Please welcome to the stage, Jeff Evanson, Vice President of Investor Relations. All right. Thank you, everyone. I hope you enjoyed the tour that we had earlier today of the Brooksville Regional Distribution Center, the tour of the Symbotic system, as well as the BreakPack system. Welcome, everyone, now to our presentation section, session of our Investor Relations Day, and welcome to our webcast audience as well. We're glad that you could join us virtually, and we look forward to taking you on a tour of one of our facilities sometime in the near future. I want to make the point that all of the materials that we're going to be presenting today, all of the slides, the videos, as well as a replay of the webcast, will all be available on our investor relations website at Symbotic.com. Just a few important disclaimers there. Our agenda for today is we're going to have our CEO and Founder, Rick Cohen, talk about our vision as a company. Next up, we'll have our Senior Vice President of Sales and Marketing, Mike Dunn, discuss our growth strategies. We'll have Bill Mines. Bill Mines is our Senior Vice President of Supply Chain. He'll talk about all the hard work he's been doing in the area of setting up outsourcing partnerships and the benefits associated with that. Next up, we have a really exciting portion of our presentation, our innovation panel. Innovation is so important to Symbotic. It really is the heart of this company, and so we are having our Chief Strategy Officer, Bill Boyd, host a panel of some of our leading innovation people. Our Chief Technology Officer, George Dramalis, our Senior Vice President of Hardware Engineering, Cristian Mori, as well as our Symbotic Fellow, Ted Macdonald, discussing mobile automation. Finally, many of you have already met Tom Ernst, our Chief Financial Officer. Tom will take us through a presentation. Finally, we will conclude with a Q&A panel with everyone on stage. Without further ado, again, thank you for joining us, and I'd like to welcome Rick Cohen to the stage. Rick. Thanks, Jeff. Thanks, everybody, for coming today. I get a chance to talk to a lot of you. I'm supposed to talk about our vision, but let me tell you why we do what we do and why I do what I do as a way of explaining the vision. I joined my family's business with my father and my brother in 1974, and that was a wholesale grocery business. A very small business. We did about $50 million a year. I just graduated from Wharton with a degree in accounting and computer science, which in 1974, computer science was a relatively new thing. I'm not sure they called it computer science. But I didn't do enough diligence on my family business, and I found out that we actually weren't making any money. So, 1974, I started working with my father and my brother to kind of create a uniqueness to C&S. Eventually, we left Worcester, where we had very expensive labor, and we moved that business to Brattleboro, Vermont. That, we did about $100 million in sales that year. In 1989, we developed the first warehouse wireless management system at C&S. If you think about 1989, it was, like, three years before the internet was invented, or certainly took off. We were using wireless technology in a warehouse in 1989, which was unheard of. It was probably the biggest failure of my life in one sense and the biggest success, one of the biggest successes. The biggest success was we took our operating costs down 50%. In 1989, we did $900 million that year, then we grew, because our cost was so low, $1 billion a year for 25 straight years. We had 17% compounded growth for 20-something years. It was crazy. What I realized was that that wireless warehouse management system was probably worth more than the wholesale grocery business, and I hadn't taken advantage of that disruption. It took 10 years or 20 years later for EXE, Manhattan, and all those guys to actually come up with a warehouse management system that was capable of doing what we were doing. That leads me to the vision of what Symbotic is. After working through this process at C&S and realizing that we had kinda maxed out where we were because other people now had warehouse management systems, they were telling people what to do, they were telling people where to put stuff, the next frontier was actually robotics. In the early 90s, I started working at robotics. Made a couple trips to Germany, bought a couple robots, programmed them, and nothing worked. In the year, I think 1999, we bought an SSI SCHAEFER system at a building that we had at C&S that was 1.5 million sq ft, 100 ft tall. Had 38, 3,000 lbs cranes, largest food warehouse maybe in the world, but certainly in the United States. What I realized after building that was that the SCHAEFER system was terrible, and it was a good thing I owned the place, or I would've got fired. I learned to hate cranes and that bigger isn't always better unless you have a very flexible system. That led to the start of Symbotic in 2007. I was looking for some ideas on what we could do basically at C&S, that started my original investment in Symbotic. In the process of between 2007 and 2020, I invested $700 million of my kids' money in the business. In 2020, we actually started to become relatively cash neutral. We had been working with Walmart for a while, and somebody asked me today, "When did you, when did you realize you were gonna be profitable?" Probably 2019, even though we haven't done it yet, but we will very soon. The vision for Symbotic is to be the best automation company in the world, number one. Number two is to move every box in the world. I can't think of any other vision that suits how big an opportunity this is. I think in the Walmart world, 97% of the boxes that we move in the world are 2 ft x 2 ft x 2 ft. Excluding automobiles, but including auto parts, excluding refrigerators, but including refrigerator parts, is about 8 cu ft moves about 97% of everything that moves in the world outside of big machinery. Let's say consumer products and actually parts. We are far and away the best company, in my humble opinion, at moving boxes in the world, so why shouldn't we build a business that is capable of being bigger and bigger and bigger? The magic of robotics, and you all as investors know this, the reason there's so much carnage in the robotics space is that everybody underestimates how difficult this is. People say, "Well, one error per 1,000 is pretty good for a robot." What we're striving for is we are about one error per 10,000 in Symbotic, and within the next year, we will be one error per million, and maybe one error per 2 million. What does that mean? It means basically hardly any humans in the structure. The big problem with robotics is that what you saw today is very few people on our side of the building that are actually working. There were some trainees, and there were some—y ou saw people on the dock, but you saw very, very few people in our system. That's the goal. The vision is a lights out warehouse that's capable of moving 97% of the boxes in the world. That's how big this business is. I was reading— I love to read business books. If anybody's got some suggestions, text me or send me, but one of the great books was the The Everything Store about Amazon, The One Device, which is the history of the iPhone. Recently, I was reading a book, and I saw this quote. It's pretty common. I've seen bits of it before. It's the Amara hype cycle. Roy Amara is a futurist. His quote is, It is this is called Amara's Law. "We tend to overestimate the effect of technology in the short run and underestimate the effect in the long run." In the short run, I think everybody's overestimated how much you can do with each picking and robotic hands. In the long run, we are going to be able to move 97% of the boxes in the world, that's really the big opportunity. My vision for Symbotic is really a long-term vision. This is not a build and flip business. That's not. I'm a large shareholder. That's not what I want to do. What I want to do is have a great customer, great company with a, with a huge potential, so we can run it for a long time, have braggingly happy employees because everything we're doing that you saw today in Walmart, I had a bunch of ideas. I think I'm one of the world's experts in distribution. A lot of these things came from Walmart, said, "Could you do this for me? Could you do this for me? Could you do this for me?" The BreakPack solution that you saw today, we worked with Walmart to develop, but that's exactly the same solution that Walgreens and CVS and everybody, a lot of food service, a lot of vendors put stuff in totes. That's a perfect solution for them. That business by itself, if I was going to an investor conference, or I was a startup, and I presented BreakPack, that would be a business that could do its own IPO. That's how big that business is. What Symbotic is trying to do is provide what I like to say with a bit of hyperbole, we wanna be the iOS of this thing. BreakPack is just an app, and the big bots are just an app, but what you saw today is that we can make any size bot, and the software is the same. We're using NVIDIA chips. We're using cameras. We're using enough horsepower and compute power that's a 1,000x bigger than the bot we replaced this year. We could do big machines. We could do fork trucks. Right now, we have this huge backlog, so we're gonna focus on making braggingly happy customers. We are gonna continue to invest in R&D, and that goes to the third part of why I do what I do. Because of the cool people that I get to work with. When I ran C&S, I was the third generation of Cohen to run that business. The business is 105 years old. I thought my job was to get the business to the next generation. I thought the generation would have a last name like Cohen. Well, my oldest child, my progeny, not child. My son, his, who's 47, worked for me twice decided he didn't wanna do it anymore. He's doing wonderful things with nonprofits. I'm very proud of all my progeny. They told me they're not children, they're progeny. I went kinda through this period of depression, thinking I was a failure. I said, "Well, I like young people. I'll just work with somebody else's kids." I found a CEO to run Symbotic, C&S, a terrific 40— Bob worked for me 30 years. Now we have a 40-year-old who's been announced as the new upcoming CEO for C&S. I spent a tremendous amount of my time looking for all ages, but especially 30- and 40-year-olds, 20-year-olds, who are really interested in bleeding edge AI, machine learning, and kind of the stuff we're doing. That is our competitive advantage. The advantage of C&S that Symbotic had is we never had a legacy product, so we didn't have to hang on to anything. We are, we are an innovation lab, and we will continue to be an innovation lab, and it's just so much fun. It is a blast being around these young people who come to the old guy on the mountain and say, "You think this'll work? I got this idea. You think this'll work?" That's really my job, is kind of coach and mentor. I understand warehouse distribution probably, I don't know, maybe there's 10 of us in the world that understand it this well, 'cause we've lived it our whole life. The technology that's involved in automating this space is very, very difficult. One of the reasons why it's so difficult is when you're automating a chip plant, first of all, the place is probably vacuum, pure oxygen, every part of the environment is controlled. When you're automating an auto plant, you have all your suppliers and everything is pre-screened and pre-automated. When you go into one of these warehouses, the humidity flows between 30% and 90%. The temperature goes between 50 and 110. The manufacturers that you're buying from oftentimes make crappy products. That's a very hard problem to solve, and it's really interesting to the team at Symbotic. The other thing that's very hard to solve, and this is where I think people don't fully appreciate, like, what's so different about your system? The fact that we're driving 250 lbs self-driving vehicles is incredibly difficult. The reason it's so exciting to our team is we're probably not gonna kill anybody. You can actually write code and look at it at the same time, and we don't have the government looking over our back saying, "No, you can't do that. You can't do that. You can't do that." So we're getting an increasingly number of people that were working in the self-driving vision AI space from companies like Cruise or Tesla saying, "I don't know if my work will ever be realized." They're coming to work for us because here you can go to Brooksville and watch 400 autonomous vehicles running around and doing incredible stuff. What's magic about our system that will keep evolving, that has given us the lead over our competition, is