Iridium Communications Inc. (IRDM) Q1 2021 Earnings Report, Transcript and Summary

Good morning and welcome to the Iridium Communications’ First Quarter Earnings Conference Call. All participants will be in listen-only mode. [Operator Instructions] Please note, today's event is being recorded. I would now like to turn the conference over to Kenneth Levy, Vice President of Investor Relations. Please go ahead sir.

Thanks, [Ragav]. Good morning and welcome to Iridium's first quarter 2021 earnings call. Joining me on today’s call are our CEO, Matt Desch; and our CFO, Tom Fitzpatrick. Today's call will begin with a discussion of our first quarter results followed by Q&A. I trust you've had an opportunity to review this morning's earnings release, which is available on the Investor Relations section of Iridium's website. Before I turn things over to Matt, I'd like to caution all participants that our call may contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements are statements that are not historical fact and include statements about our future expectations, plans and prospects. Such forward-looking statements are based upon our current beliefs and expectations and are subject to risks, which could cause actual results to differ from forward-looking statements. Such risks are more fully discussed in our filings with the Securities and Exchange Commission. Our remarks today should be considered in light of such risks. Any forward-looking statements represent our views only as of today, and while we may elect to update forward-looking statements at some point in the future, we specifically disclaim any obligation to do so even if our views or expectations change. During the call, we'll also be referring to certain non-GAAP financial measures, including operational EBITDA and pro forma free cash flow, free cash flow yield, and free cash flow conversion. These non-GAAP financial measures are not prepared in accordance with Generally Accepted Accounting Principles. Please refer to today's earnings release in the Investor Relations website for further explanation of these non-GAAP financial measures and a reconciliation to the most directly comparable GAAP measures. With that, let me turn things over to Matt.

Thank you, Ken and good morning everyone. So Iridium’s first quarter came in pretty much as we expected. It’s tough to compare it to the first quarter of last year as that quarter was hitting on all cylinders before the pandemic struck the world and our many partners and customers in the last week or two of March. Though the pandemic continues to impact certain industries and geographies, 2020 really underscored the strength and resilience of Iridium’s wholesale business model. Across our global ecosystem of more than 450 partners, each felt something different. Some felt a rapid slowdown; others missed the seasonal pickup that's typical of their business, while some actually saw an increase in activity. Fortunately, our business is off to a good start this year. Economic activities picked up in many parts of the globe and even in the most hard hit of industries like commercial aviation, consumer activity as returned in air travel volumes are on the rise. This year, we've been pleased with partner activity, the renewed pace of equipment sales, and subscriber growth and feel like we're on track to achieve the full-year guidance we provided about two months ago. I'm looking forward to seeing the remaining economic headwinds that our partners have been grappling with fall away as we move further through the year. We're really encouraged by the vaccination rates here in the U.S. and the optimism we're hearing from our partners about continued business recovery through the rest of 2021. As I said, we had a tough comp this quarter in light of the strong start to characterize our business in the first quarter of 2020. As a result, we expect to see an acceleration of service revenue growth for the balance of the year. I feel good about 2021 as a year, where we continue to emerge back to the growth rates we're capable of. And the trends I'm now seeing bear this out. Equipment sales and subscriber counts continue to grow in the first quarter, which highlights strengthening demand and the underlying health of our business. Most of our business partners have acclimated to operating with the many logistical challenges and business restrictions over the past 12 months, and have made good progress in rebuilding their sales pipelines, scheduling installations, and improving their revenue cadence. As I discussed in February, 2021 will be a year of new product introductions. Within IoT, we are seeing many signs of normality. In the first quarter, we passed a symbolic but important milestone, 1 million commercial IoT subscribers using our network, and we continue to expect double-digit subscriber growth well into the future. In the last six months, we rounded out the Iridium Edge line of commercial IoT devices with a long lived solar powered unit, and an all-in-one integrated unit with processor and development platform to facilitate the creation of new applications without a lot of additional engineering. We're pleased with the momentum of these new products that they're creating, and look forward to expanding our existing base of tens of thousands of Iridium Edge family devices. Our strategy has been to make it as easy and as fast as possible to add Iridium connectivity to an existing or competitive IoT offering. And we're reaping the benefits of this plan now. Within the retail environment, demand for personal communication devices seems to have largely recovered. We estimate that these many messaging devices account for approximately 40% of all our commercial IoT subscribers now. Obviously, this is a market that Iridium is very well suited to support. Though these devices currently operate at legacy narrowband data rates, they allow for a global connectivity and allow subscribers to keep in touch even when off the grid. We're talking now to these consumer companies about expanding into our higher speed Iridium service platforms, and are excited about the new products they're planning and we expect it will drive higher ARPU’s in the future. Overall, we're seeing a lot of enthusiasm from our partners for our newest transceiver, the Iridium 9770. This mid-band speed transceiver offers throughput that is 35 times that of our legacy modems, and we're seeing a number of new industrial IoT solutions starting to roll out this year from partners. With growth of subscribers in our commercial IoT segment averaging 20% per year, we still see plenty of runway for meaningful revenue growth and new subscriber adoption. Well, you'll see more on this later in the year. We believe Iridium connectivity can be embedded in many more consumer devices and are working towards that now. We've been very aggressive at licensing our core technology, whether they be chipsets or waveforms to companies that can embed them into their own products and will continue to do so. Our network spectrum and coverage are well suited for this and there continues to be good interest from the industry. In maritime, after the launch of Iridium GMDSS late last year, we've continued to see a steady stream of new orders and installations as fleets and ship owner seek out affordable solutions for global safety voice and distress services. Today, hundreds of terminals have shipped to the channel destined for end users in the new build market, as well as for vessel retrofits. We see Iridium GMDSS as a gateway service to the largest maritime vessels, yet price is such an attractive level that will expand the GMDSS market to smaller vessels that would otherwise go without this maritime safety device. This safety distress terminal will gain additional momentum when paired with our new Iridium Certus 200 terminals, which start hitting the market this quarter. We're seeing strong interest in Iridium Certus 200 already. It is viewed as the successor to our Iridium pilot terminals with a compelling value at its lower entry level price point. Beyond affordability, it is lighter, smaller, and faster than competing services with global coverage that they cannot offer. Among our current broadband offerings, we're seeing continued growth of our Iridium Certus 350 and 700, maritime and land mobile high speed terminals. Terminal installations are still slower than expected on ships, but picking up month by month. Increasingly, Iridium is being sold as a companion to Maritime in addition to being a standalone terminal for satellite communications. As we look forward, we expect that Iridium service will be the service of choice for VSAT backup, as it remains the most cost effective broadband offering with true global coverage and the fastest L-band speeds in the industry. In the first quarter, we saw 10% growth in broadband subscribers with ARPU’s pretty consistent to the year ago period. Going forward, broadband will continue to be an important contributor to our revenue growth. As you would expect, our business with the U.S. government has remained steady throughout the pandemic. The government continued to add subscribers in the second year of their seven-year fixed price contract with us to maximize their use of Iridium service. We expect to see an increase in engineering and support work this year as the government continues its upgrades to its private gateway in preparation for broader use of Iridium Certus. Switching gears to Aireon, despite lower international air travel, use of Aireon service by ANSP seems to be getting back to growth on the apparent backside of the pandemic. In the first quarter, I was excited to see NAV Canada NATs using Aireon to give direct shorter point-to-point routes to airlines flying between North America and Europe, rather than using the traditional and less efficient North Atlantic track system, proving out the benefits of oceanic ADS-B surveillance. During the quarter, Aireon operationalized service with the ANSPs is of India, Iceland, and Papa New Guinea. In the case of NiuSky Pacific in Papa New Guinea, Aireon Space based ADS-B service is replacing the country's ground based radar infrastructure, which alleviates the expense of maintaining, upgrading, and repairing radar stations throughout the country's mountainous terrain, providing the more cost effective solution. In the first quarter, Aireon also announced a new contract with the ANSP of Norway for helicopter surveillance in the North Sea. This is the first space base ADS-B used case specifically targeted for monitoring helicopters, and there's an innovative way to enhance safety and rescue operations in this region where helicopters are required to be equipped, equipped with ADS-B antennas. In this particular used case, Aireon will make Norway's low flying traffic visible to controllers, and also allow them to be integrated in the country's automated air traffic platform. With these recent deployments, Aireon Technology is now in service or will be in service in about half of the world's airspace. This is a remarkable achievement for a company that just went operational in 2019. Aireon continues to deliver on his promise to improve aircraft surveillance and safety, and we're very proud of their progress, and to be an equity stakeholder. I would also point out and highlight that we recently published our inaugural report on environmental, social, and governance matters in March. Iridium has always taken pride not just in doing well, but also in doing good. I would encourage you to review our 2020 report to learn more about our approach to ESG. Before I turn things over to Tom, I want to point out that we took advantage of the volatility in the market to purchase our first shares of stock under our buyback program in the first quarter. This of course demonstrates that we are now delivering on our strategy of leveraging our strong free cash flow to return capital to shareholders. So, in closing, Iridium’s business has demonstrated itself to be quite durable, even during the pandemic. We continue to generate significant free cash flow and have already deployed some of that cash through our new share repurchase program. We also see open lands for growth and are continuing to invest in R&D and new services to add to our diverse streams of income. Looking forward, service revenue growth will accelerate in the coming quarters as global lock downs and travel increases, powered in part by new product launches and unique applications. We have a busy year ahead and our plate is full. We'll cover a lot more of this and a more comprehensive, sort of five year outlook in our coming Investor Day next month. And I hope you'll join us. So with that, I'll turn it over to Tom Fitzpatrick for a review of our financials. Tom?

