Good morning, and welcome to the Ingersoll Rand business overview conference call. My name is Amy, and I will be your conference operator for today. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question and answer session. If you would like to ask a question at this time, please press star, then the number one on your telephone keypad. If you would like to withdraw your question, you can press the pound key. I would now like to turn the conference over to Ingersoll Rand's Investor Relations leader, Vik Kini. Mr. Kini, please go ahead.
Thank you. Welcome to the Ingersoll Rand Business Overview call. I'm Vik Kini, Ingersoll Rand's Investor Relations leader. With me today are Vicente Reynal, Chief Executive Officer, and Emily Weaver , Chief Financial Officer. The presentation, as well as the supplemental financial information which will be referenced during the call, are both available on the investor relations section of our website, www.irco.com. In addition, a replay of this morning's conference call will be available later today on our website. Before we get started, I would like to remind everyone that certain statements on this call are forward-looking in nature and are subject to the risks and uncertainties discussed in our previous SEC filings, which you should read in conjunction with the information provided on this call.
For more details on these risks, please refer to our annual report on Form 10-K filed with the Securities and Exchange Commission, which is available on our website at www.irco.com. Additional disclosure regarding forward-looking statements is included on Slide 2 of the presentation. In addition, in today's remarks, we will refer to certain non-GAAP financial measures. You can find a reconciliation of these measures to the most comparable measure calculated and presented in accordance with GAAP in our slide presentation and in the supplemental financial information that we published earlier today, which are both available on the investor relations section of our website. On today's call, we will provide an overview of the company, the go-forward strategy, and an update on integration efforts. We will conclude today's call with a Q&A session.
As a reminder, we would ask that each caller keep to one question and one follow-up to allow for enough time for other participants. At this time, I will now turn it over to Vicente Reynal, Chief Executive Officer.
Thank you, Vik. Good morning and welcome to everyone on the call and the webcast. First, our thoughts continue to go out to all who have been affected by COVID-19, as well as the dedicated healthcare workers, first responders, and volunteers who are on the front lines all over the world battling this pandemic. In the context of open, transparent, and proactive communication, we wanted to provide an update on the new Ingersoll Rand so that you have a strong baseline understanding of our company and supplemental financials heading into the earnings season. We will provide you with additional insights in terms of how we have transformed our company, where we're going, and what we're focusing on for continued stakeholder value creation.
I will tell you that we will not be addressing anything related to earnings, any updates to our business performance related to COVID-19 pandemic, or guidance in this call. We will provide an update on all these areas on our upcoming earnings call. For those of you who may not know me, I joined Gardner Denver in 2015 and led the company as CEO through a major transformation, including our IPO in 2017. Today, I am proud to be the CEO of Ingersoll Rand. When I think about where we came from and where we're going, I've never been more excited about our team and the opportunities in front of us as we start this next phase of our journey focused on creating value for our stakeholders. With that, let's begin the presentation of today.
Turning to Slide 3, I would like to start with a topic that is top of mind for myself and all of our colleagues around the world. That is the steps we're taking to ensure the health and safety of our employees due to COVID-19 pandemic. Given the unprecedented times, we have taken early and decisive action to protect our employees and ensure as safe a work environment as we possibly can. Given the learnings we took from early spread of the coronavirus in China, we have implemented proactive measures in our sites around the world. We have also launched daily and weekly communications to stay in close contact with the status of each of our sites and share critical information that can help educate our employee base and prevent the spread of the disease.
Moving to Slide 4, I would like to give an update as we believe that our efforts are proving to be very effective as our employees continue to be healthy. I'm happy to inform that as of this week, 98% of our sites are operational or have been transitioned to a work-from-home model. The courage of our employees and the mission criticalness of our products have allowed us to continue to be operational across the globe. A recent example is how our employees in Lonate, Italy, which is in the northern part of the country, where the epicenter of this pandemic in Italy occurred, raced to manufacture 26 Gardner Denver compressors for a London hospital in need. Many more stories like this that show you the passion and tenacity of our workforce.
In parallel, and as we communicated a couple of weeks ago, we have executed on several decisive and proactive measures to protect the company and preserve capital. Items such as salary reductions for myself and the executive team for the remainder of the year, as well as deferred merit, are some of the actions that many have volunteered to show support for our employees. More warranted by demand environment, we have also deployed actions such as furloughs. We want to ensure that these employees are taken care of, and as a result, we're paying for at least a month of healthcare benefits. While the environment continues to be uncertain, the Ingersoll Rand team is committed to taking the appropriate steps to protect our employees as well as the financial well-being of our company.
Turning to Slide 5, let me start with a few key highlights that frame out our investment story and what we will discuss today. I have had the opportunity to spend a lot of time with our new colleagues, I can tell you that we have two strong complementary cultures that are really embracing our new combined organization and working extremely collaboratively as we navigate the COVID-19 environment. I'm very proud of our teams coming together like they have. Despite being a $6 billion revenue company, our employees are entrepreneurially focused and operate with an ownership mindset. In addition, something that the legacy IR culture embodies is a focus on operating sustainably. Going forward, this will be a core imperative for us. Looking at the combined company, we now have a more diverse, broader, and technology-enabled product portfolio focused on innovative mission-critical flow creation and industrial solutions.
Our access to higher growth regions and markets has been expanded while our exposure to upstream energy has been significantly reduced. In addition, our total addressable market is now approximately 65% larger. We also believe we're well-positioned to navigate this environment and to ramp quickly in a recovery. We remain very disciplined in terms of how we manage the business and continue to execute against our simple strategy. From a financial perspective, we have architected a strong balance sheet with access to ample liquidity. As we look ahead, we have our sights set on delivering top quartile business performance in all markets and scenarios, including creating value for our shareholders. Turning to Slide 6. In looking at the combined company, at the new company, we have built a very strong foundation with a combined history of more than 300 years and a shared commitment to excellence and continuous improvement.
Our talent pool is now comprised approximately of 18,000 employees globally. Our customer focus and disciplined market strategy have produced strong results, including combined 2019 adjusted pro forma revenues of $6.2 billion, adjusted EBITDA of $1.2 billion, and a very healthy margin profile at nearly 20% adjusted EBITDA margins with room for improvement. We have a strong aftermarket revenue base of $2.3 billion as of 2019, which is around 40% as a percentage of revenue, and we have plans to grow this. As we announced in March, we're operating under four segments, which I will get to in a moment. In addition, the combined company has a greater focus in high growth areas like Asia Pacific, where we see strong opportunities to leverage the combined product portfolio for further growth. Let's now get into the new segments.
