Thanks for joining us for our next session. Very excited to get going with BorgWarner, including we have President and Chief Executive Officer Joseph Fadool, seated to the right of me, the way you're looking. Then Craig Aaron, Executive Vice President and Chief Financial Officer. At the end, Patrick Nolan, Vice President of Investor Relations. I think we're going to launch right into Q&A. Is that the plan?
Great.
OK, great. My first question is on the impact of tariffs for the industry overall and for your company in particular. How have you managed the direct impact so far? How are you thinking about the direct impact going forward, the indirect impact, in terms of the potential for demand disruption as automakers presumably eventually raise prices? Have you changed your estimate of normalized U.S.-led vehicle sales or normalized North America production as a result of tariffs?
Yeah, I'll grab that one. When you think about tariffs, our exposure has come down throughout the year. When we did our April call, we communicated 1.6% of sales. We've seen that come down to 1% of sales. A couple of reasons why. First, regulations have moved in our favor. The second is our teams have done a fantastic job to really find creative solutions to mitigate tariffs altogether. My hat's off to them. Our guidance implies 100% recovery from our customers. As we sit here today, we have agreements in place that cover about 70% of our overall exposure. We're working on the remaining 30%, and we expect to have that in short order. When you think about tariffs overall from our seat, for us, we think it's a very manageable issue.
What we're more cautiously optimistic about is volumes in North America in the back half of the year. Right now, those production schedules seem to be normal, but we need to watch and really watch that as we get to the back half of the year.
Good to hear. Thank you. My second question is to ask what your very latest outlook is for vehicle electrification, including in light of some of the recent changes to the regulatory backdrop, such as the elimination of the $7,500 U.S. federal consumer tax credit and the relaxed enforcement of greenhouse gas and corporate average fuel economy standards. Has your outlook evolved recently? In what ways might you be running the business or allocating capital any differently as a result?
Good morning, everyone. I think when it comes specifically to the changes in this market, it's fair to say that electrification is not playing loudest here. If we look across the globe, we start to see the regions are pursuing different paths. China continues to be the market where electrification is strongest, and we're winning and doing quite well there, followed by Europe, where we do see some increases year-over-year in the electrified side, especially in BEVs. In this particular market, what we're seeing is, first of all, the OEMs have much more clarity in their own cycle plans than they did a year ago. That's resulted in higher RFQ flow. Some of those programs are extensions of current business, which were some of the awards that we mentioned. Some are new applications, like in the hybrid space or advanced hybrid space, which we also won some business.
We see in this market for the near to midterm, it's going to be mainly a combustion and hybrid with some opportunities in BEV, but BEV won't be the primary growth driver in the midterm.
Right, thank you. Despite that, I wanted to ask on the drivers of your strongly higher e-product revenue. There's been a lot of talk of that EVs slow down in the industry, rightfully so. Not that we've gone backward, but we're decelerating. We're not going forward as quickly as we'd imagined. According to S&P Global Mobility in Q1 this year, global hybrid electric vehicle, plug-in hybrid electric vehicle, and battery electric vehicle production grew 25% year-over-year, while your e-product revenue to support those vehicles rose 47% year-over-year, some 22 points faster. In Q2, with HEV, PHEV, and BEV production up 17%, your e-product sales rose 31%, 14 points faster. Could you speak to the drivers of e-product growth as well as outgrowth?
First of all, we're really pleased with our performance in the first half of the year, especially when you look at the growing e-product segment. In the second quarter alone, as you mentioned, we were up 31%, which was nearly double what those end markets were doing. Great results by our team. For us, what we need to keep in mind is between last year and by the end of this year, we'll have over 30 e-product launches, which are really the basis of that growth. Why are they choosing BorgWarner? There's a couple of things. One, having very competitive technology in this space. If you think about inverters and electric motors, high-voltage coolant heaters, these are areas we've been working on and growing in scale. Second is our deep customer intimacy. We're fortunate over many years, we built a very diverse customer portfolio.
Through that, we continue to have really good customer intimacy. Serving those customers, whether it's on the foundation side or the e-product side, they know and trust BorgWarner to launch those products successfully and help them be successful. There are some nuances in certain markets, like in China, where speed to market is very important. I think through our decentralized operating model, our teams are able to run very fast in China and keep pace with those OEMs, which also leads to some of the success we see.
