Q1 2025 Chart Industries Inc Earnings Call
Good morning, and welcome to the chart Industries 2025 first quarter results conference call.
All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there'll be a question and answer session.
It's really is a supplemental presentation. We issued earlier. This morning, if you have not be used to in the release you may access it by visiting the site at Www Dot chart Industries' dotcom.
A telephone replay of today's broadcast will be available approximately two hours. Following the conclusion of the call and tell me eat 2025.
The information is contained in the company's press release.
Before we begin the company would like to remind you that statements made during this call that are not historical in fact are forward looking statements. Please refer to the information regarding forward looking statements and risk factors included in the company's earnings release and latest filings where the S. E T.
We undertake no obligation to update publicly everybody's any forward looking statements. During this conference call are friends just may be made to non-GAAP financial measures. Jesse you in understanding. This non-GAAP terms chart has posted reconciliations to the most directly comparable GAAP financial measures on the chart Industries' website.
We have provided a supplemental slide presentation to support our comments on this call can be accessed in the events and presentations section of the chart that site at Www Dot chart Industries' dotcom.
Speaker Change: Although I'll like to turn the conference over to Jill Evanko chart Industries' CEO you may begin.
Jill Evanko: Thank you Larry Good morning, and thank you for joining our first quarter 2025 earnings call. Joining me today is our CFO Joe will begin on slide four of the supplemental deck that was released this morning.
Jill Evanko: When compared to the first quarter of 'twenty 'twenty four orders of $1.32 billion increased 17, 3% and included the addition of Woodside, Louisiana LNG phase two.
Jill Evanko: What type of Louisiana, LNG is utilizing our Ips tomorrow process technology and associated equipment for their project.
Jill Evanko: As of the end of the first quarter of 2025, LNG makes up approximately a quarter of our backlog.
Jill Evanko: Sales of $1 billion organically grew six 6% and three of our four segments had an increase in sales.
Jill Evanko: Our gross margin of 33, 9% Mark the fourth consecutive quarter of gross margin above 33%.
Jill Evanko: By leveraging our 14.1% SG&A, we achieved a 190 basis point expansion in adjusted operating income margin, reflecting the last two years of cost synergies from the integration of howden dropping through to operating income.
Jill Evanko: Adjusted EBITDA of $231.1 million was 23, 1% of sales an increase of 80 basis points.
Jill Evanko: Reported adjusted diluted earnings per share.
Jill Evanko: Was 99 cents and adjusted was $1 86, an increase of 38, 8%.
Jill Evanko: Free cash flow was negative $81 million due to the uses of cash customary for our first quarter, yet still represented an improvement of $55 $6 million when compared to the first quarter 'twenty 'twenty four is free cash flow.
Jill Evanko: March 31, 2025, net leverage ratio was 2.91, and we reiterate our target net leverage ratio of two to 2.5 expected to be achieved in 2025.
Jill Evanko: Looking ahead, we continue to see positive demand trends as we start the second quarter of 'twenty five across the majority of the business and we'll share more information on that as well as an unanticipated gross impact from tariffs for which the team has been very nimble to address and take mitigating actions to date.
Jill Evanko: We also reiterate our full year guidance outlook for 2025, and we will share specifics around that shortly given our strong backlog as well as aftermarket service repair being approximately third of our business.
Jill Evanko: The first quarter 2025 order activity demonstrated continued broad based demand examples of this activity is shown on slide five.
Jill Evanko: Already mentioned Woodside to Louisiana, LNG phase two being booked in Q1 note that Woodside anticipates phases, three and four that are not yet in our backlog each of which is the same content as phase two.
Jill Evanko: First quarter 'twenty five orders in space exploration, H, LNG vehicle tanks, nuclear and marine where each greater than the full year 2024 orders in those end markets.
Jill Evanko: Highlights for the quarter include booking the first serial run order for each LNG vehicle tanks with Volvo Eicher, Hey, braised aluminum heat exchanger order with Honeywell U O P.
Jill Evanko: Tank and heat exchanger orders with a space exploration customer multiple railcars with a large industrial gas customer and an order with an E. D. A four three gas plants in Europe.
Jill Evanko: Additionally, our so orders were strong and included a carbon capture retrofit for a coal fired power plant.
Jill Evanko: As of now despite the many uncertainties associated with global tariffs and general economic conditions, we are not seeing demand declined.
Jill Evanko: Our commercial pipeline remains robust at approximately $24 billion, even as we convert larger projects in that pipeline into our backlog.
Jill Evanko: We have a meaningful pipeline also with potential large global LNG work that we believe has a significant likelihood to come into backlog in 2025, given natural gas and LNG demand in the current U S administration support for LNG.
Jill Evanko: Additionally, after market is holding up strongly across all of our regions to date.
Jill Evanko: Even with the strong orders in Q1 for nuclear Marine in space, We've already in April booked over $54 million for these three end markets.
Jill Evanko: Yesterday, we booked an order for nuclear application for power generation in Europe, which will utilize a series of our distillation recirculation and storage solutions.
Jill Evanko: Our customers' latest feedback for specific end markets reflects expectations for continued positive trends in marine metals mining energy.
Jill Evanko: Natural gas space exploration nuclear datacenters aftermarket carbon capture and hydrogen specifically in Europe generally water treatment general industrial LNG vehicle tanks, and food and beverage are inline with our original expectations that we had coming into 2025.
Jill Evanko: Finally, we are watching uncertainty in the industrial gas and hydrogen market specifically in the Americas.
Jill Evanko: We were pleased to see industrial gas orders via our Cts segment increased sequentially by 10% from Q4, 'twenty four to Q1 'twenty five.
Jill Evanko: In total we anticipate that our second quarter 2025 orders will be higher than our second quarter 2024 orders.
Jill Evanko: Datacenters in a I continue to be a driver for the growing energy demand globally, our existing portfolio of heat rejection cryogenic storage water treatment and digital monitoring to monitoring solutions as shown on slide six support datacenter customer needs.
Jill Evanko: We continue to see this end market as an area for near medium and long term addressable market for us since adding a dedicated data center commercial team member a couple of months ago, our pipeline of potential customers in this space has grown to over 50.
Jill Evanko: We are in discussions about partnerships to utilize our solutions with two specific companies beyond our existing customer base and the next 12 to 18 months commercial pipeline for datacenter, specifically has expanded to approximately $400 million of opportunities.
Joe: Joe will take you through Q1 specifics.
