Q3 2023 Eagle Materials Inc Earnings Call

Speaker 2: EPS growth of 26%, which reflects the strength of our businesses and our continued pricing opportunities in every segment.

Speaker 3: This EPS growth also reflects our exceptional cash flows in excess of our operating, growth, and improvement needs.

Speaker 4: This enables us to repurchase over $100 million in company shares this quarter, bringing our total cash returned to shareholders over the last three years to nearly a billion dollars.

Speaker 5: Operationally, we achieved the best safety performance in company history in terms of both recordable injury rate and lost time injury rate. This achievement is one that I'm most proud of as the result stems from years of focus from every employee at EGLE to ensure that we have a culture of protecting each other and much more.

Speaker 6: and caring for our fellow employees.

Speaker 7: We have consistently been well below industry averages on this metric, but this year we truly separated ourselves from our peers.

Speaker 8: I am proud of the Eagle team, the progress we have made, and want to personally thank everyone for their focus to achieve this result.

Speaker 9: We are also making progress across the board on our company's strategic priorities.

Speaker 10: One I would highlight today that I have also talked about in the past is an important environmental and operational priority for us.

Speaker 11: our rollout of Portland Limestone Cement or PLC.

Speaker 12: This priority enables us to make our scarce clinker go further in cement production and it reduces our carbon intensity.

Speaker 13: Adaptation and adoption are not immediate because there are operational investments and state DOT approvals needed.

Speaker 14: Two quarters ago, I shared that almost 15% of our semester sales were PLC.

Speaker 15: I'm happy to state that approximately 30% of our construction grade cement sold this quarter was PLC.

Speaker 16: This progress has given us confidence that we can make a full conversion to PLC for all construction grades by 2025.

Speaker 17: Very shortly, we'll be more formally updating our progress, goals, and long-term aspirations on this and other matters in our forthcoming updated Environmental and Social Disclosure

Speaker 18: Now let me turn to the coming year.

Speaker 19: I enter the year very optimistic about the prospects for EGLE materials.

Speaker 20: notwithstanding some of the obvious uncertainties about the calendar 2023 macro backdrop.

Speaker 21: Current business conditions are exceptional and provide a foundation for this year.

Speaker 22: I can say that our record results this quarter would have been even better if we did not see exceptionally wet weather, particularly in December , across the entire Heartland Network.

Speaker 23: As a reminder, wet weather does not imply demand destruction, it just means interruption and delay.

Speaker 24: Notwithstanding these temporary conditions, cement demand is strong, leaving us in a relatively sold out position with virtually no opportunity to build an inventory position.

Speaker 25: On the light side of business, our wallboard operations remain busy.

Speaker 26: Current home construction activity remains robust.

Speaker 27: The number of multi-family units under construction, for example, is at the highest level since 1973.

Speaker 28: Of course, the key question today on many of our minds is around what the uncertainty and housing activity ahead will mean.

Speaker 29: Let me offer the following perspectives on these uncertainties.

Speaker 30: First, as I have stated before, geography matters. Our enviable U.S. Heartland system that we have built will serve us well in the coming years.

Speaker 31: Specifically for cement, it is hard to see a scenario where U.S. cement demand would decline for us over the midterm.

Speaker 32: This stems from the fact that state and federal allocations to fund infrastructure are well underway and give better visibility into the next three year demand picture.

There are a few cement substitutes existing today or on the horizon that would fundamentally change this picture over this time frame.

US cement manufacturers will work to make their precious clinker go further and to be put to the highest and best use.

These efforts will not add up to enough additional supply to alter the supply demand fundamentals in front of us in the mid-term.

As the US cement supply, I see very little that would materially change the supply tension in relation to demand for the US heartland.

Barriers to capacity addition are very high for the US cement industry, both in terms of permitting and construction costs.

Even if this were not the case...

No new builds or plant expansions could change this picture over the midterm timeframe, even if the project can commence tomorrow.

High cost imports will increasingly be required to meet US demand as they have in the past.

Again, for a well-positioned heartland producer, imports to one degree or another will support pricing in the U.S. heartland as transportation is very expensive and is expected to remain so.

Now let's turn the discussion to the uncertainties for the other half of our business, specifically Gibson Wallboard.

JPSM wall board is used in single and multi-family residential construction, repair and remodeling, and commercial construction, but most significant among these is residential construction.

