Stingray Group Inc.

Good morning, ladies and gentlemen, and welcome to the Stingray Group in Q2 2024 results conference call. At this time, online is in a listen-only mode. Following the presentation, we will conduct a question and answer session. If at any time during this call you require immediate assistance, please press star zero for the operator. This call is being recorded on Wednesday, November 8, 2023. And I would now like to turn the conference over to Mr. Matthew Pelquin. Thank you. Please go ahead.

Thank you, merci beaucoup et bon matin à tous. Thank you for joining us for Stingray's conference call for its second quarter results for fiscal 2024, ended September 30, 2023. Today, Eric Boyko, President and CEO, co-founder, and Jean-Pierre Ferrand, CFO, will be presenting Stingray's operational and financial highlights. Our press release reporting Stingray's second quarter results for fiscal 2024 was issued yesterday after the market closed. Our press release and DNA and financial statements for the quarter are available on our website at stingray.com, as well on CEDR. I will now give you the customary caution that today's discussion of the corporation's performance and its future prospects may include forward-looking statements. The corporation's future operations and performance are subject to risk and uncertainties, and actual results may differ materially. These risks and uncertainties include but are not limited to the risk factors identified in Stingray's Annual Information Forum, dated June 6, 2023, which is available on CETR. The Corporation specifically disclaims any intention or obligation to update these forward-looking statements, whether as a result of new information, future events, or otherwise, except as may be required by applicable law. Accordingly, you are advised not to place undue reliance on such forward-looking statements. Also, please be reminded that some of the financial measures discussed over the course of this conference call are non-IFRS. Please refer to Stingrays MD&A for a complete definition and reconciliation of such measures to IFRS Financial Measures. Finally, let me remind you that all amounts on this call are expressed in Canadian dollars unless otherwise indicated. With that, let me turn the call over to Eric.

Thank you. Good morning, everyone, and welcome to our second quarter conference call for fiscal 2024. Stingray delivered solid second quarter results with organic growth of 7.1% year-over-year in broadcast and recurring commercial music revenues. resulting in an adjusted EBITDA of $29.5 million or an increase of 9.2% compared to last year. Our retail media and fast channels perform exceptionally well, delivering on the strength of 34.9% year-over-year revenue growth from our retail media advertising business and our fast channels, along with healthy contribution of our in-car entertainment segment. Seizing multiple opportunities, we believe we will hit double-digit revenue growth for the foreseeable future. Our retail audio advertising network in the U.S. and Canada continues to grow and strong contribution from pharmaceutical and packaged goods advertisers. We expect to grow our retailer footprint and provide more scale to the advertising network. During the quarter, we already added PVMark, the first hardware store chain in our Canadian retail ad network, connecting this brand with highly qualified consumers during their in-store shopping journey. As a result, we are on track and still maintain to achieve 40% revenue growth in retail media advertising for this fiscal year. In terms of free ad-supported streaming TV channels, 18 new Stingray channels appeared on Samsung TV Plus in the U.S. last month. This extended partnership is expected to quadruple listening hours of our audio and video products on the Samsung platform, highlighting our commitment to deliver top-tier music content to a broader audience and drive assets monetization to new heights. Last week, we announced the debut of Zen Life on Vizio free streaming service, watch free. and Samsung, which marks Stingray's entry into the wellness space for fast channels in the U.S. Zen life offers a rich music collection spanning various genres, such as spot, zen, healing, and meditation. In short, this new fast channel provides viewers with a uniquely emerged journey towards tranquility and serenity, which we need a lot at Stingray, while Stingray broadens its scope outside of its traditional entertainment. Turning to in-car entertainment, the beta launch of Stingray category application in 300,000 BYD car is scheduled for mid-December with an over-the-air system update due late January. We're addressing a fraction of BYD's total car fleet in Europe and Latin America. With this initial launch, we are highly optimistic to expand our footprint with the world's leading manufacturer of new energy vehicles. Already, our team is working on version 2.0. As for SVOD segment, revenues were slightly down in the second quarter as we continued transitioning towards the B2B-centric partners, which large and small customer base. The end result is that this business is more profitable in terms of event generated and sustainable for years to come. Finally, after completing a rigorous RFP process, we're proud to announce that we have renewed and extended our commercial background music and digital signage service with Bank of Montreal, BMO, for commercial locations in Canada and an additional period up to five years. In addition, Stateway will now proudly service BMO commercial locations in the United States, including Harris Bank and Bank of the West branches, for the same period up to five years. Across North America, this represents almost 2,000 locations that will receive both commercial background music and digital signage service. Although altogether revenues for broadcasting and commercial music business increased 10.9% to 49.9 million in the second quarter of 2024, while radio revenues remain stable year over year at 32.7 million as we continue outperforming the industry. I would like to add the announcement The announcement of a partnership agreement with Air Transat, as you know, we also service Air Canada, last week that we provide passengers with enhanced entertainment experience on their flights worldwide. To sum up, we're moving steam ahead with our growth initiative to maximize revenues on a long-term basis. We're talking about moderate investment in high-margin, high-growth sectors. We anticipate the trickle-down effect on the bottom line will be substantial, given that we're leveraging many businesses with 90% and above gross margin as we keep growing our revenue base. A final word about our capital allocation. Our number one priority remains debt reduction as we would like to reduce our net debt to adjusted EBITDA to the sweet spot between 205 and three times. We remain confident of bringing it down to close to three by the end of December of this quarter. and closer and closer to below 2.8 at the end of the year. During the second quarter, we were required to make a payment of 6.8 million to CRPC for tangible benefits related to past radio acquisition. This endured our ability to reduce our debt level in the quarter. Jean Plain will provide more explanation about our capital allocation and free cash flow over the next few quarters. So with this, Very positive, very happy with the quarter, and I'll pass you to our friend, JP.

