Q3 2024 Watsco Inc Earnings Call

Operator

We will now begin the question and answer session. To ask a question, you may press star then one on your telephone keypad. If you’re using a speakerphone, please pickup your handset before pressing the keys. And to withdraw a question, you may press star then two. At this time we will take our first question which will come from David DVD with their . Please go ahead.

Albert H. Nahmad

Morning Dave.

Heyo, Good morning, everyone. First question, I have to ask about the hurricanes, particularly how lean which hit us pretty hard here in Tampa. Could you talk about the negatives and potential of unwinding positive as you might see from of Helene and or Milton.

Albert H. Nahmad

Now let’s see if we can get one of us can tell you plenty of things you want to take that call?

Sure. I can get it started and then somebody else can pick up. But yes, we had our branch, we shut down for a couple of days for Helene. And then we also had them shut down for another couple of days with with Milton. Most everything is back to normal now. And obviously, we’re reversing or an initial rush at least of repair components that are going out the door in October. Nothing came through so quickly. It really didn’t impact us as severely as the other storm. However, when you get up into the North Carolina, Georgia area, a lot more severe damage was done and we’ve got has slowed us down, but it didn’t it didn’t really impact our sales that dramatically, no more or less.

Albert H. Nahmad

Just to add to that, I said for many years and growing up in Florida and being in Ronnskar for 32 years, that hurricane typically disrupt local markets, it may not have an impact on a whole market. And the reverse is true if there’s business opportunity and it’s good for those markets and not necessarily material for the national scale. I think the most obvious question and thought is that, you know, when they talk about $10 billion, $20billion, $30 billion of insurance investment, that these things, a portion of that always is our industry equipment or non-equipment, but it’s material materiality of that needs to play out sometime this year and next year, obviously, but done. And that’s how I’d characterize it, at least over over time. Okay. So even though of Florida is clearly your biggest market and how lean in particular ripped up the whole coast, you’re saying it’s fairly immaterial and we shouldn’t view the mid single digit grow about the growth in October as just a temporary snapback from storm activity. And what you’re saying? Absolutely not no, nothing is that that’s a material relative to housing and either disruption in the last week of the quarter or two, a benefit for the first part of October. As Barry indicated, when the insurance kick, the churn is going to kick in within the next, let’s say, 30 to 90 days. So we really don’t see equipment. So what we see is motors, so compressors, that type of thing to start with. Got it. Okay. Not amendments to Watsco. Great. Yes. Thanks for that. And then on the gross margin came in a little bit lighter than they had a reason for that here that you discussed with your one of your major OEMs. But just medium term, we still feel good about 27%. So again, does AJ, our agenda and the answer is yes, and the short term and the addition of. But higher than that, I think we’ve talked about publicly one day, we’d like to achieve 30%. So our engines are ramped up and we very much a focus on gross margin and we’re investing there and have high expectations. I think in your analysis analysis, Dave, in others, there’s obviously the magic magic words, our price and mix and price overall was pretty consistent this quarter. So that’s not really a discussion item mixes where variations are so far this year. And then for this quarter and the word mixes a broad term, very there’s customer mix or geographic mix, product mix as end market mix, there’s brand mix. So a little bit of wait and those factors. If I spend 20 minutes explaining to you what I just said, a little bit of weight on margin this quarter, but with other short term conversations. And I think if you if you consider the Altran position in front of us, if I look forward, it’s really an opportunity to basically reprice and go to market with will essentially be 60% new products over the next 12 months. So our OEMs who listen to this call, along with all of you, this is a very critical stage to where we’re making tremendous investments. Inventory is not a completely cycle of the year for in over the next 12 months. And pricing marketing features and benefits mix overall mix, you know, is going to be critical over the next 12 months to drive margin. I think one of the messages we tried to convey in the press release and are conveying now layers and somebody will ask this question is where are we on in terms of unit volumes and stability and things like that. And year to date, unit volumes are positive in the quarter. There. They are overall positive for our selling season overall positive and positive to the extent that it’s kind of conventional growth rates in units, but look at in our longer-term average. So if I tried to consider stability as well as the opportunity in front of us, you know, that’s where we have some optimism and what we’re doing. Great. Thanks very appreciated off. Thank you. And our next question will come from Tommy Moll with Stephens. Please go ahead. Good morning. Yes, sir, and thank you for taking my questions. I wanted to start on some of the co-investment you grow. You described in the press release this morning. Alongside one of your OEM partners, and it’s a two-part question