Thank you for standing by, and welcome to Micron's post-earnings analyst call. At this time, all participants are in listen-only mode. After the presentation, there will be a question and answer session. To queue up for a question, you'll need to press star one one on your telephone. To remove yourself from the queue, simply press star one one again. As a reminder, today's program is being recorded. I would now like to introduce your host for today's program, Farhan Ahmad, Vice President, Investor Relations. Please go ahead, sir. Thank you, and welcome to Micron Technology's fiscal third quarter 2023 sell-side analyst call back. On the call with me today are Sumit Sadana, Micron's Chief Business Officer; Manish Bhatia, our EVP of Global Operations; and Mark Murphy, our CFO. As a reminder, the matters we are discussing today include forward-looking statements regarding market demand and supply, our expected results, and other matters. These forward-looking statements are subject to risks and uncertainties that may cause actual results to differ materially from the statements made today. We refer you to the documents we filed with the SEC, including our most recent Form 10-K and 10-Q, for a discussion of the risks that may affect our future results. Jonathan, we can now open the Q&A. Certainly. One moment for our first question. Our first question comes from the line of Toshiya Hari from Goldman Sachs. Your question, please. Hi, good afternoon. Can you hear me okay? Yeah, we can hear you, Toshiya. Okay, great. Mark, maybe on the CAC dynamic, I know there was a question on the main call as to what's assumed in the current quarter. I thought I'd give another shot. What is assumed in terms of potential headwind from the CAC ruling in China? I guess on the CAC dynamic, you know, just at a very fundamental level, what's driving the uncertainty with regards to how customers respond? Is it the guideline itself that's uncertain, therefore, like, your customers are confused and perplexed as well? Do the customers know what they need to do, but they're just not telling you? Just curious, what's driving the uncertainty? It's a sensitive matter, so we're not going to talk a lot about it. We're trying to be talk to what we know and understand, the situation is still evolving. There's uncertainty associated with it, and it is challenging. We have outlined our what we view as our exposure, and we view our principal exposure as China-headquartered companies, which we've identified as, you know, direct sales to China-headquartered companies or sales of distributors into China-headquartered companies. That total China exposure, which is the principal exposure, is 25%. We see, you know, the risk associated with our business, which we've sized, is about half of that. That's the, you know, potential risk that we see at this time. Now, we had very little effect in the third quarter. We expect. Well, we see more of an effect, a more material effect in the fourth quarter and the first quarter. Then we anticipate that, you know, working with customers and share redistribution and other things may mitigate the impact. We've not, we have a number in our guide, of course, and, you know, you can assume that it's not the full amount of the exposure at this time. I think that's. Yeah, hopefully provides you some boundary conditions for the exposure. Got it. Then as a quick follow-up, another one for you, Mark, just on cash flow. I think on the call, you guys talked about cash flow likely to, you know, it is likely to remain challenged or extremely challenged for some time. You're sort of calling the bottom on the cycle. You know, given the supply side cuts, I think, you know, working capital hopefully starts to become more positive as opposed to being negative over the coming quarters. You know, net, how should we think about free cash flow potentially returning to positive territory? Obviously, not in the near term, but perhaps sometime in fiscal 2024. How should we think about the pluses and minuses? If you can talk to potential government subsidies, whether them being in the U.S. or elsewhere, that would be helpful as well. Thank you. Sure. I'll talk about, you know, to your point, I'll talk a bit about CapEx also. But, you know, the speed and the depth of the decline we've had in the business, combined with, you know, the node investment cycle that we had early in the downturn, you know, resulted in substantial cash flow use, and we saw that in the first quarter, the second quarter, and the third quarter, with peak use in the second quarter of, you know, $1.8 billion. As we reported, we were at $1.4 billion this third of negative free cash flow. The market conditions, they remain weak, and we have high fixed costs. You know, we are trying to remain operating cash flow positive through this period of weakness, and we were able to do that in the third quarter. You know, at these low levels of operating cash flow, though we've reduced CapEx considerably, we expect to be negative free cash flow into and through a good part, if not all, of FY 2024. Just depends on how the market recovery proceeds and how comfortable we are in, you know, the profile of CapEx spend. We're always circumspect on capital spending, we're gonna obviously keep spending low until we see clear signs of recovery. You know, we've already pulled WFE down 50% year-over-year. Next year, WFE will be lower than this year. you know, it's noteworthy that in the fourth quarter, our WFE is only gonna be 20% of spend. I mean, we've really, you