Viatris Inc. (NASDAQ:VTRS) Q3 2023 Earnings Call Transcript

Viatris Inc. (NASDAQ:VTRS) Q3 2023 Earnings Call Transcript November 7, 2023

Viatris Inc. beats earnings expectations. Reported EPS is $0.79, expectations were $0.74.

Operator: Hello. My name is Travis, and I will be your conference operator today. At this time, I would like to welcome everyone to the Viatris 2023 Third Quarter Earnings Call and Webcast. All participant lines have been placed on mute to prevent any background noise. After the speakers remarks there’ll be a question and answer period. [Operator Instructions]. I will now turn the call over to Bill Szablewski, Head of Global Capital Markets. Please go ahead, sir.

William Szablewski: Good evening, everyone. Welcome to our third quarter 2023 earnings call. With us today is our CEO, Scott Smith; President, Rajiv Malik; and CFO, Sanjeev Narula. During today’s call, we will be making forward-looking statements on a number of matters, including our financial guidance for 2023 and various strategic initiatives. These statements are subject to risks and uncertainties that could cause future results or events to differ materially from today’s projections. Please refer to today’s slide presentation and our SEC filings for a fuller explanation of those risks and uncertainties. We will also be referring to certain actual and projected non-GAAP financial measures to supplement investors’ understanding and assessment of our financial performance.

Reconciliations of those non-GAAP measures to the most directly comparable GAAP measures, are available on our website and in the appendix of today’s [Technical difficulty]. discussion, we will be making certain comparisons of results on an operational basis, which excludes the impact of foreign currency rates versus the plan that supports our [Technical difficulty] prior period results, which also exclude the results from the divested bio-similar business. An archived copy of today’s presentation and other earnings materials will be available on our website at investor.viatris.com following the conclusion of today’s call. With that, I’ll hand the call over to our CEO, Scott Smith.

Scott Smith: Good afternoon. I’m pleased to report that Viatris had another outstanding quarter in Q3. We achieved our second consecutive quarter of year-over-year operational revenue [Technical difficulty] our 11th [Technical difficulty] operating results and consistently [Technical difficulty] metrics. All evidence that we continue to build momentum as we bring the Phase 1 of our strategic plan to successful completion. In the third quarter, we delivered total revenues of $3.94 billion, representing approximately 1% year-over-year growth. And adjusted EBITDA of $1.36 billion and free cash flow of $738 million, both of which, as you will hear more about from Sanjeev later were above our expectations. Based on our strong operational performance in the first 9 months of the year, we are reaffirming our 2023 financial guidance ranges for adjusted EBITDA and free cash flow.

Company is delivering strong operational revenues in line with our expectations. However, the impact of foreign exchange headwinds requires that we make a modest adjustment to our 2023 total revenue guidance range due solely to these FX headwinds. In addition, at the end of the third quarter, we were pleased to announce that we entered into agreements on all our planned divestitures. Announcing these transactions marked the achievement of an important milestone in the execution of our Phase 1, strategic plan. We ran a strong and competitive process, and we’re able to sign agreements to divest substantially all of our over-the-counter business, our women’s health care business, our API business in India, and commercialization rights in certain noncore markets that were acquired as part of the Upjohn transaction.

All within our previously announced time lines and valuation ranges. We anticipate closing all these transactions by the end of the first half of 2024. As we look to 2024 and beyond, the momentum we see in the business gives us continued confidence that we are on track to meet our previously stated long-term goals. Specifically, we believe our existing business is well positioned [Technical difficulty]. We continue to believe that adding new avenues for growth to the stable base business will help ensure that we reach our goal of accelerating growth in the future. As we move into 2024, we remain confident that with the proceeds from our planned divestitures and our ability to generate at least $2.3 billion in free cash flow per year, excluding transaction costs and taxes, we have a clear line of sight to hitting our leverage target ratio of 3 times.

While also returning capital to shareholders through dividends and share buybacks and investing heavily to accelerating the growth of our business. We believe our focus on returning capital to shareholders and on investing in our business will be important levers to put the company on the path to achieve our long-term goals of revenue and earnings per share growth, two measures that we believe will be critical to valuing our company in the future. We plan to make investments both in our base business and in business development activities that give us the greatest potential for growth, patient impact and shareholder value. From a business development perspective, I am optimistic that we will be able to execute high-quality agreements that will capitalize on the strength of our global platform.

