Diebold Nixdorf, Incorporated (DBD) Earnings Call Transcript & Summary

Okay. Good afternoon, everybody in the room and also on the webcast. We're continuing chugging along here with UBS Global Industrials and Transportation Conference. My name is Amit Mehrotra. I'm the electrical equipment and multi-industry analyst here at UBS. Happy to welcome Diebold Nixdorf, which is financial and retail technology company involved in ATMs and self-checkout solutions for the banking and retail industry. Joining us from the company are Octavio Marquez, he is President and CEO here to my right; and then Tom Timko, Executive Vice President and Chief Financial Officer. Guys, thanks so much for joining us. Really appreciate it and looking forward to talking about the company.

Octavio, I want to start with giving us a little bit of the lay of the land. I mean 70% of the business is banking, 30% retail, you're diversified across the globe. Retail, obviously, primarily in Europe. Big service component of the business, decent growth opportunity in some of the legacy ATMs as you kind of mix up to the cash recycle machines. But a lot has happened to kind of get you to this point. So congratulations on getting to this point. It's a lot cleaner of a story, but obviously, you've cleaned up the balance sheet, made it a much cleaner story. So why don't you take us kind of maybe a little bit on this journey over the last few years, where you've been, where you are now and kind of what the outlook is and we can start there.

Sure. Well, thank you, Amit. I really appreciate the invitation. We're excited to be here and tell the story. So yes, it's been an eventful couple of years. So let me tell you a little bit about the company. As you correctly mentioned, we serve two end markets, retail and banking. Banking being 70% of the business, retail being 30% of the business. I think when you think of the evolution of our company, we are a company that serves great -- has great customers. When you think of our customer base, think of the world's leading financial institutions. I don't think there's a single global bank that we're not an important part of their operation. We serve the 25 largest retailers in Europe. So we have a very, very exclusive and we're very proud of our customer base. We have great products. Diebold has always been known for having very high-quality products and then having the service component, making those products available to consumers. So it's always been a very positive story from the point that we have a great customer base. We have a great technology that we provide to those customers, and we're very intertwined to their operations. Banks need the products that we provide for them and the services, retailers do the same in order for them to better serve their customers. So that's kind of the good news of our company. We have this blue chip customer base. We have these great technologies that we provide to the market. Our company did have a problem, which is several years ago when we acquired one of our large European competitors, we did that through a lot of debt. And that had been a drag in our company.

It was 8x levered or something like that?

At one point, a little bit over 8x leverage. Our go-forward ideas we will never be over 1.5x levered. So clearly, a big philosophical change. And what we're very focused is how do we take our core products and solutions and really start on our journey of margin expansion and then free cash flow generation because we think that, that's where the value of our company is. And why do we feel comfortable about that? When you think about banks, think of every bank in the world. They're looking for efficiencies. And one of the areas where they're looking at how do they create greater efficiencies, it's around their branch network. The biggest cost of running a branch network is the cost of cash. The cash that sits at the teller, the cash that sits at the ATM. Through our recycling technology, we can create what we call a closed end cash ecosystem, where through our hardware, our software and our services, we can reduce the cost of managing cash in the branch. To give you an example of the kind of savings that banks can realize, once they deploy these recycling technologies at the branch, every time a bank requires a cash company to go and touch one of its branches or one of its ATM, if we're talking about New York City, it's probably north of $1,000 every time you touch an ATM. If you do that several times a week, and through our technology, we can reduce those touch points by, let's say, 20%, which is not unusual, we actually create a very compelling ROI for banks to invest in these technologies. And that also supports the idea that bank branches become more of a sales office for banks and less of a transactional hub, and you start putting all the transactions in devices like our ATM cash recyclers or teller cash recyclers inside the branch.

If I could just interrupt there. So when I think of branches and ATMs, I don't think of a growth industry, but what's unique is that there's this mix-up effect from kind of a traditional ATM to a cash recycle machine. My understanding is it might cost $10,000 for a regular ATM, maybe there's a significant transaction price uplift for you guys. Is that where the growth is coming from? Or what is otherwise kind of a stable installed base?

So it is true. It's a stable installed base and as banks migrate more transactions and automate them, that creates the opportunity for recyclers that do have a higher average selling price. So that's part of the growth. But when you think of the ATM industry and this is how we plan our business. It's a very stable installed base globally. But there's constant refresh cycle going on. And we keep capturing a bigger part of that refresh cycle. Again, technology still matters a lot to banks. So we're making sure that through our hardware, software and services, we're providing a differentiated service to banks.

