Q2 2020 West Pharmaceutical Services Inc Earnings Call
After the speaker presentation will be a question answer session.
A question during session, you'll need to press star one on your telephone please be advised the today's conference is being recorded.
Require any further assistance. Please press star Zero I would now like the conference over to your Speaker today, Quintin Lai Vice President Investor Relations. Please go ahead Sir.
Thank you Josh.
Good morning, and welcome to West second quarter 2020 conference call.
We issued our financial results. This morning, and the release has been posted in the Investor section on the company's website located at West Pharma Dot com.
This morning, CEO Green and CFO, Bernard Birkett, well review, our financial results provide an update on our business and present, our updated outlook for the full year 2020.
There's a slide presentation that accompanies today's call and a copy of the presentation is available on the Investor section of our website.
On slide two is our safe Harbor statement statements made by management on this call and then the accompanying precipitate a presentation contain forward looking statements with the within the meaning of U.S. Federal Securities Law.
These statements are based on our beliefs and assumptions current expectations estimates and forecast the company's future results are influenced by many factors beyond the control the company and actual results could differ materially from past results as well as soon as expressed or implied in any forward looking statement made here.
Please refer to todays press release as well as any other disclosures made by the company regarding the rest to whats your this subject, including our 10-K 10-Q and AK reports.
During today's call management will make reference to non-GAAP financial measures, including organic sales growth.
Adjusted operating profit adjusted operating profit margin and adjusted diluted EPS, reconciliations and limitations of the non-GAAP financial measures to the most comparable financial results.
Third in conformity to gap.
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Now I'll turn the call over to watch CEO and President Evergreen right. Thank you go into the good morning, everyone and thank you for joining us today I.
I would like to begin by saying that I'm incredibly proud of how our team members across the globe have remained steadfast in our commitment to supply the much needed components and solutions to our customers under tough circumstances.
Our Q2 performance emphasizes the continued to resolve of our talented team members the strength of our company and the criticality of the role left plays during these unprecedented times.
We are in the business and helping our customers bring new medicines and treatments that improved the lives of patients which could be more meaningful then at times like today.
Given by our mission, we experienced another solid quarter reinforced by the REIT market led strategy to continuously deliver value for customers and the patience we jointly serve.
Moving to slide four.
The pandemic remains our priority given the ever changing situation, there's a huge sense of urgency in vaccine development.
As the market leader our teams are working tirelessly with our customers to ensure we supplied the right components and solutions to help resolve this pandemic.
The process for selecting the best high quality packaging components for use with what's injectable medicines, including vaccines is a complex one driven by years of science, which west has pioneered.
We're helping our customers in the selection testing and verification of components.
We're doing this and the way that prepares our customers for the future commercial scale up and launch of any successful vaccine candidates.
As we stated during our first quarter earnings call, we've seen a high adoption rate of Arb Fluoropolymer coded stops me by both west and our partner Daikyo.
These are the industry standard for packaging sensitive molecules with an outstanding track record of quality and reliability.
Notably store customers have selected Nov appear as they have made this decision to use the best in industry component to ensure the highest degree of quality and safety.
As our customers vaccine development rapidly moves into clinical trials.
The entire west team have stepped up to make certain we can supply the demand for high value products as well as any immediate surge in request for therapeutics.
The organization is also preparing for the potential volume surgeons that could come if and when vaccines are approved for human use.
All the work over the past two years across the enterprise to drive commercial and operational excellence, along with a global I'd seen west manufacturing operations has put us in a best possible position to meet the future pandemic demand.
We are accelerating our cat capacity expansion to manufacture floor attack and Nova peer components.
These investments were in a five year plan and we have brought them forward to address the expected increase into ban the latter part of this year and into 2021.
From our perspective, it it's still too early to estimate how much volume could be generated by vaccine packaging.
However, whether it's hundreds of millions or billions of doses are whats team is prepared and ready when the time comes.
Turning to slide five in our performance in the second quarter.
Our financial position remains strong I'm pleased to say that the growth trends, we have experienced over the past several quarters have continued in the second quarter and the outlook for the balance of the year remains positive.
We had a 14% organic sales growth in the second quarter, driven again by robust high value product sales and with HVP sales growth, we've experienced strong gross and operating profit margin expansion.
This resulted in a strong adjusted EPS for the second quarter.
