Thank you for standing by and welcome to the Atmus Filtration Technologies' Fourth Quarter and Full Year 2023 Earnings Call. I would now like to welcome Todd Chirillo, Executive Director, Investor Relations, to begin the call. Todd, over to you.

Thank you, Operator. Good morning, everyone, and welcome to the Atmus Filtration Technologies' fourth quarter and full year 2023 earnings call. On the call today, we have Steph Disher, Chief Executive Officer; and Jack Kienzler, Chief Financial Officer. Certain information presented today will be forward-looking and involve risks and uncertainties that could materially affect expected results. Please refer to our slides on our website for the disclosure of the risks that could affect our results and for a reconciliation of any non-GAAP measures referred to on our call. For additional information, please see our SEC filings and the Investor Relations pages available on our website at atmus.com. Now I'll turn the call over to Steph.

Thank you, Todd, and good morning, everyone. I'm excited to join you today to share an update on Atmus. I will discuss our fourth quarter and full year financial results and our outlook for 2024. I will also share some of the significant progress we have made implementing our growth strategy. First, let's discuss our performance in the fourth quarter. We drove strong financial performance in the fourth quarter, delivering an impressive finish to our first year as a public company. Sales were $400 million compared to $385 million during the same period last year, an increase of approximately 4%. Adjusted EBITDA in the fourth quarter was $71 million, or 17.9% compared to $53 million, or 13.9% in the prior period. Adjusted EBITDA for the quarter excludes $8 million of one-time standalone costs and $7 million for the same period last year. Adjusted earnings per share was $0.49 in the fourth quarter of 2023 and adjusted free cash flow was $30 million. Adjusted free cash flow excludes $4 million of one-time capital expenditures related to separation from Cummins. As expected, we saw some continued destocking and softer freight activity, which dampened revenues from our aftermarket. This was offset by continued strong demand in U.S. first-fit markets. In India, markets remained strong and in China, we saw demand slowly recovering. Now let's review our full year results. Sales for 2023 were $1.63 billion, an increase of approximately 4% from 2022. Adjusted EBITDA margin rose 300 basis points from the prior year to 18.6%. EBITDA has been adjusted for one-time separation costs which were $29 million in 2023 compared to $9 million in 2022. Adjusted earnings per share was $2.31 for the full year and adjusted free cash flow was $152 million. Free cash flow has been adjusted for $9 million of one-time capital expenditures related to our separation. Turning to our global markets now, I want to share some insight into the material drivers for our business and provide you with our guidance for 2024. Our business is diversified geographically and the length of the cycle for aftermarket and first-fit varies. In 2024, we anticipate first-fit and aftermarket will be countercyclical. Let's start with aftermarket for both on-highway and off-highway markets. As a reminder, aftermarket represents approximately 80% of our global revenues. We experienced softer freight activities and destocking during the second half of 2023 in on-highway markets. In North America, which represents a significant portion of our business, we saw the cash rate index down about 9% in the second half compared to prior year and down 5.5% over the full year. We believe we are largely through the destocking and expect on-highway aftermarket to improve as we move through 2024, driven by growth in freight activity. In global off-highway markets, we are monitoring several key industries. We expect construction in North America will be supported by resilient demands in non-residential construction, which is aided in part by government infrastructure spending. In Europe, we expect the weakness in construction activity to continue due to overall economic conditions. And global mining markets are expected to be relatively flat from a robust 2023. Based on these market assumptions, we anticipate overall aftermarket for on-highway and off-highway to be flat to up 3%. Turning to our global first-fit markets, our three key geographies are the U.S., China, and India. In the U.S., we anticipate heavy-duty truck will be down 10% to 15% and medium duty truck will be flat to down 5%. We expect the first half demand will remain robust before it begins to decline in the second half of 2024. The recovery in China has been sluggish and we anticipate a continued muted recovery. We expect heavy-duty and medium duty truck production to be in the range of down 5% to up 10%. China is the most difficult market for us to forecast, leading to this wide range in outlook. In India, we see industry demand for trucks to be flat to up 5% for the year, driven by strong on-highway performance. As a result of these market drivers and our growth plans, we anticipate total revenue to be down 1% to up 3%, resulting in guidance for global sales in the range of $1.61 billion to $1.675 billion in 2024. We expect continued strong operational performance and to deliver adjusted EBITDA margins of 18.25% to 19.25%. Additionally, we anticipate adjusted EPS will be in a range of $2.10 to $2.35. Now I would like to take a moment to share the progress we have made on implementing our four pillar growth strategy. The first pillar is to grow share in first-fit. While our first-fit business represents about 20% of our overall business, it is the foundation for driving recurring revenue in our aftermarket. We are a leader in fuel filtration and crankcase ventilation products, and we are focused on growing this leadership transition with global OEM customers. We are winning with the winners and have continued to secure Cummins new vehicle platforms. As an independent company, we also have the ability to accelerate growth with other leading global OEMs. Additionally, we are continually investing in new product development. In 2023, we opened two new technical centers for key global markets. The first center opened in Wuhan, China, and our second is our global capability center in Pune, India. Our second pillar is to accelerate profitable growth in the aftermarket. We are transforming our global distribution capabilities to provide our customers with industry-leading product availability. We established three new distribution centers in Brazil, Mexico, and Dallas, Texas, and we have also transitioned our largest distribution center in Kentucky from Cummins. We have plans in place to establish independent distribution centers in Europe and Asia-Pacific in 2024. Furthermore, we have a unique multi-channel path to diverse global markets, which includes an exclusive agreement with Cummins to distribute our products. At the same time, we are growing our distribution network and have expanded our presence in key independent channels in North America, Brazil, and Mexico. This increase in channel presence will support continued growth in our aftermarket. The third pillar is to transform our supply chain. We are investing in our manufacturing capacity to improve automation and provide our customers with industry-leading products. We completed our fully automated green cartridge production line in France. In Korea, we are expanding our production capabilities for our NanoNet filtration media. These investments will continue to improve our operational excellence and operating costs. Our fourth pillar is to expand into industrial filtration markets. We intend to pursue this growth inorganically through a disciplined programmatic approach. Our capital allocation priorities will continue to reflect our focus to grow both organically and inorganically. In closing, I want to take the opportunity to provide you with an update on Cummins announcement to launch the share exchange. As expected, Cummins has announced they will commence an exchange offer to fully split off their remaining interest in Atmus. We have filed a registration statement on Form S-4 with the Securities and Exchange Commission today, in connection with the Cummins announcement. Pursuant to the exchange offer, Cummins shareholders will have the opportunity to exchange their shares of Cummins common stock for shares of Atmus. Upon successful completion, Cummins will no longer be the controlling shareholder of Atmus. The completion of the exchange offer will be a significant milestone for Atmus, allowing us to unlock our full potential and accelerate the delivery of our growth strategy. I am proud of our Atmus team who have worked hard to deliver these results. As I reflect on 2023, we made significant progress, and this fuels my belief in what is possible for Atmus as a fully independent company. I am even more excited for the opportunities we have in front of us in 2024.

