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spk01: Greetings and welcome to the TriPoint Second Quarter 2024 Earnings Conference Call. At this time, all participants are in a listen-only mode. A brief question and answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, David Lee, General Counsel at TriPoint's home. Please proceed.
spk05: Good morning and welcome to TriPoint Homes earnings conference call. Earlier this morning, the company released its financial results for the second quarter of 2024. The documents detailing these results, including a slide deck, are available at www.tripointhomes.com through the investors link and under the events and presentations tab. Before the call begins, I would like to remind everyone that certain statements made on this call, which are not historical facts, including statements concerning future financial and operating performance, are forward-looking statements that involve risks and uncertainties. The discussion of risks and uncertainties and other factors that could cause actual results to differ materially are detailed in the company's SEC filings. Except as required by law, the company undertakes no duty to update these forward-looking statements. Additionally, reconciliations of non-GAAP financial measures discussed on this call to the most comparable GAAP measures can be accessed through TriPoint's website and in its SEC filings. Opposing the call today are Doug Bauer, the company's Chief Executive Officer, Glenn Keeler, the company's Chief Financial Officer, Tom Mitchell, the company's President and Chief Operating Officer, and Linda Mamet, the company's Executive Vice President and Chief Marketing Officer. With that, I will now turn the call over to Doug.
spk06: Thank you, David, and good morning to everyone on today's call. During the call, we will share the operating results for the second quarter, provide a market update, and discuss the progress on some of our growth initiatives. In addition, we will provide our third quarter and full year outlook for 2024. We're extremely pleased with TriPoint's outstanding results in the second quarter, which were driven by our focus on building scale and efficiencies within our existing markets as we continue to lay the foundation for organic growth in three new markets. We delivered 1,700 homes at an average sales price of $666,000, resulting in home sales revenue of $1.1 billion, a 38% increase compared to the previous year. This growth was fueled by a 45% increase in deliveries, resulting from strong market conditions, increased community count, and improved cycle times. Our gross margin expanded by 320 basis points to 23.6% compared to the prior year, driven by the pricing power we have experienced over the past several quarters which has enabled us to increase base pricing and moderate incentives. Higher revenue provided operating leverage to SG&A, as our ratio as a percentage of home sales revenue improved by 90 basis points to 11% for the quarter. This helped generate a 420 basis point improvement in home building operating margin, which was 12.6% for the quarter. The combination of strong revenue disciplined cost management, and strong operational execution led to diluted earnings per share of $1.25, or a 108% increase compared to the prior year. Our net new orders for the quarter were 1,651, with a monthly absorption rate of 3.6 orders per committee per month, reflecting continued healthy demand levels despite mortgage rates that averaged 7% during the quarter. Incentives on orders in the quarter were 3.7%, which was down slightly from 3.8% in the first quarter, indicating the strength of demand in our core market locations, coupled with a strong buyer profile that is financing with our mortgage company, TriPoint Connect. Our buyers in backlog with TriPoint Connect have an average FICO score of 753, debt-to-income ratio of 40%, loan-to-value ratio of 79%, and an average gross household income of $207,000. First-time homebuyers are 55% of our backlog. And from a generational perspective, 63% are millennials and 6% are Gen Z. Our capture rate with TriPoint Connect in the second quarter remains strong at 85%. With mortgage rates remaining elevated and nearly 80% of existing mortgage holders enjoying rates below 5%, the lock-in effect continues to bolster demand for new construction homes and influence overall selling conditions across most of our markets. These dynamics support both sales volume and pricing as the share of total home sales garnered by new home builders remains elevated compared to historical norms. We have seen normal seasonal demand trends take shape as June drew to a close and so far into July. Historically, we have experienced lower absorption rates in the summer months, and we will continue to focus on balancing pace and price to meet our overall sales objectives. We have been pleased to see that traffic and orders have improved throughout July as mortgage rates dipped below 7%. Considering how strong demand trends have been with elevated rates, the possibility of lower rates in the back half of the year would be a positive for the consumer and our business. Long term, we maintain a very optimistic outlook for the industry and our company. The ongoing demand for new housing from millennials and Gen Z, coupled with persistent supply constraints in the resale market, land availability, and labor resources, create a strong foundation for sustained growth in the new housing market. These factors position our company favorably for future success as we continue to address the increasing need for new homes in the face of limited existing inventory. During the second quarter, we repaid $450 million of senior notes, eliminating $26 million in annual interest payments. This was accomplished using existing cash, demonstrating our ability to generate positive cash flow to deliver the balance sheet while still investing in our business to grow community count and staying active in our share repurchase program. Our home building debt to capital ratio improved to 22.9% while maintaining strong liquidity of 1.2 billion. Speaking of our share repurchase program, we repurchased just over 1 million shares during the quarter for a total spend of 37 million. We have reduced our share outstanding share count by 5% over the past 12 months, bringing the