American Realty Capital Trust Management Discusses Q2 2012 Results - Earnings Call Transcript

Aug. 1.12 | About: American Realty (ARCT)

American Realty Capital Trust, Inc. (NASDAQ:ARCT)

Q2 2012 Earnings Call

August 1, 2012 11:00 AM ET

Executives

William Kahane – Co-Founder

Brian Jones – CFO

Analysts

Thomas Mitchell – Miller Tabak

Mitch Germain – GMP Securities

Jeff Langbaum – Ladenburg Thalmann

Tom Lesnick – Robert W Baird

Operator

Good morning on behalf of American Realty Capital Trust and at senior management I would like to welcome to the Company’s Second Quarter 2012 Earnings Conference Call. (Operator Instructions).

I would now like to turn the conference over to William Kahane, Chief Executive Officer of American Realty Capital Trust. Mr. Kahane, please go ahead, sir.

William Kahane

Thank you operator, welcome everyone and thank you for participating in American Realty Capital Trust, second quarter 2012 earnings call. I am pleased to be joined today by Brian Jones, your Chief Financial Officer. Let me begin by furnishing you an overview of recent events before I turn the call over to Brian to discuss our operating results for Q2.

Following Brian’s comments I will also provide a portfolio update on our real estate holdings. Before I begin as a reminder we will make certain comments that maybe considered to be forward-looking statements under federal securities law during this call. The company’s actual future results may differ significantly from the matters discussed in any such forward-looking statements. I personally I am extremely pleased with our second quarter results and confident in our recently published earnings guidance through year end 2012 and for calendar for 2013. That confidence is a result of our business model namely investing in real estate at least long term to strong corporate credit tenants, investing in real estate net leased long term; this model offers few surprises on the downside.

It is being carefully constructed on a diversified portfolio of well-located properties leased for an average remaining primary term of 13 years to high credit quality tenants on a basis we are operating and capital expenses are borne almost entirely by the tenants themselves. With no material lease expirations in portfolio until 2018. Our strong first half and particularly strong second quarter operating results allow me to announce a couple of noteworthy events, first the company’s Board of Directors has approved an increase in the current annual dividend of $0.70 per share to $0.71.5 per share commencing September 15, 2012.

This reflects a 2.14% increase in the dividend, second in clarifying our previous FFO and AFFO guidance for 2012 and providing new 2013 guidance we are forecasting 13% earnings growth over that period at the mid-points of each range. Brian will discuss our guidance in further detail in his prepared remarks. Earnings growth is anchored in part on balance sheet improvements; let’s recap several corner stone events that speak directly to strengthening our balance sheet and our continuing progress to achieve an investment grade credit rating.

Number 1, we completed our sales tender offer of close to 21 million shares of common stock in April 2012 at a cost of 220 million reducing total shares outstanding to approximately a 158 million shares. We funded the prepayment of a $161.2 million of secured mortgage debt on April 17, 2012 resulting in a net annual reduction in interest expense of $4.3 million.

We secured a permanent term loan of $235 million led by Wells Fargo securities on July 2, 2012. This replaced the $200 million interim term loan previously funded by Wells Fargo. Next we increased our revolving line of credit with RBS Citizens from 220 million to 330 million on May 4, 2012.

We were upgraded by two major credit rating agencies reflecting our balance sheet strength. Moody’s upgraded our rating from a Ba3 to Ba2 on April 5th with an adjusted score of BAA and another major rating agency upgraded us by two notches from a B++ to a BB with a stable outlook in June. We were incorporated into several different industries most notably the Russell 2000 and the FTSE NAREIT Equity REIT Index.

For the remainder of this year we will continue to focus on improving our balance sheet, growing the company’s assets and earnings per share through acquisition opportunities accretive to the dividend similar to the $64 million of new acquisitions recently announced on July 12, at an average cap rate of 8.66%. I will now turn the call over to Brian Jones our CFO to discuss in further detail our operating performance and earnings guidance, I will then take the call back and provide you a portfolio update before opening the call up to questions. Brian?

