Phinia achieves record net sales of $908 million in Q3, driven by SEM acquisition and strong operational efficiency; guidance for 2025 raised amid macro uncertainty.

Audra - Conference Operator - (00:01:00)

Good morning. My name is Audra. I will be your conference operator today. At this time I would like to welcome everyone to the Phinia third quarter 2025 earnings call. Today's conference is being recorded. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question and answer session. If you would like to ask a question during this time, simply press the star key followed by the number one on your telephone keypad. If you would like to withdraw your question, press star one again. At this time I would like to turn the conference over to Kellen Ferris, Vice President of Investor Relations.

Kellen Ferris - Vice President of Investor Relations - (00:01:37)

Thank you. Good morning everyone. We appreciate you joining us. Our conference call materials were issued this morning and are available on Phinia's Investor Relations website, including a slide deck that we will be referencing in our remarks. We're also broadcasting this call via webcast. Joining us today are Brady Erickson, CEO and Chris Grupp, CFO. During this call we will make forward looking statements which are based on management's current expectations and are subject to risks and uncertainties. Actual results may differ materially from these statements due to a variety of factors including those described in our SEC filings. We caution listeners not to place undue reliance upon any such forward looking statements and with that it is my pleasure to turn the call over to Brady. Thank you Kellen and thank you everyone for joining us this morning. I'll start with some overall comments on the third quarter, then provide some thoughts on the remainder of the year and beyond. Chris will then provide additional details on our third quarter financials and discuss our updated 2025 guidance. We will then open the call for questions. The highlights of the third quarter include the closing of our acquisition of Swedish ElectroMagnet Invest or SEM, our first acquisition as a public company, delivering our second quarter in a row of year over year net sales growth with Q3 being over 8% higher than prior year. This led to a record quarter for adjusted sales and and adjusted EBITDA dollars as a public company for the first time. Our results are mostly being compared like for like against the prior year quarter as we had substantially exited all TSAs and contract manufacturing from our former parent in the third quarter of 2024 and nearly all of our corporate structure and costs were fully in place. And finally, with our strong adjusted free cash flow, we were able to acquire semiconductors and return $41 million to shareholders via dividends and share repurchases while maintaining ample liquidity and our net leverage of 1.4 times EBITDA let's start with SEM. In June, we announced plans to acquire the company and we were able to quickly close the transaction in August. SEM is a 100-year-old leading provider of advanced natural gas, hydrogen and other alternative fuel ignition systems, injector stators and linear position sensors to the commercial vehicle and off highway sectors. With SEM, we have expanded our ignition and electronic control capabilities, broadening our system offerings. By combining Phinia's expertise in engine management systems with SEM's deep knowledge of advanced ignition technologies, we are creating a powerful platform for innovation and efficiency. We're excited to welcome SEM to the Finia family and look forward to growing with them. Moving to our Results Our third quarter performance reflects steady progress in executing our strategic priorities and our ongoing commitment to returning value to shareholders in the form of dividends and share buybacks. We are executing several structural initiatives to enhance efficiency and data visibility. We are consolidating 4 ERP systems into a single global SAP S4 HANA platform, which we will phase in across the globe over the next several years. Additionally, the integration of SEM and our ongoing cost savings initiatives are laying the groundwork for a more agile, efficient organization. Although the macroeconomic and industry outlook remain uncertain, we we are focused on what we can control through operational and cost efficiency initiatives, providing value to our customers and driving sustainable performance across all our markets. Net sales in the quarter were a record 908 million, up 8.2% from the same period of the prior year. As we benefited from the SEM contribution, favorable FX customer pricing related to tariff recoveries and increased volume in Asia and the Americas. Excluding SEM and FX, revenue increased 5%. This is the second consecutive quarter where both segments reported higher year over year sales. We reported adjusted EBITDA of 133 million with a margin of 14.6%, a 30 basis point year over year expansion. The margin expansion was primarily due to lower R and D expenses and strong performance from our Fuel Systems segment. This was partially offset by unfavorable product mix and increased employee costs. 133 million of EBITDA was also a quarterly record as a standalone company. Fuel Systems delivered a strong quarter with adjusted operating income up 33% and the margin expanding 190 basis points, which is partially diluted from the SEM acquisition. Adjusted Operating Income (AOI) was driven by research and development savings, overhead, cost control measures and efficiencies. Those are partially offset by unfavorable product mix. Aftermarket margin was down 80 basis points. The decrease was primarily due to unfavorable product mix. Our combined fuel systems and aftermarket segment adjusted operating margin was 14%, an 80 basis point increase when compared with the third quarter of 2024 and a new record for a quarter as a standalone company. Adjusted earnings per share excluding non operating items as detailed in the appendix of our presentation, was $1.59, up from $1.17 in the same period for the prior year. Finally, as we disclosed in an 8k last week, we reached an agreement with our former parent company to equitably resolve our litigation and move forward in a positive manner. We expect that a substantial portion of the settlement payments will be offset by