LuxUrban Hotels Inc. (NASDAQ:LUXH) Q1 2024 Earnings Call Transcript

LuxUrban Hotels Inc. (NASDAQ:LUXH) Q1 2024 Earnings Call Transcript May 14, 2024

Operator: Ladies and gentlemen, thank you for standing by. Welcome everyone to the LuxUrban Hotels Inc. First Quarter 2024 Financial Results Conference Call. At this time, all lines have been placed on mute to prevent any background noise. After the speakers’ remarks, there will be a question-and-answer session. [Operator Instructions] I will now like to hand the call over to Devin Sullivan, Managing Director of The Equity Group. You may begin your conference.

Devin Sullivan: Thank you, Bhavesh. Good morning, everyone. And thank you for joining us today for LuxUrban Hotels 2024 first quarter financial results conference call. Our speakers for today will be Shanoop Kothari, the company’s Chief Executive Officer, and Robert Arigo, Chief Operating Officer. Before we begin, I’d like to remind everyone that this call may contain certain forward looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, set forth in Section 27A of the Securities Act of 1933 as amended and Section 21E of the Securities Exchange Act of 1934 as amended. Statements that are not purely historical are forward-looking statements. Forward-looking statements include but are not limited to statements regarding expectations, hopes, beliefs, intentions, or strategies regarding the future.

In addition, any statements that refer to projections or other characterizations of future events or circumstances, including any underlying assumptions, are forward-looking statements. Generally, the words anticipates, believes, continues, could, estimates, projects, intends, may, might, plans, possible, potential, predicts, projects, would, and should, and similar expressions may identify forward-looking statements, but the absence of those words does not mean that a statement is not forward-looking. Forward-looking statements may include, for example, statements with respect to the company’s ability to successfully de-platform its properties from its former franchise partner and operate independently, its ability to improve its working capital and cash flow profiles, enhance its balance sheet and deliver organic revenue growth, schedule property openings, expected closings of noted lease transactions, and the company’s ability to continue closing on additional leases for properties in their pipeline, as well as the company’s anticipated ability to commercialize efficiently and profitably the properties it leases and will lease in the future.

These statements are based on current expectations and beliefs concerning future developments and their potential effect on the company, and there can be no assurance that future developments will be those that have been anticipated. These forward-looking statements are subject to a number of risks, uncertainties, some of which are beyond our control, or other assumptions that may cause actual results or performance to be materially different from those expressed or implied by these forward-looking statements, including those set forth under the caption, risk factors in our public filings with the SEC, including item 1A of our annual report on Form 10-K for the year ended December 31, 2023, and our Form 10-Q for the three months ended March 31, 2024, filed with the SEC on May 13th, 2024, and any updates to those factors as set forth in subsequent quarterly reports on Form 10-Q or other public filings with the SEC.

The forward-looking information and forward-looking statements are made as of today’s date and the company does not undertake any update — undertake to update any forward-looking information and/or forward-looking statements that are contained or referenced herein except in accordance with applicable securities laws. Management will also be discussing non-GAAP financial metrics. The reconciliation of these non-GAAP financial measures to the most comparable GAAP measures can be found in the company’s press release. With that said, I’ll now like to turn the call over to Shanoop Kothari. Shanoop, please go ahead.

Shanoop Kothari: Thank you, Devin. Thank you, everyone, for joining us today. We filed our 10-Q and issued our press release yesterday afternoon. Both documents contain significant details on our operating results. With that in mind, I’ll focus my remarks on selected highlights and key terms. After that, I’ll turn the conversation over to our recently appointed Chief Operating Officer, Rob Arigo. Rob joined us in March and hit the ground running. He’s going to provide an update on his first 60 days in his new role, including insight on the current state of our properties and relationships, his plans for enhancing certain aspects of our operations, and progress to date in those areas. We remain laser focused on rebuilding trust with our stakeholders and will hold ourselves accountable in every step of the way.

In collaboration with our new Board, our executive team has taken a hard look at every aspect of our business model to address weaknesses, enhance efficiencies, and construct a better path to deliver long-term value. We’re early in that process. And while we are encouraged by what we’ve been able to accomplish to date, we fully acknowledge the challenges that lie ahead. The most significant of these initiatives is our mutual decision to unwind our franchise agreement with Wyndham. Management and the Board concluded over long term, LuxUrban will be better served operationally and financially as an independent operator. Started this business as an independent operator and are fully prepared to go back to our origins. We’re in the process of de-platforming our properties from Wyndham systems and moving each of our hotel listings back under full company control.