Turning to Slide 7, I will start with the Industrial Technologies and Services segment. This is our largest segment, with adjusted pro forma revenues of $4 billion and roughly 20% adjusted EBITDA margins. The segment is largely comprised of the core air compression technology components from the two companies, as well as specialized fluid transfer technology, power tools, and material handling solutions. We plan to run this segment under five main P&Ls. The legacy Ingersoll Rand CTS and legacy Gardner Denver Industrial segment, including the Emco Wheaton Fuel system business, will be broken out into three regional P&Ls. This is similar structure to what we had within the legacy Gardner Denver Industrial segment. Power Tools and Material Handling business will be its own P&L.
We have also created a global Pressure and Vacuum Solutions P&L to significantly leverage capabilities across multiple platforms with a highly engineered to order focus. This business will include the Nash, Garo, Emco Wheaton Loading Arms, and custom-engineered product businesses from legacy Gardner Denver, as well as the multi-stage gear centrifugal compressor business from legacy Ingersoll Rand. Overall, we believe we have a strong foundation to build upon. Just like we saw margin expansion for the legacy Gardner Denver Industrial Segment from 2015- 2019, we see similar opportunities for the Industrial Technologies and Services segment over the coming years, particularly as the majority of the cost synergies are expected to come from this segment. Turning to Slide 8. Our Precision and Science Technologies segment includes Ingersoll Rand's Industrial Precision Flow Systems, or PFS, and ARO businesses, as well as Gardner Denver medical business unit and specialty pumps.
Combining these businesses greatly enhances our end market reach and creates a broad portfolio of positive displacement technologies, which are complementary and can be leveraged globally across customers and channels. We believe this segment is well-positioned to capitalize on medium to long-term growth trends, including aging demographics, rising trends in chronic diseases, water infrastructure, and urbanization. We also believe that the mega trends of miniaturization and point-of-care personalized medicine will drive the precision and dosing systems that we produce in this segment. In the past, we spoke about the fact that although our medical business does not have a lot of recurring traditional aftermarket, it enjoys the characteristics of long-term design cycles that one could argue is recurring revenue, since the same pump will be used in the medical design over the life cycle of the product.
Similarly, in PFS, even though these businesses do have some aftermarket, as shown on the slide, it also has the same like-for-like design cycle that in theory could account for a much larger recurrent revenue stream. As we look ahead, we're quite excited by the growth and margin expansion opportunities that lie ahead. Our main priority here is to continue to grow organically in attractive end markets through our highly differentiated technology, as well as look at inorganic growth opportunities to increase our total addressable market.
Lastly, I would like to highlight that as you saw from our 2019 results on the legacy Gardner Denver Medical segment, we were able to achieve and reach 30% adjusted EBITDA margins in 2019. Which gives us confidence in our ability to expand margins for the overall segment. Turning to Slide 9, our Specialty Vehicle Technologies segment consists of Ingersoll Rand's industrial Club Car business.
This is a business that is seeing good growth momentum due to a number of factors. First, increased demand for utility vehicles for commercial maintenance, last mile delivery, and people movement as the world transitions from gas-powered trucks, buses, and vans to smaller, fit-for-purpose, and more sustainable electric vehicles. Second, the U.S. neighborhoods with amenities promoting family leisure drives in a vehicle smaller, more accessorized, and more fun than a car. Finally, digital connectivity engulfs consumer and utility, providing information, entertainment, tracking, and control in the vehicle, which is an area where Club Car has a leading market position. We also like that this business has a lot of potential on growth around aftermarket parts and services. Turning to Slide 10, our fourth segment is High Pressure Solutions, which consists of Gardner Denver's upstream energy business, largely serving the unconventional onshore oil and gas energy market.
This is a business that we radically transformed from a largely original equipment provider prior to 2015, to a business that now has more than 80% of its revenue comprised of aftermarket consumables and services. The technology in this segment is very unique, as it is utilizing high-pressure reciprocating technology to pressurize fluids at very high levels. To put in perspective, these pumps go upwards of 10,000 PSI, which is 300x higher than the pressure in the tires for your car. The team has done a lot of market work around utilizing this technology in new industrial markets, and although we are in the early stages, we expect to see some good outcomes in the medium and long term. Turning to Slide 11, I have already alluded to the transformation that the company has seen over the years, and I want to show you in more detail here.
The point is, it is very important to understand the journey we are on and what we have been able to achieve in a relatively short period of time since 2015 as Gardner Denver. From 2015- 2019, we were able to drive strong margin expansion across all of our segments and delever the company considerably. We're now very excited to take on this next phase of our transformation as we believe the combined company provides us with a great platform for long-term share value creation. We have done this through our focus on our simple yet straightforward strategy around talent, operational excellence, demand generation, and financial discipline, including using our strong cash flow to aggressively pay down debt, allowing us to be in a position of strength. This also allowed us to do several bolt-on acquisitions since the IPO and significantly improve their financial profile.
As you can see, we're a larger, more diversified company with significantly less exposure to the cyclical upstream energy market. While we made a lot of progress towards becoming a world-class industrial company, we're excited about the next phase of our journey and believe there is a tremendous amount of value to create as we successfully integrate two great companies and continue to execute our playbook. In speaking about our playbook, turning to Slide 12, I would like to highlight the key strategic imperatives that are an essential part of our playbook to be able to achieve extraordinary execution moving forward. First, deploying talent. We believe that a highly engaged workforce, combined with an ownership mindset, is a great catalyst for long-term shareholder value creation. Second, accelerating growth.
The focus on innovative products and solutions that are then communicated to a highly fragmented customer base makes our demand generation engine a powerful platform for us to penetrate key markets and gain share. Our third imperative around expanding margins, where a combination of aftermarket growth above the 40%, as well as our focus on direct material cost improvements with our Innovate to Value or I2V process, will create a great combination for margin expansion. Fourth, allocating capital effectively, where we view that there are multiple levers for us to unlock cash and net working capital as a percentage of sales continues to be a focus across our newly formed company. We're adding a fifth imperative, which is to operate sustainably because we want to be recognized in the top quartile of companies in our industry as it pertains to ESG.
