Hello, and welcome everyone joining today's Innotiv 4th Quarter in Full Year 2025 Earnings Call. At this time, all participants are in a listen-only mode. Later, you will have the opportunity to ask questions during the question and answer session. To register to ask a question at any time, please press star 1 on your telephone keypad. Please note, this call is being recorded. We are standing by if you should need any assistance. And it is now my pleasure to turn the meeting over to Steve Halper of LifeSci Advisors. Please go ahead.

Thank you, Chloe, and good afternoon. Thank you for joining today's quarterly call with Initi's management team. Before we begin, I'd like to remind everyone that some of the statements that management will make on this call are considered forward-looking statements, including statements about the company's future operating and financial results and plans. Such statements are subjects to risks and uncertainties that could cause actual performance or achievements to be materially different from those projected. Any such statements represent management's expectations as of today's date. You should not place undue reliance on these forward-looking statements, and the company does not undertake any obligation to update or revise forward-looking statements, whether as a result of new information, future events. I lost my place. Future events. The company does not undertake any obligation to update or revise forward-looking statements, whether as a result of new information, future events, or otherwise. Please refer to the company's SEC filings for further guidance on this matter, including risks and uncertainties that could cause results to differ from forward-looking statements. Management will also discuss certain non-GAAP financial measures in an effort to provide additional information for investors. Definitions of these non-GAAP measures and reconciliations to the most comparable GAAP measures are included in the company's earnings release, which has been posted to the investor section of the company's website, www.initiv.com, and is also available in the form 8K filed with the Securities and Exchange Commission. If you haven't obtained a copy of today's press release yet, you can do so by going to the Investors section of Initi's website. Joining us from the company this afternoon are Bob Leisure, President and Chief Executive Officer, and Beth Taylor, Chief Financial Officer. John Sagartz, Chief Strategy Officer, will join us for the question and answer portion of the call. Bob will begin with some opening remarks, after which Beth will present a summary of the company's financial results for its fourth quarter and full year fiscal 2025, and then we'll open the call for questions. It's now my pleasure to turn the call over to Bob Leisure, CEO. Bob, please go ahead.

