Cencora, Inc. (COR) Earnings Call Transcript & Summary

Hi. Good morning, everybody. Thank you for joining us today. I'm Elizabeth Anderson. I'm the health care services analyst here at Evercore. I'm very pleased to be joined by Jim Cleary, EVP and CFO of Cencora; as well as Bennett Murphy, who is IR and Treasurer. So thank you guys for joining me this morning. That -- it's nice to see both of you.

I think maybe as we start off the day, I don't think Cencora needs much of an introduction, given your long tenure in the market. Maybe if we could sort of kick off, like you guys have obviously talked about some of the underlying growth rates in terms of your U.S. pharma business. If we think about what's changing materially as we go into 2025, with new biosimilar launches, and I'm talking about calendar '25. I know that, that doesn't quite align with your fiscal year. Can you talk about what's been sort of like an incremental driver of your earnings growth. biosimilar launches, we've seen continued strong Part D utilization, all of those kinds of things. So maybe I'll just broadly start it off there and then get into the details.

Great. Well, I'm happy to start and then Bennett, feel free to add in. But Elizabeth, before we get started today, first of all, I just wanted to congratulate you. When I was prepping for the meeting this morning, I saw that you were ranked this year #1 on the institutional investor list for health care technology and distribution. So I think that's awesome.

Thank you.

And then before I get started, I just also wanted to just give one quick update on this week. People may have seen that earlier this week, we had a very successful bond deal and Bennett is, I'm sure you all know, has responsibility for both IR and Treasury. And so on Monday, we did a $1.8 billion bond deal to be part of the financing for our upcoming RCA acquisition, which we're very excited about. And the bond deal was super successful. It was more than 5x oversubscribed. We did some 3-year debt, some 5-year debt and some 10-year debt. So I just kind of wanted to do a quick update there. But as we look at fiscal year '25, I would say a really good thing is that so many of the fundamentals that drove our success in fiscal year '23 and '24, they remain consistent in fiscal year '25. I mean, we expect to continue to see strong sales of specialty products to physician practices and health systems, which has been a very good growth driver for us. We expect to see continued strong solid utilization trends, and we've certainly been a beneficiary of that for quite some time. And so really kind of those key things that's been driving our success, particularly in our largest businesses, kind of those broad-based good results, those sorts of things are continuing. And then as we look at kind of incremental things that kind of impact our performance in fiscal year '25. We had very good success in fiscal year '24 on COVID vaccines, and we expect COVID vaccines to be a headwind for us in fiscal year '25. So when we gave our initial guidance, we said we expect operating income growth to 5% to 6.5% during the fiscal year. And we also indicated that if it were not for the COVID vaccine headwind that the top end of the range would be 8%, it would be 5% to 8% operating income growth for fiscal year '25. Bennett, I've hit some of the bigger things, but is there anything you'd like to add?

No, I think you hit the key things.

Okay. Awesome. Maybe diving into a couple of those parts of the comment. I mean, there seems to have been a notable change in the tone from both sides from you guys and Walgreens regarding your broader relationship. What would you -- how would you characterize this relationship change since earlier in 2024?

Well, Walgreens is, of course, a very strategic partner for us. They're, by far, of course, our largest customer on a revenue basis. And so I would just say that we're consistently engaged at many levels on what we can do to help them support their business and their business initiatives. And that's something that we have been focused on and continue to be very focused on, given the importance of the relationship to us.

That makes sense. And you guys have both talked about ways -- additional ways you can work together, clearly work together. How do we think about what types of opportunities are available given your long-standing relationship?

Sure. First of all, I want to make sure that I don't undersell the core distribution part of the relationship. I mean, given kind of the scale and given the complexity, we just have a very extensive network in place so that we can provide excellent customer service. And as a result of that, we've extended the contract 2x and now have a contract in the U.S. that runs through 2029 and a contract with Boots in the U.K. that runs through 2031. But we're also always looking at ways that we can help them support their business initiatives. And one of the initiatives that I'll just call out as an example, are there micro fulfillment centers that they're operating, and that's kind of an initiative that from a logistics standpoint, we provided some extensive incremental support. But I'll say that we're always looking at additional things so that we can drive additional value.

