Shenandoah Telecommunications Company (SHEN) Earnings Call Transcript & Summary

Great. Let me just start with this quick disclaimer. For important disclosures, please see the Morgan Stanley Research Disclosure website at morganstanley.com/researchdisclosures. If you have any questions, please reach out to your Morgan Stanley sales representative. Jim, thanks for coming back.

Yes. Thanks for having me. Great to be in San Francisco again.

Excellent. We like having you at this conference. Let's start with Glo Fiber. Why don't you give us an update on the build-out. I think you ended 2025 with 427,000 homes passed. Are you still on track to substantially completing the build in calendar 2026? And what does the final build look like for you?

Yes, Jon, we're well on track to substantially completing the build. We expect to end '26 with about 510,000 fiber-to-the-home passings and we exited -- the fourth quarter was our best quarter last year. We have good momentum going into this year. So we're in a good place on that side.

And you've talked about terminal penetration rates in the high 30s. What's the time line to reach that target terminal penetration rate?

Yes. In most markets, we get there in 5 to 7 years after we launch a market. Now there's been a couple of markets, very isolated situations where the telco built fiber after we launched service. There, we're likely to probably be getting more like low 30% penetration. The telco is taking some share there. But we have a portfolio of about 30 different markets across our 7 states that we operate Glo Fiber in. We're going to have some markets that do better than others. But collectively, we're very confident that we're going to be able to hit the 37% collectively across all the markets.

You've touched on competition. Maybe let's go there for a second. You've highlighted previously that in almost 90% of your markets, you only have one competitor. How have you seen that number evolve over the last several years? And what's your -- as you think about these new build markets, are you still seeing that type of competition rate?

We are. We're very selective in our underwriting process in selecting markets where we're going to be the first to fiber. So we're going to be the second broadband provider. We're going into dense markets, competing against generally the cable company. We're serving about 80 to 90 homes per route mile. But from a competitive standpoint, if somebody got there with fiber before we get there, we won't go. We'll -- there's plenty of other opportunities. We'll pivot and go elsewhere. So having said that, occasionally, the telco will build fiber after we built. Brightspeed, in particular, about 5%, 6% of our passings built fiber after we entered the market. But we did have a first-mover advantage. We were there first. So we still think we're going to get a return on investment. Probably won't be as high as what we originally planned, but still will be a positive return. But generally, we've been -- we ended December with about 88% of our passings are in duopoly markets. So it's us and the cable company.

Now how do you think about overall pricing power? I mean there's history in this industry of becoming the first fiber provider in the market. You price high, you get some competition, price starts to come down over time. How are you thinking about that intro pricing and the evolution?

Yes. When we enter a market, we're not going in to just compete on price. We're really focusing heavily on the technology. Fiber is a superior technology to the coax cable that the cable guys use. And we're focusing on local customer service. There is an unbelievable amount of pent-up demand with a lot of times with the cable companies when we enter into it. And we pride ourselves on answering the phone in 30 to 60 seconds, no handoffs to overseas, authentications, all done locally. If you're calling from Pennsylvania, you're talking to somebody from Pennsylvania. If you call from Virginia, you're talking to somebody from Virginia. We think that local difference makes a big deal with customers who've been pretty much frustrated for maybe the last 10, 20 years where cable was really the only game in town and there wasn't -- customers didn't have a choice.

Funny you say that because your NPS scores are exceptionally high. I think 61 is what we saw in terms of a recent survey. How does that impact retention metrics?

It's huge. Our customers love our service. And when they do, they're going to tell their neighbors, they're going to tell the family, they're going to tell their friends, and that helps the momentum to adding more and more customers. This is our seventh year now in our fiber-to-the-home expansion. And we've consistently had, I think, some of the lowest churn in the broadband industry, about 1% per month is what we've been averaging over the past 7 years. And that's a reflection upon the quality of service, the technology, the local customer service. And it's also a function of, again, being very selective in the markets that we select to invest in, that we're going to be first to fiber and they're going to be duopoly markets.

So you think 1% is the right number to be targeting long term for yourselves?

Yes, in that range. I'd say low 1s. It will grow somewhat just with the base growing. But yes, I expect it to hover in that. It has for 7 years. So I would expect the next 5 years will be similar.

Great. Switching over to commercial for a moment. You had an incredible 2025, and you're seeing, I think, in the back half, you saw bookings growth almost 10%. What are the key drivers that you're seeing in the market?

