Soho House & Co Inc

NYSE:SHCO

Earnings Call Transcript 2023-Q2

[Operator]

Ladies and gentlemen, thank you for standing by. My name is Bhavesh, and I’ll be your conference operator today. At this time, I would like to welcome everyone to the Soho House & Co Incorporated Second Quarter 2023 Results Conference Call. All lines have been placed on mute to prevent any background noise. After the speakers’ remarks, there will be a question-and-answer session. [Operator Instructions]

I will now hand the call over to Thomas Allen, Chief Financial Officer. You may begin your conference.

[Thomas Allen, Chief Financial Officer]

Thank you for joining us today to discuss Soho House & Co’s second quarter financial results. My name is Thomas Allen, and I’m the Chief Financial Officer. I’m here with Andrew Carnie, our CEO.

Today’s discussion contains forward-looking statements that represent our beliefs or expectations about future events. All forward-looking statements involve risks and uncertainties that could cause the actual results to differ materially from the forward-looking statements. Some of the factors that may cause such differences are described in our SEC filings.

Any forward-looking statements represent our views only as of today, and we assume no obligation to update any forward-looking statements if our views change. By now, you should have access to our Q2 earnings release, which can be found at sohohouseco.com in the News and Events section.

Additionally, we have posted our Q2 presentation, which can also be found in the News and Events section on our site. During the call, we also refer to certain non-GAAP financial measures. These non-GAAP measures should be considered in addition to and not as a substitute for or in isolation from our GAAP results. Reconciliation for the most comparable GAAP measures are available in today’s earnings press release.

Now let me hand it over to Andrew.

[Andrew Carnie, Chief Executive Officer]

Thanks, Thomas, and good morning, everyone. I’m going to start by talking through the quarter’s highlights, then provide an update on the progress we’ve made against our strategic priorities. I’ll then hand over to Thomas to talk to our financial performance, give an update on our balance sheet and our raised 2023 guidance before we move on to Q&A.

We’re pleased to be announcing another strong set of results this quarter with further growth in membership, revenues and profitability. We are delighted to have more members to be part of Soho House. In the second quarter, we added over 7,500 members growing to 176,000, a year-on-year increase of 24% and a 5% rise quarter-on-quarter, which was ahead of expectations. We welcomed members in all regions and in particular, new houses we have opened in the past few years that are still maturing. Remember, more than half our houses we’ve opened since 2018.

Our waitlist reached approximately 95,000, an increase of 6,000 quarter-on-quarter. We’re really pleased to see our largest sequential increase since Q1 ‘22, which demonstrates the strong appeal of Soho House globally. Total revenues grew 19% year-on-year to $289 million, underpinned by continued growth in our highly recurring membership revenues. In the quarter, they grew 35% year-on-year and 7% quarter-on-quarter. Our initiatives to drive better member experience helped drive like-for-like in-house sales approximately 20% above 2019 levels. That’s an acceleration from the mid-teens growth we saw in the first quarter as we benefited from improved visitation and spend per visit.

Our focus on operational excellence continues to drive profitability higher with Q2 adjusted EBITDA of $32 million. Since going public, this is the first time we’ve reached over $30 million of adjusted EBITDA in the quarter and also the first time we’ve reached over 10% EBITDA margins. We’re proud of these milestones, and we expect to maintain the momentum we’ve built. These stronger results led us to deliver positive cash flow from operations in the quarter.

As we did in Q1, we’re raising our full year adjusted EBITDA guidance to reflect the results of this performance. Given the strength we are seeing in our membership and house performances, we are also raising guidance for our membership and the midpoint of our revenue metrics. More on that later.

Now let me give you an update on progress we’re making against our 2 strategic priorities. Growing and enhancing the value of membership and delivering operational excellence to provide profitability and free cash flow. Our focus on rolling out initiatives to improve member experience continued in the second quarter, and we’re pleased with the results we’ve seen across our houses.

As I mentioned, our like-for-like in-house sales growth compared to 2019 accelerated up to approximately 20% from mid-teens growth in Q1. We saw both spend per visit and visitation improved quarter-on-quarter with the U.K. and Europe having both the strongest quarter since the pandemic.

We’re really pleased with both the regions’ performance, in particular, Europe bouncing back. All our houses had a great quarter, and it’s really nice to see our recent newer houses Rome, Paris, Tel Aviv, Stockholm and Copenhagen, hitting their strides and delighting members.