We expect that process to be completed by the end of May 2024 with minimal operational disruption. Let’s discuss our results for the first quarter. Net rental revenue rose 27.6% to $29.1 million from $22.8 million, driven by an increase in average units available to rent to 1,535 from 571 partially offset by lower total RevPAR, the impact of seasonality to our current portfolio and other operational impacts mentioned above. Total RevPAR declined to $208 from $257 due to the surrender of properties and the greater impact of seasonality on the portfolio versus the prior year. As a reminder, we estimate property level breakeven to be at $160 to $180 per night, so we’re still well above that threshold. As we look out to 2024, we expect that total RevPAR will rise quarter-over-quarter for the remainder of the year.

We reported a gross profit loss of $4.6 million as compared to the gross profit of $5.4 million. The loss in Q1 2024 included lease surrender expense of $1.2 million related to property in Brooklyn and an increase of expenses that include, among other items, greater commission costs, relocation costs, and employee costs due to the surrender of certain properties. General and administrative expense without non-cash items and charges was $3.3 million compared to $2.7 million, reflecting higher unit counts and associated costs. As a percentage of net rental revenues excluding non-cash charges, G&A was 11% compared to 12% last year’s first quarter. G&A margin for the 2024 first quarter was within the range of our target for the full year 2024. Total G&A expenses with non-cash items rose to $7.6 million from $4.2 million due primarily to $4.3 million in non-cash items, including the non-recurring partnership consideration costs associated with our exit from our franchise partnership.

Total operating expenses, including non-cash items, comprised of $26.2 million of net rental revenue on Q1 2024 compared to $18.5 million in last year’s first quarter. Our operating loss for the quarter was $12.2 million. Net loss was $16.8 million compared to net loss of $2.7 million. Net loss for Q1 2024 included above-referenced items plus cash interest and financing costs of $2.5 million and non-cash financing costs of $2.3 million, which taken together rose by approximately $950,000 from last year’s first quarter. Adjusted EBITDA was $2.5 million compared to $4.0 million. Our EBITDA margin in the quarter has been impacted significantly by all the initiatives we’ve taken recently, and we expect margins to continue to rise during 2024 to our stated goal of 20% EBITDA margins.

Moving to the balance sheet as compared to December 31, 2023. Cash and cash equivalents rose to approximately $1.0 million compared to $0.8 million at December 31, 2023. Total debt was approximately $6.8 million as compared to total debt of $4.3 million. Accounts payable and accrued expenses increased approximately $28.9 million from $23.2 million. The increase in accounts payable and accrued expense is primarily related to the surrender of properties and the termination of the partnership agreement. With respect to our property portfolio, as of March 31, 2024, the company leased 13 properties with 1,341 units available for rent with an average weighted lease terms of 15.2 years and 19.5 years including extension options. We’re down one property from December 31, 2023 due to reevaluation of our Brooklyn operations.

At this point, we do not expect to reduce our current portfolio any further. We welcomed approximately 120,000 guests in the first quarter. We continue to believe that there are opportunities for us to raise capital in a strategic and efficient manner, and we will be pursuing these opportunities with the best long-term interests of our shareholders in mind. Now, I’ll turn things over to Rob Arigo, our Chief Operating Officer, who will provide an overview of our properties and operations. Rob?

Robert Arigo: Thank you, Shanoop, and good morning to all. On March 6th, I joined LuxUrban team to help transform a successful real estate organization into a new world-class hotel management company. I found the opportunity to deploy the master lease agreement in a new and a very different manner, intriguing me to say the least. We are providing landlords, owners and landlords, many of whom are faced with harsh economic and financial realities and a post-COVID economy with an alternative solution to selling their assets at the priced values. I was impressed with LuxUrban’s approach and saw an opportunity to join an outstanding group of real estate professionals to build a company using the master lease agreement, longer term provide options of a more traditional third party management solution as a compliment to the MLA structure.

In a career spanning 35 years, I’ve spent the last 15 years developing, designing, and implementing flat, highly successful management teams in New York City. I’m looking forward to continuing that with LuxUrban. Many of today’s hotel management companies operating in urban markets have become very large organizations with high-cost platforms. And I know that in today’s economy, owners are looking for something different. They want a highly motivated business partner that is aligned with maximizing operational and financial results. Owners seek transparency, engagement, energy, and enthusiasm to deliver a success story. And in my past, we’ve been able to deliver flat relationships with owners and talking to them, not at them. And we’re going to show that in the coming future.

