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Becton, Dickinson and (NYSE:BDX)

Q2 2010 Earnings Call

April 29, 2010 10:00 am ET

Executives

William Kozy - Executive Vice President

Sherry Bertner -

David Elkins - Chief Financial Officer and Executive Vice President

William Rhodes -

Vincent Forlenza - President

Gary Cohen - Executive Vice President

Philippe Jacon -

Analysts

William Quirk - Piper Jaffray Companies

Jon Wood - Jefferies & Company, Inc.

Evan Lodes

Bill Bonello - RBC Capital Markets Corporation

Jonathan Groberg - Macquarie Research

David Roman - Goldman Sachs Group Inc.

Brian Weinstein - William Blair & Company L.L.C.

Jeffrey Frelick - ThinkEquity LLC

Lawrence Keusch - Morgan Keegan & Company, Inc.

David Lewis - Morgan Stanley

Frederick Wise - Leerink Swann LLC

Sara Michelmore - Cowen and Company, LLC

Kimberly Gailun - JP Morgan Chase & Co

Amit Bhalla - Citigroup Inc

Peter Lawson - Thomas Weisel Partners Equity Research

Kristen Stewart - Crédit Suisse First Boston, Inc.

Operator

Hello, and welcome to BD's Second Fiscal Quarter 2010 Earnings Call. It will be available for replay through Thursday, May 6, 2010, on the Investors' page of the bd.com website, or by phone at (800)642-1687 for domestic calls and area code (706)645-9291 for international calls, using conference ID 67104728. [Operator Instructions] Beginning today's call is Ms. Sherry Bertner. Ms. Bertner, you may begin.

Sherry Bertner

Thank you, Jacqui. Good morning, everyone, and thank you for joining us to review our second fiscal quarter results. As we referenced in our press release this morning, we are presenting a set of slides to accompany our remarks on this call. The slide presentation is posted on the Investor Relations page of our website at www.bd.com.

During today's call, we will make forward-looking statements, and it is possible that actual results could differ from our expectations. Factors that could cause such differences appear in our second fiscal quarter press release and in the MD&A sections of our recent SEC filings. We will also discuss some non-GAAP financial measures with respect to our performance. A reconciliation to GAAP measures can be found in our press release and its related financial schedule. A copy of the release, including the financial schedule, is posted on the bd.com website.

Leading the call this morning is Vince Forlenza, President. Also joining us are David Elkins, Executive Vice President and Chief Financial Officer; BD Executive Vice President, Gary Cohen and Bill Kozy; as well as Bill Rhodes, President of BD Biosciences; and Philippe Jacon, President of Diagnostic Systems. I will now turn the call over to Vince.

Vincent Forlenza

Thanks, Sherry. Good morning, everyone, and thank you for joining us today. Before turning the call over to David to review our second quarter results in more detail, I would like to briefly comment on some of the highlights regarding the quarter results, which are noted on Slide 4.

As Ed stated in our press release, we are very pleased with our second quarter results, which were in line with the company's expectations. Our overall revenue growth for the quarter was solid. BD Medical revenue growth was primarily driven by Diabetes Care and Pharmaceutical Systems. BD Diagnostics, on the other hand, grew less than expected.

We experienced an exceptionally mild flu season. As a result, we saw reduced testing levels in most of our Diagnostics businesses, which was partially offset by strong growth in our cancer diagnostics and molecular STD product platforms. Finally, we are continuing to see an improvement in our Biosciences segment.

Overall, we are quite pleased with the company's performance in a difficult environment. Our second quarter and year-to-date earnings results provide us with the confidence to reaffirm our adjusted EPS guidance for the full fiscal year.

Moving to Slide 5, you will see that the company experienced solid top line and strong bottom line growth for both the second quarter and our six-month year-to-date results. For the second quarter, our revenues grew 7%, or 6.6% on a currency-neutral basis. We experienced strong adjusted EPS growth at 8.5%, or 16.2% on a currency-neutral basis. For the six-month year-to-date results, revenue growth was 9.3%, or 7.8% currency neutral. Adjusted EPS grew at 6.6%, or 14.1% on a currency-neutral basis.

Before reviewing our guidance for the fiscal year, I would like to briefly mention that throughout our commentary, we will be discussing two types of flu: the pandemic flu, which has had a positive impact on our year-to-date revenue growth; and the seasonal flu, the absence of which has had a negative impact on our revenue growth. David will cover the impact of the pandemic flu-related revenues on the company later in his remarks.

Now let's move on to Slide 6, which looks at our guidance for fiscal 2010. You may recall that our previous revenue guidance was at about 7%, or about 6% on a currency-neutral basis. We have adjusted our reported revenue growth to approximately 6% to reflect the strengthening dollar.

On a currency-neutral basis, we continue to expect revenues to increase approximately 6%, which is in line with our previously communicated guidance. With that said, we are reaffirming our previous guidance for adjusted EPS to increase 2% to 4% to $5.05 to $5.15, or 8% to 10% on a currency-neutral basis, excluding the healthcare reform charge. Now I'll turn the call over to David to review our financial results.

David Elkins

Thank you, Vince, and good morning, everybody. As Vince just summarized, we are pleased with our first half results. I'd now like to turn to Slide 8 to highlight some of our second quarter results.

Medical revenues grew 7.8%, currency neutral, driven by strong performance in the Pharmaceutical Systems and Diabetes Care businesses. Diagnostics revenue growth, on a currency-neutral basis, was 2.7%, which is impacted by an exceptionally mild flu season and a reduction in lab testing. Biosciences showed continued improvement, with underlying growth at 9.8%. This was mainly driven by a solid instrument and reagent sales in the U.S. and in Japan.

Revenue growth in the quarter came from most geographies, with U.S. revenue growth of 6% and international revenue growth of 7%, currency neutral. Our strong bottom line performance was driven by revenue and operating margin expansion, on a currency-neutral basis.

On Slide 9, we begin to review our growth by segment. First, you can see total top line growth for the company in the quarter was 7%, or 6.6% currency neutral, with pandemic flu-related sales contributing less than 1%. For the first half, the company grew 9.3%, or 7.8% currency neutral, benefited by pandemic-related sales of a little more than 2% of growth.

