West Pharmaceutical Services, Inc. (WST) Q3 2021 Earnings Report, Transcript and Summary

Good day and thank you for standing by. Welcome to the Q3 2021 West Pharmaceutical Services Earnings Conference Call. At this time, all participants are in a listen-only mode. After the speaker presentation, there will be a question-and-answer session. [Operator Instructions] Please be advised that today conference call is being recorded. [Operator Instructions] I would now like to hand the conference over to Quintin Lai, Vice President of Investor Relations. Please go ahead.

Thank you, Amanda. Good morning. And welcome to West’s third quarter 2021 conference call. We issued our financial results this morning, and the release has been posted in the Investors section on the company’s website located at westpharma.com. This morning, CEO, Eric Green; and CFO, Bernard Birkett, will review our financial results, provide an update on our business and present an update on our full year 2021 financial guidance. There is a slide presentation that accompanies today’s call, and a copy of that presentation is available on the Investors section of our website. On Slide 4 is our safe harbor statement. Statements made by the management on this call and in the accompanying presentation contain forward-looking statements within the meaning of U.S. federal securities law. These statements are based on our beliefs and assumptions, current expectations, estimates and forecasts. The company’s future results are influenced by many factors beyond the control of the company. Actual results could differ materially from past results, as well as those expressed or implied in any forward-looking statement made here. Please refer to today’s press release, as well as any other disclosures made by the company regarding the risk to which it is subject, including our 10-K, 10-Q and 8-K 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 prepared in conformity to GAAP are provided in this morning’s earnings release. I’ll now turn the call over to West’s CEO and President, Eric Green.

Thank you, Quintin, and good morning everyone. And thanks for joining us today. We will start on Slide 5. Our team delivered an incredibly strong third quarter. Our proven market led strategy delivered double-digit growth across all three market units and geographies and excluding positive impact from sales related to the pandemic. We delivered double-digit growth in our base business. With continued strong adoption of our high value products, coupled with solid execution and leveraging our global operating model. It has led to robust margin expansion and EPS growth for the quarter. Our Q3 performance was made possible by the commitment of the West team members across the globe. We are in the business of helping our customers bring new medicines and treatments that improve the lives of patients. I’m very proud and humbled of how we live our purpose by producing billions of components and devices each quarter. And we do so with the knowledge that each and every component we make is impacting patient’s life. We continue to fulfill our purpose by earning our customers’ trust by leading with quality, service and science. Looking ahead, we are well positioned with the right growth strategy. Our committed order book remains robust. We continue to capture the benefits of the globalization of our operating network and continued capital investments to support the increasing demand driven by the pandemic and attractive end markets. With this substantial momentum, we are raising our sales and EPS guidance for the full year 2021. And for the 29th consecutive year, we are increasing the company’s dividend. Bernard will go into greater detail shortly. Turning to Slide 6. Our key drivers of growth in Q3 are being fueled by COVID-19 customers that are using our stoppers and seals, including the highest level of NovaPure and FluroTec. Biologic customers that are shifting preference from FluroTec to our premium platform, NovaPure to achieve the highest quality and tightest specifications for their newly approved biologic drugs and pharma and generic customers that are increasing orders as their demand grows for non-COVID-19 vaccines and injectable drugs. Shifting to our device portfolio and our longstanding partnership with Daikyo Seiko. We continue to see adoption and uptick of customer interest for new pipeline drugs with Crystal Zenith syringes, cartridges, and vials. To meet this demand and stay ahead of the current growth trends for future approvals, we have continued to add manufacturing capacity for CZ. Our teams have successfully validated additional lines for insert needles, syringes, and will begin producing commercial product by the end of the year. All these products, as well as other HVP components are contributing to our growing book of committed orders, which position us well for the remainder of the year and into 2022 and beyond. Moving to Slide 7. To-date, we have been leveraging our global infrastructure and tapping it into the agility of our own team to meet the increased customer orders. As we highlighted in Q2, several phases of investment are proceeding, and now being realized. Since the onset of the pandemic, we have expanded capacity at 13 existing sites with 30 major facility modifications dedicated over 300 million of capital and added over 400 incremental pieces of equipment. All while keeping pace with a growing base demand and moving our operations to 24/7. As our book of committed orders continues to surge, we will continue to make further strategic investments to meet demand. Today, we’re announcing a fourth phase of capacity expansion that will commence in 2022. This will primarily focus on expanding NovaPure production at our HVP sites in the United States and Europe. Shifting to the rapidly changing environment and the impact of COVID-19 on the global supply chain, no industry has been immune to this impact. We’re working with our partners to help overcome challenges that span from transportation and logistics, to raw materials and securing labor, all leading to cost inflation and delays. We are successfully navigating this environment. Thanks to Part 2, our unsurpassed manufacturing footprint that will continue to serve our business well, as we operate through these unprecedented times. Turning the Slide 8, I’m proud of this significant progress we have made on our ESG priorities. These have been an integral part of our one West culture and our commitment to all our stakeholders and the communities where we work and live. Over the past six years, we continue to raise the bar in all aspects of our ESG initiatives, and we remain on track to publish by year-end a supplement to our 2020 corporate responsibility report incorporating the SASB and TFCD ESG standards. Now I’ll turn it over to our CFO, Bernard Birkett, who will provide more detail on the financial performance. Bernard?

