Rivian Automotive, Inc. (RIVN) Earnings Call Transcript & Summary

All right. Good afternoon, everybody, and thank you so much for joining us for this exciting session with Rivian as part of Deutsche Bank's Global Automotive Conference. My name is Emmanuel Rosner. I'm the lead U.S. autos and auto technology analyst at Deutsche Bank. It is my distinct pleasure to be welcoming here with me, Claire McDonough. She is the CFO of Rivian. Rivian, as all of you should know, is an electric vehicle manufacturer, specializing in light commercial vehicle production and the software and service solutions that go with it for consumer and fleet customers. The company is in the progress of ramping up its first batch of 3 different vehicles, the pickup, SUV as well as the delivery van. It's targeting to produce 25,000 units this year, starting with its R1 platform as well as the Amazon van as part of the strong partnership. So first of all, Claire, thank you so much for being with us.

Thanks for having me. And we do have a truck out front as well. So if you haven't had the opportunity yet to see one of our vehicles in the wild, please do take the opportunity to go check it out.

Yes, absolutely. So maybe just to set the stage in terms of where we're at to where the company is at, can you provide an update on the supply chain and the semiconductor shortage situation that you've been experiencing? Are you seeing things improve sequentially since you last spoke to investors.

Sure. From a supply chain vantage point, we have been constrained throughout the course of this year in terms of semiconductors. So we've been able and been in a position to produce the number of vehicles that we've had in semiconductors for this year. And that constraint has continued for us. Part of the challenge in -- being a new automotive manufacturer is really instilling confidence in the supply chain itself. And so one of the things that we've done throughout the course of this year ultimately has been building that confidence, especially with the semiconductor providers that have been getting our production. And so it's both about giving them confidence and how Rivian is ramping production, but also equally giving them confidence in the fact that each of their peers are equally leaned in to the opportunity because no one wants to be a mile out ahead with an enormous allocation, but no one also wants to be the one that's causing us to hold production in a given day or a given week as well. And so we've invested a lot of time and RJ spends a lot of his time investing in those relationships and building confidence within that supply base as a whole. We spoke a bunch on our last earnings call about that dynamic itself and the confidence that we have to continue to scale production in the second half of 2022 and the opportunity that we'll have later this summer to bring on a second shift as well as part of that.

Can you talk about your current relationship with the parts and the component suppliers to what extent they're now providing you a clear line of sight for your production process and targets. I -- as you just mentioned, you spoke about this upcoming acceleration and obviously double shift. It came as a little bit striking because you were still in the middle of what seemed like constrained. So I guess what sort of like visibility are they providing you?

Sure. From a visibility standpoint, the confluence of factors that we talked about in giving them confidence around our ramp in productibility to produce at levels far in excess of what we're producing right now has allowed us to sort of increase that allocation in the back half of the year and gain visibility into what we believe will be delivered for Rivian. This is obviously continuing to be a very challenging supply chain backdrop and environment as well. And so we're actively managing day in and day out those relationships and the assurance of the supply that we're looking for to continue on that production ramp. The bright spot is, as it pertains to our equipment and our teams in the plant, we've been in a burst build fashion, able to really demonstrate the fact that our teams can operate the plant at the installed jobs per hour that we've built there. And so it truly is the supply chain that's sort of the gating factor constrained as we've been ramping production.

How's the ramp-up of the Amazon van production going? And what are you working on with Amazon to get more of them out on the road?

Sure. With Amazon, we worked really closely, hand-in-hand with them on the development and the design of the vehicles, but also how the vehicles integrate within the Amazon ecosystem. So that's everything in regard to how Amazon's software platform plugs directly into the vehicles themselves to help drivers with the routing and routing for that day as well as all of the work we've done with them on the in-fleeting and fleet management process as a whole. And so we've gone through a number of core pilots with the Amazon team to allow us to really build that confidence on both sides so that Amazon can start deploying these vehicles in a more skilled manner across their logistics hubs within the U.S. and ultimately also within Europe. So we've been in the process of certifying the EDV 500, which is a shorter and more narrow van for the commercial markets that will be used both here in the U.S., but also in Europe as well. And so that's sort of the next evolution of work that we're doing in the integration of that vehicle for the European markets. The bright spot is ultimately the feedback from drivers has been phenomenal as they think about the experience of driving, right, an EDV van. Most of them don't want to get back in their own vehicle at the end of the shift. They wish they could drive that van back to their own home as well. So it's been really encouraging to see the feedback from the Amazon team there, and we're ramping production to meet that demand.

