Motley Fool Money - Golden Arches Still Gleam

Episode Date: February 5, 2024

Is chicken the new beef? McDonald’s is innovating to please global palates. (00:21) Jason Moser and Deidre Woollard discuss: - The changing behavior of global eaters. - How McDonald’s uses data to drive menu changes. - Snap’s proclamation that social media is dead. (16:53) Ricky Mulvey talks to Patrick Badolato, an Associate Professor of Instruction at the University of Texas at Austin McCombs School of Business about what lurks in company footnotes. Companies discussed: UBER, AAPL, MCD, SBUX, CMG, DPZ, SNAP Get your Monarch Money extended 30-day free trial: www.monarchmoney.com/fool Host: Deidre Woollard Guests: Patrick Badolato, Jason Moser, Ricky Mulvey Producers: Ricky Mulvey, Mary Long Engineers: Tim Sparks, Dan Boyd Learn more about your ad choices. Visit megaphone.fm/adchoices

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Golden Arches hadn't lost their shine. Motley Full Money starts now. Welcome to Motley Full Money. I'm Deidre Willard here with Motleyful analyst, Jason Moser. Jason, how's your Monday going so far? Hey, so far, so good. It's a nice weather out there. How about you, Deidre?

I am loving our weather, but I'm thinking about our people in California who are having a bit of a tough weather time. Yeah, yeah. Cancel the final round of the Pebble Beach Proeam out there in California. On Monterey, I just was a... I mean, when the weather's that bad, yeah, you know you need to take note. Yeah, absolutely. Well, let's get into what's happening with the markets. You know, last week, big week we had Meadow.

We had Amazon. We had Apple, you know, and mostly a pretty great week. This week we've got probably more earnings, but a wide variety of large company. And maybe not your ones that are at the top of market moving, but really important to cover one of them, McDonald's. you got to talk about McDonald's, right? Absolutely. Yeah, of course. And if you look at the headlines, you know, I would say looking at the headlines

versus looking at the actual earnings sales, but look at the headlines, it's going to be companies missing revenue targets. But, you know, I look at it. Companies still able to deliver comparable sales, you know, that increase every quarter at about a little over 4% in sales growth in the U.S. in this quarter. Don't you think that sometimes McDonald's deserves a little more respect than it sometimes gets? I absolutely do.

And one of the reasons why I feel that way. Dietrich, because in my early days here, when I first got here at The Fool, McDonald's was the company I looked at and kind of didn't give it that credit that it deserved. I thought, you know what, that's yesterday's news, and people don't want McDonald's. Now, they're going to Starbucks and they're going to Chipotle or whatever. No, McDonald's absolutely deserves a ton of credit. I mean, even, you know, I'm not a big McDonald's guy myself these days, but it's impossible to ignore the success that this company's had over the course of its existence. I mean, it's easy, I think, to view it as perhaps an older or more challenged brand here, domestically, particularly.

But I think when you look at the numbers, they say otherwise, and this is a company that still has a ton of brand equity globally. And just having had the experience of traveling and living overseas for several years, I mean, I definitely saw that. I've seen that. You brought up the comps numbers. I mean, I think it's absolutely worth mentioning. I mean, US comps this quarter were up 4.3 percent. International operated markets up 4.4 percent. They're developmental markets.

They saw underperformance there. Now, a lot of that, they said, reflected the impact of the war going on in the Middle East right now. And that's very understandable. And there's some sort of second-order impacts that come from that as well. So you got to give them a little bit of a pass on that. That's just something that's completely out of their control, kind of like the weather, so speak. But, I mean, when you look at shareholders who've held on to these shares, over the last decade, this stock has returned 300 percent. I mean, well, well ahead of the market's performance

there. And you attribute it to that brand equity, I think, but also, I mean, it's a franchise model that's tremendous. I mean, they've got 40,000-plus restaurants, 95 percent of those are franchised. So, yeah, that doesn't gin up a ton on the top line compared to something like a company-owned operation, like Chipotle, for example. But what it enables, it them to do is really bring some impressive profitability down to the bottom line. You put that all the other. It's not a surprise to me to see McDonald's perform so well. But yeah, it's one of those companies, I think that a lot of people just sort of, they'll look at it and just kind of just keep on walking.