know, cut down spending on tools. you know, we are projecting the market to find its footing, and improvements materialize from here and lead to operating cash flow growth in the second half of FY 2024. as long as we see that coming together, you know, it's reasonable to assume that CapEx levels, you know, may be around this year's levels with more of a construction mix than this year, and also more back half weighted, you know, given that we wanna make sure that the market's recovering before we spend. As mentioned on the call, that would include an increase in HBM spend versus, you know, prior plans. Again, you know, the rate and pace of recovery will be in large part driven by, you know, the industry's supply response. We're being very sensitive about, you know, any incremental bit capacity. You know, there's just some strong actions on the supply side are still needed to, you know, given where inventories are. Appreciate it. Thank you so much. Thank you. One moment for our next question. Our next question comes from the line of Aaron Rakers from Wells Fargo. Your question please. Yeah, thanks for doing this call back. Mark, I got 2 questions. I wanna start with the gross margin, I apologize for trying to unpack this a little bit further, you know, as we kind of think about the fact that the inventory charges are now kind of abating, I guess the question is: Is that relative to the $300 million positive effect of kind of the sell-through of previously written down inventory, would you not expect that to potentially trend materially higher over these next couple of quarters? Also in that gross margin, how are we thinking specifically around the wafer reduction underutilization costs? I think you talked about $200 million in fiscal 4Q embedded in the guide. I think in the prior filings, I think in total there's around $300 million for the full year. Is that still the case? Just trying to, you know, think about those two variables in particular. I got one other question. Yeah. Let me get started, and you can kind of ask questions along the way, because it's a very complicated topic. I, you know, wanna make sure that we're answering your questions. On the first one, I think your question was around, you know, we realized the benefit of lower cost inventories in the third quarter, just under $300 million, you know, close to what we had expected. I think your question is: How does that look in the next several quarters? It does increase. We expect about a $500 million benefit in the fourth quarter, we expect about $500 million in the following two quarters. That, you know, that's the, you know, benefit on that lower cost inventories that sort of as it clears, the next several quarters. You know, on your question of, you know, the underutilization charges, you have two components of that. You have the amount that's in inventories, and you have period costs. Interestingly, most of the write-down, you know, in the third quarter was related to that underutilization related costs and inventories. That's what makes this complicated on a go-forward basis, because you've got a lot of those, underutilization costs and inventories get pulled forward to these charges. That's happened. You have the period costs left behind, you know, as I mentioned on the call, you've got about $200 million of period costs in the fourth quarter. You've got another $200 million-ish in the first quarter, you know, some of those period costs start to trail off. I did mention that the underutilization charges, so the higher cost inventories, associated with underutilization charges, they do persist through, you know, FY 2024. You know, obviously, the effect on margin's a function of the revenue. You know, I said the effect is kind of, from high single-digit down to mid single-digit through the year on a%. Yep. That's perfect. My other quick question was just, you talked about $6 billion as kind of the normalized inventory level. You're at $8.2 billion, but then you also said that you're carrying about $1 billion or so strategic inventory reserve. You know, when does the latter start to burn off? How do we think about what normalized looks like? Do we say $6 billion is the right number, or do we say, "Hey, when you get $7 billion, you're gonna continue to carry kind of a $1 billion of strategic inventory? I mean, there are specific reasons we're carrying some of that billion. I think the way to look at it is we're aspiring to get down to this kind of 120 days. I think that's the way to view it. We provided that number. Let's not, you know, let's not, you know, we're certainly not trying to say that, you know, that billion is the reason our inventory levels are too much. I mean, the majority of our, you know, of this, quote, "excess," so to speak, or higher inventories that we want, is not that. We're absolutely focused on, you know, and serious on our supply response to get our inventory levels down. We did wanna make it clear that, you know, we have a new target. That new target's 120 days, and that's up from what we had before at 110, and that's just due to additional process steps and the new technology, more complex products. So 120 days is the new target. We do have some strategic intentional builds that adds on top of that at this point, call it 20 days or so. You know, call it 130, 140 days, is kind of where we are in the near term, aspiring to get down. By near term, near to medium term, trying to work down to that level, probably by the end of 2024. Again, it's yeah, that leaves a considerable