Twin Disc, Incorporated (NASDAQ:TWIN) Q4 2025 Earnings Call Transcript

Twin Disc, Incorporated (NASDAQ:TWIN) Q4 2025 Earnings Call Transcript August 21, 2025

Twin Disc, Incorporated misses on earnings expectations. Reported EPS is $0.1019 EPS, expectations were $0.26.

Operator: Thank you for standing by. At this time, I would like to welcome everyone to the Twin Disc Inc. Fiscal Fourth Quarter and Full Year 2025 Conference Call. [Operator Instructions] I would now like to turn your conference over to Jeff Knutson. You may begin.

Jeffrey S. Knutson: Good morning, and thank you for joining us today to discuss our fiscal 2025 fourth quarter and full year results. On the call with me today is John Batten, Twin Disc’s CEO. I would like to remind everyone that certain statements made during this conference call, especially statements expressing hopes, beliefs, expectations or predictions for the future are forward-looking statements. It is important to remember that the company’s actual results could differ materially from those projected in such forward-looking statements. Information concerning factors that could cause actual results to differ materially from those in the forward-looking statements are contained in the company’s annual report on Form 10-K, copies of which may be obtained by contacting either the company or the SEC.

Any forward-looking statements that are made during this call are based on assumptions as of today, and the company undertakes no obligation to publicly update or revise these statements to reflect subsequent events or new information. During today’s call, management will also discuss certain non-GAAP financial measures. For a definition of non-GAAP financial measures and a reconciliation of GAAP to non-GAAP financial results, please see the earnings release issued earlier today. Now I’ll turn the call over to John.

John H. Batten: Good morning, everyone, and welcome to our fiscal 2025 fourth quarter conference call. We closed out the fiscal year with our strongest quarter, an outcome that reflects our team’s consistent execution and resilience in dynamic markets. I’m incredibly proud of how our global organization continues to deliver even in the ongoing global uncertainty, including tariff-related pressures and shifting demand patterns. For the full year, we delivered top line growth of 15.5%, with sales reaching $340.7 million, supported by a broad-based demand and strong order activity across our portfolio. Although EBITDA margins were hampered by the impacts of nonoperating and noncash items, such as currency translation loss and stock-based compensation, we continue to generate consistent free cash flow of $8.8 million.

In addition to our strong performance, this year marked a pivotal step forward in modernizing our operating model. We now manage the business across 4 product line business units led by Tim Batten in his new role as Executive Vice President, where he’ll be leading our global business operations. This supports our agile global manufacturing and supply chain structure that allows us to scale effectively, seamlessly integrate acquisitions, all without expanding our fixed infrastructure. We also made meaningful progress on our strategic priorities including the integration of Katsa and Kobelt. The acquisitions have expanded our capabilities, broadened our customer base and strengthened our long term platform for growth. I am pleased with our progress to date and look forward to reaping the full benefit from this combined platform.

Turning to the fourth quarter. We closed the year with our strongest performance in the fiscal year as sales grew 14.5% year-over- year to $96.7 million. While organic net sales declined due to reduced activity in oil and gas markets, this was more than offset by continued strength in Marine and Propulsion Systems as well as ongoing demand for higher content transmissions. Order momentum remained healthy, and our 6-month backlog increased to $150.5 million, reflecting strength in government and hybrid marine programs. Looking ahead, we remain confident in our growth trajectory, particularly in the defense market, we are well positioned to capture robust end market demand, fueled by increased defense spending across both U.S. and NATO budgets.

Given this increased activity, we are seeing strong momentum for our marine transmissions, controls, and steering systems, propulsion systems, gearboxes and transfer case products across geographies as we serve as an approved supplier to end users such as the U.S. Army, U.S. Navy and NATO. This is well illustrated in our total backlog as orders related to defense products grew approximately 45% versus fiscal ’24, now making up nearly 15% of our total backlog. With $50 million to $75 million in defense-related pipeline, we have significant runway for growth. As we further capitalize on end market strength, execute on our clear path to broaden geographic reach and remain committed to disciplined capital deployment strategy, we are poised to build on this year’s momentum and continue delivering value for our shareholders.

