Q1 2024 Eagle Materials Inc Earnings Call
Participants
D. Craig Kesler; Executive VP of Finance & Administration and CFO; Eagle Materials Inc.
Michael R. Haack; CEO, President & Director; Eagle Materials Inc.
Adam Robert Thalhimer; Director of Research & Partner; Thompson, Davis & Company, Inc., Research Division
Asher Melech Sohnen; Analyst; Citigroup Inc., Research Division
Brent Edward Thielman; MD & Senior Research Analyst; D.A. Davidson & Co., Research Division
Jatin Khanna; Research Analyst; Goldman Sachs Group, Inc., Research Division
Stanley Stoker Elliott; VP & Analyst; Stifel, Nicolaus & Company, Incorporated, Research Division
Trey Grooms; MD & Analyst; Stephens Inc., Research Division
Unidentified Analyst
Presentation
Operator
Good day, everyone, and welcome to Eagle Materials First Quarter of Fiscal 2024 Earnings Conference Call. This call is being recorded. At this time, I would like to turn the call over to Eagle's President and Chief Executive Officer, Mr. Michael Haack. Mr. Haack, please go ahead, sir.
Michael R. Haack
Thank you. Good morning. Welcome to Eagle Materials conference call for our first quarter of fiscal year 2024. This is Michael Haack. Joining me today are Craig Kesler, our Chief Financial Officer; and Alex Haddock, Vice President of Investor Relations, Strategy and Corporate Development. There will be a slide presentation made in connection with this call. To access it, please go to eaglematerials.com and click on the link to the webcast.
While you're accessing the slides, please note that the first slide covers our cautionary disclosure regarding forward-looking statements made during this call. These statements are subject to risks and uncertainties that could cause results to differ from those discussed during this call. For further information, please refer to this disclosure, which is also included at the end of our press release.
Let me start by saying how pleased I am to discuss another record quarter and a strong start to our fiscal year 2024. This quarter, we generated record revenue and net earnings expanded gross margin by 240 basis points, increased adjusted EPS by 26% and returned $83 million to shareholders through share repurchases and dividends.
Our performance in the current economic environment, where questions about the U.S. economy have dominated headlines for several quarters, demonstrates how our low-cost producer position benefits us across a variety of market conditions.
You've heard me say many times that the ability to maintain our low-cost producer position ultimately relies on the industry-leading execution by our people. Therefore, I want to thank all of the Eagle employees for their time and dedication that went into achieving the results we have had not only this quarter but over the past years, you make a difference.
Safety is a fundamental part of the Eagle culture. I could best summarize our safety culture as one where Eagle employees care for and watch out for each other. We have been successful in minimizing safety issues using our near miss reporting system that identifies leading indicators to address safety issues before they happen. I'm happy to report that Eagle continues to set the benchmark in industry safety maintaining a total reportable incident rate well below the industry average.
Now let me turn to more specifics on our performance this past quarter, starting with the heavy side. Both our Cement and Concrete and Aggregates businesses performed well, growing revenue by 15% on a combined basis versus the prior year first quarter.
Our Cement business continues to benefit from robust demand that is outpacing industry supply and every plant in Eagle's network remains in a near sold-out position. It should be noted that our Western cement network did experience very wet weather over this fiscal quarter, which led to a slower start to the construction season in these states.
As a reminder, wet weather means that the timing of a project is delayed or interrupted, it does not generally imply demand destruction. The supply-demand dynamics has proved favorable -- a favorable pricing backdrop for our cement business as well as we realized a 15% year-over-year price increase.
As we mentioned on our last call, we have announced a July 1 price increase in about half our cement markets. We continue to monitor market conditions over the coming quarters to determine if or when we implement additional price increases.
During the first quarter of fiscal 2024, our joint venture operation in Texas Lehigh, was negatively affected by an extended outage that addressed ongoing equipment issues at this facility over this past year. The extended outage resulted in increased maintenance costs and reduced production. Equipment reliability improved in July, but additional work will need to be completed during our planned maintenance outage in fiscal 2025, which will again increase the outage time line at the joint venture facility.
Growing both our Cement and Aggregates businesses is a strategic priority for Eagle. As previously announced, we completed the purchase of our Cement import terminal in Northern California, strengthening our competitive position in this market.
