通用動力 (GD) 2015 Q3 法說會逐字稿

Good day, ladies and gentlemen, and welcome to the General Dynamics third-quarter 2015 earnings conference call.

(Operator Instructions)

As a reminder, this conference call may be recorded.

I would now like to turn the conference over to Erin Linnihan, Staff Vice President, Investor Relations.

You may begin.

Thank you, Nicole, and good morning, everyone.

Welcome to the General Dynamics third-quarter conference call.

As always, any forward-looking statements made today represent our estimates regarding the Company's outlook.

These estimates are subject to some risks and uncertainties.

Additional information regarding these factors is contained in the Company's 10-K and 10-Q filings.

With that, I would like to turn the call over to our Chairman and Chief Executive Officer Phebe Novakovic.

Good morning.

As is obvious from our press release, we enjoyed another strong quarter.

We reported EPS from continuing operations of $2.28 per fully diluted share on revenue of $7.99 billion and income from continuing operations of $733 million.

This is $0.23 per share better than the year-ago quarter and $0.15 per share better than consensus.

Against the year-ago quarter, revenue is up $243 million or 3.1%.

Operating earnings are up $35 million, a 3.5% increase, and income from continuing operations is up $39 million, a 5.6% increase.

This quarter's operating earnings of $1.034 billion reflect 12.9% operating margin consistent with the 12.9% operating margin of third-quarter 2014.

By the way, this is the fourth consecutive quarter that we have had both operating earnings and EBIT in excess of $1 billion.

Sequentially revenue is up $112 million or 1.4%; operating earnings are down $47 million and operating margin is down 80 basis points.

Recall, however, that last quarter's earnings included a gain on the sale of our cyber commercial security business.

Excluding that gain, the operating earnings for the quarter rather similar.

On a year-to-date basis, revenue is up $1.17 billion, a 5.2% increase.

Operating earnings are up $320 million, a very strong 11.3% increase and operating margins are up 80 basis points, once again reflecting our emphasis on continuous improvement in operations.

With respect to cash, we had $652 million of free cash flow from operations in the quarter.

That is 89% of net income from continuing operations.

We have $1.81 billion year to date, 82% of net income from continuing operations.

You may recall that we received significant advance payments on international orders last year and on commercial shipbuilding orders the year before.

That cash is being deployed this year and next as we have previously advised you.

We are also hampered by OWC growth at Gulfstream, which is the natural result of building test articles in preproduction buildup of parts and wings for the G500 and G600.

All of the foregoing makes performance at 100% of net income this year and next problematic.

In the quarter, we repurchased 7.15 million shares for over $1 billion.

We have purchased approximately 19.3 million shares year to date for about $2.7 billion.

This is consistent with our prior guidance to you that we would repurchase shares and pay dividends in amounts in excess of this year's free cash flow.

To help you size that, we have spent $3.380 billion on share repurchases and dividends year to date, compared to free cash flow of $1.81 billion.

That is a delta of $1.57 billion.

That delta is likely to grow in the fourth quarter.

As you can see from the charts attached to the press release, our very healthy backlog is holding nicely.

Once again there was a good intake of orders in all segments, other than the Marine group, where we have received several multi-year orders in prior quarters.

The Marine group has the largest backlog of all of our operating segments.

We ended the quarter with total backlog for the Company of $68.7 billion, down modestly from the end of last quarter.

Let me say a few words about each of our business groups and I'll start with aerospace.

Aerospace had another very good quarter.

Revenue, earnings, and margin are all up from the year-ago quarter, as well as for the first nine months of the year.

The group reported sales of $2.34 billion, up from the third quarter of 2014 by $54 million or 2.4%.

This represents the group's highest ever revenue quarter.

Operating earnings increased $15 million or 3.6% to $426 million on an operating margin of 18.2%, a 20 basis point improvement on the year-ago quarter.

By the way, this is the fifth consecutive quarter with operating earnings in excess of $400 million.

On a sequential basis, the group experienced some margin compression from the first half but was nevertheless better than our expectations and guidance to you.

We had good order intake in the group at 0.8 to 1 book to bill, measured in dollar value of orders and 0.9 to 1 in number of units sold.

The distribution of the orders is also attractive, with the G650 and 650ER leading the way.

Only four of the orders were for models not yet in production.

