Ingersoll Rand Inc. (IR) Earnings Call Transcript & Summary

Very happy to have as our next presenter, all the way from North Carolina, Ingersoll Rand. All of you know, Vik Kini, Ingersoll's CFO. But before that, I got to know you as well from Investor Relations. Now Investor Relations in the good hand of Matt Fort. So really appreciate you guys taking the time.

No, thanks for having us. It's great to be here.

Happy to hear as much. So really just sort of wanted to dive in on the model a little bit, right? When you think of the sort of algorithm for the company, the idea of mid-single-digit organic. Obviously, the M&A machine is doing a good job over the last few years. Your pipeline it also seems pretty, pretty active needless to say, and you've been able to put up that low double-digit EPS growth that you've been talking about, right?

Correct.

The margin improvement every year, and I know we're not rigid on 100 bps every year, but that's sort of the idea. The push into more aftermarket and recurring revenues. I think, you're doing okay, it's like 35% last year. Can you ask -- can you describe to us the pace that you're seeing? Do you use some of the connectivity, some of the IoT devices going out, you would think maybe that could accelerate that percentage? Do you think through what you're expecting, say, this year on a parts recurring revenue growth relative to underlying equipment?

Yes, sure. So David, I think just to start with the -- what we call kind of the economic growth engine we outlined at the Investor Day back in 2021, you're spot on mid-single-digit organic, mid-single-digit inorganic on average, about 100 bps of margin expansion kind of all being driven by kind of our IRX processes, which I'm sure we'll speak about here, it should lead itself to nice double-digit earnings growth and then strong cash flow conversion. Now as we've moved through -- we just completed our 3-year anniversary as a new company here. I guess, last -- earlier this week, probably. We're pretty pleased with -- as a new Ingersoll Rand, we've known nothing but COVID and supply chain disruption, inflation. It's been the atypical kind of 3 years, but that's how we've been operating. And despite that, I think the team has done a fantastic job of executing through that. In the context of the margin expansion, you're completely right. We are expecting to drive about 100 bps on average of total company EBITDA margin expansion. You've actually seen above that in the last 2 years. So we -- despite hyperinflationary markets and all that, you've actually seen us actually out execute and outperform. In the context of the aftermarket, you're spot on. We definitely believe that the aftermarket is a core contributor not just to that sustained organic growth, and we'll come back to the components, but ultimately speaking, aftermarket on average is, roughly speaking, at least 500 basis points better on margins than the original equipment. And then you have components of that aftermarket equation. We've talked pretty explicitly about our care contracts, which are these kind of longer term in duration, kind of risk transfer agreements, multiyear in nature, really kind of got their core in the compressor side. That's that kind of annuity flow stream of revenue and they make -- we say kind of like software-esque type gross margins, which does a huge push. So to answer your question, yes, around 35%, mid- to high 30s percent. If you kind of decompose that, though, ITS side, better than that. The PST business doesn't have, I'd say, the classical aftermarket as much as the ITS business. So it's a lower percentage. But you will see that the PST business definitely has more of a recurring revenue base in the context of like-for-like type pump replacement. So it has a comparable look and feel, just not classical aftermarket. So as we think about where the aftermarket equation can get to, first and foremost, without question, there's no reason why we don't see this getting into the mid-40s, approaching 50% as we get over the horizon. The way the business is situated, the opportunity set, whether it be the core aftermarket, parts, lubricants, the service component, the care contracts and now connecting that with IoT. The IoT piece for us, what we aren't saying is that IoT necessarily today, we don't call it out as like an individual revenue stream anything like that, because we think of it more as an enabler to deliver the aftermarket. So what you've seen, and I'll kind of tie it even back now to things like the inorganic side, you've seen us, we've done approximately 30 bolt-on acquisitions since the merger. So in the last 3 years, approximately 30, and you've seen us focus not only on like the core compression technology, you've seen us focus on that ecosystem. So take one click, remove it from the compressor, what's around the compressor?

