LodgeNet Interactive CEO Discusses Q2 2011 Results - Earnings Call Transcript

Includes: LNET
by: SA Transcripts

LodgeNet Interactive Corp. (OTC:LNET) Q2 2011 Earnings Call July 27, 2011 5:00 PM ET


Ann Parker – Director, IR

Scott Petersen – Chairman & CEO

Frank Elsenbast – SVP & CFO


Michael Demaray – Elevated Capital

Sophia Lee [ph] – Morgan Joseph

John Corbett [ph] – Veney Management [ph]


Good day, ladies and gentlemen, and welcome to the Q2 2011 Earnings Call. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session and instructions will follow at that time. (Operator instructions) As a reminder, this conference is being recorded.

I would now like to introduce your host for today’s conference, Ann Parker, Director of Investor Relations for LodgeNet Interactive. Ms. Parker, you may begin.

Ann Parker

Thank you, operator. Good day, everyone. I’d like to thank all of you for taking the time today to listen to our second quarter 2011 conference call. You should have received copies of our earnings release. If not, please call me at 605-988-1000, we’ll make sure you do get a copy.

Our speakers for today’s call will be Scott Petersen, Chairman and CEO of LodgeNet and Frank Elsenbast, our Senior Vice President and CFO. Scott and Frank will review our second quarter 2011 earnings and we’ll then welcome your questions and your comments.

This call is being webcast live over the internet through our company website www.lodgenet.com. We have also slides posted on our website, which correspond with today’s comments and they can be found under the Investor section.

Before we get started, I’d like to remind you that some topics to be discussed today that do not relate to historical performance may include or constitute forward-looking statements within the meaning of the Federal Securities laws and are subject to risks, uncertainties and other factors that could cause actual results, performance or achievements of the company to be materially different from those expressed or implied by such forward-looking statements. Certain of the risk factors which could affect the company are set forth in the company’s 10-K and other filings.

With that said, I’ll now turn the call over to Mr. Scott Petersen.

Scott Petersen

Thank you, Ann, and good afternoon, everyone. In the second quarter, we continue to make great progress on our strategic initiatives, and our results achieved all of our guidance metrics.

Frank will cover the details of our financial results in a moment, but a couple of financial data points really caught my attention.

First, operating income was up 35%, driven by a 10% reduction in our operating expenses. I think this shows that we’re driving operating efficiencies across our business and being very conservative in how we operate our company during these very interesting times.

And second, if you exclude the extra interest expense we incurred under our interest rate swap agreements, we were net income positive during the quarter. Although swap agreements expired in June 30, some in the third quarter, our interest expenses will be some $4.5 million less, when we posted for the second quarter this year. And I think even more importantly this signals that we are reaching the net income inflection point that we have been driving towards over the past several years.

Profitability is on the horizon in part because of our more efficient operating cost structures, but more importantly is because of the revenue growth we’re beginning to generate from our many strategic initiatives. Under the umbrella of revenue diversification, we’re continuing to see substantial revenue gains from our strategy of selling more services to our hotel customers.

During the quarter, per room revenues from all hospitality revenue sources beyond the sale of entertainment to guest increased nearly 10%. And as a result, our average total revenue per room within our hotel business was almost flat as compared to last year.

And our Healthcare group delivered revenue, which is up 130% over last year, thanks in great part to the installation of our interactive patient system at the prestigious Cedars-Sinai Hospital in Los Angeles, California.

In addition, we’re beginning to realize significant results from the strategic initiatives we launched last year to revitalize our traditional interactive television business.

We announced Envision, our next generation cloud connected television platform in June of 2010. And by June of this year, we had completed the base development and installed a compelling technology platform in key hotels within the Four Seasons, Hilton, Hyatt and Starwood brands. And we’re seeing significantly higher guest engagement and usage with this new system. And today, we just signed a new agreement with Starwood, which I’ll tell you more about in a few minutes.

Also last fall, we reorganized our management team to create our Interactive and Media Networks group to focus on driving greater revenue out of each and every installed room. In June, that team launched what we internally dubbed out VOD 2.0, and we are seeing greater and guest usage in higher Hollywood movie revenue within that base.

Now, before I turn the call over to Frank to walk through the financial details of the quarter, I would like to take a few minutes now to further focus on our new Envision system, our VOD 2.0 initiative, and our newly formed healthcare subsidiary.