I think it's true. You mentioned the franchises. This is also, I love to mention that it's always that it's a stealth real estate company. I mean, they own all of that land, and that is very valuable and a good part of their, a good part of the company. But I wanted to talk a little bit about what you said there about the U.S. and, you know, I feel like there is that perception that people don't convictance. But then you look at their loyalty program. You've got 150 million members that have been active in the last 90 days. So that's, that's huge.

20 billion in sales in 2023. And I like the way that they're, they're pivoting things. They're constantly tweaking things. So we think of them as burgers, the Big Mac they're making like the double Big Mac now. But chicken is as big as a sales driver for them. And they're seeing that globally and they're trying to figure out like, okay, more of the world is interested in eating a chicken sandwich versus a burger. So how do we make a better chicken sandwich? And now they're taking on coffee.

You know, it started with, you know, it's just a cheaper way to get coffee. And the more you get it with your breakfast, that's great. But they're tweaking this, too, in interesting ways. I don't know. I like the way they use data a lot. I do, too. And in this age of AI, right, we talk a lot about AI and all of the potential that it offers. I mean, really, the lifeblood of AI, ultimately, it's data, right?

And, I mean, we've seen these companies from Chipotle to Starbucks and everywhere in between utilizing these loyalty programs to really take advantage of getting as much customer data. as they possibly can. And what that ultimately does, it enables these companies to keep their customers within that universe, and then cater offering specifically to those individual customers. And I think we've seen the investments in technology really pay off as well. I mean, it makes me think of companies like Domino's and Papa John's, which, I mean, no, maybe those aren't the pizza concepts that many might have at the top of their list, given some of the local choices that that exist where they may live. But the bottom line is they're very convenient, they're wonderful

options. And, God, I'll tell you, the technology, the investments in technology, they make it so easy to order. They have loyalty programs that keep you coming back from war. And McDonald's absolutely taking advantage of that same dynamic. To your point on the chicken, I mean, I think that's important, right? In this age, we've really seen Chick-fil-A take off, and I think a lot of the companies are trying to figure out ways to compete with a Chick-fil-A. Chicken, absolutely, a ton of growth there. I was reading through the call, and the investments in the time they put, McDonald's is put into this McChryspy chicken sandwich, I mean, it's really resulted in some serious

drives to the business, right? I mean, you've got, they're talking about this. This is scaled to a $1 billion brand across 30 markets worldwide. But now they also mentioned the chicken category represents $25 billion in annual system-wide sales, which essentially puts it on par with beef, right? Their beef offerings, and they're sitting there also making these investments in making their burgers better as well at the same time. So it does feel like, while there's a ton of brand equity

and a lot that they could probably just sort of hit cruise control and just keep on moving forward, I mean, they don't seem to want to rest on their laurels. And it's refreshing, I think, to see a concept like McDonald's, really trying to up its game and compete with a lot of these. fast casual competitors out there today? Well, and they've had some swings that have missed in the past. You know, we talked a little bit about Starbucks. You know, McDonald's has this new concept, the Cosmix.

It's this sort of like cold coffee drinks, and it's, you know, they've just tested it out. It's, I think, in about 10 locations. And it's doing, you know, traffic's been pretty strong so far. And then, you know, I was listening to the Starbucks call last week, and they were talking about the need to try to get people there in the afternoons. So it seems like this afternoon thing is. is interesting. But I'm wondering, I mean, McDonald's has the room to play with things like this, but what do you think about that concept? Would you be driving through the Cosmix to get yourself

an afternoon drink? I mean, if I was going by one, probably, I don't know that I'd go out of my way. But, I mean, it also could be if I was going by one and I went by there once, maybe I would find it compelling and want to go out of my way for future trips. But, I mean, I think it's important to note this Cosmic's offering. I mean, they identified, right? This $100 billion category, they quote, across their top six markets that really focus on these beverages. I mean, it's not just beverages.

If you look at the Cosmic's menu, I mean, it is more than just beverages. And honestly, hey, listen, I can see those McPops doing pretty well. If you haven't seen them, check that menu. The McPops look pretty good. But I absolutely love that they're trying this, because, again, I think in many cases, it's a matter of convenience. If they present a good offering and it's convenient, then people are going to give it a shot. And if we look back through the history of something like a Starbucks, for example, I mean, that's a company that has started to recognize the benefits of convenience