We are focusing our efforts on M&A, strategic licensing and partnerships. We are looking for innovative high-growth assets focused on areas of unmet medical need that meet our vision of addressing global health care needs and bringing access to high-quality medicines to more patients worldwide. Before I turn the call over to Rajiv to provide you with an update on our operations and our pipeline, I want to acknowledge the recent announcement that Rajiv will be retiring as an Executive of the company next April. It has been a privilege to get to know and to work with Rajiv during this past year. I could not have asked for a better partner during my onboarding at the company. I wish him nothing but the best in his eventual retirement. I look forward to working closely together in the months ahead as we complete our planned divestitures and prepare the organization for the future.

And to his continued partnership as a member of the Board of Directors. I’d now like to turn it over to Rajiv.

Rajiv Malik: Thanks Scott. I appreciate it and look forward to working with you to ensure a smooth transition while continuing to support you as we look out into the future, but in a different capacity. I also want to take the opportunity to thank all of our employees who have helped us build this strong global platform. I’m very pleased with where we are today in Viatris journey and the strength as well as stability of our core business, which is now nicely set up for the continued growth from here onwards. Moving to our Commercial segment results. We have delivered a second consecutive quarter of year-over-year operational top line growth as we predicted, which further reaffirms that we are standing strong and set up for the future.

This quarter, we recorded 1% year-over-year operational growth and are well positioned to end the full year in line with our expectations. Our well-balanced business of developed markets delivered another strong quarter growing 2% year-over-year operationally. Europe grew 1% versus the prior year on an operational basis, making it the seventh consecutive quarter of year-over-year growth. France and Italy led the growth in the region. A solid performance of generics in the Europe was another contributing factor. Our North America business was up 4% year-over-year on an operational basis, in line with our expectations. Our generics portfolio performed better than expected, driven by new launches such as Breyna, the generic for Symbicort, Lisdexamfetamine and the continued contribution of lenalidomide.

Also some other key products, including glatiramer acetate, vancomycin and Xulane performed better than expectations. Our brand business was supported by strong demand in YUPELRI, which grew 9% this quarter over the last year and in the epinephrine market. Overall, we remain confident that the developed market segment will meet our full year expectations. Emerging markets had another strong quarter and delivered 2% year-over-year operational growth led by strength across our broader generics portfolio and stronger-than-expected performance from brands like Lyrica, Zoloft and Effexor. Emerging Asia and Turkey were solid performing geographies. This segment is well positioned to deliver mid-single-digit year-over-year growth. Moving to JANZ, where brands performed in line with our expectations, while generics were slightly below expectations primarily due to customer buying patterns.

We continue to be on track to deliver full year expectations. Greater China experienced another solid quarter, primarily driven by strong performance of retail channel in China. Greater China was flat to the prior year, in line with our expectations. We believe that this segment will perform slightly better than our expectations for the full year. I’m also happy to report steady progress we made on our pipeline in this region. We recently received positive top line results for our Phase III clinical trials of YUPELRI in China, which is consistent with our U.S. clinical data, and we look forward to submitting our NDA mid-’24. We currently have 10 other products under health authority review in China. Moving to the Eye Care division. As a bridge program sunset, we saw almost 9% non-bridge prescription growth in this quarter.

We’ll continue to focus on prescription growth in quarter 4 and into the future, supported by our first direct-to-consumer marketing campaign for Tyrvaya, which we launched in early October. We have recorded $345 million in new product revenue year-to-date and are on track to deliver more than $450 million of revenue from new product launches for the full year. Let me now discuss some key updates for our R&D pipeline. We are excited by the continued progress of our eye care pipeline, which is aimed at addressing a range of vision-related disorders. All the Eye Care development programs remain on track, and we are pleased that we received FDA approval for Ryzumvi, for the reversal of pharmacologically induced mydriasis and are looking forward to a commercial launch in the U.S. in the first half of ’24.

Switching to other pipeline updates, beginning with Glatiramer Acetate people. As you recall, the FDA had accepted for review our NDA and it assigned a PDUFA date of March 8, 2024. While we continue to make steady progress regarding the FDA review of our NDA, we are saddened by the tragic situation in Israel. And we are working very closely with our partner, Mapi, who remains fully operational. We have recently submitted our registration in Europe and are excited about the potential opportunity to bring this product to patients in Europe. Our Botox biosimilar program is progressing well from the development, characterization, validation of drug substance and drug product prospective. We recently completed the manufacturing of our IND-enabling drug substance batches and are well on our way to complete the drug product contracting.

