Aptiv PLC (APTV) Earnings Call Transcript & Summary

Okay, good afternoon, everybody. Delighted to continue on with the 7th Annual Morgan Stanley Auto 2.0 conference focused on batteries and EVs, electrification. Representing Aptiv, we have Glen De Vos, Senior Vice President and Chief Technology Officer, and he's joined by Elena Rosman, Vice President of Investor Relations. Before we get into this, I just want to repeat again, this webcast is for Morgan Stanley clients and investors -- institutional investors only. No members of the press, please. Please drop and reach out or reach out to your Morgan Stanley salesperson if you're not a Morgan Stanley institutional client. Also in terms of disclosures, please go to www.morganstanley.com/researchdisclosures to look at these. And then for Q&A session, we already have well over 100 on the audience on the webcast. Don't wait, get your questions in. Your questions are not only more interesting and probing than my own, but also it makes my life easier. So do me a favor, please get in, let's make it interactive and you really want to do it for our next presenter, Glen De Vos, who's just been -- I mean, Glen, I tell people about the times when we used to do things like dinners and stuff in Manhattan, and it was probably 8 or -- 8 years ago or so, certainly 7 or 8 years ago, when everyone was laughing at Tesla and saying, come on, Elon's a little bit out there, this isn't going to work out at such a bubble. And you were like, “Okay, all right. Well, we think they've got it -- they're on to something,” and you were -- you put your -- you invested where your mouth was there, and you made -- you took the risk, and we'll talk about the Tesla business, now you got the 60%, 65% wallet share, but -- I describe you guys as the Google of autonomous and electric. I mean, try using the Internet without Google, try starting a business without having a Google search engine optimization strategy, just good luck. But you can't be -- avoid it. And I'm getting hit up by an increasing amount of nontraditional auto clients, meaning software, tech hardware clients that are doing research on a range of EV companies. They're seeing Aptiv come up over and over and they're like, “Whoa, whoa, whoa, we need to talk about this,” right? So I fully expect that my coverage of Aptiv one day will be ripped out of my cold, dead hands and covered by Morgan Stanley tech or software or Internet analysts, but until that day, I'm just happy to be here.

So, with Glen, I know you had some announcements earlier today on Smart Vehicle Architecture, satellite architecture, et cetera, timed with CES. So why don't you kick it off with emphasizing the key message there and any other parts of the vision you want to make available to the now 130 people on the webcast. Thanks.

Sure. Well, first of all, Adam, great to be here, and it's a different venue, but always enjoyable and appreciate you are hosting this. This week, we're just -- we really -- as we kind of reflect on the year that was, and since last CES, we talked about Smart Vehicle Architecture last year, and this year has really been continuing with the proof points along that path. And so what we announced today were 2 really important events for us. One was our next-generation ADAS platform. So the further consolidation and the up integration of compute into the ADAS domain. And then also with that zonal architecture, which we think is one of the really important developments for vehicle architecture. And all of this relates to our ability to provide more scalable, more cost-effective solutions for our customers. If you think about what's happened and kind of what you alluded to earlier, if you think about what's happening in our industry, tremendous change, a lot of technology coming into the car. What we're focused on is how do we -- how our customers, the OEMs, manage all that complexity, deliver that to their customers at lower total cost, and over the life of the vehicle. So the announcements this week, we're really focused in on that. And looking forward to the discussions today.

Great. So let's kind of hop into this here. I mean, it seems like every day there is another, either a SPAC or start-up that's got access to an incredible amount of capital, whether they're pre-revenue or post-revenue, but they're in position to really accelerate these things. We're seeing announcements from legacy car companies as well. Tesla's now a trillion-dollar market cap thereabouts, and then just if that wasn't enough, Apple's making cars, Baidu. Just -- when you filter through it, kind of what are -- what would you say, from last year's CES conference in Vegas, where it seems like quite a long time ago, I think for a lot us to now, and I'm sure there's more than one thing, but just the order of significance in your mind of what's really changed in terms of tech, regulatory or capital formation that's kind of accelerated some of these things that are driving 30%, 40% plus growth in parts of your business?

