Automotive Properties Real Estate Investment Trust

TSX:APR.UN

Earnings Call Transcript

[Operator]

Good morning, ladies and gentlemen, and welcome to the Automotive Properties REITs 2024 Fourth Quarter and Year-End Results Conference Call and Webcast. [Operator Instructions]

Please be aware that certain information discussed today may be forward-looking in nature. Such forward-looking information reflects the REIT's current views with respect to future events. Any such information is subject to risks, uncertainties, and assumptions that could cause actual results to differ materially from those projected in the forward-looking information.

For more information on the risks, uncertainties, and assumptions relating to forward-looking information, please refer to the REIT's latest MD&A and annual information form, which are available on SEDAR+. Management may also refer to certain non-IFRS financial measures. Although the REIT believes these measures provide useful supplemental information about financial performance, they are not recognized measures and do not have standardized meanings under IFRS. Please refer to the REIT's latest MD&A for additional information regarding non-IFRS financial measures.

This call is being recorded on March 6, 2025. I would now like to turn the conference over to Milton Lamb. Please go ahead, Mr. Lamb.

[Milton Lamb, executive]

Great. Thank you, Joanna, and good morning, everyone. Thank you for joining us today. With me in our call is Andrew Kalra, our Chief Financial Officer.

Our 2024 results reflected our continued strong and consistent performance. Our property portfolio generated solid growth for the fourth quarter and year, supported by fixed and CPI-linked contractual rent increases embedded within our leases. Compared to 2023, our property rental revenue increased by 1.5%, cash NOI was up by 2.5%, same property NOI increased by 2.3%, and AFFO per unit diluted increased to $0.932 from $0.918.

Our M&A activity picked up significantly in the second half of the year, starting with our agreement in July to sell the Kennedy Lands in Markham for $54 million. We closed under sale of the Kennedy Lands on October 1st and moved quickly to redeploy the sale proceeds to position the REIT for growth in AFFO per unit in 2025.

On October 15, we funded a $7.1 million dealership facility expansion at our McNaught dealership property in Winnipeg that added a new standalone Cadillac building with more than 13,000 feet of gross leaseable area, resulting in an annual rent increase and extended lease term. On October 31st, we entered into separate agreements to acquire two heavy construction equipment dealership properties in Greater Montreal for a purchase price of approximately $25.4 million, a Rivian-tenanted automotive property in Tampa, Florida, for a purchase price of approximately USD 13.5 million.

We funded the expansion and OEM acquisitions as part of the capital recycling program from the proceeds of the Kennedy Lands sale. Subsequent to year-end, we entered into agreement to acquire a Tesla-tenanted collision property in Dublin, Ohio, a suburb of Columbus, Ohio, for a purchase price of USD 17.8 million. We expect to close on the Rivian and Tesla properties later this month, thereby completing our capital recycling program from the proceeds of the Kennedy Lands sale.

Our acquisitions of the heavy equipment dealership properties in Greater Montreal marks our entry into an adjacent industry vertical that has similar characteristics to automotive retail properties, including essential nature of their business. Our pending acquisition of the Rivian property in Tampa and Tesla property in Columbus will mark our targeted entry into the U.S. market and will provide additional growing -- access to additional growing metro markets.

Tampa and Columbus are both fast-growing metros with increasing intensification that will support long-term property value appreciation. The Tesla-Columbus acquisition will increase our Tesla-tenanted properties to 7 within our property portfolio. Together, these four property acquisitions will further enhance the geographic, brand, and tenant diversification within our portfolio, and we expect that they will drive increased AFFO per unit.

We're pleased with the progress we have made in untapping significant value from the Kennedy Lands sale, then recycling capital into new opportunities to drive future AFFO growth per unit and value creation for unit holders. Just prior to year-end, we declared a special distribution to unit holders related to taxable income generated by the sale of Kennedy Lands in the amount of $0.55 per REIT unit, comprised of $0.081 in cash, which was paid on January 6th of this year, and $0.469 payable by issuance of REIT units that were immediately consolidated on December 31st.

And over and above the value creation generated through the Kennedy Lands sale, capital recycling, and our special distribution to unit holders, we still have the potential to benefit from the successful rezoning of the Kennedy Lands through the receipt of additional cash consideration should rezoning be approved above a certain square foot of density.

I'd now like to turn it over to Andrew Kalra to review our fourth quarter results and financial position in more detail. Andrew?

