Balchem CorporationBCPCNASDAQ
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Operator: At this time, I would like to welcome everyone to the Balchem Corporation's Third Quarter 2025 Earnings Call. All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question and answer session. Thank you. I would now like to turn the call over to Carl Martin Bengtsson, CFO. Please go ahead.
Carl Martin Bengtsson: Thank you. Good morning, everyone. Thank you for joining our conference call this morning to discuss the results of Balchem Corporation for the quarter ending September 30, 2025. My name is Carl Martin Bengtsson, Chief Financial Officer. And hosting this call with me is Theodore Lee Harris, our Chairman, President, and CEO. Following the advice of our counsel, auditors, and the SEC, at this time, I would like to read our forward-looking statement. Statements made in today's call that are not historical facts are considered forward-looking statements. We can give no assurance that the expectations reflected in forward-looking statements will prove correct and various factors could cause actual results to differ materially from our expectations, including risks and factors identified in Balchem's most recent Form 10-Ks, 10-Q, and 8-Ks reports. The company assumes no obligation to update these forward-looking statements. Today's call and commentary also include non-GAAP financial measures. Please refer to the reconciliations in our earnings release for further details. I will now turn the call over to Theodore Lee Harris, our Chairman, President, and CEO.
Theodore Lee Harris: Thanks, Martin. Good morning, and welcome to our conference call. We were extremely pleased with the financial results for 2025 and the strong performance of our company, fueled by the ongoing market penetration of our unique portfolio of specialty nutrients and delivery systems, and the favorable "better for you" trends within the food and nutrition markets that are well aligned with our food ingredient formulation systems and capabilities. We delivered record quarterly consolidated sales, adjusted EBITDA, adjusted net earnings, and adjusted EPS, with year-over-year sales and earnings growth in all three of our reporting segments. 2025 was the twenty-fifth consecutive quarter of quarterly year-over-year growth in adjusted EBITDA for Balchem Corporation. We are very proud of this accomplishment, particularly in light of the market environment within which we have been operating over the last twenty-five quarters. I would like to take this opportunity to thank the entire Balchem team for their exceptional performance and contributions toward this significant achievement. Thank you all very much. Before we get into more detail on the quarter, I would like to make a few comments about the overall market environment, including the evolving global trade situation, as well as some of the new science that has recently been published supporting our nutrients and the further expansion of our marketing efforts to help drive awareness and market penetration. We continue to see healthy demand across the vast majority of our end markets. Our Human Nutrition and Health segment continues to perform extremely well, driven by strong demand for both our unique portfolio of minerals, nutrients, and vitamins, and our food ingredients and solutions, which are benefiting from trends toward nutrient-dense, high-protein, high-fiber, and lower-sugar or "Better For You" foods, where our nutrient portfolio and our formulations expertise bring considerable value to our customers. In the Animal Nutrition and Health segment, we delivered another quarter of year-over-year growth on improved demand in both our monogastric and ruminant businesses, as a result of further market penetration of our rumen-protected precision release encapsulates nutrient portfolio and mostly, or modestly, improving market conditions in the European monogastric market. And we remain encouraged by the overall performance of our animal nutrition and health product portfolio. Within our Specialty Products segment, both our Performance Gases business and our Plant Nutrition business are performing well, driven primarily by higher demand as a result of healthier market conditions within Performance Gases and successful geographic expansion growth within plant nutrition. Year to date, on a consolidated basis, we have delivered strong growth both on the top and bottom lines, while continuing to generate strong free cash flow. And our outlook for the remainder of the year remains positive. As discussed on the last few earnings calls, we believe we are relatively well-positioned to effectively manage through the current global trade environment. To date, we have managed to fully offset the impact of tariffs associated with the U.S. Administration's evolving trade policy, either through alternate supply chain options or subsequent pricing actions. And based on what we know today, we expect to similarly be able to offset any impact of future tariffs as the trade situation further evolves. Additionally, I would like to share some progress we have made in our scientific clinical research pipeline, which continues to bolster our human nutrition and health segment. We continue to actively invest in the science behind our brands such as VitaCholine, K2Vital, OptiMSM, and Albion Minerals. These studies are integral to our strategy for entering new markets, expanding our ingredient categories, and building consumer awareness. I would like to highlight one of the studies published recently that is of particular importance. Late in 2017, we informed you that Balchem funded a pilot study. Dr. Steven