Orion Energy Systems Inc

NASDAQ:OESX

Good morning, everyone, and welcome to Orion Energy Systems Fiscal 2024 Third Quarter Conference Call. At this time, all participant are in a listen-only mode. I would now like to turn the call over to Mr. Bill Jones, Investor Relations

Thank you, operator. Good morning, everyone, and thank you for joining today's call. Mike Jenkins, Orion's CEO; and Per Brodin, Orion's CFO, will review the company's third quarter results, financial position and outlook and then we will open the call to investor questions. Today's conference call is being recorded, and a replay will be posted on the Investor Relations section of Orion's website, orionlighting.com.

Remarks to follow and answers to questions include statements that are forward-looking within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements generally include words such as anticipate, believe, expect, project or similar words. Also, any statements that describe future objectives and goals, plans or outlook are also forward-looking. Such forward-looking statements are subject to various risks that could cause actual results to differ materially than currently expected. These risks include, among other matters, that the company has described in its press release issued this morning as well as in its filings with the Securities and Exchange Commission.

Except as described therein, the company disclaims any obligation to update forward-looking statements, which are made as of today's date. Reconciliations of certain non-GAAP financial metrics to GAAP measures are also provided in today's press release. I will now turn the call over to Mr. Mike Jenkins.

Thank you, Bill. Good morning. Thank you all for joining today's call. As previewed last month, Orion's third quarter revenue rose 28%, reflecting an anticipated acceleration in contract activity on large LED lighting projects in the government sector, projects secured through energy service company or ESCO partners and projects with our largest customer. Q3 also saw growth in our electrical maintenance services business, which is benefiting from a new 3-year agreement with Orion's largest customer. Our Voltrek EV charging solutions revenue was flat with a year ago period and down on a sequential basis, principally due to the variability and timing of larger projects. We are, however, seeing very encouraging progress in the build-out of our longer-term EV charging project pipeline as we engage with new and existing customers to address their EV charging requirements.

Our business development progress makes us optimistic about our growth prospects across the business in quarter 4 and fiscal '25. In LED lighting, we have several larger retrofit projects that are underway and should contribute to growth over the next few quarters. These include the remaining $6 million in revenue from our European retrofit project for the U.S. Department of Defense, several million in annual revenue for external lighting for the next several years to support our largest customer as well as other potential projects with them.

Ongoing retrofits for a large global warehouse and logistics customer, which we expect to range from $8 million to $9 million per annum for the next few years and a large multimillion dollar project for a global technology customer, which we expect to begin in the first half of fiscal '25. In our LED business, we see continued expansion through our ESCO channel partners who continue to focus on our industry-leading high-efficiency lighting products as well as our new line of value-oriented fixtures, including our TritonPro retrofit high bay lighting fixtures and our Harris exterior LED lighting products. These products strike a balance between our commitment to high-quality components, design and energy efficiency and the budget limitations of some end customers.

These new products expand our total addressable market within the ESCO and distribution channels. As an example, we recently won and are implementing a project for a national specialty retailer through an ESCO partner using TritonPro. Due to the customer specifications, TritonPro was the appropriate product to meet their needs. This project should generate revenue of $3 million to $4 million for Orion over the next 24 months. We continue to work on our electrical contractor channel to increase our value proposition by adding the right partners, products and pricing to meet their needs. We have seen excellent quoting and pipeline build in this channel since we launched the TritonPro and our exterior Harris lines.

Reflecting the strategic benefits of our U.S. manufacturing facility here in Manitowoc, Wisconsin, in the third quarter, Orion released a full line of new LED lighting fixtures compliant with the Build America, Buy America or BABA Act. These include energy-efficient LED high bays, LED strips and LED troffers. These fixtures exceed the requirements of both the earlier Buy America Act and the new BABA Act which mandates at least 55% of material content come from U.S. sources. That the BABA act stipulates that states, municipalities and schools use BABA compliant products when possible in order to receive federal funding. Certainly, it's important to us to be a leader in American manufacturing in the lighting industry, but it also unlocks federal funding opportunities for customers that can significantly increase their ROI and support their sustainability goals.

