Sun Communities Inc

NYSE:SUI

Earnings Call Analysis

Sun Communities Reports Q2 2024 Results and Provides Updated Guidance

Sun Communities delivered solid Q2 2024 results, with core FFO per share at $1.86, aligning with guidance. Manufactured Housing showed robust performance with 6.4% same-property NOI growth. However, RV NOI declined 4.6% due to lower transient RV demand. The company converted 8,000 RV sites from transient to annual, boosting occupancy. The U.K. operations saw a 9.3% NOI growth, outpacing expectations. Sun sold properties worth over $300 million to reduce debt, lowering its leverage ratio to 6.0x. The company reaffirmed its full-year guidance with core FFO per share projected between $7.06 and $7.22 and expects Q3 FFO per share to be between $2.46 and $2.56.

Strong Overall Performance

Sun Communities reported solid results for the second quarter of 2024, with core Funds from Operations (FFO) per share of $1.86 in line with the guidance, largely driven by the same-property Net Operating Income (NOI) growth of 3.6% in North America and 9.3% in the U.K.【4:0†source】.

Manufactured Housing Performance

Manufactured Housing, Sun's largest segment, showed strong performance with same-property NOI growth of 6.4% due to rental rate increases and occupancy gains. This segment benefited from favorable demand versus supply dynamics【4:0†source】.

Challenges in the RV Segment

The RV segment saw a decrease in same-property NOI by 4.6%, primarily due to weaknesses in the Transient RV part of the business. Despite some revenue underperformance, strategic actions to increase annual RV site conversions have led to better long-term margins and increased occupancy by 30% compared to the previous period【4:0†source】【4:4†source】.

Marinas and U.K. Market Success

Sun’s Marina business achieved a NOI growth of 6.1%, staying within guidance expectations, driven by high demand. In the U.K., same-property NOI grew by 9.3%, which was above the high end of guidance. The U.K. performance was bolstered by lower-than-expected utility expenses and a strategic focus on increasing real-property NOI【4:0†source】【4:1†source】.

Debt Reduction and Asset Sales

The company has been proactive in reducing debt, with year-to-date property sales generating over $300 million. This reduced Sun’s leverage ratio to 6.0x. Significant focus was placed on disposing of non-core and nonstrategic assets, contributing to enhanced operational efficiencies【4:0†source】【4:2†source】.

Guidance for the Future

Sun reaffirmed its full-year guidance for core FFO per share in the range of $7.06 to $7.22, and set third-quarter guidance between $2.46 and $2.56 per share. The company narrowed its full-year same-property NOI growth expectations for North America to a range of 4.7% to 5.7%, despite challenges faced by the transient RV segment【4:2†source】【4:5†source】.

Strategic Focus and Outlook

Looking forward, the strategic focus remains on converting transient RV sites to annual sites, growing occupied sites at Park Holidays in the U.K., managing expenses effectively, and continuing to pay down debt. The company is well-positioned to generate attractive long-term FFO per share growth, supported by these strategic initiatives【4:5†source】.

Earnings Call Transcript 2024-Q2

[Operator]

Good afternoon, ladies and gentlemen, and thank you for standing by. Welcome to the Sun Communities Second Quarter 2024 Earnings Conference Call. At this time, management would like me to inform you that certain statements made during this call, which are not historical facts, may be deemed forward-looking statements within the meanings of the Private Securities Litigation Reform Act of 1995. Although the company believes the expectations reflected in any forward-looking statements are based on reasonable assumptions, the company can provide no assurance that its expectations will be achieved.

Factors and risks that could cause actual results to differ materially from expectations are detailed in yesterday's press release and from time to time in the company's periodic filings with the SEC. The company undertakes no obligation to advise or update any forward-looking statements to reflect events or circumstances after the date of this release. Having said that, I'd like to introduce management with us today, Gary Shiffman, Chairman President and Chief Executive Officer; Fernando Castro-Caratini, Chief Financial Officer; and Aaron Weiss, Executive Vice President of Corporate Strategy and Business Development. [Operator Instructions] As a reminder, this conference is being recorded. I'll now turn the call over to Gary Shiffman, Chairman, President and Chief Executive Officer. Mr. Shiffman, you may begin.

