EPR Properties (EPR) 2016 Q1 法說會逐字稿

Good afternoon, ladies and gentlemen, and welcome to the First Quarter 2016 EPR Properties Earnings Conference Call. Participants are in a listen-only mode. Later, we will conduct a question-and-answer session and instructions will follow at that time. (Operator Instructions). As a reminder, this conference call is being recorded.

I would now like to turn the conference over to your host Mr. Brian Moriarty, Vice President of Communications.

Thank you, operator. Thank you for joining us today. I'll start the call by informing you that this call may include forward-looking statements as defined in the Private Securities Litigation Act of 1995. Identified by such words as will be, intend, continue, believe, may, expect, hope, anticipate or other comparable terms. The company's actual financial condition and results of operations may vary materially from those contemplated by such forward-looking statements. Discussion of these factors that could cause results to differ materially from these forward-looking statements are contained in the company's SEC filings, including the company's reports on Form 10-K and 10-Q.

Now, I'll turn the call over to company President and CEO, Gregory Silvers.

Thank you, Brian, and good afternoon to everyone. I'd like to remind everyone that slides are available to follow along via our website at www.eprkc.com. With me on the call today are the company's CFO, Mark Peterson and CIO, Jerry Earnest. I'll start with our quarterly headlines and then pass the call to Jerry to discuss the business in greater detail. Our first headline, top line and earnings growth highlight business strength. As compared to the same quarter of the previous year, we achieved 19% growth in revenue and 15% growth in FFO as adjusted per share results. This established a strong momentum for us as we start the year. Next, solid investment spending across segments, this highlights the consistent opportunities illustrated in each of our primary investment segments along with the durability of each of our tenant segment. Jerry will have more to say about this in his comments.

Our third headline is Montreign gaming license activated at Adelaar. The gaming license became effective in March upon the deposit of bonds with the New York State Gaming Commission and payment by Montreign of its $51 million licensing fee to the gaming commission. We're excited to have met these key milestones as we move forward in creating value with the Adelaar property. Construction is well underway on the casino resort property and you can view and monitor the extent of the progress by going to www.montreign.com and clicking on the Construction Cam icon.

Our fourth headline is recognition of the experienced economy. Much has been written lately about the recognition of a demographic shift from an economy of stuff to an economy of experience. All we can say is welcome. Our tenants and operators provide many of the most innovative congregate experiences available whether it's enhanced theaters, TopGolf, ski properties, water park adventure lodges, [port] education facilities. We are beginning to see an increased awareness to the resiliency and dependability of these types of properties. As more people, businesses and investors recognize these demographic shifts, we expect greater opportunities for EPR to deploy capital and for our investors to realize the value of these investments.

Our last headline is well positioned with strong balance sheet. As Mark will discuss, we are at the lower end of our target leverage range on a net debt to adjusted EBITDA basis and our balance sheet provides a strong foundation for our anticipated investment spending. With a solid balance sheet, flexible access to capital and a deep investment pipeline, we feel that we are well positioned to deliver the results that you value.

With that, I'll turn it over to Jerry to discuss our investments and rejoin you for questions later.

Thank you, Greg. We began the year with strong investment spending of $145.1 million in the first quarter. The quarter's spending pace and composition reflects our disciplined balance and opportunity across our three primary investment segments. In the Entertainment segment, the theater exhibition business started the first quarter with strong performance. Box office revenues were up 7.8% year-to-date over last year. However, as we indicated in our previous earnings call, we do not expect such outperformance to continue during the full year of 2016. As of today, we still expect the box office to be relatively flat for the year overall, reflecting more of a transition year when compared with the outstanding movie schedule in 2015. With much of the franchise content being released in two-year cycles, we expect robust box office revenues in 2017.

Subsequent to quarter-end, we received the payoff of the $44 million mortgage note associated with the North Carolina Music Factory. During the quarter, we advanced approximately $22 million pursuant to the contractual terms of the note in mortgage. However, we made it clear that our underwriting would not allow us to advance beyond that level. Our borrower had significant plans to expand the project into a mixed-use development to include office and hospitality, given that such a development does not fit within our established business strategy, we permitted the borrower to repay the existing debt. Subsequent to quarter-close, given the success of these existing projects and the high level of interest in the future development, the borrower entered into a new loan and fully repaid our outstanding balance.

