Okay, good afternoon, everyone. Welcome to the afternoon session of the Stifel Cross Sector Insight Conference. I'm Matthew Sheerin, Senior Analyst. I cover stocks across the technology supply chain, including the biggest component distributors, and we have Avnet with us this afternoon. Representing the company is the longtime CEO, Phil Gallagher, and Ken Jacobson, CFO. Welcome.
Thanks, Matt.
I thought, Phil, it might be good just to give a quick, for those not familiar or have not visited the store in a while, sort of a quick overview of Avnet. And also, you've been CEO now for four years.
Yeah.
Interesting time to be CEO-
Yes
... right? Four years. But your metrics are better, comparatively, in terms of trough, where you were last trough. Margins are higher. So talk about, you know, that journey the last four years, how your position going forward.
Sure.
Yeah.
Thanks, Matt, and thanks, everyone, for your time today. So, well, Avnet, I've been with Avnet for 42 years, minus an 18-month sabbatical in there, and Avnet as a company, was founded here, in New York City. And we've been around for about 103 years at this point in time, and always been in the technology supply chain. Today, what we are, as I like to say, we're in the center of the technology supply chain. We're a distributor of electronic components, so all, you know, the semiconductor suppliers that many of you are familiar with, interconnect, passive, electro-mechanical suppliers. And we service, you know, 100,000-plus customers around the world.
We're roughly $24 billion-$25 billion in revenue, with about 35%-40% of that in Asia, 30% in Europe, and the balance here in the Americas. We ship products into 140+ countries around the world and really manage supply chains, you know, from, we like to say, from design chain through supply chain. So basically, our products are in almost any product that you're using or see that has technology, odds are there's some of our semiconductors, suppliers and/or interconnect passive electro-mechanical suppliers in those products. So, glad to answer any other further detailed questions on that. And we're listed on the Nasdaq. Yeah, Matt, so yeah, I was interim starting in August 2020, so it's almost four years now.
It's hard to believe, and became permanent from global sales operations to this role. I would say what we've really done, and thanks for the compliment, I think we got back to fundamentals and basics. I think every company goes through these different journeys and these different vectors, and I think we were starting to chase some shiny objects, frankly, getting outside of our core, and our core is value distribution. Okay? We're proud of that. What we did is we got back to some of the basics, some of the fundamentals, and I put a percentage on it.
We said, "No, no, we need to get 85% operationally sound, okay, and 15%, we'll continue to work on strategy and new and different things." And most critical, and where we had some speed bumps prior, was in the supplier side. So we really got our arms around our supplier relationships, you know, and today, I'm really proud to say the relationships are as good as they've ever been. In our business, it's really... I always, I simplify, there's three pillars, there's suppliers, I call that upstream. You got customers, you know, we take our suppliers' value propositions, we bundle those down from demand creation to supply chain services to our customers, and the middle is our employees, and we worked on the culture and the employee engagement 'cause if people feel good, they're going to play good.
But that's, fundamentally, that's basically what we've done.
Okay, great. A great starting point. So let's go to the near-term trends. We're obviously in the throes of the bottom of the cycle. It's been a very long cycle. And your revenues declined, or component revenue, year-over-year for about three quarters in a row now. Clearly, Europe has been lagging, where you've had growth there, even like-
Yeah
... the last half of last year, I think. And I know you've talked about book-to-bill as getting a little positive signs that we're bottoming, but just talk us through the fundamentals and maybe by region or end market, particularly inventories, any pulse that you have in terms of inventories at customers.
Yeah. So, I think I go back to look at the last two, three years, it was almost unprecedented growth as well, right? So it's just... So sooner or later, you're going to have that, that correction, and, and we're in that now. And it's, again, it's not our, not our first time, not our first rodeo. We'll, we'll manage through this. And good news about our business is we're countercyclical, so as things get softer, we'll reduce inventory, we'll generate cash and, you know, support our dividend, our share buybacks, and, and, reduce debt. When you look at the market, I'm optimistic that we're bouncing on the bottom. You know, maybe a quarter or two would have said, "Yeah, probably coming out of June into December, we'll start to see a recovery." And I think that's probably not the case.