Much like the automobile industry, general business aviation market is increasingly North America focused, with particularly strong interest from Fortune 500 companies.

However, the G650 continues to see activity even in areas experiencing political or economic challenges.

We had G650 orders in China, Japan, Brazil, and Eastern Europe in the quarter.

Our pipeline of projects and active sales discussions are good, so we are reasonably optimistic about order intake for the fourth quarter.

Next combat systems.

Combat had a very good quarter with revenue of $1.35 billion, operating earnings of $218 million and a really strong 16.2% operating margin.

However, margins are off somewhat against the third quarter of 2014 when we enjoyed an operating margin that was 40 basis points higher.

Compared to third quarter of 2014, revenue was off $50 million and earnings were off $14 million.

Importantly, however, year-to-date revenue was flat against 2014.

Operating earnings are up $57 million or 9.6% and operating margin is at 15.7%, up 130 basis points.

Combat Systems remains on course for a very strong year.

The Marine group's revenue is higher than 2014 both for the third quarter and for the first nine months.

Revenue in the quarter is up by $267 million, a 14.7% increase, to $2.09 billion.

Year-to-date revenue has increased by $759 million, or 14.4%, to over $6 billion.

The growth in both periods is attributable to the group's submarine programs, both construction, repair and engineering and, to a lesser degree, commercial ship construction activities.

This is the strongest revenue quarter ever for the Marine group.

Operating earnings at $181 million are up modestly compared to last year's quarter.

The group's operating margins were down 60 basis points in the quarter and 50 basis points year to date as a result of mix shift and a one-time charge at NASSCO on a warranty item in the quarter.

However, margins for the first nine months of the year remain a respectable 9.2% and should improve a bit in the fourth quarter.

And finally IS&T.

They continue to outperform our revenue expectations.

Revenue at $2.2 billion is off $28 million against last year's quarter but up $113 million or 1.7% year to date.

Recall that we initially expected a 5.5% revenue decline for the year and instead we are up almost 2%.

Operating earnings of $219 million are up $17 million or 8.4% compared to the third quarter of last year on the strength of a 90 basis point improvement in operating margin.

Year to date, operating earnings are up $100 million, a 17.5% increase on a 130 basis point improvement in operating margins.

This is a very good-news story, with both revenue and operating margins higher than expected.

So what does all this mean as far as the year is concerned?

Well stronger than expected operating results in the quarter, a lower than planned tax rate, and somewhat lower share count enable us to increase guidance for the year by $0.20.

Our guidance goes from a range of $8.70 to $8.80 to a range of $8.90 to $9.

I will now turn the call over to our CFO Jason Aiken for some more details.

Thank you, Phebe, and good morning.

I'll be brief as I've got just a couple of things to cover before we start the Q&A period.

As we've discussed throughout this year, we are seeing more of an impact on our financial results from foreign exchange rate volatility this year than we have in the past.

Still not material in the aggregate, but it is having a negative impact on some of our segments, particularly Combat Systems.

As Phebe pointed out, the group's revenue has held steady over the first nine months compared with last year.

But had foreign exchange rates, particularly the US dollar to the euro and the Canadian dollar, held constant from 2014 to this year the group sales would've been up by 8% year to date.

As Combat Systems shifts away from a heavy reliance on US military sales to an increasing level of international activity, we'd expect foreign currency fluctuations to continue to be a part of the group's story.

Moving on to interest expense, the net expense in the quarter was $23 million versus $21 million in the third quarter of 2014.

The slight increase is due to lower interest income as we've deployed over $1 billion this year from the balance sheet towards share repurchases and dividend payments.

For the full year, we expect net interest expense to be approximately $85 million.

At the end of the quarter our balance sheet reflects a net-debt position at just about break-even, a total of $41 million debt in excess of cash.

This compares to a net cash balance of about $660 million at the end of the second quarter and that change again is due to the capital deployment activity in the quarter.

Our effective tax rate was 27.6% for the quarter, lower than we expected as a result of increased international earnings as well as favorable contract closeouts and true-ups associated with the filing of our tax return.

For the full year, reflecting our favorable performance to date, we now expect an effective tax rate closer to 28%.

We funded our pension plans as expected in the quarter and continue to expect cash pension contributions for 2015 to be approximately $185 million.

Erin, that concludes my remarks and I'll turn the time back over to you for the Q&A.

