Iridium Communications Inc. (IRDM) Earnings Call Transcript & Summary

Good afternoon, and thank you for attending Iridium Communications presentation here today. My name is Vaibhav Lohiya, I'm Managing Director in Deutsche Bank Global Space Industry Coverage Group. I'll start with introducing the management team. After that, Tom will do a formal presentation, and will thereafter open up for Q&A. To my left, we have Tom Fitzpatrick, Chief Financial Officer for Iridium and to his left, we have Vincent O'Neill, who is Vice President Finance for Iridium Communications. Thank you for attending. Tom?

Thanks, Vaibhav. I'll skip through -- I'll just call your attention, and I'll be talking about some non-GAAP measures this afternoon, and I would just direct it to our website where we have a reconciliation to the corresponding GAAP measure. And so any discussion of Iridium has to start with our network, it's one of a kind. It's our main source of competitive advantage. It's unique in that it covers 100% of the globe. Nobody else does that. And so its reach is one, I would say, element of its superior functionality but it's also the functionality of the network sets it apart from others, and it's why we've won and I'm going to show you some statistics in terms of our service revenue, our EBITDA growth over time that we're quite proud of, and that success is centered in the functionality of our network. So just use the descriptors of the network is always Low Earth Orbit mesh. That's how it's described. So Low Earth is 500 miles from the earth as opposed to geostationary, which are 50, 5-0x further from the earth. And so laws of physics get in the way of providing the kind of service that we can provide when you're that far from the earth. It's also cross-linked. So results in superior functionality. Make no mistake about it, what our network does for us is our source of competitive advantage. If you just take a look at Iridium's revenues, $791 million in revenue in '23. The vast majority of that is service revenue. That's what drives the profitability of the company. It's recurring in nature. I think access and air time is -- it would be a good descriptor of it. And then the other about 25% of our revenue is engineering and support -- excuse me, and equipment. We make money on the equipment that we sell. We don't subsidize our gear so we make nice profit margins on that. Commercial voice and data is our largest component at $219 million. That's our satellite phone business and related devices. Commercial IoT is our fastest grower. It's got a 20% CAGR, 1.7 million subscribers under contract or using our network. Now we have a large piece of business with U.S. DoD about $738 million. U.S. DoD is our oldest and largest customer. Again, we talked about equipment margins that run in the 30% range. And so if you look at our track record of growth since 2014, what you see is a 7% CAGR in service revenues between [ '14 ] and '23, and what you see is that EBITDA growth outpaces the greater growth in service revenues at 9%. That demonstrates the operating leverage that's inherent in the business. So as service revenue grows, expenses don't grow as fast. They grew -- think of them as growing more like with inflation. And you see the operating leverage there with the relative growth rates. Again, the driver of this performance, first and foremost is our network. That network competitive advantage is very much intact. And we think it will stand us in good stead as we -- I'm going to show you some numbers where we see ourselves through 2030. And I think you'll see that we -- our expectations are for continued success because of the network advantage. And so service -- as service revenues grow, and we think they're going to grow quite healthily. EBITDA will -- growth will outpace that and free cash flow will even outpace the rate of growth in EBITDA because CapEx is relatively flat and fixed and interest expense. So the rate of growth in free cash flow is even faster than the rate of growth in EBITDA, which is quite impressive itself. Another element of kind of why we win is how we go to market. So we go to the market through -- we're basically a wholesaler. The only customer we build directly is the U.S. Department of Defense. We have millions of subscribers but we have 500 or so dealers that actually [ bill ] the end user. And so that's quite efficient from an administrative perspective. We're a global provider to -- of our service but we have a small number of employees because we go to market through our partner channel. And so that's efficient but it's also highly strategic in that -- these value-added manufacturers, resellers, et cetera, have deep domain expertise in the vertical markets that they cater to. And they're all -- they think of it as like R&D. They're always thinking about the needs of their end users, and they come to us and ask for product offerings. And so our -- we started with the satellite, 1 product and that is proliferated to many products. And you see the marquee names in terms of our partner channel, Garmin, Caterpillar, Honeywell, Rockwell Collins, all servicing different kind of vertical markets and acting kind of as a funnel for growth and utilization of the Iridium network. And we added 50 new partners to that 500-partner ecosystem just in 2023. So it's just -- I think that's a very good harbinger of the appetite for the Iridium network and you see the various use cases, wearables or core kinetic and environmental and climate solutions that Cryotech, various use cases but what they all have in common is utilization of the Iridium network. And again, very proud that we added fully 50 new partners just in 2023 alone. One marquee name that we added is XCMG. It's the third largest heavy equipment manufacturer in the world. We have currently 170,000 heavy equipment OEM