Summit Hotel Properties' (INN) CEO Dan Hansen on Q2 2014 Results - Earnings Call Transcript

Aug. 7.14 | About: Summit Hotel (INN)

Summit Hotel Properties, Inc. (NYSE:INN)

Q2 2014 Results Earnings Conference Call

August 7, 2014, 09:00 AM ET

Executives

Elisabeth Eisleben - Investor Relations

Dan Hansen - President and CEO

Analysts

Ryan Meliker – MLV & Co.

Jordan Sadler - KeyBanc Capital Markets

Andrew Didora - Bank of America

Gaurav Mehta - Cantor Fitzgerald

David Loeb – Baird

Wes Golladay - RBC

Bill Crow - Raymond James & Associates

Austin Wurschmidt - KeyBanc

Operator

Good day, ladies and gentlemen, and welcome to the Second Quarter 2014 Summit Hotel Properties Incorporated Earnings Conference Call. At this time, all participants are in a listen-only mode. Later we'll facilitate a question-and-answer session. (Operator Instructions)

I would now like to turn the conference over to your host for today, to Elisabeth Eisleben, Director of Investor Relations. You may begin.

Elisabeth Eisleben

Thank you, Francis, and good afternoon. I’m joined today by Summit Hotel Properties’ President and Chief Executive Officer, Dan Hansen. Dan has prepared comments related to our second quarter 2014 release and filing and following these comments we will have an opportunity to address any related questions you may have.

As a reminder, this conference is the property of Summit Hotel Properties. Any redistribution, retransmission or rebroadcast of this call in any form without the expressed written consent of Summit is prohibited.

Please also note that many of our comments today are considered forward-looking statements as defined by federal securities laws. These statements are subject to numerous risks and uncertainties both known and unknown as described in our 2013 Form 10-K and our other SEC filings.

These risks and uncertainties could cause the results to differ materially from those expressed or implied by our comments. Forward-looking statements that we make today are effective only as of today, August 07, 2014. We undertake no duty to update them later.

Our earnings release contains reconciliations to non-GAAP financial measures referenced during this call. If you do not have a copy of our release, you may view and print it from our website www.shpreit.com.

Please welcome Summit Hotel Properties' President and Chief Executive Officer, Dan Hansen.

Dan Hansen

Thanks, Elisabeth. And thank you all for joining us today for our second quarter 2014 earnings conference call.

On the call today, I’ll update you on operating results, provide more detail on our financial performance for the quarter, discuss our balance sheet and liquidity, provide review of our outlook for the third quarter and the reminder of 2014 and finish up with a brief update on the recent additions to our staff, our Board of Directors and the status of our CFO search.

Let me begin, by expressing how thrilled we are with the performance of our portfolio in the second quarter, exceeding both the high end of our guidance expectations and the street's estimates. Our same-store RevPAR growth for the quarter was 8.9% compared to the second quarter 2013 and again exceeded the Smith Travel research upscale average in the quarter.

RevPAR was driven by a combination of increases in average daily rates, which was up 6.3% and a 2.4% increase in occupancy. Two of our strongest markets this quarter were San Francisco and the Phoenix Scottsdale market, which posted 19.3% and 16.3% RevPAR growth, respectively.

We're seeing great results in our performance from the Holiday Inn Express & Suites at Fisherman's Wharf and San Francisco since the completion of the renovation in the first quarter. Our six California hotels were strong contributors as a whole, posting 6.9% RevPAR growth.

On a pro forma basis, including hotels acquired in the first quarter, we reported RevPAR growth of 11.4%. RevPAR was driven by 6.7% increase in average daily rate and increased occupancy of 4.4%. Our average occupancy in the second quarter was 79.9%, compared to 76.5% in the second quarter of 2013.

Our RevPAR growth exceeded the Smith Travel upscale average by nearly 300 basis points in the second quarter. Our continued success in posting robust same-store and pro forma RevPAR highlights the strength and quality of our portfolio and the strategic capital improvements we have made over the last two years. The continued demand in both business and leisure gives us great confidence in our portfolio's ability to continue to deliver strong results.

Growth in our EBITDA was driven by strong RevPAR growth, which was partially offset by higher operating expenses, property taxes and fees. For example, quarter-over-quarter, our same-store property taxes were up 11.7%.

Moving on to acquisitions, we did not close on any additional hotels in the second quarter; however, we did complete the acquisition of the 19% non-controlling interest in the joint venture that owns the Holiday Inn Express & Suites in San Francisco.