Thanks, Matt and good morning, everyone. I'd like to start my remarks by summarizing our key financial metrics for the first quarter, and providing some color on the trends we're seeing in our major business lines. Then I'll recap the 2021 guidance, which we reiterated this morning and close with the review of our liquidity position and capital structure. Iridium continued to execute well as we entered the second year of the pandemic generating total revenue of 146.5 million in the first quarter. Revenue was up 1% from the prior year's quarter and in-line with our expectations. As we noted on our February call, we started the New Year against a particularly tough comp, as much of the prior year's quarter was unaffected by the COVID-19 pandemic. This change in operating environment accounted for the off trend growth we saw on the first quarter and sets the table for improved growth trends for the balance of the year as we lap the start of the pandemic. Operational EBITDA was 89.8 million in the first quarter. The 2% decline from last year's quarter reflects the impact that the pandemic has had on our subscriber usage versus a relatively clean quarter a year ago. In light of our expectations for steady improvement over the course of 2021, our full-year EBITDA guidance remains at 365 million to 375 million. On the commercial side of our business, service revenue was down 1% this quarter to 90.4 million. This decrease primarily reflected a tough comp, presented by a one-time billing settlement and hosting data revenue in the year ago period, as well as lower usage in the first quarter related to the pandemic. Commercial broadband revenue totaled 9.4 million in the first quarter, up 8% from the prior year quarter. While growth from our new broadband offering has remained steady, travel restrictions continue to hamper installations and the activation of new equipment. This said, we’ve been pleased with the feedback from the channel, particularly on the performance and reliability of our broadband service. Iridium Certus broadband remains an important component of our long-term growth and we expect installations to improve once travel restrictions lift and served as a tailwind to revenue. In commercial IoT, we continue to benefit from retail use of personal communications devices. This led to revenue growth of 4% in the first quarter, even with the ongoing headwinds in aviation and oil and gas amid the pandemic. IoT ARPU was $8.39 this quarter, compared to $9.71 in the prior year period. The primary driver of this decrease was lower usage as a result of the effects of COVID-19, most notably in aviation. During the quarter, we added 41,000 net new commercial subscribers with the game driven predominantly by IoT. As a result, commercial IoT data subscribers now represent 73% of billable commercial subscribers, up from 70% in the year ago period. We estimate that consumer oriented plans now account for more than 40% of our 1 million commercial IoT users. Posting and other data services revenue is 14.8 million this quarter, down 9% from the comparable quarter in 2020. As we've noted previously, in the first half of 2020, we benefited from a billing settlement and cumulative catch up with revenue associated with an updated estimate based on observed usage patterns on the Harris payload that totaled about $2.3 million. Approximately 1.3 million of this was recognized as revenue in the year ago period and the balance in the second quarter of 2020. This accounted for the decline in hosting and other data services revenues this quarter, and will present itself again in the second quarter. Turning to the Government Service business, we reported revenue of 25.8 million in the first quarter, up from 25 million in the prior year quarter, representing a 3% rise. This increase reflects the contractual terms of our long term EMSS Contract. Government subscribers grew 9% year-over-year and reached a record 153,000 in the first quarter. Subscriber equipment started in New Year on a strong note rising 8% in the prior period to 24 million. Favorable shipments in the first quarter lead us to believe that seasonal activity could improve in 2021, compared to what we saw at the outset of the pandemic a year ago. We continue to forecast full-year equipment sales will remain in line with last year's total. Engineering and support revenue, which is largely episodic, was 6.4 million in the first quarter, as compared to 7 million in the prior year's quarter. As Matt noted, the U.S. government is upgrading their dedicated Iridium gateway to enable Iridium service capabilities. As a result, we continue to expect government engineering work to ebb and flow from quarter-to-quarter as these upgrades are completed. In all, the first quarter came in much as we had expected. Travel and business restrictions tied to the pandemic continue to weigh on certain industries that we support. While trends are improving, the impact of the pandemic was largely absent from our results a year ago. We were fortunate to have a number of new products they recently launched, as well as a strong pipeline of new partner products that we’ll roll out this year. Together, these should provide incremental revenue and subscriber growth with each quarter. As a result, we continue to reiterate our full year guidance for service revenue growth of approximately 3%. This outlook for service revenue suggests growth of approximately 14 million in 2021. Given that revenue was flat year-over-year in the first quarter, I'd like to provide perspective to put our revenue guidance in clearer focus. To achieve our full-year guidance, we need to generate approximately 5 million of quarterly service revenue growth in each of the remaining quarters of the year. This outlook is quite reasonable if you consider the following: First, as we've noted for some time, the virtual standstill in commercial aviation in 2020 impacted our quarterly revenue by about $1 million to $1.5 million per quarter starting in the second quarter of 2020. So, our comp should ease by that amount. And we're also expecting improving usage as air travel increases going forward. Second, there was a true up and hosted payload in the first quarter of 2020 to the tune of about 1.3 million, creating a headwind that will not recur at all in the third and fourth quarters, and will occur to a lesser extent in the second quarter. Third, we expect year-over-year performance in our voice and data business to improve steadily during the balance of the year, coinciding with the improving conditions in the global economy and a reopening across border travel. Depending on the region, an increase in vaccinations and a return to normalcy is expected to have an impact with the use of telephony and personal communications during Iridium’s important summer selling season. As an example, I would call out last week's deployment of our push to talk service by the Indonesian government. PTT has been a bright spot with the addition of new equipment and functionality and is generating increasing interest around the world. We also anticipate improved broadband performance this year. Improvement should follow an increase in activity of global ports, which will allow our business partners to access maritime vessels and install Iridium Certus 700 terminals. Within the government market, we expect additional traction from our partners that sell Iridium Certus into the DoD in the second half of the year. Finally, we expect the introduction of our new mid-band products in the coming months to gain traction by the end of the year, generating incremental revenue. These factors give us confidence in our ability to produce service revenue growth that averages approximately 3% this year, following an essentially flat quarter. Moving to our capital position as of March 31, Iridium had a cash, cash equivalents, and marketable securities balance of approximately 222.3 million. Our growing cash flow has been a source of liquidity and is one of the reasons that our board authorized the share repurchase program in February. In the first quarter of 2021, Iridium purchased 1.6 million shares of common stock at an average price of 37.50, leaving the company with a balance of $240.7 million in its $300 million share buyback program. We expect to continue to be opportunistic in executing these repurchases. Net leverage was four times of EBITDA. At the end of the first quarter, this was down from 4.6 times a year earlier, and includes the impact of our buybacks during the first quarter. Our long-term target for net leverage continues to be between 2.5 times and 3.5 times of EBITDA. We anticipate that we will be within this target range by year-end 2022, even after giving effect to the maximum $300 million share buyback. Capital expenditures in the first quarter were 9.4 million, and we continue to expect maintenance CapEx of about 45 million this year as we accelerated investments in real estate and support new product development. We continue to expect pro forma free cash flow approximately $232 million this year, up 15% from 2020. We arrive at this level by using the midpoint of our 2021 EBITDA guidance at $370 million and back off $71 million in net interest pro forma for our repriced debt, 45 million in CapEx, and $22 million in working capital inclusive of the appropriate hosted payload adjustment. This free cash flow reflects a conversion rate of 60% in 2021, representing a yield of more than 4%. We continue to expect growth and pro forma free cash flow will outpace the rate of growth and EBITDA this year. A more detailed description of these cash flow metrics along with the reconciliation to GAAP measures is available in a supplemental presentation under events in our Investor Relations website. In closing, Iridium continues to enjoy a strong free cash flow and improving financial position and will realize incremental revenue growth as the effects the pandemic abates this year. We see many opportunities both near-term and long-term for incremental growth and are happy that our many new products will be available to our partners this year to attract new subscribers and gain traction in new geographies and verticals. With that, I'll turn things back to the operator for the Q&A.

