National Health Investors' (NHI) CEO Justin Hutchens on Q2 2014 Results - Earnings Call Transcript

| About: National Health (NHI)

National Health Investors Inc (NYSE:NHI)

Q2 2014 Earnings Conference Call

August 4, 2014 10:00 AM ET

Executives

Justin Hutchens - President and CEO

Roger Hopkins - CAO

Analysts

Juan Sanabria - Bank of America

Daniel Bernstein - Stifel

Todd Stender - Wells Fargo

Karin Ford - KeyBanc Capital Markets

Operator

Ladies and gentlemen, thank you for standing by. Welcome to the National Health Investors’ Second Quarter 2014 Conference Call. During the presentation, all participants will be in a listen only mode. Afterwards, we will conduct a question-and-answer session. (Operator Instructions) As a reminder, this conference is being recorded, Monday, August 4, 2014.

I would now like to turn the conference over to Colleen Sullivan. Please go ahead ma’am.

Colleen Sullivan

Thank you, Tia. Good morning. Welcome to the National Health Investors Conference Call to review the company’s results for the second quarter of 2014. On the call today will be Justin Hutchens, President and Chief Executive Officer; and Roger Hopkins, Chief Accounting Officer.

The results, as well as notice of the accessibility of this conference call on a listen-only basis over the Internet were released this morning, and a press release that’s been covered by the financial media.

As we start, let me remind you that statements in this conference call that are not historical facts are forward-looking statements. NHI cautions investors that any forward-looking statements may involve risks or uncertainties and are not guarantees of future performance. All forward-looking statements represent NHI’s judgment as of the date of this conference call. Investors are urged to carefully review various disclosures made by NHI and its periodic reports filed with the Securities and Exchange Commission, including the risk factors and other information disclosed in NHI’s Form 10-Q for the quarter ended June 30, 2014. Copies of these filings are available on SEC’s Web site at www.sec.gov or at NHI’s website at www.nhireit.com.

In addition, certain terms used in this call are non-GAAP financial measures, reconciliations of which are provided in the company’s earnings release and accompanying tables and schedules, which has been filed on Form 8-K with the SEC. Listeners are encouraged to review those reconciliations provided in the earnings release, together with all other information provided in that release.

I’ll now turn the call over to Justin Hutchens. Please go ahead.

Justin Hutchens

Thank you Coleen. Good morning, everyone, and thank you for joining us. With me today is Roger Hopkins, our Chief Accounting Officer. I’m pleased to report a solid quarter and year-to-date results. We have reported 9.3% increase in normalized AFFO, and we remain very strongly position from a credit and got perspective. Roger will provide some color on the quarterly results.

Roger Hopkins

Thanks, Justin. Good morning, everyone. My comments this morning are consistent with our disclosures in Form 10-Q, our earnings press release and our supplemental data report filed this morning with the SEC.

We are very pleased to report a very strong financial result for the second quarter and the first six months of 2014. Normalized FFO for the second quarter was $34,587,000 or $1.05 per diluted share compared with $24,952,000 or $0.89 per diluted share for the same prior in 2013, an increase of 18%. Normalized AFFO for the second quarter was $31,073,000 or $0.94 per diluted share compared with $23,943,000 or $0.86 per diluted share for the same period of 2013, an increase of 9.3% and includes adjustments to exclude our straight line rental income and amortization of bond discount and debt issuance costs.

Normalized FAD for the second quarter was $32,223,000 or $0.95 per diluted share compared with $24,196,000 or $0.87 per diluted share for the same period in 2013, an increase of 9.2% and it includes an adjustment for our non-cash stock-based compensation expense. Our results for the second quarter of 2014 are reflective of our strong acquisition volume over the past 12 months.

Net income attributable to common stockholders for the second quarter of 2014 was $25,294,000 or $0.76 per diluted share compared with net income of $19,920,000 or $0.71 per diluted share for the same period in 2013. Our revenues for the second quarter were up $17,058,000 or 63% compared to the same period in 2013 due to the volume and timing of her new investments during the last 12 months, particularly those related to our relationships with Bickford and Holiday.

