Ford Motor Company (F) Earnings Call Transcript & Summary

Hello, everybody, and welcome back to our Global Auto Summit here at Bank of America. Thanks for taking the time to join us. Next up, we have Ford Motor Company, and we're very happy to have Hau Thai-Tang, the Chief Product Development and Purchasing Officer; as well as Lynn Tyson, Head of Investor Relations at Ford. Hau joined Ford quite a while ago. Hau, I think it was in the early 1990s, and has over 25 years in product development and took over the Global Purchasing role in 2013. So Hau has a real robust perspective on the balance between launching fantastic products, but at the right cost and at the right time. So Hau's got a great perspective on the real things that matter at Ford, being product and cost. With that, I'm going to turn it over to Hau for a couple of opening remarks, and then we'll get into Q&A. Hau?

Good morning, John. Thanks so much for the introduction, and thank you for having us. And good morning, everyone. We really appreciate you guys joining us this morning. I'd like to start by just maybe panning back and giving folks a sense of the progress that we're making. So it's been a little bit over 3 months since we've made some of the leadership changes and Jim Farley was appointed the COO. One of the first things Jim did was he got his leadership team together. And he introduced a really simple, but powerful framework that you see on Slide 2 of your WebEx deck, "Fix, Accelerate, Grow." And it's really a really good frame for us to think about what we need to do in terms of the now, near and far. During that first meeting, our leadership team reflected that Ford was really at our best during a crisis. And we talked about how could we possibly harness that sense of urgency, consistency of purpose and spirit of working together to really accelerate our progress. Little did we know that at that time that COVID-19 would become a global pandemic and really create that platform for us to accelerate our progress. Jim Hackett has reminded us that we shouldn't waste this crisis. And we're taking the opportunity to fundamentally transform our business. So let me talk you through a couple of aspects of this framework and just give you a couple of examples. I want to start first with the Fix. This is really all about the now. It's about urgency and focus on improving our execution, making tough choices and strengthening our business to improve our financial results. First is launch. We are really excited about the significant refresh of our product portfolio. The new products that are coming online in North America, for example, F-150, the Mach-E, Mustang, the Bronco and our another new incremental utility vehicle. They're all primarily incremental products for us, with the exception of F-150. We're launching into hot segments that are growing. And there are examples of us delivering more targeted and differentiated products to the marketplace. It's also a signal of us taking advantage of some really strong iconic brands like Mustang and Bronco and doing brand extensions to really leverage and harness that power of the brand in terms of pricing. The demand and interest on these new products has been really strong based on the reception that we've got in the preorder bank. And this, plus the fact that, as I mentioned, 3 of the 4 in North America are incremental offerings. We're not going to do any additional delay to these launches beyond the impact of COVID-19 as a mechanism to conserve cash. I know that's something that some of the other OEMs are doing. However, given our inability to work in the assembly plants during the shelter-in-place restrictions, it will have an impact to program timing in terms of the launches, but we expect to launch delays to be commensurate with the duration of the shutdown period. The next area that I want to touch on under Fix is really around improving our quality and warranty. Clearly, our warranty cost need to improve. Our spend in 2019 was almost approaching $5 billion. That's a staggering number. If you peel the onion back, the majority of this cost can be attributed to warranty coverages. So our vehicles are covered 3 years, 36,000 miles, bumper-to-bumper. And then for the powertrain, for a period of 5 years and 60,000 miles. So the coverages as well as the recalls had been the bulk of that spending. We're taking actions as part of our redesign last year to improve our long-term product quality and durability, including within product development, changing the way we work, really centralizing the decision authority and sign-off authority around core engineering and bolstering our systems engineering as well as design assurance processes. The good news is we're starting to see progress. So for example, if you looked in 2019, Ford was the second-highest-rated OEM on the J.D. Power's Initial Quality Survey. This is looking at 3 months in service. But the good news is, we're starting to see it flow through for high time in service. The other J.D. Power survey is the VDS, or Vehicle Dependability Survey, and both Ford and Lincoln are up in the top 5 of brands in the U.S. So really good progress, green shoots of the traction that we're getting. We expect this to flow through over the years as our vehicles built 3 to 5 years ago start to move out of the coverage period. The other thing that I'm really excited about is the ability now for us to leverage the data that we're collecting from all of our vehicles. We have 100% of our fleet in the U.S. now connected. And our new F-150 and Mach-E will also have over-the-air update capabilities. So the combination of these things will allow us to really reduce our exposure and cut off problems before they turn into a much larger population of issues. And then finally, we're working in a collaborative way with our suppliers to improve quality, but as well as share in the warranty cost as we incur them. The next item under Fix is around cost. We've made some progress, especially with the restructuring actions that we've implemented in Europe and in South America. That have generated significant structural cost reductions, but we know it's not enough. We have a lot of opportunities here, especially in North America, where we have tremendous volume and leverage. Our focus there is first on variable cost. This is the material cost, the logistics as well as the labor cost that go into each and every one of our vehicle, but we're also looking at structural costs and