Adam Wudel - SVP, Finance and Capital Markets Daniel P. Hansen - Chairman, President and CEO Jonathan P. Stanner - EVP, CFO and Treasurer.

Bill Crow - Raymond James Michael Bellisario - Robert W. Baird & Co. Austin Wurschmidt - KeyBanc Capital Markets Wes Golladay - RBC Capital Markets Chris Woronka - Deutsche Bank.

Good day, ladies and gentleman, and welcome to the Summit Hotel Properties, Inc. Q1 2018 Earnings Call. At this time, all participants are in a listen-only mode. Later we will conduct a question-and-answer session and instructions will follow at that time. [Operator Instructions] As a reminder, this conference is being recorded.

I would like to introduce your host for today's conference, Adam Wudel, Senior Vice President of Finance. You may begin..

Thank you and good morning. I am joined today by Summit Hotel Properties' Chairman, President and Chief Executive Officer, Dan Hansen, and Executive Vice President and Chief Financial Officer, Jon Stanner. Please note that many of our comments today are considered forward-looking statements as defined by federal securities laws.

These statements are subject to risks and uncertainties, both known and unknown, as described in our 2017 Form 10-K and other SEC filings. Forward-looking statements that we make today are effective only as of today, May 3, 2018, and we undertake no duty to update them later.

You can find copies of our SEC filings and earnings release, which contain reconciliations to non-GAAP financial measures referenced on this call, on our Web-site at www.shpreit.com. Please welcome Summit Hotel Properties' Chairman, President and Chief Executive Officer, Dan Hansen..

Thanks, Adam, and thank you all for joining us today for our first quarter 2018 earnings conference call. We are very pleased by the strong earnings performance of our portfolio this past quarter that drove both top and bottom line results to the high end of our guidance range.

A number of factors contributed to our positive first quarter results, including continued strong leisure and group demand and encouraging pickup in corporate demand and continued natural disaster related businesses. For the first quarter, we recorded adjusted FFO of $32.1 million, an increase of 6.5% as compared to the first quarter of 2017.

Our adjusted FFO of $0.31 per share came in at the high end of our guidance range of $0.28 to $0.31 per share.

On a pro forma basis, we reported RevPAR growth of 2.1% for the quarter, which was driven by a 1.2% increase in rate and a 0.9% increase in occupancy and includes approximately 100 basis points of CapEx displacement related to four hotels that had guestrooms out of service for the renovation during the quarter.

Strength in RevPAR growth was evident in numerous markets across our portfolio, with a few of the largest outperformers being Minneapolis, Indianapolis and Miami. Our Minneapolis hotels performed extremely well, benefiting from exceptionally strong demand related to the Super Bowl.

Our six Minneapolis hotels combined did post RevPAR growth of 27.2% for the quarter, led by our Hyatt Place located only three blocks from U.S. Bank Stadium that produced impressive RevPAR growth of 41.3%.

Our two Indianapolis hotels continued to ramp following successful renovations, implementation of new group strategies, and an improving convention calendar.

Combined, these two hotels had RevPAR growth of 10.1% during the quarter and once again outperformed the competitive set and the broader Indianapolis market that both reported a RevPAR decline of 2.8%. In Miami, our two hotels saw upside from strong leisure demand and some ongoing hurricane-related demand during the first quarter.

RevPAR growth at our Courtyard Fort Lauderdale Beach and Hyatt House Miami Airport was a combined 18.2%, with each hotel gaining market share within their respective competitive set. We continue to monitor corporate demand closely and are pleased with some of the more recent trends.

Given the multitude of channels a guest has at his or her disposal to book a room, tracking true corporate room nights and rates is more challenging than ever.

However, a few specific data points from the quarter give us optimism that business travel has started to turn a corner, albeit with a booking pattern that continues to be very short-term in nature.

Underlying GDP growth of 2.3% in the first quarter included a 6.1% increase in business investment spending, which historically has been a reliable leading indicator for business travel.

In our portfolio specifically, we saw weekday corporate negotiated RevPAR increase nearly 3% year-over-year but was significantly higher in what we would consider to be our core business hotels, brands including Marriott, Courtyard, Hampton Inn, and Hilton Garden Inn, where the weekday negotiated RevPAR increased nearly 9% for the quarter.

