Equity LifeStyle Properties Inc
NYSE:ELS
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Good day, everyone, and thank you all for joining us to discuss Equity LifeStyle Properties' Third Quarter 2018 Results. Our featured speakers today are Marguerite Nader, our President and CEO; Paul Seavey, our Executive Vice President and CFO; and Patrick Waite, our Executive Vice President and COO.
In advance of today's call, management released earnings. Today's call will consist of opening remarks and a question-and-answer session with management relating to the company's earnings release. As a reminder, this call is being recorded.
Certain matters discussed during this conference call may contain forward-looking statements in the meanings of the federal securities laws. Our forward-looking statements are subject to certain economic risk and uncertainty. The company assumes no obligation to update or supplement any statements that become untrue because of subsequent events. In addition, during today's call, we will discuss non-GAAP financial measures as defined by SEC Regulation G.
Reconciliations of these non-GAAP financial measures to the comparable GAAP financial measures are included in our earnings release, our supplemental information, and our historical SEC filings.
At this time, I'd like to turn the call over to Marguerite Nader, our President and CEO.
Good morning, and thank you for joining us for our third quarter earnings call. Today we will be focused on a detailed review of our third quarter results, our initial 2019 guidance, and our rationale for the recommended 2019 dividend increase.
Our third quarter results, released yesterday, showed strong quarter and year-to-date trends. Year-to-date, we increased occupancy by 209 sites, and this quarter remarks our 36th consecutive quarter of occupancy growth. Our RV properties performed better than anticipated, despite weather-related closures on the East Coast and California during the quarter.
Our online transaction activity continues to escalate. In the quarter, our RV revenue through digital channels increased 24%, and our sales of online camping passes increased by 43%.
Our summer marketing campaigns resulted in an increase in fans and followers to a current base of over 500,000. These followers are an excellent lead source for future marketing campaigns. In 2019, we will enter the 50-year anniversary of our Thousand Trails-branded RV resorts. The Thousand Trails brand has a strong customer affinity, and continues to deliver a great vacation experience for over 100,000 members, as well as thousands of guests each year.
Our partnerships with the RV dealers throughout the country continue to bear fruit as we engage with customers as they begin their first travel adventure. Our customers appreciate the natural amenity base at these locations, including mountains, lakes, and rivers. Thousand Trails members have shown an increase in their commitment to us by upgrading the level of their membership, and becoming an annual customer.
Turning to 2019, each year we finish our budget process in October and provide detailed projections for the following year. We have issued guidance of $4.12 at the midpoint for next year, which is a 6% growth in FFO per share.
Seasonal and transient activity require additional visibility to be able to forecast with more accuracy. As is our practice, we will update guidance each quarter as we have more knowledge about reservations at the property level.
Our MH and RV properties continue to experience heightened demand, as seen in occupancy and rate growth. Within our MH portfolio, by the end of October, we will have noticed 50% of our residents for rent increases, and anticipate 4.3% growth in MH revenue. We have had success building our communities, while continuing to increase rents for in-place residents. Our RV revenue is anticipated to increase 5.2% Strength in the annual base of 5.8% is the main contributor to the strong projection.
Our product is in demand, and the demographic trends are in our favor. Baby Boomers are turning 65 at a rate of 10,000 per day for the next 12 years. They are relocating to our key states, and the demand can be seen in the increased online and on-property activity. We anticipate that we will continue to see the same positive trends from 2018 continuing into 2019, including strength in our RV footprint, and increased MH ownership transactions.
I would like to update you on our proposed 2019 dividend policy. The ultimate decision for the dividend policy is a Board-level decision that is typically done at our fourth quarter Board of Directors meeting. We feel it is helpful to highlight management's recommendations and rationale with respect to the dividend. Historically, we have been able to take advantage of opportunities due to the free cash flow generated by our operations. Consistent with the past, in 2018, we expect to have in excess of $60 million of discretionary capital, after meeting our obligations for dividend payments, recurring capital expenditures, and principal payments.
Each year to arrive at a recommendation, we review our projected growth in FFO and our outstanding obligations, with the goal of ensuring our underlying financial flexibility. In addition, we stress-test our future obligations, including factoring in an increased interest rate environment to ensure that we can continue to meet our financial obligations and customer expectations. The stress test reveals the strength of our balance sheet which has been fortified over the years with long-term maturity. Currently, our average term to maturity is 12 years, which is more than double the REIT sector average. This compares to five years ago, when our average term to maturity was six years.
