Earnings Call: Q4 2017

Mar 1, 2018

Good morning. Welcome to the Icahn Enterprises LP Q4 2017 earnings call with Jesse Lynn, General Counsel, Keith Cozza, President and CEO, SungHwan Cho, Chief Financial Officer. I would now like to hand the call over to Jesse Lynn, who will read the opening statement. Thank you. The Private Securities Litigation Reform Act of 1995 provides a safe harbor for forward-looking statements we make in this presentation, including statements regarding our future performance and plans for our businesses and potential acquisitions. These forward-looking statements involve risks and uncertainties that are discussed in our filings with the Securities and Exchange Commission, including economic, competitive, legal, and other factors. Accordingly, there is no assurance that our expectations will be realized. We assume no obligation to update or revise any forward-looking statements should circumstances change, except as otherwise required by law. This presentation also includes certain non-GAAP financial measures. A reconciliation of such non-GAAP financial measures to the most directly comparable GAAP financial measures can be found in the back of this presentation. I'll now hand it over to Keith Cozza, our Chief Executive Officer. Thanks, Jesse. Good morning. Welcome to the fourth quarter 2017 Icahn Enterprises earnings conference call. Joining me on today's call is SungHwan Cho, our Chief Financial Officer. I will begin by providing some brief highlights. Sung will provide an in-depth review of our financial results and the performance of our business segments. We will then be available to address your questions. Net income attributable to Icahn Enterprises for 2017 was a record $2.4 billion, or $14.80 per LP unit, compared to a net loss of $1.1 billion, or $8.07 per LP unit in 2016. For Q4 2017, net income attributable to Icahn Enterprises was $298 million, as compared to a net loss of $206 million in the prior year period. Adjusted EBITDA attributable to Icahn Enterprises for 2017 was $1.7 billion, compared to approximately $842 million in 2016. Our investment funds had a negative return of 4.2% in Q4 of 2017, bringing our total return for the full year 2017 to a positive 2.1%. Q4 performance was significantly impacted by losses from our short equity and short credit positions. These were partially offset by gains in our long core equity positions. We rebalanced our short equity positions during the fourth quarter in anticipation of tax reform legislation. We increased our net exposure to positive 14% as of year-end, compared to negative 77% at the end of the third quarter. Net sales and service revenues for our Automotive segment in Q4 2017 were $2.6 billion, compared to $2.4 billion in the prior year period. The increase was primarily due to sales volumes at Federal-Mogul, acquisitions at Icahn Automotive Group, and favorable foreign exchange rates. In Icahn Automotive Group, we continue to make acquisitions of auto service centers and maintain an active pipeline of additional acquisition opportunities. On October 2nd, we acquired American Driveline Systems or ADS. ADS is the franchisor of AAMCO and Cottman Transmission and Total Auto Care service centers, with approximately 680 locations. With the addition of ADS, Icahn Automotive Group operates approximately 1,900 owned and franchised locations. In our Energy segment, our Q4 2017 net sales were $1.6 billion, and consolidated adjusted EBITDA was $81 million. CVR Refining had a solid fourth quarter led by strong crack spreads and record operating rates. While CVR Partners results were hampered by continued low U.S. nitrogen fertilizer pricing. In our Railcar segment, we sold approximately 4,000 railcars for $522 million relating to the previously announced sale of American Railcar Leasing to SMBC Rail. This resulted in a $154 million gain in Q4. In our Gaming segment, Tropicana delivered solid results for the quarter and the full year, with strong performances at its Atlantic City, Evansville, and St. Louis properties. In December, IEP successfully refinanced its senior notes coming due in 2019, with new senior notes due in 2025, as well as an add-on to our 6.25% senior notes due in 2022. 2017 was an active year highlighted by the sale of American Railcar Leasing and the former Las Vegas Fontainebleau project, resulting in significant gains for our unit holders. We saw improving performance in many of our operating segments, and the indicative net asset value of IEP increased by 40% to $7.9 billion. Based on these outstanding results, the board has elected to increase our quarterly distribution by 17% to $1.75 per unit or $7 per unit on an annualized basis. With that, let me turn it over to Sung. Thanks, Keith. I will begin by briefly reviewing our consolidated results and then highlight the performance of our operating segments, and then comment on the strength of our balance sheet. In Q4 2017, net income attributable to Icahn Enterprises was $298 million, compared to a net loss of $206 million in the prior year period. Full year net income attributable to Icahn Enterprises for 2017 was $2.4 billion, or $14.80 per LP unit, compared to a net loss of $1.1 billion, or $8.07 per LP unit in the prior year period. As you can see on slide five, Q4 2017, IEP had net income of $298 million compared to a net loss from