RBC Bearings Incorporated

Morning and thank you for joining us for RBC bearings fiscal fourth quarter 2025 earnings call. I'm Rob Moffitt, director of corporate development and investor relations. And with me on today's call are Dr. Michael Hartnett, chairman, president and chief executive officer. Daniel Bergeron, director, vice president and chief operating officer and Rob Sullivan, vice president and chief financial officer. As a reminder, some of the statements made today may be forward looking and are made under the private securities litigation reform act of 1995. Actual results may differ materially from those projected or implied due to a variety of factors. We refer you to RBC bearings recent filings with the SEC for more detailed discussion of the risks that could impact the company's future operating results and financial condition. These factors are also listed in the press release along with the reconciliation between gap and non gap financial information. With that, I'll turn the call over to Dr. Hartnett.

Thank you, Robin. Good morning. And thank you for joining us. I'm going to start today's call with a quick review of our financial results and I'll finish with some high level thoughts. On the industry, our outlook for fiscal 2026 and then hand it over to Rob Sullivan for more detailed color on the numbers. Fourth quarter sales came in at 438 million, a .8% increase over last year, driven by continued strong performance in our A&D segment and other very strong performance in the industrial businesses, particularly when viewed against the broader industrial trends. Consolidated gross margin for the quarter was .2% versus .1% for the same period last year and adjusted diluted EPS was $2.83 a share versus $2.47 a share of 14.6%. Clearly, we're thrilled to see the results. And this reflects the energy and commitment everyone invested to make this year successful. So a big thank you to the team RBC. Total A&D sales were up .6% year over year with .6% growth on the commercial aerospace and .2% on defense. On the industrial side, the segment grew .3% year over year with distribution and aftermarket up .5% and OEM up an impressive 5.1%. In A&D, we saw broad strengths across the portfolio. Our leading sources of growth came from engine OEMs, commercial spare parts, commercial fixed wing aircraft, missiles and guided munitions, and of course space. For the full year, A&D sales grew at 14% with commercial arrow up .3% and defense up 15.9%. Although the FAA constrained production and a prolonged strike at our largest customer coupled with other challenges that the industry faced this past year, we still grew the business at 14% and expanded margins as planned. We clearly benefited from the breadth and diversity of RBC's portfolio, giving us exposure to many different customers and many different parts of the supply chain. This includes a healthy balance between aftermarket and OEM, fixed wing and rotary craft, and commercial and defense. We also benefited from highly targeted organic growth initiatives focused on specific customers and programs that not only contributed to fiscal 2025, but should continue to benefit us in 2026 and well beyond. Moving over to industrial segment, we delivered a .3% growth this quarter. We were able to grow the business on a full year basis, even in an environment where the industrial economy has seen two consecutive years of contraction as measured by the manufacturing PMI. High service levels, lots of internal can do, and incremental progress on new product introductions were the reasons. Our outgrowth relative to peers and the broader industrial economy has been notable, and I want to commend our teams for measuring up to the high bar they reached. Results like this don't happen by chance. They are the result of our relentless focus on our organic growth during our ops meetings and the ambitious goals of our managers that are willing and those goals that they're willing to take on. Coming into the year, we talked about how our focus at Dodge is in the early innings of evolving from delivering cost synergies to driving revenue synergies. And that accelerating growth was the major priority for fiscal 2025. I'm proud to say that these early efforts appeared to be paying off year to year over year OEM sales growth in the Dodge business has been in the double digits. For the past three quarters and the very strong finish in the fourth quarter and they enable them to finish with a double digit OEM sales growth for the full year. Keep in mind OEM wins today, pay in the aftermarket and MRO dividends for years to come. With fiscal 2025 behind us, let's spend a little time talking about 2026. In terms of end markets, we believe commercial arrow is poised for growth of at least 15% driven primarily by the expected year over year production growth at Boeing and Airbus. Last year had its challenges for Boeing, but the company appears to be making substantial progress under its new CEO and recent trends are very encouraging to the industry. On the defense side, we are copying against substantial growth of nearly 22% in fiscal 2024 and 16% in 2025. Even against this high bar, we believe we can grow the business, at least in the mid to high single digits and likely more. We are adding additional capacity at several plants to accommodate very strong demand from a wide array of defense OEMs. Certainly this led by growth in submarines coupled with broader strength across RBC's portfolio in support of the government's proposed trillion dollar defense budget. For the industrial businesses and markets are a little tougher to predict due to the short term impact of interest rates, tariffs, consumer spending and general GDP expansion or not. In any event, we feel the MRO side of the world that supports the staples of human life, such as food and beverage, grain, aggregate, mining, forest products, sewage treatment, provide a steady demand for our North American product offering and are essential to keep the wheels of American industry turning and America's population fed. The last topic I want to touch on before handing the call over to Rob is the balance sheet. Last quarter, we crossed the two turn mark from a net leverage perspective and this quarter we pushed it even lower. In total, we allocated $275 million to debt repayment in fiscal 2025, taking our trailing net leverage to 1.7 turns exiting the year. We remain well poised to pursue additional accretive M&A. And the team has been very active in keeping the pipeline full of ideas. Looking ahead, fiscal 2026 is poised to be another strong year for RBC. The backdrop for growth across all of our channels is substantial and our team is laser focused on executing at the highest level. With that, I'd like to turn over the call to Rob Sullivan for more details.

