Lumen Technologies, Inc. (LUMN) Earnings Call Transcript & Summary

Good afternoon, everybody. Welcome to day 1 of the Cowen Infrastructure Summit. My name is Greg Williams. For those who don't know me, I am the cable and telco analyst here at Cowen. I'm delighted to be joined by Andrew Dugan, the CTO of CenturyLink Inc. today. The format of today's event is going to be a 40-minute fireside chat. I will leave time at the end for Q&A. You can check the box below, and you can enter a questions in the system. And I have the queue of questions over up to my right, anonymously, and I can fire away as need be. So yes, again, great to have you. Let's get started. Andrew, if you don't mind, maybe just introducing yourself and then your role of CTO at CenturyLink? Where are you spending most of your time these days? And what's your top priorities for the balance of the year?

Yes, Greg, thanks for inviting me. I'm happy to be here, and thanks for the opportunity. So my role at CenturyLink is the CTO. I drive our network technology strategy. And that includes for all layers of our network globally, really work in conjunction with our product team to build the products that we sell as a company. I've also got responsibility for our corporate security. And then in terms of where I'm spending most -- there's quite a few things. The enterprise side, continue to enhance our networking services, our hybrid and SD-WAN products, meeting the needs of our federal customers, supporting the digital transformation. But if I had to pick one thing that's different in terms of where I'm spending my time, it's really developing our Edge compute strategy and integrating our network products and security products into that application view of the world for our customers. But I also spend time on the consumer side. I'm spending time looking at technologies that can make us more efficient and serve both our fiber and copper-based customers and really trying to help make that customer interaction a much more digital experience.

Got it. Hopefully we can cover all that Edge, consumer, security. But before that, if we can talk about COVID-19 and the pandemic. How is your near-term and long-term focus shifted given the pandemic? And what does the distributed workforce generally mean for your network and your product set?

The impact has been pretty minimal. We did see some initial surge in demand as people went home, not just in terms of the applications that our customers are using around Internet-based applications, collaboration-based applications, urgent requests for capacity to serve their enterprise needs as their workforces went home. So we did see that. That's sort of stabilized, but from a long-term planning perspective, it really hasn't changed our focus. I think - I think it's probably actually reinforced our focus. We've been working hard to support the digitization of our Enterprise customers business. And as they've moved home, we've seen a lot of our customers sort of take advantage of this time to accelerate that transformation on their side. And we're seeing that activity from our customers. So I'd say it really hasn't changed our product focus. We did release 1 new product. That product was called CenturyLink Remote Connect. Supporting work-from-home connectivity to enterprise VPNs, but largely it hasn't changed what we're doing, it hasn't changed our focus.

And on the second quarter call, Jeff talked about strong booking in IGAM and Enterprise, as good leading indicators. That seems to be interesting because it it's more positive versus other operators. Other operators have told us on earnings calls that they're seeing delays. In fact, Jeff cautioned delays in the first quarter, 60- to 90-day install delays. How would you characterize your pipeline? And are you seeing any delays here? And which products are in demand in the Enterprise and IGAM segments?

Yes. So yes, we did mention that we were seeing some delays in first quarter. I think Jeff mentioned on the earnings call last week that we are seeing sort of a return to normal. We haven't seen a full return to normal, but we're certainly trending in that direction. So maybe you're not hearing that same cautioning that others are saying. But we are seeing very strong sales demand, as we pointed out on the call, really again, I think, supported by the fact that our customers are accelerating their digital transformation. Potentially, as a result of their impact from the pandemic. And where we're seeing demand, it's across our full product set. We've seen increases in voice. We've seen increases in collaboration, CDN, our enterprise networking needs. We've had some success in our Edge Compute offers that we're making. So it's across the board.

Yes. In the second quarter print, we did see that upswing in voice in collaboration quite a bit, and it was across really all the segments across the board. So I was going to ask, I mean, was it more on the collaboration side, which I would have assumed, but it sounds like you're also seeing the strength in the voice and the collaboration. Is that the correct characterization?

Yes. I think that's a correct characterization. I also think you're right. Pointing to the fact that it's probably collaboration use cases that are driving it. But not only do we offer collaboration services, which we have seen an increase in but we also offer underlying voice services for many of the collaboration providers. So for us, it may look like voice revenue, but it's really in support of collaboration because we offer services, origination and termination services, for those people who would like to use their phone to participate in collaboration with their peers.

