Status Update

Nov 1, 2016

Good day, ladies and gentlemen, and welcome to the webcast to discuss Tesla pending acquisition of SolarCity. At this time, all participants are in a listen only mode. Later, we will conduct a question and answer session and instructions will follow at that time. I would now like to introduce you for your host for today's conference, Mr. Jeff Evison. You may now begin. Thank you, Donovan, and good afternoon, everyone. Welcome to our call to discuss the Tesla and SolarCity blog that we posted to our website today. Today from Tesla, we have Elon Musk and Jason Wheeler. And from SolarCity, we have Brendan and Peter Rive. We're going to start this call directly with Q and A based upon the blog post that we posted. So please press star 1 now on your phones to enter the queue. And our forward looking statement here is, during our call, we will discuss our business outlook and make forward looking statements. These are based on our predictions and expectations as of today. Actual events or results could differ materially due to a number of risks and uncertainties, including those mentioned in our most recent filings with the SEC. All right, Donovan, why don't we go to the first question, please? Okay. And our first question comes from Rod Lach of Deutsche Bank. Your line is now open. Thanks. Yes, I was hoping to ask 2 clarifications. One is on your comment about $500,000,000 cash contributed from SolarCity to Tesla's balance sheet over the next 3 years. Are you referring to free cash flow over the next 3 year period? What exactly was assumed there? And also, if you can, just clarify the comment you made about the recurring cash flows. If you can just remind us what as of September the present value was of those recurring cash flows and what is the current sensitivity to discount rate assumptions? So this is Linden. The first part of your question, the $500,000,000 that we mentioned there, that's our forecast. That does not include any of the synergies. It's just our direct forecast that was in the S-four. That is essentially cash generation. Free cash flow, however, when you're looking at GAAP and lease accounting is a term that doesn't quite apply there. So it would just be straight off cash generation from the business. The Bank balance is $500,000,000 bigger. Exactly, the bank balance is $500,000,000 bigger. In terms of the near present value of the systems that we have under management right now, just so for those listening understand the business, when we install solar systems, we collect a recurring cash flow stream from the customers for 20 or 30 years depending on the contract. We incur the cost immediately and then we recognize the revenue over that 20 year period. So if you look at the NPV of that number as of Q2, the number was just a little over $4,000,000,000 We'll be releasing the number of Q3 on Wednesday next week. Okay. And the sensitivity to discount rate assumptions? So that's using a 6% discount rate assumption. If you actually go to our website and you look at the earnings slide, we do a sensitivity at a 6 and an 8 and another 4 to give you the different numbers. Okay. Thank you. I was supposed to say, we have to be a bit careful because there's an earnings call next week as Lyndon mentioned. So we don't want to preempt that call. So we can answer things kind of at a broad brushstroke level, but we can't pre up the earnings call. Okay. Thanks. And our next question is from Bim Kallo of Baird. Your line is now open. Hey, Elon, Lyndon, sorry about the background noise. As you look forward with capital allocation, how do we think about capital Tesla versus Solar City? And I asked this a little bit last time, but Panasonic and Buffalo, how do we think about their capital contribution this year? Thank you. Well, I don't want to speak for Panasonic. But I mean, we're pretty optimistic about that. Obviously, we have a great relationship with Panasonic and discussions with them have gone very well. The way things work at Tesla's Panasonic makes the battery cell. We've got a bunch of suppliers before that that make anode material, cathode materials separator like light and whatnot. They're also working to integrate into the Gigafactory. But then tells us everything past the sale level. And we would expect something similar in Buffalo. That's the plan of action. I think most of the capital necessary for that to take place is already there. It's already been funded. So I think it's pretty small capital requirement going forward to get things going on the cell level. A little more on the integration into the glass tiles and structures put down the roof. We're not really I'm pretty optimistic about how it's going to turn out, but I think it's really an estimational. And just sort of a general maybe general comment. I mean, it's been incredibly well received on the consumer level. Very positive. There's sort of quite a few naysayers on a financial front and some of the big hedge funds and whatnot. But I would just say, okay, for those that predict a bad outcome, how good have they been at predicting the outcome for Tesla in the past? And if they have been uniformly if they have a batting average of 0, you should really question whether their future predictions are going to be better, at least to evidence that's otherwise. I had one more. My value average, I think it's better than 0 versus channels. But Panasonic, you have one big partner with 2 big projects. I can hear you. You have Panasonic with 2 big projects. Can you have another big partner? Or how has that affected the Panasonic working on both of those things? Thank you. I'm not sure I answered that question, but