AMC Networks Inc. (AMCX) Q2 2024 Earnings Report, Transcript and Summary

Good day everyone and thank you for standing by. Welcome to the AMC Networks Second Quarter 2024 Earnings Conference Call. At this time, all participants are in a listen-only mode. After the speaker’s presentation, there will be a question-answer session. [Operator Instructions] Please be advised that today’s conference is being recorded. Now I will pass the call over to Nick Seibert, Vice President, Corporate Development and Investor Relations. Please go ahead.

Thank you. Good morning and welcome to the AMC Networks second quarter 2024 earnings conference call. Joining us this morning are Kristin Dolan, Chief Executive Officer; Patrick O’Connell, Chief Financial Officer; Kim Kelleher, Chief Commercial Officer; and Dan McDermott, President of Entertainment and AMC Studios. Today’s press release is available on our website at amcnetworks.com. We will begin with prepared remarks and then we’ll open the call for questions. Today’s call may include certain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Any such forward-looking statements are not guarantees of future performance or results and involve risks and uncertainties that could cause actual results to differ. Please refer to AMC Networks SEC filings for a discussion of risks and uncertainties. The company disclaims any obligation to update any forward-looking statements made on this call today. We will discuss certain non-GAAP financial measures. The required definitions and reconciliations can be found in today’s press release. With that, I’d like to turn the call over to Kristin.

