Medical Properties Trust Inc (MPW) 2009 Q2 法說會逐字稿

Good day, ladies and gentlemen, and welcome to the Second Quarter 2009 Medical Properties Trust, Incorporated Earnings Conference Call. My name is Terreness, and I will be your coordinator for today. At this time, all participants are in a listen-only mode. We will conduct a question and answer session toward the end of this conference.

(Operator Instructions)

As a reminder, this conference is being recorded for replay purposes. I would now like to turn the presentation over to your host for today, Mr. Mike Stewart, Executive Vice President and General Counsel. Please proceed.

Good morning. Welcome to the Medical Properties Trust conference call to discuss our second quarter financial results. With me today are Edward K. Aldag Jr., Chairman, President and Chief Executive Officer of the Company, and Steven Hamner, Executive Vice President and Chief Financial Officer.

A press release was distributed this morning, August 6, 2009, and will be furnished on Form 8-K with the SEC. If you did not receive a copy, it is available on our website at www.medicalpropertiestrust.com in the Investor Relations section. Additionally, we are hosting a live webcast of today's call which you can access in that same section.

During the course of this call, we will make projections and certain other statements that may be considered forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements are subject to known and unknown risks, uncertainties and other factors that may cause our financial results and future events to differ materially from those expressed in or underlying such forward-looking statements.

We refer you to the Company's reports filed with the Securities and Exchange Commission for a discussion of the factors that could cause the Company's actual results or future events to differ materially from those expressed in this call. The information we provided today is as of this date only and, except as required by the Federal Securities Laws, the Company does not undertake a duty to update any such information.

In addition, during the course of the conference call, we'll describe certain non-GAAP financial measures, which should be considered in addition to and not in lieu of comparable GAAP financial measures. Please note that in our press release, Medical Properties Trust has reconciled all non-GAAP financial measures to the most directly comparable GAAP measure in accordance with Reg G requirements. You can also refer to our website for the most directly comparable financial measures and related reconciliation. I will now turn the call over now to our Chief Executive Officer, Ed Aldag.

Thank you, Mike. And thank you all for interest in Medical Properties Trust, and we welcome you to our second quarter earnings call. Our financial results for the second quarter and for the first six months of the year are right on line with our previously announced guidance. Operationally and maybe more importantly during this time period, positioning for future growth, the second quarter was a very good quarter for us.

We've spend the vast majority of our efforts over the past 90 days working to reposition several non-performing assets and adding some key healthcare employees to put the Company in the best possible stance to take advantage of the numerous opportunities available. We are very pleased to announce the re-leasing of the Bucks County Hospital to a joint venture between a national hospital operator, Nueterra Holdings, and a preeminent Philadelphia area physician group, the Rothman Institute. The lease has initial five-year term with renewal options for an additional 15 years.

Upon the expiration of the initial term and thereafter, the lease has an option to purchase the lease [real estate] specific terms that are expected to result in no impairments. The lessee venture expects to invest as much as $8 million during the initial five-year lease term, and admit a large Philadelphia-area not-for-profit hospital system as a co-partner. Not only should the lease increase our annual revenue by as much as $2 million to $3 million that was not included in our prior estimates, but it also relieves us of approximately $1 million in annual property expenses that will now be paid by the tenant.

We continued to work towards a transaction on the Sharpstown and River Oaks Campuses in Houston. We continue to be dismayed at the time it is taking working with the insurance companies to resolved the Hurricane Ike damage issues on both campuses. We are negotiating with a prospective purchaser on the Sharpstown campus, and are very close to all the terms pending resolution of the hurricane restoration issue.

We are also negotiating with two entities for the vast majority of the space in the River Oaks Campus, and are very close on the major deal points. But, as always, the devil is in the details. We are encouraged by the values tentatively signed to these facilities. As we have stated in the past, the results of the Bucks re-leasing and the current negotiations on the two campuses in Houston in these very difficult economic times for the entire country is a very positive indication, not only of the value of our entire portfolio, but the special expertise our Management has to be able to protect and even increase the values of our hospital assets.

There certainly is no assurance that we will close on either of these Houston transactions. But keep in mind that we currently have no revenue included our guidance from either River Oaks or Sharpstown. Overall, our current properties have continued to perform well. Almost all of the properties have continued to see increase in their operational performance. And those select few that saw decreases have not been significant.

