STAG Industrial Inc (STAG) 2018 Q3 法說會逐字稿

Greetings, and welcome to STAG Industrial's Third Quarter 2018 Earnings Conference Call. (Operator Instructions) As a reminder, this conference is being recorded. I would now like to turn the conference over to Matts Pinard.

Thank you. Welcome to STAG Industrial's conference call covering the third quarter 2018 results. In addition to the press release distributed yesterday, we posted an unaudited quarterly supplemental informational presentation on the company's website at stagindustrial.com under the Investor Relations section.

On today's call, the company's prepared remarks and answers to your questions will contain forward-looking statements as defined in the Private Securities Litigation Reform Act of 1995. Forward-looking statements address matters that are subject to risks and uncertainties that may cause actual results to differ from those discussed today. Examples of forward-looking statements include statements related to earnings trends, G&A amounts, acquisition and disposition volumes, retention rates, debt capacity, dividend rates, industry and economic trends and other matters.

We encourage all of our listeners to review the more detailed discussion related to these forward-looking statements contained in the company's filings with the SEC and the definitions and reconciliations to non-GAAP measures contained in the supplemental informational package available on the company's website. As a reminder, forward-looking statements represent management's estimates as of today. STAG Industrial assumes no obligation to update any forward-looking statements.

On today's call, you will hear from Ben Butcher, our Chief Executive Officer; and Bill Crooker, our Chief Financial Officer. I will now turn the call over to Ben.

Thank you, Matts. Good morning, everybody, and welcome to the third quarter earnings call for STAG Industrial. We're pleased to have you join us and look forward to telling you about our third quarter results. Presenting today, in addition to myself, will be Bill Crooker, our Chief Financial Officer, who will discuss the bulk of the financial and operational data. Also with me today are Steve Mecke, our Chief Operating Officer; and Dave King, our Director of Real Estate Operations. They will be available to answer questions specific to their areas of focus.

The overall health of the industrial sector and the underlying strength of the STAG portfolio, combined with the continuation of the impressive countrywide execution, translated to another quarter of solid core FFO growth. It has been a very successful year for acquisitions with volume approaching $500 million acquired year-to-date with 2 months of our historically busy fourth quarter to go. We are very confident we will meet our current guidance of $600 million to $700 million for the year with a weighted average cap rate near the midpoint of our guidance, approximately 7%. Our pipeline of assets potentially worth acquiring currently stands at $2.2 billion and contains assets similar to what we've acquired to date in 2018.

We have recently completed our second annual comprehensive tenant survey. We conduct this survey to enhance our understanding of how tenants view our buildings, their business and the world in general. We ask questions related to the opportunities and challenges of their business, how they evaluate the locational drivers of their operations and questions focusing on broad trends in e-commerce and labor availability. We also strive to understand how their real estate needs are being met and how they can be improved. By conducting this survey annually, we can benchmark responses and examine trends that our tenant bases use of the buildings they occupy and logistical patterns in general.

This year's survey indicates increased business activity and confidence. Hiring has increased, more shifts are being run and additional lines are being added. Labor availability remains a widespread concern across both geographies and industries. E-commerce continues to be an important incremental demand driver. 36% of our portfolio's buildings are currently handling e-commerce activity, and 47% of those respondents indicate that e-commerce activity has increased in their facility over the past year. Not to be forgotten, the traditional demand drivers for industrial real estate, such as GDP growth and improved business confidence, continue to provide baseline support to industrial fundamentals.

We are frequently asked about the impact of the ongoing political rhetoric and trade restriction on our tenant base and future operations. We continue to believe it is too early to tell what these impacts will be, but note that the results from our -- the tenant survey indicate continued expansion. Our geographic and industry diversification should provide a level of protection, should negative trade impacts start to be evidenced.

One of the more interesting themes seen in the responses to the tenant survey was the reported pace of change of business activity. 29% of the respondents indicated that increase of business activity has occurred very quickly, which compares to 22% last year. This is reflected in our tenants continuing to sign long-term leases and investing in the business. Our conversations with our tenants indicate that this is expected to continue.

The strength indicator in our survey is reflected in the strong quarter and year-to-date operating metrics, including high retention and leasing spreads. These operating metrics are driving a continued improvement in our same-store NOI growth. Tenant confidence is also reflected in the retention level greater than our initial expectations. This leads us to revise our annual retention expectation to 80%.

