Pentair plc (PNR) Earnings Call Transcript & Summary

Good afternoon, everyone. Again, welcome to the final presentation of the day at Deutsche Bank's Global Industrial Conference. I'm Andrew Krill, work on DB's multi-industry and machinery team. Really excited to have Pentair here, a final presentation of the day. We have John Stauch, CEO of Pentair. And then we also have Jerome Pedretti, CEO of the Pool segment. So cool opportunity, have both of you here. Presentation fireside chat. We'll open it up to audience questions later.

So with that, John, maybe to kick it off. I think there's been a lot of focus on 80/20 recently. Maybe just can you give us an update on that. When it started? I believe it looks like January, when we can start to see some more tangible benefits and just any segments you'd call out that could be outsized beneficiaries?

Yes. So thanks for the question. First of all, just to reference, we just had an Investor Day in March. So I encourage you to take a look at it. And what I wanted to make sure it was understood is during the Investor Day, we called out a transformation journey that Pentair is on, read into that ROS expansion through 4 really important themes, which are pricing, sourcing, operational excellence and organizational excellence. And the context between sharing that is we're still committed to all our transformation goals, and we still believe that the margin targets we've put out there can be achieved. But in doing those 4 transformation efforts, we recognize that every time we try to address the complexity in the portfolio, we were having difficulty getting suppliers to accept the sourcing opportunities. We weren't able to price 100% of our SKUs to the market. And so we embarked on this 80/20 effort. We chose a firm and a partner that's proven in the industry and, quite frankly, known for the fact that they run P&Ls before, and implemented 80/20 is the course of day-to-day business. That was important to me. It was important to the company. Because I think we had to get the buy-in from the organization of -- yes, these are great ideas, but how do we actually go reduce our SKUs and how do we really improve the customer experience. So the early insights of 80/20, I didn't have them at the time of Analyst Day, have been stunning. I mean I think the good news is we crushed it. We're much better than the 80/20 that was expected. And the way that 80/20 really takes a look at it, Andrew, is your upper quadrant is what you're focused on, which is your best customers buying the products that you most want to sell to them. In good businesses, that's probably 64%, 65% of your revenue. In Pentair's context, it came out a lot higher than that. And then you work around the quadrants where Quad 2 is the complexity of products that you bring to those top customers. Quad 4, which would be the lower right would be the products that you don't really want to sell to customers that are lower in value to you. Those are the ones that you want to move with a greater sense of urgency on because they're disruptive to you. They're also disruptive to the industry. And then the lower left quadrant of 80/20 really is your key products that you want to sell to maybe lesser customers. The challenge with that quadrant is they might be disruptive to your best customers. And so there's been a lot of great learnings. I think it is absolutely opened our eyes at Pentair. I wish I would have started it really sooner. Andrew, I regret not doing that, but at the end of the day, we are where we are and what we have instead is grade 80/20 insights with incredible tools that the business leaders can use to drive their individual business performance. So I'm encouraged and excited and I think it, combined with the transformation goals, should produce an ability for us to really reduce the complexity, raise the organic growth rates and meet or exceed the ROS commitments that we shared.

And just to confirm, like these would be incremental to your 2026 margin target?

They would be. I don't think we're ready yet to commit to what that opportunity would be. Obviously, we'll see how we do, and then we'll share what the upside potential could be.

And then in a related vein, I think I know you've commented on in the past, perhaps expanding a little bit too much geographically into areas that were not arguably core. Can you maybe just expand on like how this happened? Like why and maybe like what you're doing to make sure that doesn't happen again looking forward?

Well, everything was a great idea at the moment you tried to do it, right? So I mean, it's not that long ago, we were measuring companies on their global revenue opportunity, and we fell into that. And I think some of that global revenue is really beneficial to us as a company. But in certain cases, we might have measured geographical expansion disproportionately, and that is now sitting in the businesses as complexity, that's harder today to manage through and harder today to deal with. And I say that because we have things like sustainability metrics that we have to achieve. We have compliance and trade compliance. And so if it's not a high-value product to a high-value customer, you can see how it comes back in the 80/20 insights is you're spending a lot of energy on things that maybe is not valuable to you or to your customers as a whole. So that will be a big part of the 80/20 lens.

Great. And just as we focus on the near term for a little bit, maybe just any broad strokes updates on end markets, how they're tracking. I think there's been some concerns on like the more resi and like lighter commercial parts of the market, concerns from investors last year, any views would be great.

