The oil industry is now over a year into what amounts to a massive secular pullback, with huge cuts to budgets making their way through the sector. Is Distribution Now Inc (DNOW -1.49%) CEO Robert Workman scared? Not in the least. The oil and gas equipment supplier and distrubitor is biding its time and planning for the long term while competitiors are fighting for their lives. Spun off in 2014 from oil and gas drilling equpment manufacturer National-Oilwell Varco (NOV -1.13%), DNOW remains profitable, acquisitive, and focused toward a bright future as an independent entity. In the audio interview below, Mr. Workman sits down with the Motley Fool's Sean O'Reilly and talks about he and his team's plans for the future, how they see the future of the drilling industry taking shape, and possible expansion plans in order to expand DNOW's product offering.
Transcript
Sean O'Reilly: Greetings Fools, Sean O'Reilly here with the CEO of NOW. Mr. Robert Workman. Robert thank you for joining us today.
Robert Workman: Happy to be here.
O'Reilly: How's it going?
Workman: It's going great except for the market, but other than that we're surviving.
O'Reilly: It'll turn.
Workman: Well it always does, this is not our first downturn, so.
O'Reilly: Right. So digging right in, just right off the bat here, just a few starter questions about what NOW is and does. You guys have positioned yourselves as a very unique player in a niche market. What can you tell us about what NOW, does with the oil industry, how you're positioned, and how you see the marketplace currently?
Workman: So our customer set's pretty wide. It's a huge variety. So we service drilling contractors, manufacturers like Cameron and the others that make products for the oil industry, the service companies like Halliburton and Schlumberger, our biggest customer set is our operator customers that are the ones that are doing all the expiration, midstream providers like a Kinder or an Energy Transfer, and then downstream facilities like chemical plants and refineries.
So we have a really wide customer set within the energy space. And then we provide a broad array of products and services to that entire customer base.
O'Reilly: 30,000 right?
Workman: Oh yeah, well it's actually more than that, but yes.
O'Reilly: Growing every day.
Workman: Growing every day. And then we're located in most every, almost every energy producing country. So, we're in 23 or 24 something countries outside of the U.S. and Canada. So we've expanded greatly since I took over in '01 and we're going to continue that going forward.
O'Reilly: So a little over a year and a half ago you guys were spun off from National Oilwell Varco. Just real quick for our listeners, what can you tell us about the advantages and disadvantages of being separate from the former parent company?
Workman: The advantages are pretty clear in that when you're a group at NOV, you can imagine when Pete was CEO of NOV, he had several divisions and obviously the manufacturing groups generate pretty good EBITDA margins compared to a distribution company — whether it's us or Grainger or Home Depot, right?
O'Reilly: Yeah.
Workman: And so as we generated cash, you had to put that cash wherever it would best benefit NOV shareholders which was pretty easy to put it in rig or somewhere else where you're getting the big returns. So we weren't able to reinvest in our business to the same degree that our competitors were that were stand-alone distribution firms.
So the big advantage to us is now we have kind of control of our own destiny, we're able to make decisions with our balance sheet and our cash generation that benefit solely DNOW. The only disadvantage to being away from National Oilwell Varco is that most of us started with the company either as oil well supplier, national supplier, and so there's a little bit, feel like the parents kicked you out of the house theory, except for the fact that we brought Pete Miller with us, he's with us here.
And we brought Dan Molinaro who's been the treasurer for NOV for the last 2 decades. Been there 45 years. He's now the CFO and then Raymond Chang who is the general counsel of the, assistant general counsel and corporate secretary NOV's now our general counsel. So we took our entire core management team that's been running the business forever plus some. So there's really no disadvantages of not being part of NOV. But they were an amazing parent for sure.
O'Reilly: And you guys are definitely not small by any stretch of the imagination. So given the shift that's been occurring for the last year and a half, has the strategic vision changed with NOW, at all?
Workman: No, like I mentioned earlier the entire core team that's run distribution since '01 is the core team that's across the way over here at the headquarters. So we've always been a really tight knit leadership team that has established the vision and our goals and our mission as to what we want to accomplish. And that hasn't really changed. The only thing that's changed really is we have more access to capital. Because you know as we generate returns we're able to reinvest.
