Parker-Hannifin Corporation (PH) Earnings Call Transcript & Summary

Thanks, so much. Welcome to our first afternoon session of the day, at least for me, it is. Our next speaker is Parker-Hannifin. Definitely, one of our top ideas, we just think people are continuing to underestimate. While the valuation definitely doesn't reflect the operational and strategic transformation that has taken place at the company over the past several years, and I keep telling everybody, it's like -- these guys have been at it for decade plus. So this is not the result of sort of the last restructuring. But look, I'm very happy to have with us Lee Banks, Parker's President, COO. He's also member of the Board. And I think the plan is Parker is going to have a short presentation, and then we're going to jump into the Q&A. I have some questions that I have. But feel free to submit your questions via Veracast or you can also submit them on Bloomberg IB? Thank you. Lee, I'll turn it over to you.

Okay. Andrew. Well, thank you, and welcome, everybody, to this meeting. I feel like I'm part of the Mars landing here. I got so much technology around. So I will try to do my best on this Webex meeting. So if you go to Slide 2, please. And just I will be making some forward-looking statements and some non-GAAP terminology we picked around. So I know you'll read that page info. Next slide, please. What you have here is just really -- it's our strategy summary on one page, and it's really very relevant to the transformation of the company and how it's been built. What you see on the left side is really why we're winning the competitive advantages of the company. And then on the right side is where we're going, what is accelerating performance on this foundation that's been built. All of it leading us to be a top quartile performing company. We can talk more about that later. Next slide, please. So what is distinctive about Parker-Hannifin is that this company has been built over 75, 100 years around these 8 core technology platforms. And these offer incredibly distinct value in front of our customers. And we know that for a fact because our customers vote with their wallets. 2/3 of our revenue comes from customers who are buying from 4 or more of these technology buckets. So it creates a tremendous amount of opportunity for us to be intimate with the customer, solve their problems, enhance their performance. And at the end of the day, all business starts with having a value proposition, you can excel at, and we have it with these technologies. Next slide, please. This is one of my favorite slides and a little bit of the editorial on Parker-Hannifin, I think is, this is a company that's tied to PMI, is going to perform as PMI goes. And the reason we put this slide together is maybe to bump that a little bit on what's happened over the last 5 years inside the company. So just to orientate on a slide, PMI is on the y-axis. You see the bold blue line that tracks PMI since FY '08. And then alone the x-axis is adjusted earnings per share. What is unique and has changed over the company, to Andrew's point earlier, there was a lot of restructuring inside the company in '14, '15 and even in '16. In '16, Tom and I were put into our roles, we launched Win Strategy 2.0 on top of Win Strategy 1.0. And then Win Strategy 3.0 in FY '20. And then on top of that, we've enhanced the portfolio of the company with 3 great acquisitions between CLARCOR, LORD and Exotic metal forming. So the takeaway here is margins have increased 500 basis points in this time frame and we've doubled earnings per share. Direct decoupling of what's happened with PMI. In fact, we've done this in a period of 2 industrial recessions and a pandemic. One of my favorite slides. Okay. Next slide, please. So just talking about Win Strategy 3.0 and to just to let you know, there's a lot of gas left in this tank and we're on a journey, not a real quick destination. We accelerated performance through a whole simplification process, 80/20, but we've introduced this new concept simple by design. This has a lot of legs to it. It's something that would really create great benefit for the company going forward, not only in margin, but in growth and productivity inside the company. Our innovation process is really bolstered by the way we measure it, our product vitality index in our new product blue-printing process being intimate with the customer. We're expanding quickly on digital leadership across 4 fronts. And then I think the other takeaway I want to give you on this slide is we are changing the short-term compensation structure in the company to better align with where we're trying to take the company. And we've been piloted the short-term compensation structure in our Filtration Group for the last 2 fiscal years. We will roll out half of the company this current fiscal -- coming fiscal year and the other half in the fiscal year after that. But this is being pulled in the organization. I think there's a lot of excitement, and it better aligns and drives the performance of our businesses and what our stakeholders are looking for externally. So last page, and then we'll turn it over for some Q&A, Andrew. It's just key messages I'd leave you with. This is really a highly engaged, globally engaged team. We measure engagement inside this company every year, third-party outside company. We were top quartile right before the pandemic hit. And I think that's why we've come through this so well. I talked about the strength and interconnectivity of Parker's portfolio and really Win Strategy, coupled with our purpose statement has really given us a great-looking pathway to the future. So with that, Andrew, those are my opening remarks. And I'll turn it over to you.

