Conference Transcript - LION 2026-03-04

Thomas Ia, Analyst — Morgan Stanley

Alright, we'll get started here. For important disclosures, please see the Morgan Stanley Research Disclosure website at morganstanley.com slash research disclosures. If you have any questions, please reach out to your Morgan Stanley sales representative. With that, I'm very happy to welcome back Jimmy Barge, DSL of Lionsgate Studios. Thanks, Thomas. It's great to be back again. Thank you so much. So I thought I'd just kick us off with a high-level question about the year in review. I think it's been coming up on a year now where Lionsgate separated its studio and stars businesses. Part of that rationale I think you had suggested was to unlock greater strategic optionality as a pure play studio. Can you maybe just give us an update on how that opportunity has evolved and what path you might be seeing the strategic optionality kind of take?

Jimmy Barge, CFO

Well, sure. I think our timing's great. I mean, it took a while, right? But you're right. We're coming up in May. It will be a year. And, you know, we accomplished what we wanted to accomplish. It's better strategically for both stars as well as the studio. But the objective was get back to a pure play studio. And I think you're seeing what others in the industry have done, they're kind of following suit. We started this really three years ago, ultimately to the separation, and you're seeing it play out nicely. And so our studio is well-poised. We'll talk about it later, but we're at an inflection point for our business where we're coming off of a great year creatively, heading into fiscal 27 as a March 31 year-end company, and really well-positioned, and to be an agnostic, pure play content company has major advantages, and we've seen that. So you're seeing us hit all strides in motion picture, as well as in TV. Our library sales, we're setting continuous records. We've got major record-setting backlog, which is future contractual revenues and cash flows, so very well-positioned. And then we see what's happening in the world of consolidation, and, you know, everybody wanting studios. We've got a scarce asset here already completely separated. We collapsed the A and B shares, as you know, at the time of the spin. We announced on the last earnings that we're letting the poison pill expire in May. And, you know, I think we're just extremely well positioned with our business hitting on all cylinders. At the same time, we're a pure play studio, which has got great scarcity value. Great.

Thomas Ia, Analyst — Morgan Stanley

On that industry consolidation point, I did want to ask your thoughts on the impact of potential consolidation on the industry as it relates to your business. I think it looks like this continued trend might be an ultimate impact to the buyer pool of your content, but also, to some extent, also potentially an impact to the sellers and the number of sellers that are supplying their party content. Can you maybe just level set for us the value that you bring as a third-party content arms dealer, as you've said in the past, and particularly just in a world of scaled, vertically integrated studios where your value and your library really presents value?

Jimmy Barge, CFO

Well, I think, again, it just underscores the scarcity value of library, and we can come back to that. But in terms of being an arms dealer or a seller to third parties, there's plenty of demand out there. We are literally one of the few that can really provide that content. Everybody needs content. Content's king. And so I think in terms of us being able to sell, I think the combination of their libraries, quite frankly, is to our benefit. And I think there's been quite a bit of disruption during, as you would expect, during mergers and acquisitions. So they've not been big buyers from us. So I don't see that as being an issue. I think there'll be opportunities there to sell them. But I think the ability to really sell to everybody else, and particularly during this maybe next year of kind of continuing integration, et cetera, I think we do quite well. And when we get to TV, we'll talk about it. We've already got a significant number of series renewed. And in our library, we've got a new pay-one deal coming up that's split between Starz and Amazon, so we're set well there. And we've got a great pipeline coming in TV. And so I sit there and, you know, you ask about the library value. I look at it and, you know, what was critical as a franchise is we have over 20,000 titles in library. I mean, John and Michael have been building this for 20 plus years, right? Always retaining rights. And so it's such a scarce asset and it's so unique in the industry that we have this. And so I think what you've seen in the world of consolidation is that that's what everybody wants. and the value of that, and if you just look at it and you look at Paramount's acquisition of Warner Brothers and you look at Netflix's bid and you kind of sort through, you see underlying multiples for the studio of 25-plus times, so mid-20s to high-20s multiples. And we've seen that before. We saw that when Amazon acquired MGM. You saw it not too recently, pretty recently, for minority interest where Apollo, very smart money, took out Wanda for minority interest in Legendary, 25, 26, same level. So for us, we see that as a huge opportunity for us, one, to continue to exploit our library and drive value for our company. but also we're very cognizant of those values and the ability to create outsized valuation for our shareholders in the world of consolidation. So I think the library just becomes more scarce than ever, and our production capabilities on top of that to replenish our library. And we're coming off of five consecutive records of library and no expectation that that would not continue.

