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spk02: And welcome to the Stagg Industrial first quarter 2023 earnings conference call. At this time, all participants are in a listen-only mode. A brief question and answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Steve Zarros. Please go ahead.
spk01: Thank you. Welcome to Stagg Industrial's conference call covering the first quarter 2023 results. In addition to the press release distributed yesterday, we have posted an unaudited quarterly supplemental information presentation on the company's website at www.staggindustrial.com under the Investor Relations section. On today's call, the company's prepared remarks and answers to your questions will contain forward-looking statements as defined in the Private Securities Litigation Reform Act of 1995. Forward-looking statements address matters that are subject to risks and uncertainties that may cause actual results to differ from those discussed today. Examples of forward-looking statements include forecasts of core FFO, same-store NOI, G&A, acquisition and disposition volumes, retention rates, and other guidance, leasing prospects, rent collections, industry and economic trends, and other matters. We encourage all listeners to review the more detailed discussion related to these forward-looking statements contained in the company's filings with the SEC and the definitions and reconciliations of non-GAAP measures contained in the supplemental information package available on the company's website. As a reminder, forward-looking statements represent management's estimates as of today. DAG Industrial assumes no obligation to update any forward-looking statements. On today's call, you will hear from Bill Crooker, our Chief Executive Officer, and Matt Spenard, our Chief Financial Officer. Also here with us today is Mike Chase, our Chief Investment Officer, and Steve Kimble, EVP of Real Estate Operations, who are available to answer questions specific to their areas of focus. I will now turn the call over to Bill.
spk12: Thank you, Steve. Good morning, everybody, and welcome to the first quarter earnings call for Stagg Industrial. We are pleased to have you join us and look forward to telling you about the first quarter 2023 results. Before we get started, I want to welcome Steve Kimball to the call. Steve joined us about a month ago and brings with him many years of experience in the industrial sector. Steve's primary role will be to maintain our focus on same store operations and help us unlock further value in our portfolio. Steve will also oversee growing our development platform over time. Our first quarter results clearly reflect this neck between the strength of our portfolio and the persisting volatility seen in the capital markets. The industrial market continues to benefit from strong demand driven by multiple secular tailwinds. E-commerce and supply chain reconfiguration have been consistent demand drivers with a diversified mix of industries vying for space across our portfolio. We are experiencing healthy demand from food and beverage tenants, the automobile sector, and third-party logistics providers. The uncertainty in the economy is naturally having some impact on industrial fundamentals, currently isolated to leasing of big box spaces. Large tenants are rationalizing their real estate footprint and commitment to large blocks of spaces. This dynamic is not impacting our portfolio as our average lease size is approximately 150,000 square feet. We have discussed the benefits expected to accrue to industrial demand due to the projected near and on-shoring of manufacturing operations from overseas at a high level. Recently, we have been able to provide real-life examples of this incremental demand driver. We have seen very strong demand in our markets bordering Mexico, particularly El Paso, which is our ninth-largest market, consisting of 2.5% of our portfolio ABR. The near-shoring in Mexico has provided significant incremental demand in the market, resulting in vacancy rates close to zero. We have had three leases roll in El Paso in the past three months, resulting in almost no downtime and 59% cash releasing spreads. With respect to on-shoring, projects announced include the $3.5 billion Honda electric vehicle plant in Columbus, Ohio, and the $2.5 billion solar panel manufacturing plant in Georgia. Market prognosticators have identified states like Georgia, Michigan, and the Carolinas as the likely dominant states for electrical vehicle and battery manufacturing. What is important to note is that these instances of onshoring are occurring in non-coastal, non-gateway markets. They are landing in markets where STAG has traditionally had a footprint, and we expect to benefit as this trend takes shape. Our current 2023 leasing results have surpassed our initial expectation. As of this week, we have leased 10 million square feet or 78% of the new and renewal leasing we expect to commence in 2023, achieving cash leasing spreads of 30.6%. The progress in lease volume addresses in line with the historical cadence at this time in previous years. Based on this execution, we expect our cash releasing spreads to be closer to 30% for the year. The foundation of sustainable cash same-store growth is the average contractual annual rent escalation embedded in the portfolio, which continues to increase. Our average rental escalators in the portfolio are north of 2.5%. There's upward pressure on that number as the average annual rental escalator on our 2023 leasing activity achieved to date is 3.4%. Approximately 28% of those leases have rental escalators of 4% or higher. On the development front, Our 715,000 square foot development in Greer, South Carolina is proceeding on schedule with expected delivery in early July. We expect the two building project to outperform our original underwriting. We have funded $54 million of the $68 million project and have seen strong leasing interest from tenants in the market to date. Not surprisingly, the acquisition market remains quiet with the market searching for price equilibrium. Nevertheless, we have identified several interesting opportunities. We closed on one building subsequent to quarter end and currently have another building under contract. Both opportunities have remaining lease terms less than two years and are in high-velocity industrial markets with strong mark-to-market opportunities. On the disposition side, we sold two buildings this quarter. One building was a non-core asset, and the second was a facility sold to the current tenant. In the aggregate, these transactions resulted in proceeds of $37 million, reflecting a 5.2 cash cap rate. With that, I will turn it over to Matt, who will cover our remaining results and updates to guidance.
