Fidelity National Information Services, Inc. (FIS) Earnings Call Transcript & Summary

Good morning, everyone, and thank you for joining Citi's 11th Annual Fintech Conference. I'm Ashwin Shirvaikar, Citi's Global Head of Fintech Research. My team and I cover the business processes and IT services sector. For our next session, we have FIS, and it's my pleasure to introduce Woody Woodall, who is the CFO. Woody, thank you for doing this for us. Again, I really appreciate it.

Thank you, Ashwin, for having us today.

Absolutely. Woody, you addressed perceived disruption risk with your 3Q '21 earnings sort of a multi-pronged approach you're taking toward it. Clearly, the easy part to get is the dividend increase and you can also expand your investment excitement, but have investors began to acknowledge your points on the disruption theme itself?

Yes. A couple of thoughts on that, Ashwin. First of all, we have seen investors starting to acknowledge some of the points. There's some different vectors some of the investors may be asking questions on them. But overall, they are appreciative of the disclosures, the incremental disclosures. We are seeing more competitive challenge in certain small pockets. We highlighted it, didn't run away from it and tried to articulate it where we're seeing significant wins and competitive differentiation in other parts. We try to highlight that, and that seems to be resonating as well. The other component would be the dividend increase itself where we're seeing some of the income investors starting to do work in making inbounds now at this point because I think we're really the only large cap fintech with a sustainable market yield growing at 20% per year. And then you've got some competitors in the marketplace compared to like an ADP or a Paychex or an Accenture, where we have better growth profile components, and they've had their own disruption fears in the past, and we're growing faster and trading at half the multiple. So we're seeing work going on right now. With regard to acknowledging the points that we made, yes, I believe the market has started to acknowledge some of those points that we made, and we've seen some early signs of people going, "I get it now. I see where we're headed. I see kind of what we missed," at least on some of those circumstances.

Got it. Got it. Can you discuss your updated capital allocation strategy? I mean we all understand you can make organic investments, do M&A, return capital to shareholders concurrently. So these are not either/or, but maybe some help around the thought process of prioritization would be great.

Yes. I think really the capital allocation policy, which we really highlighted, but didn't change dramatically, right? The first priority for us is to invest in growth whether that be organic growth or through M&A activities that can either supplement or extend our growth profile, that would be the first and the highest priority that we have. We are a significant cash flow generator. So it gives us flexibility to do some other things as well in terms of giving cash back to shareholders through a dividend and increasing that dividend without impeding our ability to invest for growth organically or inorganically. And then obviously, we've historically looked at share buyback as part of that overall capital allocation priority too, and you've seen us buy back significantly this year at these valuation levels. We bought back $2 billion through the third quarter and have the opportunity to buy back a lot of shares next year as well as we continue to generate free cash flow and continue our recovery from the pandemic.

Got it. Okay. Okay. Now in terms of the decision to sort of accelerate the dividend growth rate, the one question I've gotten from investors is why not buy back even more shares, given the very attractive valuation and the investors saying this. So -- or on the opposite side of the spectrum, why not say that you recognize growth is the only thing that seems to matter to certain investors and maybe accelerate client acquisition efforts. So I've gotten both sides of the spectrum. In terms of that kind of point of view whether you could have done something else, what's your response?

Yes. A couple of thoughts there. Moving the growth rate up from 20% to 10% really is helping us get back to a more normalized payout ratio and then increase that payout ratio over time. We've actually seen a decrease in the payout ratio in the last few years because EPS growth has outpaced the growth in the dividend. We think that about a 35% payout ratio long term. And based on our expectations of EPS growth, that's -- the latter half of this decade is when we get back to it. To your other point, thinking about, well, you could have bought more shares back. The incremental spend on dividend next year is about $100 million. And compared to our roughly $4 billion of free cash flow, it's not going to slow our ability really to buy shares back at all next year and really probably over the next several years either, in terms of our ability to buy shares back and continue to invest for growth. So broadly, that's why we did it to potentially attract some new buyers as our multiples are significantly below others that are paying and growing their dividend at that rate. Secondly, it's not a significant increase next year compared to the overall cash flow generation and still allows us to buy a lot of shares back next year, which would probably be our default if we can't find M&A activity that can help us drive that growth we talked about.