the fact that we started working on this three or four years ago, and we are getting some of the very, very, very best talent in the country to do this stuff. The autonomous vehicles allow you to do stuff faster, more flexibly. You couldn't do our system and BreakPack if you didn't have autonomous vehicles. If you had dumb shuttles stuck in an aisle, you couldn't do what we do. We've made the jump. We're gonna get better and better. Our bots are gonna get faster and faster. They're gonna get more accurate. They will have collision avoidance at some time. Some of this stuff, the other thing that's so exciting about where we are is it seems to me that every 15 years there is a confluence of technology. If you say 1992 was the birth of the Internet or the blooming of the Internet, even though it was started way earlier than that. 15 years later, 2007 was the iPhone. Twenty twenty-two, I'm not saying we're it. Everybody's talking about the confluence of AI, machine learning, and robotics, and we are absolutely on the leading, bleeding edge of that. The beauty of what we're doing is we're a well-funded startup with a $12 billion backlog. We're treating this like a well-funded startup. That's kind of an oxymoron 'cause some of the edge of a startup is you don't wanna be well-funded 'cause you wanna. Everything has to work. Because of me and because of my experience in warehousing, we're setting a very high bar on quality and reliability of the machines, which makes them truly self-autonomous robots in many aspects, as opposed to one error per 100 will not make it. That company will go out of business 'cause you'll have a human standing right next to the robot, and at some point you'll say, "Why do I need the robot?" Even at one per thousand, you'll say, "Why do I need that?" You've gotta be stratospherically high numbers. It's really not that high. It's Six Sigma. It's 1 error per million or Seven Sigma, one error per 2 million. And the stuff that we're doing, we're using AI and machine learning and vision and all the stuff that's coming out of these great schools, plus we had great people to start with, is what's really creating a huge moat between us and everybody else. The third thing that creates the moat is these are $100 million systems. You can't just sell a $100 million system to somebody if it doesn't work, so you've gotta figure out how to test it. You need a customer base that because of my relationship with some of these customers through the many years of C&S, there's a level of credibility that they'll actually let us test this stuff in some of their warehouses. We also have enough deep pockets, though, that if it doesn't work, we figure out a solution. It's about a huge business and an evolving business with lots of interesting applications, braggingly happy customers, and what I like to say is braggingly happy employees. One of the reasons we went public is because the folks that the buzz at Symbotic is I'm so happy that these people own stock, and I'm so happy that they, that they think it's gonna go up forever, and they're supposed to make it go up forever. The fact that they're able to participate in the value creation is just, for me, it's just spectacular having spent 105 years as a family with a very private business. It's a very special thing. With that, I'll stop. You've seen a lot of stuff, and I'll be available for questions at the end, and I'll turn it. What's next, Jeff? I'll take it. Okay. Turn it back to Jeff. All right. Thank you very much, Rick. Really appreciate all your insights and foresight. Next up, I welcome Mike Dunn to the stage. Mike is our Senior Vice President of Sales and Marketing. Mike, come on up. Thanks, Jeff. I'll reiterate what Jeff and Rick Cohen both said. Thanks for those of you that took the time to come visit us. I get the pleasure of representing this company and representing this product out in the market, and I can tell you that it's different if you get to see it in person. You guys got to see it in person, those of you that are here today. Thanks for taking the time to do that. We think it's, we think it's a big benefit to actually see the system working in person. What I wanna talk to you about today is a little bit of our growth strategy and how we think about going to market. We've taken the time to build sort of bottoms-up what we think our strategically addressable markets look like. As Rick said, this is a huge market. If you read about spending and projected spending in warehousing technology, it's well over $1 trillion when you look at it over time. We've tried to take a very conservative view and do a bottoms-up build of what we think the market looks like for us and really broken this down into three categories we call SAM-1, SAM-2, SAM-3. This is really about industries and geographies that we go after from a sales perspective. SAM-1 is really the industries that we're focused on today and where we've got success that is around general merchandise, retail, food, both wholesale and retail, apparel, and footwear space. That market, conservatively, we think is close to $150 billion of opportunity for us. As you step into SAM-2. That's all U.S.-based. As you step into SAM-2, which adds additional verticals that we think the product fits very well into, verticals like automotive aftermarket, et cetera, you add north of $100 billion to that market. As we think about sort of taking the wraps off and looking at international opportunities, in these same markets, so Canada, Mexico, Europe, et cetera, we're approaching a half a billion dollar market conservatively that we're focused on. We review this and recast this on a regular basis. For those of you that have seen this view previously, we're up about $40 billion in total on what we think the market looks like for us on a go-forward basis. How do we execute on that strategy? Our primary focus today and our sales team is small. Rick likes to say we don't have a sales problem or a demand problem. We're continuing to grow the capacity of the business. We have a small sales team. You've basically met us today. For those of you that are in the room, myself and Jason and Rick do pretty much all the selling today. We're focused today on industry and on customers that we have today, so that's Walmart, C&S Wholesale Grocers, and Albertsons. We have more customers than that, those are where we see growth opportunities. We're focused on expanding our reach into those customers. At the same time, looking to expand into new customers in those industries, those SAM-1 industries that we're focused on. This would be grocery and general merchandise retail. You would have seen us announce here in the last couple quarters, two new customer wins in this space, United Natural Foods, which is a large wholesale food customer, and Associated Food Stores, which is a co-op on the West Coast of the U.S., servicing their co-op stores. We feel really good about our execution in driving this strategy. We're not trying to add dozens of customers. Tom likes to say we're trying to add one or two a year, and that's the pace that we'll continue at for the near term as we build capacity to support the current backlog demand and the demand that we have coming in. That said, we are beginning to think about adding to our sales team, expanding, and beginning what I would call the outreach selling that we frankly don't do a lot of today. We are actively engaged in potential new customers across all of these areas on this slide. In new verticals like third-party logistics, apparel, automotive, home improvement, we've got active engagements in all of those verticals. We have active engagements with potential customers in many new geographies around the country, Canada, Mexico, Europe, Asia Pacific. Again, all of that, we're very focused on when is the right time for us to engage. With those customers and who are the right customers to engage with, given that we don't have a sales problem, we're able to be selective about which companies that we wanna work with in those space. I wanna spend a few minutes and sort of give you some additional perspective on what we hear in the sales process from our customers in terms of why we win, where the system creates value for them, and then give you a couple anecdotes in terms of what we're seeing from a sales cycle perspective. Our system has a dramatically positive impact on virtually every metric that a company would measure their supply chain and distribution performance. The most obvious one is labor. Y ou know, again, hopefully for those of you that had the chance to join us on the tour today, you saw a stark difference between the labor associated with the legacy operational side of the business and then the automated side, and the number of people that it takes to do that job. Maurice, the general manager, talked to you a little bit about the people and how exciting these jobs were and how turnover was so much lower in the space. That's a big part of a company's cost is the amount of churn that they see in these operational jobs in the warehouse. really strong, accuracy I mentioned earlier today. You know, damages and errors and mispicks that drive tremendous costs in the supply chain are virtually driven to zero as we deploy the Symbotic technology. I had a chance to talk to a few of you today about the inventory impact of our system. You know, we have the opportunity to take tremendous amount of inventory out of a supply chain. In a legacy traditional environment, what they call economic order quantity is typically a pallet because that's the unit of movement through a warehouse, and we change the game there. You can now order at the case level or at the layer level, which effectively allows you to not overbuy, especially in your slow-moving items, where a pallet may mean you're carrying 60 or 90 days of inventory. Now you can move to purchasing at a layer level or purchasing at a case level and carrying the right amount of inventory in your supply chain. We had a chance to look at and kinda hopefully give you a visual on the space impact of our system. We see pickups between 40% and 60% improvement in the footprint required to do the same amount of throughput, which for a company like Walmart that's growing at 4% a year on such a large base, really just gives them more longevity. You heard Mike Walden today talk about the ability to do more throughput and not having to add any additional space is a big win for them. When we talk to customers that are potentially building new facilities, they're able to build much smaller new facilities to do the same throughput than what they would be able to do with either traditional methods or even other technology providers. One of the points here on this slide, which I wanna make sure we highlight, is a really key differentiator for Symbotic, which is, we don't need a new warehouse. Rick talked about buying a SCHAEFER system and the technology he deployed with cranes and such. Because of the fundamentals of that technology, it really required him to build a new warehouse for that, and that's what we see from a lot of the competitors for Symbotic. In stark contrast to that, Symbotic system can be—i t can be built very small, it can be built modularly, it can grow over time. In fact, virtually every system that we build is built in phases, you saw that today. Phase 1 was running. Phase 2 will be running soon. Phase 3 will be running in a few months, and there will be a Phase 4 and probably a Phase 5 in that building. That's a huge benefit. Many of these companies already have warehouses exactly where they want them to be. They're big enough, and they're the right size. The ability to go into an existing building and retrofit with the technology is a big benefit. We saw some of the transportation impacts, which has downstream performance impacts, but also the opportunity to lower transportation costs. Transportation costs, depending on the business, would tend to be, you know, 40%-60% of your total supply chain costs. You can see companies over-indexing, like you saw at Walmart today, in the past, where they really tried to optimize transportation at the expense of other things, and we allow the opportunity to actually optimize all of the above and drive down transportation costs. And then the last point I'll make here, there's a number of other benefits, damages and waste, you know, we see. The operation you saw today at peak will ship 1 million cases. We'll have maybe one damage, maybe zero in a week. That's drastically different than what they see as shrink and damage in an existing operation. And then upskilling talent. Again, we talked about this, and the team at Walmart today kind of highlighted this point, but the amount of turnover that happens in these existing operations, the scarcity