Whitestone REIT's (WSR) CEO James Mastandrea on Q2 2014 Results - Earnings Call Transcript

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 |  About: Whitestone REIT (WSR)
by: SA Transcripts

Whitestone REIT (NYSE:WSR)

Q2 2014 Earnings Call

August 06, 2014 11:30 am ET

Executives

Suzy Taylor -

James C. Mastandrea - Chairman, Chief Executive Officer and President

David K. Holeman - Chief Financial Officer and Principal Accounting Officer

Analysts

Jonathan Pong - Robert W. Baird & Co. Incorporated, Research Division

Paul E. Adornato - BMO Capital Markets U.S.

Mitchell B. Germain - JMP Securities LLC, Research Division

Carol L. Kemple - Hilliard Lyons, Research Division

Michael Keelan Diana - Maxim Group LLC, Research Division

Operator

Good day, and welcome to the Whitestone REIT Second Quarter 2014 Earnings Call. Today's conference is being recorded. At this time, I would like to turn the conference over to Suzy Taylor, Director of Investor Relations. Please go ahead.

Suzy Taylor

Thank you, Shannon. Good morning, and thank all of you for joining Whitestone REIT's Second Quarter 2014 Earnings Conference Call. Joining me on today's call will be Jim Mastandrea, our Chairman and Chief Executive Officer; and Dave Holeman, our Chief Financial Officer.

Please note that some statements made during the call are not historical and may be deemed forward-looking statements. Actual results may differ materially from those indicated by the forward-looking statements due to a variety of risks and uncertainties. Please refer to the company's filings with the Securities and Exchange Commission, including the form -- the company's Form 10-K and Form 10-Q, for a detailed discussion of these risks.

Acknowledging the fact that this call may be webcast for a period of time, it's important to note that today's call includes time-sensitive information that may be accurate only as of today's date, August 6, 2014. Whitestone's earnings press release and second quarter supplemental operating and financial data package have been filed with the SEC, and the Form 10-Q will be filed shortly. All are or will be available on our website, whitestonereit.com, in the Investor Relations section. Also included on the supplemental data package are the reconciliations from GAAP financial measures.

With that, let me pass the call to Jim Mastandrea.

James C. Mastandrea

Thank you, Suzy. And thank you, all, for joining us on our call today. Today, we're going to review our second quarter results and update you on the recent progress of our initiatives. Dave's portion of our call will focus on our financial results and our ongoing progress in Whitestone's operating metrics.

We're happy to report a solid second quarter 2014 results, led by the signing of 102 leases totaling 221,000 square feet in new, expansion and renewals, with an average positive leasing spread of 7.5%.

FFO Core increased to $0.29 per share in the second quarter, up from $0.28 per share in the same period last year and again exceeded our dividend at $0.285 per share. Our second quarter occupancy of 86% increased 20 basis points from the first quarter and 40 basis points from the prior year. The strategic repositioning efforts we have undertaken represent Whitestone's clear roadmap to sustainable future growth. However, in the short run, these initiatives temporarily impact occupancy growth.

Given our factors on -- given our focus on smaller leases that are more profitable, there will be some variability in our occupancy from quarter-to-quarter. At the core of our progress and what truly has energized us about our highly differentiated Community Centered Property business model is the fact that it is making a difference in the properties we own and the success of our customers, the businesses that occupy our centers. We take pride in our service culture in striving to meet the needs of our tenants and our ultimate customer, the people living, working and visiting the neighborhoods surrounding our properties.

Through repositioning and redevelopment of our properties, we -- of the properties we acquire in the target high-growth markets at typically meaningful discounts to replacement costs, we are well positioned to turn them into vibrant community centers that drive cash flow. The case in point here is the progress we've made with our Market Street at DC Ranch, an upscale property in Scottsdale, Arizona. We purchased this 240,000-square-foot Class A center in December of last year. In just 6 months, we have driven occupancy to 86% from 80%, a result of signing 8 new leases totaling 15,000 square feet.

Our team has restored the [indiscernible] markets property with the addition of tenants who serve the needs of the community providing grocery and dining, education, health and wellness and services. These new tenants join our already strong tenant base, which includes Safeway and Fleming's restaurant. As new tenants come online, Market Street becomes even more attractive to future prospects. Furthermore, additional occupancy [ph] translates into additional net operating income.

