Sealed Air Corporation (SEE) Earnings Call Transcript & Summary

My name is Jeff Zekauskas, and I analyze chemicals and packaging for JPMorgan. And it's my pleasure this morning to introduce Ted Doheny, who is the CEO of Sealed Air. And as you know, Sealed Air is a leader in food packaging and protective packaging. He's been CEO since 2018. And he's really guided Sealed Air in a new direction toward a much, much stronger automation and equipment and digital footprint than they've had before. Accompanying Ted is Bobby Crow, who's in Investor Relations, who's on my right. And I think Ted is going to begin with a brief presentation, and then we'll have a fireside chat. Ted, welcome to the industrials conference.

Great. Thank you, Jeff. It's a pleasure. And for all of you here, this is my first in-person meeting. So congratulations to Jeff. I wanted to add one more thing, that we're focusing on automation, digital and sustainability. I really do want our investors to think of us as a sustainability company as well. Before I start, I just do want to mention safe harbor. I will be giving forward-looking statements and information. So I want to highlight that. But just real quick, as Jeff said brief, to tell our story, we think we have an exciting story in our journey. And the conference, I've reminded Jeff, this is an industrial conference, which we're quite at home, and that's where we're going. And our products and services are connected to the industrial space, and it's where automation is such a powerful thing. So starting with our vision, where we're taking the company is we thought it was a world-class digitally-driven company automating sustainable packaging solutions. And we're purpose driven. And I just want to make a comment, Jeff, and I know you're going to ask me about with what's going on with Ukraine and Russia right now. Our purpose -- and we spent a lot of time on this. Our purpose is we're in the business to protect. Business is very important to protect, to solve our customers' most critical packaging challenges and to make our world -- and that's the word we shift, better than we find it. And just really -- and we're a people-first business. And what's going on in Ukraine and Russia is just incredible. We've been -- daily crisis meetings on it with what our teams are doing in both countries. But just -- we can probably talk about that a little more, but I just want to shout out on that. So where we're taking the company, again, those themes of automation, digital and sustainability. So if we go to the next slide. So how are we doing on this journey. Just to highlight, we did okay last year: sales up 13%; earnings, up 8%; EPS, up 11%. And through that process, we actually are shifting our portfolio, stuff that doesn't strategically match where we're going a very good business and a shout out to those employees who left, but we're working that portfolio, not just on the ad with the M&A but aligning the portfolio. If we go to the next slide, doing something different. We are actually telling you where we're going. So every quarter, we give you visibility about 3 years where we're taking the business. And this quarter, we shared that we actually raised our model on growth. We've raised our model on earnings. And we just gave you the picture to put it out there of where we're taking the business. And we're giving you the confidence that we're doing it on the performance of our last 4 years. That we have confidence that this shift to automation, digital and sustainability is providing lift and the engine is performing. So if we go to the next slide. One other comment on the engine you'll probably ask is that leverage, as we talk about this inflation that we're dealing with, really still showing up in the engine of the volume that we're producing, and the leverage on that is above our 30% challenge. So that's, again, giving us confidence that we can drive earnings faster than sales. Keep going. So here's just a picture of our solutions. Just to highlight, these are the markets we serve. And we really focus on many, many different markets. We actually produce over 30 billion packages, so multiple different markets. And really our intent is that we want to shift from being a product-driven business to be a market-led. And so that's what we're focusing on. The business, you could see the makeup on the Americas, EMEA and Asia Pacific. Fresh red meat, our food business, very, very strong. The CRYOVAC process has created the market of extending shelf life for food safety and fresh red meat, just a tremendous presence. And actually, in this really, really tough market, we're able still to grow that. And again, the answer was how and why was through automation. The product you see there in the middle, we'll be talking about moving our protective business. And Jeff, we -- I think of it not as 2 businesses, I think of as the whole market. So here is an example, the like use. This is actually a shrink tunnel that you see there in the middle with what we call auto wrap dealing with a lot of engineers, making the products very simple. What are we doing? We're automatically wrapping, in this case, tires. We have a picture there. And actually, one of the -- after the last earnings call, someone said, hey, that looks like a big piece of cheese. Well, that's actually using the same technology that we've automated cheese to put it through our shrink tunnel. And this is where you've asked me in the past, Jeff, about material agnostic. It's the right material for the application. So that's got our wonderful CRYOVAC material protects that tire. We have cardboard around it. And we do it through a very high-speed shrink tunnel, and that piece of equipment is a $2 million piece of equipment that's actually automating the tire industry. What's also quite interesting, solving challenges. That is what we're about. So you see UPS. We are actually in UPS Innovation Center in Louisville, and visited there early in my tenure. And I asked the question, what are your 3 biggest problems? Well, their second was a thing called tires. They do not want tires on those conveyors. And if you could just even visualize that. So they have to -- they actually tax them pretty -- they won't like me saying tax. I apologize. Surcharge. And so -- and all over the world. So we worked with