and incorporating more things like drive-thrus into their restaurants. And so McDonald's, I think, has always been really known for, you know, low prices, convenience, right? This is something where they they really specialize. And now they're starting to make that sort of that progress or that leap up into bringing a little bit more quality of their offering. And again, I think the menu with Cosmix, it's compelling. It's different. It's not just McDonald's. And I think that will lead a lot of people to give it a shot. And then it just is, it's a matter of whether they find it compelling enough to keep going back. Well, and I think there's a whole new category emerging that I'm like Starbucks is trying to get people there for the like the drink and the

snack. And we've seen, you know, other companies are starting to make these sort of like lighter offerings that you come in for the drink and the snack option, especially in the afternoons. You know, it sort of reminds me a little bit of when they were trying to make, I think it was Taco Bell to try to make like fourth meal. I feel like they're trying to make another meal in here. It's the fourth or fifth meal, but it's in a different time of day, right? I think this is probably the time of day that more people can relate to because I think the fourth meal is probably geared towards people who have been out really late. and I kind of had the munchies maybe on the way home.

This seems like it's geared towards a little bit of a different audience and probably a bigger audience for that matter. Yeah. So thinking about Starbucks and McDonald's, the role of China is huge. Both of them were thinking about China. Late last year, McDonald's, they increased their minority stake in China to 48%. They opened 1,000 new restaurants or actually a little over that last year in China, all-time high. It's still a small, it's a pretty small percent of the people. business. But how are you thinking about companies that have this large consumer exposure in China

right now? Because we've got sort of geopolitical concerns there, as well as some consumer weakness. Yeah, I think of the grand scheme of things, I view it ultimately as a positive. And I've said it before, I mean, when it comes to investing in China, I know what I don't know. Investing in Pure Play China just doesn't work for me. I've watched a play out of the last 15 years in how so much of this height ends up sort of sputtering out. I mean, with exceptions, of course, but for the most part, it's just been a very difficult market to fully understand. I think, really honestly, have faith in. But I think when you, I view these multinationals of Starbucks,

McDonald's, Apple, Coca-Cola, you name it. These are great ways to get satisfactory exposure to China without actually having to worry so much about the minutia, right? Not having to to worry so much about what's going on over there. And when you look at the state of the Chinese consumer today, I know things aren't all that great right now. I think there's reason to be hopeful, though, that the Chinese consumer will start seeing better days sooner rather than later. I mean, there's a lot of pessimism out there. Challenges from the COVID policies, ongoing property crisis, that was a real one-to-punch, high rates of youth unemployment, poor economic forecast. You get the collapse of Evergrand. All of these things put together, is there's a

a ton of pessimism out there in regard to the Chinese consumer today. And I think that's precisely when investors need to start looking, right? Because we know that things eventually will improve. Perhaps we're getting a little bit closer. For me, the ideal way to participate in an economy like that is going to be through the multinationals like your McDonald's and Starbucks of the world. Yeah. And with McDonald's, you get a nice little dividend along the way.

That's a very good point. Well, I want to pivot and talk about something else that kind of is on my mind. this morning. Did you watch the Grammys? I must admit I did not. No wonder. Well, there was this commercial that caught my attention, sort of outside of the other controversies that may have caught my attention. And it was this Snap commercial taking aim at TikTok and Instagram Reels and basically kind of saying, you know, social media, social media is bad. Snapchap is good. It's this fun, happy place. We've got these like, oh, look,

I'm a broccoli face, you know. So, you know, so it's interesting. They had this big. ads bend last night. They've got this new campaign. And then this morning, they cut about 10% of their global workforce. They're reporting tomorrow. But I'm thinking about where they're taking their strategy. There was this leaked email last year that said that Evans Beagle sent out the CEO. Social media is dead, long live Snapchat. So you talked about meta on Friday on the show. certainly that is going nowhere from what I can see and from the earnings last week. But is there a case for the idea that social isn't quite as social anymore? I think there is to an extent.

I think social is going to be with us in one form or another going forward. I mean, at least I'm going to have to imagine for the rest of my life. I think it's ultimately just a matter of what people are looking to get out of it. And I do understand if folks are pulling back on the reins, little bit, and maybe not being quite as social or sharing quite as much. We've seen that stuff can certainly be used against you. It is absolutely impossible for me to buy into the ocean that meta is on the Wayne. The portfolio of app strategy for them has really paid off, and we just saw that in spades

here in the most recent quarter. Snap, I think, is in a little bit of a bind, because they still really are just Snapchat. That up-and-coming generation likely isn't looking at it with the same rose-colored, glasses that the previous one did. And when you look at the numbers, I mean, revenue growth has hit a wall. And again, like you said, I mean, Meta's report tells us there's still plenty of growth out there to be had. And I was interested to kind of look at Snap and compare it to Twitter at a certain point of time to get kind of an idea of where these two businesses were. You look at Twitter, which was acquired back in the back half of 2022. But if you look at Twitter's revenue

