Good morning, and welcome to the Alamo Group Fourth Quarter 2024 Earnings Conference Call. All participants will be in listen-only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions. Please note this event is being recorded. I would now like to turn the conference over to Edward Rizzuti, Executive Vice President Corporate Development, Investor Relations. Please go ahead.

Thank you. By now, you should have all received a copy of the press release. However, if anyone is missing a copy and would like to receive one, please contact us at 212-827-3746 and we will send you a release and make sure you are on the company's distribution list. There will be a replay of the call, which will begin one hour after the call and run one week. The replay can be accessed by dialing 1-877-344-7529 with the passcode 8958542. Additionally, the call is being webcast on the company's website at www.alamo-group.com, and a replay will be available for sixty days. On the line with me today are Jeff Leonard, president and chief executive officer, and Agnes Kamps, executive vice president and chief financial officer. Management will make some opening remarks, and then we will open up the line for your questions. During the call today, management may reference certain non-GAAP numbers in their reconciliations of these non-GAAP results to applicable GAAP numbers which are included in the attachments to our earnings release. Before turning the call over to Jeff, I would like to make a few comments about forward-looking statements. We will be making forward-looking statements today that are made pursuant to the Safe Harbor provisions of the Private Securities Litigation Reform Act of 1995. Forward-looking statements involve known and unknown risks and uncertainties, which may cause the company's actual results in future periods to differ materially from forecasted results. Among those factors which could cause actual results to differ materially are the following: adverse economic conditions which could lead to a reduction in overall market demand, supply chain disruptions, labor constraints, competition, weather, seasonality, currency-related issues, geopolitical events, and other risk factors listed from time to time in the company's SEC reports. The company does not undertake any obligation to update the information contained herein. This speaks only as of this date. I would now like to introduce Jeff Leonard. Jeff, please go ahead.

Thank you, Ed. We want to thank everyone who has joined us on the conference call today and express our appreciation for your continued interest in Alamo Group. Our results for the fourth quarter were aligned with our expectations as the Industrial Equipment division produced strong results as they did all year in a robust market. Headwinds prevailed in several markets served by the vegetation management division, as a result of elevated interest rates and lower commodity prices. I would now like to turn the call over to Agnes, who will take us through a review of our financial results for the fourth quarter. I will then provide additional comments on the results, and say a few words about the outlook for the first quarter of 2025. Following our formal remarks, we look forward to taking your questions. Agnes, please go ahead.

