Forum Energy Technologies, Inc.

Good morning, ladies and gentlemen, and welcome to the Forum Energy Technologies fourth quarter and full year 2024 earnings conference call. My name is Gigi and I'll be your coordinator for today's call. There is a process for entering the question and answer queue. To ask a question during the session, you will need to press star 1-1 on your telephone. You will then hear an automated message advising your hand is raised. To withdraw your question, please press star 1-1 again. A link with instructions can also be found on the company's investor relations website under the events section. At this time, all participants are in a listen-only mode and all lines have been placed on mute to prevent any background noise. This conference call is being recorded for replay purposes and will be available on the company's website. I will now turn the conference over to Rob Kukla, Director of Investor Relations. Please proceed, sir.

Thank you, Gigi. Good morning, everyone, and welcome to FET's fourth quarter and full year 2024 earnings conference call. With me today are Neil Lux, our President and Chief Executive Officer, and Lyle Williams, our Chief Financial Officer. Yesterday, we issued our earnings release and it is available on our website. Please note that we are relying on the safe harbor protections afforded by federal law. Listeners are cautioned that our remarks today may contain information other than historical information. These remarks should be considered in the context of all factors that affect our business, including those disclosed in FET's Form 10-K and other SEC filings. Finally, management statements may include non-GAAP financial measures. For a reconciliation of these measures, you may refer to our earnings release. During today's call, all statements related to EBITDA refer to adjusted EBITDA. And unless otherwise noted, all comparisons are fourth quarter 2024 to third quarter 2024. I will now

turn the call over to Neil. Thank you, Rob, and good morning, everyone. I would like to begin by congratulating Chris Gott and Leslie Weier, two of FET's board members. Leslie was recently nominated to serve as Assistant Secretary for Land and Minerals Management in the U.S. Department of Interior. Leslie's leadership and experience makes her an excellent choice to help our country navigate critical energy challenges. I would also like to congratulate Chris on his announced retirement. Chris has been involved with FET for almost 20 years, both as a dedicated board member and previously as Chief Executive Officer. I would like to personally thank Chris for his mentorship, guidance, and friendship. He has been invaluable throughout my time at FET and especially since my appointment as CEO in January 2022. With these announcements, I think it is appropriate to step back and reflect on the great progress we have made the last three years. Revenue is up 51% during this time. Market share, as measured by revenue per rig, is up 19%. EBITDA increased five times and margins expanded 800 basis points. Net debt is down 30% and we significantly improved our net leverage from 11 to just under one and a half times. These results clearly illustrate the progress we have made. Now let's talk about key achievements from the year, specifically our financial results, the completion of a transformational acquisition, the fortification of our balance sheet, authorization of a significant share repurchase program, and solid execution of our beat the market strategy. Financially, we delivered meaningful growth with revenue and EBITDA of 10 and 49% respectively. This resulted in a 42% incremental margin and over 300 basis point margin improvement. Impressively, we generated 105 million in free cash flow from strong EBITDA growth and efficient working capital management. Veriperm contributed meaningfully to our financial results, as promised when we announced this acquisition. Despite some market headwinds, Veriperm delivered stronger than expected EBITDA margins and outperformed the full year free cash flow plan. We also executed a $100 million senior secured bond offering, which refinanced our long term debt and maintained a strong litiquidity position. Importantly, the refinancing provided flexibility for deployment of cash. In December, we announced a $75 million share repurchase program, delivering on our promise to shareholders. The size of this program relative to our market capitalization is significant. It also reflects our confidence in generating consistent free cash flow in 2025 and beyond. This year, we made great progress on our beat the market strategy by capturing profitable market share, leveraging our global footprint and developing differentiated technologies. For example, we gained market share as demonstrated by our 15% revenue per rig growth. Also, outside the US, we utilized our strategically located manufacturing facilities to grow international revenue by almost 42%. And FET is an industry innovator, delivering new products to the market. Here are a few examples. FR120SC, the next generation iron roughneck that combines best in class torque capacity with a reduced rig floor footprint. FastConnect, a safer and more efficient zipper manifold system for multi-well, pad frac operations. Powertron, an industry leading heat transfer unit for mobile power generation. PumpSaver Plus, an incredible solution that increases oil production and reduces downtime in rod lift production systems. MagnaGuard, a breakthrough product that enables widespread adoption of efficient permanent magnet motor ESPs. And my last example, Unity, a leading edge technology that remotely controls ROVs to reduce personnel on vessels. Now, turning to our outlook, we strongly believe long-term demand for energy will grow and continued investment will be required to supply this growth. However, we expect 2025 to be a transitional year for market activity driven by geopolitical and macroeconomic uncertainties. Overall, we anticipate global drilling and completion and activity in 2025 will decrease 2 to 5% from 2024 levels. In North America, both rig count and frac fleet count are forecasted to soften. Internationally, we anticipate activity to be generally flat. We expect that continued market share gains through our beat the market strategy will partially or fully offset the impact of declining market activity. Therefore, our full year 2025 adjusted EBITDA guidance range is 85 to 105 million. There are a couple of variables, however, not in our 2025 forecast that we are tracking closely. The first is natural gas. In our guidance, we do not assume a rebound in natural gas drilling and completions activity. If demand triggers a meaningful commodity price increase, there may be some upside to activity later in the year. The second variable is tariffs. For most product families, we believe we are in a position to mitigate and pass through tariff impacts with increased pricing and supply chain optimization. This result may not be achieved immediately and we may see short-term impacts and variability in our businesses. We are continuing to monitor this fluid situation and will adapt accordingly. Before turning the call over to Lyle, I would like to summarize our capital deployment framework. First, we are forecasting 2025 free cash flow between 40 to 60 million dollars. We expect to allocate 50% of this free cash flow to net debt reduction. The remaining 50% would go towards strategic investments, including share repurchases. We continually evaluate acquisition opportunities and compare relative value to FET. With our industry-leading free cash flow yield, we have yet to find a better investment than ourselves. Buying back FET shares provides the best current value to shareholders. I am now going to turn the call over to Lyle for more details on FET's fourth quarter results and other financial highlights.

