Belden Inc. (BDC) Earnings Call Transcript & Summary

My name is Chris Snyder. I'm the UBS multi-industry analyst. I'm very excited to be joined up here by Belden, we have CEO, Ashish Chand; and CFO, Jeremy Parks. So thank you, guys, for joining.

Maybe starting off kind of very high level, we're now 3 years plus removed from COVID, a lot of disruption, a lot of acceleration in secular trends that the company is exposed to. So I'd just be interested if you kind of look back on this kind of 3-year period, what are your long-lasting takeaways?

First of all, thank you, Chris, for having this here. This is a great event. So when we look back, a few things happened maybe around the same time as the onset of COVID-19, but maybe they were cooking a little bit prior to that. The first thing that happened was the -- just the fact that the amount of data that is going through our networks was exploring, right? So both in terms of the number of devices that generate data, but also the amount of data each device generates. That was going up a lot. And for many decades, Belden has been a company that provides highly differentiated products that are used in digitization. So they're used for data acquisition, data transmission, data orchestration and data management, but we used to supply them separately, right? And other people used to form little solutions out of them and our customers were dealing with islands of solutions or islands of automation or islands of networks, whatever, right? So one thing that stayed in our minds, and when I look back over the last 3 years is how customers started asking for a way to bring these islands together. And initially, when customers came to Belden, we initially thought somebody else might solve this problem because our job should be to focus on making these high-quality products but then customers started coming back to us and saying, "Hey, you guys have built the skeletal tissue that goes into these subsolutions, so could you also help us build the bigger solution. And that is an aha moment for us. Now around the same time, a few things were happening. There was a supply chain brittleness caused by the pandemic, right? People were worried about where they make products, how they source raw materials. That led to greater interest in reshoring, which, by the way, exposed the whole problem of labor shortage, which expose the whole problem of aging infrastructure, right? So there was this dominant effect. And we found ourselves right in the middle of all that. And what came out of this was a set of Belden network and data solutions for certain verticals. And those verticals we chose because they were generating more data or using more data, but also because they were mission-critical applications like mass transit or power distribution or automotive manufacturing, right? They needed to be running all the time with high quality. And so now when I look back, I think the transformation of Belden to being a data company, the creation of this opportunity where customers want sub solutions or islands of automation or islands of data to be connected. And then everything else that happened from a geopolitical scenario, which allowed us to step forward and really reposition ourselves as a solutions company that we are now becoming.

Yes, I mean, absolutely. A lot of companies talk about going from being a product supplier to a solutions provider. At Belden, the results are showing now, whether it's the growth rates that we've seen versus historical -- the recent improvement in margins. So when you think about that journey to be a solutions provider. Is it more that you're just making yourself more important to the customer and then you can drive revenue off of that, or does it change the way you price, does it change to price conversation? What are the advantages of being a solutions product?

Yes. So I think there is a prerequisite to go from products to solutions. It's important to make sure that those products are a core part of the solution. right? Because if you completely -- if you transplant versus transform, that doesn't actually work out, right? A lot of people try that. They go and buy some other company and say, "Oh, now we're a solutions provider". So I think the fact that it's the same skeletal tissue, data acquisition, transmission, orchestration and management that was helpful. But then we did have to make some changes. So for example, so 3 big things. We had to start a consulting kind of group within Belden, we used to have 0 consultants. Today, we have close to 130 right, in 3 years. And these are consultants, they're not salespeople. They actually go in and ask the question around, hey, customer, what's your KPI and how do you want workflow to happen. Therefore, we will design data flow and design a network for you, right? So it's a process. Second, we really had to think about integration software, right? So we had all these different parts of the value chain through which data is flowing. And we had to bring data integration as a platform on top of this, right? This is not something that is typically intuitive to a hardware company. And I know there are other companies, Chris, some of them you know well. They're really good at portfolio, but they don't bring them together as a solution, right? So I think the thought of building consulting, the thought of building data integration, this was important. But third, and I think this is very helpful for us. We want to supply critical network and data solutions to mission-critical markets, but they are not likely, for example, in the nuclear power plant of a hospital to say, okay, let me try your solution tomorrow morning because that might disrupt operations that it might cause injury or death. So we have to build these large customer innovation centers, we call them, but they are validation labs essentially. So customers come in. They -- we work with them together to design a solution, and then we are able to validate that solution over multiple weeks, even months sometimes. And then they finally get a chance to put them in their operations. And I'm going to give you one example to illustrate how that creates value. So we have this power distribution company in Spain, and they came to us and they had this very complex network in mind. And we were like, okay, hang on. Before we design the setup for you, what is the KPI that you're trying to solve for. And they said, our KPI is the time it takes to find a fault in the network. And our current performance is 140 minutes on average. Okay. So we said we can design for you an intelligent for located system, which will take the data from your network and then promote the data that matters. And we took it down to 35 minutes. Now on that one experimental site we did with them in Spain, we got paid about EUR 3.3 million. Previously, even at a reasonably high margins, we would have got paid about EUR 2.5 million for the bill of materials. But now we've got more. And they got more because for them, the saving of 140 minus 35 minutes mean lower fines, more revenue. And I think they saved about EUR 30 million per annum. And they gave us a portion of that, right? So there was value for both sides, a very different process from a typical product sell. But this is certainly something that Belden is looking forward to. Today, just about 10% of our business comes from solutions. So there's a lot of potential for us to grow. And we want to take it to 25% over the next 5 years.

