Q2 2025 Five Point Holdings LLC Earnings Call
Greetings and welcome to the five point Holdings' second quarter 2025 conference call.
As a reminder, this call. This call is being recorded today's call may include forward looking statements regarding five point's business financial condition operations cash flow strategy acquisition and prospects.
Forward looking statements represent five point's estimates on the date of this conference call and are not intended to give any assurance as to actual future results.
Because forward looking statements relate to matters that have not yet occurred. These statements are inherently subject to risks and uncertainties. Many factors could affect future results and may cause five point's actual activities or results to differ materially from the activities and results anticipated in forward looking statements. These filings include those described in today's press release.
And five point's SEC filings, including those in the risk factors section of five Point's. Most recent annual report on Form 10-K filed with the SEC.
Please note that five point assumes no obligation to update any forward looking statements.
Dan Hadley: Now I would like to turn the call over to Dan had again, President and Chief Executive Officer.
Dan Hadley: Thank you Paul.
Dan Hadley: Good afternoon, and thank you for joining our call I have with me today, Mike Alvarado, our Chief operating Officer, and Chief Legal Officer, Kim Tobler, Our Chief Financial Officer, and Lee L. Key our senior Vice President of Finance and reporting.
Speaker Change: Stuart Miller, our executive Chairman is joining us remotely.
Speaker Change: On today's call I'll update you on our Q2 results, which reflects the company's consistent cadence of quarterly profitability.
Speaker Change: I'll provide a snapshot of the status of the company's current operations.
Including our strategic priorities and expectations for remainder of 2025.
Speaker Change: I'll also provide a brief update on our announced acquisition of 75% of the Hearthstone land banking residential advisory platform.
Speaker Change: Additionally, I've asked Mike to discuss the Hearthstone acquisition at five point growth strategy in more detail.
Speaker Change: And finally, Ken will give an overview of the company's financial performance and condition.
Speaker Change: <unk> guidance for the remainder of 2020 five.
Speaker Change: Well then open the line for questions.
Speaker Change: I'd like to ask that you. Please limit yourself to one question and one follow up.
Speaker Change: Turning to the second quarter.
Speaker Change: I'm pleased to report another profitable quarter from five point.
Speaker Change: We had anticipated Q2 would be relatively quiet in comparison to the beginning and end of the year.
Speaker Change: We remained profitable and generated net income of $8 $6 million, which is largely in line with our guidance for the quarter.
Speaker Change: The primary driver of this profitability was great Park land sales.
Speaker Change: It's a great park venture closed on a residential land sale consisting of 82 homesites on approximately $5 seven acres for aggregate purchase price of $63 $6 million.
Speaker Change: This enabled a great park venture generate net income of $48 $4 million during the quarter, our share of which adjusted for basis differences was $16 $7 million.
Speaker Change: From a balance sheet perspective, we finished the quarter with total liquidity of $581.6 million comprised of cash and cash equivalents totaling $456 $6 million in borrowing availability of $125 million under our unsecured revolving credit facility.
Speaker Change: Against that backdrop residential.
Speaker Change: Residential market in general have weakened as a result of higher interest rates and lower consumer confidence.
Speaker Change: This has been widely reported by many of our builder customers.
Speaker Change: They have reported in their earnings calls.
Speaker Change: Nevertheless, our results reflect our continued focus on generating revenue controlling our expenses and managing our capital spend.
Speaker Change: As you look at the remainder of the year, we expect a strong finish to 2025, we anticipate residential land sale closings at the Great Park in Q3, and Q4, notwithstanding current uncertainty in the homebuilding industry.
Speaker Change: While these challenges are leading to slower new home sales by many of the public builders to our benefit our existing communities are located in California markets that are chronically under supplied.
Speaker Change: Even with the current market conditions. There is continued interest in our communities.
Speaker Change: Yeah.
Speaker Change: On my last call I indicated that we believe we're on track to meet our prior guidance, which estimated earnings for 2025 that would exceed 'twenty 'twenty four is net income of $177 $6 million.
Speaker Change: Even in light of the current market environment. We believe that we will end the year with net income consistent with last year's earnings.
Speaker Change: Obviously the market is very dynamic at this moment and we will continue to monitor evolving market conditions as the year progresses Kimball.
Speaker Change: Kim will provide more details on our guidance for the remainder of 2025 during his remarks.
