Q1 2021 Meritage Homes Corp Earnings Call
Performance, including the company's highest first quarter orders and closings and the highest quarterly homebuilding gross margin since Q1 of 2006.
The successful execution of our strategy focused on affordable entry level and first move up homes to meet the current demand.
Accumulated and are absorbed culminated in our absorption pace of five eight per month for the first quarter of 2021 up from $4 three per month and the prior year, which was the strongest first quarter absorption pace since 2005.
We achieved this pace pace, even as we manage our spec starts and the corresponding orders and most communities to align with the production constraints and the market today.
Absent significant interest rate increases we believe the current market demand will continue the rest of this year and provide the housing industry ongoing pricing power to offset commodity and other cost increases and deliver strong margins.
And looking forward, we believe the favorable homebuilding and macroeconomic conditions will continue for the next several years mortgage interest rates remain very affordable and despite the recent uptick on an average 30 year mortgage rate.
30 year mortgage rates are below 3.25% and our backlog and buyers and the entry level space are mostly by and a payment so as long as the payments still makes sense and demand continues to be very strong.
And secondly, strong demographic trends persist.
Millennials are having life events, the align with home ownership and most baby boomers are becoming empty nesters wanting a smaller home.
Lastly, the supply of new and resale homes continues to be constrained.
And we believe that American is well positioned to capitalize on this current environment and we will continue to deliver greater year over year volume and drive profitability over the next several quarters.
Now please turn to slide four.
Earlier, this month validating and Meredith has deep commitment to be an early adopter and an industry leader and building energy efficient homes. The EPA awarded Meritage homes for 2021 energy Star partner of the year were sustained excellence as and econ recipient of this recognition.
Challenge ourselves everyday to improve upon our environmental stewardship, and our communities and the plan and as a whole as evidenced by our recent launch of a new multi speed HVAC system standard and all new homes as of this April.
And this of operating more efficiently than traditional air conditioning units, allowing owners to better manage the cover their home, while reducing their environmental impact and operating costs.
And keeping with our commitment to innovation, we also rolled out and enhanced and connected smart home automation suite.
To complement existing home technologies.
Complimenting existing features we've introduced as a centralized management and hub of our entire smart home technologies to enhance functionality for our owners, while also adding door sensors and motion detectors to increase safety and security.
This quarter, we allowed customers to transact quicker and more easily by adding non demand homeowners insurance quotes to our online financial services offering, which ultra already included online mortgage pre qualification tools and electronic payment of earnest money deposit.
In addition to launching our ESG page on Earth day last week detail and our commitment to the environment, our employees wellbeing and corporate responsibility from a diversity equity and inclusion perspective, we enhanced our recruitment process targeting.
And an even stronger and more diverse next generation and Meritage leaders both in the field and at corporate we will continue to financially support organizations that drive more diversity equity and inclusion across our nation.
Our achievements and energy efficiency innovation, and DNI will continue to add long term volume and the customer experience and shareholder return.
I'm also proud to announce that we are entering our first new markets since 2016 with the completion of several land acquisitions and the new Coastal Carolina Division and expands our east region operations, and the Charleston, and Myrtle Beach and surrounding areas and South Carolina.
We will start marketing campaigns and the next few quarters ahead of opening these five new affordable entry level communities in 2022.
I'll now turn it over to Felipe.
Thank you Steve.
Given our strong performance in 2020, we are now a top five builder and 10 of our 17 markets and we aim to continue gaining market share and all of our geographies.
As we've covered and the past our strategy is to offer quality, yet affordable homes and the entry level and first move up markets.
That being said the ongoing surge in housing and that has enabled us to capture strong pricing power and all of our geographies with year over year quarterly price increases of at least 20% on average.
Despite these increases closing asps are down a bit year over year and orders and backlog Asp's are up just a small percentage year over year. This quarter, all due to our focus on entry level product.
For the balance of 2021, we will continue to maximize price empower wherever possible based on market conditions, while managing our spec starts and the related order pace to better align with current supply channels and strength.
We believe this cadence will allow us to continue to generate elevated gross margins.
Despite an increase and that basically limits early this year, our pricing power has allowed us to push asps of NGL price above these new FHA limits and some locations.
This is not typical for our entry level communities. We are closely monitoring each location to determine if the increase is impacting demand.
Slide five.