spk00: Thank you, Bill, and good morning, everyone. Core FFO per share was 55 cents for the quarter, an increase of 3.8% as compared to the first quarter of last year. Cash available for distribution totaled $90.1 million. an increase of 9.3% as compared to the prior period. Leverage remains at the low end of our guide range, with net debt to annualized run rate adjusted EBITDA equal to five times, with $779 million of liquidity at quarter end. During the quarter, we commenced 41 leases totaling 4.8 million square feet, which generated record cash and straight line leasing spreads of 25.3% and 35.3% respectively. Retention was 74%, and we achieved record same-store cash NOI growth of 5.9% for the quarter. The increase in the same-store cash NOI is primarily attributable to the record high leasing spreads and the increase in average occupancy as compared to the prior year. In terms of capital market activity, we fully repaid our $100 million private placement note F, which matured on January 5th. There are minimal debt maturities for the next two years, with only $53.3 million maturing in 2024. As a reminder, our debt is fixed rate through maturity with the exception of our revolving credit facility. In terms of guidance, we have made the following updates. We have increased our central guidance to be between 4.75 and 5.25% for the year, an increase to the midpoint of 25 basis points. This increase is driven by accelerating leasing spreads and a modest reduction in expected credit loss. Our core FFO per share guidance has increased to a range of $2.23 to $2.27 per share, an increase of midpoint of one penny. We still expect net debt per run rate adjusted EBITDA to be between five times and 5.5 times. I will now turn it back over to Bill.
spk12: Thank you, Matt. I'm very pleased with the company sits today. We have extremely strong operational results and forecasts for the remainder of 2023. We're also benefiting from a conservative balance sheet with ample liquidity. These factors will allow us to take advantage of opportunities that present themselves throughout the year. We'll now turn it back to the operator for questions.
spk02: Thank you. We will now be conducting a question and answer session. If you would like to ask a question, please press star 1 on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star 2 if you would like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. Your first question comes from Craig Meltman with Citi. Please go ahead.
spk04: Hey, good morning, guys. Bill, maybe just starting on the acquisition environment, you know that it's been a little bit slower here, but the pipeline kind of grew almost 25% sequentially. Could you just give us a sense of what is driving that uptick? Is it anything from sellers becoming more realistic on pricing or whatever situation? I'm just kind of curious. That seems like a big jump sequentially. And then also maybe just give us a sense of, you know, what the yield expectations have done or trended in that pipeline.
spk12: Yeah, thanks, Craig. Yeah, the pipeline jumped from Q4. When looking at the pipeline in Q4 versus today, portfolio size in the pipeline is consistent. We're seeing a little bit of an uptick of development deals within the pipeline. But most of the increase is just due to our standard deals, some value-add deals, some stabilized deals. The mix of the pipeline is half of its unsolicited opportunities, deals that we're approaching owners to potentially sell the building, and the other half is lightly marketed or fully marketed. In terms of the acquisition environment, there is still a decent bid-ask spread. between buyers and sellers. We are seeing that narrowing a bit. We closed a deal subsequent to quarter end, as we noted, and as I noted, the prepared marks have another deal under contract. The yields are within our guidance range. So we still right now expect to operate within our cap rate range, given the current market conditions. But overall, it feels like the acquisition market is improving slightly.
