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Good day and welcome to the VSE Corporation Third Quarter 2024 Results Conference Call. All participants will be in a listen-only mode. [Operator Instructions] After today’s remarks, there will be an opportunity to ask questions. [Operator Instructions] Please note, this event is being recorded. I’d now like to turn the conference over to Michael Perlman, Vice President, Investor Relations and Treasury. Please go ahead.

Thank you. Welcome to VSE Corporation's third quarter 2024 results conference call. We will begin with remarks from John Cuomo, President and CEO, followed by a financial update from Adam Cohn, our Chief Financial Officer. Presentation we are sharing today is on our website and we encourage you to follow along accordingly. Today's discussion contains forward-looking statements about future business and financial expectations. Actual results may differ significantly from those projected in today's forward-looking statements due to various risks and uncertainties, including those described in our periodic reports filed with the SEC. Except as required by law, we undertake no obligation to update our forward-looking statements. We are using non-GAAP financial measures in our presentation. Where available, the appropriate GAAP financial reconciliations are incorporated into our presentation and posted on our website. All percentages in today's discussion refer to year-over-year progress, except where noted. At the conclusion of our prepared remarks, we will open the line for questions. With that, I'd like to turn the call over to John.

Good morning. Thank you, Michael, and thank you for being a part of today's third quarter conference call. This morning, I would like to first officially welcome Adam, our new Chief Financial Officer, to his first VSE earnings call. Adam joined VSE in early September and has already made a significant impact, providing valuable support for the recently completed equity raise and the negotiation and signing of the Kellstrom acquisition. Adam, it's great to have you as my partner and welcome to the team. I'd like to begin my prepared remarks by discussing the current market environment for our Aviation segment, followed by an update on our progress to date on our 2024 strategic priorities. The Aviation segment now supports more than 70% of total company revenues. Those revenues are derived from both the commercial and business and general aviation aftermarket. In the third quarter of 2024, global demand in the commercial aerospace aftermarket remained at near-record levels, driven by high passenger traffic. The market is navigating declining OEM production rates and ongoing supply chain disruptions, which continued to hinder the availability of new aircraft. The shortage of new aircraft is a significant obstacle for airlines looking to increase capacity and retire less efficient, older aircraft. As a result, airlines are extending the operational life of existing fleets, which continue to fuel demand for aftermarket parts and maintenance services. The business in general aviation aftermarket is also operating near historic highs and has entered a period of stability compared to previous cycles. Private air travel sentiment remains robust. In summary, we expect strong demand in the commercial aftermarket with near double-digit revenue growth to continue into 2025, supported by high passenger volumes, OEM production challenges and an aging global fleet. The outlook for business and general aviation also remains positive with more stable low to mid single-digit growth into 2025. Let's now move to slide 3, where I'll provide an update on our strategic priorities. Let's begin with our recently announced acquisition of Kellstrom Aerospace. Last month, we announced that we entered into a definitive agreement to acquire Kellstrom Aerospace, a leading full-service aftermarket solutions provider of value-added distribution and technical services for the commercial aftermarket. Kellstrom is a strong strategic fit and aligned with VSE's core strategic focus areas. First, Kellstrom increases VSE Aviation's customer base and market exposure to the commercial aerospace aftermarket with a focus on engines. Second, Kellstrom expands our distribution products and aftermarket service offerings. Third, Kellstrom aligns with VSE's core OEM-centric strategy with over 95% of Kellstrom distribution revenue being generated from exclusive long-term relationships with marquee aerospace OEMs. Fourth, Kellstrom expands our international reach. Kellstrom operates across 75 countries and approximately half of revenue is generated outside of North America. And finally, the acquisition presents