rightsizing our workforce to be commensurate with the natural demand in the marketplace. Our teams are laser-focused on improving cost. And in turn, it will flow through in terms of leverage and margins as we continue to bring on new products in these hot segments and improve our mix. We're also looking very closely at capital allocation. We do a cycle plan update twice a year, and we're using the second cycle plan update in this calendar year to really scrutinize our capital allocation across product segments as well as geographic markets to ensure that they can earn acceptable returns. We're overlaying the new risk profiles in these markets as well as segments based on what's happened with COVID-19. And I'll tell you that everything is on the table. There are no sacred cows in terms of where we allocate capital. The last element is a really powerful one, focused on sales and marketing. We created this enterprise product line organization that also now is under my team. And they're using data and analytics to do very agile real-time yield management across markets and geographies. And you are seeing some of this in terms of the improvements in our mix and transaction prices. We think, again, we have a real opportunity here given the freshness of our product portfolio and the new products coming online in really hot segments. And the way we're looking at it, it's a once-in-a-decade opportunity to grow our brand favorability as well as market share and revenue with products coming online like Bronco, Mach-E and the F-150. All right. Let's talk a little bit about Accelerate. This is really areas that we think are opportunities for us to extract even more value for the company. And the 2 areas that I really want to touch on is connectivity and commercial vehicles. I mentioned that we now have almost 100% of our vehicles in North America and over 95% of our vehicles around the world connected. It's giving us a huge, huge scale advantage. So we have 7 million customers using FordPass, and we expect this to grow. I talked about the F-150 and the Mach-E having this new electrical architecture that allows us to read, write and provide over-the-air updates to the key modules controlling the vehicle. The scale of the F-150 alone is higher than all of Tesla's volume during the past year, so it just shows you the potential in terms of scale leverage. So we're using this really 2 ways. One is to anticipate the needs of our customers to better provide value to them and enhance their experience with our products. But the real power, we think, is the leverage for our business and the enterprise benefits. So for example, how can we use this to identify problems and anticipate them and cut them off before they turn into a large problem? We are able to do prognostics. We're also able to do things by looking at complexity reductions as well as which features and offerings that we offer in our vehicles that customers actually really use. And this -- and combined with the data and analytics organization, we're really able to use to extract value for our customers. So we're very excited about this. I'd like to maybe talk about one example in terms of services and focus on commercial fleets because these customers really use their vehicles as a tool for productivity. So just to demonstrate the power, we're able to do things on -- for -- with our commercial fleets to really enhance their productivity and total cost of ownership. So one example is most of these fleets offer their drivers a fuel card. And we know there's an element of fraud. So by tracking the actual fuel mileage in these connected fleets, we can compare that to the fuel card usage and identify fraud for our customers. That's a source of productivity for them. Another one is around rental cars. So one of our rental car partners partnered with us to look at how they do the refueling of their vehicles. So rather than refilling their vehicles, they basically leave the vehicles at the fuel level of which customers return them, and they basically tell the new customers to just bring it back with the same or greater level of fuel. So this results in a couple of efficiencies and sources of savings for the rental car companies. First, if the customers overfill, they are able to basically monetize that excess. If the customers return the vehicles under-filled, they can charge them for that fuel at a very accurate level using our online data. But this -- the incremental source of savings is they actually can eliminate and reduce the staff that's required to refill these vehicles. So those are just 2 really simple examples of how we're leveraging the connected platform to improve the efficiency and productivity for our commercial fleets. Okay. Let's talk a little bit about the growth, and then we'll turn it over to the Q&A. Here, it's really looking at opportunities where we think we have tremendous upsides in terms of revenue and profits. One is autonomous vehicles. We're still very excited about this and working with our partner, Argo AI, to deliver a self-driving system that we can serve the movement of people as well as goods. The second one is battery electric vehicles. We think that there's going to be an acceleration in terms of the transition between ICE and BEVs, and we're using that to really scrutinize the overlap in our product portfolio in terms of capital allocation, but also take advantage of the fact that we're fundamentally redesigning the vehicle architecture for a battery electric vehicle to transform and rethink our value proposition to the customers. One area that Jim is very excited about and really encouraging us to move faster is battery electric vehicles-targeted commercial customers. So you know we have a Transit and an F-150 coming, but stay tuned. This is an area where we think there's tremendous upside. And then the last one is the affordable products. When we exited the traditional sedan segment in North America, we recognized that one of the consequences was we need to backfill our showrooms with affordable products, but we want to do this in segments and silhouettes where we have a strength as a brand and really a right to win. And so this is something that is very targeted and we think provides tremendous growth opportunity in terms of revenues and profits for the North America business. So John, with that, that's a quick rundown of how we're using this framework. I'd love to turn it over to you and answer any questions you may have.

