Good morning, ladies and gentlemen, and welcome to the NAPCO Security Technologies fiscal second quarter 2025 earnings conference Call. At this time, all lines are in a listen-only mode. Following the presentation, we will conduct a question-and-answer session. If at any time during this call you need assistance, please press star zero for the operator. This call is being recorded on Monday, February 3rd, 2025. I would now like to turn the conference over to Francis Okoniewski, Vice President of Investor Relations. Please go ahead. Thank you, Joanna. Good morning. This is Francis Okoniewski, Vice President of Investor Relations for NAPCO Security Technologies. Thank you all for joining today's conference call to discuss financial results for our fiscal second quarter 2025. By now, all of you should have had the opportunity to review our earnings press release discussing our quarterly results. If you have not, a copy of the release is available in the Investor Relations section of our website, www.napcosecurity.com. On the call today are Dick Soloway, Chairman and CEO of NAPCO Security Technologies, and Kevin Buchel, President, Chief Operating Officer, and Chief Financial Officer. Before we begin, let me take a moment to read the forward-looking statement, as this presentation contains forward-looking statements that are based on current expectations, estimates, forecasts, and projections of future performance based on management's judgment, beliefs, current trends, and anticipated product performance. These forward-looking statements include, without limitations, statements relating to growth drivers of the company's business, such as school security products, recurring revenue services, potential market opportunities, the benefits of our recurring revenue products to customers and dealers, our ability to control expenses and costs, and expected annual run rate for our software as a service recurring monthly revenue. Forward-looking statements involve risks and uncertainties that may cause actual results to differ materially from those contained in the forward-looking statements. These factors include, but are not limited to, such risk factors described in our SEC filings, including our annual report on Form 10-K. Other unknown or unpredictable factors or underlying assumptions subsequently proving to be incorrect could cause actual results to differ materially from those in the forward-looking statements. Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, level of activity, performance, or achievements. You should not place undue reliance on these forward-looking statements. All information provided in today's press release and this conference call are as of today's date unless otherwise stated, and we undertake no duty to update such information except as required under applicable law. I'll turn the call over to Dick in a moment, but before I do, I want to mention the exciting schedule of investor outreach events lined up in the coming months. On February 12th, we're set to participate in a virtual non-deal roadshow with Seaport Global. Later in February, we'll attend the Citi Global Industrial and Mobility Conference in Miami, Florida. In March, our engagements include the Raymond James 46th Annual Institutional Investors Conference in Orlando, Florida, a virtual non-deal roadshow with Wells Fargo, and other non-deal roadshow activity with Robert W. Baird. Finally, we'll cap this busy period by attending our industry's largest trade show, ISC West, at the Venetian Expo in Las Vegas from March 31st through April 4th. If anyone is interested in attending this show, please reach out to me, and I'll arrange to get you a pass. Investor outreach is a vital part of NAPCO's strategy, and I'd like to extend my gratitude to everyone who contributes to the success of these events. With that out of the way, let me turn the call over to Dick Soloway, Chairman and CEO of NAPCO Security Technologies. Dick, the floor is yours. Thank you, Fran. Good morning, everyone, and welcome to our conference call. We appreciate you joining us as we review our fiscal second quarter 2025 performance. This quarter yielded mixed results. Our recurring revenue increased by 15%, which generated a gross margin of 91% and led to a 400 basis points improvement in total gross margin to 57%. The reduction of equipment revenue was a result of timing issues with some of our distributors, as well as the timing of certain large locking projects. While certain revenue contributions shifted due to external dynamics, our core growth drivers remain intact, and demand for our products and services continues to build momentum. Importantly, our innovation pipeline is stronger than ever, with new offerings set to launch in the coming months, expanding our recurring revenue opportunities and reinforcing our long-term trajectory. As we move forward, we remain confident in our ability to drive sustainable growth and deliver lasting value to our shareholders. At NAPCO, our strategic focus is centered on capitalizing on key industry trends, including the expansion of wireless fire and intrusion alarms, the growth of recurring revenue services, advancements in school security solutions, enhancements in enterprise access control systems, and continued innovation in architectural locking products. We remain committed to delivering sustainable growth, maximizing profitability, and driving strong results on equity, all while maintaining disciplined cost management. These priorities are