the prior year. Q4 2017 had tax benefits of approximately $500 million, which were related to the recent tax changes that were enacted in Q4 of '17. Adjusted EBITDA attributable to Icahn Enterprises for Q4 '17 was $167 million, compared to $145 million in Q4 '16. For the full year 2017, we had net income attributable to IEP of $2.4 billion compared to a net loss of $1.1 billion in 2016. IEP recorded approximately $2.2 billion of gains from the sale of ARL and real estate properties in 2017. IEP also had positive performance in the investment funds compared to a loss in the prior year. Adjusted EBITDA attributable to Icahn Enterprises for 2017 was $1.7 billion, compared to $842 million in 2016. I will now provide more detail regarding the performance of our individual segments. Our Investment segment had a loss attributable to Icahn Enterprises of $132 million for Q4 2017, and a gain of $80 million for the full year. The investment funds had a loss of 4.2% in Q4 2017, compared to an 8.7% loss for Q4 2016. Long positions gained 9% for the current quarter, while short positions and other expenses had a negative performance attribution of 13.2%. For the full year 2017, the investment segment had a gain of 2.1%, compared to a 20.3% loss in 2016. Long positions had a 5.4% gain for the full year 2017, while short positions and other expenses had a negative performance attribution of 3.3%. Since inception in November 2004 through the end of 2017, the investment fund's gross return is 121%, or 6.2% annualized. The investment funds continue to be hedged. At the end of 2017, the funds were net long 14%, compared to net short 128% at the end of 2016, and net short 77% at the end of Q3 2017. In Q4 2017, we invested an additional $300 million into the funds, and our investment in the funds was $3 billion as of December 31, 2017. Now to the energy segment. For Q4 2017, our energy segment reported net sales of $1.6 billion and consolidated adjusted EBITDA of $81 million, compared to net sales of $1.4 billion in consolidated adjusted EBITDA of $43 million for the prior year period. CVR Refining had a solid fourth quarter led by strong crack spreads and record operating rates, while CVR Partners results were hampered by continued low U.S. nitrogen fertilizer pricing. For the full year 2017, the energy segment reported net sales of $6 billion and consolidated adjusted EBITDA of $429 million, compared to sales of $4.8 billion in consolidated adjusted EBITDA of $313 million for 2016. CVR Refining reported Q4 2017 adjusted EBITDA of $76 million compared to $28 million in the prior year. Stronger crack spreads and record operating rates resulted in overall solid results for CVR Refining in Q4. Refining margin adjusted for FIFO impact, a non-GAAP financial measure, was $18.87 per barrel in Q4 2017 compared to $7.32 per barrel in the prior year period. CVR Partners reported Q4 2017 adjusted EBITDA of $8 million compared to $18 million in Q4 2016. Q4 results were impacted by lower prices for nitrogen fertilizer. Average prices for UAN and ammonia were $132 per ton and $264 per ton respectively in Q4 2017, compared to $147 per ton and $352 per ton respectively for the same period in 2016. Far in 2018, we have seen lower nitrogen product imports, steady customer demand, and increase in prices for nitrogen. Turning to automotive segment. Our automotive segment's Q4 2017 net sales and service revenues were $2.6 billion, up 10% from the prior year period. The increase is primarily due to organic sales volume increases, sales and service volume increases from acquisition, as well as favorable effect of foreign currency exchange. Net sales and service revenues for the full year 2017 were $10.4 billion, or 6% above 2016 results. Federal-Mogul on a standalone basis reported Q4 net sales of $2 billion compared to $1.8 billion in the comparable prior year period. The increase was due to higher OE sales, higher aftermarket sales in North America and Asia, and favorable foreign currency exchange. Operational EBITDA in Q4 2017 was $219 million, up $37 million from the prior year. At Icahn Automotive Group, Q4 2017 operating revenues were approximately $692 million compared to $638 million in Q4 2016. As Keith mentioned, in October, we acquired American Driveline Systems, the franchisor of AAMCO and Cottman brands, which are the number one and number two transmission repair brands in North America. This transaction builds on our acquisitions of Just Brakes in January and Precision Auto Care in July and continues our path to becoming one of the largest auto service networks in the U.S. Now turning to Railcar. Our Railcar segment had railcar shipments in 2017 of 4,222 railcars, including 1,804 railcars to leasing customers, compared to 4,721 railcars for the prior year period, of which 799 railcars were to leasing customers. As of December 31, 2017, ARI had a backlog of 1,940 railcars, including 389 railcars for lease customers. According to the Railway Supply Institute, the railcar manufacturing backlog has decreased from a record level of nearly 143,000 railcars at the end of 2014 down to approximately 58,000 railcars at the end of Q4 2017. 