Good morning. Welcome to the Waters Corporation First Quarter 2020 Financial Results Conference Call. All participants will be on a listen-only mode until the question-and-answer session of the conference call. The conference call is being recorded. If anyone has any objections, you may disconnect at this time. It is now my pleasure to turn the call over to Mr. Bryan Brokmeier, Head of Investor Relations. Please go ahead, sir.

Thank you, operator. Good morning, everyone, and welcome to the Waters Corporation’s first quarter earnings conference call. Before we begin, I will cover the cautionary language. During the course of this conference call, we will make various forward-looking statements regarding future events or future financial performance of the Company. In particular, we will provide guidance regarding possible market and business conditions company expects for the second quarter and full year 2020. We caution you that all such statements are only our present expectations and that actual events or results may differ materially. For a detailed discussion of some of the risks and contingencies that could cause our actual performance to differ significantly from our present expectations, see the risks factors included in our Annual Report on Form 10-K for the fiscal year ended December 31, 2019, in Part 1 under the caption, Risk Factors, and the cautionary language included in this morning’s press release, including with respect to risks related to the effects of the COVID-19 pandemic on our business. We further caution you that the Company does not intend to update any of its predictions or projections, except during our regularly scheduled quarterly earnings release conference calls and webcasts, or as otherwise required by law. The next earnings release call and webcast is currently planned for July 28, 2020. During today’s call, we will be referring to certain non-GAAP financial measures. Reconciliations of the non-GAAP financial measures to the most directly comparable GAAP measures are attached to our earnings release issued this morning and available on the Company’s website. In our discussions of the results of operations, we may refer to non-GAAP results, which exclude the impact of items, such as those outlined in our schedule titled Reconciliation of GAAP to adjusted Non-GAAP Financials included in this morning’s press release. Unless stated otherwise, references to quarterly results increasing or decreasing are in comparison to the first quarter of fiscal year 2019. In addition, unless stated otherwise, all year-over-year revenue growth rates, including revenue growth ranges given on today’s call, are given on a comparable constant currency basis. Now, I’d like to turn the call over to Chris O'Connell, Waters’ President and Chief Executive Officer. Chris?

Thanks, Bryan, and good morning, everyone. Thank you for joining us today. Along with Bryan Brokmeier, joining me on this morning’s call is Sherry Buck, Waters’ Chief Financial Officer. I hope you and your loved ones are doing well at this challenging time and staying positive as we all strive to overcome the global COVID-19 public health and macroeconomic challenge. Like most of you, we are all working from home, so please bear with us if we encounter any unforeseen audio issues with today’s call. During today’s call, I will provide an overview of our first quarter operating results as well as some broader commentary on the impact that COVID-19 is having on our markets and businesses. Sherry will then review our financial results in detail and discuss our financial actions as it relates to the balance sheet and cost structure. We will then open up the phone lines to take your questions. As you well know, the COVID-19 global pandemic is a significant challenge for the world that is putting extraordinary pressure on the economy, our customers, employees, and their families. I would like to personally extend my gratitude for the hard work and dedication that everyone has shown over the past few months. I’d especially like to thank all of our dedicated employees who have been working in our manufacturing facilities, laboratories, and distribution centers ensuring that we can supply our products and expertise to our customers. I also want to thank our talented field service engineers who have been on the frontlines, installing and maintaining critical analytical instruments and data systems to support the ongoing work of our customers. These efforts are incredible and truly inspire me, but they don’t surprise me as I have consistently seen our great people step up to deliver benefit to our…

Thank you, Chris, and good morning, everyone. In my comments today, I will review our first quarter results and provide more details on the actions we have implemented to mitigate the impacts from the COVID-19 pandemic. In the first quarter, we recorded net sales of $465 million, which is down 8% against the prior year in constant currency. Currency translation decreased sales growth by approximately 2% resulting in a 10% decline as reported. Excluding China, this was more significantly impacted by the COVID-19 pandemic in the quarter, constant currency sales were flat against the prior year. As a reminder, since previous guidance for Q1 and full year results excluded any impacts from the COVID-19 pandemic. During the quarter, sales into our pharmaceutical markets were down 6%, our industrial category declined 7% and sales into our academic and governmental category were down 22%. Looking at product line growth, our recurring revenue which represents the combination of service and precision chemistry was flat in the quarter, while instrument sales declined 19%. As we noted on our last earnings call, recurring revenues during the first quarter of 2020 were impacted by one less calendar day in the quarter, which resulted in a slight reduction in recurring revenue. Looking ahead, there was no year-over-year difference in the number of calendar days during the second or third quarters, but there are key additional calendar days in the fourth quarter of 2020 compared to 2019. Chemistry revenues were down 1% in the quarter, as weakness in academic and governmental offset pharma growth. On the service side of our business, revenues were flat as mid-single-digit growth in service contract revenues were offset by a decline in on-demand service revenues and spare parts. Breaking first quarter product sales down further, sales related to Waters branded products and services…