Expanding our segmentation to include the retail segment, which inevitably includes a healthier number of corporate room nights, weekday RevPAR grew nearly 6% in the first quarter.

Of course, the data should be taken in a proper context, acknowledging that the first quarter is the slowest of the year for our portfolio and some of our markets continue to benefit from marginal incremental storm-related demand.

Although we did not acquire or sell any assets in the first quarter of the year, we made great progress recycling capital by entering into contracts to opportunistically sell four hotels for an aggregate sales price of $43.3 million.

For the 12 months ending March 31, the four hotels had an average RevPAR of $87, which was 26% lower than our portfolio average RevPAR of $118, and hotel EBITDA margin of 32.4%, which was 470 basis points lower than our portfolio average for the same period.

Our capital recycling strategy has allowed us to refine the portfolio and redeploy capital into hotels that we believe have greater growth trajectories at initial cap rates, in line with recent disposition activity.

Our 14 hotels currently classified as acquisition hotels, which had a 41% absolute RevPAR premium to the hotels we are selling, posted a very healthy 10.5% RevPAR growth for the quarter, led by the AC Atlanta Downtown, Courtyard Fort Lauderdale Beach, and the Courtyard Pittsburgh Downtown.

Their success validates our ability to identify and execute on high quality acquisitions and demonstrates the quality and experience in many of today's premium upscale hotels, which compete with both full service and boutique hotels.

During the first quarter, we invested $13 million into our portfolio in items ranging from common space improvements to complete guestroom renovations as well as new and dynamic bar areas and fitness centers to improve the guest experience.

Notably, we are nearing the completion of a comprehensive guestroom renovation and reconfiguration at our Marriott in Boulder, which includes conversion of underutilized meeting space into eight additional guestrooms that are now online.

In San Francisco, the renovation at our Fisherman's Wharf Holiday Inn Express & Suites is expected to be completed in mid- 2018. This timely renovation will position the hotel to capitalize on the full reopening of the Moscone Center, currently scheduled for December of 2018.

In addition to the capital we are investing in our existing portfolio, I'd like to take a moment to provide an update on our Hyatt House development in Orlando, Florida. If you recall, the 168-guestroom hotel will be located adjacent to our existing Hyatt Place at Universal Studios.

The Orlando market has been incredibly strong over the last couple of years.

Specifically, the market ranks #1 in RevPAR growth among top 25 markets and exceeded the national average RevPAR growth rate by nearly 500 basis points, posting 7.2% growth for the eight months ending in August 2017, which was prior to the market experienced elevated demand after Hurricane Irma that made landfall in September of 2017.

The Hyatt House is expected to open at the end of the second quarter and we are excited about the opportunity on a high quality, extended-stay product in the market that we've had great success in. With that, I'll turn the call over to our CFO, Jon Stanner..

Thanks, Dan, and good morning everyone. For the quarter, our pro forma hotel EBITDA was $50.4 million, a slight decrease from the same period in 2017, and hotel EBITDA margin contracted 106 basis points to 35.9% from 37%. When excluding the effect of a 12% increase in property taxes, pro forma hotel EBITDA margins contracted by only 40 basis points.

Expenses were well contained during the quarter, as hotel operating expenses increased just over 2% on a per occupied room basis, including an approximately 3% increase in salaries and wages. You will see in our earnings press release and 10-Q filed last night, we have adopted and will begin reporting on the newly defined metric of EBITDAre.

During the first quarter, our adjusted EBITDAre increased 13.9% to $46.7 million. Our presentation of adjusted EBITDAre is consistent with our previous presentation of simply adjusted EBITDA, and we will use the two metrics interchangeably going forward.

Our balance sheet continues to be well-positioned, with over $275 million of current liquidity and an average length of maturity of over four years. As of March 31, we had total outstanding debt of $981 million with a weighted average interest rate of 4.1%.

As Dan mentioned, we have made great progress on our capital recycling program, with the pending sale of four hotels for a combined sale price of $43.3 million, which will reduce our net debt to adjusted EBITDA to approximately 4.4x on a pro forma basis.

During the first quarter, we executed several capital markets transactions, including the closing of a new seven-year $225 million unsecured term loan on February 15, the largest ever unsecured seven-year bank term loan for a lodging REIT.

We were able to improve pricing to a range of 180 to 255 basis points over LIBOR, depending on our leverage ratio. Proceeds were used to replace our previous seven-year $140 million unsecured term loan that was scheduled to mature in 2022.

