Nationstar Mortgage Holdings' (NSM) CEO Jay Bray on Q2 2018 Results - Earnings Call Transcript

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About: Nationstar Mortgage Holdings (NSM)
by: SA Transcripts

Nationstar Mortgage Holdings (NYSE:NSM) Q2 2018 Earnings Conference Call July 17, 2018 9:00 AM ET

Executives

Amar Patel - EVP and CFO

Jay Bray - Chairman and CEO

Analysts

Bose George - KBW

Mark Hammond - Bank of America

Henry Coffey - Wedbush Securities Inc.

Doug Harter - Credit Suisse

Kevin Barker - Piper Jaffray

Sam McGovern - Credit Suisse

Operator

Good day, ladies and gentlemen, and welcome to the Nationstar Mortgage Holdings Inc Second Quarter 2018 Earnings Call. At this time, all participants are in a listen-only mode. [Operator Instructions] And as a reminder, this conference is being recorded.

I'll now like to turn the call over to Amar Patel, Chief Financial Officer. You may begin.

Amar Patel

Good morning everyone, and thank you for joining our second quarter 2018 earnings call. Before we get started, I would like to remind you that our quarterly press release and earnings supplement are available from the Investor Information section of our website www.nationstarholdings.com.

In addition, we will make forward-looking statements during today's call that are subject to risk and uncertainties. Factors that may cause actual results to differ materially from expectations are detailed in our SEC filings; including the Form 8-K filed today containing our earnings release and quarterly supplement. Information about any non-GAAP financial measures referenced, including a reconciliation of those measures to GAAP measures can also be found in the earnings release and in the quarterly supplement available on the website.

I'd now like to turn the call over to Nationstar's Chairman and CEO, Jay Bray.

Jay Bray

Thanks Amar. Good morning, everyone. Before discussing the quarter, I wanted to provide a brief overview of our business. Nationstar is a truly unique platform with a set of assets that are unlikely to be replicated in our lifetime. We are currently the third largest servicer in the United States. We support home ownership for over 3.2 million customers and earn fees on our servicing portfolio of almost of $500 billion.

We are also the 15th largest originator originating over $20 billion in loans annually. Our Origination segment provides solutions to our customers and allows us to recapture existing customers and gain new customers at attractive returns. Xome is our high margin fee based real estate services business, which supports Nationstar and third parties with a range of services including title, close, valuation and property preservation and inspection. Over the last year, we've fulfilled over 424,000 servicer orders and sold over 11,000 properties. Our platform has never been stronger and we have an opportunity for continued growth across all segments.

Now let's look at the second quarter results. We again delivered solid operating results with all segments experiencing growth. We reported GAAP net income of $58 million, or $0.59 per diluted share and adjusted earnings of $52 million, or $0.53 per diluted share, which is a 20% increase from the prior quarter. Servicing generated 5.8 basis points of adjusted profitability on a servicing portfolio of nearly $500 billion. Originations earned $33 million adjusted pretax income and delivered $5.5 billion of funded volume. Xome earned $13 million adjusted pretax income and sold over 3,700 properties and completed over 117,000 service orders with added third party influence.

Let's take a closer look at Servicing. Servicing had a fantastic quarter. They performed ahead of expectations achieving $72 million of adjusted pretax income or 5.8 basis points of profitability in the quarter. The increase in profitability of approximately 5% from the prior quarter was mostly the result of lower expenses. Expenses improved by $16 million, or 9% quarter-over-quarter as a result of improved efficiencies in the business. Prepayment and delinquency trends also continued to be favorable for the business. We boarded $20 billion throughout the quarter and ended with $498 billion portfolio with 3.2 million customers. We already have $65 billion scheduled to board over the second half of the year. These transfers along with other normal market transactions will help achieve our targeted growth to $533 billion by the end of the year.

In addition the opportunities for further growth are significant for both MSRs and sub servicing. We believe our capabilities to capture these opportunities are unmatched. And we will maintain the same discipline in evaluating them as we have historically. Equally exciting for servicing is our servicing transformation project which we have named project Tighten. We have established a project management office and already identified several work streams to increase efficiency while improving the customer experience.

Implementations of a few work streams are currently underway to produce $30 million in annual savings by the end of the year. This is clearly phase one. And we expect to continue to execute on more initiatives to reduce a meaningful portion of the $418 million in annual servicing expense over the next 24 months. But I am super excited that we've already identified $30 million in our first phase.

