A Guide to PNC and Shareholder Letters

Over the past two decades, PNC Financial Services Group (PNC 2.33%) has evolved into one of the best-managed companies in the financial services sector.

Listen in to this episode of Industry Focus: Financials, as The Motley Fool's Gaby Lapera and John Maxfield dissect what's behind its success.

A full transcript follows the video.

This video was recorded on April 3, 2017.

Gaby Lapera: Hello, everyone! Welcome to Industry Focus, the podcast that dives into a different sector of the stock market every day. You're listening to the Financials edition, taped today on Monday, April 3, 2017. My name is Gaby Lapera, and joining me on Skype is John Maxfield, banking specialist. How's it going, John?

John Maxfield: It's going great, Gaby. How are you doing?

Lapera: Pretty good! I'm pumped to have you on the show two times in the last two weeks.

Maxfield: Lucky you, huh? Lucky listeners. I'm being facetious, though.

Lapera: I'm sure they're so excited to hear more about banks, because that's what we're going to talk about today, banks. I know it's a surprise, because the title of the episode isn't Industry Focus: Financials or anything. We thought we'd switch it up again with more banks. [laughs] 

Maxfield: The old banking bait and switch.

Lapera: At least we crack ourselves up, John. [laughs] 

Maxfield: [laughs] Only us. Maybe our moms.

Lapera: My mom says hi, by the way. My mom loves Maxfield, listeners, in case you're curious. Although she did say you talked a little too quickly on the last episode, and she wants you to slow down so she can hear every word.

Maxfield: I love your mom, she's our most committed listener, and I agree with her that I sometimes talk way too fast.

Lapera: [laughs] In that case, now that we're done with this small talk, let's talk about PNC Bank and shareholder letters. We're going to interweave the two topics. Let's start with what's going on with PNC Bank in general right now. The reason we picked PNC Bank to begin with is because after doing that [U.S. Bancorp] (NYSE: USB) episode last week, which, if you want to link to that, I'm happy to send it. Maxfield finally published that article on the Richard Davis interview. If you emailed me about that, I'm going to email you back as soon as the show is over and send that to you. If anyone else wants that article, I'm more than happy to email it to you. Our email is [email protected]. Winding back, the reason we're talking about PNC Bank is because we talked about how great U.S. Bancorp's efficiency ratio is, and PNC Bank has an even better one.

Maxfield: Yeah. If you think about it, when you're analyzing banks as an investor, there's a couple of statistics that are really central that you're going to want to check first. Efficiency ratio is one of those. We talked about it last week, the efficiency ratio tells you the percentage of net revenue that is being consumed by operating expenses. Most banks want to get around 60%, that's what most are targeting right now. But PNC's efficiency ratio is 52.5%. So, what does that mean? The average bank in its peer group has a 62% efficiency ratio. What that means is that 10% more of PNC's revenue is available to pay taxes, cover loan-loss provisions, and to drop to the bottom line. So it has an enormous advantage right out of the chute.

Lapera: Definitely. And the things that make up the efficiency ratio are expenses and assets. 

Maxfield: Expenses and revenue, rather.

Lapera: Expenses and revenue, sorry. Not assets. Thank you. What I was going to say is, PNC has the highest revenue as a percent of asset. PNC does have the highest revenue as a percent of assets in its class, and it's over 1%, which is great. That's generally what you want to see in banks, anything over 1% is gravy. Most banks are not there yet.

Maxfield: I think we mixed up some numbers. Their revenue as a percent of assets is 4.92%, which is the highest in its peer group, and its peer group are the really large, too-big-to-fail banks, JPMorgan Chase (NYSE: JPM), Citigroup (NYSE: C), Bank of America (NYSE: BAC), Wells Fargo (NYSE: WFC), plus other large regional banks. So that's the largest with one exception, and that is Capital One (NYSE: COF). The reason that Capital One's revenue is so high as a percentage of assets is because a very large portion of its loan portfolio consists of credit card loans, and those yield, as everybody knows, a lot more than, say, a home mortgage does. So its revenue as a percent of assets is the top in its peer group. But then, if you translate that over into profitability, that's where that 1.1% return on assets is. When you're talking about profitability for banks, there's two measures that you want to look at: your return on assets and your return on equity. Return on assets is basically your unlevered profitability. Your return on equity is your levered profitability. Here's the interesting thing about PNC, and this is one of the reasons that it doesn't pop up a lot when investors are looking for the top-performing banks -- it's because their return on common equity last year was 8.58%. When you're looking for a 10% return on equity, you think, that's actually meaningfully below that standard industry benchmark that you want to see. But the reason that it's below, as we see with its good return on assets, is just because it's not very levered, which means it's a very safe bank that's still earning a lot of money if you look at it on a levered basis.