here. First part is some where you did call it out this morning with substantial detail. Did something change since last quarter that prompted the enhanced discussion on this item and then issue we look forward, is there anything you can do to calibrate our expectations about how this sort of progress and ultimately fade? Thank you. Terrific question Who wants to answer. Paul Barry? A.j. Perfect. Rick immediately yesterday? Yes, I think amount under first, and I’ll just add to it because it’s a it’s an important point. And in our collaborative spirit, you’ll get insight into how we look at the discussions internally. I wouldn’t say anything critical. It greatly changed in the third quarter as an isolated event on. We felt it needed to kind of reconcile where we are year to date. A year ago, we talked about disruptions and whenever the range of revenue was 152 hundred million dollars closures, but a year later on the idea of recovering that business growing volume, growing market share, we are establishing market share or these are markets like Florida, Texas, California that are huge markets, Carolina as well. And from there, there is a collaboration. There is a co-investment we use that term intentionally in the press release where we work with our OEM partner and trying to figure this out. And this is the scorecard year to date business and unit growth has outpaced overall growth rates for sure that that particular product group better, um, and it when we’ve talked about pricing, if there’s more to it than just the price on the product carriers, again, the mix of those products, I’m not going to get too much competitive detail in this discussion in answering to. And the other is incentives that are that we chose to put on the street to not just get somebody back buying more from us, but given the new customers at the same time, in other words, play play offense with this opportunity. And that is a shared costs and a shared experience with our OEM. But we thought it was important to go ahead and kind of reconcile that scorecard year to date. And that’s what we’ve done now. As far as extent as far as lingering impact, some which is the second part of your question, there’s some lingering impact, needless to say, in the fourth quarter and that dissipates, I would believe more so next year. Well, again, all the news, all the new retail products will come in. And and we are kind of truly working on today from a complete set of economics for those new products with all of our OEMOEM.s and on a chance to kind of recalibrate those economics looking forward. Yes. I’ll just stress that our OEM partner here is truly a partner there. Long time, long-time relationship. I think it’s a successful partnership now has then it will be absolutely a collaboration with them. And it’s nice to have such a wonderful partner. Anyone else before we move on here, right. I also wanted to ask about inventory and any pre-buy dynamics we may be seeing how you you talked about hoping to improve inventory turns. And I did note the inventory dollars for versus the second quarter, which is a typical, but at some of that, just the 14 a pre-buy that we’re seeing and what’s the view there at this point? Yes. Go ahead. Yes, it is that the inventory pre-buy on the 14th, each one of the OEM.s has come up with a with a program to at least fill in for the forecast that they have to be able to manufacture and be completed by the end of the year. And so some of them have assets that could move the inventory quickly into our inventory so that we can be ready for at least the first quarter. Now selling the four 10A that should taper down at the same time, that’s tapering down. We’re going to be bringing in the two well inventory. So I don’t see much of a fluctuation in the next quarter with our inventory. Yes, Tommy, I would just add to that that when we see most OEMs have had their last call and those products are starting to get received. And so I think as you look forward to Paul’s point about the next quarter or two, the seasonality around inventory probably looks different over the next quarter or two as we go through this transition. And then it probably takes up its normal seasonal cadence sometime middle of next year. one is for Tenet diminishes as a percentage of shipments and sell through really and a two well becomes just a greater proportion of sales and our balance sheet as well. Makes sense. And I appreciate the insight. Thanks. And our next question will come from Ryan Merkel with William Blair. Please go ahead. Good morning, everyone. Good morning. Just wanted to ask on October to start, you said meaningful unit growth improvement and then mid single digit growth. Can you just clarify what pricing is? Because my assumption was pricing is still kind of running up maybe three four. So how do we bridge the mid single digested volumes? There are popping back positive. I’ll cover that. And so let’s be careful and let’s be careful. I give a shoe and snus Britain’s right away because this is like critical data. I’m not going to comment as much on specifics for the for October, other than to say what we’ve said, which is it’s in a meaningful unit growth, Electrolux, the fee analytical about it, and we can talk to business side of it. So for the quarter, overall units were up 4%, and that includes both ducted products, which actually declined 1% and ductless products which were up double digits. So it’s a year to date trend. It’s a probably out of an 18 month trend where our investments and Douglas, our is paying off very well. Mitsubishi angry and carriers, brands and and other brands that resell and Douglas, they’ve been doing very well, both