We closed 2890 homes this quarter up 25% year over year home closing revenue of $1 1 billion as the current and the current quarter increased 21, 1% compared to 2020.
And the first quarter of 2021, we achieved a 24, 7% home closing gross margin up 470 bps from 20% in the prior year.
We sold 3458 homes this quarter, which was 11% higher than the same period of 2020.
<unk> were up 35% year over year from four three to five eight per month and accelerated faster than total order growth, even as we increased prices and limited orders demonstrating our capacity to generate significant order volume once we hit our 300 community count target and mid 2020 home too.
During the first quarter strong demand exists and both entry level and first move up product.
And two level comprised over 76% of total orders for the quarter up from 61% and the FERC quarter last year.
Entry level also represented 73% of our average active communities compared to 49% a year ago.
Our first move up communities also experienced improved demand year over year with absorptions, 45% higher than a year ago.
Now turning to slide six.
Moving to and the regional level trends on slide six.
All our regions reflected solid year over year absorption growth and Q1.
And our East region led in terms of the absorption growth with a 67% improvement over the first quarter of 2020.
Orders in the East region increased 39% year over year for the quarter, which offset a 16% decline and average community count.
The <unk> didn't had the largest increase and entry level communities, resulting in 72% of its average active communities selling entry level product during the quarter compared to 36% and Q1 of last year.
Tennessee's absorption pace of six six per month was the highest for any of our states and the first quarter of 2021 bouncing back from storms and community count GAAP out in 2020.
Absorption for our central region comprised of our Texas market increased by 34% over the first quarter of 2020, despite a 21% reduction and average community count.
Angie level communities, representing 75% of the Central region average active communities during the quarter up from 56% from the first quarter of the prior year.
Our first quarter, 2020 'twenty, one absorptions in the West region were up 13% over the same quarter and the prior year, even with a 6% decrease and orders and 16% fewer average communities on.
On a year over year basis, Arizona increased both order volume and average community count we've been able to open up new stores here and capture the exceptional demand and one of the strongest homebuilding markets today.
And continued demand in California, and Colorado led to a 31% decline and the average communities with a corresponding reduction in order volume at 17%, but 20% higher absorption pace year over year and.
Entry level communities represented 70% of the west region's average active communities during the quarter up from 50% and the prior year.
Turning to slide seven.
Of the 2890 home closings this quarter, 71% came from previously started spec inventory in line with 69% a year ago. We ended the quarter with over 2200 spec homes and inventory or an average of $11 two per community compared to approximately 2700 and the same average of 11.
Are you in the first quarter of 'twenty.
At March 31, 2021, less than 10 percentage of total specs were completed versus our typical runway of one third maintaining our goal of a four to six months supply of LNG level specs on the ground has been challenging even as we manage our order pace selling more specs and early stage production to meet elevated demand as well as <unk>.
And our spec starts to correspond with the stock supply chain constraints drove the lower spec inventory levels as well as the percentage of completed cold stacks.
And similarly, this trend led to the 47% increase and our backlog to 5240 units at the end of the FERC quarter, our backlog conversion rate decreased to 62% and the first quarter. This year from 83% last year and will likely remain and a lower than average range given sustained demand as a result of both selling homes earlier and the construction.
And the temporarily lower volume effects available to sale due to the longer cycle times.
Although supply side, Henry and mineral minimally impacted our first quarter results. We are now expecting delays, which is leading to extended construction and construction cycle time of two to four weeks.
We are still committed to our spec strategy, which enables us to pre plan and start and should look should allow us to pre contract for building materials and advanced and minimize the impact of supply chain constraints.
Labour challenges, our parental perennial issue and our sector. Although currently we have not experienced any notable label issues, we expect our transparency and scheduling visibility we will continue to be attractive to local trade, but we continue to monitor for any indication of a tightening labor market.
Even in today's environment with supply side delay, our spec strategy and the entry level communities remains a core tenet price. This building methodology gives us a competitive advantage it advantage, especially when commodity costs horizon.
Since the homes, we are selling have already started construction, we are able to better manage our profitability and avoid cost rate by Lockheed and costs before pricing. The home. Additionally, the quick close time might have a spec home allows customers to lock in a mortgage rate. We believe that our spec strategy has enabled us to increase our market share and we'll continue to do so as we grow to become a top five builder.
And all of the markets and which we operate.
I will now turn it turn it over to <unk> to provide additional analysis on our financial results.
