Q4 2024 Adeia Inc Earnings Call
Good day, everyone. Thank you for standing by. Welcome to ADIA's fourth quarter 2024 earnings conference call. During today's presentation, all parties will be in a listen only mode.
Following the presentation, the call will be open for questions.
Speaker Change: I would now like to turn the call over to Chris Chaney, Vice President of Investor Relations for Audio. Chris, please go ahead.
Speaker Change: Good afternoon, everyone. Thank you for joining us as we share with you details of our quarterly financial results.
Speaker Change: With me on the call today are Paul Davis, our President and CEO, and Keith Jones, our CFO.
Speaker Change: Paul will share with you some general observations regarding the quarter and then Keith will give further details on our financial results and guidance.
We will then conclude with a question and answer period.
Speaker Change: In addition to today's earnings release, there is an earnings presentation, which you can access along with the webcast in the IR portion of our website.
Speaker Change: Before turning the call over to Paul, I would like to provide a few reminders.
Speaker Change: First, today's discussion contains forward-looking statements that are predictions, projections, or other statements about future events, which are based on management's current expectations and beliefs, and therefore are subject to risks, uncertainties, and changes in circumstances.
Speaker Change: For more information on the risks and uncertainties that could cause our actual results to differ materially from what we discussed today, please refer to the risk factors section in our SEC filings, including our annual report on Form 10-K.
and our quarterly report on Form 10-Q.
Speaker Change: Please note that the company does not intend to update or alter these forward-looking statements to reflect events or circumstances arising after this call.
Speaker Change: To enhance investors' understanding of our ongoing economic performance, we will discuss non-GAAP information during this call.
Speaker Change: We use non-GAAP financial measures internally to evaluate and manage our operations.
Speaker Change: We have therefore chosen to provide this information to enable you to perform comparisons of our operating results as we do internally.
Speaker Change: We have provided reconciliations of these non-GAAP measures to the most directly comparable GAAP measures in the Earnings Release, the Earnings Presentation, and on the Investor Relations section of our website.
Speaker Change: A recording of this conference call will be made available on the Investor Relations website at audia.com.
Speaker Change: Now, I'd like to turn the call over to our CEO, Paul Davis.
Paul Davis: Thank you, Chris, and thank you everyone for joining us today.
Paul Davis: I'm pleased to share the progress we've made in the fourth quarter and throughout the year, highlighting the strength of our business and the opportunities ahead.
Paul Davis: We ended 2024 on a strong note with an excellent fourth quarter.
Driven by robust deal momentum and record financial results.
Paul Davis: Our fourth quarter revenue of $119.2 million and operating cash flow of $107.5 million were both post-separation records.
Paul Davis: In addition, we generated adjusted EBITDA of $80.3 million and an operating margin of 67%.
Paul Davis: We signed 10 license agreements, including 4 new deals, which were diversified across OTT, consumer electronics, pay-TV, e-commerce, and semiconductors.
Paul Davis: With our record post-separation cash flows, we were able to demonstrate the power of our business model and balanced capital allocation approach.
Paul Davis: We made accelerated payments towards our debt, reducing our balance by $50 million and bringing our debt balance to $487 million.
Paul Davis: We also initiated a stock buyback program in the fourth quarter, repurchasing $20 million of our common stock. And we invested in the future of our business.
closing 12 million dollars in Tuckin IP acquisitions.
Paul Davis: Now let me turn to further details of our fourth quarter.
Paul Davis: In the fourth quarter, we signed 10 deals, 9 in media and 1 in semiconductor.
Paul Davis: Adding new customers is critical to sustaining long-term growth and we are proud to have signed three new customers for our media portfolio and one new semiconductor customer during the quarter.
Paul Davis: With its large and growing subscriber base, the OTT market is one of our primary areas of focus as we further expand our media IP portfolio.
Paul Davis: One of our significant new deals in the quarter was a multi-year license agreement with Amazon, a top three OTT provider.
Paul Davis: This deal underscores our ability to deliver value and capitalize on the significant opportunity that exists in OTT.