domestic and international. So there’s a bit of a story inside of that number. That’s that’s our investments. Our business units doing well with data products. But if I stick to what is more mark, curious maybe for the for the group is ducted product and we’re interested in all of it. But redacted product volumes were down 1% and price was down 1% inducted products. And again, that has nothing to do with deflation or average selling prices in terms of, you know, price risk, that is mix. That’s what I’m alluding to it earlier in the call where if I look at brand mix, customer mix and market mix, there’s a little bit of a wait and price this quarter for the year for year to date, units are up a 5% and the unitary pricing is up 1%. That document pricing is up 1%. And um, and that’s kind of like makes sense to me because items launched pricing earlier in the year. I think they’ve all kind of said about the same thing about it. And this is a year where price has not contributed really anything to the equation. And honestly, I’m quite cloud gross margins kind of look the way they look in the absence of any of any price. And we know that China change, we know that’s kind of anybody else has color. Okay. Well, yet at that telephone access points event. And then just back to gross margins, can we bridge three Q back to 27%? It sounds like, you know, parts and supplies were down. So there’s a mix element that’s occurring. And you also can you quantify for the quarter, but this co-investment, so just can we get back to 27% of what are the pieces? Go ahead, Rick, can you have Brian? I don’t I and I think you heard Jay say the answer is yes, and I think there’s an upward bias to that over time and deliberate. Let me trying and then start with. I think the most important layer of margin, which we haven’t talked about and has been consistent is our transactional margin, our invoice margin, which is the most basic form of margin that any distributor can house before you get to mix. And to Barry’s point earlier from that transactional market is constant versus last year in a year where there’s been relatively no contribution to price at all in our gross margin. That is that as a testament to some of the pricing technology that’s been deployed, and it’s a testament to the work that our field leaders are doing on this subject. So then what so what do we bridge if transactional margin is constant and consistent with last year, and it’s those four basic elements of mix that we’ve talked about. It’s firstly, a difference in growth rates between equipment and on equipment that will always weigh on on your overall margin to some extent. Secondly, within equipment, it is a difference in growth rates between residential and commercial. Residential has been in that, you know, low single digits, mid single digit type environment and commercial has been higher. We like that because we have no profit dollars to account for that higher growth rate, but it does weigh and influence your overall mix. I’m certainly in particularly in the third quarter in a seasonal period, you tend to have a little bit more residential new construction than you have add-on replacement, Brian, it’s a time where we’re at the builder channel gets a lot of things done, and that tends to weigh a little bit. And it has been true that for the last year or two, the residential new construction end March that has been outpacing add-on replacement. You can look at the housing completion data to tell you that. And then lastly, is this element of customer mix, which is the hardest one to untangle in some ways. But if you just simply segment your customer base, you do see differences in growth rates and hand, what we see in our data is that that larger, more progressive, more tech-enabled customer is growing faster than than than his or her counterpart that is smaller and less sophisticated. So not to write the whole paragraph about it, but those are the three or four elements of mix that explain and help us contextualize a year to date margin profile that looks different. I go back to where I started, which is the key point at all in all of this is that that transactional margin, same customer same product is very consistent with last year. At the right answer to that, I’ll pass it on. And our next question will come from Jeff Hammond with KeyBanc Capital Markets. Please go ahead, Steve, and good morning, everyone. Good morning. I’m just trying to a two hour new product introductions. Just what kind of pricing are you seeing relative to kind of this 10% to 15%? And as you talk with your major OEM partners just address kind of their readiness, you know, so there’s no kind of hiccups as you transition your question. Yes. I can cover part of that. And that is that among all of the OEM.s that we talked to, everybody is ready as a matter of fact, one OEM, as I started their launch in in the fourth quarter, and we’ve actually taken equipment in sort of China to well when it comes to the pricing, the pricing has been consistently in the double digit, low double digit range. It’s been around 8% to 10%, some pricing a little bit higher, but we’re going to have to wait until probably the second quarter for that to be adjusted to find out exactly where that price spread between unusual situation for each of the OEMs because it’s a total new product line that’s going to be offered. That’s an unusual situation also that the case consumer is going to have to buy a system now as opposed to in the past when we’ve sold the for 10 product that could just install the outdoor unit. And now you’re not going to be able to do that technically disposed to replace the indoor and outdoor unit