Sealed Air Corporation (SEE) Earnings Call Transcript & Summary

I see. We have a few guests here. Welcome this morning to come to Sealed Air presentation. I am Susan Yang, VP of SEE Automation, Finance Leader and Treasurer. Together with me today is Ted Doheny, our CEO; and also Joel Tiss, our new Director of Investor Acquisition. So before I start the presentation, let me mention that today, in the presentation, we'll be talking about some forward-looking statements. These statements are based on information we know solely as of today. Future performance might be different based on a few factors. These factors will be listed in our annual reports, which is in the Form 10-K, and also will be revised, updated through quarterly earnings in the 10-Q there. And also, we will be using non-U.S. GAAP measures throughout the presentation. In the appendix section, you will find a reconciliation for those metrics to U.S. GAAP results. So with that, let me turn it over to Ted to start our presentation.

Great. Thank you, Susan. So if we look to Slide 3, I'd like to share a slide -- actually a slide I've used with last month in one of my customer visits, which is our largest customer, talking about the vision of where we see packaging going. And our vision is to truly solve our customers' toughest challenges in packaging, connecting automation, digital and sustainability. And we are purpose-driven in our value proposition on how we allocate capital. So first of all, what do we mean by automation? As you can see in the slide, automation starts in our facilities as we're driving touchless automation. We then bring the automation into our customers' facilities driving significant savings, and we're talking openly with our customers. Our automation solutions will drive a 3-year or better payback, fueling our equipment, service and digital business and we're looking to take this business over $1 billion in the next 5 years. Our whole portfolio is being broadened and optimized to fit the solutions model, again, equipment, service, digital and materials. So what do we mean by digital? Digital means digitally connecting our customers on how we design, how we sell, how we service and how we directly connect to our customers, and we're moving the whole company online. Digital also means digital production in our own facilities as we drive to touchless automation in our factories. Digital also means digital solutions that enables new growth or efficiencies for our customers. Digital printing, whereas we now have branded prismiq, includes digitally enabled design services, printing and connected packaging with specific solutions targeting labels, in-line printing, ink, seasonal artwork solutions, et cetera, all solutions applicable to our current materials and products. Prismiq, again, and digital printing also allows us to light up the package so you can see inside, see the packaging materials, the composition of the materials, how do you dispose of those materials. Digital printing also enables track and traceability for our customers so we can -- they can communicate their stories. In this example that we used with the customer sharing that where we're going, not only can see -- you can see where the meat comes from, but also in enabling how fresh it is, going from beyond the store to the refrigerator and even how to store and cook the protein. And then finally, what do we mean by net positive ecosystem or sustainability? We provide solutions to our customers for them to become sustainable, offering the best products at the right price and make them sustainable. Sustainability costs more. So we provide automation and digital solutions to save our customers millions so they can afford a better package. So if we go to Slide 4 for our company overview. We are a global company, producing over 30 billion packages. Our broad portfolio, global footprint and market access puts us in close proximity with our customers as we continue to expand in geographic growth opportunities. Our portfolio, now with the Liquibox acquisition, has shifted to approximately 65% CRYOVAC-based products. We're bringing our service and design online to provide faster and impactful digiting -- impactful digital packaging to our customers. Sorry for the late arrivals, I can't start over. So going to Slide 5. So we've introduced Reinvent 2.0. Reinvent 2.0 is about growth, igniting high-quality growth on 3 billion-plus platforms that I'll describe. The first is consumer ready. Consumer ready is our case-ready, specialty films and trade businesses where we believe we can double our market share with our CRYOVAC capability, linked with automation, game-changing environmental-friendly materials and digital solutions. This also includes expanding our market-leading position in bags with automation to new proteins, beyond fresh red meat, the poultry, seafood and leveraging our productivity and quality that CRYOVAC brings to the market for these high-growth protein segments. The second platform is fluids and liquids. Fluids and liquids is now over 10% of our portfolio with one of our highest-margin and fastest-growing product lines. We'll continue to disrupt the rigid container