Loar Q3 2026 Earnings Call - LOAR HOLDINGS INC

Greetings and welcome to the Lore Holdings third quarter 2026 earnings call. At this time, all participants are in a listen-only mode. A question and answer session will follow the formal presentation. If anyone should require operator assistance, please press star zero on your telephone keypad. As a reminder, this conference is being recorded. It is now my pleasure to introduce Ian McCullop, Director of Investor Relations. Thank you. You may begin. Thank you, Diego. Good morning, everyone, and welcome to the Lohr Holdings Q3 2026 Earnings Conference Call. Presenting on the call this morning are Lohrs Chief Executive Officer and Executive Co-Chairman Dirksen Charles, Executive Co‑Chairmen Brett Milgram, Treasurer and Chief Financial Officer Glenn D'Alessandro, as well as myself, the Director of Investor Relations. Please visit our website at lohrgroup.com to obtain a slide deck and call replay information. Before we begin, we would like to remind you that statements made during the call, which are not historical in fact, are forward-looking statements. For further information about important factors that could cause actual results to differ materially from those expressed or implied in the forward-thinking statements, please refer to the company's latest filing with the SEC, available through the Investor Relations section of our website or at sec.gov. We'd like to also advise you that during the call, we may be referring to adjusted EBITDA, adjusted EBitDA margin, and adjusted earnings per share, each of which is a non-GAAP financial measure. Please see the tables and related footnotes in the earnings release for a presentation of the most directly comparable GAAP measures and applicable reconciliations. To begin today, I will now turn the call over to Dirksen. Thanks, Ian. Good morning to my mates, all our partners participating on this call. Let's all turn to slide four. Now, I have said this before, and I'll say it again. Law is building an aerospace industrial cash compounder fueled by a culture of growth, respect, collaboration, and entrepreneurship. Full stop. Each day, 1,800 of my mates and I show up ready to create a significantly larger cash compounding, all while preserving our foundational principles and culture. We know that we will wake up five years from now as a much larger company with even stronger cash compounding characteristics. Today, nothing, nothing at all has changed in the macro that suggests a deviation from historical growth expectations. And the breadcrumbs we leave each quarter prove we are right on the road to achieving our goals. This quarter, we achieved record sales, adjusted EBITDA margins, and more notably, generated record free cash flow at a growth rate of 46% over the prior year's third quarter. We grew sales organically by approximately 16% during the quarter, driven by excellent execution across all our value drivers, combined with the benefits realized from our latest new business wins. In fact, this quarter is the 17th sequential quarter of record adjusted EBITDA demonstrating our consistent performance. If you turn to slide five, you'll see that we have grown each quarter in 2026 at rates higher than our growth rate since our founding in 2012. As a reminder, we have gone lower since our funding at 30 plus percent and 40 plus percent for sales and adjusted EBITDA, respectively. While we have such results, we know that we're really just getting started. But again, what really makes this quarter noteworthy is the strength of our cash flows. In fact, year-to-date 2026, we have converted operating cash flows minus capital expenditures at approximately 200 percent of net income. Turning to our end markets, please turn to slide six. Commercial OE growth continued to climb and is up 20% in the quarter versus last year's Q3. We continue to benefit from an improved supply chain and increased demand for our parts. In addition, we've also realized additional value from the shipment of products related to our new business, WINS. As we noted last quarter, two-thirds of the business we converted to WINS were for original equipment. This is now the third quarter in a row where the commercial OE end market grew the fastest. Once again, that did not stop us from achieving record results. Commercial aftermarket was up low double-digit percentage again this quarter, in line with our expectations. Given that our portfolio consists of proprietary products, we have tremendous visibility of the demand for our parts and a strong presence in the commercial aftermarket. We expect to be able to deliver such performance for the foreseeable future at the age of the active fleet during 2026 is still 17% or, put it this way, two years older than what it was pre-COVID, despite airlines attempting to manage their capacity in light of higher fuel costs. last quarter we said that we expected to see increasing demand for our defense and market products we were not surprised that in q3 we had the highest growth in any quarter this year within this end market the geopolitical uncertainty in the world the