Mortgage rates are key in modulating demand.

It is welcome to see that we are off the mortgage rate highs that we saw last quarter.

I think Fed Chairman Powell may have expressed the uncertainty right now the best when he said, and I quote, I don't think anyone knows whether we're going to have a recession or not and if we do whether it's going to be deep one or not.

Many economic scenarios imply a sizable and sustained gap between supply and demand for housing over the midterm, mainly driven by household growth and demolitions of older housing stock.

The outlook for repair and remodel demand seems especially well supported with record homeowner equity. The outlook for repair and remodel demand seems especially well supported with record

by the average age of the U.S. housing stock, and by the number of single-family homes entering their prime remodeling years.

With higher interest rates, homeowners may be inclined to stay put and improve their homes.

The bottom line for light side demand is that there is cause for optimism for the midterm and the long term as it relates to housing construction activity.

It is the near term where we see some obvious uncertainty around home buyer demand and home builder activity.

If we turn to the gypsum wallboard supply side, we see limits to manufacturing supply response broadly in the industry due to raw material supply limitations.

As we have emphasized before, we are insulated from the negative implications of this broad and important trend.

We are in fact beneficiaries of it.

as we own many decades of natural gypsum and our one plant that uses synthetic gypsum has a secure and very long term supply agreement.

There is another aspect of the industry supply situation that is important to understand and history is instructive here.

In 1998 through 2000 and in 2005 through 2006 timeframes, we saw increasing pricing for just some wallboard. We saw increasing pricing for just some wallboard.

In both cases, shortly thereafter, we saw significant price deflation.

In 2021 through 2022, we have again seen pricing progress and it raises the question among servers about what is ahead for wallboard pricing at this time.

In those prior periods, increasing demand was also met with significant industry capacity expansion which culminated just as the market demand began waning.

In the case of post 2005 and 2006, we in fact entered the longest and deepest housing construction recession in U.S. history as massive capacity was being added to take advantage of synthetic aluminum, which was believed at the time would be plentiful and cheap.

This assumption about synthetic gypsum proved to be wrong for several reasons.

One reason is the retirement coal fire power plant which is continuing.

And the other reason is the greater use among power plants of lower cost natural gas, which does not need to be scrubbed, hence does not produce a synthetic gypsum.

In recent years, we have not seen material capacity expansion. In fact, we have observed significant capacity constraints.

stemming from the ability to secure enough raw materials economically for a new plant or to expand the production of existing plants.

This is a key factor shaping the outlook that I think is unappreciated today.

I should also add that for our law board businesses, we will benefit from some tailwinds we have not seen for a while.

Notably, in the lower cost of natural gas and OCC inputs, both of which should provide some margin support.

Regardless of what 2023 brings, I have confidence that Eco Materials is positioned well to succeed.

I believe this for the following reasons.

First, we know how to navigate uncertainty.

We have proved this by being one of the very few in our space that has navigated the longest and deepest construction recession in U.S. history and remain profitable every year.

This is largely attributable to our low-cost producer positions.

which are highly sustainable and from a competitive standpoint are arguably widening.

Our pre-tax margins are in the vicinity of 25% for the enterprise and the gap with the competition is widening.

Second, our businesses are strong cash flow generators.

Our strategic decision-making is heavily focused on making the best use of this cash.

The third reason for my confidence, we are good capital allocators.

We are highly committed to growth but believe in growth in the core that meets our strategic and financial return criteria.

We have tripled the size of the heavy side of our business in recent years, and as I commented earlier, returned nearly a billion dollars to shareholders through share repurchases in dividends over the last three years.

Our return on equity stands in the vicinity of 30% today and remains industry leading.

With that, let me turn it over to Craig for a financial review of our quarter.

Thank you Michael.

Third quarter revenue was a record $511 million, an increase of 10% from the prior year.

Excluding the acquired business in Northern Colorado, revenue was up 8%.

The increase reflects higher cement and wallboard sales prices as well as increased wallboard sales volume.

The strong fundamentals in both cement and wallboard contributed to record EPS during the quarter.

diluted earnings per share was $3.20, a 26% increase from the prior year.

This increase also reflects our reduced share count resulting from our share repurchase program.

Fully diluted shares were down 10% from the prior year and down nearly 30% from the peak in 2015.

Turning now to segment performance.