[Andrew Kalra, executive]

Thanks, Milton, and good morning, everyone. Our property rental revenue for the fourth quarter totaled $23.4 million, a 0.5% increase from Q4 a year ago, reflecting growth from the properties acquired in Q4 this year and contractual annual rent increases, partially offset by decrease in rent due to the sale of the Kennedy Lands. Total cash NOI and same property cash NOI for the quarter totaled $19.6 million and $19.3 million, respectively, representing increases of 1.4% and 2% compared to Q4 a year ago.

Interest expense and other financing charges for the quarter were $5.6 million, a decrease of approximately $0.6 million from Q4 a year ago, primarily reflecting the paydown of debt in our revolving credit facility with the proceeds from the sale of the Kennedy Lands. Our G&A were $2.2 million for the quarter, an increase of $0.7 million for Q4 last year, reflecting higher short-term performance towards the write-off of an indemnity fee related to the Kennedy Lands sale, growth of the REIT, and inflation.

Net income was $12 million compared to a net loss of $15.2 million in Q4 a year ago. The positive variance was primarily due to changes in non-cash fair value adjustments for interest rate swaps and foreign exchange forward contracts, as well as for Class B and unit-based compensation.

FFO decreased by 0.5% compared to Q4 last year due to higher G&A expenses and a reduction in our straight-line rent adjustment, partially offset by lower interest expense and higher base rental revenue. AFFO increased by 1.3% compared to Q4 a year ago, reflecting the impact of the properties acquired during Q4 2024 and contractual rent increases.

Excluding the special distribution, we paid unit holder distributions of $9.87 million or $0.201 per unit in the quarter, representing an AFFO payout ratio of 86.6%, down from 87.4% in Q4 last year. The cap rate applicable to our portfolio was 6.69% at the 2024 year-end, up from 6.59% at the 2023 year end. The increase was primarily due to the Kennedy Lands sale.

During the quarter, we renewed an $11,400,000 interest rate swap within our credit facility, Facility 1, for a term of 6 years at an interest rate of 4.6%. We also increased the amount of the non-enrolling portion of Facility 1 by $15 million. With our entry into the U.S., we are focusing on mitigating our exposure to fluctuations in the Canadian to U.S. dollar exchange rate. During the fourth quarter, in anticipation of the closing of the Rivian, Tampa property acquisition, we entered into foreign exchange forward contracts to purchase USD 12 million at a fixed rate of 1.394 to be executed by the end of March 2025.

Subsequent to 2024 year-end, in anticipation of the closing of the Columbus Tesla property acquisition, we entered into an additional foreign exchange forward, in this case, to purchase USD 17 million at a fixed rate of 1.43, also to be executed by the end of March 2025.

At year-end, we had $502 million of outstanding debt with an effective weighted average interest rate of 4.37%. Our debt-to-GBV ratio as at December 31, 2024, was 42.4%. We continue to have minimal exposure to floating or short-term interest rates with 97% of our debt through interest rate swaps and mortgages. We have a well-balanced level of annual maturities with a weighted average interest rate swap term and mortgages remaining of 4.2 years.

And subsequent to year-end, we entered into floating to fixed interest rate swaps totaling $25 million, ranging from 6 to 9 years at an average rate of approximately 4.52%. We currently have approximately $89.4 million of undrawn capacity under our credit facilities, cash on hand of $0.3 million and 3 unencumbered properties with an aggregate value of approximately $43.8 million, providing the flexibility to close our recently announced U.S. acquisitions and pursue further growth.

I'd like to turn the call back to Milton for closing remarks. Thank you very much.

[Milton Lamb, executive]

Thanks, Andrew. It has been a very active period for us over the last several months. All in all, the transactions that we have executed demonstrate what we strongly believe that our portfolio and strategy provides a strong income generation and the ability to take advantage of opportunities to unlock embedded value for unit holders, which in turn opens up additional financial flexibility to further add to our portfolio and continue the value generation cycle.

Looking ahead, we're well positioned to continue generating ongoing growth with a property portfolio featuring essential retail and service properties located in prime urban markets, high-quality tenants, attractive single-tenant net lease structures and an embedded or fixed CPI adjusted rental growth. We look forward to further building on our solid financial results in the year ahead through continued organic growth and positive impact of our property acquisitions.

