Fortive Corporation (FTV) Earnings Call Transcript & Summary

I'm the [ motion ] industry analyst here at Wolfe Research. And we're carrying on with the industrials track here at the conference -- [ transportation ] business conference with Fortive, and very pleased to welcome to the virtual stage CEO, Jim Lico; and CFO, Chuck McLaughlin. Jim, I think you're going to make some remarks. Well, first of all, thanks for joining us, Jim and Chuck. And Jim, I think you're going to make some opening remarks, and then we'll get to Q&A. Thanks, Jim.

Yes. Great. Thanks, Nigel. Good afternoon. Nigel, great to see you. Good to be with you and who's ever joining us. I thought I'd make it real quick. Chuck and I, obviously, were with so many folks at our investor conference a few -- last week. So I didn't think I'd spend a lot of time. The presentation is available. We've got a few slides together from last week that are helpful. We'll certainly -- they'll probably be part of our conversation, but we won't walk through the presentation. I just thought I'd say we tried to reinforce 3 things last week. Nigel, I'm sure your Q&A will cover extensively everything. But I think at the end of the day, what we try to really -- demonstrated last week was, one, really appropriately, now where we stand with our 3 segments, try to give everybody a deep understanding of really where the business -- the portfolio of Fortive is at today in a deep way relative to each segment, the financial profile, not only the financial profile, but also just the extent of the strategies, the growth opportunities and the power of the team, quite frankly. I think secondly, we tried to demonstrate the -- really broadly how our team -- who our team is and ability to see how we're not only driving our organization at the business level, but also, obviously, from a financial perspective and as well as from a talent standpoint as well as a sustainability standpoint, so a broad range of team members on to see that. And then I think the last thing really was to show the power of FBS and how it's really impacting the business. You saw that in the segment presentations and just numerous examples of how FBS is continuing to add value, not only in a traditional sense and how maybe people are more accustomed to thinking about it in the factory, but much more broadly around the commercial aspects of things, the product development side as well as how it's really impacting new businesses, particularly in software and in health care, so lots of examples of how we're really adding value. And then how that combines with our data analytics and machine learning capability that we're building through what we call the FORT. And I think the power of FBS and machine learning really fundamentally is the driver for our continuous improvement processes in the future. So I think those were really 3 themes that I hope really resonated with folks. We'll continue to be out talking with them, and we're -- obviously, Chuck and I are -- speaking for Chuck, we're incredibly excited to be with you, Nigel, to cover a range of topics this afternoon. So I'll hand it back to you, and we'll get started.

Great. Thanks. Thanks, Jim. Obviously, the Investor Day covered a lot of the ground I'm going to cover here, but I'm sure that there are folks on the webcast who maybe did miss the event last week. I always start off on a sort of trading update, but I think it's a good place to start with M&A, given that this is sort of like the lifeblood if you will of -- well, not lifeblood, but certainly a major growth theme for Fortive. You've got an incredibly strong balance sheet. You've delevered the balance sheet down to close to 1x net-debt-to-EBITDA. First of all, just to be clear, I mean, you've gone through a lot of portfolio restructuring since the spinout from Danaher in 2016, a lot of heavy lifting on the portfolio. Are you now pretty much there in terms of this is the portfolio you want to grow with going forward?

Well, first -- and we can get into the -- a lot of the details of M&A. But I think where we start today, we are incredibly excited about the portfolio we have today. I think what you heard last week from a tone perspective and from our leaders was real excitement about the organic and inorganic opportunities within their segments as well as the opportunity -- the real earnings power that exists in each one of the segments. So we certainly believe strongly in those strategies and what we're doing going forward. And you heard that in the confidence that each one of those leaders brought forward, I think, in their presentations. That said, I think we do, at Fortive, have a deep belief in continuous improvement. And the reason why we do strategy every year, the reason why we review the portfolio progress and the strategic updates with the Board in such a deep way is to make sure that we still continue to believe that the things we have going are going to be most successful within the construct of Fortive. Obviously, something like a Vontier transaction had everything to do with the long-term belief that Vontier would be better off in its own independent way, just as Danaher believed that Fortive would be better in its own independent way. So I would suggest to you that we're incredibly confident about where we go from here. And I think you heard that last week. That said, if you take a long-term view, 5, 10 years, we always want investors to understand that we are always evaluating to make sure that everybody -- every business, every product line has the real opportunity to be great. And sometimes, that means maybe being in a different structure. But I think the answer for the day is we like where we're at. You certainly heard that last week.