Thank you, Eric, and good morning. Let’s review the numbers in more detail. We’ll first look at Q3 2021 revenues and profits where we saw continued strong sales and EPS growth, led by strong revenue performance in our biologics, generics and pharma market units. I will take you through the margin growth we saw in the quarter, as well as some balance sheet takeaways. And finally, we will provide an update to our 2021 guidance. First up Q3, our financial results are summarized on Slide 9 and the reconciliation of non-U.S. GAAP measures are described in Slide 17 to 21. We recorded net sales of $706.5 million representing organic sales growth of 27.9%. COVID related net revenues are estimated to have been approximately $115 million in the quarter. These net revenues include our assessment of components associated vaccines, treatment and diagnosis of COVID-19 patients offset by lower sales to customers affected by lower volumes due to the pandemic. Looking at Slide 10. Proprietary products sales grew organically by 35.7% in the quarter. High value products, which made up approximately 73%, our proprietary product sales in the quarter grew double digits and had solid momentum across all of our market units in Q3. Looking at the performance of the market units. The biologics market unit delivered strong double digit growth. We continue to work with many biotech and biopharma customers who are using West and Daikyo high value product offering. The generics market units also experienced double digit growth led by sales of FluroTec and Westar components. Our pharma market units also saw a strong double digit growth with sales led by high value products, including Westar, FluroTec NovaPure components. And contract manufacturing had low single digit organic sales growth for the third quarter led once again, by sales of healthcare related medical devices. We continued to see improvement in gross profit. We recorded $288.2 million in gross profit, $93.6 million or 48.1% above Q3 of last year. And our gross profit margin of 40.8% was a 530 basis point expansion from the same period last year. We saw improvement in adjusted operating profit with $182.8 million recorded this quarter compared to $103.9 million in the same period last year or a 75.9% increase. Our adjusted operating profit margin 25.9% was a 690 basis point increase on the same period last year. Finally, adjusted diluted EPS grew 79% for Q3, excluding stock-based compensation tax benefit of $0.11 in Q3, EPS grew by approximately 72%. Let’s review the growth drivers in both revenue and profit. On Slide 11, we show the contributions to sales growth in the quarter. Volume and mix contributed $142.9 million or 26.1 percentage points of growth, including approximately $83 million of incremental volume driven by COVID-19 related net demand. Sales price increases contributed $10.1 million or 1.8 percentage points of growth. Looking at margin performance. Slide 19 shows our consolidated gross profit margin of 40.8% for Q3 2021, up 35.5% in Q3 2020. Proprietary products third quarter gross profit margin of 46.3% was 550 basis points above the margin achieved in the third quarter of 2020. The key drivers for continued improvement in proprietary products gross profit margin were favorable mix of product sold driven by growth in high value products, production efficiencies and sales price increases, partially offset by increased overhead costs, inclusive of compensation. Contract manufacturing third quarter gross profit margin of 16.1% was 180 basis points below the margin achieved in the quarter of 2020. The decrease in margin is largely attributed to mix of product sold as well as timing of the pass through of raw material price increases to customers. Now let’s look of our balance sheet takeaway and review how we’ve done in terms of generating more cash for the business. On Slide 13, we have listed some key cash flow metrics. Operating cash was $423.2 million for the third quarter of 2021, an increase of $99.4 million compared to the same period last year, a 0.7% increase. Operating cash flow in the period was adversely impacted by a working capital increase as well as timing of tax payments. Our third quarter 2021 year-to-date capital spending was $176.9 million, $62 – $60.2 million higher than the same period last year. Working capital of approximately $1 billion at September 30, 202, increased by $169.4 million from December 31, 2020, primarily due to higher accounts receivable from our increased sales. Our cash balance at September 30 of $688 million with $72.5 million higher than our December 2020 balance. The increase in cash is primarily due to our strong operating results in the period offset by our share repurchase program and higher CapEx. Turning to guidance. Slide 14 provides a high level summary. Full year 2021 net sales are expected to be in a range of $2.8 billion and $2.81 billion compared to our prior guidance range of $2.76 billion to $2.785 billion. This guidance includes estimated net COVID incremental revenues of approximately $450 million. There is an estimated benefit of $55 million based on current foreign exchange rates compared to a prior estimated benefit of $80 million. This $25 million reduction in FX tailwind has been absorbed into our guidance. We expect organic sales growth to be approximately 28% compared to a prior range of 24% to 25%. We expect our full year 2021 reported diluted EPS guidance to be in a range of $8.40 to $8.50 compared to a prior range of $8.05 to $8.20. This revised guidance includes $0.35 EPS positive impact of tax benefits from stock-based compensation from the first nine months of 2021. Also our CapEx guidance remains at $260 million to $275 million for the year. There are some key elements I want to bring your attention to as we review our guidance. Estimated FX benefit on EPS has an impact of approximately $0.19 based on current foreign currency exchange rates compared to a prior estimated benefit of $0.27. And our guidance excludes future tax benefits from stock-based compensation. To summarize the key takeaways for the third quarter, strong top line growth and proprietary, gross profit margin improvement, growth in operating profit margin, growth in adjusted diluted EPS and growth in operating cash flow, delivering in line with our pillars of execute, innovate and grow. I’d now like to turn the call back over to Eric.