Yes. So Jerome, maybe you want to share what you're seeing in Pool and where we are to our original guide and our Q2 commitment, and then I'll share for the rest of the portfolio. Just so you can say something here.

Trigger some questions later. No, I think we're confirming what our guide is and we've been saying at the end of Q1 that Pool is going to go back to some growth -- high single-digit growth for the year. I think that this -- it doesn't come from the market. I think -- we think the market is still down mid-single digit, new pools being down maybe high single, but I mean remodel and aftermarket being down like low single. So the market is still down, but we still have inventory -- not inventory kind of a headwind that we had last year, and that's why we're really going to help us with the growth this year. So I think that while the market is down mid-single digits this year, we're seeing some trends, positive trends that are going to help us moving forward, [indiscernible] ask for that. So we think 2025, 2026, we want to -- the market is going to go back to mid-single-digit growth. And for us, mid-single digit plus wants to take share.

Yes. And I think it's important because I think that -- we talk about outlooks on industries, and I just want to remind everybody, we're about 40% exposed to U.S. residential. And for us, '23 was not a good environment and '24 is kind of a flattish environment. And so we're kind of muddling along and most of our residential exposure businesses are kind of flat sequentially. And then they have various year-over-year comparisons that I think get distorted sometimes we talk through it. But overall, I mean, we're working through that environment, and we see some positive indications as we head into next year that we'll be back in the growth mode. And ultimately, using our transformation journey and using the 80/20 insights to accelerate margin performance to continue to produce double-digit EPS commitments this year.

And within Water Solutions specifically, is any update on like restaurants activity? I think there are a lot of headlines on the consumer wallet being stretched a bit just kind of where you play there? It seems like you're in a more favorable area, I think it was like beverages, for example. So just what you're seeing there, like tenant grow again in 2025?

Yes, we'd like to think so. And -- so for those of you, just to remind you, we got a slightly higher than $700 million Water Solutions commercial business, primarily Everpure filtration so that great water that you drink from tap and not those blue bottles that sit on the table, but it could be drinking water. And we -- yes, yes. And we also make ice machines under the beautiful snowflake of Manitowoc. And that combination provides a really nice capability to most food service and hospitality venues. And we've had a really good synergy between Manitowoc acquisition and Pentair Everpure, and finding new customers and new opportunities to continue to grow. We like our space because we like to believe that that's the profit center for most restaurants is beverage side. I don't want to say how much money is made there, but let's just say it's more profitable than probably the food side. And because of that, we think we're well positioned, and we think we have an opportunity to continue to grow despite some of those stretched wallets that you talk about. Because I think even though fast food is up in cost, which is where a lot of these ice machines go, is still relatively inexpensive compared to what other food costs are. There's a hospitality that's returning and opening back up again in global travel. So our business is well positioned, and I think we continue to see longer-term trends to be favorable in the industry and to us.

And just more broadly on price cost for the whole portfolio. I mean it seems like inflation keeps creeping higher. I think on 1Q earnings, you said price will be up 2% for the year, costs up 3%, so kind of in the red there. Maybe just what's the latest on these pressures? And like, can you put through more price this year to kind of get that more in balance?

Yes. So first of all, we benefited tremendously from price cost in the last couple of years, right? I think we do have industries in which we sell into distribution and distribution primarily sells into dealers and end markets, where it's easier to pass price along. I think this year is much more balanced on the cost side, and I think we're back to what we call normalized inflation, normalized costs. It's fair, there's little pesky components like electronics, motors, copper. They continue to creep up based upon what they think global demand would be. And we do, if necessary, have the ability to go back to the market and price effectively. I think our current view is through the 80/20 work and addressing some of these lower value products to us adjusting those prices more significantly. We should also be able to offset some of that complexity of inflation. And I think that's our near-term focus. And I think we're balanced on price cost, and we still think that price should be able to offset costs this year.

And then maybe one last one just on 80/20. I think some of the other big name companies that have embarked on 80/20 journey, they go on multiyear, they have headwinds of lost sales. Just -- are you expecting that like are you willing to accept that? Like is the trade-off worth much better margins in your view? How do you view...

A lot of conversations about that. I mean, Jerome and I have talked about that. I think for Jerome's segment, I don't think there's a decline in revenue to achieve the complexity reduction because I think we're not serving the industry as well as we could.

