Dover Corporation (DOV) Earnings Call Transcript & Summary

Okay. Hey, everybody. Thanks for being in the room and on the webcast. Rich Tobin, Chairman and CEO of Dover. He was just telling me that this was the event that he was looking most forward to this fireside chat. Obviously, he didn't say that to me. But nonetheless, we appreciate you, Rich, taking the time to talk about the business. My name is Amit Mehrotra. I lead the multi-industry franchise here at UBS. It's such an interesting time to be talking about industrials because it's really the tale of 2 markets with the AI infrastructure market improving, obviously, continuing to be very strong and then hopefully, the non-AI market showing some signs of life.

Certainly, with Dover, very interesting conversation because the company hasn't really grown that significantly this year, but it is projecting to grow a meaningful step up in the fourth quarter. So hopefully, Rich, you can offer some insights on whether you still believe that, what the drivers are. But why don't we just start actually talking about that and kind of what your latest and greatest thoughts are?

Yes, sure. Well, actually, if you look at the slide that I just put up there, I mean the top line growth is not terrible by any stretch imagination. I think we have a little bit of a fixation lately on organic growth. But as you know, we are an acquirer. So we're up 5% or up 3% year-to-date. And we expect from an organic growth point of view that the fourth quarter to be our best quarter for the year. So despite having a variety of different market conditions during the year and tariff tumult and everything else, we're on track to hit the guidance that we put out at the beginning of February 2025, which was a good amount of top line growth, 4% to 6% and adjusted EPS being up in the teens. So we're tracking pretty much -- if you listen to our third quarter call, we're tracking where we said we'd be. I haven't seen November close, but I don't -- I haven't heard anything -- would make me think it's either demonstrably better or worse. I think it's pretty much on forecast. So the results for the year all in, I think, are going to benchmark very well versus the multi-industrial space.

Can you talk about maybe -- the full year obviously is there, but then it's a tale of the first 3 quarters in the fourth quarter. Obviously, you had some refrigeration headwinds that orders started to improve in the third quarter. Is that what's bridging kind of this inflection back to the mid-single-digit organic growth number in the fourth quarter?

Yes. As we mentioned at the end of the third quarter, it's carved off -- about 200 basis points of the growth is, if we forecast anything wrong this year, it would have been a retail refrigeration demand. I think if we had read the tea leaves a little bit better, we would have figured out that the tariffs probably had a disproportionate impact on retail food because margins are thin. I think that there was a reticence to shut down any of the stores to do refurbishment. And while we've been doing really well on the CO2 side, which is the big refrigeration systems on the top of the store and for warehousing, it's the in-store refurbishments kind of slid to the right. But as we mentioned in Q3, our book-to-bill in that business has inflected positively, and that's going to be a big driver of our organic growth in Q4.

And we were at dinner last night, and you right upfront mentioned your view on like what the impact interest rate cuts would mean on sentiment and psychology of the market and how that could turn into actually tangible activity. We don't hear a lot of CEOs talking about that. Obviously, it makes sense, but there's still a debate about what the actual impact to activity would be from interest rate cuts, whether it's 25 or 50 basis points. Maybe just double-click on that and talk about how you view that market.

Well, I mean, the next cut better be '25 in December or all hell is going to break loose. But I mean, I think there's an argument for it to be higher than that for sentiment alone. I mean I think that sentiment, it plays an important role, and I'm not talking about the equity markets and valuations or everything else. I'm just saying from a corporate activity point of view. So you went through a period where for the most part, industrial corporates came into '25. If you looked at the forecast for growth, it was okay. It wasn't great, but it was good. But then we ran into tariff tumult and a variety of other things and then kind of sentiment really swung pretty negative, especially after you had a little dislocation in the market in February, and then it's taken some time for that to gain steam. Look, at the end of the day, for us, we don't supply into like so-called interest rate-sensitive end markets like housing or auto. But at the end of the -- but also, look, we'd like to see discount rates come down. And like I said, we're -- I believe that in a market with interest rates going down, which are already baked into equity pricing. But from a corporate sentiment point of view, I think we're probably going to get a little acceleration of CapEx that got deferred in '25 and an earlier start than we saw this year.

