Sotherly Hotels Inc (SOHO) 2021 Q3 法說會逐字稿

Hello, and welcome to the Sotherly Hotels Third Quarter 2021 Earnings Call. My name is Robin, and I'll be coordinating your call today. (Operator Instructions) I will now hand you over to your host, Mack Sims, VP of Operations at Sotherly Hotels. Mack, please go ahead.

Thank you, and good morning, everyone. If you did not receive a copy of the earnings release, you may access it on our website at sotherlyhotels.com. In the release, the company has reconciled all non-GAAP financial measures to the most-directly comparable GAAP measure, in accordance with Reg G requirements. Any statements made during this conference call, which are not historical, may constitute forward-looking statements.

Although we believe that expectations reflected in any forward-looking statements, are based on reasonable assumptions, we can give no assurance that these expectations will be attained.

Factors and risks that can cause actual results to differ materially from those expressed or implied by forward-looking statements, are detailed in today's press release and from time to time, in the company's filings with the SEC. The company does not undertake a duty to update or revise any forward-looking statements. With that, I'll turn the call over to Scott.

Thanks, Mack. Good morning, everyone. I'll start off today's call with a review of our portfolios key operating metrics for the quarter, which reflect another strong step forward in the recovery of our industry.

Looking at third quarter results for the composite portfolio, RevPAR was $90.16, driven by an occupancy of 56.3% and an ADR of $160.13. Looking at these figures versus the third quarter of 2019, RevPAR was down only 9.9%, with occupancy down 18.2%, but ADR increasing 10%. Year-to-date, RevPAR for the composite portfolio is $83.78, with occupancy of 52.4% and ADR of $160.

Looking at these figures versus the comparable period of 2019, RevPAR was down 28.1%, with occupancy down 26.9% and ADR down only 1.7%. These operating metrics were ahead of most of our REIT peers that have reported thus far for the quarter. We were pleased, overall, with the third quarter results and believe the fact that our portfolio's RevPAR results finished within 10% of 2019's third quarter, marks an important step in the company's recovery.

The third quarter started strong, with continued pent-up demand from the Leisure segment as July's RevPAR came within approximately 2% of 2019 levels. The strength in demand continued through mid-August, when we started to experience some impact from the Delta variant, as group meeting planners began showing hesitancy, and major corporations pushed back to return back -- return to the workplace dates and extended travel restrictions.

We also saw the standard decline in leisure demand, caused by the return to school, something that did not occur in 2020. Despite this headwind, August RevPAR for our portfolio was only off 12%, from August of 2019. September got off to a good start as the Labor Day holiday weekend performed very well for the portfolio, from a leisure demand perspective, nearly matching 2019 levels.

However, the weakness in the Business Travel segment continued through mid-September and did not fully replace the seasonal trend away from leisure travel. Regardless, group and business travel demand began to ramp up steadily as COVID cases began to decline in the latter half of September and into October.

In total, September's RevPAR finished down approximately 16%, to September of 2019. Despite the impact from the Delta variant, our portfolio is able to improve incrementally from the second quarter and achieve RevPAR within the range, we provided for the third quarter, during our last earnings call in August.

Our portfolio's best-performing hotels during the quarter, continue to be fueled by strong leisure travel during the summer months as well as the Labor Day holiday weekend. Looking at some highlights across the portfolio. The DeSoto Savannah continued its stellar performance during the quarter, easily outpacing 2019 metrics with a 24.3% gain in RevPAR over 2019, fueled by rate growth of 23.1%. The hotel also continued to outperform its comp set, gaining over 2,000 basis points in RevPAR share during the quarter.

The DoubleTree Resort Hollywood Beach saw excellent results during the quarter, with RevPAR surpassing 2019 levels by 12.6%, driven by substantial rate growth of over 34%. Hotel Alba in Tampa continues to be a portfolio standout as it produced RevPAR more than 53% greater than the third quarter of 2019, with ADR growing over 14% and occupancy up more than 34%. This hotel achieved a RevPAR index of 131.4% in the quarter, firmly holding its position as the leader among its competitive set.

While the Delta variant had a moderate impact on the Group and Business Travel segments, we are seeing this business return this fall, as national and regional companies steadily returned to the workplace and continue to lessen travel restrictions. Examining recent booking trends demonstrate the steady acceleration in group and business travel at our hotels.

