Forest City Enterprises' (FCE.A) CEO David LaRue on Q2 2016 Results - Earnings Call Transcript

| About: Forest City (FCE.A)

Forest City Enterprises' Inc(NYSE:FCE.A)

Q2 2016 Results Earnings Conference Call

August 05, 2016, 10:00 AM ET

Executives

David LaRue - President and Chief Executive Officer

Bob O'Brien - Executive Vice President and Chief Financial Officer

Analysts

Christy McElroy - Citi

Jamie Feldman - Bank America Merrill Lynch

Sheila McGrath - Evercore

Operator

Welcome to the Forest City Realty Trust Second Quarter and year-to-date 2016 Earnings Conference Call. The company would like to remind you that today's remarks include forward-looking comments that are covered under the Federal Safe Harbor provisions. Actual results could differ materially from those expressed or implied in such forward-looking statements due to various risks, uncertainties and other factors.

Please refer to the risk factors outlined in the Forest City's annual and quarterly reports filed with the SEC for a discussion of factors that could cause results to differ. This call is being recorded and a replay will be available beginning at 1:00 PM Eastern time today. Both the telephone replay and the webcast will be available until September 4, 2016 at 11:59 PM Eastern time.

The company would like to remind listeners that in addition to using GAAP terminology, such as net earnings it will be using non-GAAP terminologies such as operating FFO; FFO, net operating income or NOI, comparable property NOI or comp NOI; and net debt to adjusted EBITDA in its discussions today. Please refer to Forest City's annual report filed with the SEC and supplemental package which are posted on the Company's website at www.forestcity.net for an explanation of these terms and why the company uses them, as well as reconciliations to their comparable financial measures in accordance with Generally Accepted Accounting Principles. [Operator Instructions].

I would now like to turn the call over to Forest City's President and CEO, David LaRue. Please go ahead, Mr. LaRue.

David LaRue

Thank you, operator and good morning everyone. With me today is Bob O'Brien, our Chief Financial Officer. We appreciate everyone’s participation in today’s call which is now earlier than usual to avoid as many complexes as possible with calls scheduled today by some of our peers. We will keep our prepared remarks brief.

I will begin with some comments on the trends we are seeing across the portfolio and our core asset types ended our core markets. Bob will provide a brief update on where we stand on our deleveraging and margin improvement efforts then will get to your questions.

The company recognizes the importance of net earnings as a uniform and consistent metrics for investors. Other metrics that we will discuss today include non-GAAP measures calmly used by the REIT industry also impact net earnings. As you saw from our press release and filings we had another strong quarter. Second quarter and year-to-date consolidated revenues and net earnings were in line with our expectations.

Net earnings variance for the for the quarter versus the same period last year reflects significant 2015 gain and change of control of interest related to our University Park and MIT acquisition last June, that did not reoccur this year.

Second quarter operating FFO per share was up 16% compared with the second quarter of 2015 and up 12% per share for the year-to-date. We had solid total comp NOI growth at 4.3% led by office which is up 6.4%. We will be happy to comment on any of these specific results during the Q& A but let me move to some thoughts on the trends we are seeing in the business and in the markets we serve.

I will start with office. As most of you know the majority of our office assets and more than 8% of our office NOI come from two markets, New York City and Cambridge Massachusetts. Those are two great office markets. New York for conventional office as well as a growing tech component, particularly in Brooklyn and Cambridge for life science and R&D. As we've noted the sizable office comp NOI increases was experienced so far this year have been driven largely by prior year vacancies at 88 Sydney Street in Cambridge and 1 Pierpont Plaza in Brooklyn.

The 88 Sydney space was filled midway through the second quarter of last year and Pierpont in the fourth quarter. Those lease up will mean that our reported office comp NOI growth for the balance of the year will moderate as we go up against stronger prior year comps in Q3 and Q4.

Overall, we continue to see steady demand and rent growth potential in both of these markets. Cambridge market for class A space is sensually full occupancy which bodes well both asset values and future rent growth as leases turn.

One example of the strength in the Cambridge market is we completed our build-to-suit agreement for 300 massive approximately three years ago and then curve market rates for new ground up the space. Today, our most recent new leases for second generation space are at average unescalated ran approximately 15% above what we've achieved at 300 base.