We are focused on long-term value creation. The stability and growth of our cash flow, our solid balance sheet, and the strong underlying trends in our business have led our management team to recommend an 11% increase in our dividend to $2.45 for 2019. We've increased our dividend significantly over the last few years.
To give a little history, over the past five years, we have increased our dividend 120%. Going back further shows that this is our 16th conservative year of dividend growth. Please note while this is management's recommendation, the Board has not yet met to discuss it.
I would like to thank our employees for their efforts in delivering another strong quarter at ELS. I will now turn it over to Paul to walk through the numbers in detail.
Thanks, Marguerite, and good morning, everyone.
I will review our third quarter results, walk through our detailed guidance assumptions for the remainder of 2018, and discuss our preliminary guidance for 2019.
We reported $0.99 normalized FFO per share for the quarter in line with guidance. Core property operations generated higher-than-expected revenues following a strong summer season in our RV membership business. During the quarter, we experienced elevated levels of operating expense following various storm events, including Hurricane Florence.
Our non-core results reflect the contribution from our Everglades Lakes acquisition earlier in the quarter. Core-based rental income was up 4.4%, compared to last year, in line with forecast, with 4% coming from rates and 40 basis points coming from occupancy. We gained 81 occupied sites in the quarter as a result of increasing our homeowner count by 144, and reducing rental occupancy by 63. Year-to-date, we have sold 417 new homes, including 74 through our ECHO joint venture.
Our core RV revenues were in line with guidance in the quarter. Annual and seasonal revenues showed strong growth of 6.4% and 4% respectively. Rate increases for our annual customers contributed almost 5%, with the remainder of our revenue growth generated from occupancy gains across the portfolio. Seasonal revenue outperformance was driven by increased occupancy in California and the Northeast, including certain properties that had limited seasons following storm events in 2017.
Transient revenue outperformance was the result of rate and occupancy gains, mainly in our Northeast and Western resorts. Our transient business performed particularly well in Maine, New York, and South Texas.
Membership dues and upgrade sales revenues were higher than guidance in the quarter. During the quarter, we sold 5,400 Thousand Trails camping pass memberships, an increase of almost 25% over the prior year. The year-to-date growth rate is similar, generating 14,400 membership sales.
Upgrade sales volume in the quarter was 781 units at an average price of approximately $6,200. The net contribution for membership sales and expenses was higher than guidance, mainly as a result of sales of our higher-cost upgrade products.
Utility and other income is higher than guidance, mainly as a result of insurance recovery. This includes a partial offset to the expenses incurred following recovery from Hurricane Florence.
In the quarter, core property operating expenses were higher than forecast, mainly from repairs and maintenance expenses related to Hurricane Florence, as well as other storm events during the quarter.
In addition, electric, sewer, and trash utility expenses were higher than forecast.
Overall, core NOI before property management grew 4.8% in the quarter and year-to-date period. NOI from non-core properties was $5.1 million in the quarter. Year-to-date, the acquisition properties in the non-core have performed as expected.
Corporate management and corporate G&A expenses of $22.4 million were higher than guidance during the quarter because of increased payroll expense, mainly related to temporary staffing needed to cover unfilled positions.
Other income and expenses were lower than guidance as a result of retail sales activity at our RV resorts in a season.
Financing costs of $26.5 million include interest on short-term borrowings to fund our acquisition activity. The funding from the line of credit was repaid with proceeds from our ATM issuance during the quarter. Year-to-date, normalized FFO was $2.91 per share, a growth rate of 6.8% over 2017.
The press release and supplemental package provide fourth quarter and full-year 2018 guidance in detail, as well as preliminary 2019 guidance. As I discuss guidance, keep in mind my remarks are intended to provide our current estimate of future results. All growth rates and revenue and expense projections represent midpoints in our guidance range.
Our fourth quarter normalized FFO guidance is approximately $92.5 million, or $0.97 per share at the midpoint of our guidance range. We expect core NOI of 5.4% in the fourth quarter to contribute to 4.9% core NOI growth for the full-year. We assume no core MH occupancy gain during the quarter.
