Good morning, and welcome to the Hyatt Second Quarter 2023 Earnings Call. All lines have been placed on mute to prevent any background noise. After the speakers presentation, we will conduct a question-and-answer session. [Operator Instructions] As a reminder, this conference call is being recorded. I would now like to turn the call over to Joan Bottarini, Chief Financial Officer. Thank you. Please go ahead.

Thank you, and good morning. Welcome to Hyatt's Second Quarter 2023 Earnings Call. Before we begin, I'd like to take the opportunity to welcome Adam Rohman who is now leading our Investor Relations and Global Financial Planning and Analysis teams. Adam has been with Hyatt for 19 years and has deep knowledge of the company most recently overseeing Hyatt's global asset management team. I'd also like to recognize Noah Hoppe who over the past three years has been instrumental leading Hyatt's Investor Relations and global FP&A teams. I'm excited to share that Noah has transitioned to a new role joining our transactions team and supporting our growth strategy. With that I'll turn the call over to Adam.

Thank you for the warm welcome Joan. Joining me on today's call are Mark Hoplamazian, Hyatt's President and Chief Executive Officer; and Joan Bottarini, Hyatt's Chief Financial Officer. Before we get started, I would like to remind everyone that our comments today will include forward-looking statements under federal securities laws. These statements are subject to numerous risks and uncertainties as described in our annual report on Form 10-K quarterly reports on Form 10-Q and other SEC filings. These risks could cause our actual results to differ materially from those expressed in or implied by our comments. Forward-looking statements in the earnings release that we issued today along with the comments on this call are made only as of today and will not be updated as actual events unfold. In addition, you can find a reconciliation of non-GAAP financial measures referred to in today's remarks on our website at hyatt.com under the Financial Reporting section of our Investor Relations link and in this morning's earnings release. An archive of this call will be available on our website for 90 days. With that I'll turn it over to Mark.

Thanks, Adam and it's great to have you in your new role.

Thank you.

Good morning, everyone. For the fifth consecutive quarter, we posted record results demonstrating our unique positioning and continued momentum. In the second quarter, adjusted EBITDA plus net deferrals and net finance contracts was up 7% compared to the second quarter of 2022 and up 48% compared to the second quarter of 2019. This is an especially notable achievement when you consider that we've sold $2.3 billion in real estate net of acquisitions since the beginning of 2019. Our ongoing transformation has significant momentum and the second quarter results continue to reinforce our confidence in executing the strategy we outlined at our Investor Day in May. During our Investor Day we highlighted Hyatt's transformation positioning the company as the preferred brand for high-end guests in each segment that we serve, while creating significant value for shareholders. Since the beginning of 2017, we've driven shareholder value by realizing proceeds of $3.8 billion from the sale of owned hotel real estate, net of acquisitions at a multiple greater than 16 times, acquired $3.7 billion of asset-light and fee-based platforms at a multiple of approximately 8x and returned over $2 billion to shareholders through common stock repurchases and dividends. We've experienced meaningful growth doubling our luxury rooms, tripling our resort rooms and quadrupling our lifestyle rooms. As a result, today we are more fee-based and asset-light with a much higher conversion of reported earnings to cash flow. We anticipate that substantial free cash flow from our increased asset-light earnings mix. In addition, the proceeds from asset dispositions will enable us to invest in growth, return capital to shareholders and maintain our investment-grade profile. Through the disciplined execution of our strategy we have outlined a path where we expect to achieve $750 million in free cash flow and an 80% asset-light earnings mix by 2025.…

Thank you, Mark. This morning, we reported second quarter net income attributable to Hyatt of $68 million and diluted earnings per share of $0.63. As Mark mentioned, this was a record second quarter with adjusted EBITDA of $273 million net deferrals of $28 million and net finance contracts of $14 million. Excluding the impact of transactions, results were up 11% compared to the second quarter of 2022. In the quarter we generated a company record of total management franchise license and other fees in the quarter, of $248 million, an increase of 21% from the second quarter of 2022 driven by the continued success of our asset-light transformation and the continued global recovery we've experienced in the quarter. As a result of our expansion in fee revenue our asset-light earnings mix relative to real estate earnings was 76% for the quarter. Turning to our legacy Hyatt results, adjusted EBITDA was $224 million for the quarter which is approximately 17% higher than the second quarter of 2022, adjusted for currency and the net impact of transactions. Our management and franchising businesses benefited from our larger system size and more fully recovered RevPAR environment. As Mark mentioned, our system-wide RevPAR in the second quarter was up 15% compared to the same period in 2022, or up 8% compared to the second quarter of 2019, fueled by strong rates and meaningful occupancy growth. And we are thrilled to see fully recovered RevPAR in the Asia Pacific region relative to the second quarter of 2019. Notably the region nearly doubled fee revenue to $42 million for the quarter, compared to the same period last year with Greater China accounting for over 40% of the region's fees in the quarter. We're encouraged by the momentum in the region and believe it will continue to serve…

