KinderCare Learning Companies, Inc. (KLC) Earnings Call Transcript & Summary

Awesome. Well, thank you guys for joining us. This is the business services track at the Ultimate Services Investor Conference. I'm joined now by Tony Amandi, the CFO of KinderCare Learning Companies. My name is Judson Lindley. I'm an analyst on Andrew Steinerman's business and Information Services team at JPMorgan. And the format of this fireside chat will be 20, 25 minutes of Q&A for me, and then I will open up the floor to see if anyone has any questions. But thank you for being here, Tony.

Thanks, Judson.

Yes. So we've just kind of passed the first year anniversary of KinderCare as a public company. So I thought maybe just to start, I'd give you a chance to assess what has been -- I think you would probably admit a little bit of a bumpy first year. So maybe take us through the plans you laid out at the IPO and what's transpired since then?

Sure. So I'm guessing everybody knows, but let me take a quick step back. So KinderCare, our biggest focus is early childhood education. So we do that through 1,600 centers, the majority of which are community-based. We have about 75 centers that are on or near site. And we also utilize all those community ones for employers business as well to get them involved in our community centers. And then we also have our [ Creme ] brand, which is a premium brand that's in there. It's about 45 centers that are for those that want to spend a little bit more, I have a little bit different services. And then Champions is our before and after school brand. It's about 1,000 sites at -- predominantly private schools, but some charter schools as well. So -- yes, we're about at the IPO mark about a year ago. So the biggest transpired is we've got 2 things going on really. One, the macroeconomic environment, probably a little tougher than we thought it was going to be a year ago, right? Administration change, some noise about Department of Education, neither one is really applicable to us, but there's definitely some noise around that. And then the macroeconomic environment definitely is hanging over us a little bit in decision-making that's happening for our centers. That said, we know like at our local level, there's things we can do to impact that. And so that's really been the focus in the last 2 quarters of what are we doing at a local level despite those macroeconomic conditions to get those families that are inquiring, and we're still seeing adequate level of inquiries at our centers to get through and really get those enrollments we need to kind of get back on the [indiscernible].

So maybe just to dig a little bit deeper there. I mean, I'm not asking you to split it out evenly because you probably couldn't. But how much of that, let's say, the declines in enrollment do you think are down to idiosyncratic issues at underperforming centers versus the unfortunate scenario that we find ourselves in with the economy?

Yes. Well, it's really hard for us to parse it. So like on one hand, we know that the macroeconomic is clearly impacting us, right? Consumer sentiment is down. Every family of really any means is making decisions about how they spend that next dollar. But what I'd start with is that we're still getting plenty of inquiries at all of our centers in order to get to the occupancy levels we want to. And so despite the overhang over the whole all of our 1,600 centers, when we really look at center by center, we really work with that local one of what's going on there and what could they do better because I've been saying it this week, but like in the end, that one center take away the city because most of our centers aren't in the city here, you got to get 80 to 100 kids within a 5-mile radius to enroll with you. And so you can overcome a macroeconomic environment like this if you're doing the inquiry to enrollment process right and you're doing retention right. And we're doing a nice job with retention. The families that are with us are staying actually slightly better than they did a year ago. So the families that are with us are seeing the value and sticking with us. It's been a new student enrollment issue for us. And we're just really trying to lean in on that to help them diagnose where in the funnel part of it, they could do better and really trying to help them do that.

So maybe assuming the macro environment does get better, which at some we hope it will. Maybe talk a little bit more about the things KinderCare is doing at the center level, specifically in your -- maybe your bottom 2 cohorts to improve performance and take occupancy higher.

