AT&T Inc. (T) Earnings Call Transcript & Summary

Thanks, Fred. There are a lot of seats up on the front for people who are in the back. If you want to move up, I'm not offended. John is not that scary. So thanks, John, for joining us.

I was hoping Fred was just going to stay up here and do the Q&A after that opening.

Right. Well, I -- well, first of all, thank you for joining us. I think we did this 2 years ago virtually, but we haven't done it for real.

Yes, I've already broken one of my COVID promises that I'd never do one of these live again.

Blame a mirror. So I was just thinking about Fred's comment, that CEOs used to stay in their lane and now they're all over the place. And you've gone the opposite. So in 2 years, you've reversed 6 years of AT&T M&A and spinning out Warner, spinning out DIRECTV. What does a more tightly focused AT&T allow you to do that you couldn't do before?

First point, to the safe harbor statement. And indicate to you that we have a website that you can go to on our Investor Relations page to get a lot more detail on what we're going to talk about today. And some of the statements I may make today could be forward-looking and subject to uncertainty and change, and you should be mindful of that as we have this discussion today. So with that out of the way. Look, I first of all, I wouldn't necessarily characterize it per se as reverse as opposed to having to adjust with circumstances that changed pretty dramatically and having to respond to those circumstances. And yes, we did that. But most importantly, focusing on what's going forward, and that's what I'm trying to do with my time. And I would say the nice part about today is nothing changes. What we started to do 18 months ago, which is to focus the business on seizing the opportunity, that Fred did a very nice job of laying out for everybody in the audience today, of where there's opportunity to grow in the core broadband, that's what we're still doing after this transaction closed in the month of April. And we're still very much running the exact same plays we outlined. We're focused on growing customer relationships in our broadband business, whether it's a wireless connection or a fixed connection. We're focused on restructuring the business to take cost out of it, and ensure that we lean into what is the opportunity in the golden age of connectivity that Fred outlined. But at the same time, we have a lot of infrastructure from maybe the past era that has to be pulled away and reengineered to take cost out and reposition the business. And then third, be really diligent about how we apply capital against the business to ensure that the areas that we're deploying it don't befall the problems that were outlined on the screen, where there's an awful lot of people chasing different opportunities. We want to make sure we're playing into the areas where we think we can be successful and drive returns. And I hope that you're seeing over the last several quarters that we're establishing a track record of doing that, and we'll continue to do that moving forward. And I feel really optimistic about it.

So I want to dig into some of those. But before we do, I want to ask you what you're seeing in the economy right now. AT&T touches so many pieces of the economy and customers. What are you seeing in terms of inflation and wages and labor? How does that impact the business today?

