Ford Motor Company (F) Earnings Call Transcript & Summary

Welcome back, everyone. Next up at our conference. Very pleased to have with us Ford Motor Company, Sherry House, CFO, from Ford. Thanks for joining us, Sherry.

I guess maybe just to start, I think you mentioned to me, it's your 1-year anniversary or maybe just a couple of days past, it's very, very close. So...

On Monday, it was.

Okay. So congrats on that. And then it's probably been about, what, 3, 4 months since you took over CFO role.

That's right. Early February.

So obviously, I'm sure you've been very busy since then. It's not like there's been anything happening in the world or at Ford. But I guess just to take a step back, like since you started at Ford, what has surprised you the most? And maybe you can reflect a little bit on -- the past couple of months or really even a year where it has been sort of so dynamic like -- what's changed about your thinking about the company, but also what's changed about what you do at the company to interact with this more volatile environment?

Yes. Well, I'd start by just saying like what drew me to the company. So what originally drew me to the company is I felt that they had an advantaged strategy. So the fact that we're in hybrids, in electrification, in ICE, having the pro business of ICE. All these things provide choice for customers. And coming from a full electrification platform as Lucid's CFO previously, having all of that, I thought was going to be wonderful. The other thing that really attracted me was the fact that some of the strategic bets the company made, I felt were good ones. So got in early with electrification, got in early with hybrids and really in an advanced position with respect to Pro. But I was particularly interested in what was happening in the advanced EV development center. We used to refer to it as Skunkworks. And now that I'm inside, and I have the chance to really see that. As an engineer, as previously an engineer, what I was so surprised by is how advanced it truly is. So I spent a lot of time in venture capital. I spent time helping companies set up corporate VC units, thinking about innovation. But when a really big company is able to do innovation at scale, that is something that is really remarkable and you need to celebrate. And so Doug Field and Alan Clarke and the people who have come into this organization are truly doing that. And they're using best practices and first principle thinking, so they're bringing together designers and manufacturers, software and hardware together, procurement together, using brand-new tools that Ford's never used before and standing up a platform that's now going to have multiple variants on it over time. This is the way that Waymos work. This is the way that some of the new age electrification companies operate, but I'm seeing it in Ford. And so I'm incredibly excited and frankly, somewhat surprised by the ability of progress that they've been able to make. So that would be a few things. And I guess you also had a second part to the question.

Yes, the second part was just, I guess, as -- in your role, right, it seems like the company has to be much more nimble, reactive, in some cases, proactive, just sort of some of the volatility. So versus maybe when you came in, what you saw, what sort of processes have changed? What have you helped to change to sort of better react with sort of the day-to-day uncertainty?

So I think you're absolutely right. Optionality and nimbleness are key. So we've had to stand up SWAT teams to be able to deal with some of the tariffs and all of the changes that are happening. One of the good things about Ford is that I think we've got the right mix of talent now. We've got a lot of new talent, but we also have the long-tenured talent. They have deep connections within the company, highly internally networked. So when something like this happens, they know exactly who to talk to and all the different functions to get situated and coordinated to be able to act. And I've been really impressed by a lot of what the business has been doing there. In terms of what am I specifically bringing to the mix, I'd say that as I observe the business, some of the things that I'm looking at is that the company has been progressing forward. They've been progressing forward incrementally. What we're looking to do now is to progress forward in a transformational way. So take a department that you might have evaluated. You might say on a scale of 1 to 5, it's at 2.5. Where in the past, we would look to get to 2.7 or 3 and say this is really good. We're progressing as a business, and it is good. But now we're saying, what if you get all the way to 5. Does it make sense to get to 5? Do you have a cost benefit of getting to 5 -- maybe you should get to 4.7. And what do you need to do to get there? How do you break down those parts? How do you do milestone-based thinking? So kind of taking some of the venture capital thinking where you put in money when a milestone is hit and you hold yourself accountable to all of those actions. The other thing I would say is that the business has been doing a good job of implementing new technologies and really starting to advance. But you can't just implement, you have to implement and get impact. And it's different because when you design it at the outside -- outset, you're designing for efficiency as the end goal, as cost savings as an end goal, not simply to put something in place. And so that type of thinking is stretching the organization's kind of frame of reference in a really good way.

