Pinewood Technologies Group PLC (PINE) Earnings Call Transcript & Summary

Hello, and welcome to this morning's call with Pendragon PLC. I'll shortly be handing you over to Bill Berman, CEO and Interim Chairman, who will take you through today's presentation. [Operator Instructions] But now over to Bill Berman to begin.

Good morning, and welcome to our call, where we shall outline our revised strategy for the Pendragon Group. At Pendragon, our vision is to transform automotive retail through digital innovation and operational excellence. Underpinning our vision and strategy is a comprehensive review of both external market dynamics and performance across our 4 divisions. The key conclusions of the review are: first, there is a strong case for change; second and most importantly, I believe there is significant opportunity for upside across Pendragon's businesses. To achieve the group's vision, we have identified 3 strategic priorities for growth: unlock significant value in the U.K. franchised motor division; grow and diversify our software business, Pinewood; and the disruption of stand-alone used car sales in the U.K. I will outline the key initiatives against our 3 strategic priorities in today's presentation. Our revised strategy aims to restore the group to sustainable profitable growth. We are targeting underlying profit before tax of approximately GBP 85 million to GBP 90 million by 2025 as a result of our transformative plan. Before I move to the agenda, I'm joined by my CFO, Mark Willis. Mark will talk through the financial targets of our revised strategy in detail later today. Pendragon has been through some significant changes of leadership over the last 18 months, but I'm confident that we now have a Board that embodies the right blend of experience from both the automotive sector and various other fields that will be valuable to us to draw upon. I'm delighted with the composition of the Board and look forward to their continued counsel and challenge as we execute our revised strategy. I'm personally excited for the opportunity that lies ahead for Pendragon, having been permanently appointed to the role as CEO in February. I've had a chance to fully access the potential of the group and believe from what I have seen and achieved previously in automotive sector that the strategy that we set out today, while ambitious, is deliverable. There are 5 parts to today's presentation. First, I will provide an overview of each of our divisions and associated market outlook. Second, a brief consideration of the impact and associated response for the COVID-19 pandemic. Third, I will outline the key initiatives against our 3 strategic priorities in the presentation today. Mark will then talk through the financial targets before I summarize and conclude. I will start with a brief overview of the divisions that make up the group and the outlook for each of these divisions. Franchised U.K. Motors is the combination of Stratstone, our premium luxury brand; and Evans Halshaw, our volume brand. Across these 2 brands, we represent 20 OEM brands, maintaining strong partnerships with these manufacturers. Both brands sell new and OEM-approved used vehicles and provide aftersales service to our customers. 2019 was a transitionary year for the group. Despite this, we sold an impressive 215,000 vehicles across our retail points and our service associates produced nearly 1 million billable labor hours. The lockdown has materially affected trade for both Pendragon and the wider sector. At the start of the year, new vehicle sales were forecast to be approximately 2.2 million in 2020. The latest forecast for SMMT is approximately 1.6 million. A V-shaped recovery is forecast, with volumes rising to approximately 2 million next year, but we don't expect to see full return to 2019 market volumes until 2023. The Board and I believe that the longer-term structural drivers for the sector are positive. Due to the pandemic and the public health concerns, we are seeing a big shift away from public transportation and mobility services to personal transportation. The mix effect of more fuel-efficient vehicles, supported by government incentives programs, is positive for us. Longer-term reductions in oil prices may improve vehicle affordability even further. Finally, we have seen a systemic shift in consumers' adoption of digital retail during the pandemic. Digital will be a key battleground for U.K. automotive retail, and I'll come back to this more and our strategic advantages shortly. Our stand-alone used division currently operating under Car Store banner is a digitally led proposition. We have the potential to scale the number of physical sites and unlock further share of the target addressable market that totals approximately 3 million vehicles per year. The stand-alone used vehicle division is particularly attractive for 3 principal reasons. It has a strategic freedom to operate and is not subject to some OEM requirements, franchised U.K. motors. The used sector is highly fragmented. Operating margin's potential is higher than the franchised new vehicles. And based upon our benchmarking versus peers, we have the opportunity to further improve our margins. The short-term impact of the pandemic is likely to be less material in the used vehicle market for a number of reasons: Used cars are less expensive form of transportation than new; supply is expected to be stable; and at this early post-lockdown stage, it is a strong start for the used car market. Prices have shown their largest monthly price for 2 years according to Autotrader, and values have risen approximately 4.6% in July. We believe the used vehicle market in the U.K. is the most attractive used car market globally. At approximately 8 million total vehicles, its scale is large and approximately 3x the size of the new vehicle market. And as I've mentioned, it's highly fragmented sector, suitable for disruption given the current low levels of innovation. The positive drivers support the investment case for the scaling of our stand-alone used car division. They also underpin franchised U.K. motors and the sale of OEM-approved used vehicles in Evans Halshaw and Stratstone. Pinewood is our software business and provides an integrated dealer management system to the group as well to other customers both domestically and internationally. It has a full suite of omnichannel capabilities. Customer leads and inquiries from various digital and physical channels are securely and easily managed in the integrated CRM module. Vehicle sales proposals are quickly combined for presentation to the customer digitally, and the end-to-end aftersales operations is managed. Real-time KPI dashboard is available for reporting analytics, and the DM system is integrated with more than 50 manufacturers. The development team has achieved Microsoft Gold Partnership status accreditation. The division is particularly compelling for 3 main reasons: the customer base is highly sticky and features limited annual churn both in U.K. and overseas, is a very profitable business and will be a key enabler and accelerator of the digital aspirations that we have for the group. The outlook for the business is extremely positive, given the permanent shifts towards digital and low-touch experiences. Having an end-to-end DMS that can seamlessly manage both the digital and physical elements of automotive retail will be critical. Pinewood is in advantage versus its peers today and will be further invested in going forward