Greetings, and welcome to the Balchem's Third Quarter 2024 Earnings Call. At this time all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. [Operator Instructions] As a reminder, this conference is being recorded. And it is now my pleasure to introduce to you Martin Bengtsson, CFO.

Thank you, Martin. You may begin..

Thank you, and good morning, everyone. Thank you for joining our conference call this morning to discuss the results of Balchem Corporation for the quarter ending September 30, 2024. My name is Martin Bengtsson, Chief Financial Officer; and hosting this call with me is Ted Harris, our Chairman, President and CEO.

Following the advice of our counsel, auditors and the SEC, at this time, I would like to read our forward-looking statements. Statements made in today's call that are not historical facts are considered forward-looking statements.

We can give no assurance that the expectations reflected in forward-looking statements will prove correct, and various factors could cause actual results to differ materially from our expectations, including risks and factors identified in Balchem's most recent Form 10-K, 10-Q and 8-K reports.

The company assumes no obligation to update these forward-looking statements. Today's call and commentary also include non-GAAP financial measures. Please refer to the reconciliations in our earnings release for further details. I will now turn the call over to Ted Harris, our Chairman, President and CEO..

Thanks, Martin. Good morning, and welcome to our conference call. This morning, we reported strong third quarter financial results with healthy growth in sales, record earnings from operations and record adjusted EBITDA.

Excellent results in our Human Nutrition & Health and Specialty Products segments more than offset the softness we continue to experience within our Animal Nutrition & Health segment. Our consolidated revenues of $240 million were higher by 4.3% versus the prior year.

Our gross margin dollars grew 11.5%, and we expanded our gross margin percentage by 230 basis points to 35.6%. Earnings from operations of $48 million were higher by 10% versus the prior year.

And we delivered record quarterly adjusted EBITDA of $64 million, an increase of 7.6%, with an adjusted EBITDA margin of 26.8% of sales, up 80 basis points from the prior year. Our third quarter net income of $34 million, an increase of 16.4%, resulted in earnings per share of $1.03 on a GAAP basis.

On an adjusted basis, our third quarter non-GAAP net earnings were a record of $37 million, an increase of 9.3%, which resulted in earnings per share of $1.13 on a non-GAAP basis. Cash flows from operations were $51 million for the third quarter of 2024, with quarterly free cash flow of $42 million.

Overall, a strong quarter for Balchem with performance that highlights the strength and resilience of our business model. Before passing the call back to Martin to go over the financial results in more detail, I would like to make a few comments about the overall market environment and some of the new innovative products we have recently launched.

In 2024, we have seen a stabilization of demand and customers returning to more normalized order patterns, following the volatility we experienced in 2022 and 2023. When we look across our portfolio of businesses, we are seeing excellent performance in our Human Nutrition & Health segment.

And similar to what we shared on the last call, we continue to see healthy demand for our unique portfolio of minerals, nutrients and vitamins in our minerals and nutrients business. And we continue to see a normalization and more steady end consumer demand in our food systems businesses.

In the Animal Nutrition & Health segment, we saw sequential improvement in the third quarter compared to the second quarter, and we believe we bottomed out in the first half of 2024.

While we are not yet back to healthy demand levels, we do expect sequential improvement in the second half of 2024 compared to the first half on improving dairy economics, stabilization of the monogastric business in Europe and the early contribution from our recent product launch of AminoShure-XL.

For our Specialty Products segment, our primary business, Performance Gases, continues to perform well in a stable market, and we expect this to continue.

While Q4 is our seasonally weakest quarter, we believe the ongoing strength in Human Nutrition & Health and Specialty Products and the continuation of sequential improvement in Animal Nutrition & Health will allow for continued year-over-year growth as we look to close out what will have been another very strong year for Balchem.

Additionally, I'm excited to share that we continue to innovate and launch new and enhanced products to support our growth.

Animal Nutrition & Health just recently launched a newly developed product, AminoShure-XL, which is a next-generation rumen-protected precision release lysine designed to consistently, reliably and economically meet the lysine amino acid requirements of lactating dairy cattle.

AminoShure-XL offers leading performance when considering feed stability, lysine content and bioavailability, and is a great addition to the Animal Nutrition & Health segment's portfolio of high-performing encapsulated products focused on optimizing dairy cow productivity and sustainability.

Our Human Nutrition & Health segment also recently brought two innovative new products to market. The first is K2VITAL DELTA Fermented, which is a vitamin K2 from fermentation in a patented microencapsulated form.

