Garmin Ltd. Price & Performance (GRMN)

Information concerning these risk factors is contained in our Form 10 ks filed with the Securities and Exchange Commission. Presenting on behalf of Garmin Limited this morning are Cliff Simble, President and Chief Executive Officer and Doug Besson, Chief Financial Officer and Treasurer. At this time, I would like to turn the call over to Cliff Pimble. Thank you, Terry, and good morning, everyone. As announced earlier today, Garmin delivered another quarter about outstanding financial results as our products continue to resonate with customers Consolidated revenue increased 23% to $1,820,000,000 a new fourth quarter record and we achieved growth and record revenue in each of our five business segments. Gross margin expanded 100 basis points to 59% Operating income increased 52% year over year operating margin expanded over 500 basis points to 28% reflecting both improved gross margin and operating leverage. This resulted in pro form a EPS of $2.41 up 40% over the prior year. 2024 was a remarkable year of growth and achievement for Garmin Garmin. While we were optimistic at the beginning of 2024, consistently outperformed even our highest expectations throughout the entire year. We achieved growth in every segment resulting in record segment revenue record consolidated revenue. 2024 was also a year of historical significance marking our thirty fifth year in operation.

Since we were founded in 1989, We have delivered more than 300,000,000 navigation and communication devices, including more than $18,000,000 delivered in 2024. Consolidated revenue increased 20% to $6,300,000,000 Gross margin expanded over 100 basis points to nearly 59%, Operating income increased 46% to nearly $1,600,000,000 and operating margin came in at 25%. We believe our performance is the direct result of our robust product portfolio, Looking ahead, we have many product launches planned for 2025, that will further strengthen our portfolio with some representing new categories for Garmin Garmin. With this in mind, we anticipate 2025 consolidated revenue will increase approximately 8% six point eight billion dollars Also, our strong results and positive outlook give us confidence to propose an annual dividend of $3.6 a share Reflecting a 20% increase over the prior dividend amount which will be considered by shareholders at the upcoming annual meeting. Doug will discuss our financial results and outlook in greater detail in a few minutes, But first, I'll provide remarks on the performance of each business segment. Starting with Fitness, 2024 was an exciting year as demand for running, cycling, and wellness products has been robust, and new customers are embracing the healthy active lifestyles our brand represents.

We experienced growth in every product category, led by strong contributions from advanced wearables. For the year, fitness revenue increased 32%. To $1,770,000,000 Gross margin was 58% a four eighty basis point improvement over the prior year primarily driven by lower product cost, and favorable mix. Operating income more than doubled year over year. To $483,000,000 and operating margin expanded approximately 1,000 basis points to 27%. Reflecting both improved gross margin and operating leverage. During the quarter, we launched Lilly two Active, our smallest GPS enabled smartwatch featuring an elegant design and up to nine days of battery life in smartwatch mode. Looking ahead, we anticipate another strong year for the fitness segment with many new product introductions planned throughout the year. With this in mind, we expect fitness revenue to increase approximately 10% for the year. The outdoor segment delivered a strong year of product achievements and revenue growth. 2024 revenue increased 16% to $1,960,000,000 driven primarily by adventure watches, following the launch of the highly successful Fenix eight series. Gross margin was sixty seven percent three forty basis point improvement over the prior year primarily driven by lower product cost and favorable mix. Operating income exceeded $700,000,000 and operating margin expanded five fifty basis points.

To 36% reflecting both improved gross margin and operating leverage. We are strategically focused on creating growth opportunities by introducing new product categories and penetrating new markets, During the quarter, we launched two products that are rising to the definition of halo product because they are changing the game in their respective markets. The first product I want to mention is the Approach R50. Which is the only portable golf launch monitor with a built in simulator. It features a 10 inches color touchscreen display and includes a preloaded database of more than 43,000 golf courses that could be played on the course [indiscernible] using a built in simulator We also launched the Descent X50i our first large format dive computer. This device includes a vivid three inch color display providing rich information that is readable at a glance And its rugged design is purpose built with leak proof buttons, a sapphire lens, a 20 ATM dive rating, and an integrated backup dive light. Looking ahead, we expect that our strong outdoor product lineup will result in revenue growth of approximately 10% Looking next at Aviation, revenue increased 4%. To $877,000,000 driven by growth in both OEM and aftermarket product categories.