Now as we look into 2023, what kind of production ramp can we expect? What planning are you doing today to secure that production run rate target?

Sure. For 2023, it's first and foremost about security of supply, as we think about the ability for us to continuously ramping production throughout the course of '22 and then ultimately, how that carries into 2023 in nature as well. So those are our core focus areas for us. We're also in the process right now of launching a number of our next-generation technologies. And so we'll see some of those introductions really at the end of 2022. First, with Amazon, where we're bringing our LFP pack -- our LFP battery pack into the vehicle as well as our in-sourced drive unit, which we call Enduro. So a lot of the work is happening in the background to really ramp production there and ultimately, the homologation of sort of those next-generation vehicles that will be critically important as we scale production into 2023 as well.

I didn't hear a number. Is there -- was there one that you're talking about for next year?

We are not giving guidance today on 2023.

I wasn't sure if I missed it. Understood. All right. So let's think about pricing and margins. Can you update us on the input cost inflation that you're observing and the impact on the bill of material?

Sure. From an inflationary backdrop, there's been an intense level of inflation across the broader OEM supply chain as it pertains to our bill of materials. And obviously, there's been a lot of news in the press around specifically the impacts that we and other OEMs have seen from a battery cell raw material costs throughout the course of this year, in particular. So as we think about where Rivian sits from an overall inflation vantage point, we're still very much in sort of the earlier stages of our production. So while we have seen headwinds from an inflation vantage point, we also have the opportunity to continue to drive down our cost from both an engineering and design perspective as we talked a little bit about what LFP means for Rivian, what in-sourcing of our driving unit mean for Rivian what, right, our next-generation network architecture can mean in terms of the fact that we'll be taking 20 ECUs in the vehicle and pulling that down to 6 as it pertains to our next-generation network architecture and the associated cost savings associated with that. Beyond the engineering development work, we have substantial runway as well from a commercial cost savings opportunity as well as we think about really investing in the relationships for the long term and also utilizing in the future what R2 can mean for Rivian as it pertains to finding supply partners that want to be with us for the long haul and are investing into that relationship in the form of that bill of materials for our launch vehicles as well. The last quarter lever and piece that we have as well is ultimately pricing. And one of the core surprises that we've had as a company was post March 1 when we increased prices of the vehicles themselves, we've seen an actual acceleration in demand, and we spoke a bit on our last earnings call about the fact that we had over 10,000 new preorders within $93,000 ASP, about 2/3 of the preorders were for our top spec, quad motor top trim adventure trim in particular. And so that confidence and momentum that we've seen from a demand perspective and the orientation towards the most premium offering that we have is another catalyst and lever as we think about the world of inflation and the pricing headroom that we still believe we have for our vehicles.

So it was actually my next question around the pricing environment. What are you seeing in terms of consumer sentiment and receptiveness to your price increases, the ones that you announced in March, but also are you seeing any signs of weakening consumer demand or perhaps in the pace of the order book building?

So we've seen momentum continue to debate, stay really strong and even to a certain degree build as we have more and more vehicles out in the wild, driving around on roads, any of you -- if any of you have a Rivian, I'm sure you will be stopped and question in every parking lot that you stop at. And so what we see is really the power of network effect as each of those vehicles and each of our customers become sort of an epicenter of their own test drives, sharing the vehicle with their friends, their family, teaching strangers on the street about who Rivian is and the core capabilities of the vehicle. So we've seen a lot of momentum from a demand perspective.

And I guess, just coming back just to the idea of the consumer sentiment, sort of like the broader environment. Besides for the specific reception for your product, are you seeing sort of like any impact in terms of either softening in the building of the order book or anything of notice recently?

So nothing of notice recently. As I mentioned, we've seen really robust demand there. And the other piece that I think is important to highlight as well is that we evolved our preorder process from a configured preorder to a reservation. And we did that both in light of the inflationary backdrop that we've faced that allows us to have that customer -- that potential customer configure the vehicle much closer to the time of delivery, but also importantly, as we talked about all of these next-generation technologies that are also coming to market. We'll have new configurations and new vehicles available for the consumer to choose from as well. And so it's important that we're really moving and evolving the process to this more flexible solution so that when it's your time to come configure a vehicle, you'll have everything that's currently available to configure at your disposal, and you'll have the end market pricing for the vehicle.

