Earnings Call Transcript - CUBE Q3 2025

Operator, Operator

Thank you for being with us. My name is Colby, and I will be your conference operator for today. I would like to welcome you to the CubeSmart Third Quarter 2025 Earnings Call. I will now hand the call over to Josh Schutzer, Vice President of Finance.

Joshua Schutzer, VP of Finance

Thank you, Colby. Good morning, everyone. Welcome to CubeSmart's Third Quarter 2025 Earnings Call. Participants on today's call include Chris Marr, President and Chief Executive Officer; and Tim Martin, Chief Financial Officer. Our prepared remarks will be followed by a Q&A session. In addition to our earnings release, which was issued yesterday evening, supplemental and financial data is available under the Investor Relations section of the company's website at www.cubesmart.com. The company's remarks will include certain forward-looking statements regarding earnings and strategy that involve risks, uncertainties and other factors that may cause the actual results to differ materially from these forward-looking statements. The risks and factors that could cause our actual results to differ materially from forward-looking statements are provided in documents the company furnishes to or files with the Securities and Exchange Commission, specifically the Form 8-K we filed this morning, together with our earnings release filed with the Form 8-K and the Risk Factors section in the company's annual report on Form 10-K. In addition, the company's remarks include reference to non-GAAP measures. A reconciliation between GAAP and non-GAAP measures can be found in the third quarter financial supplement posted on the company's website at www.cubesmart.com. I will now turn the call over to Chris.

Christopher Marr, CEO

Thank you, Josh. Happy Halloween, and welcome, everyone, to our third quarter call. It was a very solid third quarter for Cube, which resulted in guidance increases across our key same-store and earnings metrics. Across all markets, our existing customer KPIs remain strong with key credit and attrition metrics remaining consistent within historical normal ranges. We are continuing to feel diminishing headwinds from new supply as the stores placed in service over the last 3 years lease up and the forward pipeline continues shrinking. As evident by 2 consecutive quarters of improved guidance expectations, the year has played out a bit better than we expected, which we attribute to the lessening impact of new supply, a more constructive pricing environment during our busy rental season, and the continued health of the consumer. We foresee continued gradual improvement in operational metrics. We are not anticipating a catalyst for a sharp reacceleration. We are prepared and operating under the expectation that the stabilizing trends as well as deliveries of new stores will vary by market. Market level performance was similar to what we have been discussing for the last couple of quarters. Top performers continue to be the more urban, Mid-Atlantic and Northeast markets. The East Coast of Florida is experiencing stabilizing trends and some of the sunbelt markets are still finding their footing. In summary, it's a slow, steady stabilization without a catalyst for rapid acceleration, just like we laid out when we entered the year. We've seen some better pricing power that started earlier in the year for the reasons I've previously shared, while overall demand levels are mostly stable, but not growing significantly. It takes time for improving fundamentals to flow through to revenue with only 4% to 5% monthly customer churn, and this was the first quarter since Q1 2022 where move-in rates in the same-store portfolio were positive year-over-year. Assuming these stabilizing trends continue through the end of the year, we should be on improved footing heading into 2026. Now I'd like to turn the call over to our Chief Financial Officer, Tim Martin, for his commentary.

