Good afternoon, and welcome to the 22nd Annual CL King Best Ideas Conference. I'm Tom Hayes, Senior Industrial Analyst here at CL King. We're very pleased to have the management team of EnerSys with us today for our fireside chat. From the company, we've got Andrea Funk, CFO. She's gonna be leading off with a few comments and overview of the company. But for those listening online, if you do wish to ask a question, you can type that question into the Ask a Question box at the bottom of your webcast screen. All questions will be sent to me, and I'll integrate them into our discussion as we go forward. So with that, Andi, appreciate you participating today. I'll turn it over to you for a few minutes.
Super. Thanks for having us here today, Tom. It's a pleasure to be here. So EnerSys, just a little bit of background, we are a $4 billion market cap company. We just recently celebrated our 20-year IPO, and we're a global leader in the energy solutions business. In fiscal 2024, we had $3.6 billion of revenue. About two-thirds of that was in the U.S., with a little over 20% being in EMEA and less than 10% in the APAC region. We had over $500 million of EBITDA, and our EPS was $8.35, up from $5.34 in the year prior. We have a strong balance sheet. Our leverage at the end of our first quarter, and we're a June 30 year-end. So our first quarter, which it was our last quarter we reported, our leverage was at 1.1 times.
And we are an industrial tech company, which we've been making this transition over the last seven years under our CEO, Dave Shaffer's, leadership. We have four segments. Our largest is Energy Systems, which is about 45% of our revenue, and that's primarily communications, so telecom and broadband, but also about 20% of that is data centers and about 20% is industrials. Then there's our Motive Power line of business, which is a little less than half, and that's mostly material handling, where we do electric forklifts for warehousing and logistics. And then our Specialty line of business, which is about 15% of revenue, which is really high-performance transportation and aerospace and defense.
And finally, our newest line of business, New Ventures, which we don't yet have revenue, we expect to have that this year, which is a battery energy storage system and fast charging. So what pulls those different lines of businesses together? It's our three technology platforms that we have. So industrial storage, we have flooded, Thin Plate Pure Lead, and lithium batteries. Then our power electronics, so we do everything to push the signal along, for example, in network communications. We do chargers, we have smart batteries, and then software and services.
Our growth targets are 8%-10% that we announced in Investor Day, for fiscal year 2027 target versus fiscal year 2023, with a goal of EBITDA in the $850-$950 million range, and EPS target of $11-$13 in fiscal year 2027, before reinvesting approximately $1.5 billion of cash that we would have on hand if we were at two times levered by fiscal year 2027. I hope that's a good overview for you.
That was a great overview. I think I wanna go back to one point you mentioned earlier, 'cause especially those maybe investors that haven't been completely up to date on the changes that have gone on at the company. You mentioned you've evolved from an industrial to an industrial tech company. Let's kind of unwrap that a little bit, 'cause I think it certainly has changed the focus of EnerSys and certainly expanded the opportunity. I think, again, if you looked at EnerSys 10 years ago and looked at it now, it's almost two complete companies, different companies.
You're exactly right, Tom. It's dramatically different. So fiscal year 2017, which is the year Dave became our CEO, almost three-quarters of our revenue came from conventional batteries, so mostly flooded lead-acid batteries, and we were looked at as kind of a lead-acid battery company, mostly for forklifts. This past year, only 45% of our revenue came from the traditional batteries, and 55% of our revenue came from our maintenance-free offerings, so our thin-plate pure lead and lithium products, as well as our power electronics that we have, and the services and solutions that we have in our Energy Systems line of business, and software and services. So we are really the only end-to-end provider with the three battery solutions, the power electronics, and the software services in the markets that we compete.
And we're extremely customer-centric, so we have deep relationships and technology innovation with a lot of mega market trends that our products are really key enablers for things like electrification, automation, expansion of communication networks, and things like that.
No, that was good. I think maybe kind of circling back to your last quarter, and even the quarter before that, I think most of your businesses seem to be, you know, performing as expected, except for, you know, maybe broadband and telco. And I think, you know, you and others kind of that have exposure to that have kind of called out, you know, maybe some destocking from the COVID overhang and stuff like that. Could you just remind me, remind us of what your commentary was coming out of your last update?
