Lear Corporation (LEA) Earnings Call Transcript & Summary

Okay. Great. Thank you, everybody, for joining. My name is Mark Delaney, and I lead coverage of the U.S. auto and industrial tech sector for Goldman Sachs, including Lear. With me today, I'm very pleased to have with us Ray Scott, the President and CEO; and Jason Cardew, SVP and CFO. Thank you both for joining.

Thanks.

Thanks, Mark.

I thought to kick things off, there's been a lot of volatility and uncertainty in the broader auto market, not only from a fundamental perspective, but also some volatility in terms of public policy. Given that backdrop, can you share your current views on how the year is shaping up? And maybe, Ray, I can start with you.

Yes. Thanks, Mark, and thanks for everyone. That's here in person and on the phone line. But yes, so good news is we're on track as expected to close out the fourth quarter. Things are coming in line as we expected. As we look forward, I think there's a couple of things. One, we've talked quite a bit before about focusing on the things that we can control. There's a lot of noise in the system right now across policy, as you suggested, and then obviously, with the OEs around the globe. But Lear has been extremely good at focusing on our cost. And I think in the short term, that's something that we're really focused on is how we're controlling our cost, discretionary spending, how we're positioning ourselves for the short term. I think mid- to longer term, we put ourselves in a really good position. We've been investing in what I think is great innovation and technology and capabilities within our manufacturing plants and our product. And we're seeing some really good benefits of those moves through those acquisitions and the organic capabilities we have within our own facilities. We're seeing great progress within the modularity with innovation with Seating. Albeit there's been some push and pausing of the EV market, we see some great opportunities for quoting activities in E-Systems in the first half of next year and in Seating, particularly around conquest quoting opportunities in Seating in the second half. So we're really focused on our cost short term, but I think mid- to longer term, we'll put ourselves in a really good position.

And Jason would you like to add anything around the market [ outlook ]...

Sure. Yes. As Ray mentioned, we're seeing the fourth quarter sort of play out as we had anticipated and guided to the revenues of about $5.5 billion, just under that. It's consistent with the midpoint of our guidance for the fourth quarter with operating margins, about 6% Seating, right around 5% in E-Systems. And 6.5% and just over 5% for the full year in Seating and E-Systems, respectively. Production is holding up about where we had anticipated in North America and Europe, you still see some modest disruptions, but most of the production changes that we're seeing from our customers are really driven by demand. And so whether that's trying to lower inventories coming into the end of the year or prevent inventories from increasing. I think our customers have been very focused on inventory management here in the fourth quarter. Again, kind of consumed with how we had expected the year to play out. And as Ray mentioned, and the things that we can control that net performance in both of the segments, both Seating and E-Systems are operating at a high level. And commercial negotiations, restructuring automation, it's all on track, consistent with what we expected.

That's a very helpful update. And maybe sticking on the topic of cost and automation. The company has highlighted automation as one of the key drivers of cost improvement, including with this IDEA initiative, I think you said in the past that labor is about 13% of total company sales, roughly $3 billion on an absolute basis. How much of that could be automated? And what are the largest areas of opportunity for automation?

