Phinia Inc. (PHIN) May 13, 2026 Conference Transcript

Live? All right. Good afternoon, everybody. Welcome to the second day of our Industrials, Transportation, and Airline Key Leaders Conference. I'm Matt Palais with the machinery sector. For everyone in the room and joining us via webcast, it's my pleasure to introduce Brady Erickson, President and CEO of Finia. And Chris Gropp, Vice President and Chief Financial Officer. Welcome. So Finia is a fairly diverse business, and you guys touch quite a bit of end markets, geographies, customer types. You've also recently entered into some new markets, whether that be via organically or inorganically. So maybe we can just start out with a very quick high-level introduction to Finia, just for those maybe newer to the story, and just help frame the company, the competitive landscape, and also maybe your competitive edge in the markets that you participate in.

I think you hit it exactly. We're a diversified industrial because of all the different markets and regions that we serve. And so we've got, you know, 35% of our revenues, our largest area is aftermarket and service, independent and both through the OAS channels. Commercial vehicle, including light, medium duty, and heavy duty is going to make up another over 30%. We then have probably our fastest growing sector is going to be the op highway industrial and other which includes ag construction gen sets aerospace and defense and so that's already ramped up from four percent in 24 to six percent in 25 so it's growing fast and then we obviously have some light passenger vehicle businesses about 25 i think a lot of people reflect on us and always just throw us in the light passenger vehicle bucket based on our former parents but i think we're really a lot different and we're growing into a lot of different areas that makes us really unique and more appropriate as being an industrial. I think what really differentiates us is a lot of our manufacturing trade secrets and IP. We're manufacturing and machining tolerances down to plus or minus half a micron. And half a micron is kind of in between a smoke particle and the coronavirus. And that's how much we're managing too. And we've got high pressures, a lot of system integration. And that's why us taking that precision fluid management and manufacturing capability into aerospace and defense and off-highway and industrial really puts us in a really strong position, and we're getting a lot of pull in that area as well.

That's absolutely fantastic and a great introduction to the story. And I think bidding is just to jump into the commercial vehicle side. You know, you've highlighted that you expect medium-duty and heavy-duty to really become a larger portion of your business at your investor day on that path to the $5 billion in revenue. I think it was about 20%, but if I'm mistaken, let me know. Within North America, I'd just be curious. We've seen freight customers feeling just a little bit better coming back into the market after a really long hiatus of not buying trucks. We've seen spot freight rates getting a little bit better, contract rates rising, and we're also just seeing supply and demand balance come back into the market. So just according to some of the data that we've tracked and we've looked at, medium Medium duty seems a little weak, but heavy duty does seem to be coming back. I would just be curious to hear if you're seeing that reflected on your end or maybe just what you're even seeing. And then also if you wouldn't mind just touching on what else you're seeing globally, just whether that be Europe, South America, China.

Yeah, I mean, North America, when we spun in 2023, we were kind of at peak commercial vehicle in North America and Europe. And now we're kind of in that trough. We've been in this trough for probably, what, six quarters, four or five, six quarters now. And I think the hope is, as it was last year, that the second half is going to be better. Orders are starting to come in. The number of open slots that people can put their orders in for 2026 are shrinking. And in general, our customers are also saying, hey, get ready. Are we going to see volumes double in the second half? But I think we're starting to see the preparation for, hey, we see some improvement. Our view is that improvement will not only hit the second half of this year, but it will continue into 27 because the average age of the vehicle fleet out there is getting a little long in the tooth. The new engines and the vehicles that are coming out are more fuel efficient than the old version. And with fuel prices on where they are, if they want to manage their total cost of ownership, it may make sense for them to upgrade sooner. And so we see that kind of continuing kind of going forward. So that's kind of the North American market. Europe has actually been surprisingly better than we expected coming into the year. The numbers have kind of held in. They haven't gotten any worse. They're being a little bit better than we expected. And we saw a little bit of positive news out of China on the commercial vehicle side as well. And so all in all, it's still bumping along the bottom, but we are kind of at least bumping up and not going down anymore.

And that's interesting. It kind of leads into maybe a follow-up here. I'd be curious, are you seeing the potential for a pre-buy here in the second half? or are you, you know, for the missions changeover or, you know, have you seen any signs of OEMs increasing orders yet?

