Brookdale Senior Living Inc.

Good morning to all of our shareholders, analysts, and other participants. Welcome to our third quarter earnings call. Let me start by saying that we are a resilient company and our top priority is to support our residents, patients, and associates through this pandemic and on to better times. Our leadership as viewed by residents, prospects, and trusted partners will drive long-term value for our shareholders. Throughout this unprecedented period, we have taken swift and robust actions to strengthen our operations and our financial position. In the third quarter, we completed several significant financial transactions that built on the decisive actions we took earlier in the year. First, we completed a transaction with Ventas, which permanently cut our rent expense nearly in half for the remainder of this lease. In total, we lowered our lease payments by $500 million through 2025, lowered our debt, and improved our long-term cash flow outlook. This was the most significant negotiated improvement to a lease in our history. Secondly, we recently executed two important financing transactions. In August, we refinanced the assets securing our credit facility with non-recourse long-term mortgages and, in September, we replaced substantially all remaining 2020 and 2021 maturities with new 10-year debt. These financing transactions lower interest expense, extend maturities, and continue to enhance our financial flexibility. Turning to operations, we made significant progress in the third quarter as we learned to live with the ever present risk of COVID-19. We believe the well being of our residents requires a delicate balance between actions that help keep our residents safe and actions that promote their emotional and social well being. We created solutions and trained our people to begin this new chapter. Since the early days of the pandemic, we have been a clinical and operational leader in our industry with unmatched centers of excellence. This enabled us to overcome enormous challenges, evolve quickly, and share our knowledge to help as many people as we could. We took decisive actions to help protect the seniors in our care. We proactively initiated baseline testing at each and every one of our communities. To put this in perspective, this effort spanned 44 states and over 725 communities. In last quarter's call, I proudly highlighted the completion of baseline testing with over 100,000 tests. We didn't stop there. We built plans to conduct additional testing with revised testing protocols. Another recent and significant step is that the Department of Health and Human Services, known as HHS, recently shipped us over 42,000 rapid point of care tests. We are thankful that HHS recognized the importance of senior living testing needs, and we incorporated the use of rapid tests into our protocols. Through economies of scale and purchasing power, we generally keep multiple months of PPE on hand to help protect our associates and residents. We actively monitor new COVID-19 hotspots in areas close to our communities, and we have created protocols to help our teams respond effectively. Our team's dedicated efforts and our use of strong protocols are working, as demonstrated in our testing results. On October 31st, around 1% of our residents had a current positive COVID-19 test result. We are proud of these test results. However, life is about more than just protection. Each of us wants to see, hear, and hold our loved ones. Brookdale is making this a reality for our residents and their families. We're allowed by state and local regulations family and friends can now visit residents in apartments or in open air spaces after screening and with appropriate PPE. Socializing among our residents is slowly returning to a new normal with small group dining, exercise classes, activities, and in-house offerings with proper social distancing in many communities. Additionally, there are fewer restrictions on residents leaving the community. We continue to offer in-room engagement and promote video conferencing and our community associates are there to help. Throughout these uncertain times, our communication strategy has been intentional and transparent. We have focused on communicating more frequently with our residents and their families and our extra efforts have been positively recognized. Recently, we conducted a survey as part of our continued commitment to listen to the voices of our residents and families. We were thrilled to receive nearly 10,000 responses. From this survey, we learned that residents and families were overwhelmingly satisfied with how we communicated during the pandemic and that more than 80% of respondents felt their community response was about right. From the resident standpoint, we received high marks for helping residents stay in touch with friends and family, along with providing programming resources and support to help them stay engaged. From the standpoint of our residents' relatives, families have become even more likely to recommend Brookdale than in prior years. In addition to the community-wide survey, we asked our National Advisory Council a blue ribbon panel of resident representatives from select communities across the country to meet more frequently to ensure that our leadership team had timely insights into the steps we can take to improve residents' experience of life in our communities. In addition to acting on feedback from our existing residents, we are focused on how to make life easier during the pandemic for prospects, or as we call them, future neighbors. We developed multiple solutions to ease restrictions and make our move-in process more welcoming. Returning to our win locally strategy, we provided a framework to our local leaders with oversight by divisional and regional teams to make decisions on a community-by-community basis. In most cases, our sales force has pivoted from virtual visits back to in-person prospect visits, which has helped instill confidence in future residents and their families. We are again able to demonstrate in person that we have the internal expertise to help protect, engage, and serve older Americans, support their evolving care needs, and make their lives easier. We have seen confidence in Brookdale grow. In an independent national survey panel, in our top 10 markets, Brookdale received the highest rating for COVID-19 response as compared to other operators. We executed on our plan to use scale as an advantage in responding to the pandemic. In addition, during September, we had the highest volume of digital inquiries ever at just over 14,000. Our market intelligence is reinforced by third-party trend analysis that