Yes. We -- 2025, we had great success in a couple of the customer verticals. Fiber-to-the-tower was a big one. We have very strong relationships with each of the 3 tower companies, and we're getting repeat business, which is -- if you're not providing good quality service to those customers, you will not get any new business. So that's an important part, and we think that will continue into '26. We have a pretty -- I think we have the largest K-12 school market share in our Virginia markets, and we're expanding this now into some of the other states that we operate in. Here, we're getting -- the government subsidizes broadband to the school based upon -- this goes back to 1996 Telecom Act that the FCC put in place. And that allows affordable broadband. So we collect some of it from the school. The rest of it, we get from Universal Service Fund. That's been a growing segment for us as well. We also get a lot of business from other carriers. Again, we have a lot of -- we have 19,000 route miles of fiber. A lot of it is in unique routes that we're the only provider there. And if a customer wants to get from A to B, we may be the only way to connect that. So we've got a lot of wholesale and carrier business that comes through as well.

Maybe if you don't mind, touch on the uniqueness of the network because you mentioned fiber-to-the-tower being a core strength of your business over the last year and expecting to continue. I think many would say that, that's been an area of weakness across the broader market, but not for you and probably speaks to your network. But maybe if you could elaborate on that a bit.

Yes. Well, one is we were in the wireless business in most of the states that we operate in now. We ended up selling the business to T-Mobile back in 2021 for a little bit under $2 billion. So we had built a lot of fiber to the tower to serve ourselves. And now that's serving the 3 national wireless guys as well. In many cases, we're the only provider with fiber to these towers. So it gives us a unique advantage. There's a heavy capital cost for somebody else to build into each tower and build into the NFC. So that's a key factor on the uniqueness. And then just having strong customer relations is very important. I've been very impressed. We recently did an acquisition to expand into Ohio. We bought a company called Horizon Telcom. Putting the 2 networks together, we've become a more relevant customer to the wireless guys. They would prefer to have less vendors versus more vendors, and we can now -- with our 19,000 fiber route miles, we can now cover a lot more of their more difficult -- we'd like to pride ourselves in solving difficult problems of our customers. And in our case, we can cover more towers that are in these very rural areas that they've maybe struggled with in the past.

And maybe talk about churn on the commercial side because it's exceptionally low. I think you've reported 0.6% per month. What's driving that?

Again, coming back to the unique fiber routes and the relationship building.

Any challenges you're seeing across the commercial market?

No. It's a good solid growth business for us. It's not growing as fast as the fiber -- the residential fiber-to-the-home business, but it's been a nice solid single-digit, mid-single-digit growth business for us. Jonathan, we're also starting to hit potentially a new customer vertical as the explosion of AI and data centers, data centers need fiber. And some of these data centers are now going outside of the traditional areas and more rural opportunities. So we have a couple of things in the hopper right now that we're working on that might get us into the hyperscale space to start serving some of the hyperscale customers. We don't really have any of that revenue today. And if we can win 1 or 2 of these things, we think it would be pretty big upside to the commercial business.

Certainly upside to the commercial business. Have you thought about contract structure as it relates to fiber to the data center? I mean are you thinking about using that capital -- taking capital upfront to go and deploy out these builds and then leverage the network into additional revenue over time? Or is this something you're thinking about on a recurring revenue basis? Or is it still too early?

Yes. Jonathan, the opportunities that we're talking about right now would be, I would say, 75%, 80% would be on-net fiber. This is fiber that we've already built. We have excess capacity, excess dark fiber strands that we can lease that meets the needs of our customers. In some cases, again, unique routes gives us the ability to have a little bit more leverage with some of these much larger businesses than what we are and create a win-win situation that they get. They get what they need from a fiber perspective, but we get a balanced contract, which would mainly be recurring revenue going back to your question.

So capital-efficient growth?

Capital-efficient growth. Yes.

Let's talk about the telco and incumbent piece of the business that you've got. Maybe talk about your overall strategy as it relates to both the cable and the telco networks that you operate.

