Mercury Systems, Inc. (MRCY) Earnings Call Transcript & Summary

Okay. Good morning, everybody, and welcome to day 3 of the Goldman Sachs Industrials and Materials Conference. This is Noah Poponak. I am the aerospace and defense equity research analyst, here at Goldman. It's my pleasure to kick off the next session out of aerospace and defense with Mercury Systems. With us from the company is Mark Aslett, the CEO; Michael Ruppert, the CFO. These gentlemen are going to go through a few slides for the first few minutes of the session here, and then I'm going to conduct a Q&A session with them. For anybody who is on the webcast, you can e-mail in any questions you have through the webcast link there, and I'll see them on my screen, and I can then ask them of the team. And with that, Mark and Mike, thanks so much for being with us, and I'll turn it over to you.

Thanks very much, Noah, and good morning, and welcome, everyone. We're very pleased to be here today. Beginning on Slide 2. The presentation itself does contain some forward-looking statements. And due to risks and uncertainties, the actual results may differ materially from what you see on here today. So please take the opportunity of reviewing our safe harbor statement, or for additional disclosure on our risks, you can look at our Form 10-K. Turning to Slide 3, just a brief introduction to Mercury. The heart of what we're doing today is really pioneering a next-generation defense electronics company. And we've created a very unique business model that is sitting at the intersection of the high-tech world and the defense industry. And our goal is to make those high-tech innovations, that are occurring, profoundly more accessible in terms of speed and time to market, the risk associated with developing new capabilities and the affordability to make it profoundly more accessible into defense. From a capabilities perspective, we build very sophisticated computing software systems that go onboard military platforms. We do that on the sensor processing side of the world and increasingly in what is known as the C4I market, which stands for command, control, compute, communications and intelligence. And the difference between processing and the commercial world and processing and defense are the concepts of trust and security. And so we have a trusted domestic supply chain, and we've got industry-leading embedded security capability. Our customers are primarily the major defense prime contractors. We're serving their increased outsourcing needs on some of our nation's most important programs and platforms. We've got a very strong financial track record. Over the last 5 years, we've been able to grow total company revenues at a 26% CAGR, delivering 10% organic growth on average over that same period. We've been able to grow our profitability, shown here as adjusted EBITDA, far faster than what we've been able to grow the top line. I'll describe why in just a second. Now Finally, we're very proud of the fact that today, we enjoy the defense industry's highest current employee Glassdoor ratings. This is particularly important in the war for talent. But it's also helped us out as we sought to acquire and to integrate businesses into Mercury as well. Turning to the next slide, Slide 4, just a brief investment highlight. So as I mentioned, Mercury is really a very innovative company. And we're also a growth company inside of the defense sector, which is a little unusual. We focused the business really on 2 large and faster-growing segments of the defense electronics market, that has been Sensor and Effector Mission Systems as well as C4I. And we've created this very unique business model that includes internally funded levels of R&D that are far higher than the industry average overall. And we are developing and pre-integrating our own technology that allows us to produce capabilities far more quickly with lower risk and far more affordably than the more traditional way of doing it. And it's really this model and the high level of internally funded R&D is driving the growth in outsourcing and outsourcing by our customers is by far the most important trend in terms of our overall growth. We've got very sophisticated, secure computing capabilities, again, developed by a highly cleared workforce. We're spending CapEx at 2 to 3x the industry rate, and we've used that money to build out trusted domestic manufacturing facilities as well as a trusted supply chain. And we've begun this 7 years ago. And so clearly, in light of what's -- everything that's happened with COVID and the impacts of supply chains, I think, the investments that we've made will become even more important going forward. And then as I mentioned, we have become a destination employer and acquirer of choice. From a growth perspective, we've got simultaneous expansion strategies going on inside of our market. So the first major shift that we have done is kind of moved from being a product company originally to now selling more complete subsystem solutions at the Tier 2 level. As we kind of transitioned up a level in the industry, that has driven very large dollar content increases on various programs, which has been the primary driver of growth. And again, that's tied to outsourcing at the subsystem level. Simultaneously with that, we have basically moved into other adjacent markets and moving into other programs and platforms with similar needs, which is increase the size of our addressable market. And most recently, we see the opportunity of kind of replicating what we've done as we've moved from being a product company into subsystems, but now doing the same thing at chip scale and driving open systems architectures at the chip level, which has the potential of driving the future highest margin content expansion opportunity inside of our markets. M&A has also been a very important part of our strategy. We have done 11 deals and deployed over $800 million of capital in acquisitions over the last 5 years. Because M&A is an integral part of the model, we built the in-house deal origination, execution and full integration capability. So we are a full integrator. And that's primarily the reason because of our ability to extract cost and revenue synergies that our revenues have grown at a 26% CAGR, but our EBITDA has grown at a 46% CAGR. So we're doing a very good job, fully integrating the businesses and extracting those costs and revenue synergies. We've typically got multiple M&A themes going on in parallel. And we believe that we have created a very scalable business platform that will allow us to continue the model and the profile that we have created. So moving to Slide 5, and you see the financial profile here in the inverted pyramid on the left-hand part of this slide, that really does demonstrate the uniqueness of the strategy. And so it's a very simple model. We're seeking to generate high margins, expressed here is greater than 20%. We're looking to grow our business organically, on average, over time, at high single digit, low double digits. And then we're seeking to supplement that high level of organic growth through acquisitions to deliver 20% total company growth on an annual basis. If you look at our actual results on the far right-hand part of the chart, you see that our actual results have been either in line or above the profile itself. So 22 points of margin, 28% total company growth, averaging 10% organically over the 5-year period, and then 20% growth on an LTM basis. If you compare our results, just 1 column to the left of an index of Tier 2 defense companies, our results are far better than the defense industry on average. And if you compare our results with all publicly traded companies of a similar size, shown here again at the top, above the pyramid, whose market cap is between $1 billion and $7 billion, irrespective of the exchange or the market in which they're operating, there are 1,140 of those companies in that size range. If you start to progressively apply the filter shown in the inverted pyramid, what you'll find is that Mercury's results are not only some of the top end of the range in terms of the defense industry, but we're actually in the top 3% of all publicly traded companies. So we think that we have created a very unique model. And this is obviously our goals and our objectives as we move forward. So with that, I'll hand it over back to Noah for some questions.