I think we're going to. I don't think it's going down much more. And you still look versus four years ago, the industry is still up quite a bit. But I think it's going to bounce on the bottom, and as we get into the end of calendar 2024 into 2025, we'll start seeing that increase again. And we'll continue to bring inventories down, and as you said, there's definitely more inventory out there than anybody needs, but we're working that down and had nice progress in that last quarter. We'll see more progress this quarter with positive cash generation. When you look at it, and Ken can jump in here, but when we look at it by region, it is a horse of different colors here. You got. So let's start with Asia.
Prince Yun's our leader in Asia. We believe we've hit bottom in Asia, okay? We believe Asia is going to start to show growth through the calendar year, which is really good news. December quarter, typically, you see that growth in Asia. And then, 'cause in typical cycles, that starts to spread then across the West. Europe, to your point, Matt, it was only three quarters ago, we had record numbers in Europe, so multiple quarters back-to-back of all-time, you know, record numbers in Europe, which was phenomenal. We were excited about that, given all the situations going on in Europe between wars and oil and energy and whatnot. Very resilient. So now we're starting to see that correction. And Europe is really heavy in a good way, strong in industrial.
So we're just starting to see that industrial market start to soften up a little bit. As we said, you know, more inventory than is probably needed in the end customers and in the channel, and we'll have to burn that off. Also, very strong on transportation, automotive market, and our position in central is extremely good. So we're gaining share. I mean, we can't control the size of the market. We only control how well we compete in the market, and that's what we focus on in all regions, frankly, and globally. And the Americas is kind of somewhere in between. The Americas has come down as well. Again, heavy industrial. Now, in the Americas, we have a really strong verticals in defense aerospace.
And unfortunately, what's going on in the world, hopefully that market is strong today, and forecasted to stay strong. And we've increased our industrial penetration and automotive as well. So it's really, you know, again, now we always go back and talk about 2000 and the big market in 2000, 2001. I just don't feel that this time. I think the diversity and the applications of technology are so much broader than they were even 20 years ago. That's going to help us, you know, bounce on the bottom and start seeing this thing come back. And through the cycle, kind of to your first question, and why we feel like we're in good shape, is we've really managed expenses in the up cycle.
So we were very careful to manage the corporate expenses, you know, stay lean, drive the drop-through, so that we're positioned well through the market as it bounces back. We're positioned to get some really good drop-through with any kind of lift in the market.
Yeah. Anyone?
Yeah, I'd just say we're encouraged about the signs in Asia. Usually, these down cycles start in Asia and work their way to the West, and the fact we expect sequential growth in Asia in the June quarter, which is implied in our guidance, and then kinda continue from there, we think is positive and, you know, maybe a couple more quarters to go through in Europe-
Uh-huh.
and the Americas.
Yep. And aside from in Asia, I'm sure some of the, they, they're heavy in, like, consumer and some of those datacom markets, and it looks like they're coming off the bottom-
Yeah
As well. But do you get a sense, in terms of, like, the inventory work down? You talked about industrial in Europe, but any other pockets where there's more work to be done and others where you're actually seeing companies sort of back to normal order patterns?
It's a mixed bag. So first, when we talk about inventory, I mean, it's important, it's not all the inventory, right? So when we talk about, you know, over inventory, it's not all SKUs, it's not all commodities, it's certain, I would say it's a kind of Pareto 80/20. There's probably a handful of suppliers and products that are more inventory than we need. There's others in discretes, capacitors, interconnect. The inventory is really, really just fine. As far as, you know, and we're starting to see, I should add, that in addition to Asia is starting to come back, we're seeing increase in bookings in the IP&E space and the interconnect, passive, electromechanical space, which is, which is encouraging. They, they didn't go as high as the semis, they didn't go as low, so it's much more steady.
So that's also another positive sign that things are looking like they're going to be getting better again as we come out of the calendar year into 2025. As far as visibility into the end customers' inventory, that's a difficult one. I mean, what we see, we don't have visibility into all their inventories, but what we do see is their ordering cycles and their, because we take in 1,000+ forecasts from customers around the world on a regular basis, whether it be EDI, API, we'll take a fax if they want to send it to us. But what we're seeing is just a constant, continuous decline or flattening of their needs, which just tells you that they've got more inventory and finished goods and more raw goods inventory that they're still burning off.
And now that lead times have come down, still a little above pre-COVID levels, but, you know, very manageable, and there's more inventory out there. The customers are not giving us as much visibility, you know, so we're back into that again. They're not giving the visibility. Our suppliers want the visibility because they want to know what to build in the factories.
