3M Company (MMM) Earnings Call Transcript & Summary

Ladies and gentlemen, thank you for standing by. Welcome to the JPMorgan Industrials Conference fireside chat with 3M. [Operator Instructions] As a reminder, this conference is being recorded Tuesday, March 10, 2020. I would now like to turn the call over to Steven Tusa, industrials analyst at JPMorgan.

Great. Thanks, operator, and we're moving on to the third call of our industrial -- our virtual industrials conference today. As usual, if you have any questions, please feel free to e-mail them to me. We're going to go 40 minutes here with 3M. And we're very happy to have CEO, Mike Roman; as well as Investor Relations Head, Bruce Jermeland. I'm going to hand it over to them for a few comments and then we'll jump right into the Q&A. Bruce?

Actually, I'll take it, Steve. This is Mike. And thank you.

Sorry. Okay. All right. Go ahead.

And good morning. It is good to be here with you, albeit via the conference call. Maybe a few comments about what we're facing as we come through first quarter. Obviously, it's a very fluid environment that everyone is currently facing and given the unfortunate circumstances with coronavirus. And I'll comment more on that shortly. As you recall, during our January earnings call, we said we expect 2020 to be a year where we return to growth for both organic sales and earnings. And we also expect another year of strong free cash flow and return on invested capital. And I'm encouraged by how our team responded last year to the challenge that we faced in key end markets. We talked a lot about China, automotive and electronics and that we stepped up our execution, took actions to improve operations and delivered record free cash flow of $5.4 billion for 2019. And we also made progress on really important -- our 4 strategic priorities, transformation, what we're doing to manage our portfolio, really innovation at the heart of everything we do and people and culture. And these are what we really focus on to deliver long-term growth and value for our shareholders, our customers and really all of our stakeholders. We remain focused on winning with our customers even in this fluid environment, and we're keeping them at the core of everything we do. I'm confident in the strength of our 3M business model and continue to really stand on strong core competitive advantages, our technology platforms, our advanced manufacturing, our global capabilities and leading brands, so strong foundation for that return to growth in 2020. Before opening up for questions, I thought it would be good to make a few comments related to coronavirus. First, our thoughts are with those around the world who are affected by the coronavirus outbreak. And our highest priority in 3M is the safety of our people and the public. And we contribute to that through our products and solutions. And with that in mind, we've increased our production at our manufacturing facilities around the world, including those that make respirators to really -- to help meet the demand related to the coronavirus. And we did that as we saw this starting to ramp up in China in January, and we've been working on that through the entire first quarter. For the foreseeable future, we expect the demand for respirators to continue to outpace our supply and we're working with customers, our distributors, government and medical officials to make sure we're getting supplies to where they're most needed around the world. So with that, let me turn it back to you, Steve, for Q&A.

Great. Maybe just a little more color on that front. During H1N1 and SARS, you guys talked about a couple hundred million dollars. This is -- this would seem to be like obviously perhaps a much more broad situation. Any kind of context to help us be able to kind of size what kind of impact that part of this whole complex situation could have, maybe just at a basic level? What's kind of the revenue base of that business in 2019?

Yes. And you referenced what we talked about H1N1, we saw an increase in demand for respiratory-related products. And it was impact at the time of about $250 million in revenue. If you step back and look at our personal safety business last year, it was approximately $3.5 billion in revenue. And that's really focused on global safety markets that are growing low to mid-single digits over time, very good business for us and a great platform for us in that end market growth. We're recognized as a leader in respiratory protection, and it includes the respirators that are at the heart of the discussion of coronavirus. But it also includes hearing protection, eye protection, fall safety and now self-contained breathing apparatus. So that's all part of that $3.5 billion. Every one of these outbreaks, whether it's SARS, H1N1 or now coronavirus, ends up having its own unique set of circumstances, including how everybody responses to it -- responds to it. So while we don't break out the individual products, we did see that increase in H1N1. And that's maybe the best frame to think about it for coronavirus at this point.

Right. And as far as the kind of the upside growth from that business?

Yes. And it's going to depend on -- it depends on how it plays out. And maybe just another comment because there's a lot of discussion around this. We don't disclose our product line pricing. But I would say this, we haven't raised prices in the middle of this. And so that's been an important part of -- as we support our customers, we are not raising prices in the face of coronavirus.