Speaker Change: Now, let me turn briefly to our current operating strategy.
Speaker Change: As a reminder, the key elements of this strategy are.
Speaker Change: First optimizing homesite value within our existing three premier Master planned communities by matching homesite sales to current homebuilder demand.
Speaker Change: As I mentioned homebuilder demand is softening currently.
Speaker Change: We're seeing these current conditions, we're position to remain patient and continue to optimize the value and are uniquely positioned land.
Speaker Change: It should allow us to maintain the margins embedded in that value.
Speaker Change: Second we are carefully managing our fixed costs and overhead even while we pursue growth opportunities.
Speaker Change: Although there are additional costs associated with our planned growth.
Speaker Change: We're maintaining our lean operating structure.
Speaker Change: We anticipate that our acquisition of Hearthstone will be accretive to earnings notwithstanding the additional labor costs associated with the acquisition.
Speaker Change: Third we're continuing to match development expenditures with revenue generation to ensure that we are not deploying cash too far out in front of the needs of the development.
Speaker Change: And fourth we anticipate closing hearthstone in the third quarter and we're working to integrate its operations into our platform will continue to seek growth opportunities on an opportunistic basis through new acquisitions joint ventures and strategic relationships.
Speaker Change: Our focus will remain on the strategic elements of our operating platform.
Speaker Change: As we produce recurring earnings along with sustainable long term growth.
Speaker Change: But that said the members of our executive team have all been in this business long enough to know we'll need to navigate through uncertainty from time to time.
Speaker Change: Let me now provide you with some updates on our communities of note across both of our actually selling new home communities, Great Park and Valencia, we have seen a slowdown in new home sales since early April.
Speaker Change: At this time given the housing housing shortage. We believe this is a temporary condition and new home market, which will self correct over the next quarters.
Speaker Change: As I mentioned earlier the market is very dynamic at this moment and we will continue to monitor and adjust as warranted by conditions at both the national and local levels.
Speaker Change: So let me turn first to our Great Park neighborhoods community.
Speaker Change: During the second quarter builders nest community sold 112 homes versus 233 homes in Q1 of 2020 five.
Speaker Change: We currently have 13 actually signed programs and the great part roughly half of which we expect to be sold out by the end of 2025.
Speaker Change: And additional programs are anticipated to start sales later this year.
Speaker Change: I also previously reported to completion of bidding and contract and her group of nine new residential program at Great Park totaling 572 home sites, which are being sold to six builders. We still anticipate that these land sales will close either late third quarter early fourth quarter of this year, we'll have more to report on these <unk>.
Speaker Change: <unk> next quarter.
Speaker Change: I've also previously reported that the city of Irvine completed its state mandated regional housing needs assessment General plan and zoning updates for the Great Park planted area.
Speaker Change: We'll provide the great park venture with the opportunity to convert some more substantial portions of its remaining commercial land holdings to a residential uses.
Speaker Change: But continue to work with the city to expand our residential opportunities on our remaining land consistent with arena program adopted by the city.
Speaker Change: Now, let me discuss the lunch or other active community.
Speaker Change: As a reminder, lunches in the early stages of its development and still has many future phases of land delivery out of it which will enable us to provide much needed housing and the Los Angeles market.
Speaker Change: During the second quarter, our guest builders sold 49, new homes are 69 in quarter one.
Speaker Change: We currently have six actually selling programs influenza with one of those expected soft before year end.
Speaker Change: Additionally, we anticipate another four programs will open during the last half of 2025, providing a greater diversity of home offerings for prospective homebuyers.
Speaker Change: We're continuing to work with builders on the potential sale of two new communities.
Speaker Change: As I previously discussed we also continue to work with Los Angeles County, and other agencies on a regulatory approvals for future development areas in for lunch at that will allow us to deliver thousands of additional homesites in a county severely under supplied market.
Speaker Change: In total these five months are expecting system, approximately 8900 market rate homes sites and 183 net acres of commercial land approximately 139 of which is expected to cater towards industrial focused uses.
Speaker Change: Turning to San Francisco, we are currently working on our engineering for the next space infrastructure, what's the expectation starting construction early next year.
Speaker Change: As you work on these plans, we continue to explore opportunities to bring in a strategic partner or other capital sources for this mixed use bayfront community.
Speaker Change: So let me now move to the Hearthstone acquisition.
