Q3 2019 Earnings Call
Everyone welcome to todays conference call, which will begin shortly which require assistance at any time. Please press Star then drew and I mean kind of continues to play Dominion. Thanks, so much for patients.
Good day and welcome everyone to Q3 2019 comfort systems USA earnings conference call by Julie shape, Chief Accounting Officer. During your presentation. All lines will remain on wishing only if you're acquiring [laughter] anytime. Please can you start here on your phone and accordingly alone will be happy to assist you I'd like to otherwise all parties that this conference call. These being.
Recorded for replay purposes, and that would that I would like to hand, the call over to Julie. Please go ahead ma'am.
Great. Good morning, welcome to comfort systems, USA third quarter earnings call. Our comments this morning, as well as our press release that contain forward looking statement within the meaning of the private Securities litigation active 1990 side, what we will pay today is based on a current plans and expectations of comfort.
She was say.
I am expectations include risks and uncertainties that might cause actual future activity and results of our operation to be materially different from those set forth in our comment.
You can read a more detailed lifting and commentary confirming our [laughter] with Baxter and I. My recent Form 10-K , and Form 10-Q as well as in our resolutely covering these earning.
I presentation will accompany RMR blithering posted on the Investor Relations section of the company's website now that comfort systems USA Dot com.
Joining me on the call today, or Brian Lane, President and Chief Executive Officer, and Bill George Chief Financial Officer, Brian will open RMR [laughter], Okay. Thanks, Julie.
Good morning, everyone and welcome to our third quarter earnings call.
Let me start by thinking Oh, the comfort systems USA employees for their continued hard work and extraordinary execution.
I'll start with an overview about performance.
And don't go the financial results in more detail.
Whereas the 98 cents per share this quarter compared to a dollar two per share the same quarter last year.
This was a very good corridor, what's strong operating results an exceptional cash performance.
Great cash flow this quarter was 67 million compared to 23 million in the prior year.
Year to date, our free cash flow is a very strong 79 million.
We also paid down more than 50 million of debt that's very core.
Our backlog has grown to 1.6 billion in it and it has increased by 6% on a same store basis.
In September Thirtyth 28 game.
We also had a significant increase in backlog compared to last quarter.
Which is especially encouraging upgrade busy during the war.
We continue to be pleased with the addition of walking engineering, which we acquired at the beginning of the second quarter of this year.
Walk a contributed approximately six cents of earnings per share after <unk> amortization and purchase adjustments.
Which is more than we expected.
So soon after their acquisition.
I will discuss our outlook in more detail in a few minutes, but first let me turn this call over to Bill reviewed the details are up <unk> financial performance Bill.
Thanks, Brian .
Please refer to slides futuristic as I provide some explanations in detail.
Our financial results.
Third quarter revenue was 707 million, an increase of 112 million or 19%.
Compared to the third quarter of 2018.
This increase is due the acquisition of Walker engineering.
Revenue increased slightly on a same store basis for the third quarter and same store revenue was up 3% for the first nine months.
Gross profit was 143 million for the third quarter 2019, an increase of 15 million or 12% compared to the third quarter of 2018.
Gross profit as a percentage of revenue was 20.2% of the third quarter of 2019 compared to 21.5% for the third quarter of 2008 [noise].
I wanted to take a minute and talk about how walker affects our results.
Walker was a strong contributor to our earnings and cash flow again this quarter.
Of the 15 million dollar increase in gross profit that we reported in this quarter.
18 million was earned at Walker Engineering.
Having said that.
Or other subsidiaries that have the capability to perform large and complex projects that have significant material and equipment through Walker will tend towards lower average gross margin.
Without Walker, we would've had lowered net income and much lower EBITDA and cash flow. However, our gross profit margin would've been 21.8%.
So the addition of Walker impacted our gross margins by 1.6%.
Rising from a combination of the lower gross margins of their business back in certain purchase adjustments, but impact our gross margin.
[noise] DNA that was 19 million for the third quarter of 2019 compared to 75 million for the third quarter of 2018.
The increase is due to acquisition.
Putting additional amortization expense. It also reflects investments in people due to the growth we have experienced at recent here.
As soon as a percentage of revenue for the third quarter of 2019 was 12.7%, which is the same as the third quarter last year.
Income tax expense was 12 million with an effective tax rate of 25.6% as compared to 14 million with an effective tax rate of 26.11st that for the third quarter of 2018.