Looking ahead to the fourth quarter in our RV business, our current annual seasonal and transient reservation base is in line with our expectations. Our fourth quarter core property operating revenue and expense growth assumption don't include assumptions related to impact caused by storm events. Keep in mind our revenue and expense growth guidance is impacted by elevated levels of both revenue and expense in 2017, following recovery from Hurricane Irma. We don't believe we have exposure to incremental expenses related to Hurricane Florence.
For the full-year, we expect core revenue growth of 4.4%, and core NOI growth of 4.9%. Guidance for financing costs and other in the fourth quarter includes the impact of some capital events I'll discuss later when I talk about our balance sheet.
Normalized FFO at the midpoint of our guidance range is about $368 million, or $3.88 per share, a growth rate of 7.8%. The midpoint of our preliminary guidance range for full-year 2019 normalized FFO is approximately $394 million, or $4.12 per share. This represents a 6.2% increase over 2018 normalized FFO per share.
Growth in core NOI before property management is expected to be approximately 4.6%. Our projections of core NOI and normalized FFO growth for 2019 assume fourth quarter 2018 results will be consistent with our stated guidance.
Consistent with our past practice, we plan to update guidance on our January call, and we may adjust growth rates on certain line items after we finalize results for 2018. We assume no growth from incremental occupancy we may gain in our core MH properties during 2019. Base rent is expected to grow 4.3%, with 4% coming from rates and 30 basis points from occupancy as a result of sites we filled in 2018.
In our core RV business, we expect 5.2% growth in 2018. Our annual revenues are expected to represent more than 60% of our total RV revenues, and we expect 5.8% growth, mainly as a result of increases in rate across our portfolio. We project 3.1% growth in seasonal revenues, and 5% transient revenue growth. During the first quarter, we expect to generate more than 50% of our seasonal revenue for the year, and almost 20% of our transient revenue. Though the winter season is still weeks away, we considered our seasonal and transient reservation pace for the first quarter 2019 when developing our guidance assumption.
In total, our right-to-use annual payment revenue, right-to-use contract sales, and sales and marketing expenses are expected to contribute approximately $50.7 million in 2019. We assume sales and activations of 37,600 Thousand Trails camping passes next year. In 2019, we expect to sell approximately 17,400 camping passes, and we expect the RV dealer program to generate 20,200 additional memberships.
Core property operating maintenance and real estate tax expenses are assumed to increase 1.9% in 2019. As we built our budget for repairs and maintenance expenses, we assumed normal run rate operations. We have maintained our historical practice, and have not assumed expenses related to property damage or other one-time items in our guidance. We do note that over the past few years, we've seen an increase in volatility related to weather events, impact on our properties, and the cost to maintain and repair assets as a result. We intend to continue to provide updates quarterly when these unexpected updates occur.
Our guidance for non-core properties includes the expected contribution from the properties we acquired during 2018, as well as our Florida Keys properties that have fully resumed operation and should achieve, stabilized NOI next year. We assume no other acquisition activity in our 2019 guidance model.
Our guidance for financing costs and other includes the impact of capital events I'll discuss now, as I provide some comments on our balance sheet. During the third quarter, we issued approximately 860,000 shares of stock from our ATM at a weighted average price of $91.45. Cash proceeds were used to fund our acquisition of Everglades Lakes.
Next week, we expect to close on a Fannie Mae secured debt facility that has a fixed rate of 4.29%, and a weighted average 12-year term. Proceeds from this financing will be used to repay our 2019 maturities, including the loans we repaid on October 1. We have included in our fourth quarter guidance approximately $1.1 million in prepayment penalties associated with the upcoming debt repayment.
Current secured debt terms are 10 years at coupons in the 4% to 4.75% range, 60% to 75% loan-to-value and 1.35 times to 1.5 times debt service coverage. The GSEs and life companies continue to quote MH RV deals at rates well inside CMBS. High-quality H-qualified MH assets continue to command best financing terms.
We continue to place high importance on balance sheet flexibility. Our interest coverage is 4.4 times, and following completion of the refinancing activity I just mentioned, our line of credit has $400 million of availability.
Now we would like to open it up for questions.
[Operator Instructions].
Our first question is from Nick Joseph from Citi. Your line is now open.
Thanks. You mentioned the demographics are in your favor, but how much does the slowing home resale market nationally impact your business and the ability of your future residents to sell their homes moving to a manufactured home?
