Welcome everybody to Valmet's press conference regarding Valmet's proposal to start discussions on a statutory merger between Valmet and Neles. My name is Pekka Rouhiainen, I'm head of the investor relations at Valmet, and with me today are Pasi Laine, Valmet CEO, and Kari Saarinen, CFO. Today's agenda is so that Pasi will first go through what Valmet and Neles are today, and then what kind of combination these two companies would be together. This call can be listened to as an audiocast from Valmet's website where you can also follow the slideshow that Pasi will be presenting. After the presentations, you will have a chance to ask questions over the conference call phone lines from Pasi and Kari. Pasi, please go ahead.
Okay, thank you, Pekka. Like Pekka said, we are talking here about Valmet's proposal to start discussions on a statutory merger between Valmet and Neles. We have approached today the board of directors of Neles with a proposal to start a potential statutory merger between Valmet and Neles, so discussions on a potential statutory merger. Like we announced in June, we bought about 15% of Neles shares from Solidium. We said that we'll continue to buy shares when it suits us, and that's what we have been doing. Today we have approached the board of directors of Neles with a proposal. We see that the combination of the two companies in the long term would create excellent value both for Valmet's and Neles shareholders. Like you all know, a statutory merger between the companies requires negotiations between the two companies.
Even if such negotiations are initiated, there is no certainty that there will be a final result in an agreement. What is my content? First, Valmet's strategy and development to give a little bit of background to our thinking. What kind of company Valmet is today. Neles today and its strategy. Combinations of Valmet and Neles together. If we start from Valmet, you all know this, but I want to give a little bit of background of our thinking. We have been having the same strategy now for six years, or actually seven years. Converting renewable resources into sustainable results. We have developed a company where strategy is practical and our must-win implementation is coherent, and we cascade the target setting and execution down.
With this quite disciplined approach, we have been able to increase financial performance, and currently the financial targets are such that we target to grow our stable business 2x the market growth. We target also to have an EBITDA between 10%-12%. Our return on capital employed target is to be return of capital before taxes over 20%, and dividend policy, dividend payout at least 50% of the net profit. Those are the current targets which you will then think later on when we go to the combination story. How has Valmet been performing since 2013? Our orders received have been growing from EUR 2.2 billion to EUR 4 billion, and now LTM is actually a little bit over EUR 4 billion. Our comparable EBITDA has been growing from EUR 50 million to EUR 320 million in LTM, roughly.
Our comparable EBITDA margin has been improving from 2% to close to 9%. A solid track record of developing Valmet's original business and also the acquired businesses. Total shareholder return since the demerge has been 328%, and annualized total shareholder return 24%. Reasonable results in our execution. Our acquisition strategy has been that we want, of course, first of all, to have a strong focus on organic growth, and then be selective in acquisitions. The themes have been to strengthen services, like we made acquisition of J&L, and then strengthening also the pulp paper energy value chain, where examples are PMP Group, which acquisition has been signed now in September, and GL&V, which we acquired in 2019. In strengthening automation, of course, the first part was that we bought automation in 2015.
Since 2016 up to 2019, we have been able to grow the business nicely. Like you see here, also the package sales, which is the internal sales we have in our technology packages, have been growing from EUR 38 million, and actually it was even less earlier, to EUR 57 million. We have a track record of growing and also a track record of growing the internal sales with the acquired automation business. Of course, one of the topics has been to think how to strengthen our automation business in the future. Valmet today, like you know, we are number one in paper meaning paper, board, and tissue. Our market share roughly is 40% on that segment. In pulp and energy, we are number one to two to three, depending on the market, and our market share is varying between 20%-40%.
In paper, board, tissue, and paper, board, and pulp, we are the other one of two major players. The market dominance is quite high of these two players. In services, we are either number one or two, and we have a strong position in serving pulp, paper, and energy customers. Our market share in services is roughly 17% from the global market. In automation, in systems, our market position in pulp and paper is one to two, and then, of course, totally in systems business, we are a small player. About 70% of our business comes from the pulp and paper industry and 30% from the energy industries. Globally, we are strong, having 100 service centers, 16 R&D centers as examples. In sustainability, we have been strong for six years in a row in the Dow Jones Sustainability Index.