total reduction to 42% since the beginning of 2016. Through this reduction in shares and strong profitability, we have achieved a 15% growth in book value per share compounded annually over this same period. As we discussed in the prior earnings call, we are committed to growing our scale and share in existing markets while further diversifying our company and positioning us for ongoing strategic growth in our three new expansion markets of Utah, Coastal Carolinas, and Orlando. In Utah, we are pleased with our progress towards meeting our goal of first deliveries in 2025. We have our first projects under control, including a community in the highly desirable city of Holiday in central Salt Lake, which will offer premium detached homes and townhomes. It's still early innings in both the coastal Carolinas and Orlando markets, but our teams are attracting talent and identifying core market land opportunities for our premium products. We are enthusiastic about these new divisions and confident that they will contribute significantly to further growth and geographic diversification for our company. We started TriPoint Homes in California in 2009 and as the fourth largest builder currently in the state measured by deliveries, we continue to produce strong revenue and profits. With that said, We have seen the benefits of growing our business outside of California to diversify our customer base and price points while always focusing on land and core market locations. Revenue from non-California divisions previously represented less than 50% of the total company revenue. Currently, revenue generated outside of California is expected to grow to approximately 70% of our business by 2026. demonstrating our successful expansion into other top MSAs across the country. In conclusion, TriPoint Homes is poised for a very positive second half of 2024 and beyond, as we continue to capitalize on our strengths and pursue opportunities in both existing and new markets. The housing industry's underlying fundamentals remain robust, with a persistent undersupply of homes driving demand. Our strategic focus on profitability, growth, and shareholder returns, combined with a strong industry outlook, fuels our optimism. We remain committed to our goal of increasing book value per share by 10% to 15% annually, while generating strong returns, driving incremental value for our shareholders. With that, I will turn the call over to Glenn. Glenn?
spk11: Thanks, Doug, and good morning. I'd like to highlight some of our results for the second quarter and then finish my remarks with our expectations and outlook for the third quarter and full year for 2024. As Doug mentioned, demand remained strong in the second quarter with 1,651 net new home orders at an absorption pace of 3.6 homes per community per month. For some color on the markets, the West continued to show outsized demand with Arizona, California, Nevada, and Washington all reporting absorption paces above four for the quarter. Results in the central region were moderate, with an overall absorption pace of 2.5. In Texas, our Houston division continued to show strong buyer activity for our well-located premium entry level and move-up communities. Demand in DFW and Austin showed some softening in the quarter due to higher rates and an increasing supply of both new and resale homes, while Colorado has remained a challenging market. In the east, our Charlotte and Raleigh markets with attractive price points across a range of product types continued to produce strong absorption rates above the company average. Finally, our DC Metro market continues to benefit from a lack of supply and high demand with an absorption pace over five for the quarter. Our cancellation rate during the quarter remained low at 9% and we ended the quarter with approximately 2,700 homes in backlog representing 2 billion of future revenues. Turning to communities, we opened 19 new communities in the quarter and closed 22, ending with 153 active selling communities, which was a 5% increase over the prior year. We are excited about our land pipeline and future community count growth. We ended the quarter with approximately 34,000 total lots. We are approaching our short-term goal of a 50-50 owned and controlled lot ratio, with our controlled lots this quarter increasing to 48%. Looking at the balance sheet and capital spend, we ended the quarter with approximately $1.2 billion of liquidity, consisting of 493 million of cash and 700 million available under our unsecured revolving credit facility. Our debt to capital ratio decreased 860 basis points sequentially to 22.9% after paying off 450 million of senior notes during the quarter. Our home building net debt to net capital ratio was 12.2% to end the quarter. We do not have another debt maturity until 2027, which puts us in a strong position to use our capital to invest in our business and support the stock through our share repurchase program. During the second quarter, we repurchased a little over 1 million shares for a total aggregate dollar spend of $37 million, leaving us with $163 million available under our current authorization. We continue to be active in the land market during the second quarter, investing approximately $275 million in land and land development. Now I'd like to summarize our outlook for the third quarter and full year for 2024. For the third quarter, we anticipate delivering between 1,450 homes and 1,550 homes at an average sales price between $685,000 and $695,000. We expect home building gross margin percentage to be in the range of 23% to 23.5%, and we anticipate our SG&A expense ratio to be in the range of 11% to 11.5%. Lastly, we estimate our effective tax rate for the third quarter to be approximately 25.5%. Based on our strong backlog heading into the back half of 2024, we are raising our guidance of full-year deliveries to an updated range of 6,300 to 6,500 homes. We are also increasing our expected average sales price to an updated range of $670,000 to $680,000. We expect our full-year home building gross margin to be in the range of 23% to 23.5%, and we anticipate our SG&A expense ratio to be in the range of 10.5% to 11%. Lastly, we estimate our effective tax rate for the year to be approximately 25.5%. With that, I will now turn the call back over to Doug for some closing remarks.