Thomas Ia, Analyst — Morgan Stanley

So do you think the takeaway, I guess, in terms of the impact of potential M&A across your peer set is that there's potentially a little bit of disruption from a near-term perspective of pencils being down as they integrate, but the diverse set of buyers that you're still interacting with is still a healthy backdrop to continue to be able to monetize the content that you have?

Jimmy Barge, CFO

Yeah, I'd say that. And I'd say that, you know, in terms of buying content, which is easier than producing, right, that we've had a little disruption during the entire process as buyers. So I think some of that will open up, even though they've not, those two studios haven't been big buyers of our product recently. But I think some of that will open up quicker. I think some of the disruption may be in the production and everything else in development along the lines. It takes time to integrate, but we're off and running, and we've had great development. We've just finished some really strong content creation cycles, and we're poised very well for fiscal 27, and I'd quite frankly say the next two to three years.

Thomas Ia, Analyst — Morgan Stanley

Let's move on to the motion picture a little bit more in depth there, coming off of the success of some of the more recent films, most notably The Housemaid. Can you talk about your ability as a smaller player in that studio world to source and generate franchises relative to your larger peers, how that works?

Jimmy Barge, CFO

Well, sure. I mean, Adam Fogelson and his team have done a fantastic job, and you're starting to see their slate come to the forefront. So we've just come off of this in our fourth quarter, or Housemaids was in December, so late December. The Housemaid, as you noted, has been fantastic. It's a, you know, let's call it a rumor to be $35, $30 million film that's done $380 million, maybe closing in on $400 million of global box office. So just a fantastic, and, you know, that team puts that together, and that team has also hit it on the long walk, okay? And don't forget, now you see me, now you don't. So, you know, kind of the third installment of that franchise, refreshing that franchise, created a whole new franchise with the house made. By the way, there's three books there, so there's a lot more to come. We've already greenlit the second film. And, you know, we finished the year with a really nice film and nice price points and a faith-based film called I Can Only Imagine 2. So nice to have a sequel to the original film in that space. So we're just very well poised there. And I'd say, you know, they're focusing on a lot of things. I mean, first of all, I think they would tell you, look, you've got to have the right filmmaker, okay, for the right genre. and who's proven in that genre. I would just say Paul Feig was a fantastic selection in Housemaid. They bought the books thinking, hey, this could be straight video, but then realized, you know, there's something bigger here and put the right talent around that. Paul Feig is a director. Likewise, you look for something with a marketing hook. This was sexy, edgy, different, not a rom-com. If you haven't seen it, you've got to go see it. I guarantee you're going to love it, and it's going to twist and turns. and you know it's a killer and there's no pun intended there so it's a it's a great film and then you put a and it has great international appeal right with the underlying ip and the book sold what sold well around the world actually my wife picked up her her book when she we were traveling in europe she picked it up finished her book picked up another one and said wow this is great she didn't even know we were doing the movie and said the second one by the way was her favorite book, so there's clearly that one's already been greenlit called The Housemaid's Secret. And so I think you look at that, you got the international appeal, the marketing hook, you got a director, a filmmaker that knows how to do it, proven in the genre, and then you add known cast, recognizable cast, so Sidney Sweeney and Amanda Seigfried who just, they killed it again, no pun intended, it was really great. And all of a sudden, there you are with a new franchise. And we're pretty good at doing that. And I'd say Adam and his team has shown just excellent skill set. And so I expect more to come out of this franchise. And we're always every year looking for creating more franchises.

Thomas Ia, Analyst — Morgan Stanley

There always does seem to be a little bit of an ebb and flow in sentiment around the health of the box office more broadly. I mean, maybe also more specifically on the midsize film budget side do you feel like operating in that space as one of the bigger suppliers of content into that theatrical window that you have any insight into whether there's a broader consumer trend and appetite for any particular film yeah well i think you have to be more selective right you got to know what audience is there and we've we've always done that and particularly i think our team's good at it look we we see eight to twelve broad theatrical releases a year right That's just fine.