fundamental to our strategy and align with the best interests of our shareholders. I'll now turn the call over to our President, Chief Operating Officer, Chief Financial Officer, Kevin Buchel, who will provide an overview of our fiscal second quarter 2025 results. After Kevin's remarks, I'll return to discuss our strategies and outlook in more detail. Kevin, the floor is yours. Thank you, Dick. Good morning, everyone. Net sales for the quarter decreased 9.7% to $42.9 million, and that compares to $47.5 million for the same period one year ago. Net sales for the six months ended December 31, 2024, decreased 2.6% to $86.9 million, and that compares to $89.2 million for the same period one year ago. Recurring monthly service revenue continued its growth, increasing 15% in Q2 to $21.2 million, as compared to $18.5 million for the same period last year. Recurring monthly service revenue for the six months ended December 31, 2024, increased 18% to $42.3 million, as compared to $35.8 million last year. Our recurring service revenues now have a prospective annual run rate of approximately $86 million based on January 2025 recurring service revenues, and that compares to $85 million based on October 2024 recurring service revenues, which we reported back in November. The increase in net service revenues was due to an increase in our cellular radio communication device activations, particularly fire radios. We expect radio sales to continue to be a key contributor to our equipment sales and to lead to the continued growth of our highly profitable recurring service revenues. Equipment sales for the quarter decreased 25% to $21.7 million, as compared to $29 million last year. The decrease in net equipment sales was primarily attributable to reduced sales from two of the company's larger distributors, one of which, our largest customer, who purchases both intrusion and locking products, eliminated all quarter-end purchases from all manufacturers in order to reduce their inventory levels for their December 31 year-end. This distributor I spoke to personally, and he said, "It's like an old Seinfeld line." He said, "It's not you, it's us." So it's a decision they made. It had nothing to do with our product. Our sell-through was good. It's a corporate decision they made. T he other one, there was another distributor who was going through a management restructuring, and that resulted in a significant reduction in their purchase. I n addition to the timing of project work related to a significant New York City building renovation for custom locking products, it resulted in reduced sales in locking in our Q2, as this project began in fiscal 2024 and it's winding down in fiscal 2025. Equipment sales for the six months decreased 16% to $44.6 million, as compared to $53.4 million for the same period, and the decrease was primarily due to the aforementioned reasons I just mentioned. Gross profit for the three months ended December 31, 2024, decreased 2% to $24.4 million, with a gross margin of 57%, as compared to $25 million with a gross margin of 53% for the same period last year. The gross profit for the six months increased 4% to $49.1 million, with a gross margin of 57%, as compared to $47.4 million with a gross margin of 53% a year ago. Gross profit for recurring service revenue for the quarter increased 16% to $19.4 million, with a gross margin of 91%, and that compares to $16.7 million with a gross margin of 90% last year. Gross profit for recurring service revenues for the six months ended December 31, 2024, increased 20% to $38.6 million, with a gross margin of 91%, and that compares to $32.2 million with a gross margin of 90% last year. Gross profit for equipment revenues in Q2 decreased by 39% to $5.1 million, with a gross margin of 24%, as compared to $8.4 million with a gross margin of 29% last year. Gross profit for equipment revenues for the six months decreased 31% to $10.5 million with a gross margin of 24%, as compared to $15.2 million with a gross margin of 29% for the same period last year. The 400 basis point increase in overall gross margin is due to the continued very profitable recurring revenue. The decrease in gross profit and gross margin from equipment sales for both the three and the six months ended December 31, 2024, is primarily the result of the aforementioned lower sales levels, as well as lower overhead absorption of fixed costs, fixed overhead costs from our Dominican Republic manufacturing facility. Research and development costs for the quarter increased 22% to $3.1 million, or 7% of sales, and that compared to $2.5 million, or 5% of sales for the same period a year ago. R esearch and development costs for the six months ended December 31, 2024, increased 24% to $6.2 million, or 7.1% of sales, and that compares to $5 million, or 6% of sales for the same period a year ago. The increase in research and development for the three and the six months resulted primarily from annual compensation increases and the hiring of additional engineers. Selling general and administrative expenses for the quarter increased 18% to $10.2 million, or 24% of net sales, and that compares to $8.7 million, or 18% of net sales for the same period last year. SG&A expenses for the six months ended December 31, 2024, increased 17% to $19.9 million, or 23% of net sales, and that compares to $17.1 million, or 19% of sales for the same period last year. The increases in SG&A for the three and the six months were primarily due to compensation increases, the