Net income for the third quarter 2019 was 36 million or 98 cents per share would just slightly lower than the same quarter last year. One we are 39 million or a dollar two per share.
As a reminder of the dollar two per share that we earned last year was the first time in our history that we exceeded one dollar share in a quarter, so although down from last year.
Jason We reported this quarter is historically very strong.
We had a great freak out <unk> free cash flow border this quarter.
Quarterly free cash flow was 67 million a large increased from 23 million a year ago.
Our nine month free cash flow at 79 million, which compares to 47 million for the first nine months of 2018.
We feel good about our cash flow prospects for the fourth quarter and our working capital trend provide a solid foundation to continue generating additional free cash flow.
As Brian mentioned, we closed the Walker engineering acquisition at the beginning of April .
And as I said, while we expected the Walker would contribute to our EBITDA and cash flow. This year, we expect that they would be neutral to vps as we said they did better than expected and even after amortization that adjustment.
Walker contributed six cents of earnings per share this quarter.
In addition to paying down debt in the quarter, we were quite active this quarter at purchasing shares during the third quarter. We purchased 184000 of our shares at an average price of $40 and 35.
So year to date, we purchased 345000 shares.
Since we began our stock repurchase program in 2007, we've bought back 8.5 million shares at an average price of $17 and 38.
So I have a bid ask spread.
Okay. Thanks Bill.
I'm going to spend a few minutes discussing our backlog and activity in various markets insects.
He's our covenant slide seven through night.
I will also comment on our prospects, but the rest of this year.
Backlog at the end of the third quarter of 2019 was 1.61 billion an increase of 113 million.
Good for the second quarter of 2019.
A little more than half of the sequential backlog growth was a result basic of a sequential increase at Walker.
Well, we had especially strong bookings.
A year over year same store backlog also reflected very strong bookings as same store backlog compared to a year ago increased by 75 million a 6%.
In addition to strong backlog improvement.
We have remarkable balanced across our various and use sectors.
Institutional markets, which include government healthcare and education.
Made up 38% of our revenue for 2019.
Commercial sector was 31 set of our revenue.
And industrial is the remaining 31%.
Please turn to slide nine per our current revenue mix.
The 2019 construction is 76% of our total revenue.
With 44% some construction projects, new building and 32%.
From construction projects an existing building.
We are being held by good fundamentals and trends in nonresidential construction.
And we continue to book good projects, including many for next year.
Geographically, we experienced strong results in most of our markets.
With particular strength in North Carolina.
Florida, Texas and Wisconsin.
We continue to make investments in our service business.
For the first nine months of 2019.
Sure. This is 24% of our revenue.
With service projects, providing 9% of revenue and pure service, including all the work.
Providing 15% of revenue.
Hi service business is doing very well.
And on an absolute in same store basis.
Recorded 2019 service results, while high in the third quarter up 28, 2018, and both volume and and profitability.
Finally, our outlook.
Our backlog is strong and our ongoing prospects remain very supportive.
We expect low to mid single digit revenue growth.
On a same store basis in the fourth quarter of 2019, and the first half of 2020.
We see good trends in our business.
Our pricing environment continues to be good and we are optimistic that revenue and net earnings for the fourth quarter of 2019 and during 2020, well continue at a strong levels that we have it would that we have experienced.
Since the start of 2018.
Over the past few weeks I've spoken to many of our leaders across our markets and they continue to expressed enthusiasm about their construction pipeline as well as service and small project demand.
Overall, our sense is that our markets remain very supportive.
We believe that are fantastic team, so well position.
Continue to capitalize on these opportunities.
Thank you once again to our 11900 employees for their hard work and dedication.
Ill now turn it back over to Chris' question. Thank you.
Everyone. Your question and answer session. We'll now begin if you wish to ask your question. Please press Star then one.
I would like to withdraw your question seem to press Star then to start I want to ask a question start to 200. Thank you.
Okay.
And our first question is coming from the line of Adam Thalhimer from Thompson Davis. Please go ahead. Your line is open.
Hey, good morning, guys congrats.
Thanks, Adam good morning.
Hey, I wanted to zero in first on Q4, specifically after a couple of quarters of Downey S. A DC growth year over year in Q4.
On the P.S. line.
Yes.
I think that's probably more likely than not but it would be very similar I mean, we had just we're earning at high level.
Yeah, I mean add up.
We are confident.
I think we'll be putting green about now you think it's got to be so.
We're optimistic though.