81% of the current industry backlog is comprised of tank cars and covered hopper cars, the two primary railcar types manufactured and leased by our Railcar segment. Total manufacturing revenue for 2017 decreased by $165 million, or 38%, as compared to the prior year. The decrease was due to fewer shipments to non-leasing customers and an overall decrease in the average selling prices due to more competitive pricing for both hopper and tank railcars. The segment's railcar leasing revenue declined in 2017 as compared to the prior year due to the sale of ARL. Our remaining railcar lease fleet consists primarily of railcars owned by ARI. Proceeds from the ARL sale were $1.8 billion, resulting in a pre-tax gain of $1.7 billion recorded by our Railcar segment. Adjusted EBITDA attributable to IEP for the Railcar segment was $223 million in 2017, compared to $379 million in the prior year period. Now turning to Gaming segment. Our Gaming segment continues to perform well with significant gains at core properties within Tropicana Entertainment. For 2017, Tropicana operating revenues increased by 6% from the prior year, and consolidated adjusted EBITDA increased 30% to $192 million. These gains were primarily driven by performance in Atlantic City and St. Louis. Tropicana maintains a strong balance sheet, having repaid $150 million of debt and repurchased $36 million of stock in the second half of 2017. Even after these transactions, the company still maintains ample liquidity with $103 million of cash, compared to $137 million of debt. Within Trump Entertainment, losses have been reduced due to the sale of Trump Taj Mahal in Q1 2017. We still hold the idle Trump Plaza location and continue to evaluate our options. Now turning to Food Packaging. Net sales for 2017 increased by $63 million, or 19%, compared to the prior year period. The increase was due to higher sales volumes, primarily from acquisitions, offset in part by unfavorable price and product mix and foreign currency exchange. Consolidated adjusted EBITDA was $62 million in 2017, which was $7 million above the prior year period. Gross margin as a percentage of net sales was 24% in 2017, which was consistent with the prior year period. Now to our Metals segment. Net sales for 2017 increased by $142 million, or 53%, compared to the prior year. The net sales increase was driven by higher selling prices and higher volumes for most product lines. Ferrous shipment volumes increased due to improved demand from domestic steel mills and improved flow of raw materials into our recycling yards, driven by the increased market pricing. Non-ferrous shipment volumes increased primarily due to the investment in aluminum processing facilities at one of our facilities. Adjusted EBITDA was a positive $20 million in 2017, compared to a loss of $15 million in the prior year. Gross margin has improved due to a continued focus on disciplined buying, higher pricing for non-ferrous auto residue, improved market pricing, and by continued efforts to bring processing costs in line with volume and market pricing. Now to Real Estate. Real Estate operating revenue was $87 million in 2017, which was in line with the prior year period. In Q4 2017, we sold two more net lease properties for $55 million, generating a gain of $37 million. This is in addition to the sale of the former Fontainebleau Las Vegas property for $600 million in Q3 2017, which generated a gain of $456 million. The Real Estate segment generated $47 million of adjusted EBITDA in 2017. Now to Mining Segment. Our Mining Segment has been concentrating on sales in Brazil. In Q4 2017, sales decreased to $18 million compared to $22 million in the prior year. EBITDA was breakeven for Q4 2017, and $22 million for the full year 2017. This decline in Q4 performance was due to a lower net realized price as a result of lower prices for iron ore and higher discounts on impurities. Ferrous has adjusted its production to minimize these discount and maximize its prices. Now turning to Home Fashion. 2017 net sales for our Home Fashion segment were down 6% as compared to 2016 due to lower sales volumes. Adjusted EBITDA was a loss of $9 million compared to a loss of $1 million in the prior year. Gross margin as a percentage of net sales was 11% for 2017 as compared to 14% in 2016, with the decrease primarily due to sales mix and inventory obsolescence. Now I will discuss our liquidity position. We maintain ample liquidity at the holding company and at each of our operating subsidiaries to take advantage of attractive opportunities. We ended Q4 2017 with cash equivalents in our investment in the investment funds, and revolver availability totaling approximately $5.8 billion. Our subsidiaries have approximately $1.2 billion of cash and $1.1 billion of undrawn credit facilities to enable them to take advantage of attractive opportunities. In summary, we continue to focus on building asset value and maintaining ample liquidity to enable us to capitalize on opportunities within and outside of our existing operating segments. Thank you. Operator, can you please open the call for questions, please? Thank you. We'll now take questions as part of our Q&A session. If you'd like to ask a question, please press star then one on your telephone keypad, and if you'd like to withdraw your question, please press the pound key. Your first question comes from the line of Adam Gui from Mangrove Partners. Go ahead please, your line is open. Hi, this is Nathaniel on for Adam. Thank you for taking my questions today. My first