To be clear the majority of the organic growth in the second quarter was from our base business with some incremental growth coming from cobot 19 sales related to therapeutics.
That's for guidance, we believe we're in a way we are well positioned for the second half of the year that said because of the strength and resiliency of our core underlying business and the incremental opportunities being presented to support our customers with Covidien 18 solutions, we are raising her.
Cadence for the remainder of the year.
Now I'll turn it over to our CFO burner, briquette, who will provide more detail on our second quarter financial performance and the outlook.
Thank you Eric good morning.
I hope everyone continues to be healthy unsafe during this time.
So let's review the numbers in more detail when first look at Q2, 2020 revenues and profits, where we saw strong sales and EPS growth led by strong revenue performance, primarily in our biologics generics market units and contract manufacturing.
I will take you through the margin growth, we saw in the quarter as well as some balance sheet takeaways and finally, we review guidance for 2020.
First off Q2.
Our financial results are summarized on slide six and the reconciliation of non U.S. GAAP measures are described in slide 13 to 17.
We recorded net sales of $527.2 million, representing organic sales growth of 14.3%.
Colbert related net revenues are estimated to have been approximately $19 million in the quarter.
These net revenues include our assessment of components associated with treatment and diagnosis of cobot 19 patients.
Offset by lower sales to customers.
Affected by lower volumes due to the pandemic and stay at home restrictions, such as dental veterinary and elective procedures.
We continue to see improvements in gross profit, we recorded $195.1 million and gross profit.
37.2 million or 23.6% above Q2 of last year.
And our gross profit margin of 37% was a 340 basis point expansion from the same period last year.
We saw improvement in adjusted operating profit.
With $106 million recorded this quarter compared to 81.9 million in the same period last year for a 29.4% increase.
Our adjusted operating profit margin of 20.1% was a 270 basis point increase from the same period last year.
Finally, adjusted diluted EPS grew 40% for Q2, excluding tax benefit of nine cents in Q2 EPS grew by approximately 38%.
Moving to slide seven.
Our proprietary product sales grew organically by 13.3% in the quarter.
High value products, which made up more than 65% of proprietary product sales in the quarter grew double digits and had solid momentum across all market units throughout Q2.
Looking at the performance of the market units biologics market unit delivered strong double digit growth.
We continue to work with many biotech biopharma customers, who are using west and dike, you'll high value product offering.
The generics market unit experienced double digit growth led by flora Tech and film coated products sales.
Our pharma market Eunice, so low single digit growth would sales led by high value products and services, including West our and for a tech components.
And contract manufacturing had double digit organic sales growth for the second quarter led once again by sales of diagnostic and healthcare related injection devices.
So what's driving the growth in both revenue and profit.
On slide eight we show the contributions to sales growth in the quarter.
Volume and mix contribution at $59.4 million are 12.6 percentage points of growth, including approximately $19 million a volume driven by cobot 19 related net demand.
Sales price increases contribution to $7.8 million are 1.7 percentage points of growth.
And changes in foreign currency exchange rates reduced sales by $9.6 million Oreo reduction of two percentage points.
Looking at margin performance.
Slide nine shows our consolidated gross profit margin of 37% for Q2 2020 up from 33.6% in Q2 2019.
Proprietary products second quarter gross profit margin of 42.8% 330 basis points above the margin achieved in the second quarter of 2019.
The key drivers for the continued improvements and proprietary products gross profit margin War.
Favorable mix of products sold driven by high value products production efficiencies and sales price increases partially offset by increased overhead costs.
Contract manufacturing second quarter gross profit margin of 19% was 470 basis points above the margin achieved in the second quarter of 2019.
Improvement is a result of improved efficiencies and plant utilization.
There was approximately 180 to 200 basis points positive impact on margin, primarily due to a onetime engineering project work.
Our adjusted operating profit margin of 20.1% with a 270 basis point increase from the same period last year.
Largely attributable to our gross profit expansion.
1.2 note, we took a onetime charge of $6.3 million for asset impairment.
This is included in other operating expenses.
Now, let's look at our balance sheet and review, how we've done in terms of generating more cash for the business.
On slide 10, we have listed some key cash flow metrics.
Operating cash flow was $205.2 million for the year to date 2020, an increase of 52.5 million compared to the same period last year.
34% increase.
