Western Digital Corporation (WDC) Earnings Call Transcript & Summary

Perfect. So why don't we go ahead and get started. I'm Aaron Rakers. I'm the IT hardware and semiconductor analyst here at Wells Fargo. Thank you for joining us this morning at Wells Fargo's 8th Annual TMT Conference. And pleased to have the Western Digital team, Rob Soderbery, Executive Vice President of the Flash business. I guess I'll call it SanDisk. We'll see where the spin is progressing but we'll get into that. We'll get into that. But before we get there, I think we've got a safe harbor.

Yes. I'll quickly read the safe harbor statement. We will be making forward-looking statements in today's discussion based on management's current assumptions and expectations, including with respect to the separation of our businesses, our product portfolio, business plans and performance market trends and dynamics and future financial results. These forward-looking statements are subject to risks and uncertainties. Please refer to our most recent financial report on Form 10-K and other filings with the SEC for more information on the risks and uncertainties that could cause actual results to differ materially from expectations. We also -- we will also be making references to non-GAAP financials, and a reconciliation of GAAP and non-GAAP results can be found on our website.

That's perfect. From memory, right?

Yes. Totally.

You did that all off the top of your head. That's perfect. So, Rob, thanks for joining us. Yes, I appreciate it. There's a lot going on in your business. A lot of things going on in Western Digital. But I want to start at a high level. I know that you gave an update on kind of the longer-term mindset of the flash industry. I think it was a couple of months ago. I'm going to get to kind of like what maybe thought about in terms of the guidance for this current quarter, the Flash business. But why don't we level set? Like how do you see the flash industry? What's the key drivers? We'll talk about supply and demand, how Western Digital currently views the status of the NAND industry?

Yes, absolutely. So we started that macro. I did a webcast called the New Era of NAND, which is still available on our site. And that really went through like what happened in the downturn and I think to invest in a new stand-alone flash company, you want to understand that question because you definitely don't want that to happen again. And fundamentally, what we saw was essentially an overdrive of the WFE number. I saw a $20 billion WFE going into this business for a couple of years, produced a level of production volume that was unsustainable and that drove a downturn. I think coming out of that downturn, the industry is actually set up for a much, much different dynamic. And I won't repeat everything I said in that but there's a lot of reasons to understand the incentives that fundamentally changed. And so you're now in a situation where you have market participants who are all essentially aligned in terms of their strategy. And that's setting up for, I think, a sustained period here of a different dynamic in the market. And the market itself is, of course, based on all the different demand swim lanes, client, consumer, embedded mobile and of course, the one that we're spending a lot of time talking about such as enterprise SSD. And probably the biggest thing that's happened now that is a little different is we're seeing a bifurcation of that enterprise SSD kind of market dynamic from the rest of the market. And so you have your client, consumer and mobile markets going through a little bit of a mid-cycle pause here while the enterprise SSD AI tailwind is at full blast. And so that's changing, that's resulting in a bit of a different dynamic for us depending on your mix. But we think that's a couple of quarters phenomena and that the general thesis that is in place here is the correct thesis, which is clearly a more balanced supply-demand environment, very moderated capital, sustained demand drivers on both the data center and the edge from AI and consumer and the digitization of our lives.

Yes. Maybe before we get into unpacking some of those end market vectors and the puts and takes around that. Maybe just update us for those that aren't familiar, where we're at in the spin, the progression of separating the company. I know the Form 10 just recently came out, which I think many -- myself, I have gone through. But just remind us of the strategy where we're at there.

Right. So spin announced in November of last year, motivation of that is really for the folks to create 2 investable entities that had their own economics, their own capital return policies, their own balance sheets and that you really could get granular on. All the work to date on the spin was sort of the legs of the dock under the water. So 2 ERP systems, 2 Workday systems, 2 SOX compliance, public company P&L. So all that work is essentially done. So we had a trial close on October 1. We had another close on November 1. All systems are go from an internal perspective. So now it's simply -- we need to kind of get the Form 10 out, get the financing done, get the Investor Day scheduled and then get the disbursement date scheduled. So we're in the mechanical -- the final stage of the mechanical process there for the spin. So everybody feels good. We have made most of the executive hires. We have 2 complete executive leadership teams, a little bit crowded but we've got them jammed into one company right now. And I think both companies are excited to launch into the market.

