Earnings Call Transcript - FMS Q2 2021

Operator, Operator

Ladies and gentlemen, thank you for standing by. I am Emma, your Chorus Call operator. Welcome and thank you for joining the Fresenius Medical Care Earnings Call Report on the Second Quarter 2021. Throughout today’s recorded presentation, all participants will be in a listen-only mode. The presentation will be followed by a question-and-answer session. I would now like to turn the conference over to Dominik, Head of Investor Relations. Please, go ahead, sir.

Dominik Heger, Head of Investor Relations

Thank you, Emma. As mentioned by Emma, we would like to welcome you to our earnings call for the second quarter 2021. We appreciate you joining today to discuss the quarterly results. Now it is my pleasure, as always, to start out the call by mentioning our cautionary language that is in our safe harbor statement, as well as in our presentation and in all the materials that we have distributed earlier today. For further details concerning risks and uncertainties, please refer to these documents as well as to our SEC filings. We are aware that it is most likely us to keep you away from your weekend. Therefore, we try to keep the presentation short and leave time for Q&A. As always, we would like to limit the number of questions again to two, in order to give everyone the chance to ask questions. It would be great if we could make this work again. With us today is, of course, Rice Powell, our CEO and Chairman of the Management Board. Rice will give you some more color around the business development. And, of course, also with us is Helen Giza, our Chief Financial Officer, who will give you an update on the financials and the outlook. I will now hand over to Rice. The floor is yours.

Rice Powell, CEO

Thank you, Dominik. Welcome, everyone, and happy Friday. I don't remember the last time we did an earnings call on a Friday, but it's almost a weekend, so hang in there. Thank you for joining us today. I'll begin on slide four. We continue to deliver organic growth for the quarter, despite the expected adverse COVID impacts. This affected the number of treatments in our dialysis business and compounds in the related downstream assets, as dialysis patients are continuing to be missing in our clinics and they do not need certain of our services, such as vascular access or the pharmacy. And additionally, if they're not in our clinics, then they don't need renal drugs or dialysis products. We continue to see excess mortality further accumulate in the quarter, but at significantly reduced levels as we had anticipated. The second quarter revenue and earnings were both adversely affected by exchange rate effects. Earnings development during the quarter was negatively impacted by phasing and a strong prior year base. This was driven by the CARES Act funding that we received in the second quarter of last year, as you know, to cover the COVID-related expenses from the start of the pandemic. We continue to make good progress on our strategic priorities in the quarter. First, patients in value-based arrangements accounted for approximately 10% of our total U.S. patients with end-stage kidney disease and we have approximately 20,000 CKD patients in value-based arrangements.

Helen Giza, CFO

Thank you, Rice. Hi, everybody, and I hope you're staying well. As we move to slide 12, I'll pick up on the services development. In the second quarter, Healthcare Services delivered growth of 2% at constant currency overall. Organic growth increased despite the negative impact from the pandemic and from calcimimetics, due to the organic growth in the international markets. This was more than offset by negative exchange effects. The adverse COVID impact on organic growth in Healthcare Services amounted to approximately 240 basis points for the quarter. While down year-over-year in the U.S., we did see sequential improvement in same-market treatment growth. It improved from a decline in the first quarter to a decline of 2% this quarter. This shows that the underlying fundamentals are intact. I will now move to the products business slide on slide 13. Our products business achieved 1% organic growth for the second quarter. On a regional basis, both EMEA and Asia Pacific had a solid quarter, with each delivering 3% organic growth. Overall, product growth in the second quarter was driven by higher sales of in-center disposables in EMEA and Asia Pacific, machines for chronic treatment, and renal pharmaceuticals. This positive development was offset mainly by negative exchange rate effects. The organic decline in North America was driven in particular by lower sales of products for acute care treatments compared to a strong prior year base. Turning to slide 14. For the second quarter, total group operating income amounted to €424 million, which is a decline of 30% at constant currency. The chart on the left illustrates the contribution from each region, as well as the corresponding regional margins. As we have discussed, we faced an adverse impact from COVID, and we are comparing the Q2 margins against an inflated prior year base.

Dominik Heger, Head of Investor Relations

Thank you, Rice. Thank you, Helen for your presentation. I'll hand it over to Emma. Please open the Q&A.

