Pfizer Inc.
Q2 2010 Earnings Call Transcript

Published: 3 Aug 2010

[Charles Triano:]

Good morning, thank you for joining us today to review Pfizer's second quarter 2010 performance, 2010 financial guidance and 2012 long-range targets. I'm here with Jeff Kindler, Frank D'Amelio, Ian Read, and other members of our leadership team. The financial charts that will be presented on this call can be viewed on our home page at www.pfizer.com in the Investor Presentations tab by clicking on the link Quarterly Corporate Performance Second Quarter 2010. Also, I would add that this quarter we have begun providing a more detailed geographic revenue breakdown in our financial tables. Before we start, I would like to remind you that our discussions during this conference call will include forward-looking statements. Actual results could differ materially from those projected in the forward-looking statements. The factors that could cause actual results to differ are discussed in Pfizer's 2009 annual report on Form 10-K, and in our reports on Form 10-Q and Form 8-K. Also, the discussions during this conference call will include certain financial measures that were not prepared in accordance with Generally Accepted Accounting Principles. Reconciliation of those non-GAAP financial measures to the most directly comparable GAAP financial measures can be found in Pfizer's current report on Form 8-K dated today, August 3, 2010. These reports are available at our website at pfizer.com in the Investors SEC Filings section. With that, I'll now turn the call over to Jeff Kindler. Jeff?

[Jeffrey Kindler:]

Thanks, Chuck, and good morning, everyone. I'll start with six key points. First, for the second consecutive full quarters since we closed the Wyeth deal, we are reporting strong top and bottom line results across the business. Second, we are improving our outlook for the rest of this year. We are now projecting adjusted diluted earnings per share in the upper end of our range. Third, we are reaffirming every element of our targets for 2012 despite the headwinds of global economic challenges, U.S. healthcare reform, European pricing challenges and foreign exchange fluctuations. Fourth, as I discussed last quarter, we recognized that returning cash to our shareholders is an important part of how we deploy your capital. Consistent with that, we are today reporting on our repurchase of common stock during the quarter. Fifth, also consistent with that important principle, we are today reaffirming that barring significant unforeseen events, we expect our Board to approve an increase in the dividend at its December meeting. And sixth, we are announcing today that in light of our current assessment of the company's solid financial position and its strong operational prospects, we're now targeting a dividend payout ratio comparable to the current industry average in about three years. Looking ahead, we intend to continue delivering strong, steady and consistent results, even in times of economic uncertainty and even as different parts of our business face different challenges and seize the different opportunities offered by healthcare needs around the world. We believe we are well positioned to do this, based on the key factors that have driven our performance over the two complete quarters since we acquired Wyeth. First, the relentless insistence on operational execution produced by our customer-focused accountable business units. Second, our disciplined deployment of capital to achieve the right returns for the distinct risks and opportunities offered by different areas of medical research, products and markets, coupled with an ongoing drive across the company for continuing improvements in productivity. And third, a business mix of products, businesses, geographies and areas of medical research that balances both our risks and our opportunities. To reinforce this last point, please take a look at this chart. This chart shows the share of our revenue generated by each business unit during this quarter compared to the same quarter last year before the Wyeth acquisition. I'd like to call your attention to the share represented by our Primary Care business unit, the blue slice on the pie chart. This business sells patent-protected Primary Care products in developed countries, including the United States, Western Europe, Japan, Canada and Australia. Sales of those types of products in those types of markets dominated Pfizer's earnings prospects in the recent past. This chart shows us that it's changing significantly. As you can see, Primary Care generated nearly half of our revenues in the second quarter of last year. By contrast, it represents about a third of our revenues this quarter. That's important to emphasize that the need to prevent and treat Primary Care diseases in the developed world is greater than ever, and the opportunities for Pfizer to create shareholder value in addressing those needs are still enormous. In fact, our confidence in Pfizer's ability to meet those needs is strengthened by the performance of the Primary Care business unit both this quarter and year-to-date. In a very difficult operating environment, the legacy Pfizer Primary Care business increased operationally 5% this quarter compared to last year

[Frank D'Amelio:]