Understood. Understood. And in terms of that M&A, what might some of the target areas be in terms of, to say, capabilities or geos? Would you consider doing a larger size deals, say, adding scale instead of capabilities? I know investor thought process nowadays does go the opposite way that capabilities -- anything that gets you faster top line growth matters more, but scale and bottom line maybe equally important at least...

I'd like to think we've been disciplined allocators of capital in the M&A front over the years, Ashwin. We try to make sure we drive things that incrementally create shareholder value. I would tell you right now, we're probably looking at some things that are probably smaller in nature and can be pushed through the distribution channel. Some of the challenge with that is the valuations are pretty rich. So actually creating value versus destroying it sometimes is a challenge and doing the actual math. But I think in the short term, we're probably not looking at anything transformational. We're just completing the Worldpay integration work here, just finishing it up. We're just getting the balance sheet back to where we wanted it to be in terms of leverage and getting back there and probably would do more default to share repurchase and/or tuck-in M&A in 2022.

Yes, yes, yes. I get this question a lot. And in fact, 1 question just came in from an investor. And I think this -- you highlighted it in your deep dive that you did on the earnings call into Merchant, where you've historically not targeted the SMB segment and global e-commerce. So from that particular perspective, would you rely on M&A, perhaps to close that gap? What's the strategy around competing in the SMB space where it is intense competition?

It's a great question. We're excited about it being TAM expansion in a place that's growing rapidly, and we really don't play there today. We think there are a number of folks out there that are doing very well in that space without any competition from, say, a scale provider like ourselves. We've been pretty focused internally in getting the new acquiring platform up and running and get our customers converted. We've also been very focused on getting Access Worldpay in that single gateway, that single integration point up and running and tuned, if you will. I think, looking at some abilities for speeding our onboarding and speeding some of the underwriting capabilities might be some area for M&A that could help us go into there. So from a go-to-market and a strategy standpoint, I think it would be a combination of trying to take our existing capabilities down market, but if we can supplement those with finding some things that help us go a little faster with some small M&A on that front, that'd probably be where we would go.

Okay. Okay. Got it. In terms of just kind of talking about broadly talking about where you believe you're most differentiated. And I know that you do so many different things. It's not an easy question, but maybe your fastest growth areas might be indicative of where you are most differentiated or where you're personally more excited from a product perspective. Could you talk about which areas those are? And where specifically in your conversations do investors seem to have the most fears that you could be disruptive?

Got it. I'll probably give you some color by segment as to where we think we're most differentiated. I'll start with banking. I think banking has surprised a lot of people over the past, call it, 3 years, 4 years. And it really goes back further where we started making investments in modernizing our architecture, we get coin with legacy tech a lot right now, as you know, in the sentiment, the narrative, we think we've got a lot to move forward out of that thought process with our banking architecture, the underlying infrastructure, about 80% is in the cloud today. That's about as much as we can get in the cloud, given some of the things that we do process on. The technology is there, the underlying infrastructure is there. Now we started upgrading the application stack, really through a combination of PaymentsOne, Digital One, Modern Banking Platform or MBP that you've heard a lot on that are resonating in the market, trying to push new products into the market faster. And I think you saw the win rates. One happened, as you've seen revenue accelerate on that front now with that moving forward. So I think that's probably the most differentiated space there. We've had 16 MBP wins. Really, I don't think anybody else has won in that space on a fully outsourced basis. And we feel very good about our competitive position there. PaymentsOne is the same way, Digital One is very similar. We continue to upgrade there. So that would be banking. If you move to Merchant, I think we're differentiated still by global e-commerce. It continues to be our fastest grower. It's about 27% of our Merchant revenue now. It's becoming a larger and larger portion. My goal would be to try to get that to 50% of our overall Merchant revenue over time. We're about 50% domestic and about 50% cross-border with the cross-border, obviously growing significantly faster than domestic. And then if we can make some inroads into the SMB space on e-com with our differentiated capability that could continue to supplement and drive that growth at accelerated levels, so we feel really good on the Merchant side there in terms of our competitive differentiation. And then Capital Markets being the third, we've also seen some revenue acceleration probably surprised some people in our ability to take that business and transform it through a heavy license on-prem to a bundled SaaS offering that's very sticky now and has much more cross-sell opportunity within capital markets and even across the broader segments of customer base. We've set a good bit of cross-sell into our Merchant enterprise customers, particularly also the cash management and treasury management capabilities there. And that's really differentiated us right now is that end-to-end product capability versus a very siloed approach that we had in the past. In the future, I think we can continue to unlock value by componentizing the assets that we have and let people consume those and create different experiences in a way they want, whether that be new fintechs, neobanks, existing FIs, large enterprise merchants or others and feel really good about our ability to continue to drive differentiation compared to traditional competitors.