Joe: Slide seven is a summary of the first quarter compared to Q1 2024, and we will cover these in more detail starting on slide eight.
Joe: Slides eight and nine sure key financial metrics compared to the first quarter of 2024 from left to right on slide eight sales increased five 3% with a headwind from FX of one 3%.
Joe: Adjusted operating profit grew over 16%.
Joe: Adjusted operating margin of 19, 9% reflected further productivity actions favorable project mix as we execute backlog and benefits of increased efficiencies in our new manufacturing lines.
Joe: Additionally, Q1 was the first quarter since 2022 of specialty products gross margin above 30% and we.
Joe: We continue to leverage our SG&A on more throughput.
Joe: This contributed to adjusted EBITDA of over $231 million, an increase of nearly 9%.
Joe: We continue to take cost out via productivity initiatives and improved throughput via our chart business excellence as we track to our medium term 2026 goal of mid thirties gross margin percentage.
Joe: Turning to slide nine you can see gross operating and EBITDA margin expanded on both a reported and adjusted basis. In particular, we are continuing to leverage SG&A as we deliver more volumes through our shops, which is reflected in the 190 basis point improvement in adjusted operating margin.
Joe: Turning to slide 10 first quarter free cash flow was negative $80 1 million driven by typical first quarter cash outlays, including our senior secured notes interest payment timing.
Joe: Timing of insurance cost and bonus payments among other seasonal items.
Joe: As a reminder, the senior secured notes interest payment of approximately $79 million occurs in the first and third quarter of the year.
Joe: Our capital expenditures for 2025 are anticipated to be in the two to two 5% of sales range and we continue to focus on improving working capital.
Joe: Our capex is related to capacity for compressors and productivity and automation for more throughput in our shops.
Joe: First quarter 2025, working capital defined as net accounts receivable net inventory unbilled contract revenue accounts payable customer advances and billings in excess.
Joe: As a percent of last 12 months' sales was 16, 3%.
Joe: In February 2025, we shared that we signed a letter of intent with a new counterparty to replace our HVAC put call option that could have been exercised by ice squared capital on or after May one 2025.
Joe: New agreement was executed this week on April 30th.
Joe: Based on the put option triggers in the new agreement, which are substantially similar to the previous arrangement, we do not expect any balance sheet or cash impact with respect to such option prior to 2028.
Joe: We remain committed to and reiterate our financial policy as shown on the right hand side of slide nine until we are within our target net leverage ratio of two to two and a half we will not do any material cash acquisitions or share repurchases.
Joe: We reiterate that we anticipate ending 2025 with approximately $3 billion of net debt and achieve our sub two and a half target net leverage ratio in 2025 based on full year 2025 free cash flow generation between 550 and $600 million.
Joe: So let's move to slide 11 to discuss our Q1 'twenty five segment result.
Joe: Starting with cryo tanks solutions or Cts first quarter of 2025, Cts orders of $152 $6 million decreased four 2% when compared to the first quarter of 2024 is important to note that Cts orders as I mentioned earlier increased over 10% sequentially versus the fourth quarter of <unk>.
Joe: 'twenty 'twenty four resulting in the first sequential quarter increase in Cps backlog in a year.
Joe: <unk> first quarter 2025 sales of $153 million declined four 1% you grew 2% sequentially versus the fourth quarter.
Joe: C. P. S first quarter 2025, adjusted operating income margin of 12, 7% improved 220 basis points and reflects operational efficiencies as well as improved long term agreement contracts.
Joe: Going to heat transfer systems or HTS.
Joe: First quarter 2025, H T S orders of $227 million declined 7% when compared to the first quarter of 'twenty for HTS end market demand, including traditional energy LNG and Datacenters. All remained robust as is our commercial pipeline and we anticipate larger orders in these end markets for the balance of <unk>.
Joe: 2025.
Joe: <unk> sales of $267 $3 million increased five 4% driven by conversion of LNG in data center backlog.
Joe: HTS adjusted operating margin in the first quarter of 2025 was 25, 5%, a 460 basis point improvement compared to the first quarter of 'twenty 'twenty four is SG&A remains consistent even as we deliver higher volumes.
Joe: And specialty products for the first quarter of 2025 orders were $487 $7 million and increased 24, 6% when compared to the first quarter of 2020 for.
Joe: This included record orders in nuclear space exploration Marine and H LNG vehicle tanks that I described earlier.
Joe: Specialty product sales of $276 $1 million increased 16, 7% when compared to the first quarter of 2024, driven primarily by backlog conversion in hydrogen water treatment and power generation.
Joe: Specialty products adjusted operating income margin of 18, 9% grew 560 basis points compared to Q1, 'twenty four driven by backlog conversion greater efficiencies and leverage of SG&A.
Joe: Contributing to this with specialty products gross margin of 33% the first quarter that we achieved gross margin in specialty above 30% since 2022.
Joe: Finally repair servicing leasing which is a very strong segment for aftermarket service and repair.
Joe: RSO first quarter of 2025 orders of $454 $6 million grew 36, 1% when compared to the first quarter of 2024, driven in part by a retrofit order for a coal fired power plant.
Joe: <unk> sales grew one 3% compared to the first quarter of 2024, which was driven by timing of certain projects and field work being scheduled for post Q1.
Joe: <unk> adjusted operating margin of 32, 4% decreased 270 basis points when compared to the first quarter of 'twenty four as a result of lower spare sales in Q1, 2025, which we attribute to timing.
Joe: We expect in.
And continue to expect looking ahead ourselves gross margin to be in our normal mid 40% range for the year.
Joe: So continuing on with some more detail on how we plan to continue to grow ourselves.
Joe: Which is a third of our revenue approximately in half of our operating profit.
Joe: So let's look at slide 12, where you can see some of the statistics from the first quarter of 2025.
Joe: We expanded the number of service and framework agreements by 10, 7% since the end of 2024, and we have continued to leverage our e-commerce tools to drive more spares.
Joe: Using our website chart parts.
Joe: Specifically orders on the website increased 9% in Q1 25, when compared to Q1 'twenty four.
Joe: In addition to growing our installed base coverage globally, we see more and more opportunity for global coverage for screw compare compressors and axial fans in Asia Pacific as well as re recip compressors and steep turbot turbines in the middle East.
Joe: The Howden screw compressor brand is well known for reliability and quality and we are gaining installed base coverage with customers that are managing critical processes.