Operator, Operator

Thank you. Ladies and gentlemen, at this time, we'll begin the question-and-answer session. The first question comes from the line of Tom Jones with Berenberg. Please go ahead.

Tom Jones, Analyst

Hi. Good afternoon or good morning. Thanks for taking my questions. I have two. The first probably one for Helen was just on slide 15, some clarification. The 120 basis points hit to margins that you saw in H1 from higher costs for labor and supplies. Just to be clear, was any of that COVID-related, or is it all of the COVID-related cost item included in the 230 basis point headwind that you talked of? And then secondly a question for Rice on the ES the PPS proposal, not so much about the rates, but about all the other stuff that was buried in there. What should we make of some of the changes or proposed changes to the ETC models? I mean, some of them look helpful, but they don't appear to have addressed some of the key flaws in that program. So I'm just wondering, kind of what you thought about the proposals and what else you think you might be able to get done between the proposed rule and the final rule.

Rice Powell, CEO

Hey Tom, it's Rice. Helen, why don't you go ahead? I think Tom was looking for you to give some guidance on your slide 15.

Helen Giza, CFO

Yeah. Yeah happy to, hi Tom, hope you're well. So to avoid confusion, that is completely separate from any COVID-related increase. That is truly the 120 basis points that you see are truly limited to wage inflation, that we estimate around 3% for that and other increases that we are seeing across the business. That is contemplated in the guidance. I think the watch out for us on inflation is truly these increases that we're seeing and we're calling macroeconomic, more petrochemical lumber things like that that have an impact on our manufacturing costs and freight and distribution. But the 120 basis points that you see here is in our guidance and normal inflation rates and separate from COVID.

Tom Jones, Analyst

Okay. Perfect. That's very clear, and then, on the EPS?

Rice Powell, CEO

Yeah. Hey Tom, I would say, we've got work to do. We are working on our commentary. I'm guessing, because we've known each other a long time, you're poking a little bit at the EPC models. And what are they looking at when they say dual eligible to be preferred within home and transplant. We actually think that's sort of arbitrary. And I think you've got the CMMI folks looking at that versus the group of people that do the prospective payment work; they are two separate groups. And some of it is not logical. I mean, if you think about dual eligible, are they really in the best place to do home therapy, given their situation in life, etc., and is that really going to give them the best chance for good outcomes? So I think there's just socioeconomic questions we have about the way that reads and it doesn't really make sense. So we're still working on it. We do get the sense that there hasn't been a lot of coordination between this branch CMMI and what they're proposing versus where the prospective payment system is and how they look at these things. So we're hoping to connect those dots in our commentary and get a better read on this.

Tom Jones, Analyst

Okay. That's very helpful. On the subject of models, the CKCC model, anything additional you can share with us on that, since the Q1 results?

Rice Powell, CEO

The only thing I want to mention is that I've had a couple of conversations with Liz Filer this spring. They are definitely committed to starting on January 1. They are optimistic about getting it underway and seeing how it develops. We are taking their word for it and will be prepared and ready. As you know, we have all the necessary infrastructure in place, so we are looking forward to beginning this in the New Year.

Tom Jones, Analyst

Okay. That’s great. I’ll get back in the queue.

Rice Powell, CEO

Thanks Tom.

Operator, Operator

The next question comes from the line of Veronika Dubajova with Goldman Sachs. Please go ahead.

Veronika Dubajova, Analyst

Good morning Helen and Rice. Thanks for taking my question. I'll keep it to two as well, please. One, I just want to clarify a little bit the raw material commentary or cost inflation commentary Helen. And I guess just a follow-on on Tom's question just to confirm the 120 basis points that you saw in the second quarter is not outside of the usual bound that you would have expected to experience in the business. And I guess maybe if you're willing to comment on what is assumed for the second half within the guide that would be helpful just to push you a little bit more on that? And my second question is trying to follow on from something that was actually said on your parent company conference call, which is I think Stefan made some comments on the expected contribution from FMC to the Fresenius cost savings plan, and just backing out from the comments that he had made it does suggest a fairly low run rate of cost savings from FMC in 2023. I think on my math I get to about $100 million out of the — up to $0.5 billion that you're targeting. Just trying to understand whether we should be reading something into that as you guys have done more work on SME 25. Is this program really that heavily weighted towards 2024 and 2025, or are we not comparing apples and oranges here? Thanks guys.

