UMH Properties, Inc.
Q3 2014 Earnings Call Transcript

Published: 4 Nov 2014

[Operator:]

Good morning and welcome to UMH Properties’ Third Quarter 2014 Earnings Conference Call. All participants will be in listen-only mode. (Operator Instructions) Please note, this event is being recorded. It is now my pleasure to introduce your host, Ms. Susan Jordan, Director of Investor Relations. Thank you. Ms. Jordan, you may begin.

[Susan Jordan:]

Thank you very much, operator. Our 10-Q that we filed with the SEC yesterday is available on the company’s website at ir.umh.com. I would like to remind everyone that certain statements made during this conference call, which are not historical facts maybe deemed forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. The forward-looking statements that we make on this call are based on our current expectations and involve various risks and uncertainties. Although, the company believes the expectations reflected in any forward-looking statements are based on reasonable assumptions, the company can provide no assurance that its expectations will be achieved. The risks and uncertainties that could cause actual results to differ materially from expectations are detailed in the company’s third quarter 2014 earnings release and filings with the Securities and Exchange Commission. The company disclaims any obligation to update its forward-looking statements. Having said that, I would like to introduce management with us today, Eugene Landy, Chairman; Samuel Landy, President and Chief Executive Officer; and Anna Chew, Chief Financial Officer. It is now my pleasure to turn the call over you UMH’s President and Chief Executive Office, Samuel Landy.

[Samuel Landy:]

Thank you very much Susan. Good morning everyone and thank you for joining us. We are pleased to report our results for the third quarter ended September 30, 2014. UMH continued to execute its growth strategy of purchasing well located communities in our target markets including the energy rich Marcellus and Utica shale regions. During the quarter, we continued to grow our property portfolio by purchasing an additional 6 manufactured home communities located in Pennsylvania and Ohio for an aggregate cost of $17.6 million or $30,000 per site, which is well below replacement cost. These all-age communities totaled approximately 600 developed home sites situated on 278 acres. The weighted average occupancy for these communities is 87%. We have increased the number of our developed home sites by 18% over the prior year period. Additionally over the past five years we have more than doubled our portfolio by acquiring 60 communities totaling 8,300 developed home sites. Our portfolio is now comprised of 88 communities with 15,100 developed home sites located throughout 7 states. We continue to seek acquisitions in our target market areas and currently have a definitive agreement to purchase one manufactured home community in Pennsylvania with a total of 141 developed home sites for approximately $4.2 million. This transaction is anticipated to close during the first quarter of 2015. We are currently in various stages of negotiations for additional acquisitions. The shale regions in which we operate are experiencing increased growth and we believe that this growth will continue for quite some time as our country has now become the world’s largest producer of oil and natural gas. However, we feel that it’s still very early in regards to the economic growth of Pennsylvania and Ohio. Income from community operations increased 22% to $7.7 million for the third quarter of 2014 as compared to $6.4 million for the same period in 2013. Year-over-year same store occupancy has increased by 200 basis points from 81.3% in the third quarter of 2013 to 83.3% currently. Overall occupancy has increased 90 basis points from 81.3% at the year end 2013 to 82.2% currently. Current overall occupancy reflects 2014 acquisitions of approximately 1,600 sites with the weighted average occupancy of 76.3%. Our sales of new homes have been adversely impacted by the new governmental lending standards. Therefore we have focused our efforts in our home rental operations. Over the past two years we have added approximately 1,000 rental units to selective communities including those acquired as part of our community acquisition. At quarter end we had 2,207 total rental units. Occupancy in rental units continues to be strong and it’s currently at 91.3%. Occupied rental units now represent approximately 16.4% of total occupied sites. Because occupancy increases have been driven by home rentals, we will continue to allocate capital to rental units as demand dictates. Our sales of manufactured homes for the quarter remained relatively stable with $2.2 million in the recent quarter as compared with $2.3 million in the third quarter of 2013. We are also seeing the same slow growth trend in the overall housing market with single family housing starts rising only slightly. As we are experiencing with manufactured homes consumers in the overall housing market are gravitating towards renting versus owning due to the tight credit standards and limited wage growth. UMH’s core funds from operations or core FFO has increase 30% from $0.10 in the third quarter of 2013 to $0.13 in the third quarter of 2014. While this amount still falls short of our $0.18 per share quarterly dividend, we are encouraged by the recent growth in our per share earnings. This growth in per share earnings has been driven by our occupancy gains as well as our community acquisitions. And now, Anna will provide you with greater detail on our results for the third quarter.