Yes. I mean it sounds like a lot of what you're talking about does require like a deep cultural change. And like Ford is a storied manufacturer in the U.S. and really globally, but obviously, has a very sort of long history and there are sort of ingrained practices and teams and [indiscernible], if you will. So do you -- have you noticed even in your year some of that sort of culture change that is enabled that new type of thinking? Or is there still some resistance internally?

So there's a couple of things that are happening. One is we're starting to put more specialists in roles. So as opposed to putting a really great generalist in a role, we're bringing in specialists. We're bringing in Bryce Cury in manufacturing, an amazing manufacturing leader on the forefront of lean thinking. You bring in Liz Door, an amazing supply chain leader at the forefront of that thinking versus having generalists in those roles, the people understand what expertise is like. The other thing I would say that I've been challenging the company to think about is not letting your governance define what the pace of the business is going to be. Because what happens in big companies, you all see it all the time. You have weekly meetings on a topic. You have monthly meetings on a topic. You have quarterly meetings on a topic. What happens when you set up your business that way is you are running to that governance structure and you're only doing the work to be ready for that weekly meeting, that monthly meeting. But instead, if you can step back and let the priorities define the pace versus the governance structure, the business define the pace, I think you can go a lot faster and you can make sure you're focused on the right things. So these are culture differences. One other one would be the way that you break boundary constraints. If you're having meetings with just one function, a lot of times you can't break the boundary constraints because you don't have everybody in the room to tell you that you can do something. So you feel like you can't. So having more cross-functional meetings as well. These are all tactics but they make a difference. And we saw this in the work that I was able to help effectuate with Model e early on in my tenure.

Right. So let's get into some of those topics. I guess, not to sort of spend even more time on tariffs. But I think -- I just want to sort of level set for investors, right? You talked about a $2.5 billion gross impact, $1.5 billion net impact. Now my understanding, if I recall correctly, was that was sort of half materials and parts, right, some -- just like steel and aluminum, right, for the $2.5 billion and then the other half was sort of more, I guess, straight tariffs, right?

Vehicle.

Vehicle tariffs, right, exactly. Since though, you gave that color on earnings, right, we've seen a couple of things happen. One is change in China policy; and two, over this past weekend, some changes to steel and aluminum. So how should we think about what you previously said, what was sort of embedded in that? And what are the puts and takes from those two -- at least two new factors?

Yes. So I'll start by saying I'm not going to provide like the full details of those puts and takes because we're going to study that, and we're going to give you that in Q2 -- with our Q2 earnings, which will be probably late July. But let me just break down the $2.5 billion for you. So the $2.5 billion has two parts in it, as you said. About half of it is parts that also included steel and aluminum in it, okay? It also included $0.2 billion of tariffs we already paid in Q1 related to parts. The second part of it is vehicle tariffs. And so that's going to be related to the vehicles that we are importing less the offset that we are anticipating to get for the U.S. content that are in those cars, okay? So those are the two pieces. The two new things that you just mentioned, the China tariffs brings the parts piece down and the aluminum and steel brings the parts piece up. So good news is they're offsetting. So that's about the level of context that I can provide at this point, but we're going to be happy to provide more detail in Q2.

Maybe just on that. You did withdraw the guidance on the first quarter. And I think it was understandable at the time there was still a lot of raw and fresh sort of information and things seem to be changing, if not by the day, by the hour. Like do we think we're at a level now where you have a little bit more visibility and confidence to sort of reintroduce that full year guidance with the second quarter?

So -- we would like to, okay? I'll put that out there. We want to give the Street as much information as we can. When we decided not to do it in Q1, we had looked at what do we know and what do we not know. And unfortunately, what we didn't know was so much bigger, and there was so much variability associated than what we did know, we felt that it was prudent and appropriate to pull guidance. But what we did do is we said, had it not been for tariffs, we're on track with the $1 billion. We're on track with our prior guidance. We were able to define for you an estimate of what we thought the gross and that impacts of tariffs though. But what we didn't know, and some of it, we still don't know is what types of changes we might have in the domestic tariffs. You mentioned just two that happened in just the last 10 days. But then also what is going to happen internationally, any type of retaliatory tariffs, what are going to be any policy changes, consumer impacts, how is the consumer going to take the tariffs and what are going to be the impacts on them. And then importantly, we have this other item called rare earth minerals and getting the approvals out of China to move necessary components into the U.S. to spend an issue. So all those items still exist to a degree. I do think there has been some settling in several of them. And so as we move into the next couple of weeks and prepare for the quarter, if we give guidance, it will be with the caveats of what we can't define. And if we don't, we're going to give you every piece of information that we feel we can to help you and other analysts and investors with doing your models and being able to understand the business as much as possible.

