Allient Inc. Price & Performance (ALNT)

You can find these documents on our website or at sec.gov. I want to point out as well that during today's call, we will discuss some non GAAP measures. We believe will be useful in evaluating our performance. You should not consider the presentation of this additional information in isolation or or as a substitute for results prepared in accordance with GAAP. We have provided reconciliations of non GAAP to comparable GAAP measures in the tables accompanying the earnings release as well as the slides. That, please turn to Slide three and I'll turn it over to Dick to begin. Thank you, Craig. And welcome, everyone. As we conclude 2024, I want to acknowledge our team's resilience and commitment to execution and what has been a dynamic and at times challenging market environment. Despite headwinds in key industrial and vehicle markets, we continue to execute with discipline driving operational efficiencies and positioning Alley for sustained long term growth. In the fourth quarter, delivered $122,000,000 in revenue with a sequentially improved gross margin of 31.5% even as volume remains soft. Importantly, orders increased 15% sequentially resulting in a book to bill ratio of nearly one. Largely driven by strengthening demand in power quality and defense.

For the full year, revenue totaled $530,000,000 reflecting the anticipated demand softness largely due to inventory rebalancing and customer utilization of excess inventory in the channel. However, we remain focused on financial discipline generating nearly $42,000,000 in operating cash flow and ending the year with $36,000,000 in cash. Total debt reached approximately $240,000,000 at the end of the first quarter of twenty twenty four following our acquisition of SMC, Since then, we have been committed to reducing debt lowering our total by $16,000,000 over the year. On a net debt basis, given our stronger cash position, we are essentially back to where we were at the end of twenty twenty three Despite adding SMC, SNC has progressed as expected It is a well established company and their offerings have complemented our current power quality capabilities. This was our first tuck in acquisition In support of our power technology pillar, and we are excited about the synergies developing as a result. A driver of our margin improvement has been our simplify to accelerate now initiatives as highlighted on Slide four. This program has been instrumental in refining our organizational structure reducing redundancies, and optimizing production processes. In 2024, it delivered $10,000,000 in annualized improving our cost structure and overall agility.

By simplifying operations, we are enhancing our responsiveness leading to faster time to market improved customer service and stronger competitive positioning across key industries. Our goal is to drive an additional $6,000,000 to $7,000,000 in annual savings in 2025. Building on this momentum, in early February, we announced the expansion of machining capabilities at our Dothan, Alabama facility an initiative that is expected to support our goal. While there will be some onetime implementation costs, the investment is expected to pay for itself within a year. We anticipate realizing initial benefits by late twenty twenty five further strengthening our operational efficiency and cost structure. Jim will provide additional details on the associated restructuring changes. [indiscernible] Leveraging advanced machining techniques, our DOPEN facility will focus on producing complex fabricated parts that are strategically aligned with the needs of our key markets and customers. Additionally, we will transition current assembly operations from Dothan consolidate these capabilities into our facilities in Tulsa, Oklahoma and Reno, Mexico where final assembly, integration and testing are core competencies. This realignment will sharpen our business focus and optimize our global footprint. Enabling us to deliver high precision system solutions for demanding [indiscernible] across diverse sectors, including aerospace and defense, medical, and electronic test and assembly equipment.

While these transitions involve complexities, and require focused execution, we are confident in the long term efficiencies they will create. Looking ahead, we are actively identifying new opportunities to drive efficiency innovation and growth. Ensuring we remain aligned with evolving market conditions and customer demands. By continuously optimizing our operations, and making strategic investments, we are strengthening Allied's financial performance enhancing operational flexibility and unlocking greater earnings potential. This forward thinking approach is critical to maintaining our competitive edge and delivering sustained value to our stakeholders. With that, let me turn it over to Jim for a more in-depth review of the financials. Thank you, Dick. Good morning, everyone. In the fourth quarter, we reported revenue of $122,000,000 a decrease from the same period last year aligning with our expectations. The impact of foreign currency exchange rate fluctuations was nominally unfavorable by 300,000 Our geographic sales mix shifted with U. S. Customers accounting for 54% of total sales down from 59% in the fourth quarter of the previous year. The percentages were similar to full year sales mix as well. This change reflects demand challenges including lower industrial automation and softness within our vehicle markets. Breaking down our results further, let's take a closer look at how each of our key market sectors performed during the fourth quarter.