On a consolidated basis, our overall EBITDAR or lease coverage for the second quarter 2009 was up about 45 basis points to a 4.77 times, compared with 4.32 times for the first quarter 2009. Broken out by type of facilities, our acute care hospitals increased about 30 basis points over the first quarter with EBITDAR or lease-covered ratio of 5.34 times. The LTACs were down about 50 basis points to approximately 2.25 times. However, this was still up about 50 basis points over the same period last year. And the rehab hospitals were up significantly from 3.07 times in the first quarter to over 5.5 times in the second quarter.

Given that the summer months are always the slowest months with doctor and patient holidays dominating this period, we are very pleased with these results. As you know, CMS came out with their final payment schedules for 2010, resulting in good increases of 2% to 2.5% for each of our property types. Let me go through the specific results of some of our larger tenants.

Prime, which represents approximately 38% of our total portfolio, had an increase of almost 50 basis points from the first quarter, resulting in EBITDAR or lease-covered coverage of almost 5.25 times. [Fiber], which represents about 11% of our total portfolio, saw a 50 basis points decrease from the first quarter, but only a 5 basis point decrease from the same period last summer. Eight out of our 21 acute care hospitals have EBITDAR coverage in excess of 10 times. 14 out of 21 of our acute care hospitals have EBITDAR coverage in excess of three times.

Monroe Hospital saw a decline in their operations from the loss of two surgeons. But the operator there has replaced a significant portion of those loss procedures and hopes to have more than the remaining loss procedures in place by this Fall. The biggest disappointment in Monroe has been the effect the economic conditions have had on the interest of the potential not-for-profit suitors to acquire this facility. We are still in discussions with several outside systems, but the speed of this discussion has been slowed dramatically.

Several of our properties are undergoing current expansion projects. Prime is currently investing $35 million of their own funds in the expansion at Desert Valley's facility. North Cypress has just opened an additional 48 beds that they financed with their own funds. Mountain View and Idaho is about 50% complete with a $10 million expansion being financed 50% by the tenant and 50% by MPT.

As I previously mentioned, the new tenant at Bucks is doing an approximately $8 million expansion with their own funds. Our facility in Marina del Ray is planning an approximately $4 million expansion on their facility. Total bad debt for our operators decreased from the first quarter 2009 and was flat from the same period last year.

Recently HCA, Tenet, CHS, HealthSouth, Kindred, IASIS, and HMA, four of which are tenants of MPT, all reported positive top and bottom-line growth for the second quarter from continuing operations, despite the challenges associated with the economy. This is a testament to the strength of the industry as a whole, as well its ability to prosper in tight economic conditions.

As we all know, the country is currently debating an overhaul to the healthcare system in this country. While no one knows at this point what the plan will ultimately prevail, we believe that MPT will continue to do well under all of the currently proposed or mentioned plans. Obviously as more details emerge about an actual plan, we will comment further.

At this point, we are hopeful that the capital markets will allow us to resume our acquisition plan in 2010. We are monitoring the situation closely and planning appropriately. As we have said numerous times, there is no shortage of good deals for us to do. At this time, I will turn to Steve to go over the specific financial reports for the second quarter. Steve?

Thanks, Ed. Good morning, everyone. I'll review the highlights of our financial results for the second quarter, and then we'll open up the call for questions. For the second quarter of 2009, we reported normalized funds from operations, or FFO, of approximately $15.3 million or $0.19 per diluted share, and adjusted FFO of $16.3 million or $0.21 per share. There are a few items to point out that affected second quarter results. A few items, most of them expected and previously discussed on prior calls, that we expressly included from our previous estimate of $0.88 to $0.92 per share in normalized FFO affected this quarter's earnings.

First, we wrote off and reserved approximately $1.1 million or a little more than $0.01 per share of previously accrued straight-line rent related to our termination of the leases of LTACs in Louisiana. We immediately re-tenanted one of the two properties, while the operator of the other property filed for bankruptcy protection, during which we continue to receive 100% of our rent.

Because our lease termination is being considered by the Bankruptcy Court, we are uncertain as to whether to the existing operator will retain possession and continue operating the property, or we will re-lease the property to a new operator. But, in any case, the facility is profitable. And there are a number of alternative operators who have expressed strong interest in taking over operations. We do not expect any material loss or impairment.

