Texas Instruments Incorporated : TXN OQ Transcript 2024 05 30T14 00

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TXN.OQ - Texas Instruments Inc at Sanford C Bernstein Strategic Decisions Conference

EVENT DATE/TIME: MAY 30, 2024 / 2:00PM GMT

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MAY 30, 2024 / 2:00PM, TXN.OQ - Texas Instruments Inc at Sanford C Bernstein Strategic Decisions Conference

C O R P O R A T E P A R T I C I P A N T S

Haviv Ilan Texas Instruments Inc - President, Chief Executive Officer, Director

C O N F E R E N C E C A L L P A R T I C I P A N T S

Stacy Rasgon Sanford C. Bernstein & Co., LLC. - Analyst

P R E S E N T A T I O N

Stacy Rasgon - Sanford C. Bernstein & Co., LLC. - Analyst

So I guess we will get started. Good morning, everyone. Thank you for coming today. I'm Stacy Rasgon. I'm Bernstein's senior research analyst. I cover the U.S. semiconductor and semi-cap space, and I can't express what an honor it is to have our guest here today, Haviv Ilan, the president and CEO of Texas Instruments.

Now before I start, I want to mention, if you have questions you'd like to ask during the presentation, there should be a QR code in your program. It links to our pigeon hole form. You can submit questions there, and we will have time for Q&A in the end. So look, like I go on every year at this session. TI is usually here. And I always talk about the remarkable multiyear transition story that benefited TI like over the years, and they've made it look easy. They like to say that people see them as boring. I'd say that the company and the stock and the strategy have been a little less boring lately, and I want to dig into that. So to help us understand why, it's my great pleasure to welcome Haviv. So thank you so much for being with us here today.

Haviv Ilan - Texas Instruments Inc - President, Chief Executive Officer, Director

Thank you, Stacy, and thanks for having us.

Q U E S T I O N S A N D A N S W E R S

Stacy Rasgon - Sanford C. Bernstein & Co., LLC. - Analyst

So I want to start out, I think, I guess, with the Elliott in the room. So clearly, I don't think TI has ever had an activist involved. And maybe just to start out there, can you -- just to level set where we are, can you just go over what the actual baseline plan is for your capacity and CapEx investments? And then I want to talk a little bit about the letter itself and the case that they're kind of laying out and just get whatever you -- because I don't know how much you can say at this point -- but like whatever you can say, I'd love to hear your thoughts.

Haviv Ilan - Texas Instruments Inc - President, Chief Executive Officer, Director

So thanks for the question, Stacy. I definitely expected it. But I can't say a lot. Just to give you the facts, we have learned about it on Tuesday morning for the first time. So it's pretty fresh to the team. We are, of course, reviewing the notes and definitely look forward to engaging in a constructive dialogue with Elliott. I will say that, as always, we run the company and make decisions to support the company -- the entire shareholders of the company -- so that will continue to guide us moving forward.

Now, I won't go into the details today because I think it's fair we do that with Elliott first, but I will be happy to talk about our plan. First, we can talk about the why and the what and provide as many details as needed as you go through your questions.

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MAY 30, 2024 / 2:00PM, TXN.OQ - Texas Instruments Inc at Sanford C Bernstein Strategic Decisions Conference

Stacy Rasgon - Sanford C. Bernstein & Co., LLC. - Analyst

Got it. So I guess just to level set on the current point, let me know if I got it wrong. So it's $5 billion in CapEx per year from '22 to '26, and that was taken up from $3.5 billion to $5 billion. My impression there was you're effectively reinvesting the investment tax credit in more CapEx because the depreciation guidance at the time was sort of held constant. So $5 billion through '26, and then '27 and beyond was 10% to 15% of revenue on CapEx to support, in theory, 7% to 10% revenue growth at that point. Do I have that right?

Haviv Ilan - Texas Instruments Inc - President, Chief Executive Officer, Director

Well, let's -- some cases and some of the points, yes. Some of the points I would like to provide a little bit more detail. But first, let's think about the investment phase --

Stacy Rasgon - Sanford C. Bernstein & Co., LLC. - Analyst

And why, to your point? Because I mean I think by the end of '26, maybe by 2030 the revenue capacity was -- I can't even remember was supposed to support -- I can't even remember the number. Was it $30 billion? Maybe it was more.