2019 numbers: orders received about EUR 4 billion, net sales about EUR 3.5 billion, comparable EBITDA EUR 316 million, an EBITDA margin of 8.9%, and gearing about - 23%. This is on June 2020. Net debt EUR -223 million, meaning that in the end of June, our balance sheet was very strong. We employed about 13,600 people. Geographically, North America about 20%, EMEA 40%, and the rest are coming from the growth markets. Service and automation, less than half this year, last year, traditionally close to half, and the rest has been coming from the technology businesses. That was the summary of Valmet. When we go to Neles today, Neles is a strong niche player with a especially solid position in certain segments of the valve markets. It has diversified valves offering, diversified still meaning that it has very high-quality valves offering.
It's supplying valves for demanding applications, both for control applications and on-off applications. On top of that, of course, digital controllers and software to help in managing digital controllers. It has a good market position, pulp and paper number one. It's very strong in pulp, not as strong in paper. The origin is coming from the same roots where our origin is coming from. Oil and gas, they are number four to five, and chemicals number seven. They have a balanced global presence, about 2,900 employees. They have a globally balanced footprint. They have factories in all the major continents, one here in Finland, one in Finland, one big one in the U.S., now two bigger ones in China, and smaller ones in other countries like in Germany and Korea.
They have a good services network, close to the same customer base where we are operating as well. Their focus has been on safety and reliability. From an environmental perspective, the valves, which Neles are doing, are playing a very important role in reducing energy consumption, reducing emissions, and improving the efficiency and safety of customer production units. A strong niche player in the valves market. If we look at the numbers, orders received last year were EUR 681 million, net sales about EUR 660 million, comparable EBITDA EUR 97 million, comparable EBITDA margin 14.6%, and like I said, about 2,900 employees. Geographically, about 36% coming from Europe, Middle East, and Africa. America is about 40%, the rest coming from Asia-Pacific. Industry-wise, 37% are coming from oil and gas and industrial gas.
Industrial gas being, according to our information, a little bit over 10%, and then gas about 10%, and the rest in refining, about 10%-12% from refining. Petrochemical 21%, other 16%, and 26% coming from the common industry, which we serve, pulp and paper. Like you all know, Neles has a good track record for growth and potential to grow further. It's a valve company that has been growing nicely for several years. Here is the growth number from 2016-2019, and the growth number is 7.8%. A good track record. Neles has been growing by the market, but it has been gaining also market share by expanding in selected markets and broadening product offering. It has been building up the services business and services centers closer to customers. It will and continues to accelerate growth in valve controls and actuators.
Of course, Neles has an opportunity to execute targeted acquisition which supports these initiatives. A good track record and possibility to continue the good growth. How then Valmet and Neles would look together? We are saying that it would be a winning combination creating future success. Valmet and Neles together would be a Nordic-based global leader with a unique offering for process industries. Very strong in process technologies, paper, pulp, and energy, which I described earlier, strong in services, and strong in automation as well. Automation meaning systems business and valves business. The combination would be in systems number one to two in pulp and paper, in systems and in valves by clear the number one.
It would have growth potential in non-pulp and paper industries, energy and process industries, where currently about 30% of our automation business is coming from and about 70% of valves business is coming from. There would be a very good growth path for those segments together. As a total company, it would be a large share of recurring business and stable business. It would be a solid platform to grow and develop all businesses: process technologies, services, and automation. It would have a very strong confidence and reputation amongst customers. We all have a lot of products, and we would have a lot of products to which customers have a long tradition to trust on, and good personnel customers are trusting on as well. Of course, we would have a very nice winning team with shared heritage and performance orientation.
The unique offering would be unique. Process technology-wise, paper, pulp, and energy, so board machines, tissue machines, paper machines, pulp mills, multi-fuel boilers, environmental systems, good coverage of services, spare parts, production consumables, maintenance, shutdown, outsourcing services, process support optimization, and then automation, a very nice offering, having automation systems, valves, and industrial internet applications. We would cover a big part of the customer needs in the segments where we serve. Then, of course, with the products and technology we have, we could serve other customer segments as well, which is very much needed in automation and valves business. Not to focus only on those areas where we have technology offering, but to learn from there and create products there and sell even to other industries. It would have a strong margin profile and globally balanced operation.
