Sotherly Hotels Q3 2024 Earnings Report

Sotherly Hotels EPS Results

• Actual EPS: -$0.29
• Consensus EPS: $0.01
• Beat/Miss: Missed by -$0.30
• One Year Ago EPS: N/A

Sotherly Hotels Revenue Results

• Actual Revenue: $40.70 million
• Expected Revenue: $42.00 million
• Beat/Miss: Missed by -$1.30 million
• YoY Revenue Growth: N/A

Sotherly Hotels Announcement Details

• Quarter: Q3 2024
• Date: 11/12/2024
• Time: Before Market Opens
• Conference Call Date: Tuesday, November 12, 2024
• Conference Call Time: 10:00AM ET

Sotherly Hotels (NASDAQ:SOHO) is a publicly traded real estate investment trust that acquires, develops and operates select-service and midscale hotel properties in the United States. Its common shares trade on the NASDAQ under the symbol SOHO. The company focuses on branded, asset-light opportunities designed to generate stable cash flow and long-term value through strategic acquisitions and capital improvements.

The company’s portfolio comprises properties affiliated with leading national brands—such as Hilton Garden Inn, Hampton Inn, Holiday Inn Express and similar flags—located primarily in the southeastern and mid-Atlantic United States. Sotherly Hotels targets markets exhibiting healthy demand drivers, including leisure and business travel corridors, and seeks to enhance returns through targeted renovations, operational efficiencies and active asset management.

Founded in 1995 and converting to a real estate investment trust in 2014, Sotherly Hotels is headquartered in Richmond, Virginia. The organization is led by a management team with extensive experience in hospitality real estate, hotel operations and capital markets. This team directs day-to-day property management and pursues disciplined growth initiatives across attractive regional markets.

Looking ahead, Sotherly Hotels aims to expand its footprint through selective acquisitions and development partnerships, emphasizing a conservative capital structure and rigorous underwriting. The trust maintains a value-add strategy focused on improving guest experience, leveraging brand affiliations and optimizing financial performance to support sustainable growth and long-term shareholder value.

Sotherly Hotels Q3 2024 Earnings Call Transcript

Key Takeaways

• Our portfolio’s Q3 RevPAR rose 4.1% year-over-year, driven by a 7.8% occupancy gain despite a 3.4% ADR decline, with YTD RevPAR up 4.6% versus 2023.
• Urban properties led the recovery, with Hotel Alba (Tampa) posting a 13.6% RevPAR increase, DoubleTree Philadelphia up 11%, The Whitehall Houston up 51.9%, and the Hyatt Centric Arlington growing RevPAR by 3.7%.
• Category 4 Hurricane Helene caused water damage and operational disruption at Hotel Alba, with related impacts extending into Q4 and Q1 2025, though losses are expected to be fully covered by insurance.
• The company secured a $26.25 million SOFR-based loan for the Jacksonville Riverfront hotel, with an additional $9.5 million for renovations, and plans a $14.6 million full renovation to relaunch as Hotel Bellamy by January 2027.
• Updated full-year 2024 guidance projects total revenue of $177.8 million to $180.1 million (+3% YOY), hotel EBITDA of $45.0 million to $45.6 million (+1.1%), and adjusted FFO of $12.8 million to $13.4 million (-9.8% YOY).

Presentation

[Operator]

Good morning all, and thank you for joining us for the Sotherly Hotels Q3 2024 Conference Call and Webcast. My name is Carly, and I'll be coordinating your call today. If you would like to register a question during the call, you can do so by pressing star followed by one on your telephone keypad, and to remove yourself from the line of questioning, it will be star followed by two. I'd now like to hand over to your host, Mack Sims, Vice President of Operations.

[Mack Sims, VP of Operations at Sotherly Hotels Inc.]

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

[Mack Sims, VP of Operations at Sotherly Hotels Inc.]

Although we believe the expectations reflected in any forward-looking statements are based on reasonable assumptions, we can give no assurance that these expectations will be attained. Factors and risks that can cause actual results to differ materially from those expressed or implied by forward-looking statements are detailed in today's press release and from time to time in the company's filings with the SEC. The company does not undertake a duty to update or revise any forward-looking statements. With that, I'll turn the call over to Scott.

[Scott M. Kucinski, EVP at Sotherly Hotels Inc.]

