Q4 2021 Chatham Lodging Trust Earnings Call
Yeah.
Greetings and welcome to the Chatham Lodging Trust fourth quarter 2021 financial results Conference call. At this time all participants are in a listen only mode. A question and answer session will follow the formal presentation. If anyone should require operator assistance. During the conference. Please press star zero on your telephone keypad as a reminder, this call.
Is being recorded.
I'd now like to turn the call over to Chris Daly President of Daly Gray public relations. Thank you you may begin.
Thank you Darryl.
Everyone welcome to chatting Chatham lodging Trust fourth quarter 2021 results conference call. Please note that many of our comments today are considered forward looking statements as defined by federal Securities laws. These statements are subject to risks and uncertainties, both known and unknown as described in our most recent Form 10-K and other SEC filings all informed.
And this call is as of February 24th 2022, unless otherwise noted and the company seeks to on the.
The company undertakes no obligation to update any forward looking statements to conform the statement to actual results or changes in the companys expectations.
You can find copies of our SEC filings and earnings release, which contain reconciliations to non-GAAP financial measures referenced on this call on our website at childhood Chatham lodging Trust's Dot com.
Now to provide you with some insight in the channel was 2021 fourth quarter results allow me to introduce Jeff Fisher, Chairman, President and Chief Executive Officer, Dennis Craven Executive Vice President and Chief operating Officer, and Jeremy Wegner, Senior Vice President and Chief Financial Officer, Let me turn the session over to Jeff Fisher Jeff.
Thanks, Chris I appreciate that and I appreciate everyone who's joining us this morning for our call.
It certainly was an interesting end of the year and January as we all know the fourth quarter started off strong with October producing the second best month since the startup pandemic as the quarter progressed, we were hit with the onset of the omicron variant exacerbating the impact on December January .
In early February already seasonally slower months now as we sit here today, we've seen a dramatic rebound in travel we've seen business travel picked up since earlier this month and this past weekend produced our best results of 2022 through February 21st.
Revpar has jumped significantly from January revpar of $67 up $20 to $87, a whopping, 30% gain gains have been sequential each week with revpar of $75 for the week ended February $789 for the week ended February .
<unk> and $96 for the week ended February 21st Revpar was over $120. This past weekend and occupancy hit 77% with 20 of our hotels achieving occupancy of over 90% on Saturday night during the holiday weekend.
[noise] weekday travel also continues to rise this month and year to date signifying the return of the non leisure traveler, we've been seeing improving occupancy during the week with weekday occupancy is bottoming out at 46%.
During the week ending January eight and we've seen growing midweek occupancy is each week of February currently at 60% midweek.
For this past week.
We've been encouraged by the return of some tech related group business in Silicon Valley in Bellevue, Washington, as well as smaller convention related business in San Diego and downtown Dallas like.
Like we saw with the explosion of leisure travel in 2020 . One we believe that business travel is going to come strongly back. This year a clear signal has developed in Silicon Valley in Bellevue, Washington as Tech companies have announced the return finally [laughter] of workers to there.
Offices, which will bring along with that incremental business travel to the area training and product launches check companies had been a bellwether for the timing of a return to office for many other companies across the country as we know so this should kick start business travel. Additionally.
And meaningfully we believe that tech companies are going to be hosting in person internships. This summer, which accounted for over $7 million in revenue in the summer of 'twenty 19 for us and should be a major boost to our five hotels in these two market.
As a reminder, our 2019 hotel EBITDA at these five hotels was approximately $35 million and those same hotels produced a mere five and a half million dollars of hotel EBITDA in 'twenty, 'twenty and only $7 million of her.
Tally, but in 2021 so it's those hotels that have really kept our.
Our numbers down as the recovery has progressed, but we are seeing a definite different different result for 2022, we believe Chatham is emerging from the pandemic with an even stronger balance sheet more buying capacity and an even higher quality portfolio we minimize.
This cash burn throughout the pandemic by generating impressive operating results and we were the second fastest hotel REIT to become corporate cash flow positive.
In 2021, and we generated positive cash flow before capex of $12 million and excluding principal amortization cash flow was $20 million. Now. This is something that I'm extremely proud that since April 2020, essentially the start of the pandemic for our port.
Palio cumulative cash flow burn before it cap expenditures and before principal amortization was zero since the start of the pandemic. We have not used any equity dollars to fund our corporate operations I think a pretty remarkable achievement.
