Ladies and gentlemen, greetings and welcome to the Helios Technologies third quarter 2024 financial results conference call. At this time, all participants are in the listen-only mode. A brief question-and-answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star and zero on your telephone keypad. As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Tania Almond, Vice President of Investor Relations and Corporate Communication. Please go ahead. Thank you, Operator, and good day, everyone. Welcome to the Helios Technologies Q3 2024 Financial Results Conference call. We issued a press release announcing our results yesterday afternoon. If you do not have that release, it is available on our website at hlio.com. You will also find slides there that will accompany our conversation today. On the line with me is Sean Bagan, Interim President, Chief Executive Officer, and Chief Financial Officer. Sean will review our third quarter results along with our outlook for the remainder of 2024. We will then open the call to your questions. If you turn to slide two, you will find our safe harbor statement. As you may be aware, we will make some forward-looking statements during this presentation and the Q&A session. These statements apply to future events that are subject to risks and uncertainties, as well as other factors that could cause actual results to differ materially from those presented today. These risks and uncertainties and other factors have been provided in our 10-K filing, as well as our upcoming 10-Q to be filed with the Securities and Exchange Commission. You can find these documents on our website or at sec.gov. I'll also point out that during today's call, we will discuss some non-GAAP financial measures, which we believe are useful in evaluating our performance. You should not consider the presentation of this additional information in isolation or as a substitute for results prepared in accordance with GAAP. We have provided reconciliations of comparable GAAP with non-GAAP measures in the tables that accompany today's slides. Please reference slides three and four now. With that, it's my pleasure to turn the call over to Sean. Thanks, Tania, and welcome, everyone. We appreciate you joining us today. I would like to start the call with a heartfelt thank you to our suppliers, customers, business partners, and, importantly, the global Helios team, as we made advancements in the business during a challenging period for the organization. We delivered a solid quarter and made further improvements to our financial profile. We hit sales within our guidance range for the quarter while contending with contracted markets. We generated nearly $35 million in cash and reduced debt by over $19 million. Our strong cash generated from operations is up almost threefold as we continue to unlock working capital. These results validate the progress we are making with enhanced discipline around cost, capturing efficiencies, managing inventory, and honing our capital priorities. We also had meaningful margin improvement on lower sales, reflecting the team's efforts to align costs with current conditions, reduce input costs, drive manufacturing productivity, and realize the expected cost adjustments primarily from the officer transition. We utilized our excess cash to reduce debt for the fifth consecutive quarter and have brought our net debt to Adjusted EBITDA leverage ratio to 2.8x. Over the course of a two-month period, we faced three hurricanes here in Florida, two within two weeks of each other, including a direct hit to Sarasota by Category 3 Hurricane Milton. We can count our blessings because every member of the Helios and Sun Hydraulics team made it through without injury. Operations were shut down for 18 cumulative shifts throughout these storms. One of our three manufacturing facilities in Sarasota requires some additional repair before it is 100% operational. All things considered, we pulled through relatively well. Additionally, many of our people had to deal with the destruction the hurricanes caused to their homes and families. Our global Helios team stepped up wholeheartedly and contributed much-needed supplies and support for us and our community. Their physical and emotional support touched everyone here, and we cannot thank them enough. It is a testament to the incredible people that we have in our organization and the shared values that we all live by every day. While I am encouraged by the progress the team is making to improve the underlying fundamentals of the business, given extended weakness in key end markets combined with the operational impacts of the storms, we are updating our guidance for the remainder of the year. I'll turn now to discuss our results for the quarter in further detail on slides five through eight. Sales were $195 million, near the midpoint of our quarterly guidance, and down 3% compared with last year. Strong sales and health and wellness over the year-ago period partially offset the continued weakness in the agriculture, industrial, and recreational markets. The third quarter contains our typical patterns, which generally tend to be lighter than our second quarter, especially in Europe with the summer holiday shutdowns and maintenance work. The extended market weakness that we are seeing is reflected in the declines in both hydraulics and electronics sales year over year. By region, sales in APAC were the relative bright spot, as there were declines in EMEA and the Americas when comparing with last year. During this time, we remain focused on bringing our best effort to customers with respect to quality, service levels, and responsiveness. We are reducing our lead times, continuing to invest in product innovation, and staying very close to our customers. Our Sun Hydraulics past due backlog is at a 12-month low as we have stabilized from the post-Daman acquisition integration period, particularly as it relates to supply bottlenecks created from our manifold centers of excellence. The team is actively accelerating delivery dates and driving order commitment