I see pics with a digital platform.

Correct. But even on the compressor side, you have things like the dryer, so the SPX FLOW transaction, you have gas generation like Holtec, you have condensate drain -- condensate management, which is JORC. So now not just the compressor but it's downstream from that. And now if you go one click on the ecosystem, how do you now connect it to actually drive better energy efficiency and better connectivity across that. That has been part of now our kind of M&A narrative. So it actually fits nicely with the aftermarket theme that you mentioned.

Would it be fair then to say, if your organic sales growth guide is only 4%, the parts, the aftermarket should be growing?

We definitely target for the aftermarket.

That makes that margin story a lot easier for you overall.

Correct. We definitely are driving for, what I would say, outpacing of aftermarket growth comparatively over that duration. Now it's probably fair to say, in the context of probably the last year or 2, where you've seen that outsized growth that a lot of other companies have seen, original equipment growth has been extremely healthy. Despite that, I'll say, you've actually seen us maintain our aftermarket as a percent of sales and move it in the right direction despite that original equipment growth. So aftermarket growth is comping and keeping up pretty nicely with the original equipment growth. And the other benefit of that is, now you have a larger installed base to go serve through the aftermarket for the next, remember, a compressor lasts on average 8 to 10 years as an example. So we actually view this as kind of a win-win and pretty pleased with how we've been able to execute in an environment where original equipment clearly has been a huge driver as well.

Well, speaking of the original equipment, we'll get into the backlog in a second. But first, the organic 4%, right, but you also had another 4% you spoke of, that acquisitions that aren't done, they're in the pipeline, Letter of Intention. Can you just give us a little bit of an update on how that's proceeding relative to recent history, it seems like what you discussed in the LOIs turn into acquisitions?

Yes. So the level set on the guide, spot on. We guided to 3% to 5% organic growth, so let's take the midpoint of 4%. In addition to that, we actually have included guidance another $270 million of revenue from completed acquisitions. So the vast -- not all, but the biggest contributor there, for example, is the SPX FLOW transaction that just closed at the beginning of the year. In addition to that and not in guidance, to your point, David, is the, let's call it, the deals that are under LOI, our philosophy, let me tell you, we include all closed deals in guidance at that applicable time. So anything under LOI is not included in guidance. You are correct. We have 11 transactions under LOI that we reported our earnings a few weeks ago. Just a level set kind of in terms of the funnel and the composition and kind of how to think about that, funnel continues to be extremely healthy. As we reported earnings a few weeks ago, the funnel is still 5x larger than what it was at the time of the RMT. It's predominantly, if not almost exclusively, whatever we call the bolt-on type acquisitions. I think of nice niche technologies that can continue to fill in that ecosystem on the ITS and PST side, very similar to what you've seen us do historically. In terms of the actual just kind of math in terms of the LOIs themselves, I think at the last quarter, in the third quarter, I think we talked about having 8 LOIs. Well, you saw us close 2 deals, SPX FLOW and Paragon Tank truck, which is that nice blower business. So 8 came down to 6 and we've added 5 more. So it speaks to the velocity and how that kind of funnel is continuing to transit to LOIs. And you are correct, the vast preponderance, not 100%, but the vast majority of LOIs typically translate to a closed deal, it takes finding something in diligence or something of that nature for us to kind of walk away at that.

But there's nothing in this subset of 11 that would make us feel the conversion rate should be any lower than we've seen?

No. I would characterize it as we would expect it to be very comparable with what you're seeing. And just to put a finer point on it, the 11 under LOI, think of them as the smaller bolt-on Paragon type acquisitions in size, not necessarily SEEPEX or SPX FLOW size.

