Good morning, everyone. My name is Matt Sykes, the Life Science Tools and Diagnostics Analyst at Goldman Sachs. Today I have the pleasure of welcoming Jim Hippel, CFO of Bio-Techne, and David Clair, Head of IR. Jim, David, thanks for joining me today.
Yeah, Matt, thanks for having us. Great to be here. Great to have an app via typhoon this year.
Yeah, exactly. We're going to hold out that everyone can get out okay. I haven't even been outside yet. It's too hot. Maybe we just start with your fiscal Q3 results, which was a pretty solid quarter, particularly given all the macro headwinds we're experiencing today. Could you maybe start with some of the highlights from the quarter, Jim, and some things that you really want investors to kind of walk away from?
Yeah, absolutely. First of all, thanks for recognizing that it was a good quarter. We were very pleased with the quarter, especially in this environment that we are in right now, with 6% overall organic growth. More importantly, our protein sciences segment, which is the segment that is most impacted by the end markets that we are talking about mostly today, 7% growth. What was really encouraging to see was it was very widespread. There was not any one single product line or order or anything like that that drove that kind of growth. We had essentially segment-comparable growth across our core reagents, across our instrument platforms. Yeah, it was very widespread. We saw Asia outside of China come back to life.
If there was one area that was more impacted that drove the growth, it was large pharma, which was also encouraging because large pharma is our largest end market, 30% of our revenue as a company. It was the end market that we had, I'd say, the least visibility and maybe therefore the least confidence in terms of getting back to more normal end market growth as we entered this fiscal year, fiscal year 2025. To see that be so strong, we had double-digit growth essentially across large pharma. It really carried our protein sciences segment. Yeah, it was a very, very solid quarter despite a very choppy end market situation.
Great. Got it. Maybe moving on to one of the areas that is probably the most choppy is the US academic market. It's obviously become increasingly dynamic. Maybe you can remind us of your revenue from these customers and what kind of you've been seeing for your U.S. academic customers lately. I think there's been thoughts of potentially pulling forward before the budgets go away. Obviously, there's been a lot of flux. Things were suspended in February. Just kind of one, put into context what it means for your business. Two, what are you seeing from that customer base? What are your expectations for the balance of this year?
Yeah. I mean, academic has definitely been the choppiest with regards to the noise level with all the indirect cap costs started with that, and then piled on with different levels of budget cuts and so forth, and withholding NIH outflows, et cetera, et cetera. Again, I can't be more pleased with how we're positioned to handle that kind of volatility in that end market, starting with just the fact that the majority of our business with academic is our core reagents. Our core reagents are sold a little bit every day into the academic market. They're kind of a, they're just a staple with regards to having those labs open within the academic institutions. How much they're directly tied to true NIH grants and NIH funding is really hard to determine.
I can tell you, 11 years I've sat in the seat here as CFO for Bio-Techne, I've always tried to come up with an algorithm of how our academic business does in the US relative to NIH funding flows, and have yet to come up with one because the beta is actually very, very small. When NIH budgets were double-digit increases during the COVID years, we grew low to mid-single digits. Now in a situation where outflows have been down double digits more recently, et cetera, our reagents growth was relatively flat. I'll take that level of stability considering this environment. I think we're positioned very well with regards to academic to handle whatever happens there from the NIH perspective, just because I think our correlation with NIH funding is a lot smaller than I think it's perceived out there. It's a core staple.
Now, with regards to where NIH funding could go, for us, as a reminder, our academic revenue in the U.S. is roughly 12% of our revenue. Again, how much of that is truly from NIH is really hard to determine. We've estimated in the past it may be as high as half of that or 5% or 6%. Based on what we've been seeing here recently, from a correlation perspective, I think it's actually a lot less than that. I think we're positioned very well to weather that storm. Even in a worst-case scenario, it doesn't have a material impact on our overall growth rate as a company.
You have exposure outside of the U.S. to academic and government spend. Do you feel like that could be an offset? I mean, it's obviously potentially an opportunity for them to spend more. I know it's really early, but just maybe talk about that as a potential offset.
No, great point, Matthew. I think I don't think we're seeing that yet. I think it's very possible for that to happen, at least somewhat offset that. That withstanding, our academic markets outside of the U.S., which is mainly Europe, have been robust, have been outgrowing our U.S. academic market for well over a year, year and a half now. This last most recent quarter was no different. We actually grew double-digit in academic in Europe. In Europe, it's very strong. That's what allowed us to keep our academic growth relatively stable overall as a company.
