IHS Holding Limited (IHS) Earnings Call Transcript & Summary

Hi. My name is Richard Choe. I cover communications infrastructure here at JPMorgan. I'd like to welcome Steve Howden, EVP and CFO of IHS Towers. Thank you for being with us here today.

On your earnings call last week, you reported pretty strong operational performance. Can you give us an update on what you're seeing in your overall business? And then we'll be able to drill down into some of the regions or countries later on, but how are you seeing the overall business right now?

Absolutely. Well, morning, everybody, and thank you, Richard, for having us here at the conference. Yes, so we reported earnings last Tuesday, which is our Q1 numbers. And as you said, decent underlying performance within the business. For those of you who don't follow us closely, we're a 10-country tower infrastructure business centered around the emerging markets of the world. So a big business in Africa, a big business in Latin America. And we're seeing those markets continue to deliver in terms of their underlying growth potential. We are continuing to sort of ride the very early waves of 5G rollout. If you look around our big 3 markets, which are Brazil, South Africa and Nigeria, all 3 of those markets are starting to roll out 5G. We're nowhere near as advanced as we are here in the U.S., for example, and that wave of growth is still to come for us. So just starting to add new towers, colocation and lease amendments around 5G as well as existing 4G rollout. And as I said, we're seeing that across the business. We obviously had a quarter that also had some FX movements particularly in our key markets, which I'm sure we'll pick up later on. But from an underlying growth potential, we're still seeing hundreds of colocations added in the quarter, hundreds of BTS added. About 500 lease amendments added. So continuing growth.

I think the one thing that people don't always appreciate for emerging markets is how important mobile infrastructure is. And it varies by country, and there's a lot going on. Can you give us a sense on where mobile infrastructure sits in each of your countries? And how it's developing, just kind of on a broad basis?

Well, I think the first key point to understand is in the majority of our markets, maybe Brazil aside, but the majority of our markets, there isn't really a fixed line infrastructure to speak of, which means that the vast majority of people, when we're talking about connectivity, we are talking about the handset and therefore, 3G historically, 4G now and 5G just starting to come. And people use their phones for more than even we would do in this room. And that's an important point to make because it is the under sort of pin of our story. Our markets cover about 750 million people and mobile telephony is the lifeblood of connectivity. It's, as I said, no fixed line infrastructure. In terms of where those countries are in their technology curves, at the end of last year, our average 4G penetration was in the low 40%, about 44% across our different markets, and 5G was 10%, even sub-10% in some countries' case. And as you'll know from following tower stocks around the world, whenever there are new rollouts of technology, that tends to support the next wave of growth. It doesn't necessarily mean it's exponentially larger than the last wave of growth, but it certainly shouldn't be any smaller. And actually with 5G technology, we're obviously seeing different types of solutions, different type of rollout, which because our markets are somewhat behind that rollout curve in terms of time versus developed markets like here, we actually have the benefit of being able to see what's happening in markets like the U.S., like in Europe, like in parts of Asia, and almost learn a bit in terms of the most efficient way to meet that 5G demand.

And the naira was very volatile to start the year. It seems like there's a little less volatility now, but still obviously hard to predict. But the operational performance was very good, but you left guidance largely unchanged. Kind of what's your underpinning of the operations versus the, I guess, unknown volatility in the naira for your kind of guidance?

Yes. And again, so for those that aren't so familiar, so naira is the currency in Nigeria. Nigeria is our largest market, about 55% of revenue for our total business comes from Nigeria. And whilst we have a variety of contract hedgings and resets to dollars in that country, you do see in quarter a devaluation, you see hits on revenue, profitability that then step back up again in the next couple of quarters as our contracts reset. And look, the reality is we saw a significant devaluation in the course of late January, in particular. So when we were in the market in March, putting out our guidance, we already had the benefit of knowing what had happened with the currency. The currency moved from about NGN 912 to the dollar to about NGN 1,400 to the dollar in that period. So a pretty significant -- very significant devaluation in that period. And the currency is appreciated back and has been oscillating around. And to Richard's, point, there was maybe some expectation that we would upgrade guidance to the positive of an appreciating currency at this point in time, but 2 months is not that long in the course of the year and the course of a volatile currency. And I think it's a bit premature to do that, especially with the naira plateauing at around its devalued levels at this point in time. So we'll see. There's a lot of consensus view that, that currency is going to appreciate again towards the end of this year, which is different to our guidance. We've got a more cautious outlook on that currency. But as I said to everybody last week on earnings, I'll be happily wrong if the currency proves better than we're forecasting. And we'll update our guidance for a couple of quarters yet towards the end of the year. So I'll be happy if we're making positive moves in August or in November.