So is collaboration and even or is that usage-based billing? Or is that sort of by license? So I guess the question there too is we should probably expect sustained elevation of collaboration services for a while, maybe even a permanent level of elevation?

Yes. We'll have to see what happens with people returning to a normal work environment. I personally think that it's -- that we will continue to see people working in different models, working from home, working in a more distributed fashion. So I would expect that collaboration usage would stay up. And we offer multiple models for collaboration usage based as well as license-based depending on the platform. So -- but yes, I would hope that it stays up. We'll have to see how things evolve. I think we're still pretty early on. I don't think enterprises have really fully figured out how they're going to return to whatever normal is in the future.

Got it. Also on the call, your CFO, Neel Dev. He noted that CenturyLink "is leaning in on CapEx." And CapEx was over $1 billion. It was -- the CapEx rate was over 19%. That's the highest levels of the combined company I've seen. Help us understand what lean-in means as it pertains to investments in your network and your products?

Yes. Yes. So we have had higher capital spend in the first couple of quarters of the year. Some people have asked me is that COVID related? And it's not really COVID related. We did see an increase in usage that we had to react to in March and April. That did cause some increase in spend. But I'd say the lean-in comment from Neel is really based on the fact that we're willing to invest for our customers. We're willing to invest in hard, durable assets that help bring our customers on net. And that can take the form of adding buildings to our network, expanding our fiber network to new parts of the market, we've talked about the fact that we're investing in our intercity fiber in support of our infrastructure as well as dark fiber customers. So it's really -- if I had to characterize where the change comes from, it comes from those project-based investments that we're making -- and they're good investments for us. These are things where we can get a predictable return. So a lot of what we saw in the first half of the year were projects that were initiated in the second half of last year and first part of this year. Some of those are coming to a close. We'll continue to invest where we see a good return. We understand that connecting fibers to our network is an important part of what we do and an important part of our underlying service offers to our customers. So I would say that's where it's coming from and as Neel mentioned, we're willing and we'll continue to invest where we see a good return.

And the standard theme of CapEx, maybe a little longer term, with software-defined networking or virtualization or white boxes, whatever you want to call it, should there not be a long-term bias downwards for CapEx, maybe as a percentage of revenue. Just help us understand the long-term view of CapEx spend. And in turn, is that going to be spec based success based. I'm just trying to understand how CapEx and the trajectory can go in a longer view?

Yes, I think when it comes to SDN, I feel like, SDN is sometimes misunderstood when it comes to the capital impacts of SDN. I don't think SDN saves you CapEx. Software-defined network gives you more flexibility to meet the changing needs of customers. So you can -- but you still have to have a hardware to run it off. And in fact, when you deploy a box to a customer premise for a single-use case, you're probably not saving any capital, you're probably spending more capital, but you get the flexibility that comes with it. The flexibility that customers want in terms of adding new services to their portfolio of things that they buy from you. So SDN itself, I don't believe will drive down capital. But in terms of -- are helping understand the company's future CapEx spend. You asked about speculative versus success-based. We do both. I would say more of it is success-based. Where we have known customer demand and known customer orders, where we are deploying infrastructure to support those customers. That's not to say we don't do some speculative. We're actually pretty good at understanding where our demand is, and we've done speculative building adds, we've done speculative fiber expansions, and those have produced a good result for us. So we will continue to do some of that but most of our investment is directly as a result of known customer demand.

Understood. I wanted to shift to the Edge that you spoke about earlier. Actually, last year, when we hosted you in Boulder, a lot better than virtual, it was nice that -- there was a press release that just came hot off the press when we were speaking about your Edge services and your potential to tap the edge. And now we flash forward a year, you've announced 100-plus Edge sites, I saw, in the second quarter of '20 presentation. How do we think about CenturyLink's opportunity to be a leader in the Edge? And what infrastructure is currently in place that gives CenturyLink, a competitive advantage in the Edge?