Brian Jones

Thank you, Bill, I am happy to report that second quarter 2012 results are in-line with our budgets as well as our previously provided FFO and AFFO guidance. I will comment briefly on our financial statements and provide a few highlights of the financial results for the quarter.

I will then discuss our clarified 2012 and preliminary 2013 FFO and AFFO guidance. Starting with the income statement, total revenue increased 57% in the second quarter 2012 over the same quarter 2011, revenue for the quarter was approximately 45.6 million compared to 29 million in 2011.

For the first half of the year revenue increased 83% from 49.8 million in 2011 to 91.3 million in 2012, these increases reflect over 500 million of new acquisitions over the past year. Net operating income increased 56% to 43.7 million for the second quarter compared to 28.1 million in 2011.

For the first half of the year NOY increased 78% to 86.6 million compared to 48.7 million for 2011. Operating expenses for the quarter totaled 32.3 million, depreciation and amortization expense was 26.2 million of that an increase of 10.9 million over the comparative quarterly period. Obviously depreciation expense increases as our property portfolio continues to grow.

General and administrative expenses for the quarter were 3.7 million and are right in line with our annualized budget. G&A this quarter includes 650,000 of non-cash equity based compensation expense accrued as well as a 1.1 million seasonal expense for state income and franchise tax is paid.

As we mentioned in our first quarter call we expect annual G&A for the company as self-administered to be between 9 million and 10 million per year. Inclusive of equity based compensation, year-to-date is running on-budget and we believe that 9 million to 10 million of annual G&A continues to be the right level for now.

We also have spent some additional 400,000 of cost related to the listing during the second quarter. These were primarily transfer agent cost and this should be the end of the listing related expenses. As Bill mentioned there was a lot going on during the quarter on the balance sheet and the interest expense line, we increased our line borrowings by 280 million to fund the tender offer and successfully funded the $200 million interim term loan with Wells Fargo. We used net proceeds from that loan to repay a 162 million of high cost mortgage debt with a remainder going to reduce the balance on the revolver. In all interest expense for the quarter was 10.1 million up 1.3 million over 2011 and up 200,000 over the first quarter.

On a related note our coverage ratios remain strong, with interest coverage at 4.1 times and fixed charge coverage at 3.9 times. Net debt to total market cap is approximately 35% and debt to annualized EBITDA is approximately 5.5 times. For the quarter net income available to common stock holders was 4.3 million or $0.03 a share, this compares to a net loss in 2011 of 9.5 million or $0.09 a share. Funds from operations or FFO for the second quarter was 30.7 million or $19.3 a share compared to the first quarter adjusted for listing and other non-recurring expenses of 30.9 million or $18.9 per share. FFO per share grew in the second quarter primarily as a result of interest expense savings and fewer shares outstanding.

Adjusted funds from operations or AFFO for the second quarter was 30.4 million or $19.1 per share compared to 31.1 million or $0.19 a share for this first quarter. Significant adjustments from FFO to AFFO continued to include straight line rents and amortization of deferred financing cost and equity based compensation. These results are right in line with our previous provided FFO and AFFO guidance.

Returning to the balance sheet, we believe we have established and expect to maintain a conservative and very safe capital structure. At quarter end we had 511 million of mortgage debt, 200 million of interim term loan and 200 million of revolver outstanding. We substantially recapitalized and upsized the term loan to 235 million and reduced the revolver balance with the net proceeds. This is in addition to upsizing the revolver from 220 million to 330 million last quarter both of which I think demonstrate our ability to access debt capital markets. The term loan recap pushed our revolver balance down to just a 168 million increasing the unused borrowing capacity on the $330 million to a 162 million. This liquidity is more than adequate to fund projected acquisition volumes for the rest of 2012.

At quarter end the effective annualized rate on our revolver was 2.32% or a LIBOR plus 205 and the effective annualized rate of the term loan was 2.62% or LIBOR plus 235. We are monitoring the five year SWAP rate closely and expect to lock that in sometime in the next few months depending on market conditions.

