Rocket Lab Corporation ($RKLB)

Good afternoon, everyone. Thanks for sitting in here. We have Adam Spice, CFO of Rocket Lab, so we'll run through a bunch of stuff today. Let's start with the launch side before we move to kind of the space systems side of things. So we'll start with Electron. Maybe just talk about where we are in terms of your production cadence, launch cans, how much capacity you have, where we could get to in terms of Electron?

Yes. So Electron is our workhorse today on the launch side of the business. We've got Neutron coming to market ensure we'll talk about a little bit later. We've launched Electron 88 times. Last year, we launched it 21 times. This year, upper 20s is probably the right way to think about the cadence. So it's had a pretty good growth clip to it. We sized our factory at our infrastructure to do 1 launch per week. So we're kind of approaching a little bit more than half of that as we exit 2026. In order for us to double that again, we probably have to put some more factory footprint in place. I think we're pretty good from a pad perspective. We have 3 launch pads. We have 2 in New Zealand. We have one at Wallops. So -- and across those pads were launched -- licensed to launch roughly 140 times per year. So we have a lot of launch capacity. Factories are a little bit more, but Electron is a relatively small vehicle not a lot of heavy infrastructure. We could probably double production, probably take us 2 years and probably cost us a few tens of millions of dollars, but not a lot, not a lot. So we think we're in a good spot. The demand has been continuing to grow. We found new applications for the vehicle, most recently in the form of these haste missions for doing hypersonics R&D work, and that's growing really quickly. It's probably the fastest growing piece of the portfolio for Electron. But we're also seeing a lot of growth -- there's a tremendous amount of growth on the international side of Electron. And then as more and more questions have come around with regards to kind of availability of kind of ride share, access on things like the SpaceX transport emissions, it just kind of puts even more kind of a demand kind of focus on Electrons. So we think that the growth is going to continue to be strong in Electron.

And the mix of HASTE versus non-HASTE where it is today, where it can go to, what that means for price per launch?

So HASTE this year will represent around 20% of the total launches. And again, it's the fastest-growing piece of the portfolio. You can think about HASTE probably having a 30% to 50% CAGR on it at this point for the near term. And the rest of the portfolio of Electron kind of being in the 20% CAGR range. And if you look at pricing, a HASTE mission averages around $10 million versus Electron commercial launches, which are more in the, call it, $8 million to $9 million range. We do have missions that are quite higher than that, not really anything lower than that in the backlog. We occasionally get higher emission ASPs when people come with late-breaking needs that we have to prioritize and the customers are willing to pay for that. Yes.

Transitioning over to Neutron talk about where we are in terms of timeline there and the key gating steps from here to first launch.

Yes. So Neutron it's been -- it's getting put through its paces and its components, like the subsystems of the rocket. So usually the longest pole in the tent of a rocket program is propulsion. And propulsion is kind of progressing well. We posted some videos recently showing full-duration hot-fire test with the engines, gambling and so forth. So we think we're in good shape there. We're now testing the vacuum optimized upper stage engine, that's doing well. So now what we do is we basically how the engines are "working" you basically have to put them through what's called the Runbox, which is all the different conditions at which the engines have to operate, different fuel mixtures, relight temperatures, ambient, all the kind of stuff that affect kind of the real-world conditions. And so that's just a matter of kind of getting through all of those and things are progressing well. And then if you think about the avionics, that's another typical risk pocket on a development program, but we're leveraging a lot of the electronics and avionics from Electron for Neutron. So pretty low risk there, and we feel good about where we're at. The infrastructure is in place. So the launch pad is ready to go, factories are producing, engines we're producing an Archimedes engine every 8 days, which is the engine for Neutron. And so those are just kind of returning those so we continue doing a lot of testing. And I'd say the tanks and structures or the next kind of work stream. That one, we had an issue in February on our booster tank, where we had a tank rupture. We got the tank up to the flight pressures, but we didn't get to the margin. We usually push beyond that. As we push beyond the 100% of flight pressures then basically the tank let go. We ultimately root cause that to be a manufacturing issue from a third party and so now we're manufacturing the current and future tanks on our AFP or automated fiber placement machine. So should eliminate those kind of workmanship type of issues. But clearly, I think the big risk item is we've got to get that tank back on the test stand and get it through its hydro stat than it's cryostat. And all of that right now is kind of scheduled to be in the call it, the August time frame, and we're trying to pull that in a little bit into July. But everything right now is still pointing towards an opportunity to launch in -- before the end of the year.