You can't -- I can't get up in my role in a given day and not be concerned a little bit about what's going on right now. And I think we have to be mindful of the fact that inflation levels are really problematic. It's not good for anybody. It's not good for any business. It's not good for the consumer. It's not good for the country overall. And I believe that the Fed is probably dead serious about trying to stamp it out, albeit maybe a little bit behind the market in doing it, but I think they will work hard to make that happen. My concern is there's an awful lot of other structural issues to be dealt with right now that, maybe in the past cycles of looking through inflationary dynamics, weren't as prevalent. We've got energy-related issues. We have unparalleled supply chain-related issues. We have labor components that have been kind of thrown out of skew because of some of the incentive structures coming out of the pandemic. All those things make it even harder than normal to kind of move through this. I would like nothing more than come back this time next year and see that the Fed effectively navigated that into a soft landing. That would be wonderful if that occurred. But I can't use that as my primary case of planning right now. I have to assume that, in order for them to get inflation back in check, that it may be a little bit lumpier than a soft landing. And so as we look at the business moving forward, I would tell you that I'm mindful of the fact that maybe we need a plan next year that is a little bit relooked on investment levels in certain places. I don't want to stop investing in areas where I think we can build a franchise that's sustainable. But certainly, we have parts of our business that are driven by customer activity in volume and growth. And I would expect that maybe some of that gets tempered a bit if we see that circumstance, and needed to be prepared, given we're in a fairly long lead time business and making some of those decisions, to cycle some of that stuff into a different position to be a little bit more judicious if that in fact occurs. We have to continue to work really hard on the cost side. We already are running substantial momentum. We'll take another $1 billion of cost out this year. But we're going to have to be really hard on looking at whether or not there's more that we can do in moving through next year and be in a position to ensure that we keep that structure in line. We've already made some moves on pricing that were largely predicated by the fact that inflationary dynamics are driving in the market. I have a menu of what's Option 2 and Option 3 over time if this stays with us longer than any of us expected to stay with us. And I don't think you can get through strong inflationary times without understanding you got to work both sides of the equation. You saw reports last week. I saw the same stuff that came out of retail. I would tell you what we see in our business. In the demand side, I'm not seeing any softening right now. I would tell you that -- and part of it is cyclical. We're coming out of tax refund time, which oftentimes is a little bit better in general. I think we still have some consumers that are a bit flush. But we are seeing, maybe in the more stressed aspects of the economy, we're starting to see collection levels get back to pre-pandemic levels. I look at this, the trend line on that, I would say that the consumer in the low end of the market is definitely stressed in making choices. And it's probably getting down to gasoline and food and those types of things. And I think that's an early sign, and it's probably consistent with what was reported last week in some of the retail channels of what's occurring. Now having said that, we've been through a couple of these cycles, most recently in 2008, and we tend to be pretty resilient going through those. Well, we'll have to manage some things around bad debt levels, et cetera, we don't see customers moving away from the product in a disconnection construct. The TV business has a tendency to go through the dynamic of resizing bundles and the size of the product that the customer buys. But look, I think generally speaking, we're in a reasonable shape in what's probably going to be a pressured economy in 2023.

So to be specific to Mobility, where one of your peers has called out a softening of demand over the last couple of months. You haven't seen that and nothing has really changed in the last couple of months?

Well, look, I mean, you saw the quarterly numbers that everybody reported. If we refer to softening demand is that total gross inwards were the same as they were a year ago, then there was softening demand. Total gross inwards were about slightly better actually than first quarter last year. So it would be hard to say that demand has softened after most in this room would have said that first quarter last year was an uptick and it was stronger than normal. And certainly, our numbers and what we saw were consistent with that dynamic. I'm not seeing a softening demand in our Mobility business in terms of consumer activity in stores, online activity, sales activity. I think I shared publicly, as we were setting up guidance for 2022, that we had assumed that levels would return to pre-pandemic levels this year. And we kind of said that we felt '21 might have been a high watermark, and our business plan assumed that there was going to be a step down as a result of that. That step down has not yet occurred, and so we've kind of seen the sustaining levels of 2021 carrying into 2022. It's been nice. It actually has been a pleasant surprise relative to customer levels in our business. From a planning perspective, it puts a little bit of pressure on cash because of the growth dynamic. But look, I'll take that all day. It's good growth. And I'm more than happy to take those customers as they come in. Is it going to change in the second half of this year? It could. And with the posture I just described, if inflation continues to run the way it does and we see the Fed pushing to kind of tamp down demand in ways and forms, then I expect maybe it will start to slow down. Are we going to finish the year below the levels that we projected in the original business plan and guidance? That require it to pretty much fall off the cliff right now based on what I've been seeing. So far, no softening demand. Will it soften in the second half of the year? I won't be surprised if it will.

Yes. Can you give us your read on competition in Mobility right now? We've got 3 incumbent players that are all very strong, a couple of new -- DISH sort of cable coming up. How do you read the competition, where we are today, and where we'll probably go in the next couple of years?

