Clear Channel Outdoor Holdings, Inc. (CCO) Earnings Call Transcript & Summary

Good morning, everyone. My name is Jason Bazinet. I'm the Media and Entertainment Analyst here at Citi. Very pleased to have Clear Channel Outdoor with us today. Scott Wells, President and CEO; and David Sailer, CFO. Thank you.

Thanks for having us.

Yes. How are you guys doing this morning?

Doing well and great.

Doing great. Doing great.

So I'll start off with a high-level question.

Sure.

Okay. The strategic review. You've got some things behind you, some things that I think are sort of still [indiscernible]. And my question is, can you just sort of describe what you've done, what's still to come? And maybe give us a sense of when do you think all of it will be behind you?

So look, we started this at the beginning of 2022. And our goal that we started the European part of it, our goal was to sell the business as a platform, and the Ukraine war, frankly, made that impossible once that happened, the appetite for buying the business and just transacting. I mean, credit markets were a mess. I don't know. I'm sure people remember back how crazy things were in sort of that part of the year. So we pivoted at that point and focused on derisking the business and exiting some of the markets that had been more cash depleting during COVID and that were generally more challenging. And we successfully did that, and the message that we gave to everyone at that point was we're going to do this, we're going to get the business generating positive cash in Europe. We're going to derisk it and we're going to work to -- we're committed to selling it. We think it's the right thing to do to sell it but we're not going to give it away because there were investors in our investor base who were very vocal that we should just give it away. And I think if you look at our financials now, you can see that what we have is actually a good viable business and a business that is going to generate tens of millions of EBITDA for us this year of cash, not just EBITDA.

So can you just pause on that. What do you remember off the top of your head, what your north did in the last quarter, it was up a significant amount?

Yes. No, it was up 10%. Well, this is on the last 12 months. It was up 10% top line and in the low 20s for EBITDA. So yes, no, it's been performing brilliantly. And it's a classic example of focusing on the best assets and giving the management team a very clear mandate of what they need to do. And so fast forward to now, we through -- we kind of reinvigorated the Europe North sale process at the end of last year. And we threw a broad net again. We had thrown a very broad net at the beginning of 2022. So you can imagine that we have met pretty much anybody who is a prospective buyer of the business. And we have a number of interested parties and we are in the process of working through. It's one of those things where there's a lot of complexity in the business, a lot of things to diligence, a lot of things to get comfortable with in terms of contract renewals and how CapEx works and all that kind of stuff. So I have not at any point given timelines and I'm not going to give you one today, Jason. But I feel good that we have people who see value in the business and that we're not being unreasonable. We're not looking to like get the perfect multiple for it, but we're also very much not giving it away. And so that's where we are in Europe. LatAm started considerably later. We started that process kind of at the beginning of this year, the end of last year, beginning of this year. And similar things, through a broad net, there has been interest. Latin America has been complicated this year with various political things, various economic things. For those of you who aren't close for us, Latin America is Brazil, Mexico, Chile and Peru. And I think 3 of those 4 have had meaningful political things going on in this year.

But which one is a stable one? Peru?

I struggle to say it, but yes, for this year. I mean if you look at a 3-year view, you can't say that, but for the time period, it has. And honestly, I think we're 4 for 4 actually, as I reflect on what actually is going on. But despite that, I mean, we are talking to people who are familiar with doing business there. We're working our way through that. It is small. The EBITDA of the whole of Latin America is less than small markets that we have in the U.S. But again, we're not going to give it away. We're going to find a way to monetize it as effectively as we can. And it feels like a pretty good process. Some of the -- it will probably end up also being a multi-transaction.

So you went country by country? Okay.

Yes. Maybe not country by country, but it might be kind of chunks and pieces because it's just the way the buyers going up. So again, I'm speculating on that at this point. And as with Europe, I'm not going to give you a timeline but I think it's moving along well.

Okay. And just to level set for everyone, can you -- this decision to sort of exit Europe, exit Latin America, where you're going to become a U.S.-focused asset, is that just purely focused on sort of the long-term goal to convert to a REIT? Is that sort of what is the underlying narrative or it's deeper than that?

