Summit Hotel Properties, Inc. (INN) Q4 2017 Earnings Report, Transcript and Summary

Good day, ladies and gentlemen and welcome to the Summit Hotel Properties Incorporated Q4, 2017 Earnings Conference 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]. I would now like to introduce your host for today's conference Mr. Adam Wudel. Sir, you may begin.

Thank you, Kevin, and good morning. I am joined today by Summit Hotel Properties Chairman, President, and Chief Executive Officer, Dan Hansen, and Executive Vice President and Chief Financial Officer, Greg Dowell and Executive Vice President and Chief Investment Officer, Jon Stanner. Please note that many of our comments today are considered forward-looking statements as defined by federal securities laws. These statements are subject to risks and uncertainties, both known and unknown, as described in our 2017 Form 10-K and other SEC filings. Forward-looking statements that we make today are effective only as of today, February 22, 2018, and we undertake no duty to update them later. You can find copies of our SEC filings and earnings release, which contain reconciliations to non-GAAP financial measures referenced on this call on our website at www.shpreit.com. Please welcome Summit Hotel Properties' Chairman, President and Chief Executive Officer, Dan Hansen.

Thanks Adam and thank you all for joining us today for our fourth quarter and full year 2017 earnings conference call. As you know, 2017 was an extremely active year for us, as we completed nearly $600 million of high quality acquisitions, sold 12 hotels for $120 million, raised $320 million of common and preferred equity, and closed nearly $275 million of debt financing transactions. Overall, we're very pleased by the stronger than expected performance of our portfolio this past quarter that drove both top and bottom line results above the high end of our guidance range. We continue to believe that our portfolio of high quality hotels in great locations with efficient operating models will garner an outsized share of the industry's demand growth and are encouraged by the operating trends that drove our financial results in the fourth quarter. We remain optimistic that tax reform, strong demand, and continued economic improvement will benefit our portfolio of hotels with great locations and efficient operating models. On a pro forma basis, we reported fourth quarter RevPAR growth of 5.5%, which was driven by a 4.9% increase in occupancy to 76.3%, 0.6% increase in average daily rate. Our pro forma portfolio outperformed both the total U.S. lodging industry and the upscale chain scale, and most importantly continued to gain market share among its competitive sets in the fourth quarter with a RevPAR index of 115.6, which represents a 3.3% market share gain. While our occupancy gains in the quarter were partially driven by hotels located near recent natural disaster affected areas, excluding these markets RevPAR would have still increased a healthy 3.6%. For the fourth quarter of 2017, we reported FFO of $31.5 million, an increase of 17.9% as compared to the same period of 2016. And our AFFO of $0.30 per diluted share exceeded the high of our guidance range of $0.26 to $0.29 per share. For the full year, pro forma RevPAR increased 1.3%, which exceeded our guidance range of 0.25% to 0.75%. The RevPAR gain was driven by a 1.4% increase in occupancy and partially offset by a 0.2% decline in average daily rate. Our revenue management strategies continued to be effective as we once again increased our RevPAR index versus our competitive set by 1.6% for the overall portfolio. For the full year, we reported adjusted FFO of $134.1 million, which represents an 8.4% increase as compared to 2016 and our adjusted FFO of $1.34 per share exceeded the high end of our guidance range of a $1.29 to a $1.32 per share. A few of our better performing markets in 2017 included Portland, where RevPAR increased 6.6% as our two hotels continue to benefit from recent renovations and a still favorable supply and demand dynamic. Our two Indianapolis hotels delivered outsized RevPAR growth of 8.9%, following recent renovations and the successful implementation of new group strategies. This compares favorably to the comp set RevPAR growth of 4.2%, and the Indianapolis market RevPAR growth of 3.3%. Our two Houston hotels posted combined RevPAR growth of 7.5% for the year and large part due to the Super Bowl in the first quarter and demand related to Hurricane Harvey in the third and fourth quarter. Our recently acquired Homewood Suites, Tucson and Courtyard by Marriott at Yale University delivered RevPAR gains of 13.1% and 10.1% respectively. Highlighting our ability to find acquisition opportunities in higher growth markets. In general, our acquisition portfolio outperformed as RevPAR grew 4% compared to a 0.2 % increase in our same-store portfolio. In 2017, we acquired 14 hotels, totaling nearly 2500 guest rooms for aggregate purchase price of $586 million, which are all well-positioned for future growth that we expect to lead the portfolio through 2018. We continue to differentiate ourselves with capital recycling during 2017, as we completed the sale of 12 hotels for an aggregate sale proceeds of $120.2 million. To-date, all net sale proceeds from dispositions have been redeployed into high quality premium branded hotels that we believe are well-positioned to create long-term shareholder value. Turning to capital expenditures. During 2017, we invested $37.2 million into our portfolio on items ranging from common space improvements to complete guest room renovations including furniture soft goods, fitness areas, and bars. Notably, the Marriott Boulder is currently undergoing a $6.7 million comprehensive guest room renovation that includes the conversion of underutilized meeting space into eight additional guest rooms. The project is expected to be completed by the second quarter of 2018. We also began our comprehensive guest room renovation at our Holiday Inn Express & Suites in Fisherman's Wharf. The project is expected to be completed in mid-2018 and will position the hotel well in anticipation of the reopening of the Moscone Convention Center. Over the last six years we have invested well over $200 million into our portfolio and 83 hotels that we own today have an average effective age of approximately three years, further proof of our commitment to maintaining a high-quality portfolio where guest want to stay. With that, I'll turn the call over to our CFO, Greg Dowell.