Thank you, Steph, and good morning, everybody. We delivered another strong quarter of financial performance in the fourth quarter. Sales were $400 million compared to $385 million during the same period last year, an increase of approximately 4%. The increase in sales was primarily driven by pricing and the favorable impact of currency, partially offset by a decrease in volume. Gross margin for the fourth quarter was $106 million, an increase of $23 million compared to the fourth quarter of 2022. In addition to pricing, we also benefited from lower freight and commodities, which more than offset the impact of lower volumes. As a reminder, during the fourth quarter of 2022, we took action to significantly right-size our inventory and experienced short-term operational inefficiencies as we slowed production. These actions did not repeat in 2023. Selling, administrative and research expenses for the fourth quarter were $58 million, an increase of $6 million over the same period in the prior year. The increase was primarily driven by higher administrative costs related to our separation from Cummins, in addition to the impact of higher variable compensation driven by overall company performance. Joint venture income was $9 million in the fourth quarter, an increase of $2 million from 2022, due to increased performance at our joint ventures in India and China. This resulted in adjusted EBITDA in the fourth quarter of $71 million, or 17.9% compared to $53 million or 13.9% in the prior period. Adjusted EBITDA for the quarter excludes $8 million of one-time standalone costs and excludes $7 million for the same period last year. These one-time costs primarily relate to the establishment of functions previously commingled with Cummins such as information technologies, distribution centers, and human resources. Adjusted earnings per share was $0.49 in the fourth quarter of 2023, which was the same amount in the prior year. Higher interest expense incurred from debt issued at our IPO offset stronger underlying financial results. Adjusted free cash flow was $30 million this quarter compared to $63 million in the prior year. Last year, we generated significant cash flow from the reduction of our inventory as supply chains improved. Now, let's discuss our full year 2023 financial results. Sales were $1.63 billion compared to $1.56 billion in 2022, an increase of 4%. We benefited from $102 million of pricing actions which were partially offset by $34 million of lower volume and $2 million of foreign exchange headwinds. Gross margin was $433 million, an increase of $74 million from 2022. In addition to favorable pricing, we saw commodities and freight improve by $41 million. This was partially offset by lower volumes and unfavorable manufacturing costs. Selling, administrative and research expenses for the full year 2023 were $217 million, an increase of $39 million compared to the prior year. The increase was primarily driven by administrative costs related to the separation from Cummins and variable compensation. Variable compensation is higher this year as our employees delivered strong results relative to our plan. Our team will receive the payout of the incentive compensation in the first quarter of 2024, which will impact first quarter cash flow from operations. Joint venture and other income was $37 million in 2023 compared to $32 million in the prior year, primarily due to increased performance of our India joint venture. Adjusted EBITDA was $302 million or 18.6% compared to $243 million or 15.6% in 2022. One-time costs related to separation were $29 million for the full year 2023 compared to $9 million in 2022. We believe these costs will be in a range of $5 million to $15 million in 2024 as significant progress on our separation was achieved in 2023. The effective tax rate for 2023 was 24.3% compared to 19.6% in 2022. The increase was driven by a change in the mix of earnings between U.S. and foreign operations related to a legal entity restructuring implemented in anticipation of the IPO and separation. For the full year 2023, adjusted EPS was $2.31 compared to $2.13 in 2022. Higher interest expense incurred from debt issued at our IPO lowered results in 2023. For the full year 2023, adjusted free cash flow was $152 million compared to $129 million in 2022. Strong profitability and a focus on working capital management generated robust cash flow, which was partially offset by increased interest expense. Now let's turn to the strength of our balance sheet at the end of 2023. We ended the year with $168 million of cash on hand, driven by strong free cash flow generation. Combined with the full availability of our $400 million revolving credit facility, we have $568 million of available liquidity. Our cash position and strong performance during 2023 have resulted in a net debt to adjusted EBITDA ratio of 1.4x at the end of the year. Our balance sheet provides us with operational flexibility as we enter 2024 to focus on value creation and delivering total shareholder value by deploying capital for both continued organic growth and strategic inorganic initiatives. In closing, I want to thank our global team for their commitment, which allowed us to deliver exceptional results during our first calendar year as a public company. We are looking forward to continuing our momentum as we execute on our strategy in 2024. Now, we will take your questions.