Paul Davis: As we noted at the time of separation from Xperia, we believed OTT could be a significant driver of value for audio on a stand-alone basis.
Paul Davis: and one that we otherwise were not able to unlock as a combined company.
Paul Davis: The success we achieve with Amazon is a great proof point of this objective.
Driven by OTT, our new media revenue increased 65% year-over-year.
We also welcome Canon as a new media customer.
Paul Davis: which was a great validation of the value of the imaging IP in our media portfolio.
We see more opportunities like Cannon on the horizon.
Paul Davis: where imaging IP is becoming increasingly important in areas such as consumer electronics and social media.
Paul Davis: As we noted on our last earnings call, early in the fourth quarter, we signed a license agreement with e-commerce customer Neiman Marcus for access to our media portfolio.
Paul Davis: ecommerce is a key adjacent media market for us over the next several years and we have seen a tremendous expansion of our customer pipeline over the past year
Paul Davis: We were also very pleased to have renewed our agreements with both Roku and Sharp during the fourth quarter.
further strengthening our well-established position in consumer electronics.
Paul Davis: Over 90% of our customers renew their license agreements with us.
Paul Davis: in part due to our commitment to maintaining long-term relationships and our investments aimed at growing our portfolios with innovations our customers value.
Paul Davis: We are proud that we have had long-standing relationships with many of our customers, including some relationships that span over 25 years, like Sharp.
Paul Davis: The consumer electronics market continues to be a solid revenue contributor year over year, with mid-single-digit growth, and we expect to see modest growth in the future as it remains a consistent performer for our business.
Paul Davis: Our fourth quarter deals with industry leaders like Roku, Amazon, and Sharp validate our position as a leader in foundational technology for digital entertainment.
Paul Davis: These deals underscore how our innovations are helping shape the digital landscape and continuing to power the seamless, high-quality experiences consumers expect as TVs have evolved from simple display devices into connected entertainment hubs.
Paul Davis: In our semiconductor business, we signed a technology transfer agreement with a new customer that showcases the industry's continued recognition of our hybrid bonding technology as a critical enabler for high-performance semiconductor devices.
Paul Davis: It is worth noting that this deal came together quickly following our presentation at an industry conference.
Paul Davis: providing further validation that our deep involvement in our ecosystems pays dividends.
Paul Davis: Now let me turn to a few highlights for the full year.
Paul Davis: Looking at the full year, 2024 was marked by significant milestones.
We signed 32 agreements, including notable wins with Amazon,
LG Electronics
Paul Davis: Roku, Liberty Global, Canon, Panasonic, Sharp, Vizio, Neiman Marcus, X-Corp, and Hamamatsu.
Paul Davis: New customers are the foundation for our future growth, and I'm immensely proud of our team for successfully signing license agreements with multiple new customers across OTT, pay TV, semiconductors, consumer electronics, and e-commerce last year.
Paul Davis: For the full year, we delivered $376 million in revenue with a 62% operating margin.
Paul Davis: Cash flows from operations were $212.5 million and our adjusted EBITDA was $234.3 million.
Paul Davis: Debt reduction remains one of our top priorities, and last year we paid down $114.2 million of our debt.
Paul Davis: Since separation, we have paid down $272.3 million, a tremendous achievement in just over two years.
Paul Davis: Hybrid bonding was a key driver for each of the four semiconductor deals we signed in 2024.
We anticipate future success driven by our hybrid bonding technology.
Paul Davis: Industry announcements regarding upcoming products and architectures reaffirm that hybrid bonding is becoming a critical capability for future variants of high bandwidth memory, NAND flash and logic devices.
For example, a growing number of logic companies
Paul Davis: have announced new chiplet architectures, such as Intel and Broadcom, utilizing hybrid bonding.
Paul Davis: As we continue to advance our strategy in OTT, we remain focused on protecting our intellectual property.
Paul Davis: In the fourth quarter of 2024, we initiated litigation against Disney across multiple jurisdictions, including the U.S., Europe, and Brazil, for infringing our patents.
