Legacy Housing Corporation (LEGH) Q1 2020 Earnings Report, Transcript and Summary

Ladies and gentlemen, thank you for standing by, and welcome to the Legacy Housing Corporation First Quarter 2020 Earnings Conference Call. [Operator Instructions] Please be advised that today's conference will be recorded. [Operator Instructions] I would now like to hand the conference over to your speaker today, Curt Hodgson. Thank you, and please go ahead.

Thank you for joining the call today. Before we begin, may I remind our listeners that management's prepared remarks today will contain forward-looking statements, which are subject to risks and uncertainties, and management may make additional forward-looking statements in response to your questions. Therefore, the company claims the protection of the safe harbor for forward-looking statements that is contained in the Private Securities Litigation Reform Act of 1995. Actual results may differ from management's current expectations, and therefore, we refer you to a more detailed discussion of the risks and uncertainties in the company's annual report filed with the Securities and Exchange Commission. In addition, any projections as to the company's future performance represent management's estimates as of today's call. Legacy housing assumes no obligation to update these projections in the future unless otherwise required by applicable law. Now let me turn to a discussion of our first quarter performance and provide some general thoughts on our business in light of the COVID-19 pandemic. I will then turn the call over to our CFO, Cork Van Den Handel, to discuss the financials in more detail. We were pleased with our first quarter results. Quarter-over-quarter, we grew our net income by 25%, up to approximately $9 million from the net income earned in the first quarter of 2019 of $7.2 million. This was driven by a few factors: one, our loan portfolios continued to perform and interest income continued to grow, rising 16% to $6.4 million in comparison to the $5.5 million in interest income we earned in the same period of last year. In fact, both our consumer and commercial loan portfolios have now eclipsed the $100 million mark. Additionally, we decreased our expenses, lowering SG&A by about 14%. Finally, we had a onetime event under which we received proceeds of about $1 million related to the settlement of a lawsuit with a former vendor for the company. In light of the seasonality of our industry, that typically reflects lower revenue in the fourth and first quarters as well as the coronavirus impact in the latter part of March. We're upbeat about our first quarter performance this year. However, we recognize that almost everyone on this call is wondering about the second quarter and going forward, since while the first quarter was positive, only about 2 weeks were directly impacted by the pandemic and the subsequent shelter-in-place orders enacted across the country. As we previously disclosed, we took actions back in the first quarter and continued those actions into the second quarter to address these times. For example, we're offering discounts for the sale of aged inventory sitting on dealers' lots and on company-owned stores. We've reduced down payment requirements for certain manufactured home community operators, and we've conducted a small number of layoffs and adjusted the rates of pay for both hourly and salaried workers. We have seen an adverse impact on the retail side of the business from the coronavirus. I can't yet provide concrete numbers. We have at least some concern based on anecdotal evidence about decreasing levels of traffic being experienced by our independent dealers, probably based both on the virus and on the decrease in oil prices. We've also seen an impact in our company-owned stores as far as overall traffic, but the impact of that will not be fully understood or quantified until the end of the second quarter. The sales for our company-owned stores in the first quarter of 2020 was $3.2 million, a slight decrease from the $3.4 million in sales earned in the comparable period last year. The pandemic has also led to delays in some of our manufactured home community development projects since construction permitting and zoning has largely been at a standstill during the shelter-in-place. We see some signs that we will be able to ramp up our development efforts as we head into June and July. There is encouraging news. Our sales to manufactured home communities remain strong as reflected in the fact that our commercial loan portfolio increased by nearly $11 million to a total of $103.3 million, an approximate 12% interest versus the end of 2019 and a $41 million increase versus a year ago at the end of last year's first quarter. Both our commercial and consumer loan portfolios have performed well during this pandemic. On the commercial loan side, we've only granted a handful of 3-month deferral requests to certain park owners, and we're doing so only where the company receives something in return, like we get accrued interest. And in some cases, we have required cross collateralization agreements so that our loan is additionally secured. On a consumer loan portfolio, we've experienced -- and this is very surprising to me, no material impact to date, no material adverse impact to date. In fact, our delinquency rate on our 3,000-plus consumer loan portfolio actually decreased in April as compared to March. Through April of this year, our consumer loan portfolio's delinquency rate for every month has remained below 2%, a testament to our internal underwriting and servicing team led by Stuart McDowell, our Director of Retail Finance. Obviously, we'll continue to closely monitor this situation. Additionally, I do not -- I do anticipate we will see continuing decreases to our expenses in the second quarter this year since the cost-cutting measures previously discussed were really not implemented until the very end of the first quarter. Hopefully, we're on the back side of the impact of this coronavirus. Obviously, no one can know for sure. As we sit here today and looking at our overall order book, I am optimistic we can maintain or improve our current production levels through the remainder of this year, but we are prepared to be nimble and to adjust as the circumstances dictate. I'll now turn the call over to Cork to discuss the financial results in the first quarter.