The floor is now open for your questions. Our first question comes from Joe O'Dea with Wells Fargo. Please go ahead.

Hi, good morning.

Good morning, Joe.

I wanted to start on the revenue outlook. And so aftermarket flat to plus three total down one to up three. What are you thinking about for first-fit range and just any commentary on within that range? Are you anticipating share gain, any kind of sizing of share gain opportunity?

Yes. Good morning, Joe. Thank you for your question. Let's discuss the first-fit side, which accounts for about 20% of our total revenue. The projections indicate a decline ranging from 14% at the low end to 5% at the high end, with a midpoint decline of 9.5%. This outlook is significantly influenced by our U.S. exposure in the heavy-duty markets. For medium-duty, we anticipate a smaller decline due to current inventory levels. Regarding market share, we are experiencing some gains. Our long-term growth forecast suggests a general market growth of 2%, with price contributing 1% and share gains of 1% to 2%. In this instance, we expect to achieve around 1%.

And then just any kind of first half versus second half perspective on how you're thinking about it. I'm not sure to what degree first-fit demand is holding up better in the first half. And then as that would kind of slide that you'd see aftermarket come in, in a stronger way in the back half.

The way we're seeing it is that we expect first-fit to remain pretty resilient through the first quarter and into the second quarter, and then drop off more in the second half. Then on the aftermarket side, we actually expect that to be countercyclical. We'll have to see how this plays out. Of course, we saw the aftermarket, particularly the on-highway markets in the U.S., significantly down in the third and fourth quarters. I think I referenced it already, but that cash index is a good indicator of that for us. It was down 9% in the second half of 2023. So as a comparative, as we head into the second half of 2024, we do expect an inflection point in freight activity in the aftermarket. We also expect we're all the way through destocking now, and so we see some positive tailwinds for us in the aftermarket in the second half.

I appreciate those details. And then, Steph, wanted to ask on M&A and just any commentary on kind of progress with the pipeline over the last six months to nine months, and then what goals you're setting for the M&A team globally into 2024.