Sure. Sure, that's fair. The backlog, $2 billion. Total company [ revs ] aren't even quite $6.5 billion this year. So that's a big backlog but can you help us digest the comment made about your marketing qualified leads sort of giving you a sense of knowing how well you can ship and we'll talk supply chain that, it doesn't seem like you think the backlog is going down from here. So can you give us a first [indiscernible] because we don't know of that much history. I mean, obviously, Gartner days, obviously I covered Ingersoll as well, but we don't have a real series that go -- backlog is usually not 30-plus percent of next year's sales, it's 15% or 20%. How would you characterize historical versus today's 30% plus of backlog business?

Yes. So you're spot on, typically speaking, and you got to always recognize that in backlog there's probably, like in this business, 20-ish percent of our revenue base there is the longer cycle projects, which inherently sit in backlog for anywhere from 6 to 18 months. That's just always part of the equation. Now that being said, typical backlog walking into any year or quarter, you probably have visibility 60-plus days, roughly speaking. Right now we probably...

17% [indiscernible]

That's exactly right. Now we have 1.5x plus typical size of backlog compared to where you'd say any semblance of history or what normal backlog would be coming into a year. So without question, we have more visibility. Now I would say other than some of those longer cycle projects, that visibility may be where you typically walk into your U.S. visibility for a portion of Q1, you've got visibility more of it into Q2. You necessarily have visibility into the back half of the year yet. I wouldn't go that far yet. But you're completely right. In the context of the backlog itself has definitely been much more elevated. And then to the MQL conversation and kind of the whole orders dynamic. The MQLs are the marketing qualified leads, this is really a kind of an output and the construct of our demand generation engine. This is something that we have put in place and really built up since really the 2015 time frame. Just to put it in perspective, today, we have what we'll call a demand gen Center of Excellence, think of 150 people around the globe who do nothing but work on generating marketing qualified leads in a digital manner, doing targeted campaigns. These are individuals who have come from the backgrounds of the Googles and Yahoo!s of note, this is what they've done. And they are literally creating MQLs that then they are turning over to the sales team to then execute on and actually translate into an order thereafter. So it's a very different way in a classical industrial business of instigating or generating demand. And now we've been doing this long enough that we have -- effectively, we look at it every single -- if not every day, we look at every single week. You can see every region, every product line, you can slice and dice it however you like, you can see trends essentially. And what that gives us visibility to and David, to your point, in terms of the conviction around the fact that things are still trending positively right now, is that we've seen a good correlation of MQLs, one, we get about 5,000 marketing qualified leads per week. And we've got to a point where MQLs, like you would expect, they go into the funnel, but they can translate to orders in about a 6- to 8-week time frame. That's kind of that kind of conversion rate conversion, kind of conversion time.

There is a reason I bring it up and I get at the start of the year. "Hey, we know near term, let's be cautious on the back half." But if the backlog is this big, meaning it's 4, 5 months of visibility, not traditional 2. And we think the backlog is not going to go down much given the MQLs. Obviously, that's not suggesting third quarter begins this precipitous decline where we have all-in growth going from over 10% in the first half, down to 5%, when the backlog is still running at near -- and not saying it has to be $2 billion, but not getting drawn down dramatically. Do you think there is a prudent side, the other side happening?

I think there is that, that's exactly right. I mean, I think 1 thing, the comp side does get much more challenged in the back half of the year, comps are real. But the other piece here is, yes, I consider it prudency into the back half. We still do not necessarily have visibility. To your point, things are continuing to trend well. When we did our earnings, we even said the first 5 weeks of the year, year-to-date orders were still trending and we're still organically up, and that was even with the fact that Chinese New Year was a headwind in terms of timing this year versus last year at the time we did earnings. So despite that headwind, just straight dollars that we were still organically up. So you are correct, things still trend -- trending positively. The market dynamics haven't really dramatically changed in any note.

Yes, the MQLs haven't...

MQLs has been remarkably stable. And I think that speaks to the efforts of the team in terms of the demand generation efforts. But yes, I think the second half guide, consider it prudency. And kind of like 2022, hope that that's something we can outperform as we get into the back half of the year.