amount, you know, of inventories to work down, to get to that level. Yep. Thanks, Mark. Thank you. One thing I just wanted to clean up here, it came up on the call, and I don't know if Ambrish is going to ask a question, but he asked a question about the third quarter. We said that it would be -7.5%. I went back and checked the transcript, and just to be clear, we did say that, but we said, if you were just to strip out the impairment charges, so really, it was just you know, the write-down charge. If you do that, you know, which is $400 million in our third quarter that we reported, so if you do that, you have a margin of -5.4%. You know, we actually did better than what we said we would do on the call. If we adjust for the credit, then the margin is 13%, roughly. I just wanted to mention that since it came up on the call. Thank you. One moment for our next question. Our next question comes from the line of Joseph Moore from Morgan Stanley. Your question, please. Great, thank you. In Sanjay's upfront remarks, he had talked about the GH200 from NVIDIA and kind of a partnership doing low power memory for that product. Can you talk a little bit about that and kind of just generally, when you talk about having a role for low power DRAM in these kind of bigger AI clusters, what role is that and what is Micron doing to enable that? This is Sumit. I'll just give you a quick overview on that. We have a special partnership in which this product has been developed for LPDRAM to be adapted to the data center. Typically, LPDRAM has not been used in the data center for a number of reasons, including the fact that, you know, it doesn't have the RAS capabilities, the reliability, availability, and serviceability capabilities that data center customers have relied on DDR5 and DDR4 products in the past. There is work to be done to adapt this technology, and then there is some additional features and functionality that are important to deploy, that we have worked on to create a differentiated product here that is unique in the industry. It's not a standard LPDRAM product. This product has been developed in partnership with NVIDIA, it's a unique and differentiated product. The overwhelming majority of the 144 TB of DRAM is this unique, differentiated product that we have co-developed and will be deployed in volume production. We're really excited about it. I mean, this does significantly reduce power consumption, because power consumption is a big challenge in the data center, and bringing low power DRAM to the data center through a product like this one is a big step forward, and we are really excited to be leading the industry on that front. Great, thank you for that. For a follow-up, also on the AI topic, you know, you talked a lot about HBM3, but it seems like there's also a pretty healthy market for 128 gig modules for the main memory. Can you talk about where Micron is in terms of getting qualified for that product? Sure, yeah. Yes, if you look at the whole spectrum of high-capacity memory modules, it's really 96 GB, 128 GB, 256 GB. The overwhelming majority of the high-capacity module volume is on the 128 GB SKU, very little on the 256, and the 96 GB SKU is relatively new. We do have a 96 GB product in the high-capacity module offering right now. It has been in volume production since the late part of FQ3, and it'll continue to ramp through FQ4 and the rest of fiscal 2024. We expect to sell that in increasing volumes. It's, the 96 GB module actually has performance characteristics that are indistinguishable from the 128 GB module at significantly lower cost per bit, because our implementation of the 96 GB module is through a monolithic 24 Gb die rather than using TSV, and so its cost structure is very, very good, much lower than the higher cost implementations using TSV. We are taking a very similar approach to doing 128 GB modules. We are going to be doing that using a single, in a monolithic 32 Gb die, in our 1-beta technology, for DRAM. Once again, we'll be able to do that without using TSV technology. Of course, we use TSV technology for things like HBM, and we spoke about that at length in the last call. The 128 GB module that we make with our TSV is once again going to be the industry's most cost-effective solution, best ROI solution in the market when we bring it out, and we expect it to be starting volume production in CQ2 in calendar 2024. It's making, you know, good progress towards that goal. As mentioned earlier, you know, rounding out the HBM discussion to for our AI offerings, our HBM, the HBM3, which is sort of the, call it, a next generation of HBM3, head and shoulders above current HBM3 products in the market in terms of performance, bandwidth, power consumption. We expect that to be in volume production in CQ1 of 2024. Next few months and quarters are going to be very exciting for, all of our AI portfolio and the continued ramp of our business in support of the AI offerings. Great. Thank you. Thank you. One moment for our next question. Our next question comes from the line of Sidney Ho from Deutsche Bank. Your question, please? Great, thank you. I want to go back to the gross margin calculation. Thanks for all the details there. I think, Mark, you mentioned on the call that the fiscal third quarter adjusted gross margin would be 16%, - 16%. What would be the same math if we do it for fiscal Q4, including I guess there's some benefit, you talk about $500 million in Q4? Kind of related to that, when I think about underutilization, you're now at, down 30%. You said that