Graham Corporation (NYSE:GHM) Q3 2025 Earnings Call Transcript

Graham Corporation (NYSE:GHM) Q3 2025 Earnings Call Transcript February 7, 2025

Graham Corporation misses on earnings expectations. Reported EPS is $0.1442 EPS, expectations were $0.16.

Operator: Greetings, and welcome to the Graham Corporation Fiscal Third Quarter 2025 Financial Results Conference Call. At this time, all participants are in a listen-only mode. A question-and-answer session will follow formal presentation. [Operator Instructions] As a reminder, this conference is being recorded. It is now my pleasure to introduce Tom Cook, Managing Director at ICR. Please go ahead.

Tom Cook: Thank you, Paul, and good morning, everyone. Welcome to Graham’s fiscal third quarter 2025 earnings call. With me on the call today are Dan Thoren, CEO; Chris Thome, Chief Financial Officer; and Matt Malone, President and Chief Operating Officer. This morning, we released our financial results. Our earnings release and accompanying presentation to today’s call are available on our website at ir.grahamcorp.com. You should be aware that we may make forward-looking statements during the formal discussion, as well as during the Q&A session. These statements apply to future events that are subject to risks and uncertainties, as well as other factors that could cause actual results to differ materially from what is stated here today.

These risks and uncertainties and other factors provided in the earnings release, as well as with other documents are filed by the company with the Securities and Exchange Commission. You can find those documents on our website or at scc.gov. During today’s call, we will also discuss some non-GAAP financial measures. We believe these will be useful in evaluating our performance. However, you should not consider the presentation of this additional information in isolation or as a substitute for results prepared in accordance with GAAP. We have provided reconciliations of non-GAAP measures with comparable GAAP measures in the tables that accompany today’s release and slides. We also use key performance indicators to help gauge the progress and performance of the company.

These key performance metrics are orders, backlog and a book-to-bill ratio. These are operational measures and a quantitative reconciliation of each of this is not required or provided. You can find the disclaimer regarding our use of KPIs at the back of today’s presentation. So, with that, if you’ll please advance to Slide 3, I’ll turn it over to Dan to begin. Dan?

Dan Thoren: Thanks, Tom, and good morning, everyone. Many of you likely saw the press release we issued yesterday morning regarding our leadership succession plan. I’m excited to share additional details. But first, I will spend a minute on our third quarter results [Technical Difficulty] in a 7.3% increase over the prior year period. We saw strength across our key end markets with defense notably up 11%. Our gross margin improved by 260 basis points, reaching 24.8% of sales, driven by leverage on higher volume, favorable mix, and improving execution. And finally, our adjusted EBITDA margin expanded by 180 basis points to 8.6% of sales. This margin expansion translated into meaningful bottom line growth, reinforcing our focus on high margin opportunities and solid execution throughout the business.

Overall, I am very pleased with our performance in the fiscal third quarter, which reflects the hard work of our entire Graham team has undertaken over the last several years. Looking ahead, I could not be more excited about the future. The long-term demand environment is extremely favorable with our proprietary and highly engineered product portfolio enabling us to capture additional opportunities, while furthering Graham’s global reach. We continue to focus internally on improving our operations, engaging with key stakeholders and implementing best practices across the organization. Turning to Slide 4. As we announced yesterday, we are implementing a thoughtfully structured two phase leadership transition that has been thoroughly evaluated and approved by our Board over the last 18 months.

On February 5, Matt Malone was appointed President and Chief Operating Officer, while Mike Dixon has been promoted to General Manager of Barber Nichols. In the second phase, effective June 10, I will transition to Executive Chairman, focusing on Strategic Advisory and Business Development initiatives, while Matt will assume the CEO role and is expected to join our Board. At that time, Mike Dixon will be promoted to Vice President of Graham Corporation, while continuing his leadership of Barber Nichols, and Jonathan Painter will transition to Lead Independent Director. These appointments reflect our ability to develop and promote internal talent, ensuring continuity in our strategic vision, while positioning us for future growth opportunities.

I am pleased that Matt will be stepping into the role of CEO. Matt has demonstrated exceptional leadership as General Manager of Barber Nichols since 2021, delivering impressive results, including 9% compound annual revenue growth and achieving double-digit revenue growth in each of the last two years. Throughout his tenure, Matt has maintained full P&L responsibility, while playing an integral role in our corporate strategic planning. I think it’s important to highlight that we have done this transition before. When Matt took over Barber Nichols, when I became CEO of Graham, and myself and the Board have full confidence in his abilities. Additionally, I’m happy to announce that Mike Dixon will be assuming leadership of Barber Nichols. Mike brings deep industry experience, product expertise and institutional knowledge that make him ideally suited for this role.

