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

All right. Hi, everybody. This is Joe Ritchie, and I'm very happy to have with us here today Johnson Controls Chairman and CEO, George Oliver. George, a lot of talk about from the quarter. So why don't we just get right into it. And thanks for being here today. So clearly top of mind for everybody this quarter was the supply chain, right? So maybe just kind of start by describing the issues that you experienced, particularly in the North America field, and we'll go from there.

Sure. Well, I think it -- it's great to be here, Joe. Thanks for having us. I think it starts with when you look at the success that we're having from a growth standpoint because I think that's important, there's a much higher digital mix not only across our products -- digital products, but also what we're doing in the field and how we're deploying our OpenBlue capabilities. And so when you look at our demand for -- whether it be chips, microchips, semiconductor materials, certainly has been accelerated. And when we look forward, even more so. And so when the industry -- and so we've been working this. This isn't something that ultimately happened overnight. But when this all came about -- when you go back over a year ago, when really the whole semiconductor shortage came to light, as we were looking at our digital strategies, understanding all of the technologies and the chipsets that went into all of our products and then making sure that because on a go-forward basis, immediately, the industry wants to put you on allocation, which is based on historical demand versus ultimately future demand. And so we needed to quickly then look out 18, 24 months. And based on our strategies that are actually being executed extremely well, whether it be the connectivity of all of our services, which require a lot more digital components, whether it be all of the work we're doing with OpenBlue and the different capabilities. So as we project it forward, it's a much higher level of demand. And so we've been working strategically over the last 12, 18 months with all of our suppliers to make sure that we had the, long term, the right technologies that were going to be needed at the right volume so that -- with the right capacity in place to be able to serve our needs. And I would tell you, working across the industry -- in the industry, when you look at the semiconductor and microchip industry, only about 10% serves industrial customers. So this is the other challenge. A lot of it is driven by automotive or consumer demand. And so you have to make sure you have the right strategies, the right technology and then the right alignment so that your suppliers are committed to the vision and the growth that we're achieving at Johnson Controls. And we've got that today. And so we've been going through that. We've had to -- in the early stages last year, we've done multiple workarounds where you reengineer a chip which requires reconfiguring of the board and then reprogramming. That ultimately impacted some of our what we call engines in our controls business or even some of our electronic fire panels. So we've worked around a lot of that. And then as we now project the future, there are still a few more we're working through. But I think we're in a much better position. Technology, alignment with key suppliers, Johnson Controls is a key priority. And then we have recovery plans. And so this recovery also happened at a time that when you look at our volumes, they naturally go up 15% -- let's say, 15% or 20%. And so as we're looking at the recoveries of the components and then how that impacts each of the configured products and then the products into installations, you got to look at the full impact that, that has. So let me start with Global Products. Global Products, you'll say, well, you didn't have much of an impact. We delivered 14% growth, 10% of that is price. So we're getting really good price in the book-to-bill business. We're getting nice leverage on the volumes. And the business overall, when you compare that to our competitors, have actually done extremely well. Well, why is that -- why aren't they impact? Then you say your field-based business, obviously, took a much bigger hit. And a lot of that is because -- is when you look at Global Products, when you show up 1 or 2 components, there's capacity in place. Because we've increased our backlog so tremendously, our backlogs in Global Products is up 50%. Then you're going to utilize our manufacturing capacity to build what you have material for. So you're getting the volumes, but you're not ultimately getting the mix that is required to support the configured products -- projects that go through the field. And in the field in North America, we have active, typically, about 40,000 projects. And every one of those projects requires every one of the components to complete. And when you're assured a few critical chips that ultimately support some of the products and the revenues, you get a multiple on that. And so not only is it -- the good news is that we have the most digital, I think, components, not only in the products, but also now with Digital Blue that's going to be within buildings. And so our ability to be able to digitalize and take advantage of that infrastructure is going to be huge going forward. So the good news is it has uncovered that. The bad news is that we -- obviously, based on where we were in the recovery, we weren't where we'd like to be through the second quarter. And so I think with the recoveries now on a go-forward basis, we're very confident that the work that's been done, the fundamentals, the alignment that we have with our suppliers, the engineering agility that we've had and how we're working around some of these shortages has been second to none. And so I think as we go forward, we're going to see a recovery. We'll be able to ramp up and get the step-up here in volumes in the third quarter. We're just not recovering at the rate that we originally projected for the year. And then as we set up for next year, I think we're in a much better situation because, typically, we peak the third quarter. Fourth quarter comes down a bit. And I think with the capacity now -- with the recovery of the chips, with the capacity we have in place, we can recover a significant amount of that backlog early next year when we typically would drop. And instead of dropping, we can maintain a run rate that will recover the volume, recover the margin, the margin dollars that ultimately will flow through in '23.