Thanks, Jeff. Good day, everyone. Before I begin, I want to punctuate Jeff's previous comments regarding Pfizer's dividend. First, we have continued confidence in the business given the strong operational performance that we posted for the two full quarters that have included Wyeth operations. These results demonstrate the strength of our more balanced portfolio. In addition, we have continued confidence in the Wyeth integration and our initiatives are remaining on track. Finally, we continue to expect to generate consistent results over the long term, including cash flow, which we anticipate will benefit shareholders through appropriate levels of investment in the business and our pipeline to generate profitable revenue growth, as well as a direct return of cash to our shareholders through dividend payments and share repurchases. We understand the importance of our dividend, as well as our payout ratio relative to that of our peers. As such, we are now targeting a dividend payout ratio comparable to the current industry average of approximately 40% in about three years. While the dividend level remains a decision of the Board and will continue to be evaluated in the context of future business performance, barring any unforeseen circumstances, we currently anticipate Board approval of the dividend increase in December. Now let's move on to the second quarter financial results. As always, the charts I'm reviewing today are included in our webcast. The 58% year-over-year increase in second quarter 2010 revenues was primarily attributable to the addition of Wyeth products, which favorably impacted revenues by 50%, as well as legacy Pfizer products, which increased revenues by 3%. Second quarter revenues also included the positive effect of foreign exchange of $584 million or 5%. The increases in adjusted income and adjusted diluted EPS were primarily due to revenues from legacy Wyeth products and foreign exchange, which were partially offset by expenses associated with the addition of Wyeth operations, a higher net interest expense and an increase in the effective tax rate. Also, it's important to remember that both reported and adjusted diluted EPS were affected by the increased number of shares outstanding compared with the year ago quarter because of shares issued to partially fund the Wyeth acquisition. Second quarter adjusted total costs were negatively impacted primarily by the addition of Wyeth operations and to a much lesser extent by foreign exchange, which increased adjusted total cost by $48 million or 1%. The increase in adjusted cost of sales as a percentage of revenue is primarily due to the change in mix of products and businesses, resulting from the addition of Wyeth operations, which was partially offset by the positive impact of foreign exchange. The increases in adjusted SI&A and R&D were also driven by the addition of Wyeth operations, as well as the unfavorable impact of foreign exchange. In addition, our continued investment in our late stage development portfolio contributed to the increase in R&D expenses. Foreign exchange continued to have a positive impact on revenues and a negative impact on adjusted total costs this quarter. While foreign exchange had a negative impact on adjusted SI&A and R&D expenses, it had a positive effect of $99 million or 6% on adjusted cost of sales. The net effect to foreign exchange favorably impacted adjusted diluted EPS by $0.04 in the second quarter. Beginning this quarter, we've included additional schedules to our financial tables, which break out the revenues for our top Biopharmaceutical products and our total Diversified business by geographic market, including the following international markets

[Jeffrey Kindler:]

Thanks, Frank. And at this time, operator, if we could please poll for questions.

[Operator:]

[Operator Instructions] Your first question comes the line of David Risinger from Morgan Stanley.

[David Risinger:]

First of all, with respect to the wholesaler buying in the quarter, could you just go through that in a little bit more detail? And then if you could explain who you have inventory management agreements with and who you do not? For example, I would guess that maybe some chains that you don't have wholesaler buying or inventory management agreements might purchase ahead of price increases, but I'm not sure how to think through that. And then second, if you could provide some more color on the run rate in the second half and how you plan to raise that up, that level of earnings per share upward to raise the base of earnings dramatically ahead of the major patent expirations going into 2012?

[Frank D'Amelio:]

David, in terms of the wholesalers, I think the way to answer this question is, we announced on our last call that we were moving from a TIPS environment to a fee-for-service model for U.S. distributors. And what happened is last quarter, that detrimentally impacted revenues. This quarter, it positively impacted revenues. The positive impact this quarter was about $308 million, exactly $308 million. Last quarter, it was approximately the same. So on a year-to-date basis, we're pretty much net zero now relative to the change in our U.S. distributor model. So that's how I'd answer that. In terms of the run rate question, and what we're going to be doing to improve EPS going forward, it's all the things from my perspective that we've been working on. So it's continuing on our cost reduction initiatives, it's continuing to drive continuous improvement in our focused areas, which include Emerging Markets, Established Products, our Invest to Win areas. It's those kinds of things, along with executing and driving our business every day.

[Ian Read:]

We have the fee-for-service agreement with the three major distributors, at least the three major distributors in the U.S., which covers the majority of our sales into the U.S. distribution channel.

