SNCY - NASDAQ

Welcome to the Sun Country Airlines Third Quarter 2023 Earnings Call. My name is Crystal Love, and I will be your operator for today's conference. At this time, all participants are in a listen-only mode. After the speakers' presentation, there will be a question-and-answer session. [Operator Instructions] Please be advised that today's conference is being recorded. I will now turn the call over to Chris Allen, Director of Investor Relations. Mr. Allen, you may begin.

Thank you. I'm joined today by Jude Bricker, Chief Executive Officer; Dave Davis, President and Chief Financial Officer; and a group of others to help answer questions. Before we begin, I would like to remind everyone that during this call, the company may make certain statements that constitute forward-looking statements. Our remarks today may include forward-looking statements which are based upon management's current beliefs, expectations and assumptions and are subject to risks and uncertainties. Actual results may differ materially. We encourage you to review the risk factors and cautionary statements outlined in our earnings release and most recent SEC filings. We assume no obligation to update any forward-looking statements. You can find our third quarter earnings press release under the Investor Relations portion of our website at ir.suncountry.com. With that said, I'd like to turn the call over to Jude.

Thanks, Chris. Thanks for joining us this afternoon, everyone. Our diversified business model is unique in the airline industry. Due to the predictability of our charter and cargo businesses, we are able to deliver the most flexible scheduled service capacity in the industry. The combination of our scheduled flexibility and low fixed cost model allows us to respond to both predictable leisure demand fluctuations and exogenous industry shocks. We believe due to our structural advantages, we will be able to reliably deliver industry-leading profitability throughout all cycles. Today, we're announcing 3Q results, including an adjusted operating margin of over 8% on 18.5% year-on-year departure growth. We know now these results produced the highest trailing 12-month pre-tax margin of any of the 11 public mainline U.S. carriers. The same was true at the end of the second quarter. Demand remained strong across all segments of our business, highlighted by scheduled service TRASM down 5% on 15% ASM growth versus prior year. Since the beginning of the year, every month, scheduled service TRASM has reset to around 35%, higher than pre-COVID comps, with this trend generally continuing into bookings on future travel. Also, our charter block hour production, critical during the fall of scheduled service demand trough, was up over 14% year-on-year. Recall that the third and fourth quarters typically produce margins well below our annual production. We continue to deliver a high-quality product. In the third quarter, our controllable completion factor was 99.4%, while delivering the highest D0 among U.S. mainline carriers. I'm so grateful to all our team members that worked so hard to take care of our customers every day. Unfortunately, the cause of our variance of performance to potential remains crew staffing levels. Due to captain availability, we flew about 3,500 fewer block hours in the third quarter, mostly in July, when the demand environment would have supported with our fleet and the fuel price input. We continue to see staffing levels improve, albeit more slowly than we would like. Looking ahead, we recently extended our schedule through the summer of 2024 and announced 10 new Minneapolis markets. I think this is representative of our growth for the next few years as we continue to expand into our Minneapolis opportunity during peak periods, supported by modest off-peak growth in our charter business. As our growth has moderated based on pilot staffing, we've decided to lease out two additional aircraft that were scheduled to enter our fleet in Q4. This will delay the entry into service of two 737-800s planned for the fourth quarter of 2023 until the first quarter of 2025. Aircraft are generally in high demand as much of the aviation industry deals with production delays on new narrow-bodies and service disruptions from the GTF. So, we'll make good returns on these aircraft until we're able to fully utilize them. With that, I'll turn it over to you, Dave.