both. So it’s not just the raising of the price. It’s also the idea that we’re going to be selling more systems and less single unit replacements once the A. to become so firmly Lodge. And that’s going to be spread out over, you know, all 120 million units that are installed out there right now, but at some point have to be replaced all at various times times. But it seems to us that it’s a wonderful opportunity, not not only for the price increase, but also for the system sale. Okay. And then just a quick follow-on on that. Can you just remind us the multiplier effect you do the matched versus the standard? And then just maybe just touch on M&A environment. Seems like the PE. has gotten more crowded in this space and just what you’re seeing in general. I can tackle the the M&A piece here. I mean, it’s look, Jeff, there’s always more M&A to do on. There’s no way to predicted or to think about the cadence of it. And I would say that private equity was a lot more prevalent in the space on the last two years. I that has subdued a little bit of late and done. This is still bigger picture and longer term, a very fragmented industry. And, you know, I think there’s the what a lot of you all from the outside don’t see as it relates to M&A is two things. one is that we’re very focused on partnering with the right entrepreneurs, and that’s different from consolidating industry. And we that cultural element of M&A is very, very important. We want the right entrepreneurs who will embrace our technology, embrace our growth spirit and our equity culture to help transform their business on. So it’s very much a cultural discussion, oftentimes more so than a financial discussion. And then the second thing that I would point to that, I hope leads to incremental opportunity going forward is today our technology platform and our M&A discussions are essentially when the same we’ve always had access to capital. We’ve always had scale. We’ve always had great vendor relationships. We’ve always had an equity culture. Those things that’s been constant for 35 footprint today. And what has been different over the last five years is we’ve invested in this technology platform that I think now is well better understood if not, well understood out in the market, and it’s leading to more and more discussions with long-term prospects. So I know my job is to help lead some of that. And so I can speak to it with some pride and we want more of it. Absolutely. But I will also point out that as a $7.5 billion company now we have a whole lot of internal levers at our disposal to to grow and we’re not dependent on M&A to grow profitably in the future. Respective age. I think what you said about these days culture of this discussion is one of the financial discussions of future, and it runs both plays where it really has to be a good fit for the family. These are multi-year, often multifamily mortgage on-site, multigenerational family businesses that were saying on the part of our multigenerational family business. And you do you guys with your leadership team in your branding and your customers and her team do it on our umbrella and use all of our resources. And those resources are capital equity to recruit and retain great people. And these technologies, which are all about helping you grow and helping our customers grow because that’s what we’re all about a long-term sustainable growth for the business and those families and the leaders of those families that have joined our business over the last five, 10 years are really going back wherever they’re thriving. And that in that environment, they’re happy days are still running that business and they’re motivated and they’re growing and many cases faster than our legacy businesses, if you will. So it has to be a fit. And when it is a hit to the home loans, which is what we’re going for me well said, Mr. President. Okay. Thanks again, if you have a question, you may press star then one to join the queue. Our next question will come from Patrick Baumann with JPMorgan. Please go ahead. Could you Patrick pointed out, how are you? That’s hot movements? You had said it’s actually warmer appear than it is usually a time of year. I’m just wondering maybe quite quickly go back to something very set on units. I think you said year to date up 5%. Was that was that a total unit comment? Or is that patient ducted is not up that much. Right. Just maybe clarify that if you can. Yes, yes, sure. I should clarify that. So ducted is flat and units year to date and overall is up 5%, which would suggest Atlas’s digits. That’s helpful. And then John and good. And just to be like, you know, even more refined. We mentioned this in the press release if I look at our selling season, so I’m really looking at joint performance of our seasonal business and our bus joined together second, third quarter or so. There’s no no push and pull, you know, aspect to the analysis. So for the season, second, third quarter combined ducted units were up 3% and overall up 5%. So when we talked about stability, that’s that’s the frame of mind. Okay, helpful. And then are you on have you guys been I think you talked about inventory earlier. You expect it to be stable through the end of the year on year? Is your view there is the channel restocking currently, Tom, in terms of inventory from? Yes, the channel right now is picking up for any equipment in place with they’ll pick up in November, December and January. And so yes, that is not restocking at that kind of a pull forward. The, if you will, into its first quarter sales, fourth quarter shipments will turn into first quarter second quarters and I say fixed-price, right? Yes, I think the