Johnson Controls International plc (JCI) Earnings Call Transcript & Summary

Good morning and thanks for tuning in to Deutsche Bank's Industrials Conference. For those of you who don't know me, I'm Nicole DeBlase. I'm a lead analyst for both multi-industry and machinery sectors here at DB. I'm very pleased to introduce George Oliver, CEO of Johnson Controls. George, thanks for supporting our conference this year. The format of today's presentation will be fireside chat. But before we get started, George does have some opening remarks. [Operator Instructions] So with that, let's kick it off, and I'll pass it to George.

Yes. Thanks, Nicole, and good morning, everyone. It's great to be here with all of you. As Nicole said, I thought I'd kick it off with a few opening comments, and then we'll get into Q&A. As you know, we just reported our fiscal Q4 results, I'd say we had a very strong finish to 2021, having met or exceeded our financial commitments despite what I would call an incredibly challenging environment. I think overall, we are navigating this environment very well. I am very encouraged by the robust demand I'm seeing -- that we're seeing pretty much across the board. And a lot of this is not only the recovery but a lot of our growth initiatives kicking in and really starting to see some traction. And then we -- I think for the most part, we see recovery in most of our end markets. Our COGS and SG&A programs, we've executed well, and we're positioned to accelerate this year. We've initiated the 2022 guidance. We're typically ahead of others because of our calendar. We do expect another year of strong performance in 2022 with high single-digit top line growth, about 70 or 80 basis points of margin expansion. And overall, we'll be delivering about 22% to 25% EPS growth. This all sets us up well to achieve the '24 targets that we laid out at our Investor Day in early September. We also took important steps forward in our strategy to lead as a smart buildings solutions provider. I believe buildings have really become much more strategic to the customers that we serve. And as a result of that, the ability to be able to digitalize and really capitalize on these secular trends, it's going to be a big deal. We were out in front of that, having taken the merger and put together all of our digital assets and now launching OpenBlue. And so we're scaling the OpenBlue offerings. We're expanding -- we are transforming the company as we think about our digital talent, expanding our digital leadership team and building out the organization. And we're seeing good traction with OpenBlue really becoming a disruptive force in the built environment, not only in the current built environment but now being able to truly transform buildings as we look at new construction. And our strategic focus on accelerating growth is being validated in the market. We are seeing an increased pace this past year with 150 new products introduced. We have now about 125 planned for this year. We are -- service is a big deal for us, especially as we become more digital, being able to not only get the connectivity but the use of the data. That allows us to be able to create outcomes that historically we haven't been able to deliver. And then the vectors of growth, whether it be decarbonization, healthy buildings or ultimately autonomous buildings, I think, really sets us up well for an exciting decade. So on that, Nicole, we'll take it wherever you want to go.

Thanks, George. That was a good overview. So maybe we can start with a couple of questions on the current environment, and then we'll take it to the more exciting longer-term picture. So I guess it's only been a couple of weeks since you guys reported fourth quarter earnings, but the environment is clearly very dynamic. So just wondering if you can give us a sense of what you're seeing from a supply chain perspective. Have those challenges worsened? Have they remained stable? Have they improved at all? And I guess, what have been the key bottlenecks for JCI?

Yes. I'd say the industry continues to face various supply chain disruptions from -- Nicole, it's everything from chips to coils in addition to labor shortages on some of the simplest components. And so we've been obviously very actively working that. We've had a program management team throughout last year that have really positioned us to navigate the current situation pretty well. Like I said, we've been very proactive, making sure that our demand with -- our accelerating demand that we've had -- the demand out there with our suppliers and then very actively working with them and how they are making sure that they've got the labor, obviously, the materials and the like to be able to support the demand. What I would say is it's been, I think, for everyone kind of a full contact sport. But I'd say that our team, as we've come together as one enterprise with visibility to our fundamentals with everything we've done, has been a big enabler with the transformation we've been through to really proactively work this and to be able to secure the most critical materials. And so I'd say, based on what we communicated not only when we did the Investor Day but the earnings update, there's no significant changes. I would say that our team continues to make good progress over the last several weeks. And it's going to be -- there will be some time to the full recovery, but I'd say we're making good progress.