Environmental stewardship is another priority at Eagle Materials to help minimize our CO2 footprint. We are exploring the increased use of alternative fuels at our cement plants. We are laser-focused on transitioning our construction-grade cement production to Portland Limestone Cement or PLC.
PLC reduces the carbon intensity of our cement footprint and makes our clinker production go further supporting our near sold-out position across our network. We are targeting to converting 100% of our manufactured construction-grade cement to PLC or blended cement by 2025. I'm extremely proud to say that this quarter, we passed the 50% mark for PLC for our cement plant network.
Now let me turn to the performance last quarter on the light side. Over this past year, the rapid rise in interest rates led many to believe housing demand would drop dramatically along with wallboard demand. However, Wallboard sales volume and pricing have remained resilient. This is from several factors. First, let's look at the demand side.
Our plants are located in the Sunbelt, which is the largest, most stable residential construction region in the U.S. and continues to be strong. Inventory of existing homes for sale are at near all-time lows, which result in increased demand for new home construction. This has been reflected in an uptick in single-family permits recently.
As for the supply side, the reduction of synthetic gypsum supply from the retirement of U.S. coal-fired power plants and the cost of accessing natural gypsum by importing it from abroad is having a significant effect on the industry by increasing the cost curve and capping effective supply for East Coast wallboard producers.
Looking at the cost structure of Eagle and our low-cost producer position, we are advantaged in several aspects. Eagle owns or controls many decades of reserves in close proximity of all of our wallboard plants, which means we can cost-effectively access our raw material. The one plant that we utilized synthetic gypsum has many decades contract for material supply. Our main costs, OCC, freight and energy came down sequentially, providing a tailwind.
Now let me turn to some thoughts on the balance of the year, starting on the heavy side. Demand fundamentals are in place to provide multiyear visibility in cement and concrete and aggregates. We expect demand for both businesses to remain steady driven by infrastructure spending and heavy industrial and manufacturing construction activity.
Infrastructure awards are reaching multi-decade highs, and our cement business is poised to benefit from the federal overlay to robust state and local government spending. The States Eagle operates and are well ahead of the national average on growth in infrastructure contract awards proving that geography matters. Nonresidential spending is benefiting from elevated levels of activity as well as it is being sustained by unprecedented spending and manufacturing projects.
On the wallboard side of the business, we stated in the past that the near-term outlook is more unclear than on the heavy side. But in some respects, that is still true. That being said, a few things have become clear over the past quarter and the first half of calendar year 2023.
First is the supply chain-driven backlogs and homebuilding construction continued to support activity. This is evidenced in the fact that multifamily units under construction in June had an all-time record and total units under construction is just 28,000 short of an all-time record.
The second factor that's becoming clear is the effect of housing supply shortages on new home building. The lack of existing inventory to support home buyer demand means new home construction is needed to prop up overall inventory levels. While the outlook here is still difficult to predict, we have increasing confidence in the supply-demand scenario for wallboard over the mid and long term.
In summary, I am most encouraged about this year ahead because of Eagle's proven track record where it matters. First, we know how to manage through economic cycles. Our current results show that we can execute win and wear it counts across dynamic market conditions.
Second, our business generates impressive cash flows, and we are responsible stewards of that cash. Our focus has been and always will be on how to sustain the cash flow generation capability of our businesses and making the best use of that cash flow.
Our capital allocation policies have been and will continue to be centralized around growing our core business. This includes investing in our plants to keep them in like new condition, growing through acquisitions when they meet our strategic and financial goals or returning cash to shareholders through stock purchases or dividends.
With that, I'll turn it over to Craig for the financial review of our quarter.
D. Craig Kesler
Thank you, Michael. As mentioned, first quarter revenue was a record $602 million, an increase of 7% from the prior year. Excluding the recently acquired Cement terminal in Northern California, revenue was up 6%. The increase reflects higher Wallboard and Cement sales prices. The strong performance in both Cement and Wallboard contributed to record EPS during the quarter.
First quarter earnings per share was $3.40, a 24% increase from the prior year. The increase was driven by improved earnings and a 7% reduction in fully diluted shares due to our buyback program. Excluding the nonroutine items highlighted in the earnings release, first quarter adjusted EPS was up 26% to $3.55.
Turning now to segment performance, highlighted on the next slide. In our Heavy Materials sector, which includes our Cement and Concrete and Aggregates segments, revenue increased 15%, driven by the increase in cement sales prices implemented earlier this year and the contribution from the recently acquired terminal in Northern California.