subscribers. That started with Caterpillar because they're a leader in telematics. They sized up the Iridium network and decided that they wanted to use us, and then other heavy equipment OEMs followed suit. And this year, we're excited to welcome XCMG to the fold. This is just an interesting kind of anecdote in terms of the importance of adding new partners to the Iridium ecosystem. So about 10 years ago, we added -- something like that 10 years ago, we added Garmin to the fold as a provider by way of their acquisition of another company. Now Garmin is our fastest growing partner. And so the utility and the benefit to the Iridium growth story when you add partners you don't know what the next ki*ler app might be that is using the Iridium network. So this is very much fresh and ongoing. And I'm going to show you some numbers in our IoT business that suggests that we're really firing on all cylinders there. Within the IoT business, the fastest-growing segment is personal communication business. It grew from $500,000 to $1.7 million. It's highlighted by Garmin within that space. The Garmin device is called an inReach. You can get it at Cabela's. If you're a hiker, you know you're going to go upgrade. It's really a neat device with 2-way texting and SOS. It really resonates quite well in the marketplace. But Garmin is not alone in selling to this need. There's competition, ZOLEO and others. But interestingly, all of these companies use the Iridium network to deliver the signal. And I think that just goes as a proof point in the uniqueness and the unique functionality of that network that all of these competitors are using the Iridium network. I want to talk about something -- a deal that we just announced with a company called Satelles that we've announced that we're acquiring. And what Satelles does is they use the Iridium network, the paging channel on the Iridium network have to be quite strong and they use the paging channel for think of it as GPS authentication. GPS you probably know, is everywhere. There's more GPS transceivers than there are toothbrushes in the world. So it's everywhere. It's built into critical infrastructure and lots of applications. But GPS has a couple of kind of weaknesses. The first is it's vulnerable. It can be vulnerable to spoofing and blocking. And the other is that it's relatively weak versus the Iridium signal or that Satelles uses. It's fully -- the Satelles signal on the Iridium network is probably 1,000x stronger than GPS. And the -- so what of that is as to spoofing and blocking, there's an instance where there was a drone that was using GPS to find its location to land and some bad guys were able to spoof the GPS signal and tell the drone it was in a safe location when it was in an unsafe location and it landed and the bad guys got the drone. That's just one example. The ease with which that can be done is kind of startling. It's like a kid with some electronic kit can actually do it. So this GPS authentication that is provided by Satelles would preclude that type of an incident like the drone getting taken because the Satelles signal -- because it's only the Iridium network cannot be spoofed, cannot be blocked, Iridium network is everywhere and knows location quite precisely. And so if you had Satelles on the ship next -- on the drone next to the GPS, Satelles would have said, that isn't where you are, here's where you are and the drone could have known to revert to the Satelles signal. So we think there's a myriad of applications for Satelles to use. It was -- the company was founded in 2013. We've been with it every step of the way. They have fully 40 patents that we acquire as part of this acquisition. The principals of the company, Dr. Michael O'Connor and Dr. Greg Gutt are kind of thought leaders in position time and location. They're kind of known, well published and well regarded. And so we're really glad to have them join us all. We are a 20% shareholder in this company. We've acquired that via 3 investments over the last 7 years. We've had a seat on the board. I would call us very well educated and understanding of their funnel. And so we feel really good about this as a kind of known territory that we're entering in here. In addition to the government applications I talked about in commercial areas like GPS, Geo authentication. So there's multifactor authentication. So think of a chip in your computer, which shows your location. And if you're trying to get entitled on your network, you have say, somebody acquired your password but they're sitting in China and trying to get on your network, Satelles signal would say this is originated from China and you wouldn't get in. Similarly, GPS has a hard time getting into buildings. The 5G network uses GPS signals for basically traffic management and Satelles signal because it's so strong, you get into buildings that GPS can't get into. So a lot of use cases there. So we're very, very excited about this acquisition. It adds to our differentiated offering to accretive to EBITDA in 2025. In just sizing up the import of it, we were a wholesaler to Satelles in 2023. So they paid us to use the Iridium signal to provide their services to their end users. We've got about $5 million from that in our capacity as a wholesale provider. We expect that to grow to $100 million in service revenue in 2030 based on our insight into the funnel and where we see inflection points that we have pretty clear visibility to. So we think it's an important part of the story. We paid $115 million for the 80% of the company that we didn't already own, and we're financing that with the tack-on to our term loan. And so what I'd like to do is just review with you the summary of an Investor Day that we had in September of last year, September of 2023. And let me start off by saying we have seen no competitive developments that