Exactly. And the focus as well, right? We're going to free up some resources for us to focus on growth.

And I think we're missing out on dedicating the resources to the growth opportunities and recreating the innovation where we were. At lease a high-margin segment. Pool is a very high-margin segment, and I think we're going to benefit from redirecting the resources. We're sitting at about $1 billion of EBITDA in our guidance this year, and I think that's a watermark. I don't want to go below, right? Would I take less revenue with a faster growth rate to both the top line and the EBITDA line? Yes, I would. The experts say you don't have to go backwards in 80/20. I think you might see some quarter out of balance as you reposition yourself. But overall, that Quadrant 4 is roughly 5% of your revenue. But the theory is by dedicating the 20% of your resources in that quadrant, that are being tied up with the complexity and putting them back into Quadrant 1, you should be able to make up in the core for which you lose. But to answer your question directly, yes, I'd be willing to go back slightly to go forward faster both in the form of top line growth and on a more consistent and predictable basis and to continue to raise that EBITDA contribution.

I guess, Jerome, I got to ask you some questions now. Go back over to Pool. I think I want to ask on permits activity. I think like from what we can track, and it's probably a little more limited than what you see, but you're kind of trending down double digits for many months and then kind of March, April time frame, like up or flattish depending on which state just -- like are you seeing a similar trend there? And also the dollars of the pools. It seems like it was up year-over-year even if the volume perhaps not as strong for us.

Yes. So I think that you can track the permits on the volume. So I think that's trending up now still negative, like I said earlier, because we had a trough in June last year. I think they're inching up, that's still down kind of in that kind of double-digit rate. That's the number of Pool. If you look at the dollar, the dollars are down less because I think where you have more of a mix, more on the higher end, and the reason being that the higher end are more cash buyers, while I think the low to mid is more people needing financing and financing being more offensive, being also more difficult to access, which kind of the [indiscernible] kind of a lower to mid. And -- so I think by what we're seeing, we're seeing positive momentum in 2024. And I think in 2025, we're going to be signing on growing on those pool permits as well. And we are more exposed to the Sunbelt. We are more exposed to the higher-end pool being the construction [indiscernible]. So I think that the dollars for us is better because we are more on the top end of...

Yes. I mean if you go back to pre-COVID time frame, we would argue 80,000 to 90,000 pools per year is more normalized. So we're sitting here post COVID with a much lower annualized pool build rate than we would normally see. And I think that lends ourself into the catch-up rate that would generally happen. Also, those pool pads today have a lot more content on them than they did in the past. And you're much more incentivized as the new home buyer on that pool to want to automate and create the longer-term features that you can have. So I think we're up from here. I think we had that inventory we had to get through behind. I think we got to weather where we are this year and maybe some discretionary purchases or some lower to mid-end pools not being serviced or put in, but the long-term outlook for pools is relatively very positive.

And on that [indiscernible], I think there's been a debate of is Pool at trough earnings? Or is it still a peak and there's further downside looking ahead, like where do you shake out on that? It seems like -- like you said, it's low 60s versus 90s normal for new pools?

The number of food guys saying...

And more broadly as well?

Yes. So I think that there is still a demand for pool. There's more access to financing on the new pool. But the new pool is getting around 20% of our business. Remodel is about 20%, and I think that is an aged pool in the U.S., that needs to be remodeled. That can be deferred a little bit because of financing. But at some point in time, you have to renovate the pool, right? And then we the servicing, the break and fix of a pool, which is more stable, but being the technology to the pad, like John was saying, I think that's really what is going to drive that growth on the aftermarket. That means that there is good growth going. And I think that if you look at that growth, but look at the work that we're going to be doing, at least, on the transformation ourselves, plus [indiscernible] 80/20, I think we have a good runway to continue to expand our margin, right? I mean at Investor Day, we said we have a 400 basis point run rate versus 2023 and we commit to do that, at least.

I would just add that I'm very, very proud of the fact that we have a business that will produce record earnings on what I'd call a relatively lower pool build. And I think it speaks to the industry, and it also speaks to the performance of the team. I would also say that we're committed to improving our performance to the POOLCORP and the other distributors out there, and they deserve better. And they also deserve a leading pool company, which we are to be out there with them, creating the incremental demand that we have historically created. And I think the last several years is really about dealers is servicing demand. We're going to help create that demand and our dealers will benefit. The industry will benefit and our partners will benefit. And that's really around new inductions of new products, innovation, and really changing the mindset of the ease of ownership of a pool. And that's our responsibility as the leader in the North American industry.

