Knowles Corporation Q3 2025 Earnings Call - Specialty-film ramp and defense-led Precision Devices growth point to accelerated organic revenue, but film margins to weigh until mid‑2026

Eric, Conference Operator: Thank you for standing by. My name is Eric, and I will be your conference operator today. At this time, I would like to welcome everyone to the Q3 2025 Knowles Corporation Earnings Conference Call. All lines have been placed on mute to prevent any background noise. After the speaker’s remarks, there will be a question and answer session. If you would like to ask a question during this time, simply press star, followed by the number one on your telephone keypad. If you would like to withdraw your question, press star one again. Thank you. I would now like to turn the call over to Sarah Cook. Please go ahead.

Sarah Cook, Vice President of Investor Relations, Knowles Corporation: Thank you, and welcome to our third quarter 2025 earnings call. I’m Sarah Cook, Vice President of Investor Relations, and presenting with me today are Jeffrey Niew, our President and CEO, and John Anderson, our Senior Vice President and CFO. Our call today will include remarks about future expectations, plans, and prospects for Knowles Corporation, which constitute forward-looking statements for purposes of the Safe Harbor provisions under applicable federal security laws. Forward-looking statements in this call will include comments about demand for company products, anticipated trends in company sales, expenses, and profits, and involve a number of risks and uncertainties that could cause actual results to differ materially from current expectations.

The company urges investors to review the risks and uncertainties in the company’s SEC filings, including, but not limited to, the annual report on Form 10-K for the fiscal year ended December 31, 2024, periodic reports filed from time to time with the SEC, and the risks and uncertainties identified in today’s earnings release. All forward-looking statements are made as of the date of this call, and Knowles Corporation disclaims any duty to update such statements except as required by law. In addition, pursuant to Reg G, any non-GAAP financial measures referenced during today’s conference call can be found in our press release posted on our website at knowles.com and in our current report on Form 8-K filed today with the SEC. This will include a reconciliation to the most directly comparable GAAP measure.

All financial references on this call will be on a non-GAAP continuing operations basis with the exception of cash from operations or unless otherwise indicated. We’ve made selected financial information available in webcast slides, which can be found in the Investor Relations section of our website. With that, let me turn the call over to Jeff, who will provide details on our results. Jeff?

Jeffrey Niew, President and CEO, Knowles Corporation: Thanks, Sarah, and thanks to all of you for joining us today. As we continue to execute our strategy of leveraging our unique technologies to design custom engineered solutions and then deliver them at scale for customers and markets that value our solutions, we achieved strong results in the third quarter of 2025. Revenue was $153 million, up 7% year over year, EPS of $0.33, up 22% year over year, and cash from operations was $29 million, all of which were above the midpoint of our guided range. I believe our results continue to demonstrate that our focus on the markets and products where we have significant competitive advantage is paying dividends and positions us well for future growth. Now turning to the segment results. In Q3, MedTech and specialty audio revenue was $65 million, up 2% year over year.

Our continued operational excellence, sustained success of new product adoption, and cutting-edge technology is evidenced with our strong gross margins. I expect that MedTech and specialty audio will have revenue growth within the range of 2% to 4% over the year in 2025, and we are optimistic about our future growth opportunities we detailed at our investor day. In the Precision Devices segment, Q3 revenue was $88 million, up 12% year over year. We saw revenue growth across all our end markets: MedTech, defense, industrial, and EV and energy. Our strong intimacy with our customers’ applications has led to accelerating design wins. Coupled with robust secular trends in our end markets, I am confident in our ability to continue to grow revenue in the fourth quarter and beyond.

While we are seeing growth across all our end markets, I would like to highlight the defense market as it was particularly strong, with design wins in defense outpacing other end markets. Our ceramic capacitors and RF microwave solutions serve a wide variety of military applications. We have a compelling product offering of RF filters being used in next generation of defense systems, serving a broad base of applications from radar detection and jamming to ground communications, ensuring reliable and secure military communications. Our ceramic capacitors provide the electrical energy source needed for extremely harsh applications like munitions and detonation devices. Defense spending is increasing and shifting towards spending on electronic warfare where our products are in high demand. In Q3, bookings in the Precision Devices segment remained strong, particularly in defense and with our distribution partners.

