Summit Hotel Properties (INN) 3 Aug 232023 Q2 Earnings call transcript

Good day and thank you for standing by. Welcome to the Summit Hotel Properties Q2 2023 Earnings Conference Call. [Operator Instructions] Please be advised that today’s conference is being recorded. I would now like to hand the conference over to your speaker today, Adam Wudel, SVP of Finance, Capital Markets and Treasurer. Please go ahead.

good and Tanya you, morning. Thank Conkling. today I and and Hotel Trey President Summit Executive am Chief Officer, Officer, President joined Chief Vice Jon Properties Executive by Stanner Financial and

today Please in filings. are by note our securities statements uncertainties, SEC risks These subject laws. of unknown, both that our known federal considered statements and as many forward-looking defined to and are comments as described

effective duty only and statements update as today, today that Forward-looking XXXX, no we August we later. are undertake to make them X, of

You copies which on find on financial of can and our call, earnings contain measures SEC release, our this non-GAAP www.shpreit.com. filings website at reconciliations to referenced

Hotel Stanner. President welcome Chief Executive Properties Summit Officer, Jon Please and

earnings and all Thanks, thank conference today for you for us quarter Adam, joining call. XXXX our second

industry markets, will and driven portfolio. many the recent which today’s in improvement operating urban we being are our increasingly continued segments, and During of demand call, the key by NewcrestImage non-leisure metrics, trends discuss

quarter as pricing domestically to comparisons driven Omicron the replaced demand drove when in leisure our as will recent comparisons which in We update bottom concentrated yesterday balance our second guidance trends in easier quarter earnings more growth. as with afternoon. elastic and difficult last we the first our line quarter variant second predominantly year’s well were sheet range, robust provided normalized and release also revised top and transaction demand tremendous review Industry-wide provide an on activity

for high the of pandemic. our base mostly onset as a relatively second and growth the to and the compared forma RevPAR continuing midweek, increased again X.X% XX% suburban the of X%, last in Despite and respectively, comprise RevPAR portfolios, concentrated recover key was rate the occupancy was comparisons, quarter by quarter nominal and of growth a year-over-year revenue markets. urban average urban metrics new once RevPAR the which portfolio balanced more collectively our difficult pro and approximately year, during and second in RevPAR reached to driven to improve growth suburban our quarter since operating the second in and continued of increased mix X% quarter.

particularly Negotiated in grew X% the rates. segments, robust RevPAR a RevPAR transient increased demand daily X% the business. quarter, our demand business X%, are and driven recovery segment while driving average during increasingly increase Non-leisure group group a in by

demand in the the growth second our industry While index of as market impressive growth XXX a at our finished point nearly forma in the and slowed to improvement from year. second continued XXX%, team share quarter, portfolio basis pro quarter RevPAR drive RevPAR quarter last

last, the over hotels either were RevPAR Excluding X% this of increased in year that under year-over-year. or our quarter renovation second index

second introduction, and increased as As driven EBITDA over the XX% results XX%, period particularly in compared in increased I mentioned nearly quarter in to margins were basis RevPAR strong the portfolio a by of XXXX. XXX NCI the increase the same hotel point

of high testament last the post-acquisition the points across strategies strategic year, nearly of Group increased increasing RevPAR also respectively, index negotiated in XX%, during midweek XX% XX% grew portfolio a XXX%, achieved from year, quarter. NCI RevPAR and and basis RevPAR cluster and implementing to markets. last many XXX second these from done executing sales work of quarter has great team a our the the new

of driven respectively, event which the RevPAR markets highlighted growth quarter, XX% Within during XX%, and by generated the accelerating travel corporate strong group the performers quarter Texas Houston demand. NCI portfolio, second the strongest and Dallas, by and were special and

second RevPAR meaningful throughout saw improvement last by XX% the City Additionally, quarter, Oklahoma year. versus growing