Lapera: Yes. And in my defense, 4.92% is above 1%. [laughs] 

Maxfield: [laughs] Absolutely. And, just for the listeners, sometimes I throw a whole bunch of numbers at Gaby as we're preparing for the show, and anybody who listens to the show knows how fast I sometimes talk, so Gaby, I'm sure you're sometimes overwhelmed by them.

Lapera: So the main takeaways from that little section that we just talked about is, revenue as a percent of assets, you want it to be at 1% or higher for a bank that you're looking at in general, and return on common equity, you generally wanted to be above 10%. But not as big a deal for PNC that it's at 8.6% because of how unlevered it is. That actually gives us a great segue into, PNC Bank is like Thomas Jefferson, because literally all of its acquisitions are like the Louisiana Purchase. For our listeners who are not as familiar with history, I don't know how many of those there are, the Louisiana Purchase bought us a huge segment of the country that was originally owned by France, and we got it for super cheap. PNC does that all the time.

Maxfield: Yeah, I love that comparison. You know what it shows? It's the United States really knows how to work with cycles. If you look at the Louisiana Purchase, they picked it up for pennies on the dollar because France was a distressed seller at the time because they were in the middle of a war with Great Britain. There's the same situation with Alaska. We picked it up for pennies on the dollar in a distressed sale from Russia, who needed to get money at the time. That's the exact same way, not only to grow a country -- although I think some people would question whether or not the people who are buying and selling things like the Louisiana Purchase actually had title to buy and sell the Louisiana Purchase, but that's neither here nor there -- the point being, in the bank industry, if you want to grow, the way to do it is be responsible, be prudent with your lending, then wait until troubled times, and then pick up the lenders who are not able to be responsible or prudent when the bubble is inflating. So you can get them for literally pennies on the dollar. And that's exactly what PNC has done. About a decade ago, it bought Riggs Bank after it ran into some problems, it bought National City during the financial crisis and it more than doubled in size. Just recently, over the past few years, it picked up about 400 branches in another acquisition.

Lapera: And these are also great purchases because, much like Alaska had oil, or the Louisiana Purchase had, really, a variety of resources and interesting things in it, the banks that PNC has been picking up have not been in terribly bad positions. It's not like Bank of America and Countrywide. They are much better, in general, in terms of credit quality, after.

Maxfield: Yeah, that's a great point. The big one to think about is that National City acquisition that happened during the financial crisis. That was actually forced on National City by the regulators. Not only that, but then PNC went and got billions of dollars worth of money from the TARP program that National City was denied and used that money to actually acquire National City. So it's an interesting subplot to all of that. 

Lapera: Definitely. So, now that you have a little bit of background on PNC and us gushing over it, let's talk about the shareholder letter. For those of you unfamiliar, the shareholder letter generally appears at the beginning of a company's 10-K every year. The 10-K is the SEC filing that the companies put in at the end of the year that's basically like, "This is how are company did for the whole year," and it has all the numbers for the whole year and year over year metrics and explanations of where they think the company is going, stuff like that. So, pretty important SEC filing in general. This is just the very front half of it. Normally, shareholder letters are what you would expect them to be, because they are, in theory, written by the CEO, but they're probably written by a media team in conjunction with the CEO, which is full of corporate speak and not very transparent to people reading them. But this was a very interesting shareholder letter, because it had less ... what's a safe for work word for BS? [laughs] 

Maxfield: Corporate jargon.

Lapera: Corporate jargon, it had less corporate jargon than the average letter. I know that John and I have talked about this quite a bit. We love writing; there was that great writing episode we did over a year ago now. One of the most important things about writing is that, when you write, you need to be well organized. This was probably one of the best organized shareholder letters that I've ever seen. What about you, Maxfield?