Right. And then I think some of the companies have given a bit of helpful information around where -- you guys are a pretty significant percentage of sales in China/Hong Kong. Some companies have given some pretty good info around how they exited the break from the Chinese New Year and where they are from a capacity perspective just in ramping up. Any high-level color on that front just to help us just to provide some context here?

Yes. I can just -- our operations in China, we've been working to ramp up production there. We continue to produce respirators. We do produce respirators in China. And we continue to operate that factory through the Lunar New Year break and through the extended shutdown. Coming out of the shutdown, we also stepped in and ramped up our broader production in China. And as you recall, we've been in China for 35 years. We've grown up with that economy. We've developed our businesses there in line with it. And we've built capacity on the ground to serve that market. We produce a majority of what we sell in China in China for China. We don't -- and we don't export out of China any material amount. So it's really focused on that China market. So we've been ramping up our production across the remaining facilities, and we are maximizing production in our respiratory production.

Yes. Steve, just to put it in...

And then just outside it -- yes, just outside of the respirators, I guess, was the question. What's going on in those other businesses?

Yes. We have protocols in place. We are operating. And we're producing and we're ramping up to meet the market. And I would say the protocols are -- the biggest challenge is getting back to full production. But we're making progress on that.

Okay. Got it. When you think about other dynamics, I guess, to your point, you're kind of in country for country, so not a lot of supply chain issues for you guys perhaps. If there is anything there, that would be helpful just to touch on. But also what's interesting is obviously with this new wrinkle around oil, you guys don't have a ton of exposure to energy markets. But do we have the potential for perhaps a little bit of an oil dividend, if you will, on your margins, like we saw in '14 and '15?

Yes. If you -- oil is a very important raw material feedstock for us. And the model that we've talked about and still holds true is about every $10 in the price of oil is about $0.02 to $0.03 of EPS impact for us when you look at the percentage of our raw materials that are based on oil. So it's if -- when we came into the year, we were -- our model was based around a $50 a barrel kind of price. So if you see it below that, you can kind of think of it in those terms.

Got it. And then just one last one on what -- just kind of the outlook. Obviously, things have -- I mean maybe they have been -- I mean Honeywell came on and reaffirmed guidance but talked a little bit about some of the moving parts there. I mean I would assume that the organic growth outlook is probably a bit more cloudy today than it was a couple of months ago. I mean -- or is this mask thing and the oil thing enough to kind of totally offset kind of what may come your way from a macro perspective?

Yes. Like everybody else, I would say the forecast for the year are very fluid right now, given the uncertainties around coronavirus impacts. And we are seeing some near-term demand and supply impacts, including the respiratory demand as well, particularly in markets like China and I would say automotive and electronics as well. That said, we're only 2 months into the year. So at this time, I still see a return to growth for the full year and organic growth in that range of flat to 2%.

How does the electronics environment kind of play through? Because that was a market that was clearly picking up. There's a lot of longer-term initiatives around data centers and electrification of autos. But then again, the supply base is obviously in Asia. How do we -- air traffic, things like that are a little bit easier to kind of tease out, and you guys don't have any impact there -- exposure there. How do you -- how do we think about electronics through all this and the demand there through all this?

Yes. And we talked a lot about electronics the last year. I would say that started -- electronics is a great business for 3M. It's the leading edge of technology, and it's a great place for our innovation and gives us access to world-leading customers. So -- but setting the impact of the coronavirus aside, we had been looking at and expecting electronics in China to improve as we went through 2020. And automotive -- underlying some of your comments about automotive opportunities, electronics was expected to have a softer year. But we saw electronics in China improving. I would say this, through February results, it's a bit lower than our expectations in electronics at this point. We don't see the COVID-19 significantly impacting the full year expectations. But we're going to have to watch this fluid environment and see how it impacts the balance of Q1 and the rest of the year and keep an eye on customer demand and electronics ramp-up in the industry.

And I think just for the auto front, we can kind of watch what IHS does with production. Obviously, there have been some pretty eye-popping numbers out of China. The rest of the world seems to be pretty stable at this stage of the game. But who knows what happens as people just don't go to dealerships or whatever happens here globally. IHS is probably the best just to watch that, and you guys should outperform that a bit over the course of the next few quarters and thinking about the other kind of markets out there.