Sure. Okay. And one thing that I heard loud and clear last week was you're incredibly excited about ASP and the broader health care footprint you've got. And of course, you've got Fluke Healthcare and Censis in there as well. Do you think that health care is an end market vertical, whatever you want to call it, where you want to be a bigger participant over time? Do you think this could grow into a much bigger probably portfolio over time?

Yes. I mean, I think where we were 5 years ago, we had a little bit of Fluke Health, about half of what Fluke Health is today, maybe a little bit less, and that was in Invetech. So now we're up, what, five or sixfold from that from a revenue standpoint. And I think what we've seen is the Landauer acquisition really accelerating Fluke Health exceptionally well, and the results are really strong, and we feel really good about that. We had a number of examples that we shared both organically in how FBS is really driving that business. But obviously, ASP being the big acquisition that we have, the largest acquisition in our history. And the degrees of freedom that, that's really brought to us from a customer, go-to-market, global presence, that really gives us more degrees of freedom than we've really, quite frankly, ever had. So I think Barb did a wonderful job of articulating how she sees things and where those opportunities are. We see opportunities to really help hospital leaders really bring better, more safer practices to what they do today, more productivity, more cost opportunities, the ability to see more deeply into their operations, so we think there's a number of ways to do that. And I think what you heard last week was a little bit of where we could go. We like where we're at today. With the served market and with the size and scale that we have today, we have a lot more degrees of freedom than we've ever had.

Right. And then another thing that's sort of picked our attention last week was the EHS, the Environmental Health and Safety aspect. And you built a $3 million business today. It feels like you want to grow that. So I'm just wondering kind of like what degrees of freedom and what direction that could take over the next several years.

Well, Nigel, you obviously also reacted, I'm sure to Justin and the outstanding work that he's done to build that business. Obviously, came as part of the acquisition of ISC, and he's really doing a great job in leading our efforts and our thought -- really is a thought leader around where we can take the business, given his deep industry experience. I think we have a range of options. As he said, the company that the customers need doesn't exist today. And so we have a lot of the core tenets of what they need. The ability to connect those things is tremendous. I would say what we have today, just maybe for everyone's benefit is that really strong differentiated business model and iNET of really bringing connected gas detection and really worker safety to what I would call asset-intensive sort of safety-intensive industries, if you will. We put on top of that the Intelex software platform that everyone uses from an ESG perspective to really understand their sustainability efforts. Fortive uses it. We've talked about our own implementation of it to really help us not only track safety issues but the regulatory environments around environmental, but also things like how do we drive our carbon footprint goals. So I think that -- and obviously, a huge secular driver related to the need for that in every company in the world and so -- and bringing AI capability around. So we've built some really core tenets to what we have today. But to your question, sustainability is even broader than what we have today. And so those opportunities to build on other regulatory environments, deeper regulatory environments, maybe what we -- maybe a little bit better aspects of some things that we do today, certainly globalize it. We're mostly a U.S. business. So the opportunity to look around the world and see where there's opportunities to maybe build solutions that are slightly different for geographical markets given the regulatory environment might be different. So I think the degrees of freedom, we now have an incredibly scalable capability which I think is -- which gives us even more degrees of freedom. So Justin is out there that he thought the billion business could easily be $1 billion. And I think we believe we have that kind of opportunity. That's both an organic and inorganic set of strategies. We'll see how it plays out. But I think it's a real opportunity, builds around great secular drivers. But we won't be the only one trying to think through this either, obviously, given the opportunity for growth and margins in these sort of profit pools, if you will. There'll be others and we certainly understand that. So we're off to the races with a great team and excited about our opportunity.

Great. And then the -- again, sticking with the EHS theme. Some folks out there have sort of mapped this to would water quality, water infrastructure, water purification be an area that maybe Fortive could gravitate towards over time? Any thoughts around that? I know that Danaher plays in some of those themes, right? Any thoughts on Fortive could play in that?

I think it would be safe to say that where we stand today is really with the strength in the worker end of safety and the connected worker and really the compliance aspects of things that the companies are trying to manage around sustainability. We see those as great opportunities. So I think some of those other areas, lots of people in those places today who are doing a great job. I think we would look at the places where we have much more fragmented market opportunity, the opportunities to really get into those markets. Those are fundamentally -- as we talked about our -- how we look at markets, the market aspect, the company aspect, the value creation aspect, that market situation of highly fragmented markets are pretty attractive. And I would say the places where we're looking tend to have a lot more fragmentation than the ones you described.

