Q3 2022 Lument Finance Trust Inc Earnings Call
10-Q, and 10-K and in particular, the risk factors section of our Form 10-K.
It is not possible possible to predict or identify all such risks.
Listeners are cautioned not to place undue reliance on these forward looking statements, which speak only as of the date hereof and the company undertakes no obligation to update any of these forward looking statements.
More of certain non-GAAP financial measures will be discussed on this conference call presentation of this information is not intended to be considered in isolation, nor as a substitute to the financial information presented in accordance with GAAP.
Reconciliations of these non-GAAP measures to the most comparable measures prepared in accordance with GAAP can be accessed through our filings with the SEC at Www SEC Gov.
I will now turn the call over to James Flynn. Please go ahead.
Thank you Charlie good morning, everyone and welcome to the linear Finance Trust earnings call for the third quarter of 2022.
Thank you for joining.
I'd like to begin by addressing the current economic environment.
Multifamily market has experienced a period of transition over the last few quarters as lenders and investors react to inflationary pressures geopolitical risk cap.
Capital markets volatility and higher interest rates.
Theory investment activity in the market has declined as the buyers and sellers worked towards reassessing financing costs and finding a new normal for levels of asset valuations and financing structures.
Despite recessionary indicators, increasing the strong employment market remains supportive of continued rent growth for multifamily assets.
Though at a slower pace than we've seen over the previous two years.
That being said, we continue to expect rents to outpace expenses and believe the credit quality of the middle market workforce housing asset class remains extremely attractive.
While capital markets and rates remain challenging.
Credit profile.
The middle market housing market continues to be supported by favorable supply demand.
Dynamics demographics, and long term rent growth trends.
And in our view remaining an attractive investment opportunity for shareholders over the long term.
Our multifamily investment portfolio has performed well and while we did book an unrealized loss reserve against our Seoul office loan this quarter, which we'll discuss in more detail later during the call the remainder of our book continues.
To demonstrate strong performance.
More specifically within the bridge lending market lending standards have tightened and pricing on new loans has increased industry wide over the last few quarters.
Our manager and being more selective with regards to credit and the average asset is appraised LTV on new loans being offered by our manager has to Creek.
Our managers currently quoting new transactions that spreads well above 4%, whereas a year ago, we were seeing loans priced with spreads in the low to mid threes or lower.
We would expect that average that the average spread on <unk> investment portfolio will continue to increase as the portfolio grows.
With this backdrop the broader capital markets have remained volatile and dislocated.
And the CRE CLO market remain extremely challenging in the market for new issuance is limited at this time.
The last new issue CRE CLO to price in the market was in early October with AAA spreads widening to swap to silver plus $2 75.
As far as the AAA spread of LIBOR, plus 117, Enel <unk> existing CLO.
Liquidity for the lower rated Triple B bonds remains extremely limited.
Effectively reducing issuer advance rates.
In order to continue our portfolio growth on a leverage basis and fully deploy the capital we raised in Q1.
Actively focused on executing our loan financing track transaction to leverage newly originated loans from a manager.
We have historically utilized the CRE CLO market to finance, our investments and continue to believe that long term that market provides an attractive financing source due to favorable leverage as well as nonrecourse non mark to market features.
However, due to the dislocation just discussed we have elected to continue to delay of our next series CLO financing effort. We are prepared to execute a CLO quickly to the extent market conditions improve.
We are also actively exploring alternative financing options, including known unknown financing.
In Aerostructures and the Freddie K program.
Overall, it is clear that the cost of liabilities has increased and the market spreads on assets are also increasing.
We believe it likely that newly originated assets going forward will have wider spreads and existing assets in line with the increases in cost of financing.
We have also seen an increase in short term interest rates, which over time will be a benefit to LLC.
With regards to our dividend.
Previously declared a quarterly common dividend of <unk> <unk> per share.
For the first three quarters of 2022.
This level reflects the resetting of our dividend taking into account, our Q1 capital raise and increase share count.
In addition, this dividend reflected the anticipated drag on net income to common shareholders as we work to deploy the newly raised capital on a leverage basis.
We would expect our earnings to continue to be pressured in the current environment until such time as the capital markets normalize and we were able to execute on attractive loan financing transactions.
In the meantime, we continue to focus on deploying our capital into commercial real estate debt investments with a focus on multifamily assets are.
