First American Financial - Q1 2024

Executive Summary

• Q1 2024 delivered stable results in a seasonally weak backdrop: revenue $1.425B (-1% y/y), GAAP and adjusted EPS $0.45; consolidated adjusted pretax margin 4.1% as net investment gains ($0.07) were offset by purchase-related amortization ($0.07).
• Management reaffirmed 2024 outlook for modest revenue growth and Title margins similar to 2023, citing green shoots in resale orders and stabilizing commercial ARPO; Home Warranty remained a bright spot with 19.3% pretax margin.
• Investment income headwinds emerged from deposit mix shifting to third-party banks; CFO guided title-segment investment income of ~$120–$125M per quarter in 2024 with risks if mix shift continues; normalized tax rate ~24% (Q1 effective 19.9% on R&D credits).
• Operational nuances: $6M bad-debt write-off (≈50 bps Title margin impact), 150 bps Title margin drag from Endpoint and instant decisioning initiatives, and CapEx expected down 15–20% in 2024 vs. $260M in 2023.
• Potential stock reaction catalysts: reaffirmed FY outlook despite macro uncertainty; early order inflection in resale/commercial; however, deposit mix pressure on investment income and regulatory overhang (CFPB discussion) remain watch items.

What Went Well and What Went Wrong

• What Went Well

  • Home Warranty execution: revenue $105M (+1% y/y) with pretax margin 19.3% (adj. 18.8%); loss ratio improved to 41.7% from 47.3% y/y on fewer and lower-severity claims.
  • Early demand stabilization: open resale orders per day rose 5% in March and +2% in April-to-date; commercial open orders +1% in Q1 and +5% in April-to-date; management sees signs of bottoming in commercial ARPO.
  • Cost discipline and loss provision tailwind: Title loss provision at 3.0% of premiums (vs. 3.5% y/y), reflecting 3.75% ultimate loss rate and $7M reserve release from prior years.

• What Went Wrong

  • Title profitability softer y/y: Title pretax margin 5.5% (adj. 4.8%) vs. 6.5% (adj. 6.8%) last year; margin impacted by $6.2M write-off (~50 bps) and 150 bps drag from Endpoint/instant decisioning initiatives.
  • Investment income pressure: Title investment income fell to $117M (-$8M y/y) due to lower average escrow/1031 balances and a higher share of interest-bearing deposits at third-party banks; CFO flagged continuing mix risk.
  • Refinance activity still weak: refinance revenue -13% y/y with mortgage rates near ~7% suppressing refi volumes; April refi orders ~371/day, flat y/y, +6% m/m.

Transcript

Operator (participant)

Greetings and welcome to the First American Financial Corporation first quarter earnings conference call. At this time, all participants are in a listen-only mode. A brief question-and-answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please Press Star zero on your telephone keypad. A copy of today's press release is available on First American's website at www.firstam.com, forward slash investor. Please note that this call is being recorded and will be available for replay from the company's investor website and for a short time by dialing 877-660-6853 or 201-612-7415 and enter the conference ID 13745815. We will now turn the call over to Craig Barberio, Vice President, Investor Relations, to make an introductory statement.

Craig J. Barberio (VP of Investor Relations)

Thank you, operator. Good morning, everyone, and welcome to First American's earnings conference call for the first quarter of 2024. Joining us today on the call will be our Chief Executive Officer, Ken DeGiorgio, and Mark Seaton, Executive Vice President and Chief Financial Officer. Some of the statements made today may contain forward-looking statements that do not relate strictly to historical or current facts. These forward-looking statements speak only as of the date they are made, and the company does not undertake to update forward-looking statements to reflect circumstances or events that occur after the date the forward-looking statements are made. Risks and uncertainties exist that may cause results to differ materially from those set forth in these forward-looking statements. For more information on these risks and uncertainties, please refer to yesterday's earnings release and the risk factors discussed on our Form 10-K and subsequent SEC filings.

Our presentation today contains certain non-GAAP financial measures that we believe provide additional insight into the operational efficiency and performance of the company relative to earlier periods and relative to the company's competitors. For more details on these non-GAAP financial measures, including presentation with and reconciliation to the most directly comparable GAAP financials, please refer to yesterday's earnings release, which is available on our website at www.firstam.com. Excuse me. I will now turn the call over to Ken DeGiorgio.

