Automotive Properties Real Estate Investment Trust

TSX:APR.UN

Earnings Call Transcript 2019-Q4

[Operator]

Good morning, ladies and gentlemen, and welcome to the Automotive Properties REIT 2019 Fourth Quarter Financial Results Conference Call and Webcast. [Operator Instructions] Following management's remarks, we will conduct a question-and-answer session.Please be aware that certain information discussed today may be forward-looking in nature. Such forward-looking information reflects the REIT's current views with respect to future events. Any such information is subject to risks, uncertainties and assumptions that could cause actual results to differ materially from those projected in the forward-looking information. For more information on the risks, uncertainties and assumptions relating to forward-looking information, please refer to the REIT's MD&A and annual information form, which are available on SEDAR.Management may also refer to certain non-IFRS financial measures. Although the REIT believes these measures provide useful supplemental information about financial performance, they are not recognized measures and do not have standardized meanings under IFRS. Please refer to the REIT's MD&A for additional information regarding non-IFRS financial measures.This call is being recorded on Tuesday, March 24, 2020.I would now like to turn the conference over to Milton Lamb. Please go ahead, Mr. Lamb.

[Milton Donald Lamb, President & CEO]

Thank you, Joanna. Good morning, everyone, and thank you for joining us today. With me on the call is Andrew Kalra, our Chief Financial Officer. We entered March 2020 with strong momentum, well positioned to continue advancing our acquisition program, and the situation has quickly changed for us and the market due to the economic uncertainty caused by COVID-19.In today's call, we will address both the initial effects of this public health crisis on our business and our Q4 financial results. We made strong progress in expanding our portfolio -- our property portfolio through acquisitions in 2019 with the addition of 7 dealership properties. Through these acquisitions, we further diversified our tenant base and geographic presence within attractive metropolitan markets across Canada.To support our growth, we completed 2 public equity offerings in 2019, raising an aggregate gross proceeds of approximately $176 million. Our expanding property portfolio and triple-net leases with contractual rent increases, continue to drive significant growth in each of our key performance metrics.In comparison to 2018, our 2019 property rental revenue grew 40.1%, cash NOI increased by 42.3%. AFFO was up 36.3%, and AFFO per unit increased to $0.908, up from $0.87 a year ago. This growth in AFFO per unit was achieved even as we issued approximately 7.9 million units in the third week of December through a $92 million equity offering to support our acquisition strategy, and also reflects a onetime cost of approximately $1 million related to the internalization of REIT's management and operations. This internalization was an important milestone for us, signifying the next step in our ongoing development growth and further aligns the REIT with its unitholders.Our strategic alliance agreement with Dilawri has remained intact, demonstrating Dilawri's continued support for APR. Subsequent to 2019, in early February, we completed 2 more dealership property acquisitions for an aggregate purchase price of $28.9 million, consisting of Regina BMW and the North Shore Acura property in Vancouver, both of which were Dilawri properties.While our momentum has now been stalled due to the COVID-19, it's important to recognize the significant progress that has been made in capitalizing on every -- on a very compelling industry opportunity and the strong underlying value that is being created for our unitholders. This period of uncertainty will pass and we are confident that the market will again recognize the strength of our portfolio, market position and the importance of our tenant's business to everyday life in Canada and a significant opportunity that we have for further value creation ahead. Our December equity raise provided us with a strong liquidity position to manage through this.I'd now like to turn it over to Andrew Kalra to review our financial results for our fourth quarter and financial position. Andrew?

[Andrew Atul Kalra, CFO & Corporate Secretary]

