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spk01: Greetings and welcome to the Braemar Hotels and Resorts Inc. Third Quarter 2022 Resorts Conference Call. At this time, all participants are in a listen-only mode. Our question and answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. As a reminder, this conference is being recorded. I would now like to turn the conference over to your host, Jordan Jennings, Manager, Investor Relations. Please go ahead.
spk00: Good morning and welcome to today's call to review results for Braemar Hotels and Resorts for the third quarter of 2022 and to update you on recent developments. On the call today will be Richard Stockton, President and Chief Executive Officer, Derek Eubanks, Chief Financial Officer, and Chris Nixon, Executive Vice President and Head of Asset Management. The results as well as notice of the accessibility of this conference call on a listen-only basis over the internet were distributed yesterday in a press release. At this time, let me remind you that certain statements and assumptions in this conference call contain or are based upon forward-looking information and are being made pursuant to the safe harbor provisions of the federal securities regulations. Such forward-looking statements are subject to numerous assumptions, uncertainties, and known or unknown risk which could cause actual results to differ materially from those anticipated. These factors are more fully discussed in the company's filings with the Securities and Exchange Commission. Before looking statements included in this conference call are only made as of the date of this call and the company is not obligated to publicly update or revise them. Statements made during this call do not constitute an offer to sell or solicitation of an offer to buy any securities. Securities will be offered only by means of a registration statement and perspective, which can be found at www.sec.gov. In addition, certain terms used in this call are non-GAAP financial measures, reconciliations of which are provided in the company's earnings release and accompanying tables, or schedules, which have been filed in Form 8K with the SEC on November 2, 2022, and may also be accessed through the company's website at www.bhrreat.com. Each listener is encouraged to review those reconciliations provided in the earnings release together with all other information provided in the release. I will now turn the call over to Richard Stockton. Please go ahead, Richard.
spk02: Good morning, and welcome to our third quarter earnings conference call. I will begin by providing an overview of our business and an update on our portfolio. After that, Derek will provide a review of our financial results, and then Chris will provide an update on our asset management activity. Afterward, we will open the call for Q&A. We have four key themes for today's call. First, our luxury resort portfolio continues to outperform and help drive comparable hotel EBITDA of $40.7 million for the quarter, an increase of 23.5% versus the comparable quarter in 2019. Second, We continue to see strong momentum in our capital raising for our non-traded preferred stock, which is allowing us to go on offense and grow our portfolio during an unattractive time in the cycle. And we're excited about our recent announcement regarding our agreement to acquire the Four Seasons Resort Scottsdale at True North. Third, our portfolio is well positioned to continue to outperform with very strong forward bookings, as we are now seeing corporate transient and group business accelerating in their recovery on top of the already strong leisure segment. And fourth, our balance sheet is in good shape and we have no remaining final debt maturities in 2022. Before diving into our hotel performance for the quarter, I'd like to spend some time addressing two items that impacted our AFFO in the quarter, interest expense and non-traded preferred equity dividends. Our AFFO per share for the third quarter was 16 cents compared to 17 cents for the prior year quarter. First, our interest expense in the recent quarter was higher. Our weighted average interest rate at the end of the quarter was 5.5% versus 2.6% in the prior year quarter. This is a result of our strategy of utilizing capped floating rate debt. As we have stated before, we primarily utilize floating rate debt as we believe it provides a natural hedge to our cash flows. As the Fed has raised short-term interest rates, that has obviously impacted our interest expense on our floating rate loans. For the quarter, our interest expense increased $5.9 million compared to the prior year quarter. Our adjusted EBITDA RE increased $12.2 million over the prior year quarter, which is more than two times the increase in interest expense. Also, with LIBOR currently at 3.8%, effectively 41% of our consolidated debt is fixed as our interest rate caps have kicked in. If LIBOR increases above 4%, which it appears is highly likely, effectively 77% of our debt would be fixed. Those interest rate caps burn off over time, and if you assume LIBOR stays above 4% The amount of our debt that would effectively be fixed would be 77% in Q4 and 72% in Q1 2023. The second