Wheeler Real Estate Investment Trust, Inc. (WHLRL) Q1 2017 Earnings Report, Transcript and Summary

Greetings, and welcome to Wheeler Real Estate Investment Trust 2017 First Quarter Earnings Conference Call. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. [Operator Instructions] As a reminder, this conference is being recorded. It is now pleasure to turn the conference over to your host Laura Nguyen, Director of Investor Relations. Thank you. You may begin.

Good morning, everyone, and thank you for joining us. On the call today will be Jon Wheeler, Chairman and CEO, Wheeler Real Estate Investment Trust; and Wilkes Graham, Chief Financial Officer. Following Management’s discussion, there will be a question-and-answer session, which is open to all participants on the call. On today’s call, management’s prepared remarks and answers to questions may contain forward-looking statements as defined in the Private Securities Litigation Reform Act of 1995. Forward-looking statements are subject to risks and uncertainties that may cause actual results to differ from those discussed today. For a more detailed discussion related to these risks and uncertainties, we encourage listeners to review the Company’s most recent filings with the SEC. As a reminder, forward-looking statements represent management’s view only as of the date of this call. Wheeler Real Estate Investment Trust assumes no obligations to update any forward-looking statements in the future. Definitions and reconciliations of non-GAAP measures are included in the Company’s quarterly supplemental package, which is available through the Company’s Web site. With that, I’d now like to turn the call over to Jon Wheeler, Chief Executive Officer and Chairman of Wheeler Real Estate Investment Trust. Jon please go ahead.

Thank you, Laura. Good morning, everyone. And welcome to the 2017 first quarter earnings call for Wheeler Real Estate Investment Trust. Today's call will begin with the high-level review on the results from our portfolio operations and then I'll discuss the retail market headwinds we are seeing which undoubtedly affected our shareholders and how we are in fact outperforming our peers on a total return basis despite our seemingly flat stock price over the past nine months. We will also review our quarterly financials, update our second quarter and full year 2017 guidance then discuss our balance sheet and speak briefly about the reverse stock split and move to our quarterly dividend payments which were effective on March 31. I'll then close the call with our long and short-term goals for 2017. As stated in our last conference call 2017 is the gear of results for Wheeler. We have spent the past four years acquiring accretive assets that fit our core criteria of being grocery anchored and necessity based retail and growing shareholder value through positive leasing spreads, revenue growth and expense management, lowering our weighted average cost of capital, reducing our general and administrative cost and growing AFFO. The company has grown exponentially since 2012, yet we still continue to believe the stock is trading well below NAV, and we are not being rewarded for all our good work we have done to get here. We maintain that our strategy is sound and that we have a very skilled team of associates across all disciplines focusing on maximizing shareholder value. That being said we had a miss on our AFFO guidance of $0.36 to $0.38 per share for the first quarter mostly due to higher than expected seasonal property expenses and general and administrative costs. Still in the face of what appeared to be an increasingly challenging operating environment our top line results in the first quarter were in line with expectations and our leasing team continue to work very hard on both new and renewal opportunities within the portfolio. For the 17 consecutive quarter we reported a positive rent spread increase in the first quarter on 3.5% on renewals. The team renewed 33 leases for a total of approximately 179,000 square feet and signed 18 new leases to fill in approximately 54,000 square feet. 49,000 of the renewals related to 2017 expirations with the balance being early renewals and anchor expirations in future here. Same store net operating income on a GAAP basis was 2.2% against an industry average of 1.8%, while on a cash basis