IPG Photonics Corporation (IPGP) Earnings Call Transcript & Summary

Great. Good morning, everyone. I'm Brian Gesuale, senior analyst covering the industrial tech space for Raymond James. I already miss seeing everyone in sunny Orlando. So hopefully, next year, we reconvene. This morning though, we're going to kick off our industrial tech group with IPG Photonics, which has been a real bellwether and juggernaut of the group. We think the timing is terrific to hear the story given the macro acceleration, a bunch of new products that the company has out and really all of the M&A chatter from the coherent takeover drama. We are delighted to have the company's CFO, Tim Mammen, join us to update us on the story. We're going to do this in fireside chat format, so feel free to e-mail me questions and I'll do my best to get to those as well. Tim, welcome.

Thanks, Brian. Good to be here.

Well, let's just jump right into it. Maybe we just -- in the beginning, just level set the audience a bit here. Would you give us an overview of IPG Photonics, really your strategy and what differentiates you from others in the photonics space?

So at a high level, our strategy has always been to commercialize to a greater degree laser technology across a broad base of different applications. Our view has been that historically, laser technology was -- are both too expensive and difficult to use. And in fact, those are unreliable. So 3 key things that have really quite limited the adoption on a more broad-based basis of lasers, not just the industrial applications, where clearly we've had significant traction and strength over the last 15 or so years, but also in many other applications. So the fiber laser technology at its core is fundamentally easier to use. It's a much more robust monolithic device that is comprised of optical components that have thousands of hours of meantime before failure. So you -- with the fiber laser technology started to address 2 of the very important areas, right, ease of use and integratability, for example, into automated production systems or the ability to integrate the laser with robots. Or if you go back to the early stages, the pulsed lasers used in marketing applications simplified that process as well. Over the last -- and it's been a long time now, decade or so, we have also addressed the other issue, which was to make laser technology more and more cost effective. So price of lasers and fiber laser technology has come down since 2006 to 2020 very, very dramatically. And that has expanded the market for the technology significantly. So total unit volumes, for example, in the cutting market and the marking market have expanded a good -- great deal. In welding applications, unit volumes are starting to pick up and the diversity of welding applications is also starting to improve. So outside of that, our strategy is to take that core capability and introduce it to applications where we've not historically been strong. So displacing different types of gas lasers, for example, or solid-state lasers in shorter wavelengths, the microprocessing. So green, UV or ultrafast pulsed lasers, which also address microprocessing and many other applications as well. For example, there are medical applications for those types of lasers. We've also started to introduce longer wavelength lasers or commercialize them. We've always had an ability to produce either erbium or thulium lasers. And one of the successes we've had more recently is the introduction of lithotripsy kidney stone removal application for medical. So again, using a very robust, compact, reliable device built into a system that brings significant performance advantages during the kidney stone removal process. So in virtually all of these different areas, IPG has demonstrated that ability to improve the ease of use, effectiveness and reduce the cost of the technology. I'd say the other difference between IPG's strategy and the one pursued by many other companies is that we are a deeply vertically integrated company. So we have made and developed many of the different technologies that are used inside our lasers and now produce in many of those instances and have very high scale of production and produced, in some instance, like the diodes, millions of diode chips and tens of thousands of other components. And there are hundreds of those different types of components that are used. And more recently, for example, we've developed leading-edge crystal technology that's enabling some of our shorter wavelength lasers to be built. So for example, when we got down into the green and UV applications, we believe that crystal technology is fundamentally more reliable than crystals that are available in the market. So our vertical integration is an extremely important part of the strategy, both in terms of not just the scale of production, but the quality of the components that we are able to develop internally. And that quality may be the performance so they can handle higher power levels or the quality may be that they can handle those higher power levels and retain a high level of reliability.

Yes, Tim, that's great. It's a really good overview. Let's dig right into the demand picture and really maybe take this from a geographical perspective. Can you give us some color on how we should see -- how you're seeing demand trends in China, Europe, North America and really any other market that you want to call out? I think last year, the market was concerned that some of the demand initially was kind of a rebuild of inventories, but not necessarily durable at the time. I think the view today is that we're just early cycle in a recovery and the demand seems quite durable. Could you maybe just give us a comment on your views on both the durability of this demand and a little bit of the geographical perspective?