Got it. And is it fair to say now that it seemed like the big negative move was in the first quarter, if there's some stabilization, there's operating performance, but then you have FX resets kind of coming in, that the rest of the year we should see some pretty nice growth ex-FX -- a big negative FX move from here?

Yes, because of how those contracts reset with currency, you're going to see a step up in Q2, step-up in revenue, also in profitability. We were in sort of the mid-40s margin in Q1 and implied within our guidance is a step-up to about 56%, 57% for the rest of the year to get to our full year guidance. So you can see the kind of improvement in performance that's coming in the business. And a bunch of that is to do with the contract resets, some of it is not. Some of it is to do with other operational efficiencies that we're driving across the business, both at the corporate level and within countries. And some of it is just the underlying growth that we started the conversation with, carriers continuing to lease infrastructure from us in our markets.

And something else that came out of the quarter is that you highlighted potential dispositions or asset sales of $500 million to $1 billion. Can you go into that a little bit?

Yes, very eloquently done there. So in March, we announced that we were doing a strategic review. Again, for those of you that follow us, the share price has been, certainly, in our view, underperforming and under pressure for a while now. And whilst we've been spending the last 2.5 years since being a public company executing against our business plan, trying to post numbers quarter-on-quarter, meet or beat guidance, which we've largely done, The Street is still not necessarily rewarding us for how we are as -- our composition as a business. And we understand that some of those factors are linked to Nigerian macroeconomic environment, some of it's linked to customers, et cetera. So yes, we did announce in March that we were doing a strategic review with our good friends at JPMorgan. And that's ongoing for now, and there's going to be a lot more updates on that as we go through the course of the year. Last week, on our earnings call, we did take the opportunity to just give a few initial outputs of what we were thinking to help guide people in the direction of travel we're going. We said with our guidance in March, we'd already pulled back on some growth CapEx in certain regions of our business where we weren't generating the types of returns that we expect from the business. And so we had pulled back growth CapEx and that's going to drive excess free cash flow in the business, but also a variety of ways to drive profit margin. We ended the year about 53% margin last year. We expect to be 55% this year. And actually, as I mentioned a few moments ago, actually the run rate will actually be higher than that as we get into Q2, Q3, Q4. So that's sort of the internal piece. And then more of the external side, on Tuesday last week, we announced that we're looking at $0.5 billion to $1 billion of disposals from around the group, and that we'd use the majority of that excess capital that we're raising through that and cash flow generation to pay down debt, but also to look at reinvigorating our share buyback program that we have in place. And we're starting to consider whether a dividend is the right thing for the company over the next period of time. So some real moves there. We haven't gone into exactly which markets or what it might be. But March, when we announced the strategic review, we said nothing is off the table. So we're looking at a whole variety of different things. It's been quite interesting to see the amount of inbound interest from people since March, inquiring about different areas of the business, and we're just trying to bring all that together into a sensible plan. But it's clear we can raise some proceeds, put a significant stamp on valuation. IHS is trading 5x, 5.5x EBITDA right now, which we're biased, but we think we're worth a lot more than that and potentially showing the value of certain discrete assets might help push people in a different direction. So we'll see. Lots more to do this year. We gave ourselves 12 months to do that initial $500 million to $1 billion of disposals, and we've also said that doesn't restrict us from doing other things as well as we continue to monitor what's best for creating value for shareholders.

Yes. No, in an earlier meeting, SBA kind of highlighted how public markets are discounting a lot more than the private markets are. So it's interesting to see how long that will...

Yes, for sure. I mean we listed our business in October '21, and our industry is down 41% since then. So we all have in our minds, a much higher share price for all of our respective companies. We're no different to that whatsoever. We are down more than that. And I think public markets have certainly been a tough place for the last couple of years in this macro cycle. But it is a cycle, and things change.

And I think to highlight that, do you feel like the underlying fundamentals of the business have changed that much that it's devalued 40% versus the way things were? And if anything, it seems like it would actually be stronger.