We continue to maintain a simple capital structure with no preferred equity, no minority OP unit holders and a very small number of joint venture interest. As we discussed last quarter in April we received a one notch upgrade to BA2 on our corporate credit rating for Moody’s. Another major credit rating agency gave us a two notch upgrade to BB in May, so we continue see positive moment on the credit ratings front and as Bill mentioned one of our primary corporate objectives is reaching and maintaining an investment grade credit rating.

In March, we provided annualized FFO and AFFO guidance for the 12 month period commencing April 1, 2012 in a range of $0.79 to $0.82 per share which includes the impact of a $100 million of acquisitions funded with available balance sheet liquidity. We are now clarifying our guidance to provide data for the calendar year ending December 31, 2012 as well as initial guidance for 2013.

We are projecting based on first and second quarter FFO per share of $18.9 and $19.3 respectively and adjusted first and second quarter AFFO per share of $0.19 and $19.01 respectively. At full year 2012 FFO and AFFO should range between $75.05 and $77.05 per share. This guidance is in-line with our previous estimates and is still based on $100 million of acquisitions funded with available liquidity. As previously noted, we have a strong liquidity position and financial capacity and therefore do not expect the need to issue equity this year.

Preliminary 2013 guidance is for FFO to range from $82.2 to $85.2 per share and for AFFO to range from $0.84 to $0.87 per share. This projection assumes 300 million of acquisitions in 2013 and factors in our 100% physical and economic occupancy rate and zero lease expirations in 2012 or 2013.

AFFO benefits from a projected increase in cash rents of more 1.2 million in 2013 or nearly 1.5 million on a 2012 to 2013 year end run-rate basis. We do not take into account any potential interest cost savings that could result from further recapitalization of our mortgage debt or from potential rating agency upgrades. In summary, the strength and stability of our operating strategy is evident in the consistency of our financial results. We believe the growth targets set in our guidance are modest and readily achievable. We currently have excellent liquidity to fund future growth and believe our overall balance sheet remains very healthy and base.

And there is the potential for further upside as we continue to strengthen the balance sheet and reduce our secure volume. Let me now turn the call back over to Bill who will give a brief portfolio update.

William Kahane

Thank you Brian, as of June 30, 2012 the company have 486 free standing single tenant at lease properties totaling 15.6 million rentable square feet located in 43 states plus Puerto Rico. This compares to 368 properties totaling 11 million square feet for the same time period in 2011. ARCT’s portfolio is comprised of 62 corporate tenants operating in 20 distinct industries. The weighted average remaining primary term of the portfolio is 13 years, with negligible lease expirations in the next five years, 75% of annualized rental income is from tenants with investment grade ratings. From a majority or major credit rating agency, for the first half of the year we acquired three Tractor Supply retail properties, a Family Dollar store and an expansion space to a previously acquired FedEx distribution facility all are 100% occupied for an average capitalization rate of 8.5%.

Keeping in line with our earnings guidance on July 12, we announced they are CT and entered into agreements to acquire approximately $64 million of new properties which include the Family Dollar and FedEx I previously mentioned. These purchases are for multiple sellers and also included the Shaw's grocery store, seven Ruby Tuesday restaurants, 15 additional Family Dollar stores, five Dollar General stores, a Walgreens Pharmacy and a (inaudible) distribution facility which we own and has been expanded. The portfolio has an average remaining lease term of approximately 12 years and is priced at an average cap rate of 8.66%.

The acquisitions will add two new tenants to the ARCT property portfolio bringing the company’s total number of discrete corporate tenants to 64 while maintaining at almost 74% investment grade tenancy, an increasing our geographic presence to 44 states. The acquisitions are in-line with the company’s strategy to achieve diversified portfolio with the 60% concentration in the retail sector.