Let me walk you through the segment performance. In Marine and Propulsion Systems, sales grew 12.2% in the fourth quarter to $53 million, supported by robust activity in workboats, government contracts and Veth’s ELITE thrusters products. Notably, we are seeing strong momentum for orders for unmanned U.S. Navy vessels in the 300- to 400-foot range, autonomous platforms built for extended patrol periods. These orders signal a meaningful shift towards larger, persistent defense platforms and validate the investments that we’ve made in our marine transmissions and controls technology. And our backlog for Veth thrusters in the U.S. continues to grow both in Workboat and Cruise vessel segment. Kobelt contributed as expected in this quarter, primarily within our commercial marine controls business, which is now fully integrated into our systems offering.

Marine aftermarket also remained strong, driven by continued utilization of military and commercial fleets. Aftermarket revenue for the quarter totaled $4.7 million in Marine alone with a margin contribution exceeding 60%. In land-based transmissions, revenue rose 4.5% year-over-year to $26.1 million in the fourth quarter. While oil and gas shipments into China declined, activity in North America and Asia remains stable. ARFF demand stayed strong. And in addition, we continue to see action on our new E-frac systems with our first meaningful order for this segment, representing 14 units totaling $2.3 million. This validates our technical offering and supports a more optimistic medium-term outlook. Aftermarket sales in this segment were down year-over-year at $3 million compared to $5.5 million in the fourth quarter of fiscal ’24, reflecting a lower rebuild volumes tied to idle fleets.

Our Industrial segment saw strong sequential growth with fourth quarter sales rising 35% sequentially to $13.1 million. Year-over- year, our industrial products grew 82% in the fourth quarter. The improvement was broad-based across customers and supported by strength in Katsa industrial parts business. When excluding this acquisition, the Industrial segment grew 13% compared to the prior year period. Lufkin also had a strong quarter, shipping $4.1 million in the fourth quarter versus $3.1 million average run rate. While the recovery is still early, we’re encouraged by positive order trends and share gains. Our 6-month backlog rose to $150.5 million, up both sequentially and year-over-year. This reflects healthy demand and the benefit of the Katsa and Kobelt acquisitions.

At the same time, we have continued to reduce inventory levels as a percentage of backlog, highlighting our focus on working capital discipline. In closing, I’d like to also address our long-term strategy before Jeff takes us through the financial overview. I remain committed to our strategy built on global footprint optimization, operational excellence and targeted acquisitions. Our recent purchases of Katsa and Kobelt are clear examples of how we’re broadening engineering capabilities and market reach by unlocking meaningful synergies across our operations. These strategic additions complement our core expertise and accelerate our entry into higher-value uses, reinforcing our ability to deliver sustainable growth for customers, employees and shareholders.

A second cornerstone of our plan is to lead the industry in hybrid and electrification solutions. We are intensifying investment in controls and systems integration because these technologies multiply both content and margin potential on every vessel or vehicle we serve. Growing customer interest in hybrid and fully electric propulsion, particularly within marine applications, positions us to capture new opportunities and our advanced Veth and Katsa platforms give us a tangible head start. We are already winning hybrid projects in commercial and defense markets and ongoing R&D and investment will ensure we remain the partner of choice as sustainability requirements tighten worldwide. Operational resilience is equally critical. Our flexible global manufacturing network and organizational streamlining allows us to shift production swiftly in response to geopolitical dynamics and tariff regimes, preserving both service levels and cost competitiveness.

We have quantified tariff exposure of roughly 1% of cost of goods sold and have pricing actions, alternative sourcing and surcharge mechanisms in place to offset any further impact. At the same time, a robust backlog of approximately $150 million provides clear visibility while continued inventory discipline and efficiency projects underpin margin expansion. Looking further ahead, we remain steadfast in achieving our 2030 objectives of about $500 million in revenue, 30% gross margins and consistent free cash flow conversion of at least 60%. The cash we generate will be reinvested in organic growth and further bolt-on, ensuring we stay on the front foot while maintaining a prudent balance sheet. With that, I’d like to now turn it over to Jeff to discuss the financials.

Jeff?

Jeffrey S. Knutson: Thanks, John. Good morning, everyone. During the quarter, we delivered $96.7 million in sales for Q4, up 14.5% from $84.4 million in the prior year period. As John mentioned earlier, fiscal 2025 sales totaled $340.7 million compared to $295.1 million last year, an increase of 15.5%. On an organic basis, adjusting for M&A and FX, revenue declined approximately 8.4% in Q4, driven by reduced oil and gas activity, particularly in China. As a reminder, our fiscal fourth quarter factored in the full impact of the Kobelt acquisition. For the full year, revenue increased 1% on an organic basis, driven by strength in the company’s land-based transmission markets with healthy demand in marine and propulsion systems.