market with lower cost, higher value and more sustainable solutions. CRYOVAC and Liquibox technologies open the door to new markets, ready-to-drink liquids, industrial fluids, wine and spirits, consumer packaged goods, quick service restaurants and numerous other opportunities. Also in this platform, it's going to open us up quickly to over $50 million of opportunity in boxes. The third segment, Protective, which we're now referring to as our automated protected solutions, is focusing on reversing the volume decline in this portfolio. The portfolio is going to be focused on solutions model, automation, service, materials and digital that enables customer savings. We're looking to broaden and optimize this portfolio and the other portfolios with our iconic brands. We'll also continue to expand our asset base to fiber-based materials. Also, by going to MySEE, moving the company online, as you can see in the slide, we're now over 10% online, and we're working directly with our channel partners to move them as partners on online design, online services, that will enable them to offer local customer intimacy. So if we go to Slide 6, in summary, first of all, Reinvent 2.0, very simply, focusing on high-quality growth, double our sales, grow faster than our markets, double our earnings and double our stock price. This is our 5-year plan, and we want to do this faster. Second, digital plus people in SEE touchless automation. Digital means how we work with our customers now directly through MySEE. Digital means significant productivity with our touchless automation in our factories and then bringing that productivity to our customers with digital printing, prismiq, enabling unique codes on every package while producing and communicating our customer stories directly and simply on the package. This also means eliminating waste, taking the labels off the package, using digital codes. It also means giving us the ability to significantly reduce our cost structure where we can reduce our lot sizes, reduce our inventory, help customers reduce their inventory and give us access to markets where in the past we couldn't afford to be close to. And then finally, our SEE operating model and engine turning those sales to increase -- by increasing our operating leverage, margin expansion and cash generation. So if we go to Slide 7 and we look at our purpose-driven capital allocation, we remain very disciplined in our capital allocation, purpose-driven balanced approach between organic CapEx and R&D, inorganic M&A and SEE Ventures and shareholder returns with the dividend and share repurchase. On the organic side, our CapEx, we've moved now to 4% to 5% of sales to fuel the growth, 4% to 5% on growth, focused on automation, digital and sustainability investments, including our new fiber investments. Inorganically, use M&A and SEE Ventures to invest in disruptive technologies to accelerate our innovation. We'll continue to broaden and optimize the portfolio with a focus on the solutions model, again, equipment, service, digital and materials. On returning capital to shareholders, the net leverage has been reduced over the last 5 years by strong earnings growth and debt reduction. In 2023, our debt reduction focus -- our leverage focus will be increasing our earnings and paying down debt. On free cash flow conversion, last year's challenge on working capital with our inventory build will now be monetized in '23 to drive our conversion rate back over 90%, and we'll remain optimistic on share repurchases. So then in summary, it comes back down to our model. As we discussed in the presentation, we're focusing on $3 billion-plus growth platforms that will fuel the SEE operating engine. We have a high confidence in our SEE operating engine. We'll convert those sales by increasing operating leverage, margin expansion and cash generation, just like we did over the last 5 years, doing 5 years going forward. Operating leverage greater than 30%. With Liquibox in the fluids, we're actually going to be going higher, going at 40% operating leverage. SEE commercial excellence that we're defining, that's where we have the price realization. Covering inflation and getting 1%, and then the operational excellence productivity driving 1%. So the net effect of the engine, producing earnings higher than sales. And then also our digital platform driving digital sales, bringing an incremental 1% and also contributing 30 basis points to the bottom line as we drive significant synergies on how we go to market and how we service our customers. Liquibox is going to bring in 3% growth in the next 3 years with an operating leverage of over 40% and will fuel our growth in this tough recessionary environment in '23. We expect EPS to dip due to high interest expenses this year but we will be aggressively driving down debt payment and continue to convert our earnings at 10% a year going beyond 2023. Our last 5 years track record of incrementally increasing our earnings has proved that our model is working even during extraordinary challenges. We're now heading to the sixth straight year of incremental earnings. So with that, open it up to questions. You got to ask me about resins.