When we came into the end of the year, most of the economic data points that we follow continued to show improvements in strengths, whether it was PMI data points or machine tool orders in different geographies around the world. We looked at Japanese machine tool orders. The domestic demand in Japan was still a little bit weak, but it started to turn and stabilize at least. But export orders, Taiwanese orders, U.S. machine tool technology orders, German machine and European machine tool orders, although still significantly off their peaks, had started to stabilize and improve it. So the first thing is that those economic data points started to show measurable improvements. I had said when we went back to the beginning of Q3 and those data points have started to show improvements that I was -- the point I made was that they were showing improvements off a very impacted level, right? So PMI is only a reflection of expansion. If you're expanding off a really low level, it's not necessarily a sign of a durable rebound in demand. So I think what we've seen over the last 6 months is that has been sustained and even improved. So those are positive trends. Other things that we look to are the global GDP forecast this year, again, albeit off a contraction last year and a difficult time is expected to be growth rate on average in the 5% to 6% range. Now that's a very strong rebound and generally drives demand for industrial technology and capacity expansion. Outside of those areas, if you look at the different geographies, certainly, China rebounded very strongly after the contraction in Q1 last year and has sustained that performance. There's a lot of demand coming from high power cutting systems, even cutting systems at the low end of the market performing well. You've got different industries where there's a strong demand environment. So for example, the high-power cutting systems getting more broadly used in construction, heavy equipment manufacturing, certain amount of momentum starting to build at an early stage from displacement of plasma cutting systems is an area that we've talked about. In China, there's -- clearly, you had an expansionary credit period last year. There are -- I wouldn't say concern, but the view is that the credit isn't going to be quite as expansionary this year. But the feedback we've had is that there is still liquidity available, particularly for investment in advanced and automated manufacturing. So upgrading manufacturing capacity. In Europe, we certainly started to see -- we think we've seen stability and an improvement in orders in Q2 and that continued into Q3. We said even at the beginning of this year, when we just in January up until the period that we had our -- made our earnings announcement that, that order flow had been pretty robust there. We also said China had held up well. China had just gone into Chinese New Year and is just starting to get back to work. So March is going to be a very important tell in terms of how China order flow develops in March and April. That will be something we're watching regularly closely. In North America, we had very strong -- we had a weak revenue quarter in Q3, but we had a very, very strong order flow in North America and that drove good performance in Q4. We've stated that our backlog for the beginning of the year was also strong. We've started to see some rebound in some of the North American industrial applications because we'd have great strength in things like advanced and medical and some of the more special ideas, which is also good because it shows the diversification strategy that we're sharing. I think there are other trends that over the longer term will benefit the laser industry. Those include things like sort of regionalization of supply chains, where people, not just the geopolitical risks around it, but the pandemic showed that there was some vulnerability to having and relying upon a truly global supply chain. You've got shifts in cycle demand for things like vehicles shifting towards EV, which is a long-term driver for IPG. You've got continued interest in renewable energy, that's driving a lot of demand for our green lasers. Medical applications, I've already mentioned, that's expected to be, over the next decade, a significant growth area, not just for lasers, but many different types of medical applications driven by the aging dynamics of western population. So I think there are a number of different things you can point to that are important for laser technology and automation and advanced manufacturing and other applications over the coming many years.

Great. Maybe let's dive into a couple of these vertical markets. I think 20 -- it's early in 2021, but I think the year has already been crowned the year of the electric vehicle. Awful lot of enthusiasm across the entire supply chain there. Can you tell us about how you're seeing -- you've always been instrumental in the supply chain process. Can you talk about the demand in that market? What applications you support? Maybe give folks a little bit of a tutorial. And then maybe run us through that business cycle that your EV battery business has had over the last 4 or 5 years, because it's been up, it's been down, but it seems like we have a lot more durability demand there away from subsidies that maybe fueled that market 4 or 5 years ago. It seems to be standing on its own at this point.

