Hardwoods Distribution Inc. (OTCPK:HDIUF) Q3 2022 Earnings Conference Call November 9, 2022 11:00 AM ET
Company Participants
Ian Tharp – LodeRock Advisors Inc.
Robert Brown – President and CEO
Faiz Karmally – VP and CFO
Conference Call Participants
Yuri Lynk – Canaccord Genuity
Jeff Fenwick – Cormark Securities
Hamir Patel – CIBC Capital Markets
Zachary Evershed – National Bank Financial
Ian Gillies – Stifel GMP
Operator
Good day, and welcome to the HDI Third Quarter 2022 Results Conference Call. Today’s conference is being recorded. At this time, I’d like to turn the conference over to Ian Tharp. Please go ahead.
Ian Tharp
Thanks, Justin, and good morning to those joining today as we discuss HDI’s financial results for the third quarter of 2022. My name is Ian Tharp, Investor Relations for HDI, and joining me on the call today are Rob Brown, HDI’s President and Chief Executive Officer; and Faiz Karmally, Vice President and Chief Financial Officer. HDI’s Q3 2022 earnings release, financial statements and MD&A are available on the Investor section of the HDI website at www.hdidist.com. These statements have also been filed on HDI’s profile on SEDAR at www.sedar.com. Before we start, I want to remind listeners that during this call, management may make forward-looking statements. These statements involve various known and unknown risks and uncertainties and are based on management’s current expectations and beliefs, which may prove to be incorrect. Actual results could differ materially from those described in these forward-looking statements. Please refer to the text in HDI’s earnings release and financial filings issued today for a discussion of the risks and uncertainties associated with these forward-looking statements. All dollar figures referred to today are in U.S. dollars unless stated otherwise. Our comments today will focus specifically on the third quarter of 2022. Financial details for the first 9 months of 2022 can be accessed either through SEDAR or our corporate website. I’d now like to turn the call over to Rob Brown. Rob?
Robert Brown
Thanks, Ian. Good morning, everybody. Today, we’ll be reviewing recent developments at HDI and summarizing our financial and operating results for the third quarter of 2022. Initial comments will focus on our key financial and business highlights for Q3. Faiz Karmally, our CFO, will then provide additional details on our Q3 financial results. I’ll then conclude the prepared remarks for today with our outlook.
In the third quarter, we benefited from a continuation of favorable market conditions while executing well on the strategic and operating fronts. From a market perspective, consumer demand was supportive during the quarter despite an environment of higher interest rates. Volumes were down modestly compared to what was a very strong Q3 of 2021, and this was more than offset by higher product prices year-over-year. Our positioning as one of the largest architectural building products companies in North America continues to be an important competitive advantage as we source differentiated products from both domestic and international suppliers for our customers. On the strategic front, Novo and more recently, Mid-Am, collectively represent transformational acquisitions for HDI. These additions have brought us meeting management talent, important new access to the attractive pro dealer and home center channels, and a significant increase in our addressable market to sell architectural building products. On a combined basis, Novo and Mid-Am are on track to contribute over $1 billion in proforma sales for 2022 and are strong examples of our ability to deliver growth through our acquisition strategy. Both companies are performing well and contributed sales growth of $141 million or almost 30% in the third quarter as compared to the same period in the prior year. Our operating and sales teams continue to successfully adapt to changing market conditions as they execute our strategy to deliver growth organically. Our organic sales growth in the third quarter was $49 million or 10.4% increase over the corresponding period in 2021. On a consolidated basis, organic and acquisitions-related growth supported a substantial increase in our consolidated sales of $188 million in the third quarter, which is a 40% increase as compared to Q3 of 2021.
We combined our strong sales performance with a healthy gross margin percentage of 21.1%. This gross margin percentage performance is closer to our more recent trend in 2022, but below the 24.6% mark achieved in Q3 of 2021, when strong demand and tight supply resulted in a rapid increase in product prices as compared to the cost of inventory. The combination of excellent sales performance, a healthy gross margin percentage, and tightly managed operating expenses resulted in an adjusted EBITDA margin of 10% and adjusted earnings per share of $1.32. We also generated cash flow from operating activities of over $87 million and executed on our capital allocation plans by reducing debt by $54 million and repurchasing $10 million of our common shares. Share repurchases, September year-to-date have been accretive for shareholders. We have repurchased 767,000 common shares, representing over 3% of our outstanding share count. I’m also pleased to report that based on our strong performance and continued confidence in the business, HDI’s Board of Directors approved an 8% increase to our dividend to an annualized pay-out of CAD 0.52 per share or quarterly payment of CAD 0.13 per share. In summary, it was another good quarter for HDI. We posted excellent results to date in 2022 and have positioned the business to manage through a potential reduction in economic activity. I’ll return to speak more about this and our outlook later on. I will now pass the call over to Faiz to review our financial results for Q3 2022 in more detail. Faiz?