Okay. So how far have you build ahead on Neutron at this point? I guess what is the production system is geared to do what?

So at this point, we're scaling the production system to be able to produce up to 4 Neutrons per year. And now at this point, we are already starting to build -- we kind of refer to them as tails. So this first flight is Tail-1 then Tail-2, Tail-3. We're working on elements of Tail-3 at this point. And for example, on the engines, we're still kind of -- as we put the engines through their paces, we're kind of getting to the point where we'll have that full set of 10 flight engines because you need 9 on the booster need 1 in the upper stage. But again, as I mentioned, we're in a position to roll an engine off every 8 days. So it doesn't look like engines will be any kind of a gating factor. Now that we're on the automated fiber placement machine for tanks, that shouldn't be a gating item. So we really don't see anything that prevent us from ramping. And you got to be a little bit careful because what we don't want to do is we fly the first rocket and realize, oh, we probably want to change a few things for Flight 2 and Flight 3. So we're building ahead of things we think are very low risk of having to be iterated because we don't want to take a bunch of write-offs on kind of in process stuff.

Okay. The plan for reusability. When you test reusability, when you target reusability and I guess, how do you view the risk around the potential for reusability?

Well, we started working on reusability several years ago when we were looking to bring Electron into reasonable form, right? So Falcon 9 didn't start off as a reasonable launch vehicle, but they iterated their way to that. And we were progressing on a similar path with Electron, but then decided to prioritize Neutron development over Electron reuse just because the the value in getting that rocket to market first. But in the process, we've reentered 10 Electrons from space back into the atmosphere. So we understand how the materials behave. The materials are slightly different for the composites for Neutron are slightly different and ideally better than Electron for reentry purposes. But every time -- well the several missions that we reentered Electrons, we were actually testing out materials for Neutron on those missions. We've relet engines. We've done all kinds of things. So we think we're in a pretty good position of having done this now 10x on Electron to be in a good position, we're not really doing it for the first time on Neutron. But the plan right now is the first mission its goals are to basically prove that the rocket can deliver mass to orbit, do a reentry of the vehicle and then do a propulsive soft landing in the ocean, that rocket will basically sink to the bottom of the ocean. The second rocket, which we currently have planned for about 6 months after the first successful test launch, that one is planned to, again, in this case, deliver a payload, return to atmosphere and actually land on our barge. And then we're going to take that rocket and we're going to use it for [ postmortemng ]. So that won't refly. The third tale is the one where we plan on launching it, bring it back and putting that back into service in one form or another, whether it's the full rocket or whether it's -- we have to replace some of the elements on the rocket, whether it's some avionics, some of the propulsion. But that's the kind of -- and then kind of increasingly get to full reusability over the course of the next few flights after that.

How many boosters will you build?

I think it depends on how successful we are in surviving re-entry, right? So I think right now, the -- ultimately, we can foresee a need for, say, a half dozen boosters in the fleet. Our goal is to be able to fly or is designed to fly up to 20x. We've now seen Falcon 9s kind of do over 30 re-flights, but different materials usage like they're using stainless steel and aluminum tanks and so forth, a little bit quite a bit different actually. So if we can get to the 20 flights, we think a fleet of 6 vehicles gives you the opportunity to fly quite a few times approaching perhaps 100 times per year with a fleet of about 6. If you have any kind of reasonable reuse model of, let's say, you fly your boosters once every 30 days, which is kind of where Falcon is right now.

Okay. Let's transition over to talk about spaces. So it's a bigger part of your business gets less attention.

Less sexy.

Yes. But -- and what you're doing there is really, really interesting. Talk about all the capabilities you kind of build out and acquired over the past couple of years and kind of where you are in terms of being very vertically integrated on the sally side of things?