Thank you, Sherry. As we move through 2020 and our management of the COVID-19 crisis, we are staying focused on our long-term innovation strategy and investments that support a sustained recovery as market conditions improve. We are confident in the durability of the opportunity in our end-markets, our strong market position and our consistent strategy. With that, we will now begin the Question-And-Answer Session. As we are not always able to get to everyone’s questions, please limit yourself to one question and one follow-up. And if you have additional questions, please contact the Water Investor Relations team after the call. Operator?

[Operator Instructions] First question is Derik de Bruin - Bank of America.

Hi, good morning. So, can you talk a little bit more about some of the recovery in your emerging markets, just basically – just questioning – you mentioned you saw some pickup in China and some pickup in some of the other European geographies, can you talk a little bit more about that and specifically what you are seeing?

Sure. Yes. Thanks, Derek and hope you are well. We have established a really robust framework for how to think about recovery, and as you might imagine it’s not a one size, fits all approach. Every geography is really undergoing a different dynamic as it relates to two primary dimensions of recovery. One is the overall spread of the virus, and what the local public health response is, and the other dimension being the knockout effects of that approach to the local economic conditions, and there’s obviously a wide range of programs around the world. China, which went through this first, I would characterize as seeing a steady recovery that continues to gain traction at this point in time, about 90% of our customers in the pharmaceutical sector have restarted production, and there has been a very phased approach affecting both the customer operations as well as even our own offices and employees as they go serve. There are some geographies that have bounced back more quickly. If you look at Korea as an example, which actually is now our number five country in the world. As you know from the papers, they had a very assertive testing policy and program early in the process, and they are really back almost in the return to growth phase. The European countries I referred to, Europe is very much a mix bag. Some countries, including the UK and countries in Southern Europe like Spain, Italy, and France are very much still in containment, while other countries in Central Europe and even Eastern Europe, Germany, Austria, Switzerland, and Denmark, et cetera are more in a recovery phase. Again, very, very local dynamics there. It’s also hard to categorize them in emerging and developed for the reason I just stated in Europe, but also…

Great. And just one follow up if I may. Can you talk a little bit about what you are seeing with your chemical and some of your industrial customers, just as obviously we are approaching recession, it looks like we're going be in a recession scenario, how are they thinking to sort of beyond the initial COVID impact? Are you seeing people pulling back heavily on their CapEx plans there? Thank you. I’ll get back in the queue.

Yes. Thanks, Derek. It’s a bit of a mixed bag, on the industrial side. As you know about half of our industrial business is food and environmental, and environmental piece that’s actually been recently robust through this and about half of this is the material science, the chemical and polymer piece. Overall, the industrial category for us in the quarter was down about the same as pharma, and the mix of that was China taking a bigger hit, U.S. down in that mid-single-digit range, actually Europe grew on the industrial side in the quarter. And so, it is a little bit of a mixed bag. We are seeing some industrial customers hold back. We don't really see many outright closures per se. And we have seen some investment on the polymer side. These markets were pretty soft last year, and we believe there is some pent-up demand and we are actually seeing, I would say, reasonable tone in the industrial end-markets. Although, as you know, those markets are a lot more instrument-oriented with less recurring revenue, particularly in the TA instruments side. So, watching it carefully. But at this point, it’s probably too hard to overly generalize. There is pockets of strength and weakness there.

Our next question is from Dan Arias, Stifel. Your line is open.

Good morning guys. Thanks. Chris, on the pharma side, can you just talk a little bit about how things look if you separate out the large molecule which I think it’s about 30% or so of the mix from small molecule. And then, what your expectations look like if you are just trying to assess the components of pharma demand this year by pipeline?