Thank you, Nick and thanks everyone for joining this morning. As we navigate a dynamic and complex media environment, we continue to find opportunities in a strategic plan built around programming, partnerships and profitability. Key to this plan is the creation and curation of celebrated films and series, and making them available to viewers wherever they might choose to watch. I’d like to note the significant progress we’ve made against one of our major strategic priorities, generating strong free cash flow. I’m pleased to report that just halfway through the year, we have already delivered $239 million of free cash flow, and we’re well on our way to achieving our full year guidance for this important metric. This is the result of our prudent and disciplined financial management of the business. Our overall strategic approach is evident in our new branded distribution partnership with Netflix, featuring prior seasons of 15 AMC shows on the number one streaming platform in the world. This non-exclusive licensing agreement will give the vast US audience of Netflix subscribers access to our high quality, critically acclaimed content, with the AMC brand clearly represented. We believe that finding a bigger stage for our shows will be a big win for our own platforms and existing distribution partners. Years ago, Breaking Bad demonstrated the power of Netflix to help build awareness and interest in a series that was still launching new seasons on AMC. We’re looking forward to seeing our core franchises and most important current shows tap into this same powerful engine for audience expansion. Unique partnerships like this demonstrate that AMC Networks is an innovative and nimble company unencumbered by the constraints and limited options facing others in our industry. We have the freedom to work with anyone, and we have a continued commitment to nurturing strong brands and quality storytelling supported by a sustainable and predictable wholesale business model. In addition to new content partnerships, we’re growing distribution of our linear networks and AMC Plus through new internet delivered skinny bundles. During the quarter, we expanded our partnership with Philo, which launched the Ad-supported version of AMC Plus in their new core package. And the response from consumers has been tremendous with consistent week-over-week subscriber gains since the launch in June. Additionally, all of our linear networks, including BBC News, are part of Optimum’s new entertainment TV package, demonstrating the continued strength of our networks in this evolving environment. Viewership of our branded channels in the increasingly important FAST and AVOD categories continues to grow. We now have 18 FAST channels live on 11 platforms, totaling 114 active channel feeds to supplement our linear reach. We are also implementing our partnership strategy internationally, making our high quality content available to viewers through licensing and distribution arrangements with Top Tier partners in territories beyond our own footprint. We’ve recently expanded AMC’s brand presence in the UK through partnerships with Sky for The Walking Dead Universe, the BBC for our Anne Rice Immortal Universe and ITV’s Ad-support in the streaming service ITVX which carries several of our branded AVOD offerings. In keeping with our wholesale approach, our belief in the power of partnerships and desire for financial predictability, we recently entered into an agreement with Comcast Technology Solutions to manage most of our content distribution domestically and around the world. With CTS as our comprehensive back-end solutions provider, we can leverage Comcast’s scale and best-in-class technology to deliver our content much more effectively and economically than we can on our own. In terms of the advertising upfront, I’m pleased with our performance as the market continues to transform. We’ve been able to leverage our well defined and fan focused networks to achieve favorable pricing and volume across linear and digital distribution. We continue to put high quality shows on linear television, particularly AMC on Sundays and WE tv on Fridays, creating value for our advertising and affiliate partners. These examples underscore our position as a sought after and desirable business partner across the industry, enabling us to expand and deepen our distribution and advertising alliances. Our content drove several operational and programming highlights in the quarter which I’ll share before I turn the call over to Patrick for a more detailed look at our financials. The strong performances of The Walking Dead: The Ones Who Live, and the second season of Anne Rice’s Interview With The Vampire, both of which received enormous critical acclaim, drove AMC Plus to achieve all-time highs in viewership this quarter. The penultimate episode of Interview, a trial with a devastating outcome, has become a fan favorite and instant classic. We have renewed Anne Rice’s Interview With The Vampire and The Walking Dead Daryl Dixon for Third Seasons. Both series were part of our very loud and exciting presence at Comic-Con in late July. We were thrilled with the response from our engaged fans at this event which is an important annual focal point for our company and programming franchises. In other programming news, we recently greenlit a third Anne Rice Series focused on a secretive society called The Tala Masca, and announced a new series from AMC Studios set inside the bubble of Silicon Valley from Jonathan Glaser, a sought after writer who previously worked on Better Call Saul and Succession. Horror films from IFC and Shutter were also represented at Comic-Con. I would like to recognize the incredible year we are having with films in the horror genre, with titles like Late Night With The Devil, In A Violent Nature, VHS 85 [ph], and others, we have dominated Top 10 lists and further solidified these brands as being synonymous with the very best in horror, both at the Box Office and on streaming. This level of fan credibility and community is the foundation upon which all our targeted services are built, and demonstrates our strength and unique value proposition. It is worth noting that in the second quarter, both Acorn TV and our HIDIVE anime service implemented price increases with an insignificant impact on churn due to our highly engaged and brand loyal subscribers. On WE tv, our new music competition show Deb’s House was a strong performer for both, the linear network and our all black streaming service. The strength of originals such as Love After Lockup franchise, Deb’s House and Mama June have solidified WE tv’s standing as the number one cable network on Friday nights for black adults, 25 to 54, and black women, 25 to 54. We’re also very excited to see the return of The Braxtons, one of the founding families of reality television, with a new series premiering tonight. In addition to supporting our great content, we continue to drive profitability by refining our organization and operations. Under the leadership of Stephanie Mitchko, our EVP of Global Media Operations and Technology, we’re in the midst of a global transformation to streamline functions and modernize content distribution across all platforms, both domestically and internationally, which we realized through our new agreement with Comcast Technology Solutions. We’ve also reorganized our programming and scheduling teams into a consolidated unit across all brands and platforms. Under our CMO, Kim Granito, we’ve optimized and integrated marketing, media, branding, research and our award winning content room efforts. As noted earlier, it is a dynamic and complex time in media. Even as much larger players are facing existential challenges, AMC Networks is successfully pursuing a strategy built on our proven ability to make great shows to meet viewers wherever they are, and to find new ways to support and monetize our content in a fragmented world. With that, I’ll turn the call over to Patrick. Patrick