Yes. I think there's a couple of things. One, when you think about the SPACs and you think about those capital infusions, I think what it reflects is a real level of interest within the automotive space on electrification. So really strong acceleration of electrification in general. And then more focused around the rollout of autonomy, how do we see ADAS and automated driving really being implemented. And so it's exciting to see capital coming in because what that does is it kind of validates the thesis, yes, we're in the right place, we’re playing in the right areas, but it also helps -- those investments typically help drive technology advancements that ultimately improve performance and lower overall system cost, whether it's silicon carbide or battery technology or whatever. And so it's going to -- we think it will reinforce the move towards electrification. And so for us, as -- when we think about it from an Aptiv perspective, what that means we have to is, we just have to be really smart about where do we place our bets effectively in terms of which customers do we engage with, how do we engage, which technologies do we think, we have the right tone and the right to bring forward, and it also highlights the need for really us helping our customers manage all of those technologies as they come on to the vehicle. And that's ultimately what our Smart Vehicle Architecture approach is all about, simplifying and taking complexity out of the car, making it much more manageable for the OEM customers.

I think you do a great job explaining how you do that plan, how you simplify, lower cost, lower mass, while improving capability and future proofing and protecting the incumbency while you do it. So I kind of want to -- I mean if I ask this, lots of ways I could ask the question, but if I -- you're moving power around the vehicle and you're moving data around the vehicle, as you kind of increase voltage and enable electrification, and then increase and enable autonomy. Tell me how those 2 things, why they're better together, and then give us some other proof points as to -- or examples of how that actually does lower cost and improve capability for say, I'm guessing -- at least today's perspective, the largest portion of your business are legacy automakers. I know that's changing, but if we could start there?

Yes. Well, so -- let me first talk about that kind of linkage between electrification, architecture, automation and all of that. And there's --as we talked before, there's a strong linkage between electrified platforms and automation, parallels of automation. There's 2 reasons for it. One is, when you take out the internal combustion engine and that whole kind of the legacy architecture that is attached to that, that gives the OEMs kind of a clean sheet to build up on. And so they can revisit architecture, really from ground up. And that's been a real catalyst for our engagements with the OEMs as they've expanded their electrified pleats or their portfolio. We're really able to work with them on holistic architecture solutions. The second reason is, and this is kind of the Tesla effect that we talked about earlier. Is Tesla set the bar for -- if you're going to come out with an electrified platform, what does it need to be? It has to have a lot of -- it has to have performance, the -- that safety Level 2, Level 2+ capabilities. It really sets kind of that bar, which is a lot of content. And again, that plays to our strengths of really our ADAS, satellite architecture in those domains. So as you think about that linkage between electrification and autonomy, that -- those kind of go hand in hand together along with new architecture. It's now -- for us, what's interesting is, as OEMs look at their journey to advanced architectures, every OEM will take a different path, and -- because they have different legacies, they have different platforms that they have to manage. They have a lot to deal with. So what our goal is, to help these -- the legacy or the traditional OEMs, is to make sure that we can more or less tailor our offerings to their path, how they think about architecture. And in some cases, it's going full zonal now and really accelerating on zonal architectures, in other cases, it's staying with domain centralization, but all of them are moving very clearly towards what we call Smart Vehicle Architecture, where you've extracted software from the underlying hardware, where you've separated IO from compute, and now you're able to really consolidate compute. And so for us, it's how do we facilitate that journey for them. And that's what's been great about 2020. 2020 was all about validating the savings and really the value prop of doing that.

I'm going to go just outside of Aptiv, just for a moment, because I really want your opinion, because I think you're -- in your role, you see so many things, and I think their comment on this could be valuable, just holistically, for what we're trying to accomplish today with a range of presentations. And without calling out a single manufacturer, I'm sure you see everything. You see OEMs that until recently thought hybrids were just awesome and internal combustion would have a gradual phaseout. Others were like, screw that, we're going all in, and then you kind of got stuff in between. Now of course, right now, it's fashionable to say, clean sheet and we're all in and all that stuff, but you see stuff we don't see, Glen, okay? so without calling anyone out specifically, are you a bit concerned that some manufacturers aren't -- that the continuation of making internal combustion cars, in the tens of millions, for maybe a decade or 2 to come, at some level, inhibits the ability to really make a clean break culturally, or from a capital or financial perspective? I didn't know, like meaning, are you sympathetic to this whole people starting -- even if it's a PowerPoint deck and $1 billion in the bank, that, that might actually be a less disadvantaged place than a calcified, solidified -- I'm sorry if I'm leading the witness, but I just wanted your kind of input on that.

