Allison Transmission Holdings, Inc. (ALSN) Earnings Call Transcript & Summary

Great. Greetings, everyone. Thanks for joining this next virtual session at the BoA Global Industrials Conference. I'm Ross Gilardi. I'm the senior machinery analyst based in the U.S. at BoA. We're thrilled to welcome once again Allison Transmission to our conference who's been a very loyal participant over the last, I think, 9 or 10 years that I've been -- we've been covering the company. Always pleased to have Allison at the event. We've got Chairman and CEO, Dave Graziosi; and CFO, Fred Bohley with us. Gentlemen, thanks so much for being here. For everyone on the line, I think we're just going to go straight into Q&A. If anybody has any questions, feel free to just shoot them over, and I will definitely weave them into the conversation. But thanks, again, gentlemen.

Dave, I kind of wanted to just start off just on the current environment, and this is more of really an on-highway question, we'll definitely touch on your off-highway business again. But how do we sort of conceptualize what roughly a $100 barrel oil means for the industry if this was to persist for an extended period of time? And did customers sort of shift there more like medium-term objectives to just pushing their suppliers like yourself to focus more on fuel economy and driving more fuel economy out of their sort of most up-to-date internal combustion traditional models? Or does this accelerate the entire transition to zero-emission alternative propulsion? Kind of an open-ended question. I would love to get your thoughts there to kick it off.

Sure. Well, first of all, again, on behalf of Allison Transmission, thank you again for hosting the event, Ross. Your organization just had almost, I think, a decade for us, and we always look forward to the conference and participating and engaging with investors to your question. Certainly, with the oil prices or energy prices in general beyond even energy reaching the levels that they are, we're certainly seeing increased interest from our on-highway end users in terms of fuel efficiency on the conventional components. And as you well know, for a number of years, we pushed improvements there through design changes to our transmissions as well as our advanced controls. We just recently came out with our next-generation controls, which further expands our ability to deliver more fuel-efficient solutions. So certainly, with energy prices being where they are, it's created more interest in fuel efficiency. There's a number of different options we can provide. Some of those are actually changes to the mechanics of the transmissions, others are simply calibration of software changes. So that's evident. I would also note across a number of our different end markets, it's not only on-highway, we're seeing both North America as well as outside North America interest in fuel efficiency as well as in our Wheeled Defense business. So that level of in-cost inflation, if you will, is impacting all of those markets. So in terms of pushing for alternate propulsion solutions or different options on energy, that's something we've been working on for a number of years. We continue to see strong interest in alternative energy. Specific to electrification, the status of the technology and its readiness for commercialization is largely unchanged. We continue to work across a number of different OEMs and end-use duty cycles, but the fact remains it has a ways to go for the industry. And I would say the challenges you're very familiar with in terms of infrastructure and otherwise, that's not going to be a light switch. So to the extent there is, could be some increased interest. The fact is I think we're still on a path over an extended number of years to be able to -- the industry to field what ultimately end users are looking for. But having said all of that, it's really an and proposition. It's pushing fuel efficiency, reduced emissions on the conventional products, but also continuing to drive forward with the path towards zero-emissions for those customers or end users that require that.

Can you talk a little bit more about how you're approaching internal investment? How do you decide how much to allocate? And what are you allocating to sort of conventional versus alternatives this year? And how do you think that will sort of evolve over the next 3 to 5 years?

We've been -- as you know, follow us closely, we've invested heavily over the last probably 3 to 5 years now in terms of conventional improvements, new products as well as electrification. So if you look at our level of investment in terms of R&D spending, it's roughly balanced now between conventional and electrification. I would say we are reaching at some point, maturity in terms of some of the new designs we've been working on. I would expect some level of shift to some of that conventional spending to continue to be directed towards alternate propulsion. But I would say, as we sit today, it's a relatively balanced mix for good reason. It's also worth noting some of the announcements Allison has made over the last 6 months in terms of the investments that have been made to start realizing growth, incremental growth for our business, whether it be conventional or electrification is significant. Whether it's our 3414 Regional Haul Series, our new frac -- hydraulic frac product, the work that we're doing in Tracked Defense, a new 9 speed for the medium-duty market. All of that is really coming to level of closure here, we're actually fielding products and actually extensive testing. So it's exciting for us. I think it's more important and relevant that we're investing for a reason, right, which is to deliver results. So it's one thing to invest. It's another thing to be committed to growing our business. And I think, again, over the last 6 months, those announcements really reinforce the reason why we've been investing. And I think that, combined with a very disciplined approach to our cap allocation, continues to, I think, separate Allison from others.