Okay. That answer was loud and clear. So I know you get this question a lot, equipment or hardware versus software, digital versus equipment, et cetera. Is that the way you think about it? Do you think about your opportunity set in those sort of like black and white terms? Or do you just approach that problem from a different angle?

Well, I think what we tried -- yes, it's a great question because I think we have tried to dispel the thought that we were only doing software deals. And I think if you look over a 5- year period, you'd see a mix of hardware and software, right? I mean, I'd -- there'd be a very good mix. And I think that we'd like -- if the next 5 years look like the last 5 years, I think we'd feel pretty good. So I think -- and it really starts -- and why that's important is because we start with the customer and the workflow first. And we understand that accelerating our strategy means building a deeper, more productive relationship with customers. And so that can be hardware, that can be software that could be data analytics. We know it's going to be all 3. We know the generation of how things are evolving are great connected hardware brings in software. Software is able to aggregate data in undeniable ways. Cloud gives you ability to link disparate kinds of things. And through cloud and multi-tenant SaaS, you then have this incredible ability then to do machine learning off of that. So we know that's an evolution that, quite frankly, almost every market is going to go through in some way, shape or form. And so we think we can play a role in that. And that will mean we'll continue to be looking for opportunities across a range of business models that help us build the kind of workflow solution that we want to do with customers. So I would say it's -- what we've really tried last week to do was to make sure that everybody understands. We've built an incredible capability in software over the last 5 years. And we wanted to make sure that, that resonated. The number of examples that we showed last week around how the Fortive business system is creating tremendous value in software businesses, I think -- I don't think -- I believe did not go unnoticed because there were so many. We tried in the FBS and data analytics presentation to really see how this is all coming together. And I think the combination of that is really around the value creation opportunity. So we certainly indexed into making sure people understand that when we get into software, we can create tremendous value. But we also wanted to step back and make sure that everybody understood from an M&A lens, we want to make sure that we're adding value relative to the workflow.

Right. Okay. Fantastic. So Jim, what do you think -- not what you think -- what is the biggest barrier today to deploying capital on the M&A pipeline? Is it the bid-ask multiple spreads? I don't know, the course of -- the kind of the pipeline you see out there. I mean, we could see a big deal tomorrow, we could see the deal next week. It's hard to know these things. But what is the biggest barrier today to deploying capital?

It's a great question. I would say, first, I think our barrier -- last year, when we talked about this -- because I think sometimes people will take a maybe 4 or 5-quarter view of this and say, well, you haven't done anything big in 4 or 5 quarters. Well, we did a lot of big things right before that time line, right? So I think -- and the balance sheet needed to be -- we needed some time to get the balance sheet back into the pristine shape it is right now. So I think that's certainly, I would say, was we always said 2020 would be more of a bolt-on year anyway. That was going to be -- so I think it's first. Second, certainly, COVID and kind of how people were coming to market and that kind of thing certainly impacted for several months last year. I think where we stand today, though, I don't think we really have anything encumbering us, to be honest with you. There is certainly valuations are high. And I've said in a few of the breakouts we've done today. What I think Chuck and I would say is that great businesses are probably valued where they need to be. And so I don't really see valuation as an issue with great businesses. But what's happened is some of the businesses that are good that we can do good things with, they might be overvalued right now. And so I think there is some places -- and I probably could point to over the last 6 months some situations where we looked at it and said, those are good businesses, but they're overvalued, and we're going to remain disciplined. So I think there's some situations like that. What I'm trying to draw really is sort of every deal has its own story to some extent, too. So I think where we stand today, which is probably the most important part of your question is, I don't really think there's anything encumbering us. We have a full funnel. We're busy. We've continued along our activity, and we continue to look for good opportunities. And we're going to remain disciplined. We're not necessarily going to go do a deal. Just because the balance sheet's in great shape, that doesn't mean that we feel obligated to go do anything. We're going to stay disciplined the way we've been. We're going to stay focused on accelerating our strategy. We're going to be patient to see and wait for the things that we really want. And I think that's been a successful strategy for a very long time that Chuck and I have been a part of, and that will continue to be our focus in the years to come.