It is deeper than that. The business model of out-of-home is very different in Europe. And in some ways, marketers like it better. So like one of my great frustrations has been how much TV money is coming to the street furniture assets in Europe, whereas TV money is going to CTV and streaming and TikTok here in the U.S. It's just different the way because TV money is kind of leaving TV everywhere. But the business model is very different. It's very capital intensive. And for a highly levered company, I mean, kind of what happened in COVID illustrated the challenge of the business there because we ended up seeing revenue dry up in all of our geographies but in the places where we had very large minimum guarantees, you end up just hemorrhaging cash. And so for a highly levered company, I think focus and going after kind of the highest margin, highest growth prospect, businesses is the right way for us. I think the other part of it is, is it -- it will make us very streamlined relative to what we are right now. I mean, the complexity you have, every country that you add, it's more tax work, it's more compliance work, it's more government relations work, different real estate laws like the complexity that gets added as you add countries. And the reality of it is, there are a couple of big countries that we had internationally. But we have a lot of -- we have a very long tail of countries where we're quite small and where they're just quite small, and they're nice businesses. It's not that they're not businesses that are viable and they work, but they're just a distraction relative to what you're trying to do at the core. And since we took a really hard look at, were any customers looking to buy globally? Because I know this is like a complete anti-globalization play that we're doing here. Everybody else is trying to become global. We're trying to become U.S.-focused. I get the irony of that. But the reality of it is, is that customers buy locally. They don't -- there's -- I can point to like 2 or 3 campaigns over the last 5 years that were truly bought globally, the laws are different in terms of what you can do with data and so as data becomes more important part of it, that gets complicated. And then you have the whole regulatory regime kind of the trend everywhere globally is more and in some cases, the more is getting really, really onerous. And so you end up in audit committee meetings spending 20% of your meeting talking about 2% of the EBITDA because -- and that's just not a good use of your brainpower of your Board, it's not a good use of the brainpower of your management. So focusing one language, one country. And the REIT part of it is kind of out there as a strategic option downstream. I think it's something that motivates us but we're very realistic that we are not anywhere near ready to be a REIT until we deleverage.

Okay. And so that's sort of -- and this is my own bias, and I ask you this every year, and I don't know why I'm so fixated on it. But I look at your enterprise value, and there's a lot of debt and less equity. And I'm like, how do we make this a real sort of...

How do we split it a little more evenly?

Yes, split it more evenly. And then I always go down the path of sell assets at a higher multiple than your leverage. And yes, every year, you should. And so please just remind us why that...?

Someday, I'm going to get you to sit down on a tax seminar with me, Jason. This is not hard. I mean if we were talking about multiples for U.S. businesses in the like high teens, if we were able to sell assets at 17x, you were spot on. But if you're able to sell assets at sort of 12x to 14x, we have a low tax base. We've been around a long, long time. And when you're 10x levered and you have to pay, I mean, who knows what the new tax rate is going to be, but you have to pay 20% to 30% tax on it, you basically descale the business without actually making any progress on the leverage.

Okay.

And the thing of it is like, look, the thing our investors should take a lot of comfort in, our interest expense went up $100 million in the increases. We were caught with a very large variable rate part of our mix. We were 26%, 27%. It wasn't outrageous, and we had benefited from it mightily. So we had probably saved $70 million or $80 million in the couple of years prior. But because we were caught when rates went up, we have absorbed that $100 million in a couple of years' time, we're looking at being cash flow positive soon. We have expressed it in very precise ways as our AFFO and then taking into account our investment CapEx, that's going to be positive in the second half of this year, and we should be legitimately cash flow positive next year. You get a business like this to cash flow positive. We are loved in the credit markets. I mean, not to overstate it to my credit investors in here, we don't take you for granted. We love you. We appreciate you. But like we're loved in the credit markets because people understand there's like a rock-solid asset base under these assets. And so arguably, you can take a higher level of leverage. It then becomes a question of how do you get the cash flow to where you're actually able to work that leverage down over time. And you so think about the path that we're on, we get to cash flow positive. We exit and streamlined the business in Europe. We cut corporate expenses. We bring -- we continue to work on getting cash flow up. We have definitely been punished by the rating agencies like during COVID, we were punished by the rating agencies, and they haven't walked it back. I think as we get cash flow positive, that's a conversation that turns. You get a couple of interest rate cuts. We work on some of the riskier debt. We have a pretty good runway until 2027 without having to do anything and that debt that's coming up in 2027 is some of the best stuff we've got. So we're not in a hurry to work on that but we've got stuff in '28, '29 and '30 that we can work on along with the term loans. So look, I think that we are at the cusp of actually being able to flip the story. It did take us a couple of years to absorb that $100 million of incremental interest. But I see that $100 million of incremental interest going in the other direction over the next 24 to 36 months.