Sissel, the former director for the University of North Carolina's Nutrition Research Institute, received a $2.6 million grant from a unit of the National Institutes of Health, or NIH, to develop a blood-based test or biomarker to help measure choline status in humans. The NIH-funded choline biomarker study was known to be a lengthy study, only further delayed by the COVID-19 pandemic. That has now been completed, and the results have been published as a preprint. It was an important study from our perspective since it promised to help more easily identify choline deficiency in humans by identifying a choline biomarker in order to ultimately help address deficiencies through supplementation, while also facilitating research on the benefits of choline supplementation in humans. The study was a double-blind, randomized, crossover-controlled feeding study in which all 101 subjects received 100%, 50%, and 25% of the choline recommended daily intake in two-week segments separated by two-week washouts. The results of the study show that plasma choline and betaine, when measured together, are highly predictive of actual dietary choline intake. These findings offer a new opportunity to assess choline dietary adequacy and will likely be included in future clinical and population studies and ultimately be used as a common measurement in health screenings of choline intake versus daily recommended intake levels. On the marketing front, within our animal nutrition and health segment, we continue to expand our reach and impact through marketing. We have strengthened our marketing capabilities, and Balchem's Real Science Exchange platform, now celebrating five years since its launch, has grown into a leading industry information and technology resource with webinars, podcasts, and symposiums that is attracting a strong following across the industry, with high-quality content across leading streaming platforms such as YouTube, Spotify, and Apple Podcasts. This channel to the industry gives Balchem a unique opportunity to reach and interact with an expanded target audience. We will continue to invest in our marketing capabilities, and we recently partnered with Progressive Dairy Magazine to introduce the Real Producer Exchange for practical insights for dairy farmers. And later this month, we are excited to expand into the companion animal sector with new webinars and podcasts, reinforcing our commitment to advancing animal science and industry collaboration. So some exciting progress is being made on our strategic growth initiatives while at the same time, delivering strong financial results. Now regarding the third quarter of 2025's financial performance. This morning, we reported record quarterly consolidated revenue of $268 million, which was 11.5% higher than the prior year quarter. We delivered record quarterly GAAP earnings from operations of $55 million, an increase of 13.7% versus the prior year. Consolidated net income closed the quarter at $40 million, an increase of 19.1%. This quarterly net income translated to diluted net earnings per share of $1.24 on a GAAP basis, up 21¢ or 20.4% compared to the prior year. On an adjusted basis, we delivered record quarterly adjusted EBITDA of $71 million, an increase of 11% compared to the prior year. Our record quarterly adjusted net earnings were $44 million, an increase of 19.1% from the prior year, which translated to $1.35 per diluted share, up 22¢ or 19.5% compared to the prior year. Overall, another excellent quarter for Balchem Corporation, as we continue to deliver strong financial results while making good progress on our strategic growth initiatives. And with that, I'm now going to turn the call back over to Martin to go through the third quarter consolidated financial results for the company in more detail and the results for each of our business segments.
Carl Martin Bengtsson: Thank you, Ted. As Ted highlighted, the third quarter was a great quarter for Balchem Corporation with record sales, earnings from operations, adjusted EBITDA, adjusted net earnings, and adjusted earnings per share. Our third quarter net sales of $268 million were 11.5% higher than the prior year, driven by strong performance in all three segments: Human Nutrition and Health, Animal Nutrition and Health, and Specialty Products. Our third quarter gross margin dollars were $95 million, up 11.8% compared to the prior year, and our gross margin percent was 35.7% of sales, up 10 basis points compared to the prior year. Consolidated operating expenses for the third quarter were $41 million as compared to $37 million in the prior year. The increase was primarily due to an increase in professional services and higher compensation-related costs. GAAP earnings from operations for the third quarter were a record $55 million, an increase of 13.7% compared to the prior year. On an adjusted basis, as detailed in our earnings release this morning, record non-GAAP earnings from operations of $60 million were up 12.1% compared to the prior year. Adjusted EBITDA was a record $71 million, an increase of 11% compared to the prior year, with an adjusted EBITDA margin rate of 26.7%. Net interest expense for the third quarter was $3 million, a decrease of $1 million compared to the prior year, driven primarily by lower outstanding borrowings. Our net debt decreased to $89 million, with an overall leverage ratio on a net debt basis of 0.3. The effective tax rates for 2025 and 2024 were 22.6% and 22.9%, respectively. The decrease in the effective tax rate from the prior year was primarily due to certain lower state taxes. Consolidated net income closed the quarter at $40 million, up 19.1% from the prior