Great. No, that makes sense. Maybe talking about one of your other large customers, how should we think about Express Scripts' biosimilar strategy and the impact on core growth? I know that, obviously, some other people have adopted different degrees of how far they're pushing people on biosimilars and that had a different impact on sort of distribution profit. So I'd be curious how you guys are thinking about their specific transition around HUMIRA.

Yes. I don't want to spend too much time talking about their strategy, but I would say, I guess, as for the relationship, it's a really good relationship. It is predominantly brand or innovator products, which makes it a little unique. But the relationship is good. And then the biosimilar opportunity that we've always talked about is for us is really the sweet spot is the Part B side, not the Part D side that goes through the mail. So to the extent that there's incremental volume there in the market, that's good for us. But as I said, the Express Scripts contract is predominantly brand.

Got it. No, that makes sense. If we think about the benefit of biosimilars broadly, and obviously, you correctly pointed out sort of that differential in terms of profit contribution. How do we think about the contribution of both types of biosimilars to the FY '25 profit growth more broadly?

So I would say the sweet spot, right, the Part B side, those products have been in the market and they are in the P&L and they've been good contributors to our growth. And in '25, that continues. There are a couple of new products that will be incrementally good, but it's all positives within our business. And it's not just good for our business, biosimilar utilization has been really strong in the Part B side for years. The Part B side is quick adopters, quick utilizers of the biosimilars where the Part D side has been slower. So I think that that's really good for the health system overall as you take cost out and make more room for innovation.

No, that makes sense. And maybe just one other broad category of drugs that obviously a hot topic every day, GLP-1s. That -- there's been a change in sort of the availability of some of those products. How would you characterize how -- once those products go off shortage, does your relationship change? Or is there a change in sort of how the distribution model works or the profitability profile?

Yes. So 2 things. Those 2 are not Domino's, right? So it's -- they are not connected. The short-term supply constraints really determine whether or not the product is -- or how much of the product is compounded. Because they're on shortage, they're -- certain of those products are allowed to be compounded, which means they're not going through -- they're not going from the innovator, manufacturer through the distribution channel to the customer to be dispensed. They're typically -- it's outside of us. We wouldn't be handling the compounded product. To the extent that those come off shortage and they are no longer being compounded and they become the manufacturer product, that would then go through us and be a good revenue item. But particularly revenue. They are minimally profitable products for us. To the extent that in the long term years out that we hope that they become more profitable, that is certainly something that we're focused on in the long term, but it's not a near term and those 2 things are not Domino's.

Okay. That's very helpful context. Maybe turning to the Pharma Services business. This is obviously an interesting set of businesses that you guys have acquired over many years. That part of the business seems to be having a little bit of a business cycle impact that, obviously, we're not seeing in the rest of your business. Where are we in that? And then sort of how do we think about the contribution of businesses like PharmaLex or like Lash or World Courier over the course of fiscal '25?

Yes, sure. And we did call out this most recent quarter that we did have some weakness in our consulting businesses, in particular, our PharmaLex business, where, in fact, we took an impairment in the most recent quarter. And we have seen that business kind of be impacted by the market, and we see other biopharma services companies kind of being impacted by the market also. And so there has been a bit of weakness that's impacted the consulting business. And -- but we think that these are very good businesses for the long term. And World Courier, you mentioned. I mean World Courier has been just a fantastic business since we bought the business. Now all these businesses are being impacted or have been impacted by the market in the recent past but we think they're very good businesses, and they're very well positioned for the future. And so as the clinical trial market picks up, we think we'll be a beneficiary of that. And these are higher-margin businesses for us. And over time, they should be higher growth businesses. And so we feel as a company, we're very well positioned from everything from clinical trial support to commercialization services right through to distribution, of course. And so we think having this array of services is -- puts us in the right strategic position and will be beneficiaries over the long term and that these will be higher margin, higher growth businesses for us, and they position us very well to provide this broader range of biopharma services to manufacturers across a broader geography, which we think will be particularly attractive to small to midsize manufacturers.

And that makes sense. And sort of sitting from the outside, obviously, it's hard to tease out those because given the dynamic size of the revenue and profits overall. If we're looking on the outside, is it something to think about we just want to see general R&D spending growth? Is that what kind of would be the incremental driver? Like obviously, the long-term fundamentals, I hear you in terms of remaining intact. But in terms of thinking through that, like cyclical element? Or is it biotech funding? Or how do you -- how would you look at that from the outside and be like, okay, that's sort of a leading indicator or concurrent indicator to the business?