Moving to the balance sheet. Our leverage and liquidity continue to be at very strong levels. Our balance sheet remains entirely fixed rate, except for our revolving credit facility. This quarter, we continued our history of maintaining healthy liquidity levels by originating attractively priced, unsecured fixed-rate debt, well in advance of need. We continue to market a portfolio of assets for sale. Interest and investor activity has been robust, and we look forward to describing the transaction in detail once closed. This is targeted to close prior to year-end.

With that, I will turn it over to Bill to provide more details on our third quarter results.

Thank you, Ben. Good morning, everyone. Core FFO was $0.45 for the quarter, an increase of 4.7% as compared to the same period in 2017. Healthy underlying fundamentals, coupled with high tenant confidence, resulted in a strong operational quarter for STAG. Retention was 77% on the 1.3 million square feet expiring in the period and is 83% year-to-date. As Ben said, we expect retention for 2018 to be 80%.

Cash and GAAP re-leasing spreads were up 6% and 11%, respectively, and up 8% and 15% year-to-date, respectively. Through the third quarter of 2018, we have leased over 7 million square feet across 25 of our markets.

Same-store cash NOI for the quarter was up 1.4%, which compares positively to the 0.5% in Q2 and negative 0.8% in Q1. The increase this quarter is due primarily to the strong retention and leasing spreads we discussed. The year-to-date same-store NOI is up 50 basis points as compared to the prior year, which is in line with our current annual same-store guidance for the year of 25 to 75 basis points of growth. The 27% of the portfolio that is excluded from the same-store metric due to the sector-defined methodology consists of stabilized occupied space with growing cash flows driven by rental escalators averaging 2.3%, which are embedded in the in-place leases.

There have been a handful of headline bankruptcies announced and discussed recently, particularly related to Sears. Our exposure to Sears consists of one 40,000 square foot suite, which accounts for 5 basis points of annualized base rent. Other bankruptcies in the news include Mattress Firm, American Tire Distributors and Bon-Ton. Mattress Firm and ATD leased 584,000 square feet across 5 buildings and account for approximately 1% of our annualized base rent. They continue to operate out of their respective space and are current on rent. The 4 ATD buildings were built in the past 7 years and fit the markets there and well. The leases on average are 13% below market. And to the extent leases are rejected, we expect downtime well within our historical experience of 12 months. Bon-Ton moved out of the building in July, and we expect to backfill the asset soon.

G&A for the third quarter was $8.9 million and $25.6 million to date. We expect full year G&A to end within the current guidance range of $34 million to $35 million. Note that a material portion of employee compensation is tied to total shareholder return and volatility in this metric can cause fluctuations in overall G&A as we look to the end of the year.

Related to G&A, the upcoming change to lease accounting in 2019 is expected to have a relatively small impact to our disclosure. Historically, STAG has not capitalized much in the way of internal leasing or third-party legal costs. In 2017, we capitalized approximately $350,000. And year-to-date 2018, we have capitalized $213,000. Most of the capitalization is a result of third-party legal review and not costs associated with internal leasing personnel. The amounts impacting 2019 G&A related to the lease accounting change will likely be in line with 2017 and 2018 amounts.

We continue to operate the balance sheet at the low end of the leverage band with ample liquidity. At quarter-end, net debt-to-EBITDA was 5.1x and fixed charge coverage was 4.6x. During the quarter, we raised $100 million in gross proceeds through our ATM program at an average share price of $27.94 and closed on several previously announced capital markets transactions.

On July 11, we funded -- we fully redeemed our $70 million Series B preferred equities security. On July 26, we refinanced and upsized the revolving credit facility and originated a new $175 million term loan. The revolver notional was increased to $500 million and the term loan is fully swapped with a delay draw feature for up to 1 year with an attractive all-in rate of 4.12%. On July 27, we drew the remaining $75 million of term loan D. This facility is now fully outstanding with an all-in swap interest rate of 3.15%.

This quarter's capital markets activities have resulted in liquidity of $580 million with no debt maturing until September 2020. This places the balance sheet in great position to support STAG's attractive growth opportunity.

I will now turn it back over to Ben.

