McGrath RentCorp (MGRC) Q1 2023 Earnings Call Transcript

McGrath RentCorp (NASDAQ:MGRC) Q1 2023 Earnings Conference Call May 4, 2023 5:00 PM ET

Company Participants

Joe Hanna – Chief Executive Officer

Keith Pratt – Chief Financial Officer

Conference Call Participants

Scott Schneeberger – Oppenheimer

Marc Riddick – Sidoti

Operator

Ladies and gentlemen, thank you for standing by. Welcome to the McGrath RentCorp First Quarter 2023 Earnings Call. At this time, all conference participants are in a listen-only mode. Later, we will conduct a question-and-answer session. [Operator instructions] This conference call is being recorded today, Thursday, May 4, 2023.

Before we begin, note that the matters the company management will be discussing today that are not statements of historical facts are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, including statements regarding our full year 2023 financial outlook, as well as statements relating to the company’s expectations, strategies, prospects, or targets. These forward-looking statements are not guarantees of future performance and involve significant risks and uncertainties that could cause our actual results to differ materially from those projected. Important factors that could cause actual results to differ materially from the company’s expectations are disclosed under Risk Factors in the company’s Form 10-K and other SEC filings.

Forward-looking statements are made only as of the date hereof, except as otherwise required by law. We assume no obligation to update any forward-looking statements. In addition to the press release issued today, the company also filed with the SEC the earnings release on Form 8-K and its Form 10-Q for the quarter ended March 31, 2023.

Speaking today will be Joe Hanna, Chief Executive Officer; and Keith Pratt, Chief Financial Officer.

I will now turn the call over to Mr. Hanna. Please go ahead, sir.

Joe Hanna

Thank you, Travis. Good afternoon, everyone. Thank you for joining us on our call today. We were very pleased with our first quarter, which was unlike any other in our history.

I am incredibly proud of all that we accomplished to transform and grow McGrath. We divested Adler, a noncore asset, acquired Vesta Modular, a strategic target and worked on two tuck-in portable storage companies, Brekke Storage, which we announced on March 3 and Dixie Temporary Storage, which we announced on April 3. During the quarter, we also navigated the effects of unusual weather with flawless execution and delivered on a total company basis from continuing operations, 31% higher total revenues and 23% higher adjusted EBITDA.

I will begin my comments with Mobile Modular. We realized rental revenue growth in all of our geographic markets and growth in our market verticals was broad-based. Customers are continuing construction projects at a strong pace, and we saw no evidence of a slowdown. On the education side, rental revenues grew 8%, and we heard from school districts that modernization projects are being planned as expected and specifically in our growth markets, student population influx is continuing and driving demand on a consistent basis. The portable storage business continued to grow nicely with a 27% increase in rental revenues and the recent tuck-in acquisitions are integrating nicely and as planned.

At Mobile Modular, for the quarter, our focus on consistent execution enabled us to increase pricing, deploy new equipment and improve utilization. We had very healthy rental rates on new shipments, which were 25% higher than first quarter 2022. As the fleet cycles, this rate differential works its way into the installed base increasing rates in total. The overall effect on the bottom line is an improvement in rental operations gross profit, which we achieved in the quarter.

Noteworthy during the quarter for Mobile Modular and Portable Storage, our quote volumes were greater this quarter than in the same quarter last year and close ratios have remained consistent. We have not heard of any significant indications of a slowdown in projects planned from customers.

At TRS-RenTelco, the business had positive rental revenue growth, while we felt the effects of the computer semiconductor business slowdown as chip demand has softened worldwide. All our other market verticals were up for the quarter and quote volumes were above 2022.

We have taken steps to mitigate the softer demand by emphasizing sales of equipment to improve utilization. We also felt the effects of incoming equipment that, due to lead times, had to be ordered well ahead of projected demand. The secondary sales market was healthy in the quarter, and we have put in place extra incentives for the sales team to move equipment. I am confident in the steps the team is taking. We have managed cycles many times, so we are pulling appropriate levers to normalize our KPIs and to keep the business strong.

Turning back now to focus on the larger of the two divisions. We have shared on past calls that our strategic direction is to focus on growth in our modular business. With the completion of the Vesta acquisition, as well as work on the two tuck-ins during the quarter, it should be clear that we are upholding that commitment. The Vesta acquisition provides an even greater platform for growth, giving us access to 13 additional markets, as well as greater density in 15 others. The mix of commercial and education customers fits ideally with our installed base, and we can effectively integrate our operations for greater efficiency. We have been very impressed with the Vesta team as they have a depth of experience and customer focus that is a great culture fit with us.