I want to maybe just double click on a couple of things you mentioned there. So maybe I'll go in reverse order. The first is rare earth minerals, which obviously sort of has become a little bit more topical, at least in my conversations with investors over the past week. You mentioned maybe you're seeing some potential disruption. I mean like how pervasive is that? And like really -- or maybe you can just sort of describe, I guess, what it's impacting and what type of backlogs there might be in terms of getting rare earths into the supply chain that could impact your production of vehicles?

So there are many components that rare earth minerals are in. And any of those that are coming from China require you to now go through export control. And so there's an additional layer of administrative process that has to happen. Sometimes it goes through really smoothly. Sometimes things get held up and there's questions. When it gets held up in it's questions, we've got to work through that. So we then -- if we're not positive, it's going to go through, you have to look for alternative parts or alternative ways to get things. Most frequently, it goes through, it just may take more time. So then you might be facing expedited shipment costs that you weren't anticipating. And it just puts stress on a system that's highly organized with parts being ordered many weeks in advance. So we're managing it. It continues to be an issue, and we continue to work the issues. But I don't know if at some point, this is going to be a larger issue for us.

The second thing you mentioned is federal reimbursements for some of the costs on tariffs. Like can you just maybe at a high level, very simplicity, like talk about like -- how is that sort of functionally working? I don't think you're necessarily getting some of those sort of cash payments today. But like -- maybe just walk us through a simple example like what you have to do, the process that needs to go through and sort of when you expect to actually get cash reimbursements for some of those offsets?

A lot of that is being defined real-time and the timing of the reimbursements, I don't completely know. So you're paying the tariffs now. I think it's very possible that there will be a delay in getting those offsets. I'm talking about the parts offset. It could be by a quarter, it could be by a couple of quarters. But all of you that are looking at our financials in Q2, Q3, Q4, are going to have to know that it's going to be a bit lumpy. You might have more expense before you actually get the money reimbursed.

I guess just maybe to close out tariffs, and this is -- if we think about the goals of the policy and sort of reshoring manufacturing back to the U.S. And you already -- as you've highlighted, numerous times, we think -- you think you have a get sort of a competitive manufacturing footprint in U.S. But the supply base is more spread out. It does seem like when you think about this policy, there's an opportunity for you to work with your suppliers to wring out efficiencies while they maybe resource some parts there. So can you just talk a little bit about: a, what you think can move, can't move; and b, what really are those conversations you're having with suppliers about commitments and need to sort of move stuff back with the goal of, right, having it really be a win-win for both sides?

Right. So I'll start with the basics. And as you said, 80% of what we sell in the United States, we manufacture in the U.S. 80% of what we manufacture in the U.S. has USMCA compliant parts. So that means on the vehicles that we're manufacturing in the U.S., 20% is coming in from outside. So that is the piece that right now, there's a part offset for 15% what our -- not 15% of the 20%, but basically 75% of that 20% is covered. In terms of our supplier relationships, they're our partners. And so as we face the tariff situation, we face it together and the types of conversations we are having are around, do you have additional capacity in the U.S.? Could you move to the U.S.? What types of investments might help you get there? But when we look at how we interact with the suppliers, it's a very complex and nuanced situation. So deciding which suppliers you're working with in these matters might depend on the quality that they've provided in the past. Do they have the leading IT? Are they a good cost provider? How have they performed for us over the last year? So we look at all of these things also when we're working with them. But on an individual basis, we're deciding whether or not it makes sense to make some of these changes. I don't have anything to announce with you right now. But of course, you would look at some of your higher-priced components. First, items that affect more vehicles, that would be the order of operations.

Perfect. Maybe we can just talk a little bit about the marketplace, specifically in the U.S. because right part of your guidance also sort of was this market factors. And I know there wasn't a lot of specifics as sort of where there would be price or volume and market share gains, but it could be either or and it could be, I think, probably dependent on which vehicle or segment we're talking about. But I want to sort of get your temperature on how you think things are evolving relative to what you internally expected when you sort of last spoke to us on earnings. We got the sales data for May yesterday [ in Ford ]. The market overall, obviously, slowed a little bit from the past couple of months where I think we would -- we could all agree, there was at least some level of pre-buy ahead of price increases. But Ford performed I thought pretty well, very well. And it seems like some of the marketing and the messaging with employee pricing and Made in America seems to be resonating. But I want to get your sense for what you're seeing in the marketplace for Ford vehicles right now?