Yes. This -- our incumbent business has been around for many years. It's free cash flow positive. It's a mature business. Generally, our penetration rates on the incumbent broadband side are in the high 40% range. 30% of the passings, we have another -- somebody edged out and overbuilt us. But 70%, we are still the only broadband provider in those markets. Again, we're looking at not very dense markets. I shared earlier that our typical Glo Fiber fiber-to-the-home market, we're passing about 80 to 90 homes per route mile. On the incumbent cable side, it's about 40 homes per mile. So very rural. And the areas that have been overbuilt have been the dense areas. So I would -- that kind of points us that the density per route mile is even lower than the 40 homes per mile, which creates a moat around our cable business and makes it really challenging for a competitor to come overbuild us. In addition, some of the demographics, especially in the West Virginia area, are not very strong, which kind of makes it less attractive. Putting it differently, we're in the business of overbuilding cable companies. We would not pick the markets that are left. We -- they would not be at the top of our list to overbuild just because of the lack of density and the low demographics.

And so maybe talk about any motivation, if any, to upgrade these markets yourselves because obviously, it would be most capital efficient for you to do it versus someone overbuilding you. But it also sounds like you may not see the need to do so given the lack of competition.

Yes, that's correct. We've looked at it, but we -- it's a difficult business case to justify spending capital just to keep your customers. So we think there's plenty of runway for us on the DOCSIS systems that we have today. We can offer up to 2 gig download on all of our systems. That seems to be very competitive even if there is another competitor in those markets. And of course, in the markets, the 70% where it's just us, we even have a little bit more wiggle room there.

And that's talking about fixed network. Obviously, there's been a lot of noise in the market around Starlink and fixed wireless. Maybe talk about what you're seeing in those markets with respect to that type of competitor.

So when a customer calls to disconnect service, we ask where they're going, if they're moving or if they're leaving for another competitor. In the fourth quarter, on the satellite side, I think we had about 50 disconnects related to fixed -- to satellite. So that comes out to about 1 basis point of churn on the Glo Fiber side. On the fixed wireless side, it was about 225 disconnects, which translates to about 5 basis points of churn. So in our markets where we have a lot of rolling hills, we have a lot of mountains, we have a lot of foliage during the spring through fall months, the signal doesn't propagate well to get a consistent broadband speed. So we don't think those markets are going to be -- ever be very effective in relation to fixed wireless and satellite. The Ohio market is a little bit flatter. That's a small portion of our network that there may be a little bit more risk in those markets. But at least in the 80% to 90% of our passings, just the geography benefits us and kind of minimizes the risk of that.

And then maybe just touch a little bit on your general approach to subsidies, particularly as it relates to these markets or new markets that you might consider entering?

Yes. So we were granted about $150 million in government subsidies. Going back to 2022, America Rescue Plan had dedicated a lot of money for subsidizing unserved areas. And as part of that, we started building -- generally, we look to build -- get grants around our cable areas to kind of more of a defensive play, but knowing that it would also provide a nice upside opportunity on growing units. We've completed 22,000 of the 24,000 passings in the incumbent markets. The state of Virginia is substantially complete as of the end of the year. And we have a small amount to go in West Virginia to complete the government grants there. But Jon, it's been a great growth engine now that we got the 22,000 passings up. We're getting to roughly about 45% penetration after 5 or 6 quarters. Our oldest cohorts, we're already over 60% penetration. So a lot of upside. I think this is a big reason why when you look at our incumbent broadband and cable RGUs, you're seeing continued growth. It's not substantial growth, but it's -- the needle is pointing up, not down like it is in a lot of the other cable providers that are reporting their numbers.

Let's talk about your capital structure. End of last year, we heard you introduced ABS into your capital structure. Maybe walk us through what the rationale was behind that deal.

Yes. For us, it was really -- we were motivated not to maximize our capital, but to minimize the cost of the capital. So thanks to Morgan Stanley and another bank that led us through the financing exercise, we were able to reduce our cost of debt by about 170 basis points. That will save us about $11 million annually each year in cash interest. So it was a great success. We only borrowed through the investment-grade tranches. We didn't go into the sub-investment-grade tranches. We're planning to be free cash flow positive starting in '27. This is the last year of our construction phase, both on the Glo Fiber side expansion and also on the subsidized government grant passings that we just talked about. So we didn't have an unlimited need for capital. We're fully funded today and have access to capital above and beyond what we need. But it's -- the beautiful thing about ABS is it grows with you. So as we add more Glo Fiber customers and more revenue, our borrowing base keeps increasing. So that will give us a lot of optionality once we turn free cash flow positive to either return value to shareholders, maybe participate in M&A. We'll do whatever is right to really focus on increasing shareholder value.