Yeah.
They're hitting us up for it. We're hitting the customers up, and everybody's kind of just, you know, tapping the brakes on inventory, which could be an issue down the road if they're not planning appropriately. It could swing back the other way.
Yeah, well, I was going to get to that, but it looks like one difference in this cycle is that not only are your customers have too much component inventory, but their channels, right, their industrial channels, there's too much finished goods that they're working. The EMS guys are a perfect example, right?
Yeah.
They're all guiding down because their customers have too much in there, and so it's taking a while. But back to your, your question, I mean, your, your comment about your customers not giving you visibility. When lead times are short, they'll just order what they need. But I guess the question is, are we gonna run into a problem again, if in a year from now, the economy, we've got, you know, some of these end markets, five or six end markets start to recover. Are we gonna get into a shortage situation? And are you talking to customers about, yeah, we want to manage to have more inventory this cycle than last, which four years ago, everyone was saying, "Oh, we're always, always gonna-- we're gonna be owning lots of inventory." But now they're like, you know, particularly with ins- interest rates up-
That's right.
and the cost of capital, I mean, your own interest expense obviously is ballooning, but your profits are up.
Yeah.
So that's the question. Will we get into another problem? I mean, of course, for you, that's a good news, bad news.
Yeah.
The good news is you've seen profits, and then, and then the other side of that is ugly, right?
Yeah, as we did it last year, I think, Matt, you know, the CEO is the chief expedite officer, right?
Yeah.
You get calls from every customer around the world trying to get products, and the phone hasn't been ringing as much right now, but I'm not gonna speculate. But Matt, we've been around a long time. This is what happens. Everybody puts the brakes on, inventory is available, lead times are in, and look what happened post-COVID, during COVID, right? I mean, all of a sudden, all the verticals-
Yeah
... swung back at the same time. Nobody was ready for it, and we ended up with the shortages that everybody talked about for a long time. You're right, it's a good news. It could. Sometimes that's a silver lining for us, but it could be painful for the customers. So that's why we're imparting to them, that, "Hey, just give us the backlog, give us the pipeline or give us the visibility, so we can plan the pipeline with the suppliers." And we're starting to see some of it. So I don't want. It's not doom and gloom by any stretch. The book-to-bills are improving modestly, which is good news. I mentioned the IP&E, which is good news. So, we'll just see how that goes over the next 90 days.
Yep. Okay. Then I wanted to talk about one of the issues that Avnet had four or five years ago, was that some of your major semiconductor, well, two at least, or a couple, moved to either a more direct model or consolidating their distribution channels. There's concern that I get from investors, and maybe that's why your stock still trades at low multiple, where others have rerated. The concern that semiconductor suppliers, as they continue to consolidate, are gonna move more direct, particularly demand creation, where you get a better margin-
Right
... than fulfillment. I know you've given lots of reasons why that may not happen in terms of that trend, but I'd love to get your take on that.
Yeah. So, you know, those - there's a couple guys you mentioned we lost, let's call it in the analog space. And one guy in particular down in the south. You know, I'll just make one comment. Or actually, it was in analog, so I won't name the suppliers, but our analog business today is actually larger than it was when we had them. So we've-
You're right
... we've replaced that business. We've gained share in other suppliers and inside customers to replace that business. That's just a comment there. So I think we're our balance and mix today is actually, frankly, better than it was then. We don't have any one supplier greater than 5% or 10% of our total revenue, no one customer greater than 5%, so we're very diversified. Matt, the only way I can answer that today, that's how suppliers are thinking is, you know, I meet with the, our top supplier CEOs, global sales leaders on a regular basis, and I feel as confident, never comfortable, but I feel as confident today as ever about our supplier relationships. They're leaning in more.
I mean, we give them the scale, and the leverage in the marketplace and the reach that them themselves cannot get or cannot get efficiently, but they can through us. Our demand creation numbers, what we do to design registrations and get design wins from the suppliers are up. Our demand creation revenue is in the 30%-35% of our total revenue. So I don't see that today. Again, we're never, again, never get comfortable, but certainly confident that our relationships with suppliers are as good as any, and those conversations aren't on the table right now.