Thank you. [Operator Instructions] Today's first question comes from [indiscernible]. Please go ahead. Mr. [indiscernible] your line is open sir. Alright, well, let's move on to our next question, which today comes from Ric Prentiss with Raymond James. Please go ahead.

Hey, guys. I'm sure [Walt] will pop back in. Couple of questions. First, I want to talk about ARPUs a little bit. Tom, you mentioned the IoT side has been affected by aviation, but you're about to lap that. How should we think about the recovery though back to a more normal level on the aviation impact on IoT and what the trends on IoT ARPU, given the mix of personal communication devices might look like?

Right. So the second quarter, in terms of the comp, when you compare year-over-year, you're going to have 1.5 in the area of 1 million to 1.5 million in the prior year quarter that's going to be affected by the aviation usage. So, it should not be as much of a decrease in the second quarter as the first because it's kind of apples-to-apples with the aviation impact. And then as sequentially as you go forward, you know, the improvement in air travel should be accretive to the IoT ARPU.

And you should have [clawback] some of that 1 million to 1.5 million a quarter over time.

Say it again, Ric.

We should have a [clawback] similar to that 1 million to 1.5 million quarterly revenue that went down over time as aviation over time.

Over time, that’s right. Yeah, that's right.

Okay. And then within broadband, obviously saw a small base of customers, but starting to install some – how should we think about is there seasonality in that business from an ARPU standpoint on the broadband side? And as you think about selling companion and backup pieces, where do you think ARPU has in the broadband segment, as you continue to hopefully see more sales results come online?