to enable the group and its wider customer base to thrive in the coming years. Pendragon Vehicle Management is our leasing business providing fleet and contract hire solutions. PVM is a well-run division that provides stable and material contributions to the group's profitability, and the business has grown well in recent years. Full year 2019 fleet growth, for example, was 5.5%. PVM is supported by the wider scale of the group's purchasing power to unlock preferential vehicle discounts. When vehicles are at the end of their term, this provides the stand-alone used car division another cost-advantage source of high-quality inventory for subsequent sale. The medium-term prospects for the leasing sector are positive. Business vehicle leasing volumes are expected to grow 4% on an annual basis. Business confidence will return to post COVID-19, but capital is likely to be constrained. Therefore, as companies reduce their management of their own fleets, this will support PVM. Shifts in government policy towards electric vehicles and zero benefit-in-kind [ taxation ] is another key positive driver. PVM is a high-performing asset that will continue to contribute to the group on a steady-state basis. PVM remains central to the group, and the leadership team have a robust plan in place to continue the strong performance. The final slide in this section of the presentation summarizes a number of the points I have made so far as well as touching on a number of company considerations that we'll revisit shortly when I outline our revised strategy in more detail. A V-shaped recovery is forecast for new vehicle sales in the U.K. The used market is particularly attractive to Pendragon. We already have an advantage in used vehicles given our existing niche of franchise businesses, complemented by our stand-alone used car division. There have been seismic shifts in adoption of new digital and low-touch activities prompted by the pandemic. These shifts are here to stay, and the winners of the U.K. automotive retail will be those that seamlessly combine digital and physical journeys. Simply put, automotive retail whenever, wherever and however a customer wants. The sector is highly fragmented and ready for disruption given the low levels of innovation at present. We have the opportunity to leverage our scale and technology assets to disrupt the sale of stand-alone used vehicles in the U.K. Our review of business performance has highlighted opportunities to drive material improvement in aftersales profitability, used car margins and operating cost efficiency. I will come back to these points shortly when I outline the strategy in detail. Before we get into the strategy, I will briefly recap the impact that COVID-19 has on automotive sector as well as the actions that we have taken to protect our business. Social distancing measures and government restrictions led to closure of all sites on March 23 until June 1. This has had a material impact on the market volumes in the U.K. New vehicle registrations for 2020 year-to-date are down 42% in comparison to 2019. Since reopening, market volumes have improved. New car registrations in July as reported by SMMT started to recover with 11% growth year-on-year. We'll provide an update to our trading performance with our half year results on the 24th of September. Against this backdrop of the market, we have focused on 3 priorities to ensure the long-term sustainability of the Pendragon Group. First, we have maintained an absolute focus on protecting the group's cash position. We are grateful to the government for the various support measures they put in place during the lockdown period, 85% of our employees were on furlough. We have also benefited from the business rates holiday as well as the VAT payment deferrals. Our OEM and stocking finance partners have supported us by extending payment terms. We have reviewed our capital expenditure program and have either reduced or postponed spend to help offset the permanent impact on the cash flow during the closure period. Second, the pandemic accelerated our intent to rightsize elements of our business. We concluded that 15 franchised U.K. motor stores did not fit within our portfolio and had no path to sustainable profitability. These stores will be closed by the end of the year. Since reopening, we revised our operating procedures in the rest of the state, which has driven workflow efficiencies. The combination of these efficiencies, coupled with the reduction in market volumes, will result in a reduction of approximately 1,400 roles. The combined outcome will be a GBP 37 million reduction in our annual operating expense. Finally, given the material shifts in car-buying behaviors and government restrictions, we rapidly advanced our digital and fulfillment capabilities by adding online payment functionality, a home delivery flow and associated operated model changes across all digital platforms. In spite of this, we have the opportunity digitally as a key element of our strategy. Next slide, please. Our vision is to transform automotive retail. We will achieve this by accelerating digital innovation and driving operator excellence across the group. To achieve our vision, we have identified 3 strategic priorities for growth and the restoration of substantial profitability: unlock significant value in the franchised U.K. motor division; grow and diversify our software business, Pinewood; and the disruption of the stand-alone used car sales in the U.K. Against each one of these strategic priorities, there are 3 key objectives. I will now take you through these objectives and associated underlying actions that we will deliver. The first strategic priority is to unlock significant value in U.K. motor with the primary objective to accelerate digital innovation. We fundamentally believe that there will always be a major role for bricks-and-mortar in vehicle purchasing. It's hard to justify purchasing a GBP 40,000 car. Car-buying is tactile. You touch it, you taste it, you smell it, you hear it, you experience it. We expect recent shifts in buying behavior to be permanent and the better digital and fulfillment experiences will be necessary to enhance physical retailing moving forward. Automotive retail, whenever, wherever and however a customer wants. Your car, your way. We are focused on delivering a number of actions to drive performance through digital innovation. We will embed the capability to allow customers to purchase vehicles with finance across our digital channels by the end of the year. Insurance products will also be added across all digital channels by the end of the year as well. We believe that there is a material opportunity to improve used vehicle gross margins through the development and introduction of a used vehicle acquisition and management platform. By utilizing Pinewood's technologies, we will build capability to leverage data to improve the process for vehicle acquisition, automate inventory management, remove manual process and improve efficiency, and thereby, enhancing our margin. In addition, we will develop dynamic used car pricing capability by harnessing both internal and external data to optimize the pricing of used vehicle inventory in a timely manner. Each of these improvements will drive higher margins. And lastly, we will improve the platform on which the business operates by building internal technology to provide improved and consistent customer relationship management systems. Improved CRM will allow us to