Turning to integration efforts. We are on schedule, and we’ve been pleased with the progress made in just a few short weeks since we closed the transactions. The teams have thoroughly planned the integration steps, and we are on a rigorous schedule to ensure that all items are completed. To date, we are progressing as planned. Our first quarter financial results were in line with expectations. We have clear visibility on the most important items to get right, and I feel very confident that Vesta operations will be an important contributor to McGrath for 2023 and beyond.

In our portable storage operations, we have achieved significant organic growth over the last few years. To expand our geographic coverage, we pursued two notable tuck-ins to completion over the past few months. Brekke opens up the Colorado market with a fleet of 2,700 units, which is an excellent jump start for us in a vibrant and growing state. Dixie, which we completed just after the quarter end has a fleet of 800 units that will open up new geography in the South Carolina market, which is another growth area for us.

Our pipeline of additional tuck-in acquisitions is robust, and we are continuing to execute our strategy. We see further opportunities to augment our strong organic growth with portable storage tuck-ins, and this can be an effective way to smartly deploy growth capital.

On the modular building side, our capabilities tie into some of the large infrastructure projects that are underway in various locations across the U.S. We are well positioned to support these projects in the areas we operate. The acquisitions we completed over the past two years have provided a much larger geographic footprint and access to a greater customer base. Large projects are our specialty as we have a capable and experienced project management group that has been augmented with the Vesta acquisition.

With our large inventory and production centers unique in the industry, we can customize units to customer specifications, which is work we not only charge for, but also gain additional loyalty from customers as they get units tailored to their needs. This capability has been a hallmark of mobile modular for many years.

Circling back to my opening statement, we were very pleased with our first quarter results and everything we accomplished in the business. This was a huge collective effort, and I want to thank everyone at McGrath who went above and beyond to make this happen.

We are off to a strong start for the year, and our outlook for the remainder of the year is positive. We are on full throttle execution to grow our modular business and the steps we took in the first quarter clearly demonstrate the organization has the capability to execute M&A, grow organically and deliver excellent results. We are confident in our outlook for 2023 and have raised guidance based on the performance of the business.

So now I will turn the call over to Keith, who will expand on my overall comments with greater financial detail.

Keith Pratt

Thank you, Joe, and good afternoon, everyone. As Joe highlighted, we delivered strong results in the first quarter with healthy performance across the board. Our Mobile Modular segment saw notable contributions from the Vesta Modular acquisition with two months of performance included in our first quarter results. Additionally, our core rental businesses, excluding the performance from our recent acquisitions, continued to reflect broad-based organic growth during the quarter.

In my financial review today, I’m going to provide highlights from our first quarter results and specifics of our current outlook for full year 2023 performance. Before getting into my detailed comments, as a reminder, on February 1, we completed the acquisition of Vesta Modular and concurrent divestiture of Adler Tank Rentals. The effects of these transformational transactions were included in the first quarter results. As a result of the divestiture of our Adler Tanks business, the company recognized a net gain on the sale of discontinued operations of $58.9 million during the quarter, which was included in both income from discontinued operations and the company’s combined net income for the period. The rest of my comments will be focused on results from continuing operations, which excludes the impact from the Adler gain on sale and income from the discontinued Adler operations.

Looking at the overall corporate results for the first quarter, total revenues increased 31% to $163.7 million. The revenue increase was from both improved rental operations and sales revenues with Mobile Modular and TRS-RenTelco, each growing rental revenues year over year.

First quarter adjusted EBITDA increased 23% to $61.8 million, and consolidated adjusted EBITDA margin was 38%. Breaking the results down by rental division operating performance as compared to the first quarter of 2022, Mobile Modular had an impressive quarter with adjusted EBITDA increasing 40% to $42.4 million.

Total revenues increased $36 million or 40% to $126.7 million. There were increases across all revenue streams, including 32% higher rental revenues, 43% higher rental-related services revenues and 70% higher sales revenues. Vesta contributed $17.6 million total revenue and $6.8 million adjusted EBITDA for the current quarter results. In addition to the contribution from the Vesta acquisition, our rental operations sustained strong organic growth across our commercial, education and portable storage customer bases.

