Caesars Entertainment Inc (CZR) — Q2 2019 Earnings Call Transcript

Thank you, Ian. Good afternoon. And welcome to the Caesars Entertainment second quarter 2019 earnings conference call. Joining me today from Caesars Entertainment Corporation are Tony Rodio, Chief Executive Officer; and Eric Hession, Chief Financial Officer. 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 17 through 23; these slides 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. Forward-looking statements reflect our expectations as of today's date and we have no obligation to update or revise them. 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. There are certain risks and uncertainties, including those disclosed in our filings with the SEC that may impact our results. 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 the third quarter of 2018 unless otherwise stated. The term same-store refers to the performance of our portfolio of properties prior to the acquisition of Centaur and therefore excludes all Centaur performance. Also note that hold-adjusted results reflect hold versus our expectations. You can find reconciliations of GAAP and non-GAAP figures starting on slide 10. I will now turn the call over to Tony.

Thanks, Steve. I'll provide a quick review of our proposed merger with Eldorado and a high-level overview of our second quarter performance before turning the call over to Eric to discuss our results in greater detail. On June 24, we announced an agreement to merge with Eldorado Resorts to create the largest owner and operator of U.S. gaming assets. For Caesars shareholders, this cash and stock transaction will provide immediate cash value as well as the opportunity to participate in the combined company's future growth. Our Board of Directors conducted a thorough evaluation of the path by which we can enhance value the most and position the company for long-term success. They unanimously concluded that this transaction accomplishes those objectives. I'm confident that combining Eldorado's attractive platform of regional gaming properties with our best-in-class Caesars rewards program, iconic Las Vegas assets, and attractive regional portfolio will result in the creation of a leading domestic gaming platform poised for long-term success. We are working together with Eldorado to complete this transaction, which is expected to close in the first half of 2020 subject to receipt of shareholder and applicable gaming and regulatory approvals along with other customary closing conditions. Until then, I, along with the rest of Caesars management team, remain focused on improving the company's operations and financial performance through both revenue-enhancing opportunities as well as operating efficiencies. Since joining Caesars in May, I've been impressed with the expertise and professionalism of the Caesars team as well as the quality of our Las Vegas and regional asset portfolio. Room renovations across our Las Vegas assets have been a major driver of our strong performance in recent years. These investments are almost complete and by the end of the year, we will have renovated 92% of our Las Vegas Strip hotel products since 2014, providing us with a highly attractive portfolio of rooms. We're also making improvements in entertainment and food and beverage across our Las Vegas properties with new concepts like Vanderpump Cocktail Garden and Jimmy Kimmel's comedy club. The Coliseum at Caesar's Palace is set to reopen in September with Keith Urban. Between the Coliseum and Zappos Theater, we will feature several high-profile entertainers including Christina Aguilera, Gwen Stefani, Guns N' Roses, Journey, Madonna, and Shania Twain among others. Moving to the results during the second quarter, our net revenues totaled $2.2 billion, up 4.9% year-over-year driven by the acquisition of Centaur and strong hotel and food and beverage results in Las Vegas. On a same-store basis, net revenues declined 1.2%, strength in Las Vegas was offset by the impact of increased competition in Atlantic City and Southern Indiana and unfortunately year-over-year hold. Adjusted EBITDAR was $631 million, up 1.3% year-over-year or down 5.1% on the same-store basis mostly due to unfavorable hold and competition. Adjusted EBITDA margins declined 100 basis points to 28.4% driven by the high hold in the second quarter of 2018. On a trailing 12-month basis, our domestic marketing costs represented 20% of gross revenue reflecting a 90-basis point improvement year-over-year, while labor costs improved 30 basis points year-over-year to 23.5% of gross revenue. We continue to believe that sports betting will be a growth catalyst for the company over the next few years. This year, we've seen several favorable legislative decisions allowing us to pursue expansion in this area. We are currently designing and constructing nine sportsbooks across Indiana and Iowa which all are expected to be operational in September of 2019. We intend to develop additional sportsbooks in Illinois, which we hope to have operational once the regulations are in place. Additionally, the United Indian Nation in partnership with us recently opened sportsbooks at Turning Stone Resort Casino in Verona, New York and Point Place Casino in Bridgeport, New York. We are also pleased that North Carolina has legalized sports betting and we are working with our Cherokee Nation partners to roll out our product as quickly as possible. Our footprint now totals 20 sportsbooks across four states and we expect to be operational in seven states by year-end. During the quarter, several states passed gaming legislation that directly impacts our operations. In Indiana, we are very excited that our Centaur properties will be allowed to offer table games starting in 2020. We are expanding our footprint to incorporate table games and training dealers in anticipation of dealing our first card at 12:01 a.m. on New Year's Day. In Louisiana, we are working towards finalizing a 30-year extension to operate Harrah's New Orleans through 2054. In order to obtain the extension, we will invest $325 million in the property by 2024 to improve the facility, add new restaurants and add a new hotel. We believe this is a great outcome for the city of New Orleans, the state of Louisiana, and our business. Finally, the state of Illinois enacted legislation allowing significant gaming expansion in a largely saturated and high-tax jurisdiction. As a result, we expect our existing properties in Illinois and Northern Indiana to feel the effects of the gaming expansion over the next several years. I'll now turn the call over to Eric to review our financial results in more detail.