Disney is a top three OTT provider.
Paul Davis: And our goal remains to negotiate a fair and mutually beneficial commercial license.
Paul Davis: While we are committed to pursuing a resolution, we are prepared to see the legal process through to its conclusion to safeguard our IP rights.
which could take several years.
Paul Davis: We are confident in our position and believe this process will ultimately further validate the value of our innovations in the OTT ecosystem.
Paul Davis: The strength and quality of our IP portfolios provide the foundation for our future licensing success.
Speaker Change: At ADEA, one of our differentiators is our strategically focused R&D.
Speaker Change: Last year, our portfolios grew a combined 12%, which was balanced with double-digit growth in both our media and semiconductor portfolios.
Speaker Change: But portfolio growth alone is not our primary goal. Rather, we aim to focus our growth on the evolving needs of the media and semiconductor markets we serve.
Speaker Change: We also look to maintain and enhance the quality of our constantly evolving portfolios.
which is vital to both renewals and new customers.
Speaker Change: Over 85% of our patent assets are generated organically through our R&D efforts.
Speaker Change: But we also augment our internal growth through actively searching for patent assets we believe will accelerate our growth opportunities.
In 2024, we acquired five portfolios for approximately $20 million.
Speaker Change: Four of those portfolios were focused on OTT, and one was in broadband connectivity.
Speaker Change: Our most recent acquisition, which closed in the fourth quarter, focused on a unique portfolio of OTT content delivery IP.
Speaker Change: We believe future revenue growth will be driven by our continued strong track record of renewals, and importantly, signing license agreements with new customers in our key growth markets.
Speaker Change: In media, we expect anticipated declines in pay TV will be offset by growth in OTT and new wins in adjacent media markets, such as e-commerce, ad tech, and gaming.
Speaker Change: In our semiconductor business, we expect revenue from our volume-based customers using hybrid bonding for their new products will increase over time. And new opportunities in logic will provide accelerated growth.
Speaker Change: We are making great progress in expanding our recurring revenue stream and our growth markets, with a total year-over-year recurring revenue increase of 18% in our non-PayTV verticals.
Speaker Change: Given the work we did in 2024 to expand our pipeline and our expectations for progress in 2025, we believe we can continue to grow our recurring revenue and we have multiple paths to achieve our revenue targets for this year.
Speaker Change: Being actively involved in the media and semiconductor ecosystems plays an important role in defining our IP and business development strategy and keeping us close to the latest industry trends.
Speaker Change: We are increasingly recognized for the innovative new ideas we bring to the table, and the value these contributions have to the broader ecosystem.
Speaker Change: We were recognized last year at the Electronic Components and Technology Conference.
winning the Best Paper Award, which was on hybrid bonding.
Speaker Change: And our recent double gold medal win in the Merit Automotive Awards signals an exciting expansion of our technology portfolio and new frontiers.
Speaker Change: We are pleased to again be ranked in the top 75 in the world for the number of U.S. patents issued in 2024, with 597 patents granted to us.
Speaker Change: And again, we ranked above many other well-known innovative companies, such as NVIDIA, Broadcom, AMD, InterDigital, Comcast, Meta, HP, and Verizon.
Speaker Change: Our balanced capital allocation approach, supported by our strong cash generation, allows us to continue reducing debt, repurchasing shares, and investing in growth.
Speaker Change: Based on our pipeline and visibility into renewals and new customer additions, we anticipate revenue growth in the mid to high single digits in 2025.
Speaker Change: We are excited about the opportunities ahead and confident in our ability to deliver long-term value to our shareholders.
Keith Jones: With that, I'll now turn the call over to Keith for a detailed review of our financial results and outlook.
Keith Jones: Thank you, Paul. I'm pleased to be speaking with you today to share details of our fourth quarter of 2024 financial results.
Keith Jones: In the fourth quarter, we delivered revenue of $119.2 million, driven by the execution of 10 deals across a broad variety of verticals, including OTT, consumer electronics, pay TV, e-commerce, and semiconductors.