Yes. We can spend the entire rest of the conversation on this. I'll try not to, but I sometimes get excited about the conversation and I could go on. But I guess, to give my perspective on why the Edge is important and why we have an opportunity in front of us for CenturyLink. I have to explain why I think enterprises need the Edge. And it really stems from 3 beliefs of mine. One is that the cloud has taught our enterprise customers that somebody else can run infrastructure for them. Several years ago, I think that was debatable, but today, I think, it's a proven fact that enterprises trust others to run infrastructure. So the willingness to let others run in Edge environment is there. The second thing is that the CIOs of our customers, they don't want to worry about anything other than their applications. It's the applications that drive their business. Worrying about network and security are a distraction for them. So to the extent that we can integrate application management with network management and security and make that seamless for them, I think there's an opportunity. Because it's the applications that really drive their business. The third thing that is very Edge specific is that applications that are in the Enterprise are becoming more performance sensitive and not less. As you take a look at companies leveraging robotics in, and Jeff talked about one of those on our earnings call, as you talk about the increasing data needs of customers and the analytics needs. As you talk about augmented reality, virtual reality, sensors. Those applications require a certain amount of performance, both in terms of latency and bandwidth. And the answer to all 3 of these drivers is, I think, Edge Compute with integrated network and security. So why do we have a right to play in this space? Why are we different? I think that we have a number of factors, a whole bunch of factors going there, in fact, in our direction. One is we can control the network. This ecosystem is going to exist because performance is important. Network is probably one of the biggest additions or creators of latency. If we can control the underlying network, we can control the latency. Those that can't control the network, really don't have control. So that's the first thing. We're connected to the cloud. And in fact, we're the underlying fiber infrastructure provider for much of the cloud infrastructure. So again, the most direct path, controlling latency. We have the enterprise connectivity, talked about the fact that we're willing to invest to bring enterprises on net. We have security products. We've got leading edge visibility into threats from those security products. We've got real estate that's connected to our fiber. We have cloud expertise in multi-cloud management with the acquisition of ElasticBox, a number of years ago, and our Cloud Application Manager and we've got experience and expertise in IT and managed services to bring all of this together for customers. So I do think that the Edge need is real. We're seeing the demand from our customers. We're seeing the interest from our customers. And when you look at companies who have the ability to put that whole package together including the network, including security. I think there's a small group of people who have the assets to do it. And I think we're one of them.

Got it. So you laid out the demand. I counted 8 reasons why CenturyLink can win. The question, I guess is, where are we? What inning are we in the demand? I think, Jeff Storey mentioned a few anecdotes on the call about Edge wins or retail Edge win or factory Edge win. Are we seeing true demand? Or are we still early? We still need enterprise education process?

We are early. We're very early. I think the market will grow considerably over the coming years. When we think about the set of services that we're going to sell for Edge, it's a full stack of services right. We can sell space and power. We can sell IT and managed services for what we call private cloud, standing up a custom implementation for customers. We can sell bare metal, we can sell virtualized containers, virtualized machines. We can sell multi-cloud management. Where we are today, from an edge perspective, I'd say is at that lower edge of -- lower end of services. It's more of the unique use cases. The ones that are coupled and integrated with IT managed services with custom implementations. But as we start to take our edge story out to customers, we're seeing interest. We believe the demand is there. We see customers that want to engage with us. Particularly when we can tell them the story about, we're going to let you manage applications, and when you manage application the network is just there. It's not a separate transaction. It's integrated with what you're buying. It just turns up on demand. Security is built in. When they hear that story, I think it's exciting for them and interesting for them.

And how do you envision the pricing and business model to work? Maybe example of the AWS Outpost partnership you guys announced? What's the go-to-market strategy for Edge services? How do you monetize the Edge?

So when we monetize it, it's going to be selling all of those services. We talk about them individually today. We talk about selling network individually. We talk about selling space and power individually. IT and managed services individually. Shared compute infrastructure. We talked about that individually, cloud connect. This is really selling all of those together and making them work together seamlessly. So it's packaging all of that. In terms of how the business models work, how pricing works, how that works with centralized cloud use cases and pricing there. I think there's a lot to still be worked out. And we'll figure that out as an industry over the next year or so because we are, I think, still early on. How things like being an AWS Outpost partner works for us is it comes back to the fact that we can deploy and manage infrastructure for our customers through that IT managed services, professional services offer. And so we'll monetize that through that, through the network, through the security, through the cloud connectivity and selling that end-to-end portfolio of services.

Got it. And you also talked about the 100 Edge locations you have now. And I think you guys posted that you have 95% of locations within 5 milliseconds. How far along are we in the Edge build out from a facility perspective? It's 100 out of how many do you envision? And what type of facilities are these? Are these like central offices?