I'll try one. Maybe we can begin by talking about resins. How do you see your raw material costs in 2023? What do you see the patterns? And if you can talk about how you get plastics that are more environmentally sustainable? Is it difficult? Is it different from each supplier? Is it more expensive? Do you get a premium for what you sell? Can you give us some insight into what's going on in plastic materials?

Be happy to. I'm excited about the resin question, Jeff. I have a history with that on resin, for those who don't know. Joining the industrial conference, we're quite excited as moving the business to an industrial versus a converter of plastics. But on resins, it's a big deal for us. It's part of our strength. We buy over 1 billion pounds of resin. But the resins we buy are pretty special. How we put those together and make those special -- turn those special materials into our films and to protect our products is unique. So half of our production is what you would call commodity resins. So direct to Jeff's question, we are seeing that go down, finally, 2 years later from when you asked me that question 2 years ago. So -- but the specialty is still an issue and a concern. The specialty resin put us in harm's way, especially with our Food business, where it was actually being rationed over the last year and actually cost us market share. So we see that back and normalizing. So the simple answer is we see our supply based on resins now normalizing. So the opportunity for us this year is we think that will be a cost advantage. So how do we use that? And then the next question would be, what are you going to give back to the market? So the second part of the question was what's unique about the resins that we use. So if we go back to the first slide, I'll actually share this slide I used with our customers if we -- are simple. If I had to do the whole presentation in one slide. So you see there the sustainable tray. That is the iconic CRYOVAC, what we do with fresh red meat, extending fresh red meat from days now to weeks. And how we do that is very special. Some of those materials actually have 13 layers. So the environmentally friendly side is certain materials, when you do mechanical recycling, are not good. Anything with chlorine. So we've already extracted that out of the portfolio with different chemicals like EVOH, which is where we had the shortage. But what's really exciting here is what we're introducing is now can you -- back in the tray business, which we left a few years ago, we have the -- we're working on the technology, can you make the tray not just recyclable, but can you actually make it compostable? And that's what we're aggressively working and really excited about that material. So the film side of it, we have to have -- make the materials so they can be chemically recycled, not cause problems for mechanical recycling, but the real nirvana is can you make it so recycling so you don't worry about what bin to put it in, like the trays that we're working on, are actually at home compostable. So lots of exciting things that we're working on materials takes time. It's going to change the cost structure, though. And you didn't ask that question, but that's what we do with our customers. And you see that right now, how do you provide that now because it's more expensive. Even on the bubble wrap, we now have recycled content. It's more expensive. So we work, and that's where we're going to the solutions model. So we come in and we look at their facility, can we help you automate? Not just for the old days of -- they don't have the labor, reduce the labor, the safety, but also so that you can spend more for a recyclable environmentally friendly product. So we got to take out millions of facilities. So that's how we're doing it. And again, why automation is so important? The digital side is so important where you see it being lit up now, that's on communication so that we can tell people what to do with materials. But the other part of digital, it's enabling with digital printing that we can actually reduce our volumes. I'll give you an example on the materials. We produce for an order 3-month supply until we change out a new printing operation. Now with digital printing, we can cut that in half, reduce the material in half and respond to different requests from our customers. So we're attacking the sustainability piece, but I just want to be really clear, it costs more, and we got to solve that problem together with our customers.