Aerospace and Defense sales were a bright spot increasing 20% due to the timing of certain defense and space programs. We are actively pursuing several promising opportunities in the defense sector. Which we anticipate will contribute to growth in the future. Medical market revenue also increased up 5% driven by solid demand for surgical instruments The sales and vehicle markets continued to face headwinds. Decreasing 46%. This decline was primarily driven by reduced demand for powersports, as the market has struggled to rebound following the surge in demand driven by the pandemic. Additionally, our strategic decision to focus more on margin enhancing applications contributed to the overall decrease. Industrial market sales declined 11% despite a strong performance power quality sales, particularly to the HVAC and data center markets. We also saw incremental sales from the S and C acquisition. However, these gains were more than offset by reduced demand in industrial automation, [indiscernible] primarily due to significant inventory destocking by our largest customer. Slide six illustrates the shift in our revenue mix across markets over the full year period. Highlighting the key catalyst driving these changes. The industrial sector remained our largest market contributing 47% of the trailing twelve month sales.

This market was primarily driven by strong demand in power quality, as well as growth in vehicle handling and semiconductor equipment. While industrial automation initially benefited from supply chain improvements earlier in the year, sales in this sector slowed significantly as inventory levels have reset across the industry. In the vehicle market, we experienced increased demand in commercial automotive driven by ramp up of several new model programs. However, this was offset by shifting recreational spend trends in powersports and softer demand in the agricultural sector. While we saw stronger sales in surgical products, our medical market experienced ongoing weakness in medical mobility solutions. Aerospace and defense annual sales reflect variability driven by contract award and government budgets. [indiscernible] Combined with long lead times That said, defense has seen positive growth offset by declines within the space industry due to program timing. Finally, our distribution channel, while smaller, showed modest growth representing 5% of our total sales over the trailing twelve month period. As shown on Slide seven, gross profit for the quarter was $38,400,000 resulting in a gross margin of 31.5%. Gross margin remained flat year over year. Despite top line softness and expected margin dilution from our most recent recent acquisition.

The 10 basis point sequential increase in margin was primarily driven by a favorable product mix as well as the continued implementation of our lean toolkit across the organization. Notably, from the low margin point of 29.9% in the second quarter, we have seen a 160 basis point improvement in gross margin, reflecting a strong sequential recovery. We have been closely evaluating the potential impacts of evolving tariff policies, assessing our options in this highly fluid environment. With manufacturing operations in Canada, Mexico and China, we recognize tariffs may affect our supply chain, leading to increased costs. As the situation continues to develop, we will consider changes in trade policies through our pricing strategies and continuous operational We remain confident in our ability to pass [indiscernible] if not all of the potential tariff impact onto customers, ensuring operational stability while maintaining the quality and value our markets expect. Looking ahead, our ongoing supplication initiatives coupled with the integration of S and C and its added capacity, position us well to drive continued margin improvement over time. Despite current market challenges, we remain focused on improving profitability and driving operational efficiencies. As highlighted on Slide eight, we reported operating income $6,400,000 resulting in an operating margin of 5.3%.