Joe: Retrofits of existing brownfield facilities is another area that we're seeing more interest from customers such as we saw with our fans retrofit at Cheniere Sabine pass facility and also a growing pipeline for more nitrogen rejection unit opportunities.
Joe: We've received very favorable feedback on our newly developed digital LNG dashboards, which utilize digital uptime with a customer in Europe that is testing needs at their LNG fueling stations, which were purchased from us as a newbuild. We see this area are in application as well as in geography, as a large meaningful opportunity for us in after <unk>.
Joe: Service and repair in particular on mobility applications.
Joe: These are just a few examples of the many ways within our own control that we can expand the aftermarket piece of our business with our capabilities for the supply of equipment extensive service network and L. T S. As solutions for our long term partners. Another reason that we're thrilled to have approximately a third of our business in the RSL segment.
Joe: On Slide 13, you can see our gross annual estimated impact from tariffs on the left hand side is approximately $50 million.
Joe: With eight months remaining in 2025 this would be a remainder of the year gross impact of estimated approximately $34 million. If none were mitigated based on known tariffs as of yesterday.
Joe: Our team has remained very agile and has taken already certain steps and has further steps underway.
Speaker Change: Sure a few of these which are certainly not all inclusive.
Speaker Change: We're leveraging our in region sources of supply and our global sourcing for best cost where possible.
Speaker Change: Taking advantage of our flexible manufacturing footprint across the globe continuing to deploy chart business excellence and focusing on cost structure and productivity.
Speaker Change: We're passing through certain cost increases as well as getting exemptions in certain regions for specific products. For example for a specific aluminum parting sheets do you have an exemption until September of 2025 to important material duty free.
Speaker Change: We are ensuring that we have more than one supplier for every input which supports our in region supply strategy.
Speaker Change: In our book and ship business, we issued a price increase in early April.
Speaker Change: And as a reminder, we are the only manufacturer of braised aluminum heat exchangers in the United States with the worlds two largest breathing furnaces.
Speaker Change: We have a strong air cooler and fan manufacturing footprint in the United States as well as the world's largest shop built cryogenic tanks in our Theodore Alabama facility, where this week, we shipped two of our large space exploration customers. There are 1700 cubic meter tanks.
Speaker Change: Specific to steel and aluminum most of our steel is sourced domestically and is not directly impacted.
Speaker Change: To the extent that U S market pricing goes up for domestic steel, we anticipate that we can pass that along to many of our customers.
Speaker Change: And then finally with specific actions to tariffs, we do purchase project based materials at the time of order as a general rule and so we have largely locked in our cost on steel and aluminum for existing backlog.
Speaker Change: So we have not yet seen it in our results we do recognize that we face an uncertain global environment for the remainder of 2025.
Speaker Change: Currently we reiterate our anticipated 2025 outlook as shown on slide 14 setting.
Speaker Change: Setting tariff related uncertainty aside we have not seen any material changes in the business.
Speaker Change: Our full year 2025 sales are anticipated to be in the range of $4 six 5% to $4 eight $5 billion. Our full year 2025 anticipated adjusted EBITDA range is 175 to one point to two 5 billion.
Speaker Change: As we have previously mentioned our second half 2025 will be higher than our first half of the year. This is driven by the timing specific project revenue and service work in our backlog exam.
Speaker Change: Examples of this include but are not limited to the timing of revenue on the nitrogen rejection unit that we booked a few months ago Woodside, Louisiana LNG.
Speaker Change: Timing of revenue specific mining projects that were booked in the first quarter and the timing of the larger backlog for space exploration and marine that came into our backlog in Q1.
Speaker Change: We continue to anticipate achieving our leverage ratio sub $2 five in 2025 as Joe described earlier, we are committed to our financial policy as we focus on operational cash generation for debt paydown to achieve that range as shown on slide 15. Once we are within our target net leverage ratio range, we will evaluate.
Speaker Change: Eight allocating capital in a conservative way and the category shown on the bottom of the slide. These include high ROI organic capital expenditures for value creation, including but not limited to expanding our aftermarket footprint and capabilities machine automation for additional throughput and innovation related.
Speaker Change: Two R&D activities.
Speaker Change: Additionally, we will consider other ways to return to shareholders inclusive of potential share repurchases, which we consider an investment in our company and it creates value when buying stock at a discount to fair value.
Speaker Change: We will also evaluate potential bolt on acquisitions that focus in the repair and services area specific technologies and high pressure low temperature capabilities.
Speaker Change: All of these are shown on slide 15 are underpinned with our commitment to a simplified balance sheet and capital structure.
Speaker Change: And finally to conclude our prepared remarks, I would like to thank our global one chart team members for all of their continued team efforts that drove our first quarter results.
Speaker Change: <unk>. Please open it up for Q&A.
Thank you and ladies and gentlemen, we will now begin the question and answer session.
Speaker Change: That's a question you May press star followed by the number one on your telephone keypad, if you're using a speaker phone. Please pick up your handset before pressing any keys do we do all your question you may do so by pressing star to cancel.
Speaker Change: And with that to your first question comes from the line of Scott Gruber with Citigroup. Please go ahead.
Scott Gruber: Yes, good morning.
Speaker Change: Hey, good morning, Scott.
Couple questions here. So first I'll just start with a kind of number one inbound we've got chart over the last month or so is just your exposure to China.
Speaker Change: Are you able to discuss the major sales verticals into China, I think it's okay. Thanks, and maybe some some mining equipment et cetera.
Speaker Change: What are your fabrication equipment in and overall your ability to shift to the U S based fabrication destined for China too to other locations.
Speaker Change: Yes.
Speaker Change: So when we specifically in China, we manufacturer, primarily cryogenic tanks and we can manufacture certain trailers are in addition to that our equipment on the housing side related to power generation, So industrial gas and power Gen are kind of the two main verticals in China that we manufacture in China.
Speaker Change: We have a de minimis amount that we actually import from other regions in particular in the United States into China in terms of intercompany activity.
Speaker Change: In terms of.
Speaker Change: Material inputs from the United States to China, we have that reflected in the gross tariffs number that you see on one of the slides there, which we've been able to over the course of the last week or so get certain exemptions on codes actually in China specific so we've seen that gross.
Speaker Change: Those are reduced by.
Speaker Change: About 40% in the last week with those exemptions on any inbound specific material. So ultimately industrial gas power Gen and manufacturing in China for China are primarily and then the inbound materialize I just described.
Speaker Change: I appreciate that color.
Speaker Change: And then it does look like the overall tariff impact.