Thank you, Bill. STAG sits in a great position to end 2018 on a strong note. We continue to evaluate a growing number of attractive investment opportunities in population centers across the U.S. Our diverse tenant base is healthy, confident and expanding, which is reflected in this year's impressive operating metrics. The balance sheet is in position to capitalize on the numerous opportunities we see today and expect to see in the future. Our various data and process initiatives are maturing and producing greater efficiencies and new insights as STAG continues to harness the power of data. And above all else, the platform continues to focus on and deliver per share growth.

We thank you for your time this morning and for your continued support of our company.

(Operator Instructions) Our first question comes from the line of Sheila McGrath with Evercore ISI.

Ben, you moved the top end of disposition guidance down. We had previously thought that you were considering a portfolio sale. I was just wondering if you could give us an update on thoughts around a portfolio sale.

I think we, at least, alluded to it partially in our remarks. We are still pursuing the portfolio sale. I think we have probably upped the language a little bit to indicate. We're more sure that it's going to happen and it'll likely close in the fourth quarter. We are -- there's been very good activity around the assets that we marketed, and we are quite confident we're going to have a transaction for you in the fourth quarter.

And Sheila, the guidance on disposition excludes portfolio sales. Those are just noncore and opportunistic dispositions.

Okay. So we should consider in addition to the guidance a portfolio sale in fourth quarter?

That's correct.

And I think we've previously mentioned somewhere in the range of $100 million to $150 million.

Okay. And then just on the same-store metric, historically, you've guided people that it's not a good metric because you buy 100% occupied buildings. And results have been much better in historic context. So I was just wondering if you could talk through what's driving that. Is it leasing spreads? Just talk through why the metric is...

So Sheila, yes, you're correct. I mean, we do have the occupancy normalization headwind. That continues to be an issue. What you're seeing here with these positive leasing -- same-store NOI spreads going positive are the power of high retention and great leasing spreads overwhelming sort of the occupancy normalization. As long as we continue to grow at the pace that we grow at, we've been growing circa 20-plus percent a year on an asset basis, we're going to always -- and primarily 100% occupied buildings, we're always going to have those occupancy headwinds. As a result of that growth, we typically at year-end have our same-store portfolios only about 70% of our assets, where our peers are more likely to be in the low 90s percent. So it's just a very different dynamic. And they frequently will have occupancy gains in their same-store numbers, where they have put in service assets that aren't fully occupied but still have some upside in them.

Our next question is from the line with Brendan Finn with Wells Fargo.

I just wanted to get your thoughts on the acquisition environment in general. And in particular, if there's any of your markets where competition has changed recently. Maybe in terms of changes in cap rates or more or less attention from institutional capital.

I think, and I probably should defer to Steve, but I'll go ahead and answer it anyway. It's my predilection. I think what we're seeing is relatively neutral. There's still a fair amount of competition out there. I will note that the anecdotal evidence is that the nonbank lenders are starting to back away, at least from higher leverage. And I think we'll see that impact some of the competition that we see in the markets. But we're still seeing -- obviously, we're not seeing Gramercy, who was one of our sort of public competitors, anymore, but the private guys are still very strong and the small players are still very strong. So we're still seeing a fair amount of competition out there. But depending on what happens with interest rates and certainly this potential trend with nonbank lenders moving to lower leverage throughout the year could cause some competitive landscape improvement for us.

Got you. And then just a follow-up on the same store. Appreciate the additional color on your leases with ATD and Sears. Are you assuming any negative impact from those leases on Q4 same-store results?

Currently, we're not.

Our next question is from the line of Jamie Feldman with Bank of America.

Very helpful color on the tenant survey. I'm just curious, digging a little deeper, are there certain regions or certain types of tenants that seem the most optimistic? And then flip side, any that seem the least optimistic?

Jamie, I don't think there was a consistent theme on optimism related to the type of business that people are in. Certainly, there was a broad confidence across the tenant portfolio. I would say the one item that stood out was, and we've mentioned this in the past, was the sufficiency of labor in the market becoming a more important locational driver. So I think the -- what we're seeing is that markets with a lot of labor availability are becoming more favorable regardless of whether they're considered primary or secondary.

And Jamie, I was talking to an occupier the other day who was expressing their concern that Amazon had announced a facility in their close proximity, that their labor was going to be buffeted by higher wage options, et cetera. So just again, on an anecdotal basis, that's a real issue across the markets. I would say you would expect auto industry people -- or consumers of raw materials to have some angst, but we really haven't seen it because of the tariff issues. We really haven't seen that evidence in our tenant behavior.