shows consumer search demand for senior living is strong. In September, we had the highest visit-to-move-in conversion rate on record going back to 2015. Third-quarter move-ins increased 35% on a sequential basis with fewer restrictions on move-ins. On average, move-in volume at communities with fewer restrictions fared 22% better than those with higher restrictions. As we anticipated, after seeing lower controllable move-outs last quarter from residents sheltering in place, in the third quarter we returned to the normal trend, with the combined trailing 12 months controllable move-outs being slightly favorable. On October 31, 95% of our communities were accepting move-in. I am very pleased that our Executive Director and Health and Wellness Director retention rate remains over 70%. While maintaining high quality standards during the pandemic, our teams made huge efforts to protect our residents from hurricanes and wildfires, including evacuating residents and their pets when necessary. Our Brookdale everyday heroes are continually scanning for threats to our residents and uniting to help protect them. This is an incredible testament to the resilience and dedication of our leaders. They have made countless sacrifices to successfully lead through the largest global health crisis in our lifetimes and an economic crisis while serving those most vulnerable to the coronavirus. My gratitude continues for the Brookdale Everyday Heroes and the personal sacrifices they make to help ensure the health and wellbeing of our residents 24 hours a day, every single day. Turning to our government advocacy efforts, I'm pleased with the progress we've made to ensure Washington fully understands the critical role the senior living industry serves in the health care continuum to fight COVID-19. September 1st was a monumental day when the government acknowledged the importance of assisted living by announcing private pay assisted living's eligibility to participate in Phase II provider relief grants. Brookdale was the only assisted living provider HHS specifically mentioned by name due to our extensive efforts to help assist HHS in obtaining the information necessary to make this distribution. We estimate the Phase 2 grant will provide more than $1 billion for our critically important industry. We are expecting our Phase II grant funds in the very near future. In addition, on October 1st, HHS announced Phase III of the Provider Relief Fund, and we are pleased that Assisted Living is eligible for future funding. We believe that having the government include Assisted Living in the Phase III general distribution demonstrated that HHS recognizes the continuing needs and value of the senior living industry. The government understands the lost revenues as well as the significant incremental costs incurred to help protect the most vulnerable portion of the population from COVID-19 and to adhere to incremental state and local COVID-19 regulatory requirements. We are grateful for the support. I am also pleased that the National Academies of Sciences, Engineering, and Medicines Committee included senior living residents and employees under Phase 1 for its COVID-19 vaccine plan. We believe that a safe and effective vaccine will provide important fuel for our recovery And again, we are grateful that senior living is being prioritized. Before I turn the call over to Steve, let me share a few financial highlights for the third quarter. I will focus my comments on same community results. As highlighted in our last earnings call, we are heavily concentrated in the third quarter COVID-19 hotspots of Florida, Texas, and California. for both our senior housing and healthcare services segments. The hotspots affected our third quarter occupancy and census, but we continue to make progress. For senior housing, the rate of occupancy loss improved. As mentioned earlier, third quarter move-ins increased over 35% on a sequential basis. September's move-ins were more than double the April low point. On a year-over-year basis, rates held strong with move-in pricing discipline along with the ongoing benefit from the annual rent increases. Sequentially, REVPOR in the third quarter was slightly favorable compared to the second quarter. Let me now turn to our health care services. With nearly 60% of our census generated in the third quarter COVID-19 hotspots of Florida, Texas, and California, third quarter revenue was 20% lower on a year-over-year basis, yet about flat sequentially. Our home health revenue stabilized mid-year and sequentially improved slightly in the third quarter. our quality has improved to an industry-leading overall star average at 4.7 out of 5, which we expect will drive future growth. While lower occupancy in our communities affects health care services census, home health inside our communities continues to perform at a strong rate. Outside of the COVID-19 hotspot of Florida, our non-Brookdale community home health business referral growth and new case starts increased faster than prior to COVID-19 and improved relative to last year. This is an early indicator of the home health business recovery. Hospice third quarter revenue was 9% lower than the prior year. With a large portion of our services within our communities, lower senior housing occupancy is impacting this business. We are pleased to recognize approximately $6 million of Phase I grants as other operating income in our healthcare services segment during the third quarter, bringing the year-to-date grants recognized into the segment's other operating income to approximately $23 million. As we started this call, I mentioned we took decisive operational and financing actions to weather the storm and strengthen our future. Reflecting on our third quarter operational progress, there are three major areas that showcase our leadership position with a strong path forward. First, the higher volume of digital inquiries and connection center calls, along with our sales force increasing the visit to move in conversion rate, are important indicators that our business is recovering. Sales is our gateway to serve more seniors. Second, The fact that almost all of our communities are open to move-ins should help both our senior housing and healthcare businesses. Third, demonstrating our clinical and operational expertise are likely to attract more prospects and customer advocates to Brookdale. From a financing perspective, after closing the successful Ventos transaction and executing two refinancing transactions, we continue to have a strong liquidity position with approximately $500 million of cash and marketable securities at quarter end. With that, I'll turn the call over to Steve.

