Donnelley Financial Solutions Inc

Ladies and gentlemen, this is the operator. Today's conference is scheduled to begin momentarily. Until that time, your lines will again be placed on music hold. Thank you for your patience. THE END Thank you. THE END Thank you. THE END THE END THE END

Thank you. Good morning, everyone, and thank you for joining Donnelly Financial Solutions' first quarter 2021 results conference call. This morning, we released our earnings report, a copy of which can be found in the investor section of our website at defensolutions.com. During this call, we'll refer to forward-looking statements that are subject to risk and uncertainties, For complete discussion, please refer to the cautionary statements included in our earnings release and further details in our most recent annual report on Form 10-K, quarterly report on Form 10-Q, and other filings with the SEC. Further, we will discuss non-GAAP financial information. We believe the presentation of non-GAAP financial information provides you with useful supplementary information concerning the company's ongoing operations and is an appropriate way for you to evaluate the company's performance. They are, however, provided for informational purposes only. Please refer to the earnings release and related tables for GAAP financial information and reconciliations of GAAP to non-GAAP financial information. I'm joined this morning by Dan Leib, Craig Clay, Eric Johnson, and Kami Turner. I'll now turn the call over to Dan. Thank you, Dave. And good morning, everyone. From all of us at DFIN, we hope that you and your families are staying safe and healthy. DFIN is off to a very strong start in 2021. I'm pleased with the continuing momentum in our operating performance, as well as within most of our end markets. We noted on our last couple of quarterly calls that we had been seeing a return to a more normalized level of growth in software sales. and a significant increase in transactional activity. This momentum accelerated in the first quarter, and activity remained high so far in the second quarter. The growth in higher-margin software solutions and tech-enabled services, net sales, our proactive pruning of low-margin print work, along with the significant impact of our ongoing cost control efforts, resulted in first quarter non-GAAP-adjusted EBITDA of $71.1 million, an increase of 136% from last year's first quarter. Similarly, adjusted EBITDA margin in the quarter was 29%, more than doubling the first quarter 2020 adjusted EBITDA margin. Total sales were up just over 11% from last year's first quarter. Software solution sales totaled $60.3 million, growing 27.5% over last year's first quarter, Yet again, marking a quarterly record, the third consecutive quarter we have achieved a new high watermark. The software solution sales growth was led by the recurring compliance products, primarily ArcSuite and Active Disclosure, which grew 35.2% and 16% respectively. In addition, our virtual data room product, Venue, achieved an all-time high for quarterly sales and grew more than 30% year-over-year, its highest growth quarter in the last 16. This growth was largely driven by an increase in M&A deal activity and what we can surmise was robust market share performance. The strength of the capital market's transactional activity and our strong market share once again resulted in strong sales growth. nearly doubling our transactional sales from the first quarter of 2020. As a result of the regulatory change in the investment companies' business and our proactive exiting from low-margin printing contracts, print and distribution sales declined by $25 million, or 27.3%, which was slightly less of a decline than we expected. Despite this decline, first quarter 2021 gross margins for print and distribution was 32.6%, an improvement of 770 basis points from the first quarter of 2020. Our proactive planning and cost savings initiatives related to the consolidation of the printing platform are tracking ahead of plan. In addition, the steps we took during 2020 and continue to take in 2021 to optimize our operations including streamlining our organizational structure and real estate footprint, are reflected in our first quarter performance and contributed to the 136% increase in adjusted EBITDA from the first quarter of 2020. Free cash flow in the quarter was essentially flat to the first quarter of 2020, despite an increased level of incentive-based payments based on the strong performance in full year 2020. At quarter end, our non-GAAP net debt was lower than last year's first quarter by $114.7 million, resulting in a non-GAAP net leverage of 1.0 times, 1.3 times lower than the first quarter of 2020. The execution of our strategy continues to deliver positive results. Our new software offerings contributed in the quarter and are attracting strong interest and adoption. We have now delivered year-over-year expansion in EBITDA margins for seven consecutive quarters, demonstrating not only the positive impact of ongoing cost management, but also the continued improvement in our business mix. Over these seven quarters, our sales have increased by $13 million, non-GAAP-adjusted EBITDA has increased by $84 million, and EBITDA margin has expanded by 890 basis points. The $13 million increase