Thank you, Mike. As Dr. Hartnett indicated, this was another strong quarter for RBC. Net sales growth of .8% drove gross profit growth of .5% with more than 110 basis points of expansion. The quarter benefited from strong manufacturing performance coupled with the structural drivers of our gross margin performance, including dodged energies, increased utilization of our aerospace and defense manufacturing assets, and the continuous improvement focus on the RBC ops management process. Industrial gross margins during the quarter were .7% and aerospace and defense margins were 41.5%. On the SG&A line, we continued our investments in future growth. This included a combination of investments in personnel costs and back office support, including IT. This resulted in adjusted EBITDA of 139.8 million, up .4% year over year, and an adjusted EBITDA margin of 31.9%, which is up 50 basis points year over year. Interest expense in the quarter was 12.8 million. This was down .8% year over year, reflecting the ongoing repayment of our term loan, as well as a lower rate on the loan as the SOFR base rate has moved lower. The tax rate in our adjusted EPS calculation was 21.7%, reasonably consistent versus last year's 21.2%. Altogether, this led to adjusted diluted EPS of $2.83, representing growth of .6% year over year, an impressive result given the choppiness in commercial aerospace customer production schedules and the macroeconomic softness in the industrial economy. Pre-cash flow in the quarter came in at $55 million, with conversion of 76% and compares to $70 million in 113% last year. The lower conversion rate this quarter was primarily the result of timing around accounts receivable, driven by year over year increased sales. As usual, we used the cash generated to continue to de-leverage the balance sheet. We repaid $82 million of the debt during the quarter, taking our total year to date debt reduction to $275 million. All in, this is another strong year for pre-cash flow generation, and all of that cash flow is applied to debt reduction. This takes our trailing net leverage to 1.7 turns, leaving our balance sheet in an increasingly attractive position to pursue additional accretive M&A. Looking into the first quarter, we are guiding to revenues of $424-434 million, representing year over year growth of -6.8%. That guidance embeds an operating environment that's fairly similar to the fiscal fourth quarter. On the margin side, we are projecting gross margins of -44.75 for the quarter, which at the midpoint would be up against the full year fiscal 2025 performance. Our focus on continuous improvement on the margin line marches on, and can be seen in our outlook for full year gross margin expansion of 50-100 basis points, which will likely be back half-weighted. This is inclusive of all tariffs at the current levels. We currently expect tariff pressure to be minimal, and believe we can mitigate the expected headwinds and still deliver margin expansion on a full year basis. Similar to prior years, we expect to reinvest some of this margin expansion into fueling future growth through investments in the SG&A line. We expect other factors to be normal as well, including free cash flow conversion of 100%, adjusted taxes in the -23% range in capex, and the range of .5% of sales. In closing, this was another strong quarter for RBC, and we are poised for another strong year. We remain focused on leveraging our core strengths in engineering, manufacturing, and product development to drive both organic and inorganic growth, continuous improvement in operating efficiency, and high levels of free cash flow conversion. With that, operator, please open the call for Q&A.