Thank you, Neil. Good morning. I am pleased to provide details on our strong free cash flow performance and why we believe generating free cash flow in the future is sustainable. For the full year 2024, we generated 105 million of free cash flow. This is the highest annual amount since 2015 and 35 million higher than the top end of our latest guidance. These results benefited from the real estate sale leaseback transaction we announced in mid-December and for meaningful networking capital reductions. Inventories dropped by 34 million as key initiatives paid meaningful dividends. Also, our day sales outstanding decreased generating 8 million of cash. Monetizing these assets allows us to redeploy capital for a better return. We remain confident in the foundation we have built to sustainably generate free cash flow. Our 2025 guidance of 40 to 60 million is consistent with our 2024 result, excluding the large release of working capital and the sale leaseback transaction. Included in our guidance are interest and cash tax payments of about 35 million and capital expenditures of around 10 million. This guidance reflects another year of strong free cash flow, allowing us to further reduce net debt while simultaneously returning cash to shareholders. It is important to note that we are committed to maintaining conservative net leverage. And as Neil mentioned, 50% of our free cash flow would further reduce our net debt. Our remaining free cash flow would be used for strategic investments that increase shareholder value. As we have said before, we believe our stock is undervalued and it is hard to find a better investment than an FET. And shareholder returns have already begun. In January, we repurchased approximately 105,000 shares of our stock for an aggregate amount of $2 million. At the time, we met the two conditions of our bonds that address repurchases. First, we can repurchase up to 50% of the previous fiscal year's free cash flow, excluding the sale leaseback proceeds. So for 2025, we have over 42 million of share repurchase capacity. Second, our net leverage ratio must be below 1.5 times pro forma for any repurchases. Going forward, this occurrence test will be the limiting factor for when and how large our repurchases can be. Based on the seasonality of our free cash flow, we expect our repurchases to be weighted to the second half of this year. We fortified our balance sheet this year. With strong free cash flow, we retired $100 million of debt incurred in connection with the -of-perm acquisition. To put that in perspective, within a year of the closing, we retired two-thirds of the net added for this transformational acquisition. And with the bond refinancing completed in November, we have no debt maturities until 2028. We ended this year with $45 million of cash on hand and $61 million available under our revolving credit facility, with total liquidity of $106 million. Our net debt was $149 million, down $50 million from last quarter for a year-ending net leverage ratio of 1.49 times. On the income statement, our consolidated fourth quarter revenue of $201 million and EBITDA of $22 million were within our guidance ranges. The slowdown in U.S. completions activity led to a sequential decrease in our revenue. And our EBITDA margin was negatively impacted by lower sales of quick-turn, high-profit products. In the fourth quarter, we recorded two unusual non-cash items that impact net income, but not EBITDA. First, we recorded a charge of $119 million to impair the intangible assets of our coil tubing product line. Based on market conditions, we performed an impairment test and determined the carrying value of these assets should be fully written down. Going forward, this will reduce our annual amortization expense by $15 million. Coil tubing remains a valuable contributor to FET, with strong profitability and differentiated technology. We also recorded an $11 million non-cash benefit to income tax expense by releasing the valuation allowance reserves that we held for Germany and Saudi Arabia. As our operations in each country have become more profitable, it is appropriate to release these reserves. Turning to our segment results, the drilling and completion segment revenue decreased by 10%, with lower U.S. completions-related activity, sales volumes for wireline cable, coiled tubing, and stimulation capital equipment were lower. Segment EBITDA decreased 34% due to lower sales volumes and unfavorable product mix. Orders were $103 million, down 20% relative to the third quarter, which included large orders of drilling equipment, including iron roughnecks and catwalks. The artificial lift and downhole segment revenue was up 7%, primarily related to increased sales of our refinery desalting technology and artificial lift products. Sales increases in these higher margin products led EBITDA growth of 11%, and orders in the downhole product lines. I will conclude my comments by providing modeling details and our forecast for the first quarter 2025. For the full year 2025, we estimate corporate costs of $30 million, depreciation and amortization expense of $35 million, and tax expense of $13 million. We are expecting around $17 million of interest expense, which assumes a reduction in our ABL's balance through the year. We assume first quarter values to be roughly one-fourth of these full year amounts. From a guidance perspective, many of our customers have publicly indicated a slower first quarter, with progressive improvements throughout the year. Therefore, we expect first quarter 2025 revenue to be in the range of $185 million to $20 million and EBITDA in the range of $20 million to $24 million, included in our quarterly and annual guidance or additional lease expenses from the sale leaseback transaction of $1.7 million per year. Our first quarter free cash flow will be impacted by annual management incentive payments and property taxes. While we do not guide specific free cash flow on a quarterly basis, we do anticipate generating positive free cash flow in the first quarter. Let me turn the call back to Neil for closing remarks. Neil?

