Q2 2022 Great Ajax Corp Earnings Call
Enabling more analytics from our manager.
In today's volatile environment, having our portfolio teams and analytics group at the manager working closely with the servicer has been essential.
We've certainly seen the benefit of this during the COVID-19 pandemic and in 2022. So far, with significant ongoing loan cash flow velocity and credit performance, and with our 2022 a in two ythousand and 22 B securitization structures- the first a rated structures with up to approximately 40% of loans greater than 60 days or more delinquent and still rated a.
Like our 20% equity interest in our manager, we have a 20% economic interest in our servicer at a very low basis. We don't mark this to market in on our balance sheet either, or in our income statement. Our servicers currently evaluating a potential private equity round as part of rolling out a few new data in technology-driven programs.
The data analytics and source and relationships of our manager and the effectiveness of our servicer also enabled us to broaden our investment reach through joint ventures with third-party institutional investors and thereby invest in larger transactions as well. The services loan expertise is definitely appreciated by our JV partn, as several of our JV partners now pay our servicer for providing third-party due diligenceentand services for other transactions they ve be working on, and they've also hired our servicer to solve problems they may have with other servicers.
We still have low leverage. At June thirtieth, our quarter and corporate leverage was Q: zero point six X. our Q2 2020 -two average asset-basase leverage was two point two X. our corporate leverage increased as we use cash on hand to repurchase preferred shares and their associated warrants, as well as common stockwe keep trying to increase asset-basase leverage, but the significant cash F from our loan portfolio offsets this.
We own 22% equity interest in guiaa real estate Corp. guia is an equity REIT. They primarily invest in repositioning multifamily properties in specific markets and in triple net lease free stranding veterinary clinics.
We carry our guy interest on balance sheet as the lower of cost or market. Guy completed an additional round of equity in the first quarter of 2022 at a premium to our carrying value, but our balance sheet and income statement do not reflect any marup.
We think guy has a great deal of optionality and that guy can grow materially.
We go to Page 4: highlights for the quarter.
Net interest income from loans and securities, including a million of interest income from the decrease in the present value of expected credit reserves, was approximately 11.7 million in the second quarter.
Our gross interest income, excluding the one million income from the decrease in present value of expected credit reserves, was 29, 20.9 million, which is two point three million lower than the first quarter.
This primarily stemps from having four million less mortgage loans on balance sheet in the second quarter versus the first quarter and having significantly more delinquent loans than expected become performing.
As delinquent loans become performing, they provide more cash flow, but over a longer period of time. Since we buy loans at a discount, this increase in performance extends duration, which lowers yield.
A GAAP item to keep in mind though, is that interest income from our portion of joint ventures shows up in income from securities, not income from roomth.
These joint venture interests, servicing fees, are paid out of the securities waterfall. So our interest income from joint ventures is net of servicing fees, unlike interest income from loans, which is gross of servicing fees.
As a result, since our joint venture investments have been growing faster than our direct loan investments, GAAP interest income will be lower than if we. If we directly purchase loans outside of joint ventures by the amount of servicing fees, and GAAP servicing fee expense will decrease by the corresponding offsetting amount.
An important part of discussing interest income is the payment performance of our loan portfolio. At June thirtieth, approximately 74% of our loan portfolio by UPB made at least twelveth of the last 12 payments, as compared to less than 13% at the time we purchased.
Our NPL purchases over the last 12 months increased materially relative to RPL purchases.
Increases in housing prices helps maintain these payment prepayment patterns and leads to decreases in the present value of expected reserves and the related income recognition of one million of unallocated loan purchase discount reserves under CECL in the second quarter and also the reserve releases in each of the five previous quarters.
More than 30% of our full loan payoffs in the second quarter and so far in the third quarter were from loans that were materially delinquent at the time of payoff.
While regular paying loans produce higher total cash flows over the life of the loans on average, they can extend duration and, because we purchase loans at discounts, this can reduce percentage yield on the loan portfolio and interest income.
Loans that are not regular monthly paced status typically have materially shorter durations. We have seen and continue to expect the stability of housing prices will still drive prepayments from property sales for both regular paying and nonregular paying loans, and it also catalyzes monthly reperformance on previously delinquent loans.
We have seen however, that prepayment from rate term refinancing definitely slowed in the later second quarter for nondelinquent loans.