Yes. So let me start at the industry level and then I'll get into Ford. So at the industry level, I would say our view is unchanged from what we said at earnings, which is we were seeing significant increase in SAAR through Q1 and Q2, and that we believe that there will be a drop off in Q3 and Q4 as we thought there may have been pull ahead. We do believe that a lot of these imported vehicles will have to take some sort of pricing either through incentives or top line. And we think that takes some time to work through. So we were expecting more of those effects to be happening in Q3 and Q4. And so we had talked about an industry level believing that pricing might be up 1% to 1.5%. So as you get to Ford, our From America For America program that goes from now -- it's been ongoing. It goes through July 7, has been outstanding. I mean it truly has given our dealers and customers something to get excited about, something to come to the showroom about. We were able to, in May, enjoy 16% sales increase across Ford and Lincoln retail and commercial on a year-over-year basis for May. And year-to-date, we are up over 6%. So we are definitely seeing the impact of solid volume, solid demand for our products. We have a brand-new Navigator and Expedition as well. We've got a great lineup. And we've seen pricing resiliency. So when you kind of think about the P x Q, we've been very solid is what we've been able to experience thus far. And we'll talk more about that as we get to Q2.

I want to turn the conversation to cost because this is obviously a big part of sort of the forward investment case. In the past, you've highlighted that $7 billion gap versus competitors. I'm curious sort of how you assess that now given that there have been some changes, like part of that was definitely footprint, but -- and maybe that gap has narrowed not because of anything you did to improve because some of your competitors have additional costs. So I don't know if you have sort of an update of where that stands. And then maybe if you think about the three broad areas you talked about, which is the structural, the warranty and the materials. Just an update on what you've done, what can be done in the near term, what can be done over the long term? What are things that Kumar and his team are doing to further reduce costs over time and make it more competitive?

Yes. So we've looked at the competitive cost gap. First off, we've been very transparent about it. We think it's good for our business. We think it's good for the investors to know where we stand. We also see cost reduction as the biggest value unlock for our business. And something that differentiates us, I would say in a positive way because we have upside in front of us. We did look at this at the end of the year. And we did see before all this impact of footprint and tariffs, we saw a material difference in terms of us closing the gap. And that was coming through a material cost and kind of the industrial system costs of the business. It is a challenging thing to estimate. So you do have to look at mix. You have to make a lot of assumptions. But even when you put all that aside, you could see that there is a marked change in our performance. I agree that there will be additional benefits based on our footprint, it's now going to put us in a more advantaged position. If you look at something like our F-Series trucks, 100% of them are made in the United States. On our competitors, it might be 50% to 60% with a large amount being imported. That's a difference. It's an advantage for us. All of our profit pillars, by the way, are manufactured in the U.S. So in terms of progress that we've had over time, we looked at that gap, that $7 billion gap that you referenced, and we said, what are the two biggest things that we could go after immediately and go after in a detailed, thoughtful, systematic way, and we picked warranty material cost. And we got a running start as we went into 2025. We brought in a consultant. We took 4 months of really studying and looking at the benchmark, the best-in-class benchmarks. Again, not moving incrementally, moving and thinking transformationally -- difference. When we did that, we saw that there were 5 different things that we should win both material cost and in warranty to really move the needle. And I'm happy to say that we're seeing that happen. We just had 3 straight quarters of year-over-year cost improvement, and that's because of this work. And I'm hoping and expecting that we're going to continue to see that. How we're breaking it is that it is dedicated, focused, transparent work. We put a spotlight on this at the executive leadership team level. Everybody is motivated. We talk about the performance milestones that we're hitting with the -- in our all hands. Our bonuses are tied to this happening as well. And so you've got a team that is just very focused on making the change. Now as we go forward, I see lots of other areas for opportunity. If somebody knew that's coming in and coming from not a resource-rich environment, I've been 7 years with start-ups to coming into this, I see opportunity everywhere. And so I am very excited. And I think if you talk to me in a year, you're going to hear me talking more about investment efficiency, about engineering spend, about SG&A spend, and we are eager to get after all of that as well.

