Xerox Holdings Corporation (XRX) Earnings Call Transcript & Summary

Okay. Good morning, everybody. I'm Brian Alexander. I'm the Director of Equity Research at Raymond James. And it's my pleasure to host this morning's session with Xerox. We do not formally cover the company, but in my prior life as an analyst, I did follow the print and enterprise IT sector. So hopefully, I'm qualified to moderate this morning's discussion. If nothing else, it's great to feel like an analyst again. I missed those days. So we're going to jump into Q&A here. Feel free to send your questions. I will weave them in as I see them. With us from Xerox, we have John Visentin, Vice Chairman and CEO; Xavier Heiss, EVP and CFO; Louie Pastor, EVP, Chief Corporate Development Officer and Chief Legal Officer; and David Beckel from Investor Relations, VP and Head of IR. So thanks for joining us, and we'll dive in.

Thanks, guys.

So John, maybe just to start to level set for those that are not as familiar with the Xerox story and how the company has evolved from its origin as a business really focused on print, can you talk about the profile of the business today, the key business units and kind of how the company has reshaped itself over time?

Yes. Brian, thanks for having us on. First, we're still in the print business. In fact, I never want to lose sight of the fact that we dominate in terms of market share in the areas of print that we're in. But like everything else, what we've seen is we've evolved from print into services. What clients were looking for were total solutions and digital solutions around print. So it wasn't just what are you going to print. It was also what's the workflow behind it and how do we continuously work with them to ensure productivity in that area. So our development in the print business, in the small area, what we call A3 -- A4; and the A3 business, which is mid; and then in the graphic communications, we've pretty much been gaining market share even through this whole COVID year behind us. Why? Because we attach solutions around it. So that's one part of our business. It's a big part of our business. What we've also done and been in 4 years and what we started doing is we looked at different parts of our business and realized that there's a lot of jewels there that we never really focused in on. One of them is PARC and our whole innovation engine. So we were -- we're known for trading Apple, the first Apple PC and the GUI interface and all that. But we were really a research center. And what we decided to do years ago was how do we monetize this innovation. So we put an effort in our investments in innovation and saying, what are the areas that we believe can disrupt the business, whether in print or not? And we've picked a few areas. We've picked Internet of Things, IoT, where we're focused on different parts of the sensors and businesses that can disrupt. So one of the things is infrastructure. Infrastructure is one of our biggest issues right now in the world, if you think of our bridges and most of the majority of our bridges are over 50 years old. So how do we put sensors in place in these bridges, so that we're able to evaluate exactly when these bridges need repair because there's not enough people, there's not enough humans, there's not enough time to be able to do that. And there's stories every day of where bridges have fallen. So we created a partnership, and we started a company called Eloque. And what Eloque does is just that. We are with the Victoria government, their VicTrack business. They've decided to invest $50 million in their bridges, and we're working with all other parts of the world, the U.S. being one of them, on how do we help with the whole bridges infrastructure. We also have other businesses. Our HVAC business is something that we've been innovating. And what we're looking at is if we're able to take air conditioners and reduce the energy by 80%, what would that mean to carbon footprint? What would that mean to the environment? And what would that mean to affordability, knowing the expenses and knowing what it's doing to our environment? And we've been working on that. So we have a whole cleantech business we've been working on. Our 3D print, we're working on our 3D print, and I can take you through the details a bit, but at the end of the day, it's a disruptive business where we're using off-the-shelf aluminum to create 3D parts for industries like aerospace and manufacturing. All these businesses are somewhere in the cycle of we have a product like a 3D business. We have products that we are testing and implementing in IoT. In our cleantech business, we have prototypes that we're developing. So we're still in the prototype stage. But what we're doing is we're investing in all these areas over time. The other thing we did is we invested in our software business. We acquired a company called CareAR. We tied it in with all our AI that we've been investing in our PARC. And together, we created an augmented reality business, software business, of which ServiceNow invested in it and today has a valuation of $700 million. This is a business that we started a year ago. In that business, we're going to continue to invest because what basically CareAR does is basically gets a Level 1 technician to be like a Level 3. And what's happening in the technician space, whether it's in utilities, telephone, even in our business, the population is getting older and retiring, and it's getting very difficult to train and get new technicians onboard. So we're putting all this technology and AI in place to be able to service clients through using our software and our systems tied in with ServiceNow. That's part of our investments on the software side. Then as the IT services business, we talked a little bit about it before we got on. We've been investing in our IT services business in the SMB market space because, even with COVID, what's happened in the SMB market space, there's a lot of IT talent left with these clients. And a lot of it did not come back now that they're starting to open up again. And what we're offering is a full service of solution and IT services from installing PCs to SOCs to NOCs and assuring ourselves that they have a total solution that they're able to run their businesses. In some cases, we'll even be their CIOs. So that's a business that we've been investing in. We've made a few acquisitions in both Canada and the U.K., so that we can start the business there. And that's another business that's been growing quite nicely. So as we look at our business, we have our print, but it's not just print for us. It's print with digital services. We're offering full suite of solutions. On the other side, we have a software business that's focused on productivity and focused on solving customer needs. And then we have the innovation business where we have breakthrough technology that we've been working on. Through COVID and even through the times when we got hurt on the print side, and we can go through that in details, we didn't stop investing. In fact, we increased investments in all these areas, knowing that these are some of the businesses of our future.