Thank you, Lyle. I want to note one more achievement from 2024. Safety is our number one core value, and over the years we have done an outstanding job keeping our employees safe. While we were pleased with our past results, we were not satisfied. Last year, we challenged ourselves to radically improve our safety performance and culture. I am ecstatic to announce we exceeded our expectations. The teams embraced our initiative and significantly improved our key metrics to world-class levels. This is a fantastic achievement, and I want to thank the employees of FET for their hard work and dedication. Job well done. Gigi, please take the first question.

Thank you. As a reminder, to ask a question, please press star 1-1 on your telephone and wait for your name to be announced. To withdraw your question, please press star 1-1 again. Please stand by while we compile the Q&A roster. Our first question comes from the line of John Daniel from Daniel Energy Partners.

Hey, good morning, guys. Neil, I was trying to take copious notes as you were going through your prepared remarks. I think you mentioned something about a new product tied to mobile power. Did I hear that correctly? Now, so can you elaborate on what it is, what it will do, and the opportunity set?

Yeah, so the – yeah, good call. So we – in the PowerGen segment, we have a product called our Powertron. This is our heat exchanger that we supply into that market. So it's paired with a gas-resip engine. You know, it builds off our kind of leading market share in the frac industry, and so we've adopted this product to really fit the PowerGen side. So we've had a kind of a good start to the year on the quotation side. It's been pretty robust, and we're looking forward to closing some orders there.

Okay, those would all be domestic, right?

Yeah, it would be domestic. I think for us as well, as we think about increasing power demand, I think another product that does apply there is our Coil Linepipe, bringing in the gas to the data centers as well.

Okay, got it. And then just one on sort of the traditional sort of coil wireline completion stuff. As orders have moderated a tad, I mean, are you seeing a setup where you're going to – you know, three to four to five quarters of a dollar, see a spike in those orders? Do you get the sense they're working through their inventory? Just any thoughts there?

Yeah, so I think, you know, on a consumable basis, which, you know, the wireline cables, coil tubing, those are getting consumed and turning well for U.S. land. Our more capital type products, you know, whether it's power heads or radiators, things like that, I think those are the items that are looking for a spike, as you say, maybe a few quarters out, right, whether it's later this year or in the next year as that equipment ages.

Okay, we got it. I'll turn it over. Thank you, guys.

Thank you, John.