Thanks, Curt. Net revenue for the first quarter of 2020 was $38.3 million, a slight increase over 2019's first quarter net revenue of $38 million. Product sales, the largest component of our revenue, declined approximately 1% in the quarter to $31.2 million. Factory direct sales, the smallest and lowest margin component of product sales contracted 50% to $2.2 million and sales of consigned inventory through our network of independent retailers, decreased $1.2 million to $8.8 million. Sales through our company-owned retail stores decreased to $3.2 million, as Curt noted. Partially offsetting these reductions, sales to manufactured home parks increased $3.3 million or 26% to $15.8 million. Product sales gross margin percentage decreased slightly to 29.9% as a result of sales related expenses that are now being recorded in cost of sales partially offset by a more favorable product mix. Interest income in the quarter was $6.4 million, a 16.2% increase over the $5.5 million recorded in the same period last year. Interest generated by our consumer loan portfolio was essentially flat at $4.1 million, while interest from our mobile Home Park loan portfolio increased 62.5% to $2.3 million. SG&A expenses of $5.6 million decreased about $880,000 from the first quarter of 2019. This decrease was primarily the result of $0.5 million of retail store expenses recorded as SG&A in the first quarter of 2019 that were subsequently recorded in the cost of sales later in 2019 as well as a $0.3 million decrease in advertising and promotions, a $0.3 million decrease in consulting and professional fees. And a onetime $0.2 million expense in the first quarter of 2019 for settlement of a lawsuit. These decreases were partially offset by a $0.3 million increase in salaries and incentive costs primarily related to our operations as a public company and a $0.2 million increase in warranty expenses. Pretax earnings increased $2.4 million to $11.6 million in the quarter. As Curt noted, the increase included a onetime item, $1,075,000 from the settlement of a lawsuit with a former vendor. Income tax of $2.6 million increased $6.6 million over the first quarter of 2019 as a result of the higher earnings and the company filing taxes in additional states. Net income was $9 million for the first quarter compared with $7.2 million in a similar period of 2019. Net income per share based on basic and diluted weighted average shares outstanding was $0.37 compared to $0.29 in the prior year quarter. Excluding the onetime item, net of the tax effect, EPS was $0.33. Finally, our equity increased $8.4 million in the quarter to $230.8 million. That completes our financial overview, Curt.

Thanks, Cork. These are certainly interesting, unprecedented times. So far, Legacy has weathered the storm fairly well, and we remain optimistic about our ability to do what's needed to continue to sustain our business and ultimately grow. As we hopefully move into the reopening phase of the pandemic that should drive additional sales and demand. Thanks for your interest and your attention today. We will now take any questions.

[Operator Instructions] First question comes from the line of David Burdick with Oak Ridge.

First, I just wanted to ask about production and where it stands today. I think the last time we spoke, production was down only slightly from 15 floors per day to 13. Just wondering where it stands today?

Yes, this is Curt. Production is slightly up from there. We're not to 14 per day, but we are exceeding the first quarter's production slightly in Georgia, and we're maintaining the levels that I last reported in Texas of 8 per day for the 2 plants in Texas combined. So all in, we're probably around 13.5 per day, and we may be able to increase production based on order flow especially in the Southeast.

That's helpful. Regarding your manufactured Home Parks, you mentioned those were delayed. Can you just talk a little bit more in detail on those? And maybe when do you expect those to ramp up?