Ken DeGiorgio (CEO)

Thank you, Craig. Market conditions in the real estate and mortgage industries continue to be a challenge in the seasonally weak first quarter. Elevated mortgage rates and low, albeit growing, inventory levels have caused transaction volumes to remain near historically low levels. During this period, we've maintained our focus on managing operating expenses while continuing to invest in long-term strategic initiatives such as expanding our title plant assets and building technology solutions to increase efficiency, reduce risk, and enhance our customers' experience. Although our financial results this quarter were a function of the tough mortgage origination market, we have recently started to see signs of a measured recovery. In March, our open resale orders per day were up 5%, and that positive trend has continued so far in April with open resale orders up 2%.

Growth in our resale orders so far this year is the first positive change we've seen in this key market since June of 2021. We are also seeing improvement in our commercial business with open orders up 1% in the first quarter, and we have seen further growth in April with open orders up 5%. Our home warranty segment had another strong quarter, delivering a pretax margin of 19% and is positioned well for future growth. On our last earnings call, we stated that we expect modest revenue growth this year and that we can achieve title margins similar to what we posted in 2023. After closing the books on the first quarter and looking at the order pipeline in April, our expectations remain unchanged. I'd like to take a moment to address the recent attention our industry has received from Washington, D.C.

This attention is the product of a broader effort, an effort which all of us at First American wholeheartedly support, to make the purchase of a home more affordable. The focus on our industry as part of this effort reveals, however, that as an industry, we need to do a better job educating policymakers and other stakeholders about the critical role title insurance plays in protecting people's investments in their homes, which are the primary vehicle for wealth creation for a majority of Americans. This role includes not only paying claims when they arise but also the extensive work we do to correct title defects before the transaction closes, the cost of which is not reflected in our industry's claims rate. This important curative work protects consumers and lenders, among others, from $100 billions of title risk exposure per year.

Moreover, title and settlement fees are among the smallest cost components over the life of a mortgage and, as a result, are not a barrier to home ownership. The discussions in Washington are still in early stages, and we believe that ultimately our industry will be successful in reaffirming the value of title insurance to policymakers.

But irrespective, we are uniquely positioned to meet the demands of an evolving market because of our growing leadership in title data, which is fueled by our proprietary data extraction technology, our National Closing Platform and deep distribution relationships, our extensive underwriting expertise, our commitment to and continued investment in cutting-edge technology such as Endpoint, our digital settlement platform and automated underwriting for purchase transactions, and most importantly, our world-class workforce and culture, which recently resulted in our recognition as one of the 100 Best Companies to Work For by Great Place to Work and Fortune Magazine for the ninth consecutive year. Though we are the leader in the digital transformation of our industry, fundamentally we are a people business, and it is the quality, talent, and dedication of our people that ensure our company's long-term success.

Now I'd like to turn the call over to Mark for a more detailed discussion of our financial results.

Mark Seaton (EVP and CFO)

Thank you, Ken. This quarter we generated earnings of $0.45 per diluted share. Our adjusted earnings per share, which excludes the impact of net investment gains and purchase-related amortization, was the same as our GAAP earnings at $0.45 per share, as $0.07 of realized gains were offset by $0.07 of purchase-related amortization. Turning to our title segment, revenue was $1.3 billion, down 2% compared with the same quarter of 2023. Purchase revenue was up 2% during the quarter, driven by a 2% increase in the average revenue per order. Commercial revenue was $143 million, a 4% decline over last year. Though our closed commercial orders fell 4%, the average revenue per order for commercial transactions increased 1%. Refinance revenue declined 13% relative to last year.

With mortgage rates hovering around 7%, they are still at levels materially above what is needed to generate a significant rise in refinance activity. In the agency business, revenue was $564 million, down 5% from last year. Given the reporting lag in agent revenues of approximately one quarter, these results primarily reflect remittances related to Q4 economic activity. Our information and other revenues were $217 million, down 2% relative to last year. This decline was primarily due to an increase in the capture rate of title premiums from an affiliated title agent, which caused a decline in information and other revenue and a comparable increase to direct premium and escrow fees.