Fourth quarter gross profit rose 19.7% to $30 million, and gross margin improved 130 basis points to 31%, supported by a favorable product mix and onetime cost capitalization adjustments in our Katsa inventory. Excluding the impact from this onetime inventory adjustment, gross margin was 28% for the quarter. For the full year, gross profit was $92.7 million or 27.2% of sales. ME&A expenses were $24.6 million in Q4 compared to $20.4 million last year. The increase reflects the addition of Katsa and Kobelt as well as ongoing wage and professional services inflation. Fiscal full year ME&A was $82.4 million versus $71.6 million in fiscal year ’24. Net income attributable to Twin Disc for the quarter was $1.4 million or $0.10 per diluted share compared to $7.4 million or $0.53 per diluted share last year.

Full year net loss was $1.9 million or $0.14 per share compared to net income of $11 million or $0.79 per share in fiscal ’24. EBITDA was $7 million for the fourth quarter and $19 million for the full year versus $11.8 million and $26.5 million respectively in the prior year. This fiscal 2025 full year EBITDA swing reflects nonoperating or noncash impacts of currency translation losses, stock-based compensation, inventory adjustments, defined pension, amortization and other items as shown in our press release issued earlier today. From a geographic perspective, sequential sales growth was led by the North American market, where strong demand from Veth products contributed to an increased share of quarterly sales. On a year-over-year basis, the European market captured a greater proportion of total sales, reflecting the contributions from our recent acquisitions.

For the full year, we delivered double-digit growth in both European and Asia Pacific regions. The overall sales mix shifted toward Europe, while Asia Pacific represented a smaller proportion of total sales compared to the prior year, in part due to regional market dynamics and our targeted expansion efforts in Europe. We remain focused on disciplined capital management throughout fiscal ’25. Net debt increased to $15.3 million, primarily reflecting our strategic acquisition of Kobelt. We ended the year with a cash balance of $16.1 million, down 19.7% from the prior year. We generated positive free cash flow of $8.8 million for the year and maintain a conservative net leverage ratio of 0.8x and made a challenging environment. Entering fiscal ’26, we are well positioned to navigate macroeconomic uncertainty with flexibility and discipline.

Our balance sheet supports our ongoing evaluation of targeted bolt-on acquisitions that complement our innovation strategies and expand our product portfolio. As stated previously, gross margin improved by approximately 130 basis points to 31% in the fourth quarter when compared to the prior year period, driven by the continued benefits of cost reduction initiatives, enhanced operational efficiencies and a more favorable product mix. When removing an inventory adjustment for Katsa, we achieved gross margin of 28%, demonstrating sequential improvement. As we enter fiscal ’26, we remain focused on sustaining this positive momentum by further optimizing our cost structure and driving margin-accretive growth across our portfolio. Strengthening profitability remains a key priority as we execute on our strategic initiatives.

Our capital allocation priorities remain unchanged, grounded in a balanced approach to growth and value creation. We continue to pursue disciplined M&A opportunities that align with our core strengths in marine and industrial technologies, while also investing in organic initiatives such as R&D, geographic expansion and innovation, particularly in hybrid and electrification solutions. With a healthy net leverage position and a clear strategic focus, we are well positioned to drive long-term sustainable growth. I’ll now turn the call back to John for his closing remarks.

John H. Batten: As we look ahead to fiscal 2026, I’m encouraged by the foundation we’ve built. Our backlog is strong. Our global operations are aligned, and our leadership team is focused. We’re beginning to see the returns on our efforts to streamline and modernize our business across commercial, operational and strategic dimensions. Demand in global defense art transmissions and hybrid solutions continue to outpace expectations. Our ongoing collaboration with major OEMs and system integrators places us at the forefront of next-generation propulsion and power solutions. Our focus remains on disciplined execution, profitable growth and long-term value creation for all stakeholders. That concludes our prepared remarks. Jeff and I are now happy to take your questions.

Q&A Session

Operator: [Operator Instructions] And your first question comes from the line of David MacGregor with Longbow Research.

