Moog Inc. (MOGA) Earnings Call Transcript & Summary

Hello, everyone. Thank you for joining us, and welcome to the Moog Inc. Third Quarter Fiscal 2026 Earnings Conference Call. [Operator Instructions] I will now hand the conference over to Aaron Astrachan, Director of Investor Relations. Aaron, please go ahead.

Good morning. and thank you for joining Moog's Third Quarter 2026 Earnings Release Conference Call. I am Aaron Astrachan, Director of Investor Relations. With me today are Pat Roche, our Chief Executive Officer; and Jennifer Walter, our Chief Financial Officer. Earlier this morning, we released our results and our supplemental slides, both of which are available on our website. Our earnings press release, our supplemental slides and remarks made during our call today. adjusted non-GAAP results. Reconciliations for these adjusted results, the GAAP results are contained within the materials provided. Lastly, our comments today may include statements related to expected future results and other forward-looking statements, which are not guaranteed. Our actual results may differ materially from those described in our forward-looking statements and are subject to a variety of risks and uncertainties that are described in our earnings press release and in our other SEC filings. Now I'm happy to turn the call over to Pat.

Good morning, and welcome to the earnings call. We delivered a robust third quarter with record sales up 15% on prior year. Our 12-month backlog was up 23% on prior year. Our adjusted operating margin demonstrates consistent operational performance. Our record adjusted earnings per share reflect solid operating performance augmented by tariff refund and tax benefits. In addition, we delivered another quarter of very strong free cash flow generation. Demand remains strong across the portfolio. Defense is benefiting from increased investment. Commercial aerospace is supported by long-term customer backlogs and strong aftermarket activity, and industrial is benefiting from growth in data center cooling. Our success in simplifying the business has helped us to capture and efficiently execute on this demand growth. The result is a business with better momentum and better financial quality than a year ago. This quarter is another clear demonstration that both our strategy and our execution are translating into stronger financial outcomes. Now let's turn our attention to the end markets and macro environment, starting with defense. We're experiencing a generational inflection in defense demand, both in the United States and in Europe. The debate in the U.S. national security expenditure for 2027 is not whether it should increase but by how much. The key priority areas of relevance are missile replenishment, space-based capabilities and aircraft procurement. The demand signals are clear and the momentum is building around the required industrial investment. The critical concern now is the expansion of industrial capacity. This is an environment where qualified content, long-term customer relationships and operational execution matter. In that context, we're well positioned on missile actuation and controls, space systems, defense components and selected next-generation platforms. We will continue to invest in the capacity and capabilities that allow us to convert this step change in demand into delivered performance. The commercial aerospace market continues to expand. Aircraft order backlogs remain robust, supported by increasing passenger demand. Production is steadily increasing as bottlenecks continued to be addressed. We have good long-term visibility of increasing original equipment rates, while the elevated fleet age and constrained new aircraft availability continue to support strong aftermarket activity. Industrial markets over the last 6 months in both the U.S. and Europe have been solid. Demand tied to energy, semiconductors and medical has been positive. AI data center infrastructure investment has created exceptional demand for data center cooling products. Our largest end markets are favorable with long-cycle structural growth drivers. Scaling to support growth is our primary focus. We are actively managing facility expansion, workforce availability and supply chain capacity to deliver. Now turning attention to the three leadership priorities that guide our work, customer focus, people, community and planet, and financial strength. Foreign defense opportunities were a common theme at recent trade events in the United Kingdom and France, providing evidence of strong near-term European growth opportunities for us. We had a strong presence at the Farnborough International Air Show, creating the opportunity to advance discussions with customers, suppliers and investors. The show focused attention on European defense