caused us to rethink anything that we said in our Analyst Day, in September '23, and I'm going to reiterate the major takeaways from '23. So our headline here is we don't think things have changed since last September. And there were key points our CapEx holiday, so we finished building our last -- we finished building next our current constellation, finished spending on it in 2019, and we think we're not going to spend money on the next-generation constellation until 2031. So a full 10-plus year CapEx holiday. We think EBITDA scales. We think we'll grow levered free cash flow over that timeframe. As far as equipment and I am going to quote you some free cash flow statistics through 2030, we had abnormally high equipment sales in 2022 and to a lesser extent in 2023, which were basically a derivative of supply chain issues that occurred and our partners stockpiled inventory in 2022 and caused our equipment sales to go through the roof. As we modeled our cash flow through 2030, we said that's going to correct and we think it's going to correct in 2024. It create some EBITDA headwind in 2024 that we think abates in 2025. So we think all you're seeing in equipment and the year-over-year decline is simply kind of the air getting led out of the balloon and the inventory stockpiling that occurred as a result of supply chain issues. We think we'll maintain our gross debt profile and obviously, we'll take it up a bit for the Satelles tack on that we're going to do. But other than that, we'll maintain it. We're going to maintain and grow our dividend and we just announced a 6% increase in our dividend in 2024, and we're going to be repurchasing our shares. We've bought in fully $700 million of $1 billion in authorized share repurchases, and we think that continues. We've cited a revenue outlook in -- at the Investor Day in September where we saw our revenues growing from $586 million in 2023 to about $1 billion in 2030. And we identified 5 planks of growth where that growth is going to come from that sort of $400 million in growth. First and foremost, the growth comes from IoT. I just want to tell you how we've performed since -- over the recent history and since September. So key growth drivers is IoT, the [ underwriting ]. So IoT grew by 13% in 2022. They grew by 13%, again in 2023. So a bigger business, keeping the same rate of growth. We expect that in 2024, we'll be at least 13% growth. So that business is firing on all cylinders. It represents the most important plank of growth to the company and all is well there as we execute on that plan. Tuck-in acquisitions, can we go to that since there's new news there. As we said, that was 1 of our 5 planks tuck-in acquisitions. We think Satelles, which was $5 million in 2023 is $100 million in 2030. So we're coloring in that. Next, D2D. So we had an agreement with Qualcomm where they built a chip that was going to go on smartphones. It would enable connectivity to the Iridium network. It was a technical success. It worked. It was tested. It was ready to go. Qualcomm was not able to get a deal with the Android community to sell that. We got informed of that and pivoted. So we are currently investing in so-called standards-based connectivity, so using the same chip as others. It's a standard chip that chip manufacturers can make to connect to the Iridium network. We're investing in that this year and next, and expect to be a player there. So we remain confident that the direct to device. We think our network is best suited to that emerging need. And we think we'll be a player there, and that will contribute meaningfully to our 2030 profile. Similarly, things are going well in telephony and mid-band offering. So if you just consider what we're telling you, that's about an 8% CAGR in service revenues, not far off of what we did between 2014 and 2023. So -- and the message is here, more of the same in terms of growth. And what we know is when service revenues grow by 8%, EBITDA should grow by more than 8%. We've demonstrated that in the operating leverage in the business and free cash flow grows by an even faster rate, that's observable. Just kind of rounding it out, what was not part of our 5 pillars of growth to get to $1 billion was our broadband business. It's a fine business, we modeled growth there, but it's a sub -- it's not 10% of our revenue base. So for that to be a needle mover, it was challenged, and we modeled it accordingly. So in our most recent quarters, there's been some ARPU dilution because of competition in a small segment or subsegment of that business. The message is we knew about that and modeled it in how you arrived at our $1 billion. It's not a material part of our business. We think it quickly runs its course, and we get back to growth there. In Maritime, we're back up and I said, say, it's fine piece of our business but not one of the top 5, anyway. And so when you roll that together, we think we throw up capacity for shareholder returns of about $3 billion through 2030. And at the time, that represented about 50% of our equity market cap, hard to believe that was in September. Today, it represents 85% of our market cap because how the stock has traded for -- despite a lack of major competitive developments, et cetera. So we remain very confident in that $3 billion, and I think that represents kind of an important investor consideration when fully 85% of the market cap will be returned -- the capacity will be returned. And so kind of our investment highlights remain as they were in September. We have strong cash flow and flexible allocation of capital. We see ourselves delevering to below 2x EBITDA by the end of 2030. We have $1 billion of authorization for share repurchases. We've executed $700 million, gain capacity for $3 billion in shareholder returns and dividend yield is 2% and the free cash flow yield is 9%.

