Okay, well, good afternoon, everyone. I am Sidney Ho here at covering Semiconductor, Semi Cap Equipment, and IT Hardware at Deutsche Bank. The next company we have is Western Digital. It's my pleasure to introduce Western Digital CEO, David Goeckeler. Welcome.
Thank you, Sidney. It's great to be here. Thanks for having us.
Great. Before we start, I'll turn it over to Peter to read the safe harbor.
Okay. Well, thank you, everybody. Today we will be making forward-looking statements based on current assumptions and expectations. I ask that you refer to our most recent annual report on Form 10-K and our other filings with the SEC for more information on the risks and uncertainties that could cause actual results to differ materially. We will also be making references to non-GAAP financial measures, and a reconciliation of the GAAP to non-GAAP results can be found on our website. With that, let me turn it back to you.
Great. Well, let's start the Q and A. I think, I want to address the elephant in the room.
Okay, the elephant?
It's been about 15 months since you announced the strategic review. We understand you can't talk too much about the details on the status-
Right
... but at a high level, what are the priorities you're trying to achieve? And can you give us an update as to the timing of the conclusion of the strategic review?
Yeah. So first of all, strategic review has been very active. It's been a very thorough process. We're evaluating a range of options to unlock value in our business. I think at the highest level, that's the way we think about it. We believe we have two great franchises. Quite frankly, over the last year, in the depths of this downturn, I think we've even seen better performance from those versus peers. And we're, you know, we're going through a range of options of how to—how we unlock that value for all of us, I think is the best way to think about it. You know, as far as timing, we haven't said a lot about timing because I, I'm very committed to... We committed to this process.
We committed to do a very thorough review, not put artificial deadlines on it, and we haven't done that, and we still won't do that. But I think it's fair to say we're in the homestretch at this point, right? Without saying exactly what the timing is. You know, we've evaluated a lot of things. We're looking at implementation scenarios, things like that. So, we're getting there. We're making progress, but maybe one way to think about it, a kind of corollary question I get sometimes about our balance sheet. We have some refinancing to do of a convert that's coming due in February 2024. We fully expect to do that in the public markets before the end of the year. And to get that done, we have to cleanse ourselves of the material, non-public information.
We expect this all to kind of come together in the next several months.
Okay, so it's probably realistic to think that something's going to happen before the convert refinancing?
Yes, definitely.
Okay.
We want-
Got it.
That's not the driving factor in any sense of the imagination, but it's one of the things we think about. We want to be able to do that in the public markets. It's something that's top of mind for us. So, you know, the strategic review is very active, driving forward. Like I said, kind of, entering the homestretch phase, as we continue the analysis.
Okay. No, no, that's helpful. Maybe digging a little deeper in there, understanding there's a lot of different options. Can you talk about the range of outcomes? Should we could expect at the end of the day, there will be maybe some rationalization of capacity? Is that the goal is to gain share, actually gain, to increase capacity? Anything else you can add to it would be great.
You know, I think we've-- You know, we'll-- I'm sure we'll talk as we go along here, we'll talk about the two franchises. I think we've been doing... We've been making a lot of changes in our technology roadmap. We've been making a lot of changes in our cost base. We've been making a lot of changes in the way we're organized as a company to be more efficient. We've been bringing a lot of portfolio changes. We feel like the portfolio is in great shape in both businesses. I wouldn't necessarily think of the strategic review as changing the trajectory of these things. I think that we have two great franchises.
We're thinking about, like, how do we structure the business in a way? Is there a way to structure the business where we can unlock the value, value that is, that is in those franchises? Like I said, we feel very good about where the, where the portfolio is at this point.
Got it. Maybe one last question, and I'll move away from this. At a high level, what are the major moving parts that needs to be settled before a strategic review, the conclusion can come together?
Well, I mean, it's just as simple as we get to develop conviction. We're going through a large range of options for the business. It's very, very robust review, lots of parties involved. We've evaluated a lot of options. We'll talk about more of that when we get to the end, but, you know, there's a lot of different moving parts in a business the size of ours, right? Global operations, you got to look at all the financial implications. Just make sure that when we get to if we get to a different answer, we have an enormous amount of conviction, and we've thought through all the implications of that.
Okay, that's great. Maybe I'll move on to some near-term businesses.
Sure.
In terms of the end markets, can you give us an update on the various end markets since you reported earnings in July? Where do you think the true demand is? How much excess inventory is out there? And it looks like NAND prices have bottomed or may have started to increase in certain markets. Can you maybe address that a little bit as well?