Yeah, I would just add, I think we feel really good about our line card, and we have certain-
Yeah
... technologies that our competition doesn't have, and we're happy with those lines. And I think what we're really seeing, especially with all the supply chain disruptions and the, you know, availability of product, is we're actually seeing, you know, many suppliers really look at rationalizing, you know, their direct customer base versus not. So we're seeing just as many opportunities of taking some direct customers on, either through supply chain services or actually just taking them on as a core customer, versus, you know, customers shifting direct to suppliers. So, you know, with all the expectations customer have in terms of buffer stocks and visibility and things like that, I mean, that's just more in our sweet spot than it is for our suppliers. And so they're really helping us to, you know, grow our business with some of those shifts.
It's really good. Thanks, Ken. It's actually, we're very pleased with our current line card lineup. I mean, I don't want to get into names so that I'll miss one, but our top suppliers, we're number one or two with on a global basis. At Ken's point, they're starting to actually move more business to us in the supply chain services arena from they call that sometimes TAM, you know, direct to DTAM. So actually, we're very comfortable with the line card. Always watching out for what could happen in the future, though.
Okay, that's a good segue to my next question, which is on supply chain or distribution as a service, and your competitor has been talking about this, too-
Mm-hmm
... where you're actually providing the services, but you don't take titles to the inventory, right?
Right.
So there's big balance sheet difference there. And both Arrow and Avnet have been talking about that opportunity. Could you talk about that business model, maybe different business models within that?
Yeah.
How that impacts your top line, your balance sheet, et cetera?
Let me start, and I'm going to turn it over to Ken, because it's much more financial modeling, okay, than it is anything. So when we talk about supply chain services for the investors, I had to break it into a couple. We've been doing supply chain. That, that is what we do for a living, right? So we've been doing that forever, and there's traditional value add in supply chain, and we take in customers' forecast, we manage that pipeline, we do aggregation, we ship it, point of sale, so we actually ship it and bill it. We have on-site implant stores, we call them, with manned implant stores. Some of our customers will have upwards of 15-20 people on-site, managing the inventory, managing the pipelines, consignments, combines, et cetera. That has been, that's our core supply chain services, right?
Yeah.
So from years ago, the Greg Frazier days, and you would know, that was where that started. There's now another element of supply chain as a service, where it's working capital light, okay? Or zero in some cases, where it just becomes a fee-based service that we're managing, and it's throughput to us, and we just bill out GP. But I'll let Ken, because as much... This is not sold through the traditional sales force. These are definitely supply chain architects selling these, and it's a completely finance, finance model and treasury with that joker.
Yeah, a lot, a lot of what we're talking about here is volume that already exists in-- that's the TAM. This is usually business that suppliers are doing directly with large OEMs. So we use a great example during the part shortage crisis was, you know, automotive and an automaker couldn't get a $2 part, and that $2 part was holding up a $100,000 luxury vehicle. You know, these automakers are ingrained in their minds, "We're never gonna let that happen again." So someone like Avnet can step in and help them secure buffer stock, have visibility to their broader supply chains. Because you think about a large automaker, how complicated their supply chain is in terms of the number of tier ones or other contract manufacturers making everything and assembling it everywhere, right?
So giving them that visibility to the products, the most critical products, right? Doing BOM health assessments and things like that. So we're really just helping and supplementing that direct relationships by, you know, physically holding the product, getting it where it needs to be, when it needs to be there, giving visibility, and in some cases, holding working capital for a fee as well, because it's all fee-based. So we look at it as the risk of inventory doesn't lie with us. The pricing's negotiated directly between the OEM and the supplier for the component pricing, but we're negotiating service fees to warehouse, provide logistic services, as well as, you know, working capital, if that's part of the solution. And a lot of times, we're talking about, you know, very large engagements, so, you know, usually there needs to be a solution for the working capital.
So a lot of these OEMs are cash flush, so we encourage them to use their own capital to the model, you know, and we have a various different models. We can provide the capital, there could be third parties involved, or the OEM provides the capital, which gives them the cheapest cost. Either way, you know, we are working through the volumes and giving visibility, and it just gives us even more scale. And it's a service fee, so it's not gonna move the top line, but you'll see it in the gross margin and, you know, clearly then the return on working capital as well. But again, it's still smaller.
We're seeing a lot more opportunities coming out of the pandemic and the supply chain disruptions, but it's still starting to grow in scale, but with a $25 billion+ top line, it's necessarily hard to move the needle on gross margin. We think it's one of our stabilizing forces.