Thank you. [Operator Instructions] Our first question comes from Joseph Greff from JPMorgan. Please go ahead. Your line is open.

Joe, are you there? You maybe on mute.

Can you hear me now?

We got you now Joe. Thank you.

Thank you for taking my question. Mark, you had mentioned that the World of Hyatt accounted for 22% of room nights in the first half of this year for ALG. What you benchmark that against medium term in terms of percentage of occupancy at the ALG portfolio?

Yeah. I think there's significant room for expansion. I think in the foreseeable future, we see the potential to increase that by about 1,000 basis points. And the reference point that we've got is other all-inclusive resorts that we've operated for a longer period of time. The one thing that I think hasn't been realized in its fullest potential yet is MICE business, sorry, group business that we can pull into more of these properties. There are considerations I would say with occasional concerns around safety and security, but the more exposure that we get for meeting planners, travel advisers into our properties in Riviera Maya Cancun especially, the more comfortable that we see people are getting especially on the transient side. And I think group will follow.

Great. And then just a follow-up on the real estate transaction environment and we heard you loudly and clearly on the progress made on the two assets. How are you thinking about other assets being market and being brought to the market? And maybe how has that evolved just given the current conditions in the transaction financing environment?

Yes. Honestly we've not been aggressively pursuing marketing efforts for other assets at this point. We do have a couple of discussions underway with respect to reverse inquiries on specific assets that we own. And we will continue those conversations. I think at least in one or two cases these are relatively bigger hotels and/or maybe more unique hotels that sometimes take some time to put to assemble a deal because they involve other development opportunities on site and the like. So we've got a I would say a constant dialogue underway but it's just not the -- in the context of an active marketing initiative. And the principal reason we've decided to wait is --well reasons there are two. The first is it's a bit pp it's a more challenging environment right now primarily because of financing. I would say that's more much more acute in the United States than it is elsewhere because debt availability and pricing of debt in Europe is still quite reasonable and relative to historic levels. And the second reason is because we're getting paid a lot to wait. Our own and lease results continue to be very strong. I think our -- the pace of growth given how extraordinary our recovery was in the second and third quarter of last year has come down. But we have every confidence that we will end the year. We as you know have predicted that we will end up being able to sustain 100 to 300 basis point increase in margins and we think we'll end this year at the top end of that range. So we feel really good about the progression of earnings and margin expansion. And so in many ways I don't think even with higher cap rates in the U.S. the value expectations that we've got in terms of dollars and cents associated with sales of hotels is not going to we don't think we're going to realize any degradation in that. It might be the result of higher earnings and lower cap rates or sorry higher cap rates lower multiples. But it's really hard. And I'm certainly the last one who's going to ever predict the direction of interest rates so I'm not going to go there.

Great. And then one final question maybe this is for Joan. When you think about your implied second half EBITDA adjusted EBITDA adjusted economic EBITDA guidance how do you think about the cadence in 3Q and 4Q just consensus estimates or at least reasonably aligned with how you're viewing 3Q and 4Q?

Sure, Joe, maybe I'll just start with our guidance at the midpoint the $1.225 billion that we provided at the midpoint. And through the first half of the year we've generated a little bit above 50% of that amount. As you look at the second half of the year I just would probably break down what would be helpful is between Hyatt legacy and ALG. And on the legacy business we've seen seasonality typically be where Hyatt legacy results are strongest in the second quarter and the fourth quarter. So that's what we've seen from the business. Some of that is driven by group activity in those quarters. And in the ALG business we have been as you know we have been now talking about experiencing more normalized demand patterns in the ALG business. So as we look at that segment, and we look at the normalized pattern of seasonality the first quarter is typically the strongest quarter and we had very strong results in the first quarter with exceptional pricing and flow-through. In the second quarter we saw some normalized demand patterns but still very strong top line. And as I noted in my prepared remarks results increased 7% excluding some FX headwinds and some investments that we made. So as we look at ALG then for second half what I mentioned earlier is this normalization into Q3 and Q4 where Q1 is typically the strongest. And as we look at the subsequent quarters after the first quarter the normalization of demand has been what we've experienced on a historical basis before these sort of disrupted periods through Omicron post our acquisition. So, for the full year, we expect the ALG segment to be normalizing even further quarter-over-quarter. So, that's a summary of kind of how we see the seasonality between the two segments. And as we look at -- we've reaffirmed our midpoint, because we feel really good about the rest of the year, given the sustained leisure travel demand that we're seeing and the group business that Mark had mentioned earlier, really being strong into the second half of the year.