create a single view of the customer in order to drive targeted performance improvements at customer touch points, such as personal contract purchase, PCP; renewals and after-sale activities and providing better resolutions to customer; feedback in order to improve satisfaction; and long-term customer retention rates. The second objective is to drive operational excellence and best practice. We have worked hard in recent months to begin to consolidate disparate reporting across the group into a single environment. This has already enabled us to identify opportunities to prepare vehicles more efficiently as well as improve the effectiveness of our sales force. These improvements will reduce costs and improve margin. We believe there's an opportunity to deliver improved performance in the sale of finance and insurance products through both improved internal operational systems and increasing product availability through digital channels. Finally, we have identified a series of opportunities and actions to drive substantial improvements to aftersales gross margin. We can make improvements to the store process to increase both the volume and subsequent version of service opportunities. In addition, we will introduce changes to improve cross-business consistency in the application of labor charges. We will utilize new system capabilities to both improve penetration rates on service plans and newer guarantees together with the introduction of new ancillary products. The third objective here is to operate from a lean and efficient cost base. We have made significant changes to our overall operating structure in order to rightsize the model and to embed the efficiency gains we have delivered to date. Including the store closures, these changes will deliver a GBP 37 million reduction in our annual operating expense. We believe there are further cost base efficiencies we'll be able to unlock across the property portfolio. In addition, we can replace manual process with systemic solutions that will review our existing key contracts and services. Our second strategic priority is to grow and diversify our software business, Pinewood. The first objective is to deliver the material existing order pipeline. Pinewood has developed a pipeline of custom orders, which will be converted over the next 18 months. This will continue growth in the overseas customer base, with existing orders adding approximately 80% to the current international customer base and 10% to the overall customer base. The second objective for Pinewood team is to deliver further geographic expansion. In addition to the existing orders, Pinewood will invest in the capability to develop further orders and deliver subsequent implementation to a wider customer base globally. Existing relationships have the potential to unlock further orders from both dealer groups and from OEM-backed solutions to the single in-market DMS provider. We believe Pinewood has material opportunity for growth through these international channels underpinned by its compelling omnichannel DMS proposition. The third objective is to deliver digital product extension. Digital product extension will initially be the enabler for Pendragon's performance across these highlighted previously: the used vehicle acquisition and management platform, dynamic pricing capabilities and CRM improvements. These products will be available to sell to the existing or potentially new Pinewood customers. This will create a new profit pool for the division. In addition, we will explore the development of a digital turnkey retail solution for other dealer operators given the current assets and capabilities of Pinewood. Our third strategic priority is to disrupt stand-alone used car sales in the U.K. The U.K. is the most attractive used vehicle market globally. The total market for used vehicle sales is approximately 8 million per year. Based on the target age and mileage profile that will resonate best with our target customer segment, the addressable market to us is around 3 million cars per year. The addressable used vehicle for Pendragon is bigger than the total U.K. new vehicle market. We believe that Pendragon has a significant advantage. We are able to leverage complementary attributes to the wider group to provide a steady source of suitable stock. We are able to source parts for preparation at scale advantage pricing from Quickco. We have a high level of brand referrals within the group. In addition, the digital capabilities we plan to build, as previously described, will allow us to leverage further scale advantages into a stand-alone used car proposition that drives higher vehicle margins. To achieve our strategic priorities, there are 3 underlying objectives. The first is to rebrand the division. Work is currently in progress to develop an appropriate brand identity to reflect a digitally led proposition supported by physical outlets. The existing Car Store brand will be replaced next year. In addition, we will determine a revised customer proposition and operating model to underpin the repositioning branding. This will differentiate the model from the franchised used car business and appeal to broader customer base both physically and digitally. The stand-alone used car division will benefit from clear operational separation from the franchised model and will be unencumbered from the OEM showroom requirements. It will, however, continue to benefit from the group synergies in digital product extension enabled by Pinewood. Over the last year, performance on the estate has been significantly improved, increased focus on operational performance and improved stock management. Our next objective is to develop the physical estate and create a larger footprint, purpose-fit facility in targeted locations. These locations will act as stocking points, customer retail and collection points and fulfillment hubs for home delivery. Over the next 5 years, we are targeting to create 8 of these physical locations at an approximate capital cost of GBP 7.5 million per location. We believe that a combination of a digital proposition and physical stores will allow us to gain disproportionate share of the target market at an attractive operating margins. Used car sales whenever, wherever and however our customer wants. Your car, your way. Our revised strategy strengthens our existing as well as to create new competitive advantage. U.K. motor will operate from a leaner cost base with substantial improved efficiencies. It will continue to act as a cost-advantage source of supply for stand-alone used cars, fully leveraged internal and external data to strengthen our digital capabilities and have a broad portfolio targeting multiple customer segments with representation across the U.K. Pine will further surpass its competitors through the development of enhanced digital capabilities and enable the group to advance its digital and physical ecosystem and contribute to group profitability both in the U.K. and internationally. And then the disruption of stand-alone used cars is unique to Pendragon, given the vertically integrated asset capabilities within our group, has no OEM dependencies allowing greater levels of strategic freedom and will drive margin upside. The plan is ambitious but achievable. We have already made good progress in the delivery of a number of actions. We will communicate periodic updates to the market on our execution progress. I will now hand the call over to Mark to talk you through the financial targets.