BD Medical second quarter revenues increased 9.7%, or 7.8% currency neutral. As mentioned earlier, we experienced strong sales in Pharmaceutical Systems and Diabetes Care businesses. Strong Diabetes Care growth was primarily attributable to pen needle sales, and the non-product co-marketing agreement discussed on our last call. We also experienced significant growth across emerging and developed markets. The strong growth in Pharmaceutical Systems is due partially to timing, new product lines and some benefit from pandemic-related revenues.

For the first half, the Medical segment grew 13%, or 10.2% currency neutral. Again, benefited by pandemic-related sales of about four percentage points of growth. Revenues in the BD Diagnostics segment grew 3%, or 2.7% currency neutral. This was caused by the slower growth of our PAS and Diagnostic Systems products, as a result of lower U.S. hospital admissions and lower lab testing lines in the quarter.

Our Cancer and Molecular Diagnostics businesses continue to experience solid growth of about 8%. For the first half, the Diagnostics segment grew 6.6%, or 5.4% currency neutral. In the Biosciences segment, revenues increased 6%, with underlying growth of 9.8%, currency neutral. We are pleased that the Biosciences segment continues to improve. Solid U.S. growth was driven by research instrument and reagent sale and key customer purchases, benefiting our Advanced Bioprocessing business.

So we now just experienced strong instrument growth, particularly in Japan. This was driven by supplemental government funding of cell analysis instruments for stem cell research, mainly by academic institutions. For the first half of the fiscal year, our Biosciences segment grew 3%, or 5.2% on a currency-neutral basis.

Now turning to Slide 10, we'll look at our geographic results. In the second quarter, BD's U.S.-reported revenues increased 6%. U.S. Medical revenues increased 6.7% year-over-year, reflecting solid sales of pre-fillable devices and Nexiva, as well as flu-related products. U.S. sales of Diagnostics products increased 2.7%, and was impacted by an extremely mild flu season and the lower lab testing. Bioscience revenues in the U.S. increased 12.6% due to revenue growth in Cell Analysis business, which was led by research instrument and reagents.

International revenues grew 7.7%, or 7% on a currency-neutral basis in the quarter. Growth in our Medical segment grew at 8.6%, currency neutral, by strong growth in our pre-fillable devices, pen needles and infusion therapy products. The Diagnostics segment grew 2.8%, currency neutral, mainly as a result of the mild flu season. Biosciences grew at 8.4%, currency neutral, by exceptionally strong growth in Japan. This growth was offset by continued delays in Western Europe government funding of cell analysis instruments.

For the first half, reported U.S. revenues were 7.9%, with Medical increasing 10.9%. Diagnostics increased 5.3% and Biosciences growing 4.6%. International revenues were strong in our Medical segment, with underlying growth of 9.8%, currency neutral, while our Diagnostics and Biosciences grew at 5.5% on a currency-neutral basis.

Now moving to global safety on Slide 11. Reported sales grew 6.8% in the quarter, to $418 million. On a currency-neutral basis, underlying growth was 5.9%. This was comprised of a 5.4% growth rate for the U.S. and an underlying international growth rate of 6.8%. International safety slowed in the quarter, due to back-order products, the weak flu season and reduced testings.

For the first half, underlying growth was 8.4%, on a currency-neutral basis, which is a combination of an 8.2% growth rate in the U.S. and an underlying growth rate of international safety of 8.6%, on a currency-neutral basis. This also reflects the quarter two softness, as I just mentioned, due to some back orders, the weak flu season and reduced testing volumes. Vince will provide you an update on the EU Safety legislation in his closing remarks.

Now moving to Slide 12 and looking at the second quarter revenue growth year-over-year, gains from our underlying performance of 6.6% and a 3.9% favorable impact from currency translation were offset in part by the 3 1/2% unfavorable impact from our hedging program.

Moving to Slide 13, gross margin remained flat year-over-year. Underlying gross margin improved 130 basis points, mainly driven by positive product mix. Strong performance this quarter and marginal favorable currency translation had a positive impact on gross margin, but were offset by the unfavorable hedge impact in the quarter.

Slide 14 recaps the second quarter income statement and highlights our foreign currency-neutral results. As discussed earlier, second quarter revenue growth was 6.6%, currency neutral. Gross profit remained flat year-over-year, as a percentage of sales. However, on a currency-neutral basis, gross profit improved, reflecting stronger underlying performance, driving gross profit up 9.3%.

Moving down the income statement, SSG&A increased 5.9%, currency neutral. This was impacted by an increase in our deferred compensation plan, which is offset by gain on our interest income line. Increased pension costs and the cost of our EVEREST program have also contributed to the unfavorable impact on SSG&A.

R&D increased 1.7%, currency neutral, which is lower than what we expected for the year, due to timing within the year. Our spending will accelerate in the second half of the year. Our operating income increased 14.5%, currency neutral, as a result of the strong revenue growth and improved operating margins, on a currency-neutral basis.

Moving to Slide 15 and our year-to-date performance, I'll review revenue growth. Our revenue growth increased 9.3%. Performance and currency contributed 7.8% and 4.6%, respectively, which was partially offset by the hedge with a 3.1% unfavorable impact.

Looking at Slide 16, our gross margin change year-over-year, we experienced 80 basis point decline. Favorable resins and favorable mix were offset by pension and start-up costs, which were primarily related to our ReLoCo program. Our strong year-to-date performance was also offset by hedging and unfavorable foreign currency translation, which includes the effects of a one-time holding gain in the first quarter of fiscal year 2009.

Slide 17 recaps the six-month year-to-date income statement and highlights our foreign currency-neutral results. Revenue growth was 7.8%, currency neutral. Gross profit margin declined 80 basis points, due to the unfavorable hedging and foreign currency translation. However, on a currency-neutral basis, it was higher than revenue growth, reflecting the favorable margin expansion.

Moving down the income statement, SSG&A increased about 6%, currency neutral, again, impacted by EVEREST and pension costs, and an increase in our deferred compensation plan, which has an offset in the interest income line. Similar to what I mentioned earlier for the second quarter results, R&D increased 1 1/2%, currency neutral, which is lower than we expect for the year, due to timing. And as I said earlier, spending, we anticipate to accelerate in the second half of the year. Our operating income increased 14.7%, as a result of strong revenue and the improved operating margins, on a currency-neutral basis.

Now moving to Slide 18 to recap our results for the first half. We are really pleased with the results in the first half of the year. We ended the second quarter with a strong first half revenue growth, aided by pandemic flu-related orders. The Biosciences segment continues to show improvement. On a currency-neutral basis, operating margins improved, benefiting from favorable resins, as well as product mix. We generated solid operating cash flow of $688 million, with $450 million used for share repurchases during the first half of the year. Solid first half performance gives us confidence to reaffirm our previous EPS guidance of $5.05 to $5.15, excluding the healthcare reform charge.