About 32% would be coming from services, automation 24%, and process technologies 44%. These are illustrative numbers based on 2019 figures. A nice profile. Orders received would have been about EUR 4.7 billion last year, net sales about EUR 4.2 billion, comparable EBITDA EUR 413 million, comparable EBITDA margin 9.8%. Backlog would have been EUR 3.6 billion, and we would have employed 16,500 people. Area-wise, a nice solid structure, about 40% coming from EMEA, about a little bit more than 30% from Americas, and 24% from Asia-Pacific and China. A good balance geographically, business-wise, and strong economic performance as well. One big part would be the increased share of high margin and growing stable business. Increased share of high margin and growing stable business.
Valmet's stable business, including services and automation, has been growing from when we started from EUR 1 billion, and later on from EUR 1.3 billion to EUR 1.8 billion if we measure it with orders received. About 8% growth with acquisitions and organically. Neles' orders received at the same time have been growing about 4% starting from 2015. This combined entity would have a stable business value-wise of EUR 2.5 billion. A very big share of the revenue and order intake from a future combined company would be coming from stable business, where we all know that it's more stable. Of course, we have to exclude COVID time, and then it's also a higher margin business. If we think about automation, the combination would build a very good platform to build automation further.
In valves, of course, we could continue to build Neles' growth by developing the technology further, expanding services network, expanding market position in pulp and paper, but of course in other segments as well. In automation, we could continue to build pulp and paper, but then together with Neles, target more and more, like Neles is saying, energy and hydrocarbon customers, and then building services together. We could think about making acquisition to grow the automation business even further, including different kinds of products, automation products, instrumentation, analyzers, and so on, to widen the portfolio of what we have now for automation. Combining the companies would create the start for building up the automation further and would create a very nice platform to start from.
If we think about synergy potential, because we know the synergy potential quite well, we know Neles, and we have been using also some ex-Neles people to work with us to make sure that we understand the synergy well. We have revenue synergy and cost synergy. In revenue synergy, we could include Neles' valves in our package sales. Neles is very strong in pulp, but Neles is not as strong in paper and board, where we are very strong. Like you saw, what has happened in automation systems, so we could think about making the same in paper and board for valves as well. There's cross-sales opportunities, mill improvement, energy projects, and then, of course, automation cross-sales between systems and valves.
Services offering and services development. We both have a good services network close to the same customer base, and we could further grow the services offering and servicing operation if those businesses were combined. Of course, developing new offering based on the know-how what we have. We have a good understanding and good belief that there would be a good revenue synergy between these two companies or by combining these two companies. Cost synergies, of course, function costs, taking into account that there would be only one listed company, we would need only one function in each of the functions and two. We have calculated those costs. Common location. We were part of the same company early, and we were actually sharing the offices and locations some years back, and we could move back and gave some savings in common locations.
Then, of course, strengthening the supply chain for both of us would give further savings potential and increase the cost synergies. In technology, we could further continue or further develop the digitalization. Not all, but a big part of the valves are attached with an intelligent positioner, and that could be developed together with our system and the system business, then different kinds of tools how to utilize the energy. The information could be developed together as well. Then, of course, there would be a very nice possibility for remote diagnostics and remote services for the combined technology. Not as an important point, we are also saying that the integration would be easy and low risk because we know Neles and Neles knows us.
We have the same kind of background and same kind of culture in the company, the integration would be easy and not painful and low risk from that perspective. We are saying that this combination would create value to all shareholders. Here's Neles' ownership divided so that Valmet owns 29.5% or roughly 30%. Based on the analysis what we have done, about 41% are shareholders with overlapping shareholding in Neles and Valmet, so owning both companies. Owners who own only Neles are about 29%, and that includes Solidium. From this 41%, about 21% is retail, 38% are institutions, and 42% are registered shareholders.
We are, of course, thinking of the benefit of all the shareholders, but then, of course, the synergy what we could create would stay as a benefit, especially for the ones who are owners of both of the companies, which in this case is about 70% of Neles, 71% of the Neles. Of course, the combination should be such that it gives also a good benefit for the non-overlapping shareholders as well. The shareholders would benefit from enhanced strategic position, large share of stable business, recurring and profitable services, automation systems, and valve business. It would create a nice platform to grow automation systems and valve business, and then it would have financial capacity to execute on the strategy. It would have synergy potential, include revenue, technology development, and cost synergies. We would have the possibility to optimize the combined company's balance sheet.