... Yeah, so network communications, which would be both the telecom and broadband businesses, are definitely a cyclical business. You know, there's peaks and valleys over time when there's investments made in network expansion. Fortunately, we also do have a maintenance portion of our business, so we're always replacing batteries and, you know, fixing if there's ever issues. Our service network monitors the systems that are out there. But we have a lot of opportunity when that expansion is, you know, when we're in the peaks of that cyclicality. We have a lot of our power electronics are involved in that, and that really can impact our mix to a much richer mix of products in addition to the volume expansion. Shawn O'Connell is our new president of this line of business.
He came from Motive Power, and I'd say he's an excellent operator. He put in some transformational initiatives to take advantage of this kind of valley in the timing to put in some cost-cutting arrangements. We closed a non-strategic line of business that was really our residential renewable product line that we acquired from the Alpha acquisition. We closed one of our plants and used our EOS tools or our lean tools to be able to consolidate that into other lines of businesses, and did expansive RIFs with our folks to kind of streamline the organization. That alone will probably... the actions already taken will save $44 million year on year for fiscal 2024 versus 2023.
Our target really being to be at that 8%-10% during the low cycles, and a 12%-15% operating earnings in the high cycles. Right now we are in a. I'd say, the trough, and just starting to come out of it. You know, and our Q1 was the lowest volume in telco broadband since we did the Alpha acquisition. And in fact, our XM3, which is a flagship broadband product, we said that was the lowest revenue of XM3s in eight years, so even before the acquisition. But it's really cut so deep that, you know, it's created a technology deficit. It, it's not sustainable at this level. So we think it's actually even gone below the low end of the cycle.
In Q4, we announced that we thought we were at the low end of a trough, and had a lot of development activity that gave us optimism that there was plans in place to start building back up the spending. But we hadn't, at Q4, seen it in our order book. The nice thing was, in Q1, our book-to-bill increased to 1.1. It was the first time in three quarters that it was above one. We are seeing steady increase in orders throughout the second quarter as well, and we think that this is really the return to normalcy, and fully expect to be at that 8%-10% low end in the second half of this fiscal year, with opportunities for network expansion after that. I mean, there is no one-
Right
... that is saying they don't want faster internet or more access to internet.
Yeah, I guess that's my follow-up question, is, you know, obviously everyone wants faster internet, but shouldn't this have also got a bit of a boost from one of the two, either the infrastructure bill or the Inflation Reduction Act? 'Cause I know there was some broadband spending supposed to be in there. Is that still on the, you know, on the come as far as those projects?
Yeah, I mean, a lot of it is the RDOF and BEAD initiatives. So RDOF is government programs to increase access in rural areas, and BEAD is to increase access for underserved areas. So those projects, there's still a lot going on and in front of us. I think a lot of it was the providers were looking to rightsize their balance sheet in the current interest rate environment, and you were coming out of shutdowns when there were supply chain issues afterwards, and so there was some stockpiling of inventory. That they took advantage of this time to decrease their inventory and rightsize their balance sheets. But certainly, a reduction in interest rates, which we hope to learn more about this week, of course, should also help spur some of that investment as well.
Okay. Kind of want to just back up a little bit, 'cause I think another part of the transition that you guys underwent was, and I think it's a little bit overlooked, is the growth of your service network and how that kind of completes the customer experience, and, you know, how that maybe sets you a little bit apart from competition.
Yeah, so service network is huge, and one of the things I mentioned, the three core technology platforms that we leverage and play across all of our lines of businesses. Services is a great example. As we're rolling out our Fast Charge and Storage initiative, being able to have a network of service providers across the world will really help with that. In Energy Systems, our service network design solutions, they do installation and maintenance, and you know, it really helps to create some of that customer intimacy. In Motive Power, we really offer a robust customer experience, and it's the concept is our service is really there to provide maintenance, support our business.
It starts from sales, using our proprietary software to generate analytics to help the customer make the right choice, and then we do repairs of chargers, swapping out of batteries, you know, other services that our customers depend on that creates that strong customer intimacy. We really believe that a lot of our customer relationships and the superior customer service experience that we provide is a strategic advantage of doing business with EnerSys.
No, that, that's great. We actually had some questions coming in, and I'll try to work those in now. You know, to your comment on Shawn making some reduction in force, you know, moves, you know, question is: Is there any concern on labor hiring of skilled talent as those end markets start to recover?