Yes. Really appreciate that. You mentioned that even before the pandemic, data was proliferating. The pandemic accelerated that. Now everyone is very much focused on AI. It feels like that's going to bring a lot more data into the world. Does investment and development in AI kind of have an impact on Belden. Is there an opportunity there? What does all that mean to you?

Yes. I mean one way of thinking of what AI does is imagining it as a supply chain ecosystem, right? Because essentially, it's pulling data. It's a data supply chain, right? And we are participants in that supply chain. And we are able to not only source the data, but we are also able to refine and promote the data streams that matter, right? So first of all AI creates a requirement for more of our products and services. But then second, as a result of AI, a number of things will be automated at a faster pace, right? So we also benefit in terms of the applications of AI. One question I sometimes get is whether we have AI models built into our software, not really and not at this point, but Belden Horizon, which is our data anomaly detection software essentially is a, I would call it, a mid-level AI/ML model. What it does is it looks across the network and finds -- look for patterns that are not intuitive. And it might say to you the temperature on that machine is too high to do something now, right? So it's kind of an early form of AI, but I think the AI explosion is going to be extremely beneficial to the data networking industry.

Definitely. Maybe moving over to Industrial Automation, an end market that is very much focused at the industrial conference. The performance there has been quite good, outgrowing broader kind of industry benchmarks, the past multiple years, really. Can you just kind of talk about the growth rate that the company is able to achieve, how you'd be able to accelerate that? And then what's the outlook forward? Obviously, a lot of good secular trends for automation, whether it's just labor availability, wages, reshoring, moving to higher-cost regions.

Yes. So I think, first of all, we picked certain markets that are very meaningful in terms of not only the intrinsic trends driving those markets, but also in terms of the data they generated, right? So consumer packaged goods, automotive manufacturing, mass transit, power transmission distribution, intelligent traffic systems, et cetera. So these are really important decisions we made early on. Second, we were able to show customers how they could move from monitoring of assets to automation of assets to cognition using data to manage those assets, right? And in a market where labor or skill labor is in short supply, if you can get a system to do those things, that's very helpful, right? So a lot of our customers responded well. And you'll be surprised at the number of cases where we were able to do remote commissioning and report remote management of assets. For example, in a pipeline or in a power transmission and distribution environment. So these -- all the kind of use cases were very helpful. And then as we release more and more use cases by vertical. So for example, if somebody buys a solution for energy management, they also want emission monitoring, they also want lighting management -- it kind of attracts there's a network effect as we do more use cases. So I think we focus on the right markets, the right use cases and came up with some very interesting solutions early. So that was certainly good. I think the other piece of it was really our operational execution. So we typically make over 90% of what we sell in a region within the region. And we didn't have these overstretched supply chain. So we had not only manufacturing, but also our supplier base within that region. And we very quickly pivoted on especially the printed circuit board technology. We very quickly pivoted to the kind of silicon that was available in the market versus the kind of silicon that we ideally wanted, right? And I know some of our bigger competitors insisted that they should have what they're initially designed. And we said, no, we are willing to change designs. So if we take the new solutions we've created within the markets we identify and the operational execution we had. We have these close to 20% growth rates over the last few years. And a lot of it was also driven by investing in new people and skills and competencies around consulting, middleware. A lot of integration. We did some bolt-on acquisitions. So we brought in some MPLS-TP technology, which is used in IT/OT convergence. We bought a network access control company, which became part of our embedded security solutions we've got wireless for transportation and electrification. So bolt-on acquisitions, those markets and operational execution. And I think if I look forward, those trends are not changing and our execution capability is only improving.

