Jim Gustafson - DaVita, Inc. Kent J. Thiry - DaVita, Inc. Javier J. Rodriguez - DaVita, Inc. Joel Ackerman - DaVita, Inc..

Kevin Mark Fischbeck - Bank of America Merrill Lynch Stephen Tanal - Goldman Sachs & Co. LLC Justin Lake - Wolfe Research LLC Frank George Morgan - RBC Capital Markets LLC John W. Ransom - Raymond James & Associates, Inc. Gary P. Taylor - JPMorgan Securities LLC.

Good evening. My name is Christine, and I will be your conference facilitator for today. At this time, I would like to welcome everyone to DaVita's second quarter 2018 earnings call. All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question-and-answer period. Thank you. Mr.

Gustafson, you may begin your conference..

Kent Thiry, our CEO; Joel Ackerman, our CFO; Javier Rodriguez, CEO of DaVita Kidney Care; Jim Hilger, our Chief Accounting Officer; and LeAnne Zumwalt, Group Vice President. Please note that during this call, we will make forward-looking statements within the meaning of federal securities laws.

All of these statements are subject to known and unknown risks and uncertainty that could cause the actual results to differ materially from those described in the forward-looking statements.

For further details concerning these risks and uncertainty, please refer to our first quarter earnings release of earlier today and our SEC filings, including our most recent Annual Report on Form 10-K and quarterly report on Form 10-Q.

Our forward-looking statements are based upon information currently available to us, and we do not intend and undertake no duty to update these statements. Additionally, we'd like to remind you that during this call, we will discuss some non-GAAP financial measures.

A reconciliation of these non-GAAP measures to the most comparable GAAP financial measures is included in our earnings press release submitted to the SEC and available on our website. I'll now turn the call over to Kent Thiry, our Chief Executive Officer..

Thank you, Jim, and thanks to all out there on the phone for your interest in DaVita. I'll make three quick points up front. As Javier will review, we had a strong quarters for Kidney Care operations. The second point is the DMG sale process continues to progress and is on track to close this year.

And number three is we've deployed significant cash towards share repurchases during the quarter. However, as we are first and foremost a caregiving company, I will start our call, as always, with clinical results. Infection is one of the leading causes of hospitalizations in our population.

In the second quarter, we delivered the lowest infection rate since we started tracking these rates. For our in-center patients, the bloodstream infection rate actually decreased by 9% year over year, outpatients even better as the peritonitis improved – decreased by 19% year over year.

This is not only an unambiguous example of quality improvement on the clinical side, it also leads to a dramatic improvement in quality of life and lower costs for the system. And on that happy note, I will turn things over to Javier..

number one, a bill in California that seeks to restrict dialysis patients' access to charitable premium assistance by creating hurdles to patients and charities and limiting the providers' reimbursement for commercial patients to Medicare rates; number two, a ballot measure in California to capture reimbursement from private payers and interferes with our contract to the benefit of private insurance; number three, we will likely face the similar ballot measure in Ohio.

In the next two weeks, we will know if the Ohio measures has qualified. The dialysis community is committed to advocating against the measures on behalf of our patients, our teammates, and our shareholders.

We are working with a broad coalition of over 100 healthcare providers and patient groups to oppose these measures and intend to do whatever is necessary to educate voters on why these measures are flawed. Unfortunately, educating voters on regulations around a complex and lifesaving therapy such as dialysis will be expensive.

On to the fourth topic, GranuFlo, a jury recently handed down a negative verdict involving DaVita's use of GranuFlo, one of the components used to produce dialysis. Before I comment on the case, I want to be clear. DaVita's first priority always has been and will continue to be the care and safety of our patients.

DaVita has a clear record of improving patient quality of life and reducing patient mortality over the last two decades. Now on to the case, we do not believe the verdict is supported by the facts or the law. We will be pursuing all avenues to overturn this verdict and do not believe that the verdict will stand in its current form.

My fifth and final topic is DaVita Rx. As we talked about in the past, changes in the oral pharmacy space, including reimbursement reductions, have hurt the economics of DaVita Rx.

As a result, we are looking for a new way to deliver high-quality pharmacy services to our patients in a more cost-effective manner while maintaining our medication management capabilities. As such, we will be outsourcing the customer service and fulfillment functions of DaVita Rx.