And so you have certain assets that are already in the ABS facility. You also maintained your revolving credit facility outside of the ABS program. Maybe just talk about the flexibility that those 2 facilities provide you and the ability to keep both programs outstanding for the medium, long term.

Sure, sure. Yes. So we contributed into ABS 100% of our commercial fiber business and about 300 of our 427,000 Glo Fiber passings. It was the mature passings that were generally EBITDA positive and free cash flow positive in the markets they operated in. So that capital we raised there, we can distribute to the rest of the organization to continue and complete the build that we're in the process of finishing up this current year. And that's also where the revolving credit facility comes into play. It allows us to fund some of that construction to get us through the last year of our expansion plans. But as we think about '27 and beyond, again, our ABS investment-grade capacity is going to keep growing. We're going to be able to use the proceeds there to -- of roughly our incremental borrowing rate through our variable funding note program is about 5.5%. That will -- we'll be using that to pay off the revolving credit facility, which has about 100 basis points higher borrowing rate. So there's some incremental benefit in continuing to reduce the cost of capital, not only today, but in the future as well.

And so you mentioned that you didn't borrow as much as you could have. How should your investors think about leverage in the near term and then beyond? And what are you managing to, to the extent you want to go into that?

Sure. We expect to be -- this will be the last year of borrowing as we -- before we turn free cash flow positive next year. We expect the net leverage will peak around 5.3x, 5.4x by the end of the year. And then just through -- without paying down debt, just through organic growth of EBITDA, that number should end up around 3x as we get 4 or 5 years down the road just through organic growth.

And maybe to the extent you can, just give investors a sense for 5.3x, 5.4x relative to some publicly traded peers may sound high. Relative to what you could have achieved, though, it's actually quite low. And so what does that say about the fiber business that you're operating in and the efficiency of both your asset base, but then also the financing that's in place?

Yes. We passed on the sub-investment-grade tranches, which would give us another 2 turns of borrowing capacity. And with ABS, we can recycle as we put more passings in, again, 127,000 passings are not in the facility today. plus we're building another 85,000 today. So eventually, they're going to make their way shift -- we'll be transferring those over into ABS to give us even more borrowing capacity. I would expect we'll probably do another note issuance probably towards the end of '27, beginning of '28, which will free up even more capacity. So as we get into '28, '29, we're going to have a lot of capacity above and beyond our needs that could be used for a number of purposes. It creates a lot of financial flexibility. Again, whether that's paying down the revolving credit facility, returning value to shareholders, participating in M&A, we'll have a lot of options that we can encounter at that point.

And the ABS debt investment grade rated, correct?

That's correct.

Great. Let's transition off the balance sheet, talk about overall corporate strategy. A lot of chatter around M&A, consolidation in fiber-to-the-home. How do you see the world at Shentel?

Yes. In '26, as we speak today, we're very focused on completing the build and turning the page to positive free cash flow. That's first and foremost on our thought process. Along those lines, Jonathan, we announced a reduction in force last week to resize the organization for the post-expansion phase. That will save us about $12 million annually. About half of that will be CapEx, capital labor, half will be operating expenses that we'll get the benefit of. But as -- we'll continue to look for M&A on an opportunistic basis, which in the short term, that will probably limit us to more tuck-in acquisitions, fiber-to-the-home tuck-in acquisitions in the immediate area that are adjacent to our market, which tend to have a higher amount of synergies and are very accretive. But once we turn free cash flow positive, we get out to '27, '28, I think we would be more open to more transformative M&A. And we are willing to -- we'd be willing to go outside of our core area. We'd be looking to potentially -- scale matters a lot in our industry. So we'd be willing to maybe perhaps merge up with other middle market fiber companies to gain some scale. So we -- I think we're going to have a lot of options in front of us. The telecom world has a way of repeating itself over history. I've been in the business for 30-some years. I started on the wireless side. Wireless back in 2020 -- 2000, there was 20 -- I go to a conference, there'll be 20 CFOs there for different publicly traded wireless companies. We're down to 3 as we speak today. Cable heavily consolidated and the commercial fiber business heavily consolidated. So we think the fiber-to-the-home consolidation is just beginning. I think we're in the early innings of that. We think there's a lot more activity that's going to occur. And I'm not sure which way we're going to end up going with it, but we have a lot of options with our flexible capital structure that we just talked about. And we're -- for the fiber-to-the-home providers outside of the very high end of that market, our 500,000-plus passings are pretty significant in that. There's a lot of companies, a lot of them are private equity backed that have somewhere between 100,000 and 200,000 passings. At some point, those companies are going to be looking for liquidity and perhaps that could be a landing spot for us.