Timothy Martin, CFO

Thanks, Chris. Good morning, and thank you to everyone for taking the time to join us today. For the quarter, we performed in line with our expectations, reporting FFO per share as adjusted of $0.65. Same-store revenues declined 1% compared to last year with average occupancy for our same-store portfolio down 80 basis points to 89.9%. Same-store operating expenses grew just 0.3% over last year, again, reflecting our keen focus on expense control. We saw favorable year-over-year variances in utilities expenses and in property insurance following our successful renewal back in May, which we discussed last quarter. So negative 1% revenue growth combined with 0.3% expense growth yielded negative 1.5% same-store NOI growth for the quarter. From an external growth perspective, we're starting to see a little momentum here late in the year as we're under contract to acquire three stores in the fourth quarter. We also completed and opened our joint venture development in Port Chester, New York during the quarter and are scheduled to open our project in New Rochelle, New York during the fourth quarter. On the third-party management front, we had another productive quarter, adding 46 stores to our platform, bringing us to 863 stores under management at quarter end. On the balance sheet, we successfully completed our issuance of $450 million of 10-year senior unsecured notes on August 20. The offering has a yield to maturity of 5.29% and was our first time back to the market in four years. We were delighted with the execution and delighted with the support we received from our fixed income investor base. Our 2025 notes mature later this month, and we intend to satisfy those initially through borrowings under our unsecured credit facility and then ultimately term that out by accessing the bond market again in the coming months. Our leverage levels remain quite conservative with net debt to EBITDA at 4.7x at quarter end. From a guidance perspective, we updated our full year expectations and underlying assumptions in our press release last evening. Highlights of the guidance changes include a $0.01 raise at the midpoint of our FFO per share as adjusted. On same-store revenue growth, we improved the midpoint of our guidance range. Our expense growth guidance range improved as well, with a revised midpoint of 1.5% for the year. All of that translates into improved same-store NOI expectations for the year with a revised midpoint of negative 1.25%. Picking up on Chris' comments, we expect trends to continue to stabilize through the remainder of the year, putting us on better footing heading into 2026 than where we entered this year. Our guidance implies negative revenue growth in Q4, although acceleration from Q3 at the midpoint. While we're still not anticipating things snapping all the way back to normalized levels of growth quickly, we're seeing encouraging signs that are starting to flow through the portfolio. Thanks again for joining us on the call this morning. Happy Halloween. And at this time, Colby, let's open up the call for some questions.

Operator, Operator

Your first question comes from the line of Samir Khanal with Bank of America.

Samir Khanal, Analyst

Chris, I guess just how are you thinking about the balance between rate and occupancy right now in an environment where demand seems to be stable as you try to get that new customer in the door?

Christopher Marr, CEO

So ultimately, the systems are focusing in on maximizing the revenue from each customer and so trying to find that balance, and it varies by market. So when you think about those two levers, rate and occupancy, you have the elasticity of demand that one has to deal with. And so when we look at those markets that we would describe as having been solid for a while, kind of the rock stars in this part of the cycle where you're getting both rate and occupancy, I'd call out New York City, Washington, D.C. MSA, Chicago; then you have those markets that are stabilizing. So their rate and occupancy are moving in a good direction, albeit still perhaps down year-over-year. And those examples would be Miami and Los Angeles. And then those markets that are still trying to find their footing where, again, the systems every day are trying to navigate through that dynamic of new move-in customer rate versus occupancy and testing is the demand there at any price. And those would be the same markets we've talked about all year, Atlanta, Phoenix, Cape Coral, Charlotte, the sunbelt market. So really varies quite a lot by market as the systems try to find that balance.

Samir Khanal, Analyst

And maybe as a follow-up here, I know you talked about move-in rates that were positive in the quarter, kind of the 2.5% better on rate versus occupancy. I mean can you provide some color around October as well, what were you seeing kind of trends in October?

Christopher Marr, CEO

Yes. So the occupancy gap to last year has contracted from the end of the third quarter as of yesterday, we're down 100 basis points from where we were at this point last year. And the average rent on rentals, that 2.5% that you quoted for the quarter in October is kind of in that 1.92% range.

Operator, Operator

Your next question comes from the line of Nicholas Yulico from Scotiabank.

Viktor Fediv, Analyst

This is Viktor Fediv on for Nick Yulico. On your last call, you said that most demand still comes from traditional search and you're working with your partners for Gemini integration. So what percentage of leads and bookings are now AI influenced today? And how does overall the cost per AI leads compare to traditional search engine leads so far?

Christopher Marr, CEO

Yes. The leads coming through the LLMs, which is primarily ChatGPT at this point for us are about less than 1%.

Viktor Fediv, Analyst

Got it. You mentioned in the last call that the merchant builder exit is coming to the market. I'm trying to understand if this has become more intense recently and what it means for you and your potential acquisition opportunities.

Christopher Marr, CEO

I'm sorry, I think we got a little bit more clarity on the question, if we could, merchant builder sellers?

Viktor Fediv, Analyst

Yes, yes, sellers, yes, whether you can see now more of them or not really versus, for example, Q2?

Christopher Marr, CEO

Yes. No, I haven't really seen a change. Again, there's no and there typically isn't like significant duress in our sector. And so I think what you have is folks who may have opened a store in 2022, where they were underwriting cash flows based on the spectacular storage performance during COVID are clearly not meeting their pro formas. But I think what we're finding is everyone is just looking for ways to extend out and anticipate stabilizing trends and better times ahead and financial institutions for the most part, are cooperating.