Yes, it's definitely been a journey. I mean, it's been a very conscious one. I kind of think back to when I interviewed with Peter back for this role about 8 years ago. Actually is close to 9 years ago now. I asked what his vision was for the company. And if he said, "Oh, I'm out to build the most dominant small dedicated launch company on the planet. I would have said, oh, that's interesting, but probably not big enough, right, as far as what I'd pretty interested. And so what he laid out at that time, he's been very, very consistent is this vision of being an end-to-end space company where we started with small launch because it was actually doable. Right? From a capital perspective and infrastructure because we didn't have limitless capital like some other space companies that when you think about the people that we compete with, 2 of which are 2 of the richest people in the planet, right? So they have lot of access to capital. So we started off to something that was doable, which was Electron. We achieved that, but he says, "I'm going to do Electron. And then very quickly thereafter, once I prove that, that works, I'm going to basically start building out the capabilities to build satellites in a very integrated way. Because ultimately, my goal with Rocket Lab is not to just be a launch company, but I actually want to have my own assets on orbit that I generate recurring revenue from because that's the real goal here. And so there's a lot of parallels we see what SpaceX has accomplished. They've just done it very, very quickly and very successfully part of because they've had such great access to capital. They also had phenomenal engineering execution as well. But that's the same -- we share the same goal. So in order to do that, we kind of started off and we literally got in a conference room with all of our key people and said, okay, we're not going to start building satellites. And we literally block diagram explosions of what is a satellite and all the way from things like attitude direction and control to in-space propulsion to solar power and batteries and tanks and so forth. And we said, okay, where are the real choke points in all of this, and we started breaking the and say, "Well, if you want to have a satellite orbit, you need to be able to do pointing and stabilizing. So let's go order some reaction wheels and star trackers and sun sensors. And so we called up Doug Sinclair that owned Sinclair the planetary and we said they were the leader in the small sat element of the market. So we want to order some of these reaction mills and you said, "Okay, well, you'll get them about 12 months from now and they're going to cost you x and [indiscernible] like, well, that's not going to work, right? If new space is going to live up to the growth potential that we all see for it, we got to do things in a very different way. So let's just buy them and then we did that. So we bought Sinclair. That was our first acquisition. They were making about 150 reaction wheels a year. Last year, we shipped over 2,000 reaction wheels, right? And so we tend to buy these small very capable, proven heritage products and then apply the Rocket Lab kind of production capabilities and scale them pretty aggressively. So that's kind of how we've gone about kind of a methodical way of picking up out all the pieces. So we started reaction wheels and start trackers and Sun sensors. Then we basically bought a software company that controls those elements that was as [indiscernible]. And then we just continued to build off of that. And most recently, we acquired a company called Motive that makes solar actuators. So basically, the things that help your solar panels deploy when they get on orbit, very important piece because if those hinges and actuators fail, then your mission fails. So we're very careful about picking things that derisk each mission, right? And so things like solar, well, but we also kind of just don't assume that we have to buy these things. So for things like radios, we've actually developed and manufacture our own radios. You may have seen we announced a new product called [indiscernible] , which is an in-space electric propulsion system. Again, we could have gone out and acquired an EP company, but rather than spend a couple of hundred million dollars in payoffs and VCs. Pete said, give me $15 million in 18 months, and I'll go do it myself, and that's exactly what we did. So we've got the luxury of not having to buy everything that we need. We can actually develop it ourselves as well. So it's been a combination of inorganic working our way into all the key subsystems on a satellite. And then most recently, we -- well, not most recently, but the new addition to our capabilities last summer, we acquired a company called Geost to get the payload capability. So you can think of a satellite bus as being kind of the functional chassis of a satellite and the payload makes it do a specific thing, whether it's taking a picture, communicating in this case with Geost, it's an infrared sensor for doing missile warning, missile track. So each satellite has got a different payload to meet its application. So now we forayed into making the payloads as well. So now we can provide a complete solution to the customer. So the embodiment of that is for SDA, tranche 3 tracking layer win that we got late last year for $816 million that basically now we provide the full solution. It's our bus, it's our payload. I mean, hopefully, down the road, those satellites launch on Neutron. So we can kind of get that full value chain of going all the way from satellite design manufacturing launch. And then ultimately, again, when we own our own constellation assets, operate those on orbit.

You didn't mention Mynaric, it's a big one.

That's a big one. So Mynaric is...

Mynaric sorry.

Yes, everyone pronounce it differently. So Mynaric makes optical terminals. So basically, those are the devices that sit on the satellites and let the satellites talk to each other through high speed, very secure optical links. So if you think about any constellation of size going forward is likely to have these optical links versus RF links. And so yes, a very key foundational capability. It also gives us a beachhead in Europe. Europe is a very protected market. They will only buy American when they have to buy American, unless you have a presence there, where you're actually considered a European supplier because you make it on the ground there. So we now have a very modern, capable factory with several hundred people over there pumping out optical terminals, and there's an opportunity for us to produce other existing Rocket Lab products in that factory and be branded Europe. So I think it's a big -- not only does it bring key foundational technology, but it brings market access with it as well. So we're actually very, very excited about that deal. I think acquisitions have been a big part of our strategy for growth, and I think they'll continue to be. But again, it's -- we just look at any way it's possible to grow the business as fast as possible.