Our manager has one of the nation's largest capital providers in the multifamily and seniors housing space executing over $17 billion until the transaction volume last year.
Servicing a $50 billion portfolio and employing over 600 employees with 30 offices nationwide.
We believe that scale and expertise of this broad platform will continue to benefit the investors developed T.
With that I'd like to turn the call over to Jim Briggs, who will provide details on our financial results Jim.
Thank you Jim and good morning, everyone on Tuesday evening, we filed our quarterly report on Form 10-Q, and provided a supplemental investor presentation on our website, which we will be referencing during our remarks supplemental investor presentation has been uploaded to the webcast as well for your reference.
Pages four through eight of the presentation, you will find key updates and an earnings summary for the quarter.
The third quarter of 2022, we reported net income to common stockholders of approximately $315000.
Or <unk> <unk> per share.
We also reported distributable earnings of approximately $1 $7 million or <unk> <unk> per share of common stock.
Compares to distributable earnings of $2 2 million or <unk> <unk> per share in the prior quarter.
There are a few items I'd like to highlight with regards to our Q3 P&L.
Beginning with net interest income our Q3 net interest income was $5 5 million compared to $6 4 million in Q2 2022.
Excluding the impact of exit and prepayment fees on loan payoffs, which were included in net interest income in our P&L. Our interest income increased during the quarter by approximately $3 3 million from $11 2 million in Q2 to $14 5 million in Q3.
CLO interest expense increased by approximately approximately $3 million.
From $4 7 million to $7 7 million, increasing net interest income by approximately 240000.
This increase was driven by rising LIBOR and so for rates, which are a tailwind for us.
It did however experience a reduced level of loan payoffs during the quarter, which caused the reduction in exit fees and prepayment penalties earned relative to Q2.
During Q3, we experienced a $35 million of loan pay offs, which generated 291000 of exit fees. This represents a 14% annual pay off rate, which is a significant decrease relative to historical norms.
In the prior quarter, we experienced $81 million of payoffs, which generated 691000 of exit fees and 775000 of prepayment penalties.
For context, the total <unk> of our payoffs during calendar year, 2021 was $528 million or an average of $132 million per quarter. We.
We expect to continue to experience.
We expect to continue experiencing reduced payoffs feeds over the coming quarters due to persistent interest rate volatility and economic uncertainty.
Primary difference between our distributable and reported net income during Q3 was $1 5 million unrealized provision for loan loss.
This quarterly provision is related to a single $10 $3 million loan is collateralized by an office property in Chicago.
This loan was originated in July of 2018, and his Lfg's only office property investment.
As of August eight.
This year alone was placed into maturity default, we entered into a forbearance agreement with the borrower extending the maturity date to December of this year to allow the borrower more time to market and sell the property.
Based on our view of the asset and current Chicago office market conditions, an additional reserve of $1 5 million was recorded for this impaired loan.
The quarter ended September 30th.
<unk> in a total allowance for loan losses on our balance sheet of $1 9 million as of September 30th.
Dan solely related to the Chicago office loan.
Hello is on non accrual status as a result of the impaired loan classification. However, the bar continues to remain current on debt service payments.
The office market in general has been negative negatively impacted due to COVID-19 I'm in Chicago office market in particular has been challenged.
The office property collateralized, our loan has experienced recent and near term vacancies and the current Chicago office market is demonstrably soft.
All of which negatively impacted valuations of the collateral.
The loss provision that we've taken this quarter reflects all of these factors.
We're working closely with BARDA to facilitate a potential asset sale during the fourth quarter and a repayment of our loan.
The borrowers unable to sell the asset by the extended December maturity date, we expect to take ownership few deed in lieu with the goal of maximizing value for L. S T.
Hello, and was purchased by <unk> out of CLO on August 2nd and is currently being held on <unk> balance sheet Unlevered.
As Jim mentioned in his opening remarks, the remainder of our loan portfolio continues to demonstrate strong performance in other than the provisions taken this quarter I mean office alone we have not taken any other loss provisions.
Given the unrealized nature of the loss provision taken on the Chicago office alone that provision is not reflected in our distributable earnings.
Moving on to expenses, our total expenses were $2 7 million during Q3, which is largely in line with prior quarters total of $2 8 million.
As of September 30, the Companys total book equity was approximately $245 million total common book value was approximately $185 million or $3 55 per share.
