Acadia Healthcare's (ACHC) CEO Joey Jacobs on Q2 2014 Results - Earnings Call Transcript

Jul.30.14 | About: Acadia Healthcare (ACHC)

Acadia Healthcare (NASDAQ:ACHC)

Q2 2014 Earnings Call

July 30, 2014 9:00 am ET

Executives

William Brent Turner - President

Joey A. Jacobs - Chairman and Chief Executive Officer

David M. Duckworth - Chief Financial Officer, Chief Accounting Officer and Controller

Analysts

Phillip Kim - BofA Merrill Lynch, Research Division

Paula Torch - Avondale Partners, LLC, Research Division

Charles Haff - Craig-Hallum Capital Group LLC, Research Division

Brendan Strong - Barclays Capital, Research Division

John W. Ransom - Raymond James & Associates, Inc., Research Division

Matthew D. Gillmor - Robert W. Baird & Co. Incorporated, Research Division

Christian Rigg - Susquehanna Financial Group, LLLP, Research Division

Ryan K. Halsted - Wells Fargo Securities, LLC, Research Division

Gary P. Taylor - Citigroup Inc, Research Division

Dana Syrune Nentin - Deutsche Bank AG, Research Division

Operator

Please standby. We're about to begin.

William Brent Turner

Good morning. I'm Brent Turner, President of Acadia Healthcare, and I'd like to welcome you to our Second Quarter 2014 Conference Call.

To the extent any non-GAAP financial measure is discussed in today's call, you may also find a reconciliation of that measure to the most directly comparable financial measure calculated according to GAAP on our website by following the Investor Relations link to Press Releases and viewing yesterday's news release.

This conference call may contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, including statements, among others, regarding Acadia's expected quarterly and annual financial performance for 2014 and beyond. For this purpose, any statements made during this call that are not statements of historical fact may be deemed to be forward-looking statements. Without limiting the foregoing, the words believes, anticipates, plans, expects and similar expressions are intended to identify forward-looking statements. You are hereby cautioned that these statements may be affected by the important factors, among others, set forth in Acadia's filings with the Securities and Exchange Commission and in the company's second quarter news release. And consequently, actual operations and results may differ materially from the results discussed in the forward-looking statements. The company undertakes no obligation to update publicly any forward-looking statements whether as a result of new information, future events or otherwise.

At this time, for opening remarks, I'll turn the conference over to our Chairman and Chief Executive Officer, Joey Jacobs.

Joey A. Jacobs

Good morning, and welcome to our second quarter call. In addition to Brent, I'm here today with our Chief Financial Officer, David Duckworth, and other members of our executive management team. Dave and I each have some brief remarks about the second quarter and our outlook for Acadia. Then we'll open the line for your questions.

But first let me welcome Joy Chamberlain, the CEO of Partnerships in Care, and the rest of her team to Acadia. As you know, since our first quarter earnings call, we have announced and completed the $662 million purchase of PiC. This transaction brings 23 inpatient facilities to Acadia that produced 2013 revenues of about $285 million and $75 million in adjusted EBITDA. It also brings us the #2 market position in the U.K. for independent behavioral health, which is a fragmented market that has grown 9% annually in the U.K. for nearly a decade.

PiC is dedicated to providing quality healthcare services and worked closely with the National Health Services for many years to meet the behavioral healthcare needs of patients in the U.K. We are well along in the integration of our operations, which is proceeding as scheduled. Joy and her team and all of us at Acadia believe the business is poised for expansion organically and through acquisitions. As a part of Acadia, PiC now has access to the capital and other resources to pursue these growth opportunities. As a result, while we expect PiC to add $0.17 to $0.18 to our adjusted EPS in the second half of 2014, we also see a significant long-term growth opportunity that PiC presents us in the U.K. So to everyone at PiC, welcome. We look forward to working with you to continue providing the quality care to which your patients and their families have become accustomed and to expand our share of a growing market.

Turning to our second quarter financial results. Acadia had another strong performance with 20% growth in revenues, improved margins and 23% growth in adjusted EPS. Our revenue growth continued to be driven primarily by the addition of licensed beds to our operations through acquisitions and, organically, through new beds in existing facilities and de novo facilities.

