21st Century Holding Company Q2 2008 Earnings Call Transcript

Sep.21.08 | About: Federated National (FNHC)

21st Century Holding Company (TCHC) Q2 2008 Earnings Call Transcript August 6, 2008 4:30 PM ET

Executives

Michael Braun – CEO

Peter Prygelski – CFO

Analysts

Richard West – JM Dutton & Associates

Bruce Riznick [ph] – H&R Block Financial

Al Humphray [ph] – Financial West Group

Robert Sterling [ph] – National Growth Fund

Operator

Good afternoon. My name is Julie Anne and I will be your conference operator today. At this time, I would like to welcome everyone to 21st Century Holding Company Second Quarter Financial Results Conference Call. All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question and answer session. (Operator instructions).

Statements made in this conference call or in documents incorporated by reference that are not historical fact are forward-looking statements. Forward-looking statements are subject to certain risks and uncertainties that could cause actual events and results to differ materially from those discussed herein. Without limiting the generality of the foregoing, words such as may, will, expect, believe, anticipate, intend, could, would, estimate, or continue, or the negative other variations thereof, or comparable terminology are intended to identify forward-looking statements.

The risks and uncertainties include, but are not limited to, the risks and uncertainties described in this conference call or from time to time in our filings with the SEC. Furthermore, the unaudited, consolidated financial statements of the 21st Century Holding Company for the quarter ended June 30, 2008, have been prepared in accordance with Generally Accepted Accounting Principles for interim financial information and with the instructions for Form 10-Q and rule 10-01 of Regulation S-X.

These financial statements do not include all information and notes required by GAAP for complete financial statements and should be read in conjunction with the audited, consolidated financial statements and notes thereto included in the company's annual report on Form 10-K of the year ended December 31, 2007.

I would now like to turn the conference over to Mr. Michael Braun, CEO, and Mr. Pete Prygelski, CFO. Please, go ahead.

Pete Prygelski

Thank you, operator. This is Pete Prygelski.

One, I have some prepared opening remarks I want to make, and then I'm going to turn the call over to Mike for his opening remarks. The first thing I want to touch on, obviously, we're disappointed in the results of the quarter. I wanted to touch specifically on the writedowns in our investment portfolio. During the second quarter, we wrote down approximately $4.6 million in common stock, bringing the year to date total to $6.5 million.

The stocks that were written down were basically in the financial services sector. Since the write down, those stocks have recovered close to 0.5 – a little more than $0.5 million to date. Our current portfolio right now consists of approximately $147 million in cash, cash equivalents, and bond, A-rated or better, and only $6 million in common stock. Our portfolio contains no derivatives, no auction rate securities or anything of the such.

And I did want to spend a minute to touch on our new investment strategy here at the company which is we've hired an investment advisor. We are now currently in the process of hiring professional money managers to run the portfolio going forward. So, I just wanted to touch on that and I'd be glad to answer questions in a little while on that.

Also wanted to point out that despite the disappointing quarter, our book value is still at $10.34 which is down from where it was at the end of the first quarter, but about where it was at the beginning of the year. Also, as it relates to the company's dividend policy, we have no plans to alter that policy currently.

Those are my opening comments. I'll turn it over to Mike now.

Michael Braun

Yes. This is Mike Braun. The main thing that I want to touch on is just discussing where we are in the market and where we are going. I don't think it's news to anyone that we've been in a tough market, competing not only with the state, but the state run entity, which is Citizens, but also some new people coming into the market. That has, which we've discussed in previous calls, taken its toll on us, where we've lost some market share.

But really, on a go forward basis, I feel very positive about where we are. Our rates, our most recent rate decrease was effective in June. That enables us to be more competitive in the market, not only competitive from a voluntary basis, but also from a Citizens basis, in terms of taking policies from Citizens. That has opened up more territories where we can – policies now qualify to be depopulated to us, and I feel very good about that. In the press release, you'll see that it does go into that, that we are looking to do a depop.

In terms of the timing of the depop, we could've done the depop a little bit earlier. We're projecting to do this in the fourth quarter. The reason for that is, it's just the timing with the wind season. We could have a short-term – we could've taken the premium in quicker, but that gives us a lot more risk and I think that the prudent thing to do is make sure that we do it correctly. So, yes, it is a little bit of time before we do take those policies. But I think it's the right thing to do to ensure that we manage the risk for our shareholders.