of labor, and the ability to take some of that talent and teach them new skills, give them a career path, get them excited about their job, give the younger generation gamification and what they want to do as they come to work every day, really is game-changing. Let me close by sharing a little bit of perspective on what we're seeing in terms of sales cycle with new customers. You know, traditionally in a space like this where you're selling hundreds of millions of dollar systems and sometimes you're doing 300 million and 400 million and 500 million or multi-billion dollar contracts, those would be, you know, two- to three-year sales cycle processes from beginning to actually inking a deal. We're living in crazy times right now, through the pandemic, obviously, and with the situation that we see, especially in terms of labor, both cost and availability, companies we're seeing are really accelerating their decision timelines and processes around this. One of the recent customers that joined our customer list, what would have typically been a two- to three-year sales cycle was a nine-month sales cycle. That is, you know, from the point at which we had really the initial conversations with them about the opportunity, the problems through scoping out the actual project, working with the customer to build the business case, getting through multiple rounds of board level approvals, and ultimately to a contract for a commitment to deploy multiple sites to Symbotic was about a nine-month process. That's pretty unheard of, and I think that's a testament to board level pressure in the business to solve these problems. We're seeing you know, most C-level executives that we talk about and board level folks that we talk to, are very concerned about the labor situation, are very concerned about not just the cost, but the availability, and they view these as sort of mission-critical future growth enablers for the business. We're actually seeing pressure from boards down into the business versus usually it goes the other direction to go solve this problem and solve it fast and solve it in a big way. That's an exciting part for me from a sales perspective. Don't know how long that pace will last, but we're living in a good time from a sales sales go-to-market perspective. With that, thanks for your time. Again, thanks for being here. I'll turn this back over to Jeff. All right. Thank you very much, Mike. Next up, we have Bill Mines, our Senior Vice President of Supply Chain. You heard Mike say that sales, and demand is not our constraint. In fact, it's getting systems deployed. Bill, come up on stage. Bill's gonna walk us through the strategies he's been deploying to accelerate that pace and the reasons why we're doing so. Bill. Thank you, Jeff. Good afternoon, everybody. As Rick and Mike have said, this is a very exciting time to be with Symbotic. I joined the company last July. Prior to that, I'd spent eight years at Walmart helping to run their supply chain and logistics organization. First met Rick back in 2016, and we could see the sort of potential of the system to solve a lot of problems in Walmart's supply chain and help improve it. Walmart as a customer, you know, you probably know this, very demanding and sets very high bars. We set the bar incredibly high, I think, in terms of what we were expecting Symbotic to achieve and deliver, in terms of things like system uptime, throughput, accuracy, pretty much every metric that Mike just put up there on the slide. We figured out what world-class was and set the bar at that level. It's really exciting now to see Symbotic consistently achieving, and in many cases, exceeding that bar. It, I think, sets us up for a huge opportunity in the future. Again, as Mike put up, there's a lot of other industry segments out there, a massive potential for the system that we're not yet tapping into. Very exciting time to be with the company, and I think a lot of runway ahead. I'm gonna talk a little bit about what we're doing from a supply chain perspective. In particular, if we're gonna accomplish those objectives and achieve those goals, one of the things that we've got to do is, and we're working on, is building a network of partners out there that can help build the system, install it, and commission it. If you're on the tour. Sorry. If you're on the tour, able to appreciate that we tend to think of the implementation of the system in three phases. There's kind of the manufacturing and the build phase. Within that, I'd identify probably four verticals. One is you've got the storage structure, which is a lot of steel, and we're working with a lot of the Tier 1 steel fabricators that are out there to get that delivered. Then a lot of the Tier 1 engineering companies in the U.S. to deliver the lifts, the inbound and outbound cells that are doing the depalletizing and the palletizing, and then manufacture the bots. We recently set up manufacturing down in Mexico with a Tier 1 engineering company down there who are up and running now and producing bots for us. There's a build phase. There's then an installation phase where everything comes together on-site, and we put it all together, whether that's the structure, erecting the cells, and putting up the lifts. Then there's a commission phase. To oversee all of that and manage that implementation, we've engaged a number of engineering and procurement contractors that help project manage each one of these site implementations. They're all Tier 1 companies, and we've been working with them now for nine months. Seeing a huge amount of success there. All in all, so far, we're very pleased with the progress that we've made, setting up an initial network of partnerships. Good cooperation, good collaboration from the partners. More to do to expand the network, and I'm gonna talk a little bit more about that, on the next slide. Three principal goals really that I'm focused on from an outsourcing perspective with these manufacturers and installers. There's capacity, capability, and cost. You've heard a lot about, the sales side of the business. What we're trying to do on the outsourcing and partnership development side of the business is really stay out in front of the sales organization and create enough capacity so that when the sales come through, we've got the capacity there to manufacture stuff, get it put up, get it running, and deliver it to the customer. We wanna be multi-sourced in every one of those areas that I just showed and every one of those verticals so that we're not reliant on any one single partner or installer or manufacturer. What we're finding out there at the moment is there's plenty of capacity. One of the great things about the Symbotic system that you could probably see this morning is every time we implement one of these, we're not doing something different. I often characterize this as saying one of the things that we're trying to do is implement one of these perfectly and then replicate that dozens of times, if not hundreds of times. We're finding that as we implement more systems, we're getting better and better and better at the installation, shortening the timelines, compressing the cycle times, and doing it a lot cheaper. From a capacity perspective, as we approach partners, we're finding a lot of interest in coming and working with Symbotic. There's a lot of capacity out there at the moment, which is great for us. It's a good time to be out there, looking for partners. Some of that is being driven by the fact that Amazon last year cut back on a lot of their long-term plans for building distribution centers and cut back on orders with some of the engineering companies that we're now working with. That's created an opportunity for us to step in there, leverage that capacity, and really build our infrastructure of partners. From a goal perspective, what we're looking to do in the very near term is to double our capacity so that we can then really start to scale up the number of systems that we could deliver each year. From a capability perspective, one of the great things that these external Tier 1 partners bring is they've got a lot of experience, and they can really help us think through how do we do this quicker and how do we do it simpler and how do we do it better. One of the things that we're finding, one of the big opportunities that there is for us is the ability to say, "Okay, once we stand up these manufacturers, they can do a lot more work upstream at the factory that we were trying to do on site, and it was complicating our in-installation process." They can take on a lot of those activities upstream, and when they deliver product to site, it's ready to put together. It goes together very easily in a much shorter timeframe. That helps us compress the overall timeline of the implementation. A lot of these companies can also bring their experience to help us value engineer. What do we mean by that? They can look at the way we do things, how things are manufactured or put together, and help us identify opportunities to take costs out while maintaining the same quality standards and the same end product. We're also finding that, as we replicate this and we do more of these and we use the same manufacturers, the same installers, that the number of defects in the implementation process is reducing. One of the things you've probably heard us talk about in the past is we want to be a zero-defect organization, and that's particularly true when it comes to supply chain and construction and implementation. What you wanna do is really eliminate the need for rework when these things are being put up on site, and we're finding that we're getting better and better and better at doing that. Finally, cost. Okay? Rick said this is a $100 million system. You know, part of my goal is to figure out, okay, how do we take that cost down? As we bring more partners into each one of the areas, there's nothing like competition to create the opportunity to drive price down. Part of this is by having more partners in each one of the verticals, then we can get more aggressive when it comes to pricing and bidding and getting partners to really sharpen their pencils when it comes to driving the cost down. Couple of other areas where expanding the network and the base of partners is important to us. One is a lot of these Tier 1 companies have got a much more global reach when it comes to upstream component suppliers, so they can reach out into networks internationally in, for example, Asia and low-cost sourcing opportunities. We're seeing opportunities to take costs out there. They can also help us identify areas where we can be more competitive by leveraging our scale and the increase in volume to approach suppliers and say, "Okay, we want volume discounts now." We've reached sufficient scale to be able to justify going to organizations and going to upstream vendors and saying, we want multi-year deals, we want discounts for the volume that we're bringing to the table. To finalize, you know, my job is to really build a strong network of partnerships that the organization can then lean into to scale up, deliver more and more systems, and do that by developing capacity, capability, and reducing costs. Jeff, back to you. Thanks so much, Bill. Next up, I'd like to welcome our innovation panel to the stage. Our strategy at Symbotic is innovation. No better person to present our innovation panel than our Chief Strategy Officer, Bill Boyd, along with Cristian Mori, our Senior Vice President of Hardware Engineering, George Dramalis, our Chief Technology Officer, and Ted Macdonald, our Symbotic Fellow focused on mobile automation. Gentlemen. at Symbotic is innovation. No better person to present our innovation panel than our Chief Strategy Officer, Bill Boyd, along with Cristian Mori, our Senior Vice President of Hardware Engineering, George Dramalis, our Chief Technology Officer, and Ted Macdonald, our Symbotic Fellow focused on mobile automation. Gentlemen. at Symbotic is innovation. No better person to present our innovation panel than our Chief Strategy Officer, Bill Boyd, along with Cristian Mori, our Senior Vice President of Hardware Engineering, George Dramalis, our Chief Technology Officer, and Ted Macdonald, our Symbotic Fellow focused on mobile automation. Gentlemen. Hello, everyone. We started this afternoon with Rick talking about his audacious goals for where we're going to go and what we're going to do here. I get the pleasure now of introducing you to some of the people who have helped us get here and are gonna help us drive this out into the future. As Jeff said, innovation has been a cornerstone of this company since day one. This has been about, as Rick would say, revolutionary rise in the supply chain, changing things, taking that blank sheet of paper to it. In