Yes. I think the first thing is that our view of the electric vehicle investment cycle is that 2021 may be a bit of a turning point, but I certainly wouldn't say that it's simply the year of the EV in 2021. We think this is a decade-long one. And I actually don't -- I think you have to be cautious about that kind of characterization of it. Sometimes it creates a bit too much expectation as to what's going to happen in the near term around this, whereas we view this as being a longer-term, durable investment cycle if EV output is going to reach the target levels that are designated, right? So people talking about having EV production being 25%, then 40% of total vehicle output and then ultimately even higher. There's an awful lot of infrastructure that's going to be built around that. And so in terms of the manufacturing, first of all, we view it as a decade-long investment horizon. Lasers are used in different types of batteries to varying degrees. So things like pouch and prismatic use more than cylindrical, although we've heard that some of the cylindrical battery applications are looking more at lasers where historically they haven't used it because there's a bit of an older technology. But as they're introducing new, there's potentially some demand that will come out of that even. The 3 main applications that are involved in battery manufacturing very high-speed cutting of tinfoils that are used in the manufacturing process that use our very high-power pulsed lasers, the cleaning of the electrical contact points of electrodes that also use the high-power pulsed applications. And then there's a lot of complex, high-speed welding that covers different areas of the battery. So it could be from the casing to welding in the buzz bars, many of the different electric contact points and there are hundreds -- and hundreds and thousands of different welds or complex materials, so different types of alloys, which are more difficult world, for example, the mild steel. So they're complex. Once you get to a complete battery package, there's a tremendous amount of processing that's in there. In terms of how it's benefited us, it is a business that can be uneven from period to period because it's driven by capacity additions in the investment cycles. It's driven anywhere from probably 2% or 3% of revenue to 8% to 10% of revenue on a quarterly basis. I think those are sort of the main points to call out about it. I think that it's not also actually -- the final point is that it's not just demand coming out of China, right, where historically there was a lot of investment put into battery capacity and manufacturing. We have mentioned that we have received over the last 12 months or so orders that, for example, have been placed in North America. We had a significant order for battery manufacturing in Q4 of last year. There were lasers delivered at the beginning of last year that were integrated in North America, actually installed in Europe. There's a small battery manufacturing system that we've got an order for in Europe that's going into one of the automotive companies there as well. So I expect that demand to become pretty globally based rather than just being -- historically has been a bit more weighted towards China. We've seen that transition start to happen this year. It's a more on a global basis.

Yes, I think that's great color. And there's certainly a lot of enthusiasm around this being the year where capacity is added and more vehicle launches and more vehicle news lead to that decade-long cycle that you talked about. Another big area for IPG Photonics has historically been consumer electronics. I think it's prudent really to kind of throw 2020 out as a reference here, given everything that transpired. But how would you maybe think about what you're seeing on the consumer electronic side of things? And if you could compare that to any year prior to 2020, 2016, obviously, '17 was a super cycle. Could the stars align and give us another 2017? Or how would you think about the way that picture is shaping up for you at this point?

Yes. I think we'll consider the electronics as super cycle. We don't have any visibility into that. But it used to be very much a biannual investment cycle where it was tied more to product launches. '17 was really the last very strong year of investment that we saw out of consumer firms, we didn't repeat itself in '19. There was some demand last year in 2020. There is a view that this year will be a stronger investment cycle. So we've seen and -- not seen, we've heard that lasers have been increasingly repurposed for use on lines where phone technology has been upgraded rather than new lasers being purchased. And that's dampened demand over the last couple of years or so. Some of those lasers are clearly going to be getting older and they are used. The duty cycles on them are very, very high. So even a laser that's 3 or 4 years old will have potentially 10,000 to 20,000 hours of use on it because they've been running them for at least 2 shifts. So it does point towards that there could be a bit of a stronger investment cycle this year. I think one of the differences is that, first of all, that repurposing. Secondly, laser technology and consumer as -- consumer electronics has been developing and progressing over the last 10 years, right? We went back to the first smartphones, there was less laser technology in use. Then, it was sort of more the marking applications. And then you've got into more -- you've got a lot more welding applications. There are some areas within this that we don't replace. So for example, if there's a lot of PC board manufacturing at the moment, that wouldn't benefit us directly until we get more penetrated into that microprocessing application set. There are applications, for example, using ultra fast lasers that over time we would hope to get qualified for that are used in sort of some of the screen and display application structuring and some of the glass. But our view this year is we just don't have visibility yet into it being a -- and the idea of a consumer electronics super cycle, I think, for the reasons I've just articulated, it's a different dynamic than existed 3 or 4 years ago within that industry.

Tim, I think you make a really good point about repurposing some of the lasers. Do you have any stabs at what you might think of an installed base is in the marketplace that over time will ultimately need to be replaced? Any idea on that?

No. Off the top of my head, Brian, no, I don't. And so it's like total unit volumes. But yes, there are -- I mean, several thousand, for example, QCW lasers, there'd be a certain number of probably high-power pulse lasers. I just don't have the unit volumes on that at hand or haven't looked at it in terms of that data point.

