A&B (ALEX) Q1 2025 Earnings Call Transcript

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DATE

Thursday, Apr 24, 2025

CALL PARTICIPANTS

Lance Parker: Chief Executive Officer

Clayton Chun: Chief Financial Officer

Kit Millan: Senior Vice President of Asset Management

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Same-store NOI growth: 4.2% for Q1, driven by increased occupancy

Leased occupancy: 95.4%, up 80 basis points sequentially and 40 basis points year-over-year

Economic occupancy: 93.9%, up 100 basis points from Q4 and 160 basis points year-over-year

Leasing spreads: 10.2% on a comparable basis

CRE NOI: $33.2 million, a 4.6% increase (non-GAAP)

FFO per share: $0.36 total, with $0.30 from CRE and corporate FFO

Land operations FFO: $0.06 per share, including $2.2 million from agricultural land sales (non-GAAP)

G&A expenses: $7 million, down 3.4% year-over-year

Net debt to adjusted EBITDA: 3.6x

Dividend: $0.225 per share for Q2 2025

SUMMARY

Alexander & Baldwin reported strong Q1 results, executing a strategic ground lease for self-storage development at Maui Business Park. Management raised total FFO guidance while maintaining CRE and corporate FFO projections due to macroeconomic uncertainties.

Signed 42 leases representing 237,000 square feet and $5.6 million in annualized base rent

Backfilled approximately 75% of previously identified 50,000 square foot industrial vacancy at Kakaako Commerce Center.

Observed 8% increase in steel prices, mitigating impact through pre-purchasing and on-site storage

"We screen real-time tenant health metrics so we can be responsive if necessary." noted CEO Lance Parker

INDUSTRY GLOSSARY

ABR: Annualized Base Rent

GLA: Gross Leasable Area

S and O: Signed but not Occupied, representing future rental income from executed leases

Full Conference Call Transcript

Operator: Good afternoon, ladies and gentlemen, and welcome to the first quarter 2025 Alexander & Baldwin, Inc. earnings conference call. At this time, all lines are in listen-only mode. Following the presentation, we will conduct a question and answer session. If at any time during this call, you require immediate assistance, please press star and the number 0 for the operator. This call is being recorded on Thursday, April 24, 2025. I would now like to turn the conference over to Alohi Beach Shadow. Please go ahead.

Rohit Chateau: Thank you, operator. Aloha, and welcome to Alexander & Baldwin, Inc.'s First Quarter 2025 Earnings Conference Call. My name is Rohit Chateau, and I am a property manager at Alexander & Baldwin, Inc. With me today are A&B's Chief Executive Officer, Lance Parker, and Chief Financial Officer, Clayton Chun. We are also joined by Kit Millan, Senior Vice President of Asset Management, who is available to participate in the Q&A portion of the call. During our call, please refer to our first quarter 2025 financial presentation available on our website at investors.alexanderbaldwin.com/events. Before we commence, please note that statements in this presentation that are not facts are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 and involve a number of risks and uncertainties that could cause actual results to differ materially from those contemplated by the relevant forward-looking statements. These forward-looking statements include, but are not limited to, statements regarding possible or assumed future results of operations, business strategies, growth opportunities, and competitive position. Such forward-looking statements speak only as of the date the statements were made and are not guarantees of future performance. Forward-looking statements are subject to a number of risks, uncertainties, assumptions, and other factors that could cause actual results and the timing of certain events to differ materially from those expressed in or implied by the forward-looking statements. These factors include, but are not limited to, prevailing market conditions and other factors related to the company's REIT status, and the company's business, the evaluation of alternatives related to its non-core assets, and the risk factors discussed in the company's most recent Form 10-K, Form 10-Q, and other filings with the Securities and Exchange Commission. The information in this presentation should be evaluated in light of these important risk factors. We do not undertake any obligation to update the company's forward-looking statements. Management will be referring to non-GAAP financial measures during our call today. Please refer to our statement regarding the use of these non-GAAP measures and reconciliations included in our first quarter 2025 supplemental information and presentation materials. Lance will start today's presentation with an overview, then hand it off to Clayton for a discussion of financial matters. To close, Lance will return for some final remarks, and we will open it up for your questions. With that, let me turn the call over to Lance.