Gross and operating margins were 7524%, respectively, resulting in operating income of $211,000,000 a decrease of 7% year over year. The decrease in operating income is primarily due to increased R and D spending as we develop new products and certify new aircraft platforms. 2024 was a year of milestone accomplishments for aviation. We were named number one in aviation product support for the twenty first consecutive year by Professional Pilot Magazine. We also celebrated the legacy of our founders Gary Burrell and Doctor. Min Kow on upon their induction into the National Aviation Hall of Fame.

Aviation safety is once again top of mind after recent tragic acts that have shocked and saddened everyone Our strategic focus on aviation safe has resulted in many award winning innovations designed to save lives such as envelope protection, SafeGlide, SafeTaxi and emergency auto land Our most recent safety innovation runway occupancy awareness technology, was honored with a prestigious Laureate Award from Aviation Week Network as the first available system to warn pilots if other aircraft are occupying an active runway. During the quarter, Textron Aviation announced the selection of our G3000 Prime integrated slide deck for the Citation CJ4 Gen three aircraft. G3000 Prime was also selected by Beta Technologies for the Aylea electric conventional takeoff and landing aircraft, which conducted its inaugural flight during the quarter. These announcements are the first of many we anticipate as OEMs embrace this highly advanced next generation flight deck. Looking forward, we expect growth to accelerate throughout 2025 as new aircraft platforms enter production, and as conditions improve in the aftermarket, With this in mind, we expect aviation revenue will increase approximately 5% Turning next to the Marine segment, revenue increased 17% to nearly $1,100,000,000 exceeding the $1,000,000,000 threshold for the first time.

Growth was primarily driven by new revenue, from the 2023 acquisition of JL Audio, Excluding JL Audio, marine revenue increased 6%, outperforming the broader market strengthening our position as the world's largest consumer marine electronic [indiscernible] Full year gross margin was 55% a 180 basis point improvement over the prior year, and was favorably impacted by lower product cost. Operating income increased 32% year over year And operating margin expanded two forty basis points to 22%. Reflecting both improved gross margin and operating leverage. 2024 was also a year of milestone accomplishments for Marine as we were named NMEA manufacturer of the year for the tenth consecutive year and we were named Most Innovative Marine Company by Sounding Straight Only the second consecutive year. During the quarter, we were recognized with the National Boating Safety Award from CITO Foundation for the fourth consecutive year. Also during the quarter, JL Audio received an Innovation Award for the Pavilion line of outdoor home speakers from Home Technology Specialists of America. That the Pavilion line As I previously mentioned, Garmin has been consistently outperforming the broader marine market. And we expect to do so again in 2025. The marine market remains soft but is stabilized at a level from which we can anticipate recovery and growth With this in mind, we expect marine revenue will increase approximately 4% for the year.

Moving finally to the Auto OEM segment. Revenue increased 44% to $611,000,000 primarily driven by growth in domain controllers. Gross margin was 18% and the operating loss narrowed to $39,000,000 for the year. During the year, all remaining BMW models were equipped with Garmin Garmin controllers paving the way to achieve our maximum potential revenue, from the BMW program in 2025. We also captured additional program wins and made significant progress preparing for our next major program that is expected to enter production in 2027. I'm proud of the progress that we have made in our quest to build a successful auto OEM segment. As many of you know, the outlook of major automakers is softening which changes the revenue trajectory we previously shared. Even so, we expect 2025 to be another pivotal year of growth and progress towards the profitability stage for this growing business segment. With this in mind, we expect revenue to increase approximately 7% for 2025. That concludes my remarks. Next, Doug will walk you through additional details on our financial results. Doug? Thanks, Cliff. Good morning, everyone. I'd begin by reviewing our fourth quarter and full year financial results. Provide comments on the balance sheet, cash flow statement, taxes, 2025 guidance.

Posted revenue of $1,000,000,000 $8.02 $3,000,000,000 for the fourth quarter representing a 23% increase year over year. Cost margin was 59.3% increased 100 basis points over the prior year quarter primarily due to lower product cost. [indiscernible] was 30.9%, four forty basis point [indiscernible] Operating income $516,000,000 52% year over year [indiscernible] [indiscernible] Operating margin was 28.3% Garmin, five forty basis point increase from the prior year. [indiscernible] Our GAAP EPS $2.25 and Garmin EPS $7.41 40% increase from prior year pro form a EPS. Looking at the full year results, posted revenue of $6,000,000,000.09 $7,000,000,000 was in a 20% increase year over year. Gross margin was fifty eight point seven percent one hundred and twenty basis point increase from the prior year Operating expense percentage of sales was thirty three point four percent three twenty basis points [indiscernible] Operating income was $1,000,000,005.09 $4,000,000,000 46% increase.

