Brookfield Business Partners L.P. Q1 2023 Earnings Call
Okay.
Okay.
Welcome to the Brookfield business Partners' first quarter 2023 results conference call and webcast.
As a reminder, all participants are in a listen only mode and the conference is being recorded.
After the presentation, there will be an opportunity to ask questions.
Join the question queue simply press Star one one on your Touchtone phone.
I would now like to turn the conference over to Alan Fleming head of Investor Relations. Please go ahead Mr. Fleming.
Thank you operator, and good morning, before we begin I'd like to remind you that in responding to questions and talking about our growth initiatives and our financial and operating performance. We may make forward looking statements. These statements are subject to known and unknown risks and future results may differ materially for further information on known risk factors I incur.
Jude to review our filings with the Securities regulators in Canada, and the U S, which are available on our website.
Joining me on the call today is Cyrus Madden, our Chief Executive Officer, and Josh <unk>, Our Chief Financial Officer. We're also joined today by Mark Wallace, Our Chief Executive Officer at <unk>.
Advanced energy storage operations.
Cyrus will lead off and provide an update on our business followed by Mark who will discuss our strategic initiatives and recent developments at Claire Yes, just.
<unk> will finish with a review of our financial results. The team will then be available to take your questions and with that I'll pass the call over to Cyrus.
Thank you Alan and good morning, everyone. Thanks, very much for joining us on the call today, we've had a great start to the year adjusted EBITDA increased over 25% compared to last year and our adjusted EBITDA margin increased over the ear from 17% to 19% so pretty.
Significant uplift.
It's been an eventful few months in the capital markets as you know Fortunately our business has not been affected by recent U S regional banking issues.
Governments have acted quickly to stabilize competence in the broader financial system.
We're now seeing banks begin to selectively land for buyout activity again on deals in the U S. They've tightened in European credit markets are also slowly recovering from the fallout.
A flight to quality credit is serving our business as well.
The market price of debt at our largest companies like clarity with scientific games and CDK global to name a few is trading at or near par and we've been able to refinance existing borrowings and issue new debt at good terms.
As an example, just a few weeks ago Clary OS sought to refinance $1 $5 billion of its debt in order to extend its maturities through 2030.
Not only was it successful in doing so but the exceptional demand for its that enabled us to upside this offering to $3 $5 billion at an overall cost of about 7%.
We achieved this with virtually no increase to the overall cost of borrowings.
This is a phenomenal outcome and evidence of financing available for high quality businesses like the many that we all do today.
Turning to capital recycling.
As you know it often takes several years for us to implement improvements reposition our operations and build value in our businesses all else being equal in the short term. This means the earnings and cash flows our business as we buy are usually lower than those of the more mature businesses we saw.
Cell.
To put this in context, we're working to close the sale of Westinghouse our nuclear technology services provider for a total enterprise value of about $8 million. We used proceeds from Westinghouse to fund the acquisition of three great businesses last year scientific games.
CDK global intellectual and over the next few years, we expect to drive improvements to these businesses, which should nearly double the share of free cash flow, we are giving up from the sale of Westinghouse.
In the near term the Westinghouse sale proceeds will repay the financial obligations, we assumed to fund our substantial acquisition activity last year, which will support our free cash generation later this year.
So all in all our business fundamentals remained strong we're making great progress on initiatives to continue building value in our operations and that's a great segue to pass the call over to Mark who has joined US today to talk about all the great things, we're doing to drive growth at <unk> over to you Mark.
Thank you Cyrus good morning, everyone.
As a reminder, cargoes as the world leader in low voltage batteries powering one and three vehicles globally.
With unmatched scale and geographic reach we are five to six times larger than any of our nearest competitors.
Only the true global player.
We have the number one market position in the Americas and Europe and are currently number three in Asia.
To put this in context, we shipped over 150 million batteries per year and when the business was acquired by Brookfield EBITDA was approximately $1 $6 billion, we set a record year of earnings in fiscal 2021, and we continue to make strong progress in fiscal 2023.
And plan to exceed $2 billion of EBITDA over the next few years.
And depending on how much we reinvest into growth the business should generate at least $500 million or more of free cash flow each year.
Approximately 80% of the volume is driven by the high margin resilient aftermarket demand.
We're also the go to partner for virtually every automaker in the world and in many cases have majority share, bringing the right levels of technology to solve their challenges of today and the future.