Thank you, Steve. Good afternoon, everyone. During the fourth quarter of fiscal 2025, we saw the continuation of some positive trends for our business, including a strong year-over-year increase in demand for our discovery and safety assessment business. We continue to execute on the core goals outlined in our May 2025 Investor Day, including improving our cash flow and margins and maintaining our focus on customer matrix two critical elements of our plan consist of improving dsa revenue margins and continuing our rms site consolidation efforts in order to further reduce cost on today's call i'll provide an update on the progress we are making on these objectives along with the other general business updates for the fourth quarter. On that last point, on August 18th, we filed an 8K disclosing that we became aware of a cybersecurity incident which caused disruption to certain of our business operations. We worked to restore availability and access to our networks and systems during this fiscal fourth quarter. We were required to work through a number of challenges that were disruptive to the business, but we continued to execute requests for delivery of products and services while this incident inevitably had some financial impact on the quarterly results I'm very proud of how the team responded and as you can see from the results of the quarter the company maintained its momentum through this process in September we disclosed that we had engaged Perella Weinberg partners to provide general financial advisory and investment banking services to assist the company in exploring potential debt refinancing alternatives and then we later announced that a proposed settlement of our securities class action and an agreement in principle to settle the derivative lawsuits in each case pending court approval and expect that the settlement payments will be fully covered by insurance now moving on to the quarterly results we continue to see some very encouraging signs. For the fourth quarter of fiscal 2025, total revenue was $138.1 million, an increase of $7.7 million, or 5.9%, compared to the fourth quarter of fiscal 2024. The DSA business was the primary driver of this increase. Sequentially, revenue was up $7.4 million, or 5.7%. For fiscal year 2025, total revenue was $513 million, an increase of $22.3 million, or 4.5%, compared to $490.7 million for fiscal 2024. Some of the key highlights of Q4 2025 included quarter-over-quarter and year-over-year increases in net DSA awards and revenue growth. DSA revenue growth was a goal that we outlined during our Investor Day in May of this year. Compared to the prior year fourth quarter, DSA quarterly revenue increased 15.7% and awards increased approximately 61%. These results were some of the strongest DSA quarterly results we have seen over the last two years. Since our May Investor Day, we have posted increases of 12.4% in DSA revenue and 41.1% in DSA awards for the last two fiscal quarters of 2025 as compared to the last two fiscal quarters of 2024. In the fourth quarter, Discovery Business Awards increased 55% over the same period a year ago, and we achieved even stronger growth rates in the new service lines we started or expanded over the last couple years, including biotherapeutics, medical devices, and genetic toxicology. The DSA backlog conversion rate was 37.4% for the fourth quarter and was the highest quarterly conversion rate we have seen in three years. DSA margins also continue to improve, and while we believe there should be further opportunities in the future, we are pleased with the current momentum. RMS revenue for the fourth quarter was slightly ahead of last year by approximately 1%, and for the fiscal year 2025, increased 4.7% over fiscal year 2024. Phase two of our RMS site consolidation project has remained on track. In early October, we closed one of the three planned RMS facilities and now have two additional lease facilities remaining to close as we stated last quarter we anticipate future annual savings of six to seven million dollars on a capital investment related to the expanding of existing to expanding an existing lease location of approximately six point five million to date we have spent a possibly 1.8 million net of tenant allowances related to this capital investment as with previous projects we have executed in the rms segment these additional investments are intended to help modernize our existing footprint while allowing us to close older facilities the plan will reduce open capacity should create operating efficiencies while continuing our efforts to support our animal welfare objectives additionally we believe that this plan allows us to remain agile and to increase production capacity in the future as needed when When the site consolidation project is complete, we expect to have closed a total of 13 RMS facilities or possibly 60% of the RMS facilities over the last three years. During fiscal 2025, we sold two properties as a result of our site consolidation project. One property was sold in June and the other property was sold in September. The net proceeds were used to repay principal on our term loans during July and October, respectively. Our efforts also saw additional achievements during the fourth quarter, including advancements in our RMS management operation system, which have been developed over the last 14 months and are now providing data and metrics that we believe will allow us to further improve RMS operations and efficiencies in the future. We continue to improve our North American transportation fleet and operations. In the second quarter of fiscal 2026, we expect to have achieved a 24% reduction in our fleet to yield a cost savings since bringing the North American transportation in-house. This two-year project has been critical helping improve our delivery and client satisfaction. In addition to other improvements being made, with order intake and accuracy, we have seen a 55% reduction in our RMS client complaints over the last two years. Subsequent to the end of fiscal fourth quarter, in October of 2025, we're able to transfer our commercial operations to one new CRM system, integrating multiple systems into one solution for our customer relationship management systems. in addition to cost savings we anticipate this will provide operating efficiencies improved data metrics and enhance ability to communicate internally between business segments and with customers we have reduced the number of IT systems from 249 in early 2022 to 162 as of October 2nd 2025 this reduction has been part of our planned efforts beginning in 2022 to streamline and enhance our technology environment we look forward to continue to focus our efforts on increasing revenue improving margins and improving our client experiences while we did face some headwinds in the quarter we were pleased with our results which we believe further demonstrate our ability to identify opportunities integrate businesses we acquired and start up and implement action plans designed to improve revenue and margins. As for our balance sheet, we generated $14.3 million of cash from operations in the fourth quarter and increased our cash balance to $21.7 million compared to $6.2 million at June 30, 2025. Our first lien term debt matures in November of 2026, our second lien term loan in February of 2027, and our convertible debt in October of 2027. As we mentioned previously, we have retained Perla Weinberg to assist us in exploring potential debt refinancing alternatives with the goal of improving our balance sheet. We are actively having these discussions and will provide more information at the appropriate times. Before I turn the call over to Beth, I want to recognize and acknowledge that it has been very, very nice to see this increase in DSA revenue and the DSA awards over the last three quarters and believe these trends are continuing through the first two months of the current quarter compared to the same period in prior year. However, as a reminder, we are coming off some very weak numbers from a year ago, and the geopolitical and macroeconomic conditions, risk uncertainties are likely to remain with the industry for the foreseeable future. I'll now hand things over to Beth to provide the financial overview.