Operating margin was twenty five point three percent two forty basis point increase from the prior year. [indiscernible] Our GAAP EPS was $7.3 performing EPS $7.39 32% increase in the prior year pro form a [indiscernible] Next, we'll look at fourth quarter revenue by segment and geography. During the fourth quarter, we achieved record revenue on a consolidated basis for each of our five segments. We achieved double digit growth in three or five segments, [indiscernible] Followed by the Auto Emsegment, 30% growth in the outdoor segment to 29% growth. By geography, we achieved double digit growth across all led by the EMEA region, 34% APAC region Americas region had 1817% growth respectively. For full year 2024, we achieved 20% consolidated growth record revenue on a consolidated basis, and record revenue By geography, achieved 31% growth in EMEA 16% growth [indiscernible] and 12% growth in APAC. Looking next to operating expenses. Fourth quarter operating expenses or 8%. Research and development increased by $22,000,000 SG and A increased by $19,000,000 Both increases primarily due to personnel expenses. Few highlights on the balance sheet. Cash flow statement, dividends, and share repurchase. Ended the quarter with cash and marketable securities approximately $3,700,000,000 Accounts receivable increased sequentially and year over year to $983,000,000 due to strong sales in the fourth quarter.

Inventory balance increased year over year to approximately $1,500,000,000 During the fourth quarter twenty twenty four, we generated free cash flow of $399,000,000 $18,000,000 decrease on prior year quarter. For the full year 2024, we generated free cash flow of approximately $1,200,000,000 $56,000,000 increase in the prior year. Was due to improved earnings partially offset by increased working capital needs. Our full year 2024 capital expenditures hundred and 94,000,000, were consistent with the prior year. 2025, we expect free cash flow to be $1,100,000,000 with approximately $350,000,000 of capital expenditures. 2025, we expect to continue to make investments in platform to grow including facilities and IT related projects. 2024, we paid dividends approximately $72,000,000 Also, we announced our plan to seek shareholder approval for $0.6 increase in our annual dividend beginning with June 2025 Post it with a cash dividend of $3.6 or $0.9 per quarter. Say 20% increase from our current quarterly dividend of $0.75 per share. During 2024, we've used $62,000,000 of cash to repurchase company In year end, we had approximately $238,000,000 remaining in the share repurchase program authorized through December 2026. Our full year 2024 pro form a effective tax rate was 16.7%, compared to 8.5% the prior year.

Increase in effective tax rate is primarily due to an increase in the combined Switzerland tax rate response to global minimum tax [indiscernible] 2025 pro form a effective tax rate is expected to be 16.5% which is comparable to the 2024 tax rate. Turning next to our full year 2025 We estimate revenue of approximately $6,800,000,000 increased approximately 8% for 2024. We expect gross Garmin to be approximately 58.7% consistent with our 2024 Gross Garmin. We expect an operating margin of approximately 25% is comparable to the 2024 results. The full year pro form a effective tax rate is expected to be approximately 16.5% comparable to the 2024 tax rate. This results in expected pro form a earnings per share [indiscernible] 6% increase over the 2024 pro form a earnings per share. This concludes our formal remarks. Can you please open the line for Q and A?

At this time, I would like Your first question comes from the line of Joseph Cardoso with JPMorgan. Your line is now open.

Thank you and good morning. Thanks for the question. And congrats on the results here. I guess maybe the first question is just related to fitness, obviously, you exited 2024 strongly. And I was just wondering if you could help dimensionalize the key drivers for the segment between the refresh of the installed base, share gains that you're seeing with new customers as well as even potentially pricing there. And then maybe more importantly, as we look towards the 2025 growth forecast for the segment, maybe from a high level, how are you guys thinking about the contribution across those variables that you're embedding into the guide? And then I have a quick follow-up. Good morning, Joe. I think in terms of our our business performance, it was very broad based across many product lines. I think if you look at all of our product categories, each one probably has its own dynamic when it comes to, the customer base and when we introduce new products, what mix of those are new versus existing. But in general, especially in the wearables area, we're seeing many more new customers coming to Garmin which is driving our results. Looking forward to 2025, we really see more of the same.

Of course, we recognize that these are out outstanding results. So we're trying to be realistic about our growth but 10% is a fabulous outlook and they're excited to see what the year will bring. No, appreciate the color there, Cliff.