order to do that, you have to be creative, you have to have innovation, you have to be able to grow from learnings that come along the way, and have great people who can help you do that. I'm gonna without further ado, I'd like to take a minute and just have. Whoops, I'm gonna go backwards actually on this. I'd like to have you guys. I'm gonna have you introduce yourselves a little bit. George, you've been on this ride, you've known Rick for a very long time. You've been in warehousing, at C&S and prior. You might be the second most knowledgeable person of overall warehouse operations in this company after Rick. Talk to us a little bit about your background and what led you to want to be the chief technology officer of this company as we move it forward. Thank you. Yes. I have been with Rick, working for Rick over 12 years now, 13 years. I have, prior to Symbotic, worked for C&S Wholesale Grocers, and I was the CIO for 10 years there. The interesting fact is C&S Wholesale Grocers were one of the few early adapters of the system. I was fortunate enough on the customer side to deploy two Symbotic systems on the C&S side, one in 2014 and one in 2016, which is the latest is Bot4. In fact, yesterday, when we were talking with Cristian and Ted, I said, "Do you know that I still have the customer interfaces in my OneNote that I can just compare to what we have today?" They're pretty the same actually. A few more added, but. Yeah. I worked for Rick for 10 years. I've learned a lot with Rick. I've learned a lot about wholesale distribution, how the stores work, how warehouses work, how the warehouse management systems work, voice systems, you name it. For me, it was a natural choice at certain point when Rick offered me to join Symbotic, I said, "Well, That's exciting. Let's try it." I joined Symbotic three years ago. I think it's May 15, three years ago. Beautiful. Cristian, you've been in a number of different environments, as an engineer and looking at problems and how you're gonna solve them. Can you give us a little bit about your background and how you decided this was the place to start to continue to apply that and to continue to grow? Absolutely, Bill. I come from a background of heavy industrial equipment, a lot of automation. I come from Europe, build equipment all over the world. I moved here in the States, worked for iRobot, Boston Dynamics, Rivian. When I met Rick, and he showed me the system, this was so unique, so full of unique problems that were so challenging to solve that were encompassing everything that I've done before. Cause one thing is building a production line that always does the same thing. One thing is doing a simple equipment that you can simulate to its full extent, having a spot that moves and so forth. The ability to handle every case, every situation, and be able to do that flawlessly, that was mind-blowing. Seeing where the company was and where I could have helped get there with the experience that I had, that was a no-brainer. Fantastic. Ted, you're our panel's roboticist, pure and simple. You've also been through this journey for a while here. How have we kept your attention? Why do this here? When I started with Symbotic, it was at one of the—t hat Symbotic was just starting to deploy one of those systems that George was talking about. I mean, you guys saw the system today, from a roboticist who wants to build and deploy robotic systems and have control over the design and have a lot of interesting challenges to work on. There's really no comparison anywhere else that you could go to have such a breadth and a diversity of robotics challenges and the opportunity to actually develop it and see your work deployed, running in a system like we saw today. You know, for a lot of engineers who start with our company, it's very quick from somebody starting having an idea, developing it, implementing it, and then deploying it and seeing it running at that site in person is something that you can't really get anywhere else. Absolutely. Okay, with that in mind, let's talk a little bit about what we are deploying. George, maybe if you could give us just 2 minutes on— I know many folks have seen it today, others have been on site before, give us an idea of how this system all works together, and what we build off of when we innovate. Yep. I will start a little bit on a few notes about the Symbotic system. I know with some of you that I talked today, they asked me these questions, and I was wondering if I should talk about it, but now I know that I should. Some questions that they come into customers' mind when you decide to go with Symbotic system, besides the ROI, besides the cool factor to make warehouse with all the benefits that Mike and the rest of the team shared, is, am I going to have good visibility of my inventory? How my people are going to be impacted? How difficult is to implement this? A few notes on that front. The Symbotic system is a little city within the warehouse, isolated with its own network and locally run hardware. The interfaces or the communication with the customer is pretty standard, 10-12 interfaces. I would say in the grand scheme of things, this is the least of our worries every time we implement a Symbotic system. Customers can adopt this interface mechanism or these contracts, whatever you want to call them, with any messaging system that they have, and they can quickly get access to real-time inventory and real-time visibility of our system and our processes. The system is built within the warehouse. I said because it's this little city. I'm sure as you observed today, the system— think about a highway that goes in as the inbound, the highway that goes out the outbound cells. The main street of the city, the deck, the buffers, and the charge station is the parking stations. And then, of course, the houses with the roads across with all our aisles. So, the warehouse of for the Symbotic system has all the equipment in the data center. We usually have two to three racks depending, racks of standard equipment. All software is proprietary, and we use off-the-shelf OEM operating systems and databases I would call it a warehouse in a warehouse, and we used to call it a warehouse in a warehouse because it is really self-sufficient. Warehouse, Walmart does not have access to our system. From a cybersecurity perspective, some of you asked me today, we have a local network, even Symbotic system. They go and they log in through VPN and two-factor authentication. As we communicate with Walmart or other customers real-time, our inventory count and inventory visibility, there is no, I would not classify it as high-risk system in the general scheme of things. Real-time communications, low cybersecurity risk, I would say. If you think about the system that you saw today, it's a system that it has 12-16 industrial automations that is orchestrated with software that is tuning, fine-tuning continuously in seconds and sometimes in milliseconds, all inbound and outbound activity. Inbound activity will not run without outbound activity, we don't want that to be. All tasks are coordinated. We want a bot that goes into it and how to drop a case that from inbound, it pick a case for an outbound. It's orchestrated with custom software that we have full ownership and patent. So 99% of the volume that goes into a Symbotic system is fully automated. That means there is nobody touching that case, 99%. Many times, as you know, with other automations, we reach a level of 85.9% and they celebrate. We do not. There is 1% of volume that doesn't go automated. You've seen some of it, and this volume of cases is manifested as rejects, flaps open. Some of you observed how the cases were rejected in the flip where you came with Bill when I was there. Damaged cases, open flaps, and other issues that cause for us not to automate the 1% left. We are working on that, and I'll speak to that a little bit on further improving that. George, can I just— Yep. Interrupt you for one second and try to push a little bit? As a baseline for the system, obviously, this gives us a platform that we can grow off of. Maybe if we take a little pivot, maybe I can bring Ted in for just a second, and we can come back to this. You know, this gives us the baseline to do it, but it's. The question that came up today was, how robust is this system? How are you using that? As you innovate off of that, you know, where are you going? Maybe we talk a little bit about, Ted, the system and how it works, and then maybe even move into SymBot, and we can come back to some of these same truths. Yeah. Is that good? Absolutely. One thing that's a little different, you know, about our system versus a lot of other robotics companies in this space is we're not doing a point solution where you have, you know, a bot that you drop into an existing warehouse, and it helps move a few cases around. We're looking at the problem holistically and designing a complete autonomous system cohesively together to solve the problem fully end-to-end. What that lets us do is we don't design the bot in a vacuum. We look at the whole thing end-to-end, and then we have lots of different layers of automation that do all this orchestration that George was talking about. We have the embedded level compute on the edge in the bot that's doing a lot of the vision algorithms that we've talked about, trajectory planning. It's basically like a driverless car, but then we also build the roads, the city, the stoplights, the, you know, the whole thing that makes the whole thing run. Above that, we have layers of AI and algorithms that are figuring out how do you optimize the fleet performance when you have this demand to deliver cases and sequence to all these different outbound cells at the same time. You have all this inbound demand, and you have these 400 bots to get the job done. We've spent years and years iterating and refining these algorithms that bring all this together. You know, that cohesive solution from the top-level fleet control swarm algorithms down to the embedded in a single company is very rare, and not, you know, only at Symbotic. Also that design, and Rick alluded to this a little bit, is that those same problems exist at different scales. You saw it today at BreakPack. We take the basic concepts. You know, you gotta localize a bot, you gotta generate trajectories, you gotta do the fleet orchestration and planning, and apply it to a smaller scale. You can apply it to larger scale or other problems. It's a very generalizable, flexible way of approaching these problems. That's what's great about the mobile robots compared with the other traditional automation that Mike talked about with conveyors and cranes. They're purpose-built for one thing and pretty inflexible. Yeah. Well, that's great. You know, clearly that platform has been working. It's allowed us to get to where we are today. I had a question come up a couple times today. Well, if it worked, why did you guys do this SymBot? Why did you need another bot? Maybe if you could. Oops, I went backwards somehow there. Maybe we could use that as a transition. If you could talk about what we put into SymBot. Cristian, maybe you can rip off of that too, into, you know, what that allows us to do within the system as a whole. George, let's tell us why we did this, not had to, but why did we decide to do this, and how is this innovation important for us going forward? Sure. I'll start. You know, the challenge for us as an engineering department is not figuring out what to fix, but it's prioritizing, like, all the potential things we can do to make the system better and expand its capabilities. At the heart of the system is really the bot, right? It's the engine that's driving the cases through the warehouse. Rick talked about the need for ultra reliability, so that was a huge piece of it. I talked a lot on the tours of how some of the limitations of the previous bot design with respect to the traction control performance or the case handling capabilities. By unlocking some of those capabilities, it lets us move into new markets and enable things like handling tapered totes, which is a prerequisite for BreakPack. We couldn't have done BreakPack without the SymBot design. It's being able to do cold temperature systems where you need to have really good traction control and introductory control. We also see it as, you know, a platform on which that we've really put a lot of thought into the design of the hardware so that we're gonna be able to continuously improve it over time through software deployments and take advantage of the ever-evolving capabilities with vision and AI. We really try to build it a platform as something that's gonna be flexible and extensible for several years. I call it sometimes looking around corners. Cristian, as you