General Electric Company
Q4 2020 Earnings Call Transcript

Published: 26 Jan 2021

[Operator:]

Good day, ladies and gentlemen, and welcome to the General Electric Fourth Quarter 2020 Earnings Conference Call. At this time, all participants are in a listen-only mode. My name is Brandon, and I'll be your conference coordinator today. . As a reminder, this conference is being recorded. I would now like to turn the program over to your host for today's conference, Steve Winoker, Vice President of Investor Communications. Please proceed.

[Steve Winoker:]

Thanks, Brandon. Good morning, and welcome to GE's fourth quarter 2020 earnings call. I'm joined by our Chairman and CEO, Larry Culp; and CFO, Carolina Dybeck Happe. Before we start, I'd like to remind you that the press release and presentation are available on our website. Note that some of the statements we're making are forward-looking and are based on our best view of the world and our businesses as we see them today. As described in our SEC filings and on our website, those elements can change as the world changes. Please note that we will hold an Investor Call on March 10th to provide more detail on our 2021 outlook. With that, I'll hand the call over to Larry.

[Larry Culp:]

Steve, thanks, and good morning, everyone. It's hard to think of a tougher year than 2020. However, our team performed and the fourth quarter marked a strong free cash flow finish to the year. Starting with our results snapshot on Slide 2. Industrial free cash flow came in at $4.4 billion in the quarter, $0.5 billion higher than last year. This was largely driven by better working capital and improved renewables and power orders. For the year, we generated positive free cash flow of $600 million or $300 million, excluding BioPharma in the first quarter. Despite the weakness in Aviation, Healthcare drove our performance, delivering $2.9 billion of free cash, and power and renewables continued to improve. Orders were down 3% organically in the quarter. While down, this was a considerable improvement from the second and third quarters. In 3 of our 4 segments, orders were in fact up, notably equipment orders at Renewables and Power were up double-digits. For the year, orders were down 17%, with 95% of this pressure Aviation related. Despite this, our backlog remains a strength at $387 billion with approximately 80% geared towards services where we have higher margins. Industrial revenue was down 14% organically and 13% for the year. Services were down 22% this quarter driven by the Aviation aftermarket despite some moderation, outages and upgrades in Power and power upgrades and renewables. While services may fluctuate quarter-to-quarter, especially as we've seen during the pandemic, they create a multiyear backlog of profitable business, and importantly, keep us close to our customers, and we expect to grow in '21. Industrial margin was 6.4% this quarter, and 3.4% for the year. While this was an organic contraction on both measures, we saw sequential improvement through the year due to our more than $2 billion of cost actions. Adjusted EPS was $0.08 for the quarter and $0.01 for the year, which includes an impact for the restructuring recast of $0.02 for the quarter and $0.05 for the year. Carolina will expand on this momentarily.

[Carolina Dybeck Happe:]

Thanks, Larry. Broadly speaking, I'm also pleased with how we're progressing on our priorities. We're becoming more operational. We're deepening our focus on cash flow and we're using lean and automation to improve speed, quality and scale. And you've started to see evidence of this in our margin and cash flow numbers. I'll share some examples with you today. Turning to Slide 4. Larry covered our consolidated results, so let me provide some additional color on our earnings performance. First, we made some notable reporting enhancements. This better aligned with how we operate our businesses and will help us drive improvements. They also further enhance transparency and disclosure quality. Of particular note, we now include restructuring expense expected for significant and higher cost programs in adjusted EPS and in our segment results. This will drive accountability in managing costs and benefit at the businesses. The restructuring recast was an impact of $0.02 in the quarter and $0.05 for the year.

[Larry Culp:]