And just in terms of automation with the pools and like you've brought up I think about half of new pools have automation and that creates customer stickiness. Maybe just talk through that like where -- could that be 100% at that point?

I think it will be 100%. I already expect to do kind of more effortless pool and to be able to control pool with the phone, right? So I think on the new pool, it's going to be inch closer to 100%, maybe not next year, but I think it's going to get there. And I think that we're looking at the amount of automation on existing pool, which is in our bond 30%. So I think there's a lot of automation that can go on the existing pool and I think it's our responsibility also to educate the homeowner and the dealers that is going to make their life easier, right? So the homeowner, they're going to have an effortless pool for the dealer. They're going to be able to see what the poor problem is for remote monitoring, eventually remote troubleshooting and it's going to be the dealer so much more productive, rather than going to a site to a pool to see what's wrong and then coming back to fix it after that. So I think it's going to be really something that we're going to be driving. And when you have an automated pool, it drives technology because you want to continue to have that effort that pool from the same brand, right? Because the communication protocols are the same and it's more automated, and it's better for the whole pad. So I think we're going to see really some good benefit there.

Okay. And maybe, John, for you, like on this topic, do you think perhaps like spotlighting that more helps with the BSG like investors and just showing like why pool should be part of the water conversation?

I think Pool is definitely part of the water. It is body of water. It's a filtered body of water. I get asked by just very few investors of how did pool fit into the ESG lens. And I think just like other businesses and industries, sometimes you didn't create the demand for the product or the pool, but we make it more energy efficient and more environmentally friendly. And the amount of statistics that we have and the track record we have of reducing energy consumption working on green energy to solve the pools and also the reduction of chemicals and sustainability usages, we can do a better job of showcasing that. We do it through our sustainability reports, but we could be more out front. And I think we have a commitment and responsibility to it. But I also think it's a water reuse example. And as you think about pump and filtration and how things work across the portfolio, if you think about a body of water, you can close that body of water, and now we're working with communities, we're filtering water. We're extracting water from homes and rejecting that water in a much better way that can be reused by communities and certainly golf courses in irrigation an example. So I think there's a lot of sustainability things around Pool. I think there's also a wellness factor that needs to be explored more in the way people feel their mental -- their health, their fitness. So I would [ pookoo ] that a little bit to use it really adult word, [ pookoo ]. I really think that our efforts around the sustainability have been impressive with pool.

Okay. And lastly, 1 or 2 on pool, I'll just maybe, Jerome, like can you -- like have you quantified ever, like Pentair, I think the bias as your more high-end pool, which again has been more resilient, like do you sell the lower-end pools? Like, is there a percent you can give us on that?

We don't do above ground pools.

We don't do above ground pools. And I think it's difficult to quantify because of the pads are so different. But we know that due the dealers we have, we segment the dealers we sell to and the mass, majority of them -- the vast majority of them, sorry, are really on the high-end side of the pool. So more Sunbelt, more [indiscernible] pool, more complex pool, right, which have water futures and have a better -- I mean, a better look and feel within the backyard. So I think that's what we sell to that who our customers are.

I mean some of that -- I mean, we were the early adopters of the energy efficiency. We're the early adopters of the LED lighting. We created a lot of the salt water and capability. And so those tend to be in the higher-end pool side. In addition, our automation when it started, and it still is the focus was a dealer tool. It was to create the ability to not have a non-revenue generating call to a customer and do the predictive maintenance ahead of time and to help the dealer be more productive with the customer. Because of that, Andrew, I mean, we do have a track record of having supported and built and created some of the strongest relationships with the top end pool builders who take pride in what they do. And a lot of pool builders do walk away from mid-market and lower jobs because there's just really at times, no margin to be made on those types of standard pools if that makes any sense. And they get to be choosy because of their reputations in the markets that they serve.

And then just in terms of your distributors, I think they're one of your large ones in the process of being acquired, just maybe expand? Like do you think this can -- is this a good thing? Is there a pricing pressure, perhaps a larger addressable market in the end?