O’Connell: Thank you, Kristin. As the new media landscape continues to develop, we remain consistent in our strategic and financial priorities. We are leveraging our endemic strength as an innovative and nimble premium programmer, while employing disciplined financial management as the industry continues to evolve. We’ve also made significant progress in optimizing our investments, driving free cash flow and preserving the strength of our balance sheet. We remain on-track to achieve our financial outlook for the year. In just the first six months of 2024 we have already generated more free cash flow than we did in all of 2023, setting us up to achieve our outlook of the year-over-year free cash flow growth for 2024, and approximately $0.5 billion of cumulative free cash flow by the end of 2025. On to our second quarter consolidated results. Consolidated revenue decreased 8% to $626 million in the quarter, excluding prior period revenue from 25/7 Media and the return of rights from Hulu, and the current period revenue related to a one-time adjustment payment at AMC NI [ph], second quarter revenue decreased 4%. Adjusted operating income was $153 million, representing a 24% margin, and we generated $95 million of free cash flow in the quarter. Moving on to our segment level financials. Domestic operations revenue decreased 7% to $538 million, excluding revenue related to the return of rights from Hulu in the prior year period, domestic operations revenue decreased 4%. Subscription revenue of $323 million decreased 3% due to a 12% decline in affiliate revenue which is primarily driven by a decrease in linear subscribers, and was partially offset by streaming revenue growth of 9% which was driven by both subscribers and rate [ph]. At quarter end, we had 11.6 million streaming subs, and we are beginning to see the benefits of recent price increases at our targeted services, Acorn and HIDIVE flow through the P&L. Content licensing revenue was $67 million driven by the timing and availability of deliveries in the quarter. As you may recall, in the second quarter of last year, we negotiated the return of certain rights with Hulu which resulted in a pull-forward of approximately $20 million of revenue. Excluding this, licensing revenue increased 10% year-over-year. Our premium programming remains sought after, and we are seeing strength in licensing as evidenced by the recent domestic and international activity that Kristin detailed earlier. Advertising revenue of $149 million improved sequentially versus the first quarter. On a year-over-year basis, advertising revenue declined 11%, this was primarily due to lower linear ratings, and was partially offset by continued digital growth. Domestic operations AOI was $155 million for the quarter, with a healthy margin of 29%. The year-over-year decrease in AOI was largely driven by the revenue decline in the quarter which was partially offset by continued cost discipline. I’ll now briefly touch on our international segment. Second quarter international revenue was $90 million, and included $13 million of advertising revenue related to a one-time adjustment payment. Excluding 25/7 Media and the adjustment payment, international revenues decreased 4%. On an apples-to-apples basis, second quarter advertising revenues grew 18%, largely due to new streaming offerings including our new AVOD offerings on ITVX in the UK. International AOI was $29 million for the quarter. Excluding the adjustment payment, international AOI was $16 million with a margin of 21%. Moving to the balance sheet. We continue to believe that the proactive and prudent management of our balance sheet affords us valuable flexibility, as well as the ability to fully focus on the evolution of our business as the new video landscape continues to take shape. In addition to the significant refinancing activity that we discussed in detail on our last call, more recently in June, we completed an offering of $144 million of 4.25% [ph] convertible senior notes in 2029 as we sought to capitalize on the volatility in our stock price and add additional liquidity to our balance sheet. We ended the second quarter with net debt of approximately $1.6 billion and a consolidated net leverage ratio of 2.8 times. As a reminder, we have meaningfully extended our maturity profile and pushed out all bond maturities to 2029. We ended the quarter with approximately $1 billion of total liquidity, including more than $800 million of cash on the balance sheet, and our undrawn of $175 million revolver. We continue to appreciate the flexibility and optionality that our cash position affords us. We believe our capital structure will continue to present attractive opportunities for us to deploy cash in accretive manner, benefiting both the equity and the credit overtime. On that note, in the second quarter we repurchased 15 million principal amount of our 4.25% [ph] senior notes due 2029 for approximately $10 million, capturing approximately $5 million of discount. On the topic of capital allocation, our philosophy remains prudent and opportunistic. First, we look to support the business by creating and acquiring compelling programming that resonates with our audiences while maintaining healthy levels of profitability and cash flow generation. Second, we look to improve our balance sheet by reducing gross debt and optimizing our capital structure. Third, M&A and share repurchases or dividends remain further down our current priority list. Moving on to our outlook. We are pleased to reiterate our outlook today, starting with free cash flow. We continue to expect grow free cash flow year-over-year in 2024, and by 2025 we expect to have generated cumulative free cash flow of approximately $0.5 billion. Regarding revenue, we continue to expect total revenue of approximately $2.4 billion for the full year. Notwithstanding that in terms of our initial expectations for the full year, as discussed on our fourth quarter call regarding the specific revenue lines that underpin our full year revenue outlook, we are seeing some shifting in the composition of our full year revenue. Moving to AOI. For 2024 we continue to expect consolidated AOI of $550 million to $575 million. Continued streaming and digital advertising growth, as well as prudent expense management, remain a focus despite continued revenue headwinds in the business. Our content investments are at appropriate levels to best support our business and drive free cash flow. For the full year 2024, we anticipate that cash programming spend to be approximately $1 billion, and that programming amortization will be similar to 2023 levels. I’ll now dive a little deeper into some of the nuances related to programming amortization. In 2024 we continue to experience comparably lower levels of amortization expense, the result of strategic programming reassessments that occurred at the end of 2022. Additionally, carryover amortization of prior year programming investments continue to flow through the P&L. Given these dynamics, as we look to next year, we anticipate a year-over-year increase in programming amortization expense for 2025. It is important to note that this is non-cash and does not impact our free cash flow expectation for next year, and we remain highly confident in our ability to achieve cumulative free cash flow across 2024 and 2025 of approximately $0.5 billion. I’ll close with what I’ve said in the past, AMC Networks continues to employ a back-to-basics approach that emphasizes broad distribution of our content and brands across platforms and prioritizes near-term monetization. And at the same time, takes advantage of our unique position as a nimble and innovative premium programmer. We’ll continue to allocate our capital wisely to ensure we maintain a healthy balance sheet, remain extremely disciplined on expenses, and balance appropriate levels of programming investment against available monetization opportunities. With that operator, please open the line for questions.

