Rockwell Automation, Inc. (ROK) Earnings Call Transcript & Summary

All right. Moving right along here for the first large-cap diversified industrial presentation of the day. We're very happy to have here from Rockwell, CEO, Blake Moret; new CFO, Nick Gangestad; as well as Jessica and Aijana from Investor Relations. [Operator Instructions] But first, we're going to leave it off to Blake for a little bit of an intro, and then we'll jump right into the fireside chat. Blake, thanks for joining us this morning. Take it away.

Thanks, Steve. It's great to be here, and thanks to everybody out there for their interest. For those of you who are maybe a little bit new to the story, Rockwell is a pure-play devoted to industrial technology and digital transformation. We're bringing the connected enterprise to life for customers across discrete and hybrid and process industry segments, really taking manufacturing to a whole new level and helping these customers to be more resilient, agile and sustainable. We're organized in 3 segments based on the type of offering, but we go to market with a single sales force that has very deep industry expertise. And so with that, Steve, I'll turn it back to you.

Great. So just on kind of the -- I think, stepping back, but also a bit here talking about the current environment, you guys have given a very bullish chart on product orders on your last call. Can you maybe just describe a little bit more about the context around how that plays into your business? I don't know if that question makes sense. But given the growth rates there, it would suggest the near term is going to be very strong, but I'm not sure that was quite the communication. I think you guided to kind of flat year-over-year in the second quarter. So maybe just a little more context around how those orders filter through from a timing perspective and then what the counterbalances are perhaps on the other side of the portfolio when it comes to solutions and services maybe that are a little bit longer tailed in nature from order to revenue -- in the order to revenue cycle.

Sure, Steve. We gave a higher degree of detail than we may have traditionally done through the course of the pandemic because we thought during these very volatile times, more information from us rather than less would be useful. You should care about the sharp uptick in product orders, especially in November and December and continuing into January, because that has created a record backlog as of the end of the quarter even without the help from those later cycle solutions orders. So those do typically come later. They take a little longer to ship. But even without that help, we have record backlog as a company. Products are about 2/3 of our total business. And so when we've seen the kind of backlog that just the products have built, that gives us a good outlook going forward. Now we still have to get it all shipped out, but it's a strong view to the future. And this is the kind of calendarization that we would expect where product orders will tend to lead the longer cycle engineered solutions.

So when we think about whatever degree we want to assume product revenues, I mean, those orders convert, I would assume pretty quickly into revenues. If we think about kind of like the growth rates into the second quarter with product orders up double digit, if you're guiding to flat, then that would mean kind of the solution stuff is down more than double digit. I mean I'm just -- again, that's -- I'm asking about what you had said historically as opposed to giving us an update on what's happening today. I'm just trying to kind of better understand how that guidance is for the near term, at least, set up with this backdrop and this dynamic. Why wouldn't the second quarter be better than the flat organic, if that's kind of the case, given the growth rates we're seeing in products, which look pretty strong? I guess that's the easy way to ask the question.

Yes. I think you should think of the flat overall company guidance for the second quarter as more about digging out of that trough, which reached its absolute pit in Q3 of last year, but it was fairly deep, right? We saw somewhere around 20% declines year-over-year in Q3 of fiscal year '20. So it's taking a couple of quarters to come back on the backs of strong sequential improvement. And then we see in the back half of the year double-digit growth organically in Q3 and Q4, which gets us to that 6% overall organic guide for the year at the midpoint.

Right. So it's kind of that backlog helps you -- it doesn't all necessarily mean it's going to flow through in the second quarter here. It does help you kind of in the back half because you guys certainly have some very strong growth forecast for the back half of the year. The products...

That's right. And we also expect to see some help from the solutions side of things as those orders start coming in and as we see some of that conversion in the back half of the year. The average time to ship a book solutions order is typically around 5 or 6 months. So there's a little bit of a delay there, but we have seen some promising order trends even within solutions in certain areas. We called out specifically Sensia, the oil and gas joint venture. Orders in December were fairly strong.

When you think about kind of the various end markets and the second half of the year and that growth rate, maybe if you could just talk about what leads and what lags. And then are there any in that -- embedded in that guidance that are still down year-over-year or is basically everything -- is everything growing for the most part in the second half end market wise?

Yes.

And maybe just touch on the end markets at this stage, what you're seeing just from a longer-term perspective as well.