I mean, I haven't, we haven't seen it really coming in. It's more just kind of get prepped. You know, we're coming close to the end of the second quarter. There's only so much the OEMs, even if the order came in, there's only so much they're going to be able to drive the supply base to increase in 2026. So those, that kind of order board is already kind of fixed. I think some of them already said, hey, we're not going to add a second and third shift for three months than to lay off in 27 and so i think it's relatively fixed on what they can do and that's why my view is that as we start as the economy starts recovering freight rates start improving and we kind of get through a lot of chaos that's going on in the markets right now that that increase will continue into 27 uh and so we're not going to have remember the pre-buy means it crashes in 27 yep uh and and so So our view is that it's going to probably inch up a little bit. It may just continue to recover and get back to more of a normalized level in 27 and 28.

It's also a little bit muted because we're seeing Europe up, but North America is down to flat. So it sort of makes it even. So it makes it harder to see the increases coming in because you have some increases offset regionally. So you see a little bit different strength in the different regions.

And they've kind of separated the two. Before, it was both emissions regulations were going in in 27. Europe already pushed it out to 28, 29. It may get pushed out again. So that's having both go through a pre-buy was a big challenge, but now they're staggered, and so it's kind of balancing things out. And, again, our plants are supporting customers on both sides of the pond. So for us, it kind of balances out.

Thank you for that context. I think just, and I know it's becoming less of a focus on your business, but just hopping back onto the, you know, passenger, late passenger vehicle side of the business, you know, as a lot of other auto suppliers have de-emphasized traditional fuel injectors and solutions for ice and hybrid engines, you've really cemented yourself as a long-term and stable supplier. And as we've seen, projections for EV penetration have really dropped down to significantly lower levels than where they were even a few months ago.

And we've also seen North America and Europe relaxing some of their, you know eliminations around combustion engines so you know maybe you could just talk about your growth opportunities within ice and hybrid and anything you could potentially add for you know on potential further share gains or you know in the medium or longer term sure I mean our view is that you know rather than ice engines declining five percent a year they're only declining two and so yes it is a little bit better but it's still overall a declining market which is why we continue our shift towards commercial vehicle off highway and industrial uh with that said a lot of the smaller players have already kind of announced and are exiting um so the uh the tesco the contis some of the smaller player they've sold off their lines because they just couldn't remain competitive and so we see it going down to you know a two three player game you know over over the next few years uh we have been picking up on the gdi side of things you know close to a point to market share and again we started in the low teens are now probably closer to the mid-teens and we see us getting closer to the high teens you know by the end of the decade but our overall goal is that hey it's around 900 million billion dollar business for us keep it flat you know we're going to continue to invest continue to generate a lot of free cash flow maintain that business kind of where it is fully occupy it as we continue to grow in other areas now we can leverage a lot of that technology on light passenger vehicle we're using in a couple good examples we did a the gdi for light passenger vehicle we converted to diesel for off highway for kohler and for other customers for off highway applications so we're able to leverage a lot of that capability we can leverage a scale that we still have on the light passenger vehicle side and we can use that capabilities to help us be more competitive and profitable in other areas you know maybe just pulling on that thread just a little bit there, you know, something that's relatively new for you is, you know, interested to do new markets.

And as you just mentioned, you know, something that you've been able to reconfigure your engines and your products into those types of new engines. So you've entered some new markets, you know, specifically, you know, one being aerospace more recently, but you've been in Marines, stationary engines, agriculture, and off highway. But what's interesting is you've also been able to, you know, do that by flexibly leveraging your existing human capital and manufacturing capital, which I find fascinating without really much change in the R&D or CapEx percent sales lines. So what maybe is it that's inherent within these new markets or, you know, that gives you the ability to, you know, to get into these new markets without investing more heavily? But is there a chance you would look to invest more heavily into capacity or anything else?

If our growth starts going to 10 or 15%, we'll probably have to spend a little more on CapEx to support it. But with what we see right now, again, I can lay out five different injectors, one's for off highway, one's for light passenger vehicle, one's hydrogen, one's ethanol, one's natural gas. You really couldn't tell the difference. So the same engineers, it's really around precision fluid management and different pressures, different flow rates. And so we can modify the material inside the injector. We can open up the orifices to allow more flow. those are really just the tweaks that we have and so we don't have to fundamentally redesign our product to go into these new markets and that's what's so attractive for us you know and so we don't need to restructure and fire a bunch of engineers at no combustion and and buy and hire a bunch of new ones we can easily move them in between the application depending on where we're winning and where we're launching same thing on the manufacturing equipment you know a lot of the aerospace and defense we actually repurposed in one of our old light vehicle diesel lines diesel volumes in europe obviously tanked with a lot of the diesel gate over there but we're able to repurpose that line and that's actually what we're using for aerospace and defense and so for basically to get into that market i think we spent what a million euro on a on a new quality you know die penetration test and that was about it and now we're in aerospace and defense because all the other equipment we've reutilized. And same thing with the same engineers.