increasing goals of european nations to increase their military arsenal and technology as a percentage of their gdp and the U.S. needing to replenish their stockpiles has resulted in increased military funding across the globe. With that said, we continue to anticipate quarterly sales to this end market to be choppy. As always, consistent execution of our value drivers continues to stimulate loss growth and create shareholder value. We continue to emphasize collaboration, entrepreneurship, enabling above-market growth rates, being an engineered solutions provider to our customers through launching new products, optimizing manufacturing and productivity to increase performance, and achieving price over inflation to improve margins annually. This consistent performance we have demonstrated since we founded law in 2012. We have also initiated guidance in 2027 above our organic growth rates and expect sales at the high end of $755 million and adjusted EBITDA of $317 million in 2026. I'll address that later. At this moment, I'll now turn the call over to Brett to walk you through our key characteristics of our portfolio and the current state of our M&A pipeline. Thanks, Berkson. In order to drive consistent and predictable performance, we have created a diverse portfolio of products that covers essentially all end markets, platforms, and customers with an uncompromising emphasis on proprietary offerings and high service levels for both OEM and aftermarket customers as they continue to look for reliable supply chain partners. We have purposely created this model in order to position Lord to benefit from the long-term secular growth nature of the industry without some of the short-term market fluctuations that can arise when a company is overweight to a particular end market, technology, or product category. This disciplined and balanced strategy has served us well and resulted in an exceptional and consistent financial performance. In fact, despite varying conditions in each of our end markets since becoming a public entity, we have posted double-digit organic growth and improving margins each and every quarter. Furthermore, and as an example to this specific point, look no further than the last two years of lore. In 2025, our military business was our fastest growing segment and overall margins for lore went up. In 2026, commercial OEM was our fastest growing segment, and our overall margins went up, while no one can definitively predict how each of our end markets may grow in the future. I can confidently say we fully expect overall margins to continue improving and expect continued consistent organic growth, irrespective of what and market leads the way. Our portfolio is designed to be balanced, resilient, and have wide exposure across a very large and overall growing aerospace and defense market. The same disciplined and consistent approach to market also applies to our M&A strategy. Our demonstrated track record of acquiring one to two new brands per year over the last 14-plus years is still our best indicator of future activity. with the key ingredient being that we maintain our rigor in evaluating and acquiring businesses that have similar characteristics as our existing portfolio. Proprietary offerings within niche categories of aerospace and defense that have high barriers to entry and an OEM aftermarket balance. While this continues to be an M&A market that requires an appropriate amount of discipline, I am very encouraged about some of the new opportunities we are currently evaluating as there remains a breadth and depth to the different types of businesses we are seeing across all our end markets. Coupled with our organic growth opportunities and current portfolio of businesses, we feel confident that our ability to generate outsized and consistent long-term returns is still in the early innings of LOR's history. Male Speaker 1 turning to our expansive product portfolio. As a reminder, we go to market with more than 25,000 unique parts. No single part accounts for more than 3% of our annual revenue. More importantly than the sheer size of our portfolio is our integrated platform. It combines engineering, design, qualification, and production expertise across disciplines to deliver tailored solutions and to adapt quickly as our customers' requirements evolve. We continue to expand our capabilities and product portfolio through organic new product development. Over the past two quarters, we've shared exciting news about our new business pipeline, including visibility into $200 million in revenue generation over the next five years. I'm happy to report that the team remains focused on bringing home wins and expanding our overall opportunity set. We will continue to share updates on these efforts at similar cadence. You can expect an update on our pipeline when we announce Q1 2027 earnings, followed by updates on our wins in the following quarter. I'll now pass the call to Glenn to go through the financials. Thank you, Ian. Good morning, everyone. Let me recap our financial highlights for the third quarter of 26. Our net organic sales increased 16% over the prior