We added 675 licensed beds since the second quarter last year. Roughly 40% of these beds came through acquisitions and 60% through organic growth. We have added 228 beds organically during the first 6 months of 2014, with 106 of these added in the second quarter. We now expect to add just less than 400 beds organically for the full year of 2014. The beds we have added to the facilities in our same facility base were mainly responsible for our 11.5% increase in same-facility revenue for the second quarter, which reflected double-digit growth in patient days.

Consistent with our past experience, this level of same-facility revenue growth drove increased operating leverage, with same-facility EBITDA margin increasing 150 basis points for the quarter. This strong same-facility performance validates our ongoing focus on adding new beds to existing facilities and reflects growing demand for high-quality inpatient behavioral healthcare. Even as we invest to meet this demand through organic growth both domestically and the U.K., we are also continuing to evaluate additional acquisitions in our highly fragmented markets. We remain positioned to fund these growth strategies with cash flow and availability under our credit facilities. As the funding of the PiC transaction also demonstrated, we are confident of our access to additional capital for our attractive acquisitions.

To summarize, after an active and successful second quarter and first half of 2014, Acadia is very well positioned to continue to expand its market share, earnings and shareholder value. We look forward to updating you after the third quarter.

Thank you, and now here's David Duckworth to discuss our results in greater detail.

David M. Duckworth

Thanks, Joey, and good morning. Acadia's revenue increased 20.5% for the second quarter of 2014 to $213.8 million from $177.5 million for the second quarter of 2013. Adjusted income from continuing operations per diluted share grew 23.1% to $0.32 for the second quarter of 2014 from $0.26 for the second quarter of 2013.

Our adjusted results exclude transaction-related expenses of $3 million for the second quarter this year and $1.4 million for the second quarter of 2013. In addition, the adjusted results exclude a gain on foreign currency derivatives of $13.7 million for the second quarter of 2014 related to the PiC acquisition. This gain was the result of locking in to the dollar-denominated purchase price on June 3 and the corresponding increase in the value of the British pound compared to the U.S. dollar as of the end of the second quarter.

Same-facility revenues increased 11.5% for the second quarter, with a 10.6% increase in patient days and a 0.8% increase in revenue per patient day.

Same-facility EBITDA increased 150 basis points to 26.3% of same-facility revenue for the second quarter, compared with 24.8% for the same quarter last year. Adjusted consolidated EBITDA increased 20.5% to $44.7 million from $37.1 million, and the margin remained constant for both quarters at 20.9%.

As Joey mentioned, we are positioned to continue funding our growth strategies. Our operating cash flows totaled $22 million for the second quarter. And after the completion of the PiC purchase, we have $175 million of availability on our revolving line of credit. Also, post transaction, our ratio of total net debt to trailing 12 months adjusted EBITDA is approximately 4.2, consistent with where we were at the end of the first quarter of 2014.

Adjusted for nondeductible transaction-related expenses, our tax rate for the second quarter was approximately 38%, and we expect that our tax rate for the remainder of the year with PiC included in our financial results will be approximately 32%.

As detailed in our news release, we affirm our 2014 guidance for adjusted earnings per diluted share in a range of $1.44 to $1.46, which includes $0.17 to $0.18 accretion from PiC for the second half of the year. We establish this guidance on July 2, following the completion of the transaction, raising the guidance from our previous range of $1.26 to $1.29. Our financial guidance excludes the impact from any future acquisitions and transaction-related expenses, as well as of the gain on foreign currency derivatives.

This concludes our prepared remarks this morning, and thank you for being with us. I'll now ask the operator to open the floor for your questions.

Question-and-Answer Session

Operator

[Operator Instructions] And we'll go to our first question from Kevin Fischbeck with Bank of America Merrill Lynch.

Phillip Kim - BofA Merrill Lynch, Research Division

Phil Kim on for Kevin, actually. So a couple of questions, the first question being: can you provide any more color on your ability to do deals, particularly in the U.S.?

Joey A. Jacobs

Sure. We have a very active -- this is Joey, we have a very active pipeline. Just this past week, I was out with Steve Davidson and Ron Fincher, reviewing a potential acquisition for the company. So we're very busy here in the States looking at opportunities for acquisitions and expect to continue to make acquisitions in this fragmented market, as we see us making acquisitions in the U.K. for that fragmented market.

Phillip Kim - BofA Merrill Lynch, Research Division

Got it. And in terms of pricing, are there any changes in your projection of kind of the 4% to 6% commercial and the 1% to 2% in Medicare and Medicaid?