The outgrowth seems to imply that you're gaining market share. Do you have a sense as to who you might be gaining that share from? Is it from other suppliers or an automaker's in-house supplier?
Yeah, you know, the growing of market share on one hand is important for us because we want to build scale across all of our products. If you step back, you know, one of the changes we made 12 months ago in our strategy was to outgrow our end markets across the entire portfolio, not just focused on the e-products. When you think about foundational business, where we're number one or number two in the space, we do see opportunities to outgrow our end markets, partly due to penetration increases. We also see some of the smaller players are going to struggle to keep up. They won't have the same scale that's needed. They won't be able to reinvest in those businesses like many of our customers expect. Growing market share and enhancing our market position is going to be a likely outcome due to our strategy.
Great, thanks. I wanted to dig in on the margin strength in Q2. You also announced a number of awards and an increase in the dividend and share repurchase authorization. From my conversations with investors, it seemed like the margin strength was probably the biggest contributor to the share price outperformance. Maybe just to unpack those drivers a little bit of the stronger underlying margin, EBIT margin of 10.3%. It was 60 basis points higher than the Street was looking for. It was down 10 basis points year-over-year, but 40 basis points was from the tariffs, which you expect to recoup in the back half. It's kind of 30 basis points higher on an underlying basis on flat organic sales. Help us understand what were the drivers of that stronger underlying improvement.
You did discuss on the call productivity, restructuring savings, and supply chain savings, as well as higher quality, which led to lower warranty expense. Are you able to maybe dimension some of these drivers for us and give us a sense of the relative sustainability of the different drivers?
Yeah, so we were really happy, obviously, with our Q2 performance. Just to unpack some of the numbers, we were down about $30 million year-over-year in sales. We were down $8 million in income. As you mentioned, Ryan, that included $15 million in tariffs. Operationally, we performed extremely well. We really capitalized on all the opportunities in front of us. Joe mentioned a 31% increase in light vehicle e-product growth, and we converted in the mid-teens on that extra revenue. That was a great job by our Powered by Systems team to really capitalize on that growth. On top of that, our other businesses continue to focus on cost controls, things like supply chain savings, productivity, restructuring savings. In addition to that, we've seen a reduction of 20% in cost of poor quality, things like expedited freight, scrap, et cetera.
It's a combination of all of those things that led to a great Q2 result. We're really pleased. On top of that, what you're really seeing from us is a sustained margin profile of 10% or higher on a BorgWarner Inc. level. We've seen that over the last five quarters. That's something Joe and I are really proud of. We want to make sure that we maintain that level of excellence going forward.
Right, thank you. I wanted to ask about capital allocation. Obviously, you had some big announcements on the recent earnings call we just discussed, the dividend raise, the capital, the repurchase authorization increase. It sent a strong signal about your intention to return capital to shareholders. Just given the acquisitions that you've made, which has really rounded out the portfolio on the e-product side and allowing you to post the organic growth that we talked about and to win the awards that you've been winning and also maybe considering the EV slowdown. It's not growing as quickly as before. How does that position BorgWarner for the allocation of free cash flow going forward relative to pursuing inorganic growth opportunities versus return of capital?
Maybe I'll address the M&A topic, and Craig can answer the return of cash to shareholders. We are active in the M&A space, you know, for a company like BorgWarner that's very strong financially and also operationally. Especially now, we see some opportunities that could be very interesting. With that said, we have three criteria that we are looking at acquisitions through. The first is any acquisition must have really strong industrial logic. Linking and leveraging our core competence as a company, we want to make sure it's a good fit. The second is we want to see near-term accretion. Different from five or six years ago, where we really had to reposition the portfolio and we had to do some heavy lifting to get there, we're in a lot better space. Having near-term accretion is really important.
I mean, if you think about it, at the end of the day, we want to enhance and grow the earnings power of the company. The third thing is valuation. We want to be thoughtful, have a valuation that makes sense, pay a fair price for something, not overpay, which requires, you know, to run quite a few scenarios, given the volatility in the market space. Quite frankly, we've passed on a number of targets that didn't meet one or more of these criteria. I think that's the discipline you can expect from Craig and I on a go-forward basis.