And service is a big piece, too. It's like almost 2/3 of the business, right?

So remember, we have two businesses to the banking and the retail. Let me talk just in general the company. Our service business, $2.1 billion. Of those $2.1 billion, 70% of that is recurring. And what I mean by recurring is these are long-term contracts with both our banks and retailers, usually in duration for anywhere from 3 to 7 years. And basically, that provides a lot of stability for our business model.

Yes. Can we -- before we get into the equity story, can we, Tom, talk about kind of just level set where we are on the capital structure. It's obviously cleaned up. So it's great, but let's just -- for just education purposes, say where we are and then we can get into kind of what potential value you can recruit to the equity holder.

Yes. So at the end of the third quarter, our net debt leverage was 1.6x. We've come out subsequently in our earnings presentation and talked about maintaining it at 1.5x. So our debt right now, we've got about $1.1 billion in gross debt, about $1.50 billion is our exit term loan from the corporate restructuring. So when you think about that debt, it's got SOFR plus 750 attached to it, which is great paper if you're a holder. But when -- as we prepare to go back out into the market, we've got a [ 105 ] premium penalty associated to that, that expires on February 11. So very opportunistically looking into that market, but refi February -- to refi as soon as possible. And some of the discussions with the bank would indicate something much closer to SOFR plus 350, and we're contemplating, too, just given where we ended the year cash, have a potential debt pay down to a small degree to sort of help us maintain that net debt leverage ratio. But the story for us, Amit, is really on the free cash flow generation. So if you think about '24, what we've come out and said is, look, we expect to convert free cash flow at 25-plus percent, right? That's low. And it's not what we're capable of doing, but it's getting all the bankruptcy behind us, right? So we're -- if you think about this year, we're burdened with about over $60 million payments to certain vendors as a result of that corporate restructuring, that flows through the free cash flow next year. If you think about what I talked about in terms of the refinancing of that debt and the lower interest costs associated to that, that's probably $30 million to $40 million. So you can see why we're fairly confident in saying next year, we're going to be at plus 40% free cash flow conversion, which is getting to the top of where we need to be in the industry and honestly, beyond that, we think that there's a pretty clear pathway to 50-plus and that journey is going to continue.

And did the restructuring also give you an opportunity to kind of address or rightsize the cost structure? I know that there's probably lots of opportunity that you're pursuing on the SG&A side or OpEx side, benchmarking, things like that. Can you talk about -- or both of you talk about kind of what you did on the cost structure to maybe generate more profitability now that you've emerged as kind of this newco, so to speak?

Yes, I would say it's two-pronged, and then I'll let you jump in. If you think about just margins, right, and you think about product margins. Product margins year-over-year up 640 basis points, right? That's driven by a focus on efficiency and what we refer to as our continuous improvement flywheel, which is lean, right? So the company, whether it's manufacturing or a function has really embraced the concept of lean culturally driving as much efficiency as we possibly can through that. And again, not just on the factory floor, but at your desk, in the office as well, right? What you're coming in, the time you have it and then the output. It's a simple concept, but it takes a discipline to deploy and a discipline to accept right? We don't talk in charts or PowerPoints anymore. We talk in boulders, and we address what's read on the boulder. Read it, we like to joke around. It's only funny if you're a lean guy. Red is the new green, right? Yes, that's right. So I would say it's part of that on the OpEx side of the house. Based on the benchmarking, we get a couple of hundred basis points of gap that we need to close, and that's something that you're going to see us be very focused on. We'll have more to comment on our Investor Day on how to specifically we're going to go tackle it. But that, I think, is an opportunity that will begin to manifest itself in '25 and even more so in '20.

And that's on February 26.

That's correct. Yes, at Lotte Palace.

Okay. So now that we have level set on the capital structure, just gotten comfortable. Let's talk about the equity story. So I guess let's start high level and then kind of drill down competitive positioning, things like that because you guys do have great competitive positioning globally. But before that, what is the algorithm investors speak to revenue growth, margin expansion, earnings growth, that algorithm? How do you guys think about that algorithm over the next 2, 3 years or whatever compounded growth outlook that you have?

