Q2 2024 Enpro Inc Earnings Call

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Operator: Hello and welcome to the EnPro Q2 2024 earnings conference call and webcast. At this time, all participants are in a listen-only mode. If anyone should require operator assistance, please press star zero. A question and answer session will follow the formal presentation. You may be placed into Question Q at any time by pressing Star 1 on your telephone keypad. As a reminder, this conference is being recorded. It's now my pleasure to turn the call over to James Gentile, Vice President, Investor Relations. Please go ahead, James.

Hello, and welcome to the <unk> Q2, 'twenty 'twenty four earnings conference call and webcast. At this time all participants are in a listen only mode. If any what you require operator assistance. Please press star Zero a question and answer session will follow the formal presentation. He may be placed in the question queue at any time by pressing star.

One on your telephone keypad.

As a reminder, this conference is being recorded.

Now my pleasure to turn the call over to James Gentile, Vice President Investor Relations. Please go ahead James.

James Gentile: Thank you and good morning everyone. Welcome to EnPro's second quarter 2024 earnings conference call. I will remind you that our call is being webcast at EnPro.com, where you can find the presentation that accompanies this call. With me today is Eric Vaillancourt, our President and Chief Executive Officer, and Joe Bruderek, our Executive Vice President and Chief Financial Officer.

James Gentile: Thank you and good morning, everyone. Welcome to <unk> second quarter 2024 earnings Conference call I'll remind you that our call is being webcast at <unk> Com, where you can find the presentation that accompanies this call with me today is Eric Vaillancourt, our President and Chief Executive Officer, and Joe brought Eric Executive Vice President and Chief Financial Officer.

James Gentile: During today's call, we will reference a number of non-GAAP financial measures. Tables reconciling the historical non-GAAP measures to the comparable GAAP measures are included in the appendix to the presentation materials. Also, a friendly reminder that we will be making statements on this call that are not historical facts and that are considered forward-looking in nature. These statements involve a number of risks and uncertainties, including those described in our filings with the

James Gentile: Also note that during this call, we will be providing full year 2024 guidance, which excludes unforeseen impacts from these risks and uncertainties. We do not undertake any obligation to update these forward-looking statements. It is now my pleasure to turn the call over to Eric Vaillancourt, our President and Chief Executive Officer.

Eric Vaillancourt: Thanks James, and good morning everyone. Thank you for joining us today as we review our results for the second quarter and provide an update that includes the narrowing of our outlook for full year 2024. We performed well in the second quarter, with strong profitability in the ceiling technology segment and sequential improvement in both sales and adjusted segment EBITDA in advanced surface technologies. Consolidated adjusted EBITDA margins exceeded 27% for the first time.

Eric Vaillancourt: We are pleased with the team's agility this quarter as profitability shined, even as soft demand persists in certain areas of the business. Again this quarter, our people worked very hard to achieve these results that demonstrate the compelling balance inherent in the EnPro portfolio and our ability to execute well in a variety of macroeconomic scenarios. We would like to thank our 3,500 colleagues across the company for their outstanding contributions and commitment to the company's ongoing performance. Now on to the second quarter performance.

Eric Vaillancourt: After my review, I will turn the call over to Joe for a more detailed discussion of our results and our outlook for the balance of 2024. Operating performance in the ceiling technology segment was excellent during the second quarter. At AST, we delivered sequential improvement in both sales and adjusted segment EBITDA. While the semiconductor market remains soft, particularly for semiconductor capital equipment, we have seen pockets of continued growth and the beginnings of recovery.

Eric Vaillancourt: We continue to believe the low point of AST segment performance is behind. In ceiling technologies, adjusted segment EBITDA margin exceeded 35%, strength in nuclear and aerospace, as well as strategic pricing actions and the contribution from AMI, more than offset weakness in commercial vehicle OEM and Asian industrial markets. Food and pharma sales increased during Q2, although demand remains choppy, particularly in Europe.

Eric Vaillancourt: Favorable mix, cost controls, and supply chain effectiveness were also contributing factors to the record quarterly results in this segment. Our continued positive momentum and profitability in ceiling technologies reflects the underlying strength of this segment, which is focused on applied engineering differentiation, compelling aftermarket characteristics, incremental investments in organic growth, and continuous improvement opportunities have created a foundation for profitable growth. Additionally, we continue to pursue strategic opportunities in adjacent markets that build upon our core competencies in safeguarding critical environments. We are very pleased with the performance of the ceiling technology segment, and our outlook remains constructive. In the advanced surface technology segment, revenue declined 12% year over year.

