Knowles (KN) Q3 2025 Earnings Call Transcript

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DATE

Thursday, October 23, 2025 at 4:30 p.m. ET

CALL PARTICIPANTS

President and Chief Executive Officer — Jeffrey Niew

Senior Vice President and Chief Financial Officer — John Anderson

Vice President of Investor Relations — Sarah Cook

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TAKEAWAYS

Total Revenue -- $153 million (non-GAAP), up 7% year-over-year (non-GAAP) and at the high end of guidance.

Earnings Per Share (EPS) -- $0.33 (non-GAAP), up 22% year-over-year compared to Q3 2024 (non-GAAP) and at the high end of guidance.

MedTech and Specialty Audio Revenue -- $65 million (non-GAAP), reflecting 2% year-over-year growth (non-GAAP).

Precision Device Revenue -- $88 million (non-GAAP), increasing 12% year-over-year (non-GAAP) with growth across all end markets (non-GAAP).

Cash from Operations -- $29 million cash from operations, supported by lower net working capital and at the high end of guidance.

MedTech and Specialty Audio Gross Margin -- 53%, flat year-over-year (non-GAAP), but improved more than 200 basis points sequentially (non-GAAP).

Precision Device Gross Margin -- 41.5% non-GAAP gross margin, up 150 basis points year-over-year (non-GAAP), with improvement from factory utilization offset by specialty film ramp costs (non-GAAP).

SG&A Expenses -- $26 million (non-GAAP) SG&A expenses, a $2 million increase over the prior year (non-GAAP) driven by merit increases and incentive costs.

Interest Expense -- $2 million, a decrease of $2 million from the prior year as debt levels declined.

Book-to-Bill Ratio in Precision Devices -- 1 in the quarter, with the second largest bookings quarter in the trailing 12 months (non-GAAP).

Specialty Film Backlog and Revenue Outlook -- Backlog not including the energy order is close to $30 million; combined with the energy order, expected contribution in 2025 is at least $55 million to $60 million.

Operating Cash Flow Guidance -- Expected at 16%-20% of revenues for the full year 2025.

Q4 2025 Revenue Guidance -- $151 million to $161 million, indicating 9% year-over-year growth at the midpoint (non-GAAP).

Q4 2025 Adjusted EBIT Margin Guidance -- Adjusted EBIT margin projected at 22%-24%.

Q4 2025 EPS Guidance -- $0.33 to $0.37 per share with weighted average diluted shares at 87.2 million.

Full-Year Capital Spending Guidance -- Approximately 5% of revenues for the full year 2025, reflecting increased investment in specialty film line capacity expansion.

Net Leverage Ratio -- 0.6x trailing twelve months adjusted EBITDA, and liquidity exceeds $350 million including cash and revolver availability.

Tariff Exposure -- Exposure remains under 5% of revenue and 3% of cost of goods sold with successful cost pass-through to customers.

Specialty Film Gross Margin Trajectory -- Margin pressure (non-GAAP) expected to persist through mid-2025 due to ramp-up costs, but sequential improvement anticipated from Q3 to Q4 2025 as output increases.

PD Segment Revenue Growth Outlook -- Expected at the high end of the 6%-8% range for 2025.

Total Company Organic Growth Guidance -- Projected at the high end of the 4%-6% range for 2025, supported by new initiatives and backlog.

Share Repurchases -- 940,000 shares repurchased for $20 million.

Debt Reduction -- Outstanding bank borrowings reduced by $15 million.

R&D Expense -- $9 million (non-GAAP), unchanged versus Q3 2024.

SUMMARY

Management detailed a year-over-year acceleration in both revenue and earnings on a non-GAAP basis, credited to diversified end-market strength. The specialty film line is expected to more than double its sales in the coming year, with confirmed capacity expansion plans underway to meet a backlog and new large orders. Substantial bookings momentum in the Precision Devices segment, especially defense, supports confidence in sustained high-end organic growth for 2025. Recent improvements in channel inventories are expected to align future orders directly with end-market demand.