Joey A. Jacobs

No, we see no changes from our previous call about what we expect from the commercial payers and from the governmental payers. Those ranges still hold.

Phillip Kim - BofA Merrill Lynch, Research Division

Okay. And just one final question. Are there any new updates on the impacts from the form [ph] at all?

Joey A. Jacobs

Well, as you can see, from our double-digit patient day growth, we think it's -- this is just me. I believe it's a combination of Mental Health Parity being more fully implemented. It is, I think, some Affordable Care Act impact, and it is just the demand and the need for our services. So forward-looking, I think, for the remaining 6 months of this year, on growth and demand for our services, are going to be similar to what we saw during the first 2 quarters.

Operator

And we'll go to our next question from Paula Torch with Avondale Partners.

Paula Torch - Avondale Partners, LLC, Research Division

You mentioned some meaningful organic growth in acquisition opportunities in the U.K. So I just wondered if you could give us a little bit of an idea or some more color on timing. So could we start to see activity this year or in 2015? Or near term, is it really going to be more about absorbing PiC and gaining efficiencies there and improving top line near term?

Joey A. Jacobs

The transition with that transaction is going very, very well. And Ron Fincher has done an outstanding job. And all the senior management team interacting with this acquisition of PiC, and we're very excited to have them on board. We have already approved a 36-bed same-facility addition, and construction will begin on that in the near future. And we do have a couple of smaller transactions that we're looking at. So as in the United States, we have active pipeline there in the U.K.

Paula Torch - Avondale Partners, LLC, Research Division

Okay, great. And where do you think you'll be putting, I guess, the majority of your capital investments? Would it be in the U.S., U.K or evenly split? Or how should we sort of think about that going forward?

Joey A. Jacobs

This is just me looking out, once again, forward-looking. I think that we will still deploy the majority of our capital here. But we will be deploying sufficient capital for the U.K. And over a longer period of time, I think you'll see probably 75% of our capital will be spent here in the States and 25% will be spent there. But that's over a longer period of time with fluctuations by quarter and by acquisition. So both markets are opportunities for us, and we're going to take advantage of them.

Operator

And we'll go to our next question from Charles Haff with Craig-Hallum.

Charles Haff - Craig-Hallum Capital Group LLC, Research Division

I have a couple of questions for you in terms of the PiC portfolio. Are there any length of stay differences in that portfolio relative to your U.S. portfolio?

Joey A. Jacobs

Yes, there are differences. The U.K. model takes a more long-term patient approach to working with, what I believe are, the chronically mentally ill, and we take care of quite a few of those patients. So the length of stay in the U.K. is longer. And the NHS, the services there are very committed to providing this level -- this care to those residents there versus the United States model, where it's kind of separated. The acute side will stay 10 days, but then in the residential side, you will stay 6, 7 months, or possibly, in our residential. So they have more of a all-encompassing approach, where you have acute beds, residential beds, rehab beds and then a longer length of stay there. But once again, both types of patients need to have safe, secure, quality healthcare, and we believe the folks in the U.K. and our team here in the United States are very committed to providing that quality care and taking care of these patients.

Charles Haff - Craig-Hallum Capital Group LLC, Research Division

Great. Thanks for that color. And then in terms of differences in revenue per bed per day, I know it's all acute over at PiC; are there much of a difference in revenue per bed per day?

Joey A. Jacobs

No, PiC has all ranges of services, acute, residential and rehab. Their per diems are kind of in between what we would see for our residential and acute services. And so once again -- that system is a little different than the United States system. But, once again, the demand for the service, reasonable reimbursement rates per diems -- and we feel is a very good environment for which we can operate.

Brendan Strong - Barclays Capital, Research Division

Great. And my last question is regarding Puerto Rico. Wondering if you could give us an update on how the Puerto Rico market is going for you, and any updates on your de novo facility that you talked about a couple of quarters ago.

Joey A. Jacobs

Sure. The Puerto Rico facility many times is full, 100% occupied. We've just opened up new beds there. We've got more beds working to come online there. So we're absolutely pleased with Dwight Willingham as our Division President for that division. And our folks over in Puerto Rico are doing a terrific job. So Puerto Rico is doing great. The de novos, the 3 that we have been talking about, Rebound, Cascade and North Tampa, narrowed their drain on the company for the second quarter. It was only approximately $0.005 to the company, and we expect it to be contributing positively in the third quarter. So North Tampa, Rebound and Cascade are progressing. and I think the division presidents there, John O'Shaughnessy and James Duff, are on top of what's happening there. We have great CEOs in those facilities. And these are going to be tremendous franchises for us. And there'll be a positive -- it appears there'll be positive contribution to us in the third quarter.