Operator, Operator

Your next question comes from Todd Thomas with KeyBanc.

Todd Thomas, Analyst

Chris, Tim, your comments about the improving trends and third quarter being the first period of higher move-in rents and it seems like that continued in October. Your guidance assumes an improving revenue growth trend in Q4, albeit still negative. You mentioned that. But just your comments overall suggesting that, that trend of improving revenue growth, early sort of read into '26, is it fair to assume that you would expect, all else equal, that trend to continue from here, just given the 4% to 5% churn and the time it takes for that to translate to revenue growth? Is that how you're thinking about it at this point in the cycle?

Christopher Marr, CEO

As you consider the macroeconomic environment for 2026, assuming consumer health remains stable and the economy performs adequately, we anticipate a continuation of the trend from Q3 to Q4. We noted in Q2 that Q3 had a slight anomaly, which contributed to a deceleration compared to the previous quarter. Yes, we expect this trend to carry on. Currently, we do anticipate a positive shift in same-store revenue growth. I would conservatively expect this to occur in the latter half of 2026.

Todd Thomas, Analyst

Okay. And then some of your peers, I think, ran promotions are implemented, newer discounting strategies during the quarter. I was just wondering if you can speak to whether Cube participated or what discounting strategies might have been implemented during the peak season and how you're thinking about pricing, promotions and discounting in the off-peak season as occupancy typically pulls back a bit here.

Christopher Marr, CEO

Yes. So I guess there was some new vernacular introduced recently with this gross net kind of concept. The 2.5% gross move-in rate year-over-year growth that we saw is for us, it is also the net. We have not had any change in our discounting.

Todd Thomas, Analyst

Okay. Are you changing your promotional offerings, though or changing your discount strategies at all?

Christopher Marr, CEO

No.

Operator, Operator

Your next question comes from the line of Juan Sanabria with BMO Capital Markets.

Juan Sanabria, Analyst

Regarding acquisitions, some of your competitors have become more proactive, discussing more opportunities or deal flow. I'm interested in your perspective on this and whether you are willing to increase external investments.

Timothy Martin, CFO

Thanks, Juan. I appreciate the question. We currently have three stores under contract, which indicates progress. Over the past several quarters, we have observed a consistent viewpoint from buyers regarding return thresholds, and that perspective hasn’t changed significantly for us or others. However, there has been some improvement from the sellers’ side, making it more favorable for buyers, and we are beginning to see some transactions take place. This is reflected in our progress with the three stores we have under contract, as well as movements from our peers. Overall, while there aren't any dramatic changes, the market is becoming slightly more favorable as the gap between buyers and sellers has narrowed enough to facilitate some deals.

Juan Sanabria, Analyst

And then just as a follow-up, your rent per occupied square foot was strong in the quarter, up 2.4% quarter-over-quarter, flat year-over-year, better than peers. What do you think allowed you to push that in-place rate relative to the industry a bit stronger?

Christopher Marr, CEO

Yes. I believe everyone is trying to find a balance between the demand for storage and the pricing needed to attract customers, along with the marketing strategies to engage them. Some of this relates to how our portfolio is structured. At this point in the cycle, our strategic focus and commitment to quality have positively influenced our results. Additionally, some of this is just the typical seasonal trends expected as we move from the second quarter into the third quarter.

Operator, Operator

Your next question comes from the line of Eric Wolfe with Citi.

Eric Wolfe, Analyst

I believe you mentioned earlier that same-store revenue might not turn positive until the second half of 2026. However, if you're already experiencing a 2% to 3% growth in move-in rates, is there a reason to think that this won't lead to a similar 2% to 3% growth in same-store revenue? Is there some offset affecting the ECRI? I'm trying to understand why, given that you have positive move-in rents now, it would take until the second half of 2026 for same-store revenue to show improvement.

Christopher Marr, CEO

Yes. I mean not sarcastically, it's math. So we are in a business where 4% to 5% of our existing customers churn on a monthly basis. And so barring again some sort of change to the good on the demand side, again, which we don't foresee a catalyst for that. It just takes time. So you will just gradually see that slightly negative same-store revenue growth begin to move in a positive direction. And exactly when that crossover occurs, we're not providing guidance at this point, and we don't do quarterly guidance from a same-store perspective. But again, I think to be fair at this point in October 31, what I shared is kind of the conservative outlook at the moment.