And I want to come back as the conversation continues to some of those growth investments and get a better sense for how that's impacting the P&L today, how well understood that is and just kind of the overall level of investor appreciation for what you're doing outside of print. So we'll come back to that, if that's okay. And then I have a few questions on the print business. I guess, number one, hard to imagine, but we're almost up on the second year of this pandemic. We will be in March. And I guess, the question is, do you think the pandemic has permanently or, let's say, nothing's permanent, but on a longer-term basis, alter the underlying fundamentals of the print business in terms of a more mobile and dispersed workforce? And how is Xerox thinking about the shift to the extent you think that it will happen over time from in-office printing to a work-from-home environment? And how does that impact kind of your longer-term view on page volumes and supplies in the business model?

Yes. I'll touch on it in a couple of areas. First of all, in terms of going back to the office, what we've seen is as employees go back to the office, the print comes back. Doesn't come back at 90%, 80%, 100%, but it does come back. In fact, we've seen areas where workers were coming back to the office 3 days a week out of 5, and the print came back. And there's a few reasons for it. It could be security. Printing from the office, you have -- your office has security all over it, and our printers are known for security. Two is cost. Printing at home versus printing at the office could be like $0.20 a page to $0.06 a page. So what happened is when COVID started, everybody went home, and it was like just get productive. But as this goes on, CFOs like mine are realizing there's a lot of costs there that we've got to bring back. And then CIOs, they're saying there's securities there that we got to go worry about and bring back. So as they come back to the office, we're seeing trends come back. Now we're also, on our digital services, working with clients to assure that they can not only print anywhere, but when they print, they know what's being printed in remote sites. So not just -- you could be in a hotel, you could be at home, and we have cloud-based solutions and digital services that we're working with clients, so that they can have a handle of what's being printed and what are the files being utilized where and when. And that's part of what we're working with them. So we're working in the hybrid environment with them but also assuring that they have -- that when they are in the offices that they have the full workflow solutions that we have.

And when you talk to your customers about their intentions to return to the office, I don't know if you've done any sort of formal surveys, but just sort of anecdotally, you and I just talked offline about our intentions to hopefully come back in January, what are your customers telling you about their employees returning to the workforce on a permanent basis?

Yes. What we're hearing -- these are conversations that we're having. What we're hearing is it's not if; it's when. Now will there be some more flexibility that wasn't in the past on Fridays or whatever? There is some of that that's being looked at. But it's clearly what we've seen is there has been productivity hits having everyone work from home. So we're seeing a lot of if versus not if but when.

Okay. That makes sense. On a more, I guess, near-term basis, supply chain disruptions have been a significant topic of interest, not only on your call but pretty much every call during Q3 earnings. In recent weeks, we've heard more companies talking about some easing of supply chain pressure. And I'm just wondering, is that something that you are also seeing? Are you seeing some sort of recovery in the supply chain? Is it as bad as it was a few months ago? And then maybe the part b to that would be the labor shortages that you talked about as well on your last call.

Yes. What we said in our last call is we haven't seen much easing in the supply chain. So -- and again, if we think of the supply chain, it starts with getting the parts, the manufacturing to get them on containers, getting the containers to come across the ocean, to come to us and get logistics. And we didn't expect -- what we said was we didn't expect much easing to happen in the fourth quarter. And we're not seeing much easing in that area. Now are we seeing slight improvements in some areas? Yes, but not enough when you pull the string of the whole supply chain. In terms of the labor -- sorry.