Sure. Yes, so, pharma – thanks, Dan. I hope you are well. The – on the pharma side of the business, which is a little more than half of our revenue, and as you correctly pointed out, it’s about a 70:30 split. We were actually seeing really solid pharma business through the week 12. We were up in the mid-single digits on both the small mol and large mol little bit better. So some decent start to the year before a lot of the containment activities outside of China, that is those numbers are outside of China. China obviously is a real outlier for the quarter. And so, the way we are looking at that is, the manufacturing, QA QC part of the business, we’ve seen continued operations, we’ve seen growth in QA QC outside of China. We’ve seen fairly steady recurring revenues although more growth where we have contracted service plans and where there is more full production. Some QA QC has been on split shifts or rationalized capacity. We see that in the contract segment as well. But we are basically expecting to see reasonable – reasonably stable conditions on the QA QC side. On the innovation side, much R&D does continue. Some of it has been devoted to COVID. As you know, there is more than 200 trials underway for COVID-19 therapies and up to a 100 different vaccine programs out there right now, six of which are already in trial. So, as I alluded to in my remarks, we’ve seen some nice response in that segment. Obviously, China is a big part of the overall pharma picture and that’s certainly colored our Q1 results. But, we feel – we are glad that we have such a nice concentration of pharma in our overall portfolio and expect that to be a reasonably stable market as we move through this and improve over the course of the year.

Okay. I appreciate that color. And then, Sherry, any help you can offer in terms of the extent to which the $100 million will flow through R&D versus SG&A? And then, on the $100 million, is there a back half weighting that we should think about for the cost savings or you are looking to have the portion of the cost structure in the current quarter and match when you are trying to do overall? How aggressive you’ve been in 2Q?

Thanks. Happy to answer that. So, the cost actions we’ve put in place, a lot of them related to employee-related actions from salaries, furloughs, work schedules really trying to right-size particularly in the second quarter as we expect it to be more challenging likely than Q1. And then other non-essential cost that we can defer. So the $100 million in cost actions, the base against that is really can start internal plan that we’ve been working on for the year 2020. The savings with flow through about three quarters of the flow through operating expenses and about a quarter of it was flow through of cost of goods sold. As far as the timing, we did see some benefit of it in Q1 and we see – plan to see about a third of those cost actions flow through in Q2, kind of that 90-day period we talked about with some of the actions, and that would flow into a little bit of Q3, but then the remainder of it would be in the second half.

Okay. Thanks very much to you all guys.

Thanks, Dan. Next question please.

Next question is from Tycho Peterson, JPMorgan.

Hey, good morning. Chris, you haven’t preannounced six of the last seven which is I think, but given the magnitude of the unique environment and the fact most of your peers did preannounce, I am just curious why you didn’t feel this was warranted to get out there ahead of the call? And then secondly, as we think about China, I appreciate the color. Can you just talk a little bit more on pharma versus food in China and instruments and consumables maybe a little bit more color on to the end-markets? And then, any color you can provide on April trends in the U.S. and Europe relative to last two weeks of March?

Yes. Thanks, Tycho. As you know, it’s been a very fluid environment here and as we noted in our Q4 earnings call, we didn’t include any impact of COVID in our guidance. And as I mentioned before, other than China, which I think we all knew was in a challenging environment in Q1. We were actually operating within our plans really through almost until the end of the quarter. And so, as we closed the books, we just felt it would be better to issue our results when we saw the biggest and fullest picture possible, both what happened in the quarter and our expectations going forward and try to incorporate all the different steps we are taking to navigate the environment. And so, that’s why we took the approach we took. In terms of China and color on some of the different categories, pharma, if you look at the overall China result of down 45%, pharma was roughly in that range. Pharma is about half of our business there. The food business suffered primarily because a lot of the import export restrictions that went into place put a bit of a hold on laboratory type activity. And so, food was down in similar ranges and academic and government obviously was the area of greatest weakness in China as a lot of universities were closed for the bulk of the quarter and the government was delaying tenders and we do expect that government environment where there is quite a bit of food business as well to continue to remain soft as the country looks at recovery, that recovery should be led by the more of the industrial corporate sector, particularly the pharmaceutical business. In terms of the instruments and the recurring revenues, we saw an impact on both parts of that business. Certainly, to the extent we were serving customers and operating facilities and had access we were able to maintain some recurring revenues although as you know that the contracted service plans are less of a mix in China than they are in other parts of the world. So, we saw it also in the on-demand service and in the parts – spare parts business. But China went through a pretty significant lockdown where a lot of activity went on hold and that activity is coming back as I mentioned, which is steadily being managed very tops down in that environment, in that operating environment and we expect to improve directionally in Q2 and recover more fully in the back half of the year.

