CareTrust REIT, Inc.

Ladies and gentlemen, thank you for standing by and welcome to the CareTrust REITs second quarter 2020 earnings conference call. At this time, all participants are on listen-only mode. After the speaker's presentation, there will be a question and answer session. To ask a question at that time, please press star then one on your touch-tone telephone. I will now return the conference to your host, Ms. Lauren Beal, CareTrust controller. Ma'am, you may begin.

Thank you, and welcome to CareTrust REITs second quarter 2020 earnings call. Participants should be aware that this call is being recorded. and listeners are advised that any forward-looking statements made on today's call are based on management's current expectations, assumptions, and beliefs about Care Trust business and the environment in which it operates. These statements may include projections regarding future financial performance, dividends, acquisitions, investments, returns, financings, and other matters, and may or may not reference other matters affecting the company's business or the businesses of its tenants, including factors that are beyond their control, such as natural disasters, pandemics, such as COVID-19, and governmental actions. The company's statements today and its business generally are subject to risks and uncertainties that could cause actual results to materially differ from those expressed or implied herein. Listeners should not place undue reliance on forward-looking statements and are encouraged to review Care Trust SEC filings for a more complete discussion of factors that could impact results, as well as any financial or other statistical information required by SEC Regulation G. Except as required by law, Care Trust REIT and its affiliates do not undertake to publicly update or revise any forward-looking statements where changes arise as a result of new information, future events, changing circumstances, or for any other reason. During the call, the company will reference non-GAAP metrics such as EBITDA, FFO, and FAD, or FAD, and normalized EBITDA, FFO, and FAD. When viewed together with GAAP results, the company believes these measures can provide a more complete understanding of its business, but cautions that they should not be relied upon to the exclusion of GAAP reports. Care Trust yesterday filed its Form 10-Q, an accompanying press release, and its quarterly financial supplement, each of which can be accessed on the investor relations section of Care Trust's website at www.caretrustreit.com. A replay of this call will also be available on the website for a limited period. Management on the call this morning include Bill Wagner, Chief Financial Officer, Dave Sedgwick, Chief Operating Officer, Mark Lamb, Chief Investment Officer, and Eric Gillis, Vice President of Portfolio Management and Investment. I will now turn the call over to Greg Stapley, Care Trust REITs Chairman and CEO.

Thanks, Lauren, and good morning, everyone. You know, while the resurgence of COVID-19 has been difficult on multiple fronts, there are some bright spots out there that we're talking about. First and foremost, we are grateful to be able to report that our tenants and their staffs are working through it, and thanks in part to the government relief measures provided to date, our skilled nursing tenants are earnestly caring for their patients and otherwise holding up well. We are also encouraged by the recently commenced federal rollout of point-of-care rapid results testing to nursing homes nationwide. The government is reportedly delivering 600 to 700 testing platforms a week with an eye to getting them into all of the nation's 15,000 nursing facilities as quickly as possible. Several of our facilities are near the top of the distribution list. This has been a giant missing piece in the infection control puzzle at the nation's inpatient care facilities. Short of having an effective vaccine, point-of-care rapid results testing will likely be the biggest advance in the ongoing war against COVID-19. Real-time testing in places where so many of our most susceptible citizens reside should begin saving lots of lives immediately. We hope that seniors' housing facilities will be next in line for these testing capabilities as well. We also hope that the government will move to protect even more of our vulnerable elderly by including seniors' housing providers in the next round of stimulus support. As for care trust tenants, you'll recall that about 85% of our rental revenue comes from our skilled nursing assets. Our SNF operators and their care staffs are working hard daily to keep their heads above water while protecting our vulnerable seniors. And they're getting better at it every day as more is learned about COVID-19 and more resources come available to aid them in the fight. In addition to the state and federal relief dollars, the accompanying regulatory relief has been immensely helpful Suspension of the three-day qualifying stay for Medicare eligibility is the most prominent example. Hopefully, this highlights the fact that the, quote, stroke of the pen risk that some of the credit community and elsewhere are wringing their hands over actually goes both ways. Yes, the lion's share of SNF revenues coming from government sources, changes in policy or reimbursement rates can hurt providers, at least until the provider is adjusted, and which usually happens pretty quickly. But if the government's response to this pandemic proves anything about that dynamic, it is that both state and federal officials understand and are fully committed to the long-term health and economic survival of post-acute care as a truly essential industry. That is an undeniable plus in difficult times like these, not to mention the fact that the government is the most financially capable customer any business could have, especially when economic conditions are most challenging. While we don't necessarily want to project an everything's fine message, everybody knows everything's not fine, we also don't want to convey doom and gloom either. Having been in the operating trenches ourselves and seen the hard work and significant resources being devoted to the fight, we believe our providers are well positioned to continue weathering the storm for the near term. As for Care Trust itself, I'm pleased to report that we remain in great shape. We collected 99.3% of rents from April through July, and August rent collections are on track and continuing to come in as expected. We have the lowest leverage in company history today at 3.1 times net debt to EBITDA at this moment. Interest costs on the little bit of floating rate debt we do have are at historic lows, and we have no debt maturities on the horizon before 2024. And our $600 million revolving credit line is undrawn, plus we have around $20 million in cash on hand, plus our conservative payout ratio leaves us each year with a sizable chunk of very cheap capital that we can invest at solid returns. All of these funds are fully available to support our opportunistic growth strategy without raising a nickel in new debt or equity unless we want to. And speaking of investments, although the pandemic has put a crimp in M&A activity over the past few months, we expect to start announcing new investments again very soon. With that, I'd like the team to briefly talk about our results for the last quarter, as well as our thoughts on the next couple, and then we'll open it up for Q&A. Dave?