Sure. Understood. And this situation has been pretty unprecedented. I can't remember a time that this many supply chain issues have been faced at once. Is there any -- are there any longer-term learnings when you think about JCI's approach to the manufacturing footprint, the supply chain, things that you would change moving forward to avoid this in the future?

For us, as we -- with the merger and the work that we've done over the last -- especially over the last 2 or 3 years in really establishing one enterprise and one enterprise strategy with everything we've done, we are a company that has localized all of what we do, not only within our product-based businesses with manufacturing and supply chain but also regionally with the go-to-market with our direct channel, making sure we have all of the capabilities that are required to be successful in each of the markets that we support. So there's always been that framework in place. I'd say there's elements of that framework that get challenged, single sources and a lot of the other things that you -- as you look back, other things that you'd make modifications to that overall framework absolutely. And obviously, with the experience that I've had in supply chain, we've been pretty proactive. And it started with the pandemic, actually. When the pandemic hit and we saw the impact in China pretty quickly with the business we have there, we were very proactive in taking the required steps to have a balance and to make sure that we're positioned with business continuity to be able to support our customers and ultimately the growth. So I wouldn't say what we're facing today would be a lot different than what we -- the strategy that we've deployed, but it does get enhanced because of the -- let's face it, when you uncover rocks and maybe didn't -- you didn't understand or didn't emerge before that when you get into a situation, you do uncover things that ultimately you can improve upon, and that's what we're doing.

Sure. Okay. Got it. And maybe just drilling into the strength that you guys have seen in orders and backlog recently. I mean some really stunning growth numbers. When you think about what you're seeing by vertical, you talked a lot on the earnings call about how retrofit has been really strong. What about the other side of nonresi? Like how is project activity? And if you look across all of the different end markets that JCI touches, would you say that industrial is really the only vertical that's kind of lagging at this point?

Yes. So I'd say the -- both the commercial applied and unitary markets, obviously, for us are very attractive markets and with long-term secular drivers that, I think, align well with our core capabilities. And so I think because of that, that's why we're capitalizing on the current strength. We have a very strong legacy commercial HVAC portfolio. And I think the other is the investments that we've been making in our portfolio with new products over the last few years. We've significantly increased our reinvestment. We're starting to see that play out. And then with the connectivity, obviously, that's getting us positioned. So not only do we get the install, but then with the connectivity, how do we get the attached service and then the use of data to be able to create even more value. So when you look at the -- across the portfolio, I would say electrification with heat pumps and heat transfer units is big. We've been advancing our VRF technologies and been performing very well in that space. Next-gen air cool technologies is another good example. When you look at our performance in '21, we believe that across our commercial HVAC portfolio, we're gaining share. And as I said, with OpenBlue and the connectivity, I think that fundamentally has differentiated the offerings that we're bringing to our customers. You talked about retrofit. We've seen incredible demand on retrofit. And we were very focused and proactive in addressing that demand because when we started '21, our backlog was down. And then as we played -- as '21 played out, with a focus on healthy buildings and with the pandemic and the like, really set us up well to be able to capitalize on that as we talked about. We had orders up, I think, over $400 million just in that space, and a lot of that was focused on return to work, school, particularly in North America. Data centers, when you talk about the industrial and some of the other segments, strong demand globally for air cooled chillers in data centers and rental markets as well as industrial heat pumps in -- like I said, in both our chiller and IREF portfolios. And so when you look at our overall applied HVAC orders, were up, I think, 11% globally. And then North America, very strong at 9% and with orders up over 20%. So really, really strong performance there. And I think that's continuing. We've got a backlog that we've been building. When we look at our backlog today, it's up double digit. That has positioned us here to be able to perform well as we then begin to convert that backlog in '21. So the last would be the light commercial. There's been a little bit of a -- more of a later cycle recovery. Although sales in the quarter were up high single digits globally and the market demand for both unitary commercial as well as ductless equipment, that's improving. And a lot of that is tied to the healthy buildings, indoor air quality and efficiency upgrades. So our orders in that space were up 37%. So we're seeing strength there also. So I mean, it's pretty much broad-based and playing to our strength with the mix that we have in industrial and institutional.

Got it. Okay. Very clear. And then I just want to skip down a little bit in my question list and address a few questions that I've had on -- from investors clarifying some items in your fiscal '22 guidance. And then we'll talk about the longer-term stuff. So maybe the first thing is just you guys are expecting organic growth to accelerate from like the mid-single-digit range in the first quarter to high single digits for the full year. What would be the key drivers that give you confidence in that outlook? Is it backlog execution? Or is it something else?