Yes. I mean on that note, are you sensing or do you see reasons that the industrial automation market will slow? On one hand, the secular trends are very powerful. Based on the jobs report last Friday, it does not feel like there's a ton of [ black ] coming to the labor market. But on the other hand, automation is a CapEx investment. And kind of historically, there was a good deal of cyclicality with that, how do you see that?

So I think this product close slowdown that is expected or this correction that is expected is a little different. We are going into this where most developed economies have very aged infrastructure and low capacity, right? So there's that problem. There's labor shortage. So there's that problem. So if you think about the reshoring effect, I see it as it will countermeasure some of the other slowing down in fact, that's one. But it will treat different companies differently. So I like to think about it as building bandwidth of roads and building cars that can feed on those roads, right? And we are in the data business. We're no longer in the bandwidth business. So they will be retrofitting. There will be different use cases sitting on the same network. And I think we are well positioned. Data is expected to keep growing at 30%, 40% per annum. We are just the data proliferation, more sources and destinations of data. I think you're right about some correction on CapEx. I think that will happen. But I think there's another layer here. Some of the so-called industrial automation companies may also be really doing more electrification, and that's a lot of distribution-driven business, and they might see correction over there, right? So if I look at the data layer, I don't think it's going to slow down. If I look at the bandwidth layer of the CapEx layer, I think there may be some pockets. And then if I look at the base kind of electrification layer, which is linked to construction. There, I think things can be different. And we are in the data layer.

Yes, absolutely. You talked a bit earlier about the company's ability to kind of navigate a lot of the disruptions that plagued so many over the last couple of years. How do you see supply chains today? And is there -- and what's kind of the outlook there, say, over the next 6 to 12 months?

Yes. Whilst we've been good suppliers to our customers, I think we've also been good customers to our suppliers, right? And a lot of companies in the supply chain, like to do business with us because we are not necessarily the company that gets the best cost, right? We, I think, get the best return over time with our suppliers because we, for example, frequently invest in -- even invest capital in technology assets with our suppliers, which, of course, help make them a little more proprietary for us but also defray their investment. So I think in general, there is enough -- there -- the supply chain is strong enough. But if you've gone into very single source low-cost kind of model, then I think there is going to be some unwinding of that.

Yes. It feels like there was a lot of -- whether it was supply chain high grading or just bigger companies have a little bit more leverage over the supply chain, they could take share on that. But as the normalization comes in, what's the ability to defend maybe some of the low-cost kind of competitors didn't have availability now as getting better, assume they come back for the market share. How does the company defend or protect against that?

Yes. And I think really the answer lies in that fact that we are no longer trying to sell products and we moved to solutions. So it's far more sticky. It's more complex, right? So yes, there could be somebody who comes up with a router, which is -- which can compete with us from a price standpoint. Although I doubt if they can come up with something that will compete on technology, given our track record and history, but they will never be able to do the full chain of data acquisition, transmission, orchestration and management. So I think the way we position our solution now is very differentiated. I actually feel that -- some of those companies might want to become partners to us. They might want to, in certain markets or certain verticals they might want to work with us, either through interoperability of technology. But even sometimes as partners who can supply us some pieces. And we are very open to an ecosystem-based growth plan in this market. So we look forward to that.

Yes. I don't mean to leave you over here. The -- on the last conference call, the company seems pretty confident with backlog as supply chains are recovering. Can you just maybe talk a little bit about how you feel about the backlog, how you feel about order rates, obviously, lead times compressing, kind of general headwind orders. How do you feel about kind of that flow...