That's fantastic. And I think you guys are being very modest, by the way, against -- around this PMI versus performance, even under the previous management team, Parker started to get away from it quite a bit. And I would also highlight the '14 energy collapse in the middle of lukewarm recovery is a lot more than PMI, but that's a separate conversation we can have in-person, so I do think you guys are being modest about when you broke away from the PMI.

But with that, maybe we can start with the state of recovery. Can you just give us your view on key markets, industry verticals and how could this be -- how could this recovery in cycle be different? Maybe talk about big tailwinds, headwinds versus prior cycles. And I have part 2 to that as well, but maybe we can start there. And by the way, to everybody who is listening in, don't be shy, put in your questions, IB me, and we'll be happy to ask those questions. But, Lee?

Yes. So Andrew, we're in the final stages of closing out this quarter, and I don't want to necessarily give an intra-quarter guide on all the markets. We'll do that as we close it out. But suffice to say, order entry turned positive in North America, it was positive in Asia-Pacific. Aerospace got better. If you look at 2/3 of our markets, we're kind of in decelerating decline as of last quarter. Another 1/3 was an accelerating decline and when I look at the backdrop, and I feel globally, I think we're going to have a really nice recovery going forward. Tom and I both feel like, I mentioned earlier, we've been through 2 industrial recessions in the last 5 years. I feel like this recovery is going to have some legs to it. Very low interest rates, plenty of fiscal stimulus taking place around the world. Vaccination rates are really ramping up, maybe signs in Europe at this point in time. But certainly, the lack of COVID in Asia and vaccine ramping up is good. I see air travel slowly coming back, which is going to be getting back on that growth trajectory on the commercial side of the aerospace is really positive. And I think getting to being positive going forward is going to be a real benefit for all of us. So a lot of positives here going forward, and we talked about at the end of last quarter, distribution's really bouncing back strongly.

So maybe just another question we get a lot from the clients regarding what does it look like in the distribution channel? Level of inventory there? How is this cycle? What has happened differently in this cycle versus prior cycles?

Well, I would say, in this cycle, it's not too different from prior cycles. I think distributors, when they sense their end markets are down, they're quick to conserve cash, pull back, destock as quickly as they can. And I think what we're seeing now is a restocking. There's many -- I'm speaking, North Americas, when I say this right now, there was a lot of multi release orders that were placed outside the company and which will schedule over time. Because for distribution, when they sense the business is coming back, they want to have inventory in their channel to be able to quickly take market share and opportunities. And we augment that by making sure we push inventory to our distribution centers to take care of that. So very positive. Distribution's a mixed bag. I mean, if you're in kind of midstream or upstream oil and gas, okay, there's probably a bounce off the bottom right now, but it's not like it was. Time will tell if that bounces back a little bit. But by and large, if you're dealing with factory automation, in-plant activity, factories are busy right now. They're very busy. There's -- CapEx is more and more taking place, and there's really positive trends there.

Got you. Another thing we're hearing from companies, maybe they go back together, but sort of supply chain health and inflationary pressures in the cycle, what are you guys absorbing? And how should we think about it in relation to Parker?

So 3 things -- so there's definitely inflationary pressure taking place. You can just track all the commodities. And in many cases, they're up over they were over 2019, et cetera. There are lots of supply chain, we'll see around freight logistics constraints taking place right now. For Parker-Hannifin, 2 things I want to point out. One thing that is really good about the company is we design, make and sell in the region for the region. So the supply chain constraints I'm thinking sea containers, airfreight and all that, is much, much less of an issue for us because we're sourcing locally and taking care of that. Having said that, we're not 1,000% immune to that. We see it, but it's not something -- it's just regular activities taking place in the operations. When it comes to inflation, I think the one thing, if you tracked our company for a long time is we've got very good processes internally when it comes to pricing, following our pricing and also following our input costs. We track both of them on a daily basis. We can see the trends coming. We saw this inflationary pressure coming really in November. We started tracking it and getting up there. So what that allows us to do is always put pricing in place where we'll stay at worst-case, margin neutral. And that is the discipline we've had in the company. And if you followed us for a long time, you've seen -- we've always done a great job of doing that.