Second, reported FFO includes non-cash interest expenses of approximately $536,000 related to the adoption in early 2009 of new accounting for convertible debt, and another roughly $380,000 in a reduction of earnings related to yet another required change in accounting. The combined effect of these changes, which again, we have previously discussed and quantified, is to reduce quarterly per share FFO by a little more than $0.01. These changes have no affect on net earnings or cash flow.

Third, we incurred property-level operating expenses related to our non-income producing properties of approximately $1million, again, about $0.01 per share quarterly. These are expenses that as a net lease leaser we do not typically pay, as the dark properties are sold or re-leased and new operators will assume responsibility for these costs. Included in these second quarter expenses of about $1 million is approximately $231,000 related to Bucks County. Those are expenses that are no longer our responsibility.

Finally, we expensed approximately $595,000 of cost, slightly less than $0.01 per share, related to Houston Town & Country litigation, which is included in results of discontinued operations. Trial of these claims, which are described in our recent Annual and Quarterly SEC filings, has been set to begin in mid-September. We are highly confident in our legal and factual positions, and expect to prevail at trial.

Let me reiterate that our assumptions regarding future operations that have been provided this year expressly excluded the effects of the items that I've just discusses. So, aside from those expenses that impacted FFO and AFFO per share by about $0.03, we were right in line, as Ed said, with our quarterly expectations based on our previous annual guidance of $0.88 to $0.92 per share.

This morning we are revising upward our estimate of annualized FFO by $0.01 to reflect the net effect of improved results that we expect from re-leasing Bucks County, offset by the non-cash accounting changes that we just discussed. Based on the existing portfolio, we expect that commencing August 1, 2009, we will generate annualized FFO between $0.89 and $0.93 per share. Let me reiterate some of the more important assumptions in that estimate.

Today our diluted shares outstanding are approximately 78.6 million. We continue to assume no revenue from River Oaks and Sharpstown campuses in Houston. We also assume no significant changes in our debt balance, and a current LIBOR reference of 0.3%. That's the 30-day rate, and we pay in weighted average of approximately 175 points to 200 points over that rate on our variable rate debt.

Further assumptions include quarterly G&A expenses, similar to what we incurred in the first and second quarters of this year. The estimate also does not include any property-level expenses or litigation costs, write-offs of straight-line rent, or other non-recurring or unplanned transactions.

In addition, this estimate will change, perhaps materially, if market interest rates change, assets are sold or acquired, the Sharpstown and River Oaks properties are sold or leased, other operating expenses vary, or existing leases do not perform in accordance with their terms.

Turning to liquidity, as of June 30 we had approximately $573 million in borrowings. That included fixed-rate debt of $353 million with a weighted average rate of approximately 7.4%, and variable rate debt of $220 million with a weighted average rate today of approximately 2.4%.

At June 30, we had about $8 million in cash and approximately $71 million available under our revolving credit facilities. As we communicated in our last call, we have no meaningful maturities until November 2010, at which time a $30 million term loan is due. Also, one of our revolvers is scheduled to mature in November 2010. But we may extend that through 2011 for a nominal fee. That facility currently has a balance of approximately $93 million.

We have unfunded commitments to complete certain expansion and refurbishment projects within our existing portfolio that total about $7 million. We have no commitments to acquire or develop any new facilities. As most of you know, over the past year we have been squarely focused on ensuring a strong liquidity position. With the capital resources and commitments that I've just described, we believe we have more than enough liquidity for the near-term.

Additionally, with the plans that we had previously outline on our earlier calls, including the $340 million in unencumbered assets that become available by November 2010 when we repay the $30 million loan, we are confident that we will attractive alternatives during the next two and a half years to satisfy our debt maturities prior to that time.

Having said that, we continue to evaluate viable opportunities to selectively dispose of or refinance selected assets. We also continue to receive interest from third-party investors, as well as from operators that may have access to financing such as HUD-guaranteed debt. We have no definitive agreements for any such transactions at this time. However, we are encouraged that some real estate investors and lenders seem to be becoming more active. Also along those lines, we continue to have proactive discussions with our lenders.