Our weighted average cost of funds in the second quarter was higher than the first quarter by approximately 30 basis points.
Given inflation in Fed rate increases, we would expect our cost of funds on adjustable rate repurchase agreements to increase over time. However, all of our other debt is fixed rates.
Net income attributable to the common stockholders was a negative nine point two million, or 40 cents per share, including paying approximately two million or nine cents per share preferred dividends.
There are several other items of note that had an impact on earnings in the second quarter. To make it a little easier to follow, we also have a table- the ties's GAAP income to operating income- on Page 16 in this presentation, as well as in our 10 -q.
Operating earnings was five point seven million, or 25 cents per share. Taxable income net of preferred dividends was 36 cents per share.
Taxable income is very instructive of the current cash economics of the portfolio.
Taxable income was primarily driven by continued prepayment and loan purchase, discount capture from nonperforming loans and increasingly, monthly payment repperformance from nonforming loans and regular performing loans.
Our acceleration of discount allowance relates to credit performance and cash flow velocity in the second quarter was a million versus three point nine million in the first quarter.
And we expened approximately three point six million relating to the GAAP required fair value, accrual of the warrant put rights from our qute 2, 2020 issuance of preferred stock warrants versus three point two million in Q1.
This number will decline, beginning in Q3, as I will describe shortly.
There are a few one-time and unusual items in the Q2 numbers.
You may recall from our Q1 earnings call that the calling of our 2018 D in 2018 G unrated joint venture securitizations and the reitsecuritization of the underlying loans into our 2022 a a agency rated securitization resulted in March 31 GAAP charge.
That we then collect back over the remaining life of the underlying loans.
In June , we executed a similar transaction calling our unrated 2019 a in 2019 B JV transactions and resecuritizing into a 2022 B a a agency rated securitization.
Since 2019 a and 2019 B were joint ventures in which we owned to combined approximately 17%. It was not consolidated on balance sheet as loans, but held legally and under GAAP as securities and beneficial interests.
In the June 2022 resecuritization to the new a rated structure. We continue to own the same percentage, but the securities mark-to-market is lower in June than it was in March.
Because of this, in Q2 we took an impairment equal to the difference between the securities carrying values and market values in June versus March of 2020 -two of two point one million.
Like our April transaction that was a refinancing of 2, two thousand and eighteen JVs and recorded at March 31. what is unusual is the two thousand and nineteen gav loans are transferred from our two joint venture trust to our new joint venture, 2020 -two B trust, with the same partnership owning the same percentages.
We and our partner effectively sold the loans in the form of an exchange of securities from ourselves to ourselves, which triggers a loss under GAAP.
If it would go through books value, whether or not it's sale under gap because of mark-to-market change, there is no difference in expected cash flow on the underlying assets and we expect this mark-to-market quote unquote sale loss amount is fully recaptured over the expected life of the 2022 B trust.
This also doesn't reduce taxable income, as we and our partner effectively sold both assets from ourselves to ourselves and is therefore a refinancing rather than a sale for tax and there is no tax impact. It is only a sale for GAAP because we own the JV loan assets in the form of securities.
A large larger, onetime Q2 earnings charge. But one that brings on significant savings beginning in Q3 is the repurchase of 25 million face of our outstanding preferred shares at a discount and the retirement of the associated warrants on common shares and morer input rights.
This requires us to recogne a two a five million charge from the acceleration of deferred issuance costs, as well as three a five million charge for the acceleration of expense related to the warrants and the warrant putot rate.
The total onetime charge is approximately six million or 27 cents per share.
Beginning in Q3. This repurchase should save us approximately one point one to five million per quarter, or nearly five cents per share per quarter.
We used cash on hand to repurchase the preferred associated warrants and put rights.
We also had a one point eight million adjustment, or eight cents a share, as a result of certain delinquent loans that were purchased at a discount, significantly increasing reperformance in excess of our modeled expectations.
Since we buy loans at a discount, this lower yield and the present value of their cash flows.
The reperformance was so far in exx of expectations that the lower PV number was below our cost. We recorded a loss on investments in affiliates of $4 thousand, or approximately two cents per share, as a result of the flow-through of the mark-to-market decline in price of our common shares owned by our manager in Q2. Our manager receives a significant portion of their fee and shares and changes in market value of those shares flows through to us based on our 20% ownership interest percentage.