Sales revenues increased 70% or $7.2 million to $17.6 million, demonstrating progress with our initiative to grow modular sales projects. Vesta contributed $6 million of the total increase in sales revenues. We continued our disciplined fleet management and achieved average fleet utilization of 79.6%, up from 77.1% a year ago. This utilization achievement was accomplished while also growing our fleet and increasing average rental rates.

With our strategic investment focus on modulars further supported by our recent acquisitions, the average fleet size for the quarter increased by $170 million or 17% and average equipment on rent increased by $160.5 million or 21% as we successfully improved utilization. The average monthly rental rate for the portfolio was 2.89%, which was 9% higher than a year ago and reflects our focus on pricing optimization, as well as continued healthy market conditions. Higher rental revenues were partly offset by 29% higher inventory center costs and 21% higher depreciation expense, resulting in rental margins of 56%, up from 55% a year ago.

At TRS-RenTelco, adjusted EBITDA was $20.6 million, which was comparable to last year. Total revenues increased $2.6 million or 8% to $36.1 million. We saw increases in both rental operations and sales revenues. Rental revenues for the quarter increased 2%. We saw continued demand for both general purpose equipment and communications rentals, partly offset by softer demand from the computer semiconductor market.

The average monthly rental rate was 4.14%, up 3% compared to a year ago. This higher average rental rate, coupled with comparable average equipment on rent reflects stable demand and pricing for both general purpose and communications equipment rentals. Average utilization for the first quarter was 59.2% compared to 64.6% a year ago and rental margins were 40% compared to 41% a year ago. The decline in average utilization during the quarter reflects the softer demand from the computer semiconductor market, as well as extended supply lead times for new equipment. Sales revenues increased 30% year over year to $5.1 million, with gross profit increasing 19% to $2.9 million.

The remainder of my comments will be on a total company basis from continuing operations. First quarter selling and administrative expenses increased $24.9 million to $57.5 million. The increase included $14.2 million in acquisition and divestiture-related transactions costs and $3 million of Vesta expenses. Interest expense was $7.5 million, an increase of $5.2 million as a result of higher average interest rates and $142.1 million higher average debt levels during the quarter, which was primarily the result of the funding of the Vesta and Brekke acquisitions. The fourth quarter provision for income taxes was based on an effective tax rate of 23.8% compared to 23.5% a year earlier.

Turning to our year-to-date cash flow highlights. Net cash provided by operating activities was $35.7 million compared to $51.7 million in the prior year, with transaction expenses accounting for most of the reduction. Rental equipment purchases, excluding equipment received from the Vesta acquisition were $77.7 million compared to $39.4 million in the prior year. With healthy modular demand pipelines and high fleet utilization, we have front-loaded some of our new rental equipment capital spending for the year. The total cash paid for acquisitions of Vesta and Brekke was $453.6 million, emphasizing our strategic initiatives to grow the modular segment.

In addition to significant investments in new fleet and the acquisitions in the quarter, healthy cash generation allowed us to pay $11.4 million in shareholder dividends. At quarter end, we had net borrowings of $658.8 million comprised of $100 million notes outstanding and $558.8 million under our credit facility with capacity to borrow an additional $91.2 million under our lines of credit. The ratio of funded debt to the last 12 months actual adjusted EBITDA was 2.2 to 1.

Finally, turning to our updated 2023 financial outlook. For the full year, we are increasing our outlook and currently expect results from continuing operations to be total revenue between $790 million and $820 million. Adjusted EBITDA between $300 million and $315 million. Gross rental equipment capital expenditures between $190 million and $210 million.

Please note that our adjusted EBITDA outlook excludes transaction costs related to the Vesta acquisition and Adler divestiture and also excludes the income from discontinued operations and the gain on sale from the Adler divestiture.

We’re very proud of McGrath’s strong first quarter performance. As we look ahead for the remainder of the year, we will be working hard to integrate the acquired businesses while staying focused on furthering our modular growth strategies.

That concludes our prepared remarks. Travis, you may now open the lines for questions.

Question-and-Answer Session

Operator

Thank you, sir. [Operator instructions] We do have a question from Scott Schneeberger with Oppenheimer.