There are two things that I would just add to that in terms of the ALG second half. Last year, we reported in our third quarter earnings call, how extraordinary September turned out to be because, typically there's a break point after Labor Day, where you see a significant falloff in business, we saw none of that last year. It was completely sustained through the end of the quarter. We do expect as Joan described the normalization of that seasonality and a drop off after Labor Day for ALG. And then the second point that I would make is that we had onetime credits that were released from -- travel credits that were released last year, $4 million in the third quarter and $24 million or $25 million in the fourth quarter. So, those are -- if you just look at year-over-year comparisons and don't adjust for that, it will appear that we are down more significantly. But sequentially, I think that we'll see a third quarter that is under more pressured by virtue of the normalization of seasonality and a fourth quarter that is really more of our -- sorry to borrow a term from the cruise business, but the wave period where we're booking into the first quarter of the following year and actualized demand is really concentrated around holiday periods at the very end of the year.

Thank you.

Our next question comes from Patrick Scholes from Truist Securities. Please go ahead. Your line is open.

Hi, good morning everyone. On your guidance, it looks like you took the midpoint of RevPAR up a bit, but kept the EBITDA guidance range unchanged. Anything to read into that? Any higher cost expectations that might not completely have that RevPAR flow through? That's my first question. Thanks.

Sure, Patrick. I'll start with the RevPAR guidance. So, our confidence in moving that range and tightening the midpoint of that range is driven by the fact that we have achieved in the first half of the year 26.5% RevPAR growth. So we had mentioned when we had provided guidance on the first quarter that we thought we'd be in the mid-20s. So we're right there a little bit higher. And as we look at the second half of the year, we still expect to be in the mid to upper single digits for RevPAR growth in the second half of the year. So, that confidence is coming from the increased group that I just mentioned and also the sustained leisure travel we're seeing and some building momentum on the business transient side. So for the EBITDA guidance that we reaffirmed, I would say -- the one thing that's impacting the lack of raising that is the FX headwinds that we're seeing in the Mexican peso that I mentioned in my prepared remarks. So, that's one area that is impacting us relative to expectations that puts us really in line with what we said previously and we feel good about the range.

The other thing I would note is that, we did increase our integration expense estimate for the year by $5 million. That is entirely associated with Mr. & Mrs. Smith acquisition. So that's also taken into account in providing the guidance.

Okay. Thank you. And then follow-up question. Mark you had touched briefly on the financing environment. I wonder, if you could just give us your latest thoughts on that as it relates to different geographic regions? And also, especially as it relates to your average new franchisee, typically under $50 million of borrowing your latest thoughts around that? Thank you.

Yes. Look, I think the first half of the year, first quarter especially was disrupted in the local and regional bank market by virtue of some of the failures that we saw right off of that in the first quarter and that did have some ripple effect. But honestly, our first Hyatt Studios is expected to break ground in the next 60 days. And we see starts for other mostly start service hotels that are newbuilds in the United States and virtually all of that capital is coming from local banks. So in terms of sourcing the money center banks are basically out of the market still. Pricing is relatively high if you compare it to historic -- well I should be careful. If you compare it to the last five to six years it's significantly higher. Gone are the days of free money. But if you look at it over a very long period of time it's actually not that far off maybe a couple of hundred basis points in real terms higher than you would see on long-term averages. So if you look at SOFR levels people are borrowing at 7% 8% maybe 8% or 9% depending on the situation. The borrowing rates advance rates are reasonable in Europe and the borrowing rates have reached between 4% and 5% closer to 4%. But in the United States there's no question it's affecting new starts. People are still trying to structure deals in which they have short-term commitments that they think that they can refinance at lower rates in the future. The good news is local banks are still there for the best developers. And so we do see capital formation. The biggest change in our under construction the proportion of our pipeline that's under construction has been openings. So we've opened a lot of the rooms that were under construction and they're not getting refilled at the same rate that they were before and that is almost entirely in the programmatic upscale and upper mid-scale areas.

