Principal Financial Group, Inc. (PFG) Earnings Call Transcript & Summary

Good morning, and welcome to the Principal Financial Group 2022 Outlook Conference Call. [Operator Instructions] I would now like to turn the conference over to John Egan, Vice President of Investor Relations. Please go ahead, sir.

Thank you, and good morning. Welcome to Principal Financial Group's 2022 outlook call. Materials related to today's call are available at principal.com/investor. Following a reading of the safe harbor provision, CEO, Dan Houston; and CFO, Deanna Strable, will deliver some prepared remarks. Then we will open up the call for questions. Additional members of our executive team will be available for the Q&A session. Some of the comments made during this conference call may contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act. The company does not revise or update them to reflect new information, subsequent events or changes in strategy. Risks and uncertainties that could cause actual results to differ materially from those expressed or implied are discussed in the company's most recent annual report on Form 10-K filed by the company with the U.S. Securities and Exchange Commission. Additionally, some of the comments made during this conference call may refer to non-GAAP measures. Definitions are available in the 2022 outlook call slide presentation on our website. Last week, we announced Humphrey Lee has joined Principal as the new Vice President of Investor Relations. I'm excited to pass the baton and wish him well in his new role. Please join me in welcoming Humphrey to Principal. Dan?

Thanks, John, and thanks to everyone for joining the call. 2021 was a transformative year for Principal marked by several significant milestones. At our June Investor Day, we aligned on a clear go-forward strategy focused on our growth drivers of retirement in the U.S. and emerging markets, global asset management and U.S. benefits and protection. In U.S. retirement, we completed the integration of the Institutional Retirement and Trust Retirement business last June, solidifying our position as a top 3 U.S. retirement provider. Last week, we successfully migrated the IRT trust and custody business, a key milestone marking the completion of the integration. We're capitalizing on revenue opportunities, realizing expense synergies and accelerating organic growth. The revenue benefits are emerging across the enterprise in PGI, Individual Life and RIS spread. In Global Asset Management, our teams are delivering top-tier investment performance and building differentiated products, including new private credit, ASG and real estate capabilities to meet the evolving needs of our customers. In fact, Barron's recently ranked Principal #7 on its list of 100 most sustainable companies, an exciting recognition of our commitment to ESG practices. These solutions transcend across our global asset management business like in Asia, where the combination of our global and local investment expertise and the strong distribution networks of our joint venture partners is driving growth in both revenue and AUM across the region. In U.S. benefits and protection, we are expanding our product portfolio and continue investing in technology to more effectively meet the needs of our customers. This is driving above-market growth, building on the increased demand for benefits, robust hiring and favorable wage trends in small- to medium-sized businesses. And refining our portfolio to focus on our growth drivers, we also made the decision to reinsure our U.S. retail fixed annuity and ULSG block of businesses. In January, we announced the reinsurance transaction along with the additional transactions to improve the capital efficiency of the remaining life insurance business. All of this, along with the strengthened approach to capital management, allowed us to increase our return of capital to shareholders. Our go-forward strategy positions us to achieve our near-term enterprise financial targets in 2023. Over the course of 2021, our ROE increased 340 basis points to 14.3%. We are well on track to reach our targeted ROE of 15% or higher in 2023. We also increased our targeted free capital flow to 75% to 85% upon close of the transactions. We enter 2022 with significant momentum and focus. The execution of our strategic review has made us a better company, prepared us to compete and win in evolving market. Our portfolio is driving strong financial results, and we are well positioned to continue delivering for all stakeholders. We anticipate 2022 will have its complexities and the macroeconomic environment has become increasingly uncertain. Globally, we continue to grapple with the pandemic and its impact on supply chains and the overall economic recovery. The conflict in Ukraine only adds to global tensions. This is all contributing to a business climate that will require focus, flexibility and fortitude. Deanna?

