Canoo Inc. (GOEV) on Q4 2021 Results - Earnings Call Transcript
Operator: Greetings. Welcome to the Cannes Fourth Quarter and Fiscal Year 2021 Earnings Call. Please note, this conference is being recorded. I will now turn the conference over to your host, Nick Cunningham. Thank you. You may begin.
Nick Cunningham: Welcome to Canoo's quarterly earnings conference call. My name is Nick Cunningham, and I'm the SVP of Investor Relations and Capital Markets at Canoo. I recently joined Canoo after a 15-year career in investment banking, and I look forward to getting to know you all better. I chose to come in-house at Canoo because I believe in the company, vision and leadership. I'm excited by the pace and speed of activity and the mission to bring EVs to everyone. Today, I have with me investor, Chairman and CEO, Tony Aquila; and Interim CFO and Chief Accounting Officer, Ramesh Murthy. Tony will provide an update on our activity last quarter. Ramesh will then review our financial results for the quarter and turn it back to Tony, who will provide closing remarks. We'll then open the call up for questions. Please be advised we may make forward-looking statements based on current expectations. These are subject to significant risks and uncertainties, and our actual results may differ materially. For a discussion of factors that could affect our future financial results and business, please refer to the disclosure in today's earnings release and on our most recent Form 10-Q and 10-K and reports that we may file on Form 8-K with the SEC. All of our statements are made as of today and are based on information currently available to us. Except as required by law, we assume no obligation to update any such statements. During this call, we'll discuss non-GAAP financial measures. You can find the reconciliation of these non-GAAP financial measures to GAAP financial measures in today's earnings release, which can be found on the IR section of our website. With that, I will turn the call over to Tony. .
Anthony Aquila: Thanks, Nick, and welcome to the team, and thanks, everyone, for joining us as we report the fourth quarter and the final fiscal year 2021 wrap-up. As we kick off fiscal year 2022, it is the perfect time to make clear who we are and who we are not. We are not a traditional OEM. We are a high-tech advanced mobility company. I believe you're all starting to put the pieces together, and the best is yet to come. So I want to thank all of our supporters because you are also innovators and you see the same future we do. . We are in it to change it, to build a company that is valued as a true high-tech customer-centric advanced mobility company. We know this takes time, sacrifice, perseverance and even at times, persecution by those who don't believe enough in the future and how different it will be, but we do. Those who joined Canoo, if they have the same ethos, they will make it here. They find their home, passion and mission to build a high-tech, cost-affordable, long-life ecological platform that is built upon diversity and inclusion from the very beginning. We're not looking to create the next GM or Ford. We respect them, but we have no desire to be like them within our culture and/or the long-term outcome for investors. That said, we want all American OEMs or those working in advanced mobility to win. For us, this isn't just about competition to win. It's about competition for American innovation and ingenuity to win. Those that are looking for just a job and some stock options are like travelers passing through on their way back to Detroit. At the very least, we hope to leave them more inspired. We've decided to make our home in the Heartland amongst many great founders and founding families that are innovators generation after generation that have protected the cost of living, higher education, affordable housing, health care and inclusion, blended with art, culture and the adventure of American nature. We are grateful and proud that Oklahoma and Arkansas and the Cherokee Nation are where we will make our platforms and our new home. These 3 coming together allows us an amazing workforce. People that understand what it's like to do what we do. By bringing 2 states and a nation together, we have greatly decreased our risks and accelerated our ability to grow. Before I get into the big news or no news, I'd like to give a few shout outs: one, to Governor Kevin Stitt for the state of the state speech, especially the announcement to pass a bill for veterans to not pay state income tax and his commitment to increased taxpayers and not taxes; two, to Governor Asa Hutchinson for his commitment to electric charging stations across the state of Arkansas and for the creation of the Council on Future Mobility; and to VDL and the Vanderlay family and William, in particular. Thank you for your support and partnership as we made the decision to bring back manufacturing to America ahead of our schedule. We remain here to help you in any way possible, and we hope your new deals come together. And especially to the team of Canoo, those members who have embraced both the refounding and the aggressive execution of our plan. Bringing manufacturing back to America was an important decision as we can all tell by the geopolitical backdrop that is developing in front of us and will be with us for some time to come. At the time, I know the decision was not popular to many of you, but as you can see now, it was the right decisive action to take. Just to give you 1 point of how it's mitigating our risk. Those that are still focused on manufacturing abroad and bringing products to the U.S. are facing rapidly growing shipping cost, supply chain disruptions and risks, labor cost increase due to inflation and a great amount of currency risk. We believe many others in the coming quarters will have to explain their actions to mitigate increasing cost and volatility. We believe that could be impacting by up to 25% and weeks to months of additional lead time. We are located in the Heartland, where we can reach anywhere in the country in the least amount of time by road, rail or water. We believe this to be an important arbitrage that will be significant in the years to come. There is a reason why many of the greatest companies are quietly dug in to the Heartland. This part of the country delivers a disproportionate amount of goods to American households every day. We are inspired by their disciplined approach to creating value for America. So let me recap some of our key decisions. We secured a lease for our advanced manufacturing facility in Bentonville, Arkansas and broke ground on the second expansion. 