It's worth pointing out on this call that expansion opportunities are an underappreciated aspect of our distribution warehouse portfolio. The greatest long term risk to say a FedEx distribution facility is not the package volumes drop leading to a closure of a site. Rather it's the risk that volumes increase and the tenant outgrows the facility, therefore we typical acquire these properties with additional developable land included, it lowers our initial yield to pay for this expansion land but leads the long term value creation opportunities as well as providing strong vacancy risk mitigation.

As it relates to rents for the second quarter 2012 cash rents on the 318 same store properties held for full period in both ’11 and ’12 increased 1.5% to 24.7 million compared to 24.3 million for the same time period in 2011. The company since its inception has had no lease turnover, no dark stores, no lease renegotiations. ARCT’s investment grade portfolio percentage increased during the quarter which is weighted by average annual rent to 74.6% from 71.1% in the first quarter of 2012.

Our top 10 tenants weighted by annualized rent are all rated by a major credit rating agency, 84% were rated investment grade. The company intends to maintain a high level of investment grade tenancy as well as continuing to diversify its tenant base. Approximately, 92% of the company’s tenants are rated by major national credit rating agency. ARCT’s real estate portfolio continues to perform according to our acquisition underwriting and operating budgets and provide sufficient lease revenues to more than support our annualized dividend.

Additional, comprehensive data can be found in the supplemental information on the company’s second quarter 2012 operations in the current report on Form 8K that was filed with the SEC on Tuesday, July 31, 2012. In conclusion, we will continue to focus on maintaining portfolio quality, increasing earnings per share, reducing capital costs, achieving an investment grade credit rating and building our capacity to grow our dividend overtime. Earnings growth will result from accretive acquisitions and contractual rent growth, which should allow us to increase distributable cash flow.

We continue to be very excited about the company’s strong market position and compelling growth prospects and we are grateful for your ongoing support. We will now open the call to your questions. Operator?

Question-and-Answer Session

Operator

(Operator Instructions). And the first question we have comes from Thomas Mitchell of Miller Tabak.

Thomas Mitchell – Miller Tabak

In thinking about the sort of pace of your acquisition activity, I realize that it can be opportunistic and depend more on what’s available than on your own planning but is it reasonable to assume that in separating from the former sponsor and becoming totally independent and as well as operating as a public company fully and completely, you choose to slow down a little bit and now are more open for business or is that still more or less your plan is to be very, very sort of haste in your acquisitions.

William Kahane

We have always been extremely deliberate as far as our strategy is concerned, I wouldn’t say we slowdown, I would say we focused inward for a period post listing in terms of our balance-sheet improving our credit rating buying in some higher cost debt, doing some engineering if you will. We did indicate in our guidance that we would buy a $100 million of properties this year. We are 2/3rds announced and I am extremely comfortable at that level, we further indicated with our guidance for 13 that we will buy 300 million of assets, if anyone has followed the history of this company you know we are serial acquirers. 12 months prior to listing we bought over $0.5 billion of properties and prior to that we are on a pace of about $1 billion of net lease properties consistent with our strategy each and every year. We are right sized currently for our acquisition volume and where we to substantially increase that volume you might see us begin to build out our acquisition platform some but it need not approach what we look like previously when we were externally managed and buying much larger volumes of property.

You give me an opportunity to talk about our pipeline as I say 2/3rds announced under contract to close this year so we need to buy in round numbers about 35 million of additional properties and we have got earmarked round numbers about three times that volume comfortably. So we will pick and choose the right properties consistent with the strategy to close over the next six months, five months and I am extremely comfortable given what’s in the pipe for 2013 to be able to say that as a function of that aspect of our guidance we should get there within the parameters announced.

Thomas Mitchell – Miller Tabak

The second part of my question, it's a little different, I noticed that you have a certain percentage of your portfolio that is modified gross leases. How much is that and is that primarily Walgreens?

William Kahane

Yes actually modified growth refers to our GSA leases 6.5% and modified gross needs that we have to allow for a small percentage of leakage in terms of expense growth between an inflation rate and the actual expenses incurred, we reserve that level at the acquisition but those are all government leases.