Jimmy Barge, CFO

And nice to have three tentpoles. We've got three tentpoles coming up next year. That's kind of a nice franchise slash tentpole that supports underlying your slate every year. It's always a slate approach. And we stay focused on genres where we can win. We do a lot of action, do faith-based, do horror. And then we'll do edgy stuff, again, that has the right kind of marketing hook and edge to it, you know, just new originals, mid-budget. like mid-small budget, such as the Housemaid.

Thomas Ia, Analyst — Morgan Stanley

So for a success like Housemaid, how should we think about how that translates from the upside that we're seeing on the box office performance into potentially further upside and the downstream windows thereafter? Maybe just walk us through how you're monetizing that and if there's continued evolution in the opportunities that you see downstream post-theatrical.

Jimmy Barge, CFO

Yeah, well, the nice thing about a late December release as it just keeps giving. So we've got great rollover coming out of that. Now You See Me as well and the other two theatrical releases I talked about earlier. We've got great carryover coming into 27 and The Housemaid will be clearly part of that. And again, I would fully expect three films out of that, if not more, even though there's only three books. It's the type of story you could keep telling, right? And so I see that extremely strong. It's going to play on our library forever.

Thomas Ia, Analyst — Morgan Stanley

Great. So on the film slate more broadly, you've announced some big tentpoles that are anchoring fiscal 27. Michael's coming up on your games prequel. As we think about how this really consider the sustainability of motion picture momentum from an earnings generation perspective into the following fiscal years, how do you think about the appropriate run rate for your slate in terms of managing that tentpole versus mid-size kind of film release?

Jimmy Barge, CFO

Yeah I think it's you know that A8 to 12 and the tentpoles you know you don't want to rush something when it's not ready but we're set up for three tentpoles for the next two years right so you mentioned one we got great carryover again coming out of 26 into 27 right so that's great to have and then we start the year with Michael, April 24th. By the way, I've screened it. It is just fantastic. You can't stop moving your feet. And it's just spectacular. And the way it ends, I can't give it away, but it's clearly a part one. I mean, it ends. You want so much more, you know? And just really, really great and so well done. And so you've got Michael, April 24th. You've got Hunger Games in November. Remember, this is a story everybody's really been waiting for. This is the Hamish character, Woody Harrelson character, that actually won, I think it was the 25th quartile. So you know we won. You're recasting, younger recasting, new people playing the roles, by the way, which makes it nice, cost-effective, something the CFO always loves to see. And the fan base is just going crazy over this. We set trailer records all the time with Michael when it dropped. And the Hunger Games trailers have been so well received and just the online presence every time. And they did a masterful job of just rolling out the casting character after character, and every time it was just complete online buzz. So there's just so much demand to watch this. By the way, that book was the fastest-selling book out of the entire series. So you know the audience is there and the fan base and we're ready to reengage with them. And then we finish the year on Good Friday. I suspect it will come out on Thursday, given the industry standards. But this is the long-awaited, probably the most-awaited sequel ever. Twenty years later, it's the sequel to Mel Gibson's Passion of the Christ. So Resurrection Part 1, we're doing it in two parts. It's filming in Italy now. Production finishes in May. And principal photography finishes in May. And we're just so excited about that. And then the second one will follow in the following year. And then you fast forward in the following year. I really do believe we've not announced that we're going to have a Michael Jackson 2. I just told you when you finish the film, it is so set up for the rest of, you know, you just can't wait. And there's so much more story to be told. We publicly said we had three and a half hours of footage with Jafer, his nephew, playing the scene. people there and says, this is not a kid playing Michael Jackson. This is Michael Jackson. I mean, when you hear people talk about it and you see him, as I have in the first part in part one, it's just magical. And so we're excited about that. And then you have a resurrection part two, Michael two, and then you have the house made secret. So right there you've got three tent poles moving into 28. And so fiscal 28. So you got great carryover coming out of 26 into 27, more great carryover from 27 to 28, and then more great carryover from 28 to 29. And we've got a lot of other franchises, Naruto as well. You and I were talking about that early. Could be Monopoly, just a lot of opportunities there. Could be more John Wicks as well in some of those years. So just excited about having the tent poles. That feels about right. Three a year, maybe four. You know, it's always nice to have more, but, you know, plan those out and then go with the mid-budget films as we're doing, the genres that we're known for to have very high probability with modest budgets, disciplined P&A spend, international pre-sales to really drive the slate and the profitability like we've done. Great.