Thanks, Greg. I want to pick up where I left off from our last quarter's call, the first COVID impact to date. As of this week, we have 59 facilities across 15 operators reporting at least one positive COVID patient. However, as you may recall, we have viewed a running COVID count as misleading due to inconsistency in testing practices and the initial unavailability of universal testing. We believe the early reports of positive cases with high mortality rates were grossly inaccurate. This has proven correct with broad testing now finding high numbers of asymptomatic positive cases and much lower mortality rates. But it is still an especially serious threat to vulnerable seniors and those with preexisting conditions. Thankfully, all of our operators today report a higher degree of preparedness with personal protective equipment and continuing confidence in their infection control and isolation protocols. So, even though the virus is more widespread today than a few months ago, the industry is actually in better shape to deal with it. Next, let me address occupancy. Although a recent report from the National Investment Center stated that seniors' housing occupancy dropped nationally by 280 bps from Q1 to Q2, I'm pleased to report that from March through July, seniors' housing occupancy in our portfolio held steady. This reinforces our long-held view that the mid-market positioning of our seniors' housing facilities appears to be more needs-based as prospective residents have not been able to move in with family or wait out the pandemic on their own before moving into assisted living. On the skilled nursing front, occupancy has declined. We've said it before, but it bears repeating. Any analysis of nursing home occupancy has to bifurcate the short-term rehab or skilled patients from the long-term care residents. Those skilled patients represent higher revenue and margin, and offset to a degree declines in overall occupancy. Not including Ensign, Our overall skilled nursing portfolio occupancy dropped 684 bps, or almost 9%, from March to July, but the higher margin skilled occupancy increased 571 bps, or almost 37%, over the same period. The additional skilled revenue provides a meaningful partial offset to the overall occupancy loss and increased expenses associated with COVID. I'm also happy to report that portfolio-wide, the June and July occupancy trend in our skilled nursing facilities is showing a significant leveling off of the initial downward curve from census. And as people get out more and hospitals continue to slowly reopen for elective surgeries, we expect census to start rebounding. I'll shift gears now to focus on the government relief measures thus far. In addition to the positive Revenue and infection control benefits from the waiver of Medicare's three-day qualifying stay requirement. Direct payments to providers have been critical in providing the short-term liquidity bridge that most of them have needed. The Families First Coronavirus Response Act provided states with a temporary 6.2% increase in federal medical assistance percentages, or FMAP, for their Medicaid programs. Many states increased skilled nursing Medicaid rates with those FMAP funds, and we believe more will do so. Our updated estimated impact to our SNF tenants from the additional FMAP funding is approximately 21.1 million through July. There's also the Coronavirus Aid, Relief, and Economic Security Act, or CARES Act, and its several components. The first three rounds of CARES Act disbursements plus the lifting of sequestration account for an estimated benefit to our SNF tenants of approximately 86.5 million so far, although one of our tenants announced on Wednesday that they are not going to need the CARES Act funds and that they have refunded their share of it to the federal government. Thanks to these emergency measures, as well as the speedy adjustments that our tenants have made, liquidity has been sufficient for our operators. providing necessary runway for the fundamentals to recover as everyone works through this. And we should mention that in addition to those funds, CMS announced on July 31st a 2.2% increase to Medicare rates starting with the new October 1st fiscal year resulting in an estimated $750 million in additional revenue next year for the sector. Now, of course, there's intense interest in the future of COVID's impact on the industry. How long will the state of emergency last? And will the government funding be sufficient? Our belief from day one has been and continues to be that skilled nursing is a necessary component of the continuum of care and that state and federal governments will not allow the industry to fail. We can't predict how long the recovery will take, but there are four milestones that we're tracking to judge how close we're getting to turning the corner on COVID. The first milestone is clinical capability. That includes a couple of key elements. Like Greg talked about, we need point of care rapid result testing solutions at all skilled nursing and seniors housing facilities. We're pleased to see this starting to happen now. Also included in clinical capability are the continued advances in therapies for treating patients infected by the virus. The second milestone we monitor closely is government funding. A fourth round of funding for nursing homes was recently announced worth $5 billion. We have yet to see exactly how it will be distributed, but all indications are that it will be more targeted toward those in greatest need. One of those great and immediate needs is in private pay seniors housing, which is only barely starting to get attention from lawmakers. CARE Trust has recently made a significant contribution on behalf of our seniors housing operators to the lobbying effort underway to educate legislators on the critical need for relief funding for private pay seniors housing operators. The success of this effort is critical for the nation's seniors and the people who serve them. The third milestone we're watching is hospital volumes, both through the emergency department and elective procedures returning to pre-pandemic levels. Recently, the Center for Disease Control reported that by the month of May, emergency department visits had declined 42% from pre-pandemic levels. In the 10 weeks following the declaration of the national emergency, Visits to the emergency department by people over the age of 75 for heart attack dropped by approximately 28%, and for stroke by 24%. The recent resurgent of COVID may extend that trend. And the fourth milestone, of course, is the vaccine, and we're encouraged by the aggressive efforts by the industry and the FDA to bring an effective vaccine to market in record time. Some of these milestones will be met simultaneously across the industry, and others will be operator and market specific. To wrap up, we continue to be proud of our association with people and companies who are managing so well through these extraordinary circumstances. And like I said last quarter, as we weigh the current challenges along with the support provided today, we continue to see a path forward for our operators to continue to care for their residents, keep their caregivers employed, and pay their rent as they fulfill their role as a critical part of the solution to this crisis. With that, I'll pass the call over to Mark to talk about investments. Mark?