I mean it's certainly something, Nick, that we look at to the extent there's a softening of the market in the Northeast or the Midwest, that would have an impact. We haven't seen it have an impact, but that would have a potential impact on us in terms of people being able to buy homes in the South and Florida and Arizona. Right now, we're continuing to see a robust resale market and people being able to sell their homes up in North and also, frankly, sell their homes in our community.
Thanks. And do you think that the tariffs on steel and aluminum will have a continued impact on RV shipments? And if so, how does that translate into demand and growth for your RV portfolio?
I think that currently the RV manufacturers, and notably the public companies, are experiencing some margin compression due to just what you said, the rising raw material prices and higher labor rates. But really as it relates to our portfolio, 80% of our revenue comes from longer-term customers. Those customers are staying with us in cabins, cottages, as well as RVs. And that transient piece of our business is important, in that it really feeds the longer-term business. But by design, it's a small piece of our business. So it's convenient to be able to market to these newly baptized RVers, but our marketing effort really generally focuses on the 9 million installed base of RVers.
Thank you. Our next question is from Alex Kubicek from Baird. Your line is now open.
Good morning. This is Alex on for Drew. We're kind of curious what main drivers could impact resort-based revenue and membership business revenue, both positively and negatively. And how much visibility do you guys have into those drivers 6 to 12 months out?
So I'll start with the latter part of your question first, as to visibility 6 to 12 months out. As Marguerite just mentioned, the transient component of our business is important to us, but on a relative basis, it's small. It's challenging for us to predict the levels of revenue growth that we'll see from that business. The majority of it does come in the second and third, primarily the third quarter. I mentioned about 20% of the transient business will come in the first quarter.
And as you're getting closer to those quarters, that's when you start to have an understanding of the reservation pace. Further out than 60 to 90 days, it can be challenging. And I also note that weather can play a very significant factor, even in let's say a 10-day window of time or seven-day window of time, as people look at their extended weather forecasts. We can see an increase or a decrease in activity at a property if the weather patterns are favorable or not.
That's really helpful. Thanks for the color there. Is vacancy mostly spread throughout all the manufactured housing properties in your portfolio? Is there more of a split between the functionally full and the structurally lower occupancy properties? And then kind of given that scenario, generally how much more occupancy upside do you guys think exist from current levels today?
Hi, it's Patrick. So -- I assume that the question on the split of occupancy is with respect to all in each qualified, or are you asking the question from a geographic perspective?
Just kind of geographically.
Sure. Let me focus on the occupancy opportunity and the upside. In large part, that's driven by Florida. About half of our current vacancy is in Florida. Florida has been a consistent driver for us in the last several quarters, in the last several years. I consider it to continue to play a role. But as Marguerite mentioned, broadly across the portfolio we're seeing strength. California, Colorado, and Arizona have all performed favorably for us. Those basically rounds out about 70% of our MH platform.
The balance of our portfolio is largely in the Northern United States, in the North, and the Northeast. And we're seeing broad strength, a solid demand profile across the portfolio, including occupancy contributions from Minnesota and Delaware. Our current occupancy is 94.9%. We're 75 sites away from a round 95%, which is our historical high-water mark. Given that half of our portfolio is less than 98% occupied, I expect that we have an opportunity to continue to grow occupancy go forward as long as some of the demand profile that Marguerite touched on earlier continues to hold across the portfolio.
Great. Thanks for taking the question.
Alex, I would just add to that, within the MH business, really high levels of occupancy are able to be sustained because the customer is putting down considerable capital to live in our property.
Thank you. Our next question is from John Kim from BMO Capital Markets. Your line is now open.
Thank you. A couple of questions on your 2019 guidance. For the RVs, you are forecasting a higher growth rate as of now for annual versus seasonal transients. I'm wondering is that confidence level because you're locking in some of those contracts today?
Yes. The rates for the annuals have been set. As I mentioned, the majority of the increase is coming from rates on the annuals. Those rates have been set. And as I mentioned a moment ago in response to the other question, just the visibility into the transient seasonal business. We don't have a great view into that right now, and that'll develop as we work through the year.
And John, the seasonal rates are set as well. And we're heading into our largest part of our seasonal season in the first quarter.
And can you remind us approximately what percentage of your annual RV contracts are converted from either seasonal or transient?
It's generally about 25% come from either transient or a seasonal customer makes their way to an annual customer.