Faiz Karmally
Thanks, Rob, and good morning, everyone. I’m going to provide an overview of our results for the third quarter of 2022. I’ll also outline our financial position and capital allocation plans. Again, I’ll remind those listening that the dollar figures Rob and I referred to today are in U.S. dollars unless we’ve stated otherwise. Starting with consolidated revenue, our Q3 sales were $659.7 million, which was an increase of 40% or $188 million in Q3 in 2021. Focusing on our organic sales, healthy market demand supported higher product prices, and we achieved $48.9 million of growth in organic sales in Q3, which represented 10.4% organic sales growth. Acquired businesses contributed an additional $140.9 million or 29.9% of our year-over-year growth in sales and was comprised of $58.8 million in revenues contributed in the month of July by Novo, and a full quarter of contributions from Mid-Am totaling $82 million. As a reminder, we purchased Novo at the end of July last year and Mid-Am in Q1 of 2022.
Looking now at our regional activity, our U.S. operations generated Q3 sales of $610.4 million, which was 43% higher than the same period last year. U.S.-based sales increased by $183.6 million with organic sales growth accounting for $42.7 million or 10% of the sales growth, and acquired businesses accounting for the remaining $140.9 million of the total sales growth. Our Canadian operations also performed well in the third quarter. Q3 sales in Canada rose by CAD 7.8 million, which was a 13.8% gain compared to Q3 in 2021. The gains we captured in Canada were entirely driven by organic growth.
Turning next to gross profit, we posted a 19.6% improvement to $139 million in Q3 of 2022. This significant growth was supported by our strong sales results, contributions from Novo and Mid-Am, and the delivery of a healthy gross profit margin percentage. As Rob noted in his earlier comments, our Q3 gross margin of 21.1% was below the 24.6% mark achieved in Q3 of 2021, when strong demand and tight supply resulted in a rapid increase in product prices as compared to the cost of inventory. Our Q3 operating expenses were $90.9 million, which were $23.6 million higher than Q3 of 2021. The increase in operating expenses primarily relates to the operations of Novo and Mid-am, which accounted for $15.8 million of the increase. Also included in the increased operating expenses are $6.4 million related to investments to support our growth, and amortization of intangible assets acquired in the Mid-Am and Novo transactions of $3.3 million. As a percentage of sales, operating expenses remained well managed at 13.8% as compared to 14.3% in Q3 of 2021.
Moving now to adjusted EBITDA. For Q3 2022, we posted an increase of 3.4% over Q3 of last year to $66 million. As a percentage of sales, our Q3 adjusted EBITDA margin was 10%. Finally, our profit for the third quarter came in at $29.9 million, which was an 11.3% decrease versus the exceptionally strong performance we saw in Q3 of 2021. Our per share profit climbed to $1.28.
Turning our attention now to the balance sheet, as of September 30, 2022, our leverage ratio, which is a ratio of net bank debt to our trailing 12-month adjusted EBITDA after rents, was 2.6x, which is 0.3x lower than our leverage ratio at the end of Q2 2022. Our net bank debt declined by $54 million as compared to the prior quarter. We remain on track to further reduce our debt through the end of 2022. We ended the third quarter with substantial unused boiler capacity of over $200 million. Looking at our priorities for capital allocation. We remain focused on paying down debt, financing the growth of our business, both organically and through accretive acquisitions and providing incremental total returns to shareholders through our dividends and share repurchases. Regarding the latter two strategies, and supported by our very strong financial performance to date in 2022, as Rob mentioned, our Board of Directors approved an 8% increase to our dividend, representing an annualized rate of CAD 0.52 per share. In addition, regarding activity under our NCIB over the first 9 months of 2022, we repurchased a total of 767,041 shares, which represents 3.3% of our outstanding share count. With that, I’ll turn the call back over to you, Rob. Rob?