Operating earnings were up 19%, primarily because of increased cement prices, which were partially offset by higher maintenance costs during the quarter. The increase in maintenance costs was due to our decision to pull forward maintenance programs at 2 of our cement facilities. And as Michael mentioned, we also took an extended maintenance outage at our joint venture in Texas, which increased maintenance cost and reduced production.
Given the strong demand backdrop, we implemented a second round of cement price increases in early July and approximately half of our markets. And within the Concrete and Aggregates segment, revenue increased 9% and operating earnings improved 23% on higher pricing and higher aggregate sales volume. The prior year also included approximately $1.2 million of costs associated with the step-up in inventory values related to the acquisition of the Aggregates business in Northern Colorado.
Moving to the Light Materials sector on the next slide. Revenue decreased 2%, reflecting lower Wallboard sales volume, partially offset by higher Wallboard sales prices. Operating earnings in the sector increased 12% to $98 million, reflecting higher net sales prices and lower input costs for recycled fiber, freight and energy.
Looking now at our cash flow. We continue to generate very strong cash flow and allocate capital in a disciplined way. In the first quarter, operating cash flow increased 12% to $140 million reflecting improved earnings and working capital management and capital spending increased to $36 million.
During the quarter, we completed the acquisition of a cement import terminal in Stockton, California, with a purchase price of $55 million, and we also repurchased 484,000 shares of our common stock for $74 million and paid our quarterly dividend returning $83 million to shareholders. We have 7.3 million shares remaining under our current repurchase authorization.
Finally, a look at our capital structure which continues to give us significant financial flexibility. At June 30, our net debt-to-cap ratio was 47% and our net debt-to-EBITDA leverage ratio remained at 1.4x. We ended the quarter with $53 million of cash on hand. Total committed liquidity at the end of the quarter was approximately $573 million, and we have no meaningful near-term debt maturities.
Thank you for attending today's call. We'll now move to the question-and-answer session. Betsy, I'll turn it over to you.
Question and Answer Session
Operator
We will now begin the question-and-answer session. (Operator Instructions). The first question today comes from Trey Grooms with Stephens.
Trey Grooms
First, I wanted to touch on Wallboard. So volume has held in there especially well, especially in this quarter, I mean, down 4%. Is there still some benefit from the backlog of maybe unfinished homes? Or what's kind of driving that outperformance in the quarter? And then maybe if you could kind of touch on how that Wallboard volume might have progressed through the quarter? I mean, was it fairly kind of stable at the quarter average? Or did you see it waver from that at all?
And then, Michael understanding it's murky, given the uptick or maybe at least the bottoming, we've seen in starts and the optimism we're hearing from the homebuilders and given that lag there between a start and when Wallboard goes into the process. What are you thinking on kind of the timing as far as maybe a rebound we may see in Wallboard volume?
D. Craig Kesler
Yes, Trey. Good questions. Look, as we've said in last quarter and into this quarter, volume -- sales volume have remained very resilient and a lot of that was the backlog of activity as the home construction cycle elongated. Look, I'd also point out geographically, where we're positioned is the most robust market in the U.S. in that Sunbelt area generally in the southern half of the U.S. So we benefit from our regional position.
But as you pointed out, you've also started to see some really good order growth at the homebuilder level, and that does turn into wallboard consumption shortly thereafter. So resilient in the near term, with an improving outlook from the homebuilders on their order intake sets up for a pretty decent wallboard environment.
Trey Grooms
Yes. Okay. Understood. And that I guess just as switching gears here to cement, just so we can get some understanding around the maintenance costs you pointed out, Craig. On wholly owned, you saw the costs were up there. And I think you talked about 2 plants there seeing more maintenance. Is there any way to quantify this? And is that going to continue kind of as we go into the next quarter? Or is that behind us?
D. Craig Kesler
No, this is the quarter that we do the bulk of our maintenance across the network. So it's contained in this. Sometimes those maintenance outages fall between a quarter, March or April, and this quarter it all or this year, it all fell into the April, May time frame, so that you don't have those costs in subsequent quarters. And it's the right thing to do, maintaining these assets and keeping them -- they're at sold-out conditions, as Michael has highlighted, making sure that we can operate at full utilization levels through the construction season.