I guess lower interest rates are also coinciding with higher multiples. And for a company with $6.5 billion, $7 billion of firepower and growing probably will grow as you generate more cash in the fourth quarter. Valuations seem already pretty high to begin with. I assume this is in addition to kind of a lot of the AI back-office stuff, productivity stuff that you're doing, you're spending a lot of time focusing on the pipeline from an M&A perspective. How does that kind of -- how do you think about that? You're buying back more stock?

Sure. Look, if you look at the headline figures for M&A this year, everybody is making bonuses. But if you dig into the numbers, the vast majority of M&A deals that have been consummated in '25 have been very large deals and corporate carve-outs, breakups is what's really driving the market right now. The mid-market where we play has been pretty benign. And whether it's because of a paucity of targets coming to market valuations that we've seen transaction multiples being quite elevated in the mid-market right now. So our bias has moved from more M&A into capital return. We just announced an ASR. We're buying back $0.5 billion of our shares. We'll see going -- no deals are going to get really done between now and the end of the year. We'll see where we start out in '26. Maybe there'll be more assets coming to market and because there's a better amount of deal flow, we will put some kind of CapEx -- a lid in terms of multiples. But then we'll see if, in fact, multiples remain super elevated, we'll do as we always do as a variety of proprietary deals where we generally don't pay elevated multiples. And if not, then buying back our equity further in '26 becomes a real option.

And I mean, I get a good word to describe whether you sell or buy something is patient. You've been patient. And -- but I guess, like a year from now, would you fully expect to kind of deploy that firepower? Or is it still TBD just given where multiples are in the pipeline?

It's TBD. I mean we're -- we've pretty -- we're patient, but I think restrict in terms of valuation and getting returns. It's easy to sell things. It's easy to buy things. It's not so easy to create value over time. Coupled with the fact that multiples in multi-industry have come down quite a bit, it makes the trade-off between M&A and capital return more evenly balanced than it would have been a year ago.

So that sum of the parts lens in which you look at the business, it feels like your stock may be the most compelling right now as you look at it.

Proof is in the pudding. So like I said, we just bought back $0.5 billion. We're not liquidity constrained. We'll see -- we'll close the year. And depending on the health of the M&A pipeline, I think it's likely to do a mixed solution between M&A and capital return in '26.

Got it. That's helpful. So December 2, you've been really kind of front-footed and talking about the view for 2026. I don't want to reiterate what you've said, but there is not a rising tide that's lifting all boats right now as you look at '26. There's a lot of puts and takes. It feels like your confidence on '26 is really coming from the headwinds that you've endured 2 years ago or last year and now this year and kind of what you're seeing on the orders that gives you confidence that you might get some of that back in '26. But maybe talk about how much of your '26 optimism is very Dover specific because of that dynamic or more kind of you're getting more encouraged around some of the macro dynamics?

Well, I mean, look -- again, if you look at the numbers that we posted year-to-date, you want to underwrite that Q4 will be our best organic growth rate for the year, pushing up the averages. We're pretty close to kind of a 4% to 6% top line algorithm. So it's not Herculean of what we've got to deliver in '26 versus '25. I get it, everybody is concerned about price take in the marketplace. But I think that if you've gone back and looked over the previous 3 years, we're averaging probably 1.5% or 2% of price take across the portfolio. So if everybody is concerned about do we get into a more price-sensitive market going into '26, I think that's manageable for us relative to the comps, our trailing comps.

And the refrigeration, I mean, I understand the dynamics of tariffs and maybe pushing some of that replacement maintenance CapEx to the right. As a result, it feels like with the orders, what you saw in the orders, that's kind of now in the rearview mirror. Have you seen that momentum continue? And I assume a lot of that, if not all of that is replacement, but just talk about kind of your confidence around getting a lot of that lost revenue that was really seemed like pushed to the right as opposed to lost indefinitely.

Yes. I mean, look, the fact of the matter is we called it wrong for the year, but we don't believe it's lost. We just think that it's shifted. If you look at book-to-bill for that particular segment exiting Q3, it was positive. And as I mentioned before, we'll translate that into organic revenue growth in Q4. And so that particular business, I would expect to have healthy organic growth in Q4 and exit Q4 with a healthy backlog.

And so then we talk about kind of the growth -- the top line growth for next year and then we talk about mix and your -- what's that term you use non-volume or revenue cost? Is that what you see?

Yes.

We just call that idiosyncratic cost opportunity. Okay. So that's $40 million for next year. Refrigeration growing, it's dilutive to margins, but maybe not as much given the good work that you guys have done on improving that margins of those businesses -- of that business. And the growth platforms are obviously mostly accretive to margins. And then you've got the $40 million on top of that. So obviously, it sounds like the setup for margins is pretty good.