Thank you, Tony. I'll discuss our second quarter results in more detail. Please note that our consolidated results include Centaur unless otherwise stated. For the second quarter, our Las Vegas business delivered solid performance. Net revenues were $1.0 billion, up 1% year-over-year with strength in our hotel and food and beverage products. Las Vegas cash hotel revenue grew 6.3% year-over-year, occupancy increased 370 basis points to 97.5%, and RevPAR increased 6.2% year-over-year. In the second quarter of 2019, we established record performance for both cash hotel revenue and occupancy breaking the records previously established in the first quarter of this year. Overall positive hotel performance was a 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 in food and beverage as well. We believe our performance is indicative of a healthy consumer environment in Las Vegas and expect hotel demand to remain strong throughout the remainder of the year. Las Vegas gaming revenues decreased 6.1% year-over-year due to $18 million in unfavorable year-over-year hold. However, we're pleased that total gaming volume increased 3% year-over-year with table games volumes up 1% and slot volume up slightly more than 3%. Food and Beverage revenues were up 5.7% year-over-year primarily due to higher hotel occupancy levels and the improvements we've made to our offerings in the last few years. Caesars Palace drove most of the increases with strength coming from Hell's Kitchen, the newly opened Vanderpump Cocktail Garden as well as in banquets. Las Vegas EBITDA totaled $389 million, up 1.1% year-over-year or up 5.9% on a hold-adjusted basis as unfavorable hold was a headwind versus the prior year, but not significantly different from our expectations. EBITDA margin expanded to 38.8%, up 20 basis points year-over-year driven by revenue growth across the hotel and food and beverage verticals. Turning to the other U.S. segment, net revenues totaled $1.1 billion, up 8.4% including Centaur, but down 4.8% on a same-store basis. Second quarter results are positively impacted by the inclusion of Centaur, but partially offset by continued competitive and promotional activity in Atlantic City and Southern Indiana and to a lesser extent Iowa and Pennsylvania. Other U.S. EBITDA totaled $270 million, up 4.7% or down 10.9% when excluding Centaur. The same-store decline was attributable to the net revenue declines I noted earlier. EBITDA margin was 25.4%, down 90 basis points year-over-year or down 170 basis points excluding Centaur. EBITDA excluding both Centaur and Atlantic City declined 2.4% year-over-year. In the all other segment, net revenues totaled $156 million, up 7.6% year-over-year primarily due to an increase in net revenue at managed properties partially offset by decreases in table game volumes at our high-end international properties. All other EBITDA loss increased $10 million to a loss of $28 million primarily due to costs associated with our sports betting partnerships. Looking ahead, we believe we're well positioned to benefit from growth in Las Vegas and continue to be bullish on the city over the long term. In the second quarter, visitor volumes to Las Vegas increased 0.9%, convention attendance increased 0.7%, and deplane passengers increased 3.6%. We view the overall demand environment in Las Vegas as stable despite quarter-to-quarter volatility driven by shifts in the citywide event calendar and holidays. With respect to Las Vegas for the full year of 2019, we continue to expect revenue growth to be in line with last year and expect modest EBITDA margin expansion on a year-over-year basis despite the labor headwinds we noted in previous quarters. We continue to see strong group and convention business and expect this customer segment to generate low double-digit growth in both total revenue and in room nights. In 2020, the opening of Caesars Forum represents a major growth opportunity not only for Caesars but for Las Vegas as well. Caesars Forum