Thanks, Dave, and hello, everyone. On the investment front, Q2 was pretty quiet for us from a closing perspective, but it wasn't from a lack of effort. We continue to be open for business, looking for external growth opportunities that work for our operator bench as well as for us. Most of the deals we chased that fit our box were either mistimed or mispriced. Perhaps that's why one industry publication reported this week that healthcare M&A for Q2 was the lightest ever, and much of it was in Europe, not the US. The pricing reset that one might logically expect in the current environment has been slow to materialize, at least on the seller side. This is not unusual in our experience, and we continue to push sellers for realistic pricing, while at the same time acknowledging that buyers must be competitive too. But as you might imagine, the price discovery process is more unpredictable than ever right now. So we are sticking to our underwriting standards while we continue to aggressively pursue deals, even as we attempt to adjust on the fly for the uncertainties posed by the ongoing pandemic. In addition to historical cash flows and other underwriting metrics we would normally consider, There are additional factors that have lately come into sharper focus in our underwriting, including the strength or weakness and operating profile of the outgoing operator. Are they too large or too inefficient to quickly respond to the rapid changes affecting the business? Or are they too small or too unsophisticated to maneuver through today's changing environment? We're looking harder at skilled mix, average daily reimbursement rates, and how well current operators are capturing revenue opportunities. We're analyzing their staffing patterns and other operating expenses for evidence of under-management that can easily be corrected. And perhaps most importantly, we're looking very hard at our incoming operator and their plan for the assets. Does it enhance their economies of scale? How much and how fast do we think they can change the operating profile of the asset through the execution of their business plan? And what evidence do we have of their operational history that they are likely to be successful? That's an oversimplification of the process, but hopefully you get the idea. Plus, after we factor in all of the above, at the moment there are still COVID-related headwinds that we must account for, which is tricky but not impossible as evidenced by our pipeline, which I'll discuss in a moment. Thankfully, the current investment environment has begun to show signs of life in recent weeks. There appear to be more senior housing opportunities, but they're still made up of mostly broken or non-stabilized assets. And some SNF operators appear to be finally seeing a window of opportunity to exit the business, although a lot of those assets are challenged as well. But we continue to dig through the opportunities and mine for the diamonds in the rough. So despite the challenging bid to ask spread, we are cautiously optimistic that we will see and be competitive on more opportunities as we head toward the end of the year. As a reminder, year to date, we've executed on 26 million in new investments. The current pipeline sits in the $125 to $150 million range. It consists of mainly singles and doubles in both the SNF and seniors housing spaces. A pipeline also includes a few portfolio opportunities that will not only strengthen existing tenant relationships, but will also allow us to further diversify our tenant base by commencing formal relationships with outstanding operators that we have been courting for some time. Please remember that when we quote our pipe, we only quote deals that we are actively pursuing under our current underwriting standards, and then only if we have a reasonable level of confidence that we can lock them up and close them in the relative near term. And now I'll turn it over to Bill to discuss the financials.