Thanks, Mack. Good morning everyone. I'll start off today's call with a review of our portfolio's key operating metrics for the third quarter. Looking at the third quarter results for the composite portfolio compared to 2023, RevPAR increased 4.1%, driven by a 7.8% increase in occupancy and a 3.4% decrease in ADR. Looking at the third quarter results for the composite portfolio relative to 2019, RevPAR increased 6.4%, driven by ADR growth of 10.9%, while occupancy was down 3.6%.

[Scott M. Kucinski, EVP at Sotherly Hotels Inc.]

Year-to-date, RevPAR performance represents an increase of 4.6% over the same period in 2023, driven by a 6.9% increase in occupancy and a 2.2% decrease in rate. Looking at the year-to-date results for the composite portfolio relative to 2019, RevPAR was up 5.3%, driven by ADR growth of 10.6%, and occupancy decline of 4.9%. Overall, our portfolio's third quarter results, driven by strong occupancy growth, were in line with our expectations.

[Scott M. Kucinski, EVP at Sotherly Hotels Inc.]

Our portfolio's continued occupancy growth, highlighted by our slower-to-recover urban markets, is an encouraging sign that lodging fundamentals for our portfolio have stabilized. The quarter's notable occupancy gains were partially offset by a 3% decline in ADR, as leisure travelers demonstrated price sensitivity due to signs of slowing economic growth. Two major storms occurred during the third quarter, affecting our operations in Florida and Georgia. Hurricane Debby, which occurred in early August, caused no significant damage to our hotels but moderately impacted our operations in Tampa, Savannah, and Jacksonville.

[Scott M. Kucinski, EVP at Sotherly Hotels Inc.]

The more impactful storm during the third quarter, Hurricane Helene, which occurred during the last week of September, caused physical damage to our Tampa asset, as well as substantial operational impact in Tampa, Jacksonville, and Savannah. The bulk of Hurricane Helene's financial impact on our Tampa asset will occur during the fourth quarter.

[Scott M. Kucinski, EVP at Sotherly Hotels Inc.]

I will detail this impact as well as the recovery process later in my remarks. Looking at some highlights across the portfolio, despite the hurricane-related impact during the third quarter, Hotel Alba in Tampa posted commendable results, growing RevPAR by 13.6%, fueled by a 14.5% occupancy gain over the prior year. Hotel Alba continued its well-balanced approach during the third quarter with a mix of group, which grew by an impressive 54% year-over-year, along with growth from business travel and high-rated contract business.

[Scott M. Kucinski, EVP at Sotherly Hotels Inc.]

Driven by a 19.4% increase in occupancy share, Hotel Alba easily outperformed its competitive set during the quarter, growing its RevPAR index by 18.4%. As noted, the improved performance during the first half of the year at our urban locations continued during the third quarter. Our DoubleTree Hotel in Philadelphia grew RevPAR by 11% during the quarter, driven by a 15.7% gain in occupancy.

[Scott M. Kucinski, EVP at Sotherly Hotels Inc.]

The hotel's strong occupancy growth, driven by increased business travel and a more robust citywide calendar, led to a 220 basis points RevPAR share gain during the third quarter. The Whitehall in Houston, built on its strong second quarter results, growing occupancy by 60.4%, resulting in a 51.9% growth in RevPAR over the prior year. The Whitehall's occupancy improvement was predominantly driven by growth in the transient business segment, as well as improved citywide demand, an encouraging sign for the property's continued growth prospects. The Whitehall easily outperformed its competitive set during the quarter, improving its RevPAR share index by nearly 42%, driven by a 47.3% increase in occupancy share. The Hyatt Centric in Arlington continues to perform at a high level, growing RevPAR by 3.7% and outperforming budgeted expectations despite a slight rate decline during the quarter.

[Scott M. Kucinski, EVP at Sotherly Hotels Inc.]

The hotel achieved a strong 4.2% occupancy gain, drawing business from a number of diverse demand drivers in the market, especially group and transient business travelers. Looking at profitability metrics for the portfolio, hotel EBITDA margins have stabilized, with third quarter hotel EBITDA margin improving by 55 basis points over the prior year, despite the moderate decline in rate for the quarter.

[Scott M. Kucinski, EVP at Sotherly Hotels Inc.]