As we look forward here again beyond the projected revpar results in business that we see coming back for this year, we're being pretty active on on the asset and capital recycling front we.
We have and are working on a variety of things, including a sale of three or four of our hotels. We don't have anything specific to announce as of this minute, but I do think that we're far enough along to generally talk about those as well as our.
<unk> pipeline.
Which I had said before we thought this year would be more active it's turning out I think to be more active we've got you know one or two particular hotels that were kind of.
Winding down in terms of I think the ability.
To put them under contract and I look forward to doing that again I think similar to the acquisitions. We made in the domain at Austin last year in terms of opening our Warner Center Hotel really exciting new earning.
<unk> to be generated this year and again, increasing the quality of our assets our revpar on an absolute basis, and I think a little more diversity as well in terms of location and market. So I'm really looking forward to this year.
That perspective also.
Oh, let me talk a little bit more about Warner Center. The home two suites is opened I spent about four or five days out there during the opening week. It has really opened to great reviews are both from me talking to customers walking in the door as well as some of the corporate accounts that are.
We're already tried us out there.
The rooms are really far and away the best in the market. The amenities at the hotel are incredible a huge fitness room, great indoor pool area, and a very large indoor outdoor bar, which for the L. A weather should really and is already.
Moving to be quite an attraction for the local folks and the many many new apartment buildings that are being built all around our hotel within one block.
So hotel occupancy there has.
As already been over 50% on a few nights and we basically haven't even been open a month there a D. R. Last week was at $186, a very strong result, and $10 above the comp set and that's in a opening a stage.
Of the hotel.
Shifting back to the fourth quarter, let me highlight a few things before Dennis gets into all the details compared to 2019, our monthly revpar improved each month of the fourth quarter down 26, 24, and 16% respectively before slipping back to down 36%.
And you worry obviously the result of Omicron through February 21st Revpar of $87 is down 27% compared to the first three weeks of 2019, our margins remained strong and particularly impressive compared to 2019 levels. When you consider.
Our absolute revpar levels.
Our fourth quarter gross operating profit margins were a strong 41% on revpar of $92 only down 100 basis points to 2019, when Revpar was $26 higher at $118 December was particularly impressive with margins 330 basis.
It's higher.
Then 2019, even though revpar was $17 lower it's too early to tell what the margin growth will be at this point, but no REIT is better than us at regularly delivering these kind of results and we fully expect that same store margins will be higher post pandemic.
Nick.
Now not operations related but equally important in early 2021, we launched our corporate responsibility section of our website I encourage you to take a look at that which included our inaugural corporate responsibility report and formalized our efforts relating to ESG.
Just last month, we published a supplement to our report that included more disclosures and compliance with Tcf D. S. A S b and G. R. I. It's also included our first disclosure of waste data and disclose my commitment to the pledge for the CEO action for diversity and inclusion.
Chatham is fully committed to sustainability, social matters and proper corporate governance. We have recently formed an ESG committee comprised of members of management and our board of trustees, and we fully intend to participate in grasp and its real estate assessment in <unk>.
'twenty two.
Let me just mention dividends for a second here because recently hosted an Apple have announced a dividend that is something other than a nominal dividend we've minimized.
<unk> equity.
Dilution as I said more than most of our peers over the past two years, and we're confident and the ultimate recovery and the trajectory of that recovery in our portfolio before reinstating a dividend, though I think I'd like to see continued improvement specifics.
<unk> in our business travel in Silicon Valley, and Bellevue, because as you know that is a very significant piece of our overall EBITDA and we will look forward to that recovery as the year progresses, we've historically targeted paying out of her.
Hundred percent of taxable income so when we look at any potential dividend will carefully analyze our taxable income for the upcoming years. While also of course, considering use of tax deductible deductible net operating loss carry forwards.
As a result of the pandemic and we'll look and review at our dividends on a quarterly basis with our board.
Let me close by saying and reminding everyone that our relative strong performance to date and expected performance moving forward is going to be significantly enhanced in 2022 and 2023 by three key factors first tremendous upside as I mentioned in our tech.
Driven market second meaningful incremental new cash flow from our Austin acquisitions, and the opening of our new home two suites at woodland Hills, together thirdly with recycling recycling capital from the sales of lower tier hotels into higher <unk>.