Thank you. One moment for our next question. Our next question comes from the line of Dave Storms from Stonegate.

Good morning. Morning, Dave. Morning. Just wanted to start with maybe some of the puts and takes on guidance. You mentioned that the beat the market strategy should help maintain the top line despite maybe, you know, some overall market weakness. But it still looks like your EBIT of midpoint guidance is about a 5% decrease year over year. Just hoping you could speak to maybe some of the margin assumptions or price mix volume decisions that would drive that.

Yeah, I think as we look out to 2025, you know, we said the market could be down, you know, to 2% to 5%. So really, the EBIT of guidance range we put in there is really how successful we are to either partially or fully offset that market decline. So I think at the midpoint, you know, you could see, you know, the market down a lot. And, you know, down what's called a 5%, but we're we gain a little more share. Or at the low end of the market, let's say the down 2%, then we don't gain as much share. So we wanted to give kind of that range, you know, ideally, if the market stays flat and we add revenue, we'd be closer to the top end of that range.

And so that's very helpful. And just kind of on that, you know, with the general market expected to decline to 2% to 5%, are you seeing any pockets of strength? I know international has been a bright spot, you know, could be a little choppy for you guys. Just curious as to, you know, if there's any green shoots that you are seeing out there.

You know, I think it really is more on the types of product side. You know, I think our consumables, we've seen a nice start to the year. I think capital is still a little slower to start, you know, as our customers get their budgets together. You know, I think overall, you know, international is probably going to be, you know, for the year, going to be a bright spot, you know, for us, whether, you know, I think it's a good start in Canada to the year is we'll see if that can hold. And then, you know, outside North America, again, whether it's, you know, Saudi, maybe a little lighter, but Kuwait, Oman, you know, Abu Dhabi, I think all are going to be pretty good for us this year.

So that's very helpful. Thank you for taking my questions and good luck in the first quarter. Thanks,

Dave. Thank you. Our next question comes from the line of Jeff Robertson from Water Tower Research.

Thank you. Good morning, Neil. You talked about gaining market share in 2024 and over the last three years. As you look at the market conditions in 2025, are there areas where you think you still have room to grow market share? And are those, if so, are those product lines in ones that would have a favorable impact on margins versus maybe lower sales in other lines?

Yeah, that's a good, great question. You know, our focus is we want to grow profitable market shares. So we are, you know, putting the time to those key product lines that do have the higher margins, you know, where we've incentivized our teams to gain that share. So I think the areas, you know, are artificial lift and down hole, that segment, you know, high margin. It's one that, you know, we've added a lot of new products over the year. I mentioned, you know, MagnaGuard as well as our PumpSaver Plus. We continue to build out that product portfolio. So I think that's an obvious area of growth. I mentioned, you know, coil line pipe earlier on the PowerGen. We also are seeing, you know, international projects that are offshore that could be a nice boost there as well. So I don't think our gain share is done. I think we have a good runway on that. I think over time, we are absolutely focused on beating market and executing that strategy.

On the products you mentioned, the Unity remote control system for ROVs, has that been field tested to the point where you're getting more interest in it from a broader group of customers?

Yeah, we're utilizing it today. We're actually in the middle of testing those systems right now. We're going to have them delivered here in Q1. We had a little delay just in Q4 with one customer, so we pushed it into Q1 here. But yeah, I think it's still early, but it is an area where, you know, it's taking personnel off vessels. That's a huge savings for our customers. So us executing that, I think, is a really good deal. I think what's exciting too is we could upgrade our existing installed ROVs, and that's a great opportunity for us.

In the past, with respect to returning cash to shareholders, you all have, I guess, broadly talked about the possibility of a dividend. Does the share repurchase plan, do you think, just give you the most flexibility as you look at the options on the value of FET versus the valuations that you're seeing in the acquisition market?

Yeah, Jeff, I'll take that one. At this point, we don't have any specific dividend plans and do really feel like, given the relative valuation of FET stock versus other things that we could invest capital in, that's just such a screaming buy that that's where we ought to be. So that's our focus for now, for that 50% of our cash flow. I think the other 50% will continue to go to our net debt reduction. We feel like, just kind of if you use the midpoint of our guidance on cash, just 50%, take half of that as 25%, that'd be about 10% of our market cap. So if we achieve that this year, that's a very big amount. And at the same time, we can pull our net leverage down to one and a quarter, 1.3 times, something like that over the same period of time. Thank you, Lyle.

