Mettler-Toledo International Inc. (MTD) Earnings Call Transcript & Summary

All right. Good morning, everybody. I'm Tycho Peterson from the life science team. It's my pleasure to introduce our next company this morning, Mettler-Toledo. [Operator Instructions] And with that, let me turn it over to Shawn.

Yes. Hey, thanks, Tycho. It's great to be with you today and hope everybody on the call had a nice holiday. Similar to the past, we'd like to kind of start off by providing an overview of our business, our competitive advantages and an update on our growth strategies, and then we can open it up to Q&A. Before we get started, I just have this slide here to remind everybody of our forward-looking statements. And then we'll kind of jump into it. So as you look at this chart, we've had a very long track record of strong performance, really great chart, similar to what you've seen in the past. We believe we are also emerging from COVID and have leapfrogged our progress on digital marketing approaches that continue to be highly effective and allow us to gain share. So again, we feel like we've had a really good track record, but we're also emerging a bit stronger here. As we reflect on our performance, there are also a few key items to keep in mind. First, we have an organic sales growth focus that benefits from our highly fragmented markets in our installed base. Second, we have long-standing growth strategies that are well ingrained throughout the organization. We also have -- we also benefit from tremendous diversification. You've heard us talk about diversity in the past. But it's very much in terms of our customers, our products, the applications we serve, geographies and also our competition. And then finally, we have a culture built on continuous improvement that -- when you think about continuous improvement, that means gaining a little bit more market share each year, constantly bringing new products to the market and enhancing our margin and productivity initiatives. And also, it also means that we have a culture based on execution. And we believe our culture has continued to shine particularly brightly over the past 2 years as we've kind of demonstrated our agility and resiliency as we faced some of the most challenging conditions in our history. Now let's kind of go to the next couple of slides here, and we'll talk about our product portfolio. So we'll start with our lab business, which represents about 55% of our total sales. You can see we sell a wide variety of personal instruments, with dedicated sales specialists used by chemists and scientists in research, quality control and testing labs. We also sell instruments and scale up in production. These instruments are frequently used on a daily basis and are often the most highly used instruments in a lab, including pipettes, balances, various analytical instruments, as well as process analytics and automated chemistry. When you think about the breadth of our instruments, it's very evident when you think about the fact that we can supply up to 40% of the instruments on a typical lab bench. And then we also have many synergies within our portfolio regarding cross-selling, service, man-machine interfaces and our LabX instrument control software. LabX, as you've heard in the past, networks our instruments and also addresses 2 key challenges in a lab. The first is increasing productivity and the second is enhancing data integrity. Our most updated version of LabX can also accommodate 60 instruments. And we're finding that software is increasingly becoming a deciding factor for our customers in choosing a supplier in their lab solutions. This next slide is an overview of our industrial business, which represents about 40% of our total businesses -- of our total business. As you know, there's 2 pieces to our industrial business. The first is core industrial, which is about 60% of industrial. This covers a broad range of customer needs and production. We sell a wide range of weighing scales, terminals and software into a variety of manufacturing environments. We are also seeing increased demand from customers for automation in productivity solutions within core industrial, which has bode very well for our offering. Historically, this business has been more sensitive to the economy versus our other businesses, but we have a better mix versus the past and we've also benefited from reallocating resources to more attractive market segments, although it's important to note that we are also not immune to the economy. In the center of this slide, you see product inspection. So this represents 40% of Industrial. And this is sold principally to food manufacturers, about 70% of that business is food manufacturers. We sell a broad range of instruments here as well that typically ensure that there are no physical contaminants in packaged food. The growth in product inspection tends to be driven by issues surrounding brand protection, productivity and uptime rather than manufacturing GDP. And if you look at both the lab and industrial businesses, we're pretty much organized into 25 different strategic business units that typically have different competition in each category. And our competitors tend to be smaller and more regionally focused. So this slide here kind of summarizes our key competitive advantages. We have long-standing competitive advantages that help drive our consistent performance, starting with the fact that we estimate that we're the global market leader approximately 75% of the time, but we're in highly fragmented markets with a market share in excess of 25%. As previously mentioned, we also have a tremendous diversity in our business. These highly fragmented markets provide significant opportunity for us to grow organically. We capture our growth opportunity with our state-of-the-art Spinnaker sales and marketing program. We feel Spinnaker has been a real differentiator during the pandemic, and then I'll cover that in a little bit more detail in a few slides. We also support our customers with our service network of more than 3,000 colleagues, which is larger compared to our competitors. We have seen through the pandemic that our service capabilities are very important to customers, helping them with uptime, productivity