industry and us included our spring and into our bonds for large our brands of ours. But we’ll sell parts and products are sold through the first quarter and as that are being sold through can replenish them on the Fortinet yet. So we’ll replenish some of the eight to oh, yeah. Helpful home. And then and then one for you on margin and then the gross margin side on normally, there’s like a lift, I think, from seasonality in the fourth quarter because the mix, which I guess hurt you in the third quarter typically improve somewhat. Is that reasonable to assume this year? Or are there factors like that OEM investment collaboration that hold that back in the year end? I think we should see some lift with the mix. As we get into the colder season. We start seeing more furnaces, more heat pumps, which have obviously higher margins and higher volumes. So with without knowing what the weather’s going to be in the fourth quarter, I would say, yes. Okay. That makes sense . Thanks a lot. Appreciate that. And our next question will come from Nigel Coe with Wolfe Research. Please go ahead. Morning, guys. Good morning, guys. Thanks for the time. I think this is meant to be a cold winter cold and to fund the dominant experts, et cetera. That’s true. Then issue should should be a little bit of help you guys agree. I know you’ve got a lot of ground. I had a headwind to the retread sort of grown we’ve already taken just on the gross margin. Seems like there was a bit of a lapping of price from any of this year and it will not make sense and some OEM support you see. Is that more discounting going on, especially at the higher tier levels? Is that a factor tool and some of the gross margin pension? I think if you listen to Rick’s comments as a composite, we look at the most important metric, which is the transactional margin. Have any material change to your point? The answer was no. So I don’t think I must say neutral is exactly what we want, but it means there’s not been a risk factor relative to deflation, let’s say, really any level of product group. So I think it’s more subtle and the mix of it. And I think again, Paul, Paul, you have a good insight into this, but the higher tier system, the 1618, 20 plus years systems really only came into existence in our inventory sometime late last year. And is not really been a factor, if you will, and the sales process this year. I think it on the movement of of energy efficiency mandates that happened in last year convinced No the base layer into a much more broad part of our business now. And Paul maybe have some perspective. Yes, that happens every time we’ve gone through a change in standards for the federal government, and that is there a compression were a greater percentage of the industry moves towards standard efficiency. And with this last to energy efficiency change, they basically increase the efficiency to roughly 15 SEER from folded them. We definitely saw a compression where the high-efficiency equipment to shrunk as far as a meaningful size in the marketplace. Okay, that’s helpful. Thanks, guys. And then just a couple of quick ones here. And just on the eight to 12 transition. Obviously you’ve been through many of these transitions before when you compare this to be 10 SEER 13 fee of 20 to 14 a 1514. Do you think the the contract is the end customers are ready for this transition? And obviously, you’re very close to those guys. You Primo transport, cetera. Are they are they ready for this? I think the consumer is probably not ready for this. They don’t really understand what’s going to be coming at them. You indicated earlier, it’s going to be a system change out, not just an outdoor that Asia and that’s going to be a bit of a sticker shock. I think for some of the consumers once the once they see what the pricing is going to look like. So it’s more than just the 10% price increase. It’s also the entire system, the contractors themselves. I think they’re they’re going to pretty easily go through the transition. No real change in the units is going to be on the inside. You’re going to have a detector that’s going to detect any sort of leak in the refrigerant into the home. And then at 50 text that there is at a a leak, it’s going to turn that the blower motor off. So it’s not going to contaminate all the indoor air, the biggest change outside of that, the plan itself is going to have a different component in it. The old refrigerant did, but it’s still the base component in both refrigerants, the 40 54 as well as the 32 a is still 32 a so it’s going to be the same same refrigerant that we’ve had with the 14 a basically. But that’s okay. But it sounds like it’s automatic. Yes, I’ll just add that it’s our job to help them get ready from a technology perspective, PICA tech perspective from a business, insight and perspective to support them with helping us figure out what product they need and getting technical support, et cetera, et cetera. And we do that at scale and other technology backbone that I think is unparalleled space. And so far, I think everybody at a big reason why customers are contractors to do business with a lot of the Company. Okay. And then just a quick one, if I may. I’m a bit obviously great news about October, up mid singles. And I know you said no more details on that, but I guess I’m a little bit surprised with the with the hurricane impact in Florida and and the south southeast. I know you’ve got some mics day selling in October. So is there some benefit from selling days in October offsetting some of the house and impacts on my way of baseband? Yes. Again, Nigel, it’s something we track down to dollars and cents in terms of hurricane impact. And