The improvement in occupancy at our hotels in Houston, Philadelphia, and Atlanta balanced out the portfolio's rate decline, driving down the portfolio's average cost per occupied room while allowing for additional high-margin non-room revenue. Going forward, we expect normalized staffing and amenity levels, along with stabilized wage costs, which are positively impacted by a decline in contract labor, to result in relatively stable margins. While Hurricane Helene occurred during the third quarter, the majority of its operational impact will take place during the fourth quarter of this year.

[Scott M. Kucinski, EVP at Sotherly Hotels Inc.]

The Category 4 hurricane caused the Tampa Bay area's largest storm surge on record, eclipsing the previous record by over two feet. Despite the storm's sizable impact, our operating team did a commendable job keeping the property open to residents seeking shelter from the storm. As a result of the storm surge, Hotel Alba sustained water intrusion on the first floor of the hotel, causing damage to furniture, finishes, and equipment in public areas and guest rooms, as well as some building systems.

[Scott M. Kucinski, EVP at Sotherly Hotels Inc.]

Despite this damage, the hotel has remained open due to an expeditious effort to clean up and mitigate the damage, and full restoration is currently progressing at a good pace. We expect impact to operations at Hotel Alba as a result of Hurricane Helene through the first quarter of 2025. Physical impact to the hotel, as well as the resultant business interruption, are fully insurable events.

[Scott M. Kucinski, EVP at Sotherly Hotels Inc.]

A second major storm, Hurricane Milton, struck Florida just two weeks after Helene, causing major wind damage in the Tampa Bay area. As a result of the city's mandatory evacuation, Hotel Alba was closed for approximately 48 hours before welcoming back displaced residents and first responders to the property. Fortunately, during Hurricane Milton, Hotel Alba did not sustain any additional damage to note. Turning now to corporate activity, in July, we announced that the company executed a secured loan on the DoubleTree by Hilton Hotel Jacksonville Riverfront in Jacksonville, Florida. The loan, which carries a floating interest rate based on SOFR +3%, has an initial principal balance of $26.25 million, with an additional $9.5 million available to fund a product improvement plan at the hotel.

[Scott M. Kucinski, EVP at Sotherly Hotels Inc.]

The company also announced that it has entered into a new 10-year franchise agreement with Hilton Worldwide to relicense our Jacksonville hotel as a soft-branded DoubleTree by Hilton under the name Hotel Bellamy. As part of its relaunch efforts for the hotel, the company will undertake a complete renovation of the property with a cost of approximately $14.6 million and an estimated completion date of January 2027. Renovation plans for the property will include a complete transformation of its guest rooms, public spaces, building exterior, pool and sundeck, existing food and beverage offerings, as well as the addition of a new riverfront dining concept. I will now turn the call over to Tony.

[Tony Domalski, CFO at Sotherly Hotels Inc.]

Thank you, Scott. Reviewing performance for the period ended September 30th. For the second quarter, or for the third quarter, total revenue was approximately $40.7 million, representing an increase of 3.9% over the same quarter in 2023. Year-to-date total revenue was approximately $137.9 million, representing an increase of 4.7% over the same period last year. Hotel EBITDA for the quarter was approximately $8.1 million, representing an increase of 6.8% from the same quarter in 2023. Year-to-date, Hotel EBITDA was approximately $36.1 million, representing an increase of 4.8% over the same period last year. For the quarter, adjusted FFO was a deficit of approximately $350,000, representing a decrease of approximately $400,000 from the same quarter last year. Year-to-date, adjusted FFO was approximately $12.3 million, representing an increase of 5% over the same period in 2023.

[Tony Domalski, CFO at Sotherly Hotels Inc.]

Please note that our Adjusted FFO excludes charges related to the early extinguishment of debt, unrealized gains and losses on derivative instruments, charges related to aborted or abandoned securities offerings, ESOP and stock compensation expense, as well as other items. Hotel EBITDA excludes these charges, as well as interest expense, interest income, corporate general and administrative expenses, realized gains and losses on derivative instruments, the current portion of our income tax provision, and other items as well. Please refer to our earnings release for additional detail. Looking at our balance sheet as of September 30th, the company had total cash of approximately $32.5 million, consisting of unrestricted cash and cash equivalents of approximately $14 million, as well as $18.5 million, which was reserved for real estate taxes, insurance, capital improvements, and certain other items.

[Tony Domalski, CFO at Sotherly Hotels Inc.]