Okay. And then, I guess, sticking with the labor because that is a consistent comment we're hearing, how does that change your appetite for acquisitions? I mean, what we're hearing is people want to be in markets where they have public transit and closer to larger urban centers where there is a deeper labor pool. Does that shift at all the types of assets you guys are after?

Well, I mean, the reality is that the 200,000 to 400,000 square foot building, which is the sort of the middle of our strike zone, is not going to be located in a -- highly unlikely to be located in a place that is accessed by mass transit other than bus. So -- and I think that the ring road buildings that, again, is what we typically own, are going to be accessible by bus, but it's still -- I think most of the industrial labor tends to be in cars and -- which is why you've seen increased demand for employee parking, especially with regard to the people-intensive businesses like e-commerce picking, et cetera. The other thing that you see is, obviously, trailer parking has become more important. We saw that in our tenant survey. But that's something that we -- our buildings generally have adequate trailer parking for the needs.

Okay. And then as we look ahead to next year, any thoughts on your mark-to-market on leases expiring? And any large known move-outs?

There's not. We expect tenant retention next year to be in the same range as everything else. As prior years, tenant retention obviously takes into account both -- excuse me, obviously, it takes into account both retention and downtime. So we're not expecting anything unusual to happen going forward. We don't -- because of our diversification, even our large tenants -- I mean, our large buildings or large tenants are not really that significant to the overall portfolio.

Yes. We've mentioned before, Jamie, in addition to the tenant retention being in the 70% range, that mark-to-market, we think in the next 12 to 18 months, our leases are at or slightly below market.

Okay. And then, finally, just thoughts on capital needs. I guess you're going to do this big portfolio sale, but how should we think about sources and uses over the next 12 months or so?

So the portfolio sale is a source of capital -- an accretive source of capital. We'll sell and redeploy at higher cap rates, higher IRRs, et cetera. I think that the -- we will continue to rely on the ATM as our principal source of issuing equity. I know that your bank has gotten much better at it recently and is focused on it as a source of business. I know that's on the other side of the Chinese wall. But they really have, to some extent, gotten the -- or drinking the Kool-Aid in terms of an issuance way. So we will continue to issue at or around 60% equity, 40% debt. Debt, as we have been doing, it's going to be a mixture of bank debt and privately placed bonds.

Yes. And we'll match fund our acquisitions each quarter through our ATM as long as we're comfortable issuing equity. And to the extent we're not, we have plenty of room on our leverage range. We can acquire today $450 million of acquisitions with all debt, and that will bring us to the upper end of our leverage band. And we also have recycling of capital through portfolio dispositions, if it comes to that.

But -- and obviously, we don't intend to use that leverage now. We're still quite accretive issuing equity at this level and buying assets.

Okay. And what's the upper end of your leverage band again?

So we're 5x to 6x debt to EBITDA.

So you'd go up to 60%...

We've been operating, as you know, at the low end of that. We've been operating at or around 5x. And again, with equity pricing being in a range where we're comfortable, it's not likely we'll use leverage in a meaningful way.

Our next question is from the line of Dave Rodgers with Baird.

Ben, as you look out at the pipeline for new acquisitions, the $2.2 billion that you mentioned, obviously, cap rate's coming down as the weighted average lease term has gone up. I assume it's something like your rent bumps in the contracts you're buying are higher than you had historically. So do you see continued kind of downward pressure moving into '19 on that cap rate or stable, slightly higher? What's your feeling as you sit here today?

Well, David, you're quite correct on those factors influencing cap rates down. I don't think that you'll see -- if you went back to those individual parameters, I think it's unlikely you'll see any of those provide additional downward pressure on cap rates. You're not going to see lease terms go longer. Indeed, I think after the wave of capital spending that occurred post the tax cut, you might actually see leases start to -- terms to moderate a little bit. I don't think you're going to see bumps move past where they are today, so I don't think that those factors are going to put downward pressure on our cap rates going forward. If you believe that the interest rates may drift up through the coming year as well as leverage levels, as I alluded to earlier, possibly coming down, I think those will act to raise cap rates, especially as you move away from the, if you will, the super primary markets, where the weight of capital has just continued to depress and hold cap rates down. I think the more rational return profiles that you see in markets 15 to 50, or whatever like that, is those are going to remain attractive and where we'll do most of our acquisitions.