President Niew said, "I am confident in our ability to continue to grow revenue in the fourth quarter and beyond," highlighting increasing design wins and end-market demand.

Significant capital allocation included debt repayment and share repurchases as Jeffrey Niew emphasized, "We have a very strong balance sheet that will continue to support our growth as we pursue synergistic acquisitions and buyback shares."

Anderson confirmed, "specialty film output trends within the quarter were positive," setting expectations for gross margin improvement in Q4 2025 (non-GAAP) and higher utilization into 2026.

The effective tax rate is guided at 7%-11%, with management warning this may rise to 15%-19% in 2026.

High incremental contribution rates in several product lines were disclosed, with Anderson estimating 35%-40% drop-through on incremental sales, benefiting overall operating leverage as sales rise.

INDUSTRY GLOSSARY

Book-to-Bill Ratio: The ratio of orders booked to product shipped and billed in a given period, used as a metric of demand strength.

Pulse Power Applications: Uses of capacitors or components requiring rapid, high-energy discharge, such as in defibrillators, railguns, and drilling equipment.

Specialty Film: High-performance dielectric film developed for capacitors in non-traditional, high-energy applications.

Full Conference Call Transcript

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

The company urges investors to review the risks and uncertainties in the company's SEC filings, included, but not limited to, annual report on Form 10-Ks for the fiscal year ended December 31, 2024. Periodic reports filed from time to time with the SEC and the risks and uncertainties identified in today's earnings release. All forward-looking statements are made as of the date of this call and Knowles Corporation disclaims any duty to update such statements except as required by law.

In addition, pursuant to Reg G, any non-GAAP financial measures referenced during today's conference call can be found in our press release posted on our website at knowles.com and in our current report on Form 8-Ks filed today with the SEC. This will include a reconciliation to the most directly comparable GAAP measure. All financial references on this call will be on a non-GAAP continuing operations basis, with the exception of cash from operations or unless otherwise indicated. We've made selected financial information available in webcast slides which can be found in the Investor Relations section of our website. With that, let me turn the call over to Jeffrey Niew, who will provide details on our results.

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

In Q3, MedTech and Specialty Audio revenue was $65 million, up 2% year over year. Our continued operational excellence, sustained success of new product adoption, and cutting-edge technology is evidenced with our strong gross margins. I expect that MedTech and Specialty Audio will have revenue growth within the range of 2% to 4% over the year in 2025, and we are optimistic about our future growth opportunities we detailed at our Investor Day. In the Precision Device segment, Q3 revenue was $88 million, up 12% year over year. We saw revenue growth across all our end markets: MedTech, defense, industrial, and EV and energy. Our strong intimacy with our customers' applications has led to accelerating design wins.

Coupled with robust secular trends in our end markets, I am confident in our ability to continue to grow revenue in the fourth quarter and beyond. While we are seeing growth across all our end markets, I would like to highlight the defense market as it was particularly strong with design wins in bookings outpacing other end markets. Our capacitors and RF microwave solutions serve a wide variety of military applications. We have a compelling product offering of RF filters being used in the next generation of defense systems serving a broad base of applications from radar, detection and jamming, to ground communications, ensuring reliable and secure military communications.

Our capacitors provide the electrical energy source needed for extremely harsh applications like munitions and detonation devices. Defense spending is increasing and shifting towards spending on electronic warfare where our products are in high demand. In Q3, bookings in the PD segment remained strong, particularly in defense, with our distribution partners. We continue to believe that channel inventories are now at normalized levels as they are now matching orders to end market demand. We continue to collaborate with our customers leading to a robust pipeline of new design wins. Our customers continue to choose our innovative and differentiated solutions across all the markets we serve. We are positioned well for organic growth.