I do feel confident about the future. Yes, it was a poor quarter. It was a very poor quarter. Some unusual events happened this quarter. Last year, this quarter, we made approximately $10.5 million. That included some unusual income events that really helped that quarter, probably around $5 million. That, and if you back out the investments that we've written down this year, that closes the gap considerably, as to how we got where we are in terms of the second quarter of '08's earnings. And the last piece of that, and you'll see it on the financials that we released, unfortunately we've had some big losses this quarter, some unusual losses. And that's really how we got to where we are from the prior year.

On a go forward basis, I feel good about our rates, much better about our rates in the marketplace. I feel better about how we're going to move forward to get the depopulation. I feel good about what we're expanding our line to. We're going to have commercial residential policies. That's all – these things drive into maximizing our reinsurance cost. The short-term will be a little increased profitability after we do these in the fourth quarter and go forward, but also more importantly in the future, it will help us maintain our rates, maximize our costs to be as competitive as we can in the marketplace. So, I feel very good about that.

One other item on here is about where we're looking at a fronting arrangement where we're going to be writing American vehicle A-rated product. We feel that we've expanded the product and that our distribution, our agents, have asked for that. We've been working on this for some time and we're very close to signing an agreement that we're going to be able to launch quickly. And we think that that will, once again, be a profitable line and it should ramp up quickly.

So, those are just some opening thoughts, and if we can turn it back to the operator and go ahead and start taking some calls.

Question-and-Answer Session

Operator

Thank you. (Operator instructions). Your first question is from the line of Richard West with JM Dutton & Associates.

Richard West – JM Dutton & Associates

Good afternoon.

Michael Braun

Hi, Richard. How are you?

Richard West – JM Dutton & Associates

Okay. I tend to agree with you, it’s disappointing. Could you go over the situation with the Florida for the $45 million, the timing? I heard that depop, is that what we're talking about?

Michael Braun

Correct. What we're looking to do is we're expanding – we're talking with the state to expand our license and we're looking to do a depop on residential as well as commercial residential. We've always been in residential, but now we're talking about condos. So, those two depops combined, we're talking about up to $45 million. We're anticipating doing that in the fourth quarter. The reason, once again, for that timing is while we don't have approval from the OIR, we – I don't see any problems why we would not get the approval to do the depop. But, once again, we're trying to time it to ensure that we don't have the exposure to wind. So, this will occur late in the wind season. The wind season runs from June 1 to December 1. So, it will be late – it's not going to be during the peak of August and September. That's the peak of the hurricane season. It will not be then.

Richard West – JM Dutton & Associates

Okay. And then how does this effect your reinsurance situation?

Michael Braun

Well, basically, when we negotiate reinsurance, you'll see that we have approximately $31 million projected for the next four quarters. That's Q3, Q4 of '08 and Q1 and Q2 of '09. There may be a marginal increase to the reinsurance, depending on when we depopulate the policies. But it should result in very favorable earnings to the insurance company quickly. Eventually, we cannot be overly too profitable. We have to comply with the state. So, that will result in us bringing our earnings – I'm sorry, our rates down. The good news with that is it makes us more attractive and we can rate more policies – write more policies. So, this has a short-term impact that is going to significantly benefit earnings, and a longer-term impact that it's going to stabilize our market share so that we can better utilize our reinsurance. But, once again, this has not been approved yet. This is pending with the state.

Richard West – JM Dutton & Associates

Okay. And the last question is, the investment that Pete covered, it sounds like the stock – the common stock is down over 100% – not 100%, down 50% since the beginning of the year, if you have $6 million now.

Peter Prygelski

That’s – I am not sure – Rich, I don't have the exact percentage, but you're in the ballpark. I mean, if you space it on, what we wrote down was – the stocks that were effected were basically the financials that we owned and I would say that we were probably 50% or more in those stocks.

Michael Braun

And if I can say, as well, keep in mind that, once again, the market has obviously reacted unfavorably, as I'm sure everyone is unhappy with our second quarter. If we're closed at $6.50, our book value is still $10.34. That's approximately 60% to 65% that we're trading at at-book. We don't have many securities. I think Pete said that we have approximately $6 million in securities that have been completely written down. I think we're in a very good situation regarding that.