For the quarter, investment spending in our Entertainment segment was a total of $47.7 million, consisting primarily of investments in three build to suite theatres, redevelopment of three existing theaters, invested in one entertainment and retail center and the acquisition of one family entertainment center. We remain the largest landlord to the three big exhibitors in the US; AMC, Cinemark and Regal. Our purchase build-to-suite and conversion of existing theaters to the expanded amenity format remains an area of undeniable investment opportunity. The current investment environment for megaplex theatres, particularly with the standard amenity format remains a strong contributor to our investment spending pipeline.

In our Recreation segment, our TopGolf properties continued to exhibit their strong consumer preference and reliable performance. At the end of the quarter, we had 19 TopGolf properties in service. An additional seven TopGolf properties remain under construction. Lease coverage is strong, exceeding 3 times. Despite the difficulties posed by this year's ski season, we are happy to report that each of our tenants has fully funded their offseason reserves. As we discussed on our last call, we anticipate that our ski portfolios coverage would be approximately 1.2 times, reflecting unseasonably warm weather of the past winter season and we believe that the coverage for the trailing 12 months ended April 30, 2016 will be around 1.2 times.

Additionally, Peak Resorts has funded approximately $12 million of improvements for amounts in our resort and anticipates reimbursement for these improvements via the EB-5 program. The monies related to this reimbursement are currently in an escrow account pending final approvals. Peak has fully funded their offseason reserve to EPR. However, they are exploring avenues for additional liquidity, should the release of the EB-5 funds continue to be delayed. As one of those alternatives, we were approached by Peak to consider its secured term loan should they need it. We indicated that any loan request considered by EPR will be a maximum of $10 million and so require a suspension of all dividends to common shareholders of Peak, until the full repayment of the loan among other conditions. Peak continues to explore their alternatives, and we do not have any agreement to advance additional monies at this time.

Recreation spending totaled $51.4 million during the quarter, which consists of primarily the loans secured by the Hunter Mountain resort and the build-to-suit construction of 12 TopGolf entertainment facilities, five of which have been placed in service.

In our education segment, all three of our education property types, which include public charter schools, early childhood education centers and private schools continue to sustain strong growth with enrollment meeting or exceeding our under writing. As we have stated previously, we believe that our extensive operator relationships combined with our build-to-suit program provides us with a competitive advantage of building a high quality portfolio of education facilities. During the first quarter, we invested $45.8 million in the development or expansion of 19 public charter schools, three private schools and 14 early childhood education centers. One early childhood education center was placed in service during the quarter. As mentioned on our previous earnings call, during the first quarter, one charter school with a loan balance of $19.3 million was paid off by the borrower, as Mark will discuss further in addition to the loan balance, we received a prepayment of $3.6 million. This charter school was previously in our 2016 guidance for investment dispositions.

The Adelaar casino and resort project located in Sullivan County, New York remains on track with its approvals. Two significant milestones were achieved during the quarter. As we previously reported, Empire Resorts completed its equity rights offering and raised approximately $290 million of proceeds. Further during the first quarter, Montreign, a new casino subsidiary of Empire Resorts was awarded the gaming facility license from the New York State Gaming Commission after the payment of $51 million gaming license fee. The construction of the casino has begun and we continue to make progress on the project infrastructure from the Adelaar property and anticipate that [taxings] or bonds will be issued during the second quarter of 2016.

Our overall property occupancy remains strong at 99%. I want to reconfirm our investment guidance for 2016 at $600 million to $650 million based on our strong investment spending and pipeline. We also remain on track with approximately $75 million to $175 million in asset dispositions and capital recycling for 2016.

With that, I will turn it over to Mark for a discussion of financials. And I will rejoin you for questions.

Thank you, Jerry. I'd like to remind everyone on the call that our quarterly investor supplemental can be downloaded from our website. In call of the last quarter, we introduced new schedules in our supplemental to facilitate calculations of net asset value. Note that this quarter as part of the schedule found on page 26, we added a bit more detail related to other NAV components from our balance sheet. We hope you find this additional information useful.

Now turning to the first slide, FFO for the first quarter increased to $73.8 million from $32.1 million in the prior year. FFO per share was $1.17 this quarter compared to $0.56 in the prior quarter. FFO as adjusted for the quarter increased to $74.2 million versus $59 million in the prior year and was $1.18 per share for the quarter versus $1.03 per share in the prior year, an increase of 15%.