in 2022, I mean, they generated a little bit better than $5 billion. dollars in revenue. And Snap still hasn't even gotten there. And that's Twitter. I mean, a company that I think many would argue, myself included, left a ton of money on the table for just a number of various self-inflicted reasons, right? So there's some lessons learned from Twitter to me, Snap kind of rhymes. And I think when you look at the overall opportunity out there, I mean, shoot, Amazon ad revenue is up 27% for the quarter, right? So, I mean, that advertising revenue is definitely out there. It's just, it's a lot of, it's a Companies like Snap, I think, are having a little bit of a more difficult time realizing

it these days because social is such a difficult space when you're competing against meta. But I think the question really for Snap investors at this point is, you know, what are you ultimately expecting from this company? Do you think it's going to grow or is this something else? Do you feel like it's going to be acquired? Because I think the growth question is a very fair one, particularly given what we've just seen play out here in the early parts of emergency. Well, thanks for breaking down with me today, Jason.

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Now available in Canada, too. Don't keep settling for clothes that don't last. Go to QINCE.com slash Motley for free shipping and 365-day returns. Quince.com slash Motley. Last year, Uber changed the way it counts revenue. And the difference may have an impact as the company reports this week. Ricky Mulvey caught up with Patrick Badalado, an associate professor of instruction at the University of Texas at Austin McComb's School of Business

to discover what investors can find out beyond the headlines and in the footnotes. We talk a lot about headlines coming out of earnings, the big reporting numbers, but right now you want to focus on the footnotes. These are at the bottom of the page as we go through earnings season. Why are the footnotes even worth an investor's time to check out? Sure, Ricky. I love that question. And let me step back real quickly, which is I'm going to refer to the footnotes as

all of the broad, qualitative, sometimes quantitative information that's, in addition to the financial statements. So not what's on the financial statements, not the main core financial metrics. But I think they're massively informative because they give additional insight and flavor and sometimes really critical details about updates and changes that it's just, we're going to be more informed walking into earnings season or really any other assessment of a company if we've spent a little bit of time. My class, I use the phrase read good, but spend the time to avail yourself to the footnotes,

other information outside of the financial statements because it's packed full of useful tidbits of information. And sometimes they can't be hard to parse through if you're not an accounting professor. Sometimes, though, there's some gold in there. We were trading emails before this, and you said there was a classic example from Apple. Yeah, let me, your first point I want to address, and I want to give the Apple example, but I, that's the big challenge, which is like, you know, 10K is what, 120 pages long, an S-1, pre-ipfiling, something the same. And most of it, so much of it is, too much of it, if I can give my opinion, is boilerplate, where you're reading stuff and I'm not really changing anything.

The challenges, though, like the nuggets and the insights are there. They're just not easy to find. And yeah, I'm an accounting professor. I like reading these things and I'll put my time into reading the whole thing. But it's what I try to convey in a class, and I want to use the Apple example is what I teach even at the intro financial accounting level is the footnotes are there, and at times you want to, you know, grab them to think about it. So the classic one I've done over time, and this is not specifically recent news,

but Apple's got a great footnote on its accounts receivable. And there's nothing to do with what's reported on the balance sheet. There's a footnote that talks about it. I think it's page 40 of their 2022 10K. And they give a comment to the fact that what they're doing is they're requiring all smaller-scale retailers to go out and get third-party insurance so that Apple will sell to them on account. But the reality is that the retailer has to go and get backing so that if the small third-party

retailer is not able, sorry, the small retailer is not able to pay Apple, Apple's still going to collect effectively insurance proceeds. So they're going to get their cash either way. The footnote shows us that Apple has virtually no risk of collections with its account receivable reported on the balance sheet. Not on the balance sheet. There's nothing about that there. Read the footnote.