Haviv Ilan - Texas Instruments Inc - President, Chief Executive Officer, Director

Again, we'll talk through this. But let's talk about the why first, and the why starts with the market opportunity. I think it's obvious to us that the secular growth in industrial, in automotive, is actually accelerating. Of course, sometimes tough to see when you go through a correction -- and there is an inventory correction in the market -- but if you put it over a trend line, it's obvious that secular growth is there, and in my opinion, accelerating inside this decade.

Stacy Rasgon - Sanford C. Bernstein & Co., LLC. - Analyst

Because this is -- industrial auto, I mean, you've been pushing this. You were one of the first, I think, (inaudible) got to be 10, 15 years ago at least, right?

Haviv Ilan - Texas Instruments Inc - President, Chief Executive Officer, Director

Which leads me to our position and the position of -- we talk a lot about revenue, but revenue doesn't get created just by letting the market grow. It's related to our investment and our strategy. And you're right. I remember 2010, 2011, we said, hey, we are going to bias our investment, our R&D, our SG&A towards these markets, with a vision that secular growth is going to come. And we have done well. I mean I have seen the R&D machine cranking out more and more parts. We used to have one business unit building automotive parts, for example, in 2010. Each and every business unit in the company -- and the number of product lines is more than 60 product lines, they all build automotive products. So the opportunity is very, very vast, and this is how we build the position. You create the product portfolio, you engage with customers, you invest in your sales and application team, you invest in your website, which led to a strong position of almost 75% of our revenue in 2023 in industrial and automotive. So to me, to be exposed at such a high level to, I believe, a couple of the fastest-growing markets in the semiconductor industry is a good position to have. The third one, and I think we talked about it even last year, there is also a tailwind on how customers make decisions. And we run an average unit price around $0.40 or so more or less (technical difficulty) market. And these decisions would be made at the lowest level of the engineering force at our customers. But today, especially in the last couple of years, our customers received guidelines from their leadership team, from their CEOs, from their CPOs about the dependability of capacity, and TI is in a unique position to provide this geopolitically dependable capacity at a very affordable cost-competitive manner and also with muscle or the size of the capacity. So when you think about these three elements and you say, hey, we have grown industrial and automotive between 2013 to 2023 at 10% CAGR. Could we accelerate it this decade? I think we can. Hard to see right now because we are going through an inventory correction. But the nice thing about the next peak -- this is what guides our preparation.

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MAY 30, 2024 / 2:00PM, TXN.OQ - Texas Instruments Inc at Sanford C Bernstein Strategic Decisions Conference

I want to be ready to support this potential, and this is why we are invested in capacity -- okay? And it's done in three phases, and I would like to go through (multiple speakers).

Stacy Rasgon - Sanford C. Bernstein & Co., LLC. - Analyst

Yes, please. There's a lot of different pieces here.

Haviv Ilan - Texas Instruments Inc - President, Chief Executive Officer, Director

Yes, and it's very complex. I can tell you that the execution of that plan is complex, and it's actually more than three years of an investment period. It's six years, started in 2021, with the acquisition of the assets from Micron (multiple speakers) acquisition. And then working through 2022 to qualify the fab and to ramp it to production, which we have done at the end of '22. I think I was here a year ago, and we talked about the fab is ramping to production. We have continued to do that. And I love Lehi, because simply it doesn't need revenue growth to get utilized. So you think about Lehi as a transfer fab. This is where every week, we have wafers moving away from TSMC, UMC into Lehi. It's done in two waves. Wave --

Stacy Rasgon - Sanford C. Bernstein & Co., LLC. - Analyst

Just analog then, or it's embedded here?

Haviv Ilan - Texas Instruments Inc - President, Chief Executive Officer, Director

Starting with embedded, but analog is following. Let me start there to give you some more granularity here. 2022 was really F65 we call it, or 65-nanometer embedded nonvolatile memory, serving low-power MCU, serving DSP, serving wireless connectivity. All of these parts are now qualified in Lehi and shipping from Lehi. Not only you get more control shipping out of Utah versus Taiwan, but cost or the fall-through is tremendous. Think about what happened with wafer prices with the foundries in the last couple of years. The Lehi investment is predominantly done. The main power was there when you took the team, the fall-through is almost a variable cost of the substrate, some gas and some electricity. So a very beautiful transfer of revenue from a foundry into -- inside TI, and allows us also to win more business with the dependability of capacity. Lehi in essence as it ramps to full production somewhere in 2025 will be simply revenue replacement. It doesn't need growth.