Now let me walk through the key line item variances for the quarter versus the prior year. Our total revenue increased 19% compared to the prior year to another record quarterly amount of $118.8 million. Within the revenue category, rental revenue increased by $17 million versus the prior year to $93.4 million and resulted primarily from new investments. Percentage of rents for the quarter included in rental revenue were $610,000 versus $270,000 in the prior year. The increase was primarily due to $368,000 in percentage rents received related to one of our private schools. Tenant reimbursements decreased by $438,000 for the quarter due primarily to the impact of the weaker Canadian dollar exchange rate versus the prior year. Other income increased by $660,000 for the quarter versus last year and was due to favorable settlements of foreign currency swap contracts as well as an insurance recovery gain of approximately $500,000.

Mortgage and other financing income was $19.9 million for the quarter, an increase of approximately $2.1 million versus prior year. The increase was primarily due to the anticipated $3.6 million pre-payment fee we received in conjunction with the full prepayment of a $19.3 million mortgage note receivable related to a public charter school. Partially offsetting this increase was a drop in mortgage financing income related to Camelback hotel and indoor waterpark as the mortgage was rolled into the lease on the adjacent ski hill and outdoor water park in the third quarter last year at the tenant's option. Therefore, rental revenue increased and mortgage financing income decreased related to Camelback versus the prior year.

On the expense side, our property operating expense decreased by $876,000 versus the prior year due to lower bad debt expense and the impact of a weaker Canadian dollar exchange rate versus the prior year. G&A expense increased to $9.2 million for the quarter compared to $7.7 million in the prior year, due primarily to an increase in our payroll and benefit costs, including additional personnel to support our growing asset base and an increase in amortization of share based awards.

Costs associated with loan refinancing or payoff was $552,000 for the quarter and primarily related to the fees associated with the repayment of a secured fixed rate mortgage note payable during the quarter with an annual interest rate of 7.37%. Our net interest expense for the quarter increased by about $4.7 million to $23.3 million. This increase resulted from an increase in average borrowings as well as a decrease in interest cost capitalized primarily in connection with the Adelaar project. Capitalized interest related to Adelaar was $430,000 this quarter compared to $2.1 million in the prior year as the portion of the project leased to Empire Resorts was placed in service during the first quarter. Additionally, the hedge rate on $300 million of our $350 million unsecured term loan increased to an average of 3.61% from an average of 2.6%. Note that the hedge rate will decrease back down to an average of 2.94% in July 2017. These increases were partially offset by a lower weighted average interest rate.

Transaction costs decreased to $444,000 from $1.6 million in the prior year due to a decrease in cost associated with potential and terminated transactions. Finally, income tax benefit of $144,000 for the quarter relates primarily to our Canadian owned properties and taxable REIT subsidiaries. Current income tax expense for the quarter was $458,000 and as the amount included is a reduction of FFO as adjusted for the quarter. In the prior year, income tax expense of $8.4 million was recognized based primarily on an open-examination by the Canadian Revenue Agency on our Canadian trust. This examination was completed favorably during the second quarter of 2015 and the expense related to the examination was reversed at that time.

Now turning to the next slide, I will review some of the company's key credit ratios. As you can see, our coverage ratios for the quarter continue to get stronger with fixed charge coverage at 3.3 times, debt service coverage at 3.7 times and interest coverage at 4 times. We increased our monthly common dividend by nearly 6% in the first quarter to an annualized dividend of $3.84 in 2016 and our FFO's adjusted payout ratio was 81%. I'd also like to point out that we are moving to using net debt to adjusted EBITDA as the primary metric we monitor to managed leverage as we feel this is more relevant for this purpose than debt to gross assets.

As defined in our supplemental, net debt to adjusted EBITDA was 4.81 times at quarter-end and we expect to maintain this ratio within a range of 4.6 times to 5.6 times going forward. Now, because adjusted EBITDA in this calculation does not fully include the current run rate for projects put in service during the quarter and other items. And net debt includes the debt provided for build-a-suit projects under development that do not contribute any current EBITDA, we also monitor our ratio adjusted for these items entitled adjusted net debt to annualized adjusted EBITDA. This ratio eliminates the penalty that build-a-suit projects inherently causes the timing - due to timing in the net debt to adjusted EBITDA ratio. While this ratio was not much lower than net debt to adjusted EBITDA this quarter at 4.76 times, we will continue to provide this ratio in the supplemental in the future as this difference is averaged around 30 basis points lower over the last couple of years. The level of this additional ratio along with the timing and size of our equity and debt offerings may cause us to temporarily operate outside of our stated range for net debt to adjusted EBITDA of 4.6 times to 5.6 times. As you can tell by these metrics, our balance sheet continues to be in great shape.