Our year to date capital spending was $69.2 million 12.1 million higher than the same period last year and in line with guidance.
Working capital of $735.4 million at June Thirtyth, Twentytwenty was 18.3 million higher than at December 31, 2019.
Primarily due to an increase in inventory, mainly as a result of increasing our safety stock levels and accounts receivable due to increased sales activity.
Both DSL and DPL improved in the quarter.
Our cash balance at June Thirtyth of $445.9 million was 6.8 million more than our December 2019 balance.
I'm already due to our positive operating results.
Our capital and financial resources, including overall liquidity remained strong.
Turning to guidance Slide 11 provides a high level summary.
Full year 2020, net sales guidance will be in a range of between 2.03 by and $2.055 billion.
This includes estimated net cobot incremental revenues of $60 million.
There is an estimated headwind of $26 million based on current foreign exchange rates.
We expect organic sales growth to be approximately 12.5%.
This compares to prior guidance of $1.95 billion to $1.97 billion and growth of 8%.
We do expect growth in contract manufacturing to be less and HAGE two versus page one as a result of tougher comps.
We expect to our full year 2020 reported diluted EPS guidance to be in a range of $4 15, $4 25 compared to prior guidance of $3 50 to.
Two $3 a 62.
As Eric discussed, we are expanding or HVP manufacturing capacity at our existing sites to meet anticipated 2021, cobot 19 vaccine demand.
Capex guidance has raised to $170 million to $180 million.
This compares to previous guidance of 130 to 140 million.
There are some key elements I want to bring your attention too as we as you review our guidance.
Estimated FX headwind on EPS has an impact of approximately seven cents based on current foreign currency exchange rates.
The revised guidance also includes 16 cents EPS impact from our hedge one tax benefits from stock based compensation.
So to summarize the key takeaways for the second quarter.
Strong topline growth mboes proprietary and contract manufacturing.
Gross profit margin improvement gross and operating profit margin growth in adjusted diluted EPS and growth in operating and free cash flow.
Our long term constructs remains at approximately 6% to 8% organic sales growth and continued EPS expansion.
I'd now like to turn the call back over to Eric.
Great. Thank you Bernard.
Our rich history of leading in times of Great Challenge our customers expect this of US and this is what we're committed and prepared to do.
I want to emphasize that across west we are leveraging our global manufacturing capabilities size and scale to innovate lead and operate with a sense of urgency to make a positive impact and health care and society.
Our performance continue to reaffirm that our market led strategy is delivering unique value propositions to our customers are global operations team as efficiently manufacturing and delivering products with market, leading service and quality.
Then we're continuing to invest in our business with digital technology and automation across our operations to feel even brighter future.
We remain committed to deliver value to all our stakeholders on a sustainable basis as well as to maintain and build upon the values that make up or one west team.
Half the team members at West we continue to wish you good health and the days ahead, Josh we're ready to take questions. Thank you.
Thank you as a reminder to ask a question you will need to press star one on the telephone to withdraw your question press the pound Keith Please stand by we've compiled gionee roster.
Our first question comes from.
One other than Donnell with Bank of America. You May proceed with your question.
Hi, good morning.
Thank you and congratulations on the quarter under rolled on your planning recovered.
Bonds.
Thank you my first.
My first question is.
What is the mix between floor attack and Millbrook your components or you're seeing.
Evaluated by the Colgate vaccine players and.
Any thoughts on on the most likely packaging format, such a single dose or multi dose and how many doses into multi dose.
One I look let me to the this to two questions. One is in regards to Florida second Nova peer components.
Primarily most of the interest with the with then again, we have a pretty healthy participation rate with the number of.
Companies working on a vaccine solution.
In the vaccine area, we're seeing more interest from Florida Tech as the primary.
Technology.
And versus no appear now there are certain situations were no appear as a better solution and customers have elected to go in that direction, but majority I would say is in Florida tuck in some of the therapeutics that were working now whether already marketed or being.
Labeled expanded.
That's using the combination mostly nova peer in some Florida Tech.
In regards to the second part.
Yes, that's a tough.
Question, where we stand today as you think about.
How are customers are looking to add bile configuration, whether it's one dose or multiple doses per vial and it's little bit uncertain at this point in time, but the way that were mapped out all these opportunities with our customers.
Each one little different from a number of doses are the volumes that were looking at would accommodate either one dose or multiple doses per volume, but at this point in time.