guys were looking out to the future, maybe that's a better way to put it, and looking at the hardware you're developing, give us a little bit on what— Ted gave us some of where we can continue to innovate off of this, tell us a little bit about the hardware and where that drives. SymBot comes as an evolution of BotX, come from Bot7 so forth. We had a huge learning curve from the early days to today. What we wanted to do with SymBot is making a platform that is the perfect playground for Ted and everybody else that needs to write software for it. That, with the traction control, with the active steering of the caster in front, with the cameras and the machine vision capabilities, and the extra compute, is the perfect platform to grow just with software evolution. Placing new hardware in a warehouse is expensive. You need to replace the old family and so forth. We build the extra oomph to be better in the future. Ted will talk about some of the improvements that we just released that made every software release better. One example is the pick-and-place, and we should have a video. Yeah. If we can play it. If we can play the video. Ted? I talked a little bit about this on the tour. As Cristian alluded to, initially when we deployed the SymBot, we didn't have all the software in place to allow the parallelization of all this motion. The way that we designed the bot, we made it so that we could perform a lot of more parallel operations to limit the amount of time that the robot actually has to be stopped at a shelf to perform a transaction. This is just one of the ways that we're iterating on the design and improving it to drive fleet performance and reduce bot count. This is a lot of ongoing development work that we're doing, heavily in the software space, is to continue to drive the performance of these bots so that we can need fewer bots to perform the same amount of work for the same systems and significantly reduce cost. Since we're doing it through all software updates, you know, all the fleets that we're deploying in our systems today will benefit from that. Beautiful. All right, before we let George come back and talk to us, take this to the next logical end, which is the new product, BreakPack. Cristian, I thought we could spend a little bit of time here talking about the algorithms, or Ted, were you gonna talk about the algorithms? I think it's actually George talking about that. Okay, George. Thank you. Sorry. Why don't we talk a little bit about that, George, before we get to the new product? Sure. This is another base building block. Yes. Tell us how this works. Ultimately, what is the product that Symbotic is producing is a perfectly built pallet that we want to send to the store. That pallet should be sturdy, should be tall, so we can minimize transportation cost. It should be aisle-friendly. What do we mean by that? We want a pallet not to be decomposed in the back room into different carts. That's what the stores do today. We want the pallet to be ready to go into an aisle, in sequence, the store employee to unbox the products and distribute them into the aisle. This is not as simple. Sometimes an aisle can be multiple departments, sometimes can be multiple aisles, one department. We have been working in a very close partnership with Walmart to enhance this algorithm and enhance our palletization optimization that takes into account aisle friendliness, which is the planogram of the store, heavy versus light boxes, product categories that we palletize, crushability of the cases, size of the cases, and many other things that we need to take into account in order to produce the ultimate product that is going to go to the store and make the store employees happy, and will result in cost savings. Lots of R&D work is happening. We are about, I would say, in a grand scheme of things, 90% there with Walmart. There is another 10% that we have to finish in the next six months, but, this is one of the coolest and most valuable R&D activities that we have been pursuing the last year and a half, and, I think it's going to take another six months. Yeah. As you look at this overall, this is kind of the baseline building blocks of the system. These are the— we've talked about a few of the pieces of software here. Cristian, rather than going deep on distributed controls, maybe we jump right to what it has allowed us. We've been innovating on that for a year. Maybe we jump to how it's actually allowing us to do different things with our as we continue to innovate from here. As Bill was saying, supply chain has been very interesting in the last couple of years. With distributed controls, we solved a lot of the problems that generated. We allowed manufacturing to pre-test every single equipment. Every single 461, the different conveyors, the different equipment are standalone electrically and controls-wise, so they can be tested independently. That makes the assembly and the commissioning shorter. This is one of the strategy that we're using to gain time. Also, this allow us to replace components on the fly from one site to another, depending on the supply chain availability. You don't have a drive, you have different I/O blocks, this allows us to replace it very quickly. Also allow us to generate a full digital twin. This is something that is so uncommon in the industry 'cause you can see this level of details in the simulation, for example, in Boston Dynamics on a single machine, but you don't see that a full automotive plant emulated. We're able to digitize everything and test new features and new capabilities in the virtual space before we deploy it. Since our software works with every of our system, we'll be deploying a 1242 system of Walmart, for example, and we want to able to test both positive and negative cases in simulation. We are doing a lot of work with George and Ted to fully simulate the entire system, including bots, including software, so we have do an end-to-end testing. Well, maybe you can help transition us then to the BreakPack conversation. I believe we did a lot of the same work when we were looking at. Yeah. Developing BreakPack, which is allowing us to do some very different things there as well, right? BreakPack was developed fully offline because this is, as you guys seen, it's the first proof of concept. We had to develop all the software, all the interfaces tested, and we did it in digital twin. We generated several digital twin because we changed the layout several times, and we found one that was nailing all the requirements that we had. We tested that, we tested with the software, and that was amazing. Then we went to deploy it, and we had very few problems. If it was in the field where we actually had to test the software on site from scratch, we would've been taking a lot longer. Yeah. Well, George, this is your baby. Can you give us an idea of what it means to have this all together in, say, a minute or so? Yep. This is a pictorial view of what you visited today. We went at the back of this gray structure on the left, which is the BreakPack system. The blue that you see all is the core system where SymBots travel, put away cases, remove cases to bring them into the BreakPack system. This is how the integrated BreakPack fits into our Symbotic system. On the left and on the right, you have bots traveling, bringing these cases. In these cases, we talked about 99% of the cases, we do not touch them. Until there, this case has not been touched by a human. It's all automated. The only place we touch the case is when the selector opens the case to remove vendor packs or each is the places on the MiniBots. That's the only place. Again, after that action, we take full totes, and we move them back into the core system with ultimately palletize them for the store, for the outbound cells, which you can see on the right-hand side, the three outbound cells. Again, it's fully automated. The only time we touch the case for a BreakPack is whenever a selector opens the case to place the each on the MiniBot. I thought it was a good high-level overview of how the two systems are integrated and working. In fact, later on, we will move, and we will have more blue on the left side, and that will be the other system, the 3.0 system that is in construction, in commissioning right now. That's how the BreakPack will be between these two systems, fully integrated. Beautiful. Let's try to give this video really quickly if we could, and then we're gonna do a lightning round, so get prepared. Yeah. This video, I think we saw it in our introduction. Nothing different than what we saw. I think we can skip that. Okay. I mean, you can see the selector getting the case, opening the case, placing the each on the MiniBots, and pressing these green lights. Green lights are lit whenever the bot comes. It says, "I'm ready to take the each." You can see the MiniBots moving away from the selector. In the end, you will see totes palletized. Another important thing, I know we talked about bots, SymBots. One of the reasons that we developed SymBot, it was the need for us, a bot, to carry a case and a tote equally well. Right there, we have completed that, and I think we are 100% done with that. There's no doubt about that. Beautiful. Even totes have been palletized with end-of-arm tools in the outbound cells, which is another innovation that came with the BreakPack system. Fantastic. We can also mix totes and cases. Of course. in the same pallet. Yeah. Okay. Yeah. All right. Let's try to close with. I mean, we talk about having a culture of innovation at this place. Can we. I'd love to lightning round with you guys. Two or three words about what innovation at Symbotic means to you and what we're doing for the future. Yeah, you get the pleasure of starting without me telling you to start. Two or three words? Yeah. Two, three. I would say, rapid innovation. I'll take it. Cristian. There is a wealth of expertise, especially working with Rick. He has tons of ideas that makes us think and think and think, and we challenge each other. What if we do this? What if we do that? We spend countless hours debating, and then we come with a solution, and we go execution, which is amazing. Great. It's more than three words, Cristian. I don't know, but we'll give it to you. That's fantastic. George, close this out. I think we have an organization that is based on trust. People trust each other. They trust each other to challenge each other. They trust each other to cover for the blind spots. From the CEO up to the individual developer, open and honest communication and keeping each other accountable. Great. Well, Jeff, we're gonna turn it back to you. Look forward to another chance to be here maybe in the future to talk about our next set of innovation. Thanks. Thank you. All right, gentlemen. Thank you very much. Well, finance, near and dear to our hearts. We saved the best for last, right? Let me welcome my boss, Tom Ernst, our Chief Financial Officer, to the stage and walk us through some financial plans and outlook and commentary. Tom. All right. Thank you, Jeff. So much fun to be here in front of you today, so thank you all for coming. Yeah, I hope you had fun today. You know, I reflect back on a little over two and a half years ago when I first came to this location and saw the Symbotic system. We were still installing the system, still had commissioning work to do. You know, I was a CFO of another company looking at my next opportunity, and I'd never seen a tech company as cool as this one, and that was before the system was really running. Hopefully you saw the same thing I saw today, which is this system here is 3x bigger. It's got BreakPack in it, and it's even so many times cooler than it was two and a half years ago. It's just fun to be here. Thank you all for taking time to come here. We appreciate your interest. Webcast as well, we appreciate your interest in Symbotic. I'd like to start by just reflecting on what's happened here in the last year at Symbotic. When we got together here a year ago, we had not yet completed our public listing. That was one month away. We talked about what had happened the last year. We had gone from effectively being an R&D company that had under $100 million in revenue. When we were standing here a year ago, we were almost a $400 million revenue run rate. We're beginning to deploy systems by the multiples in our current- generation technology. We're very excited about our growth prospects. I think I stood up here last year and said we're thrilled to tell you about how this first year of growth had been and about how we had ambitious growth plans that we wanted to talk to you about. This year, you know, what we wanna tell you about is those growth plans are working. They're working better than we thought they would, and we grew faster