spk06: Thanks, Glenn. In closing, I want to express my sincere gratitude to the entire team as we celebrate 15 years since the founding of TriPoint Homes. Their work and relentless pursuit of excellence are the foundation of our success. Their commitment to our values and dedication to our mission are the reason we once again earned certification as a great place to work in 2024, an honor we are particularly proud of. I remain confident in our company's future and the broader industry landscape. We have a clear vision, a robust strategy, and the right team in place to capitalize on the opportunities ahead. While we navigate the inevitable challenges that arise, our unwavering commitment to continuous improvement ensures we emerge stronger every year. With that, I'll now open the call for questions. Thank you. Operator?
spk01: Thank you. We will now conduct a question and answer session. If you would like to ask a question, please press star 1 on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star 2 if you would like to remove your question from the queue. For participants using speaker equipment, may be necessary to pick up your handset before pressing the star keys. Once again, that's star one at this time. One moment while we post our first question. Our first question comes from Stephen Kim with Evercore ISI. Please proceed.
spk09: Yeah, thanks very much, guys. Congratulations on the good numbers this quarter. I was wondering if you could talk a little bit about incentives specifically. I think last time you spoke with us, you'd indicated they really hadn't risen as of late April. I'm curious how they've been trending through the quarter and, you know, kind of how they're trending now. And, you know, if you could also talk about your absorption pace. I think you talked about how there's some seasonality there that typically slows in the summer months and so forth. Do you – could you give us a sense for kind of, like, how you generally think about absorption rates – As you get into the fall, do you typically see a reacceleration? And maybe talk to us a little bit about what you see as a normal seasonal pattern through the year.
spk06: Yeah, Steven, this is Doug. How are you doing? Great. As we reported, our incentives for the quarter were a tad bit below the first quarter. And I'd say market conditions are acting very much like we had planned. We typically see summer choppiness. And then the one thing that you have to add into your planning is the national election, which happens every four years. So we add that into our playbook. So sometimes that'll require more levers to be pulled as you go through the summer months. And then in the fall, it starts picking up. Obviously, if rates tick down in September as anticipated, that will help too. So everything is actually working just as we planned.
spk09: That's encouraging. And if you could talk a little bit about maybe specifically in the area of specs, it seems like when we look at your – your land holdings, if I'm not mistaken, your land holdings in owned lots I think was down, but your inventory I think is up. Just given what we're seeing in terms of your backlog turn, it sort of implies that your spec activity has increased. I'm curious if you could sort of talk about that. How much of that is, in your view, sort of a semi-permanent kind of change? Maybe are there geographic mix issues? What's kind of driving the if I'm right, you know, and leaning into spec activity?
spk11: Hey, Stephen, it's Glenn. That's a good question. I wouldn't say we've changed our spec strategy this quarter. It's roughly the same. I think about 61% of our orders were on spec homes this quarter. And our start spec strategy has been about the same. It's somewhere between 60% to 70% of our starts are on spec. And that's been pretty consistent for us over the last, couple years. I think what you're seeing in a little bit of an inventory build is it's just getting ready for the year-end deliveries, right? We always deliver more homes in the back half of the year, and those homes are, you know, started and underway.