Operator

And we'll go to our next question from John Ransom with Raymond James.

John W. Ransom - Raymond James & Associates, Inc., Research Division

Just to demonstrate my mastery of international tax. You guys are obviously going to be generating a lot of profit in the U.K. Is it reasonable to think that, that money will probably stay there and that, that will mean in essence force you for better or worse to keep expanding in that market? Or do you plan to bring that money back here and expand here, or if you've even thought through that yet?

Joey A. Jacobs

John, I'm not an expert on this either, but I can give you how we've structure it. We've structured it so that we can maximize the cash in both places. And we have an intercompany note to the U.K. that we would be getting interest income and could make principal payments back to the United States. And it wouldn't be bothering the tax rates. And you may know that in the U.K., the income tax -- corporate income tax rate is 20%. And so we have structured it, David Duckworth, Brent Turner and our outside consultants that we've used to structure this, we went into it to get as much as a cash back to United States, be as flexible as we could there or leave it there and deploy it there. I don't think we're going to get caught into having to spend the money in the U.K.. But if the opportunities are there, we're more than willing to spend it there. But we have a way to bring a substantial amount of the money back to the United States.

John W. Ransom - Raymond James & Associates, Inc., Research Division

Do it [ph] through the intercompany. Okay, that's great. And I was going to ask you about Tampa in more detail. Could you just give kind of where are you with census there and what -- where do you need to be to be at breakeven?

Joey A. Jacobs

There's a little bit more detail than I normally would share. North Tampa was positive for the second quarter. So it's already turned the corner on profitability. The census is in the 40, 50 range. And we are very excited about where they're at and where they're going. And we think it's going to be a terrific franchise, which we actually gave you a tour of. So it's positive in the second quarter.

John W. Ransom - Raymond James & Associates, Inc., Research Division

And then lastly, could you just give an idea of your JV pipeline with not-for-profits and kind of the ramp to profitability there? How long it takes to get to a decision. Are you happy with it? Do you think it'll be bigger than we think. It is slower than you think? Just more color on that would be great.

Joey A. Jacobs

Okay. One joint venture you would know about, if you followed us, it's in Memphis, Tennessee. And it's a pure de novo. We're going through the zoning right now to get the ability to start bidding that facility. So that's something that's 18 months away from us. But we're very excited to have Baptist [ph] as our lead not-for-profit partner in the Memphis market. And I'm very excited about that market and our opportunity. That is a market that we think will really appreciate and support this facility. And it complements our Delta facility. So we feel really good about that one. Hopefully, John, we have another one to announce in the third quarter, a joint venture with a not-for-profit. So hopefully, we'll have an announcement once again. This is a forward-looking. We got our fingers crossed, and you'll have more details about it when we announce. We have -- on most days, we have 2 to 3 of these opportunities that we're working on, and so we should maybe have -- I think we will have an announcement in the third quarter of another one that will be even more exciting than what we're doing in the Memphis market.

Operator

And we'll go to our next question from Matt Gillmor from Robert W. Baird.

Matthew D. Gillmor - Robert W. Baird & Co. Incorporated, Research Division

I was just curious with the bed growth target. I think you guys have been targeting 5%. But with the growth you've seen year-to-date and the potential inform from reform and Mental Health Parity, If you thought there was maybe any ability to accelerate that even higher?

Joey A. Jacobs

By us doing 400 beds this year, that's a record for us. Now we have got our first look into 2015, and 2015, I think, is going to be -- we know it's going to be above 300. We think it could get close to the 400. And that does not include de novos, and we'll have a couple of those next year, which will add another 150, 200 beds to us [ph]. So we're feeling really good about 2015. And that is terrific growth. That is terrific organic growth that Ron Fincher manages through his division presidents, and all the division presidents -- I haven't mentioned to Keith Furman and Roxanne Jividen dividend, but all of the 5 division presidents are doing a super job of about finding opportunities in building beds. And you saw the results in the second quarter with a double-digit patient day growth. And those, the 5 division presidents and Ron, just absolutely a powerful team working with the CEOs in the field.