Okay. if I can go back just a clarification question on one of the comments you had there, global e-commerce, you called out 27% of Merchant. That's -- after it's been beaten down on the travel side because you had pretty good travel exposure, airlines and such, which has not yet recovered.

That is correct. Travel is still significantly below 2019 levels and should be a tailwind for us going forward, but we don't anticipate sort of full recovery of travel at least in our forecast to probably fourth quarter of 2022. What you're seeing right now with it is incremental growth because even during the pandemic, we picked up new names in terms of sales wins including names like Gulf Air, Lufthansa, Norwegian Cruise Lines, Allegiance. So we picked up some additional customers there. And as travel comes back, you will, not only, get the volume coming back from travel as restrictions continue to get reduced and people travel more, those new wins that we had during the pandemic are going to start seeing volume come from those new wins as well. So we feel really good about it being a net tailwind through 2022 and even beyond with the new customer wins.

Great. Great. Are you already seeing sort of your inter-quarter spend trends pick up any impact from -- I know this is relatively new, but U.S. border reopening, I mean, that's a huge thing...

We certainly saw October trends better than September trends. Today is the 15th of November. So I'll really start seeing intra-month data today, but I haven't seen it as of yet. I've been pinging the team pretty regularly as we saw some of the international restrictions to see where we're -- what we're seeing. We're certainly seeing some incremental bookings as expected. So a little early to call the ball on it, but continues to see that trend we were seeing.

Yes, absolutely. Let's go back to banking because that's sort of -- as you mentioned, I kind of recall one of my last physical meetings in terms of pre-pandemic was actually in your offices in Jacksonville, back in like late, late February, and everyone wanted to talk only about banking from a negative perspective because there was a lot of, like you mentioned, skepticism. So in there, you had a lot of success. Moved clients from pursuit to signed contract stage. Do you need to now replenish the pipeline? Or is the pipeline getting replenished as you sign? Where -- I mean, -- Is it a steady stream of contracts now that MBP seems to be more proven?

Yes. I think a couple of things. Getting that first MBP contract was really important. As you know, that first customer that decided to go, it was really important and getting that customer up and running and live and being able to have a referenceable account, all those things start to build on themselves. At this point, we've had 16 MBP wins, 6 of those are live right now. So that pace of play is continuing to grow. I do believe the large institutions are at an inflection point that are going to need to continue to go through an upgrade cycle over time to remain competitive long term. I think we're seeing that right now and benefiting from that. The pipeline continues to be refilled. We announced a few MBP wins per quarter, it seems now. So the pace of it continues to go through then we get them implemented, then we resign and build the pipe again. So it's robust. I think further, when you look at sort of bank IT spend, the amount that they're spending on new technology and customer experience, customer-facing technology is more and they're getting more efficient in the back office and spending less and less on keep the lights on our older tech. So we're getting some benefit from that as well. And I think that trend will continue. We have seen very good deal closure through the first 9 months of 2021. We've signed more business than all of 2020. And yes, well, that was 2020, but 2020 was a record sales year as well. So continue to be very pleased with banking and its growth profile and its outlook for the next several years.

Yes. Yes. based on what you mentioned, we certainly see this on the IT side of my coverage, are decision cycles getting shorter given the componentized architecture or your implementation ramps getting shorter? What -- and finally, what impact does that have on your financials, your profitability?

Yes. It's a good point. I would tell you that more and more referenceable accounts and people seeing the wins and seeing the live customers and being able to talk to them. I think that certainly helps the sales cycles. Does it cut them in half? No, but does it take a month or 2 off? Maybe of a 12-month sales cycle, probably yes. The other thing that is in there is that you do learn as you go with these implementations, and we've been doing them almost 100% remotely now for, going on 2 years. You improve, you get more efficient. So those cycles are certainly helping as well. And I think that's 1 of the things you've been seeing in our accelerated revenue growth is some of these MBP coming on a little faster. We've accelerated from 5% to 6% to 7% and continue to expect accelerated growth revenue in banking in the fourth quarter. So we feel really good about how it's not only going from pipeline, which we talked about several years ago to sales, which we talked about several quarters ago. Now into revenue and then accelerating into our P&L.