in sales is the combination of $31 million of growth in our software solution sales and $68 million of growth in our tech-enabled services sales, partially offset by an $86 million decrease in print-related sales. The trends in our results reinforce the value of our 44 in 24 strategies. specifically targeting 44% of our sales from software solutions by the year 2024, and more importantly, the resulting financial profile from such a business mix. Achieving this goal is driven by increases in our software solutions and tech-enabled services sales and decreases in print sales, yielding margin expansion and continued strong cash generation. Before I share a few business highlights as well as an update on our manufacturing platform optimization efforts, I would like to turn the call back to Dave to provide more detail on our first quarter financial results and our outlook for the second quarter. Dave? Thank you, Dan. Before I discuss our first quarter financial performance, I'd like to provide an update on the multi-employer pension plans obligation related to the second quarter 2020 bankruptcy of LSC Communications. During the first quarter, we successfully negotiated a discounted lump sum payment with one of the funds, and subsequent to quarter end, we successfully negotiated a discounted lump sum payment with the second fund. In aggregate, These two funds represented over 57% of the total liability associated with the LSC multi-employer pension plans at the time of the LSC bankruptcy. At the end of the first quarter, our liability was $21.5 million, which included the settlement payments to the two funds, the remaining contingent liability, and our estimated share of required payments until a final allocation between RRB and DFIN is determined. As a reminder, DFIN and RRD agreed to share required payments equally, and an adjustment and repayments will be made as needed in accordance with the final allocation determined in arbitration. The settlement payments to one of the funds was made in April, and our payment to the second fund will be made later in the second quarter, both negatively impacting second quarter cash flow. The expense associated with this liability has been recorded in SG&A within the corporate segment and has been excluded from our non-GAAP results. Relative to our performance in the first quarter, we delivered very strong results, including 11.1% sales growth and significant year-over-year increases in non-GAAP-adjusted EBITDA and non-GAAP-adjusted earnings per share. We maintained strong market share in our transactional filing business and posted 27.5% growth in our software solution sales, all while continuing to focus on operating efficiencies. These efforts resulted in a non-GAAP adjusted EBITDA margin of 29%, more than doubling the margin from last year's first quarter, further extending the trend in margin improvement we established in the second half of 2019 and demonstrating the strength of our business. On a consolidated basis, net sales for the first quarter of 2021 were $245.3 million, an increase of $24.6 million, or 11.1% from the first quarter of 2020. Software solutions net sales in the first quarter increased by $13 million, or 27.5%, compared to the first quarter of 2020, primarily due to accelerated product adoption within ArcSuite and acceleration of virtual data room activity in venue, driven by the improved M&A environment, as well as solid subscription growth in active disclosure. Tech-enabled services net sales increased by $36.6 million, or 44.7%, primarily due to increased capital markets transactional activity. Print and distribution revenue decreased by $25 million, or 27.3%, primarily due to a regulatory-driven reduction in demand for printed materials within investment companies and less commercial printing, where we have proactively exited certain low markets. First quarter non-GAAP gross margin was 54.7%, or approximately 1,650 basis points higher than the first quarter of 2020, primarily driven by a favorable business mix featuring growth in higher margin tech-enabled services and software solution sales, combined with lower overall print volume and the impact of ongoing cost control initiatives. Non-GAAP SG&A expense in the quarter was $63 million, $7.9 million higher than the first quarter of 2020. As a percentage of sales, Non-GAAP SG&A was 25.7%, an increase of approximately 70 basis points from the first quarter of 2020. The increase in Non-GAAP SG&A is primarily due to sales commission on higher sales changes in the business mix, higher incentive compensation expense, partially offset by the impact of ongoing cost control initiatives. Our first quarter non-GAAP adjusted EBITDA was $71.1 million, an increase of $41 million, or 136.2% from the first quarter of 2020. Our first quarter non-GAAP adjusted EBITDA margin was 29%, an increase of 1,540 basis points from the first quarter of 2020, again, primarily driven by a favorable sales mix, operating leverage on sales growth, and ongoing cost control initiatives, partially offset by higher incentive compensation and selling expenses. Turning now to our segment results, net sales in our capital market software solution segment, were $38.5 million in the first quarter of 2021, an increase of 23.4% from the first quarter of 