Adient plc (ADNT) Earnings Call Transcript & Summary

Next up, we have ADIENT, the largest seating supplier -- leading seating supplier in the world. After some missteps from a long time ago, Jerome and Doug Del Grosso have done a great job of leading the company forward and solving a lot of the issues that were plaguing the company, and now were actually on very solid footing at the moment and actually probably making still a lot more progress, I think, going forward. They've done some great consolidation of some JVs like Yanfeng. They've reworked contracts. They're working out of old contracts that were not written so well. And they've actually delevered the balance sheet to a point where -- in very good shape. So this is a company really on the move in a very important and good part of the car being seating. As I mentioned, the largest seating supplier in the world. I think we are about to see, and this is my opinion, not necessarily coming from the company, really, the inflection point of all of these efforts and this improvement in the balance sheet. The volumes recover ultimately later this year into 2024-plus. So I think a lot of the good news is still on to come for ADIENT. So we're very happy to have Jerome Dorlack, CFO of ADIENT, here. And with that, I'm going to turn it over to Jerome for some opening comments.

Yes. No, thank you very much. In terms of prepared material, what we have today is an update on our sustainability efforts. It's posted to our Investor Relations page. So I won't go through a forced march on it. I would encourage you guys to go out and take a look at it. There are just a couple of pages that I wanted to highlight on it. The first one being Page 6. So I'll get to Page 6 on it. And this is just a little bit on some of the key product offerings that we have out in the marketplace, either today or things that we're developing. And really, the purpose of this page is just to go through and really highlight -- it's not just -- when we talk a lot about seating and a lot of people think about kind of the just-in-time nature of it or the top line figure, but it's also the other products that we offer going down through the full value chain, the foam products being the Shell Foam. We're really looking at not only driving comfort, but also taking some of the urethanes out of the vehicle, eliminating some of the VOCs, looking at things like the soft back panel, which is putting light weight into the vehicle, but also freeing up room for the occupant, where that, in conjunction with our UltraThin offering, not only frees up room for the occupant, but you're also freeing up room on the underside of the vehicle, which allows for more packaging of batteries. And the UltraThin product, in particular, has garnered a lot of attention from North American OEs as the IRA moves forward. And the iron phosphate battery chemistry requires obviously more packaging space. That's garnered a lot of attention. Our initiative with H2 Green Steel, where we're actually piloting and launching now with the customer green steel activities in green steel mills and then finally, as more and more customers are moving away from weather, some of our activities around weather alternatives. On Page 7, this is like a real-world example of what we call a CO2 abatement curve. So this is something we've developed with a customer, where we've actually laid out different technologies, and the length of the bar is an example of what the cost impact is. So if it's negative, that's a cost savings. If it's positive, that's an impact in cost. And then the width of the bar is how much CO2 you can actually get rid of in the vehicle. And so this is an example of moving along that axis the different technologies that we offer, what the cost impact is per vehicle and then how much CO2 we can actually take out from a seating system or in the cost of something like sound in seat, where you're taking the sound that's around the occupant and actually putting it into the head rest. And this is more than a simple -- putting speakers into a head rest, but actually moving noise canceling in a true audio system into the seat itself -- how much CO2 but also cost you can take out. This, again, is a real-world example. And then the last one that I'll talk about is just a little bit more on our UltraThin and what we're really able to get out of in terms of the overall package height. So that 40 to 60 millimeters, when we talk about block height, that's really -- block height is the distance from the floor pan of the vehicle to where you sit in the seat. And so we're able to take out 40 to 60 millimeters, which frees up 40 to 60 millimeters of packaging space for batteries. And so at the moment, we have 2 development contracts with 2 OEMs where they're really looking at this again for -- as we move forward with alternative battery chemistries that are more compliant to things like the IRA and freeing up space in the vehicle, what benefit this would have to them. And then you can see the things listed there along with the mass reduction as well. So just a couple of highlights in terms of what we're doing from a sustainability standpoint, how we're leveraging this not just on a JIT environment, but really through the entire seating system and the value we can add through to our customers. And so with that, I'll turn it over to the Q&A and fireside chat portion of it.