In November, we attended the Federal Small Business Conference in Texas to showcase our BABA compliant products. We have received great interest from customers and our quoted pipeline is already over $1 million and growing. One additional area that should be noted is that there are now 7 states which are banning fluorescent fixtures for commercial and industrial use over the next several years. Our understanding is that these states, including California, will prohibit new fluorescent fixtures from being sold as well as prohibit replacement fluorescent tubes. We have heard from several customers that these requirements are motivating them to accelerate their timings on retrofit projects into the next 12 to 18 months.

Turning to our EV charging solutions business. We have made good progress in building out the Voltrek team and its geographic reach to meet the needs of large national customers. We are now engaged with a broader base of customers and opportunities, which are contributing to growth in our project pipeline, which is now in excess of $50 million. Quarter 3 revenue of $2.8 million matched prior year quarter 3, but was down slightly from last quarter due to project timing. We do anticipate some variability in quarter-over-quarter performance of this segment due to the timing of what we expect will be larger regional and national projects. As you probably know, there has been some recent reporting on potential pushback in the EV space by auto dealers and rental car companies as well as questions about the forecast of EV growth reaching 50% of the new vehicle fleet by 2030 or 80% by 2040.

While some of the earlier projections might prove to be a bit bullish it is clear that EV shipments are continuing at a significant rate and our communities and enterprises are very much behind in building out the needed infrastructure to support the current and future needs of EVs. Voltrek with its over 14 years of experience and impressive track record of EV charging station deployments is extremely well positioned to serve customers in this area. Voltrek's experience and capabilities are even more compelling when compared to the many industry newcomers with little or no technical or EV charging deployment experience required to plan, deploy safe, successful and reliable EV charging solutions.

Now turning to our maintenance services business, which achieved solid revenue growth year-over-year and sequential margin improvement in the third quarter. The improvement was attributable to the contribution of a new 3-year agreement to provide preventative lighting maintenance services for our largest customers approximate 2,000 retail locations nationwide. Our performance also reflects the benefit of our effort to secure price increases with key customers. Given a range of significant inflationary pressures over the past several quarters, many of these older contracts were no longer profitable. In response to higher costs, we have raised our pricing to bring our profit margin more in line with our overall business. Over the past few quarters, we have worked to reprice legacy contracts and have successfully converted 3 of our 4 customers to our new pricing structure within contracted periods.

Because we are committed to returning this business to a solid margin profile, we are prepared to exit relationships where we are unable to secure adequate pricing and margins. Many of our Stay-Lite legacy customers have their 3-year maintenance RFP processes in our current quarter 4 period, so we do expect some revenue headwinds as we move into fiscal '25 in our Maintenance segment as we continue to focus on profitability. Overall, we believe that maintenance services offers key accounts additional value and provides Orion with recurring revenue. We are active in our business development efforts and have new business in our pipeline that we believe could come to fruition in the first half of our fiscal '25.

Having touched on each of our product and service offerings. I want to reiterate Orion's focus on delivering the highest quality, energy efficiency and value to our customers with the highest levels of customer service. Our complementary go-to-market approaches of working with ESCOs and distribution partners, along with our unique turnkey solutions allow us to participate in a broad segment of the overall market. Our turnkey approach starts with visits to each site and progresses to custom project and product design, configuration and project planning, including utility and government rebates. We then can manufacture the LED fixtures or procure the EV charging hardware from industry-leading partners and manage delivery, permitting, installation and commissioning at hundreds or even thousands of sites. All with just 1 point of contact and accountability.

Our initiatives to diversify the business over the past 2 years are starting to make meaningful contributions to our growth from both new and existing customers. We continue to see significant cross-selling opportunities, particularly with long-standing large national account customers with potential needs across each of our 3 areas of operation. A priority in coming quarters is to effectively market each of our capabilities across our combined customer base. As a result of these initiatives, we expect our expanded array of solutions to support meaningful long-term growth in fiscal '25 and the years to come. Now I'll turn the call to Per Brodin to discuss our financials and financial outlook in more detail.

Thank you, Mike. As noted in today's press release, our Q3 '24 revenue of $26 million grew 28% year-over-year and 26% sequentially from Q2 of this year. Driven by anticipated strength in LED lighting and maintenance services. In prior calls, we noted several larger projects that we expected to ramp meaningfully in the second half. We began to benefit from that ramp in Q3. One of those projects is the $9.6 million Department of Defense project in Europe, which we had expected to complete this fiscal year. At this point, we have approximately $6 million remaining on this contract and think approximately $1 million or more of that amount could roll over into early fiscal '25. Maintenance services revenue rose to $4.6 million in Q3 '24, which compared favorably to $3.3 million in Q3 '23 and $3.6 million in Q2 '24.