If I may just follow up. So we pay attention to resins here at JPMorgan. And what I can tell you is that the raw material costs for the resin producers sequentially are down $0.06 a pound. And in general, for the first 2 months of the year, polyethylene volumes in the United States are down about 8%. The offshore market has been very, very strong because there have been all of these transportation difficulties. And so for March prices, there's a real push and pull where the manufacturers want -- I think they've nominated $0.06 and maybe they're hoping for $0.03. But if I were a buyer, I would try to dig in my heels if that is -- I think it's a tough market to call. But put that aside, I was hoping you would also explain a little bit about the Liquibox acquisition. That is Sealed Air is a tremendously accomplished company. What was it that Liquibox had that Sealed Air didn't have? Or how do your offerings in the liquid area compliment or how were they strengthened by the acquisition of Liquibox?

Susan, why don't you go with? Just do it the simple. Did you want me to comment on your resin piece?

Yes, you may.

Yes. So actually us being a strong buyer and kind of using our size is a strength, doing the rationing in the last 2 years with the chemical supplier, there was definitely -- all we could do is to get what we have. So with the prices moving down, the first thing that we were able to take out was to surcharge, the freight. So we have plenty of resin right now, to your short comment, especially we have -- you've heard a lot of -- everybody talking about the destocking. Our customers have enough as well. So there's going to be some choppiness as we go through. So looking to the second half of the year when things normalize, so -- yes, we see that going down. What are we going to do with it? Our internal strategy is go get volume. And right now, we have pretty powerful positions, let's go get the volume. And with our operating engine underneath, don't want to bring up what we'd have to do on pricing to go get the volume, but we leverage that at 30%, so let's go get the volume. So the material is there, more to come. But as always, Jeff, when you look at the devil is in the details, sometimes which you need, it might be the one resin you don't have. So we're not totally through it all. But we have plenty of material. If you just look at our inventory, you know we have plenty of material. So on the Liquibox piece, it's a great question. It's actually quite exciting. And we're very prudent with our capital allocation. So spending $1 billion in this tough time, we've been looking at this market and liquids for quite some time. We have a pretty strong liquids business. It was 4% of our portfolio with CRYOVAC. We do very well in tomato paste. And the key word for us is fresh. If it's fresh, then we bring our barrier expertise. So relating fresh red meat to fresh red wine. And so we've been working and actually penetrating the wine industry is one. And when I say that -- I was in Europe, and they go, "Oh, my gosh, you can't put wine on plastic." But, yes, we can. Think about -- you trust us now on the meat, we can protect the wine, actually double, triple the shelf life. So we were very interested. So that's the theme. What can we do? So the Trojan horse for us has been our CRYOVAC barrier material. So we looked at this liquid bag-in-a-box market, which is quite large in the conversion of the rigid containers. So it's all about productivity and sustainability. So if you look at it, so what's the equipment side is how do you get the liquid in the box? So that's the technology that we have developing. So how do we automatically fill the pouch? And then the piece that we really like from Liquibox, a few hundred million bags, we do 5 billion. So the pouch, the bag wasn't the issue, it's that fitting. So we do fittings, we do 10 million. Not very many for doing as many bags. So that technology that they have and doing at these volumes at this cost by putting the fitting into the bag, they invested in some equipment that we were looking at 3 years ago, they bought it. So that was quite interesting because as you bring in automation, you got to do this fast. And when you use the word CRYOVAC, it cannot have a quality issue. So we were very interested in that and the profitability there. The third area is putting it all in a box, and that's investing in some of our boxing technology, autoboxing, how do we bring that box -- and then the last issue is bringing digital again. If you look at the bag-in-the-box industry, even though the bag-in-the-box, most of the people that are in the business you hear about are making the bags, making the fittings, but bringing that full solution together, that's what the customer wants. They don't want to be dealing with the problem of how to get into the box, what's in the box. Digital printing, we think is going to be the accelerator here. So very -- also our margins in this business, extremely -- has fastest-growing margins for the CRYOVAC liquid space for us, growing at -- and then the QSR, that's the final thing that we're really interested is -- we bumped into them as we've been penetrating QSR. Use the example of lemonade, of what we've done with the Lemonade business. What we've done with our flex preps, our condiments with major QSRs where we have automated their back by putting ridging containers from ketchup, mustard and other sauces in flexible packaging, significant savings. So we bumped into -- what Liquibox was doing there with ice tea and other liquids in that space. So we saw our synergies, we saw theirs. We saw the cost synergies, and quite excited. And we preempted, as I've shared before, we went at this one because it was for sale.