From a personal standpoint, it’s been a pleasure to lead Graham for nearly four years as CEO and Barbara Nichols for 24 years prior to that. I look forward to this next phase of my career, which will require less time away from my family and enable me to focus on what I enjoy, which is business development and strategy. Over the next several months, I will be focused on a seamless transition and will continue to be a resource for the company beyond that and actively engaged. Now I will turn it over to Matt, who will provide more insight into our recent growth initiatives. Matt?

Matt Malone: Thank you, Dan, and good morning, everyone. I am truly grateful for the trust placed in me by Dan, the Board, and our entire organization. Having worked closely with the entire executive team and the Board on developing and executing our strategic plan over the last couple of years, I am energized to lead Graham into its next chapter of growth. Our strategic plan remains firmly in place as the team and I continue tremendous potential to build on our strong foundation through our robust sales pipeline, operational improvement initiatives and opportunities in adjacent markets. We continue to believe in this strategy and are fully committed to executing it while driving sustainable growth. Our success has always been rooted in our talented team, strong customer relationships and commitment to technology and operational excellence.

I look forward to working with our entire organization to capture the significant opportunities that lie ahead and importantly providing our customers with leading quality products and service. I’d like to spend a minute providing an operational update on a couple of key projects we recently announced. Starting with our new Batavia manufacturing facility, we are excited to announce that the construction of the Graham facility is progressing well and remains on schedule for completion in June of this year. This 29,000 square foot expansion will significantly enhance our manufacturing capabilities and capacity for naval defense work. This expansion will support our planned growth and continue to strengthen our position as a key supplier to the U.S. Navy.

Turning to our state-of-the-art cryogenic propellant test facility, this facility is continuing to progress towards construction and will provide a scalable cost effective alternative to existing centers. The facility will serve critical programs, meeting timely specialized testing solutions for liquid hydrogen, liquid oxygen and liquid methane across space, defense, new energy and potentially even medical applications. We are expecting initial testing to begin by mid-calendar year 2025. These initiatives coupled with our investments in R&D and focus on operational excellence, will help drive our long term growth forward. With that, I will turn it over to Chris for third quarter financial details. Chris?

Chris Thome: Thanks, Matt, and good morning, everyone. I will begin my review of results on Slide 5. Sales for the quarter totaled $47 million, a 7.3% increase over last year. This was driven by growth across our key end markets, including chemical, petrochemical, space, defense and the commercial aftermarket. These increases were partially offset by lower refining revenue due to the timing of projects. Our growth was supported by the expansion of new defense programs, improved pricing and execution and the timing of projects. Further, we are observing continued strength in our aftermarket revenue, which was up 2.4% over the record levels of last year. As a reminder, the third quarter of our fiscal year is typically our lowest revenue quarter, reflecting the holiday season and increased levels of vacation.

Turning to Slide 6. Our gross margin for the quarter expanded 260 basis points to 24.8%. This improvement was primarily driven by higher sales volume, a favorable project mix, enhanced pricing and better execution. This was partially offset by higher incentive compensation. Our gross profit for the quarter also benefited $254,000 or roughly 50 basis points from the BlueForge Alliance welder training grant we announced in July. As a reminder, the BlueForge Alliance is a non-profit that supports the U.S. Navy Submarine Industrial Base. This $2.1 million grant supports our defense welder training program in Batavia and funds related equipment. To date, we have received $1.5 million of funding under this grant and expect to recognize the balance in the next two quarters.

We are grateful for this partnership as we expand our capabilities and talent pipeline. Turning to Slide 7. You can see the strength of our earnings from the quarter and on a more historical basis. GAAP net income for the third quarter reached $1.6 million, a $1.4 million increase from the same period of fiscal 2024, translating to $0.14 per diluted share. On an adjusted basis, our net income grew $515,000 to $0.18 per diluted share, a 38% increase on a per share basis over the prior year. Similarly, our adjusted EBITDA, which totaled $4 million for the third quarter, increased 36% over the prior year and was 8.6% of sales for the quarter. This adjusted EBITDA margin represented a 180 basis point improvement over the prior year. While our SG&A expenses increased this quarter by $0.9 million.