An important point to remember is that every single car, whether a full battery electric hybrid start stop our internal combustion engine requires a low voltage battery like the ones we sell.
The demand placed on these low voltage batteries continues to increase with a shift towards electrified vehicles.
<unk> is the leader in enabling technologies for electric and autonomous vehicles with a full portfolio designed to support our customers' growing needs.
We're now partnering with over 130 electric vehicle platforms globally.
Clothing over 80, new full battery electric.
That forms launches during the last 12 months.
This puts us more than halfway toward our goal of winning over 200 old battery electric vehicle platforms within the next five years.
The automotive industry is rapidly transforming to help the world achieve its carbon reduction targets.
We believe that by 2030, nearly 90% of all new vehicle production will represent some form of new energy vehicles from start stop hybrid.
Or full battery electric vehicles.
Even more important we estimate that nearly one 6 billion cars in the park by 2030 over half will offer new energy features to reduce greenhouse gas emissions.
Leading to an increased power demands on the low voltage system and driving double digit growth of advanced low voltage batteries to serve these expanding needs.
This shift in technology represents a significant tailwind for our business today and long into the future as these new energy vehicles enter the aftermarket for multiple battery replacements.
In fiscal 2022, 24% of our total units sold represent advanced batteries, which is up more than two times from only 10% in 2015, and we expect this growth trend to continue by.
By 2027, we expect 35% of our total battery volume will be advanced.
This tailwind will continue to be a source of revenue margin expansion for years to come as advanced batteries dropped 50% to 80% higher revenue.
And double the profitability of our standard low voltage battery.
We continue to invest in capacity to serve these growing advanced battery needs to date <unk> has deployed more than 50% of the world's capacity for AG in advanced batteries, and we're adding more as we speak investing over $500 million in North America and Europe through 2000.
25 in addition to leveraging the startup of our new state of the art plant in China.
We're also expanding our portfolio to meet the growing requirements of new vehicle platforms, including full battery electric vehicles, where we have recently launched our first fully branded product strategy <unk> ex EV.
<unk> ex EV batteries tailored to each automakers electrified vehicle load requirements will work hand in hand, with our high voltage traction battery to provide the right power as well as the right levels of functional safety.
This portfolio supports batteries for automakers now, but also positions us to prepare our aftermarket customers for the future.
As part of its portfolio there are some automakers looking for low voltage lithium ion solutions today, we are a leader in this space with an application for a global automaker on multiple platforms.
Leveraging our global capabilities as well as our 15 years of lithium ion software and systems expertise and actively working with OEM customers to develop their future requirements.
We also developed a brand new technology called Smart AGM. There is nothing like it in the World Smart Atms, we designed to reduce internal failure provided continued power supply and monitor the powertrain battery performance in real time Smart AGM also allows for predictive.
Maintenance and the aftermarket.
One of the most interesting applications, where we are seeing significant customer interest is in truck fleets, where battery failures as a top calls from truck downtime.
And in addition to our advancements and new technologies, we are growing our presence in new markets, including China.
China is already the largest auto production market in the world and more importantly, the largest EV market.
Representing more than two thirds of the global battery electric vehicle production in 2022.
With the full launch of our third Chinese plant, we will represent more than half of the installed AGM capacity in the country and expect to double the volume of our China platform and the medium term.
Our global market, leading position and value added customer relationships have enabled us to implement significant pricing actions and.
And offset the unprecedented levels of inflation.
In addition, we continue on.
Our focus on driving margin expansion through operational excellence and cost reduction discipline.
To date, our team has achieved approximately 60% of the targeted $400 million of operational improvements in the business on a gross basis.
This year, we are tracking to achieve an additional $50 million in cost savings driven largely by the enhancements of our U S operations as we realize the benefit of investments in automation and the optimization of transportation supply chain and overhead costs to drive performance and productivity.
Overall, it's an exciting time for <unk>, the rapid transformation to new energy vehicles creates a significant tailwind for our business as we invest for the future our earnings and cash flow will continue to grow.
We are primed for sustained and profitable growth through our advanced technology portfolio durable cash flow generation position and a leading global market position.
With that I'll hand, the call over to Jack <unk> and I'll be available to answer questions. During the Q&A session.
Thanks, Mark and good morning, everyone.
We generated strong first quarter financial performance adjusted EBITDA increased to $622 million compared to 486 million in the prior year.
Adjusted <unk> was $381 million included 130 million of net gains related to the sale of public securities.