collection of pre spin VAT refunds, tax credits and various other tax recoveries. As a result, we do not believe that the settlement will have a material impact to our capital allocation strategies Liquidity for our Net Leverage Ratio this quarter marks an important milestone for Finia. It's our first quarter of fully comparable year over year results since the spend. With all transitional service agreements and contract manufacturing now complete and nearly all corporate costs were in place, the third quarter reflects the true underlying performance of our business. As a general overview and inconsistent with recent quarters, our results for the third quarter highlight the strength and resiliency of our business in the face of a challenging and unpredictable environment. This is consistent with the benefits of having a truly diversified industrial business with diversity in customers, markets, industries and regions in which we support. Our innovation strategy remains at the center of our growth story. We continue to invest heavily in R and D roughly 200 million annually for about 6% of sales and our customers reimburse us for about half of that through software and calibration services, demonstrating our position as a true development partner. In turn, we are making important investments in our business. They're advancing our competitive position in the key markets and allowing us to capture incremental growth opportunities and support our customers. Our brand is strong in the market and customer preferences for our products remain high. Our excellent service is supporting our growth with both new and existing customers. Let me highlight a few of the new business wins on pages six and seven. The new next generation canister technology with leak detection devices for a leading North American OEM on two hybrid light commercial vehicle programs A brushless alternator for industrial applications to a leading off highway OEM in Asia for mining haul trucks A Conquest gasoline direct injection or Gasoline Direct Injection (GDI) fuel rail assembly and controller for a light passenger vehicle applications securing our first win and new business with a major Chinese OEM moving next to our aftermarket business as shown on slide 7. We're winning both new business and expanding relationships with existing customers. Importantly, these wins are across diverse geographies, expanding our market leading product coverage and grew share of wallet with a major Middle Eastern customer. Signed an agreement with a new large customer in the United Kingdom for braking and suspension components, new starter and alternator business with additional distributors in North America. Our value proposition is differentiated and continues to attract new customers as well as deepen relationships with existing customers. As shown on slide 8, our business is diverse by end markets and geographies. Most recently we've expanded into the aerospace and defense industries. As I've mentioned on prior calls, this is an emerging and exciting adjacency for us. We're launching multiple programs with the key aerospace customer that leverages our existing engineers and manufacturing infrastructure. We have started initial shipments on our first Aerospace Business Award and expect our second program to launch in early 2026. These wins validate our strategy to extend core combustion and control technologies into adjacent markets. Now moving on to slide 9 for a discussion of capital allocation. We have taken a disciplined approach to capital allocation while remaining opportunistic about M and A. We will continue to evaluate selective M and A opportunities that enhance our product offerings in precision machine components and assemblies, electronics and controls, as well as increasing our presence in key markets and industries such as aerospace, commercial vehicles, off highway, industrial and the aftermarket. Our approach remains opportunistic and disciplined, consistent with our capital allocation priorities to invest in our business for long term profitable growth. We invested 26 million in capital expenditures during the third quarter, with funds expended primarily on new tooling and equipment. Also on the capital allocation front, during the quarter we returned 41 million to our shareholders, including 11 million in quarterly dividends and 30 million in share repurchases. We have 194 million remaining under our current repurchase authorization and we expect to continue to evaluate the best use of capital on a quarterly basis. Since The Spinoff In July 23, we repurchased approximately 20% of our outstanding shares. Even with the acquisition of SEM Capital Investment in our operations and capital return to shareholders, our balance sheet remains solid with cash and cash equivalents of 349 million, total liquidity of approximately 900 million, and our net leverage ratio remaining at 1.4 times, which is under our target of approximately 1.5 times. This was possible due to our strong adjusted free cash flow of 104 million in the third quarter. As we look to the remainder of the year, we see some marketed tariff risks as CV tariffs are coming into effect on November 1. Importantly, we will continue to work with our customers on recovery and similar to the auto tariffs, we expect to substantially recoup the costs from our customers because CV OEMs are also qualifying for the same 3.5% rebate as are the auto OEMs. We have adjusted our 2025 outlook to account for the SEM acquisition and some external factors on the revenue front. The midpoint of our outlook is up 40 million from our prior guide driven by approximately 15 million from SEM and the remainder from favorable FX volumes and pricing. The midpoint of our adjusted EBITDA guidance is up slightly as it continues to be constrained by tariff related revenue that carries zero margin. Adjusted free cash flow has been a good story for us and we're raising the midpoint of our 2025 outlook by 10 million to wrap up. We've continued to build momentum across our diversified end markets while maintaining disciplined cost and cash management. Our teams are executing our long term strategy that is focused on product leadership, stable growth, financial discipline and total shareholder returns. With that, I'll hand it over to Chris who will walk us through our Q3 results and discuss our outlook for this year.