Yeah, and just to dig a little bit deeper on capital allocation, Joe and I were very explicit in our Q2 earnings call. You should expect consistency and discipline from us from a capital allocation perspective. As I look at Q2, that's what I see. I see that we returned $130 million of cash to investors through our share repurchases and dividend. On top of that, we're really excited about the decisions of our board of directors to increase our dividend 55%, increase our authorization $641 million to $1 billion. It gives us a lot of flexibility as we move forward. We're going to continue to focus on that consistency and discipline as we move forward. We're operating from a position of strength. We have really strong liquidity. We're going to generate about $750 million in free cash flow at the midpoint of our guidance.
It gives us a lot of opportunity to do it all. We can buy great accretive assets. We can return cash to shareholders through our dividend and repurchases. We can do it all. It's something that I think is really unique about our company and something we're really proud of.
I wanted to ask, too, about maybe the less need for transformative or non-near-term accretive acquisitions on the e-product side, if that might open up two avenues for investing more in organic growth, maybe on the foundational side of the business, perhaps especially in light of the relaxation of the enforcement of the greenhouse gas and corporate average fuel economy standards, with automakers announcing not only are ICE products likely to be around for longer, but that they may now receive new investments. GM, for example, recently announced investing in a sixth generation of V8 engines in Tonawanda.
You know, how might BorgWarner be positioned to compete for this business, not necessarily that program, but you know, with some of your competitors, I think you've said in the past, maybe have pulled back on ICE investments. What do you think the potential could be for rekindling the organic growth machine on the foundational side?
If we go back 12 months ago, this was one of the main changes we made in our strategy. That is to leverage growth across the entire portfolio. We ask our turbocharger business and our thermal management business and our four-wheel drive business to outgrow their specific end markets. You can't do that unless you're investing in winning new business. Fortunately, we've seen a significantly higher flow of RFQ activity, especially in this market and in Europe, versus a year ago. OEMs are getting clarity on their cycle plans. Some of the announcements we've made in the second quarter, I think, highlight what those customers are looking for. Some of them were turbocharger extensions and four-wheel drive extensions for North America. We announced some turbo businesses, both extensions and some conquest business, which we're really pleased about. One of those conquest businesses was here. One was in Europe.
We're also seeing an increase in advanced hybrid activity in this market. In the second quarter, a few of our announcements were around some products serving advanced hybrids. For us, we feel we're in a great position to really outgrow our end markets across our entire portfolio. We do see the regions continuing to separate a little bit in what types of products they want. I think that's the beauty of both our portfolio and our operating model. We give our teams room to run and chase the RFQs and invest and win the business needed to keep them healthy and sustainable. The only target we ask them to meet is an ROIC of 15%. We continue to see success there.
Maybe moving to China, where your mix of revenue coming from the domestic Chinese automakers is amongst the highest of the U.S.-based suppliers at roughly 75%, right? It's actually above the 60% - 65% that I think that the Chinese OEMs currently command and far above the sort of, you know, 40% that the average U.S.-based supplier is levered to those companies. A couple of questions around that. Maybe just starting with, you know, how have you managed to align yourself, you know, so strongly with those faster growing domestic Chinese automakers and what might that imply for your growth in China going forward?
Yeah, we have a really strong China business. We've been there for over 30 years. Just to ground everybody in some numbers, about 20% of BorgWarner sales are within China. When you think about that 20%, 75% is with local OEMs. We have a strong presence locally. It's really about a couple of things that Joe mentioned earlier. You know, why are we successful in China? We provide great technology to that region of the world. Also, we are able to run with speed. They launch programs in half the time of the Western world. It's really important that we run shoulder to shoulder with them. That's the feedback that we hear from our customers in China. It's very natural for them to move, for us to move with them. We were a strong customer on the foundational business.
As their cycle plans changed and their portfolios changed to e-product, it was very natural for us to work with them.
Maybe as a follow-up, we've heard from some other suppliers at the conference and elsewhere that the fastest growing automakers in China, including Xiaomi and BYD, for example, know that all the suppliers want to be aligned with them, that they have the growth, right? They're able to command very strong price concessions and very favorable payment terms. There's been some concern about the low margins and long payment cycles in some of the fastest growth parts of the China market. I read an article recently about how the government planners had summoned the automakers in and asked them to please start paying your suppliers on a more standard basis, maybe a little bit more regularly. What's your sense of that dynamic?
How do you go about generally balancing the fantastic growth opportunities in China and other parts of the market, too, with the need to maintain the commercial and financial discipline that you're known for?