We continue to believe that channel inventories are now at normalized levels as they are now matching orders to end market demand. We continue to collaborate with our customers, leading to a robust pipeline of new design wins as our customers continue to choose our innovative and differentiated solutions across all the markets we serve. We are positioned well for organic growth, and I expect the Precision Devices segment will grow at the high end of our stated growth range of 6% to 8% in 2025. I would like to reiterate the strategy we are executing across both of our business units. We are leveraging our unique technologies, creating custom products through our customer application intimacy, and then scaling into production with our world-class operational capabilities for end markets with strong secular growth trends.

It is proving to be a winning combination, leading to year-to-date revenue growth of 5% and EPS growth of 15% on a year-over-year basis. John will go through our Q4 guidance shortly, but as we stated on previous calls, we are expecting to finish the year strong with revenue and EPS growth accelerating in the second half of 2025. As we look to next year, with new design wins ramping and a very healthy backlog of existing orders, we expect to see organic growth rates at the high end of our stated range of 4% to 6% for the total company. This is an increase from historical levels supported by strong secular growth trends in our end markets and new initiatives such as the expansion of our specialty film production coming online.

Cash generation from operations continues to be robust in the third quarter, allowing Knowles to purchase $20 million in shares and reduce outstanding bank borrowings by $15 million. We have a very strong balance sheet that will continue to support our growth as we pursue synergistic acquisitions, and buyback shares will continue to keep our debt at very manageable levels. In summary, as I said last quarter, I am excited by the momentum and strength the business demonstrated and the growth opportunities that we have in front of us, both in the near and longer term. Our design wins continue to be strong across our product portfolio. This is driving increased demand for our products, which gives me confidence that we have entered a period of accelerated organic growth from historical levels.

We are laser-focused on what we do best, designing custom-engineered products and delivering them at scale for customers and markets that value our solution, positioning us well for growth in 2025 and beyond. Now, let me turn the call over to John to detail our quarterly results and provide guidance for Q4.

John Anderson, Senior Vice President and CFO, Knowles Corporation: Thanks, Jeff. We reported third-quarter revenues of $153 million, up 7% from the year-ago period and at the high end of our guidance range. EPS was $0.33 in the quarter, up $0.06 or 22% from the year-ago period and also at the high end of our guidance range. Cash generated by operating activities was $29 million at the high end of our guidance range, driven by lower than expected networking capital. In the MedTech and specialty audio segment, Q3 revenue was $65 million, up 2% compared with the year-ago period, driven by increased demand in the specialty audio market. Q3 gross margins were 53%, flat versus the year-ago period. As expected, segment gross margins in the third quarter improved more than 200 basis points sequentially, and we expect gross margins to be above 50% for the full year 2025.

The Precision Devices segment delivered third-quarter revenues of $88 million, up 12% from the year-ago period. Segment gross margins were 41.5%, up 150 basis points from the third quarter of 2024, as higher end-market demand and production volumes in our ceramic capacitors and RF microwave solutions resulted in increased factory capacity utilization. These improvements were partially offset by higher production costs and lower than expected yields associated with the ramp-up of the specialty film product line. It’s worth noting that specialty film output trends within the quarter were positive, and as we exited Q3, we are well positioned for both sequential growth and gross margin improvement in the fourth quarter. On a total company basis, R&D expense in the quarter was $9 million, flat with Q3 2024 levels.

SG&A expenses were $26 million, up $2 million from prior year levels, driven primarily by annual merit increases and higher incentive compensation costs. Interest expense was $2 million in the quarter and down $2 million from the year-ago period as we continue to reduce our debt levels. Now, I’ll turn to our cash flow and balance sheet. In the third quarter, we generated $29 million in cash from operating activities. Capital spending was $8 million in the quarter. We continue to expect to generate operating cash flow of 16% to 20% of revenues for full year 2025. During the third quarter, we purchased 940,000 shares at a total cost of $20 million. We exited the quarter with cash of $93 million and $176 million of debt, which includes borrowings under our revolving credit facility and an interest-free seller note issued in connection with the Cornell acquisition.

The remaining balance of the seller note matures next month, and we expect to fund this payment with a combination of cash on hand and revolver borrowings. Lastly, our net leverage ratio based on trailing 12 months adjusted EBITDA was 0.6 times, and we have liquidity of more than $350 million as measured by cash plus unused capacity under our revolver. Before turning to the fourth quarter guidance, I want to give a brief update on the tariff situation as it relates to Knowles. While the situation remains fluid, we continue to believe our exposure to tariffs is less than 5% of revenue and 3% of cost of goods sold. We’ve had success in passing these additional costs onto our customers, and our expectation is to continue to do so without loss of business. Moving to our guidance.