In New York and in Brooklyn in particular there continues to be demand and strong pricing with new leases being signed at rates above the average of our in place rents another good sign for our ability to achieve rank growth as our leases renew.

Brooklyn, in particular we also feel are benefiting from higher asking rates from new ground up projects.

In residential, comp NOI was up 3% in the second quarter. For the past several years, we've frequently reported comp NOI growth in apartments that were above peer averages including 5.2% growth last year, second quarter. So we are up against some strong comps.

Growth in our core markets where we are focused on all the locations continues to be generally on pace with peers while remaining assets and non-core markets which tend to be in suburban settings are lagging somewhat in the current multi-family environment. As we look ahead to the balance of 2016, we see moderating growth in residential as a significant amount of new product begins to come online in markets that are of interest to us including Brooklyn, Washington DC and San Francisco.

Even with continued favorable demographics in our core markets and steady demand for rental apartments that new products will take time to absorb. As we noted in our press release, however we are confident in the strength of our sub-markets that we are focused on especially where we have mixed-used environment such as the yards in DC, Stapleton in Denver and Pacific Park Brooklyn. These types of project offer characteristic including densification, access to mass transit, a variety of uses and an active 18 to 24 hour ground plane that are attractive to today's urban rental demographics and help create a unique sense of place and community.

Shifting to retail, the sales trends in our regional malls are in line with many others in the industry are experiencing with the flattening and our modest decline in sales per square foot. Our comp NOI for the second quarter is up 2.7% which was impacted by the closing in the Nordstrom stores are South Bay Galleria Beach California where we are creating a redevelopment plan for the center and by the timing of vacancies and tenant changes at San Francisco Center.

In terms of overall trends in retail, we see the A mall class continuing to separate themselves value and sales wise from other products in the market by reinvesting and reinventing the shopping center experience. Over the last several years we and our partner QIC [ph] have invested in renovation, expansion and remerchandising programs that have strengthened our mall portfolio and contributed to strong recent spreads, we've seen since those programs were put in place.

Creative redevelopment of malls often to apply mixed use components such as apartments, hotels and community user is another significant trend as owners seek to create a sense of place within their centers. Mixed use and place making up are the core strengths of four city and our proposed redevelopment of Ballston Quarter in Arlington, Virginia is a great example of reinvigorating and reintegrating an existing center into the community and as a destination of choice.

We can provide more color during Q&A but let me turn the call over to Bob now for some comments.

Bob O'Brien

Thanks, Dave. Good morning everybody. I'm not going to take the time to go through usual walk through the second quarter operating FFO grades but appears on page 45 with the supplemental package but a quick glance at that chart demonstrates the significant positive results we are seeing across our business as we continue to execute on our strategic plan.

I do want to highlight that we are beginning to see in our results the positive impact of our efforts to reduce overhead and improve margins. As a footnote to the bridge points out the majority of the $5.3 million positive other variance in the quarter reflects reduced overhead resulting from the implementation our new organizational structure at the beginning of the year.

Our operating FFO bridged derives from a number of sources including net earning FFO and net operating income and other metrics to help illustrate the performance of the business. That being the case, let me take a minute to call the specific locations in the financial statement where investors can see savings in the form of reduced expense.

As we noted in the press release, reduced overhead with the major driver of the improvement and the other NOI for the quarter and year-to-date compared to a year ago. This is reflected in the schedule supporting net operating income on page 27 in the supplemental package. The savings were partially offset by increased corporate G&A for the quarter and year to date in 2016 versus 2015 as reflected on the income statement.

As I mentioned on previous call, we've combined certain functions such as financial planning and analysis. From our former commercial and residential that we used into center that functions serving the entire business.

Our results in this year to date evidence are margin improvement efforts. We remain confident that we are on track with the roughly $60 million in total annualized margin improvement through a combination of both cost reductions and revenue enhancements by mid to late 2017.

I also want to comment on our ongoing deleveraging efforts. This is something we've been highly focused on since we introduced our strategic plan at the beginning of 2012 and where we have seen dramatic improvement.

We ended the first quarter with the ratio of net debt to adjusted EBITDA of just over nine times. On page 43 of the quarter's supplemental package, you can see that on annualized basis we're in the mid 8 times range today, 8.3 times net debt EBITDA for the quarter and 8.7 year-to-date. And we're on track to achieve our previously stated goal of 7 to 8 times by the second half of next year. The improvement in this quarter have been driven largely by positive contribution to EBITDA by our new property additions as they lease up and stabilize. We are proud of our progress to-date and are confident in the trajectory going forward. Before I turn it back to Dave, let me touch briefly on efforts to raise capital through a non-core disposition and selected joint ventures.