Thanks, Jude. Q3 was another profitable quarter for Sun Country with revenue finishing at the upper-end of our guided range and operating margin finishing in the middle of our guided range, despite incurring a fuel price that was 10% higher than expected. Total revenue increased 12.3% year-over-year to $248.9 million, while adjusted earnings before taxes were $11.1 million versus $9.7 million in Q3 of 2022. Adjusted operating margin was 8.1% for the quarter and 14.7% year-to-date. As Jude mentioned, on a trailing 12-month basis, Sun Country's adjusted pre-tax margin through Q3 was 10.2%. This was the highest of the 11 publicly-traded mainline U.S. carriers. The strength of our diversified business model continues to be demonstrated by our strong results. Revenue for our passenger segment continued to grow in Q3, with combined scheduled service and charter revenue increasing 9.7% year-over-year to $214.4 million. Scheduled service plus ancillary sales generated $166.9 million in revenue, which was 9.5% higher than last year. Scheduled service TRASM was $0.1172, which was 5% lower than last year and a 15.1% growth in scheduled service ASMs. We're still maintaining remarkable scheduled service TRASM strength versus 2019. Q3 2023 was almost 39% higher than Q3 2019. This marks our sixth consecutive quarter of scheduled service TRASM being at least 25% higher versus its comparable quarter in 2019. We do not expect this streak to end in Q4. Our total fare per passenger declined 8.7% to $153.11, while we maintained an 86.6% load factor. Charter revenue in the third quarter grew 10.6% to $47.4 million on block hour growth of 14.1%. A portion of our charter revenue consists of reimbursement from customers for changes in fuel prices as we do not take fuel risk on our charter flying. Q3 fuel prices dropped by over 18.8% year-over-year. And if you exclude the fuel reimbursement revenue from both Q3 '23 and Q3 '22, charter flying revenue grew 14.6% over the period, which is in line with block hour growth, producing flat year-over-year charter revenue per block hour. Third quarter cargo revenue grew 10% to $26 million on a 6.3% increase in block hours. Last year, we had lower levels of flying due to scheduled maintenance events, and the annual increases in our Amazon contract occurred in December of 2022. We're continuing to grow at a profitable and measured pace. We expect total ASM growth in Q4 of this year to be between 8% and 10%. We anticipate a similar growth rate to continue for full year of 2024. Turning now to costs. Total operating expenses increased 11.4% on a 14.4% increase in total block hours in the third quarter. Adjusted CASM was up 2.6% versus Q3 of '22. This year-over-year change is down significantly from the 10%-plus increases we experienced in the first half of 2023. The timing of maintenance events in Q3 was a large contributor to our year-over-year cost increase as airframe check volume doubled from Q3 of '22 and material price increases were almost 9%. Looking into Q4, we expect heavy check volume to remain high relative to Q4 of '22. Shifting focus to 2024 for a minute, we are anticipating adjusted CASM to be roughly flat versus full year 2023. Let me switch to the balance sheet. Our total liquidity at the end of Q3 was $198 million, which was lower than the amount at the end of Q2, primarily due to the seasonality of bookings and the timing of our share repurchases, which finished towards the end of the quarter. As of November 6, our total liquidity was $230 million. Through the end of September, we've spent $210.6 million on CapEx, which has funded a significant amount of our planned aircraft growth into 2025. We anticipate our full-year 2023 CapEx to be approximately $225 million and our year-ending passenger fleet count to be 42 aircraft. Fleet growth in 2024 will be modest, and the majority of our growth will be funded through higher utilization. We expect 2024 capital expenditures to be well under half of the 2023 level and free cash flow generation to be strong. We continue to maintain a very strong balance sheet. Our net debt-to-adjusted EBITDA ratio at the end of Q3 was 2.4 times. Since we do not have a significant debt burden, we have flexibility in how we deploy our cash. Since Q4 of 2022, we spent approximately $80 million on share repurchases, which is the total amount that our Board had authorized. Just recently, our Board authorized another $25 million in repurchase authority, which we plan to deploy opportunistically. Turning to guidance. We are anticipating Q4 total revenue to be between $242 million and $252 million, an increase of 7% to 11% versus Q4 of '22 on a block -- and an increase in block hours of 11% to 15%. We're forecasting a $3.20 per gallon fuel price in the fourth quarter, and adjusted op margin for the quarter is forecasted to be between 3% and 5%. The fundamentals of our unique diversified business remain strong, and our model is highly resilient to changes in macroeconomic conditions. Our focus remains on profitable growth. And with that, I'll open it up for questions.

Thank you. [Operator Instructions] Our first question comes from the line of Duane Pfennigwerth of Evercore ISI. Your line is now open.

Hey, thanks. Just a couple for me. On aircraft, can you just remind us kind of what the ideal vintage or age on the 800s that you're targeting? And how much do you think the market for these assets has changed? I understand you're not in the market. There's a bit of a pause here. But to the extent you own them, how much do you think the value of those assets has changed in this backdrop?

