Caesars Entertainment Inc (CZR) — Q1 2019 Earnings Call Transcript

Thank you, Leeway. Good afternoon. And welcome to the Caesars Entertainment First Quarter 2019 Earnings Conference Call. Joining me today from Caesars Entertainment Corporation are Tony Rodio, Chief Executive Officer; Eric Hession, Chief Financial Officer; and Joyce Arpin, Senior Vice President of Finance and Treasurer. A copy of the press release, earnings presentation slides and a replay of this conference call are available in the Investor Relations section of our website at caesars.com. Also, please note that prior to this call, we furnished a copy of the earnings release to the SEC in a Form 8-K, and will file our Form 10-Q. Before we get underway, I would like to remind you to reference slides 2 through 3, which include forward-looking statements, safe harbor disclaimers and definitions of certain non-GAAP measures. Our comments today will include forward-looking statements as defined by the Private Securities Litigation Reform Act. Actual results may differ materially from those projected in any forward-looking statements due to unanticipated hold fluctuations, weather or other unforeseen circumstances that we do not control. In addition, Caesars Entertainment closed on the acquisition of Centaur Holdings in the third quarter of 2018. Therefore, U.S. GAAP results do not include Centaur Holdings prior to the acquisition in Q3 2018 unless otherwise stated.

Thank you very much, Steve. And good afternoon, everybody. I'm very pleased to join today's call as the incoming CEO of Caesars Entertainment. Over the course of my 38 plus years in the gaming industry, I've worked on two separate occasions at Harrah's, so this is somewhat of a homecoming for me. And I couldn't be more excited to return to lead Caesars Entertainment at this critically important time in the company's history. I have a tremendous amount of respect for Caesars and the incredible team members who are dedicated to serving our guests and creating value for our shareholders each and every day. Over the course of the last several weeks since my appointment was announced, I have been wrapping up my previous role and beginning the process of transitioning to Caesars. I'd be remiss if I didn't take a moment to thank Mark Frissora for his support in making this transition smooth for me as well as for the company. I will officially take up the new role on May 6. In the meantime, I've had an opportunity to begin to speak to members of the senior management team, and I very much look forward to hitting the ground running. I've always employed a commonsense management strategy and in partnership with the leadership team, intend to apply the same at Caesars. At the core, we look closely at activities that we are doing today that do not add value, and I want to eliminate those and begin to look at things that we can do, new opportunities to create value. A combination of the great team of people here at Caesars along with the company's powerful brands, the Caesars Rewards loyalty program and our diverse network of properties provide a strong foundation, on which I'm confident we can build to create even more value. The company has made substantial progress since the conclusion of the restructuring, and I look forward to identifying and working towards additional growth opportunities. As I get up to speed, I will quickly study our operations in detail, and work with the team to identify tactics to profitably grow market share and determine that our operating strategies and marketing mix are optimized to support growth and innovation across the properties and from the corporate center. I want to ensure that we have a culture in which all of our team members think and act like entrepreneurs. That's something our management team here will hear me talk quite a bit about and are collectively invested in our shared success. Before I turn the call over to Eric, I'd like to assure you that I intend to work quickly with the management team to formulate and begin executing a tactical plan. I intend to be very transparent with all of our stakeholders as I can be and will provide relevant updates on our plans in due course. With that, let me now turn the call over to Eric to discuss the Company's financial results.