And thank you. Please let's turn to slide eight and cover our Q1 financial and adopt and more detail.
As we've noted the 21% year over year closing revenue growth and the first quarter was the net impact of 25% increase and home closing, partially offset by a 3% declining asps.
And Steve's reflects a greater mix of affordable entry level homes. They also include year over year price increases of at least 20% on average due to the favorable pricing environment.
The 470 bps improvement and first quarter 2021 home closing gross margin to 24, 7% from 20% a year ago, mainly resulted from higher asps.
As well as the additional closing volume and efficiencies gained from continuing to streamline our operation These improvements mitigated and record high lumber prices as well as other commodity price increases.
And well documented that certain homebuilding materials are generally constrained in todays environment due to ongoing pandemic related supply chain disruption some weather events and 12 plus months and elevated demand. These shortages and rising costs are impacting all of the construction industry has some degree and we are certainly not immune to this phenomenon.
And we believe our limited SKU count and predictable contraction, Ken and allows us some advantages <unk> debate.
SG&A as a percentage of home closing revenue was nine 8% for the current quarter and 90 bps improvement over prior year, the higher revenue and savings achieved from increased technology, particularly and the sales and marketing channel allows us to better leverage our SG&A. We believe we can sustain strong margins in 2020 lines and <unk>.
Higher commodity cost and we do still anticipate some additional overhead costs related to our growth Q3 hundred communities prior to the incremental clothing and revenue from that new fitness and this will result, and an increase in SG&A over the next several quarters, but we expect the incremental revenue beyond 2021 to drive material SG&A.
The average in future years.
The first quarter of 2021 effective income tax rate with 26% compared to 18, 1% and the prior year both years reflect reduced rate from the eligible energy tax credit under the 45 hour provision and some retroactive pickups in 2018 and 2019 energy credit.
Overall, and the first quarter of 2020 lines, we achieved price increases and higher closing volume with a more efficient streamline operations, while balancing our orders pace with production. This produced expanded margin improved SG&A leverage and and 88% year over year increase and first quarter diluted EPS to $3.
And and 44.
Moving on to slide nine our.
Our balance sheet remained strong even as we continue pushing forward two or 300 community count goal, we achieved several objected and this quarter late in the quarter, we issued $450 million of new senior note price and three and 708 due in 2029, we received approximately $444 million and net proceeds on April 15th.
On March 31, 2029, we issued a notice of redemption for all of the $300 million principal outstanding on our 7% senior notes due in 2022 with a redemption date of April 32021, the early redemption of the 'twenty. Two notes will result in approximately $18 2 million of early extinguishment of debt charge.
And the second quarter of this year.
We repurchased 100000 share for a total of $8 4 million to partially offset the issuance and annual employee grants and we also received and S&P credit rating upgrade this past February and the third credit rating agency upgrade and the last two quarters, where we are now one notch below investment grade from all three rating agencies.
At March 31, 2021, and our cash balance was $716 million compared to $746 million at December 31, 2020, primarily as a result from Bayer and land bank and share repurchase Ed.
Our net debt to cap remained low at 10, 9%.
Previously noted that we have set a maximum net debt to cap target and the high <unk> low 30% range, which is in line with a quick asset turn from entry level and first move up offering our priorities for the next several years remains the same we expect to use the bulk of our cash flow on land spend for our growth strategy and to get specced into the ground.
And thanks to continued to repurchase shares routinely to offset new brands and to keep our dilution neutral and may opportunistically repurchase incremental shares. However, we looked at the majority of the return back to work to achieve long term volume growth drive profitability and gain market share.
On to slide 10, and.
On March 31, 2021 over 58000 total lots under control we had four seven year supply of lots based on a trailing 12 month closing and line with our target of four to five year supply of lots under control, we increased our land book by 40% from approximately 41500 lots at March 31 2020.
We're making good progress and remain on track to achieving our 300 community count growth by mid 2022, despite our accelerated absorption pace, we opened up more communities and we closed in Q1, this year and we already own or control all of the land necessary for our 300 communities. We're currently working through the development and the land for the.
Next five quarters.
We spent nearly $370 million and land acquisition and development. This quarter, a 50% increase from last year's Q1 spend we expect our land spend to be more than $1 5 billion annually and 2021 and beyond to sustain and replenish our 300 community we.