I expect the Precision Device segment will grow at the high end of our stated growth range of 6% to 8% in 2025. I would like to reiterate the strategy we are executing across both of our business units. We are leveraging our unique technologies, creating custom products through our customer application intimacy, and then scaling into production with our world-class operational capabilities for end markets with strong secular growth trends. It is proving to be a winning combination, leading to year-to-date revenue growth of 5% and EPS growth of 15% on a year-over-year basis.

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

Cash generation from operations continues to be robust in the third quarter, allowing us to purchase $20 million in shares and reduce outstanding bank borrowings by $15 million. We have a very strong balance sheet that will continue to support our growth as we pursue synergistic acquisitions and buyback shares. We will continue to keep our debt at very manageable levels. In summary, as I said last quarter, I'm excited by the momentum and strength the business demonstrated and the growth opportunities that we have in front of us both in the near and longer term. Our design wins continue to be strong across our product portfolio.

This is driving increased demand for our products, which gives me confidence that we have entered a period of accelerated organic growth from historical levels. We are laser-focused on what we do best, designing custom-engineered products and delivering them at scale for customers and markets that value our solution, positioning us well for growth in 2025 and beyond. Now let me turn the call over to John Anderson to detail our quarterly results and provide guidance for Q4.

John Anderson: Thanks, Jeff. We reported third-quarter revenues of $153 million, up 7% from the year-ago period and at the high end of our guidance range. EPS was $0.33 in the quarter, up $0.06 or 22% from the year-ago period and also at the high end of our guidance range. Cash generated by operating activities was $29 million at the high end of our guidance range driven by lower than expected net working capital. In the MedTech and Specialty Audio segment, Q3 revenue was $65 million, up 2% compared with the year-ago period, driven by increased demand in the specialty audio market. Q3 gross margins were 53%, flat versus the year-ago period.

As expected, segment gross margins in the third quarter improved more than 200 basis points sequentially, and we expect gross margins to be above 50% for the full year 2025. The Precision Devices segment delivered third-quarter revenues of $88 million, up 12% from the year-ago period. Segment gross margins were 41.5%, up 150 basis points from 2024 as higher end market demand and production volumes in our ceramic capacitors and RF microwave product lines resulted in increased factory capacity utilization. These improvements were partially offset by higher production costs and lower than expected yields associated with the ramp-up of the specialty film product line. It's worth noting that specialty film output trends within the quarter were positive.

And as we exited Q3, we are well-positioned for both sequential growth and gross margin improvement in the fourth quarter. On a total company basis, R&D expense in the quarter was $9 million, flat with Q3 2024 levels. SG&A expenses were $26 million, up $2 million from prior year levels driven primarily by annual merit increases and higher incentive compensation costs. Interest expense was $2 million in the quarter, and down $2 million from the year-ago period as we continue to reduce our debt levels. Now I'll turn to our cash flow and balance sheet. In the third quarter, we generated $29 million in cash from operating activities. Capital spending was $8 million in the quarter.

We continue to expect to generate operating cash flow of 16% to 20% of revenues for the full year 2025. During the third quarter, we purchased 940,000 shares at a total cost of $20 million. We exited the quarter with cash of $93 million and $176 million of debt, which includes borrowings under our revolving credit facility and an interest-free seller note issued in connection with the Cornell acquisition. The remaining balance of the seller note matures next month, and we expect to fund this payment with a combination of cash on hand and revolver borrowings.

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

For 2025, revenues are expected to be between $151 million and $161 million, up 9% at the midpoint year over year. R&D expenses are expected to be between $8 million and $10 million. Selling and administrative expenses are expected to be within the range of $26 million to $28 million. We're projecting adjusted EBIT margin for the quarter to be within the range of 22% to 24%. Interest expense in Q4 is estimated at $2 million, including non-cash imputed interest. We expect an effective tax rate of 7% to 11%. As we move forward, I expect the tax rate to increase in 2026 to the range of 15% to 19%.