Now moving to Slide 19, I would like to walk you through the impact of the pandemic flu on the company's total revenue growth during each of the two halves of our fiscal year 2010. In the first half of fiscal year 2010, pandemic flu provided a benefit to our revenue growth of 2.4%, which is mainly in the U.S. On the second half of fiscal year 2010, the pandemic flu is expected to result in a 2% negative impact to our revenue growth, due to the international pandemic revenues that were recorded in the second half of fiscal year 2009. Adjusting for the effect of pandemic-related orders, the underlying growth is consistent to full year, with a growth rate of about 6%, currency neutral.

Now I'd like to move to guidance on Slide 20. We'll first look at our revenue guidance by segment, on a reported and currency-neutral basis. As Vince mentioned earlier, we have adjusted our reported revenue growth to approximately 6% to reflect the stronger dollar. On a currency-neutral basis, we continue to expect revenues to increase about 6%, which is in line with our previously communicated guidance.

In our Medical segment, we expect revenues to increase 7% to 8%, on a reported basis, and about 6%, currency neutral. For our Diagnostics segment, we expect revenues to increase 5% to 6%, or about 5%, on a currency-neutral basis, which is lower than our previous guidance of about 6%, mainly due to the global milder seasonal flu and the low anticipated hospital admissions in the U.S. We expect Biosciences revenues to increase about 4%, or 6% currency neutral, which is better than our previous guidance of about 5%, due to strong sales in the quarter in Japan and the U.S.

Overall, we expect our operating margins for the fiscal year 2010 to remain broadly the same as previously communicated. Given our year-to-date results, we are reaffirming our previous guidance for EPS to increase 2% to 4% or $5.05 to $5.15, or 8% to 10%, on a currency-neutral basis, excluding the healthcare reform charge. We have also increased our expected share repurchases from $450 million to $550 million for the year. Thank you. And I'll now turn the call back over to Vince.

Vincent Forlenza

Thank you, David. Moving to Slide 22, I would like to provide you with the latest news surrounding the pending EU Healthcare Worker Safety legislation. The publication by the EU Commission of the directive is imminent and could be published within the next couple of months, around May or June of 2010. Once the directive is published, the member states have three years from the publication date, in which to adopt the directive and bring into force the laws, regulations and administrative provisions necessary to comply with this directive. You can see on Slide 22 some of the key dates that reflect the progression of the legislation and the projected timeline for adoption. With this adoption schedule, we are not projecting any changes to our revenue guidance.

Before we open the call to questions, I would just like to reiterate that we are very pleased with the company's performance in a difficult environment that has been challenged by lower hospital admissions and an exceptionally mild flu season. The diversity of our product portfolio and the company's global presence provides us with a resilient platform for growth, as you can see in our year-to-date results. Our operating margin improvements will enable us to fund strategic investments and continue to drive return to shareholders. Thank you. We will now open the call to questions.

Question-and-Answer Session

Operator

[Operator Instructions] Our first question is coming from the line of Rick Wise with Leerink Swann.

Frederick Wise - Leerink Swann LLC

Let me start with Diagnostics. Is there a way to think about the underlying growth of the business x the mild flu season? Or is there any way to normalize it and maybe think about how we're going to see growth progression in the second half?

Vincent Forlenza

Sure. Philippe can address that.

Philippe Jacon

Sure. So we will looked at this, and what we say right now is that if we exclude the impact of the flu pandemic, it could be about 5% growth for the year. The quantification of the seasonal flu is a little bit more of a difficult issue because the comparison is always a little bit difficult to do, compared to previous year. So this one here, we don't really guide on these seasonal flu. But on pandemic flu, it would be about 5% year-on-year.

Frederick Wise - Leerink Swann LLC

And maybe following up on the margin side. Maybe it's more for you, David. Can you talk a little bit more about -- remind us the SSG&A acceleration in the second half. And how do we think about either growth or, as a percentage of sales, how that's likely to look for the year and maybe relate that to EBIT margin? I mean, you ran ahead of our operating margin forecast for the year. It just went by fast. Can you remind us what we you thinking about for 2010, as a whole year again?

David Elkins

Yes, Rick, I'll just go through EPS. Now if you recall, for the first half of the year, currency neutral, EPS grew about 14%. And what we're seeing for the full year, it's going to grow about 8% to 10%. So that means in the second half of the year, it's about 5% growth. The flu impact on EPS is around 4%. So that means if you strip 4% out of the first half, it's about 10% EPS growth, currency neutral. And if you had 4% back to the second half, that would get you to around 9%. So that 10% and 9% in the second half gets you to the range that we're guiding of 8% to 10%.

Operator

Your next question comes from the line of Jon Wood with Jefferies.

Jon Wood - Jefferies & Company, Inc.

So Vince, or maybe this is for Bill Rhodes, just looking at the flow business, is it possible to quantify the Japan impact from the Japan stimulus?

Vincent Forlenza

Bill, would you like to take that?

William Rhodes

It is. In fact, we saw a very strong growth in the second quarter. It contributed significant amounts. It will not be sustained through the balance of the year. It provided international growth to offset some weakness in other parts of the world. But we would say that it was an exceptionally strong second quarter.

Vincent Forlenza

Jon, when we talk with the stimulus in Japan, that's an annual position that the government makes. So I think what Bill is saying is that we don't expect that to continue in the second half of the year. What happens next year is we'll have to wait and see what the government does.

William Rhodes

And it's not stimulus money, as much as supplemental funding. So that was released in the back part of the calendar year, which was made available in our second quarter.

Jon Wood - Jefferies & Company, Inc.

So if you take the international, flow business was up 9% organically. If you strip out Asia, is Western Europe flat, down, up? Just give us some sense on Western Europe there.

Vincent Forlenza

Western Europe was slightly down, and slightly down because of, primarily, timing issues and instruments. Government funding for instruments, we see those moving into the third and fourth quarter. Of course, Asia-Pac and China continues to be strong, and Japan was, of course, the strongest region.

Jon Wood - Jefferies & Company, Inc.

And then did you see anything from U.S. stimulus? I mean, it looks like the U.S. business did pretty well. Any update on the NIH impact?