Okay, let's go through the markets, then we'll go through the NAND piece. There's a lot in that question. So, you know, we have a lot of visibility in the business, from consumer to the OEMs and PCs, smartphone, all the way to the web scale players, of course, the biggest data center operators in the world. If I walk through those markets, a little bit of a first in, first out kind of view of those. Consumer was kind of the first thing we saw a weakness in last year. Consumer has stabilized. Demand trends there are predictable. You know, NAND pricing is still depressed, but we feel good about where our share is, where our brands are. That business is kind of operating as usual at this point. Next, PCs.
PCs were the next market we saw, kind of where we had depressed demand last summer. We think we're through the inventory correction there. We're kind of building to demand and demand in that market, so I think that's in good shape. Smartphone market, kind of the same, right? Maybe a little more lumpy, given the size of the players in it. And then the cloud market is one where we're still got maybe another quarter or two of inventory digestion, other things to go before we're fully out of it. So that's how we think about it. In the cloud market, you know, before I go to NAND, you know, one of the things that's going on in the HDD business is we're driving to a build-to-order kind of model.
That's a six-month lead time on what it takes us to build a drive. And so that's giving us more visibility as we start to look into the first half of the year and giving us incremental conviction in the last couple of months that we're going to see improvement there. Now, on NAND pricing... Yeah, NAND pricing, first of all, cost declines. You look at our cost declines. You look at price declines over the last several quarters, we've gone 22%, 20%, 10%, 6% on down. So it's slowing down. The declines are slowing down. I think we'll still see a little bit of decline, but it's. We're finding the bottom here. I think we're going to go through a couple of quarters of the market stabilizing, and then we'll inflect up as we get supply and demand in balance.
For us, in particular, I think we've done a very good job of kind of making sure we get our fab utilization aligned to what the demand we see in the portfolio, keep our inventory in check. One of the things you saw last quarter was a big improvement in our inventory position. So we feel good about the way the market is shaping up. Increased volume, prices stabilizing, market stabilizing. And we just, you know, when the data center market starts to come out of this, I think we'll see a full inflection of the market.
Got it. Got it. That's helpful. I think you addressed the next question I have, which is on the cloud digestion. Sounds like you've talked about inventory, maybe a couple quarters ago, and we've seen that kind of played out before, and then things are continuing to get pushed out.
Right.
The answer to that, to my question, seems like it's the build-to-order. Is there anything else that you would point to that gives you confidence that this time is real, that we'll get to the bottom of it?
Yeah, it has been a prolonged decline. I mean, last quarter, according to our calculations in the capacity enterprise business was the lowest TAM in that business for 70 quarters. So there's no doubt we're in a very severe downturn, but we believe we're at the bottom of that. We think we're going to see sequential improvement as we move through fiscal year 2024. As you said, our conversations with customers give us confidence in that. Also, you know, it's also fair to say, and I've said this many times before, the customers we deal with are very, very large customers, or they're idiosyncratic. They all have different strategies or different points in their own consumption and digestion cycle. But when you add it all up, we see incremental improvement from here.
Got it. That we all look forward to the bottoming of that.
Sure.
But, one of the other questions I'm getting a lot is from AI. So, there, how are you thinking about AI, that that's as an impact in the near term, in the longer term, especially when you think about some crowding out impact in the near term?
Yeah, I'd say I'm extremely optimistic about it. I mean, I think it's just the classic cycle of innovation happening in a world where we have this kind of frictionless cloud distribution model of technology. I think this is very exciting for everybody in the technology ecosystem. Obviously, people are going to benefit at different points in time as this technology is rolled out. And so, clearly, right now, there's an enormous amount of energy being put into: How do I get this capability into cloud infrastructure? That's very good, because the faster that happens, the faster it's in all of our hands as individuals, the faster it's integrated into our desktops, the faster it's integrated into all the other use cases it's going to be integrated into.
And I think, again, in the last 10 years, the way the cloud has been built out, it just allows the world, when a new technology comes along, to distribute it to billions of people very, very rapidly. And we're in the very early days of that, of generative AI, and it's extremely exciting. Now, again, the, how is that going to impact different businesses? Well, if you're in that early phase of all the processors you need and all the compute power to do those calculations, that's going to be the first wave of deployment, and we're seeing that. And there's no doubt that there's some sense of that is attracting a lot of budget. But once that gets deployed and gets in all of its hands, then for our business, I see that as we're essentially automating the ability to create data. Right?