Thomas Ia, Analyst — Morgan Stanley

Yeah, it sounds like the visibility on the slate is really building in terms of... On that international pre-sales front, you did mention Housemaid has a lot of international appeal. One area that I think you've spoken about before is also pretty healthy demand from an international pre-sales perspective, particularly for Michael that's also coming up. What lessons can you take from that experience? Is it so specific to the resonance of any particular film subject that you're seeing that strength, and how do you really try to replicate that level of enthusiasm in that market?

Jimmy Barge, CFO

Well, Michael's a global sensation in his music, so you can just imagine demand, but we've got a very disciplined model there. We brought Universal in on the international distribution. We did keep Japan as a territory because we had a very high level of interest that we knew existed there, and so Helen Lee and her team just did a great job, as they always do of the international pre-sales so we've got a we got a fantastic model there we distribute the US and by the way on house made as with any pre-sales you know we're set up to earn overages so in success after our international partners recoup and may make a really nice profit then we start to share the back end so our national distributors are just super excited and over themselves right now in terms of how well the housemate has performed so clearly they're going to be looking forward to new ones and then we're the only people out there really the only distributor out there with these kind of broad projects whether it be michael or whether it be resurrection this almost have to have to participate and uh and we got a proven track record with our partners of delivering okay and and also earning some back end ourselves but being and a great partner, and so they're super excited right now for our entire slate, right? But Michael in particular and the resurrection, I would add as well. Okay, that's good to know.

Thomas Ia, Analyst — Morgan Stanley

Interesting. All right, yeah, also I think on the downstream window front, you've entered into a new calendar year where the subsequent films that you're releasing will be delivered into a new pay-one agreement. So I wanted to ask about that evolution of the pay-one monetization opportunity and how we should think about how the aggregate value of that window looks now relative to your prior deal under SARS.

Jimmy Barge, CFO

Exactly. And by the way, on the last question, I'd be remiss if I didn't back up and talk about how excited the international markets are with regards to Hunger Games as well. So, you know, you can just see the demand there. But, you know, with regards to the pay one window, you know, this is great. This is where one plus one equals more than two, you know, high margin. We split the window, the pay one, traditional pay one window. We split that with stars taking, you know, the first part of the window and then Amazon taking the second part of the window. And so that's, one, just reaffirmation of the strength of our slate, Amazon's interest. It's high margin. It creates more opportunities. Again, like I said, one plus one is more than two. And, you know, that starts with the calendar year 26 releases, right, which really start soon. So we see that benefit, it'll start in fiscal 27. So that's, again, that's driving library sales, is driving, you know, downstream ancillary revenues. It's great visibility because you know it's all priced off of the box office. And, you know, we've done very well. So that's going to be nicely profitable and incremental to us in fiscal 27 and beyond.

Thomas Ia, Analyst — Morgan Stanley

Okay, gotcha. Let's move on to the television segment. You mentioned in the past doubling the number of TV series delivered next year relative to the prior year. What do you attribute to the catalyst that's really driving that strength and the rebound in terms of pickups and renewals? And how sustainable should we think about that level of delivery as we get into fiscal 28? and beyond.

Jimmy Barge, CFO

Well, a lot of this is the same as on the film side of the slate. We spent our fiscal 26 kind of rebuilding franchises and rebuilding our slate because we didn't get the carryover coming out of 25 and the fiscal 26 that we would have wanted. But now we have what we want. We've rebuilt that. If you think about it, we've created three major franchises in fiscal year 26 that really doesn't show up in the numbers to speak of, okay? The Housemaid we've talked about, Nellis talked about on the TV side, the studio, okay, coming out of season one, already renewed for season two, okay? And Hunting Wives on Netflix coming out of season one, going into season two, okay? So both of those are renewed, and what we've seen in TV is of their 13, you know, scripted series, we've had 12 of 13 already renewed, okay? The 13th, I expect to be renewed too. Can't announce anything, but it is Spartacus. It is on Starz, and it's 98% fresh rotten tomatoes. But, you know, they have an option to pick that up, and people generally don't exercise options earlier. But even 12 of 13 is unprecedented, okay? Included in there is Ghosts going to Season 5 and 6. We had a two-season order and pickup of that, which we haven't seen for a long time. So that's going into Season 5 delivered, going into Season 6. The Rookie, Season 8, that came out of the E1 acquisition. We were at Season 6 when we did that acquisition. We've had two more seasons picked up. So included in that also is we have Origins that we're looking forward to, 18-episode order as part of the power franchise. That's in addition to the renewals I mentioned. So we've got a really strong TV creative carryover, and you look at that as being sustainable because you know what you've got, right? And you'll see it in the billion six, billion five, billion six of backlog, which I referenced earlier, but that is contractual revenues and future revenues and cash flow, okay? And that's part of that, and those are at near all-time records, the backlog is. So you're just seeing that benefit there, so you have that visibility, and there's no reason to think it's not particularly sustainable in 18 and 19, because the tougher season to get renewal on is season one and going into two, right? And once you've got the fan base and you're in season two, And, of course, the margins go up and your leverage goes up as you go into seasons three, four, and five. So there's good reason to believe with that creativity of both a lot of junior programs carrying over, as I just mentioned, as well as seasons programs and particularly something like a procedural The Rookie could run forever. The Ghost has got a huge fan base behind it. We're actually with BBC doing a film version of Ghost. So there's all kind of spinoff opportunities and other ways to serve that fan base, and the team's great at doing it. So I really like seeing that, and it's nice coming off of, again, we had a rebuilding year in fiscal 26.