We remain on track to file our IND by the end of this year. We expect to initiate the pivotal clinical studies for this program in the first half of 2024. Our Phase III study for our Xulane Low Dose program in U.S. remains on track, and we have benefited from an acceleration in the enrollment rate for this study. We now expect to enroll our last patient this December. Also, we are closely interacting with FDA to initiate the Phase III program for our Opioid Sparing Meloxicom novel product in late December. Our Phase III study for Effexor generalized anxiety disorder in Japan continues to progress according to our schedule. And we remain on target to submit the NDA filing in the first half of 2025. Finally, all of our complex injectable programs are moving ahead as planned, and we continue to be very excited about the potential of this important potential $1 billion franchise.

With that, I will hand the call over to Sanjeev.

Sanjeev Narula: Thank you, and hello, everyone. Before I begin, I would also like to extend my congratulations to Rajiv. It has been a great partnership over the past 3 years, and I am proud of what we’ve accomplished together. We trust our colleagues and patients all over the world to benefit from your leadership, expertise and dedication to our business. Turning to our outlook. I want to reiterate my confidence in the strength of our unique global platform in the continued durability of our significant free cash flow generation. We’re pleased with the outcome of our announced divestiture. Which upon closing will bring the successful conclusion to our Phase 1 commitments and further serves to accelerate our financial flexibility.

As we work to finalize the plan for next year, and although we are not providing guidance at this time, we continue to expect at least $2.3 billion in free cash flow in 2024 even when taking into consideration inflation and foreign exchange headwinds to date. This excludes any taxes and transaction costs associated with divestiture. For the second consecutive quarter, the business delivered total operational revenue growth versus prior year. The performance was diversified across regions and categories. The positive mix of brand and new products drove strong gross margins. From a regional perspective, we saw 2% growth in net sales from developed and emerging markets. The growth included the benefit from brands, generics and new launches. Net sales for the quarter were in line with the expectation and grew 1% versus the prior year.

A diverse portfolio of growth driver included brand performance in emerging markets, Europe and Greater China. These revenue trends and positive momentum are expected to continue as we exit the year driven by brand strength of our global generic portfolio and new products. New product revenue in the quarter met expectations and included the first quarter of Breyna. Adjusted gross margin was approximately 59% in the quarter and was ahead of our expectation. We continue to see the positive impact from portfolio decision driving favorable mix. We reported strong adjusted EBITDA, which included investment in SG&A and R&D to advance key programs across eye care, injectable and complex products. As a result of strong adjusted EBITDA and improved cash conversion, we had an excellent quarter of free cash flow of $786 million excluding the impact of transaction costs, which represents growth of 3% on a reported year-on-year basis.

[[Technical difficulty] enabling us to deliver capital allocation which has helped to further and help us maintain our investment-grade rating. Over last 11 quarters, we have generated over $7.2 billion of free cash flow, and as a result, we have been able to pay down approximately $6.1 billion of debt during the same period, and we will pay down the $500 million maturity in Q4 from cash on hand. Additionally, this quarter, we returned approximately $144 million of capital to our shareholders. [Technical difficulty]. Expect to absorb this potential FX impact and still cash flow. Now a few updates [Technical difficulty] we continue to expect adjusted EBITDA to be lower in Q4 than prior quarters driven by 2 factors. First, low gross margin due to less favorable portfolio and segment mix.

Second, SG&A to increase driven by investment in the Tyrvaya direct-to-consumer campaign and other areas to drive future growth. We anticipate free cash flow in Q4 to be impacted by lower adjusted EBITDA higher capital expenditure and timing of biannual interest payments. As a reminder, our free cash flow guidance does not include any transaction costs and taxes associated with biosimilar divestments, the Eye Care acquisition or the planned divestiture. Additionally, our adjusted EBITDA and free cash flow guidance excludes any acquired IP R&D for unsigned deals. In closing, based on the continued strong underlying fundamentals of our business, we’re well positioned for the remainder of the year and the outlook for 2024 continues to be positive.