We’re building a future profile of what a management company will look like by endeavoring to create a new organizational structure with industry experts working alongside with a team to help refine the hotel management — redefine hotel management. We intend to create a flat organization with the best systems and tools, because we are developing from the ground up. And with input from our owners and landlords, both current and potential, our systems will be easy to use, easy to operate, but most importantly, our management approach allows our general managers and our leaders to be close to the guests, generating a memorable experience. We will be spending the next three to five months developing the LuxUrban culture and platform with new, actually income opportunities such as valet, in-room dining concepts, grab-and-go marketplaces, bringing life back to the assets that we have today, even more like.

Once all in place, expected by Q3, we expect to give guidance on impact to revenues. We are early in this process and it will take time. Our progress will depend on a number of factors, including our ability to strengthen our financial profile. But our goal and what we believe is the key to LuxUrban’s future is a revamped approach to revenue management that is designed to take advantage of the ever-changing market dynamics to realize our RevPAR potential. As we revert back to origins as an independent operator, we are going to be looking at an independent branding style, something that we believe will allow us to be more competitive in the urban markets. To that end, we are in the process of developing our own unique style guide in SOPs for sense of arrival, new amenity lines, new uniforms, new style, new SOPs that are going to set us apart and allow us to drive our growth and evolution as an organization.

The future is bright, and I wouldn’t be here if I didn’t — if I felt otherwise. We are striving to be one of the only companies that offers both a master lease agreement option and a tailored next generation third party management solution. Our culture is very simple. We want to be blue collar in action and white collar in mind. We want to build a platform that allows us to be the best hoteliers within our markets and bring a refreshing sense of arrival to our engagements supported by a proud, energized, and excited group of employees that are dedicated to delivering exceptional service. And now, I turn things back to Shanoop.

Shanoop Kothari: Thanks, Rob. I’ll now ask the operator to open the call to questions from our analysts.

Q&A Session

Operator: Thank you. We will now begin the question-and-answer session. [Operator Instructions] Our first question comes from the line of Derek Greenberg of Maxim Group. Please go ahead.

Derek Greenberg: Hey, guys. Thanks for taking my question. I guess just starting with the unwinding of the Wyndham partnership, could you provide a little more color in terms of what led you to decide that you would be better off operating as an independent operator considering the benefits that were previously stated with the partnership of higher margin and funding, I believe, this 50% of new deposits?

Shanoop Kothari: Yeah. So, got to be careful what’s said just based on our agreements with them, a lot of it’s disclosed in our filings. But look, financially, I don’t think — I think mutually both parties just looked at it and it didn’t make sense. So financially, there were some metrics that were laid out as to what, how that impacts margins and I don’t think we got to that point. So with that, I’ll — let’s move on to a follow-up question if there is one.

Derek Greenberg: Okay. Just the other expense line item in the income statement that rose over $12 million in the quarter. I was wondering if you could kind of just provide a little more detail in terms of what’s included in that incremental increase and how you expect that to progress throughout the year?

Shanoop Kothari: Yeah. So, significant amount of initiatives were taken in the first quarter, which you’ve mentioned, the unwind, as well as surrender of certain properties. There’s a significant impact to the surrendering properties with regard to additional costs, labor costs, commission costs, relocation costs, OTA costs, et cetera. So the impact is in that line. And as we navigate through that, you’ll see that return back to where it was, call it Q3 of last year, in terms of the overall metrics. Look, I’ve spent a significant amount of time sort of digging through the impacts and, look, from an overall profitability and EBITDA perspective, once we are done with some of this volatility, we’ll wholeheartedly feel like we’ll get back to the EBITDA margins, potentially even higher with some of the initiatives Rob laid out.

There’s a couple things we’d like to highlight. One is revenue management. Two is obviously ancillary revenue, both of which we’ve kicked off a little bit of that, right? The impacts of that are starting in Q2, not in Q1. And then overall, just being able to support a different revenue management strategy with the SOPs we laid out in terms of guest experience.

Derek Greenberg: Okay, thank you. And then also on the income statement, the new partnership considerations of $2.7 million. Could you just explain a little more what this relates to, if that’s expected to be ongoing? And I think it was stated it was non-cash. So I was just wondering the nature of what this line item is.

Shanoop Kothari: Yeah, so it’s the accruals associated to how we look at it. So it’s accrual, so non-cash, non-recurrent.

