Q4 2021 EZCORP Inc Earnings Call
Okay.
Good morning, ladies and gentlemen.
Welcome to the E Z Corp, fourth quarter and full year fiscal 2021 earnings call. At this time, all participants are in a listen only mode.
Later, we will conduct a question and answer session and instructions will follow at that time.
As a reminder, this call maybe recorded.
I'd now like to turn the conference over to Mr. Jean Mcgee Young Investor Relations with three part advisors.
Go ahead Jean.
Thank you and good morning, everyone. During our prepared remarks, we'll be referring to slides, which are available for viewing or download from our website at investors thought E. C O R.
P Dot com before we begin I'd like to remind everyone that this conference call as long as the presentation slides contain certain forward looking statements regarding the company's expected operating and financial performance for future periods. These statements are based on the company's current expectations actual results for future periods may differ materially.
Curiously from those expressed or implied by these forward looking statements due to a number of risks and other factors.
That are discussed in our annual quarterly and other reports filed with the SEC.
And as noted in our presentation materials and unless otherwise identified results are presented on an adjusted basis to remove the effect of foreign currency fluctuations and other discrete items now I'd like to turn the call over to <unk>, Chief Executive Officer, Jason cooler Jason.
Thanks Gene and good morning, everyone.
I'd first like to acknowledge everyone on our team for having exceeded expectations for our fiscal year 2021.
Throughout the year, our key performance indicators have improved and we are seeing continuous signs of recovery from the pandemic.
We believe that the steps we have taken throughout the year to implement our strategic initiatives.
Well positioned to benefit as we return to a more normalized operating environment.
During the fourth quarter, we saw pawn loans outstanding or PLO rose to $174 million up 32% year over year to our highest level since the beginning of the pandemic.
And for those of you who are new to our business PLO was a leading indicator of the health of our core pawn business.
Again, I credit our entire team and our stores and our corporate offices.
It was embraced our plan and we'll continue to execute delivering strong results for our shareholders and our customers.
As we begin to move through the presentation also want to acknowledge our investor relations team for helping us refresh and update the format of the materials.
Beginning on slide three.
Mostly strive for continuous improvement and focus on providing an industry leading experience for both our customers and team members and this coupled with organic and inorganic growth is how we build long term shareholder value.
During fiscal 2021, we completed the acquisition of 128 stores in Mexico.
Wired 11 stores in the Houston area and opened 15 de Novo stores in Latin America.
We now own and operate 1148 stores in five countries.
We look forward to leveraging our strong balance sheet to look for more opportunities to continue to grow our store base and expand our footprint into new markets.
Moving onto the drivers on slide four people pond passion is our overriding theme, our strong balance sheet and liquidity are crucial to enable us to meet our customers' needs.
<unk> and our 6500 team members aimed at retaining the best talent through enhancing training programs consistently rewarding performance and continually improving corporate culture.
The success, we achieved in the fourth quarter and fiscal year 2021, as evidenced with our strategic initiatives rolled out at the end of fiscal 2020 are driving the business.
Beyond our financial achievements our role in the circular economy is core to who we are natural resources our stage when you buy recycled item at a pawn shop instead of buying it do we.
We are committed to sustainability and providing a diverse and inclusive culture for all of our team members.
On slide five you can see that we achieved our strategic goals for 2021.
With a focus on team members and a passion for serving customers. We focused on three core areas. The first was strengthening the core business down to the store level.
Executing on both the PON and retail aspects of our business and becoming better managers of inventory.
The second was achieving cost savings of $14 million and building a culture of cost consciousness.
And a third was growth in innovation, which we achieved through store growth and additional digital offerings for our customers.
As we look ahead into fiscal 2022, we haven't changed our strategy rather we will continue to execute on it putting even more emphasis on developing our team members and serving our customers as we execute on our core business look for incremental efficiencies and continue to grow and innovate starting with the launch of our <unk>.
<unk> based loyalty program in October.
Turning to our key financial themes for the fourth quarter of fiscal 2021.
As I mentioned earlier PLO. The most significant driver for revenue and earnings is up 32% year over year, leading to a 30% increase in PSC net.
Net revenue was up 31% year over year, and EBITDA was up 47%.
Merchandise sales gross profit was up 38% year over year, driven by higher sales and a 41% sales gross profit margin.
Our margins are the direct result of the ongoing effort to focus on effective inventory management.
H G and inventory improved to less than 1% from 6% and our strong liquidity position enables us to fund, both PLO and inorganic growth going forward.