Yes. We watch IHS closely, too. We also stay engaged with our OEM customers, so we get a clear view of near term and their view for the year. So we're looking at both of them. And coming into the year, IHS was down slightly for the year. And Q1 was going to be softer, in particular in China. So I think that's -- with the coronavirus, that's certainly true, and we'll see some additional impact there. The rest of the year will depend on the consumer demand and how China recovers and how the other markets hold up. So we'll be watching IHS and talking to our customers and keeping close to them. We do -- the way we had laid out the year previously, we did expect to outgrow that build rate, in particular with the strong performance of our automotive electrification growth platform and where we've been winning spec-in with that, not just in the electric powertrain vehicles but also in the electronics, the increasing penetration of electronics on the broader automobile platform. So we'll -- we do expect to continue to win spec-ins and penetration and outgrow. We'll have to watch closely how the build rates go from here.

And then just one last one. What had been your expectation for domestic China for 2020 before all this kind of happened? I think it was -- on top of mind, I think it was growing maybe mid-single digits or something like that. What was the -- what was kind of the most recent update on China before all this happened?

Yes. We came into the year looking at low to mid-single digits. And like I just was kind of describing, we -- a slow start to the year with that -- the build rate in automotive being down in Q1, actually negative in Q1 in China being one of the impacts. And then as electronics and automotive became better, China, low to mid-single digits for the year.

Yes. And Steve, if you recall, Steve, that was off of a down 5% in 2019, so...

Right. Yes. You guys have already seen some of these short-cycle declines versus others. So first in, first out certainly usually applies to you guys. So sorry, one more question for you. I never in a million years thought I'd be asking this question. But what is your percentage of sales to Italy? I mean I would assume it's very low single digits. Is that -- I just want to make sure we're not missing anything that kind of stands out. Some companies have a bit more exposure than others.

Yes. That's correct. It's very low single digits.

Okay. Got it. All right. Let's move on from those questions and talk a bit more about what you're doing on this next level of Portfolio Management in transportation. Maybe talk about coming out of last year and the -- I think you were executing away at the ERP system. Earnings weren't quite as good as you expected. But it seems like some of these Business Transformation initiatives are on track and clicking away despite a bit of a lower macro demand environment. Maybe talk about what your kind of top couple of priorities are when it comes to business transformation here.

Yes. And we talked about...

In the near term.

Yes. I'll go back to the discussion we had at the Q4 earnings call. Transformation is really now the way we are moving the enterprise forward, really improving what we do, driving a competitive advantage, creating operational excellence. And it becomes really the platform for doing that broadly. We announced the changes in how we operate the company as the next phase of that. It's really based on deploying our capabilities at the center of the company, our new ERP, the ecosystem around it, building that out, putting models in place that can take advantage of that, changing our business processes, redesigning what we do to be much more efficient, effective, streamlined end-to-end. And the changes we announced with the Q4 earnings call is the next phase. And we've implemented that, we launched it January 1. And it really puts us in a position to continue to deliver on what we laid out, I would say, back in November 2018 Investor Day, talked about how we were going to leverage transformation and the investments in that priority as we went ahead to deliver improved margins and to support the model that we have to continue to deliver growth and leverage our innovation into our markets globally. So that's the next step. Transformation is really now about how we continuously improve the company going forward. It's -- it really has put a strong platform in place. We've now got end-to-end, I would say, digitization capabilities in place in our supply chain. And that's really starting to pay dividends. You saw that, I think, in our inventory management in the second half of 2019. It was one of the capabilities that was helping us to really take that inventory and drive down our days of inventory outstanding. You started to see the benefits come through in areas like Europe and Canada, where we've been deployed and now taking advantage of those capabilities. So it really becomes a platform for continuing to improve the enterprise, drive greater efficiencies end-to-end and position us to continue to drive that return to growth.

And when you think about kind of benefits of all this, where do we stand on those benefits for the next couple of years? Will those be -- will you kind of expand on those and extend maybe a couple more years on the additional benefits from what you're doing today at the next time you update long-term targets? Or how should we think about like what's still on to come from a benefits perspective?

Well, it will be a very important part of how we update our longer-term view, something that will -- we've talked about that we'll do when we meet later this year with Investor Day. It's part of, I would say, our focus in 2020. When we laid out that organic low currency growth, delivering the EPS growth, strong cash flow performance again in 2020, it's built into that. These benefits are helping to drive that. Then there is a longer-term piece of that as well that we'll talk more about as we get later in the year.

