O-I Glass, Inc. (OI) Earnings Call Transcript & Summary

Good morning, everybody. Welcome back to our next session at the 2020 Goldman Sachs Virtual Industrials & Materials Conference. We're very pleased to introduce our next company. I still call them Owens-Illinois or O-I, but officially we're now O-I Glass. Joining us from the company are CFO, John Haudrich; and also Chris Manuel from Investor Relations. Thanks so much guys for spending some time with us today.

Okay. Thanks very much, Brian, and we appreciate you and Goldman Sachs for hosting us. We're pleased to participate.

Yes. I'm sorry, we couldn't do it in person, but hopefully, by next year at this time, we'll be back up and running and able to do that. Before I jump into the fireside chat with my own questions, I wanted to remind the audience that you can electronically submit your own questions for John and Chris, using the dialogue box on your webcast. Your questions will come in to me, and then I'll be able to read them aloud probably during the last 10, 15 minutes of the session.

So with that -- and please get your questions in early, if you have them. John, this is Day 3 of the conference and what we found in these sessions is that investors are most interested in an update on real-time trends given the fluid nature of the crisis. You had your earnings call maybe a couple of weeks. It was at the end of April. But just interested in hearing if you've seen any signs of stabilization, maybe some green shoots of improvement in volumes and demand in some of those regions. I know some of the regions were particularly impacted by government actions, maybe if you're seeing any signs that those are going to start loosening up, but really kind of mostly interested in what you're seeing on a week-over-week basis in the latest set of data that you got?

Yes. I mean -- thanks, Brian. Let me address that. This is John Haudrich. So we can't give you quantified information here given the -- subsequent to our earnings, but let me just give you a little bit of feel for the different markets that we're in. In Europe, which was impacted earlier in the cycle compared to, for example, the Americas, you definitely are starting to see people out and about starting to show, as you said, the green shoots. And wow, I think there was a lot of reluctance earlier on. There seems to be some evidence that people are getting out a little bit more and doing things. You saw markets like Italy and France probably impacted the hardest. And so we're looking for how people are behaving and performing in that regard. So it's still early days, indeed. But some markets were never really negatively -- we didn't see as much negative volume, so for example, in Eastern Europe and things like that. So looking forward to more stabilization there. As we go into the Americas, probably, the most impactful area in our business has been in Mexico and the Andeans where, in particular, government restrictions impacted us more severely than in other markets, in particular, because while most glass containers have supported the essential food and beverage marketplaces, in particular, in Mexico and the Andeans, as you're referencing, beer was not considered an essential category. And so a lot more downtime had to be taken there. In the Andeans, there's more focus on opening up and started opening up in the second half of May here. So again, some early signs of green shoots in those particular markets. And if we go into the Mexico market, they have a 3-step process that they're following where, certainly, municipalities are starting to open up mid-May, starting with next week. Those are more rural locations that weren't ever really negatively impacted significantly by COVID. And then the second phase is really in the second half of May here where the -- each of the businesses need to show what their sanitation processes are and whatnot to the government with the anticipation towards the end of the month or early part of June to be able to resume activity at that point in time. So that is probably -- that later May, early part of June is when we're going to start to see those particular elements start to come back more online. Brazil has been an interesting case because it really has not ever been -- gone into any type of lockdown. Our business has been oversold down there. So we haven't been negatively impacted in that regard, but we have stopped imports from Mexico into Colombia because we're in an oversold position in there. So in the backdrop, that's more driven because of Colombia and Mexico. But overall, the market seems to be open in the Brazilian area. And here closer to home, I think we all know what's going on in that regard is that state by state, things are starting here and there to open up, probably pretty slow, but certainly some signs of opening up.

And then just want to dial in and focusing a little bit more on Mexico and the Andes that there, I guess, kind of an abrupt shutoff when the government declared your, I guess, nonessential, I'm not actually sure, the technical classification, but effectively cutting off production. But the retail channel was still selling it from what I understand, and consumers probably have cleaned that out by now and don't have much left on their shelves at home. So I mean do you think that we could get a rebound and maybe that we're just sort of pushing out some production and demand so that when things do reopen, we actually get a little bit of a snapback effect in those markets?

