Sun Country Airlines Holdings, Inc.

Good day, and thank you for standing by. Welcome to the Sun Country Airlines fourth quarter 2023 earnings conference call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question and answer session. To ask a question during this session, you'll need to press star 1-1 on your telephone. You will then hear an automated message advising your handage rates. To withdraw your question, please press star 1-1 again. Please be advised that today's conference is being recorded. I would now like to hand the conference over to your speaker today, Christopher Allen, Director of Investor Relations. Please go ahead.

Thank you. I'm joined today by Jude Bricker, our Chief Executive Officer, Dave Davis, President and Chief Financial Officer, and a group of others to help answer questions. Before we begin, I'd like to remind everyone that during this call, the company may make certain statements and constitute forelooking statements. Our remarks today may include forelooking statements that are based upon man's current beliefs, expectations, and assumptions, and are subject to risk and uncertainty. Actual results may differ materially. We encourage you to review risk factors and cautionary statements outlined in our earnings release and our most recent SEC filings. We assume no obligation to update any forward-looking statements. You can find our fourth quarter and full year 2023 earnings press release on our website at ir.suncountry.com. With that said, I'd like to turn the call over to Jude.

Thanks, Chris. Good morning, everyone. Thanks for joining us today. Our diversified business model is unique in the airline industry. Due to the predictability of our charter and cargo businesses, we are able to deliver the most flexible scheduled service capacity in the industry. The combination of our schedule flexibility and low fixed cost model allows us to respond to both predictable leisure demand fluctuations and exogenous industry shocks. We believe due to our structural advantages, we'll be able to reliably deliver industry leading profitability throughout all cycles. We have much to be proud of in the way we finished 2023. Many of the challenges of the post-COVID period are fading as we move into 2024. Our operations in the third quarter showed significant year-on-year improvement across every major operating metric, D0, A14, completion factor, and mishandled bag rate. For completion factor, we only canceled one scheduled service flight during the entire quarter. A14 increased 13 percentage points year-on-year without an increase in target block times. In 4Q, we produced a declining year-on-year CASMX for the first time since COVID. One of the main contributors to our improving cost and operational performance is that we've been able to staff the airline closer to optimal. In fact, we've seen better staffing metrics across every major labor group. Improved staffing has allowed us to allocate additional peak capacity in scheduled service and to take advantage of close-in charter demand. Maintaining peak schedule allocations has allowed us to fly almost 15% more ASMs in 4Q with adjusted TRASM declining only 8%. We continue to operate in a strong demand environment across all three segments of our business with scheduled service continuing to receive the majority of our growth capacity, a trend we expect to continue into 2024. Congratulations to the entire Sun Country team that delivered record full-year 2023 revenue, full-year passenger volume, and full year operating margin. I wanted to highlight a few things that I'm excited about in 2024. I feel like we have good control of our unit costs. While we will continue to face headwinds, particularly with the heavy check cycle of our fleet, we should be able to continue to lead the industry in cost trends going into 2024. Demand is holding up really well. For 1Q, we face challenging comps as we lap the exceptional yield environment of winter 22-23. For 1Q, we are currently scheduled to fly over 15% more ASMs than prior year with only an expected mid-single-digit decline in unit revenues. These positive revenue trends are mostly a result of growth being heavily weighted to peak period due to lessening staffing constraints. A few examples. In December 2023, we flew 120% more ASMs In scheduled service during the last 14 days of the month as compared to the first 14 days, industry capacity shifted about 3%. In 1Q 2024, March will have about 60% more scheduled service ASMs than January. This was 47% in 1Q of 23. This schedule variability, along with our cost structure, is the mode around our business and is made possible by our multi-segment model. On the fleet side, we have three aircraft in various stages of delivery. These aircraft will be part of our controlled fleet of 63 airplanes by the end of 2Q. We expect to be able to grow ASMs by around 40% versus 2023 levels with lease returns, utilization increases, and up gauging in addition to these airplanes. That should give us two to three years of growth while simultaneously producing exceptional free cash flow yields. That combination rarely happens in our industry. We have many projects that should help us keep momentum on operational costs and revenue trends into 2024. To highlight a few, in 2024, we are able to rebid our credit card agreement, which we expect to result in materially better economics. In 2023, we launched bag scanning technology that has had a material impact on MBR. That solution will be rolled out to outstations in the coming months. We automated our passenger re-accom process, which allows us to take more scheduled service risk during peak periods. We'll launch our app in a few months. Our crew rostering system will transition to PBS later this year. And all the investments we've made in crew training are starting to pay off with the lowest training footprints we've seen since COVID. Finally, our growth trends have very little risk. We have high confidence in our Minneapolis expansion based on prior success. Further, based on ongoing discussions with charter and cargo customers, I expect those segments to be able to keep growth pace with our scheduled service opportunities. And with that, I'll turn it over to Dave.