[Gary Shiffman, executive]

Good afternoon, and thank you for joining us to discuss our second quarter results and 2024 guidance. Sun is pleased to report a solid second quarter. Core FFO per share of $1.86 was in line with guidance, driven by same-property NOI growth of 3.6% in North America, and 9.3% of the U.K. Manufactured Housing, our largest segment, generated same-property NOI growth of 6.4% in the quarter, driven by strong rental rate growth and occupancy gains. We continue to benefit from the strong demand versus supply dynamics embedded in Manufactured Housing.

In RV, same-property NOI decreased 4.6%. The decline was driven by weakness in the Transient RV segment, but we are seeing continued demand headwinds. Importantly, due to ongoing transient to annual conversion strategy, we have fewer site nights available for transient guests. While we were able to partially offset revenue underperformance by managing expenses, and we're even able to hold Transient RV margins flat to budget, cost reductions did not fully mitigate the revenue impact. Our strategic focus on transient to annual conversions, increases the contribution of revenue from annual property agreements improves RV NOI margins over time and increases occupancy.

In [ 2024 ], we have now completed approximately 8,000 conversions, increasing the number of annual RV sites by approximately 30%. These RV conversions supported strong occupancy gains with our same-property adjusted occupancy for MH and RV, increased by 150 basis points to 98.7% as of June 30, 2024. Additionally, our revenue-producing sites increased by over 1,200 sites in the quarter compared to a 1,000 site increase in the prior year. We're very pleased with Marina same-property results as the business achieved 6.1% NOI growth, in line with our guidance.

Demand for the Safe Harbor networks unmatched locations, premium amenities and expert services remains strong. While we are seeing superyacht transatlantic movement earlier than originally forecast, arena business fundamentals remain strong and Safe Harbor continues to actively manage its operating expenses. Strategy in the U.K. remains focused on increasing real-property NOI and decreasing the contribution from home sales. The 6 months ended June 30, 2024, real-property NOI in the U.K. accounted for 55% of total U.K. NOI up from 42% during the first 6 months of 2023. On a same-property basis, U.K. NOI grew 9.3% over the second quarter last year, exceeding the high end of our guidance range. Strong year-over-year revenue growth was in line with our expectations, and the outperformance was driven primarily by lower-than-expected utility expenses.

U.K. home sales were in line with expectations through May before slowing in the runoff to England's elections and the related concerns regarding fiscal policy. Early third quarter trends indicates the uncertainty surrounding the elections is dissipating. Buyer interest is increasing, but some headwinds we experienced in June. Overall, for the second quarter, U.K. home sales FFO was within our expected range. In terms of other strategic initiatives, we are very pleased to share since our last earnings call in April, we sold 8 properties, bringing total asset sale proceeds year-to-date to over $300 million. We used net proceeds to pay down debt reducing our leverage ratio to 6.0x on a pro forma basis.

We are laser-focused on maximizing Sun's performance by increasing the revenue contribution from annual income, active expense management on strategic asset recycling, and debt reduction. As we continue to convert more RV sites from transient to annual, grow the base of occupied sites at Park Holidays, and reduced leverage, and is positioned to generate long-term attractive FFO per share growth. Before handing the call over to Fernando, I'd like to acknowledge and thank each Sun, Safe Harbor, and Park Holidays team member for their hard work, dedication and continued support in delivering our results. Fernando?

[Fernando Castro-Caratini, executive]

As Gary mentioned, one of our key priorities is to delever by disposing select nonstrategic assets, remaining disciplined in our nonrecurring CapEx spend, and allocating free cash flow to debt reduction. Subsequent to quarter end, we closed on the sale of 7 communities for a combined $263 million. Operationally, these transactions allow us to exit noncore markets and provide operational efficiencies going forward. The communities were encumbered with $79 million of mortgage loans, which were paid off at closing, improving our secured debt to total asset ratio. We used the remaining net proceeds of $171 million to reduce borrowings on our senior credit facility.

During the second quarter, we also sold one Park Holidays property for $5.4 million. Adjusting our June 30 results solely for the July dispositions and the associated debt repayment, our pro forma net debt to trailing 12-month EBITDA ratio is approximately 6.0x and we remain focused on continuing to improve this metric. Importantly, these properties were sold on an FFO accretive basis with reduced interest expense offsetting loss of income from the assets. For the first half of 2024, our nonrecurring property capital expenditures are down approximately 47% year-over-year. Looking ahead, we are on target with reducing 2024 nonrecurring CapEx spend by approximately 50% from last year's levels.