Great. Thank you, Bernard. To summarize on Slide 15, the excellent financial performance reported today continues to reaffirm that our strategy is working. Our market led approach is delivering unique value to our customers. Our global operations team is efficiently manufacturing and delivering product in this complex environment with a focus on service and quality. And we’re continuing to accelerate capital spending across our operations to meet current and anticipated future growth. Most importantly, we have an incredible team working to make this all happen. We are proud to serve as a valuable trusted partner for customers to support patient health and look forward to continue to play a critical role in delivering healthcare well into the future. Amanda, we’re ready to take questions. Thank you.

Thank you. [Operator Instructions] Our first question comes from the line of Larry Solow from CJS Securities. Your line is now open.

Thank you very much. Congratulations on another good quarter. And sounds like the outlook Eric, continues to improve. Maybe you can just discuss a little bit on the additional capacity expansions today that you announced. On NovaPure is that – it sounds like just another acceleration from planned capacity expansion that was probably a couple years – originally going to be a couple years out. So maybe is this NovaPure your expansion driven more on the base business, on the vaccine side? Is that more of a mix? Maybe you can give us a little color on that.

Larry thanks for the question and good morning. No, you’re absolutely correct. So what we’re seeing with the additional capital expansion is it was planned for further years out, brought it forward. This is more of a demand of both areas of biologics, new drug molecules being launched. And around the NovaPure, particularly around the plungers and also the life cycle management of COVID vaccines, as you think about various configurations, whether it’s in a vial configuration or a prefilled syringe. So it is a mix effect. And we brought it forward based on our discussions with customers and commitments that obviously we are making for them, but also what they’re making towards us.

And in terms of the life cycle management on the COVID vaccines, do you see this proliferating more into – as it goes more into doctor’s offices and maybe less on the mass vaccine basis, whereas the community centers and whatnot. I would imagine that benefit to you. Do you have any visibility on that that you can share with us in terms of dosing, switching maybe from five, 10 per vial to down to single doses?