I mean, sort of Tazenide has been a great partner for Tesla for many years for almost a decade. And I think it's going very well at the battery Gigafactory. And we really very strongly that the combination of SolarCity's technology on the cellular front with added to Panasonic's cell technology will make it the most efficient and ultimately the cheapest solar cell in the world, just as it is with the battery cell. We have the best cell in the world that's also the cheapest cell. And Ben, this is Jason. Just wondering I'd add on capital needs for the business. There's always this trade off between cash generation and growth. And I think what we demonstrated in our Q3 results is that we're really focused just on the Tesla side on strengthening our cash generation and profitability from our current products in order to self fund the future growth our future growth to the largest extent possible. So that's how we're thinking about it. All right, Donovan, why don't we go to the next question, please? Our next question is from John Murphy of Bank of America. Your line is now open. Good afternoon, guys. And I apologize, simple auto land, so I'm going to ask some basic questions maybe here. They might seem kind of basic. I mean, as we think about sort of the asset value on the SolarCity side as well as the cash flow, I'm just curious how those things can change and really kind of from 2 different angles. I mean, 1, I mean, as you guys innovate on form factor as well as performance on the solar roofs, which you seem to be doing some great job on, does that impact the existing value of the asset base that's installed? And then second, as houses change hands, how do you how does the sort of the contract or the payment stream change over to the new owner? I'm just trying to understand recourse and how those cash flows change with that kind of change? Yes. This is Lyndon. These are 2 total separate market segments. The customer who's looking at buying a new roof should absolutely look at a solid roof. Customers who have a roof and 5, 10 years left in that roof, it wouldn't make sense to buy a new roof. There's still a lot of value left in your old roof. And so we still see the retrofit market being a very active market for us and continue to grow. But today, we actually don't even address, for the most part, any customer that has a really old roof because the buying cycle is going to have to get a new roof and solar all at once. And we haven't been able to facilitate that well. Yes. It's interesting that's like the Sol City actually is a huge database of customers. Sorry for using the word huge. But a very large database of customers who were rejected for having solar panels on the roof because their roofs are basically too old and in need of replacement. And it doesn't make sense to put solar panels on the roof that is nearing end of life. So if some groups replace every 20 years, anything with less than 5 years, even maybe 7 years left on the roof, it's really not going to make economic sense to put to retrofit solar panels because they're going to need new roof and it's and older is also more susceptible to leaks. And so there's just there's actually a huge database of high value leads for the we're putting on a solar gas tile roof. And yes. I apologize. Maybe I meant like if you installed a solar roof and 2 years later you sell your house and you had a 20 year lease or loan with you guys. Okay. Who is that responsible for that and how does that of course work? Yes. So on the so let's just separate the solar roof versus just our standard business. Our standard business at the size we are right now, we have about 20, 25 people move every day. We have a very never have we ever prevented a customer from selling the house. There's a very customers actually new customers like it. They see it as a cheaper source of energy. All the installations are already done. So the transfer rate is extremely high. And that's why we have the good credit underwriting and able to raise long term financing against this asset base. So transferring is really easy. That happens every single day. With a solar roof, it probably would not fall into a lease or power purchase agreement. This be a straightforward loan. And in that case, there's no asset ownership challenge. You just transfer the ownership to the new homeowner. You don't have to think about the You're buying a roof really. You're buying a roof that happens to generate energy and reduce your utility Yes. But it's 2 transactions then eventually essentially, right, the house and the roof, right, because you're assuming 2 loans. No, no. This will be we try to design it as one transaction. I mean Okay. Okay. So that's the exit of the existing mortgage or second mortgage or something like that And then trust. Yes. It's just like we did a kitchen remodel or and like let's say you needed all your appliances to be way more energy efficient, effectively reducing your utility bill, that's an asset that the house has that is transferred with the new owner. Got you. And theoretically, you guys might get paid off at that point. So just a follow-up, I mean, on the asset base, the $5,200,000,000 I mean, as you innovate, what happens or what is the implication for the value of those assets that you're carrying? So I actually see it as a massive uptel opportunity. We have 300,000 customers installed. TahoeLil 2 is now out and it's actually very, very simple retrofit procedure for us to go back to the 300,000 customers and upsell them at Powerwall 2. So I actually see that I'm sorry? Yes. Yes. So as I see over time as we continue to innovate with other energy related products and as the