Based on your reservation so far, what have you learned about your customer in the past year?

So as I mentioned, one of the key surprises for us has been around the fact that our customer wants the very best Rivian is offering. And that orientation towards the more premium configurations has been something that's surprised us as well. So I would say that's one of the poor learnings that we had. And the other has been really around the sort of notion of our customers as brand advocates out in the market. We've been deploying a large-scale test-drive program through all of our service centers. So you can schedule for Rivian to come to your home, you can do it a test drive right here in New York City, out of our Brooklyn service center. And what we've come to realize is just how many organic test drives are happening out there with the vehicles that are in the market as well. It's another huge opportunity for us as we think about scaling awareness for the brand as well.

So I wanted to shift gears and speak about your new capital allocation strategy. You recently announced pretty big updates to the spending plans. You cut CapEx plans materially. You reduced the number of vehicle variants and essentially expressed a commitment to launch production at your next plant in 2025 without raising any additional capital. What does this mean in practice for annual CapEx level through mid-decade?

Sure. So as we look at the strategy and approach from a product development standpoint, we've really curated that focus around R2. And R2 is a midsized SUV for global markets. So that will be a vehicle platform that we produce domestically here in the U.S., but will also be produced within -- in China, within Europe as well as part of that longer-term strategic road map. And in the original plan that we were pursuing, we had [ not planned ] a number of additional variants or vehicles that will be -- would have been built on the R1 platform. But given the backlog of demand that we have that's measured in time span of years, we didn't need to make the investment in building out those additional variants for the platform today. And so we made the choice from today where we've built up teams and capabilities of bringing to market multiple vehicle platforms in parallel and the ability to move from that evolution to this singular focus on R2 as the key next-generation product for Rivian allows us to materially reduce R&D expense given the sort of reduction in prototyping of multiple variants and things of that nature. But importantly, it also has a meaningful CapEx impact as well as we think about that road map and the tooling requirements for all of those specific variants that are now focused on R2 and the fact that we'll have the foundational investments there that allow us to really rapidly introduce additional vehicle capacity globally on the back of its launch in Georgia in 2025. And so as we take a step back and look at the longer-term rate, there certainly are impacts to the overall volumes we'll have in the present to 2025 time frame. But as you look at 2030, it's largely unchanged because once we introduce R2, we're able to rapidly bring scale globally for it.

Okay. Can you be a little more specific, I guess, where -- what part of the volume plans you will get pushed out?

So the volume plans are really focusing first. Today, we have 150,000 units of overall capacity within our plant in normal, and we're working on some re-rating within the plant that will allow 75% of that capacity to be allocated towards R1 for our consumer vehicles, the R1T and the R1S. And then in 2025, we're bringing online really the first phase of Georgia, which is a 200,000 unit of capacity line for R2. And then beyond that, we have the ability to bring on the second phase of Georgia, an additional 200,000 units, and you could expect similar type volumes for R2 globally as well.

Okay. And then was there also a work truck that was an initial plan, I think it was called maybe RT? Is that something that's still somewhere in this part of the mid-decade or the next one?

So I would say there's a whole host and as you can imagine, there's many, many sort of additional vehicles that we'd love to be bringing to market. For us, it was really around the overall impact and global brand building that R2 represents That a large format truck wasn't going to represent for Rivian, and that was really a key consideration for us as we redesign the product forecast and plan.

Understood. And I guess just from a financials point of view, then in terms of CapEx magnitude, I think maybe your initial plans were $3.5 billion, $4 billion or so of CapEx a year in the through mid-decade. Has that been roughly cut in half? Or how should we think about capital savings in the meantime?

I would characterize it as more of a run rate in the low $2 billion area.

Through mid-decade. And that would support building of the plant and start of the R2.

Yes.

And did I understand it right that as part of this, there's essentially commitment, obviously, not to raise capital, essentially to get there. But does that also get you to positive free cash flow by then or not necessarily?