That's great to hear. Another question we get on just, again, sticking with M&A here. Obviously, your gross margins now are kind of close to 60%, roughly 60%, probably going a little bit above that next couple of years. Are you able to do larger deals that would dilute that gross margin back down in the 50s? Or do you think the deals that you'd be doing will be gross margin accretive?

Well, I think that we've seen the value in growth to your businesses with higher margins. So I think we have a previous disposition for that. But I wouldn't think that we'd say exclusively that, that's the only thing that we're going to look at. But we do like the value. And I think the last number of deals, we have a path to high gross margins, high operating margins and good growth. I think ASP is a good example of that, a lower gross margin maybe than where we're at right now, but the ability to bring it up pretty quickly through both FBS but also through strategy because the business model, obviously, we add more consumable. We have a strategy to grow consumables at a higher attach rate. We have a strategy to bring more -- other solutions like Censis into the game. You can move gross margins up. So I think it isn't as much the path to better gross margins it's -- that's important. It's probably safe to say you're not going to see us do something in the 30s, that's probably a good thing. But there's sometimes a small service business that we might want to add globally to extend our reach with customers. So I think -- but it's that path to better that's always super important for us, Nigel.

Okay. Great. Folks on the audience, please lodge your questions, if you got any questions in the box or e-mail me, IM me, and we'll try to get to as many as we can. I do have one question in the queue here which maybe is a good time to take this one. What is the mix between hardware and software at Fortive? And how did this change with Intelex? How much software is recurring subscription-based?

Our software businesses are in the low teens right now. And as we talked about, all of our businesses are -- we expect to grow and grow well. But the software business is growing a little faster, and we'll probably add to that. But I think, as we said last week, we'll be growing that to 20%. And I think that's -- growing from low teens to 20% over the next 5 years is a good guidepost of the direction we're going.

And that low teens, the 20%, Chuck, I mean, how much of that would come from inorganic acquisitions?

Well, I think some would have to. But keep in mind that software business is probably growing twice the fleet average. So it's going to compound up above 15%, 16%. It really depends on how the rest of the portfolio, if they get that percentage. But keep in mind, whether we end up at 19% or 22%, that portion of the business is growing very fast and very accretively.

Okay. And do you ever see a situation or an endpoint where Roper is up to 60%, I think, software right now, do you see a vision where Fortive could be at that level? Or do you think, again, getting back to this hardware and software, do you think you'd always be a bit more kind of hardware-centric?

I think the answer to your question is, for the businesses we have today, long term, they're going to continue to become certainly within what we've built today, as an example. I could see iOS, as an example, getting to the 50-ish range in the not-too-distant future, just because of the starting point. It's where a lot of our big software businesses reside. So I could see a segment getting there. We'd have to have probably some -- we probably have to have some substantial M&A in a couple of places to do that. But I think we step back and really look at what we outlined the other day, almost software-light gross margins across the portfolio, even without 50% software because so many of our businesses through FBS have high gross margins even without software. So I think the financial profile of what we showed and what we can become and what we see in the next few years, I think it's incredibly attractive if you're talking about mid- single-digit growth and the margin profile we articulated into where we're going, I think, and then if we were to accelerate that even better. But I think the path we showed you last week certainly is very much a -- it's not a dream, it's very realistic. It's a place we can get to. And certainly, if M&A were to go a different way where we did a big software deal, we obviously would jump up. I think within what we -- the range of options we have right now, we certainly could see a segment maybe even health care, depending on what happened could get up there pretty quick. Censis is a great business but -- we've got some great efforts at Fluke health, but I think at the end of the day, this hardware and software capability with great margin structures across the portfolio is something we certainly feel very good about talking about and outlining like we did last week.

Okay. Great. I think we've embedded the M&A strategy at this point. So maybe you can turn to perhaps trading and talk about what you've seen in 2Q relative to 1Q. And you've got guidance in place for high teens organic growth. Just any general color on what you're seeing so far.

Well, I think that in April, I think Jim said, talked about last week that we're off to a strong start in April. So we feel very good. That's why we reaffirmed our guide there. I think there's still a lot of work to do. The biggest month of the quarter is the last one. So we want to be mindful of that. But off to a good start and feel confident.