Derek Greenberg: Okay, got it. And then just for my last question, in your calculation of adjusted EBITDA, there’s around a $2.7 million, $2.8 million add-back for provision of income taxes and other taxes. Provided there was no income taxes in the quarter as well as none in the income taxes payable located on the balance sheet, I was just wondering what taxes this is relating to specifically?

Shanoop Kothari: Yeah, so typically these are property taxes that aren’t due until well late in the year that we paid in advance. So it’s expensed upon payment as opposed to the amortization over the period it covers.

Derek Greenberg: Okay, got it. Thank you, that makes sense.

Operator: Thank you. Our next question comes from the line of Matthew Erdner of Jones Trading. Please go ahead.

Matthew Erdner: Hey, good morning guys. Thanks for taking the question. Are there any insights that you can provide quarter to date on occupancy and what you guys are seeing there? And then, in addition to that, the transition off of the Wyndham platform, do you expect that to affect revenues at all?

Shanoop Kothari: So, the first part of the question, I’ll take both parts and then I’ll have Rob talk about occupancy as well. So 77% occupancy for Q1, that’s a combination of a couple things, right? So January was pretty heavily seasonally impacted. It’s typical, but I think based on our mix this year versus last year, it was a little bit more of an impact. But as we got to the February period, things drastically changed. So overall 77%, which is taking consideration, surrender underperforming properties, overall mix-wise extremely high in core areas and properties in New York base with softness in the more seasonal markets. With regard to impact and revenues, with regard to partnership, I would say no to that. There’s no impact to room rates or revenues. And then Rob, if you don’t mind just talking about what the current New York portfolio, what you’re seeing in terms of occupancy and so forth?

Robert Arigo: Yeah, I’m actually very — with the transition of Wyndham, Wyndham was a strong partner of ours, but from a brand perspective, there’s other opportunities. May and June, traditionally, we all know are very strong in New York. So some of the business that we may have lost with the transition, we all know that the most valuable key in New York is the [Last Key] (ph), especially in these high-demand markets. So, we think the upside potential is much stronger than the loss. So, I think overall, transient demand we see — to continue on through the summer, everything we’re seeing right now, we do not see anyone pushing their foot off the pedal for New York. And early on, looking at into September, October, things even look better than year over year, probably by plus 3% or 4%. So we feel very confident that this was the right decision at the right time.

Matthew Erdner: That’s great. Thanks for the color there. And then can you talk about the current pipeline and any new agreements? Should we expect those to kind of be back-half loaded or just how are you — what are your thoughts around timing on signing new agreements? Thanks.

Shanoop Kothari: Yeah, so for one, we’ve changed our approach to announcing, right? We’re going to announce an opening not before that, right? So I think we were pretty clear about that sort of a couple months ago. Just overall, pipeline’s there, obviously Rob mentioned the opportunity sets quite there. We’ve got to get through some of the initiatives that we’ve laid out, communicated, we’re — I think we’re almost done with the full communication of sort of where we’re looking at it. So look, I would say back-half loaded, but we’re just not ready to give specific guidance on there. I think the view here is, when it happens, everyone will be pleasantly surprised to the positive. I don’t think there’s incremental benefit for us to lead with our chin at this point. We’ll lead with results.

Matthew Erdner: Great. Thank you, guys.

Operator: Thank you. Our next question comes from the line of Nehal Chokshi of Northland Capital Markets. Please go ahead.

Nehal Chokshi: Thank you. Thank you for taking my questions. I’m curious, what’s going to be your new property management system, given that you’re going to be going away from the Oracle OPERA?

Shanoop Kothari: Rob, do you want to take that?

Robert Arigo: Yes, I will. We’re actually going to be going back to the platform that we had in place, which was Cloudbeds. And we are also developing our entire IT platform right now. And so the transition was seamless to us. And so it didn’t cause any concern whatsoever. The team was able to make the transition happen within about four days. And so that — great question, but the good news, it wasn’t a major concern.

Nehal Chokshi: Okay, good to hear that. What percent of bookings was going through Wyndham as of December or March quarter from OTA, effectively an OTA mix perspective?

Shanoop Kothari: Yeah, not a lot to disclose that. Just a factor which is what financially is not really working for us but not going to give that specific number now.

Nehal Chokshi: Okay, all right. You did say at the February 6th Investor Day though that you guys were at the brim of breakeven and breakeven was about 33%. Is that correct at least?