and compliance. We also have a long history of innovation and are generally known as the technology leader. And finally, as I already mentioned, we have a strong culture of execution and agility. Our excellent competitive advantages provide the foundation for our growth initiatives, and I'll kind of walk through that now on the following slides. This slide kind of gives you an overview of the key initiatives, which are very similar in the past. They're very established growth strategies. And while the underlying strategies are -- that the underlying strategies are continuously innovating and updating, our core growth strategies remain the same. So let's start with our Spinnaker sales and marketing program. So central to our sales and marketing strategies is small share gains in our fragmented markets. As previously mentioned, we have a highly fragmented customer base. In addition, we have an installed base of instruments of more than $15 billion in a contact database of more than 5 million contacts. We pursue these opportunities with a direct front-end sales force of more than 2,500 colleagues. We want to leverage these resources and guide them to the best opportunities. We have found this sales force guidance to be particularly effective over the past 2 years. We use data analytics to identify and pursue our most attractive end markets with differentiated resource allocations. This approach put us in an ideal position in 2021 to capture growth as our end markets recover. We also continue to structure our sales and marketing resources so our front-end sales reps can maximize their time with noncustomers and strategic accounts. We also use data analytics from internal and external data sources to generate sales alerts that provide tailored actionable information to our sales organization about potential sales opportunities. In 2021, we produced more than 150,000 sales alerts for our global organization. Data analytics also helps us identify cross-selling potential from existing -- from our existing installed base, enabling us to pursue untapped potential in customer locations where we are under-penetrated. We continue to enhance and expand our digital tools to effectively engage with customers. For example, we offered more than 2,000 webinars in 2021 compared with several hundred before the pandemic. Our webinars cover a spectrum of topics, from compliance, to productivity, to data integrity and allow us to showcase our technical and application know-how in a convenient format for customers. We're also developing additional sales enablement tools to give our sales force an array of resources at their fingertips. These tools, including value selling guides, cross-selling guides and e-demos, help our customer interactions to be as effective and efficient as possible. We also restarted our Field Turbo program, which adds dedicated front-end sales resources to capture specific growth opportunities. Spinnaker provides the framework to identify and pursue the most attractive market segments while also increasing exposure to our most strategic customers. We have improved upon Spinnaker for more than 15 years. And it has proven to be a key differentiator and has been invaluable navigating the pandemic. Service and consumables represents approximately 1/3 of our sales and is highly profitable and an essential component of our growth strategy. Service keeps us close to our customer and builds trust as we support customer uptime, which is critical when they are in a strong recovery mode. Our service force can also offer important insight into our customers' instrument needs as they are frequently on site. With a service network of approximately 3,000 colleagues throughout the world, we have the largest and we believe the best trained service for us amongst our direct competitors. We provide a wide range of services, including calibration, preventive maintenance and consultative service, which leverages our deep technical skills. Importantly, customers who come to rely on the quality of our service are more likely to buy an instrument from us. Throughout the pandemic, we have seen steady improvement in our Net Promoter Scores. And we are focused on increasing the percentage of service that we sell at the point of our product sale and leveraging our installed base for service opportunities. Now turning to emerging markets, which represents more than 35% of our total sales, with China representing almost 60% of this exposure. Our operations in China has a very strong foundation to continue to capture growth opportunities. This slide highlights our competitive advantages in China, which are remarkably similar to the overall company. Our market leadership in China is similar to our group average, although we enjoy a higher relative market share in China. We have an excellent team in China, and they have performed very well throughout the pandemic despite many challenges. They utilize Spinnaker sales and marketing techniques to capitalize on growth opportunities and gain share. The team was also instrumental in terms of ensuring our supply chain to continue to meet customer demand. Our medium-term outlook for China remains very strong. In addition to benefits from increasing GDP and GDP per capita and the government's focus on life sciences and health and safety, we continue to see increased focus on productivity, automation, connectivity and quality that are all positive for our business. However, we acknowledge it won't always be a smooth trend line as China and emerging markets in general can have short-term volatility. Now turning to our technology leadership. We are generally recognized as a technology leader and are constantly introducing new products to support our share gains, accelerate replacement cycles and support our price differentiation. We continue to enhance our sensor technology for greater precision as well as providing better productivity to our customers. Increasingly, our products have common user interfaces that are intuitive with minimal training required. Automation and software integration supports our platform strategies, which leads to greater customer efficiencies in terms of productivity and also data integrity. Finally, we are also driving R&D enhancements