stabilization. XXXX, and to as performance continue newer growth Our outlook and drive throughout EBITDA generate initiatives ramp outsized NCI expect for operational the towards to we it and continue the our positive, better hotels extremely portfolio RevPAR remains to

portfolio by NCI our Atlanta, Pittsburgh averaged of particularly downtown we Boston in concentrations, the and Cleveland, Many hotels and notably, City outside Boulder, during to Kansas have quarter. nearly all while markets the offset in recover during Chicago, growth markets well average. was Tampa, X% weakness RevPAR and performed partially in Bay on also these XX% of Minneapolis meaningful where the continued quarter, which in declined several in digits. mid-single grew most Area, Strength and markets the approximately RevPAR urban

softness relative to continue markets, our to in share Importantly, our we despite the competitive market or several improve these maintain sets. of

around the rate and occupancy compared to remains growth fell Revenue environment. industry Monday we favorable mix year October for Preliminary on softness that continues Fourth its believe our trend again Tuesday is healthy favorably, of August, Our year. last September NewcrestImage by for results continued the driven of relatively in in the the constructive, portfolio. a finished stable in less RevPAR to growth of growth and line and known a demand within June July July demand we month outsized pace with holiday generally balance outlook and for of some cyclicality early the and are though a despite

pace overall quarter, markets. During we despite in selling acquiring and the second remained transaction slower the hotels active the

In hotels the to near-term totaling result. X.X% trailing four when previously guestrooms owned as million sale $XX of we a a of wholly closed XX-month prior on the XXX needs near-term X.X% expenditures. net than million, capitalization a collective non-core for operating more income on capital rate May, represents considering price the of estimated and capital price hotel’s announced The of sale eliminating $XX.X gross sale sales

guestroom Scottsdale redeployed Lodge Scottsdale announced Inn approximately per our XX downtown guestroom Inn complexing proceeds we across Springs. from Steamboat all Located the Suites, Residence June, Nordic The a X performance expected $XXX,XXX guest venture room. hotels. enhance directly the for that the acquired was Road million of Courtyard opportunities of $XX SpringHill and North creates our those and GIC, the In and cross-selling for in portion or of with meaningful to Residence acquisition are with North, previously hotels two Inn million. joint XXX $XX.X Residence

yield on XXXX Residence a X.X% the a minimal operational renovation and several between operating prior to transformative stand-alone will equates price next over capital years. to require purchase and potential XXXX received basis the of effects in The in Inn the an X% expected investment factoring synergies. net income numerous The

recently Nordic guestroom Street, the is The independent downtown on a consistently XX ranks Springs million. Lodge a and downtown also hotel $XX.X hotel in full Hotel located acquired Main TripAdvisor. nearly Steamboat for top on We on Steamboats as in Steamboat acre

And with potential Residence joint is our approximately net within just to and prior price underwritten expected operating generate lean rate EBITDA purchase XXXX XX% margins approximately venture on the The the owned in to of street. an our results the XX%. estimated hotel’s income Inn of capitalization operating XX.X% model to synergies located realizing any hotel down

in investment near Lodge term. well Nordic has to been The and require minimal is expected maintained the capital

the However, recent of develop long-term notable in opportunities experience site downtown one-of-a-kind variety or high to and to plan, supply reductions, demand exceptional through barriers a property. expansion create thoughtful the underutilized a in of reimaging Steamboat, market, entry, the redevelopment

that expect from Lodge sharing our to various also will proximity through cost Residence benefit its and We Inn Nordic strategies. cross-selling

in Today, resulting the investment an approximately currently which is since EBITDA market is conviction Inn, EBITDA a of nearly more annual underwritten acquisition the $XXX the of above an XX% of our over margin Residence and total our Our tremendously XX%. running of our XX%. grown Inn in than RevPAR Residents yield Steamboat hotel’s has on

the drivers range. Trey, to to our year full X have me typical the let seasonal a key provide seen overview turn the I more quick call of Before trends. months the revised year, Roughly demand normalize patterns over into across we of guidance industry