significant synergies with a planned integration. Kellstrom generated approximately $175 million of revenue and approximately $20 million of adjusted EBITDA for the trailing 12-month period ended September 2024. We expect to generate run rate synergies of approximately $4 million within 18 months of close and are confident that we will be able to deliver greater than 15% EBITDA margins for the business as we integrate and optimize the businesses together. The total consideration for the acquisition is $200 million, comprised of $185 million in cash and approximately $15 million of common shares of the company, subject to working capital adjustments. The acquisition is expected to close in December. I would now like to provide an update on our 2024 strategic priorities for our two segments, beginning with Aviation. Our European distribution expansion initially supported by the Pratt & Whitney Canada, Europe, Middle East and Africa aftermarket product support program is ahead of schedule and remains on pace to reach a full year run rate by the end of the fourth quarter. We have begun expanding our product line offerings in Europe with plans to support additional product lines in the near future. Next, the financial performance and implementation of our OEM-licensed Fuel Control Manufacturing program continues to outpace expectations. The implementation of the manufacturing capabilities supporting the launch of this new program, are expected to continue into 2025. The integration of the Desser acquisition, US distribution business, which included integrating systems, processes, organization and branding, was completed in the third quarter. Supporting this integration, we launched a new e-commerce platform, shop.vseaviation.com, were all legacy Desser products including tires, retreads, tubes and batteries are now available for purchase. Finally, following the acquisition of Turbine Controls in April 2024, we remain focused on adding incremental capacity and increasing our scope with existing OEM partners before integrating the business. The performance for this business remains well ahead of our expectations. Moving now to our Fleet segment. During the third quarter, the United States Postal Service completed the implementation of its new Fleet Management Information System with all 307 vehicle maintenance facilities now live. Following this system implementation and beginning this quarter, we expect to see a gradual increase of repair activity and subsequently, an increase in the usage of our parks and we remain committed to supporting the USPS through this period of transition. Within our commercial sales channel, we are focused on scaling our e-commerce fulfillment facility, diversifying our customer and supplier base and adding new products and brands to our portfolio. Fleet segment's strategic review remains in process and we will provide an update in the near future as the USPS revenue continues to stabilize. Corporate level, we completed a very successful follow-on offering of approximately 2 million shares at $87 per share in October 2024. The net proceeds from the offering will be used to fund a portion of the cash consideration for the acquisition of Kellstrom Aerospace. The remaining balance will be funded through the revolver. Now, let's move to Slide 4, where I will provide an update on our business segment Q3 performance. In the third quarter, we delivered both record revenue and record profitability for our Aviation segment, driven by a 34% increase in aviation sales in the quarter. Our Aviation segment balanced revenue growth was driven by strong execution on new and existing distribution programs and expanded portfolio of MRO capabilities and contributions from the TCI acquisition. The Aviation segment also reported record profitability, driven by balanced contributions from new distribution programs, the optimization of existing distribution programs, MRO market share gains, and our new OEM license manufacturing programs and contributions from the TCI acquisition. During the third quarter, fleet segment revenue declined 11%. USPS revenue declined as forecasted due to the final phase of implementation of a new fleet management information system. The conversion of their facilities to this new ERP platform resulted in a temporary slowdown in maintenance-related activities and parts usage, with recovery anticipated to begin this quarter. The USPS revenue decline was offset by 20% organic growth from the fleet's e-commerce fulfillment business and expanded product offerings, supporting new and existing customers within our commercial fleet sales channel. With that, I will now turn the call over to Adam to discuss the details of our financial performance.