Our purchase and lease back of 25 independent living facilities from Holiday in late December 2013 generated $10,954,000 of rental income in the second quarter or 25% of our total revenues for continuing operations, of which, $7,979,000 was billed rent and $2,975,000 was straight-line ramp from financial statement purposes. The revenues from our RIDEA have structured joint venture with Bickford amounted to $5,254,000 in the second quarter and represented 12% of our total revenues from continuing operations. Our RIDEA joint venture with Bickford currently owns 29 assisted living and memory care facilities of which two opened in late 2013 and are not yet stabilized and there is also one facility under construction and expected to open by the end of the third quarter.

Rental income from our owned assets represented 93% of our second quarter revenue. Interest income on our notes represented 4% and our investment income represented 3%. Depreciation expense increased $5,149,000 in the second quarter of 2014 compared to the same period in 2013 as a result of the volume of our new real estate investments during the past 12 months.

Our interest expense and amortization of our note discounted issuance cost increased $5,232,000 during the second quarter compared to the same period in 2013 primarily as a result of additional borrowings to fund our new real estate investments in 2013 and 2014. Interest expense included amortization of $501,000 for related debt issuance cost and $263,000 upon discount.

Over the past year, we have also made a priority to reduce borrowings on our revolving credit facility but proceeds from debt instruments having fixed interest rates and with maturities up to 7 years. Our general and administrative expenses for the second quarter 2014 decreased $475,000 from 2013, due mainly to acquisition costs and other one-time charges in 2013.

Our non-cash share-based compensation expense was $224,000 for the second quarter and is expected to be the same for each of the new two quarters of 2014. We estimate the market value of our stock options granted each year using the Black-Scholes pricing model. Expenses recorded for accounting purposes over the vesting schedule of the stock options granted.

Our financial results for the first six months of 2014 are also reflective of our strong acquisition growth over the past 12 months. Normalized FFO for the first six months was $69,256,000 or $2.09 per diluted share, compared with $49,059,000 or $1.76 per diluted share for the same period in 2013, an increase of 18.8%.

Normalized AFFO for the six months was $61,932,000 or $1.87 per diluted share compared with $46,850,000 or $1.68 per diluted share for the same period in 2013, an increase of 11.3%. Normalized FAD for the first six months was $63,505,000 or $1.92 per diluted share, compared with $48,683,000 or $1.74 per diluted share for the same period in 2013, an increase of 10.3%.

Our revenues for 2014 increased 61% over the same period one year ago. At June 30, we had ongoing construction commitments with four tenants totaling $27 million. The total funds advanced so far on these projects for land and construction amounted to $13,686,000 million. We ended the second quarter with cash and investments and marketable securities of $21,148,000 million. In addition, we had unused capacity of $334 million on our revolving credit facility. After quarter end, we obtained $29 million of mortgage debt financing from HUD secured by seven properties and our RIDEA joint venture with Bickford. The notes mature in 35 years and carry an annual interest rate of 4.3% including the mortgage insurance premium.

Before the end of this year, we also expect to obtain secured financing for two additional properties to bring the total proceeds from HUD to $38 million. These proceeds are used to reduce borrowings on our revolving credit facility.

As show in our supplemental data report, we calculate our annualized adjusted EBITDA coverage of our fixed charges to be 6.8 to 1. We calculate our consolidated debt to annualize the adjusted EBITDA to be 3.81. We believe these step metrics are important to maintain a low leverage profile for NHI. We have almost $80 million of Fannie Mae secured debt that we assumed in an acquisition in 2013. That has a combined interest rate of almost 7% and is pre-payable without penalty on December 31 of this year. It matures on July 1, 2015.

We expect to retire this step with lower interest borrowings or with common equity if we decide to lower our balance sheet leverage further. Most importantly we have managed our debt capital to extend our maturities such that our revolving credit facility with extension does not mature until 2019, our bank term loans do not mature until 2020, and our convertible debt does not mature until 2021.

I’d now like to turn the call back over to Justin with comments about our investment portfolio and our updated 2014 guidance.

Justin Hutchens

Thanks, Roger. I will start with our portfolio performance. Our total portfolio lease service coverage ratio is 2.23 times. Our skilled nursing coverage remains very strong at 3.13 times while our senior housing portfolio improved to 1.31 times, due a large part to the solid performance of the Holiday retirement portfolio.

