Brett Lee - EVP & COO Lawrence Cohen - CEO, President & Vice Chairman Carey Hendrickson - SVP & CFO.

Joanna Gajuk - Bank of America Merrill Lynch Chad Vanacore - Stifel, Nicolaus & Company Dana Hambly - Stephens Inc..

Please stand by. Good day, and welcome to the Capital Senior Living Second Quarter 2018 Earnings Release Conference Call. Today's conference is being recorded.

The forward-looking statements in this release are subject to certain risks and uncertainties that could cause results to differ materially, including, but not without limitation to the company's ability to find suitable acquisition properties at favorable terms, financing, licensing, business conditions, risks of downturns in economic conditions generally, satisfaction of closing conditions, such as those pertaining to licensure, availability of insurance at commercially reasonable rates, and changes in accounting principles and interpretations among others and other risks and factors identified from time to time in our reports filed with the Securities and Exchange Commission.

At this time, I'd like to turn the call over to Mr. Larry Cohen. Please go ahead..

Thank you, and good afternoon. Thank you for joining us for our Second Quarter 2018 Earnings Call. We faced a number of challenges in the second quarter that impacted our financial results and will have a continuing impact on our performance for the remainder of 2018.

I'd like to begin with an overview of the key issues we faced this quarter, and importantly, provide a road map of actions we are taking to return Capital Senior Living to the level of performance that we expect and demand from ourselves.

While we are disappointed with our performance this quarter and the resulting impact to our outlook, we are moving forward with a clear plan and are resolutely focused on improving execution. Let me begin with some quick background.

We are operating in a challenging environment with more discounting from our competitors and wage pressure beginning to have an impact in some of our markets. We experienced high attrition in the first quarter of this year and higher-than-expected attrition in late April and early May.

As a result, we put in place occupancy recovery plans by offering targeted specials at certain lower occupied communities and discounts in competitive markets. While this strategy stabilize occupancy at the end of the quarter, the special discounts were above our normal levels causing the average monthly rates to fall below expectations.

As such, we expect that the lower average monthly rents that resulted from the challenged first half of 2018 will impact the remainder of the year. We also expect that the operating environment will remain challenging. Therefore, we have reduced our full year outlook.

We are addressing competitive issues head-on and are committed to restoring our wage structure, managing our expenses and providing excellent care and services to our residents. We have put in place action plans to increase revenue and reduce expenses.

We are also examining our operations to determine whether additional steps can be taken to ensure a better performance going forward. Capital Senior Living has enjoyed a 28-year history of combining excellent resident care with disciplined rate growth and proactive expense management. And we have managed well in prior challenging times.

Our 2018 operational initiatives are on track to lower costs in major expense categories, such as food, service contracts and supplies and additional initiatives will be rolled out in the third quarter.

We are also completing the implementation of a common electronic information platform that will give us more timely operational and financial information. We expect this platform to be in place and operational by the end of the year.

While we are disappointed with our second quarter results, we continue to strengthen our platform and processes to enhance our execution and increase opportunities to drive growth in the current challenging competitive environment.

We look forward to caring for and serving a growing demographic as the 80-plus senior population annual growth rate is expected to accelerate in the next 18 months and beyond. Senior housing construction starts continue to fall and second quarter starts, as reported by NIC, were the lowest level nationally since the fourth quarter of 2015.

The senior's housing industry is in the midst of a timing gap between the growth of the senior population and the decline in construction starts. Fundamentally, Capital Senior Living is well positioned to take advantage of this expected improvement in supply-demand dynamics.

With the real estate ownership, a core element of our differentiated strategy, we believe that the intrinsic value of our real estate will ultimately provide a multiplier effect when the recovery in the market and the impact from our operational initiatives take hold.

In the meantime, we are controlling what we can control and are moving forward with a focus on executing our comprehensive strategy, controlling costs and maximizing the value of our owned real estate. I will now turn the call over to our Chief Operating Officer, Brett Lee..

Thank you, Larry, and good afternoon, everyone. We are obviously disappointed in our performance in the second quarter. And I will spend a few moments today discussing the headwinds that we faced operationally and the strategies we plan to put in place to navigate a challenging environment in our industry going forward.

The high resident attrition that we experienced in the first quarter continued in April and early May, and increasingly competitive pricing and incentives offered by our competitors in several key markets led to a loss of 132 units of occupancy in April, which was considerably higher than we had anticipated during our last earnings call.