James Gentile: Continue to pursue strategic opportunities in adjacent markets that build upon our core competencies and safeguarding critical environment.

James Gentile: We are very pleased with the performance of the sealing technologies segment and our outlook remains constructive.

Speaker Change: And the advanced surface technologies segment revenue declined 12% year over year adjusted segment EBITDA margins of 21, 7% improved 160 basis points sequentially.

Eric Vaillancourt: Adjusted segment EBITDA margins of 21.7% improved by 160 basis points sequentially. Strategic Growth Investments and Operational Improvement Initiatives proceed as we continue to position AST for long-term growth. Areas of continued growth, such as in our precision cleaning business, and a brighter outlook for both our coating and refurbishment solutions and certain critical and chamber tools give us confidence that the AST segment will grow sequentially for the remainder of 2024. Long term, we are focused on executing our multi-year strategy to drive growth in AST's attractive markets with key capacity expansions and efficiency improvements that showcase our technological and process advantages that provide our customers with essential value in the semiconductor supply chain.

James Gentile: Strategic growth investments and operational improvement initiatives proceed as we continue to position <unk> for long term growth.

James Gentile: Areas of continued continued growth such as in our precision cleaning business and a brighter outlook for both our coding and refurbishment solutions and certain critical end chamber tools gives us confidence that the AFP segment will grow sequentially for the remainder of 2024.

James Gentile: Long term, we are focused on executing our multiyear strategy to drive growth in asps as attractive markets with key capacity expansions and efficiency improvements that showcase our technological and process advantages that provide our customers with essential value in the semiconductor supply chain.

James Gentile: Our balance sheet remains in excellent strength in excellent shape as we continue to pursue a variety of growth opportunities both organically and through strategic acquisition.

Eric Vaillancourt: Our balance sheet remains in excellent shape as we continue to pursue a variety of growth opportunities both organically and through strategic acquisition. We are pleased with our second quarter and our first half performances, despite well-understood macro headwinds. We expect strong execution and disciplined capital allocation to continue as we drive our value-creating strategy forward.

Joe Bruderek: Thank you, Eric, and good morning, everyone. Let's now go into the details of our second quarter performance. In the second quarter, sales of $271.9 million decreased 1.8% compared to the prior year, and organic sales declined 5%, driven primarily by lower results in the AST segment due to ongoing softness in semiconductors. Second quarter adjusted EBITDA of $74 million increased 14% compared to the prior year period. The adjusted EBITDA margin of 27.2% increased 380 basis points.

Joe Bruderek: Favorable mix, strategic pricing, lower corporate expenses, and continuous improvement initiatives offset soft demand in certain markets, while other markets experienced resiliency and growth. Growth initiatives on new products and key capacity expansions continued, along with ongoing continuous improvement discipline and supply chain efficiency. Corporate expense of $10.5 million in the second quarter of 2024 was down from $15.6 million a year ago. Last year, corporate expense was unfavorably impacted by approximately $4 million due to the mark-to-market valuation of awards under long-term equity incentive plans, compared to a favorable impact of approximately $1 million in the current quarter.

Joe Bruderek: In 2023, we made changes to the structure of incentive plans that will mitigate the volatility of corporate expenses due to share price performance for the remainder of this year and eliminate variability thereafter. Adjusted diluted earnings per share of $2.08 increased almost 14%, largely driven by the factors that drove the adjusted EBITDA improvement year on year. Moving to a discussion of segment performance, ceiling technology sales of $184 million increased by over 4%, and organic sales were essentially flat.

Joe Bruderek: Strength in the nuclear and aerospace markets, the contribution from AMI, strategic pricing actions, and improved sales in food and pharma offset deep declines in commercial vehicle OEM revenue and soft general industrial demand in Asia. Our aftermarket positions in this segment continue to show stability as the critical nature of our innovative products and solutions differentiate us. For the second quarter, Adjusted Segment EBITDA increased more than 16%. Strategic pricing, supply chain gains, the contribution from AMI, improved aftermarket mix, and 80-20 discipline drove the segment's profit growth during the period. The adjusted segment EBITDA margin was 35.5% in the second quarter, up 360 basis points.

Joe Bruderek: For the first half of 2024, Ceiling delivered adjusted segment EBITDA margins above 33%. As we have said since the beginning of the year, we expect a return to normal seasonal patterns in the segment this year, where we generally see a stronger first half. That said, underlying demand remains firm in our domestic and European general industrial market.