Thank you, Jeff, and good morning, everyone. We finished 2024 with double-digit profitability despite significant headwinds in some of our markets. Forestry and agricultural markets were weak most of the year, while governmental and industrial sectors experienced growth. Fourth quarter revenue was $385.3 million reflecting a 7.7% decline compared to the same period last year. Gross profit for the quarter was $91.8 million with a margin of 23.8% of net sales. Margin declined by 230 basis points compared to the fourth quarter of 2023, which was due to lower volume in the vegetation management division and separation expenses related to our cost reduction initiatives. SG&A expenses were $53.3 million, which is a reduction of 11.3% from the fourth quarter of 2023. These reductions are a result of savings initiatives in the vegetation management division. Operating income in the fourth quarter of 2024 was $34.4 million with an operating margin of 8.9% of net sales, resulting in a decline of 180 basis points compared to the same period in 2023. This margin decline included separation expenses of approximately $1 million. Net income for the fourth quarter was $28.1 million or $2.33 per diluted share compared to the net income of $31.5 million or $2.63 per diluted share in the same period last year. Interest expense in the fourth quarter was $3.1 million lower than in the same period in 2023, driven by reduced debt levels. The provision for income tax was $2.3 million lower compared to the same period in 2023. With that overview, let's take a closer look at the performance of our division. Our vegetation management division reported net sales of $159.8 million, a 25.5% reduction compared to the fourth quarter of 2023. The declines occurred in the forestry and agricultural segments while the governmental segment continued to grow. Operating income for this division was $6.5 million representing 4% of net sales. Savings from cost reduction actions taken earlier in the year partially offset the impact of lower revenue. Additionally, this quarter's results included approximately $1 million in separation expenses. On the other hand, our Industrial Equipment division net sales were $225.5 million representing 11% growth compared to the fourth quarter of 2023. Growth in the fourth quarter was driven by stronger sales of and snow removal equipment. Operating income was $28 million or 12.4% of net sales, a slight improvement compared to the same period last year. A few words to summarize the full-year results. Net sales were $1.6 billion reflecting a 3.6% decrease compared to 2023. The vegetation management division declined 19.8% while the industrial equipment division grew 18.7%. Operating income was $164.8 million or 10.1% of net sales representing a decrease of $33.2 million, 150 basis points year over year. The operating income for the vegetation management division was $56.6 million or 7.2% of net sales, which included approximately $4.2 million in employee separation expenses and an additional $1.8 million of other planned consolidation expenses. Industrial Equipment division operating income of $108.3 million was 12.8% of net sales, a 216 basis points increase versus the prior year on higher revenue and improved operating efficiencies. Net income for the year was $115.9 million compared to $136.2 million in 2023. Interest expense improved by $5.5 million versus prior year benefiting from reduced debt levels. The provision for income taxes was $5.3 million lower versus prior year and represented approximately 22.5% effective tax rate. Let me provide an update on our cost reduction initiatives. In 2024, while forestry and agricultural markets were slow, we executed a number of actions with a long-term goal to improve efficiencies in the vegetation management division. Those actions included consolidation of forestry plants, consolidation of US ag plants, and a significant workforce reduction representing approximately 14% of total Alamo Group global staff. We are on track to achieving our savings target of $25 million to $30 million on an annualized basis. We have already seen some of these savings in the third and fourth quarters of 2024. Further savings are expected to accelerate over the next few months. The cost associated with these actions are mainly employee separation expenses. For the fourth quarter, we incurred approximately $1 million and for the year, the total severance expenses were approximately $4.2 million as mentioned earlier. Moving on to the balance sheet.

We had a successful year navigating a challenging environment.

Our financial position is strong, providing us with the flexibility to support ongoing initiatives and future investments. Our total assets were $1.45 billion at the end of the year, representing an increase of $40.9 million or 2.9% compared to the last year at the same time. This increase is driven by higher cash and cash equivalents. We reduced our accounts receivable by $56.4 million to $305.6 million, also representing a reduction in day sales outstanding by about ten days compared to the end of 2023. Inventory of $343.4 million was reported, which was lower compared to last year. Reductions were achieved in the vegetation management division, and they more than offset the increase in the industrial equipment division. Higher inventory in the industrial equipment division supported revenue growth of 19% in that division. Operating cash flow in 2024 was $209.8 million, increasing by $78.6 million or 60% year over year. Free cash flow in 2024 was $184.8 million compared to $93.4 million in 2023. At the end of 2024, our total debt was $220.5 million and debt net of cash was $23.2 million. This is an improvement of $160.2 million or 87.3% compared to the end of 2023. To conclude, it has been a challenging but very productive year. The difficult actions we took will drive greater efficiencies long term and support our goals to increase our operating margins. I would like to emphasize our commitment to delivering long-term value to our shareholders. We are pleased that our board has approved a quarterly dividend of $0.30 per share representing a 15% increase versus 2024. Consecutive dividend increases underscore our confidence in the strength and stability of our business. As we move forward, we will remain focused on driving growth and optimization of our operations. Thank you. I will turn it back over to Jeff.