This rise was primarily due to our strategic investments in our people, our processes and our technologies. This included costs associated with the implementation of a new ERP system at our Batavia facility, an increased level of R&D spend, as well as increased cost of having a full quarter of P3 Technologies in our results that was acquired in November of 2023. Overall, these investments position us well for future growth and support our long-term objectives. I should also point out that the supplemental performance bonus from the Barber Nichols acquisition was $1.1 million during the quarter or approximately 230 basis points of revenue and will be completed at the end of fiscal 2026. Our effective tax rate for the quarter was 29% and 20% for the year-to-date period and can vary from quarter-to-quarter depending on the level and the amount of projected income from our higher tax rate foreign subsidiaries, as well as the timing of discrete items.

The decrease in our effective tax rate for the first-nine months of fiscal 2025 versus the prior year was primarily due to a discrete tax benefit recognized in the first quarter of fiscal 2025 related to the vesting of restricted stock awards, partially offset by return to provision adjustments recognized in the third quarter of fiscal 2025, due to changes in estimates. For the full year, we continue to expect our effective tax rate to be between 20% and 22%. Turning to Slide 8. You can see that our balance sheet remains strong with $30 million in cash and no outstanding debt at the end of the quarter. Additionally, we have $43 million available on our revolving credit facility, which provides us with significant financial flexibility to pursue our strategic growth initiatives.

For the quarter, our capital expenditures totaled $7.3 million and are focused on capacity expansion, increasing our capabilities and productivity enhancements, including investments in automated welding equipment and new machining centers. For fiscal 2025, we now expect capital expenditures to be in the range of $15 million to $19 million from the previous $13 million to $18 million that we guided to last quarter. This includes several major projects that are all on-time and on budget and included our opportunistic land purchase in Arvada, Colorado, where we plan to expand Barber Nickel’s operations in fiscal 2026. It also includes our cryogenic propellant testing facility, which remains on track to open in mid-2025 and our customer supported defense expansion in Batavia, New York, which will support accelerated U.S. Navy shipbuilding schedule and is also slated to open in mid-2025.

In pursuing these strategic growth initiatives, on a go-forward basis, we expect CapEx spend to be between 7% to 10% of revenue for the next several years, which includes maintenance CapEx of approximately $2 million per year. I would also like to remind everyone that all of the major capital investments we are pursuing have a return on investment that is greater than 20%. Turning to Slide 9. As expected, given the level of orders earlier in the fiscal year and the lumpiness of our business orders, orders declined to $24.8 million for the quarter. However, orders for the nine month period ended December 31, 2024 were $144.2 million and equated to a book-to-bill ratio of one times revenue. Aftermarket orders for the refining, petrochemical and defense markets remained robust and totaled $13 million for the third quarter of fiscal 2025, an increase of 51% over the prior year.

I am also pleased to report that the response to our NextGen nozzle launched in October has been very positive and we have just received our second order. We are actively pursuing multiple additional opportunities both domestically and internationally based upon our customers’ shutdown schedules and the attractiveness of our customers of this product given the significant energy and cost savings it delivers. Orders for the first nine months of fiscal 2025 benefited from the large orders announced earlier in this year that included a contract to provide cryogenic pumps for a space launch vehicle and a contract to provide the MK19 Air Turbine Pump for the U.S. Navy Columbia-class submarine, which is a new program for us. It also included a follow on order for the second option year of alternators and regulators for the U.S. Navy MK48 Torpedo program, as well as an order for a three surface condenser system for the world’s first net-zero carbon emissions integrated ethylene cracker located in North America.

Slide 9 also highlights our significant backlog, which totaled $385 million, as of December 31, due to our strong market position. This backlog continues to provide us with excellent visibility into the future and ensures a high degree of operational stability. This backlog is being anchored by our Defense business, which represented 80% of our backlog at December 31. Also noteworthy is that our space backlog increased 59% over last year or nearly $7 million. We expect approximately 45% to 50% of our backlog to convert to sales within the next 12 months with an additional 35% to 40% projected for conversion over the following 12 months. The majority of the backlog anticipated to convert beyond 12 months are from the defense sector, which are longer-term in nature.

