Revvity, Inc. (RVTY) Earnings Call Transcript & Summary

Okay. Good morning, everyone. Thanks for joining us. It's a pleasure to have the team from Perkin this morning. We have the CEO, Prahlad Singh, and Steve Willoughby, who heads Investor Relations. Most of you are familiar with Steve. I bet Steve, this is a different experience for you listening, taking questions versus asking questions. But happy to have you guys this morning.

Good morning, Vijay. Thank you for the opportunity. Even though you guys can't see Steve, he still looks as awesome as he did when you're new.

I would bet I have even less hair now.

Fantastic. On that note, maybe, Prahlad, I want to knock off a couple of short-term questions before focusing on the LRP. I think one of the inbounds you've been getting is this new Omicron. What it means for the business? Any impact from you; lockdowns, restrictions, et cetera? So maybe comment on any trends we've seen so far from the lockdowns and not the new variant?

Yes, a little early to tell, Vijay, in terms of what the impact it will have on, if any, on lockdowns and all. But so far, we haven't seen any. I think if anything that we have seen, it is slight increased demand for the COVID testing side of it, with some of the labs coming in and asking for more tests and assays. So if any, it has been on the other direction but we haven't seen any impact around ask for our portfolio non-COVID.

Got you. That's helpful, Prahlad. On the same way for Q4, if I look at your high single-digit growth guidance for Q4 and 3Q was really, really strong. I think, historically, we've had some summer slowdown, et cetera, 3Q, but 3Q came in well above on the base at 16%. Comps don't seem to get materially harder for Q4. I'm just curious, is high single still the right landing spot for Perkin? Should we have some budget flush, et cetera, heading into year end?

Yes. Great question, Vijay. And I think just as you -- philosophically, as you know, the way we've approached this is, coming into 4Q, we had started seeing some of the challenges around supply chain, logistics, PCB boards, lockdowns, et cetera. And we were a little prudent in how we forecasted or guided towards the fourth quarter. I think we were rightly, I would say, conservative in our guidance. And then as we pointed out during -- no, I think when Steve and Jamey were at another conference a couple of weeks ago, that our approach is to be prudent and ensure that we take into account these challenges, but I would agree that it is a bit conservative as to where we will end up.

That's helpful commentary. And one of the points you mentioned, Prahlad, was perhaps you're seeing higher demand for COVID testing because of the recent spike in wave. Maybe let's start with California, the lab [ which renewed ]. And I think you also got this combo test approved for [indiscernible]. Are all of your tests being now done? Is that combo? Or are you still selling a stand-alone COVID test? And does pricing change, combo versus stand-alone?

I mean the combo does have a slight price premium versus the stand-alone test. But I think the way to think of the combo is that combo test will come into play a whole lot more when there is flu. And flu hasn't really taken off to that level. So most places are still not switched from the regular stand-alone with the combo pack or the flu pack as we refer to it internally. But I think as flu takes hold, we will see some impact to it. One thing that you did ask earlier on, which I didn't answer in the first part of my question, was around the budget flush. I think if you recall a year ago, across the entire industry, there was a budget flush that had happened in the 4Q of last year. Some customers had underspent their budget earlier in this year because of lockdown, et cetera. So I would say that, for us, for 4Q, we would expect more of a normal level of year-end spending that you would typically have during normal year as compared to the first 9 months of the year.

That's helpful commentary. And then on your comments on combo test and flu, it's interesting. But one of the questions we've gotten is do current comp of antigen and PCR test, can they detect the new variant? Most of your peers have said yes. Can your test detect the Omicron variant as well?

Absolutely. And I think we did a press release on that last -- yesterday or...

On Monday afternoon.

It was on Monday afternoon. Look, I think as we've talked about this earlier, Vijay, most of the mutations that you are seeing on the Omicron variant is on the [ SG ]. And our test targets both [indiscernible], and that's where our focus is. So we've already done our [ in silico ] assessment of it, and there is no impact on the test, and we feel very confident that it is going to be effective on the Omicron variant. It's interesting that we all have to do a press release to say that. But none of our customers are questioning it, and the demand for the test is continuing to increase.

Yes. That's helpful, Prahlad. On that last point, on demand continuing to improve, what's the right way to think about it? Should we just look at overall testing numbers being reported by AdvaMed? Is that a good proxy for how testing should trend for [ outbroken ]?