Thank you, Eric. Good morning, everyone. Revenues reached 82.5 million in the second quarter of fiscal 24, up to 6.3% from 77.6 million in Q2 2023. The increase was largely due to higher retail media advertising sales, to a positive foreign exchange impact, and equipment and installation sales related to digital signage. Revenues in Canada improved 2.5% to $48.4 million in the second quarter of 2024. The growth reflects enhanced equipment and installation sales related to digital signage, increase in store commercials revenues, as well as greater revenues from retail media advertising. Revenues in the United States grew 17.5% year-over-year to $21.6 million in Q2 2024 on the strength of increased sales from retail media advertising. Revenues in other countries rose 3.8% to $12.5 million in the most recent quarter. The increase can primarily be attributed to a positive foreign exchange impact. Looking at our performance by business segment, broadcasting and commercial music revenues, increased 10.9% to $49.8 million in the second quarter of 2024. The growth was primarily driven by higher retail media advertising sales and ENL related to digital signage and a positive foreign exchange impact. Radio revenues, meanwhile, remained stable year-over-year at $32.7 million in Q2 2024, as higher local and digital advertising sales were offset by lower national airtime revenues. In terms of profitability, consolidated adjusted EBDA improved 9.2% to $29.5 million in the second quarter of 2024 from $27 million in Q2 2023. Adjusted EBDA margin reached 35.8% in Q2 2024 compared to 34.8% in the same quarter. period in 2023. The growth in adjusted EBD and adjusted EBD margin was mainly driven by higher revenues year over year. Of note, our operating expenses for the second quarter should be the run rate going forward as our cost cutting initiatives implemented last year have come full circle on an annual basis. By business segment, broadcasting and commercial music, adjusted BDA increased 17.5% to 19.9 million in the second quarter of 2024. The year-over-year increase was mainly due to an improved gross margin on higher revenues. Adjusted BDA for our radio segment declined 2.8% year-over-year to 11 million in the second quarter of 2024, the decrease can be attributed to a slight revenue decline combined with higher music regulatory fees. In terms of corporate adjusted VDA, which represent head office operating expenses, less share-based compensation, as well as performance and deferred share unit expenses, it amounted to negative 1.4 million in the quarter. Stingray reported a net income of 9.4 million, or 14 cents per diluted share, in the second quarter of 2024, compared to $3.3 million, or $0.05 per diluted share, in Q2 2023. The increase was mainly driven by a gain on the fair value of derivative financial instruments, better operating result, and a foreign exchange gain. These factors were primarily offset by a higher income tax expense. Adjusted net income totaled 14.6 million, 21 cents per diluted share in Q2 2024, compared to 10.8 million, or 15 cents per diluted share in the same period of 2023. The increase can mainly be attributed to the better operating results and a greater foreign exchange gain, partially offset by our higher income tax expense. Turning to liquidity and capital resources. Cash flow generated from operating activities totaled 19.1 million in Q2 2024, compared to 18.4 million in Q2 2023. The year-over-year improvement was mainly due to better operating results as a positive foreign exchange impact, partially offset by a greater negative net change in non-cash operating items. Adjusted free cash flow amounted to 15.6 million in Q2 2024, compared to $15 million in the same period of 2023. The increase was mainly related to better operating results, partially offset by a higher interest expense and more income tax paid. From a balance sheet standpoint, we had a cash-in-cash equivalent of $9.7 million at the end of the second quarter, subordinate debt of $25.6 million, and the credit facilities of $374.6 million of which approximately $51.5 million was available. Total net debt at the quarter end stood at $390.5 million, or 3.19 times pro forma adjusted BDA. Net debt increased $2.5 million sequentially, mainly because we paid $6.8 million in tangible benefits to the CRTC during the second quarter. This payment affected our ability to lower our debt level. We have two payments totaling 8.8 million left over for the next 24 months to complete our payment schedule related to the past radio acquisition. Nevertheless, our net debt pro forma adjusted BDA ratio still improved, secondly, from 3.28 times in Q1 2024 on the strength of increased adjusted BDA over the last 12 months. As Eric mentioned earlier, our number one capital allocation priority is to reduce our debt level and, in the process, bring our financial leverage below three times during the current year. This ends my presentation. I will now turn the call back to Eric. Okay.