Thanks, Jude. We're pleased to report strong Q4 results, including an adjusted operating margin of 7.4%, which was well ahead of our guidance. Both our quarterly and full year 2023 results, again, demonstrate the resiliency and earnings power of our unique diversified business model. 2023 was the third consecutive year of profitability for Sun Country, and on an adjusted net income basis, with one exception, we've been profitable in every full quarter since going public in March of 2021. We believe we finished the year with the highest or among the highest adjusted pre-tax margins in the industry at 9.9%. This result was very similar to 2019, despite fuel being 38% higher this year. It's important to understand that our operating model is almost the opposite of the high utilization carriers. Our passenger business flies when demand and unit revenues are highest, and we fly much less in off-peak periods. The modest increase in unit costs this produces is more than offset by the resulting improvements in unit revenue. Additionally, our diversification across scheduled service, charter, and cargo operations leads to resiliency through business cycles. Our strong 2023 results allowed us to return $68.6 million to shareholders in the form of share repurchases. Since 2022, our share repurchases have totaled $93.6 million. I'll turn now to the specifics of our fourth quarter and full year results. First, our revenue and capacity. In the fourth quarter, total revenue grew 8.1% versus Q4 of 2022 to $245.5 million. Scheduled service revenue plus ancillary grew 4.6% to $163.8 million. Scheduled service TRASM decreased 9.1% to 10.73 cents as scheduled ASMs grew by almost 15%. For the full year, total block hours increased by 9.8% versus 2022, and our total revenue was $1.05 billion, which was 17.3% higher than prior year. 2023 scheduled service plus ancillary revenue grew 15.7% to $730 million. Full year scheduled service TRASM increased 7.6% and an increase of 7.2% in scheduled ASMs. Looking forward to Q1 of 24, we're anticipating scheduled service ASMs to grow approximately 15% versus Q1 of 23, with scheduled service plus ancillary revenue growth outpacing the 4.6% year-over-year growth we saw in the fourth quarter. Charter revenue in the fourth quarter grew 8.8% to $46.9 million on block hour growth of 7.8%. A portion of our charter revenue consists of reimbursement from customers for changes in fuel prices, as we do not take fuel risk on our charter flying. Q4 fuel prices dropped by 14% year over year. If you exclude the fuel reimbursement revenue from both Q4 of 23 and Q4 of 22, Charter flying revenue grew 11.1% during the period, easily exceeding block hour growth and producing a 3.1% increase in charter revenue per block hour versus last year. For the full year, charter revenue was $190.1 million, 17.6% higher than full year of 22. Charter revenue under long-term contracts was 80% of the total charter block hours as contracted charter flying grew 25.7% versus 2022. Fourth quarter cargo revenue grew 3.6% to $25.3 million on a 1.8% increase in block hours. For full year 2023, cargo revenue grew 10.4% to $99.7 million on a 5.8% increase in block hours. As you can see, we are continuing to grow at a profitable measured pace. Q1 of 24 total block hours are expected to grow between 8 and 11%, while total revenue should be between $310 and $320 million. Turning now to costs. Fourth quarter total operating expenses increased 7.7% on a 10.4% increase in total block hours. Adjusted chasm declined by 2.2% versus Q4 of 22. During the quarter, we saw solid cost control across the company. As our pilot availability issues have eased, we've been able to achieve our growth plans and we're benefiting from the operating leverage in the business. Importantly, more pilot availability means fewer hours paid at premium rates and lower unit costs. For the full year, total operating expense increased 9.9% in line with total block hour growth of 9.8%. Full year adjusted CASM increased 6.4% to 7.5 cents, with increases in the first half of the year driving this increase. Regarding our balance sheet, our total liquidity at the end of Q4 was $205 million, which reflects $13.5 million in share repurchases during the quarter. As of January 31st, our total liquidity was $234 million. In 2023, we spent $218 million on CapEx, almost $200 million of which was for aircraft and engines. We expect these aircraft to provide the bulk of the passenger lift we need through 2025. As such, we anticipate our full-year 2024 CapEx to be approximately $100 million, and our 2024 year-ending in-service passenger fleet count to be 44 aircraft. In addition to these aircraft, We expect to have three aircraft being inducted into our fleet and four aircraft on lease to other carriers, which we expect to re-deliver to Sun Country throughout 2025. We anticipate strong free cash flow generation in 2024. We continue to maintain a very strong balance sheet. Our net debt to adjusted EBITDA ratio at the end of 2023 was 2.2 times, down from 2.7 times at the end of 2022. Since we do not have a significant debt burden, we have flexibility in how we deploy our cash. Turning to guidance, we expect full quarter total revenue to be between $310 to $320 million on block hour growth of 8% to 11%. We're anticipating our cost per gallon for fuel to be $3 and for us to achieve an operating margin between 17% and 21%. The fundamentals of our unique diversified business remain strong, and our model is highly resilient to changes in macroeconomic conditions. Our focus remains on profitable growth. With that, we'll open it for questions.