Robert Arigo: That was much more Q4 related. Q1 was a different story.

Nehal Chokshi: Understood. Okay.

Robert Arigo: So you got to think about it, right? But think about it though, February — January is not a great month, right? So not a lot of data there to really sort of extrapolate, but obviously it’s changed, right? So…

Nehal Chokshi: Okay. Thoughts on why that changed?

Robert Arigo: Not going to go through that. We’ve got limitations in what we can sort of say with regard to our agreements. So we’re just trying to be sensitive to that.

Nehal Chokshi: Understood. What about the key cash that’s been received? Does that need to be returned with termination of the agreements?

Shanoop Kothari: Yeah. So, booked as a liability, obviously, there’s a discussion that goes on that. But, the way it’s accounted for is accurate on the balance sheet, right? So how we’ve got to account for in aggregate is, we vetted through it internally with their accountants is accurate, how it ends up sort of the TBD.

Nehal Chokshi: Yeah, understood. But it’s going to weigh on your cash though. It’s the bottom line though, right? Over next, at the point in time when you return it, it’s going to be a drain on cash.

Shanoop Kothari: Yeah, of course.

Nehal Chokshi: Yeah, okay. All right. And I didn’t hear actually any June Q guidance. Can you give us any sort of color here on how to think about that?

Shanoop Kothari: Look, I mean, overall, we’re still navigating through the portfolio, right? So there’s still a little movement. The way we’re seeing things is both increase in — significant increase in RevPAR for the reasons I mentioned. Part of it was the initiatives were taken in Q1, so there’s some lack of comparability in numbers. We’re seeing well above 250 sort of daily bookings. And occupancy, Rob and I were talking right before we got on this call, occupancy in New York is, you know, we’re at max, near max capacity to the point where — I’ve got something booked and the team is asking if I’m going to show up or not so they can release the room. So momentum is there. Obviously RevPARs improving just based on getting out of a seasonally tough period. Guidance wise, we’re not going to give specific guidance, but you’ve got some of the frameworks for thinking through that.

Nehal Chokshi: Okay. And, Robert, you kind of hinted that the life in the assets has declined. Can you detail what you mean by that?

Robert Arigo: I’m sorry. Can you just repeat that one more time? I’m sorry sir.

Nehal Chokshi: Yeah you didn’t explicitly say that but you know at one point you said, bring back life to the assets and then later said bring more life back to the assets. So implicitly in that statement is that life in the assets has declined over, I don’t know, some months basically. And so I was wondering if you could just give a little bit more color to what that statement is saying here.

Robert Arigo: The term you’re saying is licensed assets. Is that what you’re saying, sir?

Shanoop Kothari: Yeah, yeah. I think…

Nehal Chokshi: That’s what I believe I heard.

Shanoop Kothari: Nehal, I think he’s talking about invigorating sort of a different customer experience that — we have traditionally run pretty lean. And Rob’s initiative is to sort of change the approach, sort of welcome approach, guest experience, et cetera. So I don’t think it was lack of life. I think it’s more of the amenities to bring additional life, right? So food service, valets, guest experience, welcome experience, et cetera. So to Rob, probably you can expand more. I think that’s what he’s looking for.

Robert Arigo: Yeah, the programs that we were on, we want to look at the highest and best use of every square inch of the building, work hand in hand with ownership. But, the opportunities that we’re looking at is the new sense of arrival program that will definitely set apart us from any other vendor, any other hotel operator, but looking at incremental revenue opportunities that include bringing valet parking to, we have some really great hotels in great locations, valet parking opportunities, there’s in-room dining, partnerships, there’s local meeting space partnerships we’re looking at. We’re looking at utilizing our suites differently and going into the market as catered hospitality venues. We’re looking at revenue management platforms, different fee structures.

And really, so I think there’s so many, and then there’s another piece that we’re just getting ready to implement now is adding a gourmet marketplace to each hotel. The grab-and-go market in New York is very rich and very profitable. So it’s just adding more color, more profitability to a quality existing space, but taking it to a new level.

Nehal Chokshi: I see, okay. And to implement these incremental revenue opportunities, I presume there’s also incremental working capital necessary to implement?