If you turn to Slide #3 of the slides that we posted on our website, let’s review the progress we’re making with Envision. As I said, we announced Envision one year ago at HITEC, which is the hotel industry’s annual technology trade show.

With Envision, our goal is to enhance and deliver a great guest experience, presenting travelers with the content and information they need for a productive and relaxing trip whether it is sourced from the Internet or accessed from our edge servers and we’ve designed Envision to also give hoteliers access to the power of interactive television platform they drive their bottom-line and overall brand experience.

At this year’s hi-tech event, we announced that we had successfully delivered on this vision and our booth traffic is the highest, I could remember and that’s been a point to hi-tech now for over 20 years.

In onshore year, our team completed the core developments in initial applications. The new system was released to our sales organization and as the day of the second quarter we had Envision installed in nine properties including hotels within the Four Seasons, Hilton, Hyatt and Starwood brands.

I’m also pleased to announce that we just signed the new master agreement with Starwood, which once again grants us a preferred provider status in which paves the way for their hotels to begin upgrading to the new Envision platform.

We are currently finalizing the Envision apps packages that they would like to see within each of their various brands, the upgrade activity should follow shortly thereafter and given the Starwood’s industry leadership in branding and marketing, we believe this new agreement represents a great endorsement of Envision and the value that will bring to the hotel industry.

I should also note that we are also in active discussions with all of our other major hotel customers and have seen solid increase in Envision contracting activity, which we believe will grow through the balance of the year and into next. So I am very pleased with the acceptance and excitement we are seeing from hotel with regard to Envision.

At the same time, we're also getting very positive responses and results to our new Envision system from our hotel guests. One of our key success metrics for Envision is driving guest engagement with our interactive system and so far we’re seeing that guest are accessing the travel and hotel information on the system at a rate three times greater than our former platforms. Actually, we’re also very pleased about this increased engagement.

And lastly, I would tell you Envision represents a win-win value proposition for our hotel customers and our company. We’re demonstrating that hotels can increase the revenues from everything from driving in-room dining to onsite amenities and they can decrease operating cost by using our evolving suite of interactive television apps.

And we in return financially benefit from hotels paying us monthly subscription fees for the usage of those applications. I guess you might change the basic software as a service business model. Our basic package goes for about a dime a day and that incremental $3 of top-line revenue drives about a 25% increase in the cash flow per room we generate over our standard high definition system.

And one of the other key factors with Envision is that it is just a software based upgrade for our 280,000 hotel rooms that already have our Hi Definition system. So we also have a sales focus on taking Envision back to those customers in addition to converting our existing analog base.

If you turn to slides #4 and #5 we present the data there that we are experiencing within the rooms that have the new VOD 2.0 merchandiser. Now, the goal this marketing initiative is to refresh the value proposition of our entertainment services, get more customers into our store and drive higher overall revenues.

With VOD 2.0, we’ve introduced three tiers of pricing, including what I would call a first to the consumer pre-DVD tier at premium price in the mid-teens, another price tier for the DVD window at around $10, and then special daily deals at less than $5 for the value consumer.

Same time we refresh the onscreen look and feel and the system now promotes a marketing message that drives home the point and we have a very unique and very early window for Hollywood movies generally 60 days before DVD release and 90 days before it’s available on Netflix.

Now, the rollout of VOD 2.0 and about 1.1 million rooms in June, we saw increased guest browsing of movie titles, that increased by about 20% to 25%, we sold around 15% to 20% more movie tickets for Hollywood titles, and we saw increased Hollywood movie revenue by about 5% to 10% in those rooms.

Now, if you go to slide #5, you see some further detail on this. And a point here is that even though guests have the option of purchasing value-based titles for only about $4.99, they predominantly are continuing to buy titles that can only be watched in our unique free DVD release window.

So now while guests were browsing and the browsing was split roughly 55%-45% between the newest movie title category and the daily deals, almost 60% of the buys were of those premium VOD titles that came at about a $15 per viewing. Of course, that’s translated into about 75% of our theatrical movie revenue. And interesting enough, the biggest revenue lift we saw came within our analog base of rooms, as compared to Hi Definition.

Overall, I would say this tells us that the guests value our entertainment offerings and that our market is really about the busy traveler, one who sees the titles they missed in the theatre, and that by giving lower price options to guests were also increasing our overall guidance.