Scott Schneeberger

Thanks. Good afternoon, guys. I have a few questions. I’d like to start out, I guess, on Mobile Modular, it sounds like the pricing was quite strong. Could you speak, I guess, Keith, a little bit more specifically to each of the key asset classes, their categories, commercial, education and portable. It sounds like broad-based strong but more some places than others. Just kind of curious what you are seeing there and sustainability. Thanks.

Keith Pratt

Yes, Scott, Joe remarked, the 25% lift on modular deliveries year-over-year, we’re seeing strong pricing there. I would say the comment is, overall, very strong pricing. We put a lot of technology to work, a lot of new disciplines and how we price over the last few years. That continues to yield benefit for us in the market.

And I would say all that toolkit is used across the board. As you know, when we run the business, we’re balancing, putting fleet to work with getting attractive pricing. And our goal is to achieve overall good economic returns on the capital that we’re managing. And you really see this with ongoing gains on the pricing front, as well as really strong utilization.

And I would point out our utilization, it was down slightly from the fourth quarter. That’s a function of the Vesta fleet that we added, which was not quite as highly utilized as our legacy modular fleet. So I do want to keep that in focus as well. Very good achievements by the business, strong gains on pricing, very healthy utilization and absorbing the Vesta fleet.

Joe Hanna

Hey, Scott, I’ll just chime in there to really quick. We saw nice pricing in – for a new fleet that’s going out. We saw nice pricing increases there for both modulars and portable storage. So in both of those parts of the business.

Scott Schneeberger

Excellent. Thanks, Joe and Keith. I have a few more here. Could you guys – probably, Joe, could you speak to the classroom environment, particularly California, but across your geographies.

In your prepared remarks, sounds like that’s still strong. It was good to hear weather did not really – it’s obviously, a lot of your geographies endured some tough weather, but it sounds like you handled that very well in the quarter. But back to the core of the question, how is the classroom outlook for this year sounds good, but if you can go in a little deeper, I would appreciate it. Thank you.

Joe Hanna

Yes. The classroom outlook is good, and that really ties back to funding in California since you asked about that specifically. The vast majority of local bond measures that get put out to voters get passed. And that’s continued to happen over the last several election cycles, and there’s money out there available.

And so, what we’re seeing is even with shifting of population in California, we’re seeing a lot of activity out in the Central Valley right now, where there’s growth in student population that’s taking place. And so, that’s been very good. Way over on the East Coast, as an example, in some states that have typically been a little bit slower for us, we’re actually seeing a lot of money be deployed right now. North Carolina is an example.

They just haven’t done much lately and they’re actually really starting to spend money on growth because that’s a nice growth state. People are moving there, and they’re realizing that their facilities scheduling is behind and they need to get more schools built. So that’s been a good environment for us. Florida really doing well down there.

So it’s just been a good environment, and we’re – we have a good outlook for this year in terms of classroom placements.

Scott Schneeberger

Sounds good. Still in Mobile Modular. Just curious an update on site-related services and Mobile Modular Plus. Still early stages in both a little bit more advanced in site-related services. But just how are you progressing there? I don’t know that you’ve quantified or broken out that component, but anything qualitative that you could share would be great.

Joe Hanna

Yes. We have not broken that out at this point, but we’re seeing growth in both of those areas, as well as our custom sales that we’ve been emphasizing. So we’re still really got the accelerator down on those things. It’s emphasized and important to the division to grow those initiatives, and that’s what’s happening.

So we’re very pleased with all of the metrics that we’re seeing from both the Mobile Modular Plus and site-related services, so all up and to the right.

Scott Schneeberger

Thanks. A few more here. One, in TRS, it sounded like from your commentary, you ordered ahead of time, I guess, supply chain constraints anticipating certain demand that may not have arisen. It sounds like semiconductor specifically, but you said you’ve incentivized your sales team to right size the fleet appropriately.

It sounds like that’s foreshadowing of even more challenging utilization levels to come. Is that how we should interpret that? Or is this something that is a shorter-term speed bump that you’re going to navigate through successfully move beyond quickly?

Joe Hanna

Yes, Scott, it’s a good question. Here’s what’s interesting about what’s happening right now. When we look at our quote volumes, we look at our activity on our website, specifically TRS because I checked into this, it’s actually quite healthy. And actually, our pipeline right now is over 10% higher than it was at the same time last year in the first quarter.