Speaker Change: It was rather modest.
Speaker Change: Because of the manufacturer in China for China, but are there other moving pieces that are helping you offset it and then Keith.
Speaker Change: The overall EBITDA guide for the year are there is there is a segment where you see our margins you know maybe a little bit stronger than we originally anticipated or revenues across a.
Speaker Change: So I guess just some color on what gives you the confidence to hold the EBITDA in light of.
Speaker Change: The terrorists and risk around the general economic slowdown.
Speaker Change: Yeah. So let me start just with the kind of overarching aspect of the business that I think is really important for people to recognize that on the newbuild side, where we are very backlog driven.
Speaker Change: That's something that we've worked hard over the last five to seven years to really focus on and then the second piece being the amount of aftermarket service repair in the business today, which is very different than it was even three years ago. Those two things really help us with our with the visibility in the business when you look at.
Speaker Change: Tariffs, specifically I laid out some of the mitigating actions that we've been taking the team's been working really hard at this the in region supply strategy. I think is is a very important one as to why you see that gross number being manageable that really came as a result of the learnings that we had.
Speaker Change: In the 2021 supply chain crisis I'd I'd also point to this what we call flexible manufacturing strategy, where we make nearly all of our parts and more than one location that that stemmed from wanting to be close to customer projects, especially with larger equipment to give us advantage commercially but over the year.
Speaker Change: Or is that flexible manufacturing footprint in conjunction with the regional supply.
Speaker Change: Is proving to to help us in this current in this current situation.
Speaker Change: When you look at other things that <unk>.
Speaker Change: Give us more confidence in reiterating our guide L O I.
Speaker Change: I can't drumbeat enough our focus on the aftermarket service repair side of the business and that business is continuing to grow and margins are in line with what we have said our expectations are for 2025, and we see multiple other ways to continue to grow that particular segment.
Speaker Change: I was very pleased to see our specialty products gross margin at over 30% for the first time since Q3 of 2022 and you know that that was what we had been really working toward to get more efficiencies in particular in the specialty shops that we have expanded such as.
Speaker Change: 31, and 32, such as Tulsa for specialty appraisal and heat exchangers. So those are a couple of the segments that I would point to and then finally as we get more Ips of more LNG content, clearly had leading with the technology and the associated equipment gives us visit.
Speaker Change: Ability into into the timing around those projects as they come into backlog. So we're really still very bullish on the natgas side of the business.
Speaker Change: Well, that's great color Joe Thank you. Thank.
Scott Gruber: Thank you Scott.
Speaker Change: And your next question comes from the line is for our clients with Bank of America Southeast go ahead.
Speaker Change: Hi, good morning <unk>.
Speaker Change: Hey, good morning.
Speaker Change: Oh, maybe I want to just continue with that Oh with that line of thinking from Scott Oh, I know the guidance is unchanged, which is fantastic to see despite the uncertainty, but I think if I'm looking at the slide that correctly you are assuming good general economic activity remains stable right and that's where a lot of people luckman Thunderbolt a lot of fun so that entity.
Speaker Change: Then maybe walk us through what could be potential risks for you from a macroeconomic standpoint rate, though maybe talk about backlog coverage.
Speaker Change: Obviously, you're allowed to sell business right just walk us through how we should think about the potential scenarios.
Speaker Change: Absolutely. Thanks for the question what I would point to is not only again the backlog driven business the aftermarket service repair.
Speaker Change: And the visibility that that lends to us, but also the diverse end markets that we serve.
Speaker Change: Are really kind of proving out to to be supportive where if we're seeing some caution in end markets such as industrial gas I mean, certainly we signaled that in China back in the third quarter of 'twenty four we didn't really see it get better.
Speaker Change: In the fourth quarter of 'twenty, four we had a softness in general and our thinking around industrial gas so while Q1.
Speaker Change: It does not make a trend we were pleased to see sequential order growth in Q1 versus Q4 in the Cts segment, but that's that's a watch that's a watch market for me.
Speaker Change: I would say I think this is not new news right, but hydrogen in the Americas. In particular is an area that we anticipate to be to be impacted by the uncertainty that we're all describing here, but outside of that I mean, just just the fact that we started the year with more orders.
Speaker Change: In space exploration nuclear Marine H LNG vehicle tanks in Q1, and the entire year of 'twenty four and 'twenty four it was a strong year that that gives us again, some more confidence around them as we see the rest of the year.
Speaker Change: Through backlog.
Speaker Change: Into the guide so the diverse end markets and the two end markets I just named it would be the risk areas if.
Speaker Change: If we will watch those very carefully and we'll also be watching very carefully if we see anything meaningfully different in terms of cancellations of projects and backlog.
Speaker Change: In the first quarter of the the only meaningful cancellation. We had was one hydrogen project out of the backlog.
Speaker Change: So that has again not been a trend so far.
Speaker Change: And then my last part of my answer I think it is which is important as just as.
Speaker Change: How do we think about the low end and the high end of our outlook.
Speaker Change: The high end will require certain larger projects that we anticipate coming in in the first half to do so and to release on this time schedules for manufacturing that are.
Speaker Change: That we would anticipate based on what the customers are telling US now so that that's I think an important thing too when I'm answering your question around uncertainty.
Speaker Change: That would be the other thing for us that we're watching as the second quarter unfolds.
Speaker Change: Right right no that's super helpful and maybe a quick follow up on you talked about the diverse end markets. Its really good to see that slide on your data center opportunity and if I'm remember got it good.
Speaker Change: But a good correctly.
Speaker Change: Well when we were in London, where there'll be you were talking about a $500 million opportunity over the next three years and all you're seeing 400 over the next 12 to 18 months. So it looks like a lot of that opportunity has come forward. So maybe talk to that a little bit on the just to if you are looking at that slide outside of just the Eric who knows where widows are you seeing that opportunity exited it.
Speaker Change: Yeah, absolutely. Thank you for the question and you remember perfectly that our original kind of addressable market size of anticipated business that we had thought for three years with about $500 million.
Speaker Change: Now that now that we've really hammered into this market with a dedicated resource we're seeing more and more opportunities for our existing product and solutions for this end market and that that $400 million a tangible number that is actually bid built bottoms up from the customer pipeline and discussions that we've had over the last 60.
Speaker Change: Days.
Speaker Change: So that that is a good to see that accelerating and the air coolers in sands. So are what we would deem to be thin fan. So air cooled heat exchangers, and then the breath of the fans that we have ranging from the tough late for that has a very specific and unique sweeping blade design, which is.