Yes. Look, I mean, if you go and look at our conversion over the last 5 or 6 quarters, it's north of 35% on incremental revenue. We used to have a band of 25% to 35%. It's probably stale now. We're pretty much locked in at the top end of that range. So what you need to underwrite to get to teens increase in EPS, if you take the middle between 4% to 6% top line growth and incremental margins at 35% and factor in the share buyback, it's -- I'm not saying it's easy or it's in the bank, but I think you can craft an argument that says it's doable for sure.

In top quartile type EPS because that's the point you're making.

We always do top quartile EPS growth.

Can we talk about the 20% of your portfolio that's kind of these growth platforms. Every time you mentioned the word turbine or AI, your stocks go up. So let's focus those conversations on those words. But I think you made an interesting point yesterday talking about the sell-in into the power generation market and how there's a lag between kind of the orders of turbines and then ultimately, the power hookup that comes with that and why you're getting more optimistic that maybe that's a second half '26 growth driver for you guys. Maybe talk about that.

Yes. I mean, sure. We are component suppliers into gas and steam turbines, the large ones. So everybody's got the press and they're sold out for years on end and everything else. That's a great business. It's not a lot of volume. So it's high ticket price, but not a lot of volume because if you go look at the amount and of large steam turbines sold every year. It's not Herculean in terms of the amount, the dollar value is a lot, but the amount of units is relatively small. So we'll take that business. It's great. We've got good relationships with that part of the market. We're actually larger in the midstream and downstream portion. So smaller turbines and the gas engines or the diesel engines that sit aside those, we've got a material position there. And we've also got a material position in gas distribution, so the pumping stations and reciprocating compressors that follow on there. And so what we've seen is very good demand on the large turbines, so very much upstream, but a lagging effect in terms of the gas distribution to serve those turbines. So at a certain point, you can install a turbine, but you need to have gas delivery to it. So we're pretty hopeful in the back half of '26, we'll see a considerable amount of CapEx on that general infrastructure to deliver those -- gas to those positions.

And one thing that we don't associate with growth verticals, but it's like retail refueling, which you've talked about is kind of entering this like multiyear kind of CapEx inflection. Talk about what's driving that and what it means for the company. And there's some legislation about underground tanks that ultimately can help as well.

Yes. I mean I think most importantly, between '21 and '24, any business with ICE exposure was almost considered uninvestable because EVs were taking over the world and valuations, anything around ICE really suffered during that period. Well, I guess, thoughts have changed a little bit in terms of that transition away from ICE, number one. Number two, because of that, there was not a lot of CapEx that went into that particular sector because even our customers were reticent in terms of building out the infrastructure with the exceptional few. So what you've seen since then is now everybody has brought down their view in terms of EV adoption over time, number one. Number two, you've seen some very successful deployment of retail fueling infrastructure. Costco comes to mind and how that drives traffic. And so if you look at the market itself, you've kind of got a bifurcation where largely driven by private equity, you've got a lot of service types of businesses like the Pep Boys of the world, consolidating tire changing and a variety of those services and then you've got the Speedways and the Wawas and the Costcos figuring out that having retail fueling along with food delivery is actually very profitable. So what the loser in the middle is the mom-and-pop gas station. So it's driving this kind of build-out of the infrastructure, and it's really got a 3- to 4-year kind of built-up demand of it because no one was doing anything for a period of time. There is a legislative aspect to it because on the underground tank side and being the 20-year vintage where you lose insurance, and that will drive some of it. But really, it's -- I think that there's a business model now that's recognized by market participants that having fuel delivery, coupled with the retail operation is a very profitable business, and you see CapEx in that space inflecting meaningfully.

Is there anything -- we think -- we talk about mix from like a margin perspective, but I wonder if there's also a consideration from like a cash flow perspective if refrigeration grows, the cash flow dynamics of that business are pretty good. Just talk about kind of how cash flow is impacted by maybe some of the mix as well.

