Jack Henry & Associates, Inc. (JKHY) Earnings Call Transcript & Summary

Let's get started. Thank you all for joining us. I am Matt Roswell. I'm part of the fintech team here at RBC. I'm joined by Dave Foss, who's the Chairman of the Board and CEO of Jack Henry & Associates. Welcome.

Yes. Thank you, Matt.

Good to see you in person.

Yes.

It's good to see everybody in person.

We did a virtual last time.

Yes, it was virtual last time.

So I guess for investors who are not familiar with Jack Henry, can you give us a brief overview of the company and the 3 main business lines?

Sure. Yes. So we are a 46-year-old S&P 500 public company. I describe us regularly as a well-rounded financial technology company. So the idea Jack Henry is if you're running a bank or a credit union, almost any technology you need to run that bank or credit union in the United States, you can get from Jack Henry if you choose to get it from Jack Henry. So we're well-rounded, offer a wide variety of solutions, well over 300 different solutions that you can buy from Jack Henry. Pretty much any fintech name that you know in our space, we have something that competes with those fintechs, but we compete as Jack Henry. We don't tend to have product names for every single thing that we do and that we're known in the market. We -- so the 3 different segments that Matt is alluding to, we have our core segment, our payment segment and our complementary solutions segment. I say regularly we are not a payments company at Jack Henry, but we do a lot in payments. We are not just a core company at Jack Henry, but of course, we are well known as a core provider. We are a well-rounded financial technology company. So first off, on the core side, we support 4 different core platforms at Jack Henry, 1 on the credit union side, 3 on the banking side, all targeted at specific customers or specific markets in our space. For our core business, we target to serve kind of that middle space for banks and credit unions. We don't serve the little, tiny banks and credit unions, and there are thousands of them out there. That is not our target market. We, by strategy, also do not sell to the top 10 banks in the U.S., and that is a strategic decision that we made not to play in that market, but pretty much anything in between. We have solutions that we sell into those spaces. On the credit union side, as far as core is concerned, we are the dominant player in credit unions, above $1 billion in assets. So we have about 49% of that market on the credit union side. On the banking side, we have about 27%, 28%, I guess, of the banks over $1 billion in assets. So we're a major player on the banking side as well. So core, by the way, for anybody who doesn't know, when we refer to the core system in the bank or a credit union, it is that primary accounting system in the bank or credit union that processes loans, deposits and general ledger. So it's accruing interest, it's posting payments, it's reconciling everything back to the GL. That's the core system. And as I mentioned earlier, we support for. So that's the first segment. Second segment is our payments segment. At Jack Henry, we have 3 primary deliverables within that segment. We have our card issuing business. We are not a merchant acquirer, and that, too, is by strategy. That's by choice. We understand that business extremely well, and we chose, a few years ago, not to get into that business. But we do issuing. So we have a large debit issuing business, and we are relatively new on the credit side, but we do credit and debit issuing today, both inside our core base and we can sell outside our core base. That's the first piece of the payments segment. The second piece is our bill pay business. It's widely installed business. About 3,500 banks and credit unions use that platform at Jack Henry. And that's a traditional bill pay platform where you go to your bank or credit union website and you pay your bills through the bank or credit union. So it's not a merchant direct bill pay business. It's through the financial institution. And then our third piece of the payments segment is what we refer to as enterprise payment solutions. It's an ACH origination and remote deposit capture platform. We're the most widely installed remote deposit capture provider in the U.S., and that's taking pictures of your check and turning them into images and transactions. And you may say, yes, that's a dying business. Believe it or not, it is not. That business is on fire in the U.S. And so it's a great business for us. But that's the third piece of the payments segment. And the last segment is kind of the catch all. So anything that's not core and not payments, of those 300-plus products I referred to, that goes in the complementary solutions bucket. So it's everything from digital banking to an online account origination, to older things like voice response and document imaging and check imaging. There's all kinds of things in that bucket. We're well known -- one of the solutions that gets a lot of attention in that segment is our Banno digital banking solution. So Banno is well known in our space, very, very hot product right now for Jack Henry, but it's a complete digital banking solution. So what you think -- what you thought of in the past as Internet banking and mobile banking, put them together into a single experience, that's what Banno is. We're actively adding customers and taking share. And we are known with that solution as having the highest ratings in the App Store and as being the fastest application in market, meaning from the time you log on to the time you can actually do a transaction is measured in milliseconds as opposed to most applications that are measured in seconds from log on to actually being able to use the application. Banno is measured in milliseconds. And so we're well known for having the fastest app and for the speed that we're adding customers. So those are the 3 major segments of Jack Henry.