That's perfect. So -- and for those that aren't familiar, one of the things that was unpacked is obviously the capital structure, the balance sheets and the differential between what goes where in the companies. But one of the common questions I get in the structure and going all the way back to when SanDisk was standalone, it's just the mechanics of the JV, right? And when we look at the capital structure, the balance sheet, it's not consolidated. So how do I think about the Western Digital piece of the asset side in the JV structure, meaning the equipment really?

Right, right. Yes. So there's sort of 3 numbers that you want to think about in the JV. There's a book value number, there's an acquisition cost, and then there's what are those assets really worth, the other number between. The book value is relatively low because we depreciate over 5 years, the acquisition value is very high, like $20 billion plus has been thrown out. And of course, the actual value of the assets is in between those 2 numbers. It's -- we have the ability to use this capital equipment for a very long time. So the average life of a piece of gear is well over 10 years. We've got like 25% of our capital equipment is 15 years at average age and it's all fully productive. So we have a big fully depreciated asset in there, which is really driving our production. And we reuse all that gear every time we do a new node, which is actually based on that node. So I think in the Investor Day, we'll probably come out with a specific number for the size of that. But it's a material fraction of that original $20 billion acquisition cost.

That was very helpful. So you depreciate equipment on 5 years but the duration of the useful life is well over 10.

Correct.

Okay. That's very interesting. And just the JV, again, understanding that it's 50.1% ownership, Kioxia, you, just the mechanics of how it works...

So it makes you -- if you're building a model for the company makes it a little tricky because the JV is off balance sheet. And so EBITDA recycles inside the JV. So if you just look at our financials, you can't do a correct EBITDA calculation because essentially what happens is we buy product from the JV. Part of that, what we purchased from the JV goes to fund capital equipment that we already bought. And so that essentially is EBITDA. But that EBITDA recycles, and so it just results in our cash CapEx being lower relative to what it would otherwise be. Or it's sort of the same as it would be otherwise be but EBITDA would be recycling on our own balance sheet, sort of recycling on this off-balance sheet entity. So that makes understanding the financials one step removed. So we'll get out with that sort of asset value number. I think the other big thing about the JV, though is just the JV has demonstrated a long-term ability to be more capital efficient. And that comes from like a lot of different factors and the age and gear is really an output of that, right? It's about the engineering of the processes, it's about the fact it's the largest fab in the world or a large manufacturer in the world. In our Yokkaichi facility, we have 7 fabs. Those fabs are connected via our track rail system. And any wafer can go to any machine and be processed in any step. So you essentially have the largest possible pool of machines to run your fab processes across. So all that has translated into very efficient capital usage. So the business isn't nearly as scary as you might think. We're more capital efficient. We have an aspect of leasing. We've got EBITDA recycling inside the entity. So we think the numbers, we'll get the model out at the Analyst Day, and we think it will be pretty interesting for folks.

Yes, that is. That's perfect. And just so we level set too, like we do have some visibility into your JV partner now that they're progressing to an IPO.

Absolutely. Absolutely.

It's not a 50-50 split of the total capacity between the 2 companies, right? There's some capacity that resides outside the JV...

40-40-20.

40-40-20.

So the JV is 80%, right, split into 2 chunks of 40, 40 and then there's an extra 20 for KIC. It's not homogenous capacity but it's roughly.

Okay. I'm going to move away from all of that mechanic stuff, and we'll anxiously wait for the Analyst Day. Going Back to where maybe I started the discussion. When you thought about the guidance into this current quarter, we talked a little bit about there's client SSD, there's some churn in the consumer market, the mobile market on the smartphone side seems to be still relatively tepid. But what underpins the expectations for the Flash business as we kind of think about this current quarter?