Yes, the -- I think you can refer to the innovator's dilemma. Their legacy and momentum is something that you have to be concerned about. Because as new entrants come in, as disruptors come in, that is -- and when you think about the announcements that have been made recently, you're seeing more and more of that. Now what I would tell you is, building cars and setting car, the OEM, when you think about that market, it takes time to develop that. And so incumbents do have an advantage with an established footprint, with an established supply chains and many other things. But at the end of the day, I think you have to -- there's a lot being asked of OEMs, investing in electrification, investing in autonomy, investing in connectivity and investing in the technology shifting on architecture in the vehicle. And so for us what's important is, what we try to do is, help OEMs to understand how can they do that efficiently. And that's the whole point behind our push towards SVA is. We think we have a unique capability to assist OEMs in making that transition, and doing it in a very efficient and a methodical way, in a timely fashion. But it's definitely -- you have to commit to those directions. You have to be moving because there are disruptors coming in, and just like we saw with Tesla, I think for many years, people were hoping they would just go away. And at the end of the day, they have not, and in fact, their architecture, as we've been saying for many, many years, is really was a precursor to where the industry was going.

All right. Let's talk about [ ADAS ]. Glen, you have 60% to 65% wallet share with Tesla on high voltage, with the Model 3 and the Model Y. How did you get to that position and does that position help you win new business, by being so close, win new business with non-Tesla players whether they are start-ups or legacy?

Hey, this is Elena. Is it all right if I maybe give that a start? I just want to clarify a part of the question that you asked. So I think as you noted, we certainly have increased our share of wallet with Tesla on the Model 3 and the Model Y specifically, to now having a share of wallet well north of 50%. And that's on -- when you think about the total content per vehicle opportunity for Aptiv, that on a -- if you combine the low voltage, where we do have content with Tesla and high voltage, it's about, for a midsized passenger vehicle, an average of about $1,000 for a battery electric vehicle. So that 50% to 60%, call it share of wallet, reflects that, and again, it's a mixture of both low and high voltage. And as they've expanded their global footprint and expanded their offerings, we've certainly been able to expand our market share with them. And I don't know, Glen, I would just add that, obviously, there's a good relationship with Tesla. It's an investment that we made certainly, I can say, about 5 years ago, right? Very conscious decision that we would prioritize Tesla for, I think, some of the reasons that you mentioned earlier. So we have dedicated engineers on-site to Tesla. And really worked with them on next-generation vehicle architecture and optimization opportunities. And Glen, feel free to, obviously, chime in.

Yes. I think the -- at the end of the day, one thing that's no different about Tesla than other OEM customers is that if you're able to provide value, you can be responsive and innovate and solve their problems, then you'll grow. And so as Elena said, we put a dedicated team on the ground, working with them closely. We recognized early on that we thought their direction relative to architecture and how they were thinking about the car was where the industry was headed. And so for us, important learning in terms of how to rethink, not just the physical content on the vehicle or the architecture of the vehicle, but also how you innovate and how you can be responsive and the speed of which you need to execute. And so that's been incredibly powerful. And then for us, to your second part of the question, that's definitely helped us in terms of understanding not just where the industry is headed regarding high voltage and low voltage wiring, but rather, okay, how can we drive innovation in that space. And that's been, for us, our recent high-voltage wins have really come directly from that, not just thinking about, okay, here's what the OEM's thinking about doing, but rather here's what we can help them do to significantly reduce cost, weight and complexity on the vehicle. So it's been a very beneficial relationship for us.

Yes, Glen, I mean, I think one of the things that people that know Tesla, I'm not claiming that I do, but maybe a little bit, to win content with them is that you're competing against them, because they in-source so much. I mean, they're arguably the most vertically integrated OEM in the world. So what's up for grabs for a supplier and their bomb is relatively scarce, okay? I think maybe you agree. So that then leads into a question that we're starting to get more is, as more car companies move into EVs, be they startups or legacy making the transition, they're going to free up a lot of labor. They're going to free up a lot of unionized labor. And their make versus buy decisions that they've been going at for the last 20 or 30 or 40 years might be different this time. So tell us -- and maybe one day Tesla starts to in-source some of their rivals of who hell knows? But tell us how your portfolio of products across the suite makes it either difficult -- why it's better for them to go with you rather than for, let's say, GM to in-source this on their new platforms?