Right. Obviously, the investment spending kind of -- that definitely got some attention on the call, Chuck. My question is investments spending is actually a good thing and a bad thing. And if you do see upside to your plan, would you be prepared to invest even more than you laid out?

Yes, as we move forward, it's not like we -- we're always investing in the businesses and we think we're appropriately invested, but we have strategy and lot of great ideas. And as we see opportunities and markets start growing faster, sometimes it's going to be putting more salespeople in place. It's not always going to be in innovation. But as things improve, we want to make sure that we keep up and that we're advantaged as we move forward versus the competition.

I think what we did -- Nigel, hopefully, this resonated, at least I think early feedback would say it did. The chart that we showed when Kirsten and Israel presented FBS and the FORT where we talked about the range of things we're doing, I think we gave a real picture to what those investments could look like. And so what would really -- what we're trying to articulate is, we see projects in the FORT. We see growth accelerator work that we're doing. And we just see those opportunities as the teams come available, we could put the team on hold for 30 days or 60 days or 90 days, but that seems silly to do rather than get them started. We see -- if we see an investment in Pioneer Square Labs where we've gotten it to a certain point, and we want to take it to the next level, we see -- we think it's silly to sort of wait 90 days or wait 120 days. So I think when we see those -- and maybe we thought 2 opportunities will become available. But all of a sudden, we see 4. And so I think that's really what we're talking about. And so I think what we painted the picture of the multiple things we're doing. And as we go into these higher growth, better secular driver markets, it's going to be even more appropriate for us to make sure that we're investing ahead of the curve as opposed to waiting around for some other disruptor to come into the market. And so a lot of that early innovation investments that we made in the quarter were things that we think can have impact in '22 and '23. And we would much rather be our own disruptor, bringing in those new ideas than have someone else do it. Protecting profit pools we have today, or going into profit pools that are potential for tomorrow. So I think that's how we think about it. And sometimes they'll come more faster than we predicted by a quarter, 2 quarters. And when we do that, we'll do some things like we did. But I think at the end of the day, what we tried to articulate last week was a real picture of what that looks like and the kinds of things we could do, and I think that was there. And then secondly, the returns are going to be very good over a 12- to 24 month period. And I think at the end of the day, what we're doing -- we're just not throwing money into places, we're really making sure we've got higher return opportunities. The last thing I would just say is somebody said, well, aren't these -- we got a good question, I thought, in one of our breakout sessions around, well, isn't this in the core investments? And the answer is yes, absolutely. In a lot of cases, we're just telling our team, hey, you've got to make that one higher priority than the other thing you were doing. But there's also times when they're in the middle of something, and they just can't do that. So for a quarter or 2, we might fund it like we do, but then it goes into their rate of spending, and they've got to find the investments. So sometimes, that's when we talk about that VCM, those are the kinds of decisions that Chuck and I and the rest of the leadership team are making. And as you said, we want to make those investments. Those are going to be high opportunity investments that we make.

And then when companies spends growth CapEx and this is obviously an OpEx, not a CapEx. But normally, if you're looking at a 1 to 2 year payback, it seems that very much like these OpEx investments are still 1 to 2-year paybacks?

Yes. I think that is the right way to think about it. Just like any time we put an investment into R&D, for example, we would expect you to bring a product to market, and then you return the money in a couple of years after it comes to -- well, a year after it comes to market, usually. And so maybe a little over two, but not much.

Right. Okay. Great. Thanks, Chuck. Just want to dig into a few business trends here. Obviously, iOS right now is on fire. We've seen a very strong recovery in iOS in 1Q, expected to happen, continue to 2Q. Are we seeing sort of channel restocking as a tailwind at this point in time? Or is this -- are we just still seeing here very strong end market demand?

Nigel, Jim and I went through the reviews last week with the operating companies. And what we saw in channel inventory is that we're in a very good place. And in fact, when you think you have to think about it in terms of weeks of supply, we watch, of course, the point-of-sale and the sell-in. But as the point-of-sale is going up, you watch that weeks of supply. And we think that if anything, we're not quite keeping up with that, we're starting to trip down. So we're not anywhere where we would say we're near elevated at this point.

Okay. And then in Precision Technologies, Jim, you're on record saying that the semiconductor CapEx build isn't necessarily -- doesn't necessarily call it with your business, you're more sort of R&D bench focused as opposed to CapEx focused. But surely, putting a number of fabs in the U.S. is good news for Fortive longer term. And I'm wondering, what is the dollar of investment spending in the U.S. mean to Fortive compared to dollar spent in APAC or do you not care?