Yes. We have the open invite to come back next year. So follow up. But -- maybe just a good segue to one of the things you just mentioned in investment efficiency. And I think one of the things that a lot of people are sort of circling here. Right now, even though to be fair, nothing is set in stone yet, but it does seem like emission policy is moving more in one direction than another, whether that's California, whether that's EPA. You've in the past talked about a certain level of your capital expenditures going towards electrification efforts. But I think listening to Jim speak recently, it also sounds like you really want to be more guided by the consumer and that's why you're sort of offering the different types of powertrain options. How does that impact your future investment in things like electrification? Not to say it doesn't ever have to be spent because I think most of us or at least I would argue that we are sort of going to trend towards electrification over time, which is a question of sort of the slope. So maybe it does get spent at a later point in time. But can you [Audio Gap] is there a net lowering of spending? Or does some of that capital get redeployed into other efforts?

So I would say that we're already making decisions like that. And you've seen the evidence of it, when you saw that we decided to cease the 3-row BEV that we were going to be producing in Oakville. And instead, we decided to bring Super Duties there. So that's a decision that we made based on watching what was happening in the market. In terms of surprise, you talked about surprise at the outset, I was surprised that the business made a decision like that because there was a lot already done, get supply chain set up, you're approaching getting ready for production. And we said, no, this doesn't make sense. What makes sense for the business, the signals we're seeing is we need to make this move. So I think it's important for you to know that Ford Motor Company has the courage to make those tough decisions, and they will make them if they think that it's right. So as we look forward, I agree with your thesis that electrification is the future. I also agree with that. But I do believe that customers are taking their time in some cases to get there. And the consumer sentiment is ramping more slowly. So the hybrids that we just now had close to 25% increase on a year-over-year basis in hybrid sales is really taking off. And that type of a continued investment is going to be important for the business in the near term. How we're managing this differently than we did in the past, to be more nimble and to be more thoughtful as we developed an internal capital committee. And now that we have the different segments, we have different hurdle rates for each of the three segments. And so we're looking at the investment and what the return on the investment is going to be in order to make that decision. The other thing we're looking at are the services, the physical services, the software services, some of the enablers. When you look at our services and you look at the Pro EBIT, we are now in the mid-teens percent of the EBIT is from physical services and the software and digital services, and we think that's only going to increase. So there's also a case to be made. When you look at our Ford+ Plan, one of the items is durability to be putting more of our money into areas like that, that have great margins and a lot less investment to get it showing up in your EBIT. So those are types of things that we're also focused on as a business. But I would say, more nimble, more thoughtful in a very strategic by-segment way are some of the key takeaways.

Great. Why don't we see if there's anything in the audience from investors. I think there's a mic somewhere. But if not -- if not, we can keep going on stage. Anything from the audience? Okay. Just going back to maybe some of the comments you made earlier on metals and steel and aluminum. I understand we're not going to get sort of the specifics on the dollar. But can you just remind us, right, like how your steel and aluminum buy works? Because I think it's sort of tranched out in terms of duration and some is contract and some is more spots. So how does that sort of play out?

Yes. So I would say, first off, 100% of our sheet aluminum is purchased in the U.S. 85% of the steel is purchased in the U.S. So when we even talk about tariff impacts, they're small for us on a direct basis, okay? Where we see a lot of the increase come through is the increase in prices. So that's the nature of -- and just making sure everybody's got a baseline on the kind of the situation. How we manage that as a business is we manage it through fixed contracts, and we also manage it through hedging. On the fixed contracts, they don't happen just once a year. They happen throughout the year. So you're in a constant situation on a quarter or a 4-month basis in which an old contract is rolling off and a new contract is being brought on. So when all of this hit, there is a delayed impact and the -- if you believe that prices are going to rise, there would be increasing costs over time. But we also have seen even recently that there has been some settling that's been happening. So you've got that offset as well.

I guess one other thing that comes up a lot, and we talked a little bit about investment efficiency. But just overall sort of capital efficiency, not just at Ford, but really this industry. And I don't think Ford officially comment on this, but there were media reports about a partnership with Nissan for batteries. I'm not sure what you're able to sort of say about that. But I'm just thinking bigger picture, like how do you, as CFO, think about partnerships with potentially competitors, but to sort of share resources, share capital that -- where there's sort of a win-win for all parties involved here?