I will touch on a few of our significant relationships. The Bickford joint venture which accounted for 13.7% of NHI's cash revenue continues to deliver strong performance and growth opportunities. EBITDARM in Q2 was flat sequentially. We closed the 17 property acquisition in our Bickford joint venture at the end of the second quarter of 2013, the year-to-date performance including the trailing two quarters versus Q3 and Q4 of last year reflects 5.6% EBITARM improvement. This is in spite of carrying costs related to the new developments. Bickford management is reporting solid occupancy so far this quarter which has been an encouraging indicator of continued solid operating performance. The two development properties are performing ahead of schedule with 55% occupancy and have achieved cash flow breakeven.

As previously disclosed we expect another new development to open during the third quarter. The Bickford relationship has proven to be a platform for growth. Since 2010 NHI’s revenue from the Bickford relationship has grown 480%. We expect continued growth in the Bickford joint venture organically along with continued new developments and acquisitions. We are pleased with the performance of our Holiday retirement portfolio of independent living communities. The Holiday relationship accounts for 20.3% of our cash revenue. The Holiday retirement portfolio continue to improve occupancy ending the quarter with 91.5%.

National Healthcare Corporation, which represented 23.2% of cash revenue and 54.8% of our skilled nursing revenue continues to perform well and enjoys a 4.26 times corporate cash coverage. Year-to-date we’ve closed 51.5 million of acquisitions of two assisted-living and three skilled nursing properties. We have also funded 7 million of construction financing year-to-date. The lease yields are north of 8%. We are very busy reviewing new potential investments and I’m encouraged by our ability to source high-quality opportunities in an increasingly competitive environment. The market remains very active with many sources of capital available to operators. We are finding success and have always found the best results from focusing on operators with long-term business plans, who are seeking a capital partner to help facilitate their growth.

NHI’s growth plan remains focused on investing primarily in assisted living and independent living communities. We are well positioned to grow over $400 million of liquidity due to our excess capacity on our revolving credit facility, and cash and marketable securities on hand. Moving forward we plan to utilize 60% equity and 40% debt to fund acquisitions and maintain our low leverage profile.

Turning to guidance. We have rated the low end of our normalized FFO range by $0.03. The new ranges $4.17 to $4.20 per share. We have also raised the low end of our normalized AFFO guidance by $0.03. The new range is $3.72 to $3.75 per share. In closing, as an NHI shareholder, you own a diversified and growing portfolio of 173 healthcare and senior housing properties in 30 States. The company’s cash flow stream is very well protected with a 2.23 times lease coverage, 7 times fixed charge coverage over our interest rate obligations, lower leverage profile at the 3.86 debt to EBITDA ratio, and a dividend payout ratio of normalized FFO of only 73.7%. In summary, I’m very excited about NHI’s market position, operating performance and growth profile.

Operator, we are now ready for questions.

Question-and-Answer Session

Operator

(Operator Instructions) Our first question comes from the line of Juan Sanabria with Bank of America. Please proceed with your question.

Juan Sanabria - Bank of America

I was just hoping you could give us a sense of the moving pieces in the guidance for the rest of the year, whether those stayed the same, as you previously stipulated? If they include any acquisitions or not? And then if you could also just comment on the same-store performance in the RIDEA portfolio with the Bickford joint venture?

Justin Hutchens

Sure. In regards to the guidance, moving the bottom of the range of -- we just had more clarity on our expenses. The moving part with the expense was getting the HUD financing in place and our other long-term financing that Roger mentioned, so we have clarity, we moved up the bottom end of the range. And we do not include investment activity in the top end of our range. So that has not changed. In regards to the Bickford same-store performance, the sequential performance really with or without the two new development properties was very flat. However, I mentioned during my prepared remarks and obviously we need to see this realize throughout the whole quarter. But they started off in the month of July with solid occupancy across the board. So we expect continued strong performance and looking forward to talking more about that after the third quarter.

Juan Sanabria - Bank of America

And what drove the dip in occupancy from the first quarter to the second quarter in that portfolio?

Justin Hutchens

There was nothing -- the move-ins and move-outs were basically on average, so there wasn’t any significant change. There are a few communities that fell, but nothing fairly significant, I can’t point to any one of that, and I have very regular communication with the management of Bickford senior living, and I am comfortable that they have a good operating business plan and it will yield positive results -- will continue to yield positive results. And like I said, census thus far in Q3 is looking

Juan Sanabria - Bank of America

Okay. So closer to, I guess, you'd expect a year-over-year same-store growth in the back-half of the year, still between 3% to 6%?

