Life Storage, Inc.

Good day, ladies and gentlemen, and welcome to the Life Storage Third Quarter Earnings Release Conference Call. At this time, all participants have been placed on a listen-only mode, and the floor will be open for questions and comments after the presentation. It is now my pleasure to turn the floor over to your host, Alex Gress. Sir, the floor is yours.

Good morning and thank you for joining us today for the third quarter 2022 Earnings Conference Call of Life Storage. Leading today's discussion will be Joe Sapphire, Chief Executive Officer of Life Storage, and Andy Gregory, Chief Financial Officer. Following prepared remarks, management will accept questions from registered financial analysts. As a reminder, the following discussion and answers to your questions contain forward-looking statements that are subject to risks and uncertainties and represent management estimates as of today November 3rd, 2022. The company assumes no obligation to revise or update any forward-looking statement because of the changing market conditions or other circumstances after the date of this conference call. Additional information regarding these factors can be found in the company's public SEC filings. In addition to the press release distributed yesterday, we furnished our supplemental package with additional detail on our results, which may be found on the investor relations section on our website at lifestorage.com. As a reminder, during today's question and answer session, we ask that you please limit yourself to two questions to allow time for everyone who wishes to participate. Please rekey with any follow-up questions thereafter. At this time, I'll turn the call over to Joe.

Thanks, Alex, and good morning, everyone. I want to start off first by thanking and recognizing all of our life storage teammates, both in Florida and throughout our company, who continue the hard work to provide support to our customers impacted by Hurricane Ian. All of our stores in Florida are open for business, and that would not have been possible without the tremendous efforts from our teammates. I would also like to say how thrilled we are that Newsweek awarded us for the fifth year the best customer service award in America for the storage centers category. This award is a true reflection of the world-class team we have here at Life Storage. Now turning to the quarter, I am pleased to report another outstanding quarter across all segments of our company. While we are seeing a return to more normal seasonal trends, our operating fundamentals and metrics remain very strong and higher than pre-pandemic levels. We believe we are well positioned as we head into 2023. To highlight a few notable results and trends from the quarter, we achieved the same store revenue growth of 14.9% for the quarter over last year. We continue to see strong and balanced revenue performance across our entire portfolio with 94% of our major markets achieving quarterly double digit revenue growth for five quarters in a row. A realized rental rate per square foot this quarter was 17.1% higher than in the same quarter last year. This is also five quarters in a row of realized rental rates per square foot growth greater than 14%. Same store NOI growth this quarter is 18.4% higher than the same quarter a year ago. That puts us at five quarters in a row with same store NOI growth of 18% or greater. As a result of these strong operating fundamentals, we achieved adjusted funds from operations of $1.73 per share for the quarter, which is 26.3% increase over last year. That also puts us at six quarters in a row with adjusted funds from operations growth greater than 25%. In regard to external growth, in the third quarter, we acquired 11 wholly owned stores for $217.5 million, And subsequent to quarter end, we acquired seven wholly owned facilities for $142 million. We view these acquisitions as complimentary to our existing portfolio, and four of these properties are coming from our third party management platform. About two thirds of these properties are stabilized, with the remaining in lease up, which will provide strong upside in future years. Outside of wholly owned acquisitions, In the quarter, we added to our joint venture portfolio with 15 stores for a $52.7 million investment. And subsequent to the quarter end, we invested in seven stores for $25.3 million. These joint ventures enable us to participate in top markets and quality properties that provide future upside with a moderate capital investment. Including joint ventures, our third-party management portfolio surpassed 400 stores at the end of the third quarter, growing more than 12% over last year with the addition of 25 stores this quarter. We view our third-party management platform as a strong strategic pillar for us that drives fee income and supports off-market acquisition opportunities. Year-to-date through October, 10 of our wholly owned acquisitions and a consolidated joint venture came from our third-party management platform. As we look towards the full year, we now estimate our adjusted funds from operations per share to increase to a midpoint of $6.44 for the year, which would be 27% growth from 2021. Andy will walk you through the quarter in more detail and our positive guidance updates. But before I hand it over to Andy one last time, on behalf of myself, the Board, and the entire Life Storage team, I want to thank Andy for his invaluable contributions and dedication to life storage for nearly 25 years. We wish him all the very best in retirement and thank him for leaving behind a strong finance team that will continue to position us for future success. And with that, I'll hand it over to Andy.