Now serving the demand and getting the orders is different, right? So the supply chain, in my simple framework kind of like, if before the pandemic which has indexed the supply chain on a scale of 1 to 10, is 10. In the worst moment of the supply chain, of course, we call it a 2. We'll save the 1 for like the Great Flood or something like, a 2. Where is it today? If it was 10 normal, 2? Where are we, is it?

Maybe somewhere in between like in the middle there. Yes, I mean I would say, yes, I mean, are things back to normal? No. And even our guidance kind of implied, hey, listen, we're not implying 2 things, we're not implying some dramatic supply chain normalization or a dramatic change in the context of the supply chain. We're also not implying or including anything in the context of deflation as well. So to the degree things continue to loosen up, sure, that can be opportunity to hopefully outperform but yes, there are still constraints. There are still -- do you get the full allocation of x, y, z component that you want, probably not. You're still working through that lead time. They're probably still a little bit exacerbated compared to whatever normal would be. Again, though, I think our teams have done, we do have a model that hopefully insulates us from that a touch in the context of being in region for the region. It's a distinct component of our model. One that actually we've continued to invest in over the course of the last 3 years and will continue to such that you don't find yourself overly reliant on one region to supply another. The vast majority of our revenue base in the Americas, Europe and Asia is served from facilities within those respective regions.

You're not doing that with India as well?

Correct. Exactly. Yes, we -- in fact, in the context of the last 12 months, we have announced distinct investments. We talked about our Buffalo manufacturing facility in the U.S. to supply centrifugal compressors in domestic U.S. We've built capacity in Brazil for the Brazilian market, and we just announced the India plant expansion largely for India purposes. So absolutely, you're actually seeing it in pockets around the globe.

And the way you described the 4% organic was only 30% volume, call it, 1.2% to be exact? That 1.2% volume growth, I mean, just give me a sense of what's in the second half? Or is it volume 5%, 6% in the first half? And just for now, we're just assuming the rest of the back half of the year is negative?

Yes. I mean flattish in the back half would be the way to think about it. And again, as Vik had mentioned earlier, we see probably the single biggest opportunity for upside as we look out to the future, is organic revenue growth in the back half.

[indiscernible] but if it's 1.2% for the year and the back half is flat, that means the first half is only 2%?

So think of it this way, to put maybe a finer point on it. The second half of the year, the implied guide is flattish total organic which means probably slightly negative on the volumes, slightly positive on the price. And to Matthew's point, I think, without question, probably the biggest piece of opportunity ahead, assuming markets continue to comply and things of that nature is probably the organic volume specifically in the second half of the year.

And given the size of ITS as a percent of the whole company, you had alluded to the first quarter, ITS orders, were feeling pretty good. I assume is that a comment we can extrapolate to, to what we've been seeing so far?

Yes. So I'd say, I mean, we did earnings like 2.5, 3 weeks ago. So I'd say the markets continue to trend generally in line with how you would expect. It's also probably worth noting that typical seasonality in the ITS business is that, one, you're continuing to see good organic momentum, but it's also typical to see book-to-bill above 1 in the first half, below 1 in the second half. And the biggest contributor to that is the longer cycle projects, which is 20-ish percent of the revenue base of ITS, you typically book those in the first half, and the vast majority, not all, but the vast majority of those longer-cycle projects tend to ship, not just in the second half, but they always usually concentrate in the fourth quarter.

Yes, just, if the book-to-bill is, I'll say well above 1. But if it's [ 1 1 1 2 ] for ITS in the first quarter, it's just another element of -- unless somebody cancels the order, they're going to ship in the second half of the year?

Typically speaking. And to your point, have we seen throughout this entire -- have we seen any -- we've gotten the question a lot. So have you seen any cancellations? No. Stocking up inventory on the compressor side typically isn't what we see kind of in our distributor base and the [indiscernible] figure nature of compressors. So, yes, to your point, it's a lot of just continued conversion of the backlog and continue to operate well in this environment.