Bill Walsh Thanks, Mark. For the quarter, normalized FFO was $32.1 million, or $0.34 per share, and normalized FAD was 33.6 million or 35 cents per share. At quarter end, our payout ratio remains at or among the lowest of our peers at approximately 74% on normalized FFO and 71% on normalized FAD. Leverage was at an all-time low on a net debt to normalized EBITDA ratio basis of 3.2 times, and net debt to enterprise value was 23%. During the first quarter, we put in place a new $500 million ATM and $150 million stock buyback plan. Neither have been utilized to date. Our liquidity remains extremely strong with more than $20 million of cash on hand today, even after having recently paid $8 million of semiannual interest on our bonds and $24 million of quarterly common dividends. We also have $600 million of availability under our revolver, and we produce almost $9 million of cash per quarter, even after this year's increase in our dividend. To give you an idea of just how much liquidity we have, if we were to acquire roughly $300 million of assets per year over the next two years, it yields approximately what we have done historically and funded those investments exclusively with our revolver and retained cash we would still be just under the high end of our stated target leverage range of four to five times on a debt to EBITDA basis. Cash collections for contractual cash rent in July were just under 99%, and so far in August are at 93%. We expect to end August collections at around 99% as well. Moving on to guidance. Despite the pandemic, we see no reason at present to alter our guidance for 2020 which, as a reminder, called for normalized FFO per share of $1.32 to $1.34, normalized FAD per share of $1.38 to $1.40 based on a diluted weighted average share count of 95.6 million shares. With the year more than half over, let me update you on some of the assumptions that were used in that guidance. Rental revenues were projected at approximately $167 million for the year, which included $100,000 of straight-line rent and assumes CPI at an average of 1.75%. CPI bumps for June and since have been around 50 bps. So not including any new investments we might make in the back half of the year, I'm expecting rental revenues to be a little less than $167 million for the year. Interest income was projected to be around $1.3 million given that interest income is already at $2.3 million for the first half of the year, but all the material loans have now been paid off, I wouldn't expect interest income for the year to go much higher. We used the proceeds from the mortgage loan payoffs to fully pay down the revolver to zero. Interest expense was projected to be approximately $26 million. This assumed a LIBOR rate of 1.75%, which is a lot higher than it is today. Given where LIBOR is today and that we did pay down the revolver to zero, I would expect interest expense to come in a bit lower. Interest expense also included roughly $2 million of amortization of deferred financing fees, and I don't think there will be any change there. We projected G&A of approximately $13.9 million to $15.8 million, which includes roughly $3.7 million of amortization of stock comp. I would expect us to come in toward the high end of the range for the year. As we have all noted in our comments today, although there is still some uncertainty around what comes next in the pandemic, our tenants are performing well and we are cautiously optimistic about the foreseeable future. We simply point out the obvious that significant developments in the COVID-19 pandemic and the government's responses thereto could alter our outlook at any time. In the meantime, We'll be staying close to our tenants and working hard to help them, and by extension us, to navigate our way through the coming weeks and months. And with that, I will turn it back to Greg.

