Northern Technologies reports Q4 net loss, but anticipates profitability rebound in fiscal 2026 through strategic initiatives and improved sales in key markets

OPERATOR - (00:01:18)

Good day and thank you for standing by. Welcome to NTIC's fourth quarter 2025 earnings conference call and webcast. At this time all participants are in a listen only mode. After the Speaker's presentation, there will be a question and answer session. To ask a question during the session you will need to press Star one one on your telephone. You will then hear an automated message advising your hand is raised. Today's conference is being recorded. As part of the discussion today, the representatives from NTIC will be making certain forward looking statements regarding NTIC's future financial and OPER as well as their business plans, objectives and expectations. Please be advised that these forward looking statements are covered under the safe harbor provisions of the Private Securities Litigation Reform act of 1995 and that NTIC decides to avail itself of the protections of the safe harbor for these statements. Please also be advised that actual results could differ materially from those stated or implied by the forward looking statements due to certain risks and uncertainties including Those described in NTIC's most recent annual report on Form 10K, subsequent quarterly reports on Form 10Q and recent press releases. Please read these reports and other future filings that NTIC will make with the SEC. NTIC disclaims any duty to update or revise its forward looking statements. I will now hand the conference call over to Mr. Patrick lynch and NTIC CEO. Please go ahead sir.

Patrick Lynch - Chief Executive Officer - (00:02:52)