Thank you, Bob, and good afternoon, everyone. For the fourth quarter of fiscal 2025, total revenue was $138.1 million compared to $130.4 million in the fourth quarter of fiscal 2024. This was a $7.7 million or 5.9% increase in revenue from the prior quarter, primarily driven by increased revenue of $7.1 million within our DSA segment. For fiscal 2025, total revenue was $513 million compared to $490.7 million in fiscal 2024. This was a $22.3 million or 4.5% increase in revenue from the prior year due to a $14.5 million or 4.7% increase in RMS revenue, primarily driven by higher NHP product and service revenue and a $7.8 million or 4.3% increase in DSA revenue. DSA revenue in the fiscal 2025 fourth quarter was $51.6 million compared to $44.6 million in Q4 fiscal 2024. The year-over-year 15.7% increase in DSA revenue was primarily driven by an increase in discovery and translational science services, biotherapeutics, general toxicology services, and surgical services. DSA revenue for fiscal 2025 was $187.9 million compared to $180.1 million for fiscal year 2024. The year-over-year 4.3% increase in DSA revenue was primarily driven by an increase in safety assessment services, including biotherapeutic services, surgical services, and general toxicology, and an increase in discovery and translational science services. Additionally, the year-over-year increase in DSA revenue was driven by our improved performance over the last six months of the fiscal year. The book-to-bill ratio for DSA for the fourth quarter of fiscal 2025 was 1.08 to 1, and our trailing 12-month book-to-bill was 1.05 to 1. DSA backlog was $138.2 million at September 30, 2025, compared to $129.9 million at September 30, 2024, and $134.3 million at June 30, 2025. Overall, net new DSA awards this quarter were $54.2 million, a 61% increase over Q4 of fiscal 2024, and a trailing three-quarter increase of 37% year-over-year. year. We continue to see strong quoting and awards for the months of October and November. The backlog conversion rate in the fourth quarter of Fiscal 2025 was 37.4%, up from approximately 33% in the prior year period. The DSA cancellations and negative change orders in the fourth quarter of Fiscal 2025 were approximately 29% lower compared to the prior fourth quarter. Cancellations in the trailing 12-month period were approximately 7% more than the prior trailing 12-month period. RMS revenue for the fourth quarter of fiscal 2025 was $86.5 million, an increase of 700,000 or 0.8% compared to Q4 of fiscal year 2024. RMS revenue for fiscal 2025 of of $325.1 million increased $14.5 million, or 4.7%, compared to fiscal 2024. The increase in RMS revenue was primarily due to higher NHP products and services revenue. The overall operating loss for the fourth quarter of fiscal 2025 decreased $6.4 million dollars from $13.2 million in the fourth quarter of fiscal 2024 to $6.8 million in Q4 of fiscal 2025, primarily due to increases in RMS operating income of $2.9 million and in DSA operating income of $2.3 million, as well as a reduction in unallocated corporate expenses of $1.1 million dollars. The increase in RMS operating income was driven by a reduction in cost of revenue, which predominantly related to reductions in costs related to NHPs, operating expenses, and depreciation and amortization of intangible assets. The increase in DSA operating income was driven by the increase in revenue discussed above, partially offset by an increase in cost of revenue, primarily driven by increased research model expenses, compensation and benefits expense, professional fees, and facility-related expenses. The overall operating loss for fiscal 2025 decreased $55.5 million from $86.4 million dollars in fiscal 2024 to 30.9 million dollars in fiscal 2025, primarily due to RMS operating results. The change in RMS operating results was primarily related to decreased operating expenses, the 14.5 million increase in revenue previously mentioned, and partially offset by increased cost of revenue. The 38.2 million dollar decrease in operating expenses was primarily driven by the $28.5 million charge incurred during fiscal year 2024 related to the resolution agreement and plea agreement, which did not repeat during fiscal year 2025, and a legal settlement of $7.6 million that we received during fiscal year 2025. Increase in RMS cost of revenue primarily related to increased costs associated with increased NHP-related product and service revenue. Non-GAAP operating income for