Yes, perfect. So we start -- let's start with what we call the opportunity region, which our opportunity region is about 150 centers. So it's about half the size of the quintile. It's predominantly Quintile 5, which is our lowest performing group of centers, a few from Quintile 4. And we carved that group out at the start of our Q2, so back in April to really focus on them. The 2 things going on there. We're predominantly new center directors. So we need to kind of speed up their training and their focus and then really working that inquiry enrollment funnel. We gave them and kind of testing out a couple of new diagnostic tools to help them with that inquiry enrollment funnel to really help them, and we're seeing some nice lift there. So opportunity region, despite the company being down occupancy, opportunity region is actually up in occupancy and is kind of through Q3 here, our fifth quintile is actually up about 200 basis points year-over-year despite the whole one down. So definitely have some optimism in what we're seeing there. Quintile 5 is the one of our kind of 5 quintiles that isn't back to pre-pandemic levels either. So coming into the year, it was about 10% behind. Quintiles 1, 2 and 3 were all surpassing pre-COVID and Quintile 4 is about right at. So there's a lot of opportunity there. Obviously, the acronym again, but to get that up to better levels. That said, we think we can spread that to all the rest of the centers, too. So we've had a big inquiry to enrollment focus throughout the mall. Coming into about a year ago, we really started rolling out a lot of new tools for both our center directors and families. We have an occupancy whiteboard that's digital that really helps the center director and district managers know where their future spots are going to be opening, so they know where they can really focus more. We've made a lot of improvements to Family Builder, which is our sales force tool we use to -- use the inquiry to enrollment funnel to give the center directors a lot of help with that. We've done things like online scheduling, which sounds super simple. But if you rewind a year ago for us, you had to call a center director and be by their calendar and your calendar to schedule one. Now you can just do that online, something like that, that takes time to get through the process because center directors were using it, but they'd use it and they'd open up their schedule from 10 to 11 and let families choose 10 to 11, and that's not really the point of having that system. So it's kind of getting them to buy into the process of like open up your whole schedule, it will be okay, and they'll let families choose when they come to that. So we're going through a lot of that adoption and kind of fighting some of the past things when everybody used to walk in our call and it's 2025 going to 2026, that's not what families do anymore. So trying to give them a lot more tools and then leaning in with more to get them -- get those enrollments higher.

Definitely understand how that could lead to higher conversion. Maybe to take a step back again to something that's maybe a little bit more out of your control. The other dynamic with the third quarter earnings was the subsidy business. So maybe just start and sort of talk to us about what actually happened in the third quarter?

Sure. So I'll take a step back even from the third quarter. So our subsidy business is about 1/3 of our revenue. And so that comes at the individual state or local levels. The majority of that money starts at the federal level. So the federal block grant gets pushed down to the states, the states decide what they want to do it. They sometimes give the state level, often push it down to lower levels. And at that point, the states are making determinations on what they're going to reimburse for reimbursement rates, how many spots are going to open and what the income level they're going to have that needs to be below to cut into that. So year-over-year, the beautiful bill kept the federal levels flat which is good for us. Of course, we'd love higher, but it kept them flat. We've got a couple of years, 2012 through '16, that whole run, the block grant was pretty much flat, and we are consistently growing subsidy over that time period. '18 and '19, it was flat, and we actually grew 6% in subsidy in '19. So it being flat is fine. We can take market share there, and we feel good about that. So flat is a great start for us. From there, the states determine do they want to add some more money in or not from their local -- their own coffers. So Nevada is one state, I know off the top of my head that doesn't add anything, which is fine. They have a nice program there, and they use the federal dollars and don't add anything in. Indiana was one that over the last couple of years was actually kind of the highest contributing one out of their own state dollars. So what happened with Indiana was they went to reconcile their budget this year with all the things going on in their state and made the determination to cut back both on rate and spots, which doing both is unprecedented and for either one that they did were both unprecedented things we hadn't seen. So on rates, they cut back rates depending on age between 10% to 30%. We've never seen a rate cut like that by a state. And then they cut about 13,000 spots. And those 13,000 spots, just due to the turn you have at back-to-school with kindergarten going out and people moving out during the summer happens really quickly. So that's pretty much all played through all the way by September. So that impacted us about 1,000 subsidy students by the end of September and all came pretty fast and quick test. The follow-up question you want to ask, so I'll just answer it for you is we don't see -- there's not very many other states that are that far over their skis like Indiana was. New Mexico is one that is kind of leaning into it a little bit more. We don't have almost any centers in New Mexico, but New Mexico is actually going to universal child care. So they're actually having a program where chunk is virtually free for everyone at certain centers. So we actually just applied with our few centers and got accepted. So starting Jan 1, we'll be part of that program, which will be great. We only have a couple of centers there. So New Mexico is one leaning out over it. The other thing that happened in Q3 was there's a couple of other bigger states for us, Arizona and Texas. They both put freezes in place. And so as they're reconciling and figuring out what they're going to do with their budget, they put a freeze in place basically saying like we're not going to give any more vouchers out for a time period until we figure this out in a good way. We're past that now. They've unfrozen, so they're giving out new vouchers. And both states have actually said they're going to put a little bit more of their dollars in going forward in the next 2 years, too, which is a great result.