We drew an initial advance of $140 million on the facility to fund the repayment of the previous loan and intend to draw the remaining $85 million of commitments in May to pay down outstandings on our revolver. The new term loan allows for additional lender commitment up to an aggregate of $375 million.

On March 20, we paid $85.3 million to redeem our 7.125% Series C preferred stock which include accrued and unpaid dividends on April 2. We repaid four mortgage loans totaling $23.9 million that had an average interest rate of 5.39%. The loans were repaid without penalty and the four hotels that secured the loans are now unencumbered.

Over 70% of our EBITDA is unencumbered today, a further validation of our continued efforts to assemble a highly flexible balance sheet. On April 30, we declared a quarterly common dividend for the first quarter of 2018 of $0.18 per share, or an annualized $0.72 per share.

The annualized dividend is in a prudent AFFO payout ratio of 52% at the midpoint of our 2018 AFFO outlook.

We updated on our guidance for the second quarter and the full year in the press release yesterday, which now assumes the previously mentioned sales of four non-core hotels scheduled to close in the second quarter as well as the opening of the Hyatt House Orlando/Universal Studios late in the second quarter.

Based on these assumptions and our first quarter results, you will see that we revised our full year 2018 guidance for adjusted FFO to $1.33 to $1.43 per share. We raised the low end of our pro forma and same-store RevPAR guidance to 0.5% to 3%, and negative 0.5% to positive 2% respectively.

Our full year estimate for capital improvements of $45 million to $65 million remains unchanged. For the second quarter 2018, we provided AFFO guidance of $0.37 to $0.40 per share, pro forma RevPAR growth of 1.5% to 3.5%, and same-store RevPAR growth of 0.5% to 2.5%.

Included in our second quarter guidance is CapEx displacement of approximately 110 basis points, primarily related to the ongoing renovation at our San Francisco Fisherman's Wharf hotel.

No additional acquisitions, dispositions, equity raises, or debt transactions beyond those previously mentioned are assumed in the second quarter or full year 2018 guidance. With that, I'll turn the call back over to Dan..

Thanks, Jon. In summary, we were quite pleased with the first quarter as our well-diversified portfolio continued producing solid results. We continue to be optimistic about the outlook for 2018 and for the future of Summit. And with that, we'll open the call to your questions..

[Operator Instructions] Our first question comes from the line of Bill Crow from Raymond James. Your line is now open..

Dan, as I look back at your outperformance for the last kind of 2.5 years, just curious whether the reduction in corporate transient business that we saw beginning in 2015, kind of it wasn't as severe for select service maybe, and therefore the uptick that we are assuring about at the recovery of business transient, it might not be as helpful.

Is that a reasonable way to think about it?.

I guess, Bill, I don't see it that way. As in our prepared comments, we talked about the strength in the business, the typical business transient type hotels, the Marriot Courtyards and Hilton Garden Inns, and to a certain extent Hampton Inns, kind of mid-weak.

I mean, if you think about our portfolio, we are much more diversified than many of our peers. So, the concentration in several markets can have more of a material effect. So, I think if you look at just the quality of the offering of our hotels, which are typically a business type of hotel, the upscale segment, competes very well for those guests.

So, I take the other side of that argument and I think we'll be a better beneficiary as corporate demand recovers..

All right, that's helpful.

And then my follow-up, Dan, for you is that I think earlier this week Hampton Inn or Marriott rolled out or Hilton rolled out their new Hampton Inn prototype, and I'm just curious, given some of the inflationary pressures on construction cost and trying to keep these brands in their own swim lanes, are we entering a new era of amenity creep, are the brands going to be sensitive to the owners at this point in the cycle?.

That's a great question, Bill. It does get a little complicated when you look at the sheer number of hotels out there within the brands. There is in the effort to become, have a consistent guest experience every year with new supply becomes more and more difficult than challenging because of different generations and different versions.

We have 14 Courtyards and only one of them is actually a prototypical Courtyard. So, changes that may be required at a prototype, you just may not be able to do. So, you start to look at each hotel and what are the specific core things that are representative of the brand and which things are maybe not quite as important.

You want to try as best you can to define the brand, but more and more we see loyalty driving that occupancy and the demand through the franchise system much more so than the brand. So, where a Courtyard in some of our markets may compete with a full-service hotel, it has a great new bar experience, great fitness centers.