40% of the equipment that is slated for Bentonville is already purchased and being used for our gamma builds. And the majority of the remaining 60% is already on its way. 70% of our machinery and tooling CapEx will be located in America, and we will continue to build upon this. And we have started laying the foundation for our mega microfactory in Pryor, Oklahoma. We've begun clearing ground, selected our group of partners that are helping us to execute the project. I will share more details with you as appropriate. Sourcing and supply chain, manufacturing in America isn't just about assembly. It's also about sourcing. We are grateful to be one of the first companies that is 91% partnered and sourced with American and/or allied countries. 750 parts of our 1,800 parts in our BOM from the LDV is sourced in the U.S., and we will continue to bring back more to America. We are now 93% sourced for our LDV. I would like to thank OESA for recently hosting us at an event with more than 250 primarily American and allied nation suppliers to explore future partnerships. Now on the supply chain. What's happening here shows the wise decision to pull forward and build in the U.S. If you look at our moves, our RBIs speak for themselves. As we've said before, we need 2 to 3x less parts to produce our vehicles, which puts us at an advantage compared to a typical OEM. We are seeing some supply chain issues, but they are isolated to some of the semiconductor chips where we are seeing a 35% increase in lead times. We will continue to closely monitor and update you on these developments. The geopolitical and pandemic impacts have proven out our strategy to accelerate bringing production back to the U.S. For gamma build update, as you know, we are now in the middle of our gamma builds, and I would like to share some progress. To date, we have built 9 complete platforms and 15 ladder frames, produced 411 modules and 24 battery packs. We also finished 25% of the full slate of battery pack testing with the remainder scheduled for completion in Q2. With that said, we had hoped to build more vehicles, but January was a tough month because of Omnicron. We anticipated some of these factors. The number of gammas we announced to build was greater than the gammas we needed. This played into our favor as we navigated the impact of the virus, hitting an optimum threshold for testing. But the team worked through it, and we have 5 gamma properties undergoing critical winter testing that is higher than most OEMs planned for. On the sales side and go to market, on the sales, we have signed a definitive purchase agreement for 1,000 vehicles for the state of Oklahoma. This would be a Stage 3 order by our definition. With respect to our Stage 2 orders, they have now grown to 14,962 units, a 60% increase over what we disclosed in Q2, which includes 1,000 vehicles for the state of Arkansas, which we expect to move to Stage 3. We remain focused on delivering 3,000 to 6,000 units in fiscal year 2022 and 14,000 to 17,000 units in 2023 for accumulative, of 17,000 to 23,000 units across this year and next. At this pace, as we advance sales negotiation with several potential partners, we are anticipating being oversold for our production volumes for '22 and '23. We are now shifting our focus to customer allocation and ways we can accelerate our delivery. On the go-to-market side, when it comes to new vehicle launches, consumers have had a consistently inconsistent and unpleasant experience. We have studied this carefully and have experience in entering new markets and scaling them quickly. In my prior life, we achieved rolling out a new region every 60 days. We are initially targeting our Phase 1 rollout in the Heartland itself, which would be Oklahoma, Arkansas, Texas, Missouri, Kansas and possibly, Tennessee. We will announce Phase 2 and 3 at the appropriate time, and these will be tightly aligned with our customer experience and our customer agreements. Moving on to other updates. We are in a capital-intensive business, and we take a disciplined approach to managing our capital, our dilution and the timing of raising additional capital. We are focused on nondilutive sources of financing to help fund our growth. To date, we have secured approximately $400 million in nondilutive incentives from the states of Oklahoma and Arkansas. In the quarter, Oklahoma awarded us from the Governor's Quick Action closing fund $15 million to support American job creation and infrastructure development. Continuing our focus on nondilutive capital, we are now able to access new sources of financing ranging from asset-backed inventory and working capital-based credit lines. At the appropriate time, we will disclose other capital raising efforts. Before I turn it over to Ramesh, while we had a pretty good Q4 and a decent January, we continue to remain in a vigilant stance in these evolving times. And now for our financial route. Ramesh?