For the fourth quarter of 2025, revenues are expected to be between $151 million and $161 million, up 9% at the midpoint year over year. R&D expenses are expected to be between $8 million and $10 million. Selling and administrative expenses are expected to be within the range of $26 million to $28 million. We’re projecting adjusted EBIT margin for the quarter to be within the range of 22% to 24%. Interest expense in Q4 is estimated at $2 million and includes non-cash imputed interest. We expect an effective tax rate of 7% to 11%. As we move forward, I expect the tax rate to increase in 2026 to the range of 15% to 19%. We’re projecting EPS to be within a range of $0.33 to $0.37 per share. This assumes weighted average shares outstanding during the quarter of 87.2 million on a fully diluted basis.

We’re projecting cash generated by operating activities to be within the range of $30 million to $40 million. Capital spending is expected to be $12 million, and we expect full-year capital spending to be approximately 5% of revenues as we’ve increased investments associated with capacity expansion related to our specialty film product line. In conclusion, our year-over-year revenue and earnings growth were strong in the third quarter, and with a backlog and increased order activity, we expect to continue to deliver both sequential and year-over-year revenue and earnings growth in the fourth quarter of 2025. I’ll now turn the call back over to the operator for the questions and answers portion of our call. Operator?

Eric, Conference Operator: As a reminder, if you would like to ask a question, please press star followed by the number one on your telephone keypad. Your first question comes from the line of Christopher Rolland with Susquehanna Financial Group. Please go ahead.

Christopher Rolland, Analyst, Susquehanna Financial Group: Hi guys, congrats, and thanks for the question. I guess my first is going to be on specialty film. If you guys could just remind us on current capacity, your plans, or even update us on your plans for capacity additions, and you know how from a demand standpoint you guys see revenue now into next year and whether you have high confidence on high volume additional customer opportunities for this product in particular. Thanks.

Jeffrey Niew, President and CEO, Knowles Corporation: Yeah, Chris, let me separate that into two pieces of specialty film. Let me answer the first, which is a little bit easier, which is, you know, back to that energy order we received in Q1. First, I think we’re on track, that starting really in the second quarter, but really fully ramping up at the end of the second quarter. That energy order will start to be delivered in the back half, in full, but starting in Q2, at around $25 million or so. That’s what we expect in that business. In the other portion of the specialty film business, right now we have a backlog that’s not counting again the energy order, that’s in excess of $25 million, close to $30 million backlog to deliver on. We see more orders coming.

We feel pretty comfortable as we look into next year that the specialty film line probably is going to be in the $25 to $30 million range this year. If you add the $25 million, it should be at least $55 or $60 million next year. We’re expanding the capacity to fulfill those orders.

Christopher Rolland, Analyst, Susquehanna Financial Group: Excellent. Thanks, Jeff. Perhaps we can talk about, I think in the press release you talked about design activity. I was wondering what you were alluding to and what underpins your high end of your target growth range. Just as we kind of think about MedTech or Precision Devices or any subsegment, what you would expect to be above and perhaps.

Jeffrey Niew, President and CEO, Knowles Corporation: Yeah, if you divide it that way, I think if I were to sit there right now, I would probably look at the MedTech and specialty audio business in 2026 being in that 2% to 4% range for growth next year. I would sit there and say the Precision Devices, which is now a business which is now obviously larger than the MedTech, is at the high end, maybe even slightly above the high end of the 6% to 8% that we provide for organic growth at the investor day. The underpinning of this, I wish I could point to and say beyond that energy order, which we highlight, that it’s like one customer or one application. We are just having a tremendous amount of success. I would sit there and say, I really commend the teams within Knowles, Chris, in terms of execution.

It’s taking our unique technologies and then customizing them for specific applications across med, industrial, defense, and then delivering them at scale with a world-class operation. We’re just having a tremendous amount of design win activity across the board. That’s why I think we feel comfortable right now when you look at the growth rates coupled with that energy order we’ll start to deliver, that all our markets are up. I was even looking, I think like even this year, we’re kind of having quite a bit of success this year in EV. That’s in 2025, which obviously a lot of people aren’t. That’s all about very specialized design wins in EV where we’re having obviously very unique and differentiated products.