year quarter. Our gross profit margin increased 150 basis points as compared to the prior year quarter, this increase was due to the execution of our strategic value drivers, as well as operating leverage. This was partially offset by higher non-cash amortization of acquired intangible assets related to the LMB and Harper Engineering acquisitions. Net income decreased $8 million versus Q3-25. The higher operating income generated by the increased revenues was offset by higher interest, higher amortization of acquired intangible assets, and higher income tax expense in 26 because of a tax benefit recognized in Q3-25 related to tax law changes. Adjusted net income decreased $3 million versus Q3-25. This primarily relates to higher interest expense and a higher income tax expense because of the tax benefit recognized in Q3.25. Adjusted EBITDA was up $23 million versus Qu3-24. Adjusted EBT margins were 40.8% during Q3 26 compared to Q38.7% for Q3 25. This increase is primarily due to our operating leverage and the execution of our strategic value drivers. This slide highlights the consistent margin improvement we have delivered over the past several years. Since 2020, our margins have increased from 30.9% to an estimated 42% for 2027, or 1,100 basis points. margin expansion strategy is built on four primary levers. First, operating leverage. As we continue to grow revenue, we benefit from leveraging our fixed cost base across a larger business, allowing more of each incremental dollar of revenue to float at the bottom line. Second, winning profitable new business by converting our organic new business pipeline into sales that continue to increase margins. This is true even though a majority of the new business sales will start out as original equipment. Third, executing on productivity initiatives. Across the organization, we're driving operational efficiencies through automation, process improvements, and using technology that help reduce costs while supporting scale. Fourth, value-based pricing. We continue to align pricing with the value we provide, enabling margin improvement while maintaining strong customer relationships. These benefits are partially offset by two factors. The first is the initial margin profile of acquisitions, where a newly acquired business may begin below our target adjusted EBITDA margin before integration synergies are realized. The second is ongoing costs associated with maintaining a public company infrastructure if you recall back to our ipo we expected to achieve 39 percent adjusted even down margins by 2026. we will have exceeded that forecast for 26 and will continue to increase margins into the foreseeable future as can be seen by the 42 percent adjusted event down margin we expect to achieve in 27. Our outlook continues to be supported by healthy demand across each of our end markets, starting with commercial OEN. We're assuming growth in the high double-digit range, approximately 19 to 22 percent, which represents an acceleration from the 17 to 20 percent growth we previously anticipated. This reflects continued strength in productization rates and ongoing recovery across commercial aerospace supply chain. In commercial aftermarket, we're expecting low double-digit growth. We continue to see strong demand driven by elevated aircraft utilization, aging fleets, and sustained maintenance activity across the global aviation market. In defense, we are assuming mid-single-digits growth. We continue the benefit from healthy program activity and long-term spending priorities across key platforms. This slide compares our previous 2026 outlook with our revised expectations. Beginning with net sales, we've increased our revenue outlook to a range of $669 million to $679 million, up from the prior range of 665 million to 675 million. Adjusted EBITDA has also increased to a rate of 270 million to 275 million, compared to to our prior outlook of $265 million to $270 million. Importantly, we're maintaining our expectation of approximately 40 percent adjusted EBITDA margin, demonstrating our ability to convert revenue growth into earnings while sustaining strong profitability. Below the EBITD line, we're also raising our expectations for net income, diluted EPS, and adjusted EPS. Net income is now expected to be between $60 million and $64 million, while adjusted EPS is expected to range from $1.36 to $140 per share. Overall, the revised outlook reflects better-than-anticipated operating performance, favorable market conditions, and continued execution against our strategic value drivers. This slide outlines the primary assumptions embedded in our 2026 guidance. For capital expenditures, we expect to invest approximately $20 million, supporting both growth initiatives and ongoing operational improvements. We anticipate full-year interest expense of approximately $80 million. Our effective tax rate is expected to be approximately 25 percent for the year. Depreciation is expected to be approximately 15 million, while amortization is expected to be 65 million. We also anticipate approximately 18 million of non-cash stock-based compensation