[Operator Instructions] Please stand by for our first question. And it’s from Thomas Yeh with Morgan Stanley. Please proceed.

Thanks so much. Good morning. Kristin, I wanted to dig in a little bit on this Netflix feel. How does it look in terms of the outline of what you’re expecting it to do relative to the experiments that you had run in the past with, say, for example, HBO with the AMC Plus pics [ph]? And has the experimentation evolved in any way in terms of what you’re hoping to get out of it and what you’re hoping to see?

Sure. Good morning, Thomas. We’re super excited about this deal. A lot of people do talk about the Breaking Bad effect and how a decade or so ago, the exposure that Breaking Bad got on Netflix really helped break that series out into something that’s now kind of part of our culture. And so with the Netflix deal, we’re putting our content non-exclusively prior seasons on a very big stage in the US. And these shows not only will get a lot of exposure to the 125 million Netflix subscribers in the US, but for our distribution partners who all have Netflix partnerships themselves, it’s beneficial to them as well, right. So if you think about, Roku [ph] has a Netflix button on their remote control, right. Comcast and others have Netflix partnerships and bundles within their distribution ecosystem. So, for us having this exposure we think will really drive as it did with Max, people back to AMC and AMC Plus for the new seasons that are premiering in 2025 and 2026 of these franchises. So, it’s exciting for us. I think Netflix is also equally excited about it. So August 19, it all shows up onscreen; so we encourage everybody to check it out and to -- if there’s anything you haven’t consumed yet of our newer franchises, watch seasons one and in some cases, seasons two, and then roll on back to us when we get into the fall and into early next year for the premiers of the new seasons.

Got it. Understood. Makes sense. Patrick, I wanted to ask about your comment also on the year-over-year increase expected in programming amortization next year. You’ve been running at about $1 billion of cash spends on programming for this year, and I think last year as well. What’s driving that bump in cadence? Are you expected to kind of hold the $1 billion zone in terms of what’s the right investment level for the future of the business? Patrick O’Connell: So the answer to your first question is, and just to clarify, the $1 billion is a cash number, right. So that $1 billion of cash programming investment is what we’re currently, kind of, investing this year. But let me flip back to the amortization question, which I think is what you’re really asking here. So obviously, programming is our largest and most strategic investment that we make in this business, and so we’re always continuously calibrating it against the available monetization opportunities, as I said in my remarks. In years passed, cash programming has floated upto $1.3 billion, almost upto $1.4 billion; certainly much higher than the $1 billion that we’re spending this year. And in 2022, you’re aware we took some decisive steps to right-size our programming levels. AMC has always been about quality, not quantity. I think that’s kind of resonated in the market. I think we’re taking very much back to basics approach there. We also reduced the level of programming on some of our services in 2023 as well. And so obviously that has a flow through effect in terms of the amortization that gets realized in the income statement. So taken together, those two steps, the write-downs at the end of 2022 and the reduction in sort of programming volume across some of our services in 2023 had the effect of reducing programming amortization in 2023 and 2024. But the reality is, we have yet to fully amortize the pre-2023 kind of higher levels of investment, what we call kind of carryover AMORT that kind of flows through the system over 3 to 4 years. So this is going to have the effect of increasing year-over-year amortization from 2024 into 2025, just given the amount of puts and takes, so we don’t think this was sort of fully kind of recognized in the markets; we wanted to call it out. But obviously, the most important aspect here is that our cash programming investment for 2024 remains roughly $1 billion; that’s our current rate. And you know, we also have clear line of sight towards the roughly $0.5 billion of free cash flow that we’ll generate between this year and the next. So this was just an effort to, sort of like, help people understand some of the moving pieces because there is sometimes some confusion between amortization and cash program investment.

