Adeia Inc. (NASDAQ:ADEA) Q4 2024 Earnings Call Transcript

Adeia Inc. (NASDAQ:ADEA) This autumn 2024 Earnings Name Transcript February 18, 2025

Adeia Inc. beats earnings expectations. Reported EPS is $0.47, expectations had been $0.42.

Operator: Good day, everybody. Thanks for standing by. Welcome to Adeia’s Fourth Quarter 2024 Earnings Convention Name. Throughout at the moment’s presentation, all events will likely be in listen-only mode. Following the presentation the decision will likely be open for questions. I’d now like to show the decision over to Chris Chaney, Vice President of Investor Relations for Adeia. Chris, please go forward.

Chris Chaney: Good afternoon, everybody. Thanks for becoming a member of us as we share with you particulars of our quarterly monetary outcomes. With me on the decision at the moment are Paul Davis, our President and CEO; and Keith Jones, our CFO. Paul will share with you some normal observations concerning the quarter, after which Keith will give additional particulars on our monetary outcomes and steering. We’ll then conclude with a question-and-answer interval. Along with at the moment’s earnings launch, there’s an earnings presentation, which you’ll entry together with the webcast within the IR portion of our web site. Earlier than turning the decision over to Paul, I wish to present a couple of reminders. First, at the moment’s dialogue accommodates forward-looking statements which are predictions, projections or different statements about future occasions, that are based mostly on administration’s present expectations and beliefs and due to this fact, topic to dangers, uncertainties and adjustments in circumstances.

For extra info on the dangers and uncertainties that would trigger our precise outcomes to vary materially from what we talk about at the moment, please check with the Threat Components part in our SEC filings, together with our Annual Report on Type 10-Okay and our Quarterly Report on Type 10-Q. Please observe that the corporate doesn’t intend to replace or alter these forward-looking statements to replicate occasions or circumstances arising after this name. To boost buyers’ understanding of our ongoing financial efficiency, we are going to talk about non-GAAP info throughout this name. We use non-GAAP monetary measures internally to guage and handle our operations. Now we have, due to this fact, chosen to offer this info to allow you to carry out comparisons of our working outcomes as we do internally.

Now we have supplied reconciliations of those non-GAAP measures to essentially the most instantly comparable GAAP measures within the earnings launch, the earnings presentation and on the Investor Relations part of our web site. A recording of this convention name will likely be made obtainable on the Investor Relations web site at adeia.com. Now, I’d like to show the decision over to our CEO, Paul Davis.

Paul Davis: Thanks, Chris, and thanks everybody, for becoming a member of us at the moment. I’m happy to share the progress we’ve made within the fourth quarter and all year long, highlighting the power of our enterprise and the alternatives forward. We ended 2024 on a powerful observe with a wonderful fourth quarter, pushed by strong deal momentum and report monetary outcomes. Our fourth quarter income of $119.2 million and working money circulation of $107.5 million had been each put up separation information. As well as, we generated adjusted EBITDA of $80.3 million and an working margin of 67%. We signed 10 license agreements, together with 4 new offers, which had been diversified throughout OTT, shopper electronics, Pay-TV, e-commerce and semiconductors. With our report put up separation money flows, we had been in a position to display the facility of our enterprise mannequin and balanced capital allocation method.

We made accelerated funds in direction of our debt, lowering our steadiness by $50 million and bringing our debt steadiness to $487 million. We additionally initiated a inventory buyback program within the fourth quarter, repurchasing $20 million of our frequent inventory and we invested in the way forward for our enterprise, closing $12 million in tuck-in IP acquisitions. Now let me flip to additional particulars of our fourth quarter. Within the fourth quarter, we signed 10 offers, 9 in media and one in semiconductor. Including new prospects is vital to sustaining long-term progress, and we’re proud to have signed three new prospects for our media portfolio and one new semiconductor buyer throughout the quarter. With its massive and rising subscriber base, the OTT market is certainly one of our major areas of focus as we additional develop our media IP portfolio.

Certainly one of our important new offers within the quarter was a multiyear license settlement with Amazon, a prime three OTT supplier. This deal underscores our skill to ship worth and capitalize on the numerous alternative that exists in OTT. As we famous on the time of separation from Xperi, we believed OTT may very well be a major driver of worth for Adeia on a stand-alone foundation and one which we in any other case weren’t in a position to unlock as a mixed firm. The success we achieved with Amazon is a superb proof level of this goal. Pushed by OTT, our new media income elevated 65% year-over-year. We additionally welcomed Canon, as a brand new media buyer, which was an incredible validation of the worth of the imaging IP in our media portfolio. We see extra alternatives like Canon on the horizon, the place our imaging IP is changing into more and more essential in areas resembling shopper electronics and social media.