Slide seven shows that on a normalized basis total expenses for fiscal year 2021 were down 7% store expenses were down 4% and G&A was down 21%.
As we've mentioned previously as transaction volume continues to grow we would expect certain expenses to increase in fiscal 'twenty two.
Our efforts to strengthen the core addressed on slide eight are directly tied to our focus on people and systems.
With a strong team and great systems, we can more effectively serve our customers.
Good PON decisions and manage inventory.
We are excited to announce that we have named Bloyer Powell president of global upon with responsibility for all pawn operations worldwide.
Global alignment will enhance the in store experience optimize expenses and further drive profitability, while we continue to benefit from having a strong local presence in each of our markets.
Training operational talent reviews and performance calibration sessions are in place to allow team members to understand their goals and measure achievements inclusion.
Initiatives on cultural transformation remain a focus for us as we ensure our team members are aligned with our guiding principles of leadership customer service accountability respect diversity and sustainability.
We've also updated our proprietary point of sale system to support our fully integrated easy plus loyalty program.
Process efficiency continues to improve with online initiatives automatic I'd scanning enhanced telephony.
<unk> store networks, and deploying enhanced Wi Fi.
It modernization will continue to enhance operations and productivity.
We believe strongly that innovation is in the central driver for sustainable growth as.
As you can see on slide nine online extension payments grew to 11% in Q4 from 9% in Q3.
And over 6000 online later way payments took place versus 5000 in Q3.
Our customers tell us that they appreciate having these convenient options for <unk> waste services.
We are also pleased to announce that our <unk> loyalty program went live in U S stores in October and launched in Latin America early this month.
Early feedback is very positive.
You will see more consistent use of the easy plus branding going forward as we streamline the digital customer experience.
After launching our inventory showcase test in May we now have over 18000 items listed online with over 140 stores currently participating which we believe is helping us capture new customers as the search for certain items becomes much more convenient.
Store growth is an important element of our strategy. We added 143 stores in fiscal 2021 and have continued our inorganic growth in October investing $15 million and a company that owns more than 20 pawn stores primarily in the Caribbean.
The integration of our recent acquisitions in Mexico, and the U S is going well.
And the acquisition pipeline remains robust.
The very nature of our business extending the useful Wi Fi and recycling millions of items contributes to the circular economy.
According to the EPA the U S had $292 4 million tons of waste in 2018.
That is nearly five pounds of waste per person.
By purchasing items in a pawn shop instead of buying new.
Our customers are reducing that weighs in.
In addition to selling pre owned items. There are many other aspects of our business that have a positive impact on the environment.
Our stores are located in the communities, we service, reducing customer travel and delivery.
We do not have warehouses and distribution facilities and our stores have a relatively small carbon footprint.
Highlighting other ESG topics, we provide in our central simple regulated and transparent financial resource for those who are underserved by traditional sources.
The way, we do business is as important as the business we do.
This is the theme of our code of conduct and we maintain a strong compliance culture overseen by our board of directors.
Independent directors holds four of the six seats on our board and we satisfy Nasdaq's recently enacted board diversity rules.
Beyond selling over $5 million pre owned items, we retrofitted 65% of our U S stores with energy efficient led lighting and recycled over $1 8 million pounds of paper in the U S.
We provided over 26000 hours of corn team pay for team members affected by COVID-19, and four hours of paid time off to each team member to encourage vaccination.
We also implemented a two year diversity and inclusion plan.
In the U S, 65% of team members and 55% of managers identify as in underrepresented minorities.
Globally, 51% of team members and 42% of managers identify as female.
I'll return at the end with some closing comments, but I would now like to turn the call over to Tim judgments, our Chief financial officer to provide more details on our financial results Tim.
Thanks, Jason.
For the fourth quarter of fiscal 2021, we reported diluted earnings per share of <unk> <unk> on a GAAP basis compared to a loss of 42.
Our prior fiscal year fourth quarter.
On an adjusted basis, we reported diluted earnings per share of <unk> 11 for the quarter compared.
<unk> per share for the prior year quarter.
For the full year GAAP diluted earnings per share was <unk> <unk> compared to a loss of $1 24 in fiscal 2020.
On an adjusted basis diluted earnings per share for the year was 38.
Compared to 39 <unk> in fiscal 2020, which is significant considering the average PLO for fiscal 2021 was less than fiscal 2020 as the PLO has been in the process of recovering.
Starting with our Q4 consolidated financial results on Slide 12.