Vincent Forlenza

Yes, we've wound up pretty much where we expect it to be, for the first half of our year, in stimulus. We expect it to be about $20 million in total for FY '10.

Jon Wood - Jefferies & Company, Inc.

So you've already recognized the $20 million...

Vincent Forlenza

No, no, no, no, no, no, no. First half of the year, we basically wound up where we expect to be. We've been saying that we would wind up at, for the full year, between $20 million and $25 million, we expect it to be around $20 million.

Operator

Your next question comes from the line of David Lewis with Morgan Stanley.

David Lewis - Morgan Stanley

Philippe, I wonder if you could talk a little about the underlying trends in the Diagnostics segment. It sounds like STD was strong. So I'm wondering if, are we taking share in STDs? And when you talk about underlying hospital weakness, are you referring more to micro trends with MRSA or are you referring more to blood collection systems?

Philippe Jacon

So STD first. As I think you guys know, the STD market, overall, is actually slowing down a bit, globally. So we are really pleased with the performance we have on both our CT/GC and Affirm products in that space, where we've been doing and growing to about 8% during the quarter. So I think we will still need to watch the CT/GC growth over time. There is less conversations happening right now. But we believe that our Viper XTR is well positioned, in terms of lab efficiency, as you will see some data published very soon. So that was the first question. Can you remind me the second question you had?

David Lewis - Morgan Stanley

Sure. The negative underlying trends, I'm wondering if it's not STD, was it blood collection systems or was it other segments of the Diagnostic business?

Philippe Jacon

Well, two things. It's certainly the infectious disease testing, overall. And we have some data that we got from various sources. One from IMS and it's clearly showing that in the three months, December to February, all the infectious disease testing have been going down over 8%. So this is a big impact on testing, and also, it's linked to less admission in the hospitals. We saw a little bit of a rebound in March, but nothing that could compensate what we've seen between December and February. So I think this is really about our Point of Care franchise. It certainly goes also into our blood culture because less sepsis testing has happened during the quarter, as well as IVSD testing. And certainly, we see also linked to the less admissions and lower testing in the labs that our Pre-Clinical System business also has been impacted by that.

David Lewis - Morgan Stanley

And Vince, just a clarification on EU, how do you see the traction in the European market progressing? Do you think this is going to be largely a step function in sort of the back half of '13 into '14 like it was sort of in the U.S. on government regulation? Or do you think there's an opportunity to increase penetration and accelerate growth prior to the full implementation?

Vincent Forlenza

Well, we think that implementation is going to take a while. I'll let Gary comment further, and it probably will proceed at different rates in different countries. But I'll let Gary comment.

Gary Cohen

I'll just add some color with what Vince has mentioned. Since in the U.S., we were dealing with, ultimately, with the national law. It had followed 26 states, passing individual laws. So therefore, we were seeing some progress there. But the national law became a uniform impact throughout the country. Whereas in Europe, even though it's a uniform policy that's being put into place, it will be implemented individually by the countries. And we're expecting some variance at how they implement. So on the whole, we're not expecting an immediate impact, as Vince had indicated. The countries have three years to move into full compliance. We think the impact will be toward the back end of that, at different rates. Plus there has been some progress already, in the absence of a legislative environment in Europe that varies by country. So some countries have moved pretty far along already, while others are still at a very early stage. That also varies by product category. So we would say, on the whole, two or three years out, we'll see more of the impact. It's going to be more of a progression than a quantum step function like we saw in the U.S.

David Lewis - Morgan Stanley

There are some mix changes, David, on inter-segment mix. Is it safe to assume that gross margin guidance for the year is the same?

David Elkins

Yes, gross margins probably would be to the top end of the range that we had originally communicated. So we'll see some improvement because of the product mix.

Operator

Your next question comes from the line of Kristen Stewart with Credit Suisse.

Kristen Stewart - Crédit Suisse First Boston, Inc.

I was just wondering if you could comment on the sales of GeneOhm and TriPath in the quarter, break those out specifically?

Vincent Forlenza

Sure, we certainly can. And Philippe will take that.

Philippe Jacon

On GeneOhm, the sales of GeneOhm, there's a little bit of an anomaly this quarter as compared to the previous quarter of the same quarter last year, which is in Q2 of fiscal '09, if you recall, at the time we said that we were recurring a one-time payment of royalties, that of course did not really happen this quarter. So if we exclude that, the growth of GeneOhm for the quarter is about 8% compared to the same quarter of last year. Now if we look at the TriPath, our TriPath growth quarter-on-quarter is close to 9%, so we are also very pleased with the underlying market growth year-on-year, it's about 9%.

Kristen Stewart - Crédit Suisse First Boston, Inc.

Question for David, just in terms of the dollars move and your hedging strategy, I know this year you're locked into it, believe hedges at 136. Could you just maybe talk about what the impact may or may not have been on your kind of full year as you recap the numbers given the change in rates? And just kind of the strategy, again remind us for 2011 whether or not we could see some pressure and absence of any hedges?

David Elkins

Sure, so when we did January guidance, we said currency would have a favorable impact year-over-year about $0.23, offset by a hedge loss of about $0.16, which gave us a net gain of about $0.07. What we're guiding now is about $0.17 currency, so you'll see the impact of strengthening dollar there. Therefore, the hedge losses is only about 12, which is about $0.05. So there's about a $0.02 gain that we're losing, but we're absorbing that within our guidance. As far as going forward, as you said, we've hedged this full fiscal year. And on our cash flow hedges, we're continuing to do our regular balance sheet hedges going forward. But for fiscal year 2011, we are not intending to do any of the cash flow hedges.

Kristen Stewart - Crédit Suisse First Boston, Inc.

And should we look at that just in terms of the change as being looking at it versus like the 136 that you hedged on relative to where the dollar maybe at particular point in time? Or will we then be in a situation where we're not seeing this hedge losses or hedge gains so that there might be more pressure on 2011 earnings?

David Elkins

I think it's anybody's guess on where the dollar is going to go into next year. We certainly wouldn't forecast where we are today. We do have the hedge loss this year of about $0.12 that we won't have next year, so that's one thing for you to consider. But with the volatility that we're seeing in the currencies, the foreign contracts as well as the option contracts are just very expensive right now.

Operator

Your next question comes from the line of Amit Bhalla with Citi.

Amit Bhalla - Citigroup Inc

On Diagnostics, if you could just tell us a little bit more about China in Diagnostics. It was very strong in the first quarter. Could you also tell us how much of what China makes up in the segment?