Can I just add to that? Because Dan’s sitting right here, and I just -- I need to congratulate him and his folks for -- you know, even with the reduction in expense since I’ve joined the company. The quality of what we’re putting on the street continues to be stellar. And we talked about a little bit in the script but anybody that’s watched season -- the current season of Interview With The Vampire, Episode Five, or if you’ve watched Daryl Dixon, which was shot in France, like the quality of what we’re producing ourselves. And then on the film side, the value of the acquisitions that our film team is doing continue to really build for us; the franchises, the content and the asset value because we’re doing great stuff, but we’re doing it in a very cost conscious way. So, just -- you know the reduction in expense is important but we’ve really, I think, sustained, if not, enhanced the quality of what we’re putting out in our products across all brands,

Understood. It’s the lifetime value of the asset in terms of -- the useful lifetime you’re using to amortize over multiple years. Has that changed? Are you kind of continuing to assess that multi-year amortization life? Patrick O’Connell: Two pieces of that. So one from an accounting perspective; no. There’s been no changes in the amortization policy or the accounting sort of around it. But to Kristin’s point in terms of building asset value in the studio, and the visibility we have into content licensing revenue, this year and next, and the $225 million [ph] that’s sort of out there in terms of guidance for this year, which I think we feel really good about; that certainly has a much longer tail. And so we continue to build asset value in the studio as a result of -- us, one at the current sort of volumes of programming, at the levels of quality that Kristin mentioned as well. There’s been sort of -- I would say, almost a return to quality in the licensing market, and we’re seeing a lot of strength there. So we feel good about that long tail value.

Thank you. Our next question comes from the line of David Joyce with Seaport Research Partners.

A couple things. First, on the streaming services, move over the backend to Comcast Technology Solutions. Is that going to provide any lift to AOI or were those already self-funding before you did that and this just makes it even more efficient? It is the first question. Patrick O’Connell: Hey David, it’s Patrick. I’ll take that first one. Listen, from a financial perspective, as is our reputation, we are continuously looking for efficiencies across the business, and so it just made a ton of sense for us as this arrangement allows us to avail ourselves of Comcast Technology Services -- sorry, Solutions; scale, infrastructure and architecture. From a timing point of view, we just signed this. This is going to be a long-term deal; there will be no impact in 2024. There will be a modest amount of onboarding and maybe some duplicative costs into 2025 but with clear paybacks over kind of 12 to 24 months. Lastly, I think it’s worth noting in terms of the economics of this deal, that it’s both, cost and capital efficient. So when we look at the NPV of this which is clearly positive, we think about it on an operating free cash flow basis; so AOI less CapEx, and we’ll get savings across both buckets. And so we feel really good about this. Net-net, it’s not just about cost savings but also cost certainty, which I think Kristin outlined here. So more to come here in the future, but again, think about it in terms of both cost and capital efficiency going forward.

Okay, that’s good to hear. Secondly, on the Netflix deal revenues would be recognized when you deliver episodes of your content. Are you making everything available at once or is it going to be kind of spread out for a while?

Yes. So 13 of the 15 shows will be available on August 19, 13 of the 15 series, and then we have two more premiering in the first quarter of 2025. And as far as revenue recognition… Patrick O’Connell: Yes, as far as revenue recognition, actually, the full amounts going to be recognized at 2024 because the availability date will be just ahead of Q1 at the end of Q4; so this revenue will be realized this year. And I would say -- just David, kind of more broadly on content licensing; we’re seeing strength in this market, both domestically with the Netflix deal, but also internationally with the new deal we cut with The Walking Dead titles with Sky. And so I know I mentioned in my commentary, some revenue uplift there. And this is -- you know, to Kristin’s point earlier about just the quality of content that we continue to produce, and there being a little bit of -- sorry quality, and they’re being sort of flight to that quality. And given how much we produce for our schedule, we’re seeing demand across not just AMC content, but also the program we produce for Acorn, HIDIVE, etcetera. And as the linear universe continues to shrink, the value of that license content in our broader ecosystem outside AMC or AMC Plus continues to increase. And so as we’ve said before, we’re exploring ways to capture additional value, both in terms of the hard dollars we get in licensing revenue, but also in terms of what I call sort of soft dollars; this is Kristin’s point about people coming back into the AMC ecosystem to watch, kind of, current season episodes, etcetera. So we think with this new model, with the non-exclusive constructs, with meaningful brand support in some cases, it’s sort of a win-win, both hard dollar licensing revenue upfront and hopefully some soft dollar economics on the backend. So net-net, this is just another way we’re exercising some of our creative kind of financial models to really sweat these programming assets as best we can.