Yes. That is a great question. And I would say that, yes, look at things like R&D spending and clinical trial spend would probably be 2 of the leading indicators to watch.

Okay. That makes sense. Okay. Can you -- obviously, you guys have made a number of nice investments this year. Can you walk me through the mechanics of how RCA gets recognized on Cencora's income statement once it is acquired? Because I know it's a little bit more complex than maybe people initially thought.

Yes. And so that is a great question. And we're really excited about the RCA acquisition. Of course, our specialty businesses have been just key drivers of our performance at Cencora for several years. And we feel that the move into these specialty MSOs is really the natural evolution of our very successful specialty business. Of course, we have the strong presence in distribution. We have a very strong presence in GPO. And now having the strong presence in the MSO space, we think is the logical next steps to provide even more high-value services to this strong customer base. And once we acquire RCA, it will be consolidated into Cencora. We will own approximately 85% of the business. And so we will consolidate the business, and you'll see that in our revenue and our operating income from the date of acquisition. That's a little bit different than our OneOncology MSO investment. We presently own 35% of OneOncology. We do have a put call in place. So a couple of years out or so, we expect to own that business, and we'll start to consolidate that then. But at the present time, we have OneOncology, our 35% of their net income in our other income below the operating income line. But RCA, we will consolidate right out of the gate, and we feel just very positive about both opportunities from both a strategic standpoint, a financial standpoint and from just the fact that we get to provide even more services to these physicians that we've had a relationship with for quite some time. And I think this is really consistent what we've talked about for a long time. When we talk about our specialty business, we've talked about kind of oncology being the #1 driver for us there and that ophthalmology is really kind of an area where we also have very high share.

Yes. No, that makes sense. I think traditionally, investors have been more focused on the oncology, saying that's a place of earlier investment by your side and others. Why did you pick retina as the first sort of non-oncology space? And I say first non-oncology space to move into, as if you've like never been in any of these space, which is obviously not really true either, but in terms of like ownership.

Yes. And so -- and again, we've been consistent, and I think our communication for quite some time that a driver of our success has been our sales of specialty products to physician practices and health systems. And oncology is the biggest market for us and ophthalmology is the second biggest market for us. And so this is a market where the retina space is a market where we have very strong distribution. We have a very strong GPO. And so it's really the natural next step in that market to have and MSO also. So this is not a market that's new to us. The doctors at RCA, the physicians there are physicians that we've had relationships with for years and years.

Okay. That makes sense. How do you think about the differences in the drug spend for a physician for ophthalmology versus oncology?

Yes. And so clearly, in oncology, it's larger, but it's also very good and ophthalmology also in an area where we've had leadership in distribution and GPO for years.

That makes sense. What about the additional sort of services element? Is there sort of in terms of -- besides like the core GPO, are there other opportunities to kind of leverage parts of the platform across those 2? Or do you think of them -- they're sort of distinct markets and they operate with different other factors that would make that not as viable as it sounds theoretically?

Excellent question. And we do think that there will be opportunities and synergies over time. Of course, there are things like the revenue cycle management service and managing working capital, there's data and analytics, and there could be learnings and synergies there over time. One area where RCA is particularly strong is in clinical trials given their size and their market share, a lot of clinical trials in the ophthalmology retina space are done at RCA sites. And so there could be some clinical trial learnings and synergies also. So we are kind of very excited about that opportunity.

And those sound like higher growth and nice margin opportunities from the financial side as well.

Yes.

Can you talk about -- I think we've been focusing on oncology and ophthalmology so far. But what about other physician specialty markets? Like what else is sort of attractive for you from that perspective? Or maybe if you don't want to talk about specific ologies, if you will, like what are the characteristics that make a particular physician specialty market attractive?

Yes. I would say, as we look at it from Cencora's perspective that we feel that oncology and ophthalmology make the most sense, kind of given the fact that they are pharmaceutical-centric and the fact that we just have historically a very strong presence in both of those markets. Now OneOncology has made an additional investment in the urology market, which, of course, makes a lot of -- but that's something that really -- that makes sense for OneOncology to do that as an add to OneOncology rather than for us to do that on our own.

Given the complementary nature of urology and oncology.