Great. So maybe we can just open up with some of the mundane topics on volume. As you look at this, and I remember having these discussions with you last year, very vividly, over dinner, the schedule volatility was pretty extreme back then, and it's gotten better over time. But there's a lot of cost that's involved with that in -- not just lower volumes, right? And you guys were pretty good at recovering some of that cost from automakers. And I feel like you specifically, personally, were kind of at the tip of the spear of going into automakers and actually negotiating some of the recoveries on that specifically. How much of those schedules gotten better? How much does that cost you versus what you've been able to recover maybe in 2022? And how do you think about that in '23 and maybe beyond?

Yes. So maybe a little bit in terms of how the schedules have gotten better. So I think when we were up here last year talking about it over dinner, I mean we had a figure of kind of 75%. If you -- if a customer ordered 100 widgets at the start of the month, they usually took about 75% of those widgets at the end of the month. If we look at it now, we're closer to that 85% to 90% range. So it's really much improved in terms of attainment from where we were last year at this time, albeit we're still at a depressed level of production, right? I mean if you think about $84 million light vehicle build that was our guide back in February time frame, so still below kind of a $90 million figure for light vehicle build. So still a depressed market, but attainment is much better from that standpoint. In terms of cost recovery or cost impact to the business, when we were in '22, we kind of were public and that we had this $100 million of net impact to the business in terms of inefficiencies, trapped labor, other costs that go along with those attainment penalties, if you would. We said as we went into '23, we felt that we could get that number down to about $50 million in terms of a new net figure, as customer schedules became more stable. We're still confident in kind of that $50 million figure for '23. And as then when we think about '24 and if customers are able to get to that [$95 million] or more historical attainment range, you can see that kind of remaining $50 million then balancing out in the '24 time frame. We know that when customers are stable, and we're able to run our plants like -- we know we can run our plants, and we see those costs quickly going away.

And would that be -- I mean, would that attainment be at the current volume run rate, meaning that if we stay flat on volumes, you would be -- but you had that improvement in stability in the schedule that you would actually get that savings?

Yes. I think we're able to do that. Yes. I mean, at the current vehicle build, if we get stability in schedules, I mean, we're able to get that kind of $50 million out. Yes, it's all about stability. Then after that, if we get incremental volume, then we get the kind of the flow-through on margin on it. But we -- there's really that level of stability as well that we need.

And if you were to think about sort of the incremental on volume, which is not something we've talked about because there hasn't been a lot of upside in volume in absolute terms for a long time, are we thinking about 15% to 20% simply? Or I mean, is there's something that's changed in the business over time that might make that somewhat better over -- as [lives] actually really lift and we're low enough at the cap U curve that you might actually get a better leverage?

So in the Q2, I think, what -- actually, it would have been in the Q1 earnings call, we did get one question on incrementals and what were our incrementals. I'm trying to think -- it was actually you who asked the question on incrementals and what were our incrementals. So I think our historic incrementals have kind of been in that, let's call it, 15% range right in there. There's nothing to say that as volume came back, the incrementals wouldn't be there. What I would say is not all volume is equal. So a lot of it depends on where does the volume come back at for us. Certainly, if all the volume comes back in China, all the volume comes back in Asia, that's good volume for us. And so that would -- our incrementals would be higher. If all the volume comes back in Europe, that's a different incremental type of picture for us. So to say what the incrementals would be, a lot of that depends on where those incrementals come from and what region those incrementals come in at, is really how you should think about it for that [indiscernible].

China is higher than the 15%, Europe's lower, and North America is somewhere right around, plus or minus.

I'd say Asia's.

Higher -- Asia, in general? Okay.

Yes, Asia, in general, is higher. So I think you need to think about where does the volume come from, so Asia versus Europe versus North America.

Okay.

And part of the reason -- and when you asked the question in Q1, what was kind of weighing on the incrementals? In Q1, we had a lot of labor that was coming into the network. There was a lot of labor inflation that came in. There was also some steel that came in in Q1 in Europe that weighed on it. And so there were challenges, and I think we were very transparent and said as we work through those throughout the year, we expect those to be resolved through the commercial claims. And we're still committed to doing that. So generally, all things being equal, volume being equal, 15% is a good number, but, yes, you just need to look where the volume comes from.

Okay. And one of the big things in the industry has been that mix has been very strong for the last 2 years. That seems like that's a much bigger beneficiary at the automaker level. But theoretically, if we're looking at larger vehicles, a lot of them have 3 rows. I'm not sure that they're really going to shrink that much because I'm not sure a lot of folks are really going to move back that much, but that's debatable. But if you think about sort of the opportunity and the risk around mix, not getting into necessarily '23 numbers exactly, but what could be the delta on a 2-row versus a 3-row crossover for Adient on seating and other content, roughly?