improvements. Our gross margin expanded 150 basis points over last year, despite $7 million in lower sales and the mixed weighting of our Balboa business. Concerted efforts to reduce overhead costs as well as lower material costs have benefited gross profit. We believe we will continue to make progress toward our goal of returning to the mid- to high-30% range for gross margin over time from a combination of enhanced cost controls, productivity improvements, and most importantly, growing volume. This includes the optimization of our manufacturing operations. For example, we have had line transitions from Tulsa to Tijuana, stood up our two hydraulic centers of excellence in the Americas last year, and we are aligning manufacturing processes regionally in EMEA and APAC for improved efficiencies. Operating margin of 11.4% was up 450 basis points from last year. Non-GAAP adjusted operating margin of 16.6% was up 290 basis points from last year. We have steadily improved operating margin through the year, even as depressed sales from challenging end market conditions. Adjusted EBITDA margin expanded 320 basis points over the prior year period. These favorable variances reflect gross margin improvement, cost control measures, and the previously mentioned expected cost adjustment. Our effective tax rate in the third quarter was 14% and was primarily due to an overall increase in discrete tax benefits driven by the officer transition in July 2024. We now expect our effective tax rate for the full year of 2024 to be in the range of 20%-21%. Diluted EPS was $0.34 in the quarter, up 209% over last year. Diluted non-GAAP EPS was $0.59 in the quarter, up 34% over last year. Starting on slide nine, I'll give more color by segment. Hydraulic sales declined 2% over the prior year period, with gross profit dollars flat. The 2% sales decline was driven by declines in agriculture, partially offset by growth in the industrial and mobile end markets. Foreign exchange had a $600,000 favorable impact on segment sales. Power & Motion recently published statistics from the National Fluid Power Association, reflecting the continued industry decline in total fluid power shipments of 14.9% in August 2024 compared to the previous year, as shown in our supplemental slides. We also just received the September data, and it reflects a 13.9% annual decline. The Ag Economy Barometer published by Purdue University, along with the AEM Ag Tractor and Combine report, continued to reflect the U.S. agriculture market remains in decline. We are seeing these trends reflected in our hydraulic sales. We have maintained investments in new products and will continue to protect this investment as it's the lifeblood of Helios. This quarter, Sun Hydraulics announced a high-capacity electrical proportional flow control valve solution. The FPJP valve takes full advantage of Sun's XMD Series valve driver, co-developed in partnership with Helios operating company Enovation Controls, demonstrating the power of our integrated strategy. Sun also commercialized ENERGEN in the quarter, and we have multiple pilot customers currently working to bring this into production. In addition, the hydraulics team has a handful of new product launches planned before year-end, with a robust product pipeline that will continue to expand. Gross profit was relatively unchanged year over year, while gross margin expanded 50 basis points on lower overhead. Operating income grew 32%, driven by targeted cost controls in the current demand environment, along with previously mentioned allocation of expected cost adjustments. Run rate SEA expenses declined over last year, displaying our work to adjust to changing market conditions and customer order timings. Turning to slide 10, I'll now discuss the electronics segment. Year over year, electronics sales declined 6%. Continued strength in health and wellness partially offset declines in recreational, industrial, and mobile markets. In the quarter, Balboa launched a new compact Clim8zone II heat pump, along with new touchpads and advanced controllers, which have been integrated into several customers' cold plunge products. We also released a new SpaTouch 4 display with upgraded software and light controllers that have been adopted by several spa OEMs. We also continue to invest in new display and control platforms from Enovation Controls, with electronic subsystem solutions launches planned in Q4 and early 2025. We are encouraged by the early customer reception of recent display product launches cutting across multiple industries, including the 12- and 15-inch Ultimate Series, the 7-inch Pro Series, and the 10.25-inch custom display in the recreational space. Electronics gross profit was up $1 million, while gross margin expanded 330 basis points over last year, reflecting the concerted focus on operational efficiencies and facility footprint optimizations. Operating income grew 62% from gross profit benefits, along with previously mentioned allocation of expected cost adjustments. Run rate SEA expenses in this segment also declined over last year, displaying our work to adjust to changing market conditions and customer order timings. Slide 11 clearly presents how effective our cash management efforts have been, with a free cash flow conversion rate of 244%. We generated cash from operations of $34.8 million in the quarter, up nearly 3x over the third quarter of last year. We continue to reduce inventory, which is now down 7% since the end of last year. This is a meaningful part of our efforts to improve our liquidity profile as we finish out 2024. Capital expenditures in the quarter were $6 million, or 3% of sales. Spending is focused on strategic investments in operational improvement and productivity, including machines, tooling, and footprint optimization. Based on the investments we have made over the last couple of years, our capital expenditure needs will be driven primarily by maintenance and opportunistic investments for the foreseeable future. Turning to slide 12, at the end of the third quarter, cash and cash equivalents were $47 