As we discussed our strategy, the fourth pillar involves expanding into industrial filtration markets, and we are committed to pursuing that. We have been focused on clarifying our strategy, identifying target markets, and assessing our opportunities to succeed in those areas. Over the past year, my strategy and leadership teams have concentrated on determining which markets to focus on and how we can excel there by utilizing our technological strengths and global distribution capabilities. We have been developing a pipeline for mergers and acquisitions and regularly reviewing potential targets during the past year, which has helped us refine our approach. We plan to take a disciplined stance on M&A. My objective for the team is to expand into industrial filtration markets through acquisitions, but it is crucial that any acquisition aligns with our growth goals while also generating value and returns.

That's helpful. Thank you.

Thanks, Joe.

Our next question comes from the line of Rob Mason with Baird. Please go ahead.

Yes. Good morning, Steph and Jack and congratulations on the quarter. I wanted to probe just your thoughts around what the puts and takes could be in gross margin for the year in your outlook. And specifically, I was curious your view on where cost is and also any efficiency gains that you can speak to. And maybe lastly, just how you think the $5 million to $15 million of one-time cost would flow through just the reported gross margin.

Okay. Good morning, Rob. Thanks for the question. I might ask Jack to take the lead on this one.

Great. Good morning, Rob. Thanks for your question. So I'll start first with kind of the impacts of price and volume from a gross margin perspective. For the full year, as Steph alluded, we're envisioning price of about 1%, some puts and takes from a volume perspective, again with aftermarket hopefully improving year-on-year, offset a bit by first-fit reductions. And then we have some share gain initiatives. All three of those put together equate to roughly an offset, if you will, at the gross margin level. And so as you think about that benefit of price, what we're expecting is a pretty healthy incremental gross margin backdrop partially offset by some continued investment in our separation activities as we've talked about, we still have few of our distribution centers to decouple from Cummins over the course of 2024 and into the beginning of 2025, which will obviously drive some of those one-time costs, but also drive some inefficiencies which are inherent as you decouple this.

So is it fair to think about gross margin flattish year-over-year with the full year that you just reported then?

Yes. I think generally speaking, we would see probably some gross margin expansion driven by that pricing activity. The other input, Rob, which we're keeping a close eye on is the input costs, right? And so our baseline assumption and what we're seeing right now is that commodities and freight remain relatively flat year-on-year. Obviously, if those dynamics change, then we'll revisit price in order to preserve our margin.

Understand. Just as a follow-up, you mentioned distribution centers that would expand into Asia, Europe. How should we think about those activities in the context of share gain opportunities, principally in the aftermarket? But should we look for outsized share gain opportunities internationally as a result of some of those actions?

So Rob, I would say firstly that we've progressed through most of our distribution center transition from Cummins already. So we obviously focused on the larger distribution centers first, these remaining distribution centers in Asia-Pacific and Europe is part of that transition. So really servicing our existing business and transitioning those distribution centers across. As part of our overall supply chain transformation, we do see opportunity in terms of product availability through our distribution network overall. And we do expect that to accelerate growth in our aftermarket. I would say that's integrated in the overall sort of shared summary that I gave you earlier. In that algorithm of the 1% to 2% at the top-line growth level is how we're still thinking about it right now. Obviously, we'll continue to push for accelerating that growth further.

That's great. Thanks, Steph.

Our next question comes from the line of Jerry Revich with Goldman Sachs. Please go ahead.

Yes. Hi, good morning, everyone.

Good morning, Jerry.

Hi, Jerry.

Steph, I'm wondering if we just go back to the M&A topic, and when you look at the range of outcomes based on your M&A pipeline. Can you just give us a sense of how much capital you think you can put to work over the next 12 months to 18 months? And I appreciate that there's a wide range of outcomes, but can you just give us a flavor for your level of optimism on your ability to move the needle on that part of the strategy within 12-month timeframe?

Thanks for the question, Jerry. Look, I would say I don't have an M&A specific deal to talk to you at this point sitting here. My expectation is our capital allocation priorities will be very much focusing on creating the flexibility for us to make the right M&A investment when we identify that, that would be the first thing I would say. Obviously, we're balancing other things in our capital allocation priorities as well, but you should expect our capital allocation priorities to demonstrate that. In terms of the size of targets and what we're looking at, I said before that we're really looking at targets in that $50 million to $60 million revenue range, generally speaking. Now, I don't intend to be bound to that, but I'm expecting that we're taking a programmatic approach to acquisitions. We want to build out our capabilities and the creation of value as we progress from expanding into industrial filtration markets. And so it will be that size level of revenue and then subject to market multiples, which I won't speculate on here as to how that may translate into capital allocation. But hopefully, that gives you at least some thinking around the prioritization and how it fits around our growth plan.