Thank you. As a reminder, to ask a question, you'll need to press star 11 on your telephone. To withdraw your question, please press star 11 again. Please wait for your name to be announced. One moment for our first question. Our first question comes from the line of Duane Finnerworth with Evercore ISI. Your line is now open.

Hey, good morning. Thank you. this improved utilization and your ability to kind of flex back up again in the peaks, which segment would you say is most constrained? Or maybe ask differently, how would you characterize margins or margin opportunity across the three segments?

Scheduled service is by far the highest margin and most affected by staffing constraints. So think about it like an S-curve or a sine wave. And if we have staffing constraints, that kind of pushes the peaks down because we can only produce a certain amount of block hours in any given period. So monthly is typically the constraint. And that yields these really expensive opportunity costs during peak periods. It's sort of becoming less of an issue as we staff the airline appropriately.

That's helpful. And so the percentages that you put out there for March versus January, is that optimal? Or do you think as we kind of roll through the year, there's maybe even more peak capture you could realize?

The latter. There's definitely more opportunity in March. So a good comp would be to look back at utilization in 2019 when we weren't constrained. And there's still about two hours per aircraft per day of production left. that we aren't able to achieve in 2023 or 2024 versus 19. Now, you know, the fleet's older than it was then. There's a little bit different dynamics as it relates to congestion in airports and things like that. So we won't achieve what we achieved then, but there's definitely plenty of opportunity for incremental flying. And the important aspect of that is that as we add more flying, it's coming kind of midweek March. But as you compare that opportunity to the average yield for the quarter, it's still above average. So we're increasing volume and unit revenues by growing peak period capacity.

Yeah, that makes sense. And just for my follow-up, I don't know if there's any way to frame it, but in terms of premium pay or overtime revenue, that you incurred in 2023 that you feel like you won't incur kind of going forward? Any way to size that, order of magnitude?

I'm not sure I can give you order of magnitude. I would just say that this is sort of what our current outlook is as we go forward. There's a minimum level of premium pay just because of the way that our contract works in any given month. So we'll need to pay that in 24 just like we did in 23, just like we did in 22. We only have two months right now dialed in at higher levels of premium pay in 2024 than the minimum amounts. So I think, I'll just comment on the overall staffing situation. Things have gotten significantly better. We've talked now for several quarters about the initiatives that we've undertaken here to try and improve the availability of captains in particular. I would say that those are bearing fruit. And we're seeing the kind of growth that we need and the kind of attrition levels that continue to occur favorably for us. So I think premium pay is sort of where it needs to be, as well as our levels of upgrade and attrition. Now, we could use more, because as you just talked about, there's more opportunity for growth here. But I think we're seeing really steady progress.

Okay. Nice to see you come through. Appreciate the time.

Thanks, Dwayne.

Thank you for your question. Our next question comes from the line of Catherine O'Brien with Goldman Sachs. The line is now open.

Hey, good morning, everyone. Thanks for the time. Hey, Katie. Hey. We're just hoping to get some high-level puts and takes on 2024. You know, how should we think about scheduled capacity growth through the rest of the year or just capacity growth overall following that 15% growth in 1Q? you know, just in the context of you already have aircraft locked in. It sounds like pilot availability is getting much better. And then on the cost side, I did some quick math, and it looks like to get to the midpoint of your operating margin guidance, I'm getting the cost X fuel on a block hour basis up about 4%. Is that the right level to think about through the year, or should we see efficiency build? Or if easier, you know, I know you guys made the comments about you think you're going to lead the industry on a CASMEX basis. I wasn't sure if that was a cost gap comment or your performance? There's a couple in there, but thank you.