We've not been as aggressive as we have in past quarters in building our pipeline, but we are evaluating several strong opportunities and have two potential acquisitions in due diligence.

We remain extremely selective in targeting only the right hotels that fit our long-term grown objectives and remain focused on the highest quality premium select service assets that will provide strong in-place yields and create long-term value.

Turning to our renovation programs, in the second quarter of 2014, we invested $6 million in five properties. During the quarter we completed the full renovation of our Residence Inn located in downtown, Salt Lake City, which included the addition of 11 guest rooms.

As part of this renovation, our team converted 24 underutilized two-bedroom units to studio and one-bedroom units. In addition to the new guest rooms all adjusting guest rooms were remodeled with new finishes, furniture, mattresses, art work and 42-inch flat screen TVs.

The common areas included the lobby, reception desk, kitchen and dining areas where all redesigned to allow for more space and better functionality for our guests.

To further enhance the guest experience two outdoor patio areas were updated to include barbeques and a fire pit. We completed the renovation with fresh exterior paint and a new parking lot.

The additional four guestrooms that we added since the first quarter were at our recently acquired Southern California properties. Three guest rooms were added at the Santa Barbara Hampton Inn and one room was added at the Ventura Hampton Inn & Suits. In total, we added 15 guestrooms to our portfolio since the end of the first quarter at an estimated cost of $50,000 per key.

We believe these additional guestrooms will generate approximately $19,000 of additional EBITDA per key over the next 12 months. This is a prime example of our team's attention to detail and ability to create value.

Next I’ll provide further detail on our financial and operating results for the second quarter of 2014. Beginning with our quarter results for the second quarter of 2014, we reported adjusted FFO of $0.28 per diluted share, which exceeded the $0.24 to $0.26 per share guidance range we provided for the quarter.

Pro forma hotel EBITDA for the second quarter was approximately $39 million, a 14.7% increase compared to the second quarter of 2013. Our pro forma hotel EBITDA margins expanded by 103 basis points in the second quarter to 36.9%.

As a reminder we've seen some hotel operating expenses come in higher this year such as property taxes and some brand initiatives, but at this point, do not anticipate recurrence of the same magnitude next year.

As an update we have made great progress in building our accounting department in the second quarter adding high quality individuals and we continue to forecast an additional G&A expense of approximately $150,000 to $200,000 per quarter that we telegraphed on our last call. We are also very excited to have added two high quality independent directors with extensive public company experience and capital market expertise to our Board.

In addition, we are fortunate to have many high quality candidates with broad ranges of experience expressing interest in the CFO position. We have made progress in our CFO search and we are in the final stage of our process.

Moving on to the balance sheet, we continue maintain a strong balance sheet and liquidity position with ample capacity and access to various sources of capital to execute our strategic growth objective.

At June 30, 2014, we had total outstanding debt of approximately $580 million with a weighted average interest rate of 4.62% and weighted average term to maturity of more than five years.

At quarter end we had $81 million outstanding on our $225 million unsecured revolving credit facility. Including available capacity on our line of credit and cash and cash equivalents on our balance sheet, we have approximately $150 million of available liquidity to fund our investment growth objectives. At the end of the second quarter our net debt to trailing 12 month adjusted EBITDA was 4.9 times.

Turning to guidance for 2014 for the third quarter, we provided RevPAR guidance for same store and pro forma portfolios of 5% to 7% and 8% to 10% respectively. Our adjusted FFO guidance for the quarter is $20.8 million to $22.6 million or $0.24 to $0.26 per share.

For the full year 2014, we increased our RevPAR growth target for our same store and pro forma portfolios by 100 basis points on both the high and low end to 5.5% to 7.5% and 6.5% to 8.5% respectively.

This change was based on our portfolio results in the first six months of the year, which were above the high end of our guidance previously provided.

We are updating our full year 2014, adjusted FFO guidance range to $76.3 million to $79.8 million or $0.88 to 0.92 per share. As a reminder our guidance assumes no additional acquisitions or dispositions in 2014.

In summary, the second quarter of 2014, was really strong for both Summit and the industry as a whole. We're thrilled with the performance of our portfolio and the continued successful execution by our team.

With that I’ll open the call to your question. Francis?

Question-and-Answer Session

Operator

Thank you. (Operator Instructions) Our first question will come from the line of Ryan Meliker from MLV & Co. You may begin.