Thanks, Dan, and thanks for joining our call today. This morning, I'll discuss our 2022 guidance ranges and our capital deployment plans. Slide 5 provides our 2022 guidance ranges on a post-transaction basis and exclude the anticipated significant variances shown on the top of Slide 7. They reflect our underlying assumptions based on macroeconomics as of the end of 2021, shown on the bottom of Slide 7. The guidance ranges and assumptions imply a 6% to 8% increase in full year 2022 total company non-GAAP operating earnings per diluted share compared to 2021, excluding significant variances in both periods. This includes a negative 4% to 5% impact to EPS growth from the lost earnings and stranded costs associated with the transactions partially offset by a benefit from the additional share repurchases from the net proceeds. Excluding the earnings and capital deployment impacts from the transactions, EPS growth of our refined portfolio is 10% to 13% in 2022, higher than our targeted 9% to 12%. As Dan mentioned, the macroeconomic environment is increasingly uncertain and has been volatile in the first few months of the year. If we were to update for macroeconomics through late February, we'd expect lower growth, primarily due to an 8.5% decline in the full year assumed daily average S&P500. Our macroeconomic sensitivities are available on Slide 9. Additional details of the transaction are on Slide 8. We're expecting an estimated $130 million after-tax impact to full year 2022 non-GAAP operating earnings. This includes lost earnings in RIS-Spread, Individual Life and PGI from the transactions. It also includes the impact of stranded costs estimated at $75 million pretax. We plan to eliminate a portion of these costs throughout the year and expect a lower net impact for full year 2022 across RIS-Spread, Individual Life and Corporate. As a reminder, these costs are reflected in the outlook ranges, and we plan to fully eliminate stranded costs within 24 months of close. As shown on Slide 5, the transactions negatively impact the year-over-year revenue growth in RIS-Spread and Individual Life but positively impact margins in both businesses. Our 2022 guidance ranges exclude estimated impacts from COVID. We've updated our sensitivity to reflect the transactions as well as a greater impact on the working age population than we originally assumed. We're now estimating a $15 million to $20 million after-tax impact at the enterprise for every 100,000 U.S. COVID-related deaths. This is higher than our prior estimate of $10 million after tax and more in line with our recent experience. The updated COVID sensitivity reflects pretax impacts of approximately a negative $20 million in Specialty Benefits and a negative $15 million in Individual Life, partially offset by a positive $10 million in RIS-Spread. While we expect a slight reduction to the Individual Life and RIS-Spread impacts on a post-transaction basis, these estimates apply on both a pre and a post transaction basis. Even though difficult to predict, we're currently assuming 270,000 U.S. COVID-related deaths in 2022 with a majority in the first quarter. Favorable investment income was very favorable in 2021. Alternative returns, real estate sales and prepayment fees were more than $230 million higher than we expected on a pretax basis. In 2022, we expect variable investment income will return to our long-term run rate. Last week, we successfully completed the IRT trust and custody migration, bringing the IRT integration to a close. We expect approximately $10 million of IRT integration costs in 2022, all in the first quarter. We expect RIS-Fee margin to continue to improve in 2022 as we realize revenue and expense synergies from IRT. We continue to expect to realize $90 million of run rate expense synergies by the end of 2023. In RIS-Spread, we expect the margin to improve relative to our prior guidance as our mix of business is shifting to higher-margin products. In PGI, 2021 revenue benefited from strong management fees and performance fees. We expect growth and management fees to normalize in 2022 and a lower level of performance fees, resulting in revenue growth of 2% to 6%. Revenue growth in Principal International is expected to be pressured in 2022 due to regulatory fee reductions in Mexico and foreign currency headwinds. Each are estimated to have a negative 4% to 5% impact on revenue growth. We are managing expenses in line with revenue and expect to maintain the margin between 30% to 34%. In Specialty Benefits, we continue to expect above-market growth in premium and fees with 6% to 10% growth in 2022. This is above our 2021 growth and is driven by our SMB focus and expertise which also contributes to stable loss ratios and above-market margins. As a reminder, the first quarter is typically our lowest quarter for earnings due to seasonality of dental and vision claims in Specialty Benefits as well as deferred compensation and elevated payroll taxes in PGI. Turning to capital on Slide 6. We plan to return up to $4.6 billion to shareholders between 2021 and 2022 through share repurchases and common stock dividends. This includes $2.5 billion to $3 billion of capital to shareholders in 2022, reflecting our targeted 40% dividend payout ratio and $2 billion to $2.3 billion of share repurchases. As we move forward with a focused and strengthened capital deployment strategy, we will continue to invest in our growth drivers, all with an aim to drive long-term shareholder value. This concludes our prepared remarks. Operator, please open the call for questions.

[Operator Instructions] The first question comes from Ryan Krueger with KBW.