We're certainly expecting that and anticipating that, to your point, is with the brewers more or less significantly reducing production, right, in response to what's going on. Production never fully stopped because you're able to run a certain amount to maintain your assets and things like that. But nonetheless, the stock has been dwindling. And I was just reading an article over the weekend where people have been making their own home brew or moonshine. And frankly, some people are getting sick by it, and it's really sad. And so it just shows you the state of the lack of availability is starting to show into those marketplaces. So we do anticipate a bullwhip effect in all likelihood in certain markets. There's been a lot of pantry loading here in North America, too, with a lot of product being shifted from on-premise over to the retail level. And so how has that all flushed through? We're being mindful of the level of downtime that is being imposed upon us, but we're also trying to manage this in a way that allows us to have the flexibility for -- in all likelihood which will be pockets of kind of bullwhip effects.

Brian, this is Chris. I would add one other piece to that. I mean it's -- you're going to see definitely in some spots where there's going to be a big surge and a refill of inventory through the channel, but there very well could be some spots where you see the exact opposite in certain parts of the world and there's a payback for later in the year. So as an example, in some cases, around the globe, brewers have said, well, geez, I usually have x amount of my beer that goes into draft. Well, that on-premise channel has been shut down. So they're bottling it or canning it or doing something like that in the interim. So perhaps there are some spots where we're seeing a little more demand now that maybe a little bit of a payback later, but there are going to be a number of situations where it's exactly as you described that we're going to have to produce like crazy a little bit later in the year to catch up. So that's what makes kind of the forecast preparation so challenging right now.

Right. And on that forecasting preparation, obviously, you've pulled the guidance with pretty much everyone else in the world given the uncertainties. But you did throw out there that you thought you might be able to see the volume declines be as moderate as maybe down 5% to 10%, which isn't great, but is obviously probably better than what we're seeing in April and May. But I guess as you sit here today, does that still seem like a reasonable forecast for volumes this year that could be in that down 5% to 10% range?

Yes, I believe so. I mean that was kind of the view that we shared a few weeks ago, if you take a look at what's -- going back to my earlier comments about starting to see markets starting to open up. I mean that's consistent with what we were expecting. So at this point in time, we run a couple of -- several different scenarios internally, taking a look at GDP, taking a look at the shift of on-premise, off-premise; taking a look at the effect of inventories in the supply chain bullwhip effects; or as Chris mentioned, maybe some of the opposite effects, targeting GDP movements and overall activities, the effect of unemployment, all those types of things. We model through all those, and we come up with a handful of different scenarios ranging from a more mild scenario to a more severe scenario. And those are kind of booked in with that 5% to 10% range.

Yes. And you mentioned the on- versus off-premise mix is one of the factors in there. And frankly, I don't think we all realize how much regional variation there was in some of those things. And I think you said on the earnings call, there was 75%, 80% of glass packaging is for at-home consumption, which would certainly be relatively defensive, maybe even at-home is benefiting in this environment. But I was wondering if you could get -- maybe if you have more granular data to break that down by region or by product. I'm guessing food is probably pretty close to 100% at home, and then beer and wine are a little bit more on-premise. But is there any more granular data you could provide there?

Yes. Sure. So back to what you referenced earlier is we said, hey, 20%, 25% of the products that we make are consumed on-premise. The other 75% to 80% are on -- consumed at home. If you take a look at -- on a kind of region-by-region basis, the Americas is probably closer to 20%. Europe is closer to 25%. And Asia Pacific is, again, closer to around the 20% range. Now within that, for example, in North America, we would say, overall -- think of just the alcoholic drink category, about 25% of that is on-premise, and the remaining component is at home. Now you go to, for example, Europe, about 35%, 36% of alcohol consumption is on-premise. Same thing, very similar to Latin America, whereas the other 2/3 or whatever is consumed in home. So you do see some regional variance going on in that regard. But by and large, you're seeing -- the pantry loading phenomenon is most pronounced in North America and in Asia -- well, ANZ, in particular, where homes tend to be larger, have more capacity and all that stuff, to store stuff, whereas it's been less of an effect when you see things in Europe or Latin America where maybe the homes don't have as much storage capacity. So there's a lot of moving pieces between that in-home, on-premise consumption and what the -- and the relationship between the pantry loading comes into play, too.

