Q3 2019 Earnings Call
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Michael last name Rich.
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The company with.
Era stock AI E.R.A. J.
Thank you. Please welfare call. It should be noted that certain statements made during this conference call, including those related to Mdcs business.
Financial condition results of operation cash flows strategies and prospects and responses to questions may contain forward looking statements within the meaning of the private Securities Litigation Reform Act of 1995.
These statements involve known and unknown risks uncertainties and other factors that may cause the company's actual results performance or achievements to be materially different from the results performance or achievements expressed or implied by the forward looking statements.
These and other factors that could impact the company's actual performance are set forth in the company's third quarter 2019 Form 10-Q , which is scheduled to be filed with the FCC. This afternoon.
It should also be noted that FCC regulation G requires that certain information accompany the use of non-GAAP financial measures.
Any information required by regulation G is posted on our website with our webcast slides and now I will turn the call over to Mr. model for his opening remarks.
Good afternoon, and thank you for joining as today's call.
As we go over our results for the third quarter 2019.
Discuss current market trends and provide some insight into our company strategy and outlook.
MDC turned in another quarter strong profitability.
Generating net income of 51 million or 79 cents per diluted share for the third quarter 2019.
The order momentum we experienced earlier this year carried into late summer and early fall as our observers absorption pace came in at 3.6 homes per community per month for the quarter.
Representing a 34% year over year increase.
This order pace combined with a 19% rise in average community count resulted in a 58%.
Increase in unit orders.
During an exceptionally strong July and August in which we generated as sales pace of 3.8 per community and order growth of 63%.
We implemented price increases at most of our active communities in an effort to better maximize the profit per homes sold.
The combination of these price increases and normal seasonality resulted in a slightly slower pace of 3.3 homes per community in September , which I would still characterize as robust for this time of year the balance between price and.
Pace is something we look at every day and we will continue to manage this dynamic on a community by community basis to achieve optimal returns for our shareholders.
In terms of demand trends by buyers segment, we continue to see relatively better sales activity.
And our more affordable price communities as compared to our higher price communities.
This trend is fairly consistent across our footprint.
And shows no signs of slowing down.
Whether it's a young family buying for the first home.
Or aging baby boomers looking to downsize.
The demand for quality affordable housing is unlikely to diminish in the near term as it has been driven by a demographic factors that should persist for some time.
We recognize it this shift was occurring several years ago and begin to refocus our land acquisition efforts at new home designs on addressing affordability to higher density projects and more efficient floor plans.
The response to our series of more affordable homes has been tremendous.
And we anticipate that are more affordable product will continue to grow as our purchase grow as a percentage of our overall business not only if we experienced a higher absorption rate as a result of our shift to more affordable product. We also.
So I have seen a benefit to our margins.
In addition, our build times have come down over the last several quarters, which should enhance our return profile overtime.
As far as our ongoing approach to business.
We continue to adhere to or build to order strategy, which limits the number of specs on the ground.
Allows us to sell higher margin options that upgrades. So our design studios, we continue to manage our operations with a balance land supply.
Carefully weighing risk versus reward before investing in new projects.
In doing so we have maintained a strong financial position as we entered the quarter with a net debt to capital ratio of 27%.
And liquidity exceeding $1.3 billion.
We believe that our combination of strong profitability.
Operation and financial discipline, and consistent return of capital So our quarterly dividends.
Offer a compelling value to our investors.
In summary, our results for this quarter provides further evidence that our new home offerings are well received in the market.
And that our company is executing at a high level.
The orders successfully experience over the last few quarters has resulted in a healthy backlog of homes.
We anticipate will translate into significant closings in the fourth quarter and beyond.
We believe that MDC is well positioned on a number of fronts and we are excited for what the future holds.
With that I'd like to turn it over and above were more in depth load.
At our results this quarter.
Thanks, Larry and good afternoon, everyone.
I think you can tell from Larry's comments that were very excited about the success, we have seen from our strategic focus on more affordable homes in our build to order philosophy.
However, I would be remiss, if I didnt acknowledge that our top and bottom line results have not yet seen the full benefit from our success.
As you can see on this slide wholesale revenues decreased by 2% for the 2019 third quarter to 750.3 million.
Net income declined by 5% to 50.6 million or 79 cents per diluted share.
You will see in the coming slides that the strategies, we have put in place are becoming more pronounced in our operating results putting us on the verge of significant top and bottom line growth in coming quarters.