Okay. That’s great color. Thank you

Next question comes from Duane Pfennigwerth from Evercore ISI. Please go ahead. Your line is open.

Hey, thanks. As you think about your expectation for September normalizing how much visibility do you typically have into that at this point in early August. So as we sit here in early August of last year did you know that September was going to be sort of way off the charts, or is there a chance to maybe close in tracks a little bit better than you expect?

Yes we actually have reasonably good visibility in relation to ALG. There's been a dichotomy between US resorts and the and our all-inclusive resorts in Mexico and the Caribbean. The US resorts have underperformed our all-inclusive hotels. And the all-inclusive hotels have a longer booking window. So we have a better handle on that now with a significant measure of our business from the third quarter already on the books. So we have a pretty good handle on the profile. There's another dynamic that I'll just mention in passing and that is the Cancun dynamic I'll call it US employments or visitation to Cancun and Riviera Maya have come down. They're actually negative year-over-year. And that's that has been picked up in two three other ways. First we've seen a 19% increase sorry a 16% increase in the Dominican Republic that's visitation to the Dominican Republic and an 11% increase to Jamaica. But we've also seen a 600-basis point increase in US outbound travel to Europe. So our hotels in Europe now have a 27% guest composition from the US, up from 21% last year. So we're seeing Americans broaden where they're going. Cancun was the place to go for 2021 and '22. It was considered to be convenient of tremendous variety great value for money and wonderful in what you can do the experiences you can have. I think people are now evolving and they're evolving to some other markets. The good news is with respect to our inclusive hotels we cover Jamaica Dominican Republic the West Coast of Mexico. And Europe has been on fire across the board. Europe has been leading both business transient and leisure for the last couple of quarters, so we continue to have a very positive outlook with respect to that. But back to your specific question about September we have reasonable visibility to it. There are last minute bookings and I think we had a higher proportion of that in 2022 than we expected. So, we were pleasantly surprised by just how strong the within four-week bookings turned out to be for the second half of September just absolutely stunning occupancies and rate realizations there. But right now we have pretty good visibility on the third quarter.

Thanks. That's helpful. And then just a quick reminder for my follow-up. What is a point-of-sale US for ALG?

It's a majority of the total occupancy. I don't have a specific number for you.

Okay. Thank you.

The remainder would be Canadian and European. Canadian this year has actually increased significantly. One of the biggest I'm sorry -- about 70% is US sourced. Canada has increased in the second quarter. That's been one of the biggest alternative markets that filled in some decline in US sourced travelers into Cancun especially and Europe is the remainder. But honestly right now we're seeing a higher incidence of European staying in Europe for their holidays still increased year-over-year significantly increased year-over-year employments into Cancun airport from Europe. But in our hotels at least we're seeing significant incidence of European staying in market.

Thank you.

Our next question comes from Chad Beynon from Macquarie. Please go ahead, your line is open.

Morning. Thanks for taking my question. I wanted to ask about China or I guess Asia just in general. I know pre-pandemic food and beverage was a huge component of that market and the fees that you would derive from that portfolio. Mark you talked about China kind of being back to pre-pandemic levels without the international inbound. Wondering if you could talk about that food and beverage component if that has come back. And then secondly on the international the inbound into China side what do you think the big catalyst or when do you think we'll start to see that business come in? Thanks.

Yes. So, it's interesting. We've seen an evolution of food and beverage demand over the last year and a half. Food and beverage actually led our revenue composition in 2021 and 2022 because staycations were really the only thing that many people could do during lockdowns. And then during the worst parts of 2022 people didn't do that anymore because they weren't even allowed to leave their apartments in major cities that is. In this year, we've seen improvements across the board across the entire week. So, business transient is actually about flat to 2019 levels. Group is fully recovered and then some and leisure transient is up. Having said that the international inbound still remains depressed or lower than 2019. It's about 40% lower than 2019. I think it was actually like 41% or something like that in the second quarter. But that's an improvement from the first quarter. And those inbound international clients are a key driver of outlet sales that is restaurant and bar and club sales entertainment venues. And so overall F&B revenues in total are slightly down relative to 2019 even as rooms are basically fully recovered. And that's really -- it's a customer mix issue that's driving that at this point.