Rice Powell, CEO

Thanks Veronika. Go ahead Helen. I think you've got one, and I'll take two.

Helen Giza, CFO

Yeah. Hi, Veronika. Yeah, so just to kind of keep clarifying maybe this raw material commentary. What we saw in the first half is in line with our expectations and the inflationary increases that we had built into our guidance range. You can expect that to continue through the second half. I think the watch out for us, as I said, is if there's anything significant over and above that that we're not seeing coming at this point. Some things have gone up and back down. Some things are still running higher, but I would say the call out year-over-year is not unusual from an inflationary increase. But obviously as we look at the current labor market and also these broader economic increases that are being driven by supply and demand, we're just watching it out and being cautious, but nothing that would take us off our guidance at this point Veronika.

Veronika Dubajova, Analyst

Thanks Helen.

Rice Powell, CEO

Veronika, number two, I would not read too much into that. And what I mean by this is we are not done with our work. And this program is not just cost cutting. It's an operational model and looking at the business and how do we want to go forward with the business. And as we've talked with FSC about this, they would certainly like more concrete numbers, and I'm not giving them to them, because we are not where we want to be right now. So I would just say I understand where they are, but I would tell you when we come to you in the fall, you'll understand where we are, where we're going, and how this is going to play out. But just keep in mind it's not a set cost cut. And so I wouldn't run numbers and try to figure out where it is because we're going to tell you where it is when we do this in the fall if you catch my drift.

Veronika Dubajova, Analyst

Understood. That’s very clear. Thank you guys, and hope you have a good rest of the summer.

Rice Powell, CEO

Thanks Veronika.

Operator, Operator

The next question comes from the line of Oliver Metzger with Commerzbank. Please go ahead.

Oliver Metzger, Analyst

Hi. Thank you for taking my questions. The first one concerns your reported vaccination level of 71%. At first glance, this figure seems relatively low, especially considering age demographics. However, I recognize that this is a global figure and there are regional differences. Could you provide more details regarding the situation specifically in the US and EMEA? As for my second question, the slide presents several metrics; I noticed that patients are down year-on-year, treatments are also down, although you mentioned a record level of home dialysis. Yet, the number of clinics is up by 2%. Am I missing something, or should I interpret this as an indication of stronger clinic utilization? Could you elaborate on the relationship between these metrics? Thank you very much.

Rice Powell, CEO

Sure, Oliver. I'll address that. With a global vaccination rate of 71%, I challenge anyone to show me better numbers, as I don't think they exist. Keep in mind that this is a global figure, including areas like South Africa and Indonesia, where vaccination efforts are limited. I feel optimistic about our position at 71%. As I mentioned earlier, we are facing significant hesitancy in certain parts of the US and other markets, which is impacting vaccination rates. However, I believe this will improve as vaccines receive FDA approval, which should help ease concerns for some hesitant individuals. While there will always be some who remain unvaccinated, the current US vaccination rate is slightly above 71%, around 72% to 73% when accounting for those not within our system. In EMEA, the rates are in the high 60s, even with the slow vaccination rates in some emerging markets, indicating that many parts of Europe are performing comparably to the US. I do think we're not meeting my expectations, but we are progressing well and striving for improvement. Regarding the 2% increase in the number of clinics, this growth was largely driven by Asia Pacific, which saw a 6% rise in clinics this quarter. We've been building and certifying new clinics over the last 18 months, and many of these are just now becoming operational. Most of the 2% growth we experienced is concentrated in Asia Pacific and international markets.

Oliver Metzger, Analyst

Okay. Great. May I quickly ask one follow-up on home dialysis record level. So, could you share with us which part comes from PD which part comes from HHD?

Rice Powell, CEO

Sure. I don't know the specific numbers, but what I will tell you is PD is consistently growing in the mid- to high single-digit numbers. And then we are still seeing double-digit growth on home hemo. And again, we had 14.8% of our treatments done at home in the quarter. But we are seeing PD fairly consistently quarter-to-quarter. And then HHD has grown faster. In some quarters, it's slow sometimes, but in this case, I think we're pretty comfortable with what we're seeing.

Oliver Metzger, Analyst

Okay, great. Thank you very much.

Rice Powell, CEO

Thank you, Oliver.

Operator, Operator

The next question comes from the line of Michael Jungling with Morgan Stanley. Please go ahead.