Maxfield: I agree. I was struck, I have never read, their CEO is a guy named William Demchak, who used to be at JPMorgan Chase for a while, and did stuff in their investment bank. I've read a lot of letters, but I hadn't read one of his before, so when I opened this up last week, or a couple weeks ago, I was really surprised by the quality of it. The first thing that struck me, to your point, Gaby, was the organization of it. I'm a writer; I'm an editor. You're a writer, you're an editor. So we appreciate these nuances. And what I found is, that very first paragraph -- and this is a tip for people who are interested in improving their writing -- that very first paragraph in Demchak's letter lays out his case, it totally provides a summary conclusion of his case, right out of the gate. What that allows you to do is test his perspective, his conclusion, relative to the facts that he lays out in the letter. And what that shows is, he is confident enough in PNC's performance that he's willing to lay it out and have people test what he has to say about that. So I think it's a great letter. But the other reason that is such a good shareholder letter, in my opinion, is that it does a really good job teasing out the natural tension that bank CEOs and executive have between growing aggressively and growing responsibly. You have to grow as a business. And as a bank, it's really easy to grow because all you have to do is jack up your loan volume by reducing your credit standards. But the problem with that is, you then take on these riskier loans, which then, in a crisis, can subject you to an existential issue. But you still have to grow. You have to balance these competing objectives. And I think Demchak does an excellent job in his letter teasing out that tension.

Lapera: Yeah. Something else, for people who are looking for writing tips, one of the other really impressive things about this letter is that he really keeps in mind who his audience is. He lays out his thesis, and then right away, he hits all of the really important numbers, and then he lays out his framework, his road map for where he sees the company going, along with the letter, which is a really great way to lay anything out. But as with all things, we encourage you to think critically about this, before we sound just like an ad for William Demchak and PNC bank. One of the most important things to do when you read anything written by a company is look at it with a critical eye, because you have to understand that there's more going on than what they're saying here. And I think one of the best examples, there's a few, but a really interesting example is share repurchases. I'm on Page 2 of the shareholder letter, and it says, "In 2016, we returned more than $3 billion in capital to shareholders. Repurchases for the full year totaled 22.8 million common shares for $2.3 billion, and we paid $1.1 billion in common stock dividends." Maxfield, what is PNC currently valued at? It's like 2.1 times book or something, right?

Maxfield: Right, 2.1 times book.

Lapera: So the question is, most people would look at that and be like, "Was that actually a really good move, for them to repurchase shares at 2.1 times book?" If they even think to think that, and they're like, "Oh, that's nice, they returned value to the shareholders by buying stock purchases." But the savvy investor would think, "Hey, does that actually make sense, to buy your stock when it's so expensive?"

Maxfield: Right. Ideally, when a company buys back its stock, it wants to buy it back cheap, because that's the way that a buyback is accretive to the book value of remaining shareholders. So in the banking world, you want to buy back, and this is ideal, but, in an ideal situation, you want to be buying back your stock at 1 times or less than 1 times book value, because that means you're basically buying dollars for $0.90 or $0.80, depending on what the valuation is. Then, once you get up to that 2 times book value and above, your repurchases actually start to destroy value for the remaining shareholders. But here's the problem that banks run into when it comes to allocating their capital. Generally, the Federal Reserve doesn't want a bank to distribute their dividends more than a third or 40% of their earnings. That leaves two-thirds to 60% of their earnings that a bank either has to retain on its balance sheet, or in some other way, get it off its balance sheet. And the only other way to get that capital off its balance sheet is through share repurchasing. So the question is, is it still a good idea when there's a high valuation, to be repurchasing shares as a bank? And the answer is, they really don't have a choice. If they retain all of that capital on their balance sheet, it will drive down the return on equity, and thereby potentially incentivize the executive to reduce their credit standards and jack up their loan volume, jack up their revenue, to offset the downward pull on their return on equity by all this additional capital that's on the balance sheet. So, a bank, in terms of buying back their shares at a high valuation, is it ideal? No. But do banks have any other choice? Not really.

Lapera: Yeah. So, this is a great example of them presenting you with something, and they're like, "This is positive," and if you think about it a little bit more, you're like, "I'm not sure if it's positive," but then when you think about it even more, it turns out it's probably net-neutral. My next example of this is actually, you should read corporate shareholders' letters with a grain of salt, because one of the things that a lot of banks like to talk about is their corporate responsibility, their commitment to volunteering and helping the communities that they're in. If you're with me on the shareholder letter, if you've downloaded it from the PNC website, if you flip to Page 7, Delivering For Our Communities, there's a whole section on how much volunteers in PNC did for the communities that they're in. And I think it's natural for most people to be suspicious of most corporations saying, "Look at all the good things we did!" And that's a fair thing, because there are complicated factors at play here that you don't really see. And one of the things he actually brings up is that PNC knows that when their communities thrive, our business thrives. So, they're basically saying, "We're investing into the community because we know we're going to get a lot back from the community."