Book value was one 14, 98 per share at June 30, first 15, 95 per share at March thirty-oneth.
Book value decreased, primarily as a result of the acceleration of deferred issuance costs from the repurchase of preferred shares and extinguishment of the associated warrants and put rights, and a $1 million mark-to-market adjustment of our joint venture debt securities, as additionally, as mentioned earlier, we took a one point eight million fair value adjustment for duration extension for over reperformance of previously nonperforming loans.
We also paid a common dividend of 26 cents per share and preferred dividends of night cents per share during Q2.
These changes were partially offset by 12 cents per share from the repurchase of common stock.
Most of this book value changes noncash other than the payment of the dividends and the warrant repurchase.
There is a table on Page 17 that details the change in book value.
Because we buy loan to the discount. The decline in loan market prices had not previously resulted in any impairment in the loan portfolio.
Strangely, the first impairment is caused by previously on nonperforming loans over reperforming, thereby extending duration.
Our book value at December 31, 19- the last quarter precooded and before the March in April 2020- market disruptions- was 15 per 80 a share. Our book value is down a total of 5% since December thirty-first of two thousand and 19, despite significant disruption and now much higher rates and lower asset prices.
We do not Mark to market our ownership interest in our manager and servicer and have close to a zero basis on our balance sheet.
They are worth significantly more than that. We believe our NAV continues to remain materially higher than the GAAP book value.
In addition to the 25 million base amount of preferred and the associated warrants and put rights we repurchased in the second quarter, we also repurchased approximately 475 thousand shares of common stock at a weighted average price of nine and 77 per share.
At June thirtie we approximately 50- 52 million of cash and for the second quarter we had an average daily cash and cash equivalment balance of approximately Sixty million.
We had 74 million of cash collections in the second quarter which, while it's a 13% decrease versus the first quarter, it's the same as the average quarterly collections throughout 2021.
As I mentioned earlier in this call, with June thirtie will also have a significant amount of uncumbered securities from our securitizations and joint ventures and unencumred mortgage loans.
The available cash and available asset-backed leverage provides us a good position for loan and other asset type urchases, preferred and associated warrant repurchases, as well as comment aryre repurchases and liability repurchases.
Approximately 74% of our portfolio by UPB made at least 12 of their last 12 payments, compared to less than 13% the time at loan acquisition. This increasase from 72% in Q4 of 21 and 73% in Q1 of and 22, despite the fact that we bought significantly more NPL and RPL since Q3 of two thousand and 21.
On Page five our loan portfolio purchased RPL represent approximately 89% of our loan portfolio. With June thirtye they represented 96% of our loan portfolio a year ago.
We primarily purchased RPL that have made less than seven consecutive payments and NPL that have certain loan level in underlying property specifications that our analytics suggest lead to positive payment migration and prepayment on average.
On Page 6, reperforming loans. We continue to buy and own lower LTV. Loans are over all RPL purchase price is approximately 43% of the current property value and 89% of UPB.
We've always been focused on loans with lower LTVs, with certain threshold levels of absolute dollars of equity and in target geographic locations, and the current times of rising rates and the potential for additional market disruptions, this becomes even more important for RPL and NPL.
On Page seven.
With NPL and Q3 and Q4 of 2021, we significantly increased our NPL purchases. Npl on average have traditionally had shorter duration than RPL.
For NPL on our balance sheet. Our overall purchase rises 89% of UPB, 84% of total owing balance, including a rearridge and 50% of current property value.
As a result of the low loan to value and higher absolute dollars of equity on average for our NPL portfolio. We have seen that rising home prices have significantly accelerated prepayment on NPL, as borrowers can turn significant equity into cash.
Under CECL. This can lead to greater interest income from the acceleration of unallocated credit reserve loan purchase discount.
As mentioned earlier, we have also seen a significant increase in NPL reperformance. This increases total cash flow, but extends duration and lower's ongoing yield.
Our historical data suggests that one of our loans makes seven consecutive payments. There's a 92% chance of 12 consecutive payments.
On Page 8, our target markets. California continues to represent the largest segment of our loan portfolio, although it is smaller percentage than it was in 2021 due to rapid prepayment. In 2021, California was nearly 30% of our portfolio and is now approximately twenty-four point a percent.
However California has been nearly 40% of all prepayments.