The market -- it's funny because everybody -- I read a lot of commentary about, is it more competitive or has competitive intensity changed? I was joking with one of my peers the other day, and I said, "What was the quarter we all walked in and said, 'Boy, that was an easy 90 days?'" It just -- it doesn't seem to play out that way. I think from our point of view, competitive intensity has always been there, and it's always there. Different play are run at different times. And I think it's a very competitive market right now. And I don't see any differences than normal. I think what's changed from AT&T's perspective, if I go back maybe 18 months ago, oftentimes, we were often responding to what others did in the market. And so this quarter, we got to tweak this or change this because somebody moved and did this and we're trying to protect this part of the base, et cetera. What has probably changed is we've kind of been on a standard set of plays that we've been running largely for the last 18-plus months. And that set of plays has been very effective and efficient for us. And it's been very helpful within the employee body because they come in every day and they know what they were doing yesterday, and they're doing it again today and refining it further. And I think that consistency has helped. Meanwhile, I look around outside, and I think there are some others in the industry, they're having to do what maybe we were having to do 18 months ago, which is continue to tweak the formula and see if they can get some momentum and change things a bit. And so I think the industry is doing exactly what it did 18 months ago. It's no different competitively. Maybe just the roles that we're playing and who's adjusting and responding is a little bit different right now than 18 months ago. And frankly, going forward in the future, I'm not sure the whole dynamic is going to change any. Do I believe that, at some point, we may have to come off the current formula that we're running in the market and do some things differently? Yes. Do I think that the second part of this year is maybe the right time for us to even think about doing that, as we're in a position to begin turning that mid-band spectrum, we see dramatic changes in the network, some of the things we can do to communicate benefit to customers, change a little bit? I wouldn't be surprised if something like that starts to play out over time. But I feel really good with where we stand and the kind of momentum we have. And the luxury of the focus that Fred referred to at the opening of the session is allowing is to be a lot more agile and focused on those things and do them a lot better than we've done them.

Right. You spoke a number of times in a few different public formats about pricing. I think on TV, you were quoted in the Journal. And then you spoke in your conference call about pricing. And then you raised prices in a fairly, I would say, a modest way on some older plans. What was the thinking behind that? And then you alluded to it a minute ago as well. It seems like, down the road, you have some other options in terms of pricing. How do you think about the ability of wireless to hold up in an inflationary environment, especially given the competition we have today?

So look, the first play we ran, I actually -- we wanted to try to make sure we did something in a transparent way for our consumers. It's really important how we position the brand in the market, that we're trying to do that. And there are other paths you can take to manage pricing. In this case, we went directly at certain plans. And we went at plans and parts of the customer base that we felt weren't enjoying some of the best offers we have in the market. And we felt this could be an opportunity for us to talk to those customers we'd not spoken to in a long time and let them know that we've got other plans in the market that provide a lot more capability than where they rested. And if they came in and thought about that, that while they may end up having to pay a little bit more, they could get a lot more value out of it. And we felt that was a very manageable set of circumstances. I'm sure we're going to have some degree of churn that we drive into this, but it will be accretive in aggregate. And most importantly, we're going to have some customers who come to us and say, "I noticed my bill's gone up. What can you do for me?" And the discussion is going to be, "Yes, your bill went up, and what I can do for you is move you into a plan that gives you a whole heck of a lot more than what you had before. I can give you an opportunity to use your device as a hotspot. I can give you the opportunity for that amount of money to have different roaming characteristics on your product and service. I can give you a better security product on top of that." And I think the net of that, our research would suggest customers come out of that feeling better about the whole equation. And our goal on everything in we do moving forward, Phil, is to find opportunities where we can equate a value dynamic back to the customer, along with ultimately driving price up, whether it's better performance on the network, having opportunities to get more features and service than what they have, treating them better in terms of their legacy with the account with some loyalty benefits with it. And I actually believe we've got a lot of tools moving forward to think about how we work pricing, not just in that segment of the base we chose to deal with this time, but more broadly across our customer set, especially as our network continues to perform. We've seen dramatic improvements in our customers' perception of network performance over the last 2 years. And I believe after we do the mid-band deployment, we're going to see another uptick. It's going to be even better. And when a customer is generally satisfied with the level of service that they have, the opportunity to talk about that value transfer with them around pricing is a much more predictable approach to do things. I don't know. I think we've got a lot of people in the industry. I'm old. I've been around a long time. I've been through an inflationary cycle. I remember what it's like to run a business in this. I think we're going to have a little bit of learning that goes on if this goes on for -- if inflation goes on for another year, another 1.5 years. And eventually, everybody is going to understand, that when all inputs are inflating, you have to think about a business from a pricing perspective and figure out how to work through that. And I think the industry will sort that out.