Well, as we're engineering these properties that we have, where we own the land towards the development of communities, the engineering dialogue is between our own engineers and the city engineers or the city staff. All of those people were sheltering in place. And while they were working, their ability to meet with each other in person was down to 0. So all meetings that took place were done virtually, and we found that it basically brought the permitting efforts frankly to a standstill. And I could go through them property by property, but the biggest property we're working on in Austin, we had some public hearings scheduled for April, which were postponed indefinitely. And we just got word recently that they're going to allow us to have that public hearing virtually sometime in June. So there was a 2 or 3 months delay that where we were just twiddling our thumbs, not getting any progress done on that. All in, we either have -- we either own or finance properties for about 8 different parcels around our market. We're still hopeful that all of those properties will bear fruit in the not-too-distant future, say, 2021, and we think we're uniquely positioned to be able to penetrate some of the most major markets in the area, we think we're uniquely positioned to do so beginning probably next year in '21.

Lastly, would you guys be able to provide any color on the cadence of the Q2 order flow thus far? And maybe what we should expect on a revenue perspective in Q2 and Q3?

Kenny, he is asking about order flow, and how it will impact revenue for Q2 and Q3. Why don't you tell him how order flow is going to work?

For the retail stores, I guess, is what he's talking about or for everything. I think the orders are starting to come back in. It got pretty slow when the shock of COVID hit, it -- we had a lot of our shows, Tunica, Mississippi. It's one of our big major shows for the year, and they canceled that show. We came out with our own show special and called it our Tunica Show Cancellation Special and to try to drive sales, and we were pretty successful with that. So we've got some pretty good backlogs. And right now with at plant levels, and we're starting to see orders come in. We're starting to see off of the retail stores, we're not seeing so much stock orders coming in, but we're seeing a lot of retail stuff come in and so the orders are starting to come in now, and it looks pretty promising for the second and third.

As far as revenue is concerned, I think I touched on this on the earnings call we had just a few weeks ago. I'm expecting second quarter revenue to be pretty much in line with what it was last year. We -- even with a slight decrease in our Texas production, our revenue will be more than made up for that by some increases in other parts of our revenue stream. And I'd like to point out, especially those that were around during our roadshow 1.5 years ago, how we said that this company was about making it and saving it we're not going to be apologizing for any of our earnings this year. This last quarter, we grew our tangible net worth by about 4%, and we will grow our tangible net worth by fairly significant numbers in each of the quarters this year. It's just the nature of what we do. We make it and we save it, and then we reinvest it. And so we don't really look for anything significantly down in top line or bottom line for quarter 2 or quarter 3. I'm somewhat hopeful for quarter 3 being up, but this thing just keeps dragging out in different parts of the country, and I'm still wondering whether my 18-year-old child is going to actually go to college this fall or whether he's going to be taught virtually. So I don't know exactly what's going to happen, but it just seems to be dragging out, not so much in places like Georgia, maybe Texas, but other parts of the country that we do, do business and are still in very much a shelter in place situation. And I just heard today that New York extended theirs for another 30 days to the middle of June. I know Virginia did the same, and I'm a little fearful that this startup in the economy is going to be slower than what many of us hope.

All right. That's helpful. Good luck moving forward.

Our next question comes from the line of Mark Smith with Lake Street Capital Markets.

First off, the cost-cutting certainly looks like it helped during the quarter, Curt, it sounds like we will see more impact in Q2, but can you just talk to how sustainable that is as we look kind of beyond Q2? And then also any pressures or relief that you guys see in commodities and manufacturing costs?