Thanks Dan, and good morning everyone. For the full year 2017, on a pro forma basis, we've reported hotel EBITDA of $211.7 million and hotel EBITDA margin contraction of 136 basis points to 37.3% from 38.7% in the prior year. The margin contraction was primarily as a result of elevated property taxes and the occupancy driven RevPAR growth that drove variable expenses higher. But excluding the 16% increase in property taxes, pro forma hotel EBITDA margin contracted by 59 basis points to 38.1%. Our adjusted EBITDA grew to $180.1 million, an increase of 8.2% over the same period in 2016. For the fourth quarter 2017, our pro forma hotel EBITDA increased to $48.8 million, an increase of 4% over the same period of 2016. Pro forma hotel EBITDA margin contracted by 65 basis points to 35.8% from the same period in 2016. Again, excluding the 22% increase in property taxes, pro forma hotel EBITDA margin expanded as expected by 39 basis points to 36.8% as compared to 2016. Moving on to our balance sheet, our balance sheet continues to be well positioned with no maturities through 2018 and liquidity of more than $300 million as of year-end. Throughout 2017, we continued to strengthen our balance sheet by laddering our debt maturities and reducing our cost of debt financing. At December 31, 2017, we had total outstanding debt of $873.1 million, with a weighted average interest rate of 3.89%. We ended 2017 with net debt to pro forma trailing 12-month adjusted EBITDA of 4.1 times which continues to be well within our stated range of 3.5 to 4.5 times. Today, more than 65% of our portfolio EBITDA is unencumbered which is proof of the progress we continue to make in assembling a highly flexible balance sheet. Earlier this month, we announced a 5.9% increase in our common dividend to an annualized $0.72 per share, which is now yielding 5.1% and results in a prudent AFFO payout ratio of approximately 52% at the midpoint of our 2018 outlook. Commensurate with our increased cash flow, this is the fourth dividend increase we have announced in the last eight quarters and demonstrates the consistency and strength of cash flow generated by our well diversified portfolio of high quality hotels. With that, I will turn the call over to our Chief Investment Officer and soon to be Chief Financial Officer Jon Stanner to discuss capital markets activity and guidance for 2018. Jon?