hiring of additional staff, increases in advertising and insurance costs, as partially offset by decreases in professional fees. Operating income for the quarter decreased 19% to $11.2 million, as compared to $13.8 million for the same period last year. Operating income for the six months decreased 9% to $23 million, as compared to $25.4 million for the same period last year. Interest and other income for the three months increased 26% to $921,000, as compared to $729,000 last year, and for the six months, increased 75% to $2.1 million, compared to $1.2 million last year. The increases for both the three and the six months ended December 31, 2024, were primarily due to increased interest and dividend income from the company's cash and short-term investments, as our net cash position continues to grow. The provision for income taxes for the three months decreased 16%, or $299,000, to $1.6 million, with an effective tax rate of 13%, and that compares to $1.9 million with an effective rate of 13% last year. The decrease in the provision for taxes for the three months was primarily due to lower taxable income. For the six months, the provision remained relatively constant, $3.4 million for both periods, this year and last year. The company's effective rate for income tax was 14% and 13% for the six months ended December 31, 2024, and 2023, respectively. The company's effective tax rate for the six months ended December 31, 2024, increased as a result of higher non-deductible stock-based comp. Net income for the quarter decreased 17% to $10.5 million, and that's 24% of net sales, or $0.28 per diluted share, and that compares to $12.6 million, or 27% of net sales, or $0.34 per diluted share for the same period last year. Net income for the six months decreased 6% to $21.7 million, or 25% of net sales, or $0.59 per diluted share, and that compares to $23.1 million, or 26% of sales, or $0.62 per diluted share for the same period last year. Adjusted EBITDA for the quarter decreased 19% to $12.2 million, $0.33 per share, and that compares to $15.1 million, or $0.41 per diluted share for the same period last year. That equates to an EBITDA margin of 28%, and that compares to 32% last year. The adjusted EBITDA for the six months decreased 12% to $24.7 million, or $0.67 per diluted share, and that compares to $28 million, or $0.76 per diluted share for the same period last year. That equates to an adjusted EBITDA margin of 28% this year, compared to 31% last year. Now moving on to the balance sheet. At December 31, 2024, the company had $99.2 million in cash and cash equivalents, other investments, marketable securities, and that compares to $97.7 million as of June 30, 2024. It's a 2% increase, and that's even after paying $22.6 million in dividends and stock repurchases during this six-month period. The company has no debt, had no debt as of December 31, 2024. Cash provided by operating activities for the three months increased 80% to $13.5 million, compared to $7.5 million last year. For the six months, increased 37% to $25.5 million, and that compares to $18.7 million for the same period last year. Working capital, as defined as current assets less current liabilities, was $143 million at December 31, 2024, and that compares with working capital of $146.5 million on June 30, 2024. The current ratio, defined as current assets divided by current liabilities, is 7.6 to 1 at both December 31, 2024, and June 30, 2024. CapEx for the quarter was $1.1 million, compared to $426,000 in the same period last year. For the six months, amounted to $1.8 million, compared to $682,000 last year. This quarter's investment includes the addition of our second state-of-the-art Panasonic chip shooter machine, which is aimed at further improving our DR production efficiencies. That concludes my formal remarks, and I would like to return the call back to Dick. Thank you, Kevin. As we close out the first half of fiscal 2025, our performance has been a mix of challenges caused by timing issues and strengths. While we experienced a decline in revenue, NAPCO continues to deliver solid profitability metrics and strong cash flow generation, further enhancing our balance sheet even after continuing our dividend program and opportunistic stock buyback, demonstrating the resilience of our business and the effectiveness of our operational strategies. Despite the decline in locking hardware caused by timing, we haven't lost sight of the significant opportunity for continued growth from spending driven by funded governmental infrastructure projects, as well as the millions of dollars going forward, state and federal level programs like Florida's School Hardening Act, Indiana's Secured School Safety Grant Program, and many other states like Texas that have approved hundreds of millions of dollars in increased security funds. Security in healthcare and retail loss prevention, as well as in multi-dwelling commercial and residential applications, are also providing opportunities for growth. We continue to remain focused on further penetrating each of these markets. A new growth opportunity in commercial locking and access control is our long-awaited MVP hosted access system, which could generate substantial hardware sales and recurring revenue for both the installing locking dealer and for NAPCO. This new innovative IP technology system enables wireless cloud access for end users of the system. Introduced initially at the International Security Conference in New York City back in