In order to stem this outflow quickly, we implemented an immediate growth plan, which included 1-month move-in concessions in our most challenged communities and markets, most notably in North Texas, Indianapolis, Cleveland and the Carolinas.

Discounting of rates at a higher-than-historical level to compete with aggressive competitive tactics and the service recovery strategy of engaging in a dialogue with every resident who submitted a voluntary move-out notice in the quarter to attempt to retain those residents in our facilities.

While the top reasons for move-out remain debt and higher level of care, we were able to produce resident turnover in the quarter from a high of 466 in April down to 399 in June through these service recovery efforts.

The use of move-in discounts that allowed us to overcome the significant loss of occupancy that occurred in April, peaked in June and have tapered off to lower levels in July.

While we overcame the early attrition challenges in the quarter, the month of June was negatively impacted by the opportunity cost of acquiring these new residents in our increasingly competitive environment.

The revenue offset of the onetime concessions, expensive commissions paid to our sales force for driving move-ins and increased placement fees in the third -- in the quarter to third-party aggregators were all headwinds that impacted our earnings.

Given the increasingly competitive environment in some of our key markets, we anticipate that additional targeted concessions may be required in the back half of 2018 and we have planned for their potential use, if needed, in our forecast for the remainder of the year.

We anticipate that any future discounts will be less pervasive than what was utilized in the second quarter, but the utilization of these tools and the extent to which they were used will be dictated by market conditions and thoughtful review and approval from the Executive leadership team.

While we faced a number of challenges in the quarter, there were also some very encouraging signs that our new centralized operating model designed to gain economies of scale and reduce cost systematically are having the desired effect and will be a significant driver of value to the company going forward.

Over the months of April and May, we rolled out a new centralized procurement platform designed to increase utilization of our GPO contracts and reduce costs through the use of a more prescriptive formulary of supplies.

We also implemented a new national menu system to reduce variation in food cost and quality and to better manage and predict our food spend going forward.

Finally, we made significant progress in our efforts to consolidate our local service contracts into regional and national agreements to better leverage our size, improve service levels and reduce costs.

In the month of June, we saw our food costs reduced by 11.4%, supplies down by 11.3% and service contracts down by 3.4% when compared to the prior year. We anticipate that this savings momentum will continue to improve for the remainder of the year as we continue to optimize our platforms to further enhance savings.

In addition to the cost savings plans I just discussed, we have also implemented revenue enhancement plans. The revenue enhancement plans include increasing level of care charges where possible and pushing rate at communities with greater than 90% occupancy in markets where possible.

We have demonstrated over the past several months, our ability to preserve margins through thoughtful cost controls, even in light of a challenging revenue environment, and we will engage in these efforts with the same sense of urgency that we did in the third quarter of 2017.

While we know we have challenges ahead of us, we believe that we are laying the right foundation to drive long-term, sustained success for our company going forward. I will now turn the call over to our CFO, Mr. Carey Hendrickson, to walk through our second quarter financial results in more detail.

Carey?.

Thank you, Brett. I'll start with some additional background on the quarter followed by a review of our financial results. As Larry noted, we faced a more challenging operating environment in the second quarter than we expected.

The action that we took in response to the challenging environment had a positive impact on occupancy, but resulted on our second quarter average monthly rent being lower than anticipated and our same community revenues increased 0.1% as compared to the second quarter of 2017.

Same-community expenses in the second quarter of 2018 increased 2.8%, which was in line with our expectations coming into the quarter. Our employee labor cost increased 3.3% in the second quarter of 2018 versus the second quarter of 2017. Our expected labor increase was closer to 2.5%.

While not significant yet, the increase in labor cost does reflect some pressure on wages, particularly for caregivers in some of our markets. Excluding communities with the conversion of units to higher levels of care, our employee labor cost increased 2.5%.

Our food cost decreased 6.9% in the second quarter due mostly to the new centralized procurement platform that Brett discussed in his remarks. These savings -- the savings resulted this initiative in the second quarter were approximately $450,000, which was ahead of our expectations.

Utilities increased 6.6% over the second quarter of 2017 with greater weather extremes than usual in the quarter. Our same-community net operating income decreased 4.3% in the second quarter of 2018 as compared to the second quarter of 2017.

