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DATE

Thursday, March 26, 2026 at 8:30 a.m. ET

CALL PARTICIPANTS

  • President & Chief Executive Officer — Paul E. Sternlieb
  • Chief Financial Officer — Darren M. Kozik

TAKEAWAYS

  • Total Revenue -- $155 million, reflecting 2% organic growth, with a 6% rise in product sales offset by a 17% decline in service revenue.
  • Americas Growth -- 4% overall, with nearly 6% product revenue growth and an 8% service revenue decline.
  • EMEA Results -- Product revenue increased 7%, but regional revenue decreased 1% due to a 21% contraction in service revenue.
  • APAC Performance -- Modest growth led by products, with India reporting strong double-digit expansion in steel, process industries, and heavy equipment manufacturing.
  • Segment Performance – Cortland (Other segment) -- 27% growth, attributed to new project activity.
  • Industrial Tools & Services (IT&S) Product Orders -- Mid-single-digit gains reported in all three geographic regions.
  • Gross Margin -- Declined 410 basis points year over year, pressured by lower service volume.
  • SG&A Expense Ratio -- Adjusted SG&A decreased to 26.4% of revenue from 28.3% in the prior year.
  • Adjusted EBITDA Margin -- 21.3%, down from 23.2%, as service margin pressure and FX impact offset product margin gains.
  • EPS (Reported) -- $0.31 per share, compared with $0.38; adjusted EPS held steady at $0.39.
  • Restructuring Charges -- $3.3 million in the quarter, targeted at the service business, with an expected payback in one year.
  • Net Debt -- $89 million, with a net debt to adjusted EBITDA ratio of 0.6 times.
  • Total Liquidity -- $499 million, including revolver capacity and cash.
  • Free Cash Flow (YTD) -- $23 million, up $18 million compared to the previous year's $5 million.
  • Share Repurchases -- $51 million repurchased during the quarter; $135 million remains authorized out of $200 million.
  • Fiscal 2026 Guidance – Net Sales -- Narrowed to $635 million–$650 million, implying 1%-3% organic growth, with mid-single-digit product growth offset by a low- to mid-teens service contraction.
  • Fiscal 2026 Guidance – Adjusted EBITDA -- $158 million–$163 million.
  • Fiscal 2026 Guidance – Adjusted EPS -- $1.85–$1.92.
  • Fiscal 2026 Guidance – Free Cash Flow -- Maintained at $100 million–$110 million.
  • Major Contract Win -- Secured a five-year service contract in the U.K. North Sea, valued at several million dollars annually, set to begin revenue contribution in the fourth quarter.
  • Innovation Pipeline -- Six new products launched year to date, with additional launches planned in the back half of the fiscal year.
  • Hydropack Acquisition -- Recently completed small asset purchase, filling a product gap in diesel-powered Split-Flow Pumps.
  • Order Pipeline Trends -- Company noted, "order rates in the quarter were strong, with strong growth in every single region year over year."
  • Middle East Revenue Exposure -- Approximately 10% of total company revenue is from the region; current conflict has led to a pause in service work due to facility access issues.
  • Tax Rate Guidance -- Held at 21%-26% for the full year.

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RISKS

  • Gross margin contraction of 410 basis points attributed to "lower volume in our service business."
  • Management cited continued near-term pressure in the service business and a forecasted low- to mid-teens annual decline for the segment.
  • Direct impact from Middle East conflict mentioned: "some pause in service work in the Middle East, mainly due to inability to access facilities, customers shutting sites, deferring work."
  • Potential broader business risks acknowledged from "higher oil prices, inflation, and general economic headwinds that the conflict has created."

SUMMARY

Management reported the highest product sales growth in ten quarters within the IT&S segment and emphasized disciplined cost initiatives that produced an improved SG&A expense ratio. The company announced a substantial new multi-year U.K. North Sea contract and outlined a robust innovation pipeline, featuring six new products launched year to date and more planned. Liquidity stands at $499 million, supporting ongoing M&A exploration and significant share repurchases, while guidance reflects continued weakness in the service business and the effects of restructuring. Leadership also confirmed increased utilization of proprietary digital lead management programs, including ongoing pilot implementations of AI to support commercial initiatives.