spk04: And then on the fully marketed deals, do you have a sense of, you know, from the brokers kind of depth of the buyer pool that you're going up against, maybe make up, and then also just kind of curious of the deals that you've seen transacted sort of the, the taking price versus the asking price, what that differential has been.
spk12: Yeah. I mean, some deals they're asking a price, um, and we'll be in the mix and, uh, Oftentimes, we're seeing those deals not close. We are seeing more deals close than we have in the past six months. In terms of where the asking price is and where the deal ultimately closes, it really depends on a deal-by-deal basis and the sellers. So when you have a more sophisticated seller with a good brokerage team, I think they have a decent handle on where it can clear. Oftentimes, what we're seeing, we saw at the end of last year and a little bit this year, is some sellers that have not transacted in the real estate market in years and have expectations that are a little bit too high. So it really depends on the deal.
spk04: I know we've talked about this in the past, but you guys operate in 30 states, and so there's a wide mix of primary, secondary, and tertiary markets. Are you seeing any differentiation in what's happening on pricing between the primary markets that you guys operate in versus the secondary and tertiary markets?
spk12: Yeah, when we look at our markets and the definitions, we've been using for the past year or so the CBRE Tier 1 markets, which is a size-based definition, but also a capital flow definition. So when you think about that, almost all of our portfolio, close to 90% of our portfolio is in the CBRE Tier 1 markets. We've done a really good job over the past five or so years to dispose of our non-core assets in the tertiary market. So overall, really happy with where our portfolio sits today. In terms of pricing mix between the higher end tier one markets and the lower end tier one markets. It really, I think the bigger price disconnect relates to the weighted average lease term. So the longer term leases are still pricing, you know, call it 50 basis points ish, maybe a little bit more depending on bumps wider than your shorter term deals. And then in terms of just apples to apples market when looking at a higher tier one market versus a lower tier one market, you're probably seeing something in that 25 to 50 basis points, depending on what the mark to market opportunity is.
spk04: And then just one last quick one. On the development deal that you guys walked away from and basically gave up the deposit there, could you just talk about what that yield had been expected to be versus where it was trending, some of the color around that?
spk12: Yeah, I can, I can do that. You got to start saving some questions for the rest of the folks here, Greg, but.
spk04: My last one, I promise.
spk12: Okay. Yeah, that deal, we put that deal under contract in 2021. It was a forward takeout. And then as, as the market moved and as our, you know, capital, cost of capital increased, it was a deal that just didn't make sense for us anymore, given the environment. It was a deal that was in the very low fives. And for us at that point, we did not feel like we were getting the appropriate return, even with the loss of that incremental capital. So very unique situation, but something that we thought was in our best interest to walk away from.
spk04: Great. Thanks, guys.
spk12: All right. Thanks, Craig.
spk02: Next question, Michael Carroll with RBC. Please go ahead.
spk10: Yeah, thanks. Bill, can you talk a little bit about the cash lease spreads that you achieved in 2023 so far and what's the expectation for the remainder of the year? I know last quarter you were kind of targeting your 23 spreads to be between 25% and 30%. I'm not sure if you mentioned this in the prepared remarks, but did you update that just given that you're already above 30% and already satisfying about 70-plus percent of those leases?
spk12: Yeah, I did. So we're close. Close to 80% of our expected leasing we've executed already to date, as you said, the 30.6%. Right now, just given how much we've leased, we've increased our expectation for the year to be closer to 30% for the year. Okay, great. There is some uncertainty in the back half of the year, which is why we've signed 80%, but still 20% less to sign. Okay.
spk10: Is there any mixed difference between that last 20% versus what you've already completed?
spk12: No, not materially, which is why we've increased the guidance for the year closer to 30%. Okay, great.
spk10: And then as you look into 24, I guess, was there anything unique in the 23 spreads in terms of geography or, I guess, the term of the leases that were rolling versus what you're going through in 24?
spk12: Yeah, I mean, this year, what we've signed to date is 10 million square feet. So it's a pretty big sample size. We're seeing really strong demand across our markets. Supply that's coming online nationally is not impacting our markets as much as some other markets. So we feel really good about the leasing spreads we've had this year. and the dynamics in the market. And one thing that's been talked about a lot is the development starts and what the new supply is going to be in 24. Right now, development starts are pretty low, so that should bode well for the supply-demand dynamics in 24. But I try to stay away from 24 guidance in the first quarter 23 call, Mike.