It's interesting. I don't think we've said the word 5G -- phrase 5G in the 10 minutes we've been up here. 2 years ago, 3, 4 years ago, that would have been the whole conversation. And so you talk about consistency and quality and value to the customer. Is 5G something that's truly different and giving them that value? Or is it the way that you serve a lot of the applications that we've already been using?

I think any time you go through an air interface change, when you think about what occurred in its predecessor with LTE, it's an opportunity to educate a customer, that there is going to be a change in what their level of service can provide. And 5G has done that. The whole discussion around 5G has done that. And certainly, device manufacturers begin to position a device to be able to take advantage of what that air interface is able to do. And we're seeing that now. The networks are catching up to what the devices are going to be able to do. We talked a little bit about this last night when I was chatting with you. I believe that you're going to need to see a maturity cycle over the next couple of years as networks become a bit more robust for those devices ultimately to deliver on their promise. They certainly are carrying the ability now to start to do things with a combination of processing, visualization, compute, and ultimately how they're connected into the cloud, to begin doing different things. But you need to have more consistency in the network and you have to have very ubiquitous deployment and very ubiquitous connectivity and consistency in how those perform. And you're going to see that in metropolitan areas as you start to move through the next 0 to 24 months. And it's not going to all get turned on all at one time. But I do see the R&D going into the application side right now for people to take advantages of those capabilities that have been deployed on the devices. In the enterprise side, it's going on with facilitation of business models, in the medical industry and in transportation. In the consumer side, we're seeing people begin to write software and capabilities for entertainment, engagement and socialization. With the amount of money and the amount of experimentation going on, I think you will begin to see capabilities show up, and they're going to work in pockets. And you're going to see people start to enjoy different experiences in pockets, a confined portion of a metropolitan area. When that starts to demonstrate the market, then I think you're going to see kind of that pervasive movement out. And this is no different than what LTE did. Early on in LTE, people who were in the urban core, all suddenly said, "Wow, it's great. I get a consistent video experience and I can watch a lot more video. But it doesn't work so well when I'm out in a suburban or rural area." Well, over the course of a couple of years, now people have come to expect that much more ubiquitous performance. The exact same thing is going to happen with 5G. And as application developers get access to network slicing capabilities, as edge deployments begin to get more robust and you have round trip times that allow for the edge to facilitate those applications, they will start to move their way out into the consumer base. It's just part of growing the ecosystem. And I do believe you're going to see that occur. To the consumer, that will be -- the basis of 5G was the introduction of that. But to them, it's going to be when that application shows up that they finally get to engage with, that they say, "Okay. Now I understand what this is about."

So let's follow up on the enterprise side. You mentioned the edge deployments, you mentioned enterprise 5G. How does AT&T participate in those? And is there a business model beyond the pipes for you? Is there a services model? Or is there an infrastructure model that you want to be involved in? .