Certainly. When I'll be conducting a question and answer session, if you'd like to be placed to the question queue, please press star 1 on your telephone keypad. You may press star 2 if you'd like to move yourself from the queue. One moment, please, while we poll for questions. Our first question is coming from Christine Lee-Wank from Morgan Stanley. Your line is now live.

Hey, good morning, everyone.

Morning, Christine.

So maybe first question on commercial aerospace, and we're starting to finally see a Boeing production rate move in that positive trajectory. So I guess I wanted to level set. Can you remind us, you know, when we actually get to, let's say, 50 per month for the 737 MAX and 10 per month for the 787. I mean, how much bigger is your commercial aerospace OE business at that point? And then also, when we think about margins, you guys have done an incredible job holding onto margins, even though production rates have been uncertain. When we get to that full run rate, how should we think about the margin opportunity?

Well, Christine, you asked some difficult questions, as usual.

And I'm hoping you're going to have some great answers.

Yeah, well, we're, you know, actually, you would be the person I would go to to ask when Boeing is going to get to the 50 a month. So, so right now we're hoping to see them get to the 38 number, which I think they're going to get to very, very soon, within a month or two. And then apparently they're pretty far along with the FAA on approving the the, what are their key metrics and which sort of turns on, turns on the next 10 planes for them. So, you know, we're thinking that it's going to be not too deep into calendar 26 before we start seeing, seeing plane builds in the upper 40s. You know, on that. Is that is that how you see it?

Yeah, I mean, I just looked at the May deliveries and we're only in the halfway part of May and they got to some pretty good production numbers. So I think I would agree with your assessment of the 38 is going to be very soon. But what I wanted to ask you is like, so when you do get to that, you know, 40s per month, or even, you know, eventually 50. I mean, how much bigger could your revenue be? Because you want a lot of ship set content for the max versus the NG that we didn't really see the full benefit of because of the disruption in production. So I just wanted to understand, could your Boeing commercial OE revenue be, you know, at this point, you know, 2X versus, you know, 2019. I just some sort of level setting numbers around that,

Mike. Okay, well, you know, let me, let me do a little math here and maybe come back at the other other end of the Q&A and I'll have my math done.

Sounds good. And then in the meantime, in industrials, I was wondering, I mean, you guys are very clear that this, the growth that you're seeing is from the improvement of, from the strategy of your team versus the end markets. Can you give a little bit more color on exactly what kind of initiatives you took and how much that provided you in terms of incremental growth versus end markets? And could you sustain your leadership in growth versus peers in this cycle?

Yeah, on the industrial side. Yeah, yeah, I think, I think, well, a couple of, couple of things there. I think, first of all, there's, there was some product lines that had service level problems that I noticed at Dodge that after we acquired the company and we started working on, working on and making it a priority with the Dodge folks to, to improve the, the service levels and the production capacity for certain products. And, and certainly they did that and, and the markets, market responded very well to that, to that initiative. I mean, that's, that's sort of the easiest thing to fix because of, you know, you don't have to worry about product development and testing and long cycle kind of, kind of things. So you really want to, you really want to get at, at the service level problems first. And then on the, on the longer cycle, they had, you know, Dodge had several products that were through the, through the test cycle when we acquired the business, but weren't, weren't capitalized or capitalization and, and wasn't encouraged. I think it was just, you know, they were busy selling the business for a couple of years. So things, priorities change. And so we were the benefit, benefactors or beneficiaries of, of that, of that business. And we were able to turn on some of those new products pretty quickly. And, and so that's, that's certainly accruing to, to the overall benefit. And then I think the third thing, there's, there's longer term opportunities that Dodge has that sort of are in the, in the pipeline right now that will take a little bit, a little bit longer to mature, but have, you know, some significant market, market positions once matured. So, you know, it's, it's overall a pretty healthy, healthy outlook for them.