Redevelopment initiatives are illustrated with the work we recently completed at Lion Square, an Asian-themed Legacy property in Houston. The redevelopment [indiscernible] positioning the center to attract additional tenants and compete with newer centers in the area. Our investment strategies of these renovations was to lease [ph] the big-box vacancy, upgrade the property to be the Asian destination demographic and attract customers with its high-income office buildings in the surrounding the area. We upgraded the facade and signage and were able to attract a large Asian restaurant. By adding this tenant, filling the vacant space between this new tenant and Teletron, the new tenant as of 8 months ago, the largest tenant in the center who have successfully filled the vacant box.

We expect [indiscernible] center of approximately $1 million to turn a very healthy $300,000 in annual net operating income from the lease-up of the vacant big-box space and incremental revenues over coming years from increases in rental rates as our tenants continue to fill.

Whitestone remains focused on adding value, driven by our unique strategies and our excellence and execution of our business model, resulting in strong organic as well as external growth.

After the close of the quarter, we purchased our first property in Fort Worth market, Heritage Trace, a Class A community center located in the 18,000-acre Alliance Texas master plan community, an area with strong demographics and more than 180,000 people living in 3 miles. The addition of this property increased our Dallas-Fort Worth area footprint to 5 properties, with over 600,000 square feet of leasable space and one fully developed [indiscernible], with another 36,000 square feet of potential leasing out an executive office space to be added. While this center is 98% occupied, even better news [ph] is that due to the near-term lease expirations, which have rent bump potential, it dovetails with our value-add operating model.

Our pipeline of [indiscernible] opportunity remains very significant and still is [indiscernible] above $500 million [ph]. We currently have 7 properties under negotiation, all within our separate and high-end markets [ph]. Bottom line is that our [indiscernible] is enabling us to drive traffic to our centers, resulting in increased occupancy, increased rental rates and strong financial revenues [ph] and healthier, more robust tenants.

We also [indiscernible] maintain a balance sheet that preserves our financial flexibly and continued focus on further driving down our cost of capital as we go forward.

With that, I would like to turn things over to Dave Holeman, our Chief Financial Officer. Dave?

David K. Holeman

Thank you, Jim.

I will start by reviewing our operating results, followed by a discussion of our balance sheet or financial position and then close with an update on our 2014 financial guidance. [indiscernible] discuss both our second quarter and our year-to-date results.

During the first half of the year, we have continued to grow our top line, our bottom line and our overall cash flow through solid same-store growth, acquisitions and judicious expense management. FFO Core for the quarter was $6.6 million or $0.29 per share. This compares to $4.9 million or $0.28 per share in 2013. For the 6 months ended June 30, FFO Core was $13.7 million or $0.60 per share. This compares to the first half of 2013 when FFO Core was $4.2 million and is a 44% increase over the same period in 2013. On a per share basis, FFO Core is up 13% or $0.07 per share for the first 6 months of 2014.

Total revenues for the quarter were $17.7 million, an increase of 20% or $2.9 million from the same period of 2013. Year-to-date revenues are up 24% over 2013.

For the first 6 months of the year, our same-store revenues, which represent 80% of our total revenues, were up 2.5%. Leasing spreads remained strong in the second quarter on new and renewal leases signed and were up 7.5% on a GAAP basis. During the second quarter, our leasing team signed 102 leases totaling 221,000 square feet in new, expansion and renewal leases. This compares to 87 leases totaling 208,000 square feet in 2013. Our average lease size was 2,162 square feet, and the total lease value added during the quarter was $14.8 million. Total lease value added for the year has been $26.3 million, up $5.9 million from last year or 29% higher from 2013.

Our total property net operating income for the quarter was $11.3 million, an increase of 20% or $1.9 million from a year ago. Property net operating income for the year was $23.1 million, up $4.7 million or 26% from last year. NOI growth is from same-store growth of 2.5% and new acquisitions.

Our interest expense for the quarter was $2.4 million at an average effective interest rate of 3.7%. Approximately 70% of our debt is at fixed rate, and our average term of all of our debt is 4.6 years. We continue to see the effects of gaining scale from our larger base of assets on our property expenses and our overhead costs. We remain focused in all of our cost-savings efforts and expect our G&A cost as a percent of revenue to continue to decrease as we grow over time.