spk10: Yeah, that makes sense. And then just last one, I know you had a few large, I guess, lease spreads that you achieved in northern New Jersey. I mean, is that mix similar in 24 versus 23? That's not going to like distort those numbers or the comparison of those numbers too much, right?
spk12: Yeah. I mean, when you think about some of the larger roles, I mean, I mentioned some of the ones we signed in El Paso at 59%. That's not Northern Jersey. We signed our Amazon building in Northern Jersey. I think that was call it 80% ish, but that's a 250,000 square foot building. So when you think about 10 million square feet, you need a lot of that to really distort the number. So it's a pretty good mix. And if you exclude one or two or three leases, it really doesn't change the number materially. Okay, perfect. Thanks. Thanks, Mike.
spk02: Next question, Eric Borden with BMO Capital Markets. Please go ahead.
spk09: Hey, guys. Good morning. Going back to the pipeline a little bit, I just want to talk about specifically on the developments and the deals and the types of assets that you're seeing come to market. Are they more greenfield, brownfield, fully entitled? Where on the risk spectrum would you be willing to transact today?
spk12: What's in the pipeline today is fully entitled deals, but it's entitled land sites that haven't started as well as some that have gone a little bit further through the process. So it really is a mix. We're bidding to cap rates or returns where we're getting excess returns over a stabilized transaction, and we feel it's in markets where we feel really comfortable with the leasing prospects. So when I talked about operating in the top 60 CBRE1 markets, it's probably in the top 30 CBRE1 markets.
spk09: That's helpful. And then over time, how should we think about the total amount of capital being allocated towards development?
spk12: Yeah, right now, we're in the early stages. So, I think we're going to get through this port 290 development, hopefully put some more under contract. And, you know, as we do more of this stuff, we'll enhance our disclosure and certainly enhance our guidance as to percentage of capital being deployed during the year for developments.
spk09: That's helpful. Thank you. And then last one for me, just on general tenant demand, are tenants looking to renew ahead of expirations today? And then if so, what are they giving up in the negotiation in order to execute on a quicker term?
spk12: Yeah, I mean, the fundamentals continue to be really strong. So tenants are leasing space ahead of lease expiration, but not materially longer, more in advance than they have in the past. So it's a similar cadence to what it was last year. So with that, they're not giving much up. We're not giving much up. So we're marking leases as close to market as we can for these lease expirations. Tenants really like the way we operate our buildings. We've got great relationships with our tenants. We work really hard at that. So they want to stay in a stag building. Very similar cadence to last year in terms of how far in advance they're leasing their buildings. Thanks, guys. Thank you.
spk02: Next question, Camille Zunel with Bank of America. Please go ahead.
spk03: Good morning. Good morning. Can you comment on what you're seeing in terms of rent growth in your markets in the first quarter, and if this changes your view on the outlook for 2023?
spk12: Yeah, rent growth in the first quarter was, depending on the market, mid to high single digits. We're still expecting that. That was our initial forecast in February. We're still projecting that for this year across the portfolio. Last year, I think we ended up high single digits, really, across the portfolio. So a slight deceleration we're projecting, but we'll see if that comes to fruition.
spk03: And it looks like in Philadelphia, your ABR fell from 7% in your second largest market to 2% this quarter. Can you speak to what's driving this decline?
spk12: Yeah, that was more of a definitional change. So we, instead of using costar markets, which has a bigger circle, what we did was we really focused on the CBRE definitions of markets. which we think is more relevant for us. When they look at markets, it's size of market, but I think as important as that is capital flow into markets. So you could have a big market, but if you don't have institutional capital flow, it won't qualify as a CBRE Tier 1 market. So that was really it. If you were to do apples to apples, a Philadelphia exposure, quarter over quarter is the same.
spk03: Okay, so from a geographic perspective, this market's still core to your strategy, no changes there?
spk12: Absolutely, yep.
spk03: Perfect, thank you. And final question, your portfolio occupancies remain quite healthy but sequentially decline nearly 100 basis points. Was there any tenant driving this change or any comments around changes in your tenant credit watch list?