I think it's unique for every company. I mean it -- from our perspective, most of our revenue base comes from California, U.K. and a big -- large central labs that are using our portfolio. And I think that's where we have seen some of the uplift. With Omicron, what is the impact on that? And again, it's 4 days old or at least, since the news has come out, it's 5 days old. So right now, it's a lot of phone calls and ask if we need this 2 weeks from now, will there be availability. And those are the kind of discussions that are happening. But it's more around exploring from customers right now rather than to put a clear pulse, offing on the pulse and say, this is -- this variant is going to increase demand by X percent.

Understood. And so far, based on what we've seen, perhaps some upside to the testing numbers, but we still haven't seen a major step-up. That would be a fair of accurate.

I would definitely say that. I would say that. There might be some impact of that, but I think it's not yet that we can quantify it and say that this is what the change would be.

Got you. And maybe switching over to with the longer-term questions, I think it was really interesting on 3Q call when you guys noted about the 5% to 7% LRP was for base Perkin and all the acquisitions you've done is incremental to that base outlook. What is the growth rate for these acquired businesses, right? And what percentage of Perkin's revenues on a proforma basis is coming from these acquired businesses at this point in time? Is that like 10%, 20%?

It's a great question. I think the way I would first take a step back, Vijay. And the way I would think of it is when we put the 5% to 7% number out, that was on our base business. So we expect our legacy PerkinElmer business to be a 5% to 7% organic grower. Now on top of that, once the deals are fully annualized, you should expect -- we should expect the acquisitions, excluding BioLegend to add another 100 bps of acceleration to it, so sort of move it more for almost 5% to 7% to 7% to 9% organic growth. Now on top of that, once BioLegend is annualized, that adds another 100 bps of acceleration to our organic growth number. So I think the way to think of it is 2023 PerkinElmer will be a high single-digit organic grower company. And I think the sequence of the acquisitions obviously might ease at it over the next few weeks or over the next few quarters. But I think, in 2023, PerkinElmer will be a high single-digit organic growth company.

That is remarkable. It's -- I mean we could all see the numbers, right? But it's remarkable how the business is transformed. What I would say, Prahlad, it's some of your peers, when they've done large transactions, they've also shown numbers on a proforma basis. I mean they haven't necessarily waited for deals to annualize. But really, I mean, what you're saying is this business on a proforma basis, it is high singles right now on the core. The -- how should we think about fiscal '22? I think, obviously, we need to have a view on the pandemic. But ex pandemic, should that base be on a proforma basis in that high single sort of numbers that we just spoke about? Or are there any moving parts for fiscal '22?

Yes, Steve is going to kick me under the table right now saying that we are not giving 2022 guidance. So don't respond.

So don't respond.

But what I will say, Vijay, I think the thing is if you just need to take a step back and look at where we were in 2015 versus where we will be in 2023. In 2015, we were a $2.1 billion company with a TAM of about $45 billion, $50 billion. And about 50% of our revenue were from markets which were growing less than 6% and about 45% of our revenue were from markets which were growing more than 6%. I think the way to think of it is if you fast forward that to 2023, our total TAM goes to $85 billion, $90 billion. And market growth of greater than 6% accounts for 80% of our revenue. So that's the transformation that our portfolio has seen with -- in terms of end market growth product portfolio, in terms of 80% or more than 80% of our revenue coming from consumables, assays, software and services and 15% to 20% of it coming from instruments. So that's sort of what we have been -- the journey that we have been on. And I -- given what we have done, we are very confident that fast forward to 2023, this will be a high single-digit company delivering as of, what we've said, 23% operating margin in 2023, which does not account for BioLegend in there, right? So with BioLegend, that is a 26% operating margin income.

That's helpful comments. And maybe one more on -- focused on '22. I think your peers have made commentary about, look, inflationary environment has been -- obviously, it's been running a little hot in the tools industry. Certainly has a pricing power. So pricing contribution for '22 should perhaps be above historical trends. Would that be a fair, accurate statement when it comes to Perkin? Or is there anything different about your business that we should think about differently?

No, I think that's a fair comment. And in fact, as I think we pointed out earlier, right? Historically, the pricing impact has been about 1% or so. But I think given the inflationary pressures and wage impact, et cetera, that we've seen, we've already started implementing in 4Q some pricing policies which I think will have a much larger impact through 2022 than historically what we have seen all done.

That's helpful. Should that have any margin implication, Prahlad, because pricing is higher? Or is that being offset by perhaps travel coming back up and some of the inflationary pressures you mentioned?