actually UPS and Continental in Germany, and they have a significant charge. So how can we work with them to solve that problem. By the way, their first problem was leakers, and we could fix that one as well. But I just want to share with you, this is where we're taking the business. What is the problem, what kind of solution can we have for it. And then we can probably talk about auto bag there when I get to the solutions multiplier. So the other thing we did in this last quarter is we gave you a deep dive on automation. We didn't have an Investor Day. We had 20 minutes of an Investor Day and said, hey, give us some detail where are you going with -- if you go to the next slide? Where are you going with automation? So here's a 3-year plan. So these are the things, and we could probably unpack this for some of the questions. This is our 3-year plan. Showing the growth rate here is much faster than the growth of the business. I have some examples to talk about. But really, the key to this slide is that gray bar that's behind, turning the model around of focusing on how we can save our customers' money in automating their facilities. The huge driver, the pull here, is on the customer payback. And even pricing our systems accordingly to you get that 3-year payback. So it's not how much your equipment cost, it's how much do we actually save the customer. And that's really the key behind where we're taking automation. On the right, you can see we've taken our top product line and making it very simple for our customers and our investors, auto box, auto bag, auto food and those automation solutions, and the bookings well over 50%. So other -- some of the other companies that you have at your conference in automation, you're going to see those same kind of numbers. But then you'll also get to some of those supply disruptions, why the sales might not be the same, so we can unpack some of that. So we go to the next slide. This one is pretty cool. But this is the level of detail. This is actually an example of a meat packing plant where we're actually taking the solution. And that the eyeball in the middle is how are we auto loading, putting robots, cobots into that process in going touchless. The sustainability side in the middle that giving the right material as we work on sustainability, lots of issues, especially on the chemical side, and then how do we use our AutoVac. AutoVac is our rotary chamber machine that's iconic in the industry, have been around 30 years. But how do we bring that even to a higher level of production. Then automatically packing. And then this piece in the middle is on the digital side, that's quite interesting. We've developed technology over time with visual systems that we can help our customers differentiate between bones, marbling, other foreign objects that are in the process and actually, at those high speeds, be able to detect is there something in there that shouldn't be. And then finally, the digital will talk more about some pretty interesting things, okay? So the next one, Bobby. If we go to the solutions multiplier here, lots of questions, well, what do you mean about the solutions multiplier. The example here is we made an acquisition of a company called Automated Packaging Systems, kind of fits into where we're going. So that's -- you see that AUTOBAG piece of equipment there. Roughly, this was a $300 million business that we bought roughly. There are parts and service. We're roughly 25% of sales. They had a solutions multiplier of 7x. Well, what does that mean? You take that AUTOBAG. What does AUTOBAG means, how do you get stuff into a bag faster. Parts and service around that. But the pull-through on materials, the full solution was 7x that original purchase. So that's into our base. So applying that same methodology to our whole product portfolio is where we're going. Right now, we're 8% on automation. We want to move that number up significantly and just using this as a model on how we can take this much faster. And I'm checking the clock, I want to make sure it's brief for Jeff's questions. Keep going, Bobby. You can cut me off too. I want to just -- this one here is the sustainability. And Jeff, a little bit of our shared background now for 2 years. The sustainability issue is huge, especially in our world today. I get asked a lot, well, what about this war on plastic? It's more than the war. I took over my first month on the job, Davos has declared the war on plastics, and I'm like Geez. So what we're balancing here is the sustainability pledge versus the environmental, going carbon-neutral. And really, where -- and this is what I mean about our portfolio being material-agnostic. Doing the right thing to solve that problem for our customers are that challenge, using a process so we give the best solution at the right price and make it sustainable, whether they're asking for it or not. That's part of what we're doing and really excited in our investor base, the draw that we've had of people coming into our stock as an ESG solution and making that real. So this is our ecosystem. In our touchless operations, we're driving touchless and automation. Right now, we have a couple of hundred cobots and robots. Over the next 5 years, we're going to have thousands of cobots and robots into our system as we go fully touchless. But what's really exciting about the automation process is we're now finishing making the bag, finishing making the pouch into our customers' operations and bringing our operations team and automating our customers' facilities, which is exciting opportunities. And then the digital side, as I mentioned, we're going to do the deep dive in next quarter, some really exciting examples. We've invested in some digital technology that we think is quite exciting that we can digitally print at high speed on film, multiple colors, invisible ink, even metallic stuff. Really exciting on where we could take digital. The last piece of our ecosystem is we're going beyond our space and actually investing with recyclers. And we've invested in plastic energy using our C ventures to close the loop, work with the industry that we can really make packaging sustainable for our customers. So I'll take a pause, make sure that I keep it brief. I do have a capital allocation slide that -- you could ask those questions.