And our residential property management operation.
Taking a look at segment performance, our industrial segment generated first quarter adjusted EBITDA of $219 million.
This compares to 217 million last year adjusted.
Adjusted <unk> increased to 162 million and included the $64 million of net gains on disposition.
Performance at our advanced energy storage operations was strong generating increased adjusted EBITDA of 129 million for the first quarter.
Higher overall battery volumes ongoing pricing initiatives and continued operational improvements are contributing to results.
Engineered components manufacturing contributed 44 million to adjusted EBITDA quicker.
The business is performing well despite reduced volumes in North America and Europe .
We're supporting the business is commercial and cost optimization initiatives, which continue to support improved margin performance.
Moving to infrastructure services adjusted EBITDA for the first quarter was $225 million compared to $208 million last year and adjusted <unk> was 86 million for this quarter.
Our lottery services operation is performing well generating $34 million of adjusted EBITDA.
Lottery fundamentals have remained extremely resilient.
With U S instant ticket lottery sales continuing to grow at low single digit rates to start the year.
Input cost pressures are starting to ease and results benefited from continued progress on our commercial strategy and supply chain optimization.
Modular building leasing services contributed 37 million to adjusted EBITDA supported by strong demand for higher margin value added products and services as well as resilience utilization rates in Asia Pacific.
And finally, our business services segment generated first quarter adjusted EBITDA of $212 million, an increase compared to 94 million last year.
Adjusted <unk> increased to $213 million and included a net gain of $67 million.
Our residential mortgage insurer generated for Ya.
$47 million of adjusted EBITDA and is performing in line with expectation given a more normalized Canadian housing market.
While higher mortgage rates have led to reduced housing affordability and lower sales activity unemployment levels across Canada continued to remain near historically low levels.
Home prices are still more than 30% above pre pandemic levels, even after falling 15% from peak levels in early 2022.
These two factors have contributed to overall <unk>.
Mortgage delinquencies remaining low.
Our business can readily manage unexpected increase in losses on claims and still generate positive cash flows.
Our dealer software and technology services business generated adjusted EBITDA of 49 million.
<unk> during the quarter benefited from recent optimization initiatives and continued growth of the business is subscription based revenue.
Turning now to our balance sheet, we ended the quarter with approximately $2 7 billion of pro forma corporate liquidity after accounting for the planned vindication of our recently closed acquisitions and expected proceeds from the sale of Westinghouse.
And with that I'd like to close out our comments and turn the call back over to the operator for questions.
Thank you.
As a reminder to ask a question you will need to press star one one on your telephone.
Once again to ask a question. Please press star one one.
And our first question comes from the line of Geoff Kwan with RBC capital markets.
Hi, good morning.
My question is.
I know it's.
Bam issue, but is there any color you can give on the fundraising at BCP six but.
Also if you can comment on <unk> commitment to that $5 million or percentage. However, you look at it.
Hi, Geoff it's Jeff Great I think I can start and then I'm sorry can add so you know we don't really comment on bonds fundraising activities, but I think from.
The last discussion I had with regards to the latest private equity fund, which is the Brookfield Capital Partners Fund six as you said PCB effects.
Were over $8 billion.
<unk> capital raise.
And.
We're still in fund raising and we expect will always additional commitments from.
That $8 billion that Brookfield has talked about.
In terms of BB used commitment.
There typically is about a third of the fund as we've typically done.
We don't expect that BCP six will be any different.
Okay.
And just my other question was as I think you've got a preference of returning to being debt free at the corporate level.
Is it also fair to characterize that that you would likely prioritize deploying capital in the current environment given.
This would seem to be an attractive time to be making acquisitions, but also monetization market don't materially improve.
This could see our corporate debt and our preferred share kind of total levels increase from where they are today.
That's a that's complicated Cyrus here Jeff.
Complicated question, but as always we will consider.
All of the opportunities in front of US all of the things we have slated that will likely be sold.
And cost of capital and sources of capital and take all of that into consideration but.
I'll start with that but tell you, yes, if we found something that we thought was highly highly.
Additive.
<unk>.
I'm quite confident we would raise the capital for that are reasonably attractive terms.
Okay actually maybe if I can ask one last question you talked about doing that with debt refinancing at a number of your companies. When you take a look at the portfolio today like would there be other.
How much more do you think you might.
Either have to do or where you think there is the winter to opportunistically extend term at a reasonable cost.