Matthew D. Gillmor - Robert W. Baird & Co. Incorporated, Research Division

Okay, great. And it looks like the average length of stay declined a little bit. But just I assume that was driven by the addition of the acute beds, but just curious if there was anything else?

Joey A. Jacobs

No, it is just, once again, the ramping up more acute patient days were treated versus previously. So it was just the acute versus the RTC.

Matthew D. Gillmor - Robert W. Baird & Co. Incorporated, Research Division

And then last one from me. It looks like there was a maybe a small real estate transaction. Just curious sort of what that was, if you had any color on that.

Joey A. Jacobs

We've bought some land for an expansion project in Louisiana.

Operator

And we'll go to our next question from Chris Rigg with Susquehanna International Group.

Christian Rigg - Susquehanna Financial Group, LLLP, Research Division

I jumped on here a little late. I have 3 overlapping calls. But did want to back to the U.S. market. I wanted to get your views -- sort of expansion. Is it -- where is the best opportunities now? Is it sort of acquisition, joint ventures, sort of acquisition-like, or sort of breaking new ground on new facilities? Where do you think you see the biggest near-term potential to grow?

Joey A. Jacobs

Well, Chris, we already have 150 de novo beds to come online next year. So we know that's already in the bag. We will have 2 to 4, I think -- and once again, this is all forward-looking. I think that we will have 2 to 4 joint venture projects, and I think that we will announce between now and then. And I think, on the acquisition front, we still are looking at acquisitions of size [ph] and multi-facility opportunities. So Steve Davidson, I think, can deliver 4 to 8 facilities here, if we were to buy a large one, even more. So we feel really good about all 3 stools -- I mean, legs of that stool. But once again, we have to execute and deliver them. But we know we got the de novos in the bag. The joint ventures are very close. And as I mentioned earlier, Steve had me and Ron out last week looking in an acquisition that we're quite frankly negotiating the letter of intent on. So we're very busy.

Christian Rigg - Susquehanna Financial Group, LLLP, Research Division

Okay, very good. And then I wanted to switch over the PiC. I know you guys have already highlighted in various materials, the margins are running decently ahead of where you guys are in the U.S. Now that you got a little bit of time under your belt with the company, do you think you can still get that margin to go even higher compared to where it is today?

Joey A. Jacobs

The opportunity is there, Chris, but it's not a lot higher. But by quickly approving same-store bed bills, we think we can bring the contribution margins up. So Joy and their team are dedicated to doing the best job possible. And I think, with the capital we can give them, the opportunity for some margin improvement is there. But once again, we'll have to wait and see and execute.

Christian Rigg - Susquehanna Financial Group, LLLP, Research Division

Okay. And then the only other question I have is my lack of understanding of the U.K. government reimbursement market. Is that -- is it prone to shocks or is it fairly stable?

Joey A. Jacobs

This is how we got comfortable in due diligence. We believe it's fairly stable. And more than fairly, quite frankly, we think it's very stable. And that's -- with our due diligence, that's the conclusion we came to. But, once again, you just do the best job you can today, and whatever happens in the future, happens in the future. But we think it's very stable.

Operator

And we'll go to our next question from Gary Lieberman with Wells Fargo.

Ryan K. Halsted - Wells Fargo Securities, LLC, Research Division

This is Ryan Halsted on for Gary, I guess, following-up that last question in terms of the PiC. How are you viewing their bed capacity? I mean, you mentioned, obviously, there is an opportunity to add beds. But is there a need for additional capacity similar to what you seeing in the U.S.? And can you put, I guess, some size around that?

Joey A. Jacobs

I believe there is a pent-up demand. Now, it's going to be new to us about how fast we can get the beds build and bring them online, but the opportunities are there for us. And we've already approved the first 36-bed addition. So we believe we can grow and grow those same-store facilities. And we have the capital to do that. And we think Joy and her team are capable doing that over there. And we'll just have to wait and see how fast that happens. We've only had it now for 30 days, so we'll just have to wait and see. But once again, we're very, very -- I am very optimistic that we can do this.

Ryan K. Halsted - Wells Fargo Securities, LLC, Research Division

Okay, great. And then my other question is, any thoughts or views on the VA bill that is in the works? And what kind of opportunity do you think is there for you guys?