Well, Hau, that's a great rundown and a tremendous amount of information in a short period of time. So we appreciate it. Maybe the first question to think about sort of the supply base in the current crisis as well as longer term as you go after cost, I'm just curious what you think the current state of your supply base is right now in the restart process, how much help or hindrance might they provide in the process. And then also as you're kind of thinking about this cost and launch equation on the fixed side, how much of a role do they play in that as far as help and hindrance as well? So maybe sort of near-term stress in the crisis and sort of mid- to long-term opportunity for them and you.

Yes, John. A great question. So certainly, with the breadth and scope of the impact of COVID-19 on the production globally, so unlike 2008, where it was targeted at primarily the mature markets. I remember I was working in Brazil at the time. And we were going like gangbusters in '08 and '09. And so this pandemic is much more global in nature, and it's cross-sector. It's beyond just automotive and finance. So in that sense, we're very mindful of the impact on supplier liquidity. We've been working very closely in monitoring the liquidity of our suppliers. As you know, with the average payment terms in the industry somewhere between 42 and 50 days, they were still getting their accounts receivables, and it starts to expire literally right about now. So this is where I think we're going to be seeing some of the pinchpoints. The good news is there's been some assistance across the globe through government means, programs. And then we're also working on a third-party payment factoring programs to help our suppliers. So we think you'll see some level of distress there, but for the most part, the suppliers have all restructured since the last crisis. And I think everybody was ahead of the game here. I've been having weekly calls with our global supplier councils to talk through the planning for a safe restart, and it's been a fantastic partnership. Some of the folks that you'll be talking to later on today, so I'd love for you to get their perspective. But the feedback we get is they really love the frequency and transparency of the dialogue, and we're all working together to ensure a safe restart. In terms of longer terms, I think we'll see some consolidation. Certainly, everybody is trying to reallocate capital and resources to the new technologies aligned around electrification, connectivity, autonomy because they tend to be higher margins. But they're also recognizing it's quite capital-intensive, and the critical skills are really in high demand. So I suspect we'll start to see some consolidation. And then one of the things that we're doing and other OEMs are doing is really scrutinizing how our businesses will change going forward and what's truly going to be brand differentiating for Ford and Lincoln. And we will allocate our internal resources on those things and the things that are going to become commoditized and not brand-differentiating, we're going to reply -- rely on our suppliers to do. So that's part of the capital efficiencies as well. And you'll see our suppliers adjust accordingly when that happens.

And Hau, in the warranty discussion, I mean, do the -- how much of a role do these suppliers play in fixing that? And how much is that on Ford? Or is this sort of a team effort on sort of paying for the -- some of the problems and then also driving the solution going forward?

Yes. It's clearly a team effort, right? People buy our Ford or our Lincoln products. They don't buy a component from our suppliers. So we recognize that it's our brand reputation. Having said that, we have a great partnership with our suppliers. For every single problem, John, we go through and do a technical analysis jointly with our suppliers, and we typically try to attribute the root-cause analysis. Is it a design issue? Is it a manufacturing defect? And in both cases, who is the responsible party? And then we share the accountability accordingly. So the process has worked well. And again, I'm excited that now that we have this connected data capability and their analytics capabilities, we could accelerate that progress and, most importantly, cut off the problem for our consumers faster so that we don't incur the customer dissatisfaction and frustration with the defect, but then also reach the equitable settlement with our suppliers faster.