expense. Finally, our diluted share count is expected be approximately 97 million shares, which serves as the basis for our earnings per share calculations. Overall, our outlook reflects continued strength across our end markets, improving financial expectations, and disciplined execution. Let me now turn the call back over to Dirksen to share our outlook for 2027. Dirksen Yates Thanks, Glenn. We are currently living in an environment with geopolitical challenges across the globe, rising interest rates, and airlines carefully managing their capacity given sustained higher oil prices. We have taken all of these macro dynamics into consideration for our 2027 guidance. We therefore have planned for a flat to up 2%-ish increase in available seat miles with regards to commercial aftermarket volume growth in 2027. But as you all know, we have multiple levels of organic growth. In 2027, the drivers of our growth algorithm are ranked in this order, new business, price, and then volume. Given our new business wins and the proprietary characteristics of our portfolio, we enter 2027 with an extremely high conviction that we'll have at least low double-digit percentage commercial aftermarket growth. With regards to our other end markets, given the demand signals, our record backlog, the improvements in the supply chain, the success of our new business conversion, and the diverse and proprietary nature of our portfolio, we expect commercial OEM and our defense end markets to also be up low double-digit percentage in 2027. As always, this view is on a performer basis, assuming we have owned all our business units since the beginning of 2026. This results in initial guidance for calendar 2027 as follows, sales between $745 and $755 million, adjusted EBITDA between $312 and $317 million, with adjusted EBIDDA margin of approximately 42 percent, gap net income in the range of 91 to 95 million, adjusted EPS between $1.64 and $1,68. Capital expenditures will be slightly above our historical rate of 3% at around 4% of sales or approximately $30 million. This is driven by investment to meet the increased demand, the robust demand we're seeing for our products with, you know, most noteworthy seatbelt restraints, fans and motors, carbon brakes, and seat track fits. Interest expense will be approximately $83 million with an effective tax rate of 25 percent, depreciation of $15 million and amortization of approximately $67 million, while non-cash stock comp of $18 million. Diluted share count, 98 million. So, please note that all the amounts I've just outlined for you relating to calendar year 2027 performance assume no additional acquisitions. However, however, however as we have noted previously, our drumbeat is to complete one or two acquisitions each year. But we cannot predict the timing of such acquisitions, With that, operator, let's open the line for questions. Thank you. We'll now begin our question and answer session. If you would like to ask a question, press star 1 on your telephone keypad. A confirmation tone will indicate that your line is in the question queue. You may press star 2 if you would like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the Star Keys. And your first question comes from John Godin with Citi. Please state your question. Hey, guys. Thanks for taking my question. I wanted to just start with the 2027 outlook. You guys gave a lot of detail. Dirksen, there's a lot of commentary there. I think that, you know, to sort of state the obvious on the market, people feel like they're lacking visibility and you're expressing a view on commercial aftermarket and defense that has a lot of visibility and you have a great sort of track record and you've offered some bridge, but I was just hoping maybe you could just dialogue with us a bit more about the conviction on aftermarket defense specifically. I think we get the drivers on commercial OEM, but on after market and defense specifically in a complex macro and geopolitical backdrop. Okay. Good morning, John, and thanks for the question. Look, we start when we look at looking out 12 months, 18 months, 24 months, we start with the metrics that's in front of us, right? So let's start with a few of those. Our book to build across all our end markets was north of 1.1. I'll leave it at that. In some cases, significantly north. So let'S start with that. That's the robust demand we're seeing. We're starting with metrics that tell us that our backlog across all our end markets are at record highs. Now, I appreciate the question, given what I would call the noise in the macro, but appreciate this, because we've been saying this since the last 40 years. We've built law to be a solutions provider. We, and the reason that we shared so much detail over the last few quarters about new business is because we're winning, converting to wins, really good content, proprietary business for us that's driving some of that backlog and some of that wins that's above and beyond the macro that everybody is focused on. So the conviction, I'll say to you this way. You guys have known this now for three years. We know this of ourselves. I'll save