And also, if we take a step back -- I'm Joel Tiss. I was on the sell side for 38 years, and I've been watching Ted for at least 30 of them creating shareholder value, and that's exactly where I'm sitting here. And if you look at what we're doing as a company, we've been systematically investing in our franchises. And so CapEx has gone from 2% to almost 5% of sales. There's so much to do. We're adding automation inside of our factories, adding efficiency. There's a whole -- the whole footprint has to be improved, changed, ready for the next decade and the next 20 years. This acquisition is now a $600 million platform growing high single digits with a potential for 1,000 basis points of operating margin improvement. It's growing faster than the rest of the company. Look at our automation business, a little more than $0.5 billion of revenues, on its way to $1 billion over the next couple of years. The operating margins when we get to that $1 billion level are going to be higher than the rest of the company. And it's also raising our barriers to entry and really changing the way that the company is going to market. E-commerce, $750 million platform on its way to $1 billion. There's definitely work to do there because the customers are getting bigger than the suppliers, so they're putting pressure on us. And we're trying to be nimble and move into the industrial markets and away from the fulfillment and some of the Amazons and things like that here -- we're about margins, profitability, innovation, really solving our customers' problems as opposed to just selling a lot of stuff at whatever price we can get. And when you look at the new product pipeline, we have a case-ready tray, which is completely sustainable and combustible and all ready to really get to the next level. And I think that's -- so that's going to be a game changer for us, and it's going to add a lot of growth to our meat platform. Bringing the business online that can really open up to a lot of new customers, improve our profitability, improve our volumes a lot. And then when you go back to Slide 8 and you look at the growth algorithm, in the last 5 years, even without these platforms that we built today, we've been able to make our numbers, 5% revenue growth, 7% EBITDA growth, 18% EPS growth. I feel like with this management team and all this investment that we've made, we're really positioned to be better than that over the next 5 years.

Jeff, he had your job, so he wanted to get all that in there quickly. But the short answer to your question on why Liquibox, the cost targets, obviously, how do you get there, the synergies that we put in for Liquibox, the $30 million, I guess -- and we want our investors who are listening. We have a mantra under promise I would deliver that $30 million, we said in 3 years. That will be less than 3 years. So the growth, that's going to be the toughest one. But I -- that's where I focus on the growth side there. I think we can do the same. This platform, with putting the 2 together, making this $1 billion part was 5 years. We put Emile in charge of it, my COO. He is so excited. Guess what he's doing? What any good leader -- he's stealing all his people to put him into this. And our commitment is to do this also the $1 billion less than 5 years. So the cost, line of sight, that's done. The growth, we're working hard on it. But feel pretty good that we're going to make that happen. Yes? Yes?

Can you discuss your prismiq technology and how that is similar or different to what [indiscernible] was trying to do with RFID technology? There's one where particularly well for food applications and RFID better in like logistics and...