Okay. That's fair. I wanted to kind of jump on to the innovation that we see at IPG. I think a lot of people underestimate that. Can you run through some of the newer products that are beginning to become revenue contributors and kind of scale those for us? Certainly, some of the products that we're excited about are the handheld laser pico second product that you have, UV and green and really any other lasers you want to kind of highlight. And maybe kind of order them by size and growth as you see them in terms of importance.

So historically, we've been obviously focused on the industrial end markets and materials processing applications, which are less than 50% of the total laser source market, right? So for the last 3 to 5 years, we've been developing many different technologies to address a broader base of that application set because it doubled -- more than doubled the size potentially of the opportunity for the company. The successes we've had more -- over the last year or so, we've seen some good acceleration in growth of being, for example, on green lasers for renewable energy, where we are with 2 existing processes and a third process likely to be introduced improving the efficiency of the solar cells. So it's not just the manufacturing process, it's actually improving the efficiency of the solar cells by anywhere from 100 and 150 basis points with each of those applications. Now those are significant improvements in solar cell efficiency. If you'd combine the green with some of the progress on UV and ultrafast, you have a business that's approaching a $40 million annual run rate. Those microprocessing applications are very significant. And the ultrafast market is probably around $300 million. Then you've got, obviously, the green and the UV on top of that. So it's probably around -- and this is excluding things like lithography and flat panel display, which is a more specialized area of that market. So it just took about -- probably about a $500 million opportunity in that microprocessing area. There are things like hybrid circuit board processing using the lasers, not just on [indiscernible] but on things like marking of plastics, manufacturing of different things. I mean one application we've been looking at on is like manufacturing of diabetic test strips, processing of glass, ceramics, semiconductors, dicing and scribing. Outside of that, the other really strong area last year that we were very pleased with was the development of the medical applications that I mentioned, so lithotripsy, which is kidney stone dusting. The thulium-based device that we've introduced to the market has really been accepted as the gold standard now. So it enables kidney stones to be broken down at much finer dust particles and make the whole patient experience a lot less painful. And the speed with which that happens is also faster. So that business grew by much more than 100% last year. And medical -- that and a couple of other medical procedure approaching about $30 million. In total, in terms of lasers, laser sources are over $1 billion for medical applications. For laser systems there, I think about $4 billion expected to grow very dramatically over the next 5-plus years. So expect the growth rate for medical laser applications in excess of 10%. So we're looking to build that business with multiple different applications. We're working on things like soft tissue treatment. So kind of rejuvenating cartilage. We're looking at some varicose vein treatments and pigmentation and lesion applications. So the idea is that within 3 years' time to build that business to at least $100 million. And then from there, grow it significantly beyond that to become more and more penetrated into that market. On the part of -- one of the systems businesses that actually -- there's some of the systems businesses were more impacted last year. So systems is one of the area that's been -- while the systems businesses have performed quite well last year with the acquisition we made at supply systems into medical device manufacturing, so this, again, is a backup to the targeting of a market that's expected to expand over the multiple year horizon at a significant rate. So we do things like stent manufacturing or using our lasers to make pacemakers and other medical devices. Another strong performer last year, so outside of the shorter and longer wavelength lasers were some of the advanced applications for A&D or government applications. So last year, it is still not commercialized, so a lot of these are R&D-type application, we had a very strong year supplying our single-mode lasers for continued research into directed energy applications. So for example, for destroying unmanned area vehicles or incoming ordinance in our mortars, rockets, artillery, that kind of thing. There's one application that's been commercialized there at lower power, single-mode lasers. The demand is still taking time to pick up. But the view is that particularly around things like UAV, unmanned area vehicle, and not just protecting, so for example, military -- remote military basis, but even infrastructure that, that application is probably the one that could grow most significantly over, say, the next 2 to 3 years. It's very difficult to pick when that's going to get commercialized there. I don't say that got to be '17 and '18 back in '11, '12, and I was not right on it. And it's kind of like an optionality on that, right? If it really does get commercialized, that's going be a very meaningful potential revenue driver.