Yes, completely. The country, I mean, the business is a bit larger than 2 years ago when the industry is devalued by 40%. Interest rates are higher. So you can't ignore that, and you can't look past that. We're just in the process of starting to refinance our own debt, the majority of which was raised at a low interest rate environment, but actually being thoughtful and methodical about it, you can actually plot your way through that and actually access different pools of capital, whether it's term loan or bond markets, which are coming back now. Even that sort of arbitrage that people think is going to be there in terms of higher interest rate cost, it is actually manageable if you get the medium-term strategy right.

And then going back to, I guess, the devaluation, but more of an overall sense of the economy in Nigeria. I think people worry that the devaluation has created this very high level of uncertainty. Kind of how is the actual economic environment in your market in Nigeria than maybe some of the other African countries that you operate in?

Yes. I mean from a Nigeria perspective, I mean, you sort of have to understand the history of at least the proceeding 8.5 years. So the government changed in the middle of last -- the middle of last year, in the summer of last year. So if you go back to the prior administration, the Buhari administration for 8 years, there was just very little in the way of economic progress. In fact, you'd say, it went the other way. The Central Bank -- how shall I say it politically correctly, came up with some interesting policy decisions and implemented certain ways. And headline of that is they held the currency and they continue to hold the currency and introduce different FX windows to trying to help that situation. And all of the things that the Tinubu government that's been in power, just coming up for a year actually, all of the things that they're trying to unpick were 8, 10 years in the making. And so there's a feeling that people want to see overnight fixes in Nigeria. And the reality is that there aren't going to be overnight fixes. There haven't been overnight fixes. There has actually been quite a lot of progress in the last 11 months since the government has been in power. Fuel subsidies have been removed, which were a huge drain on government coffers. FX liberalization has now happened. It's taken a few rounds. It's been volatile, but it has now happened. One of the concerns last year was the amount of dollarization flowing in Nigeria and how much dollars are actually available to people, that's been solved now. We've accessed a couple of hundred million dollars this year just through the first 4 months of the year. So that piece has been fixed. There's different tax environments that are being changed all to the positive corporate-friendly type action. Different reforms within the banking system as well, which, again, helps promote the flow of dollars around the country. So lots of things going on, still plenty to do for the government, but they've been making sensible steps. And we'll be the first ones to sit there and say we'd like to see it happen quicker. But when you take off your sort of IHS hat and just look at the country, they are dealing with a lot of reforms that they need to put in place to correct the last 8, 9 years, and they're going about their business. In terms of -- maybe just picking up on some of the other ones because you've spoken a bit about Nigeria. South Africa continues to be a big market for us. It's our third largest behind Nigeria and Brazil. And there, the macro environment, I would say, is reasonably benign, albeit we're about to see elections towards the end of this month. So we'll see what happens with the ruling party and whether it seems like they're going to get back in on a split -- on a split vote. So let's see how that goes. But from an inflation currency perspective, pretty benign. Interest rates are pretty stable there as well. Brazil, our other big market, actually fairly decent and improving macroeconomic position. I am sure planning people in the room follow Brazil. There, we've seen currency that's been pretty stable, actually was appreciating towards the end of last year into early this year. It's pretty stable since. Inflation has been coming right down, so we're back down around the 4% type level of inflation. And that's allowed the government and Central Bank to start reducing interest rates, which they've done for 4 or 5 meetings on the row now. So interest rates coming back down again. So Brazil sort of leading our portfolio of businesses from a macroeconomic recovery point of view, and it's looking pretty good, actually.

And since I've been covering IHS, a big concern in the past has been be able to repatriate U.S. dollars from naira. It seems like you've made a lot of headway and the country has made a decent amount of headway in kind of fixing that where I'm not being asked about that as much. Is that the right way to frame the current situation?