Yes. This is Jeff.
Were constantly watching the market and then we.
I'd like to be opportunistic where we can.
But just in terms of kind of.
Overall debt profile, so the weighted average maturity on the debt today is five and a half years.
Mark touched on their recent refinancing that'd be the Aquarius that actually extends our maturity is now 258 years.
And in the next 12 months we've got.
5% that maturing of our overall debt. So there's not a whole lot that's very imminent for us.
But we will be opportunistic.
We can then take advantage of market windows.
I do think that reasonable cost and kind of extend out the maturity on any of our debt.
And given the quality of a lot of the businesses that we own.
We think you know what.
With the right market conditions that we could get outcomes similar.
Two <unk>, where we were able to upsize and refinance.
What kind of virtually the same cost because I think like 25 basis points difference.
Okay, great. Thank you.
Thank you.
Our next question please.
And our next question comes from the line of Andrew Coombs key with credit Suisse.
Thanks, Good morning.
Apologize if I missed this but could.
Could you give us some context on where <unk> is today versus your initial underwriting and obviously theres some messiness around that because we went through a pandemic.
But I guess the question really to just two it is the extent of the transition from lead acid batteries.
Batteries more involved in evs.
Is tracking ahead of your initial expectations.
Cyrus here, and then I'm going to turn it over to Mark to give you a little bit of color there but.
I don't have the numbers in front of me, specifically, but I can tell you clarity OS is performing really well and.
More or less what we expected I think.
I will turn it over to Mark, but I think the short answer is that.
The upside opportunity here from transitioning into.
Our higher specification battery.
It's pretty interesting for us.
Yes, Andrew Hi, it's Mark Wallace, So a couple of things.
One kind of you mentioned it went through Covid high inflationary environments, all the macro challenges, but the one thing as the business continues building out and improving its what I call profit per unit, our EBITDA per unit that continues to make nice progress since the acquisition and given the fact that we have.
A lot of inflation the catch up to that happened in our fiscal 2022, we think that'll be a continuing tailwind for us in our fiscal 2023. So.
Actually a very good spot with how the performance is shaping up in the company today as I mentioned in my prepared remarks, as well, we're going to get a pretty significant revenue and margin expansion due to AGM batteries being sold into the aftermarket I was going to be a significant part of the next kind of decade story of the company.
At the same time in my prepared remarks, I mentioned that we had a target when 200, new battery electric vehicle platforms.
That we won 130.
In every case there those are all our conventional battery technologies, although we do have a lithium offering in the market today. The vast majority of our customers at this stage are continuing to choose our conventional battery technology like AGM.
Okay. That's very helpful. And then maybe just a follow on question if you think about.
You are.
Theres, obviously, a bunch of inflationary impacts have happened. So if we think about normalized margins into the future on a per unit basis, where do you think that lands versus maybe a few years ago and the traditional product lines.
Yes so.
Just on the on revenue and margin percentages. The one thing that would be mindful of is that with things like.
Our input raw material cost.
Such as led those flow through the top line, but have no impact.
And the actual cost line and so ultimately in higher replacement environments, you could see some margin deterioration just due to that.
Matt, but ultimately and how we look at the business as EBITDA per unit and so over the course of time that has continued to improve and we expect given our ability to price the market.
The growth of AGM batteries in the aftermarket and our continued operational improvements that that will continue.
Expanding through the next five years as well.
Okay, that's great I'll leave it at that thank you.
You next question please.
Our next question comes from the line of Gary Ho with Desjardins capital markets.
Hi, good morning.
Thanks for sharing some time with US maybe just carry on last last question there just on.
Pricing actions that you've put through and I want to hone in on a little bit on the labor side, given that's pretty tight labor market, particularly in the U S. Just wondering if you can provide a bit more color in terms of expectations on further price increases to maintain those margins.
And what Youre seeing on the labor side.
Can you touch on automation, a little bit I'm wondering if you can.
Elaborate on that as well.
Yes, Gary a few things.
In general as we think about pricing in the aftermarket.
We do expect to price in excess of inflation. So we do expect that pricing.
Kind of less inflation will be accretive to our margin expansion in the business and the reason behind that is one not only do we have a complete portfolio of technologies that we offer to our customers. We also offer many additional services that go along with that to include intellectual property.
Supporting our aftermarket retail customers with and with that that gives us a unique ability to.
Put more pricing in the market than you would say that general competition to do because we offer so many more services with our battery offerings.