November, we will once again be showcasing the new MVP system, along with many other new and exciting products, at the upcoming International Security Expo in Las Vegas, March 31 through April 4 at the Venetian Expo, where tens of thousands of security dealers will see it in action. We're excited about the potential of this technology for new installations, as well as retrofit or upgrade of existing locks with ease. We would ultimately drive increased equipment sales and recurring revenue from these products. Our recurring revenue growth today is driven by our StarLink radios, which alarm dealers value for their extensive coverage across both Verizon and AT&T networks. With rich feature capabilities, StarLink continues to be the preferred choice among our dealers. Our R&D team is continually enhancing these high-performance radios, designed for straightforward installation and compatibility with all fire and burglar alarm panels, ours and our competitors alike. No other company can offer this level of versatility. Unlike our competitors, our radios are also Underwriters Laboratories Certified, which is the gold standard in our industry. There are still millions of commercial buildings and residences, from offices and hospitals to schools, coffee shops, and restaurants, that need to transition from legacy copper phone lines to cellular connectivity. With StarLink, we're ideally positioned for continued strong growth in this market. Our latest StarLink FireMax 2 communicator for commercial fire and alarm systems includes dual SIM technology, dynamically using either the Verizon or AT&T networks for optimal signal strength. The streamlined solution, which dealers love, helps simplify their inventory while providing a feature-rich experience. Our recent introduction of Prima by NAPCO, a new all-in-one panel for security installation and connected home with a 15-minute installation, remains a very important focus for the company. Our goal is for Prima to address important mass segments of the security market, including residential and small business systems, with built-in Wi-Fi cellular radio communications, customer alert notifications, and video and smart home subscription options for each installed system. The security dealer, as well as the company, can add more recurring revenue, service revenue, generating accounts. Prima now offers a full set of necessary peripherals to go along with the Prima Kit. We believe this will help enhance Prima sales in the future. While we were disappointed in our overall equipment sales, which we attribute to timing, our strong net income and cash flow indicates the continued financial strength of our business. As such, we are pleased to continue our dividend program with a payout of $12.50 per share. This will be payable on 4/3/2025 to shareholders of record on 3/12/2025. Also as announced last quarter, our board has authorized a share repurchase program, allowing us to strategically buy back NAPCO stock as market conditions warrant. As always, we will strive to accomplish our goal of continued financial strength, product innovation, technological superiority, and strong profitability for fiscal 2025 and beyond. I'd like to thank everyone for their support and for joining us in this exciting future we have. Our formal remarks are now concluded, and we'd like to open the call for the Q&A session. Operator, please proceed. Thank you. Ladies and gentlemen, we will now begin the question and answer session. Should you have a question, please press the star followed by the one on your touch-tone phone. You will hear a prompt that your hand has been raised. Should you wish to decline from the polling process, please press star followed by the two. And if you are using a speakerphone, please lift the handset before pressing any keys. The first question comes from Matt Summerville at D.A. Davidson. Please go ahead. Thanks. Can you maybe comment on the number of device activations you saw this quarter relative to the prior quarter and maybe on a year-over-year basis, just trying to get a feel for, with the lower hardware volume this quarter, how that impacted activations? T hen I have a follow-up. Okay. We don't disclose the pure number, Matt, but the number was greater by about 1,000 activations in December versus November, was greater by about 1,000 activations in December versus September, and was greater by about 1,000 in December versus June. The activations, which we believe are going to get stronger because, as we've said, there's a delay from the time you have strong radio sales. There's a delay because it's being sold to distribution, sitting on the distributor's shelf, then it gets activated by the dealer, then there's rebates. There's a delay. We haven't seen the strength of last quarter, Q1, yet. With all that, the activations were still up by about 1,000. That's the best and the most I could tell you, Matt. Well, that's helpful. I appreciate that. With the recurring service revenue, we've seen deceleration now for three quarters in a row. I assume that this quarter's equipment sales imply at least another quarter of deceleration. What do you view as the more steady-state growth rate for RMR, and when do we start to see that growth rate accelerate? So I think in Q3, quarter that we're now in, we'll see it come down a little more. We were up about 15% this quarter, year-over-year. I think that rate of increase will drop a little, maybe in the 12-12.5% range. Then in Q4, I think it goes up because by