Well, I mean this quarter has been -- the whole question is how fast can you rotate out of these client bits and into enterprise bits, right? So we are -- I think we're on a good trend there. We're not yet at my aspirational goal for the business but I'm pretty pleased with the rate at which our enterprise SSDs are growing. We have essentially 2 new products in that lineup. The first is a PCIe Gen 5 compute product. That's the product that's qualified in the NVIDIA GB200 NVL. When NVIDIA qualified it, they qualified us first and they told us that it's fastest Gen 5 compute drive they've qualified. So that was a really good sign. That's getting a lot, and that's a drive that essentially attaches to GPUs on essentially a one-for-one basis. The second swim lane is this data lake swim lane. So in addition to your GPU complex, you have this very large data lake and you're doing what we used to call the database days, ETL or extract, transform and load. But you're taking -- if you're going to put an image into a GPU, you need to vectorize and embed that image. All that work happens in this preprocess, all happens in data lakes. We have a 30 and 60 terabyte device that's going into that vast data lake. We're shipping 122 terabyte device data lake next year. And that's all new -- essentially, it's new demand on the market. It did not exist in 2023, and that's quite significant. So both of those products are essentially shipping for the first time in volume this quarter, and that's driving through this next phase of that ramp. And then we'll have our 122-terabyte products. So that's all the eSSD tailwind and the headline news in the portfolio.

Yes, that's perfect. Maybe before I go double click on that enterprise side, can you -- I know in the Form 10, there are some disclosures around cloud and consumer and client breakdown. But how do I think about the mix of the Flash business from a client SSD? I guess I'll throw gaming coupled with that, maybe retail consumer solutions, mobile and enterprise. How do I think about that split?

Yes. I mean think about client is the base of our portfolio. That's the meat and potatoes of our portfolio. We're almost 30 points of share in there. So we're head-to-head with Samsung, a good day, we claim leadership. That's the base of the portfolio, along with that comes gaming. We have great share position in gaming. And so that's the largest allocation. Next is consumer. Consumer is a great business for us. I think it's going to be more important in the new company because it's bigger and growing as a function of the total business, it's countercyclic. It's higher gross margin. And so the consumers are the next layer of bits about 20%. So think of that first layer is about 40. Consumer, another 20 on top of that. On top of that is enterprise SSD, that will be about 15% of our bits in the December quarter. And that's up. I think over 5 quarters, it was 1, 2, 5, 7, 12, 15.

So 1, 2, 5, 7, 12, 15, I'm trying to...

I'm not guaranteeing the next data point in that. But we'll be a little over 15%. And then everything else is -- goes into mobile or component markets. So that's kind of the extra bits on top.

So where do you stand on client -- the client SSD market? Because that's been a tough space. I mean, we've seen a lot of discussion around, look, PC shipments are relatively tepid 1% or 2% plus or minus a quarter but there is a narrative around AI PC and that's starting to maybe materialize in the next year. Are we through inventory digestion here? When do we start to see more of...

So client recovered very strongly out of the downturn. Unfortunately, the PC OEMs had even higher aspirations. So they essentially just overshot the recovered level. So it's not that PC shipments are way down, it's that expectations weren't met. So they bought some inventory ahead of maybe an AI -- a 2024 AI PC boom, which didn't clearly happen. So now they got to chew that inventory down. That's done by the middle of '25. And the client volumes could go up 30% from here. Our selling volume could go 30% per year. So sell-in is significantly depressed relative to what they're selling out. PC OEM shipment volume can be held constant. They can grow our sell-in volume by 30% as they consume their inventory.

Just getting to that inventory level depletion.

Just getting to inventory depletion.

And WD's view is that we will see either be at Windows 10 plus AI PC?

Like the refresh cycle is not gone away. The way refresh cycles work is they essentially come back, the longer they take to happen, the stronger they happen. And so I think we're headed for a big bang windows, AI PC, future-proof refresh cycle here in '25. That's what our big OEMs are telling us. So they're not panicking at all.

Okay. On the enterprise SSD side, you mentioned the progression of 15%. Is the target 15% for fiscal '25? Is that -- what was that number?

15% for December quarter, for this quarter.

For the December quarter, okay. And for the full year should be...

15% to 20%.

15% to 20%...

For '25.

The idea is that that's going to continue to move higher.

There's no -- I mean if you look at eSSD about 25% of the total market. So that's -- so my internal goal, I'm not putting this out yet externally, but my internal goal for my boss is I need to be equally represented in the eSSD market at that level. So this 15%, I think, is a good initial threshold. We've been driving hard. We want to kind of stabilize that kind of number. And then we have big product announcements to '25, they'll get qualified in '25 and kind of later in '25, we kind of take the next run up in the market.

And you mentioned the NVIDIA qualification, which was very notable, and congrats on that. Where do we stand on the hyperscale cloud qualifications?

Hyperscale cloud. So the things that were under qualification are now qualified and there are additional qualifications starting on hyperscaler cloud. So we're broadly engaged with both the hyperscalers -- the hyperscalers, the traditional OEMs as well as the emerging storage OEMs really across that entire landscape.