So we haven't made commitments around positive free cash flow. What I will say is that what we've talked about in the past is, with this new strategy and plan, it allows us to drive the business towards positive EBITDA with the capacity that's installed in our plant in Normal, Illinois. And so what that means for Rivian is that we're in the driver's seat. We have the ability on a go-forward basis to sequentially phase our growth so that the company could be free cash flow positive on a go-forward basis. But given the acceleration of adoption of EVs, we certainly want to go much faster than that as an organization. And so that's really the dynamics at play as you think about the phasing and levers of when the company will become positive free cash flow.

Understood. Now as we think about the battery manufacturing capacities, it stands currently. It's predominantly concentrated in Asia and China for the industry. From Rivian's perspective, how far up the battery supply chain would you like to go in order to control your own destiny?

Sure. We're right now working on developing and curating our relationships that span the entirety of the battery cell supply chain. And we think it's important to craft and curate those relationships and have a diverse set of relationships as well, which has been a key driver for us as we think about both the fact that we are diversifying our cell chemistries between high nickel content cells and LFP cells. But importantly, that we're really focusing on security of supply for that second half of the decade as well, where we do see there being more challenging supply constraints.

So can you just remind us within your existing spending and building plans? What are you -- what is included from a battery point of view?

Sure, from a battery cell vantage point, one of the strategic decisions that we had was ultimately to phase the build-out of our own in-sourced or in-house [ cell ] and -- which is planned for Georgia. And so the expectation for us was to start to spend against that development post R2 production. So really the tail end of 2025, which would start some more of the capital spend and deployment against that in-source cell.

Let's shift gears to software and services. That's been a big part of the Rivian story during your IPO process. As you start to deliver your vehicles, can you talk about how that's progressing with your early consumer -- customers? When will you start deriving revenues from FleetOS -- fleet management from Amazon?

Sure. So when we came to market with our IPO, we talked a lot about the fact that we believe that the ownership life cycle itself represents as much as the initial purchase of the vehicle in terms of the potential for earnings opportunity and that's especially magnified as you think about the commercial vehicle opportunity whereby today, fleet operators are used to working with a hodgepodge of multiple third parties to really craft and assemble their own fleet management solution for their vehicles themselves. And so the very first vehicles that we're delivering to Amazon all have a subscription to our FleetOS offering attached to them as well. And so these are revenues, albeit not significant revenues today, but our revenues that we're earning really from day 1 with Amazon. And the opportunity that we have with Amazon is to make the experience that much more seamless with one singular partner that can help them throughout that end-to-end journey, right? So we're working closely with them on in-fleeting of vehicles. We're working with them on the development and training of their own employee base. So the beauty of a connected vehicle is that we can understand and ultimately track, right, all of the accident avoidance and occurrences that may have happened with that vehicle to give them, right, the knowledge and data to help drive additional vehicle safety from a driver vantage point, which is better for their employees, and it's obviously better for their own bottom line as well. And so a lot of these core factors have really driven what this curated FleetOS solution is for Amazon and it's something that we are really looking forward to also leveraging as we think about the opportunity for us to go address a long tail of additional commercial customers as well within the near term. On the consumer side of the business, we've launched with our financing offering that we partnered with [ Cason ], which is a white label solution for Rivian and is a very seamless customer experience that allows a consumer to go through the entirety of our transaction process in a matter of minutes. And in addition to financing your vehicle, you can also ensure your vehicle. So we have a partnership with nationwide offering both automotive insurance opportunities, but also the ability to bundle all of your insurance needs collectively with that program. And so those are 2 of the front-end services that we're offering on the consumer side of the business as well as all of our vehicle service and maintenance. So today, we have over 20 physical service centers across the country for our vehicles and a large and growing fleet of mobile service vans as well and mobile service trucks. We've got some [ ONTs ] in that fleet. So a lot of the service for the vehicles can be done at the consumer's home as well, which is a great option for anyone.

So can you talk a little bit about the timing for starting to generate some of these software revenue? When will you -- when will the arrangement with Amazon would kick in, in terms of that FleetOS? And then on the consumer side, I think a big piece of the opportunity was also potentially selling some self-driving options as a subscription? What is the time line for that?