Yeah. There is a bit of seasonality there. I mean, winter, in the Northern Hemisphere is the least amount of usage across many of our businesses, but maritime is one of them, a lot of ships get put away or aren't as actively sailing. So, you know, it's typically the fourth quarter and particularly first quarter, they're a little lower, and then fishing seasons and more travel occurs in the second and third quarter that I think ARPU picks up a bit, and that's been sort of a historical rate. In terms of ARPUs, I mean, ARPUs on VSAT companion are relatively fixed, you know, that sort of a typically more of a fixed price with an overage in case they use it a lot. And that's a bit lower level, obviously, than primary units. I think increasingly long-term, you know, VSAT companion will be the predominant service along with other smaller vessels. And that sort of thing, though, I think that that's going to be buoyed a bit as we move into this new service 200 round of products, because those are very cost effective for ships to be – act as both primary services, as well as VSAT backup. I'm not expecting, you know, huge growth in broadband ARPUs necessarily, certainly recovery back to traditional levels in the summer and everything, perhaps, and so there might be some growth in that regard. But I don't think this is necessarily about that this is more about continued volume, continued usage, and continued revenue growth in that segment.

Make sense. And as you think about that addressable market, are you still kind of thinking there's 60,000 vessels of the larger ones, and then you get into some smaller ones, help us just kind of understand where you're at, as far as gaining share and what that addressable market is?

Well, you know, there's additional vessels that will be built and going out there. It's a slow growth at best, you know, kind of market. So, it's sort of fixed in terms of its size and usage. The [60,000] refers to, sort of GMDSS qualified vessels that's really larger [solar class vessels], but there's hundreds of thousands of smaller vessels that increasingly want to be connected and would not be good choices, say, for the VSAT terminal, because that's a fixed cost per month. And, you know, occasional usage or pay as you go kind of usage isn't really what that model is about. So, those were all targets for us. I kind of look at the overall LBAND market as being, you know, flat-to-slightly down over time, but we seem to take a lot of share away because of our advantages and our terminal over the incumbent and increasing usage of VSAT companion as that market continues to expand. So, I think the growth is going to be more at the lower end, and definitely, as we move into higher speed from a service perspective, higher speed, lower end products, the mid-band products, etcetera as we expand our voice and data services, etcetera.

Obviously, an interesting event in the industry ORBCOMM receiving an offer to go private, what can we glean from that offer as far as re-through to Iridium?

Well, you know, I think it certainly doesn't mean anything much to us going forward, if anything other than lack of less visibility to them. I feel like we've been pretty successful over the years that sort of winning the predominant share of, sort of the business on the satellite side. They've moved much more heavily into the cellular side and more into solutions as they've, sort of moved away from that segment. You know, for example, we've done very well in the heavy equipment segment. And I think that's, you know, they've been looking to find ways of growing perhaps on a public basis, that's been more challenging. So, I think what it says overall, though is that this is, you know, the space industry is pretty hot in terms of investor interest. There's a lot of people who are looking to, sort of participate in, you know, what will continue to happen in this industry, whether it be consolidation at certain levels and growth in new technologies and new areas at other levels, and I've said this publicly before, a lot of people are talking to everybody right now, because of the, sort of amount of liquidity and activity in the market. And I think that means that there could be continued activity around a number of different segments. And I think ORBCOMM is just sort of an example of that right now.

It's good to see the free cash flow production. Keep up the good work, guys. And hope you're doing well through these COVID recovery times.

Thanks, Ric. Appreciate it.

Thanks, Ric.

Thank you. And our next question comes from [indiscernible]. Please go ahead, sir.

Thanks. Sorry about that, Matt. It is my new T-Mobile phone system. How are you doing?

Good.

Just, let's start with the share repurchase, I guess, because this is the first time ever for the company that you bought stock back. I think the pace was 59 million, you got 240 left, your average price was I think [37.54], the stocks went out that far off of it now, can you just – I know you've kind of, this is not a big surprise, the authorization came, you talked about having an interest here, but now that you've done it for one quarter, can you comment on whether this is the kind of rate that we should expect going forward, because obviously you'd burn through the authorization, you know, a little bit faster than how long it's authorized, I guess?

Yeah. Tom can add to it, but, you know, this is going to be a quarter by …

I mean it’s 60 million, you're going to get through it before two years, right?

Yeah. This is a quarter-by-quarter kind of evaluation that obviously we have to make, you know it's a computation on what our intrinsic value really is. And obviously, that's above the level that we're at right now. And so, you know, you can expect if the stock happens to be, you know, in a short period of time below what you would think our view of the intrinsic value of the stock is, and that's obviously adjusted for our leverage and that, sort of thing, that you would see continued opportunistic purchases. So, I can't say exactly what the rate will be based upon, I don't know what the stock price will end up being, but you know, clearly, we're, I think this demonstrates what we feel about our future and the potential and our value overall. So, I don’t know, Tom, if you want to add anything to that, but…

When I say Q1 though – I’m sorry go ahead.

No, I was just going to say, hey [Walt] we haven’t met, it’s Tom Fitzpatrick. Yeah, I would say, you nailed it, Matt. It's – we're going to be opportunistic. Let's see where the stock is. You shouldn't interpret the rate of buy in the first quarter as being, you know, that we're going to go through it. It's going to be where the stock trades at. Where our leverage is, that sort of thing?

Understood. So, the purchase price during the quarter was [37.50], the stocks at [38.50] before the market open. So, I'm kind of is what it is. So, when you think about dividends as a part of the capital return policy, are they out of the picture until you think the stock trades closer to the intrinsic value or is that a separate kind of decision process that the company in the board goes through?

I would say that’s separate. The things that will consider that over time, but right now, we're going to execute the share repurchase.

Yeah, as we said, Walt, you know, I think it's an issue of relative value of what you really think is, you know, kind of provides the most bang for the buck. And when you sort of feel more undervalued, which we've mentioned, not just because of the stock price, but because of our expectations about Aireon and the future. And now perhaps what, you know, with others view as competition, for example, but we don't see that really emerging in the same sort of way. Those sort of things make, I think, share repurchase the smarter decision right now. But we could evolve to dividend payments in the future that, you know, on sort of another decision process here.

Got it. So that's a good segue into question two, which is Aireon, you know, they have some payload payments, upcoming and you know, a share repurchase, or excuse me a buy down of your stake also coming, is there any update in terms of their ability to finance that or what should we expect in terms of that flow of cash from Aireon?