George, that was super helpful. I guess before we kind of unpack some of those comments, I'm just curious because it did seem like you guys did a lot of planning for the supply chain and for this issue but still kind of got caught off guard this quarter. I'm curious like when you do a self-assessment on the team, like could you've done anything differently?

Well, I think the assessment -- because I've been actively involved at every stage here of the process, my assessment would be -- and when you're in a recovery mode, you're planning to ultimately -- without any shortfalls. You're planning with the idea that everything is going to -- and you're talking about thousands of SKUs. You're not talking like 1 or 2. You're talking -- it's fairly complex. So you're assuming that everything is going to happen as planned through the recovery and then you have a decommit or you have a quality problem or decommit that then has a multiple effect because it isn't just the one element, it's how it's impacting a bigger amount of revenue. So I think hindsight 20/20, there wasn't as much risk factored in that recovery as there maybe should have been. And I think on a go-forward basis, we've taken that now into account with the guide that we provided for the remainder of the year, which I think we're at this stage very aware of, okay, where we are, what needs to get done, what's going to get done and our confidence. I mean I couldn't be more excited about the -- when I think about strategically how we've repositioned the company and the success we're having from a growth standpoint is incredible. And now I truly believe that with the work we've done in building the fundamentals and getting the alignments that we need and the leadership in place, even in this challenging environment, that we're going to see some very nice improvement here as we get through the second half.

Yes. That's helpful. The -- so you talked a little bit about the kind of complexity. I heard you say that a couple of times in your prepared comments. 40,000 projects all at one time. Talk a little bit about how your installed business maybe differs from some of your HVAC peers and why that added complexity also kind of hurt this quarter.

Yes. So in North America, when you look at our field-based businesses, and it's more so in North America, and we think this is a real, I think, advantage going forward that with our installed base of digital and controls being core -- and the reason why I say this, that historically, controls have been -- like take Metasys, which is our control. It's been mainly software in a box, combined with HVAC, put into the field. And then you support that with engineering. You configure, you support it. And that creates a nice installed base that, from a service standpoint, makes an attractive service. We're on the verge of changing where you can take the control, which is fundamental to historically how buildings have been operated. And you can take the intelligence. So you can take OpenBlue now. So we're configuring our on-prem control combined now with OpenBlue through the cloud with AI that you can create an intelligent control that is all seamless within the building through the cloud, supported. And not only does that enhance our ability to take all of our installed base with Metasys that today is on-prem, how do you now service that with connectivity, with additional use of data that supports that installed base in a whole different way? And then it does -- what it allows us to do is to then configure a mid-market solution that historically we haven't served in a big way that takes that same control and can make it much more simpler to be able to serve the mid-market. And so I think the -- why I say that is that I think on a go-forward basis, when you think about everything connected, everything we do connected everything else in the building, the ability to then, with that connectivity, have the use of all of the data within the building. And why is that important? It ultimately then creates different outcomes. And the outcomes that you achieve tied to these big secular trends that are happening within the industry. We talk about decarbonization sustainability. And right now, the focus on buildings being 40% of the global carbon footprint. And so no matter what form I'm in, with CEOs, and not only within our industry, but across business that this is now becoming front and center. The commitments are being made to get to net zero. And then as they go through the baseline of where they are, buildings become front and center. And so fundamentally now requiring different types of solutions and not only take what historically have been relatively inefficient buildings, making the buildings much more connected, much more efficient, and then the use of the data is what optimizes the outcome. So whether it be energy consumed. And typically, when you have a fully connected building with the use of all of the data, you can reduce energy 30%, 40%, 50%. And then you asked -- the other big secular trend has been in indoor environmental quality or indoor air quality. And you say historically, postpandemic, it was increase the filtration or even increase the turnover there. Well, increasing the turnover is higher energy. So one goes against the other. Or it could be an improved air handler. I mean there's lots of different ways. The way that you achieve both is through the connectivity use of data that ultimately optimizes the outcome that you can achieve. So what's happening is whether it be sustainability, healthy buildings or ultimately getting an industry more advanced with overall digitalization like other industries that have been far ahead of us is what I think is going to be the fundamental to the future buildings. And that's what -- when we look at all of our demand signals across those spaces -- I'll just give you a few. Sustainability, we have -- and these are longer cycle projects. So these don't -- you don't go sell -- these don't sell them overnight. These are months or can be even a year plus depending on the customer with what you're trying to configure. But you work to figure out, okay, what are they trying to achieve? And then how do you achieve that through upgrades or reconfiguration, deployment of new technologies? Digital is a big element of that. And so our pipeline of projects that we're actively working on is over $7 billion. We'll convert this year, let's say, $1 billion, over $1 billion of that. And these are -- these typically would be longer. These are creating an outcome. It's similar to performance contracting with what we've done in the past that really now creates a whole different outcome and you get paid based on the outcome that you create with the solution that you provide. So that healthy buildings, you thought that maybe that was a one and done because of the pandemic. The pipeline there is up or up 30% in orders in the second quarter. So that's continuing to materialize. So on the growth side -- and then with the -- I shared this on sustainability, heat pumps. Heat pumps, what you'll find, especially with their fossil fueled equipment that is not only inefficient, but obviously high levels of carbon, the ability to electrify the whole space with heat pumps. And you get like a 3:1 efficiency factor. And so that -- especially like even with the demand signals that are coming out of Europe as it relates to the energy crisis and what's happened with the -- with what everyone is trying, to reduce the demand and replace the supply with non-Russian supplied fuel. And so all of those demand signals are real. And so as we're investing in new products, heat pumps is a big deal -- obviously, the connectivity with the heat pumps. And I mean a good example, our VRF product, which we talk a lot about JCH, but Europe is a good big growth market for us. That was up like 50% of the air-to-water heat pump that we launched for Europe. So the demand signals right now are very robust, and I think we feel good about the ability with the work we've done over the last couple of years to be able to be positioned to win in that environment and then ultimately now working to make sure we can supply the growth that we're achieving.