Q4, we'll feel the effects of the strong radio sales that we saw in Q1 last quarter, and it'll stay up for a bit. Depending upon what happens in the upcoming quarter with radio sales, it can stay up. The optimal rate, given that the number is much higher than it used to be, we think we should be able to grow this by 20%, at least. That is without regard to Prima or MVP. That's separate, extra. I don't want to count that. That's got to prove itself. We think it will. But just with our radios that we're currently selling, we think it'll come back. It'll dip, and then it'll come back. 20% should be an optimal rate of increase. Thanks, Kevin. Thank you. The next question comes from Lance Vitanza at TD Cowen. Please go ahead. Thanks, guys. A couple more things I wanted to ask you about, a couple more things that are probably beyond your control that could impact the numbers in the third quarter and the second half here. T hose two things would be the fires in Los Angeles and Pasadena, number one, and then the tariffs or the tariff wars that seem to be going on right now. Just if you could discuss puts and takes from those two items, that would be great. Thanks. I can tell you on the tariff side, a lot of our competition gets product from China, and they get finished product. And all of our product comes from the Dominican Republic. We don't fly any components into the U.S. It all goes from around the world into the Dominican Republic, where it's assembled, and it comes in as a finished alarm or a locking product. Our competition, though, gets finished products. They make everything in China, most of them, both in the locking and also in the intrusion and access business. So I would expect that that 10% is going to make us more competitive in the marketplace and help us win more market shares because we have superior products, and with superior pricing, the deal is price-sensitive. That should really help us pick up a lot of share. There was some scuttlebutt about Mexico, and I understand they rolled that back this morning for 30 days. Some of our major competitors in the intrusion and fire alarm business make their products in Mexico, all their products in Mexico. So there'll be some settlement, but you can be sure that there's going to be tariffs to those Mexican products, which is going to give us the ability also to pick up share with dealers because they're cost-sensitive. And in Canada, we have some competition also that makes their control panels up there. So that's going to be kind of like the Mexican situation where there's going to be tariffs. So all in all, it should be a benefit for us. The dealers have to keep their installers and salesmen working, so they're going to be going out and keep soliciting jobs, and they're going to need merchandise for that. And the owners of those companies are going to say, "Let's try the NAPCO products. I've heard a lot of great things about it. N ow that the price is so much less expensive, it helps my margins and my business." T hat's going to be something that our salesmen are going to be looking to do, bringing all kinds of new market share, new customers, and all of our different divisions of locking, access control, and fire and burglar alarms. So that's the situation on that. When it comes to the California fires, there's going to be rebuilding. It's going to be slower. A lot of it was residential, and as I said, most of our business in the recurring revenue business is from commercial buildings, and so we would expect that the dealers are going to be putting in more and more fire alarm systems, more and more protection systems, sprinkler systems with fire communicators. When the sprinkler head goes off, the communicator will call the fire department, and I hope they're going to have plenty of water out there, but it's a terrible tragedy what happened. So that's how we look at the situation, And Lance... Thanks very much. Lance, we did do Pasadena School District, and we also announced Pepperdine, so Pepperdine is right across the street from where all this action is. Pepperdine's going to be doing a lot of dorm work. W hat we had heard is the kids were out of the school for a little bit. I think they're back now. We expect these projects to continue as we go forward. Very good. Thanks, guys. Thanks, Lance. Thank you. The next question comes from James Ricchiuti at Needham & Company. Please go ahead. Hi. Thank you. I had to jump off momentarily, so apologies if you gave this already, Kevin, and I missed it. But did you provide the breakdown of equipment revenue? I know it's going to be in the 10-Q later. Yeah, I can provide it. It will be in the 10-Q, which will be out shortly. But the intrusion and access for the quarter was $7.6 million. The locking was $14.2 million, and the rest was the recurring, which was $21.2 million. Okay. Thank you. I t sounds like the shortfall was mainly due to one distributor and, obviously, to a lesser extent, a second distributor. The question I have is, how much variability are you seeing in the sell-through among your various distributors? Meaning, is this specifically related to one distributor that you noted wants to bring down inventory levels, or is there any sign that you're hearing from them about a change in demand, whether it's uncertainty just given the economic impact of some of the things we've been hearing about? Yeah. This distributor, no, there's nothing to do with us. So if I look at their sell-through stats, their inventory levels, that's not