item I want to address is that we've ramped up our non-preferred capital raising. We've seen an increase in our preferred dividends. For the third quarter, preferred dividends were $4.1 million higher than the same quarter last year. We continue to believe this non-traded preferred is an attractive source of growth capital for us. As we deploy the capital into hotel investments, we'd expect the returns on those investments to more than offset the cost over time. Speaking of which, we're excited about our recent announcement regarding our agreement to acquire the Four Seasons Resort Scottsdale at Troon North for $267.8 million. This 210-room luxury resort sits on 37 acres and is ideally located in Picturettes, North Scottsdale. We expect to close the transaction in the fourth quarter with cash on hand and no common equity will be issued to fund the acquisition. This property fits perfectly with our strategy of owning luxury hotels and resorts and further diversifies our portfolio. Moving on to our quarterly results, we're extremely pleased with our record third quarter results and continue to see our performance compared to 2019. Our comparable hotel even at $40.7 million during the quarter was driven by strong occupancy levels at our resort properties. Additionally, REVPAR for all hotels in the portfolio increased approximately 19% for the third quarter of 2022 compared to the third quarter of 2021, which also represents an increase of approximately 19% when compared to the third quarter of 2019. Many of our hotels are in drive-to leisure markets and have been well positioned to benefit from persistent leisure demand. In total, nine of our 15 hotels are considered resort destinations. We are pleased to report that this segment delivered a combined hotel EBITDA of $25 million for the quarter. We continue to be encouraged with the ramp up of our urban hotels, which generated $15.7 million of comparable hotel EBITDA in the third quarter. For the third quarter, all six properties posted positive hotel EBITDA. This is a significant turnaround as demand is quickly returning to our cities. This includes leisure as well as corporate transient and corporate group demand. We've been saying that the recovery in our urban hotels will be the next phase of growth for our portfolio. And in the third quarter, these assets continue to exhibit solid growth. While leisure demand continues to be strong, particularly on weekends, we've been encouraged by the continued rebound in corporate transient and corporate group demand. Overall, we have seen these trends continue into a strong start to the fourth quarter. For the month of October, our preliminary figures suggest that we finished with 73% occupancy, and an ADR of $382, which equated to a rent bar of $280 for the month, exceeding 2019 by 14%. Looking ahead, we continue to see an attractive pipeline of acquisition opportunities in the market. We will continue to be extremely disciplined in our investment approach and only focus on transactions that we believe will be accretive to total shareholder return. Our balance sheet is in good shape, and we have an attractive maturity schedule with our next hard maturity not until April 2023. We've also been active on the investor relations front. In the months ahead, we will continue to go out on the road to meet investors to communicate our strategy and the attractiveness of an investment in Braymont. Looking ahead, our unique portfolio, which is focused on the luxury segment and with properties in both resort and urban markets, positions us to perform well in both the near term and the long term as leisure demand continues and business and group travel resumes. We have the highest quality hotel portfolio in the public markets that is generating positive cash flow at the corporate level and what we believe is a solid liquidity position and balance sheet with attractive debt financing in place. I will now turn the call over to Derek.
spk03: Thanks, Richard. For the third quarter of 2022, we reported net loss attributable to common stockholders of $14.1 million, or 20 cents per diluted share. For the quarter, we reported AFFO per diluted share of 16 cents. In previous quarters, we had included the as-converted shares associated with our Series B convertible preferred stock and our convertible notes in our fully diluted share count for purposes of calculating AFFO. Beginning this quarter, we are no longer including those shares and will only include those shares upon conversion. We believe this practice is more consistent with how our peers report, and we believe it will make it easier for analysts and investors to model the company's performance. Adjusted EBITDA RE for the quarter was $34 million, which was 19% higher than what we reported in the third quarter of 2019. During the quarter, the company booked an accrual of $5.2 million in G&A expense. This accrual is in anticipation of the true-up for the Ashford Securities Contribution Plan that the company expects to happen sometime in 2023. The true-up is based on actual capital raised through Ashford Securities and will be split between Braemar, Ashford Trust, and Ashford, Inc. Excluding that accrual, our corporate