demand, the strength of commercial aircraft backlog and the ability of the aerospace and defense industrial base to scale. Within military aircraft, we reaffirmed, extended and expanded distribution partnerships that enhance our global aftermarket reach. We announced new certification and direct foreign military orders for our avionics product line. Within commercial aircraft, we enhanced our aftermarket support network through partnership and added additional airline approvals for engine accessory repairs. Eurosatory in Paris provided similar opportunities to engage with defense partners with record attendance and increasing international presence, there was a recognition of the urgency to rapidly build capability shaped by the Ukrainian war. There was a strong focus on execution to deliver European rearmament, drones and counter-drone systems, missiles, ammunition, armored vehicles and industrial capacity. We announced the European collaboration to combine our field-proven remote integrated weapons platform with a robotic combat vehicle. We also recently demonstrated an enhanced counter-drone system, integrating third-party radar, our own AI-assisted fire control and our remote integrated weapons platform. Continued investment in AI data centers is fueling high demand for our data center cooling pump. We will have almost quadrupled revenue within a year. We address the demand surge through active management of our supply base, optimization of our manufacturing process and the addition of production lines. We prioritize maximizing our production yield efficiency and flow before investing in those additional lines. The data center cooling pump production ramp demonstrates what is possible and gives confidence for the anticipated high-volume missile production ramp ahead. Across our markets, the theme is consistent. The urgent need to scale capacity to meet strong customer demand. We're well positioned to deliver. We were already a proven incumbent with strong operational performance, we now have the advantage of a simplified business, creating a strong foundation to scale and grow. Now turning to People, Community & Planet. Talent is a key ability to scale capacity. Our Western New York training center, which opened in 2025, is delivering real impact. To date, we've onboarded 200 production staff, trained almost 40 machinists and certified skills of 1,400 new and existing staff. The center is reducing the time to proficiency by many weeks, which is critical as we ramp. We're extending this model to other campus locations that are experiencing significant growth. We remain disciplined in our execution and steadfast in achieving our goals. Our Baguio operation received awards for excellence in hazardous waste management and excellence in environmental compliance and stewardship. These actions are pragmatic. As our markets shift towards higher demand and greater production requirements, our workforce capability, structured knowledge management and environmentally responsible operations are key enablers of our ability to ramp. Now turning to Financial Strength. The key financial measures are robust, higher sales, strong adjusted margins and strong free cash flow. Simplification informed by 80/20 continues to be the key enabler. Space & Defense has prioritized focus and improved execution by means of portfolio reviews down to product line level. Military aircraft has tailored 80/20 to drive business decisions for multiyear programs. Commercial aircraft is using segmented P&L in decision-making around transitions and focus factory activities. And industrial continues to demonstrate site level improvements while now looking for group-wide opportunities. We are clear about where we win, disciplined in how we work, selective about where we invest and able to turn attractive market demand into improved financial performance. Now let me turn briefly to guidance. We're updating our fiscal '26 guidance to reflect our view of market conditions and our performance in the third quarter. We are increasing revenue guidance to reflect our success meeting increased demand. We're increasing adjusted operating margin and earnings per share to reflect tax refunds and -- sorry, tariff refunds and tax impacts in addition to solid operational performance, and we're increasing cash flow conversion to reflect lower capital expenditure. The broader message is that fiscal '26 is shaping up to be another outstanding year. We will deliver substantial revenue growth, reflecting the acceleration in demand and outstanding financial results reflecting our effective execution. We remain focused on delivering the year and continuing to build financial strength. And with that, let me hand over to Jennifer for a detailed breakdown on the quarter and our updated fiscal '26 guidance.