Thank you, John. Let's turn to Slides 5 and 6 of the conference call materials where I will provide an overview of our third quarter financial performance. VSE generated $274 million of revenue in the quarter, an increase of 18%, led by a 34% increase in Aviation revenue partially offset by an 11% decline in Fleet revenue. Adjusted EBITDA of $33 million increased 3% compared to the third quarter of 2023. Aviation drove this growth, up $7 million compared to the same period in the prior year, partially offset by a $5 million decline in adjusted EBITDA per fleet. Adjusted net income was $13 million and adjusted diluted earnings per share was $0.71 per share. Now, turning to Slide 7, where we will review our Aviation segment's record third quarter results in more detail. Aviation revenue increased 34% to a record $204 million as compared to the third quarter of 2023, both distribution and MRO businesses were strong contributors up 12% and 86%, respectively. The 12% increase in distribution revenue was driven by strong execution of existing OEM programs and the ramp of new OEM programs. This growth rate remains above market on a blended basis as the business and general aviation distribution market is growing at mid-single-digits, and the commercial aerospace distribution market is growing at low double-digit growth rate. Our MRO revenue grew by 86% in the quarter, driven by the expansion of new repair capabilities, market share gains, improved throughput across our MRO facilities and contributions from the TCI acquisition. Excluding contributions from the TCI acquisition, MRO revenue increased organically approximately 17% in the quarter. Aviation adjusted EBITDA increased by 29% in the quarter to a record $33 million. The increase in adjusted EBITDA was driven by scaling of new distribution programs, strong performance from existing distribution programs, an increase in MRO activity and contributions from TCI and our newly launched OEM licensed fuel control manufacturing program. Aviation's near record adjusted EBITDA margin of 16% was negatively impacted by lower margin TCI contributions. We are increasing our full year 2024 revenue growth range from 34% to 38% to 39% to 41%. Revenue contributions from the Kellstrom acquisition, which is expected to close in the fourth quarter of 2024 are not included in our updated guidance. We are also maintaining our adjusted EBITDA margin guidance of 15.5% to 16.5%, respectively. As John mentioned earlier, we are very excited about our recently announced acquisition of Kellstrom Aerospace. The acquisition is strongly aligned with VSE Aviation's distribution business and highly complementary to our recent TCI acquisition focused on the commercial engine aftermarket. The combination of the two businesses is expected to yield significant sales and operating synergies, better positioning VSE in the global aviation aftermarket. Now turning to Slide 8 for our Fleet segment's third quarter results. In the third quarter, Fleet segment revenue declined 11% to $70 million, driven by lower USPS revenue, partially offset by e-commerce fulfillment and commercial fleet sales growth. Commercial revenue was $45 million in the third quarter, an increase of 20% compared to the prior year. Commercial revenue represents 64% of total Fleet segment sales compared to 47% in the prior year period. USPS revenue, which is included within our other government channel, declined approximately 40% compared to the third quarter of last year, which was at the lower end of our previously provided guidance range. We expect to see USPS sales begin to recover in the fourth quarter, resulting in 30% to 35% decline for the full year. Moving on to fleet profitability. Segment adjusted EBITDA decreased 59% to $4 million, driven by the decline in USPS sales volume. Fleet's adjusted EBITDA margin was 5.4% for the third quarter. For the full year 2024, we are lowering our Fleet segment revenue growth range from 0% to 5% to a decline of 5% to 10% compared to the prior year based on actual revenue to date and planned customer growth in the fourth quarter. We remain confident in our ability to support USPS revenue recovery and continued above-market growth within our Commercial business segment in the fourth quarter and continued into 2025. With respect to fleet adjusted EBITDA, we are maintaining the previously provided margin range of 6% to 8%. Turning to Slide 9. In the third quarter, we generated $10 million of operating cash flow and $4 million of free cash flow, driven by disciplined working capital management and strong operating results. At the end of the quarter, our total net debt outstanding was $442 million. Adjusted net leverage, which includes the trailing 12-month results from prior acquisitions, was 3.3 times. Following our recently completed equity raise, which has temporarily reduced our adjusted net leverage ratio to 2.1 times, and the planned completion of the Kellstrom acquisition in the fourth quarter we anticipate our third quarter 2024 adjusted net leverage ratio to improve to approximately 3 times. Our adjusted net leverage is expected to further improve in the fourth quarter driven by stronger free cash flow conversion on adjusted EBITDA basis in the fourth quarter as compared to the third quarter of 2024. With that, I will turn it back over to John.