Maxfield: Yeah. And when a bank or any company is investing in the community, first of all, that's good, and that's an important thing, and we should applaud that. But to your point, it's not like a bank or a company doesn't get anything from that. And this is what I think about, whenever I hear corporate executives talking about giving back to the community, there's a memory from my childhood that it brings up. I grew up in a small town in Wyoming, an agricultural community, and bankers are really important there, because that's what allows you to buy farms, for typical person, because most people in small towns don't have enough money to go out and buy a farm. So, you get to know your bankers pretty well. And what you find in these communities is, the very best bankers, the ones that are able to act as a magnet for the best borrowers in their areas, these bankers are the ones that are the most involved in their community. They sit on the boards of the local hospitals, they are involved in the local schools, they chair the local Boy Scouts League. They do all of these different things, and they do it, basically, in effect, to market to the local community. And the other part of that is, under federal legislation, specifically it's called the Community Reinvestment Act, banks are obligated by federal law to reinvest in their community, and make sure the deposits that they're collecting aren't being translated into loans in larger metropolitan areas. To your point, Gaby, there's two things here. First, it's good for business to invest in the community. So, it's not just totally gratuitous. The second part is that, to a certain extent, they don't have a choice investing in the community.

Lapera: Yeah. So, when you see corporations giving themselves a huge pat on the back, like, yes, it is really good that they did these wonderful things, but they're also, A, to some extent, required to do it, and B, they're probably going to get something out of it, too. And there's some examples in here, and if you want to email me about them, I'm more than happy to chat.

Maxfield: One last thing I want to hit before we move on to another topic is, when you're reading through this -- and Demchak is talking about cycles -- here's what he says about where we're at right now. He talks about, in 2016, their shareholder return, even though their shareholder return over a three-year period ranks it first and its peer group, its stock in 2016 underperformed its peer group. So the question is, why? And this is what Demchak says. "To some extent, this is the result of the long-term strategic decisions we made not to pursue short-term revenue opportunities that are inconsistent with our risk appetite, and to continue to invest in our franchise." So, what he is saying there is that right now, where the banking industry is at, they are almost getting into that zone where any additional loan growth right now will almost out of necessity come from reducing your loan standards. And that is not a good thing. You don't want to see other banks doing that. But you get the impression from what Demchak says in his letter that other banks are doing that. But he's claiming that PNC isn't. Now, you don't know for sure until, as Buffett would say, the water goes out. But it's reassuring that he points this thing out in his letter.

Lapera: Yeah, definitely. That actually does fit into this general theme that we're discussing of decoding corporate speak. He's not trying to hide anything here, but because of the way these letters are written, sometimes they say something and the meaning is a little obscured. I don't know if you guys can see this, I guess you can only see this if you're watching the video, I go through and write down what each section actually means. So the whole eight page letter ends up being something like three paragraphs worth of sentences of what they actually mean when they say something. Sometimes, it's not a negative thing; it's just them having to use corporate speak, that John just decoded right there. There is one other thing that I found really interesting that they presented as a positive thing, one of the things that they're driving at, which is that they're interested in growing their consumer loans, but they're interested in growing it in surprising categories. For me, as someone who is familiar with the industry and the economic layout that we have right now, what is that they're interested in growing credit cards, student credit cards, and auto lending, which is an interesting set of things to be interested in growing for your consumer lending. Especially auto lending, which is pretty widely considered to be about to be a bubble right now. So, it's interesting, that they're like, "We want to grow this." What do you think about that?

Maxfield: What's interesting about that is that it's opposed against all these other conversation about responsible growth. When he talks about one of the elements of their growth strategy going forward, and talking about getting a deeper concentration in consumer loans, specifically credit cards and auto finance, it does certainly present itself as an interesting juxtaposition. What I would say is, his argument is that they need to balance out their consumer portfolio relative to their commercial portfolio better. So the question is, you just have to assume they're going to move into those areas in a responsible way. And if you don't feel comfortable with the management moving into those areas, then you certainly should avoid their stock.