Yes. So I think on the home depot, buying SRS and then SRS has Heritage, which is our -- Heritage is our #2 customer -- distributor. I think that we -- the deal is -- first of all, it's going to take time for that deal to play through. And everything they're saying is that Home Depot is buying in our SRS and heritage for differentiated capabilities that they don't have. So I don't think they want to have those kind of same products with all their stores because it would create a channel conflict for themselves. So I don't believe that what they say but they continue to run that separately. I think that's a smart thing to do for them. And I think we're going to continue to see that. And that's what they're saying right now, or we're going to hold them to the worse.

I will pause here to see if the audience has any questions. We'll go back to you, John, for more. Just going back to the whole Pentair portfolio, I think on the margins again and what you laid out at the analyst meeting. I think you have 24% in 2026 as a starting point and then a 200 basis points contingency. 26% if you don't have to eat into that. So can you just like walk us through like what would happen in the world that would make you use that whole 200 or maybe half of it in any way to quantify that?

Yes. I mean I think it's really about what we're willing to commit to and hold ourselves accountable to exceeding. And I'd think of the '24 as that lens, right? And I think ultimately, within the context of driving to the higher end of the margin, and I was asked this earlier, do we want more volume growth? Absolutely. Volume is a friend of operations, especially around fixed overhead and running more value to your factories is the best way to get volume leverage in your factories. So we'd like volume to get there. But I do want to say that the path to achieve the high end is there through transformation with very little volume. The contingency would be, is there something in the world that happens that makes this pause, and I think that we can get these transformation efforts. We're far enough long on each of these pillars that we feel confident in the outcome that we're going to achieve there. We've looked at 80/20, and I think 80/20 will be done across the whole entire business by the end of summer. We use that as a strategic lens of how we focus the business. And I do think that allows us to be even more successful on the transformation pillars as we apply those tools selectively to the businesses that have the higher opportunity. But I think the hardest thing about being a CEO of having multiple revenue streams and to be a leader of both of revenue streams, we say no to. And I think the best type of leadership is to say no. And there's something that you learn in the 80/20 thinking and training is that, yes, should be so coveted that should be protected by like 1,000 mills, right? I mean and you think about how many times you say maybe or you say, let's explore that, and that can be extremely disruptive to an organization. So I'm convinced that through the 80/20 and those pillars that we have, I'd be very disappointed if we weren't talking to you as we go along and raising those margin guidances in the future.

Great. And maybe, Jerome, like for pool specifically, you're already around or over 30% margin...

It's definitely over. It's going to continue to go over.

That's the answer already.

So maybe just can you on why? Like why do you have confidence in I think the 2026 target is 35% which would be among the best within industry?

Yes. And we want to be the best, right? I mean we are the leader in North America. I want to continue to be the leader in North America. Look, I think volume is going to be our friend, going to be growing mid-single digits. So there's always good drop-through on volume. But I mean, the transformation that John has talked about on pricing, on sourcing, on operation on organ excellence. I think that give us the confidence, the plan to that path to get to that 35%. And 80/20 is going to be an enabler in order to reorder drive post transformation so that's why I think with those levers, I think I have all the confidence that we're going to get there.

Listen, pool is a scale business, right? So if you think about 6 major product lines going into the same channel, they don't all have the same margin profile. They don't have all the same rate. But we are fairly scaled at what and this type of region than what we do it to. I do think there's margin upside, but there's also an opportunity to recommit to growth. And to be better at our growth metrics, our insights into the industry itself to help promote our win rates with our key partners. And so I think there's going to be more rebalancing between what we generate from the reduced complexity, but how that's fueled back into the growth agenda. And I think we'll be very clear with that, so you guys can see where those investments are.

Great. So in the last few minutes, I want to move on to capital allocation. I think your net leverage right now around like 2x, should go pretty healthily below that as we get into like summer. Maybe just any update on M&A? I think it seems like there's been a dearth of activity maybe like why or how the funnel looks?

Our funnel is kind of lean, to be honest with you. I think there's some things trickling out, but I think there feel more like teasing them out and hopeful that the results will be very high multiples. But I think you're seeing things enter a space where you have uncertainty around interest rates, you have uncertainty around global economies. And I think you got to be really thoughtful about what you're committed to or not. I'm hopeful that, that funnel starts to improve and certainly around small bolt-ons that can really help where we are, which leads you to what do we do with the cash, right? And we do think we're not optimizing our working capital yet at the level. So we do think we have another wave of opportunity with better working capital performance, which even so is more cash in. And so I think nearer term, you got to think, okay, there's $0.50 of interest -- $0.50 of EPS tied up in interest, so there's a value to pay that down. But there's also a view to reinvest in yourself and buy back your stock. And I think near term, there's probably going to be more of the focus. And then as the markets start to unfold, and we get clarity of where interest rates are going to go and how the global economy is going to start to take shape, I think then we will see more acquisition opportunity.