Got it. When you think about some of the growth initiatives, I mean, you rewind to 1.5 years ago at your investor meeting, what are some of the ones that have outperformed? You mentioned automotive electrification. Any others that kind of stand out as being decoupled growth, for lack of a better term, versus kind of the industrial economy that you've been surprised positively with?

Well, I think you called it out. Our automotive electrification, we talked about it a bit earlier, too, it's performing well. It was up -- I think we called it out as up 9% in 2019 in the face of negative build rates. And we are -- we see that continuing. It's now a little over $280 million platform growing strong and helping us to continue to outgrow the build rates as we move ahead. Beyond that are the 12 priority growth platforms that we've been talking about as a group were up 10% in 2019. So it's broader than just automotive electrification. And we have a number of those in health care. We've got investments in advanced wound care, our food safety, custom orthodontics, biopharma filtration and our population health management opportunities and our health information systems business. So those are all good examples where we're seeing strong growth and good performance. We have a number of other platforms that are also contributing to that growth. So as a group, it continues to move us in the right direction. It's really demonstrating how our innovation is penetrating and driving growth platforms for the future for us.

How big is that collection of revenue now when you think about all those market-plus, I'll call them, opportunities?

Yes. If you take those together, it's about $1.5 billion, Steve. So automotive...

Okay. Got it. Yes, that's a sizable number. On the flip side, I think you guys are continuing to kind of press on Portfolio Management. Are these -- are there any other -- are you -- where are you in that? What inning are you in on that initiative? And maybe talk a bit more about which segments are getting the most focus when it comes to perhaps pruning around the edges, like you've done over the last several years.

Yes. And I would start here, Portfolio Management is an ongoing process for us. We're continually evaluating and acting on our portfolio, focused on aligning us with the most attractive markets and the strongest opportunities for growth. And so we are continuing to evaluate the portfolio as you've seen us do. It leads to action. And health care got a lot of focus in 2019. And we've got attractive end market growth trends, and the demographics, aging demographics globally favor us. And so we're taking actions there. I just highlighted the priority growth platforms which part of Portfolio Management is prioritizing where you invest organically. And those priority growth platforms in health care are a good example of that. We also use that approach to really prioritize where we want to make acquisitions. And we added M*Modal and Acelity in 2019 in the health care focus. And then it is the view that we take that ongoing process to look at what we can do to really maximize, optimize the value we get from every part of our portfolio. And where it makes sense for us to realize the greatest value through divestiture, we take actions. And you saw some examples of that in 2019. But we continue to be active portfolio managers. It's very important part of us really delivering on the value of the 3M model. We drive that innovation to create growth opportunities. A big part of our growth performance is being positioned for that innovation in the most attractive markets, and Portfolio Management is really the way that we make sure we're doing that through all 3 of those strategies that I just highlighted.

And when turning to kind of the earnings bridge and restructuring, you guys were one of a few companies that have kind of gotten ahead of the economic weakness. You're taking another -- you took another crack at restructuring last year. Given what we've seen here, is this the type of event that has you kind of dust off further contingencies when it comes to restructuring? Or this is just viewed as so temporary that it's just not part of the -- it's not going to influence the long-term trajectory on cost-out and restructuring?

Well, the restructuring you talked about last year, that first restructuring we did, which was we announced at the Q1 earnings call, that was related to what we saw in the end markets, the slowing end markets, automotive, electronics in China. And that was getting our costs in line, really adjusting our production plans. Really within a cycle of our business, within 90 days, we changed our production plans, took costs out and announced that restructuring and took those actions. And that was about 2,000 roles around the company and had benefits of $225 million to $250 million. So that was an economic-driven restructuring. The charge that we took in Q4, that was related to what I was talking about earlier, the transformation that we are executing in 3M. And this was the next phase, moving to our new operating models globally, building out our enterprise operations, that end-to-end -- really that end-to-end customer experience around manufacturing, supply chain and customer operations. And in doing that, you make a lot of changes. You change roles around the company. And that restructuring is a part of our plan to streamline the operations with that change. And the restructuring that we took and announced in the Q4 earnings was really to move us quickly to the new model. We could have chosen to make those changes over 24 months and work through it more slowly. We made the decision to step into it. It wasn't a comment on the economic outlook. It was really an opportunity for us to step forward more directly and quickly in our transformation steps. Now when you look at what's going on, the fluid environment that we've been talking about and the uncertainty there, I mean, we're always prepared to act as we see changes in the end markets. So that's something that we will continue to look at as part of how this year plays out.