As we've stated previously, while we are encouraged by the recent trends we're seeing with property sales and credit facilities, under there is greater clarity in both the property and credit markets it is unlikely that we will commit to any significant uses of our available capital in the short-term. That concludes our prepared remarks for this morning. I'll now turn the call back over to the operator to queue your questions. Operator?

Thank you. (Operating Instructions). And our first question comes from the line of Jerry Doctrow with Stifel Nicolaus. Please proceed.

Hi. Good morning.

Hi, Jerry.

A couple, I guess, different things. I just wanted to go back and make -- get a little clarity on the Bucks lease. So what date did that start? And what are some of the variables in terms of the range of income, and also whether any of it is straight-line?

Yes. The lease starts effective immediately. Payments start in January. So there's approximately a six-month deferral until payments start, so there is a straight-line that disproportionately affects the next two quarters. When they start paying in January, you'll see the straight-line get back down to what we're more used to. The base minimum rent is $2 million.

We are eligible to earn up to an additional $1 million based on certain operating parameters. And we are hopeful, based on the level of parameters and the strength of this operator, that we will be in the money with that relatively quickly. As I think Ed mentioned, there is a purchase option that is based on a formula reference to EBITDAR generated by the facility with minimum and maximum prices in that formula.

And you said you expected not to generate a loss. But is there potential from upside on the sale, as well?

Yes, there is. There is potential for upside on the sale. And, again, that will be driven by the operating results at the time the option is exercised.

So, Steve, from an accounting standpoint on GAAP, basically we'll start off basically at that $2 million run rate essentially August 1, and it's all going to be straight-lined until we get to January 1. And then at that point, do you pick up any of this stuff that had been deferred? Or it just continues -- you know, it may go up obviously on your performance, but then where you're getting paid basically full cash or is there a --?

Yes. Getting paid full cash at that point. And, of course, the other thing to mention that we alluded to in the remarks is that we will immediately be relieved of about $700,000.00 in property expenses as the tenant takes over responsibility for those.

Okay. And that was the same as that $231,000 for the quarter?

Correct.

Okay. And are there escalates or anything like that in that lease or not?

2% annual escalates.

Okay. Okay. Great. Let's see. Was there anything else in the property expenses -- I guess there's some, although I think you touched on this, there's some that's associated with the Houston stuff, as well. And so that will just continue to run. I guess I'm just trying to decide what's the right run rate for property expenses in third quarter or fourth quarter.

Well, you're right. It's hard to predict. Most of, almost all of, the remainder of that $1 million is Houston, River Oaks and Shasta. And I think for purposes of your estimate, I think the $800,000 that we've incurred in the last couple of quarters is a good quarterly run rate.

Okay. And in terms of those properties, obviously you're hopeful to get it done soon. But we don't know for sure. One gets -- I think you were talking about selling one. And was the other the game plan is to lease? Is that what -- ?

That's where we are right now, Jerry.

Okay. Okay. All right. Well, we'll look forward to having news on those.

As do we.

Okay. There was a decrease in interest income from 1Q. Is that just the LIBOR rates? Or was there anything else going on?

No. It's just varying balances between either holding cash balances or paying down a debt. And there's been very little variability in LIBOR, really, to speak of for the quarter.

Okay. And then my last question and I'll jump off, we're obviously starting to see people issue equity with the snap-back in re-prices. I guess I took some of your comments, Steve, to suggest that you're comfortable where you are now in terms of liquidity. Is that the right inference? Or with the stock up at this price, does equity start looking more interesting?

No. We are comfortable, Jerry. And we also continue to believe that there are less dilutive alternatives that we have given our liquidity position now and the time we have to address any maturity issues. There are much less dilutive alternatives that we haven't completed exploring before we would go to something as expensive as equity.

Okay. Great. Thanks a lot.

Thanks, Jerry.

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

Hi. Good morning.

Hi, Mike.

I just want to clarify and double-check something. The $800,000 of ongoing operating expenses, that is not in the guidance, correct? So for as long as that occurs, that's not in the $0.89 to $0.93, correct?

That is correct.

Okay. And it seems that will recur until the properties are relayed or sold?

That's right. But, again, I want to point out that that is a highly variable number. And it amounted to something less than $800,000 this quarter, and actually less than $600,000.00 last quarter. So in the interest of not having bad surprises, I told Jerry that he might want to model in the higher end.