Carolina, thank you. Turning to page to 2021. We're planning to provide a full outlook for the company, including detailed segment information during our March Investor Call. But today, we'll share an overview for the total company in 2021. Moving to Slide 9. We're expecting organic growth in the low single-digit range for industrial revenue, organic expansion of 250-plus basis points for industrial operating margin, $0.15 to $0.25 for adjusted EPS and a range of $2.5 billion to $4.5 billion for industrial free cash flow. Of course, there are a number of key assumptions underpinning our plan for the year. First is the lost cash and earnings from dispositions, largely BioPharma, which, again, generated nearly $300 million in cash and $400 million in profit in the first quarter of '20 and the continued reduction of Baker Hughes dividends, which represented more than $250 million of cash flow in 2020. Second, on Aviation, where the impact of COVID has been most acutely felt and our level of uncertainty is still the greatest. Starting with the market, our plan assumes departures remain close to fourth quarter levels in the first quarter, and we begin to see the commercial aviation market recover in the second half. That said, we fully acknowledge the pace of the recovery remains dependent on containing the spread of the virus, effective inoculation programs and government's collaboration to encourage travel. At GE Aviation, we continue to expect the engine aftermarket recovery to lag departure trends across regions and fleets, particularly around quarantine requirements. And given that we generate a significant portion of our cash in commercial services, the recovery of the aftermarket remains critical. So our full year plan assumes Aviation revenue is flat to up year-over-year. And as a reminder, since the full effect of the virus was not felt until late in the first quarter of last year, we will be lapping a tough comp. Looking across our other segments, In power, we anticipate continued progress at Gas Power, with some offset in Power portfolio as we exit new build coal. Overall, we expect equipment revenue will be down, driven by our narrower scope with less turnkey volume. We're also planning for growth in our higher-margin services revenue. In Renewables, we're focused on improving operational execution and driving structural cost out. This will help us expand margins and improve cash. At Healthcare, we expect continued strength in Healthcare Systems as our new products and commercial leverage drive growth and PDx to recover. While we expect cash conversion to remain solid, it will be lower than 2020. And in capital, we expect earnings to be better. At each business, we're further accelerating cash performance and cost management with restructuring remaining elevated. So in aggregate, we have a positive trajectory going into 2021, despite areas of volatility and the continued challenges in Aviation. We're focused on delivering on our commitments, and I'm confident that our continued efforts will build a stronger and more focused GE. Turning to Slide 10. As we all know, 2020 was a year like none other. I'm truly proud of the GE team and their remarkable resilience. I hope you can see that in the face of great uncertainty, we continue to strengthen our businesses and deliver for our customers. And as we move through the second half, our businesses had a strong free cash flow finish to what was a challenging year. Momentum is growing across our businesses. We've continued to evolve our culture by embracing lean while preserving the strengths that have defined GE throughout its history. And I'm excited about the opportunities that lie ahead, how we will continue to lead the energy transition, help our customers deliver precision health and define the future of flight. As our multiyear transformation accelerates, we'll unlock upside potential with better cash generation, profit and growth. And ultimately, we expect that our industrial businesses over time should generate high single-digit free cash flow margins, while rising to the challenge of building a world that works. With that, Steve, let's go to questions.

[A - Steve Winoker:]

Before we open the line, I'd ask everyone in the queue to consider your fellow analysts again and ask 1 question so we can get to as many people as possible. Brandon, can you please open the line?

[Operator:]

And from JPMorgan, we have Steve Tusa.

[Steve Tusa:]

Congrats on the strong finish on cash. Just curious on this GE Capital change. When did that start? And is there any impact on kind of working capital trends. I'm just kind of trying to figure out how -- you mentioned that the transactions remain on kind of an arm's length basis. But how does this kind of change that -- the dynamic around working capital at all?

[Larry Culp:]

Steve, just for clarity, you mean the change in how we account for it on an equity basis that we just announced today?

[Steve Tusa:]

Yes.

[Larry Culp:]

Okay.

[Carolina Dybeck Happe:]

Okay, yes. Well, that is really to sort of simplify the way we show how GE Industrial is performing and how GE Capital is performing. That's the only change that we do there. I would say, though, that looking at the reporting changes that we have done in the quarter or at year-end, there are a couple of significant ones. And the most significant is really the restructuring recast in moving responsibility for not only the sort of execution, but also the cost as well as the benefit to the businesses. So I would say that's the biggest, most important one. And also, when we're talking about the working capital definition and the broadening working capital definition, that is really to more align with how we really run the business internally and operationally to drive improvements in working capital to show that also in the external reporting and the classified balance sheet really goes with that. That was on R&D, right? You saw that as well, is really showing that as a standalone line to increase transparency and highlight that.

[Steve Tusa:]

Just a follow-up, will you be growing assets at GE Capital on a core basis outside of insurance in 2021?

[Carolina Dybeck Happe:]

No, we're planning to keep that flat.

[Operator:]

From Wolfe Research, we have Nigel Coe.