And just a much more basic question about Parker, right? This is sort of the debate we've had with investors for 20 years. Is net basis, right, if I put together the impact on new key end markets, commodity pressure, competitive advantages. Is inflation good or bad for Parker?

I don't think modest inflation is bad for any business, to be honest with you. I think it's creating an opportunity in the marketplace when it creates opportunity. Some of our end customers are looking to cost out things quicker than they've cost them a lot before in the past, which creates engineering opportunities for us to do application engineering. It creates a positive conversation around pricing. So I'm not sure it's a bad thing.

Got you. So maybe we can sort of jump into aerospace. It is interesting that you sort of guys are saying we perhaps are at the bottom. So a, maybe a little bit more color what you guys are seeing on commercial aerospace trends as it relates to your businesses specifically because Parker now is a bigger aerospace player than it was pre exotic? But also, beyond that, what's the longer-term game plan for the evolution of Parker aerospace business? How big can it get relative to the overall company? And specifically, as I said, maybe Parker is more aerospace than you guys were before. What are the key platforms or trends that we should be paying attention to that maybe we have not been paying attention when it was smaller?

Okay. I'm going to try and answer all those questions. If I miss some. So first off, I think we love aerospace. It's a long-term business. It encompasses all the technologies that we operate as a company. And there's great technology exchange that takes place between aerospace, industrial businesses, all the big macro trends, electrification, fuel cell, hydrogen, it's just -- it's wonderful. The interplay is great. It's amazing to me. It was literally a year ago that the world changed significantly. And I sat down with the aerospace team. And we jointly said, we're going to have to restructure the commercial aerospace side of this business, and we moved fast. I mean, really, commercial aerospace was down -- travel, it was down as much as 80% in the Americas as we went into that. And that team quickly readjusted the workforce to be able to deal with the new reality. The benefit that I see going forward is that new reality has hit a bottom. You can see as people are becoming more comfortable and vaccination rates go up, you're seeing revenue passenger miles slowly start to climb. Yes, it's off significantly from a year ago, but the trajectory is in the right direction. The other -- so as that continues to evolve, and we knew it would be several years, you're going to see the primes increase their build schedule in the factories. So airliners will -- airline production will start to come back. And the other thing, the positive you're going to see is a much better mix on the commercial MRO business inside that space. So commercial MRO, I would think about as repairs and spares. And spares is the higher-margin business. And what happens when commercial aerospace goes into a trough like this, they're doing everything they can to save money, and some of the spares, provisioning some of the spares don't take place. We're going to start to see that happen as revenue passenger miles go up.

And what about Parker and usable service material? How does that impact you guys when plan's going to get parted out?

It's not -- it's -- look, it's not 0, but it's not something I'm losing sleep over. It's not a big deal at the end of the day.

Just because you're not in the hot part of the engine, the way other people are just, right? It's just the difference in price not that big?

Yes. It's the products that we're making and the proprietary technology of the parts out market doesn't take a big slice of what we're doing there. So thinking about aerospace going forward, and this is why I even get more excited about it. Everybody has to remember, we just went through this super cycle of investment in the space for probably 10 years. Not only on the military side, but on the commercial side. I mean, if you think about all the new airline platforms that were designed, there was a tremendous amount of R&D throughout the whole value chain. And I think the appetite for everybody coming out of COVID is, "let's harvest and get returns out of the investments that have taken place. And let's not be so quick to be introducing the next-generation aircraft going forward." And I think that's good for the value chain. It's good for margins throughout the value chain. It's good for Parker. I remember at one point in time, Andrew, we were up as much as 12% of R&D expense in aerospace. We're in that 3.5%, 4% now. And look, R&D at that level is inefficient. There's a lot of complexity, a lot of extra costs that are baked in that aren't necessarily just captured on the R&D line. And I think you're going to see in aerospace, commercial aerospace recover, become stable, and I think you'll see good profitability through the value chain. If I missed any questions? I think I hit them all.

That's a very comprehensive answer. So maybe another sort of area of questions that we're getting on cost savings plan, I think big upside in discretionary savings last quarter versus the plan. Just -- can you just remind us how did that come about? And what are the implications for the rest of fiscal '21.

Yes. So I think the big thing you saw last quarter was really a concerted outlook on discretionary spend. We continued to really pull in everything we possibly could, we had a great influx of business that came back too. So the incrementals on everything that we were doing, the mix was good. I mean, it was a great quarter, right? I mean, we were all picking...