Sure. With Amazon, it really starts from day 1 in terms of every vehicle that's delivered, that has an attached subscription associated with it. And as we think about the ADAS opportunity that you mentioned, interestingly, with Amazon, we have the opportunity to have curated and crafted commercial-specific fleet of capabilities and services that allow us to monetize earlier in that side of the business. Today, the consumer vehicles themselves have included in the cost of ownership, right, access to all of our ADAS solutions. So things like highway assist are available to you so that you can drive, right, eyes on road, but hands off wheel within those highway environment. And as we progress, right, our own road map, we do see the opportunity to continue to add feature set to the vehicles and ultimately start to charge for some of those ADAS solutions on the consumer side of the house. We will have a next-generation hardware set going into the vehicles really towards the end of 2023. And so around that time frame, you'll start to see more of this runway and opportunity for us to start to bring more advanced features online and ultimately begin to monetize some of that opportunity. And the same is true as you think about the software-enabled opportunity that we have. We've collectively launched a number of over-the-air updates for the vehicle that have allowed us to introduce right new feature sets. So everything from a bird's eye view of the vehicle that's enabled with the hardware set there that allows you to sort of see that overhead view as you're parking your vehicle or backing up. We've added garage door opener feature. We've added a carwash mode so that you can sort of quickly enable the vehicle to do any of the drive modes that you would like to do. And I think on Instagram, some of you have probably seen, right, the introduction of sand mode as well. So I'm sure everyone would love to have sand mode on their vehicles for this summer as well as part of that. So as we think about the phasing of these opportunities, part of the advantage is, first, showing the consumer, the core capabilities and drive modes enabled in their base vehicles and then ultimately, showcase the additional feature set that we can introduce over time in some of those cases, those additional software-enabled features will be paid subscriptions as well.

And then on the service side of your network, can you provide some early feedback on how that's going? What are some areas of strength and then some improvement that you need to make?

From a service standpoint, we've had the opportunity and advantage of really being able to forward invest in building out that infrastructure. And part of that was driven by the relationship that we have with Amazon and the importance of uptime for the commercial vans themselves. And so as you think about being a new customer and new Rivian owner, I would say we've certainly tried to build ahead of the growth within the company to support not just the volumes this year and next year, but ultimately, how we build the business into a large-scale producer of vehicles first here in the U.S. and then ultimately, as we're building out some of the European service network as well to meet Amazon's needs within that market as well. We from a service vantage point have seen encouraging signs. But I would say the challenge is similarly on service as it is with the vehicles themselves. Service is also not immune to some of the supply chain constraints. And so we've tried to ensure that we're allocating appropriate level of parts to service vehicles as well.

Maybe final big picture question for me and then opening up for all for your questions. So RJ's often expressed a long-term goal for Rivian to sell 10 million vehicles per year. how do you get to that number? And what needs to happen to achieve it?

So as we think about the long-term opportunity to be 10% of the market, so the 10 million unit number that you mentioned there, the opportunity comes from the development and build-out of a full sort of platform of vehicles in aggregate. And we've started first with our true halo products, right? The R1T and the R1s are designed to be that pinnacle of the brand in terms of performance and capability. And the same is true as we think about what Amazon and the EDV represents for Rivian is truly being that pinnacle product for us. And from there, the opportunity is to introduce additional form factors, additional price points that allow us to really expand the addressable market for these vehicles globally and build a global brand to meet the demand that we see within the market that will allow us to go from today, 2 vehicle platforms, right, to ultimately the sort of dozens of vehicle platforms that will be required to meet 10 million units of overall demand.

Great. So maybe I'll pause here with my questions and then open it up to you. Any questions in the room.

I guess one question I had was on the first 70,000 units or so. I mean, you guys are sort of loss-making on them. And so what sort of the volume level at which you guys can kind of get to a gross profit breakeven level? And then on the capital needs -- if you go back over history, it's taken Tesla probably $20 billion of their own CapEx plus another $5 billion from governments and everything to build out 1.5 million units of capacity. You guys are probably going to end the year with around $10 billion or so of cash. And as you move into next year, you can fund the normal plant, but I mean, how do you kind of think about longer-term capital needs in order to really be able to support volume ambitions approaching towards 10 million.