Yes. So that's a very good question. I think with respect to backlog, you have to keep in mind, we've never been a backlog-driven business and that we've never had a 12 or 16-, 18-month backlog like some other companies. So we've been a little bit more short cycle. And just to give you context, prior to COVID 2018, 2019, we were averaging maybe $200 million a quarter in backlog, which was a little bit less than a month's worth of revenue. So it was -- I mean, we were basically shipping our orders every quarter. Now over the last couple of years, we have built up a substantial backlog. So we went from about $200 million to $800 million in backlog entering this year. That's pretty high for us. Historically, I think a lot of companies have seen that. And our expectation was that we would start to work some of that backlog down over the course of this year, which is what we've seen. So book-to-bills have been a bit under 1 in the last few quarters, not overly surprising to us. And I think it's probably healthy that, that comes down and that the orders start to reflect a little bit more end demand at some point. So I think we'll get there. But I would say at this point in the year, given that the backlog is higher than it has been historically although lower than it was coming into the year. And that end demand is still relatively good, like you mentioned. We get information from our distributors on point-of-sale trends. They all tend to be pretty good. We've got an active project funnel which continues to grow every quarter based upon the solutions approach that we're taking. So I think we're feeling relatively good about the guidance that we gave for the year.

And did the -- is there any expectation for where -- how much backlog can be burned? Is there any -- like is it like getting back to that normalized 1 month, or that's still a bit in...

I'm hoping it doesn't get that low. I mean I think going from $800 million to $200 million, I think it's not going to get back down to that level. I think it probably normalizes somewhere in the middle. Supply chains have recovered, but I think customers and distributors have learned their lessons in some respect that you cannot let things get too [indiscernible]

Is there any -- I know some of the competitors, some of the headwinds they faced on orders are book-to-bill, is a result of customers or distributors pulling down inventory a little bit -- their lead times are coming in. Maybe there's a little bit more hesitancy on the macro than there was 6, 12 months ago. Anything to kind of call out there is related to inventory in the channel?

Yes. I would say, for sure, distributors are managing their inventory a lot more closely than they were in the past. I think last year and the year before, there was a bias towards just getting product in the door. So for sure, distributors are managing that more closely. Depending on the market, I think there will be some inventory fluctuations or some reductions in inventory at distribution, we've modeled that into our guidance. So it's not a major concern for us with respect to guidance this year, could affect orders a little bit, and you'll see it in some markets more so than others. But again, I think we're in a good spot is that we've been managing it pretty actively over the past few years. So we've not shipped more into the channel than what we thought they could consume. And I think what they're doing right now is managing inventory in total may be a small impact to us, but I don't think it's going to be material for the...

Yes. I appreciate that. Maybe shifting gears a little bit to capital allocation. The 1.5x kind of net leverage target running a bit below that. What's kind of the capital allocation priorities? And what should kind of investors expect on that front?

Yes. So the #1 priority for sure for us is organic growth. So our strategy revolves around making investments in our new products and our solutions organization. So we're going to invest in product development and CapEx and organic growth. That's number one. Number two would be bolt-on M&A. So Ashish mentioned a couple of strategically important acquisitions we've done over the past few years where we bought products or companies that make things like industrial wireless products or network access control software that we can roll into our solutions, our existing solutions and make those even more robust. And so I think we'll continue to look at acquisitions in industrial automation for sure, bolt-on type things, likewise in probably broadband fiber. We haven't talked much about that business, but we think there's a lot of good opportunities on the broadband fiber side. And then lastly, I would say that we're -- our expectation is that we're going to generate a substantial amount of free cash flow over the next few years. So I think there will be some left over. And I think we'll be open to share repurchases. Assuming the valuation, we continue to trade at a discount like we are right now.

And maybe just kind of following up on that. Obviously, multiples in the market have gone very high, '21, '22. We've seen a general derating -- now maybe there's less competition for assets out there with liquidity a lot tighter. But just given the balance sheet, given the free cash generation. Has that M&A landscape gotten more attractive? Are you seeing maybe bid-ask spread kind of narrow?

Yes, maybe a little bit. I think there's probably more room that needs to happen. I will say that the funnel itself, probably the number of companies that I expect to come to market is higher over the next couple of years than what it's been. So I do think there will be some good opportunities. And I think those spreads will continue to compress. I think we just need to be patient and wait for the right deal to come.

Yes. The one thing I'll add, Chris, to that is that we have, in the past, not a couple of what we think of as ill-conceived acquisitions in that. They brought us new customers with new problems. They didn't solve our customers' problems, right? So cybersecurity compliance with Tripwire, [ media, IT ] with Grass Valley. We certainly don't want to do those kinds of transformative acquisitions. And sometimes, the temptation does go up, right? And when you get into these situations, you have good leverage, markets kind of softening a bit. We will continue to be very focused in terms of high-quality bolt-ons that will enhance our solution strategy, right? And that's -- for Jeremy and I, that's a very important focus area.