Michael Jungling, Analyst

Thank you and good afternoon. I have two questions about vaccinations. First, can you share your expectations for the vaccination numbers by the end of this year? Second, do you have any insights on the effectiveness of the vaccinations within your ESRD patient population? Additionally, I know this is a sensitive topic, but do you have any information on the survival rate of COVID patients who have been vaccinated?

Rice Powell, CEO

Certainly, Michael. You asked great questions. It's hard for me to predict where we might land, but I would hope for a positive outcome with a 90% vaccination rate. That would be comparable to the typical annual influenza vaccination rates, which generally see around 10% hesitancy. I would really like to see us increase by an additional 15%. As I mentioned, I believe that once the vaccines receive FDA approval, it will significantly impact the US numbers. I expect to see improved vaccination rates globally, although some emerging regions still face challenges in accessing vaccines. Regarding the effectiveness, we did conduct a small study within FMC. Despite the health challenges faced by our dialysis patients, we observed that they are receiving some level of protection from the vaccines. A crucial question for us is concerning the Delta variant, which appears to be more contagious among unvaccinated individuals. However, we have noted that dialysis patients who are fully vaccinated and experience breakthrough infections due to the Delta variant generally do not suffer from severe symptoms. This is based on a limited sample size. The key takeaway is that we must continue working to get more people vaccinated to better withstand any challenges posed by the Delta variant and other potential threats.

Michael Jungling, Analyst

Can you share what percentage of your patients have actually contracted COVID-19?

Rice Powell, CEO

Yes, I probably can get that data. I don't have it at my fingertips and I don't know if anybody from the medical office on the call wants to shoot me a text I'll come back to you. I don't know that right now but we can easily get that number. It's just not my fingertips, Michael.

Michael Jungling, Analyst

Okay. Thank you.

Rice Powell, CEO

You bet. Thank you.

Operator, Operator

The next question comes from the line of James Vane-Tempest with Jefferies. Please go ahead.

James Vane-Tempest, Analyst

Thank you for taking my question. I have two please. So first, sorry to revisit again on the vaccination side. Is there anything else you can do to try and accelerate the uptake? Is it just education or just some stronger levers you could pull? And if it remains at about 25% to sort of 30% unvaccinated rate are you running any math in terms of what that might mean in terms of the evolution of patient mortality from here? And then the second one is just on the cost evolution. I'm just wondering how sympathetic your customers/payers are — so your customers on the product side and the wider payers on the service side, how sympathetic are they to any sort of price increases from your side?

Rice Powell, CEO

Thanks, David. Yes, Helen, I'll address the first two questions, and I'll let you handle the third. In terms of vaccination uptake efforts, we have implemented various initiatives globally, especially in the US, to encourage vaccination. These include educational materials and videos featuring myself and others discussing the importance of getting vaccinated. Unfortunately, the issue has become quite politicized in the US. We will continue to put in the effort to increase the vaccination rate. At the current rate of 75%, we have not attempted to project the impact on mortality, as we need more time to analyze that. Honestly, my primary focus is on raising the rate from 75% to 90%, as I mentioned earlier. We can run those calculations, but we haven't done so yet. Helen, would you like to discuss how our products and payers perceive our current situation?

Helen Giza, CFO

Yes, for sure. As you can appreciate David, a lot of our pricing is already contracted and the burden of the increased COVID cost is obviously falling on us. There's not a lot of opportunity to pass this on or get increases. Obviously, last year a lot of those increases were covered from the US government. This year obviously, we are bearing that cost. Some of that you hope will show up in future cost reports and go into the future increases. But where we have contracts with our customers it's been quite challenging and difficult I would say, to pass on any of that cost increase.

David Adlington, Analyst

Understood. Thanks, Rice.

Operator, Operator

The next question comes from the line of Falko Friedrichs with Deutsche Bank. Please go ahead.

Falko Friedrichs, Analyst

Thank you. Good afternoon. And two questions please. The first one, going back to FME 25. Rice, could you update us on the timelines on when we will get the final details. Is that still with Q3 results, or do you plan to do a Capital Markets Day around it? Any sort of timeline here would be helpful. And given that you mentioned you're sort of still working through everything, how focused should the market really be on this €500 million net income savings number? And how sure are you that it will actually be the €500 million, or could there be some variation depending on what you will sign over the next few months? And then my second question is on value-based care. Thanks very much for providing the patient numbers in your prepared remarks. Is there any way you can also provide a very rough revenue number of revenue that is coming out of value-based care and settings, and even if it's just a range or a ballpark figure?