2020, primarily due to increased venue virtual data room activity and continued growth in active disclosure subscriptions. Venue sales increased 30.6% from the first quarter of 2020, driven by an improving M&A environment and sales and marketing efforts focused on gaining market share and accelerating growth, while active disclosure also had a solid quarter, posting 16% growth. Non-GAAP adjusted EBITDA margin for the segment was 26.8%, an increase of over 1,000 basis points from the first quarter of 2020. The increase in non-GAAP adjusted EBITDA margin was primarily due to the operating leverage benefits on the increased sales, a favorable sales mix, as well as the impact of operating efficiencies partially offset by higher selling expense as a result of increased sales volumes. Net sales in our capital markets compliance and communications management segment were $138.5 million in the first quarter of 2021, an increase of 39.8% in the first quarter of 2020, primarily due to increased capital market transactional activity, continuing the trend that began in the third quarter of 2020. This growth was largely driven by the ongoing momentum in IPO activity, as well as M&A activity. The quarter was also significantly impacted by stacked IPOs, which made up a large share of the total number of priced IPOs in the quarter. Non-GAAP adjusted EBITDA margin for the segment was 43.6%, an increase of over 1,700 basis points from the first quarter of 2020. The large increase in non-GAAP adjusted EBITDA margin was primarily due to operating leverage on the increase in sales a favorable sales mix, and cost control initiatives, partially offset by higher selling expense as a result of the increased sales volume, higher allocation of overhead costs, and higher incentive compensation expense. Net sales in our investment company software solution segment were $21.8 million in the first quarter of 2021, an increase of 35.4% from the first quarter of 2020, primarily due to strong demand for ARK Digital, which continues to gain momentum since we've launched it in the second quarter of 2020, with new opportunity arising out of the regulatory changes affecting investment companies. In addition, increased activity from clients adding new funds to ARK Pro also fueled the growth in this segment. Non-GAAP adjusted EBITDA margin for the segment was 25.7%, an increase of 520 basis points from the first quarter of 2020. The large increase in non-GAAP adjusted EBITDA margin was primarily due to operating leverage on the increase in sales in a favorable sales mix, partially offset by higher incentive compensation expense. Net sales in our investment company's compliance and communications management segment were $46.5 million in the first quarter of 2021, a decrease of 37.4% from the first quarter of 2020 due to the impact of regulatory change in investment companies affecting print-related sales and a reduction of commercial printing sales related to contracts we have proactively exited. Non-GAAP adjusted EBITDA margin for the segment was 15.7%, an increase of 840 basis points from the first quarter of 2020. The increase in non-GAAP adjusted EBITDA margin was primarily due to reduction in overall expense within the segment, primarily due to cost savings as a result of consolidation of the print platform and a lower allocation of overhead costs, which are now being absorbed by our three other operating segments, as the lower activity level in this segment results in a reduced need for such shared resources. Our first quarter 2021 non-GAAP unallocated corporate expenses were $12.5 million, an increase of $2.5 million from the first quarter of last year. The increase in unallocated corporate costs was primarily due to increased incentive compensation driven by the strong performance, partially offset by the impact of ongoing cost control initiatives. Free cash flow in the quarter was negative $46.3 million, only $2.3 million unfavorable to the first quarter of last year, despite an increased level of incentive-based payments in the quarter, including annual bonuses and a 401k match based on the strong performance in full year 2020. We ended the quarter with $252.7 million of total debt and $214.2 million of non-GAAP net debt, including $22 million drawn on our revolver. From a liquidity perspective, we had access to the remaining $278 million of our revolver, as well as $38.5 million of cash on hand. As of March 31st, 2021, our non-GAAP net leverage ratio was one times down 1.3 times from the first quarter last year. As a reminder, our cash flow is historically seasonal. We are a user of cash in the first quarter, closer to break even in the second quarter, and generate more than 100% of our free cash flow in the second half of the year. As our sales mix continues to evolve to proportionately more subscription-based software solutions, we expect this seasonality to be less significant. We repurchased approximately 127,000 shares of common stock during the quarter for $3.4 million at an average price of $26.92 per share. We have approximately $46.7 million remaining on our $50 million stock repurchase authorization. As it relates to the second quarter, transactional activity in capital markets remained robust throughout the month of April. We do expect, however, SPAC