We will maintain our renal-related medication management capabilities in-house, which will help us provide differentiated integrated care to dialysis patients. And in 2019 and beyond, what remains of DaVita Rx will be accounted for as part of our U.S. dialysis and lab segment, similarly to how we handle our labs.

Let me finish by emphasizing that the underlying dialysis operations and clinical results remain strong. These results allowed us to maintain our adjusted operating income guidance range while absorbing the significant anticipated advocacy costs. Now on to Joel for some financial details and our results..

Thanks, Javier. Adjusted operating income from continuing operations for the second quarter was $419 million. This includes $12 million in non-recurring Medicare bad debt recoveries from prior periods relating to the change in revenue recognition standards we implemented at the beginning of 2018.

This is slightly above the $6 million to $8 million we expected. As you will recall, in Q1 we recognized $24 million from this change. We do not expect any significant prior-period revenue from this going forward. Excluding this impact, net dialysis revenue per treatment was up approximately $1 from the previous quarter.

This was driven by an increase in commercial and government rates, partially offset by a seasonal decline in acute treatment mix. Our continued strategic review of our business portfolio resulted in three changes this quarter, creating some noise in the quarter's financials.

First, following up on Javier's comments on DaVita Rx, in the first half of 2018, the Rx business was approximately breakeven before intercompany management fees and excluding an $11 million charge related to write-off of assets in Q2. We expect to incur some additional charges in the remainder of the year related to this plan.

These charges are excluded from adjusted operating income and guidance. For the second half of the year, we expect to incur an adjusted loss on DaVita Rx operations of $20 million to $35 million due to duplicative costs during the transition. This loss has been reflected in our adjusted operating income guidance for continuing operations.

In 2019 and beyond, we expect no significant net financial impact from DaVita Rx. Second, we sold our remaining stake in Tandigm to Independence Blue Cross. As a result of this sale, we have recognized an after-tax gain of $19 million, which is included in our discontinued operations.

Third, we sold Paladina Health in June and recognized a one-time operating income gain of $35 million, which is excluded from our adjusted operating income and adjusted operating income guidance. Regarding the sale of DMG, we continue to be on track to close the transaction in 2018.

For international, our adjusted operating income in the quarter was $3 million, which included a $5 million foreign exchange gain from the cash balance in our Asia-Pacific joint venture. We continue to expect to achieve breakeven adjusted operating income in late 2018 excluding any foreign exchange gains or losses.

This is incorporated in our enterprise adjusted operating income guidance for 2018. Now cash flow, operating cash flow from continuing operations was $606 million for the quarter. We continue to expect OCF from continuing operations for the year to be $1.4 billion to $1.6 billion.

We also expect CapEx for continuing operations for the year to be consistent with the approximately $925 million we mentioned previously.

Finally on share repurchases, through July 31, 2018, year to date we purchased approximately 15.9 million shares for approximately $1.1 billion, representing nearly 9% of our shares outstanding at the beginning of the year. This includes approximately $500 million of stock repurchased since our last earnings call.

As we said last quarter, we view this as an early deployment of the enhanced liquidity we expect later this year. On July 11, our Board of Directors approved an additional share repurchase authorization. The total amount of our repurchase authorization remaining as of July 31 was approximately $1.4 billion.

For our annual adjusted operating income guidance, we are maintaining the range of $1.5 billion to $1.6 billion, but we have now included in this guidance our expected costs associated with countering the union policy efforts. This guidance does imply lower expected operating income in the second half of the year than in the first half.

This is the result of two positive items in the first half of the year and two negative items expected in the second half.

The positive items are $36 million in Medicare bad debt revenue recognized in the first half due to the implementation of the new revenue accounting standards and $17 million in DaVita Health Solutions revenue recognized in the first quarter that we do not expect to recur.

The negative items are the $20 million to $35 million anticipated second half adjusted loss at DaVita Rx, and the increased advocacy costs expected in countering the union policy efforts. We incurred some costs in the first half of the year, but we expect costs in the second half to be significantly higher and heavily weighted in the third quarter.

Therefore, the fact that we are maintaining our adjusted operating income guidance range while incorporating this additional cost shows our increasing confidence in the underlying financial performance for 2018.

This change to include anticipated advocacy costs in our updated guidance also impacts our expected tax rate because these costs are not tax deductible. For the second quarter, our effective tax rate on income attributable to DaVita Rx from continuing operations was 29.5% in the quarter.