Super. Thank you, Mark, and thanks for that. That's a great overview. If I look at the financial model of the company looking backwards historically to try to sort of assess how it went the last time, there was a defense budget downturn. The company experienced organic revenue declines early on during the last defense spending downturn. Now today, it's clearly a different company. It's a much larger company. There -- it's more diverse with the acquisitions that have been made since then. But I guess my question is just how different today versus then? And if I gave you the hypothetical of, you're going to see 5 years where DoD outlays are down 3% to 5% a year, each of those years, can Mercury still have positive organic revenue growth in that type of environment.

Yes. So it's a good question. So the last downturn that we saw was back in 2013 and the impact of sequestration and that was meant to be the doomsday machine that was so terrible, it would never be implemented, yet it was implemented. And I think what we saw is that our customers weren't really impacted too much. But as you went down the industrial base, the magnitude and the amplification of the effects of sequestration that were felt more strongly. So we were impacted at the time. But as you mentioned, we are a very, very different company today. We are dramatically larger in size. We have got many, many more programs than what we had back then. So I think we had a few programs that we were highly dependent upon. Today, we've got over 300 different programs. Probably one of the biggest learnings that we've had coming out of sequestration for a relatively short-cycle business that we are, is the importance of having a backlog. And our backlog, as you know, because we just reported our third quarter, is at record levels. And so many more programs from a diversity perspective with a record backlog is a good combination. Now I don't think we expect, going forward, the investment outlays are going to be down 3 to 5 points a year for several years. And I know it was hypothetical. I think, right now, as we've said, we continue to expect kind of low single-digit growth. But obviously, with the massive fiscal stimulus, it's unclear what's going to happen. Now if you turn back to the company and think about our ability to grow, what we have shown is that we've actually been able to grow the business in flat to down budget scenarios. And the reason being is that we're not exposed to the overall marketplace. We have chosen the markets in which we're going to participate quite quickly. Those markets are growing more rapidly than the overall defense budget. And whether it's new platforms or modernization, we kind of get to benefit from both. In addition, I think, today, compared back in 2013, we're seeing a lot more outsourcing and outsourcing actually ends up being the largest cyclical or -- secular, sorry, not cyclical, secular growth opportunity that we see. And it's really what is driving our growth. And so even if the budget did -- was impacted and started to flatten or maybe slightly decline, we think that's actually going to drive even greater levels of outsourcing because there's going to be more cost pressures. And the whole reason that our customers are actually outsourcing more to us is because we can do things more quickly and more affordably. So I think we can continue to grow even in a more challenging budget environment now.