Well, Larry those conversations are ongoing right now. When we look at the current mix that we have for our customers, it’s still mostly in regards to the COVID vaccines, it’s still mostly within vials and multiple doses per vials. But we continue to prepare ourselves as things do change over time. But the near-term, near-future we’re really focused on meeting the current configuration. Think about our capital expansions, they’re taking typically between one – let’s call it 12 to 18 months to get in validated and start scaling up production. So that’s the type of timeline we’re looking at far as preparing ourselves for any additional demand and other configurations.

Got you. And then just last a quick one. I saw you guys have release on this and this might just be a small little additional service offer. You guys on this DeltaCube modeling platform that you put out, I think that was presented at industry meeting a couple weeks ago. Is there any color on that this sort of online I guess, it helps customers design their packaging needs and whatnot. Any color on that.

Yes. Larry, one of the drivers, if you think about our pillars of strategy under execute, one of the key drivers of being market led is digitization, obviously internally, but externally for our customers and also digitization of product, now same focus on customers. What we – we have a wealth of data and science information that we’ve developed in our laboratories and work with the customers over the years. And what we’ve been able to do is use together our digital capabilities that we’ve been building over the last couple years with a predictive modeling capability, which is a more data driven offering. So as you can imagine, a customer trying to identify with their complex molecule that they’re looking at developing and obviously ultimately, commercializing. What is the ideal packaging configuration? And so that is where we are bringing that data to the forefront leading with science, being that scientific destination choice for our customers and providing that those insights. So more to come. We’re excited that we launched this. But for me personally, it’s a great example of our leadership position in leading with science for our customers.

Absolutely. I look forward to learn more about that. Okay, great. Thanks, Eric. I appreciate the thoughts.

Thanks, Larry.

Thank you. Our next question comes from John Kreger from William Blair. Your line is now open.

A question about COVID visibility. Based upon your discussions with clients and your order book, when would you expect your COVID volumes to start to tail off?

Well, right now, the way we see our confirmed order book on a complete – if you look at it as a complete order book – committed book, you’ll find that the – we’ll see that the COVID piece continues to increase. It’s not the majority of it, but it is continuously increased. And so we have good visibility going into 2022. John a lot of the invest that we’ve made committed to last year and the one that we just spoke of today a good portion of that is related to COVID vaccines to support not just the demands in the more mature markets, but basically on a global basis. So I won’t give a number out on the COVID piece, but it’s still very robust for us.

Okay. Thanks. So the COVID 2022 outlook would appear to be up from 2021.

Well, there’s a lot of factors, John in that, but right now, the way we’re discussing it with customers expanding capacity and building the capabilities in our plants, we anticipate similar, if not a little more stronger demand in 2022.

Sounds good.

We’re also seeing, it’s not just the COVID demand that the CapEx expansions are for it. It’s for our core business demand. And as Eric alluded to earlier, like we are seeing strong growth in those areas as well. So the CapEx is not just reliant on COVID, it’s there to support our business over the short and medium and long-term. So we have enough capacity over time to or enough demand to fill that capacity when it starts to come online.

That’s good. Thanks, Bernard. Actually a follow-up question for you on margins. Given the surge that you guys have seen over the last year, what is your comfort level that they can be sustained as you think about longer term planning? Or should we think about those margins to kind of come back to the older trend line once COVID volumes start to normalize?

I wouldn’t see the margins coming back to where they were. I think the gains that we have gained over the last 12 to 24 months, our plan is to hold onto those and actually expand margins further as we move out over the next number of years. And you can see it in the dynamic of our business and where the growth is actually coming from. So it’s – a lot of it is placed within the biologic market unit, and that is driving a lot of the growth on revenue, but plus on margins. And again, it’s not specifically reliant on COVID it’s within our core business. And what we’re actually seeing and you can see on some of the callouts, the growth that we’re seeing around generics and pharma, we are seeing the high value products, getting traction in those areas also. So coupled with the efficiencies that we’re forecasting to come from operations, we believe that we will continue to expand margins. Will it be at the same pace as what we’re experiencing here in 2021? That’s something that we will give further information on when we guide here in the first part of 2022.

All right. Sounds good. Thank you.

Our next question comes from the line of Derik DeBruin from Bank of America. Your line is now open.

Hey, good morning.

Good morning, Derik.

Hi. So a couple question. I think first one, can you talk a little about the contract manufacturing segment a little bit lower than what we had forecast and also comps start getting easier next quarter. So should we start to think about starting next quarter, your back at sort of that high single digit, low double digit growth rates that your long-term guide implies?