The sale of our fed releases at housing business remains on track. Closings on the 47 properties included the net sale are expected to begin late in the third quarter with completion of all closings targeted for year-end. Our previously announced joint ventures of QIC and except the Wiregrass regional mall near Tampa, should close by the end of the third quarter, I believe we're I just waiting for final approval from the special service around that loan.

So, with that I'll turn it back to Dave.

David LaRue

Thanks, Bob. The addition to the growth in the matured portfolio in from acquisitions, our development capability continues to be a core strength and an important part of generating future growth as we're activating our existing entitlement in core markets. We open two projects in the first quarter and two more in the second, till we plan to open total of four more by the end of the year. Two of the projects already opened were office buildings, one fully leased and one 70% leased. The balance of the openings are multi-family. Details on our openings and projects under construction are included in our press release and we can answer any questions on the pipeline during the Q&A.

In summary, we're pleased with our results for the second quarter in year to-date. We're also pleased with the continued progress on our strategic transformation including our ongoing deleveraging and margin improvement efforts. Our transformation is been a result of executing on this strategic plan principles we laid out in 2012. Focus on core markets and products build a sustainable capital structure and drive operational excellence throughout our business. Today, our financial statements evidenced the progress we made and many discussions we've had with investors confirmed the support for a strategic direction.

We are now engaged in the process to reexamine and refine those principles and to math the next steps in our journey as a company. We continue to, we will look forwarded to sharing the outcomes of that process in the coming months and to continue to create value and deliver value for our shareholders including investors and our dedicated associates. Now, let's get to your questions.

Question-and-Answer Session

Operator

[Operator Instructions] Our first question comes from the line of Christy McElroy at Citi. Please proceed.

Christy McElroy

Hi, good morning, everyone.

Bob O'Brien

Good morning, Christy.

Christy McElroy

There were some recent press report about Boulevard Mall being marketed for sale. I think that was a recent expansion. Can you just talk about how the mall has performed since the expansion and just been trying to get a sense for the market. What kind of pricing are you looking to sell the asset and what type of buyer are you marketing to?

David LaRue

Christy, thanks for the question, and good morning. Yes, we have engage a broker to help us market Boulevard Mall. It's one of our I guess longest told assets open in the mid-60s and redeveloped over many different cycles in the business. It's in Amherst, New York, which is a suburb of Buffalo and it is not a dominant center in that market. We did recently bring that into the shopping center and that's been a great addition to the shopping center. And the traffic that they've experienced is been positive and it's been beneficial to them all.

So, once we've completed that inclusion in the mall, we determined that was just a good time for us to explore the value potential and in that property. It's not unlike other companies will do, is they look at different markets and properties and what where they said in the current syphon or opportunity to monetize that and focus and again stronger markets was just continue to be in line with our strategies that we have.

Christy McElroy

Thank you. And then there is a statement of corporate governance best practices coverage to couple of weeks ago by a coercion of corporate and asset management leaders. There was a big focus within that until cost there structures. I know you discussed this before but just in the context of the recent portment following your recent perception that you which enable so shed some additional light on the investment community's perception around the topic.

I'm wondering if you could provide an update on where the board stands on this new and your current loss.

David LaRue

Well, yes, we obviously saw the article and the principles that were outlined by major investors and certain company CEOs and the [indiscernible] share was identified in that as we don’t know and we discussed with a lot of you on the phone and investors at Navarrete since the 13-D was filed. This is an issue that is all -- has got the attention of the board. We've had many discussions in the board, that's fully updated on those discussions. And it is an issue that because of the 13-D being filed, does get discussed.

As we've talked about in the past, how our focus as a management team, and I think the boards focus is on executing, you continuing to deliver great results based upon the strategies that tip an outline. And that the governance the dual class issue is a shareholder issue. We think we've identified how to fill the or how to close the gap that exists by continuing your efforts regarding our margin expansion continue to focus on our core products and markets, deleveraging the balance sheet and that's what we are doing. As we complete that process over the coming year plus we will I think prove out that performance is the key to driving value.