Keith Jones: Our deal performance this quarter includes four new deals, including exciting new wins with Amazon, Canon, and even Marcus.
Keith Jones: We are extremely excited with these new additions to our growing customer count as new logos are a catalyst in driving our long-term growth objectives.
Keith Jones: Now, I would like to discuss our operating expenses, for which I will be referring to non-GAAP numbers only.
Keith Jones: During the fourth quarter, operating expenses were $39.4 million, an increase of $4.1 million, or 12% from the prior quarter.
Keith Jones: Research and development expenses were $14.9 million, an increase of $1.2 million, or 9% from the prior quarter, primarily due to certain patent portfolio development costs and due to increased personal costs as a result of expanding our R&D teams.
Keith Jones: This investment shows our commitment to innovation as enhancing and growing our IP portfolios is crucial to both finding renewals and new customers.
Keith Jones: Selling general administrative expenses increased $1.7 million or 9% from the prior quarter, primarily due to higher legal and other outside services related to supporting our media and semiconductor sales efforts.
Keith Jones: Litigation expense was $3.8 million, an increase of $1.2 million, or 44% compared to the prior quarter, primarily due to the timing of expenses related to certain legal matters, including our recent suit against Disney, and due to ongoing litigation with several Canadian pay TV operators.
Keith Jones: Interest expense during the fourth quarter was $12.3 million, a decrease of $448,000 from the prior quarter due to our continued debt payments and the benefit of a lower interest rate.
Keith Jones: Our effective interest rate in the fourth quarter was 8.9%, which includes amortization of debt issuance costs.
Keith Jones: Year over year, our quarterly interest expense decreased $3.1 million due to continued accelerated debt payments and the benefit of a lower interest rate.
Keith Jones: Going forward, we expect to see further benefits from a lower interest rate as we once again successfully repriced our term loan in January of this year, whereby we further reduce our interest rate by an additional 50 basis points.
Keith Jones: bringing our current interest rate to SOFR plus 250 basis points.
Keith Jones: This represents a cumulative 111 basis points reduction in the fixed portion of our interest rate over the past nine months.
Keith Jones: Other income was $1.3 million. It was primarily related to interest earned on our cash and investment portfolio and due to interest income recognized on revenue agreements with long-term billing structures.
Our adjusted EBITDA for the fourth quarter was $80.3 million.
reflected and adjusted even a margin of 67%.
Depreciation expense for the fourth quarter was $522,000.
Keith Jones: Our non-GAAP income tax rate remained at 23% for the quarter.
Keith Jones: Our income tax expense consists primarily of federal and state domestic taxes, as well as Korean withholding tax.
Keith Jones: Now for a few details on the balance sheet. We ended the fourth quarter with $110.4 million in cash, cash equivalents, and marketable securities, and generated $107.5 million in cash from operations.
representing a post-separation record.
Keith Jones: Operationally, the fourth quarter has historically been a very strong cash generation quarter for us.
driven by the contractual billing structures of certain license agreements.
Keith Jones: The fourth quarter of 2024 was further boosted by not only strong deal momentum in the period, but also due to receiving certain advance payments from several of our customers.
Keith Jones: With this strong financial performance, we were able to execute on all areas of our balanced capital allocation approach, which we highlighted during last quarter's earnings call.
Keith Jones: This included making $50 million in principal payments on our debt in the fourth quarter as we end the quarter with a term loan balance of $487.1 million.
Keith Jones: In the fourth quarter, we repurchased 1.4 million shares of our common stock for $20 million.
Keith Jones: And with a strong Q1 2025 cash generation outlook, we have already executed an additional stock buyback in the first quarter, repurchasing an additional 760,000 shares of our common stock for $10 million.
Keith Jones: During the fourth quarter, we paid a cash dividend of 5 cents per share of common stock. Our board also approved a payment of another 5 cents per share dividend we paid on March 31st to shareholders of record as of March 10th.