Maybe we just talk a little bit, the top 2 or 3 of these investments that you would single out that you're most excited about for the next few years?

Really on the growth -- incremental growth, certainly the hydraulic frac product, FracTran, has started to be fielded with customers actually this quarter. So that's an exciting development for us because this product is specifically designed for hydraulic fracturing. There's many high-quality products, including ours and a number of other competitors in the space, but they're largely based on mobile applications. The FracTran is specific designed for hydraulic frac and has a durability cycle that is aligned with extended amounts of run time for hydraulic rigs to then match the other components on the rigs. So when you talk about overhaul schedules and such really maximizing the efficiency and what those rigs are delivering to end users in terms of economics. So that's very exciting for us. We're also having good success in wide body mining dump in China, which is essentially an application that we created off of our well-known 4000 Series On-Highway product that's been modified for that particular duty cycle. We've seen some really strong success there. I think the team has worked extremely well with end users and really refining that product for that particular duty cycle, but it's a significant market size and not only taking the experience now from China, but looking at export opportunities as well. And then I mentioned the 3414 RHS, we would size that opportunity, North America alone probably in the $100 million range. So if you look at some of the other things that we have been working on in terms of Defense initiatives with established well-known technology is actually looking at some new designs there. That's another market that has some significant growth potential. But just a few that I mentioned are well over $0.25 billion in revenue in terms of market opportunity there.

Great. Maybe you could talk a little bit more about your experience with Hino. You're having some success there on the alternative propulsion side. Maybe if you could just flesh out a little bit more the architecture with your design there? And do you feel like that has given you sort of some additional momentum to eventually lead to some wins with some of the majors on the...

Hino has been a great partner of Allison for many years. We've -- they've done great work. They have high-quality products. Really focused on the end user experience, which is well aligned with our brand and how think about ultimately meeting or exceeding expectations and ultimately delivering an outstanding experience. The Hino team over the years has worked very closely with Allison on conventional that's now expanded to electrification. There -- we view their approach is consistent with our designs in terms of what we'd like to do, what we think the market will be rewarded for -- be rewarding in terms of differentiated solutions. I think that's important for us. Our approach continues to be a very focused one with the market rather than try to work with everybody. It's focusing on engagements that will prove certain duty cycles and I think ultimately be a very engaging process for us. These technologies, as you well know, in terms of fielding them require a fair bit of support, both from the OEM perspective as well as Allison. We want to make sure that experience with end users is outstanding. We don't look at these as -- these aren't tests per se. They're really [ improving ] the technology, and that's important because that experience is not one you can displace if it's an unfavorable one. So we're focused on high-quality experiences with a handful of different duty cycles and Hino fits that profile well. Their programs are progressing. I think they overall continue to think about the market in terms of the segmentation that's going to be required as we've talked about. There isn't a one size fits all, which is an important point. Having said that, I think the market for many reasons is really focused on e-axles as a broader solution technology, then it's a question of the different variants that will be required to serve the market.

Cummins is buying Meritor. As you know, I mean, Meritor is an important competitor of yours on the e-axle side and just wondering is this new soon to be new combined company become increasingly harder to compete with or how do you think about that going forward?

We don't -- I would say, both very high-quality companies, and we certainly respect what they do. I would also note we compete with both. So fundamentally, we don't see that combination as changing anything for Allison. We think choices are good for customers. We think it will drive technology in a way that's beneficial for everyone. So we look forward to meeting them in the marketplace. But as I said, as we see it today, it's not really changing anything from our perspective in terms of fundamentals. I'd also note there's plenty of capacity out there to do what needs to be done by all parties. So we don't see this as not necessarily surprising. I would certainly acknowledge that it's heartening to us that others are recognizing that the e-axle solution decision that we made effectively 3 years ago now is coming to pass in terms of what that means, right? So I think for us, it's a validation of what Allison chose to do back in 2019 and what we've continued to work on. So from that perspective, I think it's rewarding. But again, we don't see that as fundamentally changing anything Allison is doing.

To become -- gradually become a bigger player in electrified powertrains, and you're focused on the e-axle, but across the whole system. Do you feel like you might need a partner at some point? Or how do you even just broadly think about going it alone versus finding a partner?