customer count increases, we're able to derive additional economic value by providing additional energy products to our customers with positive food being the first example of that. Yes. I think there's like maybe too much complexity. This is like way simpler than it may sound. It's just like you made your house better by, say, having a sold roof or Powerwall, it adds the asset value of the house. It's either purchased for cash or loan. Can be provided as a lease. If it's provided as a lease, then somebody could pay that off at the time of selling their house if they want or transfer it to the new owner. Okay. And then just lastly, another simple question. I mean, as we look at the sales of all three products together, the roof, a car, a Tesla car and the Powerwall, I mean how many of those sort of triple plays do you think you'll be able to sell relative to what you're doing right now? And really, over time, will that be just 100% of your sales? I don't know how much it's a big number, but I think over time I think most customers are going to opt for all 3. And even if they're going to opt for all 3 all at once, they over time, I think they will. Yes. I think upfront the solar and storage will be opted in at a very high percentage. Yes. Very high percentage. Yes. And then The roof is tied to whether they need a new roof or not. Right. It's worth noting, SolarCity's got 300,000 customers and can sold customers. Tesla has around 170 approaching 180,000 customers all in. So there's a pretty significant base to cross sell product there. And our next question comes from Vishal Shah of Deutsche Bank. Your line is now open. Thank you. Good afternoon. This is Rachel on for Vishal. We have a question about the revenue synergies and the cash generation. So on the solar side, the existing asset, I think, do you guys think about the existing asset maybe generating additional revenues than the traditional standard sense in terms of the utility services, solar plus storage and some additional services and revenue synergies that you guys outlined today? Yes. So in that number that we put in the S-four, the cash generation from SolarCity. Just as a reminder, that was the plan that we created as a standalone. It does not include the synergies and it just passes as standalone. So with the synergies, that number is conservative and actually will increase. Yes. I do think there are additional products. I mean, additional products that I'd like to bring out that I think people will find counterintuitive at first and then find it obvious. This seems to be the pattern. It's character, if it's stupid, it's never going to work. Okay, now it's obvious. It's like a remarkable how that the same people who thought it would never work, then think it's obvious. The same people. That's crazy. And our next question is from Colin Rusch of Oppenheimer. Your line is now open. Given that you said much of the CapEx was spent in Buffalo, can you walk us through how much total has been spent in Buffalo? How much has been spent by the state of New York? And when you expect delivery on that equipment? So the State of New York has I think that's all valuable information. They've allocated about $750,000,000 towards the building new equipment and the equipment in progress or a lot of that the majority of it should arrive by the end of next year. Yes. So how much has arrived already at this point? I think that the so I'd put it at maybe 15%, 20% or so. I don't know the exact number of my heart in terms of financial value, I think, surround that number around 15% or 20%. And how much of it's been ordered at this point? And would you expect the equipment set to change materially as you start to layer in a new partner into that project? I don't think that the changes will I don't think there's any material changes. The approaches that both Salabo and Panasonic have 3 2 cells are actually the same kind of base cell design. And then there's components of each of the technologies that we're going to take and kind of create a hybrid version of each of them. So we expect all of the equipment to be perfectly applicable to the new cell process. But it's pretty exciting. I'm more ahead of carve it. Like I said, we'll have the best cell at the lowest price, which is just as we announced the best battery cell at the lowest price. That's there is a high energy density cell at the lowest price. And so what do you think that price really is? If we're selling into the U. S. Right now at $0.40 a watt for those modules. I mean, is this are you guys going to be able to reach $0.30 or $0.32 a watt as you start to ramp up at scale? So I think so you're talking about 40%. So when we look at it, we look at our cost compared to the price that we could alternatively get it from. And we're comparing your price as kind of commodity and solar panels with the flow efficiency. We think that we can get to that price point of the $0.40 a watt over time in watt scale. But with panel efficiencies in the 22% eventually approaching 24%. That's a very important distinction because you have to consider the labor cost of putting the panels down. So lower efficiency panels require a lot more labor, a lot more other material in order to get the same power output. So if you have a 15 percent panel or 16% panel compared to say a 20% or 23% panel, it means you need 50% more area. So all the other balance of this and stuff gets and labor, transport, logistics needs to be weighed into the cost per watt. Yes. And that's It's a very significant factor. Yes. I mean just like conservatively, the direct cost reductions for high efficiency panels are estimated around $0.15 a watt in terms