Thank you, Adam. I would like to conclude our prepared remarks by recapping our 2024 priorities on slide 10. It's been a busy year at VSE. We divested all non-core federal and defense assets, acquired two market-leading commercial aftermarket engine-focused businesses, expanded our footprint and won and implemented significant new business. Let's begin with our Aviation segment. First, our Pratt & Whitney Europe, Middle East and Africa program implementation is ahead of schedule, and we have introduced new product lines in our new Homburg, Germany distribution center. We will finalize these implementations before year-end as we continue to position the facility to support additional product lines in the near future. Second, our OEM licensed fuel control manufacturing program launch continues to outpace expectations. The implementation of the manufacturing capabilities supporting this program are expected to continue into 2025. Third, the integration of the Desser acquisition, US distribution business was completed during the third quarter. The remaining business integrations are expected to be completed within the next year. Supporting these integrations we launched a new e-commerce platform. We will continue to optimize this platform in the quarter ahead. Fourth, we remain focused on adding incremental capacity and expanding turbine controls partnerships with existing customers and OEM partners, while working through our integration plan. And fifth, we expect to complete the acquisition of Kellstrom Aerospace in December and look forward to begin integration activities in the first quarter of 2025. Moving now to our fleet segment. First, leadership transition will lead the priorities for the fourth quarter. As reported earlier this year, Chad Wheeler, Group President of the Fleet segment is transitioning from his leadership role this month to a consultant. Chad will support with the transition over the next 12 months. I would personally like to thank Chad for his incredible partnership and countless accomplishments achieved over a 33-year tenure with the company. Next, we remain focused on scaling our new distribution and e-commerce fulfillment center, including adding new e-commerce channels and exclusive brands. Third, we will continue to support all USPS vehicle types, including legacy and new vehicles, while managing through the temporary disruption in activity brought on by their new system conversion. Fourth, we remain focused on our organic growth and customer diversification within our commercial fleet businesses as we look to add partners, products and exclusive offerings. In summary, we continue to make significant progress on our aviation operating priorities and remain focused on delivering another year of year-over-year revenue growth and improve profitability. Within fleet, we remain committed to scaling our commercial fleet business and managing through the near-term and temporary challenges within the USPS. We are focused on generating much stronger free cash flow in the fourth quarter as compared to the third quarter of 2024. I would like to conclude by thanking the VSE team for all they do daily to support our stakeholders, where we are building a recognized industry brand and is all the result of our outstanding teams around the globe and how they support their customer and supplier partners and each other each and every day. Operator, we are now ready for the question-and-answer portion of the call.

Thank you. We will now begin the question-and-answer session. [Operator Instructions] And our first question comes from Sheila Kahyaoglu from Jefferies. Please go ahead.

Thanks. Good morning, guys and great quarter and welcome up -- welcome on. Maybe, John, for you, let's talk about aviation growth, just another phenomenal quarter, up 13% organically. How much of the guidance range would you say with organic outperformance versus better contribution from PCI that you're seeing running ahead of plans?

The wait -- so Michael, Adam -- the third – Good morning, Sheila. So the 13% was ex-TCI, correct?

Correct

Yes. So 13% is without TCI. TCI had a phenomenal, phenomenal growth quarter on their own. Is that -- I want to make sure I understood your question.

Perfect. So what's driving that aviation up….

What’s driving it. Yes, Yes. I mean the its interesting -- it's higher growth in MRO than distribution. I was really pleased with the growth rate because remember, we're in business in general aviation and commercial and that business Aviation market is stabilizing nicely kind of mid single-digits right now. So in totality, when we look at kind of our above-market growth, it's for us in our markets, specifically a strong performance. It's definitely -- our growth is greater in the MRO side than distribution. But honestly, it was pretty balanced. I mean we've got contributions from almost all of our major programs, nice kind of share of wallet gains, expansion in some of our capabilities on our MRO side, some nice new smaller business wins that are turning out to be nicer than we had anticipated. It’s a great balanced quarter. So it's not like one thing drove it, which is the best answer you can have.