Yes. I would say now we have partners, right? I mean we've talked for several years now about the idea that we viewed electrification as being different than conventional and requiring collaboration. So we do have partners today, whether those are OEMs, suppliers, frankly, other technology providers. We do have partners. I think to -- I think pointing your question in terms of are there other potential combinations or acquisitions or thinking about different avenues to combine and accelerate the process, we're always looking and thinking about that. So I think it's something that's front of mind for us, and I'm sure for many others. We do see there's room for further consolidation, frankly, on both the conventional side as well as electrification. There are many choices out there, but the number of choices over time, as you well know, is not going to be fully sustainable. So there will be -- there has to be some level of rationalization going forward.

From an M&A standpoint, I mean some of these newer entrants to the truck market or -- that have gone public or certainly not trading at multiples that they were trading at 6 to 12 months ago or however time frame you want to make the comparison. Do you think that opens up a window for Allison to be more acquisitive with particularly on any of these newer entrants to the kind of alternative space?

Well, look, I think gravity has a way of taking hold at some point. I think this is a challenging space. We've always talked about. I think we initially with some of the capital that was coming in with various players, this is a challenging space. If it was that easy, others would be here. And the fact is they're not. The Allison business and others have been built over decades in terms of experience. I don't think just because you are able to electrify something does not mean it's going to deliver the result. As we said from the beginning, we expect, and frankly, demand that the electrified experience is going to be at or better than conventional. The idea that you can essentially electrify something without understanding how the vehicle is going to be used, the duty cycle of it. That's, I think, a bit naive. To your point, I think there certainly could be some opportunities for Allison in terms of the space, depending on what happens with some of the other players. And as I said earlier, we're continuing to stay very close to the space and developments at multiple levels of our industry as well as, frankly, a number of other options. We recently announced investment with Autotech as we continue to expand our reach, right, our network of what's happening out there from a technology perspective, and typically, that's both technology and capital. We feel we're very well positioned to take advantage of those opportunities as your question implies. And again, we're patient, but we have a level of discipline to us that really gets back to what are we needing. This is an all proposition, it's conventional and electrification. It's not an or proposition.

What are you doing on alternative propulsion in any off-highway markets? And also, if you could touch on China on- or off-highway.

Sure. The -- much of the experience that we have, as you know, if you look at our businesses, that's been built fortunately over the years with our on -- off-highway business, some of those products are on-highway based, right? So we've applied, as I mentioned, for instance, the wide body mining dump for China, that 4000 Series started as an on-highway product. The team has done a tremendous job modifying it and improving it over the years, both for durability as well as a number of other attributes. It can now be applied off-highway. So we've taken that approach with electrification, which is learning, developing fundamentally e-axle technology as well as other technologies and thinking about how that could be applied to the off-highway space. That being said, off-highway, as you know, is smaller volumes, much different duty cycles, different growth. When you look at the size of the vehicles, their applications, it's a much different infrastructure exercise than for on-highway. So what -- the short answer to your question is we're applying what we're learning through the development of the e-axle technology and other alternate propulsion solutions in tech to the off-highway space. We just see off-highway being a bit further out in terms of where it can be applied successfully. There's a lot more learning and development that needs to take place relative to off-highway relative to electrification. To your point on China, it's interesting watching that market in terms of demand overall for commodities and what's happened, it's heavy demand. We've seen that again in our wide body mining dump. Energy continues to be strong there. But the other thing to remember is China is very focused on export, right? So when they're exporting to certain markets, those markets are demanding a very high level of performance from vehicles and components. So that plays well for us in terms of our ability to deliver solutions, and we continue to push that agenda very aggressively.

Demand in China? Like what are you seeing right now from more of a cyclical perspective?

In terms of off-highway, pretty steady demand there. I would say between -- we have both energy as well as mining, hauling and construction. It's pretty steady there, again, with the focus on exports, you're seeing that market continue to move. You have that lull early on because of COVID. As you know, with commodity demand is high, there's a high level of demand right now. Having said that, as we've talked about on our quarterly calls, we're all dealing with the same things, right? The supply chain issues are still there. Labor issues are there, logistics challenges. The point in my comments is not to complain about everything. It's just to tell you the realities of operating right now. In many cases, the industries, the end markets that we're exposed to are more supply constrained than demand constrained. We talked about that on our fourth quarter call.