Thanks for the kind words, Joe. Sure. And thank you for everyone for the congratulatory messages I've received. You know, it's certainly a bittersweet moment, and I've enjoyed my time here and my interactions with all of you. But of course, I'm going to look forward to retirement. As you know, joining us in the room here is Alex Gress, and I'm excited for the opportunity Alex has ahead of him, and confident that Life Storage remains in good hands. I've had the chance to work closely with Alex over the last year, and I will be assisting the transition through the early half of 2023. So I'm not gone yet. Now turning back to the quarter, Last night, we reported quarterly adjusted funds from operations of $1.73 per share for the quarter, an increase of 26.3% over the same quarter last year, and well above the high end of our guidance. The continued quarter-over-quarter increase in adjusted FFO was a result of excellent same-store and acquisitions performance. Third-quarter same-store revenue increased 14.9% over the third quarter of 2021. primarily driven by increasing rental rates. Although we are seeing a return to more normal seasonal trends, we remain highly occupied, especially when compared to pre-pandemic levels. Same store occupancy averages 93.1% during the quarter. And for reference, our same store occupancy averaged 90.7% for the third quarter of 2019. We continue to benefit from strong rate growth in the quarter, primarily driven by our in-place rate increase strategies that led to a significant increase of 17.1% in our achieved same-store rates per square foot over the same quarter from one year ago. As Joe noted, this is the continuation of double-digit rate growth for the last five quarters. Our existing customer rate increase strategies continue to be effective with weighted average increases above historical norms. Same-store operating expenses grew 6.6 percent for the quarter versus the last year's same quarter and were primarily driven by credit card fees, repairs and maintenance, and utilities expense. Payroll and benefits increased less than 1 percent over the third quarter of 2021 on a same-store basis. The net effect of that same-store revenue and expense performance was a 214 basis point expansion in our quarterly same-store net operating income margin to 72.8 percent, resulting in year-over-year growth in same-store NOI of 18.4 percent for the third quarter. Turning to the balance sheet, we supported our acquisition activity by utilizing our credit facility and issuing equity securities during the quarter. Specifically, we drew $153 million from our credit facility and issued an additional $80.2 million of common stock via our ATM program during the quarter. at a weighted average price of $133.11 per share. At the start of the quarter, we closed on the refinancing of our existing credit facility that was scheduled to mature in March of 2023. With the refinancing, we increased the facility from $500 million to $1.25 billion. This new facility provides committed liquidity to life storage through January of 2027 with terms comparable to or improved from the terms of the existing facility. At quarter end, we had significant capital available, with $794 million available on our credit facility. Our balance sheet remains very strong, with plenty of capacity and low leverage. Our net debt to recurring EBITDA ratio is at 4.6 times at quarter end, and exactly in line with the previous quarter. Our debt service coverage is at a very healthy 5.6 times at September 30th. We continue to have no significant debt maturities until April of 2024, when $175 million becomes due. Our pro forma average debt maturity is 5.8 years, and our weighted average interest rate is 3.4% at quarter end. In addition, at September 30th, 86% of our debt was fixed rate. We are updating our 2022 guidance. we now expect same-store revenue to grow greater than our past guidance to between 14.25% and 15.25%, which will be driven by improved rental rates. This increase should result in a greater same-store NOI growth that we now expect to be between 18% to 19%. The improved same-store performance is expected to be partially offset with the increased cost of capital. Based on this outlook, We now anticipate core FFO per share for 2022 to be between $6.42 and $6.46, or 27% growth over the prior year at the midpoint. With that, operator, we will now open the call for questions.

Thank you. Ladies and gentlemen, the floor is now open for questions. If you would like to enter the queue to ask a question at this time, you may press star 1 on your telephone keypad now to enter the queue. We do ask, if listening on speakerphone this morning, that you please pick up your handset while asking your question to provide optimal sound quality. Once again, ladies and gentlemen, that'll be star one at this time to enter the queue to ask a question. Please hold a moment while we poll for questions. And the first question this morning is coming from Michael Goldsmith from UBS.