Thanks, Greg. As Dan previously mentioned, we were very active in the capital market throughout 2017 bringing nearly $320 million of common and preferred equity and nearly $275 million of debt capital. Prior to the recent increases in interest rates, we were able to execute on a couple of timely transactions in a more favorable rate requirement which both lower our overall borrowing cost and gave us increased exposure to fixed rate capital. Including initially a $160 million of preferred equity and 6.25% coupon, which is an al-time low for the lodging industry. In conjunction with this issuance, we redeemed our $75 million, 7%, 8% for Series B preferred and recently announced the redemption of our $85 million of 7% and 8% Series C preferred scheduled for March. These transactions reduced our annual dividend preferred dividend payment by nearly $2 million resulting in perpetual accretion of approximately $0.02 per share. We also executed $200 million of forward starting interest rate swaps to lock in LIBOR at less than 2% for the next five years. Including these swaps our total debt is now approximately 70% indexed and well positioned to withstand further increases in interest rates. Just yesterday, we announced the closing of a new seven-year $225 million unsecured term loan, that matures in 2025. This is the largest ever unsecured seven-year bank term loan for lodging, and with the support of our bank group, we were able to improve the pricing to a range of 180 to 255 basis points plus LIBOR depending on our leverage ratio. Proceeds were used to replace our existing seven years or a $140 million unsecured term loan that was scheduled to mature in 2022. The new term loan includes a 90-day delay draw feature and no additional cost and allows for additional levered commitments of up to an aggregate of $375 million. We drew an initial advance of a $140 million on facilities to fund the repayment of the previous loan and intend to draw the remaining $85 million of commitment in March to fund the redemption of the Series C preferred. Turning to guidance for 2018 in our release you will see that we provided full year 2018 guidance for adjusted FFO of a $1.33 to $1.45 per share, a pro forma RevPAR change of 0% to 3% and same store RevPAR change of negative 1% to positive 2%. For the first quarter, we provided an AFFO guidance of $0.28 to $0.31 per share. Pro forma RevPAR growth of 0% to 2% and same store RevPAR growth of negative 2% to 0%. We’ve incorporated capital improvements of $45 million to $65 million, which includes both renovation and return in capital expenditures. Much of the increased capital spend is related to recently acquired hotels as well as some carryover projects from 2017. This capital expenditure activity is forecasted to result at a RevPAR displacement of approximately 80 basis points in the first quarter and 50 basis points for the full year 2018. Our guidance also assumes the redemption of our 7% and 8% Series E preferred stock for approximately $85 million in the first quarter, in the opening of the 160 room High House Orlando Universal Studios Hotel in the third quarter. No additional acquisition dispositions equity raises for debt transaction beyond those previously mentioned are assumed in the first quarter or full year 2018 guidance. With that, I’ll turn the call back over to Dan.

Thanks Jon. In summary, we were quite pleased with our fourth quarter results as our well diversified portfolio produced solid results in the second half of 2017 despite the challenging operating environment. We continue to be optimistic about the outlook for 2018 and for the future of Summit. And with that we’ll open the call to your questions.

[Operator Instructions] Our first question comes from Shaun Kelley with Bank of America.

Hi guys. This is Dave [ph] for Shaun. A couple of quick questions. First, can you characterize the impact from your exposure to Hurricane-affected markets in the quarter? And also, how do you think about the impact as we move through 2018?

This is Dan. Clearly, our strongest markets for the last quarter were our natural disaster affected areas, Fort Myers, Miami, Tampa, Fort Myers itself was up 42%, Miami was up almost 30, so I think if you look at our fourth quarter numbers ex the hurricanes, we were still up 3.6%, so I think you can derive some strength in those markets, but also some portfolio wide strength as well.

Thanks. And then looking on the cost side, LA showed some tough commentary on cost increases for 2018, but given your great exposure to secondary markets, what expense profile are you guys expecting for 2018 and what RevPAR do you need to get to, to reach margin expansion?

Yeah, it’s Jon. I'll take that one. We’ve been pretty consistent in saying that we need about 2% RevPAR growth to breakeven on margins, I would characterize given some of the cost pressures we’re seeing whether it’s salaries and wages or property taxes or whatever else, we probably think that’s the mostly rate driven RevPAR growth this year, obviously there’s midpoint of our pro forma guidance range is 1.5% so I think at that level you can expect us to be kind of breakeven from a margin perspective or just slightly below.

Thanks. And last one from me, in terms of supply growth, we’ve been hearing for some time that select services is seeing potentially a greater share of supply growth, how would you characterize competitive supply growth in your markets and do you see sort of a greater balance of select service entering more urban markets or suburban, thanks.

It’s Jon, I’ll jump in. I think we look at our supply growth, I’d say we expect supply growth for the industry about 2% this year. If you look at, and clearly that’s a little more concentrated in the major markets. If you look at the top 25 markets, we expect it to be about 50 basis points above that. I’d say that our portfolio is generally in line with the top 25 markets, and our portfolio in particular is, heavily skewed by Nashville , which is expecting larger supply growth this year. If you exclude Nashville from our numbers, we’re actually 20 basis points or so below the national average in what we would expect supply to grow this year. I do think it’s a fair characterization to say that there’s more supply growth in the select service change and also say that there’s far more demand growth in those chain scales as well. So, we do think that’s an offset there.

