity and also feed of the limestone into the mill circuit. I won't go into the technical details on that side. Those projects are underway at all of our facilities, so those will come on depending on equipment lead times, so you could think of a continued growth on the PLC side over this next 12 to 18 months as those projects complete. We are able to feed in at some facilities directly now, so some of our facilities have already converted over to a about a 25% shipment quantity of PLC cement. So you should see just growth over these next 18 months on a pretty consistent basis, on a quarterly basis for that PLC. As for the wallboard, we still have a little bit of capacity at some of our facilities. But that capacity would be with the addition of some shift structures and some other things that we don't need to pull on right now. We're very happy with how our operations are performing with what we have staffed and everything right now. We're running those plants 100% full out at capacity, but there is a little bit of expansion opportunity if we do add shifts on there, if the need arises on that side.

Perfect, guys. Thanks so much. Congratulations and best of luck.

Thank you. Our next question goes from Adam Bellamer with Thompson Davis. He may proceed. Hey, good morning, guys.

Was there anything that impacted cement margins specifically in Q4? You know,

We always have. Well, at least we've consistently been having the Cosmos maintenance outage happen in Q4, but that's pretty similar to where it was in the prior year. But other than that, nothing too unusual.

Got it. And then the May wallboard price increase, to what extent did that go through?

Yeah, so, you know, it's still early in the mix with it. You know, if you look at our demand profile, you know, we have a great demand profile and great demand backlog, but we're still working through that price increase right now, so I don't want to speculate on where that will finally end. You'll see some in the next quarter as that quarter rounds up where we can talk about it a little bit more.

Got it. And then just lastly, the aggregates facility that you bought, I missed. What was the purchase price, and then how should I bake in the volumes from that?

Yeah, Adam, it was a $120 million purchase price paid in late April. You know, it's a business that has more aggregates than concrete. It has two operating quarries at this point, and about three ready-mix trucks. So it is in the Colorado market, so it'll have a little bit more seasonality, you know, and obviously very busy during the summer months, and then trailing off a little bit in the winter. I'm sorry, three ready-mix plants? That's right.

Okay. Got it. Thanks, guys.

Thank you. Our next question comes from Filming with Jeffrey, you may proceed.

Hey, guys. Congrats on the solid quarter. Quick question on cement. Any color on the magnitude of increases you guys have announced? And then given the fact that you've locked up your energy cost for cement as well, can you give us a little more color on the step-up in cost, whether it's sequentially or on a year-over-year basis?

Yeah, Phil, so it was another round of double-digit price increases that's to go into effect in July, in early July. You know, following on another double digits that we had in January, again, as I said in my comments, it's atypical to have this multiple price increases in a calendar year. It's just against the backdrop of very tight conditions, sold-out conditions, as we've been saying, and combine that with some of these inflationary pressures that which have been real. So, yeah, I would expect energy somewhere, you know, 10%, you know, up from the prior year is kind of where we've landed, you know, across the system.

Okay, that's helpful. And then it sounded like, Michael, based on your comments, you're pretty confident with the mid-year price increases, whether it's in wallboard or cement, you'll stay in front of inflation. But I guess my question is, you know, from a timing perspective, should we expect a mismatch call in fiscal 1Q where, you know, inflation is ahead of the pricing, or do you feel pretty good in terms of timing that accordingly?

Yeah, no, how we always monitor when we announce pricing and everything else, we're right on time. pace with that side. I don't think there will be any mismatch on that side.

Okay, super. And then just from a demand standpoint, certainly there's some consternation around housing, but any color that you could provide in terms of how your order book is playing out between the end markets, whether it's your light or heavy material business?

Yeah, so Phil, on the heavy side, if you think about what drives cement and the demand for cement, it's public infrastructure. And you think about the components of that, it's state and local budgets and spending, and those budgets are in as good a shape as they've been in a long, long time given cash receipts. And we haven't even really seen the benefit of the other piece, which would be the federal infrastructure spending. So that side of the house for the foreseeable future has got a very good environment. On the wallboard side, again, it's a residentially oriented business. But as we can sit here today, our order trends have been very, very strong. And as I mentioned earlier, the building cycle elongating has effectively given us a backlog. We don't typically think about it that way in wallboard because the time to wallboard consumption has been short. But given that wallboard consumption's towards the tail end of the construction of a new home, you've got extended periods, and so you have the visibility into that. And again, I'll also mention just where we operate. Generally in the southern half of the U.S., where affordability and other business conditions, population and employment growth has been very, very strong, and housing starts played that out yesterday, with the south and the west being very strong.

And have you seen any inflection in your order? orders and out of your light or heavy business on the non-res commercial side, just any color around that.

You know, we don't sell to individual jobs from that perspective, but certainly the recent data around non-residential construction has been positive. You're starting to see some inflection there. We've seen very good over the last couple of years things like warehouses and data warehouses. That has been strong, but you started to see uptick amongst some of the other categories within private non-res.

Okay, super.

Thank you.

Thank you. Our next question comes from Dennis with Truist. You may proceed.

Hi, good morning. This is Dennis for Keith. Thank you for taking my questions and congrats on the quarter. So just taking a look at just the flow through of funds for roads and bridges for state DOTs, can you give us a sense, looking at your footprint, whether some areas would expect to see an impact earlier than others, just given like the budget and the timing mismatch?

Yeah, you know, really with that, there's really not, you know, the infrastructure bill is really across the U.S. and across each state. Each state will take a different stance to it, but we're pretty bullish on that. It's going to be across the U.S., so I don't think there's any one area that's more beneficial than another area. In that regard, it's really just the time it takes to work through the government and get those funds to action is really what will drive the spend in each location.

Okay, thank you. And just kind of piggybacking off of an earlier question on energy, is there any way that you could quantify diesel inflation in the quarter?

You know, look, diesel inflation, I would say, is not a big issue for us. When we talk about fuels, we're talking about solid fuels that we burn in the kiln or natural gas at our wallboard and paper mill. You know, we use diesel in the quarries, but they're located near the plants. And so not as big of an issue for us. And again, concrete is not a big business for us. And generally, you have fuel surcharges that you'll pass through on the concrete side.

Okay, thank you. And then just last a quick one. Just looking at just some of the initiatives coming out of the White House, some of the housing affordability initiatives, do you expect any major impact or any sort of impact from that just in the near term or in the long term?

Yeah, look, I think anything that comes out of D.C. at this point takes time before you'll see anything impact the business. So we're not holding our breath as it relates to some of those recent announcements. There's a lot of work before that actually gets implemented.

Okay, thank you.

Thank you, and I'm not showing any further questions at this time. I would now like to turn the call back over to Michael Hack for any further remarks.

I just want to say thank you for joining the call, and we look forward to talking to you at the end of next quarter.

Thank you. This concludes today's conference call. Thank you for participating.

You may now disconnect.