For the full year, we now expect our effective tax rate on income attributable to DaVita from continuing operations to be 28.5% to 29.5%. Now I will turn it over to Kent for some closing remarks..

A quick restatement of a few of the key takeaways; number one, we are experiencing a material amount of non-business external friction, particularly on the union side.

Importantly, however, number two, we continue to be strategically well positioned both in the context of the current business model and for the longer term providing integrated care to kidney care patients across the country. And lastly, number three, we continue to generate strong cash flows.

And with that, operator, can we go on to Q&A please?.

Thank you. At this time, we'll begin the Q&A session. And our first question in queue is from Kevin Fischbeck of Bank of America. Your line is now open..

Great, thanks. I wanted to see about the guidance.

Is it fair to say that now that your guidance includes – you actually didn't say how much the advocacy costs are going to be, but let's say $50 million of additional costs, that you're more comfortable at the low end of the guidance, or are you saying that the core business has improved through the year and you're comfortable at least at the midpoint of that guidance range?.

I guess I would say we are comfortable adding the advocacy costs and obviously bringing in a new cost and maintaining the guidance is the positive side. I would not interpret anything about where we expect to be in this guidance range relative to where we had expected to be beforehand based on the fact that the advocacy costs are coming in.

Is that responsive?.

I guess. It's basically saying you're not going to comment. So that's fine though. I guess you mentioned the two California bills and the Ohio ballot.

When we think about those things, how do you quantify the potential impact if these things were to be going through?.

Kevin, we figured you'd ask the question. Unfortunately, the answer is not very satisfying because there are so many variables in play and literally every day there's a new dynamic. As you can imagine, they're all very different.

But if the ballot initiative passes in California, you'll instantly have approximately 66,000 patients that are being treated in centers that mostly will be unsustainable. And so to assume that there's going to be some kind of a plan, a backup for that is just unrealistic.

So then you've got to go into how would it play out and then you go into, well, okay is there going to be some intervention by policy makers to avoid a crisis and if there are some regulatory things or some legal challenges we could do, and so on and so forth. But the answer to your question is we're not going to give a number.

It's too hard to do so..

All right, maybe you can help clarify a couple things.

I've gotten questions from people about what the California ballot initiative is actually trying to do because the language says the rebates go back to the commercial payers, which some people have interpreted to mean that this 15% margin is actually tied to only commercial payers rather than the 15% margin to the site across all payers on average.

Can you just clarify your interpretation of how that margin is applied?.

First of all, we've got to be careful with the phrase 15% margin because the ballot defines 115% of allowable cost, and allowable cost is poorly defined. So there's going to be a lot of debate as to what it's in it and what's not. So to assume that there's 15% margin is probably not realistic there.

As it relates to the second part of it, I think it is a rebate to the commercial patient, and that is the commercial plan.

Is that the second question you were asking?.

It's a rebate to the commercial plan, but that 15% of allowable cost, is that done at the site level across all payers that includes Medicare and Medicaid, or is it only applied to your commercial customers, which would obviously be a different thing? If you had allowable costs on Medicare, that would help.

Obviously, you're not making your 15% on Medicare. And therefore, it would increase the overall profits of the facility rather than if you were only to apply that to the commercial side of things..

Right, so it's on all costs to all payers the de facto because Medicare is in essence the low cost in many instances. You really are thinking about the commercial payers..

Yeah, okay, that's how we're thinking about it. And then I guess the last question then, on the bill that's being debated in California, how do you think about – you guys have quantified some impacts before about – if CP-8 were to go away.

How do you think about that I guess, in rough terms? Would that be similar to the gross impact exposure weighted by the California exposure of that, or do you think that it would be the net number you say that there would be offsets and the number is closer to $100 million? The $250 million is more the way to think about California being 20% of that is just order of magnitude on that..

Unfortunately, the math is not straightforward on the numbers that we gave you in the past and this one because if you look at the bill, it could effectively eliminate charitable assistance for dialysis patients because it's got inconsistencies between the bill and the OIG guidance relating to the dialysis charity assistance.

So it could literally result in disproportionately hurting low income population.

And so then you have to go into how would that population behave, what plan would they pick, what's happening with our competitors, are they having less capacity in their centers? So are patients having to in essence go deeper into their pocketbook because they don't want to be displaced, et cetera? So again, SB 1156 is quite dynamic and keeps changing.

And every time it changes it introduces a new twist, but the math is not intuitive at that level that you have..