And maybe if we can stay on that sort of connected discussion. I mean -- so how does the data flow from your vehicles back up to Ford for you to understand there is a problem with the brake lights in a vehicle or something like that, that you fix either pre SOP or post SOP once the vehicle is out in the market. I'm just trying to understand, Hau, how that kind of really flows and how far in front of these issues you can get, but then also maybe sort of in the context of data and how vehicles are being used. I mean, it's very interesting to hear that sort of real-time you can help this to inform your build combinations and that you might be able to get the -- get better build combinations out to dealers. So I just wonder, can you get into maybe a little bit of detail of one, how you use the issues that are arising in the data stream and how fast it can get to them and then also how you think about creating better mix in dealer showrooms. Because they're both very interesting.

Yes. So John, thanks for that question. So maybe I'll touch on 3 opportunities where the connected platform and the data stream can really help us. One is around quality. So I'll give you a real-life example. We have a fleet, a commercial fleet in Europe where we were monitoring the data on all of the vehicles. And one of the things we were looking at was oil consumption. And we had a small fleet, I think they had about a dozen Ford commercial vehicles. And we noticed 1 VIN number out of the 12 vehicles having a really high rate of fuel consumption. We were able to notify that fleet just because we are monitoring his fleet oil consumption and have him bring that vehicle in to the dealership for an inspection. And we found out that he ended up having a plugged catalyst and that was causing the high rate of fuel consumption. Now if we had done nothing, that most likely would have led to a catastrophic engine failure that would have incurred a high cost for him to replace the engine, but more importantly, it would have resulted in downtime for that vehicle. And so 1 vehicle out of 12 for a small commercial fleet is a really important high-leverage impact on his uptime. So he was delighted that we were able to get the issue resolved. We then, as a company, identified a special cause that caused that catalyst to be plugged up, and we were able to put that fix in. So in the past, we would have waited for 3 months in service data, maybe 1 year in service data. And then by the time we recognize the problem and put the fix in, we would have had a huge population of potentially vehicles out there with this problem. And that's what's driving the high coverage cost that I talked to earlier. So we're really excited about that opportunity to be able to first diagnose, moving forward, being able to do the prognostics around quality issues. The second one you mentioned is mix, and this feeds right back to the yield management at our enterprise, a couple of my teams are doing this. We were able to monitor which products are selling well. So certainly, in Europe, we can look at it across countries. But even in the U.S., we can look across states and regions and do things like redeploy products, changing the build combinations in our manufacturing plants, going back and changing the capacity in our supply base to build the mix of vehicles that cannot meet the real-time demand of our customers. So this has an immediate impact on profitability, but it also helps us in terms of throughput because we're not changing over our final assembly plants as well as our supplier plants to build the wrong combinations of the vehicles. So every time you change over, they build a different product offering, you lose a bit of uptime. And then it also improves our quality because, as you reduce complexity, you are able to improve the quality of the output. And then the last one is around cost. And one of the things that's a big struggle for us that we know is -- has been a disadvantage is we're over-spec-ing our vehicles. And a lot of times, it's -- it becomes a very subjective debate on which content customers really want. And sure, we do market research. We give folks, I call it, a fake budget, and we see how they allocate it, but we recognize that that's not always a perfect proxy for what happens in the real world. Now we could actually monitor the vehicles, and I can tell you whether or not customers are using their adjustable pedal features or I can tell you how often they're turning off their lane keep assist systems. So by doing that, that can inform us to get the right product feature content and options in our vehicles and optimize profits and costs. So those are just 3 examples of how this connectivity can really enhance our business results.

And is there a recognition that maybe for adaptive, let's say, adaptive cruise control that gets used maybe more than you were expecting that you can build that into the build combination and then charge and get paid for it, right? I mean, that's -- I mean that's the fruition of ultimately monetizing the better build combination. Is that a fair way to think about it too?

Yes. Yes, absolutely. So it's always an optimization process between what do you make standard as well as what do you make optional. And we look at things like the visible pricing as people do more internet searches and online buying. That's also very important. So -- and that's really the work that's being done with our data and analytics team.

And maybe just lastly on the data and connectivity. When you are collecting data and using it sort of in the fix process and then the sort of the build process for vehicles. That's easily -- I mean that's very enhanced stuff and interesting. But do you think about sort of the -- or how do you think about sort of the ability to monetize this data in products sort of on a -- be somewhat stand-alone basis? Obviously, it's going to be tied to your vehicle, so it's not totally stand-alone. But I mean, how do you think about monetizing the data outside of the 2 sort of verticals we just talked about? I mean, what are the opportunities there?