  • Diversification was highlighted, with the Other segment (Cortland) growing 27% and strong results in multiple geographies, especially double-digit expansion cited in India.
  • The recent Hydropack asset acquisition addresses a strategic gap in portable Split-Flow Pump offerings for infrastructure and power generation sectors.
  • Incremental restructuring charges of $3.3 million target the EMEA service business, with anticipated annual cost savings materializing within the next fiscal year.
  • Management held free cash flow guidance steady after reporting significant year-to-date improvement, underscoring consistent cash generation despite continued service business pressures.
  • The tax rate range remains wide due to ongoing jurisdictional planning, as stated by Kozik, "There is obviously tax planning that is underway, and it is always difficult to determine when some of those things will happen."

INDUSTRY GLOSSARY

  • HLT (Heavy Lifting Technology): Engineered product line specializing in synchronized heavy-load handling and lifting solutions, often utilized in major infrastructure, power generation, and industrial projects.
  • IT&S (Industrial Tools & Services): Core segment encompassing branded hydraulic and mechanical tool production, service, and rental for industrial maintenance, repair, and operations.
  • PEP (Powering Enerpac Performance): Internal operational excellence initiative focused on procurement optimization and manufacturing efficiency across the company’s footprint.
  • ECX (Enerpac Commercial EX): Proprietary lead management and commercial excellence program using real-time CRM systems and analytics to drive pipeline conversion and global sales effectiveness.

Full Conference Call Transcript

Paul E. Sternlieb: Thanks, Darren, and thank you, everyone, for joining us this morning. As we look back at our 2026 performance, there was a lot to be pleased about. Within our Industrial Tools & Services segment, or IT&S, product sales accelerated, growing 6% organically year over year. That represents the highest growth in products that we have enjoyed in ten quarters, since 2023. Through February, we saw some strengthening in the U.S. market, with the PMI reflecting two consecutive months of expansion in the manufacturing sector. Likewise, U.S. industrial distributor survey data through February suggests improving sentiment.

At Enerpac Tool Group Corp., we continue to see favorable trends, with overall product order rates growing mid-single digits and gains in each of our three geographic regions. Within our Services business, which represented approximately 20% of the IT&S segment in fiscal 2025, we took decisive action to address a market slowdown in the EMEA region that has weighed on overall growth and profitability. With the announced restructuring, we are rightsizing our Hydratight service operation in the region and reducing headcount to align with current market conditions. The restructuring will also support our strategic transition toward higher-margin service business and profitable growth objectives.

At the same time, we are very pleased to announce a five-year contract award with a major oil and gas company operating in the U.K. North Sea. Under that contract, which is worth several million dollars annually, we will provide maintenance and pipeline service work. I am particularly proud of the fact that we were able to secure this win against significant competition. Much like the premium Enerpac tool brand, our Hydratight brand on the service side is synonymous with superior technical know-how, value-added support, and world-class job performance. In fact, the customer indicated that Hydratight was selected for this critical work as they felt we are the only ones who could ensure reliably leak-free results.

With that, let me turn the call over to Darren, who will provide more detail on our second quarter performance as well as geographic and end-market trends. Then I will come back to talk about our progress on the innovation front and our successful presence at CONEXPO. Darren?

Darren M. Kozik: Thanks, Paul. As seen on slide four, Enerpac Tool Group Corp.'s second quarter revenue of $155 million expanded 2% on an organic basis. IT&S sales increased 1% organically, as a 6% gain in product sales was offset by a 17% decline in service revenue. While there is still softness in the industrial MRO end market, we continue to enjoy growth in power generation, infrastructure, and defense end markets on a global basis. At Cortland, shown in the Other segment, we continue to capture exceptional growth of 27% in the second quarter due to its ongoing success generating new projects.

Turning to slide five, which shows our performance by geography, we delivered solid 4% growth in the Americas—year-over-year growth of nearly 6% on the product side, with particular strength in standard products but somewhat offset by an 8% decline in service revenue. On the product side, we were particularly pleased with gains we made with national accounts. Turning to the EMEA region, let me first draw your attention to the pie chart on slide five, which shows the revenue breakdown between product and service for each region in fiscal 2025. Of note, it illustrates the greater relative importance of service in the EMEA region and how its performance significantly affects overall results.

As such, while product revenue expanded 7% in the EMEA region, with gains for both standard product and HLT, second quarter revenue in the region was down 1% due to a 21% decline in service revenue. Geographically, on the product side, while conditions were soft in Northern Europe, Southern Europe enjoyed good performance, including some project work on the power generation side. In Asia Pacific, we resumed modest growth, led by our products business. While we continue to experience weakness in China, there were several bright spots. In India, we had another strong quarter, growing double digits due to strength in steel, process industries, and heavy equipment manufacturing.