than we thought we would. In our fiscal second quarter, we reported just a couple weeks ago, we're now over a $1 billion revenue run rate. You know, I think we reflect back to where we thought we'd be in 2023, and we're a good 20% bigger on a run rate basis. It's quite a bit faster growth. The other thing I think I said last year was, Symbotic was a CFO's dream of a company from a financial profile. You know, what we've seen as the last year has gone by quarter-by-quarter is that that dream just crystallizes clearer and clearer. What's driving it? Well, we have expanding gross margin. We took the opportunity on the success in our first year of operations to go a little bit faster, to invest a little bit more in our product, to actually take our gross margins back a little bit, to accelerate growth, accelerating our outsourcing opportunity. Since then, we've been expanding our gross margins. As we look forward, we see multiple drivers for long-term growth. We'll talk about some of those today. We also have very high operating leverage. This stems from our business model whereby we have significantly more investment than our competition in research and development. We have a strong technological lead. We have an outsourcing model that provides us high leverage. While we've been able to grow the business with moderate OpEx growth here in the most recent quarters, we anticipate that continues against very high revenue growth. Finally, the low capital-intensive nature of our business, very low CapEx requirements, along with very favorable working capital dynamics we're gonna talk about today, have led us to already be cash flow positive the last couple of quarters and to expect to be cash flow positive for this fiscal year. Once again, as we look forward with revenue growth and scale, we see expanding cash flow profitability long term. Peeling this back a little bit to look at our financial performance in the first half, I know you've seen these numbers, just to hit the highlights again. In the first half of this year, our revenue growth is, you know, 173% gross margin, expanding a comparable amount at 171%. EBITDA margins are up from an EBITDA loss rate of -28% a year ago in the first half to -6%, again, showing that very high operating leverage. Let's take a step back again. I wanna back up to where we were two years ago in our fiscal first half of 2021. In fiscal 2021, we had just completed the proof of concept systems for our current generation of product. We completed those proof of concept systems at two of our customers. The first one you saw here, that was that system we toured just today. The second one was completed nearly simultaneously with another customer of ours, Albertsons, near Chicago. Those two systems had just been recently completed and were added to the four systems that we had from prior- generation prototypes and previous- generation product, bringing our total of six live systems in the customer base together. In the 2Q, as it was clear that we had our product ready to go, we began to launch our current- generation product for mass distribution, and we launched the first three next deployments, beginning that build phase that Bill Mines talked about. That was two years ago. Last year, we talked about that trajectory from there. We're sharing these numbers with you here with a little bit more detail this year. We've grown the number of systems in deployment from three in the two year- ago, two-quarter period to nine in fiscal second quarter of 2022. You can see they came in a couple of waves where we launched the first few, and then we launched kind of a next successive wave. I've talked a little bit about this in our recent financial updates with you on our financial update calls. This last year has seen a continuation of that kind of rapid growth. We've again tripled the number of systems in deployment, active deployment, from nine in the fiscal second quarter of 2022 to now 28 in the most recent completed quarter. In addition to those 28, three of the nine have since been completed. What that means is they've passed an acceptance test by the customer, which means we've passed certain performance levels that demonstrate to the customer the system works. The customer then begins to ramp those systems into full production use, and they begin paying us our recurring revenue fees. We now have nine total systems up live and running with active customers. This is what's underpinned our growth over time. You're all familiar with this trajectory. We thought it'd be helpful just to break this into a couple pieces for you to make it a little bit clearer. We divided the revenue into two buckets. The green buckets here are showing our current- generation system revenue. Then we've shaded the gray buckets, which show you our previous- generation revenue along with our recurring revenue, so you can kinda see what's driven the strong growth from Symbotic. It's those system deployments that's driving the dark green bars. You've heard us comment in the past that the prior- generation projects often had a very lumpy revenue recognition. That's why you see some very tall bars back in fiscal 2021. It's very common for us that when we're doing a prior- generation prototype deployment that we took revenue recognition in one lump at the completion of a project. Our revenue recognition is percentage of completion with our current- generation systems. Bringing that all together, this is what underpins our growth, and this is what's been the strength of our growth. As we look forward, the goals of the company are as follows. you know, our founder, Rick Cohen, sets goal number one, which is deliver braggingly happy customers. I think you've heard the rest of us say as well, goal number two is, while we're doing that, grow as fast as we can because we believe that, we believe we have a very large market opportunity. We already have a $12 billion firm-committed, non-cancelable order backlog, and we have a clear over demand situation for our technology to add to that where we choose to. Our goal is as long as we can deliver those systems and have the customers be braggingly happy, we wanna grow as fast as we can. How does the model work? Let's peel back one layer and talk in a little bit of detail. On the left-hand chart here, we're showing a system gross margin. We sell a system to a customer. You know, a system can be anywhere from, say, a $25 million system. It's modular and scalable in nature, like LEGO blocks, so it depends on exactly what size you want and what the configuration is. It might be a larger system like Rick mentioned, could be a $100 million system. There's not really a theoretical limit there. It could be multiples of that if a customer wants to deploy a very massive system at one time. Our system sizes really do range. The customer actually owns the physical system when they when they purchase it from us. They'll own the cells, the bots, the structure. In order to use the system, the customer must be current on their software subscription or software maintenance in order to have rights to use the hardware. That means that over time, we're adding gross margin to the system over the lifetime. Back to that system revenue. Our structural gross margins as we think about it, looking at the business that was won up to that $11 billion we had when we spoke a year ago, we see the structural gross margins on the system sales as approaching 30% as we scale and gain efficiency over time. When you add 25 years of recurring revenue stream in that business we had up to a year ago, we see that lifetime gross margin growing to approximately 40% over time. That's because the recurring revenue streams have much higher gross margin than the system gross margin. Software being the highest gross margin in terms of we see a structural gross margin closer to 90%. Operations services such as training or build, operate, transfer services we provide to our customer in operating their system, we see ramping into the 40% or 50% level. Same with our maintenance parts business. The opportunity doesn't stop there, though. Since we captured that $11 billion backlog, we've been bringing new customers on. We also have a pipeline of additional customers. We're finding that we have a stronger pricing opportunity with those customers, and in particular, we're monetizing that pricing opportunity with higher recurring prices. Whereas we were capturing about a 40% structural gross margin, up until a year ago, we now see that in excess of 50% with our current experience. You heard from Bill Mines, you heard from our engineering leaders about how we have multiple opportunities to take costs out of the system, not only from the implementation cycle but from the product standpoint. Those cost reductions come in, we see that as opportunity for us to expand gross margins as well over time. Finally, moving forward, we license our system to our customers on a throughput-rated basis. As those self-learning engines grow with capabilities and as we come out with future hardware, snap-on technology, those applications that can add on, those are all future upsell opportunities that further expand the margin we get from any given customer deployment. I'd like to back up and talk a little bit again about the cycle of deployment. We deploy our technology through three phases. Bill Mines outlined this for us earlier today. We have a build phase, an installation phase, a commissioning phase, and a live, and then a go- live with the customer. Symbotic does get revenue generation through all the cycle. However, the strongest concentration of revenue is in that main installation phase. We're, you know, we continue to get revenue through the commissioning phase again as well, but it's much lesser revenue generation than when we're physically installing systems. Finally, we pass that acceptance test with the customer where we've proven out, basic system capabilities. That's when the recurring revenue starts for our system. Once again, customer must be current on their software licenses in order to use the hardware. Another dynamic that makes this a CFO's dream of a company is that customer by customer and project by project, we've designed the contracts with customers such that each project has a positive working capital throughout the entire life cycle of a project. This is done simply by timing customer invoices for delivery of the system to precede our outflows of spend for input costs into the build, installation, and commissioning of the system. This is the primary source for the $700+ million of deferred revenue we have on the balance sheet, and something we expect that'll continue to move forward, and is a key reason why, despite having a - 4% EBITDA margin in the most recent quarter, we're already cash flow positive and expect to sustain that. The end result of that is we've been able to accumulate cash. We now have a $465 million cash position. That's been increasing, as I mentioned, the last couple of quarters. This provides us tremendous visibility with which to plan our growth, tremendous flexibility as we think about the business opportunities as we lay forward our growth plans over the mid and long term. Turning to the operating expenses of the business and our investment. One of the things we're most proud of is our team, and I think Rick Cohen really made this central to what he wanted to highlight to you today was the talent he's attracted and the talent we continue to attract to the organization. You know, we have not only the best people, but we have what we believe is the highest level of investment in automation, automating distribution centers in the planet. While our dollars are comparable with the biggest legacy players that have multiple billions of revenue in this space, unlike them, we have no tech debt. Our R&D is pointed entirely at new innovation in the space, and we're not done with ideas either. One of the harder things we work on as a team is how do we choose which couple of dozen things we're gonna work on so that we can be effective at them. You bring this together, our $117 million of run rate R&D, we believe is a level of investment that's stronger than our competition while we already have a more than a generational lead in technology, something that we think will not only sustain but extend that lead over time, and provides us the opportunity, without increasing by $1, the ability to sustain and extend that innovation over time. You should continue to expect, though, that we will grow our investment in overhead moderately over time. Realizing strong leverage against the revenue growth, which we expect to be much faster. We expect a similar dynamic in our SG&A line. While last year we got up here and we talked about how we're investing significantly in expanding