Ramesh Murthy: Thank you, Tony. Our fourth quarter of 2021 results are as follows: research and development expenses of $88.2 million for the quarter compared to $90 million in the prior year period. Excluding $3.1 million of stock-based compensation, research and development expense was $85.1 million. SG&A expense was $50.7 million for the quarter compared to $35.7 million in the prior year period. Excluding $15.5 million of stock-based compensation, SG&A expense was $35.2 million. GAAP net loss was $138.1 million for the quarter compared to a GAAP net loss of $9.2 million in the prior year period. GAAP net loss in the fourth quarter of 2021 included a $3.3 million noncash gain on the fair value change of earn-out shares liability related to the periodic remeasurement of the fair value of our contingent earn-out shares liability. Adjusted EBITDA was negative $120.3 million for the quarter compared to negative $42.5 million in the prior year period. Our fiscal year 2021 results are as follows: research and development expenses of $246.2 million for the year compared to $142.9 million in the prior year. Excluding $25.8 million of stock-based compensation, research and development expense was $220.4 million. SG&A expense was $194.7 million for the year compared to $51.6 million in the prior year. Excluding $82.3 million of stock-based compensation, SG&A expense was $112.1 million. GAAP net loss was $346.8 million for the year compared to a GAAP net loss of $86.7 million in the prior year. GAAP net loss in fiscal year 2021 included a $104.4 million noncash gain on the fair value change of earn-out shares liability related to the periodic remeasurement of the fair value of our contingent earn-out shares liability. Adjusted EBITDA was negative $332.6 million for the year compared to negative $108.3 million in the prior year. Turning to the balance sheet and cash flow. We ended the quarter with $224.7 million of cash and cash equivalents. Cash used in operations for the 3 and 12 months ended December 31, 2021, was $120.2 million and $300.8 million, respectively, compared to $42 million and $107.1 million for the 3 and 12 months ended December 31, 2020. Capital expenditures were $62.6 million and $136.6 million for the 3 and 12 months ended December 31, 2021, respectively, compared to 6.3% and 7.6% for the 3 and 12 months ended December 31, 2020. Tony mentioned 2 points earlier that I'll share more details on now. First, I'm proud to announce today that we have successfully remediated all 5 of our material weaknesses in our internal controls over financial reporting. We added to our high-quality and experienced staff to accomplish this with our second 10-K filing. I would like to thank each member of my team, the wider Canoo teams and our external advisers for their support as we achieve this important milestone. And the second point I'll expand on is VDL has returned our entire capital, a prepayment of $30.4 million. On a constant currency basis, the return generated is equivalent to creating an additional 11 engineers or 30 manufacturing jobs in the Heartland. We also received an equity investment of $8.4 million. Turning to our guidance. For the first quarter of 2022, we anticipate the following expenditures, approximately $95 million to $115 million for operating expenses, excluding stock-based compensation and depreciation; and approximately $60 million to $80 million for capital expenditures. Before we open the call up for Q&A, I'll turn it over to Tony for closing remarks.
Anthony Aquila: Thank you, Ramesh. We are committed to bringing high-paying jobs to local communities. We are honored to place special focus on hiring veterans and Native Americans, and we're thankful to see that come to fruition as we move to stand up our facilities in Arkansas and Oklahoma. I would like to thank all our supporters and partners again. We are doing something different here and all of you are incredibly important to us. We will continue to keep our heads down and stick with our philosophy of big news or no news as we execute on our vision. Thank you.
Nick Cunningham: Thank you, Tony. Please navigate to the webcast landing page and access the video link on the right-hand side of your screen below your audio player. We will pause briefly while you watch the video. Operator, please open it up for questions.
Operator: . Our first question is from Craig Irwin of ROTH Capital Partners.