Speaker Change: As we recently announced five point entered into an agreement to acquire controlling interest in newly formed entity that will include substantially all of the business and operations of Hearthstone, a provider of capital solutions. The U S homebuilding industry.
Speaker Change: A mood that represents a meaningful step forward in our long term growth strategy.
Speaker Change: We believe that this acquisition provides <unk> with a number of benefits and opportunities.
Speaker Change: <unk> provides us a platform to offer broader capital solutions for the many homebuilders that are ready five point customers as they continue to adopt land light strategies.
Speaker Change: We believe this will help fortify that already strong relationship with these customers and will add new ones.
Speaker Change: Second this acquisition enhances five points evolution into a capital allocator and manager of institutional capital through joint venture structures, which complements our deep land development expertise.
Speaker Change: Third with a proven national platform also allows us to immediately expand our geographic reach client relationships and capabilities.
Speaker Change: Fourth and most importantly, it introduces recurring revenue streams also connecting us to a broader network of institutional capital providers.
Speaker Change: And builder clients.
Speaker Change: We're well on our way to obtain all necessary third party consents and we anticipate that the acquisition will close during the third quarter.
Speaker Change: Let me conclude by saying that while homebuilders are navigating the market uncertainty caused in part by reduced consumer confidence.
Speaker Change: Our balance sheet and liquidity position allow us the flexibility patiently optimize our land values are still working with our guest builders to ensure the prudent development of our master planned communities.
Speaker Change: Fundamentally land is still about location and scarcity, we have well located land and extremely supply constrained markets.
Speaker Change: Now, let me turn it over to Mike provide more information on the Hearthstone acquisition and we'll discuss five points continued focus on additional growth opportunities.
Mike: Thanks, Dan.
Speaker Change: Let me briefly provide some additional information about our vision for the possibilities with a new hearthstone venture as well as our continued efforts to pursue additional growth opportunities.
Speaker Change: As Dan mentioned this represents a targeted acquisitions of five point and is the realization of our efforts to better serve the land light strategy and a number of publicly traded homebuilders have gravitated towards in recent years.
Speaker Change: It's been reported that over 70% of land pipelines for homebuilders are options rather than purchased outright.
Speaker Change: And that the public homebuilders by and developed over 35 billion in land per here.
Speaker Change: We believe our venture has the opportunity to capture a meaningful portion of that market.
Speaker Change: For those of you who may not be familiar with hearthstone. They are a market leader in prime in providing these off balance sheet capital solutions to U S. Homebuilders with current assets under management of approximately $2 6 billion.
Speaker Change: Our son started slot option program back in 1996, and we believe they're the only lot option investor operating today that has been through multiple business cycles, including the great financial crisis.
Speaker Change: Over time, the land banking space has become increasingly important as homebuilders has strategically sought to avoid holding land on their balance sheets.
Speaker Change: They have come to rely upon land banking and capital partnerships to secure home sites.
Speaker Change: Our sales model is perfectly aligned with this shift.
Speaker Change: And their proven platform provides five plant with immediate scale and credibility in this space.
Speaker Change: Our astellas disciplined underwriting and a focus on a risk managed capital deployment align with five points commitment to delivering strong long term returns for shareholders.
Speaker Change: Our sons experienced team complain with five points of public company infrastructure and development capabilities will allow us to grow the new venture efficiently and responsibly.
Speaker Change: For five point this venture helps our transition into an asset light structure, where almost all of the capital for the lot option investments will be provided by third party capital sources through a joint venture arrangement.
Hearthstone serves as the operator in these joint ventures, and earns asset management fees that are payable monthly and.
Speaker Change: An additional performance based fees when certain financial hurdles on that.
Speaker Change: Well typically only having to contribute 1% of the debentures equity needs.
Speaker Change: Beyond the immediate financial benefits, we believe that her son's relationships with capital providers and builders across the country will complement and five points existing relationships and will unlock additional strategic growth opportunities for pipeline.
Speaker Change: As part of that is we see a major opportunity in the mid term land market.
Speaker Change: The segment currently underserved by traditional capital providers.
Speaker Change: We have already had conversations with capital providers and builders, who have expressed an interest in discussing joint ventures or acquisition opportunities for land that does not fit in the shorter term land banking model.
Speaker Change: These are the types of assets that fit into the core of what we do as a land development company.
Speaker Change: In sum this is not just an acquisition.
Speaker Change: A strategic move that reinforces our position in the evolving housing ecosystem and positions us for long term sustainable growth.