So, I think it comes down to the individual market and whether the owner can justify spending it. In many of our markets, with $200 rates, we can justify making the experience a little bit better.

So, I'm not sure if that completely answers your question, but I guess the short version would be, it's going to be more and more challenging for new development to make sense, because the costs are rising faster than rate for sure..

Yes, that's helpful. That's it for me today. Thank you..

Our next question comes from the line of Michael Bellisario from Baird. Your line is now open..

Just wanted to touch on leverage a little bit, just as you guys operate kind of closer to the high end of your target range, maybe how much of that just running at the higher end is really reflective of your more positive forward-looking view versus just the ins and outs of buying and selling and timing mismatches there?.

This is Dan, Mike. I think that the range 3.5x to 4.5x has been relatively consistent over the last year or two. So, I wouldn't read being at the high end any more positive or less positive about the industry. We will kind of ebb and flow more opportunistically than anything else.

We are optimistic about the outlook and do feel like our portfolio is uniquely positioned to capture that incremental corporate business traveller, but I wouldn't read anything into the absolute amount of revenue or absolute amount of leverage..

Got it, that's helpful.

And then just how did the 100 bps of 1Q renovation disruption and then the 110 that you just mentioned for 2Q in guidance, how does that compare to what you were thinking 90 days ago and have you seen any renovation delays or greater than expected disruption from the two big projects you are working on?.

Yes, Mike, this is Jon. I think that it's probably slightly above our expectations when we gave first quarter guidance. Most of that was in the first quarter. That's probably an additional 20 basis point displacement in the first quarter.

If you look at our displacement for the year, 100 basis points in the first quarter, 110 in the second, that is very front-end loaded. So, we are obviously doing several large renovations in the first half of the year. The displacement metrics becomes much less meaningful in the back half of the year..

Got it.

And then just last one from me just on New Orleans, high level can you maybe give us an update on what you are seeing on the ground there and how things are progressing, especially on the convention calendar side for 2018 and then into 2019 as well?.

Yes, I think New Orleans particularly in the second and third quarter has a very positive convention calendar. New Orleans is again one of those markets that tend to for the year be fairly stable but can have big ups and downs within quarters. It's flip-flopped from last year. Last year it was strong first and fourth quarter.

This year, the convention calendar is stronger second and third quarter. That being said, we did have a fine quarter in the first quarter in New Orleans. I think we feel good about that market..

Our next question comes from the line of Austin Wurschmidt from KeyBanc Capital Markets. Your line is now open..

Just wanted to talk on the asset sales, you've assumed that those go to repay debt. As you mentioned, that kind of took the edge off the leverage a bit.

But just curious, as you look out, should we expect that you're more likely to continue selling in the near term or do you think that there are some attractive investment opportunities and we could start to see some pop up here in the near term?.

Austin, this is Dan. I'd say that we are somewhat of a transaction-focused company. So, we are always in the market for acquisitions. The ability to do more or less is a function of the kind of stated EBITDA, net debt-to-EBITDA range. So, that is certainly one of the governors that we have.

Opportunistically, I think it's clearly more of a seller's market than a buyer's market. So, as we look at opportunities, we're having more challenging time finding those value-add components that give us the outlook that would get us more constructive on acquiring.

So, I think at this point still a balanced capital recycling, as we telegraphed in the past, is about the best way to expect things to shape up..

And then just following up on that on the acquisition side in particular, what's kind of the appetite? It seems that maybe you are kicking around the idea of a potential independent or maybe a soft brand and I'm just curious if you can give your thoughts or view on the likelihood of you moving in that direction.

Any thoughts there?.

Sure. I think we've been, tried to be very clear in the past that we look at hotels as a way to create value for shareholders. We are not trying to build a monument to ourselves. We don't view things as a forever hold.

There are times to buy and times to sell, and in environments like today where the typical middle of the fairway acquisition is harder to find, we may be looking a little bit more around the edges, and that might mean more of a ramp story, maybe not certainly a real low RevPAR but maybe slightly below the RevPAR that we've transacted in the past that we still feel there is a value to add there, and maybe a per key price that's a little higher than we had in the past because we feel like there's a story there and it has growth left to be delivered.