Okay, great cash flow in the quarter and you've done a great job of paying down the debt quickly from.
Walker I'm, just curious what's that M&A outlook from here.
So we are very actively developing as we always do.
I'd say we.
To do a big deal.
Would require a lot of conviction right now to be honest, we probably have a bias towards.
Some debt repayment, but there are people were talking to that we would love to own and if they want it wanted to talk we would we would definitely get serious I think there. It is a prospect for you know M&A not at the at the largest sizes that we've done recently, so I think where we're just probably requiring a high degree of can.
Excellent given that we just did a very large deal.
And we're busy you know.
Getting to know those guys.
Okay, and lastly, bill what.
Your.
I'm curious walkers gross margin do you have any idea what that would be without the purchase accounting adjustments.
You know there I know off the top of my head that they were they had a 1.6%.
Effect on our gross margins this quarter only 0.2 of that came from purchase adjustment purchase adjustments were pretty quiet as far as their standalone gross margin you could get pretty close to that in the in the segment stuff. Although that does include some other electrical but we don't disclose individual company gross margin separately.
Yeah, I just want to.
Jump on that question for a minute right. We look at companies, where we were worried about earnings cash flow and how good they are the work.
There are big construction company gross margins are going to be lower but theyre overheads lower so they'll continue to really contribute EBITDA earnings EPS over a long time, so I feel really good about this company.
And I guess I could ask the question differently. The question really is.
Once you anniversary some of this early accounting stuff, where do you think electrical margin shake out the better question.
So I think the.
It's really not a question of anniversary. It's a question of amortization and we actually included I think it's on page 17 in the 10-Q, we included a table of all of our future amortization, how what well how it will go down so.
Yes, we do another acquisition or we write something off which that's not a prospect right. Now if we wrote something off early you can look up and sort of see how that amortization comes down and thats, a mathematical contribution compared to whatever wells would have happened as far as.
I don't know their margins are similar to our other big project companies, it's not that Theres, a lot of material and equipment that passes through those job what they're trying to do is maximized their gross profit per man hour like all of our guys do.
Because their business mix is making building.
Giant buildings appear out of empty pieces of land. They do sell a lot of material then margins of fine for the work they do.
Got it okay. Good enough thanks, guys I'll turn it over.
Yes.
The next question is coming from the lineup Sean Eastman from Keybanc capital markets. Please go ahead. Your line is open.
Gentlemen, thanks for taking my questions, Hey, John Nice job this corner.
Our first first question for me is.
You guys that are pretty clear expectation for the second half year.
On the second quarter call and it sounds like walk or is the.
The primary contributor to the better than expected results here in the third quarter I guess, what I'm wondering is.
After seeing their performance this quarter does does that kind of suggest that the neutral EPS contribution you guys had highlighted and expectations for next year is.
Perhaps conservative or.
Or was this just kind of lumpy outsized corridor.
So my answer to that is I hope so.
But I would not change the guidance on that right now you know year to date, they've given us so through the six month, they've given us force them there were minus two.
Because of purchase adjustments for sure and the second quarter.
You know this is a big company. So they do have the opportunity to make a big contribution at once they cover those not that and that that you can like I just talked about that than the footnote once they cover that in the purchase adjustments if they do well.
Their numbers are just bigger so they have a bigger opportunity to make a difference so we feel.
Optimistic we'll get some sort of.
Some sort of a contribution but honestly, we didn't buy them for the immediate effect right we bought them.
You know.
If we if we only bought a company that had.
As higher gross margin as we have we wouldn't have much opportunity for the improvement we've been able to get over the last many years as well so right and John just to add onto that traditional mechanical business.
Formed extremely well in this third quarter say the leader.
Yes by the way just to give you do that.
So so if you look at what we sort of.
Told people they could expect in the third quarter. It would have triangulated to mid Eightys high Eightys right and we're at 98, so six cents of that's from Walker.
Of that I guess beat if you want be lower expectations. If you want to call. It about half of it came from Walker and about half of it came from.
Our businesses, we own doing better than our thorough scrap down when they did better than we thought they would.
So I.
That's helpful.
So just kind of a combination of the too.
And then when we think about the topline trajectory for Nick for next year It seems like.
I guess after the stronger bookings this quarter and better visibility through the first half of next year.
Seeing growth Im just wondering kind of overall for next year.
And is there maybe one or two sub end markets that.