While our checking data suggests Europe and the U.K. are benefiting from Americans traveling overseas again, as we said last quarter, we were quicker to introduce new initiatives in these regions, and that approach is bearing fruit. It’s also worth noting our American business growth remain stable.

We’re now in a good rhythm of implementing seasonal and local menu changes across all houses every quarter, with members being made aware of what’s new through communication across all our digital channels.

We’ve also made changes to increase the breadth and variety of our in-house food and beverage portfolio by introducing pop-up experience like Maya, by Mexican-California restaurant at Ludlow House, Shoreditch House and Soho House Berlin and a Scorpios residency at Little Beach House Malibu. Our members have benefited from increased choice and have been sharing positive feedback.

Together, these changes in F&B have driven an uplift in sales and profits, service standards continue to be a top priority. We’ve introduced and completed new training across all our Houses, which is steadily improving service. Outside our core Soho House proposition, we continue to see strong growth in Friends memberships, which helped grow our other memberships by 40% year-on-year to approximately 72,000 members.

One area which has been more challenging is house openings. We are seeing delays in delivering projects on time from our developers. While we were confident at the beginning of the year that we would deliver 5 to 7 houses, we now expect to open 4 after experiencing construction delays with Soho House Manchester. Soho House Bangkok opened in Q1. Soho House Mexico City is opening next month and Soho House Portland and Sao Paulo are planned to open through the end of the year.

That said, we have still increased our Soho House membership by 14,000 year-to-date and raised our full year targets for 2023 membership revenue and adjusted EBITDA. We see the current global state of development as a short-term challenge for new openings, but one that our existing houses can more than offset and our mid- to long-term target of 5 to 7 new houses remains in place.

Turning to our second strategic priority, operational excellence. As a reminder, our strategy here is centered on 3 key areas: First, leveraging data and member insights operate and scale efficiently; second, expanding in-house margins; and third, having operational discipline as we grow. In the second quarter, our teams control wages well with wages as a percentage of revenues improving by approximately 250 basis points versus Q2 ‘22 and 50 basis points compared with Q2 ‘19.

Our in-house F&B margins continue to be strong, up 240 basis points versus Q2 ‘19 on a like-for-like basis despite us rolling out new menus on a quarterly basis that we referenced earlier. Overall, our house level contribution margins improved approximately 400 basis points year-over-year and 150 quarter-over-quarter to 26%. This is the highest level we’ve seen since going public, a testament to our efforts.

Our G&A expenses were in line with our internal expectations. As we alluded to in prior earnings calls, we expect G&A to be up in 2023 year-over-year, given the significant growth of our business, especially in new regions like Latin America. G&A leverage will be contributed to our high guided adjusted EBITDA margins for the year. We’ve continued to deliver on driving higher occupancy in ADR, leading to RevPAR increasing 13% year-over-year at like-for-like properties, and 36% versus the second quarter of 2019. So all in all, another great quarter delivering against our operational excellence initiatives.

Now let me pass you to Thomas to give you more detail on the numbers on our guidance.

[Thomas Allen, Chief Financial Officer]

Thanks, Andrew. Total revenue for the second quarter grew 19% year-on-year to $289 million or 18% on a constant currency basis. Membership in-house and other revenues rose 35%, 14% and 9% year-on-year, respectively, or 34%, 13%, 8% on a constant currency basis. House level contribution increased 45% year-on-year with House level margins of approximately 400 basis points to 26%. Other contribution was up 35%, with a margin climbing 370 basis points to 20.5%.

Giving more details on revenue. We saw continued strong revenue growth year-over-year, increasing revenue by $45 million with 3 main drivers. Membership growth in pricing drove a $23 million increase in membership revenues. Strong trading in our Houses, especially in the U.K. and Europe led to a $16 million increase in in-house revenues. And other revenues were up $6 million, driven by strong Soho Home and Scorpios sales growth as well as higher partnership revenues and management fees.

Our second quarter adjusted EBITDA was $31.8 million, up $16.4 million year-on-year as we benefited from the profitability initiatives we have outlined in continued membership and revenue growth. Our adjusted EBITDA for the quarter also be consensus of $29 million.

Now discussing our balance sheet. We ended the quarter with $177 million of cash and cash equivalents, including restricted cash and $590 million of net debt. Our restricted cash was higher at the end of Q2 as we had to self-insure a portion of our hurricane insurance to close on our Miami Beach House mortgage refinance.

