Playa Hotels & Resorts N.V. (NASDAQ:PLYA) Q4 2023 Earnings Call Transcript

Playa Hotels & Resorts N.V. (NASDAQ:PLYA) Q4 2023 Earnings Call Transcript February 23, 2024

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Operator: Good morning, and welcome to the Playa Hotels & Resorts Fourth Quarter 2023 Earnings Release and Conference Call. All participants will be in a listen-only mode. [Operator Instructions] After today’s presentation, there will be an opportunity to ask questions. [Operator Instructions] Please note, this event is being recorded. I would now like to turn the conference over to Ryan Hymel with the company. Please go ahead sir.

Ryan Hymel: Thank you very much, Joe. Good morning, everyone, and welcome again to Playa Hotels & Resorts Fourth Quarter 2023 Earnings Conference Call. Before we begin, I’d like to remind participants that many of our comments today will be considered forward-looking statements and are subject to numerous risks and uncertainties that may cause the company’s actual results to differ materially from what has been communicated. Forward-looking statements made today are effective only as of today, and the company undertakes no obligation to update forward-looking statements. For a discussion of some of the risk factors that could cause our results to differ, please review the Risk Factors section of our annual report on Form 10-K, which we filed last night with the SEC.

We’ve updated our Investor Relations website, at investors.playaresorts.com, with the company’s recent releases. In addition, reconciliations to GAAP of the non-GAAP financial measures we discuss on this call were included in yesterday’s press release. On the call today is, Bruce Wardinski, Playa’s Chairman and Chief Executive Officer will provide comments on the fourth quarter demand trends and key operational highlights. I will then review the fourth quarter results and our outlook for 2024. Bruce will wrap up the call with some concluding remarks, before we turn it over to Q&A. With that, I’ll turn it over to Bruce.

Bruce Wardinski: Great. Thanks, Ryan. Good morning, everyone, and thank you for joining us. Our fourth quarter results exceeded our expectations, coming in well above the high end of our expected range. The better-than-expected results were broad-based across our segments, driven by strong demand during the high season. Before we dive in, I’d like to remind everyone that Hurricane Fiona hit the Dominican Republic in late September of 2022, causing us a temporarily closed Hyatt Ziva and Zilara Cap Cana and Hilton La Romana Resorts for repairs for a portion of the third and fourth quarters of 2022. We estimate this had a $5.4 million negative impacts, net of business interruption proceeds, on adjusted EBITDA in Q4 2022, but was an approximate 70 basis points of benefit to our reported Q4 2022 owned resort EBITDA margin, as there were no corresponding revenues accompanying the business interruption proceeds we received.

Comparability of our KPIs for the fourth quarter is further challenged by the fact that the effective resorts reopened were only the highest ADR portion of the quarter. Playa’s owned resort EBITDA of $73.6 million in the fourth quarter of 2023 included a significant year-over-year, foreign currency exchange headwind of approximately $5.6 million due to the appreciation of the Mexican peso; a benefit from business interruption proceeds of approximately $900,000 and negative EBITDA at the Jewel Resorts in the Dominican Republic. For Q4 2023, we estimate that the FX headwinds had a negative 250 basis points impact on both our reported owned resort EBITDA margin as well as for our legacy portfolio, which excludes the Jewel Resorts in the Dominican Republic.

Adjusting for all of these factors, underlying adjusted EBITDA growth for legacy portfolio was approximately 6% during the fourth quarter. Finally, we’ve included a break out of segment financial KPI’s excluding the DR Jewel Resorts for the fourth quarter and full year of 2023 on pages 17 and 20 of our earnings release to help you with your modeling provide a frame of reference for the impact on our financials from these significantly lower ADR resorts. For a discussion today, commentary on comparable full year 2024 KPI’s is synonymous with our legacy portfolio as the Jewel Palm Beach was closed for a portion of Q1 ‘23 and Jewel Punta Cana was sold during Q4 of 2023 and thus would not be comparable for the full year metrics. As we outlined earlier in 2023, our expectation was that the first quarter would represent the highest year-over-year ADR and EBITDA growth in 2023 as we’ve lapped the impact from Omicron in early 2022 and growth would normalize as we enter the second half of 2023, as the base comparison period had less noise.

