Earnings Call Transcript - IHG Q3 2022

Operator, Operator

Good morning, and welcome to today's Third Quarter Trading Update for the period ending September 30, 2022. My name is Bailey, and I will be your moderator for this call. All lines will be muted during the presentation, with a chance for questions and answers at the end. I would now like to turn the conference over to our host, Stuart Ford, Vice President and Head of Investor Relations. Please proceed when you're ready.

Stuart Ford, Vice President, Head of Investor Relations

Many thanks, Bailey. So good morning, everyone, and welcome from me to IHG's conference call for the third quarter of 2022 trading update. So I'm Stuart Ford, the Head of Investor Relations at IHG, and I'm joined this morning by Paul Edgecliffe-Johnson, our Group CFO. Just to remind listeners on the call that in the discussions today, the company may make certain forward-looking statements as defined under US law. Please refer to this morning's announcement and the company's SEC filings for factors that could lead actual results to differ materially from those expressed in or implied by any such forward-looking statements. For research analysts and institutional investors, who are listening via our website, can I remind you that in order to ask questions, you will need to dial in using the details on the bottom of page two of the RNS release. The release together with the usual supplementary data pack can be downloaded from the Results and Presentations section under the Investors tab on ihgplc.com. I'll now hand over the call to Paul.

Paul Edgecliffe-Johnson, CFO

Well, thank you, Stuart, and good morning, everyone. Before turning to the trading update, I just wanted to acknowledge the other statement out this morning regarding my stepping down as CFO. It's been a huge privilege to spend almost two decades with IHG and be part of the many achievements and successes that the business has had so far, and to have played a role in setting up a very bright future with the breadth of our portfolio today, our scale, and the strength of our enterprise platform. But now is the right time for me personally and professionally to take up a new career opportunity. I will be here for another six months. So in that time, just like today, it is very much business as usual. And when it comes to my leaving, I know that I'm doing so with IHG very well positioned for further success. With that, let me turn to the subject matter of the call, our third quarter trading update. I will start as usual with a review of our trading performance. You would have seen that we're still providing monthly RevPAR data in our release, as well as giving you both the year-on-year movements and the performance relative to 2019. RevPAR for the quarter showed further strong momentum. On a group-wide basis, it was up 28% on last year and up 2.7% on 2019. The latter compares to quarter two, which was down 4.5%, while quarter one was down 17.7%. So we've seen another quarter of excellent sequential improvement. Within the quarter, all three months were positive. In our data, seen through the period and continuing in the most recent weeks, demand has remained robust. And we know from the long history of industry data that there are strong correlations with employment, and globally these measures remain high. We also know there is still more recovery to come in segments such as business and group, both of which are making strong progress, but not yet back to 2019 levels on a global basis. Clearly, there is also still more recovery to come in countries such as China, as well as a number of locations in the EMEAA region. Looking at the breakdown of global RevPAR for the quarter, the average daily rate was up 11% on 2019, while global occupancy of 68% was down just 6 percentage points. Clearly, leisure has been an important factor in our strong quarter three performance with rooms revenue from this driver up 12% on 2019, but business demand saw global rooms revenue down only 8% in the third quarter, whereas it was down 25% back in the first quarter of the year. In the US, it was particularly pleasing to see rooms revenue now back to 2019 levels for the business category. Looking now in more detail at our regional performance. For the Americas, RevPAR was up 6.8% versus 2019 and by 6.2% in the US. This represents the first quarter since the start of COVID that the wider region has been stronger than the US, driven by the catch-up in demand from the later timing of restrictions being lifted in Canada and a very strong performance in Latin America and the Caribbean. The Americas region has seen RevPAR ahead of 2019 levels for six straight months now, with September being the strongest month to date, with RevPAR up 9%. Contributing to that, US Labor Day weekend was ahead of 2019 by 16%, and for the quarter overall, leisure rooms revenue was 13% higher. As