I love that question. So I've had to present next to Avery, great company. So if we go to the opening slide, and I'll try to make it simple with a picture. So here, Avery Dennison with the intelligent label and you know more about them, obviously, for asking the question, but what we think is we have an opportunity -- we do RFID as well. As a matter of fact, one of our largest customers were using RFID and I had example in the -- when we do our earnings call about another conversion using RFID. So RFID is a way that you can signal and have a device talk to the package in this case. What we're doing with digital printing is if you look at the SEE mark being lit up, and that's where we've invested in prismiq, is using these phones that everybody has right now. The cameras on these phones are incredibly intelligent, smart, and they're also connected to the Internet. So what we're doing with the digital printing is actually embedding codes, and because we can now print with digital printing at high speed, but put a different signal, different code, on every package, your camera can see that. So what we have in this illustration. So behind the SEE mark, we have -- if you want -- you can put a bar code behind it, we can print that in. If you want a time date stamp, we put it in. So approximating what RFID does, we can give you a signal there, not a live signal, but your camera can see a unique code and then quickly check that to a QR code, take you to the website, but more specifically, track and trace that product. And the key, we think, is the digital printing, how you can do all that at lower cost because RFID -- what do you need with RFID? You need a reader. You need a reader -- not everybody in their home because that's where we want to take the picture. And by the way, I'm getting futuristic with the glasses, with the vision technology, on screen display that you see even with cars, if we could see the package, then you can maybe eliminate those labels. And that's what we're working with our customers because that label that you put on that piece of meat, you won't see that in a store. What do you normally see on that? They slap a label on it with a barcode. We could click that information and -- I've had some arguments with our customers, they don't want to put it on the bottom. But you could put that if you need it. But our digital code can tell you what you need to know. So how do we do it at a lower cost? So we think we have an opportunity to do a lower cost and actually give you more information, but really the cost advantage is we're taking advantage of the optical scanning devices that are available to you. Yes?

All right. Ted, if I can add one more. One difference is RFID code is unique for each box or each batch. The digital code can be unique for each package because it's also much less costly to put it on.

And the issue then -- just bringing CRYOVAC in -- if you notice I'm talking a lot about CRYOVAC, the power of that name is -- what we've cracked the code on digital printing is printing on flexible material. Digital printing, you see it all the time on paper, but actually printing on film, high speed, and then the drop the mic is when you say food grade, that is the key here that we think we have something pretty unique. Okay? Another resin question?

I think I'll pass on resins right now. In your automated systems for protective packaging. You've really focused on packaging material. Can you tell us a little bit about the industry structure that is in the automation business, who are really your key competitors? How does the general market share distribution work? Are you gaining? Are you losing? Where are you strong? Where are you weak? And your competitors, where are they strong? Where are they weak? If you can?

Yes. And I'll try to -- if I go too far off the reservation, pull me back in. But if you look at our protective -- if you go to the slide, look at our growth platform there. And you saw in my prepared remarks that the first thing I hit, Jeff, was the volume pressure in this business. So what this growth platform we have here is automated protected solutions, when we bring automation into the equation to -- how do we do? Extremely well. So this business right now, under pressure of destocking and what's going on with e-commerce, reading about Amazon, et cetera, so this piece is under pressure right now, especially post-COVID. So if you looked and unpacked our portfolio, well, let's talk about an acquisition we made here, APS. Now not automated protected solutions, Automated Packaging Solutions. So sometimes I get lucky. So -- but that's where we're going. So what -- how have they done in this environment? Doing well. Why? Because they're there right now in this environment. They go direct, so there's not an overstocking issue there. They -- and I shouldn't say they, we, but focus on how do you put more into a bag and remove people out of harm's way. So that part is doing well. But if you notice, we've also -- they had -- their entire portfolio was on plastic bags. So we're now converting them to also look at paper solutions, paper pouches, bringing paper bubble wrap that we've now developed, et cetera. So that's moving. So APS, automated protect -- that part is doing well. The competition in that piece, we're doing well there. Unpacking that again, one of our largest portfolios in this is our Instapak, a tremendous product line. But look, going all the way back on 10 years on that volume as well. Well, that then hit the chemical world with the resins there. That was under stress. We now have plenty of resin again, but that's bringing that solution, but that also has automation with it. We sell a piece of equipment, and the key operative word is sell. Part of our past was, do we go through distribution, do we actually put the equipment out there in hope that material comes? I was just in Latin America and I saw one of our competitors in the paper side that actually does give away the paper machines. I saw hundreds of them sitting there idle. So not giving the equipment away and not focusing really on what their customer needs, so we see that as an issue. On the distribution side, then bringing in competitors with our bubble wrap, bubble wrap on-demand. So going through distribution, we're working with our online partners, how do we design together, so we don't have this overstocking issue, but also that is under pressure on sustainability. How do we bring a fiber solution? How do we bring a recycled solution? So going down beneath that in some of our customers, actually our largest online partner actually in the last fourth quarter is doing quite well, I'd rather not say the name, but we're direct and working with them, and they are doing quite well. So unpacking the pieces. We got to go through the portfolio. But when we have discrete products in that portfolio, like we sold Reflectix 18 months ago. In this portfolio, we have multiple different product lines, but that was a discrete product, very good. We sold it at a 10 multiple, but it was a unique product. It wasn't connected to automation. So we're examining that whole portfolio. If it has automation, it has a material that we can differentiate. We then can bring our digital solution to that, that fits. Okay? Any other questions?