Thanks, Jason.

As a quick reminder, we asked participants to ask only one question so that everyone has a chance to participate.

If you have additional questions, please get back into the queue.

Nicole, could you please remind participants how to enter the queue?

(Operator Instructions)

Jason Gursky of Citigroup.

Good morning, everyone.

Phebe, thanks for the additional detail and color in your opening remarks.

It's very helpful.

I just had one quick follow-up question, though, on some of the comments that you made around the book to bill at Gulfstream with regard to value versus units.

It sounds like the number of units were a little bit better than the value.

You followed on with some positive commentary about the G650, so I was wondering if you could dive in a little bit more about the difference between the two and what that might say about the pricing environment that you're seeing today for particularly the 450 and 550.

Well, it was largely the difference between the two book to bill calculations is really about mix.

Let me give you -- let me take this opportunity, I think, to give you a little bit of color and detail and I will parse for you the demand picture because I think I want to -- I want you all to understand the demand signals in their totality.

So what I'm going to talk to about is what we have seen so far this year.

And I think this context is important.

First, Gulfstream continues to perform well in the market.

This was our strongest third order intake for in the last four years.

And by the way, it follows the strongest second quarter intake that we had in and seven years last quarter.

Second, our North American sales activity remains good.

And this quarter we saw some resurgence in the international market.

Interestingly with about half of our orders coming from ex-US, Asia, Pacific Rim, Australia, Latin America, Mideast.

So nice broad order interest and order activity.

Third, our book to bill, as you noted, is wholesome.

And, fourth, and I think this is also important to recall and understand, our firm backlog for this quarter is $13.6 billion.

That's right around the median of our backlog total for three years.

So what does that mean?

It means that the backlog's been remarkably stable.

And by the way, recall that our orders come with good deposits and strong contract terms, so they're rather sticky.

So let me give you a little bit of color going forward.

Our pipeline is good, as it's been all year.

If you're interested in the piece parts constituents of the pipeline, it is heavily North American which is whole some.

Public, private companies, high net worth individuals.

And these are sophisticated buyers who are interested in fleet replacement and augmentation.

So I think as context, that gives you a little bit of color on what we're seeing.

Now with all of that said, there are some non- macro headwinds.

We have a competitor with Whitetails in the 450 and 550 space at very low prices.

There are also five to six preowned 550's on the market that are less than five years old and these newer planes are still under warranty.

And for some customers they can be competitive with our new offerings.

So with all of that said, we remain pretty cautiously optimistic.

I think I gave you a little bit more there, but I wanted you to understand how we're seeing the entire market because I think it's important to see it in its totality.

That's very helpful.

I appreciate it.

Myles Walton of Deutsche Bank.

Thanks.

Good morning.

Phebe, you talked about the disconnect between cash generation and cash deployment.

And consistently in the past it's been 100% conversion and you teed up the 2015 and 2016 explanation thereof.

So I'm just curious how much of the deployment this year, I think you said somewhere around $3.3 billion year to date is deployed and presumably there'll be more of that in the fourth quarter.

How much of that is indicative of what you think free cash flow is once you get through this kind of negative headwinds you're seeing in 2015 and 2016?

Is that the underlying cash generator base of business that you see out in the 2017, 2018 period of time?

To the extent that I think I can fully understand your question, we will give you more color on 2016 as we always do in January of that year.

But I tried to give you some context for 2015 and 2016 and not beyond that, what we see in terms of the cash headwinds.

We have those international deposits that we're deploying, as you would expect, and were building operating working capital, also as you would expect.

If you think about it, it's all streams.

So that all flushes out at the end of 2016.

If the essence of your question is there any structural cash generation issue at our Company, the answer is no.

(Multiple speakers)

By 2017 you see it largely resolved back to the [GD] of old, the100% conversion?

Yes.

Okay.

And then just a clarification, Jason, the tax rate contribution of the $0.20 was how much?

The raise?

It was a $0.05 impact in the quarter, and as I mentioned I think we're expecting closer to 28% tax rate for the year.

So you can do the math on what that does to the fourth quarter.

Got it.

Okay.

Thanks.

Carter Copeland of Barclays.

Good morning.

Hi, Carter.

Just a quick one on IS&T.

Obviously the results there have been much better than you expected.