Lance Parker: Thank you, Alohi. Great job. And aloha to everyone joining us today. I am pleased to say that we started the year strong, beating both internal and external expectations, and made tremendous progress against the three priorities for 2025 that I laid out in our last call. They are improving our CRE portfolio performance, internal and external growth, and streamlining our business and cost structure. Thanks to Alohi and our other property managers, our CRE portfolio performed well, with same-store NOI growing by 4.2% for the quarter. Performance benefited from a large lease at Kakaako Commerce Center, bringing the asset's leased occupancy up to 95.6% at quarter-end, compared to 83.2% last quarter. From a growth perspective, we transferred a five-acre lot at Maui Business Park out of our land operations segment into our ground lease portfolio and signed a seventy-five-year lease to a prominent self-storage developer. This ground lease is notable for two reasons. First, it's a good example of strategically moving commercial land inventory into immediately recurring FFO, specifically contributing nearly a penny in 2025. And two, this transaction provides an opportunity for an equity investment in the development and operation of the self-storage facility if we choose. I have often mentioned our commitment to the Hawaii-focused asset class diverse strategy, and while this deal is part of our ground lease portfolio, it represents our first investment into self-storage. Finally, on our third priority, streamlining, we sold 90 acres of primarily agricultural zone land, which contributed to land operations earnings of approximately 6¢ for the quarter. Turning to our first quarter CRE metrics, we executed 42 leases in our improved property portfolio, representing approximately 237,000 square feet of GLA and $5.6 million of ABR. Our blended leasing spreads remained strong at 10.2% on a comparable basis. Our leased occupancy was 95.4%, up 80 basis points sequentially and 40 basis points compared to the first quarter of last year. Economic occupancy at quarter-end was 93.9%, up 100 basis points from last quarter and 160 basis points from the same period last year. The improved occupancy quarter over quarter reflects the backfill of two floors of vacant space at Kakaako Commerce Center. The year-over-year improvement also reflects the backfill of space at Waihi Mall that occurred in the fourth quarter of 2024. S and O at quarter-end was $3.4 million and includes $700,000 for our ground lease at Maui Business Park. I am pleased with our first quarter accomplishments, and based on these results, we are raising our total FFO per share guidance primarily reflecting favorable results in our Land Operations segment. We are maintaining our initial guidance for same-store NOI and CRE and corporate-related FFO. The decision to maintain versus raise our CRE-related guidance reflects the strong performance we achieved in the first quarter and recognition of the macroeconomic uncertainty that exists for the remainder of the year. With that, I'll turn the call over to Clayton to discuss financial results and guidance.

Clayton Chun: Thanks, Lance, and aloha, everyone. We began the year strong with our portfolio continuing to perform at a high level. For the first quarter, the commercial real estate portfolio generated $33.2 million of NOI, representing a 4.6% increase from Q1 of last year that was due primarily to higher portfolio occupancy. We reported 30¢ of CRE and corporate FFO per share for the quarter, which reflects an 11.1% increase when normalized for the $0.02 of swap and financing-related adjustments embedded in our Q1 2024 FFO. Total FFO was $0.36 per share for the first quarter of 2025, consisting of $0.06 of FFO per share from land operations in addition to the $0.30 of FFO from CRE and corporate previously mentioned. Included in land operations FFO was approximately $2.2 million of margin realized from the sale of agricultural zone land during the quarter as well as approximately $3 million of JV income that was due primarily to a favorable resolution of certain contingencies at a legacy joint venture. We continue to carefully manage our operating and overhead costs. For the first quarter of 2025, G&A was approximately $7 million, a decrease of $200,000 or 3.4% as compared to the same period last year, largely reflecting timing differences. For the full year 2025, we continue to expect G&A to range from flat to a penny per share lower as compared to 2024. Turning to our balance sheet and liquidity, we continue to maintain a strong balance sheet that provides us with the liquidity and flexibility needed to operate the business in an agile manner. At quarter-end, we had total liquidity of over $300 million, and our net debt to adjusted EBITDA ratio stood at 3.6 times. Approximately 97% of our debt was at fixed rates with a weighted average interest rate of 4.65%. With respect to our dividend, we paid a first-quarter dividend of $0.225 per share on April 7, and our Board declared a second-quarter 2025 dividend of $0.225 payable on July 9. Turning to our guidance, as previously mentioned, we are raising our total company FFO guidance to a range of $1.17 to $1.23 per share, reflecting the better-than-expected first-quarter land operations results. We are maintaining our guidance for same-store NOI growth of 2.4% to 3.2% as well as for FFO related to CRE and corporate, of $1.11 to $1.16 per share. Despite our strong first-quarter performance, our decision to maintain guidance for these metrics reflects an acknowledgment of the macroeconomic uncertainty affecting the overall market. On our last call, I specifically referenced 50,000 square feet of industrial vacancy in our guidance. During the first quarter, we backfilled approximately 75% of that exposure by signing a lease at Kakaako Commerce Center. It is important to note that the tenant does have a contingency in the lease, but we are confident that we can resolve it later this year. Importantly, the space was economic on day one. Our guidance also assumes a penny of FFO related to internal or external growth. We have effectively achieved that with the execution of our ground lease at Maui Business Park, and we're optimistic that we can complete more growth-related deals in the year. With that, I will turn the call over to Lance for his closing remarks.