Well, so I will answer that question. But just coming back to -- so just on content per vehicle, why is it going to -- 2-row vehicle, you're talking anywhere from 1,000, 1,800. You get to a 3-row vehicle, you're 1,500 to 3,000. Again, that's round numbers. A lot of it can kind of vary from there. But I think the other part of mix is, again, what region does it come from? So I just -- I think you got to look at all volume. Not all volumes are created equal. And depending on what region it comes from, it just prints at different levels for us as well. So it's -- yes, you -- we just got to be sensitive to which region that volume is coming in from as well, whether 2 row or 3 row. We don't see, even today, a buyer that's in a 3-row saying they want to go back to a 2 row. I mean it seems to be a pretty sticky market from a 3-row buyer being a 3-row buyer.

So I mean, as we look at mix going forward, you would assume generally you'll move with market, right? I mean the market is the market, right? I mean you can't push -- you can't change the market necessarily. But I mean it's...

No, I don't think so.

But it's not sort of this gaping negative in a forward plan or forward thought process?

No. I mean we're not overweighted. We're not overrated or overweight towards any kind of a 3-row SUV type of mix or anything along those lines. I mean, we don't have -- I mean, like we don't have [Arlington], right, as an example. I mean yes. So we don't have one of those massive platforms that are out there like that, where it's -- and Arlington is a great platform. I mean, if [Ray] wants to trade it with me for something else, we can have that discussion, but it's a really good platform. So yes, we don't have something like Arlington out there, where they're printing 0.5 million 3-row SUVs out there like that. So no, I mean, there's nothing in our portfolio that's out there like that.

On the mix, if we look at just regular ICE vehicles versus EV, I mean, that's a transition that -- at least every investor I speak with wants to think about that in the context of a supplier. Can you guys help us frame how you think about seat demand for an ICE vehicle versus an EV vehicle or price or content?

I think what we've seen so far on the first kind of wave of EVs is they've all been very highly contented. And had you asked me that question 18 months ago when the kind of ATV and -- or ATP in the U.S. was 36,000, I would have said they're more highly contented. Now as the ATP in the U.S. has gone up to 48,000, it's kind of evened itself out, right? So I'd say, they're kind of on par now, maybe to slightly higher content, apples-to-apples. But they are, generally today, I'd say, more highly contented vehicles. There are some exceptions there. But on average, certainly equal to more highly contented. Now as the next gen rolls on...

2, 3 years from now, yes.

Yes. Well, I mean not even necessarily 2, 3 years from -- I mean, [GM], Scott, I forget the number -- 38 models or something like that. Paul was just up here earlier. I’m sure he said the number. That's rolling out in the next 18 months. So we'll see what that -- how that content starts to flow through. But in the end, they have to be competitive. And they have to be competitive for consumers, and consumers have features that they want in those vehicles. And so they have a certain subset of features they demand. And I'd expect them to remain competitive from a content standpoint.

Makes sense. Similarly, to sort of discussions going on last year, you kind of -- I feel like you, once again, personally were kind of the leading edge of the curve on recovering cost inflation, right, not even just the disruption. As you think about [ raws ] kind of going up, and I think they're kind of easing really in the last 5 or 6 months to some degree, how do those discussions go with the automakers? I mean, you've got good recoveries last year, at least reasonably, relative to history. But now that we're seeing sort of the tide move in the opposite direction, are they coming back to you and sort of knocking your door and say, "Hey, Jerome, we're helpful before. But now things are moving in the other direction, we need some of that back." I mean -- or has all this kind of been -- have we gotten to a point where you've been able to negotiate indexing pass-throughs, whatever you want to say, where it's all become sort of more mechanical and you can not have these very tough discussions constantly and just a sort of a mechanism by which you capture the ups and the downs or they capture the ups and downs like you do together?