[Anna Chew:]

Thank you, Sam. As Sam mentioned, core FFO was $2.9 million or $0.13 per diluted share for the third quarter of 2013 compared to $2 million or $0.10 per diluted share for the third quarter of 2013, representing an increase of 30%. Core FFO, excluding securities gains, was also $0.13 per diluted share for the third quarter of 2014 as compared to $0.10 per diluted share a year ago. Core FFO does not represent cash flow from operations as defined by U.S. GAAP. Please see our quarterly Form 10-Q filing for the reconciliations from our net income to core FFO. Rental and related income for the quarter was $16.4 million compared to $14 million a year ago, an increase of 17% primarily due to the acquisition of 20 communities and the addition of rental units, which drove our occupancy gains since the prior period. Our community operating expenses for the quarter were $8.6 million compared to $7.6 million a year ago representing an increase of 13%. Community operating expenses for the quarter were 52.6% of rental and related income representing a 190 basis point reduction from the 54.5% for the year ended December 31, 2013. As we continue to improve our occupancy rates and increase our income, our expenses will continue to fall to a lower percentage of revenue. Income from community operations amounted to $7.7 million for the quarter compared to $6.4 million a year ago, representing a 22% increase. As Sam mentioned, sales of manufactured homes were relatively stable at $2.2 million consisting of 35 homes during the recent quarter as compared to $2.3 million consisting of 39 homes during the prior year period. Our loss from the sales operations, including interest expense, increased from $226,000 for the third quarter of 2013 to $547,000 for the third quarter of this year. Increases in advertising cost, salaries and expenses associated with setting up sales centers contributed to this loss. Although recent sales have only been fair, we believe that our capital investment has the potential to generate meaningful positive results over the long-term. As of quarter end, our capital structure consisted of approximately $256 million in debt, of which $184 million was community level mortgage debt and $72 million were loans payable. 95.7% of our mortgage debt is fixed rate. The weighted average interest rate on our mortgage debt is 4.8% and the weighted average maturity is 5.5 years. We also had a total of $92 million in perpetual preferred equity at quarter end. Our preferred stock combined with an equity market capitalization of $221 million and our $256 million in debt results in a total market capitalization of approximately $569 million at quarter end. From a credit standpoint, our net debt to total market capitalization was 45%, our fixed charge coverage was 1.6 times, and our net debt to total EBITDA was 8.7 times. From a liquidity standpoint, we ended the quarter with $2.7 million in cash and cash equivalents and $15 million potentially available on our credit facility pursuant to an accordion feature. We also had $8.9 million available on our revolving lines of credit for the financing of home sales and the purchase of inventory. In addition, we held $62.4 million in marketable REIT securities encumbered by $17.8 million in margin loans at 2% interest. Generally, 50% of the market value of our REIT securities may be borrowed on margins. We intend to limit the securities portfolio to be no more than approximately 15% of our gross assets. At the end of the quarter, we had $2.6 million in net unrealized gains on our securities investments in addition to the $1.3 million in total gains realized thus far in 2014. To further enhance liquidity, UMH plans to take advantage of the low interest rate environment by refinancing a portfolio of our manufactured home communities on a long-term 10-year basis, which will raise approximately $50 million and provides $30 million to $35 million in free cash. And now, let me turn it over to Gene before we open up the call for questions.

[Eugene Landy:]

Thank you, Anna. As Founder and Chairman of the Board of Directors, I am pleased to announce that UMH is making substantial progress on its operational business plan. Our communities are strategically very well located. We are taking advantage of the economic and population growth that has resulted from the oil and gas deposits in Pennsylvania and Ohio. These vast resources are substantial catalysts for major growth in the regions in which we operate. They are long-term catalysts and will require a long-term approach. UMH is experiencing favorable developments. As Sam mentioned, the manufactured housing industry has developed a very strong demand for rental units. UMH can purchase and install a new home for $40,000. These are three-bedroom, two bath homes that compare favorably in price and quality with three-bedroom garden apartments. Management projects that for each 1,000 units installed and rented gross income will revise by $9 million and net income by $6 million. UMH is also experiencing an improved credit market. We currently have $256 million in mortgage or other debt. The communities can over the next 3 years be refinanced adding a $100,000 to investable capital, which will allow us to maintain at eventually even increase our present cash distribution of $0.72 a share. In real estate, realizing growth in individual property values can be achieved through refinancing. This is a tax advantage method of realizing increased value. The UMH story is based on a strong housing market and an even stronger market for affordable housing. UMH believes manufactured housing offers special cost advantages. UMH has also invested heavily in areas that will experience above average growth due to the presence of oil and gas deposits in the Marcellus and Utica shale areas. With the growth of our per share earnings and the favorable deployments previously discussed, management will have recommended the Board of Directors, the continuation of our current $0.18 a quarter or $0.72 annual per share cash distribution. We will now be happy to take questions.