As we famous on our final earnings name, early within the fourth quarter we signed a license-agreement with e-commerce buyer, Neiman Marcus, for entry to our media portfolio. E-commerce is a key adjoining media marketplace for us over the following a number of years, and we have now seen an amazing growth of our buyer pipeline over the previous 12 months. We had been additionally more than happy to have renewed our agreements with each Roku and Sharp throughout the fourth quarter, additional strengthening our well-established place in shopper electronics. Over 90% of our prospects renew their license agreements with us, partly attributable to our dedication to sustaining long-term relationships and our investments aimed toward rising our portfolios with improvements our prospects worth. We’re proud that we have now had long-standing relationships with a lot of our prospects, together with some relationships that span over 25 years like Sharp.

The buyer electronics market continues to be a stable income contributor year-over-year with mid-single digit progress, and we count on to see modest progress sooner or later because it stays a constant performer for our enterprise. Our fourth quarter offers with business leaders like Roku, Amazon and Sharp validate our place as a frontrunner in foundational expertise for digital leisure. These offers underscore how our improvements are serving to form the digital panorama and persevering with to energy the seamless, high-quality experiences shoppers count on as TVs have advanced from easy show units into linked leisure hubs. In our semiconductor enterprise, we signed a expertise switch settlement with a brand new buyer that showcases the business’s continued recognition of our hybrid bonding expertise as a vital enabler for high-performance semiconductor units.

It’s price noting that this deal got here collectively shortly following our presentation at an business convention, offering additional validation that our deep involvement in our ecosystems pays dividends. Now let me flip to some highlights for the complete 12 months. Wanting on the full 12 months, 2024 was marked by important milestones. We signed 32 agreements, together with notable wins with Amazon, LG Electronics, Roku, Liberty International, Canon, Panasonic, Sharp, VIZIO, Neiman Marcus, X Corp and Hamamatsu. New prospects are the inspiration for our future progress, and I’m immensely happy with our staff for efficiently signing license agreements with a number of new prospects throughout OTT, Pay-TV, semiconductors, shopper electronics and e-commerce final 12 months. For the full-year, we delivered $376 million in income, with a 62% working margin.

Money flows from operations had been $212.5 million, and our adjusted EBITDA was $234.3 million. Debt discount stays certainly one of our prime priorities. And final 12 months, we paid down $114.2 million of our debt. Since separation, we have now paid down $272.3 million, an amazing achievement in simply over two years. Hybrid bonding was a key driver for every of the 4 semiconductor offers we signed in 2024. We anticipate future success pushed by our hybrid bonding expertise. Business bulletins concerning upcoming merchandise and architectures reaffirm that hybrid bonding is changing into a vital functionality for future variants of excessive bandwidth reminiscence, NAND flash and logic units. For instance, a rising variety of logic corporations have introduced new chiplet architectures resembling Intel and Broadcom, using hybrid bonding.

As we proceed to advance our technique in OTT, we stay centered on defending our mental property. Within the fourth quarter of 2024, we initiated litigation in opposition to Disney throughout a number of jurisdictions, together with the U.S., Europe and Brazil for infringing our patents. Disney is a prime three OTT supplier, and our purpose stays to barter a good and mutually useful business license. Whereas we’re dedicated to pursuing a decision, we’re ready to see the authorized course of by way of to its conclusion to safeguard our IP rights, which may take a number of years. We’re assured in our place and consider this course of will finally additional validate the worth of our improvements within the OTT ecosystem. The power and high quality of our IP portfolios present the inspiration for our future licensing success.

At Adeia, certainly one of our differentiators is our strategically centered R&D. Final 12 months, our portfolios grew a mixed 12%, which was balanced with double-digit progress in each our media and semiconductor portfolios. However portfolio progress alone shouldn’t be our major purpose. Relatively, we intention to focus our progress on the evolving wants of the media and semiconductor markets we serve. We additionally look to take care of and improve the standard of our continually evolving portfolios which is important to each renewals and new prospects. Over 85% of our patent belongings are generated organically by way of our R&D efforts. However we additionally increase our inner progress by way of actively trying to find patent belongings we consider will speed up our progress alternatives. In 2024, we acquired 5 portfolios for roughly $20 million.