As discussed in prior quarters, I would like to remind everyone that as a smaller reporting company as defined by the SEC, we have not yet adopted ASC 2016 gas 13, commonly referred to as seasonal or current expected credit losses, which is a comprehensive GAAP amendment, how to recognize credit losses on financial instruments.
A smaller reporting company were scheduled to implement <unk> on January one of 2023 until then we continue to prepare our financial statements on an incurred loss model basis.
I will now turn the call over to Mike Larsen Who'll provide details on our portfolio composition and investment activity.
Thank you Jim.
Jim touched on the broader economic conditions, which has continued to be volatile and uncertain. These market dynamics have caused us to and our manager to take a more measured approach with regard to new originations.
<unk>, reducing leverage and increasing spread expectations for new investments.
Due to these conditions new acquisition activity in the market has slowed and the number of bridge opportunities that support current in place cost of financing has declined significantly.
That being said, we are continuing to evaluate new opportunities on a selective basis.
At the same time, we've seen payoffs speeds slow, reducing our capacity for new investments relative to previous quarters.
We anticipate this trend continuing into 2023, while interest rate increases moderate and the general real estate markets reset to the new higher interest rate environment.
During this quarter <unk> acquired five new investments from an affiliate of our manager with a total.
Principal balance of $47 million.
Or are these new investments were loans on multifamily properties and one was secured by a seniors housing asset.
I should note that we have seen increased opportunities in the seniors housing space and for key additions of this asset class to our portfolio in the near term.
As a reminder, our managers one of the largest providers of capital to the seniors housing and health care space, and therefore is well positioned to source and evaluate these opportunities.
The new loans that were acquired this period were indexed to 30 day terms sofa and had a weighted average spread of 397 basis points. This level represents a meaningful increase relative to the current portfolio weighted average spread of 335 basis points.
The new acquisitions had a weighted average index rate floor of 75 basis points, which also represents an increase relative to the portfolio average 426 basis points.
We experienced $35 million in loan payoffs during the quarter and at quarter end, our total loan portfolio outstanding principal balance was $1 <unk> 4 billion.
Average represents a 1% increase in portfolio size quarter over quarter, and a 30% increase relative to the third quarter of 2023.
The overall portfolio consists of 70 loans with an average loan size of $15 million, providing for a significant asset diversity.
Portfolio at quarter end was 95% multifamily a slight increase from 92% multifamily as of year end 2021.
Retail our exposure to retail and office continues to remain very low and.
And due to our managers strong focus in multifamily and seniors housing we continue to anticipate the majority of our new investment activity related to these asset classes.
Touching on interest rates, our investment return profile had strong positive correlation with rising interest rates. We have included a rate sensitivity table on page 11 of our supplemental earnings presentation and overall, we expect our key to meaningfully benefit from continued rise in short term interest rates as the fed battles inflationary pressures.
Yeah.
Since quarter end, the one month term so for rate has increased from 3.04% to three 8%.
Today, and the forward curve implies so for reaching over 5% by the spring.
Holding all else equal every 100 basis point increase in software is expected to increase our annual P&L by $2 1 million or <unk> <unk> per share.
Do anticipate a positive P&L impact from these factors in the coming quarters.
And then finally on the financing side as of 930, our loan portfolio continues to be financed with one series CLO securitization has a weighted average spread of 143 basis points over one month, LIBOR and an advance rate of $83 375%.
Hello has a reinvestment period running through December of 2023 that allows for principal proceeds from repayments.
The assets to be reinvested in qualifying mortgage assets.
We do not currently utilize repo or warehouse facility financing <unk> and therefore, not subject to margin calls on any of our assets from repo or warehouse lenders.
With that I'll pass the call back to Jim.
Thank you Mike.
We look forward to updating you all on continued progress during this volatile market.
With that I would like to ask the operator to open.
Follow up to questions.
Thank you if you would like to signal with questions. Please press star one on your Touchtone telephone. If you are joining us today using a speaker phone. Please make sure. Your mute function is turned off to allow your signal to reach our equipment again that is star one if you would like to signal with questions.
And our first question will come from Crispin Love with Piper Sandler.
Thanks, Good morning.
During the quarter, the asset sensitivity and shine through as you might expect just given that 100% floating rate portfolio and that exposure that you point out on slide 11 is the key driver there.