I think on the growth platforms, we were long inventory probably over the last 18 months. A, we want to have the availability of the product because that's a way to gain market share. In some particular businesses, we've been working a lot on our footprint. And so when you're consolidating fixed cost infrastructure, you actually have to build up a lot of inventory to accommodate that transition. So we've done a lot of that in the clean energy side, and we've done a lot of that on retail refrigeration. We just announced that we're closing a pretty large plant in California and repurposing it back into Virginia. So there's been a lot of working capital associated with that transition, which is part and parcel to the $40 million of the carryforward restructuring. So I think we've got room to grow on cash flow, but from a working capital efficiency point of view, but really the fundamental driver -- our cash flow metrics are improved year-over-year. The biggest driver of that has been margin mix as opposed to working capital.

Got it...

We bind it out on the working capital. It's margin that really drives it.

Before I move into the margin, I want to talk about SIKORA for a second. I mean you bought that business, I think, for over $0.5 billion. And I think the latest disclosures was it was up 30% year-over-year. And they obviously do electric infrastructure investment exposed to that market. That's been seemingly a very good acquisition and significantly above your underwriting plan, as you said. Can you just talk about what's happening under the hood there?

Look, we'd like -- we do those all day long. It was internally resourced. So we didn't have to go into a competitive auction there. It's a little bit of an adjacency. We don't do a lot of test and measurement. We do some, but that is sitting right next to our polymer processing business. We've got a fantastic management team. We paid 15x EBITDA for it, but at that kind of growth rate and that kind of margin, we would argue that that's kind of a fair multiple. Well, that's kind of the sweet spot for us. I mean the medium-sized deals that we source ourselves that are adjacencies where the end markets know our brand equity. And so the integration risk is relatively low. So hopefully, we can do those all day long.

And do you have some of those in the pipeline that you think internally sourced that makes sense from a multiple perspective?

A few, yes. Yes. The funnel, I would say, right now is okay. Look, you can talk about funnels and say that they're huge because I can gather up everything that's private. But the real tangible actionable funnel of assets that are in play, so to speak, whether they're coming to auction, somebody is bringing it to market or whether we're self-source is decent right now. But again, it's the end of the year also. So it tends to dry up at the end of the year and then it starts at the beginning of '26. So we've got some irons in the fire. We'll see if we can close them.

And you've made some well-timed to get divestitures, obviously, as well. Is that now completely in the rearview mirror? You're happy with where you are, and it's really about adding to the portfolio. Is that the right way to think about it?

We -- what's not -- look, it's easy to sell anything in the portfolio. When you're a multi-industrial, invariably, you get the questions, why don't you sell that or why don't you sell that? So monetizing things is relatively simplistic, but we take into account tax leakage when we sell something number one. The ones that we sold actually were very good performing businesses within the portfolio, particularly our ESG business. I think we had doubled the profitability over the previous 3 years but we were looking at its strategic position at the time. So we sold DESTACO, which was margin accretive to the portfolio, but it had a lot of exposure to auto OEM. I just said to ourselves, that's probably not -- it wasn't a value. It wasn't like the margin was a problem or sum of parts that was a problem for us. It was more just kind of the end market exposure. And I think on ESG, it was more capital goodzy in our portfolio at the end of the day. I think that we had extracted as much as we could out of it and then we found a rational buyer. So are there other pieces of the portfolio that fall in the category? I guess it's maybe, but there's nothing of any consequence that we have in the portfolio that is kind of negative ROIC at this point. So it's -- we're not forced sellers. I'm more than happy. As long as it's not strategically impaired, if it's mildly dilutive, but the ROIC is high, I mean, we'll keep them forever.

And then the part of the portfolio that is growing, obviously, like thermal connectors and the heat exchangers that go into the cooling distribution units and all that good stuff. Obviously, that's going to grow for the next 3 to 5 years, but it's a relatively small -- it was $100 million this year, something like that. What is the growth rate associated with that business? And is it accelerating? Is it -- I mean, these are obviously -- they've already come from very small numbers to decent numbers now, but what are you seeing in terms of the growth percentage rates?

Yes, it's a tough one. We like our position into data centers because, again, it's critical components, and we're not doing built-up units. There's a lot of capacity coming into the market. So I think you've got to be relatively careful about profit extraction.

The capacity coming to the market, where exactly? It's data center...

When you've got that kind of capital going into a market, it's going to attract a significant amount of activity in terms of entry into the market. Now who's successful and who's not is -- I think it's early days right now. And how long the capital cycle lasts is -- I think it's too early to really tell. I mean, we just went through a period of everybody announcing EV battery construction, and that kind of petered out relatively quickly. I think this is a little bit different.