So, I think some investors might be concerned that we might have more write downs. That, in my opinion, I don't have that concern. In terms of writing profitable business, I've stated in the past, I've got an underwriting background and an agent background. I'm all about writing business. We have let policies, some of our competitors take policies that were not profitable. We feel we're in a better situation where we can be more profitable, that we're more competitive right now, and we will grow. We will – it's, like I think, just recently since June that our rates have come down again, but I think the real charge to us on a gross written basis is going to be with the two depops, the depopulation of policies from Citizens that are going to occur in the fourth quarter. And we anticipate occurring in the fourth quarter.

Pete Prygelski

And, Rich, to follow-up, I think that we, like I mentioned, we wrote the securities down to a point in time since then where we still hold those securities, obviously. If we were to sell those securities today, we would be recognizing close, a little over a $0.5 million gain from what we wrote them down to. So, as Mike said, I want to be cautious by saying we reached the bottom of those securities, but if you look at our portfolio, the $153 million, of the $153 million, only $6 million, $5.5 million, somewhere in that neighborhood, is common stock. The rest is cash and cash equivalents and highly rated bonds, a lot of government bonds.

Richard West – JM Dutton & Associates

I agree with you on the book value versus the market value. Before today's market accident was the real valuation. But the market, I think, has been over done today. But thank you very much for answering the questions.

Michael Braun

Thank you.

Operator

Your next question is from the line of Bruce Riznick [ph] with H&R Block Financial.

Bruce Riznick – H&R Block Financial

Gentlemen, I think you answered one of my questions. When you talk about wind damage, I assume you're also referring to hurricane damage.

Michael Braun

I apologize, but yes. Basically, when we say wind, we're talking about hurricanes. And our property mostly Florida, which is obviously exposed to hurricane and wind.

Bruce Riznick – H&R Block Financial

Right. So, then I'm assuming that if there were no major hurricanes this hurricane season, it would help earnings somewhat. And second question is can a small insurance company like yours survive? Or would it be better to try to hook up and be acquired by a much larger company?

Michael Braun

The first question, we have a $3 million retention on the storm, and that brings us up to, I believe, $235 million of coverage. So, any storm over $3 million, with a maximum of $235 million, we're covered. If it's a $100 million storm, you're talking about a $3 million event to the company.

And your second question is no, absolutely not. I don't think that we should be acquired or look for that. We have a – we operate primarily – we're a property company in Florida. We do liability as well, but the majority of our premium has been property. We're going to grow that, and it's a niche market. And, once again, I think that we have a sound plan. I think that there may be some competitors that are extremely aggressive out there that are willing to write policies that may not be profitable short-term, to grab market share. We are not willing to do that. I think our plan is solid, to retain book value and also, as those opportunities present themselves, we will grow our book. And I think that we have a plan with, like I said, the Citizens depop, writing voluntary basis as well, and also with what we're looking to do on this renting company for our liability product.

Bruce Riznick – H&R Block Financial

Thank you.

Michael Braun

Thank you.

Operator

(Operator instructions). Your next question is from the line of Al Humphray [ph] with Financial West Group.

Al Humphray – Financial West Group

Just a quick clarification. The common stock portfolio, I understand was closer to $12 million at the beginning of the year and now it's $6 million?

Michael Braun

That would be correct. I'm not exactly sure about your numbers. But I would say that it has probably been cut in half.

Al Humphray – Financial West Group

Okay. And then, could you comment on your expenses. It looks like they're up Q over Q?

Michael Braun

You're going to see, unfortunately, if you go to – when you see our expenses, if you look at loss and loss adjusting expenses, unfortunately, we had some bad losses this quarter, and I'm not going to speak on the specific losses. But that had a huge impact on us. And you can see that in there, where there's a difference of approximately $3 million from the previous year, $12.5 million versus $9.5 million for loss and LAE, loss adjusting expenses.

In terms of the reinsurance, keep in mind, '07 to '08, which just ended for us, we were, our reinsurance cost was approximately $11 million plus a quarter. Now we're down to $31 million. So, you're talking about a $2.5 million to $3 million reduction that we will, in reinsurance expense – and that's an approximate number, because there's some moving pieces to it. But that will adjoin the third quarter going forward.