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Yes. It was -- I mean it made my Christmas vacation all the better. I know how it was going to turn out. I mean it was a great holiday. So I think when you think about the company going forward, I'm still very bullish on our margin progression. If you think about incrementals going forward, incremental leverage. Typically, when we get a lot of wind at our backs, you're going to see that 45% to 60% incremental margins going forward, assuming that wind is going to be at our back in the incoming quarters. I don't think you'll see that much. Well, I think you'll see that 30%, 35% because we're going to anniversary a quarter where we took out a ton of cost. So if you looked at it on a comparative basis, it's still the same incrementals. But I think you can think about the incremental performance in kind of that 30% -- to be safe, 30% incremental rate going forward.

Lee, I think after this comment, I think all of us are hoping that you're having a wonderful Easter this year. So a bigger picture question. Look, you moved to the version 3.0. But which aspect of your culture operating philosophy has undergone sort of biggest transition during COVID? I know when I talk to the team, maybe digital is one of the examples. You sort of talked about using AI in your process forecasting, maybe that's a good beginning. But what else has changed? And I understand that all of this is happening within a comprehensive framework that has been working.

Andrew, it's a great question. And somebody asked me, ironically that questions, almost similar to that maybe a week ago. I think I want to go back to FY '16 and Win Strategy 2.0. When Tom and I went out and got input, 10 focus groups around the company probably touched 500 people inside the company. And we said you can change anything on Win Strategy, except you can't change the name. And what we settled on was coming back with Win Strategy 2.0 and then Win Strategy 3.0 of having 4 pillars. We added a pillar. And that first pillar on Win Strategy 2.0 and is carried forward on 3.0 is around engage people. And the biggest shift we made inside the company, not that it wasn't always there. But when we said our strategy has to start with our people. And we want to have high-performance teams and operate in a safe culture and highly engaged. When the people are thinking and acting like owners because if we have that, they're going to do a great job serving the customer. You do a great job serving a customer, there's a great chance you're going to grow. And if you're growing and doing all those things, you're going to get profitable growth. When we did that, we introduced this idea of 0 accidents inside the company, measuring safety. And we started every single meeting inside the company with our safety metrics. And we were bottom quartile. We were bottom quartile. We are top quartile today. So why do I give you all this background? I give you all this background because when we got to COVID, it was -- I can tell you, with 300 manufacturing facilities around the world, 43 different countries, it was change management like you couldn't believe. And we created high-performance teams in all these countries and how we wanted to operate in those factories because we were deemed as a central manufacturer, making parts, everything from helicopters, airplanes, ventilators, you name it, drug delivery, vaccination. And what made that possible was our team members trusted us. They knew that safety was the #1 priority, #1 metric inside the company. They trusted us in that 5 years building up to that. We were allowed to put the processes in place. And to me, that was the greatest accomplishment of getting through COVID. All those other metrics were in place to win the operating cadence, the way we do lean, everything else, but it was the idea that our employees trusted us, knew that safety was #1. And allowed us to implement these changes worldwide.

And how has your compensation philosophy has evolved or how has -- right, because I think people perform to sort of the metrics you tell them to perform and what you pay them for. So how have your thoughts about sort of paying folks evolved as you sort of have evolved this operating strategy?

Yes. So we are in the process of rolling out a new short-term annual compensation plan and it's called ACIP, Annual Compensation Incentive Plan. And for people on the phone, the way every business and employees in that business, their annual incentive was based on 1 metric, return on net assets. And you may see, well, Lee, return on net assets is a good metric to be responsible for. It is. It's a great long-term metric. It's not a great annual plan metric. And what was always frustrating for myself and Tom, it was completely inelastic based on the performance of the business. So we roll off all our businesses. And we roll them up. We create guidance for you. We hold ourselves accountable to our shareholders. And then you could have a business not performing to the roll up, but they're still getting great annual incentives. And we said this has got to change. So what is changing now is we're measuring every business annually based on a revenue target and earnings target and a cash flow target. And those targets are targets that we roll up. And when we summarize all those, that's the guidance that we give to The Street. What we've created is a plan that is far more elastic, and I'll tell you, is far more understandable for our employees lower down in the organization. We've piloted this annual incentive plan for the last 2 years in our filtration business. And they are our biggest advocates inside the company and then the biggest proponents of moving towards this way. So this is big change management, but we are on top of it, and I'm really encouraged by the way the organization is pulling it. So half of the organization will be on this fiscal year, the other half the following fiscal year. And I think this is going to really underpin everything we're doing as a company and continue to drive top-quartile performance.