Got it. Another area of focus from investors is tariffs. Maybe give us an update on your tariff exposure and mitigation efforts.
Again, fortunately, we're positioned very well from a manufacturing-based perspective and in terms of what we manufacture. Both from a sourcing perspective and from an end-unit sale perspective, we're fairly well protected from the tariff situations that have been. That's most of our products are made in the U.S. Really the only issue we have is the risk of any retaliatory tariffs. The biggest issue there up to this point potentially was always China. In the quarter, it was determined that, and it did not come as a surprise to us because it happened during the first round of tariffs during the Trump administration, our core reagents actually ended up being exempt from tariffs, from the retaliatory tariffs that China put on. The only tariff situation we were dealing with was with our instruments.
From a sourcing perspective, luckily almost entirely our sourcing comes from outside of China. We had no issue there with cost increases. Our instruments, we have more than one facility where we make our instruments and outside the country as well. We were very easily able to ramp up the production of those instruments in those other locations to source China in the future to avoid those tariffs. I think we were the only company that I saw that came out that said that not only was our tariff exposure very small, but to the extent we had any tariff exposure, we can fully mitigate it within a quarter.
Even though the environment around tariffs has softened a bit, which is great to hear, even with China, there are ongoing talks going on yesterday and today. We are not stopping our plans with regards to those mitigation efforts because it is the smart thing to do anyway. It does not really cost us much of anything to move some manufacturing around to make sure that we are safe not only from tariffs today, but any potential tariffs in the future.
Got it. China is about 8% of your revenue. Maybe discuss what you're seeing in this geography and what your expectations are going forward. I mean, it seems like for some of the more instrument-heavy companies, it's stimulus and then really nothing much else. It's stable, but there's not a lot of growth. Maybe talk about your experience in China, particularly on the reagent side and what you're seeing there.
Yeah, I mean, I think it's relatively the same story for us. Our reagent side is, it's been stable, although not growing. I think overall we had negative mid-single digit growth in China this most recent quarter, but that's kind of what our year-to-date results have been as well. That was consistent more or less in the reagents as well as in the instrument side. That's a little bit below our expectations. We were hoping that China would start to rebound in our Q3 a bit, even ahead of this "stimulus." With, again, all the saber rattling that has occurred since the new administration put in place, I think that's put caution in the wind of a China recovery as well. That all being said, I don't want to get too ahead of our skis here because there's been false starts in the past.
I was in China personally in December. Other parts of our management team were there very recently in the past couple of months. I will say in talking to our customers there, I have talked to some biotech customers. I talked to some hospital and research institutions there, and of course our own team. Unlike a year ago, rather than talking about future pessimism, things getting worse, there is actually a slight tent of optimism in their view with regards to the year ahead. It is subtle, but I think it is important. More importantly, if you are in it for the long term, we are still standing by that the Chinese market will be a very, very important market for tools.
I think the fact that we were excluded, at least our reagents were excluded from the tariff retaliatory efforts, is a sign that our products are needed and how important they are to China and how important healthcare and the continued development of healthcare is to China in the future. We get past all the noise that is occurring right now and China gets back on its feet economically, we still think China will be the largest, the fastest growing region, major region in the world for life science tools for the decade to come.
Got it. You talked a little bit about BioPharma being one of your largest end markets. Maybe discuss what you're seeing from this end market. You said you were pleasantly surprised, although visibility was low. Obviously, there's the overhang of potential MFN sector tariffs, very difficult to call, but just your view, particularly given some of the things that you do are more on the earlier side, the research and development, what is your view of the biopharma end market as we move through the rest of the year?
Yeah, with BioPharma, there's Pharma and there's biotech and we kind of combine them. I think the biotech market is very different than the Pharma market in terms of how they behave in this environment right now and where their sources of funds come from, et cetera. Large Pharma in particular, I think it's the smallest beta of the three when you think academic, biotech, Pharma. Pharma is just, they're larger corporations. They're obviously financially sound. They're not going to overreact to headlines. They're going to be much more thoughtful in how they approach things. They're not going to make major moves until there's certainty as to what moves they need to make. I think IRA was a good example of that.