Are there any -- I mean you talked about on PSA being able to kind of build to the entire thing. But are there any missing pieces you feel like in terms of what you still need from a SAP perspective?

I would say at this point, the piece that we that we still rely on third parties for -- and any time we have a reliance on third parties that's uncomfortable. Because one thing that we've learned in this market is if you build a dependence on your supply chain, it's going to burn you at some point, right? So it's really on the RF signal chain part where we are relying on third parties. So we use third parties for our beam steerable antenna arrays for our modems, for our antennas, those kinds of elements of that, the encryption boxes. So over time, I think you'll find us kind of in-source a lot more of those capabilities. Fortunately, they're out there. I mean, these -- I don't think for most of the elements that we would need to bring in house, these are not billions of dollars. These are tens of millions, if not maybe hundreds of millions of dollars of acquisitions and/or internal development.

So you talked a little bit about PWSA, but what about SBI, how you're participating there at this point, [indiscernible]

That's -- it's an exciting, but admittedly early opportunity, right? I think that that's -- I kind of view that opportunity as kind of a little bit of a risk on risk where you put risk money up to prove that you can get through a couple of technical hurdles. [ Tecogates ] If you get through those, then there's some level of reimbursement for that R&D that you put at risk, which then lets you take an even bigger bite at the apple in the next phase. And ultimately, if you get through all those phases and you keep getting some kind of return on that risk R&D not a lot. I mean that's not where the money to be made is you ultimately. If the program was to go to production, which will require the whole congressional budget approval to get through, which has all the political risk dynamics associated with it, then there's potentially a very big prize at the end of that. So we're partnering with [ Raytheon ] on that program. We -- each company brings its unique strengths and capabilities. We think we're well positioned. We are fortunate we have got so much of what we need to deliver for that program already kind of in-house. And so the incremental cost for us to go support these kind of things is relatively low. So for us, we've got -- I kind of view it as a nice option on a big opportunity that doesn't require a huge amount of kind of P&L burden at this point. So I think -- but as the program -- if the program continues, then I think that -- those R&D investments are going to kind of increase and that will take a little bit more, I think, scrubbing and scrutiny. But I think we're excited about the opportunity. We think we've got the best partner you can partner with Aaron Raytheon. So we think it could be a really big kind of needle-moving program for the company over the next several years if it comes through.

So you talked about the ultimate goal here is to put up your own constellation and have a business capture the economics around that. I mean what kind of timeline are we looking at before that becomes a potential reality and thoughts on what kind of business that would go to serve at this point?

Well, I think we're pretty fortunate and that on the launch side of the business, you get to see a lot of different business models, right? We've seen -- what I've seen come and go over the last 8 years has been pretty interesting. If you were to rewind the clock to 2018, 2019, a lot of excitement was around kind of new space business models of putting earth observation satellites up to count cars and Walmart parking lots and kind of see how low oil tankers were sitting in the water to see how much -- all that kind of stuff, none of those things really developed, right? It is supposed to be for insurance markets for after hurricanes and earthquakes and all kind of stuff, but that really didn't develop. What really did develop was government. Right? So government has become the hockey stick for our business in a lot of ways, both domestic and international governments. So if you think about applications out there, the biggest opportunity, the biggest TAM has historically been on the communication side of things, right? So we've all seen with how Starlink has grown pretty dramatically. That type of application is probably out of our wheelhouse at this point, just given the amount of capital we take to do that. And we think that it's probably pretty well addressed between what Amazon is doing, what SpaceX is doing. But there are different verticals within comms that could end up being more attractive. They're a little bit more protected, if you will, and more actionable. And Part of what we have to align to is the fact that whatever we do from a constellation perspective, it's going to be serviced by Neutron. So you have to line Neutron capacity availability with when you want to deploy your own stuff. Right? So right now, if you look, we're obviously -- we're booking Neutrons for customers, right, for third parties. Ultimately, we want to use Neutron for our own needs. But if you look at our announced cadence of one launch this year, 3 launches next year and 5 launches the year after that, you really start talking about 2029 before we'd actually have capacity of our own to start leveraging as Neutron really starts to scale. Because it wouldn't really make sense for us to kind of start thinking about deploying stuff on other people's rockets, right? So this is really focused on Neutrons availability. So Neutron is very important for a lot of reasons. It's not only important for our launch business for, but it's very important for our own constellation ambitions as well. So it's absolutely a focused investment for us and we watch these other markets develop like will the direct-to-device market become big and real. Will other applications that develop that are people are working on right now. I mean 1 thing we've seen is earth observation is a real market. It's a relatively small market, but it's real, and it's growing. Comms is absolutely real, and we've seen examples of that with again how SpaceX is growing, but there's other parts of that market. And now you've got secure government Comms as an opportunity as well that's presenting itself. And as we've seen StarShield turn a government procurement of satellites into a service procurement kind of model, which is pretty exciting. So we think there's lots of different ways to pursue the application side of the business. We haven't just talked about, I'm sure on your list you one of those opportunities that people are talking about space-based data centers, too, which is like in object literally.