We've talked about you operate a few different business silos between Glo Fiber, the commercial business and then the incumbent business. As you think about potential acquisitions, is it limited to fiber-to-the-home? Or would you explore either multipurpose assets that are out there that look similar to yours or are exclusive to commercial per se?

We do operate multiple businesses, multiple technologies. But I would say at this stage of the game, we're very focused on fiber-to-the-home. So the majority of whatever we buy would have to be fiber-to-the-home. Otherwise, we would probably pass on it.

Makes sense. You also have a history of divestiture going the other direction. You sold your wireless assets in 2021, the cell towers in 2024. We just mentioned you have multiple businesses. How do you think about keeping the asset as one versus finding other homes for potential pieces?

Yes. At this stage, we don't really have any, what I would consider noncore assets that would be for sale like the towers ended up being. So yes, we're looking at the business that we're -- this is all broadband. This is all gigabyte services, whether we're serving you with fiber, serving you with coax cable. So we don't feel a need to separate. But we do have some, again, optionality in the structure of how we're set up that if we needed to, there's some of the mechanics that we put in place to facilitate the ABS. We had to create arm's length agreements between the cable business and the fiber businesses. So some of that is now in place that if there was a need to separate down the road, we kind of have some of that plumbing work already done today.

And it would be remiss not to mention potential joint ventures. We see some operators out there that are engaging in those. You could argue the motivation is around more off-balance sheet deployments. How do you think about joint ventures? And does that play a piece of the broader equation here?

Yes, Jonathan, let me start by saying we are one of the early adopters of investing in fiber-to-the-home. We started in 2019. I think we were ahead of the curve there, and I think we're smart to do so. I would say we're going to be one of the few, if not the first, to kind of complete their stated goal and their stated build and cease expansion. And I think we're going to be smart to do that now. What we see is left to be built of fiber-to-the-home is the quality is just not there of what we saw in the early phase of our construction. Either the competition is not there. We're not going to be first to fiber, which strays us away. The density is not there or even if the density is there and the competition, there's nobody else a fiber provider, the demographics tend to be really low. So for those reasons, we have -- we don't need an off-balance sheet financing focus. We think the industry -- the fiber-to-the-home industry is going to shift from all this organic growth to more of a consolidation phase. And I think the next 5 years is going to be fascinating. It's going to be very exciting.

Let's go over to financial outlook, and we can end there. 2026, you've put out guidance, I believe it calls for 4% revenue growth, 12% EBITDA growth, which implies substantial margin gains. You touched a little bit about the recent RIF, but maybe talk about what goes into the EBITDA equation for the next year or so.

Yes. So when we add a fiber customer, there's virtually minimal operating expenses associated with that from a network perspective, which creates very high incremental margins. There is some sales and marketing expenses related to advertising, related to commissions. But I went back and looked at our incremental EBITDA versus our incremental revenue in our Glo Fiber business from '24 to '25. Our incremental margins came out to 77%. So that shows the operating leverage in these fiber networks. There's just an unlimited amount of capacity that you can add more and more customers onto it. And whether that's on the residential side or the commercial side, the equation is very, very similar. So that's going to drive EBITDA margin expansion here for the next 3 or 4 years. I've shared before, I still believe we'll probably be growing our adjusted EBITDA margins by 300 to 400 basis points in the next couple of years. We look like we're on target to do that.

There's a few companies out there talking about AI. Apparently, it's a big craze. How does AI play into the Shentel equation?

I'd say twofold. I think there's a revenue opportunity, and I think there's some additional expense savings. The revenue opportunity gets into hyperscalers building data centers where we have fiber and we could serve those data centers. And we talked about that a few minutes ago. We haven't won any business there yet, but that is upside to the plan if we're able to win 1 or 2 of those deals. On the expense side, we recently -- last year, we launched some AI initiatives to improve our customer service and the technical side of customer service. We're -- we've now started investing in half a dozen additional projects this year that will be really focused on rolling less trucks, answering the phones more efficiently, anticipating network problems before they actually occur and using that intelligence to get in front of maintenance to avoid the network going down. So that's -- we're not spending huge amounts of money. I know there's a ton of money being spent industry-wide on that, but Shentel is not leading the way on that side. But we are trying to spend smartly to gain some efficiencies.