Before opening the line to questions, I'd like to comment on the current tariff situation between Canada and the U.S. related to auto sector tariffs, which were postponed yesterday for a 30-day period. During the pandemic, when supply chain interruptions restricted new car inventories and economic contraction impacted consumer spending behavior, automotive retail proved to be highly resilient. We see parallels in varying degrees between the cross-border tariffs and the recent pandemic in terms of potential impact on new car inventories and pricing, macroeconomic conditions, and consumer spending behavior.

During the pandemic, consumer behavior changed with consumers facing limited inventory for new car purchases and servicing their existing vehicles for a longer period of time or deciding to purchase a used car instead. Our tenants were able to pivot. While new car purchases declined, their service repair and used car sales increased and auto dealerships remained profitable with many actually generating high margins. Our tenants provide essential retail services, and we are confident that they will effectively adapt, supported by the constant underlying consumer demand.

That concludes our remarks. We'd now like to open the line for questions. Joanna, please go ahead.

[Operator]

[Operator Instructions] The first question comes from Mark Rothschild at Canaccord.

[Mark Rothschild, analyst]

Milton, following the asset sale and the recent investment acquisitions, do you consider the REIT to be fully invested? Or how much more acquisition capacity would you feel the REIT has with where you're comfortable with the balance sheet?

[Milton Lamb, executive]

I mean our leverage right now are low to mid-40s. Even with the acquisitions that we've announced, that still leaves us a nice runway of plus or minus $100 million in acquisition capacity.

[Mark Rothschild, analyst]

Maybe just following up on that point. You've expanded the target for the types of assets you would own over the past year, both in terms of the type and geography to fund what could be a larger growth profile. Would you need to see the equity markets more receptive? Or would you be more aggressive maybe in trying to sell noncore assets like maybe what you saw last year was noncore, but to take advantage of an opportunity?

[Milton Lamb, executive]

Yes. I mean I still think we have runway with that $100 million to do significant acquisitions in 2025. We still like what we're seeing from the dealership world in Canada. And certainly, as you mentioned, we've -- whether it's heavy equipment or major metros in the U.S., we're pretty comfortable with what we have right now. Certainly, the equity markets right now are not at a place that we would want to look at it, considering where we're trading at NAV. But I think that we've got a runway ahead of us before we have to worry about that.

[Operator]

The next question comes from Jonathan Kelcher at TD Cowen.

[Jonathan Kelcher, analyst]

First question, obviously a lot more near-term uncertainty here, and you used the pandemic in your opening remarks. But how do you think that plays out in terms of dealer M&A activity over the next little bit?

[Milton Lamb, executive]

I mean whether it's dealer activity or just M&A overall, especially within Canada, I think there's a lot of uncertainty out there. That will be interesting to see. It's really hard in this environment for M&A to kind of get confidence to kind of pull the trigger. We still think there's going to be opportunities within existing portfolios that we don't have to just rely on M&A. A number of dealers are getting ready to be active on the M&A world. So do they pull the trigger before or after that M&A? I think it depends on case-by-case situation.

[Jonathan Kelcher, analyst]

And then now that you're -- now that you've entered the U.S. market and, I guess, since you've been public, we've been -- we've gotten used to the M&A cycle in Canada, but maybe comment on how that may differ in the U.S.

[Milton Lamb, executive]

I think the U.S. just tends to have a lot more movement within real estate and M&A overall. I would think it's still a bit similar as seasonality is Canada. But because it's U.S., and we always use kind of the 10:1 ratio as far as whether it's GDP or number of transactions in markets, et cetera. We think there's going to be the ability to be more consistent on what we're finding and what we like. But yes, I mean, that kind of world of late in the year or early in the New Year, I think that's still going to remain a bit consistent on both sides of the border.

[Operator]

The next question comes from Lorne Kalmar at Desjardins.

[Lorne Kalmar, analyst]

Just maybe sticking with the acquisition side of things. Given the uncertainty around tariffs, is there a preference or any particular sector that you are drawn towards more than the other? And I'm talking more so both on -- in terms of border and autos versus heavy manufacturing.

[Milton Lamb, executive]

I still think we're going to do the vast majority of our acquisitions in that dealership or OEM, similar to or specifically kind of Rivian and Tesla. No, I mean, for us, it's going to be -- we know and like Canada, and we're certainly seeing major markets in the states that offer the GDP and population growth profile that we enjoy in Canada and focus on. So I think it is more what's the dirt, what's the market, what's the brand, and what's the covenant. Very similar underwriting to what we've done over the last 9.5 years.