Pete Prygelski

Al, just to clarify, we're harping on the equities, I know, the common stock. But in the grand – our investment portfolio fluctuates between $150 million, $165 million, and of that, common stock is a very small piece. Because like I mentioned, most of our investments are in cash and cash equivalents, as well as highly rated bonds. And part of that is because of the NAIC's guidelines on what we can do with common stocks. So, it is a small part of our portfolio.

I believe we have it written down now to the point where we should see it only go up from where it's written down to. But again, as I mentioned earlier, we're kind of turning that over and not going to manage it in house anymore. It's going to be managed by – we have an investment advisor. We're hiring money managers. It's going to be managed professionally with the experts. And also, to jump on the expenses for a second, Mike mentioned the loss and loss adjustment expense. One of the other things that I'd like to point out is that as far as our overhead, our employee count, I think we run an extremely lean ship.

Al Humphray – Financial West Group

Okay. Okay. And last question, the current status of your stock buyback, can you comment on that?

Michael Braun

Yes. I can comment on that. We, the Board, some time ago, approved approximately a $5 million buyback, of which, I believe – and this number might not be exact, but it's pretty close. We've utilized $3.8 million of that. We have the $1.2 million under the current board approval to buy back. And we will look to do that. We will look to do that. We're looking to do that. So –

Al Humphray – Financial West Group

And when is your next board meeting?

Michael Braun

The beginning of September.

Al Humphray – Financial West Group

Okay. Any chance in speeding that up based on market conditions?

Michael Braun

Speeding the buyback or speeding up the board meeting?

Al Humphray – Financial West Group

Both?

Michael Braun

Well, even though the board meeting's in the first week in September, the board does communicate. That's something that we are looking and discussing. So, I know that sometimes people look at us and say that we've got so much cash on hand, why don't we use all that? Not all that money can be used for this buyback. So, we – there’s – you bring up a good question. I personally feel that the dividend's very important to The Street, and also I think the buyback would probably help as well. But that's something that we have to look to make sure that we use our resources correctly, and we are discussing that as a board.

Al Humphray – Financial West Group

Okay. Great. Thanks very much.

Michael Braun

Thank you.

Operator

Your next question is from the line of Robert Sterling [ph] with the National Growth Fund.

Robert Sterling – National Growth Fund

Gentlemen, you used a phrase out there, a Citizens depop, could you explain what that is and how that works and what that's going to mean to us financially in the fourth quarter in the best circumstances?

Michael Braun

Once again, I apologize that I'm using jargons. Citizens Property Insurance Corporation, that's pretty much a quasi-entity, a state entity, in the state of Florida. Originally, they were chartered with insuring people that could not get insurance. That changed about two plus years ago, where they came out and said, "No, we'll take business." And specifically, that goes back to what was called, I believe it was HB1A where they rolled back rates. Their rates have been documented to be not fiscally, actuarially sound.

So, long story short, they have approximately between 1.2 and 1.3 million policies. Their objective, one of their objectives is to get those out into the private market. However, in order to take those policies, what we call assumed policies, or we say Citizens depop, we would take over policies, and effective day one, let's just say for easy math, if it's $10 million, we would take in all those policies and effective that day, mid-term on every one of them, we would be paying out the claims, but also earning out the premium.

There's, like I say, about 1.2 to 1.3 million policies in Citizens. They've ballooned. You go back three, four years ago, and I believe they were at 600,000 to 700,000. They've grown. The state has wanted to make sure that the average resident of the state has affordable insurance, how they determine affordable insurance, and has taken an inordinate amount of risk, in my opinion, to ensure that people have cheap insurance available to them. And when I say cheap, cheaper than what the private market's able to do. I think that we, now that our reinsurance costs have come down more and our rate decreases have been approved by the OIR – I'm sorry, the state of Florida, we now can more of those policies look attractive to us that we can write them on a profitable basis.

Robert Sterling – National Growth Fund

So, if they were written too cheaply to begin with, why would you want to take them on?

Michael Braun

They're written with Citizens and the question becomes can we write them at our rates? Are our rates more expensive or less expensive? They're required. They cannot be selective. We can be selective. So, if –

Robert Sterling – National Growth Fund

You can cherry pick?

Michael Braun

Yes. We can. And the number one driver that we use is basically what we look at is our wind reinsurance, is how these policies model with our current. And I can tell you my goal is, let's just say we want to take our $10 million in premium and let's say our reinsurance cost is 50%, I feel confident that the policies we're looking at are substantially lower as a reinsurance expense. I don't know if I'm saying that clearly.