Yeah, I mean, it's a competitive market. There's no doubt about it. Cost controls are important in that market to make sure that we can hit our 15% ROIC hurdle. With that said, the R&D intensity in China is different. They value getting to market quicker, and that means less R&D activity. When you think about a Western world award, we're going to have three years of R&D intensity. In China, you might only have a year or nine months, so there's less R&D intensity. They're willing to take a ready-made product, tweak it a little bit, and get to market. That's the dynamics in that market. We've been really successful winning business and still achieving profitability hurdles, 15% ROIC or higher in that dynamic market. We're pretty proud of that.
Right, thank you. I wanted to check in on the non-automotive battery pack opportunity. Most of your business in this area today is with electric buses, right, come on an axle. You've talked at various times before about the opportunity in different industrial end markets, probably not light vehicle, but interested to hear your thoughts. Maybe you didn't pursue these opportunities as aggressively before because of capacity constraints. With the expansion of battery pack assembly to Seneca, maybe give us an update on that. Maybe with a bit of a slowdown, too, in the commercial vehicle market. I'm not sure if that applies to buses. Let us know. Certainly commercial trucks. Where do you stand with regard to the opportunity to supply into some of these more diverse industrial and/or other end markets?
It is a little bit early to talk about some of the other applications and end markets. You're right. What we've been focused on is the CV truck business, both in Europe and here, also the bus business. We have seen some slowdown in the demand, which we reflected in our call. What I'm really proud about is how quickly the teams are reacting to the near-term volatility in those markets. If I just look at second quarter as an example, we were slightly EBITDA positive in that business, cash flow neutral. From Craig and my seat, teams are doing what they need to to adjust to the new market realities, at least in the short and midterm.
Since we touched on commercial trucks, maybe just give us a bit of an update on what's going on there. Remind us of your overall exposure to commercial trucks. Obviously, a bit of a slowdown in North America. On the other hand, we're hearing South America is kind of holding up better, Europe even a bit better than North America, too. Maybe take us a little bit around the world there. I don't think you're huge in China, but North America, Europe.
Yeah, commercial vehicle makes up roughly 16% of our overall business. That includes off-highway business globally. That's a market that has been down for some time globally. We see some opportunities, especially with pre-buys on the technology side, likely going to be in this market and in Europe. For us, we stay focused on what we control. We expect that market's going to continue to be stable and also adopt more and more of the technology in our portfolio.
There was a time where there was a lot of excitement around electrification and commercial trucks, too. You had companies like Hyliion and whatnot coming out of nowhere. Just curious if you've seen the same sort of EV slowdown on the commercial vehicle side as you have on the light vehicle side and if there's a difference in terms of geographical outcomes, like on the light vehicle side.
We've definitely seen some slowdown. I mean, that's reflected in our commercial vehicle battery business. It's been more in this market than I would say in Europe, although Europe is down slightly. There's really two pieces of that market that we're serving. One is commercial vehicle. The other is bus. The bus market actually has held up quite well. These buses are typically purchased by more local municipalities that may have incentives to get to a cleaner bus architecture. That particular piece of the market is doing OK in our view, especially in Europe, where you think about the regulations by 2030, where over 90% of the buses need to be electrified. We feel pretty optimistic there. It's more this commercial vehicle side, especially in this market, with the incentives lacking.
Quite frankly, at the end of the day, all the requirements were on the commercial vehicle makers, not on the end user. It was left up to the end user whether they wanted to invest in these electrified buses. Hence, short term, we're seeing a slowdown.
Great, thanks. Going back maybe to the decision to exit the charging business, it's part of the underlying margin improvement. Are there other areas in the business where you may look to strategically exit? What would you say that the charging business exit says about how you will manage the business lines that you do keep, in terms of how you balance the long-term potential on the one hand versus near-term margin return expectations, etc.?
Yeah, maybe just to recap the charging business decision, first, it was a very difficult decision for us to take. If you look at that market, it continues to be very disaggregated, a lot of competitors. Frankly, the growth in the segments we were serving wasn't what we expected when we did the initial acquisition. We didn't see really a path in the near or midterm to reach our ROIC targets. We took the difficult decision to exit that business, sell pieces of it, close other pieces of it. I think that's the type of discipline you can expect from Craig and I on a go-forward basis. We're constantly reviewing the portfolio for opportunities to strengthen it or to maybe exit areas that we don't believe we can be a market leader and achieve our 15% ROIC.