Yes. When you look at our installed bookings, activity has been very strong and the backlog is growing. And so when you look at that, that's where we've lagged a bit in '21. And so with that backlog, that has been a significant contributor to '22. And as I said, the retrofit activity continues. So we're going to continue to see strength in the shorter-cycle installs because of the focus that we've had on healthy buildings and the like. And I think that is going to continue to play out as we begin to see the way that the nonresi/resi construction is coming back, especially supported by the ABI and the activity that we see in the market. And so when I look at the overall guidance that we gave for the year, I'd say we start out in mid-single digits in the first quarter. And we expect Q1 is a strong mid-single digits as I said. We have a record backlog with the mix of the backlog skewed to retrofit. So that will continue to play out and accelerate through the course of the year with both short-cycle business as well as long cycle. And then we are -- have been constrained. As we've said, there's been a little bit of an impact from a supply chain standpoint. With the supply chain recovering, we'll start to see that picking up. And then what I would say from a service standpoint, we are seeing the acceleration of not only the pipeline generation of service, the conversion with PSAs, getting a higher attach rate. We're up almost 400 basis points last year. And then as we project this year, we're going to improve by another 400 basis points. And then when you couple that with the traction that we're seeing in our growth vectors, the way that we're now driving decarbonization, healthy buildings and more important, some of these bigger opportunities that we have to deploy all of our digital technologies in smart buildings, that's where we're starting to see the pickup with very strong pipelines and then beginning to convert those to orders and then ultimately backlog and revenue. So it does shift a bit through the course of the year. But we're very confident that with everything we've done with our growth strategies and the execution, we're going to be positioned to be able to deliver high single-digit growth for the year in '22.

Sure. And that makes sense. I mean supply chain issues hopefully go away, and that explains a lot of the acceleration, I think. Okay. And then we have to hit the topic of price/cost because it's probably the hottest topic of investors right now. I think you guys have guided for a 40 basis points total headwind for the full year of 2022. Is the right way to think about that like first half, there is a headwind, the second half, there's a tailwind? And pricing for you guys is sticky. And so this does create a nice tailwind potentially into fiscal year '23 if hopefully raw materials start to come down.

So let me start by saying pricing has been one of the fundamentals that we've been building here over multiple years and getting strategic pricing in place, getting visibility to all of the fundamentals and be very proactive, especially with the reinvestments that we're making to make sure that we're pricing for value, right? I mean -- so that is the framework. And because of that, we have been very successful in spite of this accelerating inflation that we saw play out through '21. And so to reiterate, I would expect price/cost positive from a dollar. When you get to think of it from a dollar EPS perspective all year, then we'll stay ahead. And then ultimately, the 40 basis points that we see -- given the significant inflation you have in the top line, coupled with the increase in the cost, this is causing a little bit of the headwind that we talked about, the 40 basis points. And it's going to be a bit stronger in Q1. But as you would expect, given all of the pricing activity that we had in the second half of '21 and how that's playing out, and we're continuing with those price increases, you'll see that, that gets mitigated a bit as we get through the year. And so if import costs were to start moderating at some point later in this year, then we would expect to actually have a little bit of a tailwind. Now we're not planning for that. We're planning for -- as we're pricing today, we're planning for the longer term to make sure that we're proactive in how we're now projecting what we see to be the inflationary environment. And that's been put into our plan. But I wouldn't -- so I wouldn't have any conviction around how that's going to come back in the second half as far as any tailwind. And historically, this tends to be a very disciplined industry. And given the significant increase in costs we're seeing, the benefit of pricing in most of our businesses pretty much across the board. And so I would say, in supporting all of that is what I said earlier, we've got really strong leadership in place. Like I said, from an enterprise standpoint, we've got laser focus relative to this fundamental and how we're executing on that on a monthly basis. And I feel -- at least at this stage, feel very good that we've taken all of the actions and we're executing as well as we can given this unknown environment and this ultimately acceleration of inflation.

Very clear. And I guess when -- I mean, you guys have a growing backlog. It extends pretty far at this point. How do you feel about the pricing embedded within the backlog? Like are there escalation clauses? Are there ways that you can address that with your customers?