There was actual, there was legislation that was passed and it became law and then boom, okay, we're going to reset our portfolios, our long-term R&D portfolios now under this new kind of IRA pricing in the future, which by the way, from all intents and purposes, it appears like it was not nearly as bad as they had envisioned. Our view going into calendar 2025 was that that reset was mostly behind them in 2024. It is a big endeavor. It is expensive. You got to lay off people, et cetera. When you got to 2025, their increases to R&D budgets, which they still did even last year, it just was bent towards late-stage stuff, was going to be more widespread along a new baseline. That is exactly what we started to see even before the calendar 2025 started.
We started to see that in November and December and all through our first quarter. I think that thesis is still intact. I think they're not going to, even though I believe, and this is kind of why we took our guidance bit down in Q4 as it pertains to pharma, is that they took their foot maybe off the gas a little bit here recently, not the brakes, but just a little bit off the gas, as you would expect given the rhetoric that's occurred started in April and May with regards to pharma, whether it's tariffs or whether it's MFN. I do not think they're going to overreact. I think they want to see what happens when the dust settles. The reality is they've already did a major repositioning of their portfolio.
I think it'll take something very major to have them go back to that well again. At the end of the day, you can only strip your discovery and translational research so far, and you basically jeopardize your future. You could argue they've kind of done that already. They may have, if things do get worse for them, they may have to live with a little bit less profitability near term to make sure that they are viable long term.
Got it. And then just wrapping up on sort of the high-level questions, how has your performance in Q3 and your expectations for Q4 informed you as you head into fiscal 2026?
Yeah, I thought last year was a tough year.
When you gave me the slap me on the rib for that question.
Yeah, because they told me not to answer that question. So I'll vaguely answer it in the sense that.
Whatever you can do.
It was, I thought last year was a tough year to give get forward any kind of soft guidance for, but this year has proven to be tougher. I say that because at this point in time last year, a lot of things were known. The biotech funding situation was getting better. You could see it in the numbers in terms of the funding. That was stabilizing. Academic was not an issue then at all. Large Pharma, the pipeline reset was in full motion. You could kind of get a sense for when that would end and kind of things get back to normal. We're not as far along as that right now. We're still in this stage of massive uncertainty as to where all these policies ultimately will end up.
In that type of environment, it's very tough to pinpoint exactly not if there's going to be recovery. I fully believe the megatrends are supporting our industry for decades to come. Exactly when that recovery restarts again, because I think it was starting and now we have to do a restart. By the way, when it starts, it ramps quickly. I mean, we saw how quickly we started to come out of it. I think we'd be talking about double-digit growth this Q4 if it wasn't for what's occurred starting in February, March, and April. I think when it does recover, it'll recover quickly. That turning point right now would be very difficult to pinpoint. Normally I'd say, what am I going to know two months from now that I don't know today?
In this environment, you know a lot more two days from now than what you know for today. I'm hopeful that there'll be more known. I do not even, I'm concerned less about what the outcomes are. I think a lot of the worst-case outcomes are already built in. I think everyone just wants to know what those outcomes are so that we can now plan our business with that in mind and march forward. I think once that happens, not only that for us, but more importantly, our customers, they'll feel more confident on their purchases.
Yeah. It was interesting because you pour through some of the Q1 results for you and your peers. Particularly large pharma was off to a nice potential recovery year. It got kind of suspended. Maybe let's move on to your core portfolio of research reagents. Maybe give us an update on the performance of your proteins, antibodies, and assays. There's obviously been some consolidation in this market over the past couple of years. How has this changed the industry dynamic or competitive landscape in your view?
Not as much as you might think, actually. If you think about some of the larger ones, there was a protein, I'm sorry, Peppertech that was bought by Thermo a few years back. There's more recently Abcam that was bought by Danaher. The reality is that I think the way these companies operate under Thermo and under Abcam in terms of commercially isn't that much different. It wasn't like these companies already had large existing businesses that they completely synergized with and merged into. We haven't seen a dramatic difference in terms of how they go to market and how they compete. They're just as, they're just as strong competitors now as they were before, no better, no worse. I think honestly, when it comes to the real tougher competition, it's always been this way.
In the 11 years I've been at this company, it's more of the smaller companies, particularly in antibodies. They don't have the breadth, so they don't compete with you across your entire portfolio, but they all have their niche and they all try to take bites out of you in those niche. That's where we've kind of focused more of our attention on.