Thanks, Tony. I'll provide a high-level overview of our performance in the quarter and then give a few updates on our business before turning the call over to Joyce to discuss our results in greater detail. Caesars Entertainment delivered a solid start to the year, driven primarily by a healthy consumer demand environment in Las Vegas and our ongoing focus on operational execution. Net revenues totaled $2.1 billion in the first quarter, up 7.3% year-over-year, driven by the acquisition of Centaur Corporation and strong gaming, hotel and food and beverage results in Las Vegas. On a same-store basis, net revenues grew approximately 0.9% as strength in Las Vegas was partially offset by the impact of a heightened competitive environment in Atlantic City and inclement weather across some of our regional properties that drove closures in some instances. Adjusted EBITDAR was $562 million, up 8.5% year-over-year or essentially flat on a same-store basis. Adjusted EBITDAR margin improved 30 basis points to 26.6%, driven by both marketing and labor improvements. In addition to continuing to improve marketing and labor margins, we achieved record customer experience and service level scores in the quarter. While the majority of the labor-related cost savings that we achieved in recent years has been driven at the property level, where we've reduced headcount by approximately 12% since 2014, in March we completed a corporate cost-reduction initiative. This latest effort is expected to drive approximately $40 million in annualized cost savings. Through the combination of this effort, along with additional efficiency gains across both marketing and labor for the full year, we anticipate being able to successfully offset the $80 million in annualized labor headwinds we cited in our fourth quarter call and thus now anticipate growing margins on a full-year basis. Key operational highlights in the quarter include ongoing strength at the recently integrated Centaur properties, continued momentum in growing our sports betting business and the opening of our newest tribal management property, Harrah's Northern California. I'll spend a few minutes providing more detail on each of these. At Centaur, performance continues to provide solid EBITDAR growth as we realize benefits from implementing our Caesars Rewards database and our centralized cost structure. The performance of Centaur remains in line with our expectations, and we've exceeded our internal plan in the first quarter. We’re pleased with the progress of pending legislation in the state of Indiana. If enacted, the legislation would enable us to introduce table games earlier than anticipated and would allow sports betting within the state. We remain confident in delivering our continued synergies and achieving our goal of $200 million in EBITDAR contribution from Centaur by July of 2020. We continue to grow our sports betting business during the first quarter as well with the introduction of a new sportsbook at Harrah's Philadelphia Casino and Racetrack, bringing our total number of sportsbooks to 17, with 5 located outside of the state of Nevada. While it's still early days in terms of customer acquisition and market share, we continue to view sports betting as a solid growth opportunity. We anticipate opening additional sportsbooks at our regional facilities in the next 12 months, pending favorable legislation. We have aligned the Caesars Sports brand with some new marquee partnerships. As the exclusive NFL casino partner, Caesars has positioned its casino and resort offerings in front of more than 180 million football fans. The partnership has already begun to pay dividends, as we experienced strong VIP engagement in packages for the Super Bowl and the NFL draft recently held in Nashville. In addition, we're excited about the announcement of our partnership with Turner Sports and the Bleacher Report. We're currently developing a studio in our Caesars Palace sportsbook that will facilitate new content development and place Caesars betting odds directly into the Bleacher Report app. There is much more to come from this partnership, and we'll share more as it matures. In addition to running our own mobile offering, we also signed a new multistate agreement with DraftKings. Under the agreement, Caesars will offer DraftKings market access for its online gaming products in certain jurisdictions that will generate revenue streams for Caesars in return. Of course, all of this being subject to the passage of applicable laws and receipt of applicable gaming licenses. Additionally, DraftKings will promote Caesars as its official resort partner in states where the companies collaborate and will introduce new sports-themed experiences and sports viewing events to be held at Caesars properties. We're excited about the DraftKings agreement, which builds on several other partnerships we've entered into, further strengthening Caesars' position in sports betting. The newest property in our network, Harrah's Northern California, located just outside of Sacramento, opened for business 2 days ago, marking our fourth tribal management agreement. The soft opening went well and was well received as the property reached maximum capacity shortly after opening. We anticipate generating between $5 million and $10 million in annual fees as well as the additional network benefits in Las Vegas and other destination properties in our portfolio. The new property owned by the Buena Vista tribe of Me-Wuk Indians enables us to grow the Harrah's brand and our Caesars Reward Loyalty Program in a capital-efficient way in an attractive new region. Caesars has a long-standing relationship with various Native American communities across Northern America dating back 20 years and believe we're the only gaming operator to renew agreements with tribes multiple times.