A low prepayment environment portfolio additions and identified cost savings for 2018 will drive continued improvement in our results and allow us to achieve our stated target of six plus basis points of adjusted servicing profitability.

Now let's move on to Originations. Originations delivered $33 million in adjusted pretax income. That's a 32% improvement quarter-over-quarter. This was led by higher volume and lower expenses, complemented by our Servicing portfolio; our origination business has performed quite favorably this year relative to the industry. In the quarter, we funded over 25,000 loans totaling 5.5 billion which was composed of 2.6 billion from the consumer direct channel and 2.9 billion from the correspondent channel.

In the consumer direct channel, we have maintained refinance recapture rates in excess of 50%. We have recently begun a push to improve purchase recapture and new customer acquisitions. To help us succeed with this initiative, Francis Lobo recently joined our team as Chief Business and Product Officer. I am very excited to have him on board to lead our product and digital transformation just as he has previously done at other innovative companies. We have tremendous opportunity to help nearly 750,000 of our existing customers consolidate debt and improve cash flow.

Digitally driven customer focused tools like our Home Intelligence app will help optimize the personal balance sheets for our customers and drive additional volume for this business from both existing and new customers. With new talent, tools and products, we are confident in our abilities to provide solutions to our customers and expect continued growth in the second half of the year. Given the current interest rate and market environment and the required investment in home intelligence and new customer acquisitions, our full-year target for 2018 is $120 million of adjusted pretax income.

Now let's move on to Xome. This quarter Xome earned $13 million in adjusted pretax income both the exchange and services segments experienced sequential growth as property sales and completed order volumes increase. The exchange business sold over 3,700 properties in the quarter, that's a 16% increase. Third-party listings accounted for over 45% of total property sales as the segment continues to attract third-party business and referral listings. The exchange business added six new institutional clients during the quarter.

In addition, the services business completed over 117,000 orders in the quarter which represents a 5% increase. The field service business started taking initial orders last quarter. The processing of property inspection and preservation orders is continuing and is expected to be fully ramped capturing the $100 million revenue opportunity by the end of the year. While Xome has a proven track record of incubating, launching and expanding services, we have also opportunistically progressed on acquisitions. We believe there's going to be many opportunities in the marketplace and we look forward to taking advantages of those opportunities to support our revenue and third-party growth.

Nationstar is targeting Xome adjusted pretax income of $60 million for the full year of 2018.

Moving on to the next page. The second quarter generated solid operating results. Servicing profitability improved ahead of expectations and significant opportunities exist for growth. Originations grew profitability and volume and are focused on providing solutions for our 3.2 million customers. Xome sale and order volumes increase with a continued addition of new third-party clients. Our targets for 2018 are six plus basis points profitability for servicing; $120 million for originations; $60 million for Xome and $30 million year-over-year savings for corporate. We are focused on achieving these targets and executing on our initiatives.

In closing, I'm truly excited to announce that we will be closing our merger transaction on July 31st as we have received all necessary approvals. We appreciate the support of our shareholders, the WMIH shareholders and all our partners who have provided these approvals. We firmly believe that this transaction creates value for all shareholders. Post merger, we will be a better positioned business with additional free cash flow created by cash tax savings.

We plan to utilize this increased cash flow for continued investments and disciplined capital management. I've been here for over 18 years, and I can tell you I've never been as excited as I am now about the future of this platform, given all the opportunities for each of our segments we look forward to growing our differentiated platform and building value for our shareholders and customers.

I'll now hand it back over to the operator for Q&A.

Question-and-Answer Session

Operator

[Operator Instructions]

Thank you. Our first question is from Bose George with KBW. Your line is now open.

Bose George

Hey, guys, good morning. First just on the guidance on the servicing side. Your guidance of the six basis points mentions lower prepayment. And I was curious does that assume any change in rates? And then just given how low prepayments are right now apart from seasonality just curious how do you think prepayments will trend?

Jay Bray

No. I think it's really just consistent as they are now. We're not really assuming that rates are going lower, that prepay speeds are going lower. We're just kind of assuming that it's going to maintain throughout the rest of the year. Bose, I think the real way to think about servicing is we have $65 billion in additional portfolios locked down for the rest of the year. We think $50 billion of that will come in the third quarter. And call it $15 billion of that in the fourth. And that'll be a mix of both sub servicing and MSR. And so we feel great about the ability to continue to grow the portfolio. And that's really what's going to continue to drive kind of the overall profitability. And then I think we still see as we've talked about a lot runway on the expense side with the launch of project Tighten with some other things that we've done to tighten down losses et cetera.