Stacy Rasgon - Sanford C. Bernstein & Co., LLC. - Analyst

Okay. How much revenue does Lehi support when it's at full capacity?

Haviv Ilan - Texas Instruments Inc - President, Chief Executive Officer, Director

So I think the -- it's close to $4 billion which is aligned -- and it depends on the mix. It's going to start with embedded and later on what we call high-speed mixed signal analog. This is what we do right now. So 45-nanometer this year, and next year is analog. So when you complete that, more than $4 billion of revenue support. It's a very nice fall-through. So that's point number one.

The point number two that is going right now is RFAB2. RFAB2 is again a beautiful investment because the fabs are connected. So if you think

about the way you add capacity...

Stacy Rasgon - Sanford C. Bernstein & Co., LLC. - Analyst

RFAB1 was the original one back from 2010 with the Qimonda assets?

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MAY 30, 2024 / 2:00PM, TXN.OQ - Texas Instruments Inc at Sanford C Bernstein Strategic Decisions Conference

Haviv Ilan - Texas Instruments Inc - President, Chief Executive Officer, Director

Correct. The cost to build RFAB1 was much lower. Of course, we bought equipment $0.10 on the dollar. These days are over, and we can talk about why, but I think we all know why. And RFAB2, we've built the shell. I wish we had it earlier supporting the previous cycle, but it supports us right now. And the way it does it is as you add equipment into RFAB2, wafers are traveling between the two fabs. So it's actually one big connected fab, which is a very efficient way to add modular -- modular way of adding equipment. But more importantly, the customers don't see it as a new factory. So I don't need to --

Stacy Rasgon - Sanford C. Bernstein & Co., LLC. - Analyst

You don't have to requalify or anything.

Haviv Ilan - Texas Instruments Inc - President, Chief Executive Officer, Director

No requalification, no change notification, it's the same factory. So that serves us very well, especially now because, Stacy, I'll be very frank, part of the headwinds we experienced in '21, '22, we simply did not have enough capacity. And I was in the center of making some very tough decisions of who are the customers that are going to be told, hey, you have to find a different supplier, and it was very tough. I'm talking about a huge amount of revenue that we had to say, not right now, mainly outside of industrial and automotive. So think about consumer, think about enterprise, some of the comms and -- tough. But now as RFAB2 ramps, we go back to these sockets, and we go and rewin, and it's a very, very effective way to do it, very low cost. And that's one of the ways that RFAB2 right now is highly utilized.

Stacy Rasgon - Sanford C. Bernstein & Co., LLC. - Analyst

Are you rewinning those sockets?

Haviv Ilan - Texas Instruments Inc - President, Chief Executive Officer, Director

We are. I think customers are smart. I don't think we will be handed over 100% share, but let's start at 50% and work ourselves from there. So I think that is very, very important and again, RFAB2 is fully utilized these days. They're fully utilized. It's not at full capacity because equipment is being added.

Stacy Rasgon - Sanford C. Bernstein & Co., LLC. - Analyst

But for the equipment that's there --

Haviv Ilan - Texas Instruments Inc - President, Chief Executive Officer, Director

Yes. Yes. I mean when I say full, above 90%, okay?

Stacy Rasgon - Sanford C. Bernstein & Co., LLC. - Analyst

And that supports another, what, $4 billion or $5 billion when it's fully (multiple speakers).

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MAY 30, 2024 / 2:00PM, TXN.OQ - Texas Instruments Inc at Sanford C Bernstein Strategic Decisions Conference

Haviv Ilan - Texas Instruments Inc - President, Chief Executive Officer, Director

When it's fully built, it's going to be close to $6 billion, okay? And the other point, which is -- again, now it's more tactical, but there is also transfer wafers to RFAB -- this is the first time we do it. It's not usual, but we are transferring wafers from our 150mm wafer fabs. As we announced, I think you -- maybe people don't remember that $2 billion a year kind of fab in Sherman. In Dallas, one 6-inch fab.

Stacy Rasgon - Sanford C. Bernstein & Co., LLC. - Analyst

I thought you closed all your 6-inch fabs.