Yes, absolutely. I couldn't agree more. Tim, let's shift a little bit into the pricing environment. Pricing is certainly pretty aggressive and challenging in 2018 and '19, particularly in China, but really seem to normalize in 2020. And the tones we're getting from the market is it's pretty much pricing kind of in line with 2020, with a normal kind of low double-digit kind of pressure on a dollar per lot basis, which is pretty typical. What are you seeing from a pricing perspective? And I'm sure it differs by region. So maybe just give us some of your thoughts there.

So we were pleased that pricing was much more stable during 2020, particularly in the last 3 quarters. Some of that benefited, I think, that when the demand environment is stronger, the acuteness of the reactions from some of the competitors is less arising to like tends to lift what does lift all those from. So that was a bit better. But I think there are issues that competitors have in terms of the market price that's already been reached relative to their cost bases and limitations on how far down they can go beyond where they are at the moment. That will be one aspect to it. There are some things we get a benefit from. So for example, the EV side is much the advanced laser that we sell there are different from the lasers that are sold into the cutting market, particularly at the low end. So the low end of the cutting market historically is where the most price pressure has been. The competitors in China, they are starting to move up to higher power levels. And that's -- again, the cost down dynamic there is enabling certain things to happen, right? So for example, to address -- start to penetrate some aspects of the plasma market. So an online is always -- it's a balance between the elasticity of demand and to penetrate some of these end markets. So without doubt as laser technology has come down in cost, the market has expanded very, very dramatically even over the last 2 or 3 years, right? You've gone from probably less than 10,000 cutting systems to significantly more than 25,000 cutting systems. The problem is, is that pricing was coming down more in the range of 25% per year. So it's been a bit of a pivot victory that the Chinese suppliers have pursued because the market itself has been a bit more stagnant. How does that impact? The pricing does tend to -- even though it's originally only at the low end of the market, because people look at pricing on a per kilowatt basis, keeping it just in the low end of the market is more difficult. And then you do have these dynamics where, even at higher power levels, there's a volume increase that's being driven by displacing nonlaser technologies. And that's really -- it is a cost for you to be able to displace those nonlaser technologies more fundamentally. I'll come back, as you know, some of this is that it ties back a little bit. Some of the advantages, for example, we don't -- we've talked about them in the new products, let's come back to the handheld welder. The handheld welder is really enabled by some of the cost-down initiatives that we've brought to bear over the last couple of years as a result of some of that pricing pressure from a competitive dynamic, right? We would never have been able to introduce that handheld welder at a price that was competitive with the legacy welding technologies had a significant amount of cost not being taken out of optical components as well as some of the electromechanical components. So that's an example of kind of like where these pricing dynamics actually have started to open up a new market for us. That may be fundamentally more disruptive to welding than lasers have been historically where they've only been used on more specialized applications and in automation, those seat backs and airbag definitely are some of those examples or tailor weld of blanks. Now you're starting to get into with this manual welding process, potentially a much broader part of the market. Yes, we've heard that the competitors, even as they try to go to higher power levels of issues, continue to have issues around reliability, whether it's power degradation or being able to maintain a stable beam. There's still a part of the market, even as you get to higher power levels that will accept a lower quality technology. So there's a tremendous amount of positive puts that we have around the company. And there's still the risk around pricing in the market and the competitive dynamics are gone. We can't shy away from that, and I'm fairly upfront about it. But we've responded by reducing cost and improving quality, reducing the form factor size of our lasers.

Yes. No, I think that's very true. And actually, it segues into my next question. I want to spend a moment on gross margins. We've seen gross margins trend from the low 40s to the high 50s over the last several years. Can you talk about maybe how you've innovated down the cost curve through vertical integration? And then maybe take us through a couple of the levers that get you back up above 50%? And how we might think about the timing for that?