Our California mortgage loans are primarily in Los Angeles or ange in San Diego counties.
Florida, prepayments have also increased significantly. We purchased an NPL portfolio of approximately 85 million in late Q3 of 2021, in which all of the loans are secured by properties in Miami dayade, Broward and pondm Beach counties in Florida.
Since servicing transfer to our affiliated service, or Gregory funding in Q4 of' 21. these loans have far outperformed expectations in prepayment from property sales But even more sely monthly repayment reperformance.
We continue to see strong demand for homes in our target markets, although home price appreciation has slowed from previous record increases.
On Page nine at June thirtieth, approximately least venty-four per of our loan portfolio made at Le 12 of thelast 12 payments, including approximately 67% of our portlio that made at least 24 of the last 24. more than 80% have now made at Le seven consecutive payments.
This comparison approximately 13% at the time of purchase. As I mentioned earlier, historically we have seen that once alone reaches seven consecutivepay, ments typically gets toue 12 consecutivepayments, more than 92% of the time.
Subsequent events on Page 10. subsequent to June thirtieth, we repurchased an additional five million base amount of our preferred stocketed discount, along with associated warrants input rates. The expected annual savings from this repurchased approximately nine thousand per year or four cents per share.
We purchased approximately five point seven million UPP of RPL and four transactions, the purchase price for the loans as approximately 97% of up and approximately 40% of the property value.
We have agreed to purchase, subject to due diligence, five point seven million up of RPL and eight transactions and four thousand UPB of NPL in one transaction. The purchase price for the RPL is 86% of UPB and 60% of the underlying property value. The purchase price for the NPL is seventy-one point a half percent of PB and 70% of property value.
On August fourth, we declared a cash dividend to 27 cents per shares, to be paid on August thirty-first to holders of record of August 15. our tax income was higher than this and we still have a remaining distribution requirement for 2021 that we must determine by September 2020 -two.
Gi involved the markets and the current economic environment, though we want to be patient.
Average loan yields, excluding the accelerated income from CECL-related credit reserve, declined.
For debt securities and beneficial interests. Remember that yield is net of servicing fees and yield on loans as gross of the servicing fees, debt securities and beneficial interest is how our interest in our JVs are presented under GAAP. As our JVs increase, as they did in two million and twent-one and 2022- relative to loans, the GAAP reporting shows lower average asset yields by the amount of the servicing fees.
Biggest piece of low yield decline in Q2 however, comes from significant increase in monthly reperformance of delinquate loans, far in excess of expectation.
This has happened both in loans consolidate on our balance sheet sheet and, even more so, for loans held and joint ventures that show with securities and beneficial interest on balance sheet.
Since we purchased loans to the discount. Reperformance of delinquent loans materially in excess of expectations, extends duration, reduces yield.
The extreme home price appreciation in our target markets. Both accelerated prepayment from home sales on delinquent loans which released reserves under CECL led to- and led to material reperformance in excess of expectations, which reduces ongoing yield for loans purchased a discount.
This reperformance increases total cash flow, but reduces yield.
Leverage continues to be low, especially for companies in our sector.
We ended Q2 with asset level debt of two point three X. an average asset level debt for the quarter was two point two X.
Our total average debt cost was a little higher in the second quarter versus Q1. This is primarily the result of rising base rates for repurchase agreement funding.
Fixed rate debt is currently 60% of our total debt and we expect fixed rate debt to increase as a percent of our total debt.
On Page 12. our total repurchase agreement related Deb at June thirtity was approximately 509 million, of which 219 million was nonmarked-to-market nonrecourse mortgage loan financing and 217 million was financing on Class 8: one senior bonds in our joint ventures.
At June 30, we had approximately 139 million face of unencumbered mezanine bonds, as well as 126 million up of unencumbered beneficial interest certificates in joint ventures and 29 million U B of unencumbered mortgage loans.
Combined with five million of cash at June thirtieth, we have significant resources for being on offense and defense and to continue our stock and liability repurchases in today's volatile environment.
And with that I'm happy to take any questions that anybody might have about the company Q2 going forward markets.
At this time. I would like to remind everyone, in order to ask a question, simply press star than the number one on your telephone key pad. We'll pause for a moment to compbably que a roster.
And the first questions from the line of Eric haggen with a pttiig. Please go ahead.
