EPR Properties (NYSE:EPR) Q2 2023 Earnings Call Transcript

EPR Properties (NYSE:EPR) Q2 2023 Earnings Call Transcript August 3, 2023

Operator: Good day, and thank you for standing by. Welcome to the Q2 2023 EPR Properties Conference Call. At this time, all participants are in a listen-only mode. After the speakers’ presentation there will be a question-and-answer session. [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, Brian Moriarty, Vice President of Corporate Communications. Please go ahead.

Brian Moriarty: Okay, great. Thanks for joining us today for our second quarter 2023 earnings call and webcast. Participants on today’s call are Greg Silvers, Chairman and CEO; Greg Zimmerman, Executive Vice President and CIO; and Mark Peterson, Executive Vice President and CFO. We’ll start the call by informing you that this call may include forward-looking statements as defined in the Private Securities Litigation Act of 1995, identified by such words as will be intend, continue, believe, may, expect, hope, anticipate or other comparable terms. The company’s actual financial condition and the results of operations may vary materially from those contemplated by such forward-looking statements. Discussion of those factors that could cause results to differ materially from those forward-looking statements are contained in the company’s SEC filings, including the company’s reports on Form 10-K and 10-Q.

Additionally, this call will contain references to certain non-GAAP measures, which we believe are useful in evaluating the company’s performance. A reconciliation of these measures to the most directly comparable GAAP measures are included in today’s earnings release and supplemental information furnished to the SEC under Form 8-K. If you wish to follow along, today’s earnings release, supplemental and earnings call presentation are all available on the Investor Center page of the company’s website www.eprkc.com. Now, I’ll turn the call over to Greg Silvers.

Greg Silvers: Thank you, Brian. Good morning, everyone, and thank you for joining us on today’s second quarter 2023 earnings call and webcast. During the quarter, our top line revenue grew approximately 8% and our FFO as adjusted per share grew approximately 9% versus the same quarter prior year. These results were driven by both a continued strong recovery in our experiential properties and consistent deferral collections. As we announced on June 28, finalizing the Regal restructuring agreement was a significant step in strengthening our theater portfolio and enhancing our overall company profile. The agreement provides us with significantly — with a significantly stronger tenant, a long term master lease and a percentage rent component allowing us to participate in a recovering box office.

This resolution, we also have more visibility into our earnings outlook and we’re pleased to provide earnings guidance for 2023. Also, as recently announced, Southern Theatres was acquired by Santikos Theaters. Southern was our fourth largest theater tenant and has part of the acquisition, we repaid the remaining deferred rent. The strengthens action demonstrates renewed confidence in theatrical exhibition and strengthens our theater tenant base. Over the last few weeks, we’ve witnessed the power of theater exhibition and the validation of studios Apple and Amazon to commit to theatrical exhibition as the primary distribution platform for movie content. The combination of Barbie and Oppenheimer has become a societal event, which has transcended consumer demographics.

Separately a low budget sound of frequent blue away box office expectations generating over $150 million year-to-date. This type of outperformance is hard to predict for any single film yet overtime it is proven to be a consistent occurrence for select films. Through July 31st, box office is up 20% versus 2022 and is currently tracking towards $9 billion for 2023. The writer and actor strikes present a fluid dynamic and may impact box office, depending on the length of time to resolution. In a bit of a positive sign, it has been reported that the writers guild in the studios have agreed to meet this Friday, which they have not done for three months. Regardless of this near-term dynamic, any impact is anticipated to be short-term as the participants understand that a robust theatrical business is a necessary part of the landscape, providing the primary path to economic viability for movies.

Shifting to capital spending, we’ve completed approximately $100 million of investments to-date and are selectively growing our experiential portfolio, while being prudent in our capital allocation. Additionally, we’ve committed to approximately $224 million of additional experiential development and redevelopment projects over the next two years for which we already have the necessary capital. Now I’ll turn it over to Greg Zimmerman for more details on the quarter.

Greg Zimmerman: Thanks, Greg. At the end of the quarter, our total investments were approximately $6.7 billion with 363 properties in service, and 97% leased. During the quarter, our investment spending was $32.2 million, bringing our total investment spending for the first-half of the year to $98.7 million, 100% of the spending was in our experiential portfolio and included continued funding for experiential built-to-suit development projects and redevelopment projects commenced in 2022. Our experiential portfolio comprises 290 properties with 51 operators and accounts for 92% of our total investments or approximately $6.2 billion. And at the end of the quarter was 98% occupied. Our education portfolio comprises 73 properties with eight operators and at the end of the quarter was 93% occupied.

