RBC (RBC) Q4 2026 Earnings Call Transcript

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DATE

Friday, May 15, 2026 at 11 a.m. ET

CALL PARTICIPANTS

• Chairman, President, and Chief Executive Officer — Michael J. Hartnett
• Vice President and Chief Financial Officer — Robert Sullivan

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TAKEAWAYS

• Revenue -- $518 million, marking 18.3% growth year over year, with Aerospace/Defense driving overall gains.
• Adjusted Gross Margin -- 45.3% for the quarter, compared to 44.2% in the prior period.
• Adjusted Diluted EPS -- $3.62, up 27.9% from $2.83 a year ago.
• Adjusted EBITDA -- $168.9 million, representing a 21% increase over $139.8 million reported last year.
• Free Cash Flow -- $67.5 million for the quarter, with a conversion rate of 73.6%.
• Debt Repayment -- $116 million of debt paid down in the quarter, $27 million additionally since quarter end.
• Segment Revenue Mix -- Aerospace/Defense contributed 57%, Industrial 43% of total revenue.
• Aerospace/Defense Segment Revenue -- 41.2% increase year over year, with legacy business growth at 22.8% excluding the VACCO acquisition.
• Aerospace/Defense Backlog -- Approximately $2.3 billion, continuing to expand.
• Commercial Aircraft Sales -- Up 17.8%, of which 17.3% was organic.
• Defense Sales -- Up 65.4%, with 22.1% organic growth.
• Missile Revenue -- Exceeded $45 million, boosted by the VACCO acquisition and increased content on multiple programs.
• Space Revenue -- Exceeded $70 million, with $30 million contributed by VACCO over eight months; up sharply from $4 million in 2021.
• Industrial OEM Revenue -- Up 7.8% over last year, with distribution revenue rising 4.5%.
• Aerospace/Defense Gross Margins -- 41.6% (reported), 44.2% (adjusted), 43.7% (excluding VACCO), with VACCO over 46% for the quarter.
• Industrial Margins -- 46.5% (reported), 46.2% (adjusted).
• SG&A Expense -- $86.9 million, or 16.8% of net sales for the quarter.
• Interest Expense -- $11.2 million, down 12.5% year over year, reflecting improved leverage and lower rates.
• Tax Rate -- 21% in the adjusted EPS calculation, down from 21.7% a year earlier.
• Guidance for Fiscal 2027 -- Revenue expected between $500 million and $510 million, or 14.7%-17% year-over-year growth.
• Adjusted Gross Margin Guidance -- Anticipated at 45.25%-45.5% for the upcoming year.
• SG&A Guidance -- Expected at 16.5%-16.75% of net sales for the upcoming year.

SUMMARY

The Aerospace/Defense segment sustained expansion through a combination of new contracts, increased content on top missile programs, and backlog growth, with management indicating production rates will rise further. Industrial end markets showed stable growth in aggregates, food, beverage, grain, warehousing, and semiconductors, with initial signs of a broadening order book. Management is actively expanding production capacity—especially for marine hardware supplying submarine programs—and expects to double revenue in this sector over the next 24 to 36 months. Over 40% of commercial OEM long-term agreements remain to be repriced, with expectations for most contracts to reset by January 2027. The VACCO acquisition exceeded initial estimates for profitability in the quarter, though management cautioned not to extrapolate this result as a long-term norm.

• Hartnett explained, “we are definitely expanding our production capability.” to participate in multiple ramping missile and hypersonic programs, with both volume and content share set to rise over a three-year horizon.
• Commercial aerospace is projected to grow “beyond 15%” in fiscal 2027, with defense and space segments expected to grow at even higher rates.
• Space sector exposure now spans both legacy and emerging customers, including NASA, Boeing, SpaceX, and Rocket Lab, supporting a strategic pivot as global investment in space infrastructure accelerates.
• Industrial automation exposure is approximately $40 million to $50 million annually, with the semiconductor vertical set to drive revenue in the upcoming fiscal year.
• Management confirmed, “we have not seen” any headwinds in the commercial aerospace aftermarket to date, though high jet fuel costs are being monitored.
• Capacity tightness persists for marine programs, “taxing” U.S. facilities and prompting further investment in equipment, floor space, and hiring, with faster ramping possible in Mexico plants.
• Hartnett stated that material inputs such as titanium and aluminum remain manageable, while price volatility in high alloy steel is noted, but supply availability is not yet an issue.
• SG&A expense is expected to “trend above $80 million a quarter,” primarily due to personnel and stock compensation timing.