So, I think that creativity around opportunities gives us that flexibility to look at something that might be a soft brand or an independent that we could convert to a soft brand. We are big believers in the brands. We think loyalty drives guest behavior.

We've got a great relationship with Marriott, Hilton, Hyatt, and IHG, and explore a lot of opportunities. So, I would say that there's a lot of optionality that we have as we are looking at hotels..

I appreciate the thoughts there. And then just on the expense side, I think you talked about being breakeven on margins for the full year, maybe slightly down.

What's kind of the expectation for you to kind of claw back the decrease that you had in the first quarter?.

Yes, I mean I think that's right. I think what we said when we gave guidance for the full year is that we still feel that it takes about 2% mostly rate-driven growth to breakeven on a margin perspective.

Obviously, from kind of the midpoint or implied midpoint of our guidance range, our expectations would be that margins would be flat to slightly down. We've continued to stress that that rate, that growth in RevPAR needs to come mostly from rate.

If you look at our margin performance in the first quarter, about half of our RevPAR growth came from occupancy growth. So you saw margins decline maybe a little bit more than what would have been expected.

That being said, as we said in our prepared remarks, 2% growth on a per occupied room basis from a cost perspective I think is a signal that cost continue to be well maintained.

We do have a headwind from property taxes, as we've discussed, mostly as a result of acquisitions that we need to overcome, but I don't think our full year expectations from a margin perspective has changed..

Do you expect property taxes to – the growth in property taxes to abate a bit in the back half of the year at all or should we continue to expect kind of that low double-digit type increase?.

No, I'd expect them to abate in the back half of the year..

Our next question comes from the line of Wes Golladay from RBC Capital Markets. Your line is now open..

Can we talk about what your expectations are for your development when it comes online, how soon will it stabilize and does it help that you have an asset adjacent to it?.

Sure, Wes. This is Dan. Orlando has been a great market for us. We are marketing those two properties, the Hyatt Place and the new Hyatt House, together. So, we've got a great team on the ground.

So, while I don't know when we'll be fully stabilized, I anticipate it stabilizing faster than the typical 24 to 36 months that you'd see in a normal type of development. So, it's coming along terrific and we're pretty excited about getting it open..

Okay.

And then when we look at your leverage, and obviously we've discussed it at the upper end of your range, but how do you view leverage in the context that you do have non-income-producing assets and you do have mezzanine loans that can eventually be retired and pay down that leverage? Is that a secondary metric you look at, at all?.

Sure.

I think we consider our leverage, as I said many times, kind of a governor of how we think about capital allocation, and while we don't want to become a development company or mezz-lending company, we think there is opportunities around the periphery to add some value and build what we think is a great kind of shadow pipeline of high-quality assets in markets that we'd like to own.

So, I do think that those as they are planning on coming online, still need to fit into our overall theme of kind of 3.5x to 4.5x net debt..

Maybe I phrased the question incorrectly.

I guess, would you be willing to run at the higher end of your leverage if you do have all these non-income-producing assets which will eventually reduce your leverage going forward? So I guess, do you feel comfortable at the upper end right now being that you have the Hyatt hotel coming online and then you have these mezzanine debt pieces that you could use to, when they mature, pay down your debt and then bring your leverage down naturally that way?.

We do, yes. Sorry if I misunderstood your question, Wes. We feel very comfortable at the high end of that range. We, as we've talked about in the past, have one of the lowest amount of debt coming due in the next couple of years. So, we've got a lot of flexibility around our balance sheet.

As we've talked about, we've made great progress with the unencumbered base and the term loans and putting swaps on. So, we feel very comfortable in that range of 3.5x to 4.5x..

This is Jon. The one thing I'd add to that is, it's not just net debt-to-EBITDA. We do use that as kind of a capital allocation governor.

We also look at our fixed-charge coverage ratio and we stress test the results to kind of get a sense of where we feel like we can withstand declines in operating cash flows and still have good coverage from a balance sheet perspective. So, as Dan said, I think we feel good at where we're at from a leverage ratio to debt..

Okay.

And then lastly on the storm-relief effort benefit that helped last year and probably early this year, are you starting to see that abate as we move through the first quarter and do you expect much of it going forward?.

Yes, I think you should naturally expect that to abate a little bit. We've been blessed with great managers and people on the ground that's been incredibly combinative in our team, got there quickly and got the hotels back up and running and feel good about the work that we did there, but clearly, that type of business doesn't last forever..