Yes. From our perspective, it's simple. We've got a very stable business, right, that we expect to be able to grow the top line low single digits year after year. Our guidance for next year on EBITDA is we would expect that to be mid- to high single-digit growth as well. And then the free cash flow aspect that I've talked about now, the 40% going on to 50% -- so that's how we see it developing over time. And we expect that level of growth to continue, right? This year, if you just think about the operating leverage that this company is capable of, I think this year is a great story. We came out originally had guidance of $435 million to -- sorry, $410 million to $435 million, came out second quarter, my first quarter was able to raise guidance, $435 million to $450 million Last quarter came out and said, now we're going to be at the top end of that. So think $450-ish million. And that's on completely flat revenue. So you're growing as a percent of revenue, it's 12-point-something percent, right, which is on flat revenue, pretty impressive in year-over-year growth, right? So we think we've got those type of opportunities and a lot of that driven by the continued acceleration of our progress on the service margins and our product margins across the board.

Probably, Amit, one of the key things for us as a company is when we think about the future, we're not hoping for any dramatic change in our markets. We're being very deliberate about saying with low single-digit growth, we can continue expanding our EBITDA and continue expanding our free cash flow through gross margin expansion, I think that the best example, Tom gave our gross margin 2 years ago when I became CEO on products was a little bit over 13%. Last quarter, we hit 27.4% on the product side. So again, this is done through continuous improvement, which takes me a little bit back to the idea of what can we also do on the expense side. The company, for many years, tried to do big massive programs to reshape the company. We've changed that mindset. We now are implementing our lean operating model, which is a continuous improvement philosophy. So I don't want to change everything in the company at once. We want to make incremental quick changes every quarter that continue building on that successful trajectory. We've proven that over the past 7 quarters, and that is our intention. Let's make sure that we keep this flywheel of continuous improvement going and that we accelerate that product gross margins. We believe that there's still room to keep improving them. And our big opportunity is in our service business, $2.1 billion that we will end the year somewhere around 29% gross margin. We believe -- we are convinced that next year that will be in the 30 and then there's continuous room for expanding that.

How do you take gross margins? How do you double gross margins on the product side? I mean, it just -- is it the manufacturing footprint? Or what are you exactly doing because you don't really see that type of improvement usually?

Well, one, what's cleaning up a little bit our manufacturing structure and putting the right process in place. So one of the things that we did, and this probably also relates a lot to the current world environment of where you manufacture tariffs, all those things. So we have very centralized manufacturing in Europe. We've since over the past 2 years, distributed that manufacturing. So we have U.S. manufacturing. We have South American manufacturing. We have Asia Pacific manufacturing. We not only moved manufacturing but moved our supplier base as well. So if we put our newest factory in Ohio has a great part of our suppliers are -- or U.S. based to feed into that factory. When you think of the products that we sell, self-checkout for retail or ATMs, they're pretty large devices that are very hard to move. So being able to do local to local manufacturing saves tremendously on transportation costs. shipping something from Europe to South America...

You guys must have got really clipped on the container shipping rates and things like that during the pandemic. Is that true or no?

Yes. Clearly, all the disruptions in global logistics really hurt us. And again, that's one of the reasons why we very quickly shifted into more localized manufacturing to avoid that movement of goods throughout, throughout the world.

Right. So now you're -- I guess, the outages in region for region and...

And it's a natural hedge, right? It's a natural offset. You're manufacturing in the local currency or in that region, right? So you get a little bit more benefits from that perspective as well.

And anything in Mexico? Obviously, Mexico headlines have flared up recently, anything in your North American footprint that maybe puts a little bit more risk around some of the North American manufacturing.

So our North American manufacturing is based out of Ohio. Again, we see major risk with anything going on in Mexico right now.

Can you talk about the products themselves and the technology and the products, how differentiated it is versus some of the competitors? And I know you guys have one or two market positions in the products you serve, which is great and important point. But just talk about kind of like the technology behind it and how differentiated it is?

Yes. So let me start with retail because we haven't spoken a lot about retail. So our two products, our flagship product, self-checkout devices. We build self-checkout devices that are very modular and very open. Traditionally, self-checkout was a very tightly integrated stack between the software, the hardware and the services. Most retailers now are looking to how do we separate those purchases. So us having products that can -- our hardware can connect to any software solution. Our software solution can run any hardware, provides great differentiation for us. And then if you wrap that around our services, clearly provides significant added value. But we're also big believers that innovation continues to play a big part. So in retail, one of the things that people ask me is, the self-checkout, is that a sustainable business? So one of the things that we've done is how do we use friction in the self-checkout journey. So through AI, we now have implemented solutions, one, around produce recognition. So if you're buying a lettuce or a banana, you don't have to look in self check-out and click on it to automatically through computer vision and some algorithms so we can identify what products you're trying to buy. We've also built in a shrink solution, shrink being one of the biggest problems in retail today, not only at the checkout, but shrink across the whole store. Our AI shrink solution, again, through computer vision, you can stop a transaction at the self-checkout. If you realize that there's some anomalous behavior going on. And then as the transaction stops, you can have an associate come in and help the consumer who might have done something by mistake or -- and then continue to flow up the transaction. So we believe that through continuous innovation, we will continue winning in the retail market. And probably the most important thing for us in the retail market. 80% of our revenue today comes from Europe. So we are built...