our SG&A in order to prepare the company for its scaling operations growth. We've seen that growth in SG&A moderate quite a bit. This is because we're beginning to reap some of the early benefits from our big outsourcing push we've been talking about over the last several quarters. You know, we still have significant redundant costs with our partners as we're expanding those outsourcing initiatives that we will realize over time that'll help keep the growth moderate here as well. As we get on the far side of that transition and continue to work over the long term with these partners, we see great leverage in having them scale with us, not only to keep our operating leverage high, but to advance the technology and provide us longer term margins, we think, on a net basis. Once again, with SG&A, you should expect us to continue to grow SG&A expense, but at a much more moderate rate than the high growth of revenue we expect as we look forward. Just a couple comments on stock-based compensation. I've had a few questions about this. We issued grants in 2023 under our annual equity award program. This represented about 1% of our fully diluted share count. Now, that was at the, at the share price earlier this year. If we had done that at the share price two days ago, stock's actually up a little bit today, but if we'd done it at the share price two days ago, it would've been about 60 basis points of dilution. I feel like that benchmarks in incredibly well relative to tech companies in our comparable ZIP code of market cap. I bring this up because we, as a company with a 16-year history, we did take the opportunity to convert many years worth of long-term incentive plans that we had to RSU-based stock plans, and you're seeing a significant level of stock-based compensation in the near term that's flowing through our GAAP income statement. You should expect that to moderate over the coming several quarters and begin to normalize and reflect something that you would expect to be more consistent with that 60 basis point- type of share dilution that we have in our plan. One other brief comment here, too, I don't want to get stuck on this too much, but an exciting part of our business model that, or at least I get excited about as CFO, is we have an Up-C structure that enables us to take the tax shield benefit that the company had established as a private partnership before a public listing, carry those tax benefits into the public market, and then as those partners look to sell shares in the future, well, that's when you actually snap the line for what the tax benefit is. You know, it's— higher share price means a higher tax benefit. obviously, tax benefit is only applicable if the company has a tax liability, which we certainly plan to have in the future because we plan on being immensely profitable and much bigger. With that caveat, if the partners all sold their shares today, which they're not, but they did, this would be almost a $4 billion net tax shield. The agreement that we had with the partners that as part of the public listing is the public shareholders get to keep 15% of that. That's a $600 million net benefit that goes to offset tax liabilities in the future. Again, that goes up if sales happen at a higher than $25 share price. You know, once again, excited to be here. I think I was the closer, and we're gonna bring Jeff back up and perhaps take a Q&A session. Thank you very much, Tom. If I could be joined by all of the presenters up on stage. Management team, come on up. Remember, we do have a webcast audience, so we're going to have a roving mic going around the room. If you have a question, please raise your hand. We'll bring you the mic. Then identify who you are and ask your question, please. All right. Sure, Robin. Sure. Come on, Rick. I was hiding behind you guys. Hey, this is [audio distortion]. Thanks for taking the time. You guys talked about adding one to two customers annually, you know, your outsourcing ecosystem continues to evolve. Do you think when the deployment time kinda shortens, you go back and revisit that one to two customer number? Do you think that kinda gives you good line of, you know, visibility as you move forward? Maybe I'll kick that off. [Pierce], our plans are to add one or two new customers per year here in the near term. Our growth plans do include having more capacity slots for more customers in the midterm plus. However, we're growing so rapidly that we kind of wanna talk about that when we get there. Absolutely, to the extent that we're able to compress those installation and commissioning times and gain the benefits of speed of deployment, those are the kinds of things that enable us to open up more capacity slots and think about more new customers. Got it. You touched on being well capitalized. Maybe talk about the capital deployment priorities here, like six months or, you know, 6-18 months, where do you invest? I'll take that. Do you have a thought? The only thing I was gonna say is that one or two customers might be multiple systems. Right. Right. Our capital needs are actually quite light. Today our CapEx are extensively some R&D tooling and engineering products that, you know, this team over here likes to come up with creative toys they play with as they invent things. Or really the bulk of it is office products. It's, you know, computers and things like that for employees. That's why you see such a light CapEx number from us today. Larger internal software programs may carry some internal CapEx as well, but again, that'll be fairly light. There are things that we could consider in the future that are not part of our operating plans that you've seen recently that could be more capital-intensive, but to date, we've chosen to do much of those things that we talked about some of that a year ago, that we may invest in some things. We've actually chosen to expense more of those projects directly and do those with live field deployments rather than internal capital projects. It's possible that we'll do some more things, but for now, no. Thank you. Hey, Ross Sparenblek with William Blair. Just kinda thinking about, you know, bringing down that production capacity and the timeline there. I mean, how should we think about the buckets on be it procurement or dual sourcing the supply chain and, you know, any timeline we can, you know, kinda bring that into focus? Maybe I'll take the first part and then Bill can take the second part. One thing we did with procurement is we did wanna get out and ensure long lead time components that were challenged in the supply chain got locked in a little bit earlier. We're making sure that we have adequate supply and inventory and actually locking the specific things like circuit boards and some components that showed problematic areas in the supply chain a bit earlier. That's one adjustment we've made that's been very helpful to us to make sure that we de-risk the supply chain. Bill, you— Yeah, the only things that I would add there, Tom, we're starting to see the supply chain for some of those long lead time items ease a little bit. With the partners that we're standing up, the way the model will work is the partners will be out procuring the componentry and using their network. We expect, you know, to get a number of different benefits there. One is scale leverage. The other is shorten the lead times, identify opportunities to diversify some of those componentry sources, and then mitigate some of the risks across the upstream supply chain there. Bill, one other thing you've been successful is, or the team's been successful is we've realized shorter installation and commissioning times with ourselves alone, but then also with the partners that we're working on already so far. Yeah, to reiterate the point that we've made during the course of the conversations this afternoon, I think one of the important things is, you know, these partners bring a lot of expertise, a lot of experience, and they're using that to help do work upstream in their factories that we were trying to do on site, that was taking an awful long time and involving a lot of rework. As they're learning and they do more and more, they're able to say, "Okay, there's more that they can do upstream that helps cut our costs downstream." It compresses cycle times of implementation and installation, and that all helps reduce cycle time and cost. If I can, one other thing that we did also in engineering is qualifying alternative components, especially for the critical ones, so that supply chain has more breadth to go and choose. Oh, go ahead. Okay. Mark Delaney from Goldman Sachs. Thank you for having me and doing the presentation. Tom, you mentioned all the levers you have to gross margin and how you have drivers for that to improve going forward. I realize steel and other commodities make it hard to predict where gross margin will fall on any given year. If you assume normalized input cost environment Do you think you'd be tracking ahead of the low 30s gross margin you thought of you being achieved in 2025 at the time of your public transaction? Maybe just give a sense of where you're tracking on gross margin now with some of these levers relative to that original low 30s, 2025 target. Thanks. Yeah. Thanks for the question. What's changed for us is we've gained increased confidence in the success of our supply chain strategy. When we began the outsourcing initiative, we weren't certain that it would provide us the same margins, lower margins, higher margins. The primary goal was to make the business scale, to be able to deliver more systems over time. We have gained confidence that we think we can do it at a higher ultimate gross margin long term. Now, this is a journey as well, you know, we've taken the opportunity to move faster. We're doing more innovation in the field, which has had a suppressive effect on our gross margins in the near term. We've put the foot on the gas on moving with more partners and moving faster with them, which has had a similar effect. You know, more redundant costs and frankly, just more inefficiencies when you're moving that fast. Those two things give us visibility that as we take the business forward and with scale, that we'll continue to traject. Bottom line answer is yes, we're excited that we actually believe we'll be more profitable in the long run. Yeah. Hi, guys. Thanks for having us. This was great. This is Derek Soderberg from Cantor Fitzgerald. Tom, I noticed that your opportunity that you put out there for the addressable market went up. I'm curious what went into that, and it sounds like you're feeling confident that you have the ability to price in some of the benefits that you're driving with your solutions. I'm curious if that was part of the increase as well. Yeah. Thanks for the question, Derek. You know, the primary driver is actually, you know, Mike and his team takes a look at. The finance team helps with this. We provide an accessibility score across the identified potential targets, customers in our strategically addressed markets. As we've thought about our opportunity set with those customers, we feel like there's some significant components that are more open up to us. It's less about pricing and it's actually been more about, we just feel that our product set now has at a little bit higher success rate than we thought a year ago. What hasn't changed is the number of warehouses out there. They're pretty much where we expected them to be. Yeah. In particular, there's a few industries that, if you go back a year, we hadn't had as many detailed conversations with potential customers out there. In the past year, Jason and I have had the chance to engage with a number of those companies that give us a higher confidence about applicability of our technology in some of those industries, which drove the increase. Great. I just have a quick question for Rick. You talked a lot about the robots and the innovation that goes into that, the robots, but I'm curious if there's another part of the system that you're most proud of. What is that? Which other parts of the system do you think are gonna be really tough to replicate for others? I talk about the robots, I talk about the big robots, the little robots, the small robots. There's tremendous innovation on, there's a chunk of software that goes into the robots that we talk about, control software, which Cristian and Ted do a lot of. The other software, which George spends a lot of time on, is figuring out how to make the robots more efficient, whether it's routing or tasking. It's a lot of the software that the self-driving cars use. I think we're trying to stay away from bleeding edge, but we're somewhere between cutting edge and bleeding edge. The stuff we're doing, because the people we're hiring are saying, "Here's