Sure. So I'll start with some of the bright lights in Q1 that we expect to continue through the balance of the year, and then I'll talk about what comes on as we move through the year to add to that starting point. So semiconductor has kind of powered through, and we saw growth in semiconductor. It's not a huge part of our business, but we've got some really good offerings there, and our presence is expanding in semiconductor. E-commerce, we talked about a 40% growth in our shipments to e-commerce customers. We have a great readiness to serve there, and I don't think we're going to see any lessening of the secular trends drop in e-commerce anytime soon. Life sciences has flipped into growth. And again, with our involvement with vaccines and treatments as well as just a general strong offering in life sciences between products and software and services, I think that's going to continue through with us. In food and beverage, the starting point was, as you would expect, packaging. That's typically a leading indicator. It's the machinery builders that are buying products for their machinery. And we do expect, as we move through the year, a more general contribution from food and beverage. We also expect auto, particularly in electric vehicle as these -- both start-ups and established brand owners are buying the automation either directly or through their tier suppliers, to get their new EV products to market.

So those are kind of the growers. And maybe we'll just kind of like take a step back and delve into those because there's many different dynamics. First of all, you mentioned the semiconductor side. Anything you're seeing out there with regards to shortages? I mean you guys make a lot of electronics, and I'm sure your -- you see some of that supply chain for yourselves. What are you seeing out there on that front? Any hiccups or risks that you're seeing around semi shortages?

So if you divide the impact of the semiconductor shortages into 2 areas, starting with [ safe ] demand. Is it impacting us that the automotives are having a tough time acquiring it? Or is it having some demand on -- the demand from semiconductor customers, not a lot right now. I mean, certainly, there's some of that scarcity that's driving some of the big capital investments that some of the semi manufacturers are making. So that's a positive. In terms of our own operations, we are seeing supply chain constraints that involve electronic components, semiconductors. You see congested freight lanes, the number of ships outside of LA trying to get in has prompted us to have to go to air freight in a lot of cases. And then we did have an aggressive posture in terms of ramping up labor in our plants to be able to deal with the backlog. So we continue to be working through those supply chain constraints every day, but we're not seeing an impact on the demand from our customers.

Right. So is that -- is all that stuff kind of like new here? Or is that generally encapsulated in your kind of guidance and how you stood in January? I mean these things are somewhat fresh, but I think that there was still some noise around it -- around year-end that some of us could see. But is that embedded in guidance? Or is that kind of an incremental?

Yes. It's -- we knew that there was going to be supply chain constraints in the guidance. It's a very dynamic situation as we go through it. And as you see, order rates developing for us as well as other, let's say, sources of demand for those suppliers. So we're working it every day. We've got a good team on it, and we're building resilience in our own supply chain, but it's a highly dynamic situation.

When you think about the e-com stuff, who exactly are you selling to? Are you selling to kind of the system integrators that then go to the Amazons and the -- I mean, everybody, Walmart, everybody -- of the world? Who are you -- who is your kind of main point of contact on these fronts when it comes to e-com?

Yes. It's really across the value-add chain, beginning with direct interaction with those e-commerce providers. So the names that you just mentioned typically, as they're working through, say, proofs of concept for more advanced potentially disruptive technology, we're often working directly with those names, the end users. But we're also selling to their suppliers, the conveyance suppliers, Intelligrated, Vanderlande, Dematic, those people are good customers. And then you have smaller integrators that might have some intellectual property about a neat way of doing something, I'd say, back of store for one of these big retail outlets, and we're working with them. A lot of the focus of the technology is in motion control, being able to convey and divert, sort packages very quickly, and it's an area that we've talked about as a great fit for our independent car technology, among other offerings that we have.

And then you mentioned on the EV side and auto. So you're seeing -- I guess one way to ask the question would be, obviously, the EV stuff is growing pretty fast. You have a little bit of a different kind of wallet content when it comes to internal combustion engine and EV. It's just a different profile. Maybe talk about: a, where that business will be -- where EV will be at the end of this year, given that it's growing so fast, if there are any offsets that you're losing out on in internal combustion and then just how the business differs. When EVs grow, you're going to be serving a different part of the value chain. Maybe that's incremental -- I think there's a lot of debate around that out there. Because we see auto CapEx basically rebounding very strong, but then being kind of flat at a level, but there's going to be a big mix in there. And I think that's one of the big debates on your stock. Maybe, at a high level, dig into the moving parts there to help us better understand and model this stuff.