for our service offering. Our good weighing, titrating and pipetting practices are just a few examples of value-added services we can provide. We'll continue to lead the market with innovation. Our margin initiatives are also an important element of our growth strategy. And we have a strong track record of margin improvement, which you can see on the slide. It stems from our focus on organic sales growth, which is the most important driver of margin improvement. Pricing is also an important contributor as well as our SternDrive program for continuous improvement and operational excellence in supply chain, manufacturing and back-office functions. Our Blue Ocean program is also an important enabler in terms of providing data transparency and facilitating process automation. Finally, we benefit from business mix as our faster-growing businesses have higher margins, and we continue to invest more in these businesses. Overall, we remain confident in our ability to continue to drive margin improvement. We have an excellent foundation for pricing. It is built upon our strong brand and market-leading positions. We tend to lead the market with our technology and have clear value propositions we can articulate to our customers. It is also important that our instruments are typically personal instruments that are sold at relatively lower price points, and we're often selling directly to the end user. We combine the strong foundation with our pricing program that provides analytics, tools, processes and market support for a successful pricing achievement. We also continue to work strategically on pricing and initiatives to help improve the efficiency and effectiveness of live quotes to customers. As we face a higher inflationary environment, our agility in pricing has become very important. We were able to react quickly last year to address higher-than-expected inflationary pressures with some midyear increases. We will continue to monitor conditions and remain agile in 2022 as necessary. Our ability to continue to meet heightened customer demand while overcoming the dynamic challenges in the supply chain is proving to be a competitive advantage in this environment. Our supply chain team demonstrates tremendous resilience and agility to support customers throughout the pandemic in overcoming the myriad of challenges with respect to raw materials, components, transportation and increased customer demand. At the same time, the team also continues to make progress on Stern Drive, which comprises several hundred projects throughout manufacturing and back-office operations, focused on material cost reductions, shop floor productivity and back-office productivity. SternDrive will continue to be an important contributor to margin growth for several years to come. We are fundamentally an organic growth story, but we also believe we can complement our offering through strategic bolt-on acquisitions such as PendoTECH. PendoTECH further expands one of our most attractive businesses, process analytics in which we are a global leader in real-time measurement of key process control parameters, which customers use to optimize their production processes. More than half of our process analytics business is to the pharma and biopharma market. PendoTECH is a manufacturer and distributor of single-use sensors, transmitters, control systems and software, serving biopharmaceutical manufacturers and life science laboratories. Their primary focus is pressure, which is a common control parameter used in bioprocess applications. They are well recognized for their leading-edge innovation in single-use sensors that are increasingly important to buy in bioproduction. PendoTECH is an excellent strategic fit as it expands our presence in the very attractive high-end growth bioprocess market. We have strengthened upstream, which complements PendoTECH's strength in downstream, which creates attractive cross-selling opportunities. With the combination, we have also created a competitive single-use sensor offering in the market. We also see good opportunity to expand PendoTECH's presence on a global basis, leveraging our global reach and large customer base. PendoTECH is off to a very strong start, and we believe it will further our already strong leadership position in process analytics. Before I wrap up on the prepared remarks, let me comment on ESG, which is very important and not new to Mettler-Toledo. We established our GreenMT program more than 10 years ago and have recognized strong accomplishments, including achieving carbon neutrality with respect to Scope 1 and 2 emissions and sourcing 100% renewable electricity. We focus on 5 key areas: 1, environmental; 2, green products and services; 3, a responsible supply chain; 4, engaged employees; and 5, good corporate governance. While we have an excellent track record in ESG, we have set ambitious targets for the future. Importantly, we have recently committed to absolute emission reduction targets consistent with the latest criteria issued by the science-based target initiative. This will cover Scope 1, 2 and 3 emissions. We have also set a target to reduce our waste intensity by 20% and achieve 0 waste to landfill by 2025. To reinforce the importance of ESG, our senior management compensation in 2022 will incorporate specific ESG as well as diversity, equity and inclusion targets. Let me quickly summarize what we've covered here over the last 30 minutes -- or 20 minutes. Our leader -- we are a leader in fragmented markets. Using best-in-class sales and marketing programs and technology-leading products, we aim to gain a little market share each year and drive organic sales growth. Our sales growth, combined with our margin and productivity initiatives, will lead to further operating profit and margin improvement. We have a strong balance sheet and a long-term track record of substantial cash flow generation. We returned capital to shareholders via our share repurchase program and also pursue bolt-on acquisitions that are a good strategic fit. We have a long focus -- we have long focused on sustainability in ESG and seek to continuously improve in these important areas. With that, I'd like to conclude. And now I'll turn it over to you, Tycho, for questions.