Mark, that's a good question. I was hoping for a softball, but yes. Let's talk about commodities because that's something we all know we can look them up on the Internet. So lumber fell off a cliff in March and April, and we actually locked in lumber prices, probably at least through the second quarter, maybe a little bit beyond that. So we took a pretty bold move on lumber. Steel has gone down 10%, 15%. We're tied to indexes, and how we purchase steel. And that's got to improve in our favor, at least in Q2, and we're going ahead and buy steel a little bit further out than we would otherwise to take advantage of what we think, it is maybe the bottom of steel prices. So those are the 2 principal commodities in a mobile home, about 20% lumber and about 10% steel. And the other 70%, much of it we import from China, and we're just happy that we're getting our supplies without interruption from our Chinese vendors. And then the other half is just hard to put our finger on. Most of it doesn't seem to be vary in price no matter what's happening to the economy. So we've already told many of our customers to expect 0 price increases for the remainder of the year. I hope we can honor that forward-looking movement. So they can plan accordingly. And so basically, as we improve our product, which we do every model year, including this one coming up, our customers will get those improvements, probably at no additional cost on the units that they purchased, not that I want to get them to delay their orders, but I think like all models, we improve every time we come up with a new model a year. Now the first part of your question about cost-cutting and whether it's sustainable. We're leaving no stone unturned here. I mean if we can buy coffee cheaper, we're going to buy coffee cheaper. So we're attacking all of our G&A expenses, and I don't want to throw out, but all that means because I'll found somebody on a call that's going to get transcribed, but I think it is sustainable. I think when you have 36 million people unemployed and you have plenty of jobs for people, and when you're buying things in pretty good quantity and other people have cut down their buying. I think it puts us in a pretty powerful position as far as being able to keep these cost-cutting measures in place probably for 3, 6, 9 months. Another way to look at it is, we're able to build a mobile home less expensively, but that doesn't mean we're going to decrease prices. It's probably going to be more feature-packed than the feature than it has been in the past. That's probably the quid pro quo that we're going to see. I'm pretty excited about some of the new things coming down the pipeline in product, European cabinets and energy-efficient houses and 60-inch wide showers and things like that, that elevating the manufactured housing industry to be more competitive with the site-built housing industry. You're going to see more and more of that unveiled, not just by Legacy, but the industry as a whole. And the more that we can compete with other forms of housing, the more market share our industry is going to be able to capture. Although interest rates are down for the site built sector, the ability to get one of those mortgages is tougher, which is good news for our segment. So I don't know if you've seen this or not, but the number of mortgage applications being approved is down significantly after the coronavirus and that's just because of a natural tightening of credit across the board, and that bodes well for our industry because people will come over to our industry. Our credit standards don't really change according to economic swings, and nor do our interest rates or anything like that, we're not constantly changing our offerings on a credit point of view. Our credit criteria to date is exactly the same as it was 6 months ago. Absolutely no change whatsoever. So I don't know if that answered your question, Mark, but kind of sets us up well, I think, for the third and fourth quarter, assuming there's some sort of rebounds in the national economy.

Okay. No, that's great. You brought up kind of the financing. It sounds like you'd said delinquencies. I want to confirm this is right, delinquencies were actually down in April versus March? Can you just confirm that and talk about anything else as you kind of look into your crystal ball for the consumer market?

Any chance that Stuart McDonald's on the call, are you on the call, Stuart?

No, I don't believe he's on.

Okay. We were just fascinated by the statistics, but we fully expected higher repos and more delinquency rates at the end of April because the pandemic in Texas especially was in full force. Everybody was under a shelter-in-place, and the unemployment rate was going through the roof, and we were absolutely certain that we were going to have to create more reserves in our retail portfolio. That has not come to pass. Our delinquency at the 15-, 30-, 45- and 60-day place, which is the real sensitive part of the curve is actually better at the end of April than it was at the end of March. And who knows, maybe all the government systems, maybe the $3 trillion of our grandkids' money that's no longer our grandkids' money is helping that curve. Who knows? So let's face it. The working class unemployed are really not unemployed. They're just working for the federal government for $1,000 per week. In many cases, they got to pay raise. So maybe the real issue won't fall until the end of those benefits, whenever that is, I think it's currently scheduled for the end of July. But we don't sense any risk in our portfolio that's greater than it was before the pandemic, which is a very unusual statement I realize, but the numbers just can't be argued with. We're having to do a little bit more collection, a little bit more work on the telephone, but the numbers are pretty compelling that we're not going to have a negative effect, at least for the next couple of months on our retail portfolio. It's absolutely incredible, I think.

Okay. And then the MHP lending has always been kind of the real safe kind of business for you, but it seems like -- it sounds like you've had a couple people there that have wanted to maybe delay some payments. Can you just talk more in-depth about what you're seeing on kind of a risk profile in the MHP lending business?

Yes. It's really kind of a peculiar situation. So just to give you an example of how these parts are having to operate in the shelter-in-place. The governor of Louisiana put a moratorium on all eviction processes in the entire state. It's awfully hard to collect your rent. If you're a mobile Home park owner in Louisiana as the governor went on TV and said, no one can evict you for 4 months. So actually, our park operators are suffering more than our consumers right now. And they're telling us their revenues and how much they've taken in. So -- and those loans are solid from a security point of view, but most of these park owners don't have 60 or 90 days of additional working capital. So to the extent that they've suffered revenue declines because of the pandemic, we're allowing them to accrue that interest, in most cases, furthering our security with things that we didn't formally have a lean on, we're cross collateralizing it with things we did have lean on, but had a high equity to debt ratio. So we feel like in those cases that we have allowed them to defer payments for a few months, that we're actually in a better place than we were before because the security has been increased from our point of view, and I'm really confident of that. It's funny, you would expect the consumer portfolio to be suffering more than the commercial portfolio, but in some cases, that consumer will pay us because they're fearful of their credit rating and they're fearful that their house will be repossessed, but they won't make payments to their landlord because they know that the landlord can't do anything for 4 months. So there you go.