Can you talk a little bit about the demand environment and whether the pandemic sort of pulled forward demand, so we might be facing a drop-off at some point in time?

Yes. I would not say that at all. The pandemic -- so the pandemic was a challenge. So it was an interesting time for us. If you look back at our sales history, so our fourth fiscal quarter, we're on a July 1 to June 30 fiscal year, so our fourth fiscal quarter, June of 2020 was a record sales quarter. Why? All of these deals were in the funnel, and when the pandemic hit, they were still in the funnel, and they all kind of got signed. But then once we got through that fourth fiscal quarter, things just came to a screeching halt because if you think about banks and credit unions, the idea of working remote and serving customers remote, that wasn't a thing, right? They expected people to come into the branch, and they expected to do business with people across the table. So they all went through a major shift in their business models, their operating models to figure out how to serve their customers digitally and remotely. They did all that, but what it really highlighted to them was, okay, we have tools to use, but we really need to focus on modernizing all these tools. So digital banking is one. The -- most any bank or credit union think about is, whether they're a Jack Henry customer or not, they have Internet banking and mobile banking, and they are 2 different experiences. Think about whoever you bank with, chances are when you get your phone out, what you experience on your phone is totally different from when you sit down at your PC. That's true for almost any bank or credit union. Banno solves that problem. And so we had a lot of bankers who realized, okay, we have a need here. You put that together with -- they kind of figured out how to do commercial lending digitally during the pandemic, but it wasn't an elegant experience. A lot of demand there. A lot of demand for new account origination, account opening solutions. A lot of demand for efficiency solutions, things that will make the financial institution more efficient. So they've kind of bundled up all these demands. Well, you can't do them all at once. So this idea that all that demand was pulled forward and everybody benefited and now it's going to die, it just isn't the way it happened. There is a lot of demand, but they're having to kind of parse it out and figure out what things do we do first? How do we prioritize this? And that is going to roll for, I think, for years. If you just look at Internet and mobile banking, just that one solution or those 2 moving to one, almost every bank and credit union has to solve that problem. That's just one thing that's driving demand within our space. So you add up all the other things, I think the demand environment continues to be pretty healthy for quite some time. I will point out the surveys that were done, so I always quote on the earnings calls, in November and February, I quote a couple of industry surveys that are really good guides just to give you all us investors kind of in a feel for what we're experiencing out there. So I quote the Bank Director survey in November and the Cornerstone Advisors survey in February. Both of them telegraphed that for the 2022 calendar year, they expected spending to be up, on average, close to 10%. That was the average, close to 10%. And sure enough, that's what we've seen. We saw a -- we set an all-time sales record in December. In the March quarter, we set an all-time Q3 -- fiscal Q3 record, 40% higher than any other Q3 at Jack Henry. And I will tell you that sales trend just continues to roll along. So I don't think there was some artificial pull forward in -- as a result of the pandemic. I think it's been the opposite. I think the pandemic caused people to understand they need technology. And now they prioritize this list, and they're working their way through the list, but that's going to take a long time.

I know you get asked this question a lot, but I'm going to ask it anyway. Bank M&A, I mean, the number of banks shrinking in the U.S., [indiscernible] forever. Does that mean your total addressable market is shrinking?

It is not. So it's about -- it's been about 4% per year for 30 years or so. That -- so your point is accurate. The market is shrinking. But if you think of where is that happening. So I mentioned earlier, we choose not to serve the little, tiny banks and credit unions in the U.S. That is not our target market. So I think below $100 million in assets. And there are 3,000 of them or so in the U.S. But if you stratify the market, whether you do it on the bank side with FDIC data or do it on the credit union side with NCUA data, what you'll see is the low-end stratification, that's where the numbers are decreasing. Every other stratification, they're going up. Well, the top tier is not increasing. There aren't any more top-tier banks being created. But if you look at all the other strategy in there, their numbers are increasing. How is that happening? Either these guys down below are growing into that space, or more likely, they're being acquired into that space. And so this -- the number at the very bottom is shrinking. That's where virtually 100% of that reduction in the number of banks is coming from and credit unions. But in those markets that we serve, they're generally growing. And we see that ourselves. We see a lot of M&A happening among our customers. We serve them when they acquire another institution. We serve them by converting the data into our systems, and that trend is not slowing down.