Additionally, based on our pacing and bookings data, we were of the believe that the brief slow down in bookings experienced ahead of the summer travel season was likely the result of pent-up demand for European travel, and not indicative of weak demand for traditional winter travel to beach and warm weather destinations. This year largely came to fruition during the fourth quarter of 2023, as closer demand during the high season, particularly in Mexico exceeded our expectations and aided our ADR growth, as these peak season bookings came at healthy rates. Our results in the Yucatan were quite exceptional on a currency-adjusted basis with occupancy nearing fourth quarter 2018 and 2019 levels, our fourth quarter 2022 Yucatan ADR reflected multiple favorable true up adjustments.

Excluding these adjustments, underlying fourth quarter ADR in the Yucatan increased approximately 2% year-over-year. Most remarkable aspects of our fourth quarter of the Yucatan however was the continued execution by our operations teams in Mexico which were able to grow currency neutral margins approximately 100 basis points year-over-year on modest reported ADR growth. As you may recall, following the realignment of key management personnel, we have been revisiting various processes, staffing models and procurement practices since the second quarter of 2023 and the results of our efforts really began to show in the second half of the year as ADR growth moderated. As we’ve mentioned on previous earnings calls, the process improvement will be iterative and we will continue increasing efficiencies where possible to help offset the impact of rising wages and inflation in various expense categories.

We believe we can hold FX neutral margins steady year-over-year in the Yucatan in 2024 on positive low-single-digit to mid-single-digit ADR growth, despite underlying wage pressure continuing. In the Pacific, close to demand helped ADR growth in this segment, as well, partially offset by year-over-year occupancy declines as a result of hurricanes Norma and Lidia and our ongoing renovation work. We estimate that Hurricanes Norma and Lidia negatively impacted segment EBITDA by approximately $1 million to $1.25 million in the quarter. Similar to the Yucatan, the Pacific was able to grow margins on the currency neutral basis by approximately 290 basis points year-over-year, despite significant wage pressure. We expect to continue our renovation work in this segment during 2024, which should further help sustain rate growth in the future as the Hyatt Los Cabos had not had any major renovation work done since the significant renovation that occurred following Hurricane Odile in 2014.

In the DR, fundamental strength during the fourth quarter was led by the Hyatt Cap Cana, which continues to be the preeminent resort in one of the top resort markets in the world and was our best performing resort in Q4. Results in the segment were hindered by the Jewel Resorts, which posted a modest loss in Q4. As a reminder, we completed the sale of Jewel Punta Cana economy in late December and the Jewel Palm Beach was closed for a significant portion of Q1 2023, which we expect will provide a meaningful year-over-year increase in EBITDA during Q1, 2024. The two resorts combined for an EBITDA loss of approximately $15 million in 2023 with the Jewel Palm Beach’s loss in the fourth quarter narrowing to just under $1 million. We’re still actively pursuing a sale of Jewel Palm Beach, but do not have any updates on the status of the sale process at this time.

Finally, Jamaica had another solid quarter with occupancy increasing slightly year-over-year, along with mid-single-digit ADR growth, despite a significant headwind from lower MICE group mix year-over-year. The segment was off to a good start in 2024, that US State Department’s Travel Advisory notice for Jamaica on January 23, has had a negative impact on the second year term as cancellations picked up meaningfully. Although the warning doesn’t pertain to our resorts as much as the major metro areas, and the fact that the level of the Travel Advisory was unchanged from the prior advisory, the press coverage of this advisory notice was significantly greater than prior warnings. Bookings in Jamaica have since stabilized, but the majority of the cancellations were for states in the coming months and will be difficult to backfill.

Given the warning level was not based on any new instance or data, the impact to this while unfortunate, will likely to be confined to lost bookings in March through June. Looking at demand as a whole, demand for the fourth quarter of 2023 and beyond improved in July of last year, continued to accelerate through the third quarter and remained healthy in the fourth quarter. In aggregate, during the fourth quarter of 2023, 47.4% of Playa owned and managed transient revenues booked were booked direct down 460 basis points year-over-year. The decline was driven by fewer World of Hyatt redemption bookings, following a spike during the first quarter of 2023 ahead of a change in the conversion rate for point redemptions, which pulled forward quite a bit of demand.