Mr. GP, this concludes our prepared remarks. At this point, and I will be pleased to answer any questions you may have.

Thank you. Ladies and gentlemen, we will now begin the question and answer session. Should you have a question, please press the star followed by the one on your telephone keypad. You will hear a three-tone font acknowledging requests. Questions will be taken in the order received. And should you wish to cancel the request, please press the star followed by the two. If you're using the speakerphone, please leave your handset before pressing any keys. One moment, please, for your first question. Your first question comes from the line of Edam Shine from National Bank. Please go ahead.

Good morning. Thank you. Eric, when you say the double-digit REVs growth for the foreseeable future, are you referring to just broadcasting and commercial music or consolidated revenues, total revenues?

Good question, Adam. You're right. It's one of the things we discussed at the board. So we always keep it for broadcast and commercial. But I think that in the future with the business growing much, much bigger than radio, we're probably going to use it constantly. But for now, you're right. It's only for broadcast and commercial.

Okay. Thanks for that. You know, just in terms of the comment about 40% retail media revs growth for fiscal 2024, I mean, you were pretty clear Back on the Q1 call, there was a bit of a timing issue around Q1, obviously a resuscitation in Q2. So are we looking for a rather meaningful ramp over the next couple of quarters? Because how do we get to that 40% for the year?