Operator
The next question comes from Brent Thielman with D.A. Davidson.
Brent Edward Thielman
Just a question again on the JV, just to what degree we should be thinking about this impact in the future quarters. I think you mentioned you needed to do some more work in fiscal 2025. I guess my question is, is the ramp in that facility back up? Is there any reason to think that asset can't produce at levels it historically has until you can get more of this work done next fiscal year?
Michael R. Haack
Great question, and I appreciate it. I'll walk through a little bit on kind of Texas Lehigh and what we did. If you look at the past year, we kind of struggled a little bit with equipment reliability at Texas Lehigh. And what we have is we have the opportunity really once a year to go into some of our Killam areas and some of our other manufacturing areas because we don't take outages ad hoc. We usually do 1 outage once a year.
So when we did that this -- the past year, we identified some equipment issues we had to take care of. And when we went into the outage this year, we knew we were going to have to address those. Those took a little longer to address than we were expecting. Also during that time, though, we look at what needs to happen in the next outage so we're prepared on planning with that. We have identified a few things we have to do in the next year. that will extend the outage. I don't have a specific timing on how long that outage will be extended until we really do all of our engineering work.
But what I am very happy about is coming out of that outage, it took a little while for the new system because as you change the system, it takes a little while to get it operating exactly how we want to. So the first half of July was a little tougher. Second half of July, we've been producing at the levels we expect out of that facility. So while we know what we have to do in the coming outage planning, we feel very comfortable on where we stand with that facility for producing through this year.
Brent Edward Thielman
Okay. That's really helpful. Maybe just on Wallboard, if I compare kind of your reported price to the fourth quarter, I guess any sort of thoughts on the mix impacts or other variables to kind of consider? Is it apples-to-apples and just reflective of overall market pricing? Any color there would be helpful.
D. Craig Kesler
Yes, Brent, our price is down just a -- so I think 1%, a couple of dollars. So again, very resilient Wallboard pricing environment for us this past quarter.
Brent Edward Thielman
Okay. And then Craig or Michael, I guess, just lastly on Paperboard, I was thinking lower nat gas. So CC prices might be a bigger tailwind to the business or margins and that maybe you saw in the quarter? Anything else to consider as you think about the profitability of that business line kind of looking forward?
D. Craig Kesler
Yes. Profitability was up significantly year-over-year. And as you said, a lot of that was a contribution from lower OCC prices and lower energy. As you know, we pass, we adjust the price that we charge underneath those long-term supply agreements based on the input costs of raw materials and energy. And so that pricing will adjust quarterly, but happy with how that facility is operating, and we've got some nice tailwinds on the energy side.
Operator
The next question comes from Anthony Pettinari with Citigroup.
Asher Melech Sohnen
This is Asher Sohnen on for Anthony. You talked about wet weather delaying but not destroying demand, but just -- how should we think about the cadence of those delayed shipments? Are they largely pushed into the next quarter or maybe they're spread out over the next couple of quarters?
D. Craig Kesler
Yes. the -- and we're really talking about a lot of the Mountain region. Colorado, the month of June was either the wettest or second wettest month on record depending upon what you read. But yes, those jobs just get pushed. And it's hard to say is that in the next quarter is over a couple of quarters, but that market continues to be very robust.
Asher Melech Sohnen
Great. And then just switching gears, I think last quarter, you talked about some cost inflation maybe moderating in 2024. Are you able to roughly size the magnitude of cost inflation you're expecting in 2024 on both the Cement and the Wallboard side. and compare and contrast that with what you saw last year -- last fiscal year?
D. Craig Kesler
Yes. So on the Wallboard side, with OCC and natural gas coming down, that's -- and we said it in our prepared comments, sequentially, we saw a benefit on those input costs. and freight sequentially also came down and it was down year-over-year. So actually, somewhat cost lowers in the Wallboard business.
On the Cement side, as we've been saying, for our fiscal '24, those energy prices were largely locked into during the late fall, winter time frame, but certainly less inflationary, and we saw that and experienced that this quarter a little bit of an uptick, but nothing like what we saw in fiscal '23. As you start to look forward into fiscal '25, it wouldn't be unreasonable to start thinking about energy prices may be coming deflationary with some of the input costs for pet coke and other fuels that we burn, turning the other way and going down.
