Earnings Call Transcript - LVS Q3 2023

Operator, Operator

Good day, ladies and gentlemen, and welcome to the Sands Third Quarter 2023 Earnings Conference Call. At this time, all participants have been placed on listen-only mode. We will open the floor for your questions and comments following the presentation. It is now my pleasure to turn the floor over to Mr. Daniel Briggs, Senior Vice President of Investor Relations at Sands. Sir, the floor is yours.

Daniel Briggs, Senior Vice President of Investor Relations

Thank you, Paul. Joining the call today are Rob Goldstein, our Chairman and CEO; Patrick Dumont, our President and COO; Dr. Wilfred Wong, the President of Sands China, and Grant Chum, EVP of Asia Operations and COO of Sands China. Today's conference call will contain forward-looking statements. We will be making those statements under the safe harbor provision of federal securities laws. The company's actual results may differ materially from results reflected in those forward-looking statements. In addition, we will discuss non-GAAP measures. Reconciliations to the most comparable GAAP financial measures are included in our press release. We have posted an earnings presentation on our website. We may refer to that presentation during the call. Finally, for the Q&A session, we ask those with interest to please pose one question and one follow-up, so we might allow everyone with interest the opportunity to participate. This presentation is being recorded. I'll now turn the call over to Rob.

Robert Goldstein, Chairman and CEO

Thanks, Dan, and thanks for joining us today. Macao diluted $630 million of EBITDA for the quarter, and we are only eight months into our post-COVID reopening. These are early days. We began in Q1 with $400 million of EBITDA; in Q2, we did $540 million of EBITDA; and Q3 is now at $630 million of EBITDA. Look forward to growth in both the gaming and non-gaming revenue to lift the entire market. SCL is the largest share of non-rolling table win, rolling table win, and slot ETG win. We've always believed that completed Londoner will meet or perhaps exceed the earning power of the nation. Our future growth in Macao is tethered to these powerful assets which have all the variables necessary to drive growth in the years ahead. Whether it's rooms, gaming capacity, retail, entertainment, food and beverage, we have stellar assets. There is speculation about the future growth of Macao. A relevant question is, can the market grow to $30 billion, $35 billion, $40 billion of GGR and beyond? We are firm believers that it will, and may occur on a much shorter timetable than anyone realizes. This underscores our confidence that returns will be generated by our capital investment programs in our portfolio. We are staunch believers in the growth of the Macao market in the near and long term. LVS has invested $15 billion in Macao, which is the most important land-based market in the world. A few reference points to consider: third quarter EBITDA represents strong growth compared to previous quarters, as I mentioned. Our retail business in Macao has far exceeded pre-COVID numbers. I expect the gain portion of our business to follow the same trajectory as Singapore and accelerate in 2024. Despite the ongoing $1.75 billion renovation program, MBS and Singapore have experienced positive results. Six quarters into a reopening, MBS delivered a $490 million quarter. The power of this building is evident based on the results despite the disruptive impact of our ongoing renovation program. Disruption notwithstanding, MBS is hitting on all cylinders from a gaming, lodging, and retail perspective. Slots and ATG at MBS are approaching $1 billion annually, non-rolling tables are exceeding $20 million of drop per day. The ADRs are escalating, and our retail component is going far beyond pre-COVID numbers. MBS is a testament that quality assets prevail and validates the thesis that reinvesting in our assets will generate sustained returns. MBS has it all: an iconic building with superb decor and service levels, which attract the most desirable customers in every segment. At the completion of both phases of our refurbishment program, MBS will feature 770 suites. We used to have 200 suites before the refurbishment. There is no doubt about the future. How far can MBS go? Our expectations start with $2 billion or more in future annualized EBITDA. Finally, we're bidding for a license in New York. We have secured the Nassau Coliseum and are in the process of gaining the necessary permitting requirements to move forward. We're also receiving strong local support from the community. The resort will cost in excess of $5 billion but enables us to develop a five-star resort with unlimited appeal. This is simply an extraordinary opportunity. We are very excited about the prospect. Our bid is compelling, and if awarded the license, we will be in the ground as quickly as possible. Thanks for joining us again. I'm going to turn the call over to Patrick before we move on to some Q&A.