I've mentioned, progress on the recovery across business travel in the US, so rooms revenue got back to flat on 2019 levels for the quarter, whereas it was down 12% back in the first quarter. Revenue from groups' activity has similarly recovered well, it was down 14% in the third quarter, which is half the deficit it was in the first quarter of the year. With what's on the books, we can see that in the coming months, groups' activity is expected to turn positive on 2019 levels. While plenty can change before we get that, it's also the case that both the Thanksgiving week and the December holiday period are tracking to be up on their equivalent 2019 benchmark. As more demand has come back for business and groups' activity, together with the return of international travel to the US, the gap has narrowed between urban and non-urban performance. In January, the top 25 US markets were 24 percentage points behind the rest of the country in RevPAR versus 2019. By September, that gap has narrowed to only 8 percentage points, with the top 25 markets now up 4% and the rest of the country up 12%. It has also been interesting to see the developments of demand over days of the week as the recovery has become more embedded. Looking at data over the last six months, the RevPAR index to 2019 is strongest at weekends, as you'd expect, and second strongest on the shoulder nights of Thursday and Sunday. Meanwhile, RevPAR has most recently got back to flat across the weekdays of Monday to Wednesday. This improvement in Monday to Wednesday has been driven by occupancy rising back towards 2019 levels, whereas the rate on those weekdays over the last six months has been stable at around 5% ahead of 2019. This more recent improvement in weekdays’ performance gives us confidence of more recovery still to come as the world continues to revert back to much the same pattern of doing business as it did before. Moving on now to the Europe, Middle-East, Asia, and Africa region, where RevPAR was back to flat from 2019, a substantial improvement from down 33% in the first quarter of the year and down 10% in quarter two. In the UK, RevPAR was up 7% and in Continental Europe it was up by 11%. Clearly, these markets represent those that have had restrictions fully lifted, and they enjoyed a strong seasonal leisure period. Trading was tougher in Southeast Asia, Korea, and Japan, which together are around 20% of our EMEAA system. Here, the return of international travel has been much slower, with Japan, for example, only lifting international travel restrictions this month. Finally, moving to Greater China, where there was significant improvement in this latest quarter. RevPAR was down only 20% against 2019, having been down more than 40% in each of the prior two quarters. RevPAR related travel restrictions eased compared to the first half of the year, and the RevPAR performance has seen in July and August the best the region has seen for 12 months. However, there were some restrictions reintroduced once again in September, and just over 100 hotels were still being repurposed for quarantine use or temporarily closed at the end of the quarter. RevPAR performance in Tier 1 cities continued to be the most impacted in the latest quarter. Whilst these are feeder markets that travel into other domestic locations, Tier 4, which includes a number of key resort destinations, was able to achieve RevPAR ahead of 2019 levels. Whilst we don't know what the future pattern of restrictions will be, we know that whenever restrictions are relaxed, demand sharply returns thereafter. Turning now to net system size. Just over 8,000 rooms were opened in the quarter, an amount similar to the second quarter and ahead of the 6,600 in the first quarter. Nearly 3,000 rooms were removed in the quarter, equivalent to 0.3% of our system. The underlying removals rate, which excludes the impact of last year's Holiday Inn and Crowne Plaza review as well as our exit from Russia, was 1.7% on a year-on-year basis, which annualizes to 1.3% year-to-date. We're therefore seeing the expected lower level of removals, which reflects the success of our prior actions to further improve the quality and consistency of our estate. Underlying net system size growth was 2.6% year-on-year. You will recall that I talked at the start of the year about targeting for 2022 a net system size growth of 4%, noting that doing so will be stretching. And back in August, I said that given at the half-year stage, we were at 3.0%, achieving that target would require considerable acceleration of openings in the second half of the year. Conditions for opening new hotels have continued to be challenging for the industry, particularly in China. For example, there are around 20 hotels or 3,500 rooms in China that we had originally expected to open in 2022, but which have slipped into next year. We do though still expect openings to