I wasn't necessarily going to go there, but I wanted to ask about SpaceX and their transition to starship and away from Falcon. And most of their big chunk of their Falcon capacity has been going for Starlink for cells. It hasn't actually been -- now we don't really know ultimately, the plan with Falcon from here. But I mean, in a potential world, they launched Starlink on Starship, and that frees up capacity from Falcon to sell into the marketplace. How do you think about that? What impact that potentially could have on Neutron and pricing in the market?

If you look at what SpaceX is really chasing from an opportunity set, I don't think that being in the merchant launch business is the best ROI for their focus. I mean, if you think about like the audacious plans they have around Starlink and around space-based data centers, taking other people's freight to orbit is probably not the best use of their time, right? So -- and there's been a lot of rumors and speculation about whether Falcon 9 stays on the market for merchant capabilities or not. If it doesn't, I mean, we never counted on Neutron not having a Falcon 9 competitor. But the probability that, that capacity that's currently being used for Starlink deployments would be made available to the merchant market. It doesn't seem like the most probable outcome. It seems more like if and when Starship works, they've obviously focused that on Starlink and also on the space-based data center opportunity. But then the merchant market becomes less and less of a focus for them, because for us, I mean, we kind of look at -- our approach has been because access to capital has been different. We've taken this crawl-walk-run approach where we've been selling picks and shovels as far as hardware to other satellite manufacturers to build out our own capabilities, right? So in the process of selling satellite subsystems to our satellite manufacturing competitors, we built out our capacity in our technology portfolio. Same thing on launch. We've proven out our launch capability, and we've had our customers basically pay to develop that launch infrastructure and launch capabilities, which ultimately, both of those things we'll use for our own needs. SpaceX didn't really need to do that as much because of their access to capital. But now given where they're going, again, I think it's seeming like that Neutron is going to have a very nice spot in this market going forward once we can actually get it to a point where we can scale rapidly, which again, it's going to take a few years, but that's -- we're well -- we're kind of -- we have our plans well in place to be able to scale it [indiscernible] pretty quickly.

So as Neutron comes online, what impact will there be to your margin profile, your cash flow, you're going to build out boosters. How does that kind of play into the cash flow side?

So fortunately for -- because it's a reasonable launch vehicle, you actually end up building the greatest number of boosters early in the program right? Assuming successful on those boosters. You're not putting it in the bottom of the ocean. But each time we build a booster is about $50 million. So if you assume that I mentioned before, you have a fleet of, say, half a dozen of these boosters, that's about $300 million of capital equipment, if you will, that you're building out and from a pad perspective, again, we've got the pad built out over time, would we need to build out more pad infrastructure to support volume increases, yes. And if you think about the the timing it takes about 2 years to build a new launch pad at an existing launch facility, and it costs about $100 [ billion ]. On Neutron, we were able to get our -- have our government partners co-invest with us to about 50% of that. But if you assume $50 million to $100 million per pad in 2 years lead time, so let's say we had to build 2 new pad infrastructures and 6 boosters, you're really looking at around $0.5 billion type of investment, which is quite manageable in the context of the opportunity that we're looking at for that vehicle.

And the margin progression?