year. This quarterly net income translated into diluted net earnings per share of $1.24, an increase of $0.21 compared to the prior year. On an adjusted basis, our third quarter adjusted net earnings were a record $44 million, an increase of 19.1% from the prior year, which translated to $1.35 per diluted share. Cash flows from operations were $66 million, with free cash flow of $51 million, and we closed out the quarter with $65 million of cash on the balance sheet. As we look at the third quarter from a segment perspective, our Human Nutrition and Health segment generated record sales of $174 million, an increase of 14.3% from the prior year, driven by higher sales within both the nutrients business and the food ingredients and solutions businesses. Our Human Nutrition and Health segment also delivered record quarterly earnings from operations of $41 million, an increase of 14.8% compared to the prior year. This was primarily driven by the aforementioned higher sales and a favorable mix, partially offset by certain higher manufacturing input costs and higher operating expenses. Third quarter adjusted earnings from operations for this segment were a record $44 million, an increase of 13.2%. We are extremely pleased with the overall performance of our Human Nutrition and Health segment. And as Ted mentioned earlier, we continue to experience strong demand for our unique portfolio of ingredients and solutions. We believe our Human Nutrition and Health businesses are well-positioned to build on the momentum we are seeing across our end markets. And as consumers increasingly favor "better for you" ingredients and solutions, we see significant opportunities ahead to leverage our formulation expertise, nutrient portfolio, and strong market positions to continue to deliver healthy growth in human nutrition and health. Our Animal Nutrition and Health segment generated quarterly sales of $56 million, an increase of 6.6% compared to the prior year. The increase was driven by higher sales in both the ruminant and monogastric businesses. Animal Nutrition and Health delivered earnings from operations of $4 million, an increase of 5.2% from the prior year. The increase was primarily due to the aforementioned higher sales and a favorable mix, partially offset by certain higher manufacturing input costs and higher operating expenses. Third quarter adjusted earnings from operations for this segment were $4 million, an increase of 1.2% compared to the prior year. The end markets for Animal Nutrition and Health remain relatively stable at the moment, and we were pleased to see another quarter of top and bottom line growth. We continue to see market penetration of our rumen-protected encapsulated nutrients for the dairy market, including our ReAssure encapsulated choline and our more recently launched AminoShore XL encapsulated lysine. On the monogastric side, we see a relatively stable U.S. market at the moment, and a modestly improved European market environment following the provisional anti-dumping duties on Chinese choline that were announced last quarter. As we look forward, we expect Animal Nutrition and Health to continue to deliver growth over the long term. Our Specialty Products segment delivered quarterly sales of $36 million, an increase of 7.5% compared to the prior year, driven by higher sales in both the Performance Gases and Plant Nutrition businesses. Specialty Products delivered a record quarterly earnings from operations of $12 million, an increase of 9.7% versus the prior year, primarily driven by the aforementioned higher sales. Third quarter adjusted earnings from operations for this segment were a record $13 million, an increase of 8.8%. We continue to be really pleased with the performance of Specialty Products, delivering another strong quarter of growth both on the top and bottom line. Within Performance Gases, our international reach is creating value for our customers and helping to drive growth rates above historical levels. And similarly, within our plant nutrition business, we are having good success with our geographic expansion efforts, particularly in Latin America and Asia Pacific. Specialty Products is performing well, and going forward, we expect to be able to continue to drive solid growth for the Specialty Products segment. So overall, the third quarter was another excellent quarter for Balchem Corporation, and we believe we are well-positioned for continued growth as we head into the remainder of the year. I'm now going to turn the call back over to Ted for some closing remarks. Thanks, Martin. Once again, we are extremely pleased with the third quarter financial results reported earlier this morning.
Theodore Lee Harris: As a company, we continue to show an ability to deliver results in a variety of market conditions. Given our strong market positions and our value-added portfolio of products, the company is performing very well. We have once again effectively managed through the latest macroeconomic and tariff-related trade environment with minimal impact on the company. At the same time, our growth has strengthened as a result of the accelerating "Better For You" trends within the health and nutrition markets, given our unique portfolio of nutrients, coupled with our food ingredients and solutions capabilities. We are extremely proud of delivering 25 consecutive quarters of quarterly year-over-year growth in adjusted EBITDA, with the third quarter results reported earlier this morning. And we remain confident in the long-term growth outlook for Balchem Corporation as a company. I will now hand the call back over to Martin, who will open up the call for questions. Thank you, Ted.