[Operator:]

Your next question comes from Chris Schott from JPMorgan.

[Christopher Schott:]

First of all, I appreciate the color on the dividend targets over time, and I had a couple of questions on that. How should we think about the trajectory of those potential increases? Is that something that will be relatively consistent over the next three years? Or should we think about those potential increases as more back-end loaded as you get past the 2012 patent cycle? Second question was with the capital structure currently, what type of constraint should we think about when considering your share repo, your dividend, your business development ambitions? Basically, what type of debt levels and leverage are you now comfortable operating with given the more diversified business that you have? And the final question was thinking about the longer-term model. You've moved your Primary Care business, obviously, down to 34% this quarter, given a number of major patent expirations and what appears to be some of your larger pipeline opportunities coming from non-Primary Care areas. Where should we think about PCP going as a percent revenue over time? Could we see that number go below 25% when you consider your longer-term targets?

[Charles Triano:]

Go ahead, Frank.

[Frank D'Amelio:]

Let's see, on each of these, in terms of the dividend, I talked about -- what we're targeting now, a dividend payout ratio comparable to the current industry average of approximately 40%. Chris, we're currently at about 33%, right? Our dividend payout right now is $0.72. If you take whatever number from our guidance, you get to about 33%. So clearly, this is a commitment to reap dividend in about three years. In terms of how we get from here to there, that will take place on an annual basis. And we said, we'd have a -- we're expecting an increase, pending Board approval, this coming December. So we gave you the beginning, where we are, where we plan to get to. And then obviously, we'll tell you how we get there each December, the way I'll answer that question. In terms of capital constraints, from my perspective, with our current balance sheet, we continue to have financial flexibility. If you look this quarter and we made a commitment to increase our dividend payout, we bought back $500 million worth of our shares. We're able to fund the business operationally and do the things we need to do. And to invest in future profitable growth, I think, we're seeing some of that. In our Emerging Markets, for example, we had a strong quarter in China. We've been deploying capital in China, and we're getting a nice return on that capital. So from my perspective, I think we have lots of flexibility to do the things that we need to do to invest in the business, to return capital to our shareholders. I don't view it as an or, I view it more as an and.

[Jeffrey Kindler:]

Maybe I'll just comment on the last part of your question, Chris. The objective is to have a balanced portfolio of risk and opportunities. And as I've said before, we'll continue to review the right balance over time and not based on some pre-determined objective of percentages over some long-term forecast.

[Operator:]

Your next question comes from Marc Goodman from UBS.

[Marc Goodman:]

First, can you talk about the push/pulls on the gross margin and your expectations of how this plays out for the rest of the year and into next year? And then secondly, just specifically on Prevnar 13 and 7, can you give us a flavor for what is kind of a normal run rate of revenues of those products, how you see that playing out? Were there any major tenders this quarter versus last quarter and your expectations for how that plays out the rest of the year?

[Charles Triano:]

Let's start with Frank and then, Ian.

[Frank D'Amelio:]

So on the gross margin, I'll answer this maybe through cost of sales. If you look at our cost of sales through the first -- for the quarter and for first half of the year, they're running at about 17% for the quarter. Although if you take out foreign exchange, it's about 18.2%. And then for the first half of the year, it was 17.3%. If we remove foreign exchange, it's about 17.5%. And then we maintained our guidance, which is roughly 19% to 20%. So let me talk about what's happening there. And really, Marc, it's the items I talked about relative to revenue plus few other things. So clearly, product mix can change from quarter-to-quarter. The second thing is, we do expect some continued volatility with foreign exchange and the impact that, that could have, in particular, on cost of sales. And then, some of the LOEs that I talked about with LIPITOR and with EFFEXOR, we'll put some pressure on, as well in gross margins, as well continued European pricing pressure. So we factored all that into our guidance for the year, which is the 19% to 20%, which we maintain, and we also factored that into our 2012 targets. We kept our operating margins in the high 30s to low 40s.

[Charles Triano:]

Ian, about Prevnar?

[Ian Read:]

I think the Prevnar quarter was, I would classify it as normal quarter, the usual fluctuations. We're seeing good growth in United States coming from the catch-up volume that we're operating against our price increases and a small impact of inventory build of about $34 million. So I would just classify this a normal quarter and the expected rhythm of the business.