Operator

The next question we have comes from Mitch Germain of GMP Securities.

Mitch Germain – GMP Securities

What was your full year guidance for the year, I guess it's 0.7555 to 0.775 for 2012, where this time I guess in the first quarter for the year? Is it unchanged?

Brian Jones

The change really was from looking at things on a 12 months perspective basis, starting with the listing to converting that to the more conventional view of looking at the company holistically for the calendar year. So there really was no adjustment in any our assumptions, we do more precisely track our projected $100 million of acquisitions now that we have got greater visibility on the pipeline and closings that we did when the original guidance was announced but the real change in the guidance was to move from an annualized guidance reflecting the company as only as a publically traded internally advised self-advised company moving to a full calendar 2012 year.

Mitch Germain – GMP Securities

All right and then how should we look next year into your 300 million of acquisitions with regards to funding? Obviously you have an according feature in the line but clearly you are going to probably want to put some long term capital on some of that, what’s your thoughts there?

William Kahane

We actually anticipate that the next year’s acquisitions are going to be leverage neutral to deleveraging on the balance sheet, so there is an anticipation that we will be acquiring both debt and equity for 2013. I think we have available to us beginning next year a whole bunch of different options as far as how we raise that capital, amongst the ideas that the bankers have floated of course are larger offering but I think because of the way that we but I think because the way that we buy and I think it's reflected in the 65 million that we announced last month. You can see the benefits of using an aftermarket (inaudible) program simply because it allows us to better match fund, the acquisitions again given us the relatively small size of the acquisitions and that can sort of continuous nature of how we acquire as well as the fact that doing an ATM is far, far more cost effective from an underwriting spread as well as the discount perspective.

Mitch Germain – GMP Securities

Last question, conversation with Moody’s regarding a potential another upgrade, any update on status sir?

William Kahane

We have indicated that we would have a discussion with Moody’s following the completion and announcement of our second quarter results, so now that we have done this we will be speaking with them again shortly.

Operator

And next question we have (inaudible).

Unidentified Analyst

Couple of questions, what did I understand that the overall cap rate on the total portfolio right now is 8.66?

William Kahane

Not on the overall, the most recent acquisitions the $64 million of acquisitions we mentioned we are buying them in at 866 cap rate that’s the average cap. The ingoing yield is 8.32% and the term, the average weighted term is just under 12 years.

Unidentified Analyst

Has anyone come-up with a current book value?

William Kahane

A current book value?

Unidentified Analyst

Yes what would you say per share the properties were, has anyone broken that done to a per-share basis?

William Kahane

That’s really two different questions, I mean our book value would be the value of the properties as shown on the balance sheet, I think what you are asking for is more of a net asset value and I believe that each of the three research analyst covering has have an estimated net asset value per share, I don’t have the research report sitting in front of me to tell you exactly what those are.

Unidentified Analyst

All right and what percentage of the properties would you say we have equity, is it 60%, 65% currently?

Brian Jones

Much of the equity capitalization in the portfolio?

Unidentified Analyst

Yes.

Brian Jones

65.

Unidentified Analyst

65%.

Brian Jones

Approximately 35% debt to total market, net debt to total market cap.

Unidentified Analyst

And do you primarily deal with one or two lenders when you borrow money secured by the properties and if so who are they?

Brian Jones

We have a very broad range of lenders that we work with on a secured basis, if you look at page 17 of our supplemental package we include all of our mortgage notes payable listed by lender. I don’t know how many there are exactly I would have to count but it looks like there is at least a dozen different lenders on this schedule. I think it's important to note that it's not likely that we will be using secured debt going forward as we finance the company. We are really focused on moving from a secured borrower to an unsecured borrower, being an unsecured borrower provides us with far greater flexibility and it's certainly one of the hallmarks of an investment grade rated company is decreasing dependence on secured debt.