Got it. Got it. So just to put a finer point on that P&L question. I mean, would this, down the road, sort of result in maybe better margin improvement just because you can do more stuff remotely, there's more components, these flow together just easier? And presumably, if you provide more value, you might get paid for it as well. So I'm just -- from a -- how should investors think long term?

I think it's absolutely part of our ongoing ability to drive margin expansion and generate operating leverage through the business. The modern architecture that we have within the data centers, the cloud technology, the cloud-native applications, it's faster, it's more efficient. Our ability to tweak things and get things live is quicker. So all of that helps with that operating leverage, Ashwin. That's what gives us confidence in that 50 to 100 basis points for the foreseeable future in terms of margin expansion expense.

Okay. Okay. And are there significant investments left or development of new modules for Modern Banking Platform? And is there a timeframe you can talk to?

There's always going to be some investment in Modern Banking Platform. We started out with just simple deposits. We've moved to sort of some of the simple lending capabilities that was dropped last year. That was actually our first cross-sell form a customer who signed deposits and then moved into the lending side. There will be ongoing investment in the Modern Banking Platform to build out full front-to-back capabilities at the same level as some of our other existing capabilities in market. I think that's all within our existing investment guidance of, call it, 7% to 9%, 8% of reinvestment of our revenue back into CapEx, which is primarily software development. So no incremental investment, but again, continued ongoing investment particularly in not only Modern Banking Platform, but payments won, there will be some incremental investment in Access Worldpay and NAP as we go along to continue to make it better, more relevant and easier to do business with.

Got it. Got it. If we could shift over to speaking a bit more about Merchant. And obviously, we have 1-year stacks, 2-year stacks, sequential comparisons. In -- more an analysis, when you put everything together, does your Merchant business, generally speaking, over or under index against Visa Mastercard in particular areas like are you over-indexed on certain verticals, under indexed and others, things like that?

Yes. We've generally -- and we lay the information out there, we generally tracked in line with sort of Visa Mastercards volumes. We may not do it on every quarter basis. And depending on the verticals, it may be a little more or less. For example, in the third quarter this year, we're probably a little below Visa MasterCard. I think because our SMB exposure is a little less than others in the marketplace, is that return to opening. Conversely, midyear last year, our volumes were a little higher as more people going into the grocery store and into the pharmacy than others. And the SMB space was really more shut down last year. But largely, in our scale business, we generally track roughly in line with them and have over a number of years. We've continued to articulate that as we've talked about. And we finally just -- we just kind of opened the kimono last quarter and said here's the data. Here's how it's really tracked. And people have nitpicked on a couple of things here and there, but generally, they're getting it and saying broadly, you are tracking there. You feel like you are coming back from a pandemic, which is what we've been articulating and talking about for a while. And we just frankly, disclosed a lot of data out of here at this point to try to remove people's thought process around this share-loss narrative or heavy-disruption narrative.

Yes, yes. No, I would highly personally -- highly recommend that you continue disclosing that -- provide quarterly updates, that would be really useful for investors in terms of just understanding who you are now post-pandemic, post-merger. But in your Merchant deep dive in the 3Q '21 earnings, if you broke merchant into global e-com enterprise software-led SMB and so on. Can you maybe provide an overview of trends by category and growth prospects?