Patrick Dumont, President and COO

Thanks, Rob. I would like to cover two important topics before we get on to your questions. The first is the long-term margin structure we expect in our Macao business. As Macao market revenues continue to recover, our margins will naturally benefit from an improved business mix. This quarter, our Macao EBITDA reached $631 million at a 35.3% margin, which is an increase of 210 basis points compared to the second quarter of '23. As revenues continue to grow, we expect our margins to exceed the 36% of the Macao business in 2019. This quarter, the Malaysian Macao grew EBITDA to $290 million, with margins reaching 40.1%. This is an example of a property achieving strong revenue recovery with financial performance and margin that reflect the improved business mix. The Londoner Macao grew EBITDA to $167 million during the quarter, with EBITDA margin expanding 660 basis points sequentially to reach 32.2%. The strong flow-through of revenue to EBITDA reflects the operating leverage of our business, once the fixed costs have been covered. The transformation to Londoner has created a world-class product that is a must-see for visitors to Macao. We will naturally have some construction disruption in 2024, but we expect future EBITDA growth and margin expansion over time, so that's Macao. The second item I wanted to cover is an update on our plans for the return of capital to shareholders. Our Board of Directors has authorized a $2 billion share repurchase through 2025, and we're looking forward to restarting our share repurchase program. In the nine-year period from 2012 to 2020, we returned over $22 billion of capital to shareholders in the form of dividends and repurchases, roughly split 80% dividends and 20% to share repurchases. As we consider our future capital return, we expect share repurchase will be more heavily weighted than dividends. We believe repurchases will be more accretive than dividends over time as they reduce the denominator. We fundamentally believe in the compounding long-term benefit of share repurchases. So that's the capital return update. I'll turn it back to you today, and let's move to Q&A.

Operator, Operator

Thank you. Ladies and gentlemen, the floor is now open for questions. The first question today is coming from Carlo Santarelli from Deutsche Bank. Carlo, your line is live.

Carlo Santarelli, Analyst

Hey, guys. Patrick, thank you for the additional color. Rob or anyone over in Macao, maybe this one’s best for you. As you think about the base and the premium mass, it looks like in the quarter, you kind of converted some premium mass tables to base mass tables. And obviously, with the increases in visitation, that makes sense. Is that something you expect to do going forward? Do you have what you need in terms of the premium mass footprint at this point?

Robert Goldstein, Chairman and CEO

Yeah. The beauty of our business model is we've got plenty of capacity to cater to everyone. We will respond to the market. As you saw in the quarter, we moved tables around to accommodate where we saw demand. But with the number of rooms and our table capacity, we can grow into any market in any segment that shows strength, and that's what happened here. The truth is, I expect that to both move forward in the future and show growth both in base and premium. Our assets are built to be versatile, able to accommodate the market. Grant may have some color on that because it's true for any market. The only difference in this market for me is that we did such a huge amount of table supply that we're very nimble. Grant?

Grant Chum, EVP of Asia Operations and COO of Sands China

Yeah. Thank you, Rob. I think the repositioning this quarter towards more base mass tables is just a natural part of our optimization between the segments. As you rightly referenced, the summer saw a big increase in visitation and in the base mass business, so that was just a natural repositioning to optimize the table count. As you can see, sequentially, the win per unit increased substantially in premium mass, up 19%, and base mass, even though we reoriented the table count towards base mass, we also increased the win per unit by 7% sequentially. So I think that you can see very clearly that we actually optimized pretty well for the quarter between the two segments in terms of table capacity, and these numbers will change again as the market evolves depending on which segment is growing faster.

Carlo Santarelli, Analyst

Great. And then thank you for that. Patrick, if I could just kind of follow up on the Venetian, and acknowledging that there was some high hold in the period on the VIP side. But it's a relatively small number in terms of revenue. As you think about the margin profile, the 40.1% margins in the period at the property kind of rivaled '19, despite annualized third-quarter net revenue being down close to 18% versus what you did in 2019. If we think about that gap, that odd $600 million flow-through, getting back to kind of '19 net revenue levels at that property or any other property. How would you think about the incremental flow-through on that incremental net revenue, and perhaps we could obviously take it from there to get a sense of where margins could kind of prove out over time?