The second, VitaCholine Pro-Flo, which is an enhanced formulation of our existing VitaCholine specifically designed for inclusion in multivitamins.

I'm excited about these recent product launches in both our Animal and Human Nutrition & Health segments, which add to the previously announced launch of Optifolin+ earlier this year, as we continue to focus on bringing innovative solutions for the health and nutritional needs of the world.

And with that, I'm now going to turn the call back over to Martin to go through the third quarter consolidated financial results for the company and the results for each of our business segments.

Martin?.

Thank you, Ted. As Ted mentioned, overall, the third quarter was a great quarter for Balchem with solid sales growth, record earnings from operations and record adjusted EBITDA.

Our third quarter net sales of $240 million were 4.3% higher than prior year, driven by strong performance in both our Human Nutrition & Health and Specialty Products segments. Our third quarter gross margin dollars were $85 million, up 11.5% compared to the prior year.

Our gross margin percent was 35.6% of sales, up 230 basis points compared to the prior year. The increase in gross margin percent was primarily due to a favorable portfolio mix, where higher-margin Human Nutrition & Health and Specialty Products businesses grew, while the lower margin Animal Nutrition & Health business declined.

Consolidated operating expenses for the third quarter were $37 million, as compared to $33 million in the prior year. The increase was primarily due to higher compensation-related costs and transaction charges, partially offset by lower amortization.

GAAP earnings from operations for the third quarter were a record of $48 million, an increase of 10% compared to the prior year. On an adjusted basis, as detailed in our earnings release this morning, non-GAAP earnings from operations of $53 million were up 7.9% compared to the prior year.

Adjusted EBITDA was a record of $64 million, an increase of 7.6% compared to the prior year, with an adjusted EBITDA margin rate of 26.8%. Net interest expense for the third quarter was $4 million, a decrease of $3 million compared to the prior year, driven primarily by lower outstanding borrowings.

We continue to use our strong cash flows to pay down debt, and we reduced our debt by $40 million in the third quarter and ended the quarter with net debt of $153 million with an overall leverage ratio on a net debt basis of 0.6. The effective tax rates for the third quarters of 2024 and 2023 were 22.9% and 20.3%, respectively.

The increase in the effective tax rate from the prior year was primarily due to lower tax benefits from stock-based compensation and certain higher state taxes. Consolidated net income closed the quarter at $34 million, up 16.4% from the prior year.

This quarterly net income translated into diluted net earnings per share of $1.03, an increase of $0.13 compared to the prior year. On an adjusted basis, our third quarter adjusted net earnings were a record of $37 million, an increase of 9.3% from the prior year, which translated to $1.13 per diluted share.

Cash flows from operations were $51 million, with free cash flow of $42 million, and we closed out the quarter with $74 million of cash on the balance sheet.

As we look at the third quarter from a segment perspective, our Human Nutrition & Health segment generated sales of $152 million, an increase of 5.4% from the prior year, primarily driven by higher sales within both the minerals and nutrients business and the food and beverage markets.

Our Human Nutrition & Health segment delivered record quarterly earnings from operations of $36 million, an increase of 13.8% compared to the prior year. This was driven by the aforementioned higher sales and a favorable mix, partially offset by higher operating expenses.

Third quarter adjusted earnings from operations for this segment were $39 million, an increase of 9.7%. We are very pleased with the overall performance of our Human Nutrition & Health segment, delivering solid sales growth and record earnings from operations.

We continue to see healthy demand in our minerals and nutrients business and a more normalized demand picture in our food and beverage businesses. Our Animal Nutrition & Health segment generated quarterly sales of $53 million, a decrease of 1.9% compared to the prior year.

The decrease was driven by lower sales in the monogastric species, partially offset by higher sales in the ruminant species markets. Animal Nutrition & Health helped delivered earnings from operations of $4 million, a decrease of 30.4% from the prior year. The decrease was primarily due to the aforementioned lower sales and higher operating expenses.

Third quarter adjusted earnings from operations for this segment were $4 million, a decrease of 21.2%. As we've discussed in earlier calls, our Animal Nutrition & Health segment, along with a broader animal feed additives market, has been going through challenging market dynamics for a while now.

In the European animal feed market, this continues to be the case. And we see relatively soft market demand and continued competition from low-cost imports flooding the market. In the North American market, we are starting to see an improving trend, particularly as it relates to the dairy market. Improved US.

milk and milk protein prices, combined with lower feed costs at the dairy farm level, are creating a healthier market for our rumen-protected encapsulated nutrients. As a result, we were pleased to see our ruminant business delivered growth versus prior year in the third quarter.

