Good afternoon everyone and welcome to Green Brick Partners Earnings Call for the Third Quarter ended September 30, 2020. Following today's remarks, we will hold a question-and-answer session. As a reminder, this call is being recorded and will be available for playback. A slideshow supporting today's presentation is available on Green Brick Partners website at www.greenbrickpartners.com. Go to Investors and Governance, then click on the option that says reporting, and then scroll down the page until you see the Third Quarter Investor Call Presentation. The Company reminds you that during this conference call, it will make various forward-looking statements within the meaning of the Safe Harbor provisions of the United States Private Securities Litigation Reform Act of 1995, including its financial and operational expectations for 2020 and the future. Investors are cautioned that such forward-looking statements, with respect to revenues, earnings, performance, strategies, including but not limited to, comments related to the anticipated impact of COVID-19 on our future operations, prospects and other aspects of the business of Green Brick Partners, are based on current expectations and are subject to risks and uncertainties. Those factors could cause actual results or outcomes to differ materially from those expected, are set forth in our press release, which was released on Thursday, October 29th, 2020 and the risk factors described in the Company's most recent annual and quarterly filings with the Securities and Exchange Commission. Green Brick Partners' undertakes no duty to update any forward-looking statements that are made during the call. In addition, our comments will include non-GAAP financial metrics, the reconciliation of these metrics and the other information required by Regulation G regarding these metrics can be found in the earnings release that Green Brick issued yesterday and the presentation available on the Company's website. I would now like to turn the conference over to Green Bricks' CEO, Jim Brickman. Please go ahead sir.

Thank you, operator. Hi everybody. I hope this call finds you well. With me is Rick Costello, our CFO; and Jed Dolson, our COO. Thanks for joining the call. As the operator mentioned, the presentation that accompanies this earnings call can be found on our webpage at greenbrickpartners.com. At the top of the web page, click on Investors and Governance then click on the option that says Reporting, and then scroll down the page until you see the second quarter investor call presentation. I'll give everybody a second to do this. The inflection that started more than a year ago accelerated this quarter. We are seeing unprecedented demand for our homes, as many people adapt to a post-COVID lifestyle. People want to own their own spaces, have a home office and grill for their family and friends in their own backyard. Our neighborhoods offer these homes at reasonable price points in some of the best and most diversified growth markets in the country. We are benefiting from rapid growth and successful expansion of our Trophy Signature Homes brand in the DFW market. Our net new home orders this quarter were up 89% year-over-year, and 41% sequentially from Q2 2020. This was driven by order growth at every price point from entry level to second-time move-up home buyers. With demand for new quality homes at the highest levels in more than a decade, Green Brick has successfully continued to expand its community count, growing 18% from the prior year. At the same time, Green Brick has grown profitability managing pace and price, as we increased our Q3 2020 sales absorption by 58% and gross margins by 370 basis points year-over-year to 24.8%. We have leveraged our much higher volumes with only moderate growth in operating expenses to drive earnings per share…

Thanks Jim. Take a look at Slide 8 titled growth drivers, which demonstrate that Green Brick still has a long pathway towards future growth. On a last 12-month basis, total revenues from Q3 of 2018 to Q3 of 2020 have grown 65% over that two-year period. Additionally, our backlog grew 79% to $553 million as of September 30, 2020. These improvements indicate that Green Brick is positioned to capitalize on the booming demand of new homes and is already capturing waves of the new buyers. During these last 24 months, we also increased our lots owned and controlled by 49% and grew the average number of selling communities by 51%. In fact, in the last quarter alone, Green Brick added 3,600 lots to our inventory of lots owned and controlled while Trophy Signature Homes opened 12 new selling communities. With our dramatic growth in lots owned and controlled and record starts of over 700 units this quarter, we are confident that we have the necessary levels of sold and spec inventory to hit significant growth in 2021 and beyond. On Slide 9, we established the relationship between total lots owned and controlled and our total topline revenues. As you can see from the chart on this slide, each investment we made in land has been highly correlated to a future growth and revenue. For the last 12 months ending September 30, 2020, our revenues have already grown 27% over the 12 months ending September 30, 2019. With our massive investment in land and lots this quarter, we believe we can continue to maintain significant growth well into 2022. Slide 10 further details our Q3 2020 land investment, which resulted in at 31.5% sequential growth and total lots for the company. As the slide details, roughly two-thirds of this land growth…