It really gets to what value can we provide. Because at the end of the day, just like we make insourcing versus outsourcing decisions. We used to make our own chips and our own circuit boards at one point in time. What we've determined is, to the extent that we can leverage our broader scale, so this is, all of our business, and then innovate to deliver much lower cost, better solutions than an OEM really can do on their own, just for their vehicles. To the extent that we're able to do that, then insourcing really is not a threat for us. And that's -- so that's the challenge we've always had, is how do we always every year demonstrate that we can actually provide either those components or that software or that integration service better and at a lower total cost and with more flexibility than they can do it themselves internally. Now every OEM has a little bit different strategy on that, and certainly we hear a lot these days relative to software, about hey, the OEMs want to do more. We're actually trying to facilitate that. We want to be able to show -- led us to this part of it. We'll do the systems integration, we'll take their content, integrate it as part of the platform. We do that for every -- all of our OEM customers. We know how to do that well. We can do it globally and very efficiently. Now that's the challenge we have. We always -- every day, we have to look at how do we get better and better at doing that, and to the extent that we do. Then insourcing for us, is just one of the other things that we worked through.

All right. I have one more question here, and I got a nice lineup -- inventory of questions from investors. How close -- I've been getting a lot lately questions about how close to the battery do you get, okay? Obviously, you don't make batteries. You don't make the cells. But you do -- you're involved with a high-end low voltage architecture, i.e., some, like Lear talks about their plug box, Visteon talks about BMS and then that stock like doubled on that. I'm guessing there's a lot of things that you could talk about, that could get people into a frenzy, but you tend to be a little more understated. Give us some aspects there in terms of the software or hardware that cocoons the battery that you directly have IP on.

Yes. So if you think about what we do, and this is primarily with our SPS business unit. It's everything from the wall and the charger coming into the car, the inlet and then really all that power distribution throughout the car to the battery and then from the battery out to the inverter converters and the motors and all of that. So it's the busbars. It's the high current carrying wiring. It's the interconnection. It's in power distribution units. It's all of those things. So for us, it's a great content story. And Elena can certainly talk more about what that means from a content standpoint. Now what's interesting to us about the high voltage side of the vehicle is, we're relatively early into those architectures. And what I mean by that is, this is really, for many people, their first generation, really, of electric vehicle, true, pure BEV. And what we're seeing is kind of like what we talked within the low voltage side with Smart Vehicle Architecture, we're actually seeing those same kind of opportunities for better up integration of components for more consolidation, simplification of the overall high voltage side of the architecture. And so, as part of that, we're looking at, well, where else does it make sense for us to play? And we look at that at an ongoing basis. But that’s why we're so excited about the acceleration of electrification and high voltage, because we knew there's great opportunities for further improvement and cost reduction on that side of the architecture.

Great. All right, I'm going to try to go through some of these. We have about 13 minutes. I got 9 questions. There may be some overlaps, so you ready for some rapid fire?

Yes.

Let's do it. Okay. How does the vehicle architecture of the next gen platform introduced in 2024 compare in terms of costs or bomb versus the current platforms of SVA all else equal? And then – yes, there's a follow-up, but we need to move.

So on generation -- next generation, we typically are looking for about a 25% to 30% reduction in terms of total cost of that system. So that's -- for like-for-like, that's what you're trying to drive down to with those next-generation products. And this is no exception.

How does -- how did non-Tesla OEMs compete with Tesla if Tesla becomes the much larger percentage of the EV fleet long term? And how does Aptiv fit into that framework?

Yes. I think each -- I would start that answer with every OEM has -- first of all, they have their own identity, their own culture, their own strengths. And so what's important is, people shouldn't think in terms of, I have to become a Tesla or a Tesla equivalent, rather they have to have their electrified offerings that refer to their strengths and their capabilities. And for all the Tesla does great, OEMs have other assets that they can leverage as well. So I think that -- I think what’s -- I think it will be a very competitive landscape. I think as -- with the announcements coming from VW, from GM and from others, is you're going to have great product offerings coming in. The role we play is we can help facilitate making that transition from ICE or even hybrid into BEV. We've now really been able to optimize the cost of the high-voltage piece of it, the low voltage side. That's where we come in and we can help them do that. But I think at the end of the day, more competition in the electrified space is a great -- great for the end consumer and that's what – that’s ultimately the benefit.