The demand outlook sounds great, right? And I think over kind of like a multiyear period, I think you guys are really well positioned in that regard. I do want to get back to the supply chain because we've just gotten so many questions on it. There does seem to be some more complexity, though, to your business and how you install your projects more so than some of your peers. So when you think about that complexity, how much did that contribute to the issues that you saw this past quarter? And it wasn't just HVAC focused? Or was there a portion that was also Fire & Security as well?

So our -- a lot of our -- when we say our field-based business, it is our -- we say it's our applied business where there's engineering, there's configuration of the projects. We utilize our product. We differentiate with our product, with our digital capabilities. And so that -- when we say -- that's our project-based business. And that allows us to really differentiate -- not only differentiate the installed base, but then create an installed base that creates an annuity, right? It creates a recurring revenue. And so we've been very much focused, especially with our service strategy, on that element of what we do in the field versus just contracting. So when you're doing just contracting, you're just doing a one-and-done project, and there's nothing totally tied to that because of the -- there's no connection to the service. So we've been focusing on really differentiated installed base. The answer to your question, based on our mix of that type of business, certainly, we're going to be more challenged because of our mix. And I think a lot of it is as we're -- we've been streamlining all of our -- and a lot of this is tied to -- we are executing on the SG&A, the COGS and simplifying our business. But because of just the -- when we say complexity, it's just the pure complexity of the supply chain combining with the value proposition that we have in the field is where we probably were -- based on the mix of controls and the mix of chips and semiconductor materials, I think, is we were definitely more challenged. And like I said, when you do an apples-to-apples, when you're in a product distribution business, we've executed net-net, not the right mix, but from a volume standpoint, pricing and margin have executed in this environment extremely well.

Yes. I have one more question on this topic, and we'll open it up to investors as well in case there are any questions from the audience. You expressed some pretty good confidence that this is going to snap back. And I think on the earnings call, you guys referenced over $1 billion of revenues that could come back in 2023. Talk to us a little about your visibility in actually being able to achieve and recoup what you lost this quarter in the early part of 2023.