Eric, Conference Operator: Great. Thank you, guys. Your next question comes from the line of Bob Labick with CJS Securities. Please go ahead.

Bob Labick, Analyst, CJS Securities: Good afternoon. Congratulations. I want to offer my congratulations as well on the strong performance.

Jeffrey Niew, President and CEO, Knowles Corporation: Thanks, Bob.

Bob Labick, Analyst, CJS Securities: Yeah, I just want to follow up on the specialty film. There’s obviously lots of excitement going on in the capacities. You’ve talked about the energy order coming on next year, and the other specialty, I guess I think you said medical and defense. Any way you can elaborate on some of the products that these are going into or the ability for follow-on orders in the non-big energy one, and how that could progress over time?

Jeffrey Niew, President and CEO, Knowles Corporation: Yeah, I think I talked about a couple of them that we’ve talked about before, but they’re growing pretty rapidly and doing well for us. In all, the specialty film really focuses around pulse power applications. It’s applications where the capacitor is not being used in a traditional sense, as a building block of an electronic circuit. It’s actually being used to store a significant amount of energy that needs to be released at a very rapid pace in order to power something. We’ve talked before about defibs. We’ve talked about the railgun application. More recently, radiotherapy is a great application for us. There are a lot of applications that are emerging, that are coming.

I wouldn’t, beyond the energy order, which is very unique in terms of the size, we have a lot of unique applications that are coming to market and we continue to be called up on a weekly and daily basis. We seem to be in a very unique position, Bob, relative to the technology and the capability to deliver the solutions. Of course, it doesn’t hurt to be U.S.-based and manufacturing in the U.S. as well.

Bob Labick, Analyst, CJS Securities: Got it. Yeah, it sounds like these are new applications solving problems, maybe better than before, in kind of existing markets, but taking share from older technologies. Is that?

Jeffrey Niew, President and CEO, Knowles Corporation: I wouldn’t say taking share. I would say this is like new applications that didn’t exist before that are requiring a significant amount of power to be delivered in a very rapid period of time in order to power the device. I think one of the ones that we alluded to, which is coming, is downhole. That’s another application that, quite frankly, we’re taking prototype orders for right now, but we could see down the road with all the work that we’ve been doing that these downhole applications where our capacitors would be in high heat environments, have to be taken downhole in order to be involved in fracking and cleaning of drill bits. There are a whole bunch of different applications here that we’ve been working on for a year or two.

We’re in the prototype phase right now, but everything indicates that one is another application that would require pulse power.

Bob Labick, Analyst, CJS Securities: Got it. Very exciting. Shifting gears, obviously, the balance sheet’s in good shape. You’re buying back stock. You’ve had M&A in the past. Could you just give us an update on the M&A environment? I don’t know if with tariffs, it slowed down. Has it reopened up a little bit or what’s the opportunity or are you even focused?

Jeffrey Niew, President and CEO, Knowles Corporation: Yeah, we’re definitely focused on this. I just think, you know, where we are today as a company is we have a great organic plan. I think we want to make sure that if we do an acquisition, it’s very obvious, you know, to our analysts, our shareholders why we did it. We’re laser-focused still on acquisitions. I think we’re in a position now where we’re trying to be picky and making sure we’re going to do something that makes sense and it’s really one plus one equals three. I still am hopeful, you know, we’ll get something done, you know, over the next year or two, but we want to make sure it’s the right thing. I don’t know, John, if you have any comments.

John Anderson, Senior Vice President and CFO, Knowles Corporation: I think that the environment has improved from a quarter ago. There are more assets out there. Interest rates or expectations are coming down. We’ve got a good pipeline, but it’s difficult to say when we’re going to be able to complete. As Jeff said, we’re being disciplined.

Bob Labick, Analyst, CJS Securities: Okay, super. Thanks very much.

Eric, Conference Operator: Your next question comes from the line of Anthony Stoss with Craig Hallum Capital Group. Please go ahead.

John Anderson, Senior Vice President and CFO, Knowles Corporation: Good afternoon, guys. John, probably the first question for you. I’m curious if you can share the book to bill now and where it was maybe a quarter ago. Palladium prices are up about 30% in the last 30 days. I know this impacted you guys early in 2022. I’m curious at what price of palladium do you think it would have a negative effect in your gross margins?