Okay. Yes, that's great. If you take these -- sort of these big trends that you've described driving the growth in your business. So from product to complete subsystem, the outsourcing of those subsystems, the move into adjacent markets, where your technology can apply open systems architecture at the chip level. How penetrated Mercury is into those processes? Because if it's the seventh inning or I'm not sure if it's second inning that can give us a better sense for the duration of the sustainable growth you're seeing as these play out?

Yes. So it's a good question. So we're participating really in 3 major areas today. The market that we have been focused on, the longest, is what is known as the sensor processing or Sensor and Effector Mission Systems market, that is to do with providing higher performance processing for the different types of sensors that go onboard military platforms. And here, we're providing more complete multi-technology subsystem solutions. That is in a constant state of refresh, right? So as they are bringing in new and more advanced sensors to deal with the emerging threats, as we pivot towards Asia Pacific as part of the national defense strategy, I think, there's still a tremendous opportunity for growth there. More recently, we have moved into 2 other parts of the, what is known as the C4I marketplace, specifically, providing the computing capability for what is known as C2I, so command, control and intelligence processing. This is actually a larger opportunity then Mercury's traditional market. And we're really just beginning to scratch the surface there. The other one where we've done a couple of deals in the space, and again, we're at the very, very early stages, is in platform and mission management, which includes avionics processing. There's an enormous opportunity there. And so technology, the military uses is really a force multiplier. And these processing architectures are really the brains of the system. And it's what enables a lot of new capabilities. So we think that there's an enormous opportunity for us to continue to grow. That's kind of our, call it, traditional markets. The chip scale is a very exciting opportunity for us. And, yes, so we're obviously providing trusted microelectronics capability today. And with some of the innovations that's occurring in the tech world, specifically, the shift from what a monolithic-type ASICs into more chiplet-based architectures, where you can combine different die together from different companies, but it chip-scale to create chip open-systems architectures for the defense industry in radar, EW, SIGINT or COMINT applications. This is an enormous opportunity and could continue to allow us to expand our content footprint, again, selling into the same program, same customers, same platforms. So we see a significant opportunity for us to continue to penetrate. And I think to go back and directly answer your question, I think, we're in the early stages across really all of our major markets. So there's still a lot of opportunity for growth.

It sounds like it's kind of open-systems architecture on top of open-systems architecture. It's at the chip level and at the subsystems level.

It's true. Yes, it's a great point because it's absolutely true. So think of us as being able to provide open-systems architectures from chip scale all the way up through systems. And that's our -- open-systems architectures allow for the more frequent and more rapid and more affordable upgrade of capabilities. And we're a leader in the space there.

If I look across the industry at how the year-to-date has gone and sort of what came out of March quarter results, most defense companies had minimal impact from coronavirus-related disruptions, but almost all had some. And it seems like Mercury had very little, if any. And so, one, what is it about the business that makes it sort of even less disruptive than the average defense company, I guess? And then, two, do we need to be on guard at all that whether it's the DoD, kind of, bit of a scramble mode to do some of the things they're doing to help the industry or just priorities focusing elsewhere temporarily that there's any disruption to your business or any of the trends you're talking about here? Or are these just kind of mega trends that are sort of happening in almost any environment?