Craig Irwin: I really love that video. It's pretty snazzy. Great way to present the product. Tony, I wanted to ask if you could talk a little bit about the gamma testing, maybe if you can give us a little bit more color on the 5 properties out there. I know you're probably bound by confidentiality about exactly who and where. But can you maybe sort of tease out the character of the different programs where your vehicles are being evaluated? What kind of companies are playing with the platform? And what sort of opportunity there is with these different partners? .
Anthony Aquila: Yes. I think, first of all, Craig, good to catch up. So we've seen a pretty diverse group of between upcoming businesses and strong legacy businesses that are making the transformation to bring it to me. I think as you saw, we unveiled the LDV, which has been pretty impressive, and hopefully, you'll get a chance to come see it in person and ride in it. It has a tremendous amount of space and efficiency and a lot of safety for its workers. So it's getting a lot of positive -- I think we're going to be in an allocation issue more than we are an order issue with the level of interest we're getting from both types of companies, the emerging ones and the legacy ones. So we'll pick the allocation properly so we can get the right breadth for our '24, 2024. I think 2022 and 2023 is how we'll build that bridge to those companies. And while we're also delivering LVs to customers that have put in their orders. So I'd say, from a square footage perspective, from a performance, from a density, from an improvement in energy, the way our packaging designs work, we're feeling pretty good. But of course, we live in a constant state of dissatisfaction, and we know we can do better. And we'll continue to evolve that through the gamma testing. But it was pretty exciting to see the vehicles come up online, and when you power them up, it's pretty cool experience because it is a high-tech platform. It's not like you're cranking over an engine. And they're out there and winter testing and they're doing really well. But we wanted to build a few more units in January, but we had internal COVID omni issues, slowed us down. We had a few suppliers that suffered the same thing. And -- but we've been conservative. I think you see everybody else is kind of bringing stuff down. I think we've got the right mix. Now we just got to make sure we don't stumble on anything else. But from a customer perspective, it's been an amazing quarter of interest and advancement in those relationships.
Craig Irwin: So my second question is about VDL Nedcar. So congrats on the return of capital. That's impressive. And what's even more impressive is that they make an equity investment in Canoo. Can you maybe talk about this partnership a little bit? It was previously something others had speculated they might be able to help you with design or engineering or with procurement given their muscle in the global supply chains. How do you see this partnership evolving versus new partnerships forming? And are there multiple other sources of potential services, potential procurement support they're showing up equally as strong that can get you through to your initial production. .
Anthony Aquila: Yes. So well, great question. I mean, I think it goes to our philosophy of partnership. We just recently have been communicating as part of the refunding how we want to do business. We want to be a good partner. We want to be a profitable partner. But when there's a problem, we want to solve it together. And I think with the help we got from Oklahoma and Arkansas allowed us to accelerate, as you remember, in the beginning when I took over the company before had been purely focused on outsourcing the manufacturing. When I came in, I dropped in a 3-phased approach. We've now been able to knock that down to 2 phases thanks to the support of Oklahoma, Arkansas and the Cherokee Nation. So that's great for America. I think that what VDL has done is really commendable, right? I mean not only do they -- they could have kept our money if they wanted to. I mean -- but it's not about that. It's about a relationship between the Vanderlay family and myself. We have a long history in the Netherlands in my other entities, in my former life. So I think those relationships really helped. We -- in addition to that, we bought some products from them on very favorable terms. They're helpful. And they even shielded us from the currency risk because they want us to be successful obviously. And they did transfer a lot of knowledge to us, and we're grateful for that. So look, we'll continue to evolve that relationship. We hope that things go well for them. And recently speaking to them over the weekend, as we are in one of our other businesses, we're desperately getting our employees out of the Ukraine into Poland. So are they. But they are also -- many of these guys are suffering some impact because of some of the parts that are made and wiring harnesses, et cetera, in the Ukraine for European-built vehicles. So I think we just -- we've made some good moves there with that relationship. We'll help them. I mean it's a 2-way street. And I believe we have. It will be up to them to discuss that at the time they see appropriate. And we'll continue to be like that with every one of our partners, whether it be Panasonic or anyone else. And we also are very focused on helping American companies diversify so that we're less dependent on these volatile issues.
Craig Irwin: That's good to hear. So last question is kind of a big question, right? You're obviously not backing down from your production plans. You're gaining a lot of traction. The progress is really easy to follow, right? It's remarkable. But there is a capital need, and we all know you as a very intentional guy. I know you can't say specifically what you think you could do or what you think you want to do. But can you maybe sketch out for us the spectrum of options that you're looking at? There's quite a few different things that could be on the table. What do you see as the opportunities for capital access to support the trajectory out of '22 and into '23 and beyond with Canoo making thousands and tens of thousands of units. .