Yes. Sorry, you did ask that question. I got so excited with answering some of the other ones. I forgot that -- to go back to that. Yes. So we did announce that we've identified 100 of our sites. Those are going to generally be what we call our gateways, our larger -- our larger buildings in major metro markets. And we have made those available for our customers. We've started to deploy the shared compute infrastructure into those locations. We're relatively early on that, but that's in progress. Those sites are available for our customers who want to do the more professional services, managed services engagements today. So we're early. Out of how many do we think we'll go to? We have a lot of real estate. We've got thousands of locations. We'll see where our customers drive us. And the way that we think about Edge is the way that I think about Edge, is from a latency definition. Those 100 locations are 5 millisecond Edge, 5 milliseconds within 95% of our Enterprise demand. There's also a 0 millisecond Edge, which is on-premise for our customers. We support that today as we deploy things like AWS Outpost or other server configurations on-site and manage those for our customers. There's the centralized cloud, which tends to be tens of milliseconds away. These are all locations that will support enterprises running their applications. There's also 1 millisecond edge. And that's where our thousands of locations come in. I don't know when demand will drive us there. If it will drive us there. We'll have to see where the market evolves and where we end up. But it very well could, and we have the infrastructure to support that, if necessary.

Got it. Just want to shift to 5G really quickly. I guess it's part and parcel for the Edge as well, but Jeff called out a win on a 5G fiber deal with a wireless carrier. What are you doing? Are these dark fiber IRUs? And what are they going to small cells? Or they go into CRAN hub? Help us envision what the 5G opportunity is for CenturyLink?

Yes, it's an exciting opportunity for us, I think. We've got strong partnerships with the 5G builders. And they'll come to us for connectivity. A lot of them are looking for fiber. And it's fiber on the front haul as well as connectivity services, including fiber, on the backhaul and core connectivity as well in some cases. But we do have some customers looking for lit services on the front haul as well, 10-gig lit services. So it's really a combination of both fiber and lit. If I had to predict, I'd say that probably moves more toward fiber over time as 5G networks get built out and get utilized more. The capacity needs will increase and drive more towards fiber or up from 10-gig services to 100-gig services. And so we're actively engaged with the wireless builders. They know that we're out there willing to support their builds with construction, with fiber with lit services. And even some of our other infrastructure, we talked about those thousands of locations. Those could be locations where wireless providers run their radio controller infrastructure on the other end of the front haul. We also happen to operate a lot of vertical assets in the form of telephone poles. How those play out in 5G build is yet to be seen. But we bring a lot of infrastructure to the table. We bring value to the table when it comes to supporting the 5G builders.

Got it. So it sounds like the big 3 wireless carriers are your main customers. I am curious, we just had DISH on Friday's earning call talk about their build out and then of course we covered Cable. Do you talk to DISH or Cable at the moment? I mean we're in the midst of the CBRS auction. And they're thinking about doing out facilities-based network deployment.

Yes. We're not selective about just talking to the big 3 wireless carriers here in the U.S. We're certainly willing to support others that want to get into or are in the 5G space. So we're not selective that way.

Okay. I wanted to shift to the fiber expansion, and I got a couple of questions coming in from the audience that are also fiber related, so I'll try to tie them in. But CenturyLink is creating a 4.7 million fiber mile intercity network across the U.S. and Europe. Help us understand the type of fiber that's being deployed? Is this metro fiber? Is this like we said 5G fiber, lateral lift buildings? Where is the major deployment? What kind of fiber is it?

Yes. That particular number that you're referring to is just intercity fiber. And so that's leveraging our multi conduit infrastructure to put new fiber cables into intra or intercity network. It doesn't include the regional expansions that we're doing. It doesn't include other metro expansions, building adds, adding capacity to our metro fiber infrastructure. So that would be additive to that number. And since we've released that number we continue to see dark fiber demand that's driving more builds for us. So that number has gone up. We haven't announced what that number is, but we continue to see strong demand that's causing us to deploy more fiber.

So is it success based, or is it spec built?

It's mostly success-based. There is some speculative, particularly outside of the innercity. Innercity is success based. In absolute success. Inside the metro, most of that is success-based as well. The -- inside the metro, most of that is success-based as well. We do a little bit of speculative, as I mentioned earlier, where we identify pockets of demand, where we know if we build that we will get the sales that we want there, and those are expansions and building adds, but mostly success.