alternatives any in historical strong is normal finding of remains demand resort-oriented and leisure highly While cruises a context, urban abroad. last in markets, year’s compressed demand portion

broadly while and San continue Francisco, And soft San Jose to several Minneapolis. to urban trends, typically most demand portfolio continue recover, markets our markets within notably experience

maintaining adjusted full RevPAR growth the our range the for midpoint points by midpoint low EBITDAre guidance approximately year being by after by of is reduced million. X%. are activity We adjusted our basis EBITDA reduced approximately range while end guidance X% second our quarter $X reducing adjusting to The transaction that XXX of

operating easier last year we assumes range to to in models guidance year’s comparisons of the a continue but market with pressure align margins. practices, half better operate labor second that Our the tight we when in current expect expense

year, high and down end end. XXX to at range our basis the full points margins expect the guidance operating approximately low at of For the flat be roughly we

With that, I’ll turn CFO, our the Conkling. call Trey over to

everyone. good morning John and Thanks,

validating experienced prior of in from Summit’s location the the transient year-over-year, business the increasing a normalization and types urban most proxy experienced weekday outsized strong XX% segments, versus last year, we In in growth with While demand. RevPAR for the strong segment, negotiated portfolio momentum urban the versus in customer, see weekday benefit all year. demand patterns further RevPAR to X% particular, a hotels increasing across continued overall urban growth urban

last Negotiated by year. within to room resort was which airport this a increased second contribution our assets, was XX% particularly growth and growth, versus quarter, XX%, Group RevPAR respectively. also catalyst demand and during for meaningfully increasing night suburban group meaningful quarter the second XX%, X%

the small meaningfully year. in EBITDA and was recent While types, to Pro most second quarter last quarter million, leisure resort which the demand from for $XX.X from quarter, continue leisure town hotel the location second slight second our have moderated the levels. forma benefited outpace trends a increase XXXX of

expense and was Hotel due in for comparables, basis limited margin prior the the quarter-over-quarter other hotel amenities food significantly challenging the to variant. COVID of XXXX the beverage of contracted to XX.X%. outlets driven XXX portfolio by points contraction forma pro EBITDA year The impact half and Omicron given margin by first were

premiums to in margin. across are EBITDA the all outlets headwind In increased basis Today, operating hotels. insurance hotel incremental XXX over open resulting amenities quarter, and in nearly XX with our addition, point XX% an we

than count labor count the of expect approximately run that reflect our XXXX, second stabilized first been in FTE at rate. minimal have and quarter over was end last we the current period While the X% the FTE same half year, increases a of levels higher

than on XX% XX% margins in from EBITDA XXXX. stabilized points sequentially operating more Second represented quarter higher levels staffing XXX first and FTEs basis RevPAR, quarter nominal more model versus to reduction today’s the expanded

we to comparable more look second of staffing levels like-for-like year, half and quarter we prior given comparison of and in expense fourth As the the XXXX, amenity a third versus offerings expect XXXX.

of than average XXXX providing the in more half XXXX. second half of time, Since context, FTE of second a XXXX less favorable over for year. increased to have the increased of XX% half half the year-over-year that the levels staffing For first comparison expense this first our count X% from

contribution during outperformance transaction the saw relative venture owned quarter particular, NCI the to meaningful well of activity. relative compared overall $XX.X which of hotel the quarter million in EBITDA quarter the was adjusted million, for year-over-year, flat compared was attributable a the to decrease forma $X.X EBITDA X.X% XXXX, the decline In pro was portfolio our as the net although second portfolios. joint wholly Adjusted to as EBITDA portfolio,

quarter FFO share million Second to or share, $XX.X per of quarter compared $XX.X or million adjusted diluted second per was $X.XX $X.XX XXXX. the diluted in