Thanks a lot guys.

Our next question comes from Austin Wurschmidt with KeyBanc Capital Markets.

Yeah, hi. Thanks for taking the questions. So, clearly 4Q, came in well ahead of your expectations from a RevPAR growth perspective, but was driven predominantly by occupancy, so just curious what it is you think it will take for pricing power to return, and have you seen at all any early signs in 2018 of pricing power improving?

Austin, this is Dan, I think there are markets and sub-markets that we’ve seen our ability to hold an increased price, but it’s very much markets specific. I think we’re very hopeful that the tax cuts and the economic backdrop are going to result in increased travel and its supply moderates and gets absorbed in these markets. We do expect that we'll have opportunities to grow rate. But it has been a stubborn thing for sure. But we’re very optimistic, that we’ll start to see some strength more broad-based and a lot of the occupancy gains, as you noted, were the result of the natural disasters, and I don’t think that is our expectation for 2018.

Thanks for that. And then, kind of getting back to a lot of the work you did last year on the portfolio, acquiring nearly 600 million, I think it’s been closer to 750 million, over the last two years, which kind of gives you fresh palate for you and the team to identify those value creation opportunities going forward, and continue to outperform kind of the overall upscale, chain scale. But the zero to three RevPAR growth for 2018 is below the 2% plus growth, projected for upscale hotels, so what gives you the pause there for this year.

That's a great question, Austin, I think when we buy a hotel, performance is never linear. There’s a time to get in and change the things you need to change, whether it’s a strategy or may be a shift-in, staffing, there are lot of factors that we use to drive value. Renovation could be a year-off or 18-months off, so, sometimes there are performance that, isn't as I said linear, so we got to guide, we use the best information we have, which truthfully is six-weeks at this point and maybe a two-week forecast. So, there’s still are a lot of moving parts. We also have some shorter-term effects of some weather, we had some softness in New Orleans and some rate erosion in San Francisco, which are two of our bigger markets. So, and San Francisco, specifically, we have a renovation underway which is also a challenge to quantify. So, we do feel good about the guide, and it feels like we’ve adequately bracketed the risk and the opportunity. We don’t want that to apply, our enthusiasm is being dampered in anyway about the great hotels we’ve bought in the markets. We think they’ll compete very well and as the economy recovers and there is growth available in rate, we expect to garner our fair share as we have in the past. And part of that, I think, strength will come as you’ve seen, we’ve continued to gain market share in our sub-markets in a competitive sense.

It’s fair. Would you be willing to offer some detail as to how the portfolio is trended in kind of the mid-to-late February timeframe, because it seems as though the industry data, you noted some of the markets with challenges be clearly many is a top five market for you and a lot of strength there from the Super Bowl. Any detail you could offer at this point?

Sure, maybe a little bit in general clearly Minneapolis was a winter for January. And some of the broader based markets I think are you would expect to be national averages. But other than commenting on some softness weather related and some of our markets and some of the disruption from renovations tend to not focus on any one hotel. So, I wouldn’t that whether in New Orleans is in anyway indicative of how the portfolio will perform for the year, but if we look back over the last couple of years, we've seen whether almost every conference call from almost every lodging REIT have some factor on it. And with the great number of storms last year fires I think it's an added risk that has to the volatility of not just monthly but quarterly earnings. So, I don't know that I would say that there is anything specific other than a couple of things in some of our larger markets that we outlined.

And then, how does that 80 basis points of displacement you expect in the first quarter compare versus any displacement you have last year?

I think with very little displacement last year. For the full year, we quoted 50 basis points. I think we had 20 last year, so I think it has to be around 30-40 basis points. I believe it's similar in the first quarter that we brought 80 bps a quarter and we collect 10 to 20 in the first quarter of last year.

Great. Thanks guys.

Thanks, Austin.

Our next question comes from Michael Bellisario with Baird.

Good morning guys.

Good morning.

As you think about value creation and the leverage that you can pull this year, kind what's the biggest driver for you and how are you thinking about that and how does that play out over the next 9,12,18 months for you guys.