Vincent Forlenza

China is actually a fairly small part of the Diagnostics business, so it wasn't one of the real big growth drivers for us. But Philippe, do you have anything else to...

Philippe Jacon

No, I don't have the exact numbers here in front of me. What I can say is it's a pretty rapidly growing region for us. It's strong double digits. Certainly close to 30% growth that we see in China right now. But within your -- like everybody else, we see a lot of new hospitals, higher population that is getting tested also, and so a lot of investment in that field. But that's about what I can say today about the growth of China. That's going to be an important country for us.

Amit Bhalla - Citigroup Inc

And just a follow-up, first, on Biosciences, Discovery Labware had some distributors destocking take place. Are you through that? And then back in Medical, could you just give us a little more detail on Medical surgical. It's a little bit weaker and how did Nexiva perform?

Vincent Forlenza

So just two things on Biosciences. Bill will comment on the distributor performance in the Labware business, but we also want to get it just point out that Advanced Bioprocessing, that growth was not distributor. It wasn't affected by distributor destocking, this is end-user customers. These are pharmaceutical customers who are now starting to purchase again. Remember that we had a conversation over the last year and a half or so about one major customer who had a problem with their drug. And so they had a lot of inventory. They've grown that inventory down now, so that's the big increase in Advanced Bioprocessing. But Bill do you want to comment on?

William Rhodes

Yes, Vince is exactly right with regard to Pharma customers who had run down inventories last year. We now see their starting to buy back into their safety stock, so that's been an improvement for us, and that impacts our Advanced Bioprocessing business. In DL, which you're maybe thinking about is in our first quarter, there had been some lower orders from some of our distributors. But in fact, we've seen that reversing our second quarter and we've benefited from that.

Vincent Forlenza

And we think that, that life science market, not just for us, but for other companies as well, with a strong stimulus impacts out there.

Amit Bhalla - Citigroup Inc

And the question on Medical?

William Kozy

I think the question's on Med/Surg. We've kind of return a little bit more of a normalized growth rate. The U.S. pandemic impact for the whole quarter for Med/Surg was only $1 million as the broader contracts pretty much was eliminated in early January. Secondarily, we did see some distribution channel inventory being worked off in the U.S. in the quarter, which had anticipated much heavier vaccination activity in 2Q. Additionally, some revenue from sharps disposal products, the unused products from the pandemic period are still in the channel. And so anyhow, those couple of variables put us more on a more normalized underlying growth rate of a little over 4% for Med/Surg. And that's not unusual if you think back to where we were before pandemic.

Operator

Your next question comes from the line of Larry Keusch with Morgan Keegan.

Lawrence Keusch - Morgan Keegan & Company, Inc.

First, David or Vince, you guys spoke repeatedly about R&D spending and being a little bit lower than you had anticipated. That's actually, I believe, the second quarter in a row that you guys have made the similar comments. So I'm just trying to understand what's perhaps causing the delays, and how should we be thinking about that acceleration in the back half of the year?

Vincent Forlenza

You're right, it was lower than actually we had expected in the first half of the year, and that was due to some both some hiring delays and some timing on some clinical trials, which are occurring in the back half of the year. So this is not a change in strategy in terms of our intend to continue to accelerate and drive our programs. It's really just implementation issues in the businesses. And so in conversations with the businesses, each all three of the businesses are indicating that they will be ramping up R&D in the second half of the year.

Lawrence Keusch - Morgan Keegan & Company, Inc.

And Vince, kind of how should we be thinking about that second half ramp?

Vincent Forlenza

You mean in total dollars?

Lawrence Keusch - Morgan Keegan & Company, Inc.

In total dollars or percent of sales, however you got to think about it.

Vincent Forlenza

Yes, sure. So I don't think we have changed our R&D guidance for the year. Basically, we've...

David Elkins

About 5 1/2% of revenue growth.

Lawrence Keusch - Morgan Keegan & Company, Inc.

And then just a couple of sort of bigger picture questions, I'm just wondering if you guys might have any comments broadly on Europe for the business? And then specifically, as we're watching some of these issues crop up relative to Spain, and Portugal and Greece, could that have any potential impact? And then here in the U.S., again, just some broad comments on how you're thinking about the price environment underlying surgical procedures without flu and sort of distributor inventory? So just kind of trying to get some broad look.

Vincent Forlenza

I'll take the U.S. first then I'll hand it over to Gary for some comments on Europe. But we really haven't seen a significant change in the pricing environment in the United States over the last couple of quarters. It's always price competitive, but maybe in molecular Diagnostics, a little bit more price competition in the STD segment. But other than that, I would say that it's been pretty constant. We're not seeing big changes in our distributor's policies in terms of inventory either. At this point in time, it didn't have any big impact in the quarter. So we don't have any other expectation except for our normal expectation that, as we continue to improve our supply chain performance, which is quite good, they're always looking to tweak their inventories and see if they can take them down, but we don't expect any major changes. With that I'll turn it over to Gary.

Gary Cohen

Sure, let me give a general feel for how we're thinking about Europe, maybe in the context of how things are going globally. On the whole, we're getting very good growth out of the Asia-Pacific region with particularly strong growth in China and India, which are two strong areas of strategic focus for us, both in the near term and in the long term. We're gaining very strong growth out of Latin America. We're having a very positive year in Japan relative to past years for reasons already discussed on the call. And then in comparison, Western Europe, U.S. and Canada in terms of our outlook are more reflective of them both aiding very mature markets, also the constraints on spending. And then I think you are also getting at some of the issues that emerged in Greece and seem to be spreading a bit to some of the other countries. I'm going, in a moment, defer to David on how we're managing the credit risk there, because we've been on top of the situation in Greece for some time. And in general, manage this very tightly, particularly as we look at the other countries like Spain and Portugal. Ireland is another one that comes up in this process. But on whole, to answer your question, Europe's growth is stable, but certainly well below the company average and it's being more than offset by very strong growth in the regions that we're investing more heavily now, particularly Asia-Pacific and Latin America.