I will talk more about our ESG focus in a few minutes. As we have done since our IPO, we will continue to execute our playbook, with the mission being to drive outperformance and along with that, deliver stakeholder value creation. Turning to Slide 13, I've talked a lot today about what we have accomplished and what we are doing now, but a big piece of our success is how we do it. Our Execution Excellence process is known as IRX. It starts with our core values in the outer ring and supports our ability to achieve our strategic goals. It's founded in two execution principles, Policy Deployment and IMPACT Daily Management, also known as IDM, which drive not only how we establish and deploy goals across the company, but also how we execute on them on a daily basis.
We believe IRX is a competitive differentiator and an accelerator. The adoption of IRX and its toolkit has been widely embraced across the entire new company. We already have approximately 75 IDM rooms set up across the total company, with all segments and the corporate enterprise all participating. 15 of the IDM rooms have been implemented since early March, which shows that despite the current virtual work environment that we are all currently managing through, the simple self-directed nature of IRX can still flourish. Turning to Slide 14, as I mentioned before, our addressable market has increased by 65%, or nearly $16 billion, due to the combination of the Ingersoll Rand Industrial segment. With our expanded product and solution offerings, leading-edge technology, expertise in demand generation, we believe we can further penetrate our current customer base and continue to grow market share in both mature and niche markets.
The long-term market drivers for this segment are here to stay over the medium and long-term perspective. Even in market conditions like the one we live today, due to COVID-19, the remote connectivity platform we use across Gardner Denver and Ingersoll Rand has proven to be very effective in maintaining our compressors operationally while not having to be present at the customer location. Advances in science and research that will drive a higher accuracy of dosing levels and chemistry mixing, which are the core of our technologies within our Precision and Science Technologies segment. In addition, with the expanded total addressable market, we continue to see opportunities to target inorganic growth over the long- term as these markets remain highly fragmented. We have a team that is highly focused on continuing to cultivate and embrace potential candidate companies in this environment.
Going to Slide 15 and a look at our much more balanced and diversified end market makeup. First, we have significantly diluted our exposure to the upstream oil and gas end market. Which now stands at less than 10% for Ingersoll Rand based on 2019 adjusted pro forma revenue. This includes not only the power Gardner Denver upstream exposure, but anything that is directly related to these end markets from other segments like compressors or specialty pumps. We also have deeper exposures to higher growth and higher margin businesses, such as food and beverage and chemicals, as well as niche markets, including aquaculture and transit solutions.
Overall, we have enhanced our end market balance and diversity with about 90% of our business now exposed to more GDP-like growth over the medium to long term, and in a space where we believe we can achieve further growth due to our commercial initiatives. On Slide 16, you can see just how complementary our businesses are across the value chain and the broad portfolio of products to now cover the spectrum of compressors, blowers, specialty pumps, and vacuums. From a personal perspective and as an engineer, I get very excited about what this chart represents. Simply stated, areas where Gardner Denver didn't compete historically, like centrifugal compressors, and areas where legacy Ingersoll Rand didn't compete, like vacuums, are now filled. We now cover the spectrum of pressure and flow, which simply means we have a full product suite to provide our customers and meet their needs.
We're already identifying cross-selling opportunities and ways to leverage technology across the portfolio that should lead to incremental growth opportunities as we look ahead. This was one of the main strategic motivators for combining the two companies, which has essentially created a much stronger industry player from day one. Moving to Slide 17, I can give you an example on how the complementary product portfolio and enhanced solutions have expanded our market position in the oil-free compressor market. The merger of Ingersoll Rand and Gardner Denver has melded two complementary portfolios to give a significant potential runway to gain more share. We're now poised for future market share gains with the new combined portfolio.
Specifically, the oil-free market is one where we clearly believe that 1 + 1 = 3 , and this advantage position allows us to more fully access a more than $3 billion addressable market that is growing approximately 2x higher than the traditional compressor market. Our product coverage is now class-leading with only one other competitor comparable to our breadth of product offering. In the oil-free compressor market, we now have an end-to-end technology solution that extends across the value chain. Our combined portfolios offer the full coverage from 2 kW to more than 20,000 kW, including scroll, reciprocating, water-injected screws in the small range, and dry screw and centrifugal in the larger ranges. What is more exciting is that both companies were already working on innovations in this space.
An example of this is the E-Series on the Ingersoll Rand side, with best-in-class efficiency for the power ranges that it performs. On the Gardner Denver side, the Ultima compressor, which is a groundbreaking permanent magnet dual dry screw with unmatched energy efficiency and footprint within its operating range. We believe there is tremendous opportunity here as we continue to innovate with a stronger technology offering, as well as integrate our sales teams and deploy our channel strategy to capture share in this faster-growing market. Moving to Slide 18, as many of you already know, we believe our focus on demand generation and digital marketing is truly a differentiator for us. Through our efforts, we can potentially reach millions of end users, which provides the unique opportunity to understand the market real time, employ data-driven marketing and sales techniques, and influence buyer decisions.
Demand generation is focused on creating growth engine and driving customer retention and lifecycle revenue streams. It also allows our salespeople to focus on the right opportunities in a more efficient way and avoid too much cold calling. One real example that is highly relevant in today's environment is the application of demand generation for medical ventilators. As COVID-19 started to hit the market across the world, we saw an opportunity to educate medical device makers of ventilators about our leading blower technology. In a matter of two weeks and a cost of less than $10,000, we leveraged our digital marketing, telesales, and social selling techniques to build a $12 million sales funnel and make others aware of how our technology can help meet a critical demand during this crisis.
With the infrastructure that the team has now put in place, this is a great example of how we can nimbly target areas for growth and, in a very efficient manner, educate our customer base, as well as create leads in a cost-effective manner for our sales team. Our demand generation engine continues to mature in the legacy Gardner Denver businesses. We're now introducing this differentiated manner of digital marketing to the legacy Ingersoll Rand businesses moving forward. This is truly a core competency for the business and one we expect to deliver significant value as we look ahead. With that, let me move to Slide 19 and spend some time on the actual integration of our cultures and companies. Since we announced the deal nearly a year ago on April 30, 2019, our teams have been working hard to get ready for the combination.
I'm very inspired and invigorated by our people and the talent we have here. The team is excited to chart a new course and rise to the top. I've been most impressed with the response to the COVID-19 pandemic. Our teams are working relentlessly, effectively, efficiently, and collaboratively to ensure the health and safety of employees and position Ingersoll Rand for success in this environment and beyond. In addition to the strong talent and technology of product solutions that I addressed in the prior slides, I've also observed a very strong focus on, and commitment to, sustainability from the legacy IR team. We feel this is a critical component to our success going forward.