Returning acquisitions, so with that I'd like to turn it over to Dennis.
Thanks, Jeff with the onset of the Omicron variant and normal seasonality all of our key markets, except Dallas saw Revpar decline from sequentially from the third to the fourth quarter not surprising as Theres generally a 30% to 40% drop off in Revpar between October and December anyways, Dallas benefited from the rich.
Fair enough some smaller convention and conference related events Silicon Valley, our largest market, which comprised almost 25% of our EBITDA in 2019 remains the laggard with revpar of $74 in the quarter occupancy was 61%, which is up 40% over 2020.
And ADR was $121 up 15%.
Indicative of market with limited demand growth as Jeff spoke things are starting to look up this month and those four hotels are going to provide substantial growth for us in 2022.
As a reminder, it was about 25% of our hotel EBITDA in 2019 and 2021, those four hotels comprised only 9% of our hotel EBITDA this past year.
Our coastal northeastern hotels in our suburban New York hotels continued to produce solid results in spite of obviously seasonality in November and December with cooler weather.
Our five highest hotels with absolute revpar in the quarter, where our residence Inn Fort Lauderdale on the intercoastal waterway with Revpar over $200 on occupancy of 84%.
Followed by our residence Inns in White Plains, New Rochelle, New York again, the suburban New York Hotels, and then our resident in Anaheim and the Hilton Garden Inn Marina del Rey.
With southern California, showing some pretty strong performance as Jeff talked about even at our newly opened woodland Hills home to it's showing good quick ramp up results.
Our top six absolute occupancy hotels in the corridor of residence Inn in New Rochelle, New York, Our residence Inn Lauderdale residence in White Plains, followed by our Homewood suites in Maitland and the reason why I added our six hotel as we actually had two of our hotels in Silicon Valley at our San Mateo and Mountain view hotels actually coming in our <unk>.
Top six hotels in terms of total occupancy so again, an encouraging sign of some business travel or non leisure travel in those silicon Valley markets.
Our portfolio did significantly better than the industry with fourth quarter occupancy of 65% compared to industry wide occupancy of 58% and our weekend occupancy was 71% during the quarter.
As Jeff mentioned the business travelers are training before the omicron variant hit the U S and yet again in February we are now seeing the business travelers start to return weekday occupancy, which more correlates to the to the business traveler reached 69% in October higher than our overall third quarter weekday occupancy of <unk>.
68% are showing some growth and then before easing the 63% in November 57% in December and further to 49% in January incur.
Encouragingly as we've seen weekday occupancy increase.
Which is now stands at 56% in February , including just a bit over 60% this past week.
Although our length of stay is click down a little bit in the quarter. We continued to see an average length of stay much longer than our historical levels at our residence Inn hotels, our average length of stay was three nights.
Still well above the 2.4 nights pre pandemic and then for our Homewood suites hotels. Our average length of stay was 3.3 nights again, a pretty meaningfully above our pre pandemic average of $2 seven nights for.
For the quarter total revenue of 57 million was almost double last years revenue of $29 million, we were able to generate incremental G. O P of $16 3 million for flow through of almost 60% on that incremental revenue a great result, given the ramp up and operations to October as it was our second best month of the pandemic.
Quickly pivoting to a lower operating model caused by the onset of OMA crime.
We generated positive G O P in hotel EBITDA each month during 2021.
At the corporate level, we generated adjusted EBITDA of $15 2 million versus essentially nothing last year, and we generated <unk> per share of <unk> 12 cents, which is up 30 over the same quarter last year. When we had an <unk> loss per share of <unk> 18.
During the fourth quarter 41 hotels generated positive hotel EBITDA not G. O P again positive hotel EBITDA or top five producers of G. O P. In the fourth quarter, where our residence Inn, San Diego Gaslamp residence Inn, Anaheim, which is the first time since the first quarter of 2021 for it to be in our top five.
Our Hyatt place Pittsburgh, which is the first time, it's made the list, which was sparked by really strong weekends around steeler games.
Followed by the steady Eddie residence Inn in New Rochelle, and White Plains, New York.
As a point of reference our newly acquired rather than 10, Austin would've placed 10th on the lift and the recently acquired town place suites in Austin would have been in our top 20 producers on a per occupied room basis at our 40 comparable hotels payroll and benefit costs were approximately $32, which is down from $33.