activity to reset based on the SEC's recent statement regarding the accounting classification of warrants and their potential action on legal protection for growth projections. Our expectation is that these actions further legitimize the SPAC market as we currently are supporting our clients in their processes to file revised financial statements and amendments to their SPAC formations and de-SPAC transactions. Regarding our outlook for the second quarter, we are expecting net sales to be in the range of $230 million to $240 million. down approximately $20 million or 7.5% year over year at the midpoint due to the significant reduction in print and distribution for the regulatory changes related to SEC rules 30E3 and 498A. Given the historical seasonality of this print and distribution, the second quarter will include the largest reduction in print sales compared to the other quarters. We remain bullish on the near-term outlook for our software solution sales, as well as on capital markets transactional activity. From a profitability perspective, we expect a non-GAAP adjusted EBITDA margin in the mid 20% range, similar to last year's second quarter margin. I'll now pass it back to Dan, who will provide an update on our manufacturing platform optimization efforts and cover some first quarter business highlights. Dan? Thanks, Dave. I'd like to highlight a few items, and then we will open it up for Q&A. Regarding the regulatory change that will continue to reduce demand for print this year, we continue to expect a reduction in print-related net sales of approximately $130 to $140 million, and a reduction in non-GAAP-adjusted EBITDA of approximately $5 to $10 million. related to the regulatory change. We are ahead of our plan to deliver the cost savings associated with rightsizing our platform. As it relates to this plan, we recently announced to our affected employees that we are shifting to a digital-only platform and that we'll be shutting down our offset print platform effective June 30th this year. Any offset print requirements will be shifting to our vendor network where we have longstanding relationships. This change to our production model allows us to better align our platform with our clients' needs and also to fully variabilize our production costs for offset printing. In addition, I'm excited about the pace of development of and demand for our software solutions. Within investment companies, while the SEC's Rule 30E3 reduced the demand for print starting in the first quarter, as will Rule 498A beginning in the second quarter, we responded by launching ArcDigital last year and also introduced our total compliance management solution to the investment companies industry to serve our clients in new ways. Going forward, we will be able to leverage these solutions to address potential future rule changes. As evidenced by the 35% sales growth we posted in the first quarter for our investment companies software solution segment, client adoption of our new solutions is overwhelmingly positive. Looking ahead, we will continue to assist our clients in their own digital evolution, transitioning them from a more traditional service-based model to a step-by-step model. We expect outsized growth in 2021 from the adoption of our total compliance management solution, followed by several years of mid-teen growth as the solution expands. Within capital markets, we posted 16% growth in active disclosure sales. In addition to net wins related to serving our clients' ongoing compliance needs, we also saw increasing demand for active disclosure by pre-IPO and IPO clients. Regarding our new active disclosure platform, we launched our sales efforts in March, and we will start to see sales on the new platform in the second quarter. Two months into our sales effort, we are getting positive feedback from both new and existing clients, and this feedback is reflected in the pace at which clients are adopting and migrating to our new platform. We expect to transition all of our clients from active disclosure 3.0 to our new platform by the end of 2022. Also in capital markets, first quarter sales in our venue virtual data room solution grew by approximately 30% from last year's first quarter, achieving an all-time high for quarterly sales and its highest growth quarter in the last 16. This growth was largely driven by an increase in M&A deal activity in the quarter, combined with the strong IPO environment and our sales and marketing focus to accelerate growth. Importantly, we're achieving growth across the globe, Sales in the EMEA region grew 57%, the APAC region grew 37%, while U.S. sales for Venue grew 27% from the first quarter of 2020. The Venue pipeline now sits at an historical high, buoyed by excellent performance in a strong market. We are excited about our very strong first quarter results, along with the various sales and operational wins that produce them. We are well on our way to achieving the objectives we committed to as part of our 44 and 24 strategy. In closing, I want to thank the DFIN employees around the world who have been working tirelessly to maintain our operations and ensure our clients continue to receive the highest quality service without disruption. Stay safe and healthy. Now with that, operator, we're ready for questions.