[Nigel Coe:]

Just want to dig into your account outlook for 2021. At the midpoint, $3.5 billion, you'd be converting over 100% on your adjusted earnings outlook. So just wondering just in terms of forward strokes, what are you seeing in terms of working capital benefits, progress collections? Any detail there would be helpful.

[Carolina Dybeck Happe:]

So why don't I -- to your point there, why don't I sort of explain how we walk to the midpoint of the guide. So we're guiding for $2.5 billion to $4.5 billion of free cash flow in '21 with the midpoint there of $3.5 billion, right? So you will have to start by re-baselining the numbers from 2020. So you take out the BioPharma, disposition BioPharma and the Healthcare COVID demand, and that really gets you to roughly zero as a starting point. And then I would say you have cash earnings, it's about 1/3, that gets you to the midpoint of our range, with all the businesses planning for structural cost out, and here, we have both the normal course of strengthening the business, that's the business are on, but also the carryover from the COVID 2020 actions. And on top of that, also the low single-digit organic growth that we're talking to, right, primarily in Healthcare, Renewables and Aviation. The remaining 2/3 are driven by networking capital improvements, it's including the factoring tailwind that we talked about. And it's partially offset by other items such as the non-repeat of military in Aviation that we've called out as well as higher AD&A payments from higher aircraft deliveries really pushed out.

[Larry Culp:]

And Nigel, I would just add that I think what you see coursing through both the cash earnings and frankly, the working capital improvement, are both the improvements that we're trying to drive commercially with respect to just better upfront opportunity identification, better underwriting, pricing terms and the like, all the way through that upfront cycle, but also operationally, right? Be it in terms of cost, be it quality and delivery, that's helping us both in the income statement, but also, obviously, on the balance sheet. And I think when you look at the fourth quarter numbers, you see some encouraging evidence that while it's still early innings for us with respect to the lean transformation, we're seeing some nice results. And that will just feed on itself, that will build momentum and that is something that we're looking forward to contributing in that bridge into the '21 numbers.

[Operator:]

From Vertical Research, we have Jeff Sprague.

[Jeff Sprague:]

Just a kind of a 2-part question, if I could. Just share if you could, a little bit of the restructuring variance embedded in what you just told us on cash flow? And then also, Carolina, just picking up from what you said, if 1/3 of the earnings -- 1/3 of the cash flow is from earnings next year, that would kind of imply your underlying conversion is 65%, 70% or so. Is that what your underlying free cash flow conversion should be once we kind of normalize out of this thing?

[Carolina Dybeck Happe:]

Okay. So we'll start with the first question, then on restructuring. So we have the recast, right, that we now include basically with moving the responsibility out into the segments, and we're also including it in the EPS, and therefore, in the recast. So if you look at the quarter, for example, you have $0.02 of effect of that on our numbers. So from -- we go from 8 to 10 and 5 for the full year. And if we look at the restructuring, we -- basically, we delivered on the $2 billion of cost that we committed to, but also the $3 billion of cash as we promised. And you do have a carryover effect of that going into 2021. It's about $500 million that will then flow into the numbers and improve the earnings next year.

[Operator:]

From UBS, we have Markus Mittermaier.

[Markus Mittermaier:]

If I could maybe double click specifically on the Power free cash flow guidance. So it seems that you are clearly about a year ahead of targets here on fixed cost, but on the cash trajectory you're guiding flat next year. Can you maybe just double-click here, particularly on 12% down on the Gas Power services side, how much -- sorry, 12% down on the fixed cost side, but on the Gas Power side, you're down on the -- on services, but should we assume that there's no catch up on that side next year? And specifically on steam, and the exit of new build coal, is there something that in that fixed cost base you can address going forward? And how should we then think about that maybe over the medium term, one is flat, how do you think about it over the medium term?