I wondered if you might give us some color on where you've seen the strength and sort of break out the more traditional service-oriented offerings versus the product-oriented offerings?

And maybe comment on cost structure and your efforts there and what impact that's having?

Just a little bit more color on the successes you've been having there.

So this is good news story for us and it's across both Mission Systems and Information Technology.

They both had a strong quarter and they're proving their performance year to date.

And there's no single area that's driving strength.

Given the number of programs that we have in that portfolio, there's just constant flux and mix in timing.

They have been -- but because of their decreased cost structure, they have been winning more than their fair share.

So that has added nicely to our book to bill, which I think year to date is about 1 to 1. I know short cycle businesses, that's pretty impressive, so I think it's operating excellence, technical ability and focus.

So we're very pleased with what they've done.

Thanks, Phebe.

Doug Harned of Bernstein.

Good morning.

I wanted to get back to Gulfstream.

Two things.

To understand, one, you talked in the past about potentially moving forward some G650 production, perhaps adding some in the near-term which would help the revenue top line.

Can you comment on that?

And also where does availability stand on the 450 and 550 now in terms of months ahead?

Let me take them in the inverse order.

The 450 and 550 are about [three to four quarters], so not much of a change there.

With respect to the 650, our production is as we anticipated this year, so no changes to that.

But going forward as we prepare our plans for next year, we will look to feather in a couple of -- and I'm talking about one and two, just handfuls, onesies and twosies, feather in some 650s to help offset some of -- as we make that transition to entering into service on the new airplanes.

So that's pretty much what we've been seeing all year and saying is exactly what we're continuing to see.

Okay, great.

Thank you.

Ron Epstein of Bank of America Merrill Lynch.

Good morning.

Phebe, if you could give us some color on how the flight test program is going, because it's hard to follow as an outsider.

Just what milestones are happening and if you could just paint a picture for that?

Sure.

Our flight test program is going very well.

On the G550 we've surpassed G500.

We've surpassed more than 100 hours of flight and we've successfully completed about 45 missions.

On the 600, we've begun construction and is well underway on construction on the test aircraft and we plan to fly that in 2016.

Our entry into service remains unchanged.

Going very, very well.

As a quick follow-on, is there any chance that that entry into service could happen a little earlier if everything continues to go smooth?

That's hard to predict, since we don't -- but I'm not going to get out ahead of Gulfstream.

We're sticking right now to what our original entry into service is.

And as we go and we mature and get down the test flight program, we'll have a little more clarity.

But right now that's what we still see.

Okay, great.

Thank you.

George [Armont] with Sterne Agee.

Good morning, that Phebe.

Can you give us an update on your general thoughts of the latest talk on the budget deal and what -- if there's any material impact in terms of your overall plan and just regarding -- in particular regarding combat.

I mean, it seems like the mix there continues to favor the margin performance.

If you could just update how we see the mix going forward?

Thank you.

The budget -- the prospective budget agreement would be very welcome news, I think, from a national security perspective and certainly for us.

Our programs are fully funded in the President's request and as we understand the proposed budget agreement, so I think that's a very, very good progress made quickly.

So we're pleased with that and we would encourage and hope that that continues and see no -- we're hopeful that that's all on track.

On combat, we're continuing -- it's between last year and this year.

We've had some mix issues as we came off of mature programs that were in development and at the end of their production run started up on a whole series of new programs.

That backlog, coupled with the operating excellence of that entire group, positions us quite well for nice earnings growth.

Margins should increase over time.

If you think about that business as we've got our platform businesses, but we also have our Ordnance and Tactical Systems business.

They had an absolutely terrific quarter.

They are highly focused on their cost structure, operating leverage, and they had a very wholesome book to bill in excess of 1 to 1, so for a short cycle business, that's very, very good.

Appreciate it.

Thank you, Phebe.

Robert Spingarn of Credit Suisse.

I wanted to go back to Marine and the strength there.

You talked about it before, submarine driven.

Is this a sustainable revenue rate quarterly, Phebe, as we go forward here?

Sounds like you might outper --

Yes.

Think about the submarines in two ways.

We're at -- this will be steady-state on Virginia block four revenue.

So what we're seeing now will continue.

And we will continue to see and anticipate growth in the Ohio replacement design work, which has been growing at a very healthy clip and the growth will slow down but it will continue to grow.