Data centers are different than that...

Yes. But to us, the data centers, we like. We like our position on the critical components. We like the energy input portion. That's where we're larger. And I think in terms of total returns, we'll probably get it at the end of the day from the energy side, more from the internal components of data centers.

But what I think is interesting, too, is when I think about what you sell into that market, it's not -- I don't associate it with long lead times. Before you here on the stage or another room, there was a CEO of Eaton where over 1/3 of their revenue is sitting in backlog in the Americas business, long lead times. Vernova sold out until 2020 -- end of 2028. So it feels like the focus right now, and I think you mentioned this last quarter is like get us on the reference platforms and then maybe all that growth can come when these things are ready for showtime.

Yes. I mean, look, I think we are early in terms of capacity expansion on both the thermal connector side and on the brace plate heat exchanger side. I think we're done on the thermal connectors. For the most part, I think we have adequate capacity for the next couple of years at least. On the phrase fight heat exchanger, I think that we're done with the last capacity expansion at midyear of this year, and then we'll regroup and see where we are. But I think the part of our success has been that we had front-run that capacity expansion. So our lead times in both those businesses are best-in-class.

Which means that the growth maybe isn't to come.

If the demand is there, we're not going to be capacity constrained to follow the growth of...

Got it. Okay. Great. I want to move to margins because this has been an incredible standout. I mean there are some businesses that have been down and profits have been flat to up in dollar terms, which is hard to do. But you've done a lot of good job sort of centralizing a lot of the functions of all the different operating companies. You put in this new slide last quarter, a lot of circles in it talking about AI and what you're doing. We are searching for like downstream AI usage. you're smiling, Rich, I don't know why.

Okay, go ahead.

Okay. I'm just trying to build a case. We always focus on upstream AI in terms of the factory of AI, but we're not focusing enough on companies and how they're utilizing it. Are you a believer in it? Or do you feel like it's still difficult to get all the data in one place and then leverage it? What's your opinion?

Yes. I mean I smile because it's always the next thing and God forbid, you didn't put something in your disclosures about AI then you're not keeping up with the cheerleading section. Look, we look at it as a productivity tool at the end of the day. We've done a lot of work over the last 5 years of centralizing all of our IT infrastructure, which has been a contributor to the margin expansion, quite frankly. So the good news for us is we've got processing centers that do a lot of kind of key stroke portions of our business, AP, AR, general ledger, expense reports, which all lend themselves to automation over time. So the low-hanging fruit for us before we get into the product end of it is pure productivity, and that's where we're working really hard in terms of AI tools is to extract those kinds of savings out of it. I think it's early days on the product side and who monetizes what from AI applications on the product side.

But I think what the work you've done is -- I think you're a little -- it seems like you're a little bit ahead of it in terms of focusing a lot of the last few years and getting the data inside of one silo that you can then apply your agent to, whereas that's not necessarily the case for a lot of companies. Talk about that technical or practical hurdle because for us looking outside in, we don't maybe appreciate that.

It is a ton of work. And in the early days, it's detrimental to profit margins. You're investing in advance of getting the benefit from the leverage scale of doing that. But we went through that process between '18 and '22. So since '23, '24, '25, we've seen average transaction costs come down because we've basically got the full cost absorption on what we've done. So the amount -- when you think about the complexity of the portfolio and the size of our individual businesses, and we've been an acquirer, the amount of work that our IT people have done to consolidate that infrastructure to allow that all to be processed in one node is, a, it's thankless work; b, no one cares about it externally. But ultimately, if you do that work, it is a real money saver, and it's a way that we extract synergy value across the portfolio of the businesses. So we've built all that between the data processing side and from the engineering side. And so when we do acquisitions, we're not making up the numbers about what the synergies are, and we're not telling you that we're going to get revenue synergies and cross-selling and blah, blah, blah. We've got a playbook that we can go in there and sweep all of those noncustomer-facing costs into these processing centers. What we get out of AI over time, I mean, it's $80 million of running cost right now, cut it in half, it's not immaterial.

And that's additive to kind of the ongoing work that you do your...

That's not even in the number.