Lapera: Definitely. So it's one of those things that, you should read this as a potential investor and think, "Is this a path forward that I should agree with? Do I think this is conservative and in line with what they CEO is saying is conservative? Or am I just not interested at all?" Especially with student credit cards, those can get kind of dicey, although he does mention that he wants to use appropriate disclosures and other protections. But, those tend to have some more problems than regular credit cards, because it's a group of people that aren't as experienced, and don't have as high financial literacy, potentially, as other consumers.

So let's talk a little bit of about other information that was in the shareholder letter that's interesting. We mentioned previously, they are looking to grow their consumer loan portfolio through credit cards and auto lending, but they're also looking at growing in other ways. One of the most interesting ways is investing in tech and innovation.

Maxfield: Yeah. If you think about where the banking industry is at right now, there are literally thousands of these so-called fintech firms, these are smaller technology firms that are trying to creep into the financials space. In order for banks to be able to fend them off and protect their competitive position in the years and decades ahead, they have to be innovating and investing in the digital experience of their customers, in order to continue to fend off these fintech companies. This is something that William Demchak talked a lot about in his letter. And there's one thing in particular that he mentions in there that I found really interesting, it's this conversation about open APIs. What an API is is, basically ... [laughs] I don't know what it stands for, but, what it is, is, it allows developers on the outside of a bank to automatically tap into the data streams in these banks. If you think about a mint.com or something like that, or the Mint app, where it can aggregate information from your bank account, your credit card account, your mortgage, other things like that. It's accessing a lot of that information through an API. One of the things about APIs is that, while it allows those banking services to run through third-party apps, what it's doing is it's masking that bank brand behind that third party app. So, it's a really interesting thing. Again, it's kind of like buybacks. Banks have to invest, they have to go down these routes, even if they could be disruptive to their traditional businesses, because in order to survive and in order to survive the institutional imperative that's going on in the industry right now, in order to survive another day and continue banking in 10, 20, 100 years, they have to make these investments.

Lapera: Listeners, and Maxfield, API stands for application program interface.

Maxfield: [laughs] Thank you.

Lapera: You're welcome. But, more to your point, one of the facts brought up in the shareholder letter is that 60% of PNC's retail customers use non-teller channels for the majority of their transactions. That's basically mobile apps. So it's really important that they're expanding into this space. I think that's up from 40% just three years ago. That's an incredible growth.

Maxfield: Yeah, think about that. 60% of their customers are using non-branch channels for a majority of their transactions, and that's up from 40%. A few years from now, it could be 80%, and after that, it could be 90% and then 100%. It just goes to show how revolutionary the changes that are going on in the banking industry are right now.

Lapera: Definitely. And one of the things they have to look at is, what are they going to do with the physical branches? It sounds like PNC has a strategy. They are shifting away from full service branches to smaller -- to literally smaller footprint buildings with fewer people in them because they don't really need as many human beings doing work. Which is interesting. Actually, this segues perfectly into our next growth opportunity, which is, they are interested in growing the middle market, without opening any branches. I was joking before the show that whenever you say middle market, it sounds weird and opaque, it sounds like some kind of business that has something to do with some kind of financial vehicle that has an acronym that's equally opaque, but it's not, it's just businesses that are somewhere between $5 million and $1 billion, because that's a small, manageable range, [laughs] you know?

Maxfield: It's not like the black market, that's for sure.

Lapera: No, it's not the black market. They're not sitting around doing credit-default swaps or whatever it is. It's literally just lending to middle-sized businesses. I just think that's funny.

Maxfield: His point on that was great. He's saying, "Look, before, what we found was, in order to attract these corporate customers, these middle market corporate customers, what we found is that you had to have an established retail branch network in that area." What he's saying in this letter is, they are finding that in order to pursue those markets in specific geographical locations, they actually don't need physical retail branches there anymore. So they're going to move into Dallas, Kansas City, and Minneapolis, where they don't have physical branch networks, but they're going to start lending there much more aggressively. When you think about this, and you look at their footprint, PNC Financial could grow still significantly from where they are today in the future, which is different than those really big banks in the United States, because there's a limit to how much the grow, because they're already in some of these different markets.