will continue to be well into fiscal 2024. You also talk about period costs staying at $200 million through fiscal Q1 and trail off. Does that mean that the utilization you're expecting to start increasing in fiscal second quarter? Yeah. Let me cover a few things. If we strip out the utilization of, or the write-down effects in Q4, we would have a negative gross margin of around... Hold on one second. Just give me one second. ... Maybe while Mark is doing that, I'll, Sidney, I can try and answer your question on the wafer start reductions that we talked about. Yes, we are, you know, reducing wafer starts further from we had targeted before going from 25% - 30%. You know, there are, since we're into the range that Mark talked about, where we're now seeing period costs, that increase, from 25% to approaching 30% would be largely captured in period cost increases through some in FQ4 and then, you know, into the first half of fiscal 2024. You know, what we really said was that we're planning on, or we're expecting these, you know, reductions in wafer starts to be well into fiscal 2024. We're really just, you know, keep them in place for as long as it takes to get the inventories in line, our inventories in line, and of course, till we see the industry profitability restored or on a trajectory to be restored. Then we'll bring, you know, start to bring that capacity back online. As we're going through the year, we will also, you know, as we've said before, utilize some of this equipment towards converting to new nodes more capital efficiently, right? As we have the rest, our 1-beta ramp, that's gonna continue as we have our 232-layer ramp, that's gonna continue. You know, we'll be utilizing some of this equipment towards that, you know, those conversions. That all plays into how the period costs and the inventory charges will work as we move into the, you know, through the second half of the fiscal 2024. Got it. Thank you. Sidney, just I wanted to just double check our numbers against the guide. We had said that, we'd get a roughly a $500 million benefit for the lower cost inventories passing through. If we strip that benefit, the gross margin would go from -10.5% to over 20% negative. Just since we're talking about this, I want to just maybe clear up some confusion, because there's a lot of different views you can take here, and I just want to make sure it's clear. You know, on a reported basis, because we have, you know, obviously, the big charges in the second quarter and the third quarter, and then we don't have charges or don't have write-downs going forward in the forecast. The gross margin, you know, was -31% in second quarter, it's -16% in the reported third quarter. We've guided to -10%, -10.5%, and we would expect, you know, the reported gross margin to continue to improve into fiscal, gradually, into fiscal 2024, and then eventually be positive sometime in the second half of fiscal 2024. If we, if you take our non-GAAP gross margin in third quarter of - 16%, and you strip out all the effects, and then you think about, okay, what is the, you know, what is the effect going forward with all these effects stripped out? I said on the call that under this adjusted view, we trough over the next few quarters, and then we would improve off these low levels through FY 2024. An example of it troughing is the question you just asked, where you strip out the effects and you end up with a negative, you know, 20+% gross margin, and we would expect the same effect if you adjusted for the benefit passing through. If you strip that out, we would see the same, you know, - 20+% gross margin in the first quarter. It would begin to improve, and then eventually, you're back to normal. You know, there's no more low-cost inventories passing through. You pick up, you get back in sync with the reported gross margins. Again, in the second half of the fiscal year, you eventually have positive gross margin. Got it. That's. hopefully, that's clear. That's great. Maybe one quick one. If I, you guys talk about some of the customers considering strategic buys, and we've heard that from some of the OEMs as well. What does that mean to demand your the demand for your products in future quarters? Do they just become a pooling of demand into the current the next quarter? Or do the customers lock in a low price, but the delivery is still in the future? Can you just walk us through the different scenarios? That'd be great. Thanks. Typically, we provide the pricing only for the quarter in which the product is shipped. If a customer is interested in purchasing more than, call it, their natural demand in this quarter, then to get the current price, they would have to take the shipments in this quarter. Typically, the price would have to be attached to the timeframe for which. and would have to be competitive and appropriate for the time frame in which the shipments are being made to the customers. Sometimes some customers purchase inventory and park them at third parties, which have a business model to carry these inventories for certain monthly costs, and that has been done in the past. I will say that the end-to-end inventories are improving and the third-party inventories have gone down substantially over the course of the last few months for both DRAM and NAND, but much more so for DRAM. The reductions in inventories at third parties has been very for DRAM in the last several months. This is, this is how we do it with customers. Okay, thank you. Thank you. One moment for our next question. Our next question