Thank you. [Operator Instructions] Our next question comes from the line of Steven Cahall with Wells Fargo.

Thank you, Patrick. First, I just wanted to ask you about your comment on revenue shifting around a little bit within the guidance for the year. My best guess is this means that your licensing revenue is a little stronger, maybe after the Netflix deal announcement and the Sky deal announcement. I’m wondering if that implies with some other revenue is a little weaker. So I’d love to just understand the mix and how we might think about that carrying forward to revenue in 2025? And then to follow-up on the content amortization; that’s very helpful. Thank you for taking us through that. I don’t think that you report amortization, I think it’s mixed in with some other expenses. So I was just wondering if you could give us a ballpark for what amortization is running at in 2024 or at least how big the step-up is from a dollar perspective in 2025 as we kind of think about pencilling out the impact of your strong free cash flow generation, vis-à-vis some of these AOI dynamics to get to net leverage? Thank you. Patrick O’Connell: Okay. So I’ll take those in order. First, on just kind of revenue composition and the changing nature of the business here. I mean, listen, just to take a step back, we are operating in a very challenging and dynamic environment. We’re currently in the state of what I would characterize as sort of disequilibrium between the linear and streaming economic regimes, right. It’s making kind of forecasting a bit more challenging. The benefit we have at AMC is that we’re small, nimble, creative, and we’ve got a really good kind of value equation in the marketplace, whether it’s kind of on the wholesale or on the retail side. So that gives us a lot of kind of creative avenues to deal make, frankly, to put a point on it. And so as I mentioned before, we’re seeing like real positive yield on the licensing side. We’re seeing momentum across our streaming products, we’ve got some pricing power there; others have noted that as well. And we’ve got ways to sort of cut deals that may, frankly, drive additional advertising or affiliate revenue depending on how they’re cut. So -- and as you see the Netflix deal, there continues to be a really robust market for the premium scripted programming that we produce. So sort of -- you take it all together, the three pillars of our earnings guidance; the $2.4 billion in revenue, the $550 million to $575 million of AOI, and the year-over-year free cash flow growth, as well as the $500 million -- roughly, $500 million of cumulative free cash flow between this year and next, is still kind of fully intact. The pieces may move around a little bit here or there, but I think you’re reading it right in that we are seeing strength in the licensing market, and that’s offsetting some of -- maybe some weakness in some of the other markets. But there’s still kind of movement because we’re small, nimble, and some of this creative deal making may wind up dropping revenue in sort of other places overtime. So net-net, it’s just a reflection of kind of our unique value proposition in the market, and ways we can kind of creatively monetize our content. So that’s on the revenue side. In terms of the amortization side. Here your question in terms of the nature of the disclosure there, you should think about the amortization this year as being kind of roughly in line with the cash content spend, sort of $1 billion-ish [ph]. I won’t sort of go into further detail than that. And I think what I’ll do is, we will revisit the 2025 number when we give guidance then. So I’m not going to get into any sort of forward-looking statements other than to say, obviously, we are sort of expecting some growth here, given all the dynamics that I outlined in terms of just the volume of programming, as well as the cadence. And frankly, what show gets aired when, and at what cost, etcetera. There’s just a lot of moving pieces there, so I’m not going to get into the details other than say it will kind of grow year-over-year. We just want to call that out so people kind of have that in their models. But thanks for the question.

And maybe just a quick follow-up. I know you had a tough licensing comp in 2023, it sounds like it will be really strong with this stuff in 2024. Should we expect then, because the revenue isn’t amortized for licensing and it’s booked in the period. Is that probably going to be a tough comp in 2025 given the nature of kind of these landmark deals? Patrick O’Connell: It’s tough to say, honestly. I mean, like, given our current level of production and the strength of seeing in the market, it feels good right now. We feel really good about 2025, it’s probably going to be north of that. We’ll see how it goes from there.

Thank you. As I see no further questions in queue, I will turn the call back to management for closing remarks.

Thanks for joining us today. Have a good weekend.

And thank you all for participating in today’s conference. You may now disconnect.