already has over $290 million in cumulative bookings. Total bookings in 2020 are currently over $80 million, well ahead of our expectations. In our other U.S. segment, we continue to expect a positive incremental contribution from Centaur, which will be partially offset by the competitive pressure experienced in Atlantic City in the first half of 2019. We expect the competitive impact of Atlantic City to subside as we annualize the impacts in the second half of the year. The performance across the rest of the 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 investments in technology, infrastructure, and our sports sponsorships. We will now provide a few qualitative factors to consider in your modeling for the third quarter. In Las Vegas, we expect to benefit from continued healthy consumer demand with strength in the FIP segment. We expect net revenues to increase slightly and EBITDA to grow low single digits on a year-over-year basis. As macro trends continue to weigh on the international segment, we expect to see continued weakness in this consumer. We expect our group business to exhibit typical seasonal weakness in the third quarter as group revenue is expected to be flat with low single-digit growth in room nights. In addition to traditional seasonal weakness, Las Vegas third quarter performance will be negatively impacted by the closure of the Coliseum at Caesar's Palace and Harrah's Mardi Gras tower room renovation. We expect to complete the renovation for the Coliseum in September and the Mardi Gras tower in December. In the fourth quarter, we expect to see a strong rebound in the group business, which will allow us to grow group revenue and room nights in the low double digits for the full year. In the other U.S. segment, we expect a mixed environment across our regional portfolio as certain regions remain more affected by competition than others. Annualizing the competitive effects in Atlantic City and benefits from strong growth at Centaur will help to offset the continued negative impacts in Southern Indiana, Iowa, and Illinois due to competition. Excluding the impact of Centaur, we expect the other U.S. segment adjusted EBITDA to be flat on a year-over-year basis. We expect Centaur to remain a strong overall growth driver despite annualizing the acquisition in the third quarter as we continue to extract additional synergies and upside from the legalization of sports betting in Indiana. In terms of the all other segment, we expect to generate revenue growth in the mid-single digits and to generate adjusted EBITDA loss that represents a sequential improvement from the second quarter of 2019. The sequential improvement in adjusted EBITDA will come from the realization of savings from our corporate investments and the wind down of certain IT transformation projects partially offset by investments in our sports partnerships. From a liquidity perspective, we ended the quarter with approximately $1.5 billion in cash. As of June 30, we had nothing drawn on our revolver and had the full $1.2 billion in capacity available. In Q2 '19, we spent $161 million in the same-store CapEx and $55 million in development CapEx, excluding the convertible notes and capitalizing our REIT lease payments. At 8x, our net leverage stands at 5.3x. For CapEx in 2019, we continue to expect a range of $375 million to $450 million for maintenance capital, which includes room renovations at Harrah's Las Vegas and Paris. We expect to spend approximately $475 million to $555 million for development-related CapEx mostly related to the Caesars Forum project and our investment in sportsbooks across the U.S. Before we open the call for questions, please note that the purpose of today's call is to discuss our second quarter performance. While we look forward to answering any questions you have about Caesars, for more information regarding the proposed merger with Eldorado, please refer to our filings with the SEC. With that, we will open the call for questions.