Glen and Elena, I knew I was going to get this question. But how does your Hyundai JV tie in with the rest of your ADAS business? And is there an opportunity given the potential tie-up with Apple? Okay. There goes the Apple question.

Well, maybe I'll start with the Apple question first. I really can't comment on the Apple developments and what's been announced there. What I can tell you though is, the JV, first of all, JV is doing great. Motional with the Hyundai tie-up really filled in some of those missing pieces that we needed from automated mobility, JV perspective, the vehicle systems piece basically. So that's often going really, really well. What that means for Aptiv, in particular, is to the extent that I'm able to get access and leverage the technologies they're looking at, like they're next-generation sensing or mapping or policy and planning, they sent that -- we can leverage those. That means that helps actually with my next-generation ADAS functionality. We always viewed autonomy on that spectrum of ADAS. So that's the benefit for me. The benefit for Motional is, I can then monetize those technologies to the broader ADAS market. And what that means is, they have other revenue, they have revenue channels outside of just automated mobility, and as well, we can drive their cost down. So those are 2 significant benefits from Motional. So we have a great relationship with Motional, and Karl and the team there -- and really, it's been -- for us, that was a big move for us in 2020, and it's been a really good development.

Yes, I left my “I love Karl” t-shirt at home. I would have -- I was going to wear it here. Sorry, Elena?

No, I was just going to add, building on Glen's comments there. One of the reasons we set up the joint venture, quite frankly, was so that the joint venture would be positioned to support the broader OEM and the non-OEM community as they develop and deploy highly automated vehicles as the space evolves. And those will be production-ready autonomous driving systems at scale.

Glen, I'm just going to go into the language here. You said -- when you said you cannot comment on Apple -- I just want to say, you cannot comment, or you will not comment?

We do not comment on market rumors, speculations.

Sorry. That was just a body language check. That was just a body language check. Let's move on. Thanks, Glen. 2024, right? Where have I heard that year before? Anyway, let's move on. Can we get your reality on the NIO ET7 introduction? It's technology level 4, solid-state and timing. So I want to use you as a reality check there. Maybe you can comment on solid-state broadly, if you care to.

Yes, I think that in terms -- you're talking about the battery technology. I think in terms of -- to me, what that reflects is the continued advancement of the constituent technologies within electrification. The move towards solid state. I think I alluded to silicon carbide for the fabs. Again, investments in more advanced technologies that will drive range. I think the range on those was quoted at highest 600 miles. So I think what you're seeing there is, with that investment in those technologies now being applied to the vehicle platforms, those vehicles advancing, which is fantastic. I mean that -- what that does, to me, is that it just helps accelerate. It's kind of a compounding effect on the acceleration of electrification in our space relative to their actual performance and autonomy, I mean not having driven the cars, I think these things tend to take -- they tend to be somewhat evolutionary in nature, where you have kind of a minimum set of capabilities that you can validate, and then over time, as the fleet is in the field, there's more data coming back. You continue to improve those systems and upgrade the capabilities over time. And so we'll see exactly what that performance window looks like, and how that develops. Certainly, they're using the NVIDIA Orin platform, which is a very capable platform. And so that will -- I'm confident that'll come out with some very good content.

Okay, now when I asked about solid state, you clarified you meant battery. Of course, you were thinking LiDAR. So let's go there. Elon, as very famously said that all you have to do is solve for passive optical and radar. If you're going to use a wavelength, don't -- emitting -- an emitting sensor, don't use it in the visible spectrum. And you went on to say, you'll see all these LiDAR plans will get dropped. Trust me, it's going to move our way. Now of course, I think you have clients that do a little bit of everything. But when you hear Elon Musk say, LiDAR, even if they were free, I wouldn't use it. What do you think? What do you think about?