We vary -- hey, Duane, we vary our price based on age. So there's not really a preference because we put that in the valuation. What we've had the most success in is about a 12-year-old airplane, which is where the value historically for us has equated to the aggregate of the transferred maintenance value and the residual value of the components. Earlier than that, we have to pay a premium for the newness. And later than that, we don't get typically as compensated as we would for the age. So that's kind of the sweet spot in the market. It also happens to align with likely recent large maintenance events having occurred on that aircraft type. So, we look at the valuation just like that, transfer maintenance value. Maintenance value is getting a lot more valuable from OEM escalation predominantly and in the bids. And then we add a premium to that. We -- the last airplane we originated was about six, seven months ago, and that premium was zero. So that's a little bit -- we were getting a little bit discount through COVID. And before COVID, it was $1 million or $2 million. So, I would say it's pretty consistent. I think what's really happening is there's a lot of demand for really short-term leases, engine leases. And people are extending leases on a short-term basis. It's just all having to do with the industrial challenges of the new production.

Okay. Great. And then, are you -- I guess, are you booked for 2025? And maybe you just said -- or sorry, are you booked through 2025? And what is your growth number for next year? I don't know if you mentioned it on the call. Sorry if I missed it.

Yes. So, we are largely booked through 2025. If you recall, we did this deal with the 737-900ERs that are on lease to Oman Air. Those start to come off lease and redelivered to us in November of '24. So that's incremental aircraft in '25. Jude also mentioned a sort of additional lease deal that were near completion on -- for two more aircraft we were going to take, those will now come in the first quarter of '25. So that's seven incremental. And we may or may not be in the market for one or two more. I mean, the good news here is between improved utilization, the aircraft that we already have in the pipeline, the CapEx for those has largely been incurred already. So, we think we're in a great position from a fleet perspective.

Great. And if I could just sneak one last one in. Just your thoughts on when you think we'll be able to kind of fully capture these peak demand periods. Would spring break be a reasonable guest -- or a reasonable guess on that? I thought it was interesting FedEx suggesting that they're overstaffed on pilots by about, I think, 700. Some of the press reports, you have at least one peer which is canceling bids -- canceling higher bids or offers that it made. So, it feels like this pilot shortage is effectively over. Given that, when do you think you're in a position to sort of fully capture peak demand?

Yeah. So recall, for a year now, at least for us, the issue has not been hiring pilots, and the issue has not been pilot attrition. So that's not a concern. The issue has been on the upgrade front. And there's myriad reasons for that, which we've talked about in the past. We are seeing positive trends based on some of the actions we've taken over the last six months. We're seeing positive trends in the captain upgrade world. I think we're all around the table anticipating a very strong Q1 and a strong ability to capture peak demand in March, which is part of the company's best quarter. But the trends are moving in the right direction. We don't see a shortage of pilot availability at this point. It's an internal issue for us that we are making progress and working through.

Okay. Thank you.

Thank you. Please standby for our next question. Our next question comes from the line of Catherine O'Brien with Goldman Sachs. Your line is now open.

Thank you, gentlemen. Thanks for the time.

Hi, Catherine.

Hey. Maybe just one follow-up on the captain upgrade issue. I know you said in your prepared remarks, it's getting better but a little slower than hoped. I guess how has your capacity and unit cost outlook changed over the last couple of months, if at all, as we head into 2024? And how sensitive is that guidance to maybe seeing that captain upgrade issue going better than expected next year? Just trying to get a sense of sensitivities there. Thanks.

Yeah, I'll give you my view on that. I think our planning -- the sort of 2024 growth numbers I gave, let's say, high single, low double-digit numbers are very achievable numbers. And then the roughly flat CASM numbers are essentially a function of that. I think if we continue to see favorability in some of these upgrade trends, we can grow the airline more quickly than that. And we don't need additional aircraft to do it given the utilization opportunity that exists. Any more growth is going to have a positive impact on CASM. So I would say that our view probably hasn't changed that much in the last couple of months, maybe gotten a little bit more conservative on the growth front, but there hasn't been anything sort of drastic.

What might surprise everybody is that as we grow utilization and focus that incremental capacity into peak periods, you'd likely see an increase in unit revenue as well, because the foregone flying largely resides in periods of peak demand. Pilot constraints are a monthly block hour metric. And so you think about a really volatile demand environment like what we're designed to deal with and then push down those peaks, that foregone flying tends to be at a higher than average level for unit revenues. And so you'll see a lot of traction as we get into increasing utilization. That's going to happen a little more quickly because we're re-leasing out some airplanes. But -- and it's linear. It's not going to be like one day, we wake up, and everything's sorted out. It's just going to continue to get better, I think, as we move forward into the next couple of months.