Great. Thanks, Shawn. That was a great overview. So maybe we'll start out with just lessons learned from the past 1.5 year or so through the pandemic because you talked about emerging from COVID stronger. I know you took R&D up by almost 24% last year. So can you maybe just talk a little bit about some of the structural changes that you made during the pandemic and how you're a better-positioned company coming out?

Yes, sure. So I think, first of all, I think the markets are also coming out stronger. Like if you look at our core end markets, like biopharma is coming out stronger. But we also see the markets' trends kind of pivoting towards automation, digitalization and connectivity. And we see that not only in the labs, but also in -- on the industrial side. And as a result of that, I think that plays to some of our strengths. And then that kind of gets into a little bit of your question, too, like in terms of resource allocation. And one of the things that we always wanted to do during the pandemic was to come out stronger. And so initially, we were looking at market segments that we thought would be more resilient to COVID, but then we also want to look at market segments that would have a stronger recovery. And then as we've kind of looked at that recovery, we've started to increase resources in the front end of the business. We've also accelerated certain things on the R&D side as well. And there's good examples like on the industrial terminals where we've recently launched some new terminals which have connectivity, which plays into this whole automation theme. But if you kind of like look at how we're like emerging, I'd say that we're continuing to make investments in the front end of the business. I think our Spinnaker sales and marketing approaches are working really well when you think about the digital approaches, in terms of using analytics to identify and pursue opportunities, the tools that we have to support the sales force as well as the digital approaches we have to engage customers. And then in terms of like how we allocate resources throughout the company, we're always looking at the more attractive market segments that have higher profitability, and that lends itself for not only for sales and marketing, but also, like you say, on the R&D side and really throughout the portfolio.

And on the recovery, just looking at your guidance for a minute, 6% local currency growth for the year, do you feel better or worse about any of the end markets? You've talked about high single-digit growth in lab, low to mid in core industrial, high single in product inspection, and then low single in food retail. As we think about those 4 segments, any areas where you feel better or worse?

No. I mean, hey, we'll certainly update everybody when we announce earnings next month and kind of have an opportunity to study the fourth quarter. But right now, we don't have any different view in terms of our end markets.

And you highlighted pricing. I know you've baked in about 300 basis points for this year, a little more than last year. Can you just talk about implementing that? I mean is it all at once? Or do you do another midyear price increase as well to kind of cap up?

Yes. In our pricing program, we try to be pretty differentiated. This is something that we've always felt has been important. And if I look at like last year, there's certainly never been a year like last year in terms of accelerating inflation as well as the number of types of responses that we've had to kind of -- to counter that. If you kind of go back to the summer of 2022 -- I mean 2020, people at that point were actually anticipating a lower inflationary environment, if you can remember that, which is kind of hard to imagine sitting here today. And then literally, as we kind of entered last year, around this time, we all saw the wins we're changing in that regard. And so we had kind of started off the year with looking at the products that were most exposed to some of the -- some of those changes. So if you think about a year ago, there was -- steel prices were going up significantly. Plastics were starting -- and resins were starting to go up. There was like the chemical challenges with the Texas weather situation. And so we started approaching some of those products that had those higher exposures. But then there were topics like transportation and logistics. And then we started to think about things like surcharges, which we typically don't do, but it was much more appropriate in the environment where we could get something quicker to the market that the market also understood. And then we also did some midyear price increases, as you kind of mentioned, that were a lot more broader than we would typically do midyear. And as we kind of like look towards 2022, I can imagine it will be -- depending on the facts and circumstances, it will be a bit similar. And they kind of like -- also tie into maybe your previous question about how you're coming out stronger, I think one of the things that we've really appreciated has been the resiliency and the agility of the organization. And that's kind of like a combination of culture. But it's also combined with having a pulse on your business, having the analytics to be able to know what's going on so you know then how to react and then having the culture to make the quick adjustments. And so with pricing, I think that's kind of how we'll play it this year. We'll kind of continue to monitor what's going on, on the cost side, and then we'll make adjustments as necessary in -- whether it's specific product categories or specific countries. And then we'll try to do things in a relatively surgical manner where we think it makes the most sense.