PLO ended the period at $174 million up 32% on a year over year basis.
We are now within 16% of FY 19, same store PLO compared to 22% last quarter.
Following suit agency revenue was up 30% over last year.
With growth driven by.
Increased store count and higher average PLO.
Merchandise sales gross profit margin was 41% in the fourth quarter up from 31%.
For the full year merchandise gross profit margin was 42% compared to 33% in fiscal 2020.
These improvements reflect the commitment to improving the coal business by driving down aged general merchandise now less than 1% of title general merchandise inventory compared to 6% at the prior year quarter.
Our focus on selling inventory in the first 90 days inventory turnover is strong at two eight times.
In total EBITDA was I think $1 million in the fourth quarter up 47% compared to the prior year quarter. As a result of higher PSC revenues and increased much thought gross profit partially offset by increased expenses.
So the EBITDA was $67 5 million up $1 2 million.
When taking into account the incentive compensation accrual reversal in fiscal 2020.
EBITDA was up $22 1 million or 41%.
Turning to our U S pawn operations on slide 13.
As government stimulus payments of <unk> through the year, we have seen segment PLO rose, 28% and 16% comparing Q4 to Q3.
This is being driven by a focus on pulling operating model and serving our customers needs.
Importantly, U S colon PLO continuous trend closer to pre COVID-19 levels and is now on same store basis within 14% of FY 19, as compared to 21% last quarter.
For the fourth quarter, PSC was up 22% year over year, driven by higher average PLO.
On the retail side of the business merchandise sales was up 4% compared to the fourth quarter in 2020.
More favorably merchandise sales gross profit was up 22% year over year due to increase in cells and modules.
First sales margin expanded 636 basis points to 43% versus the prior year quarter.
General merchandise inventory continues to decline and accounted for just 1% of titled General merchandise inventory in the U S at quarter end versus 4% of the total a year ago can you do about continued focus on inventory management.
Turning to the bottom line.
U S pawn EBITDA was up 76% compared to the prior year quarter, primarily due to higher PSC and increased merchandise sales gross profit offset by increased expenses.
<unk> expenses were up 9% year over year, mostly related to an increase in incentive compensation driven by improvements in PLO net revenue beyond our expectations.
Slide 14 focuses on our Latin American operations.
Segment, PLO grew 51% compared to the year ago level or 29% on a same store basis.
As a result, PSC was up 55% driven by an increase in store count and high average PLO for the quarter.
Merchandise sales were up 5% versus the prior year quarter or down 13% on a same store basis. Prior memory Q2, lower customer traffic as a result of the effects of the delta the variance.
Let's start <unk> gross profit was up 177%, reflecting increased store count and related margins, increasing to 34% from 13% driven by effective inventory management.
EBITDA improved $7 2 million on higher PSC and merchandise sales growth profile.
Offset by increased expenses.
Store expenses were up 34% year over year with 132 additional stores and incentive compensation increases driven by PLO and net revenue improvements.
Same store expenses were up 11% year over year.
In conclusion on a consolidated basis PLO levels have continued to increase since mid April reflecting multi room corn demand trends and accelerate transaction volumes and a focused team.
As we look forward to fiscal 2022.
<unk> continues to play catch up as PLO increases.
Latin America continues to grow but a slow pace in the U S. Due to the effects of the Delta variant.
Retail inventory continued to normalize and we enter the holiday season with inventory that is not impacted by supply chain disruptions.
As we've previously said.
We expect to see some margin contraction as inventory levels increase and with the resumption of standard sales discounting practices.
Also with transaction volume, increasing and increasing inflationary pressures, we will see expenses rides.
We performed through a difficult economic cycle for the industry and we'll continue to execute our strategic initiatives in fiscal 2022.
I'll now turn it back over to Jason for a few closing comments.
Thank you Tim.
Our strategic initiatives introduced at the end of fiscal 2020 remain the same.
PLO drives revenue from Palm service charges and efficient retail management drive sales gross profit.
So we are well positioned going into fiscal 2022.
We achieved our targeted cost savings of over $14 million in fiscal 2021, and we'll continue to optimize operating cost ratios over time.
As transaction volume accelerates.
Our differentiated platform proprietary point of sale system and commitment to enhancing digital capabilities will continue to differentiate easy Corp.
We remain focused on meeting our customers' needs for cash and affordable pre owned and recycled merchandise across the U S and Latin America, and we will continue to execute on our initiatives to further strengthen our core pawn business in fiscal 2022 and drive shareholder returns.