Yes, I think -- I mean, I think it's interesting. What it reflects within the OEM community, you have vision-centric, you have radar-centric, you have other kind of centricities around the perception system. At the end of the day, the perception system is what limits sort of [ makes the ], capability of the automated driving system. That's your ability to perceive the world around you. For us, we look at LiDAR in particular, and we say, look, for Level 3 in particular, at high speed Level 3 and above, you need LiDAR to that. I mean in terms of being -- having the range, the confidence and the free space to touch in and the distance measurements, and then as well, the redundancy. Now as radar continues to go up, we’re -- we now start imaging radar along with our next-gen platform, as that continues to go up, as vision gets more capable, can you obviate the need for LiDAR? In some use cases, I think you can. But that doesn't mean in every use case. So I think it's one of those things that our position is, let's watch that carefully, how that develops. We're obviously heavily investing in radar. We have partners for vision and then we'll continue to build out those other sensing modalities to try to cover as much as we can, because LiDAR at the end of the day still is very expensive. When you think about Level 2 system today, $400, $450, $500 to -- on cost of the vehicle, Level 2+, $750 to $1,000, a little bit more, LiDAR sensors are almost that and more. So how do you really make a system that's cost-effective for the end consumer and brings them the value? Well, today that's vision [indiscernible]. But again, we continue to watch the progression of that very, very carefully.

Now with your portfolio, of course, you're addressing different parts of the pie, you got Tesla, you got legacy and then you have the new entrants. And then of course, geographically, all different combinations. Any observations you could point, high level, as we're seeing more of the SPACs and startups? Is your win rate positively correlated with the pace of these new entrants? Are you winning similar proportion of the business that you're kind of -- that you might be quoting on? Is it more? And I'm wondering any other observations of the types of, whether it's CPV or some other level of tech. Are the new entrants more aggressive? Are they willing to move a little faster perhaps than the legacy? Or is it really case by case?

It's a little bit case by case. But I think a couple of generalities, and then maybe Elena can speak specially about win rates in CPV. What I would say, some of the commonalities are, the new entrants tend to be more -- they tend to be more aggressive and have shorter timelines to market, just in general. Their timelines also tend to be a little bit more flexible. And the other comment I would make is similar to what -- how Tesla approached the vehicle, the new entrants are all thinking about the vehicle from day 1 as a software defined platform. So it's all about, how do I enable the feature functions as part of a holistic software architecture, and then the underlying hardware supports. So I would say those are some very clear commonalities. And what you're seeing now, I think, within the traditional OEMs and especially with the announcements like Volkswagen as -- regarding car software organization and other things, is a recognition that that's really where architecture is headed on the vehicle. But I would say within the new entrants, those are some very, very quick commonalities. They want to have scalable solutions that allow them to deliver very high levels of autonomy and do that through software. Maybe, Elena, you can talk a little bit about what we're seeing from a market perspective.

Sure. I mean I think you talked about it right. As OEMs migrate from modified ICE architectures to clean sheet over the next 2, 3 model cycles, we're working with a number of them to provide cost-effective, optimized solutions on their architecture. We talked a lot in our event today about some of the reduction in size and weight, the deployment of alternative technologies, materials, more sophisticated cable management. So really leveraging the full breadth of what Aptiv has to offer. We have seen significant increases in booking activity in and around midsized platforms. High voltage tends to have -- it tends to have more complexity and that tends to be in our sweet spot. Just as a data point that we've sort of used out there, we used to quote high-voltage activity, about 15 opportunities were quoted a couple of years ago per year. We are now probably seeing close to 40. And we have communicated our win rate north of 70%. So we are -- the win rate is a function of where we're focused on allocating resources to make sure that we're best positioned with OEMs who are going to drive volume in the future. And as a result, high-voltage is one of our fastest-growing product lines. We've said that we'd be about $500 million of high voltage revenues in 2020 growing to roughly $1 billion by 2022. So it's consistent with our prior communications.

Thank you, Elena. Yes, I think the emphasis on volume, high-volume is something that you can kind of lose perspective of. But talking to my Apple analyst, IT hardware analyst, Katy Huberty, regardless of when they come, whether it's 2024 or 2034, frankly, they aren’t going to do it for a 2% share, they're going to be a monster, a fricking monster. So I think it just accentuates and magnifies the competitive advantage that you have. You obviously doing a phenomenal job telling the story. You've done it consistently. You do it with credibility and visibility. And I thank both you for being -- spending time with us on a very busy day. I know you had a ton, a very busy morning and probably afternoon as well. So stay in touch, God bless, and thank you. All right? With that -- this concludes the Aptiv session. Glen and Elena, take care.

Thanks, Adam.

Thanks, Adam. Great to be here.