Yes. And I think, in fairness, we obviously get asked a lot of questions around Nigeria because that's a big part of our business. We have and we continue to repatriate from other countries as normal anyway. People obviously just focus on the Nigeria piece because it's more headline news. So repatriation from all countries continue. Nigeria is now working again. We upstreamed $61 million in the last 5 weeks. It's actually a little bit higher than that now since we reported last week. But we actually got a hold of about $200 million from the beginning of the year, which we use for a variety of purposes, including paying down some U.S. dollar debt in Nigeria. So back to my earlier comment, that piece seems to be working much more efficiently now post devaluation. So although we've seen a significant currency movement, what it has allowed is that there's much more dollars flowing around the system. That, together with the Monetary Policy Committee in Nigeria has been raising interest rates to mop up excess naira liquidity. They're meeting again tomorrow, so we'll see if they make any changes. But again, all of those initiatives seem to be working together in Nigeria, which has led to more confidence in the country. Foreign direct investment was $2.3 billion into Nigeria in the first 2 months of this year, and that's the same amount as the entire of 2023. So it gives you an idea of the confidence that's starting to come back for what is still the largest economy on the African continent, close to 220 million people continuing to grow at 4% a year despite its macro challenges. It's still a powerhouse of an economy and the good news is the beating heart of that is connectivity and people using their phones. So yes, good long-term prospects, just continue to weather out this period of volatility. But even sitting here today, where we're sitting, looking much more rosy in future looking than we were even 12 months ago.

And I'll get to your biggest customer later on, but a deal that seems to get overlooked a little bit is the deal you signed with Airtel in Nigeria. Can you give us a little bit more color on what that deal entails, and how it should impact your growth over the next few years?

Yes. So Airtel in Nigeria is our second biggest customer there. In February, we announced a deal for a shade under 4,000 tenancies over the next 5 years. And to put that in context, our Nigerian business is about 16,500 towers. Our global business is about 40,000 towers, and that was an announcement to roll them out on 4,000 locations, the majority of which is core colocation. There is some 5G lease amendments in there as well. So picking up on the theme of 5G growth. So a really important commercial deal. That's actually the largest single commercial deal we've ever signed in the absence of an acquisition, for example. So a really important one for us to get done. We also extended their contract by 3 years at the time as well. So that pushes that MLA term out to 2031, the end of 2031. So a really good piece of business. And what we've seen in a market like Nigeria is Airtel is the #2 player there, MTN's #1. MTN has been slowing a little bit, but Airtel has seen that as an opportunity to really push their own market share, hence, why a deal like that has come along and again, we're sort of the net beneficiaries of carriers competing on market share because they ultimately roll out on our infrastructure.

Got it. And jumping around a little bit, but I think it's important. You've mentioned Brazil a few times. There is some consolidation going on in Brazil, there was the wireless business. There's also, I guess, the fixed wireless business. But I think generally, in most mobile markets, they don't support 4 or 5, 6 carriers. And when you kind of get down to 3 or 4, you end up seeing some level of, I think, network consolidation or remanagement, but it can grow from there. Are you seeing that -- or do you expect to see that in Brazil as we kind of move forward and as they've gone through?

Yes, I think we've seen exactly what you just described. So there was 4 carriers in the market. Oi Mobile went through its well-known well publicized bankruptcy proceedings over the last number of years. Because we came into the Brazilian market in 2020 and that was very visible to people, we didn't have any Oi Mobile exposure. We sort of stayed away from that as we were building and plotting our way around the group. Oi fixed, we have a little bit of, less than 1% of revenue, so pretty small for us, but there is a little bit of that. So Oi Mobile is already done and dusted. And I would say the carriers -- Oi got split between the 3 existing carriers between TIM, Claro and Vivo in terms of the assets and the subscriber base. That continues to be sort of operationalized. But a large chunk of that was done through the course of last year or at least the visibility of it. So the carriers spend in 2023, 2022, even a little bit of 2021, just figuring out exactly how that deal is going to be carved up, how they were going to get -- or what assets they were going to get out of that, both subs and physical assets. And that process is all done and dusted. Carriers know what their portfolios look like. They know where they're growing and they're back into growth mode. So we've seen the sort of the full cycle of that come through. As I said, we weren't involved in the churn piece, but we are involved in now the networks and the now reinvigored attitude to growth. And that comes at the same time as 5G. So all those carriers have 5G spectrum. I would say the Brazilian carriers has been a little bit tentative on 5G. I don't think the subscribers in Brazil, were demanding of that much better services that necessitated a 5G rollout. And obviously, carriers are reasonably happy to not spend the CapEx if they're not being demanded of it by their subscribers. So -- but we are now starting to see 5G come more to the fore in Brazil and obviously in part because the carriers are no longer thinking too much about Oi. So lots of opportunity for us right now. We've got a variety of build contracts across the 3 carriers, which is really this next wave of growth. And that's probably the one area where we've pulled back on CapEx from certain big chunks of our African portfolio. We've continued to want to invest in Brazil because there's plenty of growth opportunities there.