Thanks Jed, and thank you, everybody for joining us today to review our 2020 Q3 financial results. Flip to Slide 13, please, which compares our year-to-date Q3 2020 gross margins with available pure data. Our gross margin reported for the nine months ended September 30, 2020, was 23.8% as shown here. This was up 250 basis points over the year-to-date results for Q3 2019, but for quarter-to-quarter alone for 2020 gross margins in Q3 were up 370 basis points over our margins reported in Q3 of 2019. This chart clearly demonstrates that our performance is among the very best in the industry. We believe our superior margin experience is evidence that our conservative land underwriting and prudent planning that Jed mentioned earlier are winning strategy that has left the company well-prepared to manage pace and price during the remainder of 2020 and beyond. Slide 14 visually demonstrates that we've grown our revenues and provided stable earnings by not concentrating on any one homebuyer segment. At this point two years ago, in 2018 two segments accounted for about three quarters of our revenues. Fast-forward two years and we now address six distinct and individually significant customer segments, which all experienced strong revenue growth in sales volume through September 30, 2020. And this revenue growth is in line with our 53% year-over-year growth and year-to-date net new orders and demonstrates the health of our markets. Our net new order growth breaks down as follows; net new orders of entry-level single family homes and townhomes were up 258% in Q3 2020 versus Q3 2019. Thanks to the terrific profitable expansion, highly profitable expansion in our Trophy Signature brand and growth in entry-level townhome sales and our CB JENI brand. Likewise, our net orders of first time move up and second time move up…

Okay. Thanks, Rick. When I co-founded this company more than 10 years ago, we had no revenue, but I was confident that a conservative land-focused and local strategy would be a winning course to build Green Brick Partners into a successful public home building company. Looking at our success this year, I'm elated with the accomplishments we have achieved to date, and I believe we can continue to improve upon Green Brick’s superior risk adjusted return for years to come. Our continued growth relies heavily on our capacity to acquire and entitled great land positions. With a 31.5% sequential growth in lots owned and controlled in one quarter, I believe we have clearly proven that we can meet this challenge going forward. In fact, as many of our peers sit on large cash balances at the end of the quarter, I am encouraged by the fact that Green Brick has been able to quickly pivot and redeploy capital to invest in our future growth, despite historic levels of competition for the best land and lots. With our deep roots in our core markets and strong local operators that are well connected to the land sellers and municipalities, where we operate, I believe Green Brick can continue to lay the groundwork for significant future growth and profitability. Our success this quarter would not have been possible without the hard work of our employees and team builders across the United States. I would like to thank each of you for your effort, and I am confident our dedicated team will continue to achieve great results for our investors going forward. Indeed, October has already started out very strong. I'll now turn the call back to the operator for questions. Thank you.

Thank you. The floor is now open for questions. [Operator Instructions] Our first question comes from the line of Michael Rehaut of JPMorgan.

Hi. This is Maggie on for Mike. Congrats on the quarter.

Thanks Maggie.

My first question is on that last comment about strengths continuing into October. I was wondering if you could give us an idea of how orders have trended so far in October, maybe versus the exit rate coming out of September. Have you seen any seasonality start to kick in there?

This is Jim. The type of growth that we saw in the third quarter, which was really huge over same prior periods, we've seen continue right into October. So we have not seen any deceleration in demand.

Yes. Maggie, the data point, we haven't quite finished the month yet, but we're at 269 net sales for the month. We expect to be higher than that by the end of the month, so on a year-over-year basis, we're up. It's going to be an 80 something percent handled. So it's obviously very strong.

Great. Thank you. And second, I was wondering if you could talk about the pricing backdrop that you're seeing right now. Obviously, we've been hearing about price increases across the industry. So could you talk about if you raised prices across your communities during the quarter? And if so, maybe give us an idea of the magnitude and timing of those increases? And finally, how are you thinking of those increases in terms of offsetting or more than offsetting increased input costs such as lumber recently?

Jed, why don't you talk about lumber because we're seeing that finally starting to decelerate and talk about pricing strategy?

Yes. Maggie, so we've been raising prices very steadily since August. We're seeing the price increases for October be smaller than they were in September. But we're also seeing the price increases for our input materials go down as Jim mentioned. So we're finally seeing lumber go the other direction, which is helpful from a gross margin standpoint.