Speaker Change: Is.
Speaker Change: Really well equipped and suited for applications with high wind for example in regions that are that are like the Gulf coast of the United States and so that that San can really help serve datacenters in certain applications were also in many discussions around the cryogenic cooling side.
Speaker Change: All of our business as these as these AI projects in AI learning happened the energy intensity continues to increase and so in some cases, our cryogenic cooling solutions are really well suited for those applications and then you get into things like that I consider are adjacent but still good for this end.
Speaker Change: Market, which are our carbon capture solutions as well as our water treatment solutions.
What we primarily seen to date in terms of interest as cryogenic cooling air coolers and fans.
Speaker Change: Awesome, Okay got it thanks for that color I'll turn it back.
Scott Gruber: Thanks Ara.
Speaker Change: Yeah.
Speaker Change: And your next question comes from the line of Marc Bianchi with TD Colin. Please go ahead.
Marc Bianchi: Hey, thanks.
Marc Bianchi: Another question on the tariffs and the impact Joe It sounds like so this is not reflecting any mitigation efforts.
Marc Bianchi: Maybe could you talk about you know what what the likelihood is of.
Marc Bianchi: Mitigating that and how is that reflected in the guidance is the guidance assuming any benefit from mitigation efforts.
Marc Bianchi: Correct Marc good morning, So that is the numbers that we show there is an annualized gross impact that we estimate for the year and so 12 months, obviously, we're in a month or so.
Marc Bianchi: One five years so that's.
Marc Bianchi: That's just a mathematical calc for the remaining eight months those do not reflect any of the mitigating actions that we've described here of which many many are underway, where we're certainly the norm in terms of the war rooms attacking this with Oh, all hands on deck around the world too to mitigate what.
Marc Bianchi: These potential actions are we do have good visibility to them, obviously in the contracts and backlog and how they're structured and our ability to pass through.
Marc Bianchi: Through cost to customers I.
Marc Bianchi: I mentioned, a few exemptions that we've already received to date.
Marc Bianchi: I'd also mention that inclusive in that approximately 50 million annual gross number is if the 90 day pause were lifted and it went in the 10% reverted back.
Marc Bianchi: To a higher number so that's also in that.
Marc Bianchi: So what I would tell you that we we believe that we've that we're well underway in mitigating these tariffs and that gives us confidence it won't go I won't go into specifics because some of it is a customer very customer specific but what I would say that we felt confident in actions take.
Marc Bianchi: And to date.
Marc Bianchi: Around being able to size the number within our guide range and what we've seen to date you will.
Marc Bianchi: <unk> to evaluate the success of the actions that we have but we've made some good progress to date on the mitigation efforts.
Marc Bianchi: Okay, great, Yeah, and I would just echo like I think it's definitely a much smaller number than a lot of people are anticipating.
Marc Bianchi: On an going into second quarter, and just some of the <unk>.
Marc Bianchi: Disruption that people are expecting to be out there it doesn't seem like you're expecting it for the year, but as we kind of go through the second quarter and into the back half of the year.
Marc Bianchi: Is there anything different that we should expect from a seasonality perspective like if I think about typically what we've seen from <unk> as revenue goes up 10%, maybe you get a couple of 300 basis points of margin EBITDA margin improvement from <unk> to <unk>.
Marc Bianchi: Any reason that's not a good base.
Marc Bianchi: Base case assumption.
Marc Bianchi: No reason to assume 25 is any different than the last couple of years in terms of seasonality.
Marc Bianchi: Oh, Okay and anything on the cash flow side that we should be thinking about I know you mentioned the unusual or the typical payments that occur but is there anything from because of these tariffs or anything like that that should be called out from a cash flow perspective.
Joe: The two things well the three things I guess, Joe commented on the.
Marc Bianchi: Semiannual with semiannual twice a year twice a year.
Joe: I never get that right.
Marc Bianchi: And then.
Marc Bianchi: We have a we are theres a couple of raw materials that we're gonna buy ahead in Q2 on.
Marc Bianchi: Taking advantage of the exemptions that we have which I wouldn't say is meaningful but just for everybody's knowledge and then our tax payments.
Marc Bianchi: Our normal tax payments are generally are heftiest in Q2 and Q4.
Marc Bianchi: Yep Yep, Okay. Thanks, Joel I'll turn it back.
Speaker Change: Thank you Mark.
Speaker Change: And your next question comes from the line of Eric Stine with Craig Hallum. Please go ahead.
Speaker Change: Hi, Joe Hi, Joe.
Eric Stine: Eric Good morning, So you call.
Speaker Change: Rolled out a number of these end markets.
Speaker Change: We're 25, just better or first quarter better than all of 'twenty four great color on the data center business, so probably in the category of.
That you view that as a sustainable business, where it's matured to the point, where you have pretty high confidence just curious on the other ones.
Speaker Change: You know I know business can be lumpy and Joel you've been at this for a while I mean as you look at these other end markets, where does your confidence level that they've kind of reached a different.
Speaker Change: Level for you in terms of being a business that you can count on that you see growth.
And it's kind of just move beyond that really lumpy kind of startup of end markets.
Speaker Change: Yeah, Thanks, Eric and you've been or you've been around as well for a while and seeing kind of seen the evolution and that's that's what I would call. It out its really been a journey and I'm. So pleased as we sit here today to be able to to have this discussion because we've worked really hard to get out of that.
Speaker Change: <unk> Super Charles E reliant on a project or two which you know again, that's just that's just took us some time.
Speaker Change: So reiterating your point of having more visibility on the Newbuild backlog that we have across a variety of end markets is super helpful. And then having that more meaningful RSL or aftermarket service repair them.
Speaker Change: Especially when I was talking to our four presidents earlier this week and asking like Hey in your specific region are you seeing anything that's alarming on the aftermarket service side, because that's an area that we really are.
Speaker Change: Our leaning into here and two T. The four of them said, no it's holding up very well and so that that was a big positive.
Speaker Change: I think the diversification of the end markets and more content on these projects also helps.
Speaker Change: It helps us in this in this evolution that we're under here, meaning like Hey space three years ago space exploration was maybe I'm going to spit ball here, but maybe a $10 million style. The year and now you know we told you at the end of.
Speaker Change: February we told you that we had already booked $60 million of space exploration orders.
Speaker Change: And that number is now year to date are around $95 million as of yesterday. So these are end markets that we have more content, we're leading with technology.