Thanks, Bill. Our strategy aims to restore and improve underlying profitability and put in place a foundation for sustainable profit growth. We believe this plan will deliver attractive returns to stakeholders. We are targeting underlying profit before tax with circa GBP 85 million to GBP 90 million by FY '25. Within U.K. motor, the target assumes return to the FY '19 market volume levels by FY '23 with only low levels of market growth beyond this point. Therefore, the series of initiatives we have started to outline today aimed at improving the performance in U.K. motor are targeted largely to improving gross profit margins and operating from improved cost base. In Pinewood and in the stand-alone used car proposition, we intend to grow scale, driving attractive potential returns. The profit targets we have set for the business are the equivalent of an underlying profit margin of circa 2% by FY '25. The capital expenditure required to deliver the plan will be approximately GBP 45 million per annum for the next 5 years, which is no higher than historical run rates, and we believe can be delivered within existing funding levels. As the group is funded through a combination of RCF and a private placement that mature in March 2022 and '23, respectively, the group will now assess the optimum financing strategy and sources required to support the next phase of its development in light of the strategy announced today. CapEx will principally invested in the development of IT systems for the used vehicle acquisition and management platform and to build the dynamic pricing capability in the development of the target of 8 scale stand-alone used car centers and ongoing investment in and maintenance of the franchise estate. I'll hand back to Bill to summarize now.