We can open it up for Q&A. There's somebody with mic here. So to the extent you need a mic just raise your hand and somebody can bring the mic to you. Maybe I can get us started as others are thinking about their questions. Thanks, Tom and Vince for being here. No particular order. I had a few questions, maybe I'll start with this one. I think you talked a lot about sort of historical growth and how your long-term growth outlook is tied to that historical growth, and it's not an expectation that out of the extraordinary compared to what you've already been delivering historically. But as we look at the growth in 2023, there is at least a viewpoint that the growth tapered a little bit coming into 2023. I would like for you to comment on that? And what are some of the factors that you think either drove that tapering down? Or if you have a different viewpoint, I would love to hear that as well?

Sure. So 2023 enjoyed a price increase in our commercial voice and data business and so, which was material. I think we grew commercial voice and data 14% year-over-year, and that's not a 14% grower. It grew that way because of the price increase, that was kind of well-articulated by the company and understood. So I think exclusive of that, the growth rate in our service revenues is very close to what we're saying for 2024. So we don't see a -- the slowdown or whatever that I agree [indiscernible] some are there. We had a long-standing guide in service revenue growth to average high single digits between 2023 and 2025. 2023 grew by at 9.7%, in '24 at the midpoint of our guide is 6.5%. So attaining that guide looks like a layup because you only have to be in the mid-5s in 2025 to achieve that guide. So from our perspective, it's steady as she goes in terms of how we think our business is performing. And we're just reiterating the $1 billion in service revenues in 2030 with the highlights -- or the headline being IoT growth of at least 13% in 2024.

A related question, since we're talking about the outlook for 2024, and you have put that guide out there. It's already in the year but just since your earnings announcement, any sort of early indication how the quarter is going, it sounds like you're still sticking with guide for the full year?

Yes. Just reiterate the guide for the full year.

I wanted to ask you about Project Stardust a little bit more and the D2D opportunity as you see it. You mentioned that a little bit as you were going through the presentation and how that is a driver for longer-term growth but that -- it is not necessarily expected to be a huge contributor in the near term as you're working on that opportunity. How do you think about CapEx near term associated with that investment? And then from an overall timing and size of the opportunity, if you can comment on that, that would be helpful?

Right. So I think that the perspective on D2D is there was an expectation, and we shared the expectation that we would have revenues in 2024 from the Qualcomm chip. It was done, that was our expectation. And so when that changed, and it changed pretty abruptly, we had to change and kind of adapt to the changes in the marketplace, which was it's going to be standards based. And so we needed to make investments because we think we will be a major player in direct-to-device. We think we have a global allocation of L-band spectrum or Low-Earth Orbit. We have the perfect network for it. It was demonstrated by the Qualcomm chip but now we just have to pivot to what could be a larger opportunity in this standards-based area. But we have to invest in software, et cetera, in order to -- for our signal to be carried on a standards-based chip, it's different. We had very little investment, almost none in the Qualcomm initiative but we need to invest in this. And you see it in our R&D this year, we're investing $5 million in R&D. We bumped our CapEx modestly for -- to accommodate this new initiative but it could be bigger than what the Qualcomm initiative was albeit it's going to come later, right? So it's not going to be a couple of years until we see any revenues from it. But it could be bigger. And the reason it could be bigger is there was an inherent kind of built-in objection to the Qualcomm chip on the part of the phone manufacturers, which is they had to pay extra for it, right? Whereas a standards-based chip is going to be the same chip manufactured by different chip makers and the phone manufacturer is not going to have any up for it. And so that makes -- that then knocks down the objection. And so whereas it was probably going to be only higher end tier phones that carried this functionality. If there's no incremental cost, it can go into the whole portfolio of phones. And when you go into the MNO, whether it's Verizon, AT&T or British Tel, that MNO is going to be motivated to sell you satellite services because they'll get a cut of that, right? And so we'll -- it will roam on our network, we'll get paid for basically access in air, and then the MNO will get their cut and the phone manufacturer is indifferent because it cost them -- doesn't cost them anymore. So it's a different model. It's going to take longer but time will tell, which was the better, which round up being better for Iridium in 2030.