... Yeah, it, you know, Shawn's objective with a lot of the changes that he put in place was not to cut costs because there was a, you know, a pause in our volume, but really to find ways to look at how we can optimize the business structure, so the intent is most of those positions and the decisions we made are not ones that we'll need to reverse, when the business starts to pick up, and that's part of what will drive that 8%-10% in a low market, but then 12%-15% in an up market, 'cause you're not gonna be adding back those costs, to support that increase in business. It's stuff like consolidating service locations and service centers, and duplicate management teams, and he still has some other projects underway.
You know, you get at the low-hanging fruit at first, but not just on pricing, but things like go-to-market strategies, service network, efficiencies, and quote to cash, you know, efforts like that. But these are really just optimization strategies, not cost-cutting in response to the volume being lower.
Okay. Another one that came in earlier was: When do you think power electronics will return to revenue growth?
Yeah, so we don't have a Magic eight Ball, unfortunately. So what we do is look at the signals that we have. We've got a lot of development activity underway, so looking at providing new solutions and discussions with our customers on when will these offerings be ready, knowing projects they're working on, that gives us optimism. As I mentioned, our fourth quarter, we announced that we were doing a lot of that work. So we knew that, you know, there was a planning for these next build-outs was underway, but we hadn't seen it in our order book. Fortunately, in Q1, we began. We're seeing it in order book. So 110 book to...
1.1 book-to-bill, you know, that if you have 10% growth on a quarter-sequential basis, you know, I think that's a really nice sign. So we're starting to see more of a robustness in our orders. I wouldn't say that it's, you know, it's at a peak by any means. We're just starting to come out of that trough, and we're seeing that it's beginning to come back to normal. I would expect to see steady progression throughout the course of this fiscal year, and at some point, I think there's really gonna be an ignition where it will come back on stronger. But I can't call yet when that's gonna happen.
Okay, fair enough. I think maybe shifting gears, 'cause one question is regarding this, and that would be, you know, your announced decision to build your lithium battery plant. You know, maybe you can provide an update on that process, and the question along those lines was, you know, when are those DOE awards expected for the plan as well?
Sure. So we should, we expect to be able to have some news to announce on the DOE very shortly. They had said in September was when they would make the announcement, so it's certainly a really exciting time for us. For several years, looking at supply of lithium batteries was key to our board, an area that they were working on, and, you know, we explored many different solutions. Right now, we source our lithium cells from CATL and SVOLT out of China. There's 25% tariffs that's going into effect on importing them, and just more of a move to less reliance on China-sourced cells has been critical. You may have seen some recent news to that matter. So we've been working on this with our board for some time.
When the IRA came out, that really made it much more attractive to look to invest in a U.S. source, our own plant. One of the biggest risks was on the cell coating, so the electrodes. So we have a technology partner we worked with, Verkor, to be able to leverage their expertise and knowledge. We have a lot of lithium experience. On the ES and Motive Power side, it's mostly in the pack assembly. We have our own BMS that Joern Tinnemeyer and our CTO has been worked on for several years, using automotive-grade standards, so very high, a very solid, safe BMS that we have that's passed all the same stringent requirements that you have in the automotive market, and in our aerospace and defense, we have lithium plants that we manufacture.
It's a little more like a niche business, but it's made to fit the specific demands of the customer, in this case, the U.S. government. So we're excited about this. We've looked at it, though, not just as a supply assurance opportunity, but really has to be cost-justified, so something that has a very attractive internal rate of return and will allow us to source our batteries cheaper than we could be acquiring them from the outside.
I guess two follow-up questions. One, from shovel in the ground to battery out the door, I mean, what kind of timeframe does that look like? And, and, B, would the factory replace all of your lithium battery needs?
The plant, again, we'll have an announcement where we'll give more-
Yeah
... information this month. But, you know, normally speaking, you're talking probably three to four years from-
Okay
... when you break ground till you actually are commercializing. Again, we'll provide more detail to that when we have the specifics to announce. But our intent is that this will be fully for our own needs. So we are not-- We're very different from other lithium plant startups in that we're not talking about, you know, a, an 80-gigawatt plant, that we're only going to... We have no-- We have to get these huge offtake agreements to make sure we have enough capacity to cover all the fixed costs. We're looking at, a plant that's sized only for our own requirements. We would have no third-party offtake agreements.
And in our strategic plan model, it would not quite meet all of the needs that we have internally, but we'd have the ability to expand the plant if we needed to.
Yeah, that was, that was more... The angle was, does it replace all of your current sourcing, you know, externally sourced batteries with the batteries coming out of this plant?