Maggie, our goal is to try to price and continue to maintain the pace versus price strategy. That's really been effective for us, where we can maintain 24%, 25% margins. And we're still pretty confident that that's looking good. As we add option communities, the margins are little bit lower than they are on where we own the land, but we're seeing – we're not seeing market margin that declines.

Got it. Thanks guys.

Thanks Maggie.

Our next question comes from the line of Ryan Gilbert of BTIG.

Hey, thanks. Good morning, guys. First question for me on Trophy Signature, really nice ramp going from 20 communities – going into 20 communities from seven a year ago. I guess looking out to 2021 based on your lockdown that seems like we should expect continued community count growth. And I'm just wondering what the – how that mix of Trophy Signature should look in 2021 versus where it's at now at around 20%.

Jed, can handle that. Trophy is continuing to really grow at a very fast pace. I think the only negative thing I can tell you about Trophy is that it not takes me two full days just to drive their sites and see everything that we have going on and plan for the future. But those are an exciting two days because really we're driving the communities that are just opening right now and they're pre-selling homes without even having a model. I visited four on Tuesday. So Jed, why don't you talk a little bit more about kind of where Trophy fits in to our…

Yes. Sure. As Jim mentioned, we have delivered a lot of new communities. I think we reported 20 for Trophy open stores. Really good news that we're very excited about is a lot of these communities have very long runways of lots. In many cases, the phases we've just put on the ground exceed 200 lots. So we don't – for the first time in a while, we think we're going to be able to sell 10 or more out of these communities per month without having to ration our sales or cap our sales as we've previously been doing. So we expect further community count increases with Trophy over next year. Like I said, these will be very big communities where we should see absorption more than double.

This is Jim. I don't want to get hyper-technical on this call about internal rates return and that type of analysis. But I think it's important for the analyst to know that when we have these gross margins, we're looking at right now, we're not putting big lot inflators or other thing in your assumptions when they're buying some of these properties. So if we keep getting the tailwinds that we're having, those lots should be very attractive going forward in terms of price.

Got it. And can you share the absorption differential between Trophy Signature and your more traditional brands move up product?

It really varies by what price point because Trophy can sell up to $650,000 house, but at the lower price points, we're seeing that 2x multiple compared to our other brands.

And really because sales accelerated so quickly in what two or three neighborhoods for Trophy, we had to cut off sales, we could have actually had more sales, but the next phase of lots or the next development that was in the same municipality wouldn't be ready, so that we didn't do that. We were managing pace over price and actually slowed down sales in a few neighborhoods.

Okay. Got it. And then as you go out and buy land for Trophy, are you noticing any competition for other builders or how is the availability of land for entry level communities?

Yes. Green Brick has a proven track record of performing in our core markets. And so we're seeing increased competition, but sellers are looking at our track record of closing and oftentimes selecting us.

Well, let me give you a case study event that we're working on right now. And I can't tell you this is going to close and I wouldn't tell you where it is because we're still working on it. But we had a land seller that came to us very concerned that if he doesn't sell and closed his property this year, and it's a fairly large transaction that he's going to pay a lot more in capital gains. So he came to us and said, can you guys close this rather large property before December? He knows us, he's dealt with this for a long time. And we're very optimistic that we can get that closed. And that's not something that a typically public builder could react to and get done in that kind of timetable.

Okay. Got it. That makes sense. Last question for me is just on production capacity we're seeing kind of throughout the industry, cycle times are extending fourth quarter backlog version for a lot of builders has been – they're guiding to pretty substantial decline, which I suppose is to be expected just given how strong the demand has been. So just thinking about Green Brick’s fourth quarter, you started 710 homes in the third quarter, do you think you can get all of those delivered in the fourth quarter? Or should we, just for modeling purposes, are you thinking about maybe – the cycle times extending into 1Q 2021 or 2Q 2021?

Let me answer that question at a higher level to start with because our business started where we were really and still are. I think our strategic advantage is the land entitlement, land development side of our business. And frankly, we've learned from the giants that are really great in the manufacturing and process side of their business, the Lennar’s, the Pulte’s, and we continue to improve our operations learning from these guys. And so our cycle times are improving, but they started at a higher point. And so I think Jed, we're pretty much – our cycle times really aren't extending overall, are they?