Same-community financial occupancy was 85.5% in the second quarter, a decrease of 60 basis points from the first quarter of 2018 and a decrease of 100 basis points from the second quarter of 2017.

As Larry mentioned in his opening comments that our occupancy stabilized during the quarter, looking at our occupancy by month, our same-community financial occupancy in March, the last month of the first quarter was 86.4%. Financial occupancy declined to 85.6% in April and 85.1% in May, and then increased to 85.7% in June.

The good news is that our end of month fiscal occupancy, which is simply the occupancy on the last day of the month was slightly higher on the last day of June than on the last day of March. So we entered the third quarter with occupancy that is on par with where we started the second quarter.

Our same-community average monthly rent increased 1% from the second quarter of 2017. As we note in the press release, the company's non-GAAP measures exclude two communities that are undergoing lease up of higher licensed units or significant renovation and conversion.

The non-GAAP measures continue to include the two Houston communities impacted by Hurricane Harvey since our business interruption insurance restores through economic loss.

However, the company's statistical measures as shown on Page 11 of the earnings release exclude the results of the two Houston communities since they had no residents or revenue in the second quarter and to include them would make the statistical measures less meaningful.

The company reported total consolidated revenue of $114.6 million for the second quarter of 2018, a decrease of $2.1 million over the second quarter of 2017 due to loss revenue associated with the 2 Houston communities impacted by Hurricane Harvey in addition to the pricing actions taken during the second quarter that we previously noted.

Revenue for those 2 communities was $2.3 million in the second quarter of 2017. Operating expenses decreased $0.3 million in the second quarter of 2018 to $73 million.

Operating expenses in the second quarter of this year included a $1.6 million business interruption credit -- business interruption insurance credit related to our 2 Houston communities impacted by Hurricane Harvey in late August 2017.

The intent of the BI adjustment is to cover our lost revenue and any continuing expenses that we have with the goal to restore the average net operating income we had at these 2 communities prior to the hurricane.

The business interruption coverage is to continue for 12 months after restoration of the communities gets completed and state and local approvals for occupancy received or until we reach our previous level of revenue from these communities, whichever comes first.

Remediation of these two communities is now complete and both communities began admitting residents in July, one in early July and the other mid month. Our community in Baytown currently has 23 occupied units with 13 additional deposits on hand. The total capacity of this community is 127 units.

Our community in Deer Park has 21 occupied units with 3 additional deposits on hand. This community has 120 total units. We feel good about this early progress and we'll keep you updated as we move forward. General and administrative expenses for the second quarter of 2018 were $5.7 million compared to $6.1 million in the second quarter of 2017.

Excluding transaction costs from both years and a benefit reserve adjustment in the second quarter of 2018, associated with the Affordable Care Act related to prior periods, our G&A expense decreased to $1.1 million in the second quarter as compared to the second quarter 2017 due to better healthcare claims experience and reduced bonus accruals.

G&A expense as a percentage of revenue under management was 3.9% in the second quarter of 2018 compared to 4.8% in the second quarter of 2017. Our adjusted EBITDAR was $38.4 million in the second quarter of 2018 compared to $38.3 million in the second quarter of 2017.

Adjusted CFFO was $10.6 million in the second quarter of 2018 compared to $11.5 million in the second quarter of 2017. Looking briefly at the balance sheet. We ended the quarter with $24.3 million of cash and cash equivalents, including restricted cash. During the second quarter, we spent $5.2 million on capital expenditures.

Our mortgage debt balance at June 30, 2018 was $954.6 million at a weighted average interest rate of approximately 4.8%. At June 30, all of our debt was at fixed interest rates, except for 2 bridge loans that totaled approximately $76.4 million.

The average duration of our debt is approximately 5.8 years with 93% of our debt maturing in 2021 and after. Looking to our outlook. For the remainder of 2018, as we noted in our earnings release and as Larry stated in his remarks, we expect to continue to face a challenging operating environment in the second half of the year.

Against this background, the 1-month specials and discounts implemented in the first half of 2018 to address occupancy have lowered our average monthly rate as we entered the third quarter. While we currently expect our occupancy and average rate improved modestly from here, both will be lower than our previous expectations.

Our expenses remain in line with our previous expectations, but the moderate increase in our expected labor costs offset by savings and other cost categories. All things considered, we currently expect our full year 2018 adjusted CFFO to be in the range of $38 million to $41 million. As a reminder, we're not providing quarterly guidance in 2018.