Robert Brown
Okay. Thanks, Faiz. I’ll finish our prepared comments today with our views on end markets and share more details on our progress in transforming the business, including our recently announced plans to change our name. Looking at the near-term market dynamics, we anticipate that rising inflation and recent interest rate hikes will have a negative impact on economic activity, and this may result in moderation of demand for our products. In this scenario, our team will draw on the experience gained during previous market cycles to adapt our management practices so we can continue to effectively operate our business. From a financial perspective, our balance sheet is strong, provides us with significant financial stability. Our business model also converts a high proportion of EBITDA to operating cash flow before changes in working capital. Importantly, our operating track record shows that during periods of reduced activity, we naturally released working capital investment, resulting in an additional source of cash.
Setting aside near-term market dynamics, we continue to anticipate strong fundamentals in our end markets over the mid and longer term. First, in the repair and remodel market, that comprises approximately 40% of our sales. The most recent leading indicator of remodeling activity published by Harvard’s Joint Center for Housing Studies, continues to forecast growth, 6.5% growth in the R&R market through Q3 of next year. Looking at the R&R market from a longer-term perspective, we continue to expect high home equity levels and aging housing stock to support strong levels of repair and remodeling activity. In residential construction, which comprises another approximately 40% of our sales, new building starts have moderated as affordability becomes more challenged, but new home starts remain at healthy levels. The significant timing gap between housing starts and completions provides extended demand support for our business since our products are typically installed during the later stages of construction. In terms of long-term demand in this market segment, the structural underbuilding of housing in the U.S. of an estimated 3.5 million units is a significant long-term helper to demand for our products. This, along with positive demographic factors, is expected to underpin long-term growth. For commercial markets, which comprises approximately 15% of our overall sales, our end market participation is quite diverse, and it includes opportunities in healthcare, education spending, hospitality, offices and other markets. Our broad exposure here to the commercial market positions us well to capture growth opportunities.
I would also highlight the following attributes that we have successfully built into our business model and that we will [indiscernible] our business across market cycles. Our business is highly diversified by supplier, by customer and by geography through our 86 locations across North America, and we believe this mitigates the risk associated with any one particular geography. We’ve also developed a very diverse product portfolio, generally comprised of specialty and higher-margin products with no one product category exceeding 20% of our pro forma sales. We maintain a strong balance sheet, and we generate significant cash flow, and we’ve got a proven ability to deliver meaningful growth through organic expansion as well as our acquisitions program. The Architectural Building Products market is fragmented, and there remains significant market share for us to capture.
On this final point, I want to speak about the progress we’ve made to transform our business. Over the past several years, we’ve organically expanded our product offering and added quality businesses through our acquisition strategy. Today, we deliver a one-stop customer buying experience with access to a diversified mix of specialty building products used in the finishing stages of construction. We’ve created a North America-wide distribution capability and broadened our customer channel participation to include industrial fabricators, pro dealers and home centers. Recognizing these important changes, earlier this year, we started a process to rebrand our business and to change our corporate name. We announced earlier this week that on December 2, we’ll host a special meeting of shareholders to seek approval to change the name of our company to ADENTRA. If the name change is approved, we will begin trading under the new ticker symbol ADEN and we’ll rebrand under the new corporate name as soon as possible after the meeting. Materials for the December 2 meeting will be provided to investors later this week. We believe this new name captures the overall value we have built and our capabilities to meet the diverse needs of the market. As we renew our corporate name to ADENTRA, we will continue to interact with our customers in their local communities through each of our flagship brands. We are excited to share more details on our new branding and corporate identity once the change in name has been approved by shareholders.
With that, I want to thank you for your time this morning. I would ask our operator, Justin, to join us again and provide us structures for the Q&A period. Justin?
Question-and-Answer Session
Operator
Thank you. [Operator Instructions] Our first question comes from Yuri Lynk with Canaccord Genuity.
Yuri Lynk
Maybe one for Faiz. Your selling, distribution and admin expenses have remained around 11% of sales during this period of high growth the last 18 to 24 months or so. Is that the case on the way down? Like, if we see things contract here, is that how we should model it as well, you kind of keep that 11% of sales — and I’m excluding D&A from that number. But it seems like a lot of variable costs in there. So if you could just comment on the variable fixed so we can kind of make assumptions for next year.