Yes. This is an area that we've been focused on for well over 10 years. And we've talked about the acquisitions that we've -- and they're nice tuck-in acquisitions that Thagora and InTouch, ASI and the most recent one with WIP Automation (sic) [ WIP Industrial Automation ]. And the benefits that we're seeing and how we're separating ourselves from our competition and I believe in creating a value proposition is through innovation on the plant floor, combined with engineered products for modularity and automation. So we're coupling both those together and really seeing some really good progress. Looking into '25, I couldn't be more excited. We really put in place IDEA by Lear this beginning of last year. And we're seeing increase of about 605 different products that we're heading into '25 with. And so a substantial increase from what we saw in '24. And so that gives me a lot of confidence in what we're doing on the operations on the floor of our facilities. And the opportunities that we're seeing within -- let me give you an example. We're putting in from where you look at finesse on a just-in-time. That's how one of our higher labor costs is just-in-time Seating where finesse all the way through validation and testing and sequencing is 100% automated. That's going into production at the end of this year. And as we validate and get that into production and prove it out, then we can quickly move across multiple plants. That can take out anywhere from 20% to 25% of direct labor within the facility itself. And so those type of progress, those types of steps, I think, really are what are differentiating Lear Corporation. And they only came through the integration of these acquisitions. And we are working with integrated manufacturing companies and from my perspective, it wasn't getting us the full of what we can do internally that -- But what we're realizing is that on our plant floors, we can specialize our own capital needs. And so through algorithms, software, how we're developing capabilities with our capital on the floor is making significant differences in our capital cost structure, too. We just implemented a plant that kind of a reversal. We used to manufacture about 20% of the capital that was installed on plant floor. The most recent plant we put in place, we actually manufactured and designed 80% of that. That was 20% lower capital cost for that single plant. I think those numbers are going to continue to come down. And we improved the throughput dramatically. And so that's something I'm really excited about. I think that takes a little bit longer period of time when I'm talking about right now, short term, cutting all discretionary spending, making sure we're very smart on how we're spending capital, how we're focused on capital. And the ideal situation is to obviously, automate as much as possible. It doesn't all make sense because there's lower cost labor. We're making some great moves with Mexico down to Honduras just continuing with the labor arbitrage. But where it makes the most sense in our just-in-time facilities, we're seeing really good benefits. And I also think that -- I talked about we have $3 billion of Conquest quoting activity heading into next year. And I think they're real. I mean our customers were having great conversations around the modular concept. We just most recently, we're going to validate it with Ford Motor Company at the end of this year. We talked about that being a significant event, that gives us a lot of confidence that we can take that across multiple programs within an OEM. And so I think we're going to continue to win those type of businesses. But I believe that we're about somewhere north of 10% on our controllable cost more competitive than our peers. And that's a significant step. Now I can't quite often, I don't think the irrational pricing and somebody taking the price. But on a cost per cost bases, we are significantly lower. And I think that's going to play to our benefit as we continue to quote this business in the second half.

And just to put some numbers around that, too, to help investors, and we'll provide, Mark, a lot more detail on the fourth quarter earnings call on the investments we're making in automation and advanced manufacturing. But we do expect to spend $150 million of CapEx next year on automation and advanced manufacturing. That's about $50 million more than what we spent this year. The way we evaluate these projects is no different than a typical capital investment or restructuring program. In the Seating -- on the Seating side, we typically see about a 1.5-year payback. As Ray mentioned, those initial investments in automation are really focused on our highest cost facilities, shortest payback opportunities for us. But now we're starting to see on the E-Systems side, some of the equipment costs come down some of the improvements in the equipment and what it's capable of really improving the return profile of those projects as well. And so whereas maybe a year or 2 ago, it would have been a 3- to 4-year payback, we kind of shied away from automation and wire is a result of that. We're now seeing sort of a 2- to 3-year payback, around 2.5 years on average payback on the wire side in certain applications. And so that's really what's leading to that increased investment next year compared to this year. And if you think about this over a 2-year period, by the end of '25, so between '24 and '25, we will spend $250 million of CapEx in this area and generated run rate savings of $150 million. So it's not -- it's certainly not insignificant. It's a really important contributor to that margin expansion story in the areas of the business we can control.

And I think that's really important is, I think that is a key differentiator for Lear Corporation is what we're focused on, I said, short-term focusing on making sure we're focused on all of our costs, all the way through every line item within our cost structure. But more on the structural changes we're making to our business, the sustainability of gapping out that margin as we look forward and then really offering something that's different to our customers and really differentiating Lear. We're seeing the results. I couldn't be more excited. We just had the operational teams in several weeks ago going through what we're doing globally. We're being very selective on how we prioritize these on returns. I mean the queue behind it is there's a long list, but it's how do we focus our capital, what we're spending on for the greatest return and structural sustainable changes that are going to increase our margin long term. And so it's exciting on one side. Like you said, there's a lot of challenges in the industry, but I think the timing is right for the investments we've been making over the last several years.

And Mark, just to add one more point, and Ray alluded to this, these investments in automation and the advancements we've made in manufacturing, particularly on the Seating side are a competitive advantage for us as we're quoting new business. We're seeing that materializing in terms of being more competitive. And as Ray mentioned, you could have a competitor that chases a program to a price that we're not willing to accept. But from a cost standpoint, it is a significant advantage, providing a significant advantage for us and for our customers.

That's all really interesting. I mean it sounds like even with what you have in the pipeline for '24 and '25 in terms of some of these investments that even with that, you'll still be in the earlier innings of this journey around automation. Is that a fair takeaway?