And the reconciliation process for states outside of the 3 you mentioned, and I should know this. But we're sort of past that point?

Yes, exactly. Yes. So yes, we're all past that. And so we have pretty good visibility into where they're going to be as far as rates and number of seats going forward.

Maybe to pick up on what you mentioned with New Mexico. Obviously, there's a lot of different ways to do a universal pre-K or universal ECE program. So my first question is, what do the reimbursement rates look like? How many seats are there in New Mexico? And then I guess, maybe just add a little context around maybe another state that isn't as favorable or what makes a program more or less favorable for a [indiscernible] provider?

So New Mexico will be interesting, right? It's really the first universal childcare we've seen in the states outside of a few minor local levels. It's really the first one we've seen, so it will be interesting to see how they go through it. So they are, like most ones do in universal pre-K, doing mixed delivery, also kind of referred to as parent choice. So they might do some at public schools, but also opening it up for private providers. Virtually every time they do that, they have an application process. So they don't just let you go wherever you want. You got to apply as a center and get accepted into the program so that way the state or local municipality can hold up their level of quality. So for example, we've done that in New Mexico, and we'll see how many spots we get in that program starting next year for that one. As far as universal pre-K, I'd say that it's kind of the same thing. Majority of the time, states right away or quickly get to the place where it's mixed delivery and open it up for private or they use public for their kind of pre-K or [ TK ] depending on what you want to call it and get to that point. Reimbursement rates for both those programs are interesting because for both those programs, whether they're doing it public -- the public ones or with us, it's only a few hours in the middle of the day. And so -- which is great. And we can do that, and we love doing that in the states that make sense. We love those programs because what usually ends up happening is, call it, 4 hours in the middle of the day, really great for it being free, actually more of a pain for most parents than anything else, if that's all you're getting. So we'll do that, Georgia is a great example for us. We've been doing it for years in Georgia. We'll do universal pre-K under their program for 4 hours in the middle of the day, and then we'll do what we call wrap care in the morning and afternoon around that. And by the time we do all those things, we're completely getting back to a normal private pay rate and serving those families for a full day, which is what they need to be at work.

And do you all participate in New York City?

We do at one of our centers just a little bit. So we only have a couple of centers here in the city.

So I might as well ask just because it's a topic amongst investors and obviously, in the news, our new mayor or incoming mayor has ideas about universal childcare. I guess, do you know anything about those proposals yet, what that could look like for the city?

I have -- sorry, unfortunately, I'm not up to date on that one, just given our low mix here. It's not one I'm up to speed on that.

I think the answer might actually be that there isn't much out there...

Okay, very...

I didn't know if something I don't. I guess pulling this all together in aggregate, the question on people's mind is when do you get back to positive enrollment growth, recognizing we talked about a lot of factors that are out of your control. Is that 2026? Or should we be thinking more in 2027?

I guess I'd frame it in this way. Coming out of back-to-school, that gives us kind of a band of likely outcomes through May of next year, right, within a few hundred basis points. So obviously, that means there's a little bit of climb from negative out to May for us to get out of that. The holidays is a big gating period for us. So holidays is a time when families usually have a little bit of time off and they can think through their decisions. So we definitely see some change that happens there, hopefully, in a positive way where they're coming to us. January is also the highest infant enrollment period as well. And so once we get through that, we'll have a lot better feel for how we'll look at least through May, and that will really tighten that up. And then summer is a new period and then back-to-school again in about a year is another big period for us as well. So every week from here all the way to May, we're going to grow incrementally. We're going to go add on a few net students all the way until May. May is always our highest enrollment period. So we have opportunity to break our curve and snap through. It's going to take some time. Like there's not a big period really until back-to-school next year for us to make a dramatic one. But every week, we think we can make a little bit of traction towards it and get there.

And maybe just to touch quickly on the fourth quarter. I know that you guide to an occupancy rate year-over-year, and that's down 2% now for the full year. Could you just talk about what that actually implies for enrollment growth relative to what you did on full-time enrollments in the third quarter?

Yes. So usually, they go -- like as I think of our guide to start the year, they're usually pretty tight. As the year goes, they tend to drift apart a little bit. The reason is, is because we're trying to meet the community needs at a center and adapt our classrooms. So we change classrooms as we change classrooms, that changes our capacity. And so we're trying to change those a little bit. So I'd expect it to be off a couple of 20, 30 basis points from enrollment to occupancy, but it's pretty tight.