G&A was consistent with recent previous quarters. At quarter end, we had total assets of $2.2 billion. We had $1.2 billion of loans, of which $49 million related to our joint venture partner share of the loan on the capital Hilton and Hilton La Jolla Torrey Pines. Our total combined loans had a blended average interest rate of 5.5%. We have interest rate caps in place on 75% of our floating rate debt. Taking into account the current level of LIBOR and the corresponding interest rate caps, approximately 41% of the company's debt is effectively fixed and approximately 59% is effectively floating. As of the end of the third quarter, we had approximately 36.8% net debt to gross assets and continue to make progress in our deleveraging efforts. We ended the quarter with cash and cash equivalents of $358.9 million and restricted cash of $53.9 million. The vast majority of that restricted cash is comprised of lender and manager-held reserve accounts. At the end of the quarter, we also had $22.9 million in due from third-party hotel managers. This primarily represents cash held by one of our brand managers, which is also available to fund hotel operating costs. As you can see, with our cash on hand and our ongoing capital raise of the non-traded preferred, we have plenty of cash to fund the announced acquisition of the Four Seasons Resort Scottsdale. On the capital markets front, while we did not complete any financings during the quarter, we have an attractive maturity schedule with our next final maturity not until April 2023. Our 2023 maturities include the loans on the Rich Carlton Sarasota, Hotel Yonville, and Bartisono. As you can see in our earnings release, the trailing 12-month EBITDA debt yield on these loans ranges from 14% to 32%. Therefore, we do not anticipate any challenges with these refinancings, given the high quality nature of these assets and the low LTVs. I'm also pleased to report that during the third quarter, we issued approximately 5 million shares of our Series E and Series M non-traded preferred stock, raising approximately $114.5 million in net proceeds. This strong fundraising momentum has continued, and since the end of the third quarter, we have issued an additional 1.6 million shares of our Series E and Series M non-traded preferred stock, raising approximately $36.3 million in net proceeds. We currently have 11.6 million shares of our Series E and Series M non-traded preferred stock outstanding and have raised approximately $262 million of net proceeds from this offering. We expect the proceeds from the sale of the Series E and Series M non-traded preferred stock as well as our internally generated cash flow to be our primary source of capital to facilitate our growth and deleveraging goals. As of September 30, 2022, our portfolio consisted of 15 hotels with 3,736 net rooms. Our share count currently stands at 79.8 million fully diluted shares outstanding, which is comprised of 71.5 million shares of common stock and 8.3 million OP units. This concludes our financial review. I'd now like to turn it over to Chris to discuss our asset management activities for the quarter.
spk04: Thank you, Derek. Comparable REVPAR for our portfolio increased 19% during the third quarter relative to both the same time period in 2019 and 2021. The outperformance of this portfolio during the third quarter is evident when you contrast our portfolio to the market as a whole, with the U.S. luxury chain scale having only increased 9% and the upper upscale chain scale having only increased 1% over comparable 2019 REVPAR levels. Our resort assets are thriving, with our resort hotel EBITDA having grown by over 74% during the third quarter relative to comparable 2019. We are also pleased with the third quarter performance of the portfolio's group pace, recent acquisitions, and the number of record-setting results. Group room revenue for the full year is pacing ahead of 2019 by 2%, with the third quarter actualizing ahead of 2019 by 12%. The collective lead volume for the portfolio has improved every quarter this year compared to 2019, and we are seeing a much shorter booking window relative to 2019, which bears with it the ability for more nimble pricing strategies. Group rate actualized for the third quarter 20% above comparable 2019. We are also seeing an acceleration in our group booking volume, with group room revenue booked during September exceeding 2019 by approximately 86%. In fact, we already have more group room revenue booked for the fourth quarter than we did during this time comparable 2019. Our urban hotels have been some of the larger beneficiaries of our accelerated group success. we entered 2022 with all urban hotels below comparable 2019 rev part levels. As we stand now, in September, two-thirds of the urban assets are ahead of comparable 2019 rev part. One of those hotels is a recent acquisition, the Mr. C in Beverly Hills. During the diligence process, our team created a 70-point takeover plan, which is having a significant impact on property performance. While we have only owned the hotel for 14 months, We are already performing near our year three investment underwriting. Overall, during the third quarter, Mr. C has