Of course, I got to ask you about Russia and the Ukraine and just direct and indirect impacts for Allison, as you can tell so far?

Sure. The Russia is less than 1% of our sales in 2021. So it's a small portion of our portfolio. We do have a small team there that we're continuing to obviously to support. We don't have any manufacturing footprint or otherwise. So we've gone to a full stop as we've talked about and continue to support our team. But right now, there's -- it's a full stop situation with Russia.

Love to get your perspective just on the North American truck market, Dave? And is truck production starting to recover at all? Or is this kind of semiconductor shortage, just making things very difficult for -- I mean, I know it's been things difficult. But like in terms of what you have what you might have been expecting just 6 weeks ago for the year to play out versus now?

Well, unfortunately, every day is an adventure for all of us in the industry. I would say it's better than it's been if I compare to where we were a year ago. Fortunately, relative to semiconductors, it's improved. That being said, we're frankly doing things as an organization. I would have never envisioned several years ago, the amount of work that we're having and our team, I think, has done a tremendous job digging in and resolving problems at multiple tiers of our suppliers. And the suppliers are doing the best they can. I'm not being critical of anybody. It's just - it's extraordinarily challenging. I'm not sure people outside the industry appreciate the amount of effort that all of the parties are trying to put forward to make sure that vehicles are available to deliver what everybody needs to -- for their everyday requirements, and it continues to be pretty challenged. And as I said, it's improved a bit year-over-year. But overall, it's a very strong demand market. I saw your comments, your note, I think the other day, I wouldn't disagree with anything you're saying there in terms of what you're seeing and what you're hearing from others. It's a very strong demand market. That being -- all that being said, there are still issues out there. And they're very intermittent. It's not necessarily predictable. But I will tell you the lack of buffer in the industry continues to frustrate all of the players because there is no buffer, right? So whereas for pre-COVID if there was an issue, you could sustain, you could run probably for a few weeks and not have a problem. Literally now, it's almost instantaneous. And it's not just ourselves. You need all the components to make the vehicle, obviously, it impacts OEM. So then you have very short notice disruptions, and that continues to be a challenge throughout the industry. In North America, they made tremendous progress late last year, shipping getting finishing red tagged vehicles, right? So that process has, I think, gone well. Despite the numbers, as you well know, for fourth quarter as we sit today, I think our sense is the OEMs are in a much better position relative to red tagged but they're still dealing with issues. Order books are strong as I understand it well into Q3, Q4 at this point. So it's going to be one of those years that I think largely you can sit back and say there's a very high level of demand. So the certainty of demand is pretty solid. The issues will be on not only supply base, but the underlying fundamentals around labor availability, logistics. I'm sure you've heard, I think you had it in one of your notes, the issue of just picking vehicles up from plants is a problem because there isn't transportation drivers available to take the vehicles away from the plants. I've never been aware of that and I think the history of the industry, frankly, right? So you're -- again, people are doing things that are extremely unusual. A lot of work is going into supporting the OEMs in terms of all their processes and making sure quality is there out of step at a process things like parking vehicles when they're brought back into production need to be completed and tested. And we're supporting all of those efforts to make sure the end users are getting the experience that, frankly, they're paying for and that they should expect from all of us. But it's going to be -- it's a very strong market. We talked about in our guide, the expectation in North America On-Highway up about 18% year-over-year. As we -- as our midpoint, that's obviously a strong year. Underlying that, we've talked about 6, 7 and school bus as well, Class 8 Straight, the share numbers we had. Very pleased with the team's work in terms of Class 8 Straight. The performance of our product relative to some other solutions that are out there, and we continue to see very strong demand for Allison by name from end users, and our team has done, I think, a very solid job marketing our advantages. And overall, it's -- we expect it's going to be a strong market, and I would say some level of ramp into Q2, Q3. All the OEMs, as I understand it, have announced plans for build rate increases. But again, they need all the components. So we're there to support them, but very much continues to be more of a supply constraint issue than demand right now.

But the build rate expectations for this year and the kind of the trajectory of recovery and so forth as it was presented by a lot of your customers through last earnings season, does it still feel realistic to you?