we are relatively flat reporting negative 0.3%. Before I turn the call over the Wilk to discuss our quarterly financials and update guidance, I would like to address what we just as you are seeing in the retail market landscape related to the health of the tenants and the general settlement from investors about retail real estate. It is no secret that they are increasing reports of retailers shutting their doors or filing for bankruptcy and malls losing significant anchor tenants. We read the same negative reports and articles and understand that we are facing a landscape that is quickly changing for retail, expressly for our peers. While the market is not giving us full credit for all of our successes we had in 2016, our stock is the number one performing publicly traded REIT over the past nine months and the only stock to generate a positive total return over that same nine month time period. The predominant reason that we believe we have a key advantage to navigate the rough waters ahead is that we have acquired the dominant number one or number two necessity based good center in our market where the grosser has upward trending sales and the health ratio of 3% to 4%, meaning that the sales to rent per square foot allows for them to be profitable. We have very limited soft goods retail tenants in our portfolio which is the segment of the market where retailers are announcing store closures and moving to online concept shutting down their bricks and mortar operations or even filing for bankruptcy. Our markets remain ecommerce resistance as the shopping center is treated as the community social hub. An interesting fact that we learned here recently according to the Federal Communications Commission, 39% of rural communities nationwide or about 23 million people lack broadband access compared with only 4% of urban Americans. Our success in the secondary and tertiary markets is highly attributed to the fact that the people must visit the shopping center as there is no access to online retail, for grocery shopping you cannot get your nails done or haircuts online. Even if the grocery in our market would entertain online grocery ordering the point of sales still remains the store and the customer still has to drive to shopping center two or even three times a week frequently in the surrounding small shops as well which we refer to as cross shopping and co-tenancy. Our centers are well located and we take great pride in being 94% lease and occupied with strong national regional tenants that provide cross shopping opportunities to consumer. We've certainly keep our fingers on the pulse and are in regular conversation with our retailers, as we consider them our partners. Indeed they are the key ingredient to our success. While we feel that our assets and tenants were solid and are able to persevere in the challenging retail landscape, we are not naïve to think that we could not experience a tenant bankruptcy or anchor closings similar to our peer group. Senior management in conjunction with leasing operations has performed a risk analysis on all of our properties evaluating the health for our tenants based upon their sales per square foot and other key factors such as the lease term, corporate guarantees and capital improvements in the store. We are prioritized our list and have started to conduct a market analysis combined with a retailer board analysis to put together several potential back-fill solutions should an anchor tenant or a larger junior anchor box vacate. We feel strongly as demonstrated with the case of Perimeter Square that we noted in our last earnings call and the 20,000 square foot Career Point vacancy that was backfilled within 75 days of going dark, exceptional to say the least. 75% of the space was leased to a better credit tenant and at a higher rate per square foot than the previous tenant. The remainder of the space is under LI with national regional credit tenants also at rents per square foot that area higher than the previous year. Overall, we feel the portfolio is stable and that we should not see anything near-term or a constant that we should be prepared to feel the effects of the trends we are seeing in our industry. I’ll now turn the call over to Wilkes for his review and update on guidance and then we'll close with our short-term and long-term plans for 2017. Wilkes?