O'Reilly: So take a step back. Change does not seem to be, I'm sorry, stagnation does not seem to be a part of your company's DNA. I've looked at multiple presentations. You guys talk a lot about constantly looking for new products to offer your customers. What are you guys doing there currently?
Workman: Well, we represent a lot of manufacturers. We don't manufacture products in our distribution business. And so our suppliers or our manufacturing partners are always investing in R&D to either the current product lines, expand product lines, create new products and so those are always constantly coming into the business. The biggest thing that we control that will affect doing business differently with our customers is really this group that we call our splotching division, and that's where we just become an extension of the customer. So generally a branch carries a lot of products.
O'Reilly: Is there a lot of give-and-take there?
Workman: There is on the regular noncommittal business which would be like a branch supporting 300 customers in one given territory. The thing I was trying to describe that's different for us now is we have this group that's growing rapidly where we actually have the whole team focused on one customer only in their facility. We remove duplicate SG&A, the capital employee comes off their balance sheet, our systems are integrated. Everything's electronic with the customer and so we become ...
O'Reilly: That's literally a partnership.
Workman: That's beyond partnership. We're in their headquarters, we're in their operations, we're on their platforms, and all the capital employed on the platform is our capital employed so the customer's not duplicating it with our branches. So it's a model that especially in this market, when customers are trying to improve, reduce expenses and improve capital employed on their balance sheet are really eager to explore and expand. So we have a lot going on in that space right now.
O'Reilly: So moving on to more of a what you guys do with M&A. National Oilwell talks a lot about how effective and efficient they have been for decades at acquiring companies, integrating them, they talk about the playbook and everything. Did you guys take the playbook with you?
Workman: Well, you know don't forget we did a lot of M&A at least from '01 when I took over through '14 we spun. So we had done I don't know how may dozens and dozens of acquisitions. So we used the same playbook that NOV did. The only difference really is it was part of our DNA, that was our school. And if you think about going to school to learn something, we went to NOV school to learn to do acquisitions both targeting them, valuing them, and integrating them. The biggest difference that we've made since spinning is that NOV's playbook includes 5,000 sheets on an Excel spreadsheet, right? With all this stuff you got to do to make sure you integrate properly. We just automated it with software. So now all teams have access to the same data at the same time, day one. We're not duplicating requests to the company we acquired, and just bombarding them with the same request over a month from 5 different functions within the company.
O'Reilly: So it's quicker now.
Workman: It's quicker, it' more efficient, it's more effective but in general, that software that we use is just a more efficient way to use the playbook.
O'Reilly: Got it.
Workman: So if you went over there, you'll probably see the NOV logo on all of our playbook pages.
O'Reilly: Oh my gosh, you just photocopied those at the time.
Workman: Well we just took it with us.
O'Reilly: Cool, very good. So speaking of acquisitions you guys have made two recently.Challenger Industries and Odessa Pumps and Equipment. If you could, without getting too deep, talk to us about how that's been going, how the integration's been moving on, how happy you are with the acquisitions, all that.
Workman: So we've completed nine through Odessa and Challenger's yet to be closed, but it should be ...
O'Reilly: Fingers crossed.
Workman: We got approved by the government just doing some due diligence around some other items. But so I can't tell you how well they're doing this very second because they're not part of the company yet. But they do fit a really targeted market for us which is we've always wanted to expand our participation in the midstream market and in the downstream industrial market. We're in both, but we wanted to grow our participation. So Challenger's well-known by customers for being excellent service providers in that space. Odessa Pumps is exciting. We had some facilities in the original distribution group at NOV that would design pumping systems for customers, and fabricate skids, and put them on with prime movers, and put them out in the middle of the field, and move fluid around — oil or gas or whatever. Odessa Pumps brings an entire array of product line that they assembled over their timeframe.
O'Reilly: That you guys did not have before.
Workman: Did not have that's way more expensive than our stuff. You take what they do really, really, really well and they're only in the Eagle Ford, and the Permian, and the [...] and a little bit in New Mexico. You take that skill set and their product line expertise.
O'Reilly: Through your distribution network.
Workman: And you plug it in to the rest of the distribution network, you can really grow organic share pretty rapidly.
O'Reilly: That was, I assume a big part of the rationalization for the acquisition.