this, that when we give an initial guidance for the upcoming year, we're doing that with a conviction level where I sleep very comfortably at night. We expect to meet or beat and mostly beat what we're sharing with folks. So, across all those end markets today, given the metrics that I've just shared with you, we see low double-digit growth. As I said, with commercial aftermarket, we're looking at seeing available seat miles continue to grow as it has this year, which is flattish. That's what we're projecting. Will we do better? Hopefully. In commercial OE, he didn't ask about commercial Oe because I think folks hear us there. Given bill rates at the Boeings and Airbus and et cetera of the worlds that are forecasted, we always take a 10% to 15% discount for that. So that's what's in the guide. So high, high conviction, John. Hopefully I answered your question. That was great color. And if I could ask one more for Brett. Brett, when you were talking about the M&A pipeline, I recall a specific comment about how the breadth and depth of different types of businesses was interesting to you. Maybe you could just kind of expand on what that meant. Yeah. I guess I'd say it this way. certainly in the earlier part of the year going in back into last year a lot of focus on defense a lot businesses available um for sale or for discussion uh on the defense sector and i i'd say more recently over the last quarter or two seeing uh more and more opportunities across all the other end markets. And so I'm very encouraged by that. I'm sehr guttural von den Diskussionen, die wir haben und die Typen von Unternehmen, dass wir die Möglichkeit haben, die Familie zu machen, so zu sprechen. Also, bleibt auf. Okay. All right. Thank you. Thanks, John. Thanks, Jeff. your next question comes from ken herbert with rbc capital markets please state your question yeah hey good morning everybody um maybe again just to stick on the 2027 outlook as we look at the roughly 200 basis point improvement um in ebitda margins implied in the outlook as you talk about operating leverage you know the new business productivity some of the key initiatives you've outlined, how do you think the margin progression and the key drivers change in 2027 relative to what you've seen over the past few years, or is it largely consistent as we think about the relative importance of what's behind the margin expansion? Thanks for the question, Ken, and good morning. It's fairly consistent to what we have seen over the last few years. I mean, our DNA is to wake up every day and, you know, get more price and inflation check, to be a little bit more productive tomorrow than, you Know, today, and so on and so on. I would say the one standout, this in 2027, and probably 2028, is, again, the new business. you know we we have shared with folks that uh we don't enter into a new business you don't win new business if it's not going to make make money for us if i can say that way um margins of the new business uh because we're shipping some of those now is actually exceeding what we were thinking so really feel comfortable about that so that's the one little difference because the new business ran is a lot faster than it has been uh in the prior but so far so good thanks darkson and if i could just drill down a little bit obviously you've you've increased sort of the opportunity or the revenue contribution from the new business over the last few years where are you seeing sort of increased opportunity today on new business i know you focus more on on always you think about the flywheel and and getting in on the ground floor so to speak but are you seen greater opportunities present themselves today on new business? I mean, how much could this backlog expand over the next six to 12 months as we think about just continued supply chain disruptions and challenges across the industry? I'll give you a short answer, then I'll go ahead and give you an answer. I'll just give you the short answer to your question. Are we seeing more? Absolutely. Every day we see more. Met a customer two weeks ago, having dinner at one of the conferences is, you know, we frequent, Ken. And that has now turned out to be an opportunity I didn't even dream about. All because, all because we have capabilities today that we didn't have three or four years ago, right? So every day, the opportunity set is growing. Now, my mates have convinced me that we shouldn't share the new business pipeline every quarter. But I will say this, I will say this to you. I won't say this here. It's higher this quarter than it was last. And that's just something we see naturally going because every time we have one of our mates get in front of a customer, they're sharing the capabilities across the total group, not just what they're sitting there in front of them for. And I will tell you, in more than half of those meetings, we walk away with an opportunity that we didn't know previously exists. That's just the collaboration that we have across the group that we think is actually one of our superpowers. So, yeah, it's building. It's getting better. It's becoming stronger. I'm looking