On Slide 9, we are refining our great guidance for fiscal 2025 from what we provided last quarter. We continue to anticipate revenue to be between $200 million and $210 million, which reflects projected top line growth of 11% over fiscal 2024 at the mid-point of this range. Additionally, we continue to expect our adjusted EBITDA to be between $18 million and $21 million implying 47% growth over the prior year and a 9.5% margin at the midpoint of the range. Based upon the results to date and our better than expected gross margins, we are increasing our gross margin guidance to a range of 24% to 25%, which is up from the previously expected 23% to 24%. Other adjustments to our guidance include SG&A expense, which we now expect to be in the range of 18% to 19, up from 17% to 18% of sales guided to last quarter.

This reflects continued investments in our people, our processes and our technology. With that, I will now turn the call back over to Dan for closing remarks.

Dan Thoren: Thanks, Chris. On Slide 11, we would like to remind everyone of our strategic and operational priorities that will drive our long-term success. Our expanded R&D investments and capital programs are powering key growth initiatives with a target return on invested capital exceeding 20% for all of our major investments. These opportunities, coupled with our strong balance sheet, provides us with the flexibility to pursue growth both organically and inorganically as we remain opportunistic for any potential strategic acquisitions. We are proud of what we have accomplished to date, but we still have a lot of work ahead of us to achieve our fiscal 2027 financial goals of 8% to 10% organic revenue growth per year and low to mid-teen adjusted EBITDA margins.

The long-term strategic plan we have in place, coupled with our culture of continuous improvement and our newly expanded executive team led by Matt, gives me great confidence that we will hit those marks. With that, we can now open the call for questions.

Q&A Session

Operator: Thank you. We’ll now be conducting a question-and-answer session. [Operator Instructions] Our first question is from Dick Ryan with Oak Ridge Financial. Please proceed with your question.

Dick Ryan: Thank you. So I’d like to offer my congratulations, Dan, to both you and Matt on the next chapters that you’re moving onto within Graham, that sounds like exciting opportunities for both you — both you guys and the company. So congratulations on that front.

Dan Thoren: Yeah. Thanks, Dick.

Matt Malone: Thank you, Dick.

Dick Ryan: So Dan, we continue to hear challenges in the shipbuilding side of the market. I think maybe last call, you indicated that you could see some potential opportunities as some other suppliers run into issues. And then in your news release, you’re talking about advanced discussions on new programs or expansions with existing customers. Can you kind of just square the circle on how that dynamic is playing out to you guys?

Dan Thoren: Yes. From a Navy discussion point, we have regular program reviews with our customers all the time. And the message that we’re getting from our customers is, don’t get sidetracked by the noise. We have ships to build, and we’ll take your equipment as soon as you can get it to us. We’re not talking about any slowdowns. Just keep it coming. And then, as we’re able to show that we’re hitting our delivery schedules and showing that we’re able to increase our capacity via additional people, additional floor space. We’re in discussions with our customers about what more we can do. Too early to say, exactly what those opportunities are and what they’ll result in, in the future, But it’s very positive conversation, very productive conversation. And so we’re feeling very good about it.

Dick Ryan: Okay. Good. One other one on the aftermarket, continue to show some very strong results there. And it wasn’t all that long ago that aftermarket was just going after the refining and Petrochem side, now you expanded it into defense. I mean, the strong growth we’re seeing year-over-year is that Defense kicking in? Or is that still too early? Or where is the strength coming from in the aftermarket?

Dan Thoren: Yeah. I would say the aftermarket still is more on the energy and chemical side. Our customers had told us that domestically, they were definitely transitioning over to the maintenance mode. There’s still a lot of demand for fuel, refined fuels and then feedstocks for Petrochem. So everybody is trying to keep their plants up, running and going strong. We are seeing some additional inquiries from our installed base internationally. So this NextGen nozzle that we’ve recently announced and put into a plant here domestically, we’ve got our international customers now calling and saying, we’re really interested in that. China has a big initiative to reduce their steam consumption. And India, as they continue to grow, they want to see more and more efficiency just because it allows them to grow smarter, faster and more efficiently.

So there’s a lot of interest in this NextGen nozzle. And so we’re expecting to see even our installed base internationally to really want to start to bring that type of new technology in. And then on the defense side, certainly, we’re seeing, especially the U.S. Navy wanting to make sure that they’ve got their submarines at speed. And so there’s been a big push from the Navy to make sure that we’re getting this equipment turned around and back to them quickly so that they can maintain availability as high as they can maintain it. So all really strong at this point for aftermarket, Dick, and we’re very pleased.