Joe Bruderek: New products like Auto Torque in our commercial vehicle market and new platform wins in commercial aerospace are incremental drivers for the segment's future performance. We also expect continued strength in our space exploration and sustainable power generation markets. We are excited about the various levers our team will pull to profitably grow the transformed ceiling technology segment.

Joe Bruderek: Second quarter sales of $88.1 million were down around 12% year over year and up modestly on a sequential basis. While soft semiconductor capital equipment spending persisted during the second quarter, we saw continued growth in certain areas, such as our precision cleaning solutions business, supporting leading-edge nodes. Additionally, we saw more consistent signs of recovery in advanced coatings and refurbishment solutions as the second quarter progressed. Market forecasts from a variety of sources suggest that, while the overall semiconductor market is in a strong secular growth position long term, the timing and magnitude of an overall recovery in capital equipment spending continue to evolve and move to the right.

Speaker Change: Idea of sources suggest that while the overall semiconductor market is in a strong secular growth position long term the timing and magnitude of an overall recovery in capital equipment spending continues to evolve and move to the right.

Joe Bruderek: In the second quarter, adjusted segment EBITDA decreased around 20% year-on-year. Adjusted segment EBITDA margin was 21.7% down from last year, but up 160 basis points sequentially. Volume decline was the primary driver of the year-over-year reduction in profitability.

James Gentile: In the second quarter adjusted segment EBITDA decreased around 20% year on year.

James Gentile: Adjusted segment EBITDA margin was 21, 7% down from last year, but up 160 basis points sequentially.

James Gentile: The volume decline was the primary driver of the year over year reduction in profitability.

Joe Bruderek: Throughout the downturn, we have invested in targeted capacity expansions that will position AST well as the semiconductor market resumes its growth trajectory. In addition, we are pursuing a number of continuous improvement and optimization initiatives that will better position the segment long term. Overall, we are pleased with the AST segment's performance in a challenging market environment. The segment has consistently maintained adjusted segment EBITDA margins in excess of 20% during the slowdown. Turning to the balance sheet and cash flow.

James Gentile: Throughout the downturn, we have invested in targeted capacity expansions that will position as well as the semiconductor market resumes a growth trajectory.

James Gentile: In addition, we are pursuing a number of continuous improvement and optimization initiatives that will better position the segment long term.

James Gentile: Overall, we are pleased with the segment's performance through a challenging market environment the.

James Gentile: This segment has consistently maintained adjusted segment EBITDA margins in excess of 20% during the slowdown.

James Gentile: Turning to the balance sheet and cash flow.

Joe Bruderek: Our net leverage ratio, following our purchase of AMI in January, stands at approximately two times trailing 12 months adjusted EBITDA. Pre-cash flow in the first half of 2024 was $35.5 million, down from $66.5 million last year. Timing of working capital and, to a lesser extent, higher cash tax payments compared to last year were the primary drivers of the year-over-year reduction.

James Gentile: Our net leverage ratio following our purchase of <unk> in January stands at approximately two times trailing 12 months adjusted EBITDA.

Joe Bruderek: For the year, we continue to expect pre-cash flow to exceed $100 million. However, when we started the year, we expected capital expenditures to approximate $60 million. Some of this growth spending will push into next year based on supplier lead times and delivery schedules. We continue to be excited about our pipeline of organic growth opportunities as we invest to drive long-term, high-margin growth. We have strong financial flexibility to execute our strategic initiatives, both organically and through acquisitions that broaden our capabilities and return capital to shareholders.

Joe Bruderek: In the second quarter, we paid a $0.30 per share quarterly dividend, with year-to-date payments totaling $12.7 million. In a steady state, assuming no acquisition activity in the second half, we expect to exit 2024 at a net leverage ratio around 1.6 times. Moving now to our current view of guidance. Taking into consideration all the factors that we know at this time, we are narrowing our full year 2024 earnings guidance ranges.

Joe Bruderek: And we also now expect total EnPro sales to be approximately flat compared to 2023, versus our previous revenue guidance of low to mid-single-digit growth. The primary factor in adjusting our sales view is the magnitude of the expected recovery in semiconductor capital equipment in the back half. We now expect adjusted EBITDA of between $260 million and $270 million, and adjusted diluted earnings per share to range from $7.00 to $7.60, versus our previous view of $260 million to $280 million and $7.00 to $7.80, respectively. The normalized tax rate used to calculate adjusted diluted earnings per share remains at 25%, and shares outstanding approximate $21 million.