And then, on the $100 million in cost out, obviously, a lot of that’s focused on salaries and some of the hourly workforce. Can you just give us comfort that that’s not going to impact some of the growth initiatives given that you've moved share loss in the past? How do we get comfortable that you are not cutting into potential growth opportunities going forward?

Yes. That was our guiding principle of course. We wanted to match some of our spending needs. We made some calculations as I alluded to for in a conservative scenario, how do we maintain the financial flexibility that we’ve always enjoyed. And so we modeled some numbers for the year and said how we pull that into a short concentrated period and we looked at programs both capital and projects that were going well that we had an ability to still meet our objectives on and just take a temporary pause. And obviously, shared the burden of salary reductions or hours reductions across much of the workforce. But one of our guiding principles has been to sustain the momentum we have in new product commercialization and in fact, we believe we’ve found ways not just to sustain our near-term pipeline, but actually to enhance it for benefit, to give us benefit in the second half of the year. And so, we’ve taken a very, very thoughtful approach. We took time to do it the right way. And we’ve stayed very, very close to our entire employee base and with tons of communication and context and feel good about the balance that we’ve struck there. But our growth initiatives – our primary growth initiatives are very much intact and as I alluded to in the remarks, our products portfolio, particularly on the mass spec sided, where we had acknowledged some share pressure in recent years is doing very well, actually very well in Q4. It led our performance through much of the first quarter until the containment measures hit in and when we look at our pipeline strength in the future, we do see the benefit of our new products. Next question please?

Our next question is from Doug Schenkel, Cowen and Company.

Hey, good morning everybody and glad to hear you are doing well. So, you talked about holding back on working capital spends. I am thinking that in building less inventory. If we were to move into recovery quickly than expected which would obviously be great news for all of us, is there any concern that you wouldn’t be optimally positioned to play offense and along those lines, your working assumption that instrument revenue that you expected in the first half. But it isn’t coming in due to the pandemic isn’t necessarily going to come back in the second half as customers work through challenges and the hangover associated with what’s going on right now?

Yes. Sure. Doug, happy to it. We think we have a lot of room on our inventory and I’ll let Sherry add to this if she like. But the inventory management piece is certainly prioritizing making sure we have plenty of capacity in some of the faster moving technologies once where we have visibility to pipeline. So, we match our inventory goals and inventory reduction goals as needed against dynamics in terms of where we expect our pipeline to be. So even with some of the smart working capital spend management, we think we will be perfectly able to be responsive and to play offense in fact if conditions allow. And that’s why we’ve actually, as I alluded to before, assembled an optimistic case scenario. So while we are focused more on our base case for planning and our conservative case for liquidity management, and financial flexibility, we do have our eye on what that would look like and make sure that we wouldn’t miss a beat should things improve a little bit faster. Relative to the second part of your question, Doug, where instruments got that we expected in the first quarter or even in the second quarter, given the near-term caution or less likely – we really believe at all of our pipeline analysis says that those are delays not cancellations. We still think that when we look at our quoting activity in our sales pipeline, in our order book, while they do reflect that near-term caution in general, I’d say, in particularly on our pharmaceutical customers there is an optimism about the future and an intent to returning to investing for growth in the foreseeable future. Obviously, we’ll update that as we move through the year. But we see more of a pause in that spending and don’t have any real evidence of any cancellation type activity in scale.

Okay. That’s super helpful. And just a quick follow-up. Regarding recurring revenue, I mean, that was nearly flat in the quarter. I know there were some pressure in geographies beyond China late in the quarter. I am just wondering along those lines, if you’d be willing to quantify how recurring revenue trended real late in March globally and early April and if there is any ability to use that as a launching pattern to how you are thinking about recurring revenue specifically in the second quarter essentially, have things kind of at least leveled off at late April levels. Thank you.