David Elkins

Larry, I mean, it is something that's very much top of mind, managing our exposures in Greece, certainly in Spain. We put programs in place. We believe we're appropriately reserved in all those countries. As we've looked at it, we've increased our reserves as we talked about, I believe, in the first quarter, particularly around Greece. Our DSOs over all have been pretty consistent, so we're not seeing any major changes in our DSOs. But Greece is significantly higher. In Greece, over all, they owe the healthcare industry about $9 billion. Adamed Pharma have been working with the health authorities there to try and resolve that, but that's something we are very much keeping close eye on and making sure that our exposure's don't increase there. We are seeing in Italy and pockets within particular counties where the DSOs are increasing a bit, but it's nowhere near what we had been seeing in Greece.

Operator

Your next question comes from the line of David Roman.

David Roman - Goldman Sachs Group Inc.

Just a follow-up on our earnings growth. If you look at the guidance for the year, it looks like you're sort of saying some grow earnings on a constant currency basis about 50% faster than you can grow constant currency revenue. But I think about the long-term guidance that you've given, it's a little faster than that. How should we think about through the sustainable amount of earnings levers that you can generate, assuming you buy back stock of sort of the same rate they've been in the past several quarters?

David Elkins

I think we talked about revenue growth in the first half, that's about 7.8% and EPS on a currency neutral is around 14%. What we're saying in the second half of the year is around 4% revenue growth currency neutral and 5% on EPS. If you adjust for the flu, remember that two percentage points, you'd have about currency neutral revenue growth of about 6% versus 10% EPS adjusting for flu, so very consistent with what we saw in the first half of the year. And as we're seeing for the full year, we think 6% growth is what we're shooting for, for this year. And if we'd look at our -- what we compensate our sales over the next two years, what we're saying is we're shooting for that 7% growth over the next three years is the revenue growth rate that we're striving for. Also, just recall this year, we have those additional EVEREST expenses that we talked about, as well as the one-time non-cash adjustments related to the pension. So we're absorbing those costs this year as well.

David Roman - Goldman Sachs Group Inc.

As you think about the gross margin this quarter, you said that was about -- the 130 basis point improvement on a performance basis. Can you break down for us how much of that was mix and how much was FX?

David Elkins

Within the quarter, the bulk of it is mixed being offset by pensions and startup costs related to our ReLoCo program and our Medical business. And resins obviously was a bit of favorable impact as well. If you look on the first half of the year, it's pretty much split pretty evenly between resin impact and mix. And as we talked about on the first quarter call, that resin impact will switch to negative in the second half of the year. So what we've been saying is resins year-over-year will be about the same, with favorability in the first half of the year and unfavorable impacts in the second half of the year.

David Roman - Goldman Sachs Group Inc.

And I know it's early, but will you quantify the European safety implementation opportunity, if it's not for BD but for the overall market?

Vincent Forlenza

So we're really not ready to talk about that, and as we were saying. We think we have a little time to better understand that as we've got a three-year implementation probably window here with -- as we were saying before, publication is probably in the next couple of months, and then they have up to three years to implement. We do think that it's probably going to be different than in the U.S. by business, and we're quantifying that because the infusion opportunity is probably a little less in Europe than it was in the United States with good opportunities we think at hypodermic and PAS, but we're still getting our arms around those.

David Roman - Goldman Sachs Group Inc.

And then lastly, the growth in TriPath is in pretty consistent in that 9% to 10% range. But GeneOhm, even if you x out the royalty 8% growth this quarter is, I would think, below what you had thought the run rate would be when you made the acquisition. Could you talk to the dynamics? I know some of it's probably CapEx spending related which is what's happening in the MRSA testing market and series of market development or market share?

Vincent Forlenza

Yes, I'm going to give you a quick answer to that and then we're going to have to move on in light of the line that we have for questions. But the MRSA marketplace, we are below where we hope to be. We think we're going through a bit of a transition. We're just launching the new version of our MRSA test and customers are just starting to evaluate that. We've had a little initial success, Cdiff is going well. Certainly, the market growth has been suppressed a little bit because of what's going on in the environment.

Operator

Your next question comes from the line of Jon Groberg with Macquarie Capital.

Jonathan Groberg - Macquarie Research

One, you mentioned when international safety, you mentioned back order products. Could you maybe just remind us again exactly what products those are and what was driving that?

Vincent Forlenza

So those products were in the Medical business, in the infusion therapy area specific to European catheters basically.

Jonathan Groberg - Macquarie Research

Okay. And the expectation is that those -- I'm just trying to remember what was causing the orders to kind of build out there. Is that on your side, on the customer side?

Vincent Forlenza

No, it was some manufacturing issues that we're working our way through.

Jonathan Groberg - Macquarie Research

And then just a follow-up and last question here, and trying to put this in context again with what we talk about Europe. I mean, in the past, we've talked to you about Europe. You thought that could be an opportunity for you, maybe something that helps you think about your goal to accelerate revenues in the next couple of years. I guess, as you think about this, how it's currently playing out, maybe at three years before these are implemented into law, and I don't know exactly when then those individual countries are actually thinking and implement these. But does this change your view, I guess, overall of your targets or goals or your ability to accelerate revenues over the next couple of years or not?

Vincent Forlenza

Well, I don't think it really changes our confidence and our ability to grow revenues. It gives us a lot of confidence that Europe is actually moving ahead on this. As Gary said, we don't think this is a step change situation, we may see some ramp up over the next couple of years depending on the country and then if they could ramp up after that. So I think we feel very good about the European safety opportunity. It's probably not that big an opportunity in the next 12 months.

Gary Cohen

This is Gary, I'll also jump in. It's clearly an opportunity. And it's just we're trying to accurately share are outlook of how that opportunity is going to unfold. And once this is published, which is Vince indicated as imminent, it'll be three years until implementation compliance is, in effect, mandatory in EU system. Now whether every country complies with that in a uniform manner and enforces is something we'll only know with time. We're anticipating strong enforcement in many of the countries and maybe lighter in some of the others. And there's no doubt this will help the growth in Western Europe, without a doubt, because the markets will be driven more towards safety engineer devices. If it's implemented effectively, it'll also even more importantly create the environment, the safety environment in Western Europe that we've been advocating for, for years as well as elsewhere in the world. It's just not likely to be a step function. The growth impact will start before three years, but we don't anticipate a big impact this year. And it will ramp. And what that will be worth, how rapidly the ramp, we need a little more time to start to get some actual experience as the countries begin to enact these laws. But it's, unfortunately, not going to be until three years that their mandatory have to be in compliance. We thought originally it'd be two, turned out to be three, but that won't change the long-term picture.