Okay. Actually I lied, one more question. Given these three things, I'm a big fan of you guys buying back stock in advance of DMG closing if you've got good visibility on that closing. But I guess how did you think about buying back stock in front of these three things? I guess any one of these things could be meaningful to the company.

So how do you think about valuing the company given those potential risks? And that's it, thanks..

It's a tough question to answer, Kevin, given the uncertainty that these three things create looking forward, but we stuck to our principles, which were looking at the long-term intrinsic value of the company and using that as well as a number of items to decide the pace at which we want to buy, which is obviously influenced by the DMG closing and our not wanting to have to accumulate rapidly during some artificially high stock price.

So you put that all in the mix, and that's where we came out in terms of our buyback for the quarter..

Thank you..

Thank you. And our next question is from Steve Tanal of Goldman Sachs. Your line is now open..

Hi, good afternoon, guys. Thanks for taking the question. I guess just as we were looking at the RPTs less patient care cost per treatment, I guess a measure of gross profit per treatment, it looks like the margin was down about 300 bps year on year just on that measure.

And I'm just curious to understand if there's anything to spike out there and whether there has been any change on the calcimimetics side, either from a reimbursement or margin standpoint versus Q1?.

Yeah, so a few things. Obviously, you've going to back out all the noise. Two things to point out, one is the 401(k), which was an artificial improvement to 2017. So that would probably be the single biggest thing to call out looking at how to adjust year-over-year margins..

Got it, okay. So I was actually going to ask you about that too.

And is that still consistent with the $100 million for the year, and is that ratable exactly?.

I'm sorry, I didn't hear the second part of the question.

Is that?.

The guidance for the 401(k) headwind was $100 million for the year, if I recall.

I'm just trying to check the cadence of that and if it's still similar to where you expected it'd be?.

Yes, it is, and it's relatively flat across the year. So there's not a lot of quarterly variation in that..

Great. And then just secondly, just on the G&A line, it looked well controlled, at least relative to how we modeled it.

Is there anything unusual to break out there, or is that a good run rate to use going forward?.

The best thing to do is to look at it as an annual number, and there's not much to report on that..

Got it, okay. And just lastly for me, I just wanted to clarify the comments on Ohio. It sounded like you said the ballot measure has qualified. Is that the case? It seems like there's news reports out that suggest maybe it is not..

No, I apologize if that's what you heard. We will find out on August 13, I believe, if it qualifies, so in the next couple weeks..

Got it, okay, so still uncertain. Thank you..

Thank you..

Thank you. And your next question is from Justin Lake of Wolfe Research. Your line is now open..

Thanks. Good afternoon, good evening. I just want to go back to Kevin's question on the OI guide, obviously very good that you can absorb all these incremental costs. You gave us the DaVita Rx number.

Can you give us a ballpark ballot cost estimate, or is that just too competitive and you want to keep that out of the call?.

You're correct, we'd like to keep it out..

Okay..

Thank you for asking and answering. I like that..

Well, you guys are teaching me, I am trainable. So the second thing – so it's August 1 and you've still got $100 million wide guidance range. I would think there's more visibility in the business there, so I don't think it's unreasonable to ask. Where do you think within that range, the higher? I know you have a history of doing the higher end.

Where within that guidance range do you think you're more likely to fall, probabilistically, of course?.

Yeah, so I think the reason the range remains so wide is advocacy that is contributing to an uncertainty that remains at this stage in the year. In terms of where in the range, I think we're just comfortable with the range, and we'll let it play out..

Okay. Maybe for this quarter, can you tell us where you were? It certainly looked like it was ahead of my estimates and I think consensus in terms of OI.

Can you tell us how it looked relative to your internal expectation?.

We don't guide quarterly, and I don't think we're going to comment quarterly on where we came out relative to internal expectations. We're going to stick with guiding for the year. We think that gives you the visibility that we can offer..

Okay, I'll ask one more.

Can you tell us why the tax rate is up 200 basis points?.

Yes, it's the expected non-deductibility of our advocacy costs that we expect to pay in the balance of the year – or to spend in the balance of the year. Justin, I misspoke in the script. I think I said I was – I referenced the tax associated with DaVita Rx. That was just a foot fault. I just meant DaVita, in case that wasn't clear.

But yes, the 200 basis points is from the advocacy, which is not deductible..