I'll now walk through our guidance for the remainder of the year. Second quarter core FFO per share of $1.86 was in line with our guidance range. We are reaffirming prior guidance for full year core FFO per share of $7.06 to $7.22, and establishing third quarter guidance in the range of $2.46 and $2.56 per share. Total real-property NOI is 80 basis points lower for 2024 at the midpoint of guidance, primarily reflecting the recent asset sales, and the resultant loss of income from these properties. Interest expense guidance is $6.5 million lower at the midpoint after paying down debt using the net proceeds generated from the asset sales.

North America, we are maintaining the prior midpoint of expected same-property NOI growth for the full year at 5.2% and narrowing the range to 4.7% to 5.7% growth over the prior year. Note that 2023 and year-to-date 2024 actual results have been adjusted in same-property NOI for historical and guidance purposes to exclude income from properties disposed of during the year. MH is performing well, and we forecast continued strength from this segment. A revised same-property NOI growth range for this segment of 6.8% to 7.4% represents a 50 basis points increase at the midpoint of prior guidance. For same-property RV NOI, we are reducing our prior full year guidance to incorporate recent operating trends.

The second quarter, RV transient revenues decreased 12%, underperforming the 8% decline we expected. Our revised same-property NOI range of negative 0.7% to positive 0.9% is 40 basis points below the midpoint of prior full year guidance. Embedded in our guidance for same-property RV are approximately 1,700 transient to annual conversions. Year-to-date, we have converted approximately 1,100 sites, and are on pace to achieve our full year target. We believe in the long-term attractiveness of the transient RV business, where the 5-year site adjusted revenue CAGR is 5.6%, and we are excited about the pipeline of annual conversions that we'll continue to provide in the coming years.

Our prior Marina guidance assumes some transatlantic migration by superyachts, thus far, this migration is occurring earlier than expected. Safe Harbor continues to manage favorable expenses to match revenues as demonstrated by second quarter results. We are lowering our same-property NOI growth expectations for the full year by 30 basis points at the midpoint to a new range of 6.2% to 7.2% to reflect current dynamics with that large vessel movement. U.K. real-property continues to outperform as our strategy on increasing real-property NOI bears fruit. We expect this strong performance to continue in the second half of the year and are increasing the midpoint by 250 basis points. Overall, U.K. home sales have been in line with expectations.

While July results show positive momentum, we did see some softness in the sales pipeline in June ahead of the election, and are lowering the U.K. home sales FFO contribution by $850,000 at the midpoint, based on current trends and expectations for the remainder of the year. With regards to G&A, reflecting continued focus on corporate expense rationalization, we are decreasing the midpoint by approximately $5 million or 210 basis points, reflecting an expected increase of 2.5% at the midpoint compared to prior guidance of 4.6% growth for the full year.

For additional details regarding our updated full year guidance, please see our supplemental disclosures. As a reminder, our guidance includes acquisitions and dispositions and capital markets activity through July 31 but it does not include the impact of prospective acquisitions, dispositions or capital markets activities, which may be included in research analyst estimates. This concludes our prepared remarks. We will now open the call up for questions. Operator?

[Operator]

[Operator Instructions]

Our first question is coming from Michael Goldsmith from UBS.

[Michael Goldsmith, analyst]

[ $250 million ] of dispositions kind of announced in the quarter, you did another $50 million or so prior to the quarter. So that brings you to $300 million which is kind of in line with your last capital recycling program. So my question here is, are you looking to do more dispositions from here? And if you can provide some information around the cap rates of the properties sold that would be really helpful.

[Gary Shiffman, executive]

Thanks for your question, Michael. It definitely is on plan. As we shared in 2014, we did about $300 million disposition program. So we're right on target there. We do have several other select dispositions in the market right now. We continue discussion over those. And they are the similar type assets where, in this case, the 6 MH properties that we sold actually remove us from single states where we just had one single MH property or 4 states, I should say.

So real efficiencies there. And as we look at these other properties that we're offering in the market, similar strategy with regard to the fact that they're not strategic locations and they could help to improve operating efficiencies as we go forward. So I'd refer to them as opportunistic, nonstrategic asset sales, and we will provide updates at the appropriate time.

[Operator]

Our next question is coming from Brad Heffern from RBC Capital Markets.