[Operator]

The next question comes from Frank Liu with BMO Capital Markets.

[Frank Liu, analyst]

Just a quick question on the financing side. The swaps you entered recently, I guess, is for the purpose of addressing the expiry of swaps, right?

[Andrew Kalra, executive]

Yes, that's correct. We have rolling maturities. So we've taken some advantage with some of the dips in the rates, and that's what we've done.

[Frank Liu, analyst]

And how does the new rate compares to the old rate? I mean, the rate has came down a little bit from when we -- like the last time we talked. So is it consistent with the expiry rate or slightly higher or lower?

[Andrew Kalra, executive]

The rates that we got were probably a little bit lower. On the last 2 weeks, there's been fluctuations of 15 to 30 basis points, even higher. But a considerable amount of fluctuations in the marketplace over the last 4 weeks. So we've been keeping an eye and watching our maturities and executing accordingly.

[Frank Liu, analyst]

So I guess, we can suppose that the renewal of swaps shouldn't have a material impact to your interest cost for the full year?

[Andrew Kalra, executive]

Well, we've averaged 4.37, and we've done the last at 4.5, and we'll have more renewals coming out throughout the year and then in 2026. So I don't see a significant material.

[Milton Lamb, executive]

Certainly, there's a rollover profile that we like to have consistent. Some of that rollover is from very low interest rates of 3, 4, 6 years ago. So there is a small impact, but we don't have major expiration profiles that are going to hit us at one time. And certainly, as Andrew said, where the rates are going right now and where we've been able to lock in, certainly minimizes that impact.

[Frank Liu, analyst]

And just quickly on the U.S. acquisitions. I mean a lot of people already touched on that, but like what are the common attributes from these opportunities that attract you guys most? And what's kind of the expansion plan moving forward? Like is there -- are you guys continuing to see more opportunities in the U.S. market than Canada? Or how does that dynamic play out?

[Milton Lamb, executive]

I mean the attributes, we've been very consistent in metropolitan markets, give us some GDP growth, give us some population growth. We believe that helps our tenants have a very nice profitable business. And it also gives us a bit more of a defense or offense, whereby the land is appreciation -- sorry, appreciating as we go through the term. So that's something we absolutely want to continue to look at on both sides of the border.

The U.S. just gives us more markets that offer that profile, more tenants, more diversification. But we still like the Canadian market. We certainly have deep relationships here. So we think we're going to be active in Canada and certainly being able to take advantage of markets that are available to us that have the characteristics we like in the States.

[Operator]

The next question comes from Sairam Srinivas at Cormark Securities.

[Sairam Srinivas, analyst]

Congratulations on a very busy quarter. At the risk of beating a dead horse, going back to the transaction in the U.S. When you think about these markets and when you've done acquisitions in Canada, dealerships here have these local geographic bounds and they're tied by those laws in terms of expansions and OEM laws, et cetera. Is that something very similar in the U.S. as well?

And in terms of scalability in markets, like does it even matter that you have to have scale in a certain market before expanding to different ones?

[Milton Lamb, executive]

Yes. I mean, I'll touch on the last point first. Triple net leases, we are very much a hands-off nonoperating on the real estate side. Tenants handle property management. They take care of their properties. So it's extremely scalable in that regard. Once we buy it, we want to monitor it, but we're not as active as multi-res or a retail -- multi-retail type property. So extremely scalable.

With regards to the rest, certainly, the U.S. offers opportunity, but we still really like Canada.

[Sairam Srinivas, analyst]

That make sense, Milton. And maybe just shifting to the leasing ahead. Can you give some color on the lease maturities ahead? And are there any capital commitments that you probably see coming up there?

[Andrew Kalra, executive]

Lease maturities, we have one coming up in 2026. And in terms of capital commitments, we did one with -- it wasn't a capital commitment, it was a funding request. And we do get that from tenants, and that correspondingly results in increases in rents. So the math works well there. But if you're talking about CapEx in particular, we haven't really had any CapEx given our triple net structure.

[Milton Lamb, executive]

Of significant amount.

[Andrew Kalra, executive]

Yes.

[Sairam Srinivas, analyst]

Yes. And I was actually -- I think the ones you recently did and maybe there are more opportunities there in the portfolio where you could see tenant expansion.