Lance Parker: Thanks, Clayton. Together, we achieved what I believe are great first-quarter results. I should, however, acknowledge the current macroeconomic backdrop. In these times of uncertainty, we are focusing on the things that we can control, being expeditious in lease negotiations and pre-purchasing tariff-impacted construction materials for better pricing. We screen real-time tenant health metrics so we can be responsive if necessary. Our needs-based retail portfolio is not resistant to market fluctuations, but it is more resilient. As a 155-year-old company, A&B has navigated challenging times before, and I believe our experienced team has the skill to manage through this exposure and deliver long-term results. Before ending my remarks, I'd like to give a special shout-out to Tom Lewis, the legendary REIT CEO, who just turned off the A&B board. Tom, thank you, or as we say in Hawaii, mahalo breta, for your service to A&B, your guidance, and most importantly, your friendship. With that, I'd like to turn the call over to questions.

Operator: Thank you. Ladies and gentlemen, we will now begin the question and answer session. Should you have a question, please press followed by the number one on your touch-tone phone. You will hear a prompt that your hand has been raised. Should you wish to decline from the polling process, please press the star followed by the number two. If you are using a speakerphone, please flip the handset before pressing any keys. And, one moment. Please, for your first question.

Rob Stevenson: First question is from Rob Stevenson from Alliance Global Partners. Go ahead, sir.

Gaurav Mehta: I wanted to self-storage transaction. I wanted to get some color on the transaction background. And then I think you also mentioned there's an opportunity for equity investment in self-storage. I'd like to learn more about that aspect of the transaction as well.

Lance Parker: Yeah. Hey, Gaurav. It's Lance. Thanks for the question. So I'll start with maybe at a high level. You know, this was a really good deal for us. Importantly, I view this as kind of a strategic transaction where we were able to convert non-income-producing land from Maui Business Park into long-term rental income, unlike what we've done in the past where it's been traditionally property sales. So that said, this was a seventy-five-year ground lease, and we structured it with forty-five years of known rent. That gave enough certainty to the tenant to be able to fill the rest of the capital stack. In terms of the development, their plan is to build approximately 87,000 square feet of net rentable self-storage in that submarket. So and I guess the immediate financial benefit to us is about a penny of FFO for 2025. So you know, great strategy. Check the boxes there. But in terms of financial benefits, you know, being able to turn on the FFO immediately was also hugely accretive for us. And I've spoken in the past about our commitment to the Hawaii-focused geography. But really sort of embracing the asset diverse approach and self-storage is something that I've mentioned as sort of a natural adjacency for us to consider going into in the future. And so this was a nice way to do it. You know, we take a very secure position in a long-term ground lease with the opportunity to invest on the development side in the capital stack. So it's a nominal amount of equities that we're able to put in about 20% of the equity capital stack. But, again, a good opportunity for us in a joint venture type structure to enter into this asset.

Gaurav Mehta: Okay. Second question I have is around your comments around some of the macroeconomic uncertainty. Wanted to learn what have you seen and heard from your tenants so far? Have you seen any concerns or softness from your tenants, and how you're feeling about your 2025 lease expirations?