Workman: Oh absolutely. We have just general products, pipe valves and fittings, and safety goods that just anybody can distribute. Maybe not to the same degree we do, because we have more leverage. But we have other product lines that are a lot more value added that give the customer a lot broader solution at our company. And we have like an artificial lift, an electrical and valve actuation and we've always wanted to expand our pumping solutions and this is a great way to get a good leap on that.
O'Reilly: Awesome. So we're obviously in a bit of a downturn right now.
Workman: A little bit, small one.
O'Reilly: Just a smidge, little bit. Doesn't happen a lot. Obviously acquisitions and adding to your product line are a part of your company's DNA. How much given the downturn of your acquisitions in the past been going forward have been product driven or just kind of plugging this into our distribution at work would be awesome? Or more opportunistic like this is really under value now because the market crashed and we can get a good deal on these guys?
Workman: Yeah so we have a saying at NOV that's definitely still said here which is, "Fall in love with a deal is the best way to bring a company down."
O'Reilly: Got it.
Workman: We have lots of companies that fit our intended capital allocation strategy which is energy branch expansion outside of the U.S. and Canada, because there's a lot of market out there to be had, our product line solution expansion — remember it's what I mentioned earlier about actuation electrical pumping or whatever, growth of our participation in the midstream and downstream market. So we have a really focused area around where we want to allocate capital. But at the end of the day, it's got to be valued the right way and it's got to be creative or we're not going to do it.
So there's been lots of deals we've looked at since we spun in June that would've been what I would call in your category, if we got to have it, we just didn't get it. I mean just the big bid-ask spread was too big, and our discipline that we've been trained through at NOV has not gone away.
O'Reilly: Yeah, was there an element of, like, "flying blind" with a bid-ask spread and everything. Because this is not the first time that I've heard that between the energy companies we've talked to this week.
Workman: Flying blind in what?
O'Reilly: Yeah just the bid-ask spread so nobody knows but the seller.
Workman: Well we know what we're willing to pay and we know how we're going to value it. Now what they're thinking is, you know I can't control. So we've had some acquisitions that we missed out on that would've been sizable for us and really a really good fit around our strategy that went for considerably more than we would ever value a distribution business. So how those other companies made those determinations is up to them, I don't have any idea how they came to that conclusion.
O'Reilly: Yeah. So in a lot of your investor presentations you talk about how acquisitions are valued at current profit and losses. Obviously probably that's skewed more toward losses in the last year. Obviously if you could get it at the bottom of a downturn, obviously in the upswing it becomes even more valuable. How much pushback have you seen? How much apprehension have you seen in potential acquisitions being like, "We don't want to sell right now"?
Workman: Well obviously we started up our M&A effort in earnest after we spun in June of '14.
O'Reilly: Trying to hit the ground running?
Workman: Yeah, yeah. Because we really turned it off the two years prior. We had so much going on between the integration of Wilson and CE Franklin and spinning and the SAP rollout, and all that stuff. When we reengaged at that time the market was still really hot. And so you know the bid-ask spread was like the Grand Canyon. It started to shrink early this year. In fact some of the company's we pursued last year are no longer in business today and we could've got it for inventory value, but there's really no reason to do it because it's just going to pick with our revenue.
So we actually passed on deals that we'd offered our normal valuation for last year. So it's getting smaller, people are more and more interested, and I think most firms are out there trying to figure out how long, what's the length of the legs on this downturn, right? And I think if you listen to Schlumberger who just had their call, or Halliburton.
O'Reilly: That's actually what I was about to bring up.
Workman: Yeah or Halliburton — they don't agree either. Halliburton says we bottom in first quarter of next year, Schlumberger says it's the 2017 recovery, and then everybody else is somewhere in between.
So I think as people learn and believe and come to the conclusion that this downturn's got quarters and quarters and quarters left in it — if we say it does because no one ever knows — some opportunities for companies we've gone after we weren't successful with will be a lot more likely to occur.
O'Reilly: Wait 6 months, yeah. So moving on to a few questions. We actually asked our Foolish investing community about a few questions they might have for you guys. The first one is, you've stated in the past that you had a goal of reaching 8% EBITDA margins down the road. Are you still on track to reach that number, and if not why?