I think there will be definitely some margin impact. I think it's tough to sort of gauge what the margin impact would be because you don't know how sustained the inflationary pressures are, how sustained the wage impact is, does -- as you pointed out, does travel come back, to what extent travel comes back? There are just so many uncertainties right now, Vijay, given every time we hear a news around the variant, panic spreads rapidly across the industry. So...

Yes, absolutely, for sure. I mean I can say with higher degree of certainty confidence that have been more wrong -- almost wrong most of the times whenever we've made some comments about the pandemic rise. It's time and again, it's thrown some curveballs. The -- as you look at '22 obviously, you brought up the pandemic, I think some of your peers or I should say most of them are assuming, look, assume COVID goes to some -- testing goes to some base minimal revenues and then we'll work off it, right? And I think you guys are a little unique because you said, look, '23, we think $100 million is sustainable COVID revenues. So maybe just talk about the bridge between where we are in testing now to that $100 million in '23. Should we assume a big cut for next year as a base case modeling assumption?

Yes, I think the way I would encourage you to think, Vijay, without giving you guidance around 2022 is look at how we have guided around COVID in 2021. At the beginning of the year, we were very prudent in our approach that we are going to look at it on a quarterly basis. You'll see what the impact of COVID is. And generally, we've been, I would say, more conservative than the way things have played out. And again, a lot of it has been variables, such as Delta coming into play, such as now Omicron coming to play. Don't know what the impact of that is going to be. But I think even going forward in 2022, around COVID, you will see us leverage using the same approach. And there are a couple of things. Obviously, California and U.K. have a much larger impact on our COVID revenue numbers. And while the contract has been extended out for California, the assumption that we make is only on a quarter-by-quarter basis. And I think that approach will continue from us. What the impact of Omicron or the -- any other potential variant is in 2022, don't know. Too early to say. I don't think COVID is going to go away. But I think what we have tried to do is we've had $100 million of COVID sustainable revenue in the foreseeable future on an annual basis. Obviously, 2022 will be different than that. We'll have to wait until the earnings call at the end of January to know what the forecast is for 2022.

The $100 million of sustainable revenues, Prahlad, is that -- what is the basis for that? Is that -- are we assuming COVID will become something like flu? Is that where the $100 million is coming from? Or has this opened new customers? Maybe talk about that $100 million number?

Sure. So the assumption that we make here, Vijay, is that we have now about 1,800 to 2,000, right? Is that the number of installed base -- of new installed base, which did not exist before. And capacity utilization of this installed base, we are assuming that even if it's in a post-COVID world, if it's in the 10% to 20% range around what we would bring to those customers, that would easily be $100 million number. So that's sort of -- we are trying to take a very prudent approach again and be conservative around what the assumptions we are making as to what a sustainable number would be around the COVID installed base that we have put in place. And to some extent, it is also reflected, as you look at our applied genomics number, for non-COVID. All of that obviously is a direct impact of what they have seen around our products, around our brand reputation for the same platforms being used for COVID. And that's why you see that rapid growth rate globally around our applied genomics numbers, too.

That's helpful commentary. And have customers indicated to you to the commercial team perhaps, "Hey, look, post pandemic, we will continue to use these systems for other applications?"

Initial conversations, yes, but most of them are so busy doing COVID still that they haven't really themselves had time to get their head above water to think of the future, every time they stop with something like what we have seen last week.

That's a fair comment. You brought up BioLegend which, I mean, that was transformational for a couple of different reasons, right? And at least, if -- which was -- I mean the largest deal in the company's history, right? I think one of the questions I get, and I'm more curious on your answer is how -- I mean this is -- it's grown very, very healthy teens, very healthy margins, mostly consumables. Like how did Perkin end up? Like I would have thought the intensity for the deal, right? It was a pretty competitive process, right? What allowed Perkin to close this transaction? It certainly seems to be a crown jewel. And what does it say about Perkin when it comes to executing closing deals going forward?