INDUSTRY GLOSSARY

• VACCO: Acquired division specializing in advanced fluid control products for aerospace, defense, and space applications, substantially boosting missile and space revenues.
• OEM: Original Equipment Manufacturer; denotes sales to manufacturers integrating RBC components into finished products.
• Commercial OEM LTA: Long-term agreements governing pricing and supply for major commercial aerospace contracts; contract repricing significantly affects margin trajectory.
• Backlog: Accumulated, undelivered orders expected to be filled in future periods, acting as a forward-looking indicator of demand and operational visibility.

Full Conference Call Transcript

Michael J. Hartnett: Thank you, Joshua. Good morning, and thank you all for joining us this morning. As usual, I will begin today's call with a brief review of our financial results and highlight several key trends we see across the sectors. Then I will turn the call over to Robert Sullivan, who will provide additional details on our financial performance for the fourth quarter. Fourth quarter net sales increased 18.3% year over year to $518 million driven by continued momentum in our A and D segment and steady growth in our industrial businesses. Consolidated gross margin was 44.4% for the quarter or 45.3% on an adjusted basis.

Adjusted diluted EPS increased year over year to $33.62 compared to $2.83 in the prior year period. Adjusted EBITDA rose 21% to $168.9 million up from $139.8 million last year. Free cash flow remained a strong 67.5 million and we paid down an additional $116 million of debt during the quarter. Now turning to our 2 business segments, approximately 57% of our revenue during the quarter came from and 43% came from our Industrial segment. Our A and D business has continued to deliver exceptional performance with segment revenue increasing 41.2% compared to the prior year period.

This strong momentum in aerospace and defense is further reflected in our backlog, which has continued to expand and currently stands at approximately $2.3 billion This growth continues to be driven by robust demand across the defense and space markets. Along with unprecedented commercial aircraft build rates at the major builders. For the full year, sales were up 32%, of which 19.1% was organic. With regard to our business segments, Commercial Aircraft was up 17.8%, 17.3% of which was organic. Defense was up 65.4%, of which 22.1% was organic.

Our key revenue drivers first, as many of you know, marine has been a significant contributor to our backlog growth driven by accelerating build out of the submarine fleet Given the strategic importance of submarines within today's defense strategies, we expect this to remain a meaningful tailwind as production rates continue to ramp across all subcontracts. For both the Virginia and Columbia class programs as well as fleet spares. We are adding machinery and floor space to accommodate increased production rates as we speak. Next is missiles. Missile related revenue was up significantly this year with revenue for this sector exceeding $45 million in the fiscal year. Some of this gain did come from our recent VACCO acquisition.

This growth really reflects increased content we have across several top missile programs and the expanding demand we are seeing given the current global conditions. We are planning for sustained growth in requirements for this sector in the current and future years. We also see an impressive ramp in our space business as investments in this sector continue to hit record levels. During the year, we saw space revenues come in just above $70 million including $30 million from 8 months contribution by back up. This impressive growth especially considering that space related revenue was only $4 million for RBC back in 2021.

As this trend accelerates and private investment grows, space infrastructure is being viewed not only as a major strategic national priority, but as a substantial and essential commercial reality. On top of this strong momentum, we are also supporting the unprecedented production rates for commercial aircraft and engines As you know, we are deeply embedded across these markets on 3 continents. And as a result, expect to see continued growth at both the OEM and aftermarket levels. Turning now to our Industrial business. Performance remained steady and up during the period, with OEM revenue increasing 7.8% and distribution revenue growing at 4.5%. During the quarter, we saw strength in aggregates, warehousing, food and beverage, grain, and semiconductor end markets.

As we look to the fiscal year 2027, we are encouraged by the continued strength of our operating environment and the building momentum across many businesses. We firmly believe our strong service levels coupled with our brands, our renowned brands, market positions and technical expertise provide for continued strong financial results long into the future. This was a record year for RBC and as always it is a true team effort. I want to thank our employees across the organization for their hard work, dedication and unwavering commitment to executing our strategy and serving our clients with excellence.

Robert Sullivan: With that, I will turn the call over to Robert, who will walk us through the financials. Thank you, Mike. We closed fiscal year 2026 with another strong quarter that exceeded our expectations with net sales growing 18.3%, which led to an 18.9% increase in our reported gross margin. Gross margins were 44.4% for the quarter, or 45.3% on an adjusted basis compared to 44.2% in the same period last year. Fourth quarter A and D sales increased 41.2% year over year with the VACCO acquisition excluded, our A and D business saw an increase in sales of 22.8% which highlights the continued strong growth in our legacy commercial and defense markets.