Faiz Karmally
Yes, hey Yuri, no problem. So, that selling and distribution number, some of that’s going to be variable. I mean there are things like emissions for our salespeople as an example. I mean that’s going to adjust as sales potentially do. But you’ve also got some salary folks in there, which is going to be a little more sticky. You’ve got premise costs in there for much of our operations. And again, those will be a little stickier as well. So there’s going to be a little bit of adjustment there. And naturally, its sales come off a little bit, but I wouldn’t expect it to vary one-for-one with sales dollars just given some of the more — as we described in semi-fixed elements, the things I’m describing — premise is an example. Over time, you can do things with premise. We’ve done that previously when we needed to, whether it’s get out of space or sublet space, but those are changes that you’d make certainly in the short term, certainly over a quarter or two. So, I think that’s the way you could think about it. There is a little bit of stickiness in that line as well.
Yuri Lynk
Of course. Okay, that helps. I’ll stay with you Faiz for my second question. We finally saw, it looks like your — the implied interest rate paid on your debt picked up in the third quarter. Just remind us, I think it’s all floating debt and what we should expect. Is this a good run rate? Or is it not reflecting all the interest rate hikes that have been announced to date?
Faiz Karmally
Well, yes, it’s probably not reflecting the most recent one a couple of days ago. But our effective rate right now is sort of in the mid-4s, call it, 4.5%. It is slowing. We look at from time to time whether it makes sense to fix some of that. We’ll continue to do that. But I would say, 4.5% to 5%, if you’re thinking of interest rate run rate going forward, at least until the next potential hike, I think, is how you can think about our interest expense there.
Yuri Lynk
Because you’re paying a 200 basis point spread, is that right?
Faiz Karmally
No, it’s a little less — there’s actually tiers to it, Yuri. It just depends on where our leverage ratio is. Today, it’s more like 175 basis points because the leverage ratio has been coming down. So there’s a base rate, which is SOFR and then you’re adding 175 basis points to that just to start.
Yuri Lynk
Okay, helpful. I’ll jump back in the queue, thanks.
Operator
Our next question will come from Jeff Fenwick with Cormark Securities.
Jeff Fenwick
Good morning everybody. I wanted to follow up on the conversation about the working capital levels, and you’re able to harvest some cash from that this quarter. When I look at the inventory level, in particular, it looks like you’re still running a bit higher above where you typically would have in the past. What’s the expectation of working that lower? I know there’s been some consideration just given to supply chain constraints and keeping a bit of a buffer there. But how should we think about the incremental potential for some cash to be released from inventory as things decelerate a little bit through the end of the year?
Robert Brown
Hey Jeff, nice to hear from you. This is Rob. We’ll continue to work inventory down through the fourth quarter. You did see us tip over on the inventory and release some in Q3. I expect a more fulsome release in Q4 and frankly, in some of our businesses into Q1. So I think the positive side of this is there’s generally been high inventory levels across the industry. We are not the only ones that are — destocking seems to be the popular term these days, but it seems to be getting done in a relatively orderly fashion. So we’ve actually been pretty pleased on the pricing and the margin profiles that we’ve seen in the market so far. But yes, you can count on additional dollars coming out as we get to 12/31.
Jeff Fenwick
Okay. That’s helpful. And you did mention pricing. I mean your commentary was that it seems to be holding in reasonably well. And more the variance now is on the volume side of things? And how much — I know you’ve diversified the product set quite a bit here, so there’s less direct linkage into sort of the base commodities like hardwood pricing, and that is an area where we’ve seen pricing coming down. I mean what’s the expectation? Do you think it is more gradual changes from here? Or how much are we really tracking with some of these other commodity input prices?
Robert Brown
Yes, I mean it has held in quite well. Unfortunately, the only product set that we participate in, that seems to have more of a transparent price out there in terms of index is hardwood lumber, as you referenced, that’s a 10% product category for us. And — it’s also a category that’s heavily influenced by export markets. So it’s really not indicative of the overall architectural building products offering. I would say pricing, a component of pricing is always freight, and we’ve seen freight rates easing. So that will ease prices. But other things in terms of some of the raw material inputs that go into products, including labor, but resins and glues and other overheads in an inflationary environment, they’re actually still quite high. So that’s providing some floor stability, I think, to pricing– and I do think it continues to ease. But thus far, it’s appeared to be not dramatic changes, but more of a glide path than anything.