Yes. I mean on the -- just on the first comment, I think it's -- certainly, while -- yes, I was involved in the discussion, there is within -- and this is -- I'll make the comment only because it's important to frame up the entire answer to the question. There's a highly trained set of professionals back in Plymouth and Burscheid, and Chongqing and Shanghai, and Changchun, who are these sales professionals that are on the front line every day in the -- like in the pits, negotiating this with the customer. So while Doug and myself and the team get involved, it's really this group of highly trained professionals that are really in the pits every day kind of waging this hand-to-hand combat that are responsible for the outcome. And so they're the ones that have really achieved this, what I think is a very good result. And it's because of that effort that they've really, over the last, what is now 30 months, become highly attuned to the weakness or the opportunity in all of our customer relationships. And so even though some things have subsided, so like ocean freight is a good example, it's come off of $22,000 a container down to $18,000 a container. So that, we've seen some weakness on over-the-road freight in the U.S., we've seen some weakness on -- I mean there are still costs that are significantly elevated. A really good example of this is energy in Europe, where a cost -- euro per megawatt hour and you can take gas or electricity. And the example will still hold. I think people like to look at it and say, "Well, it's not EUR 300 per megawatt hour anymore," it's not. I mean it's not, it's EUR 120 per megawatt hour. And everyone says, "Well, look, it's like it's 1/3 of what it used to be." But if you go back to 2021, it was EUR 50 a megawatt hour. So it's still twice to [ 60 ] 120% more than what it used to be. And so there's still these structural costs that need to be resolved in the cost structure. And so while, yes, some input costs may have come off of their all-time highs, there's still cost recovery to be had there. Steel is another good example. Steel is no longer $2,100 a tonne or EUR 1,700 a tonne. But it's not $700 a tonne anymore either. It's now gone back up to $1,200 a tonne. And so I think while there may have been an amount of breathing room on some input costs, others are still very stubbornly high. And that means that same group of sales professionals that we've asked to charge up that wall for the last 30 months, are continuing to make that push every day. And the customers, while they're not handing over dollar bills to us, we are finding solutions to work through these issues. In some cases, to your point, we are indexed. So on steel, we've been able to get indexes. And we're generally, I'd say, highly indexed. On our TDI and MDI, so our foaming chemicals, we're generally pretty highly indexed there. On things like labor, we're going to have to find creative solutions. On things like energy, we're finding creative solutions. On things like ocean freight, we engaged in a lot of self-help when we reshored products, when we went through and found alternative lanes, and now those things are starting to return down. But our model isn't set up to be able to absorb 20% -- 25% wage inflation in Mexico. The process in Mexico was always you had the peso would offset labor. You'd have 20% wage inflation, and the peso would go from [ 15 to 1 ] to [ 18 to 1 ]. Well, you had 25% wage inflation, but the peso has gone from [ 20 to 1 ] to [ 18 to 1 ]. It's going the other way around. And so you're not built to be able to deal with that. And so that means we've got to find solutions with our customers. And we will. I mean, we've demonstrated over the course of time, 12 months, 18 months, we can do that. It takes time to find the mechanisms, to find the solutions to be able to do that.

And when you're having these discussions, how sophisticated are there the automakers internal models of your cost structure? Meaning, do they understand when you're going through these negotiations, they see labor -- I'm just going to throw some random number out there, is 30% of -- 40% of 30% actually, probably 23%, whatever, in that, call it, 30% of your input cost, it's up 25% at 7.5 points on margin. Are they going to then dip in and say, "Okay, we understand that we're going to help you work through that over the next 18 to 24 months, and nobody is going to write you a check immediately for this stuff or maybe they will."? But like how sophisticated are there models to understand that on a program basis or maybe on a total basis, so they can have these discussions where it's not just a pushing and shoving and they're like, "Hey, you're not getting that. Stop bothering us." But they actually understand what's going on?