Perfect. So I want to go back to kind of the earlier question a little bit is that you've got the demand side. Just remind us again of how Western Digital sees like the bit demand growth algorithm for the total flash industry. Like when you're thinking about allocation of CapEx, what is the underlying views of your mindset or the company's mindset of demand growth in aggregate and you mentioned $20 billion of CapEx. Is $20 billion of CapEx now normalized at $15 billion of WFE? Just...

We have a model of the entire industry, I know every fab. I know every node. I know the capital equipment costs. We know these answers really well. Let's ignore the minus 2 plus 2 quarters because the market is still wiggling. So it's still wiggling after the downturn. But if you think on a sustained basis, pre-downturn, you saw exabyte growth of 30%. We see that exabyte growth number stabilizing post downturn at 20%; pre-downturn, you had capital peaking at about $20 billion WFE. We see that number coming down to $11 billion to $12 billion WFE, probably in a '26 time frame. So kind of going up from here towards that $11 billion to $12 billion in 2026. And that's the -- that -- we'll call that the business as usual market. It's pretty clear that AI is going to keep going here. And so there's acceleration upside from that. So I don't think there's a lot of downside in that 20% number, and I think there's some upside from a supplier standpoint, I think we went from -- if we build, [ they'll ] come mindset to before downturn to don't shoot until you see the [indiscernible] mindset after the downturn. So to the extent there is more AI drive, and we think that, that number goes up from 20% on a sustained basis, we can revisit our capital policy.

Yes. And let's say, we start to see maybe that, that moves higher. Remind me again, when that becomes a bit output like the duration of time?

It's essentially a full year. It's a full year. So The industry is not going to respond quickly to demand. So that will -- demand will essentially drive price.

Okay. That's perfect. So I try and juxtapose all of this because everything you just said is really, in my opinion, structurally good for the industry, right? The setup looks good into 2025. We've got separation, you've got Kioxia IPO. However, it seems like the pricing dynamics, the spot market seems to be still under pressure. And I get this question all the time, have you seen spot pricing? Why is -- is that the right way to think about this? Or...

So that spot pricing number is a little bit funny. So the spot pricing is pretty thinly traded. And so it doesn't really reflect what's happening behind the scenes. And so what's happening behind the scenes is that this bifurcation, Samsung actually did a nice job of explaining this. So slowdown in client, weakness to global consumers has caused a surplus of a bits in sort of the older nodes and the older generations, and that's driving weakness. Enterprise SSD generally acquires at a minimum, 1XX and beyond 1YY for anything it's performance. And so that's driving kind of more tightness in the higher end of the market. So that phenomenon, at least in my tenure has not happened before where you've had these sort of 2 different -- and so you're seeing -- look at the whole market were going south, it would be a disaster, if the whole market were serving AI would be on fire instead we're in this a little bit of a mixed terrain. But I think the big message is that lower end bit phenomena is like a couple of quarter phenomenon. It's not systemic. Like we're under shipping those markets right now because of the inventory position in those markets, and that will just mechanically work through the system.

So this AI inertia around enterprise SSDs, there's a push to 120-plus terabyte capacity points you get some maybe reprieve or finalization of inventory digestion in client, we'll put mobile to the -- I mean, couldn't we see a scenario where things get somewhat tight in the next year? No.

Yes, absolutely. I think we -- with continued supply discipline. And remember, even for people -- for all of us as we invest in new nodes, we're taking unit capacity out. So we're getting per unit growth, reducing in this case, wafer starts in a variety of different ways. And every manufacturer is slightly different. But -- so you're -- even though you're putting $11 billion to $12 billion of WFE in, you're effectively not getting growth commensurate with $11 billion to $12 billion. You're giving a lower growth rate, which is better for us in terms of setting up that tighter market. So we think that second half setup is quite good.

Okay. That's perfect. One of the things that came up last night, not to put you on this but there was an announcement by a system vendor, Pure announced a hyperscale win for flash. Obviously, you're in the flash business. I'd love to -- how do you see flash relative to nearline hard disk drives? You've got an interesting purview being still at both companies. So how do you see that kind of dynamic?