Also on the CV side, a couple of years ago, because a couple of our large customers were anticipating a very large peak on CV, because of the pre-buy, they asked us to add the equipment. We couldn't financially make it make sense because that peak only lasts for 18 months at best. So they actually paid for that capacity. So we own the equipment. They paid for it. So it doesn't show up really in our spending or in our additions because it was paid for by then. So that's sitting there. We don't have the labor put in place. All the equipment is certified. So we have excess capacity there. But it's not a drag because it was paid for by customers. That's really helpful. Ready to go.

And then just touching on alternative fuels because just keeping with the theme here, but you've highlighted really recently some great wins out of India on the natural gas side. You're doing E100 applications in Brazil. You're doing dual fuel applications in China. Could you just level set us and maybe update us on how you're thinking about future opportunities and maybe what regions you're investing the most and for what products?

Yeah, I mean, our view is that a liquefied or a gaseous fuel is going to be around in transportation for the rest of the century. So we've been saying that for a while. Now people are starting to kind of maybe believe us. but the world is not going 100% EV across all transportation. There are going to be some areas that make a lot of sense, and there's other areas that are not. Like you mentioned, Brazil is going ethanol. They see that as a carbon neutral solution. India is going heavily into natural gas, and whether it's renewable natural gas, I think you hear a lot of, you know, talk about that as well. And so for us, we think it's going to go from the fossil carbon-based fuels to maybe carbon neutral like ethanol or low carbon, like natural gas and renewable natural gas to maybe in the next decade or two, hydrogen, which is no carbon in the fuel itself. But we think that's going to take decades in order to kind of make that transition. And I think even from a national defense and a security standpoint, you don't want to be all electric because what happens if they lose the grids? Then you have trouble getting renewable energy to remote parts of the country. It's a lot easier to have a tanker go out there and set up a fueling station because then the storage is a lot simpler and you can get those remote areas. And so that's kind of where we're spending our money. We were spending a lot more on hydrogen a few years ago, but a lot of the developments that we did with hydrogen, we can also apply to natural gas and we can also apply to other applications. And so for us, it's just kind of shifting on wherever the demand is. We've got a solution, whether it's all the varying types of fuels to different pressures from you know as though as a couple bar to 350 bar and 500 bar pressures for the gasoline and even the off-highway GDI for diesel to medium-duty and heavy-duty trucks where we're talking about 2500 to 3000 bar which is like 40 000 psi if you think about that and this is very very incredible technology that we probably have as much IP in our manufacturing process than we do in the product itself wow um and so we think it's uh we're in a really good position to where as one is up and one is down we're going to continue to be that consistent performer uh given the diversity of the markets that we serve the products the technologies that

we can offer in the regions and our customer diversity as well great and i know we were talking about this a little bit while we were getting ready um but i got to ask about it just on the natural gas side, there's a confluence of factors going on right now in the market where AI is really driving extreme demand for large industrial stationary engines. And you're seeing it also in the midstream side as well. The demand is still going into that is there too. And as you've talked about before, I know it can be very challenging to isolate specific sales, where they're going, what end markets. But maybe you could help just frame this in a little bit of a different way for me. you know, I'd be curious to know how you're thinking about the future aftermarket opportunity. You know, what does that competitive landscape look like for you in the aftermarket as these engines eventually require some maintenance, given that they're running, you know, it's often 24-7, 365 in these applications. And then is anything contemplated in your long-term guidance on the aftermarket side?