Eric Wolfe, Analyst

Got it. Regarding the move-in rents you mentioned, does that take promotions into account? I'm asking because I'm considering whether consistent positive move-in rent growth, say around 2% to 4%, might eventually lead to similar growth in same-store revenue. I understand that occupancy is a factor, but I'm curious if we can rely on the move-in rent growth as a leading indicator for same-store revenue growth, or if promotions and other elements are being excluded from that calculation.

Timothy Martin, CFO

I'll jump in. If you consider a year-over-year improvement in pricing of 2% to 4% and hold everything else constant, after about 12 months of churning 5% of your portfolio each month at that rate, that's where you'd ultimately end up. This could be further supported by other factors. You might see a bit more from your ECRIs and possibly an increase in occupancy if you maintain that level of pricing power over time. It aligns with Chris' earlier point that it takes time to see the effects because it's a cumulative increase of 4% to 5% each month. If this situation continues for an extended period, that is likely where you will see revenue growth, give or take.

Eric Wolfe, Analyst

Does the move-in rents include promotions, or is that a separate calculation we should consider? I believe it was up around the mid-2s this quarter. Is that flat when accounting for promotions?

Christopher Marr, CEO

Yes. So that 2.5% is gross. And it for us is the same as the net because our promotions have not changed, the amount or the magnitude.

Operator, Operator

Your next question comes from the line of Michael Griffin with Evercore ISI.

Michael Griffin, Analyst

Chris, could you elaborate on whether you've noticed any changes in new customer behavior? It seems that if you're able to increase rents for new customers, there might be reduced price sensitivity or less comparison shopping. Also, is there any sign of homebuyer customers returning, or are they still not coming back?

Christopher Marr, CEO

Yes. I think what you're finding is you're just able to get rate in these markets that are not typically the homebuyer and seller movement market. So you're leading year-over-year improvement in rate to new customers, Manhattan, Queens, Brooklyn, Chicago, Washington, D.C. and then the laggards where you're just still trying to find your footing in terms of where is that balance and at what rate can you get that customer to convert continue to be Atlanta, Phoenix, Charlotte, some in Texas, some of the major Texas markets are moving in that direction as well. So it really is just market from our perspective, which then sort of ties into your question, which is its customer use case.

Michael Griffin, Analyst

Appreciate the context...

Christopher Marr, CEO

Yes, I'm sorry, one last piece. When we discuss supply and the diminishing headwinds across the portfolio, it is important to note that this varies significantly by market. It's not surprising that the sunbelt markets, which historically relied more on homebuyers and sellers, continue to see deliveries. While overall deliveries are down, they are still occurring frequently in Atlanta, Phoenix, and the West Coast of Florida.

Michael Griffin, Analyst

So it's kind of a double whammy for those sunbelt markets, so to say?

Christopher Marr, CEO

Yes.

Michael Griffin, Analyst

Great. And then maybe next, just on sort of the ECRIs and outlook there. I mean I realize that the rent roll downs, the move-in, move out is still pretty wide. But has your strategy changed there at all? Have customers become more sensitive to rate increases? Or are they typically still willing to accept them and you're able to push strategically where you can?

Christopher Marr, CEO

Yes. The customer health, which we continue to really focus in on, and again, varies by economic strata and parts of the country, generally across the portfolio continues to be very good, and we have not seen any change in customer behavior as it relates to ECRIs and our overall approach has been consistent throughout 2025.

Operator, Operator

Your next question comes from the line of Ravi Vaidya with Mizuho.

Ravi Vaidya, Analyst

I wanted to ask for the third-party management business. I saw a couple of stores came off on a net basis. Is there something that looking ahead, should we expect this to increase again? Or maybe who are some of the new private operators that you're partnering with? And how can that be used as a hedge for higher supply?