forward to sharing what we commit to Q1 and Q1, what that looks like. So, no, it is growing, and it is more and more opportunities, Ken. Thanks for that question. Great. Thanks, Dirksen. your next question comes from christine lewag with morgan stanley please state your question hey good morning everyone uh congrats on a great strong operating quarter so so dirks and brett you guys have consistently pointed to a cadence of one to two acquisitions per year you've been very clear that this environment could be lumpy but but can you give us more color on the supply of the businesses that meet your criteria and how the competition for those assets have been evolving? And also, I guess, you know, when you look at the apparent disconnect between public market valuations and private seller expectations, how are you assessing pricing and what's the likelihood of converting your pipeline into deals? Yeah, there's a few questions in there. I guess I've said for a while now, Christine, that to your first part of the question, the supply of available assets and businesses that make up the supply chain that potentially fit our business model is, for all practical purposes, larger than we'll ever get to. So, the opportunity set is enormous. And as it relates to the competitive dynamic, quite candidly, and it may be a little counterintuitive, we have not seen a change all that much, even in the last several years, as there's been more activity in the capital markets, more public names out there, et cetera, et cetera. Part of the reason is there is an enormous amount of nuance to understanding truly what is proprietary, truly what opportunities lie within a business and how you make it better, both from a growth perspective and an operational and execution perspective. And there's only a handful of folks who can, we think, do that effectively. We are one of them. I think a lot of you out there know the usual suspects, so we won't go through all of them specifically. And so, we see a very consistent set of competitors, if you will, for those assets that come to an auction or some type of competitive process with more than one bidder. Now, that being said, a lot our transactions are proprietary in nature. after relationships that we've built over months or even years or, in several cases, decades. So, our mix of M&A opportunities comes from competitive auctions, comes from intermediaries like your bank or banks like you, comes from proprietary relationships, and a whole array of other sources, not the least of which is the 1,800 teammates we have at LORE, all of whom think about M&A, help in the M&a process, help evaluate not only assets but strategies that we want to go after and make, you know, the opportunity set even greater for us. And so, for all those reasons, we are really encouraged about what's in the pipeline. And I guess I'll say it this way, as it relates to what opportunities we can convert, and presumably what you mean is the relatively near term, I will use these two words, stay tuned. We are optimistic. Well, it sounds great. Sounds like great news. We will stay tuned indeed. And if I could squeeze another question in, with airline profitability under pressure, are you seeing greater customer willingness to adopt more PMA parts today? And then also when you look at the company's ability to convert some of your PMA opportunities into certified parts, are you accelerating some of that investment in-house so you can convert more of that $750 million new business pipeline, line, which I know is not all PMA, but could be converted to revenue sooner? Not to want to lead the witness, but it sounds like there's an opportunity for you guys. Yeah, Christine, it's a great question. This is Ian. Where I would say you'll find us investing, and Dirksen alluded to this when he was going over our CapEx spending for next year, is we're investing heavily on our capabilities on the break side, which, as you know, is a PMA leg to the stool, if you will. So we are seeing a lot of willingness to adopt PMA in that side of the house. I don't know that it's going to be, you know, exponentially more than what we've seen historically across airlines, you know, given less oars and the different things that are at play in commercial aerospace. But I definitely can say we are investing in that area. And where we can get and capitalize on opportunities, we're going to add to that group. And what we do see, and it isn't necessarily specific to PMA, but more and more, as our relationships grow, as our business continues to have transparency by being a public entity, and we become a valued supplier to our customers, the more open-minded they are to us bringing opportunities to make their business better, be it PMA, be it a new product introduction, be it a new category that we can service them, et cetera, et cetera. Those opportunities are continuing to grow and why we always come back to, we're just at the early innings of our new business pipeline opportunity set and overall place in the supply chain. So, we're very, very optimistic about that. Great. Thank you very much. Thank you. And a reminder