comes from the line of Vivek Arya from Bank of America Securities. Your question, please. Thanks for the follow-up. For my first one, I'm curious, what's your current, you know, level of kind of D5, sales and HBM sales exposure, and where do you see it going over the next year? We have provided input that our D5 sales, we expect to continue to increase as our mix of shipments moves more and more towards D5 versus D4. We have provided some input that we expect our D5 volumes to cross over D4 in our shipments around the end of calendar Q1 in 2024. We expect the industry D5 shipments to cross over D4 towards the middle of calendar 2024. We have been leading the industry in terms of D5 capability, performance, quality, and so on, for since the time D5 was introduced, in fact. Our mix of D5 continues to be ahead of that of the industry in our business. As it relates to your question on HBM, we did have volume production of HBM2E, which was the prior generation of HBM, and we got very good learnings out of that, and we got a decent amount of revenue there. That was towards the tail end of the HBM2E market adoption curve, which moved quite rapidly to HBM3. As we mentioned before, our ramp of HBM3, actually the sort of the next generation of HBM3, which is a much higher level of performance, bandwidth, and lower power than what is in production in HBM3 today in the industry. That product, industry-leading product, will be ramping in volume starting CQ1 of 2024, and will be meaningful in revenue for fiscal year 2024, and then substantially larger in 2025, even from those 2024 levels. We are targeting a very robust share in HBM, higher than our natural supply share for DRAM in the industry. Got it. Very helpful. Then, maybe, Mark, one for you on gross margins. Let's say, hypothetically, let's say your Q1 sales units, ASP, are all kind of flat sequentially. What happens to gross margins on a reported basis? Yeah, we're not guiding the first quarter, Vivek. What I will do is provide you, because we still have, you know, price declines forecasted in the near term. However, the market is stabilizing, we see prices firming up and improving in the second half. Maybe just take the opportunity here, even though, yeah, just to maybe do some housekeeping related to your question. I give this, you know, we've given guidance in the fourth quarter, of course. There's a lot of variability in this market transition phase we're in, of course, the CAC headwind. You know, I'll give you a sense of some trends beyond the fourth quarter. Maybe on bits, you know, in the fourth quarter, we do see record bits shipments for both DRAM and NAND. Both DRAM and NAND will have strong bit growth on a sequential basis. NAND bit growth is a bit higher than DRAM. In the first half of fiscal 2024, you know, we see bits at a similar level to fiscal fourth quarter 2023, but some quarterly variability due to CAC effects. Bits should be stronger in the second half of 2024 than the first half, of course, as the industry recovery progresses and customer inventories are normalized and as we manage through the CAC effects. On pricing in DRAM is better than NAND at the moment, in terms of quarter-on-quarter changes. you know, within the second half of calendar 2023, pricing and margins begin stabilizing and increasing. On costs in third quarter were up around mid-single digits in DRAM and NAND, that's impacted by underutilization. In the fourth quarter, underutilization is going up, we will see some benefits from cost downs. Altogether, cost reductions in the fourth quarter are flat to up, basically. On CY 2024, underutilization and resulting cost headwinds will continue. FY 2024, we'll have muted cost reductions despite progress on cost downs. Of course, all this is, you know, the pace and timing of, you know, wafer start, you know, reductions will depend on the recovery timing. As volumes increase on wafer starts, of course, the costs will come down on a bit basis. You know, I think that provides you some profile. All right. Maybe, Mark, if I could. Vivek, did that answer your question? Yeah, actually, what I was really trying to get at is, let's say if we take the ASP right out of the equation, like, what helps gross margins get better, you know, sequentially? Is it a re-reflection of ASP? You know, because your utilization is, you know, perhaps not going to improve. You know, cost downs don't seem to be changing. You know, the inventory that has been written down, that $500 million number, stays flat from Q4 to Q1. I'm trying to understand what helps gross margins go up sequentially, other than ASPs. I mean, yeah, like, you're right. I mean, there isn't that much moving things left. The cost, you will as you said, the utilization is still probably not gonna come down, or the wafer start reduction will not come down. You will get the benefit of little bit technology penetration increasing, wafer output continuing to increase. You'll get some benefit on the cost, but not a big shift. The primary driver of our margins is ASP. I mean, Vivek, this is why we're, you know, we're so focused on the supply response, because, you know, the industry. Yeah. inventory levels need to improve, and which we have seen broad-based supply response. We see positive actions there, and we do have forecasted that pricing begins to firm up and then recover in fiscal 2024. Yeah, one more thing, Vivek. As we said on the earnings call, the mix between the NAND and DRAM is much bigger variable for our gross margins because, you know, the margin