Speaker Change: Now, let me turn it over to Kevin to report on our fat actual results of the quarter.
Kevin: Thank you, Mike as Dan and Mike have shared we are very excited about the progress five point is making and executing on our strategic priorities, including the hearthstone transaction and the potential it provides to drive revenue growth for the company.
Speaker Change: I'm now going to review, our second quarter financial results.
Speaker Change: And some information about our expectations for the Hearthstone venture then I will conclude by updating the guidance of what we are expecting in 2025.
Speaker Change: In the second quarter, we recognized $8 $6 million of net income, bringing us to $69 $2 million for the six months ended June 30th.
Speaker Change: The quarters net income is made up of the following two components.
Speaker Change: We recognized $17 $1 million of equity in earnings from our unconsolidated entities.
Speaker Change: $16 $7 million of which came from the Great Park venture.
Speaker Change: The equity in earnings from the Great Park venture was attributable to net income of $48 $4 million, which resulted from land sales revenue of $63 $6 million and 75% gross margin.
Speaker Change: The venture also had $8 $6 million of price participation and profit participation revenue in the aggregate as da Vinci enjoys revenue streams that come from these different types of land sales structures.
Speaker Change: Five point added $7 million of management services revenue $3 $6 million of which is associated with incentive compensation from the great Park venture.
Speaker Change: Our second quarter, SG&A was $15 $6 million and finally, we recognized $1 $3 million of tax expense.
Speaker Change: Now, let me provide a little detail about our liquidity and cash as Dan mentioned, we ended the quarter with $456.6 million of cash as well as $125 million of availability on our revolving credit facility, resulting in total liquidity of $581.6 million at the end of the quarter our debt.
Speaker Change: To total capitalization was 19, 1% and our net debt was $68 $4 million.
Speaker Change: During the quarter, our cash went down by $71 $7 million. This was largely attributable to $32 million of development costs at Valencia and interest on our senior notes of $27.5 million, while we had a sale at the Great Park venture the venture did not make a distribution this quarter and.
Speaker Change: Had a cash balance of $168 $2 million at quarter end.
Speaker Change: Well, Dan and Mike have shared a great deal about the hearthstone transaction and the transformative nature of this acquisition.
Speaker Change: Thought I would give some limited information about the expected financial implications to five point.
Speaker Change: First I want to emphasize that we haven't completed our accounting analysis for the transaction. So what I share is subject to the completion of that analysis. After we close the transaction.
Speaker Change: <unk> five point will own 75% of the common units in the Hearthstone venture and will control. The executive Committee that manages the business and affairs of the venture we will be expecting to consolidate the activities of a horse of the hearthstone venture in our financial statements.
Speaker Change: These activities include asset management and co investment with the managed capital that is raised as Mike mentioned, the venture generally expects to invest 1% of the required capital alongside the capital that is raised to finance the lot option fund joint venture structures that it is managing.
Speaker Change: Please note that these funds structures are not expected to consolidate with five point some of those funds structures currently used limited amounts of borrowed capital to augment the equity capital.
Speaker Change: That indebtedness is not expected to be consolidated on five points balance sheet as I mentioned this treatment is all subject to our final accounting analysis.
Speaker Change: Now if you reviewed our 8-K announcing the transaction you may have noted that in addition to the $56 $3 million acquisition price.
Speaker Change: Five point expects to contribute an additional $37 $5 million over time in order to fund the co investment as the assets under management grow which as I mentioned is generally 1% of invested capital.
Speaker Change: Depending upon the amount of leverage that is usually utilized in the new funds. This would suggest that we can grow the assets under management from the current $2.6 million to seven or eight excuse me from the current $2 $6 billion to seven or $8 billion. We believe that this growth can occur over the.
Speaker Change: Next two to three years and that we can achieve that growth without materially increasing the personnel required to service those funds to.
Speaker Change: Hearthstone joint venture is expected to be profitable. This year. However, we do not expect it to materially contribute to our results for 2025, but expect a larger contribution in 2026, and I will be giving more guidance in that regard at year end.
Speaker Change: I'd like to now update our guidance for the balance of 2025.
Speaker Change: We currently believe that we will end the year with net income consistent with last year's net income of $177 $6 million. This change largely reflects the possibility to certain land sales might close in 2026, rather than 2025.