[Operator:]

Your next question comes from John Boris of Citi.

[John Boris:]

First question for Frank. Just -- you indicated, certainly, there were some European pricing pressures. Can you help us understand what the impact on pricing will be in the back half, but importantly on 2011 and 2012, coming out of, most notably, France, Germany and Spain, and how that carries through to '11, '12 and any implication that has on your guidance? And then on U.S., price increases may not have been -- if were there any in the quarter? But more important, were there any in the third quarter that could have led to some anticipatory buy-ins?

[Charles Triano:]

Frank, you want to start?

[Frank D'Amelio:]

So on the European pricing pressure, I think the way I'll answer this, John, is pricing pressure in Europe is not a new entry for the industry nor for the company. And we're a global company with a global portfolio. We run the business, therefore, on a global basis. But that said, the way we think about Europe is, traditionally, pricing pressure on an annual basis has been in the low-single digits. This year, we're projecting it to be in the mid-single digits. We've factored that into our 2010 guidance. And we're assuming that mid-single-digit pressure going forward through our 2012 targets. So that's how I'd answer the question relative to what we see from an impact perspective and then the relationship of that to our guidance in 2010 and our targets for 2012.

[Ian Read:]

So John, we've moved to a fee-for-service basis. So we don't see any movements on inventories because of our anticipatory buy-in, because of price increases. So I don't think that's been an impact, and the inventory level for the end of the second quarter were equal to, or slightly down, compared to the inventory levels of the previous 2009 second quarter.

[Frank D'Amelio:]

The inventory levels this quarter with the distributors was 2.6 weeks on hand. The year-ago quarter, it was 2.8 weeks on hand, just to punctuate Ian's point.

[Operator:]

Your next question is from Jami Rubin of Goldman Sachs.

[Jami Rubin:]

Question for you, Jeff and Frank, you've purchased $500 million worth of stock during the quarter, which is obviously a great start. Something that we've been wanting to see. But frankly, a pittance relative to what your real buying capacity is and given that you're going to generate close to $20 billion in operating cash flow. So can you update us on your thoughts on this? And how more aggressive you are likely to get with share repurchases? My second question relates to business development activities. There hasn't been much this year despite, I think, your guidance, Frank, of 5% of the revenue target in 2012 coming from M&A. Can you remind us again your priorities? Obviously, there is large-scale biotech M&A activity heating up. And could you also just tell us or characterize your interest in acquiring a large scale, say, $18 billion to $20 billion biotech asset?

[Frank D'Amelio:]

So on the share repurchases, if you recall, last quarter, we said that giving prevailing market conditions, we now view share buybacks as an attractive investment opportunity and that we would be opportunistic in terms of going into the market and purchasing shares as market conditions warranted. And that's exactly what we did this quarter. If you look, we did the $500 million worth of share buybacks, almost 31 million shares. And on a going-forward basis, we will continue to be opportunistic in terms of what we do, we don't do in the market, as market conditions warrant. So I'd say that's clearly one possible use of our capital. As I mentioned, we did use some capital this past quarter to purchase $0.5 billion worth of our shares. In terms of business development, we continue to view bolt-on transactions as prudent from a business development perspective, and the focused areas have not changed. They continue to be Emerging Markets, Established Products, and our 'Invest to Win' areas

[Operator:]

Your next question comes from Tim Anderson from Sanford Bernstein.

[Tim Anderson:]

On foreign exchange, you reported a benefit of 5% to revenues. When I look at what other big U.S. direct companies reported in the quarter, very consistently, it was maybe 1% or 2%. And I know that every company has a different revenue mix. But I'm wondering, are there some reasons that can explain why Pfizer had such a unique big benefit in the quarter? Also, can you comment on what FX impact on full year revenues would be if you kept rates current? And then second question is on your legacy Pfizer Emerging Markets growth rate. You report that as 11%. I'm assuming that includes FX. What would have been the growth in that division on a legacy basis, excluding FX?