[Operator:]

(Operator Instructions) And our first question today comes from Brian Hollenden of Sidoti & Company.

[Brian Hollenden:]

Good morning, guys and thanks for taking my call.

[Anna Chew:]

Hi, Brian.

[Brian Hollenden:]

Can you talk a little bit about the impact that lower oil and natural gas prices will have on your overall strategy?

[Eugene Landy:]

Well, we don’t think it will have any. We started out in the Marcellus/Utica shale believing it was a natural gas play and natural gas is priced about one-third lower than the oil and the coming events will be that you will see trucks, buses and ships propelled by natural gas and you will see a greater proportion of energy, electrical energy generated by natural gas. And it is true the gas prices are low but the commitment in the hundreds of billions have already been made in Pennsylvania, Ohio and West Virginia, the wells are being drilled, they are being hooked to the pipelines and the train is running. So, it is true that if oil prices went down another $20 a barrel, in the future there might be less drilling, but the – what’s in the works is in the works and it’s tens and hundreds of billions of dollars of projects already committed to, you are already getting benefit by the price of gasoline being lower, you are getting lower – you are getting not only your utility prices going up every year, they are actually going down and so the consumer has more income. So we don’t think the price of oil changes our strategy at all.

[Brian Hollenden:]

Alright. Thanks for that color and then if I can just ask a follow – second question, rentals currently makeup 15% of your total site count, do you anticipate that number increasing by about 1% or 2% a year over a longer period of time, can you just give us some color on how that progresses?

[Eugene Landy:]

UMH as for the problem and an opportunity we have a little less than 3,000 vacancies and if we fill those vacancies our numbers will be very satisfactory. And we have been a little late to the game going to the rentals, but we are now going to the rentals and adding 550 approximately a year. The pipeline of rentals is in place and there were units being delivered, setup as I speak and we will continue to put the rental units into the products and really good news which we have given to you previously in this presentation is that the rental demand is very strong and we hope to go ahead 500 units a year. You have 3,000 vacancies, we will very quickly increase your occupancy, you increase your top line, and by the way, we are seeing a very nice pipeline increase in September and October and now November and there was strong rental demand in our market. We believe it will continue.

[Brian Hollenden:]

And then if I could just ask one follow-up related to that, can you just talk a little bit about on the rental side pricing have you been sort of increasing your prices year-over-year, could you just talk about that dynamic?

[Eugene Landy:]

We have the potential for substantial price increases, but we are not increasing them. We wish everybody listening to this call would go out and see a three-bedroom, two bath manufactured house which is 1,200 square feet to 1,500 square feet renting for $750 a month with three-bedroom garden apartments renting now in the same areas for $1,400 a month. So we believe we will provide greater value with our product. We may need that to attract customers who don’t know our product originally, but eventually when they move in and have the three bedrooms, two bath we think that our product is worth $1400 a month. Now we have plenty of room for rent increases over the next three, four, five years. The basic situation is we have gone through the biggest housing decline in history. The longest housing decline and we have a period where supply of housing exceeded demand. We have been predicting for years that it’s going to change and what we are saying on this conference call and if you listen to the conference call of other companies in our industry it has actually started to change. Demand has picked up substantially and we think right now our main goal is to rent 3,000 lots. If you look at the size of the population the areas with 3,000 lots is not a big number for us to rent. Housing comes back we will be back to reasonably full occupancy. And of course rent increases will come then because eventually if demand exceeds supply then to get more supply you will have to have pricing that justifies building new units and justifies the replacement cost of units. And as you know the replacement cost of our units is substantially above the price we have been paying for units that we have been buying.

[Brian Hollenden:]

Thank you.