Justin Hutchens

Yes. Well, and plus that, if you take the -- I wanted to highlight, during the prepared remarks the fact that we have only been in the portfolio, in total, since June 30 of last year. So if we take the first two quarters since then NHI has been an investor in all 27 properties plus the new developments, and I am comparing them to the first two quarters of this year, were up 5.6%. And yes, there are some indicators that second half could be strong but there is no guarantee, and I don't have a perfect crystal ball but I like the way Q3 has started.

Juan Sanabria - Bank of America

Okay. And just lastly for me, how were the options on those other properties, outside of the joint venture, shaping up? And what should we be thinking in terms of timing of potentially you executing that acquisition option?

Justin Hutchens

So, we have -- just to remind everybody, we have an option to purchase six properties for $97 million. There’s been -- since Bickford bought the portfolio, which resulted in the joint venture having the right to purchase a portfolio per a contractual arrangement we have, we have been waiting, NHI and Bickford were waiting before the joint-venture makes the purchase, to see NOI grow. They bought it at a 7 cap; it currently operates at about a 7.5, based on that $97 million purchase price. So they’re actually has been an improvement in those operations. Our perfect role would be that it’s in the 8.5 cap range and certainly the billings have potential to get there. But I would probably reiterate a remark I've made previously and that is to execute our portfolio we’re probably looking to evaluate that seriously again in early ’15. And I wouldn’t expect it to be a part of our 2014 growth.

Operator

Our next question comes from the line of Daniel Bernstein with Stifel. Please proceed.

Daniel Bernstein - Stifel

I've got a question. When I think about the portfolio tenant concentration, and you talked about early in the conference call, Holiday at 20.3% of cash revs; and NAT, 22.2%; and Bickford, I guess, is in the teens. And obviously the lease coverage is doing well in NAT and Holiday, but the tenant concentration has gone up a little bit with the Holiday transaction. How are you thinking about that tenant concentration? And when your talks with the credit rating agencies, how are they thinking about it? Where would they want your kind of concentration to be?

Justin Hutchens

I'm going to back up one step and say the first concentration issue that we needed to address from our perspective, as considering credit ratings, was moving from skilled nursing to private pay. And clearly, going from over 80% skilled nursing back in ’09, to down to 40%; today made a lot of progress in that area. While in making progress in that area we have picked up two major tenants. One of them is Holiday Retirement Corporation and the other is Bickford Senior Living. And anyone who would underwrite either operate would find that they both then operating a respective discipline for 20 years, they have high quality properties with strong performance over many, many years and Bickford is a major regional player, Holiday is a major national player and then of course the National Healthcare, it’s a publically-traded skilled nursing, well they’re senior care company that in the case of NHI has a lot of skilled nursing they do many other things as well but for NHI’s purposes there are skilled nursing focused company. So my argument and this has always been received well through our recent financings is that if you are going to have a concentration in an independent living, skilled nursing and assisted living, these are the three operators you want to have.

They have been received very well today. I would expect potential growth with all three of them and particularly with Bickford and Holiday; we have had some opportunity to enhance our relationship with NHC as well with an acquisition we had last year. But we will also grow with other operators and now help the concentration overtime. But boy if you are going to have a concentration, these are three very solid partners to have.

Daniel Bernstein - Stifel

Okay. And actually, that's a good segue into my next question, which is, when you're looking at your pipeline, you talk about finding operators that need capital who want to grow. Is that lending more to be looking more towards the regional or smaller operators on the pipeline for acquisitions? Or are there still some larger national operators who may need refinancing or re-capital?

Justin Hutchens

You are mentioning my comment in the prepared remarks what I talked about, we have the best results with operator that have long-term business plans and what that means is that they are not exiting, and there has been a fair amount of exiting that’s occurring where either properties are being exited or smaller operators that are exiting. We are not looking to exit anybody, we are looking to be a growth partner and that’s the distinction that I am making.

And that maybe with regional companies and it maybe with national companies and we have opportunities really in both categories under review.

Daniel Bernstein - Stifel

Okay. Okay. And then one last question. As the Company gets larger, how are you thinking about whether you want to recycle any assets or not or dispositions? Obviously, cap rates have compressed a lot in the last 12, 24 months. Are you thinking about -- do you have any non-core assets you'd like to dispose of at this point?