Great. And then you've seen a bigger spread between your new and renewal leasing spreads, and obviously, there's different incentives there. Wondering if there's anything oriented around the mix of between the new and the renewals that you were doing there? Or if that's just purely minimizing downtime and leveraging tenant.

Well, I think, there's 1 -- a particular lease or two. So it is mixed.

Yes. The negative new leasing spread is entirely attributable to 1 lease of 100,000 feet. It was in a building that we bought, a very above-market rent. We bought it at double-digit cap rates. So we went into this knowing that this would happen, and we backfilled the space with 0 downtime at a very healthy rate so...

Yes. The rate is still above market in our place.

And so it's -- the stat doesn't look particularly well, but the result was great.

And obviously, we took advantage of that above-market lease term. And at the term of the lease, we're able to strip off all that extra cash flow relative to simply -- if we bought a building that was at market, we wouldn't have had all that cash flow, we wouldn't have this -- the less-attractive rental spread this quarter. But we got all that cash flow, and frankly, the building performed, as Dave described, extremely well. No downtime and above-market lease -- rental lease achievement.

Okay, that's great. And maybe last question, and you might not know the answer. But you had said that you have not built in any, I guess, downtime or downside from the potential bankruptcies that you had talked about. But what's your sense on timing when you have better visibility on what you might need to do with those buildings, if anything?

Well, obviously, it depends on the pace of the bankruptcy proceedings. I mean, I think you can run through them from the worst to best. I mean, Sears kind of feels like it's a liquidation. We don't know for certain what they're going to do, but it feels like a liquidation. So that 40,000 foot space is likely going to come back to us to be re-leased. The Bon-Ton situation was something we've talked about in prior quarters. It's been around for a while. Again, it's likely a liquidation, rejection of lease and re-leasing that. We're very comfortable with that asset, the market that it's in, its position in the market and its re-leasability. As you move up to the ATD leases, these are highly functional, fungible warehouse buildings. And the ATD bankruptcy transaction is largely a capital structure bankruptcy. So they still have, we believe, good operating potential going forward. They need these buildings. They use these buildings. So to the extent that they reject them in a bankruptcy proceeding, we're comfortable about re-leasing them. And -- but we're also comfortable that they're probably not going to reject a lot them. At the end of the lease term for all those deals, we were projecting certainly a chance that they would move out. So our analysis always has the potential for having to re-lease that space. At the end of the list, this may just move that up a little bit, but we're very comfortable with the leasability of those buildings.

And all the assets, those tenants are current on their rent payments as well.

Our next questions are from the line of Mitch Germain with JMP.

Some of the rate move and economic noise, has that made you rethink your underwriting assumptions?

So Mitch, we -- on a monthly basis, we evaluate our underwriting assumptions with regard to both our equity pricing and also our debt pricing. We look at forward treasury curves to estimate the impact of when we would have to refinance these assets, what the initial, obviously, debt rate is. But also in the -- in our IRR analysis, we will have one or more refinancings during that time. So we're looking at forward curves to understand the impact on that. We're obviously looking at rental growth rates with regard to both supply and demand as well as capital availability, which impacts -- tend to impact rental growth rates as well. So we're looking at everything that we -- that is available to us to look forward and to understand the impact of the outside world on our buildings and on our capitalization.

And I know you do a substantial amount of credit analysis on tenants. Is there any specific, I don't know, industry subsectors that are just like a no touch at this point because of some macro issues?

We won't lend to investment banks, no. We -- everybody -- I mean, every industry, obviously, has looked at it on an individual basis and then the tenant within that industry and how they operate within the industry as well as how -- their own capital structure, their own customer concentration issues, et cetera. So I don't -- I mean, we've mentioned this in the past. We have -- we read some of the same blogs everyone else reads about the auto industry and the potential for diminished activity in that area. There certainly hasn't been any significant evidence of that to date. But it's certainly something that we look at as we examine how single purpose or nonsingle purpose a building may be and whether the market is dominated by a particular auto plant. We go deeper -- if it is -- if a market is dominated by an auto plant, we see what they're making there, what the company's announced plans are for that plant. We would sell -- we wouldn't buy the building with the unsold plant, but hopefully, we'll buy the Ford F-150 plant.