And how about a recession?

Yes. Is there going to be one?

When's the next one?

Yes.

That's the question.

Yes. So it appears that's a real thing. So people ask, how is Jack Henry going to perform in a recession? I'll give you a couple of things to contemplate. First off, think back to the Great Recession, 2008-ish, where was that focused? What -- I hope the worst recession any of us will ever live through, where was that focused? Exactly in our target market. It was financial institutions. That was the focus of the Great Recession. Banks were shutting down left and right, really a difficult time. So for Jack Henry, in the worst, I think, possible economic impact in our space, Jack Henry actually grew revenue. It wasn't much, but we grew revenue during that period. And our operating income dropped just marginally. So where are we at today? Today, we have a strong demand environment among our customers. The bank watch list, by the way, is minuscule. You look at the FDIC watch list, there's almost nobody on that today. So banks are well capitalized. They don't have a lot of exposure on the -- as far as risky credits on the balance sheet. Their lending practices are robust and sound again. So the bankers generally are feeling pretty good. And oh, by the way, interest rates going up in net interest margin, finally that they have to work with that they haven't had for years. So we've got a bunch of banks and credit unions that have figured out how to make money with no -- virtually no net interest margin. They've made it on fees and other creative ways. Well, now, all those things are in place, but they also have an opportunity to see a NIM improvement. And so most bankers that I talked to today, and I haven't talked to any since this morning's announcement that supposedly there's going to be a big rate increase tomorrow, but most of them are feeling pretty positive about the environment, couple that with this demand that we talked about earlier. They know they have to upgrade their infrastructure. They know they have to do things to retract -- to attract and retain customers. That is helpful to us. On top of that, when you look specifically at Jack Henry, we are today about 90% recurring revenue on a non-GAAP basis. And the only thing I exclude when I say non-GAAP is deconversion revenue. If one of our banks has acquired, they pay us to get out of their contract. That's what we call deconversion revenue. That is not a function of the operation of the company. So if we take that away, if you look at the rest of our business, we're about 90% recurring revenue. And the things people pay us for are things that they can't just turn off. They're not discretionary spend items. We're a SaaS company, by and large. So we have customers that are locked into long-term contracts. For things that can't turn off, 90% recurring revenue, it's a very resilient model. So we'll see what happens as far as the recession in the economy. But if you look at Jack Henry, we are in a pretty good spot to weather a recession. And again, we came out pretty well from the Great Recession. I don't believe this is going to be anywhere near what that was as far as the customers we serve.

Switching gears a little bit. Last year, we saw a lot of capital come into the fintech space, a lot of startups, a lot of early companies get pretty good valuations. Has the competitive environment changed?

So it's interesting. A number of companies in the past couple of years that IPO-ed either a straight IPO or through SPAC that, frankly, there was no justification for them to IPO is the way I think of running a business anyway. I think about running a business that you should probably make money in the end. I'm old-fashioned in that regard, I guess. But -- so you got these companies that IPO-ed, and they're paying the price for it now. You've seen some major hits to valuations that have happened among a lot of those companies. Most of them have point solutions. They don't -- I mentioned earlier, we have well over 300 solutions. So most of those companies have one, that competes with one Jack Henry solution. Are there some good companies? Yes. Do they get a little ahead of themselves with their IPO ideas? They did. But give them credit, they got a pretty big valuation, and I'm sure a nice payday for that activity. But there are some challenges out there for some of those folks that IPO-ed. There are a number of private companies out there that are still dependent on PE backing, and a lot of them facing another capital raise and what's the world look like. A lot of them were thinking about IPO-ing. They saw what happened with their brethren with IPOs, and they were planning to do that this year. And now that's pretty much off the table. So there's some challenges out there for some of those companies, but there are a number of them that really have nice solutions, and I hope they find a path forward because I think a lot of them are good for the industry. Some of them, over the years -- we used to be known as a serial acquirer at Jack Henry before the pandemic and before this crazy valuations happened. So prior to 3 years ago, we had done 32 acquisitions between 2004 and 2016-ish, and I'm anxious to get back in that business if valuations kind of get in line. So long answer...

Where are the valuations?