We're putting that in everybody's hands very quickly. So the faster this happens, the better, as far as I'm concerned, because as we get all of that new technology into people's hands, we're going to be able to create more data. I think the way large language models work, you train them on data of what's happened in the past. That means all the data you're generating is more valuable, so we're going to incrementally, marginally store more of it. So I think that cycle is starting. We're at the very early days of it, and I'm extremely excited about it, about what it's going to... the impact it's going to have on our business.
Okay. Maybe switching subject a little bit. I, we all know the current environment is pretty tough across both segments. Can you talk about some of the internal efforts you have implemented to weather the storm, whether it's utilization cuts and the OpEx cuts? And I know even before that, you realigned some of the hard drive and solid-state drive businesses. How does that all kind of impact your relationship with your customers going forward?
So, all right, there's a lot to unpack there, Sidney. Give me a little time on this. So first of all, let's start at the end. We organized the company in a way where we had very clear focus on the portfolio of hard drives and NAND. So, you know, the first thing I did when I came in the company, it's been three years ago now, was create business units, bring in general managers, and their job is to think about: How am I going to organize my portfolio? How am I going to build a roadmap of technology that does the best job of satisfying my customer and creating value for our shareholders, right? They sit right in the intersection of that, and that's gone extremely well.
I think we've now had three years of executing that, and if you look at our product portfolio, it's been as strong as it's ever been. In the HDD business, you know, we launched 22 TB CMR and 26 TB SMR. Now we've launched 28 TB Ultra SMR. So that product portfolio is emerging as the leading portfolio in, in the drive industry, and we're not done. We're going to keep going, right? We've got a very clear strategy of how to continue to drive that, that forward. In the, the flash business, our portfolio strategy, I think, in the downturn, has shined. Our ability to... You know, if you look at our gross margin performance versus the rest of the industry, there's a significant gap, and that's because we built out a portfolio where we have a lot of optionality.
We have a very strong consumer business with very strong brands. We've got a great client SSD portfolio. We've got a great mobile portfolio. We're building out an enterprise SSD portfolio. Spent a lot of effort on gaming. That's been a big, you know, a big emerging strength of the portfolio. So I think that, you know, that change in strategy, our change in organization several years ago, that is showing big benefits now, of those general managers having the ability to put their fingerprints and have enough time to develop products to change the trajectory of the portfolio. How does that help us navigate the downturn? The way you do that is a rigorous process of ROI analysis of what you're going to invest in, right?
So when we do have to start pulling back on investment, we know exactly where to pull back that's going to have the minimum impact on the business. How do we stay close to our customers? Where, what, you know, where if we look at one project versus a different project, what the impact is going to be on the market to us and our customers, and allows us to have a very, very good relationship with them and be able to flex that portfolio in a way that's, that's very predictable, and you're going to make the best economic decisions on how you do that. So that's, that's always. That's, that's a continuous exercise that never stops. You just keep repeating that over and over again.
As far as navigating this downturn more broadly, you know, in the flash business, I think we've done a very good job of, like, understanding where demand is, what it's going to be for our portfolio, modulating our utilization of the fab to make sure, you know, kind of the spring in between those two is inventory. And I think our inventory has been in a very good position throughout the downturn, and I think, you know, we're probably in the best position in the industry as far as the amount of inventory we have and our ability to manage that. So again, to kind of understand exactly markets, product fit, where demand is going to be, then get the production in the fab, nodal transitions, right, to make sure those are as aligned as possible.
I think we've done that extremely well over the last several months, and kind of the quality of the portfolio is coming through. Same thing on the drive side. You know, we've been taking down utilization, but not just taking down utilization. We've made the decision to just remove capacity from the system. You know, the drive industry for the last decade has been in this transition from a client business... More than a decade, 15 years, has been in this transition between a client business and a cloud business. High number of drives, smaller to smaller, you know, smaller number of drives that are much larger. So over the last year, we've removed a significant amount of unit capacity from our drive infrastructure. So just taking the fixed cost out of the system, right?
So that when the volume does come back, it'll be a more profitable business. It'll be built on top of a smaller fixed cost infrastructure. So we've been pulling all those levers to navigate the downturn. We can talk about all the financial stuff we've done as well, but from a structural point of view, it's make sure we stay aligned to the market as best we can, and then also reset the size of the business for where the market is at. We've been doing both of those.
That's helpful. Maybe that's a good segue to the next set of questions. I'll promise it won't be 10-part questions this time.