Yes. So, I’ll just maybe a little bit of color on that, thanks. Yes, the recurring revenues for the quarter were flattish as you mentioned and we are trending better than that towards the end of the quarter. We normally do have purchasing activity at the end of the quarter on consumables just as we do on instruments, not to the degree, but that definitely affected it and it’s a little bit of a mixed bag on recurring revenue from the standpoint of service. There is two big pieces of the service there. There is contract service plans where we are seeing consistent growth at normal historical levels and then you have the on-demand service which includes spare parts in a meaningful way where as our service engineers can’t access many customer sites. We obviously have that weakness in those areas. And so, in general, the early patterns in April reflected sort of where we were towards the end of the quarter particularly in our largest geographies outside of China whereas China we are seeing clear evidence of our increasing access of our service engineers into customer accounts over time here on an upward slope. We’ve seen continued containment measures in some of the other parts of the world. So I think that dynamic of a mix between contracted service plans, on-demand chemistry heavily utilized in certain areas and held back in other areas. What will probably persist for a little while here into the quarter and we’ll certainly update you on that as we get more information next quarter.

Our next question is from Vijay Kumar, Evercore ISI.

Hey guys. Thanks for taking my question. Chris, maybe to start up, but I don’t think I heard you guys mention the exit rate in ex China. I know you mentioned fourth week of March was clearly worse. But what’s at the bottom, have you seen the rest of the world wages stabilize at those levels or April trends are perhaps coming in better or worse? Any comments on the exit rate I think would be helpful?

Yes. Thanks, Vijay for the question. Appreciate it. I don’t think we want to overly – get overly précised on early trends in April. As you know, our first month of our quarter is the lightest of the three. In general terms, my comments earlier were that, China and parts of Asia, even parts of Europe have seen an improving trend whereas the U.S., other parts of Europe, India have seen the continuation of the type of containment measures. So, it’s really all about – as we get deeper into the second quarter, it will really be about the restrictions, the lifting of restrictions promulgated by both governments as well as corporate policy in terms of getting people back to work and scaling up production in facilities and that’s going to look different in pharma companies and contract companies and industrial companies. And so, I don’t want to put too much credence in early April results, other than we expect for the immediate near-term some continuation of what we saw towards the end of the quarter with some of the improvements noted.

That’s helpful. And then, maybe as a follow-up to that, when you look at the end-markets, we’ve heard perhaps some hoarding by consumers on pills respiratory drugs and anti-infective drugs and maybe pill count is going up. What is the implication of that on your – I guess, when you look at small molecule consumer business, in academic and government, is that a trend we should extrapolate from China to other parts of the world? That’s materially worse in pharma. Thank you.

Yes. It’s a really interesting question. I think it’s probably bit of a reach to try to draw too many conclusions between consumer behavior in the short-term and something like consumable usage in our business. I would look at it more as something that colors the overall pharmaceutical industry. As we look at big pharma right now, there is a lot going on. In most cases, the production continues. There is clearly more of a focus in the pharma companies on existing drugs versus new product launches, simply because their teams can’t fully get out there and launch new products. Obviously there is a COVID-19 focus with new trials with research on immune modulation and biomarker analysis. But clearly, some of the stay at home type orders have resulted in fewer doctor visits for normal routine type healthcare and medical therapies. And to some degrees that’s coloring big pharma’s mindset as they navigate through this process. So, but to boil that all the way back to consumables, I’d say, our consumables revenue and to some extent as well the instruments purchases are reflecting more of just the caution that that most of our customers are taking stepping through this. But I will say that, every single one of our customers we’ve stayed very active with even if remote, we’ve had extremely positive interactions with them and had some real breakthroughs in terms of how to serve them effectively at a distance.

Our next question is from Dan Brennan, UBS.

Great. Thanks for taking the questions. Chris and Sherry and Bryan. Chris, I wanted to ask you, I know you pull guidance for 2020 obviously, and you’ve given a bunch of color regarding trends between geographies and kind of customers. And I am wondering, given you did discuss several scenarios that you are kind of mapping for different customers and geographies, is there a range or is there any way to think about a broader range of outcomes in 2Q? Obviously, you're not going to give us a single data – a single number for guidance. But I am wondering if there is any kind of broad range that you could kind offer or speak to about how we should think about that.