And we recognize that land price appreciation and additional demand for land from all builders exists today, but we've been able to re file and pipeline without compromising our underwriting standard and the first quarter of 2021, we secured 5900 net loss more than double the volume and the same quarter of 2020, our net new last chance.
Weighted to 43, new communities of which approximately 95% are entry level to maintain our focus and affordable homes and the future.
To adjust to higher orders paced and entry level product the average community size contracted for and the first quarter of 2021, and the 129 months up 26% from the first quarter of 2020, where the average size was about 102 law acquisition.
Acquisition of larger lopsided limit some of the competition for land and enables us to leverage and larger lot count to reduce community level overhead cost per lot, while minimizing the community count churn and the inefficiencies associated with the opening including out and community to.
And to preserve liquidity, we're using options are staggered purchasing terms, where financially feasible and about 60% of our total lot inventory at March 31, 2021 was owned and 40% with the auction a slight improvement compared to prior years, 63% owned and 37% option finally all day.
A vaccine despite a lot and the pricing environment has been strongly and we anticipated which has allowed us to increase pricing by at least 20% year over year on average and driving up our gross margin expectation beyond where they were just three months ago, but these higher asp's offsetting increased commodity cost for the full year 2021, we are now projecting.
Total closings to be between 11000 712700 unit home.
I'm closing revenue of $4 $5 five to $4 85 billion home closing gross margin of approximately 25% and the effective tax rate of about 23% and diluted EPS and the rate of $13 and 75 to $14 and 75.
At March 31, and 2021, we had 203 active community and line with our guidance and slightly up sequentially.
195 communities at December 31, 2020, but down from $2 41, and the prior year, despite weather and general supply channel slowing and we were able to open up our expected communities on time 30 opening up 36% from 22 and the first quarter of 2020, we continue to anticipate about.
200 communities for Q2, this year and given our strong pipeline for community openings, we expect to see an increase of approximately 20% and our community count by December 31, 2021 from the current level today and.
As for Q2 2020 and line, we are projecting total closings to be between 2800 3100 unit.
Closing revenue of one 1% to $1 2 billion home closing gross margin of approximately 25% and diluted EPS in the range of $3 <unk> to $3 and 35.
I'll turn it back over to Felipe <unk>.
Veeva to.
To summarize on slide 12, we believe we are well positioned for increased demand over the next few years by continuing to execute on our entry level and first and that strategy.
Additionally, our 100% spec building and the entry level communities and our streamlined operations have been successful to date and we expect our strategy will continue to serve as well and the future.
We remain on track to achieving our 300 community count goal by mid 2022, given our strong balance sheet that allows us to make elevated land investments quarter after quarter to sustain and healthy land position.
And the current environment, we will continue to push our pricing power, where the market allows while managing our spec starts and the corresponding order pace in line with supply chain constraints to deliver greater margin and profitability.
With that I will now turn the call over to the operator for instructions on the Q&A.
Operator.
Thank you and I'll be conducting a question and answer session, if you'd like to be placed and the question queue. Please press star one under telephone keypad, a confirmation tone will indicate your line is and the question queue. You May press star two if you'd like to move your question from the queue for participants using speaker equipment may be necessary to pick up your handset before.
Pressing star one one moment, please while we poll for questions.
Our first question today is coming from Alan Ratner from Zelman and Associates. Your line is now live.
Hey, guys. Good morning, Congrats on just the amazing margin performance.
Truly truly remarkable.
So obviously the demand environment is incredibly strong and I think you guys are doing a great job of maximizing the pricing and I think that 20% increase it definitely sounds higher than some of the numbers thrown out by some of your competitors.
So it seems like the only limitation on sales I guess at this point is the production piece and how quickly you can get homes started and I think it and it makes a lot of sense that youre youre not selling before starts.
And just given the uncertainty on the cost side so.
With your sales pace running close to six a month what is your start pace running at right now and what ability do you have to flex that higher.
Possible low or if not if you could just kind of tell us where that's running at and that would be helpful.
It's running almost the same because as you know and entry level, where 100% stack and <unk>.
Frankly, and <unk> right now, we're more spec as well because thats what the buyers are preferring.
So it's almost the same.
Our ability to ramp up our spec our spec starts and somewhat limited in today's environment, just because of the production issues that we've been discussing but we do have the ability as we open up these new communities to.
Really come out of the ground strong and low.
And that up so we can lever it up as our community count growth.
Stabilizes.