All of the vacancy and education is from the properties held for sale at the end of the quarter. Turning to coverage. The most recent data provided is based on a March trailing 12-month period. Overall portfolio coverage for the trailing 12-months continues to be strong at 2 times. Trailing 12-month cover to theatres is 1.3 times with box office for the 12-months ending March 31st at $7.7 billion. For reference, trailing 12-month box office through June 30th, is $8.1 billion. Trailing 12-month coverage for the non-theater portion of our portfolio is 2.7 times. Now I’ll update you on the operating status of our tenants. Regal completed its emergence from bankruptcy on July 31st, which is the effective date of the master lease and all ancillary documents.

We received July rent and deferred rent from Regal. Mark will discuss amounts relating to our claims in conjunction with the completion of the bankruptcy case. We’re pleased to report that the five surrendered Regal theatres operating through management agreements are open. Based on our experience with operating theaters and our strong relationships with Cinemark and Phoenix, we were able to open the theatres less than one week after Regal turned the keys back to us. Cinemark is operating theatres in Huston Colombia, Maryland, Orange County and Suburban Chicago, and Phoenix’s operating a theater in Suburban Louisville. On July 17th, Santikos Theaters acquired VSS-Southern Theatres through an asset purchase agreement. With 10 theaters, Southern was our fourth largest theater holding.

Santikos is owned by the San Antonio area foundation, one of the nation’s premier community foundations. The combined Santikos entity operates 27 highly amenitized theaters in eight Southeastern States, making it the eighth largest theater circuit in North America. In anticipation of the Santikos transaction, we entered into a lease termination agreement on a ground lease theater property in New Iberia, Louisiana, in which we no longer have an interest. There was no change to our overall economics as a result of the termination. And in conjunction with the transaction, Southern paid its entire remaining deferred rent of $11.6 million, which will be recognized as rental revenue in the third quarter of 2023. The second quarter was a continuation of box office recovery.

Box officer for the first two quarters was $4.4 billion, a 20% increase over the first-half of 2022. Q2 total box office was $2.7 billion, a 15.5% increase over Q2 2022, led by the Super Mario Brothers movie, Spider Man Across the Spider Verse, Guardians of the Galaxy Volume 3 and the Little Mermaid. Seven films grossed over $60 million and three grossed over $100 million. Q3 is off to a robust start led by the record shattering performance of Barbie and Oppenheimer. Both of which continued to defy all expectations, along with the unexpected hit Sound of Freedom, which has generated approximately $150 million to-date. Fueled by Barbenheimer, July box office gross exceeded July 2019 box office gross. Through July 31st, 19 titles have grossed over $100 million in 2023 and year-to-date box office gross stands at $5.7 billion, a 20% increase over the same period in 2022.

Our high quality theater portfolio continues to outperform the industry. Barbie grossed $162 million in its opening three days, an additional $26 million on each of Monday and Tuesday, the highest grossing Monday and Tuesday ever for Warner Brothers and $93 million on its second weekend, also a Warner Brothers record. To-date, Barbie has grossed $366 million. Oppenheimer grossed over $82 million on its opening weekend, $46 million on the second weekend, and $181 million to-date. This is the first time of three day weekend had a film opened to a $100 million, while another opened to $50 million. Barbenheimer weekend was the highest grossing three day weekend since the pandemic and the fourth biggest weekend ever. Importantly, this box office outperformance was not fueled by franchises or comic book characters, but by two unique universally well reviewed, standalone movies, one about an iconic Mattel Toy, and the other, and historically accurate, R rated three hour movie about the development of the atom bomb.

Barbie and Oppenheimer demonstrated that content can come from anywhere and be compelling in the hands of a good storyteller. Each reached broad demographics and together they created a cultural phenomenon reminding everyone of the power of good storytelling on the big screen. We are optimistic about the remainder of the year with Teenage Mutant Ninja Turtles, Mutant Mayhem, which opened this week. Killers of the Flower Moon, Hunger Games: The Ballad of Songbirds and Snakes, Napoleon and Aquaman and the Lost Kingdom rounding out the rest of the year. Finally, there is a lot of press coverage of the writers and screen actors strikes. As Greg mentioned, it’s been reported the studios and writers are scheduled to meet for the first time in three months tomorrow.