Good morning. I'm Patrick Lynch, NTIC's CEO and I'm here with Matt Wolfeld, NTIC's CFO. Please note that a press release regarding our fourth quarter and full year fiscal 2025 financial results was issued earlier this morning and is available@ntic.com during today's call we will review various key aspects of our fiscal 2025 fourth quarter and full year financial results, provide a brief business update and then conclude with a question and answer session. Please note that when we discuss year over year performance, we are referring to the fourth quarter and full year of our fiscal 2025 in comparison to the fourth quarter and full year of last fiscal year. Fiscal 2025 was marked by order, timing shifts and selective softness in our ZERUST oil and gas and Nature tech markets. NTIC used this period to strengthen its competitive position and to execute strategic initiatives that we believe will enhance our long term growth potential. We accelerated product innovation within Nature tech, advanced new ZERUST solutions across global industrial markets and pursued emerging opportunities in the South American offshore oil and gas sector. These actions have expanded our pipeline, sharpened our focus and positioned NTIC to reaccelerate growth and improve profitability in fiscal 2026 and beyond. In fiscal 2026, we expect to start reaping the benefits gained from the strategic investments NTIC made over the past three years to upgrade our global operations and support future growth. We are also focused on flattening our operating expenses while expanding gross margins and driving sales in the higher margin parts of our business, which we expect will improve our profitability and strengthen our balance sheet in fiscal 2026. While we anticipate macroeconomic headwinds to persist, especially in Europe, we believe NTIC is positioned to deliver growth and improved profitability across many of our key markets in the coming fiscal year. So with this overview, let's examine the drivers of the fourth quarter in more detail. For the fourth quarter ended August 31, 2025, our total consolidated net sales decreased 4.4% to $22.3 million as compared to the fourth quarter ended August 31, 2024. Broken down by business unit, this included a 29.4% decrease in ZERUST oil and gas net sales and a 10% decrease in Natur-Tec net sales, partially offset by a 5.8% increase in ZERUST industrial net sales. Turning to our joint venture sales, which we do not consolidate in our financial statements, total net sales for the fiscal 2025 fourth quarter by our joint ventures increased year over year by 4.7% to $24.4 million. For fiscal 2025, joint venture sales declined 4.9%, reflecting the continued impact of high energy prices and regional political pressures on the European economy, as well as significantly increased uncertainty related to U.S. trade and economic policies and the potential impacts this will have on global supply chains. We continue to closely monitor trends across our European markets for signs of stabilization following years of subdued demand as governments begin to implement target economic stimulus packages. We expect that any economic recovery from these stimulus packages will lead to a positive impact on our joint venture operating income in future periods, especially in Germany. Improving sales trends at our wholly owned NTIC China subsidiary continue fiscal 2025 fourth quarter net sales at NTIC China increased by 12% to $4 million. For fiscal 2025, NTIC China sales increased 14% to $16.2 million, the second strongest year of sales we have experienced in this market. NTIC China sales for fiscal 2025 demonstrate that demand continues to grow in this geography. Furthermore, given that the majority of NTIC China's sales are for domestic Chinese consumption, we believe NTIC China's exposure to US Tariffs is limited. We expect demand in China will continue to improve in fiscal 2026 helping to support higher incremental sales and profitability in this market. We continue to believe that China will likely become a significant market for our industrial and bioplastics segments, so we'll continue to take steps to enhance our operations in this geography. Now Moving on to zero to oil and gas Fourth quarter of fiscal 2025 Zeros to oil and gas sales were $3 million compared to $4.2 million in the same period last year. As a reminder, ZERUST oil and gas sales for the fourth quarter last year benefited from approximately $600,000 in sales that shifted from the third quarter due to timing. On an annual basis, ZERUST oil and gas sales were $7.3 million compared to $9.2 million for the prior full fiscal year. This decline was primarily due to timing of orders. We have continually invested in ZERUST Oil and Gas to enhance our sales team and add resources to support future growth. This has improved our sales pipeline as the size and number of opportunities have expanded among both new and existing customers. Our pipeline includes global opportunities to protect above ground oil storage tanks, pipeline casings and offshore oil rigs from corrosion. The nature of this industry will always cause certain fluctuations in zero, zero oil and gas sales. Nevertheless, we still expect to see zero oil and gas sales and profitability to improve significantly in fiscal 2026 as we leverage these investments and rein in operating expense growth. Earlier this month we announced that our 85% owned subsidiary ZERUST Brazil, secured a new three year contract for a major offshore project with a leading global EPC company. Under this agreement, ZERUST Brazil will provide advanced corrosion protection solutions for floating production, storage and offloading units or FPSOs. With an estimated total value of approximately 70 million Brazilian REITs, which is equal to approximately US$13 million based on current exchange rates. The project is started in Q4 and is expected to ramp up during our fiscal 2026 and then continue through calendar 2028. This is a significant validation of our engineering capabilities, scalability of our zero oil and gas business, and the reputation we've built as a trusted partner to leading offshore operators. Brazil represents one of the fastest growing deepwater markets globally and we believe this win provides a strong foundation for continued growth and expansion across international oil and gas markets. Turning to our Nature tech bioplastics business, fourth quarter Nature Tech sales were $5.1 million, representing a 10% year over year decline in Htech sales primarily due to pricing dynamics and the timing of orders. For example, during the past year, a large North American customer of our resin compounds late purchasing for nearly six months as they made tooling adjustments to increase the output of their manufacturing line. While this contributed to Nichdec's decline in sales for fiscal 2025, we've already received orders for the first and second quarters of the new fiscal year for the equivalent of what this customer purchased from us in all of fiscal 2025. It's also worth mentioning that in Q4 of fiscal 2025, we entered into a preferred supplier agreement with the nation's leading specialized distributor for Jansan food service and industrial packaging. We expect this new relationship to translate into higher Nature Tech sales growth in fiscal 2026. We are also working on several larger opportunities for our Nature Tech solutions that we believe hold significant promise to benefit our sales in the coming quarters, including advancing the compostable food packaging solution we mentioned on our last call. Overall, we believe Natur Tech is a best in class compostable plastic business as well positioned for significant further growth in the US and abroad. While fiscal 2025 was more challenging than we expected at the beginning of the fiscal year, we remain steadfast on pursuing our strategic growth plan. We are confident in the direction we are headed. Before I turn the call over to Matt, I wanted to acknowledge the hard work and dedication for our global team of both employees and joint venture partners. Our success and our ability to navigate more complex economic periods are a direct result of their efforts. With this overview, let me now turn the call over to Matt Waltzfeld to summarize our financial results for the fourth quarter and full fiscal year 2025.