A significant portion of this growth came from our 3-year agreement for preventative lighting maintenance services for our largest customers, roughly 2,000 retail locations nationwide. So those were the growth drivers in the quarter. In terms of profitability, our gross profit percentage or gross margin increased 95 basis points to 24.5% in Q3 '24 from 23.6% in Q3 '23 due to the achievement of a more favorable sales mix of products, the impact of higher sales volume on fixed cost absorption and improved margin on services. Gross margin on services rebounded sharply to 18.5% in Q3 from slightly negative in Q2 '24 and 17.6% in Q3 '23. We expect further margin benefits driven by the continued impact of new pricing on renewing contracts in coming quarters.

Gross margin on Orion products improved approximately 220 basis points to 27.7% in Q3 '24 from 25.4% a year ago. The increase is attributable to new product sales as well as the benefit of higher volumes on fixed cost absorption. Reflecting steps taken in the maintenance business and our expectations for the business overall, we expect our blended gross margins to remain strong in Q4. Operating expenses declined to $8.4 million in Q3 '24 versus $9.4 million in Q3 '23 and $8.7 million last quarter. The year-over-year variance is primarily due to a lower earnout accrual in the current quarter and to acquisition expenses that occurred in the prior year period.

Looking at the bottom line, we reported a Q3 '24 net loss of $2.3 million or $0.07 per share as compared to a net loss of $24.1 million or $0.75 per share which included a 56% shared noncash tax charge to record a valuation allowance on deferred tax assets in Q3 '23. On a comparable basis, last year's net loss would have been approximately $6.3 million or $0.19 per share, excluding the adjustment. Cash generated from operations was approximately $1 million in Q3 '24, reflecting improved operating results and net positive working capital changes. On December 31, we had current assets of $45.7 million, which included inventory investments of $20.8 million, accounts receivable of $15.7 million and cash of $5 million. Net working capital was $15 million and our financial liquidity, defined as cash and revolver availability was $17.5 million.

As such, we believe we are in a good position to fund our operations and growth goals moving forward. As a reminder, last month, we updated our revenue expectations for fiscal 2024 to a range of $90 million to $95 million, representing growth in the range of 16% to 23%. On a preliminary basis, we are targeting growth of 10% to 15% for fiscal '25, and we will update this outlook when we report our full year results in June. And with that, I'll ask the operator to begin the Q&A session.

[Operator Instructions]. And our first question comes from Amit Dayal from H.C. Wainwright.

On the EV side, a little bit of a drop sequentially. Was it seasonality? Or are there any other factors driving some of the quarterly variance from that segment?

Yes, good question. It was just really how the projects laid out in the quarter. Project timing overall. We continue to see, as I referenced in the comments, our project pipeline continues to build now north of $50 million in the overall pipeline. And we really haven't seen any substantial pushouts or anything out or anything along those lines. due to concerns about the broader EV market.

Okay. The $50 million pipeline you mentioned, is this all Northeast? Or is it spread across the U.S.

No, it's spread across the U.S. It's out of the Northeast. So we're beginning -- we've begun our cross-selling work with our existing lighting customers, and we're gaining traction in multiple states around the country.

Okay. And then your comments around focusing on higher margin customers and higher-margin revenues. How much of the sort of lower margin revenues could be impacted by this shift in strategy? Is it a small amount that is not very meaningful? Or is it larger number that we should sort of -- can make an impact on the model projections.

Specifically, we were referring to the maintenance business, the legacy maintenance business, which was acquired with Stay-Lite. And so right now, we're working -- that's the focus. We're working through those RFPs in this quarter. So we really don't have any specifics in terms of what that could look like, but it's isolated really to the business that we acquired with Stay-Lite in the maintenance side.

Okay. Understood. Maybe just last one for me. For fiscal '25, what kind of revenue mix between lighting, maintenance and EV should we be looking for.

Well, we projected 10% to 15% guided in terms of growth for the year. We are expecting continued growth in lighting and stronger performance in EV. And the maintenance business we'll see how things are going to play out with these couple of customers through the RFP process. But certainly, growth in lighting and strong growth in EV.

And our next question comes from Eric Stine from Craig-Hallum.