Chris Grupp - Chief Financial Officer - (00:14:50)

Chris thanks Brady and thank you all for joining us this morning. As a reminder, reconciliations of all non GAAP financial measures that I will discuss can be found in today's press release and in the presentation, both of which are on our website beginning on slide 11. Our financial results in the quarter were solid and include the contribution from SEM which closed in August. As Brady mentioned, the external environment has not changed dramatically from the prior quarters. However, we continue to see strength in our Original Equipment (OE) sales across the globe enhanced by strength in aftermarket sales in select markets. We are pleased that the teams have responded appropriately and delivered strong revenue and EBITDA in the quarter. Specifically, we generated 908 million in net sales, an increase of 8.2% versus a year ago. Our top line benefited from favorable foreign exchange tailwinds of 19 million and an 8 million contribution from SEM. Excluding these impacts, net sales increased 5%, a result of better pricing, tariff recovery and increased volumes in Asia and the Americas. Let me now bridge our adjusted revenue and adjusted EBITDA for the third quarter, which you can find on Pages 11 through 13 in the presentation. Fuel System segment sales were up 13.4% including prior year contract manufacturing sales or 13.7% excluding the effect of contract manufacturing which ended in Q3 of 2024. The increase in fuel systems revenue was also attributable to foreign exchange customer tariff recoveries and the Contribution from SEM of 8 million segment margin was 13.3%, up 190 basis points year over year, primarily due to supply chain savings, productivity improvements and reduced engineering costs. Our aftermarket segment sales were up slightly year over year on positive European results combined with a small amount of tariff recovery. This revenue was partially offset by lower volumes in North America and Asia. With respect to profitability, the aftermarket Segment margin of 15% was down 80 basis points from the prior year and impacted by unfavorable product mix. On a Consolidated basis, our Q3 segment adjusted operating margin and adjusted operating income were healthy at 14% or up 80 basis points and 11.1% or up 70 basis points year over year respectively. Our teams worked hard to cut costs and improve productivity despite some volatile market conditions. Our adjusted net earnings for diluted share in the third quarter were $1.59, an increase of $0.42 per share for the quarter. These amounts exclude non operating items which are described in the appendix of our presentation influenced by lower share count as we continued share repurchases on August 1, our team was excited to welcome new colleagues to the FINIA family with the close of the SEM acquisition. Total paid was 47 million, comprised of 15 million cash proceeds to seller and 32 million used to extinguish debt assumed through the acquisition. While we expect SEM to contribute sales annually of approximately 50 million and adjusted operating income of 10 million, we anticipate the first year sales and resulting returns may face some initial headwinds given sim's reliance on a challenged CV market and potential distractions from ongoing integration efforts. In addition to SEM, we settled a claim regarding the tax matters agreement with our former parent following the close of the quarter. Our full year 2025 guidance, which we will discuss, has incorporated the impacts of this settlement appropriately. We expect that a substantial portion of the settlement payments will be funded through refund payments we receive from various tax authorities related to certain indirect tax payments made prior to the spinoff, with the remaining portion funded with available liquidity as described in last week's 8K. The settlement with our former parent also provides clarification on the company's ability to obtain and use the benefit of certain tax attributes. This has the potential of providing us with additional flexibility as we continue to optimize our tax structure. Intense focus by our teams delivered a strong balance sheet providing substantial current liquidity despite all the extra activities in the quarter. Cash and cash equivalents were 349 million while available capacity under Our credit facility remained at approximately half a billion dollars for a resulting liquidity of approximately 900 million. Cash flow from operations was $119 million in the quarter and adjusted free cash flow was 104 million, a significant increase from 60 million in the same period of the prior year. We continue to remain confident in our ability to generate free cash flow to support our capital allocation priorities. As Such, we paid 11 million in dividends and repurchased 30 million in our stock in Q3, bringing our year to date returns to shareholders to $202 million. This balance consists of $32 million in dividends and $170 million in share repurchases. Now moving to Slide 14 for a discussion of our refined full year 2025 outlook. As Brady indicated, we have adjusted our outlook slightly to account for the acquisition of SEM minor tariff changes and other macroeconomic factors. We are adjusting our 2025 sales guide, increasing the high end of the guide to 3.45 billion and bringing up the low end of guide to 3.39 billion for an increased midpoint of 3.42 billion. We are narrowing our adjusted EBITDA range with a high end of 480 million and low end of 465 million for a slightly higher midpoint of 473 million. In addition, we are taking the midpoint of our adjusted free cash flow up by $10 million to $190 million and improving our tax rate for the second quarter in a row. Our expected adjusted tax rate is now projected to be in an improved 33% to 37% range from the prior projection of 36% to 40%. As ongoing tax structuring projects gain traction and progress, we do not expect this change to have a material impact on cash taxes in 2025. Overall, we continue to be confident in delivery of solid returns as we deal with zero or low margin tariff recoveries, choppy markets and foreign exchange movements. As Brady mentioned, as we look forward, we are also disclosing implementation of a strategic effort to align our legacy structure to to more effectively match the business as it develops globally. As such, we anticipate a step up in restructuring charges approximating 35 million in infrastructure right sizing professional fees and other costs to Yield an estimated 25 million in annual savings, a less than two year payback once all projects are fully implemented. This is complementary to our normal ongoing work to ensure our operations and and corporate functions are agile and meet the future needs of our invested constituencies. We are operating from a strong financial foundation and executing on clear strategic priorities. In closing, we remain firmly committed to building sustainable value for all our stakeholders. Thank you all for your attention today. And we will now move to the Q and A portion of our call. Operator, please open the lines for questions.