And then you mentioned restarting Field Turbo. Can you just touch on that, the thought process there, and what that could contribute this year?

Yes. It's built into our guidance for 2022. This is something we've been talking about for probably a few quarters now, so not necessarily entirely new. But I think it's a good reflection of how we feel about the future. When we look at the markets, we feel good long term. We acknowledge there can always be short-term volatility. But when we make a commitment to Field Turbos, it's really more of a statement on how we feel about the long-term business. If you also look at what we're doing on the digital marketing side, we're just creating so many opportunities for the sales organization that we believe that we would benefit from having more resources to pursue those opportunities. And so for me, it's also a good statement about how we feel about those opportunities. And as I kind of like tried to highlight throughout the presentation, we do operate in a highly fragmented market. So just getting a little bit more market share each year is very meaningful. We're not changing the competitive landscape significantly. But by gaining just a little bit, that incrementalism really can be powerful over time. And so the Field Turbo program will help us accomplish that as well. And as I mentioned, we're -- as we think about that program, it is global in nature. We are going to weight it a little bit more towards China because we do feel good about the long-term prospects in China, but it is global. And we are probably also going to weight it a little bit more towards the lab business as well as our service business.

You touched on PendoTECH which looks like a nice acquisition. As you think about your bioprocess portfolio today, how do you feel about the comprehensiveness of it? Any obvious gaps you would point to? Is this an area of priority for M&A going forward as well?

Yes. It's obviously a very attractive market. We've been -- so our bioprocessing exposure is predominantly our process analytics business. But we also do sell other instruments around bioprocessing, and more broadly, in bioproduction, which also includes some of our industrial applications as well. But when you specifically focus on bioprocessing and maybe specifically process analytics, this is a business we've been in for many years. It's been really a standout performer for several years, very disproportionately weighted towards bioproduction. We have a lot of market leadership positions in a wide range of parameters from like pH, oxygen, carbon dioxide, conductivity as well as several others. We also are monitoring pure water applications in the bioreactors as well. Our process analytics business is a business also that was an early adopter of Spinnaker. So then when we look at like that footprint, as you kind of say, we do think we can organically grow it through our process analytics business and through Spinnaker. The business does grow faster than our corporate average. But in terms of M&A, hey, PendoTECH's been a fantastic bolt-on acquisitions, off to a tremendous start. It's been a great fit for us. And if we see other opportunities like that, of course, we'd be highly interested.

And maybe just stepping back and thinking a little bit about the lab business overall. I mean you guided high single-digit growth. That's above kind of the normalized trend. So how much of that is kind of catch-up spending on the lab side versus maybe a better funding environment?

Yes. It's always difficult to tell how much of our -- how much is a pent-up demand type of a topic, especially when you get into the industrial business. But the overall environment and funding environment does seem to be very positive in terms of the end markets in lab. One of the things we saw in 2021 was, in addition to strong biopharma trends, we also saw a lot of the other market segments really performing well. Chemical is a very good example where we saw a lot of strength more broadly in chemical throughout each geography. How much of that is pent-up versus a sustainable trend? Difficult to tell. And we also saw things catching up a little bit on the academia side as well, but a smaller exposure for us overall.

So I guess as we think about what's still lagging on a recovery, like core industrial actually had a pretty good year in '21, probably up around mid-teens. It seems like consumer packaged goods is still a little bit challenged. Food Retail maybe still a little bit challenged. Are those the 2 segments that are still kind of lagging at this point?

Food Retail and which one would you say?

In the consumer packaged goods?

Consumer packaged -- well, I think if you look at our Q3, in terms of like product inspection, we were up 13% in the third quarter, and then we had a guidance for Q4 of high single-digit growth. So that one, we felt in Q3 had started -- we started to see some improvement. We had put together a couple of good quarters between Q2 and Q3. We'll kind of see how Q4 comes together, and we'll update you on our call in a few weeks. But overall, we've always felt like product inspection would have more of a pent-up opportunity here. As we've talked about in the past, a lot of the food manufacturers we felt were very operationally distracted throughout COVID. And as we kind of emerge here, we feel more positive about this one as an opportunity. We feel like we're actually very well positioned for it just given also the breadth of our portfolio, our service offering, our global presence. And so we -- and we also have some nice products -- nice new product introductions that were recently launched and some stuff coming up in 2022 that we feel positive about. Food Retail, of course, is a little bit different, right? This is only 5% of our total business. As you know from the past, it can be a very lumpy business. We're only serving a handful of markets purposely. And within those markets, you're very -- it's very much a key account business, so then you have a handful of key accounts within those markets, and then you become somewhat subject to their product replacement cycles. And so that's always a dynamic within Food Retail. At the same time, we -- as we talked about on our last call, we have had a challenge in terms of electronic components in this particular business, where we use common components used often in consumer electronics. And so that's also exacerbated a little bit the challenge that we saw in Q3 and thought about when we provided Q4 guidance. But kind of going forward, as you know, this is a business that we manage largely for profitability, and we feel like it has very good synergies with the rest of the business in terms of overhead, technology and just general know-how.