spk12: I'll let Matt talk about the tenant credit, but in terms of sequential occupancy, Q123, we had about 5.5 million square feet expiring. And this quarter, we renewed 74% of that. When you adjust it for immediate backfills, it's about 80%. So we had, call it 20% of that 5.5 million being effectively non-renewed in Q1. Q1 is usually our highest quarter for lease expirations. This one just happened to be a little bit higher. If you look over the prior Q1-22, there was some pretty healthy average occupancy gains, which, as Matt's mentioned in his prepared remarks, was a driver to the 5.9% cash same-star NOI growth in Q1. Matt, do you want to talk about tenant credit?
spk00: Yeah. Hey, good morning, Camille. So, in terms of tenant credit, you know, quite simply, our watch list is very similar to what it was 90 days ago. For the quarter, we did experience approximately $125,000 of credit loss. This is significantly less than what we were budgeting. So, therefore, we have reduced our full-year credit loss assumption from 50 basis points to 40 basis points. The 40 basis points is an acknowledgement of the volatile macro backdrop, but similar to last quarter, you know, none of this is specifically associated with individual tenants. It's more of a broad-based view of potential credit loss. We'll continue to monitor and update the market, but we're very pleased with our rental collections in the first quarter. You know, we generally have larger, more sophisticated tenants. You know, almost 60% of our tenants have revenues north of a billion dollars. Over 80% of our tenants have revenues north of $100 million. So while not a credit proxy, it's a pretty good indication of the size and sophistication of the tenancy.
spk03: Thank you for taking my question.
spk02: Thank you. Next question, Blaine Heck with Wells Fargo. Please go ahead.
spk11: Great. Thanks. Good morning. Bill, appreciate the commentary on onshoring. I guess, can you just walk us through, you know, how the increased manufacturing activity impacts your portfolio directly? I'm assuming you guys aren't necessarily housing the manufacturing activities within your building. So, what are the, you know, some of the ancillary functions or tenants that that are maybe relocating to those markets and driving demand in your warehouses in those situations?
spk12: Yeah, I mean, the simple answer there, Blaine, is it's really suppliers to the manufacturing. So we are not housing the manufacturing. We're housing the – we expect to be housing more of the suppliers and 3PLs servicing those manufacturing sites. So as I noted, we're seeing – Real-life examples in the El Paso market, the past three months, we signed three leases with I think it was 59% cash roll-ups. I mentioned just a couple of examples of some onshoring. There's a lot of other examples. I know Rivian's opening a $5 billion manufacturing plant east of Atlanta, and there's a bunch of other examples, and Toyota's opening a $4 billion electrical battery plant outside of Greensboro. A lot of the markets that we're operating in is where these plants are going. We have not seen immediate impacts to our portfolio because these plants are not up and running yet, but when they are, we expect demand for our warehouses from 3PLs and other suppliers to those manufacturing sites.
spk11: Great. That's helpful. You guys talked about this a little bit, but I think development has been one area of the business I think you guys are looking to do a little more of. Can you just talk about how land pricing has trended recently and whether that would make you more willing to go out and start building a more substantial land bank for future development, like some of your kind of re re counterparts.
spk12: Yeah, we are, it's something that we're looking into Blaine right now, more on the entitled land side of the equation. But certainly over time and with, with Steve's help start to identify and, maybe put some raw land on the books. From peak pricing, we're seeing land come down 20 to 30 percent. We feel like given the market fundamentals, our outlook for the next few years and beyond, industrial is a very strong sector, and we think this is an opportune time to start to make our way into the development side of the business.
spk11: Great. Very helpful. Last one for me. You guys are right at the low end of your stated leverage target range at five times. It seems like acquisitions could ramp up as we progress throughout the year. Your pipeline increased pretty substantially. Can you just talk about potential funding sources? Do dispositions still make the most sense here? Or would you look at other sources like equity, even where the stock is trading?
spk00: Hey, Blaine, it's Matt. Thank you for the question. You know, very similar to when we laid out our initial guidance last call, we're running our business plan this year, assuming this macro backdrop with no incremental capital. We haven't issued equity since January last year. We have no need for incremental debt. We're pretty successful in the capital recycling front. You know, we actually were a net seller this quarter. Leverages of five times, we can run the midpoints of our guidance and stay within our band of five to five and a half. So I guess short answer here, Blaine, is a We're prepared to operate this year without incremental capital.