And then maybe as just my follow-up here, it's more on the operating margin guidance. Kind of suggests a slightly lower operating leverage or flow through than we did [indiscernible] kind of what we should be considering or factors that are influencing maybe the softer leverage for 2025 than what we've historically seen from the company? And then thanks for the questions.

Yes. It relates to yes, thanks. It relates to the operating Garmin, gross margin we're expecting that to be relatively consistent year over year, which we also expect as it relates to our operating expenses, as a percentage of sales, we're expecting to be up about 30 basis points. That 30 basis points is coming from R and D. For SG and A, we expect as a percent of sales to be relatively flat. The investment in R and D is basically investments for growth. Those investments are really for innovation and all the different product launches that we do have coming up for the next year.

Your next question comes from the line of Ben Bohlen with Cleveland Research Please go ahead.

Good morning, everyone. Thanks for taking the question. I wanted to piggyback that last question, Doug. With respect to gross margin, the implied guide or the explicit guide on the revenue growth across categories really suggests favorable mix in your higher margin categories grow as a percentage of revenue.

Into 2025. So curious how you how you think about flat gross margins when outdoor, fitness, aviation growing as a percentage of mix into the out year And then I had a follow-up Yes. As it relates to gross margin on a consolidated basis, yes, we do expect that to be relatively consistent. And there's a lot of different variables that go into the gross margin. We have product mix, as you mentioned, component costs, overhead per unit etcetera. And so there's a lot of mix in there from that standpoint. But we're thinking about as it relates to gross margin by segment, there's not any real major differences we're expecting. Gross margin wise segments out there may be some puts and takes as we move through the year, but relatively consistent for our gross margins by segment. Okay. Cliff, The performance in EMEA has been really remarkable. Last couple of years. I'm curious what you attribute to the success there. Could you talk about the dynamics of maybe more industrialized versus emerging markets? And any go to market efforts that have changed really driving that outperformance?

Yes. In EMEA, I would say that the strength there is primarily driven by the relative stronger benefit we get from wearables and consumer market in EMEA. In some of the countries, the major countries, we're the strong number two player in wearables Of course, America's dynamic is slightly different. So we're the number three here, but in Europe, we've been much stronger as a marketplace over there with our product line. Okay. My last one is looking at auto OEM, with respect to 2025, you mentioned capturing BMW opportunity and kind of get into your normalized run rate Could you share any thoughts on on the way we should think about the margin of this business, both gross and EBIT margin and how it scales over time and how potential new wins future platform opportunity in 2027 and beyond will influence those figures further? That's it for me. Thank you.

Yes, I think we've talked about the margin profile of this business in the past and and consistent with what we said, we believe this business is a mid teens kind of gross margin. And kind of mid single digits operating Garmin. And that's clearly what we're still driving for. We have been successful in securing new business for the future. Including the one that I mentioned that is coming in 2027 representing our largest win to date. And other smaller wins across the globe that help fill in both both terms of volume as well as margin profile that that helps support that outlook that I mentioned. Thank you.

Thank you.

Your next question comes from the line of Eric Wootering with Morgan Stanley. Please go ahead.

Great. Thanks so much for taking my question, Sky. Maybe just to start, I wanted to double click again on the auto OEM business. And maybe what I'm really trying to get at was prior expectations for 2025 revenue were $800,000,000 Obviously market conditions have softened since you originally gave that guide. But you have obviously this new large win ramping in 2027. So I'm just can you maybe just help us better understand one, the primary factors causing the 2025 outlook outside of market conditions, have anything changed kind of at the micro level And then two, how any advice on how we should be thinking about maybe the shape of the growth curve as we bridge 2025 with that 2027 win ramp? And then I have a follow-up. Thanks so much.

Okay. Yes. So, definitely 2025 was below our expectations that we had shared a couple of years ago, shaving about $140,000,000 off of the outlook that we had back then and this is 100% due to the softening outlook of automakers, particularly the higher end automakers that are operating in the China which has been struggling probably more than other areas, although, globally, it's it's generally weak. So there's really no other factor other than that. There's no other smaller factors at play really. We definitely were anticipating a much stronger outlook from them, but conditions change. As we look forward to the 2027, we do expect as we are anticipating growth here in 2025, 2026 could dip a little and then as we ramp into 2026, Okay. Very helpful. Thank you so much, Cliff. And then maybe just my follow-up is, Ken, getting to what you alluded to at the top of the call. If we go back a year ago, you guided to 2024 revenue of $5,700,000,000 and EPS of $5.40. Obviously ended up significantly underperformance with And I'm just wondering if you're approaching '25 and kind of the same degree of relative [indiscernible] [indiscernible] in 2025 new users coming into the Yes, I think we had some trouble receiving your audio there, but I think what you were asking is if you look back to 2024, our initial guide [indiscernible] more conservative than obviously where we ended up.