Like there are unfortunately the bigger drivers are little harder to find. I think some of the capital recycling we've done in the past will be difficult to replicate in scale. But I think at the margin we've been very good at that, probably better and more active than anybody else in this space. So, I think there is the drivers are plenty full but all small operationally. Whether it's our revenue management team or asset management team being in market helping to identify shifts and occupancy and making sure our hotels become remain competitive. I think some of the capital investment projects that we've done over the past and some of the new projects we've done renovating bars and fitness centers continue to drive behavior, which is little bit harder to quantify. So, I think this is a year where a lot of the little things that we have been very proud of is a very operationally focused REIT expect to drive performance.

Got it, and then just in terms of capital recycling. How would you characterize the acquisition pipeline? And then the potential for more asset sales to reduce leverage a little bit closer to the midpoint of your target?

Yeah, this is Jon. I think that as we've talked about, we'll continue to look for assets. It is a challenging acquisition market particularly as the debt markets have recovered and the CMBS market in particular sellers around enable the finance 75% LTV type financing. That creates a little bit of shadow competitor. I wouldn't say that the acquisition market is that much more difficult than it was last year. And we were quite successful last year in acquiring properties. So, I think we'll continue to try to find kind of the diamonds in the rock, and assets that we think that he profiles that are potentially little bit broken and give us an opportunity to create value and buy and fix it. I do think you can expect us it is a good market to sale as well. Sort of the extent to that creates more competition buying asset and it does accrue to our benefit as the seller. And I think you can expect us to any external growth would be funded larger through our capital recycling program this year.

Got it. And then last one for me just on the guidance. What are the scenarios kind a top-down when you think about the zero to 3 RevPAR range that need to play out to get to that low end at flat or high-end at 3%?

Well, I think this is Dan. I think it's a just a function of demand from the corporate sector. I think the corporate travel has been slow. I think with the tax reform there has been a high level of confidence with CEOs across the board and the expectations that if corporate travel picks up and the leisure travel has been fickle, but active and that has shown up in occupancy across the board, so I think corporate confidence and corporate travel would be the biggest driver of our success as a company and as an industry.

That's helpful. That's all for me. Thank you, guys.

Our next question comes from Chris Woronko with Deutsche Bank.

Hey, good morning guys. I guess could you remind us first, kind of mix is between corporate, transient and maybe leisure. And then the second part of that is are you seeing any changes right now or do you expect to see any changes this year as a result of the Marriott Starwood kind of sales integration and or anything kind of related to the merger is that anything implied in your guidance related to that?

Thanks, Chris. This is Dan. I think our mix of guests is probably fairly balanced to-date between both operating leisure, its predominantly transient, we have a little bit of group a little bit of government, a little bit of corporate negotiated rate, but I think kind of in general a 50-50 mix is probably where we would say we stand today. As far as the Marriott and Starwood merger, I think it’s been a popular topic and I have to say that Ernie and his team has truly been delivering on their promise of using their size and scale to deliver cost savings and at this point it’s a little hard to quantify, we're not seeing immediately in the numbers but we do feel strongly will benefit us going forward and that partnership is very much appreciated.

Okay, very good. And then as a follow-up. I think I know the transaction markets a little bit tough right now given the how quickly rates change and things like that and you guys are I know hunting for acquisitions that are probably increasingly hard to find. But if you look out a little bit you kind of look at your, your two or three or even longer your view. Do you think supply starts to level off after say 2019 in select service and does that make you kind of want to maybe get a little bit more aggressive to the extent that portfolio becomes available or something like that? So just change your thinking any?

Yes, its Jon. I think our view of supply that supply probably peaks late this year or early next year. I think even as we are underwriting and acquiring assets last year, I think we are very cognizant of the market that we're buying in and what the supply the demand supply dynamics are in those specific markets. So, we'll continue, I think for us it means we probably value location more than we ever have, we spend more time making sure that we owned assets in the right location that are going to be relevant, this year, next year, five years from now. So, I am not sure, that as we start to see the end of supply pipeline of kind of light of the end of the tunnel from the supply pipeline perspective it changes our view on how we think about acquisitions, we have try to be very forward thinking all along in terms of what markets and what locations, we want to own assets in.