Right, right. Okay. I wanted to just -- are there any -- if there are any questions in the audience, just raise your hand, we'll get a mic over. One of the things that is kind of interesting to me is when I look at all the companies within multi-industry, we cover 30, 35 of them, and we put a scatter plot between return on invested capital and valuation. There's one company that sticks out this over thumb. And I would -- everybody in this room and then on the webcast just do that if you can, and it's Dover. And so that's an opportunity as well as a point of frustration, I'm sure. As somebody that constantly thinks about sum of the parts and valuation and comps, how do you deal with it besides getting upset and annoyed at the market for not appreciating the ROIC, but what are you going to do to kind of crystallize that or narrow that disconnect?

You deliver the results at the end of the day.

You've been doing that.

Okay. like the bottom line is if you go and look at multi-industrials, the sector has underperformed for 2.5 years or so. There's been a lot of capital that's flowed to thematics and pure plays, and that happens over time. You can get frustrated. You can take big swings on the portfolio in or out or you can stick to your guns and just deliver year-over-year results and have a credible story of how you deliver them and that the markets turn over time between different thematics and value creation over time. So we discuss that issue with the Board of Directors all the time. I mean you can't panic and start running scenarios of doing crazy stuff to get -- to change the narrative because you can go look at -- that's been tried before, and it's a better-than-average bet, it's a failure.

But does SIKORA give you a little bit of a sight into, hey, we bought it for x multiple. It's growing significantly faster than we thought. Does it make you want to -- does it make you open to like maybe going out a little bit, buying something a little bit more expensive that gives you a little bit more of that growth vertical beyond the 20%.

We don't look at the Dover multiple and say, well, we can't pay more than our multiple, right? And we've got -- look, there are certain parts of our portfolio that should -- on a stand-alone basis, should command a very high multiple because of market structure margin and growth rate. So you got to earn your way to pay. So there are certain markets that you're going to pay up. And there are certain markets that you're not. Look, we're pragmatic about it. I mean we'll pay up if we have absolute believability of the end market and our ability to extract those profits, we will do turnarounds also. So I'm not -- we're now at the point -- in 2018, we probably didn't have the right to do it, right, because this is much more of a -- we were severely underperforming from a margin point of view. That's not the case anymore. So would we go and do a dilutive deal if we thought we can turn that business around and do what we've done with the portfolio here, sure. Absolutely.

Maybe as a final question, opine about 2026. I know you have this really convincing line, and I think you know what I'm going to say. But talking about how, wow, first time in 2 years, no business is going to be cyclically challenged or something like that. I assume that's still the case. But sitting here today on December 2, like what would you -- how would you characterize the outlook for '26?

We like the setup, right? We're going to like the exit. So if I compare exit '24 to exit '25, we were not -- we were accelerating somewhat into '25. I think the acceleration this year into '26 in relative terms is better from a setup point of view. We had a couple of businesses that were not -- from a cycle point of view, we're not done cycling down that we had to overcome in '25. We don't have that in '26. So putting the macro aside for a moment, like I said, if -- by the time we finish the year and you look at the all-in and you look at the organic growth, if we come out at 4% to 6% at 35% incrementals at a reduced share count, it solves for pretty easy. There's a ton of work behind it, right? And we never know we'll get another February again like we got last February. But in terms of a positioning point of view, we feel great about that. And from a balance sheet point of view, we're severely underlevered. So in terms of what we can do from capital deployment, either from a capital return or from an M&A, we've got significant optionality.

And just as a last point on that on the share count point, you generate the most cash in the fourth quarter. We're not even going to be able to see it on the cash flow statement, the money you spent because you're going to replenish it. And so does that give you another -- and the firepower is still multi, multibillion dollars. So does that give you another opportunity to do another -- you don't want to decapitalize the company at the same time, but does that give you another round of accelerated share repurchase early next year? Is that the way to think about it?

That's what I said before, right? I mean I think that our bias at the going into '25, everybody goes in being very hopeful, would have been -- there would be a lot of assets for sale, and we'd be a big contributor into that space. It never really happened at the mid-market. So we ended up building on a significant cash pile. We didn't like where the stock was trading in the back half of the year. So we intervened on the stock price. But we're done between now and the end of the year now. We'll see -- we'll give out pretty healthy guidance likely for '26. We'll see where we are there, whether it's an ASR or whether we just intervene over time, as I mentioned before, rather than being 75% M&A, 25% capital return based on prevailing multiples in the marketplace, at least we enter into '26 50-50. And then we'll see what happens.

Great. Well, I wish you the best of luck. I hope you guys get credit for all the good work you're doing. Thanks, Rich.

Great. Thanks.

Take care.