Thanks, Pat. Our financial performance this quarter was very strong. We had record sales and adjusted earnings per share and robust operating margin and cash generation. Before I get into the details of our performance, I wanted to highlight an item that occurred in the quarter and that included in the adjusted results we'll talk through. . We recognized the benefit related to the recovery of previously paid IEEPA tariffs in our adjusted results. We incurred these tariffs in the second half of FY '25 and the first half of FY '26. There's a $30 million benefit included in operating profit for the tariff refund this quarter, and that represents 270 basis points of operating margin and about $0.70 of earnings per share. There are other items that we excluded from our adjusted results in the third quarter, the net benefit that we excluded this quarter was $1.02 per share. We completed a comprehensive review of our domestic R&D tax credit and refined our methodology so it better reflects the breadth of our innovation activities. The benefit attributed to prior years was $35 million. We also excluded an $8 million onetime tax benefit related to ongoing legal entity simplification initiatives. In addition, we excluded $13 million of charges that were largely associated with simplification activities. I'll now talk through our third quarter results excluding these adjustments. Sales in the third quarter of $1.1 billion were 15% higher than last year's third quarter. Sales increased in each of our segments, with three of our segments increasing in the high teens and the other in the high single digits. Space & Defense sales were $336 million, up 17% over the third quarter of last year, reflecting broad-based defense demand. Demand was particularly strong for missile controls and space vehicles. In military aircraft, sales of $245 million were up 9% over the third quarter of last year. Aftermarket sales were robust, reflecting both increased repair and overhaul activity and sales of spares. In addition, activity continued to increase on the MV-75 program. Commercial aircraft sales of $254 million increased 17% over the same quarter a year ago. The increase was driven by higher volume and pricing on some of our major production programs, as well as strong aftermarket sales. Industrial sales were $282 million in the quarter, up 18% over the same quarter a year ago. Half of the increase was driven by the rapidly expanding data center cooling market. The rest of the business was also strong, most notably from medical devices and energy. We'll now shift to operating margins. Adjusted operating margin in the third quarter was 16.4%, up 280 basis points from the third quarter a year ago. The tariff refund contributed significantly to the increase in operating margin. Underlying business performance was also strong. These benefits were partially offset by last year's third quarter benefit associated with the sale of a noncore product line that we decided to exit within commercial aircraft. Exclusive of the tariff refunds and last year's benefit associated with the sale of the noncore product line, operating margin was up 80 basis points. Space & Defense operating margin was 15.7% in the third quarter, up 150 basis points. The increase was driven by operational performance, and to a lesser extent, the tariff refunds. These benefits were partially offset by increased product development, business capture and operational readiness investments. Military aircraft operating margin was 14.7% in the third quarter, up 290 basis points from the third quarter last year. Profitable sales growth both for original equipment and in the aftermarket drove the margin expansion. In addition, the tariff refund contributed to the increase in operating margins. Commercial aircraft operating margin was 15.2%, 50 basis points above that of the third quarter last year. Operating margin expanded from pricing benefits and the tariff refund. Last year's third quarter product line sale as well as a less favorable mix partially offset these benefits. Industrial operating margin was 19.9%, significantly above that of the same period a year ago. The tariff refund contributed nicely to the exceptional margin performance this quarter. In addition, the operating margin expanded related to the growing data center cooling pump business. Putting it all together, adjusted earnings per share came in at $3.72, up 60% compared to last year's third quarter. Half of the increase was attributable to stronger business performance largely related to higher sales. The other half of the increase was due to the tariff refunds. Let's shift over to cash flow. In the third quarter, we generated free cash flow of $133 million, which is nicely above our adjusted net earnings. Strong earnings contributed to our cash generation. We continue to make progress related to operational efficiencies, holding working capital relatively constant despite our strong sales growth. Capital expenditures were relatively light compared to recent periods due to timing of capital investments. Our leverage ratio was 1.5x as of the end of the third quarter. Both our earnings performance and cash generation have driven our leverage ratio down. Our capital deployment priorities will continue to center around organic growth, and we'll pursue strategic acquisitions to complement our existing portfolio. We strive to have a balanced capital deployment strategy over the long term. I'll now shift over to our updated guidance for the year. We're increasing our 2026 guidance from a quarter ago for sales, adjusted operating margin, adjusted earnings per share and free cash flow conversion. We're increasing our sales guidance for the year by $50 million. In Space & Defense, we're increasing our guidance by $10 million to reflect broad-based defense demand, in particular for missile control. We're also increasing guidance for military aircraft by $10 million, reflecting the strong aftermarket activity in the third quarter. In addition, we're increasing guidance for industrial by $30 million, reflecting growing demand for data center cooling. We're increasing our adjusted operating margin by 70 basis points to 14.1% and to reflect the tariff refund. The increases in each of our segments also reflect the tariff refund with the operating margins of the underlying businesses remaining the same. We're increasing our FY '26 adjusted earnings per share guidance by $1.05 to $11.65, plus or minus $0.10. The increase consists of the tariff refund, the increase to the current year R&D tax credit and earnings on the higher level of sales now projected. Finally, turning to cash. We're projecting free cash flow conversion to be about 70%, up from our guidance a quarter ago. Capital expenditures will be lower than previously projected due to the timing of investments to support our organic growth. Fiscal year 2026 is shaping up to be another great year. We'll achieve a record level of sales, further expand our operating margin and make meaningful progress towards generating strong free cash flow. And now I'll turn it back to Pat.