In our heavy materials sector, which includes our cement and concrete and aggregate segments,

Revenue increased 3%.

reflecting higher cement sales prices and revenue from the acquired business in northern Colorado.

partially offset by lower cement sales volume, resulting from typical weather conditions and much lower inventory levels during this quarter.

Submit prices increased 13% and sales volume were also down 13%.

Operating earnings declined 11%, reflecting lower sales volume and higher costs partially offset by higher cement prices.

Moving to the Light Materials sector on the next slide.

Revenue in our light materials sector increased 23 percent, driven by higher wallboard sales prices and sales volume.

Operating earnings in the sector increased 51% to $95 million.

as higher net sales prices helped offset higher input prices.

now our cash flow which remains strong.

And as Michael highlighted in his remarks, we continue to generate very strong cash flow and allocate capital in a disciplined way.

During the quarter operating cash flow improved 7% to $180 million.

capital spending decreased from $28 million to $18 million.

We also repurchased approximately 824,000 shares of our common stock for $103 million and paid our quarterly dividend.

returning a total of $113 million to shareholders during the quarter.

and we have no meaningful near-term debt maturities, providing us with substantial financial flexibility. Thank you for attending today's call. Drew will now move to the question and answer session. We will now begin the question and answer session. To ask a question, you may press star then 1 on your telephone keypad. If you're using a speakerphone, please pick up your handset before pressing the keys. If any time your question has been addressed and you'd like to withdraw your question, please press star then 2. At this time, we will pause momentarily.

to assemble our roster. The first question comes from Trey Grooms with Stevens.

The first question comes from Trey Grooms with Stevens. Please go ahead.

Craig, you mentioned lower inventory as well. Can you help us understand how much that really impacted the quarter, how much was weather? And then, will these lean inventory levels continue to impact your year-over-year volume going forward? Or with the lower volume in the quarter, were you able to build some inventory and maybe help mitigate that impact there as we move into the spring? Yeah, good question, Trey. In terms of this quarter's...

I think it's a pretty unique comparison both in terms of weather patterns and inventory levels of where we were a year ago versus this year. If you recall last winter, really it was late to start and allowed us to really sail through the entire month of December and then this year the weather pattern was a little different than December .

and we just didn't have near the inventory levels. So I think just a unique comparison year over year for this quarter, I think we get back more into our typical cadence where volume growth is tough to come by as we are and remain sold out, but I don't think you'll continue to see this.

type of variance in the sales volume as the inventory issue is kind of just a one-quarter thing.

Got it, okay. That's super helpful, thank you for that. And then, kind of still sticking with cement, so you guys have January price increases that have been in place now here in your cement markets, I guess for a few weeks now. Is there any early read on, maybe even directionally, on how those increases...

but with the supply demand dynamics, that's what we're expecting.

Okay, thanks a lot. I will pass it on. I appreciate taking the question.

The next question comes from Brent Dealman with DA Davidson. Please go ahead. The next question comes from

Hey, thanks. Good morning, Great Quarter as well. Hey, Craig, the earnings contribution from the joint venture was pretty strong, I guess, really snapped back despite the headwind on volume. Is there anything in particular to point to there?

Yeah, I think, look, as we said the last couple of quarters, we had some operational issues there that we believe we had turned the corner on. And, you know, with these businesses and the operations start to become more consistent, you see a turnaround pretty quick in terms of profitability. So that the operation has seemed to make that turn.

Okay, great. I guess back to Trey's question.

Realizing the supply-demand dynamics, I'm just curious, does this harsher winter

sort of impede your ability to realize these sort of new year price increases in cement in the short term or I mean how do you think about that?

No, you know, when we look at it, you know, we went into the winter timeframe and the fall timeframe, you know, at very low inventory levels. And so, you know, the weather really, as I said in my comments, just really delays the use of that product with it. So we don't see any impact.

you know, advantage cost structure, those sorts of things, all very valid. Have you seen any disruption, idling of competing assets within your footprint, those that, you know, just can't be as cost-competitive in this environment? Just wondering if you've seen any sort of...

you know changes and competitive dynamics around your your markets you play in and in the wallboard business

Now, when you look at how EGLE is structured, we're not dependent on any third parties for our raw materials supply. We're located in the Sunbelt regions. I love where we're located. I love... How to get experts and advice on how to build a model is very is a good idea. You can go there, scratch the video button.

how we control our own cost structure with it. We don't have any plant that is disadvantaged in any way to compete in these markets.