But there is some limitation out there and the market just with the current constraints that are out there and production and frankly, we think where we're pacing our communities is really the optimal pace and it allows us to be really efficient with our trade partners and then maximize margins and control our costs and we're really comfortable with our current pace and were.
We're not really looking to flex it up and we're trying to get our growth.
Okay.
Perspective April feels strong as you pointed out the March and April comps are a little weird because of COVID-19 last year and then we saw this big surge that occurred in May and June when when everyone realized that during COVID-19. The actually wanted to buy a house, so but right now.
Of the market doesn't feel like it any different than the March and it feels like its just continuing continuing on and I really just don't see anything out there that's slowing it down right now just sort of reiterate I know you guys have on our numbers that we actually had higher sales in Q2 last year than Q1, Despite COVID-19 April was tough.
But may and June recovered the.
Year over year comps do not see for us in Q2 over Q1.
Got it alright.
That's helpful. On my my references more April comps, but yeah, no that's helpful too.
So impressive gross margins, obviously of pricing power is solid.
However, you are wrapping up those communities at a time when supply chain has some hiccups and also these are highly inflationary times can.
Can you talk to how you are trying not to be impacted more than the market on the cost side because of your of overwhelming demand needs, especially with that 300.
Liberty Count target out there that you you are pretty adamant on hitting how do you achieve the balance so youre not impacted more in the marketing costs.
And I assume you are the question is around vertical cost not land cost yes.
Yes, that's right yes.
We just believe there's two things about our strategy that we're leaning into that we think allow us to sort of manage our costs.
In an environment, where costs are stable on an environment where costs are unstable the first one.
Is.
Everything we've done on to streamline our product our product is extremely repeatable, we remove complexity, we reduced the number of products that go into our products. So we're very streamlined and we have the ability to source products probably differently than if you have more products and align ourselves with our vendors and create relationships in.
Plan out of the business.
The second piece is really just the spec strategy.
And every time, we open up of new live now communities, we opened it up with a bunch of specs because that's what those buyers want.
And we're able to be really thoughtful we're able to plan out with our trade partners cadence out of our production of appropriately and come out of the ground.
Our cost.
As best we can so it's really about the streamline products and secondly, the specs is how we sort of navigate that and we're very comfortable as we open up these communities we opened up 30.
This quarter and we open them up with good good margins and good cost structure on the production was there we were able to get the homes started and get them framed in a move on through so that's really that's really what we're our strategy is.
Okay, So youre not.
So what I'm hearing is you're not impacted any more than the market as the cost basis is pretty similar to what the market and the the rest of the industry is actually taken on right.
I think lumber hurting everybody of the same honestly I think the only differentiator is whether youre able to actually get to the product for your job site, but everyone's kind of experiencing the cost.
We have less products that go into our homes. So we see less cost pressure from all of the other products that don't go into our homes.
Yes, I think we're all feeling at the same and we certainly are feeling it any more than anybody else.
Got it Thats pretty helpful. Thanks very much.
Thank you. Our next question is coming from Truman Patterson from Wolfe Research. Your line is not a lot.
Hi, good morning, everyone. Thanks for.
Taking my questions.
<unk> I can't see the MTS.
Palpable from the release share on the call. So.
With that I was hoping Steve you could elaborate a little bit on your thoughts on lumber as you mentioned.
Potentially or hopefully easing I believe was the phrase.
So any any thoughts there and then also on just your cost inflation expectations that are embedded in your 25% gross margin guidance moving forward, just what sort of acceleration.
We're expecting to see.
True, but let's look please do that if you got a question of our fishing I can probably answer that for you but of things.
Except for the fair enough yes.
Yes.
I don't think.
Anywhere in our remarks should we say that we thought cost we're going to EPS.
In 2021 everything were seeing would suggest that we're going to continue to see pressure lumber futures are up we're about to re lock across most of our footprint and we have material increases that are going on.
That being said we've had we've had the pricing power to more than overcome that and we don't see that changing anytime soon as we look out over the remainder of 2021. So costs are up costs are going to continue to go up until there is some catalysts on the lumber side.
I don't see that changing in the near term and.
But we think we are of the pricing power the pricing we've already taken over the first 90 days and then continue to take as we move through Q2.
To maintain our margins that we got into the green.
The model Chairman.
We're giving our guidance we are building in some expectation of increased.