So I'll hit on sort of the second part of your question, as you think about the capital needs for the business. And ultimately, as I mentioned, right, the power that we have is the installed base of capacity and the upfront investments that we've made in launching 2 vehicle platforms and 4 vehicles across those 2 platforms. And so those investments are largely behind us as we think about where we stand today as a company. And now the opportunity is for us to ramp up those production levels and let us extract the gross profit of that 150,000 units of capacity can deliver for Rivian. And what it allows us to do is to support the entirety of our operating expenses as a company, but also allows us to invest in some of that growth CapEx that will allow us to bring Georgia online. And ultimately, then as you think about a world in which we have 350,000 units of installed capacity, right, that becomes a self-fulfilling flywheel of growth and profitability that allows Rivian to really be in that driver's seat to self-fund growth. Our goal and expectation is to -- if the markets are willing to go faster than that and pull in some of that international growth and development. That means the growth doesn't need to be as sequential in nature, but we can have a road map, and that is similar to what you saw at Tesla do is to start off and grow in a much more sequential nature and way to help it self-fund some of that growth. So that's the way I would characterize how we think about the future and the runway that we have with those foundational investments that we've made and with the $17 billion of cash and equivalents that we had at the end of Q1. And hitting on your second question, which is an important one, how we drive that growth and opportunity is ultimately what you'll see from a gross margin vantage point, which is a step change as you look from 2023 to 2024. And the core drivers of that step chain are first and foremost, the fact that we'll have -- be in a position where we'll have ramped production to the capacity of the 150,000 units that the plant enables for us. But importantly, beyond that, we're in a world in which we're also beyond that cohort of pre-March versus preorder customers. And so as we talked a bit about our -- of the 10,000 new preorders that we've had, the average selling price of those configured orders is $93,000, which gives us a sizable headroom in terms of the underlying unit economics that they can deliver themselves. And the third piece as well is that we spoke a little bit about this new technology road map that we have. And that technology road map has the opportunity for us to reduce the bill of materials in the vehicles while also introducing a substantial step change in terms of performance and capability, which we think can merit even higher levels of ASP on a go-forward basis for Rivian. And so that's where you do see this true step change versus sort of a linear progression from a gross margin vantage point, which is a key driver for us to ultimately get to a world in which, in 2024, we can largely offset the operating costs of the company with the gross profit generated by the plant.

Any other questions in the room?

Just want to get your thoughts on the commercial van space specifically. Obviously, the [ ramp ] -- business with Amazon is documented, but if you look at the programs coming out of the other legacy players, the new EV programs, their commentary seems to suggest we're going to price to retain market share. So just kind of curious how you look at your constraints on capacity? It seems like everything is going to be going to Amazon that you can produce, while by '24, '25, you get a lot of incremental EV capacity going to the van space. Just curious how you kind of shape that up from a profitability standpoint? Kind of following up on the prior conversation, where do you really want to focus your investment here? Is it really more on the retail? Or no it's critical to establish critical mass and size in the van side? And is that kind of under discussion as we think about the time line?

It's a great question. We're really excited about the opportunity set within the commercial van space itself and the opportunity set that we have with a large-scale customer in Amazon with an initial order of 100,000 units, again, has allowed us to really invest in capability and software development work to bring not only a phenomenal van and hardware experience, but importantly, how software plays into it, which is critically important as you think about the profit pool of the commercial space itself. And so that's where, as Emmanuel asked the question before around, right, this sort of recurring revenue opportunity that exists within the commercial advanced space is so interesting and compelling as well because we do see much higher opportunity on a monthly recurring basis for there to be a sizable opportunity in that commercial van space itself. And so as we sit here today and we look at the opportunity, I would say we've built a large and formidable team to help bring that FleetOS solution into market, and we think that, that can be a huge catalyst for Rivian to garner additional sales opportunities with the long tail of commercial customers that exist within the market, and we think it is and will be a true differentiator for us as well.

How much your capacity [indiscernible] 50,000 units a year 3 years from now, how much [indiscernible].

So on the capacity that we have, the current installed capacity for the commercial vans is 85,000 units. We are, as we're working on re-rating some of the production volumes within the plant to normal going to cap that down a bit as we free-up sort of additional capacity for the R1 consumer vehicles. But we do also have the opportunity over time to make additional investments in the [ shared ] shops, paint shop and our propulsion and also are -- yes, so within our paint shop and propulsion stack to ultimately flex back up that capacity to 200,000 units in aggregate. So that's another opportunity.

Any final question in the room? Looks like you did a fantastic job answering them. So Claire, thank you so much for being with us here at Deutsche Bank Center, and thank you, everybody, for tuning in.

Thank you.