From a margin perspective, we don't care. So I think we make equal money. And so from the standpoint of that, it would -- dollars invested to dollars from a margin per -- revenue to margin is really the same. I think what I was trying to say is there's this -- I think it's becoming clear and clear that we're going to see some semiconductor investments in the U.S. here in the next few years, obviously, a number of folks commenting as recently as last week and early this week. So I think that's for sure. Timing, obviously, is a long -- you don't just build -- you don't just decide to build a fab and then go down the street to fabs r us and buy everything. So I think at the end of the day, we're going to be positioned to take advantage of some opportunities. There'll be more test equipment that goes in at tech and some to Fluke, from a general-purpose perspective. We don't have huge exposure to the capital part of that relative to most of our places within the portfolio. Our sensing businesses sell to a number of the semiconductor equipment companies. So they'll see some -- when we talk about semi in sensing tech, as an example, we're really talking about semiconductor equipment manufacturers with some good positions. So we'll see some things there that will be good. I think it's hard to predict what year that will be still. I think that's still -- it still plays out well, and I think it's good. But we're going to correlate much more to sort of just sort of general production activity, operating expense kinds of things in these places than we are CapEx. So it's a good opportunity. We're excited about it. But again, it's not a huge percentage of our revenue, but certainly gives us a little bit of tailwind, be hard to say that it doesn't.

Yes. And actually when I think about your fair share of that dollar. So I know China has done extremely strong market view over time. But if $1 of CapEx is spent, is your fair share of that $1 higher in the U.S.?

Yes. Yes. Our share is -- if I look at our share, in -- around the world, probably our 2 best places, probably for a place like tech are probably China and the U.S. So I think that, that trade-off is probably fine.

Right. You gave a lot of detail on ASP in terms of the discretionary procedures, how that's tracking across the globe. On the TSAs, Chuck, the kind of the 1Q margin, are we sort of now in a run rate for those TSAs now for the full year? Or are we still accreting some margins for the year?

I think when you look at last year to this year, you'll see a lift, but there's 98%, I'd say that TSAs are not a drag going forward and in Q2, like there's very little. There's just a couple of legal things we're doing around the world but like a million or so. Just really very nominal. So we were at the run rate. It's being a little bit masked because our consumables are down because of elective surgeries but we're still very happy with margins at ASP. In fact, they're above where we thought they'd be at the 2-year mark.

And of course, incremental margins going forward now in the 40, mid-40s, I think is the official target now?

Yes. I think that's a good -- as we look forward, pretty good particularly into the second half.

Which makes sense given your gross margin structures. But are we there in the second half of the year, Chuck? Or was that more 2022, thinking about some of the cost add-backs, some investment spending? Do you think we're sort of above 40% in the second half of the year or right on it?

Well, I think we're -- I would expect that the second half is 40%. I think that there are some add-backs. But the biggest chunk that's given us a headwind is in Q2 when you do the incremental calculation. But in the second half, I think 40% is a good number. And then as the business grows and recovers and margins in all 3 segments, we expect to build -- margins to build over the next couple of years. You'll see our gross margins continue to go up and more to come on the incremental margins. But for now, it's 40% in the second half, and we've built from there.

And just finally on leverage. You're down into the lowest we've seen as an independent company for Fortive, a good place to be, gives you lots of optionality. You've looked very comfortably in the 2s and even the 3s at some point, you now have much higher gross margins and higher EBITDA margins. Where do you -- where are you comfortable tracking longer term? Are 2 to 3, is that still the right range for you?

I think that less than 2.5 is a good place to be. We've shown that for the right deal, we'll go up to 3.5. And we see 2.5 get to like to get back down to the 2, a good model in place is in that range, for us. I don't think that there's any intention of us to run at 1x leverage. At the same time, we're going to be disciplined on deploying capital. We've got great earnings growth this year, pushing 25% for the year, 30% or 40% Q2. So we're not -- we're looking for the right things to deploy capital, and we see a lot -- we're looking at a lot of things.

Yes. Great. Well, Jim and Chuck, this is a great conversation. Thanks for your time. Thanks for being part of our conference and look forward to catch up soon.

Thanks, Nigel. Thanks, everyone. Appreciate the time. Have a great conference.

Thanks.