For the comments Tony, you've had a couple of months now under your belt, and I was just wondering, as you reflect on the last several months and your observations of the company, what has surprised you? More importantly, how do you view what you've learned so far and the opportunities that your insights may present?

Thank you very much for the question. I would say what's pleasantly surprised me overall is our performance in Las Vegas in general and more specifically our performance from a room standpoint in Las Vegas. As Eric mentioned in his comments, we had a record cash revenue at a hotel in Las Vegas in the second quarter, which exceeded our record that we had in the first quarter. I think the capital dollars spent on rooms over the last number of years have really paid off, and we're really excited about the future outlook in that vertical as well. In terms of where I think there are opportunities, I think mid to longer term here in Las Vegas, I think that our East Side properties, the properties on the east side of the Strip across from Caesars Palace, I think provide opportunities if you look at places like Flamingo and Bally's with their large room supply, we don't do very well from a food and beverage revenue per available room there. And I think it's because of the lack of some compelling amenities. So, I think we have an opportunity to do some things and add some non-gaming amenities there to drive traffic. Longer term, we have a ton of vacant land behind those Eastside properties that provide a great opportunity for us. And then, quickly from a regional market standpoint, I think that we could also probably add some compelling non-gaming amenities at certain larger properties. But I also think we could be a little bit strategic, more strategic in the deployment of our marketing dollars to hold onto our customers and win some profitable market share back.

Great. That's helpful. And then, would you guys mind just kind of maybe a little bit of an update on kind of how you're thinking about the project at this point in time? I think you guys have maybe $180 million or so in your CapEx or in the CapEx in general. Could you guys kind of talk about where that stands?

Well, it's certainly a focus of ours. We've got $80 million that we put into it to date. Certainly, the first month and a half we've been focusing on, we were focused on the merger and then our properties and our business here in the U.S. and that's going to be a focus of our attention over the next month or two to come up with a recommendation for the Board and I'll let Eric weigh in if he's got anything additional.

Yes. The only thing I'd add Carlo is that the number that you referenced in terms of the CapEx is because we're consolidating that entity. Our maximum future contribution to the project is $60 million and that would be the amount of the cash out from our balance sheet that we would contemplate in the entirety of the project.

Understood. All right. Thank you, guys.

Thanks.

Good morning, everyone. I appreciate the insights from both Eric and Tony. Eric, could you provide more details on the core regional performance? I believe you mentioned that the performance in the second half would be flat on a core basis, excluding Centaur, but I want to make sure I understood that correctly. Additionally, could you share more about the overall environment and the trends you are observing?

Yes. What you summarized is correct. Excluding Centaur, we anticipate during the third quarter that our portfolio be broadly flat. We're certainly seeing some unanticipated competition in locations such as Iowa with the new tribe that's opened up. And then, with the VLTs continuing in Illinois and starting to affect some of the Hammond area there in Indiana. But overall, I would say that the regional portfolio excluding Atlantic City some markets are performing better, some markets are worse. But I wouldn't say there's been a real change in trend. For this quarter, we happened to be down a couple percent in terms of EBITDA adjusting for those, but for the year, we're anticipating it to be about flat.

Yes. I mean, I would agree and also some competitive headwinds in Southern Indiana with the instant racing games across the river. But, I think if you look at it from a longer-term view, we have a ton of upside in Indiana with the Centaur properties with the addition of table games that are going to get here a lot quicker than we thought and the resolution of the long-term lease in New Orleans provides us with a great opportunity in the longer term. And I mean call me crazy, but I think we can improve things in Atlantic City a little bit I think that we've underperformed there, and I think that there's an opportunity for us to turn those results around.

Thanks for both. Maybe just as a follow-up to elaborate on that last point a little bit. Just maybe a little bit of an overview on ... I'm sure there's a decent amount of planning that's going to be done, but timing for the investment in New Orleans and maybe a little bit on scope like number of hotel rooms you'd be targeting there. And then, for the table just any thoughts on underwriting expectations on the upside potential there would be helpful?

In terms of New Orleans, the capital investment has to happen, and I forget it was before 2024. And there's also a limit to the number of rooms that we can add and I believe it's in the 400 and some room range. But again, I apologize for not knowing the exact number but that we're in the planning stage now and I would think that the deployment of that capital will begin probably in the second half, the latter part of 2020. And again, it's got to be done in the next four to five years anyway.

I will just add Shaun that we do expect pure returns from that capital to be kind of above 10% below 15%, so in that range, in addition to being able to secure the license extension. So overall, we think it's a great deal, like we said for both the city, the state, but also for us as a company.

Yes. I mean we're buying tens of thousands of rooms in New Orleans each and every year. And this will allow us to reduce that costs pretty significantly. So, we view this as a real big positive.

Great. Could you provide some insights on the Centaur deal? That's all I have for now.

Any color on the Centaur property?