In terms of group business, the third quarter produced a 24% improvement over the second quarter. Meanwhile, business travel improved more than 14% over the second quarter of this year. While still plenty of room to grow, compared to 2019, this trajectory of group and business demand recovery is a promising indicator for our company.

During the quarter, our managers continued their excellent expense controls, leading to strong flow-through and profit margins for the portfolio. Despite the pressure caused by rising cost of goods and labor, our management teams achieved strong margins during the quarter, demonstrated by hotel EBITDA margins, more than 300 basis points above the third quarter of 2019. The many cost savings initiatives such as regional positions, cross-training, just-in-time deliveries and simplified F&B offerings, are expected to become permanent SOPs for our properties, moving forward.

Meanwhile, hiring is slowly ramping up in proportion to the return in travel demand, as staffing shortages have improved significantly in the past 6 weeks. As children went back to school, vaccination rates improved and enhanced unemployment benefits expires.

Looking at corporate activity. In June, the company entered into a hotel purchase sale agreement to sell the Sheraton Louisville Riverside. During the quarter, the company terminated this agreement due to the buyer's inability to perform. As a result of the termination, the buyer forfeited the $200,000 deposit, associated with the agreement. We will continue to monitor opportunities for the disposition of this property.

In addition, during the quarter, the company elected to withdraw our S-11 registration statement with the SEC, which contemplated an unsecured note offering. We determined that market dynamics did not align with our desired pricing and structure. While this is not the outcome we are seeking, similar alternatives are being explored as the industry continues its recovery. Dave will comment more on this transaction and how it fits within our overall capital structure, later in the call. I will now turn the call over to Tony.

Thank you, Scott. Reviewing performance for the period that ended September 30, 2021. For the third quarter, total revenue was approximately $35.5 million, representing an increase of 146.2% over the same quarter, last year. Year-to-date, total revenue was approximately $92.5 million, representing an increase of 63.7% over the same period in 2020.

Comparing third quarter results to the same period in 2019, total revenue fell short by approximately $7.1 million or 16.6%. And comparing year-to-date results to the same period in 2019, total revenue fell short by approximately $49 million or 34.6%.

Hotel EBITDA for the quarter was approximately $8.9 million, compared to a deficit of approximately $1.2 million in the same quarter, last year. Year-to-date, hotel EBITDA was approximately $22.8 million, compared to a deficit of approximately $1.3 million in the same period as well.

Comparing third quarter results to the same period in 2019, hotel EBITDA increased slightly by $27,000 or 0.3%. And comparing year-to-date results to the same period in 2019, hotel EBITDA fell short by approximately $14.9 million or 39.5%. For the quarter, adjusted FFO was almost breakeven at a deficit of approximately $51,000, a vast improvement over the deficit of approximately $8.6 million in the same quarter, last year. And year-to-date, adjusted FFO was a deficit of approximately $4.1 million, representing an improvement of 83.8% over the same period, last year.

Please note that our adjusted FFO excludes charges related to the early extinguishment of debt, gains and losses on derivative instruments, charges related to aborted or abandoned securities offerings, changes to the deferred portion of our income tax provision as well as other items. Hotel EBITDA excludes these charges as well as interest expense, interest income, corporate G&A expenses, the current portion of our income tax provision and other items as well. Please refer to our earnings release for additional detail.

Looking at our balance sheet as of September 30, 2021. The company had total cash of approximately $32.7 million, consisting of unrestricted cash and cash equivalents of approximately $19.6 million as well as approximately $13.2 million, which was reserved for real estate taxes, capital improvements and certain other items.

Looking at cash burn for the third quarter, the company experienced a cash burn of approximately $750,000, compared to our forecast, back in August, of a cash burn of approximately $1.2 million, a positive net change of approximately $450,000.

Looking ahead to the fourth quarter, our outlook continues to trend positively. The company estimates that the average monthly cash, generated at the hotel level, to range between $2.95 million and $3 million. We expect corporate-level G&A expenses to range between $600,000 and $650,000 per month, capital expenditures of approximately $0.5 million per month, and outlay for scheduled payments of principal and interest are expected to be approximately $2.35 million per month.

Overall, we're expecting a total cash burn of approximately $0.5 million per month as seasonally-adjusted levels of hotel profitability assist us in meeting our debt service obligations, which includes scheduled repayment of deferred interest and principal, originating from last year's forbearance agreements.

At the end of the quarter, we had principal balances of approximately $385 million in outstanding debt, at a weighted average interest rate of 4.66%. Approximately 87% of the company's debt carries a fixed rate of interest.