Thanks, Milton, and good morning, everyone. We have a strong liquidity position with $75 million in undrawn credit facilities, $13 million in cash on hand and more than $100 million in unencumbered properties.Property rental revenue in the quarter was $18.1 million, an increase of 31.9% from Q4 last year, reflecting growth from properties acquired during and subsequent to Q4 last year and contractual annual rent increases across a significant portion of our portfolio. Total and same property cash NOI for the quarter increased to $15.1 million and $10.4 million, respectively, reflecting increases of 32.4% and 1.2% compared to Q4 a year ago. Growth in cash NOI was primarily attributable to acquisitions. Growth in same property cash NOI primarily reflects contractual rent increases.G&A expenses for the quarter were approximately 13.1% of our cash NOI compared to 9.8% in Q4 last year. The increase primarily reflects deferred unit expenses, which are subject to vesting and selling restrictions associated with the internalization of management and operations of the REIT. We expect G&A expenses as a result of the internalization to increase by approximately $500,000, including incentive plans for the 2020 fiscal year.Net income for the quarter was $3.9 million, compared to $13.7 million in Q4 last year. The negative variance was primarily attributable to the change in fair value adjustments for Class B LP units as well as higher interest expense and other financing charges, partially offset by growth in NOI and fair value adjustments on investment properties.FFO for the quarter totaled $10 million (sic) [ $9 million ] or $0.222 (sic) [ $0.220 ] per unit diluted, compared to $7.3 million or $0.234 per unit in Q4 last year. AFFO totaled $8.2 million or $0.202 per unit diluted compared to $6.5 million or $0.21 per unit in Q4 last year. The increases in FFO and AFFO in Q4 2019 were primarily attributable to the impact of the properties acquired during and subsequent to 2018 and contractual rent increases. The declines in FFO and AFFO per unit in Q4 2019 were primarily attributable to the onetime internalization cost and to the timing difference between the closing of the $92 million equity offering in December 2019, and the deployment of proceeds from the offering.Costs of approximately $1 million associated with the internalization lowered our AFFO payout -- AFFO per unit by approximately $0.02 for 2019 -- would have lowered our AFFO per unit by $0.02 for Q4 2019. A portion of the proceeds of the December offering was used to fund the purchase price for the acquisition of the Straightline Kia, which closed in December 2019, and the Regina BMW/Acura North Vancouver properties, which closed February 2020.For Q4 2019, the REIT paid total distributions of $8 million, representing an AFFO payout ratio of 99.6%. For 2019, the REIT's total distribution of $28.7 million to unitholders represented an AFFO payout ratio of 88.6%. Excluding onetime costs of approximately $1 million associated with the aforementioned internalization, our AFFO payout ratio for 2019 would have been approximately 86.1%. The higher AFFO payout ratio for the quarter relative to Q4 a year ago was due to internalization and timing differences between our equity offering in December and the deployment of proceeds mentioned earlier.For Q4 2019, the fair value adjustments in investment properties was $1.3 million. The fair value gain adjustment was primarily due to NOI increases, partially offset by the transaction costs related to the Straightline acquisition and adjustments on ROU assets, 2 of our land leases. The REIT's evaluation inputs are supported by quarterly market reports from an independent appraiser, which indicate no change in capitalization rates for the REIT's markets since year-end 2018. The overall capitalization rate, applicable to the entire portfolio, remained at 6.6%.I'll conclude with our liquidity and capital resources. The REIT's liquidity position as at December 31, 2019, included approximately $75 million of undrawn revolving credit facilities and $45.3 million in cash. Currently, undrawn credit facilities remain at $75 million, and we have cash on hand of approximately $13 million. Further, we have 8 properties valued at over $100 million that remain unencumbered, providing us financial flexibility, and we will continue to closely monitor our liquidity and capital resources. Capital requirements in the next 2 years are low and capital expenditures remain -- are expected to be insignificant.We had $398 million outstanding in our credit facilities at year-end with an effective weighted average interest rate on debt of 3.77%. We have a well-balanced level of annual maturities with interest rate swap terms ranging between 3 and 8.8 years, and our weighted average interest rate swap term is 6 years, up from 5.6 years at year-end 2018. The REIT's debt to GBV is currently at 43.6%, providing us with strong liquidity.I'll turn the call back to Milton for closing remarks.

[Milton Donald Lamb, President & CEO]

Great. Thanks, Andrew. While new vehicle sales in Canada were down slightly in 2019 compared to 2018, the overall business was very healthy. The period between 2016 and 2019 represented the 4 highest years on record for new vehicle sales in Canada. 2020 was off to a positive start until COVID-19. We've been closely monitoring the pandemic and the potential impact for our business and our tenant businesses. COVID-19 is likely to have a significant near-term adverse impact on new vehicle sales in Canada, with the supply chain of new vehicles and parts can also be temporarily significantly disrupted. This will impact our tenant dealerships' businesses in the near-term as consumers delay purchasing decisions. It is important to remember that automobiles are an essential part of our daily lives, and delays in vehicle service or purchases should provide a strong recovery for our tenants as this crisis subsides. We're now focused on prudently managing the REIT's available resources during this economic uncertainty. We have also proactively raised our level of planning to adapt more quickly should the risk levels rise, and we'll continue to monitor and adjust our business continuity and other plans as this crisis evolves.We currently have a strong liquidity position and benefit from a long-term triple-net lease structure and 100% occupancy rate with some of Canada's largest automotive dealership groups. Our properties are located in attractive commercial corridors of the Canadian urban markets, mostly VECTOM. We're confident with this intrinsic value of our portfolio and our opportunity for long-term value creation.That concludes our remarks and we'd now like to open the lines for questions. Joanna, please go ahead.