[Andrew Kalra, executive]

Yes. I mean they are one-offs, but they do happen on a consistent basis.

[Milton Lamb, executive]

Especially as our portfolio gets more and more mature. You don't expect it in early days, in the first few years of a lease. But as we're entering our -- we're in our 10th year, we certainly expect a bit more of that profile that can occur, but that's at pricing that the REIT feels comfortable with or we won't commit.

[Operator]

The next question comes from Brad Sturges at Raymond James.

[Bradley Sturges, analyst]

Just want to touch on capital allocation. You talked about $100 million of capacity on the balance sheet. What do you think of -- or how would -- how should we think about buybacks of the stock, just given the deep discount to NAV and the implied cap rate you're trading at? Would that be an area you're willing to deploy a bit of capital just given the potential accretion to NAV?

[Milton Lamb, executive]

Yes. I mean, certainly, we look at it. I wouldn't say it's high on our to-do list. We believe that with the cost of capital that dealers are facing because, remember, 3 years ago, they were getting very high LTVs at very low rates that we were not willing to compete with, so we stepped to the sidelines. Now we're able to be active. And as we've said before, our biggest competition has always been banks. We want to put that money to work to kind of build our portfolio and maintain some liquidity within the units. So to us, you can never say never, but we like what we're seeing more on the acquisition side.

[Bradley Sturges, analyst]

And I guess as cost of debt has been improving, you're sticking to that sort of 6.5% to 7.5% range in terms of cap rates. Are you willing to adjust that a bit depending on the opportunity?

[Milton Lamb, executive]

I mean it all depends on the opportunity. But to your point, 6.5% to 7.5% is where we felt comfortable over the mid- to long-term. And we still want to kind of exercise and go ahead in those kind of ranges. Certainly, as Andrew mentioned, pair that up with 4.5%, 4.6% debt. Those numbers work. And that's year 1. Never mind the fact that we normally have contractual rent increases going forward.

[Operator]

The next question comes from Himanshu Gupta at Scotiabank.

[Himanshu Gupta, analyst]

So just on debt financing, I mean, are there plans to put any USD dollar credit facility in place or any secured debt in U.S. dollar terms, just to minimize the FX risk?

[Milton Lamb, executive]

Yes. As we go forward, the plan will be to put a U.S. debt credit facility in place. We're not there yet. We do have capacity within our existing 3 credit facilities. And we can take advantage of the Canadian rates, which are significantly lower than the U.S. But on a go-forward basis, for sure, we would look at U.S. credit facility.

[Himanshu Gupta, analyst]

And the second part was the secured debt opportunity. I mean, can you put a mortgage on those properties there?

[Andrew Kalra, executive]

We haven't explored that on the 2 existing, but I would say, I wouldn't see a problem in doing that. We haven't explored that with this one though.

[Milton Lamb, executive]

Yes. Our strategy at this point is to do some arbitrage between available -- I certainly believe it's available U.S. debt, but that's going to be at a higher rate by 100, 150 basis points than you can see in Canada. So we'll take advantage of our Canadian portfolio to increase the leverage a bit here to use that across on the other side of the border.

Certainly, there is the ability on USD currency within our facilities or the facility that we're working with to be able to do acquisitions in states and do some natural hedging with regards to the U.S. dollar as it comes back across the border.

[Himanshu Gupta, analyst]

And then have you explored of accessing the unsecured debenture market here? I mean its market is wide open. Do you need to be certain size or leverage to access --

[Milton Lamb, executive]

Yes. I mean there's different ways to look at it. But no matter how we look at it, I don't think we're there yet. We've heard numbers that are over $1 billion in market cap, over $1.2 billion in market cap. I still think we need to continue to grow. We like our credit facilities. It provides us with very good flexibility. But I don't think we're in the unsecured market as of yet.

[Operator]

The next question comes from Sumayya Syed at CIBC Capital Markets.

[Sumayya Hussain, analyst]

Just firstly, in terms of the cadence of acquisitions, you had activity pick up in Q4 and then continue into Q1. Would the balance of the year be back-half loaded? Or do you expect more sort of spread-out transactions throughout the year?

[Milton Lamb, executive]

It's always tough to pin it. The natural cadence has always been a bit more Q3, Q4 as far as tying or closing. And then in some cases, that may drift into actually closing in Q1. But there does tend to be a bit more of a back-end loaded nature.