Q3, we're already almost 45 days into it, and we're going to be well above 60% this quarter. And we have a good chance to even double last year. So we're really, really heading in in October, November, December, very strong with signed POs. So very happy with that on the retail media side. And also the fast channels, to our surprise, we launched, you know, we had one channel with Samsung that was generating, you know, about 200,000 EBITDA. Now we launched 20 channels. We expect those sales to quadruple. So you add the fast channels, you add the Vizio, you add Samsung, you add retail media, everything in the stingray advertising bucket is growing by large money, by large influx. So I think you're very confident to surplus nicely the 40% for the year, and this quarter is looking just, you know, everything's looking green.

Just two quick questions on margin. I mean, JP alluded to the fact that you've lapped the cost-cutting, savings from a year ago? Are there more restructuring savings to be pursued? And then just related to margin, as you gear up for the joint sales arrangement with Mood Media into the new year, are there particular investments that we should be thinking about that could have a bit of an effect on margin? Thanks.

Yeah, so no real plan of cost cutting, but one thing that we're I think Stingray is one of the most advanced companies in Canada in terms of using AI. So AI makes us a lot more productive and we're able to launch many new products. So when we talk about Zenlife, we launch HolidayScape. We're just much more effective with content and delivery. So the good news is we'll be able to expand ourselves without expanding the team and our cost. So we're very happy about that. So Anne, like we mentioned on our speech today, When we talk about fast channels, fast channels have, because the revenues are net, all these products are 90% gross margin. So we should expect that our EBITDA margin will continue going up on the broadcast side. So we did 40% this quarter, but we can expect that the more we sell these products, the more that will increase our margin. In terms of NOM, the deal with Mood is a cross-selling agreement. So far, we did 2 million of cross-sell, so it's a good start. Not a huge number, and we've got to get better at it. But for sure, the relationship is, I think we'll see more results in the future quarters. But so far, it's been limited, and there's no cost. The beauty about this agreement is no cost. It's really a collaboration agreement, and I think we're going to see some success in the next few quarters.

Great. Thanks for that, Eric. Have a good day.

Thanks, Adam.

Thank you. And your next question comes from the line of Aravinda Kalapatich from Canaccord Genuity. Please go ahead.

Good morning. Thanks for taking my questions. Eric, you referred to sort of this trend you see on the retail side. You know, it is notable that the subscriber component, subscription component of BCM is also sort of sequentially strengthening. I was wondering if you can talk to those components. We know that in-car is obviously ramping, but any kind of indication as to how the S4 and the legacy piece have trended because we continue to see that subscription line within BCM also grow.

And just to make sure, BCM for you stands for? Podcast commercial. Podcast commercial. Yeah. So all of the advertising segment, like I mentioned before to Adam, we feel very comfortable with our 40% goal for this year, and I think right now we're very well positioned with the actual sales that we have, so that we're happy. For SBOT, we're making the pivot from B2C to B2B. The B2C market, with the end of COVID... I would say that most of our competitors are calling us to try to do a strategic deal. It's been very difficult, so we did the pivot. But every time we lose a subscriber at $15 because it's at gross and then we pay Apple 30%, we replace it with a subscriber at $5 with Amazon or Comcast. So for sure the pivot doesn't help us in the transition, but the investment on the B2B side is minimal investment. compared to on the B2C side, we were spending multiple millions of dollars in user acquisition. So I think it's the right move we did, but the pivot will affect not our subscribers, but the sales for the next few quarters. The good news is with Amazon, we're gonna be launching in another 10 to 20 countries, and also we're adding the Zenlife product as a SVOD, so that will also be a new product, a bit like we're doing on the fast. So I think we'll continue to see the growth, and we still maintain our goal to reach a million subscribers, but it's going to be most probably almost most of it will be B2B.

Great. Thank you. And just a quick follow-up on the margins. On the retail media side, I know that there's kind of a mix there of some rev share agreements as well as some fixed cost agreements. Can you give us an idea of what the dynamics are? I mean, what kind of margin impact we should expect as retail media ramps up at the pace that you are referring to?

Thanks. I think we should expect the same margins roughly that we have in the commercial business. So margins of about 40%. So in your guidance or in your report, that's what you should measure.