Jeff Fenwick
Okay, and then maybe one last one from me here. Just on the gross margin front, that seems to be normalizing as well. And again, with the M&A you’ve done, the profile is a bit different. But do you think the quarter that we saw here at gross margin around 21%, is that roughly speaking, where you think it settled out a bit higher from history where I think you were more of a how do we think about that?
Robert Brown
Yes. So — and you’re quite right, historical and now we are getting or quite historical because with the $1 billion in sales we’ve added in acquisitions. It has made a step change to the profile. But back in the day, we were an 18% to 19% gross profit business. Now we would be pretty dissatisfied to not have that number be in the 20s. It doesn’t settle out exactly where we saw Q3. I think we certainly would be, as I say, disappointed if it wasn’t in the 20s. It’s probably a little bit of movement yet to come depending on if the market continues to destock in an orderly fashion, if it does not, then maybe there will be some short-term variation to that. But in the longer term, yes, this is not going to head back to where it was in the past. We feel quite good about that.
Jeff Fenwick
Okay, thank you, that’s helpful. That’s all I had.
Operator
Our next question comes from Hamir Patel with CIBC Capital Markets.
Hamir Patel
Hi, good morning. Rob, can you give us an update on the trade case exposure that hardwood has had and if there’s been any developments there?
Robert Brown
Yes. So on the trade case, you’ll recall from Q2 — this popped up in July, we did note it in our Q2 release that frankly didn’t have a great deal of information about it at that time. We did work on that through the third quarter, and we’ve provided some updated disclosure as you saw in our release. We continue to view this, frankly, as an error. We’ve been caught in an act that we shouldn’t be in. Perhaps others should be. But the products that we’re importing from Vietnam from our perspective are absolutely not in the scope of this trade case. We have lots of documentary evidence and detailed [indiscernible] trails to demonstrate that. We’ve — unfortunately, we have not been given the opportunity to demonstrate that yet to the Department of Commerce. We’d like to do that with them. And ideally, we’d like to do that before their final determination in the case. So right now, we had a preliminary determination. The final determination at least for now, is scheduled for the end of January 2023. So hopefully, we’ll be able to get our position more fully on the record by then. But if not, we’ll do this in court. There are core processes that take a much more extended period of time, but they’re available and we would participate in them, particularly given how strongly we feel about being unfairly caught in this process. We have quantified the potential retroactive duties that could arise, and we disclosed that in the quarter as a contingency, $25 million to $30 million, to which a 206% duty rate would apply. But just to reiterate, it’s clearly incorrect from the company’s perspective, but we may have to fight it out over a longer term to prove that.
So, I mean maybe just mentioning one more thing on that front, which is — there was a recent related challenge, very close to this case on product scope that went all the way through the core process and ultimately, the Department of Commerce’s position was reversed by court. So we’ve seen it happen. That’s not our preferred path, but if that’s the path we have to follow, that’s what we intend to do.
Hamir Patel
Fair enough. And Rob, just the last question I had was on — in terms of potential M&A. I know it seems like the company is focused on internal initiatives, but what are you seeing in terms of the pipeline? And you seen any moderation in vendor expectations around pricing just given the deterioration in the housing market?
Robert Brown
Yes, potential sellers, I think, are acclimating to the change there. I think what was probably encouraging from our perspective was we just attended 2 recent trade shows, both on the home center pro side of the business and then separately on the industrial side. And absolutely, there’s still folks that are enthusiastic to sell their businesses and we want other things. So, the pipeline and discussions are still active. I think there’s some adjustment in terms of expectation that’s now underway. When we look at our forward plan and on free cash flow and deleveraging the balance sheet, we’re going to be responsible here. It will be a balanced approach. I would expect home runs, but we would like to continue to be participating with an ongoing flow of acquisitions even if they’re tuck-ins, and we’ll have the balance sheet to do that as part of an overall capital allocation strategy.
Hamir Patel
Great, thanks for [indiscernible]. I’ll turn it over.
Operator
And our next question will come from Zachary Evershed with National Bank Financial.
Zachary Evershed
Good morning, thanks for taking my question. Just a follow-up on the M&A angle. Do you view the NCIB as potentially more accretive than M&A transactions given your current share price levels?