And Pure essentially, at this point, is the combination of Veritas software, which I spent my [indiscernible] years and Cisco. So I know those guys, great, great company, right, innovative for many years. I think the key thing to understand here is that the HDD market in the hyperscalers is growing at the 20% CAGR, and it's enormous. So HDD is 5x larger than flash, and it's growing at 20%. So it's zettabyte growing 20%; flash is 200; exabyte is growing to maybe 30%. So it takes a long time for something that's large, even growing at that rate to make a dent. So you're talking about new HDD capacity, incremental growth of 200 exabytes, almost the size of the entire flash market. So look, both statements can be correct. This transition can be wonderful for Pure. I think they're a 3.5 exabyte player. So I can't even calculate their share. So it's like 0.0 or x percent, right? So Pure could double or triple and nobody would notice. So it's great for Pure. At the same time, it's not changing the fundamental economics. You would take -- it would take hundreds of billions of dollars of flash capital to backfill that time of zettabyte of HDD, and nobody is going to do that. So I think the better way to think about it right now is that there's jump ball workloads. So the -- for example, the AI data center workloads, so a bit of a jump ball between HDD and flash. The flash kind of got that because of performance constraints. That's consuming all of our capacity, and I think it will consume the bulk of capacity. Yes. So I would put that HDD flash substitution is a bit of a peripheral effect for quite some time.

Yes. I appreciate that. And I think just to kind of think about that, I mean, correct me if I'm wrong, Western Digital talked about like the cost curve down for flash is mid-teens.

You're right.

And the parallel line is...

It's just a long time, right? So you're starting at 6x, mid-teens, HDDs on 2% to 3% like you can get your sell-out and you can figure that out. It still takes a long time.

So maybe I'll pause if there is any questions in the audience, I'm happy to field them. But otherwise, I'll keep going. Raise your hand if you do. I want to talk a little bit about one of the things that I often for a long time, have had a lot of discussions around is technology progression, right? This BiCS6 to BiCS8 hey, WD, Kioxia has 162 layers. Other guys have, pick your number, 220 whatever.

Right.

Why is that wrong? Like walk us through the technology.

So why that's wrong is that -- so if I got a 100-story hotel, and my neighbor has got a 100-story hotel. We have 2 different -- and we want to double the size of our hotels. You have 2 strategies. You can either build a 200-story hotel or you build a second 100 story tower next door right? So the problem is diminishing returns. It's really expensive to build a 200-story hotel. So you just get slaughtered. And what's happened in the industry is you're getting diminishing returns to layers, basically, they're costing you a lot more. It takes -- you have to give all your money to Lam to buy cryo etchers to do them. And so you essentially have diminishing returns to layers. So we've always said that the correct layer goal is the smallest possible -- lowest possible layers while still achieving cost performance, power and capacity. So for example, BiCS8, even though we're the lowest layer account in the market, we have the highest capacity die. So we have 2 terabit QLC die. So why is it that my competitor has 300 layers, and I have a bigger die, that's faster and has a better cost position. Well, the reason is that there's a lot more that goes into the engineering of the device. Essentially, you think about one strategy is buy a lot of capital equipment, relax your design rules, you can get layers fast. The other strategy is conserve capital, go for a tighter, more difficult to manufacture but ultimately higher performance, higher density, lower cost device. So we've always had more of a craftsman approach to migrations. And I think we've said that to the market. We faced a lot of skepticism back from the market. I think BiCS8 is finally definitively proving that, that strategy works. So BiCS8, which is a 2XX device is faster than the 2YY devices of our competitors, and is competitive with the 3XX devices of our competitors. BiCS8 is higher capacity, it's 2-terabit QLC, our BiCS8 QLC performance -- so we're going to be doing some press next week on QLC but our BiCS8 QLC performance is twice our BiCS5 generation. So there was a thinking that, well, QLC is low performance. It's not going to serve these swim lanes. No, no, we're getting a 2x in performance because of all the things we've done in NAND innovation. So we think that BiCS8 and beyond is awesome. Our NAND strategy is -- we're completely unapologetic about our NAND strategy at this point.

Right. Yes. I understand. I mean I think part of it is to the Y-axis scale or there's x and y. So you we get more...

We get more bits per area. And then -- so therefore, we need fewer layers.

It means your etch holes are closer.

Because etch holes are closer and all -- and it's a very -- I mean, these are an amazing, amazing piece of technology where you're custom crafting this 3D cube of stuff and you're trying to get the whole cube in the smallest possible area.