Ryan Meliker – MLV & Co.

Hey. Good morning Dan and Elizabeth. Congratulations on a great quarter. I guess the only (technical difficulty) have is same-store RevPAR was up 8.9% in the second quarter. It was up 8.6% year to date. You are guiding to a deceleration to, I think, 5% to 7% in 3Q, and then even further deceleration is implied in your full-year guidance in 4Q.

Is there anything specific you are seeing across your business that is making you more cautious with regards to 3Q and then even more as we progress to 4Q? Or is it simply that there's just not a lot of visibility into your business, and you don't really believe that your portfolio can run at 9% plus RevPAR growth in perpetuity?

Dan Hansen

Ryan this is Dan. Thanks for the question. I see that our initial guidance for the year was a real range of $0.84 to $0.92 and a lot of things really needed to come together to exceed that midpoint and they have.

I think increasing the bottom end by $0.04 clearly demonstrates our confidence in our portfolio and I believe that there will be continued strength and demand for our hotels. The third quarter has started up with solid RevPAR gains in our segment and we think there is definitely an opportunity to outperform.

Q4 is just always a tough quarter to predict and we should have an easier comparison in October from the government shutdown, but October is 60% of the quarter for us. So any softness really can affect our results.

And we will have some renovation disruption to manage through as we normally do in the fourth quarter. So I think we feel good about the numbers. We think there is a great opportunity for outperformance and obviously that lack of visibility is a factor for us.

Ryan Meliker – MLV & Co.

But then there is nothing specific that you are concerned about with regards to slowing RevPAR growth?

Dan Hansen

No we don’t see any headwinds ahead of us.

Ryan Meliker – MLV & Co.

Beautiful. That's what I wanted to know. Thanks a lot. That's all for me.

Operator

Your next question will come from the line of Jordan Sadler from KeyBanc. You may begin.

Jordan Sadler - KeyBanc Capital Markets

Hey Dan. Good morning. Just had a question, last quarter you talked a little bit about fixing the mix in some of the newer property you guys had acquired And was just curious if there's still opportunities on the occupancy side to -- for some of those softer weekend nights to change the mix and continue to grow occupancy at the pace you have?

Dan Hansen

That’s a great questions and I appreciate you are asking it. It is something that Craig and our operations team worked very hard at and the time of the cycle where you would think that there would be very little occupancy left to grow, but we've shown that in our portfolio we have been able to add occupancy points, which is part of a real strong focus at each individual property level fixing that mix of business and leisure and transient.

But also I think points to a great long-term growth projection because as that occupancy growth is a factor in our RevPAR growth I think it gives us a longer runway to continue to push rates once we do hit maximum occupancy.

So I think there'll be some opportunities around the margin to increase occupancy, but I think we are at that point where we should continue to see the majority of the RevPAR gains in rate.

Jordan Sadler - KeyBanc Capital Markets

And then just separately, when you -- this is sort of the second quarter in a row you've highlighted the Phoenix/Scottsdale portfolio as being an outperformer. And just was curious if you could give a little more color as to what's driving the outperformance there?

Dan Hansen

Great management, smart capital investment. We've spent the last couple of years making investment in our properties where they make sense really focusing on things that enhance the guest experience.

So, as all renovations are not created equal, we got lot of experience over the years, 100s of hotels renovated and Craig and his team are very keen at understanding where we can drive rate and what investments can capture the best opportunity.

So I think a lot it is just getting continuing to get the new market share from the competitive set and replace lower rated business with higher rated business from the both the leisure and the transient base.

But I wouldn’t say those are just the only two that are supporting the portfolio. 44 of our 90 hotels actually had double-digit RevPAR growth. So it's not just driven by West Coast. We are seeing continued strength Dallas and Denver. The Orlando market has performed very well and National continues to perform at a great level.

We did see a rebound in some of our South Eastern Hotels, post renovation. So I think it’s a very broad-based RevPAR number for the portfolio.

Jordan Sadler - KeyBanc Capital Markets

And then just last one for me is just any changes on your thoughts on the disposition side continuing to sell assets into the strength and the strength that we've seen?

Dan Hansen

We still have just one asset left in discontinued operations, which we continue to make progress on. We have had a challenge finding the right buyer that is both qualified and we can meet at a pricing level.

Beyond that we do said it before, we feel very comfortable with the portfolio we have. We spent a lot of time and money making sure they can deliver on the performance that we outlined.