Yeah.
Well, it was one of the silver linings coming out of supply chain.
Yeah.
Supply chains broke down, and these, a lot of these OEMs, they, like, tossed everything over the wall, they outsource, and then all of a sudden, they're like: "Wow, where's our parts?" You know, and not only where are they, where are they downstream? And now we're giving them, we call it a control tower. They actually have visibility upstream to the suppliers, downstream to customers. We're really positive.
Can you give us a size of that business? I know it's hard because you get a fee, but are we talking about, like, 20 major OEM customers or dozens or how big? And how can you tell whether it's moved the needle in terms of your gross margin or operating margin, like, or is that hard to tell?
Yeah, what I'd say, it's historically always been a part of our business with some of the, let's say, the technology-type OEMs that have more advanced, you know, supply chains when it comes to semiconductors and things of that nature. I guess what I'd say is, you know, right now, if you look at our inventory report on the balance sheet, roughly 10% of that inventory is earmarked or is part of supply chain as a service type of engagements. And, you know, it does benefit. If you did took this out, you know, you'd have a lower gross margin across the board. But I would say it's not super meaningful or material right now relative to the gross profit dollars, but we see a trajectory where you have-
Mm-hmm
... you know, 3x-type growth in this area relative to the core.
Yeah.
It's in a customer, it's in the dozens at this point in time. And
Dozens.
But it kind of builds like an annuity, 'cause once you're in, it just, I mean, it just cranks, and then you add another one, it just, it's like, not mailbox income because we're doing a lot of work for it, but it just comes in every month, every quarter. And some of these, you know, few of them have been around for a long time, and everybody in here would know them. Very common companies up in Cupertino, that we've been doing, and now we're just... The pandemic and what broke down has just accelerated it-
Mm
... with the proliferation of electronics.
Yeah.
The throughput is pretty, it's sizable.
But some of the programs, you are buying the inventory and carrying it, right? And others, you're not.
Uh, uh-
So, are you getting compensated that-
Yeah
... 10%, that's still a lot of inventory you're carrying.
Yeah, I think I would say there's no free working capital. I mean, again, in our normal model, we get a margin for whether it's demand creation, fulfillment. There's usually working capital terms built in. In here, it's all fee for service, so if there's working capital involved, it's gonna be charged for and charged through. So it's very-- Phil goes into financial modeling because it's very kind of a, "depending on what service you want, here's the price" kind of thing. And obviously, with the cost of capital you mentioned there, working capital is the most expensive part of that solution.
But what we are doing in the meantime is whittling down our overall interest expenses, and the inventory comes down, and trying to provide more flexible solutions on the working capital side for these type of engagements.
Yeah.
Usually, we try to match terms, what we buy with the supplier, we give to the customer, and then, depending on how much inventory you need, right, either getting the cash up front or, or figuring out, you know, how much, you know, we want to finance for that.
Yeah. Yeah, and I'd like to talk about the inventory. Can you... You're still, what, above, you know, where you wanna be. You're obviously financing that. Your interest expense has been up. I know some of the reasons why it's still high is because of those engagements, but the supply chain engagements. So how should we think about the inventory, what it looks like over the next few quarters?
I think, you know, what I would say is, you know, this cycle, the difference is, you know, one of the things that Avnet provides a benefit for is the countercyclical balance sheet. So as sales go down and the market goes down, we burn off inventory, then collect receivables, and so you have a lot of cash flow generated in the kind of the down markets. And this has been slower to generate that cash than, than in past cycles, and it's, you know, disappointing, but I think we made good progress the last couple quarters, and we anticipate just continued progress. So we wish it was happening overnight, but, you know, there's still lots of ongoing conversation with customers about taking inventory we have on hand that they ordered. But it's, you know, good progress in terms of starting to get the-...
The inventory down and the cash flow generated, so it's gonna take a few more quarters to continue to whittle that down. But I think we just expect to see continued progress. And the good news is on the inflow side of things, it's very well controlled, right? I think all of the supplier partners, even the customers, I think everyone's working collaboratively together to try to get it. Sometimes they're tough conversations, but I think, you know, in general, kind of everyone understands that the sooner we get through this, the sooner we can get back to growth, increasing customer counts, right? And, and that's the name of the game is the secular trends are exciting, but we've got to get through the correction and, and support customers get through their, their inventory levels as well.