Commodity costs actually mentioned, there's a lot of rate locks coming up for lumber over the next couple of weeks.
The modeling that in the numbers that we provided the guidance.
Okay. Okay. Thanks for that and then.
You all reiterated your mid 2022 community count guidance multiple times.
It seems like Youre, gaining some traction there community count inflected positive sequentially. So so clearly improvement there and stabilized.
Could you just discuss a little bit how conditions may have changed over the past quarter or two.
Your ability to get communities open.
They have been.
Additional municipal delays any issues and developing land tightness in your local.
Land and divisional teams I'm, just trying to understand what some of the potential risks are.
And really hitting that 2022 community count target.
Yes, I mean, it's not getting any easier.
On the municipalities arent, moving any faster and there's a lot more people trying to get communities open that are clogging up the system.
Our teams are doing a great job.
Moving through it and executing.
We've said it before but we have the land.
Loaded and we're processing it to get to our 300 goal in Q2 I am extremely confident that we're going to get there you guys are going to start seeing.
That number move up dramatically in the back half of this year and then continue through next year. We're one quarter of further into that commitment that we made I think in Q3 of last year and it's only getting more clear right things are happening on time.
Weather events have occurred and slowed us down we're getting the land process and we're tightening up those timeline so for us.
Just another.
Other quarter of more confident and committed to that number.
But at the same time, if there was a significant weather event or.
The city you start to shut down for some reason, which I can't predict we would obviously be impacted but right now everything to go and we're very confident about hitting that number chairman. This is the same as the prior comment.
We'd like to err on the side of conservatism that we built in some cushion on that 300 community kind of as well several per week.
On.
We appropriately modeled the time delays and potential expansion in net municipal approvals just don't have that 300 community count target on time.
Okay. Thank you all.
Welcome Thanks human.
Thank you. Our next question is coming from Susan Mcclary from Goldman Sachs provided is that of life.
Hello, everyone.
My first question is on the SG&A I think when you reported back in January you had suggested that you were targeting something just north of 10 per cent for this year, but when we think about where you started the first quarter actually below that 10% and the kind of the normal seasonality of the cadence that we usually see does that suggest that that is probably coming down.
And if so what is you know any kind of new guide there that you can give us.
That's a great question, Susan I think it's a combination of two things number one is the higher asps than.
And then we had anticipated that 20% lift that we mentioned.
The combined with our ability to hold back on some of sales and marketing expenditures, whether it's a function of using more technology or just not leading those efforts right now due to the accelerated demand in the market allowed us to benefit on both sides.
I think it's fair to say that Q1 came in notably lower than what we were expecting and guiding Q.
Probably fair to assume that there is some incremental pickup in the leverage for the balance of the year from what we were thinking of Q4, although as we mentioned in the prepared remarks, we do want to caution of our some incremental cost that still need to be incurred I think youll see the dollar is expanding the immediate of leveraging.
Being penalized for <unk>.
As we had anticipated, but the are going to be some incremental dollar spend in SG&A in the back half of the year on as we ramp up the community count.
Okay. That's helpful and then.
My next question is around the cancellation rate can you tell us where that fell on the quarter and any kind of changes or what's impacting that if there were any meaningful shifts.
Yes. He was looking at it I think at what revenue of.
11%, we typically see we're going to do somewhere between 15 and 20, so especially entry level. So it is very low right now as you can imagine there's a tremendous amount of urgency with our consumers to hold onto their house and get into the house Theres not a lot of.
The second guessing the decision.
On buyer remorse so.
It's really low right now.
As the we've mentioned is that the world normalizes, we're very comfortable on in fact, we'd like to see that number tick up a little bit more of that means we're getting more people into the funnel looking at our homes.
I tried to have a wider pool with the more fallout and of smaller pool of that 100% qualified at the entry level space.
Got you okay. Thank you.
Thank you.
Thank you. Our next question today is coming from Jade Rahmani from <unk>. Your line is now live.
Okay.
Okay.
It might be on mute.
C J the either could you press star one again.
Ladies and gentlemen that does conclude our question and answer session I'll turn the floor back over to management for any further of closing comments.
Okay, well. Thank you again for attending our call and we really appreciate your interest we look forward to talking to you next quarter hope everyone has a great day. Thank you.
That does conclude today's teleconference and webcast you may disconnect. Your line at this time and have a wonderful day, we thank you for your participation today.