Patrick Dumont, President and COO

That's a great question. I think for us, the first thing is, this is what happens if you cover your fixed cost base. So when we were 70% recovered, we had to cover our fixed cost base in Macao. And as the market recovered and as tourism and visitation continue to grow, we will reach our run rate margin levels, which we always felt were in this context. What you see with the Venetian is a result of a fantastic product that is really an example of a property reaching a more run-rate level of operation post-pandemic and the performance in margins that result. We feel very strongly that the Venetian Macao is going to perform well as mass visitation continues to return to the market. Remember, Macao visitation is still about 20% less than it was pre-pandemic; we're down about 1 million visitors in the same period. So we feel very strongly about the margin potential. We're very proud of what's going on at The Londoner. We think the market is starting to understand that product operates well, and we’re starting to see the results in terms of productivity and margins. Again, we believe there's more room to grow.

Carlo Santarelli, Analyst

Great. Thank you very much, guys. I appreciate it.

Operator, Operator

Thank you. The next question is coming from Joe Greff from JPMorgan. Joe, your line is live.

Joe Greff, Analyst

Good afternoon, guys. Before COVID, you used to disclose department margin ranges for base mass table games and premium mass table game ranges. I think base was 35% to 45%, and premium mass is 25% to 40%. Are those margin ranges, or the midpoint and higher still viable, or does The Londoner and its ramp mode right now cause those ranges to be more middle or towards the lower end of those ranges in the aggregate in Macao?

Patrick Dumont, President and COO

I think for us, because of the mix of business and where we're investing, we sort of run the business in aggregate. So what we're looking at is the 40% margin that Venetian just displayed in the quarter and the 660 basis point expansion in margin that The Londoner saw as the market discovered how great it was, and we started getting more visitation and growth. So for us, that's really how we're looking at it. Departmentally, I think we manage the business overall. As Rob said earlier, we're going to shift assets to the segment that is most productive and provides the best returns.

Joe Greff, Analyst

Thanks. And then with respect to the buyback, that was great to see, Patrick. Do you look at that as more episodic or opportunistic? Or do you look at it as there's a consistent level per quarter or per year that you would aim for?

Patrick Dumont, President and COO

I think we're going to be measured over time. We want to return capital through share repurchases in a meaningful way. We believe there is a real benefit to reducing the denominator. We think it's accretive. We think there's a compounding effect in share repurchases. We're looking to do it on a regular basis. The amounts are to be determined. But for us, you see the size of the authorization; you see our balance sheet strength. You see the amount of cash flow we're generating down in the business. We're going to be aggressive. While we inherently believe in the dividend, if you look at our prior return of capital story, we're looking to be majority share repurchases and obtain that benefit. Historically, we have returned capital in a regular and repeatable way, and I believe we will look to do that again.

Robert Goldstein, Chairman and CEO

And Joe, it can't help but be somewhat opportunistic as we look at the market. Our stock is trading roughly at COVID levels, and we think our buildings are going to generate $5 billion and more, $40 billion, $50 billion in the next decade. It's hard not to look at the stock and see it as an opportunity. On the other hand, we also like to be long term and be consistent. So it's kind of a mixture of both, but it's hard for us to sit here today and look at pricing as if we’re close to Macao or half open to Macao and Singapore and not think there’s opportunity, but we also have a long-term perspective.

Joe Greff, Analyst

Great. Thanks a lot. Thanks, Patrick. Thanks, Dan.

Operator, Operator

Thank you. The next question is coming from Robin Farley from UBS. Robin, your line is live.

Robin Farley, Analyst

Great. Thank you. I wonder if you could give us some thoughts on what's holding back the lower spending customer. It sounds like transportation bottlenecks are no longer really the issue in Macao if it's the RMB depreciation? Is that something we have to wait for that to anniversary next year, or what do you think will change to elevate the visitor levels for that lower spending segment? Thanks.

Patrick Dumont, President and COO

I think it's interesting. If you go to Page 16 in our deck, and by the way, we debate this all the time. The team on the ground there is very focused on it. I think what you'll see is that visitation from China, excluding Guangdong is at 72%. Guangdong is back to 92%, but if you look at the airlift, Macao Airport was only at 64% of 2019 capacity in the quarter, and Hong Kong was only at 63%. So there's a meaningful difference. Transportation difficulties are still real, and they're improving. Customers can get to Macao more easily at this border than they could before. But we’re still not back to normal. We're starting to see some of the infrastructure for mass tourism returning, which is very positive, and we're seeing increased visits due to this recovery. Some higher value customers, premium mass customers, and the IP customers are affected by airlift issues, which are both domestic and international. As we see this airlift capacity recover, we're going to start to see more entertainment, which will benefit not just us, but the entire market as they are able to get here more easily. That recovery story is not fully realized in terms of air travel and accessibility but is on the way.