Speaker Change: And then I would be I'll be remiss not to mention Ips M. R. The LNG liquefaction process technology and health, having that out there in the market has really brought more consistency to the LNG business and more opportunities into the LNG business.
Speaker Change: Feel like we're where we're at that precipice now, where we're really seeing those two pieces of the puzzle contribute to us looking very different business than we did eight to 10 years ago.
Yep.
Speaker Change: No that's great and on repair service and leasing I know you're talking about I'm, just making sure that that business is holding up but if I recall past times, where maybe there was.
Speaker Change: Economic uncertainty.
Speaker Change: Repair service and leasing actually was was almost better off because customers are more likely to protect what they have rather than new so I'm curious it seems like that would almost be a bit of.
Speaker Change: Our counter if things were to get worse or more uncertain if that's possible.
Speaker Change: Curious your thoughts on that.
Speaker Change: Yeah, Yeah more uncertain, if that's possible rate. It's an interesting time right now I think what you said I don't think I could have said what you just said better that's how we view it in terms of aftermarket service repair.
Speaker Change: But what we also really like about the ASO business is not only what you just described whereas and the uncertainty or things things get delayed on newbuild or capex or opex purchases than.
Speaker Change: People are still.
Speaker Change: Not only retrofitting, but preventative maintenance and regular maintenance to keep the plants running is very very important and that's also where digital uptime. The howden digital uptime preventative maintenance software that we're taking across other product lines. We've had a lot of interest in that as well so that it's not a reactive where a customer has to come and ask for.
Speaker Change: Quick ship of something but rather a preventive so all of those things we like because it's not it's not one thing that's driving ourselves a lot of different things that are driving it and then this whole idea of optimization for molecules. So yeah, we talked a lot last year about the retrofit at Sabine pass for <unk>.
Speaker Change: Fans to help the customer get as much product out for them of the existing facility and I think we're gonna see more and more of that that's why we were also excited about the retrofit of our coal fire power plant orders that was the first of its above that kind for our application using our SCS cryogenic carbon capture technology.
Speaker Change: <unk>.
Speaker Change: Okay. Thank you.
Speaker Change: Thank you.
Speaker Change: And your next question comes from the line of Ben Nolan with Stifel. Please go ahead.
Speaker Change: Hey, John Joe Good quarter.
Ben Nolan: So a couple of quick ones are number one just from a macro perspective on the LNG side, just kind of paying attention to this everyday it feels like there's been a pretty material acceleration.
Ben Nolan: Of activity, maybe since the first of the year, but certainly even in this last month.
Ben Nolan: Im curious if youre seeing the same and how youre thinking about the development.
Ben Nolan: Essentially big LNG orders I don't know and then through the rest of the year or into next year.
Ben Nolan: Yeah, No I think I think your observation is is what we would have answered the question with as well we were definitely seeing an acceleration you know what our what our energy team tells me is that.
Ben Nolan: Two a T. All of our customers are saying that theyre going to take advantage of pro energy environment, and pro LNG and natural gas environment and I.
Ben Nolan: I think you're seeing that with projects that are looking or pushing really far ahead, but also it's good to see some of these off take arrangements.
Ben Nolan: Getting getting put in place for the projects. So yes, I would say that what what I didn't size in the prepared remarks, but I'll say that specifically now is four.
Ben Nolan: For our LNG specific pipeline of.
Ben Nolan: Potential orders that we would anticipate to come into backlog in the next 12 months is about $1 billion.
Ben Nolan: A meaningful number and that does not include the Exxonmobil, Mozambique, Rovuma, Oh that we already that's not in backlog, but we know we will utilize ideas tomorrow and our equipment, so that number that ex that and.
Ben Nolan: Those are that's a handful of global global LNG work and that pipeline continues to extend them and then the other piece of it that's a little bit.
Ben Nolan: Tangential, but.
Ben Nolan: Certainly hits. This this set of end markets is the nitrogen rejection unit offering that we have we have seen more and more of an increase in customers.
Ben Nolan: Customers potential customers talking to us about NR use based on gas composition that they have in their projects or even a midstream upstream guys that are maybe looking at it and are you to serve their downstream customers.
Ben Nolan: Alright.
Ben Nolan: The color is very helpful. Appreciate it.
Ben Nolan: And then secondly, just switching gears a little bit.
Ben Nolan: I know you maybe it's maybe it's nothing but it sounds like you're sort of changing how you refer to the RSL business of being aftermarket service and repair maybe it's always been that way. It's just didn't notice, but curious where the leasing part isn't that I mean is that something that you're still looking to lean into or how do you think.
Ben Nolan: The leasing.
Ben Nolan: Leasing is a function of sort of.
Ben Nolan: That part of the business.
Speaker Change: Yeah, no leasing still it's very important part of that business as well. So we just internally sometimes will we flip.
Speaker Change: Flip flop between how we refer to it and sometimes we just even say aftermarket generally for the entire segment. So that's probably just a little bit of semantics on my part, but no leasing is still a really important offering for our customers and we've stayed the course on that Dean.
Speaker Change: Standard product. So that's there's no change in our leasing strategy and.
Speaker Change: The only thing I would answer as it always has been which is that we do that within our financial policy, we're not going to go outside of our financial policy to.
Speaker Change: So it builds a massive leasing fleet on their own on our balance sheet.
Speaker Change: Alright, I appreciate it thanks, Chris.
Chris: Thanks, Matt.
Speaker Change: And your next question comes from the line of Harlan Jr. I'm with J P. Morgan Chase. Please go ahead.
Harlan Jr.: Good morning, Joe I was wondering if you could elaborate on the potential for more chunky orders in H chip HTS just wanted to see if you can.
Harlan Jr.: Expand on your commentary on an HTS.
Harlan Jr.: Yes, so what I was really trying to convey there in that commentary is that.
Harlan Jr.: Orders, while down from Q1, 'twenty four to Q1 'twenty five in HTS by about 7%. It doesn't really reflect what we're seeing commercially in the market where some of these are just timing like I can't can't always gamla $20 million to $50 million order.
Into March 30th or 31st and maybe comes in in April type of thing. So that was really the genesis of what I was trying to convey with that comment is that we continue to be to see bullishness in kind of the broader HTS end markets, but also that we do have a strong pipeline of these chunkier projects.
Harlan Jr.: Chunkier for us can be anywhere from kind.