In Australia, we continue to benefit from recovery in the core mining sector, as well as healthy demand from oil and gas. Turning to slide six, gross margins declined 410 basis points year over year. While gross margins on the product side remain at healthy levels, overall gross margins were under pressure due to lower volume in our service business. On the other hand, SG&A expense continued to reflect disciplined cost management and benefit from moving resources to our low-cost shared service model. As such, adjusted SG&A declined to 26.4% of revenue, compared with 28.3% in the year-ago period. As a result, the adjusted EBITDA margin was 21.3%, compared with 23.2% in the year-ago period.

We enjoyed margin improvement in the products business. However, that benefit was offset by pressure in the service business and, to a smaller extent, an FX impact of roughly 50 basis points. On a per-share basis, we reported earnings of $0.31 in 2026, versus $0.38 in the year-ago period. On an adjusted basis, earnings were $0.39 in both periods. In the second quarter, we booked a restructuring charge, primarily related to the service business, totaling $3.3 million. We expect to see the initial benefit of the savings in the third quarter and anticipate a payback period of about one year. Turning to the balance sheet shown on slide seven, Enerpac Tool Group Corp.'s position remains extremely strong.

Net debt was $89 million at the end of the second quarter, resulting in a net debt to adjusted EBITDA ratio of 0.6 times. Total liquidity, including availability under our revolver and cash on hand, was $499 million. Cash flow was strong, with year-to-date cash flow from operations of $29 million compared with $16 million in the year-ago period. In addition, year-to-date free cash flow expanded by $18 million, from $5 million in 2025 to $23 million in 2026. During the quarter, we returned significant capital to shareholders, repurchasing $51 million worth of stock. Out of the $200 million authorized by our Board in October 2025, approximately $135 million remains, and we will continue to opportunistically repurchase stock.

Looking ahead, while our product business remains strong, the service side of our business continues to experience pressure in the near term. Additionally, we recognize that the evolving conflict in the Middle East could have a direct impact on our business in the region, as well as potential ramifications as it relates to global inflation and economic growth. As such, we have narrowed the guidance range for fiscal 2026. We are now guiding to a full-year net sales range of $635 million to $650 million. That represents organic sales growth of 1% to 3%.

But keep in mind that growth rate is composed of solid product growth in the mid-single-digit range, or even a bit better, which is offset by projected service contraction in the low- to mid-teens range. We are now guiding to adjusted EBITDA of $158 million to $163 million and adjusted EPS of $1.85 to $1.92. We held free cash flow guidance at $100 million to $110 million, given our strong cash flow generation year to date. As we look forward, restructuring and rightsizing of our EMEA service operations will establish a more competitive cost structure and a platform for growth.

In addition, through the execution of Powering Enerpac Performance, or PEP, we see further opportunities to improve operating efficiency with our continued focus on procurement and the productivity of our manufacturing footprint, which supports our healthy product business. With that, let me turn it back to Paul.

Paul E. Sternlieb: Thanks, Darren. As you may know, we recently exhibited at CONEXPO, North America's largest construction trade show. Attendance and engagement were extremely strong. At the event, we demonstrated our latest infrastructure lifting and smart transport solutions, including several newly launched innovations. The conversations with customers were very productive, resulting in some meaningful orders booked at the show itself. This was the first major U.S. trade show where we exhibited our DTA automated guided vehicles. Among featured solutions, included on slide nine, were a new line of Split-Flow Pumps. The diesel-powered Split-Flow Pump, which we added with the recent acquisition of the Hydropack assets, enables operation without an external power source.

As such, it provides greater mobility and application flexibility, which can be a significant advantage for customers across many end markets, including infrastructure and power generation. We also introduced our battery Split-Flow Pump. Not only does it allow for operation without a power source, but it also enables use in enclosed spaces by eliminating emissions and significantly reducing noise. We also showcased and launched our IntelliLift 2.0 wireless gantry controller. With this controller, Enerpac Tool Group Corp. has introduced the world's first software-defined, wireless, and scalable heavy-lift control platform capable of operating up to eight hydraulic gantry legs in synchronous fashion from a single control unit.

It also provides the foundation for recurring software updates, multi-application expansion, and long-term ecosystem value. In addition, we launched our new cribbing rooms, our updated skid track system, and a new lightweight tow jack. These products are just a sample of what has come from our increased and more focused investment in innovation—an effort that continues to respond to our customers' needs and build the strength of the Enerpac brand. Before we open the call to your questions, I would like to thank our team across the globe. I applaud their talent and dedication. I also appreciate each and everyone's role in building a culture of ownership, accountability, and teamwork here at Enerpac Tool Group Corp.