exceeded comparable 2019 rev par by 3% and has driven group room revenue by more than 45% relative to 2019. We would also like to quickly highlight that we had a substantial number of property performance records broken during the third quarter. Six of our hotels set their highest all-time third quarter rev par. Collectively, these assets outperformed the third quarter 2019 rev par by 21%. Promisingly, they include a variety of assets between urban and resort, such as the Mr. C in Beverly Hills and the Ritz Carlton in Lake Tahoe. More encouraging, heading into the fourth quarter, we are seeing signs that this record-breaking pattern may continue. One of the record-breaking hotels was the Park High at Beaver Creek, where total revenue for the third quarter was higher than any other third quarter in the history of the hotel, finishing 5% above comparable 2021, which was the previous record year. A large component of the successful quarter was our group segment, where we had approximately 8,300 group room nights, which was a 19% increase to comparable 2019. The team has been successful in initiating collaboration amongst local businesses to promote village-wide events during off-seasons in the community. I would also like to highlight that Hurricane Ian in Fiona had an impact on our resort portfolio with total net displacement being approximately $1.5 million in total revenue. Our Ritz-Carlton in Sarasota experienced the largest displacement with approximately $575,000 in total revenue impact and approximately $3.9 million in property damage. Despite the tropical storms, Every single affected hotel within our portfolio still exceeded comparable 2019 levels during the third quarter. These resorts, the Ritz-Carlton Sarasota, the Ritz-Carlton St. Thomas, the Ritz-Carlton Reserve Dorado Beach, and Pier House Resort all collectively nearly doubled comparable 2019 in total revenue. The Ritz-Carlton Sarasota, whose market had the most significant impact from Hurricane Ian, still finished September with $5.5 million in total revenue. a 68% increase over comparable 2019. We are incredibly proud of our portfolio's resilience and support to their communities. Moving on to capital investment, we've invested heavily in our portfolio over the last several years to enhance our competitive advantage. These investments uniquely position our portfolio to benefit from the pent-up demand that we are currently seeing in our markets. In 2022, we recently completed a restaurant patio addition at the Park High at Beaver Creek and converted underutilized office space into event space at the Ritz Carlton St. Thomas. We are nearing completion of the guest room renovation at the Marriott Seattle. We are also currently converting an underutilized pool to expand the current fitness center and add meeting space at the Clancy in San Francisco. Overall, we anticipate spending approximately $40 to $50 million on capital expenditures this year and approximately $7 to $80 million in 2023. While we are reaping the benefits of several strategic initiatives that we have rolled out in the past, such as the Bartisano Villas, complete rebuild of the Ritz-Carlton St. Thomas, and key additions at the Ritz-Carlton Sarasota, to name a few, we're already launching new initiatives to enhance an already remarkable portfolio. Some of these include expanding partnerships with residential rental programs, developing underutilized land, and key additions. With these new projects underway, we are confident that the team will continue to drive the portfolio to new heights. I will now turn the call back over to Richard Stockton.
spk02: Thank you, Chris. In summary, we continue to be pleased with the trends we're seeing at our hotels driven by strong leisure demand in our luxury resort properties and recovery of our urban properties. We see a clear path for continued strength in our future financial results. We're well positioned moving forward with a solid balance sheet and a unique diversified portfolio. We look forward to updating you on our progress in the quarters ahead. This concludes our prepared remarks, and we'll now open the call up for Q&A.
spk01: Thank you. At this time, we will be conducting our question and answer session. If you would like to ask a question, please press star 1 on your telephone keypad. Confirmation tone will indicate your line is in the question queue. You may press star 2 if you would like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. One moment, please, while we poll for questions. To ask a question, please press star 1 now. We have a first question from the line of Tyler Bittori with Oppenheimer. Please go ahead.
spk05: Good morning. This is Jonathan, one for Tyler. Thanks for taking our questions. First one for me is a multi-part question on margin and labor costs. Can you provide some color in the FTEs versus pre-COVID and how the margin compares with COVID?
spk01: Excuse me, Tyler. This is the operator. I'm sorry to interrupt. You may want to use the handset or come a little closer to the mic. We can't hear you very well. Thank you.
spk02: I think we did hear enough of it. I think the question is on labor costs, and I think I'll have Chris respond to that.