Now, our movie marketing team is also focusing on other merchandizing opportunities, some of which you can see on Slide #6. So in addition to these new pricing tiers I just talked about, we are also offering guests the ability to purchase titles with a credit card versus just billing it to their room. That option is now available in about 130,000 rooms. And of those rooms, about 13% of guests are electing that purchase option. About 23% of all mature titles are purchased through this format.

So based on this success we’ll continue to push out this purchase capabilities into more rooms over the next year and during the second half of this year our team will also be testing other alternate payment options, such as promo codes and coupons and those types of activities.

We are also charging change of Odyssey [ph] when the television turns on. Actually, now it’s towards the protocol presented with our new Envision system. So rather than TV turning on to our traditional linear welcome channel, in about 430,000 of rooms, it now turns on to the interactive menu where you could find consider app at our primary storefronts. Our testing shows that this format increases revenue by about 5% over the traditional approach. So our team will continue to push this new protocol into more and more rooms over the next year.

And lastly, based on all of these activities of the merchandising team, we are very pleased to announce that we generated higher Hollywood movie revenue per room in June of this year than we did one year ago, and that trend is continuing through July. June Hollywood revenue was up about 4%, and July is tracking about 6% higher on a per-room basis as compared to last year, and this is the first time we’ve seen positive comps period-over-period just the start of the great recession. So, I’m cautiously optimistic that our strategic focus on driving higher movie revenues is starting to produce real and lasting results.

Lastly in Slide #7, it highlights our recent announcement regarding our healthcare business. Effective July 1, we created new healthcare subsidiary to reinforce our focus and commitment to this very promising market, which produce record income during the quarter.

We have a dedicated subsidiary will allow us to better pursue opportunities with federal and military hospitals and federal healthcare programs in addition to signaling to the entire healthcare industry of our serious commitments at others space. Today, we have 60 hospitals installed and we have another 10 of waiting installation.

So at this time, I’m going to turn the call over to Frank Elsenbast, our CFO for further comments and color on our results, and then we’ll go straight to your questions. Frank?

Frank Elsenbast

Thank you, Scott, and good afternoon. LodgeNet’s second quarter results were in line with our guidance and showed continued progress on several strategic and financial metrics for the company. During the quarter we continue to focus on revenue diversification, cost containment and our HD room growth. Our profitability improved significantly with operating income increasing 35% versus prior year, as we continue our drive towards positive net income.

I'll take the next few minutes to review our financial results in more detail referring to the slides issued this afternoon along with the press release. Starting with our revenue results on Slide #8, revenue in the second quarter was $106.6 million, which was within our Q2 guidance range and 5.7% below last year.

Revenue growth of 14% in our System Sales division and a steady performance in hotel services partially offset the revenue decline in guest entertainment, which was down 7.8% versus prior year on a revenue per room basis.

Our Healthcare business achieved record revenue in the quarter at $3.2 million, which is an increase of 130% versus prior year. The healthcare room base is now nearly 14,000 beds at 60 facilities across the United States. With a backlog of 10 facilities, we expect this business to show continued growth through the balance of the year.

On Slide #9, you will see sales performance by product line on a revenue per room basis for the second quarter. Revenue per room of $21.09 is just below last year’s results as we see the continued improvement in our growth businesses offsetting the majority of the decline in Guest Entertainment revenue.

Over the past few quarters, our revenue per room trend has been improving as the decline in Guest Entertainment is moderating, and we deliver strong results in our growth businesses. We expect this trend to continue through the balance of 2011 due to several factors.

The overall quality of Hollywood movies has improved versus last year, and the pipeline of movies schedule for release in the second half of this year performed better at the box office than the 2010 line up.

The launch of VOD 2.0, which Scott discussed earlier, has shown the potential to reinvigorate our Guest Entertainment business by getting more customers into our store with creative merchandising programs and tier pricing that give our Hollywood films a much broader appeal. Alternative payment options and improved many navigation also contribute to improve Guest Entertainment performance.

And finally, the improvement of our growth initiatives on a per room basis has been very consistent over the last year. And this quarter’s 10% growth rate is a modest improvement from that trend. We believe these businesses in total can continue to achieve revenue per room growth in the high single digit going forward.

The roll out of our Hi Definition footprint continues to make steady progress in Q2. We installed over 12,000 rooms during the quarter with an average cost of only $140 per room, which is a 32% reduction versus last year. The cost per room continues to decline, as we see further reductions in our component and installation costs.