Got it. And maybe just a little bit of a follow-up to that. So, as you have the ability to flex up those peaks, is the first -- as utilization increases overall, like, is the first priority to peak the scheduled service? I know you also talk about adding ad hoc charters or maybe the answer is both, just depending on the season. Just any color there would be helpful.

Yeah, both is the answer. I mean, keep in mind, the way we integrate charters and sched service is unique in the industry. So we'll build aircraft routing that incorporates both of those lines of business depending on the season. And so the predominance of incremental growth will be in sched service, but we intend to grow charters next year as well.

Got it. If I can sneak one last one in? I just want to make sure I'm not mixing apples and oranges as we think about the go-forward on scheduled service RASM. You both kind of made comments that you'd expect that versus 2019 trend, which has been 30%-plus higher over the last couple of quarters, you weren't expecting any major change. I don't know what your forecast on scheduled service ASM is, so that would be helpful. But I guess like if I just plug in plus up 30% something scheduled service RASM in the fourth quarter, I think that implies up year-over-year, and some admittedly very quick math, is that what you're expecting? Or help me figure out what...

No. So, what the point I'm making is that since the beginning of the year, we've seen a kind of a reset into pre-COVID levels. I'm using 2019 as a comp, and it's very stable between 35% and 40% on a scheduled service TRASM basis year over four, month by month. And what is important is that we had a really strong and rapid domestic recovery in the summer of '22. That recovery then moved into the near international like Mexican and Caribbean markets for last winter. And now it's transatlantic. It's probably going to go into the Pacific, I would guess. But the point is it's kind of resetting on a more permanent basis to very similar peak, off-peak trends that we saw pre-COVID, but just at a higher level. The one comp I'd call out is December. December had the best of all calendar setups in December of '19, and it's going to be a little bit of a more difficult comp. It will still be a lot better in 2023, but it won't be at that 35% level. So that -- in the quarter -- the fourth quarter for us kind of goes as December goes.

Yeah. And just maybe I didn't say it clearly enough, but the number I quoted was six consecutive quarters of 25%-up plus, and we expect that trend to continue.

Very clear. Thank you for the time.

Thank you. Please standby for our next question. Our next question comes from the line of Helane Becker of TD Cowen. Your line is now open.

Thanks, operator. Hi, team. Thank you for the time here. Just two questions. One is the scheduled service revenue in the third quarter looked like a sequential decline that was bigger than what we've seen in prior quarters, notwithstanding Dave's comment about being up 25%. And we saw a smaller increase in ancillaries. I'm just wondering if there's anything going on there.

Hey, Helane. Dave is looking at some numbers. But I just want to caution you on sequential for us because we're just really, really seasonal. So, the year-over-year change in the second quarter versus in the third quarter certainly settled down. That was a function of two things. One, we're growing a lot faster. But also, the comps in '22 were really challenging. And they lasted well into the fall season, which is something that's pretty rare for us. And that was focused on big city connectivity into Minneapolis, like I call out Boston, Seattle, big markets like that, that were really strong in the third quarter. And those have since settled down into a more permanent increase versus pre-COVID levels, but flat on the year-over-four basis.

Got it. That's helpful. And then my follow-up question is the announcement that you made regarding the ads, and it wasn't today, right, the ads out of Minneapolis for, I guess, next maybe winter and next summer. Have you seen any -- I mean, do you think of yourself as a spill carrier so you wouldn't see much pushback from Delta? Or do you see them saying, "Hey, if they're doing a good job in this market, maybe we should be there, too?"

Helane, let me give you a couple of thoughts, and I'll call Grant in here to add. So first, we have a strong brand in the Minneapolis market. We're certainly a spill carrier in some of our non-Minneapolis scheduled service flying opportunities. But in Minneapolis, we invest in the brand. We market to the community. We have a vibrant loyalty program. So, I don't view us as -- at all as a spill carrier in the Minneapolis metroplex. And that shows up in the way that we plan that schedule specifically for these reliable demand patterns. We announced 10 new markets. A lot of those markets support our MLS partnership with sched service, and I think this is going to be a theme for us. We're going to continue to connect Minneapolis to domestic and international markets focused on VFR traffic in the summer months between Memorial Day and Labor Day. And then in the winter time, it's going to be a little bit of new markets but mostly same-store sales growth as we continue to expand out into the peak opportunities with fleet growth and pilot work group expansion. So -- and that's in real contrast to what we do, say, to the Mexican and Caribbean markets out of Texas in the summer. In the past, we've flown the Hawaiian markets off the West Coast, and that is certainly being a spill carrier. But we're just very strategic about when we apply capacity so that we can deliver high unit revenues. Do you have anything else?