Thank good ction on I as as well you know, I think I PE you a question. Sure effects. You guys mentioned buying back your debt. I'm curious how you think about that relatative buying back stock. I'm also wondering if you never thought about repurchasing your securitized debt, which trades in the market. I imagine that you find the senior part of the RPL capital structure is pretty cheap right now, So ijust want to hearhow how you think about that thanks.
Sure So the answer is yes, all the above. We've already repurchased another five million of the preferred and warrants. We have authorization to repurchase more common share, S depending on price level. We have also we're in negotiations to repurchase additional preferred and the associated warrants.
And we do agree that the Class a one unrated notes that are out there from some of our previous deals, where that market and credit spreads have gone, doesn't make economic sense. Relative to where loan prices are loan prices, credit spreads have not widened nearly as much as unrated seniors on the exact same loans.
So one thing we have looked at, knowing that we will call some of our securitizations over the next year or so, is perhaps buying the seniors at a discount in the open market. We've never sold any MS, So we own all the Med still. But seniors, given where they trade at discounts and given that we know we might call deals, we we are looking at buying those in the open market to tent they become available.
That's interesting. It seems like it could be really attractive. I appreciate the Thank for the comments certain.
Good today's questions from line of Kevin Barker with Piper Sandler. Please go ahead.
Thank you, me LAD So.
I can you as sorry missed the the very beginning of the call, but you the impact of you know the getting rid of the warrants and some of the debt. Could you help us understand the quantify?
What you're going to see on a go-forward basis from this transaction. How to think about it from there.
Sure So for retiring the 25 million that we retired in.
In Q2.
That will save us approximately one point one two five million per quarter.
Or about four and a half million per year.
And then we acquired another five million.
In last week.
And that will save us additional about nine thousand a year. So the two together will save us about five point four million.
Beginning in Q3.
five point four million annually, beginning in Q3. We are in negotiations to buy additional amounts as well.
Okay and we've been using cash on hand to do it thus far. We have thought about using yet to acquire, to acquire it and retire it, because it's significantly cheaper And while the earnings wouldn't be 100%, they'd still be significant.
ok great, and then.
You've.
You have quite a bit of tax encover to less.
four quarters put in a position that you might have to make a decision here.
Given your dividend is.
Was it roughly over 60 cents below the taxable income. What are your plans on capital deployment given that situation and on taxable income versus dividends paid?
Sure sodividends we make it. We have to make adecision regarding 2021- 2022. We still have significantly more time for those decisions. That being said, we increase the dividend modestly in this quarter. We know that there'll be additional dividends will likely have to distribute, either through increase in the quarterly dividend or through a combination of increase of quarterly dividend and the specialthe other question is: given the opportunity set that a that some ruption in markets might provide, we may be willing to pay a little bit of corporate tax to then put that money to work in very high returns, should that, should the disruption occur. So that's the reason why our Board has taken the position as let's just kind of see how things play out as we closer to elections, to see whether we should distribute all of its or some of it and pay a little bit of tax and keep some of it effectively as retained earnings to put to work in a disruptive market, should that occur prior to elections.
When Ed to mean those you looking at assets in particular or you see it- this whole companies- as a potential. We see both. I wish I could fully predict the teacher, but to the extent that this disruption, we would look at assets we be, we would look at being a liquidity provider. We would look at in our joint venture structures, assets and being a liquidity provider to third parties and we'd also look at full acquisitions. We think that there potentially could be some opportunities in that market.
ok great thanks the question lar, absolutely.
Your next question. The FR line of mthical light would be reley. Please go ahead.
Oh Larry you just to follow on those comments, I mean.
Why haven't loan spreads widened? And then are you expecting the negative HP A. do you think we could have been?
credelinquencies, So just can just go a little bit there over the outlook.
Sure So the only place with loans spints- have widened versus say, a year ago, but they haven't widened nearly as much as as credit spread. Credit spreads and loans haven't widened nearly as much as credit spreads in bonds that people would issue to finance those loans's. It's kind of a strange phenomenon. Some of it has to do with capital ratios at banks and insurance companies. Because of markdowns on existing security asse securities assets, we've seen insurance companies become aggressive buyers in certain portions of the market, particularly in some of the nonq ance spaces. We've also seen.