Matt Wolfeld - Chief Financial Officer - (00:12:26)

Thanks Patrick. Compared to the prior fiscal year period, NTIC's consolidated net sales decreased 1.0% in fiscal 2025 and decreased 4.4% in fiscal 2025 fourth quarter. Because of the trends Patrick reviewed in his prepared remarks, sales across our global joint ventures increased 4.7% in the fourth quarter. Joint venture operating income in the fourth quarter increased 6.6% compared to the prior fiscal year period, primarily due to the corresponding increase in net sales. For fiscal 2025, sales across our global joint ventures decreased 4.9% while joint venture operating income decreased 9.8% compared to the prior fiscal period. Total operating expenses for the fiscal 2025 fourth quarter increased 2.2% or $9.7 million. For the fiscal 2025, primarily due to strategic investments in ZERUST oil and gas sales infrastructure and increased personnel expenses including new hires, benefits and higher travel and professional fees. As a percentage of net sales, operating expenses were 43.5% for the fourth quarter compared to 40.7% for the prior fiscal year period. For fiscal 2025, operating expenses as a percentage of net sales were 44.7% compared to 41.6% for the prior fiscal year. Gross profit as a percentage of net sales was 37.9% during the three months ended August 31, 2025 compared to 43.8% during the prior fiscal year period. Gross profit as a percentage of net sales was 37.6% for the fiscal year ended August 31, 2025 compared to 39.7% for the prior fiscal year. Lower gross margin for the fourth quarter and full year periods were primarily due to a less profitable mix of sales. There were a couple of one time items that impacted profitability during the fiscal year, including a $1.1 million benefit to other income due to the receipt of cash from the employee retention Credit that was payable in February of 2025. Secondly, NTIC recognized $387,000 in other expense during the fourth quarter of 2025 as NTIC's Chinese subsidiary was assessed penalties from Ningbo Customs Authority in China as a result of a technical classification matter. We have since updated our export documents and internal review procedures and believe this issue has now been fully resolved. We also experienced an increase in our effective tax rate for fiscal 2025 which was 67.5% for fiscal 2025 compared to 17.3% in the prior fiscal year. The changes primarily reflect increased income tax expense in our foreign subsidiaries and is primarily due to the increase in income tax expense as compared to reduced consolidated pre book tax income. As a result, our effective tax rate was unusually high and volatile in fiscal 2025. We expect the effective rate to normalize in future periods when additional profits are recognized in our North American operations. NTIC reported net loss of $1.1 million or $0.11 per diluted share for the fiscal 2025 fourth quarter compared to net income of $1.8 million or $0.19 per diluted share for the fiscal 2024 fourth quarter. For the full year, NTIC reported net income of $18,000 or $0.00 per diluted share compared to $5.4 million or $0.55 per diluted share for the fiscal 2024 full year. For the fiscal 2025 fourth quarter, NTIC's non-GAAP adjusted net loss was $607,000 or $0.06 per diluted share compared to non-GAAP adjusted net income of $1.9 million or $0.20 per diluted share for the fiscal 2024 fourth quarter. For the fiscal 2025 non-GAAP adjusted shareholders net loss was $12,000, or $0.00 per diluted share, compared to net income of $5.8 million, or $0.59 per diluted share for fiscal 2024. A reconciliation of GAAP to non-GAAP financial measures is available in our fourth quarter fiscal year 2025 earnings press release that was issued this morning. As of August 31, 2025, working capital was $20.4 million, including 3.7 million in cash and cash equivalents, compared to $23.7 million, including 5 million cash and cash equivalents as of August 31, 2024. As of August 31, 2025,' we had outstanding debt of $12.2 million. This included $9.3 million in borrowings under our existing revolving line of Credit, compared to $4.3 million as of Aug. 31, 2024. Reducing debt through positive operating cash flow and improving working capital efficiencies will be a strategic focus for fiscal 2026. We generated $2.4 million in operating cash flows for the fiscal year ended August 31, 2025. At year end, the company had $28.6 million of investment in joint ventures, of which 51.7% or $14.8 million was in cash, with the remaining balance primarily invested in other working capital. During fiscal 2025 fourth quarter, NTIC's Board of Directors declared a quarterly cash dividend of $0.01 per common share that was payable on August 13, 2025 to stockholders of record on July 30, 2025. To conclude our prepared remarks, we are optimistic NTIC's momentum is building across many parts of our business. We believe our multi year strategies are working, our global markets are expanding and our team is delivering results with a clear vision and disciplined execution. We're confident that the foundation we've built will drive continued growth, stronger profitability and meaningful creation value creation for our shareholders. With this overview, Patrick and I are happy to take your questions.