So it’s really encouraging to see those indicators out there. And the semiconductor softness, we just have to manage through it. Hopefully, it’s not something that’s going to be pervasive for an extended period here. But we have had some fleet come in that we ordered in the fourth quarter that hit our shelves.

And if we don’t see us having a good eyesight on moving that equipment out for rental opportunities, we’re going to sell it. And like I said in my prepared comments, we’ve incented the sales force to do that, and that’s exactly what’s taking place and that really kicked off in early April. So I see this as a cycle for us. We’ve managed these types of things before, and I think we’re well prepared to continue to do that. So I’m not overly concerned about it.

Keith Pratt

But one way you can maybe think about the electronics business is in normal healthy times. Good utilization in that business is in the mid-60s. That’s really good. I think with COVID and the disruption to ordering equipment and the extended lead times, as you commented, it’s harder on our team to get exactly the right product on the shelf, so to speak, in a timely fashion.

You have to make estimates much further ahead of the point of demand. So we’ve seen utilization drop more to the low 60s level. And I think that’s probably an appropriate level with the disruptions to supply lead times. And when we saw it drop below 60, that’s just not common for us.

And that’s why Joe described the kinds of actions that we take. It does take a few quarters to work through a situation like that. It just means we’re not running the business, I’d say, at our optimum level because we’ve got one portion of the market, which has got weaker demand than we typically would expect.

Scott Schneeberger

All right. Thanks. That’s helpful color. I want to turn it now to front-loading the CapEx. Could you delve in a little bit more to where that allocation is going? Clearly overall robustness. So I could probably guess, but Keith, could you share the kind of magnitude of full year expectations, how you’re thinking about CapEx for the full year and the cadence? Thank you.

Keith Pratt

Sure. A couple of things, Scott. First thing is our overall CapEx plans for the year. At this point, we haven’t made a change. If you look at the guidance, the initial range we gave in February $190 million to $210 million, that remains the same in our update. We have front-loaded, and you can see that in the cash flow statement. The vast majority of the spend is going into the modular segment. And within that segment, it’s more heavily weighted on the modular building side, although we’re still funding portable storage very enthusiastically as well, there’s still good opportunity there. On the modular building side, we’re supporting both the commercial side and the education side.

We’ve seen very good market opportunities on the commercial side. And I would say that the new CapEx is being tilted more toward markets where we’re still growing the business and essentially gaining share. So if you think of the design space acquisition that opened up a presence in a lot of the Western states, we’re now in those markets for a couple of years, and we’ve seen a lot of opportunity to grow and add capital in an attractive manner. And that’s what we’re doing, and that’s where we’re continuing to invest.

And similarly, some of the East Coast markets, Joe referenced North Carolina, as an example. Those are markets where we’ve been in the region for a while, but we haven’t really reached our targeted level of presence. And so, those are still long-term growth markets for McGrath, and we’re still in a prudent way, continuing to invest in the market, add equipment where we see the right opportunity. So this is all part of the longer-term strategy the level of CapEx in what I call our very strong legacy markets is not as big a factor.

We already have a lot of equipment in California. We have a very good presence there. But the balance is more on those growth markets, markets where we still have a lot of opportunity to take on a bigger role in the market.

Scott Schneeberger

Sounds good. Congrats on here multiple acquisitions of acquisitions of wait and a strong start to the year. I’ll turn it over.

Joe Hanna

Thank you, Scott.

Keith Pratt

Thank you

Operator

Our next question comes from Marc Riddick with Sidoti.

Marc Riddick

Hi. Good afternoon.

Joe Hanna

Hi, Marc.

Marc Riddick

So I wanted to – and this is actually kind of a question I almost never asked, but I sort of was curious about given it’s encouraging that you guys weren’t hit with the weather given kind of almost everybody else was. I was sort of curious, though, as to maybe from an opportunistic standpoint, we’ve seen extreme weather, not just in California, but other parts of the country.

So I wondered if you had any thoughts on whether or not that could either boost a little demand for classrooms, whether there’s anything that could end up being an opportunity from what you’re seeing there relative to maybe prior years.

Joe Hanna

Marc, if it’s tied to weather, I wouldn’t say there’s anything really, really significant that’s taking place. In California, just a big example, there were certain areas that got flooded. Now, that had a tendency to kind of push some construction projects and things like that. But – and I think that we did get some school opportunities there because of flooding that took place.