Great. Thank you.

Thank you. Next question today is coming from Michael Tramoli from Cruise Security. Your line is now live.

Hey, morning guys. Nice results. Thanks for taking the questions. Hey, Rob, do you happen to, I know we'll get it in the queue. Do you happen to have the gross margins by segment for the quarter?

I did read them out in my script, but I will repeat them. The industrial gross margins were .7% this quarter and A&D was 41.5%.

Got it. And, and do we, how are we, I know you gave some color on 26. Any thoughts? I mean, I guess the gross margin expansion maybe seems a bit conservative, assuming we get the volumes. And I know that's, you know, still, still a bit of a wild card. Everything from Boeing sounding better. But if we get more margin expansion, you know, I'm assuming it comes on the aerospace and defense side. Is it fair to say there's more runway there?

Yeah, I think, you know, we certainly see a lot of runway. You can see the gap between A&D and industrial where A&D is today versus, you know, where it's demonstrated its ability in the past leaves us opportunity to expand with more throughput in the plants. We've spoken about some of the contract renewals that will come up late in the year and the increased volumes all kind of contributing. So we think that, you know, the gross margins in A&D certainly have some runway there. And as I mentioned, that expansion, you know, looks, looks like it could be back, back half weighted. Okay. 50 to 100 pips. Got it.

And then you guys gave some pretty good detail on 26 with, with, I'd say more of that contained to Aero. And I get the industrial environments, you know, probably a little bit more fluid and harder to predict. But I mean, if we kind of mash it together, you know, it sounds like the Aero side of the house can grow low teams. I mean, if you kind of imply low single, maybe mid single for industrial, are you guys comfortable with, you know, a 1.7 to 1.8 billion revenue kind of bogey for next year?

You know, I think we're really sticking to the, you know, the direct guidance for the next quarter, as we always do. We've offered some color on A&D for the full year. I'll go from there.

Okay. Last, last one, and I'll jump back in the queue. You talked about minimal tariffs impact. I mean, is there, is there any change in your thought process around kind of your sentiment or views on tariffs? I mean, the commentary last quarter, you know, I think it was, you know, talking about adding spice and fuel that would be strongly net good for the business. So is anything kind of changed around tariffs, ability to offset with pricing? Are you seeing any share gains, you know, as customers potentially rethink their supply chains looking for domestic sources?

Well, I, you know, I think short term, short term versus long term. I mean, short term, we have a certain supply chain and, and so on and so forth. So there's, there's a, you know, we've looked at it pretty, pretty closely and we think short term we're, you know, we're neutral on, for the most part on tariff impact. For the long term, I think it's, you know, depending upon the extent of the tariff, the larger the tariff, the more we're going to benefit. Just, just because there's going to be, there's going to be shortages everywhere and, and, you know, the right mix will find us. We won't have to search for it.

Got it. Understood. All right. Thanks, guys. I'll turn it back to McHugh.

Thank you. Next question today is coming from Steve Barger from KeyBank Capital Markets. Your line is now live.

Thanks. Good morning. Mike, you talked about, or you talked about organic growth initiatives targeted at specific customers and programs. But I know the team is always in front of people. So is this an acceleration of existing programs or are you trying something new? And what does that look like?