With that, I’d like to hand it back to the operator to begin taking your questions. Thank you.

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Q&A Session

Operator: [Operator Instructions] Our first question comes from Chris Schott, JPMorgan.

Christopher Schott: Great. Here was on how envisioning kind of capital deployment and specific [Technical difficulty] the divestiture verticals that you talked about in the past I’m trying to get my hands around. Is this something that we — you’re kind of actively looking at this point? Or we need to wait for the transactions to close and the sense of being more kind of 2025 and beyond kind of event that we think about kind of the redeployment of some of the cash coming in the door? Or just any color you can provide there would be much appreciated? Thanks so much.

Scott Smith: Thank you, Chris. Thank you very much for the question. Yes, we’re looking for innovative high-growth assets that bring in predictable, durable revenue streams, good fit for our business that we can leverage strong global infrastructure we have. You asked about the verticals, we’re definitely looking at things in the verticals. We’re also going to be a little bit agnostic. And if there’s a good opportunity that lies outside of those verticals we will look at that very, very closely as well. The important thing for me is whatever we do, we want to leverage the global strength that we have as a company. And in terms of business development, I look at it in sort of in 3 buckets. M&A, of course, but also licensing is very, very important and partnership is very, very important.

Some of them are more capital-intensive than others. And in terms of speculating on timing, I don’t think — again, I won’t speculate on timing at this point. I think we’re looking at things very actively right now, and we’ll see where we get. But we’re excited about the opportunities that are out there. I think there’s a lot of opportunities where we’re going and what we’re doing. So I appreciate the question.

Operator: Our next question comes from Nathan Rich, Sachs.

Nathan Rich: Great. Good afternoon, and thanks for the question. I wanted to ask on the kind of transition to Phase II. And you gave some details around the 2022 EBITDA of the announced divestitures. Now I know you don’t want to give EBITDA guidance for 2024. But any color you can provide on how those businesses have trended over the past year? And any other considerations from a cost standpoint that we should think about? And then as we think about the transformation of the business and the acceleration of top line growth, can you maybe think about help us walk through what the building blocks are to eventually getting the business to that kind of 3% revenue CAGR that you’re targeting in Phase II?

Scott Smith: Yes. So first of all, yes, to ’24, I feel great about where we’re going in ’24. We’ve had now 2 consecutive quarters of operational growth, and we believe we’ll finish ’23 strong. I think it will set us up very, very nicely for ’24. We have full confidence that we’re on track to meet our previously stated long-term goals. I guess really importantly, we expect to have at least $2.3 billion in free cash flow in ’24 and beyond. Even when you take into consider inflation, FX headwinds, et cetera. I think there’s a very, very strong base to the business, and we expect to grow just with the base business, as you mentioned, in that 3% range. Just off to base the business that we have a very stable, growing, strong globally right now.

But we hope to even have a significantly higher growth rate than that from a revenue perspective as we start to invest in business development and other businesses and bring other assets in that can complement the organization that we have in place. And Rajiv, I think there was a question around divestiture.

Rajiv Malik: Yes. No, that was a specific question, Dave, can you speak on divestiture?

Nathan Rich : If we tell them 2022, how those businesses were trending, divestiture.

David Bayles : First of all, from the overall business point of view as well as between 2 divestitures, all our businesses are performing as we anticipated or better than we had anticipated, including whether it’s geography or whether it’s the brands, generics and those categories. And that holds basically true for also the businesses which we have identified and which are going through the divestiture. But also, Scott, to your point, the 3%, which we have growth, which we have indicated, just to add on to that, that included our base business, what we have in pipeline for today, that didn’t include any more deployment of the capital deployment, which may come from ’24 onwards, that will be on top of that. So I just wanted to also build upon that.

Sanjeev Narula: And one other thing to keep in mind, the business is that we’re divesting. Their margins are generally less than the company average. So what we expect post divestment, company’s margin like gross margin to be stable. From that perspective. That’s an important thing to keep in mind as well.

Scott Smith: I also want to piggyback off what Rajiv said. And as we start to really pivot to real growth from a revenue perspective and given our capital allocation plan and our desire to buy back shares. We can move the story to a long-term adjusted EPS growth story, which we’re very excited to move into that early part.

Operator: Our next question comes from Umer Raffat, Evercore.