No, no. Go ahead. I'll follow up.

Oh, please follow up.

I was going to ask, if not kind of this quarter, I mean, what are your suppliers telling you for when they expect a more normalized supply environment to the extent that they have the ability?

Yes. I think as the month goes by, we'll get a better idea of what that looks like. So every month, we have the conversations. And like I said, we didn't see much easing. But I think on a month-to-month basis, we have the -- well, more on a day-to-day basis with our suppliers. But I mean, I think as we move forward, we'll start seeing the improvements when and where. But clearly, like I said, we're not expecting an easement, and we were not expecting an easement for this year.

Yes. As we -- we mentioned it during our quarter 3 earnings call there, so we were not expecting quarter 4 to ease. We are expecting a little bit of improvement but a very similar type of situation in quarter 1, quarter 2. So our discussion with supplier indicate some improvement more towards the second half of next year.

Yes. Yes, we have like $265 million of backlog that we ended the third quarter with, which is 2.5x higher than what we usually had.

Yes, it's like more than 2x the usual.

Yes. So the pipe is there. The demand is there. Like I said, we gained the market share. That's part of the confidence that gives us as the clients are coming back to the office. They're coming back. They're looking for equipment. We're looking for changes. But we need to solve the supply chain. And like you said, COVID's always -- we're always going to do what's right for our employees, first and foremost, in terms of safety, so we'll see where that goes.

And the backlog that you cited, I think, it's at $265 million, that's primarily on the A3 side? Or is it across the board?

Yes. So the mix is mainly to A3, which is one of the reason why when we quoted the margin impacts that we had in quarter 3 was related to this mix here because the A3 product attracted higher margins at the entry of the A4 type of products. So we expect some recovery to come here, both from a revenue and from a margin point of view when the mix of revenue will be rebalanced as what we are used to see.

And then on the labor shortage that you talked about on the last call?

Yes, the labor shortage, I mean, at the end of the day, it's -- everything is provided or is forecasted based on the activities that the customer will run on how we will service them here. We see some pressure point from a cost point of view on labor. We mentioned -- John mentioned with CareAR, the opportunities that we have to have -- or to substitute some of the scale of first Level 1 engineer to Level 3 engineer with this type of technology. So we take and we address these issues with pragmatic actions that we are driving. One other point that was raised as well is that we have an ability -- because we see some inflation of costs coming here, we have an ability to transfer some of this cost pressure to customers. Yes, this is an activity that we have started in quarter 2. And in quarter 3, quarter 4, we managed to get price increases across our product range on both the equipment and the services side, so we can offset some of the impacts that we have seen currently.

Yes. I echo what Xavier is saying, basically, is labor shortages, we're all feeling it. For different reasons, we're all feeling labor shortage, and we're using AI tools, and we're using our CareAR software to help with some of it as we're offering it to other clients that are facing the same labor shortages we are not worse, in some cases.

And I know that on the print side, it's largely a subscription model. So I guess, Xavier, you just touched on the ability to raise prices. You said it should mostly offset the pressures you're seeing. So I guess, the question is what percentage of the inflationary headwinds do you think you can offset? And what's the lag time that it normally takes to raise prices, so that you have minimal margin disruption?

Yes, Brian, I would say it depends on the segment. It depends on the market. It depends on the product there. I would say, on the SMB space, it would be faster. And this is where you can have the most flexibility and the ability to import some of this price increase there. On the enterprise side, you would have some lag, and it could go contract by contract when we go on negotiation with customers. But clearly, we started this journey in quarter 2. On quarter 3, quarter 4, we put in place some merger here to push this price increase and offset the vast majority of the price -- of the cost increase that we are facing here. Some of this cost increase, you mentioned transportation, they were very tactical in quarter 3 where airfreight cost or container cost climbed and were very high. We see this being not normalized but coming back to a more reasonable level. So this relieves a little bit of the pressure that you could have on the costs side.

So when we factor in the headwinds but also the fact that you're gaining market share, as you talked about earlier, how should investors think about the overall revenue growth profile heading into 2022 as well as the margin story in 2022? I know you recently lowered your revenue outlook for this year, but you reiterated your free cash flow outlook. So what gives you the confidence that in the face of revenue pressure, you could still manage to profitability and free cash flow? Talk a little bit about that going forward.