I appreciate that. We haven't talked much about kind of the fiber business. But what's the -- a lot of government programs kind of going on right now, obviously, the infrastructure plan is a big one, but we also have the rural digital opportunity. Can you just talk about the government programs in place and what that means for fiber business?

Yes. So depending on how you stack them up, we are looking at billions of dollars, right? Actually, more than $100 billion in total across 3 different programs around infrastructure. And I think in our minds, what is important is there's a portion of that, which is -- tends to be a little more cyclical, like telecom build down and up. And there's a portion of that, which is very sustainable around what I think of it as the -- you build either the super highway or you build the access. So the highway gets built once in a decade and the access gets built all the time, right? We're in the access business. So the customers we support in broadband are building more access and they're benefiting currently, and they'll keep benefiting from these infrastructure support programs. So we actually are very bullish on the -- on our broadband business. And then within that, we are even more bullish on the fiber portion, which has become approximately 40% of our broadband revenue. Now it used to be 0, right? Something like that 4, 5 years ago. So it's really made a lot of progress. And part of it has been driven by acquisition, but a lot of it is also organic now. So yes, so broadband and within that fiber benefiting from these programs is a big focus of our strategy.

Yes. When you think about these infrastructure support programs, have they already started driving activity? Or do you think most of the benefit there kind of is still in looking forward?

I think there are 2 pieces here. So we've seen some of our cable operator customers invest heavily in DOCSIS, subgrades or conversions that will allow them to offer services and power with some of the telcos, right? So those programs -- and I believe that in some way, they are also being supported, right? So I think those programs have started. But the bulk of the infrastructure support is yet to happen. And we will benefit from that, I think, over the next 4, 5 years, at least. And if it extends beyond that. I mean if you think about it in the U.S., like all of the infrastructure, I think we found that there are other countries that have leapfrogged ahead and it's now this catch-up time, right, whether it's industrial infrastructure or broadband infrastructure or even building infrastructure for that matter. So -- yes, no, this is -- it's yet to happen. I mean that's the short answer. Most of it is yet to happen.

And when we kind of think about demand in 2023, obviously, there's a backlog. So that's to driver our growth. Obviously, a lot of secular trends. And when we look at orders, orders can be down, but that doesn't necessarily mean that demand is down. Obviously, everyone, I think, at this point is kind of plugged into lead times and those compressing. When you talk to customers, do you sense any softening in actual demand kind of for the solutions because there is obviously some macro concerns out there.

The short answer is no. So we look at 2 metrics very carefully. One is the point-of-sale data from our channel partners, right, which has actually been strengthening. And second, we look at our project bookings, and think about this, right? Our project wins translate into bookings over time, right? We may win a big $30 million project, and then it will get piecemeal over 3 years, right? So our project pipeline, our point-of-sale data is not weakening. I would even say at this point, as reshoring goes up and there is still a shortage of labor. On our industrial market, if anything -- it's actually strengthening. On the broadband markets, it's certainly benefiting from the sole secular trend. The one area that we anticipated would be weak. And I think we did a good job of pivoting away from it was commercial real estate in our Smart Buildings segment. But as of Q1, for example, only about 20% of our Smart Buildings revenue. By the way, Smart Buildings revenue is approximately 20% of Belden's total revenue. And of that, only 20% came from commercial real estate, 4%. The other 80% actually came out of health care, higher education, hospitality, multiple vertical data centers and federal investments. So if I think of those markets, they are different from commercial real estate in that. In commercial real estate, the deliverable is somebody should be able to come in and plug their computer. But in these markets, it goes beyond that. There is another KPI they're trying to solve, whether it's availability or remote learning or emergency services, there's another KPI. And they -- that market is not going down. And it's more of a retrofit market. So really, across our customers, there's a 1 piece, which is commercial real estate, where I see a little bit of weakness -- everything else is, frankly, as we had anticipated, which is why we did not change our guidance. I mean we actually took up with the effect of Sichert's acquisition for 2023, we -- at the high end, we're guiding $7.25 on EPS.

Yes, absolutely. When you see your distribution partners, do you think that they've already brought inventory down to an appropriate level to reflect where lead times are at today and where demand is at today? Or is the expectation that the -- those channel partners, there still may be some level of inventory out?