Thank you, Agnes. The company's fourth quarter results were broadly in line with our expectations given the mixed conditions that continued to be evident in our markets. The governmental, industrial contractor, and vegetation markets once again followed divergent tracks during the final quarter of 2024. Governmental and industrial contractor customers served by our industrial equipment division continued to invest in fleet modernization and performance upgrades. In North America, demand from governmental agencies and industrial contractors remained strong across all of our major product lines. Fourth quarter sales of $226 million were up 11%. Ordering activity also continued at a good pace although some slowing was noted during the final weeks of the US national election cycle. This division reported strong fourth quarter operating income of $28 million, up nearly 12% compared to the same period of 2023. EBITDA was also solid at nearly 16%. On a full-year basis, the division's sales improved by almost 19% and operating income improved 43% compared to 2023. EBITDA improved by 170 basis points year over year. Overall, the Industrial Equipment division had another excellent quarter and full year 2024 and remained well-positioned to continue this pattern of success heading into 2025. The vegetation management division continued to face tough market headwinds in several of its key markets in the fourth quarter. The combined effect of elevated interest rates and excess channel inventory has continued to depress market activity in the forestry, tree care, and agricultural equipment markets. Dealers have remained cautious as they anticipated relief in interest rates has been further delayed by the Fed as it continues to battle inflation. Fourth quarter sales of $160 million in the US declined 25% versus the corresponding period last year. Operating income in the quarter was $6.5 million. EBITDA was $15.3 million or 9.6% of sales. Order bookings improved sequentially during 2024 albeit modestly, while still remaining off the peaks recorded in 2023. While we still have a long way to go to get this division back to acceptable growth, the improvement in orders is a good indicator that the worst may be behind us. Turning our attention first to the forestry and tree care market. Sales were soft as dealer inventories remained elevated and large tree care contractors continued to postpone nonessential equipment replacements. Sales were down compared to the fourth quarter of 2023 and were sequentially lower than during the third quarter. More positively, however, order bookings in this largest part of the vegetation management portfolio improved sequentially every quarter during 2024 and rose nearly 8% on a full-year basis compared to 2023. So it seems clear that this part of the vegetation management equipment division is beginning to steadily regain momentum. The consolidation of our two largest facilities, Survey Forestry and Tree Care was completed in the fourth quarter and the expected cost savings are just becoming evident as we head into 2025 and this will certainly help this part of the division produce stronger operating results even on lower volume. In the agricultural equipment market, similar patterns were evident. Sales in this market also declined throughout 2024 including the fourth quarter. However, order bookings improved sequentially every quarter during 2024 and fourth quarter book to bill was the highest of the year, more than 115%. While dealer inventories remain elevated, they've continued to come down. Field inventory of our own products remained at a very low level. The consolidation of our two largest manufacturing facilities in the US continues to progress according to our planning. The physical move was completed at the end of 2024, however, some capital improvements in the remaining facility will not be completed until the second quarter of 2025. That is when we expect to receive the full cost and efficiency benefit of this consolidation. It was great to see that other parts of this division's business were stronger. Equipment sales for the vegetation management markets in Europe were modestly higher than in the fourth quarter of 2023, and orders were up nearly 5% compared to the prior year fourth quarter. Vegetation management equipment sales in South America while relatively smaller than the other markets were up 5% compared to the fourth quarter of 2023. Finally, this division's sales of mowers to governmental agencies were also up about 5% in the fourth quarter compared to the final quarter of 2023. It's important to note that the division's governmental sales continued to be at historically high levels. Turning now to corporate performance. As Agnes noted, fourth quarter consolidated net sales declined 8% compared to the fourth quarter of 2023. Fourth quarter net income declined 11% to $28.1 million net of separation costs of $1 million. These results reflect the persistent headwinds we experienced in vegetation management throughout most of 2024. However, we've not been staying idle. During 2024, in addition to conducting two major facility consolidations, cost improvement actions will continue in 2025 as we've identified additional opportunities to improve efficiency and streamline our operations. I was especially pleased with the improvement in the company's cash flow in the second half of 2024. As a result of our team's intensive focus on working capital reduction, we were able to dramatically reduce our long-term debt net of cash to just $23 million. The business environment remains quite dynamic, particularly in North America. We're closely monitoring developments involving tariffs and are planning actions to minimize the impact of them on our operations. With significant manufacturing facilities in the United States and Canada, we are optimistic that we can adjust our manufacturing strategy to minimize the direct impact of tariffs on profitability. Reciprocal tariffs with the rest of the global community are more concerning. These tariffs will probably appear in the form of input cost inflation. We successfully navigated the inflation during the immediate post-pandemic period, and I'm confident we will do so again. But it remains to be seen what effect this will have on global trade. As we look ahead to the early months of 2025, we expect the pattern of the past several quarters will again be evident. We expect that our industrial equipment division will continue to produce strong results and mid-single-digit organic sales growth. We also expect the vegetation management division will continue to show modest but steady recovery in order flow, backlog, and operating margin driven by the cost reduction initiatives. Division sales are expected to begin showing modest growth in the second half of 2025. Profitability is expected to show improvement in the second quarter as the full benefits of the plant consolidations and staff reductions flow through. On balance, we like how the company is now positioned and we're pleased with the results of the cost reduction initiatives we implemented last year. We're also excited about the prospects for meaningful acquisitions in 2025. Our acquisition target pipeline is the most active it's been since the onset of the pandemic. Our strong balance sheet gives us ample room for meaningful investments in inorganic growth in 2025. Before closing, I would like to take this opportunity to express our sincere appreciation to our customers, dealers, supplier partners, our dedicated employees, and financial stakeholders for their continued support of the company. This concludes our prepared remarks. We're now ready to take your questions. Operator, please go ahead.