I really critical growth drivers like maybe data centers or healthcare, yes. They are really corridor that growth or big swing factor to that growth next year or is it just kind of broad based as well.
This engage Brian Sean I.
I think it's broad based sought by our revenues were based yesterday and in certain sectors that we look at which.
First time since I've been here, we've been that balanced.
Looking at what we're looking at today industrial still very good data centers still very strong education is maintaining strength the university level and we see an improvement in healthcare.
Jim one new build hospitals, particularly in Arizona and Florida in particular, so I think if we're looking for drive is those would be the three at I expect to be.
Good in 2020.
But it's pretty it still is pretty broad base, we're still seeing a lot of stuff, but all sectors, but those are the three that have probably the most activity.
Got it and.
Yes, I think one of the real surprises for me this quarter was to see that backlog pickup sequentially. Despite a big revenue number.
I, just wonder about the backlog trajectory here.
From a capacity perspective.
Helpful or you guys.
In the backlog still go up at this point.
I don't know maybe you can help me understand.
The backlog never an isolation distant number it's all timing right, yes, right now if you look at the crew as you look at over time, we have good balance good distribution.
We have very sensitive to the workload versus the capacity that we have time, yet work that would change again.
So right now we're in very good shape in terms of that we still have some rural.
But if you look at the spread of even got some work into 2020. So was this a purely operational standpoint looking at the backlog.
The timing is good in the balance is very good right. One of the one of the important things always remember about our backlog is that it is lumpy. So we have a couple of quarters, where we have big bookings.
You know them, that's natural but thats a headwind in the next couple of quarters, because you, especially we booked for example, more than half of our same store sequential increase in backlog came from Walker. They booked a very large project well, they're going to even if they continue to but those large projects, they're going to bump one every two or three or four.
Quarters, not every quarter. So just keep in mind that it's lumpy the trends are really good.
You can't get too focused on a single quarters backlog number for us and I think especially.
Over the next few quarters.
I think we have room to have very good news and it not look.
Again, the backlog just because we'll work down some of those big projects before we take a new one you know Charlotte It gives us optimism is how many opportunities we still see in.
Net debt good work right and Thats.
And seeing a third quarter when usually we go down is it.
It's really a good sign for how the economy's doing any in the United States.
Yes I.
I agree I agree and last one for me Morford from Bill on this one.
Just given some of the moving parts with.
Hi, Walker amortization and all Im just curious how free cash flows next year relative to net income.
So.
Going into first let me talk about the fourth quarter last year, we had 75 million of free cash flow in the fourth quarter coming off of a third quarter with 23 million. This year, we're coming off of a third quarter with 67 million very very hard for us in the fourth quarter to matched last year's free cash flow, which of course was an all time crazy quarter.
We do however, we still have since the beginning of the or a net investment in working capital same store of over 30 million. So we think we're we're well positioned have very very good cash flow in the fourth quarter and I don't know why we wouldn't just cash flow. Our earnings next year I don't I can we expect to actually mid low.
At a mid single digit revenue growth, so there shouldn't be a big.
Sort of permanent move into into working capital. So I think that you'll see our normal pattern of early in the year, we won't have much free cash flow, but for the full year next year I think we have great free cash flow.
Excellent. Thanks, I'll goodness, thanks for the how.
All right John Thank you.
And the next question is coming from Bill Newby from D.A. Davidson. Please go ahead. Your line is open now.
Thank you good morning, nice quarter, guys, Hey, Thanks, Bill good morning.
Just.
One more on locker, because we haven't talked about it enough.
The seasonality in that business.
Yes a.
Little bit surprised just to see the the sequential acceleration on the revenue line.
Q2 to Q3 is that and when you get a grew I guess, 20%.
Sequentially I'm wondering if that's that's typical or with Q2 of those depressed because that was when you close. So so just Q2 was a strong revenue quarter for them Threeq. He was an even stronger revenue quarter for them. They got started on a big new booking a 100 million dollar plus booking and they revenue. They got a lot of revenue there because of some early equipment.
Deliveries.
We actually if you remember our press release I think that they had over at solidly over 100 million.
Revenue in the third quarter, but if you recall in our press release, we signaled to our investors that this was a company that was going to give US 325 to 375 million to Europe revenue at sort of a as the years past.
We stand by that we think whatever one of the thing.
Over time, we think theres an opportunity at Walker.
To do just a little less work.
And be a little more demanding on pricing, especially in a couple of their market.