Jonathan Groberg - Macquarie Research

Just to clarify, I mean, the question is you do that due diligence and you given kind of three-year views in terms of what you'd be able to grow revenue this year, the next year, the year after. As you do that diligence, does that change your view on your ability to do what you said?

Gary Cohen

No, it doesn't change our ability to do it.

Operator

Your next question comes from the line of Mike Weinstein with JPMorgan.

Kimberly Gailun - JP Morgan Chase & Co

This is Kim here for Mike. The first is just a follow-up on Christian's question from a firm earlier just regarding the cash flow hedge strategy and how could impact your fiscal '11 results. We just want to make sure that we're thinking about it right. So as we look at fiscal '10, you've said that you're going to have probably roughly a $0.12 net negative impact from FX. And if we kind of take today's rates and apply them to fiscal '11, it looks like the FX headwind for the med tech group and probably broadly you guys should be somewhere in the 150 basis point range for your fiscal '11. So if I look at that, it looks like the drop through is something in the neighborhood of $0.15 if there's no hedges in place. So I just want to make sure if I'm thinking about that right.

Vincent Forlenza

What we're guiding is that the currency impact this year is about 17%, this is just the currency impact of the hedge loss of about $0.12, so the net effect is $0.05. As you start to think about fiscal year '11, that hedge loss of $0.12 won't repeat. So where you got to in the end is the right answer. Now what's going to happen with currency next year is anybody's guess. We're pretty much looking at forward rates this year as where we are today in that 135 range. And if we finish out the year at 135, we'd probably be about 140. So it really comes down to what you assume the exchange rate's going to be for next year. And also, remember that your 60% of our business just about outside the United States, so it's also just not the euro that would be impacted by it, it's the other basket of currencies as well. But that's the way for you to think about. It's really the $0.12 hedge loss is what won't repeat next year.

Kimberly Gailun - JP Morgan Chase & Co

And is it right to think about the drop services [ph] a couple of other companies in our space that don't essentially hedge on a cash flow basis, and the drop through tends to be somewhere in the 25% to 30%, or maybe 20% to 30% range to net income. Is that going to be a fair approximation for you guys?

Vincent Forlenza

I'd be happy to just follow-up with you with a call just to go through to some detail, because I know we have a bunch of other folks on the line still waiting for questions. So Kim, Sherry and I will follow-up with you to get through the hedging.

Operator

Your next question comes from the line of Sara Michelmore with Cowen and Company.

Sara Michelmore - Cowen and Company, LLC

Vince, you talked a little about the U.S. and Japanese markets and Biosciences, and I know Europe has continued to be slow. But you had some optimism at some point that you may see some indications that demand was picking up there, so just was curious if we could get an update on that first?

Vincent Forlenza

Certainly, but in Western Europe so far, we have been seeing the rebound in government budgets year-to-date. And so it's going to take longer in the year for us to understand where the governments are going. And obviously, we're seeing some pressure in Southern Europe. We talked about Italy being difficult, Spain, Portugal, those areas. So we see those trends continuing, probably not turning around immediately, but we'll get a much better update on that in the second half of the year. Bill, any other comments?

William Rhodes

No, it's what we commented on before. Essentially, what we've seen here anticipated sales for the first and second quarters moving into the third and fourth, but it's dependent on, in most cases, government grant monies being made available.

Vincent Forlenza

So we expect that in the short run, we're going to continue to see good growth out in Asia-Pacific driving it, the stimulus funding in the U.S. in the second half of the year. So those will be more of the growth drivers than Europe for the second half of the year.

Sara Michelmore - Cowen and Company, LLC

And then on Diabetes Care, you obviously had a couple of very good quarters here. How should we think about the sustainability of that growth trend in the high-single 10% growth range?

Vincent Forlenza

I'll let Bill comment on it, but I think the underlying fundamentals here in terms of the need for these products on a worldwide basis are quite strong and likely to continue. But Bill, you want to comment more specifically?

William Kozy

No, I think, Vince, you got it. The high-end driver's pen needles. There is a one-year favorability we're getting from the partnership agreement we got that will only run through the end of the fiscal year. And think about that contributing, one, maybe a little more than 1%, maybe 2% to the year. That will go away next year. Hopefully offset by some of the new product launches that we've been describing to you.

Sara Michelmore - Cowen and Company, LLC

When will we get some visibility and what those products are? Is there something we could see at ADA, or is that going to be later in terms of getting the first look at those?

William Kozy

Sure. The Nano product was just released. It's got its approval in the last four or five business days here and you'll see that promptly. And we'll be back to you on the next product to follow, probably in our late 1Q of '11 or the latest, early 2Q.

Operator

Your next question comes from the line of Brian Weinstein with William Blair.

Brian Weinstein - William Blair & Company L.L.C.

My question has to deal with resins. Oil does continue to move a bit higher and you guys are still saying that you think that you're going to be flat year-over-year on the resins. Where would oil have to go before it makes an impact on 2010 gross margins and earnings?

David Elkins

As we said, we have the favorability in the first half of the year. If you remember, you got to be careful using oil as a proxy. Last year in the first quarter, our fiscal quarter is around $118 and about $79 in the second quarter. And what we're predicting for the second half of the year, sitting here today is about where the spot rates are now in that mid-$70 range for the second half of the year. And that will be unfavorable to last year which was in the $40 to $50 a barrel was the price range, so that's our saying. for the full year, we have the favorability in the first half of this year and a little bit of unfavorable in the second half.

Brian Weinstein - William Blair & Company L.L.C.

Real quickly on repurchases, you guys, I think, said the $550 million for the full year. Did I hear you right that you've already done $450 million in the first two quarters? So any reason why $550 million is not a conservative number?

David Elkins

You're absolutely right, we completed the $450 million in the first half of the year, that's the conversation that we continue to have with our board. But right now, $550 million is what we're planning for this year.

Operator

Your next question comes from the line of Bill Bonello with RBC.

Bill Bonello - RBC Capital Markets Corporation

Just a question on the Preanalytical System, we're under the impression that you're sort of at the very beginning of pretty broad based adoption of the push-button needles. And just curious if we should think of that as a business where we could see some accelerating growth going forward?

Vincent Forlenza

Well, the push-button needle program continues to be a strong growth driver. What we said is that in the United States, we're about mid-30s converted to push button, and we had good performance with push button in the quarter. Now if you look at the overall performance of the business, the business suffered from a lack of testing that occurred in the United States. We saw testing decreases in the hospital market and in the clinical lab market, driven by lower hospital admissions. So that took us off the trend line. But Gary can comment a little bit more specifically on the push button.