Yeah, the question is how much, how fast lithium will ramp up during the period of time till the plant is producing and producing quickly.
Got it.
So our expectation is that our demand will ramp up quicker than the capacity is available, and at that point in time, we would shift most of our demand to this new plant. Now, our lithium for aerospace and defense business, which is, again, very unique applications, that would continue to be sourced through our A&D plants. But the other thing is, because we have such a close relationship with the U.S. government, this would also help to solidify that relationship, along with the Bren-Tronics acquisition, and we would probably source some incremental revenue that we would hope to get through the DLA's electrification strategy as well.
Okay. I think that's probably a nice little segue. Maybe just touch about on the Bren-Tronics acquisition. Yeah, I think it was one of your most recent ones, and how that, you know, changes the offering that you guys provide.
Yeah, so Bren-Tronics has been a great deal. You know, we've looked at M&A as a key part of our capital allocation strategy, and the Bren-Tronics acquisition is the exact kind of project that we're looking for. So ideally for me, and, you know, not every opportunity is gonna be exactly like this, but $100-$300 million with a growth opportunity and accretive bottom line, and buying it at a nice multiple. We have a long-standing relationship with Bren-Tronics, so we knew the founder and the management team, and we've done projects with the Bren-Tronics team in the past. You know, we were able to acquire them at a nice multiple, so it adds about $100 million of revenue at about 25% EBITDA, with a growth behind that as well.
We closed this quarter, so we probably have an equivalent of about one month of the business adding in, because we had the transition period. But it's going great. In August, Dave and I, some of our other team members, went to their company picnic, and we were so thrilled to see so many of their hourly employees who were there wearing their EnerSys gear. The team, the culture they have is phenomenal. It's just a great fit. We didn't buy it relying on any synergies, but certainly there's a lot of end market synergies. We've already looked at some back office synergies, things like insurance contracts, et cetera. It's just strengthening the relationship and presence in that space.
No, that sounds great. Maybe kind of going back to one of your other newer lines of business, that would be the Fast Charge and Storage business. Can you just kind of remind us, you know, what your commentary coming out of the last quarter was, and then kind of how that also, you know, differentiates your solution from others?
Sure. So, as far as an update, this is a project that we've been working on. This, I think, is a great example of what we talked about, about how we have these three core technology platforms that we plug and play into different end markets to create solutions for our customer, so in this case, we started with the lithium batteries that we had developed for our Motive Power line of business, and you put them in a very large container, which is very similar to all the other thermodynamic containers we have in our Energy Systems line of business. You've got the lithium modules, and you can hang off of that a charger, so it's a fast charging system for EVs.
We look at ourselves as the largest charger of EVs in the world, since we have over 50% of the U.S. market share of electric forklifts, which are very similar to an electric vehicle. We have technology where we circumvent the onboard charger in the forklifts to be able to charge DC to DC, and charge the vehicle as fast as it will allow. That's one of the offerings that having this Fast Charge and Storage product will do. We received our first order for 50 systems from our launch customer, Landmark we've identified. You know, we had noted that we would be shipping our first system this quarter, which is now the first commercial system that's in the field.
The initial shipments of our first 15 systems should take place, you know, over the course of this fiscal year. Our target customers in this space are large real estate owners and operators, and really anywhere where you're getting demand charges is where this is gonna make sense-
Sure
... because about 80% of the value of the system pencils out from the demand management that you're able to do. So you can feed the batteries-
Sure
... during a period of time when there are no demand peaks, so you can buy the energy cheaper, and kind of bi-directional, that you can sell it back. And our solution, what it does is we have, you know, we have AI and machine learning in it that will be able to predict when the customer forecasted demand of energy will increase. And so you can charge during low-cost, low peak hours. You can discharge stored energy when demand prices are high. So it helps the customers avoid those peak charges. They also can have backup power, and then they are also able to do fast charging without a faster connection to the grid. So it is an exciting new product.
That, that's kind of an offshoot of a question I wrote down a few moments ago. You know, a lot of your applications seem to be predictive in nature, and it seems to be a perfect application for AI as it, you know, continues to mature. You are, I guess now, are you using some version of an AI-type solution, and where do you see that kind of helping the business?