Okay. Thank you. And separately, the 27 engine regulations coming into play, you spoke about potential to gain new platforms earlier in the call. Any opportunities with 27 changeover either for share or content for you folks?

We continue to be focused on being a leader in fuel filtration and crankcase ventilation in particular. We are targeting all of those opportunities to grow our share in those platforms, and we're having success. And so we are obviously very strong partnership with Cummins, which will continue, and we've been able to secure those platforms with Cummins. And we will continue to look to win other business in those platforms. And we've had some success in that as well. But this is very much focused on growing our share in fuel and crankcase ventilation as we see that opportunity coming up for 2027.

Okay. Super. And lastly on the Cummins front, with the transition of dialer medium duty engines, nearly 100,000 units over the next, call it five or so years, is that a global opportunity for you folks? Would you benefit across the Board on that or are there any regions where you wouldn't participate in? And how do you expect the cadence of that transition to play out as you plan your capacity?

We would absolutely expect that to be a global opportunity for us and to play out over the period of time. Our investment, we pre-plan, obviously, our investment in capacity, and we are investing in capacity to ensure that we can meet and service that demand and support our customers.

Okay. Thank you.

Thanks.

Sure.

Our next question comes from the line of Andrew Obin with Bank of America. Please go ahead.

Hi. Yes, good morning.

Good morning.

Congratulations on a great quarter. Just a question in terms of when you talk about your aftermarket, you sort of mentioned that destock is almost over. So as I look at your forecast, what is the headwind embedded in your number from the destock for the year and what sort of I guess I'm trying to sort of figure out sell through versus sell in.

It's interesting, Andrew. As you look at the aftermarket projection, and I've given a range in our aftermarket of 0% to 3% as part of our overall guidance, with a mid-point of 1.5%. It's difficult to disentangle some of the freight indices and the freight activity from the destocking activity. While you might think the destocking activity is just a supply-side issue, I do think it is intermingled with the freight downturn that we saw in the cap index, for example, of 9% in the third and fourth quarters. So look, the best projection I can give you in aftermarket at this point as we turn that corner, and as I said, it's going to be more weighted to the second half is my expectation, particularly as we saw those headwinds in the second half of 2023, that it'll be in that range of 0% to 3%. We haven't seen the inflection point yet, particularly in the on-highway markets of that turning. We're still seeing depressed freight activity. As I said, the destocking we've seen mostly conclude, but we're still seeing the depressed freight activity. We'll need to see that turn before we can give any more optimism around the aftermarket outlook.

Well, rush to rush called the bottom on freight for the summer earlier today. So there we go. Sorry, couldn't resist. But you know him, he's a character. So just a different question actually, a full separation from Cummins. Is the Board planning to revisit potential cash return to shareholders? I know folks are asking questions on M&A. Is that the first priority? What's the thinking on sort of return of capital to shareholders? Thank you.

No. Thank you for the question. We certainly will revisit that with our Board as we move through the share exchange and the transition that obviously is subject to the Board's decision, but we would certainly look to revisit that. I think, Jack, it may be worth you just talking about how we're thinking about the capital allocation priorities.

Yes, absolutely. And thanks for the question, Andrew. So just a reminder, we are coming out of 2023 in a position of strength from a balance sheet perspective. As I mentioned, $586 million of liquidity and 1.4x net debt to adjusted EBITDA. Our number one priority is to continue to reinvest in the business to enable top-line growth across our growth platforms, in addition to a successful operational separation from Cummins. Obviously, continuing to fund strategic growth initiatives with a focus on expansion into industrial filtration markets, as Steph mentioned, we will take a disciplined approach to that M&A balancing profitable growth with return on invested capital. And then, as you mentioned, continuing to evaluate cash returns to shareholders with a goal of delivering strong total shareholder return. We did pay down the revolver inside of Q3 and so I wouldn't expect any significant debt reductions outside of the contractual ones that we highlight.

Perfect. Thanks so much.

Thank you.

Our next question comes from the line of Bobby Brooks with Northland Capital Markets. Please go ahead.