Okay, all right, thank you.

The next question comes from Anthony with CIDI. Please go ahead. You asked me to do something similar to this issue but you did not answer it.

Good morning.

On cement, it sounds like the demand outlook is pretty positive.

know, getting past the issues. And I'm just wondering, you know, understanding you don't always know where your cement is going. Are you starting to see IIJA spending flow through?

volumes and are you seeing that maybe replace, you know, weaker residential activity or just more...

for the end markets and that infrastructure impact.

Yeah, Anthony, good question. You know, look, the infrastructure spending is supported in a couple of different ways. There's no doubt state spending has taken the bulk of the financing effort over the last several years and that has continued to remain very robust in our markets.

To your point, you have federal spending that is on top of that going forward. It's hard to parse out exactly what's funding an individual project sometimes, but anecdotally, you are starting to hear that those monies are starting to impact planning and individual projects. That side of the business continues to do.

very, very well. I'll point out we also continue to see recovery and strength in the private nonresidential construction activity, especially in our markets around some of these very, very large projects that are just starting to get underway.

Okay, that's very helpful. And then just a quick one on the wallpaper board side. I mean, the decline in OCC late last year was pretty dramatic. And I'm just wondering what you thought maybe drove that and the sustainability of that. And if you can just kind of remind us.

maybe the margin benefit that you could accrue from there and what the sort of lag is there.

Yeah, so as you saw this quarter, the lag is pretty quick within the paper business itself. So that contributed to a large majority of the improvement in the profitability in the paper business. It then does take a quarter or two lag into the wallboard business. But what had been a headwind in the Hexagon market...

But I'm going to say, you know, calendar 22, fiscal 23, has certainly turned around from OCC prices, as we look forward into calendar 23 and our fiscal 24. A lot of international reasons why OCC prices go up and down relates to generation and overseas purchases.

You know, the spike that we saw a year ago probably wasn't sustainable, and these are a little bit more normal levels.

Okay, that's helpful. Turn it over.

The next question comes from Jerry Revich with Golden Fats. Please go ahead.

Yes, hi, good morning everyone.

I'm wondering if you could just talk about cement margins, you know, when your footprint was smaller, you know, 20 years ago, your folks were able to get that business up to 30% margins, and I'm wondering with the price increases that you have in place now, do you think you could approach that level of margin in this cycle? Yeah, Jerry, look, you know, I would say the acquisitions that we've made over the last decade or so and the improvements that we've continued to make in the network, whether that's from a distribution perspective or just operating efficiencies.

I think we actually have a lower cost system today than where we were in prior cycles, in many different ways, logistically and operationally.

And at the end of the day, that's what we can focus on and that's how we can improve margins.

Craig, maybe just to sharpen the pencil a little bit there, you spoke about the pricing actions you've taken. Can you talk about just the level of inflation that you're expecting in cement, just to put us into context for it, the level of margin expansion that's feasible in calendar 23?

Yeah, you know, as we've been saying the last couple of quarters, we do continue to see some inflation pressures still around cement energy prices and cement that's generally solid fuels and electricity. So we expect that to continue into fiscal 2024. Now the pricing that we have in place...

should more of an offset like we have done here in fiscal 23. But I think we'll continue to see some inflation around energy and cement.

And then around the volume cadence, to your point on whether your volumes were maybe five points lower sequentially than normal seasonality, as we look at the current run rate and running that through with normal seasonality March and June , it does look like the business.

Jerry, with one exception there, you know, we've talked a lot about this Portland cement product that we've begun producing and selling out of our facilities. I think you'll continue to see that ramp up over this coming year, which should give us some incremental volume out of the facility. So you're right, generally the growth in...

The next question comes from Stanley Elliott with Stifel. Please go ahead. Hey, good morning everybody. Thank you guys for taking the question. This past year a lot of cement markets were on allocation. Do you guys think we're going to see a similar sort of dynamic in calendar 23? And you know, you mentioned...

being sold out, but just curious kind of what you're seeing high level there.

Yeah, you know, it's a great question and you know how the supply and demand is currently right now, I think we're going to be going into this next year very similar to last year where we will be, you know, our key is to keep our plants running and get as much out of each plant as we can.

seeing in the M&A marketplace right now and maybe kind of the bias of pursuing some, you know, an acquisition versus buying back your shares here at these levels.