We felt this was a prudent thing to do, given we weren’t in the hurricane season and the risk, that interest rates would continue to rise, which they have. We have now secured this incremental hurricane insurance so the cash is back in our bank and no longer restricted.

Supporting our cash position, we generated $32 million in adjusted EBITDA during the second quarter and had $2 million of noncash rent. Offsetting, we had approximately $7 million of cash interest expense, $1 million of cash taxes and $23 million of net CapEx.

Moving to guidance for 2023. The strength of our 2Q results has given us confidence to raise guidance across all metrics. We expect total Soho House members of more than 191,000 at year-end, but at least 18% higher compared to the end of 2022 and an increase from our prior guidance of over 190,000. We have seen very strong application flows over the past few quarters, as shown through our record waitlist.

Remember, we still have 23 houses or more than half of our total houses that have opened since the beginning of 2018. They are still very much in their ramp period, which has supported stronger-than-expected membership growth.

We are narrowing the ranges and raising the midpoints of our 2023 revenue and EBITDA guidance metrics. For total membership revenues, we’ve increased our guidance at the midpoint by $3.5 million to $360 million to $367 million. Total revenues at the midpoint by $5 million to $1.12 billion to $1.19 billion, and adjusted EBITDA by $3 million at the midpoint to $126 million to $134 million.

The increases are driven primarily by stronger-than-expected 2Q results with FX only benefiting adjusted EBITDA by $1 million in 2Q. Total revenue guidance is offset by the delay of Manchester till next year, but that does not have a material impact on adjusted EBITDA. Given macro uncertainty, we’re generally leaving our organic second half expectations unchanged.

With that, I’ll pass it back to Andrew for some concluding remarks before we go into Q&A.

[Andrew Carnie, Chief Executive Officer]

Thanks, Thomas. We’ve had a strong second quarter delivering on the targets we set for the year. We’ve seen continued member and revenue growth underpinned by a strong and growing waitlist. Our operational excellence initiatives are continuing to drive profitability, and adjusted EBITDA was ahead of expectations for the third quarter in a row. Leading us to increase our full year EBITDA guidance for the second time this year.

We’ve also made great progress on cash flow. We remain focused on delivering for our members and further driving membership value, and we are more confident than ever in the growth opportunities ahead for our business. I’d like to thank all our teams globally for their hard work and dedication throughout this year.

With that, we will now hand over to questions to the operator. We can take the first question, please.

[Operator]

[Operator Instructions] Our first question comes from the line of Steven Zaccone from Citi. Please go ahead with your question.

[Steven Zaccone, Citi]

Great. Good morning. Thank you for taking my question and congrats on the improvement here. I was curious if you could talk a little bit more about North America because I guess the commentary you gave to that business is stable. It sounds like Continental Europe and the U.K. had some of their best quarters.

So how is member spend per visit trending in North America? How have some of the changes that you’ve made with regarding menus and stuff been received by members? And are there any houses in particular where you still feel like you have work to do?

[Andrew Carnie, Chief Executive Officer]

Steven, it’s Andrew. Let me start, I think, I should give you an overall view of our demand. So we’ve seen demand, really strong across F&B, bedrooms and events. And our waitlist are all-time high. So footfall has continued to grow nicely with spend, which I mentioned in my prepared comments.

Yes, UK and Europe have been very good for us. It’s nice to see a lot of our new initiatives driving high spend and paying off in the quarter. We have seen that in North America. So North America has increased and saw improvements well. All the changes on the local menus are in place.

Service is starting to improve and gain traction, which drives member spend, as we’ve always talked about. If I think of June, June was the strongest growth month year-to-date across all our regions and North America. And also July is in line with trends that we’re seeing in Q2.

So North America is improving, like I said in my comments, the standouts are the changes we’ve done in Malibu, putting Scorpios in Malibu has worked really well. We’ve had some really nice traction put in on Maya concept, which is Californian-Mexican into a few of our houses. But in general, we’re feeling much more positive about North America.

[Steven Zaccone, Citi]

Okay. Great. The other topic I wanted to hit on is the Home business. So it seems to still be exceeding expectations despite the backdrop for big-ticket discretionary spending being a bit challenging. So have you raised your outlook for Soho Home this year? And just maybe give us a refresher how large it is today and where you think it can go over time?