Hey, good morning, team. Thank you for taking my question. So, pretty strong year-over-year revenue growth in the fourth quarter. Obviously, you already mentioned that it was driven by pricing and favorable impacts of currency, but slightly offset by decreased volumes. So I was just wondering if you could maybe help frame how much of an impact each of those factors were in the fourth quarter and then also maybe discuss how those I mean you kind of already touched on it, but if anything incremental that you want to add on how those factors influence your 2024 guide.

Thanks. Jack, do you want to touch on this?

Yes, absolutely. And welcome, Bobby, good to hear from you. So some of the quarter-over-quarter dynamics pricing versus last year in the same quarter was about $17 million or just about 4% year-over-year, volume was about an $8 million headwind or about a 2% reduction, and then some FX benefits of about $5 million or slightly over 1%. So that's kind of the top-line backdrop. As Steph mentioned, as we look at 2024, we would expect price to be about 1% of a benefit, share gains of about 1% offset by just about 1% of a net volume headwind, again with the impacts of first-fit offsetting the expected recovery in aftermarket. As we think about 2024 versus 2023 have not embedded any significant FX movements based on what we see right now.

Got it. I appreciate that. Moving on to the next question, could you remind me how many of the 11 distribution centers you had at the end of 2023 are located in APAC and Europe, and which ones you plan to separate from Cummins or establish as independent distribution centers? Additionally, could you discuss the financial impacts and insights gained from launching the facilities in Brazil, Mexico, and Dallas, and how you intend to apply those lessons to the rest of your operations?

Thanks for that question. We have currently four of the 11 are shared facilities still with Cummins, and so we'll look to transition those over a progressive plan over the course of 2024. I think South Africa extends into 2025 as the only remaining one beyond this calendar year. They're certainly we're at the tail end, if I describe it that way, of our distribution center transition, still obviously very important to us in terms of our global footprint. But as I talked about earlier, we have prioritized the Pareto or 80% of distribution centers and have moved through those effectively. In terms of what we've learned and the opportunities generally, we've been able to phase the work within the quarter. I would say, obviously, there is some build of inventory inside a quarter as we make the transition of the different facilities and set all of that up. Generally speaking, we've been able to do that in the quarter. There's systems transitions and facilities transitions as part of this, and all I would say, I guess is with each one of these, you get slicker in how you manage it. And so I'm not expecting any issues with the ones that are ahead of us. We have a clear plan, and I'd expect us to manage to support our customers through that transition very effectively, given how much practice we've had.

Got it. That's really good color. And then, maybe just touching on the fully automated line manufacturing line in France, could you maybe just remind us what the timeline of when that was completed and maybe talk about because I know you guys want to take the learnings from that. And obviously, you specifically chose to do that in a high-cost region, right, to see those benefits most. And just along with the timeline, just talk about maybe when you think you could get to a point where you're comfortable with the learnings to maybe apply that to your manufacturing footprint elsewhere.

Yes. So automation overall is a key part of our supply chain transformation strategy. For reference, our largest manufacturing facility is in Mexico, in San Luis Potosi. And so our strategy for automation varies by location, I would describe, and also by the different lines and opportunity sets. We very much focus on the green cartridge line as one of our bigger automation undertakings. It's a fully automated line, as distinct from, in some cases, such as in Mexico, we're using assisted robotics, which really removes some sets of the activity in the manufacturing line, but not all of it. So there's been a lot of learnings for us in France, as we've installed the green cartridge line. That decision was taken last year, I think commissioned early this year. We've been trying to scale that up. So certainly, I expect efficiency benefits as we get into 2024 associated with that line in particular, because just how that all works together has taken us some time to land. Also, part of that green cartridge line was not just the automation of it, but just the production ability that we had. This will give us much more speed than our existing green cartridge line that's more manual, to be able to support the really growing demand for this particular product in Europe and beyond. So we will continue to strategically invest in that kind of capacity. And I guess the matching there is what's the regional requirements? What are the global requirements? And then do we best service those through a fully automated line or this other end of the spectrum of just robotics to support parts of the line.

That's great. Thank you. Thank you, Steph. I appreciate that, and I'll turn the call back over to the operator. Thank you.

Thank you.

Thank you.

I would now like to turn the call over to Todd Chirillo for closing remarks.

Thank you. That concludes our teleconference for the day. Thank you all for participating and your continued interest. As always, the Investor Relations team will be available for questions after the call.

This concludes today's call. You may now disconnect.