why they decided not to buy this quarter. As I said earlier in the prepared remarks, this is about them, not about us. And I've had conversations with them since. Now we're in the new quarter. They expect to be business as usual with us and with others. For whatever the reason, it's a big conglomerate. They made a corporate decision. Maybe they're doing an acquisition. Who knows why? They made the decision they made. They're very happy with our products. They buy all our products. They buy the NAPCO intrusion. They buy the Alarm Lock locks. They buy the Marks locks. Super happy with us. And the reason they're happy is because the demand from the locking and the Alarm Lock is strong. That's where the sales really ultimately come from. If that demand is strong, their sales will be strong. So they made a decision for their year-end, December 31. And this happens every now and then with distribution. T he last question for me is just on the topic of operating expense, just in light of the slower demand that you've seen. Are you making any adjustments to OpEx? I know you've got the big trade show coming up, and obviously, you're going to be investing in that. But just any thoughts around OpEx going forward? No. OpEx will keep doing what we're doing. Nothing that happened in this quarter affects our operation. It's all, like we've been saying, timing. So we forge ahead. We think we have the right levels of salespeople and engineers, but if we need more, we add them. We've added several engineers over the last 12 months. We used to say we have 50, 55 engineers. We have probably over 70 now. What we're trying to do is get products to market faster. A lot of the products have recurring. We want to get them out in the marketplace sooner. If that means adding some engineers here and there, we could afford it. Our profitability, our cash flow, it's not an issue for us. Okay. Thank you. Thank you. Ladies and gentlemen, as a reminder, should you have any questions, please press star one. The next question comes from Jeremy Hamblin at Craig-Hallum. Please go ahead. Thanks for taking the question. And I wanted to take a step back and ask more of a high-level question. You talked about kind of the push in 2026 towards a goal to get to a 50/50 split on your equipment versus your recurring service revenues and driving that business really to kind of $300 million total revenues, which would imply 150 in the RSR. It seems like that's not likely a goal that can be achieved from kind of current levels. Wanted to get a sense for if you could maybe reframe for us where you think you could bounce back here and how we should be looking at the business. Given that this is kind of a second straight quarter in which you've had adjusted EBITDA margins in the 28% range and kind of with that target that you had laid out before, you'd been talking about maybe getting adjusted EBITDA margins up towards 40% plus. I know that's still, I'm sure, the long-term goal, but wanted a sense for what's a bit more kind of visibility on where you are with the business today. Right. Our goal is to get the EBITDA margin in the mid-40s. When we were at 32, we were on our way to it. Now we've taken a step back. We're 28. Still a very strong EBITDA margin, but not our goal. We'll hit our goal. We need a few things to happen. We need the recurring to continue to grow. I wanted to see it grow in the 20% range, as I said earlier. When we originally created the goal, the 150, 150, the 45% EBITDA target, the margin that we used was 80% because that's what it was at the beginning of this recurring revenue journey. Now it's 91% and could it go higher? Yeah, it could, but at 90% and grow it by 20% a year, that's step one. Step two, we need the equipment 10% increase, not what we saw this quarter, not what we saw last quarter. We need about 10%. We don't need anything more dramatic than that, but we need 10%. And we don't need because originally, we had margins much higher on the equipment than they're running now. They need to be in the 30s. If we can get that, grow by 10%, margins in the 30s, get the recurring to grow 20%, 90% margin, and keep your OPEX reasonable, grow it by maybe 10% more per year, then we'll be in the 40s. So I don't know if we'll get there exactly. The original target was the end of 2026, call it a year and a half from now, but we'll get there. And we want to show that we're well back to being on our way towards that goal. And the next couple of quarters, I think, will give that confidence. Let me ask a follow-up question related to the equipment revenues. To kind of reach these goals, you had had kind of high 20s in terms of where your equipment revenue run rates had been, and that was yielding nice growth on your service revenues. In terms of pushing forward to get those gross margins on your equipment revenues above 30% and kind of vis-à-vis getting your total company EBITDA margins at least to the mid-30s, let's say, as a starting point, what's the absolute dollar sales that you need or revenues that you need on an equipment perspective per quarter or on an annualized basis to think that those are reasonable targets to get the gross margins for the equipment back up to 30% plus so that you can really push forward here on total company EBITDA margin? I would say a $30 million hardware is the bare minimum of what we want. Not unreasonable. Last year, for three out of the four quarters, that's kind of where we were, a little below that. The margins really grow when you get