Yeah, so you know we look at everything as we say you know we are also very disciplined and and what we will buy How it fits into our network you can see during the past quarters where we have done Transactions where we've extended our distribution footprint You know it's right now. You know we would look at anything that comes

in the Denver market, those are things we look at continuously and we will continue to look at anything that comes to the market that makes sense for Eagle. It just has to meet our strategic criteria.

Perfect guys. Thank you very much and best of luck. The next question comes from Adam with Thompson Davis.

guys. Thank you very much and best of luck. The next question comes from Adam Dalmeyer with Thompson Davis. Please go ahead.

Hey, good morning guys. Hey Craig, I wanted to follow up on something I think you said it about non-res, particularly like large project, large non-res projects. Are you seeing that in specific regions or are you seeing that everywhere?

Yeah, pretty broad-based, Adam, whether it's the semiconductor facilities, the battery facilities, you know, it's those types of very large, you know, on-shoring of manufacturing that we've seen in our markets, and again, pretty broad-based.

based Adam whether it's the semiconductor facilities, the battery facilities, you know it's those types of very large you know onshoring of manufacturing that we've seen in our markets and again pretty broad-based. Okay.

And then Michael, you made some comments about the lack of new capacity entering the wallboard.

market going into this.

little bit of a soft patch. What's the implication of that? Do you actually see pricing, even if volumes decline a little bit, do you see pricing kind of staying flattish?

You know, when you look at everything, it's all on the supply and demand criteria with it.

You know, one of the inputs into that is how much board is going into the market. So I know, you know, there's been debates both with analysts and us when we look at different markets on what the capacity of the wallboard industry is today with it. And we just don't see, you know, in previous years we've seen, or previous cycles I should say, not years, we have seen where

you know, there's been capacity expansion added, and we are not seeing that capacity expansion added. We also have a wallboard industry that's much different today than it was in the past with a lot of consolidation that happened since the last cycle with it. So, you know, I do see a different animal this time than in previous...

Yes, on a sequential basis, we did see energy prices come down and that was a good sign. Natural gas has certainly been under pressure here the last couple of months and more importantly here the last few weeks. So, and look, I'll also tell you at a freight level, we saw freight tick down just slightly. That doesn't happen very often. So.

Yeah, we saw again some of those what have been headwinds this year starting to turn around.

Okay, thanks guys. Perfect.

The next question comes from Phil Ng with Jefferies. Please go ahead.

Hey guys, well Michael, it's great to hear that in the medium term you don't expect volumes to be down in cement. Any color on how to think about wallboard in the near term, call it calendar year 2023 just given the tougher housing backdrop. At least what we're hearing is maybe backlogs will carry the industry through the early parts of the calendar year. But a

Any color on your end, how you're thinking about the shape of the year in terms of wallboard demand? Yeah, so it's a great question. You know when when I look at it in my comments You know I'll point to some things in the comment is you know we're monitoring the near term very closely You know as said you know we have a great foundation going into this year with it. You know demand has been

and be positioning the company that if that does change, we could react quickly to that. But right now, you know, we are producing what we can produce for the near-term demand and then we'll see where the market takes us.

And on that note, Michael, you guys have some of the lowest cost wallboard facilities out there. If you guys had to pivot on the cost side, what are some of the things you can do, just given your low cost profile already?

Yeah, so how we run all of our facilities, you know, we monitor each of the facilities. We know which ones, you know, which market it is with it. We've been very flexible with Wallboard is not a very cost-intensive input business. You know, we've been able to modulate with demand just by shift structures and...

and everything to be able to satisfy that and not add a significant cost to the operation with it. So we watch that closely for each of the markets each of our plants serve, and then we modulate as needed. But right now where I won't leave you is demand.

demand has been strong so we're prepared for those if those happen but we haven't implemented those.

Just one last quick one for me. Craig, on the energy front, help us think through the step up, I guess, for calendar 2023. Because you're hedged a bit on that gas and in solid fuel prices, I think, for cement, I think you have the ability to hold onto prices for a full year, but I think it starts resetting fairly soon. Just give us a minute.