First on slide five I'll focus on the components of home sale revenues.
The number of homes, we delivered improved by 8% year over year, driven by 7% increase in the number of homes, we had in backlog to start to quarter.
Our backlog conversion rate was 40% right in the middle of the expected range for Q3 that we discussed in our previous call and inline with 40% achieved year ago.
However, the increase in units delivered was more than offset by 9% decrease in our average selling price. This decrease was inline with our strategic focus at 62% of our closings came from product lines that we characterize as our more affordable offerings as compared with 49% a year ago.
The decrease is also within the range, we outlined on our prior earnings call.
Geographically, we also had a temporary spike in the number of closings coming from Nevada.
This is the results of the utility company delays that shifted closings for a number of more affordable units in Nevada from Q2 to Q3.
We also had a low number of closings from are more expensive subdivisions in southern California during Q3.
Looking forward to the fourth quarter.
We are targeting our backlog conversion rate to reach approximately 50% compared to the 49% backlog conversion rate, we achieved in the fourth quarter of 2018.
If achieved a 50% backlog conversion rate would be our highest in more than four years.
Also our Q4 average selling price should rebound somewhat to roughly $450000 as the mix of closings in southern California, and Nevada shifts back to more typical levels.
If we achieve both the backlog conversion rate and average selling price targets for Q4, we would generate quarterly home sale revenues exceeding $1 billion for the first time since 2006, yielding a year over year increase of approximately 20%.
We are optimistic about our potential to reach these targets given that we already have the backlog in place.
However, there is risk to achieving them as the majority of the units will close in the back half of the quarter, so any construction or financing delays could push deliveries into 2020.
The targeted conversion rate in average selling price also assumes that overall market conditions remain favorable similar to what we've recently experienced.
Turning to slide six you can see that our gross margin home sales was up 110 basis points year over year to 18.8%.
This increase was driven by an $11.1 million year over year reduction in inventory impairments, partially offset by lower margins on spec homes, particularly in our California markets.
Relative to Q2, our gross margin decreased 70 basis points. This is partially explained by the absence of any positive warranty adjustments, which added 20 basis points in gross margin in Q2.
So we saw a shift in the mix of our closings away from our Northern California, Colorado markets, which were our highest margin markets in the third quarter.
There's always the possibility for some short term volatility our gross margins based on factors such as mix and the influence of spec inventories. However, we are encouraged by the continued health of our estimated backlog gross margin, which ended the quarter at level slightly above the 2019 third quarter gross margin of 18.8%.
As always note that the gross margin level, we actually realized in future periods could be impacted by cost increases cancellations price or incentive changes impairments reserve adjustments and other factors.
Our total dollar SJ expense for the 2019 third quarter was up $9.2 million from the 2018 third quarter.
The increase is mostly due to a $6.7 million increase in our general and administrative expense, resulting from a $7.4 million year over year increase in stock based compensation expense.
The amount of stock based compensation expense has been volatile from quarter to quarter based upon the accounting required for performance share units, which are described in detail in our Form 10-Q .
For the third quarter of 2019 the expense we recognized for performance share units was an all time high of $8 million.
This was due to the exceptionally strong sales performance, we saw during the quarter, which increased our backlog value significantly year over year and increased the likelihood that the performance conditions associated with these units would be achieved.
Said another way the high expense in this quarter was driven by the success, we've had in implementing our strategic initiatives.
Our fourth quarter performance share unit expense will likely decrease by roughly $3 million compared to the expense. We just recognized in the third quarter.
In addition to the general administrative increase we also had a $2.4 million increase in marketing expenses cost I additional costs incurred to open advertise and staff are significant year over year increase in average active communities.
The dollar value of our net orders increased 50% year over year to $871.7 million driven by a 58% increase in unit net orders that were slightly offset by a 5% decrease in average selling price.
The demand for our more affordable product lines remained strong during the quarter third quarter of 2019 accounting for 60% of our net new orders compared to 54% a year ago.
This increase was largely attributable to the continued success of our seasons collection, which accounted for 41% of our net new orders in the 2019 third quarter.
The increase prominence of our more affordable product lines across most of our markets contributed to year over year decrease in the average price of our net new orders.
Our monthly absorption rate of three point.
Six was 34% increase from the 2018 third quarter and was our highest third quarter absorption pace since 2005.
We saw significant increases in all three of our segments as well as in both more affordable and traditional product categories.