Harlan Jr.: $20 million at the lower end to Ah in that in that pipe that I was just referring to in my last answer of LNG specific the largest beyond what we booked with Woodside phase two would be approximately $140 million.
Harlan Jr.: Or so and there's a couple of those in the pipeline and then there's a handful of the $20 million to $70 million.
Speaker Change: Great that's helpful.
Speaker Change: Margins in the <unk> or quite a bit better than our model.
Speaker Change: You mentioned Mark talked about some of the seasonal historical season patterns can you talk about just the margin outperformance in <unk> and just how you see the setup for the rest of the year.
Speaker Change: Yeah. So I would say you know RSL was in line with what we had anticipated HTS are with the conversion of the datacenter and the LNG backlog are the more Ips tomorrow backlog, we haven't HTS the better for us and so that that's going that's a driver currently and we anticipate.
Speaker Change: To be a driver in the coming years ahead.
Speaker Change: On Cts Cts did a little bit better on the margin side than we anticipated and that's again just specific product mix in that segment.
Speaker Change: But we'd like to see well, we like to see things like the railcar order that came in that that's good that's good mix for us larger.
Speaker Change: Larger tanks are good mix for us etcetera, and then finally specialty is a is the one that you have kind of a drumbeat here that over the last 24 months, we've been we gotta get specialty back to that 30% Mark. That's that's been that's been a really hefty focus for US we did make some investments in some of.
Speaker Change: The I would say inefficiencies took a little bit longer to flow through the system, but I feel like where we're at that turning point in Q1 reflected that so looking ahead.
Speaker Change: We've said that the medium term.
Speaker Change: Mid mid 30% gross margins and we.
We feel like we're on our way on that path.
Speaker Change: Great. Thanks, a lot.
Speaker Change: Thank you.
David Anderson: Thank you. Your next question comes from the line of David Anderson with Barclays. Please go ahead.
Speaker Change: Hi, Good morning, Joe a couple of questions around the aftermarket business or ourselves.
Speaker Change: You had a really strong quarter in orders this quarter much more than we've seen in the past can you just tell us where it was kind of incremental on that quarter was there anything kind of.
Speaker Change: Kind of unique or kind of is this just kind of building up just kind of help us understand a little bit whats behind that.
Speaker Change: Yeah, absolutely thanks, Dave.
Speaker Change: And I appreciate you flip flopping between aftermarket and ourselves.
Ryan: Ryan here.
Ryan: So first I would say that.
Ryan: We were very pleased that and when we look within ourselves right. We look at leasing we will get retrofit slash service out of the category and then the third category being spares.
Ryan: And what we were very pleased to see was the retrofit service and spares both of those orders were up Q1 to Q1.
Ryan: That's good to see because it's not really at its indicating that it's not one particular driver.
Ryan: We did see a good we had a strong Americas Q1.
Ryan: Which we had we had anticipated but it came through and that's a good thing because Americans is a large region for us. It's also a region that out of the.
Out of the four regions that we discuss it currently has the lowest percent of its revenue as ourselves and so get is an indicator of gaining some share for us and then that the retrofit side.
Ryan: Retrofits Slash service side was.
Ryan: Kind of broad based demand and then there were two that were a little bit larger one being a mining.
Ryan: South Africa.
Ryan: Service project that came in and then the other being the six U S with the retrofit on our with our utility customer.
Ryan: So.
Ryan: I'm just curious so howden came in I guess, what about two years ago. So we don't really see how the aftermarket business performed during COVID-19 or some other kind of.
Ryan: Demand changes out there you highlighted industrial gas just kind of wanted to watch markets I'm, just curious how youre thinking about some of the potential risks and aftermarket I guess intuitively. If you have kind of economic uncertainty I would think maybe some of your customers would push out say a retrofit or are we kind of delayed some of the spending is there any concern there.
Ryan: That could happen or counter to that is are you just seeing kind of this build out of your backlog that kind of offsets that any of those potential concerns.
Ryan: Yeah. So let me start with the first part of the question on kind of how it into aftermarket and how it performed.
Ryan: Under in the private world that it was very consistent and so the only time in how it in where there was even kind of a blip in a quarter for aftermarket was a summer of 2020, where.
Ryan: People couldn't go to site and so that really push from like Q2 to Q3, but was within a year. So it performed consistently in kind of the five years before we owned it in.
Ryan: In aftermarket.
Speaker Change: In terms of things that we are that could be push or look differently, maybe I'll start with the with the end to answer which is with the backlog that we have an RSL that gives us a lot of confidence to what we're seeing in the in the kind of the eminency here, but also.
Speaker Change: Could there be a somebody that says hey, I'm not going to do a retrofit of a facility that's definitely a possibility, but I think with the global kind of service network in the spare side.
Speaker Change: On balance I think those two things probably balance each other.
Speaker Change: Is the way we think about it.
Speaker Change: Yes, no I would just add.
Speaker Change: I'd add one thing there I mean, the installed base of <unk> equipment is mission critical in their applications.
Speaker Change: So so.
Speaker Change: In a downturn that that that equipment is going to continue to be maintained because the ramifications of it not being maintained far outweigh the cost of the maintenance. So that's.
Speaker Change: As Joe mentioned, we saw that when we're doing that.
Speaker Change: Diligence.
Speaker Change: It's not as cyclical.
Speaker Change: Cyclical segments.
Thank you appreciate it.
Speaker Change: Your next question comes from the line of Walter Fuckwit cheaper to research. Please go ahead.
Speaker Change: Hi, good morning.
Speaker Change: Congratulations guys and I enjoyed that last discussion about how I think.
Speaker Change: Diversity is your strengths.
Speaker Change: Thanks, Walter we really appreciate that that observation and couldn't agree more.
Speaker Change: Okay, great. Thank you so I wanted to go back to the mitigation.
Speaker Change: And ask about selling price increases versus surcharges.
Speaker Change: If you've started doing any of that yet, especially around steel and.
Speaker Change: How that might.
Speaker Change: You're just passing through things through.
Speaker Change: The charges, how that might impact gross margin and the aspirations for gross margin this year.
Speaker Change: Yeah. Thanks for the question. So in terms of it maybe just stepping back we think of our business pricing in kind of three major categories. The first is project based pricing, which in that there's multiple mechanisms for change orders and things like that so that's kind of an insulated.
Speaker Change: Piece of the business the second being things that are on long term agreements, which is primarily in the Cts segment.
Speaker Change: Those have a pricing mechanism.