Operator

Next we have Jeff Langbaum of Ladenburg Thalmann. Please go ahead.

Jeff Langbaum – Ladenburg Thalmann

The first question out of the 64 million of acquisitions that you announced in July, how many of them have actually closed to-date?

William Kahane

It's three representing what portion to 64. He wants to know what percentage of the dollars.

Jeff Langbaum – Ladenburg Thalmann

And were those closed during 2Q, right so nothing has closed subsequent to the quarter?

William Kahane

Yes they were two closed and one that’s closed subsequent to.

Brian Jones

To be specific, Jeff if you are interested the FedEx expansion in Kent, Ohio is close that was for 1.7 million, we closed the Family Dollar in Stonewall, Mississippi that was for 720,000 and the Family Dollar in Corrigan, Texas, $870,000 also closed.

We tend to find pretty granular.

Jeff Langbaum – Ladenburg Thalmann

But it's still over 60 million that is going to be at least call it mid-way through the third quarter before it starts to impact numbers.

Brian Jones

We have and that’s what we model, we have closing schedules this week, next week, I mean almost every week looking forward, it's one of the benefits of how we buy.

William Kahane

The model mimics our closing dates, remember there is not a lot of, there aren’t large transactions in here, they are going to move the needle per say but we close plus or minus within five days when we anticipate closing and these should all close on schedule as forecast as budgeted.

I realized Jeff it makes a little bit more difficult to model given the way that we do it but.

Jeff Langbaum – Ladenburg Thalmann

Yes just wanted to get a sense of whether or not it had already too started to flow or when it's going to flow it, so that’s helpful. Thank you. On the G&A you mentioned the 1.1 million of seasonal tax related expenses in the quarter, does that completely back out, back itself out going forward but to recur again kind of this time next year or can you give you a little color on that kind of in terms of looking forward?

William Kahane

Yes that’s our the 1.1 million was our state income and franchise taxes for the year, so we are done with that line item expense for the year.

Then unfortunately they let make us pay taxes every year, so it will occur next year.

Jeff Langbaum – Ladenburg Thalmann

The first quarter G&A run-rate then is more realistic for kind of third and fourth?

William Kahane

I wouldn’t look at the first quarter holistically because remember the first quarter includes two months of operations as they externally advised company. I think the best way to look at it really is to continue to focus on the 9 to 10 for the year.

Jeff Langbaum – Ladenburg Thalmann

Okay got it and then finally also on the income statement in the quarter you had million in change run-up from first quarter, second quarter and other income, what was that related to and how much of that is sustainable going forward.

William Kahane

Approximately a million of that was a onetime gain, we sold an investment that we had held and so there was a gain recognized on the sale of that investment. So about a million of it was one time.

Operator

The next question we will have comes from Tom Lesnick of Robert W Baird.

Tom Lesnick – Robert W Baird

Just standing in here for Paula Poskon, first just a house keeping question, on what share count is guidance based, is that basic, diluted or what?

Brian Jones

It's diluted, our share comment basic and diluted is pretty close, really just relates to the restricted share difference but it's based on diluted.

Tom Lesnick – Robert W Baird

Great and then could you give us some color on the range of cap rates across the tenant industry types that you are buying. So for instance dollar stores, drug stores, quick service restaurants et cetera.

William Kahane

Sure I would be happy to. Let’s do dollar stores, first what we are seeing in terms of average capability over the period and the period tends to be for Family Dollar it's 10 years, for Dollar General it tends to be 15 because we buy new is about 8.5 average cap with regard to you are asking fast food? Fast food will depending on the operator but we are kind of in that same range I would say 8 in the quarter to 8.75 average cap and that’s all corporate credit. Remember that we only buy corporate credits so we are only buying corporate stores, no franchises so we have clarity and visibility on the quality of the underlying credit and in term the ability of the tenant in fact to pay.

Drug stores like Walgreens or CVS, they vary, Walgreens tends to be flattened I would say somewhere between best stores would probably be high-6’s, low 7’s, secondary and tertiary markets, low to mid-7 caps on average.