The only thing I'd add to that, Jude, is, yes, being the leisure carrier of choice up here, we added 15 new markets this year. They all work. They're all coming back. We extended -- or we added these new 10. Delta is a formidable carrier. They have a really strong hub here. We never expect to have uncontested non-stops. But the business is -- we feel very comfortable that we'll be successful, and we have sort of past examples to back up that framework.

One more thing on Delta. We want Delta to be successful in the market because it serves business customers, and we want a vibrant business community here in the Twin Cities. So I think we serve completely different segments of the market. And we launched these 10 new -- announced these 10 new markets, and they did change their schedule in a few of the markets to add some non-stop opportunities. Most of it's on regional connectivity. I think that's consistent with everything we've seen with them since the Sun Country transition began in 2018 or so.

Got it. Okay, that's really helpful. Thanks, team.

Thank you. Please standby for our next question. Our next question comes from the line of Michael Linenberg of Deutsche Bank. Your line is now open.

Hey, good afternoon, guys. Dave, you had called out...

Hey, Michael.

Hey. You had called out fourth quarter. You talked about, I guess, a large number of heavy checks, I guess, on maintenance. What would be the impact of that maybe on a margin basis? And what are some of the other sort of pressure points? If I think about margins down year-over-year, fuel is a good guy. What are some of -- is it labor? Is it maintenance? Any color on that would be great.

Yeah. So, the number of checks in the fourth quarter are about 3 times what they were in the fourth quarter of 2022. So that is a significant driver, and it's just the timing of checks. It's probably a $4 million to $5 million issue for us in Q4. So it is not small. That's probably the only one that sort of stands out for me there. But that's just -- that's airframe heavy checks. It's on our schedule, and we can't do much about it.

Okay. Good. And then just my second question, it was interesting, one of your fellow low-fare competitors was talking about refocusing on different markets and maybe allocating more of their flying to underserved markets versus overserved. And Minneapolis came up at least, I think, twice on that call. And I think you guys know Minneapolis better than anyone, Jude, you and Grant. Your thinking on that? Is it an underserved market? Is there gate availability? Should we be concerned that we're going to see more low-fare competition in that market? I know you've dealt with low-fare competitors in the past. Any thoughts on that comment? Thank you.

Yeah. I think what's interesting is how the U.S. market has kind of differentiated itself. And I think largely, the success of U.S. carriers over the last quarter has been about how they deal with off-peak demand. And there's kind of three ways they do it. One is the network carriers, which focus on business customers. They've also largely been able to take advantage of a longer Atlantic season this year. Or the ULCC guys, one of which you're talking about there, they just discount into that environment and try to stimulate some demand. Or there's guys like us and we just cut out those flights. And I think our method is the best, obviously. And what I'd say is like -- and that makes us kind of uniquely capable of serving this, in particular, the Minneapolis, but also, I think it applies to some other markets as we grow demand profile that's really volatile. And there's no -- we have 98 markets out of Minneapolis. Five of them are year round. And so, just -- the Minneapolis consumer wants to go very different places at different times based on the calendar, and we're designed to do that. So I'm not too concerned about it. I think we'll continue to have some overlap, particularly in the kind of traditionally largest leisure markets like Cancun, Orlando and Vegas, for example, and then probably also Detroit and Denver because those two carriers serve those markets a lot. But I don't think that changes my outlook at all. Grant, anything to add?

The other thing I would add to that is we've added a lot of service to a lot of new markets. So we've added new markets that allow customers here, notably leisure customers, to go non-stop. The other thing that I think is a really important component of this, Mike, is that Minneapolis has high point of sale coming out of the market. So all that has been done by this team to build the brand, build our seat share is really powerful because as people go and look for places to go, they really come to -- they'll go to delta.com, but they'll also kind of suncountry.com. So for others to come into the marketplace, it isn't just as easy as saying, "Hey, I'm going to put planes up here, and they're going to be successful." There's a lot of work to get us into what we built and developed over the last few years.