I had a question on the stranded overhead costs. Can you give a rough sense of how those would be allocated between Corporate and RIS-Spread and Individual Life? And then I guess how much of the $75 million might be actually recognized in 2022? I'm just trying to think about the incremental benefit as you eliminate those over the next 24 months?

Ryan, thanks for the question. I'll just have Deanna jump right on that.

Yes, a couple of comments there. So the first thing I'd remind you is that all of the impacts of the transaction are included in the guidance ranges for both the BUs and corporate. Of the $75 million, we're estimating that 2022 earnings would be impacted about $55 million to $60 million in 2022. Run rate, we'd be taking more action, but how it actually flows through the 2022 earnings would be that reflection. I don't have right in front of me the breakdown of the $55 million to $60 million, but I do have the breakdown of the $130 million after tax. On a pretax basis, that equates to about $170 million and think of it about $110 million in RIS, about $10 million in PGI and about $25 million each in life and corporate. So hopefully, that helps frame that a little bit.

Does that help, Ryan?

Yes, that was great. And then just -- on the equity market sensitivity of 6% to 8% per 10% move, do you assume any sort of expense offsets within that? Or could you reduce -- would you anticipate potentially reducing that sensitivity by taking some additional expense actions?

We're always going to make adjustments. I mean, that's just the history of what we've done in Principal is in line revenue and expenses. So again, any sort of actions coming outside of a range of reasonableness is going to cost Principal to do that. And frankly, you can go back in the last 10, 15, 20 years, that's always been our practice, Ryan.

Couple of other comments. So you'll see on the title there that those sensitivities are prior to management actions. The other thing that might be helpful is that 6% to 8% is pretty evenly split between PGI and RIS-Fee.

Your next question is from Erik Bass with Autonomous Research.

Can you talk a bit about the assumptions underlying the net revenue growth outlook for international? And I think you mentioned in the script, some of the fee rate changes in Mexico. So some more details there would be helpful as well as what you're assuming for the AFP business in Chile.

Yes. I'll throw it to Deanna really quickly. The only comment I was going to make as it relates to that, Erik, is in the case of Mexico, I think it's quite different than Chile and that there actually is upside long term as the model requires larger deferrals on the part of the participants. It's a different scenario in Chile, but I'll have Deanna frame that for us and try to put sensitivities around it.

Yes. So a couple of comments there, Erik, and thanks for the question. So we did identify in my comments, kind of the 2 significant drivers to that net revenue growth being lower than what we would normally anticipate. They both have about a 4% to 5% negative impact on that net revenue growth, one being the fact that Mexico -- there was a reduction in the regulatory -- in the fee that we can charge. Originally, that was going to be more of a gradual decrease and they decided to take all the action in the first year. We ultimately will benefit from the pension reform as the amount of contributions will increase. But when you're thinking about the '21 to '22 comparison, that had about a 4% to 5% overall reduction on PI's net revenue. The other one that is having some impact is FX, again, also impacting in that 4% to 5% range. I think we're tracking a little bit better on FX relative to what would have been assumed in the guidance, and you can see the sensitivity of FX on our overall earnings on Slide 9.

Got it. And just to confirm for Chile. At this point, you're assuming no changes in fee rates or anything to the business structure?

That's correct.

That's correct.

And then I just wanted to go through the sort of the accounting around the transactions. I think you mentioned in the slide that because the reinsurance deal will close in 2Q but is retroactive to the end of the year that there will be some noise in reporting. So are you going to be including the earnings from the fixed annuity and SGUL blocks as if you still own them in 1Q and then doing a true-up in 2Q to unwind this? Or maybe if you could just walk through the moving pieces there.

Yes. That is correct. So because it's not effective until the second quarter, the first quarter earnings will be unchanged, and we'll still have the earnings from those blocks incorporated in our earnings. Then what happens when we close and again, we think second quarter is very likely we'll do a year-to-date true-up that would transfer all of the associated revenue and earnings. But we'll be very transparent in the second quarter material so that you understand the impact of that true-up.

Your next question is from Alex Scott with Goldman Sachs.

First one I had is just a follow-up on Mexico and the impact. You described sort of the overall impact on revenue for the segment related to it. But I guess, can you provide some color on where you expect Mexico operating earnings to fall out from this? I'm just thinking about the size of that impact on revenue and what it may mean for profitability in that business this year?