Workman: Okay so we accomplished that prior to acquiring Wilson and C. Franklin and so our belief was once we got integrated, got on one platform, and got rid of all this duplication of overhead, that there's no reason why a larger company couldn't reach the same number, the same ratio we got to, as a smaller company. And I've always gotten pushback from shareholders going, "Well does that mean you have to do acquisitions to get there? And does that mean you have to grow revenue by some billion dollars to get there?" And I'm always like, "No, at this revenue level we can get there." It's going to take some work and some effort and we've got to get on one platform and get rid of all this additional expense. But it has to be at least revenue level unless we change the nature of business and restructure it to be a much smaller company.
So definitely we have to get back to our revenue level we were at when we put that goal out back in June '14 which is $4.23 billion of rev. And I think we can get there. In fact the downturn just helps us get there because it's, it would've been tooth and nail fighting over expense reductions after we went public in a hot market. And this market's just kind of taking care of it for us. So we're down.
O'Reilly: Welcome to Wall Street.
Workman: Exactly. We're down, we've reduced expenses already in this downturn more than we ever thought would be possible.
O'Reilly: Right. And actually I do have to compliment you on not only your cost-cutting initiatives but also your balance sheet. I mean this is, it's a work of art.
Workman: It's actually not.
O'Reilly: You don't think?
Workman: We've done a great job of taking it off the balance sheet and it's horrible.
O'Reilly: You're not satisfied. I like to hear that.
Workman: No not even close. We set on our last call for Q2 that we thought we could take another $250, $300 million off by the end of the year.
O'Reilly: Really?
Workman: I mean I think that, I would be disappointed if that's all we get.
O'Reilly: That is good to hear. You've done a great job funding acquisitions with working capital. How much further could you keep doing that before you start having to tap other funding options?
Workman: So you're right, so we finished Q2 still net cash I think, not much but still net cash after completing...
O'Reilly: A win's a win.
Workman: Yeah, yeah. After completing a lot of acquisitions and it's all come from the balance sheet. So obviously we need to tap other funding options based on the size of the deal. So if we keep doing $100 or $200 million deals, am I likely still going to be cash positive in the coming quarters?
We also have a line of credit that's largely untapped that's $750 million unsecured, and we've got a $250 million revolver on top of that which is available to us. So we have plenty of ways to tap. Obviously the size of the deal would dictate whether or not we're able to fund it from cash or from revolver.
We don't, you know our shareholders want us to get some leverage which we have none. I'm trying. I'm probably the only person in the energy industry right now trying to get levered. And so we're doing our best, but we don't want to get anymore than 20 to 40% debt to equity. We just don't. So I just have to spend I don't know what, a billion and a half dollars to get anywhere near that number?
O'Reilly: You have to really try.
Workman: We have plenty of runway if the right deals come up. If the right deals don't come up, you're just going to see our balance sheet not get levered.
O'Reilly: You don't hear that every day, "I have to spend one and a half billion dollars to ..."
Workman: Just to get barely levered.
O'Reilly: Keep trying. So moving on to general industry outlook. Obviously everybody in America, everybody on CNBC, newspapers, everybody is talking about what's going on with oil. Price is down 60%, natural gas is at $2.50 or something. How is the operating environment from your perspective? What are you hearing from your customers?
Workman: Well most of our customers are not real clear on what they believe is going to happen in the markets. So we were at an event just last night with one of our biggest onshore and offshore customers and had the four senior vice presidents there. And you get a different answer from each of them. One does onshore, one does offshore, one does joining and completion. So no one really knows where this market's going to go. There's so many things that can change in the oil and gas market that are outside of your control beyond supply and demand. But I think we're yet to find this out because this is our first time to be in a downturn since the development of the shale plays and the technology for extracting oil and gas out of those plays. I really believe that U.S. has become the new swing producer taking it away from OPEC. I really do.
Because we can shut it down quicker than they can, and we can turn it on quicker than they can. So I think what you'll find is we may, we've always had cycles in this industry. I was born and raised in the 80s in West Texas so I got to see the 80s as a kid. And then had many [downturns] since then.
O'Reilly: How does that compare to today?
Workman: I thought the 80s was the worst it could ever be.
O'Reilly: Yeah.
Workman: No.
O'Reilly: Because it went on like 6-8 years or something.
Workman: This decline is worse than anyone in my lifetime.
O'Reilly: Really?
Workman: And I was born and raised in the oil fields. This is the worst of my career with respect to the sharpness of the decline.
O'Reilly: Yeah the capital expenditure cuts.