Got it. Maybe shifting to instrumentation, it's around 20% of your revenue when you look at the actual equipment plus the consumable pull-through. Capital equipment has been a pretty challenging part of the industry recently. Yet you delivered upper single-digit growth in the third quarter, your fiscal third quarter. What drove the growth in the quarter? Do you think that can be sustained? What's differentiating you in that instrument market relative to peers?
Yeah, so a number of things. First of all, we're proud to say that we have such strong consumable pull-through in that protein simple franchise that even though for the better part of the last two years, our instruments were down, like everyone's instruments were down, the platform itself had nice solid growth because of double-digit consumable pull-through, which just gives us the confidence in our thesis that these instruments are truly used for productivity by our customers. The other thing that's unique about our instruments, whether there's three major platforms, there's the automated immunoassay platform with Simple Plex, the automated Western blot with Simple Western, and then our Biologics Maurice platform, which is truly a kind of a QC tool in manufacturing. What makes them unique is that there's not, with the exception of maybe one of those three platforms, there's not any real direct head-to-head competition.
In the case of Simple Plex, there are other companies that have similar platforms, but they're either used downstream from us or maybe upstream for the application, which we think we're in the sweet spot for and capture more of the market, more of the potential market with. In Simple Western, there really is no automated solution. You either choose to do it manually or you have our solution. In the case of our Biologics platform, there's only really one other formable competitor. Our instrument's just a better instrument, quite frankly. We're winning on the, we're taking share on new products that go into manufacturing, new manufacturing lines. The cost of these instruments are relatively cheap compared to your typical life science tools instruments. Therefore, they're easier to get through in tighter budgets than they are now.
What's encouraging is the last two quarters, not only has our overall ProteinSimple franchise grown nicely, but the actual instrument placements have increased two quarters in a row now, despite these difficult times. We think that's also a sign, particularly in large pharma, that the markets are coming back. We always believed and still believe that when the markets return to normal, we're going to see our ProteinSimple franchise really light on fire because we think there's a lot of pent-up demand for those instruments. The pipeline is as large as it's ever been. It's just a matter of budgets getting released to execute on that.
Got it. Moving to GMP reagents, it's obviously a key part of your cell and gene therapy growth pillar. What are these used for and what is the split between cell and gene therapy within this business?
We probably haven't done ourselves any favors by referring to it as cell and gene therapy, cell and gene therapy, cell and gene therapy. The devil's always in the details. There's cell therapy and there's gene therapy. The reality is that although some of our instruments are sold as QC tools into the gene therapy space, it's not a material part of our revenue. As you mentioned, the biggest part of our cell therapy revenue, or so, are actually in clinical trials. The amount of purchases bought by those 85 dwarf the other 400 or so that are in preclinical. Within those 85, we have a handful or so that are in late stage, stage two, early stage, stage three. Those handful or so dwarf the revenue from the remaining 80 that are in clinical trials.
That gives you a sense of how these things scale as the customer progresses. Ultimately you get into commercial and that's a home run. That's kind of where Wilson Wolf is entering right now, by the way. Because we have a handful of customers that have reached that point and they're driving such a large share of our overall GMP protein revenue, it now becomes very lumpy because they buy it when they need it for that clinical trial, which could be once or twice a year. That's why we're now talking about that more of a TTM basis. Luckily, two or three years from now, as we get more customers into those late stage clinical trials, that lumpiness will start to smooth out. Lumpiness is often perceived as a bad thing. In this case, it's actually a good thing.
It means we're getting customers who are progressing into later stage clinical trials.
Got it. Q3 growth did slow a little in that GMP reagent business to sort of upper single digits, still healthy growth. What was behind that slowdown and what should we expect going forward? Is this some of the lumpiness that you're talking about?
It's 100% the lumpiness. Yep, exactly.
Got it. You kind of touched on it a little bit, but just kind of want to dig a little bit deeper in terms of your exposure among the phases of drug development. There's obviously a significant uplift in volumes as programs move through later. I'm assuming a lot of what you're doing, particularly in the GMP phase, you're specked in. Could you characterize kind of your exposure to each phase, maybe across your business or across the GMP reagent business?