Beyond that, we don’t have any information on the timing for resolution of either strike, but for now, there’s been limited movement of major titles into 2024. Turning now to an update on our other major customer groups. We continue to see good results and ongoing consumer demand across all segments of our drive to value oriented destinations. Across the board, operators are managing increased operating expenses and while attendance remain strong, in some properties, we are seeing an anticipated pullback from post — peak post-pandemic performance. Despite these headwinds, many of our operators are continuing to grow revenue and EBITDARM. Our Eaton play assets continued their strong post-pandemic performance with portfolio revenue for Q2, up 9% and EBITDARM, up 2% over Q2, 2022.

Our well located Topgolf in King of Prussia, Pennsylvania opened with strong numbers at the end of June. All our theme parks and water parks are now opened for the summer season. Our operator Valcartier and Calypso waterpark is producing strong operating results as they complete one year of operating both properties. Attendants at City Museum in St. Louis is up 8% year-over-year, driving increased revenue and EBITDARM. Construction of the indoor water park at the Bavarian Inn in Frankenmuth, Michigan is about 20% complete and on schedule for a summer 2024 opening. Construction is underway on our Titanic Custard and Chocolate shop in Pigeon Forge with openings scheduled by the end of this year. Across our fitness offerings, we’re seeing continued growth in membership revenue as the post-pandemic emphasis on fitness continues.

Construction is underway for both the expansion of the Springs Resort and Pagosa Springs and the development of our Murrieta, California conference center into a new natural Hot Springs Resort. Murrieta Springs is scheduled to open in early 2024. Construction on improvements to Gravity House Steamboat Springs in Aspen locations is scheduled to commence this month. Except for NorthStar, where heavy late season snow kept the mountain open for skiing until the end of April. Our ski resorts were closed for most of Q2. Year-over-year skier visits were up 27% across our portfolio, driven by strong season pass sales. Alyeska Resort will join the Ikon Pass program for the coming ski season, which should drive increased skier visits. Our Margaritaville Hotel Nashville, approximate all of Nashville’s famous downtown destinations continues its upward trajectory in revenue, EBITDARM and occupancy.

This weekend, Nashville will host a Big Machine Music City Grand Prix with the IndyCar series racing on the streets of Downtown Nashville. At both the Beachcomber and Bellwether Resorts in St. Petersburg, we continue to see increases in occupancy and operating revenue, while ADR is normalizing from post-pandemic highs. Revenue and EBITDARM increased year-over-year in Q2 for all our overall RV park portfolio. Our education portfolio continues to perform well with year-over-year increases through March 31st across the portfolio of 17% in revenue and 25% in EBITDARM. Attendance is holding steady at very high levels. At the end of the quarter, we entered into a lease termination for a private school in Columbus, Ohio as part of a larger settlement arising from a partial casualty.

We received a lease termination fee of $900,000 and are marketing the property for sale. Turning to a quick update on capital recycling. During the quarter, we sold one of the five Kinder Care locations for which the lease was terminated for net proceeds of $4.3 million and a record — and recorded a loss of $575,000. After the close of the quarter, we sold another two Kinder care locations for combined net proceeds of $13.8 million and a gain of $1.5 million. All of these will be operated as schools. We are continuing to market the remaining two. Also, after the end of the quarter, we sold a former Cinemex theater in Hialeah, Florida, for a non-theater use for net proceeds of $9 million and a gain of $747,000. Year-to-date, we have generated approximately $31 million in proceeds from dispositions.

In mid-July, we began publicly marketing the 11 surrender Regal theatres we plan to sell. It’s early days, but we’re pleased with the interest and we’ll update you on our progress on future calls. In Q2, investment spending was $32.2 million, bringing our total investment spending for the first six months of 2023 to $98.7 million. In addition to the continued funding of experiential development and redevelopment projects commenced in 2022, we made our first investment in the Surf space, with mortgage financing for the development of Good Surf’s first location in Dallas. Good Surf is the first standalone standing wave concept developed in an Urban U.S. market. It combines surfing, food and beverage, and outdoor entertainment into a unique experience.