Appreciate that insight. And last one, I think you kind of touched on it. But obviously, with Gramercy somewhat absent at this point from the markets, have -- and not that you bid so much against them, but I know that they were somebody that you saw probably more than your other REIT peers. Has the competitive dynamics at all changed? Are you seeing any additional pockets of capital that have emerged? Or is it really just kind of status quo in terms of who the typical bidders are?

Well, yes. I mean, Gramercy was an outlier in terms of our industrial peers or, indeed, the net lease peers to the extent that they venture into our markets in terms of how frequently we saw them. Our principal competition remains regional capital, individuals, et cetera. That's the preponderance of our competition. And that mix is -- remains fairly aggressive. I believe that some changes in cost and amount of leverage may diminish that competition as the year goes on. But -- I'm not saying we've seen that yet, but that certainly feels like it could happen. But I don't think the competition has changed greatly, no.

Our next question is from the line of Brian Hawthorne with RBC.

It's Mike here with Brian. Just had a couple quick questions on the portfolio sale, if you can give us a little bit more details. I know you said the mix between opportunistic and noncore assets. Can you kind of give the breakout? Should we assume that's 50-50?

So the portfolio sale is purely a sourcing of capital. So it is assets that look like the remainder of our portfolio. And they are -- they were chosen to move with a variety of reasons. In this instance, they are not geographically proximate, which is what we had in the prior portfolio sale. This is reflective of sort of demand that's out there. Our goal was to sell somewhere between $150 million -- $100 million and $150 million to demonstrate, once again, in excess of 100 -- probably closer to 150 basis points of cap rate compression versus where could buy the assets today in that market and demonstrate accretive -- what's the word I'm looking for, an accretive reuse of capital. So we sell and redeploy at better cap rates, better IRRs.

Yes. Mike, the noncore opportunistic discussion on dispositions related to our guidance in our supplemental of $100 million to $150 million for the year. The portfolio disposition will be additive to those dispositions.

Okay, great. And then how are you thinking about the flex portfolio right now? And I believe, historically, you said that you wanted to lease that up a little bit before, selling those assets. Is that still the plan?

It's still the plan. We're opportunistically disposing those assets. This quarter, we disposed of 3 of those assets. So over time, we will dispose of all of them. I think there's 9 assets left in the portfolio.

And then, obviously, we look at it -- what we think it's worth to us versus what we can get in the market. We're not as enthralled with continuing to own them, so it's not perhaps as much of an absolute that it has to be a number higher than we think it might be worth to us for holding it for cash flow. But it's still an important factor in how we hold. And obviously, our projections as to what the future might hold for that asset. If there's a pretty strong chance of re-leasing that asset next year with a short lease term, obviously, it makes sense to hold onto that to take advantage of that re-lease.

Okay. And then with regard to your acquisition guidance on valuations, Ben, can you go real quick, and have your hurdles on your IRRs changed at all? I mean, as you're going after slightly lower cap rate assets, what's the difference between the rent bumps? And has those changed?

So obviously, better rent bumps, better rent growth. Longer lease terms, longer time to exposure to market. All -- we look to mitigate cap rates to drive cap rates down. We still expect to average an IRR at or around -- it's come down some through the years. So when we were -- 5 years ago, we're probably averaging 9.5% and now we're averaging less than that. But the overall metrics and the overall averages have not changed significantly.

(Operator Instructions) Our next question is from the line of Brandon Travis with Ladenburg Thalmann.

For modeling purposes, can you give an indication on the timing of lease expirations in 2019?

I think we -- do we disclose it? Typically, we disclose that in our investor presentation about the quarterly expirations. But if it's not disclosed in that, I would say for modeling, it's probably best just to look at what the expirations were in 2018 and use that as a guide.

Okay. And then generally speaking, what was the cap rate on dispositions during the third quarter?

So the dispositions in the third quarter were primarily noncore dispositions, so we don't disclose the cap rate on those dispositions.

Relatively de minimis amount, it's about $10 million total value.

We've reached the end of our question-and-answer session. I'd like to turn the floor back to Ben Butcher for closing comments.

Well, thank you, everybody, for joining us this morning. I think you're going to agree we had another very successful quarter. We're very excited about the opportunities going forward. Also very excited about the advances we've made internally, perhaps not necessarily visible, but in terms of our processing capability, our use of data for targeting, et cetera. Things are very -- things look very bright here, and we're looking forward to putting up some good numbers as we move into 2019. Thank you.

This concludes today's teleconference. You may disconnect your lines at this time, and thank you for your participation.