Chris, this is Dan. Just to add up a couple of comments. As it pertains to portfolio as and any change in strategy. I think we have been very consistent that portfolio of great size and scale are difficult for us because of our intensive due diligence process. So, kind of the one awesome small portfolio have always been where we found the greatest value and the greatest opportunity to create outsize growth through, operational improvements or capital investment. I would say that the governor for us as we have discussed is the range of 3.5 to 4.5 times of net debt to EBITDA so that in itself will help guide and continue to keep us focused on that continued believe in we are very important stewards of investor capital. So, went through a period in where we didn't raise capital for three years, so, we also take pride and making sure that people understand acquisitions whether its individual or small portfolio, a very much that capital is very precious to us and we want to make sure those are strong add to the portfolio.

Okay, very good. Thanks guys.

Our next question comes from Wes Golladay with RBC Capital Markets.

Hey, good morning guys. Can you give us an update on how the – development is progressing? Are you seeing any labor shortages, any cost over runs? And then to that front are you seeing any opportunity for incremental development, once that project is completed?

Thanks Wes. This is Dan. We’ve built-in pretty some good flexi billion, this schedule. So, at this point we’re still on target for opening middle of the year. Labor has been a challenging, but not something that’s, we haven’t been able to overcome. But, it does create one of the challenge, that we’ve seen more broad-based in the market, which is construction is getting more and more challenging. So, I’m not sure that, many of the projects that were started two and three years ago underwrote the type of environment, we’re in today. So, I would say, it’s less likely that that’s going to be any greater focus for us. We continue to be very opportunistic, 0 or 1, is probably more in the cards for us, in the development side, but we do think, that there'd be opportunities, over the next several years, as the supply moderates, some of the new developments, would definitely be good targets, and we get the higher level of interest.

Thanks. Okay. And then, for the margin guidance for the year, it looks like it's going to be flat to slightly down on a pro forma and I assume, that’s going to be largely just the tap headwind in the context of last years, it looks like 77 basis points headwinds to the overall margins. Will it be comparable this year? How should we think in the context of, how much of detriment it will be on the pro forma?

Yeah, this is Jon. I think, that it will still be a headwind, but much less significant than it was last year. I think, you can assume, that there will be a slight headwind, but it won’t be nearly the impact that we saw on 2017.

Okay. Thank you, guys.

Our next question comes from Bill Crow, with Raymond James.

Good morning guys. Dan or Jon, any shift in cap rates that you’re seeing in the market given the moving interest rates?

Hey Bill, it’s Jon. I’d say not yet, obviously the moving rate is still been a relatively recent phenomenon, so, I haven’t seen a lot of trade. Obviously, there’s a big trade in another space yesterday. But in terms of what we’re looking at, I can’t say, that we’ve seen a significant move, again, it’s been fair with recent – up.

Okay, and then, we all know, labor cost are going up. What about labor availability, how difficult is it to stamp a hotel these days?

Hey Bill, it’s Dan. It’s hard and getting harder. I think, the environment we’re in is going to be a challenge, not just for Summit, but across the Board. And we've got strategies in place, to try to retain employees, and I think it’s going to be one of the challenges we’re faced to it. So, I don’t think it’s going away, but I think if fortunately, we've only one union hotel. So, we do have some good flexibility with our operating model and working hard to shift from some of the contract labor to actual employees of management companies and managing it to their best of abilities. But it is going to be a challenge going forward.

All right. And then finally from me, if you put the land and at today’s cost, what is the price – the development Orlando, I think, you’ve detailed that before, but I don’t have it off hand?

Yeah, I think if we factor in it, and land cost, we’re still inside of $200,000.

Great. All right, everybody else have got my questions earlier, so that’s it from me. I appreciate it.

Thanks, Bill.

And I am not showing any further question at this time. I’d like to turn the call back over to our host.

Thanks, everybody. I wanted to take a just a minute, to publicly thank Greg Dowell, for his contributions at Summit. I truly feel blessed, that Greg joined our team, with a mission to help make us a best-in-class company. So, for me and our Board, our entire Team, the analyst and shareholders, thanks Greg. It’s been truly a pleasure. And thank you all for joining us today. We do continue to see opportunities to create value for shareholders through we've always believe there is very thoughtful capital allocation. In hotels which today's guests love. Our renovated properties and operational expertise continue to deliver strong results and we're looking forward to 2018 and beyond. So, have a terrific day and we'll talk to you again next quarter.

Ladies and gentlemen this does conclude today's presentation. You may now disconnect. And have a wonderful day.