Yes. I'd go back to the discussion we're having in pricing. As we've been enhancing our pricing strategies and the way that we execute, this has all been incorporated in how we're now pricing. And so what I'd say is you've seen all of the work that we've done, being able to execute very well over the last couple of quarters. We're confident that, that's going to continue as we move forward. We've been pricing new projects. So when I think of -- we look at a new project and we look at the cycle time of that project, we are being proactive in making sure [ that we're ] clear relative to what we think the environment is going to be when ultimately that project gets converted. And we're factoring that in the pricing. And then from terms and conditions, making sure that we have -- from an escalation standpoint, making sure we have the ability to go back and reprice contracts given the timing of the execution. Now that's not 100% across the board. But given the work we've done over the last few years, there's a much higher percentage of our contracts today that we're positioned to be able to do that. And so we've identified markets and contracts more open to price increases adjustments. So there's some that maybe you don't get as much, but there's others because of the value proposition that you're getting more. So overall, we factor all of that in as we provide the guidance and the updates that we've been providing over the last couple of quarters. And I'd say we're very much on track with the execution right now. And so I'd say if you look at the current backlog, to your question on the margin backlog, good news, it's mix more towards a shorter cycle. Some projects we've been anticipating inflation, that ultimately now has been priced in. And so as they convert, we're going to be in a much better position to be able to deliver on the margin commitments. And so overall, I think we're on track, Nicole. But it is -- as you can imagine, it depends on who you talk to and what the environment is going to be. So we're planning for -- what I would say, we're planning for the toughest environment, hoping that it's ultimately going to be in a point in time where things start to get more balanced and we start to see some reduction. But at this stage, we're planning for the continued environment to continue through '22.

Right. Very prudent way to manage it. Okay. And then I want to talk about the SG&A and COGS programs that you guys have laid out. Pretty ambitious cost savings over the next several years. Maybe the first thing is just how are you able to find so much savings after -- you've been working on the Tyco integration for so long, and we've realized those savings. And then I guess once that's in the rearview mirror, are we kind of done with these cost savings programs and it will be more like ongoing annual restructuring at that point?

Well, I think I had to start, Nicole, to say that these cost programs are independent from executing on our backlog of converting volume growth. So we want to make sure that it's understood that these are where we -- with the transformation of the company, with the focus on the fundamentals and the ability to be able to bring it all together into a lean structure, one enterprise, one lean structure with one shared service with everything we do, making sure that every step of the way, both at the -- on the COGS line or the gross margin as well as in the SG&A, that we're driving to entitlement. And so -- and then you look at what the current state is with the complexity of our ERPs and structure and the like. This has been a multiyear program that we've been continuing to simplify the company. And you've seen just tremendous progress over the last 3 or 4 years. And then especially as we've now accelerated with the COGS and SG&A this past year, really has stepped up. And we see that opportunity continuing. I'd say we're executing well. We're focusing on how we deliver growth and profitable growth and ultimately take advantage of what we see to be incredible opportunity in our space. There -- these initiatives are really helping us create speed -- simplicity, speed with everything we do within the structure that we operate within. And it's really continuing to optimize. And so your -- what I would say -- and there's still a lot of runway, you know what I mean, that we're continuing. We laid out what we believed was achievable over the 3-year plan, and we're executing well to that. We're positioned to deliver -- as I said in my prepared remarks, that we'd deliver what's committed here in '22. And so I think in every line item of the P&L, we're focused on continued improvement. I think you're starting to see that. And I think from a leverage standpoint, that positions us well with the accelerated growth that we'll achieve, above market growth, now the ability to be able to get more leverage with that growth on a forward basis.

Got it. Okay. Great. Well, I think we can kind of get off the topic of margins and talk about some of the growth initiatives that you guys have from here. I guess from a longer-term perspective, one of the most attractive growth vectors here is the whole healthy buildings initiative. Where would you say we are? I mean I know this will have a long tail. But I think at the beginning, right after COVID, you were talking about a lot of building owners blocking and tackling, doing what they need to get people back in the office. Are we now at the stage where you're seeing more long-term discussions about what the building looks like? Like what are you hearing from your customers?