Thanks, Jennifer. We delivered an outstanding third quarter. The results reflect favorable markets, but more importantly, they reflect the work our teams are doing to improve the company. We're focused on customers. We're investing in people, capability and environmentally responsible operations, and we're strengthening our financial performance through pricing simplification and disciplined execution. . Defense momentum remains a powerful structural driver. Commercial aerospace continues to provide long cycle visibility and aftermarket strength, and industrial benefits from strong data center cooling growth. We're encouraged by the progress but we're not complacent. We're continuing to focus on execution, capacity, working capital and delivery. We will continue to focus on the fundamentals, serving our customers, simplifying the business and investing behind durable demand and delivering on our commitments. And with that, let me open the floor to questions.

[Operator Instructions] Your first question comes from the line of Tom Sano with JPMorgan.

I'd like to ask about the data center cooling pumps in industrials. Could you give us more color, the growth coming from the existing customer expansions or new customer wins? And then how we look at the opportunity in Q4 as well as the -- any commentary about the capacity expansion plan as well?

Okay. Thanks for the question, Tomo. The demand is coming ultimately from one of the hyperscalers through two cooling distribution unit manufacturers, so it's not a customer expansion, but it's just greater demand through that customer stream to the end market. We have increased from around $25 million in fiscal '25 to close to $100 million in fiscal '26, so that's a quadrupling of throughput. I've talked in previous calls about ramping up our production. That has been very successful for us. We brought engineering talent to bear from other parts of the organization to improve yields, to improve efficiency underlying and flow. And once we had achieved that, we then replicated the line. So we doubled up our lines in Murphy, North Carolina, and we've just brought a line on stream in Bangalore, India, so we have three production lines running capacity of about 1,300 pumps per week. .

And then a follow-up on industrial, the margin profiles does industrial margin improved meaningfully, even ex tariffs? And how should we think about the margin trajectory from here, including all the simplification and 80/20 initiatives that you have?

I think our margin performance in industrial has improved significantly through all of the simplification activities that include site rationalizations, disposition of assets in the past, consolidation of sites, plus 80/20 being driven extensively throughout the operations. So yes, the performance of the underlying business is strong.

Your next question comes from the line of Kristine Liwag with Morgan Stanley.

So maybe following up on the data center, you've talked quite a lot about it during prepared remarks and seeing a business go from $25 million in annual revenue to $50 million is a pretty big step up, but I was wondering, can you talk more about the origin of this product, meaning that were you displacing someone else? And then what was your penetration before? And as we start seeing these significant builds, how big could this business truly be if the industry builds what's in the plan for the next -- through 2030?

Kristine, thanks for the question. This data center cooling product is pretty exciting for us. So we call it the [ RM 44 ]. The product came to the market in let's say, 2024 initially, it was tested out, so around that time, it has found a lot of traction with one of the main hyperscalers in the market. The pump itself is used for in-rack cooling, so this is where you have high-performance AI processing going on, and you need to pump liquid through those processors to cool them down, so we are in rack with this product. This is the first product in our offering for data center cooling. We have the next-generation product, which is intended for in-row cooling. So now multiple racks being cooled by one CDU. That is undergoing qualification test at the moment. It is designed to meet what is called the [ Pecos 5 ] standard, which has been established by Google, and it will come through into production next year. We expect both products to be in production during the course of fiscal '27 and we see continuing demand for these products in the marketplace.

And Pat, could you quantify how large your potential market share could be? I guess, with the $50 million that you have today, is this just presence with one hyperscaler, and could this expand to other hyperscalers? Just give us an idea of where this could grow. Could this $50 million be $500 million, could it be $100 million? Just want to understand size and scope and timing. .

There is tremendous upside potential to this, Kristine, as I said, we are predominantly satisfying the needs of one of the hyperscalers in the market. So one of the options for expansion of the business is to move across to supply others, so that is real potential for us. So we, as I said, supply predominantly one hyperscaler and two, the CDU manufacturers, there are multiple CDU manufacturers out there as well, so all this is already under discussion. And just wanted to correct, you mentioned $50 million in your statement earlier. I said our business is closer to $100 million within this fiscal year. Just short of it.

Got you. Yes. I was looking backwards. And if I could ask another question on missiles. We're starting to see the MACE programs get converted into firm contracts. And you've said in the past that missiles is about 20% of Space & Defense segment. So I wanted to understand a little better how much visibility you're getting from customers as their contracts firm up. And what are the CapEx requirements, if you have any, to meet some of the program wins and the program volume increases scheduled for the next few years? .