Okay. That's great. So part of that in terms of flipping it to free cash flow positive. I think the big standout in the second quarter other than Europe-North was airports. So what can you just sort of unpack the strength? I mean, I think revenue is up 21%, EBITDA up 17%. You raised your guidance for the outdoors -- Airports segment by a little bit also for the full year. Can you just unpack it a bit for us? Like what's going so well?

So we have been transforming the Airports business over the last 5 years. You're sort of seeing in the last I don't know, 24 months the fruits of that to some degree. But we have gotten very focused and it's a little bit similar to the conversation about Europe, where we have focused on fewer bigger airports. So our portfolio is substantially smaller than it was. And what's -- the tricky part on that is that you look at that portfolio 5 years ago and you say, "God, the gross margins in these small airports are phenomenal because you don't have the like really tough contracts with -- that you get in a major city. But the thing is, is that there's still a lot of overhead to support it, and there's a lot of other things. And so we've actually grown the business, grown EBITDA. We have not added a lot of people because we have focused the people on working on the fewer bigger. And so that's been a tenet of what we've been doing. I think a second tenet of what we've been doing is we've changed how we sell. Starting with when we launched San Jose, and we did some investor communication around this when we did. It was 6 or 7 years ago at this point, 5 or 6 years ago, I guess. We got very focused on longer-term sponsorship type deals for parts of the airports to try to lock in chunks of the inventory and really, really have huge impact for advertising. Advertisers have really loved it. We've had a lot of success with advertisers with them having a tunnel between terminals or them having a bespoke area in one of the terminals that is just all about their brand. And so we've done that. We've gone from a couple of those to tens of those at this point. And I think the third thing that we've done and I've referred to this before, is that we've made it a lot easier to cross-sell across the business. And so it is easier now for our airports people to sell our roadside and it's easier for our roadside people to sell airports. And it does turn out that there's a pretty meaningful number of customers who are actually interested in both. And so that is something that has been a real success.

That cross-sell, is that technological thing that happened? Is it just incentives for the salespeople?

It's a lot of blocking and tackling. So it's working out how to make it easy because the thing about airports is when a customer has an idea of what they'd like to do in airport, the answer is generally yes. But what that means is it's not like super simple inventory. So like if you're going to sell 5 billboards, everybody knows what 5 billboards are and they work. If you're going to sell a bourbon tasting with a domination and handout or something, that's a different sale. And so what we did was we set up a kind of concierge team to facilitate that sale coming in along with getting the comp instructions into a place. So stupid detail, but these kind of things matter. In the old world, when somebody would sell a client into an airport from road side, they would only get credit for the first contract and then the renewal would go to an airport person. We now have that -- we've worked out the comp where we split the comp or it depends. There's a lot of judgment that goes into it, but making comp work is the biggest thing when you're trying to cross-sell.

Understood. So there's been some -- I don't know, small anecdotes out there in terms of commentary around travel, right? Like I think Airbnb had some difficult numbers. There's been some concern around destination theme parks. I think you noted on your call that the airport traffic was at record levels, right? But I know investors are nervous about travel moderating just based on what the other companies are saying. Should investors be nervous about what traffic counts mean in airports as it relates to your Airport segment? Or is it more disconnected than a one-for-one relationship between passenger traffic and your Airport revenues?

It's definitely not one-for-one connected, okay? So the way passenger traffic affects us, obviously, it is an underpinning of what we're selling to our customers. But it is not the only thing we're selling to our customers. So part of why airports has done so well, and we haven't gotten into it yet, but I'm sure we'll get into the whole national local conversation, and you're going to say, well, why is national not good in out of home. And I'm going to say, well, national is fantastic in airports. And so like part of why customers like airports is because the audience it delivers. It delivers people who have the affluence to be able to afford to travel. There are a lot of business decision makers who go, even if they're not on business trips. And then you get into the whole business trip aspect of it, of getting business travelers. And you've seen the big business hubs have really picked up in the last kind of 12 months. So it is not a one-for-one relationship because a lot of what the advertisers are buying is access to that audience. And barring really catastrophic drops in audience counts, I think we can manage that. It will certainly be a factor. Like look, when people pull back on advertising, we've been waiting for a recession for a long time. When people pull back on advertising in recessions, they don't just pull back on parts of it, they tend to pull back on all of it for some -- again, depending on how serious it is and things like that. That's not happening right now. And we don't see any evidence of it in the dialogues we're having with people in the next year. But these things can change, and I am definitely not pollyanna about the macro environment and all the different uncertainties in the world. I'm quite attuned to all of those uncertainties. But so it affects us, it's not a one-for-one. And then the other part of it is, some of you might recall, we took on the New York Port Authority during COVID. We actually won that in March of 2020. That's what we heard. And the President of Airports apologized to me when he called to tell me we won, and I was like, no, Martin, we're good, like we'll figure this out. But one of the things we were able to do because we were in the middle of this great dislocation is we built technology into that contract that if passenger counts drop, the minimum guarantees, it moves. It doesn't move like dramatically, like the minimum guarantee doesn't go away. But rather than having to negotiate at the time of the passenger drop, there are thresholds built into it where the minimum guarantee will scale if that's getting passenger counts to. And that's a technology we're trying to build into other contracts. I don't know that the industry as a whole has embraced it. And so we're working on that part. But we are very attuned to being risk managers and how we manage these businesses.