Yes. So look, I think, from a supply chain perspective, we moved in hindsight, I think, much more rapidly than most companies. We began our COVID-related supply chain mitigation activities in early January. And that obviously ramped as -- after the quarter continued. We, I think, also in hindsight, moved much more rapidly than some of our customers did to mitigate the potential impacts to the health and safety and the livelihoods of our employees, which really was our primary goal. And as we did that, we shut down travel and things much more quickly, stopped business visits to our important manufacturing facilities, improved the distancing in those facilities by transitioning 60% of our workforce to work from home, again, much more quickly than what some of our customers did. And we had a coordinated response at the enterprise level. And I think as a result of that, we haven't had any material impacts inside of our facilities or events that has allowed us to continue to deliver great results. As I mentioned as well, we also have spent significant capital expenditures over the last 5 to 7 years building out our own trusted domestic manufacturing and supply chain, and a 93% of our direct supply chain is domestic. So we've actually had very little exposure to some of the disruptions from overseas that other companies have had. And so I think it's the work that we did around the supply chain over the long term, coupled with the speed at which we moved in the short term, that has allowed us to buy down risk. Now that doesn't mean that we are immune from risk because I think that would be foolish for us to think that way. I don't think that the risk, to say, is related to anything that DoD might do differently as a result of COVID and changing of priorities, we don't necessarily see that. I think the defense industrial base, of which Mercury is a part, is deemed to be essential, and we estimate that 90% of the suppliers that provide capabilities to us have also been deemed essential. So the risk is lower. But that said, we are tracking literally down at the component level, the risk over multiple quarters. And we have done multiple things to try and mitigate that in the short term. And I think that the operations team have just done an amazing job. But if I were to kind of summarize what I think the risk is, it really is in terms of the potential impact to our supply is of a COVID-related event in one of their facilities or a COVID-related event in our facilities. That said, I think, again, we've done a tremendous amount to try and reduce and mitigate that risk. And I think it's showing up in our financial results.

Okay. Great. That's really helpful. Mark, in your opening overview, you mentioned the importance of trust and security in your part of the technological input into military encrypted products. I -- I'm wondering if on -- at this conference, we've heard a lot of companies outside of the defense industry starting to talk a lot about onshoring. And the President yesterday, I'm sure you saw what the President said about the F-35 yesterday. And so this is just picking up a lot of discussion. Is this -- I don't actually have a great sense for exactly how much at the Tier 2 and Tier 3 level is not domestic in defense. Can you speak to that? And is that an opportunity for Mercury Systems?

We do believe it's an opportunity, Noah. And we've been at this for quite some time. And you're first talking about trusted domestic manufacturing, the importance of that, coupled with the need for, not just high-performance processing, but secure high-performance processing, and we are an industry leader in being able to provide those critical technologies that are developed and produced here domestically. And so we think that the onshoring is going to be a trend that continues. And we are probably best positioned right now, given the work that we've been doing over the last 5 to 7 years to take advantage of that. The chip scale 1 is interesting because the -- I think it's going to take time for that silicon that is currently manufactured offshore to be built or to be manufactured here domestically. And what we have seen is that the actual risk, from a defense perspective, may not be at the die level, but certainly at the packaging level where different capabilities could be added for the various reasons. And it's a major reason that we have basically built up our facility in Phoenix to be able to combined together, as I mentioned, dies from different companies and to package them and to add the embedded security capabilities. That would allow us to create very unique devices for use inside of the defense industry here domestically. So I think we are -- have a strategy that will benefit as the silicon industry kind of morphs into more onshored development and manufacturing. And our goal is to combine and to take the best of what's available in the high-tech world and transform that for use inside of the defense through our trusted supply chain and with the added benefit of security. So we think that we're in a very unique period of time and are very well positioned. And in fact, if I look at what's really driving the growth in the business right now, it's that concept of security. Secure processing is hugely important, and we're a leader in that.

Okay. Mike, let's pivot to you for -- talk about the M&A strategy, and then I have a few other questions in the financials. So on the acquisition front, I think the company has been a little quieter than the market was maybe expecting before coronavirus, understanding that you remain disciplined to a construct and that the timing can always be lumpy. But the net cash position on the balance sheet, and you discussed sort of always wanting to be proactive. Does the current backdrop just kind of turn off deal flow across the board for some temporary period of time? Or could you do a deal tomorrow if it was there? And what's the overall pipeline look like right now?