At the end of the quarter, we had principal balances of approximately $321.3 million in outstanding debt at a weighted average interest rate of 5.95%. Approximately 84.5% of the company's debt carried a fixed rate of interest when taking into account the company's interest rate hedges. We anticipate routine capital expenditures for the replacement and refurbishment of furniture, fixtures, and equipment to be approximately $7.2 million for calendar year 2024. As previously announced, we anticipate beginning a product improvement plan at the DoubleTree by Hilton Philadelphia Airport this year, with anticipated capital expenditures related to this project to total approximately $3 million for the year.

[Tony Domalski, CFO at Sotherly Hotels Inc.]

Turning to guidance, we're updating our previous guidance for 2024, accounting for current and expected performance within the portfolio, taking into account market conditions, the refinance of the mortgage on the DoubleTree by Hilton Jacksonville Riverfront, the second trust on the DeSoto Hotel in Savannah, and weather-related events, including Hurricane Helene. We're projecting total revenue in the range of $177.8-$180.1 million for full year 2024. At the midpoint of the guidance, this represents a 3% increase over prior year.

[Tony Domalski, CFO at Sotherly Hotels Inc.]

Hotel EBITDA is projected in the range of $45-$45.6 million, and at the midpoint of the guidance, this represents a 1.1% increase over last year. Lastly, adjusted FFO is projected in the range of $12.8-$13.4 million, or $0.65-$0.68 a share. At the midpoint of this guidance, it represents a 9.8% decrease over the prior year, and I'll now turn the call over to Dave.

[David R. Folsom, CEO at Sotherly Hotels Inc.]

Thank you, Tony, and good morning, everyone. Overall, we were pleased with our portfolio's third quarter results, which were characterized by healthy business fundamentals with further occupancy improvement, particularly in our urban markets. The nearly 8% occupancy improvement over prior year was highlighted by strong performances in Philadelphia and Houston, two slower-to-recover urban hotels which continued to stabilize during the period. Despite a slower-than-expected summer leisure travel season, which was negatively impacted by disruptions from major storms, this moderation of leisure business was offset by strong group demand at our coastal drive markets. While our portfolio experienced some softening from a rate perspective during the quarter, we were very pleased with our manager's ability to achieve solid margins and bottom-line growth while gaining RevPAR share versus our competitive sets.

[David R. Folsom, CEO at Sotherly Hotels Inc.]

As Scott mentioned, during the last week of the quarter, we experienced a major casualty at our hotel in Tampa as a result of Hurricane Helene. Despite our hotel experiencing flooding on its ground floor that resulted in a material casualty to interior spaces and systems, the hotel remained open, and remediation and restoration commenced immediately. Our staff and partners should be recognized for their commendable efforts in handling this event in a streamlined manner, which minimized impact to operations. The hotel remains open, and while the timing remains a moving target, the company expects to recover lost revenues through business interruption insurance. The occupancy improvement at our urban locations during the third quarter is an encouraging sign that these hotels are nearing stabilization following an uneven recovery period.

[David R. Folsom, CEO at Sotherly Hotels Inc.]

In fact, during the third quarter, our three slower-to-recover hotels in Houston, Philadelphia, and Atlanta delivered nearly $1 million in bottom-line growth over prior year, validating our prior assumptions regarding the recovery of these assets. The Whitehall's 60% year-over-year occupancy gain is a testament to the hotel's refocused sales strategy, as well as the improved health of the downtown Houston market. Importantly, the hotel's two most valuable clients, which are located adjacent to the hotel, being Chevron and Kellogg Brown & Root, have normalized to pre-pandemic levels. In addition, group business at the Whitehall showed tremendous growth, improving by 92% over prior year. Similar to the Whitehall, our DoubleTree Hotel at the Philadelphia Airport experienced a nearly 16% year-over-year increase in occupancy during the quarter, as strong business travel was coupled with a more active citywide calendar.

[David R. Folsom, CEO at Sotherly Hotels Inc.]

While the city of Philadelphia will likely continue to follow an uneven growth trajectory, this market is showing real progress following a slow recovery period coming out of the pandemic. Despite the strong performances at these hotels, there is plenty of upside opportunity, with Philadelphia still tracking 900 basis points below 2019's occupancy level and Houston tracking 450 basis points behind 2019's RevPAR.