million, and we had $325 million available on our expanded revolver. Despite year-to-date sales contraction, total debt was down 8%, or $41 million, from the end of fiscal year 2023, and has shown steady declines over the last five quarters, bringing our net debt to Adjusted EBITDA Leverage Ratio down to 2.8x. We have a solid balance sheet and financial flexibility to continue to pay down debt and invest organically in innovation and productivity. Importantly, our strong cash-generating capabilities support our over 27 years of consistent dividend payments, or 111 consecutive quarters. Turning to slide 13, as I mentioned earlier, we are adjusting our full year outlook to reflect the weakened end markets combined with impact from the storms. As referenced in the beginning, the cumulative impact of the 18 lost manufacturing shifts equates to approximately $10 million in revenue. In addition, we estimate approximately $3 million in recovery expenses. The remaining reduction in revenue is due to markets in EMEA and the Americas continuing to decline, with customers pushing out delivery dates as well as a weakened order book. We are adjusting our full year sales range to $800 million-$805 million. This implies revenue for 2024 down approximately 4% at the midpoint compared with 2023. We expect our Adjusted EBITDA margin to be in the range of 19.0%-19.6% and adjusted diluted non-GAAP earnings per share to be in the range of $2.10-$2.20. Even with this updated outlook, we still expect to pay down debt in the fourth quarter while reducing our net debt to Adjusted EBITDA Leverage Ratio further by the end of the year. You can find the other modeling line items in the supplemental slides. Slide 14 provides some additional understanding of where we see our market and operational drivers by segment, along with updated full year sales projections. Turning to Slide 15, I believe our results this quarter and year-to-date show that we are making progress against our financial priorities. We have been demonstrating our ability to elevate the business, even with the tough backdrop of weakening end markets and managing through multiple hurricanes. This is our third quarter in a row that we have expanded our operating margins. The changes we have made are yielding positive outcome. This is the fourth quarter in a row that we have delivered on the forward quarter financial outlook that we have provided. While we acknowledge we have had to make full year adjustments and there is room for us to keep improving our forecasting abilities, this highlights the short cycle order patterns and lead times we have across our businesses. For five quarters in a row, we have been able to reduce our debt balance and improve our leverage ratio, further strengthening our balance sheet. Through 2024, we have kept our foot on the gas from a product development perspective and continued to innovate and bring products to market. We are poised to capitalize on growth as and when markets turn. Our underlying business is more diversified than it has been historically, and this, combined with benefits of our focused efforts on continuous improvement, will become more apparent in our results as market conditions improve. As we approach the end of 2024 and commence planning for 2025, we are starting to form our views of the year ahead. We are cautiously optimistic that our end markets will start to exit their cycle troughs as they lap software comps, especially come the back half of 2025. We plan to provide our modeling expectations when we report our fourth quarter results. Global GDP is forecast for growth in 2025. Interest rates are expected to come down further. Industry data is pointing towards end market recoveries to begin at staggered timings in 2025, and our preliminary internal plans, considering current customer demand forecasts, are reflecting annual growth. Based on the investments we have made over the last several years, combined with our ability to continue to strengthen our financial profile, I could not be more excited about the prospect of shifting gears into growth mode by capitalizing on the opportunities that lie before us. In closing, I want to once again thank our global Helios team, who has demonstrated that through adversity, we can continue to unite. The resilience, dedication, and energy are undeniable across the Helios team. It is driven by a connectedness and engagement that is more powerful than it has ever been during my first 15 months with the company. There are no bounds to our potential as we continue to transform the business. With that, let's open the lines for Q&A, please. Thank you. Ladies and gentlemen, we will now be conducting a question and answer session. If you would like to ask a question, please press star and one on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star and two if you would like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. Ladies and gentlemen, we will wait for a moment while we poll for questions. The first question comes from Mig Dobre with Baird. Please go ahead. Yes, good morning. Thank you for taking a question. Sean, maybe we can start with the cost side of the equation. At least to me, when I looked at your report here, what stood out was the SG&A. And if I'm looking at SG&A in hydraulics in particular, quite a significant year-over-year decline. So I guess two questions. The first one is, can we sort of separate out what was unique in a quarter in terms of benefits, whether it's bonus accruals that reversed or something of the sort, versus what might be kind of sustainable as we think about savings into the fourth quarter and maybe even into 2025? Hey, Mig, good morning. Thanks for joining. Appreciate the question. And yeah, let me try and unpack a bit of that. So the biggest adjustment was a stock-based compensation accrual reversal in the third quarter due to the officer transition. And not to get too detailed in the accounting, but there's two methods you do that. One method, a company elects to take them on an estimated basis, and you assume a forfeiture rate