Yes. If you’re talking about getting to the end of 2021, I wouldn’t see.

Yes. Yes, yes.

I wouldn’t see acceleration in the growth rates in that timeframe. My expectation is it’ll be pretty similar to what we saw here in Q3. And we had been signaling that, talking about that for a long time, that the growth in contract manufacturing would modify for a period of time. And then as we move into 2022 and 2023, we would expect to see that growth to begin to accelerate again, but more in line with kind of mid single digit growth rates, rather than like double digit growth rates that we had experienced in 2017 and 2018. And so we’ve looked at the mix of our business and looked at where we should be deploying our capital to make sure that we are getting growth rates, but also that it’s on our proprietary side. We’re still very, very focused on contract, but I wouldn’t see it growing at double digits.

Great. That’s really helpful color. And can we talk a little bit about how you sort of thinking about CapEx over the next 2022, 2023 time period? I mean, since you’re pointing some things forward, should we expect similar levels next year? So that’s one. And then I guess, what’s the revenue potential for the additional capacity expansions that you’ve got ongoing overall?

So as Eric said, we’re seeing very, very strong demand both within our core business and responding to COVID. So, our CapEx stepped up in 2020 and here again in 2021, and we’re not going to guide to a number for 2022, but it will be a little bit higher than what we would’ve normally guided at least on that 6% to 7%. And that’s the – what we’re seeing is, and if you look at it over the last probably, 12 to 18 months, we’re stepping up capital on an incremental basis. So understanding that the demand is there so that we can feed into it pretty quickly. So all of the capital expansions are tied into demands that we can see coming from customers over the 2022, 2023 time horizon.

Great. And can you talk a little bit more about being able to pass on for pricing raw materials? Just we’re getting a lot of questions from clients on those topics across the board, but we’d love to hear you sort of elaborate more on the supply chain and pricing dynamics?

Yes, so we’ve been passing on cost increases to customers again throughout 2020 and 2021, particularly on phrase, as freight charges and logistical charges increased, we were able to pass those on to many of our customers on components, specific components where we have seen price increases, both within contract manufacturing and in our proprietary business, we have been passing those on to our customers. And obviously, keeping them in the loop as to what’s happening, but what are driving these price increases that we’re passing on. And also as we look out into 2022, we have various mechanisms in place to enable us to pass on many of these increases and it depends on what the relationship with the customer, whether it’s contracted business or not, but in the various sectors, we have various tools that we employ. So we’re able to – we don’t have to absorb the majority of those inflationary costs. And then also we’re working on the other side to make sure that we’re getting leaner and more efficient and to make sure that we can deal with those from that angle as well. So there’s a multifaceted approach.

Great. Thank you.

Our next question comes from the line of Paul Knight with KeyBanc. Your line is open.

When you look and when you plan this CapEx and look at future demand, is it emanating from fill and finish customers, or is it emanating from the therapeutic programs that are in like stability trials? How do you pinpoint what this demand may look like in even 2023 and outer?

Yes, Paul, the driver of the demand expansion or the demand increase that we’re seeing in requiring capacity expansion is really driven by the therapeutic companies directly with the drug customers, not the fill and finish. So as you know, it’s a whole ecosystem and we know where we play, but our interactions are directly with the drug customers. What’s also exciting is to see is that it’s not just concentrated one area, i.e. biologics. It’s also, we’re starting to see pick up in small molecules also which is good for our long-term franchise, but yes, absolutely the drug customers.

And then as you look at your capacity expansion, are you having to – is it 12 to 18 months with customer validation? And are you running into challenges that I’m guessing some of these are even Greenfield sites, so will you have to stretch out that, what is the duration of a build to actual produce revenue timeline?

Yes, Paul, what’s fascinating about – what’s actually quite exciting is that a few years ago we made the strategic decision to start creating centers of excellence and started to consolidate our manufacturing into particular sites throughout the world and became more effective through in systems, working with our customers, through our quality systems, also in processes to create more of an operating network. So the short answer to your questions, this is not greenfield. A lot of the investments we’re making right now are physical equipment, process expansions, maybe moving some modular approach in some sites. You’ve been to Waterford, we’ll be looking at maybe expanding that site with another modular addition on the side, but it is leveraging existing facilities. When you add it all up, it really comes down to how fast we can have the equipment manufactured, delivered, installed, and gone through validation since a lot of the equipment is replicating what’s in place already. The validation process with customers is very short, so we could have some expansion proved up and running less than just in a couple quarters. Some other expansions might take four or five quarters to get up and running.