OPERATOR - (00:23:22)

Thank you. We will now begin the question and answer session. If you have dialed in and would like to ask a question, please press Star one on your telephone keypad to raise your hand and join the queue. If you would like to withdraw your question, simply press Star one. Again, we'll take our first question from Bobby Brooks at Northland Capital Markets.

Bobby Brooks - Equity Analyst - (00:23:41)

Hey, good morning, guys. Thank you for taking my question. So excluding the acquisition and currency impact, sales were up 5.1% year over year. A really, really healthy number. I was just curious if we could dive a little bit deeper into that 5.1%. Like how much of that was pricing and tariff recoveries versus increased volumes or even possible or even just new products being shipped out? Yeah, it's a balance between kind of all three of them. I mean, pricing and tariffs is going to be, you know, about the same as volume is the same as a little bit of FX kind of tailwind. So not, not a lot of difference between the three. It's kind of equally balanced. Got it, got it. And then just with the pricing, is that pricing like you said, pricing and then tariff recovery? So it seems like those are two separate silos on the pricing. Is, is it reasonable to think that that's going to be sticky moving forward or, or how should we think about that? Yeah, yeah. I mean they're obviously they're linked directly because as we have tariffs, we're passing on price and so that's the bulk of it. And that's going to be sticky because unless the tariffs are going away, you know it's going to stay there. And again, that's one of the reasons why our, our EBITDA is not going up as much is because those are basically at break even EBITDA or Marcus and a little bit of headwind in that, but we don't see it going away. We think it's going to be there and we just got to continue to drive productivity and other efficiency improvements to get our margin back to where we expect it.

Colin - (00:25:22)

Plus Bobbi, on the tariffs, some of the things that we have been doing is in lieu of tariff pass through. We've actually gotten concessions on some other areas. So I mean, we've gotten pricing obviously on aftermarket. It is more of a price increase game, but it's not huge. It's not material, it's just a couple of million dollars when you look at the pricing and strip out just the tariff going through, just trying to make sure we get recovery on all of those.