Joe Bruderek: In AST, we expect sequential improvement in the back half driven by continued growth in our advanced node cleaning business. A Better Outlook for Coatings and Refurbishment, and Some Demand Improvement for Certain Critical In-Chamber Tools. In ceiling technologies, we continue to see firm demand in certain shorter cycle product lines and a return to normal seasonality in the segment where the first half is slightly stronger than the second half. We continue to see strong backlog and positive mix, which will help offset the continued weakness in commercial vehicle OEM demand. I will now turn the call back to Eric for closing comments.

Eric Vaillancourt: Thanks Joe. We are delighted to have reported strong profitability in the face of demand weakness in certain of our markets. Our balanced portfolio generates attractive margins and cash flow returns with several opportunities to advance our strategy and drive long-term high-margin growth. Every day, we deliver critical, leading-edge solutions for our customers that safeguard critical environments and applications that meaningfully impact our lives. Thank you again for joining us today. There is no better time to be a part of EnPro. We will now welcome your questions.

Operator: Thank you. We will now be conducting a question and answer session. If you would like to be placed in the question queue, please press star 1 on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star two if you'd like to remove your question from the queue. Once again, that's star one to be placed in the question queue. Our first question is coming from Steve Ferazani from Sidonian Company. Your line is now live.

Stephen Ferazani: Morning, Eric, and Joe. Appreciate all the detail on the call. First, I want to ask about the strength of the ceiling margins. Obviously, I mean, you noted some of your end markets are challenged, yet you still are generating, you're still expanding those margins. So the question really is, how sustainable is that? How much of that is mix that may reverse?

Eric Vaillancourt: Thanks, Steve. I'll give you a big, broad answer. The answer is we execute very, very well in a variety of ways. We expect to hold on to price. We had some supply chain savings. Our mix and volume are very good. You see, our commercial vehicle OEM sales are down, but the mix shift has been typically from 60-40 aftermarket to OEM to about 70-30 right now. So with much better aftermarket margins, it's propping up that commercial vehicle business. Thanks, Steve. We have strong businesses that perform well in a variety of environments, and it really is just really good execution. Our focus on aftermarket sales continues to lead the way.

Joe Bruderek: Yeah, I'll add, Steve, you know, we performed extremely well, as you noted, in the second quarter with ceilings with margins, you know, at 35%. We think we're sustainableably in that 30% plus or minus a little bit range. The second quarter has historically been our strongest quarter. We talked about seasonality where the second half will be slightly softer than the first half, and that will come with slightly lower margins. But in general, we feel really good about the execution that our teams are delivering, and we think we're sustainable in that 30% plus or minus range for ceiling margins.

Stephen Ferazani: Can you give a sense of how much new products might be contributing? I know you've been pretty excited about AutoTorque, and I'm assuming you get better pricing on some of these. Is that a meaningful contribution, or is it, given the size of that whole market, not necessarily that material?

Eric Vaillancourt: It's incremental, but I wouldn't call it material. That business will ramp up over time. We're limited by how much we can produce today, but the market is excited for the product, and next year will be even.

Joe Bruderek: Yeah, and we continue to invest in future opportunities for growth and audience. We're very pleased with early indications there, but as Eric noted, it's incremental at this point. I'd also like to add, you know, we've been very successful in certain key critical components in both sustainable power generation on the nuclear and natural gas side and also in commercial aerospace platforms and the incremental kind of growth that we're seeing in space exploration.

Stephen Ferazani: Are those better margins and markets?

James Gentile: In the natural gas side and also in commercial aerospace platforms and incremental kind of growth that we're seeing.

James Gentile: And space exploration.

Speaker Change: Are those better margin end markets.

Joe Bruderek: Generally, yes, and as we've kind of transformed the segment. You know, we just want to kind of press where we're strongest. We want to continue to invest where we have the best advantages.

Speaker Change: Okay.

Speaker Change: Generally yes.

Speaker Change: And as we've kind of transformed the segment.

Speaker Change: We just wanted to kind of press, where we're strongest we want to continue to invest where we have the.

Speaker Change: The best advantages to can to kick up the growth rate a little bit.

Speaker Change: And show a really strong best in class margins.

Eric Vaillancourt: I guess we got a nice order for our wave.

Speaker Change: So we've got a nice order for wave flow this quarter.