[Larry Culp:]

Markus, let me take a swing at that. I think you have the basic architecture in hand. The segment will be flat, but it really masks 2 underlying dynamics, right? You're spot on with respect to the improvement at Gas Power, I don't think we could be more pleased with the progress the team is making there. Clearly a competitive market, no question. But in terms of controlling what we can control, both again, the better underwriting upfront with respect to equipment, the continued market acceptance of the HA, all of that, I think, is in our favor. Services has been a challenge. We've talked about that, I think, through the course of 2020. And a little bit of light there relative to the order book in the fourth quarter. But I think we really know the onus is on us to continue to drive better performance in all aspects of the service portfolio there, be it CSA's transaction and upgrades. Upgrades was particularly pressured for us in '20. We know CSAs is a function of utilization a little bit better. So I think when you put all of that commercial and operational activity on top of the restructuring, where we've taken $1 billion of cost out at Gas Power, you get the early arrival of that positive free cash performance in '20 as opposed to '21. And we really move from here with a team that I think has proven that we can control the controllable and deliver better results with this book of business. I think when you talk about Power portfolio, you put your finger on steam, we're going to be restructuring as we exit coal, new build coal. That is a significant undertaking. It is early in that effort, and that will be a cash pull on us in '21 and probably to a lesser degree, in '22 as we execute on that. So when you put it all together, as you saw on the slide in the appendix, it will be roughly flat in '21. We'll be looking to drive gas as best we can, but we need to see the new coal exit through, and we'll do that as thoroughly and as thoughtfully as we can.

[Carolina Dybeck Happe:]

Yes. And just a comment on Gas Power specifically because we've talked a lot about the restructuring with the COVID-related restructuring, but it's really an achievement from the Gas Power team, with Scott and team. So achieving positive cash flow in 2020, a year ahead of plan, really basing on what Larry talked about, almost $1 billion of fixed cost out in the last 2 years. And then also basically, I would say, rebalancing our relationship with our partners and suppliers and significantly structurally increasing DPO as well as significant strengthening the processes that we still on DSOs and how we both bill, collect, including over dues, that's really gotten us to a positive cash flow already in 2020. So strong achievement there.

[Larry Culp:]

And just to come back, just to your second part of your question about the question of whether that number that you calculated for this year is an ongoing number or not. Carolina, why don't you take a minute to come back on that in terms of free cash flow conversion longer term?

[Carolina Dybeck Happe:]

Yes. When we look at free cash flow conversion longer term, we still -- we need to acknowledge that if we look at the earnings guidance also for next year, we still have elevated levels of restructuring, and we have elevated levels of pension and legal and so on. So there is still significant room to improve our earnings and then also the structural process improvements that we are driving through the business on the working capital. So we'll see a healthy cash conversion. But will take a little bit longer than next year.

[Operator:]

And from Bank of America, we have Andrew Obin.

[Andrew Obin:]

On Aviation, one of the questions we're getting is that I think plane retirements this year have been below average because I think airlines did not really go bankrupt. But how do you see -- one of the questions we get is sort of plane retirements and usable service materials availability into '21, how do you account for this in your forecast for -- your baseline forecast for Aviation in '21?

[Larry Culp:]

Andrew, you're exactly right. I mean the way we look at retirements in '20 just interestingly compared to '19, we actually saw fewer aircraft retire last year than we did the year before. But I think we're going to see that uptick in '21 in all likelihood here in the back half as volumes return and the deliveries at both of the major airframers pickup. So we're assuming that we will see that retirement transition, and at the same time, while there's been a little bit of a bid-ask spread with respect to departing out some of those planes, we're anticipating that we'll see a little bit more of that USM effect as we get into the second half at a time when we should see a return to volume activity. I think people need to appreciate that, that USM cuts both ways for us. We're -- we've been a major user of USM given the nature of our CSA obligations over time. So it will take a little while, I think, for that market to begin to really kick in. There is a lag, of course, from the time a plane is retired to the time that we would see it in the U.S. end market. But I think as we look out over the next several years, again, not trying today to pen a particular time in which we see a return to normal volume activities. From our perspective, we anticipate deliveries to outpace retirements, and that will be a net effect positive for us at Aviation. The other dynamic worth noting there, of course, is when we look at the dynamics for our fleet today, when we highlight the fact we've got a very young fleet, we're really -- what we really mean by that is we've got a little over half of the CFM56, 5B and 7B fleet, they haven't seen their first shop visit, right? So they're still early in their life cycle, 3 quarters of that same fleet have yet to see their second shop visit. So we'll typically see three during the course of a normal useful life. Our major economics happen in and around the first and second. So as these planes come back online, that green time is used, demand puts additional pressures on the fleets that -- those are the catalysts that we're really watching for relative to the beginning of the recovery and the return to, let's just say, '19 levels in our commercial aftermarket business there in Aviation.

[Operator:]

From Melius, we have Scott Davis.