Our third quarter 2019 unit net orders further benefited from a 19% year over year increase in average active subdivisions.
We ended the quarter with an estimated sales value for homes in our backlog of $2.1 billion, which was up 16% year over year on the strength of our new order activity in the third quarter.
This backlog value tend the quarter is at its highest level since 2006 and as a key factor supporting our expectation for significant year over year increases in our revenue and earnings in the coming quarters.
Active subdivision count was at 190 to end the 2019 third quarter up 20% from 150 a year ago.
We saw an increased number of active subdivisions in both east and west segments with the West segment.
Experienced the largest increase.
Active subdivisions in the mountain segment were up only slightly year over year.
Looking at the graph to the right on slide 10.
The number of soon to be active communities was almost the same as the number of soon to be inactive communities at September 30, whereas the prior four quarters have more favorable variances.
This indicates to me that are active subdivision count in the short term will be relatively flat compared to our active community count to end the third quarter.
Nonetheless based upon the progress we have already made we're on track to end 2019 with community count growth of 10% or greater from where we started the year inline with the guidance we offered to start 2018.
The number of lots, we approve this quarter increased by 19% year over year following three consecutive quarters of year over year declines this acceleration of activity reflects our confidence and market conditions.
Given the solid sales activity, we've seen so far this year.
On the strength of these lot approvals. The total number of lots we controlled at the end of the third quarter was at a high for this year. It has nearly reached its highest level in more than a decade.
For the 2019 third quarter, we acquired 2178 lots for roughly $164 million with an additional $109 million of spend on development costs.
Approximately 39% of lots acquired in the third quarter were finished lots.
Net homebuilding debt to capital was only 26.7% at the end of the third quarter, demonstrating our firm commitment to maintaining a strong balance sheet.
Furthermore, our liquidity to end the 2018 third quarter was at $1.35 billion, providing us with significant resources to fund continued growth.
Given the significant growth in our backlog and active subdivision count to end the quarter as well as our dedication to an affordability focused build to order strategy. We are excited about the potential for significant year over year earnings growth in coming quarters. We look forward to the opportunity to continue that growth longer term as we further deploy financial resources.
Into our markets across the country.
And with that I'll now turn the call back to the operator for our question and answer session.
Thank you.
We will now begin the question answer session.
To ask a question you May Press Star then one touch type thing.
If you using a speakerphone please pick up your handset the full pricing the case.
If at any time. Your question has been address and you would like to withdraw that question. Please press Star then okay.
At this time, we'll pause momentarily to assemble our roster.
Your first question today comes from Stephen Kim with Evercore ISI. Please go ahead.
Yes, thanks, very much guys.
Thanks for all the detail.
I wanted to ask you about your land spend if I could just for a second land spend.
Picked up a little bit here.
And obviously you know you spent a fair amount over the last year, so more than the last year actually last couple of years preparing for this big ramp in entry level, which is obviously a year in very much in the midst of was curious if you anticipate.
Having the ability to ratchet back your land spend or if this rate we saw this quarter.
Wallet.
Turning to 273 million bucks or so it's a pretty decent run rate.
For you on an ongoing basis.
In other words are you building land land balance here in your opinion to accelerate growth further or is this pretty steady rate that we can expect going forward.
Steve the.
I think.
This is a.
Demand pull market.
In the market is pulling us forward and we're growing into it and we expect to participate.
In what is taking place in what we see happening in the markets.
Hi.
[laughter].
That wasn't exactly [laughter] an answer to the question I didn't think in in terms of you know from what I'm hearing you say demand is incredibly it's very strong for your for your product than that obviously is what we're seeing the results, but I was curious if the <unk> the amount of land reinvestment that you're making.
Is in your view running at a level to help you accelerate your growth in 2020 and beyond or if it's a level that you view as sort of steady state.
I think we're anticipating the demanding continue to grow.
And we expect to participate Steve.
And in a similar vein, Larry you've always you and David have always been very careful with the the land strategy.
When others would be more speculative you've always held back.
And I'm curious as to how you view the land parcels of that you're seeing the land deals that you're seeing crossing your desks today are you seeing them.
Ah well located further away in order to support your entry level focus or do you find that you're able to through density and maybe other adjustments.
Remain somewhat closer in to the you know the the the employment centres and so forth you know and still hit the price points effectively what I'm getting at as I'm curious as to whether or not an entry level focus by definition pushes you a little bit more out into the fringe.