Bobby Brooks - Equity Analyst - (00:25:54)

Got it. That's very helpful, Colin. And then last one for me is great to hear you began shipping components for your first aerospace program. That's really exciting news. Do you think achieving this milestone will sort of serve as a cowbell to alert other aerospace companies you're a legit and certified potential supplier and maybe ask a different way. Do you feel there are potential customers waiting in the wings to see you successfully deliver those components for the first couple projects before stepping in and placing an order? Thanks. Yeah. And absolutely it's true. I think ever since we've announced them and then at the Paris Air Show in, in June, the level of interest the RFIs and RFQs coming to us has, has gone up substantially. And as I mentioned, I think in the last call, we fully expect to get additional awards here in the coming quarters that will continue to support that expansion. And so we're having conversation with pretty much every of the major engine manufacturers out there and see some good opportunities for us to continue to grow in that space. Really appreciate that. Caller Brady, congrats on the great quarter. I'll return to the queue. Great, thank you.

OPERATOR - (00:27:11)

We'll move next to Joseph Spack at ubs.

Joseph Spack - Equity Analyst - (00:27:16)

Thanks. Good morning everyone. Wanted a couple questions, I guess one maybe just on the implied guidance in the fourth quarter, you know, maybe slightly below expectations. I was wondering if you could give us a little bit more detailed commentary on the organic end market and then related to the guidance, but also just want to understand the business going forward. It implies the guidance about 7 million in the fourth quarter from SEM, which is I guess a million below the third quarter despite being a full quarter. In the fourth quarter. So is there some seasonality to that or is that some of that softer demand you talked about? And, and you know, for that first year of owning the business and if so, is, you know, 7, 8 million a good sort of run rate to start to think about for 26?

Chris Grupp - Chief Financial Officer - (00:28:13)

Sure. On Q4 I think we're, we always talk about seasonality in general and we haven't had a normal seasonality for a while. But I think this is looking to be more a normal seasonality where Q1 and Q4 are lighter. I think our Q1 this year was probably lighter than normal. I think Q4 typically is anywhere from 5% or so lighter than Q2 and Q3 and so I think we're kind of getting back to that normal seasonality. Obviously still a little bit of noise here in Q4 on volumes on what people are going to do around shutdown. So we're kind of taking that into account as well and making sure that in a good position on Q4 in general SEM, we are still understanding their seasonality. We are, you know, we, we are finding that their second half of the year is a lot lighter than their first half of the year. Along with little CV softness, they tend to, you know, they shut down in the summer and don't come back until later in August. And, and the expectation they're probably going to shut down earlier in December. So their windows in the, in the second half tends to be a little bit lighter. We're still, we're still confident that they're gonna, you know, as we mentioned earlier around that 50 million, we're confident they're going to kind of get back there when the market recovers a bit and see them, you know, delivering on our expectations. We just have the initial kind of hit right now. We've got a number of folks kind of going in there, beginning getting their systems and processes up to speed and probably adding more cost to their cost structure in the beginning to kind of ramp them up to what our expectations are. So not a lot of material difference to the overall company, but we do see them coming back, you know, stronger next year, the market recovers. And we'll provide more insight in our investor day meeting next year as we give guide for 2026 and we'll give that, that additional clarity on SEM as well.

Joe - (00:30:25)

And Joe, I'll add a little bit to it because I think that with so much going on in the markets, our units are just being very, very cautious on what they're putting out there because, you know, you name the issues there. I mean, we are not hitting, being hit materially by any like the JLR issues. That's not a big issue for us, but it makes tariffs coming in the, you know, there's a lot of things out there, none of them hit us materially, but our units get a little cautious. And so we're just trying to be a little conservative in Q4.

UNKNOWN - (00:31:01)

The other one is the aluminum supply issue for Ford and.