It's pretty difficult to pinpoint exactly number doses per vial.
That our customers be going with.
Thank you appreciate their responses and the color there and.
My second question. This we've seen a number of public announcements from corn in silicon oxide ore EZ Io too and after Jack on the last while supply side are covered 19 I.
I would've expected to have seen something on I'm Crystal Zenith from West. So my short question is what can you tell us about crystals Dennis how it compares competitively versus some of the other solutions out there that have gotten government grants for their call. Good response, and what sort of covered hopper.
Two entities are you seeing for crystals enough.
Yes, it's we look at little little differently I think when you think about the preferred solution in the market right now is still glass.
And so I know that the companies that are manufacturing glass are working on making sure. They have the appropriate volumes by can't speak to them specifically.
What do you think about Crystal Zenith, it's already a proven technology in the marketplace will the number of critical drugs, specifically around the biologics.
And the demand that we have for Crystal Zenith is increasing in fact, we are in process of increasing capacity.
Our Scottsdale, Arizona facility.
To address the increase around there one ml insert needle technology.
We do see certain customers that require.
The crystals into technology in the areas of vaccine exploring that option.
But I would say at this point, we have not gone out and.
Side government grants frankly, I think our company as the market leader, we were leading from the front.
And were worked with number of customers around the CZ technology, but I would say right now what it looks like is that the preferred solution on the immediate phase would be around glass.
Okay got it I'll leave it there. Thank you congrats once again, thank you one.
Thank you. Our next question comes from John Kreger with William Blair. You May proceed with your question.
Thanks very much.
Can you talk a bit more about your capex expansion plans.
Are you can we assume you're running sort of that full tilt at this point or do you have the ability to flex your output with your current configuration and when can we expect the the new capacity to come on line that you that you talked about with the higher Capex budget. Thanks.
John what we have done as we decided to.
Bring forward capital in regards to specifically equipment that will be placed strategically in.
Three three of our center of excellence sites of high value products.
We had the these.
Yeah. This equipment earmarked for latter years based on trajectory of our current business and our current portfolio, but due to our discussions with customers. We are preparing to make sure that we will be able to address this surge that we'll see specifically around.
Flora Tech.
Stoppers in the marketplace now in regards to the timing we're looking at towards the end of this year of having the capacity installed and validated and we will build too.
Started the expansion of volume at that point in time, Bernard you want to talk a little bit more of the bad on the timing John some of that possibly will be in and at the end of this year and it's particularly related to Flurotec products and then when we would be Larry name.
Incremental capacity and parity on in 2021.
And so all of their commitments that we have needed to put in place are actually in place with our equipment suppliers at the moment. So we'll have a phased introduction.
Of that equipment. So it won't have any it won't disrupt our business in any way love all of the equipment that were ordering is replicating equipment that we already have in place at West software.
So really set up well to make sure that we can onboard that equipment quickly and meet customer demand.
Excellent just a follow up to that what's sort of capacity. This will that give you for four attack if you're willing to say.
Yes.
Yes, we havent, we haven't revealed exactly the amount, but it's significant in the areas around Flurotec, specifically, yes, a base of based on all of the discussions we've had with customers.
And.
The lighting, where a number a difference models and we believe that we will have sufficient equipment in place to me.
The customer demand.
And when when it comes.
Excellent.
Thanks, very much I guess, one last one anything you can add on the sustainability of the pickup in growth and contract manufacturing.
What's happening with a contract manufacturing really is around the.
The diagnostics area and also Injectables.
Auto injectors and what we're finding is this a lot of this is installed capacity that we've been ramping up for the last couple of years.
We do see that.
The growth rate of high single digits too low double digits is more inline what we expect of contract manufacturing it has been running.
A bit stronger over the last several quarters.
But on the other side, we continued to have discussions about future.
Installed capacity of similar products so.
We will see the second half is here a little bit softer than the first half from a contract manufacturing perspective.
Thats purity comp issue I am on on the growth rates from a from a dollar perspective, we don't see any softening in contract manufacturing and you connect.
Let me see the revenue itself growing.
To me, but it will grow at slower rates purely because of the comps that we're facing in the back half of the year.
And you can see the positive impact that's having John on margins.
Where we were able to reports.
19% noted there were some one time gains in their regarding certain engineering work that we were doing which we would not expect were fees.