The one other thing I'd add is that it just creates a more difficult comp in the fourth quarter when we saw the most of the benefit last year, particularly in a market like Houston..

Yes.

So, sticking with that, should we just dial back the occupancy gains from last year and just normalize them, it would then pretty much adjust for the comp issue?.

Yes, I think clearly Houston had a good lift in occupancy in the fourth quarter, specifically [indiscernible]. The market is a difficult market. Obviously, there was a Super Bowl comp in the first quarter that makes the comparison this quarter more challenging. But I do think that market continues to perform well.

It was a market that's historically a 60% to 65% occupancy market in the fourth quarter, that ran closer to 80% in the fourth quarter last year..

Okay, thanks a lot..

Our next question comes from the line of Shaun Kelley from Bank of America. Your line is now open..

This is [indiscernible] on for Shaun. Kind of sticking with the last question a little bit, if we take your RevPAR guide, the 25 basis point increase, it clearly carries through the 100 basis point outperformance in the quarter.

But then, factoring in the 2Q guide in your comments, around roughly 100 basis points of displacement in 1Q, 110 in 2Q, and materially less displacement in the second half of the year, the implied guide would appear pretty conservative or somewhat conservative.

So, what are the puts and takes you're thinking about as we consider guidance and any material events in the second half of the year that we should be aware of? Thanks..

Thanks for the question. We'll take that. This is Dan. I would say that our guide is based on truly the best information we have today. I think there's always a few puts and takes when we put our guide together.

I think the overarching scene that we want people to take away, and this is not just unique to Summit but unique to the industry, is really the short-term nature of bookings. We had a group five days out book 60 nights, which obviously we didn't forecast. It wasn't in – but it was a $200,000 piece of business.

So, we were fortunate because of our portfolio with great locations, many freshly renovated to earn that business, but we could lose [indiscernible] business too. So, the volatility around booking continues to be wide.

And also, as we talked about in our prepared comments, the transparency around the booking channel is a little bit more challenging than it's ever been. You do have the typical corporate guests that are not booking a local negotiated rate. They may be booking a retail rate and things like that.

So, while we do feel optimistic and have some good data points that give us confidence, we don't want to be overly aggressive without more solid trends..

Great, that's it for me. Thanks..

Our next question comes from the line of Chris Woronka from Deutsche Bank. Your line is now open..

Dan, I want to ask you, since you guys are pretty transient-centric portfolio, especially with a lot of short-term corporate business, are you seeing any changes post the cancellation policy tweaks? I know Hilton just rolled out this new semi-flex cancellation.

Are you guys seeing any positive impacts in terms of revenue management yet?.

I wouldn't just say we've got quantifiable evidence that adding the cancellation policy somehow stopped or changed anything, but it's definitely a step in the right direction.

So, anecdotally, we think it's positive for the industry, positive for our portfolio, but I don't know that I have any quantifiable evidence on the positive effects of that change..

Okay, fair enough.

And then kind of following up on that, you have a lot of what I would call semi-urban assets or maybe just straight out urban select-service assets, and we've seen some of the other REITs on the full-service side chasing some more of the resort type stuff, and I know there is some select-service in resort markets now as much as full service, is that something where you guys maybe become more interested in going after that part of the market, the resort market?.

I wouldn't say that. Chris, it's Dan. I wouldn't say that's directing our acquisition activities at all.

I think we are always opportunistic, and to the extent we find an acquisition that is in a market that has a resort component to it, maybe similar to the Courtyard in Fort Lauderdale, we wouldn't necessarily make that focus purely because of the resort market. I think we weigh a lot of factors and where we can add value.

So, I would say it's not driving our investment behavior, but clearly, we look at all the components when we underwrite a hotel..

Okay, very good. Thanks Dan..

Thank you. And that concludes our question-and-answer session for today. I'd like to turn the call back over to Dan Hansen for closing remarks..

Thank you all for joining us today. We continue to see opportunities to create value for shareholders through continued thoughtful capital allocation in upscale hotels, which today's guests love. Our renovated properties and operational expertise continue to deliver strong results.

So, hope you have a terrific day and look forward to talking to you again next quarter..

Ladies and gentlemen, thank you for your participation in today's conference. This concludes the program and you may now disconnect. Everyone have a great day..