David Sutherland MacGregor: Can I just start with the backlog. Obviously, very strong $150 million. You talked about the acquisitions as a contributing factor, you talked about defense. Can you just walk us through maybe where else across the mix we maybe seeing particular strength? Is it broad- based, or is it particularly in these 2 verticals? And — just a little more detail there would be helpful.

Jeffrey S. Knutson: Yes. I think it’s at the 2 biggest. I think there’s strength across the portfolio. I think even within oil and gas, we’re starting to see some good improvements. I think we noted it’s not in the year-end backlog, but we did get some initial E-frac orders as we rolled into fiscal ’26. So quarter-over-quarter, most of that improvement was in the markets that you point out, so defense. Propulsion continues to be really strong globally. Pleasure craft, the Veth operation continues to look at sort of record levels quarter-over-quarter. So yes, a lot of strength in the markets.

John H. Batten: David, I’d only add, this is John, with the part that’s beginning that’s really picked up, I would say, in the last quarter is the defense. And it’s — for us, it’s been in the marine — for the U.S., it’s been in the marine area. And in Europe, it’s been in land-based transmission products. For NATO, all-wheel drive vehicles.

David Sutherland MacGregor: And just maybe can you elaborate a little further around the defense. And I realize it’s historically been maybe a smaller part of the overall business, but it sounds like the growth prospects there are improving rather dramatically. Just talk about how you plan to manage that, and what the potential could look like?

John H. Batten: Well, it is basically making sure that we have the capacity to meet the demand. When we acquired Kobelt — sorry, when we acquired Katsa, in between the agreement and closing, Finland joined NATO and then Sweden joined NATO, and we’ve been blessed with approved supplier that is feeding a lot of the trucks in NATO and these programs are growing. So our #1 focus is making sure that we can meet the demand in Finland for these vehicles. And a lot of that’s going to entail what products we brought — when we acquired Katsa, it was for their capability and also their product line that they developed. They were a parts supplier. They had fantastic machining capability, but they were really in their infancy in supplying finished product like gearboxes.

It’s a big time now. So it’s going to be what can we take from Finland and assemble and build other places to make sure that we have the capacity to meet that, and we do. And so that is — it’s exciting because there’s a huge growth potential there as these vehicles — as more and more of these vehicles are built and the more contracts coming. So it’s going to be what do we offload, and we have facilities depending on what the product is, what the tariff structure is, but we can move assembly to Belgium, to Italy, to Texas to meet that demand. And same for the marine transmissions for the U.S. Navy. This is really ramping up. And we have — right now, we have — we believe we have the capacity in Racine, but that’s easily something that we could offload into Lufkin if we need help.

David Sutherland MacGregor: Good. Sounds pretty encouraging. I wanted to maybe just ask you, you talked about some of the commercial synergies and the cross- selling. You noted in the press release that integration efforts are creating more commercial opportunities. I was just wondering if you could expand on that.

John H. Batten: Yes. So it’s 2 different scenarios really with so Veth — when we acquired Veth, they had sales agents around the world, didn’t really have distributors, what we would think of as distributors in our industry, something like what Twin Disc would have or Caterpillar or Cummins, where you have dedicated workshops, train mechanics, spare parts on the shelf locally. And that’s what we brought to Veth. And we had a delay in the growth because of COVID and then we had supply chain issues. But now that those are mostly behind us, we’re really starting to see the Veth product take off in other geographies. And I think right now, North America might be, if it’s not #1, it’s #2 in their backlog. And it’s across — it’s river cruise ships, it’s workboats, and so — it took some time, but now it’s starting to happen, and we’re starting to see that momentum build in Asia.

We’ve had projects in Australia. It’s the same thing we’re going to do with Katsa, very similar, had 1 external agent, and so we’re starting to bring that global support to their product line, and we’ll be integrated 1 of their hydraulic PTOs into our product line. And so they had no real distribution around the world. Kobelt does have a lot of dealers around the world, and this is going to be a different integration and synergy because some of their dealers, we feel could be very influential in helping us sell some of our products. And vice versa, we think in some regions where we have company-owned subsidiaries in Asia and Australia. We think we’re going to be very strong in growing their products in different regions. But we’re really excited about both acquisitions, bring new products, new customers, but it’s something that we can plug into our system, particularly with Kobelt.

Their industrial brake line, which they’ve had some good success with in parts of North America and different applications, we think that we can really take that business globally.