Investment income within the title insurance and services segment was $117 million, down $8 million relative to the prior year, due to lower average interest-bearing balances in the company's escrow and tax-deferred property exchange business that were partly offset by higher interest income from the company's warehouse lending business. The provision for policy losses and other claims was $29 million in the first quarter, or 3.0% of title premiums and escrow fees, down from the 3.5% loss provision rate in the prior year. The 3.0% loss rate reflects an ultimate loss rate of 3.75% for the current year, with a $7 million release for prior policy years. Over the last several quarters, we have highlighted the margin drag in the title segment related to both Endpoint and instant decisioning for purchase transactions.

Together, these two strategic initiatives reduced our pretax margin in the title segment by 150 basis points this quarter. Pretax margin in the title segment was 5.5%, or 4.8%, on an adjusted basis. These margins reflect a $6.2 million write-off of uncollectible balances impacting the margins by 50 basis points. Total revenue in our home warranty business totaled $105 million, a 1% increase compared with last year. Pretax income in home warranty was $20 million, up 28% from the prior year. The loss ratio in home warranty was 42%, down from 47% in 2023, driven by lower frequency and severity of claims. Adjusted pretax margin in the home warranty segment was 18.8%, up from 15.2% in 2023. The effective tax rate for the quarter was 19.9%, lower than our normalized rate of 24%, due primarily to research and development tax credits recognized during the quarter.

In the first quarter, we repurchased 58,600 shares for a total of $3.5 million at an average price of $59.37. Our debt to capital ratio as of March 31st was 30.3%. Excluding secured financings payable, our debt to capital ratio was 22.5%. Now I would like to turn the call back over to the operator to take your questions.

Operator (participant)

Thank you. We will now be conducting a question-and-answer session. If you would like to ask a question, please Press Star one on your telephone keypad. A confirmation tone will indicate that your line is in the queue. You may Press Star two if you'd like to remove a question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star key. One moment, please, while we pull for any questions. The first question comes from the line of Bose George with KBW. Please proceed with your question.

Bose George (Managing Director and Senior Equity Research Analyst)

Hey, everyone. Good morning. Michelle, I wanted to first ask just about investment income. I mean, Mark, you noted the reduction here year-over-year was on lower escrow and I think on 1031 balances. Can you just dig into some of the drivers of that?

Mark Seaton (EVP and CFO)

Sure, Bose. So one of the things we've seen here as interest rates have risen is that more of our customers are electing to earn interest on their escrow deposits. We have two. I'm simplifying here, but we have two basic types of deposits: savings deposits and checking deposits. And more of our customers are electing for savings deposits. In itself, that shouldn't really have an impact on our investment income because one of the advantages that we have is we can monetize savings deposits when a lot of our peers can't because of our bank. But the second dynamic that's happening, in addition to the shift to savings deposits, is that more of those savings deposits are going to third-party banks as opposed to our own bank, First American Trust.

A lot of it's related to economic reasons because, you know, third-party banks will pay higher rates than First American Trust. And so if we have a higher mix of our deposits at third-party banks, we can't earn interest on those. So when you look at the total mix of deposits that we don't earn interest on today, it's 30%. A year ago it was 18%. So that's that mix shift has been a little bit of a headwind for us for investment income. And then the second factor, of course, is just the 1031 business's volumes are lower today than they were a year ago.

Bose George (Managing Director and Senior Equity Research Analyst)

Great. Yeah, that's great. That's helpful. Just to be clear, is it the commercial customers who have the ability to, you know, kind of direct that escrow versus the residential, or how, how does that work?

Mark Seaton (EVP and CFO)

Everybody has the ability to do it. Whether you're a, you know, consumer or a large, you know, commercial client, you have the ability to request a savings account. But typically, commercial customers are the ones that really drive that trend.

Bose George (Managing Director and Senior Equity Research Analyst)

Okay. Great. Then just in terms of, you know, sort of expectations for that investment income line item for the remainder of the year, can you just talk about that?

Mark Seaton (EVP and CFO)

Yeah, sure. So, you know, when we look to the next couple quarters, we think our investment income in the title segment will be somewhere between $120 million-$125 million per quarter. We'll probably be at the higher end of that range in Q2 and a little bit lower, as the year goes on, in that range. And that assumes a couple things. One, just the normal seasonality of the business. Typically Q1's the kind of the low point in terms of investment income just because escrow balances are lower there. The second thing is, we have our, you know, we've talked about these Home Point balances, and we expect the Home Point balances to leave, you know, somewhere around Q2. So that assumes that Home Point balances will leave. That's going to be about $20 million of annualized investment income.