Thanks, Bill. We hope this discussion has been helpful for you. We are grateful for your continued interest and support. And with that, we'd be happy to open it up again for questions. Valerie?

Thank you. Ladies and gentlemen, if you'd like to ask a question, please press star then 1 on your touchtone telephone. Again, if you'd like to ask a question, please press star then 1. Our first question comes from Jordan Sadler of KeyBase. Mark, your line is open.

Thank you. And good morning. I wanted to start off on the pipeline, if you could. Mark, you gave some good color, but maybe we could dive in a little bit deeper. Curious about sort of the mix. Maybe if you could split it out in terms of represent senior housing versus SNFs. But also, you know, geos and pricing. So I'm curious if, you know, geographically, you know, if you're able to look a little bit more broadly given sort of the federal support or are you kind of, you know, federal support for SNFs and healthcare generally, are you kind of looking a little bit more broadly than you might have otherwise? And then on pricing, You know, are you seeing any dislocation that would get you what might ordinarily be more attractive pricing?

So let me start off with the first of your three or four questions. So from a mixed perspective, it's about 70-30 SNF to seniors housing. From a geographical perspective, I think that's actually the most important piece of our underwriting. If you look at certain states that have not been impacted as severely, you know, from an underwriting perspective, it's a lot easier. You can certainly strip out the COVID-related expenses as well as the stimulus and any revenue uptick. So those are Buildings on an asset by asset basis that have obviously had little to no COVID exposure are fairly straightforward. And in fact, a couple of those fit the profile of assets in our current pipeline. And then you get to the broader kind of geographical question. You have certain states like California, for instance, where on a pre-COVID basis, buildings were being traded at, you know, kind of the highest price per bed metrics that we've ever seen. California continues to be an extremely hot market, and so operators and buyers will continue to be very aggressive, you know, out west. While in the Midwest and certainly up in the northeast in some states, You can't give buildings away because of reimbursement, because of length of stay, because of the impact of COVID. So to conclude and to kind of help pull it all together, I would say geography is very, very important. And what states are doing to support you know, COVID, you know, out in California, you know, there's talk of a couple increased, you know, increases to Medicaid over the next, you know, 12 to 18 months. So we factor that in while, you know, other states, you know, we've seen, you know, we've seen a hit or, and we are hearing that there could potentially be some challenges with the Medicaid rate. So... So geography is probably the biggest consideration, one of the biggest considerations that we have as we look to bring on acquisitions.

Okay. And then just as a follow-up, and I'll yield the floor, on those geos, I'm not sure if I'm reading you as, you know, California is more attractive because of what the state is doing or more, you know, expensive because of what they're doing. And so I'm kind of curious, you know, Would you be interested in sort of the value plays in either the Midwest or Northeast, or is that stuff just too risky?

Well, I think it depends. As we've always said, it's operator first. And if operators feel like they can go into certain Midwest markets or even Northeastern markets, and execute, then we would go there and obviously adjust our underwriting and come up with value based on, you know, where they think they can execute on their business plan. So we would obviously take into consideration what the in-place cash flows are doing and then adjust for COVID and other factors. So, you know, we continue to be, you know, operator-led. And as folks want to grow even in markets that may be perceived as somewhat challenged on the rate front. If there's a reason, as I said in my prepared remarks, from a scale or a business plan perspective, then we would go there. We would obviously need to risk adjust our pricing.

Okay, thank you.

Thank you. Our next question comes from Dominique. You're the Raymond James. Your line is open.

Hey, good afternoon or good morning out there, I guess. Can you give us some details on the tenant or tenants that are not current on rents right now? What's their asset mix and your expectations for them getting current?

Hey, Jonathan. It's Dave. Right now, we haven't made any rent concessions, and everybody's current, basically. We've got one operator. That's not in our top ten list. We actually have two seniors housing operators not in our top ten list that aren't exactly current. One of those has asked for us to consider a rent concession, and we've just begun to evaluate that. So that's the current status on rents.

The two tenants that haven't paid are one is premier, one is noble, and they And they don't usually pay until around the 10th. So they're in line with past months.

Got it. Okay. And, Bill, what percentage of rents are on a cash basis today? I don't know if it's any, but, you know, could you give us that percentage? And then are there any operators on the threshold of maybe going from accrual to cash basis?