Yeah, let me start with the cost question for next year. I don't have the block hour numbers off the top of my head, but let me give you just some CASM indicators, which I think are probably very similar to block hour. On the CASM front, I think what we're expecting now is CASM to basically be flat to up low single digits. And here's the rationale. I think I mentioned last quarter, we have a program underway of accelerating some maintenance spend into 2024, which will have a modest bump to chasm, but pay significant dividends in 2025 and 2026 in terms of reduced unit costs by sort of bringing some more activities forward and packaging them into the current checks. So that's going to be a little bit of a cost bump, but I think right now, looking forward, we're seeing, like I said, flat to low single-digit chasm growth.

And my comment around relative chasm performance was mainly to kind of point out that we're not subject to the major challenges, particularly on the fleet side, that the rest of the industry is dealing with. So we don't have gear turbofan. We're not subject to new aircraft delivery delays. We don't expect to do any engine performance restoration, so aren't subject to OEM escalation in 2024. We don't have max nines. You know, there's just not that much pressure on our costs relative to the industry. So I think we'll continue to produce better trends, maybe not on an absolute basis. And then on your question on capacity growth, you know, like generally, We would think about mid-teen block hour growth. Most of that will be allocated to SCED service.

Got it. Super helpful. And then a lot of your competitors have spoken to stronger domestic trends as capacities come down. I know your model is more immune to overcapacity in the troughs, which has been the roughest periods when capacity is out of whack. But has this had any impact on pricing in the peaks where you flex up your flying? Any early reads on spring break or summer that you want to call out that you find encouraging? Thanks for the time.

Yeah, I mean, as I mentioned in my comments, spring break of last year was spectacular and probably not repeatable. And so we've seen a bit of a settling consistent with comments that you've heard other carriers make in the Mexican Caribbean markets. But you know, this year will produce substantial TRASM premiums to pre-COVID levels, as consistent with my comments in the last several quarters. The domestic market's doing really well. I think, you know, we're seeing a rebound in Florida, which is important to us. As we lap the EIN challenges that West Florida was facing last year, sort of broadly, I think things are really good, consistent with other folks' comments. Grant's here with me. Anything?

No. That's absolutely the case. And the airline's digesting well, 20% capacity growth in March. So it just speaks to how the brand has been built in Minneapolis. We definitely continue to be and work very hard to be the leading leisure airline in that marketplace. And I think our results speak to that point. And we're going to compete aggressively for that title going forward.

Great. Thanks for the time. Thank you. One moment for our next question, please. Our next question comes from the line of Ravi Shankar with Morgan Stanley. Your line is now open.

Good morning, everyone. This is Catherine on for Ravi. Thank you for taking my question. I was just curious about, you kind of mentioned this in your last question, but As the floor of chasm across the industry is expected to potentially push RASM up, I was curious if that helps you guys take price or share in that scenario.

Yeah, I mean, generally, yes, but the things that make us less subject to capacity effects also reduce the impact of sort of unexpected grounding of the GTF lead, for example. We're just not... for good and for bad, we're just not as exposed to the industry machinations. But, you know, capacity out of the system is a net positive, I think, you know, but we'd be like the secondary tertiary effect of like reallocation of capacity to backfill, we'll pull, you know, on the margin some capacity off our network maybe from ROAs, but it's not material.

And just as a quick follow-up, so I know close-in bookings across the industry were really strong in last year and even probably 2021, and then kind of dropped off in 23. What is that looking like now? And I'm curious if you guys, you know, what normal behavior might look like for close-in bookings at Sun Country?

Close-in remains really strong. I mean, the shape of the booking curve, which is sort of like aggregates bookings made any given time. It's very similar to pre-COVID levels, but at a higher fare. So, you know, I think the future looks a lot like the past in passenger behavior. I think, you know, things are really positive. Grant, anything else? No. Yeah. Good.

Thank you. Thank you. One moment for our next question, please. And our next question comes from the line of Mike Lindenberg with Georgia Bank. One moment, please, for your question.

Hold out. Oh, you guys hear me?