Robert Sterling – National Growth Fund

No. I don't understand.

Michael Braun

Basically what I'm saying is these policies will help us get more from our current reinsurance program, short-term, more profit to the company, long-term, they will help us even lower our rates more in the private market.

Robert Sterling – National Growth Fund

What are we looking at? What do you have? I'm looking at your press announcement. You've got, you're talking about $30 million?

Michael Braun

We're talking about as high as $45 million.

Robert Sterling – National Growth Fund

$45 million. What's that going to mean to our bottom line?

Michael Braun

If we take, let's say we take $45 million, up to $45 million, we would start earning immediately. There are expenses associated with it, but I think there's going to be a good margin at the end of the day on that. We have not yet been approved to take those policies, but there are some policies that look very attractive to us.

Robert Sterling – National Growth Fund

What are we annually, annualized 10% margin, is it 15%, 5%? What are you looking at?

Michael Braun

You'd have to look back at our historical on that. But I think between the fees that we generate, things like that, I don't know that 10% is not – is a good round number. I don't want to give you a specific number that's higher or lower than that. But we do generate fees off of those policies, and we also, obviously, earn an underwriting profit, and we also, obviously, earn investment off of that, off of the prepaid premium. So, I don't want to give you a specific number on that, but I would say that it's profitable business for us. It looks good.

Robert Sterling – National Growth Fund

And why, again, does the state want to give it up if it's profitable business?

Michael Braun

The state's not – you're asking good questions. The state does not want to necessarily be in the business of insurance. So, they're trying to get smaller. But, like I say, about two years ago, that's when the state said a lot of people are feeling the pain. So, let's make our rates even cheaper which really made them balloon up, and it hurt us. It has absolutely hurt us. We’ve lost a lot of policies. So, now it goes back to a more stable market where we're, our rates are less than theirs in the majority of territories in the state.

Robert Sterling – National Growth Fund

Why would you want your rates to be less?

Michael Braun

Well, our rates, we're not comparing our rates to Citizens'. We compare our rates to what our expenses are. We feel that we have a pretty good book. We feel that we control our expenses. So, we think that we can take policies from the state and we can manage them better than the state can. But we're not going to take all the policies. We can cherry pick the policies that we're interested in.

Robert Sterling – National Growth Fund

Okay. Now, one other thing, and that is increasing shareholder value. All of us on this call are shareholders. Specifically, what are you doing? The last gentleman talked about the stock buyback. Why don't you take the $5.5 million that's left over and buy your own stock back? You are having Banc of America or whatever's in your portfolio, you're selling at 65% more or less of book value. Sounds like you've got a good business going forward. Why not utilize your capital that way?

Michael Braun

When you say the capital, there's different pieces to that. The insurance companies have cash and things like that, but we can't use that money for stock buyback.

Robert Sterling – National Growth Fund

No. You've got $6 million worth of stock, you said.

Michael Braun

Yes, let me try to clarify. The equities that we have are bought within the insurance companies. We collect premiums from policy holders. That money sits in, for instance, Federated National. What we can do is we then buy, we invest that money, and earn potentially capital gains or –

Robert Sterling – National Growth Fund

Right. You buy Banc of America stocks and you get a 4% dividend. Right?

Michael Braun

Correct. But we are not –

Robert Sterling – National Growth Fund

Why not buy your own stock and get an 8% dividend?

Pete Prygelski

Our insurance companies are not allowed to buy our own common stock. We can only buy that through our holding company. The cash in the holding company can buy it back, but not our individual insurance companies. The majority of our funds are in our insurance companies.

Michael Braun

Right. And the money that's in the holding company is used for operating expenses, but also to fund the dividend.

Robert Sterling – National Growth Fund

Okay, okay. So, if you were to increase your stock buyback, and by the way, stock at this level, if you're not buying it back at this level, I don't know when you're ever going to buy it back. But how much would be available to – let's say in the case of directness, let's just go for it. How much is available then in your surplus or whatever to go ahead and buyback your own stock? Buy then the treasury stock?

Michael Braun

Basically, just using rough numbers, we have probably close to $8 million in the holding company, of which the dividend is funded. So, you have $8 million there. Then it comes down to – that's for the dividend and to buy the stock back. So, that's the total amount that there is, $8 million.