[Brad Heffern, analyst]

Can you give an update on the U.K. loan collateral and if any of those assets are potentially among the assets that you're looking to monetize in the near term?

[Fernando Castro-Caratini, executive]

Brad, thank you for the question. No, those assets that were collateral for the U.K. loan are not part of those potential dispositions. As we detailed during our call and investor conference call in April and investor conferences since then, the Park Holidays team has taken over the operations of those, and we're excited to see them continue to produce.

[Operator]

Your next question is coming from Samir Khanal from Evercore ISI.

[Samir Khanal, analyst]

Gary, maybe you can elaborate on this Marina business being down 30 basis points. You kind of mentioned there's large vessel movements. Maybe talk around that a little bit. And I guess, what gives you the confidence to say that a 30 basis point cut is enough at this time?

[Gary Shiffman, executive]

Thanks, Samir. Well, certainly, as we do at all our businesses, we build from the bottom up. We remain very positive about continued near- and long-term FFO growth for our Safe Harbor Marinas business. And in fact, investor demand in the asset class itself has never been greater. So embedded in our revised guidance is this adjustment in Marinas in the second half is, we really see these large superyacht vessels heading towards the transatlantic and [ the Med movement ], just as Fernando said earlier than forecasted.

So we did forecast this but there has been a fair amount of pent-up demand through COVID. These boats have been more stationary. And I think with all this on the agenda over in the [ Med, ] including the Olympics and things like that, there's just been earlier departure. These boats go back and forth across the Atlantic, and we do have the historical numbers to take a look at how things do return. We have built in the fact that with America's Cup taking place over on the other side of the Med this year, these boats will probably return where we might expect them in August, September. We're more likely to see them come back in late September, early October.

[Operator]

Our next question is coming from John Pawlowski from Green Street.

[John Pawlowski, analyst]

My question is on the U.K. business. I just want to better understand what's going on in the ground in terms of the meaningful shift in same-store revenue guide, a meaningful decline in expenses. So we started the year, real-property revenue is expected to grow roughly 5%, now it's tracking towards 7% and expenses were expected to grow by 8%, and tracking towards 4%. I just love some on the ground operating color from what's happening in that portfolio?

[Gary Shiffman, executive]

John, I'll start out and then Fernando can add some specifics. But looking at the U.K. operating environment, we are feeling better then we have as inflation is running at 2% and overnight, Bank of England announced cut of rates of about 25 basis points. So these macro trends, if you will, are positive for our consumer and should bode well for our U.K. operating businesses, which are actually seeing in our real-property performance.

So big picture, things look positively improving there. We believe our continued focus on increasing real-property contribution over home sales profit is the best strategy in creating stakeholder value. So we remain really focused on increasing occupancy, and increasing real-property contribution. And I turn it over to you, Fernando for...

[Fernando Castro-Caratini, executive]

And John, from specifics as it relates to revenue and expenses. I'll remind everyone, right, the same-property pool for the U.K. Its total contribution in '23 was about $70 million. So a small dollar amount can have a large change from a percentage basis, but we are seeing the outperformance coming both from the top line and then expense side. On the top line, we're seeing our new owners at higher rates than originally forecasted.

And then from an expense perspective, and this applies to the first half of the year as well as the second, we have seen lower utility and forecast lower utility costs than we'd originally expected. Those are going to be the largest drivers of that continued outperformance, and what has allowed us to take guidance upward as meaningfully as we have over the course of the year.

[Operator]

Our next question is coming from Josh Dennerlein from Bank of America.

[Joshua Dennerlein, analyst]

Gary, I just wanted to follow up on your comment on the superyacht movement. You said that you expect to -- I think some of the superyachts that started to come back in October after the Americas Cup. It looks like the Americas Cup ends late October. Was that just misspeaking? Or is that when you kind of assume the boats to come back?

[Gary Shiffman, executive]

Yes, just making -- I was just commenting that they usually come back late August, September. And due to Americas Cup, there'll probably be a month or two delay in them coming back and we took that into account in the approximately $750,000 reduction at the midpoint related to that.

[Joshua Dennerlein, analyst]

So I guess, current guidance assumes kind of like a November return?

[Gary Shiffman, executive]

Yes, correct.

[Joshua Dennerlein, analyst]

Okay. just wanted to clarify.

[Operator]

Your next question is coming from Eric Wolfe from Citi.