I got you now. Now we can. Oh, sorry. Just to follow up, I actually have two questions here, but one, a follow-up on Duane's question where you've talked about really being able to take advantage of the marginal opportunity here. I think in the past you've characterized that being able to now take advantage of the fact that you can have the fixed cost base. You're able to sort of capitalize on that. I think you've characterized it as like a 40% operating margin, incremental operating margin as you better utilize your asset base. You did sort of backtrack and say, well, we're still going to be off about two hours from where we could have been or where we were back in 2019. Is that magnitude on the incremental opportunity here, does that still come at it is my math, right? You know, somewhere in the 40% range or so. Is that how we should think about it?

Yeah. I mean, so, so what we're talking about there is not an operating margin, but rather a contribution margin. So profits in excess of variable costs, revenue in excess of variable costs. And, and yeah, I mean, our, our March VAC, variable contribution, is in excess of 40%. So is it in July? So is it in the back of December? So as we grow those markets, grow those periods of time in the calendar, we would expect that level of contribution for those incremental flights, absolutely.

Yeah, Mike, I think one of the things on the utilization comment, 2019, there were some unique things, particularly around military flying was really strong and other things that we were able to pick up. We're not saying that there's not two hours of opportunity. There's opportunity. We're just not maybe going to get back to the nine plus hours that we did in 2019 because there were some unusual things. But there's plenty of opportunity on the utilization front to drive high variable contribution flying.

Yeah, downward pressure on utilization is going to come from the check cycle that Dave mentioned earlier. We have a higher sparing ratio than we've had in the past. You know, we're going to make sure we execute real well in operations, and that requires a little bit of conservatism on utilization.

Great. And then just my second question, as we go back to, you know, fleet and procurement and the like, and I appreciate your point about, you know, that you're not dealing with the issues that a lot of other carriers are, whether it's the GTF or the grounding of the MAX 9. But now it does seem like that going forward, one of the large OEMs, Basically, we'll really only have one airplane that people care about. As you know, there's not a lot of interest in the MAX 9. It's going to be all about the MAX 8. And it seems like that that's probably going to be the primary airplane of choice over the next couple of years, which will probably put a lot of upward pressure in the used market for 800s and even used 900ERs or maybe even 700s. What are you seeing in the market? And it was, you know, obviously encouraging to see that, you know, you picked up two more 800s from, you know, fly to buy. So that plus the five from Omen. So you have seven shells of growth. Have you identified, you know, additional shells out there? that are maybe, you know, that you're working on right now? And what are you seeing on the pricing for these used airplanes? It would seem like that, you know, the bid for those types of airplanes have actually moved up given the constraints at the OEMs. Any color on that would be great. Thanks.

So, Mike, I think you covered the operating lessors. And every quarter they say how strong the market it is for residual value. This is One time that they're right. We're going to, I mean, you know, so all the challenges that the OEMs are having is kind of trickling into the used aircraft market and availability and pricing are, are both moving in the favor of the owners of aircraft. And we are comfortable then not having to do any deals for a few years, um, and just cashflow and, um, You know, we remain in the market. We're very active. If an airplane's out there trading hands, we're at the table. But the bid-ask for us has really widened over the last several months. And, you know, we only originated one aircraft over the last 12 months, and we may continue on in that trend for the foreseeable future, say two years. The point I was making, though, is that we could grow this airline 40% without any incremental changes. originating aircraft deals.

That's great. That's great color. Thanks. Thanks, everyone.

Thank you. One moment for our next question. Our next question comes from the line of Brandon Alinsky with Barclays. Your line is now open.

Hey, good morning, guys, and thanks for taking the question. Jude or Dave, I guess Can you talk to us looking into April in the second quarter? Because you guys do have, just based on the model and your peak schedules out of Minneapolis in the first quarter, 2Q can be a little bit softer. So how do you see at least the first half of the year playing out from a profitability perspective?

So just a little bit of expectation setting. Easter's a lot earlier this year than it was last year, and so that'll have a negative effect on April on a year-over-year comp basis, which is expected. We had a really spectacular April of last year. As I mentioned, the winter of last year was really special, and that won't repeat itself. But the trends that we've seen as we kind of lap the COVID recovery have broadly maintained themselves. I mean, we're... You know, we're looking at 25%, 30%. TRASM, you know, sort of broadly over 19%. You know, you've got to adjust for these calendar shifts, but, you know, generally fares have kind of reset themselves at a stable but a much higher level. You know, 2Q for us is not nearly as good as 1Q, and that ought to be the same this year, but, you know, we're certainly really bullish about where we're booking right now.