And how should we think about capital intensity long term? You've talked about completing the build, telecom industry has a history of continuing to be capital intensive even when builds are largely complete, but it does feel like fiber-to-the-home is going to be a bit different. So maybe talk about longer-term capital intensity for Shentel.

Yes. On our residential business, both the fiber business and the cable business, we expect the capital intensity to land in the 15% to 25% range. For ' 27, we're likely to be closer to the 25%. And a lot of that is due to the fact that we're a greenfield overbuilder on the fiber side. So when we win a new customer in a new market, generally, we have to do a drop, a fiber drop from the curb to the customer's house. That costs us $750 to $800 to connect that customer. If that customer moves and somebody else moves in and we have to go back and reconnect, the reconnect cost to where an existing fiber exists is only about $300, so significantly lower. But in the near term, as we're thinking just ahead to '27, we're probably looking -- targeting to kind of land around 25% on the residential business. And then on the commercial business, the commercial business is always going to have a higher capital intensity rate just because every commercial customer requires some degree of capital. Generally, we look at that as a function of the revenue that we're getting, and we try to get our money back within, say, 36 to 42 months. The near net stuff, sometimes we're getting it back within 12 to 24 months. But some of the recent wins that we've had, especially with like the cellular guys, there's a little bit more off-net that we have to go to, to connect the customer. So I think that is going to be more in the 20% to 30% range. And again, we're probably targeting the high end of that range for next year based upon what's in the funnel today. So overall, I think if you blend those 3 capital intensities together, we're going to be kind of in the 25% to 30% range next year, which should translate to where we've been spending capital the last couple of years, it will be about 1/3 of what we've been spending recently. And most of that capital is going to be spent on cost to connect, to a lesser degree, on maintenance. One of the areas where fiber providers just have a sustainable competitive advantage over our cable peers is on maintenance. The fiber networks just require very little maintenance. There's very few electronics in the fiber network as opposed to the HFC coax cable network. As a result, the costs are down, the reliability is up, the uptime is up and there's less repairs and outages. And that's also a factor in why our churn is so low is customers -- the network rarely goes down and our customers -- at the end of the day, that's one of the first things customers think about if they're thinking of switching service or not switching service.

You've cited 3 pillars to achieving free cash flow positive, double-digit EBITDA growth, reduction in capital intensity and then the reduced interest cost coming from the financing, all of which we've touched on at this point. I guess how confident are you in achieving that free cash flow trajectory? And what do you end up doing with all the cash?

Yes. We're -- again, exciting inflection point right in front of us. As each quarter passes, I get better transparency and visibility and confidence that we're going to hit the number. On the EBITDA growth side, we've grown EBITDA 16% over the last 5 years. So we think the 12% target is very achievable. On the declining cost of capital, thanks to Morgan Stanley and one of our other bank relationships, we're able to reduce our cost of capital there. So that's already in place. I would say from a risk standpoint, the only risk I see, I think we're on schedule to complete the build. But we use a lot of -- most of our outside plant construction is outsourced. And a lot of these are small businesses. And my biggest risk is these guys don't send us an invoice right away. And some of that CapEx that is done in '26 may actually get paid in '27, and that may move the number up a little bit. But I don't think it's going to be material, but it's something we're monitoring.

How do you think about ultimate return to capital program? You historically paid a higher dividend. Is that something that's on the horizon? Do you think about share buybacks longer term? Maybe just talk what's ideating as you think about return to free cash flow positive?

Yes. We pay a small dividend to our shareholders today, and that's kind of motivated -- the company started as a telephone co-op in the Shenandoah Valley. So about 30% of our shares are still owned by retail. And that dividend is kind of important to them. But it's about a 1% yield today. It's very small. That could be something we would look to increase once we're generating free cash. I think a share repurchase program could be something we would consider. We do have to think about that with the preferred stock because there are some restrictions on putting a share repurchase program as long as the preferred is in place. I think about possibly taking the preferred out down the road. We do have an option in the agreement that if it doesn't convert to common after the fifth-year anniversary, we could redeem that in cash. And again, with our flexible credit facilities, that could be an option as we get out into the '29 time frame as well.

Great. Well, I think that's probably a good spot to end. Thanks again for coming back. And hopefully, we'll see you next year.

Yes. Thanks for having us.