question is that it appears that within the hedge fund, you've made a pretty substantial shift in terms of your net exposures. I was hoping you could comment on why that shift has been made and how you're thinking about what risks you're taking now as opposed to what you were taking a year ago. Sure. Hi. This is Keith. Yeah. I think the biggest component of that shift is as we ended the third quarter at about negative 77%, which was obviously very short. Leading into the fourth quarter, I think Carl had a constructive view that was frankly ahead of the curve related to the probability of tax reform getting passed and what that would ultimately mean for the economy and earnings in the S&P 500. We aggressively covered some of these hedges which, it's all hindsight, but that wound up saving the fund multiple hundreds of millions of dollars, obviously doing that. It was really strictly driven by that view in the fourth quarter. We ended the year at positive 14%, which I assume you understand that longs and shorts are fairly balanced there. I think we're cautious. I feel like we're always cautious. I would say that this tax reform will have a significant earnings uplift on most public companies over the next couple of years. With that being said, we're cognizant of valuations being at all-time highs, trying to keep it pretty balanced. I think that was rebalancing effectively. Within your short portfolio, does that remain mostly CDS, or is that index options? To the extent it's options, are you measuring that on notional, or are you measuring that on a delta adjusted basis? No. First of all, majority of our hedging activities are delta one, and we always measure on a notional basis on the equity side of things. When it comes to credit hedging, we obviously perform various adjustments given that it would dramatically overstate the net exposures on a credit basis if you didn't kind of adjust, if you just used notional. Equity is primarily delta one. If we do layer in options against it, then we would delta adjust those. Okay, thank you. My next question is there's been a volatile start to the year, and I noticed that some of the larger investment in the portfolio have moved pretty significantly. Could you update us on investment returns through the first two months of the year? Yeah, we don't provide mid-quarter guidance or anything. All I'll say is that we feel very good about how we have the portfolio positioned. My final question is that when I look at the automotive segment that you report, and I try to disaggregate Icahn Automotive from Federal-Mogul, it appears that EBITDA has turned negative within Icahn Automotive. I was wondering if you could comment on the performance of Icahn Automotive, and then how you're thinking about the roughly $1.7 billion of equity value that you're attributing to that, to the extent that I'm correct, that EBITDA has turned negative. Sure. You are correct that EBITDA was negative at Icahn Automotive Group in 2017. It was a significant restructuring year. Just to give you a kind of quick recap of the year. First quarter, Q1 of 2017, same-store sales were dramatically falling, probably in the 5%-7% negative same-store sales range. We aggressively swapped out the management team, bringing in a number of new talented executives to basically turn the top line around, and they did that. Q2 went to flat. Q2 was maybe -1%, Q3 was flat roughly, and Q4 was positive same-store sales. The new year is off to a very good start on a top-line basis. In stabilizing the top-line revenue growth in 2017, it required a number of initial spending that you need to do first in order to get the sales. There is a lag effect on that. A lot of those costs are captured in 2017, which kind of don't paint the full picture of a normalized run rate basis. Two comments. When you say how do we value it at a $1.7 billion, that's the book value of the company, okay, on a GAAP basis, and we feel real good about that, and I assume you're referring to the NAV statement. Secondly, for 2018, now that we have top line literally growing, we're now in there basically optimizing the cost structure to turn all these sales into profitability. Thank you very much. You're welcome. Your next question comes from the line of Seth Basham from Wedbush. Go ahead, please. Your line is open. Good morning, and thanks for taking my question. I wanted to follow up on the auto segment, if you don't mind. Trying to understand a little bit more what types of moves you made to restructure that business in 2017, and what gives you confidence that we'll see continued growth in 2018. As a follow-up, if you could add a little bit more thought as to the vision for the auto segment going forward, that would be really helpful. Sure. Thanks. Yeah. I guess what some of the initiatives besides replacing out significant members of the management team, significant regional directors, area directors, et cetera, and really upgrading the talent, the number one thing we did was invest in inventory to dramatically expand our parts availability on the store side to grow the commercial business. The commercial business is where the future is at, as I'm sure you know. Frankly, having the parts inventory helped stabilize the DIY business, which industry-wide is probably a flat to moderate plus 1, minus 1 type business going forward. We dramatically