Yeah, I mean, it's obviously, it's a big opportunity for us. I think as we're talking about, you know, the data centers and whatnot, we supply injectors and now ignition systems for a lot of natural gas applications now whether it goes into a truck into a genset you know and that genset is it going to a hospital or a data center can't give you those those exact numbers but one of our acquisition of SEM was the ignition systems and they're primarily for those larger bore larger applications that may be you know a megawatt or so and so their big big customer or is Cummins, and that was an entrance for us into those gensets for a larger bore. Historically, from an injection standpoint, our fuel injection is maybe we're good, maybe up to maybe 20 liters. That's not going to be enough for some of these big gensets. Now, you will have natural gas, you know, 500 kilowatt, maybe up to a megawatt from some of those things, but we're not into the larger injection system, but we're now on the ignition side of things. So I think we'll see that continued expansion of our portfolio into that space and we see opportunities and again we're going to be able to leverage our existing intellectual property and our engineers and our manufacturing we just need to design and develop you know larger uh larger flow and larger applications and so we do see a lot of opportunity if you see a lot of our uh our business right now we've got you know 35 of our revenues are aftermarket that's because the parts that we produce they're high wear replacement type parts, especially on the commercial vehicle side of the injection. We'll replace those maybe two to four times over the lifetime of the vehicle. We like parts like that. Ignition is like that as well. And as they go into gensets, we'll see that as well. Similar on the commercial vehicle, it's miles driven. We'll tell you, you know, every million miles or a million kilometers, you're probably going to need a replacement. On the genset side, it may be, you know, running two years, depending on the component and how much where they see and how much operation. So same thing with aerospace and defense. They do a number of hours. And so we like that type of business because we have the distribution and it's very much a dividend that keeps on giving. So we get the OE and they're going to replace you with the OE part for those two to four times kind of going forward. And so that's why we like those businesses and like the product lines that we're in.

And then Chris, is there anything just on the aftermarket guidance side that you could add on that?

Well, we love aftermarket. The thing that people keep asking us, obviously there's a lot of things going on in the world right now and there's questions on the Middle East, is it going to slow down production and things? And then what we always remind them is we don't like our markets down. However, if our OE is going to go down, if CV is going to be down, we're going to catch it on the aftermarket side. and it's you have to remember that 50 percent of everything that aftermarket sales come from the fuel system side so it's very good for both sides of the business and one way or the other we're gonna catch those sales and it just sort of balances out the business and yeah to to those those points i mean the aftermarket has really been a very steady and resilient part of your business and even during some of the more tumultuous times that we've had in the environments in your end markets.

You know, at your investor day, I think you highlighted a 41 billion core products opportunity in the existing geographies. Could you guys maybe just talk about what your strategy is for taking existing products and expanding to those new geographies and penetrating those new markets? And just maybe what do you think the long-term realistic market share gain could be in that area?

Yeah, I mean, our overall view and our aftermarket is the market itself is growing just where the fleet's growing, the average age is increasing, Therefore, the market's growing 1% to 2%. We're generally able to pass on 1% to 2% in pricing, inflationary costs. And then we roughly have another 1% to 2% is going to be that market share gain. And so that's why our aftermarket's been that solid 4%, 5%, 6% grower in all the different markets. It just continues to kind of chunk away in that market. And we think that will continue. Generally, how we then go to market, I think Investor Day was a good example that Neil shared with folks. is you know we'll first go to market like on steering suspension and braking we'll go to market develop all to get all the skus get that coverage ready for europe launch it there get to grow and says yeah that's going to be a really good product line now let's launch the north american skus let's launch the asian skus and start adding you know onto that and so we're not going on this hey we're going to go globally everything all at once and then if something goes wrong we have a big issue so we tend to start you know one region at a time and then continue to kind of grow from there and so we've we've been focused on you know looking at opportunities where there's a there's a gap in there customers want a good branded product with oe quality and so we'll go through and we'll define the specifications we'll work with the supplier to meet our specifications for the oe product and that's what we then take to the market and we're very fortunate in the fact that you know our two big brands in the market are going to be Delphi and Delco Remy and you know the Delphi brand is one of the few brands out there that's probably one of the top five premier brands that when people look at they go ah that's a good quality you know reputation I know they've made this part and Delphi in its history has probably made about every component on the vehicle so whatever we put it on you know it's going to get that that cachet that goes with it but we're just going to be very selective on what we do put it on to make sure that we maintain that reputation and as you may have mentioned earlier it's that you know maintaining that 95 first time fill rate 95 coverage that's what we bring and I think the one benefit that we've had in the marketplace is that they know that we're going to be around because there's a lot of our competitors that have de-emphasized combustion and if they de-emphasize the OE combustion that means they're going to eventually de-emphasize the aftermarket combustion products. Well, our aftermarket customers and the independent aftermarket shops are concerned with that just as much as the OE guys were. And so we're actually getting a lot of pull from the independent aftermarket shops and the OEs because they know we didn't overinvest in electrification. Our balance sheet didn't get levered up because of it and a bunch of write-offs. And they know that we've continued to invest R&D dollars in that combustion space.