Lance Parker: So, you know, I would say that while there's definitely some uncertainty around tariffs, you know, I'll answer the question twofold. So first, specific to the question about tenants, we have not seen any sort of real-time concerns for issues related to tenants. So, you know, we continue to screen sort of our real-time metrics which include weekly volume of weekly letter of intent. So registering and measuring tenant interest, we continue to screen on tenant sales. Screening real-time foot traffic to all of our centers. And to date, those all remain positive. I could, you know, cite probably a couple of examples where maybe execution timelines have been extended, but these are really individual data points, nothing to form a trend line. And then the one sort of direct impact that we have started to see on the tariffs side is in construction costs. And so we do have the ability to suit at Maui Business Park. We have been in discussions with others for some potential opportunities as well. So to try to get ahead of that, to the extent that there are opportunities for us to pre-purchase materials specifically on the steel side, get free tariff type pricing, we're taking advantage of that.

Gaurav Mehta: Okay. And then maybe lastly, as a follow-up on the build to suit, I did see that the construction completion moved to Q1 2026 from Q4 2025. Is that related to your comments around tariffs and macroeconomic uncertainty?

Lance Parker: No. That was really, you know, we broke ground late last year. And so once we, you know, started moving dirt on-site, we had a better sense of what that timeline was going to look like. And, realistically, just given the natural course of construction, it'll be completed sometime in Q1 of 2026.

Gaurav Mehta: Okay. Thank you. That's all I had.

Lance Parker: Okay. Thanks for the questions.

Operator: Alright. For your next question, it's coming from Alexander Goldfarb from Piper Sandler. Please go ahead, sir.

Alexander Goldfarb: Okay. Good morning out there. Think it's still good morning. So just a few questions here. First off, just to go back on this tariff discussion, is the what is the leasing discussions or when you talk to the tenants are people is it just sort of, like, cocktail conversation or are tenants legitimately having concerns about either future leasing plans or what may happen to their business. As far as cost of running their operations. I'm just trying to understand if it's just you know, theoretical and it's just banter. Or if people are actually having a practical impact on the way they lease or are thinking about ordering or opening stores?

Lance Parker: It's a great question, Alex, and this is Lance. No. It's we're in, obviously, some very uncertain times. And for us, in real time, you know, we're trying to sort of differentiate between soft data and hard data. So certainly on the soft data side, there's a lot of talk. There's concern. But as I mentioned earlier on the hard data side, not really seeing any real-time impact. Leasing activity still remains robust. Again, I, you know, I can think of a couple of examples where signing of leases took a little longer than we might have expected, but really hard to say whether that was tariff related. Is there exposure? Certainly, going forward, but in terms of what we're seeing in real time, we really haven't seen that flow through yet.

Alexander Goldfarb: Okay. And then as we look to the guidance, I think you raised it sort of 3¢, but you had a 6¢ pain. I can understand you know, some caution, Yeah. Sorry. Everyone's doing the same. But that seems like a lot of caution, doesn't it?

Lance Parker: Well, you know, we've taken some steps to try to differentiate between our overall FFO and our CRE and corporate-related FFO, which really focuses just on the core part of the business. And we did have strong results in Q1. For a variety of reasons, we felt it was appropriate to maintain guidance there. We did have a bigger beat in terms of expectations on the land ops side. And so similarly, we felt it was appropriate to flow that beat through. And that's where the 3¢ is really coming from. You know, we've talked in the past about land ops, and I think our midpoint when we gave initial full-year guidance was at about 3¢ attributed to that side of the business. We obviously came in stronger than that, and it's always a little difficult for us to predict, but it is still a focus of ours. And so I was really pleased to be able to see that performance, and I think we're trying to, you know, sort of flow that through for the rest of the year.

Alexander Goldfarb: Right. But you also added empty from how we on the development. So it just seems like the guidance increase is you know, overly conservative based on what you executed in the first quarter plus the incremental investment, and we're only at the start of the year.

Lance Parker: Yeah. Look. It's a fair observation, Alex. I would say on penny for development, we did and I'm pretty sure I mentioned this in our first-quarter call. That in our full-year guidance, we were carrying $0.1 for growth in the guidance. And so effectively, what we've been able to do with this DXC deal is cover that knot. So feeling pretty good about the fact that we were able to, in the first quarter, sort of cover that penny, and then I would say, you know, just sort of forward look on acquisitions, it's you know, we're still seeing dislocation in the market. But our investment team is very active. We're looking at a lot of other opportunities, and so I am hopeful that we'll be able to place additional capital going forward. We're just not gonna carry it in the guidance.