Well, it depends on whether you're talking to A&D or industrial. I mean, obviously the way the A&D works, you're always in front of people with new programs. I mean, it's just, it's just the way, the way the business is working, you know, seems like it's always worked that way. Industrial, it's, you know, it's a little different. I think, I think Dodge has had pretty much over the years, a pretty, pretty fixed mix and in a well, well honed process. And so, you know, Dodge, we're taking a few additional steps to, to invigorate, you know, their OEM business. And, and that's having modest, modest, modest, modest, modest, modest, modest, modest, modest, modest, modest, modest, modest, modest, modest, modest, modest, modest, modest, modest, modest, modest, modest, modest, modest, modest, modest, modest, modest, modest, modest, modest, modest, modest, modest, modest, modest, modest, modest, modest, modest, modest, modest, modest, modest, modest, modest, modest, modest, modest, modest, modest, modest, modest, modest, modest, modest, modest, modest, modest, modest, modest, modest, modest, modest, modest, modest, modest, modest, modest, modest modest, modest, modest, modest, modest, modest, modest, modest, modest, modest, modest, modest gains. And is

that targeting more wallet share with existing customers? Or are you casting a broader net for new customers?

Both, absolutely both. And we're doing some things to make it easier for new customers to do business with us. And we're opening up some geographic regions that have been, where we really didn't have significant representation or customer reach in the past.

Guy, you may have talked about this in the past, but what are the new regions that you're really targeting?

Well, I think there's the most productive regions are in North America. The more exotic and higher risk regions are elsewhere in the world. You know, South America, India, Mexico, places like that.

Got it. And then last question. I know capacity utilization is always a tricky question because of productivity initiatives and your ability to run over time or add a shift. But if you're going to post double digit growth in A&D and we also get a firmer industrial production cycle, how much flexibility do you have in the plants to support that higher growth right now?

Well, I'm glad you asked that question. Because, you know, we've got a lot of plants and the demand on these plants isn't the same on all the plants. I mean, some plants are overloaded with demand. Some plants are just well balanced. And so on the A&D side of it, it looks like about 70 percent of our revenues, plants that make 70 percent of our revenues, are way over demand. Demand is in capacity or are not balanced. There's far more demand than there is capacity. So, you know, that's, you know, we've had what double digit growths for the last couple of years in those businesses. And inevitably, we kind of hit a capacity ceiling in some of those businesses and we're working our way through that ceiling now. And so that's capital, machinery, labor. So we're adding labor, we're adding hours, and we're adding machinery. And actually, we're moving machinery from plants that are balanced and can do with less machinery to plants that are where demand is in capacity is constrained. So all that is taking place as we speak. And so we're going to grow our throughput in those A&D plants through this year. And it's going to continue next year. It's going to be the same process, at least for the next two years. We're just going to be chasing this for a while. But that's a great thing to have to deal with. I mean, of all the problems I have, if you call this a problem, I'll take it.

Yeah, for sure. That's a great problem to have. Did you, maybe I missed it. Did you throw out a capex number for the year?

It'll be in the 3 to 3.5%.

Got it. Okay, thanks.

Thank you. As a reminder, that's star 1 to be placed into question Q. And if you're on speaker phone, maybe it's necessary to pick up the speaker before pressing star 1. Our first question, our next question, I should say is coming from Pete Skibitzky from Alabama, but your line is not live.

Hey, good morning, guys. Morning, Pete. Maybe one for Rob. Hey, Rob, I think you said the free cash conversion target for 26 is one time. You had this big receivables build here in the fourth quarter. I don't know how fast you expect to collect on that, but it seems to the extent you can collect on that, since it's pretty large, that maybe one times conversion is kind of conservative, unless you think as you grow here that fourth quarter will be kind of ongoing receivables delays. But I was wondering if you could give some color on that.

Yeah, I mean, one time is always our target. Hopefully we'll beat it. We are continuing to grow sales, so there will always be some of that pressure, but we're going to do what we can to exceed that.

Okay, fair enough. And then just on the CapEx profile, I guess maybe Mike, if this reconciliation bill goes through and defense budgets grow well into the double digits, is that going to kind of set off another CapEx cycle for you guys, just given that's a pretty big step up in potential demand there? I don't know what this current cycle kind of enables you for capacity-wise.