A lot of that's in Germany, if I'm not mistaken?

No. I would say it's across Europe. We're -- some of our largest customers are the large grocers in the U.K. Think of global companies like IKEA, BP. So we have a very, very, very distributed business across Europe. We're not dependent on any large country in Europe. But again, if you think about all of Europe, the retail market in Europe is smaller than the retail market in the U.S. So having just 10% of our revenue come from the U.S. and being a -- not one of the top players in the U.S. provides a great opportunity. We have the right products. We have the right solutions in place. So we believe that as we develop our plans next year to really more aggressively go after the U.S. market, small incremental improvements will produce significant growth for us.

And I guess on the banking side, there's obviously a big installed base, and we're talking about replacements. But my guess would be on the retail side, there's like better growth because of new placements and new units. So that's just a better growth algorithm on that side of the business, unless I'm mistaken.

So retail -- our self-checkouts had been growing double digit for the past 2 years, and it had all been in Europe and it had all been new placements. So when you see all the growth in Europe, we were all the growth in Europe. This year, that growth slowed down as retailers kind of digested this, we see that starting to pick up sometime in the second half of next year. We do have the opportunity of the North America market where we're very underpenetrated. And the other thing that's very important to us is there's new verticals moving into self-checkout. When you think of the traditional self-checkout verticals, that's a grocery store. I think that it's pretty well understood that, that is an industry that will continue using self-checkout. But we're now seeing self-checkout being used in fashion. So you'll see more of that being deployed in fashion. We're seeing more self-checkout in fuel and convenience, so the convenience store at a gas station also using self-checkout. We're seeing growth in ordering kiosks in the QSR business in the quick-serve restaurants. So we believe that not only the core grocery market will sustain growth, but all these new verticals will keep adding.

So when we go to a McDonald's or a fast food and order at the kiosk, that's kind of what we're talking about software...

You're probably ordering at one of our devices.

Got it. Got it. And there is, I would assume, a pretty high service attachment to those placements. I have in my notes here that it was like retail's 50-50 product service. Correct me if I'm wrong there. But tell me about the margin differential? Do you actually take a lower margin for the new placement and then the service streams are quite, quite lucrative.

So I think the best way to think about it, Amit, is every product that we put out in the market have a service contract attached to it. And that is usually a 5- to 7-year contract. But we build that annuity with every place. And whether it's a replacement of our own product or a new placement, we build that service annuity. The margin profile of our service business is very similar across geographies. So we're very focused on gaining new endpoints and attaching our services to them.

And what has been the reason for the retail side to kind of be a little bit weaker now? Is it just general economic activity, you talked about improving in the second half of next year. But can you just put a little bit of finer point of do you feel that the business has bottomed now and we're just waiting for the inflection? Or do we have a little bit more to go?

Yes. Look, I think what we've said is we're starting to see signs of stability. If you look at third quarter, right, it was nominal, a couple of million. But again, it felt like at bottom. We expect to continue to see that sort of recovery and then get back to kind of the growth rates we're -- by the second half of next year, right? And that's based on conversations with our customers. You're starting to see it a little bit now in the order entries that we're getting as well. So positive, positive signs to the second half recovery.

And in terms of -- you said you're underpenerated in North America, is it -- are there a couple of players that kind of dominate here? Or is it just really kind of migrating from that -- from the European market here to the U.S. and you can kind of take your fair share?

I would say that as a company, we always had an eye in North America since we acquired these technologies. The challenge that we've always experienced is, as I mentioned in the beginning, this was a very tightly coupled solution. So it was very hard for you to break into a new account where the software, the hardware and the services are all linked together. The market has dramatically changed, and we see many of the large customers opting for either building their own software or having a third-party software run the hardware or try to integrate hardware into existing solutions. So I think that, that opens the market for us. It gives us an opportunity, again, through the openness of our hardware solutions to connect to any, any point-of-sale platform out there or people who are tired of their own point-of-sale platform because they're like usually very old legacy solutions. Our software platform is cloud-native, API based. So we believe that, that also creates a great opportunity for us to position our software in a different manner and grow in the market.