With the strength and depth of our talent, as well as long-term growth from attractive macro drivers and significant margin expansion opportunities, I've never been more excited about what's in front of us and what we can achieve. Now let me talk a little bit about our first 100-day strategy and execution process. Moving to Slide 20, we have provided a lot of details on this slide to give you a sense of the rigor around our integration execution. The big takeaway is that we have a team, we have a process, and we're making significant progress. Despite the COVID-19 pandemic, we are executing our 100-day integration playbook in line with our original expectations and, in certain areas, even accelerating our execution. An example of this is our ability to stay on track, launching over 16 RFQs, touching over 1/3 of our direct material spend.
Moving to Slide 21, for any organization, leadership is critical, and I'm excited to welcome several new executives that joined our senior team. We have a nice balance of strong talent from both legacy companies and have been working around the clock to ensure we hit the ground running on day one. Having a strong leadership from both legacy companies also has ensured a strong melding of the cultures, and I have seen a lot of collaborative teamwork across the entire organization as a result. Now let me move to the next slide and talk a little bit about the key additions to our Board.
Over the past couple years, we have reconstructed our board, bringing some incredible and diverse talent to our company to infuse some unique domain expertise, starting with Bill Donnelly and John Humphrey joining in 2017, both very successful CFOs who helped execute the transformation of Mettler Toledo and Roper Technologies, respectively, using different company strategies, but resulting in the same end goal of solid total shareholder return. In 2018, we were able to attract Liz and Tony from Cisco and Marc Jones from Arris Communications, both bringing a deep expertise in IoT technology, as well as experience with revenue-generating models that leverage IoT data. Our three newest board members, Kirk Arnold, Gary Forsee, and Tony White, bring expertise in critical areas such as entrepreneurship, employee ownership, technology, sustainability, and broad operational and financial knowledge.
With these additions, our board is highly diverse, not only from a gender and ethnicity perspective, but also much stronger from an experience and capabilities perspective. I am excited to see how our board will leverage this diversity in supporting our long-term vision and strategy. Moving to Slide 23, in parallel with our companies merging, we spent a lot of time developing a purpose that will resonate with our employees, customers, and shareholders and define our combined culture. Our purpose, Lean on Us, is rooted in four core values. One, we think and act like owners. We're driven by an entrepreneurship spirit. Two, we're committed to making customers successful. Three, we're bold with our aspirations while moving forward with humility and integrity. Four, we inspire teams, because we know that cultivating a sense of inclusion, belonging, and respect will develop the most talented employees.
From my perspective, I can humbly tell you that I believe that the culture or the heart and soul of any organization is critical to its success. I'm inspired by our people. I'm proud to lead this organization as we build on 300 years of combined history and continue our journey during an unprecedented time. Moving to Slide 24, as I mentioned in the beginning of our call today, sustainability was truly an embedded cultural trait of legacy Ingersoll Rand. Our senior leadership team, supported by our board, feel very strongly that we want our company to be a sustainably-minded organization and have purposely accelerated ESG-centric initiatives across our organization with a focus on environmental health and safety, sustainable operations, and diversity and inclusion in our workforce.
We're excited to be working on the new Ingersoll Rand's first-ever sustainability report. Are in the process of preparing submittals to leading rating agencies, including the Dow Jones Sustainability Index and Carbon Disclosure Project. We think we have a very compelling story to tell, and we're excited to start that journey. Moving to Slide 25 and rounding out the integration section, we remain confident in our expectation that we will achieve cost synergies of $250 million over a three-year period. We have made significant strides already, as you can see on the page, and we feel confident that we will be able to continue to accelerate our actions. Actions around structural savings and procurement are well underway already, and we have continued to build and refine the roadmap for the years ahead.
I will be speaking more about this during our upcoming earnings call and will provide more color at that time. Turning to our financial position on Slide 26. We provided this update on our April 1st COVID-19 business update presentation, available on our new website. I will not go over all the details we provided, but the key takeaway here is that we have a strong balance sheet, ample liquidity with no maturities until 2027, as well as multiple levers to unlock cash. We will provide more details on our financials on our upcoming earnings call. Turning to Slide 27. I'm going to end my presentation this morning with an important slide, which summarizes multiple catalysts for future value creation. We believe that our strong and differentiated business model allows us to continue to out-execute.
We now have increased our addressable market by more than 65%, giving us great opportunity for demand generation execution as well as inorganic opportunities. We have acquired access to an install base that is exceptionally strong, giving us a solid roadmap to accelerate our aftermarket revenue streams that today sit at roughly 40%, but we believe have more room for improvement. I'm also pleased with how our teams have taken on new challenges, like the passion around getting recognized as a top quartile ESG company in our space. Lastly, we cannot make it happen if it wasn't for our culture of execution, which is the foundation of IRX. I passionately believe that the combination of IRX with ownership mindset we have, and the fact that all of our employees will become owners of this great company, will give us the ability to deliver long-term sustainable value creation.
To that end, we're excited and optimistic about the future, even as we navigate this extraordinary time. With that, we'll turn the call back to the operator and open it for Q&A.
At this time, ladies and gentlemen, if you would like to ask a question, please go ahead and press star, then the number one on your telephone keypad. Your first question today comes from the line of Andrew Kaplowitz of Citigroup. Your line is open.
Good morning. Thanks for the presentation, Vicente.
Thank you.
Can you give us some more color as to how synergy execution has changed, if at all? I know it's early, obviously, in the process. During the pandemic, you mentioned teams coming together faster, although you're still guiding to 250 by year three. Does that mean ultimately you could get higher synergies? I think you mentioned accelerating direct material spend synergies. Can you get those types of synergies faster during the crisis?
Andy, for sure, it's about the acceleration. I think we said in the past that if we were going to be in a downturn, that we would find ways to accelerate. I think that speaks volumes to the process that we have with the use of the IRX, and we're finding ways to accelerate the synergies as we go into 2020. In terms of increasing the $250, I think at this point in time, maybe a little bit too early. We're very focused on what we can do here in 2020 and the acceleration of that, and we'll be very glad to talk more about that during the earnings call.