Yes. There's...

Have they come in [ enough? ]

There's some -- there's -- people are finding religion. There's some reasonableness that seems to be settling in. So I'm optimistic right now that hopefully, by the end of the year, there will be some real deals to look at and some real opportunities for a company like us. We're known as a disciplined acquirer. We don't chase the shiny object. You don't see -- we don't -- our goal is not to do an investment where an investor -- or do an acquisition where an investor would come and say, what were you thinking on that valuation? We want to do deals that are understandable to our investors. And so we're a disciplined acquirer, and I'm pretty hopeful that the things will kind of continue to normalize, and we'll be able to do some deals.

The company just took the wraps off its technology modernization strategy. What are the main tenets behind it?

Yes. So -- and you know me well enough to know I can talk for about 3 hours on this topic. I won't. But -- so what we -- so our job at Jack Henry, we serve financial institutions, and a big part of our job is to try and see around corners. We got to figure out what is coming down in the future, what's coming down the path that our customers will want to consume. And we have to be thinking about it now when they're going to want to buy it 2 or 3 years from now. And so several years ago, about 5 years ago, we started trying to figure out how and when do we get to public cloud with everything we do. So we have a number of solutions today that we run on public cloud. But core solutions today for any provider in the U.S., you run that in a private cloud environment. Public cloud is not -- there's no demand in the public cloud for core because bankers are scared of the public cloud. Regulators will not tolerate that. But there's been this movement, right, toward public cloud. There's this interest in public cloud, and we could see that coming. So a few years ago, we settle on a strategy. We started writing code about 2.5 years ago to position our company to be a full stack public cloud provider, all the solutions we offer, primarily core, but then all the other things on the public cloud. And so I announced the strategy in February, and what I said at the time was this is a strategy announcement. This is not a product announcement. Nobody can bake any revenue implications in all of your models for 3 years from today. This is all about where is our company going in the future. And it was more for our customers and prospects so they could see how are we going to get to the public cloud if we partner with Jack Henry and how is Jack Henry going to do it differently. And it is a very different strategy. So what we've seen a couple of competitors do is either a lift and shift where you take some old technology that runs over here and you figure out how to make it work on the public cloud. You can do that, but you don't really take advantage of all the really cool stuff that's available in the public cloud environment if you do that. So we eliminated that idea pretty quickly. We could take the core and rewrite it as a core on the public cloud. We adopted a different strategy. We kind of rethought core, and we said we're going to unbundle the core. There are all these functions in the core. We're going to unbundle those things and put them on the public cloud as discrete components that our customers can consume as discrete components if they want to. And what we're really trying to enable is this idea of connecting in those components with fintech solutions on a public cloud through an API layer to allow the customer more flexibility to do -- our customer more flexibility to do whatever they want to do to serve their niches or their customers that they serve. And so we announced this in February, have had great response from the market, great response from customers. A number of large regional banks have contacted us saying, okay, let me -- we want to understand this because you guys may have cracked the code here on how we can get to a modern stack without putting the whole bank at risk with a big bang core conversion. And so we have a long way to go on this. This -- again, this was a strategy announcement to make sure we understand where we're going and how we're going to get there. But we are in the process now. We have customers in beta. We'll take customers live with the first modules this summer, later this summer, and then we'll start rolling out the rest of the modules over the next several years. But this is, like I say, a very long-term strategy for us, but it's a very differentiated strategy from anybody else who's talking about doing core processing on the public cloud.

That leads to 2 sort of follow-up questions. First is, do you think it's an offensive strategy or a defensive strategy?

Yes. So it's more offensive than defensive. We don't have a lot of customers saying, we're going to leave you guys because you don't have a -- or we didn't have customers saying we're going to leave you because you don't have a public cloud strategy. So it was a lot more about gaining share -- continuing to gain share. We're already gaining share in our space, but continuing to gain share in the market and moving upstream. So we're in the large regional bank space today, but there is more demand in that space. And they have a tougher time to go through a core conversion, core modernization. And so we saw this strategy as something that would be unique and would allow them more easily to address the requirements that they have as they try to modernize their tech stack. So it's more offensive than defensive. But if you ask me 4 years from today, when a lot of bankers are saying, I got to get to the public cloud, if we hadn't had this, we definitely would have been in the defensive mode because we would have been trying to protect our current revenue stream.