Thank you, Eric. I will discuss our first quarter results in more detail. Please note that our consolidated results include Centaur unless otherwise stated. For the first quarter, we again delivered strong results in Las Vegas, where a healthy consumer demand helped us generate net revenues of $955 million, up 5.8% year-over-year with strength across all verticals. Las Vegas cash hotel revenues grew 7.9% year-over-year with occupancy up 250 basis points to 95% and RevPAR increasing 4.9%. Overall, positive hotel performance was the result of strong group demand, which saw double-digit room night growth and increased leisure demand from growth in direct bookings at caesars.com. The increase in occupancy provided a lift in performance for all business verticals in the Las Vegas segment. Las Vegas gaming revenues increased 6.6% year-over-year due to favorable hold and improved slot volume. Strong revenue growth was partially offset by a decline in table game volumes notably in baccarat as we experienced a softer Chinese New Year versus last year. F&B revenues were up 5.4% year-over-year, primarily due to overall demand from higher hotel occupancy levels, new outlets being fully online, and increased banquet revenues. Las Vegas adjusted EBITDAR totaled $360 million, up 12.1% year-over-year or up 3% on a hold-adjusted basis as favorable hold contributed between $25 million and $30 million. Adjusted EBITDAR margin expanded to 37.7%, up 220 basis points year-over-year, driven by higher revenue growth in the high-margin gaming and hotel verticals. Turning to the other U.S. segments, net revenues totaled $1 billion, up 9.1%, including Centaur, or down 4.5% on a same-store basis. First quarter results were positively impacted by the inclusion of Centaur but partially offset by continued competitive and promotional activity in Atlantic City and extreme weather across our regional portfolio. Our Metropolis and Horseshoe Southern Indiana properties experienced prolonged closures due to flooding. We estimate that weather conditions resulted in headwinds of approximately $32 million for net revenue and $17 million for adjusted EBITDAR for the quarter. Other U.S. adjusted EBITDAR totaled $233 million, up 7.9% or down 11.5%, excluding Centaur. The decline was primarily driven by the net revenue declines in Atlantic City. Adjusted EBITDAR margin was 23.1%, down 20 basis points year-over-year or down 170 basis points, excluding Centaur. Adjusted EBITDAR, excluding both Centaur and Atlantic City, was down 2.5% year-over-year. In the All Other segment, net revenues totaled $150 million, up 4.9% year-over-year, primarily due to favorable hold at our international properties. All Other adjusted EBITDAR loss increased $12 million to a loss of $31 million, primarily due to growth investments in our technology infrastructure and sports partnerships. From a liquidity perspective, we ended the quarter with $1.4 billion in nonrestricted cash. During the quarter, we generated $255 million of cash flow from operations, giving us the ability to pay off the $100 million balance on our CRC revolver. As of March 31, our total revolver capacity was $1.2 billion. In the first quarter of 2019, we spent $153 million in same-store CapEx and $65 million in development CapEx. Excluding the convertible notes and capitalizing our REIT lease payments at 8 times, our net leverage now stands at 5.3 times, down 0.2 turns when compared to the year-end of 2018. We remain committed to deleveraging the balance sheet over time and reiterate our gross lease adjusted leverage target of 4.5 times by the end of 2021.

Looking ahead, we believe we are well positioned to benefit from growth in Las Vegas and continue to be bullish on the city over the long term. In the first quarter, visitor volumes to Las Vegas increased 0.8%, convention attendance increased 1.5% and deplaned passengers increased 2.6%. We view the overall demand environment in Las Vegas as stable, despite the quarter-to-quarter volatility driven by shifts in the citywide events calendar and holidays. In 2019, we continue to expect revenue growth in Las Vegas to be in line with last year's growth and we expect stable EBITDAR margins year-over-year. We continue to see a strong group convention business in 2019. And due to strength in recent bookings, we now expect to generate low double-digit growth in total revenue in this segment. In 2020 and beyond, we see several important catalysts for growth, including the opening of Caesars Forum and the arrival of the Raiders. Caesars Forum is expected to open in April of 2020 and already has over $230 million in bookings through 2025, with more than 90% of those bookings representing new customers. Total bookings for Caesars Forum in 2020 are currently above $70 million.

In our Other U.S. segment, we continue to expect growth from Centaur of about $80 million to $85 million versus 2018. This is expected to be partially offset by approximately $40 million of headwind from competition in Atlantic City in the first half of 2019, which we expect to subside as we annualize the impact of this competition in the second half of 2019. The performance across the rest of our other U.S. portfolio is expected to remain stable on a year-over-year basis. Regarding the All Other segment, we expect to generate a larger operating loss for the full year 2019 compared to 2018, due to the investments around technology and sports sponsorships that we mentioned previously. We anticipate that the corporate costs related actions taken in March will drive the results in this segment to improve sequentially throughout the year. Before opening the line for the Q&A, I'd like to remind everyone that we'll not be discussing or answering any questions regarding the transaction committee's work. Additionally, while Tony is on today's call, I'd like to remind everyone that he will assume the role of CEO on May 6, and will not be commenting on the committee review process or Caesars' strategy, performance or operations. We can now take the first Q&A question.