Yes. So I think there's a combination of things here for us and our position. We service -- we have a very enviable position in the largest of business customers. And they're going to be -- they are the ones right now that are pushing and trying to develop in this area. And without naming specific customers that I haven't talked -- gotten the approval from before I got up here today, I would tell you our experience largely is they're looking at opportunities in 2 ways. One, within the operation of their enterprise, can they make their business more effective with 5G deployment? And the capabilities are there. So private networking and capabilities to run their business differently. And then two, as I just described, as this becomes more pervasive out in the macro network, what can they do to change their business model? Well, the way AT&T interfaces with a large enterprise customer on that is, one, we help them understand what they can do to improve the operations of their enterprise. Where is that occurring right now? Manufacturing, we're seeing a lot of it. And so we go in and we work with them on, is private networking relevant for them? Do I see a great recurring return opportunity in helping the company through private networking? It's not intuitive to me that there is relative to deploying private networking, but I can help them on a services model construct. The more complex and the larger the business is, the more help they need. And typically, when I look at the applications that are developing, most of those companies don't look at it and say, "Well, unlicensed spectrum is going to solve my problem." They tend to say, "What can I do within my operating environment and how can I extend beyond the walls of my operating environment?" And that's where a company like AT&T can come in and say, "Look. We can help you with private. We can also give you access to spectrum that we have and manage that in your environment. And let us support that activity, let us bring some expertise." But that looks more like a services model than a recurring revenue model in my view of how that's going to develop. Now once we deploy that private capability, we have a relationship with the customer. And so maybe you can envision a manufacturing company that builds automobiles as an example. And part of what we do on the private side is to make their manufacturing operation more efficient and effective. And as part of that relationship, we end up having a capability to manage services in the vehicles they actually produce that move out into the broader environment. Now that opens up an opportunity for a recurring relationship. Where we used to sell connectivity to a vehicle that was relatively low-ARPU, most of these manufacturers are saying, "Gosh, in a 5G environment, I can really do some different things in that vehicle. I can do different things in how it operates from a transportation perspective. I can also think about how I do different things in bringing entertainment and engagement with my customers that are in there. What can I do with you to make that happen?" That starts to open up the recurring revenue opportunity that is the kind of thing that is in our sweet spot. But it's predicated on the fact that we have a broader relationship with that enterprise that allows us to do more complex networking with them. So then there's more endpoints, more connectivity, more monthly recurring revenue as a result of that. And that's my view of kind of how this plays out in the enterprise space over time. That repeats itself in the medical space. Look, I look at the consumer entertainment space and see the same dynamic occurring. And so that's my belief of how we play into that and how we think about the market developing.

Just on the side there. Are you more flexible now in working with different entertainment companies and maybe different business models now that you don't own one yourself?

I think we've always been flexible. I clearly believe that, for us to fulfill our best proposition of being the premier connectivity provider, we need to work with a broad cross-section of folks who need access to an end-user customer. Not just in entertainment, literally in any industry. And that should be the strength of what we bring forward, building -- in this case, choosing to lean into connectivity. And thinking about it as being proprietary in nature probably would diminish the overall value of what it is that we can build here.

Yes. Let's switch gears to Wireline and fiber. Maybe just take us through the -- not what you've said publicly, 30 million locations over the next few years. But where do you see the sort of fiber landscape in the U.S. going over the next, I don't know, if it's 5 or 10 years? And how can AT&T play a part in that?

Fred put up a slide that you all saw with a lot of company names on it. And I think his characterization to that is probably correct, that some may not be here in a period of time. I believe, in some cases, those names are up on a sheet of paper and their business plan is they don't want to be here in 3 years or 5 years. They'd like to be bought out and consumed by somebody else. And that may be fundamentally what they're trying to do. We'll see how that plays out. Look, I would tell you this. There's a lot of names up on that sheet of paper that most consumers wouldn't be able to identify, no, couldn't, even on an unprompted basis.

There are names in there I don't know.