But overall, kind of the weather is an event, and we deal with that particular event when it happens and then we move on. So I’m not seeing any kind of long-term effects that would affect the business at this point.

Marc Riddick

Okay. Great. And then, so I want to shift gears a little bit. We haven’t had chance to talk as much about. It’s been, I guess, now about a year, a little over a year, I guess, now actually, I guess, more than a year time flies, since the Design Space and Kitchens. I was wondering if you could sort of give an update on that because you did make mention of sort of some of the learnings that took place, particularly with Design Space, and sort of how that will play into the integration efforts with Vesta. So, maybe you could give a bit of an update there.

Joe Hanna

Yes. It’s a good question, Marc. When we close Design Space, McGrath actually hadn’t completed a transaction of that size really ever. And so, we – what I like to refer to the team is that you have to develop muscle tone for certain things like this.

And we actually hadn’t developed that muscle tone. And so, we went through some learning there as we acquired that business and integrated it into our systems. And I think from that experience, we have a really good process that we developed for Vesta. And I think we’re coming into that acquisition more organized and with a more clear understanding of what we need to get and when we need to get it.

And I’m really happy about that. And it’s working out very nicely for us. We’ve got very organized processes. We know exactly what we need to do.

The team is really highly oriented on getting it done. And I think we’ve really developed much better muscle tone there. And so, we’ve learned a lot, and we’re deploying all those learnings into the Vesta acquisition and integration. So that’s why I’m very pleased that it’s going well so far.

Marc Riddick

Great. And then, I know we – so I discussed this a little bit, I guess, but I wanted to sort of highlight the acquisitions that were done sort of since the Vesta and Adler divestiture. I wanted to talk a little bit about sort of that expansion geographically and the various footprints that you’ve added with those two acquisitions. And then, maybe sort of – is there sort of a general target as to some key markets that you might want to get into that you’re not in? Or are there sort of lead areas that you’d sort of highlight as to where you really want to be? And conversely, are there places you don’t necessarily want to be as far as how you expand throughout the country? Thanks.

Joe Hanna

Yes. So the great thing about tuck-ins, especially in markets where we do not have a presence is it is a complete jump start. You get the equipment, you get some personnel. Typically, you get a facility that you can jump start and expand from.

And so, with the Brekke acquisition, as an example, we really didn’t have much of a presence in Colorado. That really gets us a presence there. Jump starts us there, gets us with a good customer list and a good – gets us in with a company that has a good reputation. And so, off we go.

And so, we look for those opportunities and our list of potential acquisitions that we have is quite long, and it’s a complete bonus when we get to open up a new area like we did with Brekke and we did with Dixie. Now, that always doesn’t happen. Sometimes somebody may come for sale in an area that we’re already operating in. And that’s actually a plus two.

We can get it for the right price because it increases our density and brings with it new customers. And so, all these tuck-ins that we’re taking a look at right now and the two that we pull the trigger on quite happy with, and we’d like to do more.

Marc Riddick

That sounds, good to hear.

Keith Pratt

Yes, if I could just add.

Marc Riddick

Of course. Go ahead.

Keith Pratt

A lot of good local operators at some of whom have built really good quality fleets. And when there’s a situation where those operators are considering selling the business, when we look at the ones that are attractive to us, a number of things really start to happen. One is we’ve got to do the deal with the right economics for both parties. But under McGrath’s ownership, all the tools that Joe described, we bring to bear on that new operation.

So we can look at pricing optimization, we can look at adding additional services like Mobile Modular Plus some of the offerings to put inside the box. And for good operators in a good market, with our backing, we can generally grow the presence in that market. So they give us more places to deploy growth capital. We’ve done a few of these over the years, not many. Most of our growth in portable storage was completely organic, but we’ve been – seeing this is a way to add to it.

Marc Riddick

Right. Sounds good. Thank you very much, guys.

Joe Hanna

Thanks, Marc.

Keith Pratt

Thank you.

Operator

Ladies and gentlemen, that appears to be the last question. Let me now turn the call back over to Mr. Hanna for any closing remarks.

Joe Hanna

I’d like to thank everyone for joining us on the call today and for your continuing interest in our company. We look forward to speaking with you again in late July to review our second quarter results.

Operator

Ladies and gentlemen, this concludes today’s conference call. Thank you for your participation. You may now disconnect.