So tie it to -- it's -- obviously, the 2 big fundamentals there is the volume, the ability to be able to convert the revenue, finish projects, book the revenue and then ultimately get the leverage that the revenue flow has. And so when you project -- I mean this is high mix also. So when you're completing this part of the project, it's the high mix element. So when we project -- typically, we ramp, which we are in the third quarter, but a lot of that is the demand. The recovery really starts in the fourth quarter and the first quarter. And it also, when you look at -- I think it's important. This fundamental is important because when you're looking at revenues, you got to understand the pricing that's coming through revenues, pricing and units. And so in our book-to-bill business in Global Products, we'll -- when we say we get 7% or 8% price as an enterprise this year, that's a mix, and it's higher price in Global Products because of the transactional nature. And it's lower because of this backlog that ultimately flows at -- we still have backlog that was booked prior to any ramp-up of inflation. We're always planning for inflation in our cost models, but we pivoted 3 quarters ago to say this is not going to be sustained at the level that was being projected from an economy -- from an economic standpoint. We were building in, at that stage, very high levels of inflation looking forward. So as we've been booking our backlog over the last 3 quarters, it's at a much higher cost on a forward-looking basis with the proper language in the contracts to be able to have an index to inflation on a forward-looking basis. We still -- in our existing contracts in the backlog, there's always clawback. There's always change orders and other delays that you go back and negotiate. But with the level of inflation that's happening, when you have projects that were booked prior to that period, and they're still coming through conversion, that's where you get into some of the pressure, right, coming through the margin. And so I would assure you that what we've been putting into backlog has caused it at a much higher level. And then we create value, so we sell value above that, and we accrete margins to that elevated cost. So when you project going forward the recovery -- and then so I project the volume on price, we have, like I said, not only high-single digits this year on products. But what's already been priced on a forward-looking basis that will flow next year, we'll see another -- that level of pricing, kind of the least mid- to high-single digit, purely based on what's in backlog, what's going to flow. And then our project-based business, when you look at the recovery in North America, it's volume, mix and then the acceleration of completing the longer-term projects while we're now getting into a much, much better mix of projects the way that they've been priced over the last 3 quarters. And so your question about volume, pure unit volume, is that not only do we start to recover in the fourth quarter the unit volume, but we have $1 billion of capacity that normally we would then slow down in the first and second quarter if we were -- didn't have the backlog we had, that we have the opportunity to be able to continue the recovery of the backlog, get the additional volume, get the leverage from that volume, and then ultimately, with the backlog that converts, we'll be much more -- the margins will be much more enhanced because of how those projects were booked over the last 9 months.

Yes. Two follow-ons to that. So number one, when you talk about capacity, you're talking about resourcing the projects. And then secondly, when you think about the product, it sounds to me like you have a little bit more visibility or you feel confident in the visibility in your chip supply, which is obviously an important component. Is that fair?

Absolutely. There's no doubt in my mind -- and I would tell you my confidence is because it's been top to top, I mean, across these suppliers as far as their commitment, their capacity. You have, in some cases -- and we haven't been in this position, but you have -- because of the demand for chips and semiconductors, you've had suppliers firing customers that ultimately say, listen, based on my capacity, I can't support you any longer. I mean it's that -- and so -- or you're on allocation, like I said earlier in our discussion that allocation is based on historical demand. And when you're in a growth mode like we are from a digital standpoint that -- I mean unless you fundamentally change the relationship or get a different commitment, then you're not going to be able to achieve your goals and objectives. And I would tell you, that all has been solved. And this goes back -- this wasn't -- I mean these semiconductor materials and chipsets are multiyear developments and the like. And so I would tell you that we've done a nice job solidifying that supply. Now it's about getting the full supply chain with every one of the components recovered to a level that we can ultimately then support the projects that are in backlog and convert, and then continue the acceleration that we're having because of the digital success that we're having.

Well, I'll turn it to the audience. Any questions from the audience at this point? Happy to keep going. All right. Let's keep going. So price/cost. So you mentioned, if my math was correct, it seems like you were in a negative position this past quarter from a price/cost perspective. And some of what you just described, I think, is this backlog conversion issue. So again, I think you're talking about high single-digit pricing. How does the price/cost equation now change going forward as you execute some of these projects?