I think there's more to happen. I think they've started the process. We -- our distribution partners are typically very well entrenched companies is very well capitalized. They know the market trends reasonably well. And for example, WESCO is one of our channel partners, right? And they're a public company. So in general, I think we will see a little bit more of that in 2023 before it becomes completely normal. But I will say, within that, if I look at Belden's portion with those partners, we, I think, did a great job of not over shipping in 2023, right? Most of what we shipped went out of projects. So our partners have been telling us that overall, we have problem X, but the problem with you is much smaller than that, which I think makes us feel very happy.

Yes. Yes. Absolutely. Maybe going to the 2025 targets a little bit. Can you just maybe kind of talk about the high-level 2025 target, kind of progress made to date and kind of where we stand with almost kind of 2 years out.

Yes, sure. So we gave those targets, to your point, about a year ago, it was in June of last year. We had an Investor Day. And at the time, we were guiding EPS for the full year, I think it was about $5.70 for 2022. And we said, look, we just came off a 3-year where period where we grew double digit. We delivered 30% incremental margins over that 3-year period, and we grew EPS at a 12% CAGR over the 3 years. So we said new targets going from 2022 to 2025 that said we were going to do the same thing, deliver GDP plus growth with mid-single digit roughly deliver 30% incremental margins and 12% EPS CAGR again. And so that would have taken us from $5.70 to $8. So the target was really an $8 EPS target for 2025. Now since then, over the past 12 months, we far exceeded our expectations for 2022. And we're guiding now at the high end, $7.25 for 2023. So with 2 years to go, we're 1 year in, and we're more than 2/3 or 2/3 roughly the way there. So I think we're in great shape relative to those original targets. And I think we're feeling good about all the progress we've made for sure.

Yes. I mean when I kind of compare to peers, the incremental margins stood out to me. Can you just kind of talk about the drivers of that because 30% equates to a lot of margin expansion.

Yes. So yes, so when you look at Belden, I think people don't realize how good our gross margins are sometimes. We had -- in the first quarter, our gross margins were about 38.5%, which is unusually good for us. I think we're -- we guided roughly 37% for the full year. But we're kind of high 30% gross margins. On an incremental basis, our gross margins are about -- are in the low 40s, call it, 42%, 43%. So basically, the math was you grow mid-single digits, you deliver 43% incremental gross margins, you keep R&D flat as a percentage of revenue, which is for us pretty small [ 4-ish ] percent. And then you grow SG&A about [indiscernible] as revenue. And that's the math how you get there to the 30%.

I appreciate that. I may turn back to Ashish. Maybe you could ask one on price. Obviously, the whole world has taken outsized price over the last 2 plus years now. And kind of where we are at today, inflation, not gone, but cooling is probably the right kind of tag line. But for kind of a company like yours, and I think you would probably argue the value I'm providing to my customers is maybe higher than it's ever been. So kind of -- kind of taking those 2 sides, how do you feel in -- how do you see price developing from here?

Yes. So we did get ahead of the inflation problem early. We did pricing in '21. We did pricing in '22. And I thought we executed pretty well. There was a little bit of price in our Q1 results, which is a kind of carrying forward. But really going forward, we haven't modeled price per se into our numbers. But obviously, there's opportunity, right? Because like you said, there was a case where we were working with the monorail system, and they were solving a problem that caused them a $9 million loss per annum. And the BOM and the solution we were providing was actually at $2 million. But to me, I could have charged $9 million, right? Now obviously, that's theoretical, and there's somewhere in the middle that we have to charge. So I think we would see more and more opportunities where we are able to get a bigger slice of the value. But at this point, the guidance we've given and the numbers we've shared we've not baked that in, right? So we look at that as more opportunity. We also need to get better, Chris, at doing this. And in a way that doesn't hurt our customers, and we want to establish longer-term partnerships with them. So the goal of the solutions approach is not necessarily to drive more price or price percentage, but really to drive more stickiness and bigger contracts.

Yes. It's a great example and certainly kind of speaks to the strategy. When you know the value you're adding, there's a little bit of a legal room for both parties to go ahead. So we're up on time. But thank you to everyone in the room for joining. Thank you to everyone tuning in. And most of all, thank you guys for joining us today. Very much appreciate the conversation in having you here. So thank you, both.

Thank you.

Thank you, Chris.