No. On the table game upside. Sorry.

Yes. The table games. Sure. Based on our experience from seeing other markets where they've introduced table games from a competitor perspective, but also from us when we did it in Pennsylvania. We expect to see about $40 million of incremental EBITDA from the introduction of table games at the two properties. As of right now, we're continuing to progress very well from a performance perspective even absent the table games, and our tracking is right on if not slightly above our business case that we put together when we bought the properties. In addition to the positive table games, Tony mentioned the sports betting opportunity. And beyond that, we own five OTBs that we acquired with the purchase of Centaur. And we're anticipating being able to open those as well. So, we all have seven sports books in the state of Indiana running very shortly.

Thank you very much.

Just a clarification on Slide 5, when you talk about the Las Vegas performance. I mean how did that gaming volumes are up 3%, but then gaming contribution on revenue is down $1 million, could just talk about the disconnect there? Thank you.

Is that year-over-year? Good. Well, we held it. I know we had 20% back in 2018 and 10% back this year and overall table hold went from 19% last year to 15% this year. So, our volumes were up, but our win was down pretty significantly and it's just a function of bad luck or great luck last year.

That excludes hold. So, anything else going on, is it like the promotional environment, is it the mix of games potentially?

Yes. It's a mix thing that we're talking about. So, we had a very strong volume. And then, we had lower other table games volumes. And so that caused the volume on the table game side to be up slightly, but the theoretical expected win to be slightly lower than that. On the slot side, we had slot volumes up approximately 3%. And there's really not much variability on the slot side from a mix standpoint.

That’s helpful. Yes. That makes sense. And then, just talking about Vegas in general, you highlighted having a really strong convention calendar for the second half of the year and some seasonality there. Just on the bank calendar, how is it shaping up for you guys versus last year for the back half of the year?

Really well. I mean we feel good about our booking pace and the trends that we're seeing. And then, in on more of a longer-term view, I mean we think that there is a number of positives that are going to increase demand as we go into 2020. In addition to the Forum over the next couple of years. You've also got the Raiders coming to town, obviously, the expansion of the Las Vegas Convention Center as well as the MSE sphere. And then, ultimately once the merger is complete, we've got four pretty significant metropolitan areas that will get plugged into Caesars rewards as well that will also add to the demand. So, we think the prospects look very strong.

Perfect. Thank you.

Question. Just you noted some costs on the sports betting partnerships this quarter and next quarter maybe just talk about your expected ROI and timing of when we might see that?

Yes. The costs are coming in associated with our deal with ESPN, Bleacher Report and the NFL. We're expecting in the back half of this year when the NFL season comes along that will really start to see some share improvement because we've been investing in that channel up until now. We also have the opening of ESPN broadcasting booth right on the Las Vegas Strip at the Link that will open later in the year as well. And then finally next year we'll have the draft here in Las Vegas with a preponderance of the events at our facilities. And so we're very excited about that.

We view those as certainly longer-term investments that we're not going to get returns on right up front. But as we expand sports betting in more jurisdictions and leverage the popularity of the NFL and having a team here in Las Vegas, we certainly think that they're going to pay big dividends down the road.

Got it. And then, apologies, if I missed this, but in the presentation, you noted that hold had a $10 million to $15 million impact for revenue, but a $15 million to $20 million hit to EBITDA. So, what was the flow through so high?

Yes. It depends on the jurisdiction and the tax rate associated with it. So, we have two properties that have a lot of volatility. Obviously, Caesars Palace here in Las Vegas, but also our London clubs operation. And as you know, the tax rate here is very low and the tax rate in London clubs is very high. So, you can have more than 100% flow through based on the mix shift of where that hold happened.

Okay. Understood. All right. Thank you so much.

Thanks.

Hi. Good afternoon, everyone. I wanted to just follow up on Las Vegas for a moment. There's been so much discussion about the issues of resort fees and parking charges and finding other ways to generate growth beyond just room rates. Can you just talk about what you're seeing and what your strategies are regarding those issues in Las Vegas today?