Maybe I'll try a last one. You're also a company that packages industrial products. And there's all kinds of controversy these days about what industrial demand is like and whether there's destocking whether there's not destocking. How do you see the industrial markets for packaging in 2023?

The -- well, I have the one example I think we've talked about here on the slide in the industrial space, actually with the tires. And this one is actually going to be sold last year, this year converted. So it's a good question. If you see that one in the lower right corner, this is an industrial, a large tire manufacturer in Europe that our partner, UPS, actually brought us in to, say, help because it was one of their biggest problems. They don't want tires into those incredible conveyor systems, if you've ever visited their facility. So they asked us to come help solve that problem. Well, how they helped and everybody else, all the major carriers, is they put a huge surcharge on tires. So they brought us in and we worked, and it did take a while, and that's why, Jeff, and even with my team, it just takes time. But as you can see there, and because I was in Austria, that looks like a big piece of cheese. Guess what we brought in? We brought in our shrink tunnel technology, and we solved the problem. And again, brought a full automation system. You see that equipment, and we're calling it, very simple, not all of our long names, it's an auto wrap, auto bag system. And so it's solving a problem in the tire market where they paid a huge surcharge. And so how can we actually do more faster? So what you see right there, that's our shrink film, actually co-designed from our medical units, et cetera, but it's in the industrial space, but then it also ties into the sustainability issue. So if you look at that, you see on the corners, not putting a whole box around it, I know it doesn't look that complex, but at the 4 corners so it doesn't roll. But -- so it's a plastic fiber, sustainable solution, offering significant savings, and this is roughly a $3 million automation system that we put in place, and it has close to $500,000 a year of materials being pulled through. So those are the things we're working within the industrial platform because we have some really, really good technology. But it's got to be as that long example I gave you, Jeff, we've got to be working directly. So the first sale, we worked very closely, took 3 years. The second sale, working with our partner now, putting it online on MySEE, so we can design, let our customers design that. And so we just give them an example of an industrial solution, we're offering a sustainable solution, less than 3-year payback, and many, many other opportunities. The reason using -- putting it online, that gives us the reach in how we can do more. The industrial piece, part of our $1 billion platform here that we're talking about, we got to go faster. Right now, as you see in the upper corner, we went from 5% in the third quarter, 10% in the fourth quarter, we're moving. Not fast enough, but we're moving. Any other questions? Because Joel will ask a question and give his own answer. Well, thank all of you for your time. Just in summary, times are really tough. And as we've gone through challenges, and Joel has been with us, just unbelievable challenges we've got through, and the engine has fought through this over the last 5 years, don't even want to list them all. But this year is tough, whether someone is claiming a recession or not, I'm with our customers directly, that's out there, it's real. So we will fight through this and we will continue to grow and have it make it 6 years in a row. We have a dip there right now on the EPS with earnings. And Susan, we're paying down that debt. We're going to pay that down fast. But pretty excited. The challenges make us a better company. The adversity really defines us as a business, and it's a wonderful business to be because our customers are actually asking us, if not begging us, to come in and help them. So pretty excited though times are tough, we're going to fight through this. So thank you for your time.