China, 53 PMI, a lot of people, positive surprise. The government 5% forecast, maybe a little less than some people would have liked to see, but we can debate what a guidance means, beatable, not beatable. But the 53 PMI at least is supposed to be -- that was real. That was actual. Did you feel 53 PMI?

Yes. That's a great question. I would say our China business, frankly, if you go to fourth quarter, if you take a step backwards here, fourth quarter, COVID, a lot of concerns of what's going on. Our China business operated really well. We saw in the compressor side of the business, which is the biggest piece of it, double-digit orders growth in Asia Pac and China is the single biggest component there. So we actually have executed and operated well in the fourth quarter on the orders momentum even through the first part of the year, even up until recently here. Again, you wouldn't get to positive organic momentum in ITS, February, the first week year-to-date without China continuing to execute and operate well. So that team has done a fantastic job, independent of the market variables, continued to execute and operate. I think they probably are one of our -- probably our hallmark kind of examples of a lot of the, control what you control, a lot of the self-help from a commercial perspective, whether that means the Ingersoll Rand brand name in China is, in our opinion, the name of names and now being able to leverage that and be able to penetrate with, for example, Gardner Denver technology that maybe hadn't gotten as much of a foothold in China, now leveraging the IR name. So for example, blower vacuum, right? Now using the IR channel to market there and taking something that has a very low base and continue to build up on that, relaunching the Gardner Denver branded compression technology there, leveraging the IR presence to push that. And then just, frankly, using demand gen to go target those higher-growth targeted verticals and in the market that are frankly just seeing better growth than whatever the average is. So the answer to your question is, have we seen a dramatic change today versus, make it up 2 months ago, 3 months ago? Not dramatic, and I'd say a lot of that is just because we've actually seen good growth.

You had top growth. Most companies were down double digit. You've been doing double digit growth.

We've seen good -- we've been doing pretty good there, both of the -- through the entirety.

So the feedback hasn't been like, hey, a little extra coming from the way the macro read would be or no?

I think the team is encouraged that that's a continued sign for growth as we look forward.

I guess the SEEPEX deal, I mean, they must have a pretty bloated SG&A, I guess, but still that the way you've really driven those margins in 5 or 6 quarters. It's a different starting point. SEEPEX came in at mid-teens, the SPX business is already coming in, I think at mid-20s.

That's correct.

But when I think about the margin potential at SPX, just to sort of level set us, because that's a -- it's a sizable deal. It's enough revenue to kind of move the needle a bit. The margin potential there, should we think of that as a plug-and-play with synergy on driving top line or no, there's 500 type bps of margin from it or is that too much to ask?

No. I mean I think it's a little bit across all those categories. I mean the SPX FLOW business, a fantastic business. It's dryer technology, the dryers are effectively attached to the compressor. We've known the business for decades. We've literally been a customer of SPX FLOW on the Gardner Denver side historically. So it's piece and parcel to what we're selling and what we're doing. To your point, yes, it's coming in, let's just call it, for all practical purposes, close to fleet average margins on the ITS side. But I think, again, as you think about, inherently, what we kind of put in the model is what we consider to be controllable type synergies. So whether that be things around the pricing side of the equation, cost side of the equation. And then ultimately, what we do believe that there are meaningful revenue synergies. We don't underwrite the deal on that, but that's absolutely we'd like to. Should we -- and we actually said when we announced the deal, we expect it to be accretive to ITS in relatively short order, and that would imply multiple hundred basis points of potential opportunity without question.

And just to give us a little heads up, the ones in LOI status, roughly company average, below?

Yes, I would say they're by and large in line in 20% plus type EBITDA margin.

There was SEEPEX coming in. That is a good deal now, but will it drive the PST margin?