difference between the two is very big. That, any sensitivity around that can have big changes. Just keep that in mind. Understood. Thank you. Thank you. One moment for our next question. Our next question comes from the line of Karl Ackerman from BNP Paribas. Your question, please. Yes, thank you. I was hoping you could remind us how long it typically takes to qualify your products, and how that varies between data center and consumer applications. The reason why I'm asking is, I guess, should we think about the CAC impacts and mitigation factors being similar to traditional views of price elasticity, such that as long as the memory density and the form factor does not change, then changes can be fairly immediate, or are customers more inclined to make changes on the next, product cycle? Any thoughts on that would be super helpful. Sure. Yeah. I mean, I think, there are different scenarios, depending on the customer and the product. The most high-volume products that we have, for example, in DRAM, are already qualified at multiple customers around the world, and we have a certain share at individual customers that can be flexed up or down, depending on customer needs, and our own supply and so on. In a lot of situations, the products are already qualified. It's a matter of an allocation of share to Micron versus others that customers go through. Those type of volume shifts are not dependent on any kind of additional quals taking place. In some cases, some additional quals may have to happen for the same product going into newer platforms. Those tend to be shorter when the product is already in volume production at a given customer in other SKUs. If there are actual share gains to be had at new customers or new products are to be ramped that have not been broadly qualified before, those go through a fairly regular qualification cycle, and that qualification cycle, again, varies based on products for client platforms, whether it is SSDs or DRAM, it could be about a quarter, 3 months or so. For data center platforms, it tends to be longer, both on SSDs and DRAM platforms. Typically it could take more than 3 months to get qualified. In some cases, 6 months also is possible. Those are, again, for situations where the product is new or a new generation of DRAM or NAND node is ramping, or it's a completely new customer or a completely new application. In the majority of cases where mainstream product shipping in volume, you know, we tend to have fairly broad set of qualifications already done, and it's a matter of share shifts. Got it. No, that's super helpful. If I may ask another follow-up. I guess, is the outlook for calendar 2023 bit demand, which has been reduced lower this call, is that driven by the recent restrictions on your collective China business? Or is the reduction in demand driven by a view that some customers have stocked up bits at attractive prices and may take longer to reduce the memory inventory? I just wanna, hoping to clarify that. Thank you. Sorry, can you repeat what the question, which reduction are you referring to? The bit demand. Yeah, Oh, the bit demand. We're saying that, yeah. It's really more about, Karl, that comment we made, someone can fill in, but that comment we made was for the industry, and it's really driven by some of the reductions in TAM that we see for smartphones and- PCs PCs, that are both, you know, gonna have, somewhat lower unit sales than what we were forecasting before. Yeah. I mean, that CY 2023 is not a Micron statement. It is a industry TAM reduction. It has nothing to do with the CAC. It's to do with a reduction in volume forecast of units. We have reduced our unit shipment estimates for PCs into double digits, low double digits. That is taking the PC units to a level that is now well below what the PC units were in 2019. Smartphone units are mid-single digit% decline, which is worse than the low single digit% decline we had estimated earlier. We have also taken some impact into these TAM numbers related to the inventory reduction rate and pace at the data center customers due to the macro environment in terms of how fast that inventory or how the pace of the consumption of that inventory at our customers has also contributed somewhat to the reduction in TAM. Offsetting just the TAM reduction, though, is we have increased our estimate for the level of supply reduction that is taking place. Compared to the last cycle, the last quarter, this quarter's estimate, while the demand has come down, the supply has come down more. We do have a view now that both DRAM and NAND supply is currently... The new production is currently running below the shipment levels. Consequently, inventories at producers is going down, but also end-to-end inventories in the supply chain are going down. Customer inventories are improving, third-party inventories have improved markedly. Certainly supplier inventories are also improving, even as our own volumes are increasing. The volumes are increasing as an outcome of inventories being reduced throughout the system. That's how it's all playing out. Thank you. I know we are out of time, but I just wanted to mention, if anybody has any questions, the IR team will be here. I know we couldn't get to everyone today. The modeling in this time period is particularly challenging with all the moving pieces. If you have any questions, feel free to reach out to the IR team. Thank you. Thank you, ladies and gentlemen, for your participation in today's conference. This does conclude the program. You may now disconnect.