I want to say again that we're thankful for our team members, who drove results for fiscal 2021 that surpassed our expectations.
And we are enthusiastic about our prospects for continuing the momentum into 2022 with a business that continues to be unique and essential for our customers.
And with that we'll open the call for questions.
Operator.
Thank you Sir at this time with that.
Thats take any questions you might have for us today.
If you would like to ask a question over the phone simply press star one on your Touchtone telephone.
Again that would be star one on your Touchtone telephone.
We have our first question from the line, Brian Nagel with Oppenheimer. Please go ahead.
Hey, guys good morning.
Good morning, nice quarter congratulations.
Thank you thanks Paul.
I guess a few questions you all kind of go through I mean first submission for Bob I guess, a bigger picture perspective, we've talked a lot about just the extent to which.
The Covid crisis has impacted your business you mentioned today that I think youre starting to see.
Roughly speaking from some relief from those those headwinds. So the question I have is when you look at the backdrop for the business right now.
How much.
I mean to what extent is the pandemic of the remnants of the pandemic in the United States still a headwind for your business and how do you see that unfolding that dynamic unfolding over the next couple of quarters or so.
Okay.
Sure so.
You're saying.
We arent yet back to the levels, where we were on PLO in 2019, but as we've talked about.
On this call we were getting close and 2022 is the year, we get there and beyond and we're excited about that.
What I would say is.
As we said in previous quarters the impact of.
The Covid crisis is less in the U S than it is in some of our Latin American countries.
That's primarily driven by.
The vaccination rates, which are catching up and some of those and so the other countries and thats, helping the business a lot.
One of the things we saw is.
In the U S with each incremental stimulus actions and does it not just the impact of.
The pandemic, it's also the impact of the reactions to it.
Incremental stimulus actions and we saw the recovery.
Come a lot quicker with each successive one and in the U S. That's directly related to the fact that people are more active and they're out doing things.
And when they are active that generates needs for cash and so the demand comes back fairly quickly.
We've seen that.
Countries as we make our way through Latin America, and Central America, There has been a little bit more of a lasting impact we've.
We've seen a great recovery there as well.
But it's been a little bit more muted because of the ongoing impact of the Delta variant.
In Mexico, we saw that we didn't have a big back to school season to those kinds of things are still there.
As we look into 2022, our expectation is that we'll continue to be able to report on progress.
Again versus where we were in 2019, and then also moving past that but it's a little bit different story, depending on the countries we're talking about.
Got it that's very helpful.
And then Jason also I guess also from a bigger picture perspective, you spent a lot of time in the call today Echo did go into his job just laid out the sustainability aspects of your business.
The question I have is it.
It makes sense for combustion as investors demand standpoint to really understand and respect that aspect of easy Corp.
Is there something you could also argue are you also or will you also advertise more aggressively to customers.
This is a way to shop more sustainably.
Absolutely I'm glad you brought that up one of the things.
Followers on social media that you're starting to see more from us is exactly not reminding.
Consumers that we are a great source if they are concerned about their carbon footprint and even if they can afford to buy new but they want to choose to buy us. We are a place where they can do that and you'll see us advertise for example.
The chemicals in the water required to make certain items, whether it's a laptop or a bicycle or whatever it may be.
There's no packaging on our on our goods. So yes, that's a message that we're that we're getting more active about with our core customers and then also with customers, who maybe aren't historically, our core customers who will be attracted to the idea that we're recycling goods.
Got it very helpful. Thanks, a lot I appreciate it.
Thank you Brian.
Thank you.
Our next question comes from the line of Steve Emerson with Emerson Investment Group. Your line is now open.
Congratulations on a great quarter and looks like it could.
Sustainable pattern.
Okay.
Bill.
The last answer on sustaining a priority.
Yeah.
Are you going to start buying goods without power based.
Based on your expense.
Data capabilities.
Price checks.
It is.
Are you thinking of snake.
Is good.
Sure.
Yes.
Thank you.
The answer to that is yes.
Element of our business that has always been a buy sell business. What we want to do is exactly what the customer wants and sometimes the customer wants to do upon transaction.
And we're happy to do that sometimes they just want to sell the item and we want to continue to make sure our customers know that we're agnostic to the outcome. We just wanted to do the transaction that they want to do.
And our expectation, though is over time.
More people.
We will look to a pawn shop for those kinds of buy sell transactions when they may have done in the past.
With no intention of actually doing upon transaction, but really more intense.
Chad Im walking into the store and just selling us an item and we're happy to do that.