I think we feel that you'll continue to see a positive trend in the overall expense. If you think about it I mean we’re anticipating the boarding of the $50 billion. We've already -- we have the people on board. So you have the $50 billion of incremental portfolios coming in third, early fourth without any really incremental expense. So that's how we're -- that's the math that we're using to get to the six plus basis points.

Bose George

Okay. That makes sense, thanks. And then just can you talk about the pipeline for any larger transactions that are out there?

Jay Bray

Well I think we -- when you look at it in totality it's a pretty large pipeline, right. I mean when you look at just normal servicing transactions throughout the year that's close to $300 billion, and that's just kind of normal trades as you see through some of the brokers et cetera. When you look at some of the consolidation opportunities that are out there I mean some of them publicly announced, some of them not, I mean that's going to be another 250 to 300. And then just through our normal kind of process of sub servicing opportunities that we see in the pipeline. I mean you could be talking close to an $800 billion pipeline and we generally win our fair share of that. So I mean we're bullish. I mean I think we do see opportunities to acquire and grow the sub servicing business. Again, I think our approach is going to be no different than in the past, be very disciplined and very thoughtful and look at what really makes sense for the overall platform. But it's --I would say it's larger today than it's been in a long time.

Bose George

Okay, great, that's helpful. And then just one more just on the origination side. The reduction in the guidance that $20 million. Was that mostly volumes, margins, just what was different from what you had seen earlier?

Jay Bray

It's really -- it's not that complicated. I mean when you look at our overall volume expectations we're hitting those, but we're seeing more coming from correspondent than versus direct-to-consumer. The real change in guidance is almost solely driven through the change in our payoff mix. So we had assumed a certain amount of -- when payouts in the portfolio would be purchased and versus refinanced. We've actually seen more purchase payoffs than refinance than what we had forecasted. And so it's just a function of that. Our recapture on the purchase payoffs is quite low. That's something we're working on and frankly I have seen a lot of improvement in but still not enough to move the needle. So it's really just a change in the mix of our overall payoffs in the portfolio are more purchased today than we had forecasted versus refinance.

I mean the good news is on the refinance side we're still recapturing over 50%. And if you look really at the direct-to-consumer channel, quarter-over-quarter revenues are up; expenses are down, volumes up. So that channel is rocking and rolling. And I think we'll continue to have great quarters but the pond that they're fishing in is just kind of a little bit smaller because we're seeing more of the payoffs in purchased - in the purchase area. So it's really all due to that. Now if that changes, clearly we'll come back and give you guys an update and we think there could be upside but right now as we see the mix that's what the shift was due to.

Operator

Our next question is from Mark Hammond with Bank of America. Your line is now open.

Mark Hammond

Thank you. Hi Jay and Amar. I had three quick questions. So the first one regarding the recent bond deal. You have $2.5 billion in debt pro forma. I was wondering if you could give any expectations with regards to the pace and amount of de-levering if any that the investment community could expect?

Jay Bray

Well, I think look we were on the positive side pleased to get the deal done in a tough market. Clearly, we extended the weighted average life of our debt from call it two years to over five. And still when you step back and look at it the overall debt and the cost of that the deal is still cash flow accretive. And so we're --I think we are overall pleased to have that done and kind of have our capital structure locked in. From a de-leveraging standpoint, I mean one example of that is if you recall in our pro forma we had assumed 2.7 or 2.75 kind of the original pro forma for debt. We actually only went out and raised in total 2.5. So we already kind of put some of our extra liquidity to work and brought that 2.75 down to 2.5 versus the original pro forma. So I think that's a good story.

And then if you look at our track record it's pretty outstanding right. We have over the last three, four years de-levered over $60 million plus in overall debt, bringing the debt down from really it was around 2.5 all the way down to 1.8 and 1.9. So we have a good track record of that. When you look at the cash flows overall the business, I mean we feel like we're still going to be able to make the investments we need to grow the portfolio and continue to delever. We'd like to bring call it over the next three years debt back down to the level it was kind of pre merger. So that's in general how we're thinking about it. Now that will depend on what market opportunities exist and what --where we can deploy capital and what the returns are in the marketplace. But we're very focused on de-levering. We always have been. I think we've got a good track record of doing it and we see a pathway to do that. But we're going to balance that with the $800 billion pipeline and what some of the other opportunities in the marketplace are.