Lapera: Definitely. This also speaks to the efficiency ratio that we were talking about earlier. They're keeping expenses down by not opening new branches when they don't need to open new branches, and they're doing that by testing and learning, which is one of the most important things that companies need to do in order to survive. Because if they just cruise along doing exactly what they've been doing for 100 years, it's not going to work out great, especially with how quickly things are changing for companies now.

Maxfield: Yeah. And to that point, he says in here, they're in their fourth year of a five-year, $1.2 billion plan to modernize the company's infrastructure and to build out key technological and operational capabilities. One of the things he says in that conversation is that, in 2017, the current year, they finally expect those investments to begin generating net expense savings. He goes on to say that will help to fund initiatives to enhance innovation and capabilities further. So, all these investments that they're making, they are now finally coming to fruition, and starting to impact the bottom line.

Lapera: Yeah. So there's a lot of really good information in the shareholder letter, a lot of really interesting things to think about. I highly encourage everyone to go ahead and do their own literature review, which is what today essentially was, of the shareholder letter, and let me know what you actually think of it. Speaking of, Maxfield, PNC, would you buy it?

Maxfield: I, as maybe I have hinted in the past, I am not buying any stocks right now. And the reason I'm not buying any stocks right now is because it's my opinion that the market is really high. And people are going to say, "John, you're market timing; that's not what you stand for." As a general rule, at The Motley Fool, that is not what we stand for. However, I think we have this inflation induced bump up in bank stocks in general, so I'm generally staying away from them right now, looking for better opportunities in the future. However, if you're looking for a good bank stock to put on your watch list to watch in the future, if there is a correction in the market, I think PNC Financial is a great selection because, No. 1, I think it has a very good CEO, William Demchak, and No. 2, he's young, he's only 55, which means he could still be around for another decade running the bank, and No. 3, because it's a regional bank, and because its growth opportunities are so promising, this is a stock that could really do well over a very long period of time.

Lapera: Yeah, I agree with you. And also, listeners, I have to do my usual legal disclosure which is, we are not recommending this personally for you. This is just our personal opinion. It really is up to you. You need to do your own research and think about how this type of investment would fit into your portfolio, and whether or not it actually makes sense to you. But I would agree that PNC is definitely an interesting bank to look at. I think William Demchak is a straight shooter, which is not something that I think is frequently said about bank CEOs. I actually love, there was a section in here where Demchak threw some serious shade on Wells Fargo. Wells Fargo remained unnamed, basically saying, they have a high commitment to making sure that the people at PNC know what the deal is, and it's not to create fraudulent accounts. Also, I realized today that not everyone knows what throwing shade means. It means casting aspersions on, insulting. So now you can use that. It's cool street slang with your kids. I would love that. Send me a story if you actually say "throwing some shade on you, kid," because I think that would be hilarious. But yeah, I agree. I think PNC is definitely an interesting stock to research. I'm also not buying stocks right now, so I'm not going to buy anything, because mostly, I tapped out my account with that Industry Focus-helps-Gaby-pick-stocks week we had a few weeks ago, so I have no money to buy stocks. But yeah. One point that I wanted to finish up with, unless, Maxfield, did you have anything else you wanted to say about PNC or shareholder letters in general?

Maxfield: No, just to reiterate the the point that I don't recommend people to buy it right now, but I recommend people keep their eye on it, and if a better opportunity comes up, think about it at that point.

Lapera: Good. My final point is, the other really good thing to look at is conference calls. If you can keep your grubby little hands on a conference call, that is great, because it's a question and answer format where analysts in the industry who are very familiar with it are asking pointed questions to the executives. It's a good way of knowing whether or not executives know what they're talking about, whether they're bluffing, what's going on. It's an exact transcript of everything that everyone has said. Conference calls are also a really good place to learn new things, because you have these analysts asking these really technical questions with all sorts of new words that you might not know, or concepts that you might not be aware of. And every time you see a new one, you just look it up and add it to your mental toolkit for being able to analyze banks in the future. Last point, this is financial literacy month, apparently. I just got an email today about it. So get ready for a financial-literacy episode soon. In the meantime, go out and increase your own financial literacy.

As usual, people on the program may have interests in the stocks they talk about, and The Motley Fool may have recommendations for or against, so don't buy or sell stocks based solely on what you hear. Contact us at [email protected], or by tweeting us, @MFIndustryFocus, and let us know what you would like to hear next. Thank you to Heather Horton, today's rad producer, and thank you to you all for joining us. Everyone, have a great week!