Prepay fees in the quarter, given the decrease or is there anything else at play.
There is a lag in how assets might re priced relative to the liabilities.
So.
Most of our.
Our loans are floating as you pointed out most.
Have caps in place are all caps in place of varying lengths of time, that's on the borrower side on the interest rate side, so existing assets.
The only impact.
The impact is with the rate change right. The spreads are going to remain constant.
Were not disposing of assets off of our balance sheet, So theres not.
We're holding those maturity so there isn't a.
Any sort of.
Pricing differential that occurs with the existing assets. So it really is the run off.
As loans pay off which I think we mentioned is.
Has it been slower than we anticipated it being.
Slower in the coming quarters than what we've seen over the past couple of years.
But we do we do see.
And the impact of of that.
That.
Slowdown in payoffs reduces exit fees as these.
Those are all typically structured with exit fees. So there is.
Some some <unk>.
Negative from an earnings standpoint in that we're not getting exit fees as quickly as we have in the past.
But from a performance or or other.
Impacted it's relatively.
Relatively muted.
And I should point out as we.
There is capital that is currently.
Very imminently going to be deployed into new assets, but we've had.
Some payoffs that werent.
Immediately.
Reinvested. So there was some drag from that excess capital.
Okay, great. Thanks, Tom Thanks, Tim.
And then Jim you mentioned.
The exit fees in the quarter I think I missed the exact number was somewhere between 300 and 400000 is that right.
Okay.
Yes.
Fees for the quarter Crisp and were 291030 $5 million of pay offs.
Okay, Okay perfect.
And then just one last question for me just looking at your 10-Q, there was a decent move in risk ratings from the grade to grade three credit bucket can you. Please speak to some of the key drivers there.
And then just more broadly how do you view the credit quality in your book.
We're entering a recessionary environment it seems like it.
Pretty good other than that that one loan to discuss but just curious on that move and credit buckets.
Yes, I mean look like.
We discussed I mean on the on the multifamily side.
We feel pretty good about the portfolio.
As a whole.
The kind of I'll call it the broad reach.
Our risk rating change is really reflective of the market.
And while the business plans have largely been.
Largely been.
Consistent with what sponsors thought they could achieve on the on the rental growth side.
We see inflationary pressures on the expense side and just as he put out general.
Uncertainty.
Some recessionary trends overall.
So we think that just just from a if you were to kind of just put a broad risk rating on the market that that has changed if you. If you think about the asset class in our portfolio, we feel comfortable in the performance but.
With this increase in rates and.
Inflation pressures among all the other things that we've talked about.
We just feel that.
From a from a prudent standpoint and looking at it.
There's there's greater risk today than there was three quarters ago or four quarters ago and Thats really.
Reflective in the ratings.
What we haven't seen in.
The capital markets and overall and I think until we do we will we'll have some open questions is really the decrease in volatility right. So each each week each month, we've been waiting for not so much our rates have to go down or spreads have to go down or the SEC.
That could be a positive.
It's the volatility.
<unk> and <unk>.
Cause of that.
Really the primary driver of of those ratings.
With higher rates.
Exits on on on loans that are.
Tighter than they were with lower rates.
Part of it is really.
Just the math function, but there is.
Relatively.
Good sponsors and good good capital ahead of.
Good good equity in our portfolio and we think it is performing well on a relative basis, certainly to other asset classes and to our peers.
Thank you Timna that all makes sense to me and I appreciate you taking my questions.
Thank you Christian.
And our next question will come from Christopher Nolan.
With Ladenburg Thalmann.
And again Christopher Nolan Your line is open. Please go ahead.
Can you hear me now.
Thank you, yes, hi, Chris Hi for.
For the CLO financing is.
Is there any sort of reset or changes in the advance rates that would happen over time or is it sort of stable once it's set.
Yes. There is no there is no change to two advanced rates of the existing CLO Theres no change there is a.
Eventually after the reinvestment period as loans pay off you have your your.
Typical structure of.
Sure.
Buying down senior bonds, but thats, usually when those deals get called.
Thanks.
Further into the future, but no change during the day.
Okay.
The prospect of.
It seems like a slower investment environment, you guys are being much more cautious any possibility of doing a share buyback.
I think we.
We've talked about this in the past I mean, the board is in the us.
US as managers I've talked about.
A number of different ways that we can.