Mark Hammond

Great, thanks. That's helpful. Speaking of the pipeline and in the prepared remarks you had mentioned opportunities in servicing and sub servicing. Would be able to comment on any opportunities within reverse servicing specifically that you're seeing?

Jay Bray

Reverse is a -- it's just such a smaller pond, right. If you step back and think about what's going on in that business, you've seen originations shrink dramatically which we think were prudent steps taking on the origination side of the market. And so it's just a smaller pond when we looked at reverse historically it's been a -- I would call it an opportunistic opportunity where there were just trades that really made sense. We have a great platform now. If there are portfolios that make sense for us we'll certainly take a look at them, but when we speak to the pipeline we're really focused on forward. We don't really include reverse in the pipeline because we just see this as more one-off opportunistic type transactions.

Mark Hammond

Got you. And then the last one would be do you have the percentage of your primary forward servicing that's Ginnie Mae offhand?

Jay Bray

It's going to be --

Amar Patel

Between the MSR it's roughly about to 15% to 16% and over the broader portfolio including MSRs and sub servicing, it's close to 18%.

Operator

Our next question is from Henry Coffey with Wedbush. Your line is now open.

Henry Coffey

Yes, good morning, everyone. So in sort of conjunction with less retail from the recapture business, maybe you can just give us some sense of where sale margins are for both retail and correspondent?

Jay Bray

Yes. They actually did quite well. I mean we tend to quote kind of revenue and profit, but if you look at the direct -to-consumer, Henry, I think quarter-over-quarter our revenue actually grew. Let me just get that number in front of me. So we are 4.43% in direct-to- consumer revenue in the first quarter. We're at 4.8% in the second quarter. So you saw about 8% overall increase in correspond.

Henry Coffey

So and it went 4.43% of volume to 4.8%.

Jay Bray

That's right.

Henry Coffey

Okay, thank you. And then correspondent?

Jay Bray

Correspondent was pretty flat actually. It went from again I'm giving you the revenue side of the equation call it 56 to 50. So that's down a little bit but pretty flat for correspondent.

Henry Coffey

And frankly better than industry if you look at what the majors have been reporting. And that mix change is likely to continue given what --given your comments on the call. And we're going to see more correspondent and maybe slightly less retail.

Jay Bray

I don't think you'll see it change materially from the second quarter. I mean you may see correspondent tick up slightly, but what we had really forecasted like I said for the remainder of the years, the direct consumer volume would be slightly higher just due to more refinance payoffs. But I don't think you'll see a change that much Henry because we're ahead. If you look at overall, again origination is a pretty remarkable story 32% up quarter-over-quarter. If you look at the volume, we're actually ahead of kind of where we thought we would be from an overall volume standpoint. And so I don't think you'll see a huge shift in that mix. So we'll keep you posted on that.

Henry Coffey

And then with Xome. I mean it just sounds like it's a second half story that you get more --the September quarter is seasonally is a big one and then you have the property preservation business kicking in and by the fourth quarter.

Jay Bray

Yes. I think it's -- I think that's the simple way to think about. I mean the good news on them is the third party machine is working. I mean I'm pretty proud of the guys we signed eleven new third-party customers in the second quarter; five in the exchange business; six in the services business. When you look at overall percentage of third party and that continues to climb. We actually had some huge wins in the quarter. A lot --one large win with one of the GSCs. Couple of big wins with some very large financial institutions. So I think you're just going to see steady momentum in the services and exchange business. And then to your point field services, it's doing well. We think it's on track. And you'll continue to see that climb throughout the rest of the year. So I think you're right net-net that's the way to think about it, but I feel like we're a bit ahead on our kind of third-party wins. And hopefully that momentum will continue into the third.

Operator

Our next question is from Doug Harter with Credit Suisse. Your line is now open.

Doug Harter

Thanks. Jay as you're looking at the pipeline can you just talked about how the presence of the DTA changes your appetite for doing transactions whether they be MSRs versus sub servicing versus whole companies? And whether there's anything else sort of that makes more sense given that DTA?