So as we work towards the spin commencing, where do we -- how do we think about the BiCS8 transition? Where are we at today? Where do you think we'll be at a year from now? It seems like given the fact and it's a CMOS bonded array architecture, is a different architecture than what you've had, just the relevancy, importance of that...

So first of all, think about zero technology risk. That was one of the fastest to yield nodes we've ever done has a lot of desirable characteristics. There's essentially -- the CBA was a technical challenge but it's not a capital challenge or a manufacturing challenge. So we're really good. So the gun has gone off. We're in the race. We're shipping BiCS8 now. We'll just continually migrate our portfolio to BiCS8, really over probably a 2, 2.5-year time period here. I think the device that people are really waiting for is the 122 terabyte ultra-high cap device. But that's not the only device we'll do. We'll have our client devices, we'll have consumer devices. So it will -- and then we'll modulate our BiCS8 investment to achieve that 20% growth target we talked about.

Perfect. And that CBA architecture maintains that idea that you can keep a 15% mid-teens per annum kind of cost down?

I mean it does. But I'd say at the industry -- at the industry, it used to be that you've got that 15% out of, what I call, brute force, which is you just got so much technology advantages node to node, you'll get that 15%. Now that 15% is much more subtle. It's continuous improvement, it's longer capital cycles. There's a lot of sort of more back to basics manufacturing in that number. So maybe half of that is, say, nodal transition, and half of that is just kind of operational efficiency. So your mileage will vary in terms of different vendors but this notion that you could just get arbitrary cost reduction forever, which turned out not to be healthy for the industry, I think that's gone.

Okay. That's helpful. The final couple of questions in a few minutes I got left, I'm just going to kind of rapid fire a few things off. I'm not going to ask you like longer-term gross margin. We'll wait to see maybe Analyst Day update on long-term target. But the enterprise mix, does enterprise come into the portfolio at a higher structural gross margin for the company?

Yes and no. So enterprise, in normal market, compute will be the highest gross margin. The compute eSSD, storage eSSD will be kind of at sort of average gross margins, then clients and so on. Now in a downturn, the enterprise SSD is also cyclic. So you'd be a little bit careful about your enterprise SSD mix, and that's why some of our competitors that were heavy enterprise SSD had a pretty rough go of the downturn. So we like a balanced portfolio with the benefits of portfolio economics, helping us on a through-cycle basis.

Right. And that's preface against a through-cycle flash gross margin target of 35% to 37%...

Yes. The May '22 is 35% to 37%. Obviously, we'll know the bite of the apple here when you come out at the Investor Day.

Okay. What's -- in the final minute, what do you feel like -- I didn't ask that I should be asking you like on the Flash business. I'm sure there's a lot of different other vectors. But to me, it's all about how we feel about the structure last asset really.

That's something we haven't talked a lot about is consumer. I love the SanDisk consumer business. I've wanted since I got here to invest more in consumer. We do 200 million units per year, branded consumer units, single package units to consumers. And we've been doing that for 15-plus years. So think about billions of individual consumer purchases. So that SanDisk brand is imprinted around the globe. It doesn't matter like, which Uber I'm in or which Bellhop, I'm talking to, like when I tell them I'm from SanDisk, they know who I am. We think -- and that business for us has been very good on a through cycle basis. It has been very good. Now it's been attached to an HDD consumer business that was shrinking. So that's some headwinds. So we think that, that consumer business is a really nice part of the portfolio. In addition to being a great go-to-market vehicle, it's another part of our through-cycle economics. It consumes lower yielding bits for us. So it works in the fab economics. So it's part of the -- it's a very important part of the overall SanDisk story above and beyond the 20% of bits to represent.

Yes. And just to be clear on that point, like leveraging that business to kind of take on the leading edge of node transitions is kind of gets you up the learning curve...

Yes, you can take a leading edge, you can take the trailing edge. I can -- if I need to sell more eSSDs, I can ship that business to a different node. So it gives me a lot of flexibility in how I consume, it's all captive. And I want to share it with anybody. So I have 20% of my bits are presold every year. I don't have to worry about those, which is a great place to be.

Rob, why don't we wrap it up there? And I appreciate you taking the time.

All right. Look forward to seeing everybody soon at our Investor Day.

Thank you so much. Appreciate it.