Yes. And I would just add that about 30% of our business in 2019 was coming from international. So that being down 40% in the second quarter and the progression that you described Mark it was 60% in the first quarter. So there's a significant upside there. And in the quarter our fees doubled over last year. So when you think about the runway with respect to that international inbound coming from flight capacities it's a big tailwind for us going into the future.

Yes. And the outlook for flight capacity is actually quite good. And there's a lot of talk about like what the health of the consumer is. And what's super interesting is that retail sales are up about 7% and foodservice sales restaurants and nightlife double-digit growth in the first half of 2023. The stuff that's a little bit lagging is clothing apparel and durable goods. I would only add that one thing that we are keeping very close tabs on is the real estate the residential real estate activity which has seen a significant decline in activity over the last quarter. That matters in terms of how people think about their net worth. Having said that consistently all of the surveys that have been done and our engagement with our members tells us that in fact 68% of the respondents. So they plan to splurge on themselves and travel and restaurants are at the top of the list and have consistently been at the top of the list over the last year. So we see a prioritization of travel and entertainment call that F&B and entertainment, despite the fact that there are some potential headwinds with respect to the residential real estate market in China.

Great. Thanks. And then a quick follow-up. Could you just remind us your mix of business transient between large corporates and SMEs?

It's a majority of large corporates. My guess is that it's about a 60-40 split between large corporate and SME. Large corporate, I would say, it's really a tale of many different dynamics. So if you look by segment, banking has been the one that's been off the most and that had to do mostly with the shock of the bank failures in the first quarter that had a carryover. Not every single one of our bank clients is down. In fact our largest single bank and financial institution customer is up. But the overall sector is down, manufacturing is looking slightly better. Professional services, expecting continued significant travel volumes, so consultancy and the like. Same with professional -- sorry, same with tech. Actually tech is looking at increases. The layoff impact has moderated. So we think that's behind us and the meeting planners and travel managers for tech are suggesting that they're going to see an increase over the remainder of the year and pharma about flat. The only other thing I would note is that corporate -- in terms of the mix of corporate and association on the group side, corporate in terms of our bookings is looking like 42% corporate and 32% association. This is full pattern bookings in the second quarter, which were a record -- not quite a record but the second highest since the first quarter of 2019 at $500 million. So we're still weighted towards corporate and we're seeing sustained corporate demand on the group side. So really, really encouraged to see that and think that that's going to persist in the foreseeable future. Now, if you look into future years, about a third of the total full pattern bookings that were made in the second quarter, about 34% was in the year -- for the year, 66% was into future years. Half of that 66% was into 2024 and then the remainder was into the plus two, plus three and plus four plus year periods. So what we're seeing is and we still have some reasonable patterns left to book in 2023 second half, and although they're dwindling and 2024 and that's creating a lot of back pressure for associations. So we're going to see -- we predict that we will see an increase in the proportion of association bookings through the second half of this year, because they really need to secure their dates.

Thank you very much. Appreciate the color.

And comes from Stephen Grambling from Morgan Stanley. Please go ahead. Your line is open.

Just wanted to stick with ALG a little bit. Specifically within the distribution and Destination Management business what is the sensitivity of this segment to things like revenue per departure versus departures. Should we see a pullback in leisure spending expand? And is there any impact from completing the integration of the broader ALG business with Hyatt that could also impact this segment?

Yes. I mean vacations is going gangbusters. Departures were about flat to last year. That's the result of the normalization of seasonality but we had unit net revenue growth of 10% because pricing is really strong and our mix is very weighted towards 5-Star versus 4-Star. In fact, I did mention the Cancun dynamics versus cascading into other markets. The one thing that remains true in the Cancun Riviera Maya market is that 5-Star hotels are outperforming 4-Star hotels by 10 points. So even though employments and arrivals from U.S. customers, which are the highest-rated customers is dropping because they're cascading into other markets that is not true with respect to 5-Star hotels. So our experience is going to look a bit different than the overall segment AI segment in Cancun at large. The average unit price on the books for the second half for ALGV bookings is up 5%. And so we have more destinations on sale because we've added inventory that we're selling through the platform. But pricing is maintaining. And concurrently the one other thing I did not mention is that the package prices are actually moderating by virtue of airfare coming down in some cases quite significantly because a lot of capacity got added into Cancun you can't snap your fingers and change your segments and your system. And so airlines have dropped rates into Cancun to try to induce demand. That's helped to sustain some demand but it's also made the overall pricing capability of the hotel sector solid. With respect to Unlimited Vacation Club membership is up 10% year-over-year and about 25% of the contracts signed have been from existing members upgrading to higher tiers and that's reflected in the higher price per contract, which is up 6%. So we're really encouraged by what…

Our last question will come from Shaun Kelley from Bank of America. Please go ahead. Your line is open.