So Walt, they owe us $8 million of the hosting fee this year and will pay that towards the end of this year. And so there's a minimum hosting payments that they have to make of 16 million in cash. So that's included in their fully funded plan. They're looking to refinance the debt that they have in place, currently with cheaper debt. And basically what they will do is, they'll do [indiscernible] to their new facility, as their business grows and their, you know, their leverage statistics enable them too. We think it's going to be late 2022, 2023. The first installment will be they'll pay us the balance of the hosting fee plus interest in late 2022 or early 2023. Then 120 million will come thereafter. And that is – just think about that as they will do that as soon as the debt markets are cooperative based on their leverage statistics to do a tackle on to the facilities, they're kind of looking to put in place, you know, here in the first half of this year.

But if they gain traction, but if they gain – the debt markets are favorable, if they gain traction, they're in their business, they’re already a 50%, as you mentioned, is the timeline that you laid out, is there any opportunity for that to accelerate? Obviously, if they NPV-ed their future payments, they could probably pay you a little bit less, but is that a possibility or is it really more of a 2022, 2023 timeline for those payments?

We're modeling it late 2022, 2023. If they do better than that, that's only goodness. But that's how we're thinking about it Walt.

Obviously, they're – Walt they're a healthy business right now. And I think that they are certainly continuing to grow. I think they're going to have more and more opportunities presented to them. It's nothing that we can sort of plan on in any regard at this, because it depends on the market and their continued financial success. But it's definitely a healthy business, and these are interesting times, you know, in the financial market, so we'll see if they find other opportunities, but I wouldn't model it any different than what we're putting right now. Just as this, I think it's the appropriate.

But it's a possibility, understood. So, can you just sneak one more in, in your broadband expectations in terms of accelerating growth? And Ric mentioned, obviously is relatively small, but is it, should we think about that in terms of more of a unit driving that or ARPU or a combination of both?

I'm sorry. I missed that first part.

Just on the overall growth for 2021 in broadband. So, if you look at broadband, you know, in terms of revenue growth accelerating, as you know, over the course of the year, is that more of a unit driven item or ARPU or is it kind of a combination of both?

Well, a little bit of combination of both. We're not expecting to see growth in ARPU, other than sort of normal seasonality of what we'd see like last year, you know, returning and I would expect that that would be a normal thing. So, it continues to be just the units added month-by-month. We're continuously sort of net units grow every month. In fact, I'd say there's even been, you know, sort of a positive trend over the last six months as things have continued to move more positively. I really think that that will – should start opening up a lot more in the next coming months as certain ports get a lot better, and a lot – really more than anything else, it's global travel. You don't think the comparison is there from a maritime perspective, but really, just getting installers on airplanes, not to have to quarantine in a port or something to get onto a ship is an impact. So, I think all those things are going to help and then with new products, they're even lower cost and more, you know, I think those that will also be a bit of a driver too.

I guess I just would have thought with service, the service products delivering higher speeds, that you could also provide some lift to ARPU now.

Well it does provide a lift ARPU over our traditional open port levels. I mean, you don't see that maybe fourth quarter to first quarter, but that's the seasonality effect, but I think you'll see it, sort of on a comparable quarter going forward, as you'll see comparisons against, sort of apples and apples after we get out of this sort of weird first quarter comparison. I think you will see ARPU growth over, you know, the old days they’ll say, open port level service. And particularly in primary, you know usage quite a bit higher.

Great. Thank you.

Thanks, [Walt].

Your next question today comes from Mathieu Robilliard with Barclays. Please go ahead.

Yes, good morning, and thank you for the call. I had a question with regards to the competitive environment in the maritime segment, just curious to know, if there was any changes there either from Inmarsat or from some of the VSAT reseller? I think I heard that some of them were being a bit more aggressive on the low-end, maybe a reflection of the tough environment, but any color would be great? And then the second question, more about your product, with regard to your IoT products, can you clarify for me, these products are two way products for most of it, or only part of them are two-way and none of them are two-way, but if you could give a little bit of color in terms of different possibilities of what you can do on IoT that will be super useful? Thanks.

Yeah. Thanks, Mathieu. Well, on the second question, all of our products are two-way. You know, we've never offered a one-way product, I know other MSS operators do. We really believe the value of our network is the fact that it's real time two-way global etcetera. And that's one of the reasons why we've been so successful. There isn't really that big a demand for one-way. I think that's more of an aberration that somebody can only offer a one-way product in some cases. So that's what they're selling. It's one of the reasons, for example, our consumer business on IoT has been so successful, because those are all confirmed delivery, and you know, that actually, every person knows that they push a button or get a text or send a line, they actually know that it got delivered and that somebody can return back to them. On the first part, in terms of competitive environment, no, we don't really see a big change in the, sort of the overall competitive market. One reason for that is, we're still relatively new in the maritime market. You know, we're working from a pretty small base. And while we've been around it for a while, broadband is still relatively new. So, it's a bit of an open market for us. The market, we've always expected would shrink slightly as sort of VSAT became more and more and more competitive. We've always viewed ourselves as sort of a specialty broadband service versus a commodity broadband service. So, you know, the overall market for LBAND companion and primary use on smaller vessels and on sort of vessels that don't operate all the time and have really, really high ARPU, actually high revenue and bandwidth requirements was really still always our market. That market really hasn't changed much. It is true that there is, I think the low-end of the VSAT market is being more aggressive. So perhaps it's affecting slightly what we expected a little bit sooner, perhaps, but I think it's really around the edge of what we've always expected the market to be. Yeah, by the way, another positive – by the Mathieu, another positive trend there, you know, of course, I'm really – feel good about the fact that Speedcast, for example, is out of bankruptcy now. I mean, I think that's a positive. They're certainly opportunistic about their future. We've missed them being in the market this last year, as aggressively as they kind of work through their own issues. I think I'm seeing a lot of pretty much optimism around most of the maritime channel, about the sort of the recovery that they're expecting the rest of this year. And I think competitively we feel like we're really, really well-positioned with our increasing range of service products.

That’s great. Thank you very much.

Thanks, Mathieu.

And our next question today comes from Hamed Khorstan with BWS Financial. Please go ahead.

Hi, good morning. First off, could you just talk about the voice and data subscriber number just going up ever so slightly in Q1? Seasonally, this is not the quarter you would see that subscriber count go up? Was this an anomaly? Was this just the timing of deliveries? If you could just talk about that a little bit?

Are you saying sequentially – go ahead Matt.

Yeah, sequentially, yeah it was [362].

Right. So, I would say it’s an improving environment, right. I mean, so think, into the first quarter, we saw some relaxing, I think that's going to continue, we'll get the seasonality effect into the second quarter that we're entering our summer selling season now. So, I think that's what's at work there.