And you realize, maybe that's something you'd expect. for a behemoth like Apple, but really no risk of collection, given the way they structure their deals with any smaller retailer. Is that something that's rare among companies? I could imagine a lot of companies, you know, they want to get the cash that they're entitled to on that account, but I don't know of any other companies that do that. Yeah, great, great question. I wish I had a better answer and I don't, like, how many use it, how many don't. And I worry that, you know, the classic answer is just like, well, Apple kind of could do it once because it's in such a, you know, position of strength. But I'll give in a personal finance example of this that I usually try to

talk about in class, which is this is very similar to what we may face when we're getting a mortgage with PMI or private mortgage insurance. The bank's going to require us, we put less than 20% down, to go pay for PMI insurance, or private mortgage insurance. And if that's so that the bank still collects its mortgage payments effectively, if we were to fall or miss a payment or something like that, it's crazy to think about it. But it's similar. It's like you have one very powerful player, the bank giving us a mortgage, and one far less powerful entity, us, the homeowner. And the argument is you're going to basically make the smaller player pay the insurance to protect the larger player.

That's what Apple, you know, Apple's doing a version of that with its accounts receivable, ensuring it collects. When you're one of the biggest companies on the planet, it's easy to know that other companies need you more than perhaps you need it. Uber is reporting tomorrow. This is a more recent example. last year, the company changed how it treats discounts and promotions. We're talking about it. I think you said this was an important change. So what happened? What they do? I think for this one,

it's worth stepping back again and kind of talking about the way they laid things out with their initial IPO filed in 2019. And there's a lot of layers. There was a lot of conversations, but I'm going to just get to the point, which is they did not call. So if you've taken Uber, You know, you've got Uber Eats delivered or you've, you know, taking a ride to go somewhere with an Uber. I certainly have done that. But we are not Uber's customer in their IPO. We were not their customer. We were called riders or end users.

Their customer, consistent with their IPO document, was the driver. You know, the driver providing the driving the car, providing transportation. And that may seem weird, but that's sort of the genesis of this whole idea. In their IPO, they had a bunch of promotions and discounts that were issued the rider or the end user, and they were actually booking that as both revenue and then offsetting it with sales and marketing expense. I think it was, I mean, rounds to $3 billion in 2017 and 2018 combined in the two years preceding their IPO, but $3 billion. And I'm not, this is legal. There's a way that this works out. It's because the riders, we're not their customers.

But to simplify, maybe oversimplified, it's similar to. saying that they were effectively buying their own services, and that's what it works out to. So if they gave a ride or a $20 coupon, that $20 coupon was counting as revenue. It was removed via sales and marketing expense, so no effect on operating income, but still, an opportunity to increase revenue to boost the revenue growth in the early stages of the company. So now the revenue is not comparable, and maybe you'll even see a slight revenue decline as they make this change. Why do you think Uber's making it? Yeah, so let's just be specific about the change, too, but then I definitely want to offer some lens into what we can think about before the 2023 earnings

come out. What they change in the second quarter of 2023, and I actually think, based on the numbers, it was like towards the end of the second quarter, but I don't know the exact date, but they change in the second quarter of 2023 is in many of their major markets, it looks like it's roughly two-thirds using the third-quarter numbers, but they now are classifying the rider, effectively, as a customer. And as they're classifying the rider as a customer now, that actually means that they're not, if they give promotions and discounts, which they're continuing to do, it's not a removal of promotions and discounts, but now they're not counting the promotions and discounts as revenue, and they're also not offsetting it as

a marketing, sales and marketing expense. Ricky, you already alluded to this, and I just want flesh it out a bit more. The challenge here is this change occurred mid-year, roughly. So it's going to be hard to compare anything coming out tomorrow with 2023's numbers with anything that happened in 2022 or any prior years. And even within 2023, because the change didn't happen at the beginning, it might be kind of hard to think about quarter-to-quarter comparisons or year-over-year comparisons. In this case, to reiterate your point, revenue will actually be smaller because they're not including, I think in quarter three, it was $521 million. So that just had one quarter, $521 million that would have been in revenue is not there

and also is going to be removed from sales and marketing expense. So the year-over-year revenue growth, all else held equal, is going to be lower. It's just going to be harder to achieve any kind of growth because stuff that was classified in revenue is no longer classified that way. And maybe there's a tie to the story where Kashashahi comes in as the CEO of Uber, wanting a sort of leaner, more focused company, and maybe take away some of that noise. In the S-1, I know we've made fun of it on the show in the years past, the total addressable market was 4 billion people, or basically everybody in the 63 countries that it operated in

at the time. I mean, do you think that with this move in the footnotes, the way that Uber's changing the way it counts revenue, is that part of the story here with the company as it is today? Love that question, and I want to elaborate on it, but I think there's one more level, and I hate to be nitpicky about this to go for it. You're the professor. That sales and marketing expense is also going to go down, and so I just caution, it's not a criticism of Uber in any way, but just preparing us for what we're going to see is that year over year sales and marketing expense should also decrease, you know,