step up in the fourth quarter, and we continue to explore a number of organic opportunities to help deliver on our ambitions for net system size growth. Turning to signings, we added more than 13,000 rooms into our pipeline in the quarter, which was similar to the second quarter of this year and also to the third quarter last year. This takes the pipeline to 278,000 rooms, which is an increase of 2.9% year-on-year. The strategy we have been following for stimulating growth is evident in the signings performance. Our current system is two-thirds weighted in the mid-scale segment and one-third in upscale and luxury. However, of the signings in the quarter, more than half were across upscale and luxury. On a regional basis in the Americas, we signed over 5,000 rooms, which was 40% more than the prior quarter and well ahead of the same two quarters in the last two years. Signings included the first in the region for the Vignette Collection brand, the first all-inclusive property of Kimpton, which will be in Playa del Carmen in Mexico, and four more Atwell Suites as momentum builds for this new brand. When we look at signings year-to-date in 2022, we are up more than 40% compared to each of the last two years. Signings this year in the Americas have also continued to push upwards in chain scale terms. Currently, the region is weighted around 80% mid-scale and 20% upscale and luxury, but around a third of signings this year have come from upscale and luxury. In EMEAA, there were 2,500 rooms signed, a drop on the prior quarter. A significant increase in signings is expected in the final quarter of the year though just as we saw last year. We continue to see strong owner interest in conversion opportunities, including multi-brand portfolio deals similar to several that we have signed in the EMEAA region over the last 12 months. In Greater China, signings picked up to 5,400 rooms from 4,500 in quarter two, though COVID restrictions still continue to be a challenge to development activity. That said, signings are still outstripped openings by over 2:1 with 39 openings versus 79 signings year-to-date. Although signings in Greater China, as well as 24 Holiday Inn Expresses, have been a particularly strong performance, with 10 Hotel Indigos and 20 Crowne Plazas added to our pipeline. Finally, just to point you to a few other updates we included towards the end of today's statement. On the criminal cyber-attack that we suffered in September, we issued an initial announcement when it first occurred and an update statement towards the end of the month. Today's statements just summarize these for you. Key to our update statement was that no evidence of unauthorized access to systems storing guest data was identified. On the disruption caused to booking channels and revenue-generating systems, this first occurred on the 5th of September and two days later by the 7th of September, we had reactivated our websites and mobile app along with most of our other channels and systems. During that time, the hotels continued to operate and were able to take reservations directly. Secondly, on the share buyback, we've included an update; we're currently 59% through the $500 million program, which so far has reduced our share count by just over 3%, the weighted impact for the year of which will benefit our earnings per share calculation. And third, we have included a reminder on our debt facilities and currency exposure. In terms of what we hold in sterling, this is approximately GBP1.6 billion of net debt for each GBP0.10 movement in cable of the balance sheet date results in a translation impact of approximately $160 million. The movement drove a favorable net foreign-exchange benefit at the half-year, and if today's rate was the same at the end of the year, the translation impact will be closer to $400 million. There's also an equivalent transitional benefit on the interest cost to the bonds, the blended borrowing cost is 3.1%, and the annual interest charge is around GBP56 million. So this GBP0.10 movement in the average rate for the year results in the translational impact of approximately $6.6 million. Along with other movements, our adjusted interest expense for the year should therefore be approximately $130 million for 2022 compared to $142 million for 2021. So to summarize the third quarter, strong trading has seen our group-wide RevPAR exceed pre-pandemic levels with the Americas well ahead, and EMEAA broadly flat, but China is still lagging. Net system size growth was 2.6% year-on-year on an adjusted basis. We expect openings to pick up in the final quarter of the year, and we continue to explore opportunities to help deliver on our ambitions for net system size growth. The pace of signings driven by a pleasing increase in the Americas led to growth in our pipeline of 3%. With that, I’ll now pass this back to Bailey to open up the call for questions.