For total Animal Nutrition & Health, we were also pleased to see the sequential improvement in the third quarter compared to the second quarter, and we expect the second half of 2024 to be better than the first half.

Our Specialty Products segment delivered quarterly sales of $33 million, an increase of 10.6% compared to the prior year, driven by higher sales in both the performance gases and plant nutrition businesses.

Specialty Products delivered quarterly earnings from operations of $11 million, an increase of 20.3% versus the prior year, primarily driven by the aforementioned higher sales and a favorable mix, partially offset by higher operating expenses. Third quarter adjusted earnings from operations for this segment were $12 million, an increase of 18.9%.

We are very pleased with the performance of Specialty Products in the third quarter, both from a sales growth and margin perspective. And we expect demand to remain healthy in our performance gases business. And our plant nutrition business will follow the usual seasonality of lower second half demand.

So overall, the third quarter was another solid quarter for Balchem. I'm now going to turn the call back over to Ted for some closing remarks..

Thanks, Martin. Once again, we are very pleased with the third quarter financial results reported earlier this morning, as well as our year-to-date performance. As a company, we continue to show an ability to deliver results in a variety of market conditions, given our strong market positions and our value-added portfolio of products.

And we remain confident in the long-term growth outlook for Balchem as a company. I will now hand the call back over to Martin, who will open up the call for questions..

Thank you, Ted. This now concludes the formal portion of the conference. At this point, we will open up the conference call for questions..

[Operator Instructions] And the first question comes from the line of Robert Labick with CJS Securities. Please proceed with your question. Congrats on another great quarter..

Hi, this is Will on for Bob. Congrats on another great quarter..

Thanks, Will..

So you guys just announced two new products in HNH. And on the last call, you guys talked about Optifolin+ and the new ANH rumen-protected amino acid.

So my question here is, can you tell us more about your product development process? Where do you get your ideas from? Is it you or your customers? How long is the time to develop and launch? And what is the pipeline for new stuff right now?.

Yes. Thanks, Will. We really are pleased with the recent product launches, not only in Human Nutrition & Health, but as I mentioned, in Animal Nutrition & Health. And I think that this really stems from a lot of work that we've been doing over the last -- even three to five years and developing our pipeline process, our new product development process.

We have kind of an in-house development pipeline process that we're very proud of that kind of blends process but also speeds to market. And we really get our ideas from anywhere we can. So yes, customers, but also our significant marketing efforts that we've also been talking about, investing in over the last few years.

So we feel like we have a very healthy ideation hopper as well as kind of healthy products represented at each stage of our process. It normally takes, I think, I would say, for the non-food part of our portfolio because food is a little bit faster, given the need for meeting taste and texture requirements of limited time offers.

It's much faster pipeline. But when you put that aside, it typically takes about a year, I would say, to bring an idea to fruition and sometimes a couple of years. And we have, I think, recently done a really good job of using external help in developing some of our new products, and that kind of speed things along.

It also adds to the innovation process. But we feel really good about the investments that we've been making over the last few years, both in marketing and in R&D, to ultimately result in more products brought to market. And really pleased with these three that we've talked about..

Great. And then the minerals and nutrition subsegment in HNH has been particularly strong. I think the growth in flavors and powders have been fine, but maybe lagged a little.

What is the outlook for each over the next 12 months?.

Yes. We could not be happier with the performance of our Human Nutrition & Health business. The growth that we've really delivered over the last, I would say, few years has been really healthy. And certainly, over the last year or so has been particularly strong, led by the minerals and nutrients business, as we have said.

And we do believe that, that growth will continue for minerals and nutrients, although at a bit of a muted level just because the year-over-year comps are becoming a bit more difficult. But we see that business continuing to grow year-over-year, partly driven by healthy market growth overall.

And then our specific portfolio of products increasing their penetration in the marketplace. So growing at faster rates than the market as a whole. So we continue to see that for minerals and nutrients.

And I think the good news is that we feel, as you pointed out, the food business has been performing well, but at lower growth rates, and we see growth starting to accelerate a bit more in the broader food formulation business with the market recovering somewhat.

And again, our portfolio of products and our kind of the subsegments that we're focused on like nutritional beverages and so forth, growing at faster rates.

So we do feel as though the food business will, as we go forward, be growing at a bit of a faster pace than it has been for the last few quarters, while the minerals and nutrients business will continue to grow, but perhaps at a bit of a slower pace than it has given the year-over-year comps.