Okay. Okay. Got it. And you were talking about acquisitions, and you mentioned, I think, there are you're seeing a number of opportunities out there. And you'll pick and choose, obviously, when is the right time to put capital to work. Listening to other calls, other property types, people have talked about cap rates obviously being notably higher in terms of what they're looking at compared to a year or so ago.

Can you put that in the context of what you're seeing? Look at a deal from a year or so ago, what the pricing would have been. Talk about maybe the types of deals and where the pricing is penciling out now versus last year.

I think the biggest difference is a year ago there was a wide gap between the seller and purchaser expectations. That gap has narrowed tremendously. Now, at the same time, the gap of the different types of deals has gotten wider, where a year ago I think that -- a little more than a year ago, probably 18 months ago, you were looking from our standpoint anywhere from 9% to 11%. Today that's -- our cap rates will be closer from 11% to 14%, depending on the transaction.

Okay. Great.

Just at a probably not a very strong data point, we mentioned the Mountain View property in Idaho that we're sharing the capital expense on. We're doing that at 12%. That's a very strong property. It's got very good coverage, very good future. And our capital is going into debt with a 12% return.

Okay. And going back to the Bucks lease again, $2 million, can you talk about how the pricing of that lease was come up? Was it looking at it on per bed, or was it something else? And just maybe a little more color on how $2 million is the right number.

Well, it was obviously a number of things, Mike. It was the timing of how quickly this transaction would occur. We have had other people that were interested in it, as well. But this is a very strong venture. It's well-established. We have great confidence in their ability to operate the facility.

Leasing it quickly to stop the bleeding that we were having on the property from our standpoint from the property expenses and the $3 million of ultimate rent that we can collect there before the escalators is where we thought the target ought to be. The tenant wanted to have some hurdles in there from an operational standpoint. And we were comfortable with that, given what we know about the market and their ability.

Okay. And last question; is this going to be a new location for the business? Or is it the tenant is basically picking up from another building and just moving operations to this, or starting from scratch?

A little bit of both, but mostly a new location.

Mostly new? Okay.

But with a very long and profitable history of operations, again, because of the physician group that's coming.

Okay.

And I think we also mentioned that we do expect or we've been told to expect a very large Philadelphia area not-for-profit to become a partner in the future.

Okay. Great. Thank you.

Thanks, Mike.

Your next question comes from the line of Kevin Ellich with RBC Capital Markets. Please proceed.

Good morning, guys. Just a couple of questions. Steve, I missed some of the details you provided on the straight-line. I was wondering if you could go over that again. And is that what caused the sequential decline?

No. What caused the sequential reported decline was taking the $1.1 million write-off against straight-line revenue.

Got it.

That's why it has got a variability in the second quarter. In the third and fourth quarters, because of the Bucks straight-line, we'll expect that to be higher than what it's been, something in excess of $2 million. But that will drop back in the first quarter of '10 to a more normalized rate of around $1.5 million a quarter.

Got it. That's helpful. Thanks. And then, Ed, going back to your comments about the publicly traded hospital operators, you mentioned that bad debt came down. Could you give us an idea as to what type of bad debt they're running at?

Well, that was actually bad debt for all of our hospital operators, not just the publicly traded. But that was our portfolio.

Right. Is it around 10%? Or do you have any idea?

It's a little bit higher than 10%.

Okay. And then you touched on healthcare reform and what's going on. I guess big picture, it still seems unsure what's going to get done. But obviously the way the hospital operators have been performing, is your expectation if something -- if a bill gets passed, this would be a good thing for you guys?

I think it's a neutral thing for us, Kevin. It's hard to comment on bills that aren't out there yet. So we're commenting at a very global aspect of being the landlords with very large coverages, EBITDAR lease coverage ratios. And the rent is still going to get paid from any one of these scenarios that you go through. If you look at the short run and the bills that have been announced immediately, it's very positive because it adds tremendously to the number of paying patients out there. But we think overall in the short, medium, to -- I mean, the medium to short long-term, it's neutral to us.

Got it. That's all I have. Thanks, guys.

Thanks, Kevin.

Your next question comes from the line of Karin Ford with KeyBanc. Please proceed.

Hi. Good morning.

Hi, Karin.

Can you just remind us how does the $2 million of the new Bucks rent on the new lease compare to what the previous tenant was paying?