Haviv Ilan - Texas Instruments Inc - President, Chief Executive Officer, Director

We haven't. We haven't. But we are doing something very unique, modernizing these parts. So think parts even from the Burr Brown days (multiple speakers), getting redesigned into modern 300-millimeter wafers. So think about from 2,000 chips per wafer into 0.5 million (multiple speakers) in real cases cost becomes quote-unquote really just package and test costs. And the exciting part is -- forget about the cost fall-through, it's really the modernization of the part, meaning customers now have the peace of mind that I can run through the next 40 or 50 years. So they know that they are out of old factories and they have -- they can design them in into future systems, especially at the lower cost that we are running in right now. I'm excited about that. That's another -- again, when we talk about capacity, yes, there is $30 billion, but these fabs are going to shut down. So this is also a tailwind that no one takes into factor. What I'm excited about, and we build these factories during a downturn revenue decline because revenue is starting to stabilize and maybe starting to show momentum. Having these two factories running at full capacity, one on the expense of the foundry, one on the expense of our 200mm. So underutilization in 200mm and 150mm may be growing, but our 300mm wafer fabs are running at full and I think --

Stacy Rasgon - Sanford C. Bernstein & Co., LLC. - Analyst

And those ones are fully depreciated anyway, the 200 --

Haviv Ilan - Texas Instruments Inc - President, Chief Executive Officer, Director

Yes, but you know, there is still labor there, and there is underutilization associated with them. But that's hard work, to utilize your best capacity or most modern capacity, especially because it prepares you for the future. I'm excited about that, and I think people underestimate that. And you will see that fall through. You don't have to wait 15 years for that, okay? That's coming now, as we speak. So this is phase one, you know. LFAB2…

Stacy Rasgon - Sanford C. Bernstein & Co., LLC. - Analyst

That's all phase one.

Haviv Ilan - Texas Instruments Inc - President, Chief Executive Officer, Director

Phase one, yes. This is LFAB1 and RFAB2. Now, the more complex one is -- let's talk about LFAB2 and talk about Sherman, which is the heavy lifting in Texas. LFAB2, in my opinion, more straightforward. It's also on our slide, large investment, on our largest fab.

Stacy Rasgon - Sanford C. Bernstein & Co., LLC. - Analyst

$11 billion.

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MAY 30, 2024 / 2:00PM, TXN.OQ - Texas Instruments Inc at Sanford C Bernstein Strategic Decisions Conference

Haviv Ilan - Texas Instruments Inc - President, Chief Executive Officer, Director

Yes. And we support probably more than that on revenue. Sophisticated type of product compared to what we do. So running from 65 all the way to 28.

Stacy Rasgon - Sanford C. Bernstein & Co., LLC. - Analyst

Do you have any products on 28?

Haviv Ilan - Texas Instruments Inc - President, Chief Executive Officer, Director

We are developing that now. It's our own process, and the investment is tailored to our portfolio, mainly led by embedded but also high-speedmixed-signal for analog. And these will ramp sometime in -- it will ramp actually in LFAB but we'll continue to ramp in LFAB2. In LFAB2, when we think about 2026, why we have 2026 as a milestone, this is when we are ready to receive tools.

Stacy Rasgon - Sanford C. Bernstein & Co., LLC. - Analyst

For LFAB --

Haviv Ilan - Texas Instruments Inc - President, Chief Executive Officer, Director

Yes. And LFAB2 is a beautiful fab because it's connected. So we will add in a modular way to -- as a function of revenue. And we said, I think, in the last capital management, we will decide capital beyond '26 based on where revenue is. First, what's your position. And then growth perspective. So you said 10% to 15%, so I disagree. It's (multiple speakers).

Stacy Rasgon - Sanford C. Bernstein & Co., LLC. - Analyst

That was also on the slide, I think --

Haviv Ilan - Texas Instruments Inc - President, Chief Executive Officer, Director

But it's a funnel, it's a funnel. Okay. We also - thought should we change the slide? We decided not to touch it, but I think you asked a question during that call, it can go from zero to

Stacy Rasgon - Sanford C. Bernstein & Co., LLC. - Analyst

Right. I mean, if revenues are growing 2% in '27, I'm assuming that [your CapEx would be lower] (corrected by company after the call).

Haviv Ilan - Texas Instruments Inc - President, Chief Executive Officer, Director

Absolutely. And then you think about the fall-through, it's immediate, right? So that's just to clarify 2027 and beyond on that investment.