A lot of the straight line rent or call it the tenants that had big straight line rents associated with their rental incomes were taken to cash last year in Q3. So we don't really have, and as you heard in my comments on guidance, we don't have a lot of straight line rent. Only 100,000 is expected to be recognized this year. So as I look at rental revenues, they're almost call it all on a cash basis.

Okay. Fair enough. Another one for Dave. You said seniors housing occupancy is flat, I believe since March. Yet, you know, I look at premier, the coverage there continues to deteriorate. Can you just talk about what's going on there? What's the plan to reverse that trend? And, you know, hopefully when things can recover.

um you know the story really hasn't changed very much there jonathan um their their occupancy has actually held steady through the pandemic as well if you recall from prior calls last year they they had some challenges some real headwinds at a couple of their buildings from a regulatory perspective and just by the end of last year they were they had turned the corner there but had quite a bit of ground to cover. Going into the pandemic, we saw occupancy tick up, and it's just held steady since. So it's a challenging time for anybody that had been, you know, turning things around to make a lot of progress with that during the pandemic. And so it's actually, we're pretty gratified to see them just hold steady through this so far.

Okay. Appreciate that, Kyle. I got one more, maybe for Mark, but there were some FAD payout comments in the press release that I thought were interesting as it relates to external growth, and you talked about the pipe, the geographic mix, the asset mix earlier on Jordan's question, but what's going to be that deciding factor on actually closing and announcing some of those deals? Is it going to be a continued improvement in case count or just sellers finally maybe acquiescing on price? Um, I mean, the pipeline's about the same, I think it's last quarter. I'm just wondering, you know, when do we actually see it come through? And I know you're hopeful by the end of the year, but trying to get maybe a little bit better visibility on timing.

Yeah. You know, I, you know, I would say that the, the deals we're actively pursuing, we're, uh, we're just making sure that, uh, that our operators are comfortable, that our, you know, call it normal diligence is, you know, is checking out. And then obviously, you know, we need to solve for the unknowns. And typically you do that from a structural perspective. So what happens if COVID, if there's a COVID outbreak a week before close, those types of things. You know, in every deal, it's a little bit different, and every seller is a little bit different. So we have to structurally account for that. And so I would say, you know, as Greg alluded to in his comments, that, you know, hopefully we'll be announcing some soon as we, you know, have been working hard over the past six months to, you know, to get to the point where we can say that.

Okay. All right. I look forward to seeing that. Appreciate the time.

Thanks. Thank you. Our next question comes from Connor Siversky of Bertinger. Your line is open.

Hey, guys. Keegan on for Connor. So first, I just want to touch on, so you guys have high exposure to states like Texas and California. You maybe touched on the contingency plan around these states facing spikes in cases recently, and would you have any new protocols in place to help mitigate it?

Yeah, you know, as you look at our portfolio in Texas and California, you'll see the heavy concentration there of the Ensign Group as our primary tenant in those states. Having the Ensign Group as our primary tenant is a pretty strong contingency plan. And so their coverage, as you can see, has been incredible. they just announced and had their earnings call yesterday and had record performance. So while we're certainly monitoring and staying close to all of our operators there and throughout the portfolio, we take quite a bit of comfort as we see these guys, not just Ensign, but all of our operators, you know, mitigate quite a bit any drops in overall census by seeing that skilled mix increase. In spite of the virus spreading there, we don't have elevated concern for those two states. Okay, thanks for the color there.

And I guess to follow up, how has your approach to testing changed since the first quarter? I know last quarter you guys mentioned that the availability was largely dictated by local authorities. So have you been able to kind of source it on your own?

We have not, but not for the lack of trying. So we are pleased that the federal government is finally making some progress there in shipping directly to nursing homes. Our operators have largely struck deals or relationships with local labs in order to solve the problem on their own. We've continued, as recently as a few days ago, pounding on the door of companies like Abbott to try to shake loose those rapid result molecular testing capabilities for our operators. But their supply chain hasn't caught up to demand and thus far hasn't allowed us as a new relationship to source anything for our tenants. But we continue to push for that. Okay, thanks for your time. You're welcome.

Thank you. I'm showing no questions at this time. I'm just trying to call back over to Greg Stapley for any closing remarks.

Thanks, Valerie. And, again, thanks, everybody, for being on the call today. If you have any other questions, you know where to find us, and we're happy to take your calls. Have a good weekend.

Ladies and gentlemen, this does conclude tonight's conference. We may all disconnect. Have a wonderful day.