That's great. I'm going to shift gears and talk about this national local dichotomy that you touched on. I sort of -- when I speak to executives across the industry, right, there seem to be 2 camps. There is the -- we have a slight secular issue as it relates to national advertising for the Outdoor Ad medium. And then the other camp says, "No, this is all -- you can trace it back to weakness in specific verticals, there's no signal here." And I think you land a little bit more in the former camp than the latter. Is that right?

I'm kind of a third camp. I'm actually -- so I completely agree, like I can do math as much as the next guy. And there is absolutely no question that specific verticals have hurt our space. If you look at the verticals that were big 3 or 4 years ago and you look at the verticals that are big now, it has been incredibly dynamic how that mix has changed. But I think my third camp would focus a little bit more on agency economics and how the agencies are changing because that is what underlies how this gets placed. I mean, first of all, I'm going to say it, I say it every time I mean in any of these interviews, there are no real national buyers in out-of-home. So what everybody likes to call national is the large agency. It's the stuff that goes through the big holdcos, and the big holdcos are having their own challenges, some more than others, some are having a pretty good time. But as they work through it, they have had challenges on their fee structure. And so they have had to figure out other ways to make money than how they used to make money where it was just kind of a markup on whatever media that they placed. And in doing that, they have become more media traders and they have -- I mean, the options that you have, if you're an agency, I mean, God, I used to be in the ad buying side of the business in the early odds. Like back then, you like looked at 4 or 5 different things, and that's how you place your budget. Now you've got like 1,000 things you can place your budget on and lots more coming every day. I mean the number of people who are developing ad serve businesses or ad-supported businesses is just exploding. And so the agencies are doing what any reasonable business would do is they're trying to like steer more of the money to places where they're able to get more value. And that comes from things like video production. It comes from principal buying, like there's just -- there's a lot of dynamism. So I don't think you can -- I don't think you can distill the national challenge that out-of-home has and then put it on top of it you have programmatic. So programmatic until recently was an unvarnished good for the roadside people. There are 10,000 to 12,000 large-format billboards and programmatic -- and automation is going to be good for the industry over the time. So don't hear me becoming a programmatic bear. That's not true. Our programmatic business is performing wonderfully. The challenge with it is, as you have companies that spent substantially in out-of-home shift from buying direct from the vendors to buying programmatically, you're going from them looking at 10,000 or 12,000 large-format boards roadside to like 90,000 or 100,000 screens, including all sorts of different sizes, in store, adjacent to store, charging stations, gas stations, like the number of screens has exploded and programmatic has made it easy to go in. And so one of the things that we have seen a little bit this year, it's not the explanation for what's going on with national, but I'm very attuned to it because it's something we have to be on top of, is that when a large brand shifts from buying direct to buying programmatically, and God forbid, it goes to the Open Exchange with the partners. They will spread that buy like peanut butter. And you'll see -- and again, this has happened with a couple of accounts and we are all over it, and we're working on it. But we have to pay attention to this because there's a quality thing. First of all, out-of-home will get a bad reputation. It's kind of what happened with display ads and programmatic, that like a bunch of junk inventory, sorry to my friends in the smaller format, but a bunch of weaker inventory comes in, becomes easy to buy, and it's cheap, and that then like causes people to say, "Oh, I'm getting efficiency" but they're not really getting efficiency, they're just getting small screens.

When you say, spread like peanut butter, I think that was the phrase you used, you're not talking about spreading like peanut butter across the inventory that Clear Channel has. You're talking about spreading like peanut butter just across all?