Yes, sure. I think about global e-commerce and really decouple that from some of what others call e-commerce. Ours is truly web-only merchants. It excludes omnichannel revenue. That omnichannel revenue is really included primarily enterprise -- It's our fastest growing client type. We've got 50% cross-border, 50% domestic. Cross-border continues to grow much more rapidly than domestic. That's why we continue to try to expand geographically and expand geos that we can provide and consolidate those in markets outside the U.S. volumes. It seems to be what most of those web-only merchants are looking for is to consolidate those domestic players in other countries, and we continue to invest to try to get there as fast as we possibly can and grab that market share and market opportunity. Within enterprise, enterprise is in North America primarily, but also have our U.K. business. It's really merchants with more than $5 million in annual sales volume. These are very complex, large merchants generally for us. They're typically priced on a transaction basis. We continue to wrap multiple services around those with deep, long-term relationships that are interfaced into these large, complex customers that make those much more sticky in terms of relationship and our ability to give new capabilities in that space is what's really driving a lot there. And then finally, we broke out the SMB space for us, which is roughly 25% or so of the overall merchant revenue. Those for us -- our cut on it was customers or merchants with less than $5 million of annual sales volume. We tend to traditionally go there via a partner-enabled or ISV strategy, being a more neutral player there and plugging our payments capability, our back office capability into those software players. It's done really well in my mind in terms of recovery in retail and in sort of what we call in all other verticals where that vertical expertise and the software expertise is important. Where we've had a little bit more of the challenge has been in the small business restaurant, which we tried to highlight on the call. And then our real opportunity in my mind is in the SMB space is around taking our e-commerce capabilities into the SMB space, which ultimately helps us continue to outpace overall market growth, overall TAM growth. and really lets us enter a new higher growth market that we really haven't played in, in the past.

Got it. Okay. Okay. And then you -- in terms of just the differentiating factors that a merchant might use to select your e-com platform say, or competitors. And you, in your classification, separated out web-only, but is that how your merchant clients look at it? Or is it your classification? I mean, should it not be more omnichannel? I mean can you talk about the differentiation?

Yes. We think about it in terms of these -- we have only merchants that are trying to consolidate vendors around the world. We think that's a significant opportunity. If we have an omnichannel customer call it like walmart.com, we're certainly going to provide capabilities to them. We just capture that within the enterprise group as we're going to service that merchant, that customer across all the different capabilities that they consume, which are multiple. When you think about e-commerce itself, we really try to compete on complexity, geographic reach and authorization. And we think we're differentiated in the market there. We really shine the more complex the transactions. I think a good example of that has been our ability to win in crypto and 7 out of the 10 crypto exchanges now we've been able to win on some of the very large multinational areas like Disney+, for example, where every time we open up a new geo, they can just turn it on and go live. And we've seen authorization rates help us win competitively in the marketplace. We just picked up crypto.com off a competitor who was really driven off authorization rates, which were significantly better, the Stroll Hacker Group recently recognized us as having the best authorization rates in the market, and that's where a lot of those competitive wins at the end of the day help tilt the scales in our direction is around auth rates.

Yes. Okay. Is that same thing important also to the SMB market as you kind of then now target that? Will there be different differentiation that...

I think it will be some level of differentiation while the auth rates are always going to be important regardless of client size or where they're at, I think onboarding customers in a more simple fashion, underwriting in a more simple fashion are going to be things that we've got to continue to build out or buy to help improve our capability. The underlying engine is very strong in industrial and strength. We've got to find ways that it's a little easier for some of those SMB merchants to onboard.

Got it. Okay. Okay. In terms of just the reasons why FIS has not historically targeted that segment, what was it? I mean, the reason -- was it a technology gap that you'll now need to close, is the sales and distribution just very different? Any thoughts why you weren't...

Yes. I think at the end of the day, it was bandwidth, Ashwin. I mean at the end of the day, Vantiv and Worldpay were trying to come together and put their e-com capabilities together. They were winning in multinational areas. FIS comes and buys Worldpay, we start combining them as well. We've got significant global reach. So we're pressing that global reach as fast as we can and then getting the new acquiring platform up and running, getting Access Worldpay up and running, which is a much simpler single point of integration is going to be helpful. Combining all those together is why we really haven't gone into the SMB e-commerce space with bigger at this point, but as you know, we typically -- once we go into a space, we go in with bigger and we feel good about our ability to execute. When we make a decision, and that's kind of where we're at. So we may need to build some incremental capabilities. We may need to buy some incremental capabilities to make it even better, but that's the direction we're headed and feel good about.

Got it. Okay. You mentioned crypto. Obviously, that volume coming in can be quite significant partly, I would imagine, just being crypto MDRs are very attractive and partly that volume can come in good spikes. What kind of lift has crypto given to you recently? Is it easy to call it out? Should investors worry about sort of comp next year?