We expect this to smooth-out over time and believe we are in line with our targeted 50% transient direct booked revenue mix. During the fourth quarter of 2023, playaresorts.com accounted for approximately 13.6% of our total Playa-owned and managed transient room night bookings, continuing to be a critical factor in our customer sourcing and ADR gains. Taking a look at who is traveling, roughly 43.3% of the Playa-owned and managed room night stays in the quarter came from our direct channels. Geographically, the biggest change in our guest mix during the fourth quarter was our European and Mexican-sourced guest mix, both of which were up nearly 300 basis points year-over-year. Our Asian-sourced guest mix improved modestly year-over-year, but remains the most depressed, as it is still only approximately 25% recovered versus pre-pandemic levels.

Our Canadian guest mix has remained relatively muted as approximately 60% recovered versus pre-pandemic levels. However, there’s recently been a significant increase in flight capacity into our markets from Canada for the high season. So I am optimistic our Canadian guest mix will improve in the coming months. Our visibility remains a critical factor of our success, as our booking window was just over three months during the fourth quarter. In total, while 2023 was a very successful year for Playa on many fronts, we faced significant headwinds that masked the robust performance in our core portfolio. However, our focus on execution and the stellar fundamentals should shine brighter in the near future as the profit headwinds are expected to abate.

Starting in the first quarter, we will begin to lap the significant profit decline at the two Jewel properties in the Dominican Republic. At current US dollar to Mexican peso spot FX rates, we expect FX pressures to ease significantly beginning in Q3 2024 and we will be lapping the significant increase in our insurance expense in Q2 2024, as well. Finally, on the capital allocation front, we repurchased approximately $33.5 million worth of Playa stock during the fourth quarter and an additional $14.6 million thus far in the first quarter, bringing our total repurchases since resuming our program in September of 2022 to approximately $245 million, or approximately 20% of the shares outstanding. We continue to believe that our significant free cash flow generation is underappreciated, given the modest amount of ROI-driven CapEx expected in the near term and continued healthy business fundamentals.

Once again, I would like to thank all of our associates who have continued to deliver world-class service in the face of unexpected challenges and rising operating costs, their unwavering passion and dedication to service from the heart is what truly sets Playa apart. With that, I will turn the call back over to Ryan to discuss the balance sheet and our outlook.

Ryan Hymel: Thank you, Bruce. Good morning, again, everyone. I’ll begin again with the recap of the segment fundamentals, followed by an overview of our balance sheet and expected uses of cash and conclude with our outlook for ‘24. Before I begin my review, I’d like to remind everyone that starting in the first quarter of 2023, we elected to reclassify on-premise room upgrade revenue from non-package revenue to package revenue to be consistent with industry trends. We’ve recasted prior periods to conform with the current period presentation. A reconciliation of these changes made prior to the reporting period for ’21 and ’22 can be found in our investor deck on Slide 5. As Bruce mentioned, there are some unique items affecting the comparability of our financials in the second half of 2023 that I would like to remind you of before we dive in.

First, Hurricane Fiona hit the Dominican Republic towards the end of Q3 2022 and caused significant disruption at the Hilton La Romana, the Hyatt Cap Cana, which we chose to temporarily close for a small portion of Q3 ‘22 and over half of Q4 oof ’22. We shared on our previous earnings call, that we estimate the EBITDA impact to be – to Q3 2022 to be roughly $3 million and approximately 80 to 90 basis points to resort EBITDA margins. And for the fourth quarter of ’22, a $5.4 million EBIT impact net of business interruptions. Given the pronounced seasonality of our ADRs during the fourth quarter, these resorts were disproportionately open during a much higher ADR portion of the fourth quarter, skewing our Q4 2022 ADR comparisons. Secondly, the Mexican peso had a very large year-over-year change during the fourth quarter of 2023, which negatively impacted our EBITDA by approximately $5.5 million and resort margins by 250 basis points.

For full year 2023, the strengthening of the Mexican peso had an approximately $24.1 1 million impact on our owned resort EBITDA or 260 basis points and a $24.5 million impact on our total adjusted EBITDA. Third, during the fourth quarter of ’22, as we’ve mentioned previously, we had several adjustments that significantly increased the reported Q4 ‘22 ADRs, the largest of these was related to an advanced pricing agreement rates in the Dominican Republic, which we detailed in our Q4 2022 earnings release on Page 17. As a reminder, these adjustments totaled nearly $10 of ADR or 2.5%. Fourth, business interruption, we recognized again a gain of roughly $900,000 from BI proceeds during the fourth quarter of ‘23, which increased owned resort EBITDA margins by approximately 40 basis points.