That business is very well-positioned for additional revenue increases.

And you see the margins coming back into the 9%s?

Yes.

I do.

Okay.

Thank you.

Robert Stallard of Royal Bank of Canada.

Thanks so much.

Good morning.

I would ask Myles's question again, maybe from a different direction.

The buyback in the dividends exceeding free cash flow this year, do you think that's something we should expect again next year?

And do you have a leverage target in mind?

You've gone back to net debt to cash [of] basically zero, but do you see it actually moving to a net debt situation going forward?

So I think one way to think about it is we would never view a net cash position as being optimal and even a breakeven situation is not optimal.

I don't necessarily think we'd characterize as having a target leverage position so much as we think about having the preservation of the strong balance sheet that allows us to be poised to quickly and readily take a strategic direction when the opportunity presents itself.

And as far as capital deployment goes, I'll look at my boss and say I'm not going to speak to our plans for next year and get out ahead of her.

You know where we are today is trying to normalize that deployment of capital to a net income level, given that we see free cash flow being somewhat less than net income this year.

Maybe a quick follow-up, Jason, as well, on the foreign exchange you mention this is something we should watch.

What's your hedging situation?

Do you have most of these export revenues hedged?

Yes.

Two parts to answer that question.

From the perspective of actual economic exposure in having a foreign currency revenue or expense item in a particular business, we have that 100% hedged and we're totally secure on that front.

What I'm referring to strictly is the translation of our indigenous businesses in Spain, in the UK, in Canada and so on, translating those operating results back into US dollars for consolidated reporting.

So it's not an economic loss we're talking about, it's a headwind from a US consolidated reporting perspective.

But from an actual economic exposure standpoint, we're very comfortably hedged.

That's great.

Thanks so much.

Hunter Keay of Wolfe Research.

Good morning, everybody.

I think some of the wait times, if not all of them, by your aircraft platform at Gulfstream actually increased a little bit last quarter, including 450 and 550, both the CBs.

You've indicated there's some headwinds there in that market right now, call it crosswinds, if you will, from, obviously, a competitor.

The question is have you actually scaled scale back on 450 production at all this year as it relates to the next couple of years of rate?

And can you remind us what the wait time is for the 650 right now?

Thanks a lot.

Our production for this year is exactly on track, no changes.

We're in the process of setting our production rates for next year.

And we will give you that color when we report fourth quarter and give you guidance.

The 650, actually, we are one or two slots away from moving to a second quarter of 2018 availability.

That backlog, as wholesome as it is, continues to grow.

Thank you.

Sam Pearlstein of Wells Fargo.

Good morning.

I want to go back to the same question, I guess, in terms of the free cash flow.

And I guess I'm just trying to think about when you first came in, Phebe, you talked about the M&A organization as being broken and needed to be fixed.

And I guess I'm wondering why we haven't seen you make more actions there?

Is it the budget outlook?

Is it the prices?

Is it that you see more value in the stock?

What would make you change your view towards buyback and start thinking about acquisitions?

So far we've seen nothing of particular note that's interesting at accretive prices.

I think that's the best way to think about it.

We're really not looking because there isn't much out there from our perspective.

We just continue to keep our powder dry and continue to see us through the course of the year buy back shares as it makes sense tactically.

Thank you.

And if I can follow up, is there any way you can size the warranty issue at NASSCO?

No.

It had to do with a bearing on a driveshaft.

That's the extent to which I understand the shipbuilding challenge there, but we took the warranty and NASSCO is -- we took the charge and NASSCO is all set to -- poised to recover for next quarter, so that was a one-time event and it's in our rear view mirror.

Okay.

Thank you.

Howard Rubel of Jefferies.

Hi, Phebe.

I'll be a little bit like trying to pull teeth here, but we will see if I can succeed.

Your outlook for Gulfstream, they've continued to surprise you.

Yet you're being very conservative about the fourth quarter.

Could you elaborate a little bit more on some of the challenges?

Is it higher R&D?

Is it a mix?

Is it something else that causes you some concern about profitability?

The fourth quarter is going to be lighter than the third quarter.

And let me take you back to last quarter when we talked about Jet aviation and that we were going to see some margin compression in the second half as we began to spend on engineering and the preproduction activities at Basel that we need to do in anticipation of the start of production which begins early next year.

That has happened and it will continue into next quarter.