Was an increase of 30 basis points year over year and was flat sequentially. In the fourth quarter, we incurred minimal restructuring charges bringing the full year total to $2,000,000 These charges were primarily cash based and largely tied to severance expenses. As Dick mentioned, our simplified to accelerate now program is well underway. And we are actively implementing additional cost saving measures. During 2025, we are targeting an incremental $6,000,000 to $7,000,000 reduction in annualized costs. With initial benefits expected later One time implementation costs of the DOPEN initiative are estimated to be approximately $4,000,000 to $5,000,000 and are expected to be substantially incurred in 2025 and our anticipated to produce a full payback within a year. Slide nine highlights our bottom line results showing continued sequential improvements. For the quarter, net income reached $3,000,000 translating to earnings per diluted share of $0.18 Adjusted net income was $5,200,000 or $0.31 per diluted share which excludes non cash amortization of intangible assets as well as business development restructuring and realignment costs. Our effective tax rate for the quarter was 22.2% The prior year's fourth quarter tax benefit of $400,000 reflected realization of certain NOLs and R and D credits and incentives.

For the full year 2025, we expect our effective tax rate to range between 2123%. Internally, we used adjusted EBITDA as a key metric to measure our operational performance and progress. Adjusted EBITDA for the quarter was $14,100,000 or 11.6% of revenue. We are targeting further improvement in EBITDA margin through our ongoing simplification efforts. Sequentially, our adjusted EBITDA margin rose by 10 basis points demonstrating the effectiveness of these initiatives. Turning to cash generation and our balance sheet, on Slides ten and eleven, we remain disciplined in managing working capital while continuing to invest in strategic priorities. For the full year, cash from operations reached $41,900,000 reflecting strong working capital efficiencies and non cash adjustments that help offset lower net income. At year end, cash and cash equivalents increased 13% to 36,100,000.0 further reinforcing our financial flexibility. Capital expenditures for the year totaled 9,700,000.0 compared with $11,600,000 last year as we refined our capital allocation strategy to focus on high value high return projects. In 2025, we anticipate moderate CapEx growth with spending projected between $10,000,000 and 12,000,000 aligned with our targeted investment priorities. Our days sales outstanding increased to sixty days. Primarily due to customer mix and timing.

Inventory management remained a top priority Inventory turns remained flat sequentially at 2.7 times. Throughout 2024, we navigated the impact of extended supplier lead times. Receiving inventory for orders placed up to a year earlier, As a result, but we are actively aligning stock levels with current demand. Encouragingly, total inventory declined 5% year over year and excluding S and C, was down approximately 11%. On the debt reduction front, total debt stood at $224,000,000 at year end. Reflecting the NC acquisition. However, we remain committed to deleveraging reducing debt by $7,200,000 in the fourth quarter. Net debt finished the year at $188,000,000 representing a net debt to capitalization ratio of 41.5%. Which was lower To enhance financial flexibility, we amended our twenty twenty four credit facilities in the fourth quarter securing less restrictive covenants and expanded EBITDA add backs to support long term planning. Our year end leverage ratio as defined in our credit agreement was 3.43 times. Additionally, to mitigate interest rate risk, at the end of the quarter, we entered into a new three year hedging $50,000,000 of debt providing stability amidst slowing rate fluctuations. These actions reducing debt optimizing capital allocation, and managing financial risk reinforce our ability to execute our simplify to accelerate now strategy with discipline, Looking ahead to 2025, our financial priorities remain clear and focused.

First, we are committed to reducing inventory and strengthening working capital management. We have already made progress in aligning inventory with current demand conditions and this will remain a key area of focus to further improve [indiscernible] Second, we will continue to drive cost reductions through operational efficiencies. Our simplify to accelerate now program is in full execution mode and we are implementing additional initiatives to streamline operations and enhance profitability. And finally, we are dedicated to reducing debt as we remain disciplined in capital deployment and cash management. We have already begun deleveraging following the S and C acquisition and we will continue to take strategic actions to strengthen our financial position. With that, if you advance to Slide [indiscernible] Will now turn the call back over to Dick. Thank you, Jim. The underlying fundamentals of our business remain strong. Fourth quarter order rates demonstrated solid momentum increasing 15% sequentially. Growth was primarily driven by strength in power quality and defense, while orders also rose 12% year over year benefiting from similar end market tailwinds, and contributions from our recent acquisitions. Although backlog has declined due to shifting customer ordering patterns, we remain focused on positioning the business sustained demand recovery, and a normalization of run rates.