Okay. All right. That makes sense. The other thing that you talked about on the third quarter call as it relates to 2026 is pricing and that you expect to benefit from higher tuition rate increases in 2026 relative to what you did in 2025. Could you just maybe help investors think about that or get comfortable with taking a higher tuition rate increase in the backdrop of where we are with enrollments?

Yes, of course. So I'd start with just our process for what we do. So we do price increases at a center level and even at a classroom level, but really at a center level predominantly. So we are looking within our 4 walls at lots of things. The kind of 2 biggest ones is our own occupancy. So where are we at as far as volume, but then also engagement. So we work with Gallup and do engagement surveys for both our employees and our families, gives you a really good feel about how that center is doing. If the families and employees are more engaged, there's a lot more stickiness to everybody involved, less engagement, less stickiness. We've seen that -- it's a good thing to factor into price. Outside our walls, our competition levels, competition pricing are kind of the 2 big ones. General demographics, too, like if we're seeing at that local level, something shift, we'll think about that in our pricing. So we build that pricing from there and then obviously, it comes together collectively. So we feel good about each one of our individual pricing. We're putting in those factors despite the macroeconomic environment, we know at each individual level where we should be. And we've been pretty good at that private day one and able to pass that along. The next thing I'd say is -- so we're going through that right now, and that's why we kind of didn't give you anything specific for next year yet. We'll put those rates in on January 1 for new students and age-ups. What that does, and not that many in the industry are doing that yet, but what that does is when a student starts, they're almost always going to pay the most they ever pay that week for the rest of their time with us because as they age up, their prices drop because of student teacher ratios, and we can embed a 3% to 7% price increase, and they still pay less than they did the week before when they move up in the classroom. And so come September, we'll have some price conversations, but we're in the teens as a percentage of our families actually having a real -- your price is going up next week conversation in September. And so it lets us really embed those prices a lot easier going forward.

And I guess just to make the delineation between private pay and subsidy, is your pricing strategy any different from what you just talked about for subsidy? And do you have more certainty about subsidy since the funding is pretty much set at the state and federal level for next year?

Yes, exactly. So we have a good feel of how subsidy rates are going to be for that. On private pay, we'll know here pretty soon. So coming into the year, we'll have a good feel on private pay -- on overall rate as well as private pay, of course, but overall rate, we'll be able to guide to that. And the one thing that did impact us this year, right, was mix. So we'll obviously go into the year with expectations of knowing where the private pay rate is, know where the subsidy rate is, our expectations with how each one of those student counts are going to go. This year, our subsidy rate was lower than our private pay one. We knew that coming year coming into the year, we actually grew subsidy students more than private pay. And so that mix pulled us down. We've had a number of years where subsidy rate overall is higher than private pay. So that's not -- that was just a happenstance this year.

Another regulatory question or related to the regulatory environment. You've talked about the Employer-Provided Childcare Credit that was enhanced with the One Big Beautiful Bill Act. I ask about it every time I talk to you guys because I think it's interesting. But I guess my question is, have you integrated that into client conversations? And have you seen any traction?

Yes. So it's in every one of our client conversations. So we are attacking it with our current clients that are doing Tuition Benefit+. So let me step back really quick for everybody. So we refer to tuition benefits. So tuition benefit is our program where we're offering a discount to families at a provider, a client that's across the nation to go to any of our KinderCare centers. It's a great option for us to provide a discount because we've got a captive audience that they partner with us with marketing on, and we know those families are stickier than other families. So the discount is a good ROI for us. What we pushed the last few years is what we call Tuition Benefit+, and that's where providers are also chipping in. So we've got a couple of big providers across the United States. They're chipping in an extra 20%. So the family is paying just 70% of market rates. We're getting reimbursed that extra 20% every month by that provider. And so we're just only chipping in our 10% discount in that example. So I say that to -- we're utilizing in all our tuition conversations, tuition benefit conversations. We're going to our current providers and being like they're Tuition Benefit+, and we have one that was doing a 10% kick in and like, hey, the numbers basically play out. You can go to 20% for your families and you're seeing out of cash next year for -- because of this new 45F and they're going to do that, which is great. So now nothing directly to us, we're hopefully going to get more families from that because now they're paying 70% instead of 80%, and we know they're super sticky. We're utilizing that in conversations to build centers, too, because they can use that to build centers. We're utilizing it for new sales also to try to get them to jump to Tuition Benefit+ right away rather than tuition benefit. So we've got a little bit of an uptick. I think they've got to get through a Chief HR Officer, usually procurement and a CFO, and they're the worst part to get all the way through that. So we know it's going to take a little while and it doesn't go in place till January 1 yet.