So couple that with you've got a higher R&D and lower launch assistance, and that's essentially the story from where we sit right now.

Okay.

Thanks.

Did you pull any teeth?

No, and I'm not going to try too hard, because you've been pretty consistent in doing a reasonable job there.

Thank you.

George Schapiro of Shapiro Research.

Phebe, I'm going to try and follow on to Howard's question.

For the margin at Gulfstream to only be 18 1/2% for the year, it requires the fourth quarter to be down like 16.5% or something.

Why would it get that low?

As I told you, we're seeing a significant margin compression at Jet.

And I think if you back in the math, it's fourth quarter, maybe somewhere around 18%.

Jet is a factor.

Our R& D spend is going to be higher.

There's really nothing other than that.

There's nothing structural, if that's what you're getting at.

What's R&D going to be relative to the third quarter?

Up.

Okay.

I'm sure you won't quantify it, but I'll let you go with that.

Thanks.

Thank you.

David Strauss of UBS.

Good morning.

Phebe, on the G500, could you talk about order interest there ex the initial fleet buyers that came in for that airplane when you announced it?

One question about your comments on free cash flow conversion as we head into next year.

Are you assuming that advances -- we see a further drawdown on the advances side into 2016?

Thanks.

Yes, on the latter question.

And on the GE500 and 600, customer interest has been good.

And we expect that interest and demand to increase as we progress through the development program and we, frankly, get closer to EIS.

This is an attractive airplane set for our customers.

Thank you.

Joseph DeNardi of Stifel.

Good morning.

Phebe, just looking at combat, just given the strong order flow over there over the past 18 months or so and the FX pressure that you're seeing this year.

What's the growth for that segment look like next year?

Are some of the international contracts flowing through but just being offset by FX and does that annualize next year?

As you would expect, we took in a large number of orders into the backlog in 2014.

And if you look at the engineering cycle, and typically when programs start production you could reasonably expect that production to begin in 2016, and I think we've been pretty clear about that.

But I don't want to get into more detail on what 2016 looks like until we finish our plan.

Okay.

Thank you.

[Seth Seizmann] of JPMorgan.

Good morning.

Notwithstanding what you just said about not getting into 2016, I was wondering if you could comment on how the profitability headwind from Jet carries over in Aerospace -- from Jet aviation carries over from Q4 into 2016 since you've got some pretty tough margin comps in the first half of the year, the Gulfstream margin was around 20%.

I thought that the cost management in Aerospace was one of the ways to help manage this transition from the 550-450 to the 500-600.

Well, your supposition is right.

Cost management is going to be key.

The margin compression that we've seen in Jet reverses in the first quarter of 2016.

As they begin production right now, they're simply in a dueling phase and engineering for these large body and narrow body airline completions.

That's a fair amount of engineering work.

We will get into production then starting in the first quarter of next year.

Great, thank you.

That headwind is behind us.

Nicole, I think we have time for one more question.

Our last question comes from the line of Pete Skibitski of Drexel Hamilton.

Nice quarter, guys.

Thank you.

Phebe, there was some press during the quarter about Bath on the DDC 1000.

Can you give us your thoughts on that program and how it's going and if there's any financial risk going forward related to that?

Let me talk a little bit about 1000.

As we've said before, this is a highly complex and revolutionary surface combatant, and the first of which -- we've got three in our backlog and three under construction, the first of which is nearing sea trials.

We are continuing to work with the Navy to resolve any developmental issues that they see.

And I think we all agree that we are working through all of those technical challenges on this first ship.

By the way, the bellwether we use to think about performance on that ship is you may recall that the complete redesign of the deck house on the third ship was reassigned to us.

The design is nearly complete and construction is proceeding quite nicely, so that suggests considerable learning and I'm very pleased with at least that performance there.

We do have some risks going forward.

We will manage that accordingly.

They were working very closely with the Navy and Navy's other subcontractors on this program.

And let me give you some sense of magnitude.

Bath is 1/32 of our sales.

We are paying quite a bit of attention to whether they [complex war ship] but I think the context is important here.

Thanks so much.

Thank you for joining our call today.

If you have additional questions, Erin can be reached at 703-876-3583.

Have a great day.

Thank you for participating in today's conference.

That does conclude today's program.

You may all disconnect.

Have a great day, everyone.