[Operator]

[Operator Instructions] And your first question comes from Brad Sturges at IA Securities.

[Bradley Sturges, Equity Research Analyst]

I guess maybe just starting off with the non-Dilawri tenants, could you comment on I guess the EBITDAR coverage ratios that -- or at least the range of coverage ratios that would be exhibited at December 31?

[Milton Donald Lamb, President & CEO]

Sure. The -- while Dilawri provides metrics and certainly, AutoCanada provides metrics as being a public company, the remaining private tenants, we receive their financials as we do the acquisition, and we're very comfortable with them, but we do not receive annuals, so we can't comment on rent coverage on EBITDAR. Certainly our strategy from day 1 has been to work with groups that have multiple brands, multiple dealerships to -- and providing indemnification to allow us greater security. And at times like this, we're happy we did that.

[Bradley Sturges, Equity Research Analyst]

And maybe just digging into dealership profitability a little bit. With new car sales slowing down in the near-term and probably beyond that, how much of profitability within the dealership could be from like repairs and maintenance, finance, insurance, things of those revenue items?

[Milton Donald Lamb, President & CEO]

Sure. I mean, typically, if you look at the U.S. companies and what we've seen here, you're normally talking about a significant portion of the revenue is new car sales, but 80% of the profitability is from the other sectors you just mentioned. I would caution that this is not just an economic drop in new car sales. There has been consumer behavior changes as well. People are in shutdown. So we expect to see, it's still early days, but we would not be surprised to see a drop in service as well. I think one of the comments that we look at and kind of step back and consider is where does the automotive dealership, the automotive world sit when we come out of this. As mentioned, I think that will allow some pent-up demand. You can delay your service, but at a certain point, when kind of the world gets back to normal, you're going to get rushed back in to get that. You can delay switching out your winter tires. But at a certain point, you're going to want to do that. You can delay a new car or a used car, but at a certain point, it comes back. So we're very confident that this is a very strong business going forward. But any of the metrics we would normally look at for dealership profitability under COVID-19, there's just not the transparency and the track record to make any assurances.

[Bradley Sturges, Equity Research Analyst]

And with -- in the context of your liquidity position and some of the planned capital improvements that you're looking to do over the next few quarters, does this impact your expected timing of those improvements? Or are those still going to go on as expected in terms of current timing?

[Milton Donald Lamb, President & CEO]

What you've seen, and certainly, when you see the Q1s, there was a number of capital expenditures that are related to -- actually, most of them are related to tenant obligations that we have upon acquisitions. And a number of those have already set. Andrew, what do we do about outstanding?

[Andrew Atul Kalra, CFO & Corporate Secretary]

The -- yes, Brad, this is about for the next 12 months, about $5 million, and that will be tenant dependent. If the tenants spend the money on their upgrade improvement, then we'll fund that. At this point in time, it is probably likely to happen, probably in the back half of the year. So it's about $5 million.

[Bradley Sturges, Equity Research Analyst]

And over 2-year period?

[Andrew Atul Kalra, CFO & Corporate Secretary]

Over a 2-year period, it can be about -- it's about $15 million.

[Milton Donald Lamb, President & CEO]

And that is associated with the rent increase as it's funded.

[Andrew Atul Kalra, CFO & Corporate Secretary]

Right.

[Bradley Sturges, Equity Research Analyst]

Right. And just strategically, are you -- is the focus now just preserving liquidity and keeping levers low? Or are you -- would you consider acquisitions opportunistically or to help strengthen one of your tenants, for example?