At this time, if you would like to ask a question, please press star, then the number one on your telephone keypad. We'll pause for just a moment to compile the Q&A roster. Your first question comes from the line of Charlie Strasser with CJS.

Hi, good morning. Morning, Charlie. Morning, Charlie. Hey, I was wondering if we can get a sense of where we are with the SEC rule changes, you know, based on your Q1's actual and your guidance for Q2. How much of that $130 million to $140 million revenue reduction is kind of baked into the first half of this year?

Yeah, Chuck. So we Charlie in the first quarter, we said, you know, Crick was down 25 just based on the historical seasonality of when we see most of the print hit. The second quarter will have kind of disproportionately larger impact than what we saw in Q one and will be the largest impact of any quarter during the full year.

That's helpful. Thank you. And then shifting a little bit to the transactional work, obviously SPACs have been a big percentage of the IPOs that came out in Q1. I think we saw incredibly record growth. I think Q1 was higher than all of last year. What percent of your transactional revenue in the quarter was related to SPACs? And then also, are you starting to see any pickup at all in the stacking work at this time?

Sure, Charlie. So I'll start and then Craig or Dan can jump in. When we look at our performance in the SPAC market, obviously, as you said, it was up substantially relative to last year. But from a share perspective, we did very, very well there, and it's historically been an area – that we hadn't focused on until more recently. And so we did very, very well there. With respect to some of the D-SPAC transactions, we're starting to see some of that. But from an overall M&A perspective, We commented on the venue growth being strong at over 30%, obviously tied to the M&A activity. Some of that D-SPAC related, and then others just more in the traditional M&A space. And, Charlie, this is Craig. To build on that, Dave mentioned the reset. We expect on the other side of that it will be less manic but certainly brisk. And there are 426 SPACs that are searching for a business combination right now. There were 92 that were announced in Q1. We did see a drop-off in April, but it was equivalent, honestly, to the January-February numbers. So we, from a long-term perspective, as Dave mentioned, believe the SEC attention will actually legitimize and we'll see this move forward as a strong product.

Great. And then the companies that are de-SPACing and working with you on kind of the transaction part of that, are they also signing up for kind of recurring long-term compliance work as well?

Yes, so we're seeing certainly when they do the initial setup of the shell SPAC, we're seeing them also sign up for active disclosure or compliance solution and new active disclosure. We're also seeing during the de-SPAC process, the venue supported by Brevia, which is helping with their M&A diligence. And then certainly at the acquisition time, we're seeing them continue to report using active disclosure. So it's a real opportunity for us.

Great. Thank you very much. Thanks, Charlie. Thanks, Charlie.

Please press start and the number one if you would like to ask a question. Your next question comes from the line of Peter Heckman with Davidson.

Hey, gentlemen. Spectacular results, and good to see that your share of filings, both on capital markets and investment, continues to be real strong. Certainly, I think that a lot of the investments that you're doing in upgrading the technology are helping you keep share, but do you think there's also the opportunity to gain share? If so, what areas of the business do you think... based on your current technology rollout plans, do you think you have the best opportunity to gain some share? Sure. Thanks, Pete. So when we step back and we look at our relative position in our markets, we're number one, two, or three in each of the markets in which we play. And so to your point, we start from a very strong position as investors you know, the only full service provider in our markets, it offers us a great opportunity to sell across the house. And so, you know, you take each of these individually, very high share on the transactions part. You know, we did see that market change a bit, and we adapted and have been increasing share in SPACs. When you look at our compliance software side, Active Disclosure has a great opportunity. We rolled out a new product As we mentioned, the new active disclosure, brand-new build of the product, and have seen very good interest and very good adoption. And, you know, as we mentioned in our comments on venue, we can surmise that at 30% growth, that was a share-taker. So we continue to see very good opportunity there. In those areas, those are all the capital markets, transactions compliance areas. When we jump over to the investment company side, the mid-30s of growth on our software offering, which was really supported by the team did a fantastic job of developing solutions for the markets and a changing market. with what was taking place with regulation with 33 and 498A. And we saw that come down on the print side, but obviously saw a great opportunity, developed a well-received solution, and have seen outsized growth there that we think continues through the years. So we feel very good in all of our core offerings. That's great. That's great. And then in terms of... just the capital allocation. I mean, you've done a fabulous job of deleveraging here over the last couple of years. And so you're now down to one times. I guess, how are you thinking about capital allocation? Are you starting to see some seller expectations come down on the M&A market? So So that might be some opportunity, or for now, are you just going to continue to deploy free cash flow towards debt reduction and opportunistic shared purchases? Sure. Yeah, absolutely. I went into a fair amount of detail on our last call, and our perspective on it remains unchanged, which is really continue to drive performance, generate the strong cash flow, and be disciplined and thoughtful on how we deploy shareholder capital to grow the business profitably. When we look at the various, the five ways of deploying capital, you know, we have been accelerating investments into the organic growth initiatives. And that's really, you know, to your comment, multiples and seller expectations remain extremely high. So, as I said, we've put more into organic investment. We've been paying down debt. We've done a little bit of share buyback. And I would expect, you know, more of the same, but, you know, overriding, continuing to be very disciplined. Got it. That's helpful. I'll get back to the queue. Appreciate it. Thank you.