And the 2024th quarter, and 14% below fourth quarter 2019 per occupied room cost of 37.
In the second quarter of this past year, we rented reinstituted complimentary breakfast and most of our hotels, where it's offered to guess calm breakfast costs were zero point $9 million in the quarter, which is up about a half million dollars over the same quarter last year, but down approximately $400000 compared to the 2019 fourth quarter.
As we've talked about before the brand's proposed new standards that reduce some of the offerings and should lead the same store savings and so far that seems to be the case on a per occupied room basis breakfast breakfast costs were $2.47 in the 2021 and fourth quarter, which compares to $2 99 and the 20th.
19 fourth quarter, a significant decrease of approximately 17%.
On the Capex front, we finished 2021 with Capex spending.
Slightly over our budget of six and a half million and as we look ahead to 2022, our Capex budget is 23, and a half million, which includes a $17 $5 million of renovation costs at five hotels and then we also have our remaining $6 million budgeted, which includes almost $1 million related to associate.
Alert devices, and another $1 million related to brand initiatives for signing and signage embedding.
With the hopeful and of the pandemic. We are looking forward to seeing most of you in person this year, whether that be at a conference or in connection with direct investor meetings Jeremy.
Good morning, everyone. Chatham Q4, 2021, Revpar of $92 represented 93% increase versus our Q4 2020 revpar of $48 into.
And the 22, 7% decline versus our Q4 2019 revpar of $119.
The Q4 decline of 22, 7% versus 2019 showed continued sequential improvement relative to Q2, 2021, which was down 39% from 2019, and Q3, which was down 26% from 2019, while the positive trends reversed a little in January with Revpar of $67.
<unk> was down 36% to 2019 in early February due to the Omicron variant, we expect performance to continue recovering with decreasing revpar declines relative to 2019 throughout the remainder of 2022.
Through our significant efforts to contain costs, we were able to generate a Q4 GOP margin of 41, 1%.
The 41, 1% margin achieved in Q4 at a revpar of $92 was only 100 basis points lower than our Q4 2019 GOP margin of 42, 1%, which was achieved at a revpar of $119. Our Q4 2021 Hotel EBITDA was $17 6 million adjusted EBITDA was <unk>.
$14 2 million adjusted <unk> was $12 per share and cash flow before capital, which represents hotel EBITDA less corporate G&A cash interest and $2 $2 million of principal amortization was positive $5 $1 million.
It's worth noting that these solid results were achieved even with the somewhat limited amount of business travel in Q4.
As Jeff mentioned, some of our largest and most profitable hotels before the start of the pandemic like the four residence inns in Silicon Valley and the residence Inn Bellevue are very dependent on business travel and have seen the least amount of recovery of all our hotels. The date when business travel starts to recover in a more meaningful way our portfolio should experienced significant upside from its current level.
Based on feedback from our management companies conversations with key corporate accounts and advanced bookings for Q2 'twenty two at some of our business transient focused properties. We are optimistic that business travel will start increasing in a meaningful way in 2022.
We have taken a number of steps to strengthen <unk> balance sheet and non dilutive ways during the pandemic and the balance sheet is now in the best shape, it's ever been.
<unk> March 31, 2020, and December 31, 2021, we reduced our net debt balance by $250 million, which represents a 32% reduction despite spending $40 9 million on our home to Warner Center development over this period and spending 71 million to acquire the residence Inn in town place suites Austin.
At December 31st we had $199 million of liquidity between our unrestricted cash balance of $19 million and $180 million revolving credit facility availability.
In Q4, we exercised an option to extend the maturity of our revolving credit facility to 2023 and obtained additional options to further extend the maturity of the facility to 2024.
With a reasonable leverage solid liquidity and meaningful free cash flow, we are well positioned to opportunistically pursue attractive investments.
In addition to coming out of the pandemic with a better balance sheet than we had going in and we're also going to be exiting the pandemic with a better hotel portfolio than we had going in.
The Q3 2021 acquisitions of the residence Inn in town place suites, Austin and recently opened home too.
Warner Center will meaningfully enhance Chatham growth and the quality of our portfolio by adding three newly constructed high revpar hotels and markets that have very strong demand growth.
To continue enhancing the quality of our portfolio by acquiring new high quality hotels in markets with strong growth in recycling capital in cases, where we believe sale prices are attractive relative to future growth prospects. We are very optimistic about the future given the potential for significant improvements in operating performance as business travel begins to recover.