One of the things that we really focused on over the last year is our ability to manage inventory to.
Churn if you will you called velocity internally turning items in those first 90 days.
Not having aged inventory buildup in those kinds of things and as we manage that effectively we want to do it we'll do as much inventory as possible.
And make sure that our throughput is as high as it can be and I think the buy sell approach is critical to continuing to drive that.
Excellent.
And it kind of change here Eric.
Or the Internet.
<unk> Street tremendously.
Two or so or purchases are you ready to start.
Brian.
Or other financing plans for here is good.
We have spent a lot of time and are continuing to spend a lot of time looking at at this idea of financing at the terminal terminal, whether it be lease to own or buy now pay later and it comes in many different forms we.
We continue to do that.
But there aren't ready at this point to make any announcements in that regard.
Okay.
Obviously.
H.
Sure.
E Com E C O.
As a new branding.
Paul.
It could be considered.
Yeah.
Poorer image or tougher internet.
<unk> com.
So.
Just a thought.
Yes, Thank you for those comments Steve.
When you spend time in our stores with our team members watching them serve our customers.
It's there's nothing better in this business to do than that than just to see.
This process, whether it's <unk> or it's upon.
Of our customers coming in and evaluating service that we provide our team members being show engaged and enthusiastic and passionate about doing that.
It's Ed.
It's been probably one of the best parts of my journey from the board and joined the executive team.
And getting closer to all of that and seeing it firsthand. So we'll be focused on both aspects of the business going forward just like we always have been.
What we do is so unique and essential.
And our customers tell us that every day. So we're proud to do it and we want to continue doing it exactly how we have done.
And what.
Sure.
Great.
EBITDA from <unk>.
Sure.
Is good I don't know if its possible, but scramble the eggs.
And what ratio would you like to see a picture.
So the best way to have a look at that.
Okay.
<unk> on a.
Look at the PSC revenue.
And then we will get the merchandise.
Gross profit.
And for the.
And then for the quarter Youll see that the net revenue was 100.
<unk> hundred $17 million.
Eight out of about $72 million.
And then $45 million.
<unk> sales go ahead Paul.
Okay.
To see that.
We'd like to see both numbers continue to grow up.
Okay, that's exactly what we'll execute on in the coming years, okay. Good.
Richard Hare by Wall Street as more of.
REIT retail center you, possibly.
Cure Merck is merchandise.
Gross profit to be Baker than your PSC.
And your loans.
Yeah.
Yes for us, it's really about providing that schwartz of the customer.
So while we want to continue to grow both if our customers demanded one.
For a period of time over the other.
And one had more growth than the other.
Like I said before I think we'll be in a position, where we're sort of agnostic to that we want to continue to drive both and we think actually the retail side of the business will drive some incremental customers into our stores.
But at the end of the day, we wanted to do the transaction the customer and standing in front of US wants to do and we want to give them the choice that can deal with us in whatever manner. They want.
Thank you again as a reminder, if you would like to ask a question over the phone Super Press Star one on your Touchtone telephone.
We have our next question from the line of David came in the Cayman wealth management. Your line is now open.
Good morning, Congratulations nice quarter.
So my first question is you're making a deliberate effort to tap the opportunity for consumers.
Goodbye sustainability and O&M something pre owned is a priority.
That being said that customer tends to be more tech savvy and rather than go into stores treasurer harming so to speak looking for the items that they desire it would be advantageous.
I think helpful to them, if there was a digitization or.
Many of those items that they're seeking could be booked up.
Their phone or their laptop could you speak to that effort.
On your side, what Youre doing to digitize have we done it.
To what extent and then what the results are.
Thanks.
Yes.
We agree with you.
The future of this business will involve.
Given that customer the option to sort of look at it what's available before they before they buy.
To be able to go directly to the store that has exactly what they need or even at some point to be able to do all of it online.
It is important that we continue to explore that and we are so weak.
We've been working hard this year on what we're calling our inventory showcase.
Got that now rolled out in a lot of test stores and what we're seeing is that in.
Obviously, the data will continue to come through this proves this point up what our customers are telling us exactly what you said they really love the idea that.
If they don't have to.
To go on the treasure Hunt.
<unk> stores to find what they need that they can go online and advance signed it and then go directly to the stores that has what they want.
Some really positive feedback on that I think for Robbins is there always going to be able to do you want to do the treasure Hunt.
Once you go to several stores and see what they can find and Thats one of the things Thats really unique about the PON business is that every store every day has something different in it and people like to go and explore that but for those who don't want the choice.