We're projecting EPS to be within a range of $0.33 to $0.37 per share. This assumes weighted average shares outstanding during the quarter of 87.2 million on a fully diluted basis. We're projecting cash generated by operating activities to be within the range of $30 million to $40 million. Capital spending is expected to be $12 million, and we expect full-year capital spending to be approximately 5% of revenues as we've increased investments associated with capacity expansion related to our specialty film line.

In conclusion, our year-over-year revenue and earnings growth were strong in the third quarter, and with the backlog and increased order activity, we expect to continue to deliver both sequential and year-over-year revenue and earnings growth in 2025. I'll now turn the call back over to the operator for the questions and answers portion of our call. Operator?

Operator: As a reminder, your first question comes from the line of Christopher Rolland with Susquehanna. Please go ahead.

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

Jeffrey Niew: Yeah. Chris, let me separate that into two pieces of specialty film. Let me answer the first which is a little bit easier, which is back to that energy order we received in Q1. So first, I think we're on track. That's starting, you know, really in the second quarter, but really fully ramping up at the end of the second quarter. That energy will start to be delivered in the back half in full, but starting in Q2. Around $25 million or so. That's what we expect in that business. You know, I think the other portion of the specialty film business, you know, right now, we have a backlog that's not counting again the energy order.

That's in excess of $25 million, close to $30 million backlog that's that to deliver on. And we see more orders coming. So we feel pretty comfortable as we look into next year the specialty film line, you'll probably it's gonna be in $25 to $30 million range this year. You know, if you add the $25, it should be at least $55 or $60 million next year. And we're expanding the capacity to fulfill those orders.

Christopher Rolland: Excellent. Thanks, Jeff. And then, perhaps we can talk about I think in the press release, you talked about design activity. Was wondering what you were alluding to and what underpins your high end of your target growth range. And just as we kinda think about MedTech or Precision Devices or any sub-segment you would expect to be above and Yeah. So if you drive that way, you know, I think if I were to sit there right now, I would probably look at the MedTech and Specialty Audio business in 2026 being in that 2% to 4% range for growth next year.

I would sit there and say, the Precision Device, which is now a business, which is now obviously larger than the MedTech, is, you know, at the high end to maybe even slightly above the high end of the 6% to 8% that we provide for organic growth at the Investor Day. The underpinning of this, I wish I could point to and say, beyond that energy order, which we highlight, that it's, like, one customer or one application.

We are just having a tremendous amount of success, and I would sit there and say, I really commend the teams within Knowles Corporation, Chris, that in terms of execution, it's taking our unique technologies, and then customizing them for specific applications across MedTech, industrial, defense, and then delivering them at scale with a world-class operation. We're just having a tremendous amount of design win activity across the board. That's why, you know, I think we feel comfortable right now when you look at, you know, the growth rate coupled with that energy order will start to deliver. That all our markets are up.

You know, I was even looking, you know, I think, like, even this year, you know, we're kind of having quite a bit of success this year in EV. That's in '25, which, you know, which obviously a lot of people aren't. And that's all about, you know, very specialized design wins in EV where we're having, you know, obviously very unique and differentiated products.

Christopher Rolland: Great. Thank you, guys.

Operator: Your next question comes from the line of Bob Labick with CJS Securities. Please go ahead.

Bob Labick: Good afternoon. Congratulations. I want to talk to my congratulations in as well on strong performance.

Jeffrey Niew: Thanks, Bob.

Bob Labick: Yeah. So I just wanna follow-up on the kind of the specialty film. There's obviously lots of excitement going on in the capacity. You should talk about the energy order coming on next year. And then the other specialty I guess I think you said medical and defense. And any way you can elaborate on, you know, some of the products that these are going into or the ability for follow-on, you know, orders in the non-big energy one and, you know, how that could progress over time?

Jeffrey Niew: Yeah. I think I talked about a couple of them that, you know, we talked about before, but, you know, they're growing pretty rapidly and doing well for us. But it all the specialty film really focuses around pulse power applications. It's applications where the capacitor is not being used in a traditional sense, you know, as a building block of an electronic circuit. It's actually being used to store a significant amount of energy that needs to be released in a very rapid pace in order to power something. And we talked about before about, deep, defibs, we talked about in the railgun application. We talked about, more recently, radiotherapy is a great application for us.