[Sumayya Hussain, analyst]

And then just on the tenant side, as you have more current conversations with them, what themes or concerns have emerged in terms of growth plans for some of your tenants? Any updated views there?

[Milton Lamb, executive]

Yes. I mean last year, especially at the beginning of the year, there were a lot of buyers that were looking at kind of the adjusted earnings of some of these dealerships and saying '21, '22, even a bit of '23 were very high margin arguably anomalies. So what is a normal run rate on EBITDA going forward? The general comment is '23 has been a very healthy year on profitability, but it demonstrates a bit more of a go-forward run rate, which allows vendors and purchasers to get closer on what the underlying multiple will be on the income. So I think that's a good thing. There's more visibility, there's more comfort. And so that often leads to more activity.

[Sumayya Hussain, analyst]

So would you say that your -- in your view, the biggest catalyst to spur more M&A would be, I guess, more normal multiples as opposed to interest rate stability or just that they've deferred their growth plans for too long?

[Milton Lamb, executive]

Yes. I mean the multiples, they haven't really been the argument. It's what the denominator is that they're multiplying on EBITDA. So getting more comfort on that EBITDA certainly helps. There is a bit of a, what happens with limited inventory, what happens with higher service, et cetera, with either delayed or different consumer behavior if we do face tariffs.

I think there's just a lot of head scratching that's going to occur, not just in auto, but overall. In the auto retail side, we've seen it before. These dealers can pivot very quickly and remain very healthy. So that allows us to sleep and hopefully allows our unitholders to sleep well at night. I just think there's a lot of head scratching going on.

[Operator]

The next question comes from Giuliano Thornhill at National Bank Financial.

[Giuliano Thornhill, analyst]

I just had one question on your kind of U.S. acquisitions. I was just wondering why both catered towards kind of nontraditional OEMs. Is it just they're less competitively bid on? Or is it the like traditional dealer groups, do they just not get the capital? I was just curious why that was the case.

[Milton Lamb, executive]

Part of it was the opportunity in the markets, the land. The other part is we like having some exposure to direct OEMs in the case of Rivian and Tesla as opposed to just the dealership model. Certainly, the dealership model has been very resilient. But having public companies like Rivian and Tesla certainly is a nice part of our diversification. Doesn't hurt as well that we think they're going to be 2 of the ones that do very well in the EV world. So just high level of comfort with the tenants being Tesla and Rivian and still a light on the actual dirt itself in the markets.

[Operator]

[Operator Instructions] The next question comes from Jimmy Shan at RBC Capital Markets.

[Khing Shan, analyst]

Just a follow-up on the tariff comment on the tenant. I know you drew a parallel to the pandemic, but I was curious as to what the tenants are telling you in terms of how they think it will impact your business if this turns out to be, I guess, more permanent in nature? And then I guess also, what are they doing in the meantime?

[Milton Lamb, executive]

So what we're hearing from the tenants and just overall in the marketplace is that some of the OEMs, a lot of the OEMs have got ahead of this by onshoring. So you'll see a lot of inventory in the Canadian ports. So that will create a bit of a buffer. As demonstrated during COVID, when you see inventory tightening up, it doesn't change the consumer behavior as far as the need because it's still essential retail. But what it does is sometimes changes the margins as demand remains similar, but supply gets constricted. That will drive prices for used cars a bit higher. Margins will remain healthy.

And on the consumer behavior side, as prices of some of these cars go up, you may see groups change their behavior on what quality, does it go from luxury to mass market brands? There is going to be -- or does it go from a new car to a used car. You're going to see some changes that do occur. It's going to be interesting as well because it's -- when you talk to them, it's not really brand specific. It tends to be a more model specific on where they're produced and where they're going to come in to Canada because, certainly, what's crossing the border, in which way? Are they coming from Europe? Are they coming from Asia? Are they coming from the States? So it's a bit of a medley of all things, but we do know that the dealers tend to be very good at pivoting.

[Operator]

Thank you. We have no further questions. I will turn the call back over to Milton Lamb for closing comments.

[Milton Lamb, executive]

That's great. Thank you, everyone. We enjoy today and look forward to talking to you in the future. Thank you.

[Operator]

Ladies and gentlemen, this concludes our conference call for today. We thank you for participating, and we ask that you please disconnect your lines.