throughout your periods that the stock-based comp is being expensed. Or alternatively, you take the expense on a cash basis at the time of forfeiture. We elect the former, so we take the one-time benefit. So I'll give it to you on a full year-to-date basis. That adjustment was $2.7 million of an expense pickup net of the cost. In In the third quarter, in isolation, it was $5.5 million. So when you take that out for our third quarter, just from a run rate perspective, we were still down $2.1 million from the prior year. And as you highlighted, there are specific actions we had taken. As you know, when we put out our guidance for the full year, it was predicated on a back half growth story. And with that back half growth story, we had assumed that we would be layering in more costs to support that growth. As we saw that not materializing starting in the second quarter and now reinforced even further with our cut in the fourth quarter, we tapped the brakes and frankly took some cost actions to try and match with the current demand environment. And I can talk specifically to some of those, but they're the ones you would think about when you look at our cost buckets. Headcount is a big one. And so it's not adding those incremental roles. It's not being as quick from a backfill perspective. Those more discretionary costs like travel, I'm not going to call it a travel freeze. I'll call it a travel frost unless it's really truly customer-facing and we need to take that trip, dial that back. A lot of the corporate expenses, minimizing that, consultants, those sales and marketing efforts, those engineering efforts, we're not cutting there. We're continuing to invest there because we see this as temporary market headwinds that we want to be positioned really well coming out of it as our markets recover. I think I try to highlight some of those things on the call in terms of our product development and our new products that we've launched that will help support that growth as and when these markets turn. I see. That's helpful. Thank you. You referenced gross margins several times in your prepared remarks talking about getting back to a more normalized level. But if we're looking at hydraulics specifically, you're running, call it 31-ish% gross margin. Looking back, this business just a couple of years ago, was it 35%, 36%? At a point in time, it was even higher than that at 37%. Now, there's been some volume compression. We recognize that over the past couple of years. I'm kind of curious as to how you think about this business going forward. At what point in time do you guys have to make some decisions around the existing capacity, the cost structure fundamentally in here to try to boost margins? Is this a story that it's just dependent on volume? We just have to wait for volume to get better whenever later in 2025 or 2026? Or is there something that you can proactively do to get margins closer to what you would consider to be a more normalized level? Yeah. Great question, and it's specific to hydraulics. Recognize the gross margin contraction, but 100% would point first and foremost to the volume. And you've seen that contract. And keep in mind too, during this period of contraction, there's also been new acquisitions that have been added to that hydraulic segment, specifically Schultes and Daman. And so you factor in that incremental growth as well. And then that highlights that the Sun and Faster businesses have had more contraction. Those acquisitions didn't come with the same gross margin profile that we enjoy at Faster and Sun. And so they've been diluted at the gross profit level, but from an EBITDA perspective, pretty strong given they have lower cost structures. The other thing I'd maybe highlight just within the segment of hydraulics is the mix shift. Particularly this year, we've been more impacted by the Ag down cycle, which the Faster business is more indexed towards. And the Sun business is actually holding pretty flat year over year from the cartridge valve and the manifolds. And from a margin perspective, that Faster business typically runs a little higher. And so within the segment, you got a little bit of a bad mix developed there as well. But overall, with the volumes, that's the number one factor. And as we return those, we will expect and we will show and demonstrate that. I think you would have seen that too in the first half of the year, looking at it sequentially to the back half of last year. And now we're in this constrained environment right now, but we would expect to grow that. Last thing I'll point to is there was numerous centers of excellence, repositioning of products, manufacturing plants, not only here in the Americas, but also what we're working on in Europe and in Asia positioned really well. The Asia market continues to be a bright spot for us. So as and when the volume returns and you have that fixed cost structure already in our actual results, we're going to naturally get more leverage out of that. It sounds to me that we just have to wait for higher volumes. If that's the case, what sort of volume do you think is required here, given all the changes that you talked about, in order to get back to 35%-36% gross margin? Is that target even achievable or tangible at this point, or should we have set our sights a little bit lower? No, I think it's levels that we've achieved as a company before. It's the $225 million type quarters where we'd expect to be in the mid-30s at that point. And as we can push towards that billion-dollar run rate of $250 million quarters and beyond, that's when we see our ability to surpass the 35% and be marching towards the upper 30s. Last question for me. It sounds in the way you've described the setup for 2025, it's likely going to be a year with sort of a tale of two halves, right? You're starting slow in your hydraulics business, probably down year over year, maybe things get better in the back half. And I recognize that I've already kind of asked this question, but how do you plan on running the business to sort of address that slow start to 2025? Is