Faiz Karmally
Hey Zach, it’s Faiz here. I can take that. Our thinking on the NCIB, and I’m going to take the dividend as well, and with the M&A path that Rob described is– we can do all those things, like we’re not really into making choices around let’s do one over the other. We’ve demonstrated that not only in our history, but this quarter, where we not only paid a dividend, we increased it. We bought back a meaningful amount of shares for HDI. I mean we’re creeping up here on 4% of the outstanding float. About 40% of what we issued in December that the equity raise has been repurchased. And I would describe that as modest dollars, and we’ve taken leverage down at the same time. So I understand your question from a valuation metrics perspective [indiscernible] and that’s why we’re doing it. But we’re not into making choices around those things. We can continue to reduce debt, pay what I think is an attractive dividend in this environment. We’re going to continue to do tuck-in M&A and M&A deals. As Rob mentioned, when we look at our free cash flow planning, those are things that we feel confident we can continue to allocate capital towards, and we’re going to do that. So that’s our point going forward.
Zachary Evershed
Makes sense, thanks. And then what are you expecting in terms of costs associated with the rebrand?
Robert Brown
Very modest. And that’s a funny question because we’ve all read or heard anecdotes of companies that kind of explode themselves on expenditures of that nature and they get a little low. We’ve not done that. I would say, yes, we engaged outside help because you want to do it right. But we’re true to our core principles around frugality and value for service. So we’re talking tens of thousands of dollars at most here, and we’re really happy with the outcome. The other comment I would make is we can get there because this is really a forward-facing public company rebrand. We’re not pushing this down into the — all of the operating businesses to have exceptional brand equity already with their local flagship brands. This is to change the narrative a little bit at the public company level. And then we will also use it with our large vendor suppliers that cross brands for us, and we like to deal with them with one voice, and that voice will be ADENTRA.
Zachary Evershed
Thank you very much, I’ll turn it over.
Operator
And our next question will come from Ian Gillies.
Ian Gillies
Good morning everyone. You noted in the prepared remarks that there seems to be an orderly destocking by your competitors and yourselves to date. Are you seeing any distress yet on the private side of those you’re competing against that create any pause for concern as we head into 2023?
Robert Brown
No, I don’t think so. We have not picked up anything that I would describe as competitors in distress. They are maybe a little bit extended with more inventory than is typically pace, but they’re generally reasonably well capitalized.
Ian Gillies
Okay. That’s helpful. There’s been some conversation around interest rates, et cetera, through the call. I was just curious, given the sharp change in rates, should we be thinking about any change in your debt targets of where you might be willing to take them in the event you do identify bolt-on transactions or anything of that nature?
Robert Brown
No. We’ve said that in the normal course, we are comfortable running up to kind of 3x leverage. In a market that we’ve got elevated uncertainty, you’re going to probably work rather lower end of that range for obvious reasons. That’s how we think about that. And I think I said in my earlier comment, we’re going to be active in the acquisitions, but probably not home runs, I think that tails with that thinking. And as mentioned, we’ve got enough free cash flow on the horizon that we expect based on our internal work to be able to have multiple paths to put it to work. We’ve got to do it and it’s decent in this environment. It’s a nice participating feature for some investors. We’re going to continue to be active on the NCIB, and we can also find our way into tuck-in M&A without stressing the balance sheet or getting too concerned about higher leverage.
Ian Gillies
Yes, that’s very helpful. And then Faiz, one last clean-up question for me related to the trade case in the United States. At what point do you have to accrue a liability for something of this nature? Do you not expect you’ll have to for some time? I’m not quite sure how that works.
Faiz Karmally
Yes, it was tough to assess that situation. It’s not a– there’s no clear trigger yet, [indiscernible] facts and circumstances in what you know against the relevant guidance. So we’ll just continue to do that. But I can’t give you, like, here’s the trigger, because the accounting guidance doesn’t quite work that way. And there’s just a lot of uncertainty as Rob described. So we’ll continue to assess that, and we’ll report out when that makes sense.
Ian Gillies
Okay. No, that makes sense. Thanks very much, I’ll turn the call back over.
Operator
Thank you. And as a reminder, if you would like to signal with questions, [Operator Instructions]. We’ll pause for a moment. At this time, there are no further questions. I’ll hand it back over to you.
Robert Brown
Yes, thanks, Justin, and nice job today. Thanks to everyone for joining us on the line. We appreciate your interest in HDI and just do reach out to Faiz or I you’ve got follow-up questions, and I hope everybody has a great rest of the day.
Operator
Thank you. That does conclude today’s conference. We do thank you for your participation. Have an excellent day.
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