We're seeing anything that comes from a factory is a little bit of a game of Whac-A-Mole. We can't get windows one week. We can't get – trust is the next, but we're working through these issues. The biggest thing is as we've gone to all of our suppliers and vendors at our biggest brands like Trophy and work at an even flow schedule, so they can predict exactly how much material we're going to be needing on a weekly basis. So we feel good about starting even more homes than 700 in Q4.

Okay. Got it.

Well I can tell you something, it's going to be – unless the cities for some reason just shutdown where you can't get building permits, we’re going to significantly exceed third quarter starts.

Okay. Great. Thank you.

Our next question comes from the line of Aaron Hecht of JMP Securities.

Hey guys. Great quarter. I'm wondering on the subcontractor side, are you seeing any constraints there that may limit your ability to push the order growth? Or is that just not an issue?

This is Jed. It’s an issue. We are the fifth – Green Brick is the fifth biggest builder in DFW. So in DFW where we're getting a lot of our units and our revenue, we have the ability. We're important – we're very important to our vendors. And so we're getting top priority compared to some smaller builders. That being said, like I mentioned earlier, it's Whac-A-Mole. I can't tell you what next week's production problem is going to be, but there will be one. The good news is we haven't found a production problem that we haven't been able to relatively quickly solve.

The other thing that's helping us is apartment starts are really decelerating. And that was a big component of starts in the DFW market, more than 30,000. And is that decelerate that labor pool is shifting to a single-family.

Hey, Aaron. This is Rick. Thanks for joining the call and your questions. Also, if you look at our Florida builder GHO Homes, they have a top market share there which is consistently been 20% to 25% market share. So they got a lot of focus and attention there. And also Brian Bahr in Colorado Springs with Challenger Homes is always amongst the top three in terms of sales closings and starts, so we get a lot of attention there as well from the subcontractor community.

Yes. Two or three public builders, for example, told dip their toe bought a very small building in Colorado Springs, seems every eight or 10 years the guys from Denver who want to dip their toe in that market. But the labor and subcontractor markets are really very closely held among three builders in Colorado Springs.

Got it. And then it sounded like you started managing your pace a little bit based on your community openings or the lot availability. And it sounded like – I think you said that you're going to expect any kind of growth next year, which is great. And you highlighted all the lots being brought on, but wondering if you're going to continue to manage that pace to have less volatility in the community count, so we see kind of consistent growth or if there could be some volatility there.

Well, this is Jed. We can't, not every community we take on can be 1,000 lots unfortunately with a long runway. So it really is a balance. A lot of our communities are 100 lots or less. So we do need to ration starts in those communities, where I do it based on what our internal capabilities, as well as our external vendor capabilities are. But the good news is we have several big flagship communities where we're going to be able to start 10 to 15 homes a month, every month. And we have the long runway lots to do that.

If you look at your lot position today, and obviously you've brought on a lot of lots, but are there any holes that you guys are going to look to backfill? Maybe it's 2022, 2023, is there a specific timeframe based on the pace that you guys are seeing now that you really have to be focused on?

Well, Rick can talk about the cash flow. We're reinvesting our cash flow heavily into land positions. We have a conservative balance sheet. Those investments we are going to be making right now and into early 2021 are really for 2023 and 2024 revenues. And we're just starting to tee that ball up right now.

Right. And last one for me, given the growth that you're seeing, do you have to start thinking about some new markets or do you have enough runway to considerably grow within the markets you're participating in currently?

Well, we're in Dallas, which is the largest only house market, it's North of 40,000 starts. So to give you a benchmark, Horton's building over 7,000 houses here, so there's a lot of runway here. I think when I was saying about 2,200, they're kind of way behind Horton, but still a big, big builder here. The Atlanta market is similar. The neck fight is big. I think Horton's 3,000 starts there. So there's a lot of runway in both of those markets, but at the same time, if we could find a market that we thought made sense, and I think we're going to start looking back in mid-2021.

Got it. Appreciate it. Fantastic results. Thanks guys.

Thanks Aaron.

Our next question comes from the line of Alex Rygiel of B.Riley.

Thank you. Really nice quarter gentlemen.

Hey, Alex. Alex, I just wanted to welcome you to the call and thank you very much for initiating coverage. We appreciate that and for your excellent report in doing so. So welcome.

Thank you, and excited to be a part of the team here. Couple of quick questions. The closings average selling price was about 422 in the quarter. With an increase in contribution from Trophy, directionally, how should we think about modeling average selling price over the next few quarters?