Keith Jones: M&A has been and will continue to be an operational priority for us as we expand and grow our existing patent portfolio to address evolving technology trends.
Keith Jones: We augmented our internal R&D efforts through making several strategic tuck-in patent acquisitions.
Keith Jones: In the fourth quarter, we acquired patent portfolios associated with OTT and broadband connectivity.
for a total of 12 million dollars.
Keith Jones: I would like to also highlight, even with all the capital allocation efforts in the quarter, we were able to increase our overall cash and investment position.
Now, we'll go over guidance for the full year 2025.
Keith Jones: We expect revenue to be in the range of $390 to $430 million.
Keith Jones: This guidance includes the significant semiconductor deal we noted last year.
Keith Jones: As a reminder, our agreements tend to be relatively large and complex, which creates volatility from period to period.
Keith Jones: Overall, we see the first half of the year and the second half of the year being relatively equal.
Keith Jones: However, our first half could see fluctuations in that period due to the timing of certain agreements.
Keith Jones: A notable component of our Revenue Outlook is its overall stability.
Keith Jones: The foundation of our revenue is very solid, as approximately 80% of our revenue outlook is driven by the backlog of existing contract agreements.
which is a consistent profile as in prior years.
Keith Jones: Operating expenses are expected to be in the range of $166 to $174 million.
Keith Jones: We anticipate modest single-digit growth for both research and development, as well as selling and general administrative expenses from the current run rate, as we continue to invest in both technology expansion, as well as people and processes.
Keith Jones: We anticipate that our litigation expense will approximately double driven by our recent litigation filings with Disney, as well as our ongoing litigation with several Canadian paid TV operators.
Keith Jones: We expect interest expense to be in the range of $41 to $43 million.
Keith Jones: This reflects the impact of the debt repricing we completed in January.
Keith Jones: However, our guidance does not contemplate the impact of any potential further interest rate changes issued by the Federal Reserve.
Keith Jones: We expect other income to be in the range of $4 to $4.5 million.
We expect a resulting adjusted EBITDA margin of approximately 59%.
Keith Jones: We expect the non-GAAP tax rate to remain consistent at roughly 23% for the full year.
Keith Jones: We also expect capital expenditures to be approximately $1 million for the full year.
Keith Jones: Looking back at our performance in 2024, I'm extremely proud of our team and what we accomplished.
Keith Jones: We've made tremendous progress engaging in closing deals with new customers, such as Amazon.
Keith Jones: We have expanded our pipeline with new opportunities in our growth verticals such as OTT, eCommerce, and Semiconductor.
Our financial performance.
Keith Jones: given by record cash flow, debt reduction, expense management, and return of capital to shareholders has been outstanding.
Our future is bright, and our outlook is strong.
Keith Jones: With the strides that we made in 2024 and since separation, I'm greatly encouraged and excited that we can continue this momentum into 2025 and beyond.
Keith Jones: That brings an end to our prepared remarks. And with that, I'd like to turn the call over to the operator to begin our question and answer session. Operator.
Speaker Change: Thank you, sir. And everyone, if you would like to ask a question today, please press star 1 on your telephone keypad. Once again, that is star 1 if you have a question today. We'll take the first question from Madison DePaola, Rosenblatt Securities.
Madison DePaola: Hey guys, thanks for taking my question and congrats on the great results. I was just wondering, regarding the revenue guidance, could you provide any more detail on what key assumptions will drive the low and the high end of that outlook?
Speaker Change: Hi Maddie, great talking to you. You know, great question. In terms of our guidance that we look, we
Paul Davis: Paul and I really wanted to be kind of thoughtful on how we kind of laid things out. So, you know, our pipeline is incredibly strong.
Paul Davis: We made some really great momentum, as you can see by the number of deals that we closed at the end of the year. We see that momentum keeping up. One of the things about our business, it's
Paul Davis: really, really focused on discipline. And so with that being said, getting the proper economics is really what is most important to us. And with that being said, you could have some volatility in terms of the timing when deals get signed.