there something else that you can do from a temporary cost standpoint, or should we basically think about modeling average or above-average decremental margins to start the year? Thank you. Yep. Thanks, Mig. Yeah. For me, that's the million-dollar question. And we don't want to cut too deep that we're not ready when the markets return. But for us, it's continuing to focus on those discretionary type expenses. But we came out of our long-range planning, strategic planning cycle, and we're in the midst of our budget planning. And certainly, there's still a lot of mixed signals out there. But what we're seeing is the timing and the duration of these market downturns and the cycles historically that these markets have operated in has to become a new norm. They've been sustained down for too long. And so we will be very cautious to not get ahead of ourselves and continue to operate. For instance, in the fourth quarter, implied in our guidance, would be year-over-year operating expense reductions. We will continue to maintain that run rate. And as and when we see the orders tick up and the leading indicators in the macro data would be when we will trigger to invest further. But we also have the playbook of what do we have to do if it gets worse and look at where could we take down costs further. So I wouldn't say we're at a point that we won't have some lever still, but it's going to be more predicated on the macro for us. Thank you. Good luck. Thanks, Mig. Thank you. The next question comes from Chris Moore with CJS Securities. Please go ahead. Hey, good morning, guys. Thanks for taking a couple. Yeah. So you talked about total fluid power shipments down 14.9% in August, 13.9% annual decline. Is the expectation for kind of slow and steady improvement when it does begin, or is there the opportunity for a quick turnaround in certain products or end markets? Yeah. Thanks, Chris. Good morning. I don't see it as a hockey stick drastic move. Despite the market weakness that we highlighted and is well documented out there through the industry data, we feel actually pretty good. From From a Sun Hydraulics perspective, we're flattish this year and year over year. So implied in that is we're regaining some market share. We certainly last year had our own inflicted pain with our centers of excellence, if you recall, building the backlog with the Daman acquisition and quick expansion and moving all the manifold assembly up from Sarasota to Indiana. And so as these markets do recover, I would expect that we can outperform because, one, we are doing that now, and we would expect that to continue. But on top of that, we're pretty excited about the product pipeline. I referenced a couple of products in the prepared remarks, and I will tell you I'm just as excited about what we haven't talked about yet that really will help accelerate, and then the final thing that's really important in that market is our ability to hit our commitments on delivery lead times. That backlog didn't help last year. I understand, and I apologize to our customer on some of the delays that we had in fulfilling their orders, but as we highlighted, we're in a way different spot right now with a 12-month low on that backlog and our commitment to not only hitting our delivery times, but now moving to the next phase of improving them and getting back to what our legacy Sun customers are accustomed to with us. And so you put those factors together, and that's what gives us confidence that we can actually outperform there. Got it. That's helpful. APAC looks like one of the bright spots, revenue growth, I think both segments for Q2 and Q3. Maybe talk a little bit more about what you're seeing there. Just trying to remind us, how far below peak revenue are you there currently? And just how important is it to have local manufacturing there, especially in China? Yeah. I think there's two stories to the APAC region, one a hydraulic story and one an electronic story. And to your specific question, we're not back to levels that were pre-pandemic. And certainly, the APAC region was most severely impacted from us in our sales that went down first. So we still got room to get back to where that was at and then start growing it. And I was over in the region in the second quarter. And what I see from a hydraulics perspective is we've got the in-the-region for the region strategy, which is serving us very well to service our customers, be closer to them, don't have the long lead times, whether it's the supply chain or our deliveries to our customers. And within that, there was just a show here this past month in China. And what we're seeing a trend develop is there's a lot of local manufacturers. It's not the big American and European OEMs that are selling the volume in China. It's local manufacturers. And what was very noticeable at the show was a technology advancement to position ourselves both from an electronics, but also hydraulics perspective to capitalize on that, for instance, Faster. We sell a lot of couplers in China. We've got our subsidiary that sells directly to unique OEMs there, but our advanced products from a Faster perspective and our system solutions would be perfect for that as that market advances, and so we're excited about that, but also within the hydraulic segment, we've got a beautiful business in Australia called CFP that continues to outpace the rest of the region and continues to outpace our hydraulic segment growth and even our overall company growth. It's a distribution business, but also heavy into the mining industry, so we sell our Sun cartridge valves through that, but also servicing business from an engineering perspective and the mines. Unfortunately, from a mix perspective, it's not as profitable as the rest of the hydraulic segment is purely selling cartridge valve components or coupler components at Faster. It actually has been a headwind from a profitability perspective, but the top line has been a good trend. When I moved to electronics, one particular trend that we're seeing there is on the health and wellness side. The