But we really do feel good about the products that we have, the positions that we have and then the overall market dynamics within Human Nutrition & Health..

Very helpful. And then just one more on the ANH side. Milk prices are continuing to rebound.

How have dairy farmers reacted in terms of demand for your product?.

Yes. Maybe I'll let Martin take that one..

Yes.

Well, it's certainly been a positive development over the last number of months in terms of the milk prices and also in terms of the combination for the dairy farmer, right? That one end for them is the milk prices and what they sell out, but also their biggest expense is the feed input costs, right? And they have really come down so that the net margin for the dairy farmer is positive, where they're making money again, where they're starting to invest again and they're thinking more about their productivity and efficiency.

And this has translated into increased demand for the feed additives and the rumen-protected encapsulates that we deliver. So we have seen that. We can see it in our order books. We can see an improvement, which is very positive.

There is a bit of a time lag that we've talked about before that -- it's not the first month where the dairy farmers see a change that they immediately turn around and place orders. There's usually a delay because they want to be convinced it's sustainable and that it will last, and it's not a short-term blip.

But from what we can see in the market, it appears to be sustainable, and that will be a much healthier market for the foreseeable future. And that is now starting to be reflected in the order books. So it's a very positive outlook from that perspective..

And the next question comes from the line of Ram Selvaraju with H.C. Wainwright. Please proceed with your question..

Hi. Thanks very much for taking my questions. Congrats on the performance in the quarter.

I wanted to ask about how Optifolin+ has been doing so far? And in particular, also, if you could give us some additional qualitative color around how you expect the introduction of the new HNH products to impact gross margins going forward? Also, if you had any commentary to provide regarding VitaCholine Pro-Flo and how this might change the evolution of the overall VitaCholine franchise going forward in terms of broadening its reach and how that might be achieved, that would be very helpful..

Okay. Great. We got three parts to that question. And maybe I'll take the latter part. So VitaCholine Pro-Flo is really a -- an exciting product for us. It's actually a patent-pending product that is encapsulated. And one of the complexities of choline is as we've probably talked historically, is it's hydroscopic in nature. So it attracts water.

And sometimes that makes it difficult to deal with. And this very unique encapsulated product will allow VitaCholine more easily and efficiently to be included in multivitamins. And that really has always been one of the areas that's been a bit more difficult for us. So we tend to see VitaCholine and choline products in a singular form by themselves.

And we're pleased with, excited about the growth that we've been able to deliver kind of despite this technical hurdle that you oftentimes have to get over. And what VitaCholine Pro-Flo does is it addresses that issue, particularly when trying to formulate a multivitamin that includes choline in it.

So we've largely been excluded from the multivitamin kind of market, and we're excited that we now have a solution that can address that, and it really opens up a fairly significant market for us. And so we're optimistic that we will be able to penetrate that market like we have not been able to do in the past. So that's really what it does for us.

And again, what we've been really doing for years is building awareness around the health benefits and importance of choline and penetrating the market, prenatal, infant formula, nutritional beverage. And the multivitamin market is part of that, that has really not been available to us.

So it opens up that side of the market somewhat, and that's a fairly significant market. As far as gross margin goes, these products, out of the gate, are higher gross margin than our typical products. So they certainly would not be a drain on gross margin percent, if you will, and would be accretive to gross margin. So I think that's very positive.

And Optifolin+, it hasn't really been on the market that long, but we're very pleased that we can say that we are selling the product. We have orders on the book. And I would say in total, it adds up to about an annualized sales rate of about $2 million, which I think is good and a bit ahead of our expectations in the very early days.

We have a huge industry conference next week, SupplySide West in Las Vegas. It's very important to us. We will be showcasing these new products that we talked about on the call today as well as Optifolin+. So we're hopeful that, that will further accelerate the excitement around these new innovations. But so far, so good with Optifolin+..

Okay. Great. And then with respect to how you anticipate allocating capital in terms of commercial support, in particular, for the HNH assets. I was wondering if you could comment on two things.

One is how you're looking at allocating additional capital to sales and marketing expenses going forward, particularly in support of the new product lines? And to what extent you expect that to potentially yield accretive results, more sales and marketing investments, so to speak? And if there are any new sales and marketing channels that you are contemplating and employing going forward? And then secondly, if you could comment on, broadly speaking, the long-term strategy in HNH, in particular, as it pertains to what we see as burgeoning interest in the two areas of anti-aging and weight loss? And if you see any opportunities potentially for Balchem to become more meaningfully involved in that on the healthcare consumer product side within the HNH segment?.