$XX quarter, a From capital basis. approximately portfolio in basis consolidated standpoint, $XX million second a we expenditure rata on our on pro million in and a the approximately invested

totals the Dallas, second Suites, For for our the Cherry rata pro $XX quarter year, renovations hotels Suites Denver. Hilton X comprehensive and was CapEx Inn, on CapEx New Suites, ongoing Staybridge Metairie, basis Hyatt approximately at Place spend Orleans SpringHill in Tucson Creek, Downtown, our a by Embassy million. Courtyard Garden now Milpitas, driven

X.X% XX to related adjusted revenue an additional in adjusting hotel and net displacement, revenue, million XXX.X%. the basis for RevPAR points RevPAR displacement basis million points million renovation $X second renovation quarter Second approximately XXX in $X.X quarter additional $X to increased to index was When increased in growth an and EBITDA. EBITDA

Hyatt’s the of We cadence benefit example typical more our An renovation of of benefits the execute is in our evident pandemic. for ability has the activity, recent Place are initial Renovation into settled Orlando recently clearly Studios, to the award. won which first the which our since Year Hyatt – time a Universal meaningful projects seeing team’s renovation Best

In renovation time in than same completed, the period. XXX%, since averaged of the month achieved the RevPAR the XXXX hotel XX than a the for more hotel was percentage index has higher points

and drive relative profitability portfolio ensure to to our market drive continue the share, our the growth. renovations we portfolio quality transformational and across expect of positions the ongoing and future We age to company

of Jon venture. the Nordic including the Scottsdale acquisition previously North our and the highlighted the sale GIC our pack transaction Steamboat the Residence through wholly of Lodge owned Inn activity, joint X and

this estimate revenue reduces $X $X.X and EBITDA approximately million and transaction XXXX, respectively. For million, by adjusted we activity

share Scottsdale of requirements. be estimated should asset near-term remainder the with to were capital us going minimal Inn assets sale with proceeds than of $XX million noted The that North, from allowed and the pack both the rata to funded hand. sale into the the proceeds Lodge four-pack CapEx from sale Nordic and near-term acquisition Steamboat X It pro on the properties, defer cash of our of Residence of the more proceeds high-quality reinvested the net

Turning to the balance sheet.

an liquidity robust of overall positioned, July interest risk position of rate XX% March our $XXX at including effective over current rata share approximately debt remains interest sheet the perspective, Our is interest fixed, X.X% that an of rata became average balance million. rate management X, well swaps From XXXX. of pro our rate inclusive pro and

as company’s consists of And fixed the than a we a unsecured facility, our the the $XXX is facility fixed million $XXX just loan. increased a revolving successfully to average refinancing $XXX including fully of June at XX% date June, to which extended length The When result, preferred blended over unsecured the is credit million credit rate and senior balance XXXX. completed approximately million maturity maturity credit coupon a our securities, years. more X sheet senior term X%. senior of unsecured facility of In

For we have accounting fourth a the quarter as for when the balance no all sheet available maturities options. XXXX, extension whole, debt of until

Directors corporate time, for an capital room liquidity quarterly continues per prudent shareholders, operating increases approximately assuming returning opportunities. $X.XX balance over dividend an material appropriate continues between to maintaining dividend a per future share, which and common represents to the payout dividend for declared prioritize of leaving changes On to share a a represent growth our to Board of environment. XX, ratio, company of The no current striking leverage dividend or reducing July $X.XX yield The X%. AFFO annualized of

on our include not as As referenced our normalization This non-operational as across provided key of results we the as evening, Based we second last Jon certain well or our the additional any demand items. revising future year quarter markets guidance previously in highlighted metrics transaction certain reflects release does outlook outlook, XXXX press our full updated as ranges metrics. activity. are full operational for ranges operating and company’s capital guidance well year previously

been Our million range full an adjusted million to year range and EBITDA range to to translates of of FFO revised has $X.XX X%. growth $XXX RevPAR X% range to an to guidance per RevPAR $XXX This adjusted full AFFO respectively. million, range revised and transaction of adjusted year to this reduction $X full EBITDA the million quarter in year Included share. is account estimate which activity, and impact we second of for a $X.X to $X.XX