Okay. And then on your expense growth for next year, you're forecasting 1.8%, which is less than half of what you project for this year. How do you plan to keep that at moderate levels, and what levers do you have to maintain these levels?
Yes, I think the growth rate, as I mentioned in my remarks, we don't have an assumption for unplanned weather events. And so that is creating some difficulty just in tracking what's driving the growth. But I'd say that if you adjusted 2018 for the impact of weather events that we've had this year, the growth rate for 2019 wouldn't be showing kind of the sub-2% number that you're seeing. It really would show a CPI number, 100 basis points or higher than what we're showing now.
I apologize if I missed this, but can you give an update on the lending environment for MH and RV assets? I think you said last quarter it was 60% to 75% LTV, 4 to 4.5%?
Yes, I'd say overall the interest level is about the same as it was last quarter and the underwriting remains the same. Rates have ticked up a bit. So 10-year coupons are 4% at the low end to 4.75% at the higher end.
So it hasn't moved materially from last quarter?
Correct, correct.
And then one final one what is the remaining interest rate on your 2019 expiring debt?
It's all in at 6.1%. So as I mentioned, we have -- we expect to close next week at a fixed rate of 4.29%, and we'll clear all of that outstanding debt.
Thank you. [Operator Instructions].
Our next question is from Samir Khanal from Evercore ISI. Your line is now open.
Good morning. Can you briefly talk about how active your acquisition pipeline is currently? I know you did the $70 million of acquisition, but kind of what else is out there? Maybe what else you're looking at in terms of maybe what's under contract?
Sure. So when you consider kind of the broader acquisition market, not just ELS, I think in the quarter there have not been a lot of closings. Not to say that pipelines have changed, but really the timing of closing deals. They just don't naturally coincide with the quarter-end close. What we're seeing is deals distributed evenly, RV and MH. We currently have properties in all stages of the transaction process from LOI to under-contract. And we generally, we will report on them when we've closed.
In the quarter, in addition to the 600-site property we bought for $72 million in July, we closed on a small RV park adjacent to one of our premier MH assets in North Fort Myers. The purchase price was $6.5 million. It was really as an example of us strategically focused on opportunities directly around our properties.
Okay. And I guess my second question to Paul is I know we had spoken about property taxes at one point in the past, and there were some pressures, I think, from State of Florida. What's kind of the update on that?
Yes, so what we saw in the quarter, the TRIM notices came in for Florida, and we didn't see as much increase as we had anticipated. And so we've adjusted our accruals. I think it is translated into more of a CPI-type growth expectation for Florida, and we had maybe a 100 basis points or so more than that dialed into our expectation.
Thank you. Our next question is from Joshua Dennerlein from Bank of America Merrill Lynch. Your line is now open.
When you guys look at the internal growth rates of MH and RV communities over kind of long period of time, do you expect MH or RV to kind of show faster NOI growth and maybe what would drive the differences?
I mean I think it depends. You can look historically what's happened. I think if you look to the future, it depends on what would be happening in the -- in any environment at the time. Certainly, factoring CPI, what is CPI going to be for the next four or five years? We don't know the answer to that, but that's a driver. And on the -- something that we haven't seen is obviously the Baby Boomer trend coming into the -- being able to be part of our locations and be part of our properties at 10,000 a day. We haven't seen that. So how that impacts going forward, that's certainly a factor.
And just the overall demand, kind of go the RV side, just the overall demand for what we're seeing is a high demand of customers wanting to get outside, be with their families, get away from the traditional hotel-type of environment. And those are some of the contributing factors to what we would see on growth rates going forward. Difficult to say which one would excel over the other.
Okay. And could you remind me, has RV or MH outperformed over the last five years?
If you look at it on a revenue basis, RV has been stronger. I don't have in front of me what the -- on an NOI basis.
Thank you. Our next question is from Todd Stender from Wells Fargo. Your line is now open.
Hi. When you look at home sales, you saw a decline year-over-year. It's not major, but when we look at on a macro basis, there's definitely concern out there about declining demand, at least in the single-family residential side. When it comes to MH, you definitely have a different dynamic. You've got the lack of new supply, but can you guys talk about anything you're seeing in the market maybe as a potential pullback? Even if it's segmented by all-age or age-restricted any comments there?