We will now begin the question and answer session. Pick up your handset before pressing the keys. To withdraw your question, at this time, we will pause momentarily to assemble our roster. Our first question is from Mike Shlisky with D. A. Davidson. Please go ahead.

Good morning, and thanks for taking my questions. Hi, Mike. Hello there. I appreciated your commentary on margins for 2025. Will we start seeing some benefits here in the second quarter?

On the plant consolidation. Okay. So you can talk to us about the industrial group for 2025. Oh, there you have some volume increases. Are there any unusual mix changes or anything something we should be thinking about that might affect the margins in 2025 or just maybe just broad terms of what the emails could be in the coming year here. Yeah. Thanks, Mike. Great question. I don't see significant mix changes within the industrial equipment division at the moment. All three of the segments of that division are holding up very, very nicely. And January has gotten off to a good start. So we're very pleased with the direction inside that division. In terms of the tariffs and plant capacities so on like, you may recall that we repurposed our plant in Worcester, Ohio from forestry and tree care equipment manufacturing to snow removal. That was done partly to mitigate the potential risks related to tariffs so we can produce snow removal equipment for the US market inside that facility and use it to serve the Canadian market. So that's really the only significant major shift. As we've done that, that's liberated some capacity in another one of our snow removal plants in the US. And so it gives us some opportunities to think about how we can continue to streamline the operations inside the industrial equipment division. Having said that, the utilization of facilities in that division is already running very, very well. The under-absorption is essentially nil. For a bit now. So we're in a pretty good spot.

Got it. Thank you. Also, great to see you've basically got almost zero net debt at the moment. I give you a lot of kudos. It was really a gradual process to pay down that debt from more bark and get to a very comfortable level here. So I guess I was wondering what you do with your free cash from here. Do you pay down the gross debt and try and go below the net debt? Do you just raised the dividend? Do you have other plans for Spot investments or are you just gonna try and save money for every day?

No. We're not trying to save money for a rainy day at all, Mike. Obviously, as I said, our M&A pipeline looks very interesting right now. So really that's the primary purpose of any cash that we continue to accumulate and that's why we like the debt position that we're in. But I think any further reduction of debt would frankly be counterproductive. So if the M&A targets don't come, we may buy back a few shares just because we believe strongly in the future of the company.