Carl Martin Bengtsson: This now concludes the formal portion of the conference. At this point, we will open up the conference call for questions.
Operator: And your first question comes from the line of Robert James Labick with CJS Securities. Please go ahead.
Robert James Labick: Good morning. Congratulations on another record quarter.
Carl Martin Bengtsson: Thanks, Bob.
Robert James Labick: Sure. I wanted to start with the food ingredients and solutions. For the last several quarters, it's kind of really picked up after, you know, previously lagging the minerals and nutrients growth rate. You just mentioned the "better for you" trend, but could you drill down a little more and talk about the changes in Food Solutions and the drivers and the outlook for each of the sub-segments in 2025?
Theodore Lee Harris: Absolutely, Bob. And first of all, just stepping back a little bit, we really were extremely pleased with the performance of the entire segment, Human Nutrition and Health. Just to kind of peel that onion back a little bit. Sales for H and H were up, you know, 14%. And then if you, you know, talk about the nutrient portfolio, it was up about 30%. But as you highlight, the food ingredient business was up nicely as well. So it was really good to see the food business up almost 7%. And, you know, we don't see that growth rate differential necessarily changing over time. We always see the nutrient portfolio as growing faster than the food portfolio. But as you point out, the food growth was kind of low single digits there for a while and now significantly increased. And the primary driver of that is what we touched on in the prepared remarks, and that really is the benefits we're seeing from the "better for you" trends in the market, whether it's in meat sticks, which is a high-protein snack to replace, you know, other snacks, or whether it's a high-fiber nutritional beverage that is trying to address even some of the negative implications of GLP-1 drugs, for example. We see quite a few of our customers introducing new products targeted to that audience, and we all know that's a pretty sizable consumer base. Or whether it's high-protein bars, for example, with our C Crisps and our ability to add high-protein crisps to certain kinds of bars in the marketplace. So all of those trends are really helping support and strengthen our overall growth in food ingredients. And it's really a combination of our nutrient expertise from the nutrient business, our unique products, you know, encapsulated products, our kind of emulsified fat powder systems, our flavor systems, and our ability to combine all of those in solutions for our customers as they're introducing new products to serve those trends. And we think those trends are likely to continue for the foreseeable future. You know, I think the "better for you" trends have been going on for decades. And of late, we've seen some accelerants to those trends, whether it's the GLP-1 drugs that I touched on that, you know, have side effects and have sort of unique nutrient needs, if you will, for the consumers of those products. That's an opportunity for us. Certainly, the, you know, the RFK Junior focus on, you know, healthier for you products, less processed food products is creating an accelerant, if you will, to this long-term trend. So, you know, we're really pleased that our portfolio of products caters to those trends and is allowing for us to get new wins in the marketplace and grow our food business at a higher rate than we have historically. So we're quite excited about that.
Robert James Labick: That's great. Thank you. And then just on the nutrient minerals and nutrients side, the growth was phenomenal as well. Your major markets of choline, K2, MSM, magnesium, etcetera, can you talk about it's been a penetration story for a while, where are you in terms of product penetration? And what is the opportunity? How much longer of a runway is there for penetration and awareness of your products?
Theodore Lee Harris: The short answer is we're a long way from that endpoint. You know, again, as I've talked about in the past, you know, to some extent, our challenge is the majority of our portfolio, whether it's choline, or vitamin K2, or even MSM, are not very well known. I would even add the idea of chelated minerals, higher bioavailable minerals are not so well known and, you know, kind of recent studies show that they're, yes, a little bit better known today than they were five years ago, but still not well known. So we think that we have a significant way to go. We think that the market opportunities are still, you know, three, four times multiples of the size of the market today. And in the minerals, you mentioned magnesium. In the mineral space, the overall mineral market is huge. And the position that chelated minerals have within that market remains tiny. So the opportunity there is to both eat away at that bigger minerals market with these higher bioavailable, more effective products, but also kind of drive market penetration to users that aren't supplementing with those minerals as well. So it's really sort of two vectors of growth, but we certainly see, you know, very strong double-digit growth in each of those portfolios, and we expect that to continue for some time.
Robert James Labick: Okay. Super. I'll jump back in queue and let others ask questions. But thank you.