Sure. Well, let me start with the takeaway, and that is that we think that the rise of electric vehicles, cars and trucks, SUVs and so on, we think that's a net positive to Rockwell. We've always said that our auto business is correlated most highly to model changes as opposed to SAAR content. And when you think about new EVs coming out, those are model changes, new models. And so that kind of work is good for us. When you look at the differences between a project in internal combustion, engine-driven vehicles versus EV, you have all of the traditional processes within internal combustion that were strengths for us. So you think about stamping the metal and painting it and assembling it into the body and doing the trim and the chassis, the final test, running it on the test stands. All those pieces are still there as you make the move to electric vehicles. But for Rockwell, what we have in addition is new space when it comes to the battery assembly, the motor winding, which are more in line with good application fits for us as opposed to the subtractive manufacturing. Think of CNC, boring out cylinders and finishing metal surfaces. That's an area that we address through partnerships with companies like FANUC, but we don't have a whole lot of installed base there. And so this is net positive business for us, whereas for some of our suppliers, including our biggest competitor, it's -- there's a little bit of a cannibalization that they have to be worried about in the power transmission side. In addition for EV, virtually all of these new facilities are adding MES software to assist with the scheduling. It's moved from more of a nice to have in an auto plant maybe 15 years ago to something that's seen as absolutely necessary now. And we have a great offering with our auto suite MES offering there. So those are some of the dynamics. Now in terms of the rise of electric vehicles, I think by 2040, we're going to see more electric vehicles on the road than internal combustion engine-driven vehicles. And so again, I think that's good for us. You have to balance that a little bit as those ice plants close. We lose a certain amount of MRO business on an ongoing basis in those plants. But as a way to dimension that, a new EV plant, all in, could be $5 million, $10 million of business for Rockwell, maybe a little bit more. And the MRO that you would get from an existing facility might be seen in more of the, say, $0.5 million a year type of business if they don't have new expansions and so on. So you could run the calculus of that. But again, going back to the first point, the model changes and the new models coming out with EV, we think, is a net positive to us. And by the way, automotive is not the huge part of Rockwell's business that it was in the past. We talked about under 10% currently of our total mix. And so that growth on EV, while EV and powertrain is still relatively small, around $100 million, the growth rates we can see will have an impact larger on our auto business due to the denominator being a little smaller than it might have been as a percentage of our total.

That's super helpful. And when you talk about kind of the -- that opportunity for an EV plan, does that include kind of the battery as well? I mean it seems to me that there's like -- it's now 2 very kind of distinct parts of this. The battery is -- making a battery is -- seems to be a little less integrated as part of the process versus maybe the prior under one roof, if you will, that they're building really new factories for these battery plants. Are you including kind of the batteries in there? Or is that something you look at as a different sliver that's above and beyond the traditional auto discipline?

No. It's a separate but connected sales pursuit. So if you're going after, say, a Korean battery manufacturer, you're going to have a different set of decision influences than where the final plant gets put together somewhere in the American Midwest. But they have to be related. And at some point, there is some coordination there. Different brand owners are going to do it in different ways with varying degrees of autonomy between the people who are putting the battery together, whether they're doing it as a JV, they're contracting it all out. So we have to have a flexible approach there. I would say one of the things that, of course, we've had a lot of interest in is the reshoring question, and EV battery is turning into one of those areas that I can point to, to say, yes, there's something there. We're seeing -- and it's not reshoring. It's shoring. It's basically...

It never was there in the first place.

Exactly.

And on that front, many of these are global companies that are based over in Asia. Are they -- when it comes to kind of like the core technology they're using, are they bringing their own automation technology? And you guys are going -- I know you've talked a lot of Independent Cart being kind of a driver of content there, which is a new revenue source for you guys. Are they bringing some of their own technologies so you guys are kind of attacking different areas? Or how does that kind of play out if an Asian -- one of the major Asian players comes and brings their plan here?

Yes. Often, they are bringing some component of their -- the technology that's, say, incumbent. And so we have an opportunity to break in and to grow share in the area with a truly disruptive technology like Independent Cart. So it's possible that we can win the Independent Cart but not necessarily pull through all the rest of our automation. But there are also strong value propositions to be able to have an integrated system that includes not only the Integrated Cart motion control, which is a pretty good project in its own right, but then adding to it some of the other automation that's required. So it's a new area. It's largely open. We have access through that Independent Cart Technology through our software that position us well for EV going forward.