[Operator:]

The next question comes from Joe Valdrini of Bank of America/Merrill Lynch.

[Joe Valdrini:]

Good morning everyone.

[Anna Chew:]

Good morning.

[Joe Valdrini:]

Anna, there are two quick questions. Can you talk a little bit about the share dilution and the strategy around that? And then I heard a few numbers being turn around about future refinancing what you are going to do with those funds. Can you provide a little color on that? That will be great.

[Eugene Landy:]

Well, the first color is what Anna announced and Anna is working on it doing a wonderful job as usual. As you know, the credit market is excellent. We have had 4, 5 different groups looking to refinance our products. We are sorry that on this conference call we can’t announce anything, because we don’t have a term sheet, we don’t have a commitment, but we are more than optimistic that the products are substantially up in value and the financing is available. And we intend to refinance our products and we are starting with our first group of products, which we think will net about $38 million. So, the other part of your question related to as I missed that….

[Joe Valdrini:]

Every quarter and I have asked this before we have kind of noticed there has been quite a bit of share dilution and I think you talked about it before, but if you could kind of reiterate the strategy around that?

[Eugene Landy:]

Well, we are starting to issue equity. We don’t really like to issue equity. We are looking as we said we think we now can issue substantial amounts of debt and stay a low leverage REIT. We are looking into the possibilities of growing in the future using preferred equity rather than common equity, but we are very conservative – we have gone through around four recessions in difficult times. And we have great credit relationships. And the reason we have great credit relationships is we have managed to maintain earnings even at adverse times. So, we have issued equity. We are issuing equity this year. We have bought over $200 million in products. We are buying more than $40 million in rental homes. We believe we are getting a very good return on it. So, we don’t consider the equity dilution. But on the other hand with cheaper capitals available, our policy will be to seek the cheaper capital and we are saying with the current low interest rates and credit availability, we are going to rely much more on debt than equity in the future. And if we really have a strong balance sheet and strong income statement, we would look to using perpetual preferred, so we issue less equity. So, management is very well aware that equity is important and we are trying not to issue it. And on the other hand we are trying to balance things to have a strong financial statement to present to our creditors, so that we can announce that we intend to raise as much as what $50 million, Anna.

[Anna Chew:]

Right.

[Eugene Landy:]

$50 million.

[Joe Valdrini:]

Okay. So, it sounds like you are shifting now. That’s good.

[Eugene Landy:]

Absolutely, shifting. And the equity that we have been raising as soon as Anna finishes, we will probably reduce the amount of equity issue under the dividend reinvestment shareholder investment plan. And we are not looking to do an equity issue now, we are looking to do a preferred, but as you know in preferreds, you need coverage, you need 3 to 1 coverage and we are projecting that, but the investment bankers don’t want projections, they want to see actual numbers. So, we are working on it and we are very, very optimistic that we can structure UMH with debt and preferred equity and not issue as much common. We don’t think the common we have issued in the past have been dilutive at all. We have doubled – we went from 6,000 sites to 15,200 sites. And if you do that, you had to issue equity and we did and we think the equity issue was worthwhile. There will be much plus equity issuance in the future.

[Joe Valdrini:]

Great, thank you.

[Operator:]

And our next question will come from (indiscernible) of Wunderlich Securities.

[Unidentified Analyst:]

Good morning, guys. How committed are you to the dividend and I mean, exactly the dividend has been $0.72 back to 2009 and I mean so you are making whatever 11 or 12 you are paying 16?

[Eugene Landy:]

Well, how committed with dividend? I went back today there was an expert who said people talk about corporate governance, corporate governance is a dividend. The distribution to the shareholders is the most important thing on corporate governance. Sharing with the shareholders the returns is very, very important. And when you are a REIT and your dividends are sheltered by depreciation, there were strong reasons to make the distributions. So, UMH will face with a situation, where due to the housing recession for a period of time we were not covering the $0.72 with funds from operations. On the other hand, real estate is a total return vehicle. Total return means your current income plus the appreciation of the property. And we have had people talking to us, telling us how much our properties have appreciated and we agree with them. Our properties have appreciated. We bought properties at $20,000, $30,000, $36,000 a site. We have got $15,000 a site. We have had substantial gains. We can realize those gains through refinancing. So, we believe we can cover the dividend then through the refinancing, but we also believe it would – it didn’t make any sense to me to cut the dividend in 2013/2014, because we didn’t cover it. And we didn’t cover it with capital gains from sale of securities, but that’s another matter. We want to cover the dividend with funds from operation. We only owned $0.13 last quarter. So, we have to pickup another $0.05 and the rental units adding thousand rental units for $40 million. And the other good things which are happening, we think we can get the funds from operation up to $0.72 and cover it. If we don’t quite cover it, we are covering it with the growth in value of the company, the growth in value of the properties and our ability to refinance the properties. So, we are committed – we are totally committed to the $0.72 dividend. And on this conference call, we are telling people that things have turned and we have the money with a year, 2 years ago, you might have been concerned that you wouldn’t have the cash to pay the dividend, but we have the cash.