A and D gross margins during the quarter were 41.6% or 44.2% on an adjusted basis and industrial margins were 46.5% or 46.2 on an adjusted basis. Excluding VACCO, our aerospace and defense gross margins were 43.7% during the period. We are encouraged by the margin improvement we have achieved within A and D driven by increased efficiencies, volumes, and newly awarded contracts in the period. Looking ahead, we expect these benefits to continue to further support margin improvement while recognizing the impact will be gradual as these benefits flow through. On the SG&A line, we had total cost of $86.9 million or 16.8% of net sales for the quarter.

This ultimately resulted in an adjusted EBITDA of $168.9 million or 32.6% of sales for the quarter. That represents an approximate 21% increase in adjusted EBITDA dollars during the quarter compared to the same period last year. Interest expense for the quarter was $11.2 million This was down 12.5% year over year reflecting the improved leverage position achieved over the last 12 months coupled with lower interest rates compared to this time last year. We paid off $116 million of debt during the quarter and $27 million since the end of the fourth quarter.

The tax rate in our adjusted EPS calculation was 21% compared to last year's 21.7%, This led to adjusted diluted earnings per share of $3.62 representing growth of 27.9% year over year Free cash flow in the quarter came in at 67.5 million with conversion of 73.6% compared to $55 million and 75.7% last year. For the full year, free cash flow was $342.6 million with conversion of 119.1% compared to $243.8 million and 99% last year, Our capital allocation strategy continues to remain focused on de leveraging by using the cash that we generate to pay off our outstanding debt and we continue to remain on track to pay off the remainder of the term loan by November 2026.

Looking into 2027, we are guiding revenues of $500 million to $510 million representing year over year growth of 14.7% to 17%. Adjusted gross margin is expected to be in the range of 45.25% to 45.5% and SG&A as a percentage of net sales is expected to be in the range of 16.5% to 16.75%. With that, operator, please open the call for Q and A.

Operator: Thank you. We will now be conducting the question and answer session. And our first question comes from the line of Kristine Liwag with Morgan Stanley. Please proceed with your question.

Analyst (Kristine Liwag): Hey, good morning, everyone. I wanted to dive a little bit deeper into your comments about the missile end markets So first, you talked about how VACCO was able to increase share of content on programs. Can you expand more about what that looked like? And also, the genesis of this question ultimately, with the multiyear agreements that we are seeing the Department of War signed with the missile providers, we are seeing volumes of, you know, 200% to 1 thousand% growth in the next 5 to 7 years. Just want to understand more how VACCO plays into that.

And then also, with VACCO's deep relationships with some of these customers, are there avenues in which RBC Bearings can increase total company share into some of these end markets to solve for the shortages that the industry is facing.

Michael J. Hartnett: Thanks. Well, Kristine, good morning. There was a lot of questions in there. Sorry. I hope you answered them all though, Mike. Well, you know, VAACO, you know, provides some pretty unique components to manage fuel systems. And in the case where they are fuel system is generated by liquid propulsion, vacuum back VACCO has products that pretty widely used, particularly on some of the more significant, programs like, like the Tomahawk. So we expect to see more expansion with VACCO on these missile programs as time goes on.

And sort of enough said there, but the RBC side, I mean, we are we are probably we sort of took a little survey of around our plants to see exactly which systems we were servicing and it is it is it is a pretty broad range of systems. And you know, certainly, it is the well known Patriot and the GMLRS and the, Tomahawks and but there is also the standard missile, the Javelins, the Meteor, missile in Europe, and there is a next gen missile that is recently been developed to replace the Hellfire So we are on all those systems. And it is and we are definitely expanding our production capability.

To participate further in all of these programs. So that is that is happening now. I am not sure I got all of your questions answered, but I think I might have touched on a few of them.

Analyst (Kristine Liwag): that is super helpful to get the context for those programs. But I guess, Mike, as you kind of look at the significant growth the industry needs to build to be able to meet the capacity needs of the Pentagon it just seems like a very big number, right? So I guess my follow-up question to that is, you have your existing share and you have got this volume and it sounds like you will be prepared for that. But are there other avenues where you could take higher shipset content in these programs, so you would get the double benefit of the volume plus potential share increase?