Particularly rewarding on a personal note is the way our employee engagement scores have improved every year since 2022 and now exceed industrial manufacturing industry benchmarks. It is our people and shared culture that make Enerpac a premier industrial solutions provider. With that, we would be happy to take your questions.

Operator: We will now open for questions. Your first question comes from the line of Will Gildea of CJS Securities. Your line is now open.

Will Gildea: Hi, Paul and Darren. Good morning. Can you talk about how much of your business comes from the Middle East and are you seeing an impact in the region due to the current conflict?

Paul E. Sternlieb: About 10% of our total revenue for the company. What I would say on impact—I mean, we do not obviously know how long this conflict will last and if it would materially impact our outlook for the year. But, certainly, it does create a greater level of uncertainty, no doubt. We have seen, since the conflict with Iran, some pause in service work in the Middle East, mainly due to inability to access facilities, customers shutting sites, deferring work. I would say, largely, we believe that is work that has been pushed to the right. Work will need to take place. In some cases, given some of the damage to facilities, there will be more work post the conflict.

Beyond the Middle East itself, of course, there are impacts more broadly from higher oil prices, inflation, and general economic headwinds that the conflict has created. What I would say—and what I have said to our team—is we are working on what we can control, which is obviously keeping our people safe in the region, which we are doing and have done, and certainly trying to proactively identify additional commercial opportunities on a global basis to mitigate any impact to our business.

Will Gildea: Thank you. That is super helpful. On the updated guidance, can you provide some more detail on your expectations and maybe talk about how you are thinking about the cadence from quarter to quarter?

Darren M. Kozik: Sure, Will. As we look at revenue, I would say in the first place, as we talked about, our product business is very strong. IT&S product in the first half is up 5%. We expect to see mid-single-digit growth for that business for the total year, so we have been very pleased with that performance. On service, we have continued pressure in the third quarter, but we expect to see a little bit of a rebound in that business in Q4. As you saw in our prepared remarks, we think that business for the total year will be down—a decline of the low- to mid-teens. That is the framework from a revenue perspective.

As we look at gross margin, we expect to see sequential improvement into Q3 and then into Q4. That is coming off of roughly 46%, just north of that, in Q2, so we expect to see that improvement in the second half. For SG&A, our goal is simple—maintain or improve SG&A as a percent of sales for the year. That is the framework we have on the lines of the P&L. From a free cash flow perspective, strong performance—$23 million, up $18 million year over year—so we held that guidance. As we step back, we still see opportunities to improve the margins.

We are looking at the service business, we have ongoing initiatives in procurement and at our manufacturing footprint, and, obviously, we have PEP running to improve those margins in the second half. That is how we think about the business.

Will Gildea: Thank you. Thanks.

Operator: Your next question comes from the line of Ross Sparenblek of William Blair. Your line is now open.

Sam Carlo: Good morning. This is Sam Carlo on for Ross. Thanks for taking my question. I guess starting on the HLT business, I am curious specifically, have you seen any project slowdowns as a result of the macro uncertainty over the past month or so?

Paul E. Sternlieb: No, nothing to date, Sam. In fact, our HLT business remains, I would say, quite strong and healthy. Good backlog. It is a product line where, I would say, we are extremely differentiated. We continue to see really robust engagement with customers, good order rate activity. We are also encouraged by activity we see particularly for HLT in the data center end market. Although still a relatively small portion of our overall revenue as a company today, we do see good upside opportunities. We did have good engagement with customers at the CONEXPO show in Las Vegas specifically around data centers, including some repeat orders.

Sam Carlo: Got it. That is good to hear. Switching gears a little bit, we noticed there is an incremental M&A cost as well as some sizable share repurchases in the quarter. Can you give us an update on what your M&A pipeline looks like and maybe update us on your near-term capital allocation priorities?

Paul E. Sternlieb: Yeah, absolutely. I can talk about some of the M&A, and Darren can talk more broadly around capital allocation. Clearly, value-creating M&A remains a very key focus and key part of the overall growth strategy for the company. We continue at any point in time to evaluate interesting opportunities that we think could be value-creating and could have synergies and good strategic and financial fit with our company. Yes, we did incur some more significant costs in the quarter related to different opportunities that we have been evaluating.