Okay. Perfect. And then the last one for me, just as we look at the demand for homes today. Maybe talk about some of the mix shift that you saw in channels from kind of retail and independents and MHP during the quarter. How that is today? And what impact that kind of has on your margins, if we see more maybe single wides rather than double wides and kind of what's happening in the shift of sales?

Well, I think we're just seeing a continuation of the shift away from traditional mobile homes being sold, I should say, manufactured, I think it's going on that, but it's 66, but we're seeing a continued shift away from principal houses for owner-occupied out in rural America to not necessarily owner-occupied in communities in Urban America. A shift that's been going on for years, but now then let me say something that may change that. If it gets to where people are fearful of living right next to each other and on top with each other, there may be a rejuvenation of living out in the country. If that happens, then we -- our industry is well positioned. We serve rural America in places that the major homebuilders don't serve. We serve where there's no concrete plant, where there's no home depot, no lows, no plumbing contract. So that's what we do. We do that better than anybody would have for decades. If there is any resurgence in demand in rural America, it will mean that we have an uptick in the industry, and I'm wondering if this health scare or health issue that we have is going to make people reevaluate, do they want to live on top of each other or they want to buy 2 acres, 40 miles from the city center. If that comes to pass, then we're back in business in rural America. So to answer your question, for the last couple of years, single wides have been outpacing double wides, and that ratio has been increasing, I'm going to guess that 80% of what we build now are single wides where -- at times it's been 50-50. And so -- but because we're building for communities that put a single wide in and they run it, but if it gets to be where there's more demand for rural housing, rural housing is in double wides. So that ratio is basically just a placeholder for people's value system, do they want to live in the country or they want to live in the city. So if you see a shift this quarter and you might, from the industry into selling multi section homes, I think it will correspond with a value system shift that America would rather live outside the major cities rather than inside the cities. So I hope that answered the question, but if that shift doesn't occur, then we're going to be selling a lot of single wides to park owners.

Our last question comes from the line of Chris Colvin with Breach Inlet Capital.

Curt, congrats on a good quarter and strong outlook. I wanted to clarify. So the revenue, the second quarter of this year, you've got pretty strong visibility. I mean we're halfway through the quarter, but also because of the lag production and orders. So you've got strong visibility into that, and you're saying that you expect it to be in line with, call it, $46 million of last year?

Well, I always base it on production. So I always -- so basically, I think production translates into sales because we don't build speculative product. We only build with sold. So I know that production is going to be about the same as last year. And on top of that, we are currently in the process of buying, I have to do the numbers on this, approximately $4 million worth of product that's private brander for us up in Indiana that we didn't have last year. Now it won't all be done by the end of the second quarter, but a good part of it will be done by the end of the second quarter. So a slight decrease in Texas production, coupled with our increase in private branding in Indiana should result -- I mean, I'm not the guy that does the work on what's filed with the SEC, but should result in relatively flat revenue year-over-year. And that's what I've been saying. As far as $46 million, I kind of look at it how much of the plants' building and then in our revenue, as I'm sure you picked apart, Chris, we include things that aren't just product sales. And those other forms of revenue are on the increase. So product sales particularly in Texas should be flat to down slightly. Add to that product sales in Indiana or the Midwest, it will be up significantly. The net result is we should be flat to slightly up in product sales. And since the other things on our financial statement are growing like interest income, then -- obviously, if we make $20 million a year, and we reinvest it in interest-bearing things. And the next year, we make money on -- we make interest income. So that's where I'm coming to that, but I can't validate the number of $46 million.

Yes. I guess maybe being more instead of, I guess, a bigger picture. Based on the orders you're seeing, production you're doing, it sounds like -- and who knows if we're going to have a second wave, what happens with oil in Texas, but kind of given what you're seeing today, is it fair that your revenue could ultimately be flat to last year? Or is that -- am I getting too aggressive with that comment?