Yes, absolutely. So the way we prioritize it right now, as I mentioned, is just-in-time. I mean that's our higher cost. We get the biggest returns straight away. But in parallel, what we're running is examples within trim and wiring harness. And so there are fast-moving events that we'll use with companies that are solving bigger problems that we don't need to invest in that will be solved. But I think where we can differentiate ourselves in the, what I'll call, the secondary priority is trim and wiring harness. We're seeing great benefits and changes. I'll give you an example. Thagora was a company that we acquired, which really is writing software and programs to really scan hides and trim and utilize it in a much more efficient manner. In the old ways of looking at it, you'd put dyes on every single piece and utilization rates were higher. That's where the scrap gets -- where you really get the cost. Now we're digitizing all that with an internal program that only Lear has to really drive efficiencies within that process. And that one example, even though is an example within leather hides, can be used across multiple different platforms within Lear. And that's why it's so important that we keep these in-house. There's proprietary rights that we have. We're patenting everything that we're doing, especially on the plant floor, the modularity of what we're doing with the seat. We have -- and I think it's -- I don't want to be overlooked, but the modularity of the components within the trim cover itself, we're in validations, late stages of validations. We said that's a significant event for us. We're going to -- those facilities that are going to build those modules will be automated. And so it will be a lights-out type facility that we can scale across multiple platforms, once the modular design is done and validated, it's built and it's scalable where we can go across multiple platforms. It's agnostic to any frame system that's out there. So we don't have the legacy issue of worrying about the just-in-time facility. We can supply the key components to the seat to our competitors. And what I'm liking is at the highest levels within the executive ranks of the OEs, we're showing them this capability, and they couldn't be more excited. Now you have to get through the validation process. There's a certain level of patience that you have to have. But now we're there. We're getting it to its validated. That gives a lot of credibility to our customers to say, you can do this. And what -- I hate to say it internally, don't waste a good crisis. Our customers are going through a lot of pressure on cost. This is something that we can take cost down and give a greater value to the end customer. And so -- and it's something that we can expand and grow on and expand our margins. So everything we focus on is generating margins above our cost of capital. That's what we're focused on, and this is a great opportunity. So as they're struggling with cost and trying to take cost out, it's amazing as they come in and we get to show them this validated process and system that's going to be automated with confidence that we can -- because it's been validated that we can take it across multiple platforms. So that's the business we're quoting heading into next year. Now we're seeing quotes, which is interesting. One of the points that was brought up, can you disrupt the customer sourcing model? And that was what we're out to prove, and we're seeing the customer sourcing model be disrupted because we're getting quotes now for just our modularity. So we can quote the independent of the just-in-time facility, and we're getting a quote for the modular assembly within our automation, in our automated facilities. And so that's the second half next year. A lot of these programs have been pushed for a lot of different reasons, but that $3 billion of Conquest quoting activity that we have in the pipeline, I'm very confident in because we're getting a lot of positive feedback from our customers on what we can do, and they're looking for changes. There's no question about it.

No, that's great. I mean there's -- sounds like there's a lot that's going on there, both from a cost and business sourcing perspective. And I just want to make sure I heard correctly. So just-in-time 20% to 25% automation opportunity for some of these programs you're looking at?

Yes.

Yes.

Okay. There's been a lot of market share shifts in the industry, especially in China. Maybe talk about how that's affecting Lear.

Well, we've been in China for 30 years. So we have, I think, a great team on the ground. And you're right, there's been a lot of shifts, particularly with the multinationals and the shift with the domestic Chinese. And we've built an outstanding relationship with some key customers in China. As a matter of fact, some of our fastest-growing customers, our fastest-growing customer right now is BYD. We will, over the next several years, have 30% of their Seating business within China. So we've established strong relationships. I think from our perspective and what I'm seeing even with some of the conversations I've had with the domestic Chinese is that they're very interested in technology and capabilities. And so why we've been able to compete very competitively and win business with the local Chinese suppliers is because of our innovation. I think the domestic Chinese are much more willing to look at change when we talk about a modular system or technology that really changes their product. And so I think that's one thing that we've been doing a great job of. We've done a nice job with the luxury end with the domestic. We've done a really nice job because of our capabilities. And I think that that's really been a nice basis for us to continue to grow. I mean we have BYD, Geely, we have Changan. We're now Xiaomi. There's a number of customers that we can continue to grow with. And so I think as the shifts in market share continue, what I've seen we can still continue to win Conquest business with the domestic, let's say, the Detroit 3 or European customers, we're still seeing that shift. We're seeing a fast pace and growth within the Chinese because of the way we can accelerate our capital on the ground. We cut a program down that was typically 2 years to 1.5 years down to 8 months. And it's because we actually manufacture our own capital. And we're seeing doors get open that we haven't seen before with the Japanese OEMs, too. So I think looking at the changes, even though our changes in China, we've seen changes across the board that are allowing us to still continue to grow. That's it.