Mr. Rodio, congratulations on the new role.

Thank you very much.

Joyce, there's a lot of valuable insight regarding Las Vegas and the current trends. There have been mixed messages coming out of Las Vegas over the past year. I was hoping you could share your perspective, considering the different business mix in the current environment where the high-end segment seems to be under pressure. Could you discuss what you're observing beyond the favorable demand and group dynamics that gives you confidence in the near- to medium-term outlook?

Carlo, this is Eric. I would echo your comments that, in general, we believe that the environment in Las Vegas is quite solid. It does have volatility between quarters, as Joyce mentioned, due to shifting holidays and different events. But broadly speaking, we're seeing very good traction on the group side. We're also seeing solid demand from the FIT side and the transient side. As you saw, our occupancies were up 250 basis points to 95%. So there's clearly demand coming in for the hotel and the hotel side. As we look into Q2, we currently have approximately 150,000 non-group room nights on the books, more than the same time last year. So we continue to experience strong hotel demand and believe that, that will translate itself into incremental food and beverage and gaming demand. The patterns for the year continue to be relatively strong. And I think, in general, we are certainly, as a company, more bullish on Las Vegas than I think the overall perception of certainly some in the investment community.

Eric, that's very helpful. And just if I may, back in the fourth quarter what we spoke and you talked a lot about 2019 and trying to more or less baseload, and it seems like, obviously, in the first quarter you've achieved that, in the second quarter you just mentioned a 150,000 non-group room nights already on the books, up year-over-year. As you think about kind of the second half, is that agenda to really get out in front and kind of baseload still part of the playbook right now for the company as you look beyond, kind of, 2Q?

Yes. That's exactly right. We feel that the efforts we started in the fourth quarter and certainly it carried through into the first and second quarter, have performed quite well. You can see the evidence in the occupancy as a headline number, but you'll also see increases in food and beverage and other ancillary spend. We also think that it's better from a risk management perspective because if there are shifts in the economy or we don't anticipate certain gaps from an entertainment perspective, having that room nights on the books earlier in the bookings cycle, certainly, we believe is a better strategy and do anticipate continuing that throughout the course of the year.

And then, if I may, just one follow-up question for Joyce. I know you said 2Q revenues in Las Vegas you felt they would be broadly in line with 2Q ‘18 in the period. You then reminded us a favorable hold last year in the period in Las Vegas. Was there another tidbit that you kind of mentioned that we should be mindful of in 2Q that I might have missed there?

Just the continued cost pressures we faced in the quarter will continue into the second quarter here in Las Vegas. As you recall, we renegotiated our union contract late last year. So the year-over-year increase in those union wages you'll see in the second quarter.

So, broadly comfortable with 2019 margins staying flat, but 2Q a little bit of pressure and 1Q, obviously, nicely ahead year-over-year, is that accurate?

That's right.

My first question is about the regional programs you mentioned during your last call. You were planning to launch several initiatives that would help you market more effectively to your customers. Have these been implemented yet? If they have, how should we anticipate their impact for the rest of the year, particularly regarding the potential to reduce your marketing expenses?

Yes. We're continually evaluating our various marketing campaigns. We do a lot of test and control, and we make efforts to identify the elasticity of a particular customer or customer segment so that we can tailor the marketing reinvestment to those customers. We were successful in reducing our overall marketing spend for the company despite having slightly higher marketing spend in Las Vegas due to the increased comp expense. But overall, we were continuing to reduce marketing. We're now below that 20% level, when in 2014, if you remember back, we were around 24%. So we successfully cut it by 400 basis points. There is some technology that we have coming. We recently enacted sales force, which as we continue to put that into production phase and use it for more campaigns, that will help us to do even a better job with respect to the targeted marketing.

Can you discuss the trends and differences between the various sports betting markets you operate in, including both brick-and-mortar and online mobile, as well as the impact on your properties?