We have spent a lot of time understanding the Surf space and we’re excited to be part of Good Surf’s first project. We’re maintaining our investment spending guidance for funds to be deployed in 2023 in a range of $200 million to $300 million. As of the end of Q2, we have committed an additional approximately $224 million in experiential development and redevelopment projects, which we expect to fund over the next two years without the need to raise additional capital. We anticipate approximately $105 million of that $224 million, we deployed over the remainder of 2023, and that is the amount included at the midpoint of our 2023 guidance range. Cap rates continue to be in the 8% range. In most of our experiential categories, we are seeing high quality opportunities for both acquisition and build-to-suit redevelopment and expansion.

We continue to have a good pipeline with new and existing customers and concepts. Likewise, we continue to exercise discipline, reducing our near-term investment spending and funding the investments primarily from cash on hand, cash from operations, disposition proceeds, and borrowings under our unsecured revolving credit facility. As we have said for the past several quarters, we are limited by the recovery of our cost of capital not by opportunity. I now turn it over to Mark for a discussion of the financials.

Mark Peterson: Thank you, Greg. Today, I will discuss our financial performance for the second quarter, provide an update on our balance sheet and close with providing 2023 earnings guidance. We had another strong quarter of results with FFO as adjusted of $1.28 per share versus $1.17 in the prior year, up 9% and AFFO $1.31 per share, compared to $1.23 in the prior year, up 7%. Now moving to the key variances by line. Total revenue for the quarter was $172.9 million versus $160.4 million in the prior year. This increase was due to improved collections from cash basis customers, the effective acquisitions and developments completed over the past year, as well as scheduled rent increases. During the quarter, we collected a total of $7.8 million of deferral payments from customers, of which $7.3 million was from those on cash basis accounting that was recognized as additional revenue.

Per court order we also received an additional stub payment from Regal related to September 2022 minimum rent of approximately $0.7 million that was recognized as additional revenue this quarter. I will discuss how we expect cash basis deferrals and Regal’s bankruptcy settlement on July 31st. The impact — the remainder of this year in 2024 when I go over guidance. Percentage rents for the quarter increased to $2.1 million versus $0.5 million in the prior year, primarily due to improved performance at one ski property. On the expense side, G&A expense for the quarter increased to $15.2 million versus $12.7 million in the prior year, due primarily to higher professional fees, including those related to the Regal resolution, as well as higher payroll costs, including non-cash, cash share based compensation expense.

During the quarter, we recognized an impairment charge of $43.8 million, primarily related to eight of the properties surrendered by Regal based on third-party appraisals. This charge is excluded from FFO as adjusted. Interest expense net for the quarter decreased by $1.7 million, compared to prior year due to an increase in interest income on short-term investments and an increase in capitalized interest on projects under development. Lastly FFOs adjusted from joint ventures for the quarter was $1.5 million versus $3.4 million in the prior year. [Technical Difficulty] decrease was due primarily to non-recurring government incentive received in the prior year at our experiential lodging properties in St. Petersburg, Florida, as well as higher interest expense resulting from the refinancing of these properties last year.

Turning to the next slide, I’ll review some of the company’s key credit ratios. As you can see, our coverage ratios continue to be strong with fixed charge coverage at 3.5 times and both interest and debt service coverage ratios at 4.1 times. Our net debt to adjusted EBITDAre was 5 times and our net debt to gross assets was 39% on a book basis at June 30. Lastly, our common dividend continues to be very well covered with an FFP payout ratio for the second quarter of only 63%. Now let’s move to our balance sheet, which is in great shape. At quarter end, we had consolidated debt of $2.8 billion, all of which is either fixed rate debt or debt that has been fixed through interest rate swaps with a blended coupon of approximately 4.3%. Additionally, our weighted average consolidated debt maturity is under five-years.

With no scheduled debt maturities in 2023 and only $136.6 million due in 2024. We had nearly $100 million of cash on hand at quarter end and no balance drawn on our $1 billion revolver. The Regal resolution behind us, we are pleased to provide 2023 FFOs adjusted per share guidance of $5.05 to $5.15, representing an increase of approximately 9% at the midpoint of — versus 2022. As we have discussed previously, given our cost of capital and the current inflationary environment, we have consciously decided to limit our near-term investment spending and fund these investments primarily with cash on hand and operating cash flow, as well as disposition proceeds and borrowings under our unsecured revolving credit facility. Accordingly, we are confirming our 2023 investment spending guidance range of $200 million to $300 million and we do not anticipate the need to raise additional capital to fund these amounts.