Right. And then what's the -- I guess this is more of a high level. You're the first global CEO that we've talked to for this conference, and I'm going to ask this of every CEO. I mean are there -- are you dusting off contingency plans today but kind of waiting to see what happens to put them into action? Or is what you've seen enough to perhaps take another type of charge or another type of restructuring, more akin to what you saw early last year as opposed to what you did late last year? I'm just trying to kind of understand the CEO mindset right now around all this. Is it -- or is it just too early to kind of take that -- to drop those measures and take those measures?

Well, maybe set the ground. Through February, our total company organic growth was slightly positive. And for Q1, we expect now organic growth to be roughly flat to down slightly. And that's with what we can see in terms of COVID-19-related demand, maybe adding about 1 percentage point to organic growth and then some of the other end market dynamics putting us in that down slightly kind of view of Q1. So that's where we sit today. We're watching closely our demand going forward from that to decide which of our plans do we execute, where do we make changes. So I would -- I don't know if I'd call them a set of contingency plans. It's really we will quickly adapt to what we see as the market unfolds and including any actions we need to really get in line with changes in that demand. It's been both sides of it to this point. We've seen some impact on softer demand in areas like China. And then we've seen, of course, the ramp-up in demand on respiratory protection. So we're actually executing on both sides of this today. We're going to watch it closely. It's -- we aren't -- right now, we don't -- with that, what I just described to you, we aren't executing anything else, but we're watching it closely.

Right. When -- that's helpful color. When it comes to the longer-term targets that you laid out in '18, maybe if you could just speak to those. Obviously, 2019 started off not quite as planned, on a bit of a softer footing. How do you -- how do we put that performance in the context of the longer-term plan that you laid out in '18?

Well, we've been talking about there are areas that we are focused on as we come into 2020 and really that return to growth and talked about priority growth platforms, markets that are really important for us. I would say beyond that, we are -- we'll come back as we go through the year to talk more about the longer-term plans. When we -- the plan that we talked about in 2018 Investor Day, clearly the first year didn't go according to plan. But we're focused on that 2020 view right now, that return to growth, that flat to 2% organic growth and delivering on the leverage to EPS and strong cash flow as well. So more on the longer-term plan as we get later in the year.

Do you feel as though you need to have a lot -- I mean is the longer term plan -- I know you guys have -- all companies are now doing this. I don't think it was such a prerequisite for companies to give 3- to 4-year targets 10 to 15 years ago when, in fact, the longer term actually may have been easier to discern because of -- there was a real trend line on growth versus the current environment, which seems to be a 2-year cycle of on and then a 2-year cycle of off. I mean do you feel as though you need to give a long-term target? Or is there an option to reevaluate that and just say, "Hey, we're going to give annual guidance and we have initiatives and transformation that drive long-term growth and margins but we don't necessarily feel like we need to sit here and put a bogey on the board?" Or do you feel the long-term target is just a part of -- helps you plan or whatever it is? Maybe just comment on that.

Yes. I think in your question, you went around how we kind of consider this as well. What -- how do we think about this? I think it's important that people understand the value that the 3M model delivers and how we view it and how we are prioritizing to deliver on that, the strategies that we have. And so there needs to be some context for it. And the annual guidance is an important part of that. How we talk about a longer-term model is something we're thinking about. And really -- but it's important that we are very clear about what do we see the 3M model delivering and how is it going to be positioned in the year ahead and in a way for investors to understand it and for us to be able to sustain that performance and be credible around it. And you're judging how we allocate our capital against that model. And so we're talking about all that. We'll go into a lot more depth with how we think about it as we pull together a focus for the Investor Day later this year.

Right. And then just to kind of wrap it up here, it's a topic that I haven't probably done as much work as others on. I think it's extremely complex and hard to kind of size. But maybe just the latest update and perhaps some near-term mileposts around the PFAS environmental liabilities. What's the kind of latest messaging on that front?