Here at a point in the cycle, which <unk>, it's probably not early.
I don't think it's late.
And we have for I don't know 40 years plus.
I found it as long as you have money you could buy good land.
We have adequate liquidity, we are buying good land and the majority of what we're buying is right.
Oh aligned with the market demand as we see it at this time, we haven't changed any of our strategies.
Pretty consistent we buy what we believe we need we don't but big <unk> by a lot not acres and it is served as well and I believe it will continue to also Steve.
Right. Thanks, Larry Bob quick one for you the backlog of the marching in backlog last quarter was a bit higher than what I I think it was a bit higher than what you did this quarter and so I was curious as to did anything surprise.
As you in terms of the what ultimately closed and drove the margin that we saw this quarter.
You know I I think there's always the chance for some volatility in the margins and you know once you take out that.
That weren't you definitely our last quarter, we're about 50 basis points off from where we were last quarter I think there's some some mix you know in there you know, there's there's different things going off the specs and there's nothing I would.
Wood wood view as as alarming there we kind of you the the merchant picture is a somewhat.
Then in that that kind of high teens low nineties level, we bent over the past a few quarters.
I think we find encouraging.
The backlog I gross profit margin now what we estimate to come out is higher than we what we just close at that Eighteeneight. That's always a good sign it kind of speaks to.
No further stability that are are gross profit margins.
Got it thanks a lot.
Thank you.
Your next question comes from Alan Ratner with Salmonella Associates. Please go ahead.
Hey, guys could afternoon I. Thanks for taking my questions first one I guess just continue on the gross margin to to be <unk> to be honest with you I mean, I guess when I look at the at the margin a backlog.
Compare that to your ear really strong order growth, yeah, I guess I'm, a little surprised that that there's not an ability to push that margin or even a bit higher than the range of any kind of running after the first three quarters of the year. So maybe that's coming I I'm not sure, but Bob or Larry you know can each talk a little bit about how you're thinking about the.
Pace versus price equation today, because when I see 60% order grow kind of feels like maybe there's some some margin being left on the table, but perhaps you're seeing something else on the consumer side that give you a bit more pause as far as pushing price harder than than you are today.
I mean, we we have increase price in third quarter, we increased prices about 80% of herself divisions.
Yeah relatively modest probably on average about 1% a price increase in the those subdivisions that we did increase price. So we are actively doing that we do look at pricing on a weekly basis and make adjustments on that is necessary.
Get the the only other thing I think that would factor in there is is when you're on the front end of of subdivisions and as you know we've increase our subdivision account quite substantially this year I think there is a tendency to try to make sure you get enough units going, especially since we build or to make sure you got a good enough runway for your trade. So there's some of that going.
And you don't want to increase so much that you're you're slowing down the the the sales. So yourselves don't have anything to work on so there's a little bit of that.
But we're still looking at it on a weekly basis trying to make sure that that balances right.
Okay <unk> that's helpful. Bob and then on the S.G.N.A. you know obviously, a the strong orders understanding that there's some stock copying triggered here how should we think about that going forward is this step off that we saw this quarter is that the the reasonable run rate for corporate G.N.A. or was there somewhat of a I guess catch up.
From the first half of the year now and Anvil that maybe yeah pull back a little bit a and subsequent quarters.
Yeah speaking to that just specifically to the the P.S. use that reform share units. The the accounting gets a little tricky contributes to the volatility in that amount $8 million during the quarter or is that really an old time, hi for us. We we haven't seen that that level and it was driven by really fantastic worse.
Since the orders were were so good all the southern probability of those being achieved increased as well. So what what we think there's going to happen is that $8 million will decrease.
I'm, probably by about $3 million to the 5 million for for Q4 we will have to evaluate it I'm happy ending Q4 in in kind of make sure everything still lines up but that's what we see right now so.
Thing else is equal you would see a 3 million dollar sequential reduction and.
In the G.N.A.
Got it that's helpful <unk>.
<unk>.
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Your next question comes from John Lavalin with Bank of America. Please go ahead.
Hey, guys. Thank you for taking my question, maybe just to to to go back to Allen's question for a second on the gross margin I mean, even without pushing price further I mean, just thinking about the volume that's coming through in the fourth quarter. The price increases that already have been announced and then just the improved mix that should happen sequentially. It it does feel like fourth.
Gross margin should be better than just slightly better sequentially I'm just trying to understand it you know if it were missing something here.