Yes. So right out of the gate, with the pandemic, this became front and center. And what I would say, Nicole, I might have said this earlier, where buildings maybe historically have lagged other industries because they've been more viewed as a cost or a balance sheet item and not as strategic from a customer perspective, and therefore, you worked at a lower level within the organization. What's happened within buildings now, they've elevated strategically within our customer base. And so the amount of engagements that I have at the C-suite level with CEOs relative to what is the future of their buildings, how do they -- how should they think about health and safety, how should they think about digital and the opportunity for digital to truly transform the work that's done within the building, it's night and day. So when you look at the indoor air quality, with that being front and center right out of the gate, we quickly have seized that with -- not only because we have all of the combined technologies and capabilities that when you put together into what we call our healthy building solutions portfolio -- no matter what the end market or the type of building, we're positioned to be able to solve the problem and do it in a way that is not increasing the energy consumed to do it, but it's doing it in the most efficient manner. And so that has ultimately been driving a lot of our success short term. And when you think about what I'd like to think about is people cost, people represent 90% of typical building operations. And so it's a 3-30-300 rule on average, where companies spend $3 on utilities, $30 on rent, $300 on payroll on a per square foot basis per year. And so the focus now on the people element of the buildings is very important, not only with the indoor air quality and indoor environmental quality as that drives occupant productivity. And they're seeing studies are showing like double-digit, 10-plus percent productivity. It increases obviously, engagement and retention and ultimately addresses some of the insurance cost. And ultimately so, it has become recognition that there's a significant value to building owners and tenants. And so we've gone after this not only with the stimulus that has been put out there around education, around healthy buildings for schools and the like. And so that is short term. Now your question relative to what do I see the future buildings to be, I think, obviously, they're going to be different. I think most companies recognize that bringing people back to the office is fundamental to their culture, to how they do work, how they innovate, how they think about leadership development, all of the above. And I think even with our brief discussion prior to this session today, the idea that, hey, there's a lot you can do through video, and it's very productive, at the end of the day, as you're building a company culture -- corporate culture and focusing on growth and focusing on customers, what is that going to look like going forward. And so I would tell you, although there might be a restructure of existing space, there still are going to be -- the studies that I've seen that are on a go-forward basis, it does stabilize and ultimately begin to grow from a pure commercial space. And so I'm pretty encouraged that with the trends, not only healthy buildings but this focus on decarbonizing buildings, because buildings represent 40% of the global carbon footprint, and then with the thought that digitization or I'd call it autonomous buildings, those come together. And we believe it's about -- it's a significant pickup in technology spend per square foot. And then it's very much aligned to now supporting the strategy -- the strategies that our customers are deploying to be successful, not only with their growth but also with their employee engagement and their overall productivity within their building. So I think there's a lot going on, but I'm very encouraged that -- the market that we shared in our Investor Day was about a $250 billion market or -- cumulative over 10 years, additional market above and beyond the $300 billion that we serve today that is absolutely materializing. The demand signals are real. And now given everything we've done to position to capitalize on those trends, we are well positioned in accelerating our position.

Got it. Okay. And I mean it makes sense. I mean decarbonization is becoming a focus. Buildings are heavy use of energy. It just makes sense that they should be taking off right now. And OpenBlue, clearly a key enabler of all of that. The one question I did have is as you're selling like healthy buildings, let's call it, a package, is there more interest from your customers in buying both HVAC and Fire & Security, not like a bundle but from you? Like is that an advantage that JCI has?

So this is like a big question, Nicole, because it was fundamental to the merger that we did [ back ago. ] And I believed at that time that all of the digital systems within a building would converge into one architecture. And then within that architecture, have a data platform, be able to collect all of the most critical data, apply AI and then create outcomes that historically buildings haven't been able to create. And they've been very inefficient. And like I said, they represent a significant amount of the carbon footprint. And so that all being said, it isn't necessarily -- so as we look at our core businesses today and how we sell at a lower level, we're continuing to sell HVAC equipment or a fire system or a security system. But now in line with these trends that are underway, you're not selling individual systems. You're selling a full solution. And those systems are absolutely critical to the full deployment of the capabilities that are critical now to be able to deliver the outcomes that we're delivering. And so it isn't necessary -- so I think it helps. So you'll continue to serve the market as it's served today. But these disruptive forces or trends that are underway are actually going to play to our strengths because we can effectively provide let's -- we've launched Net Zero Buildings as a solution. Net Zero Buildings as a solution does include ability to not only -- the most advanced HVAC and the digital controls that historically would have been HVAC. But it also includes the digital infrastructure with security and the ability to [indiscernible] and be able to collect the most important data within a building that ultimately comes together to create a Net Zero Building. And so what I would say, Nicole, that is beginning to materialize. Certainly, from an enterprise account, this is an important element. When we look at our top 100 customers, they represent -- these are the most successful, the highest growth companies that typically across all of the end markets we serve. We have -- those enterprise accounts are growing, when I say strong, strong double digit, really strong. And it's because as you're not only continuing to do what you're doing with each of the individual systems, you're now putting together solutions that now is capitalizing on the breadth. So the breadth of our product, the deployment of [indiscernible] [ the ] use of data and now being able to create an outcome that historically hadn't been achieved. And so I think over time, I mean, you'll see all of the building systems that are core to our portfolio will be uplifted as we begin to capitalize on these growth vectors.