In exchange for our investment at the hotel property, we enter into a new five-year agreement which gives us the exclusive rights to provide in-room entertainment to hotel guest. The performance of these Hi Definition rooms remains very strong. On Slide #10, you can see the revenue from these rooms continues to run over 60% higher than our analog base. We now have HD systems in 18% of our Guest Entertainment Rooms and we expect this percentage to steadily increase as hotels enter a reinvestment stage after an extended period of conservative investment during the recession. While we are steadily increasing our HD room count, our overall room base has been declining somewhat. We ended the quarter with 1.8 million rooms served. This is down from 1.9 million in the prior year and is a result of a few factors.

In order to focus our capital in our most productive hotels, we have established revenue targets for our capital reinvestment program. Hotels that fall short of these targets need to cover a portion of our capital investment to ensure we achieve an appropriate return on our invested capital. And the hotels that have elected to leave our system are much lower revenue hotels on average.

The revenue per room for the hotels that left our system this quarter was 45% below our average. The vast majority of these hotels are not replacing LodgeNet system with another VOD provider. But I’ve elected it to only provide basic free TV service to their hotel guests.

We would expect this trend to continue through the remainder of 2011 and moderate in 2012, as our portfolio of hotels becomes more focused in the properties that meet our required ROI targets.

We believe our interactive TV systems remain a critical component of the hotel guest experience and expect our room base to stabilize and then resume growth, as new hotel construction regains momentum.

In addition, as we continue to reduce the average cost per room to deliver our interactive services, our products are more affordable and appealing to a growing number of hotels throughout North America and to our international customers served by a global network of licensees.

Gross margin in the second quarter was 43.6% and a comparative table of our gross margins by service line is included on Slide #11. Guest entertainment margin for the quarter was 61.7%, as we aggressively protect margins on this business even as we see volume declines.

Margins for hotel services improved 360 basis points, as we improve gross margins on our TV programming business as older contracts with heavy incentives reach their contract end date had been replaced with market rate deals. The expiring contracts were written before the acquisition of On Command and new contracts do not include any ongoing subsidies.

Healthcare margins improved by over 400 basis points to 53% for the quarter, strong margins on the recurring revenue base. Results also reflect solid system sales as LodgeNet Healthcare solution continues to gain traction is a very efficient and economic solution for leading healthcare facilities.

On Slide #12 is the snapshot of our operating expenses for the second quarter. In total, cash expenses were down over 10% versus prior year. This represents a reduction of $2.3 million, and was a significant contribution to our AOCF performance for the quarter. The majority of these savings are a result of the reduction in force that was done in January. Company is focused on reducing spending on certain back-office operations, while investing in key growth drivers, product development and to roll out of our Hi Definition Envision platform.

In addition, we offset higher few costs for our 300 field service agents to maintain our systems at our 900 hotel properties. We will continue to focus on cost control and expect to operate at a lower expense level versus last year for the balance of 2011.

Profitability for the second quarter was strong with adjusted operating cash flow for the quarter at $26.4 million. This is at the mid point of our Q2 guidance of $25 million to $28 million. We continue to focus on maximizing our AOCF, while delivering a high operating margin. On Slide #13, you will see the trend for our trailing 12 months AOCF performance over the past five quarters.

Our consistent operating margin is a result of two main factors. The first is our attractive gross margins. We are focused on improving margins across every business line. Recent improvements in Guest Entertainment, Hotel Systems and Healthcare have allowed LodgeNet to maintain gross margins in the mid-40s despite the shift in our sales mix away from Guest Entertainment, which is our highest margin product line. The other significant driver is our continued efforts in reduction our operating expenses, which was discussed earlier.

Profitability at an operating income and EPS level both improved this quarter as we continue our efforts to deliver bottom-line profitability. Slide #14 provides a year-on-year comparison for these metrics.

Operating income for the quarter increased 35% versus last year to $8.2 million. In addition to the gross margin performance and operating expense reductions just discussed we have also seen a continued decline in our D&A expense all of these items contributed to the significant improvement and profitability.

Our net income available to common shareholders in the second quarter was negatively impacted by $4.5 million of interest expense related to our interest rate swap agreements. In the absence of the swap interest this quarter LodgeNet would have generated positive net income. The interest rate swaps expired at the end of the second quarter, and we expect our ongoing interest rate to drop to approximately 6.5% versus 12% this quarter, which will contribute to continued improvement in our bottom-line performance.