Michael, your line is live. Please go ahead. Good morning. Thanks a lot for taking my question. Congrats, Andy. Congratulations, Alex. My first question is on expenses. The expense growth was 6.6% during the quarter. Year-to-date, you're at 4.6%, which implies, with your guidance, it implies an acceleration in the fourth quarter, maybe between the 7% and 11% range. So I guess the question is kind of, how much is this a function of a rising expense environment? How much of this is a function of just maybe an easier or more difficult comparison on the expense side? And then how do you think you manage your expenses kind of heading into next year, given you've already done a lot of great things to reduce expenses, but how much further opportunity do you have?

It's a good question, Michael, and thanks for the compliment. When you look at the fourth quarter, I think there is inflationary pressures, and you saw that through the first three quarters. The big difference in the fourth quarter is our property taxes. In the fourth quarter of 2021, we had a great benefit on the property tax line to the tune of almost $4 million. So we have a very tough comparable, and that's what's driving the change from Q3 to Q4 in the growth in expenses. That line item just in the quarter will probably be over 20% for the fourth quarter. So that's what's driving and nicking the NOI growth in the fourth quarter. But it's a tough comparable more than anything else. Everything else, inflationary pressures, we've seen those throughout the year. We've controlled them well. Dave's team's doing a great job on the payroll line and other lines. R&M, we still have some work to do, but... you know, we're comfortable with the inflationary pressures and the controls we have in place and the technology we're investing in, the biggest thing will be the property tax line in the fourth quarter.

So maybe the true run rate of expense is closer to your year-to-date growth rather than kind of what's implied in the fourth quarter?

Well, without the property taxes, yes. Yes, it would be very similar. If we didn't have that property tax comparable in the fourth quarter, our NOI would probably grow 12% to 13%, but obviously in the guidance you can see it's less than that. It's from the property tax impact. Got it.

And then just on kind of the topic of kind of returning to seasonal trends, can we dig a little bit deeper in terms of, like, how this quarter played out that was kind of similar to what a normal seasonal third quarter would look like versus what was different. Like, did it start a little bit later, the cadence through the quarter and kind of how that sets up kind of like the back half or sets up the fourth quarter, I guess. And just given that, you know, last year was probably, you know, since there wasn't any seasonal, there was less seasonality, the gap this year to last year is obviously going to widen. But like, do we expect kind of like, as we get kind of the seasonal lift early next year, that kind of like the gap over last year kind of narrows again?

You know, I think the seasonality is about what we expected. You know, when we look at the occupancy, and again, we're trying to maximize revenue, but the occupancy is trending as we thought. A little bit higher than a normal seasonality decline is what we're seeing, and that's what we forecasted. I think that the surprise to the upside has been rates. I mean, they really hung in well during the quarter. We had rent roll up. But for 22 straight months and then coming through the quarter, we saw some deceleration where we saw rent roll down in September. In August, it was pretty flat, slightly negative. So I think rates have performed better than we thought. The acquisitions have also performed much better than we expected. Compared to our underwriting, our acquisitions are performing much better. And that's just the platforms. Once you put acquisitions on our platform, and we're talking about the 2021 acquisitions, they're performing better than we expected from a rate side, from an occupancy side. So it's a combination of things that, you know, it's a little different than normal seasonality trends, true, but has been above our expectations.

Michael, Joe, I'll add that, you know, obviously Andy mentioned that the occupancy declines were a little bit higher than seasonality, but that wasn't unexpected. As you know, we've been very aggressive with the rate increases this year. And we've continued that, you know, through the third quarter. And so we expected the move outs and we were not surprised by them. What's been very encouraging has that demand has been there. Actually, in the third quarter, our move ins were 7% higher than last year, which was an excellent year. So we think that's going to continue through, you know, 20, you know, the spring season, we think demand and feel good that demand is going to be there. And, you know, we'll start the year off, you know, at an occupancy level, which is we feel is a good start to the year, and we'll be able to build upon that as we go through the spring season.

Thank you. Congrats again, guys. Good luck in the fourth quarter.

Thanks.

Thanks.

Thank you. Your next question is coming from Smeeds Rose from Citi. Smeeds, your line is live. Please go ahead.

Hey, good morning. This is Maddie on for Smeeds. Just had a question about the uninsured damages add back to core FFO. We're interested to know if that includes tenant reimbursement claims or if it's more related to property damage and if any of those costs are expected to be recouped.