Okay. One thing that's preoccupied many investors' minds since November is some of the potential policy changes we might see with the new administration. Obviously, keeping in mind that [ the ministry is not here ] and that we don't necessarily have those policies exactly. But sort of given the broader focus on tariffs and onshoring and the new administration, what changes do you see as necessary to Cencora's supply chain?

To Cencora supply chain, not much. So the way it generally works in pharmaceuticals is that we take title of the product here in the United States, whether that's from being originated here in the United States or being originated elsewhere. So we're not -- for the -- that's what makes the pharmaceutical space a little different than like some parts of the medical space are different. But for pharmaceutical space, generally, the manufacturer, the importer of record, if it's originating outside the country.

Got it. No, that's helpful. And how do you think about sort of the broader, I guess, ability of cost pass through. Like you, in that case, would be a total pass-through mechanism if API prices went up, all of that can just -- there's no difference on that. But it's nodding for all of you who are listening on the webcast. Okay. Perfect.

Yes.

Okay. That's helpful. Any other potential changes that you think at least as far as what we've heard that are something you think of as either something as an incremental opportunity for Cencora or something that you think is potentially like something you'll have to manage around?

No. I think for us, we are always advocating on behalf of our customers. We -- where there is generic or biosimilar opportunities we are supportive of that. It's good for the health. It's good for the health care system. It's good for us. So no, I mean, I think we will continue to focus on advocating for our -- for a lot of our community-based providers that -- to make sure that they have the appropriate voice and the appropriate access on all fronts.

Okay. That makes sense. You obviously -- Cencora, as we all know, went through a management transition this year. Many of you have all worked together for many years, and it's been -- from the outside, it seems all seamless. But sort of how did you think -- what are your early priorities as we sort of think about these changes that have happened since Steve left?

Yes. So let me first say that I think the CEO transition has gone really well at Cencora. And I think our Board handled it incredibly well. And of course, Steve still is with the company's chair. And I think Bob Mauch is just doing a fantastic job in his first couple of months. But of course, Bob has been with Cencora for many, many years. And like myself, Bob came to Cencora through an acquisition. He had a business that he sold to Cencora many years ago. And really, since that time, Bob has run every business at Cencora. Most recently, he was Chief Operating Officer. But before that, he had run all the different businesses at one point in time or another. And so Bob understands the company incredibly well. I would say one thing that really sets Bob apart, one of the many things is he's very customer-centric and very focused on customers. And one of the interesting things that Bob did with our leadership team during his first 2 weeks as we did -- we went out and did a connection tour. And we spent 2 weeks in the field, meeting with a lot of our important customers and our team members also. And so I think you'll see that Bob has a really kind of a customer-centric approach. And so I think the CEO succession and transition is going really well, and it's also fantastic to continue to have Steve's involvement as Chair.

Nice. That's great. Okay. As we think about, I think one part of your business that, at least from the U.S. investor perspective has been is a little bit less well known, I think, is to use your European operations. As we think about sort of that in your international business broadly, can you talk about sort of what incremental opportunities you're seeing in that space more broadly? And sort of how do we think about that in terms of sort of any of the puts and takes that you're particularly focused on this year?

Yes. And so our international segment represents about 20% of our operating income. Our U.S. segment represents about 80% of our operating income. When you look at our International segment, one thing you'll note is that the operating margins are significantly higher in our International segment than our U.S. segment, and that's because the services businesses make up a larger component of the International segment. And when we bought the Alliance distribution business, of course, it has kind of that core wholesale distribution business, but it also has a leading 3PL business in Europe, which is, of course, a higher-margin business. We also have the World Courier higher-margin business in the international business, and we have the PharmaLex higher-margin businesses. Our Canadian business is part of the international business that's been particularly strong the past year. But I would -- and so I would say that I would expect our percentage of operating income to stay about the same, I wouldn't expect a major change there. And I think we'll just continue to grow our international business and it will continue to be a higher-margin business. Kind of given the relative size, it probably will, from time to time, be a little bit lumpier than our U.S. business in terms of kind of that might have a quarter that has higher growth and a little bit lower growth next quarter. So kind of just given the scale, I would expect it to be a little lumpier than the U.S. business.

That makes sense. Your 2 largest competitors have mentioned improving sourcing benefits in recent quarters. What has changed in the generic sourcing environment in 2024? And where do you see incremental opportunities?