I think it's realistic based on the assumptions that everybody is making, right? I think your ability to act or deliver those assumptions is really going to be the challenge, right? I don't question in any of the OEMs desire to do what they're saying they want to do. It's really a question of what the art of the possible is? And there's only so many things we can control as an industry. I think, frankly, you asked about Russia, some of the issues coming out of the -- I didn't know that until Russia happened about potential impacts on chip supply and such, right? That's new news for many and then you sit and say, well, what are your assumptions? So again, I think the industry is fully capable of delivering on what they say. The question is, are they going to have all the components to do that? Labor, as I understand it, for most, at least at the OEM levels is not really an issue. It's on their supply side more than anything else.

I just want to go back to market share, Dave, you alluded to the numbers. I mean, certainly, Allison's market share despite all the kind of concerns out there has held up extremely well in pretty much all cases, I mean I think you slipped a tiny bit in Class 8 Straight, but I think went up very flat up everywhere else in the North America On-Highway side. What are you baking in for '22 on market share? And I mean do you foresee sometime over the next 2 to 3 years more of these EV models are hitting the market and getting commercialized that you'll see some slippage in those numbers? Or should we -- are you just kind of for everything that might fall off, do you just have enough new products or what have you increased penetration that they'll remain stable for the next few years?

We don't -- in terms of the assumptions for midpoint guide for '22, we really haven't assumed much of a difference per se. From 2021, there's some small adjustments here or there, but I would say nothing that significant. I would offer, though, when you look at the overall trend for our products, over the last 5 to 10 years, certainly not something you could be confused about. We've gained significant share. We're 10 years into the IPO of Allison Transmission. If you think about where we were at the time of the IPO, we received many questions similar to the one that you just asked, except it didn't involve EV. And it was around potential competition, other technologies. And here, we sit having grown share, I think, across the board. So we feel very good about that, but that's a process that started decades ago. So I don't believe there's any real differences that we've assumed for '22. We do have some gains here or there. And I think, as I mentioned earlier, the team has done a very good job driving our value prop. And it really does get back to the key there is if we're not differentiated on a TCO basis to deliver what end users need to make that type of investment, then we won't be successful. I think we've proven that we have a very compelling value proposition. EV as we see it, we talked about a bit on our Technology Day in last October. We see the next few years in the hundreds of units in terms of EV. You have to get, I think, to the other side of the decade as you start maybe seeing in the thousands. But I think to your question, do we see that having a significant impact on our share over the near to medium term? The answer is no. We don't see that necessarily. And that's before we're actually producing our e-axles and selling those. So we feel very good about where we are from a conventional portfolio perspective. I'd also offer outside of North America, it's still very low penetration for fully automatics. And we've made some good headway there with the team's focus and we're not trying to do everything there either, but I think what you will see from us and you saw the result of that last year, continuing to gain, gain share out there in terms of outside North America with the emerging markets. So we're proud of that effort. So it's not just about North America. It's about growing both the conventional share as well as delivering these EV solutions.

All right, Fred, it's your turn. I got a bunch of Fred questions now. I wanted to talk about just your cost structure and just to kind of go through your P&L and obviously the cash flow outlook and so forth. But look, Allison, it remains an extremely profitable company. You had, I think, a 52% gross margin in 2018 and then you're still holding in the high 40s. You've had some -- you got the die-casting business, and there have been some modest changes in the portfolio. But is that 52% in-play again realistically at whenever the peak is of the next cycle? Or can you hold on like on as price cost starts to moderate, hopefully? I'd love to get your thoughts there, too. Do you hold on to kind of this high 40% level for the next few years?