Helpful, thank you. With the expected volumes for EVs now being less and maybe also given that the price premiums that EVs command over ICE vehicles have come down, it seems that automakers that had previously desired to manufacture EV components in-house might be more open to lower cost, less vertically integrated solutions. Are you seeing any confirmation of that? Does this increase the opportunity for BorgWarner going forward?
Frankly, that's not a question we get as we did a couple of years ago. We think the insourcing versus outsourcing is somewhat stabilized. You have some OEMs who announced they wanted to be fully insourced on the drive module, and from what we see, they're issuing RFQs for certain applications for either components or systems. We think it's going to move around a little bit over time, but it's really not a material change in how we're serving those markets. We're a firm believer that you're going to continue to need scale, great technology, and move fast to get cost out of these EVs and really to serve the end customers. It's very difficult for us to see too many OEMs that are going to be able to build the scale needed like BorgWarner can.
You mentioned that we've got more clarity now with regard to the regulatory environment when it comes to emissions. We're getting more clarity on tariffs. Curious if, because we had such less bidding activity in the last year and a half or so, maybe you've seen some improvement already, but if there could be almost like a flurry of activity in the back half of the year here. If that's confirmed by your conversations, in what way are you positioned to maybe capitalize upon an increase in bidding activity?
Yeah, it is true. There was, I'll call it a quiet period while people were trying to figure out what to do since battery electric vehicles were not taking off, especially in this market and to a lesser degree in Europe. As we mentioned, the OEMs seem to have great clarity now. The RFQ flow is significantly higher. We've prepared ourselves to serve those RFQs. I think second quarter is a great example of the number of wins and the breadth of our wins across the globe and in this market, across combustion, especially advanced hybrid applications. We think we're in a great position to continue to win. That's really what we're focused on, winning new business across the entire portfolio. As we mentioned, that's a change we made about 12 months ago to not just focus on the e-growth, but to leverage outgrowth across all of the businesses.
As I think about how the tariff story has unfolded this year, I feel like the headwind has maybe not been quite as great as was imagined. Relative to the burden sharing by suppliers and the cooperation with the automakers, I think that's worked out more positively than many had feared as well. I'm just curious what you're thinking as you look ahead to July 2026 with the USMCA renegotiation. Of course, we don't have a lot of visibility, but do you feel like, first of all, you can hazard a guess what may happen? Secondly, does the manner in which the industry has responded to the tariffs that we have had in place, even though there's been a lot of USMCA exemption, form a bit of a pattern for how we might expect automakers and suppliers to cooperate post-July 2026?
2026 seems so far away given how fast the business moves. It is true. I think most suppliers have found a way to work with the OEMs to either mitigate the impact of tariffs or to gain recovery. Obviously, the OEMs so far seem to have decided not to pass all that through to end customers, maintain pricing, which I think has helped the industry to maintain volume. That's one of the reasons we improved our outlook for this market. We continue to see strength in the third quarter releases. Longer term, we'll just have to see how it plays out, how the OEMs change their view, what they're going to pass through or not to the end customer. Of course, our teams are working hard on finding solutions to the tariff impacts, right?
How to mitigate it, resource activities, if we need to maybe change where we're building a product. That's what we're focused on in the mid to long term to find ways to mitigate some of the tariff impact.
Great, thanks. I've got some more questions. Are there any in the audience, though? One up front, please.
I'm coming.
We can hear you, but the webcast folks need the microphone.
Thanks for the update. Just to follow up on Ryan's earlier question, with the RFQ activity picking back up and the highlights that you mentioned in 2Q, can you give us kind of an update on the growth over market? You mentioned growth above your end segments. What are we thinking about right now, you know, in terms of foundational versus your e-products? It sounds pretty positive. On those two segments, what's the growth over market that you're kind of thinking about over the next two years? More importantly, given the fast pace of China sourcing, could your third year out actually be getting to a higher level of growth over market? Any clarity on that?