And so they know that we've got some of the best technology out there too and brady said it so i'm going to bop in because he said it but you have to know that we don't just buy adjacent parts so braking and steering and just pass it through we actually make sure the engineers go in and put it to oe level so it's a good quality part and it's just not something that it's something that the consumer can trust and so therefore our customers really like that because they can sell it at a premium and yeah i mean that's that's another thing that I found really fascinating is that, you know, between the products that you produce internally, you know, between fuel systems, aftermarket, manufacturing, and those that supplement through your third party that you pass through as well, you can cover that 95%

as we've talked about. And, you know, I'd just be curious, you know, how do you view the white space here? Is there any adjacencies you'd be considering going into?

Has Iran or has shipping costs increasing, you know, made you kind of consider or had any bearing on the decisions to take any products in-house that maybe you wouldn't have or considered before yeah I mean I think we could that's the one benefit by producing some in-house and buying some on the on the outside so there are examples on in order to get the 95 percent of of of the product we can either make it in our existing plants or we can buy it from somebody else and there was a period of time that we were buying more from third parties out of Asia because that made the most sense rather than tooling up for a bunch of low to medium volume parts well now the equations changed well guess what now we can says hey now it makes more sense for us to do it internally well a lot of our peers don't have that option they can buy it or they can buy it they can change who they buy it from but they can't says hey now I'm going to make it in in the North American region to support the North American market and Asia supports Asia type of thing so that's where you know if we look at any additional assets you know we're not looking to just to be a distributor we want to have that manufacturing that OE pedigree that comes with it whether it's OE products and or you know remanufactured product we want something that actually comes with some operations because if it's just going to be developing the product and as Chris mentioned qualifying it making sure it meets our specifications and selling it it doesn't make sense for us to buy a company that just does that? Because we can just do that organically. I can add another 10 engineers and probably launch another 5,000, 10,000 parts a year type of thing.

That's very helpful. And I guess speaking about organically or inorganically, I'd just be curious to touch on your capital allocation. We talked about this earlier. In terms of capital allocation, you recently bought Swedish Electromagnetic, but you've more heavily typically leaned towards share repurchases and dividends. And you've done a really good job. You've increased your dividends several times since the spinout. You've also bought back, I think, 23% of shares, if I remember that correctly. And then just given your free cash flow generation, your current valuation at near seven times, and just the low leverage compared to the target that you announced the investor at 2.0 times, just help us think through your capital allocation priorities. Also, maybe how are you thinking about the inorganic pipeline as well?

Yeah, I think the pipeline is strong, but it's got to meet our criteria of being in the right space strategically that's synergistic and at the right valuation. When we're buying back a lot of those shares, we were trading probably at four times, five times, six times. And so it's very difficult to justify an acquisition or find an acquisition that's at five times. You know, when you're trading at five times, it makes more sense to buy back your shares. And that's where we really focused a lot of our effort on it. on the dividend side, our cost of the dividends still is in that 45 million range.

Yes.

So we bumped up the dividend rate, but the dollars is still the same because we bought back so many shares. So we're kind of keeping the dividend impact in that 40 to 50 million range. The cents have gone up. I think we're now up to a buck 20 a year right now, but it's still the same amount of number. So we're always going to take a look at using the remaining amount of that money is either versus acquisitions versus our share price. And so we're going to say, hey, what's the safer, better way to generate as much shareholder value as possible? So we don't need an acquisition to execute our strategy. We'll continue to increase our revenues. We have a good aftermarket business. We see consistent growth. We see a lot of cash generation. so whatever we do don't screw up the base case of just growing two to four percent you know over the decade and beyond and buying back a bunch of shares that's our base case so an M&A has to be something that we think is going to generate more value than that base case and that's what we saw from SEM so SEM you know it was commercial vehicle focus it has a nice aftermarket with it as alternative fuels added Cummins you know more exposure to Cummins with them that was helpful force and it was a you know it was a creative they had good margins and it was you know less than five times and and we felt their longer term growth rate was actually higher than our two to four percent uh range and so we therefore we thought it was a pretty good deal so those are things we're looking for there's not many of them out there which is why you know we've probably gone through a couple hundred um but we're just selective in what we do have you increased your range of what you're willing to buy maybe going from you've multiple scum ups so you've gone from maybe buying five times assets to looking at you know six seven maybe seven eight correct i think we can we can inch it up i mean would we look at an asset that's at our level and higher yeah if it's significantly different than our mix of products so if it's heavy if that's 100 percent aftermarket or it's 100 aerospace and defense we're probably not going to get it for six but we're always going to compare it relative to ours you know going out and paying 15 times when we're trading at seven seven and a half that's a difficult i don't care if it is aerospace and defense we're going to try to keep it relative to our own multiple because we still think we have a significant opportunity for multiple expansion to be to look more like a diversified industrial whether it's a gates a sensata you know a donaldson a dormant you know allison they're all trading in the 10 to 15 times. And we think that's closer to our peer group. And we're just working our way there. And it's just as we continue to gain, you know, a track record and a reputation of, you know, delivering on our commitments, I think we'll eventually get there.