As you generate cash over the next few quarters, what's the allocation? Are you looking to bring down the short-term borrowing so the interest expense comes down, stock buybacks? What's the priority?
Yeah, I think a combination there. I mean, obviously, our leverage is going up a little bit because of the fact that EBITDA is down, but we look at it as, you know, we want to be opportunistic. Our shares are trading below book value, so we want to continue to support the buyback. Over the last two years, we've roughly accumulated 10% of our outstanding shares, going from 100 million to 90 million as we exit this year. But we still think paying down debt and having that capacity and lowering the interest expense is appropriate, so we expect to see that as well. Although, again, just like getting inventory down, it's going to be hard to get interest expense down to historical levels, but we think we can keep whittling away, and that'll be accretive and create a tailwind for us on EPS.
Supporting the dividend too.
Yeah, and supporting the dividend.
Yeah.
We have an annual dividend of about 2.5% yield, depending on the share price.
Any, any questions, anyone? Nope. I'd like to talk about your Farnell-
Yeah
... specialty distribution business, which focuses on design engineers. They buy small volumes. That's a business that you bought a few years ago. You've had financial targets of, I think, in the teens in terms of operating-
Yeah
- margins. You've hit that a few times, but not consistently. So, and I know you're going through a restructuring there, so can you talk about that?
I, for sure. And, you know, investors get to know me, I'm pretty transparent. We're disappointed where we are with Farnell right now. We did get up in the 15, almost 15% operating margin, in the peak, and as things corrected, they just corrected, and the deceleration was a negative drop was pretty, pretty significant. So we're doing some restructuring at Farnell. We. I just want to get really clear. We love the property, and it was at one time 6% of our sales and 26% of operating income. Okay, that's the margins that they deliver. So our objective is to get that back into the double digit, okay, operating margins, and get it back in somewhere between 10% and 15%. So we're restructuring. We announced that, taking some expense out, somewhere between $40 million and $60 million. That's underway.
And then we had a separate strategy session where we're actually bringing it. We'll keep it separate, Matt, but we're gonna leverage more of the Avnet, Inc., where they have not been leveraging that. And we had some management changes of recent, so we'll be announcing a new leader here shortly. In the interim, we've had two of our best leaders in Europe managing that for me over the last-
You're doing a search right now?
Oh, we're very close.
Uh-huh.
Oh, absolutely very close. So we'll remain a separate entity. We're going to be aligning closer to the Avnet core and leverage what the Avnet core can bring to Farnell, and then what Farnell as an e-commerce digital business can bring to Avnet. So, really excited. What we're looking for is incremental gains. So as you know, they close out a 4% operating margin. We want to get that from 4% back to 5%, to 6%, to 8%, you know, and we think going out fiscal 2025, starts in July. Fourth quarter, fiscal 2025, we'll be back closer to the double digit, probably 8% operating range is the model.
and that's based on the OpEx cost-
Yeah
- and the expectation that you're going to grow again?
Yeah.
Yeah. Okay. Okay, a couple of minutes left, and we haven't talked about AI and what's the play for other than the fact that obviously you're selling into everything, and are you doing things with hyperscalers? Are you doing, working with the big, hardware OEMs?
Yeah, directly and indirectly. I mean, AI is definitely an opportunity for everybody, as is 5G and what's going on in power, et cetera. You know, we don't obviously play directly in there, but we do through the associated sale. So anywhere some of those big chips go, they need more power, they need more analog, and we've been getting some actually phenomenal opportunities in some of that space. And you got to remember, a lot, you know, a lot. As I said earlier, our industrial customer base is extremely strong, okay? A lot of those, I don't want to name names, a lot of those industrial customers are selling into the data centers, into the hyperscalers, right?
So we're getting it not only in selling products and down the road services, but we're getting it through our traditional customer base that's benefiting from the growth in AI. So definitely an opportunity for us, no question, I think, for everybody. And then when it ends up driving more applications on the edge, okay, we got the right MPU suppliers, MCU suppliers, we're from the edge in, we'll benefit from.
Okay. Okay, I think we're out of time, but thank you very much, Phil.
Thanks, Matt.
Thank you. Ken, thanks.
Thank you. We'll stay around for a little bit. Thank you. Thanks.