Speaker Change: As we mentioned last quarter, we continue to monitor the debt markets and remain ready to consummate a REIT refinance transaction for our senior notes, including the pay down of some amount of principle. When we determined it is prudent to do so.
Speaker Change: With that let me turn it back to the operator, who will now open it up for questions.
Speaker Change: Thank you well now be conducting a question and answer session. If you'd like to ask a question. Please press star one on your telephone keypad.
Speaker Change: Confirmation tone will indicate your line is in the question queue. You May press star two if you'd like to remove your question from the queue for participants using speaker equipment may be necessary to pick up your handset before pressing the star keys.
Speaker Change: One moment, please while we poll for questions.
Speaker Change: Thank you. Our first question is from Alan Ratner with Zelman and associates.
Alan Ratner: Hey, guys. Good afternoon, congrats on the Hearthstone deal exciting.
Speaker Change: Growth opportunity for the company.
Speaker Change: I know, you'll give more 'twenty six color in a few months, but I just I'm curious in terms of the economics of it should we just think broadly is that business kind of being a percentage of assets under management and less some type of personnel expenses is that the right way to think about modeling that longer term.
Speaker Change: Yes, yes, Alan that's that's the way you should look at that.
Speaker Change: Okay, Great and then just in terms of the business itself you know there has been.
Speaker Change: Quite a few new entrants into the land banking space over the last year or two and what we've seen generally kind of terms and structures.
Speaker Change: Getting more competitive in that space that you know I think specifically with no road in smaller deposits and kind of smaller.
Speaker Change: Interest carry compared to what we've heard was kind of ongoing previously in the private arena.
Speaker Change: Have you given any contemplation to kind of products or.
Speaker Change: New terms or financing vehicles that youre going to be offering the public got community to get that.
Speaker Change: Assets under management up to seven or 8 billion over the next few years.
Speaker Change: Oh, Thanks, Alan for that question is a very good question, you're right. There is a lot of them.
Speaker Change: <unk>.
Speaker Change: Just to say movement in this space right now.
Speaker Change: But what what the I think what we see out there is that demand is much greater than current supply.
Speaker Change: So we don't need to really make any changes from what we're currently or what hearthstone is currently doing working with them, we're going to hopefully expand their capital base and there should be a lot more there's a lot of need in this space and the homebuilding world. So we don't think we have to change anything Hearthstone has got a great platform them.
Speaker Change: And business model and we think we can stay consistent with that.
Dan Hadley: Great I appreciate that Dan.
Speaker Change: So pivoting to I guess, the core business if you will.
Dan Hadley: Land side, you know we've been.
Dan Hadley: Hearing from a lot of public builders last few days about their business. It seems like everybody's pulling back starts they're pulling back land spend.
Dan Hadley: All your projects are unique and that Theyre, obviously very desirable in both good and bad markets, but a lot of management teams are talking about the possibility of achieving lower land prices from sellers and just getting some capitulation on that front.
Dan Hadley: I'm curious when you think about the guidance for the land sale. Later this year I know you you kind of mentioned the reduction is more I think a timing thing and maybe some of those those deals get pushed out to 'twenty six but are you contemplating the possibility of potentially lower pricing in either great Parker Valencia, either on a per watt basis.
Dan Hadley: Per acre basis compared to what you've achieved more recently given what we're hearing from the builders recently.
Dan Hadley: Yeah, you know Alan I've, I've actually marine the same things you've been reading, but.
Dan Hadley: California is so supply constrained in unique.
Dan Hadley: They can't really.
Dan Hadley: You know they can't replace land that's here.
Dan Hadley: But you know we are not we are we will.
Dan Hadley: We'll work with our builder partners to the extent that they reach out to us, but I think at this point, we do think that we've got the ability to you know to let this market kind of settle down hopefully.
Dan Hadley: And move or so move our land forward as we are planning.
Dan Hadley: But at this point I think that.
Dan Hadley: Okay.
Dan Hadley: At the end.
Dan Hadley: The uncertainty in the market is just going to have to play out just a little bit longer and so we are at this point or are thinking more about just trying to work with our existing builders.
Dan Hadley: And.
Dan Hadley: You know and keep our land sales moving forward.
Dan Hadley: Got it that's helpful. Dan and then and final one from me on the land development cost side.
Dan Hadley: When you think about Valencia and the development work out ahead of you there and then hopefully eventually San Francisco gets up and running.