Yeah, I would, you know, really call that flat. I don't know. I mean, 1,000 subscribers is not a, you know, huge increase. But I mean, I would say, you know, Tom talked about one bright spot just to kind of call out, it's not huge numbers, but you know, PTT really, really did very well last year on the basis of the new handset devices from our partner Icom, and just the fact that people are really seeing that as a unique and viable service. Indonesia was only one big example, which I think was, you know, recent that there's been many other first responders, militaries, civil agencies, and that sort of thing who are seeing, you know, a global PTT service that’s been a faster and more effective way to kind of communicate. So that's an interesting service to look at. And then I think, you know, we didn't have the seasonality last year that we were expecting. But I think there's a lot more optimism that people are really, really wanting to get out of their homes and get out and travel. And I think you see it in sort of the pent-up demand in air travel and whatnot this year. So, a lot of our partners are telling us they're pretty optimistic about the summer season. We'll see how that plays out, but I think that will affect both our voice and data business, as well as sort of consumer IoT and some other places where, you know, people just want to get back off the grid again, you know.

And given that this is - Q1 was winter time, do you think those equipment sales you had were installed and going to be activated in time for the Q2, Q3 period?

You mean, the increase – the good equipment revenues? You know, that's across the board. Some of those are, you know, handsets and that sort of thing. A lot of them are, I think, bullish IoT partners who see a resumption in, sort of the growth rates that they're expecting and don't want to be cut short of inventory as they build out their hundreds and hundreds of solutions that are built on the Iridium network across a wide range of industries and verticals, etcetera. So, it's really a broad based sort of equipment basis. And I would view it more as a general optimism of our partners for the future as opposed to like a specific message about anything specific. So, and by the way, it varies kind of lead time by industry from, you know, weeks to many months sometimes in terms of our seeing that equipment get into, and being activated. And it really depends on how complicated the manufacturing supply chains are of any individual partners. There's so many different sort of models that any one of them have as to, you know, and whether a $60 part or something is that big of a part of it, what they just don't want to do is, have a stock out somehow that it might be $1,000 solution, and it's just really a part of a big solution, you know.

My last question was on IoT. Are you becoming more and more consumer driven? Because industrial, is becoming more competitive or is just the consumer just becoming so popular of the consumer devices?

Yeah, it's the latter. I mean, it's absolutely just the consumer is becoming more popular, we're just extremely well suited for that. There are increasing numbers of companies that are going after that. For example, you know, I mean, garment has always done extremely well and has expanded their portfolio dramatically in terms of different products that they're bringing to the market. They're expanding their coverage, their geographic coverage, and then we started seeing companies like ZOLEO really do very well last year. And I think they're very bullish about this year. Companies like Somewear Labs, and ACR Communications with their products, and Bivy, which includes Bivy now, a number of these, and I just think that it's a very cost effective way for consumers to make a connection, kind of, in some ways, you know, we've cannibalized ourselves a little bit on the satellite phone market, because that was the only way that people could stay connected, you know, 5, 10 years ago, and now for a lot less money and less cost, you can effectively communicate, you know, whether you're a bush pilot or a scientist or you know, doing oil and gas or on a ship on an airplane, that sort of thing. So, that's just done very well. You know, we continue to add partners in all our industrial IoT segments. They're also being very bullish about, sort of the recovery that they're seeing whether it be in heavy equipment, or fishing and transportation, oil and gas, all those sort of markets. And I think you're also – we're also very bullish about the mid-band solutions that a lot of those industrial IoT companies are saying with if you can give me more speed, and a faster connection, where you go IT instead of IP, excuse me, instead of, sort of the mechanism we sort of had before, I can see sending pictures and data and sort of streaming things and that sort of thing. So, I think that will be a positive to, sort of the industrial IoT segment.

Okay, thank you.

Thanks.

Your next question today comes from Anthony Klarman with Deutsche Bank. Please go ahead.

Hi, thanks and good morning. A question may be back to Matt, to some comments that you were making on, you know, it's still being a challenge around getting installers on the ships and things of that nature. I guess I'm just wondering, you know, what the guidance assumptions are around, you know, broader based reopening and easing of some of the COVID restrictions that have been in place that have prevented some of the install volume from picking up, I guess, how dependent is the 2021 outlook on some sort of return to normalized install activity and being able to get access to some of the ships, I guess, particularly with maritime?

I would say, you know, we're being I don't want to use the word conservative, but I say we're being appropriately skeptical that there's going to be a fast recovery necessarily, so we're not looking for a huge return to really, really high growth rates or anything, but we are seeing really positive signs in a number of markets in Asia, you know, China, Singapore, Australia, New Zealand, you know, those are all markets that are getting back to really normal people are starting to travel around, there's, you know, getting to ports, they're having – not having issues installing things. Europe is much more challenged right now, particularly certain ports in Europe. And I think that will hopefully turn around in the next two or three months, but we're not sort of forecasting that to the immediate, you know, boom here in the next coming month or two. So, I think it's not going to be back in the second quarter in the same way. But hopefully, we'll start easing a bit in third quarter. And then and maybe certainly by the end of this year will be a lot better. South America right now, of course, is starting to enter winter, and that slows itself down. There's a lot of optimism in South America, but there's also COVID still is hitting South America hard. So those ports are a little slower still. And I expect that that will be very late in the year before we sort of see the recovery from them if not into 2022 before we see that there. But North America in particular, obviously, I think it's going to really come back pretty strong here in the second half. And I think that will affect also local kind of distributions here.

And I guess, it sounds like from your prior comments around personal devices, and some of those things that consumer activity will probably lead the rebound a bit, given that there seems to be some pent up demand to travel and get, you know, back off the grid, perhaps so to speak.

Well, as I said we've seen more normality there, I think in the last couple last couple months, and certainly, you know, into the first quarter and what we're kind of hearing from people there is that that seems to be back almost to normal in many places. And they're talking about expanding product lines and geographic reach and that sort of thing. So, I expect that to continue to be strong. But IoT overall, is really, really gotten much more active. And by the way, Anthony, let me just correct, someone has reminded me here. I did answer a previous question about one-way versus two-way IoT, while I'm talking about that. That is still true. We don't have sort of a one-way IoT service, but we do have a unique service, of course called paging, which goes way back where we still supply that service to a small number of devices. But we've expanded that service to something called birth, which is a one-to-many kind of solution, which extends into things like satellite time and location, which is, we're very, very bullish about. I don't call that one-way IoT, I call that as sort of a one-way data transmission across the wide area. But that's – I just wanted to make sure I, you know, we have a very unique range of services that cover a lot of ground and I can at least make some of my team happy to know that I answered that correctly.