We believe that performance-based stock compensation, resulting in significant ownership by management, is the best way to align our team with our shareholders. Included in G&A expense for the quarter was approximately $1.2 million of amortization expense of noncash share-based compensation. Based on our current financial performance, we expect the expense related to the amortization of noncash share-based compensation to be approximately $4.2 million for the full year 2014.

Now let me touch on a sum of our key operating measures. As Jim mentioned, our total occupancy rate was 86% at the end of the second quarter, up 20 basis points from last quarter and 40 basis points from the prior year. I will remind you that our total occupancy represents physical occupancy and does not include tenants under lease which have not yet moved into our properties.

Our tenant base consists of 1,232 tenants. And our unique leasing strategy continues to be effective, producing increases in occupancy and positive rental rate spreads. We have a diverse tenant base, with our largest tenant comprising only 1.9% of our annualized rental revenues. As I previously mentioned, our leasing spreads for the quarter rose 7.5% on a GAAP basis, demonstrating the effectiveness of our unique operating model. Lease terms for our properties range from less than 1 year for smaller tenants to over 15 years for larger tenants. Our leases generally include minimum monthly lease payments and tenant reimbursements for payments of taxes, insurance and maintenance.

Now let me turn to our balance sheet. As of quarter end, we have $264 million of real estate debt, with a consolidated debt-to-EBITDA, excluding non-cash share-based amortization, ratio of approximately 7x. Real estate debt as a percentage of our total market cap was 43% as of the end of the quarter. And the company's EBITDA-to-interest expense ratio was a very healthy 3.4 in the second quarter of 2014.

Whitestone has 42 properties which are unencumbered by mortgage debt as of June 30, 2014, with an undepreciated cost basis of $363 million. The total undepreciated value of the company's real estate assets was $549 million as of quarter end.

As of quarter end, $176 million or approximately 70% of our debt was subject to fixed interest rates. We currently have approximately $45 million in fixed-rate 10-year financing in process, which will bring the fixed-rate portion of our debt to over 80%. The company's weighted average interest rate on all of our debt and fixed-rate debt as of the end of the quarter was 3.3% and 3.8%, respectively.

As of the end of the second quarter, Whitestone has $100 million of available capacity under its credit facility, which reflects the fixed-rate financing discussed previously and $5 million of cash available on our balance sheet.

Finally, let me comment on our 2014 earnings guidance.

We are reiterating our previously announced guidance expecting FFO Core per share for 2014 to range from $1.09 to $1.18 per share. Our guidance regarding acquisitions, dispositions and redevelopment remains unchanged. Once again, if our guidance changes materially, we will provide subsequent updates on our quarterly earnings calls and releases.

With that, let me turn the call back to Jim.

James C. Mastandrea

Thank you, Dave.

In closing, I'd like to reiterate that Whitestone's steady progress is a product of staying true to our value-add strategy. We do this by helping our tenants grow their businesses by rigorous leasing and asset management, by developing on land we own and by acquiring accretive assets in high-growth target markets.

In closing, I'd like to thank you for your continued confidence and support and the privilege that I have to lead Whitestone.

With that, I would like to conclude the review of our results and open up for questions. Operator, I will turn the call back to you.

Question-and-Answer Session

Operator

[Operator Instructions] And we'll take our first question from Jonathan Pong with Robert W. Baird.

Jonathan Pong - Robert W. Baird & Co. Incorporated, Research Division

How should we be thinking about your capital-raising plans as you ramp up your acquisition activity and fill that revolver? Can you sort of handicap where your bias is right now between the ATM, if we'll follow on [ph] equity offering, dispositions and new mortgages? And I guess, if the answer is new mortgages, I think around 2/3 of your gross real estate value is unencumbered right now. How low can you see yourselves going on that metric on a run rate basis?

David K. Holeman

Thanks, Jonathan. This is Dave. Let me touch on your question. First of all, we have given guidance for the year of acquisitions in the $40 million to $80 million range. We have reiterated that guidance on today's call and remain confident in our ability to close on acquisitions in that range. For financing of those acquisitions, as we've always done, we'll continue to access all of our capital sources. We have a credit facility that's $175 million, led by a very strong group of banks. That facility has an accordion option also that can take it to $225 million as well. And as I mentioned, we are also doing some mortgage financing, which will free up additional space on that credit facility. So really, we continue -- the guidance we've given really reflects our ability to acquire $40 million to $8 million -- $40 million to $80 million in acquisitions using the debt we have available on our balance sheet, which is a combination of additional draws on our credit facility as well as some -- securing some really attractive long-term fixed rate, at great rates, that will continue to do over the balance of the year. Touching on the unsecured portion: We have continued to grow our unsecured portion of our assets. As we look to grow Whitestone, we obviously would like to position us to have a very flexible and attractive balance sheet. And we feel that having a significant portion of our assets unsecured helps us to do that.