Dan Hadley: We've also heard a lot about the potential for driving land development costs lower.
Dan Hadley: Given everything that's going on in the market and I know you're at your chairman Who's on the line has talked a lot about potentially utilizing AI as a tool to to also leverage that.
Dan Hadley: Part of the business I'm curious if that longer term youre kind of optimistic that that might filter through to five points business, specifically and the two projects that have a lot of development work out ahead of them.
Dan Hadley: Well you know I think Alan the broad answer to that is that is that technology progresses. We're hoping it really helps us really try to be able to manage our land development work better.
Dan Hadley: Analyze it better.
Dan Hadley: Ultimately still we're going to be in a very.
Dan Hadley: Kind of physical moving dirt not going to change.
Dan Hadley: But hopefully we can move it in.
Dan Hadley: Smarter and more efficiently and I think there is some technology that people are working on that could help us there but for this point, we haven't we haven't changed any of our budgeting our thoughts around that.
Dan Hadley: We think about our future development, but we are hopeful that it can make us more efficient and moving the dirt.
Speaker Change: Great. Thanks, a lot and good luck with everything.
Alan Ratner: Thank you Alan.
Alan Ratner: As a reminder, if you'd like to ask a question. Please press star one.
Alan Ratner: Okay.
Speaker Change: Our next question is from David Lundgren private Investor.
Alan Ratner: Yes.
Yes, hi, Thank you for taking my question.
Alan Ratner: I had a question about the.
Speaker Change: Using your cash I didn't know if you consider using some of the cash to buy back shares.
David: David Yes, thanks for asking.
David: People are interested in that question are currently under our senior note indenture, we were not able to do that.
David: So that's part of what we're looking at as we look to perhaps refinance those notes.
Speaker Change: Okay, and then I mean, I guess, the the elephant in the room that rarely gets discussed on these calls is that the stock price being well below book value and I've been a shareholder for many years and I'm curious if you're ever going to try to address that or look into reasons why the market isn't value using you where you should.
And I think as an investor I think one of the reasons youre not valued at the appropriate stock prices because of your corporate structure, which is very confusing and this recent deal to buy hearthstone is making everything more confusing because you're buying 75%. So now you have you're adding like another serpentine layer. So I don't think that this new transact.
Speaker Change: It helps with the corporate structure I think if you could somehow simplify the corporate structure, maybe that might help the share price, but that's a long term shareholder I was just wondering if you or is this a concern for you that the stock price doesn't reflect the true value. The fact that you're well below book value.
Speaker Change: You know David I appreciate that question.
Speaker Change: First of all I want to answer directly about hearthstone hearthstone when it since it will consolidate it will not add to any complication. If you will in that will own 75% that we reported 100%.
Speaker Change: But as it relates to overall to the concern about the difference between the book value and the B.
Speaker Change: The fair market value of the stock at this time.
Speaker Change: Hi, I appreciate the difficult structure that exists, but I there are advantages to it from the tax side and other elements that are very important to the company.
Speaker Change: And Additionally, I think another time, we might go through kind of the elements that are associated with the stock going down in value.
Speaker Change: But we see it rising and continuing to rise over the next several years.
Speaker Change: Okay well. Thank you for answering my questions. I think you guys are executing really well I just I'm just always wondering why the stock price doesn't reflect that so but thank you for answering my questions.
Speaker Change: Thank you. Our next questioner question is from Ben Fader, Rattner with <unk> capital.
Ben Fader: Hi, I just wanted to clarify something that you said.
Speaker Change: You said that there would be some debt pay down when you eventually refi the bonds I think previously you.
Speaker Change: Talked about 100 to 200 million of of debt pay down is that still the right number.
Speaker Change: Ben This is Kim thank you.
Speaker Change: That will be determined at the time when we enter into the transaction I don't know what it will be at that time give.
Speaker Change: Given that the market is changing daily it's important for us to assess our needs and and everything is as that day comes.
Speaker Change: Great.
Speaker Change: Thank you there are no further questions at this time I'd like to hand, the floor back over.
Speaker Change: Too.
Dan Hogan: Dan Hogan for any closing comments.
Speaker Change: Thank you Paul.
Speaker Change: On behalf of our management team. We thank you for joining us on today's call and we look forward to speaking with you next quarter.
Speaker Change: This concludes today's conference call you may disconnect. Your lines at this time. Thank you for your participation.