spk09: Gotcha. Any geographic issues there or factors or other, maybe price point mix? Because I notice your ASP has been trending up pretty nicely.
spk11: It has. That's just mixed, but nothing really to point out there. I think, you know, all this is done on a community-by-community basis, and I don't think any geography sticks out one way or the other. I think it's all kind of like Doug said, going according to plan.
spk09: All right. Sorry. Sounds great, guys. I'll turn it over to the other questioners. Thanks. Thanks, Stephen.
spk01: The next question comes from Mike Dahl with RBC Capital. Please proceed.
spk12: Good morning. Thanks for taking my questions.
spk04: Just to stick with these kind of questions around your comments on June, July, I guess there's, on one hand, you're saying that you're seeing the seasonal slowing. On the other, you're saying that traffic and orders improved the last few weeks as rates picked down. Can you just help square that up? I know you typically see your pace down for 3Q versus 2Q, but relative to your normal seasonality, is it your intent to message that July may be tracking better than your normal seasonality, or how would you characterize it?
spk06: Hey, Mike, it's Doug. No, it's normal seasonality. So, you know, as you look into the Q3 pattern and, you know, we plan, like I said, this Seasonal plat pattern. I don't see anything different than I've seen previously and you know You can't make a quarter out of three weeks or four three weeks of the year either. So You know, we're very bullish where we stand today and there's very strong demand between the Millennials and Gen Z's but it's normal during the summer months and then as I mentioned I And I'm sure a lot of you are familiar with the national election also creates, it almost creates an additional summer month, to be honest with you. So it just takes a few more levers to get people across the goal line. And it's very normal. And again, everything we plan in our business going forward.
spk08: Hey, Mike, this is Tom. Just to add on to that relative to the comments regarding improvements in traffic and fire quality into July, I'd say that's more reflective of the positivity around a declining rate environment. And so we do see some short-term fluctuation in that. But overall, as Doug said, normal seasonality is what we're experiencing. Okay. All right. Thank you.
spk04: Second question, just in terms of, I mean, there's been puts and takes around your Your community account, obviously, that's always tough to predict your position for some nice growth over the next couple of years. But in the near term, you know, your closeouts is a pastry open. Can you just update us on how you're thinking about the back half? Sorry if I missed it in the opening remarks, but just the community account trajectory and then remind us, you know, on that updated basis. regional SKUs where you're having more or less success right now.
spk11: Yeah. Mike, this is Glenn. I'll take that one. Community count, everything is, all our openings that we planned for the year have opened. So, it's just we've closed out of a few more communities than we originally thought just with some, you know, strong absorption paces in certain markets. And I think Originally, we thought we had guided that we were going to be roughly flat year over year this year when it comes to ending community count. I think we might be a little bit down from that. I think now we'll be in somewhere in the range from 140 to 150 communities to end the year. But again, that has nothing to do with openings. That's all just kind of closing out some communities a little bit faster. And so the community count pipeline feels good into next year. And, you know, like you said, there will be some community count growth into next year and the year after as well.
spk04: Given that lower ending base and the faster closeouts, is there any comment you can make about 25 and just level setting around what you think for 25?
spk11: We had said last quarter that we're going to see roughly 10% ending community count growth in 25, and I think we still feel good about that compared to where we're going to end this year. And so, yeah, the community pipeline is still there. It's just, like you said, it's hard to predict when it comes to closeout. So that's all that's driving that towards the end of the year.
spk12: Okay, great. Thanks, guys.
spk01: The next question comes from Alan Ratnett with Selman & Associates. Please proceed.
spk03: Hey, guys. Good morning. Nice results in the quarter. First question, you know, I'd love if maybe you could just drill in a little bit in terms of what you're seeing across price points and segments within your consumer. Any notable shifts during the quarter? You know, I guess I'm especially interested in, you know, given the volatility and rates, did you see any more elasticity among, you know, more of your first-time buyers move up and kind of where things sit today?
spk11: Thanks, Jacob. Not much difference there. It's a pretty good mix. When you look at, let's look at absorption pace for the quarter, for instance, it was fairly consistent between entry and move up, you know, and active adults. And so it was pretty consistent. When you look at margins, they're fairly consistent across those regions. Because, again, I think our entry level is more of a premium entry level, and so it doesn't require maybe the level of incentive as you see as some entry level builders out there. So, you know, it felt pretty consistent. pretty even out there.