Rice Powell, CEO

Thank you for the questions, Falko. I'll address the first one. There's an A and B part regarding the timeline and the savings numbers. Helen, if you could cover value-based care, that would be great. To clarify, I consider fall to be October and November. If we were to hold a Capital Markets Day, we would likely aim for the middle of October. We also have the earnings call scheduled for November 2, so that's a relatively short window. We need to determine what makes the most sense during this time. We're focused on achieving the €500 million target and we expect a one-for-one payback over the planning period. We're approaching this with the mindset that we are committed to delivering what we've proposed, and if there's potential for more, we will pursue that as well. Now, Helen, could you discuss value-based care?

Helen Giza, CFO

Yes. Happy to. Hi, Falko. As you know, we stopped reporting the care coordination number separately because our business is evolving and we are transitioning more toward the capitated model, making separate reporting less logical. This is a crucial aspect of our dialysis services business. I also believe that reporting revenue numbers isn't particularly meaningful since our contracts involve various models, some of which have cost pass-throughs while others involve shared savings. We're actively evaluating what this means for our reporting, especially in light of our operating model work with FME25 and what key performance indicators will be relevant for BBC moving forward. We recognize that we are undergoing significant changes as this segment of our business continues to expand, so we will provide more updates regarding our reporting in the future.

Falko Friedrichs, Analyst

Okay. Thank you.

Operator, Operator

The next question comes from the line of James Vane-Tempest with Jefferies. Please go ahead.

James Vane-Tempest, Analyst

Taking my question. Apologies I had some technical difficulties before. So apologies if these have been answered. Just firstly on inflation. It's interesting on slide 15, I think it was how the impact from was more than the offsetting factors for Medicare Advantage. And you do mention how inflation is going to continue in the second half. So is it fair to say that the Medicare Advantage for the year will not be able to offset inflationary pressures? And then my second question on machinations I think you said 71%. Just wondering if you can comment on your patient population in areas which have lower vaccination rates compared to the national average? And then a final quick question, if I can is excess mortality, I think you said it was 406 in June. I know, we're nearly at the end of July. But I'm just wondering what – where we are at the moment? Is it sort of 350-ish or so or sub-300? It would be interesting to know where we are coming into the summer. Thank you so much.

Rice Powell, CEO

Thanks, James. No worries about the difficulties our way of life these days. Helen, I'll let you take number one on the inflation in slide 15, and I'll come back around on vaccination.

Helen Giza, CFO

Yeah, happy to. Hi, James, it's good to hear you. The inflation, obviously, when we put out the guidance back in February, if you recall, I had a slide there that showed a lot of pluses and minuses. And obviously that's what we're tracking; without doubt, the inflationary increases year-over-year were built in. And I think it is an important driver of the change from 2020 to 2021 that we shouldn't forget. And of course, the Medicare Advantage is a kind of a positive offset to that. So I don't think anything untoward, or we want truly were trying to signal anything concerning in slide 15. In fact, it was trying to show to be more helpful to kind of understand those increases. But I think obviously, as I – you may have missed my comments earlier to probably both Tom and Veronika that the – we just want to be cautious and watch those inflationary increases in the back half. But we have a base increase built in already. And of course, we are happy with the Medicare Advantage performance as an offset to that too.

Rice Powell, CEO

Yes. Thank you. So James, I'm not sure, I understood what you were asking me relative to vaccinations and what we're seeing versus other parts of the world. Can you just run that by me again? I just want to make sure I get it right.

James Vane-Tempest, Analyst

Yeah. Sure. So, when you look at where your patients are located say, particularly in the US. I'm just wondering where the concentration of your patients lie versus where you've seen higher or lower levels of vaccination. So for example, you have more patients in less vaccinated areas than the national average, which would basically mean it might be harder to get to that 90% level, if there's sort of more — and perhaps if you can take that in national as well. Thank you.