And by the way, it's also going to be about $20 million of annualized interest expense. So it sort of washes on a net basis. But if you're just looking at our investment income, it'll go down, you know, about $5 million a quarter once we lose those balances. And the third thing it assumes is just, you know, two Fed rate cuts. Now, I know I was looking at it this morning and that Mark is assuming one Fed rate cut, but we had two Fed rate cuts at the end of the year. So when you mix that all together, we think we should be somewhere between $120 and $125 per quarter in the title segment.

Bose George (Managing Director and Senior Equity Research Analyst)

Okay. Great. Thank you.

Mark Seaton (EVP and CFO)

Thanks, Bose.

Operator (participant)

The next question comes from the line of Terry Ma with Barclays. Please proceed with your question.

Terry Ma (Senior Equity Research Analyst)

Hey, thanks. Good morning. Can you maybe just speak at a high level about your confidence level in achieving the revenue growth and margin guide? It's a pretty uncertain macro and interest rate outlook.

Ken DeGiorgio (CEO)

Yeah, Terry. Thanks for the question. This is Ken. Yeah, I mean, you know, listen, we think that challenging conditions will persist for the year, though we think, you know, 2024 will be slightly better. And I think we have a high degree of confidence in that. But again, I want to emphasize it's slightly better. And we look at things like, you know, the commercial business, while it was, you know, weak in the first quarter, you know, we're seeing open orders, as we mentioned, up 1% in the quarter, up 5% in April so far.

You know, in the commercial business, our, our ARPA, while it had the typical seasonal decline, it is up 1% over the prior year, which suggests that, you know, maybe the price discovery has, you know, has concluded or is at least well along the way. And I, you know, I noted that there was an article in The Wall Street Journal earlier this week about, you know, Blackstone thinks that, that commercial real estate has hit, hit bottom. And obviously they have their finger on the pulse of the commercial real estate market. So that gives us some confidence on the on the on the purchase market on the commercial market. You know, on the purchase market, you know, affordability will, you know, continue to be a challenge with mortgage rates, prices, you know, low supply.

But, you know, we are seeing some, you know, some green shoots there with, you know, as I had mentioned, open resale orders up 5% in March and 2% so far in April. So again, we're, we're pretty confident that'll 2024 will be better than 2023, but it isn't going to be meaningfully better.

Terry Ma (Senior Equity Research Analyst)

Got it. That's helpful color. And then my second question, just on the margin drag from Endpoint and instant decision. I think you said it was 150 basis points this quarter. I think you guys quoted 130 last quarter. So what drove the delta? And how should we think about that drag kind of evolving throughout the rest of the year?

Mark Seaton (EVP and CFO)

Really what drove the drag was, you know, we had a little bit less revenue at Endpoint and a little bit more expenses at both Endpoint and kind of our, you know, instant decisioning for purchase transactions. We're making a lot of progress with both. With the drag should be less going forward just because of, you know, Q1's typically the lowest revenue. So just the fact that, you know, our revenue at the title segment is going to, you know, improve from here on out, that's just because of the math is going to reduce the drag from here on out.

Terry Ma (Senior Equity Research Analyst)

Got it. That makes sense. Thank you.

Mark Seaton (EVP and CFO)

Thanks, Terry.

Operator (participant)

The next question comes from the line of Soham Bhonsle with BTIG. Please proceed with your question.

Soham Bhonsle (VP and Senior Analyst)

Hey, good morning, guys. Hope you're all doing well. Mark.

Mark Seaton (EVP and CFO)

Hey.

Soham Bhonsle (VP and Senior Analyst)

I just want to dig a little bit deeper on the margin guide. So if, you know, if I sort of, take what you're implying, right, sort of flat-ish margins for this year, that would imply, you know, margins for every quarter sort of going forward are just, I guess, higher from last year to hit that double-digit margin. So can you just walk us through some of some of the moving parts? I think you just mentioned, you know, some of the drag stuff. But, like, can you yeah, just a little bit more detail there, there would be helpful.