spk00: And I'll add to that, Alan. The order segment mix was just slightly higher for move up this quarter, but very slight. I mean, typically it's fairly even for us between premium entry level and move up.
spk03: Great. Thank you for that, Linda and Glenn. Second question, I guess this is probably more for Glenn on the debt pay down. I'm just curious how you're thinking about the reduction there in interest expense. It's probably about $25 million annually, if I'm doing the math correctly. And I know that won't filter through to the T&L immediately, given the capitalization of interest. But I guess as you think about the go forward, should we expect that to be kind of a straight drop down to your GAAP gross margin? Or do you think about that differently in the sense of now maybe even being able to compete more aggressively for land against builders that have a lower interest burden, and maybe it doesn't, it's not a one-for-one on margin, but maybe facilitates growth a bit easier.
spk11: Yeah, Alan, good question. It is about $25-26 million annually savings, and you're right, it'll take, you know, maybe a year and a half until you see that impact to margin, and I think there will be a slight positive impact to margin, although we are also, you know, utilizing land banks to, you know, grow our controlled lot percentage. And so, you know, that cost hits margins as well. But it gives us the opportunity to de-lever and to be opportunistic, you know, with our balance sheet and our leverage where it's at. I don't know if it allows us to pay more for land. You know, I mean, that's on the margin. I think we, you know, have a really good underwriting process and we stick to that. So, I don't think that really factors into it.
spk12: I appreciate it. Thanks, guys.
spk01: The next question comes from Carl Reindick with BTIG. Please proceed.
spk07: Thanks. Morning, everybody. Just on regional color, I wondered if you could talk about just within California strengths in terms of the specific metros. And then the central region... absorptions are down, what, 35%, 40% year on year. And I'm kind of wondering if you're thinking through a more aggressive pricing or incentive strategy in that particular region, just given the softness relative to the rest of the business.
spk08: Morning, Carl. Good questions. This is Tom. You know, in California, we continue to be encouraged by activity throughout all our markets there. But specifically, Southern California has been very strong, noted by the Inland Empire. You can see the volume of activity that we're having there. The Bay Area continues to go well. I'd say, as is typical, we see first changes in the Sacramento market, and we have had a little softer Q2 in Sacramento than anticipated. And we'll continue to focus on balancing pace and price and making sure we've got the right tools in our toolbox to continue our order pace.
spk06: Hey, Carl. This is Doug. On the central region, when you look at probably the two softer markets that we've been having to pull more levers at, it is definitely Colorado and Austin. The resale market has definitely peaked up in the Austin area. Houston still is very strong. Dallas had some weather issues. So it's actually coming back very strong as we get into June and the early part of July. So I think if you would ask me, my two primary markets that we focus on with the right levers to pull would be Austin and Colorado. That would be my assessment.
spk07: Okay. Thank you, Doug. Thank you, Tom. And then just to Glenn, back on the issue of next year's community count, is your anticipation, Glenn, as you look at it, that there'll be any kind of a meaningful mix shift in terms of regions or communities? addressed price point so entry-level versus versus move up next year or do you expect a mix in 25 to look roughly similar given that we got some new markets coming some growth in some in the Carolinas etc so I'm just just thinking about that in terms of pricing for next year thanks yeah good question not significantly Carl I think you will see a slightly more mix in the central and the east as there is a good community account pipeline in places like Houston and Dallas and Charlotte and Raleigh
spk11: But it's not going to be a big meaningful mix shift.
spk07: Okay. Thanks, Glenn. And by the way, congratulations, Linda, on your promotion, too. Thanks, all.
spk00: Thank you, Kyle.
spk01: The next question comes from Jay McCandless with Redbridge Securities. Please proceed.
spk02: Hey, thanks for taking my questions. The first one, just wanted to stay on that inventory comment for a minute, Doug. And is the inventory existing in new, I guess, in Austin and Colorado? Is that more harmful or more of a threat to your entry-level communities or your move-up communities in those markets?