Thank you, Jon and good morning everyone. I’ll begin by touching on some of the financial highlights in the first quarter of 2017. I’ll then address guidance followed by our review of our operations and balance sheet. We reported first quarter 2017 AFFO per share of $0.31 below our guidance of $0.36 to $0.38. The variance to our guidance principally comprises $0.01 per share and higher than expected auditing, [indiscernible] and tax return fees some of which have been budgeted for the second quarter of 2017. Approximately, $0.02 per share of higher than expected property operating expenses including higher still removable cost, and most of which can be reimbursed by our tenants later in the year. Another few pennies per share and higher than expected seasonal G&A cost including onetime catch up payment on 2016 sale income taxes and slightly higher benefits costs. To summarize we had guided to $0.045 per share of seasonal costs and these came in $0.03 higher overall, or $0.075 per share for the quarter. The additional $0.02 per share of higher property expenses for which we will seek reimbursements from our tenants later in the year accounted for the rest of the $0.05 miss relative to the lower end of our guidance. Further these $0.075 of seasonal cost and $0.02 of higher operating expenses add up to $0.095 which combined with the $0.015 share of loss income from the Career Point Vacancy at parameter square that will be backfilled with higher rents later this year, accounts from 100% of the $0.11 per share variance between our reported $0.31 results and our $0.42 dividend. Comparing our results to the first quarter 2016, or reported AFFO of $0.31 came in 45% up year-over-year and after adjusting for the $0.11 of total seasonal property and corporate expenses higher reimbursable property expenses and loss income from Career Point that will be refilled. Our results would have been 96% higher year-over-year. As we look to the second quarter we expect a much cleaner quarter with substantially less seasonal cost. So let me address our guidance and outlook for the rest of the year. We are establishing guidance for the second quarter of 2017 for AFFO per share of $0.40 to $0.42 per share. As I detailed earlier the $0.11 variance to our $0.42 dividend in the first quarter included $0.095 of seasonal and property expenses that should not carry over into the balance of 2017, but also included the $0.015 [ph] in loss Career Point income that does not start to be replaced by higher Aspire income as well as another lease until the third and fourth quarters. We understand the importance of covering our dividend as soon as possible and we will strive to make up for this lost income in the second quarter, with new leasing and/or third-party fees, but our guidance range of $0.40 to $0.42 allows for some conservatives on this front. For the full year 2017, we are lowering our AFFO guidance to a range of $1.64 to $1.68 from our previous range of $1.68 to $1.73 to account for the higher cost in the first quarter and to allow for bit more conservatives on our leasing and fee assumptions that I just mentioned. In general [audio gap] the $0.04 to $0.05 share reduction in our guidance relative to the detailed annual guidance we disclosed from our last conference call and [indiscernible] can be attributed to higher seasonal G&A and property costs in the first quarter of '17, and otherwise the detailed guidance that we discussed last quarter and summarized in the latest investor desk still holds true. Also note that due to approximately $300,000 in the first quarter of non-cash amortization of above market leases related to our newly acquired village of Martinsville and Rivergate assets which were not factored into our original core AFFO guidance for year. We are adjusting our core AFFO guidance to $1.80 to $1.84 to account for these non-cash adjustments to rental income. Turing to operations, first quarter 2017 same store NOI increased 2.2% year-over-year on a GAAP basis and declined 0.3% on cash basis. GAAP results compared favorably to the 1.8% same store NOI growth of public returning RETIs, retail REITs that have reported thus far in this earning season, but also highlight the headwinds facing the sector as discussed by Jon. These headwinds were felt during the quarter partially an increased bad debt expense during the quarter and we noted our top line rental revenues net of that bad debt expense slightly out performed our internal expectations. Turning to leasing, I would like to summarize what was a very active quarter for us on both the new and renewal front. First of all, we started the year guiding to 100,000 to a 125,000 square feet of new leases and 98% renewals on expirations, and I'm pleased to report that one quarter into the year regarding renewed a 179,000 square feet at 3.5% rent bumps, 49,000 square feet of which were on leases that expired sometime in 2017 and signed 54,000 square feet of new leases that approximately $14 a square foot rents which equates to $1 per share square foot more than our original projections. Before, I move on I'd like to mention four important updates to our non-GAAP disclosures in our 10-Q and supplemental package that should help investors and analyst better analyze our results. First, our property portfolio summary now included both our traditional economic occupancy metric which ended in March 31st at 93%, as well as the least percentage metric which ended March 31st at 94.2%. The addition of the lease percentage allows for the inclusion of leases that have been