And we've seen, for example in the unrated world, a lot of the buyers were open end bond funds that have had redemptions So they don't necessarily have material money to put to work versus managing liquidity. So, for lack of better term, the what I'll call the senior securitization market is a little bit structurally broken as opposed to. There's more risk in the securitieswe've seen some where Fannie maye assats and loans and we've seen some larger loan sales where the loans traded 75 or 100 basis point tighter yield than where a 75% seni or bond backed by the same loans would trade.
Which is not something that you see very often.
So ilarry to what would is look you think this will normalize on spin? GI, ment? Obviously you guys are position to buy loans cheap and do you think things you're going to keep out in any of you and housing and just just delquencies- are you starting to see any pick up on?
So we're not seeing more delinquency in our portfolio. But our portfolio was not like an index fund. Our portfolio- the significant absolute dollars of equity which we've seen- is far more important for delinquency than LTV. So our portfolio: we've seen the opposite. We've seen less delinquency because bor.ro-wers. The HPA of the last 18 months has given borrowers so much more dollars of equity that they're significantly more protective and determined than they were maybe a year and a half ago.
Or two years ago and, as you can tell from, the effect is had on our loan yields by extending duration. It's significantly more than we ever would have expected these loans would reperform.
The the. We see it. We're starting to see appraisal, the new origination, being pushed a little bit. We're starting to see some of the things on the fringe.
That I think, will cause some, maybe some, cheapening of loans. But the real issue is that the securitization system was a little bit broken, particularly in the unrated world now. one of the reasons for us.
We've been fortunate that our loans have done so well and our servicer has such a good kind of performance reputation that DBRS now allows us to do a rated securitizations up the 40% of the loans being more than 60 days delinquent or nonperforming and that really helps us kind of kind of avoid the unrated senior issuance market.
Oh that's interesting.
Yeah.
Okay well that things are said, we Gu a well position and when you know things do, do start to come out and trip to supply. And there I want to ask about you fing up to me. Your leverages belows he, you go higher. But you can also free up some cash from via the guy. Is there an update on you know a N PO O where?
Yeah guy is actually running a couple of different pathways. They are working on a IPO filing, although the markets for IPO aren't aren't significantly good right now. But it create optionality by basically getting it through the process so that sometime in the fall or Q1 we can just decide. It's also looking at an additional private round in conjunction with some other things. It's also been approached by three specks who are interested in rolling it in. So we're having kind of all three parallel paths on guya and I don't know which one is the most likely, but we're running all three paths in parallel.
And you have the option of selling. I mean, at somepoint even you could. Yeah, if if were a public entity, we would. We would probably have a 90 day walkup. But public ity, we could create liquidity, we also could. Just, it would also be marginable if it was a public entity as well.
Great the last question. It its for the operating E PS. There's a lot of noise going to.
And and and I think of that's is before. But we look at taxable and operating and mean at some point they have to converge. What do you encourage investors to? To focus on UH.
The tax is kind of the closest.
Reference we know to kind of follow the cash.
Right the gap has all kinds of other kind of gap required. You know, for example, Cecil. It's clear from kind of the way we've had to use it and implement it. Cecil was not designed for people who buy loans at discounts. It was designed for banks who were iginate loans at part, and so Cecil creates noise quarterly for us, but it doesn't necessarily, we don't necessarily learn anything from it. The we follow the cash is really what we learn from and followed the delinquency.
And we've seen our loans significantly outperform on a monthly basis.
For our abbook, our expectations. Some of that has been driven by afew- very high levels at HPA in our target markets- over the last 18 months.
And we. I know you're going to find it hard to believe, but we don't have a loan purchase model that assumes 25% annual appreciation in properties.
So.
I Yeah, Yeah So. So as a result we we, you know the, the amount of reperformance of of loans. You know W typically we look at nonperforming loans. They kind of break into three patterns. They either sell and pay off and put a lot of cash in the bank- they reperform, or they do something in between.
We've seen in our target markets with the HPA, we don't have any of the something in between. It's only sell and put a lot of cash in the bank or just pay every month like clockare.
Mixed total sense.
Yeah Thank's for I appreciate it.
And at this time there are no further questions. I will turn the call back to Larry for any closing remarks.
Thank you everyone for joining our great hax second quarter 2022 earnings call. We look forward to talking to you in the future and keeping our head down and just keep doing what we do. We appreciate your confidence us and thanks for joining it.
Thank you all for joining today's call. You may now disconnect.