Yes. I think this is game-changing, John. So historically, we've thought about our business as very much a transaction model, right? You come into the showroom, you buy a vehicle, you drive off the lot. And then we hope you come back in 5 or 6 years and buy another vehicle. And in between, we really don't have the connection with our customers unless something bad happens and we issue a recall notice. Once the vehicles become connected, we can really step back and think about our business and our value proposition differently, and it's more of a use model. And so what do I mean by that? I think Satya Nadella from Microsoft told us that Google makes more money on every PC than Microsoft does. And that was -- that's when the light bulb went off for me in terms of the distinction between a transaction model. I sell you a PC preloaded with Windows and Microsoft Office to a use model, every time you go on the Internet using Windows explorer and you do a search, Google monetizes the ad traffic. And we think we have the same opportunity here. Certainly, the ability to provide over-the-air updates is a huge enabler because we can then upgrade the vehicles, provide incremental content. And that's a really powerful new delivery opportunity for us. And -- but the key thing is, beyond putting in the plumbing in terms of the electrical architecture and the over-the-air capabilities, we have to organize ourselves differently so that we're able to take advantage of that. And that's why you see some of the changes we've made like creating these enterprise product line teams that have the P&L responsibilities for the product. That's why now the enterprise connectivity team works for me. And it's end to end. It's not just what's embedded in the vehicle. It's the FordPass app. It's also our cloud capability. So we're really excited about it. We think there's tremendous upside here that, frankly, people haven't dimensioned and factored into the valuation of our company. So this is an area that's a huge focus for us and that you can see why it's under this Accelerate framework.

Okay. I've got a lot of questions coming up, 10 minutes left because this is great to have so far. So I -- if we think about that, it sounds like there's sort of a different tree, one for retail, and one for commercial, which one do you think will be more valuable in monetizing that data? And then if we kind of take that one step further and thinking about your Argo AI efforts and think about the AV potential sort of in the same vein of this tech-forward thought process, is that more applicable to the retail consumer or a commercial consumer? And has that changed at all with the crisis that we're all in the midst of?

Yes. I -- we think the opportunities in terms of the profit pools are probably both very lucrative on retail as well as the commercial customers. However, we want to focus initially on the commercial customers because, one, it aligns with our strengths as a brand. You know how dominant we are with commercial fleets in Europe as well as in North America. But secondly, those commercial customers rely on their vehicles as a key part of their productivity. So they worry about dollars and cents. So they are going to be the first ones that I think will appreciate this, that will help partner with us to extract the maximum value. And the learnings that we get from those commercial fleets and those examples I gave you earlier, we can quickly scale up and apply to our retail customers. So we want to start first with the commercial customers because if -- of all those reasons, but we think the opportunity is equally as compelling for the retail customers. In terms of the opportunities with autonomous vehicles, clearly, for the commercial customers, it's about optimizing uptime, productivity. And there is huge, huge potential there for the passenger customers, retail customers, they now have a lot more free time at their disposal that they're not driving in. We want to be able to leverage that connectivity platform to enhance how they use that time, whether it's for play, whether it's for productivity or even resting, we think tremendous opportunity there that we can capitalize on.

Okay. And then just in the last 5 minutes or so here, I want to get back into the more traditional product pipeline. So I mean, as we look at the efficiency of spends on PD for the past sort of 5 to 10 years, you could argue that some of it had not been as efficient as it has been historically. That's probably more in the last 5 years. And how do you think -- and you might quibble with that. So I mean you might disagree with that, but it seems like there's been less efficiency on product spends, at least for the last 5 years or so, and that it seems like it's getting much more efficient going forward. But how do you think about that internally? And how should we think about that externally and sort of measure it? Because it seems like there's a huge opportunity there. There's a lot of dollars spent, and we're starting to see that -- the fruits of that, but I am just curious how you measure that and think about that internally and how we should think about that externally.