Hi, Mandy. It's a combination of two items. The uninsured damages, about $2.6 million. A million of that was our customer insurance claims. that were above our normal trends. We pay customer insurance claims every month, right? Things happen in storage, whether it's floods or fires. Those things happen every month. This hurricane was very unusual. It's the first time we had customer claims at a back from a hurricane event. We weren't self-insured back in 17 when Harvey hit from a customer insurance claims. The other 1.6 million is the damages from our properties that is uninsured. So it's deductible portion. of the damage that incurred. And those repairs are ongoing. All of our properties are open and going through the repairs. So we don't expect any continuing there. There is no recoupment on any of those costs, though, that $2.6 million will not be recouped.

Okay, great. Thank you. And just on third-party management, could you speak to what the pipeline is looking like? And as we think about next year, do you have a sense of what net ads could look like?

You know, Manny, we continue to be really pleased with our efforts of the third-party management team. Our reputation is out there in the industry. We're getting looks from a lot of new potential owners. The pipeline through the fourth quarter is going to remain strong, and we're going to be opening stores and putting Life Storage brand on several new stores through the end of the year. So we're very excited about that pipeline, and we think that's going to continue through next year.

Great. Thank you. And congrats to Alex and Andy.

Thank you. Thank you. Your next question is coming from Lizzie Doiken from Bank of America. Lizzie, your line is live. Please go ahead.

Good morning. Thanks for taking my question. I was wondering if you could give an update on how demand trends have been through the end of October here, so to the extent you can give some color on data points around occupancy,

rate um would like to kind of hear how that trended through october sure yeah you know lizzy the uh the move-ins in the same strong movements in october were pretty much on top of last october so those look good move outs continue to be higher so we saw it's pretty much a normal seasonality drop from september to october 60 basis points in occupancy so we ended october at 91.8 but that's pretty typical uh rates as they typically do this time of year, trend downward, although the street rates in October were pretty much down the same level they were in September. It didn't go any further south, so we're happy with what we see there.

Great, thank you. And I was wondering if you could comment on how late fees, bad debt, trended through the quarter, and if you're seeing anything any pickup or anything different into October as well.

Similar to what we saw last quarter, late fees and delinquencies have returned to normal, what we saw pre-pandemic, which is not good for our customers, obviously. Their balance sheets aren't as strong as we saw the last few years, but it is good for revenue, actually. The late fees are back to normal levels year over year. Bad debt is about 1% of revenue. That had trended down all the way to about a half a percent of revenue during the pandemic, back to pre-pandemic levels at that 1%. So as long as we don't see a significant rise from where we're at, we're comfortable. Customers are acting very similar to what we saw in 2018 and 2019.

Okay, thanks for the color. And congrats, Andy and Alex, on the transition.

Thank you. Thank you. Your next question is coming from Hongliang Zhang from JP Morgan. Hongliang, your line is live.

Yeah. Hey, guys. First of all, congrats to the both of you. I was wondering if you could talk a little bit about your continued ability to grow rents considering it sounds like street rates have stabilized a little bit but are still lower than where they were this year and move outs are probably expected to continue to be higher.

Yeah, I think the street rates, you're right, have come down. But how we're growing our rents is really it's the current customers and what we're doing with our ECRI program. That existing customer rate increase, we've been very aggressive the whole year. We continue to be aggressive until the data tells us differently. We think we can continue to increase our current customers above normal levels. So I think that's the big driver of what you're seeing in our in-place rate growth.

Got it. And we'll see also just the, you know, we obviously monitor the supply. We don't talk too much about it because it has been muted. And I think with the rise in interest rates and, you know, again, the cost of construction is high and, you know, we feel pretty good about this new supply coming on. And obviously when there's a lot of new supply, you know, street rates get some pressure, but we don't see that happening, you know, anytime too soon.

Yeah. So it's fair to say your ECRIs are still trending higher than historical news.

Yes.

Yeah, and then if I could sneak one last one in. You've been pretty active on the acquisition market so far this year. Could you talk a little bit about how you're seeing cap rates trend so far?

Sure. Yeah, we obviously hit our guidance and we'll probably be there for the rest of the year. But we've had a very active year. We've added to some very great markets, some Class A stores, some lease-up stores, some fully stabilized stores. I think if you look at the beginning of the year, to what we just recently closed in Phoenix. Probably the change in cap rates has been about 75 to 100 basis points, which has allowed us to continue to find good deals. There's a lot of product out there, but right now, given the capital market situation, we're seeing more deals come back to market that didn't close or didn't trade. I think they'll be there in the beginning part of the year, but I think right now most buyers are on pause.