Umer Raffat: Hi, guys. Thanks for taking my question. I wanted to focus on China business for a second. And it looks like your China business is holding in broadly fairly stable, except for FX. And it appears to be quite different in performance versus what some of your peer companies also with meaningful China businesses have reported. And I kind of see that not just on the emerging markets sales reported — sorry, Greater China sales reported but also in the product level breakout. So I’m just curious, what do you think is tracking different and or is there some timing of revenue recognition that is playing out and maybe we do see some weakness in 4Q? Because it does seem like it’s a little more industry-wide? Thank you.

Scott Smith: Umer, I can’t speak about our peers, I can speak about our China business, which right from ever since we have gone through this evolution around the policy dynamics and all that live through our 95% business has gone through the VBP. We had gone through the cycles of VBP. And we have taken this time to reorient and shift our business more towards a private paid channel. And that’s what we have seen. We have found that the equilibrium between the hospital and private pay channel, and we have been trying to invest more on that. And investing in the pipeline, for example, even this quarter, just getting the Yupelri positive data because Yupelri and Dymista performance now going through the approval channels and also the pipeline.

We cannot be more excited about what we are seeing in the underlying business or the fundamentals of our China business. Extending that to emerging markets. We take our time to figure out how to manage this the hybrid business we have between the brand as well as the generics, and we have found that sweet spot and you see emerging markets business, the brand is performing better than expected, generic performing better than expected. So I can speak about our business, we seem very confident and optimistic about this business, and that’s what is entering the stability to the base. And coupled with the new launches, new launch revenue, I think that’s what is driving based growth of 1% year-over-year, 1% which you see in that.

Operator: Our next question comes from Glen Santangelo, Jefferies.

Glenn Santangelo: Thanks for taking my question. I just wanted to follow up, Rajiv, on some of the comments you were just talking about that the generics business was performing better than expected. Could you maybe talk about the pricing environment in terms of what you saw in the quarter? And if there’s any discernible trends that are worth sort of calling out? And any sort of comments around the sustainability of that recent trend would be helpful. Thanks.

Rajiv Malik: Glen, after several quarters, I can say that we have seen — I’m not — we have seen perhaps a longer stretch of stability after so many years, I would say. And I don’t see any trend at the moment because it’s a generic business that plan. It’s both demand and supply. And at this point of time, is that we see some still supply disruptions going on, on some key molecules and key products. And it’s about your own portfolio, your own ability to supply and basically the flexibility in the supply to sometimes respond to the market needs. And that’s what I think we have set for ourselves, and that’s got giving us a stability. And I don’t see at the moment in the environment, some more trends which we should be concerned about.

Operator: Our next question comes from Jason Gerberry, Bank of America.

Jason Gerberry : Thanks for taking my question. Just wanted to inquire about the inflationary pressures on cost of goods that was flagged last quarter. It appears like either that was maybe not realized this quarter because of mix or perhaps there were some other offsets. Really curious more so just to think about how those inflationary pressures, do you feel like you may see those manifest in 4Q or into next year? That would be helpful. Just some of your peers have flagged inflationary pressures as well in cost of goods. So just wondering if you can level set? Thanks.

Sanjeev Narula: Yes. So Jason, thank you for the question. So we had anticipated inflation pressure, and we’ve kind of talked about that when we made our plan give the guidance to that. We’re managing our costs very well. So the impact is still there for inflation. And in this quarter, we have an inflation impact, but it is less than what we had anticipated. So clearly, our teams are doing a great job in managing the cost. And you can see that reflected in our gross margin, which is coming better than we expected. And we’ve actually raised the full year metrics to 58.75% on the strength of mix and us managing the cost, including inflation, better than what we had anticipated.

Operator: Our next question comes from Ash Verma, UBS.

Ash Verma : Thanks for taking my question. So on emerging markets, can you elaborate the dynamic here a little bit? You mentioned customer buying patterns impacting 3Q? I didn’t hear you saying that you’re going to expect to get to the outlook that you had for the emerging market, although I heard that for other geographies? And second one, I just wanted to understand the FX impact. So 3Q revenue saw a $7 million headwind, but you’re lowering your 2023, midpoint by $250 million. Is this all concentrated in just 4Q alone? Thanks.