Thanks. To build on Cindy's last statement of having a strong liquidity position, let me start with highlights for the third quarter. First, I am pleased that we completed two significant financing transactions. As a result, we have no significant debt maturities until 2022. Second, we will recognize nearly $1 billion of future lease savings. based primarily on year-to-date completed transactions. Third, for senior housing, occupancy declines slowed from July through September. In addition, for the third quarter, we maintained our rate discipline and even improved same community rev pour 60 basis points sequentially. Fourth, in healthcare services, Revenue for home health, the largest business in the segment, returned to growth on a sequential basis. And lastly, we kept a tight control on operating activities while continuing our commitment to quality care. Discretionary capex was cut, expenses were reduced except for intentional investments such as marketing, and year-to-date G&A, excluding transaction costs and non-cash stock-based comp, continued to be 11% lower than prior year. Let me provide some color with financial updates related to COVID-19. As a reminder, We provided a COVID financial impact summary on page four of the supplemental. These government grants, deferrals, and COVID-19 related costs are included in our reported and same community financial results. In the third quarter, we recognized $10.8 million of government grants as other operating income. The majority benefited the healthcare services and the skilled nursing units within our CCRC segments. The grant income was from satisfying the conditions of the previous allocation, incremental infection control fund allocation, and state grants. As Cindy mentioned, we expect Phase II grant funds in the very near future. For COVID-19 costs, we incurred $24.5 million of expense in the third quarter, bringing the year to date expense to $95 million. After building multiple months supply of PPE in the second quarter, COVID-19 costs declined approximately 60% in the third quarter. While we are incredibly grateful for the government grants that we have received, the COVID-19 impact on our business has far exceeded the value of the grants. We recognized $37 million of government grants, which compares to an estimated lost revenue of $161 million, and COVID-19 costs of $95 million through the end of September. We are pleased to be included in phase three funding. We are very interested in learning more about the methodology HHS will use to disperse additional funds. Turning to operations, starting with senior housing, I will focus my comments on same community results. Senior housing revenue was 7.7% lower compared to the third quarter 2019 and 4% lower on a sequential basis. We estimate the impact of COVID-19 was nearly $71 million of lost revenue for the quarter. Detailing the revenue components, our sequential occupancy decline slowed in the third quarter, which is impressive considering how many communities were located in metropolitan areas that were considered COVID hotspots. The sequential occupancy trend for independent living was slightly better than assisted living. This is partially because independent living has a longer length of stay and assisted living generally has a more frail population. Rate or rev pour for the third quarter was 3.5% higher on a year-over-year basis and 60 basis points higher on a sequential basis. We maintained rate discipline and are pleased that our ability to increase move-ins demonstrates that we were able to show the value that we provide. The senior living industry is highly fragmented and it is critical for each of our communities to win locally. While our goal is to maintain rate, the market remains very dynamic and we will continue to actively monitor and respond to select market conditions. Same community compensation related expense decreased 2% on a sequential basis. The favorability was driven by scaling variable labor in relation to lower occupancy and matching bonuses to performance, partially offset by the additional holiday in the third quarter. Other facility operating expense decreased $22 million compared to the second quarter, driven by lower non-labor COVID-19 costs of $29 million, somewhat offset by marketing investments, seasonally higher utilities and repairs, and several million dollars of natural disaster expenses. As Cindy mentioned, numerous hurricanes and wildfires created additional demands on our Brookdale Everyday Heroes as they mobilized to help protect our residents. While there was sizable damage to several communities