Yes, it's a good question, Alex. And as you can tell, it's not an insignificant part of our earnings profile for Latin America. And believe me, we are taking aggressive actions to align expenses with the anticipated revenues. As Deanna just mentioned, we anticipate we'll get upside in future years relative to higher contributions as required by the model. But in the short term, it does put pressure. Do you want to quantify that, Deanna, any further?

Yes. I don't know if I have that right in front of me right now, but I do think it is important to understand that we are planning to take expense action to offset a portion of that decline. Again, but we're also looking long term how we think revenue will be impacted by the future increase in contributions. So there will still be positive earnings in Mexico. I don't have the number right in front of me, but we are being very aggressive on expenses there to make sure that we do have a profitable business to grow upon.

Got it. And then I guess a follow-up is just when I think about the baseline, I think, in 2021 for international was about [ 296 ] and what you've laid out here, I think, points to some positive growth off that despite this impact to Mexico. What are the places in international you would highlight as sort of the offsets there that are showing strong enough growth to even not just make up for lost earnings in Mexico but even still continue the growth?

Yes. It's sort of interesting to see how the migration of this Principal International has occurred in the last 30 years. Some of this is shifting over towards Asia, and that's frankly not a surprise to us. Malaysia just continues to perform exceedingly well. Economy is good. COVID is not as much of a disruption. And so that Southeast Asia region, we think, has got good upside. Another contributor, of course, is China and Hong Kong. If we went back to Latin America with the higher interest rates and there's some sensitivities around the product that's in Brazil with higher interest rates now have gone up significantly compared to that in the U.S., we'll also see upside from the Brazilian operation. So we have a pretty good line of sight on that and feel very good about our ability to deliver on the numbers we've provided you. Does that help, Alex?

Yes.

The next question is from John Barnidge with Piper Sandler.

You talked about a new COVID earnings sensitivity reflecting a working age population, age migrated back up a touch from elevation in 3Q '21 to 4Q '21, probably since then. Can you talk maybe dimension what the assumed average age embedded in that revised COVID guidance ranges, please?

Yes. John, thanks for the question. Obviously, COVID has been very difficult to predict, both in the number of deaths that we see and then how it translates into our block of business. I'd say we likely assume kind of an average of what we were seeing in the third and fourth quarter of last year. I think we'll see most of that come about in the first quarter of this year and then hopefully trail down from that. But I'd say that would be how I would frame the average age.

Okay. And is there any assumed catch-up utilization or prolonged need to cure policies in Specialty Benefits as related to COVID embedded in the guidance, please?

Yes. I mean I think the first thing I would say is we have not seen much disability impact like some of our peers have had. And I'd say we would continue to have some of that embedded in our thought process for 2022. But again, as we looked at the underlying trends of what we saw in 2021 and what we expect, I wouldn't say there's a significant impact of what you're talking about.

John, something that may have to do with just the -- again, the sized customer. We've talked about this before, small- to medium-sized business maybe not acceptable to people being out on disability, for example, small teams of people, 30, 40 employees at a place of employment. So we actually think it's quite manageable and it has not gotten outside of our comfort zone. Hoping that helps, John.

It does.

The next question is from Tracy Benguigui with Barclays.

Could you contextualize if you have any direct or indirect exposure to Russia, Ukraine?

Yes. It's a good question, Tracy. And it's -- actually, we have a very small modest amount of exposure in Ukraine, it's -- the first thing I'd say is I feel for the people of Ukraine. It's an incredibly difficult situation for them. And we do not have any employees in Ukraine and the amount of business that we have in Russia is actually quite insignificant. So overall exposure is nominal. We don't necessarily depend on it from a supply chain perspective and even in our emerging market debt product lines, minimal exposure to Ukraine and Russia for that matter. So for Principal, it has more to do with the humanitarian component. And of course, we want to make sure we've got shields up relative to any cybersecurity attacks that could potentially impact any of our businesses around the world. Does that help, Tracy?

It does. Also, some of your peers have started to provide quantitative guidance with respect to LDTI. Can you share any thoughts with respect to the impact as of the January 1, 2021 transition date and where we're sitting today on the interest rate side?

Deanna, please?