And you mentioned dark fiber revenue, can you maybe talk about the trends there in the growth perspective? Lease-up, as dark fiber -- do you lead the dark fiber sales? Is it something you do when the customer wants it? How do you look at dark fiber and the growth trajectory for CenturyLink there?

Yes, when we engage with a customer, we'll engage and understand what their needs are. And we have a subset of customers that want to build backbones. And when we're engaged in a backbone conversation, we'll fit the solution to their need. And in some cases, that's dark fiber and in some cases that's lit services. So it really varies, I wouldn't say we lead necessarily with anything, we come in and understand the need and fit the need. I don't think we talk too much about specifically our dark fiber revenues. That's something that you'll have to wrestle out of Neel at some point, if you want those specific numbers. But dark fiber is a good supporting business that helps us be in the end-to-end provider for our customers. It's just a part of our overall portfolio and it's good business for us.

All right. I'll wrestle it out. I've been working out. I wanted just to switch gears on fiber though, to the consumer world of fiber. In May, I think you called out expansion of your fiber equipment to 400,000 residential small cell locations, but it's still a small portion of your base, I think, 2.4 million homes out of out of 20-some-odd home passed. Why so limited? I mean, we just put out a report actually this morning saying, I mean, it's economics, the cost per home passed is fairly high. And then you're going in and competing against Cable, who's got DOCSIS 3.1 with possible 10-gig speed. So can you help us understand how you think about the fiber build out, the cadence of the fiber to the home build out for CenturyLink. And the economic decisions you make to deploy that fiber?

Sure. Yes. So the way I look at our consumer fiber builds. And it includes single-family homes in established areas. It includes new construction, and it includes multi-dwelling units where we have contracts with apartment owners. And so the way that I look at it is the same way we look at all of our investments, where can we get a good return? And there are parts of our infrastructure where we can build fiber at in a way that's cost-effective for us where we get a good return. And those are the areas that we focused on. I think, it's been called, I think, maybe we called it micro-targeting in our earnings announcement or previous discussions. When we look at the opportunity with those consumers, we not only just look at the consumer opportunity, we'll look at the small business opportunity. We look at the tower opportunity when we choose where to build. We look at the aggregate of that demand. And so we have identified locations where the cost to serve will get us a good return. And that's where we're focused. We have more opportunity out there. So I do expect that this is something that we will continue to invest in, when the opportunity presents itself and it has the return profile that we like.

So it sounds like multiuse fiber is key. You want to use it for other opportunities and other verticals?

Yes. We look at the aggregate demand.

I wanted to move really fast to security. Just help us understand the change in data security demand that we've seen with COVID and then in this 5G Edge world, help us understand the new normal that will essentially play the role of security?

Yes. We've been focused on security for a while. We've been building out our security profile. One of the things that the people have asked me about and have wondered about is has the whole pandemic changed the security environment? And I think it has, in some respects. But largely, it hasn't changed. The threats may look different, but the threats are similar and threats morph all the time anyway. The phishing attacks that might be out there trying to get people to click on links. They may be COVID related now. Sometimes they're natural disaster related. The bad guys out there are opportunistic, and they will take advantage of fear and try to take advantage of people. But the underlying threats and the attack vectors are similar. Where I think it may be a little different is that as people work from home, one of the things that I think enterprises face is, people are using their own infrastructure, their own computers to do work. And does that create a security exposure for enterprises that they need to worry about. That same computer might be something that the work from home people are using at night to consume other types of content and some -- in doing their personal e-mail that may not have the same sort of e-mail filters that enterprise networks have. I think that's something to think about. And how can we, how can others help enterprises feel more secure in this type of environment where the threats for people's home may be a little bit different than the threats for an enterprise workplace. So that's a product area to think through.

And another product that you touched on CDN, you saw growth in CDN services. Where are you seeing this demand. This is obviously from debuted workforce environment, the VPN, is it more over the top video? Where do you play in the CDN space and where you're seeing this influx?