So there's a lot of applications that are emerging. That are coming. I wouldn't you know, beyond the energy order which is very unique, in terms of the size, we have a lot of unique applications that are coming to market, and we can be called up on a weekly and daily basis. We seem to be in a very unique position, Bob, relative to the technology and the capability to deliver the solutions. And, of course, it doesn't have to be US-based and manufacturing in the US as well.

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

Jeffrey Niew: Oh, I wouldn't say taking share. I would say this is, like, new applications that didn't exist before. That are requiring, like, a significant amount of power to be delivered in a very rapid period of time in order to power the device. I think one of the ones that we alluded to, which is coming is downhole. And that's another application that, you know, quite frankly, taking prototype orders for right now. But we can see down the road with all the work that we've been doing that these downhole applications where our capacitors would, you know, be in high heat environments, have to be taken downhole in order to be involved in fracking and cleaning of drill bits.

There's a whole bunch of different applications here. We've been working on for, like, a year or two. And we're in the prototype phase right now, but everything indicates that one is another application that requires pulse power.

Bob Labick: Got it. Very exciting. And shifting gears, obviously, balance sheet's in good shape. You're buying back stock. You've, you know, M&A in the past. You just give us an update on the M&A environment. I don't know if it, it would tariffs, it slowed down. Has it, like, reopened up a little bit? Or what's the opportunity? Or are you even focused

Jeffrey Niew: Yeah. We're definitely focused on this. We're definitely focused on this. I just think, you know, where we are today as a company is we have a great organic plan. And, you know, I think we wanna make sure that if we do an acquisition, it becomes it's very obvious, you know, to our analysts, our shareholders why we did it. And so, you know, we're laser-focused on acquisitions, but I think

John Anderson: And so, again, we've got a good pipeline, but it's difficult to say, you know, when we're gonna be able to complete it. As Jeff said, we're being disciplined.

Operator: Your next question comes from the line of Anthony Stoss with Craig Hallum. Please go ahead.

Anthony Stoss: Good afternoon, guys. John, probably the first question for you. You mentioned, they're 1,500. Again, you know, we're monitoring this closely. If there are opportunities to pre-buy even beyond the second half of next quarter, you know, sorry, of 2026. We'll do that. But I don't see this impacting our gross margins in a way at this. Yes. I mean, we've had kind of we went through this once before, obviously, we were able to raise prices. But I think one of the things that we've done is we've kind of fixed the price as John said, through the middle of next year.

So we're not subject to, like, you know, big swings in volatility over a short period of time. And I would also add that, you know, if we get to the back half of next year and prices remain the same, I think we'll probably be, you know, having discussions with our customers about it. I mean, I don't think it's a big deal at this point. On the book to bill, our book to bill within PD, was one for the quarter. Now just it's worth a little color here. It was the second largest order of the quarter in the last four quarters.

Think what you're starting to see is, you know, quite frankly, that one is the revenue is up significantly. And so, you know, it's getting a little bit more difficult to produce those crazy book to bills that we had in the first half. We're starting to deliver on those. But I will say this, it was we had a very strong again, bookings quarter. When I said it's the second largest bookings quarter we've had, the last twelve months, I would also I would also, just say, you know, the backlog is quite high as well. And that's why, you know, we again, not even counting the energy order, we put so many orders in the last three quarters.

I did look just yesterday at where the bookings were month to date, and it appears we're having another strong bookings month. And the gross margin side. How much or how many more quarters do you think that'll last? Film. You're making improvements in Q4. And what kind of impacts is it at now? You know, Tony, I mean, in terms of you're talking about the specialty film line specifically? Yes. I mean, more margins, I'll say, in Q3 were and we had a great quarter overall, but that was an area for improvement. Margins were well below the total company and the PD average.