[Milton Donald Lamb, President & CEO]

Yes. I mean, that's kind of 2 questions in one. I think whether it's us or anyone else, right now, it's a bit of a step back, wait and see, preserve liquidity. It'll be really interesting. We think this may allow for an elevated level of consolidation when we come out of this. And so we certainly want to be there for that. And I would think that the opportunities on the consolidation may occur before the capital markets fully come back. But that is more of a midterm as opposed to a short term. I think in the short term, you have to keep your head down and see what is occurring around you. You do make a port -- a point about supporting your tenants. There may be the opportunity in working with a tenant. And we always say, we want to be partners with our tenants to provide them liquidity and allow us to get a high-quality property. So I won't say no to that. But it certainly has to have other benefits for the REITs and unitholders as we look at it.

[Operator]

The next question comes from Jonathan Kelcher at TD Securities.

[Jonathan Kelcher, Analyst]

First, just following up on a couple of Brad's questions there. On -- you don't get the annuals for the non-Dilawri tenants, but when you were doing the acquisitions, what sort of the range of rent coverage that you're comfortable with going in?

[Milton Donald Lamb, President & CEO]

They tend to be very much in the general market, which is the 2.5 to 3, 3.5. And that tends to be consistent amongst a lot of the larger dealership groups. They tend to be pretty good at what they do.

[Jonathan Kelcher, Analyst]

Okay. Fair enough. And then secondly, just to confirm. On the capital improvements, the tenants spends the money and then you repay them?

[Milton Donald Lamb, President & CEO]

Correct. Yes, it's associated with money spent for construction for either expansion -- well, mostly for expansions or construction.

[Jonathan Kelcher, Analyst]

Okay. And then just finally, have any of your tenants come to you yet for any rent deferrals? And how are you going to think about that, if and when that happens?

[Milton Donald Lamb, President & CEO]

Yes, certainly, looking around the industry being retail overall, you're certainly seeing that theme come up, in my view, way too often. But I understand COVID is a very different world than traditional uncertainty. We've had no formal requests. I mean, it's still very early days. It was just yesterday that Québec and Ontario announced nonessential services, and it was good to see that dealerships in Ontario and service in Québec are included in that essential bucket list. But we do understand that there is going to be an impact in consumer confidence and consumer spending. Deferrals, we'd have to take it, and we would like to see more information before we have commitment. It's just too early to do assurances. We certainly want to work with our tenants, though.We firmly believe these are -- the reason why we went with these tenants to begin with is we believe that they will be some of the groups that have the banking support, the financial support, the OEM support that in the mid to long term, they will be the consolidators. So we want to be there with them as they continue to grow.

[Operator]

The next question comes from Kyle Stanley of Desjardins Capital Markets.

[Kyle Stanley, Associate]

So I'm just kind of following up a little bit on Jon's question there. So in your -- if you haven't had many early discussions yet with our tenants, so I'm just wondering, do you know how many have had to shut down operations? Or if service and repairs are still ongoing at this point?

[Milton Donald Lamb, President & CEO]

To our knowledge, we've not been informed of any closures. So I mean, it wasn't that long ago that March 4, we were at 12 40, and there wasn't really an issue. So our tenants are also experiencing the same, what's happening and they're rolling their sleeves up. But auto service is something that's certainly needed. It is an essential service. But we certainly believe that, that -- the volume during the COVID lockdown will be at a lower level.

[Kyle Stanley, Associate]

Okay. And then I guess, to your knowledge, is there any language in your leases that would provide tenants the ability to either defer or ask to have rent deferred? Should they be forced to shut operations similar to the government kind of forcing them?

[Milton Donald Lamb, President & CEO]

Yes. I mean, no one -- there's nothing in it that stops anyone from asking anything. No one's shy about asking. But as far as the rights, a lot of our leases have no force majeure. And the ones that do a force majeure, we actually have a carve-out that states with the exception of rent payments. So it would be very difficult for them to be able to point at something. I think it is more of a, as you called it, an ask or request, and we do like the fact that there's indemnification behind it.

[Kyle Stanley, Associate]

Okay, that makes sense. And then just the last one for me. Just some clarification on the $500,000 of G&A this year. So is that incremental to the 2019 total G&A that was spent?

[Andrew Atul Kalra, CFO & Corporate Secretary]

That's correct. Well, you've got a -- for the 2019, you'd have to deduct the $1 million that was a onetime and then you would have to add the $500,000.

[Kyle Stanley, Associate]

Okay. Great. That's what I thought. I just wanted to be sure.