Please go ahead.

Okay. I'll open for you for questions.

Are you ready?

Yes.

Okay. Good. So the world keeps changing, Ted. Maybe in November, oil was at $70 a barrel. Today it's at $100. There are all kinds of stresses and strains in the global economy. And when you looked out at what 2022 might be like after you completed your 2021 earnings, you had a particular vision of the way things might be. Is your vision of 2022 any different? That is when you look across the volume trends in your markets, you look across the raw material trends in your markets. Do things look more or less the way they did before? Or do they look different? Are they easier or harder, or the same?

I'll end with the last thing you just said. They're harder. But I also -- we use a term, and I've learned early in my career in life and maybe way back to sports, adversity defines you. So the adversity that we're -- by the way, can I add one more thing. Just speak like woke up and had a crisis meeting on China. Anybody's following the COVID outbreak in China. So we'll just add more opportunities. So looking at 2022, when we were planning and doing our guidance and how do we thread that needle, and we looked at what we knew and we looked at what we didn't. And we said, hah, this is what we think the strategy will work for in what we knew. Since then, much harder. Since then, much more challenging. But that doesn't mean that we can still perform. It's going to be very, very different just literally every day. And then and what we threw a war in there, too, by the way. So the strategy is actually how do we go faster. We're getting called in all over the world where there's another supply chain issue, another chemical shortage. Remember, last year, we had that a couple of plants were knocked out in Texas. So I think this adversity making us more flexible in our supply base, to that part of the question, more flexible also on our supply base on equipment. We had this huge backlog. How do we go to third parties, contract manufacturers, go around the world to make that happen? I think we're going to have to do that faster. Some of the areas of the world, Russia's hard to do business in, so that's going to go away. How do we make it up in other places? So short answer to the question, it's harder. Adversity is redefining us, but I feel pretty good. It's the same strategy. What do you do call a play? We're going after automation. And if customers have an issue with inflation, we're pricing disciplined, but with care. And it was very careful because customers are always listening. We want to be there to help them. We're doing it with discipline, with care. And the sustainability is not going away. We have to really work with our customers, but that means that we're going to have to be more productive and efficient. So the answer, it's going to be tougher. But I think we're getting tougher, and I think we're going to have continual advancements in 2022.

When you describe the changes in the environment that you face, are the -- is the largest change demand or raw materials? And how do you pivot in order to offset some of the pressures that you face?

I think it's always all of the above, Jeff. So I think we started seeing demand -- a temper in demand temp. So is the demand holding us back? I'm talking about the GDP and et cetera. So we started seeing that. But we didn't see the demand slow down with our solutions because customers are really struggling with labor, their efficiencies. They're having huge cost pressures with inflation. So we're seeing that demand for our solutions actually still quite strong despite macroeconomic change. On the supply side, the second part of your question, we've done a really nice job. And know the major chemical companies that you know better than I, some I know very well. But we've worked quite closely with our major resin suppliers, also paper suppliers that -- which the energy piece is really putting pressure on paper. So we're working with them also to get into their innovation engines. So we don't have to develop everything ourselves. But how can we innovate new products, integrate new materials? How do we do compostable, renewable materials? So we're leveraging those pieces quite well to bring the innovation engine to drive growth as well.

Just very quickly, do you have a -- what's the size of your business in Russia and Ukraine? And with energy prices in Europe being so high, has that affected some of the way that you see European today? Have you felt that at all?

Well, first of all, on the Russia, Ukraine, it's roughly 1% of our...

So tight.