Yes. It feels like at this point, the traction that we've got in crypto is going to be much more sustainable in terms of the exchanges in the sales that we do. Again, we've got 7 of the top 10 exchanges out there. We've got 20 crypto merchants. Has it helped some this year? Absolutely. Do we believe it's going to continue to help in 2022 and beyond? Absolutely. If there is some volatility around there, Ashwin, we would call it out. But right now, we don't see anything that we would highlight to say, "Hey, look out for next second quarter or third quarter in terms of a comp around crypto." It's just part of the overall growth rate. Just cleaning up our recovery from the pandemic has been much more of our focus right now to try to get people focused on our recovery in the 2-year stacks have been coming back and up into the right versus trying to highlight some other incremental comp that might or might not be in there. But very pleased with where crypto is. I think within the marketplace, we've got a very good reputation in there and being able to really leverage that going forward as we believe crypto is going to continue to be an ongoing growth engine in the marketplace.

Got it. And one question we get is sort of the yield dynamics between transaction and volume growth and revenue growth in the Merchant segment. Any thoughts on what investors should look for going in the next year?

Yes. We've traditionally seen yield being a few points positive to overall volume growth. If you go all the way back to Worldpay and Vantiv, we believe long term, that's probably about where we'll get again because the way the pandemic impacted us in terms of our verticals and the yield, we've been trying to highlight it very crisply. We've got probably 60% of the revenue is on transaction versus volume mix. So average ticket size really matters, really mattered last year as we saw people go into the grocery store less and less with huge average ticket size growth. We're seeing that starting to come back down. As it comes back down, that creates significant yield tailwind. Some of the verticals that we serve, travel and airlines, for example, and some of the best yields that we have. So we anticipate that to come back. If you look at where it was compared to 2019, it was a minus 16% in 2Q. It was a minus 7% in Q3. We anticipate that to continue to improve as we fully recover and the various verticals fully recover. But net-net, we've seen yield be a few points of positive to volume on a very normalized historic basis.

Got it. Okay. Okay. Just shifting briefly to capital markets, an incoming question from an investor. Are there any synergies in keeping capital markets together? How do you think of simplifying the corporate structure by divesting that freeing up capital, it could lead to a re-rating of the market multiple.

Yes. A couple of thoughts on that, and we've had some questions. One, we do what we believe is a really good job of integrating companies. And when we integrate and we don't just cut out some redundant costs, we truly integrate the companies, utilizing a leveraged operating model to drive margin. And that's a difficult thing to unwind and has significant dissynergies just like the synergies that come in when we integrate it. So that's 1 thought that we have. The other thought that we've had is looking at cross-sells, a good bit of our cross-sells from cap markets particularly in cash management and treasury management capabilities have been into some of the large enterprise merchants. And you're seeing cap markets accelerate its growth rate. That's part of it as well. So thinking about pulling this apart, we tried to highlight on the call some of these "Super users" that use, really, capabilities across all 3 segments and really, where we want to go longer term is to create a platform where financial services can be consumed on a little more componentized basis. And if people want to go create a new experience, whether they be a fintech or a merchant or a new player in the market or an end-to-end neobank, however they want to capture what they want to do from a customer experience, they can capture that via us, bolt that together and then have a new capability. So that's one of the really important thinkings from our perspective in driving long-term value and unlocking long-term value is being able to create these cross-segment capabilities. Both on a sales perspective and in a product perspective.

Understood, understood. We're kind of running up on time here. So any last thoughts if you want to leave investors with, with regards to where you are? What you're hearing? Things like that.

Yes. It's a great question because as you might imagine, we've got a ton of questions over the past 18 months. Why is the stock not performing? What's going on? You're losing share. We try to dispel that with data. We'll continue to provide data, so investors can make their own cases about how to underwrite the stock and how to think about our future in terms of its success, we'll continue to highlight transparently, wins, where we're headed strategically and how we're going to drive it. We still feel very good about our midterm outlook, that's 7% to 9% on the top line. and 50 to 100 basis points of margin expansion, and we'll continue to allocate capital in ways that we think are going to create long-term shareholder value. We also believe there's a significant disconnect in valuation and fundamentals and we'll continue to stay in the market buying shares back at these levels. But I guess that's how I'd end it because that's really the dialogue I've been having with almost everybody for probably a year or more now, Ashwin.

Okay. So why except I don't have like $2 billion to buy stock with. But thank you very much for your insights. I really appreciate it. Thank you for being part of our event.

Thank you for having us, Ashwin. Good to see you.