Theodore Lee Harris: Thanks, Bob.
Operator: Your next question comes from the line of Raghuram Selvaraju with H.C. Wainwright. Please go ahead.
Raghuram Selvaraju: Thanks very much for taking my questions and congratulations on a very strong quarter. I was just wondering if you could comment on international antidumping practices being enacted at the state, regional, governmental level that could conceivably boost sales, particularly in the H and H segment ex-U.S.? And especially if you could give us maybe just an overview of the status of the European anti-dumping campaigns as these pertain to choline specifically. Where that is currently and what impact you expect it to have over the course of the coming months and indeed into next year? Thank you.
Theodore Lee Harris: Yeah. Thanks, Ram, for your comments and your question. You know, there are really, sort of two aspects to antidumping, and maybe I'll start with the current initiative where the European Union has preliminarily put antidumping duties on China-origin choline chloride, and maybe to your specific question, that's both for human choline chloride as well as animal choline chloride. And it's just a clear recognition by the European Union of unfair trade practices by China and trying to create a level playing field. Those duties are still preliminary. There's quite a process that is underway. We initially announced that the duties were, I think it was 195% to 120%. And after further calculations, they reduced those by about five percentage points, so not significantly, which we were pleased to hear. And later this year, certainly by the end of the year, they should have a final vote for the enactment of those duties, and then they will become, you know, approved in their final form and would be in place for five years, which also would be a very good thing. And there is an opportunity for us to work with the European Union to try to address some of the typical reaction from China of moving the product through other countries, and we're working to try to do that. And that would only strengthen the impact of the duties. But certainly, broadly speaking, across the nutrient sector, whether it's in animal or in human, these types of pricing practices are quite prevalent from China as well as others. And I do think that there is an improved environment within which to bring these kinds of cases to the government entities and to get an appropriate response. So we are kind of actively reviewing where that makes sense, where we believe these practices are happening and kind of using that tool. Unfortunately, it is expensive and it is lengthy. And so, you know, you have to go through that. But clearly, in the U.S., and we think in the U.S., there's an improved environment for us, companies like ours, to bring those kinds of cases to the governments, and we'll do that as appropriate going forward.
Raghuram Selvaraju: Okay. Great. And then, also just wanted to ask about the Orange County microencapsulation manufacturing facility. Can you just summarize again for us when you expect construction to be completed on that facility now that you have the state approvals in place? And also if you can give us a sense of what the magnitude of impact is likely to be on revenues and earnings quality once that facility comes fully online. Thank you.
Theodore Lee Harris: Yes, sure. We're really excited about that. We announced that in our second quarter earnings release, and we felt like, you know, we should update our shareholders on the progress that has been made. And essentially, what we tried to say and the highlight on the press release is that we're moving forward. And we have gotten the most recent approvals to do just that, move forward with the plant. And, you know, we essentially, what we're doing is building a new plant that has twice the capacity of the old plant and will effectively shut down the old plant, which was, you know, one of the first sites that we ever had as a company. In fact, the first site we bought it back in the sixties. And at that point in time, it was an old creamery that we used to make food ingredients and has kind of sort of far outlived its effectiveness. And so it was time for us to upgrade and modernize, and we've done that just down the road so that we can continue to use the employee base from the old site and so forth. And so we're really kind of putting in place in this new plant some new technology around our microencapsulation and more efficient technology. The encapsulation business, for example, just in Q3 grew about 26%. So it's a fast-growing part of our portfolio and has been growing significantly really over the last few years, and we need the capacity. Our current capacity is getting us by, but we're soon going to start to run out of capacity in the coming couple of years. And so the plant will be, from a construction perspective, completed early in 2027, and we expect to be producing new product by 2027. So the way we're looking at it is it's going to allow this important product line to continue to grow at double-digit rates. And our encapsulate business is certainly on the higher end of our gross margin profile of the business within our company. So, you know, we're excited to invest in that product line, and we're excited to be able to allow it to continue to grow beyond our current capacity levels.
Raghuram Selvaraju: Okay. And then just two quick questions for Martin, if I may. Firstly, wanted to ask if you expect the pace of debt repayment to be the same in the next couple of quarters as what you just most recently reported? Particularly in light of the significantly lower debt burden and the very low net leverage ratio that Balchem Corporation currently has. Just wanted to see if you're planning to take your foot off the gas on the debt repayment schedule or if you're intending to keep going at the most recently reported pace on a quarterly basis? And also if you could just give us a sense of whether you expect the most recently reported quarterly effective tax rate to be an appropriate assumption to carry forward for the remainder of 2025? Thank you.