Thanks. I wanted to try to dig in on buybacks on just a particular angle, I guess, maybe to think about how management and the board thinks about the broader context of the buyback pacing, maybe as it relates to the leverage goal to the 2.5 to 3.5? And I guess I'm thinking about it in the context that your EBITDA is in a pretty tightly defined range, and given what you've reported in the first quarter, it certainly seems very reasonable and your CapEx and cash interest are now in very tightly defined ranges given you're on a long CapEx holiday and the term loan has been repriced, so you have really good visibility. So, the visibility around free cash flow is very high. And I guess, you know, Matt, you mentioned talking about discounts to intrinsic value, I guess I'm wondering if thinking about what the spend was in 1Q if nothing else changes with respect to the public market view of intrinsic value, if this is kind of a run rate that we would think about, or if not, then what some of the other cash uses are that management and the board might wanting to be having cash resources on hand to avail themselves of?

Well, you know, I think you stated the question very well. We have a lot of visibility to, sort of what our cash flow and leverage rates etcetera will be over the next two years, which is why we can be as confident we are. As Tom said, that our leverage ratios will be in-line, even if we affect the whole $300 million, by like the end of 2022 because, you know that doesn't take a lot of expectations on market recoveries, etcetera. So, on that basis, we can, you know, I just want to make sure we don't plan for a specific amount of spend or anything, you know, we're not going to spend it on a level of, you know, making sure X amount of dollars goes out each quarter. But, you know, if our view of intrinsic value, which changes a little bit quarter-by-quarter at least over a half. And as that changes, and we re-compute sort of an intrinsic value and sort of decide what, what sort of, you know, the market continues to perform, you know, below our intrinsic value, then we'll, we'll feel that that would make a great buy to support that and buy back shares. And I think that's a great value and a strong thing to do for the company and for shareholders. And so hard to, I don't want to try to project that into a specific amount or anything, because I don't really know exactly how the market will be and how volatile it is, and what price it hits. And, you know, what level, you know, things kind of kick off to divide. But I guess, overall, I'd say, I'd agree with your overall premise.

Maybe finally, just on Aireon, they have not really yet had to materially avail themselves of the investor bridge that you and the other investors have put into place. I think there are some small amounts that you guys have noticed had been funded on there, but you mentioned in the Q that you do expect additional funding to be required in 2021 and 2022 with air travel starting to come back and not being a volume based business. Is there a number that you would expect to have to fund in to the investor bridge for Aireon this year, and next?

We were talking about not much money, and I think our piece of the bridge is, I don't know, in the area of 10 million bucks. So, it's not, and we'll see whether they draw on that or not. I mean, they're looking to refi their existing facility. And that, frankly, is looking good. And so to the extent they get that done, we won't have to fund it. Like as I say, we're not talking about a lot of money.

Alright, thank you very much.

And your next question comes from Louie DiPalma with William Blair. Please go ahead.

Good morning, Matt, Tom, and Ken.

Louie, how are you?

Hi, Louie.

Doing okay. Matt, on the subject you, just mentioned of satellite phone cannibalization from IoT, how does that impact your view of the long-term satellite phone growth rate? And, you know, with your government EMSS Contract and satellite phone growth, you know, becoming more mature, can – you know, your, you know, faster growth with broadband and IoT, is that enough to carry growth for the entire company?

Well, I don't think we're being consistent with what we've ever talked about. We've never felt that sort of satellite phones with future of this company. It was always – it's held up remarkably well. Competition is sort of fallen away in a lot of ways. And so, despite, you know, what I call cannibalization, I would say, it was cannibalization of growth in that area, you know, but it's maintained it’s sort of a stable sort of base and maybe even has potential for small growth as there will be new products coming and we have some plans in that area. And, of course, we continue to see sort of strong performance in PTT. All those things sort of lead us to believe that this could be certainly a stable source, if not slow growth, you know, and so it's more of a, always been sort of a platform , high margin, you know, strong cash flow producing margin that's been more about protecting and ensuring state our base, while we grew in broadband, grew in IoT, you know, we've obviously grown and hosted payload, we have a lot of enthusiasm about mid-band sort of services, which will drive potentially sort of voice and data and IoT revenue lines, but you know, still see good growth in the U.S. government. So, and there's these unique additional services, things like STL, and other things which we believe will continue to drive growth. So, we have plenty of growth vectors in the company. I always am more concerned that that didn't become in any way a, you know, a tailwind in some ways, and it doesn't look like it is or will be.

Sounds good. Thanks, Matt. Looking forward to the Analyst Day.

Yeah. Thanks, Louie.

And our next question comes from Chris Quilty with Quilty Analytics. Please go ahead.

Hi. A follow-up question for Tom, you had mentioned you're seeing partners getting additional traction selling into the government, is that, are you referring to the push to talk activity, are you starting to see some early entry with Certus products?

Certus. I was referring to Certus Chris. There have been – just one partner, and they've made good traction, and we think we're going to see some additional revenues out of them, kind of in the fourth quarter.

And COMSAT, are they focused solely on government or is that international also?

No, it’s solely government DoD.

Okay. And is there an effort to sell that internationally to other governments?

Oh, yeah, no. And there's already been a lot of activity on that front. That comes out of our commercial gateway. So, it isn't reported in the same, it's not the same partner. And it's not the same service that's more from our many other Certus partners that primarily on the land mobile side, but in some cases in the maritime side, and I'm expecting, as aviation products emerge later this year, and in 2022, they'll also be some aviation take up there as well.

Got you. And going back to the consumer versus industrial in IoT business, if you sort of strip away the impact of COVID, and just focus on the industrial customers, what should we expect, you know for sort of future growth rates for that business? Is that, you know, kind of a low single digit business, does that have the potential for double-digit growth on a go-forward basis as you roll out service products?