Chinese manufacturers are getting very aggressive. We've been on the ground recently and seeing a tremendous amount of investment in manufacturing, automation. A lot of those spas are right now being made in China and exported to Europe. We think the market will come to the U.S. as well, but there's obviously a lot of formidable customers of ours, OEMs in the U.S. that already have supply chain and manufacturing here. But it could be a trend there. We're seeing our health and wellness grow aggressively right now. And that was thanks to the Joyonw ay acquisition, if you remember, that we made back in 2021. So we have full manufacturing capabilities, and it's part of that strategy of in-the-region for-the-region. So that's where a lot of our growth is coming from right now in Asia. Got it. Very helpful. Maybe just one last quick one. Given the election results, just any thoughts from a tariff perspective? Y eah. Obviously, we've been watching that closely. I think from the tariff perspective, not as concerning for us. And that goes back to the in-the-region for-the-region strategy. Most of our supply chain is localized. So I think it's more impactful for products that are end markets or if you have a strategy of sourcing from China for components into your production in the Americas. So that is not as impactful for us. But certainly, we are excited about the opportunity to reduce corporate tax rates. We think local manufacturing will be rewarded. We're proud to have manufacturing throughout the United States across both of our segments. And overall, I think it should be a net neutral or a net good guy for us from an EPS perspective. Got it. I appreciate that. I'll jump back in line. Thanks, Sean. Thanks, Chris. Thank you. The next question comes from Nathan Jones with Stifel. Please go ahead. Good morning, everyone. Hey, Nathan. Hi, Nathan. I just wanted to start off following up on Mig's line of questioning on getting back to mid-30s% gross margins in hydraulics. You mentioned $225 million kind of quarterly run rate to get back to that level. You guys have added a fairly significant amount of capacity since a couple of years ago when you were at that level. Can you get back to that kind of historical gross margin levels at historical volume levels, or do you need additional volume to absorb that capacity that's been installed over the last couple of years? Yeah. Well, so just to clarify, my 225 wasn't just specific to hydraulics. I know Mig's question was, so that was total company, obviously. But I think if you look at, we were in the lower 30s the first half of the year, approaching kind of 34% and not quite at that 225 level. The additional activities we've done and the investments we continue to make from a CapEx perspective are focused no longer on capacity because we view that we have ample capacity to support hundreds of millions of dollars of incremental sales collectively through all our plants. And so as that volume goes through it, we don't need to add fixed costs or anything. And so that's going to drop. So I think we can get there with the existing footprint cost structure at that $225 million level to the mid-30s. And again, I'd point back to where we were in the first half of the year to give you a little confidence in that. And not to mention some of the other just overall mix headwinds we've had this year. For instance, on the electronic side, the growth is coming from the health and wellness space, the Balboa space that we know is lower margin than our Enovation Controls, indexed heavily to that rec and marine space. So as and when that market turns, that will also help. Okay. Thanks for that. I guess a follow-up question. You guys took down revenue guidance for the full year, about $25 million, most of which is in the fourth quarter. If I do some math on that, $3 million of recovery costs in the fourth quarter, some kind of normal decremental margins on that revenue decline, it does appear that the fourth quarter, kind of from an operating perspective, is maybe a little bit better than you were expecting before. If you hadn't have had these headwinds, it would have seemed that the margin would have been better than anticipated. Can you, I guess, A, confirm or deny that my math is correct, and then talk about the operating performance of the business outside of these disruptions that you're seeing? Yeah. Well, certainly from a trend and a sequential and an improvement, absolutely, we would have expected the fourth quarter to continue to improve. When we did have to adjust it down, certainly that hurt from a gross profit rate perspective, but I would also say, because we hadn't paced in the expense that we had planned earlier in the year, that certainly is helping as well. Roughly 300-400 basis points, so what was your math? What was the number you threw out there, Nathan? Sorry, I missed it. I think without the headwinds of lower revenue and the additional expenses to the hurricanes and things like that, that the EBITDA margins in the fourth quarter were probably looking at something in the low 20s before all of these adjustments around. It would have been higher than was embedded in the prior guidance. It's just a question. Agree. No. Exactly. I'm aligned with you. Sorry, I just missed that first part of your question. No worries. Okay. So, maybe you could just talk about what's led to just better core operating performance in the businesses there. Sure. So, the normalization of all of the activities from a back-end operational footprint certainly have helped. From a specific activity perspective, I would refer to the Centers of Excellence. So, one is our continued efforts from the Tulsa to Tijuana facility. So, we continue to ramp up production in our Mexico. We expanded that facility last year. And as we get more leverage and fill that up, that certainly helps us from a lower cost perspective. I think in the region for the region strategy is paying off. I mentioned the acquisition of Joyo nw ay that has helped on the electronic side. But we continue to make other efforts on optimizing