we have like the last two or three days of the quarter, and we had three or four days for Milton this quarter. So I think if we have any pickup, if it’s been offset by disruption with Milton Lamb and again, in relative terms, not that material of an event, I think with the destruction that is obvious in these markets as a business opportunity that will flow once term funding flows, nothing is immediate. And but the word destruction using purposely because that’s what has gone in those markets, there will be about opportunity once less dollars flow right asset. I was wondering about why, frankly, it’s just important client. We have a lot of employees that are where the path of these bonds and very happy to say that everybody is safe and accounted for and those who have discretion construction in their homes or problems that we could help with the are helping to bolster our ability. We care very much Matt and team members, and we’re very thankful. Everybody came out. I stayed relatively speaking, Tom and agri last well said. Thanks. And our next question will come from Steve Tusa with JPMorgan. Please go ahead. Senior Ceusa power you. Hey, good morning. Sorry, just to follow up to to perhaps a question on got a little bit late on the call here. How do you have complete visibility into, you know, all the OEMs pricing for a two-well product at this stage? Is there anybody that’s been out on playing a little more closer to vest in others? It not just your suppliers but kind of across the industry? Yes, we have visibility into every every every manufactures a pricing. I was only one or two that right now have not really fully released their price. I think that it’s not that they’re trying to be coy or HorseFly about to either release applies kinds of things that they’re timings, probably just a little bit off, but for the most part, we’ve got most of the pricing in. And Bill, why don’t I believe is yes, pricing is going to hold, you know, throughout this entire transition. That’s that’s the question we ask. And our end-user customers are kind of looking at it. As you know, a bit of like similar to like the less put the list price increase where I mean, I think most of the OEMs are pitching, it is as cost push, which is inevitable versus like, hey, here’s the new price and then let the negotiations began or how are they might how are our most of them looking at it. I think most of them are very serious about this price you announced for because they are adding costs were added and adding two new components to the system itself. So due to that, I think that the yes, the I think the pricing will probably be closer to the of the 8% to 10% range in the 15, but I think it’s going to hold around 10% had relatively. Yes, 8 to 10 is kind of a bit of a discount to what they had previously said, I think a little bit, but not not that much and we’ll have to wait and see and find out. Yes, I think that it’s not anything right now. You know, right. Yes. Theoretically, though, I want to remind you, I mean maybe that’s maybe what you’re asking that question from an OEM perspective. But from our perspective, if we buy, let’s say, $25 million or one skew from an OEM, the prices, you know, could two of us were reselling that once that $25 million at May be a 1,000 different prices depending on the customer, the market, the end market, you know, those variations, obviously on our selling price and more, ironically, there’s variations on our by price, depending on timing intended and here again, customer end market. So this is a are far and more so than district analysis. And when we allude to technology, that’s helping us to do that and raising margin over the last four or five years. So that’s where technology has played its role in that Snowflake management, if you will, have a much more capability than we had three or four years ago. And in this transition has another chance to to accomplish the same thing. And if we need to react to a market condition, we and we have our early and react to our costs. So that’s that fluidity is why this is hard to predict, but I can tell you why it’s benefited us in the last three or four years now make no 10% or whatever. And like stick it into a model on a spreadsheet like it’s a lot more complicated than that blood from a lot more complicated than that. And there’s very little inflated the heart of the variable part of variable Friday. So I wish it was as simple as that, we probably, but it’s not as simple as that because you have to do our market segments. We’ve got an analogy to the pricing. Got at one one last one for you. Just on the light commercial side, everybody had a pretty good 3Q. I wanted to one of your peers said it’s a little bit slower in the fourth quarter on any any signs of weakening there on the back of fundamentals in the next year for light commercial? I think as the availability of the commercial product improved, I think we saw some some some reduction in some of the pricing. But as far as the demand, the demand has remained fairly strong. Okay. We’re still up double digits. Yes, great. All right. Thanks, guys. As usual extra details guys. And this concludes our question and answer session. I’d like to turn the conference back over to Albert Nahmad for any closing remarks. Once again, it’s always good to communicate to all of you, and we hope you’ll leave here for the next quarter’s numbers and performance. So thank you for your interest in our company. And as we said earlier, it’s Jerry. Why don’t you come down in Miami and tedious process? Bye-bye. The conference has now concluded. Thank you for attending today’s presentation. You may now disconnect your lines.