signed but rents have not yet commenced such as the Aspire lease that backfills the Career Point anchor lease at Perimeter. Second, Page 15 highlights the renewals and new leasing results for the quarter which I've just summarized. Third, we've added a fair amount of details to our lease expiration tables breaking up our annual expiration disclosures into anchor and non-anchor leases and further breaking these expirations out into those with options to extend and those without options. If you recall that at December 31, 2016 we disclosed just over 350,000 square feet of expiration in 2017. Page 14, of our first quarter supplemental package now shows that for the 12-months ending March 31, 2018 amongst leases expiring without existing options available to extent we have just one anchor lease totaling 21,000 square feet and 78 non-anchor leases totaling a 156,000 square feet or about 2,000 square feet per lease. Finally, Page 16 of the supplemental package lays out for the first time not only our calculation for capital expenditure reserves, but also our actual CapEx and TI cost incurred both the gross and net of vendor reserved funding basis. To summarize our $0.20 per square foot reserve was adjusted down in the first quarter by $39,000 due to several projects that we ran through our camp pools and operating expenses, which resulted in a $206,000 CapEx reserve in our AFFO table. As a comparison, we actually incurred $434,000 of total CapEx and tenant improvement cost during the quarter. The 336,000 of these costs were funded via vender reserves at the property level. As such our actual total CapEx and TI's funded with cash during the quarter totaled $98,000. To be sure the reason we use the reserve method in our AFFO table is to account for quarter-to-quarter volatility in this costs and we'll certainly have quarters in the future when actual cost amounted to more than the reserve. But in the first quarter of '17 our actual costs were approximately a $0.01 below our reserve. I want to thank our financial reporting team for their hard work on these improvements to our disclosures and we will continue to work to improve our financial disclosures as we move forward. Moving on to the balance sheet. We ended March 31, 2017 with approximately $482 million of total assets or $537 million of total assets gross of $23 million of accumulated depreciation and 32 million of an intangible accumulated depreciation related to our properties. These amounts include our 64 income producing assets nine land parcels, our office headquarters of Virginia Beach, Virginia and our $12 million off balance sheet loan to the Sea Turtle Marketplace development at Hilton Head Island, South Carolina. Our total of debt at March 31, was $312 million, gross of $7 million of unamortized debt issuance cost. Our weighted average interest rate on our debt at March 31, 2017 was 4.35% and our debt to gross asset value the governing metric on our key bank line was 62.2% compared to the mass allowable leverage of 65%. Looking at our debt maturities on Page 9 and 10 on the supplemental I want to highlight a couple of points. First of all Page 10 of the supplemental totals our debt maturities and regularly scheduled principal payments by year, so these totals will be slightly higher than just the sun of each year's debt maturities. Of the $95 million of debt maturing by March 31, 2019 or over the next 24 months, 7.45 million was outstanding on our reviewer line at March 31, 2017 which bears interest at 8%. Just yesterday we paid down this balance of $7 million and paid $140,000 extension fee to extend this maturity from April 30 of 2017 to April 30 of 2018. Recall that no matter when we will pay off the remaining $7 million, we will owe an exit fee of $240,000. Our $75 million line of credit with KeyBank which had $68 million outstanding as of March 31 at LIBOR plus 250, accounted for the single largest maturity over the next 24 months in May of 2018. The Key balance decreased by 6 million from year end as we refinanced our Falling Road [ph] asset off the line into a $6.2 million three-year construction loan at 4% which will help fund our out-parcel development there. As we stated in the past, KeyBank remains a very active partner of ours and we continue to work with Key to finalize a syndication partner bank. We thank Key for all their support in the past and we certainly hope to continue to grow our relationship with Key overtime. Excluding the Reviewer [ph] and KeyBank lines our total debt maturities over the next 24 months totaled 15.2 million, bearing a weighted average interest rate of 5.1%. We are actively working with various lenders to refinance all of these loans including our Reviewer line and we hope to have positive updates to report on this front later this quarter. Finally, I would like to provide a quick update on two structural changes we made at the end of the quarter. First on march 31, we executed a one for eight reverse stock split that reduced our total shares and operating units outstanding from approximately 74.5 million to approximately 9.3 million. We received consistently positive feedback on the reverse split and at this point we are happy with our boards' decision to enact the split and are moving forward. We also moved to our quarterly dividend payment and we just made our finally monthly dividend payment from march 2017 on April 28 last week. Our first quarterly payment will occur on July 15 for the period of April through June 2017. With that I'll turn the call back over to Jon for his closing remarks.