Dick Ryan: Okay. Just quickly, Chris mentioned the second order for the NextGen nozzle. Was that domestic or international?

Dan Thoren: That one was domestic.

Dick Ryan: Okay. Great. Okay. Thanks again, guys. Congratulations.

Dan Thoren: Thanks, Dick.

Matt Malone: Thank you. Thanks, Dick.

Operator: Thank you. Our next question is from Russell Stanley with Beacon Securities. Please proceed with your question.

Russell Stanley: Good morning, and thanks for taking my question. Just given the orderness or the lumpiness in order flow, which is obviously quite natural if you look historically, I’m wondering where you see your ideal book to bill ratio being, where is the best balance between driving sales growth and while ensuring reasonable lead times for customers?

Chris Thome: Yeah. So our annual goal, Russ is to, as you know, our annual goal is to increase revenue 8% to 10% organically per year, right? So we always set a sales goal, an order goal for ourselves of a book-to-bill of 1.1 times, which means that we’re continually growing our backlog and our sales by that amount. As you pointed out, our orders tend to be lumpy and our book-to-bill ratio is one times for the year to date period. And I would also point out that our order pipeline is very robust at this point in time. It’s just lumpy as you pointed out.

Matt Malone: Yeah. And I think Russ maybe a little bit more color on that. We’re planning on and aligning our future revenue to hit this 1.1%, which basically means that we need to be able to recruit the people and to have the facilities ready to support that 1.1% growth. So we’re very active in strategic planning and investments in our people, our processes and our plants to continue to support that. We — in an ideal world, we’re not pushing out deliveries at all, but actually improving deliveries. And so there’s a lot of activity on the planning strategic side to be able to support that.

Russell Stanley: Got it. And that dovetails, I think, in my next question, the two major shipbuilders just talked to ongoing supply chain challenges and labor challenges. And I’m wondering what you’re seeing with given your plans, what you’re seeing with respect to potential funding, additional funding from BlueForge given the success you’ve had to date?

Dan Thoren: Yeah. So the government has said that they plan on continuing the supplier development funding for several years still in the future. And we are talking to our customers about where is the next need, where should we be planning to invest ourselves as well as apply for funds to be able to expand capabilities and capacities. So it’s an active conversation. We have several proposals in front of our customers today, and we’re just kind of waiting for them to sort it through. I mean, they’ve got a lot of requests and they’re just looking at it from a priority and a return on investment kind of perspective. It really helps to have shovel ready projects and it really helps to have established training programs in place, which Graham does have. So we’re cautiously optimistic that this funding will continue to flow to Graham Corp.

Russell Stanley: That’s great. That’s all for me for now. Thanks again and congrats on the quarter.

Dan Thoren: Thanks Russ.

Matt Malone: Thanks Russ.

Operator: Thank you. Our next question is from Tony Bancroft with Gabelli Funds. Please proceed with your question.

Tony Bancroft: Yes. Good morning, gentlemen. Nice job on your performance. Just I attended a sort of a Marine Corps (ph) lecture dinner the other night and the guest of honor was a Senior General just actually discussing the budget and talked about the supplemental potential for the $200 billion supplemental that is being kicked around. Maybe question one is, would you have any exposure? And if so, sort of what kind of exposure to that potential upside above the 895 (ph)? And then, on the flip side, what are your thoughts of, you also talked about the downside of we don’t get an April 30 budget, then we go back to the, as you know, the 2023 minus 1% and then an impact of the CR, which I’ve heard that number — the other number being kicked around on the Navy side of like negative almost $4 billion if a CR gets implemented.

I know you guys are long-term — you have long term program, which is a beautiful thing, but just the impacts, maybe puts and takes on those two dynamics?

Dan Thoren: Yeah. That’s at that kind of top line level, it’s really kind of hard to understand how it might come down and affect other programs. You’re right in that, we feel very fortunate that we’re involved in some of the most strategic programs that the U.S. Navy has. And so given that we’re often funded by advanced procurement types of funding that, that is spent, several years in advance of the actual shift being approved. We feel very, very fortunate that we have some visibility of that. So the supplemental, if they’re going to bump up overall defense spending, that takes pressure off probably all programs. If we go into continuing resolution, it’s probably going to put more pressure on those programs that aren’t as strategic. Boy, being able to look into that crystal ball and seeing what effect it might have on our specific programs, I’m not good enough to tell you that one.