First of all, there's nothing in that 11 LOIs that's of the SEEPEX or SPX FLOW size, let alone of a, what I would call a margin profile that's comparable to SEEPEX. So no, nothing you would expect, that's like SEEPEX, which for the record, SEEPEX, 40% plus gross margin. So a fantastic business, to your point, yes, just had a heavy cost structure and clearly something we've been working on here over the course of the last 5 quarters. So to put in perspective, it's gone to about approximately 25% EBITDA margin, so about 1000-basis point improvement in, call it, 5 quarters. It is still slightly dilutive to PST segment margin. So without question, there's still plenty of room to go, but pretty pleased with the progress we've made in a relatively short period of time.

Yes. One thing, I mean nobody can deny Vicente and everybody here has built a pretty constructive culture at Ingersoll. I mean, no two ways about it. Employees acting like owners because they are owners, right? And you gave that good chunk of stock when the merger happened. But still the ability to get labor, especially in this country is a struggle. So I thought it's interesting even with that culture, and I know a lot of pandemic issues, people rethought their lives and what they wanted to do, but that you still had voluntary turnover of 10-plus percent of headcount. It just shows you like it's tough to keep people, let alone find people to add. So this inorganic opportunity also has that benefit as well that it's just easier to grow it on from the human capital side. Can you give us a sense, if you could, as the CFO as well, I mean, kind of what the wage increases are looking like, the trending of that and also just a way -- and you have really done a lot of things that you would think you'd have one of the lower turnovers. It's not like every company provides that data. So I'm not saying you're 10%, 13% higher than average because we don't know everybody's average. But it was still interesting to even see it that high with the culture that you have.

Yes. I think the way I would characterize it is, I mean if we had our -- like anyone else, requisite level of voluntary turnover for sure, has it been lower than any degree of what we'll call industry benchmark that we manage and look to and from third parties, we'd also say that's a fair statement. David, to your point, in terms of one of the biggest contributing factors I do absolutely believe is the culture and this ownership mentality. As you said, we've done 2 all employee equity grants, 1 at the time of the Gardner Denver IPO and then 1 in roughly speaking, August 2020 as part of the merger. We also have announced what we call our kind of Ownership Works Grant, whereby any new employee to the company, whether it's just hired in the company or via an acquisition, 1 year after their start date we will issue the equity as well. So this concept of continuing to ensure that all of our employees are owners and get to participate in that ownership of the company continues. And I absolutely believe that is a very big differentiator. I mean you've seen it so many times over in the context of executing through the last 2 years, executing through supply chain environment, executing through lock down environments in China, people reference and really, I'm an owner of the company. This is my responsibility to serve the customer. So you hear it, you see it, it's pervasive. In the context of the second part of your question of what are we seeing in the market right now? Yes, there absolutely is what I would call labor inflation. It's part of the narrative, and it's part of our guidance. The best way I can probably describe it is, in the U.S., as an example, if historically, merit increase or labor inflation was on average around 3%, it's now probably closer to 4%, just to use kind of rough numbers.

It's that modest difference.

I mean it's got puts and takes across differing roles and different regions. I wouldn't say it's dramatically different in terms of that percentage increase, which just to be clear, that's still 30% difference from prior years to current year. That is embedded in our guidance. And it's worth noting that we are using productivity as a means to offset that. So in the guidance you saw, that is one of the headwinds in terms of labor inflation. We are using productivity to offset it. But I do think, to your point, there's a nuance or a very different model at Ingersoll Rand in the context of employee ownership that without question, I think, has a little bit more of a retention component to it that we very much see as differentiating ourselves in a tight labor environment.

If Chair Powell was here, and you were giving him advice on what you're seeing on the wage front. Are wage increases peaking? Or would you argue -- and this is our industry we look at, maybe not every industry, we know tech, you've seen the layoffs and so forth. But would you say your wage increases are peaking right now? Are you seeing anything with a looser labor force out there that this is sort of peak wage increase?