Robin Farley, Analyst

I guess I'm thinking that the air travel wouldn't necessarily be where the lower spending customer will be coming from, and high-speed rail seems to be back to pre-COVID levels. Is there anything else you think is impacting that needs to change, whether it's policy in Mainland China or anything else outside that transportation issue? Thanks.

Robert Goldstein, Chairman and CEO

Grant, do you want to jump in here?

Grant Chum, EVP of Asia Operations and COO of Sands China

Sure. Yeah. I think, Robin, the point Patrick referenced about 72% out of non-Guangdong is accurate. If you consider the regional differences between provinces, some of the higher-spending provinces are actually above 2019 in terms of visitation, while some are lower. There are regional differences depending on a host of factors ranging from transportation to hotel room availability, and their propensity to cross borders on trips. This was the first summer holidays since COVID, and I think we see a significant acceleration in that non-Guangdong visitation this quarter. We're up 22% over visitations, with mainland China up a lot more. This is reflected in property visitations we saw this quarter, with the 17% increase in base mass revenue. Traffic is picking up but at different paces.

Robin Farley, Analyst

Okay. Great. Thank you all.

Operator, Operator

Thank you. The next question is coming from Stephen Grambling from Morgan Stanley. Stephen, your line is live.

Stephen Grambling, Analyst

Hi. Thanks. This may be a bit myopic, but I would love to hear more color on how Golden Week is trending and how different customer categories are recovering, especially around big events that seem to historically drive significant recovery.

Robert Goldstein, Chairman and CEO

Steve, we traditionally don't talk about the current quarter. We'll keep that intact here as well. I think if you look at the numbers in the market, you'll see the strength of Golden Week. The numbers are driven by the government and other sources but we never comment inside the quarter.

Stephen Grambling, Analyst

Fair enough. And maybe changing to something more specific, I would love to just hear anything around potential near-term disruption that might occur, starting in November, and when that might be felt most and when we can anticipate the re-ramp?

Robert Goldstein, Chairman and CEO

Yeah. I'll turn to Grant. There will be some disruption, but we still feel as though it’s manageable. We're looking to keep business operations smooth while managing the renovations, similar to what we accomplished in 2019 when we started the holiday conversion into The Londoner hotel. You may see some disruption on the gaming side in the middle of next year. We'll manage the Sheraton Tower renovation methodically over the next 15-18 months, enhancing customer yielding while getting these works done quickly. The expansion will deliver much better experiences.

Patrick Dumont, President and COO

One thing to think about is our focus on return on invested capital and growth in Macao. Our anticipation is the returns on these investments will be commensurate with those we've made previously and will drive meaningful growth. The initial market reaction to the current products we launch backs that view. Given the customer response and the performance of assets long-term, we believe the completed Londoner will match the Venetian in potential.

Robert Goldstein, Chairman and CEO

I'd also add that the size and scale of our portfolio give us flexibility. We have other rooms available, allowing us to minimize disruptions and maximize the opportunity to deploy our other assets to keep our business strong despite the renovations.

Stephen Grambling, Analyst

Thanks. I'll jump back in the queue.

Operator, Operator

Thank you. The next question is coming from Chad Beynon from Macquarie. Chad, your line is live.

Robert Goldstein, Chairman and CEO

Chad?

Operator, Operator

Chad, please check your mute button. Your line is live if you wish to ask a question. Okay. We can come back to Chad later. The next question is coming from Shaun Kelley from Bank of America. Shaun, your line is live.

Shaun Kelley, Analyst

Hi. Good afternoon, everybody. I just wanted to go back to the margins in Macao, and maybe discuss the flow-through a little more. It seems flow-through was a bit better in the third quarter vs the second. Can we get some color on the factors driving that? Was it normalized staffing, non-gaming amenities, or the base mass mix recovering? What do you see as the contributing factors?

Patrick Dumont, President and COO

Thanks for that, and I appreciate the question. I'll tell you there's a little bit of magic to it: it's called revenue increase. For us, it really is just more customers, spending money on our product, and demand recognition. We just saw tremendous improvement in customer service, which is a highlight for us. So overall, it's just growth in revenue across all segments that contributed to this growth.