Maybe a question on China. That recovered nicely in '21. You're projecting about 10% growth this year. Can you just touch on some of the gives and takes there? You've got noise around local tenders. You've got export issues. So how do you think about the gives and takes around that 10% growth for China this year?

Yes. Probably the -- we feel -- when we step back, the -- like we like the big picture trends of like -- we talk a lot about growing GDP, GDP per capita, the focus on life science, health and safety. All those themes, I think, are very positive for us. We also feel really good about the acceleration of trends towards automation and connectivity. We've seen that a lot in the industrial business, but of course, it's also a topic in the lab business. Within China, there's also been a lot of investment in terms of the economic zone kind of going to the west, which we feel like has benefited our industrial business. And then there's also been a lot of investment in strategic segments, such as lithium batteries, microelectronics, new materials and things like that, that have also benefited our business. So those are the things that are kind of on our mind for themes going into the year and for next year -- and for the future. Kind of some of the other more shorter-term topics are -- probably the bigger one is pent-up demand in 2021, difficult to assess. Also difficult to assess the amount of stimulus that might have been in the economy that we could have benefited from in terms of some maybe project activity on the industrial side. In terms of some of the other dynamics that you referred to, like the made in China initiative, certainly something we've monitored and have looked at. Our assessment is that it shouldn't be a significant exposure for us. We -- as you know, we have a very large local manufacturing footprint in China for China that we benefit from. And then when you do look at products that we would import into China, we have very strong value propositions. And frankly, I'm not sure there's always even local competition in those categories. We'd probably more likely go up against international competitors.

And some of the trends, you've highlighted automation, digitization. Are those more driver in emerging markets or developed markets?

We've seen it in both. We've seen it in both. It was interesting to me because I probably first heard the antidote when I was talking to Chinese colleagues, maybe, I don't know if it was a year ago or so. And then we just -- I just really started to see this thing accelerate. And as I've kind of been talking to colleagues over the past year in the west, I'm hearing the same stories. And so there's just a lot of investment from our perspective going on here. And like I said, it really is -- fit really well when you think about our terminals on the industrial side. We have a lot of software and it's really been a great -- and we also have transmitters as well. And we've also just been fortunate enough to have put a lot of -- come up with a lot of innovation over the last couple of years in this area, too. So it's been a great combination of those things. And then I'd probably also layer on the focus from a sales and marketing perspective. We've certainly been focusing on this in terms of how we think about the market, marketing activities. And so that's also been something that's been a nice driver here as well, too.

Maybe in the closing minute or 2, you guys are obviously an incredibly well-run company. You plan succession well. Coming up on Patrick's 1-year anniversary, taking over. I'm just curious how he's put his own imprint on the business in the year that he's been on board.

Yes. Patrick's had a great first year, I think. I think the results also speak for themselves. But internally, I would say the temperature is really positive. He's really been a great leader. And I think we've got a really good first year. As you know, he didn't come here with a mandate to change things. And so very early on, he was very clear with the organization, that he wants to double down on our strategies. And he actually launched a lot of initiatives, and that we had like a global leadership meeting virtually last summer. And a lot of the themes were about doubling down on things like Spinnaker and SternDrive and pricing and cross-selling and all these types of topics. And so that's certainly something that we've been focused on. But you can imagine, he's also not sitting still either, right? So we -- the idea for all of us is to continue to evolve. And I think you'll continue to see us to do that. We'll continuously improve and evolve. And a lot of it comes down to this cultural thing too, right? And Patrick's been a tremendous cultural fit for the organization. And he's just very like-minded in terms of this mindset of continuous improvement, so.

Well, it's great to see. Shawn, we hit the end of the session. So I want to thank you for taking the time. It's great to see you, and enjoy the rest of the conference.

Okay. Thank you, Tycho. Great to see you, too. Enjoy the rest of the conference as well. Bye.