David Sutherland MacGregor: We talked before about, as you sort of enter some of these new markets, there’s pressures on margins just associated with getting the brand and the product and the engineering reputation seeded in that market. But the expectation, of course, was that once you were in that market, you established yourselves that you’d start to see some margin improvement. Do you feel like at sort of an inflection point there, and as you enter into 2026, these businesses sounds like they’re getting well seeded and well situated that you’re going to see that margin improvement, or is that maybe a little longer to come?

John H. Batten: Yes, I do. I think we’ve — the supply chain disruption it lingered as far as suppliers not making it in different areas, and you’re having to change quickly. And it’s not really about the price, it’s — we just need this part. So we’re going to pay what we have to pay to get the parts, so we can ship the product. That’s starting to dissipate. We’re also — we have a large section of our supply in India, and we’re moving suppliers in India to get a lower price. And so the acquisition in Katsa is absolutely helping us lower the way they manufacture gears is a very effective way to do it with the bar stock and internal heat treat. So that is something that we’re learning. They’re doing more of our internal gear supply for other operations.

So I do think we’re at an inflection point. We’re also being a little bit more disciplined in products that we don’t want to make any more and get those out of our portfolio and every product has the right to die and we’re being more vigorous on that and focusing on the products with where we can succeed and have a higher margin.

David Sutherland MacGregor: Just a couple more for me quickly. The marketing, engineering and administration that was up in the quarter. I’m mindful that some of this is variable, of course, but what level of revenue growth can you support with the existing ME&A spend?

Jeffrey S. Knutson: I think we have — that infrastructure can support well north of $400 million. I think we don’t see the need to add any significant investment at that layer. Most of what the increase within the quarter was sort of a full run rate of Kobelt. We have some purchase accounting amortization flowing through there. So I would say Q4 wouldn’t be what we would expect a run rate to be going forward. And I think the run rate that we’ll have will support from $400 million to $500 million without any really meaningful increase.

David Sutherland MacGregor: Good, good. And then I guess, just looking forward to 2026, your sort of high-level thoughts around the balance sheet and free cash flow. How are you thinking about leverage, how you’re thinking about cash flow conversion in ’26?

Jeffrey S. Knutson: Yes. I mean we stated our target is to deliver 60% of EBITDA to free cash flow. I think we’ve done a reasonable job in the second half of fiscal ’25, getting back on track in terms of generating free cash flow. I think we have inventory at a pretty high level as we enter fiscal ’26 given the orders on the books and the demand that we’ve got coming at us. I don’t see that continuing to grow. I think we’ll get some good cash flow coming out of inventory as we work through the year. Maybe it stays flat, maybe it comes down. But I think we’re on a good growth pattern. So I think operating cash will improve in the year. We like to see our leverage ratio come down because we want to do more Katsa and Kobelt type of actions. We’ve seen what that can do for the company. So that’s a priority for us. And part of that is getting the balance sheet back to a position where we can do that comfortably.

David Sutherland MacGregor: I guess that sort of begs the question, is ’26 a year of integration or additional acquisitions possible?

Jeffrey S. Knutson: I mean I think they can both happen, right? I think our integration team is well along the path of all the activities that John mentioned, getting the training done, getting the product in the right channels with the right partners. But in the meantime, I think we continue to look for what the next step is. I wouldn’t say we’re going to continue to do 2 acquisitions a year. That was a bit of an acceleration for us. But I think we want to continue working that side of the equation and making sure we’re developing both sides of the growth puzzle.

John H. Batten: Yes, I guess, David, let me just follow on a little bit with some color. Yes, so when — we have the businesses aligned in verticals. And the industrial business is being led by a guy from Katsa, and the transmission business is being run by a guy out of Racine, where most of the transmissions. Marine is being run by a gentleman, who — he doesn’t have any plans to reporting directly to him, but he has multiple products. He has products from multiple plants in Propulsion. He’s got the whole plant there. And Kobelt right now is being run as a separate business unit as we really haven’t just begun the integration. But I would say we haven’t done a lot of acquisitions in our history. And when we did Veth, we quickly ran into COVID, and it was, I would say, a little bit more difficult integration.