Yes, it will. And we actually are planning a five-year kind of outlook for a couple of our plants and sort of what do we need for capital and how do we adjust? Because when you look at what the growth is going to be in some of those plants over the next five years, given sort of the A&E profile that we're looking at, we have to act now to get ahead of it.

Okay, okay, makes sense. So last one for me just on, I think Steve kind of asked about the SG&A investments. I think I might have missed some of it. Could you just update us on the timeline in terms of, have you reached kind of peak incremental spend on some of the incremental IT investments and the Indian investments that you guys wanted to do? And so I don't know if we should expect some operating leverage at this point going forward or are you still kind of growing that investment and maybe what's the return timeline on that?

Yeah, so we're continuing to invest in the growth. Obviously, we're trying to grow the company at a healthy rate, but the key takeaway would be, you know, of that margin expansion that, you know, we're seeking, we're always aiming to see a good amount of that fall down to the EBITDA line. That's the best way I'd frame it.

Fair enough. Thanks, guys.

Thank you. Next question is coming from Ross Sparenbeck from William Blair. Your line is not live.

Good afternoon,

guys. You're

up.

Hey, on the defense guidance, I believe you guys said, you know, mid to high field digit plus for 2026. It seems like a, you know, generally broad range there. So it'd be great to just gauge the sensitivity and what's informing the lower end versus the high end. Is it more just ramping capacity or is it kind of just customer timing?

It's probably ramping capacity, Ross. It's, you know, we've we've are working our way through some pretty substantial contracts with with the majors, both claim builders and the defense agencies or the, you know, the defense OEMs. And so a lot of them are already booked or in process or late to book because of administrative delay on the other side. But it's it's it's definitely it's it's definitely going to be a capacity challenge for us.

Okay, I understand. And then maybe it's on industrial. Can you just elaborate on some of the dynamics there on the strength on the OEM side? You know, the Dodge being strong, but maybe just on the RBC Classic.

Hey, Ross, it's Rob Moffitt. Just looking at the end markets, mining metals was our strongest. We've had a couple of decent quarters there. Aggregate and cement was number two and warehousing and logistics is an end market that has turned very nicely positive for us. Those are those are our top three contributors to

growth. Okay, so I mean, you get the sense that the worst is kind of in the rear view here. Oil and gas is still expected. Second half, 25. So maybe it's more just a mix when we think about the first quarter margin gross margin step down. It just strength in the OEM for RBC Classic.

You talk about the you talk about the Q1 versus Q1 last year, I think I would just point to the fact that, you know, Q1 last year was an exceptionally strong margin quarter. We had a nice product mix there, coupled with some expedites that were flowing through, if you recall. So, you know, I just kind of remind you that the overall implication for the Q1 margin is above the full year. Fy 25 performance.

Ross, if you're thinking in terms of growth, we do still have headwinds in the oil and gas segment, the semi semiconductor end markets still think that those are going to turn. If you look at the strong performance that we had in industrial, it's a lot of the things that Dr. Hartnett talked about earlier, organic growth initiatives, really strong performance at Dodge, you know, picking up pockets of market share in different places. It's the things that we focus on during ops that are driving that more so than markets. Awesome. Thanks,

guys. Thank you. Next question is coming from Jordan Leonis from Bank of America. Your line is now live.

Hey, good morning. Thanks for taking the question. I appreciate the comments on the debt repayment, but could you guys give a sense of what you're seeing for M&A pipeline? Has anything changed in the market for you or what's coming up that you'd be interested in?

Well, on M&A, you know, I would say that, first of all, we've been working hard looking at alternatives and lots of alternatives. And so we've been busy. And synergy is important to us in our aspects of selection, and we're very selective. But we're spending considerable amount of time here on candidates. And it does it does it does burden. It's a big burden for the staff. Let's put it that way. We think progress is being made. We think the balance sheet is in good position to do something if we need to act. And if we do see something we like, we'll act quickly.