[Andrew Carnie, Chief Executive Officer]

Good question, Steven. So we’ve obviously talked Soho Home with you in the past. It is – it does continue to exceed expectations. It’s growing really nicely again this year. much more than what you hear of other folks in the home industry, particularly RH and other folks. We are very focused on profits this year within Soho Home and improving member experience.

For example, we’ve just launched our first bathrooms collection to our members, because our members kept asking us where they could find our bathrooms. So that’s super exciting. I’m not going to talk about how big it is just yet. I think it’s got another year of growth until we really start articulating that business.

But yes, it’s really strong for us. And our – and again, it’s interiors by Soho House. So it’s everything we do at Soho Home is based on what our members are asking us to do, and it continues to delight them and grow really nicely.

[Steven Zaccone, Citi]

Great. Thanks for all the detail. Take care.

[Operator]

Thank you. Our next question comes from the line of Sharon Zackfia from William Blair. Please go ahead with your question.

[Sharon Zackfia, William Blair]

Hi. Thanks for taking the question. I appreciate there’s been a lot of complexity with opening new properties for you as well as others over the past few years. But can you talk about the House pipeline for ‘24 and ‘25? And kind of what that looks like maybe even breaking it down by where the focus is regionally?

[Andrew Carnie, Chief Executive Officer]

Sure. Sharon, great to hear from you. So if you think about it, opening new houses is important, and we do have a great pipeline of 5 to 7 for the foreseeable future. But what matters most to us is membership growth and retention. We’re really proud of the members we welcomed in our existing houses this quarter.

We’ve delivered that 35% increase in membership revenues. We’ve opened 24 fantastic houses since 2018. And what you’re seeing is they’re really hitting their stride and a lot of them are now ahead of historical maturation curve.

So I think, we obviously, are a membership business, and we focus on membership, our houses are part of that. Regarding today, developers are suffering from supply chain issues, labor availability. It’s obviously a more expensive finance environment. And you’ve heard that on other earnings recently.

I did want to talk a little bit about Manchester because because we – I did it in my prerecorded comments, the developers are renovating an Granada studio building. It was built in the 1950s, it’s got expensive structural work, and it’s just taking a bit longer because as you know, we go in more historical buildings. We’re not new builds.

And sometimes, we have some lumps and bumps along the way on that. So the project is progressing well now. It hasn’t impacted membership applications. And again, that is the key. So actually, our membership applications continue to grow, actually ahead of our expectations on Manchester. So that’s the only one that’s moving this year. If we think about the next 3 years, we do have a pipeline locked at 5 to 7 we continue to get favorable terms. So our terms haven’t changed. We’re still asset light and the favorable terms that we have.

And we continue to grow in the key regions like North America across Europe, some more growth outside of London here in the U.K. and some further growth in Asia. So that hasn’t changed. There’s just a few small lumps and bumps that we’re managing.

[Sharon Zackfia, William Blair]

I know you’ve done a lot to improve the member experience. I guess when you talk to members either anecdotally or in a more systematic fashion. Where do members think there’s been the most improvement? And where do they think there’s still the most opportunity to improve going forward?

[Andrew Carnie, Chief Executive Officer]

Yes. So we recently did another one of our surveys across all our members. And what they’ve noticed in the last six months is we really improved food which is one of the things that they really wanted us to do. So they’ve noticed the food becoming more local, different houses offering different offers, becoming more seasonal, they’ve noticed there’s improvements that we’ve made in communications, in our digital channels, on our app, on in our events.

We’ve got a lot more choice in our events. We recently did Coachella for our members and House Festival. So they are seeing the things that we’re really focused on. The one area that we continue to really focus to improve on is service. So a lot of our – the next 6 months is going to be based around service and improving our service, improving quality of service, the speed of service, the friendliness of service across 10 of our largest houses, we’ve just introduced a new role called Member Host.

So this is a new role that really when the members come into our houses, we greet them in a really friendly way. We take them to the table. We get them a drink. We know a lot more about them now so we can really, really help them have a better experience in our houses. But I would say a lot of things we’ve talked about on member’s notice and enjoy, and then the next focus for the next six months is definitely service.

[Sharon Zackfia, William Blair]

Okay, thank you.

[Operator]

Thank you. Our next question comes from the line of Stephen Grambling from Morgan Stanley. Please go ahead with your question.