Yes. No. Something you mentioned earlier was that you have kind of pulled back a little bit on CapEx, but the one place you haven't is Brazil. Can you talk to us a little bit about your build-to-suit opportunity that you're currently building and where that might go over the next few years?

Yes. I mean last year, we built over 800 sites in the market. In quarter 1, we built 158 sites. Our full year guidance is for around 600 sites in Brazil, and that to give you an idea of magnitude, that's 600 million out of 850 million for the entire group for 2024. To be honest, we could do a lot more than 600. That's really being dictated by our capital allocation strategy, and we're continuing to assess that as we go through the year. If we feel like the return on those incremental sites is worth doing, then that's something that we're going to keep considering because there's certainly a significant growth opportunity there. We're also still putting a bit of capital into fiber there. So we have a small fiber business in Brazil as well, which to give you an idea of magnitude, about 4% of our revenue comes from that fiber business called I-Systems. And that gives us sort of a complementary product offering to customers. So when we're talking to the big carriers, we're talking to them largely about towers, but also about fiber connectivity as well.

There are significant competitors in Brazil. Do you feel like you have enough scale? And is there enough opportunity to continue to build the business there, if you want to get bigger there, I guess?

Yes, absolutely. I mean I think we were the largest builder of sites last year in the market, and those are coming from the top 3 carriers, right, the people that you want to be doing business with. We have close to 8,000 sites in Brazil, plus a fiber network, and it's really only SBA and American Tower that are ahead of us. And they have a slightly different offering in terms of not giving that fiber piece. So yes, I think we've got a pretty good market position. We want to keep growing. The strategy in Brazil was always to acquire our way in and then build our way to really give ourselves a nice blended overall return on the market, and that's certainly what we've been doing for the last 4 years. And there still seems to be plenty of opportunity for growth there. We're not on the acquisition trail right now, but certainly from a build perspective, greenfield build perspective, yes, lots of opportunity.

One of the, I guess, concerns has been your relationship with MTN, but over the past few months, you've signed a bunch of renewals in various countries. Can you talk a little bit about what's been accomplished over the past few months? And then what is kind of coming? And then we could talk about MTN in Nigeria after that.

Yes. So we have -- so MTN is our largest customer, roughly 60% of our revenue. It also happens to be our largest shareholder with just under 26% of the company. And they built that shareholding through a variety of ways. They did inject capital into the business sort of 10 years ago. It was part of their infrastructure strategy at the time, and they also retained an equity stake in one of the assets that we acquired from them. And eventually, we consolidated all of that at the top to make life a bit easier. So we've had a long history with MTN, continue that for many years to come, I'm sure. The reason to give that background is we've acquired a lot of portfolios of assets from them. We have MTN in, how many, 6 countries. And that means that we have different contracts with them across all of those different markets. And we acquired a lot of our businesses in 2013, 2014 and 2015, and a lot of those are on 10-year renewals. And so we've been going around renewing all of those contracts. And so to Richard's point around, we've been having a, should we say, robust negotiations and public dialogue with MTN over the last 12 months or so. But during that time, people are concerned about the relationship between us and them, but actually during that time, we've renewed 4 MLAs with them. So Cameroon, Ivory Coast got done at the end of last year, Zambia, we just announced, South Africa, we've just extended. That was our most recent one from 2022. We actually just extended that by another 2 years. We've got one more small one that's not far of getting done. And then Nigeria is obviously where a lot of discussion has been and that one continues to be discussed between ourselves and them. Lots of work, lots of progress, we're not quite there yet, but fingers crossed, we'll be able to say something on that in the not-too-distant future.

I think the thing that maybe gets lost on people is that these are 10-year contracts and you've just renewed a bunch of those, so you're not going to have to deal with this hopefully for the next 10 years.

Yes, until the early to mid-2030s. Yes, exactly.

But I guess with the MTN Nigeria contract, that is the big outstanding one. Can you -- and it's always interesting because I always have this issue with -- the carriers are -- your success is for the carriers to be successful and vice versa, and it's a very symbiotic relationship. But yet, I think a lot of times, people get caught up in the, sometimes public negotiations, so to speak, and they forget that you have been partners for a long time. And in this case, very much so. What are the kind of bigger points that investors should know about in terms of what you're looking for in a renegotiation versus maybe what a carrier would want?