So, we wouldn’t actively market anything, but based on some of the transactions that have been out there, if there is an opportunity to exit a lower growth or a less strategic market and redeploy that into higher growth, higher RevPAR market we would definitely be in favor of that.

Jordan Sadler - KeyBanc Capital Markets

Great. Thanks for the color and thanks for taking the questions.

Dan Hansen

Sure.

Operator

Your next question will come from the line of Andrew Didora from Bank of America. You may begin.

Andrew Didora - Bank of America

Hi. Good morning Dan and good morning Elizabeth. Just one question for me just regarding the acquisition environment. Dan, I guess we've obviously seen a lot of interest in limited-service assets of late.

Based on things that you have been taking a look at and seeing out there in the market, where do you see these deals pricing relative to replacement costs and can you maybe give us a sense of where you think your portfolio is worth on a replacement cost basis? Thanks.

Dan Hansen

Replacement cost and per-key cost are always a tough metric to look at. Per-key is easy because it's easy to calculate and everybody wants to buy below replacement cost. It makes them feel like they got a great deal.

Replacement cost is much more difficult to pinpoint. You really need to factor in the cost to your capital for the two years or longer thought it tells under construction and the time you need prior to breaking ground and zoning and planning and franchise approval and design and we can debate all day what replacement cost is.

We've seen budgets on new construction enough markets and I have been doing this a long time and have looked and with all that said we do look at per-key cost its relationship to what we believe replacement cost is and it’s a strong check for us in the underwriting.

But I think the more relevant measure is as we look at it as whether it's accretive to our portfolio and the consistency of those earnings. What we are starting to see on the pipeline side assets price that some would like at above replacement costs, but a lot of times that just doesn’t factor in what the land cost would be because there is no land for sale because it may be a higher barrier to entry market or it may not factor in the time that it takes.

So apologize for the long answer but when we look at assets, the per-key replacement cost is one measure that we look at. As far as our portfolio, we go through kind of an individual analysis on each asset to determine what we think fair value is.

I don’t know that we’ve rolled up or telegraphed publicly what we think the portfolio is worth, but I can’t say just an average hotel of the quality that we have, is probably 130 to 140 a key for just the construction on average plus the land. So I think we’re easily 20,000 a key under that level all things being equal.

Andrew Didora - Bank of America

Very fair answer. Just as a follow-up, with the additional competition out there and private equity coming in and your relatively small pipeline now versus where it's been in the past. Are you seeing fewer deals that are accretive to your portfolio, or is it more just taking a break after everything that you've brought on over the past call it 18 or 24 months.

Dan Hansen

I think we haven’t been aggressive as we have in the past in building our pipeline. So it’s more modest than it’s been but I think that’s more a result of our capacity than anything else there. There’s still a fair amount of one-off transactions available. There’re starting to be fewer and fewer in the portfolio transactions because of as you mentioned private equities interest and the low interest rates being able to drive higher leverage.

But I think as the remainder of the cycle progresses, our story is not just one of acquisitions. There’s a lot of internal growth as we’ve just demonstrated, so smart capital recycling and selective acquisitions I think is our thought process going forward.

Andrew Didora - Bank of America

Great. Thanks a lot Dan.

Operator

Your next question will come from the line of Gaurav Mehta from Cantor Fitzgerald. You may begin.

Gaurav Mehta - Cantor Fitzgerald

Thanks. Good morning. Just a quick question on the margins and I am sorry if you’ve talked about this earlier in the call, but in the previous call you’ve talked about 25 to 75 basis points margin expansion in 2014. Is that still the expectation?

Dan Hansen

Yeah I think that range we discussed in the queue in an earlier call is a fair range for us to look at going forward. That’s obviously on our pro forma basis.

Gaurav Mehta - Cantor Fitzgerald

Great. That’s all I have. Thanks for taking the question.

Dan Hansen

Thank you.

Operator

And your next question will come from the line of Chris Woronka from Deutsche Bank. You may begin.

Chris Woronka - Deutsche Bank

Hey, good morning Dan and Elizabeth. Dan, I was hoping you could -- on the acquisition front, you mentioned you have two hotels that you are looking at. Can you tell us roundly whether -- how much of your capacity those would use up if you bought them? And also just on the size of the pipeline, you mentioned that it's smaller. Is that purely a function of just private equity penciling out differently then you guys would?