Mark Seaton (EVP and CFO)

Yeah, sure. So just with our margin outlook, there's a few things going on. I mean, just to reiterate, I mean, we think that the margins will be comparable to last year. It's still early in the year. There's still a lot of things that are moving around. You know, on the positive side, you know, we've got, we're off the bottom now. We just talked about this. We've got open orders up, and that's going to bode well for later in the year. So we finally feel like after two years of, you know, having, you know, negative growth, we're bumping up off the bottom, and we're going to expect growth in our, you know, core businesses of purchase and commercial. We've got tailwinds with respect to the loss rate.

We've got tailwinds with respect to a lot of the cost-cutting efforts we did last year. And then we got headwinds. We've got, we're going to have about $20 million more of depreciation this year because of some of the capital expenditures we've made in the past, and some of these projects are going live. So that's going to be a headwind. Some of our benefits and 401(k) matches and things like that kind of get reset. And then we just talked about earlier on the call how we have some headwinds for investment income. So I think that for the, you know, I think the second quarter is going to be tough to beat where we were a year ago. But we expect that the margins, you know, second half of the year, will be kind of better than we had last year.

When you mix that all together, we should be in line with last year.

Soham Bhonsle (VP and Senior Analyst)

Okay. Got it. And then just on investment income, you know, so you sort of noted, you know, non-interest-bearing deposits maybe moving out of FA Trust to third-party banks. You know, should we, I guess, in the guide that you gave, the $120, I believe, are you sort of baking in, you know, a continuation of that, or, you know, do you sort of see more normalization there after this quarter?

Mark Seaton (EVP and CFO)

Yeah, thanks for that. First of all, their interest-bearing accounts are going to these third parties. Just, I just want to correct that. And in our guide here, we assume that 30% mix stays the same. So that's a risk. I mean, if the 30% keeps climbing, I mean, that's going to be a risk to our $120 million-$125 million guide. But we also are kind of in the very early stages of coming up with plans to kind of reverse that trend by paying more at the bank. So I think, you know, the assuming a 30% mix of third parties is a reasonable assumption, but it could go, you know, it could go higher or lower depending on what happens in the market.

Soham Bhonsle (VP and Senior Analyst)

Okay. Thanks, guys.

Mark Seaton (EVP and CFO)

Thank you.

Operator (participant)

Thank you. As a reminder, if you would like to ask a question, please Press Star one on your telephone keypad. A confirmation tone will indicate that your line is in the queue. You may Press Star two to remove a question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. Our next question comes from the line of Mark Hughes with Truist Securities. Please proceed with your question.

Mark Hughes (Managing Director and Senior Equity Research Analyst)

Yeah, thank you. Good morning.

Mark Seaton (EVP and CFO)

Good morning.

Mark Hughes (Managing Director and Senior Equity Research Analyst)

Any more detail you can discuss on potential regulatory changes if buyers are not required to purchase the title insurance but it's bundled in with the mortgage? How do you view that as a competitive evolution in the business?

Ken DeGiorgio (CEO)

Yeah. And I assume you're talking about the markup the CFPB, you know, request for information for prohibiting lenders from passing through the cost of title. I mean, this has been, you know, tried. This was tried before by HUD, and it didn't get off the ground. You know, and I think probably a big reason for that, and I think it'll be a big reason for why it probably won't get off the ground this time around either, is the lack of transparency. So, you know, I think policymakers prefer that borrowers know exactly what they're paying for because ultimately borrowers will still pay for lenders' title insurance policies. It'll just be wrapped up into the interest rate or loan-level price adjustments or what have you. So I don't think ultimately it'll take off.

But if it does, you know, I think, you know, the value proposition of title insurance to lenders is well-established. And, you know, I think again, we have to keep a close eye on developments, but I don't think it'll ultimately have a significant impact on, you know, on the lender side of our title insurance business or the industry for that matter.

Mark Hughes (Managing Director and Senior Equity Research Analyst)

Thank you for that. The commercial ARPA, you suggested that was an indication that price discovery is progressing. Was there is there a mix shift a part of that? You know, bigger deals started happening because of the price discovery? Is that the idea?

Mark Seaton (EVP and CFO)

Yeah. The bigger deals are always, you know, a component that we look at. You know, we had four what we call mega deals with, you know, premium over $1 million in the most recent quarter. So that always has an effect on the commercial ARPA. But as a general statement, we think that, you know, after again, after seeing, you know, declines in commercial ARPA for several quarters now, it's finally leveled off, which is a good sign. Kind of mirrors the bottoming we've seen on the residential side.