I think I kind of already did and I just outlined there. I mean, like I said before, there's a handful of customers that are in later stage clinicals that dwarf the revenue of the other 75 or so or 80 or so, whatever that number is, that are in earlier stage clinicals. And then those dwarf the revenue of the 400 or so that are pre. That is kind of how you can think about the ramp.
Okay. You touched on it before, but just another key part of your cell and gene therapy strategy is Wilson Wolf.
Yes.
Maybe remind us kind of how much of you are in the company today, how Wilson Wolf fits in with the business, and how has the company actually been performing recently?
Yeah. Wilson Wolf, they have a product called the G-Rex, which is basically a disposable bioreactor about the size of a laptop. In cell therapy, particularly in immunocell therapy, it's all about after you've re-engineered the cells, you've taken out of the body, you've got to now take those re-engineered cells and grow them in the billions before you put them back in the body to make sure they can take effect. That all happens in this bioreactor. The food and the regulators of that food intake is essentially the media and the GMP proteins that are all put into that bioreactor. All the magic happens in that space.
Most, if not all, the other solutions out there for cell therapy, that bioreactor is in more of a traditional type bioreactor, a very large piece of equipment, expensive, takes up a lot of space, thus not very scalable. Wilson Wolf's G-Rex is this very portable, again, laptop size. You can fit 10-20 of these in a cabinet the size of what would be just one of a normal size bioreactor. The potential to scale is much greater, which is very important if these ever become mainstream therapies. Also, the cost point becomes a lot less because the price of this little bioreactor is a lot less than a traditional bioreactor. Because what it contains is basically our ingredients, that's where the marriage happens.
We've come up with a tool called ProPak we just recently released, which is a tool that basically snaps onto the G-Rex that has already a predetermined amount of our reagents in it. You don't have to fuss with guessing how much to put in and when to put in. It automatically feeds it. We're making it even easier to use our reagents with the G-Rex. As you mentioned, we've already purchased roughly 20% of the company. We have a buyout target in place where they hit certain metrics. It's roughly $226 million in revenue TTM or $136 million of EBITDA TTM. We would buy the remaining 80% for $1 billion, which is still a pretty good ratio.
If they do not hit that target within now by the end of calendar 2027, then we are obligated to buy and Wilson Wolf is obligated to sell the remaining 80% at 4.4 times trailing revenue. Remember, this is right now a 70% EBITDA business. It will probably be 60% under a public company requirement, but nonetheless, it will be a great, great acquisition for us. It mirrors extremely, we are already co-marketing our products together, but once we are all under the same hood, that will be even easier to make those synergistic sales. It is one of those rare acquisitions that is not only going to be accretive to growth because they have been growing in the mid-20s on a TTM basis, partly because they have their seven cell therapies that are currently approved. They are in five of them.
As you go from a transition from phase three to commercial, there's a bit of a lull. It takes about a year, year and a half to get through all the manufacturing processes with the FDA. That is kind of why their growth rates were subdued this past year, even though mid-20s is not bad. Now they have at least three of those five going online this year. Just those three alone will accelerate double-digit growth, even if the rest of the portfolio is flat, which is probably not going to happen. Again, a massive accretion to growth, great accretion even to our EBITDA percentage, which is extremely difficult to find at a very, very fantastic valuation. We are very excited about it.
Got it. Maybe shifting over to spatial biology and diagnostics, maybe just give us an update on your spatial biology business. Where is your portfolio currently focused? How has the Comet platform been performing in the current environment?
When you think about spatial, as there is in any of our end markets, there are kind of three key phases. There is discovery, which then the output of discovery is translational when you find your few select targets of interest to actually make from it either a diagnosis, a diagnostic, or a therapy from. When you do that, now it goes into the clinic, right? Where our focus has been from day one with our acquisition of ACD, which has been now seven, eight years ago, has been on that translational space. Because of that focus and because we got just the ultimate solution in our ACD reagents in terms of single cell resolution and specificity for RNA targets, I think we are the biggest player in that space.
Because of that, we also are very well positioned as our customers move from translational ultimately into the clinic to follow that journey with them. In some cases, we've even jump-started that because roughly 10% of our revenue in spatial is already coming from the clinic with our partners in Ventana and Leica. We are already there. I think we're one of the few spatial companies that can actually say that we already have solutions in the clinic and have proven that work in the clinic. With over $120 million in revenue of reagents, we are, I think, the largest player in pure spatial as well. That business is also knocking on the door of 30% EBITDA. I think we are the only spatial business that actually is very profitable, right?