Thanks, have a great quarter.

Thank you.

Thank you. Your next question is coming from Spencer Alloway from Green Street. Spencer, your line is live. Please go ahead. Thank you.

I believe you mentioned earlier that you guys saw a rent roll down in September. I was just hoping you guys could provide an update on what that rent roll dynamic looks like today.

Yeah, Spencer, in the quarter, it was very slight, right? It was less than 1% roll down when you looked at the quarter as a whole, but in September, it was about 8% roll down. Now, that's not that atypical as you get to later parts of the year. I think it went back to 2017 and 2018, and that was maybe four to five. So it's not atypical as we go through the typical slow season of the year, but it is different than what we saw the last 22 months, right, where we had rent roll up. So definitely back to more normal trends, coming off of some pretty high rates.

Okay, and then you, just maybe circling back to the ECRI comments, are you able to provide an update on the, or provide commentary around, like, the magnitude that you actually sent out, maybe on average in the quarter?

I would, you know, it's been consistent throughout the year, Spencer. You know, high teens, you know, we'll evaluate, you know, what we're going to do early in 2023. Right now, the volume of increases isn't as significant as what we do earlier on in the year. So we still feel comfortable with those high teens.

Great. Thank you, guys.

Thank you. And the next question is coming from Juan Sanabria from BMO Capital Markets. Juan, your line is live. Please go ahead.

All right. Thank you. Maybe for Joe, just on the acquisition side, do you expect to remain active? And could you just maybe help us get a sense of where the stabilized yields you would expect or are underwriting currently given the changing cost of capital today?

Yeah, I mean, we're probably on the wholly owned side, you know, going to probably not be too active for the remainder of the year. unless we start seeing cap rates continue to move higher, which I don't think will happen. I think the five, five and a half range is probably the highest that a seller will be willing to trade. But we have the lever to work with our JV partners, and we've been very active this year, close to a half a billion in deals with our JV partners, and we'll continue to use that option if we don't feel comfortable doing wholly owned deals. And obviously, we're going to continue to grow our third-party platform. You know, I think a lot of buyers are probably on the sidelines through the remainder of the year, Juan. So I think, you know, we'll see where the capital markets are heading into 2023. And, you know, that'll kind of dictate, you know, how active we'll be on the wholly-owned front or on the JV front or obviously both.

And you guys have been pretty acquisitive for a good stretch here. Just curious if you could give us any sense of what the quantum of benefit presumably would be to same store revenues for next year as the pool changes.

Yeah, Juan, I didn't do the analysis of that 2021 acquisitions that are coming in the pool. I will tell you this year, they have grown tremendously better than we expected. I think even from Q2 to Q3, that pool of 2021 acquisitions, the revenue just from quarter to quarter grew like double what our same store grew. So that's just the power of our platforms and what they do in that first year, year and a half when we put them on the platform. So they're performing well. I would think it's going to give us a little bump. I just haven't quantified. It's tough to change, as you can see from our same store pool analysis, we show the last three years groupings. It hasn't impacted it a whole lot. And I would think by the time they go in in 2023, it's not going to be a significant increase.

Can I sneak one more in? What's your plan on the line of credit? You've got 456 as of the quarter end. Should we think about like an unsecured raise here at some point or just curious on how you plan to manage that line exposure and your views on rates, I guess, as a part of that?

Yeah, I think we're very comfortable with the flexibility we have with that line. Capital markets right now really aren't matching up. So I think we're comfortable leaving things on that line. It's a small portion of our total debt. As you can see, it's some 86% of our debt is fixed rate as of the end of the quarter. But we're comfortable there. At some point in the future, when the capital markets open back up, yes, we would turn that out. That's typically what we do. But there's no hurry on that. We've got great flexibility. And no true needs. When you look at our needs, it's really driven by acquisitions. As Joe said, you know, there's a pause on those now.

Yeah, we're pretty happy, Juan, with the execution of our new revolver. We kind of snuck it in there in the summer at a window when the banks were willing to lend. And we got some great terms and provided us some great flexibility. And really, you know, prior to doing that, you know, our line was a half a billion. And our availability is much greater than that today because of it.

Great. Thanks and congratulations, Andy and Alex.

Thanks, Juan.

Thank you. Your next question is coming from Flora Tong from Evercore. Flora, your line is live. Please go ahead.