So curious, I know with your large customer, I mean you all know who it is, your large customer, you've clearly expanded beyond the retrofit of the footprint to the maintenance now? I know that they are very interested on the EV side. Just curious if you're seeing that dynamic with other national accounts where you are starting to see that expansion beyond just your -- I mean, I guess, it's your legacy business of the core LED retrofit.

Yes. Great question, Eric. Yes, we are. I mean I think that there's interest on certainly the EV front with a broad swath of our customers. And all of -- particularly our large public customers. A lot of those are considering their electrification strategy moving forward to support their guests, their employees and, in some cases, electrifying their fleet. So we are having conversations with a broad group of them. Some of them, the maintenance services might apply to, particularly retail customers who don't have maintenance staffs in their locations. That's really where our value proposition probably is strongest. And so there are conversations happening there as well. So we see all 3 of these pillars continuing to work moving forward from a cross-selling standpoint.

Got it. And then just coming back to the initial outlook here for fiscal '25. So I mean, basically, it's your implied fourth quarter the midpoint and you're annualizing that. But if you dig down into that, I mean, so you expect to be done, largely done with the DoD project. And is it fair to say that you are not assuming the renewal at better pricing with that fourth customer on the maintenance side?

Yes. We certainly agree that our projections are that we'll be substantially complete with the DoD project. On the maintenance side, we feel like we've taken reasonable considerations into the forecast.

Okay. And then as we think about that DoD project? I mean, correct me if I'm wrong, but you are kind of qualified. I know that you still have to go through the RFP process, but maybe talk about that pipeline as well, whether it's something that there are things out there that could replace the project you've completed as you get into '25 or just more about the long-term outlook.

Sure. Absolutely. Yes. The federal space is one that's of keen interest to us. We do have a significant pipeline that has been built over the years and continues to be acceleratingly built right now, both on the lighting side as well as on the EV front, and that's both working with partners like we are in the DoD situation and in some cases, on a direct basis.

Got it. I mean is there a way to think about what's the most typical form partners were...

Typically, we're working through it. Yes, typically, we're working through an ESCO partner who would do kind of the entire project including HVAC and other elements. And we are the lighting specialists who basically manage that, and we often manage that in a turnkey fashion.

Okay. Does that do anything to your kind of visibility into what's out there? I suspect it's something where you're working with certain partners and you kind of I would think would have a view of what the potential is out there.

Yes. We view the long-term projects, and we have a significant pipeline that's built up with core partners.

And our next question comes from BJ Cook from Singular Research.

Just a couple of things here I want to touch. On the EV segment for just a second. You mentioned here in the short term that the timing of some of your larger projects, do you expect all or some of those projects just to kind of simply move to the next quarter?

Yes. I think it's the next quarter and maybe the quarter after that, both near term, some of these things have been moved out a little bit. Again, I want to stress that we're not seeing any kind of broad reaction in the marketplace, any of the headlines that we've seen about the rental car companies or anything like that. This is just normal kind of project push out. That's the way I would describe them at this point.

Yes. A couple of things, BJ, that can impact timing as some of these customers are waiting for permitting and sometimes they're waiting for final grant approvals and they can't move forward without that. So there's a couple of things that just are kind of gatekeepers to certain projects just it can push things up part of a month, but it will cross over a quarter. So those are the kind of dynamics we're dealing with.

Got it. Appreciate that. I guess you also talked about $50 million plus pipeline in EV that's pretty impressive. I guess I'm kind of wondering if some of that comes from the infrastructure bill? Or maybe that's further down the road and there might be a benefit in addition to what you guys are doing internally?

Yes. Good question. We're seeing that product build or that pipeline build rather, is coming from the organic Voltrek business, it's coming from cross-selling opportunities with our lighting customer. It's also coming from strategic partners like equipment providers that we work with and a true kind of partnership format and share opportunities there. So we've rapidly built that pipeline from several quarters back, it was approximately $30 million. So we've seen nice build on that. And again, the team is very focused on driving those through to converting those to wins and execution.

Just 1 more quick one. You guys are chatted about running off and renegotiating some of the legacy unprofitable maintenance business. I appreciate that. Can you at least give us a glimpse of what segment margins might look like on a normalized basis.

Yes. I think that's awfully hard to say too. A lot of it depends on our sales volumes, but we expect over time that things will be at a fairly normalized rate.

And our next question comes from Bill Dezellem from Tieton Capital Management.