Now Sherman is a little bit more complex. And the reason is Sherman is what we call a new dot on the map. Luckily, the map is -- its proximity to North Texas. It's only 30 miles away, but it's a new fab. Then you build a new clean room, and we are building two together because it's more efficient. We said on the call equip Sherman 1. What we say equip is really qualified. So the capacity is going to be very small, less than, I think, less

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MAY 30, 2024 / 2:00PM, TXN.OQ - Texas Instruments Inc at Sanford C Bernstein Strategic Decisions Conference

than $0.5 billion of capacity in '26, but you need to build it in order to not only qualify the fab, you also have to get acceptance of your customers. So it's a long lead time type of approach. And that's how we think. You build the infrastructure so you can build into that clean room when the time comes. Same example is LFAB2 but needs some equipment in 2026. We are running the, Stacy, analog right now, copper and aluminum, 130 to 65. So it's a very sophisticated fab. The revenue (multiple speakers).

Stacy Rasgon - Sanford C. Bernstein & Co., LLC. - Analyst

That's the plan for Sherman right now?

Haviv Ilan - Texas Instruments Inc - President, Chief Executive Officer, Director

Yes. And revenue per fab is going to be close to $9 billion over there.

Stacy Rasgon - Sanford C. Bernstein & Co., LLC. - Analyst

And there's going to be four fabs eventually?

Haviv Ilan - Texas Instruments Inc - President, Chief Executive Officer, Director

Correct. But again, you build according to revenue. The beauty of SM1, SM2, and again, they are connected, we can think about them as one large fab as you add capacity in a modular way based on revenue. So just to go into more details about our plan and also to clarify the '27 and beyond. Now we said we finish it in '26. We always try to execute at the best level, and it's within '26. I don't have the exact month yet, but I think we should be done some of them at the end of '26, some of them earlier. So that will guide later on our capacity investment.

Stacy Rasgon - Sanford C. Bernstein & Co., LLC. - Analyst

I guess if I add all of the incremental revenues, we had Lehi, which was -- maybe I don't know how much of it is incremental from where we are

right now, it's somewhere you look maybe it's...

Haviv Ilan - Texas Instruments Inc - President, Chief Executive Officer, Director

Yes, don't think about Lehi as incremental revenue.

Stacy Rasgon - Sanford C. Bernstein & Co., LLC. - Analyst

Okay. Okay. And I guess same thing with Lehi 1 and 2. So Lehi 2 is $11 billion. And then it sounds like Sherman when it's done is what $36 billion, $9 billion apiece you said.

Haviv Ilan - Texas Instruments Inc - President, Chief Executive Officer, Director

That's what we talked about 10 to 15 years, but we'll build them as revenue comes.

Stacy Rasgon - Sanford C. Bernstein & Co., LLC. - Analyst

Incremental revenue capacity growth between now and '26 is primarily Lehi 2 then, is what you're suggesting?

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MAY 30, 2024 / 2:00PM, TXN.OQ - Texas Instruments Inc at Sanford C Bernstein Strategic Decisions Conference

Haviv Ilan - Texas Instruments Inc - President, Chief Executive Officer, Director

No, it's 0 from Lehi 2. Lehi 2 as we said at the end of '26, it's clean room only, okay? The $11 billion is for, of course, for clean room and equipment, mostly equipment. Equipment doesn't start before '27.

Stacy Rasgon - Sanford C. Bernstein & Co., LLC. - Analyst

Okay. So there's $5 billion a year in spending between now and '26, but there's not a ton of incremental revenue capacity that's ready to go between now and '26.

Haviv Ilan - Texas Instruments Inc - President, Chief Executive Officer, Director

No. RFAB2 is incremental revenue. Of course, we are right now winning back sockets, but it gives you more capacity. So capacity for the company will grow. We mentioned, I think, supportability of $13 billion, but that's a sterile number. Included in there is mix, but it's never 100%. And I have a couple of fabs I need to shut down. So all of that gives you the picture of where we can be. Now let's talk about the revenue, Stacy, and I look at it peak to peak. So 2014, 2018, 2022, TI grew between every peak every time, 21%, I think, 27%, and you named a year and the growth of maybe let's take 2026 as an example but it's exactly that 4-year span. I don't think revenue is going to be flat to 2022, especially how was it was compressed in 2022 and especially (inaudible).

Stacy Rasgon - Sanford C. Bernstein & Co., LLC. - Analyst

How much revenue do you think you gave up or left on the table in by '21 and '22 because of the constraints you had?