Operator, Operator

Thank you. Our first question today comes from Jamie Rollo from Morgan Stanley. Please go ahead. Your line is now open.

Jamie Rollo, Analyst

Thanks. Good morning, everyone. Congratulations to Paul on the new role at Flutter. I have three questions. First, regarding the 4% net unit growth this year, you mentioned organic opportunities in the past, along with some uneven business from alliances with casino operators and US Army hotels, which have generated low revenue. Can you clarify what the fee contribution from these organic opportunities might be and if it aligns with typical organic openings? Second, you mentioned a potential increase in Q4, but how optimistic are you about achieving the 5% net unit growth target for next year? Lastly, concerning the technology breach, are there any implications for your relationships with some of the owners? Is there any additional capital expenditure they might need to cover? Also, was there any impact on your US RevPAR? I believe you reported a 6% increase, while the market rose about 12% in the mid-scale segment; was some one-time issue affecting your results? Thank you.

Paul Edgecliffe-Johnson, CFO

Thanks, Jamie. And, yeah, thank you for your comments on the Flutter movement, but six months still here, so plenty to do. In terms of growth this year, so we're pleased with the openings that we've had and we are really pleased with the success we've had in reducing removals, which I think we know has held back our net unit growth compared to some of the peers. So openings coming through, and more openings will come through in the fourth quarter. And then we're working on a number of opportunities where owners are talking to us because they have seen all the work that we've done on our systems and our enterprise platform, they know we've got the industry-leading tech capabilities. All the work we've done on the loyalty program with the relaunch there. And there's just a lot for them to like, and particularly through the pandemic some owners have said, you know, this is just harder than it used to be. So we would like to have access to the platform, in terms of the fee contributions that we would make from a deal like that, yes, they are sort of at or above what we would make on an average room. So this isn't a low value bulking up if you like. And also we have said this is organic, so i.e., we're not going out and sort of buying something. So it's genuine room additions, but on a larger basis not done yet. So I can't be 100% certain it will get done by the end of the year, but I am very hopeful, let's put it that way. And in terms of 2023, so there's a lot of rooms in the pipeline, lot of openings coming through. We had some of the China openings still be delayed into next year. And the opportunities I'm talking about for people to join the platform, there are quite a few of them. So I think that this can be almost of another leg to the stool if you like that we can bring in our portfolios that people wanting to access the platform. And I think that can help us get up to those even more aspirational levels of growth. That said, I'd also sort of put their little proviso out there. We've always said we want to have industry-leading levels of net system size growth. So if what industry-leading looks like in 2023 is lower than five, then that's what we'll be targeting rather than sort of five specifically numerically. What's always been important for us is that we are leading the industry. And as we used to when you look at it on a gross basis, we had the highest level of openings back in 2019 in the industry. In terms of the tech breach, I think the important thing to remember here is that we had to close off some of the booking channels for a short period of time. Hotels were still able to take bookings, so you could call the hotel, turn up at the hotel and make your booking. So we had to close out some of the remote access to systems to ensure that we could get these criminals out of the system. And as I look at the data, it's actually very difficult to tell because we don't have all the competitors' numbers to compare against. But I can't see anything that tells me there's been any meaningful revenue shift or any meaningful loss of revenue. So I think different segments have done better depending on how fast they come back and which geographies they're in, but can't see anything in the numbers that tells me that we had any meaningful loss of business.

Jamie Rollo, Analyst

And the relationships with owners and initial CapEx hope we needed to catch up which?

Paul Edgecliffe-Johnson, CFO

Thanks, Jamie. I mean, the owners, I think, understand because they know that all companies are constantly being subject to criminals trying to infiltrate their systems. So I don't think it’s news. And in terms of additional CapEx, no, I mean, we have a very strong tech platform. We're in the cloud ahead of our competitors. And so there's an awful lot of investment that's gone in over the years. And which, as you know, some of our largest competitors are now having to face into the need for them to make that investment, but we're ahead on that. So nothing, no further investment required that I've identified to date, at least.

Jamie Rollo, Analyst

Thank you very much.

Operator, Operator

Thank you. The next question today comes from the line of Vicki Stern from Barclays. Please go ahead. Your line is now open.

Vicki Stern, Analyst

Yeah, good morning. Just firstly coming back on the sort of outlook for openings next year. How are you thinking about signings and openings against the backdrop of higher interest rates now and just generally tough financing? And perhaps you could sort of answer that with a bit of comment on how that plays out differently, perhaps across the different regions. I imagine, US, own a profile slightly different, for example, to those in Asia? And then just related to that what portion of your pipeline is actually financed and actually what does it need to sort of prove to you in terms of financing before you're willing to sign them up? And then just finally on the balance sheet, so you've got potentially an additional $400 million or so of cash, thanks to FX movements. Just how are you thinking about the Group's capacity to use that as we go into next year? You previously mentioned that you are happy to sit at the higher-end of that leverage target range in normal economic times, not sure how normal these are, but just any comments on how we should think about your objective within that range as we look into next year? Thanks.