In in the second half a year, what we forecast to see strong.
Quarter over quarter growth when we compare to last year on the margin front.
This is something that we've been talking about for a while as we continue to improve efficiencies and the utilization within the contract manufacturing network and taking a lot of the learnings that we hadn't proprietary over the last number of years.
And really starting to implement those within contract manufacturing.
And so I would continue to see expect to see margin expansion, but.
Not not to the levels of 19%.
Great. Thanks much.
Thank you. Our next question comes from Dave When you with Jefferies.
Received with your question.
Hi, Thanks, Good morning, Congrats on the the nice acceleration wanted to ask a couple of questions around your Covisint vaccine comments.
We are hearing from some other vendors that are that are involved in the development whether it be.
In clinical trials space or maybe contract manufacturing space about.
The government involvement in the overall funding our various governments I guess I should say in the overall funding of these development activities and.
Discounting as a result, and I guess I want you are clearly calling out of Flotek and no appear and you have for a little bit.
Are you getting are expecting to get full price on those volumes when they ultimately scale up and go commercial hopefully, yes, Dave are our agreements with our customers are based on historic counsel at current.
Price points. So we are we're looking to obtain what we traditionally have received for those products.
I realize that's just some funding going into certain.
Going into certain manufacturing to R&D side, but we're not seeing the money got really going into the percentage of Cogs.
Over the money going into the Cogs. So the supply base. So low if you think about our if you think about our product kind of on a configuration could be anywhere between 15 to 35 cents.
It was one dose or five dose you can see how from a per dose perspective, it's not a significant percentage to cogs. So so I think we're well positioned and the expectations. The continue with our our our policies around how we price according to the value we create for to support our customers.
So on the you anticipated where I might go next Clinton may have tipped you off.
The.
The I guess the curiosity that I have is that the that historical argument has been one that that you've made I've certainly made that.
The the cost of these components as a percentage of in most cases, a very high priced you know maybe even for figure per dose type price on a biologic is a very very small percentage.
We're talking about price per dose at what some of these companies are promising that like $10 or if it's a four or five dose for violets, maybe it's 40 or $50 of value is a very different equation than a thousand dollar dose biologic.
How is it that the the interest level or the the sensitivity to that price.
Is as low as it is there appears to be as low as it is.
And I guess to spend the question. The other way if customers are able to get over that so easily in this environment is that a signal that the adoption rate outside of covert for high value products should significantly accelerate.
Because the price sensitivity is really as low as it is.
I can take the first part of the question and maybe Eric might want to cover the second part of the question.
So just Joe So we're clear.
We have we're not getting support from the any governments.
West is investing an extra.
$40 million essentially this year in Capex and even some into 2020.
We've obviously, we're funding that ourselves.
And when you win when you look at Ash Youre, comparing the cost of our product the selling the end selling price.
They are saying is.
The cost of our product as a percentage of their Cogs. So they're cogs doesn't change no matter what they sale the product das cog cost producing is still the same and we're still a relatively low part of that and then if you work out the price per dose potentially there could be 510 20 doses in a violent.
We sale one stauffer per vial, so you've got a device back the call sure style by the number of doses. So it becomes a really small part.
Of the Cogs and regarding pricing, we haven't gone and tried to Jack gold prices in this whole process, where where we are maintaining the pricing essentially that would that we've had in place and on on the 90 of these products now pricing changes.
A lot of time regarding configuration, but you know.
I think thats, that's the way to look at it rather than saying as a percentage of their price.
Okay Thats helpful for you and ended the number of doses provider.
And Dave when you think about.
Our customers have been and will have been using our.
For use in Florida Tech or they are using Nova peers are very comfortable with that because they have user components on other molecules. They have in the marketplace for other purposes, especially around biologics and so there was a comfort of think when they think about how they can go to market fast when you think about regulatory thing about safety.
About quality and scale, we have the scale. We can we can manufacture the volumes that were speaking of.
In a very very short period of time, So I think Dave that's that's where they can customers' confidence and comfort to continue to go after that part of our portfolio versus using the same basic standard product.
And.
So I'll stop there, but that's that's the reason why we're seeing the demand and that okay.
And maybe a a last question in.
In the news at least I am sure Bye bye numbers and perhaps the ones that don't get as much interest interest or press.