RevPAR the second year growth of in full XXXX. of revised X.X% implies Our X.X% RevPAR half guidance to

half the approximately of hotel Assuming the growth aforementioned RevPAR points midpoint second range, the basis XXX half EBITDA XXXX. margin second contract versus of will

interest $XX rata We Series pro dividends million and million pro Z to F expect to the to excluding $XX $XX to to $XX.X distributions be costs Series million, amortization million. year $X.X approximately to preferred financing $XX Series range and E full rata expense, be capital of million. expenditures from preferred deferred be million

XX% now given size fee GIC covers the mentioned, Summit the the nearly corporate to G&A expense. payable As previously annual increased of joint income of venture, cash

any may distributions, Summit earn year. promote the during Excluding

the we questions. call will open to your with And that,

first of come [Operator question Wurschmidt KeyBanc will Markets. our Instructions] Austin from Capital And

Your is open. line

basis how the venture Great. joint the prior Guys, Thanks decrease your versus the your RevPAR breakout versus And function portfolio of versus morning. ADR decrease expectation? and of RevPAR good outperforming. assets in change, a in point within then kind and owned that GIC does is guidance between decrease gap across occupancy the a wholly between the adjusted performance growth EBITDA are XXX

driven range, as Austin, RevPAR wholly the prepared owned reduction up and is little alluded the portfolio, reduction split which by the is the you in adjusted midpoint quarter, in point would as the is portfolio, than the – is second to relative higher percentage And NCI portfolio. the reduction ADR. we it which I the correctly. XXX fairly strength evenly reduction a the Hey. of it’s in the range a of EBITDA by remarks, performance in The in between Good morning say offset the occupancy the XX% GIC particularly Jon. which softer was said basis yes,

you was far share then to pace to in detail you June, what the RevPAR performance, it And which July back forward Can half reacceleration the it. line in mid-X% some think just roughly Got or in the the was I you comfortable guidance? get gets range. said as as with mid-X% with around implied

Yes.

You correct. are We June. July right X.X%, – around line finished essentially with in

Some of slow of July month that holiday. affected around was start by a Xth to the the

July. performed half July of half front back of than the the So, better much

Our X%. XX%. pace up pace for up is Today, is for our August September about

at is this reasonable us it when look we quarter in on really range And is normalized midpoint of second the So, numbers positive. the the we pickup have some comfort next range. half the back which a still a gives mid-X.X% and month look year we books for that is saw level more very the of range, of our kind pickup, of that that the

our [Operator next come question of Baird. Bellisario from Instructions] And Michael will

line is Your open.

morning everyone. Good Thanks.

I sort that be how follow-up on reduction Just implied flow seeing the versus any top and just of Maybe line and business? question, of pressures in might first expense decremental guidance just half incremental to the line wanted outlook. normal the on through the bottom you the to is really a second much

top driven, Yes. Mike. line It’s predominantly

the started environment the year. back a of be were the year the than much the we to is for half assumption stabilized And second first in happen half trend Our see that quarter. in in expense to more we of even

third room about expenses so the June, quarter. quarter less X% up of can to in start basis. Our on than the occupied expense second you normalization see and grew environment per a X% in were the in the They

end XX% but count end X% it where was third essentially last over count our up second is the versus quarter June. the was the in And of the second at FTE FTE quarter, flat Our quarter at total year. of of in the up about

well-known still there So, some are headwinds.

environment, are costs prepared mentioned remarks, operating are insurance still as our up labor in tight We in we a significantly.