Our diversified portfolio is well aligned with key macro trends, including data center expansion, electrification, energy efficiency, automation, and the electric hybridization of all types of vehicles including those the defense sector. We are actively engaged in several prominent new program opportunities at our newly formed Allient Defense Solutions Unit. Which we announced in a press release in the fourth quarter of twenty twenty four. We are also continuing the strategic realignment within our company. To support the significant opportunities available to Aliat in this sector, as well in some of our other targeted verticals. Our outlook is outlined on Slide 13 We anticipate a moderated pace of orders across most markets through the first half of twenty twenty five but expect continued strength in areas benefiting from long term macro trends particularly data center expansion. Customer inventory adjustments appear to be nearing completion and as we move forward mid year, we expect greater stability in order flow. Supporting a strong return to revenue levels that improved operating margins as we capitalize on emerging growth opportunities. As part of this open transition, we expect some near term inefficiencies. Including dual production lines and temporary inventory buildup across multiple locations. However, these are necessary steps to ensure a smooth transition and position us for long term operational improvements.

Ultimately, these initiatives reflect our commitment to building a more efficient agile and sustainable foundation for future growth. At Allient, we are actively driving innovation and efficiency through targeted investments and strategic realignment. Our focus on operational excellence exemplified by our simplify to accelerate now program, ensures we remain agile and competitive in a dynamic environment. By optimizing our cost structure, streamlining operations Leveraging our global footprint, we are strengthening our ability to deliver high precision solutions that meet the emerging needs of our customers. I am proud of what we have accomplished this past year and remain optimistic about our path forward. Our strategic initiatives combined with our team's dedication positioned Alia well for the future. With that operator, let's open the line for questions. We will now begin the question and answer session. Our first question comes from Greg, Palm with Craig Hallum Capital Group. Please go ahead. Hey, good morning everybody. Thanks for taking the questions and congrats on a better end of the year, some improved execution for sure.

Thank you, good.

If we could just start at maybe a high level Dick, just give us a little bit more color on kind of what you're seeing out there across [indiscernible] [indiscernible] is worth noting and maybe how that relates to A, sort of the potential to return to growth for the year and maybe the cadence of how you think 2025 plays out? [indiscernible] Let's start with geography.

I would say to you that North America continues to strengthen. I think what's what we're looking for there is for the industrial sector to come back to life and get back to normal rates and growth. We do see Some challenges continuing in the powersports area.

There's inventory levels at the dealers seem to be pretty high and so forth. So we don't expect that to return to the COVID days where it just went through the roof here.

As far as Europe goes, I would tell you that in Europe, the driven certainly by Germany, they still have some softness and it's They have administration change they're going to be going through Depending on what happens there and the policies that we see implemented there, hopefully they'll also see some return emphasis on automation and growth in the industrial sector as well. Global and primarily for us it is North America where we see the benefits the data center expansion and our capabilities to support that are very encouraging. That's continuing to have some pretty strong tailwinds and we expect [indiscernible] and to be a pretty good beneficiary of that. Defense sector, the programs that we're working on. And so we look at defense. We call it the we created the new business unit as we announced last year and talked about a little bit here.

There's many new programs that we're working on and we believe we have a [indiscernible] product set and a solution set that makes us kind of unique in the space. And is gaining a tremendous traction. We've put resources in that have proven track records of growth and expansion And we're really emphasizing that this is going to be a strong area for us and opportunities in the future based upon these new programs. We had in the past talked about the additions and how the inquiries went up based upon the conflicts that were occurring but we haven't seen increased demand. Well, we have seen increased demand there. So the demand is going up I think we'll see that demand continuing to expand into the future here. There's other areas that we when we talk about our simplify to accelerate now strategy I think many people relate that to say while you're streamlining operations, creating operating efficiencies, you're reducing costs, and that's really what's generating the fixed cost reductions that we're going through. But I will tell you even more so than that is the ability to respond quickly. To get these organizations aligned much closer to customers, so that we can support them better and we can move very quickly on.