Yes. Well, 1% is important. Remember, our average bag price is $0.16. So we're in the pennies. So -- and I don't want them listening right now.

I understand.

So the -- but it's not material. But the implications, to the second part of your question, it has tentacles around the world. So for instance, on the energy price, you feel the energy price if you feel in the raw materials. So part of our engine on how we handle that inflationary cost is we think -- it took us a while to catch up. In the fourth quarter, you saw that we're catching up. But we just have to be open and honest that the inflationary pressure is going to be there for a while. There's rumor there might be a Fed rate change today, so we've got -- that's coming. But on the supply side, having the diversified footprint of suppliers, not just on resins, which we are, but in the other components, I think we're in better shape through the crisis of having a diversified supply. But the short answer is the inflationary pressures are going to continue.

So Sealed Air is an enormously profitable and free cash flow generator company.

Okay.

Or at least in my eyes.

Why don't we go back to the model?

Yes. And maybe this year you'll generate something on the order of $500 million in free cash flow, maybe a little bit more. And sometimes you think about acquisitions, sometimes you think about share repurchase, sometimes you think about dividend increase. But we're in a volatile world. And my own impression from -- my own impression was, I thought that you had more of an acquisition bias for your free cash flow this year. But there's been so many changes in the world. Our -- do you have mainly an acquisition bias? And do you find that those opportunities are still as available to you as they appear maybe a month ago?

I like the way you asked these questions so softly. So the reason why I don't want our investors and I surely don't want our team to think we're extraordinarily successful. That's part of our mantra. We have huge opportunities. Remember, we're moving into automation, sustainable and digital. We think we're very undervalued in that space. So there's more opportunity here. So I just want to capture that. So the free cash flow piece there, I think we have more opportunities. So the short answer, if you do the math, which you already have, this engine performs. And now you're taking it up a notch, you could be generating $2 billion of cash. What are you going to do with that? That's your question, right? So let's go to the capital allocation. And again, the first part of that curve, though, I wanted to highlight, we have a discipline of doing what we say we're going to do. So that's very important to us to separate a little bit from our past when we had the diversity thing in there. I just want to highlight that. So if you look at our capital allocation, it is purpose-driven. And so we have, to answer your question, invest and acquire. We did a portfolio realignment. But yes, we are in the market. We are looking -- and so don't want to announce anything, but we are looking in this area. But it's what we talk about. Are we interested in equipment and service like APS and doing that? I get asked that question a lot. Very successful. Move that 600 basis points in 3 years. And so did everything, how are you going to make equipment? So yes. So the other part is what you saw last year, we did the share repurchase. So if you look at that cash, what's in that model is saying, hey, what we modeled to say half of it to M&A, half to share repurchase. Well, last year, we were looking at a couple of things. It just went right, Jeff. And we are not going to buy something that isn't right. And so we couldn't get close -- so we didn't. So what did we do? We put the lever on, the share repurchase did okay, something like $400 million, close to 8 million shares at $51 a share. So that seemed like that was a pretty good return to our shareholders. But we are still looking in that space because we think we have some exciting growth opportunities in automation, digital and sustainability investments. So yes, we are looking to fuel that engine. And that's the other reason why there's -- in that history of 3 to 5 model, now to 5 to 7, we had M&A. So M&A is in our future. So we're giving the visibility to our investors of what we're looking at without being specific of what company. But yes, short answer, we would like to have M&A in that 3-year horizon at the right company, at the right price that makes sense.

So if in the course of the year, the right company is there, but for various reasons, you can't get that deal done, do you build cash? Or do you give it back to the shareholders?

I think we'd probably do both. And so the building cash in this environment may not be the right thing. Or do we take a look at our balance sheet to even get stronger for when the right opportunity comes. I think we could be smarter on how we handle our balance sheet, and I'll just leave it at that. So inherited a model, and I'm not used to the leverage. And so we're working on that. So I think we have opportunities to be smarter on how we use our leverage. But to be ready for it to go get it.

So in more recently, what you've said is that the fundamental growth rate of Sealed Air really should accelerate. That is in the old days, maybe sales would grow 3% to 5%. In new days, they would grow 5% to 7%, and there would be a corresponding acceleration to EBITDA growth. And with many companies, Ted, they make projections but there is really pretty precise often in the way that it estimates things. So what is it about -- what changed so that you looked at your business and you said, you know, this fundamentally grows faster. Was it a piece of innovation? Was it a market? And where did the extra couple of percentage points of growth come from for the future?