And as we get to the end of our strategy, if that is not the case, then this topic will obviously have become to the board for discussion. But at this point, we are focused on delivering on our strategic objectives.

Christy McElroy

Thank you, Dave.

Operator

Your next question comes from the line of Jamie Feldman, Bank America Merrill Lynch. Please proceed.

Jamie Feldman

Thank you and good morning. I was hoping you could focus a little bit more on your comments on residential and just how supplies impacting fundamentals and I think you commented on suburban versus some of the more urban materials. But maybe just deeper dive into your thoughts on that property type and what you're really seeing on the ground in terms of ability to push trends and even leasing volume?

David LaRue

Yes. So, I think from a volume standpoint and occupancy standpoint you can see that we are continuing to be successful, that Jamie that the question is right on with what is happening in this property space today. There are large amounts of new products being delivered in cities like New York, including Manhattan, Brooklyn, Queens etcetera. San Francisco, Washington DC, and to a great extent that phenomenon that additional supply's being delivered into suburban communities as well.

It is in only the top metro markets but every urban core, Cleveland, Pittsburg, Detroit, Indianapolis is seeing an influx of rental product and the basic laws of economics prove out all the times when supply is increased even with an increasing demand I think you are going to have less pricing capacity, I think in certain markets again I guess in all markets this trend does flow, I think we heard peak of that development construction and delivery in ’16 it’s just starting ‘17 and ’18 that we see having down and so as we look at demographics both from a baby boom perspective and millennial perspective and when we look choices that demographic cohort those demographics, cohorts are making, we think that rental is a choice that is being made as we see home ownership continue to drop. We see that trend continuing in with growth that occurs naturally in our country and growth and demand for this product type we think in the long term it’s going to be this project’s – this additional supply will be absorbed by the demand and that equilibrium which again in these past years has been in clear favorable landmark and will moderate as new supply concern well again return – sort of return to the norm.

Jamie Feldman

And I guess just to put some numbers around it, can you maybe talk about on average how much can you push rents, maybe what your thoughts over the next year on that and then are you, how are you tracking on your underwriting for the development projects versus January?

David LaRue

Yes, so again we don’t breakout our comp at a live projection by product type but it’s as you recall or you may recall I stated, our year-end call with our 2015 results we are looking in the high treat percent comp and increases across our portfolio, we still think that we are going to achieve that based upon where we are happily through the year as we talked about its – a lot of that has been driven by the strength of our office and releasing that we had there. So, I see that we will continue t hit our goals going forward, pricing on an individual apartment basis, as we look at our new product being delivered it is at or above our pace and at or above our projected NOI we think that based upon the product we are delivering in the specific submarkets where that is happening, so our project in Washington it that sense of place, which I have referred to in my discussion which I think is a tracking more demand than market properties in general and so far what we delivered are projected yields are forwarding steady. So, we don’t see that a drop in our project yields.

In New York again I have mentioned, I should say we have four buildings on a construction one condo [indiscernible] and the majority of the units being delivered out of that 1000 plus construction pipeline is affordable and the demand for that product type again is in demand and supply is not an issue so we see that being absorbed very quickly and our projected returns holding on those as well.

Jamie Feldman

Okay. Thank you.

Operator

Your next question comes from the line of Sheila McGrath with Evercore, please proceed.

Sheila McGrath

I guess, good morning. Dave I was wondering if you can give us an update on your thought process surrounding telling a part of specific park in Brooklyn and where that stands?

David LaRue

Good morning Sheila and thank you for the questions. So, specific part as we mentioned on our last call we have been having discussions about the opportunity to recapitalize, we have not come to conclusion on any of those discussions, although they are ongoing that is we think for us an opportunity, a prudent to locate the market in the demand that does continue to exist in, so we continue to evaluate that and if so when we come to a conclusion either getting a deal done or not being able to proceed we will obviously inform our investors etcetera of more that stands.

Sheila McGrath

Okay, great. And then you did mention the Ballston project, I was just wondering if you could remind us what that project on entails when you think might come open and then stabilize?