to the audience, to ask a question, press star 1 on your phone. To remove yourself from the queue, press start 2. And your next question comes from Sheila Kayoglu with Jefferies. Please, your question. Thank you, and good morning, guys. Appreciate you guys putting yourselves out there with the 0 to 2% capacity growth assumption for 27. You know, perhaps if you could just add some detail around what you're seeing in that outcome as it relates to oil price and just thoughts on broader macro. And if you could perhaps comment on your platform exposure and whether you're expecting any bifurcation between any of your new gen aircraft versus content on your old gen, please. Let me take. Good morning, Sheila. Good to hear your voice. Morning. You too. Let's start with what I said about ASM growth, right? What we've seen this year, and I know you know the statistics probably better than I do, is flat to down ASM growth as airlines have managed to take out unprofitable routes, etc. So the way we kind of think about forecasting into the future, given where oil prices is today, is we assume more of the same, right? That's the assumption. That's not the expectation, but the assumption, and more of this same to us would be flattish, and if you want to give a range down 1%, up 2% somewhere within there, that's how we built our forecast. Now, with that said, and hopefully you heard the answers to some of my questions before, I'm not seeing that in our demand, right. I'm not seeing that in the bookings that we have. I'm, I'm seeing that when I sit down with a customer and we're talking about capacity and what the capacity expectations on our side of the table has to be to meet their goals over the next year, two or three years that, that I'm Not seeing, but what we do do when we build a forecast, we want to make sure we get in front of our partners, everybody on this call and all the investors in law and make sure that when we say we're going to hit a number, we're gonna hit a number. So keep that in mind. Now with regards to our product offering, we don't see any, I'll say this way, any changes between new aircraft, old aircraft, all engine, new engine for the parts that we're making today, they carry forth from legacy right through to the future. We're not, as you know, making engines we're not making wings you know the things that actually move the needle when it comes to fuel efficiency and those things we're making switches and push buttons and you know latching mechanisms right um and what what where the opportunity set is is a little bit of improvement um showing up on time with a quality product and you get to stay on that platform and the new gen. So that's kind of how we think about the products that we, you know, offer to our customers. So hopefully in there somewhere, Sheila, I answered your question. That's it. Thank you, Dixon. Maybe can I ask another one? I guess on two-part, on M&A, you know what's holding you back the most, I guess? Is it just, I know you stick to your knitting when it comes to M&A, the margin profile, the valuation. So what's holding you back? And as you think about the past year, you know, you had LMB in December, Harper in January. How has perhaps like no new M&H coming in here this year changed the way you run the business for the better, whether it's the new pipeline or focus on productivity? Well, there's no change in how we run the business, that's for sure. And for those of us who have actually done M&A, you would know that it's lumpy and it's unpredictable. And I could give you several examples, which I won't on this public forum, but several examples of things that we are very close to. And for the intricacies and personalities and nuances that go into M&As, which is not as simple as buying a public stock or not. Sometimes things work out, sometimes things don't. And to your point earlier, we remain very, very disciplined. So, what you're going to see is never a linear straight line of a pace or a cadence of M&A when you're measuring things in quarters as opposed to years or multi-years. And so, you'll wake up, you know, at some point in the future and say, wait a minute, you did a flurry of deals. Are you doing too many? You know, how can you do that? And the point I'm trying to make is it's unpredictable and it's lumpy, and that's the nature of the M&A business for those of whom, for those people who are disciplined about it and will only execute on transactions that will increase the equity value of the company. That's the best way I can answer it. Okay. That's super helpful. Thank you. Thanks, Sheila. Thank you, and there are no further questions at this time. I'll now turn it back to Dirks and Charles for closing remarks. Thank you! So, look, first of all, a big thank you to all my mates who are the heart and soul of law And to everyone that has taken the time to hear our story today, we continue to be excited about building our aerospace and defense cash compound that we call law. And looking forward to speaking to you all in February. Thank you very much. Thank you. This concludes today's conference. All parties may disconnect.