Thank you, Wilks. As we look to the second quarter we are not pleased with the overages on the expenses during the first quarter and specifically the miss on guidance. However we are working hard to maintain and grow top line results to improve our cost containment initiatives at both the property and corporate levels, to opportunistically strengthen our balance sheet and broaden our investor base. We see 2017 as an increasingly challenging operating environment, but see opportunity specialty and ancillary income over the balance of the year to additional leasing, development and other unscheduled income opportunities in our current portfolio. Long-term we see ability to refinance properties that have materially higher interest rates and as what is market today and recouping some of the unexpected expenses in Q1 during our year and reconciliation process. We are hyper focused on creating long-term shareholder value as I along with management and the board have heavily invested in the company. With that I would like to thank you all and turn it back over to the operator. Operator?

Thank you. [Operator Instructions] Our first question comes from Mitch Germain with JMP Securities. Please proceed with your question.

So it seems like the ability to meet that dividend payment at this point, to the higher end, everything kind of has to go right for you to get there. A lot of your gains that you referenced Jon in terms of stock performance being given back today, why not just cut it and right size the dividend to a level that appears to be more aligned with the cash flows of the company?

Thank you, Mitch. First of all, obviously, that wouldn’t be my decision that would be a board decision as you know, number one. Number two, we feel very strong about where we are and what our prospects are for 2017, we can't predict mother nature and the excess of snow removable cost, some of the items that we felt that would have been expensed in the second quarter of 2017 took effect in the first quarter of 2017. And it's not a smoothen if you will or a blending that we can do over a 12-month period, we have to do the measuring [ph] quarter-by-quarter. So now that we are out of the first quarter in essence and we are in the second quarter, we feel our prospects are strong and we don’t think that a dividend cut is warranted.

And you guys reported earnings Feb 28th, establish guidance then, how much of that $0.09 or so because I know you've referenced them, so how much of that $0.09 was already somewhat known?

I mean, we established guidance in the February we only had January results so the $0.02 of higher property operating expenses obviously we determined that as we got results from the properties over the course of all three-months and the same as can be said to the $0.03 of extra seasonal cost, the majority of those happened in February and March.

Got you, and then seems it has to do about $0.44 of quarter to get to the mid-point of your guidance, for the rest of the way you are guiding to about $0.40 to $0.41. So where is that big pick-up in the back half of the year, is that the Career Point backfill?

Mitch it's Jon. I think there is a couple of things. I think it's the reconciliation process that will be completed when you get into April, May and June. Obviously, some of them are true, obviously take a little bit longer than what we've liked. I think number two the progression on the leasing that we have seen very, very strong results at on none of the small jobs that as we referenced earlier on the anchored renewing early, and I think on some of the Phase 2 components that we have in the pipeline is referenced on Falling Road and also we talked in the past about the Colombia powerhouse project down in Colombia, South Carolina. So I think it's really like four or five so process that will get us there. It's not just one. And quite frankly it's the constant focus, constant push on rent spreads and the ancillary and specialty income of the parking deals. As I've said the last four and half years, it's amazing the income that you can pick up literally investing in the parking fields.

Last question for me. Wilkes just with regards to the new expiation details that are illustrated in the supplement, I guess I'm confused, what's expiring for the next nine months?

For the next nine months we have 269,000 expiring, just at the end of this year.

So that’s not in the supplement alright?

The supplement is on a 12-month basis, so its displayed as the 12-month ending March 31 2018.

Any way you can shoot me that information on the nine months ended for December 31?

I think going forward we are going to break it out on a calendar basis in our disclosures, but I'll get it to you.

Our next question comes from Steve Shaw with Compass Point. Please proceed with your question.

You guys had three renewals at lower rental rates, can you guys talk about those?

Which one were those? I am not -- where was that referenced Steve?

[Multiple Speakers] you guys each have renewal rates, leases, what -- when amount of lease of that increase were flat and decreased there three that quarter renewed that lower rental rates.

We could follow up offline on that Steve. To give you the details.

[Operator Instructions] Our next question comes from Craig Kuccera with Wunderlich. Please proceed with your question.

Just following back up on the guidance, I think last quarter Wilkes you had talked that I think for the year cash G&A was going to be around 4.8 million, what is emended in the new guidance?

It should be practically 200,000, so 5 million which accounts with higher seasonal cost in the first quarter.

Okay so that’s the only change. I saw you -- you did mention you extended the loan with Reviewer [ph], but can you comment on how things are progressing with your third quarter maturity, particularly the bank line of credit? I think both are fairly small balances, but are coming good?

The 15 million of maturities we have next two years is outside of KeyBank and Reviewer. They're all small balances, we are working on each of them. I don’t think we can comment on any one individual, but we feel our prospects are good for each of them.

And I appreciate you mentioning the bad debt, but clearly there has been a pretty healthy uptick the last couple of quarters can you comment on higher seeing, tenant performance and are you seeing any segments or tenants that you have on a negative watch list that give you some concern?

Yes, its Jon, Craig. So obviously as we've previously mentioned that soft goods and we really don’t have that much soft goods. And as you know with more in the safety and service retail oriented. So on a watch list per say with the consolidation going on in the grocery store industry, which I think is good and it makes the makes that consolidation of his competitors stronger. I do think you could potentially will see some type of fall-out in the future, now who that will be and who that will not be, I don’t know. But again, the retailers that are in all markets in the sector of tertiary markets doing our analysis and our health ratio we feel that they are all in a pretty good position right now been at that 3% to 4% rent versus growth sales. So as those specific type, I think the electronics, we don’t have a heavy emphasis on electronics or furniture. The video stores we don’t give any value to. So as to any higher percentage it just doesn’t exist.