So we're not pushing for growth are expecting growth, we think ultimately.
The best path for that business and its people.
Is different to make sure they get paid for every hard thing they do and I would say if anything.
I would expect.
There there is sort of annualized revenue contribution next year to be lower than this year at I would expect that to be good news.
Okay, but as I think about the seasonality next year.
I shouldnt the.
The Q2 to Q3 seasonality should be relatively similar to the core business.
Yes, I don't have a reason to predict that there are enough there in Texas theres not as heavy a winter in Texas, So I would say, they're probably a little.
Flatter over the full year, but for whatever reason all of our businesses even in the even in Florida have some of that seasonality where people get very busy in the summer. They close things out and then there is always a slow first quarter, but what about wells, you're seeing bill it just from an activity level, Dallas and San Antonio in particular in August .
And it is very busy so there will be very busy to this winter.
Okay that that clears it up thanks, and then I guess just.
I think you guys get this question every quarter, but from a labor standpoint, I mean, obviously I expect inorganic growth to pick up again.
I mean, where where do you stand from a labor standpoint, and as that are you still being forced to turn away work.
Because of that.
Yes.
But things delay would think thats a long term issue I think we're doing a really good job utilizing technology, which applicable we talked about three fab for years, which is a big help.
Using technology to help either the construction guy the service gross and become more efficient productive yet been save and doing quality work, that's helping us. So I think we have been able to do more work with less people. So I mean, we will continue to work on that and we'll continue to look for good people to join US we're good place.
The work so I'm very confident we'll be able to find good people.
All right that doesn't it for me. Thanks, guys. Appreciate it I don't think take care.
And the last question is coming from the line of Joe Mondillo from Sidoti and company. Please go ahead. Your line is open now.
Hi, guys good morning.
Good morning, Joe.
I also wanted to ask a question on Walker as well.
The gross margins I guess at least the acquisition related I think theres some acquisitions outside of Walker, but in terms of they acquisition data you know the FX.
Same store sales data.
It looks like.
Gross margins expanded by over 300 basis points from the second quarter to the third quarter and I think I think some amortization fell off from Twoq to Threeq, you, but even accounting for that looks like gross margins expanded sequentially by over 200 basis points. So I'm just wondering what.
Sorta drove that I assume that it's at Walker, but.
The gross margin.
So gross margin not counting walker year over year.
Threeq you to Threeq, you, which I know is not what you're talking about was up 0.3%. The sequentially engine in gross margin was just our typical third quarter seasonality, we we always have a stronger.
Quarter typically that third quarter is always our strongest border virtually all really always from a revenue standpoint, and almost always from a margin standpoint, although sometimes.
In a really every now and then the fourth quarter will have higher margins than the third quarter.
So I think that just seasonality the increase.
Gross margins sequentially.
Okay. So at Walker would there be from Threeq to Fourq, you would there be a step down at all would you anticipate gross margins at Walker.
For any one company, that's extremely hard to predict but over a period of years I would expect that Walker has lower gross margins in their third quarters than they have in their fourth quarter and for this year. If you'd made me guys. Just just as for any of our company that's more likely than not.
Don't think it's a huge difference like I said, our fourth quarter can sometimes rival our third quarter.
But it's not going to be from a performance issue. They did the work. They do is very good so right right right.
Okay and then okay. So in terms of for Q gross margin, how do you think about that.
Year over year comparison.
Considering that there will be some amortization that would be a headwind.
And in the fourth quarter, how do you think about that for Q gross margin comp.
So on a same store basis, I think we right now I'd say, we have a good opportunity to match last years fourth quarter and frankly, it's not as a top of comparable as the second and third quarter, where.
Of course Walker is going to continue to average us down a sort of full company as reported basis, probably you know.
To a degree similar to the third quarter.
But you know you get very lumpy rate when you're trying to pick one quarter at 60 effective one company, even a big what but I would say the general trend is what I just said and also Joe If you look at a total number is services a smaller percentage, but as the big.
Absolute number in terms of.
Revenue and profitability, so that helps that gross margin too so.
I'm not we have no projects were worried about out there so.
Okay, we should perform while the fourth quarter.
Okay, and then I wanted to ask about FCX <unk>.
So your same store revenue with sort of flat in the quarter, yet your same store X gene and was up over 7%.
And I and the Q you cited in investment in new personnel, and I think professional fees, which.
Were largely related to a tax investment.
So.
When did you see the hiring.