Sure, Ross. I mean, I think the short answer is 52% in play? Yes. I think cost price is important to understand. I mean, last year, we were cost price negative for really the first time significant, obviously, elevation in commodities. And we do have pass-through methodologies in place with the vast majority of our North American customers, we passed through roughly 75% of aluminum and steel. Looking across our entire book of business, we passed through about 60% of the commodities. We typically accept them real time coming in from our supply chain so we can negotiate on the value add. There's a lag in those pass-throughs as we've talked about a 6- to 12-month lag. So really effective 1/1 of this year, the vast majority of our pass-throughs kicked in place. It generates about 125 basis points of price for 2022. Laying on top of that commercial negotiations, we expect price to be in the sort of 275 basis point range. Part of the challenge is, as you know, commodities continue to fluctuate and elevate. So to the extent that you're taking cost increases this year, you're going to have that lag again. We -- as we have things build up in the guide, we are slightly price cost favorable. But when you really drop through, call it, $70 million in price with very little margin on it because you're covering the cost, it has an impact on EBITDA margins. That's hitting us by about 100 basis points this year. If you look at our cost of goods sold disclosures and the sensitivities we provide relative to commodities, if you look at commodities returning sort of to 2020 level, obviously, the first thing that would happen is we benefit from those cost downs immediate and not have to do the pass-throughs for 6 to 12 months. But when we do pass-through -- passing through roughly $0.60 on a dollar, we expect that to lift margins 225 to 250 basis points. Margins are always interesting from our standpoint. I mean, we really focus on EBITDA and really as a proxy for cash. So we're certainly focused on generating more cash as a company. So a lot of people focused over on our margins over the years, were they sustainable? Clearly, we've grown them significantly over the last decade. But again, if there's business on a risk-adjusted basis, it makes sense to pursue that could be somewhat slightly dilutive to our margins. We're certainly open to that. The nice situation we sit in, we're growing outside North America. We made the capital investments in our 2 overseas manufacturing facilities in India and Hungary. So we, right now, running a one-shift operation in both facilities, so we can easily add on a second shift. So you're really looking at those -- the growth outside North America while you may need to do some element of penetration pricing initially to gain share, it's all coming off an incremental cost base. So -- and we feel definitely well positioned. I mean we're out this year right now. I mean we're actively looking for other opportunities to grab price this year. When you think about -- you just think about everything that our transmission does in the commercial vehicle, talk to Dave about fuel. When the price of gas goes up, diesel goes up, the value of our transmission is worth more because we're saving fuel. When the total cost of the vehicle goes up, which has certainly happened. And as the OEMs pass on some pretty significant price increases, our vehicle -- our transmission makes that vehicle significantly more productive. So the value of our product goes up. So I think there will continue to be opportunities for us to gather price via the value proposition that we deliver while at the same time continuing to grow share.

That's. And we just have a couple more minutes. So I'll -- we will close on this one, kind of a mind teaser on Allison. But look, I mean, your share count has halved pretty much. And you continue to buy, you've been the aggressive buyers of your own stock and your market cap I think is around $4 billion. The valuation multiple is not what it used to be, despite all the positive things you've done. At the current pace of free cash generation, Allison could be private in 8 to 10 years without borrowing a $0.10. I'm not really making -- stretching my neck up there. That's just the math. Does Allison -- given the -- like the valuation and just everything that's kind of going on, do you still see the benefits of remaining a public company? Or are we kind of like witnessing a slow-motion privatization, which is kind of like if you could describe like what's happened in the kind of the last 5 to 10 years ago with all the stock that you bought back is kind of already been unfolding. But how do we think about -- how do you think about that?

So I think obviously, it's -- as you know, I mentioned the IPO 10 years ago, and I think we were very clear at the time of the IPO, we're going to be very disciplined about capital allocation and returning cash to our shareholders, Ross. And I think you've seen us do just that. Fundamentally, our view hasn't changed. We view the -- our business is undervalued at this stage. And to your point, in terms of the multiple and what's happened, I think the big story there is thoughts around the EV which is certainly understandable and rational. But I get back to the fundamental performance of our business, the attributes of what it is, which is highly profitable, generates cash and certainly with our focus on it from an investor standpoint, allocating capital accordingly. We certainly view ourselves as having the flexibility to do a number of different things. And I think for us going forward, we really don't focus on the ownership of the business. Frankly, we focus on running our business. We'll let the capital markets figure out the balance of that in terms of where their interests lie, what they want to be invested in for those particular reasons. But to your point, we're not here to solve that particular mind bender. We have enough to do running business on a day-to-day basis. And frankly, the last 2 years have been even more than that. So look, we all look forward to less eventful days. But in the meantime, we're going to continue to drive our value proposition here and do what we set out to do, which is to create the performance that allows us to look at a number of different opportunities and give credit again to our team, our customers, the OEMs to deliver on what's been a very challenging few years here. And I think for us, we're well positioned as I opened, I think, the session with doing a lot with our business, frankly, and with the team that we have.

All right. Perfect. Well, thank you for those kind of comments to wrap it up. I think that's a good place to kind of move on to the next session. But Dave and Fred, thank you so much again for being such great supporters of the conference. It's always a pleasure to host you. We'll get to do it in-person one of these days, one of these years. Again, hopefully, London, but I really enjoyed the discussion and thanks, everybody, for participating. We'll see you at the next one.

Thank you, Ross. Thank you. Take care.

Thank you.

Thank you.

Bye-bye.