Great. I'm sure you know everybody's sort of focused on China, what's going on over there. You mentioned the Ingersoll Industrial businesses historically were relatively strong in China. I think we know that. Can you update us as you've started to integrate the business on their positioning in China and how you expect that to help your legacy business moving forward?
Yeah. Yes, Andy. I can tell you that some of the things that we have seen with the Ingersoll Rand team in China, first of all, the team is fantastic. The leadership team that we have there, that came with the business, the depth of talent that we have seen in China and also Asia Pacific is being very positively received and pretty exciting to see that. The legacy Gardner Denver was actually smaller than the legacy Ingersoll Rand. We're going to leverage their position to be able to sell the entire product suite, like vacuums and blowers. I think this is what is really exciting for us, that we can leverage now from a commercial perspective and be able to achieve some growth synergies here.
Thanks, Vicente. Appreciate it.
Yes. Thank you.
Your next question today comes from the line of Mike Halloran of Baird. Your line is open.
Hey, good morning, and thanks for the context.
Absolutely, Mike. Good morning.
Hey, Mike.
First, you laid out the product portfolio range and overlap. Could we just talk about innovation priorities? Slide 16 kind of timeframe, you laid out what the product portfolio now looks like, where the overlaps are. How are you identifying and prioritizing what the opportunity set looks like with the combined companies? I know part of what you did on the legacy GDI was accelerating what that innovation curve could look like, a little conversation on that. Then does that Slide 16 kind of inform where you're trying to go with innovation and maybe even some tuck-ins over time?
Yeah, Mike, coincidentally, two weeks ago, we actually completed our product summit in North America. We're still doing that. Our European one, it's actually happening now as we speak, and also the Asia-Pacific. Obviously, our plan was to do all that face-to-face. We're still doing it, but we're doing it virtually. So it was pretty exciting to get over 100 people virtually and really see the level of excitement and depth of knowledge on the product categories. To your point, yeah, I think out of that product summit, we were able to kind of rank and stack and create a very solid funnel on how we're going to leverage the two complementary technologies. At the same time, we spoke about some very specific areas where we believe we can accelerate some innovation.
Similar to what you saw back in 2016, where we said, "Let's just prioritize." It's not about doing 1,000 different projects, but it's about how do you prioritize the top 10 or top 15, and that's exactly what we're doing right now. Is just how do we double down on some of those critical priorities and then really move pretty fast on gathering voice of the customer and gathering market assessment to then be very specific on the innovation that we're about to develop. Yeah, we're following that same playbook, and I think I can tell you it was really, really exciting to spend the time with the teams during that product summit, a few weeks ago in North America, and doing the same thing now here in Europe and Asia.
Speaking of prioritization, when you think about the 100-day rollout and then the multi-year rollout here, with the change in demand environment, has the prioritization curve changed at all from you from a synergy perspective? Where are you specifically spending your time, when it comes to driving the synergies?
Yeah, I'll say in terms of prioritization, the few things that have changed, from the perspective is that we said number one priority is the health and safety of our employees. We have done a lot of work to ensure that there is not only our factories and locations operationally, but our employees are healthy. We have daily calls with all the sites, over 300 sites. I think it has worked really well. I'll say in terms of acceleration, it's all about, regarding the synergies and the 100-day plan, it's all about what we can control. In terms of synergy targets that we believe that structural changes that we could accelerate, for sure we will accelerate those.
We know the procurement savings takes a little bit longer because you still have to go through the process of the RFQs, getting the approval process with the suppliers, and doing all the validation. That still takes some time to get done. It's all about what we can control. We think we can control the structural changes. We can control liquidity and cash. I would say that the prioritization has been on health and safety, the acceleration of the structural changes, as well as what I just mentioned in terms of this product summit. It's not only generating the prioritization of the innovation, but also the ideas around the Innovate to Value on the I2V that is very focused on kind of very quick, radical, direct material changes on our product lines that we have.
Great. I appreciate it. Thank you.
Yeah. Thank you, Mike.
Your next question comes from the line of Julian Mitchell of Barclays. Your line is open.
Thanks, good morning. Maybe just the first question around supply chains. I think you mentioned that your own plants are in pretty good shape, as regards coping with the current environment. Just wondered if you could help us understand, whether that same notion applies to your supply chain globally. Maybe looking beyond the short- term, say on Slide 12, you talked about converting the supply chain to a pool system. Maybe help us understand, what exactly you're aiming at there, and how quickly that would take to enact.
Yeah, no, great, Julian. Good questions here. I think the best way I can categorize the supply chain is that, if you go back to some of the commentary we made at the last earnings call where we were talking about China, we saw the supply chain about a couple of weeks behind us getting recovered. I think if you think about it from that perspective, there's a bit of a lag on supply chain getting up to speed. That's kind of what we're seeing now as we kind of move through Europe and then also the U.S. The fact that our factories continue to be operational, it means that we do have inventory that we need for shipping the product that we're getting orders, otherwise we will not be bringing employees back into the factories. There is definitely supply chain disruptions.
I think this is the other place that has been, in a way, beneficial for us, that as the two companies combined, we combined two very large supplier bases. That is allowing us to be more selective as to the suppliers that we want to keep, and also to be able to be more selective on higher reliable suppliers based on the spend that we have. I think it's providing a very good opportunity for us to move fast through that decision-making of the supply chain selection. In terms of converting the supply chain to a pool system, so, if you remember, last year we talked a lot about how on working capital we're unlocking a lot of cash, and we did a lot of work on AR and AP.
Inventory still is an area of focus and opportunity for us. One thing that we embarked at Gardner Denver last year is with the implementation of kanban systems or pull system, which is a way for more efficiently linking the supply chain to the usage of the material versus going on forecast and MRP, which tends to be highly inaccurate. I think we're just utilizing the lean thinking and the lean methodology that manufacturing has. I think we have now a level of maturity, and we are implementing some software solutions that are allowing us to link the supply chain in a much better way. We started doing that at Gardner Denver. It has been very successful.
Now as we have been able to see what Ingersoll Rand has and the capabilities that we can add on, it also becomes a very good opportunity for us to really enhance the supply chain and create this kind of pull system instead of a push system. Again, it's just one of those great ways to optimize for us moving forward.
That's very helpful. My second question, just around historic sort of free cash flow performance in downturns. If there was any color you could give on how the legacy GDI performed, sort of free cash-wise, perhaps back in the 2015, 2016 industrial downturn, and also any help on the same point on the legacy Ingersoll Industrial segment's free cash flow. For example, did you see big working capital tailwinds and so forth? Was there a mitigation of what was going on with some of the P&L profit trends?