The the smaller companies are numerous some of the highest profile of these players chasing the vaccine in the ones and work seed for example, I would think would be classified in your pharma segment can you speak too.
Differences in growth rate that you're seeing is that something perhaps as simple as timing.
As to where those those inquiries and adoption rates and sampling demand might come from in regard to again like just to name a couple of the Astrazenecas and JNJ use of the world that are that are in this vaccine chase.
Yes, no Dave when you think about whether the small or large because of the nature of the molecule we classify that biologic.
Okay.
Yes, so when we talk about vaccines were all encompassing I want I wouldn't try to split out the vaccine opportunities between the three units from our performance perspective.
Got it okay, alright, very good thank you.
Great. Thank you.
Thank you. Our next question comes from Larry Solow CJS Securities. You May proceed with your question.
Great. Thanks, Good morning, guys.
Good morning, and Laura Qual.
Good morning.
Eric you mentioned that the 15th that 35 cents per vial.
Would that be just full floors, what does that sort of range discussing and and you mentioned some companies from customers have chosen will report, which I guess encompass is sort of all the HBP.
Is there any body just choosing flooring second maybe would weststar.
Potentially getting adequate.
Yeah, Larry It does vary on the final configuration and all the additional services we provide.
That number that was references more around the floor tech portfolio versus notebook period over period is higher.
Okay.
And the 19 million you guys referred to in the quarter.
19 in the quarter and 60 million for cold weather related revenue that.
Full year number.
Thats the full year.
And that included an overnight.
That's right.
Yes, yes, so thats a full year number of about 60 million that we'll see right now.
Got it and I imagine some you'd mentioned a look on the therapeutic product.
Yes.
And then the vaccines I guess, obviously, it's just barricades occasion of components testing or whatnot again inevitably if something's commercializing scale than you would obviously numbers, we grow a lot more.
We looked at that.
Larry the way I look at it I think you're right. It's the way we break it out and the way. We're looking at we don't give up the numbers, but we're very small segment is so we understand what's around hospital enablement. So this is like the IB and blood to think about supporting therapies to getting the I see you.
And then therapeutic treatments, which we have a very high participation rate because of our biologics position.
Those are really the key areas when you think about more near term.
Hey, saying that we didnt as we think about vaccines as we work with our customers. Obviously there there is some element of.
Providing product for trials, but that is obviously low volume and therefore, we don't we can and it's very difficult to predict when and how much and by whom so we're holding and we're holding off at that at this point, but as we've said in our capital investment is that we are going ahead.
Sure.
20% operating was there any.
Nothing unusual I know you called out a couple of hundred bits on contract manufacturing side was there anything else unusual in the quarter.
That could have benefited most margins.
Oh.
Other than the the piece on contract manufacturing that I call dose area you know.
All of the coal would relate it costs you know have been recorded in Cogs.
Right.
They're all included in that margin number.
Right pretty clean other than they had CMP and I think.
The contract manufacturing piece.
Yes, thats about it and then within operating margin you called out impairments of certain assets and that's a onetime.
Right you could you do you took that add on the adjusted.
Right or is that in the adjusted number two the underwriting.
Sorry I.
The write off in your adjusted number are you adjusted out.
In the adjusted number it's in there.
Oh, it isn't there what we didnt.
Okay, and then you mentioned some increased overhead arm, which impacted your margins a little bit with that is that refers to Florida, taking out youre that positive that hasn't come online.
Hi, guys right well, yes, there's costs around pp, there is incremental costs and so.
Supporting and a lot of the workforce at our plants, we've gone to split shifts so and we're obviously pain shift premiums.
You know to keep the plants up and running so and then also there was seven some incremental freight costs.
Right, Okay, great alright, Thank you very much appreciate it.
Thank you Larry Thanks, sorry.
Thank you and I'm not showing any further questions. At this time I would now like to turn the call back over to Clinton lives for any further remarks.
Thank you Josh and thank you everyone for joining us on todays conference call and online archive of the broadcast will be available on our website at west pharma Dot com in the Investor section. Additionally, you may access a replay through Thursday July thirtyth by using the dial in numbers and conference I'd prefer.
At the end of today's earnings release.
That concludes this call have a nice day.
Okay.
Thank you ladies and gentlemen. This concludes today's conference call. Thank you for participation you may now disconnect.
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