Robert Sterling – National Growth Fund

Okay, okay. But, going forward, you're projecting being profitable, right? On an ongoing operating basis?

Pete Prygelski

Mike's touched on it. If –

Robert Sterling – National Growth Fund

You're profitable now on an operating basis without this write off. But going forward you are, right?

Pete Prygelski

Yes.

Robert Sterling – National Growth Fund

So, that will increase?

Pete Prygelski

Absolutely. I feel absolutely that we – that our plan is absolutely sound. It's going to – like I said earlier, it doesn't kick in, really the fourth quarter is when I'm anticipating the majority of that benefit. And we have plenty of cash on hand to pay that dividend as well as the cash that we generate.

Robert Sterling – National Growth Fund

The two of you are shareholders, right?

Pete Prygelski

Yes.

Michael Braun

Yes.

Robert Sterling – National Growth Fund

Okay. So, what are you going to do to get the stock price up?

Pete Prygelski

We, as a Board, are discussing our options the best way to use the holding company's resources. So, we are very well aware that the stock is trading at 65% of book. The board is aware of that and we are looking at some options.

Robert Sterling – National Growth Fund

Okay. And as shareholders, are you happy?

Pete Prygelski

As a shareholder, I want the value to be up. Absolutely, obviously.

Robert Sterling – National Growth Fund

So, you're not happy?

Pete Prygelski

We're both disappointed with the quarter. We're definitely disappointed with the quarter. One of the things I touched on at the beginning, to help increase shareholder values, we're committed to maintaining the dividend. We have a current buyback with $1 million left in approval and if the board extends it more, we'll definitely look at that. Those are two things we can immediately do. But the bigger thing is, long-term outlook, to implement some of the plans that Mike's gone through, to get the approvals from the state that we need, which we think are forthcoming and to execute the depopulation of Citizens, to get involved in condo, and to implement the fronting with State National.

Robert Sterling – National Growth Fund

Okay. If you were sitting in my chair, what would you tell management?

Michael Braun

Our objective as management is to –

Robert Sterling – National Growth Fund

No, no, no. You change positions with me.

Michael Braun

Okay. I understand what you're asking, and our objective is to run the company, use the resources in the most profitable manner. So, we're trying to do that, not only for our holding company, our two insurance companies, our managing general agent and our claims company. There's challenges that we face. There's opportunities that you're saying we have with the stock. We are aware of that. The board is aware of that. And we are looking at different possibilities with that. Our job, as management, is to protect the shareholders, to create shareholder value. And there's, obviously, the market disagrees with where we're at and we understand that there may be some possibilities for us to solve that. That's a board decision that we are looking at.

Robert Sterling – National Growth Fund

Okay. And there was another question earlier. Have you ruled out selling the company?

Michael Braun

I don't think that's in the best interest of the shareholders. I personally don't. We'll do what's right for the shareholders at the end of the day, obviously. But that's not something I think that this, as we, like I say, we'll get a jump in earnings with the fourth quarter. I think that's going to reward shareholders. We're doing that for the benefit of the shareholders. I think that we have a good business plan, and I think that it's going to work. That's my opinion.

Robert Sterling – National Growth Fund

Does your former CEO support the business plan going forward?

Michael Braun

Yes, he does. He is on the Board and the Board is aware of what our business plan is. Yes.

Robert Sterling – National Growth Fund

Okay. Good, good. Thank you.

Michael Braun

Thank you.

Operator

(Operator instructions). There are no further questions at this time.

Pete Prygelski

Just in closing, I just want to say once again, it is a disappointing quarter and I don't want the shareholders to think that we do not see that or know that or understand that. We have a business plan. We think it's sound. Our objective has been to make sure that we protect book value and to generate earnings. I think that we have protected book value in a very difficult market and the time has turned where we can now be more aggressive with our growth and I think that will not only increase book value, but obviously increase earnings.

Our objective is to reward our shareholders and to create value for them. So, I'm sure that the results will speak for themselves as we move forward and I feel good about where we're headed. Once again, I understand that the quarter's disappointing to a lot of the shareholders here, to most everyone, and we do know that. So, thank you very much, everyone, for your time and calling in.

Operator

Thank you for participating in today's 21st Century Holding Company's second quarter financial results conference call. You may now disconnect.

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