Thank you so much.

Thank you. Next question today is coming from Christine Lee White from Morgan Stanley. Please proceed with your problem.

If I wanted to get back into Mike, you know, to check on your math, I know you're really good at it. So I just want to make sure you didn't forget. But. I

thought I was hoping you'd forget.

This is

the way my math. This is the way my math came out. And I'll let you do it by I did it by 10 plane built rate for the 737. Okay. A 10 plane rate annually would add about 24 million. For the 777. A five plane rate would add 24 million. And for the 320. A 10 plane rate would add 12 million.

Great. Wow, these are great numbers. And then. So thank you. So I'll do some number crunching and follow up with you offline. But I was wondering, maybe since I'm back in queue, another follow up on the previous question on M&A. You know, speaking to some industry folks, I actually think that a lot of people are really surprised what you're able to do with a Dodge asset. Right. I mean, who would have thought that by now, you know, industrial, your industrial business would be a few hundred basis points higher on gross margin than your aerospace defense business. So I guess, you know, looking at you've always had faith in your team and you've had a pretty structured way of training all your employees. But I think, you know, that that kind of performance really surprised the industry and Dodge. So I was wondering now that you have seen the size, I mean, doubling your revenue and getting over a thousand basis points in margin within 18 months of ownership. These are all pretty spectacular accomplishments really on operations. I was wondering, does that give you more confidence? Does that widen your aperture regarding deals you could look at assets that you think you can turn around or extract more value from? And also, you know, when you look at your priorities for for the balance sheet at one point seven times that that you but you do have a lot of runway. And, you know, with your organic business, you don't need to acquire. But can you give us some sort of guidance regarding what kind of assets would be interesting to you? Is it more industrial? Is it more aerospace defense? Like, are there some sort of milestones or markers either in size or proprietary content that we can kind of follow? Thanks.

Sure. Well, certainly on the aerospace defense side, we, you know, we like we like companies that that sell sell to our customers because, you know, the customers in that in that sphere are very sophisticated. The terms and conditions are very difficult and time consuming to negotiate. And so if you if you have a customer where you've negotiated your terms and you you have you understand you understand how the customer makes decisions and you you know, you know the people with the account and and how they think. And and you have the account covered with with marketing people that are there have been servicing the account for a decade. You feel pretty comfortable in in a company that that looking at a company that services that account, too. So you can quickly identify what the company's position is, what you know what its reputation is, you know, how it goes to market, how it prices its product, so on and so forth. So that's part of the profile that we really we really like. And that also would add scale at that account to us, which, which overall helps in in your statement of work. So, so that checks a big box, and we like that box checked. And when it comes to making things. You know, we have. I don't know. I'm probably more than a thousand engineers that know how to make stuff and and they're you know, they're very good at manufacturing processes. So our ability to absorb the manufacturing world for the target is very, very high ability. And so if they're doing something that we can improve, we can identify it right away. And we can we can bring in the right specialist that deals with that particular aspect of manufacturing and sort of off we go. And and so there's nothing for us. There's nothing scary about it. And and it's and it takes a lot of risk off the table at the same time. You know, the account, you know, the manufacturing, you know, you know, the plan efficiencies, you know, what you can do to improve the plan efficiencies. You know, maybe what what what the pricing mechanism is different than maybe you would want you would price. So, you know, you can you can see a long way when when there's candidates that have that kind of a profile.

Great, thank you.

Thank you. We reach out of our question and answer session to turn the floor back over for any further closing comments.

OK, well, I have no no more comments. I think I'm pretty much commented out, but I appreciate everybody participating today. And and there was a lot of good questions. I hope we gave you good answers and we look forward to talking to you later in the summer. Thank you.

Thank you. That does conclude today's teleconference webcast. We just connect your line at this time and have a wonderful day. We thank you for your participation today.