Hi, Tim. It's Flora from Evercore with . So congratulations on the great quarter and on the transition side. I guess my question is like the occupancy is trending downward sequentially in the year over year, but it's still about the 90 levels by roughly 240 bits. So what level of occupancy where you start to be cautious and therefore use more promotional discounts and do a bit more advertising to maintain the occupancy at a certain level?

You know, we're obviously very pleased with where occupancy is today. We're still, you know, above pre-pandemic levels. And we don't see a lot of new supply coming on. So, you know, we'll run promotions where it makes sense. And, you know, we can be very selective in markets and unit sizes as to where we want to build occupancy. And we'll do that as and when needed. But right now, we're very comfortable with our occupancy levels. We think it's a great spot to be heading into 2023. And I think we've learned in, you know, probably 2020, 2021, that you know, we were almost too occupied heading into the spring leasing season. We didn't have a lot of availability. So I think the position we're in now and our occupancy levels are, you know, in a good spot heading into, you know, spring of 2023. Okay.

Yes, that's really helpful. Thank you so much.

You're welcome.

Thank you.

Thank you. And as a reminder, ladies and gentlemen, if you would like to join the queue to ask a question, you can press star 1, on your telephone keypad at this time to enter the queue. Once again, ladies and gentlemen, that'll be star one on your telephone keypad at this time to enter the queue if you'd like to ask a question. The next question today is coming from Kebin Kim from Truist. Kebin, your line is live. Please go ahead.

Thanks. Good morning. Congratulations, Andy and Alex. Thanks, Kebin. First, like a basic question. I know the average turnover in your portfolio is about 5% to 6% of your tenant's turn every month. But a lot of times, you know, that turns the same space month to month. So when you look at it from a full year perspective, like how much of your portfolio actually turns?

You know, I think it's – you're right. Some of those are – so it's probably about, you know, if you look at 3% a month is about the average true turns. So if you look at that, it's somewhere around 36% of the portfolio changes over.

Okay. And when you think about the ECRI program, I think you mentioned that the magnitude of the increase is still the mid-teens or high-teens. But when you look at it going into next year, what are some of your high-level thoughts on your ability to keep that program the same? Or given what's happening with street race and occupancy, how are you thinking about altering that program?

The beauty of the program, Keevan, it's something that we don't have to make a decision today. It's something we look at each month, each week if we have to. There's a lot of data that's going to come in over the next couple of months with regards to the economy and the Fed and consumer balance sheets, demand. It allows us a great flexibility to be very reactive and and make smart decisions, and that's what we'll do. You know, I think we're going to be in a good spot. I think we'll be in a position to do, you know, ECRIs that are a level, you know, higher than what we used to do pre-pandemic. Will it be as good as this year? I'm not sure. We'll decide probably early January, February, and when the letters start going out.

Okay. And, you know, your Stanford revenue growth has, I mean, it's outstanding, but it is decelerating, which is not a surprise. It's probably decelerating about four points over the past couple quarters, each quarter. And your fourth quarter implied guidance calls for about 10%. And maybe we can say that's conservative, so maybe it's a little bit higher than that by the time we end the year. But, you know, this four-point pace of deceleration, is that realistic to think about that going into 23 as well?

You know, I think, you know, we're not guiding the 23 yet, and it would be tough to say. I think we're going to start the year in a good spot. Like I say, if we end the year at 10, we're starting January close to that. So I think we start the year at a strong spot. How it flows through the year will depend on the ECRIs. They are driving a lot of that revenue growth, as Joe says. We haven't made that decision yet. Will it be somewhere between pre-pandemic and what we've done the last year? Maybe. We'll have to see. We'll watch the attrition rate of those ECRIs That will be the driver. We'll have a little bit of occupancy, right? We'll have a little bit of potential, more occupancy as we go into the next busy season than we had this year. So maybe there's a combination there, but it's tough to tell right now. We'll, as we say, make those decisions as we see the data going through the next few months.

Okay. Thank you, guys.

You're welcome.

Thanks, Kevin.

Thank you. And this does conclude the Q&A session for today's call. I would now like to turn the floor back to Joe Saffire for closing remarks.

Well, just thank everybody for joining today's call. We look forward to seeing many of you in a couple weeks in San Francisco.

Thank you, ladies and gentlemen. This does conclude today's conference call. You may disconnect your phone lines at this time and have a wonderful day. Thank you for your participation.