that footprint. Even within EMEA right now, we acquired NEM, as you know, more recently. In between the NEM and Faster, both being in Italy, some optimization efforts there. So these benefits will ramp and continue to gain traction and improve, but will span multiple quarters and right now are subdued just because of the volumes. So those would be the ones I would point to that are having the most impact here in the near term. Awesome. Thanks very much for taking my questions. Thank you, Nathan. Thank you. The next question comes from Jeff Hammond with KeyBanc Capital Markets. Please go ahead. Hey, good morning, everyone. Hey, Jeff. Hi, Jeff. Maybe just give us an update on system win progress. Is the weaker markets kind of slowing that sales cycle, or are you still seeing good progress on that? Yeah, for sure. Thanks, Jeff. So, absolutely fully committed to that strategy and also very excited about what we've done over the last quarter in terms of progress in advancing some system solution opportunities. In fact, next week, we'll likely, early in the week, have a press release out about a new subsystem win in the electronic segment. And it'll be a great example of what I've been talking about, of us getting closer to our customers, gaining more wallet share from them, being an extension of their engineering facilities. This particular one is, and I also have highlighted in the past, this is a space I came from that it takes a while. You got to get in early in the product development cycle, multiple years. And so this particular one we'll talk about was three years ago, an existing customer where we were sitting with them with the drawings up on the wall, the cardboard cutouts of what it needed to look like, and then partnering, sitting next to them along that process all the way up to, "All right, get the clay models. Here's the production build. Let's validate, test it. Let's tweak it." And so that's an example. But I would also tell you that's a big part of our strategy going forward is our go-to-market plans and building that funnel further, getting closer to the customers. And as a reminder, we don't put any of these into our guide until we know. And we are working some larger ones still. And once we know them and have them, we will absolutely talk about them. We'll absolutely put them in. We don't want to get in front of ourselves. I would highlight, I'm as excited as I was since I've been here because there's very real opportunities that the team across both segments are chasing. Frankly, as we get our leverage down, we've said we want to run this business between two times and three times. We're making good progress on that. That's going to be core to our M&A strategy of how we become more beneficial to a customer, how we provide them with value and more solutions that makes it stickier. Many times we're displacing multiple suppliers with these types of projects. Once we're in, it's hard to eliminate that. Partially, that's on us to continue to innovate, listen to the voice of the customer, partner with those customers to develop the things that their customers want and ultimately delight them. So long-winded answer, I know, Jeff, but no, we're really excited about that. No, that's helpful. Just on the $10 million revenue loss from the hurricane, I'm just wondering if there's a catch-up period in 1 Q, first half 2025, or is kind of the markets weakening make that less clear? Well, not only less, maybe, yes, a little less clear, but also with it happening now in a period where markets are a little constrained, it's actually an okay time for that. I think we do get the volume back. But we're running three shifts. So we've got three facilities here in Sarasota that make cartridge valves. And they're running three shifts. So it's not like we can add additional production. But we also are experiencing 12-month high distributor inventory levels across the globe from a valve perspective. Now it's continued to increase each quarter. And so one thing that's important and the easy button for us would have been, "Let's just continue building and let's continue to grow our own inventory and to help preserve our margin." But we haven't done that. As we've talked about, we've taken inventory down $7 million. It's a big part of our working capital initiatives and debt reduction. And so I think it will be volume that can come back over time, but it will be more predicated on just the general markets' improvements. Okay. And then last one, it seems like maybe more markets got worse than better this quarter. But as we move into 2025, what do you think are some end markets that are maybe more clearly stabilizing or showing signs of maybe being the earlier to return to growth? Yeah, you're right. I mean, certainly, we felt that more markets turned negatively than positively. Again, hence why we guided down a little bit lower. Again, some of the positions in the market cycles that these challenging markets are would tell us that they could be troughing and returning to growth next year. I'll point to the space that I came from. I mean, certainly, the OEMs in the marine and power sports space have maintained really strict inventory and production discipline in response to their current market demand. And as a critical component supplier to them, when they're not producing or they're cutting their builds, that hurts us. I do think with interest rates, one cut's not enough to move that market. As further cuts develop, if they develop, that will bring those payment buyers back into that market. And that's going to be needed because a lot of that product is financed. As that comes back in, I think that will help our Enovation Controls business. I also highlight that we're operating off of relatively low comps and relatively low expectations for a sustained period that, again, I think that that gives us an opportunity to start growing, whether or not our existing customers grow or all of those diversification efforts and going deeper with existing customers or getting old customers to return to us as well. Okay. Thanks