our DSA segment in the fourth quarter of fiscal 2025 was $9.3 million or 6.7% of total revenue compared to $7.4 million or 5.6% of total revenue in the fourth quarter of fiscal 2024. Non-GAAP operating income for our the DSA segment for fiscal 2025 was $28.5 million, or 5.6% of total revenue, compared to $30.3 million, or 6.2% of total revenue in fiscal 2024. As Bob mentioned, we continue to be focused on our DSA margins, and we expect to see improvement in future quarters, largely through operating leverage, and assuming we continue to see a stable pricing environment. In our RMS segment, non-GAAP operating income in the fourth quarter of fiscal 2025 was $14.9 million or 10.8% of total revenue compared to $12.7 million or 9.7% of total revenue in the fourth quarter of fiscal 2024. Non-GAAP operating income for RMS segment in Fiscal 2025 was $56.7 million, or 11.1% of total revenue, compared to $44.3 million, or 9% of total revenue in Fiscal 2024. Interest expense in Q4 of fiscal 2025 increased to $15.7 million from $12.3 million in the fourth quarter of fiscal 2024, primarily due to non-cash interest incurred in relation to the second lien notes issued in September 2024. Interest expense for fiscal year 2025 increased to $56.6 million from $46.9 million in fiscal year 2024, primarily due to non-cash interest incurred in relation to the second lien notes issued in September of 2024 and periodic draws on our revolving credit. Consolidated net loss attributable to common shareholders in the fourth quarter of fiscal 2025 totaled $8.6 million or a 25 cents loss per diluted share. This is compared to consolidated net loss attributable to common shareholders of $18.9 million or 73 cents loss for diluted share in the fourth quarter of fiscal 2024. Consolidated net loss attributable to common shareholders for fiscal 2025 totaled $68.6 million or a $2.11 loss per diluted share. This is compared to consolidated net loss attributable to common shareholders of $108.4 million or $4.19 loss per diluted share in the fourth quarter of fiscal 2024. For the fourth quarter of 2025, adjusted EBITDA was $11.8 million, or 8.5% of total revenue, compared to $5.4 million, or 4.1% of total revenue, for the fourth fiscal quarter of 2024. For fiscal year 2025, adjusted EBITDA was $34 million, or 6.6% of total revenue, compared to $18.2 million or 3.7% of total revenue for fiscal year 2024. Our balance sheet as of September 30, 2025 included $21.7 million in cash and cash equivalents as compared to $21.4 million on September 30, 2024 and $6.2 million on June 30, 2025. Net cash provided by operating activities in the fourth quarter of fiscal 2025 was $14.3 million. This was primarily driven by a change in operating assets and liabilities of $18 million, partially offset by consolidated net loss adjusted for non-cash impacts of $3.7 million. The change in operating assets and liabilities was largely attributable to NHP customer deposits received during the fourth quarter. Cash use and operating activities was $10.5 million for the 12 months ended September 30, 2025, compared to $6.8 million of cash use and operating activities for the 12 months ended September 30, 2024. The company has utilized and will continue to utilize its revolving credit facility during the normal course of business as needed. As of September 30, 2025, the company had access to the $15 million revolver and had an outstanding balance of $3 million. Total debt net of debt issuance cost as of September 30, 2025, was $402.1 million compared to $393.3 million on September 30, 2024, inclusive of our first lien term loans, our convertible notes, and our second lean notes. Capital expenditures in the fourth quarter of fiscal 2025 were $2.7 million or 1.9% of total revenue. The fourth quarter of fiscal 2024 capital expenditures were $5.3 million or 4.1% of revenue. Capital expenditures in the 12 months of fiscal 2025 were $16.6 million or 3.2% of total revenue. Fiscal 2024 capital expenditures were $22.3 million or 4.5% of revenue. While we continue to feel positive about the progress we have made in recent quarters, we are not providing formal fiscal 2020, but 2026 guidance at this time. As we have stated previously, we hope to resume providing guidance once we have greater clarity on the market and client demand and clarity on any impact to our business once there's more information on tariffs. As with that financial overview, we will turn the call over to our operator for questions.