So they -- yes. Go ahead. Sorry.

I was just going to say -- and we already have a track record. So this isn't just aspirational. We have a good track record in places like Korea of having done successful projects with these battery manufacturers.

And I guess this kind of cuts across the onshoring discussion, but I guess the very famous TSMC plant that -- the press release I've been forwarded by my clients, I think, 600 times in the last 6 months. When you think about the traditional semi guy coming over here versus the discussion we just had on the EV battery, how may that be different or the same? You mentioned Independent Cart, but that seems to be very -- the EV battery situation has been brought up more than once on that front. How would you play in that type of scenario with a plant like that, that's more of a traditional semiconductor type of plant with a big foreign player coming here?

I think somewhat similar, although we've got the benefit in that specific case that TSMC is already a good Rockwell customer. We don't win everything that they do, but they're already a very big customer for us in Taiwan. And so we're continuing to work with them to maximize our content as they bring a plant over into the U.S. where we have the added benefit of having really unmatched support from us and our electrical distributors as they look at who can get them up and running as fast and keep them running with minimal downtime.

What are the types of applications you're fulfilling for them over in Taiwan? When you think about the various major product lines, what do you do for them over there? I wasn't aware that you guys were that -- were strong in Taiwan.

Yes. So a couple of the applications that come to mind would be the building management. So you have to have very highly controlled building management systems in terms of the humidity, the temperature, the cleanliness of the environment that their products are being put together in, and we have great engineered solutions for that. It's a real strong part of our business, in particular, in Asia and then in some of the material handling applications moving between different pieces of machinery and test stations and so on. Those are traditionally good applications for us as well. And I should say, Independent Cart rears its head there. Again, it's got some applicability due to the kind of precision of motion control that can be provided in the semiconductor industry.

Got it. And then before moving on to kind of more of the high-level discussion around IS and CS, oil and gas -- so we talked about kind of some of the bright spots. I know you mentioned Sensia, but now kind of moving to perhaps the industries that have been a bit more challenged recently at least. You mentioned Sensia doing well here on orders. How do we kind of look at the trajectory of oil and gas in the second half? And then what should we be watching as we move into '22 and '23 from that end market?

Yes. So I think oil and gas gets better. It has been a tough spot. We expect for the full year, while we're guiding up in growth as a company, 6% at the midpoint. We're seeing oil and gas -- that's a way to say it would be -- that's despite oil and gas being down high single digits for the full year. Oil and gas has traditionally almost always lagged the recovery in other industry segments. I think we had some extra special headwinds with oil and gas that came about as a result of the price wars, the pandemic and so on. However, being focused more on that digital oilfield and on efficiency of existing wells rather than drilling new holes in the ground is where I like to be, and I'm glad we're positioned there. I think oil and gas is going to recover. We're seeing some pricing support in terms of their price per barrel, that's going to help, but there's still a lot of oil being pulled out in the ground, and I think customers are more likely than ever to be talking about doing it as efficiently as possible to be able to reduce that breakeven point to be able to profitably produce a barrel of oil, and that's exactly where Sensia is positioned. So it's taking a while, but I think it does give us some reason for optimism in '22 and beyond.

And I recall, last cycle, your oil and gas business was -- there was still a big upstream portion, but a lot of it was offshore and some of the drill ships and things like that. How is the profile of your oil and gas business today when you think about upstream, onshore versus -- offshore versus onshore and then kind of the downstream and midstream stuff? Is there a big difference in split now?

So since you gave us a greater geographic reach in certain areas, particularly Europe and the Mid East, that was where they had greater penetration than we did with our traditional oil and gas business. We're seeing about 60% of our business in oil and gas upstream and then maybe 30% midstream. So a relatively small amount is downstream. We see that in process safety, the work that MAVERICK, our acquisition from a few years back, is doing. But the majority of our work is upstream and midstream and a little heavier weighted towards onshore than offshore. We are doing work on rigs offshore, but a little more than half of our business would be onshore.

And then one last one just on the end markets that we didn't cover. Food and beverage is obviously a big space for you guys. I think it held up reasonably well initially. But obviously, with your growth rate for the total company down double digit, food and beverage kind of cycled as well. How is that -- what's embedded for this year? And are we at a bit more of a normalized level there? Or did that really cycle down as well as we move through the pandemic period?