But as we look to the third quarter, I'll note that the third quarter has 1 additional day as compared to the second quarter, which typically adds approximately $600,000 of expense to cover an additional day of labor for hourly workers and additional food cost.

Also, the third quarter is seasonally our highest quarter for utilities expense due to the hot summer months. Utilities expenses have historically been approximately $1 million greater in the third quarter than the second quarter.

Also, the second quarter of 2018 included a couple of credits that will not repeat or will not be at the same level of magnitude in the third quarter. In the second quarter of most years, including the same quarter this year, we received -- we received a workers' comp credit related to our participation in Ohio State workers compensation program.

The credit in the second quarter of 2018 was $700,000. This will not repeat again until the second quarter of 2019 potentially. Also, we reduced our bonuses and our G&A expense by $1.3 million in the second quarter of 2018 to reflect our adjusted outlook.

This was a catch-up adjustment for the first half of the year, so we currently expect the credit adjustment to bonuses in third and fourth quarters to be half of this amount or $650,000. Because of these items, we currently expect our third quarter CFFO to be less than our second quarter CFFO and then to grow in the fourth quarter.

I'll now turn it back to Larry for some brief closing remarks..

As I noted earlier, we were operating in a challenging environments with more discounting from competitors in some of our markets than we experienced previously. We were addressing competitive issues head-on and are committed to restoring our wage structure, managing our expenses and providing excellent care and services to our residents.

Our company has a long history of combining excellent resident care with disciplined rate growth and proactive expense management and we have managed well in prior challenging times.

While there is more work to do, we continue to make progress on strengthening our platform and processes to enhance our execution and increase opportunities to drive growth going forward, and believe we are well positioned to take advantage of the coming churn in supply-demand metrics.

In the meantime, we are controlling what we can control and are moving forward with a focus on executing our comprehensive strategy, controlling costs and maximizing the value of our owned real estate. With that, I'll now open the call for questions..

[Operator Instructions]. And our first question will come from Joanna Gajuk with Bank of America..

In terms of the guidance, right, so it implies, Carey, the second half will be much worse than the first half. I guess, by my math, it's maybe 19% down year-over-year in second half versus down 6%, call it, first half of this year. So I know you talk about -- you're implementing some incremental cost cuts.

So why is that the pressure is accelerating or is just that it's a culmination, I guess, the -- you exiting the Q, S2 much lower than that you would have otherwise and that's driving the kind of weaker -- even weaker results in second half of the year.

So can you just flash our how we should think about the second half looking so much worse than the first half?.

Yes, Joanna, thank you for that. Yes, when we provided guidance at the end of the first quarter, we didn't expect the competitive pressures to continue and impact the results what they did in the second quarter.

And we do begin the second half of the year at a point that's lower from an occupancy standpoint than we would have had -- than we had earlier in the year and also, our rate is less than we would have expected. It's primarily the real change, our projection for expenses have not changed.

The change is primarily related to lower average rates than we previously anticipated. So really I'd said that about occupancy, but occupancy, as I mentioned, that last day of fiscal occupancy in June and I want to be clear that that's not financial occupancy, that last day is about where we were when we enter the second quarter.

But our rate is considerably lower. And that's what's really is driving the second half..

And I guess, you made a comment that you did not expect, I guess, as much competition as it happen.

So can you flash out the markets where you're seeing that, is it across the board and why you didn't see it coming, I guess, three months before?.

Yes. So this is Brett, and thank you for the question. As we talked about in the script, there are some major markets where we're seeing the most pressure. North Texas is an incredibly competitive market for us. The Cleveland, Ohio area is a competitive market as well as the Carolinas and the Indianapolis area.

And I think the -- there were 2 things that really led to some of the challenges that we had in the quarter.

I think because of the really challenging flu season that affected most of the operators in the first quarter, we saw some of the competitive pricing really accelerate in the second quarter, because everyone was trying to refill the lost occupancy and we didn't necessarily anticipate that going into the second quarter.

And then our own loss of occupancy in the -- we typically, in the second quarter, see attrition start to stabilize and normalize. It continued at a much higher rate than we had anticipated in April and early May. And so I think it was the combination of those two factors..