And this recession is obviously a lot different than any one we've seen before. So we usually try and go to prior recessions for some sort of a playbook or an analog. And I think you guys talked about on the call, the '08, '09 volumes only fell around 3%, 3.5% in Europe and the Americas. Now we're talking about declines more in the 5% to 10% range. So it's obviously different. Is it really just that on-premise channel being completely shut down that's driving the worst volumes? And so as we think about lockdowns ending and folks being able to get back out and about, we maybe get back into what a normal recession, if there is such a thing, what the unemployment rate and all those kinds of things that we could maybe get back more to that kind of a volume growth decline category?

I think that there's 2 major variables that make this different than the past. The first is, as you mentioned, the shutdown of the on-premise component and the push to retail and things like that, which causes such a rapid skewing of things. And then things, we believe, will ultimately normalize with that as people get comfortable to interact and things like that. And then you'll follow more-than-normal recessionary trend of a few percent type of impact when you have the overall supply and demand elements balancing. The other variable that's hitting us so hard is that in so many markets right now, you're not working under the economies of supply and demand. You're actually working under the economies of stoppage. And so regardless of what people want, because of the federal and state regulations in many regards in different countries, you simply can't produce. You can't ship. You can't do a lot of different things that would otherwise be normal supply and demand things. Now that probably is more of an acute problem here in the second quarter, as we talked about, and changes. So we're going from economics of stoppage to economics of -- gradually to economics of supply and demand, with us probably exiting later part of the year, all things considered, more working under the economies of traditional supply and demand of a recession.

Yes. That makes sense. And just to think about the impact to margins or -- and the question we get asked a lot is, what's the sort of decremental margin you would expect to see on these types of volume declines? I think you talked about it on the earnings call it being somewhere in the 40% ballpark. But could you talk about that and maybe what actions you can take to improve that as you have a little bit more time to prepare for this and what action you can take to take variable costs out from here?

Yes. Let me give you a little bit of background there because, indeed, the decremental margins is very much of a sliding scale based upon the actions that we're taking. So let me just give your attendees a little bit of a background on our cost structure. So our cost structure -- there's 5 key buckets in our cost structure, each pretty close to 20%. So it's energy. It's raw materials. It's labor and benefits. It's transportation, warehousing, logistics. And then the last bucket is things like depreciation, M&A and all those other categories. So you can get a sense in there which ones are variable and which ones are fixed. So when this thing first hits us, and so for example, in the Andeans where the government says, you guys got to stop for a period of time, the first thing you do is you just take your machine lines down. And that is a situation where you're stuck with about 50% of your cash fixed cost, but you can get out from 50% of the costs under those scenarios. But that's probably your least efficient way to manage things, although it's your most flexible way to manage things. Now quickly, what we do and have been doing and continuing to do is saying, okay, how do we then aggregate these various different machine lines that are scattered down all over the place and bring them into specific furnaces, which often have multiple machine lines underneath them, and you can take those furnaces, either cold or keep them warm or keep them cold. In which case, then you can get out from, call it, 70% to 80% of the cash fixed cost. And then ultimately, you can try to aggregate more into factories, take the full factory down in these -- in here and there, and then you can get out from 95% of the fixed cost component of it. Now what you need to do is you need to balance off, right? You need to maintain a combination of these different tactics to be able to manage through this, because if you're going to take a factory down, you want that -- you're going to have -- that's going to have to be down several months, otherwise the cost of bringing it up and down just doesn't work. Same thing on furnaces. If you're going to take a furnace down, you -- that's got to be down for several weeks, if not a couple of months, too, because of the cost going up and down. Whereas the machine lines, you're absorbing a lot of fixed costs, but you also have a lot of flexibility, on a dime you can turn it back on. And that's the unique calculus that we're going through, market by market or supply chain by supply chain, to come up with some combination. So clearly, the April window was largely hit by machine line downtime because that's when things were first hit hard. As we move over the course of the second quarter, we're getting more and more of that moved into some combination of those 3 different buckets I was talking about. And ultimately, you can get out from a good chunk of that and then try to find things when it's much more into a supply and demand scenario and you're dealing with fewer things here and there that you can calibrate. So I think the business has an opportunity to get away from that 40% decremental situation that you talked about, and it's something more favorable, but it does require us to go through that analysis and network optimization.

And the timing to get there, do you think you can get there by the third quarter or maybe it's an exit rate in the third quarter where the decrementals can maybe move from [ 4 ] to -- your overall margins are kind of high teens. So you're never going to get decrementals any better than that, but maybe you get them into the 30% of high 20% range by the time you're exiting the third quarter if you have time to take these actions?