[Unidentified Analyst:]

Good. So, when you are looking at these manufactured homes versus the old trailer homes, lot of people think what is it like the depreciate – I mean, these are built much, much better, right. And so the useful life on these things is substantially better than something 10 or 15 years ago, right?

[Samuel Landy:]

Yes, it is Sam Landy here. I don’t see any reason that you couldn’t say that a new single lighthouse won’t last 50 years, it will last 50 years or more and a multi-section house will – that last as long as any house built. Our houses are shipped down the road at 60 miles an hour. It’s a well-built house that if properly maintained will last as long as any other house. And we were speaking about rental units versus sales before, a manufactured house cost about 40% less than a site build house because of the efficiencies of building in the factory. And the problem we faced is that our loan hasn’t been a better product than the conventional mortgage. Our loan has costed more. The rental program does away with that discrepancy. We can use all of our cost advantage to our advantage and charge lower rents. And we are buying and setting up 1,000 square foot houses for $40,000 and we can rent these for $800 a month and so you are grossing more than 20% and these things should last 50 years plus. To me, renting is even better than selling, because you get the rent increases every year. The home is going to last a substantial period of time. And I think – and you get all the advantages of manufactured home construction. So, I think it’s a great program.

[Unidentified Analyst:]

With all of the government programs, I mean, the lack of government programs and the differentials between the conventional mortgage and this, what about rent-to-own, I mean, in people giving them and so you don’t have to turn these people away, they still want to own something, but they cannot qualify, but they got good income and you think they are good prospects?

[Samuel Landy:]

Yes. We do lease with an option to purchase and it does result in sales. Renting homes also attracts people who have never lived in a manufactured home community, so they can try it out. And yes, there is a lot of reason to believe that rentals will turn into sales, Sun Communities does it all the time. On top of that, you can take part of somebody’s rent and credit that towards their down payment later. So, the rental program does have the potential of generating substantial sales.

[Unidentified Analyst:]

I saw it in one of your recent reports, Berkshire or something I would assume that’s Berkshire Hathaway is providing financing and stuff. So, I mean, he is still through Clayton Homes or something, is that going to be involved and it maybe make buying a home a lot simpler with the shorter paperwork and stuff?

[Samuel Landy:]

Well, so there is two things – two different things going on, but they are both Berkshire Hathaway’s companies. 21st Mortgage is financing our home sales through a special program with us, where we guaranteed a loan and they do the approval process. It’s a successful program, but it’s not as successful as I would like. And the reason it’s not as successful is the SAFE Act Dodd-Frank. The paperwork requirements and the amount of information a customer has to provide us to close the loan after they are approved for financing, it’s been overwhelming to the customer, working people just don’t have the ability to document and generate all the paperwork required in a loan approval today and that’s really hurting sales. The second program with 21st Mortgage is they are now going to finance the purchase of our rental units, which is a great benefit to UMH. So, when we purchase 500 units at $40,000 apiece, $20 million, we can borrow 100% of the invoice from 21st Mortgage and we pay the setup cost. So, that’s a fantastic program for us. It’s great for UMH and we are just beginning to use it now.

[Unidentified Analyst:]

Great, thank you.

[Operator:]

And next we have a question from David Minkoff of DCM Asset Management.

[David Minkoff:]

Good morning, gents and Anna, I guess.

[Anna Chew:]

Good morning, David.

[David Minkoff:]

Hi, Anna. You talked about the refinancing of the mortgage and I know it’s not said yet and you still have some work to do on that, but what rate would you expect to pay versus what you are paying now. I am trying to get some sense of the savings on the refinancing?