Haviv Ilan - Texas Instruments Inc - President, Chief Executive Officer, Director

Look, we have done that discussion internally; it's significant, and it was concentrated on the three markets I've mentioned.

Stacy Rasgon - Sanford C. Bernstein & Co., LLC. - Analyst

Because it really is interesting if you actually look at the data over the last like four, five years. I mean, you clearly did lose share. I mean, is this the primary reason? Because it wasn't just analog -- it was analog, and it was embedded. If I just look like strictly just at China as well, I'm sure we'll get to China, but everybody is worried about the Chinese taking share, and like broadly the multinational analog players have been gaining share in China except for you. Like you've been losing share in China over the last several years if you just the data. Do you think it was just all because of constraints? Do you think there was something else going on? And is there anything changing there?

Haviv Ilan - Texas Instruments Inc - President, Chief Executive Officer, Director

So yes, first, as we like to talk about market share, as you see there is -- we have forecasted Q2. I think revenue is building momentum. Let it play out, okay? And we are not done with the asynchronous market (inaudible) inventory digestion. So let's go through this. But I will say that it is a big part of the issue. I will say that the decisions were to -- how to select the customers in which you will have to take a step backwards. I mentioned the markets. And in China, we had some big customers on the consumer side, and we had to give up some of the sockets. But they see what we are doing right now, and they're willing to entertain us, and we are going to fight hard and get back on the board. So that's the China comment. And I can talk more about China later. But to me, compression.

The second point, and I was just about to say something -- how we peaked in '22 -- and analog peaked in '22, and embedded actually peaked a year after, the middle of '23. But if you think about the pricing move of Texas Instruments versus the competition, and I listen to all the numbers,

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MAY 30, 2024 / 2:00PM, TXN.OQ - Texas Instruments Inc at Sanford C Bernstein Strategic Decisions Conference

and I look at (inaudible) -- we have to distinguish between ASPs and pricing. It's not always the same. There's a ton of mix going on there right now because of the asynchronous nature of the market. But if you look at -- just to listen to what people did and also hearing it from our customers, I think we were the most customer-friendly. We haven't hiked the price to the level that people did. And that's part of the compression of the peak in 2022. That's my belief. This is why I give ourselves a good chance to form a new peak. And also the probability is very important, Stacy. How bad will it be to have the opportunity again in '26 and not execute? That would be devastating for the company, and we are not going to let that happen.

Stacy Rasgon - Sanford C. Bernstein & Co., LLC. - Analyst

Yes. I mean your inventory strategy flows into this is correct. So I find it interesting that -- I wondered about -- I know you guys were constrained, but at the same time, you were also building a ton of inventory, and you still are -- and again, I'm not going to -- I understand why, I understand the whole idea of the lifetime of the product as we move on, it doesn't go stale. Did you just build the wrong kind of inventory like at that point? Was it just hard to match what you built with (inaudible).

Haviv Ilan - Texas Instruments Inc - President, Chief Executive Officer, Director

The beginning of COVID maybe.

Stacy Rasgon - Sanford C. Bernstein & Co., LLC. - Analyst

The beginning. (inaudible) Yet like anecdotally a lot of the constraints were coming from TI.

Haviv Ilan - Texas Instruments Inc - President, Chief Executive Officer, Director

So let's be fair. Maybe we built a ton of inventory of which we have built two tons of inventory. Okay. So it was not the wrong inventory. It was the right one.

Stacy Rasgon - Sanford C. Bernstein & Co., LLC. - Analyst

Not enough of it?

Haviv Ilan - Texas Instruments Inc - President, Chief Executive Officer, Director

Not enough. Because that's why we were flying high at the beginning of the upcycle because we had inventory. We were unique there. We had product on the shelf.

Stacy Rasgon - Sanford C. Bernstein & Co., LLC. - Analyst

You were the only ones that actually decided to keep running on COVID. Everybody else shut down. It was a problem, right?

Haviv Ilan - Texas Instruments Inc - President, Chief Executive Officer, Director

Correct. I don't think it was well received at the time, but all we wish right now we had more, right? And that's what guides our current inventory investment, which it's the right part because we have the right data to know it's the right parts. And we think it's going to step up very well, especially if the surge is (inaudible). And at least I want to prepare at least to similar historical surges. Stacy, if you look -- I know you look at the units. You

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