<unk> continued to support the shareholders and the stock price through.
Trying to increase the.
Creating value relative to book.
That's certainly one of them.
But.
Also one of the options, but I'll also point out one of the challenges that we face and what we've really been focused on is actually increasing our float and increasing.
The shareholder base.
While that has.
Positive impacts on.
As you describe it also has other impacts and so.
It's something that certainly we've talked about but not anything that.
We've made the decision or expecting.
At anytime in the near future.
Okay. That's it for me thank you.
And our next question will come from Jason Stewart with Jones trading.
Hey, guys. This is Matthew on for Jason This morning.
Are you guys talking at all about preferred shares share buyback.
Yeah.
Oh.
We have not looked at the <unk>.
Currently I think we've said in the.
If you look at the where that rates are today.
It's sub 8%.
Cost of capital so it would be challenging to replace it with something cheaper today.
I think the prior question.
The comment is probably.
If you're just looking at that.
The cost of each.
And no other factors I think.
Common.
It would be more bang for your Buck in the preferred.
Gotcha, and then could you talk a little bit more about the lag in pricing of loans versus liabilities.
Yes, I mean look liabilities change chains.
The spreads are set but the rates change yes.
Immediately right. So every time Theres a theres a.
The change in rates that impact both the asset side and.
And the liability side.
But on the on the spread side.
The portfolio is.
Is seasoned and so spreads spreads on loans have generally moved a bit slower.
Over the past really really regular way, but also.
In this environment so.
In order for us to replace the whole portfolio at current spreads you need the whole portfolio to roll off if it's really just a matter of.
Rates change immediately in the portfolio you can only change as you as you have repayments.
And given the.
Given the anticipated.
Slower repayment rate and the and.
In the coming quarters.
That that will further exam.
Exacerbate that transition.
Gotcha, and then could you provide a view on where you think the terminal fed funds rate tops out.
Okay.
I think I think if we have this call added.
Weaker month over the past three or four I'd, probably have a different answer.
But.
The signs of somewhere around 5%.
In the short term, meaning next year seems to be.
Seems to be the current goal.
The expectation is that it seems logical to me and Thats kind of what we're assuming.
Weather creeps down a little bit from there I.
I think it depends on a lot of other factors.
Including.
The general state of the economy, what we see in the inflation numbers.
The.
Tightening thats gone on over the past.
A couple of quarters actually.
It makes us what makes its way all the way into the numbers I think will have an impact on on where that comp where that end.
But I do I do think we're going to hit five.
But I think it's very possible that it comes back a little bit into the fours.
And then probably stays around there for.
At least the next.
Four or five six quarters.
Again, I think it's heavily dependent on the data that comes in around inflation.
And some of the other economic indicators.
And mostly.
The.
<unk> and the predictions have been wrong.
And what those numbers are going to show in the past.
Several reading so.
I think I think we need to see I think we need to see the numbers come in somewhere where they were expected.
Over a couple of periods and then we can feel comfortable that.
The projections, even only a few quarters out on rates are.
Are more accurate than they have done over the last few quarters.
Gotcha, Thanks for taking my questions.
And our next question will come from Stephen laws with Raymond James.
Again Stephen laws. Your line is open. Please go ahead with your questions.
Again Stephen laws. Your line is open. Please proceed with your questions.
And once again, if you would like to signal with questions. Please press star one on your Touchtone telephone.
Star One if you would like to signal with questions and our next question will come from Matthew Howlett with B Riley.
Thanks, Good morning, everybody.
So a two part question first on outlook for dividend coverage with core distributable EPS from do you think you still can achieve that.
Part and when you look at that.
The financing alternatives that you outlined the three.
In a bucket and say what can we sort of look at what kind of incremental portfolio growth. You think you could achieve if you're successful roe's.
Those things.
Sure on the on the ladder.
Yes.
It certainly is a question of leverage trade and so the first thing is our transactions getting going to get done and then what is the leverage point I think the leverage point will be.
Perhaps a bit lower than than what we've seen in the past you mentioned that a triple BS have been really pressured.
Hard to it's hard to it's hard to say whether that's a.
I wouldn't take that as a long term.
Permanent.
Financing change in the market, but right now I would expect.
Leverage to be not in the low eighteens, but probably somewhere in the $70. If you were to get this transaction done.
<unk>.