Well, we don't – I mean, we've combined the two for a growth rate, you know, so I'm assuming you're talking about service revenue growth rate, you know, that has traditionally been, I don't know, you know, we typically are able to throw, you know, 10 million or more on a year, you know, sort of on the bottom line is our top line and bottom line on service revenue, due to IoT. And I feel like collectively, you know, we're kind of getting back to that pace, and could potentially accelerate that with new products, and mid-band and those sort of things going out in the future, you know, assuming that we continue to perform in all those areas. So, I don't really break the two down. I mean, we don't, sort of look at them as multiple businesses, we talk about them separately, because one is much lower ARPU, but a very high volume, the other is lower volume of units, but much higher ARPU, and potentially with mid-band sort of services that segment will benefit the most from ARPU growth. So, I don't know how to really balance that out for you specifically here. But you know, I think both of them are going to contribute going forward to our growth rates.

Okay. And maybe to take it at a different level, I think, seven of the last nine quarters, the IoT ARPU has been down double-digit, do you see either usage levels going up post-COVID or service-related products slowing the rate of decline in ARPU? And I think Tom also mentioned 40% of the base now is consumer. So, the mix down is potentially starting to slow, should we look at perhaps more single-digit declines on a go forward basis or do you think this double-digit rate continues as the mix continues to shift?

So, Chris, the most acute impact on IoT ARPU was the fall off in aviation. So, they were, you know, the safety services. So that hit us in the second quarter of last year for between a 1 million and 1.5 million right. So, now that as air traffic starts to come back, as Ric said, we'll start calling that 1.5 million back, and that'll be accretive to the IoT, ARPU. So that should definitely ease the rate of decline just because we're going to be calling back that 1.5 million, which is, you know, is substantial on the – impact on the ARPU.

And the rest of the decline Chris is, you know, I mean, it's just really mix for this most part. I mean, when you just throwing in, you know, $3 and $4, I mean $4 kind of customers against, you know, a, you know, a base that's higher, and that continues to expand become a larger part of the base, it just brings down the ARPU, it really doesn't – I know, since there is an incremental costs in either cases, I mentioned this often quarter-by-quarter, we don't spend a lot of time worrying about ARPU levels, as long as volumes continue to grow and the usage of our network is appropriate, since those don't use much of our network. So, we're happy as long as the overall service revenue continues to grow in IoT and contributes to the bottom line and cash flow.

Great. And a similar question in the maritime market, I know it's still early days with GMDSS, but, you know, extensively those terminals are free usage for emergency purposes, but when the customer gets it on board, it's metered pricing, and they tend to use it. Have you seen any downward push – downward pull from the GMDSS units or do you expect to on a go forward basis as they pick up as a part of the mix?

I think it's pretty small – I mean, it's noticeable today. I mean, it's still, you know, dozens of sort of units been activated, and there's hundreds, you know, sort of in the pipeline to be activated this year. You know, and I think that, you know, the current units right now, today are really narrowband units. So they really are really in the voice and data line, not in our service broadband line. So, they're not pulling or will pull down the units at all. In fact, if anything, they'll probably contribute and add to voice and data revenues. New Certus units as we move into those Certus qualified units, which are more next year and beyond, you know, that could start to happen a little bit. But you know, we'll be at a much bigger base at that point. So, I don't know that that would be very noticeable.

So those are service enabled GMDSS units?

Not today. I mean, today, the largest [indiscernible] units are…

In the future?

Yeah, in the future. I mean, that's under development right now with those partners, with us and partners with our terminal manufacturers, etcetera. There's still work to be done to certify those new units. And yes, those will also be free for GMDSS calls, but they'll be able to put broadband revenues on there, if they'd like. So, I think you're seeing today people are putting sort of putting narrowband GMDSS units on as we said, we think that they're going to be taking our Certus 200 products, if they're really kind of on the low end or sort of 700 if they're at the higher end for, you know, standalone or companion type applications. But that will all get consolidated perhaps down into a single terminal, you know, in a year or two, when those new certifications are completed for those terminal manufacturers for service based GMDSS.

Great. And final question, I think we've talked extensively on prior calls, why SpaceX and OneWeb are not competition. But there are a number of constellation operators doing IoT focus in the last six months, year, we've seen lots of satellites launch by Swarm and Hiber, and Myriota, and Lacuna, and Kepler and others, are you seeing any impact in the market? And I guess none of them really have a full service up and running, but efforts on their part to access your channel or customers or pricing strategies, is there anything relevant that you're seeing in the market today?

Yeah, that's a good question. I continue to ask and look for that and talk to partners and that sort of thing. And really the visibility to them is still quite low. The people who have sort of talked to them and experiment and tried any of those services have found them to be not industrial strength, by a long shot. You know, they're still not – they're non-real time systems. So, they were more competitive with, you know, the older, like an ORBCOMM system or something like that, as opposed to sort of our system. So, we weren't seeing many of the applications that we were looking at being very interested in those kind of systems. You know, if you're, obviously, if you're tracking sheep or something, and you don't really care where they are just, you know, generally, what part of the field they are once a day or something, maybe that's going to be what you're looking at. And there might be some playing around with that, or sort of the soil, soil moisture or something like that. I think those are really good applications for that. But they're really, still very, very early stages of those being very viable services are generating a lot of revenue or a lot of interest. So, I’m not saying there isn't a market for those, not for certainly as many of them as there are. So, I think they're all going to struggle. I also do find that partners are a little confused by the – so many choices, and so many different technologies and picking the wrong one and wondering if they're going to stay in business and how long they'll be in business. And so it always takes a lot longer to, sort of develop the channels. We know that because it took us a long time. And so, I think it's going to take them a fair amount of time to get lots of traction. But I still believe that it's very ancillary to what we do. It's not directly in line because none of them really are suggesting that they can kind of offer a real time two-way global service in a comprehensive way, but they could offer an alternative for a very low cost, sort of check in application down the road. And we're keeping an eye on them and seeing if it makes sense to partner which we've already, sort of talked to a number of them about possibly doing and we'll consider other things as that market evolves.

Great. Thanks for the nice quarter.

Thanks Chris.

Ladies and gentlemen, this concludes today's question-and-answer session. I'd like to turn the conference back over to management for closing comments.

Yeah, well, thanks for joining us. As Chris said it was an in-line quarter, which is what we like to see. I think we'll see some more acceleration, you know, growth is as the environment continues to improve, and it will be – we're looking forward and we're preparing right now for our Investor Day on May 26. So, I hope you'll be able to join us virtually for that and we'll be going into a lot more detail about, sort of our expectations of growth over the coming years. I think definitely you'll find that interesting. So, thanks for joining us today. Take care.

Thank you, sir. This concludes today's conference call. We thank you all for attending today's presentation. You may disconnect your lines and have a wonderful day.