Thank you. One moment for our next question. Our next question comes from the line of Steve Ferrazani from Sudoti.

Morning, everyone. Appreciate you taking my question. I did want to follow up a couple of the earlier questions. In terms of your breakdown on seeing 2% to 5% decline in drilling and applications, I'm just trying to think about some of your individual markets. You know, Veriperm has been really successful at high margin. You know, in December, we saw a pretty healthy guidance from the bigger oil sands producers, but that was pre-tariff talk. You said that Canada started up healthy for you. Are you seeing any kind of impact at this point? Are you expecting any kind of impact?

Yes. I think the, you know, in Canada, it was a good fourth quarter. You know, I think the, I think rig count has been good here as well to start the first quarter. Haven't seen an impact yet from tariffs. It's something that, boy, we do a lot of analysis. I think we could see a slowdown if we did have that 10% oil tariff come through on Canadian crude. That would be something that we'd have to adjust to for sure.

Okay. And then it's on the other side of the border. And I don't know how much exposure country to country, but Mexico, obviously very soft. Could that hit you in the first half?

Yeah. Our, you know, our exposure to Mexico is fairly limited. It's a really small part of our business. So yeah, I'm not as concerned there. I think, you know, North America for us is primarily Canada and the U S.

Okay. And Steve, maybe I'll jump in on, on just, sure. Let me jump in on the, on the tariff comment, just to give a little more color there on how we're thinking about it. Neil mentioned, we, we don't have any tariff impact included in the guidance that we provided. It's just too early to really understand, but we do have experience with what happened in prior tariff regimes and what that looked like. And our view is we have probably a outcome. And that is that, you know, first our, we're given our market position with a lot of our product offerings. We have the ability to pass on tariff increases to our customers. And that would be our expectation. However, the uncertainty and volatility that can come from that until the market settle out definitely could be a near term, let's call it choppiness or bumpiness in results. So we don't have anything in there, but, but definitely something that we're watching and our teams are monitoring really daily to, to make sure we take the appropriate actions.

Excellent. If I get one more in, obviously your balance sheet extremely strong. You noted that the outperformance of VARRA PERM, if we end up in this sort of soft environment, flat to slightly down year, new opportunities might emerge given the balance sheet. I understand the better returns from share buybacks. Are you open and ready to jump if the next VARRA PERM comes up and not say it would?

Yeah, I think if we can, again, I think in our comments, we talked about looking at the relative value, right? Of our shares versus opportunities out there. So I think if we, saw the relative value in an acquisition, I think we would absolutely, as you mentioned, VARRA PERM fantastic acquisition, great team. We'd love to load that, add another one.

Excellent. Thanks everyone.

Thank you.

Thank you. One moment for our next question. Our next question comes from the line of Eric Carlson.

Hey, good morning guys. Morning, Eric.

Morning.

I was wondering, just maybe talk through a little bit of, I mean, clearly with the kind of the large and impairment charge and Q4, the kind of the headline income and EPS numbers probably grab a lot of attention, but you have to forgive my quick math, but I mean, I think it was just over a hundred million loss for the year, but a lot of kind of attributed to the impairment charge and then FX and then a higher interest expense. So maybe just on a go forward basis, if you just look at kind of the income statement, it feels like it's set up to be a little bit more normalized instead of all these one-offs from transaction expenses and so on and so forth. So maybe just a few thoughts there would be interesting.

Sure, Eric, definitely. And definitely a lot of noise in there. So just draw your attention to the earnings release and our table in the back that would show in a full year, adjusted net income numbers. And if you look at those, I want to spend a minute on those, if you look at those on a year over year basis, our adjusted net income is actually down from like negative one and a half percent to negative 10. What is that? And that's really driven by the interest expense that we added for the bearer per acquisition of about 12 million. But with our net debt now coming down and with our guidance, we expect a really meaningful improvement on a year over year basis. So 20, 25 should be better. The other place that there was a year over year increase was on tax expense. Again, an increase due to bearer per and a little bit tied to this pillar to global minimum tax that's out there. So through this year, we've already restructured some of that and we'll be able to have a lower go forward tax guidance that we have. So between those items, lower interest forward, lower taxes forward, lower amortization expense going forward, we're set up for a much improved net income and EPS result in 20, 25 versus 20, 24.