Operator
The next question comes from Jerry Revich with Goldman Sachs.
Jatin Khanna
This is Jatin Khanna on behalf of Jerry Revich. Can you update us on your M&A pipeline? And at what point would you consider accelerating the buyback given your cash generation and leverage profile?
D. Craig Kesler
Great question. Again, that's what really matters at Eagle is we generate a significant amount of cash. Balance sheet is in a very good position and so how do we continue to allocate that capital in a disciplined way? The M&A pipeline remains robust. There's lots of opportunities. We do have very strict criteria around the financial return and strategic criteria for those investments.
We've been able to, over the last couple of years, find investments that have met those requirements and they've been very good return projects for us. Most recently, the import terminal in Northern California. So we continue to look for those opportunities, but we also know that we passed on a number of investments that didn't meet our hurdle rates. And so then we turn and give that cash back to shareholders. We generally do that through our share repurchase program, and we've been very active in our share repurchase program over the last several years.
Operator
The next question comes from Stanley Elliott with Stifel.
Stanley Stoker Elliott
Michael, in the prepared remarks, you talked more about shifting some of the fuel sources to more of an alternate fuel source. Is that going to be a larger capital increase? Or is that kind of normal maintenance sort of capital? And then kind of along those lines, what would the expectations be in terms of the energy cost when we come out on the other side of all that?
Michael R. Haack
No, it's a great question. We've been looking at this for a long time. We run several of our plants with alternative fuels currently today. So what we're doing is looking at really adding a few to the system of alternative fuels and then tweaking what we do with -- to increase the use of alternative fuels.
How we look at the alternative fuels is really for some with a CO2 reduction, but also we look at it that at times, those alternative fuels are actually very good financially too, as a hedge against coal and coke at times. So these investments are not major investments with it. They're -- they're really just a minor investment that we've been working on over the past year, and we'll continue to maximize the use of alternative fuels where it makes sense for us.
D. Craig Kesler
Stanley, I'll follow up on that comment. Just we talked about it last quarter with capital spending. You saw it up at about $36 million this quarter. So we are anticipating capital spending up this year in the range of $145 million to $165 million. A lot of -- some of that is these alternative fuel investments. And then we continue to invest in the facilities around PLC and some of the investments there.
As Michael pointed out in his opening remarks, we made significant progress this quarter to be over 50% PLC, and we'll make some more investments so that as we exit this year, we can continue to increase that.
Stanley Stoker Elliott
That's very interesting -- with these investments not being kind of larger in nature over an extended period of time, then that probably you should help from the cash flow perspective, even beyond that. And that was kind of just the question. Second, on the cement price or the cement markets in general and heavy side as a whole have been very good about the second round of increases. It's hard to say if we're really kind of looking at a paradigm shift and kind of how the pricing comes to market. But with demand being sold out effectively, a lot of good demand drivers coming on, how do you think about the industry evolution to a second round increase as we think on a go-forward basis?
D. Craig Kesler
Stanley, it's a good question. And we don't like to speculate too much on pricing. But you pointed out, demand continues to be strong with the federal highway build funding just starting to really benefit the business. It's really not quite even impacting the business. So that gives you a lot of confidence around multiyear visibility of this strong demand environment, as we said, around even the residential, you're starting to see some pickup in housing starts and the housing orders at the homebuilder level. So all of that points to a good strong demand environment.
And that's against the backdrop of very limited supply response, whether that's because of alternative products, diminishing availability or just the inability to add meaningful new capacity, utilization rates should remain high for longer. And that's generally the formula for pricing. The exact cadence, we can't predict, but it would tell you a good pricing environment for quite a while.
Operator
The next question comes from Adam Thalhimer with Thompson, Davis.
Adam Robert Thalhimer
So I'm curious on -- and I had to dial in late, so sorry if I missed this, but the cement volumes, it was the first growth in 5 or 6 quarters. Just curious kind of what drove that in your opinion and what the outlook is?
D. Craig Kesler
Look, as we just said, the outlook for demand continues to be robust in the cement market with infrastructure spending improving. I mentioned residential. But even on these large manufacturing industrial facilities that continues to be a meaningful part of the demand environment. And as we've said the last couple of quarters, we're sold out.