Your next question comes from the line of Rod Sharma with B Reilly.

Hi. Good morning, guys. Spectacular results. Congratulations. Thanks, Josh. Sure, absolutely. If you could touch upon the cash flows for a second. I know you talked about there was some extraneous items in there because of the LSC bankruptcy settlement. And I know the seasonally, the cash flow is supposed to be negative the first quarter. Could you isolate the incentive comp and the LSC impact on cash flows?

Yeah, Raj. So the LSC... Multi-employer pension plan payments were pretty small in the first quarter, I think around a million dollars or so. The two settlements that we talked about, while one of them happened in the first quarter, the payment was actually made in the second quarter. And then on the second settlement, that payment will also be made in the second quarter. And frankly, the biggest impact on the first quarter cash flow on a year-over-year basis, and we were roughly flat, I think, down a couple million dollars in free cash. But the big delta from year-over-year was really driven by the increased inflation. of comp payments including uh annual bonus payments and 401k uh we wouldn't break that out as a as a discrete number but uh you know given the performance last year um you know those plans paid at a higher rate than a much higher rate than they they typically had in the past okay um

All right. And then just two more questions. Of the $130 million decline that you were expecting in print and had allowed for, I know Q1 was down 25. How much would Q2 be? I heard you say that primarily the entire amount would be taken in Q2. So the first half, you would have taken most of the $130 decline in print.

No, sorry. And if I said that, let me clarify. What I intended to say was that the second quarter. will be the largest decline of any of the four quarters of the year. So it'll likely be substantially larger than what we saw in Q1. And then Qs 3 and 4, ballpark should be roughly similar to what we saw in Q1.

And then just lastly, the software solutions for the rest of the year, do you expect similar sort of robust growth in software solutions?

Yeah, as we've talked about on the software side, You know, expecting double-digit growth, and that's really across the board. You know, when you look at it on a product-by-product basis, the momentum, we have an active disclosure, grew 16% in the quarter. We expect that, you know, to be in the kind of mid-teen range. Venue was 30% in the quarter, and that has been picking up the last couple quarters. This was, you know, our highest growth quarter. And, again, a lot of that will be tied to the M&A activity. And as we said, from a perspective on venue, you know, the pipeline is very strong there. And then when we think about ARC Suite, we had a very aggressive plan coming into the year. You know, the first quarter at plus 35% was a little bit ahead of that plan. But, you know, we do expect that, you know, the combination of these offerings within the ARC Suite and especially ARC Digital and Total Compliance Management will continue driving strong growth throughout the year. Yeah, and the only thing I would add to it is that, you know, if you reflect on last year, venues growth started to pick up in the back half, you know, commensurate with M&A picking up. And so you'll run into comparables in terms of year-over-year growth within each quarter. But notwithstanding that, you know, we would expect to be in that mid-teens category.

Right. And then just lastly, the guidance for Q2 assumes a capital market transactional activity in line with Q1 or lower? No.

So our guidance there, Raj, you know, we think Q1 transactional activity will be up, you know, not near the amount that we saw in Q1, right? Q1 we said in our prepared remarks that transactional activity almost doubled from the first quarter of 2020. In the second quarter, you know, our guidance implies somewhere around, you know, 20% or roughly $15 million increase in transactional. So to the extent that, you know, from a market perspective, it's stronger or weaker than that expectation, you know, there's some plus or minus in that guidance.

I'm sorry, 15 million sequential increase?

No, sorry, $15 million year over year. Got it.

Okay, well, thank you so much for taking my questions. Congratulations again. Thank you, Raj. Thanks.

Your next question comes from the line of Charlie Straza with CJS.

Hi, just one quick follow-up. Just looking at the balance sheet and the debt remaining on the balance sheet, any thoughts there on potential refinancing, taking advantage of the kind of robust capital markets that you're seeing on your own business?

Yeah, Charlie. So we look at this all the time. To your point, we have the eight and a quarter notes that become callable at 102 in October, you know, given the strength of the markets. And, you know, hopefully that continues, right? We believe that it will and that there'll be an opportunity to refi that at a significantly lower rate. But a lot of that will just depend on, you know, what market conditions are at the time. Excellent. Thank you very much. Thank you. Thanks.

And there are no further questions at this time.

Okay. Thank you all for joining, and we'll look forward to speaking again in early August. Thank you.

This concludes today's conference. You may now disconnect.