Disposition proceeds guidance for 2023 is $31 million to $41 million and we have increased guidance for percentage rent by $1.5 million at the midpoint, primarily due to better performance of the ski property I discussed previously. Note that is in prior years, percentage rent is heavily weighted to the fourth quarter. Also note as discussed in our recent call that none of the percentage rent expected for 2023 relates to the new Regal Master lease, which is based on lease year and is expected to be recognized in 2024. Additionally, we are raising G&A expense guidance by $1.5 million at the midpoint, due to higher professional fees, including those related to the Regal resolution and to a lesser extent, higher payroll costs, primarily due to incentive compensation.

I also thought it’d be helpful to summarize our expectations for deferral collections and certain other amounts to be recognized as revenue in 2023 and included in our guidance, as well as our expectations for these amounts for 2024. As you can see on the slide, we expect to recognize a total of approximately $35.7 million in 2023 for cash basis deferral collections, Regal stub rent, Regal prepetition related to the master lease properties for the period from September 1 to September 6, 2022 and the lease termination fee for an education tenant that Greg described. Most of the $19.3 million estimated for the second-half of 2023 is expected to be recognized as revenue in the third quarter, due primarily to the collection of the entire remaining deferred rent from Southern theatres of $11.6 million in connection with the sale to Santikos, as well as those amounts related to Regal’s bankruptcy resolution.

While additional amounts may be received not shown on the slide related to our rejection damages with Regal that are treated as an unsecured claim. We expect any such amounts will be nominal. With Regal’s bankruptcy resolution and the full deferral repayment by Southern, the deferred rent receivable not on our books, excluding the amount held in advance related to Regal, is reduced to approximately $12.9 million, of this amount a $11.5 million relates to one cash basis attraction tenant who’s repayment timing is based on an earnings threshold, which is not expected to be achieved in 2023. The remaining amount of approximately $1.4 million relates to two cash basis tenants that are paying according to agreed upon schedules through 2024 and thus the amounts to be recognized in the fourth quarter and next year for these tenants are expected to be nominal as shown on the slide.

Finally, I want to remind everyone given that Regal’s master lease was effective on July 31st. This tenant was moved to accrual basis at that time. As discussed on our previous call, we expect the five theaters surrendered by Regal that we will operate will break even over the remainder of 2023, and this is what is included in the midpoint of guidance. Furthermore, we have also included in guidance the anticipated carrying costs for the 11 surrendered theatres that we intend to sell over time, which will be reflected in property operating expense. Guidance details can be found on page 24 of our supplemental. Now with that, I’ll turn it back over to Greg for his closing remarks.

Greg Silvers: Thank you, Mark. As I stated in my opening comments, we are pleased to have delivered a favorable Regal outcome, which combined with the Santikos acquisition, means that the three of our top four cinema tenets now have very high quality balance sheets with minimal risk. Given these improvements in credit, the continued success of our non-cinema portfolio and the demonstrated consumer preference for out-of-home entertainment, we continue to believe that EPR offers a very attractive value for investors with a well-covered dividend and an opportunity for multiple expansion. With that, why don’t I open it up for questions. Theresa?

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Q&A Session

Operator: Thank you. We will now conduct the question-and-answer session. [Operator Instructions] Our first question comes from Joshua Dennerlein of BofA. Your line is open.

Joshua Dennerlein: Yes. Hey, everyone. Good morning.

Greg Silvers: Good morning, Josh.

Joshua Dennerlein: I just wanted to ask about the writer strike. At what point would the strikes start to impact your portfolio or the movies, being released? I’m just trying to curious if there’s any risk to 2023 box office within the strike and certain restrictions around the accessibility to market during the strike?