[Scott Davis:]

I was hoping a little bit of a nitpicky question, but what's left in corporate that you guys plan on parsing out to the businesses if you can be somewhat specific. I mean, is there still R&D that's done at a central level? Or is everything being kind of built out already? I'll just leave it there.

[Larry Culp:]

Yes. Well, there are a couple of things in place, Scott, and I'd rather talk about that internally before we talk about it externally. But in effect, what you've seen in the last couple of years, really is not only the reduction of the core through absolute reductions, but also the movement of a number of the traditional corporate functions that had been at the center in some form out into the businesses. There is still a fair bit of activity. You're referencing there, specifically the global research center where we have a shared facility. That's really not part in a major way of that corporate net number that you see there, right? The businesses are paying their way by and large in that regard. Also, keep in mind, we've got a number of P&Ls in what we call corporate, principally the digital business, our $1 billion software business. Some of those businesses are more independent than of the portfolio. Others are operationally linked. So we'll continue to work to improve those businesses. And if there are situations where they can work more closely or better with the businesses under a different roof, we'll do that. But I think we'll continue to look for opportunities, but they will be on balance, more modest in scale and scope than what you've seen in the last couple of years.

[Operator:]

From RBC Capital markets, we have Deane Dray.

[Deane Dray:]

A couple of questions on Aviation. It was announced last week, one of the major airlines said they were restarting deferred engine overhauls. And just would like to hear how you expect to flex Aviation capacity back up to meet this normalized demand? And then any color on the supply chain challenges you mentioned in Aviation?

[Larry Culp:]

Sure. Well, Deane, it's probably, probably most helpful to just frame kind of what we did and where we are, right? We didn't bring that activity level down to zero. We try to resize it in a way that embrace this harsh, unfortunate near-term reality, but gave us a little bit of room just because -- back to Andrew's question, a number of dynamics that are hard to know in the short-term with absolute certainty, be it the retirement dynamic, how fleets are going to manage green time just even in the short-term, how folks are going to flex around the COVID effects as we saw in July and August and then in the other direction here in the first quarter. So as an operational matter, I think what John, Russell and the team are prepared for is a number of scenarios where when we see that recovery, we'll leverage some of the, if you will, the excess cost that is still there. Because again, we didn't take it to the bone, but also, we have -- we've laid in place plans that will give us an opportunity to ramp back effectively from a safety, from a quality, from an on-time delivery perspective, but also to have the right cost structure along the way. But we will be dealing with limits, right, in terms of our shop visit capacity in a particular window. And then that's part of the conversation we're already having with customers as they begin to think about the second half of '21. They want to make sure that they have their fleet in tiptop ready to go condition. So a lot that we're working through there. Clearly, our supply chain has been through a roller coaster right there along with us. I mean it was a year ago, I mean, literally, right now, when we're talking about not only continued volume ramps, but a new introduction, clearly at Boeing, with the MAX. And then literally weeks later, we're talking about slamming on the brakes. Part of what you saw in the fourth quarter is a little bit better inventory performance because the lead times and the cycle times in Aviation tend to be longer than they are in some of the other businesses. But we are working as closely as we can with the supply base to help them do what we're doing, and that is worked through the near-term here, where we have these volume pressures, but also be ready for, again, a number of scenarios by which we see a return toward more normal volumes.

[Operator:]

From Morgan Stanley, we have Josh Pokrzywinski.

[Josh Pokrzywinski:]

Just on Aviation, maybe a 2-part question. But Larry, you mentioned and expecting a lag in terms of the recovery in your shop visits versus what the market traffic is, it doesn't look like it's happening today, but I get that's the phenomenon that develops over time. Just given so much of the free cash flow performance at the corporate level is working capital and not earnings, I mean how much of the range is really dependent on Aviation as a market because it doesn't seem like there's a ton of volatility or expectation in the forecast that in Aviation core performance is really driving that. And maybe that's a lag or something else, but am I interpreting that right?