When it comes to labor clearly one of the aspects that we're focused on in the U S. Operation has continued.
Deploy automation.
Because that reduces the dependency of course on labor and also makes us more efficient so.
I mentioned in my prepared remarks that the U S will deliver about $50 million of year over year actual cost reduction actually improving our bottom line performance and we expect going forward.
Do you want to frame it.
The 2%.
Net conversion cost savings in the U S from the efforts, we have around transportation automation reduction of scrap rework et cetera.
And Thats why we are.
Convinced we'll be able to deliver $300 million of net.
Cost savings for the business in the next few years as well.
Okay perfect. Thanks for that.
Then second question, maybe for Cyrus are just great.
Were hopefully a few months away from closing the Westinghouse transaction of the $1 5 billion in proceeds have you had discussions with Brookfield in terms of their intention then how much of the proceeds will be used to repay the aircrafts.
And maybe can you just quickly remind me the financing cost difference between the press and the corporate pool borrowings.
Yes, Josh.
I can take.
No.
We haven't had any conversations yet as you're aware.
To any asset monetization.
Brookfield does have the ability to ask a repayment on those so.
As we get.
Closer and more clarity on exactly.
At closing on Westinghouse.
Have that conversation so I can't really.
Give you a definitive answer on that today.
In terms of the cost of borrowing at virtually the same perhaps are at.
6% or.
Rcs is a tad higher just with the rates increase but.
Not significantly different.
Okay. Thanks, and then just last question maybe for Cyrus I, just want to talk about the revised refi angle little bit, there's probably a bunch of assets up there.
And the market that might be challenged somewhat given the higher <unk> costs, whether that's higher amounts of leverage that you had on the books are.
The refi concept jumped dramatically versus a few years ago are you seeing more opportunities as a result, and how does that play into evaluations and more generally on your deployment pipeline do you see more opportunities on new investments or bolt ons to existing assets like the.
The U S.
<unk> that you've done.
Yes for the first time in a long time, we are seeing a bifurcation.
Uh huh.
<unk>.
Investors view of companies between high quality companies and credits and lower quality companies.
<unk> and including I would also say.
Highly leveraged companies, which have pretty good assets.
And for the first time in the long time, what that means is.
There are haves and have nots, which is the way it used to be.
And the haves have access to capital like <unk> has tremendous access to capital and the have nots are struggling and we're seeing bond yields and that yields for those companies.
<unk> levels I haven't seen in many many years.
So the short answer is yes, they are definitely going to be some really interesting opportunities coming out of this we are seeing.
We are seeing larger.
I'll call them.
Multi asset companies that have elevated levels of that starting to contemplate selling some pretty good businesses.
I think that's an opportunity and we see companies that simply need to deleverage. So there might be some recapitalization opportunities for us too.
So all of the above.
Okay. That's helpful. That's it for me thank you.
Okay.
Thank you one moment for our next question.
Our next question comes from the line of Devin Dodge with BMO capital markets.
Thanks, Good morning.
Wondering if there was a question on <unk>.
Profitability and stepped up pretty materially from what we saw in the back half of last year.
I think there's been some M&A activity that may distort the picture of it and is there much seasonality in this business or is the Q1 performance.
A reasonable proxy for baseline earnings going forward.
I will let Dennis answer that one.
Denis Turcotte here.
It's a reasonable proxy given.
The dynamic we've just been through I E inflation rolling through the business, but the management team there a very strong team and they've done a lot to get costs down and maintain and even expand margins. So I think it's a good proxy having said that there is a little bit of seasonality, but more.
It's really more around certain segments as you can imagine as interest rates go up and people in general I think are getting a little more nervous on the retail side or the <unk>.
<unk> for example.
Come off.
You are getting some of that more.
I think it's more in anticipation of recessionary actions moving forward.
Okay, Okay, and then maybe switching over to CDK.
I was just wondering if without a sale of that heavy equipment dealer business I'm just trying to understand if that was a meaningful contributor to earnings to the overall overall business.
Can you help us understand the rationale for monetizing it and if theres other parts of the business that you would want to trim going forward.
Yes, there are a few I'm going to say noncore smaller businesses within CDK, which in the longer term probably.
It fits the business.
The one that was sold was very small less than 5% of EBITDA. We sold it for around I think around 20 times EBITDA. So we thought for the.
The business.
And our investment it was up.
Pretty accretive transaction and that's why we did it.