Shaun Kelley, Analyst

Great. Thanks, Patrick. And as my follow-up, I want to dig deeper into the buyback authorization. Can you give us a couple of parameters? Pre-COVID, this company had a high overall payout ratio, but with an ambitious capital program across potential developments, how should we think about the payout ratio and medium-term leverage?

Patrick Dumont, President and COO

We’re currently sitting at about $5.6 billion worth of cash. Macao is starting to become very cash-generative, and Singapore is too. Given the timing of our development obligations and those cash flows, we will be able to invest in core market growth, redevelopment of key assets, and pursue New York and other opportunities. As for payout ratios, we’re not going to weigh dividends as heavily as before. We're looking to flip it. Majority returns will come from share repurchases and growth. Regarding leverage, prior to the pandemic, we spent years transforming the company into an investment-grade name. This provides us efficient access to capital and flexibility for future projects. We prefer to be leveraged 2 to 3 times on a gross basis and believe that we’ll deleverage over time through EBITDA expansion. Maintaining an investment-grade rating is also key for the benefits it provides.

Shaun Kelley, Analyst

Thanks for that.

Daniel Briggs, Senior Vice President of Investor Relations

Thanks, Shaun.

Operator, Operator

Thank you. The next question is coming from Brandt Montour from Barclays. Brandt, your line is live.

Brandt Montour, Analyst

Great. Good evening, everybody. Thanks. For Marina Bay Sands first, in your slide, you show flight capacity hovering around 80% recovered. Given the momentum you are seeing in that asset, do you still feel like you need that last 20% of China inbound to fully recover to hit the $2 billion run rate target? Can that happen while Tower 3 is under renovation?

Robert Goldstein, Chairman and CEO

The quarter's results demonstrate our positive trajectory. While we always want more visitors, the diverse assets in Singapore are coming together harmoniously. One significant point is the improvement in the suite product, which was previously lacking. When it goes from 200 to 770 it boosts our potential. Our goal is $2 billion in future returns. The opening of China flights will greatly enhance potential. We're just now entering this recovery, and while we have a faith in this product, it's essential to see where future guests come from.

Brandt Montour, Analyst

That's super helpful. And then over on Macao, on Slide 14, it shows the win per visitor coming down quarter-over-quarter; this is the second quarter that has declined. Is this wholly explainable by the reallocation of tables to base mass, or are there other constraints impacting win per visitor that you’d want to highlight?

Patrick Dumont, President and COO

Just a quick thought on Page 14. This is really driven by the number of visitors showing up to the market, which is averaging down. But I'd like Grant to comment further for additional color.

Grant Chum, EVP of Asia Operations and COO of Sands China

Absolutely. You're right that the premium mass has returned first, and for the first couple of quarters after reopening, those revenues skyrocketed versus historical levels. As we're seeing more base mass, especially in the summer, it is normalizing. It is crucial to note that we are still attaining a higher quality mix of customers than in the same quarter of 2019, showing higher revenue per visit.

Brandt Montour, Analyst

Got it. Just to clarify: it’s mix towards base mass, but there are also well-heeled customers spending slightly less, like families? Is that a way to look at it?

Grant Chum, EVP of Asia Operations and COO of Sands China

No, this slide shows that the mass revenue per visit arrival is actually higher than the same quarter in 2019. The higher spend per capita is an indicator across all market segments, as reflected in the retail analysis as well.

Patrick Dumont, President and COO

Thanks, Brandt.

Operator, Operator

Thank you. The next question is coming from George Choi from Citi. George, your line is live.

George Choi, Analyst

Thank you very much. While we believe concerts can help generate incremental revenue in Macao, how should we consider the associated incremental expenses? Specifically, do you expect the concerts at the Venetian this month to be both EBITDA accretive and margin-enhancing at the same time?

Patrick Dumont, President and COO

Entertainment is a significant part of our business. We're focused on using events to drive premium visitation and create programs for customers that offer experiences they can't find elsewhere. Our strategy here has been successful in Asia. We opened a new venue in The Londoner to facilitate these events, and in the third quarter, we successfully ran about 15 different events with 19 performances. This strategy builds the attractiveness of Macao as a destination. The economics remain sound—we've been doing this for over a decade, calibrating our entertainment investments against returns. Different partnerships can range from pure rental to co-investing, and that analysis continues to drive the initiative forward.