[Eric Wolfe, analyst]

You mentioned that the dispositions were done on an FFO accretive basis. But it looks like you took down your real-property NOI by around $10 million and the interest expense is taken down by about $6.5 million. So I was just curious whether there was something else in that real-property NOI other than just the dispositions?

[Fernando Castro-Caratini, executive]

Eric, this is Fernando. Yes, there's there are some shifts as it relates to performance over the course of the second quarter for the rest of the portfolio. We did -- our same-property growth was at 3.6%, slightly below the midpoint of the range, so that does have some shifts as it relates to that and movements in our nonsame-property's pool, which would account for any acquisitions that were done last year or any of our development assets that are in the process of stabilization.

[Operator]

Your next question is coming from John Kim from BMO Capital Markets.

[John Kim, analyst]

Gary, you mentioned the BOE interest rate cuts, I imagine that's going to lead to higher demand for Park Holidays. But I was wondering how you're going to manage home sales from that being a bigger contributor to FFO going forward? We noticed that margins also increased during the quarter on home sales. So how are you going to balance that demand versus home sales not being a big part of earnings going forward?

[Gary Shiffman, executive]

So I think that I would share with you, John, that we have a great operating team with a strong 10-year history on the portfolio, best-in-class assets there. So we will -- we have put together a forecast that reduces margins and increases of velocity of occupancy. It's in our forecast. So there will be a continued delicate balance. If we were to see we have more room to reduce margin. We will reduce margin, and our goal of creating stickier revenue, if you will, and more valuable revenue on the real-property side.

[Fernando Castro-Caratini, executive]

And John we'll -- I'll add while we are, right? The business plan is to continue reducing the percentage contribution from home sales. It is -- it feeds getting more owners, and it is leading to that outperformance that we're seeing on the real-property side. So home sales will continue to be part of the business, just like it is here in the U.S. It is a larger contributor on a percentage basis than in the U.S. But we'll continue to manage those sales, manage the margins to accelerate velocity and that ultimately will result in more reliable income on the real-property side.

[John Kim, analyst]

So you're saying that buyers are willing to take a lower price, but with longer term on the land rental, or maybe the higher rents on land rental?

[Fernando Castro-Caratini, executive]

Not just saying that accelerating, right? Sales ultimately lead to more owners paying rent on the real-property side. So it is our sales funnel as many of the -- many of our guests that vacation with us end up purchasing a holiday home within our properties. So that's -- that is the interplay between the home sales and the real-property or rental income side of the business.

[Gary Shiffman, executive]

So the residence, if you will, pay their pitch fee or their rent fee, but they're on annual contracts. So in reducing margin and making these more attractive, we expect to accelerate the velocity of occupancy fill, John.

[Operator]

Your next question is coming from Keegan Carl from Wolfe Research.

[Keegan Carl, analyst]

Just wondering if you could give some more color on your Transient RV outlook for the balance of the year? And just more color on how July 4, in particular, it performed?

[Gary Shiffman, executive]

For Fernando, if you have a little bit of pacing information to share and everything like that. I'd just remind everybody that we remain laser-focused on converting transient to annual. Obviously, over long periods of times, the margins are better, the predictability, the forecasting and the budgeting. We have about 25,000 transient sites right now with approximately 2,000 a year conversion average. So we expect over the next 5 years to convert 10,000 or more sites.

And we're just very pleased to say that we've had a lot of success in converting, and it's really leading to a sticky revenue as we can forecast annual, much better average tenure stay right around 6 years. And I'll let Fernando respond to how the holiday is going.

[Fernando Castro-Caratini, executive]

Sure. So Keegan, transient revenue for the full year, is now expected to decline by about 10% for the year, which implies, call it, a decline of about 8.8% for the second half of the year. The 4th of July results and pacing for Labor Day have given us comfort that the revenue decline is more muted in the second half as the results that we saw during the first half, because it's one more transient-focused resorts are at peak occupancy, and these have performed closer to original expectations this year.

For the 4th of July, we were down about 7% on revenue. [ That's -- and I'll note, ] right? We've converted over the trailing 12-month period. We converted around 7% of sites from transient to annual. When you're comparing just the 4th of July day, we were up over 24% for just the 4th of July day. As it relates to Labor Day pacing, we're currently pacing it being down between 4% to 6% on revenue for the weekend.

[Operator]

Our next question is coming from Jamie Feldman from Wells Fargo.