Paul Edgecliffe-Johnson, CFO

Thank you, Vicki. In terms of how owners will respond to a higher interest rate environment, this situation resembles the interest rates many are accustomed to before the period of extremely low rates. Hotels can still deliver a strong return, even with debt costs significantly higher than before for construction or permanent financing. However, accessing that debt is definitely more challenging now, and I don’t anticipate this improving in the near future. The strongest brands are those securing financing, and our portfolio is well-positioned for this environment due to their proven ROI. We have several extended-stay brands along with upper and mid-scale offerings, like Holiday Inn Express and avid, which are excellent cash generators. I believe we will perform well on a relative market share basis, although conditions may vary globally. In North America, owners are primarily working with regional banks, while in Asia, relationships with banks may yield more favorable access to financing. Consequently, owners will need to invest more effort to obtain debt capital in the U.S. Regarding the process of signing hotels, financing is contingent on having a brand; lenders require assurance that the project will be backed by a strong brand. Initially, owners will secure a franchise contract with us before approaching lenders, showcasing their affiliation with IHG to discuss financing. While we don’t track the daily financing status of our pipeline, we ensure we don’t sign new deals without confidence in the owner's ability to secure financing. This scrutiny is crucial since owners pay a significant signing fee to enter the pipeline, which they do only with conviction that they will secure financing. Regarding IHG's financing, our strategy of maintaining unhedged sterling has allowed the Group’s net debt to decrease by $400 million this year due to currency fluctuations. The company remains highly cash-generative, typically converting over 100% of our EBIT into cash. We executed a $500 million return at the half-year mark, with approximately 60% already completed, and we expect to finish this by the end of the fiscal year. At that point, net debt will have declined through both translation and additional cash generation. This positions us within a net debt to EBITDA range of 2.5 to 3 times, allowing for further returns when the time is right. We will maintain a strong balance sheet, and I prefer not to speculate on our exact positioning within that range at this moment. However, our history of returning surplus cash to owners is well-established.

Vicki Stern, Analyst

Great. Thanks very much.

Paul Edgecliffe-Johnson, CFO

Thanks, Vicki.

Operator, Operator

Thank you. The next question today comes from the line of Jarrod Castle from UBS. Please go ahead. Your line is now open.

Jarrod Castle, Analyst

Thank you, and good morning, Paul. Where do we currently stand on second-half net unit growth? It seems there has been some decline. Additionally, could you provide an update on the unauthorized attack on your computer systems, particularly regarding any lawsuits filed against the company? Lastly, how are you managing inflationary pressures, and have there been any further cost-cutting measures implemented? Thanks.

Paul Edgecliffe-Johnson, CFO

Thanks, Jarrod. So in terms of unit growth, I was quite pleased with the openings in the third quarter, but there is more to do in the fourth quarter, and there's a lot of hotels that are close to opening. So we need to get those opened by the end of the year. There's lots of hotels kicking in EMEAA that are ready to open, and large hotels. So I think we will see a step-up in the fourth quarter. It is challenging in China with all the restrictions there. And there are 3,500 hotels which are pretty much ready to open, but it's just challenging to get them open right now, so they're just sort of stored up if you like. In terms of lawsuits, one of the realities of doing business in the US is that there will be lawsuits. So I think that's just something that we're very used to, and it's ordinary course business for us. So I wouldn't read too much into that. In terms of the inflationary environment, well, clearly we want our owners to be making as much money as possible, and that the increase in both building materials and operating supplies and equipment and labor costs all impact owner profitability. So there's a lot that we do, both through procurement looking at doing global deals with the likes of Unilever to buy Dove, for example, and to secure the supply chain, but also through our own recruitment channels where we identify talent for a lot of our hotels and pass them on. So there's a lot that we do that to help owners maximize their own profitability. In terms of IHG P&L, as you know, we've been investing into the business for multiple years. And if you think back to sort of 2018, when we restructured the company and then invested back in for growth, I think that yielded really good returns for us. We took $75 million out during the pandemic and actually more than that in 2021. But we said we'll be investing it back into the business to make sure we have the right capabilities. So it's going to get the right balance between being very efficient, but also having enough capability to grow the business at the maximum pace. As I look out into 2023, there will be pressures on wage costs within the business, and about 70% of our costs are people costs, about 15% depreciation and amortization, and 15% of other. Obviously, there won't be any increase in that D&A piece. And labor cost inflation next year, I mean, it's difficult to be precise on that; I've seen a number of companies coming out around the sort of 4% to 5% level. And then there's the measures that we always put in place to manage costs. So I don't think it's particularly different from where we have historically been, given the nature of our business. And we actually have a relatively low level of pressure from input cost inflation.

Jarrod Castle, Analyst

Okay. Thanks very much.

Paul Edgecliffe-Johnson, CFO

Thanks, Jarrod.

Operator, Operator

Thank you. The next question today comes from the line of Leo Carrington from Citi. Please go ahead. Your line is now open.