So Yes. We have the benefit of simplifying or reducing the amount of overhead that sits in these sits in some of these silos and but making them more effective by working closely together with our customers and we think it improves our responsiveness to our customers, which ultimately leads to growth in business. So Pretty quick. Highlights of market. We don't see didn't discuss Asia. As you know, that's not a significant part of our business. But it still remains stable.

Yes, that makes sense. I'm curious Europe specifically given recent news there proposed stimulus kind of a almost like a whatever it takes moment. I mean, I know that's been a challenging market Germany specifically where you have a lot of exposure. But probably too early to to tell now, but do you feel like there could be any green shoots that that emerge or is it more of a let's wait and see mode and see how that kind of the year shapes up? I would say it's a wait and see mode, Greg. I don't think we have enough information Yes, there's been discussions on their stock, but RFP underground in Europe tell us that continuing to hold the line up expenditures and looking at operational efficiencies and so forth and focusing on new product development and programs that they think will kick off [indiscernible] midyear and beyond before we start to realize any of those benefits.

Yes, okay. Makes sense. And then just lastly, you talked about it a couple of times about data center exposure and some of the strength there. Can you just kind of remind us exactly from like a revenue exposure standpoint And just in terms of growth rates, what did you see last year? Any sense on what you're expecting kind of this year? And what's the overall opportunity there in space? Yes. Well, I think Certainly, from our perspective, one of it is advantages that we have that we feel will Help us outpace the industry and the growth is that we do have some higher power solutions that are quite unique in the marketplace. That does give us a competitive edge And I commend the team that made a bet that that's where the market was heading several years ago and the bet was correct. And so therefore, we are positioned quite uniquely and have the ability to take advantage of that. From an overall standpoint, we're looking at pretty significant [indiscernible] we've had year over year in the 40% range. And we do expect that that [indiscernible] levels, but has the ability to continue well into the future.

Okay. All right. I'll leave it there. Best of luck. Thanks. Thank you, Rick.

And the next question comes from Ted Jackson Northland Securities.

Please go ahead.

Thanks. Good morning.

Good morning.

Dick, I'd like to talk about both powersports and actually medical as well to start with. If you look at those businesses, the medical business, I know there's a lot of moving parts underneath the hood, but the medical business seems to have stabilized at around let's call it, dollars 20,000,000 for the last two years.

And when is that kind of a sort of a base level run rate? Can you just sort of talk a little bit about what's going on underneath the covers? And I mean, it just seems to me that that business is based out. And then exactly a similar thing with regards to the powersports, which also seems to have kind of based out around $20,000,000 on a run rate basis for the last, call it, two quarters.

And is that a way to kind of think about this business? Is that as these two business lines for you that they're kind of just sort of flatlining along kind of found their floors and what we had to wait for is those markets to stabilize and turn around.

That's my first question.

Sure. So looking at Medical first, I mean, when we talk about Medical, and I've mentioned this before that we look at the applications in a more finite level internally. We call them FOAs or field of applications. And we look at our medical Allient basically group them in lump them in two different parts. One would be medical mobility and the second would be instrumentation. Instrumentation being treatment equipment or surgical robot and other types of diagnostic equipment, instrumentation type The other type we talk about the medical mobility or patient handling you're looking at wheelchairs, patient beds, rehab, And we also we have other applications in there that in the past, I mean, for example, rest of And we saw that come back down to levels below what we saw in the past. So there so I think it's kind of leveling out now and stabilizing, but then we have other applications that are in various different types of pumps. Applications. So I would tell you that we are focused on areas that we think will have some continued growth well into the future. Surgical robotics and instrumentation and diagnostic and test equipment higher end equipment that in the innovation that's occurring there, that's not going to go down.