Yes. I don't know how much there's been an overall change. I would just say that one of the things that we've talked about for the last several years is that manufacturers were talking openly about optimizing their portfolios and looking at how they are prioritizing their infrastructure to potentially some higher moat products, right, whether it's biosimilars or generic injectables or some of the other products. So I think that some of those things could just be playing out in a more -- as a more calm environment on the generic front.

Okay. And maybe -- okay. One more on generics. There's obviously been -- the FDA has been sort of focused on a little bit of an increase in the number of generic drugs that have shortages and reported shortages. How does that impact Cencora?

Yes. I mean shortages are a problem. So if we can't get the product, it's not good. So I'm just saying that explicitly because always it comes up with investors. So there's not -- we need to have the product. So to the extent that there are these iterations or challenges on the supply side, what we focus on is working diligently with manufacturers to understand their outlooks, their expectations, their API availability, their API sourcing and also work very diligently with our customers to make sure that they have -- they can optimize and manage their inventories appropriately because the thing that is most disruptive in any supply chain is if there's some -- there's buying outside of need, right? So the -- maintaining that connection and that communication line, downstream with our customers, upstream with our suppliers, keeps the supply chain efficient and helps prevent unnecessary shortage from over buying. So we stay really close to our customers, suppliers and really make sure that, that communication channel is ongoing and that we can help our customers navigate any potential iterations on the supply side.

Okay. Is that something that's sort of also been like a post-COVID implementation in terms of working through some of that and sort of some of those like communications and out of scope buying? Was that just been a broader...

I would say it was on display a couple of times in COVID because there is one product that had political [ foughter ] around it for COVID -- as a potential COVID treatment that was really only used for lupus. And there were parts of the country that were started ordering that product that we do not think had a big uptick in lupus patients. So we were tamping down that -- turning down that demand to help prevent -- to help keep the supply chain efficient and help make sure that the buying is appropriate, and it's not some of that activity.

Okay. That's very helpful.

But the actual process is fair share allocation. So just looking at what people buy, making sure that we understand it, making sure we understand what will be realistic and what is needed to manage. So we have all of our customers are -- have access and appropriate access.

Yes. No, that makes sense. Maybe circling back to -- and you were talking about this before in terms of OneOncology closing on the United Urology Group. That's obviously a very large MSO with a number of providers. Why are they -- you mentioned, obviously, that there's some nice synergies. But why are they expanding into urology? What is that sort of specific overlap that sort of occurs between those 2 therapeutic areas?

Yes. Let me start by saying that we're really pleased with the OneOncology investment, and we are very pleased that OneOncology is continuing to grow both organically and through acquisitions. And of course, one of the key acquisitions that OneOncology made is the United Urology Group. And so this just -- it makes a lot of sense for OneOncology because if you look at the cancer care ecosystem, urologists just play such a key role in cancers such as prostate cancer and bladder cancer and other cancers. And so it really is just -- it makes a lot of sense for oncology and urology to be together. And so it was really very logical and nice acquisition for OneOncology to do, and we were highly supportive of it and invested additional capital in OneOncology as part of our support.

Okay. Do pronounce the acronym UUG or you say, U-U-G?

U-U-G.

It's probably a better choice there. That makes sense. Okay. Maybe switching back to biosimilars. You talked about Part B kind of being the sweet spot and you're providing more wraparound services and obviously higher margins. If we look at the future launch pipeline, there's this big wave of medical benefit biosimilars coming post '28. Is that sort of in line with your like longer-term time line of sort of that contribution? Or do you see that sort of continuing to ramp up as we go across those years?

Yes. I think you'll still -- you'll continue to have utilization of the existing biosimilars in the market. I think that certainly there are some products that will get biosimilar competition in the out years and to the extent that they're in the medical benefit that will be incrementally good for us. It's a great space for us already. And to the extent that those products come in and they will be incrementally better. And importantly, they'll make room for other innovation in that space.

Okay. That makes sense. Maybe adding one on Part D there. Obviously, many of the managed care companies have talked about higher Part D utilization this year as the IRA has brought down out-of-pocket costs and well, again, next year. How have you seen the changing regulatory environment on that side and the changing like patient obligation part change in terms of that being a driver to your business?