using the third quarter number alone by that $521 million. It'll be more than that because we don't have the fourth quarter information yet, but the sales and marketing will decrease as a dollar amount and also will decrease as a percent of revenue. So I mentioned that. We're going to see like margin improvement where one expense decreases as a percent of revenue. And it's not good nor bad. It's just a result of this reporting change. So worth being informed when we walk in there because what we don't want to be saying is,

wow, look at this great efficiency improvement with sales and marketing. They must be getting better at promotions and discounts or marketing. And I'm not in any way saying they're getting worse. But no, the data just mathematically will lead to, sales and marketing expense decreasing as a percent of revenue. So that's like efficiency that's worth understanding the reporting behind. But Ricky, I love your other question. I want to kind of flush it out a bit more as well.

Yeah, I was pretty critical kind of looking at Uber in the pre-IPO stage. We've done a bunch of classes and, you know, kind of offering that there's a lot of questions and confusion and seem like distractions. And, you know, then COVID hits and just upends everything, which, you know, is tough for so many different companies. But I think the Uber that emerged is really fast. fascinating business model, and I think they've kind of figured out what they are. The phrase I use and I talk about them in class is, this is not a replacement for individual car ownership.

This is not a target market of four billion people, but what they are is a platform of convenience. A company that can offer us rides when we need rides can offer us goods. And I applaud the fact that Uber Eats has become so inclusive of not just fast food restaurant meals, but you can get delivery groceries and florists and like all these other things, which I think makes it more convenient for the customer, but also a better, you know, driving opportunity, better utilization for the driver. So I think that like focus on the core and they're getting away from the autonomous and the replacement for individual car ownership is a, is a massive, you know, step in the direction, still questions, still stuff to figure out. But, you know, that core competency, the platform

of convenience is something that we like convenience. We like stuff. We like, you know, getting places and getting things delivered to us. And that may be a successful move in many ways for them. Seems like it is. If you're not going to, you know, maybe you're checking out the foot footnotes in a report. I think one piece of research you shared with me that is worth investors' attention, though, that they can track for the companies that they own and follow is the risk factors in an annual report. There are some researchers that found that how companies management changes the risk factors and changing their wording can often predict maybe future trouble for the company, and that section is worth a little bit more attention.

Yeah, I agree. And I say that my thoughts on reading the literature and everything, it seems like reading the footnotes is still not that commonplace, you know, full of information, but I love teaching it because, hey, that's your possible chance for differentiation. You know, the change in the language, what's there. And I agree, sometimes the risk can be informative. I love the way they were looking at it in that study. But I'll offer a few other areas I think are worth checking out.

And we gave the specific discounts and promotions and sales and marketing with Uber. But some other ones I strongly recommend is, first and foremost, actually, I'm going to rank this. The segments, look at the segments of the business. You know, segments move in different directions. This is true for Uber. Their freight segment during 2023 has been going down, year-over-year decline in revenue growth, where deliveries and mobility, you know, those are growing at different rates. So companies have segments.

They don't just do one thing. Read as much as you can off the income statement, the financial statements to find out about segments. Another one, MD&A, management discussion analysis. You know, they don't always give you everything you need, but often there's that movement. Hey, here's factors that contributed to a trend, factors that offset, a granular data that gives us a little bit more about like, okay, let me know a bit about the story behind it. Revenue recognition, which I would argue is massively important for Uber and its S-1, are realizing, wait, who's their customer? How do you do this? And then if you have companies with revenue

recognize over time or have some discretion on, are they the agent in the transaction, are they sort of the main provider? Like, there's more there as well. Risks, looking at debt footnotes can be certainly informative in cases like Silicon Valley Bank and others, taxes in certain cases. So yeah, really try to figure out what's valuable for the company and then use the footnotes as like, you know, hopefully you're thirsty for I want to get more information. I want to get granular data on what's there. Patrick Badalado is a professor of accounting and finance at the McComb School of Business at the University of Texas. Thank you so much for your time and your insight. Thank you. Ricky, I really appreciate it. As always, people on the

program may have interest in the stocks they talk about, and the Motley Fool may have formal recommendations for or against. So don't buy ourselves stocks based solely on what you hear. I'm Dieter Wollard. Thanks for listening. We'll see you tomorrow.