[Andrew Atul Kalra, CFO & Corporate Secretary]

And that's internalization. So I wouldn't -- that's just internalization. There's obviously -- depending on where we go on infrastructure and hiring individuals, we'll see where that leads us. But at this point in time, those numbers are only associated to the internalization.

[Operator]

The next question comes from Sumayya Syed at CIBC.

[Sumayya Syed Hussain, Associate]

Just in your commentary, Milton, on the pandemic, you mentioned an increased level of preparedness and ability to act quickly. Just any color on what that exactly entails for your business at this point in time.

[Milton Donald Lamb, President & CEO]

I would believe we're not alone in that, most of the other REITs, especially the proactive REITs, whether it's creating an ad hoc committee or whether it's creating more frequent Board calls. Just yesterday, in our Board meetings, in the morning, Québec announced. In the afternoon, Ontario announced. So that is just making sure that the communication -- sorry, the ability to adapt and obviously, putting in place a preparedness plan on COVID-19, all of that kind of goes into that comment. It is not business as normal across our economy right now. So we should not treat it as though it's business as normal. And therefore, we're just at a higher rate of awareness and a higher rate of communication.

[Sumayya Syed Hussain, Associate]

Okay. So just being more prepared. And I guess it's still early days, but in the current environment, how do you kind of foresee new development activity on the Dilawri side to be impacted?

[Milton Donald Lamb, President & CEO]

Well, yes, I mean, the short answer is it's early days. In this very moment of time, I think people are, whether it's Dilawri or our other dealer tenants, are trying to figure out what's their next step, both defensively and on the acquisition opportunistic side. I'm sure they're looking at both sides. It's too early to tell. On the mid to long term, I think these are the groups that are going to be able to take advantage of the consolidation, which I think will increase once these clouds dissipate. Certainly, they have the bank -- they being Dilawri and the other dealership groups, have the banking relationships to be able to move forward as this market gets back to normal.

[Sumayya Syed Hussain, Associate]

Okay, that's fair. And then just lastly for me, for the capital provided for the handful of properties in the quarter, roughly what kind of rent increase did you see as a result of that?

[Milton Donald Lamb, President & CEO]

They tend to be very much in line with the original cap rates going in. Potentially 25 basis points, 35 basis points higher. But if it's done as the contract as part of the acquisition, it tends to be at the same price as the acquisition, at the same cap rate as the acquisition, I should say. If it is done as a later ask, it really depends on the market. It can be slightly higher.

[Sumayya Syed Hussain, Associate]

Okay. And these ones were engaged at the time of the acquisition, I believe?

[Andrew Atul Kalra, CFO & Corporate Secretary]

They were announced as part of the...

[Milton Donald Lamb, President & CEO]

Yes. The ones that were done for the Dixie Automall and Meadowvale Honda, that was done post, and that was certainly announced December as part of our raise. I would say there's not a material difference than our normal cap rate range.

[Andrew Atul Kalra, CFO & Corporate Secretary]

That's fair.

[Operator]

The next question comes from Mark Rothschild from Canaccord.

[Mark Rothschild, MD & Real Estate Analyst]

Most of my questions have already been asked and answered. Maybe just in regards to your tenants, it's reasonable to expect that some are going to ask for some rent deferral or rental relief of some sort and that might be something that you're going to feel you need to do. But besides for that, you do have sufficient liquidity to complete acquisitions, and there are likely to be some attractive opportunities in the coming months or year. What's your thought on that versus buying back stock? Clearly, the units are very depressed today, and the market is evolving quickly. But how do you think about that now that you've grown the REIT quite a bit over the past few years?

[Milton Donald Lamb, President & CEO]

I mean, the first thing we look at is cost of capital. And today, certainly, the stock price or the unit price that we're trading at today, that is a very compelling return on capital. We also have to -- we originally did the raise in December to allow us growth. But in effect, it's allowed us a very secure level of liquidity, which we're certainly enjoying and benefiting from right now. We want to make sure that we maintain that liquidity as -- until the clouds part on this. It does allow us enough room to do some things, but I don't think you'll see dramatic moves because we like that liquidity, and we think investors feel more -- should feel more secure having that level of liquidity, and we certainly do.

[Operator]

The next question comes from Matt Logan of RBC Capital Markets.

[Matt Logan, Analyst]

Milton, following up on your comments about strong banking relationships for your tenants. Can you provide any color on Dilawri's liquidity position, just cash and undrawn lines?