Now let's turn to the next slide for a capital markets and liquidity update. At quarter end, we had total outstanding debt of $2 billion, about 85% of this debt is due to fixed rate debt or debt that isn't fixed or interest rate swaps with a blended coupon of approximately 5.3%. We had $217 million outstanding at quarter-end on our $650 million line of credit and we have $11 million of unrestricted cash on hand. We are in excellent shape with respect to debt maturities. As of today, we have scheduled balloon maturities of only $62 million for the remainder of 2016 and $158 million in 2007.

Turning to the next slide, during the quarter, we prepaid in full one secured mortgage note payable for $4.6 million with an annual interest rate of 7.37%, as I mentioned earlier. Our secured debt as a percentage of total debt continues to decrease and now stands at less than 14%. During the first quarter, we took advantage of the timing of our inclusion in the S&P Midcap 400 index and issued 2.25 million common shares and a registered public offering for net proceeds of a $125 million. The proceeds from this offering we used to pay down a our line of credit.

Additionally, subsequent to quarter-end, we issued 258,000 common shares under our Direct Stock Purchase Plan or DSPP for net proceeds of $16.9 million.

Also as Jerry indicated, last week we received prepayment in full of the $44.4 million mortgage note receivable related to the North Carolina Music Factory. Accordingly, we continue to be well positioned to fund our strong investment pipeline.

Tuning to the next slide, we are confirming our guidance. For 2016, FFO as adjusted per share of $4.70 to $4.80 and our guidance for investment spending of $600 million to $650 million. Guidance for 2016 is detailed on page 28 of the supplemental. Note that our guidance for termination fees related to public charter school buyouts is unchanged for the year but as far as timing, I did want to point out that for the second quarter we expect this number to total $2.2 million. This amount relates to a public charter school sale for net proceeds of $12 million that has already occurred in April. I would also like to point out that in our guidance this quarter we broke out the effect of the conversion of the 5.75% Series C convertible preferred shares to get to FFO from net income as the conversion is dilutive to the per share results for FFO and FFO adjusted for 2016.

Now, with that, I'll turn it back over to Greg for his closing remarks.

Thank you, Mark. The first quarter of 2016 was a continuation of our commitment to smart, disciplined growth. Additionally, we're actively managing our portfolio to not only lower risk where appropriate, but also to recycle capital and establish market place value on certain assets. These efforts will further enhance the consistency and reliability that is valued by our shareholders. As you heard today, our underlying segments are performing and growing. Our balance sheet and access to capital is strong and our investment opportunities are solid. These pillars form the foundation for our enthusiasm for the balance of the year and beyond.

With that, I'll open it up for questions.

(Operator Instructions). Tony Paolone, JPMorgan.

Greg, you mentioned in your opening comments that the investment pipeline is pretty deep and I was wondering if you could just put a little bit more detail around that, in the past it has been pretty good at kind of locking the next 12 months' worth of activity pretty early on in the year, and just wondering what's on the horizon as you look at this new pipeline?

Yes, I would tell you that I think we feel that we're solidly in the upper 80%, 90% of what our pipeline relative to kind of known where we're at right now, but the thing that's interesting to us is right now we're seeing some real acquisition opportunities, especially as Jerry referenced in the theater area where we're seeing these conversions to high amenity and our willingness to understand that space and move forward with operators in there. There is really quite a bit of opportunity there and likewise in the education space, as Jerry referenced the growth in that area is very strong. So in those two areas, I'd say are the primary kind of drivers.

Okay. And on the theaters side, are these theaters that have been either converted already or built to some type, yes?

would say it's actually the hybrid of that. It's a former theater that's getting bought and then converted to the new amenity. So the location is solid, it was a former traditional theater with not the luxury seating and expanded food and beverage that go along with that, and then doing the conversion, buying the theater and then converting it. So if you listen to all of the other major exhibitors, they have got major, major capital deployment plans to further this. So as they go out and look at their theaters and they are looking for someone to do some capital along with their capital to do that conversion, a lot of landlords are not looking to do that. So if there is an opportunity to buy out the existing landlord, us come in and then put some capital along with the operator capital, we're seeing some really strong opportunities in that area

And in terms of on the sales side, can you give us a sense as to how much you guys have in the market right now for sale and how that's come along?