grew the commercial business by investing in the inventory, I'd say, double-digit same-store sales growth as we implemented all these commercial programs. As far as on the service side, again, it was right-sizing the labor, making sure we had the service centers appropriately staffed with the appropriate number of technicians on the right days, et cetera. Also having the parts availability ties into that as well. It leads to better customer service, leads to lower out buys and higher profitability in the service segment. Thanks. As you look forward to the future over the next three to five years, where do you see this business going? Well, again, our main focus right now is really we're up to about just under 2,000 repair shops across all of our different brands. The industry has 260,000 repair shops in the U.S., and we're a top five right now at 2,000. Obviously it's a very fragmented industry, and we're aggressively trying to consolidate it. I think five years from now, you're going to see us with having dramatically more repair shops as we roll them up or expand either through acquisitions or greenfields. Look, it's not easy, otherwise somebody would have already done it. It's a great opportunity to have a national brand with 10,000 locations. We have a long way to go, but that's our goal. That's where our number one focus is on expanding the service centers. Thank you very much. Your next question comes from the line of Dan Fannon from Jefferies. Go ahead, please. Your line is open. Good morning. I'd like to start with a question about the investment fund. Just touching earlier on the question about volatility. Given that there has been a lot more volatility to start the year, does that potentially change your view on maybe the positioning or how you might be thinking about it? Any color there would be helpful. In that sense, how quickly can you, given that you use index options on the equity side, how quickly can you go from your current position, let's say, back to where you were in Q3? Sure. Hey, Dan. First of all, as far as if we wanted to go back to negative 77%, you can do that over the course of literally a day or two. We're talking S&P 500. These are extremely large and liquid markets. As far as pivoting from the hedging point of view and moving the exposures around, that can be done very quickly. As far as volatility goes, it doesn't really change the way Carl and the team looks at the investing process. We've said this over the years, we're not traders, right? Although, I get it makes for a good news story with stock prices moving up and down in much bigger moves versus the last few years, it doesn't really affect us. The strategy is the same as activist investors, you'll see some new names coming out in the news, maybe you've already even seen today. As activist investors, look, we're going to look to unlock the value in certain long positions that we feel confident we could be the catalyst to bridge the gap between current trading value and the ultimate intrinsic value. At the same time, we have no idea where the market's going. Carl's openly said, no one can predict where the market's going, we try to hedge out as much macro risk as we can. Understood. Maybe just touching base on the automotive business again. You talked about it as the strategy here is a consolidating play in a highly fragmented industry. As we look out longer term, how does the change in the backdrop, if we get to more electric vehicles, where theoretically the demand for repair and those kinds of things is going to be less, is part of the play on an aging fleet of existing cars at this point? Or is there a bigger macro risk that, let's say, electric usage of vehicles grows a lot faster than maybe people are anticipating? Yeah. I don't think we agree with the risk related to electric as far as the effects on the repair business. Just to give you a little bit more color. The biggest categories of repairs that we are performing on a daily basis are tires, batteries, brakes, alignments. As far as last time I checked, every single one of those categories is still going to be involved with I assume electric vehicles are going to have wheels and brakes, right? From that perspective, we feel good. Would it lead to a little bit less under the hood engine work? Of course. Obviously, the electric vehicles don't have combustible engines. The other point I would make there is that's not a huge part of our existing repair business right now. At the same time, though, I would tell you, the existing car fleet and electric's penetration, we don't subscribe to some of the estimates out there of how quickly that's going to switch over. You've got multiple hundreds of millions of cars in the U.S. here that are going to require repairs for the next 10-12 years. That's helpful. Maybe just a bigger picture question here. In some of the segments, whether we look across Viskase or the Home Fashion business or some others, you've been involved with these segments for quite some time. They've tended to be perhaps more in an extended turnaround mode or perhaps flattish in terms of their growth profiles. What is the playbook here at this point? Is there a decision that's consciously being made that you guys are just simply being patient and waiting for a more perfect exit opportunity? Or is it better to maybe exit those