So what held up even during those periods of contraction we saw over the last few quarters was packaging. And so the packaging OEM portion of food and beverage, and you've seen this at shows at -- like PACK Expo and things like that. We have a very strong presence there. I think food and beverage is -- we're expecting mid-single-digit growth for the full year. A lot of the food and beverage end users basically were just trying to keep their existing capacity maximized and running as full out as opposed to putting in new lines. And they were just trying to keep existing assets running just as fast and around the clock as they could. And so that had some suppression on what the growth rates might have been otherwise. But we do expect food and beverage to improve through the year, not just in the packaging, but at the end user side as well.

Right. So when we kind of step back and now think about, I guess, business model a little more, on your interconnected software and services, what is the -- what's kind of the profile of growth there? The services business was kind of down more than I probably would have expected given the nomenclature of services. How do you kind of -- how do you see that moving forward here in the second half and then kind of into next year?

Well, as you said, services typically does hold up through a cycle with a little less volatility than products. I saw that in 2008, 2009 when I was running our services business. The difference through the pandemic has been just not being able to get people on site. So I don't think we've ever had to deal with such a protracted lack of mobility that affected that. It didn't impact areas of remote support, technical support, which are a big part of that services business. But in terms of the break fix work, the people-oriented business, repairs, being able to collect repairs and manage that on site, going out and sending a field service technician, that was severely impacted during the depths of the pandemic, but -- particularly as we're pivoting to areas of new value within services that are included in what we've called connected services. So cybersecurity services, services and solutions as a service, which is a small but growing part of that business, technical support, I see very good long-term trends for that. And that's why that part, along with the Information Solutions, the so-called IS/CS bucket, areas of new value, we're confident in double-digit growth this year and hitting $500 million of organic revenue by the end of this year.

I think you guys had talked about some project delays there. I mean I guess that's -- maybe that's what you're saying on the kind of services side. Is that -- has that loosened at all? Maybe that wasn't services. I wasn't quite clear on what that was referring to.

Yes. The lack of mobility affects both the traditional services as well as the solutions where you've engineered a project and now you have to go on site and commission it. We are seeing some loosening up in the constraints, getting people on site. It's still with us, but it's getting better. We've also seen, and I just -- somebody forwarded me over the weekend a picture of the first roll of paper from Green Bay Packaging, which is a big project win that we talked about a couple of years ago. They just brought paper to the wire and rolled it here recently, and a big part of that commissioning was done with remote support. So that was an example of us using our own remote support tools where we couldn't have all the people that we might have had traditionally standing right there alongside the machine and the winder.

And so you had said $500 million in organic revenues this year. I guess what's the total number you expect? Is that the total number...

We haven't talked about that, but what we -- what we're comfortable is that with this trajectory of that $500 million of organic this year, getting to that $600 million next year, which is something we talked about back in 2018, we feel good about that. And we continue to grow that business with organic growth and things that -- we grew ourselves like cybersecurity services and MES, but also with some inorganic contribution from companies like Fiix, the Toronto-based asset management software-as-a-service company.

So when we think about the growth next year, I guess, if it's $500 million this year, does that mean you have 20% growth lined up for next year? Or is the base -- we have to kind of add some acquisitions in this year, and that raises the base? Or there is more acquisitions to come next year to kind of grow into that base, the $600 million?

That confidence is without doing additional acquisitions, but that's not to say there might not be additional acquisitions.

Okay. But we are thinking about the reported growth next year going from $500 million to $600 million for '22. That's the implication.

Yes. We're confident we're going to get to $500 million this year, and we're confident we'll get to $600 million next year.

Got it. When we think about the software side, how is that business model different? And I think this kind of gets to the question around your distribution channel. I know you have a new head of channel there. And is this more -- you said you're going a little bit more direct. Historically, you were -- your distribution channel has always been a very strong part of your story fundamentally. Is the bit of a tweak in distribution strategy, is that driven by this push to software and going more direct? Or is there something else in the mix here? Or is there no change in the distribution strategy?