Thank you, Mark. Next slide, please. In summary, we are well positioned with 3 strategic priorities for growth and transformation. There is a material opportunity to unlock value in U.K. motor by accelerating digital innovation, driving operational excellence and best practice and cost control. Pinewood's geographic expansion will be accelerated and the team will deliver new digital products. The disruption of stand-alone used cars is our final priority, and we have significant advantages versus the competition. The plan restores the group to sustainable profitability, targeting an underlying profit before tax of approximately GBP 85 million to GBP 90 million by full year '25. Thank you for your time, and we welcome any questions you may have.

[Operator Instructions] Our first question is from the line of Sanjay Vidyarthi of Liberum.

Bill, Mark, just a couple of questions for me, please. The first is that, obviously, there's been a lot of change in terms of people at Pendragon. I just wanted to get some feel for the strength on the bench in terms of the operational team that you have in place and how that filters through the organization now, how confident you are that you have the people in place to execute what is an ambitious strategy. Second question is, you mentioned dynamic pricing on used cars. Does this mean that the everyday low-pricing model that you previously had will no longer be in place? Is there a change there in terms of the kind of no haggle policy that you previously have?

It's Bill. So on your first question on the team, absolutely, I feel that we have the right team in place. We've made several additions over the last 6 months to strengthen up areas where there either -- we didn't have either the right person in the position or the position was created. And I like the team that we currently have as well as we have several other candidates that we're in the process of bringing in to short any remaining opportunities that we have, i.e., we have a high-level executive coming in to take over our stand-alone used car business in the coming weeks, and we've got announcement when appropriate. So I'm sort of very happy with the team that we surrounded ourselves with. And I definitely think we have the team to achieve the goals that we've set out. As far as dynamic pricing, I'm a firm believer in the no hassle pricing. Customers don't like to negotiate. One of the things that they always represent that they don't like that portion of the car-buying experience. But what I'm saying -- when we're saying dynamic pricing is being able to price effectively to the market, even to a specific region within a market and be able to not necessarily be the low price leader, but have a fair price to the market and one that does 2 different things, gives the customer good value for their investment and create the highest margin possible for us.

Our next question is over to the line of Benjamin May at Berenberg Bank.

Just a couple from me. Firstly is on the hub-and-spoke model that -- will you be using some of the existing prep centers from Car Stores to form the basis of these 8 larger fulfillment sites? And if not, what's going to be done with those? And then secondly, that sort of feed into my questions on home delivery. Clearly, that's something that you flagged. Just trying to get a sense of how significant shift in momentum has been here from consumers, whether or not it's actually seeing significant uptake or whether or not it's more of a marketing thing and customers still like to buy the vehicle on site. And if you do go down the route like because they were doing more home delivery, does that require a certain number of units to be able to make that economical? Or will that charge be, in the long term, passed on to the client?