Clayton Chun: So, Alex, this is Clayton. Just to follow-up on what Lance is saying, the Maui Business Park plot where we had executed that ground lease, we had in connection with this lease, we transferred it from land operations into CRE. And so the penny that's being referenced is resulting from this deal. It's gonna be applicable towards CRE and corporate FFO. Just wanted to make sure that that was understood.

Alexander Goldfarb: Okay. And then just finally, just point of clarification. You mentioned that you signed you addressed 75% of the 50,000 square feet of industrial vacancy outlined in the fourth quarter. But you mentioned something about the tenant having some contingency. Is that contingency on the 75% of space leased? So perhaps it's not signed, sealed, delivered, or what is this contingency referencing?

Kit Millan: Hi, Alex. This is Kit. So we leased two full floors at Kakaako Commerce Center. And that represents over 60,000 square feet of space. And it backfills both the storage facility we referenced previously as well as the office space on the sixth floor that had been vacant for about two years. That we talked about quite a bit earlier. And it's a very important deal for both A&B and the tenant. So we moved really quickly to effectuate that lease. And it went economic immediately. Now there are some landlord and tenant obligations around capital that we need to resolve, but we're pretty confident we can get there. And the tenant is already building out that space, demonstrating their commitment to the deal.

Alexander Goldfarb: Okay. So to put that as a contact, Alex, if that's the backfill does include that deal with the contingencies, and while we do have a high degree of confidence that we'll be able to work through them, if for whatever reason we couldn't, that was sort of I guess, basically reverse out from the occupancy.

Alexander Goldfarb: Okay. Just so I'm clear, did I confuse it? Is it the internal? Vacancy you were talking about, or this is a different this is office?

Kit Millan: So about 30,000 plus square feet of that was in the original guidance that we talked about. And then the additional amount was that office space on the sixth floor. It's still in the industrial portfolio, but it was built out as office originally.

Alexander Goldfarb: Awesome.

Lance Parker: Okay. Listen. Thank you very much. Thanks, Alex.

Operator: Alright. And, for the next question, we have Rob Stevenson from Janney. Go ahead, sir.

Rob Stevenson: Good afternoon. Lance, back to the tariff question. How big of a spike have you seen or expecting to see on building materials? And what is the ability that you and others have to really stockpile, you know, wood, steel, other items? You know, given the, you know, ability there at Maui Business Park and other places to store stuff.

Lance Parker: Yeah. Hey, Rob. You know, it's kinda hard to answer on a forward look. I guess, you know, some real-time examples, steel, for example, we saw about an 8% increase. And we were able to preprice based on that and to lock that in. Obviously, here in Hawaii, we also have the logistical challenge of getting material. And so one of the things we've been able to do is, is to buy, I guess, anyone could, but we've been buying and then just storing on-site. Just to take advantage of that. And it's, you know, again, kind of forward-looking. It's really tough to say what sort of price increases we might expect on what materials, but we're trying to take advantage any way we can. Obviously, sometimes that requires us to make commitments sooner in the development process or the TI build-out process that we might otherwise do. And I think like a lot of people, we're having conversations with both our distributors as well as our tenants. In trying to sort of share in that risk profile. And so I'm thinking of one example where we did have a tenant who was willing to basically make a commitment upfront to try to get that cost down.

Rob Stevenson: And we were able to, you know, sort of share in that risk profile, but, you know, like everyone else, we're just doing what we can to try to mitigate that as much as possible.

Operator: Okay. And then how active given all the turmoil with both rates as well as the stock market, how active is the Hawaii retail industrial transactional market been year to date? In terms of deals either completed or stuff that's out there in the marketplace today?

Lance Parker: Not a lot that I could point to in terms of actually closed transactions. But I had mentioned earlier, our investment team is very active right now. So there are a lot of opportunities that we're circling. And, you know, the reason I said I'm, you know, sort of hopeful, maybe even optimistic that we'll be able to land a couple of deals sometime in the remainder of the year.

Rob Stevenson: Okay. A point of clarification, the storage development is that on the entire five acres there, or is there some piece of that left over for you to do something else with? Is that ground lease to the entire five acres?

Lance Parker: It's for the entire five acres. Yes.

Rob Stevenson: Okay. And then a couple for Clayton. The 30¢ of FFO related to CRE incorporated Q1 2025, any expected drags on that as we move throughout the year? Any notable move-outs where occupancy is gonna fluctuate down temporarily, etcetera? Anything else that sort of hits that number and produces any type of material drag as we think about the remainder of '25? At this point?