So customers were doing this more in-house themselves and now they're opening it up. Is that what you're -- is that the...

So I would tell you that we see a shift in the mindset of customers where they -- we're looking at a very tightly coupled solution. Now they're saying all these elements can be bought independently. On the software side, some of the larger retailers are opting for doing things in-house, but there's also many third-party companies that play in that space. So we see that people moving away from the monolithic solution and looking at either doing some of that in-house or partnering with a software specialists.

And once you're in there, is it really difficult to switch? Or is it relatively easy to turn on somebody and turn off somebody?

So again, in the past, it was very difficult to switch, again, because everything was very tightly coupled. Today, if you're a grocer that's using some of the more popular soft, I can go there and connect in a couple of days. So we've made it very easy with our hardware saving with our software. If I need to connect the third-party device to my software, not a Diebold Nixdorf device. It is also a very easy integration. So I think that that's what's providing the ability, and we spent a lot of time and effort in making sure our solutions have that openness because we believe that, that was the way market was going.

But does it also open up to maybe more pricing and discipline and market share is?

Again, remember, once you have the solution, the service component becomes critical because where we're very established in Europe, we have a very strong service base. Making sure that we keep those devices up and running and providing the functionality that consumers want. That in the U.S. or North America, where we have very little share, anything that we can win becomes automatically incremental to us. And then we can wrap our services around that and provide that same, same experience as we provide in other markets. And remember, innovation continues to be key. So think it's not just winning the hardware but the hardware with the AI component or the computer vision component can really provide a differentiated experience for new customers.

Yes. And I want to talk about that real quick in terms of innovation and R&D and CapEx and all these things. And what is the scope for driving innovation to ultimately drive revenue growth? And how does that kind of actually represent it in what you guys are spending to develop new technologies?

So if you think about it on the retail side, we're very focused on our computer vision AI products. That we think is a great differentiator. We need to keep investing in that to make it available to not just our own devices but any other device. So that will be a growth avenue for us. And taking it also away just from the self-checkout and applying that same technology to the point of -- to the human point of sales or to the lanes in the -- or to the aisles in the store or the warehouse in the store. So we're thinking about shrink as an overall concept in enveloping the whole store. I think that's one of the areas where we're very focused on. When you think of banking, I talked a lot about this closed end cash ecosystem. So how do you manage all the cash that's sitting both in your ATM and in your branch. The software that does that and it's a software we call the transaction middleware how does that integrate and add additional functionality to those branches and to those ATMs, whether it's video conferencing, or video on-demand on the ATM. We believe that all those new services will keep generating demand for us and then making it easier for smaller banks to implement recycling technology, make sure that they don't have to change their core systems and through our software, we can actually help them implement recycling at a faster pace.

How do you -- just thinking about this, how do you future-proof the banking business? Because I think about my old experience with cash today versus 5 years ago, 2 years ago, 10 years ago. And we'll always need cash, obviously, but I don't know if you have stats on kind of the amount of cash that's actually in circulation, Apple Pay, things like that. How do you future proof that business from that dynamic?

So first think of our banking business is a very global business. So it's very difficult to give you one -- the amount of cash in circulation keeps growing, and it's growing according to the Federal Reserve in the U.S., more than 5% every year, and it's been growing at that rate for the past 7 years. So from that perspective, cash continues to be a very sticky payment method. The other thing is think of the different geographies where we operate. We have some markets that are very cash heavy. Think of all the Latin America markets, think of some of our Asian markets, extremely cash heavy. So -- and in some of those markets, the ATM is the entry point to the digital ecosystem of banks. So in some of those markets, the ATM with additional functionality becomes part of the whole digital ecosystem. Think of markets like more mature markets like Europe and the U.S., where the recycler becomes a way to move transactions away from the teller line and into an automated solution. So we believe that as we do that, we're future-proofing the business. Cash will always be a service that banks need to provide. So we think that, that it's hard to convince somebody like you and me that don't use cash that much that this is a durable payment method. But when you think of the different layers in society of different geographies in the world, cash continues to be something that is very prevalent.