Okay. And I know it's early days, so you may not have enough of a sample size to say, but is it smaller clients that are more receptive to this, just given the size of the credit? Or has it become bigger?

So the one switch is actually a decent sized client, and -- but it should impact everybody. I mean we've got -- we definitely have tuition benefit. We have one Tuition Benefit+, for example, they pay 90%. So they pay it all, right? So it's free for their -- it's a little small medical center and they pay completely for their childcare one. So for them, great, probably maybe not much of a win for us, but for them, great. And so we can utilize that one to talk to others about like, hey, think about getting up to 40 and 50 on a smaller one where their costs don't spend quite as much. But on the bigger ones, it's a great option, too.

So bringing the discussion together in full service, and I guess this is for the whole business, but the majority of your algorithm pertains to full service. You laid out a medium-term algorithm at the IPO. I think on the conference call, you said you're still confident in getting back to that. So maybe just talk to us about each of the individual components.

That would be great. So yes, we laid out kind of 5 parts of our revenue algorithm. So I'll start with the ones that are basically on and think they'll continue to. So one is our B2B business. So we think of our B2B business about our on-site centers as well as our Champions brand. So we're really on the Champions before and after brand, selling to presents -- not presidents, to superintendents and principals to get into that business. And so we really consider that B2B, and it's that same leader running both of those. We put a 1% to 2% algorithm on that as far as revenue growth, and we're hitting the lower end of the range. We're right at 1% now, and we're adding about 200 new sites there and confident we'll be able to continue that going forward. On our greenfields, also a 1% to 2% algorithm there. Next year, we'll be in the mid-20s for a number of greenfields. This year, we're in the teens. That was kind of constrained by some capital decisions we made during COVID. It takes a little over 2 years once we say go on a center to get it up and going. So we knew we'd be in this place, but feel good where we're going to be next year and even have really good purview into 2027 on where that's going to go. So we feel great about that. Tuck-in acquisitions is another 1% to 2% lever, and that's one where we are kind of low 20s for acquisitions last year. We'll beat that this year and don't see any reason why we don't beat that going forward. The market is really robust, incredible EBITDA multiples, often 0 to 1x EBITDA because we're partnering with a REIT to buy their center, and we can capitalize that and buy at a really low one. So we're at about 1x revenue there, too. So feel good about that ongoing. The 2 biggest ones are price and volume, right, occupancy and tuition rate. So tuition rate at 3% to 5%. This year, we'll be outside of that based on everything we've talked about today. This is really the first year in a long time we've been outside of that with kind of some of the subsidy pulldowns as far as mix and what subsidy rates done. We feel good about getting to that in the next couple of years at the latest, but we'll talk about that a little bit more as we give guidance for '26, but we're just not far off from that. one feel good about getting back -- so occupancy is really the one that's hanging out there a little bit. And you kind of asked when we think we'll get back. '26 is probably a stretch to get back in the 1% to 2% next year. Paul said '27. And I think with all we've done, there are focus on inquiry enrollment and some of the other changes we've made. We announced we promoted Lindsay Sorhondo to Chief Operating Officer, which is wonderful. I think she's going to do some great things both in the background of the business, but taking some stuff off Paul's plate, letting Paul get a little closer to the business. And then at the same time, we actually took out kind of a layer in our field team, too. So we kind of have East and West in the KinderCare one and have put those 2 still really high-performing individuals in better places at the company, but that's going to let our brand leader get a lot closer and really focus on inquiry enrollment. So we definitely have optimism we can get back there pretty soon.

That's great. You talked about costs. So I'll shift to margins. Obviously, teacher wages are a big component of your cost structure. So maybe talk to us about the other components investors should be aware of and kind of in the context of you've seen margin compression in the last couple of quarters. So what does it take to get back to expanding margins, which I know was a goal at the beginning of the year?