I think what we have in Q3 is pretty representative of where we think we're going to be for the foreseeable future going through 2021, let's say.

Perfect. That is helpful. And also over the last couple of quarters, there's been a little bit of a mix shift of owned versus controlled, can you talk about that sort of longer term as a new strategy, I guess, and also, kind of expand a little bit upon the pressure that it could create on your margin?

It's really not a shift. It's really something that lies within the numbers. We have noted, I think it's in the – where we disclose the lots owned and controlled. We know a couple of other buckets. Within the controlled category, we don't consolidate any of our joint venture assets or any of our joint venture lots in terms of lots owned and controlled. So the lots that we have for East Jones Bridge in Atlanta or Sendera, which is a new joint venture with Taylor Morrison in DFW, are included in lots controlled, but there are lots that we are developing ourselves. So those lots don't represent a change in philosophy. They just show in the controlled bucket because we don't consolidate them, okay. And then there's another bucket of controlled lots that are deals that we are hard on. Our inspection period has ended. We're moving forward with acquisition. We might've actually closed them in October. We count those in control, but those are blanks, those are lots that we are going to develop. And once we close on them, say in October, they move from controlled to owned. So really when you add this back, we're over 70% to 75% as of Q3. So there really isn't a shift. It actually is a great question that allowed us to disclose that we continue to get lots for our own account, not getting option lots.

Let me just add one thing to what Rick was saying. I think by now, I think we've proven that we're very disciplined in our approach to buying land and that land has produced high gross margins. For the analysts on the call, we are going to carry forward that discipline on any obstacle land we buy, you're putting up 10% of the lot price, sometimes more in Earnest money, if you option lots in our markets. And if we're not underwriting those deals to 19% gross margins, which are still greater gross margins than some peers have being semi land heavy, we're not going to option the lots.

Very helpful. And last question, a lot of your public peers have been investing in and talking a lot about virtual sales. Can you touch upon that topic a little bit as to the importance of it as it relates to your company?

Yes, this is Jed. We feel like we have very good websites, very good virtual tours for the buyers. We have sold some houses without the buyers actually setting foot in the neighborhood, but that would still be a relatively low percentage. For most people, the home is their biggest investment. So I think for most people they want to touch the house and walk the neighborhood prior to buying.

Thank you very much.

Thanks Alex.

Our next question comes from the line of Alex Barron of Housing Research.

Good morning. Good afternoon, gentlemen. Thanks for taking my questions. Yes, I wanted to understand a little bit better the mix of the homes. How many or what percentage of the orders would you guys consider? I don't know how you measure either entry level or affordable and how does that compare versus a year ago?

Rick is getting the data. Hold on a second.

Yes. It was part of my script. Net orders of entry-level single-family homes and townhomes were up 258% in Q3 2020 versus Q3 2019. So from a relative basis, it's obviously a much expanding piece of the pie. You could see in our other chart where we reflect the – literally a pie chart that shows our participation of entry-level buyers, which is on Slide 14. And the actual closings at this point are 13% entry-level. So with that kind of dynamic happening with the growth on a year-over-year basis that's points to – next year at this time, it's going to be a bigger piece of the pie. And in fact, a lot of the communities that Trophy opened in Q3, most of them are entry-level.

Got it.

Yes. The other benefit that we're seeing that we really didn't anticipate just because I didn't know better. When we started Trophy three years ago is that the positive impact, the entry-level and the lower price houses have on these conforming mortgages and the ability to create income for our financial services platform. We only own 49% of those platforms. But these mortgages that were originating in these platforms are much more profitable than in our other platforms and the capture rate is higher.

Okay. And how does the margin outlook in the price for power look right now at the entry-level versus your move-up business. I'm just trying to get a sense of where margins to go next quarter or into next year?

I'd say it's very similar.

Okay. And if I could ask one last one. I was trying to do, I guess, a breakdown based on your filings of your geographic regions. And it seems like the revenues in the Southeast are down, whereas Central are up significantly. So what's the rationale for that?

The rationale is capital allocation. We're making higher returns on capital in these market, and we're reallocating capital into DFW and Trophy is much easier to scale. Our builder in Atlanta, the Providence Group is the best infill builder. And if you take a look at what they're doing, they do it great, they do it better than anybody in Atlanta in infill. We're really excited about an 800 home infill deal that we have under development. I'll call it East Jones Bridge, but that platform is more complicated and harder to scale. But this is very nice returns, great business, but that's why Trophy expanded into Dallas because we were here.