Back in January, in the middle of the month, I believe that the government awarded something like $150 million to repair existing EV charging stations. Was Voltrek involved in that process and if not, why?

Bill, nice to hear from you. No, we have not seen that money flow through at this point in time. A lot of the funding from the federal government does take quite some time to work its way through. The [ Navy ] funds as an example, were approved probably about 18 months ago, 18 to 24 as that funding is going to the states and now just kind of beginning to hit the street. So we have not benefited from that funding at this point in time.

My impression, Mike, was these were actual awards that had taken place. Did I misread the announcement?

Bill, I don't know the specifics of the announcement. I would have to go back and check on that.

Okay. Let me continue down the EV path. The $50 million of pipeline that you referenced, how does that compare to 1 year ago?

Yes. We were probably, I would say, around $30 million a year ago, maybe a little less. Actually less, yes. So it's built substantially.

Congratulations. And then you referenced in the release and in your opening remarks that 10% to 15% growth anticipated next year. What do you currently see as the trajectory of how the year looks and really as much thinking rate of change, are you anticipating that each quarter is going to be roughly up 10% to 15%. Is it front-end weighted, back-end weighted? What's your general early read on that?

Yes. Good question, Bill. Typically, this year and the years prior, we tend to be more back-end loaded as a company. It's the way kind of the timing of some of the projects and the capital cycle tends to work out. I think that the growth rate would be applied, let's say, at this point in time, and we haven't really given any specifics on this. But I would see quarter-over-quarter growth throughout the year, but we're probably going to still the way the quarters will lay out be a bit back-end loaded.

So Mike, just to make sure I understand what you're saying there is that the rate of change that 10% to 15% is probably similar for each of the quarters. However, in an absolute dollar sense, the year will be back-end loaded just like it was this year and that's how we get the math to be up 10% to 15% each of the quarters.

Yes. Good summary, Bill. Absolutely.

Okay. And then 1 additional question, please. You've referenced the large accounts and their interest in all 3 business segments. Talk a little bit more about that, if you would, please. And including to what degree this is new customers that are wanting to do a bundle of all 3 versus existing customers primarily and any additional insights you can share would be appreciated.

Sure. I could use 2 examples of customers right now. One is a customer that we did a very large EV installation for. Our team, as they've worked with this customer has made them aware of our new exterior lighting products, which are available, the new Harris ones that we launched this past year. And so we're in the process. We quoted $0.75 million project -- lighting project for them. So that's an example of cross-selling, working from an EV standpoint, to lighting. On the other side, we have a long-standing manufacturing customer of ours, public company, multiple sites throughout the U.S. They're now getting through their strategy on electrification, which will include fleet for them. And we're engaging -- actively engaging with them in terms of helping them design their layouts and requirements as they move forward and then obviously, hope to move that to execution. So those are 2 examples of some of the cross-selling.

And relative to the new customers versus existing, what you described is primarily existing, do you have any new customers that are coming to you or that you're finding that are right out of the gates, wanting to talk about doing all 3 aspects of your business, lighting, maintenance and EV?

I think the reality is that new customers typically come to us about a pressing need in one of the 3 areas and that once the customer comes into the ecosystem, let's say, we cross-sell from there. That's typically the way it works.

And our next question comes from Andrew Shapiro from Lawndale Capital Management.

You mentioned in your script 3 of 4, I guess, legacy customers on the maintenance side have been converted to have their service contracts up at market prices rather than the money-losing lower price level. This last customer's contract, it runs off when? Is it during the current fourth quarter or sometime thereafter?

The end of April.

Okay, at the end of April. And are there margins at a loss in this? Or have you recognized like a fixed price defense contract, remaining estimated loss in the revenues generated from this contract going forward or just at 0 margin? Or there is some embedded loss here?

No, there is an embedded loss. We do not have a reserve for future losses on that contract based on the nature of that contract. So as we work through the contract, at least the completion of the current contract, we would anticipate there's additional losses as netting against the other results within maintenance.

Right. Yes. No, no, already seen the improvement. And someone had asked you the question and maybe you were just hesitant to provide the numerical range of sort. Someone asked you the question on what the normalized margins would be from this segment once the money-losing contract burns off and I didn't know, are you comfortable or are you able to provide a range or that was just something that you'd rather not for whatever competitive reason that provides?

Full transparency, I didn't quite hear the full question before. So we anticipate that business operating in the 20% margin range.