Yes. Ben, this is Bill. I'll take this. So first off, we are -- let's just go with the digital sales right now. Since we came out of lockdown, just through our stand-alone used car business, we've been averaging between 15% and 20% of all of our used vehicle sales on a stand-alone basis have been home delivery. And when we're saying home delivery is where a customer, at no point in time, had to physically engage with the store. They started the transaction online. We were able to facilitate 100% of it online and then deliver the vehicle to them. Obviously, this has gone up since the pandemic, but we feel that customers will be more inclined to go down this pathway. But as I talked about in the presentation and as I've talked in the past, cars are very tactile. You touch, you taste, and you smell and you feel and you experience them. And a lot of that is very hard to translate on an online basis. What we're trying to create and have is to be able to have a customer engage with us in any way that they choose. If they want to start at home and then finish up in the store, that's great. If they want to come into the store and then finish at home and any combination thereof, we want to be able to facilitate that for them because not every customer is going to want to do it the exact same way. So we want to be able to give them options. The hub-and-spoke portion of it, over time, that's going to evolve. We do have a couple of the prep centers that are currently operating, i.e., in Coventry, which is supplying most of the inventory for our stand-alone used car business currently. That will continue to operate as it is. As we go to open up the new stores, the format of the stores may vary depending on available space and acreage and the cost effectiveness of either having reconditioning on-site or having it off-site and facilitate, whether it is store inventory and/or delivery. And then the hub-and-spoke that you talked about is on those larger states, say, with reconditioning on site. We could have smaller stores that are 10, 15, 20 miles away. That hub would sit here and supply the inventory as well as a retail outlet. And then dispose could be able to sit here and deliver cars directly to consumers, either for pickup or home delivery or just conventional sales.

Okay. That's very clear. And just maybe one last question. You spoke about making it easier for the consumer to buy finance and insurance products online. Is there any sort of obstacles behind the scene on why that might not happen by the end of the year? Or do you have a sort of firm plan on that being possible? And also, is there -- clearly, you're going to be using third-party providers for that finance and insurance. Is there anything that they have indicated to you that needs to be different doing that online to doing that in store?

So on the -- I'll go kind of reverse order. So far, all of our financing solutions and providers have been very supportive of this, and we've seen no pushback whatsoever. And to the best of my knowledge, there's been no outside request from them. As far as the different products that are offered online, we feel confident that we'll be able to -- on a stand-alone used car piece, to be able to facilitate that by the end of the year. And the biggest thing maybe slowing that down or while you're taking our time on it is to make sure that we are doing it in the most honest, ethical and compliant way possible. So to make sure we're doing it within FCA guidelines and making sure that we have the training throughout our stores and our associates and making sure, like I said, that it is completely compliant.

We now go to the line of Matthew McEachran at Nplus1 Singer.

The first question I've got, just in relation to the road map towards GBP 90 million of profit over 5 years. During your presentation, you talked about expectations of a V-shaped recovery and also of a fairly steady new car market next year compared to this year. I'm just wondering how dependent upon a V-shaped recovery your plan is because, I mean, one of your peer group has issued a very cautious update today with regards to the prospects in the market for next year. So that's the first question. Just talk about how reliant on conditions are you to deliver the plan.

Sure. So Matt, I'll take the first half of that, and then I'll have Mark walk you through the contributions through the financial model. So when we're seeing a V-shaped recovery, to me, I would say it's a protracted V. Normally, you hear the L shapes, the U shapes or you've got the Ws. When I'm saying a V-shaped recovery, it's going to bounce back, but it's not going to bounce back in the next 30, 60, 90 days. We'll get back to 2019 volume numbers on the new vehicle side in 2023. So it is elongated V, and it will take time to get there. The plan that we put into place, if you look at it, except for the stand-alone used car business being incremental sales, we are not looking or saying that we're going to outproduce what the market is. Now I feel confident that we'll be able to do that, but that's not we're calling out in this model. What we're saying in this model is along with what the SMMT has reported and the 2023 return to new car volumes, this is the growth and contribution rate that we can grow to and maintain throughout that way. Yes, sales have rebounded since coming out of lockdown. But once again, like everyone has said, a lot of that is because of pent-up demand. And if I could tell you what the volumes are going to be for the rest of this year into next year, I wouldn't be doing this. I'd be sitting in an office, some place, just predicting the future all day long, right? So it's hard to say. But once again, this is not -- the strategy is not dependent on us having to outperform on the marketplace to get there. But once again, I think we will. And Mark now can walk you through where we think the current -- how the contributions are going to be over time.

Yes. I mean, not too much more to add to that. That's pretty comprehensive. So to get to those targets, we have still our own internal modeling. And as Bill says, we've been pretty cautious on what we think the market will do. And as we've both said as we've gone through the presentation, the plan is predicated more on driving improvements to margin through the initiatives we talked about and making sure that we take the cost actions we've taken today and continue to focus on further opportunities to improve and run off a lean and efficient cost base. Over the long term to 2025, we're assuming that the market is back at 2019 levels, as Bill says, with only really low levels of market growth beyond that point. So it's not dependent, as Bill says, on the market recovery, albeit our expectation is that by 2025, it is back at the level it was in 2019.