Leo Carrington, Analyst

Good morning, Paul. Thank you. Two questions for me. Firstly, can you expand on the ADR trends, please, with some color and perhaps regional color as to how the mix of leisure and sort of corporate rate has evolved through the quarter? And then taken in the mix of your earlier comments on the holiday periods looking good, to what extent do you think November, December RevPAR can resemble September, October’s performance versus 2019? And then as a second brief follow-up on openings, has the Q3 conversions brand mix been similar to that which you saw in H1? And then thinking about 2023, do you think the conversions mix would move north of 30%? Or is 30% sort of the right level for next year? Thank you.

Paul Edgecliffe-Johnson, CFO

Thanks, Leo. Since we began to emerge from the pandemic, much of the growth has been driven by rates, and it's been encouraging to see how the revenue management discipline in IHG and across the industry has functioned. When demand rises, people have opted for the highest available rates, which has proven to be an effective strategy. We observe no indication of a loss in pricing power. Each month, rates continue to improve. As demand rises across all segments—leisure, corporate transient, and group—it creates more compression, enabling us to remain aggressive with our rates. I remain optimistic about this trend. Looking at my latest data, I recognize that booking windows in this industry are short, suggesting the visibility I have extends only a few weeks ahead. However, demand pricing remains strong. While I can't predict with certainty how November and December will unfold due to limited visibility, there's nothing indicating we won't see trends similar to those observed in the third quarter. Regarding conversions, our conversion brands are performing well, and we now have a solid mix that allows us to tap into significant opportunities. It's crucial to balance new build openings and conversions. The rate for 2023 will largely depend on the number of new builds versus conversions because that will influence the proportionality. A mix of 30% is satisfactory for me. If new builds were to slow significantly, then that proportion could potentially increase, but that's not how I aim to achieve it. Conversions enter the system more rapidly, making them appealing, but new builds also have their advantages.

Leo Carrington, Analyst

Okay. Thank you very much, Paul.

Paul Edgecliffe-Johnson, CFO

Thanks, Leo.

Operator, Operator

Thank you. The next question today comes from Alex Brignall from Redburn. Please go ahead, your line is now open.

Alex Brignall, Analyst

Good morning. Thank you very much. Paul, I have a couple of questions. First, regarding the conversions in Q4. There has been some concern about how, with only eight weeks remaining, they might not be signed or converted. Any insights you can provide on how long it typically takes from signing to transforming these into IHG-branded hotels would be very helpful. Additionally, I would like to discuss the interest rate environment and its historical impact on your signing rates. It's been a while since we've seen rapid increases in borrowing costs. I'm curious if this creates a short-term slowdown in signings without affecting the long-term trend, or if the impact is more gradual, causing a slower rate of signings as rates increase. Thank you.

Paul Edgecliffe-Johnson, CFO

Thank you, Alex. We are exploring several opportunities, though I can’t provide too many specifics at this time. However, I'm optimistic that we can incorporate these into our system by the end of the year. While I can't guarantee anything until it's finalized, my goal is to achieve a significant portion of the rooms from this initiative, which would help me reach my target of 4% for this year. I understand the desire for more information, and we will share it as soon as possible. Regarding the interest rate environment, it's a mix of interest rates and the availability of debt from regional banks, along with owner behavior. Hotel owners want their properties financed and opened. Typically, when financing is tight, supply in the industry decreases. However, with strong demand, occupancy rates and prices rise, allowing existing hotels to perform better. This success gives owners a stronger case to present to banks, encouraging them to finance new hotels. Over the past 20 years, I've observed cycles where periods of high demand and low supply eventually lead to increased lending and a resurgence in supply. I can’t predict exactly when this will occur, but I am confident it will happen eventually.

Alex Brignall, Analyst

Paul, thank you very much and good luck in the new job.

Paul Edgecliffe-Johnson, CFO

Thanks very much, Alex.

Operator, Operator

Thank you. There are no additional questions waiting at this time, so I like to pass the conference over to Paul Edgecliffe-Johnson for closing remarks. Please go ahead.

Paul Edgecliffe-Johnson, CFO

That's great. Thank you, Bailey. And thanks everybody on the call, and really good to have all the questions. And just to let you know that our fourth quarter update and the financial results for the full year will be out on Tuesday, the 21st of February. So I look forward to talking to you all then, if not before. Bye for now.