and smaller damage across other communities and affected regions, property insurance will cover the majority of the cost. Same community operating income decreased 25% compared to the prior year quarter. On a sequential basis, despite lower revenue, with OPEX reductions, the third quarter operating margin improved 120 basis points. Without question, we are operating in the most difficult environment in the history of our industry, and we're taking actions to reduce that impact. Moving to the healthcare services segment, revenue was 20% lower compared to the third quarter 2019, while nearly flat on a sequential basis. We estimate the impact due to COVID-19 resulted in $15 million of lost revenue in the third quarter. Healthcare services operating expense was 12% lower than the prior year quarter and 3% lower on a sequential basis. We continue to see the benefits of structural changes made earlier this year and scaling operations to better match expenses to revenue. Lastly, in the third quarter, we recognized $6 million of government grants for healthcare services. Turning to GNA, excluding transaction costs and non-cash stock-based comp, third quarter GNA was 10% favorable to the prior year quarter. This benefit is from workforce scaling completed at the beginning of the year as we aligned our infrastructure to our go-forward business needs. Incrementally, we tightened G&A spending further with the onset of the pandemic. Unique for this quarter, I want to highlight cash operating lease payments as we successfully completed the Ventas transaction in July. As a reminder, our cash flow significantly improves by a half a billion dollars, through permanent rent reductions over the next five-plus years. As part of the transaction, in the third quarter, we made a one-time cash payment of $119 million, which we recorded as an operating lease payment. The one-time impact was partially mitigated by a permanent step-down in Ventas rent that started in the third quarter. After completing the Ventas transaction, the third quarter cash lease obligations are down 30% compared to the prior year quarter, and our pro forma lease coverage improved to about one times. Excluding the one-time Ventas cash lease payment, the third quarter adjusted EBITDA was $55 million compared to $80 million for the prior year quarter. Adjusted free cash flow was negative $114 million for the third quarter compared to negative $14 million for the prior year quarter. Without the one-time Ventas payment, the year-over-year improvement would have been approximately $20 million and summarized in three highlights. The adjusted EBITDA decline of $25 million was more than offset by favorable Non-development CapEx, which was $36 million lower than the prior year quarter, similar to the last quarter, because community access was highly restricted for the wellness of our residents, we delayed or canceled many elective CapEx projects. And interest expense, which was $11 million lower, reflects lower interest rates along with lower financing lease costs related to the health peak transaction completed in January. Turning to liquidity, which is my top priority, as of September 30th, total liquidity was $491 million, a decrease of $109 million from June 30th. The decrease in liquidity was primarily due to the one-time Ventas payment of $119 million. Now, let me share what we're seeing for the fourth quarter. In October, our month-over-month occupancy trend softened. While our controllable move-out stabilized, we believe potential residents and their families delayed move-ins to see what will happen with the new resurgence. We are monitoring the current outbreak carefully, and barring a severe resurgence, we still expect quarterly occupancy declines will continue to improve. We expect to receive up to approximately $50 million of additional grants from Phase 2 relief. We expect non-development CapEx to be approximately $35 million in the fourth quarter, or $140 million for the year, which is another $10 million reduction from our prior outlook. for a total $50 million reduction in non-development capex from our original 2020 plan. And lastly, working capital is expected to be approximately a $25 million use of cash, primarily due to an extra payroll cycle in 2020. While the coronavirus is unpredictable, we have been proactive in strengthening our operational and financial position. With approximately $500 million of liquidity at the end of the third quarter and plans to remain judicious with investments, we believe we have a strong liquidity position. I will now turn the call back over to Cindy.