what the latest thinking from Waymo is, or Cruise, or Tesla or Toyota." I'm really excited about the work in both areas, but software would be the one that I didn't mention, and I'm very, very excited about that area. Thank you. Jim Ricchiuti with Needham. On the tour, it became apparent that there are other opportunities in the warehouse you talked about. I think you alluded, suggested that there are some opportunities around the loading dock and maybe some others. I'm trying to get a sense as to what the philosophy is of build versus buy? You want to take this? Oh, I thought you said "Bill." But you said build. Build versus buy. I'm happy to. Yeah. to. Yeah. I thought I was gonna get out of this one. We'll both answer it. One of the things that I learned from in the process at C&S, as fast as we grew, we did a lot of acquisitions. We should have been more acquisitive, more aggressive on acquisitions. I look at some of these products, and I'm saying they're really good, but they're not gonna be successful because they don't have the discipline that this whole group has to say, "No. We're not talking about Four Sigma. Four Sigma is not gonna get you a successful company. Six Sigma, Seven Sigma, one error per million, one error per two million is what you need. I think there's a lot of opportunities for us to buy companies that would have failed. We can take where they are and transform them with our technology, a lot of software, a lot of hardware, and g row very fast. I also think some of those things may be add-ons that we sell. You could sell some of this stuff. You could sell a BreakPack system without a whole system. That creates more customer activity, more customer interfaces, more opportunities for add-on sales. Bill does, I mean, every deal we look at, Bill and I, it's Bill, Tom, and me together. Yeah. Unsurprisingly, we're taking a very similar and disciplined approach to what we did when we built this whole company, right? Which is, we would like to find the right technology that is the right addition to what we're doing. Some of that we will be building, some of that may be out there already, but we're laser focused on continuing to deliver as we look at putting more systems in and delivering on the promises we've made, and then finding the right balance of what we grow with from here. Yes, we'll be looking at lots of things. We'll also be working on internally on everything that we can bring to market in the right way and at the right time. Okay. If I may, just one final question from me. Just with respect to new customer additions, is there more of an emphasis on thinking, hey, other geographies or other verticals, if you could? Yes. I mean, we're stepping through that process. You know, right now we're focused on existing verticals, in SAM-1, SAM-2 adds verticals, so we'll first go to other verticals in the U.S. In parallel to that, we're having conversations with a number of companies, outside of the U.S. We would go there, but we consider that the third step in our, in our growth trajectory. Hey, this is Joe Giordano from Cowen. Rick, what's the competitive response been? You know, I know that what you have is different. I've been here several times, and it's amazing to see. You know, it's $0.5 trillion TAM that you're suggesting in SAM-3, and I can't imagine that your competitor is just gonna let you take it all. Like, what are they doing? Yeah. Well, let's just start there. Yeah. Yeah. It's interesting. Mike could share this. We're seeing no new competitors. We run into WITRON on some sites. KNAPP is mostly focused on e-commerce, so we're not running into them. Dematic is struggling in a lot of areas. To some extent, we've created a new space, which is all these retrofits. To some extent, people that we were competing with are now much more willing to cooperate with us and maybe do build to suit kind of things that would be good partners for us. Amazon hurt a lot of people in this cutback, people are making a decision, do I cut back overhead? Because a sales cycle for some of those guys was three years. We're not [inaudible]. I'm always looking over my shoulder. I'm only paranoid 'cause people are chasing us, but we're not seeing a huge amount of competitive response. Walmart's made it clear, "Don't call on us." If anything, we're seeing small startups saying, "Maybe we should be talking to you about, can you help us get into Walmart?" Which may lead into a discussion of, will you just buy us? I think we're seeing that. The WITRON is very well-financed. They're out there. Never wanna minimize them. They kinda started this warehouse automation. They're good. They're limited in what they can do. They can't do what we can do. But if—t hey're out there, and they're very big in Europe. When you look at your potential market out there. I don't know if people, how do you think about their willingness, the potential customer's willingness to, like, wait long enough for you to even be able to deploy the technology for them? Because, like— Yeah. Yeah. People aren't gonna wait 10 years to do something they know they need to do now. How do you think about that? What Bill has generally said, but not as aggressive as I would, is we are working. [inaudible] qualify. I'm very focused on inventory. I came from a world where inventory was everything. You didn't wanna have any leftover Pac-Man cereal. You didn't wanna have any leftover PURELL. You didn't wanna have any of those. I came from that wholesale grocery business where inventory management was everything. That being said, we are gearing up not to build to suit. We are gearing up to build inventory 'cause we can sell everything we can build. We are very focused on changing our model, and nobody's ever built 40 systems in a year. The most that any of these guys have ever built, whether it's Dematic, WITRON, is 10, as far as I know. We will get to 40. We will be surpassing them sales-wise probably next year. Our answer is we're gonna build systems faster. We don't know how fast yet. We're gonna have to figure out how to build inventory. We're gonna have to get better controls on inventory. That's the answer. Thanks. Tom, when exactly are they getting to 40? All right. Thanks. Greg Palm from Craig-Hallum over here. First off, thanks for hosting us and appreciate all the great info. This is a two-part question. It's, you know, clear that you've got lots of growth opportunities. You talked about, you know, penetration of existing customers, you know, new verticals, new customers, new geographies. How do you prioritize each of those? The second part to that maybe for Tom would be, how do you balance profitability, you know, off of those versus the, you know, the investment that's required to go after some of that? Thanks. Do you wanna take the first one? Yeah. In terms of priorities, you know, that's the purpose of us laying out the SAM-1, SAM-2, SAM-3. We're first prioritizing continuing to penetrate existing customers that wanna do more. We have active conversations with every one of those customers about doing more. Second priority is expanding into new verticals, really into the SAM-2, which will expand the verticals that we're focused on. Third would be the geographical expansion. Those are how that's how we've laid out the priorities. Now, that being said, we also have constant conversations internally amongst the leadership team as we have opportunities to get to the point where they're ready to move forward, which is how do we maximize the value creation for us as well? Who are the right new customers? Our priority is to add customers that wanna build many sites with us versus customers that wanna build one site. Then strategically looking at who are the right sort of beachhead new customers and new verticals and new geographies that help us expand into those spaces. I'll say a couple things about profitability. We're intensely focused on maximizing the net present value of our future stream of profits at the company. We intend to be profitable. We intend to really take advantage of our opportunity. We also find huge value in being a disciplined operator of the business and driving towards increasing performance as well. Those are both important values that Rick has really instilled in the company that come from him as a cultural direction. You should expect us to be focused on delivering both. Yes, this is Rob Mason with Baird. This last quarter, Tom, you had a book- to- bill of 1. Your backlog really didn't change, but you didn't book any new customers. It appeared that, because of the performance, you were able to see more revenue in the future. I'm just curious, you know, within the existing backlog, how much more performance opportunity resides in that current backlog? Thanks for the question, Rob. As we talk about backlog, we're talking about the accounting definition of remaining performance obligation. There definitely is some variable performance upside to the backlog as we move forward. It's also the appropriate way to think about measures. We as a company intend to drive the cost of our system down, right, over time. There's certainly variable consideration that we have in our contracts that don't get included in backlog that you may not earn, right? Those are the primary reasons why there may be some upside outside of actual new bookings that drive backlog growth or moderate backlog depletion. Just as a follow-up there, again, if you think about your system gross margin today, use the example $50 million system, just 30% gross margin, or just below that. relative to, you know, that target where we are today, what would be kinda the one or two big movers to get closer to that target gross margin and when we might see those? Yeah. Two biggest movers, these are something that are gonna come over time, are first, we have a significant amount of in-fields product that we're delivering to customers that you've seen here today on your tours, that are being field tested. They're effectively field proof of concepts. It's our ninth major platform release of our autonomous bot, SymBot. We're delivering that. You saw them running on multiple levels of the system here. They're running in multiple sites out at our customers today. You also saw BreakPack. That's that product as well we're delivering. It's a proof of concept that we're delivering with a customer. When we deploy technology like that, those do not bring the same gross margin contribution as our finished current- generation product, and those are very significant levels of revenue generation for us today because we're moving significant quantities of those in the recent periods. As we move forward, we'll probably continue to have programs like that, but perhaps not at the same rate we have here in the recent timeframe. And particularly as we think about it in the near term, those will moderate a little bit. The second thing we have that's clearly visible that'll provide us some uplift is we have multiple sources of redundant costs associated with our supply chain initiatives. While we're ramping up first, and then second and third partners across multiple areas that Bill Mines walked us through, we have redundant procurement teams. We have redundant operations teams. We have knowledge transfer efforts. We have engineering efforts. We have system efforts that are adding some redundancy to the cost as well. A lot of that gets carried over into —some goes in OpEx, but a lot of that gets carried over into COGS as well, that acts as a depressant effect in the nearer term on gross margin. Those two are actually bigger than steel. I know we've talked about steel last year because steel was at a very high level. As I think you're all aware, steel for any long-term contract we have with a customer is a pass-through cost for us. That means that we're gonna get the same gross profit dollars, but when steel is at an elevated level like it has been again the last three or four months, that elevates our revenue and elevates our COGS, which takes down our reported gross margin. That's a couple to a few hundred basis points of impact relative to what the longer run, say, the 10-year average steel index would be. That's a third-tier effect that's not insignificant either. Thank you. Thank you everyone for the excellent questions. Are there any other questions? We have maybe just a minute or two. Excellent. Thank you everyone for joining us today. Thank you to the management team for their excellent work, thank you very much to my colleague, [Kim Zmijewski], who made this event run on time, smoothly and professionally. Thank you to her as well. For those in the room, the bus is available to take you to the airport, don't forget your bag. Out the doors to your left, take a right, the bus will be right out there. Thank you again for coming.