In a more meaningful way the growth we expect from the Austin acquisition in Warner Center.
Under development and our ability to pursue additional growth opportunities given our strong balance sheet.
Significant liquidity.
While we're not going to provide guidance at this time for those of you building your own projections I want to remind you that during the construction of the home to Warner Center, we've been capitalizing interest.
Associated with the $70 million development and after it opened on January 24th 2022, we began recognizing the interest expense.
And the opening of the home to Warner Center, we expect interest expense, excluding amortization of financing costs to be approximately $6 3 million in Q1 and $27 million for the full year.
This concludes my portion of the call operator, please open the line for questions.
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One moment, please while we poll for your questions.
Okay.
Okay.
Yeah.
Our first questions come from the line of Ari Klein with BMO capital markets. Please proceed with your questions.
Thank you and good morning.
The signs of recovery in Silicon Valley are pretty encouraging.
How you think about the trajectory of the recovery there.
San Francisco, which is also a lag and it certainly has some longer term question marks can silicon valley in San Francisco It would run on kind of independent frac for the recovery.
They really are high area. This is Jeff I mean, we've always said.
It's really different demand generators.
Obviously, a lot of convention business related.
San Francisco Silicon Valley is very much dependent on its specific Facebook Apple you know those kind of customers Google obviously.
And what they are doing relative to travel and having their office open or not open which are all pretty much spitting distance from our hotels, depending upon which one you're talking about there.
So that's the that's really the driver I wouldn't draw any specific correlation I guess for whatever else you're looking at.
Got it and then maybe turning to the asset acquisition.
The acquisitions and dispositions and you've kind of highlighted.
Any more specifics as far as the markets, maybe where youre looking to potentially sell and work and buy and what kind of pricing kind of looks at like in those markets.
You know, we're really trying to focus on looking at older hotels.
That really are on the bottom end of the absolute revpar.
As you look at the hotels that we own and also considering capex needs in those hotels. So as we move forward, we're just trying to really.
Maximize our cash flow here as the recovery continues.
So combining I think all those factors.
It's really somewhat less market, driven I think I'm going to say.
You know for example, you might see us sell an older hotel in Dallas, but we love Dallas and we would buy something in the same day in Dallas, depending upon obviously, Brandon and price et cetera, but so I think it's more oriented towards the age of the asset and.
Where it really it really sits in the food chain here.
Okay, and then just maybe on on labor.
Are you, where you want to be from a from that.
No employee standpoint, the number of employees you have.
And what are you anticipating and 2022 from a wage growth standpoint.
Hey, Ari this is Dennis Yeah, I mean, as we sit here today, we're pretty pretty we're in good position from a labor perspective.
Honestly, it's lower seasonal months anyway, so normally where we're trending down in terms of our absolute labor count at this point of the year anyway, and then we will start to ramp up to the summer so.
Think we certainly saw that alleviate.
As we got into the fall last year, we were pretty happy even though our absolute employee count was still down kind of 30% to 35%.
And if you looked at kind of our September and October levels.
No we don't foresee any problems at the moment filling any labor major labor needs as we head to the more busier months coming up here as.
As we get through the spring and I think from a from a labor cost perspective, I think where we had a pretty big increase in 2021 on wage per hour and I think as we look kind of a 2022, where kind of a mid single digit.
Increase.
For our average labor cost so we still project that to be higher than you know what.
What might been historical but still kind of middle single digit because we did absorb a lot of that last year.
Got it thanks for all that color.
Youre welcome.
Thank you as a reminder, if you would like to ask a question. Please press star one on your telephone keypad.
Our next questions come from the line of Tyler Batori with Janney. Please proceed with your questions.
Good morning. This is Jonathan on for Tyler. Thanks for taking my questions first one for me I wanted to follow up on the labor cost discussion I was wondering if you could provide some color on what drove those GOP margins in December and I wanted to parse out a little bit in terms of the key drivers of the cost savings going forward. I mean is that is that all driven.
By presumed labor savings or is there something else in there.
It's most yeah, Hey, John it's mostly labor savings I mean, we'll have a few things here and there that that might change one month to the next that is predominantly labor.
Okay, great. Thank you for that color and then switching gears a little bit I guess, how much of that lower rated early pandemic government responder first responder type business remains in the portfolio.