I think Julian, definitely, if you kind of go back to the 2015 and 2016 timeframe, we were still able to generate cash even in that downturn on the GDI side. If you look at that, those days, we were also able to expand margin. Even in the downturn of the revenue, we were able to expand our basis point of margin, which obviously allowed us to unlock the ability to be able to create more cash. We view it in the perspective that we're going to follow the same playbook. I think we always said that here we have a lot of good opportunities to unlock cash. On the GDI side, you can see that net working capital has definitely, as a percentage of sales, has improved since we went into the IPO by close to 500- 600 basis points.
It's an area that we still see great levers for us to improve. It's not only the working capital, but it's also our tax rates. It's also our kind of the new term loans that we have with interest rates, interest rate expenses. I think we view it as a great opportunity for us to leverage the multiple levers that we have.
Great. Thank you.
Yeah. Thank you.
Your next question today comes from the line of Jeff Sprague of Vertical Research. Your line is open.
Thank you. Good morning. Hope everyone's well.
Good morning.
Thanks for the call. Hey, just two quick ones from me, if I could. Also kind of going back on the theme of 2015 and 2016. Obviously, this looks like you've got a much more severe energy-related downturn. You've highlighted your energy exposures. Give us a little bit of color on kind of the second derivative effects you saw in legacy GDI through that downturn. I'm thinking specifically kind of in the industrial manufacturing bucket there, how kind of the second derivative effects worked its way through your business.
Yeah, Jeff, we definitely saw that second derivative primarily on the compressor side. It tends to be mostly on compressors that are exposed to really some of these kind of upstream side of the business. That's why what we were trying to do here in the end market, percentage that we actually apply here is that when you do the math, you can see that that upstream energy exposure is not only what the legacy upstream in Gardner Denver is, but as I said on the opening remarks, it also includes some of the compressors that are exposed to the upstream business. In terms of the second and third degree of what can happen there, I would say we'll see what this market does in this case. We have some data historically with the percentage in terms of how much does it get affected. Let's see.
We're treating this. At least our teams are viewing this in the most harsh conditions and really being very proactive and playing a down playbook side, assuming things are going to be much worse than back in 2016.
Separate from the synergy question, but just back to kind of crisis management, for lack of a better term. Can you give us a sense of how much opportunity or short-term saving there is in some of these quick actions you're taking on compensation, perhaps also T&E? I'm sure that's coming in dramatically from what your prior plans were. Some of those things that you can kind of grab quickly, how significant are those?
I can tell you, Jeff, that just give you one example. I approve every expense that goes above $1,000 in the corporate side. You can see on the supplementals how much money we spend on corporate. That tells you the level of micromanagement that we're doing in terms of really understanding. It serves a dual purpose. One is obviously, yes, control so many expenses, but I think also more pronouncedly, it provides a great opportunity for all of us to really understand where all those expense streams are happening and how do we really reassess and really attack them. Yes, I mean, the T&E and those are kind of the simple ones. It's basically about understanding whether consultants or any other activities that are being kind of used in the business that have been more difficult to stop.
I think this is a pretty good process that we have implemented that is allowing us to have a really great control of all discretionary spend.
If I can add to that just quickly. The fact that we've been using IRX and planning for this merger for almost a year here gave us some great ability to really attack things quickly here. We did that even in March before we all started working remotely.
Your next question today comes from the line of Nicole DeBlase of Deutsche Bank. Your line is open.
Yeah, thanks. Good morning, guys.
Good morning, Nicole.
I just wanted to dig a little bit more into the aftermarket comments. Vicente, I think you said, you're at about 38% exposure to aftermarket for total revenues for the combined business. Where do you think that can go over time? And if you look across the new four-segment structure, where do you see the greatest opportunity to expand aftermarket exposure?
Nicole, we definitely see opportunities for us to expand that. In simply stated, if you remember the legacy Gardner Denver industrial segment, our aftermarket exposure was roughly 35%. We learn more about the kind of Compression Technologies, which is the legacy Ingersoll Rand, their aftermarket and services is more like 50%. There's a lot of things that we can learn from what they have done and really apply that to the Gardner Denver side. I think that just kind of gives you a perspective of what we can expand on that ITS segment. I also think that the Precision and Science Technologies segment is one of those that this recurring aftermarket, even though we're still showing a percentage, it's kind of somewhat understated due to the like for like pump replacement side.
It continues to be definitely a very good opportunity not only for margin expansion, but also as we see this down cycle, we're finding ways on how we can really accelerate it by just learning from best practices that the other teams have done.
Okay. Got it. Thanks. That's helpful. Then just as a follow-up, are you guys at all thinking about doing a review of the portfolio now that you have a combined business? I guess, the one business that kind of sticks out as maybe not being like the others is Club Car. If you could talk a little bit about, if that business is core to the portfolio and if there's synergies between that and the rest of what you guys do now.
Yeah. Nicole, This is the excitement that we have is that at this point in time, we're heavily focused on the synergy and the value creation that we said that we needed to execute, which is get into the $250 and everything else that we need to do. We also said that the multiple levers for expanding or kind of value creation is that we have some portfolio optionality. As we get closer and better kind of going through the process of the execution and the synergies, and we see some good momentum and the market recovering, it just gives you that opportunity for us to be able to look into the optionality.
Thanks. I'll pass it on.
Thank you.
Your next question comes from the line of Nathan Jones of Stifel. Your line is open.
Morning, everyone.
Morning, Nathan.
Morning.
Follow-up on the synergy questions here. I wonder if you could talk a little bit about what's volume dependent and what's volume independent in the synergy creation. Clearly there has to be some kind of total revenue assumption to generate that $250 million of synergy savings in it. Obviously volume's going to be a little bit lower in 2020 than we anticipated. Can you just give us some color on what you can generate independent of volume and what you need some volume in order to get to that $250 million?
Yeah, absolutely Nathan. If you remember a chart that kind of shows that supply chain of the $2 billion and the $250 million. Clearly, the procurement side is volume dependent. The $250 million was on the volume of the procurement was also done based on 2019 spend data for direct material and indirect material. We also said that portion is the one that kind of comes out later, kind of year two and year three, because it takes time to obviously execute the RFQs and go through the inventory burns and all of that. What is definitely very independent is the structural, which is more of what we were expecting to happen in year one.