Thank you. If you'd like to ask a question, press star 1 on your keypad. To leave the queue at any time, press star 2. Once again, that is star 1 to ask a question. And our first question comes from Frank Taknan with Lake Street Capital Markets. Your lightning is open.

Great. Thank you for taking the questions.

I was hoping I could start with one on one of your previous comments in the prepared remarks about some headwinds in the quarter. It looked like really nice top line, really great bookings, maybe a little bit more expense in the model than expected. Can you maybe kind of parse out what some of those headwinds were and maybe what revenue would have been without those headwinds or what those incremental expenses were in the quarter to kind of give us a better feel for maybe what some of the extra expenses in the model were and kind of parse out what the quarter could have been maybe without some of the extra cybersecurity expenses in the model?

Yeah, well, you – hi, Frank. You identified what the major headwind was for us in the early August, finding out that the cybersecurity incident we reported. That was probably the most major thing we faced. and yeah we can quantify some of those things a lot of overtime a lot of communication a lot of third-party cost and you know it's and some studies and some work that may have been redone but it's the intangible cost that you can't really identify the toll it takes on the operation and the customers or people may be holding back on issuing an award until you get through it, and so it's hard to quantify that, and, you know, what happened, if you would have asked me, you know, do you think you could have increased our award 63% during a quarter or come close to the, you know, the 54 million awards we had, I would have never expected that, so I think we did a great job but I think it would also be naive for us to think that it didn't have some impact on on our on our earnings our expenses and some of our wards that there would be hard to call it'd be hard for me to quantify if we would if we could quantify the wood but I think this it's really those intangible costs and the time it takes for organization to focus on that as you can see we're very focused on the client service we're very focused on integration we're very focused on IT integration and so that you know that's a lot of diversion of time and effort when you when you have to go through something like that but I was very pleased at how quickly we recovered I was very pleased with our ability it you know we have had other times before when we've had other suppliers hit or or that we've we've had to go manual on paper so we we we're we try to be prepared but no matter how prepared you are um there are always things that you're not you're you're never prepared for but uh overall i was very pleased with how we responded but yeah be naive to think that it didn't have some impact um and that it's not really that quantifiable but i think we're getting through it nicely and as i look at the last quarter and i look at the first two months of this quarter um you know the quoting and the awards and and uh are are moving forward nicely So, you know, so I think we've gotten through that.

Got it. That's helpful. And then my second one was going to kind of follow up on your last sentence there. Just any quarter-to-date trends your comfortable sharing would be great as it relates to ordering patterns. And then a refresher on kind of some seasonality. I think in the past you've called out some of the holiday season has had some seasonality for kind of revenue recognition for the quarter. So anything you can help us understand as we think about. Well, yeah, thank you.