Our insurance last have some of year-over-year, some tax is had fourth costs rebates. about significant up the we quarter comparisons of difficult property and baked year we got are XX% that in, where to some

driving the the year, EBITDA. is forecasting portion that’s margin contraction about points for balance we a basis down of that in So, in the the of midpoint are XXX which

half our actualize roughly at Our the second operating assumption. we our the revenue of thought essentially would are where that’s flat we midpoint margins lower GOP of adjusted for the year, in consistent expenses, the with range

a to driven pressure on answer long is the the of So, say, most decrease line. by top

for Got it. question overall just when then maybe capital you potential balance on use to focus how allocation, all? with second capital do make Thanks reducing of then a Thanks. capital lot. potential mean And start might the buybacks on stock and have maybe at price, that the sense, if your at business? leverage of you do uses And I other

it’s to the Yes. certainly is Look, is the something value undervalued believe We consideration. the portfolio. always certainly a stock that intrinsic relative of

you that want leverage. corporate do it correctly. make managing alluded with we to our We to sure think I balance

bias think allocation asset sales optionality have capital us the on some to a towards give lower we in I front. manage little and to leverage near future try the

that based there your where midpoint then just Got one on of Trey, leverage just it. does And year-end for follow-up numbers? put net guidance,

Yes.

On puts the it us high-Xs. today, numbers the in probably

probably guidance in the it had I on before, mid-Xs. think was based we the

that X.X refinancing of did What the a you the leverage a say, including a XX fair Mike, of credit about perspective. facility. we months, moved we would from the amount know, activity probably is over of probably X.X, as last turn So, I

gives volatile and to that what the while bit don’t near-term of kind a leverage out us right some higher, there comfort until risk the markets. have is capital refinancing ability so a end the the navigate obviously now little that market does in of any debt And ‘XX feel fact we

Thanks.

Our next Raymond question from Instructions] will James. come Crow [Operator Bill of

open. is line Your

how that if Portland, your Thanks. like Minneapolis is which Good same boat last Francisco few if are you all you talked and long-term, thinking in over morning. it is, about and Jose, impairment not Seattle Jon, mentioned the maybe I sort suffering positioning about and think years, is San some we of permanent there? San markets

really assets. fronts. our Yes. And year on a Minneapolis two earlier did variety has been this Minneapolis of market of challenged a sell we

a They very, from a combination around We have incident. Floyd remaining. the challenged assets of are in lot very the It’s a very, very assets. good George both of downtown. unfortunately been is It’s There market. riots are recovering two the little market. never both BT They really

around more that have to Minneapolis. it’s we road back think tried in never. for it do is, market. leisure-based I a so reorient longer And say to hate But have demand we to

that. is of those Our a many that in see you recover is out concerns think those first start that think a that it’s hope of reflect to of pre-pandemic. commonality We longer closer is And we life markets But bit capital I is our safety little decisions traction. that mentioned foremost, do road there addressed you step to There back. in something will think of hope I those first and hold kind markets. to can a some that allocation was real getting back the there Minneapolis it and what

at are And more further, here enjoying turns a I market little new now. so Texas, of and performance has are coming this a a in North has tough strong it. new you it’s supply, tailwind in into particular, we also But year how been lot the a the supply next about whether quarter. thinking which comps just than am wondering headwind with really of Shifting that the

Look, for a the market. Yes. Houston us. been bullish Dallas are market we on has really DFW tremendous

area geographic I really thing overall look the to point one large DFW you that of out have how mindful at in statistics of the supply we be think Metroplex, you encompasses. when always a

at really exposure we submarkets. in DFW, in so look look it at of we pockets when And our

We have got downtown exposure.

Frisco. in are We

in Grapevine. We are

growth, independently are of Fort team we we to And hotels are we done think other. of supply-demand way through this I brands and obviously, benefits realize work tremendous submarkets. really of all those do can there cross-sell. has have multiple having Arlington. really operate in that operations multiple place in Worth. don’t cluster in dynamics the in each I the the are in each great that start seen different year And We by of they and put benefit And think and with the we sales to which market. are the large,

of those certainly I and that in even year large, think still we outlook very, even by as for as that about supply markets. mindful go are transition portion or But the next we very we of feel business good portfolio we So, into the into next year.