Yeah. And then the purchase ARPA, this wasn't much movement, but last quarter it was up four, this quarter up two. Any detail on that? Was that just a geographic mix shift? What do you see there?

It's kind of what we think. I mean, there's two things that drive it. One is, you know, housing prices. Housing prices are still rising. I think given the fact that where housing prices are, the increase in housing prices, we would expect kind of a 2% fee profile. The other thing that can drive it, depending on the quarter, is just the mix. I mean, if we get a lot more business in California, which has a higher fee profile, that could drive things. But really it's more a function of where housing prices are.

Mark Hughes (Managing Director and Senior Equity Research Analyst)

Thank you.

Mark Seaton (EVP and CFO)

Thanks a lot, Mark.

Operator (participant)

And our next question comes from the line of John Campbell with Stephens. Please proceed with your question.

John Campbell (Managing Director of Equity Research)

Hey, guys. Good morning. Just back to the transition of the HomePoint loans, it sounds like you're expecting some of that offboarding to take place in Q2. I guess first, will that be the bulk of it? And then secondly, can you maybe talk to the offboarding fees, maybe the size and timing of those?

Mark Seaton (EVP and CFO)

Yeah. Thanks, thanks, John. So we're going to today we've got roughly about $380 million of deposits, give or take. I mean, it changes by the day. And we think $50 million will leave around May 1st, and $330 million will leave on July 1st. And at that point, we won't have any more of the HomePoint loans. And as I mentioned earlier, when we lose those deposits at our bank, we'll lose $20 million on an annualized basis of investment income because we're really just earning Fed funds. And we're also paying out Fed funds. So we'll lose about $20 million of annualized expense, as well.

John Campbell (Managing Director of Equity Research)

Okay. And then are there fees associated with that offboarding that are paid to you?

Mark Seaton (EVP and CFO)

There are deboarding fees, you know. I would say they're pretty de minimis, though. I mean, less than $1 million. So there are deboarding fees, but it's not. It won't be material.

John Campbell (Managing Director of Equity Research)

Okay. That's helpful. And then from a CapEx standpoint, last quarter, Mark, I think you mentioned expecting $30 million or so of relief just from the wind down of some software projects. Honestly, that's been ramped, and you expect higher depreciation from here. But, just from an overall CapEx standpoint, kind of what you're expecting for this year and maybe if you got visibility next year, what that looks like for next year?

Mark Seaton (EVP and CFO)

So we think our CapEx has peaked. Last year we were $260 million of CapEx. We think CapEx will be down somewhere between 15%-20% this year. You know, and a lot of that has to do with some of these big, you know, initiatives. You're never done, but you know, the sort of the pig's been pushed through the python, if you will, and we're kind of over the hump. And also we're doing things a lot more efficiently now. We've found that you know, just hiring great tech talent, great engineers, it's just a better way to build products as opposed to going to third parties where you're paying more and not quite getting the same value. So that's been a big initiative for us, and we're seeing you know, early signs of success.

So we feel really good about the direction of where we're going from a tech perspective. And not only is that going to help us from a performance in terms of building products, but it's also going to have the effect of saving dollars, particularly CapEx dollars. So 15%-20% decline this year. And that's with still making all the strategic investments that we feel like we need to make.

John Campbell (Managing Director of Equity Research)

Okay. That's helpful. If I could squeeze in one more, I think I might have missed this, but did you comment on the April refi, month-to-date orders?

Mark Seaton (EVP and CFO)

The April refi orders are. We're running at about 371 per day. It's about the same as where it was last year and about 6% over last month.

John Campbell (Managing Director of Equity Research)

Okay. Great. Thank you, guys.

Mark Seaton (EVP and CFO)

Thanks, John.

Ken DeGiorgio (CEO)

Thanks, John.

Operator (participant)

As a reminder, if you'd like to ask a question, please Press Star one on your telephone keypad. One moment, please, while we pull for any additional questions. At this time, there are no additional questions. That also concludes this morning's call. We'd like to remind listeners that today's call will be available for replay on the company's website or by dialing 877-660-6853 or 201-612-7415 and enter the conference ID number 13745815. The company would like to thank you for your participation. This concludes today's conference call. You may now disconnect.