Jonathan Pong - Robert W. Baird & Co. Incorporated, Research Division

I guess, reading between the lines, David, it sounds like you guys are comfortable sort of holding the line balance a little bit elevated for the time being, at least.

James C. Mastandrea

Jonathan, let me say we're never comfortable. We have -- just to give you an idea, that while we haven't announced many acquisitions so far this year, I have looked at, along with our acquisitions team, 29 potential acquisitions, and that's in 6 months. And these are great properties. And so we're very selective to pick the very best of those great properties. We will adjust that to -- we'll adjust our capital needs to meet our acquisition needs, but we'll do so on an accretive basis. And for the time being, our acquisition strategy is targeted, single, one-off properties with good returns that we think are in markets that we can build a base in.

Jonathan Pong - Robert W. Baird & Co. Incorporated, Research Division

And then maybe moving to the leasing front. It looks like, on a net effective basis, your cash spreads on new leases were flat or maybe slightly down this quarter after a couple of quarters of positive growth. Was there -- were there any signings that skewed that number lower? Or how else would you characterize, I guess, a little bit of the deceleration of core on that front?

David K. Holeman

Sure. As you know, when you look at any particular quarter, there's only a small amount of leases coming through per quarter that -- and so we tend to look at a little longer period. There was -- on a cash basis, just comparing the ending lease rate versus the beginning lease rate, we were down slightly this quarter. As I mentioned, on a GAAP basis or a straight-line basis, we're up 7.5% for the quarter, which is -- continues to be very positive. So we don't necessarily see a trend. One of the things we've had to do is we've given a little bit of incentive on new tenants coming in initially, but we've been able to put very attractive rent bumps on those leases and therefore get an overall effective rate that we think is a good positive. And you can see that in our GAAP leasing spreads. So I don't think there were any big leases that really skewed that number, but in any given quarter, it's a small amount of leasing activity compared to our overall tenant base of 1,300 customers.

Operator

And we'll move to our next question, from Paul Adornato with BMO Capital Markets.

Paul E. Adornato - BMO Capital Markets U.S.

Looking at occupancy, the metric that you quoted was physical occupancy, I think, so not including leases signed but not yet occupied. If we look at the other metric that is signed but not yet occupied, what would that number be? Do you have a pipeline of signed but not occupied leases?

James C. Mastandrea

We do. Dave?

David K. Holeman

Yes, sure. So one of the things we do is we -- it's very important in this business with the smaller tenants to really maintain a robust leasing pipeline. So with our leasing team, we're always tracking the deals that are out there in the pipeline, in all various stages. We do have a significant amount of leases that are signed, not occupied, and we always do. We also in this business have a little bit more role of our tenants than you do in some of the bigger boxes, but those, of those tenants, the smaller tenants, as you know, are much more profitable. So in any given time, we probably have 50,000 to 80,000 square feet in signed leases that aren't yet opened, which would reflect 1% to 2% of occupancy that's in the queue and just needs to move in over time.

James C. Mastandrea

Let me add to that, Paul. A couple things we do is that -- while this is physical occupancy, what we do look at is -- and we do this first 6 months, is that focusing on the rental rates. So we're going -- we're looking at markets and making sure that we're capturing all of the potential revenues. And sometimes when you do that, you sacrifice a little bit of acceleration on the filling of the properties. A goal we have is to look at year-over-year progress within the enterprise and with an interim basis reporting on a quarterly basis. So you'll see, as we've done each year, is we really finished each year fairly strongly and because we do focus on that. And the only other thing I'd add on is, sometimes, while we still have a number of Legacy properties, they do take a little bit longer in markets. And in terms of redeveloping, which includes painting, sometimes physically rebuilding sections of the walls, things like that, it takes a little bit longer, but we're starting to see now there's a lot of that picking up, particularly in the Houston market.

Paul E. Adornato - BMO Capital Markets U.S.