And you just touched on -- sort of the second follow-up was, does it help you move upmarket?

Yes, definitely. We're already seeing requests upmarket. And they're all trying to figure out what does their road map look like. So their long term -- their discussions about long-term transitions. So nobody wants -- nobody that we're talking to says we're going to do this in 2 or 3 years. They're trying to think about how do we get to a modern infrastructure within the next 5 to 10 years, and that has already attracted a bunch of attention in our space.

Do you think it'll also help kind of break the chain where normally, once you get the core customer and then you try to sell additional solutions on top of it, where now you could come in with a Banno solution and then bring in pieces of a public cloud for core?

Yes. So it's an interesting point. We had -- in some respects, we had already broken the chain a few years ago when we launched ProfitStars. So ProfitStars is our brand at Jack Henry that we used to sell to non-Jack Henry core customers. And we have 7,000 or so non-Jack Henry core customers that we work with today through the ProfitStars brands. We're selling them these complementary solutions. They don't have our core, but we sell them these other complementary solutions. So to the point you're making that we could continue with that motion and start selling them core components just like we sell them complementary products today. So absolutely, that is a benefit -- or a potential benefit from this strategy.

Okay. The accountant in me has to ask cost to the strategy.

Yes. So the commitment that I've made is -- and we've modeled all this out. We today -- or we have historically, for the last 6 or 7 years, we've spent about 14% of revenue on R&D, and that's a combination of expensed R&D and capitalized software, 14% of revenue on a rising revenue number. And so the way we model this out is we can -- if we continue at 14% on a rising revenue number, we can fund all of this and do it ourselves. I've had the question, do you have to acquire something in order to build this out? We don't have to do an acquisition. We can fund this ourselves, doing development internally at that 14% rate. And so we're very comfortable with that. We can support 14%. We've been doing that for a long time. And we tend to -- we capitalize, and then we put things in production, and we start -- we amortize the expense off. So it's not that we're building up some great big backlog of capitalized software because we tend to put these things in production as we will put these models in production, and they come out of -- they capitalized, and they start to be amortized off. So 14% looks like a reasonable sustainable number for us for the future.

And any sort of breakdown between sort of the required spend of the 14% to sort of run the business and then the amount that's going towards innovation?

Yes. Is there a breakdown? Yes. Do I want to share it? Probably not. Yes. It's -- there is certainly R&D that is required -- when you're in the software business, you don't stop. I mean you can, but then your business dies, right? So you don't stop when it comes to innovation. You have to constantly be innovating. So we certainly are spending on existing solutions, but you can probably intuit that a big chunk of this is going toward the tech modernization. By the way, on the topic of innovation. So just last Friday, I think, or Thursday, you -- if you look back, you'll see a press release from Jack Henry. We were again this year named by American Banker as one of the top 50 fintechs in the United States. And what American Banker does is they only name 50 companies every year, top fintechs. And so whenever -- when you hear the word fintech, you think, okay, Silicon Valley startup, less than $100 million in revenue, less than 500 employees. 49 of the companies on that list fit that profile. And then you got Jack Henry, 46-year-old, $2 billion, S&P 500 company on the cool kids list. And why is that? It's because of this innovation that our teams have been delivering. And we're 6 years now in a row on that list. None of our major competitors have ever been on that list. Jack Henry, 6 years in a row on that list. And it's because of that innovation, it's because of that commitment to delivering new innovative R&D solutions.

So what innovation should we look forward to for the rest of the year?

Well, we have -- I've talked publicly about a new fraud solution that we're delivering. We're delivering our Banno business platform. So we have Banno in market. We've been in market for a couple of years now on the consumer side. But Banno business is coming out later this year. And then several of the modules for the tech modernization -- the core modernization strategy are coming out. So those would be the things I would highlight as the kind of the new things to talk about.

Is there any part of the tech modernization strategy that would help Jack Henry run more efficiently? I mean, you guys are pretty efficient now, but...