At the outset of the pandemic, we have significantly -- or since the outset of the pandemic, we have significantly scaled back our capital projects and anticipate that capital expenditures will consist, primarily, of the replacement of systems critical to the operations of our hotels. We anticipate total capital expenditures for calendar year 2021, of approximately $3.1 million, of which half will be spent in the fourth quarter.

In March of 2020, we announced the suspension of our dividend and a deferral of payment for dividends on our common stock, announced 2 months prior. The suspension and deferral eliminated draw on the company's cash reserves of approximately $4.4 million per quarter.

And I'll now turn the call over to Dave.

Thank you, Tony, and good morning, everyone. Overall, we were pleased with our portfolio's progress during a quarter, which was characterized by continued strength in leisure demand as well as moderate impact caused by the Delta variant. The quarter started exceptionally strong, with pent-up leisure demand continuing to drive performance during the month of July, which outperformed July's 2019's hotel EBITDA by more than 18%. This represents the first month since the onset of the pandemic, where financial performance exceeded the same month in 2019, an important milestone in the recovery of the company.

By mid-August, the Delta variant started to impede the return of group and business travel, which industry analysts forecasted, would replace the strength in leisure travel during this time frame. Fortunately, by mid-September, COVID fears in our markets had mostly been quelled as case counts and hospitalization started to decline, resulting in the resumption of group and business travel.

Overall, we were very pleased with our managers' ability to preserve profitability and to eclipse 2019's hotel EBITDA for the period, an especially impressive accomplishment, considering the headwinds faced during the quarter.

Several unique challenges continue to face our industry as the recovery unfolds, heading into the new year. As previously discussed, the labor shortage has been particularly difficult for our industry. However, over the last several weeks, there has been a noticeable shift and more qualified employees are starting to be hired at our properties as enhanced government benefits have expired and children have returned to normal in-person learning. This is evidenced by the encouraging data from the latest jobs report, with payrolls rising more than expected and the unemployment rate falling to 4.6%, its lowest mark since the start of the pandemic.

Secondly, in recent months, the threat of inflation has become a major focal point of the business community as wages and cost of goods sold have steadily increased. While inflation does not appear to be transitory, we believe our revenue management and pricing strategies can help offset increase in costs, thus minimizing its impact on our operations.

Last week, OSHA announced, starting January 4, private sector companies with 100 or more workers, must require their employees to be fully vaccinated against COVID-19 or to be tested for the virus weekly. This executive order is being highly contested and litigated, and we will continue to monitor its impact on our company's operations.

Lastly, supply chain disruptions have impacted the lodging industry, making it difficult to efficiently receive shipments of food and beverage, guest amenities and other supplies. Our management teams have adapted to this challenge by utilizing local suppliers and simplifying menus and guest amenities.

Despite the challenges still facing our industry, recent demand trends bring optimism for the continued recovery of our business. First, one of the most important catalysts in the return to a normalized lodging environment, is the resurgence of business travel. Although the return of this segment was delayed due to the Delta variant, third quarter business travel improved by 14% over Q2. And in recent weeks, we have seen business travel continue its upward trajectory. While major corporations are still hesitant in reverting to normal travel policies and a full return to the workplace, demand from small- and medium-sized businesses are nearing stabilization.

We expect most major corporations to resume more normalized office environments and travel policies in the first quarter of next year. Additionally, recent data from major airlines, reported the best corporate booking trends since the onset of the pandemic, a positive indicator for the lodging industry.

While also impacted by the Delta variant, group travel is starting to pick up in our hotels, as more corporate association and government group events are being held at our properties to supplement the social events that have made up the majority of bookings in this segment. Those groups that canceled in the third quarter, as a result of the Delta variant, are simply rebooking in later months, indicating that the demand is there.

Looking to 2022, our group booking pace for next year, is approximately 71% of the same pace in 2019. This is a substantial improvement over last year, when our group -- our similar group booking pace was approximately 50% of the group booking pace in 2019.

Rate growth continues to surprise to the upside, and we believe it will fuel a faster-than-expected recovery for the industry. Pent-up travel demand, coupled with consumers' increased savings during the pandemic, has led to less price sensitivity among travelers, enabling our managers to drive rate at our hotels. In fact, during the quarter, we achieved a 10% rate premium for the composite portfolio over 2019. Our managers were able to couple those strong rates with diligent management and cost controls at our properties, to achieve strong margins and excellent flow-through. We expect this trend to continue into next year.