Workman: Even if you compare it back to '09.
O'Reilly: Yeah.
Workman: We dropped faster than '09.
O'Reilly: But we bounced back.
Workman: Way faster, then we recovered to the same dip in '09 and then we went this way when '09 went this way. Okay? So this is definitely the most challenging environment I've ever been in. So, I think what's going to change in the [United] States is I think you're going to see possibly more severe cycles that are more compressed. Which honestly would be a benefit to us because most of our competitors can't manage through those kinds of cycles.
O'Reilly: Well not only that, but it puts a burden on E&P companies to increase efficiency, that means improved products, technology, all that.
Workman: No doubt about it. And it's gotten a lot more efficient in the last three years than it's ever been. I mean one of our customers cited that their well costs had dropped from $12.5 million to $6 million and they're still dropping.
O'Reilly: Right, no it's getting crazy. So just comparing this, I'm really interested to talk about the '08, '09 downturn where we went down to 37 and bounced right back up, and then all that compared to today. What are you seeing in terms of capital budget cuts from your customers? What were they doing then versus what are they doing now?
Workman: So customers typically announce their budgets around this timeframe. This month or next month or whatever. Most of them are saying they're not putting them out until January, February next year. So it's still ...
O'Reilly: So they're holding out.
Workman: It's still questionable. I think Q4 for anybody in the oil service space could be the worst quarter for sure in that you've got budgets running out because people are trying to live within their cash flow, and you've got the holidays. So you put all that together, it could be a pretty difficult quarter for anybody. In fact I think Haliburton, Schlumberger, all saying the same thing as well — that Q4 could be a really difficult period. Just the question is does it recover in Q1, or does it recover in 2017? Anybody that thinks they have the answer to that question is fooling themselves.
O'Reilly: Is lying, yeah. So looking at your more recent results, a lot of your customers have, negative margins. A lot of your customers outside the United States and Canada, there have been, it's been small but they're still [showing] operating profit margins. Have you found that international foreign-actual countries, have you found that customers outside North America are more willing to ride out this downturn in terms of what they're willing to spend?
Workman: No, what happens, it's such a different dynamic because most of our customers outside of Canada and the U.S. are largely driven by decisions made by national oil companies. Many of these national oil companies have a lot of social programs. Okay? So they can't, like Venezuela or Saudi Arabia or Mexico or you name it OK. So they don't have the same drivers for decision-making that you know somebody in the states and Canada would, or offshore Gulf of Mexico.
And so and most of their projects are big projects. These are projects that you just don't, like if the oil price comes up to 70 bucks, somebody in Bakken is going to put 12 rigs back to work tomorrow morning, OK? If someone in the Gulf of Mexico or someone offshore Venezuela, or offshore, it takes years to get that project started. And then when the oil prices crashes you don't just turn it off like you could just lay down a rig on a land play. So they're just lagging everyone else because they can't react as quick as a land play can.
O'Reilly: So we've seen this more than 60% drop in the U.S. base rig count, you know just onshore. Do you anticipate a major drop in production coming up in the next six months once that actually gets felt?
Workman: It's not a really difficult thing to calculate. If you look, right now what's happened is production growth is dropping, OK? Production's dropping but it's still over prior quarters, prior years because it's coming down, but it's still higher.
O'Reilly: What's the word, they started rolling over?
Workman: So if you just extract like that decline rate for sure we're going to have some serious declines in the offshore play. The one swing factor in that is that used to the total cost of drilling a well and producing oil and gas, the biggest expense used to be the drilling contractor. Has been forever.
O'Reilly: That's no longer the case.
Workman: Now it's the service company that's doing the completion work, the frack job, OK? So what customers have done which is inconsistent with any other downturn I've ever been in, is they're still drilling some wells. The rig count's down 60%, I could be wrong, but it got even worse if it weren't for this new phenomenon. They're drilling and not completing, drilling and not completing, drilling and not completing.
O'Reilly: Just leave it in the ground. Sitting there.
Workman: So if oil comes up to 60 bucks, 65 bucks, 70 bucks, all they got to do is get the frack spreads back out. Okay? And they could have [...] on them that fast. So you could see a spike in production and a drop in prices. A stop, a drop in production, and a drop in prices. I mean who knows what we're going to go through. We have a completely new world out there that we've never experienced before.