David LaRue

So, Ballston just to give I guess long history – opened in 1982 and it was regional three level two departmental store mall in Arlington. Arlington is I think all of as really done well explored in terms of growth apartments and just demand in general office and in Lifestyle retail in that area, what we are doing with our partner, we brought QIC into this as we purchased one of the department stores boxes back from Massey and we are I guess turning the mall inside out where it is designed in the past it sort of turn to its back on the marketplace back on the exterior and we are going to take the roof off in as I mentioned urn it inside out we have a plan to do a residential apartment building there as well and there is office included, so we work it this is a again a good example of a place where we can create that synergy between all those different uses and serve the demand that exist in that community pocket. We are still working through final entitlements, we plan to get under construction in 2017, early 2017 and it will be a 18 plus months, 18-24 months redevelopment effort.

Sheila McGrath

Okay. Thank you.

David LaRue

Thank you.

Operator

We have another question coming from the line of Christy McElroy with Citi, please proceed.

Unidentified Analyst

Hi, it’s Michael Bevan in here for Christy. At the end of our opening comments you talked about you engaged in a process to as you said being here refined the strategic planned principle that you originally sort of came out with in 2012, focus on your core markets and products to build the sustainable capital structure and de-lever and drive operational excellence it sounds like you are now in a process to I guess refine those or change those and maybe you can shade a little bit more light in terms of what’s being done and the time line and how that will evolve?

David LaRue

Okay Mike. Thanks for the question. Yes so 2012 is a long time ago. It was coming out of one of the worst economic cycles the country ever had and what we put in place those pillars or principals. Pillars on our visual portrayal of it but principals that we live by we think we have served this well and it's created tremendous amount of value by adhering to those. I guess what we are doing it's four years ago and it's been a normal cycle for us as a company to look at our strategies going forward and we are looking at those pillars we think that they are solid at their foundation but they are always ways to examine how to take that to the next level.

What’s the next federation? What does focus mean? Sustainable capital we have defined for this period as getting to a targeted net debt to EBITDA 70 times we are well on our way to get as evidenced in our financial statements. We are going to look at that in conjunction with everything else going on the business and how we see our opportunity to allocate capital to development opportunities give new supply given demands in the market, given demographic shifts allocate capital to the balance sheet, should we do more, are we good with where we have targeted so I think it's a natural place to be when you -- of expansion that doesn't have anybody really feeling great as an expansion it's been that slow steady but we want to make sure we are reexamining those principals and making sure that they serve our investors and our stakeholders in the best way possible given new dynamics and new information that has come out since we put them in place.

Unidentified Analyst

Does that also incorporate products in terms of where you evaluate sort of the market as well as the profit types of your investment?

David LaRue

That definitely be a question Michael and again as you know and as I think other listeners are saying we have done a great job on focusing our portfolio to our quarter product types of apartment office and retail. I think the question that Christy asked earlier about Boulevard mall is part of that ongoing look at the retail part of the business does it shift where we want to be positioned as a classic operator of regional shopping centers. And every portfolio always has a value someone high end of that and someone low end and some on the middle and so we continue to as we drag to be through our operational excellence we want to make sure we are efficient in delivering services and return to the shareholders. So that in fact is on that question is on the table.

Unidentified Analyst

Are you involving outside consultant _ you had all the consultants to go through the reorganization are they playing a part in strategic plan at all or this is really driven internal my management and board?

David LaRue

So, we have again always not even not just as this current use of advisers outside advisers starting with the re-conversion in all the work that was involved with that but the reorganization so in every strategic play we have done in the past we had outside experts and outside opinion and because we don't know all the answers. And having somebody come in with the different perspective and challenge and push is we think very additive and positive to the overall process. So we think that we will do that in the future.

Unidentified Analyst

I think, I know the answer to this, I assume corporate governance is not going to be a principal you are going to have a view on or will it be part of sort of look towards the future or this is not going to be part of this plan?

David LaRue

Well, corporate governance I think we every business is focused on corporate governance so we are focused on it specific to the question you are asking us is similar what Christy asked us about the share and again....

Unidentified Analyst

Well. it's not as much a share to share which we know we expressed views, but I am just – I am trying to understand the scope of this plan in terms of strategic and planned principals as you think of updating that you have talked about the types of things you want to be investing in the balance sheet development, I just didn’t know a section of this plan we are going to say corporate governments. Maybe size of the -- what you are up, sure I mean corporate government in totality covers a lot of different things not just cost structure. So I just didn’t know that was going to be part of the plan that you put forward for the future?