Jeffrey Niew, President and CEO, Knowles Corporation: I’m going to let John take the palladium question first, then I want to just cover the book to bill.

John Anderson, Senior Vice President and CFO, Knowles Corporation: Yeah, Tony, you’re right. The palladium costs have increased. I will say we’re pretty good in terms of we’ve got pre-buys. We have a pretty good position at least through the first half of next year where we’re kind of locked in at prices below today’s market price. If they continue to elevate, I know you’re looking back 12, 18 months ago, they got over $2,000 a troy ounce. As you mentioned, they’re $1,500. Again, we’re monitoring this closely. If there are opportunities to pre-buy even beyond the second half of next quarter, sorry, of 2026, we’ll do that. I don’t see this impacting our gross margins in a negative way at this point.

Jeffrey Niew, President and CEO, Knowles Corporation: Yeah, I mean, we’ve had a, you know, kind of a, when we went through this once before, obviously, we were able to raise prices. I think one of the things that we’ve done is we’ve kind of fixed the price, as John said, through the middle of next year. We’re not subject to, like, big swings in volatility over a short period of time. I would also add that if we get to the back half of next year and prices remain the same, I think we’ll probably be having discussions with our customers about it. I don’t think it’s a big deal at this point. On the book to bill, our book to bill within Precision Devices was one for the quarter. It’s worth a little color here. It was the second largest order quarter in the last four quarters.

I think what you’re starting to see is, quite frankly, that the revenue is up significantly. It’s getting a little bit more difficult to produce those crazy book to bills that we had in the first half, but we’re starting to deliver on those. I will say this, it was a very strong, again, bookings quarter. When I said it’s the second largest bookings quarter we’ve had in the last 12 months, I would also just say that the backlog is quite high as well. That’s why we took so many orders in the last three quarters, again, not even counting the energy order. I think we feel very comfortable about how bookings are. I did look just yesterday at where the bookings were month to date, and it appears we’re having another strong bookings month in October. I think that the trends continue.

It was, as I said in the prepared remarks, particularly strong, the bookings in defense, and then with our distribution partners. We had a well above one in our distribution partners and in the defense market.

John Anderson, Senior Vice President and CFO, Knowles Corporation: Thanks, Jeff, for that. If I could sneak in one more for John, you said it’s good to hear that the thin film, you’re making improvements in Q4 on the gross margin side. How much or how many more quarters do you think that’ll last? What kind of impacts is it at now?

Jeffrey Niew, President and CEO, Knowles Corporation: You know, Tony, in terms of you’re talking about the specialty film product line specifically?

John Anderson, Senior Vice President and CFO, Knowles Corporation: Yes.

Jeffrey Niew, President and CEO, Knowles Corporation: Margins, I’ll say in Q3 were, you know, we had a great quarter overall, but that was an area for opportunity and improvement. Margins were well below the total company and the PD average. As I said, it’s really a question of we’re adding costs, both fixed overhead, we’re incurring higher than a normal scrap cost. We’re seeing within the quarter some, within Q3, we saw some positive trends. August was better than July. September was much better than August. Coming out of that, our trajectory is right.

John Anderson, Senior Vice President and CFO, Knowles Corporation: I think the question, just I think you’re not going to really see the full benefit of what we think the gross margin we can get to until probably late Q2 when the energy order starts to fully ramp. Because just remember, what’s going on is we’re hiring people, equipment is starting to run, you know, we’re putting overhead in place to deliver this energy order, but we’re not actually delivering a lot of units yet or producing a lot of units. It is impacting gross margin, and that’s really not going to go away fully until mid to late Q2.

Jeffrey Niew, President and CEO, Knowles Corporation: I do, again, see sequential improvement from Q3 to Q4 in gross margins due to improved output and capacity utilization.

John Anderson, Senior Vice President and CFO, Knowles Corporation: Yeah, very good. Thanks, guys.

Eric, Conference Operator: Your next question comes from the line of Tristan Guerra with Baird. Please go ahead.

Hi, good afternoon. Could you give us a sense of the gross margin leverage on incremental utilization rates and where utilization rates are currently? Also, as a follow-up to the prior question, what is the gross margin impact from the ramp in specialty film in Q3? Assuming that impact, as you said, disappears by mid-next year, is it kind of a linear decline or is it more of a decline that happens mostly when you start ramping in Q2 of next year?