I think as a business, you have to first start with thinking about where do you want your core competencies to be. What are going to be your strategic elements that you are providing to the customer? Whether it be brand or differentiation or certain types of IP, what we're doing in the advanced EV development center, for instance, really important in terms of differentiating. But then as you look at a very competitive global landscape with differentiated needs in software and in vehicle sizing, as you go around the world, it could make sense. It does make sense to be thinking about should you partner in order to get more efficiency on things that you don't either have to be #1 in, or perhaps you and your partner are going to be #1 in, but you're just offering it through a different brand experience. And so we are absolutely open to doing that. I think we will continue to do that. You see that we've got some great partnerships already. We have partnerships with Volkswagen. We've got a couple of them in China, for instance. And I think we will do more of that. Because in this day and age, in the pace of change that is happening, the pace of development is accelerating, you're going to need to do that. You don't have to do everything but do what's most important.

I guess the follow-up question is it seems like as an industry and sort of if you look at what the consumer wants for the car, like what the consumer values in the car is changing. We're certainly versus 5 years ago, 10 years ago, 20 years ago. So what are some examples of what Ford views as that sort of core competency that you feel you need to own versus sort of an area where you might be willing to look to some sort of partnership?

Well, some of the in-cabin experiences, some of what you might be referencing in terms of software expectations, but that's still going to be regionally defined. So we might decide hypothetically that in the U.S., we define more of that. But in other areas of the world in Asia, maybe we've got a partner that's helping us to define more of that. So I think you've got to look at it on a regional basis and make that determination of where you want to be. I like the fact that we have the advanced EV development center, not just for the customer elements of it, but also the cost efficiency that comes with more vertical integration and more simultaneous engineering by having hardware, software, procurement, manufacturing, all co-located.

Maybe just to close on Model e, which is obviously since you've segmented, it's been quite obvious to investors sort of the loss there. You talked a little bit about this in the first quarter and sort of not to sort of extrapolate, but how should we think about Model e sort of progressing through the year, maybe into next year? And then time back in one of the points we talked about earlier, which is if there is slower demand for EVs, at least in the U.S. and potentially less of a need to from a regulatory perspective to sell them. Shouldn't that in and of itself be a little bit of a tailwind to the loss since there is sort of a variable loss right now for those vehicles?

Yes. So let me start at the beginning. So we were very early to market with the Lightning in Mach-E, and those are continuing to sell very well, particularly the Mach-E. We're still having increasing sales of the Mach-E. I just took delivery one by the way on Friday, and I love it. It is Bright red, black wheels, and it's really fun to drive. So I highly recommend it. But that product continues to do really well. Yes, there are losses there. Yes, we are continuing to work those. And we're making some important changes like we're changing where the battery is going to be sourced to bring down the cost. But with that, you have some launch expenses as you do it. So these things take time to work out. Our Gen 2 kind of in 3, we've got the European launches. So we're now going to be benefiting from the full year effect of the Capri, the Explorer, the brand-new Puma that's in Europe. And those are better from a cost performance basis than the model than the Mach-E and the Lightning. Then the third, even better, more profitable, larger scale is what's going to be coming out of the advanced EV development center starting in 2027, and we are spending money now on that. So when I talked about the losses for this year, $1 billion of that is spent on the new. And that new is going to have a nice return on investment. So you need to kind of put that in context when you're thinking about the spend this year and its impact on the future to get us to more profitable, more affordable vehicles for our customers. So I think that's very important. Now the other thing you talked about, as you talked about the regulatory environment, it might that shift or change? Yes, it might. I think this is where Ford's strategy of having the hybrids and the ICE and the powertrain is really powerful. And so might, we have more flexibility that we don't have to manage just a compliance, but we can maybe manage more to the real-time signals that we're seeing in the market from customers and maybe able to do a little bit more maneuvering that could be more profitable? Yes, I think that that's a real possible upside for us.

And maybe just one rapid fire as we close. The over $4 billion of commitments that you've disclosed in the K to buy credits and just to confirm, there are provisions that allow you not to have to [ make those ] purposes if the...

If the rights change, that's right.

Perfect. Great. Well, Sherry, thanks so much for joining us. Really appreciate the conversation.

It was great to be with you. Thank you so much.

Thanks.