That's all right.
But, I would say, if I go to the... Maybe I'll, I'll spend a little bit of time on hard drive and flash, but I want to start with hard drive because it does feel like, there's some structural changes going on. Your competitor recently talked about shifting the business more to build to orders, and they also suggested raising prices for certain SKUs, even though the market is kind of not very good at this point. Do you see that as a sign that there are some changes going on in the market? And while we're at that sub-subject, I said only two parts this time. How does the build to order any different than long-term agreement that you, you guys are already doing right now?
... Okay. You said it was only going to be two parts.
Two parts.
Okay, so, first of all, let's talk about the HDD structurally changing. I think you're 100, 100% correct. The industry is changing in some fundamental ways, right? Let's start from the products. Even when I came in, I mean, this industry has been around a long time, but even when I came in the industry three and a half years ago, it was kind of this, "We're going from 14 to 16, and 16 to 18, and 18 to 20," and kind of everybody went at the same pace, and there was a lot of discussion, "Who's first? Who's second? Is somebody a month ahead of somebody else?" And it was almost like this scorecard that was being kept.
That's kind of all changed now because the industry's gotten, you know, both on the customer side and on the supplier side, and that there's different strategies being implemented now about how to drive areal density and how to drive capacity. Western Digital has taken a strategy of saying: "Look, we're going to go from... We're going to implement ePMR, then we're going to implement OptiNAND, then we're going to bet on SMR and ultra SMR, and that's going to give us a very predictable roadmap as we drive up into HAMR." Right? So now you're starting to see... And then on the customer side, they are starting to say they're not just all taking the next cohort. There's different strategies. Some big customers are, more and more big customers, quite frankly, are like transitioning to SMR. Some are not.
Some are at different capacity points. Some have hybrid drives between SMR and CMR. So you're seeing, in some sense, a much more complex market of how to fit the pieces together. And so if you look at the market right now, we have customers consuming 18 TB drives all the way up to 26 TB drives in volume. So how you think about that market has to change, right? It is changing right before our eyes. Now, on the build-to-order, yeah, that's a big... A big piece of this transition I talked about of saying: "Hey, we're just, we're not just going to grow into this capacity we had from client. We're now going to reset to a lower point. So now we can produce fewer drives.
We want to produce the drives that the market needs." The more insight of where our customers is going, the better we can all plan for that transition, right? So that when you need a drive, we have it available, and we don't have too much infrastructure or not enough. So you're right, long-term agreements were a first step in that direction, right? And it was like: How do we get more visibility into where our customers are going? That, that was a good phase of the market. Now we're going to a different phase, which is, "Hey, we got to be more planful about this." You know, maybe the downturn, you know, accentuated that. And, you know, now we're talking to our customers, "Hey, it takes us, you know, six months to build a drive or more.
Like, we want to hear from you about where your demand is going to be six months from now." And customers are accepting that conversation. So, that is... And again, part of this fact that there's a lot of different capacity points now, it's not just everybody buying the same thing, exacerbates that a little bit. So the industry is changing, I think, will lead to a much healthier industry for everybody.
Do you think that will translate into margins at some point when all these LTAs, not LTAs, but build-to-orders?
It does. I mean, that's our role. It's like the way you drive margin in a technology business is you build a better product, right? You build a value proposition that your customer values, and that's what we're very focused on doing. That's why, you know, that 26 TB drive is going to ramp very fast this quarter because it's a great product, and it delivers a great TCO to our customers. It's very solid technology that we can produce at scale. And so if you do that, then you're able to drive margin on that. So when we get past this, you know, the volume is going to come back, right? The long-term thesis on data growth hasn't changed.
We're in a lull right now because of a whole bunch of factors, you know, overconsumption during the pandemic, some efficiency changes, you know, a little bit of crowding out, as you talked about, but that will come back. As it comes back, it's going to be on a better cost structure business for our side. We've got a long roadmap to continue to deliver better and better innovation to our customers. As both of those things happen, it will become a more profitable business.
Okay, that's, that's great. Another debate that is ongoing with investors is that one of the all flash array peers have been talking about there will not be any hard drive systems being sold in five years, because the operating cost of flash is going to be so, so competitive. Clearly, you guys have hard drive, you have flash, so you may not be completely-
We have some insight into this question.
Yeah, but curious, how you think about that?