Jeffrey Niew, President and CEO, Knowles Corporation: Yeah, a lot of questions to unpack there, Tristan. I would say, you know, the first thing with respect to the gross margin utilization and capacity, you really have to look at it as on a product line by product line basis. We have some product lines that are running close to full capacity within the ceramic capacitors business and others that we’ve got some capacity. It’s really difficult to kind of go and give you a blanket on what our capacity utilization is.

John Anderson, Senior Vice President and CFO, Knowles Corporation: Generally speaking, like our drop-through on incremental revenue.

Jeffrey Niew, President and CEO, Knowles Corporation: I would say, you know, if that question is easier to answer, on average, again, it depends on product line, but overall, you can think of 35% to 40% dropping to the bottom line on every dollar of sales. You know, our variable contribution, you can see our gross margins, call it 45%. Our variable contribution margin is higher than that, obviously. We don’t have a lot of incremental operating expenses. If I was modeling this, yeah, every dollar of sale, kind of think of it as that 35% to 40%. Obviously, if it’s MSA, it’s going to be a little higher than that. Certain areas within Precision Devices can be a little lower. Overall, kind of use that 35% to 40%.

John Anderson, Senior Vice President and CFO, Knowles Corporation: John, you’ll agree, but I think what you’re going to see is some linear improvement in Q4, Q1, and into Q2. You’re going to see probably a bigger jump up in Q3 once we’re fully running the production. It’s going to kind of be linear and then a jump up.

Jeffrey Niew, President and CEO, Knowles Corporation: Yeah, the only thing I would say is sometimes Q1 has a little seasonality where in some of the.

John Anderson, Senior Vice President and CFO, Knowles Corporation: I’m talking about specialty film specifically, though.

Jeffrey Niew, President and CEO, Knowles Corporation: Oh, specialty film.

John Anderson, Senior Vice President and CFO, Knowles Corporation: Specialty film specifically, you will see sequential improvement Q3, Q4, Q4 to Q1, Q1 to Q2, and then a big jump up as we get into Q3.

Jeffrey Niew, President and CEO, Knowles Corporation: In some of our other business, like MSA, typically, you know, Q4 is a really good, Q3, Q4 are good quarters, and then we see a little dip down in Q1.

John Anderson, Senior Vice President and CFO, Knowles Corporation: Yep.

Eric, Conference Operator: Okay, that’s very useful.

Jeffrey Niew, President and CEO, Knowles Corporation: I think the overall theme, Tristan, is this. I still think that a number of our businesses, specifically the specialty film product category, still has upside gross margin that should help the overall company continue to raise EBITDA margins over time.

John Anderson, Senior Vice President and CFO, Knowles Corporation: Yeah, I would just, last point on this, you know, if we’re going to finish somewhere 44% to 45% in 2025, there is opportunity to go higher in 2026, really driven by the, in the back half of ’26, driven by that ramp up in the specialty film product line.

Eric, Conference Operator: Okay, that’s very useful. For my second one, your exposure to distribution and industrial within Precision Devices, is that still around 40%? You’ve mentioned that inventory levels are back to normal. Is that the case for industrial and distribution as well? You’ve mentioned a very nice ramp in industrial. Should we assume that even in that segment, inventory levels have normalized? If not, when do you think that happens?

Jeffrey Niew, President and CEO, Knowles Corporation: I would say, you know, generally speaking, a big portion of what we categorize in our distribution business is industrial, and that business is up. Now, here’s what I just say is, it’s a little opaque yet to answer the question on industrial growth year over year because you’re taking into account inventory burndown. I can definitely say that if you look at the growth in distribution, we’re going to have some pretty nice growth in our distribution business. When we see their POS reports, they’re seeing nice growth as well, and a big portion of that’s industrial. Again, it’s hard to actually say how much industrial is growing, but I can tell you the inventory is for sure out. We’re definitely seeing ordering trends that are saying that orders are lining up with demand as opposed to we’re burning out in inventory.

We don’t really need that much to order that much from you.

Eric, Conference Operator: Great. Thanks again. Very useful. There are no further questions at this time. Ladies and gentlemen, this concludes today’s call. Thank you all for joining, and you may now disconnect.