That's only going to increase And as it starts to expand its reach into the world market, we think that there's definitely some opportunities there. And we're investing there. The other markets aren't going to that either. I mean, insulin pumps and the flood in blood pumps and other types of I'll call it more home care or Individual Care I don't think that those are going down. I think there's definitely going to be a growing market, but maybe not as fast as and maybe from our standpoint, it doesn't have the same technology that we would see in the higher level of robotics and instrumentation markets. As far as respiratory and breathing, I think that will be stable. Unless we have some change that occurs in the environment here, that's probably going to stabilize. So we see for us our emphasis be it on providing the higher end higher level solution, continue to expand in there expand our reach in there as we look at the vertical, we do as I mentioned to you, we do look at it two different ways. One, is a more competitive different type of structure for handling in some of the other individual products consumer type products as well but the instrumentation and surgical robotics and so forth.

Requiring continuing to require higher end, faster, better solutions that we think will have some continued growth out into the future. So you asked about is it stabilized? I think we have some room to return it to the growth levels that we haven't seen yet. But then I do think we have growth opportunities there and it's one of the key verticals for us. Power Sports, Jeff, same questions for that? Yep. I think it's going to be a Allient. If you take a look at the market, can you take a look at the major players in the industry and so forth. I think they're all talking the same way that it's a challenged market. It's also the dynamics of that market have certainly changed over the years mean, clearly, when we were one of the innovators in in power steering, selling at the market, the volume has gone up You see the chain the retail chain that's being sold in the big box stores and we call them whether it's sporting goods stores, whether in the the warehouses, you're seeing that as well as you still have the dealers. And I think there's a squeeze going on what's the margin potential And as the volumes have gone up, you've seen some competition outside of North America.

Which claims to be taking some market share. So I do see that into the future as definitely a challenging market and our customers They've got battles on their hands to retain share. To drive cost out and to figure out how we work with the new channels and the cost reductions that they're seeing in our end products And that's where we have to support Is there a case to be made that as you get towards the back part of this year that the business is at least bottomed out? And then regarding to you, you have a do have exposure within that segment to the commercial vehicle market. The outlook for the commercial vehicle market second half of 'twenty five and through 'twenty six looks very encouraging because of sort of pre buy for EPA regulations and such. So when you think about the vehicles segment in aggregate, do those balance each other out or do you think you can actually grow it? I would say to you that we have there has been an offset that's occurred there for us. I mean, we have had we do have growth in the commercial vehicle market. But I also want to repeat what I seem to be saying in every one of our conference calls.

That We look at this market as the opportunity to sell into the automotive or vehicle markets itself and mostly automotive from a volume standpoint gives us some critical mass and core unit volume. That we can leverage into other markets, not just other vehicle markets, also in some other markets within the company.

That in itself we have enough volume there now where we feel we can take advantage of that and we can leverage that but it is not for us In fact, we are looking at and we've already made the decision internally that we want more than niche applications. We're not interested in niche competing with people who will do this thing to run their businesses at extremely low margins, if any at all.

So the challenges are going to be there. And fortunately for us, we are positioned in some niche applications. It's growing. It's profitable, and we can leverage that into other areas. It has offset some of the drop. That we've seen in the powersports, but not all of it. I mean powersports, as everyone knows, was certainly our biggest customer was in that space is no longer our largest customer. In fact, no longer is in a reporting requirement for us. [indiscernible] that's good and it's bad. From the standpoint of we've always worked very diligently on diversifying our business into other sectors which we've done And so the goal wasn't to reduce the volume there, and grow it everywhere else. The goal was to maintain the volume growth as elsewhere.

For the most part, we've done that.

So there has been some offset, but not enough to cover the Power Sports drop. Okay. I've got one more bigger question then a couple of little tiny ones for Jim. I want to move over to the inventory stuff and your largest customer. So when Rockwell put out their quarterly stuff, they did actually pretty much put a flag in the ground saying that they had seen a lot of their inventory within the segment kind of pushed to normal. And so with that in mind, I mean, obviously, Turning around. Can we talk a little bit about the cadence of that? I mean, is it something that we should see like [indiscernible] like you'll report first quarter and you'll see a level of improvement in second quarter, like level improvement in third quarter, level improvement in fourth quarter. And And am I reading your guidance right [indiscernible] or your commentary, right, with regards to to the cadence of the year that you see that the inventories within that channel being normalized by the time we get into say like the third quarter of the year. And then I got two just real quick ones for Jim. Sure. The So what I have to caution everyone on is that the again, we talk about broader markets.