of labor, mounting hardware and so on. But also there's if you got to think about the differentiation in the eyes of the customer as well, if we have a superior product, they will always pick up. So the differentiation, I think makes a difference as well. Exactly. You don't want to compete just on price point. That is not a good that does not make for a good business. I'm just trying to put some metrics it. And so I guess maybe we can revisit it on the SolarCity call given that we're short time today. Thanks so much guys. All right. Our next question is from Brian Johnson with Barclays. Your line is now open. Yes, good afternoon. I have a couple of questions, on the debt side of the combined company and understanding of course we'll see more when sources work. So the first, if we think about your statement that the recurring cash flows exceed non recourse debt by $2,000,000,000 at the end 6% discount rate, How much of that $2,000,000,000 is from the renewal assumptions for after year 2020, which has seems to have a gross value of 4,800,000,000 dollars So looking at Q2 numbers, Your contracted number is $3,100,000,000 and then your uncontracted number is $900,000,000 so total of $4,000,000,000 And then your debt on that is $1,800,000,000 which leaves us $2,200,000,000 Okay. So it would be about $1,100,000,000 excluding the renewals. I guess second related to that, given what you've shown with the solar roof, how do you think that's going to affect the renewal rate on the Solar City panel leases? I know it's 20 years out, but since we are dealing with NPVs going out 30 years. So the it's a high probability that many of our customers actually may need to replace the roof within a 20 year period. That happens today. We just remove the panels. We just put it back on. Remember the panel is essentially paid for by the customer. Yes. It could be repurposed. Yes. It could be repurposed. But we do expect that depending on the customer's roof that a healthy percentage renew. Okay. And third question It should be clear like it's going to take like a long time to really deploy SolarEdge at scale. But ultimately there's in an order of $70,000,000 $80,000,000 residential. If you could always take North America, including Canada and Mexico, man, it's a big number, maybe $150,000,000 something like that group. And so just the sheer scale of that is mind boggling. And yes, so that's just South America. Yes. I'm just getting at some of these customers, if it does take a while, but if solar roof is successful when the renewals come up in 20 years, that may be a better option for the customer than leaving the panels on an aging leaking roof. It certainly will be for some number of customers. But then we will take the panels and put them on the commercial installation or put them on some other customers' roof. So essentially you don't have a trade in value of your roof. It's not 0. Like those panels still work fine. Really key point to understand is it generates electricity. So there's real value in those panels. Yes. But if you have somebody who says they want to go to solar glass roof, we just take the panels and the electrical equipment supporting the build style panels and grease them on other houses. It will take a long time for everyone, they want to do a solar roof. It's not going to be but yes, not be everyone. And then the panels are still going to make sense for any kind of flat roof installation, where you don't have where things are not visible. So an intact commercial installation was on a flat rooftop or on a residential situation with flat rooftop, there's really no point in having something as beautiful from an aesthetic standpoint if nobody can see it. And final question related to debt. SolarCity has converts. My reading of those, which may be wrong, is they're payable in cash given where the stock price is and where the conversion comes out to. A, is that right? B, will you downstream cash? C, can you actually convert that to settle with additional shares? And just how should we think about as from the Tesla level, the refinancing that Solar City? And actually as part of that, can you confirm that it's going to be a D sub and that Tesla is not going to be guaranteeing the debt of the new SolarCity sub post acquisition? I mean, SolarCity was definitely under any of the debt obligation, of course. But I'm not sure what you mean. Well, I guess one technically will you still be is the plan to keep SolarCity as a bankruptcy remote subsidiary of Tesla as your current ABL seems to indicate that you have 2 what's that? Should be one company. But I think that's really I see zero chance of Sol City going bankrupt, 0. Right. So then will Tesla downstream money to pay to refinance or will SolarCity be out refinancing the converts on its own? It's just one it's going to be one company. And just to address the actual payment of that convert, so remember this is in 2 years' time. The company generates roughly $200,000,000 a quarter of NPV, future value. We've now proven them. We can monetize those cash flows. And over the last 120 days. We raised cash equity. We did a Securitization, yes. Securitization or selling the financing the future cash flows either through debt or through an equity investor coming in and buying these cash flows. Yes. Yes. There's like a lot of confusion between securitization or selling off of cash flows of product and general corporate debt. Yes. So none of this is corporate debt. Right. Just to be clear. Yes. That's why it's focused on the converts, which is corporate debt. Solar bonds are a bit unfortunate. Solar bonds, but when I'm talking about the What piece of the puzzle? When I'm