more sales flowing through your offshore factory. Our Dominican factory, the more volume we push through it, the better the margins are. We've shown this in the past because when we get busy, we just have to add more direct labor. That's the lowest piece of the cost structure. We have a facility that could handle it. We have machinery that could handle it. We just bought another Panasonic chip shooter machine, which will give us even more efficiency, get us even better margins. So you need that volume. And as long as the mix is reasonable, you get there. Locking has to be a key part of the mix. It's been that way. Locking has margins in the 35%-40% range. We don't care so much about the radio margins, the hardware. It's all about the recurring. So as long as the mix is reasonable, the volume is in the 30 plus, we could be in the 30s. We've proved it in the past. It just happens. Just add more direct labor, nothing else. More overhead absorption, margins expand. So we got to have that. Great. Thanks for taking the question, and good luck. Thanks, Jeremy. Thank you. The next question comes from Jaeson Schmidt at Lake Street. Please go ahead. Hey, guys. Thanks for taking my questions. Just curious if you can update us on how the ADI relationship is progressing and if it's progressing to plan. ADI is doing well, introducing us to more and more dealers, as we've talked about in the past. They made an intro for us to Securitas, who now buys our fire radios. We had said maybe it was the last call. I'm not sure. We thought ADI could be a 10% of equipment sales customer. That's our hope. Their sell-through stats are good. If that keeps up, that could happen. So very happy with the relationship, and we have more work to do. The potential is very good with these guys. Gotcha. T hen just as a follow-up, just given how December played out and kind of how Q3 here is tracking, would you still expect sort of normal seasonal patterns for equipment revenue in June? I would. If you go back to the history books of this company, Q4 is always the strongest. You never know with distribution. You never know with things that are unforeseen. But statistically, I would expect it to be the best. A lot of our big customers, big distributors, their year-end is December. So they don't usually make decisions like we just saw in June quarter. F or us, the June quarter is important. We want to maximize our sales. So typically, it's the best. We expect it to be the best. We expect Q3 to be a comeback quarter versus what we just saw. W hatever it is, we expect Q4 to be even better than that. Okay. Perfect. Thanks a lot, guys. Thanks, Jaeson. Thank you, ladies and gentlemen. As a reminder, please press star one if you have any questions. Follow-up from Matt Summerville at D.A. Davidson. Please go ahead. Thanks. I just want to be clear. Equipment revenue, could we expect that to grow on a year-on-year basis in Q3? I mean, logically, if this was a one-time "this is us, not you" type thing, why wouldn't we start to see year-on-year growth in Q3, again, in hardware? Q3, like Q2 and Q1, had a very large amount of sales last year from this large New York City project that we've talked about. S o it's a special project, and it's not going to be as large this year in Q3 as it was last year. That's not to say there won't be a special project or two in this quarter, but I can't say that as I sit here today. Without that, the comparison is difficult. So if we did close to $30 million last year, we'll have a tough comp because of this special project that we saw last year. So even if the distributor comes back, and we're pretty sure he will, and we think the other distributor as well, it'll significantly put us beyond what we just saw in Q2. But to hit $30 million, I can't say for sure. A lot depends on special projects, which we might get, but that's why there's a little hesitation. T hen just lastly, on share repurchases, given what's happening with the stock today, are you thinking about more aggressive repos? You're sitting on $100 million. What's the right way to kind of think about that? We like to do this opportunistically. This could be a nice opportunity based on what the stock is doing. We like having a lot of cash, and for moments like this where we could use some of it, we still are looking at acquisitions. It has to be the right one, but that's part of what we do. We have a lot of banks trying to find the right deal for us. We don't want to do a deal unless it's the right one. We're not going to rush into anything. We feel our business is strong just the way it is, but there could be a deal out there. We keep looking, and it'd be nice to have cash for that too. So we try to balance it: buybacks, the right acquisition, dividends, and keeping cash on hand, all the above. So stock buybacks is in the equation. Got it. That's it for me. Thank you. Thanks, Matt. Thank you. That concludes our Q&A. I will turn the call back over to Richard Soloway for closing comments. Thank you, everyone, for participating in today's conference call. As always, should you have any further questions, feel free to call Fran, Kevin, or myself for further information. We thank you for your interest and support, and we look forward to speaking to you all again in a few months to discuss NAPCO's fiscal Q3 results. Bye-bye. Have a great day, everybody. Ladies and gentlemen, this concludes your conference call for today. We thank you for participating, and we ask that you please disconnect your lines.