And as a reminder for the full year ‘23, we recognized the gain of $6.1 million from business interruption proceeds and recoverable expenses. And lastly, as we mentioned the DR Jewels, these resorts continued to weigh on the performance of the portfolio in ‘23 negatively impacting owned resort EBITDA margins by over 250 basis points for the fourth quarter and for the full year ‘23, the two resorts recorded an EBITDA loss of approximately $15 million and negatively impacted owned resort margins by approximately 280 basis points. And I’m moving on to the fundamentals, before I begin all references to expense and margin KPIs on a currency neutral basis unless otherwise stated. Our fourth quarter results were ahead of our expectations as demand steadily picked up throughout the quarter, higher demand and easing pressure from food and beverage and utilities expenses again on an FX neutral basis, as well as our cost efficiency measures led to a reported, our resort margin declined of about 290 basis points, which again included a 250 basis point year-over-year headwind from foreign exchange.

And a 40 basis points benefit from business interruption proceeds and a 70 basis point headwind from the two Jewel resorts in the Dominican. So adjusting for foreign exchange and business interruption in the prior period and in this period, our legacy portfolio maintained margins on a year-over-year basis. The higher demand for our ADR gains in the quarter was very broad based with all segments reporting year-over-year ADR growth excluding the two Jewel Resorts in the DR. On the comp front, food and beverage cost continue to be favorable as a result of lower input prices and cost efficiency efforts by our operations team. Utilities and labor were also favorable in the quarter with the latter reflecting efficiency measures as wage inflation continues to remain a headwind.

As Bruce mentioned, we’re undertaking efforts to streamline and improve our procurement process across the entire portfolio to take advantage of our scale. These efforts are really just beginning to bear fruit from the heavy lifting undertaken thus far in ‘23 and we expect the benefits to accelerate at the company moves into ‘24 and beyond as our cost savings are averaging currently mid-single digits to high-single-digit improvements per category. We estimate that we’ve only penetrated roughly 30% of the potential addressable procurement savings thus far with half of the savings flowing into our cost during the fourth quarter of 2023. Now turning to our MICE Group business, our 2024 net MICE Group business on the books is approximately $52 million, up roughly 23% compared to the same time last year.

Our MICE business on the books for ‘24 is much more balanced versus 2023, which as a reminder had difficult year-over-year MICE comparisons in the second half versus what we traditionally experience. Finally, turning to the balance sheet, we finished the quarter with total cash balance of $272.5 million and total outstanding interest-bearing debt of $1.09 billion. We currently have no outstanding borrowings on our $225 million revolving credit facility, and our net leverage on a trailing basis stands approximately three times excluding leases. We anticipate our cash CapEx spend for full year 2024 to be approximately $80 million to $90 million for the year, partitioned out between $35 million to $40 million for maintenance CapEx and the remainder designated for ROI-oriented projects.

Also as a reminder effective April 15th, we entered into two interest rate swaps to mitigate the floating interest rate risk in our term loan due 2029. We entered into a two and three year contract both of which had fixed notional amounts of $275 million and carries fixed SOFR rates of 4.05% and 3.71%, respectively. Secondly, we’ve implemented foreign exchange hedges on approximately half of our Mexican peso exposure for 2024, which would greatly reduce the volatility of the impact of our reported EBITDA this year. Based on exchange rates at the times we entered into the FX swaps, we estimate that full year 2024 FX impact to the Mexican peso to be approximately $7 million to $11 million, but again with nearly 75% of that impact coming in Q1of ‘ 24 and nearly 100% of that impact in the first half of the year.

On the capital allocation front, as Bruce mentioned, we repurchased an additional $33.5 million of stock during the fourth quarter and additional $14.6 million thus far in Q1 ’24 since we began repurchasing shares of last September, we purchased over 32.8 million shares or as Bruce mentioned nearly 20% of the shares outstanding. We still have over $185 million or $190 million remaining on our existing repurchase authorization and with our leverage ratios at or near for the time, we anticipate free cash flow generation of the business and the attractive valuation of our stock, we believe repurchasing shares is a very compelling use of capital and intend to use our discretionary capital to repurchase shares going forward, depending on market conditions.