Rajiv Malik: I think on emerging market, some of our key brands, Lyrica, Zoloft, Effexor region, some of the brands have been performing pretty well. Turkey — and also emerging Asia, we call it, this is geographies like Thailand and [indiscernible] and all those countries put together. They have performed above expectations. And I see this trend continue. I mean I see emerging markets well under track for mid-single-digit growth, year-over-year growth, driven on the strength of their portfolio, diversity and markets where we are seeing that confidence. Sanjeev?

Sanjeev Narula: Yes. Yes. So Ash, on the FX, a couple of comments. So what’s going on in the three currencies? So 70% of our business is non-U.S. dollar denominated. 50% comes from three currencies, which is the euro, Japanese yen and Chinese RMB. What was going on until about September as you could probably track that. Dollar had sense against the Chinese RMB and Japanese yen. And then euro was favorable to what we had assumed. But September onwards, the euro started weakening with all the Fed action that was going on. So whatever the offset that we were seeing in the first half of the year went away. So you see the impact is much bigger now starting September in fourth quarter than we had anticipated, and that’s what we are reflecting in our full year guidance, assuming the October 8 stands.

So it’s all three currencies. It’s all FX and operationally exactly in line with what we had anticipated. And you saw that we reaffirmed our guidance on EBITDA and free cash flow absorbing the FX impact.

Operator: Our next question comes from Balaji Prasad, Barclays.

Unidentified Analyst : Macula [ph] on for Balaji. Thanks for taking our questions. Just wondering if you guys have any thoughts on today’s move by the FTC to challenge more than 100 in popular patents listed in the FDA’s Orange Book. I’m wondering if this will have any impact to the interest. Thanks.

Brian Roman: So this is Brian Roman, the General Counsel. Thanks for the question. Our company has been an industry leader in challenging and proper Orange Book listings for many years. So this is an issue that we understand well, take seriously, and frankly, I’d like to see the issue getting some attention. That QC hasn’t shared with us what concern they have about these particular patents. But I’d add that there already has been for years’ significant generic competition for our epinephrine auto-injectors.

Operator: Our next question comes from David Amsellem, Piper Sandler.

David Amsellem : So just a couple of product-specific questions. Can you talk about how you’re thinking about the generic Symbicort contribution next year? I know you talked about revenue being a below expectations and developed markets because of phasing of that product. So just talk about where that product is heading. Then any update on iron sucrose that would be helpful. And then on business [Technical difficulty]. What’s your willingness to move away from that or look at other therapeutic silos? Thanks.

Rajiv Malik: So I’ll answer the sort of the last part of the question first. And as I said earlier, that those three verticals, we think very highly of in terms of the type of assets that are there [Technical difficulty] areas, but we’ll keep our minds open. [Technical difficulty] All right there that can help us really move the company away. Again, what we’re really looking to do leverage the company. And if there are assets outside of those 3 areas that we find that can really help us secure our growth in Phase II, we’ll definitely look at them.

Sanjeev Narula: And David on launch of Breyna generic with the Symbicort. We couldn’t be more pleased to launch another complex part to make products as affordable alternative to [Technical difficulty] we are looking at the pickup of market share. Now isn’t kept for customers, for example, we can be in some comment — selling to some common entities, veterans or issues like [indiscernible]. So it doesn’t capture — we are — it’s exactly how we are model. It’s going to be a significant contributor because we don’t see a competition on horizon at this point of time for the next year, it’s going to be a meaningful contributor to that. And the miss — and I won’t call — first of all, we are very happy to have more than $450 million.

We have already captured $345 million on new launches, and we are well on track to do more than $450. [Technical difficulty] Most likely the launch being early the first quarter early in the first quarter of the next year. And nothing has changed otherwise, we are exactly on track. We delivered exactly how we planned.

A – Scott Smith: Are there any more questions in line?

Operator: No sir. I would now like to turn the call back over to Scott Smith, CEO, to make a few closing remarks.

Scott Smith: Thank you very much, and thank you to everybody on the call. In summary, I’m very, very pleased with the overall execution momentum and the momentum that we have as we bring Phase 1 of our strategic plan to a successful conclusion. I’m very much looking forward to moving into Phase II of our strategic plan, and I fully believe in the future trajectory of Viatris, and I’m very excited for what’s to come. Thank you all again for your attention.

Operator: This does conclude today’s Viatris 2023 third quarter earnings call and webcast. Please disconnect your line at this time, and have a wonderful day.