Robert Arigo: Great question. In the gourmet marketplace, it’s actually — they provide, they do the build-outs, they do the complete supply material ordering, and they pay us net profit. The parking vendors, we’ve negotiated a pretty strong deal that again, they’re paying us net profit for the use of the garage. So a few years back, parking lot vendors were not as open to conversation, but now they’re getting a little bit better. So we have strong relationships there. But everything that we’re looking at right now, there’ll be some investments when it comes to sense of arrival, but it’s nothing substantial. So I think that we’re going to prioritize in what comes first. But a lot of the things that we’re going to be doing are going to be strategic partnerships within New York. And they are going to help us take the hotel to the next level.

Nehal Chokshi: Thank you.

Operator: Thank you. Our next question comes from Daniel Kurnos of Benchmark. Please go ahead.

Daniel Kurnos: Yeah, thanks. Good morning. Quick one, Rob, just to follow up on that. As we think about some of the integration, either from an automation or from the hotels advancing their own tech stack in partnership with you guys, I’m just curious how you’re thinking about improving the guest experience and if there is actually any tech advancements that you would like to be making to help further your goals and initiatives out of the gate?

Shanoop Kothari: Actually, we’re just getting ready to head into high tech at the end of June. And we were kind of focused a lot with Alexa and the Amazon platform. So we’re going to be working closely with them. Something that probably looking at Q3, Q4, but bringing some new, the most contemporary technology into the guest room. I’m a big fan of technology that is simple, that is easy for the customer to use. And I think sometimes people jump on technology a little bit too early, but I think using the Amazon platform is something we’ve already reviewed and it’s something in the near future for us, but that’s still in negotiations. The other part of it is designing and what I’ve been able to do in the past is designing a management company that the technology that the associate is using is easily and easily executed, so the customer is feeling a good experience and it’s consistent.

I think sometimes technology can be overdone and sometimes it’s not executable. So we’re very sensitive to making sure whatever we do works well and consistently.

Daniel Kurnos: No, that makes total sense. And we’ve seen issues in the past before. And just, obviously, Shanoop, to your point on sort of back-half loaded in terms of the pipeline, how much do Rob’s initiatives, new SOPs, everything else, and what we just talked about, influence sort of how you think about expansion potential from here? Does it change potential mix? Does it change who you target? Just love to get a little bit more color. Thanks.

Shanoop Kothari: Yeah, so look, we’re going to be much more guarded on sort of how we roll out expansion. But look, and also actually, just offhand, Rob wanted to kind of throw out sort of revenue numbers potential and we decided not to collectively. We want to really sort of digest the opportunity set, as Nehal mentioned too, impact working capital. Certain things can be big impact, but impact working capital, which we’re very focused on. So, look, I mean, all the lower hanging fruit initiatives are underway. As it requires incremental capital, we’re being much more methodical about it. We’re much more focused on second half. Sort of really focusing on the second half, the first half of the year is really sort of the initiatives we mentioned earlier. So the combination of what we’ve laid out as sort of, called secondary revenue opportunities is going to be built with what our opportunities are with regard to potential growth.

Daniel Kurnos: Okay, fair enough. Thanks guys, appreciate it.

Operator: Thank you. Our next question comes from Tom Kerr of Zacks Investment Research. Please go ahead.

Tom Kerr: Good morning, guys. Most of my questions have been answered. Just wanted to know if you’re providing more color on potential financing options for lease development or lease deposits. Besides the surety bonds, I saw the surety bonds was up to $10 million. Are there other sources now that the Wyndham development money is not available?

Shanoop Kothari: Yeah, so Tom, thanks for the question. So yeah, there’s other sources, surety bonds out there. There’s some other things that we’re looking at. Obviously, they’re in the works, so nothing to disclose at this point. But, there’s other ways of financing as well. So, look, all options are on the table, thinking through what’s the right way to do it, what’s the right timing. But, look, I would say that, there is other stuff. It’s just not at the point where we can talk through it and announce it yet.

Tom Kerr: Great. That’s all I had. Thank you.

Operator: Thank you. There are no further questions at this time. I will now turn the call back over to Shanoop Kothari, Chief Executive Officer, for closing remarks.

Shanoop Kothari: Thank you. So, thank you all for joining the call. We’re pleased at our progress today. We understand there’s still much work to do, right? So as mentioned, we’ve got — really focused on the work in the first half of the year. The actions we’ve taken have helped stabilize the business and define our new path forward. As we said a short time ago, we understand that proof will be in the consistency of our results and we remain committed to delivering on our objectives. Thanks again for your time and have a great rest of your day.

Operator: Thank you. This concludes today’s conference call. We thank you for participating and you may now disconnect.