Yes. Tracy, obviously, we've been seeing that as well. Honestly, what I would say is we've been working very diligently. But the transactions that we recently announced do have an impact on how LDTI will run through our books. So we do need to sharpen our pencil and make sure that our estimates that we would give externally do impact that. And so again, we're targeting likely more in the middle of the year to be able to come externally with our impact.

Looking forward to hearing that.

The next question is from Tom Gallagher with Evercore.

First question is for the margin guide in RIS-Fee, the 25% to 29% range, where do you think you'll get to in 2022? Would you say -- should I just take midpoint of that? Or would you expect it to start lower end and build up from there?

Deanna?

Yes. Well, obviously, market is going to have some impact on that. But I think it's likely pretty common to think we'll build throughout the year, and we'd be targeting the midpoint for the full year. Obviously, there's some seasonality to expenses that does impact our fourth quarter results, but that's how I would think about it. We'll start compare more closer to where we were at the end of last year and then build from there.

And don't discount it, Tom. Even though we've had volatile equity markets, there's just really strong employer matching contributions, strong reoccurring deposits. We saw that in '21, and frankly, we have no reason to believe it's not going to hold up and then salary increases. So there are some natural offsets in this business to equity markets falling, although we have a high degree of sensitivity as you very well know.

Got you. Yes, that makes sense, Dan. And just related to that point, can you comment on the flows embedded in your revenue guidance for RIS-Fee and PGI?

Deanna, do you want to cover that?

Yes. One of the things that we continue to talk about here is that because of the varying fee levels of assets that are coming in, our focus is much more on making sure we're getting the revenue growth that we have out there. And sometimes that cash flow can be less meaningful. Having said that, I think both of those 2 businesses that you mentioned are feeling good about their competitive position, their product competitiveness, and the prospects of how that might flow into net cash flow as we move into 2022.

A lot of momentum on sales. We anticipate sales to be up 20% in the full-service space. So again, we feel very good about that. And then also just the fact we've opened up some markets, Tom, as a result of making the acquisition of IRT with the consulting community that just weren't open before. So that net cash flow number varies so much between the small, medium, large and jumbo plans that focusing in on revenues and margins is where we'd love to take the conversation as we go forward.

Got you. And if I could sneak one more in. Just the -- I guess, the 270,000 COVID mortality assumption for 2022, that's well above what some of your peers have guided to. Can you kind of walk through -- I heard what you said the majority in Q1, which makes sense if you look at where things stand quarter-to-date. But are you assuming a reinfection wave and a variant in the fall? Or how do you -- how should we think about the sequence of the 270,000?

Before I throw out to Deanna, believe me, there's enough public sort of estimates out there that runs the full gamut ranging all the way from probably 100 to 300. And so is with that sort of backdrop and on level of certainty that we provided the guidance. But you want to put some more numerics around that, Deanna?

Yes. So I think you would -- you would agree that it's very difficult to estimate that beyond the next few months. And so we do look at a number of sources, which are much more credible in the short term than they are in the long term, which is why we gave you a rule of thumb and you can adjust your forecast and actuals as new items come in. Sitting here today, I think most would point to somewhere between 200 and 300. We may be slightly above maybe where it might be, but that's how we think about it. And again, very difficult to predict what might happen post first quarter.

The next question is from Suneet Kamath with Jefferies.

First off, just congrats to Humphrey. My first question is just on the RIS-Fee $90 million of cost savings related to the deal. Have you said how much of that is reflected in your 2022 guide?

Suneet, I apologize. Can you ask that one more time?

Sure. I think you're guiding to IRT cost savings of $90 million. I think that was like the revised number. And I'm just wondering how much of that is embedded in 2022 guidance?

Yes. Okay. Very good. Deanna, do you want to?

I'm trying to find the exact number. I think we're going to achieve on a run rate basis around $75 million to $80 million by the end of 2022. How that comes into the actual '22 earnings would be slightly less than that. And that's how we would frame it. So still on track for the $90 million run rate will again be in that $75 million to $80 million by the end of 2022.

Okay. And then I guess on the $130 million from the transaction, did that number change? For some reason, I thought it had been like $110 million, but I might be missing an update or missing a piece. Is that number consistent with what you guys said in the past?

Yes. So I'll kind of take you through the context there. So when we announced the transactions, what I talked about in that was $125 million to $130 million of after-tax impact, and we're now narrowing in around that $130 million range. The $110 million that you're remembering is the earnings just from the fixed annuity and ULSG block and would not have included the stranded cost impact as well as there's been some runoff of those blocks as well. So that would be what you would be remembering. But the $130 million would actually be at the low end of what I talked about at the January call.