Our business is built one relationship at a time by people taking care of people. I am incredibly proud of the actions we've taken to support our associates, residents, and patients to ensure this business is strong for the long term. We have listened to the feedback we've received from the people that are part of our communities, and that has made us better. We are going to keep doing that. From a financial perspective, we have taken far-reaching actions to reduce our rent expense, lower debt, improve cash flow, and enhance our overall financial flexibility. As an industry leader, we remain focused on being a trusted partner to deliver quality care in an environment that helps keep associates, residents, and patients safe during this pandemic. We are also committed to sharing our expertise with others outside of Brookdale. Looking ahead, it remains undeniable that the silver wave of the baby boomer demographic growth is approaching. with nearly 1 million new potential residents a year starting in 2022, the demand for senior care will increase. While I'm increasingly optimistic about the near-term availability of a vaccine to accelerate our recovery, we will continue to manage our business, operate our communities, and serve our residents and patients in the best way possible in today's environment. Thank you.

Mary, this is Kathy. We are ready for the Q&A.

Thank you, Kathy. Ladies and gentlemen, as a reminder, to ask a question, you will need to press star 1 on your telephone. To withdraw your question, just press the pound key. Again, if you would like to ask a question, just press star 1 on your telephone. Your first question is from Brian Tankalot. Your line is open.

Hey, good morning, guys. I guess my first question, Steve, thanks for the color that you gave on Q4 occupancy trends and your expectations. But I just wanted to ask, how are you thinking about the blending of typical seasonality for Q4 as well as you guys reopening the facilities or the communities to visit and people coming in to check the place out? And then what do you think the catalysts are would be for recovery back to pre-COVID levels?

Sure, Brian. So the occupancy question, as you know, the virus is unpredictable. We expect to see a sequential decline in occupancy, but We do expect that to moderate again in the fourth quarter. It's important to keep in mind that some of the key drivers for occupancy and recovery, 95% of our communities are open and accepting residents. The low infection rates that we currently have in our communities is certainly a plus. And our survey that Cindy mentioned on the call states that the majority of our residents say that our COVID response is on target. So looking long term, that focus on the well-being of our residents certainly is the right strategy. In addition, we're continuing to make marketing investments. We added marketing in the third quarter and also into the fourth quarter. And then lastly, as Cindy mentioned, we see an increasing likelihood of a vaccine. And so we think that senior living communities being ranked and prioritized to receive the vaccine will certainly help occupancy in the future.

Brian, I want to add just a couple of things to Steve's answer. He did a great job of teeing it up. But it's important to remember that at the beginning of the third quarter, we had our communities largely closed to visitors as we were completing our baseline testing and also within the community there were a lot more restrictions than we have today and we know that being able to have visitors is important to our residents and so that is something that as we look at the fourth quarter that should be better for us than the third quarter. I think another thing that's important to remember is Brookdale, the industry, and the regulators have gotten a lot more experience in working through COVID-19. And initially in the pandemic, if you had a single positive COVID-19 case, you could not move anyone into the community. Now that we've demonstrated the strength of our infection control protocols, in some cases, not in every case, we're able to continue to move residents in even if there is a single positive COVID-19 resident in the community. And then I think the vaccine is an important fuel for our recovery, and it's great that senior living is prioritized at the beginning of that, both our residents and staff. And then I just want to ask or mention the rate. We have been very, very disciplined about the rate during the entire year of 2020, and the fact that our rev pour increased sequentially 60 basis points, and that actually helped us improve our income on a same store basis, 70 basis points. I think that's something that is important because it's really not just about occupancy. It's about getting the most revenue from your available rooms and maximizing rev par. So just balancing occupancy and rate is always something that we're going to do to accelerate our recovery.

That makes a lot of sense. And then Cindy, you obviously did some refinancing or restructuring of the leases during the quarter. How are you thinking about incremental opportunities to do that? And then how are you thinking also about the health peak announcement, I think it was yesterday or earlier this week, that they're trying to reduce their exposure to senior housing and just stay with CCRCs?

Well, I think the one thing that Brookdale has demonstrated is that we will be nimble and that we will respond to current market conditions. And we have been incredibly successful over the last few years creating win-win transactions. Now, it's impossible to know when the opportunities will arise, but whenever possible, we'll look to create additional value for our shareholders through lease renegotiations. As for the HealthPeak transaction, I think that it's important to know that HealthPeak has been an important partner for Brookdale, and we are grateful for their support. We do lease a number of communities from them, and we expect that even if they transition the properties, that we would have a strong relationship with the new owner of the properties, and importantly, continue to receive the CapEx funding that HealthPeak committed to under the lease. And of course, we would continue to make our rent payments as due under the lease.

Josh, and then last question for me. Steve, just as I think about your debt maturity and thinking about the cash flows that you're generating, given the occupancy trends, how are you thinking about the stack of upcoming maturities and how you're thinking about funding those payments. Thanks. You bet, Brian.