Put it this way. I'd say that, that's feasible, but it's very much a function of the backdrop of the marketplace, right? I mean we're modeling in. We're not anticipating a V-shaped recovery. I don't think too many people are. The question is, how big is that, you -- when do you start to see that inflection and managing it through. Nonetheless, we can make a lot of progress over the course of the second quarter here, early part of the third quarter to go through a lot of network optimization, but I can't give you a specific window of time.

The more clarity you get around what that volume number will be, the more concrete actions you can take to get that fixed cost out. And as of right now, still not understanding how big those inventory bubbles are or how aggressively people go back to bars, restaurants, things of that nature, that's still not as clear of a process yet. So that's really what we need some better clarity to get all the way down as low as we can and maximize that.

I'm going to switch over to the cash flows a little bit, maybe start with capital spending. And I think you came into the year targeting CapEx around $350 million to $375 million. On the earnings call, you cut it to $300 million or less. I think you said roughly 1/3 of that was simply currency movements. You do a lot of that spending outside the U.S. But what are the other projects and spending you were able to cut out? And should we think about that spending just being deferred and pushed out to the right, and so you'll eventually have to incur it? Or because of the lower volume environment, is there some kind of permanent reduction in CapEx you might get?

Yes. Sure. So keep in mind, to maintain our business, call it, $275 million to $300 million is a pretty normal maintenance range for the business. We're -- our factories have about a 12-year life on average. We've got 150 of them. So you're doing about 12 of them a year, so plus or minus. So that scenario under that $300 million ZIP code isn't significantly different than kind of the norm. So what we have changed, in addition to the FX adjustment that you said was favorable, is we have a number of strategic projects that was making up the difference, call it, $50 million to $70 million of strategic projects or so. What we've done is we've focused those on bringing up our facility at Gironcourt, France, which is supported by a long-term supplier agreement. It was targeting the second quarter. It might shift a little bit out, not because of anything other than worker availability to complete the process, and then bringing the second MAGMA facility online in the first part of 2021, which is the second MAGMA facility, the first one in Europe that we're looking to do. So those are all remaining on track, and the investments are secured in those regards. But we also have a fair number of just smaller kind of facility upgrades, modifications-types of things, a few million dollars here and there. We pretty much kind of put those off to the side. Those are fairly discretionary. Of course, you want to do those and you want to be able to upgrade facilities and make changes, but those will probably be minimized. And as far as the timing of those, like I said, some of them are discretionary in the timing. But with the backdrop of a more challenging marketplace that we're experiencing right now, I think they are somewhat associated with fundamental here and there kind of pockets of growth opportunity. So we'll probably sit on those for the period of time. So as we think forward, obviously, the maintenance investments, and then I think we're going to be very judicious about what we invest above and beyond MAGMA at this point in time.

Yes. And just one on the balance sheet and liquidity before I go to some of the audience questions. Last week, you went out into the bond market. I think you initially were looking to raise $500 million. You had some pretty decent demand. You upsized it to $700 million. I think the interest rate kind of in the 6.5% to 7% range. The coupon rate there, a little bit higher than the coupon on the last couple of offerings, but the environment is what it is. Just wondering what your plans are for the proceeds for that offering? Are you looking to term out the liquidity from some of the credit facilities to longer-term financing? And related to that, I know on some of the credit facilities, you've got -- you've had some debt covenants. Are those still in place? Or have you kind of been able to eliminate? Or is there potential to kind of eliminate some those debt covenants?