[Stephen Grambling, Morgan Stanley]

Hey, thanks. Maybe a follow-up on the cadence of house build. It seems like this year, even with the lower house build, you’re kind of hitting this positive cash from operations inflection. I guess, why you have it accelerate? Do you feel like actually having a much more balanced growth rate may actually be providing optionality down the road?

[Andrew Carnie, Chief Executive Officer]

Great question, Stephen. Let Thomas answer that one.

[Thomas Allen, Chief Financial Officer]

Thanks, Stephen. So if you think about our pipeline, obviously, these are projects that we’ve committed to over the past few years. And so what’s being delivered in the next couple of years really got locked in historically. A couple of quarters ago, we slowed our guidance just because we didn’t want to be aggressively trying to go out and find new deals, and we really wanted to be picky around looking for what was best for our members and what could generate the highest ROI.

We have a good pipeline, as Andrew highlighted earlier, to continue to deliver on our growth. And so we’re going to deliver the pipeline that we have embedded. I mean we are dealing with broad macro construction delays. And so that is having an impact on how many we can deliver this year.

[Stephen Grambling, Morgan Stanley]

And then a quick clarification as a follow-up. I think, I caught this in your remarks, but the core guidance, I think you said is unchanged. I think I saw that the FX moved by about $10 million which looks like it’s a little bit more than the increase in EBITDA. Is it just a – like a translation issue like that doesn’t fully flow through to the bottom line? And maybe any kind of color you can provide in terms of puts and takes there.

[Thomas Allen, Chief Financial Officer]

Yes. So when we think about the guidance, we updated the midpoint of the guidance range for the year on revenue by $5 million. We had about a $10 million benefit from FX, and that was offset almost directly by a $10 million impact from house delays. And so we’re upgrading our guidance for the year by $5 million on the top line.

On EBITDA, we raised the midpoint of our guidance by $3 million. About $1 million of that was FX, and about $2 million of that was improved organic trading. We’re not seeing a big impact from the house way in terms of benefiting our performance for the year.

[Stephen Grambling, Morgan Stanley]

Super helpful. Thank you.

[Operator]

Thank you. Our next question comes from the line of George Kelly from ROTH MKM. Please go ahead with your question.

[George Kelly, ROTH MKM]

Hey, everyone. Thanks for taking my questions and congrats on a really strong quarter. So the first topic I wanted to cover is your house level contribution margin, really nice improvement there sequentially and year-over-year. I was curious, I guess, two questions on that. A, what were the biggest drivers? You mentioned a whole bunch of stuff in your prepared remarks, but are there one or two things that you could isolate just as being most meaningful in driving that margin improvement?

And then second question on the same topic is, what initiatives have yet to play out that you’re excited about? And could those sort of bring us another like higher of contribution margin?

[Andrew Carnie, Chief Executive Officer]

George, great to hear from you. Look, the team is doing a good job delivering on our initiatives that we laid out, containing costs, ensuring the membership falls down to profits, improving margins on F&B. So we’ve just been very consistent on delivering that week in, week out, which is what we articulated we were going to do at the beginning of the year.

The things that I’m most excited about is continuing to be consistent on delivering those improvements on margin, within F&B, on managing our costs as we grow, on reducing our G&A as we look through for the next 12 months because there’s some really good opportunities there for us. So we’re just continuing to be very focused on managing the core of our cost structure really well.

[George Kelly, ROTH MKM]

Okay. And then second question for you on your waitlist, the growing waitlist. Curious, what does it tell you? I guess, it’s the broad question. And I’m just curious, like, does it give you a lot more confidence to take pricing in the future? Or are there other ways to monetize folks on that waitlist, I don’t know, through alternative membership offerings or like what – anything that’s being contemplated there? And that’s all I had.

[Andrew Carnie, Chief Executive Officer]

Look, we love nothing better than welcoming new members into our houses. It’s what we do best. We are seeing very strong applications, the most in over a year across all our regions. We’re super pleased with some of the newer houses like Austin and Nashville and Paris and Rome and Tel Aviv. They’re really, really starting to gain momentum with the local membership. So – if we think about our membership, our retention remains really strong, and that’s one of our key metrics for driving that recurring revenues and delivering that 35% growth.

Our application levels continue to be exceptional. So that’s something that we obviously worked really hard on, especially in our newer regions. So there’s a lot of appetite for joining Soho House. We’re not thinking about pricing this year yet. As a reminder, we did increase pricing for new members at the beginning of this year, higher than existing members. The existing member increase was below inflation.