[David R. Folsom, CEO at Sotherly Hotels Inc.]

Though the Georgian Terrace in Atlanta experienced lower-than-expected ADR during the quarter, the hotel's management team was able to maintain solid flow and deliver excellent bottom-line results. Contributing to the solid bottom-line results for the Georgian Terrace was the group segment at this hotel, which grew an impressive 19% over prior year. Moving forward, we believe the Georgian Terrace has plenty of growth opportunities, as its third quarter occupancy rate was still more than 1,400 basis points below the comparable period in 2019.

[David R. Folsom, CEO at Sotherly Hotels Inc.]

Looking at the total portfolio, the group picture remains solid for the balance of the year, with full-year bookings pacing 5.7% ahead of prior year. On the balance sheet front, during the quarter, we were encouraged by the successful refinancing of our Jacksonville Hotel, allowing us to meet our capital and funding needs for its lifecycle improvement plan. We view the refinance terms with Fifth Third Bank as a favorable outcome, especially given the challenging conditions in the mortgage and lending markets for commercial properties.

[David R. Folsom, CEO at Sotherly Hotels Inc.]

We believe our repositioning strategy to a lifestyle hotel will allow the hotel to become more competitive in the dynamic downtown Jacksonville market, which we believe is poised for significant growth over the next several years. This repositioning strategy will be similar to the recent strategy employed at the Hotel Alba in Tampa, which has created significant value.

[David R. Folsom, CEO at Sotherly Hotels Inc.]

Looking ahead, we will continue to conservatively approach upcoming debt maturities for our portfolio, which are spread evenly over the next few years. As we look at the fourth quarter of 2024, we are cautiously optimistic regarding operating fundamentals for the balance of the year. Upscale and upper-upscale hotels are expected to outperform the broader lodging market in the near term, an encouraging indicator for our portfolio.

[David R. Folsom, CEO at Sotherly Hotels Inc.]

Preliminary October RevPAR shows a 6.1% improvement over prior year, fueled by continued improvement at our urban hotels, coupled with solid group production across the portfolio. Full-year 2024 RevPAR for our portfolio is forecast to range between 102% and 104% of full-year 2023 RevPAR. We believe that our portfolio of well-positioned hotels, lifted by continued growth in the group and business transient segments, will deliver strong returns for our shareholders. And with that, Operator, we can open the call up for any questions.

[Operator]

Thank you. We'd now like to start the Q&A. If you'd like to raise a question, please press Star followed by one on your telephone keypad. And if you'd like to remove yourself without any questioning, it will be Star followed by two. Our first question comes from Alexander Goldfarb of Piper Sandler. Alexander, your line is now open.

[Alexander Goldfarb, Managing Director and Senior Research Analyst at Piper Sandler]

Hey, good morning down there. Dave, I mean, it sounds like everything is sort of back to 2019. I think that's what you guys said. Good improvement in urban, business, group, everything. So is that a fair statement? Do you think that the portfolio overall is back to 2019, or do you think it's maybe even exceeding where you were performing in 2019?

[David R. Folsom, CEO at Sotherly Hotels Inc.]

I think one of the things that I mentioned, and so did Scott, and maybe Tony as well, was we still have a lot of room left on the occupancy column. That's where the growth is going to be for our portfolio as we continue to get additional group bookings, additional business transient bookings, and continue to round out what was once the RevPAR. I think throughout the portfolio, we're seeing the opportunity to get our occupancy back online. It still far underperforms 2019.

[Alexander Goldfarb, Managing Director and Senior Research Analyst at Piper Sandler]

Okay. And then can you just go back through the hurricane damage? I think, Scott, you mentioned it's more of an impact in fourth quarter. Can you just explain how that works as far as what we'll see in earnings and also what's in earnings versus what's on the back end, meaning insurance recovery that doesn't flow through earnings, but that you'll be reimbursed?

[David R. Folsom, CEO at Sotherly Hotels Inc.]

Yeah, I'll let Scott give you the blow-by-blow, but the short answer is we're going to report the P&L for the hotel into our earnings. And at the same time, as the quarters unfold, we're going to have business interruption that will be a payment that will also appear at the corporate level. There might be a lag of two to three months, depending on how the carriers respond, to true everything up. But the short answer is we're going to have some impairment at the hotel because of the casualty, and you will see that impairment recovered in the form of business interruption insurance at a later time. It's not going to be a year from now. It might be 30 or 60 or 90 days. And if it all happens in the same quarter, then it will be transparent to everybody.