Our quarter ended December 30th is typically our weakest quarter during the holidays. We, for a lot of research models and our diet, between Thanksgiving and Christmas tends to be a slower time. There are probably less working days. Some of the universities and some places are, you know, are down for the holidays. So we do tend to see this being typically our weakest quarter. As far as quantifying, you know, we're coming off six months, the last six months of 12.5% DSA revenue. For us, it's very important. We go back to Investor Day, Frank. There are really two things that we're focused on. Costs coming out of the RMS business. We're not looking for a lot of, you know, major increase in sales, but costs coming out of the RMS business, we identified that $6 or $7 million. And we talked about growing the DSA business and seeing incremental margins of 50, you know, 50-plus percent on that growth. And so seeing that 12% increase in revenue over the last six months is encouraging. And, you know, we have an increase in awards of over 37% over the last nine months. So that's, you know, I think last quarter we say 63%, but it's coming off a very weak Q4 of last year. But if we can maintain that awards increase of somewhere 20% to 30%, and we can maintain that revenue increase of anything close to what we've experienced the last two quarters, then we're going to be pretty pleased with how things are going to go for us, I think, in the future. So I'm not seeing anything right now that says that we can't, after these last two months, that it's not possible. I think that, you know, it would be helpful to see others in the industry, see some of those same tailwinds that we've seen, and I think some are starting to indicate they're starting to see that. I think that's very encouraging. For us, when the industry does well, we're obviously going to do even better. But we've had a great nine months, no doubt about it. Very pleased, probably better than we thought we could have done. I think we're seeing the pricing stabilize quite a bit. And I think we're hopefully hearing other people now starting to see some of those same trends. And that will be a huge help to us also. Got it. That's helpful. I'll stop there. Thank you.

We'll take our next question from Matt Hewitt with Craig Hallam Capital Group. Your line is open.

Good afternoon. Thanks for taking the questions. Maybe first up, and I'm sure you're sick of talking about this since April, but with the FDA now announcing formal guidance regarding new approach methodologies and trying to pare back on the use of large animal models in toxicology studies, I'm just curious if you could remind us how you're positioned, maybe your exposure to monoclonal antibodies, anything along those lines?

Yes. Well, our revenue related to monoclonal antibodies is minimal, very small if any. And so we're not really worried about that. With the amount of quoting activity we have going on, that's not going to, I think, have an impact. We do sell a lot of research models and NHPs. I could not tell you how all of our customers use those NHPs. I've seen some others that we've reached out and talked to, and I don't think they see any impact. I think what we saw in the guidance that they're providing is just that guidance. The customers are still going to make their own decisions about what they're going to require for safety assessment testing. and I don't know you know there's so this one thing is guidance second what are what what are our customers going to want to do for before they you know put a drug into a human in terms of safety assessment and so we've not seen a big change in that and right now you know I wouldn't see it having really any impact but I think it was it was a positive that they were able to clarify what they came out and said in April. But still, it's guidance. It doesn't mean that's what people are going to do or not do, because they're all going to make their own decisions of what is safe and what they want to do from a safety assessment standpoint.

That's super helpful. Thank you. And then, I realize it's early in the pharma budget cycle as they start to look at 26, but as you talk to some of your partners, some of your customers about those budgets for next year. What are you hearing? I mean, is your sense that budgets are going to be flat to up next year? Any color on those lines would be helpful too.

Well, right now, I think we are seeing, as we did last year, and we've seen so far this quarter, an increase in the quoting that is this meaningful, I would say, this quarter. I think we'll see a substantially increase in quoting I think we're in the closing also so when it comes in the next year we're probably booking a little further out than we have for a while and so I think that's encourage that's encouraging we also I think over the as we mature again we're a very young company and I think what we're seeing is more of a reoccurring customer base. So a little bit more comfort in gaining our customers' confidence. We do a great job of delivery, and I think we see an increasing amount of reoccurring customers, which is also very encouraging. But right now, you know, obviously we're on a pretty good roll in the last nine months. I don't see anything that is going to disrupt that, and I would be very encouraged, you know, to start hearing, as I think we started to hear, others in the industry also identifying those same trends. So, you know, I don't have any more to add to that. I can't tell you what they're going to do next year, but right now what we see so far this year and over the last two months, we haven't seen anything to dampen our optimism and our ability to see an increase in revenue next year.

Well, that's good. And, yeah, congratulations. It hasn't been an easy environment. You guys have executed well the last few quarters. So congratulations on that. Thank you.

Once again, if you would like to ask a question, please press star and 1 on your keypad now. We'll move next to David Winley with Jeffries. Your line is open.

Good afternoon. Thanks for taking my questions. Bob, maybe another way to interrogate the DSA improvement in the environment would be to ask around your lead times. How quickly can you start studies for clients? And maybe flipping the coin, how quickly do clients want to start studies? and are you seeing any movement on that measure?