Yes. So as you mentioned it, so first of all, our strategy from a revenue point of view, on the print business, and I can add IT services within this year, is still to be in a growth mode and to drive some activity here that will support or offset some of the secular decline in this business. Number one is market share. As John mentioned it, we have been leading in market share, and we have been now, for the last 5 and 6 quarters, consecutively growing the market share, regardless of the supply chain environment, number one. Number two, our ability to, I would say, cross-sell or sell additional services. Usually, you think about subscription model or is it only related to page volumes? Yes, page volume is a component, but it's not only the component. John mentioned offerings like capture and content services or creative services that we have for our customer, marketing services that we are providing for our customers, these offerings have a significant traction, specifically post-COVID-19. Our ability to serve customer helps them to work in a hybrid environment and on digital, on paper, supporting as well as their digital transformation, is critical. And we see a lot of traction. We quoted this during our earnings call in quarter 3. For example, capture and content was growing 66 signings, 67% quarter-over-quarter or year-over-year versus last quarter. So quite a significant support that we got from these offerings that are not straightly print or page volume-oriented here. So that's the offset to this revenue trajectory or these trends that you can second guess or expect on the print activity.

And when you talk about gaining market share, maybe can you dive a little bit further into the drivers of the market share gains? And are they concentrated in certain parts of the business, either certain geographies or customer segments or types of products? Just trying to get a sense for the sustainability of the market share gains and the drivers of it.

Yes. Want me to take it?

Yes. Sure.

Yes. So Brian, we -- just real quick. So IDC is the main source of market share for this industry here. And IDC publish our quarter 3. By the way, quarter 2, quarter 1, we have a very similar number here. And in quarter 3, we gained roughly 2 points of market share on this market here. And these 2 points were across different segments that we are working on, on our geographies. As you know it, we are not present for some print activity. We are not present in Asia. So on our geography, 2 points of market share. On A4, which is usually dominated by other players, we are gaining market share. And the interesting point on A4 is that we are gaining market share on the high end of A4 where print volume on I'll call that equipment margin are a little bit more attractive than the entry personal inkjet. We are not present in inkjet type of activity. On the A3, we -- again, we are leading here against our Japanese competitor here. We gained significant market share during quarter 2 and quarter 3. And finally, in production, we also, with the introduction of a new product on the expansion of our product range to non-xerographic type of activity, we have activity on inkjet printing, on the leading product called Baltoro. We also [ deepened ] and gained market share against some of our competitors.

And then, I guess, if we can move to the nonprint part of the story. John, at the top, you outlined a number of different businesses that you're funding. I guess a bunch of questions. I guess the first one is how much investment are you putting into these businesses? In other words, what would profitability look like if investment was more normalized? And then I have some questions just kind of on the overall synergies between the different systems.

So what we're doing is we're going to be standing up these businesses come first quarter next year. We're also having an Investor Day. In there, if we think of the businesses we're standing up, so our financial services business, you'll see the metrics that work in the financial services business and the return, the profit, the cash flow, the cash flow minus the debt, the securitization, you'll start seeing all that because you don't get all the details. You've got some of it in the third quarter. So you'll see where that's heading. Software group, the same thing. So why did it get a valuation? We did say that next year -- software group, we did say, right?

Yes.

That software group is going to grow to $70 million...

$70 million.

$70 million, and we gave the valuation. But again, you'll see the details of spend cash and where we're heading. Then you'll see PARC. And inside of PARC, we have Eloque, the IoT business. We have the whole IoT business. We have HVAC. We have our research, and we have our 3D business. And same thing, you'll see where the cash flow is going. We're doing that in maybe -- we're doing that for a few reasons because I think there's not enough information out there that truly evaluate Xerox today. And when you start looking at the investments, the cash flow, the return, the profits and frankly, the possible monetizations of each and every one of these businesses is what will take you through. I think the valuation will look different and which brings us back today. When we look at a margin and we look at a cash flow, that's all incumbent in it, how much has been spent, how much has PARC drained on the cash flow, why, where are the investments, what do we think the valuations are. So all of that, we've said in January 2022, we'll be breaking these businesses out, and we'll be giving you the information that's pertinent in each and every one of these businesses that totals back into Xerox. And then February-ish, we'll be doing an Analyst Day.