One small but important part for retail is that the merger being a tax-neutral structure for Finnish shareholders. They would save quite much money by not paying to a taxman in Finland. We are saying that the combination would create value to all shareholders in Valmet and in Neles. As a summary, we are saying a statutory merger between Valmet and Neles would create a solid and strong Nordic-based global leader. We believe that the merger provides the best potential for long-term value creation for shareholders.
Okay. Thank you, Pasi, for the presentations. Now we are ready to take questions over the phone line. Operator, I hand over to you.
Thank you. If you wish to ask a question, please dial zero one on your telephone keypads now to enter the queue. Once your name is announced, you can ask your question. If you find your question is answered before it's your turn to speak, you can dial zero two to cancel. Once again, that's zero one to ask a question or zero two if you need to cancel. Our first question comes from the line of Sven Weier of UBS. Please go ahead. Your line is open.
Yeah. Good afternoon, and thanks for taking my questions. The first one is just on the timeline. I was wondering if you expect to announce some of the terms already before the 22nd of October so that Neles shareholders can compare the two. That's the first one.
We have now approached Neles' board, and we are waiting for their response. The timeline is depending, of course, on Neles' board reaction and then how quickly the negotiations will continue.
Is it your goal to have it out before that?
Can you repeat?
No, sorry. Is it your goal? I mean, are you trying to have it out before the 22nd of October?
We can't set the goal alone. We work, I hope, well together with Neles' board.
Okay. The second one is a technical question. Conscious of this best price rule, I think you have in Finland, I mean, does it also apply to this situation here that you would have to offer at least the highest price that you paid? Does it not apply to this situation here?
Hi Sven, this is Kari here. Actually, there's no minimum price requirement here. This requires now that we negotiate, and after that, then the board of both companies approve the rules. There's no minimum price requirement here.
Okay. My last question, if I may, is just obviously, you now talked about revenue synergies, cost synergies without quantifying. Of course, we got the midterm target of Neles by 2025. We're all aware of that. I mean, and that's quite some growth on the top-line side. I mean, how do you view those targets when you think about the synergies that you have? Do you think that makes that achievable, or do you think those targets look conservative against what you have in mind? Maybe you can elaborate on that one.
I think that, of course, will be part of the discussion with Neles' board as well, but I think there is room for a little bit tougher target setting.
Okay. Understood. Thank you very much.
Thank you, Sven.
Thank you. Next question comes from the line of Tom Skogman of Carnegie. Please go ahead. Your line is open.
Yes. Most of my questions have already been answered, but I just wonder how you think that the share price is going down significantly again today, and there is a threat that you will have Neles owning almost half of Valmet in the future while it will contribute with less than 20% of sales and also earnings, in my estimate.
Of course. We have had quite often a situation that when we announce something, the share price drops, and later on, it recovers and goes even up. When talking about this size of proposal, then I wouldn't look at one day's reaction in the stock market.
Where do you think the stock market is wrong? It's at least one source to look at also longer-term views, how the market thinks. What is the market not getting with this? It looks like from the outside that Valmet shareholder will be heavily diluted in the future, and we cannot be certain that the peer group valuation will change from Andritz and other types of companies supplying products in the future.
Yeah. Sorry, I lost my focus. I was somewhere else. It's a tough day, of course, we are thinking about Valmet's shareholders' value creation all the time. That's our goal. In long term, I think we have been proving that that's what Valmet has been delivering. Of course, the structure, what we want to negotiate with Neles' board is such that both shareholders will be benefiting, not only Neles' shareholders.
Of course, we are working, in this case, for Valmet, but then taking into account the interest of Neles' shareholders as well to find an amicable solution where both companies could combine and then start to work on the synergy impacts, which are to be seen.
All right. Thank you.
Thank you. The next question comes from the line of [Andre Olson of Voltere]. Please go ahead. Your line is open.
Hi. Thank you for taking my question. I just was wondering on the timing from your side on this. Given that your first stake purchase was back in June before the restructuring of Metso, why didn't you just propose this initially with first stake purchase?
We had several parts which we thought that can happen. One was that we are following the development of Neles, and we are developing it together with Neles, being part of Neles' board as well. That was our original plan. What happened was and then slowly increased our ownership in Neles. What happened was that there came the competing bid from Alfa Laval and also the fact that Neles' board has made it very difficult for us to get to the board of Neles. We had to a little bit accelerate the thinking process inside Valmet at what we want to do, and that has been the reason for the actions now.