It feels like a more certain opportunity as long as the technology gets to that point because it's standards-based.

Yes.

Makes sense. From a network capacity standpoint, I don't know this question has come to you guys historically, in terms of the spectrum allocation that you have, are there any limitations that you foresee in the current business plans as you project that out through 2030? And if the answer to that is, yes, there might be limitations? Is there a plan to buy or acquire spectrum through any means?

So spectrum isn't readily available. I think -- I would say one of the things we really like about the Satelles acquisition is it's $100 million worth of incremental revenue, and it doesn't consume any capacity -- spectrum capacity. So that's a really nice acquisition. Acquiring additional spectrum, there's not a lot of it to be add, near term. So through this generation constellation through 2030, we don't see it as a constraint. It's in the design of the next-generation constellation, it's a consideration because there's things you can do to basically get additional capacity out of your existing spectrum, things like adding more satellites to your network constellation. And so I get the question of, well, is your next-generation constellation going to cost more -- less than your last one? And one would think that because of Moore's Law as you get more for your dollar in electronics with the passage of time, kind of on the other hand, to the extent that we want to bring more capacity out of our existing spectrum, you can do that by adding satellites, and so that would push -- so will that all balances out? I don't know but it becomes a consideration in the design of the next-generation constellation.

Got it. How do you address that though, if there is no spectrum available. Is it more addressed just putting more sats.

That's one way. We're making investments today to bring more capacity out of our existing constellation. So lots of things you can do but like I said, it's not pressing as to this constellation but it's a relevant consideration in the next generation.

Okay. The next one I was going to ask you was I think you recently put out a report talking about extension of the life of your satellites. Is it fair to say that pushes out the CapEx associated with the next-generation constellation by a full, call it, 5 years, which is how part of the life extension of the satellite has happened? And related to that, if so is the case, is it fair to then assume that your ability to generate and have a higher cash flow conversion also gets pushed out by that 5 years because you continue to have high cash flow conversion without that associated higher CapEx for the next-generation constellation?

Well, so when we cited the CapEx holiday and we cited the 10-year CapEx holiday when we were in the throes of building this generation constellation. I want to say, in 2018, we were saying we're going to throw out -- we're going to have a CapEx holiday for a decade, and we're going to throw off a lot of cash and we're going to buy in the shares and pay a dividend. In 2018, investors [ says ] like, good luck. I hope it happens in the and thankfully, it has happened. But the background on the 10-year CapEx holiday was just by observation. We observed that our last generation constellation lasted 20 years and was working fine when we decommissioned it. So that was a plot point, if you will, from which we said well, it's going to last 20, then we ought to have comfortably a 10-year CapEx holiday. That's separate and distinct from what the accountants tell you, you need to do in terms of your book accounting life for your constellation, and you need a reference point there. When you're just starting out, you need a reference point. And so the design life of this generation constellation was 12.5 years. Notwithstanding, the fact that we thought it would last 20, right, because the last one -- network last we have to 20. But you need to go with something that's document -- well documented, et cetera. So that's what we started with, and then began to accumulate in the 5 years since we launched our first satellite, began to accumulate performance data. We haven't had a failure of a satellite. We launched 5 new spares. And so with 5 years of performance data and the 5 new spares, it becomes -- that analysis then leads you to say, okay, no, 12.5 is not accurate. It's more like 17.5. It doesn't really impact the cash profile. It more closely links up the cash flow profile than our prior useful life assumption did because this would have the current constellation fully depreciated by 28, 35-ish, which is about right, right? If we start building the new one in 2031, that feels certainly more right than the 12.5 years. So that's a long-winded answer to your question but that's kind of how those 2 concepts interrelated.