I'm sure that will be very well received. So is it fair to say that your belief is maybe the lack of appreciation and from a valuation perspective for the Xerox stock is more based on the lack of transparency, which will change on February of next year? Or do you hear from investors that know your story well, look, we get it. We understand what you're doing, but it's a complicated story because these businesses don't all fit together? So in other words, is it more about transparency or lack of strategic appreciation?

Look, again, I'm not going to speak for the investors. I am an investor myself. I'm not going to speak for all the investors. We speak to a lot of them. I think the more transparent you could be with information, the more they can make a decision on the valuation of the business. Now if they have all the transparency and it's still too complicated, then that's a discussion we could have. I don't think we're at a discussion of still too complicated. I think we're on a discussion of, here's the information that we have. And the lowest common denominator is your print business, so we're going to evaluate you on your print business. Your -- the majority of your print business is based with businesses, both SMB and large accounts and government. And with COVID hitting, our expectation is here's what happens to your business. So that's why I think part of the clarity -- like software is a great example where we got a valuation, an outside valuation of $700 million on it. Are you still going to want the information, understanding why is it $700 million, how does that compare, what is your revenue, what's your drain, what are your investments? And all of that will come forth in 2022.

Do you want to give a little bit of a commercial on CareAR, just given -- I know you had a press release a few months ago announcing kind of the formation of 3 different software businesses under that umbrella. And you talked about the $700 million that ServiceNow saw. Do you want to give a little bit of a pitch for what they saw and why that business is valued?

Yes. I think the way to commercialize CareAR is the interest we're getting from a lot of different clients, including the Verizons and including the hotels. Anyone that has a service business has a few issues. One is the labor forces aging. There is a shortage of labor force. Two, it's expensive to do calls out there. And what we've done with CareAR, with our AR facilities using artificial intelligence is simplified. So what you're going to see again in January is the pilots that we're doing. We're all starting a pilot, but the demand is there. There is a strong demand for this product because it's pretty much a product on its own. And while there's competitors that have pieces of it, we've tied it all together in a solution. Again, I can't speak for ServiceNow. That was the attraction of ServiceNow, a time inside of their own bill of material and selling it as well. The other thing we're seeing a strong pipeline on is the amount of system integrators that want to include it inside of their solution. So I look at CareAR like when ERP was developed 20 years ago, ERP didn't exist. And someone like Bond or someone like SAP said, I'm going to put it all together. I'm going to put this whole solution together from billing to manufacturing, to order, to cash and get it out. That's what we did with CareAR. And we took that business, and now you have the system integrator saying, "Hey, we want to sell this." You have our clients saying, "We want to pilot this." We have our own sales force that's doing it. So we're starting to get confidence behind it. And yes, we can send you a lot of information on CareAR. But at the end of the day, the proof of the pudding is on clients demand and who's interested in reselling it on your behalf.

How much customer overlap do you have across these businesses? And how do you incentivize your sales teams to cross-sell and harness the collective portfolio with your customer base on the print side? How are you cross-selling, I guess, is the question?

I think you said it best. It's cross-selling. We incentivize our teams to sell CareAR. We incentivize our teams to sell 3D, to sell some of our new products and digital services. So our incentive plan is basically selling, of course, profit and cash flow and revenues in there. And then we have incentives just to cross-sell. So no salesperson is not going to cross-sell. In fact, they want to because one thing we found is when we utilize CareAR or we talk about our IoT business, it's another entry point into a client that sometimes was difficult to enter through our normal relationships because it's different buying groups. So what I think our salespeople found quickly is entering with a CareAR discussion and then go into digital services and eventually print, and we've seen some of that downstream revenue come that way as well. So it's back to training our sales folks on understanding who are the clients to speak because there are different clients inside of an organization. But at the end of the day, that they’re all tied together.

And John, this is valid for our direct sales force, but also our channel.

Our channels...

Our channels force is also heavily interested of having something to differentiate being back up by Xerox as a solution. And we mentioned system integrator being also here a new source, a new road to market where the scope of the solution that could be deployed could be broader than just the set of products they knew before.

Yes. We were using bots inside of Xerox to automate our businesses. We've now taken those bots applications in AP and HR. We've bundled them, and now we're selling it to the SMB marketplace, and that's starting to take traction. So those are the kind of things we're doing with our innovation. So we're like -- one of our areas is optimizing our business. So one of our 4 key areas. I've talked about the other 3, cash was one of them, optimizing our business. But we don't believe in just cutting. As we go and create cash, what do we invest back in? And then how do we monetize it? And bots is a great example how do we monetize bots that we even implemented inside of our own organization, so that we can go and be more productive and more efficient.