Yeah, so, you know, as I mentioned, our first system of Fast Charge and Storage is just delivered now. So in our current revenue base, we don't have extensive AI, although we do have a lot of software that does, you know, warehouse management. We've got maintenance chips on our, a lot of our batteries to make them smart batteries, so you can provide signals back. But the solution that we have in the Fast Charge and Storage product, if someone were to choose to use our software for their energy management, that's where we would have AI embedded and machine learning embedded, so that way the customer could say, "When do I think- I'm gonna have my highest energy draw, and when should I be filling the batteries?
At what rate should I discharge the batteries so that I can optimize my energy consumption?
I think that's kind of interesting, 'cause I think, you know, when you talk to some investors, you know, they still kind of view EnerSys as a hardware company. But, you know, as you said, there's a lot of work to add software, you know, to the solution base. You know, how does that combination of being able to give the customer both a hardware and a software solution kind of change the competitive equation?
Yeah, so when you look at where we came from, as I mentioned, you know, almost three-quarters of our business being flooded lead-acid batteries, there we were providing a product to our customer. What we like to look at now is we provide solutions to our customers. So, during the sales cycle, we have software that will look at what their use case is, and what's the best solution for them. And, you know, that's where really we take these three core technology platforms that we can plug and play to find the best solution for them. Our CTO refers to this, it's a German term, as the Baukasten principle. I like to look at it as Legos.
We've got these solutions that we can plug and play, and have expertise that we can help, not just, you know, give a customer a battery, but give them a, you know, full end-to-end energy solution.
Okay, no, that's great. Maybe going back to one of the lines of businesses we really haven't talked about is the Motive Power. I think you know, I think I saw a study that about 40% of forklifts still run on you know, in internal combustion engines. You know, how is that transition kind of going towards more electric forklifts?
Yeah, so in the past, we always looked at our Motive Power business as a GDP business. Because when you move material around, you typically have some kind of material handling piece of equipment that's moving it. So that's the historic view of how we looked at it. But there's really been a divergence over the last couple of years, and a lot of that is driven by these mega market trends that we referred to in the beginning. So one, you know, as we mentioned, electrification. As you just pointed out, Tom, about 40% of forklifts are still internal combustion engines.
So others as there's a movement towards, you know, looking at your carbon footprint, there's a lot of initiatives, like the CARB and the GHG, which are environmental regulations that are forcing a reduction in emissions, and those will drive some of the conversion to electric forklifts, which will create a growth over and above. But on top of that, there's also automation. So anywhere where we have a customer who's moving material using, you know, a human being, there's a move towards using some type of an automated guided vehicle or an AGV, all of which are typically some kind of electric material handling piece of equipment. Our maintenance-free offerings are another good example. There's the struggle of getting human manning and the increase in labor costs.
Anywhere where we cannot have the maintenance requirements of a flooded lead-acid battery, and moving more towards our thin plate pure lead or lithium helps with that as well. So there's a lot of momentum that's causing a higher growth. Of course, with our maintenance-free offerings, there's an increase in sales price, so we get the... Not only are we able to sell more of them, but we're selling them at a higher price, which helps our top line as well.
That's helpful. One topic that came up in some earlier meetings I had today with some of my companies was just the increasing, I guess, unreliable view of the grid and how that's, you know, being played out in multiple different scenarios across the investment space. Maybe kind of give an overview of how some of your battery energy storage, excuse me, systems maybe play there, or maybe I'm missing a point, you know, how EnerSys can help out. Because it seems like we're getting to a tipping point where companies aren't waiting on the sidelines for the power to go out, they're actively going out, looking for solutions.
Yeah, so there's solutions that we have across our product portfolio to help meet these needs. You know, just one example, you probably recall us talking about the CPUC projects that we had in Energy Systems over the last year. So the California Public Utilities Commission put in a 72-hour power backup mandate, for broadband customers, that you needed to ensure that you could have energy storage, whatever that meant, that you would... If the power went out, you'd still be able to provide broadband services for at least 72 hours. And that was mostly driven by the need to, you know, if there was wildfires, how would you be able to make sure that people could still hit emergency services? So we won that award.
That was about $200 million, of which a little over half of it was our Thin Plate Pure Lead solution, and a little less than half was lithium solutions that we're still helping to install those. But as the grid becomes more unstable, backup power becomes more and more important, and that's one of the reasons why there really is no better place to be right now than in energy storage. I think our BESS that you mentioned, as we talked about, and our Fast Charge and Storage, is a perfect example for this. As we mentioned, it's powered by advanced, intelligent, computing-driven predictive analytics that offers a critical solution to a broad range of customers, as the need for reliable, cost-effective energy management has never been greater.