We've clearly gotten that question before. I think quite prepared to. Last couple of ones for me. So one is I want to get back to the OpEx question because you talked about getting it to the industry benchmark, I believe, and opportunity to do that. So can you just talk a little bit more about kind of the levers you can pull given all the improvement you've already made prospectively to kind of get that and what the opportunity is. And then the last thing I want to talk about is kind of obviously this Investor Day in February 26. You have low single-digit revenue growth, high single-digit earnings growth. Beyond that, what are you guys going to talk about that is kind of additive to the story?

Yes. So for us, as we look out to next year, right, we're thinking OpEx is going to be flattish, right, maybe up 1% as we normalize on some of the employee stock grants, et cetera, right, that have gone away and now come back. But the opportunity -- and maybe I'll just pivot slightly here and focus a little bit on, if you looked at our adjusted EBITDA over time since the bankruptcy and what we refer to as transformation or professional fees, right, to help us get out, whether it's the fresh start or whatever, build certain muscles. That spend last year was probably closer to 120. This year, it's 80. Next year, it's 40, right, or better. And that's -- when you think about some of the opportunities in OpEx, that's one. I think that we have more opportunities to automate our processes, certainly on the function side, if I look at my own backyard in finance. We still have opportunities to bring automation in there. And again, it's really kind of focusing on that lean journey of what are we trying to solve for? How are we going about doing it? And then who's utilizing that product, right? So as we begin and as the teams begin to adopt that mindset, I think the opportunities on vail themselves. The -- one of the things that we've gone through recently is we've actually in-sourced a bunch of our order to invoice in Warsaw in Poland, and we're seeing a return on that. And I think that that's just the beginning for us. now that we've got these group of highly skilled employees, we're going to be able to drive a lot more efficiencies there, right? So I think it's -- I think there are a lot of opportunities in OpEx over the next year or 2 or 3, and we're going to continue to ring those out.

You want to answer the Investor Day question, Octavio then I wanted to also ask about the leverage because you do have a big service business high recurring revenue. Obviously, you don't want to go to 8.5, but 1.5 is probably the right place to be. But I wonder if there's an opportunity to kind of do some M&A drive the growth a little bit.

So probably that's a good segue into our Investor Day and kind of the things that we want to talk about. So the first thing is what Tom described earlier. So organically, we believe that we can grow low single-digit revenue and mid- to high single-digit our EBITDA. And then the story around cash flow growing from 25 to 40 to plus 40 and more over time. So we're going to talk a little bit about that story. We're also going to talk a little bit about how we intend to return value to our shareholders. As the company starts generating more cash flow, -- we have a fairly low CapEx model. Our CapEx every year fluctuates between $50 million, $60 million, sometimes a little bit lower, some a little bit higher, but it's not a highly high CapEx model. So when as we go into the 40% free cash flow conversion, you're talking about north of $200 million. What do we do with that money? So we have to -- we will outline what our return policy will be to our shareholders. And then as we keep going into the out years and keep building the operational muscle. When you talk about M&A, I think we can only earn the right to do M&A once we've proven that we have a strong operating model and that we can integrate small things into the company. So when you think of our service business, which is $2.1 billion, can we add additional things to our service business over time? Small things that become highly accretive almost immediately. So that's kind of what we're thinking for the next 2, 3 years. But again, first, we want to make sure that we portray how solid our model will be over the next couple of years, how confident we are on our ability to grow at those levels and actually generate the free cash flow that we believe is most important metric for us right now.

Yes. And I guess what a difference a couple of years was in terms of now what to do with the cash flow that you're generating. It's a little tricky for you guys because -- you've got a couple of large holders and you don't necessarily want to decapitalize the company and make them even more concentrated. But is there an opportunity to kind of actually be a liquidity provider to derisk some of that with your cash flow internally?

Look, I look at it two ways, right? Yes, I think we're actually fortunate to have the big holders that we do. They've been very supportive. -- Part of that return if it is vis-a-vis a share repurchase, you get that stock price up, right? And then there may be an opportunity and a desire to sell some of those shares, right? So I think it's how do you manage it, right?

Time to pump a little bit.

Yes, a little bit, right? And then we're always in conversations with them. in regards to potential equity down the road and how we would treat it.

I'm going to end it there. I've -- this is fascinating. I've enjoyed learning about your company, and I'll be following it closely. And I wish you guys the best of luck. But thank you for participating again.

Yes. Thank you. Thank you for having us.

Thank you.

I appreciate it.