Okay, so the tax rate for next year, as long as there's no advocacy cost, would revert back to your original guidance.

So this is a one-time charge?.

Depending on how you view advocacy going forward, yes, it not a fundamental change to the tax rate..

Okay, great. I'll jump back in the queue. Thanks..

Thank you. The next question is from Frank Morgan of RBC Capital Markets. Your line is now open..

Yes, I guess I'll follow up on Kevin's question earlier about buybacks.

Clearly, $1.4 billion left under your existing program, if I heard you correctly, in light of what's ahead of you with both the ballot initiative and this SB 1156, what is your appetite now for further purchases ahead of the outcome of those two events?.

Frank, we have been comfortable communicating our strategy about buybacks, but we're very reluctant to comment about what we're going to do in any given period. It's not something we want to signal. We don't want to drive the stock up artificially and then feel compelled to buy into that.

So we will continue with our buyback strategy, but I don't have any particular color for you in the next quarter or so leading up to be the ballot initiative..

No change in cash flow from ops guidance absorbing those advocacy costs, any changes in your outlook for CapEx in terms of just looking at free cash flow?.

No, still the $925 million number we've given in the past is still a good number..

Okay. And then final question, just any updates, any thoughts around the patient, any timing there or updated thoughts from a regulatory or a legislative perspective? Thanks..

This is KT. The short answer is it's still the case that we have a real shot. We need the CBO score. And if that comes out at a reasonable level, we have a real shot. We didn't bring it up proactively because we figure many of you are sick of hearing that paragraph.

But it's still for us very, very alive, and every week we cross our fingers and hope for the CBO score..

Okay, thanks..

Thank you..

Thank you. And our next question is from John Ransom of Raymond James. Your line is now open..

Hi. I'm next to a very chatty and loud Southwest gate agent, so sorry for the background noise if there is any, two quick questions for me.

As you think about CapEx after this year, have you done any more analysis of the relationship of CapEx and growth? Is there a way you could bracket expectations for next year, or is it too early to do that?.

So for next year, we are comfortable saying that we will head back down to a number that's more closely aligned with our 2017 number, and that our view is that 2018 had a couple of things worth roughly $100 million that were unusual, and those will go away, so, something in the low $800 million..

Okay, so that's roughly – that's almost 2x your depreciation.

Is that just the permanent plateau, no matter what?.

Hold on one second..

Okay..

Why don't you give us a few minutes to reflect on the question and see we can come back in a satisfactory way?.

It just seems like a big number, but....

Let me take it..

Sure..

The $800 million – I'm sorry, John. The $800 million is – I wouldn't call it a new plateau. It's definitely tied to our growth. Remember, most of that is not maintenance CapEx, it's development CapEx.

We are thinking about ways to get the number down both through small initiatives around lower cost to build de novos, in lowering our IT spend and stuff like that, as well as some larger ideas that I mentioned briefly on the call last quarter.

That said, I don't think we're prepared to guide to any trend on the number ahead of what we've said about 2019..

Okay, fair enough. And secondly, the pharmacy initiative, I know you've called out some losses for the back half of the year.

When do you think that transition will be done, and what would be good expectations for the ongoing contribution of the business?.

The transition will be in Q3, maybe it slips a little into Q4, and the economics post that in 2019 will be irrelevant..

So it would go from losing what you're saying to basically breakeven or off the P&L.

Is that a way to think about it?.

That's a good way to think about it..

So it's a good guess. So I asked about the pharmacy I think last call or two calls ago, and you guys were pretty adamant that it was a strategic asset that you wanted to keep.

So what changed in the last two quarters that made you change your mind?.

It's mainly a revenue change, John. So we've had a couple of contractual changes in a drug that has the potential of being generic for quite some time. It went generic, and it went generic, and the pricing was quite rapid, the decrease in pricing. So the combination of several revenue hits made the decision, while painful, the right one..

Okay, fair enough. Thank you, that's all I have..

Thank you..

Thank you. And our next question is from Gary Taylor of JPMorgan. Your line is now open..

Hi, good morning. Good morning, really, good afternoon. Just a question, I know you had said on calcimimetics, it was essentially similar contribution as the first quarter. In the first quarter, you said it was $19 revenue per treatment. Would you be more precise? Is it right on $19, is it different....

Yeah, it's about $19, no material change..

And it looks like there was almost $10 million of equity investment income, a line item that usually is not material, contributing to the operating income.