You know, you're able to use this with the predictive analytics to provide a small, smart, cost-effective, and reliable solution. When you put these battery energy storage systems together, you can almost create. They call it a virtual power plant. Because the grid isn't above capacity all the time, so what you're able to do is level-load the capacity, so you can more efficiently use it, and that helps our customers to save money, and expand the power that's able to be generated by the existing grid.
... No, that's helpful. I guess one area when I'm talking to investors about it, and they're also a little bit confused, is on the IRC 45X credits. You know, I think you mentioned last quarter, you're still expecting the IRS refund part of that, and maybe just kind of remind us on the longevity of the expected credits.
Yeah, so, the IRA is the tax law that went into effect on January 1st, 2023, and it's in effect for 10 years with a phase-out on the last three years of it. It is a production credit for domestically produced battery cells and modules, and there's a $35 per kilowatt hour credit for cell produced, and $10 per kilowatt hour credit for module assembly. The battery cells have to have more than 100 watt hours per liter, and so almost all of our Thin Plate Pure Lead and the bulk of our flooded lead-acid batteries that we produce in the US already qualify.
Okay.
And that's where we say that we'll get a benefit of anywhere from $120 million-$160 million per year from the IRA. Now, it's booked as a reduction to cost of sales. It's not subject to taxation, and we've used those credits to offset the required federal tax payments that we had to make. And we have our first refund that would be for last fiscal year, we would expect to get at the end of this fiscal year, as far as just timing when things are filed. So that'll be a little under $100 million that we would get back. So the bulk of the IRA credits that we've booked in our P&L have not yet been monetized.
Okay.
After that point, we'd get, you know, about the same amount every year.
Okay. Does that change at all with the... if you guys do build a battery plant?
Yeah, so the if we build the lithium plant, the bulk of the batteries that we would produce there would also qualify. So we would get more. You know, as we expand our capacity in the US, we would be able to get more credits, and the lithium plant would certainly be a significant expansion. Our thoughts, the way we viewed that, is the current IRA credits that we get would certainly, only a portion of them would be needed to fund the plant investment itself. And then by the time the plant would be operational, you know, and the plant would still be ramping up is when you'd start the phase-out of the IRA.
Probably the IRA impact of incremental IRA benefits we would get from this lithium plant would really just help to offset production and efficiencies as the plant's ramping up. 'Cause by the time the plant's really, you know, fully operational and at the right longer term OEE targets, you'd be in the phase-out period of the IRA.
Okay. I guess just maybe lastly, I know we touched on it, on pieces of it through our discussion today, but could you just kind of maybe formally kind of summarize the capital allocation strategy? Just make sure kind of it's because I think you guys have a lot of opportunity. You're relatively low levered. Just your kind of thoughts on that.
Yeah, and it's especially important. When we laid out our five-year strategic plan, we had $1.5 billion that if we were at two times levered of cash, that would either be internally generated or that, you know, we could borrow just to be at that two times levered. So capital allocation becomes very important. We take a very disciplined and clear approach to capital allocation. So first, to, you know, invest internally, our typical cap spending is $80 million-$100 million. Of course, that lithium plant would be over and above, but a lot of the growth from areas like power electronics are not as capital intensive. So that won't grow at the same rate as our revenue would grow, other than that, that lithium plant.
Second would be strategic M&A, and we talked about kind of what our targeted M&A is, that $100-$300 million, Bren-Tronics being a perfect example of the type of investment we'd like. That was an 8.7 multiple, so, you know, accretive from the get-go. Third is we target our net leverage to be two to three times EBITDA. We like to stay on the low end of that. We're at 1.1 at the end of our first quarter, so we certainly have ample dry powder that we have there, but we don't intend to go above the low end of that range. And then to return capital to shareholders through both dividends and stock buybacks. In fiscal year 2024, we did about $100 million of stock buybacks, and we had about $35 million of dividend.
Earlier last month, we announced a 7% increase in our dividend to $0.24 per share. We have a policy where we wanna grow our dividend with earnings. You know, I think we've got a lot of opportunity to do some exciting things with our excess capital.
Great. I think that brings us to the end of our time. I appreciate it always. It's great to talk to you and learn, continue to learn about the business.
Thanks so much, Tom. It was a pleasure.
Thank you.