Moving on to cash flow in Slide #15, our business continues to generate significant cash to fund our HD rollout, new product innovation as well as covering our ongoing interest costs, our preferred dividend and any working capital needs.

We generated $2.4 million of free cash flow during the quarter. This is a decline versus last year and is due to a significant change in our working capital balances versus last year in higher interest payments in the quarter. When you adjust for these two issues our comparable free cash flow for the quarter would have been just under $20 million with the difference versus last year due to additional capital investments in the upgrade of our room base this year, and a $1.5 million decline in AOCF versus last year.

On Slide #16, you will see that we continue to delever the company with the net debt leverage ratio of 3.35, we are maintaining significant cushion to our amended leverage covenant of 4.0.

Now, wrap up with our guidance for the third quarter, which is laid out on Slide # 17. We are expecting revenues to be in the range of $106 million to $110 million. This revenue projection assumes a decline in Guest Entertainment revenue per room of 1% to 6%, and an increase in total revenue from our diversification initiatives up 2% to 4%.

Adjusted operating cash flow is expected to be in the range of $24 million to $27 million, and net income available to common shareholders is expected to be in the range of a net loss of $0.08 per share to net income of $0.02 per share.

This concludes our formal remarks. I’ll now turn it over to the operator who will repeat the instructions for the Q&A portion of our call.

Question-and-Answer Session


(Operator instructions) And I’m showing our first question comes from Michael Demaray from Elevated Capital. Your line is open.

Michael Demaray – Elevated Capital

Good afternoon, Scott and Frank.

Scott Petersen

Good afternoon.

Frank Elsenbast

Good afternoon.

Michael Demaray – Elevated Capital

Once the last call you said that attrition would likely come in around 100 to 110,000 rooms for 2011, is that number still the same or has that moved?

Scott Petersen

I would say, we’ll be in the upper end of that, this is the quarter it was more than what it came all higher than the trend line, so would probably the upper end of that range for the year.

Michael Demaray – Elevated Capital

Okay, all right. Thank you.


And I’m showing our next question comes from Sophia Lee [ph] from Morgan Joseph. Your line is open.

Sophia Lee – Morgan Joseph

Hi, good afternoon. I’m actually Sophia for David Kestenbaum.

Scott Petersen

Very good.

Sophia Lee – Morgan Joseph

So I have two questions; the first is regarding the Healthcare division. So why have we decided to spin off the Healthcare division, did anything in particular trigger the decision? Like do you plan to hold on to the unit and if you can talk about the competitive environment for that business segments and any talent you may face going forward?

Scott Petersen

Okay, from a financial standpoint, the results, the difference is really a more of a legal approach. When it comes into the federal government has a major role in the world of healthcare and healthcare policies and by having a separate legal entity that contains the entire business it does position us better for doing business directly with the federal government, makes it easier from a contracting standpoint not involving the entire LodgeNet organization in certain policy requirements that might be required to contract for the federal government.

We also think it send a very strong message to the Healthcare industry overall that we have a separate company that’s focused on that market versus just a division of recruits and solid results were seen back from the business. We want to take every measure we can to be a successful as possible and then so far we have seen some great growth in this quarter particularly with a record growth. So that’s basically the overall underlying. I suppose this subsidiary does give opportunities to do more joint ventures or strategic initiatives with third parties that this structure might be easier with the dedicated subsidiary, but there is no specific action at this point in that area, but I think, philosophically, probably does promote and enhance those opportunities.

Sophia Lee – Morgan Joseph

So my second question has to do with Envision. So I know you’ve just been ramping up a launch, so how are the roll outs going, and have you seen the VOD products increasing as a result of that?

Scott Petersen

Right. So Envision term, if we are taking a hotel from an analog platform to a Hi Def platform, we’re seeing comparable increases in Guest Entertainment purchases as if they went from an analog to our former Hi Def platform, 280,000 rooms that are installed there. So with one exception would be that it does turn on now that interactive mode, which promotes even higher revenues than our former standard kind of protocol in the Hi Def platform.

So overall when it comes to Guest Entertainment activities that that is very comparable to the prior system, overseeing even on greater guest engagement from the standpoint of having more information on the system. And so with more like three times greater accessing of on system information, which for us means that we’re demonstrating to hotels that the system is a valuable tool for the guest, which supports the hotels demand for our systems and then of course ultimately then paying us a software fee for using the system. So overall, very pleased with the direction that is going.