So some of those down quarters were simply either unusual weather events or just very difficult year-over-year comps because of inventory levels that existed a couple of years ago that simply just aren't there today. So I think you're kind of in this range for demand. PLC will give us some upside opportunity there. And then obviously, the new import terminal that we purchased in Northern California gives us some inorganic growth opportunities, but this isn't a surprise to us.
Adam Robert Thalhimer
Great. And then on the Wallboard side, you just talked about the pickup in starts and permits, which we've seen as well. June was the first down volume quarter. How long do you think the air pocket lasts for you guys?
D. Craig Kesler
Look, again, as we said, demand continues to be resilient. I don't know that I'd call it an air pocket as much as I might call it, a lull. But things -- and again, some of it is because of where we're located, in the southern half of the U.S. But things have been resilient. And with the orders are improving, that sets up for a better environment for wallboard down the road.
Adam Robert Thalhimer
Okay. And then Aggregates volumes lastly, were way above. And I'm just curious if that was a specific project? Or is that a good level to use going forward?
D. Craig Kesler
Yes. We had a really unique opportunity. So some of that is inorganic. If I were -- we opened up or began operating our quarry in Kentucky and starting to sell construction-grade aggregates out of that. It historically was just feeding the cement plant in Kentucky, but we are now selling aggregates out of that pit. And -- but even if I were to kind of same-store sales were up 18%, but we had a really good opportunity there that -- the team has done a good job with.
Operator
The next question comes from Phil Ng with Jefferies.
Unidentified Analyst
This is actually Collin on for Phil. I just wanted to start on the cement business. You definitely made it clear that you're sold out, so volume growth might be a little bit difficult. But can you just talk about the additional volume opportunities from PLC and that new import terminal, kind of what the new MAX Cement shipment capacity could look like after you have both of those things fully ramped and sort of the timing of getting there?
D. Craig Kesler
Yes. PLC is one opportunity, kind of a mid-single-digit type of growth opportunity over the next year or two. As you've seen, we've made significant progress this year in improving and expanding the production of PLC. That will continue into '24 as well. As we make some of these investments that are necessary.
And then on the import terminal, we've owned it for just a couple of months. Customers have been very happy as we've moved into that business, and it's fit very, very well, very strategic with our Northern Nevada cement manufacturing footprint. A little too early to give a whole lot of guidance on those volumes quite yet, but we've been very, very happy with the performance to date.
Unidentified Analyst
Great. That's helpful color. And then just on the July cement price increase. Can you just remind us the magnitude that you put the pricing letters out for? And maybe talk about how implementation is going to, I think it was for early July?
D. Craig Kesler
Yes. It was another double-digit increase. And as we said, it's about half of our markets. And not surprisingly, as you think and we talked a little bit about it today, some of our Western markets experienced a very unusual late winter, early spring snow and rain. That has continued in some of those markets. So just pushed the start of the construction season back a little bit. So those are the markets that generally didn't see the second round and again, not surprising there. But look, conditions remain sold out and happy with how the pricing is progressing.
Unidentified Analyst
Great. And my last question is just on Wallboard pricing. I know you talked about minimal slippage from quarter-to-quarter, but any comment on how pricing trended within the quarter, maybe where you exited versus the average and just how you're thinking about pricing for the rest of the year?
D. Craig Kesler
Yes. The exit price is pretty close to the quarterly average, and we'll continue to monitor that, but we don't have any pricing actions for the rest of the year at this point.
Operator
The next question comes from Jonathan Bettenhausen with Truist.
Unidentified Analyst
I am on for Keith Hughes this morning. I was wondering if you wouldn't mind going into a little bit more detail geographically about where exactly you see maybe the best infrastructure demand in the Eagle heavy markets?
D. Craig Kesler
Jonathan, I would tell you, it's pretty broad-based across our footprint. I don't know that I'd highlight 1 area or the other that's much stronger. They're all doing very well. And I would say our markets, in general, are outpacing the national average.
Unidentified Analyst
Great. And then in these states now that have been kind of quicker to pick up some of the spending, you're kind of expecting to see more demand growth as the infrastructure build funding continues to be realized, right? I'm reading that correctly?
D. Craig Kesler
Yes. That's right.
Operator
This concludes our question-and-answer session. I would like to turn the conference back over to Michael Haack for any closing remarks.
Michael R. Haack
Thank you. Thank you, Betsy. Thank you for joining us today, and we look forward to talking to you in the fall.
Operator
The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.