[Milton Donald Lamb, President & CEO]

No, they certainly have to provide us with financial statements, but they don't provide us with liquidity statements. And the last financial statements we received were December 31, as of end of year. They certainly enjoy a lot of regions and a lot of dealerships. But no, we can't provide comments on that. We're not provided the comments either.

[Matt Logan, Analyst]

Okay. In the MD&A, there is commentary on Dilawri's debt to EBITDA. Do you know the debt-to-gross book value figure for Dilawri?

[Andrew Atul Kalra, CFO & Corporate Secretary]

No, Matt, we don't have that information. We're only provided those metrics that we identify in the MD&A.

[Matt Logan, Analyst]

Okay. And maybe just changing gears...

[Andrew Atul Kalra, CFO & Corporate Secretary]

And I guess the other point is that those are December 31, 2019. So they're not going to be reflective of anything that has happened, but that's the information that we'll provide.

[Milton Donald Lamb, President & CEO]

Yes, the world has changed a lot in March.

[Matt Logan, Analyst]

Certainly. In terms of your own liquidity position, is there a minimum amount of cash and undrawn facilities that you'd like to maintain?

[Andrew Atul Kalra, CFO & Corporate Secretary]

Given these times, we are managing cash in a very prudent manner. So we have the undrawn lines of credit facility of $75 million. We'll decide over the next 6 weeks how much cash we'll keep on hand.

[Milton Donald Lamb, President & CEO]

But between cash and undrawn, we certainly want, I'd say, easily 6 months. But I would go with that at this point, approximately 6 months. But we're not near that. We're still well above that.

[Andrew Atul Kalra, CFO & Corporate Secretary]

Yes.

[Matt Logan, Analyst]

So 6 months would be relative to which figure?

[Andrew Atul Kalra, CFO & Corporate Secretary]

6 months to run the operations and our commitments for the operations.

[Matt Logan, Analyst]

And in terms of mortgage maturities for 2021, can you tell us the value of that mortgage?

[Andrew Atul Kalra, CFO & Corporate Secretary]

Yes, I don't disclose it. And the reason why I don't disclose it because it's not material. So it's a small amount, and that's why I don't disclose it, but I'll say it's immaterial to the overall operations of the REIT. The bulk of that 15.7 is a 10, is the latter up to the 2027.

[Operator]

[Operator Instructions] The next question comes from Tal Woolley of National Bank Financial.

[Tal Woolley, Research Analyst]

Just wondering, Milton, if you can speak to a situation where say, say a dealership does wind up in some level of financial distress during this period. What's the role the OEMs also play in helping to work out that situation because it's not like they want to see the dealership fail, and it's not like they can just open up another one next door in like a couple of days. So can you talk maybe a bit to sort of how that relationship plays out in this kind of market, too?

[Milton Donald Lamb, President & CEO]

Yes. I mean, you're touching on what I'd consider as being a bit of a shadow covenant. You can imagine how much OEM spends on R&D, manufacturing and marketing, just to see a dark dealership. They would certainly be working with the existing dealer to provide them liquidity, aka being sold to another dealership group that has the ability to kind of run those operations. That's the one side of it. And the other side of it is we are talking about franchises. So it's not that it's a large chain that can decide to shut down 1/3 of its locations. If you shut down a location, you lose that franchise that has the, in most cases, in a kilometer radius. And that is worth something.One of my comments earlier is, we looked at whether it's our industry, certainly, we looked at our industry. But overall, there's going to be groups that were on the precipice -- tenants that were on the precipice of staying in business, and this pushes them over. There's going to be other tenants that there's not going to be a pent-up demand. You either consume it now or you consume it again when the COVID virus dissipates. And then we believe that the dealership communities in the third category, which is that anything you delay today as far as a new purchase and/or service, you're going to have to do when those clouds part. So it certainly is worthwhile for dealers and very worthwhile for OEMs to make sure that when this air clears that their dealership and their footprint remains. So yes, I think it's going to be very important for them.

[Operator]

There are no further questions at this time. You may proceed.

[Milton Donald Lamb, President & CEO]

That's great. Thank you, everyone. Have a good day.

[Operator]

Ladies and gentlemen, this concludes your conference call for today. We thank you for participating, and we ask that you please disconnect your lines.