Great. Thank you.

And the margins, again, on the fast channels are much higher because, you know, if we do a dollar of sales, we only include the net revenues. after the rev share with a Samsung and LG. So on the fast channels, the margins are much higher, more like 90%. Understood.

Thank you. Thank you, sir.

Thank you. And your next question comes from the line of Drew McReynolds from RBC. Please go ahead.

Yeah, thanks very much. Good morning. I was late hopping on, but just on the ad markets, Eric, as you kind of look into Q4, you know, obviously your businesses, you're quite bullish on. Just wondering if there's anything kind of macro-wise seeping in in terms of weakness as we get to the kind of seasonally stronger holiday season. And then secondly, just on the in-car entertainment ramp up, you know, last quarter you talked a lot about kind of, you know, where you see this segment in this business heading. What should we... kind of look for in calendar 2024 in terms of how this particular revenue stream ramps up? Thank you.

Okay, so yeah, for the fast channel, like I mentioned, Adam, we expect this quarter to be above 60%, so we're having a great quarter of signed IOs, so we're very excited. All of our segments, Retail Media Canada, Retail Media US, and the fast channel are growing at these high, high double digits, so we're very happy about this quarter. So no impact. For the car business, we're launching BYD in December, so that's a big one. BYD, we're launching in 400,000 cars. They expect to do 4 million cars a year. And how many cars are we going to be? We don't know. We're also looking to do mics for them. It's a big agreement. We went to visit BYD at their plant in China. Wow, very impressive. It's just a very impressive company. And Tesla's growing every month, so that's our first two big customers. And CES is coming along, and I can tell you that we're speaking and we've met. We went to Korea, Japan, and China. We've been to California maybe six times. So every big car manufacturer in the world, Toyota, Mitsubishi, Subaru, Volkswagen, Audi, friends at Volvo, You know, every Honda, every car manufacturer in the world, we're in discussion. We're looking at different application. It's going to be, you know, it's going to be interesting because all these deals are deals from eight to 15 years. So it's going to be an interesting, but tough to know, tough to see if we're going to be in every car. But for BYD, that should be material for next year. You know, we get a revenue per car, so we'll see the impact of that. And hopefully, we'll have more car launches in 2024. So, exciting times, but, you know, we got to show the pudding.

Okay, thanks. Thanks for that, Eric. And just so, like, I'm clear, in terms of, like, Stingray services being You know, installed here, I know it's Stingray Karaoke. Are there other services that are being installed, or certainly you're thinking of kind of broadening kind of the service portfolio? Just how are you thinking along those lines?

That's a very good question. So, A, we're providing karaoke. We're also looking to provide music. It's like having an XM series in every car in the world. So a lot of discussion about that. And the other one that every car manufacturer wants that we own is is our Calm Radio unit. So you can have a Calm Radio app in your car while you drive. Maybe it would be needed here in Montreal with the traffic and the way people drive. But I think there's a lot of demand, and we'll be launching Calm Radio with BYD as an example. So I think we have these three products, and we're also offering, as you know, we have a trivia division. So we're also launching audio trivia in cars. So it's really a nice bundle of products that will be included when your car is connected. So at the end of the day, the cars will become your next cable operator, if I can say. So interesting. And 99% of the listenership in cars is done while you drive. So it's not, you know, I think Netflix realized quickly, when you park your car and you charge your electric car, you're not going to stay in your car and watch Netflix. You're going to go get a coffee, you're going to buy something or walk your dog. People don't stay in their car while it's charging. So, and we have a chance as an audio company to be able there when you drive your car, and that's why the karaoke app on Tesla is such a success, because it's in-car driving. Interesting. Okay, thanks. Thanks for that, Eric. Appreciate it. Thanks, Drew.

Thank you. And your next question comes from the line of Jerome Dubrell from Day Jordan. Please go ahead.