Well, we do talk about this topic quite a bit. I would say we certainly appreciate and understand the uncertainty that this creates for shareholders. And we continuously are reviewing any exposure we have. We update our reserves to reflect the changes as this progresses. We're -- there are a number of dimensions to the second, change the assessment as we move ahead. There's -- there are -- there's litigation, and we've been trying to provide clarity around that, as much transparency we can as to what we face in litigation. There's also a number of efforts on around regulatory and legislative changes, and we continue to update on that. So those are kind of the near-term actions to watch that can help create a little more of a frame for understanding what's going on. We will continue -- I said it on my Q4 earnings call, we're really guided now. We've got a strong team that's managing this proactively, really bringing sound science, and we're contributing to the understanding here. We are taking corporate responsibility, and we outlined what we're doing, where we manufactured and disposed of the historical chemicals that we -- chemistries that we exited and what we're doing around that. We continue to update that. And then we're committed to providing transparency. So as we can give you more information, we will continue to update you. And so we'll continue to provide updates as we go forward. Just in that vein, we did reach a mediated settlement in the Wolverine case just recently. And that was -- just to be clear, that was part of the Q4 reserve that we took -- that we announced on the Q4 earnings. So we'll continue to update as we go.

Right. Is this something that, from a timing perspective -- I mean is this just for the next couple of years, there will be a settlement here, a settlement there? Is there -- are we waiting on more of a standardized kind of framework from the government before kind of making -- taking perhaps more of an approach to kind of ring-fence and consolidate this liability? How do we think about what's going to come at us over the next, call it, 18 months to 2 years on this thing?

Yes. It's probably good to just again kind of lay out the dimensions of PFAS and how we think about it. And yes, I can kind of give you some milestones. So there is where we manufactured and disposed of these PFAS chemistries historically. And we exited these chemistries more than 15 years ago. But we have 5 sites, 3 in the U.S. and 2 in Europe. And the reserve that we initially took in Q1 of last year and then updated in Q4 this year really puts us in a position to resolve those issues, the ones that we have in front of us now. So that's one dimension. Second dimension is the aqueous film-forming foam. This is the multi-district litigation that majority -- nearly all of those cases have now been assigned to a federal court in South Carolina. And that is going to progress according to that -- those court actions. And just that -- as a reminder, that's not just a 3M matter, there's more than 20 companies involved in that and the Department of Defense. And the first actions from that, we would expect late this year. So that's a little bit of a timing around that. There's other litigation out there, some of it related to product litigation, where we sold product and other manufacturers use our products and then disposed of it. And so we -- that's an example of what we -- some of the reserve that we took in Q4 earnings call. And then there's other litigation that will emerge. And then there are some other piece of litigation like personal injury, primarily around property values today. So those are kind of the litigation fronts. And we'll continue to update on that, both in our discussions with investors and then also in our Q and K. The other part of it is the regulatory side. And the EPA has committed to a management plan here. They're working it. We came out in support of that. We do continue to support that with our science. We're -- and we've been working on a clearinghouse of data to be available for anybody who wants to do the research in this area and certainly for support in the regulatory work. They are planning on a maximum contamination level as part of that regulatory framework. And so that's something to watch for. We don't know when that management plan will be finalized and when that -- that recommended or that maximum contamination level would come forward. So that's -- I don't have -- I can't give you kind of an estimate on time yet. But that -- those are the dimensions that are -- what we will continue to provide updates on as we go ahead.

Got it. And then just lastly, we're getting one from e-mail here. Maybe this is one for Bruce. When you look at your China revenues, remind us how big it is. And also, as you break that down, how much is automotive and electronics versus other? Or maybe just break it down between the segments, however you can help on that front.

Yes. So China is about 10% of our global revenue. Our 2 largest segments there are Safety and Industrial and Transportation and Electronics, given the amount of manufacturing activity there, particularly around auto and the electronics market. So health care is a fair amount smaller than consumers, very small in China for us.

Got it. I think that's basically it. I really appreciate your, guys, time and being flexible with the call and totally also appreciate how complex this is to talk about. So the color on the first quarter is extremely helpful. And we know that, that's still a very fluid situation, so nobody's taking anything really to the bank. But it's helpful that you guys have at least tried to size it a bit. And we -- kudos to you guys for giving that extra color. I think that's it. Do you have any closing comments? But if not, we'll just end it there.

No. Thanks, Steve. I really appreciate the opportunity to talk with you today and talk again soon.

Yes. Thanks a lot, guys.

Yes. Thanks, Steve.

Ladies and gentlemen, that does conclude the conference call for today. Please disconnect your lines.