And we’re not really thinking about monetizing that waitlist. We have our trends, obviously, some trends that continues to grow, and you saw those numbers in the quarter. But we’re just focused really on growing our membership, retaining our members and delighting them when they’re in our houses.

[Thomas Allen, Chief Financial Officer]

I would just add, historically, we’ve increased prices most years, we didn’t, during COVID, but then for the past 2 years, we’ve had outsized price increases. So we always have the – we always look at increasing prices every year. And so it’s an assessment we’ll make looking at the macro environment at the end of the year.

[George Kelly, ROTH MKM]

Gotcha. Thank you.

[Operator]

Thank you. Our next question comes from the line of Joe Greff from JPMorgan. Please go ahead with your question.

[Joseph Greff, JPMorgan]

Hello, everyone. Andrew, I have a question on the House pipeline, and I know you talked extensively on it. Would you say that the houses that you had originally planned to open in 2024 are also similarly delayed? Or do you actually see an above-average growth year in houses benefiting from the delays in 2023? How are you thinking about next year?

[Andrew Carnie, Chief Executive Officer]

All right, Joe. In short answer, no. Manchester moves into next year, and the current plan of 5 to 7 is still the plan for 2024. We have not seen any movement in that thus far. There’s a nice pacing throughout the year. So the – like I said in my prepared comments, the only change we’re seeing right now is Manchester.

And that’s why we’re just reiterating that we’ve still got the 5 to 7 planned out each year for the next 3 years. And yes, there’s lots of macro challenges, but we’re very focused, and we have a fantastic team working with our partners to deliver them.

[Joseph Greff, JPMorgan]

Great. My next question is the frozen member count spiked up and it’s up in absolute terms, and it’s also up as a percentage of total memberships by a wide margin over the last 5 quarters. What’s driving that? Is that just a function of annual dual increases? Or what’s driving that?

[Andrew Carnie, Chief Executive Officer]

Candidly, no, it’s actually normalizing. So it’s below 2% of total members. It’s always healthy for us to have frozen members we are super flexible with our members. It’s part of what we do, be it from a member situation changes, they move, their family life changes. So that’s I think it’s a real value add of membership being able to freeze.

And if you think we’re still below pre-COVID levels on frozen. So we’re not even where we used to be before COVID. So we were not concerned about frozen. It’s a benefit to our members, and we always embrace it when our members want to freeze.

[Thomas Allen, Chief Financial Officer]

Joe, I’ll just add that remember, during COVID, we saw a big spike in frozen percentage in the number of members. Obviously, there’s going to be a pause after people freeze. And so to Andrew’s point, I think that we’re normalizing and we’re still very happy that we’re – I think we’re still sub-2% and then pre-COVID we’re around 3% on average.

[Joseph Greff, JPMorgan]

Thank you.

[Operator]

Thank you. Our next question comes from the line of Julie Hoover from Bank of America. Please go ahead with your question.

[Julie Hoover, Bank of America]

Hi, thank you for taking my question. Other revenues were really healthy this quarter. You touched on Soho Home already. But can you discuss where else you’re seeing strength in that segment? And specifically, how is Scorpios doing this summer?

[Andrew Carnie, Chief Executive Officer]

Sure. Let me have Thomas answer that question.

[Thomas Allen, Chief Financial Officer]

So as Andrew said, we’ve had strong – we continue to have strong growth at Soho Home despite us focusing more on profit even than revenue there, we continue to see really good growth there. Management fees have continued to grow. Remember, we added 2 Neds last year. They’re performing well, and we’re also seeing good organic growth in that segment.

Scorpios is growing year-over-year. We have heard anecdotally that the Mykonos market is a little bit softer, but we continue to see strong growth there. And then finally, I’d highlight that our townhouses are performing very well. Remember, those are hotels with restaurants, and so they’re benefiting from really strong RevPAR trends.

[Julie Hoover, Bank of America]

Okay, great. Thank you very much.

[Operator]

Thank you. There appear to be no further questions at this time. I’ll now hand the call back to Thomas Allen for concluding remarks.

[Thomas Allen, Chief Financial Officer]

Thank you, everyone, for joining the call today. Please reach out if you have any follow-up questions. We look forward to talking to you all again after our Third Quarter Results

[Operator]

Thank you. This does conclude today’s conference call. Thank you for participating. You may now disconnect.