Okay. Maybe that brings to my second question. And John, since it was pretty balanced distribution up fall, so neck and neck in terms of organic growth. Maybe how do you think about the exit rate as we exit the year underlying market for MRO versus distribution? And maybe share gains like you had given the wins you have. How do we think about that as we exit the year and into 2025?

Yes. I think as we get into 2025, I think, in totality, we feel very comfortable. We've said that we'll continue to outpace the market growth and be in a double-digit margin growth -- organic growth perspective for next year. And that includes a definitely -- I don't say a softening of business in general aviation, but a moderation. So that market is probably going to grow somewhere 6% on the high end, kind of 4% on the low end. But we still feel with the share gain that we have won and what has not yet been realized that it puts us in a double-digit growth trajectory for next year.

Okay. Thank you.

Thanks, Sheila.

The next question comes from Ken Herbert from RBC Capital Markets. Please go ahead.

Hey, John and Adam and Michael, good morning. Maybe, John, looking at the growth you're seeing within your end markets within Aviation, how much for the industry do you think distribution is taking share as a part of overall parts sales into the aftermarket?

Yes, I think it's a great question. I think on a personal level, I think I've shared with you a number of times, Ken. I think the market is growing a little slower on the distribution side than what you see in totality. I think many of us have been gaining share over the last number of years and we're starting to realize those gains. So I think that on the commercial side, you're really looking at kind of mid to high single digits. And I think on the business and general aviation side, it's like mid single digits in terms of where I think the market is and then the rest is us outperforming that market with share gains and kind of share of wallet expansion and the like with our existing OEMs and our existing product lines.

Okay. That's helpful. And as we look into 2025, can I appreciate the commentary on the top line. Maybe without getting specific in terms of margin expectations, maybe you can just walk through a couple of the maybe moving pieces as we think about Aviation segment margins next year and how they could look compared to 2024?

Yes. I think we have some work to do internally on how to present it because we obviously have a $200 million business coming on board in the fourth quarter, that's at a lower margin percentage, so how we kind of share both the impact of TCI and Kellstrom next year, so to give investors and yourselves confidence that our kind of core business and integrated assets that that margin has kind of stabilized, let's say, 16 plus. And then you're going to see an impact on that TCI and Kellstrom until we start integrating. We will start integrating pretty quickly, but we need to find the right way to demonstrate that because you've got some puts and takes. But I'd say if you do the math that way, you can get a feel of the core organic business. And the biggest driver of margin improvement there is going to be the Honeywell Fuel Control program and that implementation. And then you've got those other two business, which is on a margin percentage is slightly dilutive, but there's integration and other activities that will happen throughout 2025 to put them in a stronger position as we get into the end of the year.

Okay. Very helpful. So obviously, as we look at the core organic business, aside from the fuel control or the sort of licensing EBITDA contribution next year, we should expect just the base MRO and distribution business to see margin expansion of 16 -- or I mean, sorry, of the 2024 levels.

Right, that's what they look at it?

I would say based on what we said, Ken, going back to November of 2023 on our guidance that we provided, the initial increase in 2025 over 2024 was related to the implementation of the fuel control program. So we've been able to take some of those benefits upfront in 2025, but we see incremental benefits in 2025 as well as we fully build out those capabilities and burn off that higher cost inventory.

Okay. Perfect. Thanks, Michael. Thanks, John and Adam.

Thanks.

Thanks, Ken.

The next question comes from Michael Ciarmoli from Truist. Please go ahead.

Hey, good morning guys. Nice results. Thanks for taking...

Good morning, Mike.