Yes, absolutely. Yes. Look, I mean, labor collectively is about $0.50 on the dollar of revenue as far as costs. And so that's obviously the biggest one. Rent is about 15% of it. And then all the rest of them kind of add up slowly for food, insurance, landscaping and things like that, none of those add up too fast. The one call out on food, I would make is at centers that get over 25% subsidy, we get reimbursed by a federal food program for all food cost of that center for that program. So that's one that often at a center that has some subsidy students, it actually kind of isn't even a cost for us, which is great. I mean you alluded to it, occupancy is a big driver on operating leverage. So our current calculation was 2% increase in occupancy is worth about 1% in EBITDA margin. Where we're sitting the downward is probably about right, 2% as well. And so it puts pressure on teacher hours, right? You lose a student. You don't get to necessarily lose exactly the number of teacher hours per day that you did because you got teacher-to-student ratio requirements, you got to keep, and we will and want to keep those. So definitely puts pressure on that. And then it puts pressure on rent and some things there, too. So we are next year going to roll out a new labor tool, which we're really excited about. We made an announcement a few months ago that we're partnering with Legion, who partners with a lot of multi-location businesses to build labor tools, and we're going through that sometime probably later in '26, we'll roll out our tool and really utilize a lot better data and insight to forecast better. Legion would probably tell you we're going to use AI. I'm not sold if that's good or if it's just really good insightful data that we're going to use to do that. But a lot more predictive analysis to get to where we need to be with labor. We're going to save some dollars, which makes the CFO of me really happy. Just as importantly, though, we're going to make it so schedules and things are a lot better for our teachers. So I think we're going to really improve our engagement with our teachers too, which hopefully will help with occupancy as well. The other cost that just being thoughtful to is G&A, right? So we invested a lot in this business in '23 and '24 to get to where we wanted to be on the sales and the growth things and some of our digital tools I talked about earlier. We know that we're at the high point there. And so we'll continue to see some G&A leverage. You all go look at our financials and say, you're not leveraging G&A, Tony. We're leveraging outside of our public company costs this year, right? So we had to take on all those as the first year public company with third-party costs and insurance and audit and things like that. Behind that, though, we are doing a little bit of leveraging. I still think we'll keep doing that into the future. And then the last one, which we talked about a little bit, though, is we are confident that we'll continue to create margin enhancement through the difference between tuition and wage. And so we'll be able to drive tuition above our wage rate and that will be able to keep funding the bottom line as well.

Great. I guess maybe pause to see if anyone wants to ask you a quick question. Otherwise, I've got a couple more. Cool. Maybe talk about Champions. You mentioned it in your algorithm. I guess just how big the business is today, what you see as the runway for opportunity? And I guess I'll take a stab. You've never really -- you don't break out profitability between full service and Champions, but just directionally, how it compares to the full-service business.

Yes. So let's start there. always shocks people a little bit, but pretty much all our Creme, Champions or for employers, they're all about the same margin business. So Champions has a much lower tuition price point. They're at schools. We don't pay much rent. The teacher student ratios are a lot higher. So it kind of offsets a much lower tuition and gets a similar gross margin. Champions as we sit here coming out of back-to-school is about 1,100 locations. We just added about 200 new ones, net this year, we're going to add about 120 plus or minus net to the count, which is great. There's -- depending on which one you look at, 60,000 to 90,000 elementary schools, we're currently the biggest private provider out there. The YMCA also does it. And so they're bigger than us. There's a lot of runway out there. There's a lot of -- there's shockingly a lot of elementary schools that don't even have before and after school care. So those are easy opportunities. There's a lot out there that do their self-op. And so easy for us to come in and just take that over for them and the principal doesn't even have to think about it anymore and they love that. And then there are some of the other ones like the YMCA where we come in and guarantee homework is done and add some more curriculum to it, and it's not just play. And we think that can be lift too, and it's definitely selling point and so there's a lot of runway for Champions, and we're confident it will grow double digits well into the future.

Great. Maybe last question for me. Capital allocation. I know you guys talked about your priority being investing in the business organically. But I will ask about have you discussed any more share repurchases as a potential use of capital?

Yes. So a Board meeting last week, and it's a constant conversation, right? Is that the right next step? I can tell you coming out of the Board meeting, we came out with the determination that buying tuck-in acquisitions at multiples that make sense is still a great thing that we should be doing for both the near term, but definitely the long term, continuing with our greenfield strategy and funding this Champions growth is the right thing to do. So nothing imminent right now, but as you would expect, it's an ongoing conversation with the Board.

Awesome. I think that's all we have time for, but always good to see you, Tony, and thank you for being here.

Well, Thanks, Judson. Thanks for having us.

Yes, of course. Thank you.