Sophia Lee – Morgan Joseph

Okay, great. That’s all I have. Thanks.

Scott Petersen

Thank you.


(Operator instructions) And I’m showing our next question comes from John Corbett [ph] from Veney Management [ph]. Your line is open.

John Corbett – Veney Management

Essentially, a two part question. On your slide that pointed out it had been a change in working capital you would have essentially the same free cash flow year-over-year. In the second half of the year, will there be any change in the working capital requirements such that are you anticipating more or less same amount of free cash flow in the second half of last year? That's the first part.

Frank Elsenbast

Okay, this is Frank. I would say that the change in our working capital has been driven primarily by our accounts payable within the working capital, and we have $13.5 million difference year-on-year –

John Corbett – Veney Management

Is that going to replicate in the third and fourth quarter?

Frank Elsenbast

Well, I think that you will see some continued true-up on those working capital balances as we get into the second half of the year. That’s been kind of but the indication I’ve given in the last couple of calls is this would happen through the course of 2011, so yes, you should continue to see some of that continue in the second half of the year.

John Corbett – Veney Management

Okay. So the question then becomes there won’t be a dramatic amount of free cash flow available for debt pay down, is that a fair statement?

Frank Elsenbast

Well, the debt pay down will certainly be less than the amount of pay down that we had in 2010 under the (inaudible) amended leverage ratio we probably have a debt cushion of about $60 million right now. So, there’s not quite the imperative to pay down the debt so was last year.

John Corbett – Veney Management

The next question is, any reference today, I think it was the 32% decrease in the cost of installing per room the Hi Def, what attributed this, is that just prices falling in the market place for Hi Def?

Frank Elsenbast

Well, we continue to see benefits from a number of areas there. The cost of the technology continues to come down, big part of the equipment that we installed there, is a processor, big server storage device and those costs continue to come down. We see lower installation costs and there is less with a reduction in our work force there is also less overhead that gets attached to those installations. So it’s truly a multifaceted reduction that gives us a much lower cost here compared to last –

John Corbett – Veney Management

Do you anticipate any additional decrease or should we use the 140 to 180, I think you referenced in the call as continuing that is probably will not be driven lower?

Frank Elsenbast

I’d refer, until we give a different indication, I would use the 140 to 180.

John Corbett – Veney Management

Okay. And tie-ing those questions together, you did not specifically indicate how many more rooms would confer to Hi Def in the second half of the year? Could you give us some indication of that?

Frank Elsenbast

I think when we get into the third quarter we could see a bit of a pullback from the pace we had in the second quarter at I think 12,300 in the second quarter, the target would probably less than 10,000 in the third quarter.

John Corbett – Veney Management

Final question is I believe you had a press release about Envision being rolled out into The Chatwal Hotel in New York. That’s a less than a 100 room hotel. Is likely that where you roll it out will be boutique or type of hotels high-end clearly, or is there a chance that some of your marketing perhaps would be for larger convention of Chatwal account?

Scott Petersen

The larger dimension properties, basic business properties Westin’s, Hilton’s, Hyatt would be clear prime proof also, so it’s been up as Cavin [ph]. The boutique is on account of personnel to move using your term and I like that term for characterization of the properties, but Envision is now required for these apps or an add-up. So the core system lie itself really is our base HD system been allows us to always upsell the hotels going forward.

So for example, the Starwood, our announcement today, Westin is a great business type property, but ‘Ws’ of course have a different feel, they’re little more boutique, generally smaller size, so Starwood would be looking to put different apps in the ‘W’ than they would in the Westin, of course Starwood would have different combinations, St. Regis such as those luxury brands and the Charlotte, of course, is under one Starwood umbrellas, so it is intended to be a very broad opportunity, there’s the full boat and then but it’d be very basic as far as the apps and rolls are delivered.

John Corbett – Veney Management

All right, thanks very much, gentlemen. Good luck.

Scott Petersen

Thank you for your comments.


I’m showing no further questions at this time.

Ann Parker

Thanks again everyone for joining us today. I remind a replay of this call can be accessed over the next month via the internet through our company website, www.lodgenet.com. The slides used during this webcast will also be archived on our website for your reference, under the Investor section. If you have any difficulty downloading those slides, we would be happy to send them on request. Thanks again, everyone and have a good day.


Ladies and gentlemen, thank you for participating in today’s conference. This does conclude the conference and you may disconnect. Everyone have a wonderful day.

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