Hi. Good morning, everyone. Thanks for taking my question. So Mark one high-level one and then, kind of, wanted to probably beat the dead horse on ALG a little bit. But so on the high level just wanted to, kind of, get your thoughts on some other companies out there provide a little bit of color on 2024 expectations for net unit growth. And you've obviously given lot of detail just coming out of the Analyst Day. So my question is just, kind of, how do you feel about that at this point in time? And just can you remind us of some of the your pros and cons to that build as it relates to things like conversions, Hyatt Studios launch? Just anything that would -- any movement or any things that have, sort of, kind of updated your thinking as it would relate to kind of how you're expecting '24 to look like? I know you've already addressed the financing environment. You don't need to hit that twice.

Okay. Thanks. So for everyone's edification what we said at Investor Day is that we saw a 6% to 7% compounding net rooms growth into the future. And we feel really, really good about that. Excellent. I mean, first of all, yes, we've seen openings of a number of hotels that were under construction and then new starts have slowed down. So that is a bit of headwind. Based on our dialogue with a bunch of developers for whom we're moving from LOIs to signed contracts for Hyatt Studios, we see a very high incidence of developers moving to construction pretty quickly. We're going to open our first Hyatt Studios before the end of next year. And so we really feel great about the fact that we're finding that really good developers are great partners are actually finding access to capital. But it is also true that we just continue to find more and more conversion opportunities. And we see it coming from many different sources. One significant dynamic that's underway right now is that a number of portfolios of hotels many of which are self-managed are owned by families and a lot of European families some Mexican families and there have been generational changes either because of the prior generation dying and leaving the business to their kids or a change in circumstance in terms of the family holding. And those are opening up significant opportunities because they are relatively larger. It usually involve multiple properties. And in most cases we've been able to unlock ways in which we can uniquely structure how we assist these families to achieve their goals. In many cases they want to continue to hold the real estate. So we are signing up management relationships for a number of hotels. The incidence of that is increased. And so we're getting more and more confident that we've got a pipeline on to itself that will continue to provide a baseline against which we then will see a recovery in new starts as the capital markets start to normalize over the course of the coming year. So I would say extremely confident in short.

Really helpful. Thank you. And then the follow-up and again, I really apologize, if we've kind of covered this in a way that I didn't totally detect. But just as it relates to ALG and the outlook there and this is specifically on the package RevPAR side I believe in the quarter package RevPAR was up something like 9.5%. And I think you said that pace and I'm not sure if this was for the second half but I think you said second half pace was up 8%. So I kind of wanted to both validate are those apples-to-apples? And is that kind of decel the sort of what's embedded in the outlook, or are you embedding a more dramatic deceleration, specifically on the packaged RevPAR side just given again some of the seasonal normalization. And again I know you've talked about that a lot.

It is apples-to-apples. The 8% is on the books business. So it doesn't include tentatives and stuff like that. That's not the way we provide data. And rates are higher in the second half. And yes, it is one of the drivers of our outlook with respect to continued normalization over the back half of the year. And just in the vein of completeness, I just want to remind everybody that we did have $30 million of release of travel credits and $4 million in the third quarter and $24 million or $25 million in the fourth quarter. So you have to take that out as a means of doing a comparison. But I would say, we are diving in deeply right now on how we go to market and how we're organized with respect to commercial services in ALG. We kicked off a pretty comprehensive review of that. And I do think that that will yield benefits over the course of the remainder of the year but they'll be most realized next year. By the way everything I'm talking about including – so the other thing I don't think came up is that we had $4 million of investments in a specific technology platform capacity for ALGV and Trisept in the second quarter, which are not recurring. So we said that we were going to be investing further behind the platform. We have and we will continue those investments into the year. 100% of what I just covered is included in our full year guidance and outlook.

This concludes today's conference call. Thank you for participating and have a wonderful day. You may now disconnect.