Joey A. Jacobs

Once again, we'll have to wait and see if it gets out. We have close relationships. If we have a facility that's close to a military base, we already have working relationships with those bases. So obviously, if we can help the VA and the military when meeting the needs, we are there to do that. And our commitment is that if we need to deploy capital to build a special unit for these individuals, we will do that. But we already have very good relationships with the bases that we're close to.

Operator

And we'll go to our next question from Gary Taylor with Citi.

Gary P. Taylor - Citigroup Inc, Research Division

Could you give us an update on total beds and total percentage, acute and RTC, at this point, at the end of the quarter?

Joey A. Jacobs

Well, Gary, you finally found the question I can't answer. David's here. How many total beds do we have, David?

David M. Duckworth

Yes, Gary. At the end of the quarter, before PiC, we had about 4,300 beds, and within that, 3,900 are in our same-facility group.

Gary P. Taylor - Citigroup Inc, Research Division

Okay. And do you -- on the 4,300, do you have the latest breakdown, even just approximate, on acute versus RTC?

David M. Duckworth

Yes, 65% of those are acute beds.

Gary P. Taylor - Citigroup Inc, Research Division

Okay. And I also noticed on the same-store book that the pick up in the average length of stay declined, which is you're attributing to, obviously, the bulk, if not all of the de novo bed growth is coming on the acute side. What about the slowdown on the same-store revenue per patient day? Given that the same-store mix is skewing more towards acute, you think it would pressure length of stay, which it has and sort of lift revenue per patient day. So that modest increase, is that just purely a function of what states -- these new beds happen to be in and are more like [ph] what the rates might be in those market? Is there anything else impacting that number?

Joey A. Jacobs

I mean, this is Joey. You're right in that the beds, what state we build the beds in can have an impact on it. What we did see what is -- I believe -- David, you can correct me, a slight increase in Medicaid for the quarter, and that would have a lower revenue per day. And so I believe it was more of a function of the payer mix for the quarter. We don't see anything there, really. So once again, we're pleased that it was positive point, I think 0.8%, and year-to-date we're at 1.5%. So it was just a mix on where the revenue was coming from and also what payer source.

Gary P. Taylor - Citigroup Inc, Research Division

Okay. Last question. How do you think you'll report PiC? Will it be a separate segment? Will it just be in the non-same-store book and just roll into the same-store book like a typical acquisition? Or have you give thought on what sort of visibility in the reporting you might provide?

Joey A. Jacobs

Gary, we are having those discussions as we speak. So we have not decided about how to report it. We're still thinking through what would be best for everybody. So we're still working through that. So -- but we'll have you. Obviously, the third quarter will be here before we know it, and we'll have that decision made.

Operator

[Operator Instructions] And we'll take our next question from Darren Lehrich with Deutsche Bank.

Dana Syrune Nentin - Deutsche Bank AG, Research Division

It's Dana Nentin in for Darren. Just on the Partnerships in Care business, are there any revenue or earnings metrics that you could provide for Q2? And then maybe on a go-forward basis, as you add beds internally, what are your expectations for occupancy trends there and how those beds would get added in and ultimately ramp?

Joey A. Jacobs

First, I don't even have -- well we have number somewhere for the Q2. But we're not -- we weren't running it for the quarter. So we'll be giving you plenty of data, once -- now that we have it. We expect -- where we're building beds, they're actually - last time I talked to Joy there, they were actually turning patients away. So we think these beds will ramp up rather quickly. And rather quickly to me would be within 12 to 18 months of opening. These beds would be back to what the facility was experiencing for utilization prior to the building of the beds. But once again, we're going to build them. We know there is a demand for them, and we'll just see how fast it ramps up.

Operator

And that concludes today's question-and-answer session. I would like to turn the call back over to today's speakers for any closing or additional remarks.

Joey A. Jacobs

Sure. I know a lot of our folks in the field listen in, I want to thank them for their hard work and their dedication to providing quality care to all our patients. I really want to publicly thank the senior management team here and their execution in the second quarter of operations, plus doing the acquisition of PiC. It was truly a team effort, and I'm extremely proud of the senior management team in what they did. It's just good to sharing their successes. So very, very appreciative of all their efforts. We think the rest of the year will look a lot like the first of the year. And so we look forward to talking to you at the end of the third quarter, and see you then.

Operator

And that concludes today's conference. We appreciate your participation.

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