talking about the $4,000,000,000 and then we're talking about the 1.8 dollars That's not corporate debt, that's asset financing, just to be real clear on that. And let me just non recourse asset financing because it's just yes. And so when if you're looking at the run rate of the company, when you look at the net present value that we generate every single quarter, it's roughly $200,000,000 And so just maintaining that run rate, we'll be able to monetize enough cash flows to essentially cover the converts. Okay. So that's the point. Yes. And this is Jason. Just to add one more point on top of that. So SolarCity has 2018 converts. We also have 2018 converts. And our original issuance on our converts is $660,000,000 We've actually paid down more than $450,000,000 of that convert. So we've done that in the last 90 days. So we significantly derisked 2018 in the capital structure moves that we've made over the last quarter. Okay. Thanks. All right. Everyone, we are at the 30 minute mark here. Do you want to take a couple more questions? Just do a few more. Okay. All right. Donovan, let's take the next question. Our next question is from Charlie Anderson with Dougherty and Company. Your line is now open. Thanks for taking my question. One of the comments in the blog post on revenue synergies was that customers have overlapping product interest. I wonder if you have any statistics to back that up, whether it be Model 3 reservation holders overlap with maybe the SolarCity pipeline, anything there would be helpful. Thanks. We've not surveyed our customers on this. So it would be it's somewhat speculative, but I don't know if Len, if you have any idea on that. Yes. I think the overlap on the Model 3 will be quite dramatic. The Essent Access, I think, is a fair amount of overlap there, but probably not as much as you'll see in the Model 3. And then as a follow-up, I wondered, Elon, I wonder if you could maybe compare and contrast the outlook for Tesla Energy with and without SolarCity? I'm concerned there's probably 2 very different outcomes there potentially from your perspective. Yes. I mean as we've expressed before, I'm pretty optimistic about where the vote is going. And the early vote so far have been overwhelmingly in favor. But we find a quite strange if that doesn't turn out to be the case. But we would just have a more planky product offering where we'd be selling batteries and then trying to sort of sell us if you'd be selling solar systems, they wouldn't be well integrated, they wouldn't be sold as a package. We really wouldn't have a good basis for I think for favoring SolarCity because would that be a separate company? So it'd be kind of a kind of forced into an arm's length situation. Actually makes it harder. It's very difficult. We went through this earlier this year with, say, the Hawaii utility deal, where it's a combined solar battery system. And which runs through the InterPlan Directors of both Boards, Escrow's long process of approval, verifying it's an OMSL transaction, slowed down the whole thing. There's no way we can scale that. Like we're going to do over time 100 of utility level solar battery installations. We want this to be a seamless integrated system, near both utility level, commercial level at the consumer level. And it's just very unwieldy do so as 2 separate companies. Thanks so much. And our next question is from Joseph Spak with RBC Capital Markets. Your line is now open. Thanks. Just a quick clarification on Rod's first question. I didn't quite catch it. On the $500,000,000 is that going to include the cash that will be on hand at the close of the deal? No. That's new generation. The generation of cash, yes. Okay. Thanks. And then to follow-up on the last point. If for some reason the deal didn't go through, would you look to set up a partnership or a joint venture to sell the solar storage combination or potentially even look for multiple partnerships? I don't think we can really do a joint venture. I kind of hate joint ventures. I think they rarely work. And I'm not sure we have a good basis for doing so unless we're a 1 company. I mean, we're working jointly. So it would be, I guess, working with kind of a heterogeneous set of companies. And it would be a worse product, worse experience for the end user. That would be strange. End users can tell the stores, Sees, Solastry or whoever it is, etcetera. We don't have some smorgasbord of store offerings in our stores. It would be strange. Would you go into an Apple store and see like 6 different cell phones getting sold? And our next question is from Julien Dumoulin Smith with UBS. Your line is now open. [SPEAKER JULIEN DUMOULIN SMITH:] Hey, it's Julien here. Good afternoon. So a question, can you comment real quickly around the remaining obligations to New York in terms of the $5,000,000,000 of the 10 years? Just comment, is that something that would be contemplated as being kept at the Solicity Tesla level, under any Panasonic deal? Or is that something that was negotiated as part of the Panasonic off take? How do you think about that? So just to be clear, those are basically the cumulative COGS of what would be the Tesla Solar City and Panasonic partnership combination. And it also includes the operations that Salsity currently has in New York. So we actually think that our total COGS will be in excess of that number over the 10 year period. And none of these relationships are really going to kind of affect it one way or another. So just to make sure I heard you right. So you're still confident you can hit that number. It still remains with the company, but even pro form a for any deal that you guys engage with