So margins, it's a function of success on getting to reasonability, right? So the vehicle that will -- is currently planned to launch at the end of this year. That's an R&D vehicle, no revenue associated with it. A lot of the R&D is already in the rearview mirror on that when it launches. The second tail that we talked about, that's going to be, that will be revenue associated with it, but either kind of neutral to negative margins on that one, on that first customer paying mission. By the time you get to your reusability and the question is going to be, okay, let's say, the third vehicle that we fly land successfully on the barge and is reused. Well, at that point, depending on how the auditors. We work with the auditors to get the treatment on that vehicle, that may also have been a fully expensed tail. In which case after that, you're not burden, the COGS isn't burdened with the booster anymore. But at some point, you're going to get your model a point where, let's say that we're all in agreement that the vehicle has proven that it can fly 20 times. Well, then you're amortizing a $50 million booster over 20 emissions and the margins really become much more predictable and I think predictably towards our model of 50% non-GAAP gross margin. But there will be a journey along the way, and there's going to be some volatility because at some point, you may have agreed that you're going to try to amortize this booster over 4 flights and maybe it flies 8x, right? So you fully amortized the booster over 4 launches and you get free boosters essentially for the next 4 missions. So there will be some volatility, but we would -- what we're looking to do is is probably break out Electron and Neutron separately within our launch business. You can see that. So you can see the steady progression of Electron. And you'll see that progression as well, the volatility associated with the Neutron. So you can kind of kind of form your own opinions about where margins will end up.

So as you think about the future state of business, I mean maybe not thinking about putting up your own constellation, it seems a bit out there. But the launch versus space systems piece. So Space Systems larger today, more backlog, but how do you think about kind of the relative growth profile of the 2 parts of the business looking out beyond maybe the next year or 2?

Yes. Well, if you go -- if you think, again, in the 3- to 5-year type of horizon, we think there's a 20% to 30% CAGR on Electron from where we're at today. So again, if we -- let's say, we're -- if we're launching kind of pushing towards, let's say, somewhere in the 25 to 28 launches this year on Electron and you apply that 20% to 30% CAGR to that. You can get -- you can -- and ASPs continue to drift up. Could that be call it, $0.5 billion to $1 billion business in the next 3 to 5 years? Yes, I think there's potential for that, particularly as international governments look to do kind of more of what the U.S. has been doing. Now Neutron, I mentioned that 135 cadence, Well, I think that once you can get that vehicle to be launching, let's say, a couple of dozen times a year, which could be in that same time frame. And those come along at kind of $50 million to $55 million ASPs. You're not talking about another $1 billion contribution from that. And I think we've been historically conservative on forecasting ASPs. So hopefully, there's some upside to that, particularly who knows what the Falcon 9 dynamics are at that point in time. And then the Space Systems business has the biggest TAM in front of it, right? So that's the one where we're -- we've got pretty broad exposure to kind of a rising tide raising all ships thing where we sell into everybody who's playing into these major programs globally. So that business has got a lot of big opportunities in front of it. So I would say that I still see Space Systems being bigger than launch. It's probably -- I think the mix between launch and Space Systems will probably -- today, it's 70% Space Systems, 30% launch. Could I see it getting closer to maybe 60-40 or 55-45 in favor of Space Systems. Yes, I can see that. But I think the growth is still going to be -- I think in the near term, stronger on Space Systems until Neutron really kind of hit the stride.

Okay. And then in terms of capital, future capital in the [indiscernible] , you talked about the investment in Neutron that's out there. you've had a lot of success with the ATM in terms of raising capital. How do you think about potential future capital needs? And obviously, you've been a very active acquirer. Just how you're thinking about that and your preference for using the ATM program. Obviously, stocks has been done very well. So how do you think about future funding needs and how you might go about that?

Yes. I think our -- I would say, with the capital that we had exiting Q1, I don't think there's -- what we've talked about around needs for Neutron, we really don't need to raise any more capital for Neutron or even our Space Systems business. It's really all about inorganic. It's like we want to have plenty of dry powder to go kind of acquire strategic assets, which there are quite a few out there. I think that we're continuing to look for more needle-moving kind of things. I think historical, if you look at the deals we've done, they've been very strategic vertical integration plays, bringing really unique capabilities in the portfolio, but they haven't been financial deals, right? We're requiring a lot of revenue and cash flow. I think that's -- as we continue to evolve as a company, I think we're going to start to put more of those kind of deals and focus because it's really now about how do we get true scale into the business. And there are some inorganic ways of doing that, but just we want to be well positioned to be able to capitalize on those.

Okay. Well, we're about out of time. So we'll -- I think it's a good place to end. Adam, thank you for the time.

Thanks, David.