Yes. So I mean IPG has always been very focused. I sometime say that DNA of the company is not just around the technology, it's around the ability to take cost out of components and reduce the cost per watt of them. So we've done that very successfully over the entire life of the company. More recently, we've had to probably even actually run faster in order to achieve those gains. So for example, on the diode side, it's not necessarily coming out of increasing the scale of production or getting better yields. We've already got those benefits coming through. So what ends up happening is you have to key changes we've made to get more power out of every chip. And then for a given number of chips that you're incorporating in a diode, your cost of your total power for the same bill of material goes up, your possible lot comes down. We've also started to look outside of the optical components at the other areas of the laser, so the electromechanical design. So our ultra compact lasers that we're introducing to the market initially for the low end of the cutting market incorporates significant design improvements in those areas. And we're going to be able to transition some of that up to even, we mentioned on the last call, up to 8 kilowatts over time of power. So we get the same benefit on that cost side coming out. So the sort of DNA within the company to reduce cost, it comes back to the strategy that I mentioned right at the beginning of the call, right? We've got a -- our whole strategy has been able to -- has been to try and reduce the cost of laser technology to ensure that it's deployed in more and more different applications, not just in materials processing but outside of them. In terms of gross margin, we're pleased with the performance, particularly last year, that we've got. I mean you have to strip out some of the unusual inventory provisions that we've suffered over the last 18 months or so given some of the volatility in the end markets. It was -- certainly, if you strip those out, you've gone from probably the low -- the mid-40s rather than the low 40s, like 44, 45, up to 48%, not quite at that sort of high-end of the 45% to 50% range yet. So in order to get back up to 50%, and I kind of like, look at this, let's get back up consistently in the upper half of that range before we start talking about beyond that range. You continue to want to have scale in the operations. So continue to grow total revenue. You want the newer product introductions and the high-value product that we're selling continuing to grow. You want pricing behavior to be more rational in the market on a longer-term basis. If so -- it could be -- some of it will be driven by product mix, where we have significant advantages, the cost down initiatives. So as -- we're still not really benefiting from the ultra compact laser being sold in volume for cutting applications or from that bill of material moving up to the 8-kilowatt level. So all of those transitions over time. And then growth in the emerging products will always help because they are higher margin, much more complex product to make and have more barriers to entry and less competitive dynamics around them.

That's great. This is going to be my last question. The space has really seen some focus on M&A. Can you talk about how, if at all, the consolidation of the market changes anything for IPG? And then also talk about your balance sheet. I mean it's stellar. You generate an awful lot of cash. So how important are inorganic growth opportunities for you as well?

We've always said that we don't view ourselves as a consolidator in the industry. I think there's a lot of different issues that you have to deal with when you do try and consolidate. Obviously, you have the benefit from scale, but you're also dealing with, sometimes, technologies that are not particularly close to each other, right, and trying to integrate and leverage value off them or different cultural ways the companies function and making that aspect of an integration successful, I think, can be. And that's just not where our DNA is. Other companies are better and good at it. We've really been focused on internally developing technologies that we think are superior. And maybe it takes a little bit more time to do that, but ultimately the returns that we get off that historically have been very, very significant. The acquisitions we do make tend to be either on a forward or backward integration basis where we're looking at technologies that can be added to what we're doing and can really drive value in conjunction with our products. So for example, there's some beam compression technology that we acquired with OptiGrate, that's extremely important to the company and developing our ultrafast laser technology. We're using some of their capability as well in our diodes manufacturing and diode components. So we're finding broad-based uses for that, not just in the emerging ultrafast market. The acquisition of ILT that produces medical device systems, I talked about how that has performed actually quite well last year. The Laser Depth Dynamic acquisition is extremely important in adding real-time weld monitoring capability to the welding processes and ultimately has applications outside of welding. So for example, could be used in things like cladding and other deposition technologies. So we're trying -- we're looking for acquisitions that kind of can be combined with our existing portfolio of products and leverage their growth into different end markets on a faster basis than we'd otherwise be able to. In terms of the balance sheet, we -- even last year, we're very pleased with the growth, the profitability that we're able to generate, given the difficult environment as well as the total cash flow. So I think our capital allocation strategy has evolved is much more mature than what it was 4 years ago, both in terms of acquisitions but in terms of -- we have done some buybacks initially. We had an unrestricted buyback initially that was executed, and we've been doing more antidilutive ones. And we've got another $200 million unrestricted buyback that's approved at the moment. So total capital that's been deployed is probably approaching $600 million, I think if you add all the acquisitions up and the total amount that we've spent on buybacks and then there's still another $250 million. And it's a testament to the cash flow generation of the company, that we still got a very significant amount of cash on the balance sheet even though we have executed around that.

Yes. No, it's amazing, the amount of cash your business generates in good and poor cycles. So it's been something to see. That's all the time we have for today. I want to thank everyone for joining us out there in the virtual world. And Tim, thank you for taking the time to go through the Q&A with me.

That's great. Thank you very much. And good luck with the rest of the conference. Hopefully, we'll see down in Tampa next year when it's [indiscernible] today.

Absolutely. Everyone, thanks so much. We're going to sign off from here.