Thanks for taking my questions. First, I'm glad to hear you're maintaining the 40% guidance. Wondering if in retail media, what are the kind of next steps operationally that you're implementing? You see that, well, you've established a better sales force. Maybe you can provide an update on where we are in terms of audience measurements. So what's next in operational terms?

The big issue that we have in retail media in both the US and Canada is we're selling roughly 10% to 20% of our inventory. We really need to increase the sales function. We've hired a lot of new people. Hiring salespeople takes time, so it's for sure another training. So we have a lot of capacity to sell more, both in the U.S. and Canada, and the agreement we've moved really helps us on that. But we have to be more aggressive on the sell side. I think everybody realizes that. Second thing in Canada, in Canada we're looking to finalize the last two big grocers that were in final stage, and the two last pharmacies that we don't have. So our goal will be in Canada that by the end of the year in March, We would have every pharmacy and every grocery store in Canada connected to a retail media, giving us that network effect. So those are the two things we need to have right now. And the third one is, you know, we have to evangelize this market. People are used to buying radio. People are used to buying TV. People are used to buying out of home. So we're not in one of those buckets. We're in a bucket. It's out of home, but it's stores. So I think it's working well. A lot of new... I know advertisers with us, but we have still a lot of work to do.

Okay, thanks. The second one is on the third quarter outlook for next quarter. I was looking at my model and it looks like a tough comp. It was a very good quarter last year. This time, can you remind us if there was anything special last year for the year on your term prison for next quarter?

Yeah. No, this quarter, again, it looks all green compared to last year. Very positive. I think the consensus that we have in the market is fair, and we feel very comfortable. Also, not only on the fast channels, but retail media, but the Tesla and all of our customers, everything looks good, and also a strong corridor in E&L, a lot of deployment. So I think we'll be very comfortable to meet your consensus or even try to exceed them.

Thank you.

Merci, Jerome. Merci.

Thank you. And your next question comes from the line of Scott Fletcher from CIBC. Please go ahead.

Hi. Good morning. I also missed the front end of the call, so apologies if I double up on anything. But you mentioned getting more aggressive on the retail media sales front. Would there be any desire to to sacrifice any margin in order to cut price to sell more, or is that not necessary? It's really just a matter of body.

Like I said, the retail media margins right now are roughly the same than our broadcast division, around 40% EBITDA margin. For us right now, it's hiring the right people, but the sales are so huge. The tickets we get in the U.S. would be anywhere from one to three million U.S. a ticket. So if you get the right person with the right advertiser, it just – but it's, again, it's getting – it is a new market. Not many people have experienced retail media selling. So you get certain individuals and they're not used to this market. So there's a lot of work to train, evangelize, and that is our biggest challenge. You know, we want to do tuck-ins and all that, but we have – we're only selling 10% of the inventory right now. So we could do 10 times more sales if we would sell all our spots. So in radio, they say if you don't sell it, you lose it because you can't get back that minute. So radio guys do a good job, and we have to get to that level one day with retail media.

So it sounds as if pricing is not the roadblock there. It's really just sourcing the demand to fill that spot at that time. Sure.

Sourcing the demand and explaining, again, the buckets is TV, radio, auto, home, and you have the in-store co-op budget. How do we fit in in those? And so we really have to evangelize this new opportunity. We're getting a lot more sales. The radio team is selling a lot of retail media. So we walk it, we call it from wheels to store. So you'll hear an ad in your car, and then when you get to the store, you'll hear the same ad, knowing that that person was in the car and is going to Metro or Loblaws. so working very hard together to get that connection. So we'll get a buy for radio, and then we'll get a buy for retail media. But, again, it's a new strategy, and like I said, we're having a great, incredible growth this year, but we'll need to be more, again, more strategy and more salespeople and more customers, and it's all about execution.

Okay, thanks. That's really helpful. And then you've mentioned in the past that there's good recurring customers, the nature of this retail media buys are quite recurring. Are you still seeing that, like the existing customers?