[James Feldman, analyst]

So when we met with your team at NAREIT, there was a lot of talk around bigger picture potential either spinoffs or sales, whether it was a Safe Harbor spin-off or things to do with the U.K. business. It sounds like now you're on the path of stick with all the core businesses, sell some noncore assets. Is that the way to think about this kind of a lot was discussed whether at the Board level and you guys are now thinking the plan is, let's enjoy what we've got, maximize NOI margins, and get to our leverage targets through asset sales? Or is there something else that may be coming down the pipe?

[Gary Shiffman, executive]

Well, Jamie, I would say that we certainly would share anything of major consequence. We operate all of our business platforms to increase FFO growth, real-property contribution over home sales, as we indicated, both in the U.K. and in the U.S., maximize returns and conversions by transient to annual and continue to grow contribution and FFO growth in the Marina segment.

That being said, we're just laser focused, as I said before, on our strategies that we've shared with you. we believe they will create stakeholder value. That said, we'll continue to evaluate all options. And when I think about how we're looking forward, I'd suggest we're just starting to see the benefit of our strategic plan translate into NOI growth. And I think what we tried to get across. When we met last is the fact that without the headwinds of what we've gone into, into '24. The '25 will be a much better year where we can see NOI growth translate into FFO growth. And for now, that's really what we're targeted at. So nothing really new or change that I would suggest recent period of time.

[James Feldman, analyst]

But when you think about potential options, is there anything that would get in the way of your current trajectory for '25 growth?

[Gary Shiffman, executive]

There is nothing that I say that would change how we're evaluating and working towards '25.

[Operator]

Next question is coming from Omotayo Okusanya from Deutsche Bank.

[Omotayo Okusanya, analyst]

Just to stick on Transient RV. Again, it's been very hard for the entire industry to kind of forecast what that's going to look like for all year. And I guess at this point, when you think about that business, what are some of the signs of the green shoots you're looking at to kind of make you feel more confident about it ultimately "stabilizing"? And when do you think you may actually start to see some of those signs?

[Gary Shiffman, executive]

Well, I'll start out, and you can add Fernando. I think Fernando shared the 5% CAGR growth in the Transient segment over the last 5 years. And as we think about things, certainly, we've shared a lot about the benefit of converting transient to annual. So that's been very, very favorable as we move forward. The transient sites today, as I said, we're converting about 2,000 a year. So good growth there. And I think that we see RV over a long period of time as a very, very good business, the transient has some cyclicality to it.

We're pushing through that right now. We're probably headed for the pre-Covid levels, and we'll continue to control expenses. Manage the variable expenses that we can. And I think the benefit of really having best-in-class, well-located RV communities and a great operating platform to go forward. The last thing I'd add is that the transient is a great funnel for conversions. So the transient portfolio helps us in the profit margin that we get on the annual side of things and the growth we get on the annual side.

[Fernando Castro-Caratini, executive]

I was just going to reaffirm, right, our strategy of conversion continues to minimize the impact in the near term of any short-term volatility on the transient side, that business on a site adjusted basis, as I mentioned, has grown at an over 5% CAGR on the revenue side. But that right, we will continue to minimize. Transient revenues 4 years ago represented about 60% of total revenues in our same-property pool. They're now approaching 40%.

And so our strategy is bearing fruit. We're seeing continued demand for conversions, and then that family is with us on average for a 6-year period of time. And we're hard at work to continue to extend that tenure. So it is all part of the strategy to continue minimizing that near-term impact.

[Operator]

The next question is coming from Mason Guell from Baird.

[Mason P. Guell, analyst]

Regarding the line of credit balance, it looks like there's over [ GBP 1 billion ] online. Are there any plans to pay down the U.K. borrowings?

[Fernando Castro-Caratini, executive]

We are consistent with the strategy as it relates to capital recycling, and free cash flow conversion that we would look to continue to pay that down. That is our immediate use of proceeds for any capital recycling opportunities or free cash flow is the paydown of short-term borrowings on our credit facility.

[Operator]

Thank you. We reach the end of our question-and-answer session. I'd like to turn the floor back over to Gary for any further or closing comments.

[Gary Shiffman, executive]

Well, we thank everybody for their participation, and we do look forward to sharing with you third quarter results. Thank you.

[Operator]

Thank you. That does conclude today's teleconference. You may disconnect your lines at this time, and have a wonderful day. We thank you for your participation today.