Good morning. Thanks for taking my question. Maybe just to stay on this topic of kind of market share and growth. I mean, are you seeing or taking share specifically or seeing opportunities from Boeing Global Services? And then I guess on the MRO side, too, I mean, it seems like there's a real shortage of capacity. It seems like we've got some established players adding new capacity. Does that -- do either of those dynamics have any impact on sort of your growth on a go-forward basis?

Yes. I mean, Mike, you look to ask the competitive question. So I think about how much I want to share publicly. But I would say there's three real areas of growth for us. Number one is we're very OEM-centric and what we do. And as our model is starting to resonate with OEMs, the OEMs are coming to us, and we're having strategic conversations of, hey, here's work I'm doing today that I don't want to do or I shouldn't be doing or I need to find another solution for. And we're winning a lot of work that way. So that's work that's not competitively been in the market. My competition is not running after that work. And it's not kind of in the market today, it's being done by the OEM. The second group is definitely traditional share gain, and you are thinking of the largest player out there specifically in terms of distribution. And I think many of us in the market are looking at opportunities to gain share against that large player. And you are correct on the third, we saw really strong growth in our MRO businesses in the third quarter, including PCI. And it's really a function of creating capacity. So we’re really doing a lot of capacity planning, looking at different shifts, looking at how we manage our shop floor because opening up that capacity in and of itself is what's driving the revenue. Turnaround time continues to be the most significant kind of differentiator in the market in terms of MRO ability to win new business.

Got it. That's helpful. And what about pricing? Is there any pricing contribution to kind of your growth or above market growth? Are you able to get price? I mean, obviously, yes, turn times and able to win business. But are you seeing price across distribution and MRO

Yes. I mean prices -- we look at price and volume when we look at growth. So price always has an element to volume. I would say, since I've been at the business, I kind of joined during that COVID period and that post-COVID period where you saw price had a bigger impact than we saw kind of in the preceding cycle. I would say it's moderating a bit. It's still an element of the total growth rate. But it's definitely moderating a bit compared to what we saw two years ago.

Perfect. Thanks, guys. I’ll turn back in the queue, John.

Thanks, Jeff.

[Operator Instructions] And the next question comes from Noah Levitz from William Blair. Please go ahead.

John, Adam and Michael, good morning. This is Noah on for Louie DiPalma. Thanks for taking my questions.

Hey, Noah. How are you doing?

Doing well. Thank you. To start off, you've acquired now both Turbine and Kellstrom, which serve the commercial engine aftermarket. Can you talk a little bit about what you're finding particularly attractive about the commercial engine aftermarket space as you're expanding beyond the business and general aviation side? And the $4 million in synergies, is that expected to be more cost synergies? Or will there be some revenue contribution as well? Thanks.

Yes. I mean, I think, first, I'll talk about the market. And if you look at a lot of the public companies out there like StandardAero or EPTIE [ph], there's a lot of great businesses that are -- and I wouldn't say are competitive to us that are complementary or do some different types of things, and you can see their growth rate. I think it's a combination of factors of why that market is really robust in terms of aircraft that are aging, that are going through more unplanned repairs than anticipated because of build rate declines at the OEMs, coupled with some new engine types that are coming in a market where the OEMs are now focused on those engines. So there's more work on legacy engines that are going to hit third parties like ourselves. I think those are the 2 reasons that we see the market very, very attractive. The other thing is a complex market, and it's one that distribution and MRO really serve and add real value in the space. With regard to synergies, I mean, they come from a variety of places. I would tell you that we have a strong core competency in terms of integration. And we feel very confident. And obviously, we publicly shared a number in our ability to drive that to closure over the next 12 to 15 months.

Got it. Thank you. And then a follow-up. Now that you've done those secondary and giving yourself a little bit more wiggle room with leverage, can you talk about future M&A? You've been highly acquisitive this year, in particular, would you -- like is that still in the playbook? Is there anything in the pipeline? And would it divert from the new commercial engine aftermarket that you've kind of focused on with the past to? Thanks.