Well, the previous tenant was paying probably about twice that.

Okay. And are you guys -- I know you said the tenant is going to be investing new capital. Are you guys investing any -- have to invest any capital as part of the lease?

No.

No.

Okay. Regarding Monroe, can you tell us how much rent you got on Monroe in 2Q, and what your expectations are for Monroe rent for the rest of the year?

Not off the top of my head, Karin. We recorded rent at contractual rates. The property is cash flowing to the rent line. But I can get that detail back to you. I just don't know exactly what we collected on and recorded on Monroe.

So no expectations of a rent decline then in the second half of the year?

No.

No.

Okay. That's helpful. Just the final question is on G&A. I think you mentioned in the beginning part of the call that you had brought on some additional employees. And then you said in your remarks that G&A was probably going to remain constant.

I know a lot of companies in this environment are looking to try to reduce those types of costs to help boost results when things have been tough. Can you just talk about your thoughts on the infrastructure of the Company and adding additional employees, and what you expect over the longer-term to be happening on the G&A line?

For a matter of fact, Karin, there's been very little addition to employees. What we've done is plan for the future. We certainly want to -- we believe that the economy and the capital markets are all going to come out of this. And with the opportunities, we want to be in a position that when it does we can act immediately.

So what we did was eliminate some positions in some departments that we can outsource at a cheaper price. They're basically dead time right now. We can pick them back up through the outsourcing when we need them. And then we greatly increased the amount of healthcare-related expertise with adding some additional employees here. So from a net effect standpoint, the G&A, it was almost neutral.

Do you guys think there's any cost efficiencies you guys could do on that line going forward? Or do you think at this point you're set?

Karin, we're planning to grow. And so from that standpoint, we think we're set. If we thought that this was it and we weren't going to grow anymore or even decline, then the answer is yes, we absolutely could shrink the Company. But our plan is to continue to grow.

Okay. Thanks very much.

Your next question comes from the line of Brendan Maiorana with Wells Fargo Securities. Please proceed.

Hi. Yes. Good morning. Thank you. This is actually Young Ku here with Brendan. Going back to a couple of questions on Bucks County, could you tell us what the initial lease yield on the asset is, by any chance?

I'm sorry. The what?

The initial lease yield.

The initial lease yield?

So, for example, that $2 million in revenue, how does that compare to, say, your cost base on the asset?

It's about a -- on the minimum, it's about a 6%.

Okay. And just a clarification. That $8 million in CapEx; will you guys be financing that for them, as well?

No.

No.

Okay. And one last question regarding financing. In terms of equity raise versus dividend cut arguments, you guys are paying out about $60 million in annual dividend. How do you guys feel about that versus a potential equity raise? How would you rank one versus the other?

We're not considering either for any immediate decision right now. But it's clearly we want all things equal. The philosophical view, I guess, would be, in my view anyway, is that if you're going to raise equity you clearly have to address the dividend. You don't want to raise equity if you're not going to put it to use, and then all you're going to do is turn around and pay out a high dividend from those equity proceeds. But, as I say, that's not something that we're considering at this time.

Got it. Great. Thank you.

Your next question is a follow-up from the line of Jerry Doctrow with Stifel Nicolaus. Please proceed.

Hi. I just wanted to get a little color on was it Los Gatos the one that you picked up in the Houston deal and then re-leased to Prime? That had some variable aspects to it, and was just wanting to know what status and whether we see any upside potential there.

Jerry, I think you're talking about Shasta.

Shasta; I'm sorry. Sorry.

Shasta is doing very well. We continue to expect it to be cash-flow positive this year and to begin participating either late this year or early next year.

Okay. But nothing material in terms of the next couple of quarters we need to be thinking about in terms of earnings?

Look, Prime continues to surprise us and amaze us at how well they do. But it's not in our planning.

Okay. Okay. Thanks a lot. Sorry. I think Los Gatos is an HCP hospital. My error. All right. See you.

And there are no other questions in the queue. I'd like to turn the call over to Ed Aldag for closing remarks.

Again, we certainly thank all of you for your interest and your patience today. If you have any questions, please continue to call Charles, Steve, or myself. Thank you very much.

Ladies and gentlemen, thank you all for your participation in today's conference call. This concludes the presentation, and you may now disconnect.