Well, what I would tell you is that we -- overall, and you see it in Global Products, we've been a price leader. And the -- when you look at the transactional business and the work we've done there to make sure that we're ahead of that -- and like I said, this past quarter, it was 10% of the overall 14% growth. And so that has become fundamental, right, with what we do. And so because of the -- when we say negative price/cost this quarter, I think it was negative -- we're down $10 million on price/cost. And then for the year, we're projecting that we'll be positive $50 million. A lot of that is because of the -- when you look at the project-based business, that's where we're getting some of the older backlog that's converting that, that hasn't been able to get that step up to a level that we'd like because of that backlog. So that's really been the pressure. And then on a go-forward basis, I'm convinced from a value proposition -- we're holding a value proposition. We're booking, on a forward-looking basis, the -- maintaining high levels of inflation. And then with -- that combined with the productivity that we're achieving and the work we've done on SG&A and COGS gives me confidence that when this all flows out, we're still -- we're positioned -- our issue is on rate right now because of -- when you look at this year, we'll have -- just purely with the accelerated inflation and the accelerated price, we're way up from what we originally projected on price. It's 90 basis points of headwind on margin rate purely because of the accelerated price offsetting the costs, you're not getting the full margin rate. Now on a go-forward basis, we -- obviously, that's improved significantly. And so then the other part is I think when you look at the year, roughly 60 basis points of "disruption." And so when you net that, we say this year we're still going to hold relatively flat, maybe down 30 basis points. So net of it, we're -- the underlying fundamentals are on track with what we committed when we did the -- when we laid out the longer-term plan. Obviously, there's -- from a timing standpoint, there's been a little bit of a time delay here based on the disruption. But I think given the backlog, given the fundamentals and how this flows through, when you look at revenues over the 3-year plan, the first 2 years are going to be significantly inflated because of the overall pricing that's being achieved. And it doesn't look to change in the near future relative to the pricing element. And so I think from an overall volume units -- so you say it's pricing in units, and it's making sure that we've got the margin that will support the margin rate that we projected, we're still positioned to do that over the plan that we've laid out. And I think the fundamentals are what matters to say when you get the disruption that we've seen short term, is it purely short term? Or is it because the fundamentals are weakening? If anything, the fundamentals are strengthening, growth, pricing, overall margin, and it's a matter of timing.

One question we get specific to your business is the impact that the fleet is having on -- and not necessarily like the margin you're going to get. Are you able to offset increased fuel costs? Or I mean what's been going on there?

Well, I mean I think it's important to understand -- because I think it'll give you a sense on how we work, right? Every week, we have a pulse with the supply chain, and I'm looking at forward-looking triggers on commodities -- on all commodities, on capacities, on -- so we have had -- and the idea is we have very robust -- so as a result of this over the last couple of years, robust pricing taken into account because we are -- we do have a longer cycle business with the field-based business. So we were planning for significant energy inflation, right? I mean we weren't -- we were -- we saw what was happening with the whole supply and the challenge that, that was creating and some of the decisions around taking off some of the higher carbon supply and so on and so forth. And then you get the conflict in Ukraine, and you say, okay, now what is that -- how does that then change our outlook on what the cost of fuel to our business is because of the nature -- because it impacts -- it isn't just the fleet. I mean fuel ultimately comes through, all of the commodities at the end of the day. So it's $100 million. So I go to the meeting after the crisis and say, okay, now what's the model look like? $100 million. Now, is that -- that's an annualized number. So it's not short term. So short term, you say, okay, what's the impact short term? And what are the levers or mechanisms that we have in place that quickly offset the short term while you're building the fundamental into the long term?

Yes. So specific to that, in your installation contracts, do you have...

Yes.

I'm assuming there's some kind of fuel surcharge that you can throw in there. Okay. Is there typically a lag between like when you're actually feeling the impact to your P&L and recovering?

I mean I think -- there's always a little bit of a lag, whether it's in the quarter or the next quarter, but we -- we're pretty -- especially in this environment, Joe, I mean, you use -- in this environment of inflation, you use every lever that you can to ultimately manage the risk. But it -- and it's one of these things that where every step of the way, you're ready to go and then you get another -- something that comes in from left field, but...

It's been that kind of environment, for sure.

But I think the -- I think it's a good discussion because I think it would talk to we're a different company. It does talk to the, let's say, the functional excellence we've built, the organizational agility, the strategic agility that we've had and really being more outside in seeing what's happening and really being the leader in setting the stage for what we believe based on the value proposition, the type of problems we solve is an incredible decade ahead. And so I think -- and then from an execution standpoint, then having leadership team and then the fundamentals -- the functional excellence required to be very predictive on the fundamentals that we're executing on because of the volatility that we've been operating in. And I think my perspective would be we're a whole different company in being able to do that. And I think we've obviously had some short-term challenges, but that doesn't -- or shouldn't get in the way of the opportunity and the confidence that they have to deliver going forward.