One the Alright. so. me, were one final out the there, over That’s months helpful. six for busy just obviously transaction you environment last or

from We you acquisition, towards are opposed reducing am But point levels are reinvesting. what biased you of there leverage wondering of view. kind disposition your seeing out as I to an

Yes, been mean I active, a historically. still pretty have less transaction active Bill. we than bit we sure. a slow have environment, been little certainly It’s

tried to and owned which we profiles, both were that have that really to really have We be think had assets. yield adjacent They were compelling really assets, existing acquired attractive those of strategic I assets. two around to assets assets current upside the

the part markets can are still I a find that lenders assets think key, liquid local market up we of owner RevPAR, per are but I asset towards think that improving. probably with can of do do The with choppy. think type We partner to, manage we the we yield time. leverage have transaction financing to lower most this part they financing. operators local lower selling kind still you over as bias in as view alluded lower to lower of come

are where in get seeing market at five they months, months ago. compressed have spreads We done certainly the four were financings from that months three or

environment. it’s side. a some still financing encouraging on the slow So, transaction are there signs But fairly

thoughtful on where opportunistic And can assets. be to find we so we sell opportunities are trying and to

for Great. me. it That’s Thanks.

Thanks Bill.

[Operator Asad Instructions] from will Bank of next Dany America. And of question our coming be

line Your Dany. open, is

Hey everybody. morning guys. Good Hi.

is RevPAR Just my in the of hold growth expense leverage we the half point how year? this So, forward? would going question margins much what’s need back to like

a Yes, great question. it’s

that. kind still by think tight is breakeven just to for is there have are margins. higher of insurance part expenses a X.X% growth and we of a breakeven that always at X% historically, think I the driven that than I It’s as looked little market. labor higher RevPAR Again,

So, midpoint half of our growth. of guidance year RevPAR the assumes range the X.X% back

on on We those half, We at XXX points basis are property X.X% taxes. roughly somewhat see GOP back breakeven the by about RevPAR driven levels. of growth expect contraction do to margin in

to think the the level for market. true the the or half expense so of or X% even what in levels, just what points or level XXX I the breakeven would mid to probably labor probably seeing basis are growth RevPAR So, at of That’s GOP in than stabilized we labor account environment. operating normalized, the RevPAR we in back expect higher high-Xs in kind range a

last year. half I your the Got compared QX to interesting for of And how follow-up, shake But that to out just where back yes, it. end then, guess to the expect wage has would so a been as you year? being flat at QX you costs, point And brought like an point about this about of trending? FTEs of the

of expectation need in wage versus digits on expense be of or the growth. digits. for higher-single moderation saw the this Yes. to increases the us room more particular, wage kind half some moderate. wage lower-single per to We the first the of June, occupied front. growth stabilized the in in think get are kind pretty we breakeven on has to to in second but And year, in growth growth continue the in been We margins that’s much see quarter to a We

are we our not It’s think primary I there. concern. probably

struggling We with are markets. availability still of labor in certain

It’s bit, but it’s a still did pre-COVID. labor down still Our little is what utilization running it of running. contract Xx

money more things like that. over spending training still items are We on time would items, on than we and turnover-related like like

made before, there the was market. still moderated as to the in It’s a through but progress improvements has it So, we little are wage year. better labor really than growth be probably

Got it. Thank you.

And I remarks. closing to President for I’m questions. the and back turn showing no Stanner, further like Jon would CEO, to now conference

of many of and joining thank for you at our We seeing look after quarter. enjoy again Yes. Thank hope today. to you you conferences the third and you rest Thank summer. with speaking We you. us you all our upcoming all forward your

today’s for participating. call. concludes this And Thank conference you

disconnect. may now You