Jay Bray

Yes. I think net-net Doug doesn't change it a lot obviously. I think it certainly puts us on a level playing field with any financial buyer that's out there in the marketplace. And it's certainly obviously is a positive but I don't know Amar if you want to cut, comment or anything else there and how it would change our philosophy.

Amar Patel

Yes. I mean I think as we Jay said previously kind of have a pretty disciplined approach when we look at MSR deals and the route we go with them, whether we go fully commit our capital or we engage a capital partner or we do sub servicing. I think that mindset in terms of our target yields that we want to achieve is going to stay the same. The DTA is likely a good benefit for us. And it's something that our shareholders can benefit from in the future. But that our mindset is to continue to be disciplined with how we invest our capital and making sure we get the right returns for the level of risk we are taking with our investment and with our capital.

Doug Harter

And then if you could talk --you talked about again an active pipeline. Can you talk about where you see your --the scale on the servicing side, the ability to kind of add additional balances and how much additional headcount you might need to add just so we can get a sense of incremental profitability up for that pipeline?

Jay Bray

Yes. I mean I think --I mean I'd start with where we're at today right. I think the $50 billion for the third quarter. We feel good about and we don't need to add any incremental heads and kind of did that in the second quarter and still reduced expenses overall. I think the $15 billion in the third clearly --I'm sorry in the fourth, we don't need to add any heads for that. It's not of the size that we would need to add. When you think about the pipeline overall I think it depends, Doug on the size and complexity of the opportunity. An easy way to think about it as we can add if you take $15 billion and kind of current servicing, we probably need less than 100 heads for that, right. If you take --if that's a mix of delinquency then you're going to need more, but we when you think about the size and scale the platform that's really in my mind no strategic buyer out there that can compete with us. I mean given the scale, given the machine that we have today, I don't see anyone compete with us but as we think about these new opportunities it depend on the size and complexity of those. But we don't anticipate for the remainder of the year to get to that $530 million needing to add frankly anybody at all. I think it will be a very small number.

Amar Patel

And we think about overall capacity and larger opportunities, it's all about technology people in space from a technology standpoint. We have 3.2 million loans on our platform today. The platform has been tested to take on close to 6 million loans without any really significant investments and incremental technology spends. We can grow beyond that obviously if we invested more. So getting to that higher customer account would not require big investments from our standpoint. We've shown from people side, we've shown we've been able to increase headcount as necessary because our training programs are great. And we can get people ramped up pretty quickly within space obviously we've --our principal locations in Dallas. We've got another center in Arizona. And we've got capacity in all those locations to currently add space for the people as well.

Operator

Our next question is from Kevin Barker with Piper Jaffray. Your line is now open.

Kevin Barker

Thank you. In regards to the amortization expenses this quarter net $48 million which was in line with last quarter. You had an acceleration of CPRs to 12.1% from 10.7%. Was there a reason the amortization expense basically remained the same and just slightly higher on basis points this court even though CPRs went higher?

Amar Patel

Yes. Fair question, Kevin. The actual gross amortization actually went up. We reported net $48 million which includes gross amortization net of co-invest accretion. And so if you --prepay did go up marginally from Q1 to Q2. And so gross amortization did go up, but because of the mix of the prepays, depend on where it was between our excess servicing spread pools versus our unencumbered pools, there was a bit of an offset there. And that's why we had a net no changed amortization. And that's one reason why we exceeded our expectations for Q2.

Kevin Barker

Okay and then what are your expectations for CPRs in your guidance for six plus basis points of servicing UPB?

Amar Patel

Well, we've said that our estimate is 11% net of recapture. And if you look at where we're at today in Q1 and Q2 we are slightly below that. Now with seasonality factors Q3 is intended to be higher, but we're seeing the trends pretty favorable meaning the payoffs request and the volume of prepays is not as high as we've been expecting.

Kevin Barker

So when you say net of recaptures, are you including some recapture earnings in your servicing profitability or so what would be the gross CPR in that guidance?

Amar Patel

It would be around 12.7 and we're not including earnings. It's really just a volume and UPB metric.

Kevin Barker

Got it, okay. And then what is the cost basis of your MSR in the second quarter and basis points and then what amount of fair value markup was associated with --that came through fair value that was amortized?

Amar Patel

Yes, cost basis is approximately 80 basis points and the difference between the fair value and the cost basis that came through in Q2 was $31 million.