Tom Lesnick – Robert W Baird

And how do you see those cap rates trending, have they been trending lower over the past few quarters?

William Kahane

No we are not seeing, the truth of the matter is we are not seeing a lot of moment in cap rate, we are seeing the strongest properties holding out for lower caps or higher prices. They don’t seem to be trading actively. There is enough kind of uncertainty and bad data baked into the economy so that people are still cautious and as a result we haven’t seen a lot of movements even in better credits and therefore we are able to buy depending on the credit and the use, in the low to mid-7s to mid to high-8s and as you know our financing costs tend to run fixed in the high-2s, low-3s.

So the spread using modest leverage gets us to comfortable coverage and enables us to continue to buy accretively and in volume.

Tom Lesnick – Robert W Baird

Finally do you have a long term target of AFFO payout ratio for your dividend?

Brian Jones

I don’t know that I would say that we have a long term target, I would say that I would expect our AFFO, the payout ratio to continue to decline slightly, I think our AFFO growth will exceed, our dividend growth in the long term but certainly given the high level of certainty over the revenue stream. We are comfortable with even a much higher payout ratio than we have right now but I think that ultimately the dividend level is at the discretion of the Board and I think that they are the idea for the time being is that our AFFO will grow faster than the dividend.

William Kahane

Remember that this company was built on the notion of durable dividend and this Board which was the same Board that built the company is transfixed on making certain that there is limited downsized risk and ample coverage and the ability to continue to grow prudently that dividend level.

Operator

(Operator Instructions). It appears that we have no further questions at this time, we will are going to conclude the question and answer session. At this time I would like to hand the conference back Mr. Kahane and management for any closing remarks, gentlemen.

William Kahane

Thank you operator. At this point I would simply like to thank you for joining us today. We make an effort to communicate this company’s performance and our thought process through our filings, through our letter to our investment base, through our fact sheets and through making ourselves available to you. Should you have any additional questions, issues or concerns? So having said that we hope the call has been informative and we will look forward to speaking with you next quarter. Thanks so much for joining.

Operator

And we thank you sir and to the rest of the management for your time. The conference is now concluded, we thank you all for attending today’s presentation. At this time you may disconnect your lines. Thank you and have a great day.

Copyright policy: All transcripts on this site are the copyright of Seeking Alpha. However, we view them as an important resource for bloggers and journalists, and are excited to contribute to the democratization of financial information on the Internet. (Until now investors have had to pay thousands of dollars in subscription fees for transcripts.) So our reproduction policy is as follows: You may quote up to 400 words of any transcript on the condition that you attribute the transcript to Seeking Alpha and either link to the original transcript or to www.SeekingAlpha.com. All other use is prohibited.

THE INFORMATION CONTAINED HERE IS A TEXTUAL REPRESENTATION OF THE APPLICABLE COMPANY'S CONFERENCE CALL, CONFERENCE PRESENTATION OR OTHER AUDIO PRESENTATION, AND WHILE EFFORTS ARE MADE TO PROVIDE AN ACCURATE TRANSCRIPTION, THERE MAY BE MATERIAL ERRORS, OMISSIONS, OR INACCURACIES IN THE REPORTING OF THE SUBSTANCE OF THE AUDIO PRESENTATIONS. IN NO WAY DOES SEEKING ALPHA ASSUME ANY RESPONSIBILITY FOR ANY INVESTMENT OR OTHER DECISIONS MADE BASED UPON THE INFORMATION PROVIDED ON THIS WEB SITE OR IN ANY TRANSCRIPT. USERS ARE ADVISED TO REVIEW THE APPLICABLE COMPANY'S AUDIO PRESENTATION ITSELF AND THE APPLICABLE COMPANY'S SEC FILINGS BEFORE MAKING ANY INVESTMENT OR OTHER DECISIONS.

If you have any additional questions about our online transcripts, please contact us at: transcripts@seekingalpha.com. Thank you!