Greg Silvers: Josh, what we know right now is there has been limited title movements yet. Again, it’s — it could be a potential if we see, I mean, the product that we’ve seen for the balance is generally done for ‘23, but it really begins with studios if they’re going to move product either one to be supported promotionally by the actors or two, if they have any last minute kind of reshoots. So it’s really in the purview of the studios. So we don’t know right now. I think, the only what we would call bigger title. We’ve had one move that we’re aware of. Everything else right now is standing path. Hopefully, as we’ve talked about, as there is beginning to be some discussions that, that will prove very fruitful and we can quickly move to kind of resolution of this and have little to no impact. But Greg, I don’t know if you have…

Greg Zimmerman: No, I think you’ve covered it, Greg.

Joshua Dennerlein: Thanks for that. And for 2023 guides, sorry if I missed this, is there any percentage rent included in your guidance range for the back half of the year?

Greg Silvers: Yes, yes. Oh, yes for the back half of the year, yes, we said that for percentage rents for the year are going to be $12 million. And as I said, percentage rent as it has been historically is kind of heavily weighted to the fourth quarter. So we expect about 50% of it in the fourth quarter and the remainder of what — wasn’t recognized in the first six month to be in the third quarter. So yes, there’s definitely percentage rents in the back half. None related to Regal, if that was your question, those that percentage rents based on lease year and we expect that to hit next year depending on box office.

Joshua Dennerlein: Okay. Perfect. Yes, that was — what I was trying to get at. Appreciate it.

Greg Silvers: Thanks, Josh.

Greg Zimmerman: Thanks, Josh.

Operator: Thank you. [Technical Difficulty] question comes from Todd Thomas with KeyBanc Capital Markets. Your line is open. Mr. Thomas, your line is open.

Todd Thomas: Yes, hi. Sorry about that. Just first question, so appreciate the detail in the earnings slide around the deferred rent payments and other revenue collections in the third quarter and really through 2024. So just to be clear, so after the incremental $11 million you expect to see in 3Q, or $0.14, the decrease in 4Q versus 3Q that you’re anticipating that gets us to a relatively clean run rate in the fourth quarter as we think about 2024? Is that the right way to think about it in terms of, all the non-recurring items, it’ll just leave us with a pretty clean run rate beginning in fourth quarter of this year?

Greg Silvers: Correct. We only expect about $300,000 to impact as far as deferral and these kind of out period stuff to impact the fourth quarter. I think the fourth quarter will give you a clean run rate, but remember we have some seasonal businesses and so forth and percentage rents, heavily weighted to fourth quarter. So there’s other adjustments rather than just taking it times for to do, but it is a clean number as far as deferrals and stub payments and so forth. And like I said, only a very small number expected to be recognized in Q4.

Todd Thomas: Got it. Okay, and then can you comment a little bit more on the theater sales? It sounds like there is interest from other existing theater operators. I’m just curious, if you can discuss the potential timing and how we should think about those carry costs, sort of, coming offline?

Greg Zimmerman: Sure, Todd. It’s Greg. So historically, over the last 2.5 years, we’ve sold 10 theaters, six of those were for non-theater use, four for theater use. So that kind of gives you the goalpost. We needed to wait to market these, because Regal hadn’t notified the individual theaters that they were closing and we wanted to be mindful of their employees, et cetera. So we really only started hard marketing last week, but we were out soft marketing before. I’d say of the 11, we’ve had interest of some sort in about eight. We’re already approaching labor days, so the idea of being able to get something closed this year might be difficult given the timing of real estate transactions, but I would expect we’ll start to see a cadence toward the end of this year and into next year for selling those. And again, if you look at the run rate over the last 2.5 years, we saw about three or four year.

Todd Thomas: Okay. And do the discussions that you’re having, negotiations at all. Are they impacted at all by the strikes that are ongoing right now or is that not really a consideration? And then separately on the strikes, Greg, I’m just curious, to the extent that there is a resolution here, if the strikes are extended a little bit further here, but you get a resolution. I mean, how quickly does production re-ramp and the release schedule get back on track to the extent that there are some delays here. Any sense there?

Greg Silvers: So, Todd, I’ll take the first part and then I’ll let Greg answer the second part. Actually, I would say the answer is there’s zero impact from the strike. As Greg mentioned in his remarks, the fact that Santikos was willing to buy Southern clearly shows that people are seeing the continued recovery of theatrical exhibition. And obviously that’s amplified by the just unbelievable success of Barbie and Oppenheimer, which just as I said before, record shattering. So, we actually have quite a bit of interest from theatrical exhibitors for some of these theaters.