Great. Thanks, Ram. Thanks again for the questions. Relative to HNH, we feel like we are getting a good return on our increased marketing dollars as well as our increased R&D dollars. So we're going to continue to allocate capital in an increasing way to marketing and R&D, particularly for HNH. I don't want to overstate that.

I think it's kind of material from our perspective, but it's not going to be a sea change, if you will, in the spend there. But we will be growing our R&D spending faster than our overall spend. We'll be growing our marketing spend faster than our overall spend. And so far, we feel like we're getting a return on investment.

And where that spend will go will be continuing some of the marketing efforts that we've been talking about in the past relative to building awareness. We talked about the recent sponsoring of the Jets. We're going to continue to do things like that.

Europe is a real opportunity for us to find ways to do something similar, and we're going to be doing things like that. And you kind of mentioned other channels. We do believe and now feel as though we have a good plan around increasing our investment relative to social media marketing.

And that will also be receiving increased allocation of capital for us because we really see an opportunity there. We've been, I think, dipping our toes in that over the last 6 to 12 months. And I think we're seeing some good results from those kind of pilot situations and will be allocating more capital there.

So specifically, marketing and R&D will receive increased capital. Relative to anti-aging and weight loss, I think that overall, sort of the kind of sports nutrition, adult nutrition has been a focus for us. We've talked in the past about being kind of overly weighted towards kind of infant nutrition, infant cognition and prenatal and so forth.

So some of these marketing efforts and R&D efforts are moving us squarely into other categories. Anti-aging is a broad category that I think does work very well with many of our products, from K2 to MSM to choline and so forth. So anti-aging, I think, in square kind of in the middle of our focus area. Not so much, weight loss.

That has not been a major focus area, nor one that our products necessarily have played significant roles in.

But there is this ancillary role that comes into play when -- if somebody is on a weight loss drug, for example, of some sort, I do think overall, a vitamin, mineral nutrient supplementation sometimes becomes even more important in that weight loss program. And I think there's a clear role for us to play there.

So anti-aging, for sure, and sort of an ancillary role to play, I think, in the overall weight loss category as well, both of which are obviously very important today..

Great. And then just very quickly, two quick questions for Martin.

One is with respect to the continued evolution of interest rates and the possibility of you all having access to lower cost of capital on the debt side, do you think that, that is likely to change in any way, the manner in which Balchem prioritizes debt repayment? And then secondly, just the standard question on where you think the long-term effective tax rate is going to go and if you believe that 23% is still a reasonable assumption for modeling the effective tax rate over the course of 2025..

Yes. Thank you, Ram. I think for the second part of the question on the tax rate, I do feel that, that 22% to 23% is sort of the right number to use. If you just sort of do the basic math, you'll end closer to 23%, but we tend to always sort of find and work on creative things to lower that a little bit.

We've proven over time that we've been good at lowering that rate a little bit. But I think it will be in that 22% to 23% range for sure. Year-to-date, we're at 22.2%, I believe, and I think we'll end the year in that 22% to 23% range.

So I wouldn't expect a big change there based on what I'm seeing and based on the geographies we operate and the regulation in the different jurisdictions, et cetera. In terms of the access to debt and the debt markets and some of the changing environment there and so forth, we keep assessing it. We meet with the various players on an ongoing basis.

So we get updated on what's happening and what's changing and what's available to us and what's not, and we constantly assess that. None of it have triggered a change yet in our behaviors, but that's not to say that it won't at some point if we think that something is more favorable to us.

For now, we're happy with the revolving credit facility that we have in place that we believe we have at a fairly attractive rate as well compared to the alternatives. But it also depends what our overall debt structure and burden looks like, and that varies a lot as it goes hand-in-hand with our M&A strategy.

So M&A is -- can be unpredictable in terms of timing and in terms of size. And should we enter into some transaction at some point that puts more debt on our balance sheet, then we will certainly also assess sort of what the right debt structure and source of that is to optimize for Balchem.

So I think all the options are on the table, and it's just a constant evaluation. But we have good relationships and good insights and good discussions around it. So we'll decide as we go along..

And the next question comes from the line of Kyle May with Sidoti..

Maybe for Martin, to follow up on the last question. Just wondering if you could get us -- give us a sense of what you're seeing in the M&A market, kind of deal flow and maybe areas of interest? And then secondly, I appreciate that you try and keep the balance sheet in a good place for those opportunities.