I think it's -- I'm not going to say it's peak. I mean, it's definitely a high watermark for the company without question here. And I will also say that there are components within the business and differing parts of more specialized labor and things of that nature, where I will, without question, say, the percentage increase has been a little bit bigger than what we referenced here. So I think without question, it's something we're going to continue to monitor. We're going to continue to see. We're not adverse if we have to, we've done certain things out of cycle as needed for targeted components of the organization even in 2022. So that's just been part of how we operate. And we've been able to, I'd say, adapt pretty well. And despite that, keep our voluntary turnover at relatively lower rates than we see in the total industry. And at this point, you still haven't seen that being an impediment to being able to deliver results. So we're pretty happy with how we've managed in what has been a pretty tough environment.

And last thing for me, we've seen some materials like hot-rolled steel, for example, tick back up, others steady, copper had the lift and it's come off a little bit, but still a bit high. The way you're going to market with price, has the year started a little bit where, have we thought we might only do January? We might go midyear, but we have that flexibility or has there been a little bit of that we've raised price a lot, a lot of intracompany or intra-year price increases, we're sort of reticent to go back to the market right now. We don't want to test demand elasticity necessarily or no, you could roll out another?

Yes. It's more latter. In fact, we said as part of our guidance and we go back to that 4% organic guide. We said 70% price, 30% volume just due to the carryover nature of the actions we took in 2022. And we said the vast majority of that 70% price was due to carryover but we also did say that we do intend to take what we consider to be normal course pricing actions, maybe 1% to 2% in the context of 2023. Now...

Is that enough to keep price cost margin?

We do believe so. And we've actually managed to be price cost dollar positive every quarter to the duration, and we've been margin positive for several quarters in a row here. We do believe that, that is the right kind of equation for us as we sit here right now and in the environment we see. One thing to note, David, is that it doesn't -- every region, every product line will be a little bit different in terms of what they do in the market. So it's not that every business is taking a -- I'm making this up, a March 1 price. No. It's every business and region will do what makes sense in their respective markets and areas. But we do think that the environment is still there to continue to do that what we call a normal course. And we've been able to take, I'd say, 1% to 2% price increase. Even if you look back at the history of the company, year in, year out, that's just been part of the model and given where we play in the market. So we don't think things are going to be dramatically different this year. And if for whatever reason, things change dramatically. We showed in the context of last year, the ability to take pricing actions, and we typically are taking them -- we're not waiting for to see what competition are doing, the actions that we think are appropriate for the company.

We're about out of time. Anybody have a question? I have one last one I'm going to ask. I'm not saying you're going to opine upon every competitor with real, real full insight. But just curious, on the compressor side, right, you can think of Atlas Copco, the other products, maybe a little more Dover, Flowserve. Just curious, the competitive landscape right now are -- you don't have to be nice. No one's watching. But just the idea of the dynamic of, "Oh, the dollar is a bit strong, maybe Atlas Copco could be a little friskier and not having to raise price as much, or you name it." Just curious, any color you can give us competitively, anything unique going on that we should be at least thoughtful about from a competitive dynamic?

Yes. No, I think the beauty of where we operate, whether it be ITS or PST, is that we've got great competitors, a lot of whom are public peers of note. So I would say it's a very disciplined market. If you think about the compressor side, you got Atlas Copco and ourselves as the #1 and #2 players. I think it's a very disciplined environment in that respect, creates a healthy demand environment out there. It gives us both good benchmarks to use in terms of how we're individually operating in the respective regions. And anything I would point to of things dramatically changing the landscape, I think, no. I'd say it's been a relatively, what I'll call, a disciplined environment out there in terms of where we've been playing, which is what we like to see.

All right. Well, thank you very much for coming. Appreciate your time.

Appreciate it. Appreciate it.

All right. Thank you.