And perhaps wondering if our 2025 outlook has a degree of conservative and built in Absolutely, 2024 exceeded all of our expectations internal and external. And we did also feel that there was a lot of potential in 2024. So we worked very hard to achieve everything that we could. As we look to 2025, we, of course, always start our year and try to be pragmatic in our outlook. There's a lot of the year that's ahead of us. A lot of the revenue that comes in the back half of the year with seasonality, and especially in the consumer markets, we're trying to be pragmatic and deliver, something that we have high confidence in. And we'll continue to work throughout the year to achieve and overachieve what we've said.

Thank you so much, Cliff. I appreciate the color. Thank you.

Your next question comes from the line of George Wang with Barclays. Please go ahead.

Hey, Tim.

Thanks for taking my question.

Just two quick ones. Firstly, just want to double click on the auto OEM.

Just curious like in terms of the profitability kind of obviously you laid out target of MSD, OM medium term. Just curious whether you expect to turn profitable kind of in the next couple of quarters? Just kind of near term, like any thoughts on so the breakeven level kind of going to kind of low single digit Just curious if you can impact some of the near term dynamics in terms of the bottom line for the auto OEM? Thank you.

Well, auto OEM profitability is obviously our goal. This is a very dynamic business and as we've pointed out, we're affected by the ups and downs of our customers too. So we're managing through that. I think we're doing very well I would like to point out that we report all of our segment results on a GAAP basis. Allocate, cost to overarching corporate segments that help dress up segments. So what you're seeing with our auto OEM segment [indiscernible] GAAP results. And our profitability metrics may not match point per point for everyone else in the industry. But that said, our segment, auto OEM segment still provides very meaningful contributions in margin that cover a portion of our corporate costs that wouldn't go away if we didn't have this portfolio. And we also achieved significant leverage in our in our manufacturing as well as our supply chain by combining the volumes that we have across our business. 18,000,000 units a year is is very substantial and very attractive for our suppliers. So we're able to to achieve cost savings the benefit of which you are seeing in all of the other segment results.

Okay. Just a quick one. Just as we step back kind of zoom out in terms of the high level on the consumer Is there anything kind of you would like to call out kind of maybe different versus kind of last quarter, kind of three months ago in terms of the consumer backdrop? And especially if you can address some of the selling that sell through especially as it relates to some of the flagship products in terms of restocking cycle in the space of outdoor, just curious over the next couple of quarters, whether you should see sustained momentum just on the flagship trip for product, if you will, And just any sort of sell through kind of you want to kind of call out versus last quarter? Thank you.

Yes, I think we've probably made most of our our remarks. I would say in terms of the consumer and as we looked at the results of Q4, as well as our registration behavior that we can see in near real time, The sell in and the sell through was very well matched. And we believe that the retail channel is is not overstock. It's at a healthy level and we continue to see strong registrations in our products. From our perspective and the kinds of products that we offer and the customer bases for those products, I would say that those customers seem to be fine. We don't want to say that there's no consumer pressure because we know that there is But in general, the, the, the, embracement of our our products has been very strong and we feel good about where our customers are at.

Great. Thank you. I'll go back to the queue.

Your next question comes from the line of David MacKrani from MacGregor with Longbow Research. Please go ahead.

Good morning everyone and thanks for taking my questions. Congratulations on a strong quarter, Cliff. Great performance. Thank you. I guess I want to start by just asking about lower product costs. Because you called that out in each segment. And I'm just trying to get a sense is obviously there's some operating leverage benefit here from the strength in unit volumes, but is there something else going on here from the standpoint of variable costs or anything from a structural standpoint that would be helpful for the modeling. Well, increased production definitely allows us to leverage our our investments and higher volumes, of course, more efficiencies on production line. And as I just mentioned to George, the added volumes that we have with our combined business over 18,000,000 units last year allows us to have more efficiency in our overall supply chain and component purchasing. So So we're seeing benefits from that and expect to continue to see that. So it's scale benefits, there isn't anything kind of from a structural standpoint that's changing?

No, no, yes, we are very clear. It's definitely the scale Right. Got it.

And then secondly, I wonder if I guess If you could talk about tariffs, I guess somebody has to ask the obligatory question. You've got Taiwanese manufacturing, you've got the BMW, which I guess gives you some indirect exposure to the extent that there's tariffs on foreign automotive production. Can you just talk about your exposure there?