Dan Hansen

I think it’s a little bit of -- I’ll take those questions in reverse order. The size of the pipeline is directly proportionate to the activity we expect to have and a lot of the sellers are friends and we don’t have an interest in tying up assets that we don’t have either the capacity or the legitimate interest in closing.

Our reputation is very important to us and we want to make sure that we are very transparent with sellers, what we can and can’t do, so we do have a great reputation and a wide variety of contacts over the last dozen years.

So if opportunity -- if we need the opportunity or have the capacity to look at additional assets, we feel we can build that pipeline fairly quickly if one or both of these acquisitions we’ve been spending a lot of time line decides or doesn’t come to fruition we can easily backfill with others out there and in the marketplace.

But I think that our view on the pipeline is one that is very fluid and we want to make sure we’ve very respectful with sellers. As far as capacity, depending upon whether we close these two assets or we replace one with another, I would say any of those two assets could take up anywhere from 30% to 50% of our available capacity.

Chris Woronka - Deutsche Bank

Okay. That’s helpful. And then can you maybe give us an update on how the Hyatt Place in Minneapolis is ramping up relative to your expectations?

Dan Hansen

Yeah. It’s very solid. I think it’s the best way to describe it. Nothing ever ramps as fast as you would like it. I think we have gone through a lot of challenges so to speak in building a base of business. There is the All-star game going that will help us to some extent but we’re very happy with the product where we continue to steal market share as we get to the back half of the year and are able to renegotiate some business contacts. We expect that to be running at full steam next year.

Chris Woronka - Deutsche Bank

Okay. And then just on the value-add opportunities, I think the room additions you mentioned looked like a terrific ROI. Are there more -- and I know most of those came out of one hotel, but are there more things like that? You have 90 hotels. Is there anything similar, or is it ones and twos from here?

Dan Hansen

Yeah for us it’s ones and twos. A lot of the value-add is a result of acquisitions. We’re having tremendous upside from the Doubletree in San Francisco that was converted from Radisson upon our purchase.

Brand conversion, the majority of those are done in our portfolio but there are small things that Craig and his team are focused on month end and month out on where to extract maximum value, but as far as any large scale repositioning or re-brandings, the majority of that's done.

Chris Woronka - Deutsche Bank

Okay. Very good. Thanks.

Dan Hansen

Thanks Chris.

Operator

Your next question will come from the line of David Loeb from Baird. You may begin.

David Loeb – Baird

Hi Dan. Just to close the loop on the last question, did I do the numbers right? 38% return on those new rooms?

Dan Hansen

That’s correct.

David Loeb – Baird

Very nice. And to go back to Ryan's question, your fourth-quarter guidance seems to imply around 2% RevPAR growth, just based on what your actuals were for the first half and your third-quarter guidance. I understand the conservativism, but shouldn't you have a lift again from Minneapolis in there? So is your assumption -- is your base case basically at this point that you just can't see RevPAR enough to see it being substantially positive yet?

Dan Hansen

Yeah, I think that’s fair for the fourth quarter. It should also -- that if the variance for fourth quarter RevPAR based on our range is pretty significant too. If you use the high end of our range, in fact then the fourth quarter, it’s more like 6% rather than 2%. Rather than if you use the high end and set the midpoint.

So I think there’s some variance in there that because of the -- where the fourth quarter sits and it being less impactful, small things moved the needle quite a bit that -- it may be perceived as more conservative than it actually is.

David Loeb – Baird

Okay. One more question for you, last one. Can you give a little more color on the CFO search and what you're looking for? What are the characteristics that are most important to you or the qualifications for the CFO?

Dan Hansen

Sure. I think with the status of our company and where we are in the lifecycle we went out with very specific list of skill sets and really have been overwhelmed with tremendous candidates that have a wide variety of skill sets, but some other things that are very important to our Board and us and we believe the shareholders is REIT experience, financial experience not specifically an accountant but accounting experience and accounting department experience and obviously public company experience. I think that our investors and shareholders and our team really benefit from those specific qualities.

We were in the final stage. We’d expect to be able to make an announcement somewhere in the next 30 to 40 days and again just -- very fortunate to have great candidates, throw their name in the hat and look forward to getting this to conclusion.

David Loeb – Baird

Great. Thank you.

Operator

Your next question will come from the line of Wes Golladay from Royal Bank of Canada. You may begin.