Alright. Maybe one last one for me. Jeff, congratulations you announced a few months back your eventual retirement. So congrats there. Any update for us on how the search has been coming so far?

It's proceeding very, very well, Mike. We've just come off our fourth meeting, and I'm very pleased with the direction the board is taking. However, having said that, I'm in the saddle and I'm gonna continue driving the bus as long as I needed to do that. I'm not slowing down at all.

That sounds great, Jeff. Thank you so much. I'll pass it along.

Alright. Thank you, Mike.

The next question is from Chris Moore with CJS Securities. Please go ahead.

Hey. I think we'll start good morning. Start with margins. So Q4 operating margins were 8.9%. Just trying to get a feel for maybe the puts and takes of you guys being able to generate better than 10% operating margin in 2025?

I think we're in a pretty nice position to do that, Chris. And the reason is the full effects of these cost reduction initiatives haven't flowed through yet. But the costs associated with them largely have. So as I mentioned on the call, we have a little bit of CapEx left to do associated with that, but all of the separation costs and so on are well behind us now. And as you heard in the remarks, the resizing of the company was actually a little bit more dramatic than we'd initially planned. That's a little bit of a safety buffer from our point of view. So I think as long as industrial can keep growing and they are and hold on to their profitability, which has been steadily increasing as you've seen, and we get our vegetation management division to keep kind of gathering momentum. It won't be dramatic in the first half, but as I said, our own inventories in the field are really low, particularly in ag. A little less so in forestry. But even in forestry, the inventories come down quite a bit. I think the outlook for the second half is quite good. And, of course, when forestry does start to regain momentum, their cost structure is so streamlined now that should drop very quickly at the bottom line, and that's where my confidence comes that we should be able to stay above 10% off income for the full year in 2025.

Maybe if I can add hi. This is Agnes. If I can add something here, fourth quarter seasonally is always a little bit lower, so I expect us to be above 10%. You know, the last year, 2024, we achieved 10.1%. I was quite happy with that because looking at the history of Alamo, this is the second highest year that we've done in the last at least few decades. So we've been okay with that. And like Jeff said, considering all the actions we have taken, we are already starting to see some benefits of that. So I will be pushing to to get back to normal.

Got it. Very helpful. I think Jeff, in your prepared remarks, you talked a little bit about channel inventory levels. I know they had been coming down over the last couple of quarters, but just maybe could you characterize them a little bit further in terms of what you're seeing in early 2025? And know, how much further they need to come down in order to make a difference?

Yes. I I can give you some good color on that, Chris. Let's start with the agricultural equipment side. The inventory is now very low by historical standards, and that's why we're seeing some orders even though the rest of the ag market is reporting that recovery yet. Our dealers are just out of stock, and they have to order now. And I think that's gonna continue for a bit. It won't be overwhelming, but it'll be a positive trend, I believe, all through the first quarter. Then if we move up to tree care, where the next segment up the food chain inside that division, the field inventory in tree care area has come way down. And that was our biggest problem. A lot of the mulching equipment and the tractors that drive those were in excess, and that's come down very nicely during the fourth quarter. We've been very pleased with that. And then as we expected, we started to see some nice orders starting to come out of our national accounts again. These are people like the David trees, the Lewis trees, the Asplants of the world who began to reinvest in fleet. They've been postponing some investments, and we saw some of that go through. We also saw some nice orders flowing through from the state of California related to fire management going forward for chippers and the like. So that's very helpful to us because that was the most hard hit area in 2024. Then when you go to the high end of the food chain, the industrial forestry equipment, field inventory isn't heavy there. It's expensive. It's not a lot of machines. It's just high-ticket items. With the wood pellet industry now starting to recover, with Viva now finally getting recapitalized and back on their feet, those customers are ordering again as well. So there's still further work to go to clear the inventory there, but we're in a much better position than we were one quarter ago. So I hope that helps.