Okay. And if we were to look at the existing vacancy in the portfolio, I was wondering if you could characterize that. Is that anchor space, small shop space? What's the breakout between large and small shop sizes?

James C. Mastandrea

Yes, good question. Couple of areas that -- we have one office building in Dallas which is a Legacy property. We have -- it's always been slow to fill, so that's a chunk of the occupancy that we've carried for a while. It's an office building that we acquired with the company originally. And it's adjacent to a cemetery, which is always a quiet place to have offices but not necessarily a strong place to promote tenancy. So -- and then we have one box that's secured [indiscernible] down in what we call Belmont. And then we've had a couple -- and then a box there would be like 40,000 feet. But anything -- those are probably the extent of large pieces that we have. We're seeing some real growth in our Asian properties, which we love because that's an area that we've really had a specialty in and we're starting to see some progress in that. And going from some of the large vacancies at work, they're all starting to fill now. So we've got a few spaces like that, that we continue to lug. They're slow. We recognize them, but we work them and keep working them.

Operator

And we'll move to our next question, from Mitch Germain with JMP Securities.

Mitchell B. Germain - JMP Securities LLC, Research Division

Jim, you referenced 29 deals that you've underwritten so far this year. I'm curious if you know how many of those deals traded and who are the active buyers in those sort of properties.

James C. Mastandrea

Yes, they haven't all -- they haven't come to fruition yet. And they're in markets that are only 2 of those deal -- or 2 -- 4 of those deals were in markets that we're currently in, and the other ones were in new deals, and they haven't closed yet. Some of them haven't even gone under contract yet, but when we look at them, we make a decision to see if they fit within our portfolio. When I look -- when we're looking at them, it's not like we're bidding on them and we lose them, so -- but the -- my point of referencing that, Mitch, is that we are extremely active in terms of looking at transactions. And we have a little bit of a different approach than most others in our industry, and that is we are like local hunters stalking property. And they come to us and then we spend some time on improving, anywhere from 2 days to 2 weeks, and we make a decision to see if it fits. We don't look at any deal that we don't think has the potential of closing. It's just a matter is it priced right, can we -- can our management style really create and add value to the property. I mean we're not out looking at properties that are 95% occupied, that are just 5 and 6 cap rates, that are bonds that we can't do anything with. We take a pass on those quickly. I will say that virtually 90% of the properties that I've looked at have some form of grocery anchor or a drugstore anchor or a Starbucks anchor or some element of credit in it [ph], which is part of our business model, but we do emphasize that we like to make our money on the smaller spaces. And we happen to have quite a few properties that have Safeways in them, Albertsons in them, grocery store and that. So we're not -- and it's not like we're just out looking for properties that don't have any leg to them.

Mitchell B. Germain - JMP Securities LLC, Research Division

Got you. And maybe just as a follow-up with regards to the function of aggressive pricing in the markets. Why not step up your sales efforts?

James C. Mastandrea

Step up the what? I'm sorry. Step up the what?

Mitchell B. Germain - JMP Securities LLC, Research Division

Your asset sale efforts.

James C. Mastandrea

We have 3 under contract right now. They're going through due diligence. And I'm sure you're aware that, when you have Legacy assets that we have, it -- you just double the time for someone's due diligence. So we have 3 sales. We have another property that we're considering and that -- in Arizona, one of the first properties we bought, we think that we've done so much to it that the opportunity for profit in it is pretty significant. It's a small property, though, but we think that, once we reach the point where we can't add any more value to it, we will put it up for sale. So we're getting to that stage now because it's only been a few years since we did the IPO and started buying these turnaround properties that they're about ready to put some of these on the market for us. We think you'll see more of that maybe at the end of this year, but for sure, next year, you'll see something.

Operator

[Operator Instructions] And we'll move next to Carol Kemple with Hilliard Lyons.

Carol L. Kemple - Hilliard Lyons, Research Division

I just wanted to verify. Did you all say the pipeline is in excess of $500 million?

James C. Mastandrea

That's correct.

Carol L. Kemple - Hilliard Lyons, Research Division

And you said you have 7 properties under contract. Can you -- or under negotiations. Can you talk about where those properties are located and what type of properties those are?