Well, probably the operating engine is number one. So we have confidence on do we have innovation in the past? Absolutely. Did we go after new markets in the past? Absolutely. Did we look at the portfolio, though, is multiple markets or were we caught up in the past of these 3 divisions that said, in my Product Care, Food Care and diversity. So fundamentally changing where the growth opportunities are is a piece of that. I also think if the automation piece, now that we have APS into the engine, we had equipment. But focus on the equipment, not to sell -- not just to sell more materials but focus on that automation to really save our customers millions, that growth is much higher than the average portfolio. Looking at that 5 -- that 8% of our business growing at north of 20% and even would like to take that higher. So moving that to a bigger piece and the pull through, I think, quite interesting opportunities. And again, so that's why we use this chart here to show you. When you say old Sealed Air, we put a pivot in the line at '17. '17 doesn't have diversity, '17 is when we reinvented the company. So the engine is different. So when you're running regression on your models, and this is for our new investors, regression will say if you do what you did, you're going to get what you got, right? So we have a progressive model to say now put into your model some things that are working differently that were there in the past. So those models -- we are confident. And that's why the deep dive on automation, digital deep dive coming to show. Maybe look and we'll explain why we think the model of the future is different than the model of the past. But we're building on that engine that we are going to deliver margins higher than the growth rate. And that's beneath that engine is that productivity is coming through. You don't see that, Jeff. I'm just highlighting that because of the strong inflation. That volume, we're converting and last year, close to 40%. So we're not -- people ask me, well, Ted, what's the margins you're looking at? We're going still north of where we are today.

When you acquired the APS business and you expanded your automation portfolio, did that business help both sides of Sealed Air? Did it help both the protective side and the food side? Or was it more geared towards the 1 or the other? And when you're looking out to buy new things, is it an either/or choice? Or can the things that you buy affect both divisions?

So why don't we go back to the slide, I'm trying to get you to change with me, but you're not doing it, so go back to our market slide.

Sure. Okay. Yes.

Yes. well, and I'm just saying it -- because I want you to really understand where we're going. Remember, we want to be market led where your answer said helping both divisions. So if you look at that entire example, the entire example has CRYOVAC -- it's not cheese, it's a tire. But it's taking that material that CRYOVAC, that shrink material, that auto wrap system that was designed as a Turkey shrink ton. So I just want to highlight. So where the market growth is going to come is that's where we're giving you our top 13 markets now of where we think that growth is coming from automation, digital and sustainability being the lift. So where is it coming? So I'll use the old terms. So we'll talk about the Protective. Well, what was the biggest market for Protective? E-commerce. Do we expect e-commerce to continue to getting more stuff at home, especially in the pandemic? Yes. So we're developing new products, and that's where you see the auto bag system coming in. And I'll give an example on e-commerce with digital. I'll give you a sneak preview of why we're so excited about digital. Right before the holidays, we had a major customer ask for a mailer. You're familiar with our mailer business.

I am.

We do a few hundred -- a few hundred million mailers. And they wanted to put their name on the mailer, but they wanted their digital code, and they wanted it by the holiday season. Well, as most customers, that's 3 weeks. So we sent our graphics, are seen everything is remote, did it digitally. Analyzed what they wanted on the mailer, got their artwork. We sent that because then they wanted an actual print. So we sent it to our facility in Illinois digitally, no one touched it, right to the machine where we have our new digital printing in line. So no flexographic prices. Printed it on the mailer, sent a few copies to the customer, kept that line going. Got the order, they changed some of their codes. 3 weeks later, shipped 1 million mailers. That is kind of where we want to take the business. So the market is available to us. I don't want to be handcuffed to say whether it's Protective or Food. The Food business right now on the far right, one of our high-growth markets seafood, using that as an example. Seafood actually was down last year. Why? You see all those ships that are out there in the ocean, that's where most of the seafood comes in. So it was spoiling. So that opportunity for us is now to bring some of our new technology that we have to do what we did for fresh red meat to do the same for seafood. That's going to take time, but those markets are moving. But it's not just going to be a food. It's going to be Food and Protective aspect to get that growth.

I see. So there are synergistic opportunities. When your customers buy machines, do they look at it differently now in the old days? Did they say, well, we get these very inexpensively. But now we see that there's a much greater value. And so we're really willing to compensate you more for the machines that you sell. Have the actual returns on the equipment that you sell changed very much?