Got you. Maybe we can talk about sort of margin trajectory and drivers. So how should we think about longer-term gross margin expansion opportunity? And what are the key drivers of margin expansion over the long run? I know you're focused on simple-by-design, automation, new manufacturing technologies, as I said, new digital tools. And maybe before you start, can you clear up, we're getting a lot of questions. Do you define your gross margin somewhat differently from others that would help as well before we start? So maybe your definition of gross margins relative to your competitors, and then what are the levers to drive gross margin up over the years?

So I think the way to think about -- so the answer -- the quick answer to your question is our gross margins incurs other costs that other companies don't. And because we're very decentralized, there are what we would call other operating costs. They go into that cost of goods sold. So the best way to look at our margin and comparing it is I would just look at segment operating margin. How is this company comparing against other companies in its peer group on a segment operating margin level? So you would see our our gross margin be a little bit lower, and then you're going to see our SG&A be a little bit lower, and it's really the combination of those 2 things. Look at the segment operating margin level, and that's the good screen. As you know, we gave targets, FY '23 targets for margin expansion growth and all that. We're well on our way to meeting or exceeding those FY '23 targets. And also, for the third time we've raised targets in the last 5 years. We are going to hold an investor forum, hopefully, in New York City next March. And we'll be introducing...

Making new targets?

Yes. We'll be introducing new 5-year targets at that point in time. So I'm very confident that we're going to meet the FY '23 targets, and I'm very confident that we've got a lot of runway to go past that. I mean, when I think about all the basic levers we have in Win Strategy 3.0 around lean, high-performance teams, simple-by-design, simplification, our international distribution, our digital leadership. All this gives me great confidence that there's just a long way to go on this. And lastly, with our team, they buy into it, too. I think the first time when Tom and I took the reins, it was said we're going to go from 15% to 17%, and we've been pursuing 15% for a long time. They thought, okay, you got to help us show us how we're going to get there, and I think they all buy into it now.

So a, I do have sort of broader question on capital allocation and algorithm going forward, do have a very specific question from the audience. So sort of question, total debt is up year-over-year as is debt to EBITDA, where do you want long-term for their ratings? And how do you think you will get there and paying down debt versus EBITDA growth? I think it's a very technical way of asking something that I was going to ask in a less technical way, but maybe you could just address very specific question from the audience.

Okay. So I'm going to kind of bucket this all together in terms of capital allocation and debt structure. So as you know, after the LORD and Exotic deals, we were up about a 4x gross debt to EBITDA. We've said externally we'd like to get it down around 2x, and that's kind of where we've been headed for debt rating agencies, et cetera. We are going to have paid off all our short-term debt here by this summer, whatever outstanding commercial paper that we've got left. So we're going to have some flexibility from a balance sheet standpoint going forward. And we will look at how to deploy capital inside the business in what we think is the most meaningful way. I mean, we're going to always start with the dividend. We got a 62-year record. I think it is -- nobody on the team wants to miss that. We'll continue to invest in the business. We'll continue to service the debt where we can. And then we're going to deploy capital between share buyback and M&A activity. I think there is a bias that we've got a greater opportunity to buy companies and be quickly, synergistically accretive to Parker-Hannifin because of the platform that we've built over all this time. And you've seen the ability to quickly synergize the returns on these companies with CLARCOR, Exotic and LORD. So what -- -- but if there's a bias, it's towards adding to the portfolio.

And what is the competitive environment for deals?

Well, I mean, it kind of speaks to pipeline, right? And the one thing we've learned through all this is you can never stop developing the pipeline between LORD, Exotic and CLARCOR. We've been talking to those companies forever. And sometimes things feel like they'll never going to happen, but they do happen. LORD would be a great example of that. So we're very active in the pipeline. The pipeline, the level of activity is high. And we're working on it, working on it real hard.