With continued access to credit, we were really pleased with our execution of two important financing transactions in the third quarter. Following those transactions, we have no large maturities in 2020 or in 2021. And the important part also is that like 98% of our debt, these financings were non-recourse property-backed mortgages and effectively free of operating performance covenants. With an initial rate of approximately 3% combined with a third of our debt structure having a variable rate, we lowered interest expense in the third quarter by $7 million on a year-over-year basis. So, suffice it to say that we were very pleased with this proactive step to strengthen our financial position.

I think the financings are good evidence of strong financial and operating actions that Brookdale has decisively taken throughout 2020 and during this pandemic. Thank you so much for the questions, Brian.

Thanks, guys.

Again, if you would like to ask a question, simply press star followed by the number one on your telephone keypad. Your next question is from Stephen Balaket. Your line is open.

Great, thanks. Good morning, everybody. So a couple questions here. You know, one just on the COVID vaccines that you just kind of brought that up. I guess I'm curious whether or not Brookdale has completed any sort of marketing surveys just to assess the sensitivity of prospective residents to enter senior housing, you know, with or without a vaccine. Or in other words, would you expect a COVID vaccine to have an immediate notable impact on, let's say, your monthly and quarterly occupancy? Or would this take maybe several quarters, maybe even a year? or more before it would lead to a, you know, what we would call maybe a material move back up in your occupancy trends the way you see it right now?

Yes. Steve, we regularly conduct market research in our markets. And one of the things that we see is that consumer sentiment changes every time we do the survey. The good news is that we're seeing the majority of residents and prospects still think that senior living is a safe solution. And what we have seen is improvement in healthcare professionals and their willingness to recognize senior living is an important way to help their patients live a better life. And that's actually improved since the early stages of the pandemic. With regard to a vaccine, I think that what everyone is trying to figure out, or at least the vast majority of people are trying to figure out, is how to reduce risk. And so while we haven't conducted consumer research on the vaccine, It is something that we're watching the research that's available to us, and we do know that there's a focus on reducing risk.

Okay, the other quick one, you touched on the success of your resident rate strategy, and we've all seen that the rev core growth has either held steady or actually improved this year, so that's worked out pretty well. Just regarding the rate strategy for 2021, You did mention in the prepared remarks that you'll monitor and respond to certain local market conditions when necessary. But I guess overall, should investors still expect the REV4 to continue to grow year over year for Brookdale next year, the way you see it right now?

So the important thing to remember is for our in-place residents, we do a rate increase on January 1st of each year. And so normally you see that impact in our first quarter results. With regard to market rates, which are for new residents moving in, we continue to focus on the quality of our care and the services that we provide. However, in some cases, where appropriate, because of local market conditions, we may respond to what we see in the market. So, net-net, I think there is more good news than bad news, but it's a pretty dynamic environment. Steve, do you want to add to that?

No, that sums it up. Our goal, Steve, is to maximize REVPAR, so that's profitable occupancy. It is not to chase occupancy. We do have pricing discipline, and like Cindy mentioned, in certain very competitive markets, we are adjusting some discounting to match those rates. But our focus is to win locally and really assess market by market, community by community.

Okay.

All right. I appreciate the color. Thanks.

Thanks, Steve. Mary, this is Kathy. Our other analysts that cover our company shared that our earnings call was at the same time as other companies, so they might be late to the Q&A. Do you see anybody else in the queue?

There are no one else on the queue at this time.

Okay. Then I think that we will follow up with them later and thank you very much. Cindy, do you want to say a last comment?

Certainly. I just want to thank everyone for joining the conference call today. We are very focused on the health and safety of our residents, our patients, our associates. I'm very proud of the fact that year to date we've conducted over 185,000 tests to keep our communities or help keep our communities as safe as possible. And there's no question that during the pandemic, we've taken swift and robust actions to strengthen our operations and our financial positions, as well as to capitalize on the growing demand for senior housing, which we are expecting. You know, nearly a million new potential residents a year are available starting in 2020. So we are playing a game to maximize our financial flexibility in the short term and prepare to win in the long term. Thank you very much.

Ladies and gentlemen, this concludes today's conference call. Thank you for joining In-N-Out Disconnect. Thank you. so so Thank you. Thank you. Thank you. you Thank you. Thank you. Thank you. Thank you. Thank you.