Craig, let me also note that the $250,000 of bad debt in the first quarter, about $150,000 of that was Career Point rents that we still accrued in the first quarter. I think we won't be accruing those in the second. So you'll see about 150,000 -- you'll see a %150,000 reduction both rental income and the bad debt expense.

Got it, all right thanks for the color.

Our next question comes from the line of Frank Ullman with FCU Holdings. Please proceed with your question.

Jon, in your prepared remarks you commented that your tenants are reporting increases in the same-store sales. I'm curious if you can provide a little bit more color on that because most of the tenants in your Top 10 list, at least the ones that are publicly traded have reported declines nationally. And then the one quick comment, I see in your Top 10 list that Byloan and Dixie separated out as different companies, as are Kroger and Harris Teeter, yet they are affiliated in those two respective cases. May I suggest you add a note in the future to reflect that.

That's a very good point. Thank you for Sir and the reason we do that is because they do operate those independently. So referencing Kroger and Harris Teeter, obviously Kroger bought Harris Teeter and they are operated independently. That maybe have there buying power collectively as to their wholesale and credit lines but we had a couple of Kroger, we had the one Harris Teeter and since you brought up here is Teeter, that's the one down there on Falling Road outside that we will probably go down outside of Charleston. As it relates to trending our upward trending sales we've focused on the health ratio, we will prefer that a grocery store would be between 3% and 4% in their base rent versus their growth sales and if you look at the investor deck on our website we've shown a little pie chart, I'm not sure what page that's on, but a pie chart is to where those percentages are and there are just a few out liars that are in that 4% to 5% range, but most of them are between 3% and 4%. Now a product typical grocery in the secondary and tertiary markets, they're healthy and they're profitable between $250 and $275 per square foot on an annual basis. So if you take a 30,000 foot store and just do the multiple between $8 million and $10 million growth sales stores are profitable, and that leads to a whole another conversation about competition risk, where we are buying assets at 50% of replacement cost. Whereas somebody new came in, it would be at 200 or 250 a foot and were to 100 bucks a foot. So where there may be declining sales on a particular tenant, their health ratios were still good and they are still profitable stores, but they may have declined because of whatever type of competition, as I mentioned in past conversations, you have Wegman's in south and Public's march in north. You have the consolidation we have previously talked about and also you have the hold in leaders of the coming in from Germany that are obviously taking retail dollars away from somebody else. And one last point on that, the years ago with the Wal-Mart effect, that was always the big beast, almost the devil out there that’s gone, and Wal-Mart's really not doing that many more super stores and they've cut back on the inner-city express doors and they're mainly focusing on the village grocery stores. But also they are putting a heavy focus on online as other that we know about the Amazon and so for, but as with privacy mentioned that our narrative, we just don’t see that online sales generating too much business in our secondary and tertiary markets as well as those stores or those sales to be generated from those sales and those markets. Have I answered your question sir?

Ladies and gentlemen, we have reached the end of the question and answer session. I would like to turn the call back to Jon Wheeler for closing remarks.

Thank you, operator. Again, focusing on retail and general we are sometimes kind of looped in or thrown into retail as to the big box retailers and the malls. And we don’t do malls we don’t do big box we don’t do town centers and we don’t do outlet centers. And we're primarily focused on grocery anchored shopping centers and then assassin service business. And a lot of the backfills for the formal video stores had been fitness facilities as well as like for example, we had a prior fitness going into formal Career Point down in parameter and Tulsa Oklahoma. And I am proud to say that both privately prior to November 12, and now publicly that just about in all cases, when we had some type of failure that was an unscheduled event created by a tenant, we've been able to easily backfield that space at higher rates with better crop shopping and co-tenancy with retailers that are not currently represented in that particular sub market. So in turn that creates just an overall better environment and also in most cases it creates a customer draw or traffic that is switched from maybe a three to five mile radius to attend 15 even a 20 mile radius and again bringing customers to the shopping center. So one thing I always like to say is, we know how to buy well, but we know how to lease and manage very well and also when situation happen like Career Point, and there will be future ones as well down the road. So on behalf the team here of Wheeler, I would like to thank all those that dialed in for the call and we look forward to talk to you again in august when we report second quarter 2017 results. Everybody have a great day. Thank you.

This concludes today's conference. You may disconnect your lines at this time. Thank you for your participation.