spk04: Yeah, thanks for the question, Jonathan. Thank you. There's certainly a lot of pressure as it relates to margin and labor costs. There's a lot of challenges there, right? So wages are increasing. We're seeing wages up over 30% at 2019 levels. The labor market is very challenged. We're having to use more contract labor than we have in the past. The inflationary pressures are driving up the cost of nearly everything we bought. We're seeing increases to utilities. You know, there's a lot of headwinds there. With that said, we're very pleased to see that our EBITDA margin is up to 2019. And so despite those headwinds, we've been able to navigate them. And our focus in doing so has really been on driving ADR. ADR flows at a very high rate, and our portfolio is up 35% in ADR to 2019. Another area of focus for us has been ancillary revenues. We hear from our customers that when they travel to these incredible resorts, They want a great experience. They want great offerings, and they're willing to pay for it. And so we've kind of mirrored those two and had a heavy focus on our ancillary revenues and offerings. And we're up 17% per occupied room to 2019. Those things have helped us preserve margin. But the other thing is our labor and staffing models. And labor is one of the highest costs our hotels incur regularly. We've been very diligent in working with our management partners in terms of ensuring we've got the right staffing model and a lot of those COVID-identified efficiencies pulled through. So as it sits today, we're at 78% of FTE count to kind of pre-COVID. Occupancy for the portfolio is at 87%. And so we're trailing kind of that occupancy rate. And we've got a number of open positions. So we are staffing up selectively for the demand that we're seeing and the demand we expect. But even if we were to snap our fingers and all of those open positions we have could be hired tomorrow, we would still be at 86% of pre-COVID levels. You know, we're very encouraged by the job that our managers are doing and managing our staffing models. I think the other benefit you're going to see as we move forward is that a lot of our hotels and markets are heavily reliant right now on contract labor. The labor market is so tight and so tough, and we've had to pay and bring on a lot more contract labor than we've used in the past. That comes at a much higher cost. And so we are encouraged as we move forward and the labor market somewhat stabilizes to we'll be able to move away from contract labor and move more towards in-house labor that'll come at a significant cost savings.
spk06: Okay, thank you for all the color, and hopefully you can hear me a little better now. And switching gears, you guys are obviously making excellent progress on the preferreds, the new preferreds, I should say. Can you just talk about how that's gone versus your original expectations and how you're thinking about that part of the capital stack longer term? I mean, is there a target or potential internal impact or external cap rate there and how much you would do there?
spk03: Hey, Jonathan, it's Derek. I'll take that. So, look, we've been pleased with the capital raise. The capital raise will expire in February of next year, so it's only got a few months left on it. It was filed for $500 million total raise. As we've said, we've raised just under that to date, under $300 million to date, so we've been very pleased with that. I think once we finalize this capital raise in February, we will revisit, reevaluate where we are in terms of the preferred percent of our capital structure and what we want that to look like going forward. But having said that, we believe it's a very attractive source of capital for us. And as Richard said, it's allowed us to go on offense and buy some great assets at a great time in the cycle. And we're very pleased with the way we've been able to put that capital to work and believe it will ultimately being a creative source of capital for our shareholders.
spk06: Okay, great. Thank you for that. And then last one, if I could, on the acquisition, can you just talk about the performance of the asset in 2022 and how that compares to 2019 and the timeline to get to some of the underwriting assumptions and the outlook for the hotel? I mean, are there any low-hanging fruits or anything there in terms of quick operational adjustments you can make?
spk02: Yeah, sure. Happy to talk about that. This is Rich, and I'll let Chris also make some comments. So the asset Four Seasons Scottsdale is running at least 15% higher in rent par versus 2019. The thing that's great about it, one of the things that we really like about this hotel is its ability to generate strong margins, particularly for HAB-Jacques Juilland, He has such a sprawling resort at such a very high service level so historically margins have been running over 25% at the no I level and that's the sort of your production, we expect going forward. HAB-Jacques Juilland, So yeah, I think there's there, but even with that said, you know, there are a number of levers that we can pull we've done already an extraordinary amount of due diligence on the operations of the property. and have some ideas to further enhance performance. I mean, Chris, anything else you'd like to add to that?
spk04: Yeah, our team's really excited about this acquisition. There's a lot of, I call them, larger initiatives that will reposition and transform the asset kind of long-term, but then there's also a number of, as you call it, low-hanging fruit and short-term initiatives that we plan on pulling through. The deal hasn't closed yet, and we certainly have been in discussions with the team, but I don't want to share any of those publicly until we kind of align. But we are excited for both the short-term and the long-term potential of this asset. In terms of timing on close, I mean, we've said – Yeah, our plan is to close by the end of the year.
spk06: Okay, great. Thank you for all the detail, guys. That's all from me.