As you correctly pointed out on the intro to your question, we have visibility for the second quarter, we're not guessing. The third quarter is starting to come in line with our plans for the third quarter, and the fourth quarter will be highly dependent on how well we do with our Texas Fort Worth Show in September. But if I -- I guess I would probably be happy if we had flat revenue in 2020 versus 2019. It wouldn't surprise me if it's 5% one side or the other of that. And I would be surprised if it was 10% one side or the other of that. Does that answer your question?

Yes. No, that's helpful. I know you don't give specific guidance, just generally how you're seeing the world. But -- and then gross margins, which bump around a little bit. Those were -- I think it looks like 30% product gross margin. Is product gross margin, is that something that probably comes off? And again, I know it could be lumpy quarter-to-quarter based on mix, but is that something that probably comes down a little bit with pricing?

If we churn out that we have to make significant price concessions in order to maintain production levels, you will see a deterioration of margin. We try to make other concessions other than price, easier financing or lower down payments or we'll give you some priority slides so you can get it quicker or we'll give you some freight or we'll give you some features for -- as a package product that we might not give anybody else. So we tend to do special arrangements with an individual customer as opposed to across the board product -- price decreases. But we intend to maintain our national 4% market share. We think if need be, we'd go toe to toe with anybody out there. We buy our materials as well as anybody. Our labor is as good as anybody's, and we're not going to give up our market share.

Yes. Makes sense. So it sounds like it could be a little pressure at least versus kind of the gross margin you've been seeing, but it could be a small sets. And then SG&A, obviously, is coming down. So all in, earnings could be potentially flat to -- it could be flat, I guess, year-over-year potentially, which most companies aren't talking about that.

If we're able to make the money and reinvest it in interest-bearing activity, which is the plan, then theoretically, the profits could go up even if sales remain flat. That's theoretically what it is. I mean we now have a tangible net worth of approximately $231 million. Last quarter, at the end of the year, it was $222 million. So as that goes up and as we're able to deploy those earnings into profit opportunities then I think we should see increased profits even if revenue remains flat. That would be my -- that's my dream world right there.

Got you. And then last question, share buybacks, is that something you all are -- you're open to in this environment or is that something to pushed back until more clarity on the world?

Well, Cork, do you want to take that? Do you have the numbers?

Yes. I can dig that up fairly quickly, Curt. You'll see in the queue, Chris, that we had some share repurchases during the first quarter, and we also had some that took place thereafter. Clearly, it's something that Curt and Kenny take care of, watch very carefully -- I apologize. I'm still looking for the quantity that was repurchased in the quarter. But I can...

I think you all are still actively repurchasing, I guess, the summary, right?

Yes, within the limits that we're allowed.

I think in Q1, we repurchased 60,000-plus shares at $10-or-some-odd cents a share. We have been somewhat active in the second quarter in the -- I mean -- I mean, if we can buy it at $9 a share, that we're competing with the other people who want to buy. But we're definitely trying to go in there and buy when we think that it's -- that the liquidity issue in our stock is pushing it down. As you know, that our volume is so low, if somebody goes out there and tries to sell 50,000 squares, he can move the market pretty significantly. So we try to take advantage of those anomalies. If it gets up to, let's just say, 1.3 or 4x book, we're probably not going to be in the market, but if it gets down anywhere near book, we're going to be all about that probably as long as we have the authority to do so.

Yes. Makes sense. Well, I really appreciate it, and great job. Look forward to hearing the next update.

Thank you. And this does conclude today's question-and-answer session. I would now like to turn the call back to Curt Hodgson for closing remarks.

Well, folks, I don't know how many are on line, but we appreciate you all listening in. I will say that this has probably been the most interesting time of my business life, and I've been around a lot of interesting times. There's been a lot of moves up and down. I've been up the 3:00 in the morning, checking in on things and then back to sleep -- sleeping back at 4. And so it's kind of interesting for somebody that the things that they were born to do this. I think we're managing it very adeptly, and here, I'm proud of the fact that our tangible book value is up 4%, and it's kind of how I measure our success, and I hope that you shareholders stay with us. As I've said, we will probably outperform our peer group during these challenging times and I am hoping the numbers show that in the next quarters as well as this one. Thanks for attending the call, and we look forward to hearing from you next time. See you.

Ladies and gentlemen, this concludes today's conference call. Thank you for participating, and you may now disconnect.