Vijay, I was asked the same question by a person named Steve Willoughby 4 years ago from the sell side when I did the EUROIMMUN32:30 acquisition. Question was that how did you guys get hold of it, why did somebody else not get hold of it and then what's unique about the biggest deal in the history of PerkinElmer at that point of time. And my answer around BioLegend to you is the same that I did give him at that point of time. We will not succeed in deals that go to auction or go through a long business process. That's not our sweet spot. Our sweet spot is identifying founder entrepreneur based companies that are highly successful in what they do. But for them, culture assimilation, entrepreneur ability, ability to continue to innovate without getting overwhelmed by large company processes and procedures is what they want to do, and that's why they want to take the company. And that's why I'm not talking about what BioLegend would do, but I would encourage you to think of what the past acquisitions have done. If you look at Tulip, if you look at Cisbio, if you look at Meizheng, if you look at EUROIMMUN, all of them have far exceeded our expectations around the deal model that we had in place for them. And I think the same logic is what we used for BioLegend. Just to give you an example, we put in a 10-minute video because this was COVID times, of all the founder entrepreneurs of the companies over the past 5, 10 years and had them talk to the principles at BioLegend to explain what the culture is, of as these companies come into the fold, how they operate and how they function? And if anything, the Innovation Summit that we had at the BioLegend campus 2 weeks ago only further strengthened our assumptions and further validated what we thought that this deal would be for PerkinElmer, and then I would say that we are more optimistic today than we were when we closed on the deal.

That's helpful perspective. It certainly, I think it's -- that's come up. I think a couple of your peers have brought this cultural aspect as being an advantage -- a different [ share ] in their ability to close transactions. But sticking on to BioLegend, I think a lot of questions I got post deal with why is this business growing mid teens. Is it serving flow cytometry? Flow cytometry does not grow double digits. Maybe talk about what's allowed this business to grow, I mean, double digits, right, close to 20% in the past 5 years. What is unique about this asset? Is there some unique antibody that they have? And why do they win in the market?

Yes. I'm not sure how much time we have to talk about this. But let me just try and see if I can address all aspects of it, at least most aspects of what you had in the question. I think one way to think of it is BioLegend, I think it was 5 or 7 years ago had 5% share in this marketplace. And today, they are in the high 20s. And 2, 3 things that we have, for example, at the Innovation Summit, the KOLs that they have, one of the speakers and one of their KOLs and partners, if you recall, [indiscernible] hearing and he was waving the paper about see, this is what -- there is now data out there around CD4 and CD8 and what the impact that has on the immunity. The principal author is on their advisory board. He was the guy whose name was on that paper. They had KOLs from Harvard and some of the top schools around Immunology. So the way they have operated is they work with KOLs, they bring antibodies into the marketplace. And look, antibodies are not going away for several decades. In fact, what COVID has shown is the importance of that. In addition to that, the logistics and the operational capabilities that they have brought in around building unique capabilities not just around R&D, but just in time automated delivery of getting products out to their customers, it is the most unique thing that I have seen. Now add to that, I don't know what percent of their business is non-flow related.

1/3.

More than 1/3 of their business is non-flow related, and that's the fastest-growing segment of their product portfolio, and it will continue too with its own proteogenomics and proteins, et cetera. So again, I listed several aspects of it, but hopefully, that sort of gives you a sense of why they continue to be successful, gain share and expand the TAM that they play in.

That's helpful comments. And I think you mentioned that 1/3 of their business is non-flow proteogenomics, et cetera. How fast are those markets growing, Prahlad, and can you take these antibodies and get into like single cell proteomics in genomics kind of work?

Yes. So I think those markets are actually growing double digit, right?

50%.

And significantly higher. So the base is obviously small, but there is a rapid growth explosion there. And it will continue to grow and they continue to take share. What was the second part of your question sorry, Vijay?

Can you go into a single cell?

They've got stuff in their pipeline to focus on that and work on that. And also, if you look at what we have in our portfolio, Honeycomb was one example that we talked about at the Analyst Day. Now how do we combine that with what they are working around single cell. That brings up another opportunity for growth.

Understood. And then one of the things that came up at the Analyst Day or even on the call was you highlighting synergies across these different transactions or I think you brought up Peter and his team at Oxford leveraging some of the antibodies from BioLegend. Maybe talk about those opportunities. What kind of products are they launching? And can they be meaningful?

Yes, I think the way to think of that, Vijay, and as I mentioned, we -- even during the earnings call and even later, we had our Innovation Summit there 2 weeks ago. And I think some of the synergies we have assumed that would be natural. Whether it's around our presence in emerging markets, where there are markets -- they have much smaller presence. Our ability to leverage our supply chain, logistics, et cetera, that they would help grow their business. But the assumptions that we had made around technological synergies were much more conservative than what we saw coming out of that Innovation Summit. The EUROIMMUN scientists, and there were 3 or 4 of them there, their focus was not just outsourcing antibodies, but sourcing specific antibodies, say for example, around their neurodegenerative disease portfolio. And the BioLegend scientists are, yes, we can tailor these and get you these in a few weeks. And these guys are, "Right, can you do that really?" So that's one example. Peter talked about how he is able to use that for his Oxford Immunotec portfolio. Cisbio had a similar reaction. Legacy PKI, whether it was [ Turku or Taichung ], Tulip, Horizon, something the list is on and on. And we sort of assumed "a number" without having -- we knew that there was an opportunity. We just didn't know that the opportunity could be at the scale it potentially can be.