Anthony Aquila: Yes. So look, I think as you're seeing everybody else is doing what we did in the beginning, right? I mean you remember the first call. And we just have some experience in the industry and around new product launches. So look, my view is we're very focused as shareholders as well as the management team to make sure we're using nondilutive capital for our shareholders. If you study the innovators to the slide that the team put up earlier during the earnings call, you'll see where we -- it takes patience, right, to do these things right. And if you look at these great disruptors, it's -- there's a tough period. If you do the right thing, you keep your head down, you focus on IP, you find a way to do it differently and make sure that it's great for the consumer and/or the industrial users of your product and your partners, you're going to come out ahead. So you got to kind of figure that out. Now you got to have more than one option, what I've learned over the years. First of all, every CEO out there should be focused on nondilutive capital for our shareholders. Sometimes getting a bunch of capital is not the right thing to do. And timing of it is important. So I think we've done a really good job on demonstrating how much, we're probably one of the largest ones to achieve this nondilutive capital. In addition to that, we had to build up assets. Assets allow you to access traditional financing. We learned a lot from how Elon figured out his way through this. I think there, he'd probably do it a little differently, but he gave us a good road map. So did others that did it wrong by raising too much capital. Look, I think a person in a company and entrepreneurs do the best when they have enough but not too much. And the timing of that could be very dilutive over a decade if you get it wrong. So I feel good about the ability to access other types of capital. And while I haven't covered it, but where we're building our factory is in an opportunity zone. And many people on this call may not know what that means, but it allows us to access other types of capital that is very low cost and very centered around ESG and the development of communities that have been dislocated. So look I think, as you said with your nice compliment, we're pretty methodical. We're still proving ourselves. We know the road ahead. We have options is the message I want to send clear.
Operator: Our next question is from Jaime Perez of R.F. Lafferty.
Jaime Perez: So I want to change topics a little bit maybe on the sales model. I don't think we've touched upon this and if you forgive me. How do you plan to sell? Do you plan to sell it to a dealership or direct consumer? Maybe give us a little bit color on that. And the second question, what innovations we expect to see in the new vehicles as far as software? Because I know, Tony, you came from a software background. .
Anthony Aquila: Yes. Jaime, it's good to talk to you again. So look, I think the customer journey, our free cash flow per customer per year will go up per household. We do things differently here. Like I said, we're not trying to push steel. If you listen to the poem that describes our life and our passion in that video is we're leaving breadcrumbs, but it's a competitive space. We want to make sure people don't steal too many of our ideas. But you'll see a different kind of engagement model that's very customer intensive, meaning that they're engaging, and of course, it's a micro transactional model on the software side. So it will span beyond our own vehicles. As you know, we built a business worth billions of dollars from my garage on creating transaction value. We're helping customers through the journey of vehicle ownership and service maintenance and repair. We think that that's a very big business, and we'll announce some things in the coming period of work we've already commenced with various clients. In addition to that, I'd say, the other innovations you'll continue to see is, for us, we believe you've got to fight inflation by doing it differently. And you got to eliminate parts. You got to eliminate history that is no longer relevant to the customer's experience or gives him productivity and safety. So I think we've done a pretty good job on -- as we took the original platform. The team has done an amazing job. The design team is phenomenal here. They're really dedicated. I mean they are just amazing. They're very involved in our real prototype builds. We do build different kind of models than traditionally they do. In addition to that, consumers can basically keep their chassis, save $22,000 in the future. They can upgrade the system and change the top hat. So doing some things very differently will generate revenue. In addition to that, the way we're accessorizing the vehicles, like these are full packages. So as far as go-to-market goes, I'm not prepared to say it, but I would say it will be consistent to what you have seen us do over the last year. But it will be something that will be much more consistent, much more well controlled and give customers a higher experience and satisfaction. I mean it's pretty tough today to get through the process. We want to make it super easy, hybrid it between technology and physical interventions. So I will bring that forward shortly. And I think we'll see what people think, but we feel really good about it.
Jaime Perez: Yes. And I'm just excited to see the analytics and the info system of the vehicle because we saw the vehicle last year, but I'm just little bit excited what you expect to -- from the vehicle itself.