But that would that could still if we levered call it $100 million of capital Youre still that's.
Or call it 4% to 450 of assets at the lower end.
I think the returns on those.
Again, it's there is a reason why we've waited we think we think that.
Using our having unlevered loans and waiting for some some stability in the capital markets has made more sense. So we would still look to look to see four look to execute a transaction with kind of a.
Double digit.
Double digit gross return.
And.
Yeah.
In terms of which which of those all of those options including that.
We do have.
You know reasonable confidence that the CLO market returns at some point in the future of the question is is that in.
Q1, Q2, Q3, we think it's an attractive financing sources generally had.
Good support from the Investor base I think.
I don't think its being treated I don't think CLO as they're being treated in a different way than other securitized products I think it's just a general.
A general slowdown in the overall capital markets activity.
Yes.
So I hear you correctly, if he feel.
Average $100 million something like that.
At 10%.
Gross narrow.
Are you implying is something that the earnings accretion could be something like four five cents.
Quarter four from a transaction a successful transaction.
So I mean I think.
About four or five.
I think I think I think the way to look at it is we can lever that 100 million.
Yes.
If you do the math, we think yes, we can get a.
A.
Yes.
High single or double digit return on that $100 million.
Versus a.
Uh huh.
Unlevered return.
Alright.
8% and if we can get double digit you know you can run the math and say okay. That's what that's what the impact is for the shareholders.
I wanted to put out specific guidance on EPS, because obviously, that's dependent on us being able to execute a transaction, which.
While we believe we'll be able to execute a transaction the timing of witches.
[noise] unknown at this point.
But I think it's too levered to $3 to $400 million at a double digit yield.
Versus on Levered loans that.
So for a plus.
$350.
Got you know when we can do the math and it's compelling and that's why it shouldn't.
It goes to my next question I mean in terms of dividend coverage I mean.
So you get that with the sensitivity as you pointed out you could that you could pick up.
<unk>.
On the interest and then with the capital deployment I mean, it seems like there.
Your line of sight to dividend coverage, I mean thinking about the wrong way.
No I think I think look I think that where we're certainly looking and continuing to look at the earnings quality of earnings growth I think if you look at sulfur that has had a.
Set aside the impact on the asset at the asset level from an earnings level that has had a meaningful and will continue to have a meaningful impact.
On our bottom line in our in our ability to <unk> to cover our dividend as we move forward.
So that's a.
Yeah.
Again cleansing out any impact that has on the overall economic environment assuming that.
Things remain reasonably stable in multifamily that higher sulfur as it is.
Positive to the earnings and our ability to.
Cover our dividend from a core standpoint, and if we can.
We can execute a capital markets transaction that adds a little bit more I think thats, even better obviously.
And just last one from me senior housing.
In terms of yield.
Senior housing multifamily you still feel that that asset classes and sell it.
What you see in the multifamily that you've done in multifamily. Thank you for taking my questions.
Yeah sure I mean, the seniors housing again, we have.
We're one of the largest seniors housing lenders in the in the country.
At the manager level.
What we've seen is as high quality assets on the senior side.
They're looking to <unk> to truly transitioned to permanent financing typically in the are often in the FHA space.
And they have kind of long lead times and a little bit of a.
The longest story, but strong sponsors acquiring assets and building their portfolios.
And.
Attractive leverage points.
And frankly, good spreads I mean, we just we just see the opportunity there.
Yes.
Being pretty solid.
Obviously, we love multifamily.
But the market in terms of bridge lending and.
Growing rents in and.
The rehab nature of our kind of existing portfolio in the last couple of years is changing it's not it's not gone away. It's just in the midst of a change and there are fewer.
Attractive investments from our standpoint than there were a year ago and that's just.
In fact, and so as we've identified new assets, it's not that we're not looking at multifamily. We certainly are but I think that we have.
From our standpoint, we've seen more attractive investments on the seniors housing side than we've seen.
Over the past couple of years.
And we think that.
That provides the benefit to the LTE shareholders.
Thank you.
And at this time there are no further questions I'll turn the conference back over to you.
Okay, great. Thank you everyone for joining we look forward to speaking with you next quarter.
And.
Hopefully we will have.
You know some stability in the market. So we'll talk that thanks al.
Thank you.
And that does conclude today's conference. We do thank you for your participation have an excellent day.
[music].