I'm saying when you go from looking at 10,000 or 12,000 large-format bulletins, when you're dealing with the vendors to 100,000 all format screens. If you're on the Open Exchange and you're bidding, your money is going to gravitate to where you're perceived and the data, when you especially get down to some of those small screens, the data is very dubious because you will have some box, I'm not going to criticize any particular thing, but some box with a small screen on it in customer service at a Walmart, claiming credit for all the foot traffic in the Walmart, but come on.

Really?

So this is going to get sorted, just like it got sorted in display. But it is something -- like it was a significant headwind last year, the proliferation of the screens, that normalized a little bit and we've seen programmatic -- I mean it has grown very nicely the first half of the year and it's continuing to. But there are an awful lot more customers showing up in programmatic who were formally direct. And that's what we've got to keep an eye on.

Okay. And how -- just can you remind us how big programmatic is?

We've never disclosed that. And it's complicated because there are a number of different flavors. There's kind of the true SSP programmatic where you're going through the whole ad tech thing and having all of the ad tech fees on it, and then there's automated direct where you're just trading and there's no intermediary really.

Understood. Can we talk about other sort of sales efforts beyond programmatic? I think you've made some efforts to try and hire some salespeople to sort of zero in on particular verticals to be more effective at selling and sort of tacking this. Can you talk a little bit about what your hypothesis is? What you -- how you're sort of attacking it and any sort of success you've had so far?

So we started doing direct -- we formed our client solutions team probably 6 years ago. And we discovered -- we did it a lot of wrong ways before we kind of did it the right way, but we discovered that what really works is having somebody who is deep on a thing. And the deep on a thing, it could be something horizontal, like I know how to pitch people who've got funded by BCs or it could be a vertical where I know how to talk to people in the beverage industry. And so what our Client Solutions team has evolved to. Initially, we started out much more of just like let's go get the big accounts that aren't buying out-of-home and build relationships with them. What we found worked better was working with people who had relationships in a vertical or spoke the language of the vertical. And so we have low double-digit millions of sales that are coming from this initiative already as a result of those investments that we made in the Client Solutions team. What we've really gotten traction on in the last couple of years is in pharmaceutical where the combination of our data and analytics because that turns out to be the real linchpin thing that you want is the data and analytics that are the way they do the data analytics, not the way we think they should do it. And we figured out how to do pharmaceutical analytics the way pharmaceutical does them. And we have a kind of anchor client that's been with us a few years, and we've added a couple of clients, and we're now at the point where I think we're going to have a real presence in pharma. We've got several campaigns running right now. And it's something that I think has relevance to an awful lot of drugs. These are drugs that are going to have broader audiences, it's not for super niche, specialty cancer drugs. It's for things that are diabetes or mainstream kind of diseases that a lot of people have. And so this is something that I think is an area that we can make real progress on. We need to bring the auto insurance vertical back. It's probably never going to come back the way it was in time of 2019 time frame, but that is a vertical that we're definitely focused on. We're focused on consumer products. We have beverage investment that's going on. And it's kind of a constant discussion between Bob Mccuin, our CRO, and I on like, okay, what are the next ones, because what we're trying to do is bring in that person who -- or develop the person, because in some cases, it's somebody came internally, but develop that capability, get them linked to the data and analytics so that they have the key to how that customer set thinks about it and then wrap around some marketing and do some industry events and things like that. So that's where we're headed with this. It is not inexpensive, getting this kind of expertise. It's very different from how we did "national historically" but I think with the dynamics going on in the agencies, it's actually critical for us to do it because being able to talk to the people who actually control the budgets is really centrally important to locking in business.

That's great. Dave, can I shift over to you for a second?

Sure.

I think during both the first quarter and the second quarter, you guys have articulated sort of a back half waiting towards the year. Can you just unpack that a bit and explain how much confidence you have in that, particularly given some of the macro fears that people have at the moment?