Michael J. Hartnett: Yes, the answer there is yes, and we are working on that now. And so we are working on both. The volume is pretty substantial on some of these of these programs. I think 1 the programs I did not mention was hypersonic missile program, which we are also part of. Which is a significant program for us. So yeah. I mean, we are gonna have our hands full with volume, and at the same time, we are we are increasing mix. And increasing the mix is a little bit slower because requires tooling and that sort of thing. But it is it is within it is within the a 3 year certainly within a 3-year period.

Analyst (Kristine Liwag): Great. that is super helpful. And you also called out your space revenue exposure, which is larger right now than your missile exposure. For this end market, can you give us an idea about customer set? Are these traditional space companies? Are these the new space companies? what is your role in that ecosystem? And where do you see the growth coming from?

Michael J. Hartnett: Well, it is both. it is both the existing you know, people that service the service the space industry since Apollo, You know, it is the Boeings and the Lockhees and the Northropes and the and the Raytheon's. The Collins. And so on. So it is that standard group, which we you know, been long associated with. it is also the new the new people. Such as of course, SpaceX and Blue and Rocket Lab and a few others whose names do not come to mind quickly.

So, you know, I mean, we are it is both sides of the street. it is it is, you know, right now, you know, we like to think of it as you know, 50 years ago, when there was the Apollo program, the only table in the casino was NASA. And now it is a huge casino with many tables. NASA being 1 of the tables. And so there is there is just a lot of places to do business for our particular mix of talents and manufacturing skills. And so we are we are really very actively engaged in trying to trying to determine how to take that forward in the in the best possible way for our shareholders.

Analyst (Kristine Liwag): Great. Thank you very much for the color. And very great to see a solid quarter from you. Thanks.

Operator: Thank you. Thanks. Our next questions are from the line of Steve Barger with KeyBanc Capital Markets. Please proceed with your questions. Thanks. Good morning.

Analyst (Steve Barger): Mike, for the last few quarters to include your comments today, you have talked about adding equipment and headcount to support customer ramps. I am curious, where are you tightest capacity wise by end market or program? And what do you think the entire company is capacitized to from a revenue standpoint?

Michael J. Hartnett: Well, you are asking even bigger questions, Steve. Well, certainly, we are tight on producing marine hardware. there is no question about that. it is got our attention. And we are adding equipment and floor space and test labs and people. To accommodate that. I mean, the submarine business has been you know, sort of dormant since they canceled the Seawolf. And now it has to, you know, the entire support system is in this extremely aggressive ramp. And, and doing everything they can to keep up. With the priority right now being the Columbia. And so it is yeah, it is it is taxing. We are up to it. We are making progress.

We are adding we are adding capacity. We will probably attempting to double our revenues over a short period of time. Years, not months, Steve. it is it is it is all production related, but definitely gonna double our revenues in that sector over the next 24 to 36 months. And then just overall company, like, you are running at $500 million run rate, so $2 billion annualized. How much is the current footprint with incremental kind of tweaks, like, support 2.5 billion or $3 billion? Just trying to get a sense for when you need a more robust and long life kind of capacity expansion or CapEx cycle?

Well, the CapEx cycle, this past year has been adding bricks and mortar since sort of moving some plants around. That as a because they the infrastructure in existing plants got a little tired and it seemed better to build a new 1 than it did to fix the old 1. So we spent a little bit money on brick and mortar, and but going forward, it is it is gonna go into equipment. And so know, we expect we expect to be in that 3.5%, maybe 4% range. Some years, and it will be it will be hard equipment.

And you know, in terms of in terms of correction ability, we have you know, some great plants in Mexico that are well staffed and well tooled. And our big production aids for us. And so and our ability to flex those plants is high. So that really helps with the with the capacity situation. it is it is more difficult to hire in The United States in many areas. it is taxing. it is less difficult in Mexico. And so it is that is that is been part of our strategy in terms of increasing our throughput.

Analyst (Steve Barger): Got it. And then for a follow-up, with multiple programs ramping at the same time, are you seeing supply chain constraints for the things outside your control that could affect the programs you sell into? Any issues with castings or forgings or things that you source?

Michael J. Hartnett: Yeah. On the on the a and d side, there is always the issue of titanium. You know? There may be we have not seen it yet, but, you know, we are watching aluminum high alloy steel, is available and a price that is extraordinary. But if you have the money, you will you will you will get the seal. So those are those are some of the areas to watch for us.

Analyst (Steve Barger): Got it. Thanks.

Operator: The next question is from the line of Scott Deuschle with Deutsche Bank. Please proceed with your question.