Carl Martin Bengtsson: Ram, yes. I'll start with the second one as it's a quick answer for the tax rate. I think sort of our best estimate for the year is around 22.5% plus or minus a little bit. So kind of where we're at year to date and where we think we'll finish the year at around 22.5% plus or minus a little bit. On the debt repayment pace, I mean, obviously, we've generated strong free cash flows. And as you know from the past, we deploy that capital, and paying down our debt is part of that. I think it will depend a little bit on the pace and timing of M&A. As you know, we talk a lot about pursuing various opportunities all the time. Unfortunately, you know, we haven't gotten anything over the finish line more recently. That is not to say we're not actively participating, actively discussing, actively pursuing, you know, strategic M&A. So I think that will impact it a little bit on how we see sort of those opportunities develop here as we go forward. Also, you know from the past that we do deploy some of our cash into keeping our sort of share count relatively flat. So we do some share repurchases for anti-dilutive purposes, just to keep sort of our shareholders' ownership relatively stable. So that will impact it as well in terms of at what pace we repurchase shares just to keep our share count flat. Meanwhile, we will continue to reduce debt as there is excess cash. And then I think the big trigger that will change that is sort of when the next M&A transaction occurs, because I think that is more a matter of timing than anything else.
Raghuram Selvaraju: Thank you.
Theodore Lee Harris: Thanks, Ram.
Operator: Your next question comes from the line of Daniel Scott Harriman with Sidoti. Please go ahead.
Daniel Scott Harriman: Hey guys, good morning and congrats on another great quarter. Just a couple of quick ones from me today. Within Specialty Products, with that 7.5% year-over-year growth, can you give us a breakdown of how much came from Performance Gases versus Plant Nutrition? Then with the Plant Nutrition growth, could you just update us and provide a little bit more information about the success you're seeing with your geographic expansion within that business?
Theodore Lee Harris: Yeah. Sure. Just to give you some growth numbers within Specialty Products. So as you said, overall, we grew about 7.5%. The Performance Gases business grew about 7%, and the Plant Nutrition business grew about 13%. So that combined resulted in the 7.5% growth. So we're seeing nice growth out of both Performance Gases, traditionally reviewed as kind of a lower growth business. But after a number of years of different impacts on growth, whether it was air emission systems upgrades or nursing shortages or COVID impacting elective surgical procedures and so forth, that market seems to have stabilized and is doing well. But we're also seeing nice growth in that business geographically, particularly in Europe. So we're seeing some differential growth there as well. So Plant Nutrition, obviously, is a smaller business for us, but historically has been more focused on the United States and I would say particularly California. We tend to sell into higher-end crops, like grapes and so forth. And so an important strategic initiative for us has been to expand internationally for multiple reasons, for growth reasons, but also to balance out some of the seasonality that we experience in that business. As you know, the first half of the year is much stronger than the second half of the year because of the growing season in the U.S. So we've had a very deliberate effort to try to offset some of that down part of the season with growth in either the Southern Hemisphere or other geographies. And we're having some success in that, and that was worth noting, particularly in Latin America. We're seeing stronger growth as well as in Asia Pacific. You know, some countries that are sort of kind of stand out, you know, Brazil, India, for example, are areas where we're having some good success, and it's been quite a deliberate effort on our part, and we're pleased with that growth. While the U.S. business has been, you know, relatively flat, I would say, the international business has been driving the predominance of the growth in Plant Nutrition.
Daniel Scott Harriman: Great. I really appreciate it, guys. Again, congratulations.
Theodore Lee Harris: Thanks, Daniel. Appreciate it.
Operator: There are no further questions at this time. I will now turn the call back over to Theodore Lee Harris for closing remarks.
Theodore Lee Harris: Once again, thank you all very much for joining the call today. We really appreciate your support and your time. And we look forward to reporting our Q4 2025 results in February. That sounds like a long way away, but that's when it will be. In the meantime, we will be participating in Baird's 2025 Global Industrial Conference on November 12, and we certainly hope to see some of you there. So thanks again for joining.
Operator: Ladies and gentlemen, that concludes today's call. Thank you all for joining. You may now disconnect.