Well, we're certainly seeing them continue to escalate. I think one of our competitors just announced an increase as well. I look at that as something that we need to be a little bit cautious about as continuing to escalate those because I think that over time at some point there's going to be the straw that breaks the camel's back. I don't think we're there yet. But, I want us to be very judicious and as I said cautious about taking those rates any further. I mean it's certainly a revenue stream that's hard to walk away from and that it's been accepted to this point. But, I think we're getting pretty high.

Yes. The only thing I'd add is that we had RevPAR growth of 6.2% this quarter. We had very strong RevPAR growth last quarter as well, much faster than the rest of the United States for both us and for my city as a whole. And so, I don't think that the resort fees and the parking fees are inhibiting our ability to grow the rates. We hit 97.5% occupancy, up 380 basis points. So, we really don't have a demand problem at this point with respect to interest of people coming to Las Vegas.

Yes. The other thing, I would add that if and when there is any kind of economic downturn, I think that those things will be felt a lot more by the consumer at that point than in New York today where the demand is so strong.

Got it. And I. My follow-up question is, Tony that you made the remark that you think there is room for improvement in Atlantic City. Could you elaborate on that just a bit and talk about what strategic levers you think are available?

If you examine the performance of our same-store properties in Atlantic City, the seven we had before Ocean and Hard Rock opened, it's clear that we've underperformed. The three properties are lagging behind the other four overall. If those remaining properties can find ways to maintain some level of market share profitably, I believe Caesars Entertainment can do the same. We are currently reinvesting 300 basis points below the market average. I’m not saying we need to significantly increase our spending, but we can strategically test initiatives to change customer behavior and regain some of the lost market share, which should be our top priority. Secondly, at Caesars Atlantic City, and not so much at Harrah's, I think we could allocate more capital to enhance non-gaming amenities, providing reasons for people to visit our properties. Successful properties are those that have invested in the customer experience, and unfortunately, we haven't done that sufficiently in recent years.

Got it. Thank you very much.

Thanks Dave.

Hey, good afternoon everybody. Thanks for taking my question. Eric, I appreciate all the modeling help on the back half. I think last call you indicated an expectation that margins for the full year would grow for the entire business. Are you feeling better about that target after getting through the second quarter here and would you expect both the third quarter and the fourth quarter which show margin expansion?

Yes. We did mention last quarter that we thought the company as a whole would have slightly higher margins then we do feel confident as we head into the back half of the year with that. If you notice this call, we did also call out that we expect Las Vegas margins to be modestly higher. And last quarter, we weren't as confident in that. We felt like we have very good momentum. The verticals that we're talking about from the hotel standpoint and the gaming standpoint are very high margin verticals. And so, to see those grow gave us a lot more confidence in terms of the margin here in Las Vegas. But as a company as a whole, yes, we continue to expect to see margin growth for the rest of the year.

Also, we're being very judicious as we have some attrition about replacing bodies particularly here at corporate where we're evaluating each and every departure and through the review those in the last three months. We recognize almost $15 million worth of annualized savings there. We're also looking at scaling back some of our participation games to the tune of about $10 million there. So, there's a few other cost initiatives that we're engaged with that are going to allow us to take some cost out of the business.

Great. Thank you. And then, with respect to asset disposition activity would you consider monetizing any of your assets over the next several months, if the opportunity was right or is your thought to leave the current portfolio as is for now?

Well, we're reviewing things as we would whether we're heading into a merger or not. Well, we have some inbound inquiries periodically and there's a few that are more interesting than others and we'll continue to follow-up on those and if we think something makes sense then we'll present it to our Board.

Great. Thank you very much.

Thank you.

Hi. This is Daniel Adam on behalf of Harry Curtis. Just one question to the extent you can comment on it. And Tony, I think you remarked on it just before, but the cost reduction effort in anticipation of or ahead of the closing of the Eldorado acquisition, where do you currently stand and what is your expectation over the next six to 12 months? Thanks.

Currently, the initiatives we have implemented have resulted in $25 million in savings. We will continue to examine replacements at the corporate level as we progress. Additionally, we are looking to reduce some external contract and consulting fees. While I hesitate to assign a specific dollar amount, given that we've already achieved $25 million, I expect that by the first quarter of next year, this figure will increase to over $50 million, or something in that vicinity.

Okay, great thanks.

Thank you.

Okay. Thanks everybody. Appreciate it.