Got it. Okay. Well, thank you and great job.

Yes. Thank you for being on the call and asking questions.

Our next question comes from the line of Bill Dezellem of Tieton Capital.

Thank you. A couple of questions. First of all, your average sales price in backlog is up for the first time since I think the second quarter of 2019. To me that was surprising given the growth in Trophy. So would you talk about that just in general? Number one. And then number two, what are the implications of this?

This is Jed. So we're seeing – as we've previously discussed, we're seeing very strong demand across all of our segments. For example, our Southgate luxury line has a average sales price of just under 700,000. We're seeing a lot of people move out of 3,500 square foot homes that are now officing from home that want to be in a 4,200 square foot home with a home office. So that's a little bit of it. The other part is Trophy is also selling several mini homes in the fours, fives and even sixes that are value oriented. So the competition maybe $100,000 higher, but people were perceiving a much higher value with our product that maybe priced at 600 compared to a competitor at 700. And we have several of those communities. So that's also a little bit of it. But we are – as I mentioned, we're seeing strong demand across all market segments. Our luxury line in Dallas has consistently sold 25 houses a month for the past five or six months.

Thank you. And taking that a step further, Q2 of 2019 ended up being a bit of a springboard where things started to really rebound since then. Is there any correlation that we can take from your backlog pricing being up now and what that – and the implications that could have for next year or am I reading too much into that?

You're reading too much into it, Bill. It really is a dynamic of all of our brands selling and putting homes in backlog. And when you think about it, you're not going to have tremendous backlog growth at CB JENI Homes, our townhome builder, for instance, with the low price point. But you are going to see a lot of build jobs at Southgate Homes, where they're building $600,000 to $700,000 homes. So it really is not reflective of a movement in ASP or movement in revenues for any particular time period. It's just great to have the sales in backlog and enter 2021 with – knowing that we have a lot of our closings accounted for.

Great. Thanks. Let me switch to new home orders up 89% in the quarter, starts were up – normally would be a big number, up 32%, but it's still a really big gap between your starts and your orders. You've talked about increasing your starts. I guess still, I'm going to ask, how do you close that gap?

Well we’re starting as many homes as we can right now.

And many of our starts Bill are sold homes and not spec homes. We're also closing the gap. You mentioned 89% growth in orders. If we had really tried, that could have been even higher. But in many cases we limited sales to give ourselves the chance to – we didn't want to sell a house today and started three months from now. So all the homes that we've been selling, we're trying to start within the next 30 to 60 days.

Fantastic, and congratulations on just a build out quarter.

Thank you.

Our next question comes from the line of David Hicks of David Hicks Company.

Good morning, and congratulations for establishing such a tremendous reputation in the North Texas market over the last 10 years. I've been enjoying watching you guys and your success. Understanding the importance of land and lot availability for your future, I'm curious as what you have seen from the municipalities were your team seems to have a really good reputation in the areas you work and the ability to [down zone] land that has previously been commercially selling, but you can turn it into residential land given the times that we're in.

Thanks, David. This is Jed. I think we're on the early cusp of that wave. We haven't really seen the municipalities that we work in both Dallas and Atlanta be too eager to convert commercial zoning to residential. And I think all the municipalities are very busy right now. They're facing challenges working under a COVID environment, and we're seeing things take longer to get done. Most of the infill projects that we're seeing are less than 100 units, oftentimes less than 50 units. Whereas, if we go out to the more perimeter areas of our municipality or our markets, we're seeing those projects 300 to 400 lots so – and it's a little bit easier to work in the perimeter.

Number two. Are you seeing lot positions becoming available from less well-capitalized builders or lot developers that have perhaps gotten over their skis and just can't handle things, so you're able to go in and perhaps buy some lots at a discount?

No. For example, Dallas is it running – in Dallas, 24-month lot supply is considered equilibrium. We're at 17 months right now. So it's more of a bidding war than a discount.

And that's on trailing demand.

Yes. As Jim mentioned, that's on trailing demand.

Very good. Thank you. And again, great quarter guys.

Thank you.

Thank you.

[Operator Instructions] I'm showing that there are no final questions at this time. With that, we will conclude today's conference call. You may now disconnect your lines and have a wonderful day.