OK, that's helpful. I guess. And then just looking at kind of the cash flow numbers, so obviously finished very strong, but for the full year, about 45 percent of current market cap in cash generated and a good majority of that just from operations. So maybe I'm thinking of the context of I know some people have brought up ways to return capital and kind of the relative value. I mean, I did kind of quick math, but it looks like kind of the median EV to EBITDA on kind of the peer group at least stated and kind of the proxy statement for incentives is maybe six and a half. And that's excluding a few I couldn't find information on. But you guys kind of trade at under four, three point seven five. So almost 50 percent discount to that. I mean, when you think about deploying capital, obviously a VAC makes a ton of sense. There's a lot of kind of surety to what you're getting there. And maybe just when you think about the relative value, like if I know I can buy 10 percent of my shares, that increases my free cash flow by share per share by 10 percent. I can kind of put that on a flywheel and repeat it versus what is the relative value needed by a strategic acquisition on the outside. So maybe just thinking about the hurdle rate of different ways to do that, because obviously buying your stock seems like a no brainer. But like if I can buy if you can buy your stock at under four times EVITDA, what's the hurdle rate? Like what do you need to be able to buy a bear per mat again? Does it need to be three times or it doesn't need to be just maybe provide some context for that? I think that'd be really helpful.

Yeah, I think we we go back to what's our acquisition guideline strategy, right? We want to get companies that have differentiated products in niche markets. We want to have an accretion to key multiples and cash flow per share I think would be one of those. And we don't want to put ourselves in a tight balance sheet by adding a lot of debt. So as far as a specific hurdle rate, I think we would just really stick with our guides there. I think we'd look at it on a case by case basis. I think accretion would be a big point to that. And so I think it would be we got to find the right it would have to be the right deal at the right price and the really the right discount tool where we sit to get it done.

Okay, that's helpful. And then maybe in deploying kind of buyback, I know the comment already was probably weighted a little bit more heavily to to have, can you just provide some what are kind of your limitations on terms of daily volume and then in terms of maybe opportunity to source some larger blocks of shares just kind of looking at the filings? I mean, there's still at least one really large bondholder still holding I mean, 900,000 shares. So I mean, when you think about how you deploy that most effectively, maybe just provide some context.

Sure. Yeah, talked about in our prepared remarks, really the limiting factor is going to be our one and a half times net leverage ratio pro forma for the buyback. So we ended fourth quarter just under that opening the door for us to be able to get some things done, obviously, as we buyback shares that that kind of increases that on that pro forma number. So we'll generate free cash flow through the year probably lighter in q1. Well, like I said, guided lighter in q1, and then stronger in the later part of the year, which opens up opportunity for us. I think the other thing we would do is we look at open market purchases, we want to make sure we sit within the appropriate safe harbors. So we're limited in terms of average daily trading volumes and what that would be for us. So that would be kind of an open market kind of an opportunity. So I think we look at those, there's plenty of volume out there. And in January, when we did buy, we were able to get that done in a short amount of days. So I think when we're in the market, we could do that relatively quickly and be able to buy up some of those shares. But we'll be focused on that one and a half times the measure as we get under that, that provides more opportunity, more opportunity for us.

Okay. And then you said, so the based on the math, it's 42 million would be kind of available, but obviously, with kind of cash flow projections, it would come in under that. That's right. And then maybe the last my last question would be, you have been able to do some things to take advantage of kind of generating one off cash flow, like the sale lease back at the end of this year, you did it in previous years as well. Just wondering if there's any other low hanging fruit out there to kind of generate kind of cash above and beyond operations?

Yeah, so if you look at our if you look at our guidance, and what we got at the 40 to 60, really, that doesn't include any incremental cash from an asset monetization like to sale lease back. It also doesn't include any working capital benefit or increase. Right. So kind of assuming flat numbers, and both of those were big contributors in 2024. So we'll continue to look at ways to do that. Both on the working capital side, our teams are very focused on inventory reduction, given the kind of market condition here and what's going on with potential tariffs, we're being prudent around not getting too short on inventories these days. So I think that'll be something we'll have to balance through the course of the year. And then clearly, as we look at our portfolio, both what new product additions we want to make, and where we might want to trim back on our portfolio, it's all about returns. And how do we improve the returns cash returns that those portfolios can give. So we'll be looking at those as well, but but nothing specific included in our at this point.

Okay. That's helpful. Thanks, guys. Good quarter. Good year.

Thank you. Thank you.

I would now like to turn the conference back over to Neil Lux for closing remarks.

Okay, well, thank you for your support and participation in today's call. We look forward to our next meeting in May to discuss our first quarter 2025 results.

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