And one of the biggest -- it is interesting, when you guys did CLARCOR, there was this weird timing was European restructuring. I think CLARCOR sort of showed us through -- call this, through the downturn. But it seems that LORD and Exotic has just gone a lot better just in terms of, clearly, lessons learned during CLARCOR have been applied to LORD and Exotic. So what are the big takeaways from what has gone right with LORD and Exotic deals?

Well, I think the takeaway across all 3 deals is absolutely put your best people on it. These are dedicated integration teams, smart people, focus, there is a monthly review. Well, I'm looking at it weekly, but Tom and I will do a deep dive, monthly review on every one of these integration teams and how we're integrating the companies. I think when you look at M&A and you look at the synergy opportunities, CLARCOR was very different from LORD and very different from Exotic. CLARCOR was clearly a rooftop consolidation quick play. And when we did this deal, it was around FY '16, we were in industrial recession. There wasn't a lot going on. And we got very aggressive on rooftop consolidation and then all of a sudden, businesses started coming back. And really, what happened to us is we got caught operating multiple facilities where there should only be one. The number one thing you have to do when you're going through an integration like that, you have to serve the customer. So you cannot take your eye off the customer because when you get to the other end of it, if you don't have a customer, you've lost all the possible value you can possibly have. So there were several quarters there. I mean, it seemed like more than several quarters, where Tom and I were talking about inefficiencies, productivity, all that. We knew this will short-live. We knew we were serving the customer. We knew what we had in front of us was not some great feet, it was just timing. And I think the one thing that went wrong with CLARCOR was the timing. Lesson learn, maybe we wouldn't have been as aggressive on the rooftop consolidation, no matter where we were in the cycle. We would have piecemealed it a little bit better, but we'll see the next opportunity we have. But it's an absolute home run today.

As we -- sorry.

Go ahead.

No. I guess, just a follow-up. As we try to back into sort of synergies achieved from these deals, these are big numbers. So as you sort of think about like future deals, can you capture synergies that are similar order of magnitude? Do you have a playbook now? Well, you sort of have 3 deals where you have achieved them. But do you think this playbook can be applied to deals going forward?

Well, again, every deal is different. The big synergy opportunity with CLARCOR is all around rooftops. The big synergy opportunity with LORD, I'm taking growth out of these as that's a given, big synergy opportunity with LORD was SG&A costs. We knew we could do a lot more there. Why? Because we had this huge EMG platform with a lot of infrastructure in place. That's the benefit of putting something with Parker. There's a huge installed network there that you can get some synergies out of. And then Exotic, really, we wanted more content on the engine, but the beauty with Exotic is we've been able to expand their customer interactions beyond what they've had before in the past and get some synergies through technology and through SG&A costs. But they've all 3 just gone very well. So the playbook's there, whether we get 10% to 14% synergies, it depends on the next deal. But we're not -- we're going to be prudent about what we're signing up for.

Maybe the last question, we have a couple of minutes left. How do you think -- we have been getting questions also competitive environment and the rise of new Chinese competitors. I guess I've been looking at you guys close for 20 years now. And there's been talk about rising Chinese competition for 20 years. It does seem we're finally at a point where there are some sort of competent Chinese competitors. Who are they displacing right now? And at the same time, I would imagine, as you have better quality out of China, it sort of raises the overall standard for the industry, and that creates opportunities for you guys to sell high-end product as well. So how does this dynamic sort of interplay? And maybe specifically in Asia is a good place to start.

Well, so it's really a multifaceted answer, but there are really good Chinese competitors. And we're a really good Chinese competitor. I mean, China is a very large operation for us. We've got multiple factories there, great technology development, and we compete really, really well across all our technology groups in China. What differentiates us is the same story I talked before, interconnected technologies. There is no one competitor that brings all that together and has the depth of putting it together like we do. I think a lot of the growth you've seen in Chinese competitors is really a consolidation of the Chinese market in many ways. So you had incredibly fragmented Chinese market in many of these technologies. And some of these companies have figured out how to consolidate it or squeeze other smaller players out. So it's a consolidation. But there's no -- look, I'm always aware of any competition, but I don't go to bed at night worrying about Chinese competition because we compete with them every day, and we hold our own and do just fine across all those things that they've always treated us well in the past.

I think we are right on time. So with that, I want to thank you for your time. Thank you, everybody, for listening in. And if you have any questions, feel free to reach out to me or feel free to reach out to Parker team. Thank you so much. Pleasure to have you at our event. See you next year.

Thank you.

Hoping for that.