Yes, sure. So as you know, Noah, M&As are our #1 capital allocation priority. I think we've -- over the last 5 years, we've done 11 deals, deployed over $800 million of capital. We think we've created a lot of value to that. And when Mark went through the inverted pyramid, that really is our financial model, the third part of that is supplementing the organic growth with M&A, and we're going to continue to do that. In terms of activity, and prior to COVID-19 hitting, we were extremely busy. I mean we closed APC in September of last year, which is American Panel Corporation. We were very busy at the end of last year and the beginning of this year. As we've said, we've never been as busy as we were, that's why we did the equity offering last May. As you said, we're disciplined. And so all that activity at the end of last year, beginning this year, we're extremely busy, but we ended up passing on a handful of opportunities because of valuations or the risks that we saw in the deals. And so we're continuously looking at risk-adjusted returns, we'll continue to do that. Now when you look at the current environment and even coming into this quarter, even though, we passed on some deals over the last 6 months, the pipeline was really robust, and it still is really robust. When COVID hit, obviously, that slowed things down. I think buyers as well as sellers were focused on mostly the same things, which is taking care of the people and making sure that we're reducing risk in our business, as Mark just talked about, with supply chains and our own facilities. And so that definitely has put a pause on M&A activity. I think that there's going to continue to be a pause for a period of time because I think that we need to get some predictability to both near-term earnings and future earnings of potential targets. But I think coming out of it, we're in a net cash position. We still have a lot of targets, a lot of opportunities and we're, as you mentioned, in a net cash position. So we think that we'll continue to look at acquisitions, that the activity will pick up, it really is a question of when. And is that a month, is it 2 months? But we can be doing work in the background, and obviously, we are.

So one of the things I'd just add to that, Mike, right, and that we've discussed, is we actually think there's probably going to be more opportunities, right, going forward than what there was before. Because yes, I think, there are companies that probably having gone through this, particularly that are private, are going to say, maybe now is the time to take advantage and to sell the business. And we think that we're a very attractive place to land, given the financial strength that we have demonstrated, but also, as we talked about, the cultures and values at Mercury is an integral part, I think, of the attractiveness of being acquired by Mercury, but also the sustainability of what it is that we've created. And so I think there's actually going to be more M&A opportunity as a result of what's just happened going forward, Noah.

Yes. That's really interesting. And I'd imagine in your end market, probably a greater ability to act on that sooner than later versus some other end markets, where you may have businesses that don't want to kind of sell at the bottom, whereas, if defense, as an end market, is more resilient as soon as the sort of just capital markets are open, you could maybe act.

Yes. No, I agree. I agree with that. And by the way, I've mentioned near-term and long-term predictability of earnings. We are in the defense industry, which appears to be and offer more visibility than others.

Yes. Okay. Mike, maybe give us an update on where you see the profit margins of the business from here. I know you've -- in the current fiscal year, there's elevated R&D that has the margins flat year-over-year at the adjusted EBITDA line. Last year, that margin was down a little bit, while R&D was also down, so the gross margin was down. So just with all the moving pieces there, I guess, as we look forward, is there elevated R&D, again, next year or not? And just sort of level set us on where you see the gross margins and the EBITDA margins going for the business over time?

Yes. So you're right. I mean if you look back at fiscal '19, we had some moving parts; and entering fiscal '20, we had guidance for EBITDA margins that were relatively flat from fiscal '19, as we continue to invest in the business. And as you mentioned, R&D this year has been up significantly as a result of all the opportunities that we've had. I think in the last 12 months, R&D on a dollar basis -- IRAD on a dollar basis is up over 40%. When you step back, what we're really focused on is those EBITDA margins because there are some movements between gross margins were of customer-funded R&D and internal R&D. We're -- we've talked about it at Investor Day, and again, going back to the financial model and the inverted pyramid, our goal is to expand EBITDA margins over time. And there's a page, actually, in my section of the presentation that provides a couple of key points in terms of how we're going to do that. And we think we have a clear path to do that. Now as I've said in the past, Noah, there's 2 headwinds that we see to margin expansion, both of which, we believe, are good things. The first is higher R&D, which we saw this year as we had new design wins and new opportunities. If that level of activity continues to grow, that could increase R&D, but it will drive additional organic growth over a period of time. So that's a good aspect of the business model right now. And we hope that continues. The second could be acquisitions, that would be slightly below our target model, but where we have an opportunity to create significant value. And the Germane acquisition was a great example of that, where it had lower EBITDA margins when we bought it, but we were able to recognize significant synergies by integrating it into Mercury and integrating it into Themis, and we think we've created a lot of value doing that. But it did have some pressure on margins in fiscal '18 and fiscal '19. But overall, if you look at the 5-year plan, I think, we've got a really good path to expanding margins for a variety of reasons, operating leverage, program mix as well as continued acquisition integration, and that's our goal.