Paul Davis: The pipeline remains strong. We remain very confident in executing on that pipeline.
Paul Davis: So when you take a look at the midpoint, that's kind of really what we shoot to.
Paul Davis: But we want to be a little bit realistic in terms of being patient and what you're seeing at the lower end is the possibility of us taking a little bit longer and holding to our point and trying to get to the lower end of the guidance and getting the deal economics that we really desire.
Paul Davis: So the high end of the guidance is things executing at the velocity, what we kind of witnessed at the end of Q4 and maybe seeing some further progress on that.
Paul Davis: So we're very excited. Everything that we've put and remodeled are things that we have clear line of sight today. So we're very excited about the outlook for that. And once again, what you're seeing is just continued momentum of our success in our business.
Speaker Change: Okay, great. Yeah, thank you so much for taking my question.
Next up we'll hear from Hamed Khorzan, BWS Financial.
Hamed Khorzan: Hi, so first off could you just talk about this semiconductor transfer agreement because transfer usually doesn't mean any sort of a cash or licensing.
Hamed Khorzan: Oh, hey Ahmed, this is Paul Davis. Yeah, absolutely. So this is a deal that, as I noted on the call, that we're really happy with. It came together towards the end of the year. We were at a conference in the middle of the year and they approached us.
Hamed Khorzan: It's a technology transfer agreement, and so that's part of our semiconductor business, where we will not only provide a license to our patent portfolio, but also provide know-how and engineering hours for a customer to really get them up to speed.
This particular customer is focused on really high performance.
Hamed Khorzan: imaging and detection systems. They have their own, you know, cutting-edge silicon that they that they work on and so wanted to have...
Hamed Khorzan: you know hybrid bonding as part of their offerings and and so us our engineering team being able to work with them uh is is it's critical so it's not a transfer in the sense of from a value standpoint we certainly do get do get value and and cash from the technology transfer part of
of our agreements, generally speaking, with those types of.
deals.
Okay, and then my follow-up was, is there any...
Hamed Khorzan: update as to how real, you know, possibility it is for you to get this semiconductor deal signed because now you're saying, you know, Q1, 1 half and 2 half might equal the same but Q1 and Q2 might be lumpy so I'm assuming the semiconductor deal is still very questionable.
Hamed Khorzan: Yeah, I mean, you know, like, you know, and you've talked to us, you know, these deals are very large. They're complex. They take they take time getting them them right. And sometimes we do have
Hamed Khorzan: a push out in time to make sure we get the right economics. We're still very much engaged with this customer. And we feel very strongly about the value of our IP and how it's relevant to that customer. So we still very much.
Hamed Khorzan: in our line of sights and our goal for this year to get it done. And there was a push out, you're right, from last year, and that happens from time to time. But it's something that we're still very optimistic about.
Okay, great. Thank you.
You're welcome.
Our next question will come from Matthew Galinko, Maxim Group.
Hey, good afternoon. Thanks for taking my question.
I think you mentioned four IP portfolio acquisitions.
Hamed Khorzan: in 2024, including one in the fourth quarter. Can you talk a little bit more about the pipeline and maybe where those portfolios are coming from? Are they kind of operating company portfolios that are just?
Hamed Khorzan: are they being monetized? Are they IP portfolios that have been passed around, kind of non-operating type companies? Can you talk about the origins of some of these and what you're seeing as far as opportunities?
Matt: Yeah, absolutely Matt. You know, we actually did five patent portfolio acquisitions in 2024.
Hamed Khorzan: and really with a focus again on OTT and broadband connectivity.
Hamed Khorzan: You know that the sourcing of the deals have come from, you know, public companies, you know, private companies that are that are smaller might need need funding. And, and that we have evaluated in terms of being very excited about, you know, the, the IP and being a fit within our existing R&D efforts.
Hamed Khorzan: And so it's really a broad source of different ways that come to us. Our corporate development team is, you know, does outreach and knows people in the industry and also, you know, sometimes brokers that come and approach us as well. But we try to, you know, to really source and be known as a buyer of IP that, you know, can...