Yes, John, you've helped us think about it differently. So historically, a lot of companies looked at and many analysts look at R&D spending as a percentage of revenue. And when you look at it that way, Ford was not atypical. I think we are just sort of middle of the pack, high 3%, 4%. But then the next question is, well, what are you actually delivering for that spend, that level of spend? And that's where your analysis that you guys lead around, average age of portfolio and product freshness really comes in. So we -- that's how we look at it. We combine the actual spend as a percentage of revenue and then we overlay what am I delivering for that. And that's where we see that we have more opportunities in terms of fitness, and that's been a big part of our focus since Jim Hackett's come on board. And as you mentioned, we're starting to get a lot more leverage out of that spend. And the big enabler for us was reducing our number of architectures from 10 down to 5 flexible architectures so that we're not reengineering the fundamental underpinnings of the vehicles. So that's a huge savings. And then we're also, at the same time, combining that with a modular catalog of things that are more visible to the customers that we can reuse across vehicle lines. And the combination of those 2 things, plus adopting agile work methods to speed up time to market, is putting us on a trajectory to match who -- the people that we think are the best in the industry in terms of engineering spend and throughput.

And, Hau, one of -- just a follow-up on that. I mean, one of the challenges right now is there's a lot of money being spent on powertrain by Ford and the whole industry in the move towards electrification. How do you kind of balance those PD dollars into the powertrain versus all-new products? Because one of the early things we're seeing in car awards this year is that there's varying degrees of sort of traditional refresh rates and average age -- or showroom age impacts versus companies that are maybe spending or overspending on EVs versus some that are somewhat neglecting them. I mean, how do you think about that balance in that PD dollar? It's a big question that the industry is -- has to struggle with at the moment.

Yes. So I think we're in a transition phase now where companies are forced to spend on both ICE and BEVs. So that's a bit of near-term pain. The way we're addressing that is dramatically reducing the complexity of our ICE offerings. We're also leveraging strategic partnerships and alliances, like what we're doing with VW and Mahindra that share that burden. And then as I touched on earlier, we really believe that there's going to be an acceleration from ICE to BEVs. People are seeing the benefits of not having a lot of traffic and vehicles active, and how that translates into improved air quality. So we're using that as a catalyst for us to really scrutinize where we have overlap between ICE products and electrified products that are targeting essentially the same customer in terms of product offering, and we want to reduce that overlap. So that will accelerate that transition and minimize the dual spending. And then the last thing that I don't think people recognize is, when we launch a new ICE product, we constantly have to upgrade it on every -- it used to be every 3 years. Now it's almost becoming annually in terms of keeping it up to date with the increasingly more stringent CO2 and emissions requirements all around the world. So when you think about the hundreds of millions of dollars on each vehicle line that you have to spend every year to keep it regulatory-compliant, once you switch to a BEV, that spending goes away. You don't have to worry about emissions. You don't have to worry about CO2. So we can reinvest that care and feeding that we would have to really do for ICE into product freshness and connected services and over-the-air updates that deliver true value to the customers that they're willing to pay for.

Yes. That's interesting. It's a tough balance. And maybe lastly, to just wrap up, I'd be remiss if I didn't ask you a question about the Bronco nameplate, but also maybe the Mach-E. And thinking about these 2 somewhat sub-brands, I mean, how much do you blow these sub-brands out into full -- I mean, they wouldn't be full vehicle lines, but vehicle lines that Ford may be able to leverage with higher ATPs and sort of brand recognition that might be certainly above a normal mid-level vehicle? I mean, how do you think about the -- this sort of this brand extension and the ability to monetize that? Because it sounds like Bronco dealers are stepping up with some showroom money to really create some areas to highball for the Broncos. So I'm just curious how you think about how far these things can go and what you can do with them.

We think there's a tremendous opportunity, so Bronco and Mustang are iconic names. Raptor would be a great example of what we've done there. It was only on F-150, we've extended it to Ranger where we potentially could do more with that. We only have to look across the street. FCA has 9 Jeep products, the last time I counted. It accounts for at least half of their revenue and profit pools around the world. So all underpinned by the Wrangler. So we think we have the same brand strength with Bronco and Mustang and nameplates series like Raptor that we need to really capitalize on. So you're starting to see just the initial us dipping our toes in the water, but we think there's tremendous upside there, John. So more and more opportunity for us there.

Okay. Well, we'll certainly stay tuned and that's exciting for, I think, all of us, but me personally. So thank you very much for the time, Hau. We really appreciate it, and it was really, really informative and very dense with material. So we'll be following up with you and Lynn, too. So thank you very much for the time, guys. We really appreciate it.

Thanks, John.

Thank you, guys. Have a good afternoon session as well. Thanks.

Thank you.