[Frank D'Amelio:]

Yes. So on foreign exchange, the reason that we've been different than our competitors is really based on our fiscal calendar for international. So remember, our fiscal year ends in November for our International business. So for the second quarter, it includes the months of March, April and May. Whereas for the rest of the industry on a whole, it's April, May and June. So in the quarter, we had March and not June. And what happens, Tim, is if you look at the euro to the dollar, for example, in March, it was 1.36 on average. If you look at the euro to the dollar on average for June, it was 1.23. So if we had June in the results, our $0.04 benefit would have been more like $0.02 on an EPS basis. The 5% in revenue would have been more like, call it, 2%. So it's really the calendar, the months that are included in the calendar that caused the difference. On foreign exchange impact for the year, I think what I would say is, this quarter, it was $584 million on revenue. On a year-to-date basis, it's $1,316,000,000. I'm trying to project that on a going-forward basis. Just with all the moving parts and with the different currencies and the basket of currencies that we have, it's extremely difficult. And the third question? On Emerging Markets, that 11% was operational. It excluded foreign exchange. So think about that 11% as it's our legacy Pfizer Biopharmaceutical business unit of Emerging Markets that all in grew 11% operationally, which excluded the impact of foreign exchange.

[Operator:]

Your next question is from Eric Lo from BoA Merrill Lynch.

[Eric Lo:]

I was wondering if you could comment on what the profitability of those sales are in this region? And second question, I wanted to maybe follow up a little bit in terms of the switch to the fee-for-service distribution model. Are you foreseeing any impact to your sales in the second half coming from that?

[Charles Triano:]

Frank for the first question, Ian for the second.

[Frank D'Amelio:]

So on the profitability of Emerging Markets, there is no doubt that gross margins in Emerging Markets are lower than the gross margins in our traditional Biopharmaceutical business. But the Emerging Market business also has lower expenses. So when we look at the operating margins that we'll generate from the emerging markets and factor that all into the combined company, that's what allows us to reaffirm our 2012 targets for operating margins, which were in the high 30s, below 40%, which, by the way, is where we are now. If you look at our results this quarter, operating margin for the quarter is about 42%. If we remove foreign exchange, it's about 40.5%, consistent with our targets for 2012, which clearly assumes growth in the Emerging Markets and factors in those income statement dynamics that I just alluded to.

[Ian Read:]

Those three went to a fee-for-service as of the beginning of this year. The underlying sales and demand are not influenced by buying patterns because of the fee-for-service. So I don't expect to see any impact from the second half of the year from fee-for-service and the fluctuations that Frank is talking about, our fluctuations that occurred in our '09 results between the first and second quarter, which then, on a growth basis, creates a comparison into this year.

[Operator:]

Your next question comes from David Maris of CLSA.

[David Maris:]

Just wanted to understand a little bit better on the sales force headcount globally, how that developed during the quarter and maybe during the first half of the year? What is it in China and the Emerging Markets, and how has that changed?

[Frank D'Amelio:]

Why don't I run the total headcount numbers and then, Ian, you can comment on the sales force. So if you look -- when we closed Wyeth, our headcount was 120,700, and that was the middle of October. Please remember, when we announced Wyeth in January, our headcount was about 130,000. So the headcounts have reduced from announcement to close by 9,300 people. Since we closed, the headcount numbers now, by quarter, have been from 120.7, to 116.5, to 113.8, to 112, 1,100 people. So since we closed on the deal, we reduced our total workforce by 8,600 people. That's in addition to the workforce reductions from when we announced the deal to when we closed the deal, which were another 9,300 or so, so a big number. I also want to mention that despite that, we're actually growing headcount certain parts of the portfolio, for example, in Emerging Markets. So that's a net number that I just quoted. Ian?

[Ian Read:]

So in the U.S., most of the field force changes were made very quickly up the Wyeth acquisition, so they are recently stable, some minor tactical changes. Emerging Markets, we continue, where appropriate, to add field force. So if you look at China, we've expanded from 2,600 reps to 3,000 between the first and second quarter. That has been the major country where we we're adding field force.

[Operator:]

Your next question is from Seamus Fernandez from Leerink Swann.

[Seamus Fernandez:]

Maybe, Frank, can you characterize for us the relative side of a bolt-on acquisition for Pfizer at this point? How we should think about it and how disruptive, something like that, might be viewed, given where you are in terms of the innings on the different -- or how you're thinking about disruption in terms of the inning where you are on breaking out the different business units and sort of separating out and having the different business units operate? And then the second question was, I think, fairly simple. How much did the two days of incremental Pfizer sales contribute in the first half of the year? Just wanted to know that number quickly.