Two recent headlines bring additional optimism for the recovery of the lodging sector. First, last week, Pfizer announced that in clinical trials, its COVID-19 pill, which can be taken after showing symptoms, produced very promising results. Because the oral treatment can be easily administered at home, officials believe the drug should be a game-changer in putting an end to the pandemic. We believe, this should fuel demand by providing a layer of additional confidence to consumers, who may have still been hesitant to travel.

Second, on Tuesday, the U.S. reopened its borders to international travel, which should create additional demand for U.S. travel and accelerate the industry's recovery.

Looking at our strategic initiatives for 2022. As Scott mentioned, the market dynamics in September, did not align with our desired pricing and structure for an issuance of senior, unsecured debt in the public markets. We intended to use the proceeds of that debt to repay the high-cost, covenant-heavy liquidity loan, we took in 2020, at the height of the pandemic.

The repayment of the loan -- the repayment of that loan remains a top priority for the company, and we believe there'll be opportunities in the coming year to repay that debt in whole or in part.

Looking towards 2022, we believe the location of our assets in the Southern U.S., will continue to act as a tailwind for our portfolio and a competitive advantage versus our peers. Travel demand in those destinations has outperformed the broader U.S. lodging market and, we believe, should continue in this pattern, especially during the upcoming cold weather months.

Further, we believe our urban markets are poised to break out as demand generators continue to reopen, business travel begins to normalize and more sizable groups book events and room blocks at our hotels. As a result of the additional upside we see for our portfolio, along with the recent decline in COVID cases in our markets, we are optimistic about our growth prospects, heading into 2022. We remain dedicated to proactive investment strategies, making sound operational decisions while delivering long-term value for our shareholders.

We will now open the call for questions.

(Operator Instructions) Our first question comes from Tyler Batory, from Janney.

Apreciate all the detail here. Very helpful. Just two follow-up questions for me. I wanted to dive in, a little bit more, on the leisure travel topic, certainly been a bright spot for the industry and for your portfolio. Interested, your perspective on the sustainability of that demand, especially as we move into the winter here. And then, also interested, when you look ahead, possibly to 2022, what your perspective is on the sustainability of the rates and the ADR, in that business, which has been exceptionally strong?

Yes. Thanks, Tyler. Right now, I mean, as you well know, Leisure has been a mainstay for the lodging industry and in a lot of our hotels. And I don't see, necessarily, a major shift, going backwards in that segment. I mean, we still have a ways to go, even though the rate has been very, very strong. I still think, we're going to get the same amount of leisure travel that we've historically seen at our hotels, especially those that benefit from that segment. And we just don't see booking trends, where rate is going backwards, right now.

Now, granted, Leisure is a shorter-term booking window than the longer-term group window, but right now, what we're seeing is rate still being very attractive. And I think, part of that is -- there's still a lot of pent-up demand. We did have a lot of excess, what I would call, stimulus money that was sloshing around the markets and people took advantage of the extra cash in their pocket to go travel. But at the same time, the rate picture is also a function of the general pricing in the economy, and that's not going down anytime soon.

Okay. Okay. So in light of that commentary, and then, I think that the outlook that you provided, in terms of group, for next year, and corporate is quite positive, I understand that you can't give guidance.

But just at a high level, how are you thinking about 2022, from a RevPAR and an EBITDA perspective? Is it possible that you could get back to 2019 levels, next year, just given everything that you're seeing out there?

Yes. To your point, I don't know the answer to that. And even if I did, I probably couldn't tell you right now, on the phone. But I'm very encouraged by what we're seeing from our manager, with respect to pace and expectations. Now, are we going to get back to our portfolio RevPAR of 2019? I don't know. But this year has been a very pleasant surprise, on that front. And I don't see us going backwards unless something happens in the market that we haven't anticipated yet. I don't think, rates' necessarily going to back off.

And with respect to EBITDA, I think margins are still being managed correctly in our industry for a variety of reasons, and our portfolio is no different. I think what you may see, though, going forward, is RevPAR. When I say RevPAR, globally, in our -- in the domestic markets, RevPAR, I feel it's going to be a little sooner to come back than maybe some of what you read in the consultants. EBITDA may be a little later than that because of some of these cost issues that have emerged in the last 90 to 120 days. So I think, EBITDA may lag a little bit behind the RevPAR increases.