Great. Can we touch on just a couple of other quick ones before we end? China. So I think roughly around 6% of your business. It's been a really good growth driver for you. I'm just curious, you have about a $30 million to $40 million impact from China just into the second half. I'm just curious like anything that you can tell us on what's happening on the ground for you.

Yes. So I mean we talked a little bit about this last week. It -- obviously, the way that they're managing the virus, I think, is a challenge because I don't believe it's sustainable. And I think we're starting to see some pull back on that relative to how operations have opened up and a little bit more tolerance for how cases are being managed. Initially -- we have 2 large sites. We have -- Wuxi is our chiller site and Wuhu is our JCH manufacturing site. And so we did see some short-term shutdowns. When I say short term, a week, maybe 1 was a week, maybe 1 a little bit more. We had just incredible resiliency of our employees where we had 400 or 500 employees staying in the factory, wanting to work because they could stay within the facility. They couldn't leave and opted to work instead of go home and isolate. And so we continue at a much lower capacity. Now we're back to -- not quite sure we're back to full capacity, but we're back operating. There are other disruptions relative to movement of goods and some of the logistics and that element. So I think we're -- we didn't like put an exact number on that, but I think we factored that risk into as we have provided the guide for the second half. So I think the team is very resilient. I mean I touch base with the team daily and making sure that we're doing everything we can to support everyone that's in lockdown. You got to realize some of our people have been in lockdown without able to even go outside for weeks at the end of the day. So some of that is, I think, being relaxed a bit, but we're going to obviously work that and stay close to that.

Got it. Last question for me.

Just another comment on that.

Sure.

From a China supply chain -- so obviously, we have the local business, the field service business and then, of course, the product that's produced there -- our product that's produced there. But for the other elements of the supply chain, we've been diversifying that supply chain since the pandemic. And so a lot of the, let's say, components that would be supplied from China to support other parts of our business, we've been working to make sure that we have redundancy of supply, and we've done a good job there.

Makes sense. Last one for me, George. So you sounded confident in the next couple of years, particularly on the top line growth expectations and what you laid out for your 2024 targets. I'm curious, are you equally confident in margins and the earnings framework between now and 2024?

Yes. Absolutely. When you look at the margin framework, it was -- I mean, obviously, growth, right? It was the ability to get to the growth and getting to the mix of the growth that is obviously driven by high-value products. We're reinvesting. We've been reinvesting for 3 or 4 years at an industry-leading rate. And I think we're seeing that when you look at our Global Products growth, like I say, when you look at that subset of our business, actually performing extremely well, both in volume share, margin rate and leverage. And so I think that's fundamental. You look at what we're doing in services, and I would combine digital with services. We have an incredible opportunity to take an installed base that historically has been served mechanically without any connectivity. And so we'll attach -- we'll improve our attach to 45%. Now I think the more important number, and we'll begin to talk about this, is what part of that 45% is actually now digital, is connected. And so it's a much smaller percent that actually is connected because that is what enables you not only to support the core, but with that connectivity, you then enhance the value and you get additional revenues tied to, whether it be sustainability, other services. And so that's going to be a big component. And that's tied to not only serving sustainability, Healthy Buildings and the like. And so I think that growth is happening. The connectivity is high margins -- much higher margins, that mix and then overall OpenBlue. And then the COGS and SG&A, we're on track. We've been simplifying the company. We've been building strong functions. We've been taking out the redundancies. The last phase of that will be going to a much more simplified ERP framework, and that's already in the works. And so we're on track there. And then it's making sure that as we now, with the discipline around the growth and the margin rate, continue to be able to create value, get paid for the value, offset inflation. And I think we have -- those fundamentals are certainly in place and -- as we're navigating the current environment. So I have real strong confidence that -- with where we are, with where we are in the space, with what's happening within the industry, how we're differentiating, how we're leading with technology and how we're building fundamentals that support that plan, we're on track to be able to deliver that.

Great. George, thanks for the time today. Thank you for coming.

Terrific. Thanks, Joe. Appreciate your time.

It's great to see you.