Yes, I think it's pretty well known, we've talked about [match] exposures that we have, imagine assets in the market and we've taken to TopGolf to the market as well primarily. I think those will have better color on those as we move into the second quarter, those just kind of went out toward the end of the first quarter and so beginning to - the interest will become more finalized as we get into that, but those are the two kind of primarily areas that we're seeking a disposition on.

Okay. And then last question on the note that you got repaid on the North Carolina loan you made, can you give us a sense as to what the IRR was on that investment?

Yes, that was about a [9, 9.5] on that and since that it was - it really came down to, Tony, again, they had an opportunity to expand their business to do something. That really isn't our business. So when they got into - wanting to put an office tower and some hospitality, that was more of not kind of recreational or anything like we have done in the past. We made a decision that this is not kind of our business, but these are people who have done entertainment before and done it so we wanted to be to the extent we could accommodate it, because we think there may be opportunities with the Group in the future. So we presented the ability for them to pay us off and they did actually rather quickly, I mean it spoke to the opportunity set that they have with regard to this other properties. And hopefully as they do this project and other projects that there might be opportunities to redeploy capital with them again.

Craig Mailman, KeyBanc Capital.

Just want to follow up on the theaters, some of those conversion opportunities or those some of your existing tenants coming to you with that investment or is it the existing landlord, knowing that you guys are big in this space and coming to you directly?

We've had some of both, Craig. I would tell you that it is a lot primarily driven by our operators, because as I said, we're very close to them as a group and spend a lot of time with them, but we have had the situation where an actual landlord looks, sees it as a time to monetize and get out because one of the requirements that we have when we actually invest with an operator is to extend the term, and they are not really - with an existing landlords, they're not really willing to extend the term unless they can do this conversion. If they don't want to put the money in, then they are at an impasse and so we get from both of those people who are at that impasse, we get opportunities with and if it's a location that we believe in and then an operator that we think can execute on and we have faith in, then we have been having good success with proceeding.

And are any of these opportunities kind of breaking off from the potential AMC Carmike deal or is that too early to see opportunities come from that deal?

It's really kind of early for that as they've indicated that they hoped to deal with that in the fourth quarter of this year is what their anticipated closing. So I think there's not really been anything that has developed from that specifically yet, but we're hopeful that that kind of activity will spur additional opportunities.

Okay. And then in the $600 million to $650 million, just to clarify the 80%, 90% that's what you guys think your visibility of the call it $625 million at the midpoint?

Craig, about 60% of that has already started and in process at the end of the first quarter or so.

How much of just theater acquisitions or education acquisitions are in that $625 million?

There is some - we always kind of have an idea of some of that kind of 10% factor in there of opportunistic type things and so could it be bigger than that opportunity, it could be, but when we are setting our kind of plan, we generally - as you've seen before, Craig, we have a strong 75%, 80% of that either in process or identified, waiting to begin, or already under construction. We have some that we think is going to start construction, but the timing on that and then we have generally a little plug for opportunistic things that will develop during the year, but that's usually 10% or so.

Okay. And then just one last one on Peak. You covered just kind of the lower end of the range of what you guys like to see there and now they're coming to you for potentially some bridge financing. Is this tenant or as you guys look at the credit are they on the watch or is it just potential near-term liquidity till they get the EB-5 money?

Well, I think it's really kind of a liquidity issue in the sense that if you think about what was described, they spent $12 million of their cash in an improvement on our property remember, I mean, that $12 million was spent in Mount Snow. They also have -- they paid us back $75 million roughly last year on properties, so they have a substantial amount of assets. And when we look at it, they had a one-two cover, I think this is an area that I think as they begin to plan, they're looking for contingency just in case there is something here. So I think we don't look at it in terms of bridge in the sense this could be capital that's just deployed for a greater period in just a short time. So they fully funded their reserves, we think they are a good company. It's just that they have made some capital improvements this year in anticipation of getting their money much faster than they have. And so in that sense, we think it's prudent to - in the since they're improving our property to think about what role we could play.

Richard Moore, RBC Capital Markets.

The first thing I'm curious on is the drop in investment spending (inaudible) that's in progress of $112 million, that was all Adelaar, is that right?