Yes. Sure. Yes. No. We were very pleased with the receptivity in the credit market of our bond offering last week as it was well oversubscribed. As you mentioned, we have upsized and kept the interest rate within a very reasonable band, given today's places, as you mentioned. So looking at our capital structure, obviously our primary objective is -- for the company is to manage our balance sheet and to reduce leverage for the company and to improve the financial flexibility. So what we're doing with these proceeds is we are refinancing near-term maturities. We're completely taking out the -- we don't have any bonds maturing in 2020. We have $125 million, plus or minus, that was due in the first quarter of 2021. We're taking that out. And then we have a $500 million bond due in the early part of 2022. We're taking -- we're substantially reducing that, not all of it, but the clear majority of it. And then we have some bilateral loans next year that we're going to take out. So as a result of this, we won't have any bond maturities in 2020, we won't have any in 2021. We'll just have a small stub in 2022. So we believe that this takes out -- substantially takes out the near-term maturity view of the business right now. As far as the interest rate, I mean, what we're taking out on those bonds is plus or minus 5% debt. So we're placing 5% debt with 6%, 6.5% debt or so. So there's a little bit of dilution -- earnings dilution there. But all things considered, we're quite pleased to be able to push out the maturity calendar significantly, de-risk any of the financial flexibility of the company over the next several years or so here. So that's our primary objective there. Now on the liquidity. The liquidity has been very good. We've got $1.7 billion at the end of the first quarter, which by the way, is probably our biggest use of cash quarter of the year given the seasonality of our business. And so we've said, probably, we want to maintain at least $1.25 billion of liquidity given that we're entering into the later part of the year, which is a seasonally stronger period typically for us. That's a positive. We do have a one covenant -- a key covenant in the bank credit agreement. It is leverage ratio of 5.0x, and the -- we were at 3.9 at the end of the first quarter. And so clearly, that is the one covenant out there. We're managing our business in light of that. We said on our earnings call, we're taking very meaningful action to counteract and mitigate the financial impact of COVID. We're reducing CapEx. We just talked about, we're significantly reducing SG&A costs. We put a salary reduction and deferral program in and a number of different things that we're doing to counterbalance this to be able to manage through the balance of the year.

Great. And I'm going to now shift over to a couple -- we've had a couple of questions come in over the webcast. Again, if anybody else has any questions, please try and get them in now, but we've had a couple come in. So I'm going to transition over to those. This is an interesting one. Asking if you are able to make glass vials for vaccines or other medical uses. Is that maybe a potential new market opportunity or maybe you're already in the market? That's something that I haven't really thought about.

Yes. That has been raised and that's come across my desk, too. The example is with what's going to be needed with, ultimately, the COVID vaccine, the need for vials and the opportunities there. There's various different glass organizations, some focus on cosmetics, some focus on medical, some focus on containers and things like that, but they do fundamentally work on the same processes and things like that. It comes down to the machinery and the molds that you have and some -- up to some level the know-how. In some regards, we make very small containers for various different purposes, which is consistent with the vial. I can't give you the medical details and everything like that, but I'd say the manufacturing processes are pretty consistent, and that's certainly something that's come across our desk.

Okay. Yes. And then another question on the, I guess, it's on the on-premises, off-premises debate, but it also is around the glass versus aluminum can debate a bit. So the question is asking if glass loses share to cans when you see that shift from on-premise to at-home consumption.

I think you got a category-by-category movement here, right? I mean -- so if the reference is on beer, in particular, as you shift -- so by and large, when people are doing pantry loading, right, there -- which has been the phenomenon that's been going on over the last several weeks, people are loading up with quantity and things like that. So in some regards, beggars can't be choosers in some sense. So there's been a lot of demand for everything, right, in that regard. Now there probably is some level of element there that in situations where people want to buy quantity, there's always the quantity aspect of a case of cans versus a case of glass or what we'll see with the unemployment levels and things like that, whether how much value versus premium plays into effect and things like that. So those are variables outstanding. I don't -- I think it's way too early to be able to read the tea leaves in any regard on that because the pantry loading has been such a unique phenomenon that changes so many variables.

Great. I'm going to switch back to some of my own questions. One, I wanted to hit on MAGMA, which is something you referenced a little bit earlier for some of the strategic investments and the growth CapEx. And I think it was back at the 2018 Investor Day, you unveiled it. I think for those in the audience, you can do a lot more justice explaining it, but it seems like a new glass-making technology, completely different than the traditional technology that everybody in the world uses today to make glass. I was hoping you could kind of explain the advantages of it to the audience a lot better than I just did and what it will allow you to do, how it can maybe fundamentally change the way that your cost structure is set up and the way that your cash -- capital expenditure needs are and how the rollout and development of the technology has been going so far.