When we talk about automotive, we talk about industrial, we talk about medical and so forth that we do focus and I mentioned this to you that we have these FOAs that we feel that we gain some competitive advantage there and then we look to leverage that into any all the opportunities that it are out there for the same type of solution. From the industrial automation standpoint, and I can appreciate that our Rockwell has talked about that there they gained momentum and they're kind of cleaning out the channel and getting their inventory levels adjusted. And that is great news. Okay, because we have suffered from that. It was a big headwind for us this year. I would tell you it was overweighted. That it was a situation where we had a pretty strong backlog based upon long lead times. Of component parts, mostly electronic component parts that we had to go out and secure Rockwell also was supporting that effort. To get out and get these components secured. And when we got them, and we were able to produce, they were taking everything we could produce But there was something that I would tell you that must have been off in the planning system because you hit a cliff, [indiscernible] So it tells me and just being totally open about it, it tells me that we probably had a higher level of inventory in their channel than some of their other customers might have seen and that perhaps we would to have a longer climb out of the Ford as they return to improving automation projects and utilization of our products.

So your statement about are we seeing improvement, the answer is yes. Is it going to continue to improve month after month, quarter after quarter? Yes. When will it return to what we will call a normal state? I will say to you that I don't expect that to occur until later in the year. That's based upon the improving demand that we're seeing and the cadence of that improvement, seeing I'll also caution us that We had a surge last year, a very strong surge and we talked about 40,000,000 head that we would have coming into the year based upon the surge So That level of business that we did have last year That's we don't see that repeating. In the near future. We see that it's going to be that was pent up demand and it was a surge demand based upon inability to get And now that's freed up and it's flowing inventories are being consumed we will return to some type of normal demand but it will be below the surge that we saw last year. That's one of the headwinds that we will face going forward. Does that answered your question? It does. Thanks very much.

My last two questions, which are really kind of short. So the one is with the Dotham restructuring and the cost let's call it $4,500,000 that's going to come through in 2025. Are you going to break that out and how are you going to structure the breakout if you are within your financial So pretty simple, just kind of want to understand kind of we're going to see it and then any kind of color you can give in terms of when we're going to see it would be helpful. As well and then one more behind that. Well, we don't typically break it out. But what I would tell you is that it's under it's well underway, the effort. We know that quite candidly, I'd love to be able to tell you that it's going to be ratably our investments are going to be ratably over the year, but I think it's going to be little lumpy, Ted. And I would tell you it's probably going to be more towards the back half of the year when we start seeing the the greater cost. I mean, we are going to incur costs and the first half of the year, but I think it's going to be weighted towards the second half.

And you won't even show that within the quarter? And as normally put our restructuring and business development. Okay. Just making sure. So we will see it in there but we'll be able to you won't call it out individually, but we'll see it in there in terms of the line item and understand what it is. [indiscernible] And then my last question, just to make sure, can I think I have the rate down, but what is the interest rate for your swap that you put in that $60,000,000 I think I have $3,200,000 Is that correct? That sounds about right, but I'll confirm that up for you. Okay. Okay. That's it for me. Thanks for the patience with Thank you, Ted. Ted. This concludes our question and answer session. Would like to turn the conference back over to management for any closing remarks. Well, thank you everyone for joining us on today's [indiscernible] for your interest in We will be participating in the ROTH Conference on March 17, in Data Point, California. Otherwise, as always, please feel free to reach out to us at any time and we look forward to talking to you all again after our first quarter twenty twenty five results.

Thank you for your participation and have a great day. The conference has now concluded. Thank you for attending. Today's presentation. You may now