In those where it's really meant not to not to hurt or benefit either party and you know what we learned in the last supply chain crisis was that the lag time in terms of the mechanism like flip flopping.
Speaker Change: Was was something that we had to manage better and subsequently we've done that and then the third is really the book and ship business with the price book, We did launch a price increase earlier in April for that piece of the business.
Speaker Change: Watching that carefully but I think overall, we feel like we've got a lot of good activities underway that would not.
Speaker Change: Materially impact margin as we see it today.
Speaker Change: One thing I wanted to add on the on our tariff exposure one thing to remember is we don't manufacture finished goods in other regions and then bring them into the U S and have tariff exposure on a on the whole value of the equipment, we're largely manufacturing in the U S for the U S market and so our exposure.
Speaker Change: Or is the raw material side in every case, where we source those raw materials internationally. We also have domestic sources. So we can pivot between the international raw materials versus domestic raw materials sources as the economic situation changes like tariffs so not importing finish.
Speaker Change: Goods for resale and having exposure on the whole value of the finished goods as well.
Speaker Change: There is one important aspect of our tariff exposure.
Speaker Change: Okay, great and within April pricing, there was a price increase not a surcharge.
Speaker Change: Is that right that was a price increase that's a price increase correct.
Speaker Change: Okay, great, Okay and then.
Speaker Change: Thinking about it right to think that there could be a gross margin impact from.
Speaker Change: From some of the sources.
Speaker Change: Just sort of still planes, maybe even possibly into.
Speaker Change: Gross margin targets.
Speaker Change: Yeah, I would say not I Wouldnt go too.
Speaker Change: So far as to say it's positively at all.
Speaker Change: What I would say is we feel like the the gross potential impact is manageable.
Speaker Change: On an annualized basis clearly that's based on what we know today.
Speaker Change: That we have the team has done an exceptional job in terms of being agile and then.
Speaker Change: Hitting these hard we have also.
Speaker Change: Some members of our executive leadership program that are on this daily and we're tracking it and all of that so our intent would be that through these mitigating actions, we're able to manage our way where it does not have a meaningful impact to gross or operating margin.
Speaker Change: Okay, great. Okay. Thanks, so much.
Speaker Change: Thanks will.
Speaker Change: And your next question comes from the line of Rob Brown with Lake Street Capital markets. Please go ahead.
Speaker Change: Okay.
Speaker Change: Yes.
Speaker Change: Hi, Joe.
Speaker Change: Hey, Rob.
Speaker Change: On the specialty gross margins.
Speaker Change: We're improving nicely in the quarter or what's sort of the opportunity there where do you think you can get those too.
Speaker Change: Yes, thanks, Rob and thanks for recognizing that to it's kind of been.
Speaker Change: A long haul to get.
Speaker Change: Through some of the stuff that we really needed to get that capacity in play given given what we're seeing in terms of demand.
Speaker Change: Yeah I'd be happy if you know this year it hangs around the low thirties. If this if we can consistently be 30% plus in the next.
Speaker Change: And the next nine months or eight months I'm going to be pleased with that what I think it should be is closer to like 33, 34%.
Speaker Change: But in terms of 2025, we still have we still have some.
Speaker Change: Efficiencies to gain in order to get to that but in terms of like the project mix and the technologies and capabilities and some of the unique manufacturing capacity that we now have.
Speaker Change: That should that should be taking closer to that 33, 34%, but I don't want to get out over our skis for what it could look like in 'twenty five.
Speaker Change: Okay. Thank you I'll turn over.
Speaker Change: Thanks, Rob.
Speaker Change: And your next question comes from the line of Martin Malloy with Johnson Rice. Please go ahead.
Speaker Change: Yes.
Speaker Change: Good morning, Thank you for taking my questions.
Speaker Change: Hey, Marty is the first question I had was on the nuclear I was just wondering if maybe you could talk a little bit more about the scope of potential.
Speaker Change: No Award for chart, whether its upgrade projects on existing.
Speaker Change: Large nuclear facilities or maybe some of the newer isamar designs.
Speaker Change: Would you potentially could sell into those areas.
Speaker Change: Yeah. Thanks, Marty for the question. We're excited about nuclear we're excited about helium. We're excited about datacenter you know there's a lot. There's a lot going on at all kind of circles. This energy intensity and energy security concept in terms of nuclear.
Speaker Change: Well, there's a few different areas that we play in so retrofitting existing is primarily smaller dollar work for us So take a fan as an example.
Speaker Change: Those that that work is fairly consistent its not huge its not large in terms of what we have right now, but it's generally coming from the players that you would anticipate it comes from the second is <unk> and that's more of what I'd call like an early it's more it's a little bit more embryonic in where it is and its evolution a lot of smaller players trying to sort out what they want to do it.
Speaker Change: In particular in Europe, but we have good capabilities.
Speaker Change: On the compression side for that and then the third is what I call like nuclear slashed helium and we have our current customers and.
Speaker Change: Well growing pipeline of potential new customers for helium circulation.
Speaker Change: One area and that this category helium liquefaction compression goes into that as well compression kind of leads some of that but also our cryogenic technologies do as well that third category is where I see the largest.
Speaker Change: Opportunity in kind of the near medium term that pipeline in the first quarter.
Speaker Change: Yeah.
Speaker Change: It grew three times.
Speaker Change: It was.
Speaker Change: So, it's becoming a hotter topic.
Speaker Change: And that's not a.
Speaker Change: That's not a regional comment is a comment for both Europe and North America.
Speaker Change: Oh great.
Speaker Change: And from a follow up question just wanted to ask about with respect to chart water.
Speaker Change: Are you all doing anything in terms of oilfield produced water pretreatment or cleaning it up even further for beneficial reuse.
Speaker Change: Oh, no not specific to that application and most of our water treatment is S docs oxidation oxygenation and Pes as P. Faas.
Speaker Change: Okay.
Speaker Change: Thank you.
Speaker Change: Okay.
Speaker Change: Thanks Marty.
Speaker Change: And there are no further questions at this time I would like to turn it back to Jay Levine for closing remarks.
Speaker Change: Yeah.
Speaker Change: Thank you so much to everyone for joining us today, and we look forward to keeping you updated across the coming few months and quarters ahead have a great day and thank you again to all of the global launch of our team members for all you do every day.
Speaker Change: Take care.
Speaker Change: Thank you presenters, ladies and gentlemen. This concludes today's conference call. Thank you all for joining you may now disconnect.
Speaker Change: Oh.
Speaker Change: Okay.