Kevin Barker

And then in the pipeline that you laid out, roughly I believe it was $800 billion, is that right?

Amar Patel

Yes.

Kevin Barker

And then what is the expected yield that you would have on new acquisitions given the type of pipeline that's out there today?

Amar Patel

Well, it would depend on how we would structure the transactions, right. The $800 billion will include $350 billion of normal market. On average there is about $150 billion to $200 billion of trades via the bull market. There's another $150 billion of the trades via the flow market. And then we've got other consolidation opportunities. And then we've got a sub servicing pipeline as well where you got active clients who are pursuing to get more sub servicing volume in. So the returns are all different for those types of acquisitions. Typically, if we want to invest for a capital, we want to get close to mid-teens type of returns. And we do believe that we have that opportunity with some of the portfolios that we're looking at. And that's currently where we're investing. If we go fully commit our capital to it, but then we can also engage a capital partner when we're working alongside someone for MSRs. And then with sub servicing obviously there's no capital required, but we target 25% to 35% margins of our business.

Kevin Barker

So in the mid-teens return you're referring to a pre-tax ROE or is that --and is that considered on a levered basis or is that on a gross on levered basis?

Amar Patel

Yes. That is unlevered return on a pretax basis.

Kevin Barker

Okay and then you mentioned -- correct me if I'm wrong, you said 50 basis points gain on sale margin to correspondent channel this quarter and --

Amar Patel

That is the revenue, yes.

Kevin Barker

The revenue and so when you refer to the net gain on sale margin versus peers would that 50 basis points be apples to apples or is that backing out the significant part of expenses that you would otherwise see at some of your competitors?

Amar Patel

Well, I can't comment on competitors. From our standpoint right we are in 50 basis points in revenue. That can range anywhere 50 to 55 five and our costs are typically 25 and we make 25 basis points of profitability or net margin on correspondent.

Jay Bray

I mean that's the way we typically have managed the business, Kevin, looking at what is the net kind of profitability and how we view that again it's just another way to acquire MSRs and so we're maintaining that 25 basis points of what we call profitability and kind of EBIT earnings before taxes. That's how we think about it.

Kevin Barker

Okay and then one more. What was the average capitalization of an MSR on your origination channel this quarter, given CPRS have been relatively low?

Amar Patel

I don't have the exact number in front of me, but I believe it's in 110 basis points range.

Operator

Our next question is from Sam McGovern with Credit Suisse. Your line is now open.

Sam McGovern

Hey, guys. Thanks for taking my questions. I'm just following up in the last question. I was hoping you could talk about where transactions are happening for MSRs both for newly originated and also for Ginnie and seasoned MSRs and whether those transaction values have changed much over into the last quarter or two?

Amar Patel

Sure. I mean if you look at Q2, we boarded $20 billion, of that $14 billion was MSR; $6 billion was sub servicing and looking at the $65 billion that we've already got scheduled to board over the second half, it's around $35 billion sub servicing; $30 billion MSRs. And so that average out about 50:50 between the MSR and sub servicing mix. And we're seeing returns fairly flat quarter-over-quarter, Sam. I mean from our standpoint we are able to invest at the required returns and with our --how we can kind of invest capital and getting how counter partners introduced sub servicing I think we can have plenty of opportunities to further penetrate the pipeline. We haven't really seen to your question-- we haven't really big --seen a big change in yields across those products.

Sam McGovern

Got it. That's very helpful. And then just in terms of the latest credit stats, I was hoping you can provide an update in terms of where those numbers are? I can't imagine that they've changed much since the deal was marketed but if you have those numbers at hand that would be helpful.

Amar Patel

I'm sorry Sam, what was that? What credit stats --

Sam McGovern

The latest credit stats. Whether it its debt to EBITDA or debt to equity?

Amar Patel

Oh sure for the corporate debt, yes, I mean it hasn't changed at all, our debt to EBITDA is going to be around 1.1 and our debt to EBITDA coverage is like they are going to be close to 4.5 to 5.

Operator

And I am showing no further question. I'll now like to turn the call back to Jay Bray for any further remarks.

Jay Bray

Thank you, guys. We appreciate you participating and we have on calls throughout the day. So thanks a lot.

Operator

Ladies and gentlemen, thank you for participating in today's conference. You may now disconnect. Everyone have a great day.