Hamed Khorzan: you know, move quickly and evaluate the IP and acquire portfolios from a variety of different folks, and that's where these have come from.
Speaker Change: All right. Thank you. And I guess the follow-up to that question is, how do you?
How do you evaluate them against the
Speaker Change: opportunities that you have on the licensing side? Can you draw like almost like a direct link to what you have in the pipeline to how that might accelerate?
Speaker Change: opportunities in the pipeline or is that a little bit more amorphous and you know you see future opportunities to bring them into deals but you know it's not something that you see you know happening in you know a six-month period.
Speaker Change: Yeah, that's a great question, Matt. You know, we start with making sure we have clear alignment between our business units and the corporate development team on the strategies that we are focused on. Our growth strategies remain the same, which is semiconductors, OTT, and the media-adjacent markets.
Speaker Change: We start with those categories of where we could add to the portfolios through acquisitions.
Speaker Change: and really target specific areas then within that subcategories where we identify gaps in our existing portfolio that we might have, where we could really augment and accelerate.
you know those growth opportunities and so.
OTT was certainly an area as we really.
Speaker Change: tried to focus on getting those deals done. Amazon is a great example of that. And then also the Disney litigation that we filed.
Speaker Change: are proof points of our belief in both our organic and our inorganic patent portfolios that we have. You'll also note, though, that we expanded into broadband connectivity and we acquired a portfolio related to that.
Speaker Change: and that might be an area we haven't really talked much about before. But if you think about our existing customers, especially around pay TV and their businesses and what they're focused on, that's a key area for them and a key revenue stream for them. One that we have been organically working on now for the past several years and we saw an opportunity to add to our portfolio there as well.
Speaker Change: Thank you and if I may get one additional question in just on the balance sheet you've done a lot of work on
Speaker Change: Any sort of target ratios you have in mind or, you know, how much debt are you comfortable holding before you kind of, you know, slow down on the, on retiring debt or that sort of a, you know, as you get their approach?
Speaker Change: Oh, that's a great question, Matt. I mean, when you take a look at where we started in our journey, we made tremendous progress, as Paul noted, paying down over $270 million in debt and really deleveraging our balance sheet, and then, lo and behold, our cash is up from where we started. That's a heck of an effort.
Speaker Change: As we continue to make progress, you know, we see our year-over-year interest expense.
Speaker Change: coming down significantly. If you take a look at the guidance that we provided, if you look at from our first year in 23 to what we're guiding for 25, you're looking at $20 million in interest expense reduction, and that's real savings.
Speaker Change: and being sub $500 million in debt is something that we take pride in.
Speaker Change: And when we take a look at our model and the strength and the opportunities that we have, that's something that Paul and I talk about quite a bit, there is a number out there in terms of debt that we're comfortable carrying.
Speaker Change: If we take a look at some of our forward-looking EBITDA that we have...
Speaker Change: in particular in the next couple of years or so, I think we'd be in somewhat of a comfortable spot.
of kind of carrying a fixed debt component.
Speaker Change: and then really using that extra cash flow to really reinvest in the business and return capital to shareholders.
Speaker Change: It's a great question. It's something that we spent a lot of time focusing on. You can see through the repricing, you know, managing the balance sheet is something that we spent a lot of time and I think we've made some great progress in 2025, 2024 and 2025.
Thank you.
Speaker Change: And everyone, at this time, there are no further questions. I'd like to hand the call back to Mr. Paul Davis for any additional or closing remarks.
Paul Davis: Thank you, Operator. I want to thank our employees for a successful 2024 and for their steadfast commitment to achieving our goals.
Speaker Change: In March, we will be participating in the Loop Capital Investor Conference and the Roth Capital Annual Conference.
Speaker Change: We look forward to seeing you at these and other investor events and updating you on our progress.
Thank you for joining us today.
Speaker Change: Once again, everyone, that does conclude today's conference. We would like to thank you all for your participation. You may now disconnect.