Anthony Aquila: Yes. And we'd love to have you come out. I'd extend that to you. Now that Omni is getting a little better, we will be able to come out and spend some time with us.
Operator: Our next question is from Amit Dayal of H.C. Wainwright.
Amit Dayal: So Tony, just with respect to these Stage 3 orders, does that involve any deposit or advances from the customer?
Anthony Aquila: Those are committed purchase orders. So they'll either have deposits or they'll have, so to speak, binding agreements. In other words, based on the credit we'll predicate whether we want the discount or not -- I mean a deposit or not. So in certain cases, we'll take them. In certain cases, we won't just because of the type of buyer. That makes sense?
Amit Dayal: Yes, yes. Understood. It does. And then
Anthony Aquila: .
Amit Dayal: Yes. What's the expected mix for the 2022 target of 3,000 to 6,000 vehicles between lifestyle and delivery?
Anthony Aquila: So we sourced it so that it can have a little bit of flexibility. But right now, we're kind of 80-20 focused with some deviation capability between the LDV and the LV. And the main reason is these larger customers, they have long-term needs and getting them more used to the product and how it changes their workflow is important. So that's why we're kind of entering an allocation game with those customers. So right now, that's kind of the current mix, capability. To the extent that we need to make sure we're getting enough of the LVs out, we have the ability to also produce that. I think the biggest -- we brought our numbers down. So holding at 3,000, I think somebody just recently dropped by 1/3 or so. It's a tough environment. The first year or 2 are tough. But right now I feel like we've already done, aligned to what we can do. We feel pretty good about it. We still got a little stretch in there, but we got a pretty wide range between 3,000 and 6,000. And we're just going to keep our heads down and knock it out and not get too big. But the way things are firming up, we're going to need to find ways to accelerate our ability to deliver vehicles which is a good problem to have. I mean we're people who love to create problems worth solving and then solving them. It's no fun solve a problem you don't have.
Amit Dayal: Understood. You touched on inflation, Tony, trying to sort of control inflationary trends and things of that nature. Has there been any change in your pricing plans for the vehicles given the inflationary environment we are in right now?
Anthony Aquila: So we just recently had a meeting with a bunch of our partners, suppliers and vendors, and we've seen certain parts that were $2, $3 go up to $100. But I think our view was way back when, when we took over to bring the volumes way down is we -- committing to 50,000, 60,000, 75,000 units, a vendor or supplier is never going to believe you anyways when you're going to start, you're new, having been on the other side. So you kind of price it accordingly, and then you actually get ratcheted the wrong direction. So I think a lot of them are going to be facing some hurtful ratchets on their cost structure. But nonetheless, just the environment with the geopolitical and the pandemic, we've seen a few items go from a couple of dollars to $100. And -- but will we pass that cost along? No, the reason is, with those particular vendors, we are working with them on mitigation strategies, and we never overextended ourselves on commitments. So we can pivot to another supplier if we have to and/or bring it in-house. So I think it'll be a bumpy couple of years in this category for all of us as things smooth out and things calm down. But we've eliminated so many parts. That's our best inflation fighter, innovation. And -- but we are taking hits here. Labor costs are higher. Shipping costs, I mean, gosh, we'd be sitting here telling you about thousands and thousands of dollars per unit increases if we were still bringing the vehicle from Europe. Not to mention the lead time. I know I was talking to somebody the other day. They got 6 containers that can't move and won't move for weeks. So I think we're making the right steps. I mean there's always -- like I said, we live in a constant state of dissatisfaction. It's not a small task. But we're not trying to win it in a quarter, right? We're really grinding it out, navigating these items. But right now, we are holding the line on the pricing we've aligned with, but we went into that with cushion. It's getting away. And I do believe we're priced if you study us historically, we've always been able to bring price up a bit because the consumer backs us, the customer back us. And that's a partnership. And so if you look at where we were when others were at 70%, right, I mean I think our RBIs kind of speak for our thoughtfulness. I know many people have said, why don't you guys say more because it's tough to always pull those words back. I'm sure someday we'll pull a few here and there back. But you want to minimize that. Misses happen, but mitigation is something we are constantly focused on here, which is allowing us to keep pushing through those milestones.
Operator: We have reached the end of the question-and-answer session. And this does conclude today's conference. You may disconnect your lines at this time. Thank you for your participation, and have a great day.