The drop in property under development, yes, we put $154 million in service for Adelaar.

Okay. I got you. Okay. And then, you guys bought one family entertainment center in the quarter, right?

Yes.

What is that again, exactly?

It's an Andretti's concept and so we have one that's part of a they bought, we had one under that they opened and we bought and there was an opportunity for us to grow with them as they have other development opportunities.

So, Greg, what all was in there exactly?

It's a Karting with a food and beverage overlay. The facility that we bought was in Atlanta, very successful and they've got a proven balance sheet with some quality backing and we think again, when we think of FECs, we look at it's an activity oriented and then a food and beverage overlay and there are different activities, whether that's bowling or to a certain degree activities in Karting, other activities that can be a driver for that additional food and beverage overlay and there's several operators who are doing extremely very good jobs out there with high coverages and we are kind of making investment, but not investments in the operating but making real estate investments with several of these at this time.

Okay. And then is there a cap rate sort of associated with that?

I'm looking right now but I think it was a little right at nine.

And then, I'm a little curious, maybe I'm not exactly understanding how you guys do this, but like I was looking at the number of TopGolfs you have in the portfolio is the same this quarter, as it was last quarter, I think it's 19. And you had 16 under development last quarter, and this quarter you have 11 under development. Did we lose five somewhere or do I just understand, what you guys did?

Five came into service this quarter. That's the number we had five, if you remember from Jerry's comments, five came in service. Now what we also had is we added some new more in under development. So what you're catching in the quarter is new under development or replacing those that came in service. So that's the number, it's not that we're off on our numbers. We had more that came under development, but we also placed five in service in the quarter.

Well, in fact the press release says you have 19 complexes today and you had 19 - in the beginning part it says portfolio update and then there was 19 last quarter. And so would there be 24 then in service right now or is that?

I think we had, I think what it was raised with spending on in-service assets. The 19 and then to confuse it even more, we had one property that was under ground lease that we put in-service but then, now it's going to be a full build out. So, you tell me how to classify that one, we're treating that now as a build-to-suit. But, so the property counts get a little confusing, we're additional spending on things already in service, because there is some tail spending on that and then you have with the situation where ground lease turns into a build-to-suit. So there's a little bit of reconciliation, I'm going to do that offline.

We have 19.

19 is the right number.

19 is fully open. As Mark said, we have one project, where we were just doing the ground, we were going to be a ground lease on those. So, we showed that in service since we're not going to make any improvements, TopGolf has come back to us and said yes, we'd like you to do the improvements on there, we've agreed to do that under our program. And so that was one that shows it was in service, but now it's going to be also have construction spending.

If look at the least scheduled, maturity schedule, you'll see one more lease in there, that's that ground lease. But Jerry, we don't change the 19, because now it's back under construction. So I know that's confusing, but that's the story.

Really, so Mark, you're saying and if you have 16, if you're spending on 16, that is meant 16 new projects.

That's right.

Okay. Okay, then on that North Carolina loan that got paid off, was there a prepayment with that as well?

There was not.

Not. And then I think the last thing for me is, could you explain me I missed it, you guys went pretty fastly, that was good, but did you explain why interest expense jumped so much?

Yes, it's a combination of really several things, less capitalized interest, because we put out lot of in-service. Of course, increased borrowings associated with the investment growth and then thirdly, the hedge rate on our term loan popped up this quarter and then it goes back down in early 2017, just based on the timing of the way the hedges were put in place.

Okay, great. There was one more, did you sell some charter schools in the quarter, besides the one or is that -?

We had a pay-off of a charter school loan that came with a pre-payment fee and that fee was $3.6 million, the gross proceeds on the mortgage note was $19.3 million.

Okay, but no additional sales of charter schools?

No.

No, we did have one subsequent to them in the quarter, that's the one I talked about in guidance for next quarter, that's for $12 million and there is a termination fee associated with that, it's in our guidance that we think. But that happens subsequent to the end of the quarter for $12 million.

I am showing no further questions at this time. I would now like to turn the conference back to Gregory Silvers.

Well, thank you everyone for joining us today. We appreciate your interest. If you have any further questions, please don't hesitate to reach out to us and we look forward to talking to you next quarter. Thank you.

Thank you.

Ladies and gentlemen, this concludes today's conference. Thank you for your participation and have a wonderful day. You may all disconnect.