It's where do I start, I guess, is the question. So first of all, this whole thing about power, like, that's a, like. People need to do their homework. The amount of power on, consumed by a hard drive and power consumed by an enterprise SSD is roughly the same. Depends if it's an idle or read-write state, there can be differences, but when you add it all up, they're roughly the same. So that's not any kind of thing that's going to drive a transition. Look. As long as the hard drive has a innovation roadmap of continuing to deliver better density, it is going to be the storage mechanism, the predominant storage mechanism in the cloud. That is not going to change, and there is a long roadmap on being able to deliver that.
So I don't have any concern about this issue at all because we're very close to our customers that buy both of these products, and we know exactly how they use them in the mix in their infrastructure. And we have an enormous amount of conviction they are complementary technologies in the data center. This has been a confusing point since I started this conversation many, many years ago, which is, there's a tendency to conflate what happened between flash and hard drive on the device with what's going to happen with flash and hard drive in the data center. They're very different. On the device, they were substitutes, flash substitutes and hard drives. There's nobody debates that. In the data center, they are highly complementary technologies. They are both growing.
They are both growing markets in the data center, and that will continue for a very, very long time. And if you want to know the economic reason, or if you want an economic data point of while that's the case, if anybody that owns flash fabs believed that, they would be investing very heavily in flash fabs right now, and people are doing the opposite. So we're trying to take investment out of flash to get supply-demand balance right. So there's all kinds of reasons. We could talk about this for a very, very long time, but these technologies are highly complementary in the data center, and it's going to be that way for a very long time because they both have a very strong roadmap of continued innovation, of bringing a better value proposition to our customers.
Got it. Speaking of roadmap, you can't talk... Well, you kind of have to talk about the hard drive roadmap between HAMR and PMR. Your competitor has been a little more vocal about transitioning. Sounds like you guys are, it will be maybe a couple of years after that. Just curious how you think about the competitive landscape if you decide to move, that won't transition until a couple of years later? I don't know the right timing is, but love to hear your thoughts.
I think it's, you know, as what I said earlier, that the drive market is changing, and the fact that you can't, it's not just everybody going from one capacity point to the next capacity point to the next capacity, to the next capacity. Right now, it's like a much more, much more full roadmap with lots of different technologies in there. HAMR is certainly one of them. HAMR will have, you know, we're believers in HAMR, right? There's no doubt about it. We've been working on HAMR for 20 years, like everybody else in the industry. We have made other technology choices in our product portfolio that is going to lead us into HAMR, specifically the ones I mentioned earlier, ePMR, Ultra SMR, OptiNAND. That technology is being validated by the market as we speak.
Every quarter we go, you know, we're building a more profitable business. We're taking a little bit of share. Our goal is not to take share. Our goal is to drive profitability. We have a more profitable business that's growing. That means the technology strategy is working because we're bringing a better proposition to our customers. Again, we just announced the next step in that, in 28 TB Ultra SMR. HAMR's time will come. It will be a very successful technology. That transition will take years to happen. We are just starting to walk into that. Maybe as a corollary, you can go back and look at the transition to helium drives, you know, many, many years ago, which was a fundamental technology change, and in hard drives, and it took many, many years for those drives to penetrate into the system.
So we feel like the strategy we've put in place is an extremely strong strategy that allows us to get there, right? And have all the capacity points filled in with technology that is proven, and we can manufacture at scale, and our customers are telling us, like, they're voting that they like that strategy. Ultra SMR is being adopted by, you know, the biggest cloud vendors in the world as their technology standard.
Okay, well, maybe stay on technology roadmap a little bit. If I switch over to the demand side, you officially announced BiCS8. I think it's 200+ layers, 218, I think.
18, yeah. You got it.
In March, so I got it right. Based on CMOS bonded to array technology, talk about the overall benefits of this technology and maybe how do you give us an idea about the timeline of productization.
So first of all, we're very excited about this, right? I'll, I'll say that I think the technology team has done an unbelievable job. This is where... You know, I'll say a little bit about the JV before we get there, before we talk about BiCS8. The JV is just a wonderful construct. The relationship between us and Kioxia is extremely strong. We invest together on our technology roadmap and have for 23 years. That leads to an enormous amount of benefits for us, benefits of scale, benefits of investment, and I think we've had decades of sustained excellence in innovation in that technology roadmap that has supported our business. We can talk about that from a CapEx point of view at some point, maybe.