Understood. And sticking on to this theme of acquired businesses coming in better than deal model for it to think of. Oxford is interesting. I mean I knew the business when they were stand-alone. China was always a big opportunity for them, but they clearly commercial reach, that this is something that Perkin couldn't help them, right? Maybe talk about your share position within that market for latent TB testing and how that could improve under Perkin's ownership?

Yes. I think there are 2 ways to think of it, Vijay. One, the latent TB market itself will continue to expand and transition on to blood-based assays, IGRA assays, which Oxford provides. But more importantly, for Oxford, the one thing that they were selling prior to the acquisition was assays. Now with our ability, we are able to sell workflows, bringing Nexcelom's image analysis portfolio, bringing our liquid handling platforms. They are able to now put workflows together. Now once that they have done that, again, keep in mind that they have not sold these components before, right? So the excitement not just in their teams but even in our teams to be able to leverage the full platform and capability to be able to bring this out into the marketplace gives a natural edge. On top of that, the core competencies around regulatory servicing, which a company of Oxford's size didn't have, and being able to use that across the globe from PerkinElmer will obviously be very helpful for them. So I think there are 2 aspects to -- there are 2 ways to think about. One, the latent TB market will expand on its own. And we feel very confident that Oxford will take a disproportionate amount of share in that growing market.

And just remind us on -- I think Oxford is growing like 20%, I think, pre-pandemic for their latent TB test. Should that be something higher than 20% under Perkin's ownership. I wanted to ask you for specific whether it's 25% or 30%, but safe to assume it should be above those levels.

I would not give you a number, but I would say it would be a fast-growing company. And then I think...

We expect all of our recent acquisitions to grow in the mid-teens.

I think the way to think of it, Vijay, is that if you look at all our acquisitions, right? The smaller, the bigger, the medium size, all of them combined, some outpacing others, all of them combined should contribute for more than mid-teens growth for the company.

Interesting. I did want to touch upon Vanadis and NIPT. Actually, recently, someone asked me this question. Perkin used to talk a lot about Vanadis, and now I don't see them talking much nowadays. Maybe just remind us, Prahlad, where we'll be on Vanadis and NIPT. And why has it taken perhaps a little bit longer to penetrate this market?

Yes. I don't think it has taken longer to penetrate the market. It's not because of a lack of demand from the market. It's from our own perspective. I think over the past 18 months, we couldn't get these instruments out to far-flung areas. Our engineers couldn't travel. Keep in mind, when we launched Vanadis, we probably had 10, 20 engineers who were fully trained on doing the installation, verification and validation. And the reason -- the 2, 3 parts to your question. One, I think just, culturally, I want to move beyond us talking about single products or product lines. I would rather talk about reproductive health as a whole. But let me just specifically address Vanadis, right? The pandemic gave us an opportunity to address some of the growing pains that we had seen during the launch of Vanadis. Unfortunately, once those were addressed, engineers couldn't travel. Installations and validation and verifications couldn't be done. That has started now, and that is going very well. And it's not just in Europe but across regions. So Vanadis is going to be a very important component of our reproductive health portfolio. And if anything, just to sort of give you a sense, when we say 5% to 7% Legacy PerkinElmer organic growth, reproductive health in that is somewhere in the 5% to 10% range assumption. Now given the depressed birth rates and the decline that we have said, in order to compensate for that, Vanadis is going to more than compensate for that and then keep that in the high single digits for reproductive health. So sort of that's the way to think of it. Now in addition to that, there's going to be some independent clinical data coming out of labs, which will further provide an impetus for customers to switch to our NIPT product, which is fully automated, does not need a significant genomic analysis of data sets, provides what customers are looking for and has a very low no-call rate. So at a very economical price. So my confidence in Vanadis has only increased.

That's helpful. And how should we think about the revenue model here for us? Should this be like a typical diagnostic model where you place systems and then assign a 5-year contract for volumes? Or is this more for an upfront system sale model?