4 of these portfolios had been centered on OTT and one was in broadband connectivity. Our most up-to-date acquisition, which closed within the fourth quarter, centered on a singular portfolio of OTT content material supply IP. We consider future income progress will likely be pushed by our continued robust observe report of renewals and importantly, signing license agreements with new prospects in our key progress markets. In media, we count on anticipated declines in Pay-TV will likely be offset by progress in OTT and new wins in adjoining media markets resembling e-commerce, advert tech and gaming. In our semiconductor enterprise, we count on income from our quantity based mostly prospects utilizing hybrid bonding for his or her new merchandise will improve over time and new alternatives in logic will present accelerated progress.

We’re making nice progress in increasing our recurring income stream in our progress markets with a complete year-over-year recurring income improve of 18% in our non-Pay-TV verticals. Given the work we did in 2024 to develop our pipeline and our expectations for progress in 2025, we consider we will proceed to develop our recurring income, and we have now a number of paths to realize our income targets for this 12 months. Being actively concerned within the media and semiconductor ecosystems performs an essential position in defining our IP and enterprise growth technique and preserving us near the most recent business tendencies. We’re more and more acknowledged for the progressive new concepts we deliver to the desk and the worth these contributions should the broader ecosystem.

We had been acknowledged final 12 months on the Digital Parts and Expertise Convention, profitable the Greatest Paper Award, which was on hybrid bonding. And our latest double gold medal win within the Advantage Automotive Awards alerts an thrilling growth of our expertise portfolio in new frontiers. We’re happy to once more be ranked within the prime 75 on the planet for the variety of U.S. patents issued in 2024, with 597 patents granted to us. And once more, we ranked above many different well-known progressive corporations resembling NVIDIA, Broadcom, AMD, InterDigital, Comcast, Meta, HP and Verizon. Our balanced capital allocation method, supported by our robust money technology permits us to proceed lowering debt, repurchasing shares and investing in progress. Based mostly on our pipeline and visibility into renewals and new buyer additions, we anticipate income progress within the mid-to-high single digits in 2025.

We’re excited in regards to the alternatives forward and assured in our skill to ship long-term worth to our shareholders. With that, I’ll now flip the decision over to Keith for an in depth assessment of our monetary outcomes and outlook. Keith?

Keith Jones: Thanks, Paul. I’m happy to be talking with you at the moment to share particulars of our fourth quarter 2024 monetary outcomes. Within the fourth quarter, we delivered income of $119.2 million, pushed by the execution of 10 offers throughout a broad number of verticals, together with OTT, shopper electronics, Pay-TV, e-commerce and semiconductor. Our deal efficiency this quarter consists of 4 new offers, together with thrilling new wins with Amazon, Canon and Neiman Marcus. We’re extraordinarily excited with these new additions to our rising buyer rely as new logos are a catalyst in driving our long-term progress goals. Now I’d like to debate our working bills, for which I will likely be referring to non-GAAP numbers solely. In the course of the fourth quarter, working bills had been $39.4 million, a rise of $4.1 million or 12% from the prior quarter.

Analysis and growth bills had been $14.9 million, a rise of $1.2 million or 9% from the prior quarter, primarily attributable to sure patent portfolio growth prices and attributable to elevated personnel prices on account of increasing our R&D groups. This funding reveals our dedication to innovation as enhancing and rising our IP portfolios is essential to each signing renewals and new prospects. Promoting, normal and administrative bills elevated $1.7 million or 9% from the prior quarter, primarily attributable to larger authorized and different outdoors providers associated to supporting our media and semiconductor gross sales efforts. Litigation expense was $3.8 million, a rise of $1.2 million or 44% in comparison with the prior quarter, primarily because of the timing of bills associated to sure authorized issues, together with our latest go well with in opposition to Disney and attributable to ongoing litigation with a number of Canadian Pay-TV operators.

Curiosity expense throughout the fourth quarter was $12.3 million a lower of $448,000 from the prior quarter attributable to our continued debt funds and the good thing about a decrease rate of interest. Our efficient rate of interest within the fourth quarter was 8.9%, which incorporates amortization of debt issuance prices. Yr-over-year, our quarterly curiosity expense decreased $3.1 million attributable to continued accelerated debt funds and the good thing about a decrease rate of interest. Going ahead, we count on to see additional advantages from a decrease rate of interest as we as soon as once more efficiently repriced our time period mortgage in January of this 12 months, whereby we additional diminished our rate of interest by a further 50 foundation factors, bringing our present rate of interest to SOFR plus 250 foundation factors. This represents a cumulative 111 foundation factors discount within the fastened portion of our rate of interest over the previous 9 months.