The latest chapter of that story is BiCS8, which is, how are we going to continue to scale NAND technology and continue to stack up, you know, continue to stack up layers? And, you know, we saw a point where, you know, in traditional circuit under array, you're basically building the CMOS, and then you're stacking the NAND on top of that in the manufacturing process. Here, we have separated that into two separate processes. You put a wafer through for the CMOS, you put a wafer through for the NAND stack, you flip one over, and you bond them together. All right? That's kind of incredible. When you see the wafer, it just looks like a regular wafer, but it's two wafers bonded together. So what are the benefits of that?
First of all, you're putting the wafers through the process separately, so you can reduce cycle time and you can get yields to ramp faster, right? So I'm doing a simpler, each process is simpler. I'm doing them independently. I can start to ramp yields faster. I can make progress faster. Secondly, the CMOS is, like, higher quality because I'm not stacking stuff on top of it in the manufacturing processes. I'm sending it through. It's brilliant quality. Now I get, like, way faster IO speeds. The quality of that product is just much, much better, when I put them together. Thirdly, now that I've got this process perfected, I can innovate on both of them at different rates.
I can start pushing the stacks up or down on top of the same CMOS. I can innovate the CMOS, put that on top of a different stack, and I've got a lot more optionality in the portfolio. So better product, higher quality, faster yield times, faster ramps. It's just a major, I think, advance in commercialized NAND technology. We think everybody in the industry is going to have to go through this to continue to scale, and it's behind us now.
Okay. I do want to talk about capital intensity, which you kind of predicted, but how... One of the questions I'm always getting from investors is that you seem to be, your capital intensity seem, seems to be consistently lower than some of your competitors. How, how are you able to do that? How do you stay competitive in, in that situation?
Yeah, I kind of hinted at this earlier. Maybe it wasn't a hint, it was a foreshadow, but it's, it is literally sustained excellence in innovation of a NAND design team that has been working together for 23+ years now. And they've just generated, you know, generation after generation of NAND technology. It is a specific goal of the technology development to be capital efficient. How do we design our next node, so we get the most number of bits for the least amount of dollars, right? That's a, that's a design goal. And this team is just really good at it. And people ask us this all the time, like, "You must be falling behind because you're spending so much less money. You know, you're spending less money than your competitors." No, we're actually not. We're just good at it.
You know, we looked at numbers for the last three years, and Peter can keep me honest here. We were, like, at 2/3 the CapEx of the industry, of what we've been spending to get the same, to get what we believe is a superior product out. So this goes to the power of the JV. Why do technology partnerships last for 23+ years? Because they work, right? There's a very clear value proposition in those partnerships for both players, and it's very, very clear in this one that this is how it shows up. One of the ways it shows up.
Okay, that's great. Maybe just to follow up on that, how should we think about CapEx for next year? I know that's one of the topics everyone talks about.
I'm going to let Peter. I'm gonna, I have to let Peter.
There you go.
I could go. I'm going to let Peter.
Yeah, from a CapEx perspective, clearly, given the current environment, we've been very disciplined in terms of where we put CapEx. Now, remember, when we talk CapEx, we're talking about CapEx on a combined basis, cash CapEx for HDD and flash. And if you just take a look at fiscal year 2023, we were able to pull total cash CapEx down by about a 1/3. So we were very proactive, very prudent, came back and tried to trim where we could in order to help the cash flow that we to improve our cash flow generation. Now, as you look at fiscal 2024, we haven't set an exact target. All we've said so far is we expect a significant reduction in terms of cash CapEx. And when we say significant, we're talking somewhere around 50% down year-over-year.
Now, of course, if things worsen, we'll try to go back to the drawing board again and tighten that up a little bit more. If things get a little bit better, we might increase that slightly, but there's likely going to be a lag before we start doing that.
Okay, yes. Great. Maybe just to wrap up, what are some of the key messages you want investors to take away from this meeting? And maybe there are other areas that you think investors may have underappreciated or they may have overlooked, for the story?
I think we covered it here, Sidney. And again, thank you for the time today. We really appreciate it. We feel good about where the portfolios are. We've done a lot of work where our businesses are, not just the portfolio, it's just a part of it. We've done a lot of work on getting the portfolio in market leading positions in both franchises, getting the cost structures in the right places, managing the business through this really severe downturn, but giving ourselves the financial flexibility. Peter, Wissam, and the team have just done a fantastic job of helping us navigate through that. And we feel like the business is in a very good spot. We do feel like it's underappreciated, and this is where the strategic review comes in.
We're fully committed to exploring and are exploring a complete range of options of how do we unlock that value for all of us.
Okay, I think we're out of time. Thank you for the time again.
Thank you. Appreciate it.