Sure. We, as you know, the different states have different rules and opportunities to accept sports betting. In New Jersey, we currently have both sports betting at the properties and also online. We're finding good uptake online, and we're also finding that those online customers when they sign up on sports betting are also shifting over into our other online products. So it's a good acquisition tool. For the property betting, we haven't opened our permanent sportsbooks yet. We're opening one on the boardwalk in the middle part of this year. And once those happen, we expect to see much larger increases in terms of the bets taken at the properties. That coincides with similar reaction to what we're seeing in the Mississippi sportsbooks. Those sportsbooks are definitely driving traffic to the properties. Our nongaming beverage and food spend is up, particularly during events where you have high concentration of sports betting people in the properties. But those are proving to be traffic drivers. And then as we mentioned in our remarks, we're very optimistic about the other new states that are either pending with legislation or are currently debating it that ultimately this will be a great traffic driver for our casinos in the regional markets.

Eric, I wanted to start with just free cash flow. I know during the past couple of calls, you've given some general targets in terms of kind of how the model looks in the next couple of years and now given some of the corporate cost changes and CapEx shifts, I was wondering if you were willing to provide just some general targets for free cash flow in the next couple of years, and if anything has dramatically changed since prior calls?

Yes, sure. I would think at this point, our guidance from a free cash flow perspective is the same as it was in prior periods. The improvement in our EBITDA through the cost-cutting will add marginally to that. But our target is to still have roughly $1 billion of free cash flow in the 2021 period, and it'll ramp up considerably starting next year once the CapEx spend for our convention center slows down in the early part of next year.

And then, on Atlantic City, how is the competitive environment looking? Has the new competition kind of taken their foot off the marketing accelerator? And have you adjusted your business model at all? So if we see the same type of marketing in the higher seasonality quarters 2Q, 3Q, your business could look different?

Yes, we are not seeing much of a change right now unfortunately in terms of the competitive environment in Atlantic City. The first quarter and the fourth quarter are the low seasons in terms of the demand to the city and that certainly impacted us considerably. We are anticipating much stronger demand in the summer months. And as you saw in the third quarter last year, we performed quite well despite the competition, but from a reinvestment perspective, it's still quite high. We have modified our strategy a little bit as we headed out of the first quarter, and as we're entering the second quarter, we've increased our investment modestly. As a portfolio, we were investing about 300 basis points behind the rest of the market and we felt that it was suboptimal from an EBITDA perspective and so we increased that slightly.

Joyce, just going back to the comments you made about the second quarter, you throw all of this into the cauldron and it would seem that it would be at least in Vegas sort of heroic to get to last year's EBITDAR number? Is that right?

Yes. It was a record quarter last year, and while we remain very optimistic about the market, the demand environment, and our ability to utilize our database, it will be challenging to match those figures compared to last year. That's correct.

And then in the regional markets, we've seen some companies report their regional results. Can you talk about March and April, particularly, did you, to the extent that you lost business, oftentimes it comes back in 30 to 60 days, did you experience that in March? And then, we've heard some positive rumblings about April as well, a little color on that would give us some sense of the sequential lift, particularly in those markets that were challenged by weather?

Yes, Harry, this is Eric. I would say that March was certainly a good month for us. It seems to be a combination of the pent-up demand from the shutdowns and the February weather, along with the tax returns that came in from the federal government, which really boosted that March period. Overall, it was clear that the quarter improved during that time. April has also been reasonably solid compared to the previous year.

I wanted to clarify the labor situation. Did the union contract take effect at the beginning of the first quarter in Las Vegas, or does it actually start in the second quarter? I couldn't quite determine that based on the earlier discussion.

Yes, it was in the first quarter, Shaun. And in addition to just the union contract, we had some other headwinds, such as our 401(k) that we mentioned earlier and some medical costs that affected the broad employee base as well. But all of that compounded, we were successfully able to offset it as you saw a reasonably good flow-through in the company in aggregate in the first quarter.

Could you provide insight into the core regional environment? You've mentioned your achievements in marketing, but regarding labor, costs, and operating leverage in the core regional operations, excluding Atlantic City and Centaur, what is the current cost growth in those markets? Additionally, what type of challenges are you encountering, or is the situation relatively stable?

I believe it's different from one market to another in the Midwest. There is definitely pressure regarding labor, mainly due to a shortage of workers. We are struggling to find qualified talent in many of these markets, which consequently drives up labor costs, but this situation varies by market.

Could you please remind us about your baccarat exposure on the high end in Vegas? Has the weakness you experienced around Chinese New Year continued into the second quarter? Is this decline due to just a few players or is it more widespread?