Yes. And Mark, I'll just add. If you look at our revenue in China from 2021 to 2024, it grew by almost $1 billion from $4 billion to $5 billion despite that market share shift that's happened. And we have -- our business is over-indexed to the international OEMs there. It's gone from -- the Chinese domestic sales has gone from 22% to 30% of revenue from '21 to '24. And as we look out to 2027, it's approaching 50-50, and we expect another, and are targeting another $1 billion of revenue growth. Some of that's a bit obscure because that much of that revenue is in nonconsolidated joint ventures, but we're also actively working to try and consolidate some of that business as well.

That's great. And picking up on that broader theme of market share and some of the success the company is having, specifically within Seating, Lear has spoken in the past about its just-in-time market share having been about 25% as of 2023. You've got a goal to get to 29% by 2027. Ray, maybe give us an update on how that's progressing?

Yes. I think this comes in different phases, too. We're very successful back at just 2019. We won at that time based on volume revenue dollars was about $2 billion. So we saw a nice win rate on Conquest. And so it wasn't us losing business. It was us actually getting Conquest from our competitors. I think we're kind of in that same period of time, too. Like I said, a lot of programs have been delayed, pushed or changed as far as what the expectation is with volume. But in the second half right now, we're starting to see that same type of quoting activity that we saw back in '19, where we were very successful with Conquest wins. And I think that's really what we're focused on is the second half next year that will continue to accelerate our growth to 29%. And even though there's been a pause, let's say, or delay, whatever we're calling this EV slowdown, which is kind of in the interim, slowed down our backlog growth, I still see the opportunities in the second half next year, allowing us to get to that 29%. And so I'm very confident. I mean, there has been a pause, like I said, because of some factors around EV, but I'm very confident given the conversations we're having with our customers that we're going to be successful with a portion of that Conquest win heading into 2025.

Okay. That's great. And then another opportunity within your Seating business has been around Thermal Comfort System or TCS. Is Lear still on track for about $1 billion in sales and reaching your profitability targets for TCS by 2027?

Yes. The short answer is yes. We're on track for both of those. And we talk a lot and have talked a lot about the development projects that we've been awarded. We have 60 development projects with 22 OEMs. But we haven't talked as much about the production contracts. So we have 9 production contracts, the first of which went into production in the middle of this year with Volvo on Comfort Flex. The first FlexAir program went into production this year with Hyundai. So we're now converting those development contracts to production contracts. And based on those 9 contracts that we have been awarded, it's about $100 million of revenue associated with that. So that's the first key step towards achieving that the growth that we've targeted in Thermal Comfort. And in terms of the margin profile of that business, it's generally higher margin than Seating overall. So 10% to 15% is sort of the normal conversion on the incremental revenue that we're seeing in Thermal Comfort. And beyond the new business, the other key catalyst for the margin expansion in that segment is restructuring. So many of the facilities that we acquired from IGB and Kongsberg were in Eastern Europe, and we've moved that footprint and are in the process of moving that footprint to North Africa, and that's a meaningful contributor to that margin expansion in that segment. And as we work through those other development projects throughout the first part of next year, we look forward to providing updates on how many of those have been converted to production contracts just to give investors a sense of the key drivers and enablers to achieving that $1 billion target. But as Ray mentioned in his opening remarks, we're seeing a lot of interest from customers and a lot of success. The most important of which is the completing the validation on the Ford Comfort Max module. That's our first Comfort Max award, competing the durability testing, which we did in the last quarter was a huge milestone. And now that opens it up for other business with Ford, whether we have the jet or not and with other customers, as Ray alluded to, just reducing that risk profile of that product by completing the validation work that's happened already. And Comfort Max becomes a more important part of the growth story in Thermal comfort as time goes on to just give you a kind of frame of reference, the average CPV of Comfort Flex is sort of $50 to $100. That's where you're combining seat heat and massage or pneumatic lumbar and seat heating, for example, 2 components within Thermal Comfort. Comfort Max, you're adding the trim cover to that as well. And the CPV can be $250 to $500 a vehicle. So it's a much greater growth opportunity from a revenue standpoint with similar margin profile as the Comfort Flex product. So getting that first development project through validation and ready for launch is essential and a key enabler to that growth in that business.