So we started a few years ago talking with our distributors about how we're going to need to evolve together to maximize our value in the future. And electrical distribution, that limited distribution model, still remains absolutely central to our go-to-market strategy. But particularly in lower share parts of the world like Asia and parts of Europe, that distribution is necessary but not all by itself sufficient. And so when you think of certain areas, think of China, for instance, we have strong electrical distributors and we continue to work with them to provide them new competitive products to make them as successful as possible. But we also will be layering in some degree of specialty distributors that might have a certain industry or geographic focus that allows them to be a part of the effort. You look at additional value-add partners, engineering houses that we're working to cultivate relationships with. And then those areas have always had a little higher percentage of direct business than we do in, say, a product-driven North American market, but we do expect that there will continue to be an important role for direct sales, particularly as you get into, say, multisite, more complex information solutions with software. That is not to say that our electrical distributors will not have an important role in software, including software-as-a-service. So for instance, the Fiix software, the asset management software we just bought in Canada, I think Rockwell has an opportunity to be particularly disruptive there by turning on our distributors to that offering because the decision-makers for that type of software are often decision-makers that we know in the maintenance part of the production life cycle, our competitors in that space. When you think of the traditional computerized maintenance management software providers, they don't have anything like that kind of channel to be able to come in at a grassroots level. And so we're turning them on. I was just with our distributor leaders last week at our partner network conference, and they are excited and so am I. And maybe, as importantly, the staff from Fiix is also excited about that because that's a way to market that they never had as an independent company. So distributors are going to play a strong role in our future, including the software aspects of what we sell.

Got it. One last wonky one on the details. Nick, maybe this is a question for you. I recall talking with you many times about bridges -- of moving parts on bridges at your former employer. A little less complicated here, I think. But when we think about kind of the moving parts this year with the gain and the investment levels that you had, the implication would be that you offset those 2 this year that the gain goes away obviously, but then the -- that spending goes away, that would imply that kind of the non-gain-related EBIT or segment incremental margins will be very high, right, because you're basically getting a $35 million, whatever it is, tailwind above the line within operating profit. I still think there's a little bit of confusion around -- is that the right way to look at it for next year when we think about some of the moving parts into next year?

Yes. Blake, I'll take a cut at this, and then you can follow up if you'd like. That incremental spending that we talked about on the last earnings call, the vast majority of that is what we are choosing to spend this year and not building to a new higher run rate. So from that respect, Steve, what you're describing is making sense. But there's also -- at any given time, we're also looking -- are there other investments that we think are wise things for us to be doing? And that could come into play in '22 as well. But then that onetime gain that we shared on the last earnings call, you're right, that's just -- will be done and not carry forward into '22. But the vast majority of what we isolated as this incremental spend is for this fiscal year only.

So I guess should we think about 30% to 35% as still the number next year on a core basis? Or is it -- I mean, again, if that cost goes away, it will be meaningfully higher than that, right?

As we're thinking about future years, that 30% to 35% incremental margin is part of how we're thinking, and that's still how we're thinking about next year as well.

Okay. Great. I think we've got time for one more maybe. Blake, can you just update us on where you stand with PTC and ultimately kind of the -- maybe where we are in a run rate benefit perspective from that relationship, maybe a little bit of color around the numbers into next year or where you expect it to go? This would be the last question.

Sure, sure. Well, I continue to be happy with the PTC relationship. As we talked about benefit to share owners, we talked about the revenue and the profit coming from the resale of PTC software, which shows up in our -- that Information Solutions & Connected Services bucket. I should say that the vast majority of what's in there is our own homegrown software. It's not the PTC software. So that's an important and fast-growing piece of it, but it's by no means the majority of what's in there. But that's going well. And I think with some of the recent personnel additions that we've made, I think we're ready to accelerate that. The second area of benefit from that relationship is the way that we're becoming an earlier, larger part of our customers' digital transformation, and that's manifested in the pull-through. We're seeing bigger orders and a higher win rate for our traditional offerings like MES because we have that broader portfolio. We see -- having that basket now, including the PTC software, the MES software, our analytics software, simulation from Emulate3D, we have more ways to win, more ways to add value there. And so that pull-through is meaningful, and that shows up in a lot of ways across our offerings. And then the final is the appreciation on the capital investment that we made, which is going okay now as well. So I'm happy with it. We continue to look for ways to grow the relationship, but the first focus is the commercial value that we're providing to customers.

Great. We'll wrap it up there. Guys, thank you so much for joining us today. Best of luck over the course of this year. And hopefully, we'll be back in person. No snowstorm for next year. Thanks, guys.

Good seeing you, Steve. Thanks.

Thanks, Steve.