Well, I think, there's exposure everywhere as it seems and it can change of course, rapidly. So I think everyone is still waiting to see what what really transpires. I believe that we are probably optimally positioned in terms of of all of the discussions that have been going on while we have exposure here and there. I think for the most part, our supply chain is is out of the way of where most of the attention is being focused right now. So we we could have some impacts. We don't really know how to quantify that, but we're we believe that we're in a good position to minimize the impact.

Do you have anything in the guidance for that now?

No, there's really nothing that you could plan for right now. Again, that's there's a lot of changes almost on a daily basis. So we'll just have to wait and see. But at this moment, we we don't anticipate that there's going to be major impacts.

Okay.

Thanks very much.

Your next question comes from the line of Ivan Vrinsett with Tigris Financial Partners LLC. Please go ahead.

Hi, thanks for taking my question and congratulations on another great quarter and a great 2024.

Thank you.

My first questions are on the two really great new products you launched, the the Approach Golf Simulator and the Descent diving computer. These are more higher priced products. Are these targeted more are you or at the professional markets? Are you seeing, let's say, interest or purchase for the dive computer from dive professionals, which would be like a new channel for you, maybe the ones that work at oil rigs or in shipyards. And the same thing for the [indiscernible] Are you seeing a lot of interest, let's say, from golf pros who use it for teaching or for golf schools.

Yes. I would say, Ivan on both of those products, really the customer base is a broad range. Specific to DIVE, of course, these are very serious DIVE electronics. And so consequently, it definitely appeals to a person that is more serious about the sport, but we see interest in that product across a range of of enthusiasts from on down to to others including professional divers, work divers, that kind of thing. So it's a broad range. And the same is really true for the R50 There's a lot of people that like to have those in their garage or in their rec room, as especially when winter weather is so bad, they can play courses wherever they want to. And this product is unique because it can be taken out to the actual golf course and used on the course as well. So it's really a broad range. We don't really see a specific customer base that is gravitating to that product and we love that because appealing to a broad range is always better.

Yes. So my friends who know say that the approach for the price has a lot of features that are in similar items that are two, three, four times the price. So I think Yes, maybe we missed the pricing.

On your connected cabin display, which was really I thought incredible at CES, what kind of feedback did you get or are you getting on that?

I think we got really good feedback on on the unified cabin. It is, of course, futuristic investment on our part, so that we can demonstrate to automakers our capability, both in terms of of innovative product design as well as as shaping the future of the automotive industry. So we see a lot of follow-up interest in that and it may not necessarily result in a car that you see with something called the Unified Cabin, but the technologies we're demonstrating and the underlying core electronics and systems that we're designing for it will definitely become part of future cars.

Well, I thought it was pretty cool. I would like a car with all that. Well, wishing you a big 2025.

Yes, I think we all love to see that demonstrated and we all wish we had a car loan kind of Thanks.

Thank you. Your next question comes from the line of Noah Zetskin with KeyBanc.

Capital Markets. Please go ahead.

Hi. Thanks for taking my questions. Maybe just a couple for me on the marine industry.

Obviously, 2024 was tougher from an industry perspective. I think new boat retail in The U. S. Was down close to 10%. New boat shipments were down over 20%. Obviously, you guys grew 6% organically which implies pretty substantial share gain there. So I guess first, if you could just remind us how to think about the mix of the business from an OEM versus aftermarket perspective And then if we were to see some stabilization in the industry in '25, I think your guidance is for 4% growth.

So just any reason to think that might be a bit conservative if the industry were to stabilize? Thanks.

Yes. I think we definitely continue to see share gains across our product line. The for us, the mix of product is more than half is is retail aftermarket, although growing sizable amount is OEM. As well. In terms of the overall market condition right now, I would say that again, we don't see big downswings. We also don't see big upswings. I don't think the market is going to to snap back to double digit growth. Without some other catalysts. But it's still a very solid market and many have been calling for growth for quite a while and they've mostly been wrong because the market has just taken some time to correct itself after COVID. But But in general, we see stabilization. We believe that from here, it's kind of a something we can build on and if the market performs better, we would expect, of course, that we would also outperform. Thank you.

That concludes our Q and A session. I will now turn the conference back over to Teri Segg, Director of Investor Relations, for closing remarks.

Thank you all for joining us today. Doug and I are available for callbacks We'll be talking to you in the near future. Have a wonderful day. Bye. Ladies and gentlemen, that concludes today's [indiscernible]