[Larry Culp:]

Josh, I would say that if we -- Carolina walked you through kind of the walk to the midpoint as if GE was a business as a whole. The slide in the back of the earnings presentation, where we look at cash flow by business, I think it's really meant to capture the fact that the bulk of the range is going to be made up by what happens at Aviation, and that will largely be a function of what happens in the market, particularly the aftermarket. There's a bit of renewables in the range there as well. But I think what we've seen through the course of 2020 is that, fortunately, when all was said and done, our Power businesses were able to work their way through the pressure and the uncertainty. We had a number of orders at Renewables that came in at the end of the year, and we didn't know they were going to be there until they were there. And fortunately, they were. But clearly, this will be a year of climate broadly, and that will be a good thing for our Renewables business. And I think Healthcare, while we won't convert at the exceptionally high levels the team did and credit to them in the back half of last year, Healthcare, I think we've got good line of sight on. So when you look at that range, I think the bulk of it, again, is really a function of Aviation. I like the way we're executing, we can always do better. But that said, it will really be a function of what happens in the end of the market. And I think what we try to do here is provide a framework that isn't assuming some sort of out of the consensus early spike recovery in Aviation, that would be in a word foolish.

[Operator:]

From Goldman Sachs, we have Joe Ritchie.

[Joe Ritchie:]

So I'm going to apologize upfront for the 2-part question, but I wanted to first ask a question to Carolina. To maybe just bridge us a little bit given the reporting changes, bridge the EPS guide for 2021 versus what you reported in 2020? And then my second question for Larry. Just from a portfolio perspective, arguably, there's never been a better time to divest assets that you don't want longer term. How are you thinking about that for 2021?

[Carolina Dybeck Happe:]

So let me start with the EPS question, it is really focusing in on the restructuring, right? So I commented in the beginning that we have restructuring in the EPS now and that the effect of that for the full year is around $0.05. We do expect to have, I would say, roughly the same level of restructuring in 2021, right? So you don't have an effect from elevated or changed restructuring levels when you compare '20 to '21, when we do the work on the EPS.

[Larry Culp:]

I would say with respect to portfolio evolution and capital allocation, Joe, I take your point relative to the market dynamics, it's -- they are remarkable. But that said, I don't think any of our businesses are close to optimizing their underlying performance, and again, clearly pressure and some uncertainty here in the very short-term, particularly around Aviation. But I think what we want to do in '21 is build on the momentum that we think we clearly demonstrated last year, continue to pursue our strategic intent across the 3 major areas that we've talked about. And over time, we're going to be open to ways to deliver value, maximize value at GE. But we still have a lot to do, still a lot in front of us. And I think that's the way at the end of the day that we will do right by shareholders, customers and other stakeholders.

[Operator:]

From Barclays, we have Julian Mitchell.

[Julian Mitchell:]

Maybe just the first question around -- or my only question really around the outlook for Power portfolio, Larry. It seems like looking at the slides, that's one of the few areas where the cash performance remains very, very difficult in 2021. Maybe just help us understand the moving pieces within that. And you assume that by the time you get to the end of this year, you've really sort of cleaned the deck and those businesses have a shorter positive cash flow in '22.

[Larry Culp:]

Yes. I would say that -- I think we talked a little earlier about the makeup, encouraged by what we saw in 2020 at power conversion. It's losing less money is different than making good returns, but you've got to work your way through that. And the power conversion business is doing that. Our nuclear business is smaller, sub-billion size, but fundamentally stable. The action, to your question, Julian, really centers on the steam business. And again, exiting the new build coal business, which has largely a European base is going to be a multiyear effort. We're in the very early stages of that. So that's really the primary cash pull on Power portfolio, and I would say, in the segment in '21. And given the way that plan will inevitably play out, we'll be talking about this at least in the first part of '22 as well. But I think we've got our arms around that. Again, it will -- all of that will mask a lot of the momentum that Scott and the team have built. But we'll keep you posted. It is what it is. But when we get to the other side, I think that segment is going to be a much better contributor for us.

[Operator:]

And that's all the time we have. At this point, we will now turn it back to Steve Winoker for closing remarks.

[Steve Winoker:]

Thanks, everybody. I'm going to actually -- I'd like to come back to a question that was raised earlier on the call about our reporting GE Capital and equity method investment within the GE Industrial column of our financial statements. And I'd like to be clear, I think we'd all like to be clear that it has no impact whatsoever on working capital or any individual transactions. It was done simply to simplify reporting and make that column more reflective of GE Industrial earnings as investors have been requesting. So I want there to be no ambiguity on that front whatsoever. Thanks, everybody, for participating. We look forward to your follow-up calls and wishing you a good start to 2021.

[Operator:]

Thank you. Ladies and gentlemen, this concludes your conference. Thank you for your participation today. You may now disconnect.