Grant Chum, EVP of Asia Operations and COO of Sands China

Yeah. We are pursuing entertainment to create a better attraction. This hasn't stopped since reopening, and we've increased our efforts since we opened The Londoner arena. The economics haven’t changed, and we've had great events that increased the attractiveness of our properties. We know how to calibrate investment in entertainment vs. revenue return based on the cost and partner involvement.

Robert Goldstein, Chairman and CEO

In my experience, entertainment is an essential component of any top-tier resort. You can never underestimate its impact on customer engagement, loyalty, and overall business performance. We have been stable in this area, and you'd be surprised how much we can lean into it. Entertainment is a powerful aspect of our strategy for both tourism and as part of our comprehensive offering.

George Choi, Analyst

That’s very good color. Thank you.

Robert Goldstein, Chairman and CEO

Thank you, George.

Operator, Operator

Thank you. The next question is coming from Dan Politzer from Wells Fargo. Dan, your line is live.

Daniel Politzer, Analyst

Hey. Good afternoon, everyone. First, on Singapore, the CapEx, the $750 million for Phase 2: how do you view it relative to your longer-term expansion plans? I know it's been pushed out, which increases the budget, but is this more of a bridge to that, or how should we think about long-term updates?

Robert Goldstein, Chairman and CEO

This is about commitment to Phase 1 because the product, as good as it was architecturally, lacked some inner details we needed. It’s crucial for Phase 2. It's the best money we can spend to make our product and position much stronger. We aim for monumental dividends from this investment in the future. This budget doesn’t connect explicitly to Phase 2, but it’s designed to enhance Marina Bay Sands.

Patrick Dumont, President and COO

We are developing a product-driven business. Investing in quality and innovation in service will drive returns over time. The Londoner is setting standards, and with this investment, Marina Bay Sands will soon match industry leaders. While IR 2 is a different development with its own timelines, we are excited about it and eager to get started as soon as possible.

Daniel Politzer, Analyst

Got it. Thanks. And moving to Macao, it seems the non-rolling ship win has stabilized around 22% to 23%. Is this driven by a premium mass shift, and should we expect this to edge back to 23% to 24%+? Or are there other elements impacting this?

Robert Goldstein, Chairman and CEO

You’re right to focus on that. It’s critical to understand why the entire industry seems to be down. We don’t have an honest answer why. The math on the baccarat games doesn't change, but changes in customer behavior can affect everything. It would be wonderful to see it rise to 24% again; it would significantly impact EBITDA and earnings. We don’t have clarity yet but will share insights as we get them.

Grant Chum, EVP of Asia Operations and COO of Sands China

Rob is absolutely correct. We lack a clear answer. Some theorize that premium mass might create more volatility; hence we see percentages fluctuate. We will closely monitor this.

Daniel Politzer, Analyst

Got it. I appreciate the detail. Thanks.

Operator, Operator

Thank you. The last question today is coming from David Katz from Jefferies. David, your line is live.

David Katz, Analyst

Hi. Good day, everyone. Thanks for taking my question. I just wanted to revisit the historical margin levels in Singapore, which were north of 50%. Could you discuss the factors affecting growth back to that level and the headwinds you see?

Patrick Dumont, President and COO

Notably, there was an increase in our tax rate by 3 percentage points and a 1% GST that impacted margins. We have managed expenses and business mix to combat inflation, but we expect strong margins as revenue grows based on our investments and the market dynamics. We are tightly managing productivity yields and capital returns. We anticipate a strong future there.

David Katz, Analyst

Understood. And for my follow-up, despite a strong quarter, the market seems to expect macro pressure. Are you noticing factors that would validate this perspective?

Patrick Dumont, President and COO

Our markets are fortunate; Singapore continues to draw tourists. It’s great for business and offers many recreational activities. We don't see the impact like broad-based consumers. Our focus is on niche tourism, and we have a solid appeal to those segments. Our strong position in both markets drives growth even through different conditions.

David Katz, Analyst

Got it. Thank you very much. Appreciate it.

Operator, Operator

Thank you, ladies and gentlemen. This does conclude today's conference call. You may disconnect your phone lines at this time, and have a wonderful day. We thank you for your participation.