Different earnings was $1.3 million and was primarily associated to curiosity earned on our money and funding portfolio and attributable to curiosity earnings acknowledged on income agreements with long-term billing constructions. Our adjusted EBITDA for the fourth quarter was $80.3 million, reflecting an adjusted EBITDA margin of 67%. Depreciation expense for the fourth quarter was $522,000. Our non-GAAP earnings tax fee remained at 23% for the quarter. Our earnings tax expense consists primarily of federal and state home taxes in addition to Korean withholding taxes. Now for a couple of particulars on the steadiness sheet. We ended the fourth quarter with $110.4 million in money, money equivalents and marketable securities and generated $107.5 million in money from operations, representing a post-separation report.

Operationally, the fourth quarter has traditionally been a really robust money technology quarter for us, pushed by the contractual billing constructions of sure license agreements. The fourth quarter of 2024 was additional boosted by not solely robust deal momentum within the interval, but in addition attributable to receiving sure superior funds from a number of of our prospects. With this robust monetary efficiency, we had been in a position to execute on all areas of our balanced capital allocation method which we highlighted throughout final quarter’s earnings name. This included making $50 million in principal funds on our debt within the fourth quarter, as we ended the quarter with a time period mortgage steadiness of $487.1 million. In the course of the fourth quarter, we repurchased 1.4 million shares of our frequent inventory for $20 million.

And with a powerful Q1 2025 money technology outlook, we have now already executed a further inventory buyback within the first quarter, repurchasing a further 760,000 shares of our frequent inventory for $10 million. In the course of the fourth quarter, we paid a money dividend of $0.05 per share of frequent inventory. Our Board additionally accepted a cost of one other $0.05 per share dividend to be paid on March 31 to shareholders of report as of March 10. M&A has been and can proceed to be an operational precedence for us, as we develop and develop our present patent portfolio to deal with evolving expertise tendencies. We augmented our inner R&D efforts by way of making a number of strategic tuck-in patent acquisitions. In the course of the fourth quarter, we acquired patent portfolios related to OTT and broadband connectivity for a complete of $12 million.

I wish to additionally spotlight even with all of the capital allocation efforts within the quarter, we had been in a position to improve our total money and funding place. Now I’ll go over steering for the complete 12 months 2025. We count on income to be within the vary of $390 million to $430 million. This steering consists of the numerous semiconductor deal we famous final 12 months. As a reminder, our agreements are typically comparatively massive and sophisticated, which creates volatility from period-to-period. Total, we see the primary half of the 12 months and the second half of the 12 months being comparatively equal. Nonetheless, our first half may see fluctuations in that interval because of the timing of sure agreements. A notable part of our income outlook is its total stability. The inspiration of our income could be very stable as roughly 80% of our income outlook is pushed by the backlog of present contract agreements, which is a constant profile as in prior years.

Working bills are anticipated to be within the vary of $166 million to $174 million. We anticipate modest single-digit progress for each analysis and growth, in addition to promoting and normal and administrative bills from the present run fee as we proceed to put money into each expertise growth in addition to folks and processes. We anticipate that our litigation expense will roughly double pushed by our latest litigation filings with Disney in addition to our ongoing litigation with a number of Canadian Pay-TV operators. We count on curiosity expense to be within the vary of $41 million to $43 million. This displays the influence of the debt repricing we accomplished in January. Nonetheless, our steering doesn’t ponder the influence of any potential additional rate of interest adjustments issued by the Federal Reserve.

We count on different earnings to be within the vary of $4 million to $4.5 million. We count on a ensuing adjusted EBITDA margin of roughly 59%. We count on the non-GAAP tax fee to stay constant at roughly 23% for the complete 12 months. We additionally count on capital expenditures to be roughly $1 million for the complete 12 months. Wanting again at our efficiency in 2024, I’m extraordinarily happy with our staff and what we completed. We made super progress partaking and shutting offers with new prospects resembling Amazon. Now we have expanded our pipeline with new alternatives in our progress verticals resembling OTT, e-commerce and semiconductor. Our monetary efficiency pushed by report money circulation, debt discount, expense administration and return of capital to shareholders has been excellent.

Our future is brilliant and our outlook is powerful. With the strides that we made in 2024 and since separation, I’m significantly inspired and excited that we will proceed this momentum into 2025 and past. That brings an finish to our ready remarks. And with that, I’d like to show the decision over to the operator to start our question-and-answer session. Operator?