Tony Bancroft: Got it. That’s very helpful. Thank you and great job and congratulations, Dan, Matt and Mike looking forward to following with you guys.

Dan Thoren: Yes. Thanks, Tony.

Matt Malone: Great. Thanks, Tony.

Operator: Thank you. Our next question is from Joe Gomes with Noble Capital Markets. Please proceed with your question.

Joshua Zoepfel: Hey, guys. This is Joshua Zoepfel just filling in for Joe. I just wanted to congratulate you guys, Dan, Matt and Mike on the new goals and the transitions. I’m looking forward to seeing where you guys — how the next story unfolds for you. But, this kind of, you guys mentioned in your prepared remarks, obviously, on-going back into the order lumpiness. And just kind of looking just at the defense orders, they kind of seem lower than usually their usual trend. Do you guys really have any kind of additional color maybe to why that is?

Dan Thoren: Well, certainly versus the prior year, our orders are down because in the third quarter of last year, we had $100 million in orders related to some follow-on orders for some of our — the programs we’re on. And typically, we’ll get some of those once a year. We announced last quarter that we won the Air Turbine Pump for the Columbia-class submarine, as well as the follow on order for the MK48 Torpedo. So really just given the long-term nature and the large size of these contracts, it just lends itself to be lumpy and but we’re not concerned with the order flow right now in the defense programs.

Joshua Zoepfel: Okay. Yes. That’s helpful. And kind of just moving along, you guys usually mentioned before just kind of core targets from M&A side of things. Can you guys — can tell me a little bit maybe progression on that front, how the kind of market is looking, obviously, with the new administration coming in not even a month ago? So just a little bit of an update on that front.

Matt Malone: Yes. Maybe expand your question just a little bit more.

Joshua Zoepfel: I just wanted to see, are you seeing any potential targets maybe on the M&A side that you guys have maybe looked at?

Dan Thoren: Okay. You want me to?

Matt Malone: Go ahead.

Dan Thoren: Okay. Yeah. So we have a pretty active M&A program going right now. We put out a target description of the types of companies that we’re looking for, and we’re actively on the road talking to different companies about what their plan is, their openness to acquisition, etc. So I would say that it’s actually fairly active. I can’t really comment on the pipeline per se, But generally, we really like engineered product. We like companies that have engineered product that have some kind of an IP moat, some kind of a technology moat. And then what that allows you to do is, is really reinvent yourself. So if you’re capable of upgrading product and improving its performance, that’s long term, that’s a great place to be. So that innovation, that ability to reinvent yourself through engineered product and then manufacturing that same product is also a nice place to be.

Once you have it installed base, then you’ve got the aftermarket that goes with that. So if you kind of painted the picture of the type of company we’re looking for, It’s a company that ultimately enables us to continue to look at the full lifecycle of the product with our customers. It allows us to get in very early in the conceptual design phase and then support them all the way through with aftermarket. We had stated earlier that we were kind of looking for companies as small as maybe $10 million in revenue up to a size of like the Barber Nichols type of an acquisition. So there’s $70 million or $80 million. And as Chris talked about earlier, we’ve got a very strong balance sheet to be able to go after those types of acquisitions. So again, active there, we’re on the road talking to companies that fit those attributes and in pipelines too early to really talk about what’s there today.

Joshua Zoepfel: Okay. Perfect. Yeah. Thank you so much.

Dan Thoren: Yeah.

Operator: Thank you. There are no further questions at this time. I’d like to hand the call back over to Daniel Thorne for any closing comments.

Dan Thoren: Thank you, Paul. Thank you, everyone for joining us today and your interest in Graham. I’d like to remind you that we will be presenting at the TD Cowen Aerospace and Defense Conference next week on February 12 in Arlington, Virginia, as well as the Oppenheimer Emerging Growth Conference being held virtually on February 25 and 26, and then the Gabelli Funds 35th Annual Pump, Valve and Water Symposium in New York City on February 27. Interested investors should contact your sales representative to register and schedule one-on-one or group meetings. As always, a live webcast of the presentation along with presentation materials will be available on our Investor Relations website. We hope to see you there. And as always, please reach out with any questions. Have a great rest of your day.

Operator: This concludes today’s conference. You may disconnect your lines at this time. Thank you for your participation.