Yes. I mean it's a great question. We've been acquisitive and we'll continue to be acquisitive. I would say it's not a necessity to our story. This is not a roll-up story. This is -- we're adding capabilities, customers, products and the like. So the right assets that are out there, we obviously want to be a player in that space because a lot of assets didn't trade during COVID, as they waited for the market to recover, there happens to be a decent number of assets that hit the market this year and we found the 2 that really kind of matched our strategic portfolio the best and thought that was best to execute on those 2. The difference in what others do versus what we do is we fully integrate our businesses. So when -- you asked me today, 2025 is going to be about integrating the businesses, optimizing the businesses, getting our platform and our foundation ready for that next phase of both organic and inorganic growth. That said, we always keep a pipeline of M&A. Is there anything absolutely pending? No. But if the right transaction comes along, we look at it. But I would say right now, our near-term focus is closing on Kellstrom, again, as I mentioned a minute ago, probably Kellstrom will be integrated first, getting PCI -- expand those that shop floor and get them ready. The growth and the opportunities are plentiful out there and really positioning our business for the next phase of organic growth as well. Its tuck-in M&A happens, great. If it doesn't happen, we'll keep our balance sheet nice and clean and continue to hopefully generate stronger free cash flow in the back end of this year and into next year. So we're going to make the balance sheet look even stronger and focused on execution.

Great. Thank you. That’s all for me.

The next question comes from Josh Sullivan from Benchmark. Please go ahead.

Hey good morning. What's your sense of the overall aftermarket cycle at this point? The conversation around aftermarket versus OEM momentum is picking up, Boeing resolving the strike, supply chain slowly improving, but maybe not fast enough. What's your view of the aftermarket, both from demand side, as well as supply side as you guys are exposed at this point?

Yes. I mean I continue to think the market is a little softer than others. I mean I think the market naturally is kind of on the commercial side, closer to 10% than it is kind of above 10%. And I think that because of the combination of factors, I think there's a capacity constraint, I don't think supply chain is really that's fixed. And I think that there's a -- it looks like a whack-a-mole one thing gets fixed another issue pops up in the market. I feel that there's kind of abundance of factors out there. Do we look at 2025 and even into 2026? I don't believe you're going to see build rates back to kind of historic levels, and you're going to see kind of slow and steady growth in build rates for new aircraft. So I do believe we've got two more years of nice strong organic growth into the cycle.

And then maybe one on the fleet segment, just the post office operating system any different now with this new ERP in place, as it relates to your business historically?

This is to you, Michael.

Yeah. No, I would say from the new FMIS system our position with them is as strong as it has been. We are very much embedded within their supply chain. So it's a matter of just working with them, working through the kinks and the processes and helping them essentially repair these legacy but also the new vehicles that are coming into the installed base. So we continue to be here to support the USPS through this transition and we see positive results in terms of the vehicle maintenance facilities that had been moved to the new ERP system and have now begun to recover. Now that we've passed this point in time in terms of the completion, which happened during the third quarter, we should see a nice recovery into the fourth quarter. And that should extend into the first half into 2025.

Yeah. I think one thing to add, Josh, is that, it's interesting, we were with the team last week, and I would like Europe pretty accurate in your forecast, because it seems quite complicated to me and they're like, at this point, it's just math. We have data on the first sites that went live and how they're recovering. It's the system still is not, I would say, the most efficient. So we're not seeing -- even at the sites that went live a year ago, we're not seeing those levels, we're not seeing kind of fleet level, what it was before the system transition happened. So it's a slow gradual kind of increase as we get into next year. The big question is, where does it level off? Because the fleet transition kind of happened, it's probably more like 85-ish percent of kind of where it was at the peak.

Great. Thank you for the time.

This concludes our question-and-answer session. I would like to turn the conference back over to John Cuomo, for any closing remarks.

Thank you, everybody, for making time for us today. I look forward to a strong finish to the year and speaking with you early in 2025. Have a great day.