Joanna, this is Carey. One of other things I will note about the second half versus the first half is, from an expense standpoint, there -- our expenses are where we expect them be from an -- we didn't change them in our projection.

But they are always seasonally higher in the second half of the year because you do have 3 more days in the second half of the year than you have in the first half of the year, so that's -- as we've talked about, that's typically about $600,000, that's $1.8 million from those 3 additional days of expense.

And that our utilities are also seasonally higher in the second half of the year because the third quarter is the highest quarter of the year. And typically, the second quarter is the best quarter of the year. So you kind of have that difference in the two halves of the year..

Next we'll hear from Chad Vanacore with Stifel..

So just thinking about the competition that you're seeing.

Would you say that's driven more by new supply in your markets or are other competitors that had -- were existing in your markets discounting rate or some combination of the 2?.

Chad, it's Larry. It's primarily existing competitors, larger companies that we all know, that, as Brett said, industry at a lower level of occupancy. It was a very difficult winter, where everybody lost occupancy, it continued with April. As I think, you pointed out and you know, April is always a tough month.

And as a result, it just become much more price-competitive. If I look at the second quarter NIC MAP data, there only really one -- there's only one market with supply and that's Dallas, which we've spoken about, North Texas. If I look at the other areas of the country, for us, Trumbull, Connecticut has 2 competitors under construction.

North Carolina, 2, that's Raleigh and Charlotte. So we really don't see a lot of new supply in our markets, which is pretty consistent. It's -- the difference is and it's been a new phenomenon is that we're seeing much more aggressive pricing from a broader base of operators in some of our more competitive markets..

Okay. And then just thinking about the rate, yes, you said the expectation, that rates are going to be constrained through the rest of the year because you're going to discount to stabilize that occupancy.

Should we expect rate curve to be on par with what it was in this quarter, which was plus 1% same-store or is there another range that you're thinking about?.

It's probably going to be a little bit less in the third quarter and the fourth quarter, third quarter, particularly than it was in the second quarter. And then we would expect that to improve modestly throughout the year.

So I think, in the fourth quarter, we should have better rate growth than we have in the third it's because we still got to absorb some discount that we had in the second quarter and that continued into July and so we've got that in the third quarter..

And Chad, let me also address the rate. As we said, we had concessions or specials and discounts. Most of the concessions or specials were onetime reduction for the first month and those units will be then reverting back to market rates. And then you had discounts where there were discounts. So it's a combination of the 2 that gives you that 1%.

Without the concessions, the rate this quarter would have been 1.7% over last quarter. So -- and then as Brett said, the discounts continued in May and June. So we'll start to see July occupancy rate be impacted in somewhat in August and then to start to see the rate rebuild in the balance of the year.

And our strategy is to then take advantage of areas where we can to increase level of care fees or rates in stronger markets and we've already begun that process to try to minimize some of the impact by the discounting that occurred over the last few months..

Okay. And just one more. So you've instituted a number of cost saving efforts that should start reaping benefit. The second quarter, it looked like operating expenses were pretty much on par with the first quarter or maybe a little bit higher. What's the offset there? So you should be seeing some savings from your new processes.

Is the offset that the wages that you've spoken to about expecting to being offset in the second and third quarter?.

Yes. So, yes, we do expect a little bit higher wage cost in the second half of the year than we had in the first half.

And -- but otherwise, our expenses should be fairly similar other than the fact that, like I mentioned, we do have three more days in the second half of the year and as we've got 1 extra day in the third quarter and then two additional days versus the second quarter and the fourth quarter.

So -- and those two have an impact as well utilities cost, which I referred to, which were seasonally higher in the third quarter, come down a little bit in the fourth quarter, but are still higher than the first or second..

[Operator Instructions]. We'll now hear from Dana Hambly with Stephens..

Just curious on the -- it's been another -- a number of new initiatives being undertaken in the last year or so and it sounds like there's a lot of things you still need to do.

Just curious if you're seeing any impact on your labor force if this is causing some exhaustion or any kind of disruption to operations or do you feel like this is more external factors that you're just having to respond to?.

Yes, I think it's a great question, and thank you. The initiatives that we're focused on in terms of centralization that are now bearing fruit from a cost savings perspective are the biggest initiatives that we undertook. And we really focused on things that would add value and allow folks to work smarter, rather than harder.