I mean, you see what's what's out there I mean, the best thing to look at is is our backlog that we've we've kind of shared with you.
And yeah right now what's in backlog is is slightly better than what we just closed so I'll leave it at that for now no doubt I hope you're right [laughter], Okay fair enough.
If we if we think about the the lots that we're purchasing a third quarter and kind of the pace that that's that's going on there which is pretty encouraging we think I mean, you should figure to assume and and I don't know how far you want to go out and 2020, but it's a fair to assume that in 2020, you could still see pretty decent a community count growth.
Yeah, I I think that's that's certainly a possibility I think we certainly have have work to do on it yeah. I mentioned in my prepared remarks that the soon to be active versus soon to be an active it's it's almost dead. Even so that that kind of mean short term yeah, there's not as much of an opportunity.
To increase our community count, but as you get a little bit later and 2020, I I still think as possible to to increase so they do it on that I think we still need to see what happens here in in you for to.
So you get a better view of Ah how that night looking 2020.
Okay. Thanks, guys.
Thank you.
Your next question comes from a Michael Rehaut with J.P. Morgan. Please go ahead.
Oh.
I'm from Mike.
First I want to ask about.
No, but obviously you saw strong demand a really strong demand across the quarter.
That the entry level was performing better than the move out to my probably find somebody else, but I was wondering if you could talk a little bit about the market dynamics in the competition makes you were saying.
<unk> yeah.
Yeah, I think for the move up you know things like a reduction interest rate yeah, certainly helps that category as well you're just as we saw it increases <unk> for more of that.
Affordable.
Consumer we also saw an increasing the absorption rate for the traditional more move type of consumer as well. So I think even though the overall absorption rate for that consumer is a little bit.
Lower than like our our seasons collection.
The gross margin is a little bit lower than a than our seasons collection I still think that that group is doing better.
Okay, Thanks, and I apologize if I'd Miss still stand never paired her mark. They can you give us percentage of waters in closings perceiving this quarter versus last year.
Yeah for a orders I believe we were at 60% versus 54% last year and I think for closings. It was 62 versus 49.
Okay. Thank you and that was that was a portable overall I should say.
Okay.
Thank you.
Your next question comes from Truman Patterson with Wells Fargo. Please go ahead.
Hi, Good afternoon, guys. Thanks for taking my question.
Just wanted to follow up on that prior question. You also had 60% of orders this quarter were towards the.
Portable product.
Versus 54% last year.
Has the shift towards the affordable product is this largely finished or do you think you guys have more rotation ago.
Yes, when we initially talked about it.
We talked about 50% to 60% beyond the.
The right kind of range.
I could see going a little bit higher could.
Float up more towards 65% to 70% range, but I think it has flattened out a little bit.
Yeah, we still want to some extent through to up to.
More traditional buyer.
It just doesn't grow as quickly.
All right. Thank you.
I was hoping you could possibly discuss I it might be a little difficult to dissect, but maybe qualitatively discuss the margin profile on some of your newer entry level communities versus those that had been opened to a year or two.
I'm really hoping to understand whether competition in the entry level land market is intensifying in driving up costs and this is possibly impacting.
Gross margins near term.
Yes, it is tough to add to split up.
I will say you've heard it from a lot of builders that focus on on the more affordable consumer. So I think it's it's certainly a factor there's more competition out there I would not say at this point that it's necessarily driven up.
Costs, a lot and I will say.
We we certainly that benefit from a build to order strategy and that makes us up a bit distinct and how we operate.
Maybe insulate us a little bit allows us to get into some some better land positions and master plans, where some others might not be able to get into.
So I think thats already still playing out and we're glad to have a head start.
On.
Tending to the more affordable consumer.
Okay, and then hoping hoping for clarity on your September orders I believe you all suggested in the prepared remarks that the absorption pace in September took a step back relative to July and August just looking for clarity that was purely due to you all pushing pricing correct not.
Deterioration in market conditions or anything like that.
Yes, I mean through three in September I think is pretty good so it's hard to call that.
Anything that resembles poor market conditions. So.
Yes. It comes after we had increased or during that time, when we're increasing pricing 80% of our subdivision. So I still think that is quite healthy.
Okay. Thank you.
Thank you.
Again, if you had a question. Please press Star then one your next question comes from a Buck Cohen with Raymond James. Please go ahead.