Got it. That's definitely exciting that we're seeing that now. We're running short on time, George, but I did want to hit on capital allocation before we wrap things up. We can't miss that. I mean the free cash flow conversion has been really strong, 105% this past year, especially in a difficult supply chain environment. So kudos to you, that's been a high point, I think. I guess maybe thinking about if you're continuing to generate strong free cash flow, is the plan to do more Silent-Aire-like deals? Like what do you think are the top capital allocation priorities for you guys over the next few years?

Yes. Let me just touch upon the progress we make because this is very important. I mean we've had a very strong focus on free cash flow, on conversion over the last few years. We've looked at every one of the fundamentals. We've got the accountability, the process improvement and then the automation that's driving these fundamentals. And you've seen the output from that very strong over the last couple of years. And there's still plenty of opportunity for improvement. So we'll continue to execute as we have and deliver 100-plus percent free cash flow conversion. And so when you look at just working capital as a percent of sales, we've improved that by 160 basis points. So it's pretty [ remarkable. ] So that's going to continue and, I think, will position us here for a lot of flexibility and additional capacity. When you look at the capital allocation, Silent-Aire a good example. This was a business that when you looked at the trends underway in data centers and the HVAC, how important the HVAC and the innovation around HVAC is to that vertical market, this was an ability to be able to take, obviously, a core strength of ours, but also from a go-to-market standpoint, really then be positioned to capitalize on what we see to be an incredible growth market going forward from a vertical market standpoint. So we feel really good about that. I mean that's a good example of how we take our portfolio and think about where we might have gaps, ultimately serving where the growth will occur and how do we make sure we've got the right organic investments. And then are there inorganic investments that potentially accelerate our ability to capitalize on that demand and/or fill any technology gaps that we have? And so when you think about the priority, I would say, what I would say is from an overall capital allocation, it's continuing to increase dividend in line with earnings, continuing to repurchase shares. We've committed on a sustained basis, repurchasing shares. I think this year, about $1.4 billion. And then to add 1 or 2 points of top line growth through M&A. And so I would tell you that our pipeline and the M&A would be bolt-ons, whether it be, like I said, product like Silent-Aire or continued service -- extension of service digital. So when we look at all of our organic investments that are going into our software platform, the work that Vijay Sankaran is doing, not only at the edge device level but also in the digital data platform and the AI, that ultimately is critical to being able to support the solutions that we're developing. Those are the big ones. And then what I would say is we're going to stay focused. We believe that we're uniquely positioned with our combined capabilities and now our ability to be able to continue to execute strong organic execution with the idea that we can continue to strengthen the portfolio with these bolt-ons 1% or 2% top line. That contributes nicely with what we're doing organically. [ And then ] we've got a first-class team. We brought in François Mandeville, and he's got incredible depth in technology and having done very successful M&A across other industrials. And he's been on board and the team that we've built and really made it fundamental to our operating teams. That I think is -- gives us a lot of confidence based on the pipelines that we've been building. And then obviously, the way that we begin to convert, very, very confident that we're going to be able to deliver that 1% to 2% incremental growth above and beyond what we're delivering organically.

Got it. Great. Okay, George. Well, that's it for today. We're out of time. I really enjoyed the conversation. Thank you so much for participating, and thanks to the audience as well. And yes, we'll talk soon. Have a good day.

All right. Nicole, thank you. Thanks for having me. Have a good day.

You too.

Bye.