I would say that we continue to have and cultivate a fairly robust funnel, and at any point in time, we are having a good number of ongoing discussions at various stages of evolution with different target opportunities. Obviously, we cannot really comment more specifically, but I do feel that the M&A environment overall is robust, that our funnel is extremely robust, and that we are spending certainly appropriate time engaging on that in the marketplace and with particular targets. Of course, as you know, we have a balance sheet to support, from a capital perspective, really anything that we think would be appropriate for the company and our shareholders.

Darren M. Kozik: Yeah, thanks, Paul. I would just add from a capital allocation perspective, our first priority is obviously investing organically back in the business. You will see our CapEx trends there. We want to improve our operations, whether it be IT or in the factory footprint; we are doing that CapEx in the first priority. Secondly, when we see an opportunity in the market for share repurchase, we will take it. We obviously saw some of that in Q2, but that does not prohibit us from other activities. You can see our leverage at 0.6 times. You can see we have not tapped the revolver, so we have plenty of firepower left for M&A.

We are really consciously balancing all those activities across those three priorities.

Sam Carlo: Got it. That is good color. Then quickly, one more—maybe comment on the size and strategic fit of the Hydropack acquisition. It sounds like you have added some products using that platform.

Paul E. Sternlieb: We did. That was really effectively a small tuck-in. It was an asset purchase—really not material in terms of the cost for us to acquire that. It is a partner we have worked with for a long time, and that particular product line is very additive to what we do. It is a specific gap we had in our portfolio on Split-Flow Pumps powered through alternative sources, in this case, diesel, for portability and remote site applications. We were extremely pleased to get that across the finish line and to be able to announce and show it at CONEXPO, where we actually did get quite a degree of interest.

It has been a product that has been in the market, and successfully so, for quite a number of years, but we do believe with Enerpac Tool Group Corp.'s global presence, distribution network, and the strength of our brand overall that we can continue to grow that product line much more. We were super excited to get that over the line.

Sam Carlo: Got it. That is good color. I will leave it there. Thanks, guys.

Paul E. Sternlieb: Alright. Thanks.

Darren M. Kozik: Thanks, Will.

Operator: Your next question comes from the line of Tom Hayes of ROTH Capital Markets. Your line is now open.

Tom Hayes: Morning. On the service business, I know you have taken—I think you mentioned—two restructurings in the past year. Can you maybe just talk about scope, the payback, and where you have the service business positioned now?

Darren M. Kozik: Sure, Tom. We did take two. Our first was in 2025. What I would say is that was roughly a $6 million charge, but only about $4 million of that was related to people. That was really global reductions, and some of those activities just take time to mature for the business. As you saw in Q2, our SG&A was rather favorable versus prior year, so we are starting to see some of that come through. Overall, that restructuring had about a twelve-month payback. Then, just in this quarter, we announced another restructuring—just over $3 million. That was primarily tied to our service business.

We have seen some pressure there, specifically in Europe and the Middle East, so we did make those adjustments. What I will say is that the benefit of that will flow through both direct cost and SG&A given the nature of our service business. From a service perspective, we think we have the right footprint now. You heard Paul talk about the big deal we have won. Even in our guidance, we think Q3 is going to be tough, but Q4 should be a rebound in our service business. We think we are in a good spot.

Tom Hayes: Okay. Appreciate the color. It was really nice to catch up with you guys at CONEXPO. The booth was great and seemed busy for the days that I was there. I was just wondering, can you provide a little bit more detail on the pace of the introductions of the new products and should we expect some impact to the top line this year, or is it more of a next-year contribution from the new products?

Paul E. Sternlieb: Thanks, Tom. We were extremely pleased with the team's progress on innovation and our ability to launch quite a number of new products at the CONEXPO show—six in total. Those are all really new-to-market opportunities not only for Enerpac Tool Group Corp., but in most cases to the world in terms of differentiation on the product lines. Some of these are really exciting, extremely differentiated technology that just is not available to customers today until we launch. The team has done a great job there. You can see that we are picking up and accelerating the pace of innovation. Last year, we launched five new products in fiscal 2025.

I think we said last quarter we hoped to come close to doubling that. Obviously, we are well on pace first half of the year with six already launched. We do have more products planned for launch in the back half of this fiscal year, so stay tuned on that. That is the benefit of our very focused investment we have been making in innovation.