And on buybacks, is like there any sizing of like what could be more run rate I think you used to do $100 million, $200 million or so a year. Is that a good starting point to think about it?

It's a great question, Andrew. The only reason I don't ask this -- answer this definitively is maybe you guys are used to is we're not the same size company as a large cap. So half a turn of leverage for us is $500 million, right? I think at some point, we need something off to the side or something available to do that acquisition or 2 within the scope of, call it, $1 billion -- maybe that's 2 of them with inside that, that could be something we've wanted for a long time or desired, that's now available. We got to go do. But when you start to step beyond that, I think that would be more uncomfortable on the size of an acquisition being too large, or are you going to be into a larger equity play anyway. So I think that helps size it, but we're going to go out and ridiculously buy back the stock. I think it just has to become a part of our overall capital philosophy and little bit of buyback, a little bit of debt pay down and just reintroducing that again between now and the rest of the year, now that we feel comfortable where our leverage is.

And just last one on M&A. Like any particular focus areas you think where like the funnel is most active or like where you want to add to?

We would love to expand commercial Water Solutions and the dedicated effort we have around the restaurant side. I think we'd also be interested in technology add-ons and pool between water chemistry and/or unique energy applications that can play into the continued innovation that we bring into pool. And then I think our larger flow businesses earn the right to invest, but I think it needs to be specific around what industries they're going to and how do they bring technology solutions for longer-term capability forward. But you know what any of those bring them, but talk to your team today. They didn't have those like ready to go.

Got it. Maybe for next year. And then on the portfolio itself, I think, in my view, I think your tone has like become a little bit more, I think, more of the portfolio is arguably core than if you were asked that question like a year or 2 ago. Maybe just can you expand on like how you're thinking about that and maybe how 80/20 plays into how you're evaluating different parts. I think again, this is mostly seems like it applies to the flow segment more than the other 2?

Yes. So just to remind everybody, Pool is definitely core. Thank you, Jerome. Water Solutions, what we do there is water treatment. And I think it's very important to our sustainability journey, and it's very important for us to continue to build out capabilities. And then I think everybody groups flow. It's $1.5 billion, but $1 billion of it is pumps that are really core to what we do. And it's hard to make water better if you're not moving it. And so I try to get people to understand that we have a really good pump position. And I think the team has done a really good job on margin to position themselves delivering cash. And I think we have an opportunity to expand the organic growth. But I think people are really speaking to is we have $500 million of filtration that tends to feel more industrial in scope. And of that $100 million is industrial wastewater, which again, is core. And the rest of that has to be figured out as to what value it has or doesn't have within the Pentair portfolio, the RemainCo. It's not in a loss position, so it's a matter of degree of opportunity, and it's highly integrated into what we do elsewhere in the portfolio, so separating it could be hard. So we work through 80/20, I think it focuses first, making sure it fits into the mission and vision and purpose of the company. And then how do we improve it is kind of where we're focused. It was a better M&A environment for divestitures as well. Maybe we'd be talking more openly about a couple of things here and there, just because if that was an exit to simplicity of the organization, we'd consider it. I just don't think that avenue is really open at the moment.

Great. I think we have one minute left. So maybe just you want to leave us with what are you most excited about looking ahead and any other key messages you want to leave the audience with today?

Yes. So overall, I mean, $4 billion of portfolio moving improvement and enjoying water. Ultimately, I feel good about the transformation journey we are on, the progress of 8 straight quarters of margin expansion, the fact that we feel confident that we have the tools to continue to build that out. And starting to use 80/20 to understand not just where the incremental margin opportunities are, but to suggest where we should double down in the portfolio to expand and accelerate the organic growth rate. And with that, I think it provides an aligned strategic capability for us as a management team to all talk about a common language and then hold ourselves accountable to overdelivering against commitments. And with that, I appreciate you inviting us, and I appreciate you having us.

All right. Great. Thanks for being here.

Thank you.

Thank you.