Sure. I mean, we'll go back to even what Scott was saying earlier. As we -- when we provide our guidance in the third quarter, and I'm not reaffirming, but like I still feel the same as we did when we did that back in August. But we said earlier in the year when we got into it, the first quarter was tough. Local has been strong. It was strong in the first quarter, second quarter, and I feel like that's going to happen throughout the year. From a national standpoint, we said it was going to be a little bit lumpy. We started off the year strong in the first quarter. Similar to last year, National was kind of up and down, and the second quarter was tough. And as we're getting into the third quarter, I feel pretty good about where we are as a business. When you compare the third quarter of last year to where I feel like we are this year. I mean we said it last year, and some of the agencies took the summer off. And it was tough, like the third quarter of last year was pretty tough. We're not seeing that this year. We feel like the conversations are strong. I thought the fundamentals are strong. One of the big things we'll talk about, and you mentioned before, do you see a recession or the macro not looking good. We look at cancellations. And we saw a few of those as we're going into it last year. We're not seeing that this year as we go into the third quarter. And I feel like the conversations with the advertisers has been strong, and I feel like that will continue as we get into the third quarter. The fourth quarter is the biggest quarter. I mean, that hasn't laid in yet. But as we're looking for the third quarter, I feel good.

Okay. That's great. Are there any questions in the audience for either Scott or Dave? I think we have got one in the front here?

It was a line you said right at the beginning. You were saying that in Europe, you felt that the Outdoor companies are doing a better job of taking some of those sort of traditional display, I think TV budgets. Whereas in the U.S., that money is being diverted to Connect TV and other platforms. Why is that? And is there anything you can do to change it in particular with the sort of digital offering?

So I think first and foremost, marketers really appreciate the format of a bus shelter close to shop. It's almost a point-of-sale kind of reference. And it has always been the case that CPG in particular, which is obviously a big TV advertiser, has done more business with out-of-home outside the United States than inside the United States. And so what -- in this period where we have both, I'm leveraging the access that we have to some of those folks to actually get with their global people and have dialogue about, hey, you spend 5% of your budget on out-of-home in the U.K. and you spend 0 in the U.S., why don't you give us a chance? Let's talk about how we work through it. So that's a slow process but it's a little bit that tradition. And then I think the other part of it is we can get a lot closer to video on bus shelters than you can. It's not full motion video and it certainly doesn't have sound, but we can do things that are very eye-catching and that are kind of in concert with the video ads that people want to run on street furniture that we just can't do on a roadside asset. So it's a little bit the form factor. It's a little bit the location and kind of the tradition now it's gone. But I think that's the principal reason why there's a big difference there.

That's like that was the original retail media, I guess, doing a CPG ad outside of that?

Well, I mean it's funny. Outside the U.S. retail media, we exited the mall business probably 15 years ago or 12 years ago for very specific reasons about working with the malls because they kind of were selling the ads themselves and it was a channel conflict. But retail media outside, we do the screens inside of Tesco and Sainsbury and depending on the different countries, different channels. We actually operate those. I think O-Media just had a big announcement in Australia about what they're doing with retail media, and it's the same thing. That has not been the way things have developed here with retail media because the retail media is more of a repurposing of the trade dollars. And so the principles don't want to give any of that up to the -- if we were to sell it. But I think that's an area that we would explore with people of -- because like the way it works with many of these retailers outside the U.S. is that they will have a kind of protected list of accounts that they're selling directly to and it's where they're getting their trade dollars or they have their relationships. But then you can sell to anybody else who's not in conflict with those. And so that's how it works with the market for retailers in other countries. I think that might be an opportunity for us downstream as retail media evolves but I'm not -- don't hear that as this is a big strategic initiative. It's not the -- going vertical and direct to advertisers is the big strategic initiative, not chasing a different channel.

Okay. You touched on this earlier, Scott. But Dave, maybe you could just remind everyone in terms -- like when I look at your bond maturity schedule, it looks fantastic, fairly benign, like there's no real moving parts there. Is that a fair characterization?

Yes. I mean, look, from a -- obviously, the quantum debt is large, but from a maturity standpoint, I think the team -- we've done a good job of pushing those maturities out. I mean we've done a lot of work. We've been really active in the capital markets over the last couple of years and our next maturity is in 2027, and that's actually a very attractive piece of debt. So we have created that runway really to grow the business from an organic standpoint and kind of going off the initiatives that Scott has been talking about. But it doesn't mean that as rates come down and we obviously are more fixed than variable but we still do have a term loan out there. So as rates come down, if there is something compelling that makes sense for the business, we'll absolutely take a look at it. And also, as rates come down, we do have maturities that start in '28 and '29, and we'll start looking at those in a couple of years from now.

And can you remind me the term loan? Is it SOFR plus? Is that how it's called?

Yes. It's SOFR plus [indiscernible].

Okay. Great. So that's a little bit of a tailwind. And hopefully, we'll be talking about free cash flow. All right. Very good. Scott, Dave, thank you so much for the time. It's been great.

Thank you, Jason. Good talking to you.

Absolutely.