Okay. Okay. Excellent. A couple of other questions for me. I'm interested in what you're seeing on the supply front, in some of your markets. There's one discussion about supply growth down substantially from where it was, pre-pandemic, and potentially that's a long-term tailwind. Is that something that you're noticing in your markets?

Well, I compare this a little bit to the recession. I mean, properties that were well under development, probably had a pause, but they're going to get open. But I would tell you, the lending community is still not favorable on new development for hotels. I would think that'd probably be a fair statement to make.

I think there's bigger demand for real estate and for hotel properties for alternative-use reasons than necessarily, new starts for hotels. There's a lot of negative sentiment about new supply and what about this new normal, with respect to people not working in the office. We think that, that sentiment is misplaced here. We think, even if people are working from home, more than they used to, there's still going to be a lot of business travel and travel, in general.

So we don't necessarily think that's going to be a big negative for hotels. So I don't see any major new supply issues that have not yet been revealed to us, that we didn't know a year ago or 2 years ago.

Okay. And then, probably last question for me. Just interested, what you're seeing on the transaction front. Obviously, the sale didn't come to fruition? Any other assets in the portfolio perhaps, that you might be looking at, for sale? And how are you thinking about the Louisville asset, going forward now?

Well, I mean, I think Louisville is an opportunistic sale for us. Unfortunately, the buyer couldn't perform. There has been additional interest in that hotel. So we're looking at that. I mean, generally speaking, hotel prices are very, very attractive right now, in terms of sale prices.

So the -- whether we have interest in other hotel sales, we'll look at those, each individual, as they pop up. But the acquisition market is very active right now, and pricing is very high.

The next question comes from Alexander Goldfarb, from Piper Sandler.

So just a few questions here. Can you just -- just help me understand because it's really interesting. You guys were able to drive higher ADR, but overall, occupancy was down. So I mean, we've all seen the tourism impact. You go to airports, et cetera, you can see the packed flights. So what's going on? So basically, the tourists are willing to pay higher rents. But I would think that, that would translate to more occupancy.

So can you just, sort of, walk through what you guys are seeing and why if you have -- because it seems like you definitely, have pricing power. Why wouldn't we see higher occupancy as well? Maybe you can just walk through it or maybe it's just portfolio mix, where your destination hotels are doing really well, and still, it's the more business travel hotels are still lagging. And maybe, that's the offset.

Well, that's part of it, you're right. I mean, we do very well on the weekends, especially in our leisure-destination locations. And we've suffered a little bit, as everybody else has, in those destinations, on weekday travel.

I will tell you, there are selective indications in our portfolio, for instance, where we've tried to manage our rate structure and maintain rate integrity in some locations and sacrificed a little occupancy for that. And that's not necessarily a bad thing, given what we've gone through over the last 2 or 3 quarters, with respect to labor shortages.

And I will tell you, for instance, in Hollywood, where we have a large presence in Florida, the large, 1,000-room resort, Diplomat, opened. And they are a luxury brand on the ocean front with 1,000 rooms, and they're undercutting the entire market with rate.

So we've tried to maintain rate integrity, and that has sacrificed a little occupancy. And that actually helps with flow-through. But our thesis is, as the group returns and as the business travel returns, we're going to backfill that occupancy with that additional segment business. But your observation is well taken.

Okay. So if I understand you correctly, so basically, one is, you have labor shortages. So in a sense, you don't want the hotel to be "too full". Is that -- that's basically what -- one of the things you're grappling with?

No, not really. I mean, we can service the guests. And like I said, on weekends, we have -- sometimes we have 100% occupancy on the weekend. So it's really not about guest service delivery, but -- and it's not a conscious decision to take less occupancy. Sometimes, we just don't get it during the week.

Yes. I mean -- Alex, it's Scott. I mean, I think, at the end of the day, we're [far] off from 2019 occupancy, but we're more than double what we were doing last year. So we're, obviously, doing fairly well, in terms of occupancy recovery. It's just -- ADR is just far outpacing the occupancy recovery for us. And I think, that's what a lot of our peers are (technical difficulty).

No, I mean, that's great, and it definitely jives with what we look at, when my wife had looked for vacation hotel rates, God bless. And then, on the operations, you spoke about the efficiencies that you've gained, the margin improvement and how you think, that will be permanent. You also spoke about business steadily getting -- coming back.

So in general, do you feel like you guys have put the portfolio in the best position possible? Or do you feel like there's some other things that you guys can do, outside of demand, coming back, to help improve things?