Q&A Session

Operator: Thanks. [Operator Instructions] We’ll take the primary query from Madison de Paola, Rosenblatt Securities.

Madison De Paola : Hello, guys. Thanks for taking my query and congrats on the good outcomes. I used to be simply questioning concerning the income steering, may you present any extra element on what key assumptions will drive the low and the excessive finish of that outlook?

Keith Jones : Hello, Maddie, nice speaking to you. Nice query. By way of our steering that we glance, we, Paul and I actually wished to be form of considerate in how we form of laid issues out. So our pipeline is extremely robust. We made some actually nice momentum that you may see by the variety of offers that we closed on the finish of the 12 months, we see that momentum maintaining. One of many issues about our enterprise, it’s actually, actually centered on self-discipline. And so with that being stated, getting the correct economics is basically what’s most essential to us. And with that being stated, you can have some volatility when it comes to the timing when offers get signed. The pipeline stays robust. We stay very assured in executing on that pipeline.

So whenever you check out the midpoint, that’s form of actually what we shoot to. However we wish to be a little bit bit sensible when it comes to being affected person. And what you might be seeing on the decrease finish is the potential for us taking a little bit bit longer and holding to our level and making an attempt to get to the decrease finish of the steering and getting — I’m sorry, getting the deal economics that we actually need. So the high-end of the steering is issues executing on the velocity what we form of witnessed on the finish of This autumn and possibly seeing some additional progress on that. So we’re very excited. Every little thing that we’ve put and we modeled are issues that we have now clear line of sight at the moment. So we’re very excited in regards to the outlook for that. And as soon as once more, what you’re seeing is simply continued momentum of our success in our enterprise.

Madison De Paola: Okay, nice. Yeah, thanks a lot for taking my query.

Operator: Subsequent up, we’ll hear from Hamed Khorsand, BWS Monetary.

Hamed Khorsand: So first off, may you simply speak in regards to the semiconductor switch settlement as a result of switch often doesn’t imply any kind of a money or licensing.

Paul Davis : Hello, Hamed, that is Paul Davis. Sure, completely. So this can be a deal that, as I famous on the decision, that we’re actually proud of. It got here collectively in direction of the top of the 12 months. We had been at a convention in the course of the 12 months they usually approached us. It’s a expertise switch settlement. And in order that’s a part of our semiconductor enterprise the place we is not going to solely present a license to our patent portfolio, but in addition present know-how and engineering hours for a buyer to actually get them in control. This explicit buyer is targeted on actually excessive efficiency imaging and detection programs. They’ve their very own cutting-edge silicon that they work on and so wished to have hybrid bonding as a part of their choices. And so us — our engineering staff having the ability to work with them is vital.

So it isn’t a switch within the sense of from a price standpoint, we actually do get worth and money from the expertise switch a part of our agreements, typically talking, with these kinds of offers.

Hamed Khorsand: Okay. After which my follow-up was, is there any replace as to how actual risk it’s so that you can get the semiconductor deal signed as a result of now you’re saying Q1 – first-half and second-half would possibly equal the identical, however Q1 and Q2 may be lumpy. So I’m assuming the semiconductor deal remains to be very questionable.

Paul Davis : Sure, Hamed, like and also you’ve talked to us, these offers are very massive. They’re advanced. They take time getting them proper. And typically we do have a push out in time to verify we get the precise economics. We’re nonetheless very a lot engaged with this buyer. And we really feel very strongly in regards to the worth of our IP and the way it’s related to that buyer. So we nonetheless — it’s nonetheless very a lot in our line of sights and our purpose for this 12 months to get it carried out. After which there was a pushout, you’re proper, from final 12 months and that occurs now and again. But it surely’s one thing that we’re nonetheless very optimistic about.

Hamed Khorsand: Okay, nice. Thanks.

Paul Davis : You’re welcome.

Operator: Our subsequent query will come from Matthew Galinko, Maxim Group.

Matthew Galinko : Hello, good afternoon. Thanks for taking my query. I believe you talked about 4 IP portfolio acquisitions in 2024, together with one within the fourth quarter. Are you able to speak a little bit bit extra in regards to the pipeline and possibly the place these portfolios are coming from? Are they form of working firm portfolios which are simply being monetized? Are they IP portfolios which have been handed round form of nonoperating kind corporations? Form of are you able to speak in regards to the origins of a few of these and what you’re seeing so far as alternatives?