So I would -- I think if you go back over time, we've talked off and on about that out-of-pocket cap potentially being incrementally better for pharmaceutical utilization broadly. I think that it's -- one of the things we've talked about consistently is the challenges that are caused by benefit design and often getting in the way of patients being able to access the care that's being prescribed to them by their medical professional. So to the extent that some of those hurdles and benefit design or some of those challenges and the patient getting access to the pharmaceuticals, their doctors prescribing them that should hopefully help on the utilization front incrementally. And it should also help on the overall health care system spend in that if you assume that the patients are in a position where they need that pharmaceutical that will help them -- help prevent them from needing other medical interactions or readmittances and it will help keep people healthier.

That makes sense. And when we think of those challenges, is that all cost or is that -- what are the...

Yes. The benefit design.?

Yes.

Yes. I think if you go back in time, if you look at now versus 10 years ago. I mean the significant portion of the population is on high deductible plans that have created some hurdles there.

Got it. No, that makes sense. Cencora's long-term EPS target of 8% to 12% growth includes, let's say, 5% to 8% growth from AOI and then the rest from capital deployment. You have the 2 deals that you did recently, RCA and UUG. How do we think about the balance of capital allocation priorities now post those deals? Obviously, you talked about sort of getting them funded. So that would just be helpful to hear more about.

Sure. And thank you very much for asking about capital allocation because one of the great things about our business is we do generate very strong free cash flow. And so how well we deploy capital is just going to be such a key -- one of the key value drivers for us over the long term. Now one thing I will say in the near-term priority for us will be to do some delevering after the RCA acquisition. And then we'll also continue to have balanced capital deployment. And what I mean by that is we're investing in the business every year, and we find that has a good ROIC for us. And this year, we'll have about $600 million of investments in the business. And a lot of that is technology, and a lot of that is infrastructure as our company continues to grow at strong rates then we'll also, as part of the balanced capital deployment be doing strategic M&A. And of course, a lot of that is spoken for over the next few years between RCA and then buying the rest of OneOncology. We'll be doing opportunistic share repurchases. And this past year, I think we did a really good job, and we did $1.5 billion of opportunistic share repurchases throughout the year. And then we'll grow the dividend on our stock each year also. And we have been growing the dividend at 5% a year. And most recently, we increased the dividend growth rate to 8% and so that we could have it in line with the low end of our long-term EPS growth guidance. And so you will continue to see balanced capital deployment from Cencora to drive value.

That makes sense. And maybe just to double-click on what you're talking about the tech investments. Can you kind of tease out like what are the tech -- this is your first tech investment, right? Like what exactly is that? What is sort of the incremental benefit you're expecting out of that?

Yes. It is such a fundamentally important part of our company because we're just so efficient. And given our scale to have really state-of-the-art technology and operating technologies in our business is so important. And so one example I'll give you is significant SAP investments. And like, for instance, we've been -- we're making -- we're doing a significant SAP and warehouse management investments in the U.K. so that we can have the same sort of systems that we have here. And so -- and that would be just one example. But -- and we're doing the same sorts of things in the U.S. and then a lot of data and analytics investments also. But it's a critically important part of our business model and something we're very focused on.

Nice. I have this like NASA style picture of you, seeing all the -- everything moving around now going forward, that would be good. Nice. Maybe in the last couple of minutes, Cencora, we started a well-known company, many people have been following it for many years. What do you think it is about the company, if there's anything that sort of still understood or misunderstood by investors?

Gosh, I think we're understood pretty well. And I'm just personally just super optimistic about our company and our industry. over the long term because I think we're just going to continue to be beneficiaries over the long term from pharmaceutical innovation, which I think will accelerate and we'll continue to be beneficiaries of utilization trends, which I think will continue to be strong. So I'm just -- I'm very optimistic about our long-term potential.

Yes. And I think -- I don't think there's anything that's generally misunderstood. So what I would say is maybe that -- to what our current shareholders appreciate is strong cash flow generation quite high ROIC, stable, growing business with components of our business that are higher margin, higher growth and it's truly a strong, consistent executor from the internal management side of the business over -- with a strong track record over the short-, medium- and long-term history. As we look ahead, I think those current shareholders see that ROIC, they see that cash flow, they see that execution, and they see that stable growing business and have a lot of confidence. And so to the extent that there are other shareholders in the outside looking, those would be the characteristics that I imagine they would want to focus on.

That sounds right. So thank you very much. Appreciate the time.

Thank you.