O'Reilly: So let's just pretend that happens. Oil pops up 70, 75, you guys, you're not an oil production company. You supply more than 30,000 products to the guys that do that. How long before you start seeing the benefits of them getting those rigs back on and everything.
Workman: So the worst thing about this business is that when the market declines we're the first to feel it, right off the bat. I mean the minute the rig goes down, it stops. The minute that the operator stops drilling, they stop taking battery hookups. I mean we feel it immediately. Where other companies have backlogs like NOV. That was one of the best things, you asked me earlier what's good and bad about not being part of NOV.
O'Reilly: A billion dollar backlog.
Workman: The good part about NOV is they had a 10 or 15 or 20 billion dollar backlog so when the market went down, we didn't have to react that fast, and we could make more conscious decisions about sustaining our future that didn't try to make people happy about our performance in a given quarter.
We don't have that here, OK? We have no backlog. So the worst thing about this business is it drops first. The best thing about this business, it reacts first. So there was a little blip about 3 months ago where oil got to 60 bucks and about a dozen or so rigs went back to work in the Permian. Those rigs ...
O'Reilly: The parts they need.
Workman: ... needed to $30,000 to $40,000 worth of parts ...
O'Reilly: Right off the bat.
Workman: ... within 24 hours to get those rigs going back to work which is about 6 weeks of consumption-ish on operating rig. And it didn't reduce their consumption, so they consumed like normal, but they needed all that up-front stuff. So the worst thing about this is, I'm going to have every CEO of every land contractor calling me at my house complaining when they try to put 500 rigs back to work, and I don't have enough stuff to supply those rigs to get them back to work.
O'Reilly: Wow. So you had a lot of the employees were burning the midnight oil.
Workman: Well, 12 rigs we can handle. Okay? But if you have a real recovery ...
O'Reilly: A couple hundred.
Workman: We're going to ... yeah.
O'Reilly: So moving back out to investors, what are three things that a potential, maybe a current investor in NOW, that you think they should know about how to properly evaluate your business?
Workman: So I would say there's four things you should hold our feet to the fire about, OK? One is are we growing share organically? So that's why on our call, I call out what's revenue per rig without acquisitions and what is it with acquisitions. Because the minute we get into having to buy revenue growth, you know you've got some problem. It doesn't mean every single quarter we're going to grow organically, but we need to have a trend that says we're growing organically.
Two is are we, regardless of what's going on in the market, are we managing our P&L in a way that we're improving all of our ratios whether it's EBITDA margins or net income or whatever. Three, working capital. This business is biggest risk in the world is working capital. Okay? That's it. I don't need, I don't have much capital employed in this business other than the receivables and inventory. And so how we manage our working capital as percent of our revenue is really important.
And fourth, you know a big part of our story is the fact that we have a super clean balance sheet and we're going to allocate capital for M&A and are we allocating it consistent with our strategy that we've communicated to the whole investing public and are we doing it wisely with discipline. That's the four things I would watch on us.
O'Reilly: So before we wrap up here, again thank you so much for your time. Just a little bit more of a lighter question. At the Fool we're big fans of Peter Lynch, obviously a very famous investor. And one of the things he loved to do when he sat down with a CEO was ask him what other CEOs inside or outside their industry that they admire, that they like to learn from.
Who do you admire inside or outside your industry that you admire?
Workman: There's several firms that impress me with respect to how their team leads their organization that are distributors actually. Not necessarily competitors to me, so maybe that much of a competitor, right?
O'Reilly: Right.
Workman: Out there but the one I learned the most from was the NOV team under Pete [Miller}. I mean think about it, we had, there was 5 of us that were on that team or so. I think it was 5. And most have gone on and are currently CEOs of large public companies.
O'Reilly: Right.
Workman: Okay? So something went right there. And just how our team worked together in different businesses doing different things with sometimes similar customers, was my learning ground. Outside of that, I really lean back and spend a lot of time on some of the teachings of people like Patrick Lencioni and Jim Collins. I mean they have leadership team meetings every quarter with my staff, we spend a half day, full day just going into those types of areas of leadership development and as a team working through these exercises, and having debates about how we apply to our business and principles. So really it's either these executive coaches or these executive experts, or it's what I've learned for 15 years at NOV as being part of the leadership team there facing all sorts of challenges in capital allocation, and market swings and everything else.