David, hi. I guess some of that depends on studies. We typically, in the DSA business, see our DSA business come in and start within weeks, not months. The larger animal safety assessment businesses tend to come in with closer to a three to nine month lead time. We have started studies faster than that, but right now we're operating our large animal safety assessment capacity is operating at a very high level of capacity at the moment. um so um you know i think we can we can generally see out um you know a couple quarters in terms of the large animal um capacity and and the usage of that capacity but this is the um you know for the discovery and for the um smaller animals um we can generally start those um much quicker Okay.

Flipping to RMS, and Frank may have tried to get at this a little bit, but in your segment disclosures, margin was impacted sequentially. uh and i'm wondering i guess first of all was the cyber event cost differentially impactful in the rms segment versus dsa or i would kind of have thought that that would have been at the corporate level but just just want to try to interrogate the moving parts in that rms margin Well, the RMS margin for our small animals and diet business tend to be improving

as we've reduced the number of sites we have by 60%. And I think that's becoming a bigger part of our margin story, actually, and that's improving. And I think we'll see that improve this year as those costs continue to come out. I believe that in the NHP segment, sometimes that can differ based on the cost of the NHPs that we're bringing in and some of the costs that related to those NHPs. So I think we probably had a few, a little bit higher costs maybe than we did in the prior quarter. Um, so that's just based on, you know, spot market or sometimes of what we're buying and selling for.

Okay. Um, maybe zooming out then if I, if I think about that RMS business, you've got, you know, a few different things going on. You just named a couple. Um, but I'm wondering along a number of vertices, like how would you describe volume versus price in RMS, large animal versus small animal mix, and then, you know, kind of models versus services. You know, again, you have kind of several different ways to think about the mix moving in that business. I wondered if you could shine a light into that for us.

Oh, gosh.

So volume versus price, large versus small animal, and then on the models versus services, I'm really digging at how is your, you know, animal services business in Texas developing.

Yeah, volume versus price. The small animal business and the diet business, one of the reasons that it was important that we reduced the sites by, you know, 13 or by 60 percent is because that is a very fixed-cost structure. So taking out the cost and maintaining volume definitely allows us to improve our margins. And as volume goes up, that also, and mainly fixed-cost structure, would help us quite a bit also. So I think we're seeing the margins improve in the diet of the small animals because of that formula. As far as the Alice, Texas facility, you're right. That is, we are buying and selling. We're also boarding and breeding, and we have services. So the services business continues to grow, as does the domestic breeding operation. And then some of the other margins come and go based on the demand in the market and what we're able to buy for and sell for. And that has, I think, the volatility of that market and that price has been a lot less than it has been in the last two or three years. I think it's become a lot more stable. But there are a lot of factors in there, and you know you start putting in tariffs and you have transportation you have quarantine those are all factors that can they can also change your costs for the most part we've been able to pass along tariffs but if we have extended quarantine which we don't at times have and or change in transportation costs which we times have those can also impact those impact those margins. So those are probably a little bit more variable. We're not seeing big swings, but we're seeing, which is that that's half of our RMS business, that we could see some swings in those margins as the others are constantly improving.

Okay. Thanks for that. I'll leave it there. Thank you.

Thanks.

Thank you. At this time, there are no further questions in Q. I will now turn the meeting back to Bob Leisure for any additional or closing remarks.

All right. Well, thank you, everyone. We are encouraged with these results and the recent growth we've seen with our DSA quoting awards over the last two quarters. And as this growth develops, we'll need to remain vigilant on delivering an exceptional experience, service, and product for our clients. We've made great progress on the financial goals we outlined during our investor day, and we're continuing to evaluate opportunities to further improve our balance sheet. As I said in the past, we are a much better company today than we have ever been in the past. We still feel we have a plan for much further improvement in the future. Thank you and have a good day.

Thank you. This brings us to the end of today's meeting. We appreciate your time and participation. You may now disconnect.