Clayton Chun: Hey, Rob. I would say that with respect to what's known, there is no known blips that we're anticipating due to move-outs or the like.

Rob Stevenson: Okay. That's helpful. And then lastly, the $3 million of JV income, is there anything else abnormal that you're expecting in that line over the remainder of '25? Does that line, you know, go back to the $700,000 million a quarter it's typically been over the remainder of the year? Or is there something else coming through there? As we think about the remainder of '25?

Clayton Chun: So as far as that JV income, that was mentioned in the prepared remarks, it was somewhat of a one-time type of event with respect to the resolution of those contingencies. And so we're not anticipating there to be anything else unusual. That's not to say that there wouldn't be variability, but we're not anticipating anything over the balance of the year.

Rob Stevenson: Okay. Thanks, guys. Appreciate the time. Have a good night.

Lance Parker: Thanks, Rob.

Operator: Alright. And we are down for the last question. As a reminder, if you wish to ask a question, please press number star and then the number one. Alright? And for the next one, we have Mitch Germain from Citizens Bank. Go ahead, sir.

Mitch Germain: Thank you. Let me ask Rob's question. First of all, guys, congrats on the quarter. Clayton, let me ask Rob's question differently. Are there any other kind of legacy issues that could be recollected that could be, you know, in the numbers going forward, or was that just a one-off situation?

Lance Parker: Hey, Mitch. It's Lance. I'd say there's always that possibility. You know, we want to sort of leave that door open in that this is an area of the business that we're looking to simplify out. So there are some opportunities there. It's very difficult to predict when or if they may occur. But it's certainly possible. But just to support Clayton's comments in terms of our forward look over the next three quarters, we're not anticipating anything out of the ordinary.

Mitch Germain: Gotcha. When you guys originally put your guidance together, was there any anticipation of external growth that was included in those numbers, or is Maui Business Park the self-storage ground lease, is that just additive? How should we think about that?

Clayton Chun: Yeah. Mitch, hi. This is Clayton. So with respect to the growth in our guidance, we did have a penny of FFO for the 2025 year. And so effectively, what happens as a result of this Maui Business Park deal that we just closed, that covers it. And so we do have, obviously, the balance of the year. Hopefully, we will see other opportunities be realized. And so we'll see how it plays out.

Lance Parker: And I would just add. And then we certainly have aspirations of placing additional capital later this year, but of course, as the months go on, the impact to FFO for the calendar year is gonna diminish. And that's why, you know, we felt like the penny was the right number when we put together our initial guidance.

Mitch Germain: Gotcha. Last one for me. Same store. Obviously, strong Q1, you got the leasing done, you got some leasing done in your industrial portfolio. You know, obviously, your guidance implies a deceleration. So is there anything specific that you want to call out as to what could be driving a reduced pace of growth in the back part of the year?

Lance Parker: So I'll take this from a big picture, and then, you know, I'll ask Clayton and Kit to add any additional color they may want to. We had identified upfront a handful of very important leases and other operations milestones that we needed to hit. That was factored into our full-year guidance. I know that Clayton was purposeful in comments in providing that full-year guidance initially about the fact that the earnings may be episodic throughout the year, but, you know, this is how we looked at the full year. And so really strong results. Some of that, quite frankly, was just kudos to the team for being able to tackle a lot of the things that we identified over the course of the year in Q1. So I would describe it as less of slowing for the remainder of the year as opposed to just sort of pulling forward some of the things that we had identified into Q1.

Clayton Chun: And just to add on to what Lance is saying, what we also explicitly stated in the prepared remarks is the fact that the guidance does acknowledge the fact that we have this uncertainty overhang. And so we did take that into consideration as we settled in on this guidance.

Mitch Germain: Right. Appreciate your time, guys. Thank you so much.

Lance Parker: Okay. Thanks, Mitch.

Operator: Alright. Since there are no further questions at this time, I will now turn the call over to Clayton Chun. Please continue, sir.

Clayton Chun: Thank you, operator, and thank you all for joining us today. If you have any follow-up questions, please feel free to call us at (808) 525-8475 or email us at investorrelations@abhi.com. Aloha, and have a great day.

Operator: Alright. Ladies and gentlemen, this concludes today's conference call. Thank you for your participation. You may now disconnect.

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