Yes. I mean, labor for us is a hole that's, call it, 5% to 6% of our COGS. It varies by product group. So our Trim product line, so the soft covering is obviously more -- that's much more labor-intensive product. And that one, it's -- their cost models are very straightforward and transparent. In fact, it's generally called like sew minutes. So it basically takes so many minutes to sew the Trim cover. So they know what it takes. And those minutes are valued at sew much per labor minute. So it's a very transparent discussion. And so they understand our cost model very transparently. And in almost all cases, the cost models were set up with them. And so it's -- there's not necessarily a debate over the inflation Yes, the inflation or the input costs. There's more of a, "Okay, how do we resolve this?" And I think that's where we're really uniquely positioned, and I go back to some of the examples that were shown earlier of -- because we are the world's largest seating pure-play kind of seating guy, we can bring forward to them solutions that don't always just involve us saying, give me money. It's around, "Let me do this in the value chain. Let me -- if I don't have this product today, let me integrate foam. Or if I don't have the Trim, let me take over the Trim or let me take over the sourcing of this widget or that widget. Let me do this VA/VE." So it's not always just a "Give me price." It's "Let me do other things in the value chain. Let me do other types of activities. Let me do other types of cost savings to get to this solution in order to balance my costs that don't necessarily add cost to your cost structure." And that's where there's a lot of discussion around like the price war in China, as an example of what impact will that have on the Tier 1s margins. And what we've seen so far is it's really reinvigorated our activity around ES3 because we bring something forward there that our competitors, at least so far, haven't been able to around, really value-adding to the seat, driving value engineering into it and immediately getting content either in the seat that the customers will pay for or removing content that they won't and keeping margins neutral. And it's the same thing as we go through these customer negotiations. I mean it's really -- it's not always pricing, it's finding other creative solutions to improve our margin and to hold their top line figures. And that's what I think when you talk about our speed of cost recovery, I think we've really been able to do that well over the past 30 months. So it's not always just been about "Give me money, give me money." It's been finding some of those more creative solutions with our customers.

Got you. And if you think about market share, there are some folks that claim that they're probably taking market share from you. There's some market share you're happy to walk away from, from old contracts that are rolling off. If you think about market share or sort of business wins over time, do you think it's necessary in your economic model to regain or grow market share again over time at some point as you've retrenched because it seems like we're kind of getting to that point where that might be part of the thought process or what you go after? Or is that just not part of the economic model as you're running it?

No. I mean our economic model is, we will bid and win business that makes economic sense for us. And if that means we're at market share that we're at today, if we're at 2 points less, 2 points more, 3 points less 3 points more, I mean that -- like that's an outcome, not an input, it's how we think about it. For us, what's more meaningful is, and this is where -- I mean, other guys, I presume the guys up in Southfield...

Maybe.

Yes. Did you call us the guys in Plymouth by the way? Because Plymouth guys said, the guys in Southfield, so the guys in Plymouth. But when we -- like when we think about it, there's a million ways to calculate market share. For us -- what's important to us is like we talk about value chain and are we winning the value chain. So for us, 85% of our wins last year had more than one component of the value chain in it. So we didn't just win the JIT. We won the JIT plus the Trim or the JIT plus the Trim in the foam and the metal. That -- and that's where we can really add value. That's when we talk about getting to this commercial resolution. The more of that value chain you control, the more easily you can find commercial resolution as well. So for us, when we win a new contract, and a good example of this is when we go from product X to product why and it's a new generation and if we just win that same business, but we pick up the Trim of the foam underneath it, our top line market share number may not change because the revenue doesn't change, but we pick up components that are underneath it. And so actually, we're adding much more value through that activity. And that's what really matters at the end of the day, is through that win is adding that content that's below it through that value chain win. And so that's what we're really, I'd say, more focused on, is what's below that top line revenue? What's the quality of the top line revenue? How much vertical integration do you have below it in the Trim on the foam figures?

Got it. Getting to sort of leverage in the balance sheet, which I'm sure Doug will have a question on, too, but I mean to maybe think about it selfishly from an equity standpoint, you're getting to a point where the balance sheet is in good shape. I mean, how do you think about buybacks and dividends over time? We're getting into that zip code where these things become real potential realities.

Yes. I mean I think on the buyback side, I think we've said we'll be disciplined and opportunistic, based on where the share price is at, and we continue to stand by that. No change from that standpoint. And on the dividend front, I think we've always said we prefer a buyback scenario versus a dividend scenario.

Okay. So the $600 million authorization is still outstanding. You guys have -- I mean, I'll leave it at that, right? But that's going to be opportunistic on a grid and based on timing?

Yes.

Thank you, John. So I think you're planning to generate about $200 million in free cash flow this year. The leverage target, I think, is 1.5% to 2%. Do you need to be that low? Do you feel like there's maybe opportunities in the M&A front that you could take advantage of, especially if we kind of head down a downturn? Are there things out there that are interesting right now?