Maybe we could shift gears to E-Systems. Lear's Electrification business is assumed to be about $800 million of revenue in your 2024 guidance. The company had been targeting over $1 billion by 2025 prior to the EV slowdown. Recognizing EV production has been slower. What are some of the growth catalysts you see from here for E-Systems?

Yes, I think we've talked about the pause in EV, and we did a really nice job, I believe, of really streamlining our product portfolio from what we had, 25 different products down to 13 and really focusing on where we believe we can get a fair return above our cost of capital and grow the business. And we're doing a nice job. Now we have the pause in EVs. So Battery Disconnect Units and Intercell Connect Boards, we still have great capabilities and believe that we can still grow in that area. We're strong with General Motors right now in the Battery Disconnect Unit, with Volvo, with BMW, with Stellantis, still quoting different programs with them as far as the next generation. We have right now -- I talked about the Conquest opportunities in Seating. We probably have 2 of the biggest Conquest quoting actions going on right now with E-Systems, significant. And I think I feel just as confident given some of the feedback we're getting from the customers on the opportunities there that could really be a game changer for growth within E-Systems and really focused on that power distribution. I mean that's something we're very good at. We believe [Technical Difficulty] the margins continue to improve. We're obviously rolling off business that we don't believe we can scale properly, not investing in it, not spending the R&D money, putting the R&D and the investment in engineering and programs where we feel we can expand margins quicker. But I think given the pause in the EVs, I still see great opportunities for growth in power distribution, particularly with 2 big Conquest wins that hopefully will be announced sometime early next year. And I think that's, again, it's nice to talk about all these things, having great confidence and great conversations with the customers, but we're really trying to put these things so we can make key announcements, one in E-Systems and the Conquest opportunities we have. And two, as we just talked about with Thermal Comfort, we're very close. We've gotten verbals on modular assemblies with a key customer that we believe we hopefully can announce early next year. I think that will continue to validate what we're talking about.

In terms of just the revenue for Electrification, it's still been a meaningful contributor to the growth in E-Systems. That business was $565 million in 2022, grew to $750 million this year. So it's a little bit lower than what we had previously estimated. And we think that can grow another 6% or so next year to $800 million and maybe a little bit more. It may be less of a contributor to that growth in the near term in E-Systems. But I think that, that if you look out longer term, the Conquest awards in wire that Ray just alluded to would certainly allow us to get kind of back to that historical 6 points of growth above market that we've achieved for the last 5 years in E-Systems. And again, this year, that's the growth rate we've achieved. We may have a pause there for a year or 2 as this electrification trend sorts itself out. But longer term, we're poised for growth in that business.

And Ray, you mentioned 2 Conquest opportunities. I think you said they're both power distribution. Would that be high-voltage products you're providing from wiring? Or is there...

It's a combination. It's ICE and high power.

Okay. Okay. One of the things that's been very topical for the broader market and industry has been around tariffs. And I'm hoping to double-click a little bit on that topic with Lear. Maybe help us better understand how much of the -- as you're having conversations with some of your customers and thinking about how you could potentially share some of these costs if tariffs are enacted, how are some of those discussions progressing?

Well, I think there's a lot of uncertainty right now on how those are going to play out, but we have taken a very proactive approach with organizations such as MEMA and anything that we can get out and our voice can be heard along with our customers. And it's early. It's a little bit too early to really get into any real substantive conversations as far as what it means. But we have approached our customers, kind of given them an idea of how we're looking at it. We have historically looked at this thing and there have been in some of the models and how we quote business, an area for duties and tariffs that we have been in the past, been able to get. So I think it's just going to open us up to some type of conversation around what the contracts terms and conditions and how we're going to have to adjust if this does materialize. And I think that's going to be just an open dialogue and conversation around how we're going to negotiate the contract because we're not going to pay it. We're not going to pay it. There's no way we'll ship product. And so I think it has to be a discussion that we have with our customers and gets resolved.