It depends on the customer. Obviously, some customers do make a CapEx investment and some customers do a reagent rental model similar to the newborn screening business that we have. But I think the way to think of it, from our perspective, if a lab is doing more than 5,000 tests annually, there -- we would be getting around EUR 100 per test. That's the way to think of it. Obviously, if a lab is going to do less than that, our view will be that they would be doing more as a CapEx investment.

Got you. And then one on China. I think some of your peers have spoken about some cadence issues when they look at the March quarter with Chinese New Year. Anything on China from a cadence issue we need to be aware of for Q1?

Absolutely not. Again, our quarter, this is in the middle of the quarter. New Year is in the middle of the quarter and we don't see any reason for it to [indiscernible] at us at all.

That's helpful. And then China has always been tricky for us, Prahlad, at sometimes. You'll have these big macro changes, right? Like food regulation, which it's hard for us to model. Any big changes in China rumblings that you're hearing from feet on the ground, either from a regulatory perspective or anything else perhaps?

No, I think, Vijay, the way I would think of China for us, right? It has been a great success story for us and a great growth story, and we expect it to continue to be in that way. Over the past 7, 8 years, we've established -- we've acquired many companies locally. EUROIMMUN is known as Oumeng in China. It's not known as EUROIMMUN. You know PerkinElmer product portfolios are through SYM-BIO and Haoyuan. So we've got local brands. We've got, as I mentioned earlier, 50,000 square meters of R&D and manufacturing capabilities on the outskirts of Beijing and Shanghai. And in most places, we are known as local companies. And in the product portfolio that we play in, to date, we've not seen any other challenges around procurement, policies, et cetera that some others have seen. It doesn't mean that there won't be a pricing impact over the next few years. But I think with the pricing impact will come an expansion of the market. And I think given our structure and our local positioning, it will actually allow us to more than offset by share gains if there is any pricing impact. So I feel good about China. I think China is going to continue to be a strategic market for us, where we will see continued growth as we have. I mean in the last quarter, as you know, our diagnostics business grew more than 30%. So it will remain very strategic for us.

Fantastic. I know I had a lot more questions on Horizon and Nexcelom, some interesting stuff, but in the interest of time, I want to focus on D&I and ESG, I think I've been asking this for all companies. I think you guys are unique because you laid out your goals at your Analyst Day. But maybe just remind us on what those goals are for Perkin?

Yes. I think before I sort of go to the goals, the way to think of it, which is, we've always been sort of a vision-based company, and it has been organic for us. And maybe we've not specifically talked about it from a public perspective. But over the past year or so, I've encouraged my leaders to be more public about commenting around what we have been doing, how do we prioritize our goal, what action plans we have been taking, what have we been doing around -- whether it's around maternal and paternal leave, around parental leave, that's an example, around diversity and inclusion. But I think to sort of take a step back and answer your question more specifically, the way we've sort of laid out our ESG goals at Analyst Day was one, reach carbon neutrality by 2040, reduce Scope 1 and 2 emissions by 30% by 2030. We do have a 15% reduction in nonhazardous and nonrecyclable waste by '25. But more importantly around the diversity piece, I want to ensure that 40% of our positions at leadership levels is populated by females by 2025. And we recently -- and I think we talked about that on the earnings call, we had an engagement service sent out to all employees where we had more than 75%, I want to say?

77%

77% engagement and response. And I want to keep it at the satisfaction at greater than 75% and also try and reduce our voluntary turnover to less than 10%. So we've sort of laid out these goals. But this is not something that is we focus on an annual basis. It is something that we are doing in day in and day out. And internally, we want to be the champion for good. And whether that's around the environment, whether that's around sustainability or whether it's around diversity and inclusion. On all of that, we want to lead by example. We want to walk the talk. And I think we've taken the right steps in that direction, and we'll continue to do so.

Understood. And maybe a last 30-second clarification on that. You've laid out very specific ESG D&I goals. Do you track them on an annual basis or some of the -- perhaps the comp metrics tied to those goals? Or because it's organic, for you guys, this is part of who you are, and it's not something special, maybe, from an external perspective, it's different?

Yes. I mean, it's Jamey and I, some of our compensation is already tied to that. But I think you will see over the next subsequent years in '22 and beyond, even the other leadership team, some of their comp will be tied to these ESG goals. But just to be clear, already some component of Jamey and my comp is tied to this.

Fantastic. I think with that, we're at the end of time. Prahlad and Steve, thank you both for taking the time this morning.

Thank you, Vijay. It's great to see you, and look forward to continue our discussions throughout the day. Thank you.