OPERATOR - (00:18:52)

Thank you. Ladies and gentlemen, as a reminder to ask a question, you will need to press Star 11 on your telephone and wait for your name to be announced again. That's star 11 to ask a question. One moment for our first question and we have a question coming from the line of Tim Clarkson with Ben Clemens, your line is now open.

Tim Clarkson - Analyst - (00:19:16)

Hey Patrick. Hey Matt. You know obviously this year was not what everyone wanted, but just a couple of background questions in general are the income taxes on our international business Are they higher than the taxes domestically here in the United States?

Matt Wolfeld - Chief Financial Officer - (00:19:36)

It's not that it's higher. It's that essentially what you have is you have a situation where with all of our subsidiaries, let's say the main five subsidiaries, they have a standard statutory tax rate, you know, somewhere between 20% and 33, 34 percent, depending on the country. And so all of those subsidiaries are profitable, so they generate tax expense. So if you look at it from an effective tax rate, when you put it all together, you have essentially the numerator in the effective tax rate calculation is a fixed number. There isn't a significant amount of. There isn't a significant amount of tax expense from North America. However, we do have tax expense from North America based off of the. We recognize here based off of royalties and dividends that we received from JVs. The issue that we have is that the denominator in the calculation, there's very little profit, especially in fourth quarter that went into that number. And so what it created is a very large effective tax rate for fourth quarter. The expectations are that going forward, as there is more profitability, specifically in North America, the denominator in that calculation will increase. For example, if we had more profit in North America, we would have had the same numerator, the same tax expense, but the denominator on the calculation would have been significantly higher, would have led to a more normalized effective tax rate. It's just the nature of how the tax provision calculation works, especially when we had obviously a difficult fourth quarter from a North American standpoint. So I do expect it to normalize in fiscal 2026 as we get back to similar profit levels that we had before. Okay, sure.

Tim Clarkson - Analyst - (00:21:24)

So I know you mentioned that you're looking to cut expenses in the company too. I mean, how realistic, how much money do you think you can cut to improve profitability?

Matt Wolfeld - Chief Financial Officer - (00:21:36)

The goal at this point isn't to cut expenses. The goal is to, I would say, maintain the level of operating expenses that we had or close to the same level operating expenses that we had in fiscal 25. I mean, if you recall, all through the end of 2024 and through 2025, we talked about the increased investments that we've made in the oil and gas group and a couple other areas inside of the company with the ability to kind of use those investments to drive revenues going forward. We didn't see the revenue increases in fiscal 2025. The expectations are the investments that we made in 2024 and 2025. We'll start seeing the results of that in 2026 and beyond as those investments, specifically the people that we hired, are able to gain traction and drive revenue growth. So the expectation is that we're going to drive revenue growth in 2026. Those gross margin dollars falling down to the operating profit line as we're able to hold operating expenses as stable as possible. Sure.