The investments we made behind our innovation lab here at our headquarters in Milwaukee, our prototype facilities, etc., are really allowing us to dramatically increase the pace of innovation and reduce the time to market with the ability to do prototyping on the fly and in real time and effectively overnight in many cases on parts. In terms of incremental revenue, as typical for our markets and Enerpac products, most new products we launch, frankly, take multiple years to ramp for a few reasons. One, it is just the nature of our end markets—seeding these products and customers taking time to understand them, then to trial them, and then ultimately buy them in bigger quantities.

Secondly, of course, we globalize them over time and commercialize them in different regions where we are operating. That does take time for us to be able to, in some cases, get certifications and get inventory levels at the appropriate amounts depending on the country or the region. Even with products that we have launched over the last two or three years, we continue to see those ramp commercially quarter over quarter. We will see some revenue benefit, I believe, in the second half of this year from these products launched, but it is not going to be hugely meaningful. We expect to see more significant benefit over the next twelve, twenty-four, thirty-six months.

Tom Hayes: Is there anything you can talk about a little bit about the new U.K. service contract, maybe timing of when that is going to begin and any expected financial impact?

Paul E. Sternlieb: We were, again, very pleased with that—very competitive process, great customer. As we referenced, this is a five-year award that we were given that is worth several million dollars per year, and we were awarded on the basis of our technical proficiency and world-class performance. That is extremely exciting. We do expect to start to see revenue flow from that contract in Q4 of this fiscal year. As I said, that will run for about five years. That is not the only thing in that market we have been working on.

As we referenced in last quarter's call, although we have had our challenges in the service business in EMEA, our team commercially has been hard at work on trying to offset that with additional wins, and this is just one great example we wanted to highlight that we thought was quite meaningful.

Tom Hayes: Great. Appreciate the color. Thanks.

Paul E. Sternlieb: Thanks, Tom.

Operator: If you would like to ask a question, please press star followed by 1 on your telephone. Your next question comes from the line of Steve Silver of Argus Research. Your line is now open.

Steve Silver: Thanks, operator, and thanks for taking my questions. Paul, it was great to hear about the strong leads and the industry response coming out of CONEXPO. I am curious, including the new leads that you have also previously discussed coming out of the DTA acquisition, can you discuss a little bit about the current lead pipeline versus any historical trends there?

Paul E. Sternlieb: Good morning, Steve. Thanks for the question. I would reference back actually to our Enerpac Commercial EX, or ECX, program, and that has really been the foundation that we set for commercial excellence and how we drive lead management and lead cultivation here at Enerpac Tool Group Corp. globally across all our regions. We have really seen that significantly strengthen over the past year. That is a program that we built proprietary for Enerpac. We first rolled out in the Americas region and then, over the last year or so, more globally. We use that to manage our funnel process and drive lead conversion with our CRM. We use Salesforce.com to track all of our leads globally.

We can get real-time dashboards on the quantity and quality of leads, conversion rates, days in stage—all sorts of interesting stats that give us some leading indicators around the health of our pipeline. Broadly, that is looking quite favorable. Then, of course, you see that more as a lagging indicator in order rates, which, again, we referenced in our prepared remarks. The order rates in the quarter were strong, with strong growth in every single region year over year. I am really encouraged by the progress that our team has made commercially on ECX. I think it is having a real impact for us.

It is driving focus on our commercial team, and it is making sure that we follow up in a timely manner as we generate new leads. We also have some interesting opportunities where we are piloting some implementation of AI in our business, specifically on the front end around lead generation, and I think we will see that continue to bear some additional fruit for us in terms of new lead identification and qualification over the next few quarters.

Steve Silver: Great. Thanks for the color. One more, if I may, for Darren. The tax guidance range for fiscal 2026 is fairly wide at this point. While you narrowed the guidance range operationally, is there anything you can discuss in terms of jurisdictions or any puts and takes around the tax guidance range at this point of year?

Darren M. Kozik: From an overall tax guidance perspective, we have kept the range. There is obviously tax planning that is underway, and it is always difficult to determine when some of those things will happen, so we do keep that range a little bit wider. From a one big beautiful bill perspective, we do not see a significant impact on rate. There is a little bit of benefit on cash there, which we baked into our guidance. We did hold that rate at 21% to 26%.

Steve Silver: Okay. Fair enough. Thanks so much.

Operator: Thank you. I would now like to hand the call over to Paul for final remarks.

Paul E. Sternlieb: Okay. Well, thank you again for joining us this morning, and if you have any follow-up questions, please feel free to reach out directly to Darren, and have a great day.

Operator: Thank you for attending today's call. You may now disconnect. Goodbye.