I think 1.5% to 2% has been our stated target. I don't see us deviating from that. I think, yes, I think we, as a collective kind of industry, have to think about leverage targets differently in this interest rate environment, right? I mean 1.5% to 2% at 3.5% is different than 1.5% to 2% at [ 7.5%, 8% ]. I mean it's a different interest carrying costs. I mean it's just math. And so I think 1.5% to 2% as our balance sheet is we have to refinance, and that comes on to our portfolio at higher than 3.5%, is it comes on at 7%, [ 7.5%, 8% ]. I mean our new notes came on at [ 7.5%, 8% ]. I think we're comfortable at 1.5% to 2%. And I think we just went through that refinancing, we pushed our average term from, call it, an average of 3.5 out to 5 years now. So I think we're still -- I think we're in a good position there. From an M&A standpoint, there's no white spaces in our portfolio. Every contract we bid on, we have all the technology we need. We have -- either in our portfolio, where we can obtain that technology through our JV partners or through our relationships that we have through our supply partners. So there's nothing out there that says we need to go and acquire something, if something attractive were to come across the desk. We, obviously, would look at it. But we have to weigh that versus what is -- to the question that was asked, what does that look like versus the plan that we go forward and execute? And what's the better return for our owners? And so that's -- those are the things that we weigh.

That's perfect. We've got a few minutes left. Anybody has a question? Jim?

I'd be disappointed if Jim didn't ask the question.

I would be, too.

So four of you has got a pretty high leverage they're dealing with, takes some pretty disciplined -- [ you're ] -- seems pretty committed to their financial targets. So of the big 3 on seating, when you're bidding on new programs like over the last 6 months, do you like what you're saying in terms of the big 3 holding on discipline and nobody is getting a little carried away? And then my concern would be in China, your best margin region and where you actually now have local players kind of by design, who are now kind of out there floating around, but they're kind of tied into certain OEMs. So maybe that's not as big a risk. Just would love your thoughts on that dynamic of your segments pricing power as you negotiate with the OEMs, seems to me to be pretty good, but you tell me.

Yes. So I don't want to do [ Magnanni ] discredit, so I'd roll them in. I'd say the big 4 -- I don't want them to say any nasty [ grams ] and say, I sold them out. So I think among the big 4, I think we're pretty disciplined from that standpoint. I mean we all generally behave ourselves. It's a disciplined market. I think from a China perspective, there are local players. But I think what differentiates us in China, I just go back to -- because we are the world's largest pure-play seating individual, when it comes to bringing new technology into that region -- and that's what really that region thrives on, is technology. And that's when you look at who's gaining market share there, what's the accelerator growth there, it's technology in the vehicle. That's what differentiates. And when they need someone to bring technology forward, they don't go to the local players. For a [ Wuling ] van, they may. But for the vehicles that command margin and where we can extract margin, they go to someone who can bring that technology, who can bring that margin, who can bring a swivel seat, a full recline, a deep reclined seat, who can really bring forward technology offerings. They come to Adient. And that's what we see. And that's why if you look at our market share since the YF spin-out, we've been able to expand. We've held our own. We're at an incumbent win rate there in the high, high 90s, plus conquest business. So we're actually gaining market share there. And it's been a very, very successful region for us, and we've held their own from a margin profile standpoint, really because of that technology offering we can bring. And what's great about that region, we had this discussion in an earlier breakout session, is the pace at which they churn technology as well. So it's unlike in some of the other regions we operate, you sometimes get stuck with a bad contract or you get stuck with a poor decision, whereas there, you've got a 2- or 3-year development, not window, but I'm talking life cycle. And so your ability to bring new technology to market and change in VA/VE and add content is so rapid there. And so people talk about this risk associated with price wars. And I do understand that, and I'm not discrediting that. But also, if there's a region where you're going to drive content and drive technology, where you can bring margin, it's going to be in China just because that's where the consumer -- I mean, they create it, and that's what differentiates it. And so it's -- I mean, I was just over there 2 weeks ago, and it was great. It's like invigorating. And you sit in the products there, and I mean you can put them head-to-head with anything I've said in anywhere in the world. I mean they really are world class from that standpoint. So it was -- I mean it was really good. And I mean it's a really good region for us. And our ability to differentiate there is truly outstanding.

A lot of that is because of your product.

Yes.

Right. I mean that's -- I mean, that's what you're actually sitting in, I mean, it's [indiscernible] to buy.

Yes.

On that note, we're out of time. So Jerome, thank you so much for joining us. We really, really appreciate it. Thank you.

Thank you.

Thanks.