Analyst (Scott Deuschle): Doctor. Hartnett, can you give us any sense as to what level of commercial aerospace growth you are planning for in fiscal 27?

Michael J. Hartnett: Well, Yeah. Certainly, the demand will be greater than our growth and our growth will be beyond we are planning for growth on commercial aerospace beyond 15%.

Analyst (Scott Deuschle): Okay. And would you expect defense and space together to grow faster or slower in commercial aerospace?

Michael J. Hartnett: Faster.

Analyst (Scott Deuschle): Okay. Good news. And then there is been some recent notable strength in the industrial market recently. Guess, can you remind us as to how much exposure you have to industrial automation and then speak to the demand trends that RBC is seeing in that vertical specifically?

Michael J. Hartnett: Industrial automation as a supplier to industrial automation? Yes. Yeah. Well, I mean, that part of it is a supplier to that. that is that is a little bit of a of a small sector for us, but it is it is it is you know, we like it. I mean, it is I think we are in the $40 million to $50 million a year range kind of in that space. And, yeah, I you know, certainly, semicon fits into that space nicely. Where we supply robotic components for chip manufacturing? And that demand has been strong. It has not shown up in FY 2026. as a significant contributor, but it will in 2027.

Analyst (Scott Deuschle): Okay. And then can you share any detail on what the current level of annualized sales is for RBC into the humanoid robot sector?

Michael J. Hartnett: And what type of growth you have been seeing there recently? it is small. it is, you know, it is you know, for us, that is that is still sample making. And, you know, and we continue to support the industry as it is as it is being developed. We do not see any volumes there from anybody.

Analyst (Scott Deuschle): Okay. Thank you very much.

Michael J. Hartnett: Yep.

Operator: The next question is from the line of Pete Skibitski with Alembic Global. Please proceed with your questions.

Analyst (Pete Skibitski): Good morning, guys. Nice quarter.

Michael J. Hartnett: Hey, Pete.

Robert Sullivan: Hey, Pete.

Analyst (Pete Skibitski): Mike, in a way of understanding kind of recent trends are you guys seeing any headwinds in the commercial aerospace aftermarket just from airlines kind of tightening their belts in this higher jet fuel environment?

Michael J. Hartnett: We think about April and kind of May to date, I would say we have not seen it yet. Got it. We are watching it. You know, we are we are it is on it is on the bubble. Okay.

Analyst (Pete Skibitski): And your aftermarket, is it more leveraged to the engine or to the airframe?

Michael J. Hartnett: Yes. Okay. Okay.

Analyst (Pete Skibitski): I guess last 1 for me. Just on can you update us on where you are at with the your commercial OEM LTA repricings? I am just wondering if all of your LTAs have repriced at this point into sort of the post COVID inflation environment. I think I would written down that January 1, 2026, you would have do not know if it was a 100% of your contract would be repriced at that point or some lower percent. I am just wondering if you could shed light on that.

Michael J. Hartnett: Yes. I would say that is about 60%. Okay. there is still another 40% to go.

Analyst (Pete Skibitski): Okay. I guess by the end of this fiscal year, maybe 2 more fiscal years?

Michael J. Hartnett: Effective January 2027, Okay, okay. Okay.

Analyst (Pete Skibitski): Thanks guys. Thanks.

Operator: Thank you. The next question is from the line of Alexandra Mandry with Truist. Please proceed with your question.

Analyst: Hi, nice results and thanks for taking my question. I just wanted to see if you could provide any further details underpinning the fiscal Q1 guidance and any initial thoughts on fiscal 27?

Robert Sullivan: Yes. Just like we typically do when we put these rates this together, we have a range of outcomes both in aerospace and industrial. that is kind of where we led to the 5% to 5.1% on sales. The aerospace the aerospace margins have obviously been a accelerating, and we are we are very happy with that. That was contemplated when we were looking at the consolidated margins that you see in Q1. The industrial margins have obviously been coming in at a higher level. So as aerospace and defense has been growing faster, you know, it is puts a little bit of a dilutive effect on the consolidated margins.

But for the full year, we think we can still expand the consolidated gross margins by about 50 basis points. So kinda how we put it together. And in SG and A, it is just a reflection of our kind of continued investment in the in the organization to effectively be able to achieve the growth we see in front of us.

Analyst: Great. Thanks. And I guess, what is your M&A appetite going forward? And what capabilities or company profile might you be looking for if you are interested?