But if nothing were to arise and given where the balance sheet is now, are there any additional uses of cash that you could kind of deploy to return that to shareholders?.

Yes. So first, on the M&A deal flow, I would say it's improving in terms of the activity in the market. The last two years have been very quiet just in terms of any quality assets out there to discuss.

There is an improving trend for sure in terms of activity and sort of the deal flow that we see come across our desks and sort of the willingness for owners and sellers to initiate discussions. I would still not call it a hot market or a booming market or anything like that, but it is starting to pick up a little bit.

So if this trend continues, you would think that, as you go into 2025, that it would be a fairly active market, or that would be my expectation.

So the other part of your question in terms of returning value or cash to shareholders, we have in the past done stock buybacks for antidilution and to keep our share count flat when we've had periods where there's been no M&A and strong cash flow generation. So we always assess that as an alternative to returning value to our shareholders.

But I think at the end of the day, if you take a step back, I think what you've seen in the past of how we operate and our capital allocation philosophy of first really investing in our organic growth and augmenting that with M&A and serving our debt and continuing to sort of pay and grow the dividend, which we've done consistently now for over a decade and then sort of the stock buyback being sort of the last lever in this equation, that will continue.

We're not doing any fundamental strategic change in how we deploy our capital or our philosophy. So I think you should probably expect more of the same..

Okay. Got it. That's helpful. And then maybe just kind of housekeeping. Operating margins continue to remain strong, even better than last quarter.

Just can you provide any guidance or thoughts about what we could see in 4Q?.

The -- well, obviously, we're very pleased with the margin rates we're seeing at the moment. As I mentioned briefly in the prepared remarks, we're benefiting a little bit from a favorable portfolio mix where HNH and Specialty Products are growing. And ANH, being lower margin, relatively speaking to the other two segments, declining.

So that's having a positive impact to the overall margins. And even within that, right, if you look at HNH, minerals and nutrients, being relatively speaking, higher margin than the food ingredients and minerals and nutrients growing faster has favorable mix impact as well. So we're benefiting from that.

So as we look forward, we think some of that will moderate, right, and the margin rate will contract a little bit as a result of ANH returning to growth as we enter into 2025. The food ingredients versus the minerals will grow not necessarily faster than minerals and nutrients, but it will grow.

So I think there'll be a little bit of a moderation there from a rate perspective. The other thing also is that from an input cost and raw materials, we've sort of gone through this deflationary period for a time where raw materials were decreasing from a year-over-year and sequential perspective, and that has sort of stopped and plateaued.

So we don't have that benefit anymore of sort of input costs and raw materials coming down. So I think that favorable timing lag that you have in that scenario will also go away, which will put a little bit of a pressure on the margin rate.

So I think it will contract a little bit, but still remain strong and healthy if you look at it from a historic perspective..

Great. That's really helpful. And then maybe one last one for me, and apologies if I missed this, but the European food market or feed market for ANH, I believe you pointed to or mentioned that, that's stabilizing.

Any additional perspective on how we should think about that going into 2025?.

Yes. I think you will -- that the feed market in Europe, and that's where we saw a big decline in this year, primarily driven by sort of low-cost international products being flooded into that market.

So prices came down, right? So volumes have remained somewhat stable as we've defended our share, but prices came down significantly as a result of this flooding of the market. We saw that in the early part of the year, sort of late last year and early part of this year is really when we saw the big change.

And then for the last, call it, quarter or 2, it's more stabilized and sort of found a balance and it's humming along at that level. So I think as you think -- as you look into the future of 2025, I expect it to remain relatively unchanged.

I don't see a big change in the market or end market demand or anything that's driving a big rebound, nor do I see, barring any structural change, the flooding of the market to stop unless there's some intervention from sort of an EU perspective of wanting to look after that situation.

So barring any structural change, I think it will remain kind of the same. Not getting worse, but not getting better either, just sort of plateaued..

There are no more questions at this time. And I would like to turn the floor back over to Ted Harris for any closing comments..

Thanks, John. Once again, thank you very much for joining our call today. We really appreciate your support as well as your time today, and we look forward to reporting out. It's hard to believe it's going to be 2025, but our Q4 2024 results in February of next year.

In the meantime, we will be participating in Baird's 2024 Industrial Conference in Chicago on November 12 and 13, and we certainly hope to see some of you there. So thanks again for joining today..

And ladies and gentlemen, that does conclude today's teleconference. You may disconnect your lines at this time. Have a great rest of the day..