Tim Clarkson - Analyst - (00:22:45)

Okay. On the oil and gas, it sounds like there's some additional business that will kick into the first quarter and further on out with some of these larger orders. Now, what is driving this business? Is it just having more sales than out in the field in places like the Middle east and Brazil? Or is it, you know, is the technology finally getting to be accepted as, you know, superior to the legacy technology of the cathodic protection technology?

Patrick Lynch - Chief Executive Officer - (00:23:16)

Yeah. Can you, can you hear me? Yeah, I can hear you. Go ahead. Right, okay. It's. It's a common people out there. It's just general acceptance of the technology in the market. But we've proven that it works over and over again. We're getting repeat business from existing customers as we're pulling in new customers, and that's really starting to. Starting to give our oil and gas business the attention that we think it deserves.

Tim Clarkson - Analyst - (00:23:55)

Sure, sure. In terms of the packaging, I know that you guys had a breakthrough in terms of being able to kind of replace the traditional plastic wrap packaging that doesn't allow air to go out. And you've now developed packaging that's similar to that, that's compostable. I mean, how close are we from getting some business from that?

Patrick Lynch - Chief Executive Officer - (00:24:22)

For that, I'd like to turn the question over to Vinita Lal, who runs our niche tech business. Why don't you go ahead?

Vineet - (00:24:29)

Yeah, this is Vineet. Yeah. We have several customers where we're doing trials with compostable packaging, especially for food, consumer food applications. So this is something that we're working on. We've gotten some good feedback not just here in North America, but also in India, where there's a big market for these kind of applications. So we expect some of those opportunities to start hitting our sales in 2026.

Tim Clarkson - Analyst - (00:24:59)

Okay. Are the costs similar for the compostable product versus the legacy product?

Vineet - (00:25:05)

No, the cost is definitely higher. It's a premium solution. But due to legislations and government regulations in countries like India, these companies are forced to use compostable packaging instead of traditional plastic packaging.

Tim Clarkson - Analyst - (00:25:24)

Okay. Okay. Well, great. Well, I'm looking forward to seeing some of those results. I'm done. Thanks, guys.

Dennis - (00:25:30)

Thanks, Dennis.

OPERATOR - (00:25:33)

Thank you. Our next question coming from the Lineup Gus Richard with Nordland Capital Park. Marcus your line is now open.

Gus Richard - Analyst - (00:25:42)

Yes, thanks for taking the questions. You mentioned weakness in North America. Could you just describe where that's coming from? The main weaknesses in North America we experienced throughout the entire fiscal 2025 was primarily the Nature Tech group and the oil and gas group. If you look at the oil and gas group in North America was down close to 46% on the year. Natur-Tec North America was down about 13% on the year. Got it. Okay. And then in the floating platforms for the oil and gas, I'm trying to wrap my mind around how your solution will work floating on the water. And how much does that open up the market opportunity for you?

Patrick Lynch - Chief Executive Officer - (00:26:50)

Well, it's a new market for us overall. It's not like you're trying to. It, put the entire rig into a package, but you're taking sections of it and finding unique ways to apply our technology in those sections to provide long term corrosion protection. And based on what we've seen in practice in Brazil so far, we think this is an opportunity, obviously that can be very good for us. Not just Brazil, but in other areas around the world where they use offshore platforms. The only thing I'll add, Gus, is that the work that we talked about in Brazil specifically on these FPSOs, there's a service component to it where there are actual ZERUST oil and gas employees that are living on the offshore, essentially the offshore floating platforms and applying the ZERUST solution to the infrastructure. And then they're on the rig for a period of time and then they leave and then replacements come in. And so it's been a long process in order to be able to get slots where our specific workers can be on those platforms to do the installation work. And so that's a different. It's kind of a different sales process than we typically see with onshore, where we're typically selling the solution and it's getting installed and then, you know, you don't need to continually apply and continually upkeep it.