Wes Golladay - RBC

Hi. Good morning everyone. Excellent quarter. Looking at that nearly 300 basis points outperformance in the pro forma pull, how would you attribute that? Would it be the renovation pickup? Would it be the market positioning that you have? Or is it the premium select service product you have? And how do you see this outperformance going forward relative to the market?

Dan Hansen

It’s a great question Wes. I think it’s a little bit of all three. The premium select service product competes very well with full service more so than it ever has in history. The hotels are located where people want to stay. The amenities are on par with what they can get at nearly all full service hotels.

So as a segment I think it’s very important and starting to get recognized as a real opportunity. For us specifically in the markets we’re in, yeah, we’re very proud of the capital investment we’ve made and when we make those investments, you should expect terrific returns from those and we’ve been able to deliver that.

But the last part of that is just the people. None of this happens without great people. Great partnerships with our management company and the great operations team that from renovations to revenue management that can deliver on the results. So I think it's part of what it takes to truly a best-in-class management team and yeah, I couldn’t be happier and more proud of our team.

Wes Golladay - RBC

Okay. Now looking at that Hyatt portfolio, the one with the below-average margins you acquired a few years ago, where is that at now? And how much margin lift do you have still to capture, let's say, next year and beyond?

Dan Hansen

Well I think there’s probably still a couple hundred basis points of margin expansion. The majority of the renovations are done, Hyatt's management team has made some great changes and they got great leadership there that continues to really focus on the right thing.

So they actually have been very happy with the progress that’s been made. But yeah, I still think there’s a couple hundred basis points as improvement. Part of the value proposition with Hyatt places, it is starting to really be recognized more and more as a premium select service asset warranting a premium multiple.

They just crossed 200 Hyatt places in the system and they’ve done that with strong developers and great market. So we think there’s still lot of opportunity with those assets in that brand.

Wes Golladay - RBC

Okay. Thanks a lot for taking the questions.

Dan Hansen

Thanks Wes.

Operator

Your next question will come from the line of Bill Crow from Raymond James & Associates. You may begin.

Bill Crow - Raymond James & Associates

Hey, good morning Dan, nice quarter.

Dan Hansen

Thanks Bill.

Bill Crow - Raymond James & Associates

Let me tie the last answer and a couple of the other answers together. Hyatt announced they are shopping 42 select service assets, two different pools, the smaller one being 10 properties. Is that something that you would be interested in? I know you're familiar with it. You've dealt with Hyatt before. Or is that something that's just off the table, given your remarks about one-off asset acquisitions going forward.

Dan Hansen

Hyatt’s a great partner and a great friend. We think the brands are terrific. They are all into this portfolio and the portfolio that we bought for a long time since the AmeriSuites acquisition. So two years ago, we went through the portfolio and it shows specifically those 11 hotels we thought we could create the most value from.

So our real bind from Hyatt I would be expect to be largely done. On a portfolio basis, it’s just not something that really works for us. So that’s a long way of saying how we’re not a buyer of the portfolio.

Bill Crow - Raymond James & Associates

Great. That was it and my other questions have been answered. Thanks.

Dan Hansen

Okay. Thanks Bill.

Operator

(Operator Instructions) Your next question is a re-prompt from the line of Jordan Sadler from KeyBanc. You may begin.

Austin Wurschmidt - KeyBanc

Hey Dan, it's Austin here with just one quick follow-up. It seems like the limiting factor on the acquisition side is really your capacity today. Could you just give us a sense of where your targets are or where you'd like to see leverage by year end or end of 2015?

Dan Hansen

Sure. I think we’ve talked in the past four and half to five and half times funded debt EBITDA as the range we would expect to be in. We are not uncomfortable at the higher end of that range at this stage in the cycle, but as the cycle progresses not just the 2014 but you know 2015 and 2016 we would anticipate the growth in our EBITDA and recycling of capital and smart balance sheet management to get us even below the bottom into that range. So I think that will always be the range at least for the balance of the next six to nine months that we play in.

Austin Wurschmidt - KeyBanc

Great. Thank you.

Dan Hansen

Thanks Austin.

Operator

And now at this time we have no other questions in the queue. I would like to turn the call over to Mr. Dan Hansen for your closing remarks.

Dan Hansen

Thanks everybody for dialing in today. We are really looking forward to our next call and seeing you a lot on the road. Have a great day.

Operator

Ladies and gentleman, this concludes your presentation. You may now disconnect. Enjoy your day.

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