Just to clarify that, the $250 million of total synergies, the volume piece of that was based on your volume in 2019, not some anticipated volume in 2022 or 2023?
That's correct. Yes.
Great. That's helpful. My follow-up on sustainability. You said you want to be a top quartile company in sustainability. Can you talk about what that actually means to you, and what you'll have to do in order to be a top quartile company? What kinds of metrics you're using, what things you're going to lay out for us to track?
Absolutely. As you can imagine, we believe in you get what you measure. We'll definitely have the metrics and the numbers in place to be able to track the progress on these, and we'll be able to talk about that. What we're doing is utilizing the current Dow Jones Sustainability Index questionnaire and analysis and gap analysis. Also the Carbon Disclosure Project too as well, to be able to provide that kind of gap analysis. That's going to be able to give us the kind of key leading indicators and metrics for us to be able to track and be able to document how we can become that top quartile in the ESG. There's a lot of things based on the preliminary gap analysis that we have done, that we're currently doing. We're just not documenting and measuring.
I think it's a matter now to better understand how do we really provide the necessary data to just be considered in some of these facets. As well as then make some improvements in some other areas. There's a lot of goodness that is happening today in the organization, whether you think about diversity and inclusion. Look at our board, 40% of our board is diverse. Whether you can think about all the products that we're making that will drive energy efficiencies with compressors and vacuums and blowers. They're all kind of at the center of being able to drive that energy efficiency and greenhouse gases. I think it's just about doing that gap analysis, creating the metrics, and then we'll communicate that to everyone.
Excellent. I look forward to hearing more about that. Thanks very much for your time.
Absolutely, Nathan. Thank you.
Your next question comes from the line of Joe Ritchie of Goldman Sachs. Your line is open.
Thanks. Good morning, everyone. Great to hear from you.
Hey, good morning, Joe.
Hey.
Just the first question on just free cash flow for a second. Vicente, I remember pre-IPO when we walked through the Sedalia plant. You could tell all of the inventory opportunity that there was within the organization. I'm curious, as you take a look at the legacy Ingersoll compressor business, whether there is that same type of opportunity and when we get to a more kind of normalized state of an economic backdrop, how do you guys think about the free cash flow targets for the combined entity?
Hey, Joe, I can tell you that there's still plenty of opportunities. Kind of what you saw in Sedalia, if you were to come out today, you'll see a big improvement. Sedalia is one of our benchmark factories where we have done a lot of work around this kind of pull system, and utilizing a software solution to be able to connect our supply chain on a pull versus a push, and that has really improved our inventory. There's still plenty of opportunities on that side as well. I will say that as we have gone through the sites, there's definitely opportunities on the Ingersoll Rand side. It's a combined high level of really solid opportunities on both sides. In terms of free cash flow, we'll probably be able to provide that maybe better here as we kind of come to the earnings call.
As you saw, we have seen that Gardner Denver last year, we generated about $300 million of cash. You can see the nature of our business of being kind of low CapEx. Based on the size of Ingersoll Rand, maybe you could extrapolate, but I prefer for you not to do that yet until we kind of walk you through some of the numbers that we're seeing. We'll be able to provide you with a good assessment of that here on the earnings call.
Okay, great. Then maybe just my follow-on question, I know we've talked a little bit about the synergies and the timing of the synergies. I guess, one of the things we've seen with other companies that had Irish domiciled companies, there were some kind of tax entanglements associated with recognizing some of the synergies in a timely manner. I'm just curious, just from your own perspective, are there any issues, any tax implications that we need to be aware of as you start to think about being able to realize that $250 million?
Yeah. Joe, in the $250 million, there's actually nothing is attributable to tax pool there. What we do in tax will be on top of that. There's certainly opportunity. Remember, with the merger, we're no longer domiciled in Ireland. We converted back to what Gardner Denver was essentially. We're a U.S. domiciled company. You can see the 25% tax rate in the supplemental information we put out. We think that's a good baseline. I do think there'll be some choppiness in the tax rate as we work through purchase accounting this year, 25% is a good baseline to measure the company off of.
Okay, great. Thank you very much.
Your next question comes from the line of Josh Pokrzywinski of Morgan Stanley. Your line is open.
Hi, good morning, everyone. Hope you're all well.
Hey, Josh. Yeah.
Hey, Josh.
Vicente, you touched on it a little bit in a few questions. I guess I just want to ask it a bit more directly. On the supply chain front, I think we've heard a lot about the shortening of supply chains, people rethinking that maybe given some either inefficiencies or vulnerabilities exposed in this whole process. How much of what either went on in the clean room or what you had initially been planning is still actionable versus something that you're going back and rethinking today?
If you're referring to, Josh, to specifically here the supply kind of our asset in relation to the $250 million or in relation more to kind of current production levels?
Either one I think is fine. I guess the $250 million and the sourcing as part of that is probably the most topical. Either bucket is I think is probably fair game.
Yeah. I think from a supply chain perspective, just to be clear, we're definitely not immune to any of the disruptions that are happening out there. I think the benefit that we have here in this case is that, if at a Gardner Denver level we had X amount of suppliers, we now have actually close to 5x more supplier base than what we had before. We're being very selective. In these RFQs, we're going to suppliers that can be actually providing supply to our factories right now. Those suppliers that have proven to be not able to be resilient in these downturns, we're just not including them on the RFQs.
I think we're just leveraging the new data that we have, in terms of this downturn, to be able to be highly selective on that supply chain that we think is going to be more sustainable long- term.
Just follow on here. I think one of the slides kind of mentioned some of the milestones you'd met in a meeting that had been postponed until folks can travel. Is there any other kind of disruption in executing some of the integration or rethinking the plant footprint, etc , just because folks have a harder time traveling and other social distancing measures that kind of get in the way of productivity?
Sure. Yeah. From a footprint perspective, we always had the footprint as being kind of year two, year three, because those take long term. You got to really study that well and making sure you don't create customer disruptions and prepare for everything. The meeting that we said that we postponed, it was a leadership meeting. It was kind of having the top 150 leaders from a global perspective. We're having virtual meetings. One great example of that is this product summit, where we're going to have close to about 120 leaders globally from a product management and engineering perspective in Davidson. I think it was the last week of March. We canceled that, but we still held the meetings and the sessions. We just did it virtually. I can tell you, it worked really well, and obviously saved a lot of money in T&E.