Yeah, and I would also say that you've seen a continued ability of us. To add capacity where we know we're going to be profitable sort of. Throughout the process, and we work really closely with the operating teams. So I would say there's a lot of work going on to understand where we can add some incremental capacity in the second quarter. So those keeping score with DO and those sorts of things, it's not all in there yet. And I would echo Jude's sentiment. We understand what the world's gonna look like in the second quarter and we have a plan for it. So, yeah.

That's a really good point. I mean, it's our scheduling philosophy is one where we hold back some capacity. and kind of allocated as bookings matriculate. And I think that's, you know, that's the right way to run our business. Many airlines schedule above so that competitors notice and then they kind of cancel down as bookings happen. We have the opposite. So we'll have this little bit, you know, a couple percentage points of capacity to allocate as we get in closer, which will help as well.

I appreciate that, too. And then, Dave, maybe on expectations and the offsets, I know you mentioned, you know,

maybe lower premium pay this year but what else do you have going on on the cost side that you can speak to well i mean i think i think cost control across the company has been very solid um you know on the uh so so there's a lot of operating leverage here sort of as we grow you know like we talked about a minute ago here on the aircraft side we've basically got the shells we need to to fly the 2024 level um so that's you know Operating leverage kicks in and we get a chasm benefit from that. We've also got a number of IT projects that we've been working now that I think are going to contribute to a lower chasm as well. With the exception of this maintenance issue, which is sort of a decision that we've made, costs are well in control. I can't point to any one initiative. I just think across all of the areas of our company right now, costs are well in hand. Thank you.

Thanks, Brandon.

Thank you. One moment for our next question. As a reminder, ladies and gentlemen, the Star 1-1 to ask your question, and please wait for your name to be announced. Our next question comes from the line of Christopher Stepalafas with Susquehanna. Your line is now open.

Good morning. Thanks for taking my question. What percent of your charter is currently under contract and how much is up for renewal this year?

We have about 85% of our charter revenue right now is under long-term contract. As these pilot and other staffing issues sort of resolve themselves, we want to drive a little more ad hoc revenue. Um, but right now, like I said, 85 percentage or so is, is, uh, is long-term.

I think we have any significant contracts up now and we're working closely with any of that are, so we feel really good about the portfolio. Uh, and they like what we're doing and we like being connected with them.

Okay. Okay. And the second question to the, uh, sequential decline in block hours and cargo is that just reflective of a weak peak or perhaps. a regional shift in Amazon's network between carriers?

It's just a little... No, that's only... That's a result entirely of the sea check cycle and some weather disruptions that we had. It has nothing to do with... I mean, I can't comment on anything about what Amazon's plan is.

Okay. Okay. Great. Thank you.

Thank you. One moment for our next question, please. Our next question comes from the line of Catherine O'Brien with Goldman Sachs. Your line is now open.

Hi, again. Thanks so much for the follow-up. Dee, maybe just one quick one on the share purchase program. You know, you guys were pretty active the last two years. I think you've got like 11 million, 11 and a half left. And CapEx is stepping down materially. You know, I guess any comments on, you know, are there any changes to how you're thinking about capital allocation or should we just stay tuned on the shareholder returns front? Thanks so much.

Yeah, first of all, your comment on the free cash flow generation is spot on. I mean, CapEx at the company will drop by more than half between 23 and 24. if we deliver the kind of results that we think we're going to deliver, we're going to generate a lot of free cash, and then we'll have to decide what we're going to do with that cash. There is more share buybacking that we would definitely look at. We don't have a lot of debt that's economical to pay down. We don't have a lot of debt, period. We don't have a lot of debt that's economical to really pay down early with sort of one exception. So what I think is as we go forward here, there will be decisions around, do we do share buybacks? Do we pay down this one piece of debt that we can? You know, we're going to fully fund, and we have been fully funding, cost reduction and revenue generative initiatives, particularly on the IT side. We'll continue to do that, but that should be reflected in the $100 million I talked about for 24 capex. So we're in a good position to have a lot of flexibility around how we deploy our cash in 24 and 25.

That's great.

Thanks so much. Thank you.

I'm currently showing no further questions at this time. I'd like to turn the call back to Mr. Bricker, Chief Executive Officer, for closing remarks.

Well, thanks, everybody, for joining us today. Have a great day, and we'll talk to you in 90 days.