Okay. Great. That's helpful. Mike, one of the other companies in the industry, here at the conference yesterday, highlighted something that I'm not sure everybody looking at the industry or whether this applies to any company. So I'm just not sure how much people are aware of this. But their point was, in tax reform that was past a few years back, that starting in 2022, R&D will be required to be amortized over a 5-year period as opposed to expensed each individual year. And therefore, companies with any R&D and, especially companies with high R&D, which Mercury is a company with higher R&D, for cash tax purposes, it would give you higher income, therefore, higher cash taxes and therefore, would be a negative impact to the 2022 free cash flows. And then, I guess, over that 5 year -- the first 5 years of moving to that methodology, it would just be a smaller impact each year and then in year 5, it would all line up. Is that your understanding of that? And I guess, how should we think through that for Mercury, where there is high R&D?

Yes. So I'd start out by saying we haven't guided long-term cash flow or long-term tax rates. We have guided the 50% free cash flow to adjusted EBITDA, which is our free cash flow conversion. But obviously, we're aware of that new rule. It could have -- and as you said, it requires the amortization for tax purposes over 5 years rather than expensing in the first year. That could have an impact on cash taxes. But I'll tell you, Noah, there's still a lot of ambiguity in the rule. And we're still working through the amount that would be required to be capitalized in its impact. As we get closer, we can discuss that more. But again, there's -- and I think the other company mentioned this, too, a lot of ambiguity in terms of how you treat labor and salaries, which is a big portion of our R&D expense. So I guess, I'd say, more to say about that at a later date. But overall, if you look at the free cash flow conversion of the company today, we feel very good about where we stand.

Okay. Great. Yes. I mean, could still be reversed, really only has its maximum impact in 1 year...

Yes.

Sort of a timing thing versus something that you'd expect the stock market to capitalize in a DCF, but also something that I'm sort of hoping to bring up, just so people know it's coming and can -- not be surprised.

Yes. And Noah, when you mentioned DCF, obviously, the long-term tax rate isn't impacted by this. It's a short-term kind of over that period of time item.

Right, right. Great. We are almost out of time in the session. So I just want to ask one more question of you guys. Mark, in your opening, and you've mentioned this before, and I know you take a lot of pride in it, which is the Glassdoor ratings and the culture of the company. It's an industry where there's really just a lot of really good companies with good managements and clear, good cultures. So it's not a low bar to have achieved that. So how do you achieve that? I mean, how is Mercury and even more favorable destination for employees in the industry versus other really good companies in a high-quality industry?

Yes. Look, it's -- I mean, it started at the top, right, that we've got a real focus on creating an environment, which is the culture and the values that we have that allows people to come in and do their best work each and every day amongst a brilliant set of colleagues. And if I were to kind of summarize the culture, I kind of boil it down to 3 things: Mercury is a very innovative place to work. And so we're innovating on -- in technology, but also, as we've demonstrated, we've got a very innovative business model that is producing great results. So we attract innovative people; the second is that as a team, I think, we are insanely focused on delivering outcomes. So we're very result-oriented business; but the third part of the culture, which, I think, is a real positive is helping and caring for one another. And I tell you that the way in which we responded during the COVID crisis to take care of our teammates, is just -- the response back from the employees has just been amazing. And I don't know if you follow our Glassdoor scores, but they've literally -- they're already industry leading, and they've increased substantially over the last couple of months. So -- and it's how we've responded, right? I mean, taking care of the manufacturing folks, paying them. And if they were impacted in any way, we set up a $1 million emergency relief fund that we've made payments to folks. So they were able to build supplies in the initial part of the crisis. And since then, the fund is being used as many of their family members have been impacted and laid off. And so that genuine caring for employees has really shone through, and it's the heart of what we do. And for me, culture -- the cultures and the values of an organization is all about sustainability. And I think we're doing a very good job at it. And during the crisis, we were due to take our employee's survey -- engagement survey, and we're like, no, no, should we do it, right, in the middle of a pandemic? And we did. And we saw at least a 15-point increase in terms of the level of engagement for employees. So I think it starts with how you take care of employees, and cultures and values aren't just a poster on the wall at Mercury, it's really we're living them. And it's that trueness to who we are, I think, is what is demonstrated in our results.

Super. That's really great. Well, listen, we're out of time. So thank you both so much for joining the conference. We really appreciate your time, and I hope everyone has a great Friday.

Thanks, Noah.

Thanks, Noah.