Rice Powell, CEO

Perfect. Thank you. That's helpful. So if we deal with the 800-pound gorilla, which is the US. I can tell you that the issue that we are seeing is in the southern states Mississippi, Alabama, Louisiana, Arkansas, Missouri; that is where we are finding the most hesitancy among those people. And so if we're going to appreciably get close to 90%, we're going to have to get some of the folks that are in that southeastern US region. There are some far out west Montana, Wyoming, Idaho, but we're going to have to see some number of those folks when these get FDA approval come into the program, if you will. And I suspect there will be some that won't just based off of political whatever you want to call it, ignorance whatever. I think when you look in the rest of the world, there is no question that, if you take EMEA, we've got to continue to get more vaccination in developed markets and what I'd say kind of some of the medium emerging markets. But there are some places that we don't like it, but we don't know that it's going to get appreciably better such as South Africa, or if you think about India or Vietnam, Indonesia. So we have to get as much as we can from those places that are vaccinating and they have the ability. We have tried to get vaccines into South Africa and some of these other countries and we're working on it, but it's not an easy thing to do. And then on your last question I would tell you that we don't have a read if we were at 406 in June what will be in July. I hope the heck it's well south of there. But we'll get a view of those numbers probably around the mid to latter part of August. It takes us somewhere between two weeks to three weeks when we close the month to be able to get those numbers. So we're just not in the right place to do that just yet.

James Vane-Tempest, Analyst

Okay. Thanks so much.

Rice Powell, CEO

You bet.

Operator, Operator

The next question comes from the line of Christoph Gretler with Credit Suisse. Please go ahead.

Christoph Gretler, Analyst

Thank you, operator. Good afternoon or morning. It's nice to speak with you. I have one more question regarding wage inflation in the US. I've heard from several US hospitals about significant increases in wage inflation that they anticipate. The PPS rate seems somewhat backward-looking in this regard. What are your thoughts on this? How much flexibility do you have to accommodate the rise in wage inflation? Is there any discussion happening in Washington D.C. about possibly providing additional support this year, considering it is still a year with high inflation? If you could elaborate specifically on the labor market situation for dialysis clinic personnel, that would be great. Thank you.

Rice Powell, CEO

Sure. Happy to Chris. Nice to hear from you. So a couple of things I would say. We are looking and we have planned for wage inflation in this year at around 3%. So I think we have some of that covered. I do think that the ESRD population and if you will our clinic staff or nurses, I'm not sure we are a perfect equivalent to what you're seeing in the big hospital systems in the US. I actually think they may be experiencing things a little different than we are. Their rates may be a little higher. But we believe that we have planned accordingly for this. What we have done is as we were in the pandemic, we utilized temporary health to help us get through spots because we've had some employees that had to go out they were all as well. So I think we've gotten through that okay. What I would say to you is yes at a 1.2 PPS drafted number I would have loved to have seen it higher. It was within the range that we thought it could be. I think there are two pieces to the answer to your question. One is that there's still €24 billion in provider relief funds that are sitting in D.C on access. And to the degree that those funds would be available for us relative to PPE and potentially some labor help there that's out there. We continue to talk about that. But D.C. is pretty focused right now on infrastructure but we continue to see if there's a possibility for that. And I think that the overall labor situation in the US, particularly in healthcare, I think that's going to get discussed in D.C. as well and we would certainly weigh in on that. But I think I'm less worried about where we are for the back half of the year and how we plan that, it would certainly be nice to get some PPE help as I've been a broken record on that every quarter. But at this point, we've not had any more active detailed conversations on that. Hopefully that's helpful for you.

Christoph Gretler, Analyst

Yes. Very good. Thank you. Appreciate the comment and have a great weekend later on.

Rice Powell, CEO

You as well.

Operator, Operator

There are no further questions at this time. So, I hand back to Dominik for closing comments.

Dominik Heger, Head of Investor Relations

Thank you, Emma. Thank you everyone for the lively discussion and for limiting to two questions, that's highly appreciated. I hope you all have a good summer as good as you can have it at the moment. And we hope to have enough time to speak to all of you during the third quarter, and looking forward to speak to you again. Take care.

Rice Powell, CEO

Stay safe folks. Enjoy the rest of your summer and your weekend. Take care.

Helen Giza, CFO

Bye, everybody. Thank you.

Dominik Heger, Head of Investor Relations

Bye-bye.

Operator, Operator

Ladies and gentlemen, the conference has now concluded, and you may disconnect your telephone. Thank you for joining, and have a pleasant day. Goodbye.