[Frank D'Amelio:]

So Seamus, on the days question, it was two additional selling days in the first half in the U.S. and assume it's about $100 million a day. it's a touch higher than that, but $100 million a day, so giving us a $200 million on the impact of the days first half of the year versus second half of the year. In terms of business development and the size, I used the term before bolt-on transactions. I think of bolt-on transactions as a few billion up to maybe several billion, but it's in that kind of a range relative to a bolt-on transaction.

[Operator:]

Your next question comes from Tony Butler from Barclays Capital.

[Charles Butler:]

Jeff, you've made some commentary around balancing risk and reward. You've also talked about productivity in R&D and ROI. And there's also been guidance given about lowering R&D costs by roughly $1 billion by 2012. But I'm curious, given the fact, it seems that the landscape has changed in R&D risk. It's gone up tremendously. Would it not be more prudent to consider even lowering that number, $8 billion to $8.5 billion by '12 even further, maybe another 10%, maybe 20%? Is that some thought around discussion internally?

[Jeffrey Kindler:]

Tony, I said earlier, I recognize that the return on investment, R&D spend is an important thing to focus on, and we are looking at that in general. And the way we've been focused on this, as you know, is to first of all, think very hard about what disease areas we should be in. And in those different disease areas, there are differences in terms of the return, in terms of where we want to take risks. Some risks are higher than others, and we have really improved, I think, the model in terms of moving Phase III decisions to places where the people making those decisions are accountable for the returns in a different way. And I think that we've made some important decisions in that regard, and we'll continue to look at the overall spending both in general and in how the spending that we have is determined on both the product basis and across the portfolio. It's an important issue, and we continue to review it.

[Frank D'Amelio:]

And Tony, it's Frank. If I could just run the numbers quick. You mentioned the $1 billion. In 2008, the combined spend of Wyeth and Pfizer R&D was about $11 billion. Pfizer was about $7.5 billion, Wyeth was about $3.5 billion, and so we're targeting $8 billion to $8.5 billion, which are the numbers you mentioned by 2012. That's a $2.5 billion to $3 billion reduction off of the pro forma 2008 numbers.

[Operator:]

Your next question comes from Bert Hazlett from BMO Capital Markets.

[Robert Hazlett:]

First is regarding the higher-margin area of the Emerging or Established markets, that of injectable products. How attractive is this area to you? And can you do licensing to play here or do you need to do acquisitions? And then my second question is regarding crizotinib, the ALK inhibitor. In the genetic testing that's necessary for ALK elevation, how widely available is that currently? And do you have any plans to develop that test? And can you just discuss maybe other tumors that may express or over-express ALK that you might be considering with that drug?

[Charles Triano:]

Ian?

[Ian Read:]

Injectables. Yes, injectables are important part of our strategy. We're actually -- as a first wave, we're working in the U.S. with injectables. But certainly, we see it as important Emerging Market. We see that being done primarily through licensing at the moment as regard our strategy. And on the second one, on the crizotinib, on the genetic testing, we're working with various suppliers, Abbott, being one of them, to ensure that, that test is widely available at launch. And that we're also looking at the databases to see the expression of the altgin [ph] and other tumor types. we know it's present. There have been some studies talking about prevalence in various tumors. But right now, we're really focused on the opportunity in lung cancer and getting that product to market.

[Operator:]

Your final question comes from Steve Scala from Cowen.

[Steve Scala:]

At this early juncture, what is your expectation for the launch of LIPITOR generics in November of 2011 relative to timing? Do generics launch, relative to number of competitors, is it one or two or six? And supply, can they supply 20% of the molecule or 100%? And then secondly, what changes, if any, in R&D should we expect with Dr. Dolsten on board?

[Ian Read:]

So regarding Lipitor, we expect the generic to launch in November, and we expect them to have full-some supply.

[Jeffrey Kindler:]

And Steve, with regard to Dr. Dolsten, he's a fabulous world-class scientist and physician, who has really exciting ideas and opportunities. He's been responsible for our worldwide R&D organization for a couple of months and has already brought on board some world-class scientists and leading physicians. And watch this space, there's some very exciting things to come, and I hope you'll have the opportunity to meet with him soon.

[Charles Triano:]

And with that, I will thank all of you for joining us today. We appreciate your interest and time. And we hope you all have a good day.