Certainly. We primarily focus on the ultra-high-end international market at Caesars Palace, with some overlap at Paris, but it's mainly driven by Caesars Palace. We typically hold about 15% to 20% market share in that segment in Las Vegas, which is slightly lower than some of our competitors since we primarily provide that product at Caesars. Overall, I would say that customers visited less frequently and spent less during their visits, a trend that persisted through the first quarter and to some extent into the second quarter. However, in the second quarter, there is usually less concentration, so the impact is not as pronounced.

That's helpful. Can you provide insights on the quarterly performance of baccarat and its mix? Additionally, last quarter, you mentioned a 2.5% market growth for Vegas this year. How do you view that after reviewing the first quarter results?

Yes. I don't have the quarterly fluctuations of the baccarat play. I think the best thing to do would be to look at the LVCVA or the gaming board reports and you can see what the market does and we generally trend with the market because it does tend to come over holiday periods. So from that standpoint, that's probably the best answer. And then in terms of our expectation for the full year, our view companywide was that our performance in this first quarter was generally right on kind of where our expectations were. So we haven't varied any of our full year projections at this point.

Just going back to the marketing spend, what does your analysis show in terms of your metrics of marketing efficiency versus some of your peers in that, do you spend more? Do you spend less? And when you think about your margins on, I guess, a tax adjusted basis regionally outside of Vegas, where else do you see opportunities outside of marketing versus the peer set?

Yes. You need to evaluate it on a market-by-market basis. Generally, where we have solid information about others' investments, we tend to be slightly below. I mentioned Atlantic City, which has the best disclosure regarding what everyone spends, making it our most reliable evidence. From a tax rate adjusted margin perspective, we usually align closely with some peers in regional markets. This is often influenced by whether there is a hotel and the table gaming component, as these are significant labor drivers in those areas. Additionally, we currently outperform the Strip in Las Vegas in terms of margin significantly.

Okay. And then just switching gears to CapEx. If I look at your slides, you are now talking to a cash CapEx number, rather than before I think you had a GAAP CapEx number with a difference of $140 million. Maybe you can help me understand the thought there? And then also in the footnote of that slide, you made reference to remaining cash for Korea should the project continue. Am I reading too much into that comment? Or is there an expectation that this might not happen?

Yes. The reason we're reporting cash CapEx and referencing the GAAP definition is due to the Korea project. We consolidate that from a GAAP perspective, and we noticed that both analysts and investors were asking many questions and were confused about how it affects our actual cash flow. The project involves our partners and Caesars investing capital, and we will be raising debt financing. Therefore, we wanted to emphasize the cash impact to us for our investors. Our intention was to provide clarity regarding our actual cash deployment. Regarding the project, it is a development initiative in Korea. We need to secure financing, obtain agreements, and ensure the project stays within budget, so there will always be risks involved with such projects, and we wanted to mention that as well.

Just digging into that marketing efficiency a bit more. I think it's been roughly around that 20% mark for three quarters now. Do you think you can continue the pace of improvements you've been able to capture over the past four years or at a certain point, do you run the risk of going too deep?

I think we are always trying to improve the way that we can market to customers. I think that it would be unrealistic to assume that we can continue the same pace of change that we made over the last 4 years. We did change fairly dramatically the amount that we were giving back to the customers. As we mentioned in Atlantic City as an example, we believe that we can make slightly more money by slightly increasing our investment to certain segments relative to where our competition is. So, not all of our efforts are designed towards reducing modeling. There is a balance; it just tends on that to be down. Certainly, the technology that we have coming out is going to be able to enhance that. We also have some greater insights into how customers react to the marketing changes that we'll be able to roll out. And so you should expect to continue to see improvement along these lines, but it won't be at the same pace that it was for the last three years.

Great. And then just a question on the maintenance CapEx. Beyond the hotel renovations, you're still having the work. So there are any other areas of meaningful deferred CapEx that you think need to be addressed over the next few years?

No. We don't think that there's anything specifically like there was with the hotel rooms. You can always improve your properties' food and beverage and you can always improve the appearance of the floor and add new slot machines and we try to do that on a measured basis. Right now, we think that we're in a good situation where the continued spending of around that $500 million a year mark is sufficient to maintain all of the properties. We'll be evaluating that and having discussions with Tony as to what the expectations are going forward. And there may be opportunities to invest more into certain markets where customers are willing to spend more with us in return for enhanced capital.

Thank you very much.

Thanks, everybody. That concludes the call.