Michael J. Hartnett: Well, the profile is would be, mechanical products. Servicing a customer base similar to very similar to almost by name. To the customer base. That we currently service. It would be a company that would be preferred to be insolvent. And it would be in a geography that would be easy for us to get to. Repair an insolvent company. Great.

Operator: Thank you. Thank you. Next question is a follow-up from the line of Scott Deuschle with Deutsche Bank. Please proceed with your question.

Analyst (Scott Deuschle): Hey, Robert, the SG&A costs came in a bit high relative to guidance this quarter.

Robert Sullivan: Can you speak to what drove that? It looks like stock comp is a piece of it, but the response piece is that as well? it is it is really primarily personnel costs. That kind of flowed through just the timing, and certain compensation matters that kind of flow through stock comp specifically was up notably. Just a few other administrative costs that kind of came through.

Analyst (Scott Deuschle): Okay. Should we expect it to trend above $80 million a quarter going forward? It looks like that is the first quarter guide implies, but just want to check if I should continue.

Robert Sullivan: Have that in the model. I think that is probably right. It will be, you know, a little bit above 80. Okay.

Analyst (Scott Deuschle): And then last question for doctor Hartnett. Just as SpaceX ramps up production of Starship, should we expect that to drive an acceleration in your space revenue growth?

Michael J. Hartnett: Honestly, I think we are still working on some Starship programs, but I would say right now, the outlook there for us would be modest. Okay. Thank you very much.

Operator: Next question is from the line of Steve Barger with KeyBanc. Please proceed with your question.

Analyst (Steve Barger): Thanks. And Mike, last quarter you were early versus other companies talking about an industrial inflection saying demand improved in December and January. Has that momentum really held up exiting your Q4 into Q1?

Michael J. Hartnett: Yeah. I would say I would say it has. You know? I mean, it is modest, but it is held up.

Analyst (Steve Barger): Either I would say the story through industrial earnings has been kind of a broadening out of orders across automation, semis, power, some of the same things that you talked about. I guess, are you seeing more breadth in the industrial order book Breadth in terms of sectors serviced?

Michael J. Hartnett: Yeah. Across more end markets. You know?

Analyst (Steve Barger): Last year, aerospace, defense, and I guess things related to data were really the drivers. Is that broadening out to some degree?

Michael J. Hartnett: Well, you know, when I when you look at the amount of money that is going into the, AI and the build out of the server farms, And it is there is an enormous amount of build out that is that is occurring right now. And since our aggregate business is our aggregate business of 20%, 17%, something like that, So, you know, you can see it through our aggregate business. that is Yeah. that is something extraordinary is happening someplace. in the United in North America. And that is that is 1 step. Yeah. That has breath. Yep. No.

I think that is an interesting comment on just kind of that should be a leading indicator to a lot of other industrial end markets as that kind of flows through.

Analyst (Steve Barger): Does that make sense to you?

Michael J. Hartnett: Yeah. It does. Yeah. Perfect. Thanks. Yep.

Operator: Thank you. The next question is from the line of Ross Sparenblek with William Blair. Please proceed with your question.

Analyst (Ross Sparenblek): Hey, good morning guys.

Michael J. Hartnett: Good morning.

Robert Sullivan: Good morning.

Analyst (Ross Sparenblek): Just 1 quick question for me. Did I hear you right at the ex-VACCO Aerospace and Defense gross margins were 43.7%?

Robert Sullivan: Correct. So that puts VACCO around 48% gross margins in the quarter? VACCO was about it was over 46% this quarter. They had some really strong you know, unique items flow through this quarter.

Michael J. Hartnett: Great mix. That kinda pushed it.

Robert Sullivan: I would not expect that to be the naturalized run rate. For the full year, I believe their adjusted margins were probably more in the, you know, mid thirties. Which is their normal operational level. And that is baked into the forecast for Q1. You said that would that is a pretty exceptional trajectory if we were to assume that in the 2027.

Michael J. Hartnett: Yeah. Yeah. Yeah. Do not do not assume that.

Analyst (Ross Sparenblek): Alright. Well, nice quarter, gentlemen. Thank you.

Operator: Thank you. Thank you. At this time, I will turn the floor back to Doctor. Hartnett for closing comments. Okay.

Michael J. Hartnett: Well, we thank everybody for their participation. Participation and interest today in RBC and look forward to speaking again in late July. Good day.

Operator: Ladies and gentlemen, this will conclude today's conference. Thank you for your participation. You may now disconnect your lines at this time, and have a wonderful day.

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