And I can't overstate the volatility of our schedule. We'll have days with 150 flights and days with three in the third quarter. And it's just -- that's how we're able to generate these unit revenues reliably.

Yeah. Great. And just if I could squeeze in one quick last one, Jude. If you had the right amount of pilot time so that you could really lean in during the peaks during the September quarter, how much better -- like how much margin have you left on the table because you're not at the optimal staffing level just yet, knowing that, that additional flying tends to be very high margin? Just trying to...

So, our variable contribution in July is about 40%. And that's -- so incremental flying into that period would be a little bit lower than that because when we're capacity constrained on monthly block hours, we'll bunch together the flights on the peakiest of days. So, we'd be expanding into Wednesdays and Saturdays, for example, but it'd still be in the 30%, 25% range. And that demand period would have lasted into the beginning of August. So that 3,500 of foregone block hours probably would produce somewhere in the range of $7 million to $10 million of operating earnings for the quarter.

Okay. Very good. Thank you. Thanks everyone for answering my questions.

Thanks, Mike.

Thank you. Please standby for our next question. Our next question comes from the line of Scott Group of Wolfe. Your line is now open.

Hey, thanks. Afternoon. I know we talked about the fourth quarter RASM assumptions, but maybe just help us with some of the other pieces in the fourth quarter revenue guide, scheduled service capacity and then maybe expectations on charter and cargo revenue.

I'll start with the easy one. Cargo is fairly flat, which we would expect every quarter to be from kind of looking forward. Dave, anything else?

Yeah. I mean, we talked about what our sort of -- what our revenue growth and our block hour growth expectations are for the fourth quarter. I think we're probably going to see unit revenues down moderately in the fourth quarter, and we've got largely these maintenance costs as the biggest driver of CASM in Q4. I think those are sort of the major trends.

Okay. And then maybe -- I get there's a lot of seasonality to your model each quarter, and there's just not a lot of pre-pandemic history. Just so what I'm hoping to get some help on here is, right, if you just look at the operating margins, Q1 was 20%, Q2 was 15%, Q3, 8%, now this quarter is 4%. I mean, what's your -- like what's the margin run rate do you think we're at right now entering 2024? Is this based on what you know today? Is this a mid single digit margin, a high single-digit margin, a double-digit margin? I just -- it's hard to know, right? There's so much seasonality. We just don't have a lot of history.

Our pre-tax trailing 12-month margin is 10.2%. And so you were talking about operating margins, so that put operating margin probably in the 14% range. I mean, I think that's something we should be able to continually replicate.

I think that 14% number is replicatable in the near future, and the potential for the business is greater than that. I mean, Jude mentioned the number. Once we get sort of the full advantage of the peak opportunities, particularly in the summer months, we should be able to do better than that sort of mid-teens operating margin number.

And you feel like you've got visibility to that low-teens op margin next year?

Yeah. I mean, we're selling through Labor Day. So we have pretty good visibility into sales. I don't know if you watch our schedule that much, but we're adding January. Other commentary you're seeing around the industry is people cutting back in January as being a trough period. We're seeing the need for more capacity and also responding to improved pilot staffing situation. Yeah, I think it looks kind of pretty good in the first quarter.

Yeah. So I mean, we're not giving full-year 2024 guidance at this point. But based on where we're at now in terms of getting our plan together for next year, we think we have some very achievable revenue and cost goals, and they put our op margin in that range that we were just talking about.

Okay. And then maybe just lastly, just some of the puts and takes around free cash flow for next year. It sounds like CapEx coming down a bunch. But how do you think about free cash flow next year?

Yeah. So free cash flow is going to be significantly higher. First of all, again, not to give too much '24 guidance, but we expect a material improvement in results next year and a drastic reduction in CapEx. So I think we're going to be a very strong free cash flow generator, which is one of the reasons we felt comfortable allocating another $25 million to share repurchases. We will continue on this track. Our aircraft are largely purchased. Operating results look strong. Based on what we've seen so far, we'll continue to make the best use of our cash as we generate it.

Okay. Thank you for the time guys. Appreciate it.

Thanks, Scott.

Thank you. At this time, this does conclude our question-and-answer session. I would now like to turn the call back over to Jude Bricker for closing remarks.

Thanks for your time and attention, everybody. We'll talk to you again at the end of the year. Thanks.