Now, we more recently, about two years ago now, added an instrument to the portfolio, Comet, through the acquisition of Lunaphore, which is basically an automated solution for spatial in the translational space. We bought it because we're fully convinced it's the best tool in the market, whether it's the fastest, it can look at the most targets, easiest to use, all those things. Also, and as importantly, it's the only tool out there that can truly do multi-omic spatial detection on the same tissue, on the same run, on the same screen. It can find both RNA targets of interest and protein targets of interest in the same run. The beautiful part about it is, again, the pull-through. Not only does it have its own chips that are dedicated to the instrument, but obviously it pulls through our RNAscope from ACD reagents.
It also pulls in a lot of antibodies for protein detection. It is one of the most synergistic instruments we have with regards to pulling through our reagents.
Got it. Maybe shifting more towards financial, maybe walk us through your outlook for Q4. What are the assumptions behind your top line and operating margin expectations for the quarter?
Yeah. On the top line, we basically were expecting more of the same from Q3 in terms of Q3 was already a tough market for our US academic, and that obviously has not changed much. Our run rates have not changed much either. It is still holding up very well, all considering, but pretty much the same as what we saw in Q3. Biotech, the smaller biotech end market, same thing. That has not come back like we thought it would because capital markets are still very uncertain in terms of the future, and they are always concerned where the next dollar is going to come from. They are a bit on, they have slowed down a bit as well, and we see that continuing this quarter.
The biggest change from our guidance from how we ended Q3 versus Q4, because we did 6% growth and now we're guiding the low single digit for Q4, it's really around large pharma. It's really just a level of kind of needing to just make sense and some conservatism in the sense that we saw pharma in April come off the gas a little bit. That put the brakes on to come off the gas. By the way, we see this on a daily basis because 70% of our business, we can see every day come through our orders. When we saw that happen right away in April, guess what? It coincided exactly with when the tariffs were announced and the targeting around pharma, etc.
It kind of makes sense that, again, these large pharma companies aren't going to overreact, but they're not going to keep the pedal to the metal in that type of situation. That's what we started to see in April. We just basically are predicting that to continue through the quarter until there's more certainty around what this all means for pharma at the end of the day. We saw the growth rates go from double digit down to kind of mid-single digit, and they've been holding there fairly nicely. You blend that all together, it basically takes us to low single digit. That's the top line. On the bottom line, we did call out, we had a very nice margin performance in Q3. We had almost 200 basis points of margin expansion.
Unfortunately, we had a call down Q4, basically be down somewhere between 100 and 150 basis points year over year. The main reason for that is, again, the tariffs. Even though we talked about being relatively immune to tariffs and especially going forward in our quick mitigation strategies, we still were impacted at least for half the quarter on the reagents and for most of the quarter on the instruments until we get this all transitioned to all of our factories globally. That has caused us some headwind this quarter, but it is a one-quarter event, we think only. That is the main drivers of the margin.
Got it. For my last question, just more on capital allocation. You announced a $500 million share repurchase plan during earnings. Does this signal any shift in priorities in terms of capital allocation? In that sense, how are you thinking about M&A strategy moving forward?
The short answer is no, does not shift. If you think long-term in life science tools, it's such an innovative space to think you can innovate completely on your own and be viable 10 years from now, that's not the way the game's played. You have to have M&A as part of your strategy, long-term strategy, and it will continue to be for us. The M&A market for us tends to be more private companies. For the first time in a long time, we're starting to see some valuation conversations make a little more sense. We are encouraged that you'll see more activity from us there in the coming year. At the end of the day, we bought back some stock the last couple of quarters because we think we are very much undervalued.
Rather than have cash build up on the balance sheet, put that cash to work on our own company when it's as cheap as it is. The authorization, we used the rest of our authorization. It's good housekeeping to always have an authorization in place. We basically renewed that authorization. We bumped it up by another $100 million. Yeah, while the stock continues to be what we believe is severely undervalued, rather than having cash build up on the balance sheet, if we bought it last two quarters, you can imagine how we think about it right now. It's not necessarily a strategic shift. It's more of a tactical shift.
Understood. Jim, David, thank you very much. Appreciate it.
Yeah, thanks.