Okay. Thank you. Do you expect the Neles' board to be welcoming from this proposal, given that in the past, from what I understood now, they weren't that welcoming?
I'm sure that they are very eager to talk about it because it's clearly showing the benefits of the merger to Neles' shareholders. Of course, they have obligation to talk with us, and I'm sure that the discussion and cooperation with Neles' board will be very good.
Okay. Thank you.
Thank you. Next question comes from the line of [Niko Matidarskinen] of the Finnish News Agency. Please go ahead. Your line is open.
Thank you for taking my question. I am interested in the terms of your proposal. As we know, this merger proposal is parallel to another offer made by Alfa Laval, which offered EUR 11.5 per share and total EUR 1.7 billion. Can we hear what your offer is going to be?
We have just proposed this merger now for Neles' board. The terms and conditions are, of course, subject to the negotiations that we hopefully start quite soon. At the moment, we cannot say anything else on this.
Okay. Thank you.
Yep.
Thank you. Next question comes from the line of Sindre Sørbye of Arctic Asset Management. Please go ahead. Your line is open.
Yes. Hi. Thanks for taking my questions. I mean, it's been partly answered, but from the outside, the deal looks a little unbalanced in the sense that if you look at the multiples, for instance, on enterprise value to EBIT at the current share prices, the multiples are more than double for Neles. Put it another way, if Neles' shareholders end up with, let's say, between 35% and 40% of the company whereas less than 20% of the revenue or sorry, the EBIT comes from Neles, it would really require a lot of synergies or, I mean, probably not over EUR 100 million quite short term. Is that realistic?
No. We haven't announced the synergy figures now, and we, of course, want to talk about them with Neles' board. It's true that the multipliers for Neles are higher, and traditionally, it is so that automation companies are traded with higher multipliers. Of course, it's a question of negotiation that what kind of value Valmet share would have and Neles share as well. When calculating the ownership, then one has to remember that we own about 29.5%. That you need to take into your account when thinking about to whom the value goes.
Okay. Thank you.
Thank you. Next question comes from the line of Antti Suttelin from Danske Bank. Please go ahead. Your line is open.
Thank you. When I listen to your synergy story, I get the picture that this will be rather long term. Do you think when you speak to Neles' board of directors that the board of directors could actually favor an offer made by Valmet, which could be even lower in initial value than that of Alfa Laval or say at least or at max on the same level in the sense that you think you have such a great long-term prospects that they would outweigh long-term a kind of an even smaller initial offer price?
Sure. First of all, this long term, short term, yes, I think the synergies partly would actually come quite quickly. Quickly meaning in one to two years. I'm sure that we can start to increase the share of the package sales in paper and board machines quite quickly. Part of them would come quickly, and the integration benefits would come quickly as well. The longer-term ones would be technology development, new product development, and services development. I see actually that there are synergies which could come quicker and then which would be coming later on. I think it's a very interesting point you are raising, and we will be very happy to discuss that with Neles' board, how they see the value of a competing bid where there's bid available now and then maybe not that good benefit for the shareholders longer term.
We, as Neles' big shareholder, think that the long-term benefit is more important. We hope to convey the same message to other investors who are long-term investing in Valmet and Neles.
You think technically, purely technically, the board at Neles could favor an offer which potentially could carry somewhat lower initial value. Is that technically possible for a board of a company?
I think it depends on what kind of contract they have now made with Alfa Laval. I'm not capable of answering on that.
Yeah. Antti, it's, of course, impossible for us to say. Of course, our first target is now to go to negotiations and do the due diligence, and after that, then talk about the terms. We are not yet there.
Yes. I appreciate it. Thank you. Thanks.
Thank you. We've got one further question in the queue. Just as a reminder to participants, if you do wish to ask a question, please dial zero one now. The next question comes from the line of Kati Pohjanpalo of Bloomberg News. Please go ahead. Your line is open.
Hi. I have two quick questions, really. The first is, why did you choose not to include any specific terms in your letter to Neles today? Secondly, I'd like to ask how you plan to finance this merger. Thank you.