Very helpful. And maybe just to wrap that up a little bit. So vegetation revenue was down, I think, just under 20% in 2024. Comps will be a little bit easier. I mean, is a low single-digit decline for the year, is that achievable? Is that aggressive?

You know, I think we're gonna do better than that, Chris. I'm more of an optimist about that. I actually still think we're gonna work out a little bit of growth next year. Okay. At the rate we're going. So I'm more optimistic, and our dealers are more optimistic they have been for quite a while as well in that space. So, you know, I think that the overall ag market is so dynamic right now and farmer sentiment is reacting both short term and long term. Short-term sentiment's been a little bearish because of all the talk about tariffs and kind of the actions of the federal government. Makes everybody nervous. But their long-term outlook is actually quite good right now, and the prospects for that market, you know, if the war in Ukraine gets settled, and I think it will, that helps for a great deal, particularly for us. Historically, we had a nice export market in both Ukraine and in Russia. So I'd love to see that back. So then as you move into the forestry and tree care space, as I said, most of the inventory overhang now in tree care is gone. And we're starting to see nice orders flowing through again for mulching heads and for chippers, not at the level they were, in the sort of late pandemic period, but coming back to a much more normal order flow. And as I said, sequentially orders have been rising every quarter for most of last year. So I think we can clearly state that we're off the bottom. I think the momentum should continue to increase as we go throughout the year. Obviously, tariffs are the big wildcard, but if you think about that, most of that business for Alamo Group is North American business, and most of it is US then. And again, we have facilities on both sides of the US-Canada border, so I'm not overly concerned about tariffs. We've studied it exhaustively. It's done profitability; it's not a significant risk at this point in time. So I'm fairly bullish about the way 2025 is gonna shape up, and, you know, already we're off to a pretty good start. The early weeks of the year have been very encouraging.

Sounds good. I'll jump back in the line. Thanks, guys.

Thanks, Chris. The next question is from Greg Burns with Sidoti and Company. Please go ahead.

Morning.

Good morning, Greg. Could you just talk a little bit about the order activity on the industrial side? Where in particular were you seeing declines this quarter? Okay. Yeah. Great question, Greg. The back truck market, first of all, held up very, very well. That's been running steady and decent growth. So there's been no interruption in that whatsoever. The sweeper side, street sweepers were down a little bit, and you've heard me talk on call before, Greg, sweepers tend to be the canary in the coal mine. But this was a national election year as I highlighted, and we always see disruption in that particular product group in a national election year. That's happened every year every four years anyway since I've been with the company. Snow removal was down a little bit. I think some of that is related to our own lead times. We were so busy throughout the second and third quarter. I think our lead times getting a little bit long, but ramping up this Worcester facility in Ohio to produce snow removal is helping to alleviate that quite a bit. So I think that'll come back on. And obviously, the snowfall this winter has been actually really, really good. We've had frequent snowfalls, so it's required continuous plowing. So I think the outlook for snow removal going forward is actually pretty good. But it was those two areas that we can then back backing trucks remain very strong.

For the sweepers and sewer cleaners, vac trucks, what are your lead times like there? We've heard others in the space talk about longer lead times. And if you have more normal lead times, are you at all able to benefit from that dynamic in the market?

Yeah. We are, Greg. Our lead times are still running three to four months. We're in a pretty good position there. We've still got capacity available. So we're not overwhelmed in either one of those product groups at all.

Okay. Thank you.

The next question is from Mircea Dobre with Baird. Please go ahead.

Hey, guys. This is Peter Kalamcarian on for Mig Dobre this morning. Quick question for me on the morning, Jeff. Quick question for me on vegetation. Could you first remind us the percent of that $25 million to $30 million in savings that is flowing directly through vegetation? My recollection was almost all, but I just want to confirm that. And second, given these cost savings, how are you thinking about vegetation deck decrementals maybe in the low to mid-twenties like we saw in the fourth quarter or maybe does that get a bit better with savings still to flow? I'm curious to kind of hear your thoughts there, maybe the margin puts and takes for vegetation.