[Anna Chew:]

Well, right now, I think we can get approximately anywhere between 4.25 and about 4.45 some of these loans are at the 5 and 6.

[David Minkoff:]

That you currently have 5 and 6, you mean?

[Anna Chew:]

That we currently have, correct.

[David Minkoff:]

1 point or up to 2 point savings in that, is that it?

[Anna Chew:]

Right, but it’s not just a point of the interest savings, but it’s also how much we can take out of the loan. Some of these loans we have had on the book, let’s say, for 7, 8 years and what happens is it’s paid down so that the principal is paid down. So, what we can do with refinancing is to obtain additional funds and pull out some cash out of that for other investments.

[David Minkoff:]

So, that bags the question, if the financing is so good on the interest rate, isn’t the preferred stock that we are paying 8% on and I know Gene talked about perhaps doing some further preferred issues, but right now, the 8% is expensive financing. Now, going out 10, 15 years maybe it will turn out to be okay, but right now, are we being drained, not drained, but I mean, burdened somewhat by the 8% on the preferred stock?

[Eugene Landy:]

Well, we have made a lot of money with the preferred. We are glad we issued it at 8.25% that we could make those acquisitions that are now so valuable, but we are well aware that in May 2016, UMH has the right to call the 8.25% preferred and we will replace it with something else. That could be all the way from 2% bank debt to 6.75%, 7% new issue preferred. So, we have to wait 2 years, but you are quite right, David, at some point we are going to have a saving, we don’t know how much when we substitute for the 8.25% preferred that’s currently on the books and 2 years in our lifetime is right around the corner.

[David Minkoff:]

I think dry area and it goes faster than ever. Well, one comment on the leasing, I am glad the leasing program, the renting program is going very well, but I think the real boom you will see in 2 years and beyond when some of those or a percentage of those lessees be turned into buyers. So, we haven’t really even seen the benefit of the leasing it other than that they are filling up the vacancy rate and bringing up your occupancy rate. And that’s a positive, but the real thrush should come in 2 years and beyond when these people turn into buyers or a good percentage of them do hopefully, so?

[Samuel Landy:]

So, what I am hoping for is a little bit different than what you are saying. So, a) we need buyers back. In 2006, we did $16 million in sales and made $2 million and today we are only doing about $8 million in sales and we are losing money. So, we definitely need buyers back and hopefully as the economy improves that’s going to happen. But I am not so big on the concept that you need to sell rental units to make money. I think rental units can in fact be more profitable than a sale. Up until a year ago we did our own lending where we earned 9% or 10% or 8%, 9% or 10% on our loan portfolio. So, every time we sold the house, we earned the interest. You hopefully had a markup in the sale and you earned the lot rent. Today, we are not earning the interest on the sale, because we are letting 21st Mortgage have the loan. So, if you compare a sale and the profit on the sale, especially in a low profit environment like there is today compared to a rental unit, we are going to buy a rental unit today for $40,000, we are going to collect $8,000 a year on it, 20%. What difference is, to me, I am better off collecting that rent as long as possible, because I fully believe I am going to raise the rent 4% a year? So, I think the rental program even without ever turning into a sale is fantastically profitable and a great way to go.

[David Minkoff:]

That’s great.

[Samuel Landy:]

You seemed to be lining up?

[David Minkoff:]

Right now rather than buying, so that’s to your advantage, very good. Nice to see a better quarter and some light at the end of the tunnel here, so, that’s good. Okay, keep up the good work.

[Samuel Landy:]

Thank you.

[Anna Chew:]

Thank you.

[Eugene Landy:]

Thank you, David.

[Operator:]

(Operator Instructions) I am showing no additional questions. We will conclude the question-and-answer session. I would like to turn the conference back over to Samuel Landy for any closing remarks.

[Samuel Landy:]

Thank you, operator. I would like to thank the participants on this call for their continued support and interest in our company. As always Gene, Anna and I are available for any follow-up questions. We are heading to Atlanta for this week’s NAREIT conference and hope to see some of you there. We look forward to reporting back to you after our fourth quarter. Thank you.

[Operator:]

The conference is now concluded. Thank you for attending today’s presentation. The teleconference replay will be available in approximately one hour. To access this replay please dial U.S. toll free 1-877-344-7529 or international 1-412-317-0088, the conference ID number is 10052094. Thank you and please disconnect your lines at this time.