But once we got through that, it integrated pretty quickly. But my point is that we have — we think we have Katsa pretty well integrated after a year of getting them on SEC reporting, getting the IT and everything buttoned up. But I’m really impressed with how quickly we’ve been able to integrate them operationally. And now we have 1 gentleman there who’s running our industrial business. And the other person there is — he has the traditional manufacturing operations, Twin Disc manufacturing operations reporting to him in Finland. So this 1 — this has just been — for us, I think, it’s been a huge success, Katsa.

Operator: [Operator Instructions] And we have another question from Simon Wong of Gabelli Funds.

Simon T. Wong: Looks like you — between the 2 acquisition and the growth in defense, you’ve done a good job in diversifying away from the oil and gas business. So I guess my first question is how big is your oil and gas business now for the company?

Jeffrey S. Knutson: Yes. I mean it was a difficult year as we — I think we pointed out in terms of demand coming out of China for a variety of reasons. So it was down. As a percent of revenue for the year, it was around 8%, which compares — that’s about half of what it was a few years ago in terms of percent of total revenue. So part of that is growing, obviously, the other pieces of revenue, but revenue within that particular market was also down year-over-year.

Simon T. Wong: Yes. It’s definitely a difficult year. It’s encouraging to see or hear that you got your first order for the E-frac. If I recall correctly, you were — your offering in E-frac is pretty differentiated from what’s on the market. Can you remind me what’s your E-frac offering is?

John H. Batten: Yes. So we used our standard geared transmission, spaced off to 7600. And the big difference is that — so you have just a regular motor — electric motor, and you shift the speed with our transmission versus doing a variable frequency drive. And we think that our solution is not only less expensive, it’s more robust and will last longer. And it’s a better solution to drive the pump. And yes, so we — thankfully, we’ve worked very hard at this, and we got our first spread order after the fiscal year closed. But I’d also draw out, Simon, that we have — we’ve been working on modifying the 7600 as well to work with some pure natural gas engines. So we think that that is also going to be a big opportunity for us in the coming fiscal year and particularly more in fiscal ’27. But yes, we think this was probably the lowest — looking back and looking forward, fiscal ’26 is probably going to be our lowest year for oil and gas as a percentage of sales.

Simon T. Wong: Would you think oil and gas can go back to as a percentage of total?

John H. Batten: I could see it getting back to 15%.

Simon T. Wong: Okay. Great.

John H. Batten: Yes. There’s a lot — there’s more activity. I mean, we have orders for North America. We have orders for South America. We have orders for China. So we think the outlook is certainly better than it was in fiscal ’26.

Simon T. Wong: Okay. All right. And then just a housekeeping question really quick. What’s your CapEx for ’26?

Jeffrey S. Knutson: Yes. I think with the additional acquisitions and Katsa being a very machine-intensive kind of operation, it will be a little bit higher than what we’ve been seeing. So I think in the $12 million to $14 million range.

Operator: And another follow-up question from David MacGregor with Longbow Research.

David Sutherland MacGregor: Yes. Can you hear me okay?

John H. Batten: Yes.

Jeffrey S. Knutson: Yes, David.

David Sutherland MacGregor: I just wanted to come back on with 1 quick one, and we’ve talked before about some of the businesses in North America that maybe are playing at a lower margin level, but that there’s a fairly good opportunity to improve margins there? And I guess I’m just thinking 2026, it sounds like you’ve got very strong order book across lot of these businesses. Is the margin improvement at this point really just volume related and the order book would portend a pretty substantial improvement there, or are there other factors that we should be thinking through?

John H. Batten: Yes. Well, it’s certainly volume related. It is — as I’ve said, Katsa has shown that they are more effective in certain gear production costs, so moving gears to Katsa and lower — more focus on different lower-cost countries and then moving within suppliers in India. So we have all of that going on. And then certainly, the CapEx that we’ve put in, in TwinCo, which is our North American operations and in Belgium. So it’s a lot of everything. It’s focused on lean, it’s focused on part quality. There are several initiatives that are making that up. But certainly, volume — there’s no substitute for volume and that really helps.

Operator: I’m seeing no further questions. I would now like to turn the call back over to John Batten for closing remarks.

John H. Batten: Thanks, Demi. And again, thank you for your continued interest in Twin Disc. If you have any follow-up questions, please contact either Jeff or myself, and we look forward to speaking with you in November for our fiscal ’26 first quarter call. And Demi, we’ll turn it back over to you.

Operator: Ladies and gentlemen, that concludes today’s call. Thank you all for joining. You may now disconnect.