Hi. This is Agnes. I'll take a first run at this. So the $25 million to $30 million in savings that we have announced, we're on a very good way for achieving that, by the way. And this is all in vegetation. So all actions we took, you know, the consolidations of plants, the reductions in force, is in vegetation. So nothing in industrial. When it comes to decrementals, I we have seen the improvement as we've been taking those actions. And as we go into 2025, I expect that improve quite a bit, especially since those savings are still a little accelerating in the early months in this year. And also the cost that we're not going to have the separation costs that we had last year, were not repeated. So, I expect those to improve.

Yeah. And I would echo that. What I would say further on beyond that is that the actual sell price cost margin in that division held up pretty nicely all through last year. The impact to net margin that you see in our published results or the effect of under-absorption, which is why we took such dramatic actions to reduce capacity. That work is largely done. We're still seeing just a little bit of impact from it. Because the consolidation isn't quite bedded down yet in the large facility down in Alabama, but that should settle down in Q1. And then I think we'll see the margin stabilize and start to rise. So and as Agnes said, all of the savings really that we've announced will be eventually be reflected in the bottom line.

Awesome. Super helpful, guys. I guess moving to industrial now, just thinking longer term, you've taken a lot of steps to improve the overall margin profile of the segment. You hit roughly, let's call it, a 13% operating margin for the full year 2024. Maybe thinking longer term, where do you think the margin in this business can get? Any further plant consolidations, operating initiatives, to be aware of that could lead to, I don't know, sort of fundamentals, you know, structural margin uptick in this segment. I know maybe in the past you've talked about, like, hitting mid-teens. Is there anything, you know, any color there?

Yes. I can give you some nice color there. I think 15% operating margin in that segment is very doable. And very doable within 2025, at least by the end of the year, not on a full-year running basis, but I expect we should be able to end the year at that level next year. We do have some further plant consolidation opportunities within the industrial division as a result of the realignment within our Forestry and Tree Care segment as I mentioned. The second largest facility in the vegetation management division was the West one in Worcester, Ohio, which has now been repurposed to produce snow removal equipment. That allows us to consolidate some of our smaller facilities that were more fragmented across the US in particular. So I think that'll be a nice gain as we head through 2025, and we have clear plans to get that this year.

Awesome. Thanks, Jeff. And then just one more for me. I wanna circle back to M&A. You know, we've been talking a lot lately about some bigger opportunities on the M&A side. Are there any categories in particular you're looking at, adjacent categories of interest geographic expansion, you know, any color you could add there on kind of what you're looking at with that inorganic component would be super helpful.

Yeah. I mean, I obviously can't be too terribly specific here, but we're looking at things that are closely in our wheelhouse. You know, more governmental work, there's opportunities there. In some larger segments of governmental that we are not currently serving. That would be incremental products within our governmental portfolio. See very nice opportunities in Europe. We're chasing a couple of very interesting cases at the moment that would take our industrial further and deeper into the European market, which has been a goal of the company for a very, very long time. So we've seen so many opportunities right now in the timing of them is what we're trying to gain a little bit because some of the sellers are also wary of what the tariff impact might be. But in any event, our goal is to keep our balance sheet spotlessly clean and nice and taut, so when the opportunities do come, we can react very positively to it. And I do think that's gonna happen during the first half of 2025. At least some of these are gonna break loose, at least. That's my expectation right now.

Awesome. Thank you, guys.

Thank you.

This concludes our question and answer session. I would like to turn the conference back over to management for any closing remarks.

Thank you for joining us today. We look forward to speaking with you on our first quarter conference call in May 2025. That concludes.

The conference is now concluded. Thank you for attending today's presentation. You may now disconnect.