Chris Grupp - Chief Financial Officer - (00:31:07)

Very fair, fair enough. I guess just in the quarter, Chris, I just, you know, you sort of talked about some of the, the factors driving the results specifically in fuel systems. I just want to understand, you know, you had plus 37 million volume mix only a million flowed through to EBIT. And I know you sort of talked about negative mix, but feels like there has to be something more than that in there. Is there anything else we should be thinking about that sort of really weighed on the flow through there? No, a lot of it, Joe, has to do with if you see we actually specifically call out ECU because as a part of the separation from BorgWarner, we sell ECU from them and that literally has no margin on it. Now those contracts are coming up in the next couple of years or those restrictions come out and we're relooking at that. But at the end of the day, ECUs, the, those components are very expensive and they just, you know, if, if we're going to pass them through or we're looking for other ways of do they sell directly? So that's part of it. But if you also look, yeah, the contribution margin is low, but the units, the contribution is based on standard. If you look at the other two lines where you see really good productivity and other costs, those are coming in much better. Which means my standard is going to get better next year. So to it'll shift as long as my units are covering it. Whether if my contribution margin is low and they're covering it with productivity and other cost reductions, I'm okay with that because it just means that I'm getting better, my products are getting cheaper because the units are doing what they should be doing.

Joseph Spack - Equity Analyst - (00:32:51)

That's helpful color on you See you. If I could sneak one more in just on slide 8. I noticed you put in power generation and maybe that's been in there all along, but there's definitely been a little bit more focus on you know, turbochargers into power generators. And you know, almost all modern turbos have direct injection. Has there been any increased inquiries into, into that business or is that a growing opportunity and pipeline for you?

Chris Grupp - Chief Financial Officer - (00:33:23)

Yeah, I mean we're, that's kind of, we throw that in the industrial side as well. Whether that's the, you know, power generation, the linear generator that we were working for hydrogen to gensets both small, even large plug-in or range extending EV power generation units. That's an area we're starting to pick up more business. And again I think we'll, as we may have highlighted, we're probably going to split out our Commercial Vehicles (CV) and other OE next year as well because that's starting to become, you know, a meaningful portion of our, of our revenue. So we'll probably add some more disclosure on that as we head into next year. Thank you.

OPERATOR - (00:34:08)

And as a reminder, if you would like to ask a question, please press star one at this time. We'll go next to Jake Scholl at bmp.

Jake Scholl - Equity Analyst - (00:34:19)

Hey guys, congrats on strong quarter. I just wanted to circle back to the Ford fuel pump recall from a few months ago. Now that you guys have had a chance to work through that, can you talk about what impact you're seeing on the business, especially on the cash side? Thank you. No cash impacts, no update? No, no. Still no concerns on our side. We haven't adjusted our warranty accruals and no cash impact at this point. All right, thank you. And then can you just provide some color on the timing of the restructuring program you announced? When do you expect that to come out and then when do you expect to fully realize the 25 million savings? Thank you. Yeah, I mean we see that it's starting to roll out now. They're starting to get, I think the initial, initial go live. I think it's starting in 2026. It's going to take us a few years. There's a number of different sites that are at different stages of, I guess their system capabilities that will be kind of rolling out, but I think fully, I think Chris, and fully completed by 2028 over that time period. So we see it's going to be a multi year. It was just a, it was a bigger number than normal. And so we thought it was prudent to go ahead and kind of call it out given the multi year nature of it and the benefits that we expect to see. And this is also just a, I would say the next stage of us just continue to drive efficiency and right. Sizing, you know, the number of data centers, the number of complexity we have in software and systems and really just consolidating that, consolidating them into, you know, one instance, one reducing the number of redundant software systems that we have and licenses and really driving a lot of, you know, efficiency in our operations and in the systems that we're using. So when we got spun out, obviously it was, you know, old Delco Remy, old Delphi Automotive, parts of Warner and now SEM. They're all kind of different. And so we're going to establish a kind of a core standard that then is going to be the standard template that will roll out for future acquisitions and future locations as well and make it a lot simpler for us. Got it. Thank you.

OPERATOR - (00:36:50)

And that concludes our Q and A session. I will now turn the conference back over to Brady for closing remarks.

Brady Erickson - Chief Executive Officer - (00:36:57)

Great. Thanks everybody. For joining. And just again, a shout out to all of our Affinia employees. A really great quarter, as we mentioned, you know, with record sales, some great cash flow. First acquisition, continuing to give cash back to our shareholders through dividends and repurchases and and still maintaining a very robust balance sheet. And actually, I think our cash balances are up from the prior quarter after the acquisition and the share repurchases and the dividends. So really proud of the team, looking forward to closing out the year in a very positive manner and continuing the momentum that we have. So thank you very much for joining.

OPERATOR - (00:37:36)

And this concludes today's conference call. Thank you for your participation. You may now disconnect.