[Alexander Goldfarb, Managing Director and Senior Research Analyst at Piper Sandler]

But can you quantify that? Is that like a penny, two pennies, three pennies, just so we have a?

[David R. Folsom, CEO at Sotherly Hotels Inc.]

Yes, Alex. I mean, two different things to try to clarify here. So for the third quarter, as I had mentioned, we had two hurricanes, Hurricane Debby and Hurricane Helene, that had operational impact on several properties in our portfolio. Besides Tampa, none of those were insured events. We just had lost business over the course of the time those hurricanes were blowing through the southeast. So that probably relates to about $0.01 in lost AFFO for the company in the third quarter that is not recoverable. That's just impact from storms. For Tampa specifically, as it relates to the damage from Hurricane Helene and that going forward, again, we're not forecasting that into our guidance because our expectation is that we are going to receive the business interruption proceeds by the end of the third quarter to book that.

[Alexander Goldfarb, Managing Director and Senior Research Analyst at Piper Sandler]

In the quarter for the quarter.

[David R. Folsom, CEO at Sotherly Hotels Inc.]

In the quarter for the quarter. So when we report the fourth quarter, our expectation is that we'll have BI proceeds to compensate us for any lost impact, and therefore, we're essentially made whole. If that doesn't happen, we'll obviously fully detail out the variances there and our expectations, but right now, that's our expectation. So we're not adjusting guidance based on the current impact that we're seeing in Tampa as a result of the hurricane.

[Tony Domalski, CFO at Sotherly Hotels Inc.]

This is Tony, and I'll just add, I think where you might see a little bit of impact is on the top line because when you get reimbursed for business interruption, you don't get reimbursed for the revenue. You get reimbursed for the net profit, and we're expecting by the time we report earnings in late February, maybe the 1st of March, that we'll have gone through that process with our carriers, and we'll have a good picture as to what that amount of recovery was for the fourth quarter, and we do expect that it will be approximately what we had expected to earn. I don't think this fourth quarter would have been an aberration to the last year's financial performance for the property, so I think we'll be able to get the carriers on board for that.

[Tony Domalski, CFO at Sotherly Hotels Inc.]

So as Scott said, we really don't expect to see any impact on Hotel Alba. We don't expect to see any impact on FFO. We don't expect to see any impact on adjusted FFO for the Hurricane Helene and the resultant loss of business.

[Alexander Goldfarb, Managing Director and Senior Research Analyst at Piper Sandler]

Okay. So that's helpful. And then just the final question. The second mortgage on the DeSoto, can you just walk through the thinking on that? Again, this has been a topic we've discussed for quite a while, but I would think the view would be to reduce leverage steadily over time. But just curious, the $5 million second mortgage, if this is related to some improvement package or just the thoughts behind it?

[David R. Folsom, CEO at Sotherly Hotels Inc.]

Yeah. Yeah. It's directly related to some improvements to the property. We had an exterior restoration project that's been going on for a couple of years now at that property, essentially replacing all the brick facade of the building. It's a 1960 building, and the brick facade was due for a major restoration project. So ultimately, worked with the lender to increase the leverage a little bit on that to help fund that project. That hotel has a ton of equity built up in it. It's a low leverage point on the asset, but ultimately, it was solely tied to that restoration project. So the dollars we pulled out from financing went back into the asset.

[Alexander Goldfarb, Managing Director and Senior Research Analyst at Piper Sandler]

Okay. Thank you.

[David R. Folsom, CEO at Sotherly Hotels Inc.]

Thanks, Alex.

[Operator]

Thank you. We currently have no further questions, so I'd like to hand back to Dave Folsom, CEO, for any closing remarks.

[David R. Folsom, CEO at Sotherly Hotels Inc.]

Thank you, Operator, and thanks to everyone. Thanks to everyone for listening today, and we'll talk to you next quarter.

[Operator]

This concludes today's call. Thank you to everyone for joining. You may now disconnect your lines.

Participants

Executives

• Mack Sims, VP of Operations
• Scott M. Kucinski, EVP
• David R. Folsom, CEO
• Tony Domalski, CFO

Analysts

• Alexander Goldfarb, Managing Director and Senior Research Analyst at Piper Sandler