businesses or whichever ones by design and then better allocate the capital elsewhere? Are those businesses really the best place to have that capital locked up? Yeah. It's a good question. We're not capital constrained, so maybe that's part of the reason that we don't really. I understand what you're saying. That's not exactly how we look at it, because it's not like we're not making other investment opportunities because we continue to hold one of the smaller segments that is kind of still being operated for improvement. That's one thing I would just say, we're not facing a ton of opportunity cost here. With that being said, I think our goal is, look, we're always evaluating buying additional businesses, selling businesses, and improving what we have. I think a bunch of them that we've had for a long time, obviously, by the fact that we're still holding them, we believe that we can create more value over the long term by continuing to make operational improvements, potential tack on acquisitions, potential restructurings, or whatever the case may be that will lead to more. There's not a scenario where I could sell something today and I'm just like, "Nah, I don't want to do it because I'm going to get less value in the future." Obviously, we're managing the book to create the highest amount of value. If we thought we could sell something today and that looked good versus the future value that we can create by holding it, we would do that. I think we've shown over the last 20 years that we do that, right? A lot of times, our businesses are, we're selling at what we believe is a fair price to us, but that allows the acquirer can create more value under their structure, under their cost of capital, under their cost of debt, under their synergistic opportunities, whatever the case may be. Understood. That's helpful. Then maybe just a final question on how you guys think about commodities in terms of your exposure. You guys actually have a decent amount of exposure through commodities, whether it's through the segments or even you did have through at least the investment funded, whether it was Freeport-McMoRan at one point. I think you guys have exited that position. What kind of determines what the allocation you guys have to commodities and stuff relative to everything else? It just seems that you guys are more involved in that segment than perhaps, and have been for some time at this point. Yeah. I think our exposures to commodities and making those investment decisions really just it's a name-by-name basis and the investment opportunity at the time. By the way, just to clarify, because I don't want people to think, we are not out of Freeport-McMoRan, just to be clear. I think Okay, it was just you guys got under the 5% threshold. Is that right, or? Yeah, that sounds correct. Okay don't want to read stories that we're out of it, because that's not actually true. In any event, yeah, we've paired exposures as we've had significant gains in it. With respect to commodities in general, it's a case-by-case basis. I would also say that maybe we haven't articulated on it well, is that when we do have a name like Freeport or an oil and gas producer or whatever the case may be, we also do put on name-specific hedges to de-risk some of the commodity price movement. That's helpful. It could be shorting copper, it could be shorting WTI, it could be shorting a basket of similar companies that operate at a higher level. There's a number of things we do to manage the risk. Understood. That's very helpful. Thank you. That's it for me. Okay. Thanks, Dan. Your next question comes from the line of Jesse Freedman from Warlander. Go ahead, please. Your line is open. Hi. Good morning. Just two questions in regards to Tropicana. One would just be interested in the strategy for the business going forward, in the context of the current M&A environment. It seems like there are peak multiples being achieved from sellers in the current marketplace. Then the second one would be on the balance sheet. Just wanted to know what you think the optimal capital structure would be for this company. Yeah. Our strategy with Tropicana is to continue, obviously, they filed their 10-K a day or two ago. They had record earnings. That has been the culmination of seven years of capital investment back into the business. It's paying off dividends. We expect 2018 to be a great year for them. Look, I'm not going to comment on M&A activity other than to say that management, they've over the years looked at a number of opportunities that they could acquire and harvest synergies and management does a pretty good job of operating casinos, and they are constantly looking for casinos that they believe are mismanaged, so to speak, and we're happy to support them in that. As far as other M&A opportunities, it's just a matter of valuations. As far as the capital structure, it's something that we periodically look at. As you can imagine, a number of investment bankers reach out, and so we're constantly evaluating the capital structure. We appreciate that there's not a ton of debt on Tropicana right now. Thank you. I currently have no more questions in queue. Okay. Thanks everybody for joining us, we'll look forward to talking to you after first quarter results are released. Have a good day. This concludes today's conference. You may now disconnect.