spk01: Thank you. Again, if you wish to ask a question at this time, please press star and 1 on your touchstone telephone. The next question is from the lineup, Brian Maher with B Riley Securities. Please go ahead.
spk07: Yeah, good morning, everyone. Just a couple of quick questions. Well, maybe the first one's not so quick. you know, we're seeing, obviously, some softness in the resort part of the portfolio, clearly offset by the urban part of the portfolio. Has the addition of the more recent resorts, you know, Puerto Rico, Beverly Hills, soon to be Scottsdale, is that changing the kind of seasonality of the Repar and or EBITDA?
spk02: Yeah, Brian, hey, thanks. This is Richard talking. Yeah, you know, I think... Historically, we have had a type of seasonality that would go from strongest quarter to weakest quarter as you progress through the calendar year. As we're emerging from COVID, with the recovery trend as a countervailing trend, it's a little bit more difficult to parse out that seasonality. That said, we are starting to see a stronger fourth quarter than we have historically, which could be as a result of that festive season at our resort properties, which tends to be a very strong, strongly profitable couple of weeks for us. So I do think you will see that where our fourth quarter will be far stronger than it has been historically.
spk07: Okay. And maybe one for Derek, you know, on the debt side, I appreciate the comments on the fixed versus the floating. But is there anything out in the marketplace that you're seeing that You know, similar to kind of what we're all seeing with interest rates spiking materially that would compel you to fix more of the debt. And if you opted to do that, maybe what level of magnitude and, you know, how painful might the cost be?
spk03: Yeah, so Brian, I think the way I'd answer that question is I'd say, look, nothing's really working. TAB, Mark McIntyre:" Made us want to change our focus in terms of our focus historically has been to be a predominantly floating rate borrower. We still believe that as a TAB, Mark McIntyre:" Hotel owner, but that's the right way to structure our balance sheet and that look, there are times when TAB, Mark McIntyre:" It's going to be a little painful as we're seeing now, but we've also benefited significantly from that over the past few years, so I wouldn't say there's any sort of change in strategy on the horizon from that perspective. I would say that one thing we will look to go do or we'd like to go do is take some of our property level financing and maybe convert some of that to more corporate level financing. We used to have a corporate level term of a credit facility that we ultimately drew down and converted to a term loan. I think ideally we'd like to have a credit facility and maybe a term loan. that may be a little bit more efficient from a pricing standpoint, give us a little more flexibility. So I think that's something that we'll look to do in the future.
spk07: Okay. And just lastly, and maybe I'm a little bit slow and you could explain this in more layman's terms, but can you walk through, you know, once again, I know you did it once, but maybe a little bit more basic that, that Ashford Inc. true up expense. And, you know, is this just a one-time thing or might we, you know, have to deal with this again in a year or whatever, if you do more financings through Ashford Inc. Thank you.
spk03: Yeah, so the true-up that we booked in the quarter relates to the contribution agreement that really goes back a few years when Ashford, Inc. started Ashford Securities, which is really a captive fundraising platform. And that plan and that contribution plan stipulates that the operating cost, the loss, if you will, of Ashford Securities will be split across the businesses, across the three Ashford-related companies, based on the percent of capital raised. To date, Braemar has been the only company that has raised any capital through Ashford Securities. And so that true up that we anticipate will happen in 2023, GAAP requires us to go ahead and anticipate what that might look like. And today, based on how we think that's going to look like, we had to go ahead and book that accrual. I suspect over time that that will balance itself out. We do have some other securities in the market with Ashford Securities that are not Braemar related. And if we're successful in raising capital for those securities, then those other platforms would have to step up and fund their share of the operating costs associated with that. So hopefully it's not something that we have to talk about every quarter, and it was a bit of a one-time thing that sort of rebalanced the share of operating costs, and over time it will balance out across the three companies.
spk07: Okay, that's helpful. Thank you very much.
spk01: Thank you. Ladies and gentlemen, we have reached the end of the question and answer session, and I'd like to turn the call back over to the management for closing remarks. Over to you. Sure.
spk02: Thanks, everybody, for joining us on the third quarter earnings call, and we look forward to speaking with you again on the next call. Have a good day.
spk01: Thank you. Ladies and gentlemen, this concludes today's conference. Thank you for joining with us. You may now disconnect your lines at this
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