Thomas Ia, Analyst — Morgan Stanley

Last quarter you didn't mention that 33% of your library revenue now comes from TV, which I think historically has been a much lower number relative to the motion picture contribution. I mean, recognizing that TV licensing deals can be lumpy, can you talk about the industry demand for film versus TV catalog and how you see that changing? Film always, to me at least, feels a little more evergreen in terms of the demand that these streaming services are.

Jimmy Barge, CFO

Yeah, you know you need both. And just to lay out, in the last 10 years, we've gone from 15% of the library being TV to 33%. Okay. Over that same period, we've had a 10% growth CAGR on trailing 12 months library. Jim Packer and his team, they do such a great job there. We've set our fifth record, which I mentioned earlier. We've had two quarters now with trailing 12 months over a billion dollars. Okay. Very high margin, 50% plus cash margins, 40%, 45% segment profit margins. So just a great business. So TV has become more and more of that. And I think that's really indicative. It's indicative of demand, but it's also indicative of success of our TV program. And we've been at this a lot, right? So you've got to create the franchises to kind of stoke the library, and then you've got more to sell and execute. So we're doing a lot there, and we're also mining our deep catalog. We're actually using AI to help mine the deep catalog or the longer tail catalog, creating incremental revenues, very high margin. These are usually unrecouped projects, okay, and doing rev share, whether it be subscription or advertising models without cannibalizing at all the licensing, the traditional licensing model. So feel very strong about library and its success and TV in particular being a major part of that.

Thomas Ia, Analyst — Morgan Stanley

Great, great. Let's talk about AI. I mean, it's obviously a big topic that's been affecting everybody across industries and a big topic at this conference. You appointed a chief AI officer pretty recently and have done multiple partnerships, I think most prominently with Runway that you announced and spoke about some internal initiatives there. Can we talk about how AI is delivering a tangible benefit to Lionsgate today and how you see that evolution of that technology really changing the ability for you to monetize your content?

Jimmy Barge, CFO

And I think this, by the way, is just very positive for the industry, very positive for us. First and foremost, we're going to be talent first. We hired Kathleen Grace from Vermilion, very focused on artists' talent relationships, but the opportunities here are fantastic. And Kathleen reports directly to John, our CEO, and we're taking that approach. But we were early movers with Runway, as you mentioned, and a partnership there allowing them to use part of our library to actually build tools. not to replicate the library or do something else in terms of distribution, but to build tools. And we're using those tools. We're using other AI platform tools as well, right? And we're already using it. We're doing this in many areas, as you would imagine, previs, which is the previsualization of film and TV. I think we saved two weeks on Hunger Games where you're just setting camera angles, all the other things, storyboarding, the things you would do, sequencing of scenes, et cetera, and, you know, utilizing it there, utilized it in Spartacus to amplify a lot of the fight scenes, used it on another television episode to actually change the lines using the voice of, of course, at their artist agreement without having to bring people back in and reshoot or do something to change a line for a better line. So we're already using it. That's on the cost side, but I mentioned on the revenue side, I think is really probably some of the greatest opportunity, right? And I mentioned already what we're doing on our longer tail deep library, but there's just incredible opportunity, I think, there to do more.