Okay.
You expect to kind of dividend that up to the corporate or are you going to keep that in the business maybe delever.
We will keep it in the business.
Okay makes sense I'll turn it over thank you.
Q1 for our next question please.
Our next question comes from the line of James <unk> with National Bank financial.
Yes. Thanks.
Question for <unk> just.
Maybe a little bit of a clarification question.
Target date to exceed the $2 billion in EBITDA.
What what year would that be in or a timeframe.
Then.
Linked with that given the $500 million of free cash flow each year, what would you expect leverage to be.
Once you hit that sort of $2 billion target.
Yes, Hi, James It's Mark Wallace so.
We don't have any specific date to give out on the $2 billion I mentioned prepared remarks.
One a very good trajectory up from our kind of our 21 record year in the next few years, we would expect to cross the 2 billion Mark.
I think it's probably a pretty easy math math calculation. When you look at kind of our leverage we ended last year was at five four times.
If you think about the levered free cash flow around the $500 million.
Paying back you can probably extrapolate in the next few years, how that would look relative to the $2 billion.
As with all businesses.
Yes.
Okay, and you would you would expect to use the bulk of that 500 million to repay debt or would it be more like 50% debt, 50% organic growth opportunities other capex stuff like that.
How are you thinking about that.
Yes, so when we give out that number we've talked about our levered free cash flow number. So we've included prior to that or you would consider running our business and whatever growth capital we would need so yes, we would see that that.
That kind of number for deleveraging the company.
Number one for us.
Okay perfect. Thank you.
<unk>.
On you need us.
Obviously, it was broken out in this quarter as.
Disclosures since there.
Is there something in.
In that business that you can give us a little bit more color in terms of.
Your growth expectations on on the Brazilian fleet market, where youre seeing in that business.
Trajectory over the next several quarters to a couple of years.
Cyrus here, why don't I start and and others will chime in but.
Look we closed on.
The acquisition.
Really a merger of equals about six months ago.
That transition is going well.
Business is performing despite a very tight credit environment, it's performing quite well and we expect it to continue performing well this year.
Fleet management is benefiting from.
Our rent versus buy decision and as I said, a tighter credit environment. It's also been benefiting from medium term contracts. It hasnt play in place.
Rent a car has slowed down a little bit.
Yes.
Because of the economic slowdown in Brazil, but used car sales have been quite high and factor.
<unk> more demand that's migrating from new car sales just given the economic environment.
But to answer your question a little more directly we expect the business to perform quite well this year.
Okay, and then last one for me.
With.
The term out of debt and refinancing.
Are you able to are you able to update some of the data points from the Investor day around the.
The weighted average cost of borrowing how much is fixed or hedged and.
Our sensitivity to changes in interest rates at this point.
Sure I can do that so we ended the quarter with.
Weighted average interest rate seven nine coupon.
The weighted average term on that debt is five five years, but with the if you factor in the Clarion and financing that happened <unk> bye.
Five eight years of course with the effects yet.
The fixed versus float so we took advantage of.
Some of the volatility that we saw.
This quarter it just slipped somewhat the banking issues in the broader environment and put on a few.
More hedge interest rate hedges within the business. So we're now a 50% hedge compared to closer to 40% last quarter.
And I think I've made a patched on this last quarter, but.
<unk>.
Some debt within the business side.
We don't think is appropriate to hedge like our data.
In Brazil, that's just an economical.
Oliver is that they have within the businesses. So if you kind of factor that in we're about 80% hedged on that.
We want to be hedged on.
So we're quite happy with the overall fixed versus float ratio today.
And then in terms of sensitivity I think we had talked about this at Investor day, and it really hasn't changed much but now 75 basis points.
Increase in rates is about.
60 $65 million the impact on the business on free cash flow.
Okay.
I may have misheard, the weighted average interest rate.
Could you just repeat that because I feel like I heard seven 9%.
Yes, that's right.
And it was four 9% at the Investor day.
Yes, there's five rehab.
Yeah, Okay and now it's almost eight am.
Am I getting that apples to apples.
Yes.
Okay.
Got it thank.
Thank you.
Thank you and I'm showing no further questions so with that I'll hand, the call back over to CEO Cyrus Madden for any closing remarks.
Thank you very much for joining us this quarter and we look forward to speaking to you next quarter. Thank you.
Ladies and gentlemen, this concludes today's conference call. Thank you for participating and you may now disconnect.
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