We are. So if you think about it, when you're in the private cloud business like we are, essentially, you're in the data center business, right? You own and host data centers. That's what a private cloud is. And so as we continue to move to public cloud, there are those efficiencies that are inherent in kind of offloading some of that demand into a public cloud environment as opposed to having to refresh your own hard work. In this day and age, I've been in this business a long time, there was -- years ago, you would buy a new hardware every 10 years or every 7 years. Now it's every 3 years. So you got that capital outlay every 3 years. And when you're running large production centers, that's a big deal. And so as we continue to move load over to the public cloud environment, as this continues to come online, there is that opportunity to slow. We want to eliminate our expense in the private cloud environment because we're going to support customers in that environment for many, many years to come, but it'll slow that need for us to spend money in that area. So that certainly is an efficiency. And then when you think about the development environment, so we, like any other core provider out there, we've been delivering with kind of traditional models where you deliver new software or new releases once or twice a year. Well, when you get into the public cloud environment, you can take advantage of all the tools that are there, and we've seen this because our Banno and several of our platforms run public cloud today, but our Banno is a good example where when you're in public cloud, you can take advantage of all the design tools that are there. So think about any app that you have on your phone, right? Those are all public cloud solutions, those design tools are there, and we can take advantage of those with the solutions that we offer. The security infrastructure that's there, that is very robust, and we are -- today, we're in Azure and AWS, working on moving to Google. So our goal is to be cloud agnostic when it comes to the public cloud providers, but the security infrastructure there is very robust. When you get into the public cloud, you can take advantage of DevOps. So DevOps is where you're doing rapid release of software, and we do this with Banno today. We're doing sometimes 20 or 25 releases a month of new feature function. There's no core provider out there that can do that today. But as we move into the public cloud environment, we can take advantage of that functionality. And so there are a lot of things that will make us not only more responsive to our customers, but more efficient in the long run.

Turning back to innovation a little bit. What product surprised you over the last 5 years in terms of its -- the rate of its adoption? And what product do you see, to the people in this room to sort of pay attention to, 5 years from now?

Yes. So I'll tell you the one that has -- I mean we thought it was going to be a home run, but it has absolutely been a home run, has been Banno. So the market really understands the differentiation between Banno and the other solutions out there. In fact, just to give you a quick aside here. So I was doing one of these sessions. I was doing a fireside. I was on stage, a bunch of investors and buy side folks in the audience. And there was a guy who came in sat in the front row, and he was very familiar to me, but I recognize a lot of faces normally when I do these things. He's very familiar to me, and I kept trying to remember who is he, but I did my thing and got a question about Banno, and we got all done, and I stood up and he stood up and greeted with me. Hey, Dave, it's great to see. And I realized, he's the CEO of one of our large regional banks. He was at an investor conference, but he's the CEO of a bank. And he said -- and at the same time, a couple of investors walked up and said, hey, could we ask you real quick, a couple of questions on Banno? Well, this guy who runs Banno, he's a banker. He said, let me tell you guys what a difference this solution has made for my bank, and he started walking through stories with these investors. It would look like a plant, but it -- honestly, it was, I didn't invite him, he was just there, but he was so passionate about here's what this solution has done for my bank. That story is getting out there. It's totally differentiated from any other digital banking solution. And that story is out there. And so that has been a real home run for us in the past few years. And your other question was, what's the home run looking forward? I think I'm very confident that our tech modernization strategy is going to be a home run. I think this fraud solution that we're rolling out now, later this year, is going to be a big home run. There is a lot of demand for a kind of revised fraud management technology out there, kind of totally rethought fraud management technology. So I think we're going to have a real win on our hands with that one. But that isn't even in the market yet. So I'm a little ahead of myself by saying that, but I think it's going to be like that.

Yes. Okay. And I guess as the final question as we run out of time, taking up sort of a step back, what should investors look to Jack Henry for in terms of fundamental performance, stock price performance, cash flow, all of those.

So we're -- we operate the company conservatively. We don't do crazy things. We don't -- I mentioned earlier, we don't chase the shiny object when it comes to R&D. You will not see us do a transformational acquisition. If you see me announcing a transformational acquisition, that tells you the company is in trouble because -- and we're not -- by the way, I'm really confident with where we are today. So you won't see us do a transformational acquisition. You will see us continue to run the company in a very disciplined manner. We've telegraphed already 8.5% top line is a good number to expect as far as revenue. We're focused on trying to drive about 50 bps in margin expansion per year. That seems achievable, and we all know what's happening in labor. And all the costs have gone up. And so that's a little bit of a headwind when we have that conversation. But I think what you'll see from us is more of the same, focus on the domestic U.S. market, taking share in our market and running the company in a disciplined manner.

Okay.

Thank you very much.

You bet. Yes. Appreciate it.