Thanks, Good afternoon, just continuing on that trend any chance you'd be willing to characterize how October .
Demand is shaped up if theres been any sort of other response to the price increases that were put in in September or any any color on October so far.
I mean, I think October is shaping up good I think.
Similar to previous months, we're expecting a significant.
Year over year increase in the number of net new orders.
In October versus year ago.
Okay.
And.
And I just noticed your.
Mix of optioned land the seems to be going down at a fairly quick pace I guess optioned lots controlled were down 20% or better year over year is there something going on is it getting more difficult to find additional deals to put under option is that a function of competition out there how do you think about.
The right mix of putting land on the balance sheet versus what you can do and find options out there to keep the community count going.
Yes, I know you know that if we could have everything under option.
Finished rolling options, we would love to do that is it's just not available.
A lot of our markets without putting up really high deposits or or doing something else.
That.
Maybe it makes the transaction really not off balance sheet, even of it appears to be.
I think theres a lot more deals now that that do require development fact, I think of what we approved it's roughly 80% that requires developments. So it's just harder to get kind of pure options done when when that's the case.
Okay. That's helpful and just one last quick one just geographically just go through the Mark has any any markets you'd call out is just particularly strong or.
Any places that are are showing signs of softening at the moment and I guess.
Also just curious about Colorado in particular just.
Is there any way too.
Helped boost the absorption rates, even further in Colorado, just given the affordability challenges there.
Yes, I would say.
Overall, Phoenix's then Bennett stand out for us.
In terms of of what they've been able to do.
I think the affordability the market.
Kind of a very solid deployment of of our more affordable product out there.
As done done wonders for that market.
Yes on the on the other end, California in particular and more expensive round that continues to be of a bit softer.
From a Colorado standpoint, I'd say, it's tough colorados varying just fine.
Right now one of the things that we.
We have put into place in Colorado is our urban duplex product.
Yes. It was just in a sub division or or too and I think that is expanding.
In Colorado, So I think that is another step affordability.
In in this in the Colorado market.
So we're hopeful that that will.
Give some relief to the affordability picture out here.
Perfect. Thanks, guys appreciate it.
Sure.
Thank you Keith Your next question comes from Alex Barron with housing Research Center. Please go ahead.
Yes. Thanks.
So generally a lot of people say that the entry level sector is a little bit more price sensitive.
I'm just trying to understand our these price increases that you guys.
Good who intentionally to slow down the market because.
You can't keep up with the production or is it just to try to rate margins, but I mean.
You know what is that going to do to orders I guess I'm just trying to.
If you can help me walk through your thinking here.
Yes, I mean, I think you have the bullet point on.
Still strong September 3.3 absorption rate.
Even though we've we've been focused on.
Increasing prices to some degree.
I mean, you're always going to look at the price versus pays dynamic and we look at it on a subdivision by subdivision basis, we don't put out edicts across our markets and say it absolutely has to be one way or the other.
We want our managers focus on.
All three of those aspects, whereas your production at.
Where's your pace that and in whereas your pricing at so I don't think there is.
Just one thing out there.
That you can focus on yes, I will say us as far as increasing prices go first of all was relatively modest about a 1% increase in those 80% that we did show increases in.
But we remember were catering to a consumer consumer that's looking for affordability, but we're not looking to go to the bottom of the barrel generally speaking we've kept our product a little bit nicer, we allow for a build to order product.
So we feel like we attract.
Both a.
Consumer who is maybe first time consumer, but also a move down consumer.
And.
Somebody who maybe has a maybe a little bit more money to spend just because.
They want the build to order.
Aspects that said, we're able to offer so that's some to keep in mind as well when you talk about how the price increases relate to.
MDC specifically.
Okay and what were the.
I guess, the the insulin and close the percentage of closing so as a percentage of revenues this quarter versus a year ago.
Let's see incentives I think roughly.
550 basis points.
Year ago might have been just north of.
400.
And last quarter.
Last quarter.
Would've been right around.
That.
Kind of 550 basis points.
Okay. Thanks, Bob.
Sure.
Thank you.
There are there for the questions at this time I would now like to turn the conference back over to Mr. Bald mountain for any closing remarks.
Thank you and I appreciate the pursuit vision on today's call.
At this point.
We will.
The conference call and look forward to speaking with you again.
Following the report on our Q4 earnings.
Thank you Sir the conference has now concluded. Thank you for attending today's presentation you may now disconnect.
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