David LaRue

Well yes we are again size of board is again up to the board of directors. So again something that the board directly has control and influence on but also part of that is transparency disclosure we think as we think about in the way we are formatting our new segment that will come out the third quarter that insight that readers of our and users of our financial statements will get how the business will improve that particular part of corporate governance. And so all aspects of business Michael are considered during this strategic planning process. We don't just look at one thing or another and strategy is supposed to encompassing in so we do take that seriously. We think we made great improvement in that over these past years and we will continue to strive to do that.

Unidentified Analyst

And just on perception study during the quarter I am curious what was the thing that board took at being most proud of in terms of how that strategic plan and perception study that they are most pleased about and conversely I guess what surprised them the most of the negative coming out of…?

David LaRue

Mike, I don't think I want to get into specifics of where our boards individual or collective take away was on the perception study. What I will tell you is that one we very much appreciate the input direct input that we received from everybody who participated in that that the board did hear through our outside advisers directly what the feedback was and that real time information is very useful for the board and evaluating the right strategic direction of the company. So striving get into what they think I think the best thing is that they heard what the perceptions of the community are.

Unidentified Analyst

You said - it was your job but you know.

David LaRue

I don't understand.

Unidentified Analyst

I said that thing was the job you are doing? Anyways.

David LaRue

I’ve never tried to grade my own paper. So I leave that to the comp and my dad.

Unidentified Analyst

All right. Take care.

David LaRue

All right. Thanks Michael.

Operator

Your next question comes from the line of Sheila McGrath from Evercore ISI. Please proceed.

Sheila McGrath

Yes. I guess Bob or Dave on the new segments on the reporting can you remind us what that's going to look like and then also the goal there and then are we are going to see kind of the historical re-segmented ahead of when you report or one you report earnings in November will that be the first time we see the different new buckets?

Bob O'Brien

Sure Sheila. So he took every question until this one so. You are asking me something. Anyway on the segment I think we said before really three primary segments operations developments and corporate. Operations will clearly be dropping down into product components retail apartment and office. Development will likely have a development segment as well as the land segment potentially broken out at least in the footnotes if not on the face of the financial. We think that that's going to provide David talked about better transparency into our figures. And they will be comparable to prior periods but those prior periods will be published simultaneously with our third quarter results. So we are not going to get the results ahead of time we have I feel like I am wiping my team for the past two plus years trying to get the counter years in place and the re-conversion in our segment so our teams are working very hard and very diligently to get that done. A lot of work to be done. The information is all there. We are just putting it into different buckets which we think will help the investors and the public to understand our business and for us to better explain it and provide greater transparency. So we anxious to get out other bunch of work to be done. We are making good progress but I think that's going to help a lot.

Sheila McGrath

No, I think it should be good. Also on the dividend we all know your guild is much lower than REITs and your targeting capital to deleverage. Is there any thought on when if you get to that 7 to 8 times is that a trigger event when you or the board would revisit the dividend policy?

Bob O'Brien

David pointed me again. So I think we are going to be pretty prudent about utilizing our internal generated capital internally generated capital. So certainly our goal is to continue to raise that dividend overtime. Not just better tax, but viewing it as a percentage growth overtime but as we alluded to in the comments and the questions part of going for this strategic planning across is really looking at all those things of course the dividend and the dividend yield and how we grow that dividend overtime as part of that. The dividend ultimately is the board decision as well we as management want to recommend what where we should go with that based upon both internal factors and external feedback like your comment here that we received. So we are trying to remain responsive to the feedback we get but also prudent with respect to the business in terms of how we are going to grow that. So an important component of all the things that we are going to look at certainly dividend is one of them and we will take that up as we go through our plan across this.

Sheila McGrath

Okay, great. Thank you.

Operator

Ladies and gentlemen that concludes our Q&A. I will now turn the call back to Mr. LaRue please proceed.

David LaRue

Well, thank you all very much for your investment of time and energy into not only the call but for City Reality Trust as we stated we see great results from what we have been able to accomplish and we see promises we look forward as we continue to execute on our strategies. At the end of each call I think I have always tried to point out that this business is built on the people who take part in it every day. I want to thank them once again for their ongoing effort and commitment and dedication to our strategy into our company. And I hope everybody has a good rest of the summer. So thank you very much and we will talk to you soon and again on next quarter call. Have a good day.

Operator

Ladies and gentlemen, this concludes today’s conference. Thank you for your participation and you may now disconnect. Have a great day.

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