Yes, sure. And that's kind of the point. What I will tell you is, when we go out and we talk to a customer about do you trust a business for networking, and are you interested in the product or service from this company? We do pretty well on that front. And so I think we have an opportunity, with capital smartly deployed, to take advantage of those trends that Fred alluded to at the opening, which are strong demand for very robust networking and networking that is becoming more and more symmetrical as the days move on, and networking that we see continuing to grow at a substantial level. And we are building the most scaled infrastructure of anybody in the country right now. And I don't -- I'm not just saying that from a fixed connectivity perspective. The fiber that we're putting into our network and the fiber we're deploying right now and the orientation of our company and business is to make sure we're taking advantage of that deployment for every product and service that we put out there. To truly recognize the benefits of a 5G network, you need a very distributed wireless access point infrastructure. And for a long time, I've said internally, we don't run wireless networks and we don't run fixed networks, we run a network. And everything starts with fiber. And there is -- I sit here today and I think it's intuitive to most people, and they look at it and understand, if you're truly going to get the benefits of 5G and distributed deployment, every wireless access point needs fiber on the back side of it. And if you're going to have 1 within 800 feet or 1,000 feet of a customer to deal with a high-density situation, you need fiber on the back side of it. Fiber, in my point of view, is a defensible right of way and a strategic advantage, and that's why I'm pushing and moving down that direction. And it helps all of our businesses. And so look, I think we're going to be in a bit of a foot race right now. I actually think this sets up reasonably well because I think we're moving from a time of largely 0 cost of capital to real cost of capital and real returns. I have business cases that work in that respect. I think some of those names up there on the chart, it gets a little more spurious as a result of that. I think continuing to lead into that and invest through it with how we've now positioned the business with our financial flexibility is really important and I want to make as much progress as quickly as I can. We are doing things inside of the company right now to try to think about, if we're operating at this pace of throughput, can we operate at this pace-plus once federal money starts to move into the pipeline? Is there an opportunity to expand capacity and move faster and more to take advantage of those opportunities that are out there? And I think in combination with our expertise our strength in supply chain to get our hands on the equipment that's necessary to build, which is not an inconsequential issue right now; our ability to harness labor to deploy it because we're making broad commitments across broad geographies with longer-term dynamics around it than some of those companies up there; and then marching into the environment with a brand, and a brand that not only can promise connectivity into the household, but a brand that can promise connectivity no matter where the customer goes, I feel really good about our ability to be successful against that slide that was shown earlier.

And I would add a long relationship with state government and union officials who probably want to help garner some of that federal infrastructure money for you.

So this is going to open up a whole new set of dynamics as the government goes out and distributes this money, and it is going to be different on a state-by-state basis. Each state is going to come up with a different framework. I know this is a fact. I've been out making the tour of the various large states that we have longer-term and stronger relationships with. And I'm going to be honest with you. California is going to come up with a slightly different twist on how they want to build and deploy on this federal money than what Texas chooses to do...

It seems fairly likely.

But we're going to be prepared for both, and we're actively working with both. And we have the opportunity to think about a model that works for both. And when we're having these conversations as we get into the local decision-makers, when we can walk in and we can talk about not only solving problems for access to broadband and low-cost connectivity, which we've now put in a low-cost plan in the market that we launched about 45, 60 days ago that is -- socially looks very responsible. We have reputation behind that will stand behind it. We're in the market putting it out there today. We're promoting it. We're pairing it with things that we can do socially with other not-for-profits to bring in devices and do education on how people use access. And then we can walk in and say, we also are a FirstNet provider and we can do things to augment FirstNet coverage in a particular underserved area that make sure that you have good public safety response characteristics by augmenting some of our infrastructure deployment with maybe a more robust wireless deployment. We can walk into that dynamic in a lot different place with scaled union providers and deployers than some of those names on that sheet of paper. And I believe we will do very well when we put our mind to it.

Yes. You've talked about -- I'm looking at our time. You've talked about execution as really important. And one of the surprises for me over the last 5 or 6 years is that some companies with fiber, including AT&T, have not penetrated the market as much as they -- as I would have expected with an equivalent or better product than cable. So what did you change since you've come in to really push that penetration? And what kind of efficiencies are you getting?