What was driving that figure?.

We are taking a look, Gary..

Yeah, I think it was $9.795 million..

And, Gary, could you even talk a tad louder?.

Oh, yes, I'm sorry..

Yeah, Gary, I'll remind you that the APAC joint venture we have is an equity investment, and the foreign exchange swings related to that come through that equity line..

You had called – I think you said that FX was $5 million, so about half of it.

So is it fair to think that line is probably a few million dollars a quarter, but not necessarily $10 million or...?.

I think you should expect that to swing around and not contribute in either direction over any sustained period of time..

Okay, just two more quick ones. It looks like ancillary $7 million loss in the 1Q added – it was a positive $3 million in the 2Q, I don't think that was DaVita Rx yet.

So was there something driving that?.

I'm sorry, you're asking about the ancillary line?.

Yes, where you give operating income, I think it was negative $7 million negative in the 1Q and it was plus $3 million this quarter, so about a $10 million sequential good guy?.

Yeah, there's some noise in that line. I think in Q1 it had the DHS number, which was a $17 million good guy. In Q2, it had the Paladina write up, which was a $35 million good guy..

Okay, might have to follow on that one..

Oh yeah, and Q2 also had the Rx minus $11 million running through that line..

Okay, I might have to follow up because it's better, so I'm not sure I understand all that, but I won't tie up folks.

Just last question is, so I follow your math on if you take the first quarter revenue per treatment less the $24 million Medicare bad debt recovery in the 2Q, $352 per treatment less the $12 million Medicare recoveries puts your normalized revenue per treatment up about $1 sequentially from 1Q to 2Q.

But you said that increase was related to commercial and government rates, so I just wanted to make sure I understand that. I don't think there would be a lot changing on the government rate side intra-year. It may be some intra-year commercial.

I guess generally I'd consider maybe there's just some fluctuation of mix, but I wanted to make sure I was understanding that properly..

Yeah, there is some – within the government line, remember, Medicare fee-for-service is not our only government payer. There's Medicare Advantage. There's Medicaid fee-for-service and managed Medicaid. So as mix shifts between those buckets, you can see some shifts in the RPT..

Thank you, that's all I had..

Thank you..

The next one is from Justin Lake of Wolfe Research. Your line is now open..

Thanks, a few more questions. You said the DMG sale process is on track.

Is there anything further you can share with us? For instance, what might be left to do here when you met the second request, so we can understand the clock a little bit, anything?.

Really not much to add, both parties are working to get it closed in 2018..

Okay, anything on commercial mix in the quarter in terms of up, down, or it continues to be pretty steady?.

Nothing to call out, Justin..

Okay. And then on share repo, I just ran some back of the envelope numbers, and you bought back 16 million shares. I think we're pulling up about a little over 200 million shares have traded year to date. So you guys have been responsible for about 7.5% of the volume.

I'm just curious if that's – is that the gating factor to the percentage of volume you can be out there? Is that the gating factor to what you've bought, or is that 7.5% number – I'm just trying to think about looking ahead and the timing of share purchases going forward, or is that just there's no really rhyme or reason to it and don't use that 7.5% as a proxy?.

I would not use that as a proxy for what we can buy. What percentage of the volume we are does affect our thinking at times. But I wouldn't say over the course of the quarter or the year to date, that's been a driving factor in how we think about buybacks..

Okay. And then lastly, I just want to confirm. When I asked about the tax rate going up 200 basis points, you had indicated that most if not all of that is coming from the lack of deductibility of advocacy costs.

Is that correct?.

Yes..

So that didn't have to do with DaVita Rx or anything else, right?.

No, there are other small things related to the change in the tax law that will flow through that, but it's largely related to advocacy..

All right.

Because I think what's going to – what people are going to do is put two and two together here and basically you can math into how much advocacy costs have to be then to drive a 200 basis point change in your tax rate?.

Yes, the old rate was a range and the new rate is a range, but I get the math you want to do..

I'm picking up $75 million, and I only say that because I'm sure everybody is going to do it.

Is that a number that you'd want to walk us up or down on?.

We don't want to comment on what we are going to spend..

Okay, that's it for me. Thanks..

Thank you. And that's the last question in queue at this time..

All right, thanks, everyone, for your interest. We'll talk to you again in three months. Thank you..

Thank you. And that concludes today's call. Thank you for your participation. You may now disconnect..