And now turning our attention to our outlook for 2024. As we mentioned in our release, we expect our full year 2024 adjusted EBITDA to be between $250 million to $275 million, which includes the following key considerations and inputs. The first, we assumed ADR growth of mid-single-digits for the total portfolio and low-single-digits for the comparable legacy portfolio. The driving force of the delta between these two is a positive of approximately 360 basis point impact from removing the lower ADR room night in the mix from the recently sold Jewel Punta Cana, partially offset by the ramping occupancy at Jewel Palm Beach. Occupancy, we expect to be up mid-single-digits – mid single percentage points for the total portfolio and up modestly for the comparable legacy portfolio.

We expect RevPAR growth of low-double-digits for the total portfolio and low-single-digits to mid-single-digits for the comparable portfolio. We estimate that the disposition of the Jewel Punta Cana and the ramping occupancy at the Jewel Palm Beach contributed approximately 900 basis points to 2024 RevPAR with the value majority of that contribution being from the results of disposing of the Jewel Punta Cana and only a modest contribution to RevPAR from the Jewel Palm Beach, at improving occupancy is partially offset by the negative mix of ADR. Again, as we mentioned, we assume FX headwinds of $7 million to $11 million based on current exchange rates. We expect construction disruption impact of approximately mid-single-digit to high-single-digit EBITDA in the Pacific and at Hyatt Zilara.

Inflation, as we’ve mentioned several times on this call, we’ve been diligently working to improve our efficiency and we believe we’ve lowered our margin leverage hurdle to approximately 4% ADR rate growth to hold margins flat on a currency and business interruption-adjusted basis. And then, lastly, we expect a modest negative net impact from annualizing corporate expense increases from ’23, again partially offset by a higher and growing fee income from our managed business and Playa collection feds. And with regard to the cadence, we expect the first quarter to show the most robust profit in the year, given the Q1 2023 comparison, which as a reminder, included a $5 million loss at the DR Jewels. So again, it’s to sum this up, at the midpoint, this $250 million to $275 million range represents approximately 1% decline year-over-year versus the business interruption-adjusted $255.8 million figure that were reported in ’23.

Now moving on to the first quarter. For the first quarter of ’24, we expect reported occupancy to be in the low to mid 80% and reported package ADR to decline low-single-digits year-over-year basis, again due to the Jewel Palm Beach. However, comparable legacy portfolio ADR is expected to grow low-single-digits. We expect owned resort EBITDA margins to decline year-over-year given the continuing FX headwinds in Mexico, which are expected to negatively impact margins by approximately 200 basis points at today’s spot rates. Putting it all together, we expect Q1 owned resort EBITDA of $108 million to $114 million, Playa collection and management fee income of roughly $2 million to $3.5 million, corporate expense of approximately $14 million to $15 million, which again includes a negative FX impacts related to our office in Mexico.

And finally, Q1 adjusted EBITDA of $98 million to $104 million. Given our booking window, we are currently 96% booked for the first quarter. And hope that framework helps guide you to fine tune your models and get further insights to what we’re seeing and expecting. With that, I’ll turn it back over to Bruce for some concluding remarks.

Bruce Wardinski : Great. Thanks Ryan. So, the year is off to a good start. We saw the top-line growth despite the setback in Jamaica from the travel warning and lapping difficult comparisons from 2023. We remained focused on the areas within our control such as our expense efficiency efforts and ongoing portfolio optimization. On the latter point, we’re actively working on the sale of Jewel Palm Beach and we will be continuing the renovation work that is slated in the Pacific, as well as beginning renovation work on our successful Hyatt Resorts in Cancun. We will continue to redeploy the significant free cash flow we generate in share repurchases and our market-leading assets setting us up to accelerate growth beyond 2024. So that concludes our presentation and now we’ll open it up for Q&A.

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Q&A Session

Operator: [Operator Instructions] The first question comes from Smedes Rose with Citi. Please go ahead.

Smedes Rose: Hi. Thanks. We have a lot of moving pieces here that will probably take a little time to kind of build through more carefully, but I guess, my question is really, can you just speak to underlying kind of demand and booking patterns that you are seeing thus far into 2024. I know you gave some EBITDA guidance, but I mean, and I guess, kind of any impacts from the shift in Easter and if that’s affecting?