Where we're seeing it primarily is in over-the-top video and gaming. And when people were first sent home in early March, we saw a big increase. I think as people are -- locked themselves in their house, and they weren't going out to the movies, they weren't going bowling, they weren't going out to dinner, they were inside the walls of their home, and the entertainment that they consumed, whether it be gaming or video, increased as a result. And so that -- a lot of our CDN growth came from things like that. I think we're seeing a little bit of tapering of that. I think it's an indication that the economy is returning a little bit more to normal. People are getting out a little bit more whether it's going to restaurants outside or going on more walks and taking more advantage of outdoor activities as they feel safer. It's a slightly changing dynamic, but I'd put it in the gaming and video, clearly.

Got it. I wanted to change gears and talk more about the secular challenges that preceded even the recession that we're in today. And that's the larger ILEC spacing technology shift. The one we spoke about last year. The private, the public networking. UCaaS and the cloudification of network services and internally caused those pricing pressure. So we asked a similar question last year. Help us understand how the network is evolving and how CenturyLink is evolving to manage these secular declines. Because you have legacy products with high margins. And how do you keep that margin preservation through the evolving needs of your customers?

Yes. I'd say generally is by supporting the transformation that they're going through, and making available to them the services that they need to deliver on that transformation. Whether it's things like SD-WAN or UCaaS or Edge Compute or dynamic networking services cloud connect as they move to the cloud, additional security services. We absolutely are seeing and will see decline in some of those legacy products. And you can see it in our revenue, certainly.

Is that accelerating? Sorry to interrupt -- is that accelerating because of the distributed workforce? Are we seeing more SD-WAN more public networking as a result?

Yes. So I think it's accelerating. How much of the accelerating is actually due to COVID, I think, is unclear. And what the future holds, I think is equally unclear. I think it's a continuation of existing demand. I think the opportunity is greater than the risk for us in the long run, though. I think we have more opportunity to catch a -- capture a larger part of the market. One of the trends that I've noticed is, I've talked to customers is, they're really taking advantage of this time now to transform their business. To clean up their UCaaS offers. To clean up their private versus public use cases. Migrating services to the cloud that they want to migrate to the cloud. So while they have very attentive workforces that are paying attention to communications about work-from-home, return to work. How to get access to the applications that they need to do their job and the disruption that that's occurred that this has created? IT decision makers are, in many cases, accelerating that transformation. And I do think that turns into an opportunity for us.

How should we think about the margin profile? I asked a similar question last year. And has anything changed in terms of managing the margin mix shift because you're -- when these enterprise customers or any customer is going to more public networking, there seems to be a narrative that the legacy NPLS or private lines margins sort of go away and it gets a little more challenging.

Yes, I'm going to make you wrestle that one out of Neel as well from a specific number standpoint. But the way that I'm looking at it is, if -- let's say, the margin profiles shift, and I don't think they necessarily have to shift for the worse, but let's say that they shift. There's more service opportunity available to us. Take public networking. It used to be that when somebody bought a public network connectivity, they just bought the connectivity. Now you have the opportunity to sell additional services that go along with it. People still want private networking to go along with it, so you potentially are still selling private networking. You're selling SD-WAN, which is a managed service on the premise, which includes the management of a device on-premise. And there's a revenue opportunity there as well. So I don't think it's a one-for-one type trade as people switch out those services. It's a matter of capturing the opportunity that that shift creates.

And on the topic of margin, I wanted to shift to the cost savings initiatives. Last week on your earnings call, it was a bit of a surprise, there was a pull forward of some the cost savings, I'm talking about the $800 million to [ $1 million to ] $1 billion 3-year cost initiatives, which in the first quarter, Neel Dev noted there could be a delay to it. But then, of course, this last print, you guys accelerated so much cost. What are the key ways in your organization that's contributing this saving initiative?

I'd say what's really important for us and what my organization is contributing to is the automation of our business and the operational efficiency that that ultimately creates. So -- and creating the digital experience that lets customers self-serve. We have our adapter networking products. If you think about how we're building our Edge Compute products, it's all around automation. It's all around customer enablement. The fact that we don't have to take customer orders and push them through a process. We enable customers to consume services on their own. That's a reduction in operational cost. So there's -- our whole digital strategy fundamentally will take cost out of our business because there's less hands needing to touch as we create automation. So my team is a big part of supporting that automation. And we also do the job that we've done for a long which is continue to look for new technologies that take capital cost out of our business and make us more efficient there. Higher speeds, lower unit cost, more automation.

So I think we're out of time. So we'll leave it there, Andy, thank you so much for participating, and thanks, everybody, for listening, and enjoy the rest of your summer.

Great. Thanks.