Gary Cohen

Obviously the push button, we're not at the very beginning, because the product has been out for a number of years now in the U.S. We've been getting steady strong growth, including overall double-digit growth in the quarter. It's in an earlier stage in other parts of the world. And as we look at, for example, the anticipated ramp up of conversion in Europe, push button will be one of the key products along with other blood collection safety-engineered devices and then the devices in medical as well, so it continues to be the very important part of our portfolio. And I would say, we're several years into progress. But as with many of these devices, the transition rates actually go over years, whether they're safety engineered or other new device categories. It's very different from some other industries that have very rapid adoption.

Bill Bonello - RBC Capital Markets Corporation

I know it's still far off in the future, but just anything to comment on HandyLabs, BD MAX, or is Europe continuing to develop that platform?

Vincent Forlenza

It will be great for Philippe to give you quick update on our progress so far, because we're making some good progress.

Philippe Jacon

Yes, absolutely. Again you said it, we are really hitting our milestones with BD MAX, so actually it's kind of two phases. And we're going to start selling the two color which was the existing one in Europe, and we are shipping it next month. Actually, we already have customers there taking their product, and our Group B Strep test. And we are hitting all the milestones in R&D, developing the platform in six colors that, these days, we confirmed that the launch will occur at the end of '11, beginning of '12 as we said previously at Armenia [ph] (1.05.40).

Vincent Forlenza

Yes, we're very excited about potential for this instrument.

Operator

Your next question comes from the line of Bill Quirk with Piper Jaffray.

William Quirk - Piper Jaffray Companies

Vince or Philippe, can you just give us an update on the CapEx or called the instrument environment Diagnostics business?

Philippe Jacon

Yes, I think, again, we have a capital expenditure receivables recent rental, so the market is kind of a split between the two. So it's not as critical as we may see in other businesses. So overall, I think we see a little bit of an easing -- the market is being easing a little bit on capital expenditure right now and we see our customers being ready to take on new platforms. So we've got some actually pretty good placements in the second quarter. Unfortunately, offset by less admissions and lab testing that's been bringing down. But in terms of the instrument themselves, the trend is pretty good.

William Quirk - Piper Jaffray Companies

And just a quick follow-up. Thanks for the color on the pricing trends in the Molecular side of the business. Can you just give us the same update for Microbiology?

Philippe Jacon

It's not very different, but I would say these are competitive markets where with most of what we do is we kind of bidding processes and so on. So I would say there's a little bit of tension on the pricing more in the, I would say, Standard products like prepared, plates and media, things like that. We probably raise it. It's pretty stable. So nothing really to report that would change the picture of the business really at this stage.

Operator

[Operator Instructions] Your next question comes from the line of Peter Lawson with Thomas Weisel.

Peter Lawson - Thomas Weisel Partners Equity Research

Just going back to the cytology questions, the volumes in that business, what were they like? And was the growth to that TriPath business based around the volume or pricing?

Vincent Forlenza

No, the growth in the TriPath business is not based on pricing, it's based on instrument placements and reagent volumes. So that business, it's not a price play.

Peter Lawson - Thomas Weisel Partners Equity Research

And the Medicare Part D charge, I might have missed this, but what was the product that was related to and there were any further impacts from healthcare reform coming other than the device tax?

Vincent Forlenza

It wasn't product related. In the Healthcare Reform Bill, there's an impact on tax deductibility of retiree prescription drug coverage, and we had a deferred tax asset that we had written off, because going forward, it won't be tax deductible, so you wouldn't get that benefit. That's the only charge that we'll have associated with that looking forward. The other major factor from a medical tax perspective is the -- from medical devices, there's a 2.3% tax that will go into effect in 2013. If you take a look at our U.S. sales in 2009, that's about $3.2 billion. About 20% of our products or 20% of the value of our sales will be excluded from that tax and that's more of a consumer-type products. So therefore, that tax, if you did in on a 2009 basis, would be about $60 million.

Operator

Your next question comes from the line of Evan Lodes with Barclays Capital.

Evan Lodes

First, I was wondering, would you be willing to quantify the impact of volume versus price for the Medical, Diagnostics businesses?

Vincent Forlenza

I don't think we can go there.

Evan Lodes

And then secondly on the healthcare reform question, how much of that tax you think is going to be able to be passed on, and of the remaining part, how much will be offset by volume when that kicks in the year later?

Vincent Forlenza

Well, it's really too early to say what the specific dynamics on that or going to be. The entire industry is going to have to pay that tax. From a volume standpoint, we think that there will be some increase. Really hard to quantify at this point in time, because people are being treated. We think that the preventive care is going to be something that will be new in the system, so there will be some positive impact, but very difficult to say at this point.

David Elkins

And Evan, just for your knowledge, when you think about price volume for BD generally, the bulk of our growth is all volume. Price plays a very little impact on our year-over-year growth.

Vincent Forlenza

Right.

Operator

Your final question comes from the line of Jeff Frelick with ThinkEquity.

Jeffrey Frelick - ThinkEquity LLC

Real quick for Philippe, just a follow-up on the HandyLab Jaguar, when do you expect to complete and submit the clinical studies there? And which assays will you be submitting?

Philippe Jacon

We will start with the HAI assay which are MRSA and CD. So again the launch day that we have and again we confirm and we're very optimistic about that is by the end of 2011, beginning of '12. So it's, yes, one year.

Vincent Forlenza

About a year from now. Of course the assays or MRSA...

Philippe Jacon

MRSA and CDs are the two main assays we're going to have and so then we'll continue with Group B Strep as we're having already.

Jeffrey Frelick - ThinkEquity LLC

Okay. And then lastly, just the next sweep of business uptake. How would you characterize that capturing new accounts or upgrading the existing basic customers?

William Kozy

It's a mix of business right now, and we can't get you the exact numbers on [indiscernible] (1.11.47) product penetration continues to be pretty much at rates we expected the growth for the quarter was well known at the 35%.

Vincent Forlenza

We thank all of you for your very thoughtful questions on the call. We're very pleased, once again, with our first half performance. And as we look towards the second half of the year, as we said, we expect the underlying performance to be -- once we neutralize for the flu to be very similar in the second part of the year, and we look forward to speaking with you again next quarter. So thanks very much.

Operator

Thank you. This does conclude today's teleconference. Please disconnect your lines at this time, and have a wonderful day.

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