spk11: Great.
spk02: Thank you, guys. Once again, if you would like to ask a question, please press star 1 on your telephone keypad. Your next question comes from Mike Mueller with J.P. Morgan. Please go ahead.
spk08: Yeah, hi. Just sticking with development for a second, I guess if you do end up expanding that, should we be thinking a little bit more of full traditional ground up or that in a mix of stepping into projects that were recently developed but are, you know, not yet leased and just taking on the leasing risk? I mean, how are you thinking about that?
spk12: All along the spectrum there, Mike. So we will step into projects that are almost complete and take on the leasing risk. We'll want to get a better return than if that building was stabilized, all the way to, you know, buying an entitled land site today. and taking on the development risk and the leasing risk and the market risk. So we're evaluating all those opportunities. We've executed on all of those opportunities to date or are in the process of executing on, I guess, the last one. So it will be a mix as we get into this more and we do more of this. We'll certainly enhance our disclosure and our guidance on it. But right now, we're evaluating a lot of these opportunities.
spk08: And how is the staffing, I guess, in-house in terms of if you're thinking about expanding the actual ground-up components, like doing it all from scratch? I mean, how staffed are you for that to do more than a handful of projects?
spk12: Yeah, we're very well staffed today. I mean, it all depends on how much. Our approach to this will be using general contractors so we can flex up and down without having all the staff in-house. I think that's very similar to some of our peers. some of the private shops. So for us right now, we're staffed appropriately, and it all depends on how big this opportunity is.
spk06: Okay. Thank you. Thanks, Mike.
spk02: Next question comes from Nick Fillman with Baird. Please go ahead.
spk07: Hey, guys, just one quick question for me. On the acquisition pipeline, you kind of said 50% lightly marketed. How does that compare relatively to the historical pipeline?
spk12: It's about the same. It was from a lightly marketed, when you start factoring in fully marketed, the pipelines move a little bit more to unsolicited transactions now than it was before. And so with that, you'd expect our hit rate to be lower because we're not sure in all these cases that there's a willing seller at a market price. So it's moved more to the unsolicited than it has in the past.
spk06: Very helpful. Thanks. Thank you.
spk02: Next question, Steve Sokwa with Evercore ISI. Please go ahead.
spk05: Yeah, thanks. Just one question, I guess, broadly. I know cap rates are going to vary by market and growth rates vary by market, but I guess one way to normalize all that is to maybe think about unlevered IRRs on the things that you're buying or selling. So I guess the question is, where do you think unlevered IRRs are today for kind of your core markets, and maybe how has that changed, or how have you changed the unlevered IRR hurdles that you're willing to invest in?
spk12: Yeah, it's probably high single digits, Steve, today. Obviously, those numbers have gone up a bit with our cost of capital. When we evaluate a transaction, it needs to be accretive. So as our cost of capital increases, our unlevered IRR requirements increase as well.
spk05: So high single digits meaning 7, 8, 9, 10? Maybe not 10, but where in that range of high single digits would you say?
spk12: Well, it's probably in the seven and a half to nine range, I would say.
spk05: And I guess that would the nines be sort of the smaller markets and, you know, the seven and a half kind of the maybe the tier one CBRE markets you think about along those kind of lines?
spk12: Yeah, I mean, it's a mix. It really depends on what we can get for going in cap rate and then factoring in the growth rates that we're projecting. Some of the, as I said, most of the portfolio, I think 90% of the portfolio is in CBRE Tier 1 markets, but cap rates and returns vary across those markets. So it just depends. And it also depends on the opportunity and who we're competing with on the opportunities. So A lot of times we're buying from local private equity where the competition is only a couple other bidders in this market. So we feel like we can extract some value on the acquisition buy side. And so sometimes those can, even if they're in the bottom half of the CBRE tier one markets, sometimes yield a significantly higher result than some of the higher tier one markets.
spk06: Great. Thank you. Thank you.
spk02: Thank you. I would like to turn the floor over to Bill Croker for closing remarks.
spk12: Thank you, everyone, for joining us today. Really appreciate the questions. Very happy with where we are today, as I mentioned, and the outlook for 2023. And we look forward to seeing many of you at the upcoming conferences. Thank you.
spk02: This concludes today's teleconference. You may disconnect your lines at this time and thank you for your participation.
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