Yeah, 95% of our customers recur. So it's a very, so that would be, you know, the holy grail, our goal is to be, we get to the size that we can start doing like the TV group does, you know, we do upfronts. So in the U.S., we are doing upfronts for next year. So in the U.S., we know with the big pharmas, they'll give us an upfront in November, December for the whole year. So in the U.S., with some pharmacies and all that, our fill rate is much higher. So we're able to do upfronts because in the U.S., our fill rate goes much higher with certain vectors. So that's exciting. So that will be the holy gold that we start doing that and have more visibility for you guys.

Okay, that's really interesting. Thank you.

Thank you. And your last question comes from the line of Tim Casey from BMO. Please go ahead.

Hi, good morning. Just two for me. How should we think about the E&L line, the equipment and labor line? I mean, is that going to drive directly off installation? So, you know, is there a sort of quarterly run rate you can give us or kind of direct us to And the second question, just on debt reduction, you mentioned you had a tangible benefits payment in the quarter, and I think you said there's another $8 million over the next 24 months. When should we think about those payments dropping? And is there anything else, any other contingent considerations, any other one-offs in terms of payments which we should think about as we try and project your debt reduction schedule? Thank you.

Okay, thanks. And by the way, Tim, I want to say thank you for BMO for this great agreement. I know for us it was good for us to be involved with a local bank. I had a lot to do with it, let me tell you. No, no, no. I even got a nice email from your CEO, so I was very impressed by that. No, but the BMO deal, we're looking at anywhere – At $500,000 a month of recurring, these are round numbers, so it's $6 million a year for five years. You've got $30 million of recurring, and on the E&L side, anywhere between $5 to $15 million a year in E&L. It depends. That one is, you know, you've got 2,000 locations, and every location that we do signage in is about 50,000 locations. Again, these numbers are round, so it's a very nice agreement for us. So we're happy with that. That will impact the E&L for the next few years. I must say that lately, E&L for us, it's not a big margin EBITDA business, and it's not really recurring. So that's why we never use it in our organic sales, because it goes up and down. But for sure, we could expect E&L to at least grow by at least $10 million a year more. So we were at $18 last year. So I think we'll be running between 25 to 30 million a year in the future. But they're very happy with the recurring part of the content that we provide on signage. So in terms of debt reduction, first of all, we have CRTC, we have a payment of roughly four million in August 24, four million in August 25. That's the last payment that we have to pay for the radio acquisition. So we're happy with that. All of it is paid off, and there's really no more. As you can see, there's no more real. We don't have any earn-outs. It's very minimal. So I would put in my models almost zero earn-out coming out or less than $2 million, not very material. All of the ISEN deal that we bought for $60 million was paid off last quarter, so we paid that deal in less than two years, so we're happy with that. And the debt EBITDA, like I mentioned before, will be close to three in December and will be well below three by March. We're reimbursing a lot of debt in Q3, Q4. And we're a strong EBITDA, strong margin. And the customers we have, they pay in 30 days. So we're not worried about Samsung and Tesla and BMO and all our customers paying. So we're in a good position to really... And next year, we expect to be well below 2.5 at the end of next year. So, our debt-to-bid ratio is really coming down fast. Thank you. Hey, thank you, Tim, again for the deal.

Thank you. Mr. Eric Boyko, there are no further questions at this time. Please proceed.

Okay. Hey, on behalf of the entire Stigway team, thank you very much for joining us today on the conference call. I know you guys had a busy day. I know it's a A lot of traffic out there. So we look forward to speaking with you again following the release of our third quarter results in February. And we're excited for that board meeting already in advance. So thank you for every analyst to take your time and speak to us today. We appreciate your devotion and attention. And I'll miss you tomorrow.

Thank you, ladies and gentlemen. That does conclude our conference for today. Thank you all for participating. You may all disconnect.