Ryan Hymel : Yes, as Bruce mentioned, in the closing remarks, the first quarter is off to a grat start. On the Easter front, for us, any time Easter is further out, it’s just essentially a long gate to our high season. So it’s a week earlier this year. So the benefit of Easter moves into the Q because that’s a very important week for us – particularly in Mexico. So that benefits in Q1, but it does essentially shortens our high season by approximately a week, and essentially like the week or two right after Easter are slower months for us. So longer is better further out is better, so it has a nominal impact on our overall results from a being a week shorter. But things are off to a really good start. Things are pacing well in the first half of the year.

I think one of the main points that we want to get across and we think about our margin are kind of pacing and then just the pace of our growth in 2024, it’s pretty evenly balanced. Obviously, the first quarter have some comparability issues because the Jewels were a drag in Q1 of last year and the Jewel Palm Beach wasn’t open. But generally the kind of cadence of our RevPAR growth and our top-line stats for ADR and for RevPAR are pretty even throughout the year. I do think there’s been kind of a return to kind of normal seasonality in our business. But other than that, I think it’s – things are off to a great start. And the biggest thing that we needed to monitor as Bruce mentioned was the impact of the cancellations from the travel warning from Jamaica.

I know we talked to many folks last night it has already stabilized at least from – hey it’s turns positive again quickly, but we’re not back yet so far. So the next kind of couple months, particularly in March and April and May will really give us some insight into how well we recover some of that lost business. But other than that, things have started off well.

Smedes Rose: Thanks, and could you give sense to what you are seeing on the supply side, I guess, specifically in Jamaica and with return from other folks of this quite a bit of construction underway and maybe you are trying to continue by that?

Ryan Hymel : Yeah, that of all the markets has again planned or at least what’s been kind of announced it’s probably the highest number of potential room counts you’re talking kind of mid-teens, potential rooms being added. Again, assuming it all gets done. That market in general has not had an immense amount of supply. I’m talking specifically of Montego Bay Airport has not had a lot of supply over the years. Hello.

Smedes Rose: Yes.

Ryan Hymel : Okay. So you’re still there Smedes or we should make sure we didn’t lose anybody. Sorry. For example that market, from 2019 to ‘23 it’s CAGR was less than 2%. So there is a little bit more coming in there. But generally, what the plan is still low to mid-single-digit room nights in all of our destinations. And again that assumes that all gets done.

Smedes Rose: Thank you.

Ryan Hymel : Thanks, Smedes.

Operator: The next question comes from Shaun Kelley with Bank of America. Please go ahead.

Shaun Kelley : Hi, good morning, everyone. Ryan, Bruce, maybe just to follow up on Smedes’ question there. I mean, I guess, one question we’ve asked is just, can you see the same level of improvement in the peaks that you would see in the shoulders? And, I know it’s a little far out but I think the surprise has been some of the strengths you’ve seen even as you kind of approach peak season, it seems like things actually accelerated a little bit. So just kind of how do you think about peaks and valleys a little bit? Because again, I think maybe in the shoulder seasons, we’re not really sure if that’s an easier comp or if that is a place where just behavior is normalizing and kind of wondering how you’re seeing it.

Bruce Wardinski: Sure. It’s a great question, Shaun. So, I mean, I would say, if you look back, a couple quarters ago, right, everybody’s concern was that the leisure bubble has burst and particularly on our business that the benefits that we got in ‘21 and ’22 were diminishing, right. And people were going to Europe or they’re not willing to pay the amounts or it kind of it was transient kind of demand. Well, I think what’s transient in the more transitory is what I meant. But what I think we’ve really seen is, that the demand is still there. It’s really strong. And what we did in December, what we’re seeing so far in the first quarter is incredibly positive for our business. So I think the fear that people had that is kind of going away or going to greatly drop, has not materialized and I don’t believe it’s going to materialize.

So, the second part of your question is, okay what does that mean for the shoulder season? Is it going to be a easier comp? Or is it going to be kind of a continued return to normalization. I think it’s more just a return to normalization. Sure, maybe we will benefit from an easier comp that’s kind of related to that. But I think historically, our business drive to huge amount of our profit in the first four months of the year. And then in December and I think you’re kind of going back to that kind of pattern. The good news for us is, it is accelerating. So what we saw in the fourth quarter, particularly in December and what we’re seeing in the first quarter is accelerating. And so I think that bodes well for our business. It’s kind of messiest meets.