I think, we’d probably want to stay short of that, Dan, for now, I’d rather just provide qualitative description of how we are thinking about those ranges. Obviously, a base case type of scenario where we have more of an expected progression of these countries through recovery – sorry, containment recovery and return to growth. In a conservative case scenario where if we see the persisting low level for demand for instruments and high levels of containments and obviously building our financial plans off of a conservative scenario and then in optimistic case, to say, hey what if it comes back faster and there is some pent-up demand that materializes sooner. Those are just qualitatively how we are looking at it. At this point, I think it’s premature to spend too much time describing what those numbers look like and we will obviously try to do more than as we move through the year. But as I alluded to in my remarks, we’ve seen periods of macroeconomic pressure historically in different scenarios and we have always benefited from the underlying strengths and demand characteristics in the end-markets that we choose to focus on. And so, we are planning for a solid rebound when market conditions allow.

Okay. Great. And then, maybe just on the industrial end-market, you had a comment earlier that sounded fairly, I am not saying constructive, but didn’t sound like the expectation would be that things would worsen materially. I am just wondering, could you break down a little bit within industrial? Your exposure to chemical, given what's going on with oil prices and spreads and environmental, I believe you had a favorable comment about the trends in the quarter and obviously, broadly for thermal for TAs. Maybe if you could us a little flavor for what's going on within industrial? And does the 2008, 2009 experience with how your broader industrial business performed, has that sort of predicated it at all? Or is the business mix just too different to use that to kind of help us think about the impact in 2020 and 2021?

Yes. I know, it’s a really interesting thing to dig into. The industrial category is about 30% of total revenues, which is in rough terms, half and half between food and environmental and material science. Material science tends to be the more cyclical piece and the majority of that is chemicals and polymers. We’ve seen, I mean, the chemicals side of the business is smaller piece, polymer is the bigger piece , especially advanced polymers and we’ve seen sort of okay customer activity in that area. The chemical area is generally smaller and it’s probably too hard at this point for us to draw a direct correlation between what's going on in some of the energy markets in that right now. TA is the biggest piece of the materials as you know and it’s more affected than Waters generally with fewer recurring revenue sales, capital equipment sales are 80% of that. And we have seen more cyclicality in that business as you know, although we feel really well positioned in that area. I mentioned three new products that are exciting in TA. We have the strength of the Discovery line. We’ve got a gradually improving mix towards high tech, high performance materials, pharma and even consumer products. And so, I think we are better positioned in the materials sector relative to where we have been historically and even some of our peer groups, because of some of the investments we’ve made there. So, we are watching it carefully. Obviously expecting the pharma part of the business to lead the recovery as it happens. But feel very good about our overall materials, material science, industrial portfolio. Like I mentioned the food could be pretty lumpy especially with the big concentration in China. And on the materials side, we have seen actually some reasonable demand through cycles in recent years with a lot of what we are doing on applications, PPOs and other type of applications that have been invested in by governments and municipalities. We probably have time for one more question please.

Brandon Couillard with Jefferies. Your line is open.

Hey thanks. Good morning. Just two questions, Chris. Could you touch on government academic trends geographically? Was that end-markets fairly weak throughout the period? Did it see a more precipitous fall-off towards the end of the quarter? And then, could you just remind us in terms of your service mix of the break down between contracting versus break fix and spare parts?

Yes. Thanks, Brandon. Appreciate the questions. And first of all, in academic and government, that was the weakest of the categories as we mentioned it was geographically the most weak in China where we saw a bigger decline in the government and academic business, relative to even the overall business and that was a function of the fact that most universities were closed in China for much of the first quarter and the majority of government tenders were delayed. So, that was a pretty clear line. And in China, historically, the academic and government business is a bigger mix of our overall business in part because of the government food labs and that's nearly a quarter of our business historically in China. So that had a big impact. We actually saw some more – actually better performance, kind of flattish to slightly up in the U.S. in academic and government where we were doing pretty well and that did have an impact at the end of the quarter. But that business was performing reasonably well, but have limitations to customer sites in probably the immediate future. And then, Europe was, I feel that the overall European performance of up 4% for the quarter, that was led by strong pharma, a modestly positive industrial and offset by negative on academic and government in Europe, which was a more cautious environment in that sector in the quarter. Relative to the service contracted plans, generally run in the sort of 40%-ish plus range in the developed markets and less than that in emerging markets. So, between a third to 40% or so of our service business is in the contracted service plans with the remainder being on-demand spare parts and lines of that nature. So, we’ve continued in all those categories although, I’ve…

And thank you. This does conclude today’s conference call. You may disconnect your lines and thank you for your participation.