Okay. Got it. And then maybe if I could just sneak one more in on RIS-Spread. I think, Deanna, you talked about business mix shift benefiting the margin in that business. Is that just exiting the fixed annuity business? Or is there something else kind of going on in terms of the business that you've retained?

It really is the exiting of the fixed annuity business. And so that segment has our PRT business, our investment-only GIC and MTN business, our bank, and it previously had the retail fixed annuity business. More of the institutional type products have a higher margin. And so as we exit retail fixed annuity, we'll have a slight upward movement in the expected margin in that business.

It's exactly what we would have concluded as a result of the strategic review and what was our go-forward strategy versus the divesting of the business. So we really like that spread business on a go-forward basis and the economics for the enterprise.

Your next question is from Andrew Kligerman with Credit Suisse.

Yes, congrats to Humphrey. Great, great selection for IR Director. I just want to follow up on what Suneet was asking about the margins. RIS-Fee goes from a previous guidance level of 23% to 27% now to 25% to 29%. So I'm assuming that the cost saves from IRT that are driving that largely. And then with respect to the margins on RIS-Spread going from 65% to 72% to the new kind of normalized 75% to 77% transaction-related onetime items, that would be the deal that you just announced a couple of months ago. So is there anything more in there? Are these the steady margins going forward?

Yes. A couple of things I'll mention there. We will have some additional benefits of synergies that will come in, in 30 for our RIS-Fee. The other thing I would say is RIS-Spread does have some stranded costs. So as we work through that, we'll see if there's any meaningful impact to that. The other thing I know you're all aware of is that LDTI does become effective 1/1 of '23. And so we'll need to understand the impact in all of our businesses relative to that. And ultimately, that could have some impact on these margins and revenue as well.

That was helpful. And then with respect to business mix. So you had a strategic plan that you started in June and completed recently. And so as we look forward to 2022, '23, can we expect further review? Can we expect more transactions, buy or sell?

There won't be. The reality is this, we've been very consistent in how we've talked about it from when we visited in June with investors that this was an exhaustive process that Principal undertook with outside advisers and consultants led by the finance committee of the Board. We've come to the conclusion on what would stay and what would be divested. We love the go-forward strategy, and we've shared that on numerous occasions. And we just reemphasize today that what we have in these portfolios around fee spread and risk are more than our cost of capital. It aligns with our strategy of serving the needs of small- to medium-sized employers, their key executives and those planned participants. It's a global strategy. It is one that's based upon comprehensive solutions to our customers. And frankly, we couldn't feel more confident on our ability to deliver on that go-forward strategy. So I appreciate the question, but we really love the mix. And frankly, Deanna and I have spent a lot of time with investors throughout the last 6, 9, 12 months, and there is a lot of buy-in to what we have framed and they certainly understand it. And they understand how spread can contribute, how protection contributes just as a fee contributes to our long-term success. So I appreciate the question, Andrew.

Yes. Got it. Dan, that makes a lot of sense. And just maybe a kind of a sidebar follow-up. A lot of companies are looking at flow reinsurance of their existing blocks. Is that something that you might consider instituting around the margin, which really wouldn't upset your business mix but a potential strategy?

Yes, something I probably was remiss in not pointing out. All of those items on the margin, if you will, Andrew, that could help enhance performance without undermining our strategy, of course, we want to look for those things. So just as we've used reinsurance in our life business and other parts of the company for a long time. So yes, that is correct. We would look for those kinds of opportunities.

We have reached the end of our Q&A. Mr. Houston, your closing comments, please.

Yes. I think I may have just made them in that I was going to talk a little bit about we went through an exhaustive strategic review. I want to mention the transactions in closing in the second quarter but a lot of confidence around our ability to execute on this 2022 go-forward strategy. We wish the equity markets were more cooperative than they are, but that's our issue to deal with. And my last and closing comment is just around how excited we are about Humphrey joining the team. but equally a great debt of gratitude to John Egan for his leadership and the IR function for over a decade, and we're very appreciative of his leadership and put us into a really favorable position to hand it off to Humphrey. So with that, have a good day, and we look forward to speaking with you on the road.

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