Timothy Martin, CFO

Thank you for the question. Regarding our third-party management program, we focus on the stores we add to the platform, which is where we exert our control. Our development team is actively seeking opportunities to bring on new owners and stores. This year, we've successfully added over 130 stores for the eighth consecutive year. This aspect of our business remains strong. However, predicting when stores will leave the platform is challenging. Some of this year's churn was due to us acquiring 28 stores that were previously in the third-party management category. Many stores exit the platform because they have transacted and sold to new owners who either manage their own operations or have differing arrangements. As a result, estimating net growth in store count on the third-party management platform is uncertain. We focus on what we can control. When stores leave the platform, we believe it's indicative of a job well done. We've assisted owners in creating value, enhancing performance, and typically preparing them to meet their goals as they transition their assets to others.

Operator, Operator

Your next question comes from the line of Spenser Glimcher from Green Street.

Spenser Allaway, Analyst

Maybe just going back to the acquisition front. Are there certain markets or geographies that you guys are more comfortable underwriting just due to greater stabilization of fundamentals? And then on the flip side, are there any markets that are sort of redlined right now just because there's still too much operational uncertainty maybe outside of the obvious supply-heavy markets?

Timothy Martin, CFO

We feel confident underwriting in all markets. Our underwriting approach includes various risk factors based on specific characteristics. The best opportunities may currently be in more challenging markets, as others may not see the potential we do. We don't exclude any markets based solely on supply or other criteria. Instead, we ensure that we are appropriately compensated for taking on that uncertainty. Although these markets can complicate underwriting when evaluating current rates and future projections, it's doable. This is especially true in local markets where a store faces competition from new supply. Accurately forecasting how rates will stabilize after new supply enters the market is challenging. However, this aspect of the investment process is engaging because the most complex deals can also offer attractive risk-adjusted returns. We are not steering away from any markets but are carefully weighing all associated risks.

Spenser Allaway, Analyst

Okay, yes, that's very helpful. And then can you just share what stabilized cap rates you guys are underwriting on the three assets that you're acquiring in 4Q?

Timothy Martin, CFO

Those three assets are a little bit of a mixed bag between stable and not stable. Going in, when you look across the three, we're going in, in the low 5s and stabilizing across the board fairly early on in year 2 or 3 at right around a 6% across the board for those three opportunities.

Operator, Operator

Your next question comes from Brendan Lynch from Barclays.

Brendan Lynch, Analyst

New York City continues to perform quite well, and it continues to outperform other large markets in the Northeast. Maybe you can just kind of compare and contrast what is leading to that outperformance. Obviously, there's a lot of supply issues in the sunbelt, maybe it's the same in the Northeast. But just kind of any color that you can provide on New York relative to some of these other markets in the region?

Christopher Marr, CEO

Yes. So it's going to be partly what you just said. So again, the boroughs really nonexistent new supply impact. So you're really stable from that perspective. You have a more need-based customer. And then obviously, we have a very significant position there and one in which the asset quality is extremely high. So we just have everything in our favor in a market that in this part of the cycle is just doing very well. Other Northeast, Philadelphia, Boston, a little bit of a mixture there. You've got supply as opposed to the boroughs. And you have a little bit more of a mix in the customer base. It's not quite sunbelt like, but you do have a little bit more of that mover, so to speak, than you might have in, say, the Bronx. So I think it's kind of a combination of those two things. And you see that similarly in urban Chicago, you see it in a few of the other urban markets.

Brendan Lynch, Analyst

Great. And then maybe just sticking with New York City, you've got new development coming there. It's a relatively small investment. I think the $19 million. Maybe just talk about what would allow you to get more assertive or aggressive on development in the New York City area.

Timothy Martin, CFO

It's really about finding opportunities that are in locations complementary to our existing portfolio and that have a demand for new products. However, it's become more challenging to finalize deals in the boroughs due to the absence of tax incentives. There are certainly opportunities out there, but they require more effort to uncover, and any opportunity we pursue needs to be something we are genuinely excited about.

Operator, Operator

Your next question comes from the line of Eric Luebchow from Wells Fargo.

Eric Luebchow, Analyst

Can you comment a little bit on any trends you're seeing on your average length of stay? It seems like vacates have been kind of muted across the industry this year, obviously helps from a roll-down perspective, but perhaps takes a little bit longer for some of these better move-in rates to flow through the portfolio. So any commentary on that would be helpful.

Christopher Marr, CEO

Sure. When you think about those trends, I would macro say they're consistent, still elevated. So our customers who have been with us greater than a year, that's up 50 basis points year-over-year. And again, if you kind of compare it to pre-COVID, so third quarter of 2019, it's plus 260 basis points. And then those customers who have been with us greater than 2 years, which is about 40% of our customers, that's actually down year-over-year about 140 basis points, but again, up 50 basis points what we saw in 3Q '19. So continue to be pretty consistent, have come down a bit off of peak, but still elevated relative to historical metrics.