Gus Richard - Analyst - (00:28:27)

Okay. And just out of curiosity, is that having to have folks on the rigs and continually reapplying, does that have an impact on the margin profile for the floating platforms? Yeah, I mean, it's a slightly decreased margin given the service component and things like that compared to just selling any of the other zero and gas solutions where you're just selling the actual product and somebody else is doing the installation work. Got it. Thanks. That's super helpful. And then the one time, I guess, is the Chinese tariff Custom, whatever the heck that charge was, was that a one time event and non reoccurring or is there an impact to the P and L going forward?

Patrick Lynch - Chief Executive Officer - (00:29:15)

No.

Puneet - (00:29:16)

Well, Puneet, do you want to adjust that? Yeah, it was a one time event. I mean, essentially we produced some compounds in China that are filled compounds, so they contain minerals in them that we export out of China. And when you export it, I mean we've always followed international norms for HTS codes that we use here in the us, in India, in Europe, and essentially when we export it out of China, we get a VAT credit. Now because of the trade war between the US and China and Chinese customs cracking down on any exports that contain minerals or rare earths, there's a customs official who basically said that because your compounds contain these minerals, you're not eligible for the VAT refund. And so that basically accounted for, we had to repay back all the credit or the rebate that we got. So we expect this to be a one time event moving forward that will be part of our cost of goods sold.

Matt Wolfeld - Chief Financial Officer - (00:30:23)

So essentially it was a couple years worth of VAT that the Chinese government clawed back as well as a penalty on top of that for using what they deemed to be the wrong code for the vat. So the expectations are it's a one time charge that we took and decided. We weren't going to challenge the Chinese government in this. We wanted to move forward as quickly as possible with the, you know, with the process so we can continue the, you know, the import and export of the, of the product. Got it. And then on the food packaging application.

Gus Richard - Analyst - (00:31:04)

You know, is this going to be. You know, like packaging in, I don't know, you know, like a vegetable produce supplier or is this something applied in a supermarket over, you know, chicken breasts or whatever?

Patrick Lynch - Chief Executive Officer - (00:31:23)

Go ahead.

Vineet - (00:31:24)

Yeah. So we are looking at multiple applications. One of the applications that we're looking at in India is packaging of milk. So these are milk pouches where we're working with some of the largest dairies in India to change over from conventional polyethylene packaging to a fully compostable solution. And we've run trials. We had to engineer the product so that it met the barrier performance, the shelf life performance, the handling, and then even on their form filled machines the throughput was, with our solution was equivalent to the throughput with existing plastic technology. And so we have proven all that and we expect that to be a growth business, at least in India. In the US we are working with consumer foods companies where they're looking to get looking at multilayer structures which would be used for, you know, things like sauces and salad dressings and those kind of food items.

Gus Richard - Analyst - (00:32:26)

Oh, okay. So replacement for a tetra pack.

Vineet - (00:32:31)

Yeah. Or pouches, you know, like these little pouches for, you know, salad dressings or short shelf life sauces.

Gus Richard - Analyst - (00:32:43)

Got it. Like the pouches you would get in a restaurant for.

Vineet - (00:32:48)

Yeah, yeah, in a restaurant or a qsr. So this one, you know, the project that we're working on in the US that's essentially for a QSR segment. Got it.

Gus Richard - Analyst - (00:33:01)

And when do you expect that to sort of add to Naitsteq revenue? Is that, you know, revenue second half of fiscal 26, you know, is it starting today? You know, can you give a little bit of color as to when you expect that to contribute to revenue?

Vineet - (00:33:20)

The, the application in, in the US that requires some, you know, I would say fine tuning. So we are working closely with the customer on trials and prototype validation. So that will probably take several quarters at least before we can introduce that in the market. But the application in India, we've already gotten an initial deal from one of the dairy companies. And so we expect that business to kind of grow probably, you know, by Q2, Q3 of fiscal 2026.