spk06: The inventory in Austin is really on the resale market. You can pull up the data. It's definitely peaked up. So that is a competitor now to us in the new home market. Most of the builders, and we focus on core locations, and in our core locations, we're still doing very well. And builders typically have less new home inventory. If you actually look at the inventory levels in DFW, for example, you'll see new home inventory a little bit higher, and the resale market's still very locked in. So it's kind of a tale of two different analysis there. Yeah.
spk02: So when we were all last together on the first quarter call, you guys talked about an absorption in April at 3.9, but you finished the quarter at 3.6. Could you maybe walk us through what happened during the quarter when things really slowed down and what type of absorption numbers you're seeing so far in July? Okay.
spk11: Yeah, Jay, good question. April, it was actually fairly consistent throughout the second quarter. April was 3.8, so pretty close to that 3.9 that we talked about. And then May and June were both at 3.5. I think when you saw rates kind of tick up a little bit in May is when you saw a little impact to pace. But for us, we plan our business somewhere in that 3 to 4 range, and 3.5 is still a nice, healthy absorption pace. And then Like we said, you know, July is going into kind of normal seasonal patterns. It's a little early to say on absorption. But, you know, right now it feels, you know, good and normal like we said.
spk02: All right. Could you also tell me, Glenn, what percentage of communities during the quarter you guys were able to either hold or take price?
spk11: Yeah, it was – roughly a little over 50% of communities we were able to slightly raise pricing, either through a combination of base price increases or lowering of incentives, so a little over 50% of our communities.
spk12: Okay, great. That's all ahead. Thanks, guys.
spk01: The next question comes from Alex Baron with Housing Research Center. Please proceed.
spk10: Good morning, everyone.
spk01: Thanks.
spk10: Yeah, I was just wondering more along the lines of, the pattern, I guess, of the deliveries this year. This quarter, I think you guys were above your guidance. Next quarter, you know, sequentially down. And then I guess the full guidance implies back up in fourth quarter. So I was just kind of wondering what's been driving the pattern or the timing of deliveries that way, which is somewhat unusual from historical.
spk11: Hey, Alex. It's Glenn. Good question. It's normal to see our highest deliveries in the fourth quarter, so I don't think that's out of the norm. I think what you're seeing in the third quarter is just a little dip. We came into the second quarter and the first quarter with a good spec pipeline, and we were really successful selling and closing homes within those quarters. I think that's what led to the outperformance in the second quarter. And then you're filling back up that pipeline and backlog, and then you'll see the normal higher deliveries into the fourth quarter.
spk12: Got it.
spk10: And in terms of starts, did you give that number? I don't know if I missed it.
spk08: No, we didn't give that number, Alex, but we were right around almost 1,900 starts for the quarter, which was right on our pace. Got it. And about 62% of those... Sorry? And about 62% of those were specs for those starts.
spk10: Okay, got it. Thank you so much. Have a great rest of the year. Thanks. Thank you.
spk01: We have a follow-up from Jay McCandless with Wedbush Securities. Please proceed.
spk02: Hey, thanks for taking my follow-up. I did want to ask with the gross margin guide that you put out for the quarter or for 3Q and for the full year, Could you talk about what type of lot cost inflation you contemplated in that guide and any insight color you could give us as to how you're thinking about lot cost inflation going into next year would be appreciated.
spk11: Yeah, obviously the lot costs are factored into our guidance. And I think going into next year, we don't think it's, you know, a huge contributing factor. I mean, lots are actually going, you know, costs have gone up, but they always go up. I think we talked about last call that we're seeing anywhere from five to 10% in lot costs. So we haven't given guidance for next year, but obviously, you know, there's always that new community mix that has some impact.
spk06: Yeah, and Jay, this Doug, I would add, I mean, the lot costs for next year are all known. We own and control our deliveries for 25, and actually a majority of our delivery forecast for 26. So the lot cost is not a variable in our business plan. It's pretty well known. The variable will be direct costs, revenues, indirect costs, stuff like that. You know, land that we're looking at today is a variable for really late 26, but really 27 and beyond.
spk12: Great. Thanks for taking my follow-up. All right. Thanks.
spk01: Thank you. There are no further questions at this time. I would like to turn the call back over to Mr. Bough for closing comments.
spk06: Well, thanks everybody for joining us on today's call. We look forward to chatting with you all next quarter, and I hope you enjoy your summer months. Thank you.
spk01: This concludes today's teleconference. You may disconnect your lines at this time. Thank you for your participation, and have a great day.
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