Maybe the first one that about putting any specific terms. Of course, we first wanted to go through the discussions with the board and then go through the due diligence, and then the terms come then later on. About the second question related to the financing. Merger, of course, is a merger, and typically, there's no financing needed in this case.
If we go further on and then look about optimizing the balance sheet, that is, of course, something that then we need to take a look later on once we are there because the combined company would have a large share of high margin and growing stable business. That, of course, gives us then also a good way to optimize the balance sheet and maybe also then look at the debt levels of the company at that point of time.
Okay. We have one further question from the line of Tom Skogman. Please go ahead. Your line is open.
Tom, we can't hear you.
Tom, if you have your line on mute, if you can unmute your phone.
Yes. This is Tom Skogman from Carnegie. Can you hear me?
Yes. We can.
We can now. Yeah.
Yeah. I just wonder about these technicalities. What type of how high acceptance would a Neles AGM need to approve a merger with Valmet? How does it really work with the Finnish law?
Over. Yeah. Okay. Kari will answer.
Our understanding is that it would need to be two-thirds of the AGM, and then the merger would go ahead. Of course, first, Neles' board would need to propose it and then two-thirds of the votes at AGM. The same goes with Valmet as well.
All right. Thank you. Thanks.
Thank you. We've had a few further questions come through. The next is from the line of Johan Eliason of Kepler Cheuvreux. Please go ahead. Your line is open.
Yeah. Hi. Pasi, Kari, and Pekka. It's Johan here. Just curious. You talked about the shareholders of Neles, but how about your own shareholders? Have you had discussions with the major shareholders of Valmet, and are they sort of in line with your ambitions? That's sort of my interest point here. Thank you.
We have had some discussion, no, we continue to have discussions with our shareholders.
They are not worried about the share price tanking when you talk about further acquisitions of Neles?
Up to now, at least, there haven't been any.
Okay. Thank you. It will be interesting to see.
Okay. We've got a couple more questions. The next is a follow-up from the line of Sven Weier of UBS. Please go ahead. Your line is open.
Yes. Thank you. One follow-up, Kari. I just wanted to be 100% clear of what you just said on the balance sheet optimization. Is it essentially that, obviously, after this deal, your balance sheet looks probably quite a bit overcapitalized regarding equity, and you could afford a higher gearing with the stable business you have as backing this? Is buying back shares an option, obviously, to decrease the dilution again that you now will have initially? Is that one of the options you're thinking of?
Well, I would say that that could be one option. Of course, Sven, first, we would need to get there. Of course, that could be one option then at that stage. Yes. Yes.
Okay. Got it. Thanks, Kari.
The final question is a follow-up from Sindre Sørbye. Please go ahead. Your line is open.
Yes. Hi again. You speak a lot about revenues in Neles. That's related to pulp and paper. That's less than 30% of the total revenues. In fact, you will be increasing your share of revenues towards upstream oil and gas, petrochemicals, and refining quite significantly. That raises a few questions from an ESG angle. Secondly, would you really be able to create so much synergies in those segments which are actually the bulk of the top line from Neles?
Sure. If I start from the revenue synergies. Of course, for Neles to grow, Neles has to grow both in no, I'm not saying pulp because I think they are strong, but they have to grow in paper and board. Then, of course, they need to grow in other segments as well. In oil and gas, what Neles is reporting, according to our understanding, a big part of this oil and gas is actually gas and then also industrial gas.
Industrial gas is making things like oxygen and that kind of things which are needed in different kind of processes. Of course, we would continue to grow that part of the business. A small part of the business is in refineries. There, of course, from an ESG perspective, Neles's role there is to reduce the emissions, improve controls, and reduce the energy consumption in refineries. From that perspective, Neles is working hard in trying to make those industries more sustainable. A little bit same as in automation which we acquired in 2015 that, of course, the total business has to grow, not only the business which is closely linked to the rest of the Valmet. All the businesses have to grow on their own merits. We are sure that we can manage that in Neles as well.
Thank you.
Thank you. As there are no further questions at this time, I'll hand back to our speakers for the closing comments.
Okay. Thank you, Pasi and Kari. Thank you, everybody, for good discussions. As a reminder, Valmet's Q3 interim report will be published on October 27, and then we will have an interesting Valmet Pulp and Energy Investor Day that we will organize virtually on November 19 this year. I hope to see everybody online in these two events as well. Now, thank you, and have a nice rest of the day.