I think it's just we're very quickly, nimbly, and pretty agile in terms of kind of reorganizing quickly, but still holding steady to the execution that we said we needed to get done.
Got it. Appreciate the color and stay safe out there.
Sure. Thank you, Josh.
Thanks.
Your next question comes from the line of David Raso of Evercore ISI. Your line is open.
Hi. Good morning. I have two bigger picture questions. First one's about the response so far by competitors and customers. Which type of projects and markets, however you want to define it, are you seeing the greatest early uptake in the increased power of the combined company? Maybe which are the ones that you're seeing the competition and customers using this transition period to sort of ramp up the competitive pressure, maybe look elsewhere? The second question, do you have any early thoughts or even maybe early customer conversations about manufacturing moving back to the U.S. as a byproduct of life after the virus impact, be it from shortening supply chains and so forth? Thank you.
Yeah. No, great question. The way, as you were asking the question, I think the two for me are somewhat related. I think one of the competitive advantage that we have as a new company is that we are in the region for the region. At Gardner Denver, our footprint of manufacturing and supply chain was really heavily centered around being in the region for the region. It was a strategic nature that we took, and it is something that we still hold kind of steady. When you look at some of the competitors that we have in our space, in the different product lines, not all of them have that capability.
Again, if you think about compressors that we're able to make them in the U.S. for the U.S. or in China for China and in Europe for Europe, it's actually a competitive advantage in this current environment. I think it's proven to be very useful for us as we communicate with customers, not only on the current environment, also as we think about further in terms of what you might be asking here and referring to customers wanting to buy more made in the U.S. for the U.S. I wouldn't say that I haven't seen that extremely to be the case. Definitely some customers talk a lot about it, because obviously, I guess in the U.S., they want to be more supportive of U.S. production.
It's something that, regardless of the case, I think a competitive advantage for us is that kind of footprint that we have and the selectiveness and what we have been able to do in the region for the region.
If local consumption, local production, that's sort of an initial competitive advantage from the increased power of the combined company. What are you seeing competitively, though, on the response? I assume anytime you see two big players come together in a sector, the other players can at least use this transition period to maybe sow a little seed of doubt in the customer and try to get their share up competitively. Can you just give us any color, maybe which verticals are you seeing that more?
I wouldn't say that.
Geographic or type of project?
Yeah. Maybe not a particular vertical. You can see that, on our end markets, we're so highly diverse. Even the biggest chunk, which is generally industrial, there's so many end markets on that one, it gets lumped together. I would say that's still very early to see a real response. We have been just about a month now together as a new company. Our teams are watching that carefully, and we'll see if any response. Obviously, difficult to respond to these barriers that we have in the terms of being in the region for the region. Opening a factory in these days is obviously quite difficult with the current situation that we all live in.
All right. Thank you for the time.
Thank you.
Your next question comes from the line of Ivana Delevska of Gordon Haskett. Your line is open.
Good morning, guys.
Good morning.
I just wanted to ask you about the fixed versus variable cost structure for the pro forma portfolio. Would it be pretty similar to Gardner Denver? Also, just as a follow-up to that, how would you expect it to perform during a downturn?
Yeah, I think it's fairly similar to the Gardner Denver, in terms of percentage. Kind of two-thirds variable, 1/3 being kind of roughly fixed. In terms of the downturn, clearly, it's where we see opportunities in what we can control across both of the businesses. Not only on the fixed, as I alluded to the structural changes that we're driving, but also on the variable. That whether even myself take salary cuts or furloughs or things like that we need to get done now, as well as some of the other activities that we're driving here in terms of I2V or procurement. Yeah. I think we see good opportunities across both, and clearly, we're implementing a lot of proactive measures as what we expect here in this downturn.
Thank you. One follow-up on the footprint opportunities. You mentioned that there would be more of a year two, year three benefit coming. Do you have a plan in place right now, and it's just a matter of executing it in year two and/or year three? Is the plan going to come further down the road? Does the current environment help you accelerate the plan?
Yeah, no. Thanks. We do have a plan already in place. We actually have a plan in kind of three different waves. We're being prudent in terms of kind of the phasing and the acceleration. Even if we wanted to accelerate, obviously, with the no travel and the stay-at-home kind of work, it's difficult to make any of these moves. To the extent that we could later in the year move and create some acceleration, we will. But at this point in time, we're just focusing on those places that we can control and still continue to assess the footprint, which is not only the manufacturing side, but it's also sales offices and other kind of We have, I think it's roughly 14 million sq ft of footprint, so to speak. It's a lot that we're going through our database and really assessing what can we do.
Thank you.
Your last question today comes from the line of John Walsh of Credit Suisse. Your line is open.
Hi. Good morning. Thanks for squeezing me in here. I hope everybody is well.
Absolutely.
Just a follow-up on kind of thinking about the way you're organizing some of the operations of the new segments. Clearly, a lot of the cost synergy's in that industrial bucket. Just wondering, looking at something like High Pressure Solutions, is there any shared manufacturing with other parts of the business? Is it kind of from a manufacturing and operational standpoint run separate from the others? Maybe same question, it could be for any segment.
It's actually fairly separate, John. Yeah. It is really standalone. The high pressure is kind of standalone, and sort of the specialty vehicle standalone. Even within the ITS. In the ITS, you have the power tool business, which is also very standalone from a manufacturing and footprint perspective. Yeah, we tend to like to run fairly dependent in terms of creating these P&L structures so that the general managers and the presidents of the business have that level of ownership and authority.
Great. Thank you. Then, thinking about growing that aftermarket and service piece, obviously, as you grow the install base, more stuff will break. You'll kind of have aftermarket parts. Just wondering, looking at the portfolio outside of the legacy IR piece, is there really an opportunity to kind of sell more on uptime? Should we think about it as bigger install base, more aftermarket parts, and that's really how that part of the business grows?
Yeah, no, I think that's spot on, John, in the sense that uptime or kind of what we call remote monitoring systems, this is an area that we do see a lot of very good opportunities. We are learning a lot from what Ingersoll Rand is doing. They have several thousand of machines that are on these kind of constant uptime/remote monitoring systems. We do have also a legacy platform from Gardner Denver. We used to call it iConn. We're now evaluating the best of both worlds, and how do we really accelerate that? Because we think that that could be a more kind of constant recurring revenue where we're here on our end. Thanks again.
This concludes today's conference call. Thank you for your participation. You may now disconnect.