Speaker Change: Not meaningful in any ways in terms of size, but meaningful in the sense that we're getting the product accepted into the market.

Eric Vaillancourt: And again, you know, the two-thirds aftermarket position in this segment is a governing factor that, you know, we're super excited about.

Speaker Change: And again, the two thirds aftermarket position in this segment is.

Speaker Change: A governing factor that.

Speaker Change: We're super excited about.

Stephen Ferazani: Excellent. If I could turn briefly to AST before I turn it over,

Speaker Change: Excellent.

Speaker Change: If I could turn briefly to ask to you before I turn it over.

Speaker Change: In terms of the guidance I mean, we've all heard some of the higher profile earnings calls this quarter and I know you sort of cited market sources for the.

Stephen Ferazani: In terms of the guidance, I mean, we've all heard some of the higher-profile earnings calls this quarter. And I know you sort of cited market sources for saying the recovery might be a little bit slower to the right. But can you give a sense of specific customer conversations, whether they have changed, and whether the conversations have been more around timing versus the actual recovery?

Eric Vaillancourt: I would say that if we're thinking about kind of the underlying where we're focused is to kind of execute on where we're strongest, and you know, I think less about customer conversations and more about kind of what's happening as the semiconductor industry has continued its recovery after almost a couple of years of pretty significant de-stocking. You've seen memory prices increase substantially, which is driving underlying market growth statistics for some of those external sources.

Eric Vaillancourt: But underlying capacity utilization is still light. So as, you know, capacity gets absorbed, semiconductor capital expended spending generally follows, and that, you know, where we're seeing that pricing dynamic on units kind of drive industry statistics higher, that capacity utilization variables are still a little bit slower to recover. Unknown Attendee Not just in the longer term, you have, you know, very strong positions and new platforms. We continue to invest in where we're strongest.

Unknown Attendee: Unknown Attendee Any update on...

Eric Vaillancourt: It's just a little bit to the right. We're seeing some build plans a little bit to the right with customers, but that's it. Nothing out of the ordinary. It really is coming down to capacity utilization, just being a little slower.

Stephen Ferazani: Fair enough. Great. Thanks, everyone.

Operator: Thank you. As a reminder, that's star number one to be placed in the question queue. Our next question is coming from Ian Zaffino from Oppenheimer. Your line is now live.

Operator: Hey, good morning, guys. This is Isaac Sellhausen on for Ian.

Isaac Sellhausen: Thanks for taking all the questions. Just to follow up on AST, could you just touch on trends you've seen moving past the second quarter? Sounds like you've seen some improvements sequentially in a few areas that you noted. I guess have things started to turn the corner yet as far as any positive inflection on the capital equipment side? I know you just commented on that, but maybe if you could just touch on some of the growth areas that you've seen sequentially. Thanks.

Joe Bruderek: Our cleaning business is doing very well and has throughout the whole cycle. So it's grown basically every quarter. So that continues to be a safe source of strength.

Eric Vaillancourt: Our coatings business is starting to recover a little bit. I would call it green shoots where we're getting some new orders here or there. We also see some of our in-chamber parts picking up a little bit of momentum. But again, it's just a gradual recovery. So it's not a hockey game.

Joe Bruderek: A little slower than we would have liked, but consistent, and we're still very well positioned for long-term growth. Once we get through this recovery, I look for things to be very good.

Isaac Sellhausen: Okay, understood. And then as far as the growth investments and sort of the continuous improvement initiatives that you've talked about in the segment, could you just remind us again what those entail? And then as far as the investments you've made in Asia and the US, sort of where we are with those investments as well.

Eric Vaillancourt: Our Arizona investment is just about ready to come online. We may even see a little bit of revenue this year, which will be earlier than expected. But it won't be significant.

Eric Vaillancourt: It'll be testing and ramping up, if you will. We also invested in Singapore. So we're invested in key markets for expansion, and we're well positioned there in both markets, just waiting for business to take off there. In terms of continuous improvement efforts, it's really just the EnPro operating system. It's not... I don't... To me, it's just basic blocking and tackling.

Eric Vaillancourt: When you look at what we do in ceiling technology, we do the same thing in AST; we just haven't owned those businesses for as long. So what you see is a little bit of facility consolidation; you're seeing some machining being moved around for lean activities, better utilization of people, better utilization of equipment, and narrowing our footprint a little bit. So it's a little bit of everything. It's not just about one thing

Eric Vaillancourt: There's a little bit of price, a little bit of supply chain savings. It's just basic good execution. And that team is getting the EnPro way, if you will, and will continue to improve over time.