Yes, it's a great question. So if you look at this picture on the solutions multiplier, let's talk about one of those machines that we've done for years. You see the -- that's a rotary chamber machine. I don't know if you saw it, it looks like a huge octopus. It is the CRYOVAC process. It's been around for years. So that's part of the next slide, if you go to Bobby here, that is a picture of the full end-to-end system. So what has changed? Bobby, go to the solution states. Yes, stay at the solution slide, sorry. And so what the customers focusing on -- and I met with the CEOs of these major meatpacking companies. What gets their attention is when we say the average bag price for one of these plants is $0.31. Just telling them directly, it's going to probably make it sustainable and to give you a better bag, it can probably go to $0.32. But we're going to come into your facilities and save you millions. The conversation shifts dramatically. So it's not what we're going to sell, but how we're going to save. I'm giving you the short answer, Jeff, but that is the fundamental shift of it's not what we're going to sell. It's what we're going to save. And by the way, we just got to keep pushing that. And we're going through a transformation. Our sales is moving to more of a service solution type arrangement. I gave you some of these examples. But what felt weird the way you asked the question is the customers don't want to give us more money. I mean they're not going, oh, hey, you guys want to make more money and automation. They're only going to give us more money is if we're saving them a lot more than what they're buying. So that's why the 3-year payback. And if I had capital coming into our facility, we're raising our CapEx. If someone said I can get a 3-year payback on capital and fuel our engine, line them up. And especially, when they can't get people. That is the huge driver. So it takes time, but that's where we're focused. It's not on what our stuff costs. They're not going to help our profitability. That's what -- they're not interested in our profitability. They're interested can we help them save money. In automation, digital and sustainability gets their attention. And by the way, they trust us because of our history and like the gloves that we have, I've shown on the robots. Are we making the robots? No. But the gloves and how we touch that meat and put it into a bag and our scientists understand how important that is, they trust us.

So is the right way to think about the equipment market for you is that it's an unsaturated market right now? In other words, the e-commerce retailers, the providers of meats, they really have a deficit of equipment in order to mechanize and make their operations more efficient. And what you're doing is you're stepping in and you're saying, oh, there's natively a very, very high rate of demand growth. And what we can do is we can avail ourselves of this sharper rate of demand. Is that the way to think about it or some different way?

Yes. And you can write all that down in your write up. So that was very good.

So what about...

Have you been into a meat packing plant?

Not recently.

Well, pick 2. What you just said was very eloquent, so thank you. I'm going to come to your conference again.

Okay, good.

So if you look at a meat packing plant, you see automation through the whole plant until you get to where they put it into a bag. And you see people all over the place. They have a viewing -- most of the large ones have a viewing area. And if you just look at it, you go, wow. If you go into a fulfillment center, one of the large fulfillment companies, I think you've heard they hired, I think, last year, 800,000 people in the holiday season. 800,000. So huge opportunities. I hope Bobby wrote down the way you described. So that is -- that's what we're fulfilling. That's the need that's out there.

So on the e-commerce side, are there various machines with packaging material that you want to sell, but also various machines with the packaging that you don't want to sell? That is, do you have a premium strategy? Or when you look at the Sealed Air portfolio of Protective materials, does it lend itself to particular e-commerce applications that you want? And then there are others you wish to avoid?

I think, yes, we'll let the market decide that. Is the way you described before, where we can save our customers the most money and create the pull-through, that's going to self-align our portfolio versus where we did get in trouble in the past in trying to push our product. Some of that we divested. We divested some really good business in HVAC. It doesn't sound like packaging. So the answer is yes. So if we look at the iconic bubble wrap, what a great -- bubble wrap is everywhere, ubiquitous. But bubble wrap was then difficult to ship because it's all air. I mean, expensive. So now we create bubble wrap on demand, you push a button, you create a bubble wrap. But that's still not good enough. So do you want bubble wrap or do you want air pillows? And so we're using digital technology now to make that easier for the customer, but then also to minimize the bubble. And that's where we have our core view product, just a single bubble in a box and to make it so -- the products need to be self-defined by the demand that we can create. If we can save a lot of money, the portfolio will be self-aligned.

Okay. Well, I think that, that's our time. Thank you very much for attending, and we wish you very well on your automation journey.

Automation, digital and sustainability journey.

Yes, and sustainability. Okay. Thank you very much.

All right. Thank you, Jeff.