Gus Richard - Analyst - (00:33:57)

Got it. That's it for me. Thanks so much.

OPERATOR - (00:34:04)

Thank you. And I'm showing there are no further questions in the queue at this time. I will now turn the call back over to Mr. Patrick lynch for any closing remarks. One just queued up coming from the line of Sac Liggett, Desmond Liggett Wealth Advisors. your line is now open.

Sac Liggett - (00:34:23)

Hey, good morning guys. Thanks for taking the question. You know, on your presentations here. Over the last, I think couple years you've had a strategic objective of hitting greater than 15% top line growth and you know, slower expense growth. I'm just curious. I know the last couple years have been sort of, you know, investment years for you, but how are you thinking about those objectives looking forward?

Patrick Lynch - Chief Executive Officer - (00:34:59)

Matt, I think you're better qualified to handle this one.

Matt Wolfeld - Chief Financial Officer - (00:35:02)

I guess from a top line growth standpoint, we are still, certainly still optimistic. We look at the opportunities that we have specifically in oil and gas, specifically in nature tech. The expectations are that those two groups are going to have some significant growth in 2026. The traditional Z Rust business is going to be relatively stable with some slight growth. But certainly the opportunities that we have in nature tech and oil and gas kind of worldwide are what we expect to kind of fuel that 15% growth this year. Certainly we didn't get that last year. But we think the investments that we've made should put us back to that kind of growth rate, which would obviously have a significant impact from a, you know, a gross margin standpoint. And again, with the dollar value slowing down to the, you know, to the earning EPS level.

Sac Liggett - (00:35:55)

Yeah. Okay. And then, you know, the operating cash flow came off quite a bit this year. How are you thinking about that for FY26 and free cash flow for that matter? If you could give us an update on your CapEx expectations. Well, our fiscal 2025 was a large year, really. 24 and 25 were a large year from a CapEx standpoint. We had a new ERP, new SAP ERP system that was implemented, which was. Which certainly wasn't cheap. We funded that out of operating cash. We also purchased a building that's directly adjacent to our existing headquarters here for the increased production and warehousing that we need, given we're kind of outgrowing the current footprint that we have here. So we were able to add another 60, 70% to our office, to our space here. The expectations are for 2026 that there's going to be very little capital improvements that are needed in North America. There are additional facilities we're looking at in Brazil which they would fund on their own, which wouldn't involve operating cash coming out of North America. And they have a cash surplus in Brazil. And also at Nature Tech India, they're looking at essentially building their facility there to accommodate the production and warehousing needs for the Indian business. And again, they would be funding that and taking care of that entirely within their operating cash and any kind of financing. So the expectations are specifically in North America in 2026 that we're going to be able to add a significant amount of cash to pay down our line of credit. The goal is certainly to.

Matt Wolfeld - Chief Financial Officer - (00:37:49)

Pay down. The line of credit as much as possible. Get back to the point where we're seeing increased earnings, we're able to ramp the dividend back up and have a nice cash cushion to be able to kind of fund future growth and needs that the company has over the next few years. All right, yeah, that sounds promising. Then. And then last or two small ones for me, I guess. Any benefits you're seeing this coming year from one big beautiful bill? Not really. That's our business.

Sac Liggett - (00:38:27)

Okay, and then any AI use cases that you guys have identified for the coming year?

Matt Wolfeld - Chief Financial Officer - (00:38:36)

No.

Sac Liggett - (00:38:40)

All right, thanks for taking the questions. Good luck.

OPERATOR - (00:38:46)

Thank you. I'll now turn it back to Mr. Patrick Lynch.

Patrick Lynch - Chief Executive Officer - (00:38:50)

All right, thank you. All for joining this morning. Hope you have a nice day.

OPERATOR - (00:38:57)

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