And we have a good hedge position within for natural gas again, which is more within the paper and wallboard segments. And, uh, you know, but we're not, we're not overly hedged. So we are enjoying some of these lower prices, uh, and, and expect to continue to enjoy them at these lower levels.

We have a good hedge position within for natural gas again, which is more within the paper and wallboard segments And you know, but we're not we're not overly hedged. So we are enjoying some of these lower prices And expect to continue to enjoy them at these lower levels Any color on how hedged you are for natural gas?

It's around 30% or so as we go into fiscal 24. Okay, great. Thank you guys. Appreciate it.

The next question comes from Tyler Brown with Raymond James.

Please go ahead.

Hey, good morning guys.

Good morning, guys. Welcome aboard again.

Hey, a couple of questions on the wallboard side, but I got to go back to the wallboard margins. Can you just help us maybe parse a little more specifically the impact of OCC on that 400 basis points? Maybe what percent of your costs are paper and wallboard? Given the OCC prices remain pretty low and I know there's a lag...

Can we see even more help as we kind of move into fiscal Q4? Yes, so in terms of the lower OCC prices, it really didn't have much of an impact on the wallboard business. As I said, it manifests itself first within the paper business as they're purchasing on a daily basis.

the shift to the pricing to the ultimate wallboard business happens over a one to two quarter lag. So that margin improvement that we saw this quarter didn't really have much to do with OCC. That is still yet to come for the wallboard business.

Okay, that's super helpful. And I don't want to be super near term focused, and I think there's some questions out there wanting to talk about wallboard volume, but just any color on how January is tracking? I mean, are volumes still positive? It just seems like if you use normal seasonality...

wallboard volumes could be down year over year in Q4? Just any color there? Yeah, look, I think as we said, I think Michael's comments are orders and shipments have remained steady during the quarter and even here into a little bit of early January . So, as Michael's been saying, we haven't seen any change in that.

Okay, just my last one here, this big picture question kind of comes again back to this idea around wallboard margins, more in the intermediate term. But doesn't the outlook look pretty good there? I mean, one, you've still got the OCC benefit kind of on the come. They're saying what looks to be kind of lower for longer.

Two freight rates have peaked in the near term. In my view, they're going to be deflationary in 23. Three diesel and gas prices are both fading. And four, I think labor starts to disinflate as the year goes on. I mean, doesn't that lend itself to durability around margins at a minimum or an ability?

to I guess at a minimum at least absorb any pricing weakness that may be on the horizon in wallboard

Yeah, look, Tyler, I think you pointed out some very good positive trends for the industry and for us. I would add to that, just again, for our unique position and the surety around supply of gypsum that we have. So, many of these things that you were mentioning were...

macro, more general ideas, but as it relates to Eagle, yeah, there's that surety of supply at a reasonable cost for us. So yeah, we think our wallboard business is very well positioned.

Yeah, perfect. Okay, thanks guys. Next question comes from Keith Hughes with Truist. Please go ahead.

Thank you. Most of my questions have been asked, but one quick one on Wallboard. What are you hearing from your distributor customers on how they feel about their inventory positions?

heading into this season, any kind of indications, light, heavy, just directional commentary would be great.

Yeah, you know Keith, at the end of the day, there's really not a lot of inventory in the channel. Wallboard is a perishable product, so it degrades if it's kept outside. So you're talking about weeks. So I, you know, and it's always hard at this time of year. We exited the holidays.

you know, you're into January where you can have weather disruption. So I don't know that that's much of an issue. Okay, and secondly on cement, particularly in the JV, the amount of tons has come down the last couple years. I know you've got the issues we discussed earlier.

in the last couple quarters. But longer term, is there any reason it wouldn't get back to the kind of times we saw a couple years ago, particularly given the tight market in Texas you've been discussing?

Well yeah, Keith, you know we need to look at that in two different lenses on that. For our manufacturing tons, we've been sold out consistently and we've talked about some of the operational problems we've had that we think are behind us. So the operational side and the manufacturing tons would be there.

We also had a larger side that was a procured material that we were moving. That side has dried up, so the gross tonnage on the procured side where we were buying and reselling will be more consistent with where it's been over this past year.

Okay, that's helpful. Thank you.

This concludes our question and answer session. I would like to turn the conference back over to Michael Hack for any closing remarks.

Thank you, Drew. We appreciate everybody calling in today and we'll look forward to talking to you at our next call.

The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.

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