What's the possibility that as we look out in the later 2020 to rewrite into into higher business.
Yeah, I mean, we really don't have a whole lot of first responder business, we still do have.
Some traveling nurses, especially in a few markets there are more of our urban or urban markets, whether that suburban New York.
Specifically for one of them.
And we've seen some of that in southern California, as well, but.
Thank you know are in.
Reason, why we were able to pivot pretty quickly in the early days of the pandemic and throughout the pandemic was because of our predominantly extended stay rooms in select service rooms, we were able to get demand from the people who are traveling at the time, but also as you know the business traveler starts to recover.
For example in Silicon Valley, we do have a hotel that has a good number of still traveling nurses.
That we would look to eventually shift out of that as we move towards later in the spring, especially for some of this in turn business in <unk>.
And Apple related business, and essentially reduce that room count down to pretty much nothing in it and transition to the higher rated customer. So we have nothing on the books from a long term obligation committed perspective that would not allow us to make that shift, which I think is important.
Yeah.
Okay, Great I appreciate all the detail there and then last one for me if I could Jeff I believe you mentioned in 2022 looking into.
Different mixes and geographies for the acquisition and I'm curious as you look out longer term, maybe 345 years is there any way you more broadly thinking about reshaping the retooling the portfolio, whether that's geographic exposure or more or less extended stay any thoughts on that.
Well, we've said on a couple of different conference calls, we want to be about 80% extended stay. So that's the primary driver and goal for us, but you know to be opportunistic in this kind of acquisition environment.
Our focus is is to remain in the kind of markets that we already own in but we want a diversified demand generator base and we do over time I think we end up with less of our EBITDA on a.
<unk> basis.
Silicon Valley, only because we most likely will grow outside of Silicon Valley. Some of those markets are the obvious sunbelt markets and it seems like everybody wants to be in but we've always been just attracted by.
Demand generator growth, and where and where thats occurring in the country and I think we've been pretty good and matching up our acquisitions, you know with pretty vibrant sources of business.
And I think we'll just continue to focus along those lines.
Okay, great. Thank you for all the color that's all for me.
Okay. Thanks.
Thank you our next questions come from the line of Anthony Powell with Barclays. Please proceed with your questions.
Hi, good morning.
For me I guess any any early learnings or observations from from home too and and L. A how has it gone so far any surprises in terms of demand or a or cost structure, there would be super helpful.
No I think that honestly hi, Anthony its Jack.
Dennis or Jeremy might want to chime in after but I will tell you that it's absolutely according to pro forma and both on the revenue side and the expense side.
You know, we've been very lucky I think and having enough bench talent to particularly to staff that hotel you know and the most important positions and staffing early off you.
You know unfortunately, we were delayed a little bit and getting it open only primarily from the wonderful folks in Los Angeles and there.
Never ending request for.
Other things to be added vis vis the inspection process, but that's my minor political comment for the day beyond that.
Operationally it does feel good and you know our our folks there are are really encouraged by what they're hearing from our guests as well.
Got it and then maybe I guess based on that.
I know you want to buy more stabilized hotels, but more.
<unk> development kind of AR and an option for you.
And in the coming years, given the experience there.
Yeah, I think so we've talked about.
Always specifically some extra land that we've got in Portland, Maine, but we really have and we have another piece of land on our balance sheet, but I think that we're encouraged particularly.
Just as I said in a prior response to what would you sell I mean, having brand new or hotels that are five years old or less is a pretty attractive place to be in the upscale extended stay business and generally select service business hotels farewell.
How to open them, we know how to pre opening them on the island side. So you know we're not going.
Kind of whole hog into the development business, but certainly I think adding two or three hotels that way over the next two or three years is something we look forward to do.
Alright, great. Thank you.
Thank you there are no further questions at this time I would like to turn the call back over to Jeff Fisher for any closing comments.
Well I appreciate everybody being on the call today, obviously, there's a lot of other news that can.
Preoccupy us, but we look forward to working well beyond those kind of current events and frankly.
We're continuing to do the good things, we talked about on the call today, hopefully the rest of the environment.
Particularly on the virus front.
Will be favorable for all of us and.
And we look forward to talking to you next time thanks.
This does conclude today's teleconference. We appreciate your participation you may disconnect your lines at this time.
The rest of your day.