Yes. I mean I think Nigeria is quite a unique situation. We've just talked a few moments ago about 4 or 5 other MLAs that got renewed pretty, I wouldn't say easily, it's always a negotiation, but certainly efficiently. Whereas Nigeria has its own fact pattern of circumstances. We've spent a few moments talking about the macro environment in Nigeria and that obviously plays into contractual terms between us and MTN. And so things that we are talking to them about the percentage of hard currency linkage, CPI escalator obviously, very important, term of the contract. One of the big things that we've done in various parts of our African portfolio, including Nigeria is, historically, we've looked after the power. So power is all-inclusive service that we've provided previously. That's allowed us to invest in it, drive our efficiencies in that and make returns on that part of our business. But we're talking to MTN about whether that's the right model and whether we pass the responsibility of that back to MTN. And then there's sort of churn discussions as well in terms of amounts of sites that they want to move elsewhere, and we want to retain. So all those 4 or 5 things, they're all significant items in their own right, but they all move together. To the extent we can be flexible in one area, we might need some protection in another area. And so those 4, 5 items are all moving together. And as we mentioned at the beginning of the call, the Nigerian macro has been pretty volatile at the beginning of this year, and that's happened during the course of our negotiations with them. So both sides, obviously, you need to figure out how that macro environment plays out within the terms that we're negotiating with them. So it's a process that's taken a while. It's not straightforward, but we're making progress. And we know everybody from the outside wants to see that resolved, and from the inside, we want to see it resolved as well.

And one of your, I guess, big investments over the past few months, year, quarters has been Project Green in terms of power in, I guess, developing countries is not as kind of an easy thing as in developed markets because of the grid. Can you go through a little bit on what's been invested and what benefits you've seen from Project Green?

Yes. And that ties to my earlier point around who looks after power. So Project Green is a very imaginatively entitled renewable energy investment program that we put together in the fall of 2022, where we said we were going to invest about $214 million of CapEx over the next 3 years and generate savings, and we expect it to generate savings of $22 million last year, $51 million this year and $77 million next year off the back of that $214 million of investment. And basically, that is moving away from diesel generators and moving towards solar panels, electrification, lithium-ion batteries, et cetera. When you own the power cost in the business, you can be more creative around those things because the returns are accreting to us. So that project has been running for a couple of years now. We've spent the vast majority of that CapEx. We've got $10 million more to do this year. So we spent $204 million so far. Last year, we forecast $22 million of savings. It was $24 million of savings. And this year, the $51 million number, that's -- we're on track for that. So the project is going well, it's on track, and that project is also going to deliver close to half of our 50% drop in greenhouse gas emission intensities -- intensity, which is a target that we've got for 2030. So it's an important project from a cost perspective, volatility of cost perspective, diesel, but also from an emissions point of view as well.

You mentioned it a little bit at the beginning of our conversation, but just to kind of circle back to it. Your leverage is between 3 and 4x, which actually is kind of lower for most tower companies. How are you looking at capital allocation as you kind of look forward now that you're not investing as much in build-to-suits in Africa, there's opportunities in Latin America, but overall, as you generate free cash flow and potential sales, what would that go to?

Yes. I mean we're 3.8x levered today, which obviously still sits within our 3 to 4x range. As you said, it's low for the industry. But we, as a business, have always operated quite prudently from a balance sheet point of view. We've been in the low 3s during the course of last year and actually prior to that, we, for a long time, been in the high 2s from a leverage point of view. So with 3.8x today, a lot of that is driven on the devaluation, and we're going to see that, that will probably hold through the course of this year and then naturally delever next year as we start dropping some of the devalued quarters. But one of the big outputs of raising proceeds and higher cash flow generation is we want to accelerate the paydown of debt. Again, it goes back to a little bit what I was mentioning towards the beginning around the sort of the thoughtful and sensible strategy on the balance sheet and managing interest rate expense in this environment, given a lot of our debt was raised in a low interest rate period. So that's certainly playing into our minds. We've targeted $500 million to $1 billion of proceeds plus extra internal cash flow generation, that happens to be about half to a turn of leverage, and that's really what we want to see off the business. I want to be back down to a low 3, maybe even into a high 2 over the time periods to come.

That's great. Thank you.

Thank you. Thank you, Richard.