So we expect the missile programs to be around $275 million in fiscal '26. That's around -- it's over 20% growth year-over-year, and that is not reflecting the significant step-up that is coming through those 7-year agreements. As yet, the impact of those 7-year agreement has not yet flowed down to our backlog, Kristine. But we are in very active discussions with all of the primes. We know exactly what their requirements and expectations are for demand over the coming years because we've been doing scenario analysis and exercises over the course of the last 18 months to prepare for that scaling activity. So there is significant more upside to come on the missiles that is not yet reflected in our business backlog. And you then asked about how we scale -- asked the question about how we are scaling. I talked about the data center cooling ramp as an example of what's required. There's an optimization of production flow, there's improvements of yields, so we're doing all of the necessary engineering work to improve what we do in manufacturing these and then we will replicate production lines to facilitate that scaling. We have some based within existing facilities in Salt Lake City to build out additional lines that will cover us for a period of time before we would have to do an expansion to the buildings or additional buildings. It is -- it requires capital in the form of test equipment, mostly but not heavy machining equipment, so we use external supply chain and internal A&T operations to produce these CAS systems, control actuation systems, that are used on the missiles.

Your next question comes from the line of Gautam Khanna with TD Securities.

I was wondering on the MV-75, because there's been a bit of a funding gap, Textron has talked about kind of managing to what they expect the reprogramming action to be. And I'm just curious what your -- have you seen any slowdown in work? And what is your visibility kind of into calendar Q4 of what your -- what Moog's level of activity on the program will be if the funding does not come through for Textron?

Yes. Thanks for the question, Gautam. We've had consistent levels of work activity on MV-75. So we haven't had a disruption to workflow or slowdown in workflow over the last quarter. We anticipate that, that continues through the fourth quarter as well, and that's all built into our guidance. Indeed, Textron did have a disruption to their workflow over that period over the last quarter, that is resolving itself. Everyone is back at work in their facilities, and they have committed to self-funding the gap, if necessary over the course of the next number of months. In some cases, they have a do not exceed on our spend, which is already factored into our guidance.

Okay. And I understand that factored into the guidance through the fiscal year end of Moog, but I'm curious what happens from calendar -- fiscal Q1 promote, do you have visibility into that quarter as well?

Well, we haven't given our guidance for next year, but we're pretty confident that the momentum of this program will continue.

Okay. Jennifer, I may have missed it, but can you quantify the tariff recovery by segment in the quarter?

Yes, I can do that, Gautam. So again, it was $30 million on a consolidated basis, which is 270 basis points of operating margin. So if you go into the slides, you'll be able to see it for our guidance change. So our guidance -- the biggest segment that had an impact that were changing for guidance for the year is 120 basis points in industrial. So take that times 4 or so to get to a quarterly amount, that's 480 basis points in industrial. Commercial for the year is going up by 90 basis points, so that makes the quarter about 360 basis points. Those are the two biggest segments. . The other segments, just to round it out, are 30 basis points for the year for Space & Defense, we're increasing our guidance by. And so that's 120 basis points in the quarter. And military is 20 basis points for the year or 80 basis points for the quarter.

Okay. And I guess where I was confused and perhaps I'm just missing it here, but the delta in sales was $50 million, correct, across the consolidated entity, and we've talked about $30 million from tariffs that were, I guess, unexpected, right? So $30 million of the $50 million is tariff related. I was just curious where is the other $20 million by segment coming from?

Are you looking -- that's not in sales, just so you know, so it's just in the operating. It's just an operating profit. So this is just hitting no sales, all operating profit. And so that's why it's got the margin impacts that I just noted.

Okay. That explains it.

So when you're looking at our performance for operating margin for the quarter, we had the 270 basis points that are due to the tariffs broken down into the segments like we just discussed, and then we also had last year's product line sale, the helicopter, the pneumatics business. So that benefit was 70 basis points last year. So that's a drag on us this year of 70 basis points, so that leaves the underlying business performance up by 80 basis points Q3 to Q3.

Perfect. That explains it. And just one last one for me. I just wanted to ask if there's any disconnect in terms of Moog's sell-in on the A350 with the 787 relative to the assembly rates and the delivery rates? Or are you seeing pretty consistent order patterns? And if you could just comment on that.

We're maintaining pretty consistent production plans, and they are in line with the needs of our customers. So no, we're not -- you got them.

Your next question comes from the line of Jon Tanwanteng with CJS.