As I said, it's really a question of we're adding costs both, you know, fixed overhead. Incurring higher than the normal scrap cost. We're seeing within the quarter some within Q3, we saw some positive trends. So August was better than July. September was much better than August. So coming out of that, we're kind of trajectory is right. But think the question just I think you're not gonna really see the full benefit of what we think the gross margin we can get to when the energy order starts to fully ramp.

Because just remember, until probably late Q2, what's going on is we're hiring people, equipment is starting to run, you know, we're putting overhead in place to deliver this energy order. But we're not actually delivering a lot of units yet or producing a lot of units. So it is impacting gross margin, and that's really not gonna go away fully until mid to late Q2. But I do, again, see sequential improvement from Q3 to Q4 in gross margins due to improved output and capacity utilization.

Anthony Stoss: Yeah. Very good. Thanks, guys.

Operator: Your next question comes from the line of Tristan Gerra with Baird. Please go ahead.

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

John Anderson: Yeah. A lot of questions to unpack there, Tristan. I would say, the first thing with respect to the gross margin utilization and capacity, you really have to look at it as on a product line by product line basis. You know, we have some product lines that are running close to full capacity within the ceramic capacitor business and others that we've got some capacity. So it's really difficult to kind of go into give you a blanket on what our capacity utilization is. But generally speaking, like our drop through on incremental revenue, I would say, you know, if that question is easier to answer. On average, again, depends on product line.

But overall, you can think of 35% to 40% dropping to the bottom line on every dollar of sales. You know, our variable contribution, you can see our gross margins, call it, 45%. Our variable contribution margin is higher than that, obviously. And we don't have a lot of incremental operating expenses. So if I was modeling this, yeah, every dollar sale, kinda think of it as that 35% to 40%. Obviously, if it's MSA, it's gonna be a little higher than that. And certain areas within PD can be a little lower. But overall, kinda use that 35% to 40%.

Maybe judge is fuel free, but think what you're gonna see is some linear improvement in Q4 Q1, then in Q2, and when you're gonna see probably a bigger jump up in Q3 once we're fully running the production. So it's gonna kinda be linear and then a jump up.

Tristan Gerra: Yeah. The only thing I would say is sometimes Q1 has a little seasonality where in some of the I'm talking specialty specifically. So Specialty film specifically. We will see. So think, you know, that, you know, both a number of our businesses specifically the specialty film product category, still has upside gross margin that should be help the overall company continue to start continue to raise EBITDA margins over time.

John Anderson: Yeah. Would just last point on this. If we're going to finish somewhere 44% to 45% in 2025, there is opportunity to go higher in 2026, really driven by the, in the back half of 2026, driven by that ramp up in the specialty film line.

Tristan Gerra: Okay. That's very useful. And then for my second one, your exposure to distribution and industrial within PD is that still around 40%? And you've mentioned that inventory levels are back to normal. Is that the case for industrial and distribution as well? And you've mentioned a very nice ramp in industrial. So should we assume that even in that segment, inventory levels have normalized and if not, when do you think that happens?

Jeffrey Niew: Would say, you know, generally speaking, a big portion of what we categorize our distribution business is industrial. And that business is up. Now here's what I have to say is it's a little opaque yet to add the question on industrial growth. Year over year. Because you're taking into account inventory burn down. But I can definitely say if you look at, the growth in distribution, we're gonna have some pretty nice growth in our distribution business. And when we see their POS reports, they're seeing nice growth as well. And a big portion of that's industrial. Now again, it's hard to actually say how much industrial is growing.

But I can tell you is the inventory is for sure out. We're definitely seeing ordering trends that are saying, that orders are lining up with demand. As opposed to we're burning out inventory. We don't really need, that much to order that much from you.

Tristan Gerra: Great. Thanks again. Very useful.

Operator: There are no further questions at this time. Ladies and gentlemen, this concludes today's call. Thank you all for joining, and you may now disconnect.

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