Well, there's a couple of things. One is, as I said, I think deployment is important. And if you had to do over, if I was kind of making maybe different decisions 4 or 5 years ago, I would have been leaning as heavily into things then as we are today. And so when you start to deploy in a more consistent fashion and when you are able to get out into a metropolitan area and have a consistent footprint, it opens up opportunities for scale, and we're doing that now. So we did deployment that was largely out of expediency to try to meet regulatory commitments and get low-hanging fruit and it created a bit of a patchwork. And now as we're deploying, we're going back in and filling in a lot of that patch work, which means that we can do things like advertise more broadly in a metropolitan area to create awareness. You're not dealing with kind of this patchwork and trying to be so precise that you can't get marketing scale. Two, look, the company is really focused and committed to this right now. And it's not a hobby. And when things aren't a hobby, it doesn't matter whether you're the person in marketing that's responsible for building top of funnel or you're the technician and the garage. Technicians in our garage today understand that fiber is their future. Maybe 3 years ago, they were skeptical about it or they were fighting it or resisting or didn't know if we were committed to it. And when a technician understands that their job and their deployment of this infrastructure means heir well-being -- they love the product, by the way. They like going into fiber households because customers love them. They hug them, they send them candy, they do all the stuff. Nobody does that with a DSL service. And so we now have every technician leaning into this. And when they finish an installation at one house, they walk up 5 doors to the right and 5 doors on the left and leave door hangers, where they talk to people who stop them in the neighborhood and they sell and move the product. And so we have gotten really good as we're deploying, building the pre-90-day before ready for service, the 30-day before ready for service, the day of service, the 30 days after. We have a machine on this right now, and it's working far better than it ever had and it allows for that far more rapid penetration. And it's a team, from technician all the way through marketing, to everybody who works in brand, all those things are starting to support it because that is what we do, and we're not distracted.

Okay. Let's finish up with maybe a message to investors on the credibility of AT&T and management going forward. So you've cut the dividend, which I think was painful for a lot of people maybe here, but you're talking a lot more about growth than we have in a long time. So maybe just finish up with that and then we'll let you go.

First thing I would say is, if you're sitting in my shoes and obviously walking into the job, you kind of think about what your next couple of years are going to be and what are you going to do. It became apparent to me walking into this job, the last thing I wanted to do for whatever period of time I sat in this chair was to say no a lot to my employee body. That's kind of demoralizing and de-energizing. And so getting the capital structure equation right so that I could say yes more frequently to good ideas, that I knew from my time in the industry and the people around me knew were things that we should have been doing, in order for me to have credibility and enjoy my job, I needed to be able to say yes more frequently. And when that occurred, that brought in the need to make some hard decisions around the structure of the business, dividend, our capital structure, so that we could get this business operating. Everybody wants to come in and win. We have a proud history in our company. We have a strong brand. We have people who know how to be the best. And I felt like we were in a situation where we weren't allowing them to be their best based on the resources that we can hand them and what we were doing. So my job was to change the calculus on that. And I think right now with where we sit, I've at least cleared the deck on some of that stuff. And as I tell the rest of the company, it's now your job to deliver the returns. It's now your job to step up to the commitments, and we have to do that every 90 days. And that's a candid conversation we have amongst the management team. It's an understanding. And if I can't deliver that back to the investment base, then that requires me to make other decisions. I think the business understands that. I think you're starting to see that kind of momentum build, but it's an every 90-day kind of thing. I'm not going to suggest we're going to have a couple of speed bumps along the way and a few things that have to jog left and right, but it better be, generally speaking, up and to the right. And I know that, that just is something we've got to work on and carry forward. And once that's not a question you're going to ask me to sit down like this, then I know that we can move on to the next thing. And we can -- we have some credibility restored. We've got to work on that as a management team, I'm well aware of that. We'll do it every 90 days at a time. We'll try to be as transparent as we can. I think you've seen we've shared and changed some of our disclosures and what we're doing, so you have visibility into the business, so you can walk this journey with us. We'll continue to do that. And that's the only way I know how to do it.

I look forward to it. Thanks, John.

Thanks, Phil. Thanks for having me.