That process being much more convenient.
We're going to continue to focus on providing that so we're excited about what we're seeing in these early days, we've got a lot more to do to roll it out.
To more stores, but the test so far has been going very well.
Okay. That's helpful.
And then can you speak to the last transaction that you did in the Caribbean what percent ownership do you have or.
And more importantly give me an idea of what multiple we paid of EBIT.
So we are we're not in the control position in that transaction.
So we own we own less than half.
Of the business.
What we're excited about it and it gives us exposure to some new geographies.
Caribbean some countries, where we don't currently have stores.
And this idea of diverse geographic diversification, that's something we want to continue to pursue.
And that perspective, we're very excited about it.
And Jim do you want to.
Haven't said, we haven't disclosed the multiple but what I would say and correct me on this but what I would say, it's not upside what we've seen in other transactions.
That's correct okay.
Okay and then.
You know as M&A happening.
In a let's call it a high double digit EBITDA area like 6789 is that safe to say.
So generally we talked about multiples of false dawns.
And Thats.
Heavily dependent on the.
Number of stores.
And the growth rates.
Of the company and so that's generally the way that I think so.
That's why we look at.
Okay four to eight times, so that being said when we look at your stock.
A recovery in the business.
Where we are now in EBITDA. It seems like your stock as a multiple of five to six.
However, if we do not saying.
There's going to be dilution.
With a bleed from me.
The convert.
That matures.
The shorter term on I believe it's two and 700 824.
It seems like it would be a great use of capital and our balance sheet to retire some shares to offset that dilution assuming it seems like we're on a trajectory to get well above $10 a share where those bonds will convert.
What's your sense.
What's your view on that I mean, it seems to me if I do the math and pull out my calculator. It would be great usage of capital and very competitive in terms of versus M&A.
In terms of accretion so could you comment on that please.
Absolutely yes.
Look at it we know that the best way to drive long term growth and the company has two operating stores well on them to have more stores.
We're convinced that we're operating.
At a high level on both the pump side and the retail side, we wanted to do that a resume stores as possible on the multiples one thing Thats a little misleading on that is when we say four to eight times, we're talking about trailing EBITDA not what we can do with it once we have it so what we ended up seeing is.
Actual multiple over time it ends up being much less because we can make some improvements with the way we have our processes in place just versus a.
Smaller company, maybe a mom and pop operation that doesn't have the same sophistication on the way that they value items put upon transactions in place operate their manage their inventory those kinds of things. So we ended up seeing that.
Actual multiple ends up being much lower.
But at the end of the day, I mean, youre right, we want to be good managers of capital.
We want to first and foremost make sure that we always have enough capital to fund.
These pump transactions for our customers and also to grow.
And do that over more stores, but as we over time look at our excess capital we'll continue to evaluate.
Ways to put it to work to make sure it's optimized.
Okay, I mean, another option not your investment banker here, but.
Perhaps even tendering for the bonds.
Again, 2024 bond convertible bonds seem like to have a very high likelihood of striking.
And therefore, diluting the equity, but another way to skin the cat would be tendering for the bonds and then to replace that capital for example, with a preferred stock offering I see almost every week from investment bankers getting term sheets.
<unk> stocks people or yield hungry.
And technically on the balance sheet, it's not that is that something that you'd look at.
Remember the principal amount, maybe let's say it was $100 million on that bond tender premiums and then replace that cash with preferred is that something you've looked at or would consider.
We're pretty constantly look at what's available in the capital markets to make sure we're focused on optimizing our capital structure.
In terms of other use of capital so on the subject of whether or not you just buyback bonds versus do something else with the capital.
I think you were talking about both either just buying them back or buying them back and replacing that instrument with something else. What I would say as you know those kinds of things as a use of capital stand behind.
Making sure that as I mentioned before we are in a good position to fund.
And we're in a good position to continue to grow as we see opportunities in the market and we do the pipeline is still very strong.
But clearly we spent time looking at those things and we will continue to do it.
Okay.
Thanks, guys. Good luck and have a nice.
Sure Bob.
Egypt.
Thank you there are no further questions at this time, Mr. Jason <unk>. Please continue.
Great. Thank you and thanks, everyone for joining us. This morning, we look forward to continuing to report on our progress and we hope everyone has a great Thanksgiving holiday.
Thank you. This concludes today's conference call. Thank you for participating you may now disconnect.
Okay.
Okay.
Sure.
Yes.
Sure.
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