And then are there any other smaller customers that you have in that segment that are also with these kind of fixed rate terms that have to burn off with smaller amounts of money loss? Or this is it?

Yes. We've addressed all of the situation we have and are addressing all the situations, big or small, that need to be addressed from a margin standpoint.

And our next question comes from Steve Rudd from Blackwall.

I want to just focus on your last statement that you've addressed. You are addressing all the margin issues. And I appreciate the prior callers or questioners clarification on the fourth customer. On the 3 of the 4 customers that have not been -- that have been converted to the new pricing model with our better margins. What I want to understand is, are there contracts now fully -- the negative margin contracts fully done, just like you said, in April and fourth customers loss contract will be done. Is it that there's -- those other 3 customers, there are no more contracts with them that have these negative margins? Or is it simply that they're accepting prospectively on new contracts, better margins, but there's still contracts with them that have yet to work off with the negative margins.

Yes. Good question and good ask for clarification. So we have -- to be clear, we have gone to these customers within contract periods and we have successfully repriced 3 out of the 4. As also indicated in my comments earlier, this is the RFP season, let's say, for the majority of these accounts. So the majority of the RFPs are taking place now in our quarter 4. And so therefore, we are -- as we suggested, some of these RFPs may not renew because of the profitability concerns that we have.

Another way to think about it, while the 3 of the 4 open the contract mid-contract, we did not extend those contracts. So they went back to the regular RFP cycle.

Okay. And what I want to clarify here, it's interesting, and I'm glad you guys reached out to these 3 of the 4 customers. What's -- or to the 4 or 4, but you had success with this 3 of the 4. What's interesting to me was their willingness to reprice the existing contracts. And I think the implication there is that those contracts are no longer unprofitable. Is that, first of all, correct implication that these existing contracts with them are no longer unprofitable?

Correct. The ones that have been repriced are profitable.

And then the second half of that is with the customers' willingness to reprice those existing contracts, there's what I hear in your answer is an implication that the we probably won't be doing much more with a number of them, and that's kind of a strange outcome where, yes, we understand that we need to reprice. But no, we really -- we don't see a model going forward. And I just don't -- I don't know how that lines up, but you see what I mean. We need to reprice our contract. But going forward, we really don't see ourselves doing much more business. Yes, I don't know how those 2 line up. Do you follow the conflict I'm trying to resolve?

Sure. Sure. I understand. I would say that they understood the inflationary environment, and therefore, we negotiated our way to pricing within contract periods. Anytime you get into an RFP situation, it's a competitive situation. And so therefore, there's a lot of unknowable. What we do know is that we're not going to take on business which is not profitable. And if we end up shedding some of the revenue because of its unprofitable nature and especially for one of these situations, that will benefit us in the long term.

Okay. All right. And that's obviously the way to go. I do want to ask you one thing, though. Have you or do you have any ability in the marketplace to go forward on a cost-plus model because it seems to me that we got squeezed on our -- like everybody did on margins during the pandemic and the bottlenecks, et cetera. But your particular business, I think, might lend itself to a cost-plus model so that we reduce the risk that either we get our pricing wrong or that other exogenous events, which are floating around in massive possibility wack us yet again. So is there position [ for ] your cost plus?

Unfortunately, that's not the way the industry works. And so it's basically a fixed price 3 year, and the customers are all use the same methodology. So we have to subscribe to that if we're going to end up doing business with them. So again, we feel like we've had some wins. We've had some contracts which have been won and some RFPs, which we've gotten pricing through which we feel good about. And but we do have some that we're in the midst of right now, which are unknowable, except for the fact that we're not going to take on unprofitable business. So that's what we've committed to, okay?

Pretty deep into the weeds, if you want to have a detailed conversation some time maybe you could reach out to the IR group, and we could schedule a separate call for that.

And that concludes the Q&A session. I'll now turn the conference back to Mr. Jenkins for concluding remarks.

Thank you all for joining our call today. We look forward to updating you when we report our full year results and as we progress through fiscal '25. We also hope to speak with you at upcoming investor events, including Singular Research, Emerging Growth and Value Leaders webinar on February 22, or to meet with you in person at the LD Micro Invitational in New York City, April 8 and 9. Please contact our Investor Relations team with any questions or to schedule a management call or meeting. The IR team's contact information is in today's press release. Thank you again.

Thank you. This concludes today's call.