Would there be an opportunity to move labor from Mexico to Honduras faster if...

Yes, I mean those -- so there's a lot of things internally that we're doing. So that's one of them. There's other things that we can do to reposition ourselves. So maybe parts come in slightly different than the way they're shipped in today. We've done things in the past that we have to work through with our customers. But I think those are all things I think we are being very proactive about it and not just sitting here waiting for something to happen, but being very proactive, being very in front of our customers, talking to anyone that will listen on what this means to the industry. But I think the other thing that's very important is that of a seat system, a significant part of that is directed. So it's an industry issue. That's going to be a conversation, maybe a 3-way party for us were included in the conversation, but that has to be discussed with the directed supplier and our customers. And so this is an industry issue. This is not a Lear issue. This is going to be solved a lot of different ways, but we are taking very proactive steps right now.

And Mark, you can look at what happened with China with tariffs as kind of an indication on the directed material where there was a tariff that was applied, that impact was passed through to our customers.

Okay. Jason, a couple of financial questions, if I could, please, for you. Given the increased focus on automation and your IDEA initiative, assuming industry volumes were to be flattish next year, how should investors think about margin improvement in both segments? Maybe you can touch on both 2025 and then also longer term?

Yes. And I know we had previously communicated our target margins of both segments of 8%. And at one point in time, the goal was to get to that in 2025. Obviously, a lot has changed. Volumes are lower, particularly in our key markets. There's been the market share shifts in China that have happened, elevated wage inflation, just to name a few. But what Ray and I talked about, this is the environment that we've got to operate in. So we're not satisfied with the margin profile of the business right now and are working to aggressively improve the cost structure of both business segments. Obviously, Seating is closer to getting to the 8% target. We're at 6.5% this year. And I think it's reasonable to expect 30 to 40 basis points of net performance improvement in that business year-after-year, driven by automation primarily and maybe to a lesser extent, restructuring. In E-Systems, we have a longer road ahead of us. We're at 5%. So the gap to 8% is larger. But the opportunity to improve the cost structure through net performance and improve margins through net performance is greater in E-Systems. I think it's reasonable to assume 40, 50 basis points a year -- year-on-year improvement in margins in E-Systems through net performance. Now what are industry volumes going to be? I think that's likely a headwind as you look out to next year, probably down a couple percent globally. But the things we can control, we're working very aggressively to improve the return profile of both businesses. And even at 6.5% in the Seating, I'll highlight, we are generating a significant return in excess of our cost of capital. E-Systems is the one where we've got more work to do. And Ray alluded to the product portfolio and the changes we've made there, we've pared back our electronics portfolio, nothing is off limits in that business right now. As we embark on this journey to get returns back to where they need to be in E-Systems.

And just to add to that, too, real quick. I mean, it's also this pause and allows us to pivot and be very selective. I mean when I talk about growth opportunities, we're very selective on programs that historically have run at a real good rate that give us a lot of confidence that they'll continue to run volumes at a very steady pace. And so this is a time for us to really look selectively. We believe we're in a strong position because of what we've done with our cost structure. And there's programs we just will shy away from because we don't believe or we're going to set them up differently contractually with some guarantees if we do move forward with them. But the programs that we talk about that we're really excited about are historically strong programs with a strong demand and a great brand in a great region. And so we are very selective in how we're looking at growth today, too, relative to where we believe the growth will be longer term.

Very helpful. Jason, I was hoping you could provide an update on your priorities for capital allocation?

Yes. As we look at the balance of this year and into next year, they're largely unchanged. We're continuing to invest in automation and CapEx will continue to run in that high 2% range, low 3% range as we support the competitive position of both businesses. Tuck-in acquisitions on the advanced manufacturing side, we'll continue to also -- we'll continue to invest in that, but those are sort of $15 million to $25 million type deals at this stage. And then the balance of that cash we're returning to shareholders. Through today, we will have bought back about $350 million of stock here this year. We'll continue buying back shares through the balance of this year and look to do the same as we look out to next year.

Great. Well, unfortunately, we have run out of time. Jason, Ray, thank you both for joining.

Yes. Thanks..

Thank you.