Paul Davis : Sure. Completely, Matt. We truly did 5 patent portfolio acquisitions in 2024 and actually with a spotlight once more on OTT and broadband connectivity. The sourcing of the offers have come from public corporations, personal corporations which are smaller, would possibly want funding and that we have now evaluated when it comes to being very excited in regards to the IP and being a match inside our present R&D efforts. And so it’s actually a broad supply of various methods they arrive to us. Our company growth staff is — does outreach and is aware of folks within the business and likewise typically brokers that come and method us as properly. However we attempt to actually supply and be generally known as a purchaser of IP that may transfer shortly and consider the IP and purchase portfolios from quite a lot of totally different of us, and that’s the place these have come from.

Matthew Galinko : All proper. Thanks. And I assume the follow-up to that query is, how do you consider them in opposition to the alternatives that you’ve on the licensing aspect? Do you — are you able to draw like virtually like a direct hyperlink to what you’ve gotten within the pipeline to how that may speed up alternatives within the pipeline? Or is that a little bit bit extra amorphous and also you see future alternatives to deliver them into offers, but it surely’s not one thing that you just see occurring in a six-month interval?

Paul Davis : Sure. It’s a nice query, Matt. We begin with ensuring we have now clear alignment between our enterprise models and the company growth staff on the methods that we’re centered on. Our progress methods stay the identical, which is semiconductors, OTT and the media adjoining markets. So we begin with these classes of the place we may add to the portfolios by way of acquisitions and actually goal particular areas then inside that subcategories the place we determine gaps in our present portfolio that we would have, the place we may actually increase and speed up these progress alternatives. And so OTT was actually an space as we actually tried to give attention to getting these offers carried out. Amazon is a superb instance of that after which additionally the Disney litigation that we filed are proof-points of our perception in each our natural and our inorganic patent portfolios that we have now.

You’ll additionally observe, although that we expanded into broadband connectivity, and we acquired a portfolio associated to that. And that may be an space we haven’t actually talked a lot about earlier than. But when you concentrate on our present prospects, particularly round Pay-TV and their companies and what they’re centered on, that’s a key space for them and a key income stream for them. It’s one which we have now been organically engaged on now for the previous a number of years, and we noticed a possibility so as to add to our portfolio there as properly.

Matthew Galinko : Thanks. And if I could get one extra query in, simply on the steadiness sheet. You’ve carried out plenty of work on getting debt-off the steadiness sheet. So maybe do you’ve gotten a goal — any kind of goal ratios you take note of? Or how a lot debt are you snug holding earlier than you form of decelerate on the — on retiring debt? Or is that kind of — as you get there method?

Keith Jones : That’s an incredible query, Matt. Once you check out the place we began in our journey, we made super progress, as Paul famous, paying down over $270 million in debt and actually deleveraging our steadiness sheet. After which lo and behold, our money is up from the place we began. That’s a heck of an effort. As we proceed to make progress, we see our year-over-year curiosity expense coming down considerably. In case you check out the steering that we supplied, if you happen to have a look at from our first 12 months in ’23 to what we’re guiding for ’25, you’re $20 million in curiosity expense discount, and that’s actual financial savings. And being sub $500 million in debt is one thing that we take satisfaction in. And once we check out our mannequin and the power and the alternatives that we have now, that’s one thing that Paul and I discuss fairly a bit.

There’s a quantity on the market when it comes to debt that we’re snug carrying. If we check out a few of our forward-looking EBITDA that we have now, particularly, within the subsequent couple of years or so — I believe we’d be in considerably of a cushty spot of form of carrying a set debt part after which actually utilizing that further money circulation to actually reinvest within the enterprise and return capital to shareholders. So it’s an incredible query. It’s one thing that we spend plenty of time specializing in. You may see by way of the repricing, managing the steadiness sheet is one thing that we spend plenty of time, and I believe we’ve made some nice progress in 2025 — 2024 and 2025.

Matthew Galinko: Thanks.

Operator: And everybody, right now, there are not any additional questions, I’d like at hand the decision again to Mr. Paul Davis for any extra or closing remarks.

Paul Davis : Thanks, operator. I wish to thank our workers for a profitable 2024 and for his or her steadfast dedication to attaining our targets. In March, we will likely be collaborating within the Loop Capital Investor Convention and the ROTH Capital Annual Convention. We stay up for seeing you at these and different investor occasions and updating you on our progress. Thanks for becoming a member of us at the moment.

Operator: As soon as once more, everybody that does conclude at the moment’s convention. We wish to thanks all on your participation. Chances are you’ll now disconnect.