Justin Hutchens

Good question. We don’t have much at this time that we would consider non-core is that we would like to dispose it. We’ve done quite a bit of that over the past several years and I think we have leased a 150 million or more of assets that we have sold or may have paid off if there was a loan and we were happy to see some of those assets go. And to use your description, they were non-core, but looking at the portfolio today, I don’t really, I wouldn’t call that a higher priority.

Operator

Our next question comes from the line of Todd Stender with Wells Fargo. Please proceed.

Todd Stender - Wells Fargo

Justin, you just mentioned that there is owner-operators looking to exit. Is that a reflection right now of where we are in the market? Pricing, obviously, is healthy; it's frothy in some pockets of the country, particularly in assisted living. Is that a larger percentage of the deals that are out there in general, would you say?

Justin Hutchens

I would say I agree with everything you just said that the cap rates are as low as I’ve ever seen them across the Board. I think everyone of our peers would probably agree with that. Partly, what’s driving that is just some new competition, a lot of liquidity entering the phase but one thing I would like to point to is the fact that the strength of the industry drivers that as well. And if you look at both the assisted living and the independent living, portfolio of performance across the country, it’s as strong as it’s ever been and has rebounded since the recession. And so it’s attracting a lot of capital and with interest rates being low, there is a lot of new capital that has entered the space. That’s all okay and I think it creates an exit opportunity for operators that are not looking to continue operating a particular property or a particular portfolio or their company moving forward. And in the case of NHI, what we are looking forward, our operators that value and understand the long-term nature of a lease. And they are concerned about who their relationship is with, and who that we are selling across the table from, after they put the contract in place. We’ve been in business for over 20 years, and we have a very reliable track record of partnering with operators and so. We like to rather than getting your portfolios and being an exit, we like to partner with operators to help them grow the company and that's the distinction. And there really is both types of opportunities available on the market. The exit opportunities were generally driven by brokers or investment banks that have the number one priority of rights. The relationship oriented portfolio usually involves other moving pieces besides price. You might have forward commitments to grow; you might have the desire of an operator to secure development financing, you may have the desire of an operator that have an earn out paid because you’re trying to preserve their cash flow since their intention is to remain in business. If that type of dialogue that we have proven to be very effective and we’ll continue to be over time; at least that’s our goal.

Todd Stender - Wells Fargo Securities

That's very helpful. Thanks, Justin. And just kind of on that segue; talking about relationships, you now have a few properties with Chancellor, including your recently announced acquisition Sacramento. Can you talk about that relationship specifically, where it is now and how big a partner do you think they could become?

Justin Hutchens

Chancellor Healthcare is a small California-based company that's been in business for a number of years, well over 20 years. They have come and go, in and out of certain properties. They have few campuses that are very long-term, one of which we own. It's in Loma Linda, California. It's an independent living skilled nursing campus. That's how we started our relationship. When we bought that campus, and leased it back to Chancellor and the degree to construct assisted living community on their campus. They enjoyed very-very strong lease coverage in that campus which has helped to provide some of the credit support for their desire to grow. They have grown with us and we bought in a property in Maryland. We have the one in Sacramento, and we continue to look for growth opportunities with Chancellor. Don’t see them being in a large concentration or a major customer for a SEC standpoint at any given time, in the future because of the size of some of our other customers, but they have proven to be an important growth partner for us and we have a higher regard for their operating track record and their ability to transition out new acquisitions and new developments.

Todd Stender - Wells Fargo Securities

Okay, thanks. And Roger, just finally, it looks like you closed on the HUD financing last month. But you still have two more properties, I think, that you'll add to that. Will those additional properties also come from the Bickford JV? So, under the same terms? And do you think is that it for secured debt, at least for the time being?

Roger Hopkins

Yes. Those two properties are part of that RIDEA portfolio. And we do think that will be for secured debt for a while. And as I mentioned in my prepared remarks, we currently have secured debt with Fannie. And I think it’s reasonable to expect that that might go away as well. We certainly want to emphasize the capital has been unsecured rather than secured as we go forward.

Operator

And we have a follow-up question from the line of Daniel Bernstein with Stifel. Please proceed.

Daniel Bernstein - Stifel

I don't want to keep you on any longer, but one more question. Looking at some of your peers, they've been doing a little bit more on the lending side, particularly the skilled nursing. And you obviously had a relationship, or have a relationship with Capital Funding Group here in Maryland. Do you see any opportunities to do some more lending, whether it's senior housing or skilled nursing? Are those opportunities out there? Have they maybe disappeared a little bit with the availability of capital that's out there for operators?