Got it. We talked a little bit about -- I guess there's always industry questions around the competitive landscape, and you commented on that a little bit. I've heard in the past your public remarks about the so-called commoditization of broadband but it feels that, that's more related to satellite operators that provide commodity broadband, Iridium has never been that. What would you say to people asking questions around Starlink? What parts of your market segment are potentially impacted by Starlink becoming a future competitor even if they were to enter that marketplace?

Right. So where you see competitive development is in our broadband business, which is, again, it's less than 10% of our revenues. And we've -- what we've seen is in certain instances, and it's the minority of the instances, we happen to be used as a primary on vessels. While our offering service is more expensive than what is available in VSAT now. And so a prudent man wouldn't use us as a primary, they would use this as a companion because the issue with any player in the Ka-band, whether it's Starlink or ViaSat, they all have the same Achilles' heel, which is they're susceptible to rain fade and even heavy cloud cover, which means the signal doesn't go through and you have no communication device on your vessel. That's not a circumstance that a merchant vessel could -- can operate under. So you need to have an L-band backup and that's us. So what we've seen in the last couple of quarters is where we're primary, we're being converted to a companion and that has been diluted ARPU a little bit. It's like 3 or 4 quarters of effect. And the key point is we saw that in September '23, they were in the market, and we expected that and build it into our $1 billion growth projection. So it's -- we don't -- that's easily accommodated and not a big deal. As we step through the rest of our business in commercial voice and data, we've been providing high-quality voice services for 25 years and [ VOR ] satellite phones. It's a niche market. There's like 450,000 satellite phones out there but it's highly inelastic, right? There are cheaper alternatives. In [indiscernible] they're cheaper than we are. But like I said, it's inelastic. There's a voice quality. It works anywhere, very good call statistics in terms of blocks and drops. Starlink as they put their offering is that it's going to be regional. So they have a relationship with T-Mobile. It's not global. So right there, it's a different kind of use case, if you will. So we don't see much impact there. I just showed you the IoT numbers, I don't know [ where ] near our IoT business. I told you about the personal communications companies. They're all using our network. It's the fastest-growing segment. So we feel pretty competitively insulated there as well. DoD, they're oldest and largest customer, they terminate their traffic at our -- their gateway in Hawaii, it terminates our signal. So we feel like the moat is alive and well and as strong as ever over the rest of our business.

Yes. And the only comment I would really quickly add to Tom's point is on the telephony side, it's 400,000, 450,000 subscribers that we've built up over 20 years. So it's really, really niche. So these are customers who are looking for specific characteristics that align with our network, they're first responders. They want a ruggedized product. So it's very, very specialized what we're providing for them, and it's a small niche of the subscriber base, basically.

They're not going to use the iPhone?

I don't see that happening. Yes.

I have a couple more, but back in that we are 3 minutes from the end of our time. Any questions in the room? Yes. I'll continue. The add-on -- related to the Satelles add-on in terms of term B loan add-on that you talked about, how large is the impact expected to be on leverage there?

It's like 2/10 of the turn. So as we -- I've gotten questions like, well, did you ever think about backing off the rate of share repurchases? The answer to that is, no. So we would much rather take leverage up by 2/10 of a turn because it's just going to delever that quickly. We reiterate that we're going to exit 2030 below 2x. And we're going to keep our pacing and keep finding the shares, particularly at these levels.

Okay. And then the last one from me, just to return on capital to shareholders. You talked about a 6% dividend increase. I guess you can't comment specifically but if you think about dividends going forward in terms of increases, is it fair to expect for investors that you'll continue to think about and get internal approvals from the Board on potential increases to dividend yield over time?

So I would say when the Board considered a dividend, the key points were that they could increase it over time and that it would be easily accommodated in the next CapEx cycle. So that's -- that was -- when it was conceived, that's they were the benchmark. So yes, I expect it to grow over time.

And the other related point to the return of capital to shareholders is share buybacks, given where your share price is, is the expectation that the pace of that buyback will either continue to be the same or increase over time if the share price doesn't materially change or improve?

Yes. So we certainly like the shares here. I think we're demonstrating that with the tack-on to our term loan, right? We're not going to kind of continuing to buy in the shares, dominates to deleveraging.

Right. That's all I have. Thank you very much.