The new personnel was that sort of at the end of two Q. So you saw big increase in as teenagers. Thank you and then also in terms of the tax investment of 900 Kay.
Does that.
That's just a onetime thing in the three and the third quarter.
So let me take each of those individually.
And really I'm going to add up the something as well as important as far as the tax thing goes we are.
We made some investment with professional firms and to to be in a position to claim and we have claimed on our tax returns. Some credits that were entitled to those did not benefit us in large part yet because.
We'll have to go through an audit their inherited are.
We didn't take the benefit but we did bear the expense. The other reason that as DNA. If you. If you if you only new our topline numbers you would not expected that DNA to be up as much as it was.
We did and that we did hire people because were bigger we have more people, but I would say another factor when we really dug into it was we pay our most important bonuses by far the largest dollars that are paid at conferences enjoy today are paid to the human beings, who run our 40 or so subsidiary.
And in general virtually all of them half their bonuses based on cash flow.
So, whereas last year, we had a huge amount of our cash flow in the fourth quarters. So we accrued the bonuses for that in the fourth quarter, we had a pretty big bigger than that tax expense.
By double a pretty big.
Accrual for cash flow bonuses, because we had a ton of cash flow. So we're happy about it also that you know that we only give that cash flow, what though by the bonus for cash flow matches the quarter when the cash flow calm, but sometimes cash flow.
They like in this case as big or in a quarter that the proportional earnings were so good chunk of that is also accrual for cash flow bonuses based on the extraordinary cash flow.
Okay, literally getting us share of cash flow.
They generate.
Okay.
Alright, and then.
Hey, I just wanted to ask about the same store bookings that you've seen this here.
It seems like sort of if you back out the acquisition. It seems sort of same store bookings have been sort of.
Flattish.
And I'm curious, if you're getting positive benefits on price.
Has the same store sort of volume of project spend sort of.
You know sort of tailing down have we seen sort of peak.
Volumes at the same store basis.
Yes.
Well can you talk about 3% from the ended the year you get also remember nothing in service and small project goes into backlog also we do a lot of work during the quarter. It does that makes a backlog decided on a Monday you'd done in a week at June so there's a fair bit of work that we get within the quarter, particularly in that.
Second our third quarter that doesn't make it through backlog so.
I'm not worried at all about.
Same store revenue backlog today people are churn okay now, we're turning away work so.
Okay.
And then I guess, just lastly, I wanted to sort of asking you guys about sort of the macro data that we're seeing.
And considering that and you can confirm this.
Considering I think most of your business is that the tail end of.
Construction products, considering that and then what you're hearing in terms of macro data is there anything.
In the macro data of any of these sources that you're reading or whatnot.
Give you any caution in any of your end markets at all.
Yes.
The narrative on TV.
Are going to talk people into something is my biggest concern, but as far as in our business and also not just in our business, which as you point out is late cycle.
In our conversations with customers and our with our business development people.
There may be a recession out there. It is not it has not yet a bit bay that bill sooner or later, there's going to be a recession, but right. Now is just not showing up in anything we're seeing dislike for years people kept asking at during the financial crisis.
Isn't it getting better and we say Gee, we hope so.
Right now cycles as do we hope not but we're definitely not seeing no.
Okay, Yeah, I'm, not even really right.
Not even really referring to a recession at all but just specifically nonres construction you see the Dodge.
Construction starts have been down negative.
Architectural billings index.
Is indicating contraction and I'm just wondering if if any of that specific nonresidents data not just general economic recession talk or whatnot that specific nonres, if you've seen or heard or.
Heard any of.
Indications of a slowing or anything like.
We have not.
But you also.
All right up in New York, San Francisco some of these big Northern cities the markets that we're end as Bill mentioned many times.
Sort of second tier smaller cities. The activity is still very good and we're seeing no signs of.
Of the data for use by economists affecting us.
Okay, great well, thanks for taking my questions have a great alright.
Take care.
No incoming questions.
Whatever.
So we always said, okay, Chris I'll wrap it up.
I'd like to thank everyone for joining the call today.
We're very pleased with our results for the quarter. We are optimistic we will finished he is strong with good momentum going into 2020.
Im sure we're going to see many of you on the road here in the near future and I Hope everyone has a very happy upcoming holiday season. Thank you and have a great weekend.
Thanks, everyone.
Thank you everyone that concludes our call first today you may now disconnect. Thank so much for joining and have a great day goodbye.
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