Eric Luebchow, Analyst

I appreciate that. And I know you provided a little bit of directional commentary on '26, but just trying to take maybe more of the bull case. Obviously, if we get a housing catalyst, if we see a pickup in customer mobility, move-in rates continue to find stability, start growing. Do you think it's reasonable we could get back to more historical levels of growth by maybe the second half of next year, certainly into 2027 and then potentially even higher beyond that, especially given some of the supply delivery commentary. Just wanted to get your temperature on what you see over the next few years and not just into '26?

Christopher Marr, CEO

Yes, I see the bull case unfolding as you described. It's about finding a demand catalyst, and if that happens, housing being the most evident example, we still have a strong consumer base. This could lead to consistent performance from the solid markets we've seen recently, while the markets like Charlotte and Nashville should experience a nice rebound. We are well-prepared to achieve the necessary rates, and we've demonstrated our ability to do so, especially in recent months. Additionally, we expect to see an increase in occupancy as well. If these conditions materialize, I believe we could witness higher performance levels.

Operator, Operator

Your next question comes from the line of Michael Mueller with JPMorgan.

Michael Mueller, Analyst

I want to revisit the topic of development supply. How quickly do you think supply might recover in some markets as they improve over the next few years? Are there many competitive projects near you where others are just waiting for the right moment to start, or do you anticipate having a longer period without significant supply?

Christopher Marr, CEO

I believe predicting the future is quite challenging and somewhat uncertain. Therefore, I expect the recovery to be gradual. There are several factors to consider. We are still facing high costs, and as a result, the recovery in move-in rates will take time. Additionally, developers who started their projects in 2022 and are currently trying to maintain their positions may be hesitant to engage in new developments until they manage their existing operations. Furthermore, local and regional banks, which are the primary lenders for these developers, need to adopt a supportive approach regarding underwriting and financing options. This will likely limit activity in the near term. Looking ahead to next year and the first half of 2027, I anticipate continued caution. Certain markets appear to be very active, but I expect overall constraints to persist. Practically speaking, if the market does begin to improve, it typically takes about six months to ramp up and an additional twelve months for construction, meaning we could be looking at an 18-month timeline from that point onward.

Operator, Operator

Your next question comes from the line of Michael Goldsmith with UBS.

Michael Goldsmith, Analyst

Move-in rate was up 2.5% during the quarter, apparently, both on a gross and a net basis, but came down in October. So how did the move-in trend during the quarter? Did it peak in October? Or did it peak kind of earlier during the period? And is that how it normally plays out?

Christopher Marr, CEO

Yes. Move-in trend was historically normal. You see kind of that peak in July and then trends tend to sequentially start to slow down. But again, I think the message here is that the road is a bit windy. We've got markets that are continuing to move in a fairly straight line in an upward trajectory. And then there are markets, again, pick on the sunbelt where the road is a little bit more windy. So overall, I would say, kind of consistent with the last couple of years is what we've seen.

Michael Goldsmith, Analyst

Got it. And you said on the call maybe a couple of times just really stabilizing trends and encouraging signs. By stabilizing trends, are you referring to same-store revenue growth and by encouraging signs, you're suggesting the move-in rate. Is that kind of what you're pointing to?

Christopher Marr, CEO

Yes. So again, the top line metric, same-store revenue growth will just kind of beat the drum again. It takes time for that to move given the relatively low churn in the customer base. So when we talk about stabilizing trends, we're talking about move-in rates and demand levels, which again, have been weaker than historical, but fairly consistent and occupancy. So it's more of the KPIs that are happening every day, which will then gradually bleed into the same-store revenue result, which will then gradually move that in a positive direction. Okay. Thank you, everybody, for participating. Again, stabilizing trends, encouraged by the direction overall that the portfolio is moving. Assuming these continue, we expect to be on improved footing heading into 2026. We look forward to seeing some of you at upcoming conferences. And next time we're on a quarterly call, we'll share our specific expectations for 2026. So thank you all. Happy Halloween.

Operator, Operator

This concludes today's conference call. You may now disconnect.