Yes. I mean -- I think, obviously, I mean, we're still ramping up operations. So I mean, part -- I think, we're going to have good margins and good flow-through, going forward. But quite frankly, I mean, part of our ability to flow profitability right now, is because we have limited food and beverage operations, and we're only bringing back those type of amenities as the demand dictates it. Food and beverage is less profitable department for us at our hotels.

As we reopen those -- all the outlets and all of our service amenities, that's when we start having a little more margin pressure. But I think, we're in a pretty good position to manage that. And we're only going to bring back those services and those amenities as it makes sense and as we believe they're going to be profitable for the operation.

So there's definitely, more opportunity as we get these hotels fully ramped up. We're far from, what we would consider, running on all cylinders, particularly at a handful of our hotels that are -- that we've called out in the past. I mean, the urban hotels are still really running on skeleton staff and very minimal amenities, just because the demand is not there yet.

Okay. And then, another question. The COVID loan that you took, obviously, during COVID, hence the term COVID loan, that loan that has, I think, the kicker on the back end. Is there a set deadline, when that loan has to be repaid? Or is there any sort of accelerated or increasing interest rate or payback feature that if you don't pay it back by a certain time, kicks in?

No. It's a 3-year term. And it's flat interest rate and flat repayment factor.

Okay. So it's a fixed 3-year term?

Right.

We can prepay it in advance. We still own the multiple.

Our next question comes from Robert Edwards from (inaudible)

Great performance, guys. Great performance. I was wondering, do you guys plan on installing electric car charge stations at your hotels?

I'm going to have Scott answer that because I don't know the answer to that.

I mean, it's not a primary focus for us. I'll tell you, in the past, we've been approached by Tesla and some of the other companies about possibly installing at certain locations that have high traffic visibility, but it's not a top priority for us right now, nor is a guest request.

(Operator Instructions) We have a question from William Walker, from Independent.

Yes. I would like to ask about the suspended dividends on the preferred stocks that are cumulative, how that is accounted for? Do you have a total on the accumulated, on all 3 of them? And can you discuss that, please?

Sure. This is Tony Domalski, William. We follow proper accounting for that. We don't record any of those liabilities on the balance sheet as a dividend liability until those dividends are declared. Our Board has suspended those dividends and not declare them now, for about 6 or 7 quarters.

So we have some -- we have accumulated about $14 million worth of undeclared dividends, and we disclosed the totals, every quarter, in our filing with the SEC, on either Form 10-Q or Form 10-K.

(Operator Instructions) We now have a question from Michael Galantino from Chapin Davis.

Yes. It's a good quarter in a difficult time, right? For the last 2.5 (inaudible). So you guys are really pulling it together.

I have a quick question though, on business, business. So have you guys done any internal studies on when business travel will be picking up? And do you have any idea on when those percentages will get back to, say, 90%, 95% occupancy, on business travel?

Yes. Look, it's picking up now. So last quarter, I mean -- BT is still, probably, the last thing to come back. But as I mentioned in my remarks, Mike, the last quarter was markedly better than second quarter, and we're seeing the same sort of trajectory in this quarter.

And we think, not only the transient business traveler but the corporate group business that coincides with the BT traveler, will come back strong, next year. I mean, this was the year for transient leisure travel. We think, next year will be the return of business travel. Now, when we get back to the same level of BT segmentation that we saw in 2019, that's a crystal ball that I just don't have.

Yes. I mean, you see varying consultant data out there or other industry data. I mean, some of it will say 2024, 2025. But I mean, the airlines, the data they're putting out, I think, it was either Delta or Southwest, they expect their business travel, from a flight perspective, to be back to 90% to 100% by the end of next year, which we think, that would be great. It seems a little aggressive, but that's coming straight out of their last earnings call.

Mike, the other thing -- Yes, go ahead.

[2024,] 2025, somebody said that (inaudible)

I mean, that's on the -- that's on, kind of, the doomsday consultant data, you see. And then again, you see something more aggressive, where an airline will say it's going to be all the way back, by the end of next year. We think, it's probably a little bit closer to the end of next year than this 2024, 2025, given what we're seeing.

This concludes our Q&A session. Thank you for joining today's call. I will now pass you back to Dave Folsom for the closing comments.

Thank you, everyone, for joining us on the call, and we look forward to speaking with everyone, next quarter.

Thank you, everyone. You may now disconnect your lines.