Isaac Sellhausen: Okay, thank you very much. Best of luck.

Operator: Thank you. Our next question today is coming from Jeff Hammond from Key Bank Capital Markets. Your line is now live.

Jeffrey Hammond: Morning, Jeff.

Jeffrey Hammond: Just, I mean, maybe to put a finer point on AST sequential improvement, just, you know, should we look at 2Q to 3Q as being similar to 1Q to 2Q, or is it a little bit stronger than that?

Joe Bruderek: Jeff, as we talked about coming out of the first quarter, right, we expected really slight improvement second quarter over first quarter. I think we'll see a little bit more gradual than that going into the back half of the year, where we continue to see kind of mid-single digit quarter over quarter improvement through the second half of the year. Definitely more gradual than it looked like coming into the year, but still, you know, sequential improvement quarter over quarter through the rest of this year.

Joe Bruderek: We continue to see good performance as we see our cleaning and refurbishment business moving into advanced nodes, concentration there, continued strong growth through the cycle, and as Eric talked about, some of our refurbishment work and in-chamber tools are starting to pick up a little bit here and there, but again, it's just more gradual versus, you know, a strong bounce back and strong recovery in any given period.

Jeffrey Hammond: Okay, that's helpful. And then just in the ceiling, I think we've been hearing, you know, PMI weakening and kind of softening the US short cycle. You know, maybe outside of a truck, it doesn't really seem like you're seeing that. Maybe just, you know, talk about the U.S. short cycle and what you're kind of building in for the back half.

Eric Vaillancourt: We're not seeing that at this point, Jeff; we're building in our normal seasonality. If you look at our seasonality over time, usually about 52% in the first half, 48% in the second half.

Speaker Change: <unk>, 52% in the first half 48 in the second half.

Eric Vaillancourt: And that's what we're building into the model. We're still very strong in nuclear, still strong in space. So there are some good things there. The mix and commercial vehicle is also part of it. Our demand is still pretty strong. So right now, we're just building a normal seasonality.

Speaker Change: That's what we're building into the model were still very strong and nuclear still strong in space. So there's some good things there the mix and.

Speaker Change: Conversable commercial vehicle is also part of it our demand is still pretty strong.

Speaker Change: Right now, we're just building a normal seasonality.

Joe Bruderek: Yeah, and I would add we're not, you know, seeing any significant inventory destocking or stocking in any direction. Our order demand is in line with distribution and demand, and, you know, things still feel pretty firm right now as we head into the second half.

Speaker Change: I would add we're not seeing any significant inventory.

Speaker Change: Destocking, you're stocking in any in any direction.

Speaker Change: Our order demand is in line with distribution and demand and.

Speaker Change: Things still feel pretty firm right now as we head into the second half.

Jeffrey Hammond: Okay, and then just last one on CapEx, I think you said you thought 60. What do you think that number is? And I guess anything that you fall short of, I'd assume, you know, falls into 25.

Speaker Change: Okay, and then just last one on Capex I think you said you thought <unk>. What do you think that number is and I guess anything that you fall short I would assume.

Speaker Change: <unk> falls into 'twenty five.

Joe Bruderek: Yeah, I mean, we have a really strong pipeline of opportunities to invest in from an organic growth standpoint in both segments. We've talked about that this year. And heading into the year, we were executing towards the $60 million. It just looks like some of that spending may leak into next year a little bit, plus or minus a little bit. And it's just timing of execution on the supply chain side and our suppliers' ability to get there.

Speaker Change: Yeah, I mean, we haven't really strong pipeline of opportunities to invest in for an organic growth standpoint in both segments.

Joe Bruderek: So, yeah. Yeah, get the equipment to us at the right time. So, you know, we're still extremely committed to those projects and feel really excited about the long-term growth prospects we're investing in. It's just the timing of that spend is going to most likely leak into 2025 a little.

Jeffrey Hammond: Okay. Perfect. Thanks, guys.

James Gentile: Thanks, Jeff. Thank you. We've reached the end of our question and answer session. I'd like to turn the floor back over to James for any further closing comments.

James Gentile: Have a great day, everyone. Thank you for your interest.

Operator: Thank you. That does conclude today's teleconference and webcast. You may disconnect your line at this time and have a wonderful day. We thank you for your participation today.