So let's talk about cash a little bit and how you prioritize...

My favorite topic. My favorite topic.

How you prioritize capital allocation in the context of $500 million in free cash flow. How do you guys think about buybacks versus dividend versus M&A versus organic investments?

So the answer is quite simple. So our capital allocation policy guidance had been very consistent. We plan on -- we want to distribute at least 50% of our free cash flow to our shareholder. Historically, we have done much more than this. If I remember correctly, cumulatively, this year, we are both under -- about 70%, something like this, so via share repurchase, but also high-yield dividends that we have currently. Clearly, we provide high return and high attraction from a share point of view to our shareholder via [ assist share ]. After this, what is left is clearly there in order to support the evolution of the company to growth of the company. And as you know it, we have been acquisitive. So we are doing acquisition regularly, around $100 million, $250 million per year. And this is easier in new areas, new capability. CareAR started with a small acquisition. The 3D printing technology has been accelerated also by an acquisition in capacity or capability. But also, we are acquiring distribution on IT services capacity, so we can reinforce our leadership both in print and expand in IT services.

So a couple of years ago, you attempted to buy HPQ. So from an M&A standpoint, should investors assume the focus of M&A will be on the nonprint side in these growth areas? Or are you still open to industry consolidation on the print side and driving that?

Yes. Look, we've been public that we believe this industry should consolidate, but it will always take 2 companies to agree for an industry to consolidate. When we look at M&A, we have certain areas we look at: ROIC, we look at our IRR, cash flow yield before and after, where do we think the synergies are. That's how we make decisions on our M&A transactions. HP was a great example of all that when we looked at it. And we decided not to do HP because of COVID. It just was really difficult given everything was shutting down at that time. So yes, where we said we'll look at any size M&A that makes sense, but it's got to fit the rigorous model that we look at to make sure we get the right returns.

And no conversation would be complete without a discussion of ESG. So I was just hoping you would give us a little bit of information on how you as a management team think about ESG and how you're driving different sort of behaviors within the company to be more ESG-friendly. And that's not to suggest that you weren't before, but I know everybody is trying to incorporate new policies.

Yes. No. Look, we -- and you may know this, we got the Terra Carta award in Europe. So that was part of COP26, and we were announced for that. ESG is ingrained inside our culture. In fact, my executive team is compensated on ESG metrics -- on all ESG metrics. And we said we'd be kind of neutral by 2040. So we brought that in 10 years since we made the original statement. Yes, I can take you through the areas, but it's something that we're definitely focused on.

The DNA of the company.

That's the DNA...

Yes, yes. A simple example. We invented duplex from 20 -- for 2 side of the paper. That's a way to reduce waste there. We are also recycling now our product for more than 20, 30 years. And every year, we bring back some of these asset. We recycle them, and we ensure that we are, I call that, good citizens this way. It is in the DNA of this company.

Yes. No. It sounds like it. You guys were focused on it before it was cool to focus on it. So I guess, in conclusion, anything else that you want to share with investors or potential investors, any sort of disconnects in terms of how investors appreciate or understand your story that we haven't already discussed? It sounds like there's going to be a lot of new information to come out in February, which should really enhance the understanding and the transparency of the story. But I just wanted to give you one last opportunity with some closing thoughts, if you have any.

Yes. No. Look, of course, if there's other questions from investors, we'll gladly answer them. But I'd ask them to look at our total business and look at our balance sheet, look at our balance sheet, look at our total business. I'll look what the true debt is, not what the debt that's shown because we do have a financial business, an XFS business. And quickly, you'll see that net debt goes to positive. Investments we've made, where we're heading, the cash flow that we've driven, even during the toughest times, so we were a positive cash flow every quarter during the first year of COVID, which was not an easy task, but it's our maniacal focus. In fact, it's 1 of our 4 areas. And I return to the shareholders. We continuously focus, like Xavier said, it's 50% of free cash flow, but we've done more than that over the last few years.

All right. Well, thanks for joining our conference, and thanks for giving me the opportunity to talk to you about the business, and we will let you go. And thank you very much. Appreciate your time.

Thank you, Brian.

Thank you, Brian.

Thank you, everyone. Have a good day.