So when we think about the centralized procurement platform, we essentially eliminated what was a paper process and turned it into a much more streamline process that -- and that gave people some time back.

We do have some initiatives around enhancing quality and making sure that we have focused discussions around how we operate our facilities on a day-to-day basis as we become more of an assisted living and memory care company and those are just built into the daily task that we're doing every day.

The transition of our new electronic platform has gone, I think, as we anticipated, it would. I don't think that's been a major source of pressure or stress to our workers teams and ....

Yes, and on that Dana I would say, on the electronic platform, that was began in 2017. So it was the sales folks were -- had their implementation piece of it in 2017, and 2018 it's been on a business director, really it's the business director and the nursing director for those components.

And then the dietary program we've been talking about is really with the -- and really across various people, so it's not putting too much burden on any particular [indiscernible]..

And we don't have any evidence to show that this is driving additional turnover or stress..

Okay. Okay.

And then, Larry, on the lease portfolio, obviously, you've seen in the marketplace with the REITs in Brookdale, a lot of restructuring, I don't believe you have any real near-term maturities, but could you just -- obviously, not generating a lot of cash flow there, can you talk about the strategy with that portfolio and if there's any ongoing discussions?.

Sure, Dana. We actually are having constructive dialogue with the landlords. If you look at our leases, we have 25 properties with HCP, 19 mature in 2026 and 2025. We have 24 with Welltower up to '25 or '26 and then 7 with Ventas, we bought those back. As you indicated, I think, there's a movement amongst the operators and the REITs.

I saw the transcripts from both Ventas and Welltower, particularly, Welltower converting some triple net into idea structures. Obviously, there's a movement amongst HCP to move more towards management from triple net. So we're having very productive conversations that are constructive with all landlords.

And again, we would feel that the leases place a burden on the company.

They obviously had escalators for another 9 years, to the extent that we can restructure them and equitize them in some fashion, it would move what would be equivalent to hundreds of million dollars of debt and then give us more strategic flexibility moving forward without the burden of those leases. So that's a focus I have, Dana.

And we're having, as I said, very constructive discussions with all landlords..

Okay. All right. And then there's, obviously, a lot of value in the real estate, there does appear to be disconnect between that valuation and the way the markets valuing your stock. So I don't know if you can answer, this is more of a Board discussion, but I'll just throw it out there.

What are you doing besides obviously focusing on improving the underlying operations to realize value in the real estate?.

Well, we're very fortunate we own the real estate. In this quarter, it's a perfect example. We're disappointed with the results, but we own most of our real estate. And as I mentioned in my comments and in the press release, that intrinsic value is intact. We have real tangible assets.

And as we improve our performance, both from the initiatives that we're implementing and improvement in recovery in the market, there's a multiplier effect. Meaning that if the real estate trades at a cap rate, then every dollar of improved income can multiply double digits, whatever the cap rate you want to put out there.

So right now we are very focused on operations and sales and marketing. We are focused on recovery, both on the expense side, the cost initiatives as well as other initiatives to soften the effects on the discounting in the second quarter.

We're focused on making sure that we are more discipline on pricing going forward, so that we will have more growth. Because as that rate grows is a strong correlation to income growth. And then the real estate value, we would hope again, multiply at that effect.

And as I said, we're fortunate to own the real estate as much as we do today because this is a perfect quarter to reflect that, that intrinsic value of our organization is intact even with a disappointing quarter..

Okay. All right. Last one for me, and I'm sorry, I think you covered this in the prepared remarks but I didn't get it.

On the discounting, how long you anticipate you'll continue to use discounting?.

So we've always had a baseline level of discounting. It increased due to these competitive pressures in May and June. It is tapered down in July, and we anticipate that it will go back to baseline levels in August.

We have plans and built into our predictions, the ability to utilize onetime concessions in both the third and fourth quarter, but we will only utilize those tools if necessary and driven by market conditions.

And so as Larry said, we're focused on taking a very disciplined approach, keeping a very close eye on our market conditions and then having a targeted approach going forward to respond to those..

[Operator Instructions]. And that will conclude today's question-and-answer session. I will now turn the conference over to Mr. Cohen for any additional or closing comments..

Thank you, and good afternoon. And again, we welcome you to call Carey or myself, if you have any questions regarding the quarter. And we wish you a good evening. Thank you very much..

That does conclude today's conference call. Thank you for your participation. You may now disconnect..