Panasonic, you still feel comfortable? Yes, absolutely. All right, great. Excellent. Thank you. Thank you. Thank you. Thank you. Thank you. Thank you. Thank you. Thank you. Folks. From Philip Shen with Roth Capital Partners. Your line is now open. I will just take maybe one last question here. Thanks for squeezing me in here. Why did key members of the Saliva team leave so soon after the acquisition and ahead of the commercial ramp up? So yes, there was one member of the Salabo team and I think we were just to be honest, get it in a different direction. We still maintain a good relationship with him. But yes, for kind of a variety of different reasons, we were just kind of wanted to take it in a different direction. But it has nothing to do with our planned ramp necessarily. Do you I think you addressed this earlier, but do you continue to plan to move forward with the saliva process? Or do you expect to find I think you mentioned a hybrid cell that's possible between saliva and HIT the HIT cell that Panasonic produces? And if that is the case, do you plan on making them a hybrid? At a high level, can you explain how that will happen? Sure. So we're basically going to get bring the best learnings from both of the teams. So I'll give you an example. So saliva has kind of perfected a heterojunction cell on a using a 6 inches wafer, okay. And Panasonic is yet to transition to a 6 inches wafer. So we'll kind of take flavor's learnings on 6 inch and apply that to the learnings that Panasonic has kind of achieved over the years scaling heterojunction cells to gigawatts and beyond. Okay, great. And as it relates to the solar roof, a number of companies have tried to pursue solar shingles over the past number of years, Dow Energy Convergent Devices, etcetera, and they've all kind of come and gone. What are you doing fundamentally that is different? And what are your cost targets for the solar shingles? And what is the timing of those cost targets? Dude, you just threw in 3 questions there after Stigget. That was the last one. Thank you, Lon. We definitely appreciate it. And I know there are lots of people interested in the answers to these questions. So definitely appreciate it. First of all, I've never seen a solar roof that I would actually want. Have you? Even one? I haven't. Yes. I mean, you took the Dow and all those ones, they just you can aesthetically they're weak. I mean, they're not they're worse than a normal roof. Every one of them that I've seen is worse than a normal roof for that exception. So like unless you're going to beat no roof on aesthetics quite well there, none of them did that. And then just the attention to detail, the aesthetics, the integration of the cell with the right type of glass, it's just always been done poorly. I just don't know a single case where it's been done well. And I've been really quite keen on doing that for a while. Like I mean, I have solar panels on my roof, but they're kind of in an area which is hard to see. So I have my roof is French slate roof. So that's one of the tile styles I want to do is like could we make a French slate a roof that looks like French slate that I could replace my entire roof with. And it would be aesthetically better. And we're able to get that super hard. And with the manufacturing process, they were confident it's going to be very low cost. It's basically high volume glass. I mean it is using a lot of techniques from the automotive glass business. And in case it wasn't obvious with the announcement, Tesla has created a glass technology group, so which were some really phenomenal people. I'd like to first elements of that on Model 3. So it's just like glasses, it's not expensive. It's actually in volume glass is very cheap and very resilient. So and then applying kind of the hydrographic painting, but hydrographic coloring also fundamentally an expensive process. We're using the micro louvers to provide earth tone colors. Also we're very low cost and volume. Like none of these things are fundamentally expensive. I don't know why nobody has done this before. It blows my mind. The other area why the other time, Phil, ignore the aesthetics. Just to say it was beautiful. Their distribution process is another reason why I don't think it succeeded. They went back, creating the product, going through distributors who then sell to the installers who then has to get installed. So you have multiple people in the value chain who each add a compounding margin and then the end product was just too expensive. Yes, exactly. It's sort of everything overhead and profit to like this power with a lot of inefficiency in this distribution chain. And yes, I mean it's just if you look at the fundamental cost, what's the cost? I mean, just like a ground up analysis, like what's the cost of glass, cost per pound, cost kilogram of glass, creating high strength glass. It's incredibly low. It's basically it's processed sand. How much would cost to do hydrographic printing in volume, also very low cost to reduce micro louver foam in volume, very low. It's basically plastic or very durable plastic. And then it just the trials that need to snap into a back end skeleton structure, it's like snapping a light bulb. It's really simple. It tells me why hasn't somebody done this? I don't know. I wish they had. And if they had, we wouldn't bother. But for some bizarre reason, they're not. All right. Thank you very much everybody. Thank you for joining us today. We look forward to chatting with you in the future. Ladies and gentlemen, thank you for participating in today's conference. This does conclude the program and you may all disconnect. Everyone have a great day.