James C. Mastandrea

We can say something. We have 3 -- 2 properties we expect to go under contract this week in Arizona. We have a third property we expect to go under contract in the next 2 weeks, and that's in Texas. And then we have 1 more property, it's a small property that we expect to go under contract. That's in Arizona. Those are the 4 that we think will be under contract fairly soon. And then we have 3 properties that we have selling under contract with a potential buyer.

David K. Holeman

And I would maybe just add a couple of comments. The characteristics of the properties we're looking at remain unchanged. I mean so if you look at the acquisitions we've made over the last couple of years, very similar. We look for properties that -- where we don't get in an auction. We look for properties that have a significant value-add component either from lease-up or adding GLA. So we're really sticking to our strategy, our Community Centered Property strategy, of identifying acquisitions that aren't being auctioned or not in there in the auction process where the prices are being driven down to ridiculous levels. So we have a very active pipeline of acquisitions. Obviously, as we go under contract, there is uncertainty as to fully closing those properties, but we have a very active pipeline. We have several deals under negotiation that we expect to close. And as I have said before, we've given guidance, $40 million to $80 million in acquisitions for the year, and we remain very confident in our ability to do that.

Carol L. Kemple - Hilliard Lyons, Research Division

Okay. So is -- the $7 million under negotiation you spoke of earlier, was that 4 that you expect to buy and 3 you expect to sell? Or were there 7 that you expect to buy?

David K. Holeman

I don't think we've given guidance down to that detailed level, Carol. We expect to continue to grow just as we have in prior years. And so we haven't given -- that's probably a little too much detail on the acquisition levels. We do have -- as Jim mentioned, we have a pool of 3 properties that we currently are looking to sell. And then we have several acquisition candidates that are anywhere from letters of intent to contracts where we're doing diligence.

James C. Mastandrea

And I would say, Carol, 2 things. One is the 4 that we have under or will be under contract very shortly, those are very promising. Each of those are in excesses of 7% cash-on-cash return. And if you accumulate it all, then we could finance them under our line-of-credit debt.

Operator

And we'll take our final question from Michael Diana with Maxim Group.

Michael Keelan Diana - Maxim Group LLC, Research Division

In The Wall Street Journal this morning, there's an article on online shopping with a somewhat dramatic title, shoppers flee physical stores. Could you comment on that as to the relevance of that to your strategy?

James C. Mastandrea

Sure. Actually, that article was pretty nice to read because we set out way ahead of marketplace in our industry a business model that really focuses on service-based tenants. And I don't know about all the folks on this call, but I get packages every week from Amazon.com. And I think we're seeing people who are going to physically shop someplace to minimizing. What we are seeing, though, is people love to go to an area where there's a Starbucks, where there's a cigar store, where there's a fountain, where they can hang out with the kids, where the traffic is easy to get in and out of, where it's not a place where thieves go through and have smash-and-grab on -- which is in a lot of markets, there are a lot of smash-and-grabs going on today. We protect our shoppers from that. So we create places that some of you would call earth [ph] place where they can go to a restaurant and spend some time just hanging out. So we think that, that has been effective for us. It's a different strategy. It requires working with the tenants that you have, getting to know their tenant -- their customer base and then accommodating them through just -- we even -- before we paint a property, we put sample colors on the wall and let tenants who wish to look at the colors and give us some input on which ones they prefer. So we're doing things that appeal to that shopper that is not coming to buy goods.

Operator

And there are no further questions in the queue. I'll turn the call back to Jim Mastandrea, Chairman and Chief Executive Officer.

James C. Mastandrea

Okay. Well, thank you very much, operator. And thank you, all, for joining us on our call.

And I would like to invite anyone who would like to visit us here in Houston or visit us in any of our other markets, that I'd be happy to work out a schedule to meet you there and show you what we're doing. We just -- we love the business. We'd love to take you out and show us our business model. Sometimes, after a tiring 2 or 3 treks through some of the properties, most people we've showed them to, they say, "Hey, I got it. We like what you're doing."

The other thing I'd like to mention is that we think that we've got a fairly robust business model and have almost tripled our size since we did our IPO, but sometimes, that doesn't seem like it moves fast enough. Our concern is -- we're not worrying about how fast it moves. We're just worried about being profitable year after year after year. And I think we're beginning to see a lot of traction.

With that, I'd like to thank you all for being investors. And thank you for -- and the analysts as well. And thank you for your interest in our company.

Operator, that's all I had to say.

Operator

That does conclude today's conference. Thank you for your participation. You may now disconnect.

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