Thomas Ia, Analyst — Morgan Stanley

What about at the consumer level? Is there a broader existential threat about the value that consumers place on premium scripted content? There's, I think, a lot of increased focus on a shift in at least consumption towards user-generated content. Is there any view from Lionsgate about how to potentially participate in that, or if you feel like there's a differentiation factor that becomes more prominent?

Jimmy Barge, CFO

Oh, sure. Look, I think the first thing to say is that historically, when you've seen technologies, which has almost always been really a friend of content and IP, but when you see technology lowering the cost and maybe more productions feasible because of lower costs, what you see with more supply is an increase in demand and value for the higher end of known IP and fan bases, and it's something that's already been created. So our franchises actually go up in value. You could see that actually with Sora 2, right? Because as soon as you know it's going to happen, all the industry writes letters, including ourselves, say you can't use our IP, you're going to get sued, okay? And all of a sudden the downloads and the interest and usage of that just went down significantly, okay? But that doesn't mean there's a world where we might not extract the fee and licensing and share with talent and the guilds in an appropriate format, as we always do with the revenue streams coming out of our creative process, and being able to allow people or the fan base to more interact. And so there's definite fee opportunities there. It could be short form or up, but I don't think it's ever going to replace long form, okay? And if you think about it, the creative community, just using Housemade as an example, just talking about what went into creating that, no one person creates it on their own, okay? And the creative people, the future Paul Figgs, and even now, or Steven Spielberg, or James Cameron, or Michael Jackson, they're going to work in a creative community that's collaborative, okay? And that's the nature of this business. And you're going to want to be working in that collaborative environment. Are you going to be using AI tools? Sure. But your ability to kind of emerge, maybe you do emerge through short form or other, but even then, you're going to want to change the world. You're going to want to be on the big screen. You're going to be everywhere. You're not just going to want to be on YouTube and TikTok. You're not going to be happy with 100 million TikTok YouTube followers. You're going to want to be much more broadly distributed, disseminated and work with people that actually create with you more and to be the best you can be. And I see that as being, you know, very beneficial to what we do already. Okay. In terms of working with talent, it's consistent with being talent first driven and it's consistent with driving future revenue streams for everybody to share and participate in. Gotcha.

Thomas Ia, Analyst — Morgan Stanley

On that value of IP point, it certainly feels like there's more momentum in your desire to expand your monetization potential into other ancillary formats like live events or video games. Can you just give us an update on the traction you're seeing there and how we should think about how meaningful this might be in terms of a contribution to your earnings?

Jimmy Barge, CFO

Well, it's all incremental. It's global experiences from gaming, stage plays, experiences, the John Wick experience, the Saw franchise, all of these franchises, the fans want to interact in so many ways. And you can actually create those environments. And I think AI will actually even help further in that context. But what you have to have is you have to have the known content. And so it makes the library even more valuable. So the more library, the more franchises the more opportunities and we're doing that already and i think there's just going to be more opportunities to do it you probably saw you know meta uh entered into an agreement with with fox for i think 50 million a year for three to three three to five years you know to have access so the the future revenue streams is not the same industry but the concept that you'll participate paid in future revenue streams, et cetera, and be able to interact more with your fan base I think is enhanced here.

Thomas Ia, Analyst — Morgan Stanley

I'd be remiss to not ask you a little bit more about free cash flow, given your position as a CFO. In our last few seconds, maybe just tell us a little bit about how you think about the cash needs of a studio. I think there was an initial ramp as you got back to more of a steady state production on the investment level, but maybe just talk a little bit high level about what you see as free cash flow conversion over a more steady state and the leverage situation.

Jimmy Barge, CFO

Sure. We've got strong free cash flow coming. As we said, we're back in loaded in fiscal 26. It was a replenishment year, if you will, so you were spending more cash than you were amortizing cost off through the D&L, so less of a conversion of EBITDA into free cash flow. So it's a use of free cash flow very judiciously. We've talked about the franchises that we've created. And so you'll start to see those cash flows coming in the future. And you'll also see future cash lower than amortization. So actually, it'll be additive. It turns around. So that's a working capital benefit going into the future. And we see very strong free cash flows coming out of the trailing 12 months and also the trailing 12 months driving, delivering as we go into mid-fiscal 27. Thank you so much. That's all the time we have. Okay. Thanks, Thomas. Appreciate it.