I was wondering if you could provide just a little more detail on the recent contracts about $100 billion to one of your customers on these 7-year missile programs. Is that in line with your expectations, number one. Number two, when do you like really start to see that flowing through to you on the P&L? And then number three, just as a side question, are you included on this this [ patriot derivative ] that's supposed to be lower cost?

Thanks very much for the question, John, and good morning to you. So the first question was the orders that have been received by the primes in line with what we were expecting, yes, they're expecting step-up in production rates of factors of three for PAC and factor of four for PAD and so on through the MACE programs. Yes, those -- all those are in line with prior discussions we've been having with our customers. So we're preparing to step up appropriately to support that demand. As I said earlier, that demand hasn't yet flowed down to us in terms of orders, which are reflected in backlog, so we are in very active discussions because, as you know, this is an urgent requirement of the U.S. government, and we expect in the near future to conclude our discussions with primes. So that's the expectation, our ability to step up. We're confident that we can do that. And the last part of your question was the low-cost program. Much of the steering controls required are very similar between the low-cost sale that's being proposed on existing missile. So we believe we have an opportunity. Also, the CAF system is a low -- in terms of the overall system cost is a small portion of the overall system cost.

Okay. Great. And then a second question, again, a little more detail on the data center opportunity. Do you -- are you actually courting additional customers beyond the hyperscale customer that's pulling all of your capacity today? Or is that dependent on the CD manufacturer, that's the first question. And the second question is, do you actually have the capacity or capacity planning to address more than one customer at this point?

Yes. This is a great question, Jon. I would say over the course of the last 12 months, our focus has been on getting the capacity up to the required levels because we had more demand than we could satisfy with the existing one customer, but our outreach already has started on business development across multiple CDU manufacturers and hyperscalers.

Your next question comes from the line of Alexandra Mandry, with Truist Securities.

Great results. So I had a follow-up to the missile discussion. Are there opportunities to be a second source and gain additional market share? And I wanted to get your view on the potential margin expansion opportunity considering the volume increasing multiple times on these platforms?

So thanks, Alex. I'll address the first part of the question, and I'll let Jennifer take the second part of that question. So the first part is there more opportunities out there. We are actively looking to increase scope on some of those platforms. So we have content, we believe that could support other aspects of the missile as well, not just the CAF system. So that's active business development that we're pursuing that can increase the scale of the business. Do you want to do the margin one, Jennifer?

Yes. We've got solid operations and production capabilities currently. Certainly, we're going to scale up on that, too. But we do have clear expectations for what we're managing to for an acceptable margin profile. .

Your next question comes from the line of Kristine Liwag with Morgan Stanley.

So Jennifer, during the prepared remarks, you mentioned strategic acquisitions to complement your existing portfolio. I just wanted to clarify with the statement, is this a difference versus your historical outlook on acquisitions, which are more on bolt-ons. I think most of the sizes were below $100 million, is this a shift from that? Or is that just a continuation of looking for bolt-ons with that span?

I would say it's a continuation, but with a more secure readiness. So our focus right now is on our organic operations. You'll see that coming through capital expenditures even though we are late a little bit this quarter. We've got great organic growth opportunities, and so you'll see that coming through on capital expenditures as we move forward in R&D and things like that to secure our business. But we do want to grow our business, complement our organic growth with acquisitions as well. This is something that we would -- we feel better prepared to do today than a couple of years ago with the simplification activities that we've got already established and well in place, we can more successfully and confidently integrate an acquisition today than we could a couple of years ago, so we feel more ready on that. But I would say that it's still in the bolt-on type of acquisition. I think we go up a little bit higher than what we've had in our historical ones. Sometimes we find those opportunities are scarce from that size type of perspective. But that's what we'd be looking to, to complement our organic growth, and specifically in areas that are strategic. So there are certain areas in the defense portfolio and other portfolios that we'd be interested in growing inorganically in addition to the sources we have inside the company already.

And I think we also -- we're also developing our capabilities and skills internally as well. We bought the Cotsworks acquisition last year. It's performing very well for us, and the integration is proceeding nicely. So that also is useful for us as we start moving forward and thinking about other opportunities to bolt on.

There are no further questions at this time. I will now turn the call back to Pat Roche for closing remarks.

So that concludes our earnings call. I appreciate you taking the time to listen to our update on the business, and I look forward to providing an update again next quarter. Thank you all very much.

This concludes today's call. Thank you for attending. You may now disconnect.