Yes, Paul, as soon as the equipment hits the production floor and is validated, it’s operational. So we have demand to feed into its straight away so that the payback on the capital is pretty quick for us at this point. And again, that’s why we were doing this phased approach so we can manage it appropriately.

Okay. Thank you.

Thanks, Paul.

[Operator Instructions] Our next question comes from the line of Dave Windley from Jefferies. Your line is now open.

Great, I wanted to ask a few, first one is whether or not your views on your COVID revenue for the full year change with the results that you posted in third quarter. Is it still $430 million?

$450 million.

$450 million okay.

We called out.

Okay. Sorry. I missed that. On innovation Eric, the CZ was a topic of a conversation really dating back to before your tenure got quiet for a while and I hear you calling it out. Again, I guess, I’m interested in, maybe some color around the drivers of that. Did the company – has the company kind of enhanced the material or work through some developmental bottlenecks with clients that’s allowed that to kind of break free on a renewed basis?

Yes, Dave, if you think about the device portfolio, let’s just call it roughly 5% of West on the proprietary side. So 5% of the business, CZ is the largest portion of that. And what we’re seeing is the reality is we’re continuously optimizing the product and coming out with new line extensions, however it’s taken while to see the market and gain confidence and traction, but once it starts becoming quite common use for the high end biologics, we’re seeing that acceleration. So in particular with the insert needle syringes that we have been producing in Arizona, we’re actually at the stage of doubling capacity by the end of this year. And that’s what was referenced. So when you think about the growth, which is above the company average, significantly above the company average, we do see through the number of approvals of drugs in the market. Plus what’s in the pipeline that’s being reviewed as we speak that this is an exciting area, but it has taken time. You’re right. Dave, it’s been – this has been discussed for a number of years, but now it’s becoming more noticeable in our growth numbers, particularly around devices.

And then sticking with innovation, in previous commentary, you’ve talked about, hey, NovaPure is not the end of the road. We’re not done with NovaPure. We want to continue to innovate, any comments on that front is NovaPure Prime in the offing at any time in the near future?

Well, I don’t know if I can use that now, because I’ll have to notate you. I will say stay tuned, I got to be careful in that category, but I will tell you that what’s really exciting is that the teams that we’ve put together, particularly with the market led approach, we’re getting better insights on where we are headed on what products are being pulled by our customers and what problems we’re trying to solve. I know earlier, we just briefly mentioned a new digital tool and that actually was DeltaCube that was actually derived from conversations with our customers. Wouldn’t it be great if we could do this? So stay tuned on that question. We are constantly developing and but be assured though there will be products that are being pulled by our customers today.

Got it. Last question for me is around capital deployment. You’ve talked at times about being interested in acquisitions. I can imagine that maybe finding what you wanted at attractive prices might be a little hard in this market. Raise the dividend, but not by much. Is there any appetite given of growing cash on the balance sheet to say, make the dividend more substantial or are you holding it back for acquisitions? What’s your thought around cash?

Well, I would say the first priority, Dave, and particularly in the environment that we’re in today is to continue to feel the very robust organic growth that we have in our hands and that we’re dealing with. It’s a great problem to solve, right. And so we’re going to continue to invest in our own infrastructure. What I’m excited about is that it’s a really short payback and it’s expanding current portfolio. We do think there’s opportunities on the M&A front and we’re continuously building that capability out here. But our primary focus I’ll tell you is laser focus on execution. But we’re opening up our discussions broader than that today.

Thank you.

Thanks Dave.

I’m showing no further questions at this time. I’d like to turn the call back over to Quintin Lai for closing remarks.

Thanks, Amanda. And thank you for joining us on today’s conference call. An online archive of the broadcast will be available on our website at westpharma.com in the Investors section. Additionally, you can access a replay through Thursday, November 4th, by using the dial-in numbers and conference ID provided at the end of today’s earning release. This concludes today’s call. Have a nice day.

Thank you. This does conclude today’s conference call. Thank you for participating. You may now disconnect.