a lot. Thanks, Jeff. Thanks, Jeff. Thank you. Ladies and gentlemen, a reminder to all the participants that you may press star and one to ask a question. The next question comes from Jon Braatz with Kansas City Capital. Please go ahead. Good morning, everyone. Sean, I'd like to be Sean, I'd like to return to Faster a little bit. And I'm curious how far out you can see the business, obviously OEM-related, and how far out does the order book extend? And then secondly, the agricultural cycle at times has some legs, and it takes a while before things turn around. And should this cycle extend a little bit longer than maybe what you might think, do you have some levers to pull at Faster to improve the cost structure, maybe labor force reductions or something like that? Just curious how you might look at the business if the cycle continues to be soft for an extended period of time. Yeah. Hey, Jon. Thanks for the question. Certainly, that's an area that for us, when we talked about last year, Faster having a record year. It was the best year ever, despite there was already some Ag weakness in the marketplace. And I give Matteo Arduini and the team over there a lot of credit for really trying to diversify, not away from Ag, but adding just construction, mobile end markets, and looking for those adjacent markets that use couplers. And with our board at the strategy session, that was a key topic for Faster, how we can go deeper and look for those other markets. There's a lot of things that use couplers in this world. And we're positioned really well to attack some of them. And so where are those growth markets? And so from that piece, longer term, we think we can sustain this. And whether it continues on further, we certainly don't see the ag improving in the first half, at least from our perspective in the next year. But back half isn't out of the question. But in the near term, to your question on what can we do, I will point to the diversification efforts, and we continue to increase that sales funnel and go to market strategies there. But also from a cost perspective, we're taking this opportunity in the back half of the year, particularly as we got through the European holidays and now as we get into the holiday season at the end of the year. For instance, our NEM facility, our production is closed down every Friday for the rest of the year. We're extending a little bit of that to our Faster business as well. And frankly, slow playing some of the expansion that we talked about going on there. We're pacing that accordingly because we don't need that capacity. So there's levers there, but it goes back to we don't want to cut too deep because as and when that market returns or those diversification opportunities are realized, we need to be able to aggressively grow that business and get it back to where it was. And the last thing I would highlight just from a cost, one thing we've done here in the Americas is we've absorbed the Faster U.S. business into our Sun Hydraulics facilities and Daman facilities. So that helps certainly just from a cost perspective as well. Okay, Sean, thank you very much. Thanks, Jon. Thank you. We have the next question is from Mig with Baird. Please go ahead. Yeah, thanks for taking a follow-up. And this is really related to a question somebody asked earlier about the election and the outcomes here. I mean, you mentioned your Tijuana facility several times. And obviously, we know that you have good exposure there. And there's obviously tariffs for Mexico are on the table. NAFTA gets renegotiated in 2026. And I recognize it's a little bit early to have a definitive answer here. But in terms of how you think about managing the business, are we sort of to expect that you're going to be relocating maybe some of your manufacturing if tariffs are being imposed back to Oklahoma or other U.S. locations? Or is it that you're just going to try to manage through that with price increases and other cost savings or efficiencies that you might get, but still maintain sort of the existing manufacturing strategy that you have in place? Thank you. Yeah. It's a great question. Obviously, speculation at this point, but certainly we've heard the rhetoric in the news as well on Mexico and the large Ag OEMs challenge there, but for us, I wouldn't say we're backing off anything right now. We always have to evaluate our manufacturing footprint to have it optimized. If there was a negative impact, that's the beauty of we do have dual manufacturing capabilities. What we do in Tijuana can be replicated here in the United States and our Tulsa facilities and other facilities in the Midwest as well, or vice versa. We've certainly enjoyed the benefit, particularly on the Enovation Controls shift of some of the Tulsa to Tijuana manufacturing from a cost perspective, but to your point, if tariffs, new tariffs or new NAFTA renegotiated that abate those, then yeah, we would look at different footprint optimization. I don't see a scenario that we shut down a plant completely because when you look at the Balboa business, that's how when we acquired Balboa, how we acquired the Mexico footprint from a manufacturing perspective. That's important strategically too. A lot of those customers are out there on the West Coast. We also have a facility in the United States for Balboa down in Otay near the border in San Diego that we could look to help augment some of that as well. So tough to prognosticate or speculate right now, but certainly something we're aware of and watching. Appreciate it. Thank you. Thanks, Mig. Thank you. As there are no further questions, I would now like to hand the conference over to Tania Almond for closing comments. Great. Thank you, operator. And thanks, everyone, for joining us today. We published our upcoming conference schedule for the next few months this morning, and we look forward to seeing many of you on the road and virtually. Thank you so much and have a great day. Thank you. This concludes today's conference. You may disconnect your lines at this time. Thank you for your participation.