Justin Hutchens

We have made some mezz financings in the past, and we've actually done some with Capital Funding Group and some other relationships as well. When the make a mezz loan you still have that relationship oriented point of view. We are not just out billing on paper. And there is quite a bit of debt occurring where you basically have about five day deadline to make your bid, and then whoever bids the best, wins that sub-debt piece. That’s not our style. We are going to want to be very -- we are very concerned with who the operator is and what their intentions are moving forward and is there a strategic partner for NHI. It’s certainly never been a primary focus of ours; it’s just something that’s available if it meets the need of a particular operator. And then as it pertains to skilled nursing, we’re very particular in making any investments in that space and we like the fact that we think the risk is priced in pretty well but we are concerned always in every investment type and especially where government reimbursement is involved in their underlying credit of the operator. And so if you see us making investment in skilled-nursing, we’ve given a lot of consideration to the operating track record as well as their balance sheet strength, but primarily we are focused on making investments in private pay whether they would be alone or a lease, we’ve shown that we will do a joint venture as well.

Operator

And our next question comes from the line of Karin Ford with KeyBanc Capital Markets. Please proceed with your question.

Karin Ford - KeyBanc Capital Markets

Just a question on the pipeline, Justin. Would you say that the deals that are under review today, there's a bigger pipeline or a smaller pipeline than there was at the beginning of the year? And are you looking at any big portfolios? Or is it primarily one-off?

Justin Hutchens

Okay, I would say this that the pipeline from the standpoint of -- from a quality standpoint is bigger now than it was earlier in the year, which means we have more of our relationship type deals under review and we are reviewing both large portfolios, small portfolios and one off assets.

Karin Ford - KeyBanc Capital Markets

Okay. That's helpful. And going back to the Bickford occupancy question in the quarter. I think you said the two lease-ups were about 55% occupied this quarter. What were they in Q1? And can you just give us also a year-over-year same-store number for the 27 that you guys owned in Q2 2013 and Q2 2014?

Justin Hutchens

Unfortunately I don’t have all that detail right in front of me. The two developments in Q1 were close to 50% occupied through Q2, they are a little bit better at 55 and of course we expect them to continue to ramp up. And then the year-over-year and the same store was probably flat to down; and sequentially, it was probably down a touch as well. But I mentioned where we think it’s going and we will see [indiscernible].

Karin Ford - KeyBanc Capital Markets

Great. Okay, great. And then I guess going back a little bit to the concentration question and also your desire to continue to do additional deals with your current relationships. Does the concentration with Holiday -- I know it improves the private pay, but would you guys consider doing another deal with Holiday? Are you looking at doing that? And you mentioned independent living in your prepared remarks as a focus. Would you guys do an independent living acquisition outside of Holiday?

Justin Hutchens

The short answer is yes, the both, and let me explain why. In the case of Holiday, if you look at the investment we made with them in the fourth quarter, we underwrote that on a trailing nine at a 10 cover and 89% occupancy. Now they are at 1.1 and they have 91% and they’ve ended the quarter at 91.5% occupancy. So that portfolio has momentum and the feedback I have on their company is that the company has momentum. So they are doing very well, we already knew there were strong operator and we are pleased that they are performing as expected and so therefore are considering their operating team and performance and the credit profile we have in our underlying tenant. We would be comfortable doing more with holiday. We would also be comfortable purchasing an independent living community and leasing it to another operator that would have a solid background in the industry. Of course this is hypothetical, so we would underwrite that operator and assuming they had a solid track record that would be important. The other thing that would be important is the fact that independent living fundamentals are very strong, they’ve rebounded very nicely since the recession and there is very little new supply being added and there is in fact less new supply being added to independent living and there is assisted living.

So overall, we like Holiday, we like independent living and we’d be happy to invest in with Holiday or without in the independent living asset class.

Operator

(Operator Instructions). It looks like there are no further questions at this time; I will turn the call back to you.

Justin Hutchens

Okay, thank you for the participation on our call today and we look forward to speaking with you on the next quarter conference call.

Operator

Ladies and gentlemen, that does conclude the conference call for today. We thank you for your participation and ask that you please disconnect your line.

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