Sure. Sure. Thanks. Obviously, this is something that we're very excited about and is very promising development technologies, and we're very pleased with the progress we've made and the milestones we've achieved and very excited to get it over into the next facility in Germany that I referenced. But what is it? So glass has been made for some time in these large furnaces. Think about the size of a kid's gymnasium. You put in a whole bunch of batch. It gets heated up to 3,000 degrees, a big kind of soup of glass and takes about a week for it to ultimately come out the back end and become a glass bottle. So that is being replaced with MAGMA, which is fundamentally more like a machine. It could -- the size of it is -- a traditional furnace door of a MAGMA facility you could probably fit in the room that you're in right now. It's a steel machine. You could put your hand right up to it. If you've been to a traditional glass furnace, you don't even want to go within 30 feet, it will burn your eyebrows off. So it is a fundamentally different technology, it uses different engineering aspects to be able to do this, which is the science behind it, which is patented by the company. We've got a number of patents into the MAGMA process. So we believe that we have a protected IP perspective. But what it fundamentally is, is a smaller glass unit that it allows you to have a high level of flexibility. So you -- the glass that goes into that comes out in hours instead of days as glass, and it's actually coming out a little bit better quality than the traditional sense. It is significantly lower on its capital intensity than these large kid-sized gymnasium furnaces and is tracking to be lower operating costs on a per unit of consumption basis than we see historically because of the reengineering of it. The advantages of it is that it allows you to not only be lower cost and lower capital intensity but a lot more flexible. It has an on, off switch to it. So you can -- if you don't need glass that day, you can flip the switch off in an hour or 2. It turns off and you can put it back on an hour or 2 later, you have glass. That traditional older furnace that we're talking about, that takes a week to turn on and off and bring back up, and then it has potential risks of structural elements because of that change. It allows you to be much more flexible changing jobs. You can -- it's much more scalable. You can put a number of these smaller units in place rather than one big mega facility. And one of the biggest challenges that we've had for glass is that it is such a big investment that you want it to be oversold by the time you put it in. Otherwise, back to our conversation earlier, there's so much fixed cost that you're absorbing that you have to cover. This allows you to get out from underneath that and be able to put capacity in a lot smaller increments, and that allows you to make less capital bets at any given time and allows you to more quickly scale up. These things can be prefabricated. A glass factory takes probably 18 months at least to build. You can prefabricate this. And literally, the one that we have in Illinois, we put in place in less than a week once we had it on-site and up running and things like that. The ability to colocate with your customer, this thing would not require the typical big smokestack factory that we've had before in the past. Ultimately, it could be just put in an industrial warehouse. So the flexibility to colocate with your customer put many aspects of this around. It's a lot like a minimill concept of steel in any regard. So all of those come together in a way that's lower cost, lower capital intensity, greater flexibility, more scalable, lower big bets that you need to make and an infrastructure becomes a lot lighter than we historically had in place. So it blends a little bit of what the converters have, the flexibility of the converters, but still keeps the unique aspects of glass creation forming all in one process. So we're very excited about it. It does represent, not only a different change of engineering, but something that changes and creates a new business model capability within glass. It changes the profitability and the applicability of glass within the marketplace.

And you said earlier, on average year, you got to replace, I think it was about 12 furnaces a year or so, at $10 million to $12 million apiece. Is it likely that we see -- if MAGMA goes well, we see, instead of replacing 12 furnaces, maybe in the traditional sense, you're going to put in maybe, I don't know, maybe 6 furnaces and 6 MAGMA machine or it's going to be more than 6 MAGMA machines, but you'll just naturally transition over to MAGMA as the legacy furnaces burn themselves out. And so this isn't necessarily going to be a step change higher in CapEx. It's maybe even going to be a more efficient use of CapEx as you roll it out.

I think that's our thesis, right? And as furnaces come off-line at the end of life, you replace them with MAGMA. You could do that at the same pace as you've done before. You can do it in an accelerated pace, take advantage of the lower capital intensity. All those things are variables that we can take a look at. Or you could say, we're just going to take advantage of the lower capital intensity and keep our CapEx down. And it also opens up growth opportunities that we've always -- like I said before, I mean, it's such a big capital investment that you got to be oversold at the industry. And I think O-I, in particular, has shied away from making those big decisions and big bets, sometimes to our disadvantage. In this way, you're able to jump on growth opportunities that we haven't been able to do before in the past. So that's the thesis. We're looking to validate that. There's multiple different ways in which we can get this in the marketplace within our system and others and things like that, and all that's all part of the new emerging business model.

That's great. We're out of time. If -- sorry?

No. No. No. I'm sorry. Go ahead.

Okay. We're at the end of the program. I wanted to thank John and Chris for joining us and everybody who listened in on the webcast, especially those of you who submitted questions. And I hope you guys enjoy the rest of the conference. Have a great day, and thanks again, everybody.

Thanks, Brian. Thanks, Goldman Sachs. Appreciate it.

Thank you.

Take care. Bye.