That's fantastic. And then maybe just wrapping up with just one final thing that maybe you could touch on here. I know if you have probably been hearing it a lot at the conference, but I'd just be curious how we can think through your tariff impact. You know, in the last couple quarters, you know, the net tariff passed around the EBITDA line has actually been a nice tailwind for you or a little bit of a tailwind, even though on the full year it was slightly below or slightly margin dilutive on higher sales, which absolutely makes sense. But just given the rollback of IEPA, you know, the new Section 122 tariffs, just remind us your expectations, you know, around the remainder of the year and also maybe how we should think about how those tariffs and customer reimbursements that you have flow through your P&L.

I'll start off. So last year we incurred about $40 million in tariffs, and we got most of that back. We've worked with our customers very closely to pass that through, and we're quite successful with it. We got a little bit more of it back in Q1. So then coming into this year, we expect that even with the changes that went on, they don't affect us, the changes on the 122. It does not affect us very much this year. So it's going to be roughly the same rate per quarter because they started at the beginning of Q2 last year. You still saw a material effect in Q1, although we got back more than we had expense, the recovery from last year. The rest of the year, it'll be basically flat year over year, unless something happens again. And I never throw that out of the door, but we're just trying to make sure that we stay even with it. And then we're working on recouping the tariffs from the government. You know, that's coming in fits and halts and going back and forth. We don't really see that we're going to get back much this year. But even if we do, most likely it's going to pass through. Whatever we got back from, you know, our customers, we'll just pass it back to them. So we see it as even and flat.

Yeah, and so for 2025, it was margin dilutive. And so I'm not sure it's accretive or anti-dilutive on the way back out. So it'll be from a margin percentage standpoint, it's really going to be beneficial. But from an EBITDA dollar, it's neutral as it was last year. And so we had 40 million of hit, but it didn't affect our EBITDA all because we basically got all of it back. And so the same is going to be unwinding. There's going to be a little bit of upside because obviously there's a split between IEPA for the OE side, which is where we got that direct pass-through and the aftermarket was more of a generic price increase so it's similar to what you know GM is not going to go back to their customers and says hey you know in that truck that you bought three months ago let me give you some of those tariffs back yeah because they absorbed a good chunk of it as well and so you know there may be a little bit of upside there but it's not something that's uh we're not trying to make money on our customers through tariff pass-through and that makes perfect sense and then Brady Chris with the last couple minutes is there anything else you'd like to just add to the audience and those listening on the line we gotta hit tax that's a good that's a good uh yeah we are kind of known as with a we came out

when we spun out with a crazy uh outrageous effective tax rate um north of 40 at one point and and we've slowly worked it down uh hue one was the first time we got it down to just below 30 percent and the team my team's worked really really hard on it um and continue to work on it we'll get it down and we'll be in a reasonable range but it's just one of those slow boring things we have to do but and that's and that's kind of a testament of what we're trying to be as well it's there's a there's a lot of stuff going on up and down but we just you know with our business and diversity we're just going to continue to kind of chunk away fantastic uh and

And so whether it's working down, you know, taxes, whether that's, you know, growing or aftermarket, whether that's going in these different areas, we don't see a whole lot of restructuring. We have a good footprint for where we need to be. We design, develop, produce or source produce and sell within regions. So you know, a lot of this tariff and, you know, protectionism that's going on, that's kind of okay for us because we produce primarily in the region that we sell. So it minimizes a lot of that impact. And if need be, a lot of our equipment we can pick up and move regions. And we've done that because we had excess capacity of GDI in Europe. And we sent lines, one to China, one to North America, and one to Brazil to support different things. And so that's, I think, one of the big advantages that we have is we have a pretty flexible and nimble kind of human capital as well as manufacturing capital. It allows us to quickly kind of shift into these different markets. So that's probably the biggest thing I see is the benefit that we have.

Good product, talented teams, good reactions, appropriate reactions to the market. That's about all you can ask for.

That's fantastic. Thank you both so much, and I appreciate the time today. All right.