Sure. It's Patrick. We really haven't seen any pullback from a demand perspective. As I mentioned a little earlier on the call, we're seeing pretty consistent demand across the portfolio, even just into some of our secondary markets. And as you point out, new home sales were off roughly 30 year-over-year. For the quarter, we had roughly 141 new home sales in the quarter. A couple of drivers for the quarter in particular and there is a natural ebb and flow and some timing impact on new home sales.
We're reaching higher occupancy in some of our core markets. Colorado and California have been pretty significant contributors on the new home sales front over the last several years. And we've also started to deplete some of our new rental inventory in some of those markets out west, particularly in Arizona and California. So we just have fewer new homes available for sale in some of those key markets where new home conversions have been a driver, not only in new home sales, but in quality of occupancy growth.
Maybe just for a little perspective on a trend that kicked in 2014, so it's post-Great Recession. We've always been focused on homeowner occupancy growth. As the economy firmed up, single-family housing market firmed up, we saw strong growth in occupancy since 2014, picked up 300 basis points. We sold 2,000 new homes. And we've increased owners in the portfolio by more than 3,200. So I think if you look at that trend where the fundamentals in the market, the demand profile, the single-family housing market have all been relatively consistent, I would expect that we're going to continue to grow occupancy go forward, as long as those fundamentals hold tight.
That's very helpful. Thank you. And just going back -- I don't know if I missed this -- back to the 2019 core guidance. Have you guys spelled out the occupancy and rate expectations within community-based rental income?
Yes. So we have 4.3% dialed in for next year, 4% of which is rates and then 30 basis points is occupancy. And that is occupancy that was gained in 2018 that we expect to have the impact of or the benefit of in 2019. We don't have an assumption for occupancy gains during 2019.
Got it. And just one last one, Paul. You had an $80 million line of credit balance at the end of Q3. You also refied those mortgages which went on the balance, which went on the line what's the amount that you're going to tap the agency debt for, and will that scrape the line clean?
Yes, it's a little bit confusing, just because right at the end of the quarter, we funded from the line of credit to pay off those loans that were able to be prepaid on October 1st. So when you look to the amount, it's just north of the amount that we have coming due $190 million. So it's just north of $200 million.
Thank you. Our next question is from John Pawlowski from Green Street Advisors. Your line is now open.
Thanks. Patrick, on the MH side, I know portfolio wide the fundamentals are very good. I was hoping you could give some details on the laggards in the portfolio. What do occupancy trends look like, rent growth deceleration? Are any markets declining in occupancy or anybody -- is any market seeing pronounced rent growth deceleration?
You know, but the straight answer is no. But if you look across our broad portfolio, I guess I'll focus in on Las Vegas as an example significantly impacted by the dislocation of the single-family housing market. It's taken that market some time to rebound. That market is rebounding. We're seeing contribution not only on an occupancy front, but on rental conversions. That's started to materialize over the last few quarters.
So if you take that as an indication across the broader portfolio, I mentioned earlier some strength in some other secondary markets in the North -- Minnesota, Delaware. We're seeing demand for home purchases, new home purchases. We're successful in rental conversions. And I think that just speaks to the depth of the demand profile that's started to emerge post-Great Recession.
Okay.
John, and I think that answer would've been a little bit different a couple of years ago, certainly, but as Patrick just mentioned, we're seeing strength in our Minnesota market, where a couple of years ago we just hadn't seen that.
Okay. So that's predominantly demand driven. On the supply front, will any of your communities see higher pressure from competitive new supply in 2019 versus 2018?
There may be one or two new developments in the state, but it's just such a small number, that really doesn't impact us.
Okay. And then last one for me. I understand the expense impacts of the hurricane season. Were there any top-line growth, negative growth impacts from just not being able to lease properties that were closed up for a little while?
We certainly had some I think at the beginning of the year, beginning of 2018 really as it relates to Hurricane Irma. The next two hurricanes really didn't have an impact in terms of top-line revenue. But that we've already -- we've talked about in the first quarter, in the last quarter of 2017. But other than that, for Hurricane Florence and Michael, we haven't seen any issues with respect to revenue.
Thank you. Since we have no more questions on the line, I would now like to turn it back over to Marguerite Nader for closing comments.
Thank you, everyone, for joining us today. We look forward to updating you at our next call.
Ladies and gentlemen, thank you for your participation in today's conference. This concludes the program. You may now disconnect.