Yeah, we have seen over the last few years our outgrowth has been in that 1% - 2% range. This year, you can expect something similar, a little bit closer to 1%, 1.5%. Our target is higher than that. Our internal goals that we've set for our businesses, and frankly, they've set for themselves, is to have stronger outgrowth. We haven't announced externally what that number is, but we see great opportunities on both sides. I'll give you a couple of examples. If you look at the penetration of turbochargers in this market, it's north of 50%. In Europe, it's north of 90%. In China, it's 75%. We still see opportunities for penetration increases as an example. In China, I would use four-wheel drive as an example. It's in the single digit. Compared to here, it's 45% roughly.
As those OEMs especially want to export more and serve some of the various markets, especially in Asia, South America, Europe, we think the penetration opportunity for four-wheel drive, there's still a lot of room for growth there. The foundational business, we've asked them to outgrow their end markets. We think there's good opportunities. I should also mention growing market share, obviously, is one lever.
Just one quick follow-up on China. Undoubtedly, one of your Chinese customers is going to do much better than you think, and one is going to do a lot worse. It's just the nature of those customers. It sounds like from a cost structure standpoint, you're kind of selling the same product. I'm simplifying, but relative to the market share volatility, that's not going to have that big an impact on your China margins. Is that an overstatement, or is that kind of how you're running that business?
Yeah, obviously, we're working with the top six Chinese OEMs in that region of the world. Some are going to probably do better than others. I think our focus is to support those customers to try to be successful. As you see that volatility, it's all about making sure we have flexible equipment so that we can quickly pivot if we need more capacity for one customer or the other.
That's great. Thank you.
Yeah.
Any more questions in the audience? We do have one toward the back. The webcast folks need the microphone. Thanks.
Curious on the 10% margin target that you guys have spoken to, or 10% like kind of as a floor coming out of the second quarter for five quarters in a row here. Is that a level that you think could be a quarterly floor from here, or is it more of an annual floor to aim for?
Our focus is convert in the mid-teens, convert in the mid-teens. You know, Joe and I are really trying to drive consistency, consistency in our P&L, consistency with how we allocate capital. That's our goal going forward. I'm really happy with our performance over the last five quarters, and I don't see a reason why that shouldn't continue as we move forward.
Maybe in a couple of minutes here, it remains I'll ask some questions around relative strength within the very strong e-product portfolio. Is there one product or a couple of products that are growing substantially faster? I mean, I feel like the 800-volt silicon carbide inverter just seems to have stronger traction. You let me know, maybe it's electric motors. Also, are there areas where you maybe have a higher relative exposure compared to the industry, for example, on, you know, is your share the same when it comes to integrated drive modules and components and systems that support that versus, you know, e-beam axle, et cetera? Where are you seeing this growth relative to the industry?
If you think about our e-products, starting on the traction side, inverters, motors, and then complete drive units, we continue to grow the business and grow share. We're in a very good position in our view. Some of the other products that we serve the e-market with, like high-voltage coolant heaters, we're number one in that market today. Over seven years, we went from zero revenue, no products to being a market leader today, which we're really proud about. We continue to leverage our core competence, work on new products, whether it's cooling technology or it's propelling the vehicle forward. As you know, we don't break out market share by product line, but it's safe to say we focus on being a top three player in anything we do. When you're in the top two or top three, you have scale. You can reinvest in the business.
You can maintain a margin profile that's acceptable to BorgWarner. That's what we're focused on, on all these new products. We want to scale them and grow them so that we can be one of the top three players.
I thought one of the things that Frédéric Lissalde used to say that resonated with me, he said that BorgWarner aims to be a trusted powertrain advisor. You know, by being strong on the EV side and on the ICE side, you just want what's in the best interest of the customer. We're not here to sell you a turbocharger. All we do is sell turbochargers, right? Also, if you're strong in inverters and you're strong in EV axles, we're not an EV axle company here to sell you EV axles. We'll work with you to find the best solution. Do you feel that that strength all around in the portfolio actually helps all the different parts?
We absolutely think that's true. What Fred's getting at there is we're not just a one-trick pony trying to sell one product line. We see as we move toward electrification, we're actually taking on more subsystems and more systems. We understand the trade-offs that the OEMs are making to meet the performance of their customers. I do think that builds trust. I think they view us as a partner that not only understands how they work and how they operate, but we can trade off the engine architectures to make sure we serve them with the right technology.
OK, with that, we are a little bit over time. Please, everyone, join me in thanking Joe, Craig, and Pat for the great color and insight.
Thanks.